HomeMy WebLinkAbout05-18-20 F&A Committee Packet 1
OTAY WATER DISTRICT FINANCE AND ADMINISTRATION COMMITTEE MEETING and SPECIAL MEETING OF THE BOARD OF DIRECTORS
BY TELECONFERENCE 2554 SWEETWATER SPRINGS BOULEVARD SPRING VALLEY, CALIFORNIA
MONDAY May 18, 2020 12:00 P.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 JU-RISDICTION BUT NOT AN ITEM ON TODAY'S AGENDA In lieu of in-person attendance, members of the public may submit their comments on
agendized and non-agendized items via email at boardsecretary@otaywater.gov.
Public comments submitted will be read into the record at the Committee Meeting and the public may continue to watch and listen to meetings. The information on how to watch and listen to the District’s live streaming can be found at this link:
https://otaywater.gov/board-of-directors/agenda-and-minutes/committee-meetings/
DISCUSSION ITEMS 3. ADOPT RESOLUTION NO. 4379 TO CONTINUE WATER AND SEWER
AVAILABILITY CHARGES FOR DISTRICT CUSTOMERS FOR FISCAL YEAR 2020-
2021 TO BE COLLECTED THROUGH PROPERTY TAX BILLS (CAREY) [5 minutes] 4. ADOPT RESOLUTION NO. 4380 TO ESTABLISH A REDUCED TAX RATE FOR IMPROVEMENT DISTRICT NO. 27 AT $0.0035 FOR FISCAL YEAR 2020-2021
(KOEPPEN) [5 mins]
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5. ADOPT RESOLUTION NO. 4381 CONSENTING THE DISTRICT TO ENTER THE JOINT PROTECTION PROGRAMS OF THE ASSOCIATION OF CALIFORNIA WATER AGENCIES/JOINT POWERS INSURANCE AUTHORITY (ACWA-JPIA) AND ELECT TO JOIN THE LIABILITY, PROPERTY, AND WORKERS’ COMPENSATION PROGRAMS SPONSORED BY ACWA-JPIA; ADOPT RESOLUTION NO. 4382
AUTHORIZING APPLICATION TO THE DIRECTOR OF INDUSTRIAL RELATIONS, STATE OF CALIFORNIA FOR A CERTIFICATE OF CONSENT TO SELF-INSURE WORKERS’ COMPENSATION LIABILITIES; APPROVE MODIFICATION TO THE DISTRICT’S PURCHASING MANUAL SECTION 7.2.8, BOARD AUTHORIZED PURCHASES EXCEEDING THE GENERAL MANAGER’S AUTHORITY, TO
INCLUDE INSURANCE SERVICES PROVIDED BY ACWA-JPIA; AUTHORIZE THE GENERAL MANAGER TO SIGN CONTRACTS AND AGREEMENTS AS NEEDED FOR INSURANCE PROGRAM SERVICES ON BEHALF OF THE DISTRICT WITH THE ACWA-JPIA; AND APPOINT A REPRESENTATIVE TO THE ACWA-JPIA BOARD AND AN ALTERNATE (FAKHOURI) [10 minutes]
6. ADOPT RESOLUTION NO. 4383 AMENDING THE DISTRICT’S RESERVE POLICY, POLICY NO. 25, OF THE DISTRICT’S CODE OF ORDINANCES ESTABLISHING A SEWER RATE STABILIZATION FUND; AND APPROVE THE TRANSFER OF $175,000 FROM THE SEWER GENERAL FUND TO THE SEWER RATE
STABILIZATION FUND (KOEPPEN) [5 minutes] 7. ADJOURNMENT
BOARD MEMBERS ATTENDING: Mitch Thompson, Chair Mark Robak
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All items appearing on this agenda, whether or not expressly listed for action, may be delib-
erated and may be subject to action by the Board.
The Agenda, and any attachments containing written information, are available at the Dis-trict’s website at www.otaywater.gov. Written changes to any items to be considered at the open meeting, or to any attachments, will be posted on the District’s website. Copies of the
Agenda and all attachments are also available through the District Secretary by contacting
her at (619) 670-2280.
If you have any disability which would require accommodation in order to enable you to par-
ticipate 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 May 15, 2020 I posted a copy of the foregoing agenda near the regular meeting place of the Board of Directors of Otay Water District, said time being at least 24 hours in advance of the meeting of the Board of Directors (Government Code Section §54954.2).
Executed at Spring Valley, California on May 15, 2020. /s/ Susan Cruz, District Secretary
STAFF REPORT
TYPE MEETING:Regular Board MEETING DATE: June 3, 2020
SUBMITTED BY:Andrea Carey,
Customer Service Manager
PROJECT: DIV. NO.All
APPROVED BY: Joseph R. Beachem, Chief Financial Officer
Jose Martinez, General Manager
SUBJECT:Adopt Resolution No. 4379 to Continue Water and Sewer
Availability Charges for District Customers for Fiscal Year
2020-2021 to be Collected Through Property Tax Bills
GENERAL MANAGER’S RECOMMENDATION:
That the Board adopt Resolution No. 4379 to continue water and sewer
availability charges for District customers for fiscal year 2020-2021
to be collected through property tax bills.
COMMITTEE ACTION:
See Attachment A.
PURPOSE:
That the Board consider the adoption of Resolution No. 4379 to
continue water and sewer availability charges for District customers
for fiscal year 2020-2021 to be collected through property tax bills.
ANALYSIS:
The District levies availability charges each year on property in
both developed and undeveloped areas. State Water Code Section
71630-71637 authorizes the District to access such availability
charges. In order to place these charges on the tax roll, the County
of San Diego requires the District to provide a resolution
AGENDA ITEM 3
2
authorizing the charges. Each year, the District provides a
resolution along with the listing of charges by parcel. Current
legislation provides that any amount up to $10 per parcel (one acre
or less) is for general use and any amount over $10 per parcel ($30
per acre for parcels over one acre) is restricted, to be expended in
and for that Improvement District. The District uses amounts over
$10 per parcel to develop water and sewer systems within the
Improvement Districts where the funds are collected. In accordance
with legislation, the District places amounts up to $10 per parcel in
the General Fund.
FISCAL IMPACT: Joseph R. Beachem, Chief Financial Officer
The availability charges, as budgeted, will generate approximately
$1.2 million in revenue.
STRATEGIC GOAL:
This revenue source will help the District meet its fiscal
responsibility to its ratepayers.
LEGAL IMPACT:
None.
Attachments:
A)Committee Action
B)Resolution No. 4379
ATTACHMENT A
SUBJECT/PROJECT:Adopt Resolution No. 4379 to Continue Water and Sewer
Availability Charges for District Customers for Fiscal Year
2020-2021 to be Collected Through Property Tax Bills
COMMITTEE ACTION:
That the Finance and Administration Committee recommend that the Board
adopt Resolution No. 4379 to continue water and sewer availability
charges for District customers for fiscal year 2020-2021 to be
collected through property tax bills.
NOTE:
The “Committee Action” is written in anticipation of the Committee
moving the item forward for Board approval. This report will be sent
to the Board as a committee approved item or modified to reflect any
discussion or changes as directed from the committee prior to
presentation to the full Board.
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RESOLUTION NO. 4379
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE
OTAY WATER DISTRICT CONTINUING PREVIOUSLY
ESTABLISHED WATER AND SEWER AVAILABILITY
CHARGES FOR FISCAL YEAR 2020-2021; REQUESTING
THE COUNTY TO COLLECT SUCH AVAILABILITY
CHARGES ON THE 2020-2021 SECURED TAX ROLL AND
TAKING OTHER RELATED ACTIONS
WHEREAS, the Otay Water District (herein "District") is a
member of the San Diego County Water Authority and the
Metropolitan Water District of Southern California and, as a
member, the District is entitled to purchase water for
distribution within the District and water so purchased is
available to property in the District that is also within the San
Diego County Water Authority and the Metropolitan Water District
of Southern California, without further need for annexation to any
agency; and
WHEREAS, Improvement District No. 18 has been formed within
the Otay Water District (herein "District") and sanitary sewers
have been constructed and sewer service is available to land
within the said District; and
WHEREAS, in consideration of the benefit that water
availability confers upon property within the District, and in
further consideration of the need for revenue to pay the cost of
water storage and transmission facilities which directly and
specifically benefit property within the District, the District
has previously determined that water availability charges be fixed
and established under applicable provisions of law; and
Attachment B
a
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WHEREAS, in consideration of the benefit which sewer
availability confers upon property within Improvement District No.
18, and in further consideration of the need to pay the cost of
sanitary sewers which directly and specifically benefit those
properties, the District has previously determined that sewer
availability charges be fixed and established for Improvement
District No. 18 as provided under applicable provisions of law;
and
WHEREAS, the District desires to continue the collection of
such water and sewer availability charges without increases or
revisions in methodology or application.
NOW, THEREFORE, the Board of Directors of the Otay Water
District resolves, determines and orders as follows:
1.SCHEDULE OF WATER CHARGES
(A)The water availability charges previously fixed and
established are hereby continued for Fiscal Year 2020-2021 at the
existing rates, as follows:
(1)In Improvement District No. 22 the charge shall be
$30.00 per acre of land and $10.00 per parcel of land
less than one acre.
(2)For land located outside an improvement district and
within one mile of a District water line, the charge
shall be $10.00 per acre of land and $10.00 for each
parcel less than one acre.
(3)For land located outside an improvement district and
greater than one mile from District facilities, the
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charge shall be $3.00 per acre of land and $3.00 for
each parcel less than one acre.
(B)Modifications The charges provided for in subparagraphs
(1) through (3) in (A) above shall be modified upon petition by
the property owner where the property does not receive water from
the District as follows:
(1)where a parcel of land or a portion thereof is within
an open space easement approved by San Diego County,
the charge for such parcel or portion thereof shall
be fifty percent (50%) of the charge determined
pursuant to paragraph (A), provided the owner files
with the District proof, satisfactory to the
District, that said parcel of land or portion thereof
is within such a designated permanent open space
area;
(2)where a parcel of land or portion thereof is in an
agricultural reserve under a Land Conservation
Contract with the County of San Diego, pursuant to
the Land Conservation Act of 1965 as amended, the
charge for such parcel shall be $3.00 per acre,
provided the owner files with the District proof,
satisfactory to the District, that said parcel of
land or portion thereof is within such an
agricultural preserve;
(3)where a parcel of land or a portion thereof is within
an area designated as a floodplain by the County of
San Diego, the charge for such a parcel or portion
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thereof shall be $3.00 per acre, provided the owner
files with the District proof, satisfactory to the
District, that said parcel of land or portion thereof
is within such designated floodplain; and
(4)where a parcel of land or portion thereof exceeds a
30% slope, and where such is not within a legal
subdivision, lot-split or planned residential
development, the charge for the slope portion shall
be $3.00 per acre, or if such a parcel is less than
one acre and more than one-half of the area exceeds
30% slope, $3.00 for the parcel, provided the owner
files with the District proof, satisfactory to the
District, that said parcel of land or portion thereof
meets or exceeds the slope.
(C) Exceptions The charges provided for in (A) and (B)
above shall not apply, upon petition by the property owner, to the
following:
(1)land located within an area designated as a floodway
by the County of San Diego;
(2)land designated as a vernal pool area by a govern-
mental agency authorized to make such a designation
and which designation prohibits use of such area for
any purpose;
(3)land owned by non-profit, tax-exempt conservation
organizations specializing in identifying and
protecting the natural habitat of rare species; or
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(4)land that is located within the boundaries of the
Otay Water District but not within the boundaries of
the Metropolitan Water District of Southern
California and the San Diego County Water Authority.
2.SCHEDULE OF SEWER CHARGES
(A)Sewer standby assessment or availability charges are
hereby fixed and established for Fiscal Year 2020-2021 as follows:
(1)In Improvement District No. 18 the charges shall be
$30.00 per acre of land and $10.00 per parcel of land
less than one acre. The preceding charges shall not
apply, upon petition by the property owner, to the
following:
(a)any portion of a parcel which is undeveloped
and maintained in its natural state within an
Open Space Area as a requirement under the San
Diego County General Plan, provided the owner
of such parcel files proof, satisfactory to
the District, of such designed Open Space
Area;
(b)any portion of a parcel located within an area
designated by the County of San Diego as a
floodway or floodplain; or
(c)any portion of a parcel of land which exceeds
a slope of 30% and which is not within a legal
subdivision, lot split or planned lot split or
planned residential development.
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3.DEFERRALS
(A) Deferral of Charge, Purpose Situations may arise when
an owner of a parcel of land does not use and has no present
intention of using water and/or sewer provided by the District on
a parcel of land, as defined in Section 4. The purpose of this
section is to permit an evaluation by the District, on a case-by-
case basis, of the circumstances which pertain to such situations
to determine whether a deferral of charges should be approved
according to the terms and conditions herein provided.
Any owner of a parcel of land who believes that the amount of
the water and/or sewer availability charges fixed against such
parcel should be deferred may file an application with the
District for deferral of the charge, as follows:
(a) Application The application shall include a
statement describing the circumstances and factual
elements which support the request for deferral.
(b)The General Manager shall consider the request
within sixty (60) days after the filing of a
completed application. If the application for
deferral meets the established criteria, the
General Manager may decide whether to approve the
request and order the charge deferred accordingly.
If the request is denied, the applicant shall be
notified in writing stating the reasons for the
denial.
(B) Appeal to Board of Directors If the General Manager
denies a request, the owner may file an appeal with the Board of
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Directors within sixty (60) days after such denial. No new
application for deferral need be considered by the General Manager
until expiration of twelve (12) months from the date of a denial,
unless differently directed by the Board of Directors.
(C) Deferred Charges on Restricted Parcels, Criteria The
levy of the charge may be deferred annually as to any parcel of
land which meets each of the following criteria:
(a)The owner of such parcel makes a timely application
requesting deferral of the charge.
(b)The parcel, which is the subject of the request,
will become subject to enforceable restrictions
which prohibits the connection to the District
sewer system or use of water on the parcel, except
by means of natural precipitation or runoff;
provided, however, if considered appropriate by the
General Manager, local water may be used for
limited domestic stock watering and irrigation
uses.
(c)The owner executed a recordable agreement which
includes provisions that:
(1)set forth the enforceable restrictions
pertinent to the subject parcel;
(2)the agreement may be terminated upon written
request by the owner and payment of all
deferred water and/or sewer availability
charges, plus interest thereon, compounded
annually, and accruing at the legal rate from
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the date such charges would have been
otherwise due and payable;
(3)no water and/or sewer service from the
District shall be provided to such parcel for
a period of ten (10) years after the total
amount due for the charges deferred, plus
annually compounded interest, is paid in full
to the District, unless a surcharge penalty as
described below is paid to the District prior
to connection of any water and/or sewer
service;
(4)if the surcharge is not paid, during the ten
(10) year period, while water and/or sewer
service is not available to the subject land,
the owner shall pay all annual water or
availability charges as fixed; and
(5)contains such other provisions considered by
the General Manager to be appropriate.
(D) Surcharge Upon termination of the deferral
agreement, an owner may elect to receive water and/or sewer
service prior to the expiration of the ten (10) year penalty
period upon payment of a surcharge. The surcharge shall be
equal to the amount of the annual water and/or sewer
availability charges fixed for the parcel(s) of land in the
year of election to receive water and/or sewer service
multiplied by the number of years remaining of the ten (10)
year penalty period. This surcharge shall also apply if a
9
property owner develops a parcel that is subject to a
deferral agreement without termination of said agreement.
(E) Enforcement Procedures In order to insure that
terms and conditions of the recordable agreement are being
met, the General Manager shall:
(1)Maintain a record of all parcels approved for
deferral of the water assessments or availability
charges.
(2)Report to the Board of Directors any instances
where the terms of the agreement are being
violated.
(3)Take such other actions or procedures considered
appropriate.
4. DEFINITION OF PARCEL The term "parcel" as used herein shall
mean a parcel of land as shown on the assessment rolls of the
County Assessor of San Diego County as of March, 2020.
5.NOTICE AND REQUEST TO THE BOARD OF SUPERVISORS AND AUDITOR
As provided in Sections 71634 to 71637, on or before the third
Monday in August, 2020, the Secretary of this District shall
furnish, in writing to the Board of Supervisors of San Diego
County and to the County Auditor, a description of the land within
the District upon which availability charges are to be levied and
collected for Fiscal Year 2020-2021 together with the amount of
the assessments or charges. At the time and in the manner
required by law for the levying of taxes for county purposes, the
Board of Supervisors of San Diego County shall levy, in addition
to taxes it levies, water and/or sewer availability charges in the
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amounts fixed by this Resolution for the respective parcels of
land described in Section 1 of this Resolution. All county
officers charged with the duty of collecting taxes shall collect
the charges with the regular property tax payments in the same
form and manner as county taxes are collected. Such availability
charges are a lien on the property with respect to which they are
fixed. Collection of the charges may be enforced by the same
means as provided for the enforcement of liens for state and
county taxes.
6. CERTIFICATION TO COUNTY BOARD OF SUPERVISORS The District
certifies that this Resolution complies with the provisions of
Article XIIID of the California Constitution in that the
availability charges are existing charges first set by the Board
of Directors of the District prior to November 6, 1996. At the
time the availability charges were initially established, the
District followed the applicable provisions of law then in effect,
and the District has continued to comply with such provisions,
including any requirements for notices or hearings, as from time
to time in effect. Therefore, pursuant to Section 71632 and
Section 71638 of the California Water Code, as currently in
effect, the District may continue the availability charges in
successive years at the same rate. The District further certifies
that the charge is not increased hereby and the methodology for
the rate is the same as in previous years. The charge is imposed
exclusively to finance the capital costs, maintenance, and
operating expenses of the water or sewer system of the District,
as applicable.
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7. CERTIFIED COPIES The Secretary of this District shall
deliver certified copies of this Resolution to the Board of
Supervisors and to the Auditor of San Diego County with the list
of charges described in Section 4 above.
8. CORRECTIONS; OTHER ACTIONS The General Manager of the
District is hereby authorized to correct any clerical error made
in any assessment or charge pursuant to this Resolution and to
make an appropriate adjustment in any assessment or charge made in
error. Furthermore, the General Manager and the Secretary of this
District are hereby directed to take any further actions and
deliver such documents and certificates as necessary to carry out
the purpose of this Resolution.
PASSED, APPROVED AND ADOPTED by the Board of Directors of the
Otay Water District at a regular meeting duly held this 3rd day of
June, 2020.
Ayes:
Noes:
Abstain:
Absent:
President
ATTEST:
Secretary
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I HEREBY CERTIFY that the foregoing Resolution No. 4379 was duly
adopted by the BOARD OF DIRECTORS of the OTAY WATER DISTRICT at a
regular meeting thereof held on the 3rd day of June, 2020 by the
following vote:
Ayes:
Noes:
Abstain:
Absent:
District Secretary
STAFF REPORT
TYPE MEETING:Regular Board MEETING
DATE:
June 3, 2020
SUBMITTED BY:Kevin Koeppen, Assistant Chief
of Finance
PROJECT:DIV. NO.All
APPROVED BY: Joseph R. Beachem, Chief Financial Officer
Jose Martinez, General Manager
SUBJECT:Adopt Resolution No. 4380 to Establish a Reduced Tax Rate for
Improvement District No. 27 (ID 27) for Fiscal Year
2020-2021
GENERAL MANAGER’S RECOMMENDATION:
That the Board adopt Resolution No. 4380 to establish a reduced tax
rate for Improvement District No. 27 (ID 27) at $0.0035 for fiscal
year 2020-2021.
COMMITTEE ACTION:
See Attachment A.
PURPOSE:
Improvement District No. 27 (ID 27) has outstanding general
obligation bonds which mature in fiscal year 2023 and is the only
improvement district with general obligation debt service. As of
July 1, 2020, the outstanding debt will be $2.1 million with an
interest rate of 4%. The bonds are non-callable.
At the beginning of each fiscal year staff must provide the County of
San Diego, Property Tax Services, with the tax rate to be charged
upon all property within ID 27 to ensure the amount of tax
collections will support the annual debt service requirement. Staff
recommends that the Board adopt Resolution No. 4380 to establish a
reduced tax rate for ID 27 at $0.0035 for fiscal year 2020-2021.
AGENDA ITEM 4
2
This is a reduction from .00375 in FY 2019-2020 to .0035 in FY 2020-
2021.
BACKGROUND:
In December 1992, the District sold $11,500,000 of general obligation
bonds in ID 27 for the construction of the 30mg reservoir. The debt
and levying of the tax was approved by the voters. When the Board
subsequently approved the issuance of the debt based on voter
approval, it covenanted to levy this tax as approved by the voters.
At the time of the formation of ID 27, the District intended to have
a maximum tax rate of $0.10 per $100 of assessed valuation. The tax
rate has remained well below the intended maximum rate.
The District refinanced the bonds in fiscal year 1998 and again in
fiscal year 2010 which resulted in a reduction in the annual debt
schedule. Property valuations peaked in fiscal year 2008 at $12.5
billion, dropped below $10 billion in fiscal year 2011, and is now
valued at more than $11 billion. The combination of the reduced debt
service requirement and the increased assessed values resulted in the
District’s ID 27 reserve levels exceeding the target.
From fiscal year 2009 to fiscal year 2015, the tax rate was $0.005
and from fiscal year 2016 to fiscal year 2019, the tax rate was
reduced to $0.004. In fiscal year 2020 the tax rate was reduced
again to $.00375. During all of these years the District has covered
any tax collection shortfalls from the ID 27 reserves.
For fiscal year 2021, staff proposes to reduce the tax rate from
$0.00375 to $0.0035 and continue to cover the tax collection
shortfall from the ID 27 reserves. Staff projects that a $0.0035 tax
rate will wind down reserve levels until the expiration of the debt
on September 1, 2022. Upon expiration of the debt, staff anticipates
that the reserve will be fully depleted.
FISCAL IMPACT: Joseph R. Beachem, Chief Financial Officer
The tax proceeds are legally restricted for the sole purpose of the
repayment of this debt. These proceeds will be collected until the
debt obligation is fully paid, at which time the fund is planned to
have a zero balance. The $0.0035 tax rate is projected to generate
$611,478 in revenue in fiscal year 2021. The projected revenue,
given the recommended tax rate combined with the current fund
balance, will meet the annual ID 27 debt service principal and
interest payment of $750,600.
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STRATEGIC GOAL:
Through well-established financial policies and wise management of
funds, the District will continue to guarantee fiscal responsibility
to its ratepayers and the community at large.
LEGAL IMPACT:
None.
Attachments:
A)Committee Action
B)Resolution No. 4380
C)ID 27 Tables
ATTACHMENT A
SUBJECT/PROJECT:Adopt Resolution No. 4380 to Establish a Reduced Tax Rate
for Improvement District No. 27 (ID 27) for Fiscal Year
2020-2021
COMMITTEE ACTION:
That the Finance and Administration Committee recommend that the Board
adopt Resolution No. 4380 to establish a reduced tax rate for
Improvement District No. 27 (ID 27) at $0.0035 for fiscal year 2020-
2021.
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.
1
RESOLUTION NO. 4380
A RESOLUTION OF THE BOARD OF DIRECTORS OF
OTAY WATER DISTRICT FIXING TAX RATES FOR
FISCAL YEAR 2020-2021 FOR PAYMENT OF
PRINCIPAL AND INTEREST ON GENERAL OBLIGATION
BONDS OF IMPROVEMENT DISTRICTS (GF 1600)
WHEREAS, California Water Code Section 72091 authorizes the
Otay Water District, as a municipal water district, to levy an
ad valorem property tax which is equal to the amount required to
make annual payments for principal and interest on general
obligation bonds approved by the voters prior to July 1, 1978.
NOW, THEREFORE, the Board of Directors of the Otay Water
District resolves, determines and orders as follows:
1. Findings. It is necessary that this Board of
Directors cause taxes to be levied in fiscal year 2020-2021 for
Improvement District No. 27 of the Otay Water District to pay
the amount of the principal and interest on the bonded debt of
such improvement district.
2. Amounts to be Raised by Taxes. The amount required to
be raised by taxation during fiscal year 2020-2021 for the
principal and interest on the bonded debt of Improvement
District No. 27 is as follows:
Improvement District No. 27 $611,478
3.Tax Rates. The tax rates per one hundred dollars
($100) of the full value of all taxable property within said
improvement district necessary to pay the aforesaid amounts of
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principal and interest on the bonded debt of said improvement
district for fiscal year 2020-2021 is hereby determined and
fixed as follows:
Improvement District No. 27 $0.0035
4. Certification of Tax Rates. Pursuant to Water Code
Section 72094, this Board of Directors hereby certifies to the
Board of Supervisors and the County Auditor of the County of San
Diego the tax rates hereinbefore fixed, and said County Auditor
shall, pursuant to Section 72095 of said Code, compute and enter
in the County assessment roll the respective sums to be paid as
tax on the property in Improvement District No. 27, using the
rate of levy hereinabove fixed for such improvement district and
the full value as found on the assessment roll for the property
therein, and the Secretary of this Board of Directors is hereby
authorized and directed to transmit certified copies of this
resolution, Attachment B, and made a part hereof, to said Board
of Supervisors and said Auditor.
PASSED AND ADOPTED by the Board of Directors of the Otay
Water District at a regular meeting held this 3rd day of June,
2020.
Ayes:
Noes:
Abstain:
Absent:
President
3
ATTEST:
Secretary
4
I HEREBY CERTIFY that the foregoing Resolution No. 4380 was duly
adopted by the BOARD OF DIRECTORS of the OTAY WATER DISTRICT at
a regular meeting thereof held on the 3rd day of June, 2020 by
the following vote:
Ayes:
Noes:
Abstain:
Absent:
District Secretary
IMPROVEMENT DISTRICT 27
History
1989 Improvement District 27 was formed with $100,000,000 bonding authorized.
1992 District issued $11,500,000 in General Obligation Bonds primarily for the constructionof a 30 million gallon storage reservoir.
1998 District refinanced outstanding debt of $10,900,000.
2009 District refinanced again outstanding debt of $7,780,000.
TAXES DEBT TAX ASSESSED
COLLECTED SERVICE NET RATE VALUATION INC%
FY03 $725,085 $848,600 ($123,515)$0.01500 $3,837,693,353 37%
FY04 $829,036 $848,700 ($19,664)$0.01400 $5,047,625,296 32%
FY05 $994,501 $840,800 $153,701 $0.01200 $6,454,909,846 28%
FY06 $1,081,991 $840,385 $241,606 $0.01000 $8,579,576,581 33%
FY 07 $862,795 $837,936 $24,859 $0.00700 $10,348,663,242 21%
FY 08 $917,168 $835,017 $82,151 $0.00600 $12,518,643,676 21%
FY 09 $747,175 $830,823 ($83,648)$0.00500 $12,308,043,285 -2%
FY 10 $605,405 $934,674 ($329,269)$0.00500 $10,378,404,507 -16%
FY 11 $606,966 $781,144 ($174,178)$0.00500 $10,131,397,697 -2.4%
FY 12 $597,799 $752,976 ($155,177)$0.00500 $9,941,622,812 -1.9%
FY 13 $650,587 $773,863 ($123,276)$0.00500 $9,869,377,173 -0.7%
FY 14 $658,147 $750,088 ($91,940)$0.00500 $10,226,148,004 3.6%
FY 15 $706,025 $748,663 ($42,638)$0.00500 $11,157,255,925 9.1%
FY 16 $612,980 $751,663 ($138,683)$0.00400 $11,904,159,221 6.7%
FY 17 $640,241 $747,969 ($107,728)$0.00400 $12,738,454,702 7.0%
FY 18 $678,655 $744,633 ($65,978)$0.00400 $13,574,290,102 6.6%
FY 19 $720,975 $749,433 ($28,458)$0.00400 $14,327,195,366 5.5%
FY 20 (1)700,712 747,200 ($46,488)$0.00375 $14,470,467,320 1.0%
(1)Due to timing of the report, taxes collected is an estimate.
TAXES DEBT TAX ASSESSEDCOLLECTEDSERVICENETRATEVALUATION INC%
Est Fund Balance 6/30/20 $416,722
FY21 611,478 750,600 ($139,122)$0.00350 $14,615,171,993 1.0%
Interest $2,601
Est Fund Balance 6/30/21 $280,202
Historical Data
Change in Fund Balance
$0
$2
$4
$6
$8
$10
$12
$14
$16
Bi
l
l
i
o
n
s
ASSESSED VALUATION10 Year History
STAFF REPORT
TYPE MEETING:Regular Board MEETING DATE:June 3, 2020
SUBMITTED BY:Eid Fakhouri, Finance Manager PROJECT:DIV. NO.All
APPROVED BY: Kevin Koeppen, Assistant Chief of Finance
Joseph R. Beachem, Chief Financial Officer
Jose Martinez, General Manager
SUBJECT: Adopt Resolution No. 4381 Consenting to Enter the Joint
Protection Programs of the Association of the California
Water Agencies/Joint Powers Insurance Authority (ACWA-JPIA)
and Hereby Elects to Join the Liability, Property, and
Workers’ Compensation Programs Sponsored by the Authority.
Adopt Resolution No. 4382 Authorizing Application to the
Director of Industrial Relations, State of California for a
Certificate of Consent to Self-Insure Workers’ Compensation
Liabilities
Approve Modification to the District’s Purchasing Manual
Section 7.2.8 “Board Authorized Purchases Exceeding the
General Manager’s Authority” to Include Insurance Services
Provided by ACWA-JPIA.
Authorize the General Manager to Sign Contracts and
Agreements as Needed for Insurance Program Services on Behalf
of the District with the ACWA-JPIA.
Appoint a Representative to the ACWA-JPIA Board, and an
Alternate.
GENERAL MANAGER’S RECOMMENDATION:
That the Board adopt Resolution No. 4381 consenting to enter the
joint protection programs of the Association of the California
Water Agencies/Joint Powers Insurance Authority (ACWA-JPIA) and
hereby elects to join the Liability, Property, and Workers’
Compensation Programs sponsored by the Authority.
That the Board adopt Resolution No. 4382 authorizing application to
the Director of Industrial Relations, State of California for a
certificate of consent to self-insure workers’ compensation
liabilities.
AGENDA ITEM 5
That the Board approve modification to the District’s Purchasing
Manual Section 7.2.8 “Board Authorized Purchases Exceeding the
General Manager’s Authority” to include insurance services provided
by ACWA-JPIA.
That the Board authorize the General Manager to sign contracts and
agreements as needed for insurance program services on behalf of
the District with the ACWA-JPIA.
That the Board appoint a representative to the ACWA-JPIA Board, and
an alternate.
COMMITTEE ACTION:
Please see Attachment A
PURPOSE:
To request the Board change the District’s insurance carrier from
the Special District Risk Management Authority (SDRMA) to the
Association of the California Water Agencies/Joint Powers Insurance
Authority (ACWA-JPIA) for Liability, Property, and Workers’
Compensation Programs.
ANALYSIS:
The Otay Water District (District) has been a member of the SDRMA
insurance authority since FY03. The District currently utilizes
SDRMA to provide liability, property, and workers’ compensation
insurance. From time to time, the District has performed market
rate comparisons to ensure our annual contributions charged by
SDRMA are reasonable and competitive, the most recent review was
conducted in 2014.
Starting in FY19, the District’s annual contributions to SDRMA for
insurance have significantly increased for many reasons.
Primarily, the reinsurer market is experiencing major losses which
are then passed on to insurance pools in the form of annual premium
increases. Some of these major losses are due to massive
wildfires, floods, and personal liability issues around child
safety.
Other factors that affect SDRMA include operating expenses,
District’s payroll, insured valuations, and loss history.
Below is a table that summarizes the District’s annual insurance
premiums paid to SDRMA since FY18 including the proposed quote for
FY21.
SDRMA
FY18 FY19 % FY20 % FY21 %
Property &
Liability $ 650,906 $ 775,520 19.1% $ 908,948 17.2% $ 1,454,317 60.0%
Workers'
Compensation $ 319,226 $ 405,167 26.9% $ 608,624 50.2% $ 563,212 -7.5%
In response to the SDRMA FY21 proposed rate increases, District
staff submitted applications to three (3) California Joint Powers
Insurance Authorities (JPIAs) and directly to an insurance carrier
through a broker that covers pools and large governmental agencies.
The insurance carrier/broker was not able to provide a quote due to
conflicts of interest with SDRMA and other pools unless the
District would first officially withdraw from SDRMA.
In order to obtain quotations, SDRMA requires its members to first
submit a provisional notice of withdrawal. The provisional notice
was submitted to SDRMA prior to obtaining competitive quotes.
According to the SDRMA program rules, we have until June 1, 2020 to
rescind the notice and remain in their JPA or we may notify SDRMA
of our final decision to withdraw from SDRMA’s insurance programs.
If no action is taken by June 1, 2020, by default SDRMA will renew
the policy. Due to the timing of the District’s Board meeting,
District staff requested and obtained an extension from SDRMA for
filing the final notice of withdrawal to June 4, 2020.
The District received preliminary quotations/proposals from ACWA-
JPIA, Public Entity Risk Management Authority (PERMA), and Golden
State Risk Management Authority (GSRMA).
PERMA and GSRMA FY21 quotes for property and liability (P&L) are
within $15,000 of SDRMA’s FY21 quote. However, workers’
compensation (WC) coverage under PERMA and GSRMA is nearly $350,000
higher than SDRMA. GSRMA requires members to participate in both
P&L and WC programs, while PERMA allows members to split
participation. These options were not financially beneficial to
the District and therefore staff did not pursue membership with
those JPAs.
ACWA-JPIA proposed an overall quotation that is $485,020 less than
the FY21 program renewal amount proposed by SDRMA. The quotations
on the following page include a 5% multi-program discount for
participating in both the P&L and WC programs.
FY 21 Quotations ACWA-JPIA SDRMA Savings (1)
Property & Liability (P&L) $1,103,925 $1,454,317 ($350,392)
Workers' Compensation (WC) $ 428,584 $ 563,212 ($134,628)
TOTAL $1,532,509 $2,017,529 ($485,020)
If the District decided to split coverage and move only P&L to
ACWA-JPIA it would lose $31,000 in SDRMA multi-program discounts
and lose an additional $30,000 in ACWA-JPIA multi-program discounts
for not participating in its WC program. This is another reason to
move both insurance programs to ACWA-JPIA.
Staff compared the proposal to the District’s current insurance
programs with SDRMA. The programs offered by ACWA-JPIA are
equivalent to SDRMA and are summarized in Attachment J.
ACWA-JPIA Background
ACWA-JPIA evolved in 1979 after most commercial insurers abandoned
the public entity market. As a result, public entities formed risk
pools to reduce and stabilize long-term insurance costs and ensure
access to coverage and service critical for local government
functions such as the acquisition, treatment, and delivery of
water.
As a California special district, ACWA-JPIA operates as a public
entity. They are member owned, member governed, and member driven.
The JPIA only serves water agencies and is currently made up of
over 360 member agencies.
Included with the insurance coverage is a full-service claims
management function and risk management function. ACWA-JPIA’s risk
management staff partners with member agencies to cost effectively
control exposures to potential losses in all insured programs.
This includes on-site assessments, specialized training, and best
practice recommendations.
Regarding claims management, ACWA-JPIA employs experienced in-house
claims staff and state-certified examiners experienced with JPIA
member agencies. ACWA-JPIA utilizes statewide claims resources
including investigators, adjusters, and specialized legal counsel.
These resources conduct aggressive investigations and provide
defense against questionable claims.
Terms of the Proposal
ACWA-JPIA proposed a quote that provides equivalent program limits
to what the District currently has with SDRMA. The minimum program
commitment is three (3) years. Overall, the programs and limits
are consistent with the coverage provided to existing ACWA-JPIA
members. The list below includes a few differences between the
District’s existing policy with SDRMA versus the ACWA-JPIA
proposal. With a change to ACWA-JPIA the District will experience:
1. An increased limit for inverse condemnation from $1M to $5M
pool coverage and up to $55M coverage through reinsurance.
Inverse condemnation coverage protects members against private
owner claims that arise from the operation or failure of a
public facility that damages private property.
2. An increase in accidental pollution liability limits from $2M
to $55M.
3. A reduced limit for employer bodily injury from $5M to $4M;
this is a component of WC.
4. Under ACWA-JPIA, property and WC insurance will continue to
renew on July 1st of each year. These rates will be available
during the District’s annual budget process.
However, general liability (GL) insurance renews on Oct 1st of
each year, and the final renewal rate is usually not available
until August or September. For budgetary purposes, ACWA-JPIA
will provide their best estimate for GL rates in April, but
this amount could be different than the final rate notice in
August or September.
5. In lieu of a deductible, ACWA-JPIA utilizes a Retrospective
Allocation Point (RAP). The RAP is the portion of the claim
that is allocated directly back to a specific member and not
the shared pool. Any amount over the RAP is then allocated to
the pool and then reallocated to its members based on various
factors. ACWA-JPIA uses a rolling four-year look back to
review closed claims to determine the RAP allocation for each
member agency. According to ACWA-JPIA, the annual insurance
payments to the pool have been actuarially determined, are
historically adequate to cover the RAP, and rarely result in a
bill or request to the member to “true up” and pay a balance
after the four-year look back. According to ACWA-JPIA this
method usually results in a refund to member agencies or a
credit to be used in future years.
Unlike today, the District will not be required to make annual
deductible payments beyond the annual insurance payments.
Currently, the District has a $50,000 deductible for GL and
$1,000 deductible for property coverage. With ACWA-JPIA, the
RAP will be similar, $50,000 for GL and $1,000 for property.
Under ACWA-JPIA there is also a $15,000 RAP for WC. Currently
the District has a $0 deductible for WC. The annual payment
to ACWA-JPIA is set at a level to cover the RAP and premiums.
Even with the RAP, the annual WC savings with ACWA-JPIA versus
SDRMA is nearly $135,000.
ACWA-JPIA Board Representation
ACWA-JPIA is member governed and the ACWA-JPIA Board of Directors
includes a representative from each member’s Board. The JPIA Board
elects an eight-member Executive Committee to work on its behalf
with the JPIA management and staff.
Member agencies are required to select a representative and an
alternate to sit on the ACWA-JPIA Board. Full Board meetings are
usually held twice a year and a representative from the District
should attend at least one Board meeting annually. These meetings
are in conjunction with the ACWA conference.
Duties of the Board can be found under Article 8 — Powers Of The
Board Of Directors in the Joint Powers Agreement (Attachment E).
The Board of Directors of the Authority shall have the following
powers and functions:
(a) The Board shall elect from its voting members pursuant to
Article 10 of this Agreement an Executive Committee.
(b) The Board may review all acts of the Executive Committee,
and shall have the power to modify and/or reverse any decision
or action of the Executive Committee upon a majority vote of
the voting Directors present at any Duly Constituted Board
Meeting.
(c) The Board shall review, modify if necessary, and approve
the annual operating budget of the Authority, prepared by the
Executive Committee pursuant to Article 11 (d).
(d) The Board shall receive and review periodic accountings of
all funds under Articles 17 and 18 of this Agreement.
(e) The Board shall have the power to conduct on behalf of the
Authority all business of the Authority, including that
assigned to the Executive Committee, which the Authority may
conduct under the provisions hereof and pursuant to law.
(f) The Board shall have such other powers and functions as
are provided for in this Agreement or in the Bylaws.
Staff is recommending the District Board appoint a representative
and an alternate to the ACWA-JPIA Board.
The primary representative must be a member of the District’s
Governing Board, the alternate shall be an officer, a member of the
Governing Board, or an employee of the District.
Each Director or alternate of the ACWA-JPIA Board shall serve until
a successor is appointed. Each Director or alternate shall serve
at the pleasure of the member by which he or she has been
appointed.
Purchasing Manual
Each year, the District renews its participation in an insurance
Joint Powers Authority, whether with SDRMA or another JPA. The
renewal process includes updating the insured property list,
reporting payroll changes, and possibly making policy changes to
ensure the District is adequately covered.
Members must make a three-year commitment when joining ACWA-JPIA.
In order to facilitate the administration of the program, staff is
recommending the District’s Purchasing Manual be revised to include
ACWA-JPIA as a noted addition to the General Manager’s purchasing
authority.
According to the District’s Code of Ordinances, Chapter 4,
paragraph 4.01, “With the exception of real property, all purchases
shall be made in conformity with the District Purchasing Manual
promulgated by the General Manager and approved by the Board.”
Currently, item 7 under Section 7.2.8 of the Purchasing Manual
refers only to SDRMA as the designated insurance service provider.
Staff is recommending that the Purchasing Manual be broadened to
include all insurance services including ACWA-JPIA, or other Board
approved insurance providers.
Purchasing Manual Current Language
7.2.8 Board Authorized Purchases Exceeding the General Manager’s
Authority:
a. The General Manager or his/her Designee is authorized to exceed
his/her delegated purchasing authority under Section 2 of the Code
of Ordinance and purchase the following goods and services without
Board approval so long as the overall Board Approved District
Budget is not exceeded:
1. Temporary labor services
2. Fuel, gasoline and diesel
3. Sewage Transportation and Processing
4. Water Meters
5. Service and maintenance of the District’s Board adopted sole
source Enterprise Resource Planning (ERP) System, Tyler Eden
6. Service and maintenance of the District’s Board adopted sole
source Geographic Information System, Environmental Systems
Research Institute (ESRI)/GIS
7. Medical Service Benefits, Property Liability Insurance and other
products and services as provided by Special District Risk
Management Authority (SDRMA)
8. Regulatory Fees
9. Service and maintenance of the District’s Board adopted sole
source Cityworks® work and asset management system.
10. Service and maintenance of other Board adopted sole and single
source enterprise systems, infrastructure and services.
11. Mount Miguel Antenna Site Lease Agreement and Addendums
Purchasing Policy Revision Bolded (Item #7 only)
7. Health Benefits, Property, Liability Insurance, Workers’
Compensation and other products and services as provided by Special
District Risk Management Authority (SDRMA), Association of
California Water Agencies – Joint Powers Insurance Authority (ACWA-
JPIA) or any other Board approved provider.
Next Steps
On May 1, 2020, the ACWA-JPIA held an Executive Committee meeting
and approved the District’s application for membership to
participate in its insurance programs.
In order to complete the membership process, the following steps
will need to be completed:
1.The Board adopt Resolution No. 4381 consenting to enter the
joint protection programs of the Association of the California
Water Agencies/Joint Powers Insurance Authority and elects to
join the Liability, Property, and Workers’ Compensation
Programs sponsored by the Authority.
2.The Board adopt Resolution No. 4382 authorizing application to
the Director of Industrial Relations, State of California for
a certificate of consent to self-insure workers’ compensation
liabilities.
3.The Board approve modification to the District’s Purchasing
Manual Section 7.2.8 “Board Authorized Purchases Exceeding the
General Manager’s Authority” to include insurance services
provided by ACWA-JPIA.
4.The Board authorize the General Manager to sign contracts and
agreements as needed for insurance program services on behalf
of the District with the ACWA-JPIA.
5.The Board appoint a representative to the ACWA-JPIA Board, and
an alternate.
6.The Board Secretary sign and certify Form A-2 "Certificate of
Consent to Self-Insure Workers' Compensation Liabilities and
Representatives of Agency are Authorized to Execute any and
all Documents Required for such Application."
7.Staff to notify SDRMA of withdrawal from the JPA Insurance
Authority.
Additionally, District staff will meet with ACWA-JPIA to coordinate
the claims management process to ensure a smooth transition is in
place as of July 1, 2020.
FISCAL IMPACT: Joseph R. Beachem, Chief Financial Officer
If the District maintained its current provider for property,
liability, workers compensation, the estimated annual premiums would
be $2,017,529. With the proposed change, the estimated annual
premiums will be $1,532,509. This is an overall 34% savings and
results in an approximate savings of $485,020 in FY21. Funding for
these expenditures is budgeted in the FY21 Operating Budget and is
sufficient to cover costs.
STRATEGIC GOAL:
Demonstrate financial health through formalized policies, prudent
investing, and efficient operations.
LEGAL IMPACT:
None.
Attachments: A) Committee Action
B) Resolution No. 4381
C)Resolution No. 4382 (Form A-2, Page 5)
D)ACWA-JPIA Proposal
E)ACWA-JPIA Agreement
F)ACWA-JPIA Entity Description, Introducing Your
Best Protection
G)ACWA-JPIA Memorandum of Liability Coverage
H)ACWA-JPIA APIP Binder of Insurance
I)ACWA-JPIA Director Selection Form
J)Insurance Limit Comparison
K)Purchasing Manual – Redline Version
L) Purchasing Manual – Proposed Version
M) PowerPoint
ATTACHMENT A
SUBJECT/PROJECT:
Adopt Resolution No. 4381 Consenting to Enter the Joint
Protection Programs of the Association of the California
Water Agencies/Joint Powers Insurance Authority (ACWA-JPIA)
and Hereby Elects to Join the Liability, Property, and
Workers’ Compensation Programs Sponsored by the Authority.
Adopt Resolution No. 4382 Authorizing Application to the
Director of Industrial Relations, State of California for a
Certificate of Consent to Self-Insure Workers’ Compensation
Liabilities
Approve Modification to the District’s Purchasing Manual
Section 7.2.8 “Board Authorized Purchases Exceeding the
General Manager’s Authority” to Include Insurance Services
Provided by ACWA-JPIA.
Authorize the General Manager to Sign Contracts and
Agreements as Needed for Insurance Program Services on
Behalf of the District with the ACWA-JPIA.
Appoint a Representative to the ACWA-JPIA Board, and an
Alternate.
COMMITTEE ACTION:
The Finance and Administration Committee recommend that the Board
adopt Resolution No. 4381 consenting to enter the joint protection
programs of the Association of the California Water Agencies/Joint
Powers Insurance Authority (ACWA-JPIA) and hereby elects to join the
Liability, Property, and Workers’ Compensation Programs sponsored by
the Authority.
The Finance and Administration Committee recommend that the Board
adopt Resolution No. 4382 authorizing application to the Director of
Industrial Relations, State of California for a certificate of
consent to self-insure workers’ compensation liabilities.
The Finance and Administration Committee recommend that the Board
approve modification to the District’s Purchasing Manual Section
7.2.8 “Board Authorized Purchases Exceeding the General Manager’s
Authority” to include insurance services provided by ACWA-JPIA.
The Finance and Administration Committee recommend that the Board
authorize the General Manager to sign contracts and agreements as
needed for insurance program services on behalf of the District with
the ACWA-JPIA.
The Finance and Administration Committee recommend that the Board
appoint a representative to the ACWA-JPIA Board, and an alternate.
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.
RESOLUTION NO. 4381
A RESOLUTION OF THE BOARD OF DIRECTORS OF
THE OTAY WATER DISTRICT
CONSENTING TO ENTER THE JOINT PROTECTION
PROGRAMS OF THE ASSOCIATION OF CALIFORNIA
WATER AGENCIES/JOINT POWERS INSURANCE AUTHORITY
WHEREAS, pursuant to the provisions of Section 990, 990.4, 990.8, and 6500 of the
Government Code, this District wishes to enter into an agreement with various other districts
entitled "Joint Powers Agreement: Creating the Association of California Water
Agencies/Joint Powers Insurance Authority" (the Authority), for the purpose of participating in
the Joint Powers Insurance Authority created thereby, which since its formation has provided
for and administered joint protection programs as more fully set forth in said agreement; and
WHEREAS, said joint protection programs offer significant advantages to this District
in terms of cost, liability protection, property protection, workers’ compensation protection,
and services, and entering such programs, on the conditions hereinafter set forth, appears to
be in the best interest of the District.
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Otay Water
District:
Section 1. That the Otay Water District hereby consents pursuant to the above-
mentioned Joint Powers Agreement, and the resolutions and policies enacted in
implementation of such Agreement, to enter said joint protection programs.
Section 2. That the District hereby elects to join the Liability, Property, and Workers’
Compensation Programs sponsored by the Authority.
Section 3. That the District hereby selects $__50,000___as its Retrospective
Allocation Point (RAP) for the first partial year of participation under the Authority's cost
allocation formula for liability exclusive of Dam Failure Liability.
Section 4. That the District hereby selects $__15,000__ as its Retrospective
Allocation Point (RAP) for the first partial year of participation under the Authority’s cost
allocation formula for workers’ compensation liabilities.
Section 5. That the Treasurer of this District is hereby authorized to pay to the
ACWA/Joint Powers Insurance Authority its first deposit premium.
Section 6. That the Secretary of the Board of Directors of this District is directed to
certify a copy of this resolution and to forward the same resolution, the signed Joint Powers
Agreement, and the JPIA deposit premium payment promptly by mail to the Association of
California Water Agencies/Joint Powers Insurance Authority, P.O. Box 619082, Roseville,
California, 95661, at which time coverage will commence the 1st day of July, 2020.
PASSED, APPROVED, AND ADOPTED this 3rd day of June 2020 by the following
vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST:
_______________________________ ______________________________
Secretary President
Form: A-2 (1-2016) | Page 5
RESOLUTION NO.: __________ DATED: __________________________
A RESOLUTION AUTHORIZING APPLICATIONTO THE DIRECTOR OF INDUSTRIAL RELATIONS, STATE OF CALIFORNIAFOR A CERTIFICATE OF CONSENT TO SELF-INSURE WORKERS' COMPENSATION LIABILITIES
At a meeting of the _____________________________________________________
(Enter Name of the Board)
of the ________________________________________________________________
(Enter Name of Public Agency, District, Etc.)
a ______________________________________ organized and existing under the
(Enter Type of Agency, i.e., County, City, School District, etc.)
laws of the State of California, held on the _______ day of ______________, 20___,
the following resolution was adopted:
RESOLVED, that the above named public agency is authorized and empowered to
make application to the Director of Industrial Relations, State of California, for aCertificate of Consent to Self-Insure workers' compensation liabilities and representatives of Agency are authorized to execute any and all documentsrequired for such application.
IN WITNESS WHEREOF: I HAVE SIGNED AND AFFIXED THE AGENCY SEAL.
X_____________________________________________ DATE: __________________________________ SIGNED: Board Secretary or Chair
______________________________________________Printed Name
______________________________________________Title Affix Seal Here______________________________________________Agency Name
z
Coverage Proposal
OTAY WATER DISTRICT
April 3, 2020
Page 1
Liability Coverage Quotation
LIABILITY PROGRAM LIMIT ................................... $55,000,000 *
SUB-LIMITS:
$ 5,000,000 - Terrorism
$30,000,000 - Subsidence
$30,000,000 - Lead
$35,000,000 - Mold
INCLUDES:
Bodily Injury
Errors & Omissions
Public Officials Errors & Omissions Liability
Accidental Pollution Liability
Property Damage
Employment Practices Liability
Inverse Condemnation
Automobile Liability
*Coverage afforded for drones that follow FAA Rules and Regulations Part 107 of Title XIV.
Retrospective Allocation Point (RAP) .................................................................... $50,000
10/1/19 TO 10/1/20
ESTIMATED DEPOSIT PREMIUM ...................................................................... $732,692
PREMIUM WITH MULTIPLE PROGRAM DISCOUNT (5%) ................................. $698,058
Deposit premium based on estimated annual payroll of $15,324,800.
CYBER AND TECHNOLOGY LIABILITY COVERAGE
Included with Liability Program
Limit of Coverage .................................................................... $3,000,000 per claim
........................................................................................ $5,000,000 policy aggregate
INCLUDES RETENTION SCHEDULE
Third Party Liability Coverage Revenue:
First Party Coverage <$5,000,000....................................... $10,000
$5,000,000 to $25,000,000 ................ $25,000
>$25,000,000..................................... $50,000
Page 2
Property Coverage Quotation
PROPERTY PROGRAM LIMIT .................................................... $500,000,000 *
*subject to submission of Property Program application, including statement of values
$100,000,000
$500,000 **
$50,000,000
$25,000,000
$25,000,000
$10,000,000
$2,500,000 **
$2,500,000
$500,000
$100,000 **
SUB-LIMITS:
Accidental Mechanical Breakdown
Business Interruption
Extra Expense
Off Premises Service Interruption
Flood – Program Aggregate
Zones A or V
Earthquake – Program Aggregate
Money & Securities
Accidental Contamination – Program Aggregate
Employee Dishonesty
**Additional limits available, if scheduled
TOTAL INSURABLE VALUES:
Buildings & Fixed Equipment & Contents ..................................................... $405,309,879
Mobile Equipment ............................................................................................. $1,695,243
Vehicles (62 units) ............................................................................................ $2,798,478
Coverage afforded for drones that follow FAA Rules and Regulations Part 107 of Title XIV; excludes
damage sustained while in flight
DEDUCTIBLES: (higher deductible options available)
Buildings, Fixed Equipment & Contents ................................................................... $1,000
Mobile Equipment .................................................................................................... $1,000
Vehicles - physical damage...................................................................................... $1,000
Accidental Mechanical Breakdown
Turbine Units & associated Equipment,
Electrical Generators, or Electrical Power Distribution ................................. $50,000
All other objects ........................................................................................... $25,000
Service Interruption ..........................................................................24 Hour Waiting Period
Earthquake ....................................................................... 5%, subject to minimum $75,000
Flood- All Zones .................................................................................................... $100,000
7/1/19 TO 7/1/20 ESTIMATED DEPOSIT PREMIUM ............................................ $349,275 ***PREMIUM WITH MULTIPLE PROGRAM DISCOUNT (5%) ................................. $331,811 ***
***rates subject to change 7/1/2020
Page 3
Excess Crime Coverage Quotation
GROUP PURCHASE PROGRAM
Limit of Coverage ............................................................................................. $1,000,000 *
INCLUDES
Public Employee Dishonesty
Forgery or AlterationComputer FraudFaithful Performance of Duty
Deductible ................................................................................................................ $1,000
ESTIMATED ANNUAL PREMIUM 7/1/19 TO 7/1/20 ............................................... $1,200 **
*Higher limits available
**Subject to carrier’s review of completed application
Page 4
Workers’ Compensation &
Employers Liability Coverage Quotation
WORKERS’ COMPENSATION
Limit of Coverage ................................................................................ Up to Statutory Limits
EMPLOYERS’ LIABILITY
Bodily Injury by Accident ................................................................................. $ 4,000,000
Bodily Injury by Disease - each employee ....................................................... $ 4,000,000
Bodily Injury by Disease - policy limit .............................................................. $ 4,000,000
Economy of Size Discount – 12%$ (31,387)
Discounted Premium $ 230,174
Experience Modification Factor 1.96
Modified Premium $ 451,141
JPIA Multiple Program Discount (5%)$ (22,557)
Estimated 7/1/19-20 Deposit Premium $ 428,584
Minimum Retrospective Attachment Point (RAP) - $15,000
*rates subject to change 7/1/2020
Deposit premium is payable on a quarterly reporting basis. No up-front deposit is required.
ClassCode Classification EstimatedAnnual Payroll Rate7/1/2019*EstimatedAnnual Deposit
7520 Waterworks Operations $3,002,600 .0451 $ 135,417
7580 Sanitation District $658,500 .0303 $ 19,953
8810 Clerical $8,394,900 .0086 $ 33,996
8742 Salesperson-MeterReaders $3,268,800 .0104 $ 72,196
Total $ 15,324,800 $ 261,561
Page 5
Premium Summary
Program Estimated AnnualPremium
Estimated Annual
Premium with Multiple
Program Discount (3)
Liability Coverage $ 732,692 $696,058
Property Coverage $349,275 $331,811
Workers’ Compensation Coverage $ 451,141 $428,584
Excess Crime $ 1,200 $ 1,200
Total Estimated AnnualPremium $ 1,534,308 $1,457,653
CONDITIONS:
1.Participation in pooled programs requires an initial three-year commitment;
2. Favorable Risk Assessment, including:
a. Complete Applications for Property Program and Excess Crime Program
b.Detailed loss history – Liability, Property, Crime & Workers Compensation
c.Detailed Statement of Values
3.Approval by ACWA JPIA Executive Committee;
4. Board to adopt resolution to join ACWA JPIA pooled programs;
5.ACWA Membership
Joint Powers Agreement
Creating The
Association of California Water Agencies
Joint Powers Insurance Authority
Adopted May 9, 1979
Revised on May 7, 2012
Joint Powers Agreement — Table of Contents
Recitals ........................................................................................................................... 1
Article 1 — Definitions ..................................................................................................... 2
Article 2 — Purposes ....................................................................................................... 4
Article 3 — Parties To Agreement ................................................................................... 4
Article 4 — Term Of Agreement ...................................................................................... 4
Article 5 — Creation Of Authority .................................................................................... 4
Article 6 — Powers Of Authority ...................................................................................... 5
Article 7 — Board Of Directors ........................................................................................ 5
Article 8 — Powers Of The Board Of Directors ............................................................... 6
Article 9 — Meetings Of The Board Of Directors ............................................................. 6
Article 10 — Executive Committee .................................................................................. 7
Article 11 — Powers Of The Executive Committee ......................................................... 7
Article 12 — Meetings Of The Executive Committee....................................................... 8
Article 13 — Officers Of The Authority ............................................................................ 8
Article 14 — Standing Committees.................................................................................. 9
Article 15 — Insurance Coverage ................................................................................... 9
Article 16 —Implementation Of The Joint Protection Program ........................................ 9
Article 17 — Accounts And Records ............................................................................. 10
Article 18 — Responsibility For Monies ......................................................................... 11
Article 19 — Responsibilities Of The Authority .............................................................. 11
Article 20 — Responsibilities Of Members .................................................................... 12
Article 21 — New Members ........................................................................................... 13
Article 22 — Withdrawal ................................................................................................ 13
Article 23 — Cancellation Of Membership Or Participation ........................................... 14
Article 24 — Effect Of Withdrawal Or Cancellation ....................................................... 15
Article 25 — Termination And Distribution ..................................................................... 15
Article 26 — Provision For Bylaws And Manuals .......................................................... 16
Article 27 — Notices ...................................................................................................... 16
Article 28 — Amendment .............................................................................................. 16
Article 29 — Prohibition Against Assignment ................................................................ 16
Article 30 — Agreement Complete ................................................................................ 17
JPIA Agreement Revised May 7, 2012 Page 1
Joint Powers Agreement
Creating The
Association Of California Water Agencies
Joint Powers Insurance Authority
THIS AGREEMENT is made and entered into in the County of Placer, State of
California, by and among the water districts and agencies (hereinafter "Districts")and other public entities (hereinafter "Friends of ACWA") organized and existingunder the laws of the State of California, which are parties signatory to thisAgreement and listed in Appendix "A", which is attached hereto and made a part
hereof. Said Districts and Friends of ACWA are sometimes referred to herein as
"parties" or "Members".
Recitals
WHEREAS, California Government Code Section 6500 et seq. provides that two or more public agencies may by agreement jointly exercise any power commonto the contracting parties; and
WHEREAS, California Government Code Section 990.4 provides that a local
public entity may self-insure, purchase insurance through an authorized carrier,or purchase insurance through a surplus lines broker, or any combination ofthese; and
WHEREAS, California Government Code Section 990.8 provides that two or
more local entities may, by a joint powers agreement, provide insurance or
reinsurance for any purpose by any one or more of the methods specified inGovernment Code Section 990.4; and
WHEREAS, the parties to this Agreement desire to join together for the purposeof establishing pools for self-insured losses and purchasing excess insurance or
reinsurance and administrative services in connection with joint protection
programs for said parties; and
WHEREAS, it appears economically feasible and practical for the parties to thisAgreement to do so;
NOW THEREFORE, for and in consideration of all of the mutual benefits,
covenants and agreements contained herein, the parties hereto agree as follows:
JPIA Agreement Revised May 7, 2012 Page 2
Article 1 — Definitions
The following definitions shall apply to the provisions of this Agreement:
(a)"Auditor/Controller" shall mean that person, designated by the Executive
Committee who is required to draw, or cause to be drawn, checks, warrants,
and electronic payments on behalf of the Authority, and to provide for anannual audit.
(b)"Authority" shall mean the Association of California Water Agencies JointPowers Insurance Authority (ACWA/JPIA) created by this Agreement.
(c)"Board of Directors" or "Board" shall mean the governing body of the
Authority.
(d) “Chief Executive Officer” shall mean that employee of the Authority who isso appointed by the Executive Committee and ratified by the Board ofDirectors at the next meeting, unless approved unanimously by the
Executive Committee.
(e)"Claims" shall mean demands made against Members which are within theAuthority's joint protection programs as developed by the Board of Directors.
(f)"Deposit Premium" shall mean the amount determined by the ExecutiveCommittee annually, as necessary to fund each joint protection program of
the Authority.
(g)“Director” shall mean that individual selected by the Member, from itsgoverning body, to represent the Member on the ACWA/JPIA Board ofDirectors.
(h)"District" shall mean those entities of local government empowered by law
to replenish ground waters, distribute, control, treat, develop, acquire, use,
store or supply water, or empowered by laws to protect, drain or reclaimlands within the State of California, including but not limited to irrigationdistricts, California water districts, municipal water districts, county waterdistricts, municipal utility districts, and drainage, water replenishment,
reclamation districts, flood control districts, conservation districts, sanitation
districts, sanitary districts, special act districts, cities, and joint powersauthorities which are signatories to this Agreement and are members of theAssociation of California Water Agencies (ACWA), or are affiliated withACWA based on their meeting the criteria currently specified by ACWA for
ACWA Affiliates – “Friends of ACWA”.
(i)"Duly Constituted Board Meeting" shall mean any Board of Directorsmeeting noticed and held in the required manner and at which a Quorumwas determined to be present at the beginning of the meeting.
JPIA Agreement Revised May 7, 2012 Page 3
(j)"Excess Insurance" shall mean that insurance or reinsurance which maybe purchased on behalf of the Authority to protect the funds of the Members.
(k)"Executive Committee" shall mean the Executive Committee of the Board
of Directors of the Authority.
(l)"Finance and Audit Committee" shall mean the committee of the Authoritycomposed of financial staff of districts appointed by the Board President andratified by their Districts.
(m)"Fiscal Year" shall mean that period of twelve (12) months which is
established as the fiscal year of the Authority.
(n) “Friends of ACWA” shall mean those public agencies that do not meet thedefinition of “District” who are members of the ACWA or are affiliated withACWA based on their meeting the criteria currently specified by ACWA for
ACWA Affiliates – “Friends of ACWA,” and which are also signatories to this
Agreement.
(o)"Insurance" shall mean and include a joint protection program, self-insurance through a funded program, and/or any commercial insurance orreinsurance contract.
(p)"Member" shall mean either a "Friend of ACWA" or a "District" which is a
signatory to this Agreement.
(q)"Policy Year" shall mean a period of time, usually twelve (12) months,determined by the Executive Committee into which each joint protectionprogram is segregated for ease in determining deposit premiums, incurred
losses, and retrospective premium calculations.
(r)"Retrospective Premium Adjustment" shall include the terms"Retrospective Premium" and "Retrospective Adjustment" and shall meanthe amount determined by the cost allocation plans and formulas adoptedfrom time to time by the Board as a Member's share of losses, expenses,
and contribution to the catastrophe fund or other reserve.
(s)“Secretary” shall mean the person appointed by the Executive Committeeto record or cause to be recorded, and keep or cause to be kept, at theprincipal executive office or such other place as the Executive Committeemay order, a book of minutes of actions taken at all meetings of the Board of
Directors and Executive Committee.
(t)“Treasurer” shall mean the person appointed by the Executive Committeeto keep and maintain, or cause to be kept and maintained, adequate andcorrect financial records of the Authority.
JPIA Agreement Revised May 7, 2012 Page 4
Article 2 — Purposes
This Agreement is entered into by Members pursuant to the provisions ofCalifornia Government Code sections 990, 990.4, 990.8 and 6500 et seq., in
order to provide comprehensive and economical public liability, workers'
compensation, unemployment, health, accident and/or dental, and propertycoverage, or coverage for other risks to which the Board of Directors may agree.
Additional purposes are to reduce the amount and frequency of losses, and todecrease the cost incurred by Members in the handling and litigation of claims.
These purposes shall be accomplished through the exercise of the powers of
such Members jointly in the creation of a separate entity, the Association ofCalifornia Water Agencies Joint Powers Insurance Authority (the Authority), toadminister joint protection programs wherein Districts and Friends of ACWA willseparately pool their losses and claims, and jointly purchase excess insurance
and/or reinsurance and administrative and other services, including claims
adjusting, data processing, risk management consulting, loss prevention, legal,and other related services.
It is also the purpose of this Agreement to provide, to the extent permitted by law,for the inclusion at a subsequent date of such additional Members organized and
existing under the laws of the State of California as may desire to become parties
to the Agreement and members of the Authority, subject to approval by the Boardof Directors.
Article 3 — Parties To Agreement
Each party to this Agreement certifies that it intends to and does contract with allother parties who are signatories to this Agreement and, in addition, with suchother parties as may later be added as parties to and signatories to this
Agreement pursuant to Article 21. Each party to this Agreement also certifies thatthe deletion of any party from this Agreement, pursuant to Article 22 or Article 23,shall not affect this Agreement or such party's intent to contract as describedabove with the other parties to the Agreement then remaining.
Article 4 — Term Of Agreement
This Agreement became effective on the date of execution hereof by the last of
sixty (60) Districts with a combined 1978/79 liability policy premium of $2 million,
and it shall continue until and unless terminated as hereinafter provided.
Article 5 — Creation Of Authority
Pursuant to Section 6500 et seq. of the California Government Code, there is hereby created a public entity separate and apart from the parties hereto, to beknown as the Association of California Water Agencies Joint Powers InsuranceAuthority. Pursuant to Government Code Section 6508.1, the debts, liabilities and
JPIA Agreement Revised May 7, 2012 Page 5
obligations of the Authority shall not constitute debts, liabilities or obligations ofany party to this Agreement or of any District or Friend of ACWA.
Article 6 — Powers Of Authority
(a) The Authority shall have the powers common to Members and is hereby
authorized to do all acts necessary for the exercise of said common powers,including, but not limited to, any or all of the following:
(1) To make and enter into contracts;
(2) To incur debts, liabilities or obligations;
(3)To acquire, hold or dispose of property, contributions and donations of
property, funds, services and other forms of assistance from persons,firms, corporations and governmental entities;
(4) To sue and be sued in its own name; and
(5) To exercise all powers necessary and proper to carry out the terms and
provisions of this Agreement, or otherwise authorized by law.
(b) Said powers shall be exercised pursuant to the terms hereof and in themanner provided by law, and in accordance with Government Code Section6509, the foregoing powers shall be subject to the restrictions upon themanner of exercising such powers pertaining to the Walnut Valley Water
District as specified in The California Water District Law (California Water
Code Sections 34000 et seq.).
Article 7 — Board Of Directors
(a) The Authority shall be governed by the Board of Directors which is herebyestablished and which shall be composed of one representative from eachMember, who shall be a Member director selected by the governing board ofthat Member. Each Member, in addition to appointing its member of the
Board, shall appoint at least one alternate who shall be an officer, memberof the governing board, or employee of that Member. The alternateappointed by a Member shall have the authority to attend and participate inany meeting of the Board when the regular member for whom he or she isan alternate is absent from said meeting.
(b) Each Director or alternate of the Board shall serve until a successor isappointed. Each Director or alternate shall serve at the pleasure of theMember by which he or she has been appointed.
(c) Each Director representing a Member, or his or her alternate, shall have onevote.
JPIA Agreement Revised May 7, 2012 Page 6
Article 8 — Powers Of The Board Of Directors
The Board of Directors of the Authority shall have the following powers andfunctions:
(a) The Board shall elect from its voting members pursuant to Article 10 of this
Agreement an Executive Committee.
(b) The Board may review all acts of the Executive Committee, and shall havethe power to modify and/or reverse any decision or action of the ExecutiveCommittee upon a majority vote of the voting Directors present at any Duly
Constituted Board Meeting.
(c) The Board shall review, modify if necessary, and approve the annualoperating budget of the Authority, prepared by the Executive Committeepursuant to Article 11 (d).
(d) The Board shall receive and review periodic accountings of all funds under
Articles 17 and 18 of this Agreement.
(e) The Board shall have the power to conduct on behalf of the Authority allbusiness of the Authority, including that assigned to the ExecutiveCommittee, which the Authority may conduct under the provisions hereofand pursuant to law.
(f) The Board shall have such other powers and functions as are provided for in
this Agreement or in the Bylaws.
Article 9 — Meetings Of The Board Of Directors
(a)Meetings. The Board shall provide for at least one annual regular meeting.It may also provide for adjourned regular meetings, special meetings, ormeetings upon call of the President of the Board.
(b)Minutes. The Secretary of the Authority shall cause minutes of regular,
adjourned regular, and special meetings (but not of any closed-sessionportion of any such meeting) to be kept and shall, as soon as possible aftereach meeting, cause a copy of the minutes to be forwarded to each memberof the Board and to each Member.
(c)Quorum. Any fifty (50) voting members of the Board present when the
meeting is called to order shall constitute a quorum for the transaction ofbusiness, except that less than a quorum may adjourn from time to time. Avote of the majority of those voting members present and voting in theprescribed manner at any Duly Constituted Board Meeting shall be sufficientto constitute action by the Board except as otherwise specifically set forth in
this Agreement or in the Bylaws.
JPIA Agreement Revised May 7, 2012 Page 7
(d)Compliance with the Brown Act. All meetings of the Board, including,without limitation, regular, adjourned regular, and special meetings, shall be
called, noticed, held and conducted in accordance with the provisions of the
Ralph M. Brown Act, California Government Code Section 54950 et seq.
Article 10 — Executive Committee
(a) There shall be an Executive Committee of the Board of Directors which shallconsist of nine (9) members, as provided in the Bylaws. Eight (8) membersof the Executive Committee shall be elected by the Board of Directors from
its voting members as provided in the Bylaws. The ninth member of the
Executive Committee shall be the Vice President of the Association ofCalifornia Water Agencies, who shall be an ex officio member of theExecutive Committee.
(b) The Executive Committee shall appoint a President and a Vice President of
the Board of Directors from among the eight (8) Executive Committee
members elected by the Board of Directors, as provided in the Bylaws. ThePresident of the Board, or the Vice President in his or her absence, shallserve as the Chair of the Executive Committee.
(c) The unexcused absence of a member of the Executive Committee, other
than the Vice President of the Association of California Water Agencies,
from two consecutive meetings may be cause for the removal of saidmember by the Executive Committee.
(d) Vacancies on the Executive Committee shall be filled as provided in theBylaws.
Article 11 — Powers Of The Executive Committee
The Executive Committee shall have the following powers:
(a) The Executive Committee shall determine details of and select the jointprotection program or programs of the Authority.
(b) The Executive Committee shall determine and select all insurance, includingexcess insurance and reinsurance, necessary to carry out the jointprotection program or programs of the Authority.
(c) The Executive Committee shall have authority to contract for or developvarious services for the Authority, including, but not limited to, claimsadjusting, loss control and risk management consulting.
(d) The Executive Committee shall cause to be prepared the operating budgetof the Authority for each fiscal year, subject to review, modification and
approval by the Board, as provided for in Article 8 (c).
JPIA Agreement Revised May 7, 2012 Page 8
(e) The Executive Committee shall receive and act upon reports of all othercommittees and from the Chief Executive Officer.
(f)The Executive Committee shall appoint the President, Vice President, Chief
Executive Officer, Secretary, Treasurer, and Auditor/Controller of theAuthority.
(g) The Executive Committee shall have the authority to engage, retain, anddischarge persons, firms, or other organizations as the Executive Committee
deems necessary for the administration of the Authority. The Executive
Committee may delegate this authority to the Chief Executive Officer of theAuthority.
(h) The Executive Committee shall exercise general supervisory control of andprovide policy to the Chief Executive Officer.
(i) Additional committees and sub-committees shall be established by the
Executive Committee as it deems necessary to best serve the interests ofthe Authority.
(j) The Executive Committee shall have such other powers and functions asare provided for pursuant to this Agreement.
Article 12 — Meetings Of The Executive Committee
The meetings of the Executive Committee shall be held and conducted as
provided in the Bylaws. The Committee shall make periodic reports to the Boardof Directors, advising the Board of its decisions and activities.
Article 13 — Officers Of The Authority
(a)President and Vice President. The President and Vice President of theBoard shall be appointed by the Executive Committee from among theExecutive Committee’s eight (8) elected members. In the event the
President or Vice President so appointed ceases to be a member of theBoard, the resulting vacancy in the office of President or Vice President maybe filled on either an interim or a permanent basis at the next regularmeeting of the Executive Committee held after such vacancy occurs. In theabsence or inability of the President to act, the Vice President shall act as
President. The President, or in his or her absence the Vice President, shallpreside at and conduct all meetings of the Board, and shall chair theExecutive Committee.
(b)Chief Executive Officer. The Chief Executive Officer shall have the generaladministrative responsibility for the activities of the Authority and shall
appoint all necessary employees thereof, subject to prior authorization of
JPIA Agreement Revised May 7, 2012 Page 9
each position by the Executive Committee and shall perform such otherduties as may be assigned by the Executive Committee.
(c)Auditor/Controller. The Auditor/Controller shall be appointed by the
Executive Committee. The duties of the Auditor/Controller shall be as setforth in Articles 17 and 18 of this Agreement.
(d)Secretary. The Secretary shall be appointed by the Executive Committeeand shall be responsible for all minutes, notices, and records of the
Authority.
(e)Treasurer. The Treasurer shall be appointed by the Executive Committee.The duties of the Treasurer shall be as set forth in Articles 17 and 18 of thisAgreement.
(f) The Executive Committee shall have the power to appoint such other
officers as may be necessary to carry out the purposes of this Agreement.
Article 14 — Standing Committees
The Board or the Executive Committee may establish standing committees fromtime to time, as provided in the Bylaws.
Article 15 — Insurance Coverage
(a) The Authority shall maintain such levels of insurance coverage for Membersas may be determined by the Executive Committee. Such coverage mayprovide for binding arbitration before an independent arbitration panel of any
disputes concerning coverage between the Authority and a Member.
(b) The Insurance coverages provided for Members by the Authority mayinclude protection for comprehensive and economical public liability,property, workers' compensation, employee benefits, or coverage for otherrisks which the Executive Committee may determine to be advisable.
(c) The Executive Committee may arrange for group policies to be issued forMembers interested in obtaining additional coverage, at an additional cost tothose participating Members.
(d) The Executive Committee may arrange for the purchase of ExcessInsurance. The Executive Committee may discontinue purchase of this
Excess Insurance, if at a future time it is no longer needed to protect theAuthority's funds.
Article 16 —Implementation Of The Joint Protection Program
(a) The Board of Directors shall establish the insurance coverages provided forin Article 15, the amount of deposit premiums, and the precise cost
JPIA Agreement Revised May 7, 2012 Page 10
allocation plans and formulas, and shall provide for the handling of claims,and the pro forma financial statements of each joint protection program, and
shall specify the amounts and types of Excess Insurance or reinsurance to
be procured.
(b) The Deposit Premium for each Member for each joint protection programshall be determined by the Executive Committee.
(1) Deposit Premiums shall be based on estimated costs for a given
program year. Costs shall include estimates for claims, excess
insurance/reinsurance, general & administrative expenses, programreserves and include an estimate for interest earnings.
(2) Each Member’s share of the Deposit Premium for the given programyear shall generally be based on its payroll and past loss history for the
Liability, Workers’ Compensation, and Employee Benefits Programs
and scheduled values for the Property Program.
The Executive Committee may make retrospective premium adjustments to priorprogram years.
(c) The Retrospective Premium Adjustment, and all other adjustments to the
Authority’s financial records respecting each Member, shall be made
annually. All premiums shall be due and payable within thirty (30) days afterthe invoice date.
(d) Inasmuch as some Members may experience an unusually high dollar valueof losses during a single Policy Year, which would increase their
Retrospective Premium substantially above the Deposit Premium for that
joint protection program for that Policy Year and cause budgetary problems,the Executive Committee may allow for payment of a portion of suchadditional Retrospective Premium to be made over a period of time, not toexceed five years, with reasonable interest.
(e) The Executive Committee shall have the power to disburse or distributereserve funds for their intended purposes.
Article 17 — Accounts And Records
(a)Annual Budget. The Authority shall annually adopt an operating budget,pursuant to Article 8 (c) of this Agreement.
(b)Funds and Accounts. The Treasurer of the Authority shall establish and
maintain such funds and accounts as required by the Executive Committee
and as required by generally accepted accounting principles. Books andrecords of the Authority shall be open to any inspection at all reasonabletimes by authorized representatives of Members as otherwise required bylaw.
JPIA Agreement Revised May 7, 2012 Page 11
(c)Treasurer's Report. The Treasurer shall present a complete written reportof all investment activities for the most recently completed fiscal year to the
Board at its regularly scheduled meeting.
(d)Annual Audit. The Auditor/Controller shall provide for a certified, annualaudit of the accounts and records of the authority, which audit shall be madeby a certified public accountant and shall conform to generally acceptedauditing standards. Such report shall be presented to the Executive
Committee and, following its approval by the Executive Committee, shall be
presented to the Board of Directors for concurrence.
Article 18 — Responsibility For Monies
(a) The Treasurer of the Authority shall have the authority to delegate thesignatory function of Treasurer to such persons as are authorized byresolution of the Executive Committee.
(b)A bond in the amount determined adequate by the Executive Committee
shall be required of all officers and personnel authorized to disburse funds ofthe Authority, such bond to be paid for by the Authority.
(c) The Treasurer of the Authority shall assume the duties described inCalifornia Government Code Section 6505.5, including:
(1) Receive and acknowledge receipt for all money of the Authority and
place it in the treasury of the Authority;
(2) Be responsible upon his or her official bond for the safekeeping anddisbursement of all of the Authority's money so held by him or her;
(3) Pay, when due, out of money of the Authority so held by him or her, all
sums payable on outstanding bonds and coupons of the Authority;
(4) Pay any other sums due from Authority money only upon checks,warrants, or electronic payments approved by the Chief ExecutiveOfficer or his or her designee. The checks, warrants, or electronicpayments shall be reviewed by the President of the Board and the
Chair of the Finance & Audit Committee.
Article 19 — Responsibilities Of The Authority
The Authority shall perform the following functions in discharging itsresponsibilities under this Agreement:
(a) Provide insurance coverage as necessary, including but not limited to a self-insurance fund and commercial insurance, as well as excess coverage,reinsurance, and umbrella insurance, by negotiation or bid, and purchase,
as necessary.
JPIA Agreement Revised May 7, 2012 Page 12
(b) Assist Members in obtaining insurance coverage for risks not included withinthe coverage of the Authority.
(c) Assist each Member's designated risk manager with the implementation of
that risk management function as it relates to risks covered by the jointprotection programs within the Member.
(d) Provide loss prevention and safety consulting services to Members asrequired.
(e) Provide claims adjusting and subrogation services for Claims covered by the
Authority's joint protection programs.
(f) Provide loss analysis and control by the use of statistical analysis, dataprocessing, and record and file keeping services, in order to identify highexposure operations and to evaluate proper levels of self-retention and
deductibles.
(g) Review Member contracts to determine sufficiency of indemnity andinsurance provisions when requested.
(h) Conduct risk assessments for each Member.
(i) The Authority shall have such other responsibilities as deemed necessary
by the Board of Directors or Executive Committee.
Article 20 — Responsibilities Of Members
Members shall have the following responsibilities:
(a) The governing board of each Member shall appoint a representative and atleast one alternate representative to the Board of Directors, pursuant toArticle 7 of this Agreement.
(b) Each Member shall appoint an employee of the Member to be responsible
for the risk management function within that Member and to serve as aliaison between the Member and the Authority as to risk management.
(c) It is recommended that each Member maintain an active safety officerand/or committee. Each Member shall consider all recommendations of the
Authority concerning unsafe practices.
(d) Each Member shall pay its deposit premium and premium adjustments,including any Retrospective Adjustment, within thirty (30) days after theinvoice date. After withdrawal or termination, each Member or formerMember or its successor shall pay within 45 days to the Authority its share
of any additional premium, when and if required of it by the Executive
Committee under Article 24 or Article 25 of this Agreement.
JPIA Agreement Revised May 7, 2012 Page 13
(e) Each Member shall provide the Authority with such other information orassistance as may be necessary for the Authority to carry out the joint
protection programs under this Agreement.
(f) Each Member shall in any and all ways cooperate with and assist theAuthority, and any insurer or reinsurer of the Authority, in all matters relatingto this Agreement and covered claims, and shall also comply with allBylaws, rules and regulations adopted by the Board of Directors and
Executive Committee.
Article 21 — New Members
The Authority shall allow new Members entry into its joint protection programsonly upon approval by the Board, or by the Executive Committee if specificallydelegated such authority by resolution of the Board, which resolution may imposesuch conditions or limitations upon such authority of the Executive Committee as
the Board deems appropriate. Members entering under this Article may be
required to pay their share of the organizational expenses as determined by theExecutive Committee, including expenses necessary to analyze their loss dataand determine their Deposit Premiums.
Article 22 — Withdrawal
(a) A Member may withdraw as a party to this Agreement any time prior to itsconsenting in writing to enter the joint protection program.
(b) A Member that does not consent in writing to enter the joint protectionprogram must withdraw as a party to this Agreement prior to the effectivedate of the program, or it will be considered to have voluntarily withdrawnupon such effective date.
(c) As respects to coverage Programs of the Authority, other than the Employee
Benefits Program:
(1) A Member that enters or has entered any pooled joint protectionprogram may not withdraw as a participant of that program, as a partyto this Agreement, or as a Member of the Authority, for a three-yearperiod commencing on the Member's date of entry into said pooled joint
protection program.
(2) After the initial three-year non-cancellable commitment to each pooledjoint protection program, a Member may withdraw only at the end ofsaid program's Policy Year, provided it has given the Authority a twelve-month written notice of its intent to withdraw from said pooled joint
protection program.
JPIA Agreement Revised May 7, 2012 Page 14
(i) No later than ninety (90) days prior to the end of said pooled jointprotection program's Policy Year, any Member having given an
Article 22 (d) conditional notice shall make clear to the Authority its
final decision on withdrawal. Final notice of actual withdrawal mustbe given and received by that date in clear, unambiguous form.The staff is instructed to rely on such final notice received on orbefore ninety (90) days prior to the end of the program's Policy
Year, and no rescission of such final notice can be made after
close of business ninety (90) days prior to the end of the program'sPolicy Year. If no such final notice is received by close of businesson the required date, staff shall treat the original notice with all itsconditions and ambiguities as final notice of withdrawal.
(ii) Any participation by a former Member must be effected as a new
Member. No benefits will be held over from the withdrawingMember's former status as a previous program participant.
(3) Members may withdraw from any group purchase program at theconclusion of its Policy Year, without being required to give the twelve-
month written notice required for withdrawal from pooled joint protection
programs.
(d) Members may withdraw as a party of the Employee Benefits Program to beeffective on the first day of any month by providing written intention ofwithdrawing to the Authority at least 60 days prior to the proposed effective
date of the withdrawal. Any such withdrawal shall be effective only upon
receipt of the notice of withdrawal by the Authority which shall acknowledgereceipt of such notice of the withdrawal in writing effective upon theproposed filing date, or such other date as the Executive Committee maydesignate which is not more than 90 nor less than 60 days from the notice in
order to bring such notice of withdrawal in compliance with the terms hereof.
(e) A Member may not withdraw as a party to this Agreement nor as a memberof the Authority until it has withdrawn from all of the programs of theAuthority.
Article 23 — Cancellation Of Membership Or Participation
(a) Notwithstanding the provisions of Article 22, the Authority shall have the
right to cancel any Member's participation in any joint protection program
upon a two-thirds vote of the voting Directors present at any DulyConstituted Board Meeting, provided that a reasonable time shall beafforded, at the discretion of the Board of Directors, to place coverageelsewhere.
(b) Notwithstanding any other provisions of this Agreement, the participation of
any Member of the Authority, including participation in any of the Authority's
JPIA Agreement Revised May 7, 2012 Page 15
programs, shall cease and be canceled automatically at the end of the nextcomplete Policy Year for each program whenever such Member's
membership in the Association of California Water Agencies, or its affiliation
with said Association based on its meeting the criteria currently specified byACWA for ACWA Affiliates – “Friends of ACWA,” ceases. Such automaticcancellation shall not relieve the Member or former Member of itsresponsibilities as provided for in Article 24 (b).
(c) Notwithstanding any other provisions of this Agreement, the participation of
any Member of the Authority, including participation in any of the Authority’sprograms, may be canceled at the discretion of the Executive Committeewhenever such Member is dissolved, consolidated, merged or annexed. Areasonable time shall be afforded, in the discretion of the Executive
Committee, to place coverage elsewhere. Any such cancellation shall not
relieve the Member or former Member of its responsibilities as provided forin Article 24 (b).
Article 24 — Effect Of Withdrawal Or Cancellation
(a) The withdrawal or cancellation of any Member from this Agreement shall notterminate the same and a Member by withdrawing or being canceled shall
not be entitled to payment or return of any premium, consideration or
property paid, or donated by the Member to the Authority, or to anydistribution of assets, except as provided in Article 25 (c).
(b) The withdrawal or cancellation of any Member after the effective date of anyjoint protection program shall not terminate its responsibility to contribute its
share of deposit premium, premium adjustments or funds to any funds or
insurance program(s) created by the Authority until all claims, or otherunpaid liabilities, covering the Program period any part of which the Memberwas signatory thereto have been finally resolved and a determination of thefinal amount of payments due by the Member or credits to the Member for
the period of its participation has been made by the Executive Committee. In
connection with this determination, the Executive Committee may exercisesimilar powers to those provided for in Article 25 (b) of this Agreement.
Article 25 — Termination And Distribution
(a) This Agreement may be terminated at any time by the written consent ofthree-fourths (3/4) of the voting Members, provided, however, that thisAgreement and the Authority shall continue to exist for the purpose of
disposing of all claims, distribution of assets and all other functionsnecessary to wind up the affairs of the Authority.
(b) The Executive Committee is vested with all powers of the Authority for thepurpose of winding up and dissolving the business affairs of the Authority.These powers shall include the power to require Members and former
JPIA Agreement Revised May 7, 2012 Page 16
Members, including those which were signatory hereto at the time the Claimarose or was incurred, to pay their share of any additional amount of
premium in accordance with loss allocation formulas for final disposition of
all Claims and losses covered by this Agreement. A Member's or formerMember’s share of such additional premium shall be determined on thesame basis as that provided for Retrospective Premiums in Article 16 of thisAgreement.
(c) Upon termination of this Agreement all assets of the Authority shall be
distributed only among the Members that have been signatories hereto,including any of those Members which previously withdrew pursuant toArticle 22 (d) or were canceled pursuant to Article 23 of this Agreement, inaccordance with and proportionate to their cash contributions (including
premium payments and property at market value when received) made
during the term of this Agreement. The Executive Committee shalldetermine such distribution within six (6) months after disposal of the lastpending Claim or loss covered by this Agreement.
(d) In the absence of an Executive Committee, the Chief Executive Officer shall
exercise all powers and authority under this Article. The decision of the
Executive Committee or Chief Executive Officer under this Article shall befinal.
Article 26 — Provision For Bylaws And Manuals
As soon as practicable after the first meeting of the Board of Directors, the Boardshall cause to be developed Authority Bylaws and a Mission Statement.
Article 27 — Notices
Notices to Members hereunder shall be sufficient if delivered to the principal
office of the respective Member.
Article 28 — Amendment
This Agreement may be amended at any time by a two-thirds (2/3) vote of thevoting Directors present at any Duly Constituted Board Meeting.
Article 29 — Prohibition Against Assignment
No Member may assign any right, claim or interest it may have under thisAgreement, and no creditor, assignee or third party beneficiary of any Membershall have any right, claim or title or any part, share, interest, fund, premium or
asset of the Authority.
JPIA Agreement Revised May 7, 2012 Page 17
Article 30 — Agreement Complete
The foregoing constitutes the full and complete Agreement of the parties. Thereare no oral understandings or agreements not set forth in writing herein.
IN WITNESS WHEREOF, the parties hereto have first executed this Agreement
by authorized officials thereof on the date indicated below:
DATE: _________________ _____________________________________
Member
BY:
_____________________________________
Signature of Authorized Representative
FORMED BY WATER AGENCIES
FOR WATER AGENCIES
Water agencies have a unique set of risks not every provider can cover. In
1979, water agencies banded together to share their risks and associated
insurance costs. They empowered ACWA JPIA to provide the best coverage
for their needs …and we delivered.
Today, we are the leader in providing California public water agencies with
liability, property, and workers’ compensation loss coverage programs as well
as employee benefi ts. Serving only water agencies, our experience, expertise
and knowledge are highly tuned to our members’ unique requirements.
We are a strong, innovative organization. We continually evolve to serve our
members’ ever-changing demands with programs designed by them and for
them. As your partner, we always battle for your agency’s rights and best
protection.
ADVANTAGES AT A GLANCE
Strong, stable risk-sharing pool with over 360 members
100 percent member governed, member driven and member focused
Complete protection programs tailored specifi cally to water agencies
Programs with cost savings of 20 to 30 percent compared to
commercial insurance
Value-added services to help reduce claims, keep costs low
and protect members
Trustworthy, reliable and knowledgeable staff dedicated to each member
Tools, technology and resources to support your agency’s needs
Resourceful, in-house staff with expertise in every service area
OUR MISSION
ACWA JPIA is
dedicated to
consistently and
cost effectively
providing the
broadest possible
affordable insurance
coverage and
related services to
its member agencies.
Introducing Your Best Protection
WATER AGENCIES HAVE A CHAMPION IN THE JPIA
Public entities created pools beginning in the early 1970s. In fact, ACWA JPIA evolved in 1979 after most commercial
insurers abandoned the public entity market. As a result, public entities formed risk pools to reduce and stabilize
long-term insurance costs and ensure access to coverage and service critical for local government functions such
as the acquisition, treatment and delivery of water.
As a California special district, ACWA JPIA operates as a public entity. We are member owned, member governed
and member driven. Our Board of Directors includes a representative from each member’s board. Our Board elects
an eight-member Executive Committee to work on its behalf with the JPIA management and staff.
Unlike the commercial insurance industry, which uses profi ts to measure success, ACWA JPIA provides services,
coverage and risk management tools with the singular goal of servicing our members. We work closely with each of
our members to provide customized programs, resources and services for their needs, no matter the agency size.
HOW WE WORK
Water Agencies must be a member of the Association of California Water Agencies to join the JPIA. Our Board
and Executive Committee approve entry into the JPIA. Upon joining, members agree to share the cost of risk by
contributing to pooled programs. This pool of funds pays for all member claims and, as a result, reduces the burden
of long-term claim costs for all members. At the end of each program year, if claims costs are below anticipated
levels, members may be eligible for refunds. ACWA JPIA is proud to be a partner with water agencies throughout
California. Quite simply, ACWA JPIA is a proven source of innovation, expertise, education and fi nancial stability.
PROTECTION – EXCLUSIVE TO MEMBERS SERVICES – EXCLUSIVE TO MEMBERS
PROPERTY PROGRAM
• $500 million limits
• Pooled retention to $100,000 per loss
• Includes boiler and machinery
GENERAL, AUTO, EPL AND PUBLIC OFFICIALS ERRORS
AND OMISSIONS LIABILITY COVERAGE
• Up to $55 million limits
• Pooled retention to $5 million per occurence
• Funded for catastrophic events
• Excess premium returned to members
• Employment Practices Liability
WORKERS’ COMPENSATION
• Over 6,000 employees covered
• Statutory limits
• Pooled retention $2 million
• No deductible
• In-house claims examiners ranked #1 in California
• Funded for catastrophic events
EMPLOYEE BENEFITS
• HMO, PPO and consumer-driven medical plans
• HMO and PPO dental plans
• Life insurance and disability plans
• Employee assistance and wellness programs
RISK MANAGEMENT SERVICES
• Certifi ed safety professionals on staff
• On-site consultations and risk assessments
• Assistance with safety policies
HUMAN RESOURCES SUPPORT
• Certifi ed human resource professionals on staff
• Employment practices hotline including free legal consultations
• Regional HR group meetings and individual consultations
• Employee handbook/policy reviews
• Model water district job descriptions
EMPLOYEE BENEFITS SERVICES
• Advocacy and claim support
• Legal compliance assistance
• Electronic enrollment system
TRAINING RESOURCES
• On-site, local and regional classes
• Online courses
• Professional development programs
CLAIMS SERVICES
• In-house claims staff
• Specialized legal counsel
• Investigation and defense
MEMORANDUM OF LIABILITY COVERAGE
For The
Association of California Water Agencies
Joint Powers Insurance Authority
DECLARATIONS
FORM NUMBER: MOLC-100119
MEMBER AGENCY: Member Agency
MAILING ADDRESS: P.O. Box 123
Anytown, CA 95432-0123
COVERAGE PERIOD: October 1, 2019 to October 1, 2020
12:01 A.M. Pacific Standard Time
LIMIT OF LIABILITY: $5,000,000 per occurrence
Signed by: Date: September 29, 2019
(Authorized Representative)
TABLE OF CONTENTS
Section I
Definitions .................................................................................................................. 2
Section II
Coverage ................................................................................................................... 8
Section III Limit of Liability .......................................................................................................... 9
Section IV
Who is Covered ....................................................................................................... 10
Section V
Defense of the Member Agency .............................................................................. 10
Section VI
Exclusions ................................................................................................................ 11
Section VII
Conditions ................................................................................................................ 16
Addendum Crisis Management ..................................................................................................... i
Liability – Section 1 – Coverage (MOLC-100119) Page 1 of 26
LIABILITY
COVERAGE PROVISIONS
This is a Memorandum of understanding between all of the Member Agencies
of the Association of California Water Agencies Joint Powers Insurance Authority
(ACWA JPIA), a California public entities risk pool operating under Sections
990.4 and 990.8 of the Government Code and other provisions of law. The
purpose of this Memorandum is to set forth the terms on which the ACWA
JPIA's Member Agencies have agreed to pool certain third-party liability risks
among their membership, and have agreed to purchase excess liability insurance
(or reinsurance) above the limit of coverage provided by the Member Agencies'
pooled funds. This Memorandum shall be applied according to the principles of
contract law, giving full effect to the intent of the Member Agencies of the ACWA
JPIA in adopting this Memorandum of Liability Coverage. None of the parties to
the Memorandum are entitled to rely on any contract interpretation principle
which would require the interpretation of ambiguous language against the drafter
of an agreement. The Member Agencies participating in the pool understand
and acknowledge that their risk-pooling arrangement governed by this
Memorandum is not insurance nor is it subject to regulation under the Insurance
Code. As the ACWA JPIA is not an insurer, it has no obligation to issue
reservation of rights letters, nor does it have any obligation to provide Cumis
counsel to a Covered Party in a disputed coverage situation, as an insurer might
have under Civil Code Section 2860.
Throughout this Memorandum, words and phrases that appear in bold have
special meaning. They are defined in Section I - Definitions. Words that appear in
CAPITAL LETTERS have reference to the like titled section in the
Memorandum.
Neither the terms nor conditions of this Memorandum may be changed, except
by addendum issued by us to become part of this Memorandum.
In consideration of the premium paid by the Member Agency, and subject to all
terms and conditions herein, the Authority and the Member Agency agrees as
follows:
Page 2 of 26 Liability – Section 1 – Coverage (MOLC-100119)
SECTION I - DEFINITIONS
Aerial application means the delivery of herbicides and/or pesticides by use of
an agricultural aircraft including but not limited to airplanes, helicopters, and/or
unmanned aircraft.
Aircraft means a vehicle designed for the transport of persons or property
principally in the air.
Authority means the Association of California Water Agencies Joint Powers
Insurance Authority.
Automobile means a land motor vehicle, trailer or semi-trailer.
Bodily injury means physical injury, sickness, disease, or emotional distress
sustained by a person, including death resulting therefrom, and also includes
care and loss of services by any person or persons.
Claim(s) means a demand for money.
Covered Party means any person or entity set forth in Section IV of this
Memorandum.
Cyber Liability means any liability arising out of or related to the acquisition,
storage, security, use, misuse, disclosure, or transmission of electronic data of
any kind, including, but not limited to, technology errors and omissions,
information security and privacy, privacy notification cost, penalties for regulatory
defense or penalties, website media content, disclosure or misuse of confidential
information, failure to prevent unauthorized disclosure or misuse of confidential
information, improper or inadequate storage or security or personal or
confidential information, unauthorized use, unauthorized access to computer
systems containing confidential information, or transmission or failure to prevent
transmission of a computer virus or other damaging material.
Dam means any artificial barrier, together with appurtenant works, which does or
may impound or divert water, and which either: (a) is 25 feet or more in height
from the natural bed of the stream or watercourse at the downstream toe of the
barrier, or from the lowest elevation of the outside limit of the barrier, if it is not
across a stream channel or watercourse, to the maximum possible water storage
elevation; or (b) has an impounding capacity of 50 acre-feet or more.
Any such barrier which is not in excess of 6 feet in height, regardless of storage
capacity, or which has a storage capacity not in excess of 15 acre-feet,
regardless of height, shall not be considered a dam.
Liability – Section 1 – Coverage (MOLC-100119) Page 3 of 26
No obstruction in a canal used to raise or lower water therein or divert water
therefrom, no levee, including but not limited to, a levee on the bed of a natural
lake the primary purpose of which levee is to control floodwaters, no railroad fill
or structure, tank constructed of steel or concrete or of a combination thereof, no
tank elevated above the ground, and no barrier which is not across a stream
channel, watercourse, or natural drainage area and which has the principal
purpose of impounding water for agricultural use shall be considered a dam. In
addition, no obstruction in the channel of a stream or watercourse, which is 15
feet or less in height from the lowest elevation of the obstruction and which has
the single purpose of spreading water within the bed of the stream or
watercourse upstream from the construction for percolation underground shall be
considered a dam.
Regardless of the language of the above definition, however, no structure
specifically exempted from the jurisdiction of the State of California Department
of Water Resources, Division of Safety of Dams, shall be considered a dam,
unless such structure is under the jurisdiction of any agency of the Federal
Government.
Damages means monetary compensation legally recoverable from a Covered
Party, for past injury caused to a claimant by the unlawful acts or omissions of
said Covered Party, except for the following:
1.Punitive or exemplary damages, statutory multiples of
damages, civil fines or penalties, or any other liability over and
above actual damages, by whatever name called, irrespective
of whether the Covered Party's governing board has taken
any action or passed any resolution electing to pay such
damages;
2.Criminal fines or penalties;
3.Back-pay awards or any other restitutive relief awarded to
compensate a claimant for services rendered to, or financial
benefit otherwise conferred upon, a Covered Party; and any
FLSA Wage and Hour or any CA Wage Order or any similar
Federal or State law claims or suits against, either the
Member Agency or Covered Party; and
4.Injunctive and/or administrative relief.
Defense costs means reasonable fees charged by an attorney appointed by the
Authority to defend the claim or suit and all other reasonable fees, costs and
Page 4 of 26 Liability – Section 1 – Coverage (MOLC-100119)
expenses attributable to the investigation, defense or appeal of a claim or suit
that is within the scope of coverage afforded by this Memorandum, and that has
been, and remains, duly tendered to the Authority for defense and indemnity
under this Memorandum, except salaries of employees of the Covered Party,
the office expenses of the Member Agency, and expenses of any claims
servicing organization the Member Agency has engaged.
Employee means any person whose labor or services is engaged and directed
by a Covered Party, whether past or present, including a volunteer, official, or
applicant for employment. This includes part-time, seasonal, and temporary labor
or services, as well as any person employed in a supervisory, managerial, or
confidential position. Employee shall not include leased employees, independent
contractors or subcontractors, agents, or servants of any Covered Party, unless
the Covered Party has the right to and does control and direct the details of their
work rather than the result of that work. Employee also shall not include spouse,
child, unborn fetus, parent, brother, or sister of the employee.
The exclusion of independent contractors or subcontractors from the definition of
employee shall not apply to a claim for sexual harassment specifically
authorized under California Government Code 12940(j)(4) and (5).
Employment Practices Liability means liability of the Covered Party for
compensatory damages payable to any prospective, present or former employee
on account of a violation by Covered Party of any federal or state Employment
Liability Statute or conduct held to be in violation California public policy, arising
from:
1.Refusal to employ such person; or
2.Termination of such person’s employment; or
3.Coercion, discrimination, retaliation, harassment, demotion,
reassignment, discipline or other employment-related practice,
policy, act or omission, provided such practice policy act
omission does not include the willful commission of a crime or
intentional infliction of bodily Injury.
Liability to the employee shall include liability to any spouse for economic
damages or emotional distress incident to any of the acts 1 through 3 above.
Employment Practices Liability excludes anything not enumerated above,
specifically excluding liability for breach of any employment contract, including
without limitation any liability for wages, salaries, bonuses, stipends, expenses,
overtime, retirement, medical or disability benefits, back pay, or any severance or
other amount payable on termination.
Liability – Section 1 – Coverage (MOLC-100119) Page 5 of 26
Employment Liability Statute shall include the following:
Title VII of the Civil Rights Act of 1964 and amendments thereto; the
Americans with Disabilities Act; the Age Discrimination in Employment
Act; the Equal Pay Act; the Pregnancy Discrimination Act of 1978; the
Immigration Reform Control Act of 1986; the Family and Medical Leave
Act of 1993; the Genetic Information Nondiscrimination Act of 2008; the
Health Insurance Portability and Accountability Act of 1996; the California
Fair Employment and Housing Act; and any California or Federal statute
to the extent it proscribes the same conduct.
Hired automobile means an automobile used under contract on behalf of, or
loaned to, the Member Agency, provided such automobile is not owned by or
registered in the name of the Member Agency or an employee or authorized
volunteer of the Member Agency.
Member Agency means the local public agency, designated in the
DECLARATIONS, which is a party signatory to the Joint Powers Agreement
creating the Association of California Water Agencies Joint Powers Insurance
Authority and is a participant in its Liability Program.
Member Agency's product means any goods or products, other than real
property, manufactured, sold, handled, distributed or disposed of by the Member
Agency or by others trading under its name, including, but not limited to,
domestic water, agricultural water, recycled water, waste water, or electricity.
Member Agency’s product also includes containers (other than vehicles),
materials, parts or equipment furnished in connection with such goods or
products.
Memorandum means this document, the MEMORANDUM OF LIABILITY
COVERAGE.
Nuclear material means source material, special nuclear material, or byproduct
material. “Source material,” “special nuclear material,” and “byproduct material”
have the meanings given to them by the Atomic Energy Act of 1954 or in any law
amendatory thereof.
Occurrence means:
1.With respect to the bodily injury, property damage, or sudden
and accidental pollution: an accident, including continuous or
repeated exposure to substantially the same generally harmful
conditions, which results in bodily injury or property damage
Page 6 of 26 Liability – Section 1 – Coverage (MOLC-100119)
neither expected nor intended from the standpoint of the Covered
Party. Property damage that is the loss of use of tangible property
not physically injured shall be deemed to occur at the time of the
occurrence that caused it.
2.With respect to personal injury and Public Official’s errors and
omissions respectively: an offense described in the definition of
those terms in this Memorandum.
3.With respect to Employment Practices Liability: an act, policy, or
course of conduct by a Covered Party during the coverage period
which results in a claim for wrongful employment if the first act,
policy or course of conduct occurred during the coverage period.
All allegations by the same employee in the same claim shall be
considered one occurrence for the purpose of the Limit of
Coverage, and such occurrence shall be deemed to exist on the
date of the alleged first act, policy, or conduct, in the event of an
allegation of multiple acts, policies, or course of conduct.
Owned automobile means an automobile owned by or under long term lease
to the Member Agency.
Personal Injury means: (a) false arrest, malicious prosecution, or willful
detention; (b) libel, slander or defamation of character; (c) invasion of privacy;
(d) wrongful entry or eviction, or other invasion of the right of private occupancy;
(e) assault and battery; and (f) discrimination or violation of civil rights prohibited
by law or violation of federal civil rights laws, not intentionally committed by or at
the direction of a Covered Party.
Pollutants means any solid, semi-solid, noise, liquid, gaseous or thermal irritant
or contaminant, including smoke, vapor, soot, mists, fumes, acids, alkalis,
chemicals, biological and other etiologic agents or materials, genetically
engineered materials, teratogenic, carcinogenic and mutagenic materials, waste
materials, and any irritant or contaminant. Waste material includes materials
which are intended to be or have been recycled, reconditioned or reclaimed.
Pollutants does not include domestic water, agricultural water, recycled water,
waste water, or water furnished to commercial users, nor include waterborne
asbestos.
Products hazard includes bodily injury or property damage arising out of the
Member Agency's products or reliance upon a representation or warranty
made at any time with respect thereto, but only if the bodily injury or property
damage occurs away from premises owned by or rented to the Member Agency
Liability – Section 1 – Coverage (MOLC-100119) Page 7 of 26
and after physical possession of such Member Agency's products has been
relinquished to others.
Property damage means physical injury to or destruction of tangible property,
including the loss of use thereof at any time resulting therefrom; or loss of use of
tangible property which has not been physically injured or destroyed.
Public Official’s errors and omissions means any and all breaches of duty by
any Covered Party arising from mistake, misstatement, misleading statement,
error, neglect, inadvertence, omission or negligent action or inaction, in the
discharge of his/her duties for the Member Agency including service with any
other entity at the direction of any Member Agency, except for the following:
1.Willful commission of crime or other dishonest, fraudulent or
malicious act;
2.Obtaining financial gain to which the Covered Party is not
legally entitled;
3.Faulty preparation or approval of maps, plans, reports,
surveys, designs, bid documents, or specifications unrelated
to the operations of a Covered Party; but this exception does
not apply to reports provided to any other water purveyor or to
services provided by a Covered Party for another Covered
Party; or
4.Adoption or administrative application of any ordinance, resolution
or regulation.
Sexual Abuse or Molestation means any actual or alleged negligent or
intentional act, error or omission, amounting to or resulting in sexual abuse or
molestation or threatened sexual abuse or molestation of any minor.
Subsidence shall mean earth movement including, but not limited to, landslide,
mudflow, earth sinking, earth rising or earth shifting.
Sudden and accidental pollution means the sudden and accidental discharge,
dispersal, release, or escape of pollutants, resulting in property damage or
bodily injury neither expected nor intended from the standpoint of the covered
party, onto or upon land, into the atmosphere, into or under the ground, or into
any watercourse, whether natural or man-made, or body of water or aquifer, but
does not include any discharge, dispersal, release, or escape of pollutants,
whether sudden or accidental or gradual or intentional from any fixed or
Page 8 of 26 Liability – Section 1 – Coverage (MOLC-100119)
stationary contained, vessel, or tank of any description whatever, when located
above ground or underground.
Suit(s) means a civil proceeding in which damages are alleged because of
bodily injury, property damage, personal injury, or Public Official’s errors
and omissions to which this Memorandum applies. Suit includes:
1.An arbitration proceeding in which such damages are claimed
and to which a Covered Party must submit or does submit
with the consent of the Authority; or
2.Any other alternative dispute resolution proceeding in which
such damages are claimed and to which a Covered Party
submits with the consent of the Authority.
Terrorism means an act, including but not limited to the use of force or violence
and/or threat thereof, of any person or group(s) of persons, whether acting alone
or on behalf of or in connection with any organization(s) or government(s),
committed for political, religious, ideological or similar purposes including the
intention to influence any government and/or to put the public, or any section of
the public, in fear.
Ultimate net loss means the sum actually paid or payable in cash in the
settlement or satisfaction of claims or suits, for which the Covered Party is
liable either by: (1) adjudication, or (2) compromises with the written consent of
the Authority, after making proper deduction for all recoveries and salvages
collectible, and includes defense costs, court costs and interest on any
judgment or award, but excludes all unallocated loss adjustment expenses and
all salaries of employees and office expenses of the Covered Party and
Authority.
Unmanned Aircraft means an aircraft, aerial system or device that is not
designed, manufactured, or modified after manufactured to be controlled directly
by a person from within or on the aircraft, aerial system or device.
SECTION II – COVERAGE
The Authority shall pay on behalf of any Covered Party the ultimate net loss
which that Covered Party shall become legally obligated to pay to a third party
by reason of liability (1) imposed by law, or (2) assumed by contract, for
damages because of:
Liability – Section 1 – Coverage (MOLC-100119) Page 9 of 26
1.Bodily Injury Liability;
2.Property Damage Liability;
3.Public Official’s Errors and Omissions Liability;
4.Personal Injury Liability; or
5.Employment Practices Liability
to which this Memorandum applies, caused by or arising out of an occurrence
during the coverage period.
This coverage applies only to claims for damages arising out of those activities
the Member Agency was engaged in at the inception date of this
Memorandum, and not to claims arising out of any activity or service which the
Member Agency added to its operations after the inception date of this
Memorandum, unless such new activity or service is reported by the Member
Agency to the Authority at least 60 days prior to commencing the new activity
or service.
This coverage does not apply to claims for damages which are either expected
or intended by the Covered Party.
Any increase in the Member Agency's exposure with regard to levee
maintenance, hydroelectric generation, fire, police or ambulance services must
have prior approval of the Executive Committee in order to have coverage under
this Memorandum.
SECTION III – LIMIT OF LIABILITY
Regardless of the number of (1) Covered Parties under this Memorandum,
(2) persons or organizations who sustain injury or damage, or (3) claims made
or suits brought, the Authority's liability for the ultimate net loss shall be the
lesser of:
1.$5,000,000 Any one occurrence, arising out of bodily injury,
property damage, Public Official’s errors and
omissions, personal injury or Employment
Practices Liability, or any combination thereof; or
2.The total limit for all Covered Parties provided by any purchased
excess insurance or reinsurance, subject to the Authority’s ability
to recover from those excess insurers or reinsurers.
Page 10 of 26 Liability – Section 1 – Coverage (MOLC-100119)
SECTION IV –WHO IS COVERED
Each of the following is a Covered Party to the extent set forth below:
1.The Member Agency and any subsidiary or special district or
agency totally governed by the Member Agency;
2.Any director of the Member Agency while acting within the course
and scope of his/her duties;
3.Any employee or authorized volunteer of the Member Agency
while acting within the course and scope of his/her duties; and
4.Any party designated in the foregoing paragraphs 1 through 3 while
acting within the course and scope of his/her duties with respect to
the use of an automobile not owned by the Member Agency and
then only excess over any other insurance specifically insuring said
automobile. Any person while using any owned or hired
automobile and any person legally responsible for the use there of,
provided the actual use of the automobile is with the permission of
the Member Agency.
SECTION V - DEFENSE OF THE MEMBER AGENCY
On causes of action covered by this Memorandum and only those causes, the
Authority shall have the right and duty to defend any suit against any Covered
Party, even if all allegations are groundless, false or fraudulent. The Authority
may make such investigations, negotiations or settlement of any claim or suit as
it deems expedient. The Authority shall not be obligated to pay any claim or
judgment or to defend any suit after any of the Authority's limits of liability have
been exhausted.
The Authority shall have no duty to defend any suit against a Covered Party,
nor to pay any costs or expenses incurred by any Covered Party, at any time
before the suit is tendered to the Authority, nor shall the Authority have any
duty to pay any costs or expenses incurred by any Covered Party at any time
after the Covered Party withdraws its tender of the suit to the Authority for any
reason.
This coverage applies only to claims for damages caused by an occurrence, for
damage or injury that occurs during the coverage period of this Memorandum,
and then only if, prior to the first day of the coverage period of this
Memorandum, no person or party authorized by any Covered Party to give or
Liability – Section 1 – Coverage (MOLC-100119) Page 11 of 26
receive notice of an occurrence or claim knew that the injury or damage had
occurred, in whole or in part. If such an authorized person or party knew, prior to
the first day of the coverage period of this Memorandum, that the injury or
damage had occurred, then any continuation, change or resumption of such
injury or damage during or after the coverage period of this Memorandum will be
deemed to have been known prior to the coverage period. Injury or damage will
be deemed to have been known to have occurred at the earliest time when any
person or party authorized by any Covered Party to give or receive notice of an
occurrence or claim: (1) reports all, or any part, of the injury or damage to the
Authority or to any other risk pool, any insurer, or any other indemnitor; or (2)
receives a written or verbal demand or claim for damages because of the injury
or damage; or (3) becomes aware by any other means that injury or damage has
occurred or has begun to occur.
With respect to any covered claim or suit against the Covered Party, the
Authority shall select and assign counsel to defend the Covered Party(s)
against the claim or suit. The Authority will consider the wishes of a Covered
Party with respect to the assignment of counsel; however, the Authority retains
the sole right to make the assignment of counsel. If the Covered Party refuses to
be defended by the counsel assigned by the Authority then this Memorandum
shall not provide any defense or indemnity to such Covered Party for such claim
or suit, and the Authority shall not be required to contribute to any defense
costs, settlement or judgment arising from such claim or suit.
Any claim for damages by one Member Agency against any other Member
Agency, if otherwise covered by this Memorandum, shall be submitted to
binding arbitration pursuant to Section VII. – Conditions, F. RESOLUTION OF
DISPUTES, (6) Arbitration Procedures for Resolving Disputes.
SECTION VI – EXCLUSIONS
This Memorandum does not apply to any defense or indemnification for the
following items, whether the act or occurrence is alone, or is concurrent with
other, covered matters:
A.Liability arising out of the ownership, maintenance, loading, unloading, use
or operation of any airfield, or similar aviation facility; or
Liability arising out of the ownership of aircraft, or the maintenance or use
of owned aircraft.
This exclusion does not apply to claims arising out of the ownership,
operation, use, maintenance or entrustment to others of any unmanned
Page 12 of 26 Liability – Section 1 – Coverage (MOLC-100119)
aircraft owned or operated by or rented to or loaned by or on behalf of
any Member Agency if operated in accordance with all applicable federal,
state, and local laws, rules, and regulations, including but not limited to
Federal Aviation Administration (FAA) Rules and Regulations for
unmanned aircraft detailed in part 107 of Title XIV of the Code of Federal
Regulations.
B.Any obligation for which any Covered Party, or any carrier as insurer
therefore, may be held liable under any workers' compensation,
unemployment compensation or disability benefits law, or under any
similar law; or
Liability of any employee or authorized volunteer with respect to bodily
injury of another employee or authorized volunteer.
C.Liability for property damage to:
1.Property owned by the Covered Party;
2.Aircraft in the care, custody or control of the Covered Party.
D.Liability arising out of:
1.The Covered Party's delivery or non-delivery of Member
Agency’s product, based on any decision made by the Covered
Party's with respect to either obtaining a supply of water or
electricity for, or allocating the available supply of water or
electricity, among the Covered Party's water or electricity users; or
2.The Covered Party’s claim to, right to or ownership of any supply
of Member Agency’s product.
E.Liability for:
1.Bodily injury, property damage, personal injury or Public
Official’s errors and omissions which would not have occurred or
taken place in whole or in part except for the actual, alleged or
threatened discharge, dispersal, seepage, migration, release or
escape of pollutants at any time; or
2.Any loss, cost or expense arising out of any:
a.Request, demand, or order that a Covered Party, or any
others, test for, monitor, clean up, remove, contain, treat,
Liability – Section 1 – Coverage (MOLC-100119) Page 13 of 26
detoxify or neutralize, or in any way respond to, or assess
the effects of pollutants; or
b.Claim or suit by or on behalf of a governmental authority for
damages because of testing for, monitoring, cleaning,
removing, containing, treating, detoxifying or neutralizing, in
any way responding to, or assessing the effects of
pollutants.
c.Aerial application of weed abatement or spraying or pest
abatement or spraying.
However, this exclusion shall not apply to bodily injury, property
damage, personal injury, or Public Official’s errors and omissions
arising out of the actual, alleged or threatened discharge, dispersal,
seepage, migration, release or escape of pollutants that:
a.Was sudden and accidental, and neither expected nor intended by
a Covered Party; or
b.Resulted from the use, handling, storage, discharge, dispersal,
release or escape of chlorine or any other chemical used in the
water treatment process or waste water treatment process; or
c.Arose out of explosion, lightning, windstorm, vandalism or malicious
mischief, collapse, riot and civil commotion, flood, earthquake or
the collision, upset or overturn of an automobile or equipment; or
d.Arose out of the heat, smoke or fumes from a hostile fire; a hostile
fire is defined herein as a fire that becomes uncontrollable or
breaks out from where it was intended to be; or
e.Arose out of weed abatement or spraying, unless by and/or through
aerial application; or
f.Arose out of pest abatement or spraying, unless by and/or through
aerial application; or
g.Arose from propane or natural gas; or
h.Arose from the products hazard.
Page 14 of 26 Liability – Section 1 – Coverage (MOLC-100119)
F.Liability arising out of:
1.Estimates of probable costs, or cost estimates being exceeded, or
failure to award contracts in accordance with statute or ordinance
which under law must be submitted for bids; or
2.Failure to perform or breach of a contractual obligation; or
3.Settlement Agreements. Claims alleging breach of a settlement
agreement involving a Covered Party in an underlying matter that
was afforded coverage under this Memorandum will be covered for
no more than $25,000.00 reimbursement by the Authority to the
Covered Party for indemnity and defense as a combined total.
G.Liability at any time arising out of the manufacture of, mining of, use of,
sale of, installation of, removal of, distribution of, or exposure to asbestos,
asbestos products, asbestos fibers, or asbestos dust; or
To any obligation of the Covered Party to indemnify any party because of
damage arising any time as a result of the manufacture of, mining of, use
of, sale of, installation of, removal of, distribution of, or exposure to
asbestos, asbestos products, asbestos fibers, or asbestos dust; or
To any obligation to defend any suit or claim against the Covered Party
seeking damages, if such suit or claim results from or is contributed to,
by any or any combination of the following: manufacture of, mining of, use
of, sale of, installation of, removal of, distribution of, or exposure to
asbestos, asbestos products, asbestos fibers, or asbestos dust.
H.Liability for past, present, or future claims arising in whole or in part, either
directly or indirectly, out of selenium, or any compound containing
selenium.
I.Liability for punitive or exemplary damages, statutory multiples of
damages, civil fines or penalties, or any other liability over and above
actual damages, by whatever name called, irrespective of whether the
Covered Party's governing board has taken any action or passed any
resolution electing to pay such damages.
J.Liability arising out of the hazardous properties of nuclear material.
K.Liability arising out of the partial or complete structural failure of any dam.
Liability – Section 1 – Coverage (MOLC-100119) Page 15 of 26
L.Liability arising out of or in connection with land use regulation, or land use
planning, the principles of eminent domain, condemnation proceedings, or
inverse condemnation by whatever name called, to the extent that such
liability is alleged to, or does, result from deliberate, decision-making
conduct by the governing body of the Covered Party, and whether or not
liability accrues directly against any Covered Party by virtue of any
agreement entered into by or on behalf of any Covered Party.
This exclusion does not apply to inverse condemnation liability arising
from accidentally caused physical injury to or destruction of tangible
property, including all resulting loss of use of such property, for which the
Covered Party may be legally responsible.
M.Liability imposed by any “No-Fault,” “Uninsured Motorist” or “Underinsured
Motorist” law, or any similar law.
N.Liability arising out of any claim for Cyber Liability or by any name by
which it is called.
O.Liability arising out of injunctive and/or administrative relief.
P.Liability arising out of the actual or threatened abuse or molestation of
any minor, including but not limited to physical abuse, corporal
punishment, sexual abuse, or sexual molestation by any Covered
Party, or anyone acting on behalf of the Covered Party.
Q.Liability arising out of the adoption or administrative application of any
ordinance, resolution or regulation.
This exclusion shall not apply to the physical enforcement of an ordinance,
resolution or regulation, such as liability arising from the act of delivering a
fine, citation, warning, notice or inspection.
R.Liability arising out of or by reason of:
1.The purchase, sale, offer of sale, or solicitation of any security,
debt, bank deposit, or financial interest or instrument;
2.Any representations made at any time in relation to the price or
value of any security, debt, bank deposit or financial interest or
instrument;
3.Any depreciation or decline in price or value of any security, debt,
bank deposit, or financial interest or instrument; or
Page 16 of 26 Liability – Section 1 – Coverage (MOLC-100119)
4.Employee Retirement Income Security Act of 1974 or any law
amendatory thereof, or any similar law, or arising out of fiduciary
activities with respect to employee benefit plans.
SECTION VII - CONDITIONS
A.PREMIUM/DEPOSIT PREMIUM
All premium payments required by this Memorandum shall be computed
in accordance with the Joint Powers Agreement and the cost allocation
plan adopted by the Authority's Board of Directors. The Deposit Premium
is an estimate to be credited against the amount of Retrospective
Premium determined under the cost allocation plan.
B.INSPECTION AND AUDIT
The Authority shall be permitted, but not obligated, to inspect the
Member Agency's property or operations at any time. The Authority
shall have the right to examine and/or audit any data provided by the
Member Agency which affects or may affect the Member Agency's
financial obligations under this Memorandum.
C.SEVERABILITY OF INTEREST
The term Member Agency is used severally and not collectively.
D.MEMBER AGENCY'S DUTIES IN THE EVENT OF OCCURRENCE,
CLAIM, OR SUIT
1.The Covered Party’s duties in the event of an occurrence, claim,
or suit reasonably likely to involve the Authority are as follows.
These provisions are conditions precedent to coverage afforded
under this Memorandum.
Written notice containing particulars sufficient to identify the
Covered Party and also reasonably obtainable information with
respect to the time, place and circumstances thereof, and the
names and addresses of the injured and of the available witnesses,
shall be given by or for the Covered Party to the Authority or any
of its authorized agents.
a.The Covered Party shall immediately notify the Authority
upon receipt of notice of a claim involving:
Liability – Section 1 – Coverage (MOLC-100119) Page 17 of 26
i.One or more fatalities;
ii.Loss of limb or amputation;
iii.Loss of use of any sensory organ;
iv.Spinal cord injuries (quadriplegia or paraplegia);
v.Third degree burns involving 10% or more of the
body;
vi.Serious facial disfigurement;
vii.Paralysis;
viii.Closed head injuries;
ix.Serious loss of use of any body functions;
x.Long-term hospitalization;
xi.Class action suits; or
xii.Sexual abuse or molestation.
2.If claim is made or suit is brought against the Covered Party, and
the Covered Party seeks defense or indemnity against the claim
or suit from the Authority, the Covered Party shall immediately
forward to the Authority every demand, notice, summons or
process received.
3.The Covered Party shall cooperate with the Authority and with
defense counsel appointed by the Authority and, upon the
Authority's request, assist in making settlements, in the conduct of
suits and in enforcing any right of contribution or indemnity against
any person or organization who may be liable to the Covered Party
because of injury or damage with respect to which coverage is
afforded under this Memorandum; and the Covered Party shall
attend hearings and trials and assist in securing and giving
evidence and obtaining the attendance of witnesses. The Covered
Party shall not, except at the Covered Party's own cost, voluntarily
make any payment, assume any obligation, or incur any defense
attorney's fees or costs or any other expense other than for first aid
or damage mitigation.
Page 18 of 26 Liability – Section 1 – Coverage (MOLC-100119)
4.With respect to "Small Claims" as defined below, the Member
Agency may elect to make investigations and settlements. At the
request of the Member Agency, however, the Authority shall
investigate, handle, deny, accept or otherwise settle any such
claim or claims on behalf of the Member Agency.
“Small Claims” within the meaning of this condition:
a.Must be for property damage only, with no apparent
potential for related bodily injury allegations;
b.Must not have estimated damages for all claims arising out
of the occurrence exceeding the Member Agency's
applicable Retrospective Allocation Point; and
c.Must be settled within sixty (60) days of the date of filing or
be turned over to the Authority's claims handling agency no
later than the 62nd day.
If a Member Agency incurs a loss which meets the above
constraints, it may use the following procedures:
a.Negotiate settlement of the claim up to the specified limits;
b.Issue a check to claimant or otherwise compensate claimant
for the agreed upon damages; and
c.Report the settlement to the Authority with a copy of the
claim report, along with a copy of any release taken, and
receive reimbursement for the amount of the settlement.
5.The Authority shall not be liable for occurrences, suits or claims
with regard to which the Member Agency fails to comply with this
subsection D.
E.ACTION AGAINST THE AUTHORITY
No action shall lie against the Authority unless, as a condition precedent
thereto, there shall have been full compliance with all the terms of this
Memorandum, nor until the amount of the Covered Party's obligation to
pay shall have been finally determined either by judgment against the
Covered Party after actual trial or by written agreement of the Covered
Party, the claimant and the Authority.
Liability – Section 1 – Coverage (MOLC-100119) Page 19 of 26
No person or organization shall have any right under this Memorandum
to join the Authority as a party to any action against any Covered Party
to determine the Covered Party's liability, nor shall the Authority be
impleaded by the Covered Party or the Covered Party's legal
representative. Bankruptcy or insolvency of the Covered Party or of the
Covered Party's estate shall not relieve the Authority of any of its
obligations hereunder.
F.RESOLUTION OF DISPUTES
1.General
The following procedures shall be followed in resolving any dispute,
claim, or controversy arising out of or connected with the
agreements set forth in this Memorandum. Such disputes shall be
resolved by either administrative proceedings or binding arbitration
as provided for herein. The parties in these proceedings shall be
the Authority and the Member Agency and are hereinafter
referred to as "party" or "parties".
2.Initiation of Proceedings
Either party shall give written notice to the other party of its intent to
initiate proceedings to resolve any dispute covered by this
SECTION VII – Conditions, E. Such notice shall contain a
statement setting forth the nature of the dispute, the amount
involved, and the remedy sought.
3.Administrative Procedures for Resolving Disputes
a.All disputes subject to these proceedings shall first be
submitted to the following designated committee, depending
upon the amount in dispute, to determine whether the
dispute can be resolved by administrative proceedings
without having to be submitted to binding arbitration.
Level and Committee Amount in Dispute
1.Liability Program Committee Not in excess of $50,000, per
occurrence
2.The Authority’s Executive
Committee
Over $50,000, but not in excess
of $200,000, per occurrence
Page 20 of 26 Liability – Section 1 – Coverage (MOLC-100119)
3.Ad Hoc Board Committee Over $200,000 and up to the
attachment point of re-insurance
or excess coverage, per
occurrence
b.A separate Ad Hoc Board Committee shall be formed for
each dispute as follows:
i.Upon initiation of the dispute, the entire Board
roster shall be randomly prioritized.
ii.The first seven Board members on the prioritized
list agreeing to serve on the Ad Hoc Committee,
or to have their alternates serve, shall comprise
the pool. At least five members of the pool shall
be required to convene the Committee.
iii.No Board member representing a Member
Agency that is a party to the arbitration, nor
his/her alternate, shall serve on the Ad Hoc
Committee.
4.Administrative Hearings
Administrative hearings before committees shall be conducted in an
informal manner with the Chair of the Committee presiding at the
Liability Program Committee and the Executive Committee and the
Chief Executive Officer of the Authority presiding, without a vote,
at the Ad Hoc Committee. They shall be conducted in accordance
with procedures determined by the Committee except as follows:
a.List of Witnesses and Documents
If either party wishes a list of the other party's witnesses and
documents, it may demand it in accordance with the
procedures set forth in California Code of Civil Procedure,
Section 1282.2. However, the failure to list a witness or a
document shall not bar the testimony of the unlisted witness
or the introduction of an undesignated document, provided
that good cause for the omission is shown as determined by
the Committee.
Liability – Section 1 – Coverage (MOLC-100119) Page 21 of 26
b.Presentation of Evidence
Each party shall present its evidence in an informal manner.
The Chair of the Committee shall rule on the admission and
exclusion of evidence, but the Chair need not follow the rules
of evidence and rules of judicial procedures.
c.Cross-Examination
Each party shall be permitted to cross-examine witnesses.
d.Testimony Under Oath
The testimony of witnesses shall be given under oath, with
oaths to be administered by a Notary Public.
e.Representation by Counsel
Parties have the right to be represented by counsel.
f.Stenographic Record
Either party wishing a stenographic record shall make
arrangements directly with a stenographer and shall notify
the other party of such arrangements in advance of the
hearing. The requesting party shall pay the cost of recording
the hearing if no transcript is ordered. If a transcript is
ordered, the cost of the transcript and of recording the
hearing shall be prorated equally among the parties ordering
copies.
g.Place of Hearing
Unless otherwise agreed to by the parties, administrative
hearings shall be held at the general office of the Authority.
h.Time of Decisions
Decisions shall be made promptly by the Committee in
writing and, unless otherwise agreed by the parties or
specified by law, no later than ten (10) days from the date of
the close of the hearing.
Page 22 of 26 Liability – Section 1 – Coverage (MOLC-100119)
i.Costs and Expenses
Each party shall bear its own expenses.
5.Time and Method of Appealing Administrative Decisions
Either party may appeal the decision of the Committee to which the
dispute was first referred pursuant to paragraph (3) above. Notice
of such appeal shall be submitted in writing within ten (10) days of
receipt of the Committee's decision. If the initial decision was by the
Liability Program Committee or by the Executive Committee, the
parties shall confer within ten (10) days of receipt of the Notice of
Appeal to determine if they are both willing to submit the appeal to
one of the committees set forth in paragraph (3) above having
greater jurisdiction than the Committee that made the initial
decision. If they agree to submit it to such a committee for final
binding determination, the parties shall indicate this in writing and
the matter shall be submitted to that committee and heard in
accordance with the procedures set forth in paragraph (4) above. If
either party is not willing to have the appeal heard by another
committee, or the initial decision was by the Ad Hoc Board
Committee, the appeal shall be submitted to binding arbitration in
accordance with the procedures set forth in paragraph (6) below.
6.Arbitration Procedures for Resolving Disputes
a.Selection of Arbitrators
If an appeal of an administrative decision is submitted to
arbitration, each party shall, within ten (10) days, select one
arbitrator and submit his or her name in writing to the other
party. Within ten (10) days after their selection, these two
arbitrators shall select a third independent arbitrator. If the
two parties cannot agree on the selection of the third
arbitrator within ten (10) days, either party may petition the
Placer County Superior Court for the appointment of the third
arbitrator pursuant to the provisions of Section 1281.6 of the
California Code of Civil Procedure. The third arbitrator shall
preside as the Chair of the arbitration panel. Except for
notification of appointment and as provided in the California
Code of Civil Procedure, there shall be no communication
between the parties and the arbitrator(s) relating to the
subject of the arbitration other than at oral hearings.
Liability – Section 1 – Coverage (MOLC-100119) Page 23 of 26
b.Discovery
The procedures set forth in California Code of Civil
Procedure Section 1283.05 relating to depositions and
discovery shall apply to any arbitration pursuant to this
paragraph (6).
c.Testimony Under Oath
The testimony of witnesses shall be given under oath, with
oaths to be administered by a Notary Public.
d.Stenographic Record
Either party wishing a stenographic record shall make
arrangements directly with a stenographer and shall notify
the other party of such arrangements in advance of the
hearing. The requesting party shall pay the cost of recording
the hearing if no transcript is ordered. If a transcript is
ordered, the cost of the transcript and of recording the
hearing shall be prorated equally among the parties ordering
copies.
e.Place of Hearing
Unless otherwise agreed to by the parties, arbitration
hearings shall be held at the general office of the Authority.
f.Closing the Hearing
Each arbitration hearing shall be completed within one (1)
day; provided, however the arbitrators may, for good cause
shown, schedule such additional hearings as are necessary
to ensure that all evidence material to the controversy is
presented.
g.Time of Decisions
Decisions shall be made promptly by the arbitrators in writing
and, unless otherwise agreed by the parties or specified by
law, no later than ten (10) days from the date of the close of
the hearing.
Page 24 of 26 Liability – Section 1 – Coverage (MOLC-100119)
h.Costs and Expenses
Each party shall pay its own expenses, including the
expense of the arbitrator appointed by it and the expense of
any witnesses which it calls. Except as otherwise provided
herein, the expenses of any witness or the cost of any proof
produced at the direct request of the arbitrators, and all other
expenses of the arbitration, including the travel and the other
expenses of the third arbitrator chosen by the first two
arbitrators shall be borne equally by the parties.
i.Interpretation and Application of Rules
With respect to any procedure not herein expressly provided
for, the arbitration shall be governed by the California Code
of Civil Procedure provisions relating to arbitration (Section
1280 et seq.). The arbitrator(s) shall interpret and apply
these rules insofar as they relate to the arbitrator's powers
and duties. All decisions of the arbitration panel shall be
decided by a majority vote.
7.Funding of Defense and Payment of Claims Pending Resolution
of Dispute
During the course of the administrative and arbitration proceedings
provided for herein, the Authority may fund any defense to the
claim against the Member Agency and any settlement of that
claim approved by the Member Agency, subject to the right of the
Authority to recover from the Member Agency any amounts paid
out by the Authority for such defense or settlement which are
finally determined not to be owed by the Authority under this
Memorandum, with interest thereon at the legal rate of interest on
judgments.
8.Effect of Arbitration Decisions
All decisions on appeals, whether by an administrative committee
pursuant to paragraph (5) above or by an arbitration panel, shall be
final and binding upon the parties.
Liability – Section 1 – Coverage (MOLC-100119) Page 25 of 26
9.Not Applicable to Excess Carriers
These arbitration provisions are intended to bind only the Authority
and its Member Agencies. They are not intended to be binding
upon any of the Authority's re-insurers or excess carriers.
G.OTHER COVERAGES
The coverage afforded in this Memorandum shall be excess of, and shall
not contribute with, any valid and collectible insurance or self-insurance or
other coverage, other than any excess, or umbrella insurance, or
reinsurance procured by the Authority or the Member Agency.
Any and all payments made by others on behalf of the Member Agency
towards defense costs, settlement, or satisfaction of a claim or suit to
which this Memorandum applies, including but not limited to payments
made by any valid and collectible insurance or self-insurance or other
coverage but not including payments made by any excess insurance,
umbrella insurance or reinsurance, procured by the Authority or the
Member Agency, shall serve to satisfy the Authority’s liability for
ultimate net loss and shall be treated as though paid by the Authority
hereunder. Such payments shall not be considered “recoveries and
salvages collectible” under the definition of ultimate net loss set forth
under Section I. – Definitions of this Memorandum.
H.SUBROGATION
In the event of any payment under this Memorandum, the Authority shall
be subrogated to all the Covered Party's rights of recovery therefore
against any person or organization, and the Covered Party shall execute
and deliver instruments and papers and do whatever else is necessary to
secure such rights. The Covered Party shall do nothing after an
occurrence to prejudice such rights and shall do everything necessary to
secure such rights.
I.WITHDRAWAL/CANCELLATION
The Member Agency may withdraw from the Authority and cancel this
coverage only:
1.At the end of one of the Authority's Liability Program Coverage
Years;
Page 26 of 26 Liability – Section 1 – Coverage (MOLC-100119)
2.After three or more years following its first day of coverage by the
Authority's Liability Program; and
3.After twelve months' advance written notice of such intent to
withdraw is given by the Member Agency and received by the
Authority.
The Authority may cancel the Member Agency's participation in the
Authority's Liability Program upon a two-thirds vote at any duly
constituted Board of Directors' meeting of the Authority. However, any
canceled Member Agency shall be permitted a reasonable time to obtain
other basic liability coverage before such cancellation becomes effective.
COVERAGE SCHEDULE
FOR COVERAGE PERIOD 10/1/2019 - 10/1/2020
*SUBLIMITS:
$ 5,000,000 Terrorism
$ 30,000,000 Subsidence
$ 30,000,000 Lead
$ 35,000,000 Mold; Perfluoroalkyl and Polyfluoroalkyl (PFAS)
All coverage renews at 12:01 a.m. Standard Time at Roseville, California.
COVERAGE LIMIT CARRIER
$5,000,000* JPIA Pooled Layer
$5,000,001 to $10M Safety National Casualty Corporation
$10,000,001 to $20M Markel Global Reinsurance Company/Great American Insurance Company
$20,000,001 to $25M Everest Reinsurance Company
$25,000,001 to $30M* Lloyd’s of London (Brit Syndicate 2987)
$30,000,001 to $35M* Great American E&S Insurance Company
$35,000,001 to $40M* Hallmark Specialty Insurance Company
$40,000,001 to $45M Illinois Union Insurance Company
$45,000,001 to $50M Allied World National Assurance Company
$50,000,001 to $55M General Security Indemnity Company of Arizona
Page i of v Liability - Section 1 - Coverage (MOLC-100119)
CRISIS MANAGEMENT COVERAGE CRISIS
MANAGEMENT COVERAGE ADDENDUM TO THE
MEMORANDUM OF LIABILITY COVERAGE
NOTICE: Words that appear in bold, except for headings, have special meaning and
are defined either in this Addendum or in the Memorandum of Liability Coverage to
which it is attached.
COVERAGE LIMITS:
Coverage A: Crisis Response $ 250,000 Each Crisis Management Event
and annual aggregate
Coverage B: Crisis Communication $ 50,000 Each Crisis Management Event
and annual aggregate
COVERAGE AGREEMENT:
A.Advancement of Crisis Response Costs during a Crisis
Management Event
The Authority will pay on behalf of the Member Agency those Crisis
Response Costs that may be associated with damages covered by
the Memorandum arising from a Crisis Management Event that first
commences during the Coverage Period, up to the amount of the
Crisis Response Coverage Limit.
The Authority may advance the Crisis Response Costs that may be
associated with damage covered by the Memorandum directly to third
parties.
B.Crisis Communication Expenses
The Authority will pay on behalf of the Member Agency the costs of
Crisis Communication Services arising from a Crisis Management
Event that first commences during the Coverage Period, up to the
amount of the Crisis Communication Coverage Limit.
C.A Crisis Management Event shall first commence at the time during
the Coverage Period when a Key Executive of the Member Agency
first becomes aware of an Occurrence that gives rise to a Crisis
Management Event and shall end at the earliest of the time that the
Authority determines that a crisis no longer exists or when the Crisis
Response Coverage Limit and/or the Crisis Communication
Coverage Limit, whichever applies, has been exhausted.
Liability - Section 1 - Coverage (MOLC-100119) Page ii of v
LIMITS OF COVERAGE:
A.The Crisis Response Coverage Limit is the most the Authority will
pay for all Crisis Response Costs under this Addendum, regardless
of the number of Crisis Management Events first commencing during
the Coverage Period.
B.The Crisis Communication Coverage Limit is the most the
Authority will pay for all Crisis Communication Costs under this
Addendum, regardless of the number of Crisis Management Events
first commencing during the Coverage Period.
C.The Authority will have no obligation to advance Crisis Response
Costs or to pay Crisis Communication Costs from the earliest of the
time that the Authority determines that a crisis no longer exists or
when the Crisis Response Coverage Limit and/or the Crisis
Communication Coverage Limit, whichever applies, has been
exhausted.
WORDS AND PHRASES WITH SPECIAL MEANING (DEFINITIONS):
A.Crisis Communication Coverage Limit means the limit shown for
Coverage B: Crisis Communication in the Coverage Limits of this
Addendum.
B.Crisis Communication Firm means any public relations firm
approved by the Authority that is hired by the Member Agency to
perform Crisis Communication Services in connection with the
Crisis Management Event.
C.Crisis Communication Services means those services performed by
a Crisis Communication Firm in advising the Member Agency on
minimizing potential harm to the Member Agency from a covered
Crisis Management Event by maintaining and restoring public
confidence in Member Agency.
D.Crisis Communication Costs means the following amounts incurred
during a Crisis Management Event:
1.Amounts for the reasonable and necessary fees and expenses
incurred by a Crisis Communication Firm in the performance
of Crisis Communication Services for a Member Agency
solely arising from a covered Crisis Management Event; and
Page iii of v Liability – Section 1 – Coverage (MOLC-100119)
2.Amounts for reasonable and necessary printing, advertising,
mailing of materials, or travel by directors, officers, employees
or agents of a Member Agency or a Crisis Communication
Firm incurred at the direction of a Crisis Communication
Firm, solely arising from a covered Crisis Management
Event.
E.Crisis Management Event means an Occurrence that, in the good
faith opinion of a Key Executive of the Member Agency and with the
concurrence of the Authority, in absence of Crisis Communication
Services, has been or may reasonably be associated with:
1.damages covered by the Memorandum; and
2.significant adverse regional or national news media coverage
Crisis Management Event shall include, without limitation, man-made
disasters such as explosions, chemical releases, major vehicle,
equipment or construction accidents resulting in multiple deaths,
burns, dismemberment, traumatic brain injury, permanent paralysis, or
contamination of food, drink or pharmaceuticals, or wide-spread
property damage due to infrastructure failure.
F.Crisis Response Costs means the following reasonable and
necessary expenses incurred during a Crisis Management Event
directly caused by a Crisis Management Event, provided that such
expenses have been pre-approved by the Authority and may be
associated with damages that would be covered by the
Memorandum.
1.Medical expenses;
2.Funeral expenses;
3.Psychological counseling;
4.Travel expenses;
5.Temporary living expenses;
6.Expenses to secure the scene of a Crisis Management Event;
and
7.Any other expenses pre-approved by the Authority.
Liability - Section 1 - Coverage (MOLC-100119) Page iv of v
Crisis Response Costs will not include defense costs or Crisis
Communication Costs.
G.Crisis Response Coverage Limit means the limit shown for
Coverage A: Crisis Response in the Coverage Limits of this
Addendum.
H.Key Executive means the General Manager, Chief Executive Officer,
Chief Operating Officer, Chief Financial Officer, Board President, or
General Counsel of the Member Agency. A Key Executive also
means any other person designated as such by the Member
Agency’s Board of Directors.
EXCLUSIONS:
This coverage will not apply to any Crisis Response Costs or Crisis
Communication Costs in connection with a Crisis Management Event:
A.arising out of, based upon or attributable to any acts alleged, or to the
same or related acts alleged or contained, in any crisis, claim or Suit
that has been reported, or in any circumstances where notice has
been given under any coverage of which this Memorandum is a
renewal or replacement or which it may succeed in time; or
B.arising out, based upon or attributable to any pending or prior crisis,
claim or Suit as of the inception date of this Memorandum.
CONDITIONS:
A.The Member Agency must report any Crisis Management Event to
the Authority within twenty-four (24) hours of the time that a Key
Executive first becomes aware of an Occurrence that gives rise to a
Crisis Management Event to be eligible for the advancement of
Crisis Response Costs or the payment of any Crisis
Communication Costs.
Notice of a Crisis Management Event may be given by calling the
Authority at 1-800-231-5742. Written notice shall be given as soon as
soon as practicable thereafter and should include:
1.how, when and where the Crisis Management Event is taking
or took place;
2.the names, addresses and contact information of any injured
parties and any witnesses; and
Page v of v Liability – Section 1 – Coverage (MOLC-100119)
3.the nature and location of any injury or damage arising out of
the Crisis Management Event.
B.Any payments by the Authority for Crisis Communication Costs or
advancement of Crisis Response Costs under this Addendum will
not:
1.be deemed to be a determination of the Member Agency’s
liability with respect to any claim or Suit that results from a
Crisis Management Event; and
2.create any duty for the Authority to defend any Suit or to
investigate any claim arising from a Crisis Management
Event, nor any coverage obligations under the Memorandum.
All other terms, definitions, conditions and exclusions of the Memorandum remain
unchanged.
Alliant Insurance Services, Inc. CA License No. 0C36861 www.alliant.com
Association of California
Water Agencies/JPIA
July 1, 2019 – July 1, 2020
Alliant Property Insurance Program (APIP)
Binder of Insurance
Presented by:
Seth Cole
Senior Vice President
Rob Lowe
Vice President
Andrea Ferry, ARM
Account Manager - Lead
2019-2020 Alliant Property Insurance Program (APIP) Summary of Bound Changes Page 1 of 4
APIP SUMMARY OF BOUND CHANGES
THE FOLLOWING ITEMS ARE CHANGES FOR THE 2019-2020 POLICY TERM
Coverage 2018-2019 2019-2020 Bound Changes
Flood A&V sub-
limit coverage
wording
Per Occurrence and in the Annual Aggregate
for all locations in Flood Zones A & V
(inclusive of all 100 year exposures). This
Sub-limit does not increase the specific flood
limit of liability for those Named Insured(s)
that purchase this optional dedicated
coverage.
Per Occurrence and in the Annual Aggregate for
scheduled locations in Flood Zones A & V
(inclusive of all 100 year exposures). This Sub-
limit does not increase the specific flood limit of
liability for those Named Insured(s) that purchase
this optional dedicated coverage.
Combined
Business
Interruption
Combined Business Interruption, Rental
Income and Tax Revenue amd Tuition
Income (and related fees). However, if
specific values for such coverage have not
been reported as part of the Named Insured's
schedule of values held on file with Alliant
Insurance Services Inc., this sub-limit amount
is limited to $500,000 per Named Insured
subject to maximum of $2,500,000 Per
Occurrence for Business Interruption, Rental
Income and Tuition Income combined, and
$5,000,000 Per Occurrence for Tax Revenue
Interruption. Coverage for power generating
plants is excluded, unless otherwise
specified.
Combined Business Interruption, Rental Income
and Tuition Income (and related fees). However, if
specific values for such coverage have not been
reported as part of the Named Insured's schedule
of values held on file with Alliant Insurance
Services Inc., this sub-limit amount is limited to
$500,000 per Named Insured subject to maximum
of $2,500,000 Per Occurrence, Per Declaration for
Business Interruption, Rental Income and Tuition
Income combined. Coverage for power generating
plants is excluded, unless otherwise specified.
Tax Revenue
sub-limit
Combined Business Interruption, Rental
Income and Tax Revenue amd Tuition
Income (and related fees). However, if
specific values for such coverage have not
been reported as part of the Named Insured's
schedule of values held on file with Alliant
Insurance Services Inc., this sub-limit amount
is limited to $500,000 per Named Insured
subject to maximum of $2,500,000 Per
Occurrence for Business Interruption, Rental
Income and Tuition Income combined, and
$5,000,000 Per Occurrence for Tax Revenue
Interruption. Coverage for power generating
plants is excluded, unless otherwise
specified.
Coverage moved to it’s own specific field:
$ 3,000,000 Tax Revenue Interruption – Per Policy
Provisions. However, if specific values for such
coverage have not been reported as part of the
Named Insured’s schedule of values held on file
with Alliant Insurance Services, Inc., this sub-limit
amount is limited to $1,000,000 Per Occurrence –
Per Policy Provisions.
Miscellaneous
Unnamed
Locations
Miscellaneous Unnamed Locations for
existing Named Insured's Excluding
Earthquake coverage for Alaska and
California Named Insureds. If Flood coverage
is purchased for all scheduled locations, this
extension will extend to include Flood
coverage for any location not situated in
Flood Zones A or V.
Miscellaneous Unnamed Locations for existing
Named Insured's excluding Earthquake coverage
for Alaska and California locations. If Flood
coverage is purchased for scheduled locations, this
extension will extend to include Flood coverage for
any location not situated in Flood Zones A or V
2019-2020 Alliant Property Insurance Program (APIP) Summary of Bound Changes Page 2 of 4
APIP SUMMARY OF BOUND CHANGES CONTINUED
THE FOLLOWING ITEMS ARE CHANGES FOR THE 2019-2020 POLICY TERM
Coverage 2018-2019 2019-2020 Bound Changes
Unscheduled
Landscaping
sub-limit
wording
Unscheduled Landscaping, tees, sand traps,
greens, athletic fields and artificial turf and
further subject to $25,000 / 25 gallon
maximum per item.
Unscheduled Landscaping, tees, sand traps,
greens, athletic fields and artificial turf and further
subject to $25,000 / 25 gallon maximum per item
for existing Named Insureds excluding Earthquake
coverage for Alaska and California locations. If
Flood coverage is purchased for scheduled
locations, this extension will extend to include
Flood coverage for any location not situated in
Flood Zones A or V.
Unscheduled
Infrastructure
Unscheduled Tunnels, Bridges, Dams,
Catwalks (except those not for public use),
Roadways, Highways, Streets, Sidewalks,
Culverts, Street Lights and Traffic Signals
unless a specific value has been declared
(excluding coverage for the peril of
Earthquake Shock, and excluding Federal
Emergency Management Agency (FEMA)
and/or Office of Emergency Services (OES)
declared disasters, providing said declaration
provides funding for repairs).
Unscheduled infrastructure including but not limited
to Tunnels, Bridges, Dams, Catwalks (except those
not for public use), Roadways, Highways, Streets
(including guardrails), Sidewalks (including
guardrails), Culverts, Channels, Levees, Dikes,
Berms, Embankments, Street Lights, Traffic
Signals, Meters, Roadway or Highway Fencing, and
all similar property unless a specific value has been
declared. Unscheduled infrastructure coverage is
excluded for the peril of Earthquake and excluded
for Federal Emergency Management Agency
(FEMA) and/or Office of Emergency Services (OES)
declared disasters, providing said declaration
provides funding for repairs).
Primary
Terrorism
Per Named Insured Per Occurrence subject
to $200,000,000 Annual Aggregate of
Declarations 1-14, 18-22, 25-30 and 32-34
combined as respects Property Damage,
Business Interruption, Rental Income and
Extra Expense Combined for Terrorism
(Primary Layer).
Per Named Insured Per Occurrence subject to
$200,000,000 Annual Aggregate of Declarations 1-
14, 18-30 and 32-34 combined as respects Property
Damage, Business Interruption, Rental Income and
Extra Expense Combined for Terrorism (Primary
Layer).
Excess
Terrorism Limits
Per Occurrence, All Named Insureds
combined in Declarations 1-14, 18-21, 25-30
and 32-34 for Terrorism (Excess Layer)
subject to;
Per Occurrence, All Named Insureds combined in
Declarations 1-14, 18-21, 23-30 and 32-34 for
Terrorism (Excess Layer) subject to;
Excess
Terrorism
Aggregate
Annual Aggregate shared by all Named
Insureds combined in Declarations 1-14, 18-
21, 25-30 and 32-34, as respects Property
Damage, Business Interruption, Rental
Income and Extra Expense combined for
Terrorism (Excess Layer).
Annual Aggregate shared by all Named Insureds
combined in Declarations 1-14, 18-21, 23-30 and
32-34, as respects Property Damage, Business
Interruption, Rental Income and Extra Expense
combined for Terrorism (Excess Layer).
Pollution Policy Summary of Bound changes is provided with the Pollution Coverage document for those who
request the coverage.
Cyber Policy Summary of Bound changes is provided with the Cyber Coverage for those who request the
coverage.
2019-2020 Alliant Property Insurance Program (APIP) Summary of Bound Changes Page 3 of 4
Master Policy Form Wording Bound Changes
Coverage 2018-2019 2019-2020 Bound
Policy Term July 1, 2018 to July 1,2019 July 1, 2019 to July 1,2020
Section I, E., 2.
g.
Unscheduled Landscaping, tees, sand
traps, greens, athletic fields and artificial turf
if specific values for such items have not
been reported as part of the Named
Insured(s) schedule of values held on file
with Alliant Insurance Services, Inc.;
Unscheduled Landscaping, tees, sand traps,
greens, athletic fields and artificial turf if specific
values for such items have not been reported as
part of the Named Insured(s) schedule of values
held on file with Alliant Insurance Services, Inc.
This coverage extension does not apply to the peril
of Earthquake in the states of California, or Alaska.
If Flood coverage is purchased for scheduled
locations, this extension will extend to include
Flood coverage for any location not situated in
Flood Zones A or V;
Section I, E., 2.
o.
Unscheduled Tunnels, bridges, dams,
catwalks (except those not for public use),
roadways, highways, streets, sidewalks,
culverts, street lights and traffic signals
unless specific values for such items have
been reported as part of a Named Insured(s)
schedule of values held on file in the offices
of Alliant Insurance Services, Inc. excluding
Federal Emergency Management Agency
(F.E.M.A.) and/or any State Office of
Emergency Services (O.E.S.) declared
disasters, providing said declaration provides
funding for repairs;
Unscheduled infrastructure including but not limited
to Tunnels, bridges, dams, catwalks (except those
not for public use), roadways, highways, streets
(including guardrails), sidewalks (including
guardrails), culverts, channels, levees, dikes,
berms, embankments, street lights,traffic signals,
meters, roadway or highway fencing, and all
similar property unless specific values for such
items have been reported as part of a Named
Insured(s) schedule of values held on file in the
offices of Alliant Insurance Services, Inc.
Unscheduled infrastructure coverage is excluded
for the peril of Earthquake, and for Federal
Emergency Management Agency (F.E.M.A.)
and/or any State Office of Emergency Services
(O.E.S.) declared disasters, providing said
declaration provides funding for repairs;
2019-2020 Alliant Property Insurance Program (APIP) Summary of Bound Changes Page 4 of 4
Master Policy Form Wording Bound Changes Continued
Coverage 2018-2019 2019-2020 Bound
Section II, B. 19
The Company retains the right to determine the
acceptability of all such property(ies) once it has
been reported. Additional premium will be
calculated from the date of acquisition.
Replacing complete sentence with:
After the reporting of a location added under
automatic acquisition, the Company retains the
right to determine acceptability of all such
property(ies). Additional premium will be
calculated from the date of acquisition, if values
are in excess of USD25,000,000.
Section II, B. 20
Coverage is extended to include property at
locations (including buildings or structures,
owned, occupied or which the Named Insured is
obligated to maintain insurance) located within
the territorial limitations set by this policy.
Coverage provided by this clause is limited to
any sub-limit noted on the Declaration Page
attached to this form, and by terms and
conditions of this policy form. This coverage
extension does not apply to the peril of
Earthquake Shock in the states of California, or
Alaska. If Flood coverage is purchased for all
scheduled locations, this extension will extend
to include Flood coverage for any location not
situated in Flood Zones A or V.
Coverage is extended to include property at
locations (including buildings or structures,
owned, occupied or which the Named Insured is
obligated to maintain insurance) located within
the territorial limitations set by this policy.
Coverage provided by this clause is limited to
any sub-limit noted on the Declaration Page
attached to this form, and by terms and
conditions of this policy form. This coverage
extension does not apply to the peril of
Earthquake Shock in the states of California, or
Alaska. If Flood coverage is purchased for all
scheduled locations, this extension will extend to
include Flood coverage for any location not
situated in Flood Zones A or V.
Section II, C. 8.
Unscheduled tunnels, bridges, dams, catwalks
(except those not for public use), roadways,
highways, streets, sidewalks, culverts,
streetlights, and traffic signals, excess of the
sub-limit terms provided on the Declaration
Page.
Deleted in its entirety
Section III, B. 5.
(3rd paragraph)
If the Named Insured has reported Tax Revenue
Interruption values for which premium has been
charged, such loss recovery after deductible shall
be limited to whichever is the least of:
1. The sub-limit insured on the Policy;
2. The actual loss sustained;
3. The difference in amount between 97.5% of the
anticipated revenue and the actual total revenue
after the loss.
If the Named Insured has not reported Revenue
Interruption values, such loss recovery after
deductible shall be limited to whichever is the least
of:
1. The actual loss sustained;
2. USD5,000,000 per occurrence
If the Named Insured has reported Tax Revenue
Interruption values for which premium has been
charged, such loss recovery after deductible shall
be limited to whichever is the least of:
1. USD3,000,000 per occurrence
2. The actual loss sustained;
3. The difference in amount between 97.5% of the
anticipated revenue and the actual total revenue
after the loss.
If the Named Insured has not reported Tax
Revenue Interruption values, such loss recovery
after deductible shall be limited to whichever is the
least of:
1. The actual loss sustained;
2. USD1,000,000 per occurrence
Form Letters3
EVIDENCE OF PROPERTY INSURANCE ISSUE DATE (MM/DD/YY)
07/01/19
THIS IS EVIDENCE THAT INSURANCE AS IDENTIFIED BELOW HAS BEEN ISSUED, IS IN FORCE, AND
CONVEYS ALL THE RIGHTS AND PRIVILEGES AFFORDED UNDER THE POLICY.
PRODUCER
ALLIANT INSURANCE SERVICES, INC.
100 PINE ST. 11TH FLOOR
SAN FRANCISCO, CA 94111-2711
PH (415) 403-1400 / FAX (415) 402-0773
LICENSE NO. 0C36861
COMPANY
VARIOUS PER ATTACHED SCHEDULE
CODE SUB-CODE
INSURED
ALLIANT PROPERTY INSURANCE PROGRAM (APIP)
ASSOCIATION OF CALIFORNIA WATER AGENCIES/JPIA
2100 PROFESSIONAL DRIVE
ROSEVILLE, CA 95661
EVIDENCE NUMBER
APIP1920
POLICY NUMBER
017471590/06 (Dec 32)
EFFECTIVE DATE (MM/DD/YY)
07/01/19
EXPIRATION DATE (MM/DD/YY)
07/01/20
CONT. UNTIL
TERMINATED
IF CHECKED
THIS REPLACES PRIOR EVIDENCE DATED:
PROPERTY INFORMATION
LOCATION / DESCRIPTION
PENDING RECEIPT OF COMPANY POLICY(IES), THIS DOCUMENTATION IS PROVIDED AS EVIDENCE OF PROPERTY AND
BOILER & MACHINERY INSURANCE COVERAGE FOR LOCATIONS ON FILE WITH ALLIANT INSURANCE SERVICES.
COVERAGE INFORMATION
COVERAGE / PERILS / FORMS / AMOUNT OF INSURANCE & DEDUCTIBLE
“ALL RISK” OF DIRECT PHYSICAL LOSS OR DAMAGE AND ALL EXTENSIONS AND SUBLIMITS OF COVERAGE PER PEPIP
MANUSCRIPT POLICY FORM. SUBJECT TO POLICY TERMS, CONDITIONS AND EXCLUSIONS.
LIMITS & DEDUCTIBLE ATTACHED FOR THE FOLLOWING:
PROPERTY
COVERAGE
BOILER & MACHINERY
COVERAGE
REMARKS (INCLUDING SPECIAL CONDITIONS)
CANCELLATION
SEE ATTACHED
ADDITIONAL INTEREST
NAME AND ADDRESS NATURE OF INTEREST
MORTGAGEE ADDITIONAL INSURED
EVIDENCE OF COVERAGE
LOSS PAYEE X (OTHER)
EVIDENCE OF COVERAGE
SIGNATURE OF AUTHORIZED AGENT OF COMPANY
X
X
2019-2020 Alliant Property Insurance Program (APIP) Property Evidence Attachment Page 1 of 7
Association of California Water Agencies/JPIA
ALLIANT INSURANCE SERVICES, INC.
ALLIANT PROPERTY INSURANCE PROGRAM (APIP)
PROPERTY EVIDENCE ATTACHMENT
TYPE OF INSURANCE: Insurance Reinsurance
NAMED INSURED: Association of California Water Agencies/JPIA
DECLARATION: 33-Public Utilities 1
POLICY PERIOD: July 1, 2019 to July 1, 2020
POLICY NUMBER: 017471590/06 (Dec 32)
COMPANIES: See Attached List of Companies
TOTAL INSURED
VALUES:
7,832,712,889 as of June 25, 2019
COVERAGES & LIMITS:
$ 450,000,000 Excess of 50,000,000 Primary Policy. Below Sub-Limits are
Inclusive of Primary. Per Occurrence: all Perils, Coverages
(subject to policy exclusions) and all Named Insureds (as
defined in the policy) combined, per Declaration, regardless of
the number of Named Insureds, coverages, extensions of
coverage, or perils insured, subject to the following per
occurrence and/or aggregate sub-limits as noted below.
Not Covered Flood Limit - Per Occurrence and in the Annual Aggregate (for
those Named Insured(s) that purchase this optional dedicated
coverage).
Not Covered Per Occurrence and in the Annual Aggregate for scheduled
locations in Flood Zones A & V (inclusive of all 100 year
exposures). This Sub-limit does not increase the specific flood
limit of liability for those Named Insured(s) that purchase this
optional dedicated coverage.
Not Covered Earthquake Shock - Per Occurrence and in the Annual
Aggregate (for those Named Insured(s) that purchase this
optional dedicated coverage).
$ 100,000,000 Combined Business Interruption, Rental Income and Tuition
Income (and related fees). However, if specific values for such
coverage have not been reported as part of the Named Insured's
schedule of values held on file with Alliant Insurance Services,
Inc., this sub-limit amount is limited to $500,000 per Named
Insured subject to maximum of $2,500,000 Per Occurrence, Per
Declaration for Business Interruption, Rental Income and Tuition
Income combined. Coverage for power generating plants is
excluded, unless otherwise specified.
$ 50,000,000 Extra Expense.
2019-2020 Alliant Property Insurance Program (APIP) Property Evidence Attachment Page 2 of 7
Association of California Water Agencies/JPIA
Not Covered Miscellaneous Unnamed Locations for existing Named Insured's
excluding Earthquake coverage for Alaska and California
locations. If Flood coverage is purchased for scheduled
locations, this extension will extend to include Flood coverage for
any location not situated in Flood Zones A or V.
COVERAGES & LIMITS:
(continued)
180 Days Extended Period of Indemnity
See Policy
Provisions
$25,000,000 Automatic Acquisition up to $100,000,000 or a
Named Insured's Policy Limit of Liability if less than $100,000,000
for 120 days excluding licensed vehicles for which a sub-limit of
$10,000,000 applies per policy Automatic Acquisition and
Reporting Condition. Additionally a sub-limit of $2,500,000
applies for Tier 1 Wind Counties, Parishes and Independent Cities
for 60 days for the states of Virginia, North Carolina, South
Carolina, Georgia, Alabama, Mississippi, Louisiana, Texas and/or
situated anywhere within the states of Florida and Hawaii. The
peril of EQ is excluded for the states of Alaska and California. If
Flood coverage is purchased for all scheduled locations, this
extension will extend to include Flood coverage for any location
not situated in Flood Zones A or V.
$ 1,000,000 Unscheduled Landscaping, tees, sand traps, greens, athletic
fields and artificial turf and further subject to $25,000 / 25 gallon
maximum per item for existing Named Insureds excluding
Earthquake coverage for Alaska and California locations. If
Flood coverage is purchased for scheduled locations, this
extension includes Flood coverage for any location not situated
in Flood Zones A or V. $ 5,000,000 or 110% of the scheduled values, whichever is greater, for
Scheduled Landscaping, tees, sand traps, greens, athletic fields
and artificial turf and further subject to $25,000 / 25 gallon
maximum per item.
$ 50,000,000 Errors & Omissions - This extension does not increase any more
specific limit stated elsewhere in this policy or Declarations.
$ 25,000,000 Course of Construction and Additions (including new) for projects
with completed values not exceeding the sub-limit shown. $ 2,500,000 Money & Securities for named perils only as referenced within
the policy.
$ 2,500,000 Unscheduled Fine Arts.
$ 250,000 Accidental Contamination per occurrence and annual aggregate
per Named Insured with $500,000 annual aggregate for all
Named Insureds per Declaration.
2019-2020 Alliant Property Insurance Program (APIP) Property Evidence Attachment Page 3 of 7
Association of California Water Agencies/JPIA
$ 750,000 Unscheduled infrastructure including but not limited to Tunnels,
Bridges, Dams, Catwalks (except those not for public use),
Roadways, Highways, Streets (including guardrails), Sidewalks
(including guardrails), Culverts, Channels, Levees, Dikes,
Berms, Embankments, Street Lights, Traffic Signals, Meters,
Roadways or Highway Fencing, and all similar property unless a
specific value has been declared. Unscheduled infrastructure
coverage is excluded for the peril of Earthquake and excluded
for Federal Emergency Management Agency (FEMA) and/or
Office of Emergency Services (OES) declared disasters,
providing said declaration provides funding for repairs.
COVERAGES & LIMITS:
(continued)
$ 50,000,000 Increased Cost of Construction due to the enforcement of
building codes/ ordinance or law (includes All Risk and Boiler &
Machinery).
$ 25,000,000 Transit.
$ 2,500,000 Unscheduled Animals; not to exceed $50,000 per Animal, per
Occurrence.
$ 2,500,000 Unscheduled Watercraft up to 27 feet.
Not Covered Per Occurrence for Off Premises Vehicle Physical Damage.
$ 25,000,000 Off Premises Services Interruption including Extra Expense
resulting from a covered peril at non-owned/operated locations.
$ 5,000,000 Per Occurrence Per Named Insured subject to an Annual
Aggregate of $10,000,000 for Earthquake Shock on Licensed
Vehicles, Unlicensed Vehicles, Contractor's Equipment and Fine
Arts combined for all Named Insured(s) in this Declaration
combined that do not purchase optional dedicated Earthquake
Shock coverage, and/or where specific values for such items are
not covered for optional dedicated Earthquake Shock coverage
as part of the Named Insured's schedule of values held on file
with Alliant Insurance Services, Inc..
$ 5,000,000 Per Occurrence Per Named Insured subject to an Annual
Aggregate of $10,000,000 for Flood on Licensed Vehicles,
Unlicensed Vehicles, Contractor's Equipment and Fine Arts
combined for all Named Insured(s) in this Declaration combined
that do not purchase optional dedicated Flood coverage, and/or
where specific values for such items are not covered for optional
dedicated Flood coverage as part of the Named Insured's
schedule of values held on file with Alliant Insurance Services,
Inc..
$ 3,000,000 Contingent Business Interruption, Contingent Extra Expense,
Contingent Rental Values and Contingent Tuition Income
separately.
$ 3,000,000 Tax Revenue Interruption – Per Policy Provisions. However, if
specific values for such coverage have not been reported as part
of the Named Insured’s schedule of values held on file with
Alliant Insurance Services, Inc., this sub-limit amount is limited to
$1,000,000 Per Occurrence – Per Policy Provisions.
2019-2020 Alliant Property Insurance Program (APIP) Property Evidence Attachment Page 4 of 7
Association of California Water Agencies/JPIA
$ 500,000 Jewelry, Furs, Precious Metals and Precious Stones Separately.
$ 1,000,000 Claims Preparation Expenses.
$ 50,000,000 Expediting Expenses.
$ 1,000,000 Personal Property Outside of the USA.
Not Covered Per Occurrence Per Declaration Upgrade to Green Coverage
subject to the lesser of, the cost of upgrade, an additional 25% of
the applicable limit of liability shown in the schedule of values or
this sub limit.
$ 500,000 Per Occurrence and Annual Aggregate per named insured for
Communicable Disease subject to an APIP Program aggregate
of $10,000,000 for all declarations combined except Hospital
declarations.
$ 100,000 Per Occurrence while in Storage and In Transit coverage subject
to $10,000 Deductible for Unmanned Aircraft as more fully
defined in the Policy. Not Covered while in Flight.
$ 100,000 Per Occurrence with a $1,000,000 Annual Aggregate per
Declaration for Mold/Fungus Resultant Damage as more fully
defined in the policy.
VALUATION: • Repair or Replacement Cost
• Actual Loss Sustained for Time Element Coverages
• Contractor’s Equipment/Vehicles either Replacement Cost or Actual Cash
Value as declared by each insured. If not declared, valuation will default to
Actual Cash Value
EXCLUSIONS
(Including but not
limited to):
• Seepage & Contamination - unless otherwise provided by the Pollution Liability
Coverage per the Summary attached. If, insured purchases such coverage.
• Cost of Clean-up for Pollution - unless otherwise provided by the Pollution
Liability Coverage per the Summary attached. If, insured purchases such
coverage.
• Mold - as more fully described in the Master Policy Wording or otherwise
provided when Pollution Liability Coverage is purchased, and as defined in the
coverage Summary.
Deductibles: If two or more deductible amounts provided in the Declaration
Page apply for a single occurrence the total to be deducted shall not exceed
the largest per occurrence deductible amount applicable. (The Deductible
amounts set forth below apply Per Occurrence unless indicated otherwise).
“ALL RISK”
DEDUCTIBLE:
Excess Coverage only. $100,000 All Risk Deductible in Primary Placement Per
Occurrence, which will apply in the event a more specific
deductible is not applicable to a loss.
2019-2020 Alliant Property Insurance Program (APIP) Property Evidence Attachment Page 5 of 7
Association of California Water Agencies/JPIA
DEDUCTIBLES FOR
SPECIFIC PERILS
AND COVERAGES:
Not Covered Per Occurrence for Flood Zones A & V (inclusive of all 100 year
exposures).
Not Covered All Flood Zones Per Occurrence excluding Flood Zones A & V.
Not Covered Earthquake Shock: If the stated deductible is a flat dollar
amount, the deductible will apply on a Per Occurrence basis,
unless otherwise stated. If the stated deductible is on a
percentage basis, the deductible will apply Per Occurrence on a
Per Unit basis, as defined in the policy form, subject to the
minimum deductible per occurrence.
$ 1,000 Per Occurrence for Specially Trained Animals.
DEDUCTIBLES FOR
SPECIFIC PERILS
AND COVERAGES
(continued):
$ 500,000 Per Occurrence for Unscheduled infrastructure including but not
limited to Tunnels, Bridges, Dams, Catwalks (except those not
for public use), Roadways, Highways, Streets (including
guardrails), Sidewalks (including guardrails), Culverts, Channels,
Levees, Dikes, Berms, Embankments, Street Lights, Traffic
Signals, Meters, Roadways or Highway Fencing, and all similar
property unless a specific value has been declared.
Unscheduled infrastructure coverage is excluded for the peril of
Earthquake and excluded for Federal Emergency Management
Agency (FEMA) and/or Office of Emergency Services (OES)
declared disasters, providing said declaration provides funding
for repairs.
$ 10,000 Per Vehicle or Item for Licensed Vehicles, Unlicensed Vehicles
and Contractor's Equipment subject to $100,000 Maximum Per
Occurrence, Per Named Insured for the peril of Earthquake for
Named Insured(s) who do not purchase dedicated Earthquake
limits.
$ 50,000 Per Occurrence Per Named Insured for this Declaration for Fine
Arts for the peril of Earthquake for Named Insured(s) who do not
purchase dedicated Earthquake limits.
$ 10,000 Per Vehicle or Item for Licensed Vehicles, Unlicensed Vehicles
and Contractor's Equipment subject to $100,000 Maximum Per
Occurrence, Per Named Insured for the peril of Flood for Named
Insured(s) who do not purchase dedicated Flood limits.
$ 50,000 Per Occurrence Per Named Insured for this Declaration for Fine
Arts for the peril of Flood for Named Insured(s) who do not
purchase dedicated Flood limits.
24 Hour Waiting Period for Service Interruption for All Perils and
Coverages.
2.5% of Annual Tax Revenue Value per Location for Tax Interruption.
Not Covered Per Occurrence for Off Premises Vehicle Physical Damage. If
Off-Premises coverage is included/purchased, the stated
deductible will apply to vehicle physical damage both on and off-
premises on a Per Occurrence basis, unless otherwise stated. If
Off-Premises coverage is not included, On-Premises/In-Yard
coverage is subject to the All Risk (Basic) deductible.
2019-2020 Alliant Property Insurance Program (APIP) Property Evidence Attachment Page 6 of 7
Association of California Water Agencies/JPIA
Not Covered Per Occurrence for Contractor's Equipment.
SPECIAL TERMS AND
CONDITIONS:
It is understood and agreed that not withstanding anything contained herein to the contrary the following shall apply
to this Policy:
SPECIAL TERMS 1: The following wording applies to all limits and sub-limits contained herein.
The Company's limit of liability in any one occurrence under this policy, after deduction
of the Total Underlying Insurance Limit of $50,000,000 and any applicable
deductible(s) or Self-Insured Retention shall not exceed:
The Company's 100 % of $450,000,000 Policy Limit in any one occurrence. Sub-limits
of coverage are inclusive of Primary 50M.
Not Applicable Special Terms Limit
Not Applicable Special Terms Deductible
SPECIAL TERMS 2: The Terrorism coverage provided under this policy is excess of 100,000,000 per
Occurrence, 200,000,000 per Aggregate Primary Terrorism policy placed outside of
APIP.
Not Applicable Special Terms Limit
Not Applicable Special Terms Deductible
SPECIAL TERMS 3: For El Dorado Irrigation District, there is No Coverage for dams, tunnels, bridges,
flumes, canals, and power generators.
Not Applicable Special Terms Limit
Not Applicable Special Terms Deductible
SPECIAL TERMS 4: Unscheduled Property is hereby Excluded from Miscellaneous Unnamed Locations
coverage, Errors & Omissions coverage, Business Interruption coverage, and Tax
Revenue Interruption coverage.
Not Covered Special Terms Limit
Not Applicable Special Terms Deductible
The following stand-alone coverages are provided by the APIP program but are not covered in the Limit of
Liability or the Sub-Limits of Liability above or attached to the Master Policy Form Wording. Carriers
providing these coverages are included in the Schedule of Carriers.
Excess Coverage Only See Special Terms Per Named Insured Per Occurrence
subject to $200,000,000 Annual Aggregate of Declarations 1-14,
18-30 and 32-34 combined as respects Property Damage,
Business Interruption, Rental Income and Extra Expense
Combined for Terrorism (Primary Layer).
2019-2020 Alliant Property Insurance Program (APIP) Property Evidence Attachment Page 7 of 7
Association of California Water Agencies/JPIA
Excess Coverage only. $100,000 All Risk Deductible in Primary Placement Per
Occurrence Deductible for Primary Terrorism.
$ 600,000,000 Per Named Insured for Terrorism (Excess Layer) subject to;
$ 1,100,000,000 Per Occurrence, All Named Insureds combined in Declarations
1-14, 18-21, 23-30 and 32-34 for Terrorism (Excess Layer)
subject to;
$ 1,400,000,000 Annual Aggregate shared by all Named Insureds combined in
Declarations 1-14, 18-21, 23-30 and 32-34, as respects Property
Damage, Business Interruption, Rental Income and Extra
Expense combined for Terrorism (Excess Layer).
$ 500,000 Per Occurrence Deductible for Excess Terrorism (Applies only if
the Primary Terrorism Limit is exhausted).
$ 2,000,000 Information Security & Privacy Insurance with Electronic Media
Liability Coverage. See attached Cyber Coverage Document for
applicable Limits. (Cyber Liability) If, insured purchases such
coverage.
Not Covered Pollution Liability Insurance Coverage. See attached Pollution
Liability Insurance Coverage Document for applicable limits and
deductibles. If, insured purchases such coverage.
TERMS & CONDITIONS: 25% Minimum Earned Premium and cancellations subject to 10% penalty
Except Cyber Liability Premium is calculated on a pro-rata basis, unless there is a
claim in which case the premium is deemed fully earned. If, insured purchases such
coverage.
Except Pollution Liability Premium is 25% Earned at Inception, unless there is a
claim in which premium is deemed fully earned. If, insured purchases such coverage.
NOTICE OF
CANCELLATION:
90 days except 10 days for non-payment of premium
BROKER: ALLIANT INSURANCE SERVICES, INC.
License No. 0C36861
Seth Cole
Senior Vice President
Rob Lowe
Vice President
Andrea Ferry
Account Manager
Coverage outlined in this Evidence Attachment is subject to the terms and conditions set
forth in the policy. Please refer to policy for specific terms, conditions and exclusions.
2019-2020 Alliant Property Insurance Program (APIP) B&M Evidence Attachment Page 1 of 3
Association of California Water Agencies/JPIA
ALLIANT INSURANCE SERVICES, INC.
ALLIANT PROPERTY INSURANCE PROGRAM (APIP)
BOILER & MACHINERY EVIDENCE ATTACHMENT
NAMED INSURED: Association of California Water Agencies/JPIA
DECLARATION: 33-Public Utilities 1
POLICY PERIOD: July 1, 2019 to July 1, 2020
POLICY NUMBER: 017471590/06 (Dec 32)
COMPANIES: See Attached List of Companies
TOTAL INSURED VALUES: 7,832,712,889 as of June 25, 2019
COVERAGES & LIMITS: $ 50,000,000 Excess of 50,000,000 Boiler Explosion and Machinery
Breakdown, (for those Named Insureds that purchase this
optional dedicated coverage) as respects Combined
Property Damage and Business Interruption/Extra Expense
(Including Bond Revenue Interest Payments where Values
Reported and excluding Business Interruption for power
generating facilities unless otherwise specified). Limit
includes loss adjustment agreement and electronic
computer or electronic data processing equipment with the
following sub-limits:
Included Jurisdictional and Inspections.
$ 10,000,000 Per Occurrence for Service/Utility/Off Premises Power
Interruption.
Included Per Occurrence for Consequential Damage/Perishable
Goods/Spoilage.
$ 10,000,000 Per Occurrence for Electronic Data Processing Media and
Data Restoration.
$ 2,000,000 Per Occurrence, Per Named Insured and in the Annual
Aggregate per Declaration for Earthquake Resultant
Damage for Named Insureds who purchase Dedicated
Earthquake Coverage.
$ 10,000,000 Per Occurrence for Hazardous Substances / Pollutants /
Decontamination.
Included Per Occurrence for Machine or Apparatus used for
Research, Diagnosis, Medication, Surgical, Therapeutic,
Dental or Pathological Purposes.
NEWLY ACQUIRED
LOCATIONS:
$ 25,000,000 Automatic Acquisition for Boiler & Machinery values at
newly acquired locations. Values greater than 25,000,000
or Power Generating Facilities must be reported within 120
days and must have prior underwriting approval prior to
binding
2019-2020 Alliant Property Insurance Program (APIP) B&M Evidence Attachment Page 2 of 3
Association of California Water Agencies/JPIA
VALUATION: Repair or Replacement except Actual Loss sustained for all Time Element
coverages
EXCLUSIONS
(Including but not limited to):
• Testing
• Explosion, except for steam or centrifugal explosion
• Explosion of gas or unconsumed fuel from furnace of the boiler
OBJECTS EXCLUDED:
(Including but not limited to):
• Insulating or refractory material
• Buried Vessels or Piping
NOTICE OF
CANCELLATION:
90 days except 10 days for non-payment of premium
DEDUCTIBLES: Excess Coverage only. Except as shown for Specific Objects or Perils.
Excess Coverage only. Electronic Data Processing Media.
Excess Coverage only. Consequential Damage.
Excess Coverage only. Objects over 200 hp, 1,000 KW/KVA/Amps or
Boilers over 5,000 square feet of heating surface.
Excess Coverage only. Objects over 350 hp, 2,500 KW/KVA/Amps or Boilers
over 10,000 square feet of heating surface.
Excess Coverage only. Objects over 500 hp, 5,000 KW/KVA/Amps or Boilers
over 25,000 square feet of heating surface.
Excess Coverage only. Objects over 750 hp, 10,000 KW/KVA/Amps or Boilers
over 75,000 square feet of heating surface.
Excess Coverage only. Objects over 25,000 hp, 25,000 KW/KVA/Amps or
Boilers over 250,000 square feet of heating surface.
10 per foot / $2,500 Minimum Deep Water Wells.
24 Hours except Not Covered for Donald Von Raesfeld Power Plant
Business Interruption/Extra Expense Except as noted below.
30 Days Business Interruption - Revenue Bond.
24 Hour Waiting Period Utility Interruption.
5 x 100% of Daily Value Business Interruption - All objects over 750 hp or
10,000 KW/KVA/Amps or 10,000 square feet heating surface.
5 x 100% of Daily Value Business interruption - All Objects at Waste Water
Treatment Facilities and All Utilities.
2019-2020 Alliant Property Insurance Program (APIP) B&M Evidence Attachment Page 3 of 3
Association of California Water Agencies/JPIA
BROKER: ALLIANT INSURANCE SERVICES, INC.
License No. 0C36861
Seth Cole
Senior Vice President
Rob Lowe
Vice President
Andrea Ferry
Account Manager
Coverage outlined in this Evidence Attachment is subject to the terms and conditions set forth in the
policy. Please refer to policy for specific terms, conditions and exclusions.
2019-2020 Alliant Property Insurance Program (APIP) Cyber Liability Evidence Page 1 of 7
Association of California Water Agencies/JPIA
ALLIANT INSURANCE SERVICES, INC.
ALLIANT PROPERTY INSURANCE PROGRAM (APIP)
CYBER INSURANCE EVIDENCE
TYPE OF COVERAGE:
PROGRAM:
NAMED INSURED:
Information Security & Privacy Insurance with Electronic Media Liability Coverage
Alliant Property Insurance Program (APIP) inclusive of
Public Entity Property Insurance Program (PEPIP), and
Hospital All Risk Property Program (HARPP)
Any client(s), entity(ies), agency(ies), organization(s), enterprise(s) and/or individual(s),
attaching to each Declaration insured under the ALLIANT PROPERTY INSURANCE
PROGRAM (APIP) as their respective rights and interests may appear which now exist
or which hereafter may be created or acquired and which are owned, financially
controlled or actively managed by the herein named interest, all jointly, severally or in
any combination of their interests, for account of whom it may concern (all hereinafter
referred to as Client(s) / Entity(ies)
DECLARATION: Various Declarations as on file with Insurer
POLICY PERIOD: July 1, 2019 to July 1, 2020
POLICY #: TBD
TERRITORY: WORLD-WIDE
RETROACTIVE DATE: APIP/PEPIP
For new members – the retro active date will be the date of addition
July 1, 2018 For existing members included on the July 1, 2018/19 policy
July 1, 2017 For existing members included on the July 1, 2017/18 policy
July 1, 2016 For existing members included on the July 1, 2016/17 policy
July 1, 2015 For existing members included on the July 1, 2015/16 policy
July 1, 2014 For existing members included on the July 1, 2014/15 policy
July 1, 2013 For existing members included on the July 1, 2013/14 policy
July 1, 2012 For existing members included on the July 1, 2012/13 policy
July 1, 2011 For existing members included on the July 1, 2011/12 policy
July 1, 2010 For existing members included on the July 1, 2010/11 policy
CSU
July 1, 2008 California State University and CSU Auxiliary Organizations
INSURER: Lloyd’s of London - Beazley Syndicate:
Syndicates 2623 - 623 - 100%
2019-2020 Alliant Property Insurance Program (APIP) Cyber Liability Evidence Page 2 of 7
Association of California Water Agencies/JPIA
COVERAGES & LIMITS:
Ai
$ 25,000,000 Annual Policy and Program Aggregate Limit of Liability
(subject to policy exclusions) for all Insureds/Members
combined (Aggregate for all coverage’s combined,
including Claims Expenses), subject to the following sub-
limits as noted.
Ai $ 2,000,000 Annual Aggregate Limit of Liability for each
Insured/Member (Aggregate for all coverages combined,
including Claim Expenses) subject to the following sub-
limits as noted:
BREACH RESPONSE
Breach Response
Costs:
$ 500,000 Aggregate Limit of Liability for each Insured/Member
(Limit is increased to $1,000,000 if Beazley Nominated
Services Providers are used)
FIRST PARTY LOSS
Business Interruption
Loss Resulting from
Security Breach:
Business Interruption
Loss Resulting from
System Failure:
$ 2,000,000 Aggregate Limit of Liability for each Insured/Member
$ 500,000 Aggregate Limit of Liability for each Insured/Member
Dependent Business
Loss Resulting from
Security Breach:
Dependent Business
Loss Resulting from
System Failure:
Cyber Extortion Loss:
Data Recovery Costs:
$ 750,000 Aggregate Limit of Liability for each Insured/Member
$ 100,000 Aggregate Limit of Liability for each Insured/Member
$ 2,000,000 Aggregate Limit of Liability for each Insured/Member
$ 2,000,000 Aggregate Limit of Liability for each Insured/Member
LIABILITY
Data & Network
Liability:
Regulatory Defense &
Penalties:
$ 2,000,000 Aggregate Limit of Liability for each Insured/Member for
all Damages and Claims Expenses
$ 2,000,000 Aggregate Limit of Liability for each Insured/Member for
all Damages and Claims Expenses
2019-2020 Alliant Property Insurance Program (APIP) Cyber Liability Evidence Page 3 of 7
Association of California Water Agencies/JPIA
Payment Card
Liabilities & Costs:
Media Liability:
$ 2,000,000 Aggregate Limit of Liability for each Insured/Member for
all Damages and Claims Expenses
$ 2,000,000 Aggregate Limit of Liability for each Insured/Member for
all Damages and Claims Expenses
eCRIME
Fraudulent Instruction:
Funds Transfer Fraud:
Telephone Fraud:
$ 75,000 Aggregate Limit of Liability for each Insured/Member
$ 75,000 Aggregate Limit of Liability for each Insured/Member
$ 75,000 Aggregate Limit of Liability for each Insured/Member
CRIMINAL REWARD
Criminal Reward: $ 25,000 Aggregate Limit of Liability for each Insured/Member
COVERAGE
ENDORSEMENT(S)
Consequential
Reputational Loss:
$ 50,000 Aggregate Limit of Liability for each Insured/Member
Computer Hardware
Replacement Costs:
$ 75,000 Aggregate Limit of Liability for each Insured/Member
RETENTION: $ 25,000 CSU Auxiliary Organizations only
$ 50,000 Per Occurrence for each Insured/Member with TIV up to
$500,000,000 at the time of loss
8 Hour waiting period for Dependent/Business Interruption
Loss
$ 100,000 Per Occurrence for each Insured/Member with TIV greater
than $500,000,000 at time of loss
8 Hour waiting period for Dependent/Business Interruption
Loss
*Per Insured/Member with TIV below $250,000,000 have the option to buy-
down the retention from $50,000 to $5,000 with an additional premium of
$2,500 per entity.
NOTICE: Policy coverage of this policy provides coverage on a claims made and
reported basis; except as otherwise provided, coverage under noted
coverage schedule applies only to claims first made against the
Insured/Member and reported to underwriters during the policy period.
Claims expenses shall reduce the applicable limit of liability and are subject to the
applicable retention.
2019-2020 Alliant Property Insurance Program (APIP) Cyber Liability Evidence Page 4 of 7
Association of California Water Agencies/JPIA
EXTENDED
REPORTING PERIOD:
For Named Insured - To be determined at the time of election (additional premium
will apply)
SPECIFIC COVERAGE
PROVISIONS:
A.
Breach Response indemnifies the Insured/Member for Breach Response Costs
incurred by the Insured/Member because of an actual or reasonably suspected
Data Breach or Security Breach that the Insured first discovers during the Policy
Period.
B.
First Party Loss
Business Interruption Loss indemnifies the Insured/Member sustains as a result
of a Security Breach or System Failure that the Insured first discovers during the
Policy Period.
Dependent Business Interruption Loss indemnifies the Insured/Member sustains
as a result of a Security Breach or a System Failure that the Insured first discover
during the Policy Period.
Cyber Extortion Loss indemnifies the Insured/Member incurs as a result of an
Extortion Threat first made against the Insured/Member during the Policy Period.
Data Recovery Costs indemnifies the Insured/Member incurs as a direct result of
a Security Breach that the Insured first discovers during the Policy Period.
C.
Liability
Data & Network Liability pays Damages and Claims Expenses, which the Insured
is legally obligated to pay because of any Claim first made against any Insured
during the Policy Period
Regulatory Defense & Penalties pays Penalties and Claims Expenses, which the
Insured is legally obligated to pay because of a Regulatory Proceeding first made
against any Insured during the Policy Period for a Data Breach or a Security
Breach.
Payment Card Liabilities & Costs indemnifies the Insured/Member for PCI Fines,
Expenses and Costs which it is legally obligated to pay because of a Claim first
made against any Insured during the Policy Period.
Media Liability pays Damages and Claims Expenses, which the Insured is legally
obligated to pay because of any Claim first made against any Insured during the
Policy Period for electronic Media Liability.
D.
E.
eCrime indemnifies the Insured/Member for any direct financial loss sustained
resulting from:
• Fraudulent Instruction
• Funds Transfer Fraud
• Telephone Fraud
That the Insured first discovers during the Policy Period.
Criminal Reward indemnifies the Insured/Member for Criminal Reward Funds.
2019-2020 Alliant Property Insurance Program (APIP) Cyber Liability Evidence Page 5 of 7
Association of California Water Agencies/JPIA
Coverage
Endorsement(s)
EXCLUSIONS:
(Including but not
limited to)
Consequential Reputational indemnifies the Insured/Member for Consequential
Reputational Loss, that the Insured incurs during the Notification Period as a
result of (i) an actual or reasonably suspected Data Breach or Security Breach
that the Insured first discovers during the Policy Period and (ii) for which
individuals have been notified pursuant to the Breach Response Services
definition.
Computer Hardware Replacement Costs means reasonable and necessary
expenses incurred by the Insured Organization to replace computers or any
associated devices or equipment operated by, and either owned by or leased to,
the Insured Organization that are unable to function as intended due to corruption
or destruction of software or firmware directly resulting from a Security Breach.
Coverage does not apply to any claim or loss from;
•Bodily Injury or Property Damage
•Trade Practices and Antitrust
•Gathering or Distribution of Information
•Prior Known Acts & Prior Noticed Claims
•Racketeering, Benefit Plans, Employment Liability & Discrimination
•Sale or Ownership of Securities & Violation of Securities Laws
•Criminal, Intentional of Fraudulent Acts
•Patent, Software Copyright, Misappropriation of Information
•Governmental Actions
•Other Insureds & Related Enterprises
•Trading Losses, Loss of Money & Discounts
•Media-Related Exposures – Contractual liability or obligation
•Nuclear Incident
•Radioactive Contamination
•First Party Loss – with respects: 1. seizure, nationalization, confiscation, or
destruction of property or data by order of any governmental or public
authority; 2. costs or expenses incurred by the Insured to identify or remediate
software program errors or vulnerabilities or update, replace, restore,
assemble, reproduce, recollect or enhance data or Computer Systems to a
level beyond that which existed prior to a Security Breach, System Failure,
Dependent Security Breach, Dependent System Failure or Extortion Threat;
3. failure or malfunction of satellites or of power, utility, mechanical or
telecommunications (including internet) infrastructure or services that are not
under the Insured Organization’s direct operational control; or 4. fire, flood,
earthquake, volcanic eruption, explosion, lightning, wind, hail, tidal wave,
landslide, act of God or other physical event.
2019-2020 Alliant Property Insurance Program (APIP) Cyber Liability Evidence Page 6 of 7
Association of California Water Agencies/JPIA
NOTICE OF CLAIM:
• IMMEDIATE NOTICE must be made to Beazley NY of all potential claims and
circumstances (assistance, and cooperation clause applies)
• Claim notification under this policy is to:
Beazley Group
Attn: TMB Claims Group
1270 Avenue of the Americas
New York, NY 10020
tmbclaims@beazley.com
NOTICE OF
CANCELLATION:
10 days for non-payment of premium
REINSTATEMENT
PROVISIONS:
Optional reinstatement at 125% of the Annual Policy Premium
CYBER COST:
Cost is included in Total Property Premium
Earned premium is calculated on a pro-rata basis, unless there is a claim in which
case the premium is deemed fully earned.
OTHER SERVICES Unlimited Access to Beazley Breach Solutions
BROKER: ALLIANT INSURANCE SERVICES HOUSTON, LLC
License No. 0C36861
NOTES: Coverage outlined in this Evidence are subject to the terms and conditions set forth in the policy. Please
refer to Policy for specific terms, conditions and exclusions.
2019-2020 Alliant Property Insurance Program (APIP) Cyber Liability Evidence Page 7 of 7
ALLIANT PROPERTY INSURANCE PROGRAM
SUMMARY OF CYBER BOUND CHANGES
THE FOLLOWING ITEMS ARE BOUND CHANGES AS FOR THE 2019-2020 POLICY TERM
Coverage 2018-2019 2019-2020 Bound Changes Status
Business Interruption Loss resulting
from System Failure: $250,000 $500,000 Enhancement
Dependent Business Interruption
Loss resulting from Dependent
System Failure:
N/a $100,000 New Coverage
Fraudulent Instruction $50,000 $75,000 Enhancement
Funds Transfer Fraud $50,000 $75,000 Enhancement
Telephone Fraud $50,000 $75,000 Enhancement
Computer Hardware Replacement
Costs N/a $75,000 New Coverage
Endorsement Enhancements:
Voluntary Shutdown Coverage - Included Enhancement
Amend Data Recovery Costs - Included Enhancement
Amend Settlement of Claims - Included Enhancement
Amend Definition of Data - Included Enhancement
ALLIANT PROPERTY INSURANCE PROGRAM
2019-2020
NAMED INSURED SCHEDULE
AS OF 06/25/2019
THE NAMED INSURED IS:
Named Insured shall be deemed the sole agent of each and every Named Insured for the purpose of:
(1) Giving notice of cancellation,
(2) Giving instructions for changes in the Policy and accepting changes in this Policy
(3) The payment of assessments / premiums or receipt of return assessments / premiums.
Member(s), entity(ies), agency(ies), organization(s), enterprise(s) and/or individual(s) for
whom the Named Insured has extended coverage is as follows:
Page 1 of 1 DECLARATION 33
Association of California Water Agencies/JPIA
2100 Professional Drive
Roseville, CA 95661
NAMED INSURED MEMBER(S):
Association of California Water Agencies/JPIA
(ACWA JPIA)
Alliant Property Insurance Program
2019-2020 Policy Year
Schedule of Insurers (Bound)
Company A.M. Best's I.D. #A.M. Best's Guide Rating Standard and Poor's
Page 1 of 3
Allied World National
Assurance Company
012526 A, Excellent;
Financial Size Category 15;
$2,000,000,000 or Greater
(As of 02/15/19)
A-
(As of 05/30/18)
Arch Specialty Insurance
Company
012523 A+, Superior;
Financial Size Category 15;
$2,000,000,000 to greater
(As of 10/11/18)
A+
(As of 06/25/18)
Aspen Insurance UK
Limited
084806 A, Excellent;
Financial Size Category 15;
$2,000,000,000 or greater
(As of 03/01/19)
A
(As of 06/26/18)
Ategrity Specialty
Insurance Company
020603 A-, Excellent;
Financial Size Category 8;
$100,000,000 to $250,000,000
(As of 09/26/18)
Not Rated
(As of 06/17/19)
Chubb European Group
Limited
086485 A++ , Superior;
Financial Size Category 15;
$2,000,000,000 or greater
(As of 12/13/18)
AA
(As of 06/24/16)
Endurance Worldwide
Insurance Limited
083234 A+, Superior;
Financial Size Category 15;
$2,000,000,000 or greater
(As of 07/20/18)
A+
(As of 04/26/18)
Evanston Insurance Co. 003759 A, Excellent;
Financial Size Category 15;
$2,000,000,000 or Greater
(As of 12/19/18)
A
(As of 07/27/17)
Everest Indemnity
Insurance Company
012096 A+, Superior;
Financial Size Category 15;
$2,000,000,000 or greater
(As of 05/02/19)
A+
(As of 12/22/15)
General Security
Indemnity Company of
AZ
02837 A+, Superior;
Financial Size Category 15;
$2,000,000,000 or greater
(As of 09/19/18)
AA-
(As of 09/07/15)
Hallmark Specialty
Insurance Co.
010838 A-, Excellent;
Financial Size Category 8;
$100,000,000 to $250,000,000
(As of 08/23/18)
Not Rated
(As of 04/22/19)
HDI Global Specialty SE 086486 A, Excellent;
Financial Size Category 15;
$2,000,000,000 or greater
(As of 01/11/19)
A+
(As of 05/18/18)
Homeland Insurance
Company of New York
010604 A+, Superior;
Financial Size Category 15;
$2,000,000,000 or greater
(As of 03/08/19)
Not Rated
(As of 04/22/19)
Alliant Property Insurance Program
2019-2020 Policy Year
Schedule of Insurers (Bound)
Company A.M. Best's I.D. #A.M. Best's Guide Rating Standard and Poor's
Page 2 of 3
Interstate Fire and
Casualty Ins. Co.
02267 A+, Superior;
Financial Size Category 15;
$2,000,000,000 or greater
(As of 08/30/18)
AA
(As of 03/17/16)
Ironshore Specialty
Insurance Company
013866 A, Excellent;
Financial Size Category 15;
$2,000,000,000 or greater
(As of 05/16/18)
A
(As of 05/02/17)
Lancashire Insurance
Company (UK) Ltd.
078390 A, Excellent;
Financial Size Category 12;
$1,000,000,000 to
$1,250,000,000
(As of 10/24/18)
A-
(As of 02/28/18)
Landmark American
Insurance Co.
012619 A+, Superior;
Financial Size Category 14;
$1,500,000,000 to
$2,000,000,000
(As of 11/02/18)
A+
(As of 04/18/18)
Lexington Insurance
Company
002350 A, Excellent;
Financial Size Category 15;
$2,000,000,000 or Greater
(As of 06/20/18)
A+
(As of 06/06/17)
Liberty Mutual Fire
Insurance Company
002282 A, Excellent;
Financial Size Category 15;
$2,000,000,000 or Greater
(As of 05/16/18)
A
(As of 06/17/14)
Lloyd’s of London 085202 A, Excellent;
Financial Size Category 15;
$2,000,000,000 or Greater
(As of 07/12/18)
A+
(As of 10/12/17)
National Union Fire
Insurance Co.
(Berkshire)
002351 A, Excellent;
Financial Size Category 15;
$2,000,000,000 or Greater
(As of 06/20/18)
A+
(As of 05/17/19)
PartnerRe Ireland
Insurance Ltd.
088621 A, Excellent
Financial Size Category 15;
$2,000,000,000 or Greater
(As of 06/15/18)
A+
(As of 09/07/16)
QBE Specialty Insurance
Company
012562 A, Excellent;
Financial Size Category 15;
$2,000,000,000 or Greater
(As of 06/13/18)
A+
(As of 06/30/18)
United Specialty
Insurance Company
013105 A, Excellent;
Financial Size Category 9;
$250,000,000 to 500,000,000
(As of 12/19/18)
Not Rated
(As of 04/30/19)
Alliant Property Insurance Program
2019-2020 Policy Year
Schedule of Insurers (Bound)
Company A.M. Best's I.D. #A.M. Best's Guide Rating Standard and Poor's
Page 3 of 3
Westchester Surplus
Lines Insurance
Company
004433 A++, Superior;
Financial Size Category 15;
$2,000,000,000 or Greater
(As of 12/13/18)
AA
(As of 06/24/16)
Westport Insurance
Corporation
000347 A+, Superior;
Financial Size Category 15;
$2,000,000,000 or Greater
(As of 12/13/18)
AA-
(As of 10/28/11)
XL Insurance America
Inc.
002423 A+, Superior;
Financial Size Category 15;
$2,000,000,000 or Greater
(As of 12/06/18)
AA-
(As of 11/19/18)
06/25/2019
Association of California Water Agencies/JPIA
2100 Professional Drive
Roseville CA 95661
Alliant embraces a policy of transparency with respect to its compensation from
insurance transactions and a policy of disclosure as to the insurance carriers with
which Alliant does business.
The commission Alliant will receive from the carrier as a result of this placement
will be no greater than 11% of the premium.
Alliant Underwriting Services will also receive additional compensation from the
carrier for providing Underwriting Services up to 16.9%. A fee of $0.00 has been
included on your invoice for Loss Control, Engineering and Appraisal services
provided by Alliant Business Services.
Alliant Underwriting Services and Alliant Business Services are internal operating
groups of Alliant Insurance Services, Inc.
Alliant has no ownership interest in any of the carriers or any other intermediaries
(if any) that were a part of this placement.
Upon written request, Alliant will further disclose all quotes and indications sought
and received by Alliant in connection with your insurance placement, and the
terms, including any Alliant interest in or contractual agreement with any of the
prospective insurers, of all compensation to be received by Alliant. Request should
be mailed to:
Alliant Insurance Services, Inc.
701 B. Street, 6th Floor
San Diego, California 92101-8156
Attention: General Counsel
NOTICE:
1.THE INSURANCE POLICY THAT YOU ARE APPLYING TO PURCHASE I BEING
ISSUED BY AN INSURER THAT IS NOT LICENSED BY THE STATE OF
CALIFORNIA. THESE COMPANIES ARE CALLED “NONADMITTED” OR
“SURPLUS LINE” INSURERS.
2. THE INSURER IS NOT SUBJECT TO THE FINANCIAL SOLVENCY
REGULATION AND ENFORCEMENT THAT APPLY TO CALIFORNIA LICENSED
INSURERS.
3. THE INSURER DOES NOT PARTICIPATE IN ANY OF THE INSURANCE
GUARANTEE FUNDS CREATED BY CALIFORNIA LAW. THEREFORE, THESE
FUNDS WILL NOT PAY YOUR CLAIMS OR PROTECT YOUR ASSETS IF THE
INSURER BECOMES INSOLVENT AND IS UNABLE TO MAKE PAYMENTS AS
PROMISED.
4. THE INSURER SHOULD BE LICENSED EITHER AS A FOREIGN INSURER IN
ANOTHER STATE IN THE UNITED STATES OR AS A NON-UNITED STATES
(ALIEN) INSURER. YOU SHOULD ASK QUESTIONS OF YOUR INSURANCE
AGENT, BROKER, OR “SURPLUS LINE” BROKER OR CONTACT THE
CALIFORNIA DEPARTMENT OF INSURANCE AT THE FOLLOWING TOLL-FREE
TELEPHONE NUMBER: 1800-927-4357 OR INTERNET WEB SITE
WWW.INSURANCE.CA.GOV. ASK WHETHER OR NOT THE INSURER IS
LICENSED AS A FOREIGN OR NON-UNITED STATES (ALIEN) INSURER AND
FOR ADDITIONAL INFORMATION ABOUT THE INSURER. YOU MAY ALSO
CONTACT THE NAIC’S INTERNET WEB SITE AT WWW.NAIC.ORG.
5. FOREIGN INSURERS SHOULD BE LICENSED BY A STATE IN THE UNITED
STATES AND YOU MAY CONTACT THAT STATE’S DEPARTMENT OF
INSURANCE TO OBTAIN MORE INFORMATION ABOUT THAT INSURER.
6. FOR NON-UNITED STATES (ALIEN) INSURERS, THE INSURER SHOULD BE
LICENSED BY A COUNTRY OUTSIDE OF THE UNITED STATES AND SHOULD
BE ON THE NAIC’S INTERNATIONAL INSURERS DEPARTMENT (IID) LISTING
OF APPROVED NONADMITTED NON-UNITED STATES INSURERS. ASK YOUR
AGENT, BROKER, OR “SURPLUS LINE” BROKER TO OBTAIN MORE
INFORMATION ABOUT THAT INSURER.
7. CALIFORNIA MAINTAINS A LIST OF APPROVED SURPLUS LINE INSURERS.
ASK YOUR AGENT OR BROKER IF THE INSURER IS ON THAT LIST, OR VIEW
THAT LIST AT THE INTERNET WEB SITE OF THE CALIFORNIA DEPARTMENT
OF INSURANCE: WWW.INSURANCE.CA.GOV.
8. IF YOU, AS THE APPLICANT, REQUIRED THAT THE INSURANCE POLICY
YOU HAVE PURCHASED BE BOUND IMMEDIATELY, EITHER BECAUSE
EXISTING COVERAGE WAS GOING TO LAPSE WITHIN TWO BUSINESS DAYS
OR BECAUSE YOU WERE REQUIRED TO HAVE COVERAGE WITHIN TWO
BUSINESS DAYS, AND YOU DID NOT RECEIVE THIS DISCLOSURE FORM AND
A REQUEST FOR YOUR SIGNATURE UNTIL AFTER COVERAGE BECAME
EFFECTIVE, YOU HAVE THE RIGHT TO CANCEL THIS POLICY WITHIN FIVE
DAYS OF RECEIVING THIS DISCLOSURE. IF YOU CANCEL COVERAGE, THE
PREMIUM WILL BE PRORATED AND ANY BROKER’S FEE CHARGED FOR THIS
INSURANCE WILL BE RETURNED TO YOU.
D-2 (Effective July, 2017)
Date Issued: May 14, 2019 Alliant Insurance Services, Inc. | www.alliant.com | CA License No. 0C36861 Page 1
Disclosures / Disclaimers
This evidence of insurance is provided as a matter of convenience and information only. All information
included in this evidence, including but not limited to personal and real property values, locations,
operations, products, data, automobile schedules, financial data and loss experience, is based on facts and
representations supplied to Alliant Insurance Services, Inc. by your organization. This evidence does not
reflect any independent study or investigation by Alliant Insurance Services, Inc. or its agents and
employees.
Please be advised that this evidence is also expressly conditioned on there being no material change in the
risk between the date of this evidence and the inception date of the proposed policy (including the occurrence
of any claim or notice of circumstances that may give rise to a claim under any policy which the policy being
proposed is a renewal or replacement). In the event of such change of risk, the insurer may, at its sole
discretion, modify, or withdraw this evidence, whether or not this offer has already been accepted.
This evidence is not confirmation of insurance and does not add to, extend, amend, change, or alter any
coverage in any actual policy of insurance you may have. All existing policy terms, conditions, exclusions,
and limitations apply. For specific information regarding your insurance coverage, please refer to the policy
itself. Alliant Insurance Services, Inc. will not be liable for any claims arising from or related to information
included in or omitted from this evidence of insurance.
Alliant embraces a policy of transparency with respect to its compensation from insurance transactions. Details on
our compensation policy, including the types of income that Alliant may earn on a placement, are available on our
website at www.alliant.com. For a copy of our policy or for any inquiries regarding compensation issues pertaining to
your account you may also contact us at: Alliant Insurance Services, Inc., Attention: General Counsel, 701 B Street,
6th Floor, San Diego, CA 92101.
Analyzing insurers' over-all performance and financial strength is a task that requires specialized skills and in-depth
technical understanding of all aspects of insurance company finances and operations. Insurance brokerages such as
Alliant Insurance typically rely upon rating agencies for this type of market analysis. Both A.M. Best and Standard and
Poor's have been industry leaders in this area for many decades, utilizing a combination of quantitative and qualitative
analysis of the information available in formulating their ratings.
A.M. Best has an extensive database of nearly 6,000 Life/Health, Property Casualty and International companies.
You can visit them via this AmBest Consumer Web link. For additional information regarding insurer financial strength
ratings visit Standard and Poor's website at www.standardandpoors.com.
Our goal is to procure insurance for you with underwriters possessing the financial strength to perform. Alliant does
not, however, guarantee the solvency of any underwriters with which insurance or reinsurance is placed and maintains
no responsibility for any loss or damage arising from the financial failure or insolvency of any insurer. We encourage
you to review the publicly available information collected to enable you to make an informed decision to accept or
reject a particular underwriter. To learn more about companies doing business in your state, visit the Department of
Insurance website for that state.
NY Regulation 194 and General Broker Compensation Disclosure
Alliant Insurance Services, Inc. is an insurance producer licensed by the State of New York and other States. Insurance
producers are authorized by their license to confer with insurance purchasers about the benefits, terms and conditions
of insurance contracts; to offer advice concerning the substantive benefits of particular insurance contracts; to sell
insurance; and to obtain insurance for purchasers. The role of the producer in any particular transaction typically
involves one or more of these activities.
Compensation will be paid to the producer, based on the insurance contract the producer sells. Depending on the
insurer(s) and insurance contract(s) the purchaser selects, compensation will be paid by the insurer(s) selling the
insurance contract or by another third party. Such compensation may vary depending on a number of factors, including
Date Issued: May 14, 2019 Alliant Insurance Services, Inc. | www.alliant.com | CA License No. 0C36861 Page 2
the insurance contract(s) and the insurer(s) the purchaser selects. In some cases, other factors such as the volume of
business a producer provides to an insurer or the profitability of insurance contracts a producer provides to an insurer
also may affect compensation.
The insurance purchaser may obtain information about compensation expected to be received by the producer based
in whole or in part on the sale of insurance to the purchaser, and (if applicable) compensation expected to be received
based in whole or in part on any alternative quotes presented to the purchaser by the producer, by requesting such
information from the producer.
Other Disclosures / Disclaimers Cont.
FATCA:
The Foreign Account Tax Compliance Act (FATCA) requires the notification of certain financial accounts to the United
States Internal Revenue Service. Alliant does not provide tax advice so please contact your tax consultant for your
obligation regarding FATCA.
NRRA:
(Applicable if the insurance company is non-admitted)
The Non-Admitted and Reinsurance Reform Act (NRRA) went into effect on July 21, 2011. Accordingly, surplus lines
tax rates and regulations are subject to change which could result in an increase or decrease of the total surplus lines
taxes and/or fees owed on this placement. If a change is required, we will promptly notify you. Any additional taxes
and/or fees must be promptly remitted to Alliant Insurance Services, Inc.
Changes and Developments
It is important that we be advised of any changes in your operations, which may have a bearing on the validity and/or
adequacy of your insurance. The types of changes that concern us include, but are not limited to, those listed below:
Mergers and/or acquisition and any change in business ownership, including percentages.
Any newly assumed contractual liability, granting of indemnities or hold harmless agreements.
Any changes in existing premises including vacancy, whether temporary or permanent, alterations, demolition,
etc. Also, any new premises either purchased, constructed or occupied
Circumstances which may require an increased liability insurance limit.
Any changes in fire or theft protection such as the installation of or disconnection of sprinkler systems, burglar
alarms, etc. This includes any alterations to the system.
Immediate notification of any changes to a scheduled of equipment, property, vehicles, electronic data
processing, etc.
Property of yours that is in transit, unless previously discussed and/or currently insured.
Loss Notification Requirements:
Your policy will come with specific claim reporting requirements. Please make sure your organization understands
these obligations and time limitations which are outlined in the attached Loss Notification documents. Contact your
Alliant Service Team with any questions.
Date Issued: May 14, 2019 Alliant Insurance Services, Inc. | www.alliant.com | CA License No. 0C36861 Page 3
LOSS NOTIFICATION REQUIREMENT
ALLIANT PROPERTY INSURANCE PROGRAM (APIP)
Claim notifications need to be sent to Robert Frey, Diana Walizada and Sandra Doig. In the event this is a Cyber loss please
include item III contact, for a Pollution loss please include item IV contact in addition to Alliant Insurance Services contacts.
I. During regular business hours (between 8:30 AM and 5:00 PM PST), First Notice of Claim should be reported
to Alliant Insurance Services via telephone, fax, mail or e-mail to our San Francisco Office:
Robert A. Frey, RPA Diana L. Walizada, AIC, CPIW, RPA, AINS
Senior Vice President, Regional Claims Director Vice President, Claims Unit Manager
Voice: (415) 403-1445 Cell: (415) 518-8490 Voice:(415)403-1453
Email: rfrey@alliant.com Email: dwalizada@alliant.com
Address: Alliant Insurance Services, Inc.
100 Pine St, 11th Floor
San Francisco CA 94111
Toll Free Voice: (877) 725-7695 Fax: (415) 403-1466
II. Please be sure to include APIP’s Claim Administrator as a CC on all Claims correspondence:
Sandra Doig
McLaren’s Global Claims Services
Address: 1301 Dove St., Suite 200
Newport Beach, CA 92660
Voice: (949) 757-1413 Fax: (949) 757-1692
Email: sandra.doig@mclarens.com
III. Cyber Liability Carrier Beazley NY needs to also be provided with Notice of Claim immediately (if purchased):
Beth Diamond
Beazley Group
Address: 1270 Avenue of the America’s, Suite 1200
New York, NY 10020
Fax: (546) 378-4039
Email: tmbclaims@beazley.com
Elaine G. Tizon, CISR
Assistant Vice President, Claims Advocate
Address: 100 Pine Street, 11th Floor
San Francisco, CA 94111-5101
Voice: (415) 403-1458 Fax: (415) 403-1466
Email: elaine.tizon@alliant.com
IV. Pollution Liability Carrier Allianz Global Corporate & Specialty (if purchased):
Allianz Global Corp. & Specialty Att: FNOL Claims Unit
Address: 1 Progress Point Parkway, 2nd Floor
O’Fallon, MO 63368
In emergency call: (800) 558-1606
Fax: (800) 323-6450
Email: NewLoss@agcs.allianz.com
Akbar Sharif
Claims Advocate
Address: 1301 Dove St. Ste. 200
Newport Beach, CA 92646
Voice: (949) 260-5088 Fax: (415) 403-1466
Email: Akbar.Sharif@alliant.com
Please include the Insured /JPA name along with the following information when reporting claims:
Time, date and specific location of property damaged
A description of the incident that caused the damage (such as fire, theft or water damage)
Estimated amount of loss in dollars
Contact person for claim including name, title, voice & fax numbers
Complete and return the Property Loss Notice for processing.
Mortgagee or Loss Payee name, address, and account number
Date Issued: May 14, 2019 Alliant Insurance Services, Inc. | www.alliant.com | CA License No. 0C36861 Page 4
IN THE EVENT OF A
PROPERTY LOSS:
1) Follow your organization procedures for reporting and responding to an incident
2)Alert local emergency authorities, as appropriate
3) Report the incident to Alliant Insurance Services immediately at:
877-725-7695
All property losses must be reported as soon as
practicable upon knowledge within the risk management or
finance division of the insured that a loss has occurred.
Be prepared to give basic information about the location and nature of the incident, as well as steps which have been
taken in response to the incident.
4) Report the incident to McLarens Global Claims Services AND your Alliant
representative
Date Issued: May 14, 2019 Alliant Insurance Services, Inc. | www.alliant.com | CA License No. 0C36861 Page 5
PROPERTY FIRST NOTICE OF LOSS FORM
SEND TO: Alliant Insurance Services, Inc.
BY MAIL: 100 Pine Street, 11th Floor, San Francisco, CA 94111
BY FAX: (415) 403-1466
BY EMAIL: rfrey@alliant.com AND dwalizada@alliant.com
Carbon Copy APIP Claims Administrator: sandra.doig@mclarens.com and your Alliant representative
Today’s Date: _________________
Type of Claim: (check all that apply)
Insured’s Name & Contact Information
Insured’s Name: Point of Contact:
Address:
Phone #:
Broker/Agent’s Name & Contact Information
Company Name: Alliant Insurance Services - Claims Point of Contact: Robert A. Frey & Diana L. Walizada
Address: 100 Pine Street, 11th Floor, San Francisco, CA 94111
Phone #: 1-877-725-7695 Fax #: 415-403-1466
Policy Information
Policy Number:________________________________ Policy Period: ______________________
Limits of Liability: _______________per___________agg Self-Insured Retention/Deductible: ______________
Loss Information
Date of Incident/Claim: _____________ Location:___________________________________________________
Description of Loss:
_______________________________________________________________________________
_____________________________________________________________________________________________
Please list all attached or enclosed documentation: (check if none provided) __________________________
_____________________________________________________________________________________________
Name of Person Completing This Form: _____________________________________
Signature:___________________________________
Real Property Vehicles
Personal Property Other
Date Issued: May 14, 2019 Alliant Insurance Services, Inc. | www.alliant.com | CA License No. 0C36861 Page 6
Per the PEPIP USA Form Master Policy Wording, Section IV General Conditions;
J. NOTICE OF LOSS
In the event of loss or damage insured against under this Policy, the Insured shall give notice thereof to
ALLIANT INSURANCE SERVICES, INC., 100 Pine Street, 11th Floor, San Francisco, CA 94111-1073.
TEL NO. (877) 725-7695, FAX NO. (415) 403-1466 of such loss. Such notice is to be made as soon as
practicable upon knowledge within the risk management or finance division of the insured that a loss has
occurred.
Date Issued: May 14, 2019 Alliant Insurance Services, Inc. | www.alliant.com | CA License No. 0C36861 Page 7
IN THE EVENT OF A
CYBER LOSS:
1) Follow your organizations procedures for reporting and responding to an
incident
2) Alert authorities, as appropriate
3) Report the incident to Beazley Group immediately at:
tmbclaims@beazley.com
All Cyber losses must be reported as soon as practicable
upon knowledge by the insured that a loss has occurred.
Be prepared to give basic information about the location and nature of the incident, as well as steps
which have been taken in response to the incident.
4) Report the incident to Alliant Claims Department and your Alliant
representative
SPECIAL NOTE REGARDING PRIVACY NOTIFICATION COSTS:
The policy provides a $500,000 Aggregate Limit for Privacy Notification Costs. If you utilize a Beazley
vendor, the limit is increased to $1,000,000.
Please contact Beazley for a list of approved vendors.
Date Issued: May 14, 2019 Alliant Insurance Services, Inc. | www.alliant.com | CA License No. 0C36861 Page 8
CYBER FIRST NOTICE OF LOSS FORM
Today’s Date:
Insured’s Name & Contact Information
Insured’s Name: Point of Contact:
Address:
Phone #:
Broker/Agent’s Name & Contact Information
Company Name: Alliant Insurance Services – Claims Point of Contact: Elaine Tizon
Address: 100 Pine Street, 11th Floor, San Francisco, CA 94111
Phone #: 877-725-7695 Fax #:415-403-1466
Policy Information
Policy Number: Policy Period:
Limits of Liability: per agg Self-Insured Retention/Deductible
Loss Information
Date of Incident/Claim: Location:
Description of Loss:
Please list all attached or enclosed documentation: (check if none provided)
Name of Person Completing This Form:
Signature:
SEND TO: Beazley Group
BY MAIL: 1270 Avenue of the America’s, Suite 1200, New York, NY 10020
BY FAX: (546) 378-4039
BY EMAIL: tmbclaims@beazley.com
CC Alliant Claims Department:
elaine.tizon@alliant.com , and your Alliant representative
Date Issued: May 14, 2019 Alliant Insurance Services, Inc. | www.alliant.com | CA License No. 0C36861 Page 9
A. NOTICE OF CLAIM, LOSS OR CIRCUMSTANCE THAT MIGHT LEAD TO A CLAIM
1.If any Claim is made against the Insured, the Insured shall, as soon as practicable upon knowledge by the
Insured, forward to the Underwriters through persons named in Item 9.A. of the Declarations written notice
of such Claim in the form of a telecopy, or express or certified mail together with every demand, notice,
summons or other process received by the Insured or the Insured’s representative; provided that with
regard to coverage provided under Insuring Agreements I.A. and I.C., all Claims made against any Insured
must be reported no later than the end of the Policy Period, in accordance with the requirements of the
Optional Extension Period (if applicable), or within thirty (30) days after the expiration date of the Policy
Period in the case of Claims first made against the Insured during the last thirty (30) days of the Policy
Period.
2. With respect to Insuring Agreement I.B. for a legal obligation to comply with a Breach Notice Law because
of an incident (or reasonably suspected incident) described in Insuring Clause I.A.1 or I.A.2, such incident or
reasonably suspected incident must be reported as soon as practicable during the Policy Period after
discovery by the Insured. For such incidents or suspected incidents discovered by the Insured within 60
days prior to expiration of the Policy, such incident shall be reported as soon as practicable, but in no event
later than 60 days after the end the Policy Period, provided; if this Policy is renewed by Underwriters and
covered Privacy Notification Costs are incurred because of such incident or suspected incident reported
during the 60 day post Policy Period reporting period, then any subsequent Claim arising out of such
incident or suspected incident is deemed to have been made during the Policy Period.
3. With respect to Insuring Agreements I.A. and I.C., if during the Policy Period, the Insured first becomes
aware of any circumstance that could reasonably be the basis for a Claim it may give written notice to
Underwriters in the form of a telecopy, or express or certified mail through persons named in Item 9.A. of the
Declarations as soon as practicable during the Policy Period of:
a. the specific details of the act, error, omission, or Security Breach that could reasonably be the basis for
a Claim;
b. the injury or damage which may result or has resulted from the circumstance; and
c. the facts by which the Insured first became aware of the act, error, omission or Security Breach
Any subsequent Claim made against the Insured arising out of such circumstance which is the subject of
the written notice will be deemed to have been made at the time written notice complying with the above
requirements was first given to the Underwriters.
4. A Claim or legal obligation under section X.A.1 or X.A.2 above shall be considered to be reported to the
Underwriters when written notice is first received by Underwriters in the form of a telecopy, or express or
certified mail or email through persons named in Item 9.A. of the Declarations of the Claim or legal
obligation, or of an act, error, or omission, which could reasonably be expected to give rise to a Claim if
provided in compliance with sub-paragraph X.A.3. above.
Date Issued: May 14, 2019 Alliant Insurance Services, Inc. | www.alliant.com | CA License No. 0C36861 Page 10
ALLIANZ GLOBAL CORPORATE & SPECIALTY
IN THE EVENT OF AN
ENVIRONMENTAL EMERGENCY:
1) Follow your organization procedures for reporting and responding to an
incident
2) Alert local emergency authorities, as appropriate
3) Report the incident immediately at:
800-558-1606
4] Report the incident to Alliant
Akbar Sharif
Claims Advocate
949-260-5088
415-403-1466 – fax
Akbar.Sharif@alliant.com
Be prepared to give basic information about the location and nature of the incident, as well as steps
which have been taken in response to the incident.
DO follow your organization’s detailed response plan
DO contact your management as well as appropriate authorities
DO ensure anyone who could come in contact with a spill or release is kept away
DO NOT ignore a potential spill or leak
DO NOT attempt to respond beyond your level of training or certification
Date Issued: May 14, 2019 Alliant Insurance Services, Inc. | www.alliant.com | CA License No. 0C36861 Page 11
Today’s Date:
Notice of: (check all that apply)
Pollution Incident Potential Claim Other
Third-Party Claim Litigation Initiated
Insured’s Name & Contact Information
Company Name: Point of Contact:
Address:
Phone #:
Broker/Agent’s Name & Contact Information
Company Name: Alliant Insurance Services - Claims Point of Contact: Akbar Sharif
Address: 1301 Dove St. Ste. 200 Newport Beach, CA 92660
Phone #: 1-949-260-5088
Policy Information
Policy Number: Policy Period:
Limits of Liability: per agg Self-Insured Retention/Deductible
Loss Information
Date of Incident/Claim: Location:
Claimant Name/Address:
Description of Loss:
Please list all attached or enclosed documentation: (check if none provided)
Name of Person Completing This Form: Signature:
SEND TO: ALLIANZ GLOBAL CORPORATE & SPECIALTY
BY MAIL: Allianz Global Corporate & Specialty, Attn: FNOL Claims Unit, One Progress Point
Parkway, 2nd Floor, O’Fallon, MO 63368
BY FAX: (888) 323-6450
BY EMAIL: NewLoss@agcs.allianz.com
CC Alliant Insurance: Akbar.Sharif@alliant.com and your Alliant Representative
Date Issued: May 14, 2019 Alliant Insurance Services, Inc. | www.alliant.com | CA License No. 0C36861 Page 12
VII. REPORTING AND COOPERATION
A.The “insured” must see to it that the Insurer receives written notice of any “claim” or “pollution condition”, as soon as
practicable, at the address identified in Item 7.a. of the Declarations to this Policy. Notice should include reasonably
detailed information as to:
1.The identity of the “insured”, including contact information for an appropriate person to contact regarding the handling
of the “claim” or “pollution condition”;
2.The identity of the “covered location” or “covered operations”;
3.The nature of the “claim” or “pollution condition”; and
4.Any steps undertaken by the “insured” to respond to the “claim” or “pollution condition”. In the event of a “pollution
condition”, the “insured” must also take all reasonable measures to provide immediate verbal notice to the Insurer.
B.The “insured” must:
1.As soon as practicable, send the Insurer copies of any demands, notices, summonses or legal papers received in
connection with any “claim”;
2. Authorize the Insurer to obtain records and other information;
3.Cooperate with the Insurer in the investigation, settlement or defense of the “claim”;
4.Assist the Insurer, upon the Insurer’s request, in the enforcement of any right against any person or organization which
may be liable to the “insured” because of “bodily injury”, “property damage”, “remediation costs” or “legal defense
expense” to which this Policy may apply; and
5.Provide the Insurer with such information and cooperation as it may reasonably require.
C.No “insured” shall make or authorize an admission of liability or attempt to settle or otherwise dispose of any “claim”
without the written consent of the Insurer. Nor shall any “insured” retain any consultants or incur any “remediation
costs” without the prior express written consent of the Insurer, except in the event of an “emergency response”.
(Emergency Response coverage is limited to the first 7 days)
D.Upon the discovery of a “pollution condition”, the “insured” shall make every attempt to mitigate any loss and comply
with applicable “environmental law”. The Insurer shall have the right, but not the duty, to mitigate such “pollution
conditions” if, in the sole judgment of the Insurer, the “insured” fails to take reasonable steps to do so. In that event, any
“remediation costs” incurred by the Insurer shall be deemed incurred by the “insured”, and shall be subject to the “self-
insured retention” and Limits of Liability identified in the Declarations to this Policy.
Date Issued: May 14, 2019 Alliant Insurance Services, Inc. | www.alliant.com | CA License No. 0C36861 Page 13
APIP Pollution: Claim Reporting Fact Sheet
This page outlines the steps that should be taken BY YOUR ORGANIZATION, at the time of an environmental incident, to assure
that the Pollution coverage offered with ACE through APIP is not jeopardized. We ask that you review this document and provide
copies to all appropriate colleagues in advance of a possible incident.
Coverage under Pollution policies is dependent on specific compliance with claims and loss reporting; especially in the case of
“Emergency Response” expenses that you may incur to address a pollution loss. For these “Emergency Response” expenses
there is a strict seven (7) day window, following discovery of a “Pollution Condition” by the “Insured”, after which reasonable
expenses will not be reimbursed unless the carrier has given prior consent. It is extremely important pollution exposures be
reported immediately; and clearly no later than seven (7) days.
Although we ask that you fully review your policy and all its’ Terms and Conditions, we have highlighted some key sections of the
ACE policy which address the Emergency Response issue and the reporting provisions:
III. DEFENSE AND SETTLEMENT C. The “insured” shall have the right and duty to retain a qualified environmental
consultant to perform any investigation and/or remediation of any “pollution condition” covered pursuant to this
Policy. The “insured” must receive the written consent of the Insurer prior to the selection and retention of such
consultant, except in the event of an “emergency response”. Any costs incurred prior to such consent shall not be
covered pursuant to this Policy, or credited against the “self-insured retention”, except in the event of an
“emergency response”.
V. DEFINITIONS
F. “Emergency response” means actions taken and reasonable “remediation costs” 7 days following the discovery
of a “pollution condition” by an “insured” in order to abate or respond to an imminent and substantial threat to human
health or the environment arising out of such “pollution condition”.
T. “Pollution condition” means: 2. The discharge, dispersal, release, escape, migration, or seepage of any solid,
liquid, gaseous or thermal irritant, contaminant, or pollutant, including smoke, soot, vapors, fumes, acids, alkalis,
chemicals, hazardous substances, hazardous materials, or waste materials, on, in, into, or upon land and structures
thereupon, the atmosphere, surface water, or groundwater.
V. “Remediation costs” means reasonable expenses incurred to investigate, quantify, monitor, mitigate, abate,
remove, dispose, treat, neutralize, or immobilize “pollution conditions” to the extent required by “environmental law”.
VII. REPORTING AND COOPERATION
A.The “insured” must see to it that the Insurer receives written notice of any “claim” or “pollution condition”, as
soon as practicable, at the address identified in Item 7.a. of the Declarations to this Policy. Notice should include
reasonably detailed information as to: 1. The identity of the “insured”, including contact information for an
appropriate person to contact regarding the handling of the “claim” or “pollution condition”;
B.The “insured” must: 1. As soon as practicable, send the Insurer copies of any demands, notices, summonses or
legal papers received in connection with any “claim”;
C.No “insured” shall make or authorize an admission of liability or attempt to settle or otherwise dispose of any
“claim” without the written consent of the Insurer. Nor shall any “insured” retain any consultants or incur any
“remediation costs” without the prior express written consent of the Insurer, except in the event of an “emergency
response”. (Emergency Response coverage is limited to the first 7 days)
D.Upon the discovery of a “pollution condition”, the “insured” shall make every attempt to mitigate any loss and
comply with applicable “environmental law”. The Insurer shall have the right, but not the duty, to mitigate such
“pollution conditions” if, in the sole judgment of the Insurer, the “insured” fails to take reasonable steps to do so. In
that event, any “remediation costs” incurred by the Insurer shall be deemed incurred by the “insured”, and shall be
subject to the “self-insured retention” and Limits of Liability identified in the Declarations to this Policy.
The bottom line is if there is a Pollution event, please contact us immediately so that we can report the Incident and properly
protect coverage for these unexpected events; please refer to the Claims Reporting form for proper contact information
Date Issued: May 14, 2019 Alliant Insurance Services, Inc. | www.alliant.com | CA License No. 0C36861 Page 14
ALLIANT FACT SHEET
Page 1
RETAIL BROKERAGE VS. WHOLESALE & SERVICE OPERATIONS
RETAIL BROKERAGE VS. WHOLESALE & SERVICE OPERATIONS
Many insurance brokerage firms, including Alliant Insurance Services, Inc., have affiliate and/or subsidiary companies
that perform services associated with the risk management and insurance procurement process. Alliant has
numerous and varied client relationships that may involve any combination of Retail Brokerage, Wholesale Brokerage
and other Loss Control or Risk Management Consulting work. In addition, Alliant’s affiliates, such as Alliant Business
Services (ABS), can provide clients with other services not necessarily directly related to the risk management or
insurance procurement process such as Human Resources Consulting and/or Appraisal Services.
Normally when acting as clients’ “Retail Broker” Alliant will collect a commission as compensation, or may have a Fee
for Service compensation plan. Typically Alliant will then have a written Agreement with clients, and that document
includes full disclosure concerning compensation including wording similar to the following:
In addition to the commissions that Broker receives, Alliant Underwriting Services (AUS), a division of
a related entity, may receive compensation from Broker and/or the carrier for providing underwriting
services. The financial impact of the compensation received by AUS is a cost included in the premium.
Additionally, the related entities of Alliant Business Services (ABS) may receive compensation from
Broker and/or the carrier for providing designated, value-added services. Services contracted for by
the Client directly will be invoiced accordingly. Otherwise, services will be provided at the expense of
Broker and/or the carrier.
This contract language is in addition to the standard disclosure wording contained in Alliant proposals. At the bottom
of this Fact Sheet we have attached what we include on our Standard Proposals. (Additional disclosure wording is
also included on Alliant invoices.) Full disclosure is a key component of client communication concerning
compensation.
The Retail Broker activities, and Alliant’s other services involved in Wholesale Brokering are distinctly separate. Our
Retail Brokers and staff act as advocates for the client and are involved in the day-to-day delivery of services spelled
out in our “Scope of Services.” Such services include negotiating terms and conditions of coverage, issuance of
certificates, tailoring coverages to meet specific needs, and assuring that all lines of coverages are properly provided
to protect clients’ assets.
Wholesale Broker activities are provided through Alliant Underwriting Services (AUS). These include administration
of programs that Alliant companies manage and/or underwrite, and involve separate functions from Retail Brokerage
service. Alliant Insurance Services, Inc. has other operations including, AUS and ABS, which provide non-retail
brokerage services. The inclusion of these Wholesale Broker activities into a program has additional advantages
that accrue to clients, primarily in the realm of cost savings, as needed services can generally be provided less
expensively by a wholesale outfit than by a traditional insurer. This is especially the case when a program is large
or complex.
As in any business, the cost of services will vary year by year based on program size, underwriting authority, and
other factors. AUS receives compensation from carriers for which it provides underwriting and program
administration services. There are numerous services involved in this Wholesale Broker function, including:
Underwriting new and renewal business for the primary/excess markets
- PML Analysis
- Claims Analysis
- Program Management
- Program Administration/Information Technology associated with program management.
AS JUST ONE EXAMPLE, the Public Entity Property Insurance Program (PEPIP) - formed in 1993 to meet the
unique property insurance needs of public entities – has grown from 65 members in one State to over 9,000 members
in 45 States. This growth has fueled insurance cost savings for all members.
ALLIANT FACT SHEET
Page 2
To achieve Program results, AUS annually:
Underwrites over 6,000 renewal applications,
Reviews Statement of Values and associated COPE (Construction, Occupancy, Protection & Exposure)
information for over 262,303 PEPIP property locations,
Allocates premium between 25 separate insurance markets,
Establishes renewal pricing parameters in accordance with the underwriting/rating standards provided by the
program markets, and
Performs Program Accounting including individual member pricing billing, collections, and remittance to program
markets.
Additional ABS services available to Program members include:
Loss Control Services (no specific budget and can be tailored to individual clients).
Appraisals (Buildings over $5M appraised every 3-5 years. We currently do every 3 years, but we are
evaluating doing every 5 years at renewal).
Infrared Testing (again tailored to the client but not an unlimited number of days).
Business Interruption Consulting (assistance by Forensic Accountant in determining Business Interruption
values).
PEPIP Solution Center (24 hr. hotline to address Property Loss Control questions).
Webinars (8-10 web based training sessions per year on Property related topics).
Alliant Insurance Services, Inc., our Retail Brokers and colleagues all strive to provide the high level of service
expected from our clients at a competitive level of compensation that should be clearly understood and
documented.
Commissions are customarily paid by the insurance carriers to their agents and to brokers as a percentage of premiums. In
addition to the commissions that Alliant receives, Alliant Underwriting Services. ("AUS"), a division of a related entity may
receive compensation from Alliant and/or the carrier for providing underwriting services. The financial impact of the
compensation received by AUS is a cost included in the premium. Additionally, Alliant Business Services (“ABS”) and/or
Strategic HR may receive compensation from Alliant and/or the carrier for providing designated, value-added
services. Services contracted for by the client directly will be invoiced accordingly. Otherwise, services will be provided
at the expense of Alliant and/or the carrier. Further information is available upon written request directed to: Alliant
Insurance Services, Attention: General Counsel, 701 B Street, San Diego, CA 92101.
JPIA Board of Directors - Member/Alternate
An excerpt from the JPIA Agreement:
"Article 7 - Board of Directors"
(a)The Authority shall be governed by the Board of Directors which is hereby established and
which shall be composed of one representative from each Member, who shall be a Memberdirector selected by the governing board of that Member. Each Member, in addition toappointing its member of the Board, shall appoint at least one alternate who shall be an
officer, member of the governing board, or employee of that Member. The alternate appointed
by a Member shall have the authority to attend and participate in any meeting of the Board
when the regular member for whom he or she is an alternate is absent from said meeting.
(b)Each Director or alternate of the Board shall serve until a successor is appointed. Each
Director or alternate shall serve at the pleasure of the Member by which he or she has been
appointed.
(c)Each Director representing a Member, or his or her alternate, shall have one vote.
Please have your agency’s Board of Directors designate a JPIA Director Representative and
Alternate Representative.
Member Agency:
JPIA Director Representative:
Must be a member of the agency’s board of directors.
Preferred mailing address:
E-mail address:
Phone number:
JPIA Alternate Representative:
Preferred mailing address:
E-mail address:
Phone number:
Please mail form to: Attn: Bobbette Wells, ACWA/JPIA, PO Box 619082, Roseville, CA 95661-9082
or FAX to: (916) 774-7040
Insurance Limit Comparison
SDRMA LIMIT ACWA LIMIT
Coverage Occurrence Occurrence
Boiler & Machinery 100,000,000 100,000,000
Flood (excluding A and V) 10,000,000 10,000,000
Flood (A and V) 10,000,000 10,000,000
Cyber 3,000,000 3,000,000
Mobile/Contractors Equipment 1,000,000,000 Actual Value
SUB-LIMITS:
Business Interruption 500,000 500,000
Extra Expense 50,000,000 50,000,000
Off Premises Service Interruption 25,000,000 25,000,000
Money & Securities 2,500,000 2,500,000
Accidental Contamination – Program Aggregate 250,000 250,000
Employee Dishonesty 1,000,000 1,000,000
Unscheduled Landscaping 1,000,000 1,000,000
Unscheduled Infrastructure 750,000 750,000
E&O Property 50,000,000 50,000,000
General Liability
Bodily Injury 10,000,000 55,000,000
Property Damage 10,000,000 55,000,000
Accidental Pollution 2,000,000 55,000,000
Employee/Public Officials E & O 10,000,000 10,000,000
Employment Practices Liability 10,000,000 10,000,000
Employee/Public Officials Dishonesty 1,000,000 1,000,000
Auto
Auto Bodily Injury 10,000,000 55,000,000
Auto Property Damage 10,000,000 55,000,000
Uninsured Motorist 1,000,000 (1)
Auto PD - Comp 100,000 ACV
Auto PD - Collision 100,000 ACV
High Dollar Vehicles 1,000,000,000 ACV
Scheduled Trailer 100,000 ACV
Workers' Compensation
Employers Liability 5,000,000 4,000,000
Workers' Compensation Statutory Limits Statutory Limits
Outside Policies
Fiduciary Liability - Hudson Insurance Company 2,000,000 2,000,000
Other Fiduciary Liability Employment Benefits -
(Employee Benefits Liability due to Employee
Benefits Acts, Errors and Omissions, or any
combination thereof; and/or) 10,000,000 10,000,000
Endorsements
Failure to Supply (FTS) 1,000,000 (2)
Inverse Condemnation 1,000,000 55,000,000
(1)District property insurance would cover damage to District owned property, and workers’
compensation would cover injury of District employees.
(2)Under Section 23 of The District’s Code of Ordinances, The District does not guarantee
continuous delivery of water on demand. ACWA-JPIA will cover up to $55M of liability claims
due to accidental failure to supply (FTS), but not FTS due to a discretionary District action.
Page 1 of 32
OTAY WATER DISTRICT
PURCHASING MANUAL
Revised August 2, 2017April 28June 3, 2020
Page 2 of 32
Table of Contents
Section Page
1 – Mission and Ethics Statement . . . . . . . . . . . . . . . . . . . 4
2 – Organization . . . . . . . . . . . . . . . . . . . . . 5
Purpose
Statement
Responsibilities
3 - Purchasing Policy . . . . . . . . . . . . . . . . . . . 7
Purpose
General
Policies
4 - Purchasing Guidelines . . . . . . . . . . . . . . . . . 9
Purpose
General
Guidelines and Protocols
Vendor Involvement
Guidelines and Protocols
5 - Legal Considerations Regarding Purchasing . . . . . . . 11
Purpose
General
6 - Types of Purchases . . . . . . . . . . . . . . . . . . 12
Purpose
General
Procedures
Construction Services (Public Works)
Professional Consulting
Cooperative/Joint Purchases
Emergency Purchases 13
Materials, Goods, Services, and General Consulting
Petty Cash
Sole Source Purchases
Blanket Purchase Orders:
Guidelines for Issuing Blanket Purchase Orders 14
Guidelines for the Use of Blanket Purchase Orders
7 - Pricing/Bidding Requirements . . . . . . . . . . . . . . 15
Purpose
General
Requirements
Formal Advertising
Quotations
Public Works – Construction
Request for Proposals 16
Two Step Bidding
Purchases Exempt from Competitive Pricing
Emergency Purchases 17
Page 3 of 32
Board Authorized Purchases Exceeding the General Manager’s Authority
8 - Change Orders . . . . . . . . . . . . . . . . . . . . . 18
Purpose
General
9 - Authorization to Purchase – Signatory Authority . . . . 19
Purpose
General
10 - Documentation of Purchases . . . . . . . . . . . . . . 20
Purpose
General
Procedure
Purchases Exempt from Purchase Order Requirement
11 - Special Considerations . . . . . . . . . . . . . . . . 22
Exceptions to Purchasing Procedures
Bonding
Encouraging Emerging Business Enterprise
Insurance
Invoicing
Receiving, Inspection and Acceptance 23
Specifications
Inventory
12 - Disposal of Surplus Property . . . . . . . . . . . . . 24
Purpose
General
Procedure
Auction Sale
Sale to Federal, State, and Local Municipalities and Government Agencies 25
Sale to Republic of Mexico Municipalities and U.S. Government Agencies 26
Donation of District Surplus Property to Municipalities, Government Agencies, and
Charitable Organizations 27
Exchange or Trade-In 28
Disposal as Scrap
13 – Cal Card Credit Cards . . . . . . . . . . . . . . . . . 29
Purpose
Guidelines
Definitions
Procedure 30
Authorized Purchases
Responsibilities
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Revisions . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Page 4 of 32
Section 1 – Mission and Ethics Statement
1.0 PURPOSE:
To provide an understanding of the basic goal of the purchasing function within the Otay Water District.
1.1 MISSION STATEMENT:
To provide for the procurement, storage and distribution of all supplies, equipment and services for the
District using progressive purchasing techniques, methods and stringent controls while seeking the
highest cost savings for the customers of the District.
1.2 ETHICS STATEMENT:
The Otay Water District, its governing Board, employees, and agents who are involved at any point in
the process to select suppliers, award and administer contracts and approve payments must adhere to
high standards of ethical behavior. To this end, the policies and guidelines established in this Purchasing
Manual are intended to ensure that purchasing and purchasing related decisions are in accordance with
adherence to the high ethical standards of the purchasing community and of the Otay Water District.
Page 5 of 32
Section 2 – Organization
(Rev 2017-05-03) (Rev 2017-08-02)
2.0 PURPOSE:
To provide an understanding of the Purchasing Division’s organization and its relationship within the
Otay Water District.
2.1 STATEMENT:
The Purchasing and Facilities Manager directs the Purchasing and Facilities Division. The Purchasing
and Facilities Manager reports to the Chief of Administrative Services, who in turn reports to the General
Manager. The General Manager reports to the Board of Directors.
Board of Directors
|
General Manager
|
Chief of Administrative Services
|
Purchasing and Facilities Manager
2.2 RESPONSIBILITIES:
2.2.1 Board of Directors – Ultimate authority regarding the purchasing policies, practices and guidelines
of the District rests with the Board of Directors. It is the Board’s responsibility to establish policy and
direction regarding purchasing functions in accordance with the District’s Code of Ordinances.
2.2.2 General Manager – The General Manager is responsible, in accordance with the District’s Code of
Ordinances, for ensuring that the District complies with Board direction regarding the purchasing
function.
2.2.3 (Deleted)
2.2.4 Chief of Administrative Services – It is the Chief’s responsibility to administer the District’s
Purchasing and Facilities Division as directed by the General Manager.
2.2.5 Purchasing and Facilities Manager – It is the Manager’s responsibility to manage the Purchasing
and Facilities Division as directed by the Chief of Administrative Services and to:
a. Develop objectives, policies, programs and procedures for the negotiation and the
acquisition of materials, supplies, equipment and services for the District.
Page 6 of 32
b.Coordinate purchasing policies throughout the District.
c.Disseminate to other departments purchasing information designed to promote efficient
operations.
d.Negotiate and approve assigned purchase orders in the best interest of the District.
e.Make purchases for the District in such a manner so as to maximize the value received for
monies expended.
f.Arrange for the sale or disposal of materials and supplies declared surplus by the Board of
Directors.
g.Maintain inventory levels at a satisfactory operating level.
h.Work with District departments to promote vendor/seller relations.
i.Work with District Departments and Committees establishing standardization of
workmanship, materials and supplies used throughout the District.
j.Protect the District’s interest in matters concerning charges related to the purchasing of
materials, supplies and services.
Page 7 of 32
Section 3 – Purchasing Policy
3.0 PURPOSE:
To provide an understanding of the purchasing function and to establish and present the
purchasing policies within the Otay Water District.
3.1 GENERAL:
Purchasing is fundamental to the operation of the District. It means the acquisition of goods and
services in exchange for an acceptable price or consideration. A purchase may be in the simplest
form or it may involve the development of lengthy written agreements. Every purchase involving
the transfer of goods or services is a contract. As a contract, there are considerations as to the
nature of the purchase, its value, timing, method of payment, delivery, and other conditions that
must be addressed. For this reason, it is the District’s policy to rest the responsibility and authority
to purchase within the Purchasing and Facilities Division (Purchasing Department).
3.2 POLICIES:
a.General Policy: All purchases and requests for pricing or repair services shall be made in
accordance with applicable laws and the District’s Purchasing Manual, policies, and
procedures.
b.Open Door Policy: The Purchasing Department shall maintain an “Open Door” policy
with all salespeople desiring to sell goods or services to the District.
c.Interviews with Salespeople: If it is necessary for staff, other than Purchasing Department
personnel, to interview salespeople regarding details of their products, requests for such
visits should be made through the Purchasing Department. In interviews with salespeople,
no one except the Purchasing Department may comment on the preference for any product,
or give any information regarding performance or price.
d.Correspondence with Suppliers: All correspondence with suppliers must be processed
through the Purchasing Department unless it is technical in nature and makes no references
towards purchasing.
e.Negotiated Changes: Unless authorized by the General Manager, the Purchasing
Department will negotiate all changes to purchases.
f.Authority to Question: In order to serve the best interest of the District, the
Purchasing Department shall have the authority to question all requests for purchases
regarding quantity, quality, timing, and specifications.
g.Approval of Gratis Materials and Samples: The Purchasing Department must approve all
gratis materials, supplies or services submitted to the District as samples or tests prior to
their acceptance.
h.Conflict of Interest: Employees are required to disclose to the Purchasing Department
any conflict of interest in the selection or recommendation for selection of District
vendors, suppliers, or consultants. All contracts shall contain language, as approved
by the District’s legal counsel, requiring Vendors, Suppliers, and Consultants to disclose
any actual and potential conflicts of interest that exist between the Vendor, Supplier, or
Consultant and the District, its representatives, agents, Board of Directors, and employees.
Page 8 of 32
Section 4 – Purchasing Guidelines
4.0 PURPOSE:
To provide guidelines and protocol for the standardized application of purchasing activities within
the Otay Water District.
4.1 GENERAL:
To a large extent, the Purchasing and Facilities Division’s (Purchasing Department) performance
will be measured by how well it satisfies the needs of various departments within the District. It is
essential that there be mutual cooperation between District departments to ensure that a condition
of confidence exists. For this reason the following standardized guidelines and protocols have been
established.
4.1.1 Guidelines and Protocol:
a.Departments will keep the Purchasing Department informed of their current and anticipated
activities.
b.Overlapping duties regarding purchases will be clearly defined in the best interest of
the District.
c.If the material or equipment requested is not readily available or its price is such that
significant savings can be realized through alternatives, the alternative that is in the best
interest of the District shall be selected.
d.Policies and procedures of the District’s Purchasing Manual will be followed.
e.The Purchasing Department will notify interested departments on matters related to
shortages, new products, discontinued products or anything else that directly affects the
performance of the interested department, the Purchasing Department, or the District.
4.2 VENDOR INVOLVEMENT
Through the Purchasing Department’s contact with vendors, it is in a position to develop or
diminish the District’s reputation and/or vendor/District relationships. The District promotes a
fair and aggressive purchasing manner that results in positive vendor relationships. To
accomplish this, the District has established the following standardized guidelines and
protocols.
4.2.1 Guidelines and Protocol:
a.All competition between suppliers is to be kept open and fair.
b.Advantages through vendor errors shall be declined.
c.Revision of bids after submission shall not be accepted.
d.Materials not strictly up to specification that may be usable without sacrifice shall be
reviewed.
e.Bids shall only be solicited from those vendors with whom the District intends to do
business.
Page 9 of 32
f.The District shall not be obligated to any particular vendor.
g.Vendor locations may be visited to promote product and vendor knowledge.
h.Transactions and communications with vendors shall be truthful yet shall not divulge
sensitive or confidential information related to competition.
i.Vendor questions, calls or correspondence shall be answered promptly and in a manner that
maintains fair competition.
Page 10 of 32
Section 5 – Legal Considerations Regarding Purchasing
5.0 PURPOSE:
To provide understanding and direction related to legal considerations within the purchasing function of
the Otay Water District.
5.1 GENERAL:
The District has designated that the Purchasing and Facilities Manager has the authority to act fiducially
as its agent with regard to the purchase of materials, supplies, and services. This designation is referred
to as Law of Agency. As such, the Purchasing and Facilities Manager binds the District to whatever
buying decision is made and makes the District responsible for any purchase order issued under his/her
limits of authority. In addition to acting in the best interest of the District, the Purchasing and Facilities
Manager must ensure that various Federal and State statutes governing purchasing and interstate
commerce are complied with. For these reasons, consultation with the District’s legal counselor shall
be made whenever there is a question concerning anti-trust implications, warranty, risk of loss and
rights and remedies of the District.
Page 11 of 32
Section 6 – Types of Purchases
6.0 PURPOSE:
To provide standardized procedures for the purchase of consulting, construction, materials, goods, and
services within the Otay Water District.
6.1 GENERAL:
The District recognizes the varying levels of complexity within the purchasing function and the need to
establish standardized procedures to administer the various types of purchases made within the District.
6.2 PROCEDURES:
6.2.1 Construction Services (Public Works):
The General Manager, or his/her designee, may award purchase orders/contracts for construction services
that are within the authorization limit of the General Manager as set by the Board of Directors.
Competitive pricing of construction purchases must be in accordance with the bidding and pricing
procedures of the District as outlined in Section 7.2.3 (Pricing/Bidding Requirements) of this manual.
Award shall be made to the responsive and responsible bidder who has submitted the lowest bid
meeting the requirements and criteria set forth in the invitation to bid. For construction contracts
exceeding staff’s limit of authorization, a summary of bids together with staff’s recommendation for
award or possible rejection of bids must be presented to the Board of Directors of the District at a board
meeting. Should an award be made, the Board of Directors will authorize staff to execute a contract on
behalf of the District. After approval as to form and legality by the District’s legal counsel, the successful
bidder and the District’s representative will sign the contract. A copy of the executed contract
shall be promptly provided to the Finance Department for proper accounting review. If after
notification, the successful bidder fails to execute the contract within ten (10) days, the bid deposit,
made in cash, cashier’s check, certified check, or bid bond will be forfeited.
6.2.2 Professional Consulting:
The General Manager, or his/her designee, may award purchase orders/contracts for professional
consulting services that are within the authorization limits as set by the Board of Directors. Professional
Consulting Services are defined as architectural, Engineering, Environmental and any other service as
identified within the California Government Code § 4525-4529. Competitive pricing of consulting
services must be in accordance with the bidding and pricing procedures of the District as outlined in
Section 7.2.4a (Pricing/Bidding Requirements) of this manual. Award shall be made to the consultant
whose response to a request for proposal best meets the District’s needs. At the discretion of the Board
of Directors or the General Manager, the review of submitted proposals may be made by a Committee
established by the Board or the General Manager. For professional consulting contracts exceeding the
General Manager’s limit of authorization, a summary of bids together with staff’s recommendation for
award must be presented to the Board of Directors of the District at a board meeting. Should an award be
made, the Board of Directors will authorize staff to execute a contract on behalf of the District. After
approval as to form and legality by the District’s legal counsel, the successful bidder and the District’s
representative will sign the contract. A copy of the executed contract shall be promptly provided to the
Finance Department for proper accounting review.
6.2.3 Cooperative/ Joint Purchases:
The Purchasing and Facilities Manager may utilize cooperative/"piggyback" contracts, multiple
award schedules and joint power agreements awarded by Federal agencies, any state, municipality
Page 12 of 32
or public agency to purchase goods and services, up to the General Manager’s authorized approval
limit or subject to Board of Directors’ approval when the General Manager’s authority is
exceeded. These purchases are exempt from the District’s competitive solicitation requirements
so long as the contracts, schedules and agreements are solicited in a manner substantially
consistent with District purchasing policies. (Rev 2017-05-03)
6.2.4 Emergency Purchases:
In the event of a catastrophic emergency, the guidelines and requirements as set forth in California state
statute and in the District’s Code of Ordinance shall prevail over those stated herein.
6.2.5 Materials, Goods, Services, and General Consulting:
Purchases of materials, goods and services, the value of which are within the limits authorized by the
Board of Directors, may be made by the District’s General Manager or his/her designee. Competitive
pricing for materials, goods and services must be in accordance with the bidding and pricing procedures
of the District as outlined in Section 7.2.2, 7.2.4, 7.2.5, and 7.2.6 (Pricing/Bidding Requirements) of
this manual as applicable. Purchases shall be made from the bidder whose bid best meets the District’s
requirements and needs as set forth in the invitation to bid or request for quotation. The Board of Directors
of the District must authorize purchases exceeding the General Manager’s authorized approval limit.
At a meeting of the Board of Directors, a summary of bids together with staff’s recommendation for the
award of a contract/purchase order or the rejection of bids shall be presented. Should an award be made,
the Board of Directors of the District will authorize staff to execute a purchase order/contract on behalf
of the District.
6.2.6 Petty Cash:
The primary purpose of petty cash funds is to reduce costs associated with purchases and expenses in
accordance with the District’s financial policies.
6.2.7 Sole Source Purchases:
Other than contracts for construction, alteration or repair of District facilities, a contract may be
awarded for materials, goods, services, or general consulting without competition when the District’s
General Manager or the Board of Directors determines that either the product is designated to match others
in use on a particular public improvement, is a unique or novel product application required to be used in
the public interest, or where only one brand or trade name is known. Sole source purchases may be
made by the District’s General Manager provided the value of the purchase is within the limits authorized
for the General Manager by the Board of Directors of the District and the reason for the sole source
authorization is documented by the General Manager and retained in accordance with District’s record’s
retention policy. The Board of Directors of the District must authorize sole source purchases exceeding
the General Manager’s authorized limit. At a meeting of the Board of Directors, staff will present the
bid submitted together with a recommendation requesting an award of purchase order/contract to the
vendor identified as the sole source. Should an award be made, the Board will authorize staff to
execute a purchase order/contract on behalf of the District.
6.2.8 Blanket Purchase Orders:
Blanket purchase orders are issued to reduce administrative and operational costs, inventories and
paperwork and may be issued for regularly purchased materials, supplies and services. Should a
blanket purchase order be issued, the order shall include a description of each material, supply and/or
service requested, a unit price for each, the period of time the order shall be in effect, and a statement
obligating the vendor to deliver all or a specified part of the District’s usage requirement upon receipt
Page 13 of 32
of an authorized release from the District. Not included on the blanket purchase order are specific
quantities. Instead of specific quantities, the blanket purchase order shall list an estimate of the quantity
of each item that will be used for the period to which the blanket purchase order refers. Blanket
purchase orders may not be issued for a period of time exceeding one year unless authorized by the
General Manager.
6.2.8.1 Guidelines for Issuing Blanket Purchase Orders:
a.Blanket purchase orders may only be issued, changed, or revoked by the Purchasing and
Facilities Manager or the General Manager.
b.Competitive pricing and vendor selection for blanket purchase orders shall be in accordance
with the policies and guidelines as set forth in this manual.
c.The Board of Directors must authorize blanket purchase orders exceeding the General
Manager’s authorization limit. At a formal meeting of the Board of Directors, a summary of
the requested blanket purchase order(s) shall be presented. The summary shall include a
description of the materials, supplies, and services required, and total order pricing. Should
the Board approve the blanket order(s), they will authorize staff to issue a blanket purchase
order on behalf of the District.
6.2.8.2 Guidelines for the Use of Blanket Purchase Orders:
a.The supervisor of the employee receiving materials, services, and/or goods released against
a blanket purchase order will write the account code/work order information, sign (attesting
that the release is authorized and that all goods/materials/services were received and accepted)
and forward the receiving (packing slips) document to the Finance Department. Processed
shipping documents (coded and signed) must be submitted to the Finance Department no later
than the end of next workday from the date items were received.
b.In the event that invoiced unit pricing exceeds the unit price indicated on the blanket
purchase order, Purchasing will contact the vendor requesting that a corrected invoice be
sent to the District and notify them that payment will be withheld pending the receipt of the
corrected invoice.
c.Should the ordering individual wish the warehouse to take delivery of items released under a
blanket purchase order, notification must be given to warehouse staff. Said notification
should be made by written memorandum or through e-mail or other electronic form and
must include information on the purchase order number assigned to the purchase, what and
when goods are to be delivered, and who will ultimately receive the goods.
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Section 7 – Pricing/Bidding Requirements
7.0 PURPOSE:
To provide requirements, policies, and guidelines for the pricing/bidding of purchases within the Otay
Water District.
7.1 GENERAL:
It is the District’s policy to request competitive pricing from responsible vendors for all purchases
exceeding $10,000. Pricing, although important, is not the only factor in determining the overall cost
and value of a product. Quality, service and delivery are factors that must also be considered when
comparing quotations. It is by weighing these factors that an intelligent decision can be made to purchase
the product with the greatest value for the least overall price. (Rev 2017-05-03)
7.2 REQUIREMENTS:
7.2.1 Formal Advertising:
Public works purchases, as defined in the State of California’s government and contract code, shall follow
the procedure outlined under the California Uniform Public Construction Cost Accounting Act
(CUPCCAA) (Sect 22000 et seq. of the California Contract Code and as set by the California Uniform
Construction Cost Accounting Commission (CUCCAC). Solicitations must contain a brief description of
the goods or services required, state where prospective bidders may obtain plans and specifications and
make any required deposits, state the time and place of the bid opening, and state that the District reserves
the right to reject one or all bids. (Rev 2016-09-07) (Rev 2016-09-07)
7.2.2 Quotations:
For purchases greater than $10,000, excluding public works subject to CUPCCAA or formal bidding, a
minimum of three competitive quotations must be obtained. Quotations received may be in written or oral
form. Should oral quotations be received, written documentation must be made identifying the bidder’s
name, contact name, telephone number, the date of the quotation and the pride bid. Should three quotations
not be obtainable, documentation in the form of a notation of memorandum must be provided and attached
to the purchase requisition. Where only one price is obtainable, the actions taken to obtain competitive
pricing shall be documented and attached to the purchase requisition and the purchase may be made and
the requirements of this section shall be satisfied. (Rev 2016-09-07) (Rev 2017-05-03)
7.2.3 Public Works - Construction
Public work purchases equal to or exceeding what is authorized under the California Uniform Public
Construction Cost Accounting Act (CUPCCAA) (Sect 22000 et seq. of the California Code and as set by
the California Uniform Construction Cost Accounting Commission (CUCCAC) must be formally
advertised and sealed bids received. (Rev 2017-09-07)
The Purchasing and Facilities Manager or the General Manager’s designee, in conjunction with the project
manager, and where appropriate, the District’s legal counsel, shall publicly open all sealed bids and
tabulate the results. The bid tabulation, along with a recommendation for award contract or
possible rejection of bids, shall be forwarded to the District’s General Manager.
In the event that the value of the purchase exceeds the General Manager’s signatory authority, a summary
of bids shall be presented together with staff’s recommendation for an award of contract or possible
rejection of bids to the Board of Directors of the District during a formal board meeting. The Board of
Directors will then authorize the execution of the contract on behalf of the District.
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Award shall be made to the responsive and responsible bidder who has submitted the lowest bid
meeting the requirements and criteria set forth in the invitation to bid. After approval as to form and
legality of the contract documents by legal counsel, the successful bidder and the appropriate District
representative(s) shall execute the contract. A copy of the executed contract shall be promptly provided
to the Finance Department for proper accounting review.
7.2.4 Request for Proposals:
a.For the Solicitation of Professional Consulting (Engineering): (Rev 2016-09-07)
The General Manager, or his/her designee, will establish a review panel to evaluate and rank submittals
(proposals) using criteria published in the Request for Proposals package. Documents, invitations, and
evaluation of submittals for professional consulting services shall be made in compliance with
Government Code Section 4526-4529 and District Policy #21 – Policy for Selection of Professional
Consultants.
b.For the Solicitation of General Consulting and Services:
The General Manager, or his/her designee, shall determine the method for soliciting and evaluating
proposals for general consulting and services. The request for proposal must be in written form and must
provide sufficient information to clearly identify the work required and provide respondents with a
clear understanding of the District’s needs, work specifications, expectations and the criteria that will
be used to evaluate submittals.
7.2.5 Two Step Bidding:
Where it is considered impractical to initially prepare a purchase description to support an award on price,
a request for proposals may be issued requesting the submission of not priced technical proposals. This
will be followed by an invitation for bids limited to those bidders whose technical proposals meet the
requirements set forth in the first invitation.
7.2.6 Purchases Exempt from Competitive Pricing:
The following contract/purchases are exempt from competitive pricing:
1.With Federal, State or Local Agencies,
2.Temporary labor services to fill time-limited employment needs,
3.For the sole purpose of obtaining expert witness for litigation, and
4.That are for legal defense, legal advice, or legal services.
7.2.7 Emergency Purchases:
During times when the General Manager has declared an emergency, where the immediate acquisition
of materials, goods, and services is required, the purchase of needed materials, goods, and services shall
be made in accordance with California state statutes and per the District’s Code of Ordinances.
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7.2.8 Board Authorized Purchases Exceeding the General Manager’s Authority: (Rev 2017-05-03) (Rev 2017-08-02)
a.The General Manager or his/her Designee is authorized to exceed his/her delegated purchasing
authority under Section 2 of the Code of Ordinance and purchase the following goods and services
without Board approval so long as the overall Board Approved District Budget for Labor and
Benefits, Materials and Maintenance and Administrative expenses is not exceeded:
1.Temporary labor services
2.Fuel, gasoline and diesel
3.Sewage Transportation and Processing
4.Water Meters
5.Service and maintenance of the District’s Board adopted sole source Enterprise Resource
Planning (ERP) System, Tyler Eden
6.Service and maintenance of the District’s Board adopted sole source Geographic Information
System, Environmental Systems Research Institute (ESRI)/GIS
7.Medical ServiceHealth Benefits, Property,. Liability Insurance, Workers’ Compensation and
other products and services as provided by Special District Risk Management Authority
(SDRMA), Association of California Water Agencies – Joint Powers Insurance Authority
(AWCCWA-JPIA) or any other Board approved provider. (Rev 2020-064-2803)
8.Regulatory Fees
9.Service and maintenance of the District’s Board adopted sole source Cityworks® work and
asset management system.
10.Service and maintenance of other Board adopted sole and single source enterprise systems,
infrastructure and services.
11.Mount Miguel Antenna Site Lease Agreement and Addendums
b.The General Manager or his/her Designee is authorized to exceed his/her delegated purchasing
authority under Section 2 of the Code of Ordinances and purchase the following goods and services
without Board approval so long as the amounts are commensurate with the District’s water
revenues for the same time period:
1.Water
2. Gas and electric utility for the operation of the District
3. Chemicals and gasses for the treatment of potable and recycled water.
Formatted: Subscript
Formatted: Subscript
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Section 8 – Change Orders
8.0 PURPOSE:
To provide guidelines for the initiation and approval of contract change orders within the Otay Water
District.
8.1 GENERAL:
Change orders may be initiated by the contractor/vendor or by the District. The District’s General
Manager or his/her designee must approve change orders as defined in the District’s Code of
Ordinances, Section 2.01e. The Board must approve change orders exceeding the General Manager’s
authorized limit. Only written change orders are allowed.
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Section 9 – Authorization to Purchase – Signatory Authority
9.0 PURPOSE:
To provide guidelines and protocol for establishing signatory authority for the approval of purchases
within the Otay Water District.
9.1 GENERAL:
The Board of Directors of the District has sole signatory (ability to sign contracts and approve purchases)
authority within the Otay Water District. The Board may, at a regularly scheduled board meeting,
establish signatory authorization limit(s) for the General Manager as defined in the District’s Code of
Ordinances, Section 2.01c-e. The General Manager at his/her discretion may delegate his/her signatory
authority, as he/she deems necessary. Other than as identified in Section 7.2.8 of this Manual, “Board
Authorized Purchases Exceeding the General Managers Authority”, delegated authorization limits may
not exceed those established by the Board for the General Manager. Delegated authorization
must be documented in the form of a memorandum, signed by the General Manager. Included in the
memorandum must be a listing of individuals and/or job classification to whom signatory and
purchase approval authority has been delegated and the maximum dollar value(s) of said authority.
Copies of the memorandum shall be provided to the District’s senior management team and to the
Purchasing and Facilities Manager. The General Manager at his/her discretion may allow the
Department Chiefs to delegate their signatory authority, as they deem necessary within their departments.
(Rev 2017-08-02)
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Section 10 – Documentation of Purchases
10.0 PURPOSE:
To provide standardized guidelines and procedures for documenting the authorization, pricing
and award of contracts within the Otay Water District. All purchases exceeding petty cash limit,
excluding purchases identified as exempt from this requirement under “Purchases Exempt from
Purchase Order Requirement”, shall be required to be documented as prescribed herein.
10.1 GENERAL:
As a public agency, the fundamental practice of documenting purchases must be followed. The
documentation must provide a record of vendor name, address, contact and telephone number, pricing,
authorized purchase approval(s), terms and conditions, consideration, placement of order, receipt of
order and authorization of payment. Documentation will be made on a “purchase requisition” form
(printed or electronic) together with a purchase order/contract (printed or electronic).
10.2 PROCEDURE:
a.A “Purchase Requisition” (requisition) form is an internal control document. It shall be used
to record vendor name, address, contact and telephone number, authorized purchase
approval(s), pricing, quantities and special terms and conditions. Documentation of competitive
pricing may be in the form of a memorandum or note attached to the requisition. For purchases
requiring the use of formal bidding/advertising, the bids received will be retained in accordance
with the District’s record retention policy. The requisition may be in written or electronic form
provided that it is standardized, and immutable.
b.When complete, the requisition will be used to produce a purchase order/contract. A copy
of the completed purchase requisition will be retained in accordance with the District’s record
retention policy.
c.The purchase order/contract represents a written agreement between the District and the Vendor.
In addition to identifying the District and Vendor, it is used to document terms and conditions.
d.The purchase order/contract will be in a form as approved by the District’s legal counsel.
e.The purchase order form shall be the used as the District’s primary contract document
for material, service, and supply purchases. Typically, purchases of professional engineering
services, consulting and major construction require contracts in a form other than a purchase
order. In the event a contract in a form other than a purchase order is used, the District’s
counsel shall approve it as to form. A purchase order may be issued for control purposes
to supplement a contract. In this event, the purchase order will reference the contract document
as representing the agreement between the District and vendor.
10.2.1 Purchases Exempt from Purchase Order Requirement:
a.The Board has identified the following purchases as exempt from the requirement of a
written purchase order/contract:
1.Travel and meeting advances and reimbursements
2.Purchases less than the petty cash limit
3.Prepaid travel expenses, i.e., airfare and hotel
4.Utilities
5.Television and satellite service
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6.Meal reimbursements
7.Telephone usage charges, including wireless telephones and pagers
8.Postage
9.Classified, legal, and display advertising
10.Petty Cash purchases
11.Mileage reimbursement
12.Memberships and dues
13.Subscriptions and books
14.Permits and fees
15.Customer refunds
16.District credit card reimbursements
17.Employee awards, incentives
18.Employee educational reimbursements
19.Seminars and training
20.Purchases made utilizing Cal Card
21.Contracts or letters of agreement as approved by the General Manager or the Board
of Directors
b.Completed purchase requisitions may be required, as determined by the General Manager
or his/her designee.
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Section 11 – Special Considerations
11.0 Exceptions to Purchasing Procedures:
In specific instances, such as Federal Grants and Assessment Districts, there may be specific requirements
in the contract or ordinance relating to the expenditure of such funds. The conditions of such agreements
and ordinances shall take precedence over the procedures established in this manual.
11.1 Bonding:
a.In addition to any required bid deposit or bond, all construction contracts in excess of $35,000
shall require:
1)A PERFORMANCE BOND in the amount of 100% of the contract price, and
2)A LABOR AND MATERIALS BOND in the amount of not less than 50% of the contract
price.
b.For construction contracts under $35,000, bonding shall be in accordance with District Policy
No. 31, Encouraging Disadvantaged Business Enterprise Firms.
11.2 Encouraging Emerging Business Enterprise:
The District’s purchasing practices shall reflect the requirements set forth in District Policy No. 31,
Encouraging Disadvantaged Business Enterprise Firms.
11.3 Insurance:
a.General, Automobile, and Errors and Omissions:
All contracts shall have a requirement for general, automobile, and errors and omissions insurance
as applicable to the type of service or work contemplated. The amount and type of insurance
required for each type of contract shall be at the discretion of the General Manager in an amount
so as to indemnify the District from loss.
b.Workers’ Compensation:
All public works contracts shall have a requirement for workers’ compensation insurance in an
amount as required by law. Additionally, all non-public works contracts shall require workers’
compensation insurance coverage in an amount sufficient to indemnify the District from loss.
11.4 Invoicing:
Financial obligations of the District are normally settled on a Net 30 day payment basis. All
invoices submitted to the District must include:
1)The vendor’s name, business address and date,
2)The District’s purchase order/contract number and the vendor’s invoice number,
3)The shipment date and/or the date of service,
4)The terms of sale and applicable payment discounts,
5)An itemized description of materials purchased or services performed, including quantities,
unit prices, discounts, extensions, and other charges as specified in the purchase order/contract,
Page 22 of 32
6)Sales and other taxes and freight charges, itemized separately or as specified by the District.
11.5 Receiving, Inspection and Acceptance:
a.All materials, supplies or services furnished shall be exactly as specified, free from all defects and
shall be subject to inspection and testing by the District. The method of inspection to be used
in any particular procurement shall be commensurate with the specific quality and specification
requirements. The Purchasing and Facilities Manager shall be notified immediately if any
materials, supplies or services do not conform to specification. In such cases, the Purchasing
and Facilities Manager shall take appropriate action to protect the interests of the District.
b.Receiving shall be documented on the receiving copy of the purchase order or other electronic
form. When all materials, supplies and/or services have been received, the receiving staff will
forward the vendor’s shipping document(s) to the Finance Department and indicate (in writing or
electronically) that the materials, supplies and/or services have been accepted and that the purchase
order is authorized for payment.
11.6 Specifications:
a.All purchases of materials, supplies and services shall meet the requirements as published by the
District in “Standard Specifications for Water and Sewer Construction”.
b.The requesting person shall define specifications for materials, supplies and services not
addressed by the above referenced publication. The specification shall include information such as
brand or trade names, description of material or method of manufacture, description of performance,
purpose and use, physical and chemical properties, and any other information needed so as to give
the purchasing department enough information to purchase correctly. For purchases requiring a
written specification, it shall be the requisitioning staff’s responsibility to provide a complete
specification document.
c.All specifications shall be drafted so as to assure the maximum practicable competition for the
District’s needs.
11.7 Inventory:
General Manager or his/her designee shall identify District property to be inventoried and shall insure
that periodic inventory reconciliation is performed.
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Section 12 – Disposal of Surplus Property
12.0 PURPOSE:
To provide a standardized method for disposing of materials, supplies and other property, excluding
real property, that is surplus to the needs of the District.
12.1 GENERAL:
a.It is staff’s responsibility to keep the District’s inventories as low as possible and to standardize
materials, supplies and equipment in order to minimize the number of articles carried in stock while
b.Surplus Items - The General Manager shall develop, on an as need basis, an inventory of properties
that are surplus to the District’s needs. The General Manager or his/her designee may declare items
with a residual value less than $10,000.00 as surplus to the needs of the District and authorize their
disposal. Where the residual value of an item exceeds $10,000.00, only the Board of Directors may
declare the property surplus and authorize its disposal.
c.Items of Little or No Value – Items that have no value to the District and little or no value in the
market place except as scrap or for a purpose other than its originally intended use, the General
Manager or his/her designee shall have authority to declare said properties trash or scrap and
12.2 PROCEDURE:
Once property has been declared surplus it shall be the responsibility of the Purchasing and Facilities
Manager, in a manner provided herein and approved by the General Manager, to dispose of the surplus
property. All property shall be disposed of “as is-where is”, with no warranty or guarantee as to
serviceability or usability and where applicable, paid in full in U.S. currency prior to delivery. District
property tags shall be removed from the surplus property prior to its disposal. District employees, as private
individuals, may purchase District surplus property by participating in auction sales as prescribed in
Section 12.2.1 Auction Sale.
12.2.1 Auction Sale:
a.Disposal of surplus property may be accomplished through auction sale.
1)Through consignment of items to a vendor, a private auctioneer, licensed and bonded to do
business in San Diego County, to sell on behalf of the District. Where authorized by the
General Manager, the Purchasing and Facilities Manager shall enter into an agreement with
the vendor that has the potential of generating the most market interest and, therefore, the
highest net proceeds for the District. The consignment vendor shall, at its expense, advertise
the item for sale and shall accept offers for the District, with the District having final
acceptance authority.
2)By advertising for sale in a newspaper of general circulation or in any other manner approved
by the General Manager. Newspaper ads shall be placed at least two (2) weeks prior to the
sale date and shall identify the property for sale. Sealed bids will be solicited unless
otherwise directed by the Purchasing and Facilities Manager and the property will be sold to
the highest bidder.
Bid security shall be provided by requiring that a ten percent (10%) guarantee accompany each
bid or aggregated bid. Such bid security shall be in the form of a certified check, cashier’s
check, or money order payable to the order of the District. Payment of the balance of the total
Page 24 of 32
bid must be made by the successful bidder within twenty-four (24) hours after the award.
In the event the successful bidder fails to pay the balance of his bid, the bid security will be
forfeited and the award will be made to the next highest responsible bidder.
The successful bidder shall be responsible for all required permits, fees and licenses. The
property shall be removed from District premises in a time frame established by the Purchasing
and Facilities Manager.
3)By participation in a joint municipal/public agency public auction. Where authorized by the
General Manager, the District may dispose of surplus property through participation in a
joint municipal/public agency auction.
12.2.2 Sale to Federal, State, and Local Municipalities and Governmental Agencies:
a.Where it is in the best interest of the public, surplus property may be sold by the Purchasing and
Facilities Manager to municipalities and government agencies in accordance with the follow
guidelines. The Purchasing and Facilities Manager shall give preference to local governmental
agencies located within the District’s boundary.
Page 25 of 32
1)If the estimated fair market value, as determined by the Purchasing and Facilities Manager,
does not exceed $10,000, a negotiated sale may be conducted with the governmental agency
and sale of the item concluded at the price determined to be a fair and reasonable market price
for the item.
2)If the estimated fair market value, as determined by the Purchasing and Facilities Manager,
is greater than $10,000 but does not exceed $50,000, the General Manager’s approval shall
be obtained prior to any sale. Information provided to the General Manager shall, at a
minimum, identify the government entity, the rationale behind the sale at the value, and the
manner in which the fair market value was determined.
3)If the estimated fair market value, as determined by the Purchasing and Facilities Manager,
is greater than $50,000, Board approval shall be obtained prior to any sale. Information
provided to the Board shall, at a minimum, identify the government entity, the rationale behind
the sale at that value, and the manner in which the fair market value was determined.
12.2.3 Sale to Republic of Mexico, U.S. Municipalities and Government Agencies:
a.When the District has declared items surplus to its needs and the Purchasing and Facilities
Manager has determined that the item(s) should be sold in accordance with the guidelines
contained herein, such item(s) may be sold to Republic of Mexico, U.S. municipalities and/or
government agencies under the following guidelines:
1)Prior to consummating any sale to a Republic of Mexico, U.S. municipality and/or
governmental agency, the Purchasing and Facilities Manager shall ensure that right of first
refusal for known requirements is offered to local governmental agencies.
2)The Republic of Mexico, U.S. municipality and/or governmental agency shall forward to the
Purchasing and Facilities Manager, a written official request which provides the following
information:
a.Name and address of municipality or governmental agency.
b.Name and telephone number of responsible official who can consummate a resulting sale
agreement and sign appropriate sale documents.
c.Description and quantity of surplus property items desired.
d.Statement as to how the items requested will be used by the requesting municipality or
governmental agency.
3)If the estimated fair market value, as determined by the Purchasing and Facilities Manager,
does not exceed $50,000, the General Manager’s approval shall be obtained. Information
provided to the General Manager shall, at a minimum, identify the government entity, the
rationale behind the sale at that value, and the manner in which the fair market value was
determined.
4)If the estimated fair market value, as determined by the Purchasing and Facilities Manager,
is greater than $50,000, Board approval shall be obtained. Information provided to the
Board shall, at a minimum, identify the government entity, the rationale behind the sale at that
value, and the manner in which the fair market value was determined.
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12.2.4 Donation of District Surplus Property to Municipalities, Governmental Agencies, and Charitable
Organizations:
a.Where it is in the best interest of the public, surplus District property of no or De Minimus
value, where proceeds of the sale of the property will be less than the cost of the sale of the property,
may be donated under the following guidelines to municipalities, governmental agencies, and
charitable organizations in lieu of discarding such property:
b.The District’s Purchasing and Facilities Manager shall first assess the value of the item and the
cost of disposal and make a determination that the item has no value or De Minimus value.
c.The requesting municipality, public agency, or charitable organization shall forward to the
Purchasing and Facilities Manager a written donation request, approved by its governing board or
chief operating officer, which includes the following minimum information:
1.Name and address of municipality, agency, or charitable organization.
2.Name and telephone number of responsible official who will accept the donation, if
approved, and sign appropriate donation documents.
3.Description and quantity of surplus property items desired.
4.Statement as to how the items requested will be used by the requesting public agency.
5.Proof of charitable status (501 (C)) organizations as applicable.
d.Donation of surplus items requested shall be made to requesting entities giving priority to
entities as follows:
1.Public agencies within the District’s boundary
2.Public agencies outside of the District’s boundary
3.Charitable organizations within the District’s boundary
4.Charitable organizations outside of the District’s boundary
e.Donation of District owned surplus property of no or De Minimus value may be approved by
the Purchasing and Facilities Manager when the estimated total fair market value of the
donation, as determined by the Purchasing and Facilities Manager, does not exceed either $25
per item or $500 per lot.
f.Donation of District owned surplus property of no or De Minimus value may be approved by
the General Manager when the estimated total fair market value, as determined by the
Purchasing and Facilities Manager, does not exceed $10,000.
g.Donation of District owned surplus property of no or De Minimus value, where the total
estimated fair market value of the donation, as determined by the Purchasing and Facilities
Manager, exceeds $10,000 shall be made by the Board.
h.For the purpose of this policy, charitable organizations shall mean a non-profit organization exempt
from taxation under the provisions of the Internal Revenue Code, 26 U.S.C. 501 (C), whose primary
purpose is public service or a Republic of Mexico registered public organization promoting
economic and social well-being in the border region.
i.In consideration for the donation and as a condition of transfer, the recipient of the donated surplus
shall execute a release and indemnification agreement satisfactory to the District’s General Counsel.
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12.2.5 Exchange or Trade-In:
Where deemed by the Purchasing and Facilities Manager to be in the best interest of the District, the
surplus property may be exchanged or traded in on new supplies and equipment. Trade-in values must
be documented and retained in accordance with the District’s records retention policy.
12.2.6 Disposal as Scrap:
In the case of surplus property that has been determined by the General Manager or their designee to be
trash or scrap with no or De Minimus value, and where no governmental or non-profit organization
expresses interest in the item, the Purchasing and Facilities Manager may dispose of the property in any
manner deemed appropriate. Where property is disposed of as scrap, full records of such disposal shall
be kept.
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Section 13 –Credit Cards
13.0 PURPOSE:
To provide procedures and guidelines for the issuing and use of credit cards and for the
administration of the Cal-Card Program within the District.
13.1 GUIDELINES:
a.The General Manager is authorized to be issued and to issue credit cards and to establish
revolving credit accounts with vendors where it is in the best interest of the District, in
accordance with applicable statutes and laws.
b.Where feasible, the issuing of credit cards shall be through the State of California Cal Card
Program.
c.Use of credit cards shall be limited to appropriate purchases as defined herein.
d.Purchases utilizing credit cards shall be made in accordance with this policy and established
purchasing procedures and guidelines as defined in the District’s Purchasing Manual. This
includes, but is not limited to complying with the District’s requirements related to authorization
and pricing/ bidding.
e.The intent of utilizing credit cards, and in particular Cal-Card credit cards, is to:
1.Reduce costs associated with the accounts payable function,
2.Reduce payment time to District suppliers,
3.Provide a means to take advantage of time sensitive price discounts,
4.Enhance District operations and reduce cost,
5.Reduce dependency on petty cash disbursements,
6.Provide for expedient purchases during emergencies.
13.2 DEFINITIONS:
a.Cal-Card Program: A system developed by the State of California (under Governor Wilson’s
Executive Order W-73-94) designed to facilitate public credit card purchases up to $50,000.
b.I.M.P.A.C. Government Services (IMPAC): Credit Card provider contracted with the State
of California, through a Master Service Agreement, to provide Visa Credit Card service;
maintain master file and account for each card holder; send monthly statements to each
cardholder, approving official, and agency or district accounting office.
c.District Representative: The District’s contact person for program and accounting office
functions; determines which District personnel receives cards; establishes card limits
including purchase restrictions; establishes District’s procedures and guidelines for
participation in the Cal-Card Program.
d.Cardholder: Person(s) designated by the District’s Representative as being authorized to
make purchases using credit cards and/or the Cal-Card Program within District procedures
and guidelines.
e.Approving Official: Person(s) designated by the District’s Representative to review,
approve, and/or certify monthly cardholder billing statements and adherence to District
purchasing and budgetary procedures; forwards monthly statements to the District’s
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accounting office.
f.Accounting Office Representative: Person designated within the District to receive and
process credit card statements and documentation.
g.Credit Card Limit: The transaction and spending limit established by the District
Representative for a Cardholder.
13.3 PROCEDURE:
Purchases made utilizing credit cards and/or Cal-Cards shall comply with the District’s
requirements, guidelines and procedures as defined within the District’s Purchasing Manual.
13.4 APPROPRIATE PURCHASES:
a.The General Manager or his/her designee shall determine which goods and services are
appropriate for purchase using credit cards and may, in the best interest of the District,
restrict where, when and how credit cards are utilized. The value of a purchase made using
credit cards is limited to the signatory authority of the General Manager and must be
categorized as one of the following:
1.Exempt from the requirement of a purchase order/contract,
2.Made under the auspices of a blanket purchase order,
3.Documented and approved in a form approved by the General Manager,
4.Made under an emergency declared by authority of the General Manager.
13.5 RESPONSIBILITIES UNDER THE CAL_CARD PROGRAM:
13.5.1 District’s Representative:
a.The General Manager or his/her designee is the District’s Representative relative to the Cal-
Card program.
b.The District’s Representative shall be responsible, for:
1.Completion and processing of State required documentation for participation in the Cal-
Card program,
2.Establishment of credit card limits (Credit card limits shall not exceed the purchasing
authority of the General Manager as granted by the Board of Directors and those limits
established by the General Manager under his/her Signatory Authority Delegation
Schedule),
3.Identification of Cardholders, Approving Officials, and Accounting Office
Representative,
4.Overseeing of the Cal-Card Program within the District,
5.Insuring adherence to the District’s purchasing policies, procedures and practice.
13.5.2 Cardholder:
a.The Cardholder shall be responsible for:
1.Adhering to the procedures and guidelines set herein,
2.Reviewing his/her monthly statements for accuracy,
3.Retaining, reconciling, and attaching sales slips and, when applicable, approved
requisitions to his/her monthly statement,
Page 30 of 32
4.Providing and documenting account code information on monthly statements by
transaction,
5.Submitting his/her reconciled statement, with attachments, to his/her Approving Official
in a timely manner.
13.5.3 Approving Official:
a.The Approving Official shall be responsible for:
1.Adhering to the procedures and guidelines set herein,
2.Reviewing and approving for payment the monthly statements for those cardholders
under his/her supervision,
3.Insuring that all information required for payment, including account coding, of monthly
statements is provided to the Finance Department,
4.Requesting additional documentation if necessary,
5.Forwarding all statements to the Finance Department in a timely manner.
13.5.4 Finance Department Representative:
1.The Finance Department Representative shall be responsible for:
1.Adhering to the procedures and guidelines set herein,
2.Receiving consolidated monthly statements,
3.Receiving reconciled statements from Approving Officials,
4.Reconciling statements in accordance with District procedures and policies governing
the accounts payable function.
Page 31 of 32
Appendix
1.Otay Water District Board of Directors Policy No. 21
2.Otay Water District Board of Directors Policy No. 31
3.Otay Water District Memorandum -Signatory Authority Delegation (Revised as necessary by the
General Manager)
Page 32 of 32
Revisions
1.Codified October 2009
2.October 2014 –Amend Section 12 - Disposal of Surplus Property by Board action,
3.April 2016 – Amend Section 7.2.8 Board Authorized Purchases Exceeding the General Manager’s
Authority by Board action.
4.August 2016 – Correction of minor spelling errors. Board action not required.
5.September 2016 – CUPCCAA adoption. Section 7 – Pricing/Bidding Requirements by Board action.
6.May 3, 2017 - Section 2 – Organization; 6.2.3 Cooperative/ Joint Purchases; Section 7 –
Pricing/Bidding Requirements; 7.2.8 Board Authorized Purchases Exceeding the General Manager’s
Authority; miscellaneous formatting by Board action.
7.June 7, 2017 – Added: Section 7.2.8, a, 8. Regulatory Fees
8.August 2, 2017 – Modified: Section 7.2.8, a, 7 Liability Insurance and other services added; Added:
Section 7.2.8, a, 9. Cityworks, 10. Enterprise Systems, 11. Antenna Lease Agreement; Modified:
Section 2 – Organization: Assistant GM deleted; Modified: Section 9 – Authorization to Purchase –
Signatory Authority: Assistant GM deleted
8.9. April 28June 3, 2020 – Appended Section 7.2.8, a, 7 to include: Association of California Water
Agencies – Joint Powers Insurance Authority (AWCCWA-JPIA) or any other Board approved
provider.
Page 1 of 31
OTAY WATER DISTRICT
PURCHASING MANUAL
Revised June 3, 2020
Page 2 of 31
Table of Contents
Section Page
1 – Mission and Ethics Statement . . . . . . . . . . . . . . . . . . . 4
2 – Organization . . . . . . . . . . . . . . . . . . . . . 5
Purpose
Statement
Responsibilities
3 - Purchasing Policy . . . . . . . . . . . . . . . . . . . 7
Purpose
General
Policies
4 - Purchasing Guidelines . . . . . . . . . . . . . . . . . 9
Purpose
General
Guidelines and Protocols
Vendor Involvement
Guidelines and Protocols
5 - Legal Considerations Regarding Purchasing . . . . . . . 11
Purpose
General
6 - Types of Purchases . . . . . . . . . . . . . . . . . . 12
Purpose
General
Procedures
Construction Services (Public Works)
Professional Consulting
Cooperative/Joint Purchases
Emergency Purchases 13
Materials, Goods, Services, and General Consulting
Petty Cash
Sole Source Purchases
Blanket Purchase Orders:
Guidelines for Issuing Blanket Purchase Orders 14
Guidelines for the Use of Blanket Purchase Orders
7 - Pricing/Bidding Requirements . . . . . . . . . . . . . . 15
Purpose
General
Requirements
Formal Advertising
Quotations
Public Works – Construction
Request for Proposals 16
Two Step Bidding
Purchases Exempt from Competitive Pricing
Emergency Purchases 17
Page 3 of 31
Board Authorized Purchases Exceeding the General Manager’s Authority
8 - Change Orders . . . . . . . . . . . . . . . . . . . . . 18
Purpose
General
9 - Authorization to Purchase – Signatory Authority . . . . 19
Purpose
General
10 - Documentation of Purchases . . . . . . . . . . . . . . 20
Purpose
General
Procedure
Purchases Exempt from Purchase Order Requirement
11 - Special Considerations . . . . . . . . . . . . . . . . 22
Exceptions to Purchasing Procedures
Bonding
Encouraging Emerging Business Enterprise
Insurance
Invoicing
Receiving, Inspection and Acceptance 23
Specifications
Inventory
12 - Disposal of Surplus Property . . . . . . . . . . . . . 24
Purpose
General
Procedure
Auction Sale
Sale to Federal, State, and Local Municipalities and Government Agencies 25
Sale to Republic of Mexico Municipalities and U.S. Government Agencies 26
Donation of District Surplus Property to Municipalities, Government Agencies, and
Charitable Organizations 27
Exchange or Trade-In 28
Disposal as Scrap
13 – Cal Card Credit Cards . . . . . . . . . . . . . . . . . 29
Purpose
Guidelines
Definitions
Procedure 30
Authorized Purchases
Responsibilities
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Revisions . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Page 4 of 31
Section 1 – Mission and Ethics Statement
1.0 PURPOSE:
To provide an understanding of the basic goal of the purchasing function within the Otay Water District.
1.1 MISSION STATEMENT:
To provide for the procurement, storage and distribution of all supplies, equipment and services for the
District using progressive purchasing techniques, methods and stringent controls while seeking the
highest cost savings for the customers of the District.
1.2 ETHICS STATEMENT:
The Otay Water District, its governing Board, employees, and agents who are involved at any point in
the process to select suppliers, award and administer contracts and approve payments must adhere to
high standards of ethical behavior. To this end, the policies and guidelines established in this Purchasing
Manual are intended to ensure that purchasing and purchasing related decisions are in accordance with
adherence to the high ethical standards of the purchasing community and of the Otay Water District.
Page 5 of 31
Section 2 – Organization
(Rev 2017-05-03) (Rev 2017-08-02)
2.0 PURPOSE:
To provide an understanding of the Purchasing Division’s organization and its relationship within the
Otay Water District.
2.1 STATEMENT:
The Purchasing and Facilities Manager directs the Purchasing and Facilities Division. The Purchasing
and Facilities Manager reports to the Chief of Administrative Services, who in turn reports to the General
Manager. The General Manager reports to the Board of Directors.
Board of Directors
|
General Manager
|
Chief of Administrative Services
|
Purchasing and Facilities Manager
2.2 RESPONSIBILITIES:
2.2.1 Board of Directors – Ultimate authority regarding the purchasing policies, practices and guidelines
of the District rests with the Board of Directors. It is the Board’s responsibility to establish policy and
direction regarding purchasing functions in accordance with the District’s Code of Ordinances.
2.2.2 General Manager – The General Manager is responsible, in accordance with the District’s Code of
Ordinances, for ensuring that the District complies with Board direction regarding the purchasing
function.
2.2.3 (Deleted)
2.2.4 Chief of Administrative Services – It is the Chief’s responsibility to administer the District’s
Purchasing and Facilities Division as directed by the General Manager.
2.2.5 Purchasing and Facilities Manager – It is the Manager’s responsibility to manage the Purchasing
and Facilities Division as directed by the Chief of Administrative Services and to:
a.Develop objectives, policies, programs and procedures for the negotiation and the
acquisition of materials, supplies, equipment and services for the District.
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b. Coordinate purchasing policies throughout the District.
c. Disseminate to other departments purchasing information designed to promote efficient
operations.
d. Negotiate and approve assigned purchase orders in the best interest of the District.
e. Make purchases for the District in such a manner so as to maximize the value received for
monies expended.
f. Arrange for the sale or disposal of materials and supplies declared surplus by the Board of
Directors.
g. Maintain inventory levels at a satisfactory operating level.
h. Work with District departments to promote vendor/seller relations.
i. Work with District Departments and Committees establishing standardization of
workmanship, materials and supplies used throughout the District.
j. Protect the District’s interest in matters concerning charges related to the purchasing of
materials, supplies and services.
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Section 3 – Purchasing Policy
3.0 PURPOSE:
To provide an understanding of the purchasing function and to establish and present the
purchasing policies within the Otay Water District.
3.1 GENERAL:
Purchasing is fundamental to the operation of the District. It means the acquisition of goods and
services in exchange for an acceptable price or consideration. A purchase may be in the simplest
form or it may involve the development of lengthy written agreements. Every purchase involving
the transfer of goods or services is a contract. As a contract, there are considerations as to the
nature of the purchase, its value, timing, method of payment, delivery, and other conditions that
must be addressed. For this reason, it is the District’s policy to rest the responsibility and authority
to purchase within the Purchasing and Facilities Division (Purchasing Department).
3.2 POLICIES:
a.General Policy: All purchases and requests for pricing or repair services shall be made in
accordance with applicable laws and the District’s Purchasing Manual, policies, and
procedures.
b.Open Door Policy: The Purchasing Department shall maintain an “Open Door” policy
with all salespeople desiring to sell goods or services to the District.
c.Interviews with Salespeople: If it is necessary for staff, other than Purchasing Department
personnel, to interview salespeople regarding details of their products, requests for such
visits should be made through the Purchasing Department. In interviews with salespeople,
no one except the Purchasing Department may comment on the preference for any product,
or give any information regarding performance or price.
d.Correspondence with Suppliers: All correspondence with suppliers must be processed
through the Purchasing Department unless it is technical in nature and makes no references
towards purchasing.
e.Negotiated Changes: Unless authorized by the General Manager, the Purchasing
Department will negotiate all changes to purchases.
f.Authority to Question: In order to serve the best interest of the District, the
Purchasing Department shall have the authority to question all requests for purchases
regarding quantity, quality, timing, and specifications.
g.Approval of Gratis Materials and Samples: The Purchasing Department must approve all
gratis materials, supplies or services submitted to the District as samples or tests prior to
their acceptance.
h.Conflict of Interest: Employees are required to disclose to the Purchasing Department
any conflict of interest in the selection or recommendation for selection of District
vendors, suppliers, or consultants. All contracts shall contain language, as approved
by the District’s legal counsel, requiring Vendors, Suppliers, and Consultants to disclose
any actual and potential conflicts of interest that exist between the Vendor, Supplier, or
Consultant and the District, its representatives, agents, Board of Directors, and employees.
Page 8 of 31
Section 4 – Purchasing Guidelines
4.0 PURPOSE:
To provide guidelines and protocol for the standardized application of purchasing activities within
the Otay Water District.
4.1 GENERAL:
To a large extent, the Purchasing and Facilities Division’s (Purchasing Department) performance
will be measured by how well it satisfies the needs of various departments within the District. It is
essential that there be mutual cooperation between District departments to ensure that a condition
of confidence exists. For this reason the following standardized guidelines and protocols have been
established.
4.1.1 Guidelines and Protocol:
a. Departments will keep the Purchasing Department informed of their current and anticipated
activities.
b. Overlapping duties regarding purchases will be clearly defined in the best interest of
the District.
c. If the material or equipment requested is not readily available or its price is such that
significant savings can be realized through alternatives, the alternative that is in the best
interest of the District shall be selected.
d. Policies and procedures of the District’s Purchasing Manual will be followed.
e. The Purchasing Department will notify interested departments on matters related to
shortages, new products, discontinued products or anything else that directly affects the
performance of the interested department, the Purchasing Department, or the District.
4.2 VENDOR INVOLVEMENT
Through the Purchasing Department’s contact with vendors, it is in a position to develop or
diminish the District’s reputation and/or vendor/District relationships. The District promotes a
fair and aggressive purchasing manner that results in positive vendor relationships. To
accomplish this, the District has established the following standardized guidelines and
protocols.
4.2.1 Guidelines and Protocol:
a. All competition between suppliers is to be kept open and fair.
b. Advantages through vendor errors shall be declined.
c. Revision of bids after submission shall not be accepted.
d. Materials not strictly up to specification that may be usable without sacrifice shall be
reviewed.
e. Bids shall only be solicited from those vendors with whom the District intends to do
business.
Page 9 of 31
f.The District shall not be obligated to any particular vendor.
g.Vendor locations may be visited to promote product and vendor knowledge.
h.Transactions and communications with vendors shall be truthful yet shall not divulge
sensitive or confidential information related to competition.
i.Vendor questions, calls or correspondence shall be answered promptly and in a manner that
maintains fair competition.
Page 10 of 31
Section 5 – Legal Considerations Regarding Purchasing
5.0 PURPOSE:
To provide understanding and direction related to legal considerations within the purchasing function of
the Otay Water District.
5.1 GENERAL:
The District has designated that the Purchasing and Facilities Manager has the authority to act fiducially
as its agent with regard to the purchase of materials, supplies, and services. This designation is referred
to as Law of Agency. As such, the Purchasing and Facilities Manager binds the District to whatever
buying decision is made and makes the District responsible for any purchase order issued under his/her
limits of authority. In addition to acting in the best interest of the District, the Purchasing and Facilities
Manager must ensure that various Federal and State statutes governing purchasing and interstate
commerce are complied with. For these reasons, consultation with the District’s legal counselor shall
be made whenever there is a question concerning anti-trust implications, warranty, risk of loss and
rights and remedies of the District.
Page 11 of 31
Section 6 – Types of Purchases
6.0 PURPOSE:
To provide standardized procedures for the purchase of consulting, construction, materials, goods, and
services within the Otay Water District.
6.1 GENERAL:
The District recognizes the varying levels of complexity within the purchasing function and the need to
establish standardized procedures to administer the various types of purchases made within the District.
6.2 PROCEDURES:
6.2.1 Construction Services (Public Works):
The General Manager, or his/her designee, may award purchase orders/contracts for construction services
that are within the authorization limit of the General Manager as set by the Board of Directors.
Competitive pricing of construction purchases must be in accordance with the bidding and pricing
procedures of the District as outlined in Section 7.2.3 (Pricing/Bidding Requirements) of this manual.
Award shall be made to the responsive and responsible bidder who has submitted the lowest bid
meeting the requirements and criteria set forth in the invitation to bid. For construction contracts
exceeding staff’s limit of authorization, a summary of bids together with staff’s recommendation for
award or possible rejection of bids must be presented to the Board of Directors of the District at a board
meeting. Should an award be made, the Board of Directors will authorize staff to execute a contract on
behalf of the District. After approval as to form and legality by the District’s legal counsel, the successful
bidder and the District’s representative will sign the contract. A copy of the executed contract
shall be promptly provided to the Finance Department for proper accounting review. If after
notification, the successful bidder fails to execute the contract within ten (10) days, the bid deposit,
made in cash, cashier’s check, certified check, or bid bond will be forfeited.
6.2.2 Professional Consulting:
The General Manager, or his/her designee, may award purchase orders/contracts for professional
consulting services that are within the authorization limits as set by the Board of Directors. Professional
Consulting Services are defined as architectural, Engineering, Environmental and any other service as
identified within the California Government Code § 4525-4529. Competitive pricing of consulting
services must be in accordance with the bidding and pricing procedures of the District as outlined in
Section 7.2.4a (Pricing/Bidding Requirements) of this manual. Award shall be made to the consultant
whose response to a request for proposal best meets the District’s needs. At the discretion of the Board
of Directors or the General Manager, the review of submitted proposals may be made by a Committee
established by the Board or the General Manager. For professional consulting contracts exceeding the
General Manager’s limit of authorization, a summary of bids together with staff’s recommendation for
award must be presented to the Board of Directors of the District at a board meeting. Should an award be
made, the Board of Directors will authorize staff to execute a contract on behalf of the District. After
approval as to form and legality by the District’s legal counsel, the successful bidder and the District’s
representative will sign the contract. A copy of the executed contract shall be promptly provided to the
Finance Department for proper accounting review.
6.2.3 Cooperative/ Joint Purchases:
The Purchasing and Facilities Manager may utilize cooperative/"piggyback" contracts, multiple
award schedules and joint power agreements awarded by Federal agencies, any state, municipality
Page 12 of 31
or public agency to purchase goods and services, up to the General Manager’s authorized approval
limit or subject to Board of Directors’ approval when the General Manager’s authority i s
exceeded. These purchases are exempt from the District’s competitive solicitation requirements
so long as the contracts, schedules and agreements are solicited in a manner substantially
consistent with District purchasing policies. (Rev 2017-05-03)
6.2.4 Emergency Purchases:
In the event of a catastrophic emergency, the guidelines and requirements as set forth in California state
statute and in the District’s Code of Ordinance shall prevail over those stated herein.
6.2.5 Materials, Goods, Services, and General Consulting:
Purchases of materials, goods and services, the value of which are within the limits authorized by the
Board of Directors, may be made by the District’s General Manager or his/her designee. Competitive
pricing for materials, goods and services must be in accordance with the bidding and pricing procedures
of the District as outlined in Section 7.2.2, 7.2.4, 7.2.5, and 7.2.6 (Pricing/Bidding Requirements) of
this manual as applicable. Purchases shall be made from the bidder whose bid best meets the District’s
requirements and needs as set forth in the invitation to bid or request for quotation. The Board of Directors
of the District must authorize purchases exceeding the General Manager’s authorized approval limit.
At a meeting of the Board of Directors, a summary of bids together with staff’s recommendation for the
award of a contract/purchase order or the rejection of bids shall be presented. Should an award be made,
the Board of Directors of the District will authorize staff to execute a purchase order/contract on behalf
of the District.
6.2.6 Petty Cash:
The primary purpose of petty cash funds is to reduce costs associated with purchases and expenses in
accordance with the District’s financial policies.
6.2.7 Sole Source Purchases:
Other than contracts for construction, alteration or repair of District facilities, a contract may be
awarded for materials, goods, services, or general consulting without competition when the District’s
General Manager or the Board of Directors determines that either the product is designated to match others
in use on a particular public improvement, is a unique or novel product application required to be used in
the public interest, or where only one brand or trade name is known. Sole source purchases may be
made by the District’s General Manager provided the value of the purchase is within the limits authorized
for the General Manager by the Board of Directors of the District and the reason for the sole source
authorization is documented by the General Manager and retained in accordance with District’s record’s
retention policy. The Board of Directors of the District must authorize sole source purchases exceeding
the General Manager’s authorized limit. At a meeting of the Board of Directors, staff will present the
bid submitted together with a recommendation requesting an award of purchase order/contract to the
vendor identified as the sole source. Should an award be made, the Board will authorize staff to
execute a purchase order/contract on behalf of the District.
6.2.8 Blanket Purchase Orders:
Blanket purchase orders are issued to reduce administrative and operational costs, inventories and
paperwork and may be issued for regularly purchased materials, supplies and services. Should a
blanket purchase order be issued, the order shall include a description of each material, supply and/or
service requested, a unit price for each, the period of time the order shall be in effect, and a statement
obligating the vendor to deliver all or a specified part of the District’s usage requirement upon receipt
Page 13 of 31
of an authorized release from the District. Not included on the blanket purchase order are specific
quantities. Instead of specific quantities, the blanket purchase order shall list an estimate of the quantity
of each item that will be used for the period to which the blanket purchase order refers. Blanket
purchase orders may not be issued for a period of time exceeding one year unless authorized by the
General Manager.
6.2.8.1 Guidelines for Issuing Blanket Purchase Orders:
a.Blanket purchase orders may only be issued, changed, or revoked by the Purchasing and
Facilities Manager or the General Manager.
b.Competitive pricing and vendor selection for blanket purchase orders shall be in accordance
with the policies and guidelines as set forth in this manual.
c.The Board of Directors must authorize blanket purchase orders exceeding the General
Manager’s authorization limit. At a formal meeting of the Board of Directors, a summary of
the requested blanket purchase order(s) shall be presented. The summary shall include a
description of the materials, supplies, and services required, and total order pricing. Should
the Board approve the blanket order(s), they will authorize staff to issue a blanket purchase
order on behalf of the District.
6.2.8.2 Guidelines for the Use of Blanket Purchase Orders:
a.The supervisor of the employee receiving materials, services, and/or goods released against
a blanket purchase order will write the account code/work order information, sign (attesting
that the release is authorized and that all goods/materials/services were received and accepted)
and forward the receiving (packing slips) document to the Finance Department. Processed
shipping documents (coded and signed) must be submitted to the Finance Department no later
than the end of next workday from the date items were received.
b.In the event that invoiced unit pricing exceeds the unit price indicated on the blanket
purchase order, Purchasing will contact the vendor requesting that a corrected invoice be
sent to the District and notify them that payment will be withheld pending the receipt of the
corrected invoice.
c.Should the ordering individual wish the warehouse to take delivery of items released under a
blanket purchase order, notification must be given to warehouse staff. Said notification
should be made by written memorandum or through e-mail or other electronic form and
must include information on the purchase order number assigned to the purchase, what and
when goods are to be delivered, and who will ultimately receive the goods.
Page 14 of 31
Section 7 – Pricing/Bidding Requirements
7.0 PURPOSE:
To provide requirements, policies, and guidelines for the pricing/bidding of purchases within the Otay
Water District.
7.1 GENERAL:
It is the District’s policy to request competitive pricing from responsible vendors for all purchases
exceeding $10,000. Pricing, although important, is not the only factor in determining the overall cost
and value of a product. Quality, service and delivery are factors that must also be considered when
comparing quotations. It is by weighing these factors that an intelligent decision can be made to purchase
the product with the greatest value for the least overall price. (Rev 2017-05-03)
7.2 REQUIREMENTS:
7.2.1 Formal Advertising:
Public works purchases, as defined in the State of California’s government and contract code, shall follow
the procedure outlined under the California Uniform Public Construction Cost Accounting Act
(CUPCCAA) (Sect 22000 et seq. of the California Contract Code and as set by the California Uniform
Construction Cost Accounting Commission (CUCCAC). Solicitations must contain a brief description of
the goods or services required, state where prospective bidders may obtain plans and specifications and
make any required deposits, state the time and place of the bid opening, and state that the District reserves
the right to reject one or all bids. (Rev 2016-09-07) (Rev 2016-09-07)
7.2.2 Quotations:
For purchases greater than $10,000, excluding public works subject to CUPCCAA or formal bidding, a
minimum of three competitive quotations must be obtained. Quotations received may be in written or oral
form. Should oral quotations be received, written documentation must be made identifying the bidder’s
name, contact name, telephone number, the date of the quotation and the pride bid. Should three quotations
not be obtainable, documentation in the form of a notation of memorandum must be provided and attached
to the purchase requisition. Where only one price is obtainable, the actions taken to obtain competitive
pricing shall be documented and attached to the purchase requisition and the purchase may be made and
the requirements of this section shall be satisfied. (Rev 2016-09-07) (Rev 2017-05-03)
7.2.3 Public Works - Construction
Public work purchases equal to or exceeding what is authorized under the California Uniform Public
Construction Cost Accounting Act (CUPCCAA) (Sect 22000 et seq. of the California Code and as set by
the California Uniform Construction Cost Accounting Commission (CUCCAC) must be formally
advertised and sealed bids received. (Rev 2017-09-07)
The Purchasing and Facilities Manager or the General Manager’s designee, in conjunction with the project
manager, and where appropriate, the District’s legal counsel, shall publicly open all sealed bids and
tabulate the results. The bid tabulation, along with a recommendation for award contract or
possible rejection of bids, shall be forwarded to the District’s General Manager.
In the event that the value of the purchase exceeds the General Manager’s signatory authority, a summary
of bids shall be presented together with staff’s recommendation for an award of contract or possible
rejection of bids to the Board of Directors of the District during a formal board meeting. The Board of
Directors will then authorize the execution of the contract on behalf of the District.
Page 15 of 31
Award shall be made to the responsive and responsible bidder who has submitted the lowest bid
meeting the requirements and criteria set forth in the invitation to bid. After approval as to form and
legality of the contract documents by legal counsel, the successful bidder and the appropriate District
representative(s) shall execute the contract. A copy of the executed contract shall be promptly provided
to the Finance Department for proper accounting review.
7.2.4 Request for Proposals:
a. For the Solicitation of Professional Consulting (Engineering): (Rev 2016-09-07)
The General Manager, or his/her designee, will establish a review panel to evaluate and rank submittals
(proposals) using criteria published in the Request for Proposals package. Documents, invitations, and
evaluation of submittals for professional consulting services shall be made in compliance with
Government Code Section 4526-4529 and District Policy #21 – Policy for Selection of Professional
Consultants.
b. For the Solicitation of General Consulting and Services:
The General Manager, or his/her designee, shall determine the method for soliciting and evaluating
proposals for general consulting and services. The request for proposal must be in written form and must
provide sufficient information to clearly identify the work required and provide respondents with a
clear understanding of the District’s needs, work specifications, expectations and the criteria that will
be used to evaluate submittals.
7.2.5 Two Step Bidding:
Where it is considered impractical to initially prepare a purchase description to support an award on price,
a request for proposals may be issued requesting the submission of not priced technical proposals. This
will be followed by an invitation for bids limited to those bidders whose technical proposals meet the
requirements set forth in the first invitation.
7.2.6 Purchases Exempt from Competitive Pricing:
The following contract/purchases are exempt from competitive pricing:
1. With Federal, State or Local Agencies,
2. Temporary labor services to fill time-limited employment needs,
3. For the sole purpose of obtaining expert witness for litigation, and
4. That are for legal defense, legal advice, or legal services.
7.2.7 Emergency Purchases:
During times when the General Manager has declared an emergency, where the immediate acquisition
of materials, goods, and services is required, the purchase of needed materials, goods, and services shall
be made in accordance with California state statutes and per the District’s Code of Ordinances.
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7.2.8 Board Authorized Purchases Exceeding the General Manager’s Authority: (Rev 2017-05-03) (Rev 2017-08-02)
a. The General Manager or his/her Designee is authorized to exceed his/her delegated purchasing
authority under Section 2 of the Code of Ordinance and purchase the following goods and services
without Board approval so long as the overall Board Approved District Budget for Labor and
Benefits, Materials and Maintenance and Administrative expenses is not exceeded:
1. Temporary labor services
2. Fuel, gasoline and diesel
3. Sewage Transportation and Processing
4. Water Meters
5. Service and maintenance of the District’s Board adopted sole source Enterprise Resource
Planning (ERP) System, Tyler Eden
6. Service and maintenance of the District’s Board adopted sole source Geographic Information
System, Environmental Systems Research Institute (ESRI)/GIS
7. Health Benefits, Property, Liability Insurance, Workers’ Compensation and other products and
services as provided by Special District Risk Management Authority (SDRMA), Association
of California Water Agencies – Joint Powers Insurance Authority (ACWA-JPIA) or any other
Board approved provider. (Rev 2020-06-03)
8. Regulatory Fees
9. Service and maintenance of the District’s Board adopted sole source Cityworks® work and
asset management system.
10. Service and maintenance of other Board adopted sole and single source enterprise systems,
infrastructure and services.
11. Mount Miguel Antenna Site Lease Agreement and Addendums
b. The General Manager or his/her Designee is authorized to exceed his/her delegated purchasing
authority under Section 2 of the Code of Ordinances and purchase the following goods and services
without Board approval so long as the amounts are commensurate with the District’s water
revenues for the same time period:
1. Water
2. Gas and electric utility for the operation of the District
3. Chemicals and gasses for the treatment of potable and recycled water.
Page 17 of 31
Section 8 – Change Orders
8.0 PURPOSE:
To provide guidelines for the initiation and approval of contract change orders within the Otay Water
District.
8.1 GENERAL:
Change orders may be initiated by the contractor/vendor or by the District. The District’s General
Manager or his/her designee must approve change orders as defined in the District’s Code of
Ordinances, Section 2.01e. The Board must approve change orders exceeding the General Manager’s
authorized limit. Only written change orders are allowed.
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Section 9 – Authorization to Purchase – Signatory Authority
9.0 PURPOSE:
To provide guidelines and protocol for establishing signatory authority for the approval of purchases
within the Otay Water District.
9.1 GENERAL:
The Board of Directors of the District has sole signatory (ability to sign contracts and approve purchases)
authority within the Otay Water District. The Board may, at a regularly scheduled board meeting,
establish signatory authorization limit(s) for the General Manager as defined in the District’s Code of
Ordinances, Section 2.01c-e. The General Manager at his/her discretion may delegate his/her signatory
authority, as he/she deems necessary. Other than as identified in Section 7.2.8 of this Manual, “Board
Authorized Purchases Exceeding the General Managers Authority”, delegated authorization limits may
not exceed those established by the Board for the General Manager. Delegated authorization
must be documented in the form of a memorandum, signed by the General Manager. Included in the
memorandum must be a listing of individuals and/or job classification to whom signatory and
purchase approval authority has been delegated and the maximum dollar value(s) of said authority.
Copies of the memorandum shall be provided to the District’s senior management team and to the
Purchasing and Facilities Manager. The General Manager at his/her discretion may allow the
Department Chiefs to delegate their signatory authority, as they deem necessary within their departments.
(Rev 2017-08-02)
Page 19 of 31
Section 10 – Documentation of Purchases
10.0 PURPOSE:
To provide standardized guidelines and procedures for documenting the authorization, pricing
and award of contracts within the Otay Water District. All purchases exceeding petty cash limit,
excluding purchases identified as exempt from this requirement under “Purchases Exempt from
Purchase Order Requirement”, shall be required to be documented as prescribed herein.
10.1 GENERAL:
As a public agency, the fundamental practice of documenting purchases must be followed. The
documentation must provide a record of vendor name, address, contact and telephone number, pricing,
authorized purchase approval(s), terms and conditions, consideration, placement of order, receipt of
order and authorization of payment. Documentation will be made on a “purchase requisition” form
(printed or electronic) together with a purchase order/contract (printed or electronic).
10.2 PROCEDURE:
a. A “Purchase Requisition” (requisition) form is an internal control document. It shall be used
to record vendor name, address, contact and telephone number, authorized purchase
approval(s), pricing, quantities and special terms and conditions. Documentation of competitive
pricing may be in the form of a memorandum or note attached to the requisition. For purchases
requiring the use of formal bidding/advertising, the bids received will be retained in accordance
with the District’s record retention policy. The requisition may be in written or electronic form
provided that it is standardized, and immutable.
b. When complete, the requisition will be used to produce a purchase order/contract. A copy
of the completed purchase requisition will be retained in accordance with the District’s record
retention policy.
c. The purchase order/contract represents a written agreement between the District and the Vendor.
In addition to identifying the District and Vendor, it is used to document terms and conditions.
d. The purchase order/contract will be in a form as approved by the District’s legal counsel.
e. The purchase order form shall be the used as the District’s primary contract document
for material, service, and supply purchases. Typically, purchases of professional engineering
services, consulting and major construction require contracts in a form other than a purchase
order. In the event a contract in a form other than a purchase order is used, the District’s
counsel shall approve it as to form. A purchase order may be issued for control purposes
to supplement a contract. In this event, the purchase order will reference the contract document
as representing the agreement between the District and vendor.
10.2.1 Purchases Exempt from Purchase Order Requirement:
a. The Board has identified the following purchases as exempt from the requirement of a
written purchase order/contract:
1. Travel and meeting advances and reimbursements
2. Purchases less than the petty cash limit
3. Prepaid travel expenses, i.e., airfare and hotel
4. Utilities
5. Television and satellite service
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6. Meal reimbursements
7. Telephone usage charges, including wireless telephones and pagers
8. Postage
9. Classified, legal, and display advertising
10. Petty Cash purchases
11. Mileage reimbursement
12. Memberships and dues
13. Subscriptions and books
14. Permits and fees
15. Customer refunds
16. District credit card reimbursements
17. Employee awards, incentives
18. Employee educational reimbursements
19. Seminars and training
20. Purchases made utilizing Cal Card
21. Contracts or letters of agreement as approved by the General Manager or the Board
of Directors
b. Completed purchase requisitions may be required, as determined by the General Manager
or his/her designee.
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Section 11 – Special Considerations
11.0 Exceptions to Purchasing Procedures:
In specific instances, such as Federal Grants and Assessment Districts, there may be specific requirements
in the contract or ordinance relating to the expenditure of such funds. The conditions of such agreements
and ordinances shall take precedence over the procedures established in this manual.
11.1 Bonding:
a. In addition to any required bid deposit or bond, all construction contracts in excess of $35,000
shall require:
1) A PERFORMANCE BOND in the amount of 100% of the contract price, and
2) A LABOR AND MATERIALS BOND in the amount of not less than 50% of the contract
price.
b. For construction contracts under $35,000, bonding shall be in accordance with District Policy
No. 31, Encouraging Disadvantaged Business Enterprise Firms.
11.2 Encouraging Emerging Business Enterprise:
The District’s purchasing practices shall reflect the requirements set forth in District Policy No. 31,
Encouraging Disadvantaged Business Enterprise Firms.
11.3 Insurance:
a. General, Automobile, and Errors and Omissions:
All contracts shall have a requirement for general, automobile, and errors and omissions insurance
as applicable to the type of service or work contemplated. The amount and type of insurance
required for each type of contract shall be at the discretion of the General Manager in an amount
so as to indemnify the District from loss.
b. Workers’ Compensation:
All public works contracts shall have a requirement for workers’ compensation insurance in an
amount as required by law. Additionally, all non-public works contracts shall require workers’
compensation insurance coverage in an amount sufficient to indemnify the District from loss.
11.4 Invoicing:
Financial obligations of the District are normally settled on a Net 30 day payment basis. All
invoices submitted to the District must include:
1) The vendor’s name, business address and date,
2) The District’s purchase order/contract number and the vendor’s invoice number,
3) The shipment date and/or the date of service,
4) The terms of sale and applicable payment discounts,
5) An itemized description of materials purchased or services performed, including quantities,
unit prices, discounts, extensions, and other charges as specified in the purchase order/contract,
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6)Sales and other taxes and freight charges, itemized separately or as specified by the District.
11.5 Receiving, Inspection and Acceptance:
a.All materials, supplies or services furnished shall be exactly as specified, free from all defects and
shall be subject to inspection and testing by the District. The method of inspection to be used
in any particular procurement shall be commensurate with the specific quality and specification
requirements. The Purchasing and Facilities Manager shall be notified immediately if any
materials, supplies or services do not conform to specification. In such cases, the Purchasing
and Facilities Manager shall take appropriate action to protect the interests of the District.
b.Receiving shall be documented on the receiving copy of the purchase order or other electronic
form. When all materials, supplies and/or services have been received, the receiving staff will
forward the vendor’s shipping document(s) to the Finance Department and indicate (in writing or
electronically) that the materials, supplies and/or services have been accepted and that the purchase
order is authorized for payment.
11.6 Specifications:
a.All purchases of materials, supplies and services shall meet the requirements as published by the
District in “Standard Specifications for Water and Sewer Construction”.
b.The requesting person shall define specifications for materials, supplies and services not
addressed by the above referenced publication. The specification shall include information such as
brand or trade names, description of material or method of manufacture, description of performance,
purpose and use, physical and chemical properties, and any other information needed so as to give
the purchasing department enough information to purchase correctly. For purchases requiring a
written specification, it shall be the requisitioning staff’s responsibility to provide a complete
specification document.
c.All specifications shall be drafted so as to assure the maximum practicable competition for the
District’s needs.
11.7 Inventory:
General Manager or his/her designee shall identify District property to be inventoried and shall insure
that periodic inventory reconciliation is performed.
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Section 12 – Disposal of Surplus Property
12.0 PURPOSE:
To provide a standardized method for disposing of materials, supplies and other property, excluding
real property, that is surplus to the needs of the District.
12.1 GENERAL:
a. It is staff’s responsibility to keep the District’s inventories as low as possible and to standardize
materials, supplies and equipment in order to minimize the number of articles carried in stock while
b. Surplus Items - The General Manager shall develop, on an as need basis, an inventory of properties
that are surplus to the District’s needs. The General Manager or his/her designee may declare items
with a residual value less than $10,000.00 as surplus to the needs of the District and authorize their
disposal. Where the residual value of an item exceeds $10,000.00, only the Board of Directors may
declare the property surplus and authorize its disposal.
c. Items of Little or No Value – Items that have no value to the District and little or no value in the
market place except as scrap or for a purpose other than its originally intended use, the General
Manager or his/her designee shall have authority to declare said properties trash or scrap and
12.2 PROCEDURE:
Once property has been declared surplus it shall be the responsibility of the Purchasing and Facilities
Manager, in a manner provided herein and approved by the General Manager, to dispose of the surplus
property. All property shall be disposed of “as is-where is”, with no warranty or guarantee as to
serviceability or usability and where applicable, paid in full in U.S. currency prior to delivery. District
property tags shall be removed from the surplus property prior to its disposal. District employees, as private
individuals, may purchase District surplus property by participating in auction sales as prescribed in
Section 12.2.1 Auction Sale.
12.2.1 Auction Sale:
a. Disposal of surplus property may be accomplished through auction sale.
1) Through consignment of items to a vendor, a private auctioneer, licensed and bonded to do
business in San Diego County, to sell on behalf of the District. Where authorized by the
General Manager, the Purchasing and Facilities Manager shall enter into an agreement with
the vendor that has the potential of generating the most market interest and, therefore, the
highest net proceeds for the District. The consignment vendor shall, at its expense, advertise
the item for sale and shall accept offers for the District, with the District having final
acceptance authority.
2) By advertising for sale in a newspaper of general circulation or in any other manner approved
by the General Manager. Newspaper ads shall be placed at least two (2) weeks prior to the
sale date and shall identify the property for sale. Sealed bids will be solicited unless
otherwise directed by the Purchasing and Facilities Manager and the property will be sold to
the highest bidder.
Bid security shall be provided by requiring that a ten percent (10%) guarantee accompany each
bid or aggregated bid. Such bid security shall be in the form of a certified check, cashier’s
check, or money order payable to the order of the District. Payment of the balance of the total
Page 24 of 31
bid must be made by the successful bidder within twenty-four (24) hours after the award.
In the event the successful bidder fails to pay the balance of his bid, the bid security will be
forfeited and the award will be made to the next highest responsible bidder.
The successful bidder shall be responsible for all required permits, fees and licenses. The
property shall be removed from District premises in a time frame established by the Purchasing
and Facilities Manager.
3)By participation in a joint municipal/public agency public auction. Where authorized by the
General Manager, the District may dispose of surplus property through participation in a
joint municipal/public agency auction.
12.2.2 Sale to Federal, State, and Local Municipalities and Governmental Agencies:
a.Where it is in the best interest of the public, surplus property may be sold by the Purchasing and
Facilities Manager to municipalities and government agencies in accordance with the follow
guidelines. The Purchasing and Facilities Manager shall give preference to local governmental
agencies located within the District’s boundary.
1)If the estimated fair market value, as determined by the Purchasing and Facilities Manager,
does not exceed $10,000, a negotiated sale may be conducted with the governmental agency
and sale of the item concluded at the price determined to be a fair and reasonable market price
for the item.
2)If the estimated fair market value, as determined by the Purchasing and Facilities Manager,
is greater than $10,000 but does not exceed $50,000, the General Manager’s approval shall
be obtained prior to any sale. Information provided to the General Manager shall, at a
minimum, identify the government entity, the rationale behind the sale at the value, and the
manner in which the fair market value was determined.
3)If the estimated fair market value, as determined by the Purchasing and Facilities Manager,
is greater than $50,000, Board approval shall be obtained prior to any sale. Information
provided to the Board shall, at a minimum, identify the government entity, the rationale behind
the sale at that value, and the manner in which the fair market value was determined.
12.2.3 Sale to Republic of Mexico, U.S. Municipalities and Government Agencies:
a.When the District has declared items surplus to its needs and the Purchasing and Facilities
Manager has determined that the item(s) should be sold in accordance with the guidelines
contained herein, such item(s) may be sold to Republic of Mexico, U.S. municipalities and/or
government agencies under the following guidelines:
1)Prior to consummating any sale to a Republic of Mexico, U.S. municipality and/or
governmental agency, the Purchasing and Facilities Manager shall ensure that right of first
refusal for known requirements is offered to local governmental agencies.
2)The Republic of Mexico, U.S. municipality and/or governmental agency shall forward to the
Purchasing and Facilities Manager, a written official request which provides the following
information:
a.Name and address of municipality or governmental agency.
b.Name and telephone number of responsible official who can consummate a resulting sale
Page 25 of 31
agreement and sign appropriate sale documents.
c.Description and quantity of surplus property items desired.
d.Statement as to how the items requested will be used by the requesting municipality or
governmental agency.
3)If the estimated fair market value, as determined by the Purchasing and Facilities Manager,
does not exceed $50,000, the General Manager’s approval shall be obtained. Information
provided to the General Manager shall, at a minimum, identify the government entity, the
rationale behind the sale at that value, and the manner in which the fair market value was
determined.
4)If the estimated fair market value, as determined by the Purchasing and Facilities Manager,
is greater than $50,000, Board approval shall be obtained. Information provided to the
Board shall, at a minimum, identify the government entity, the rationale behind the sale at that
value, and the manner in which the fair market value was determined.
12.2.4 Donation of District Surplus Property to Municipalities, Governmental Agencies, and Charitable
Organizations:
a.Where it is in the best interest of the public, surplus District property of no or De Minimus
value, where proceeds of the sale of the property will be less than the cost of the sale of the property,
may be donated under the following guidelines to municipalities, governmental agencies, and
charitable organizations in lieu of discarding such property:
b.The District’s Purchasing and Facilities Manager shall first assess the value of the item and the
cost of disposal and make a determination that the item has no value or De Minimus value.
c.The requesting municipality, public agency, or charitable organization shall forward to the
Purchasing and Facilities Manager a written donation request, approved by its governing board or
chief operating officer, which includes the following minimum information:
1.Name and address of municipality, agency, or charitable organization.
2.Name and telephone number of responsible official who will accept the donation, if
approved, and sign appropriate donation documents.
3.Description and quantity of surplus property items desired.
4.Statement as to how the items requested will be used by the requesting public agency.
5.Proof of charitable status (501 (C)) organizations as applicable.
d.Donation of surplus items requested shall be made to requesting entities giving priority to
entities as follows:
1.Public agencies within the District’s boundary
2.Public agencies outside of the District’s boundary
3.Charitable organizations within the District’s boundary
4.Charitable organizations outside of the District’s boundary
e.Donation of District owned surplus property of no or De Minimus value may be approved by
the Purchasing and Facilities Manager when the estimated total fair market value of the
donation, as determined by the Purchasing and Facilities Manager, does not exceed either $25
per item or $500 per lot.
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f. Donation of District owned surplus property of no or De Minimus value may be approved by
the General Manager when the estimated total fair market value, as determined by the
Purchasing and Facilities Manager, does not exceed $10,000.
g. Donation of District owned surplus property of no or De Minimus value, where the total
estimated fair market value of the donation, as determined by the Purchasing and Facilities
Manager, exceeds $10,000 shall be made by the Board.
h. For the purpose of this policy, charitable organizations shall mean a non-profit organization exempt
from taxation under the provisions of the Internal Revenue Code, 26 U.S.C. 501 (C), whose primary
purpose is public service or a Republic of Mexico registered public organization promoting
economic and social well-being in the border region.
i. In consideration for the donation and as a condition of transfer, the recipient of the donated surplus
shall execute a release and indemnification agreement satisfactory to the District’s General Counsel.
12.2.5 Exchange or Trade-In:
Where deemed by the Purchasing and Facilities Manager to be in the best interest of the District, the
surplus property may be exchanged or traded in on new supplies and equipment. Trade-in values must
be documented and retained in accordance with the District’s records retention policy.
12.2.6 Disposal as Scrap:
In the case of surplus property that has been determined by the General Manager or their designee to be
trash or scrap with no or De Minimus value, and where no governmental or non-profit organization
expresses interest in the item, the Purchasing and Facilities Manager may dispose of the property in any
manner deemed appropriate. Where property is disposed of as scrap, full records of such disposal shall
be kept.
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Section 13 –Credit Cards
13.0 PURPOSE:
To provide procedures and guidelines for the issuing and use of credit cards and for the
administration of the Cal-Card Program within the District.
13.1 GUIDELINES:
a. The General Manager is authorized to be issued and to issue credit cards and to establish
revolving credit accounts with vendors where it is in the best interest of the District, in
accordance with applicable statutes and laws.
b. Where feasible, the issuing of credit cards shall be through the State of California Cal Card
Program.
c. Use of credit cards shall be limited to appropriate purchases as defined herein.
d. Purchases utilizing credit cards shall be made in accordance with this policy and established
purchasing procedures and guidelines as defined in the District’s Purchasing Manual. This
includes, but is not limited to complying with the District’s requirements related to authorization
and pricing/ bidding.
e. The intent of utilizing credit cards, and in particular Cal-Card credit cards, is to:
1. Reduce costs associated with the accounts payable function,
2. Reduce payment time to District suppliers,
3. Provide a means to take advantage of time sensitive price discounts,
4. Enhance District operations and reduce cost,
5. Reduce dependency on petty cash disbursements,
6. Provide for expedient purchases during emergencies.
13.2 DEFINITIONS:
a. Cal-Card Program: A system developed by the State of California (under Governor Wilson’s
Executive Order W-73-94) designed to facilitate public credit card purchases up to $50,000.
b. I.M.P.A.C. Government Services (IMPAC): Credit Card provider contracted with the State
of California, through a Master Service Agreement, to provide Visa Credit Card service;
maintain master file and account for each card holder; send monthly statements to each
cardholder, approving official, and agency or district accounting office.
c. District Representative: The District’s contact person for program and accounting office
functions; determines which District personnel receives cards; establishes card limits
including purchase restrictions; establishes District’s procedures and guidelines for
participation in the Cal-Card Program.
d. Cardholder: Person(s) designated by the District’s Representative as being authorized to
make purchases using credit cards and/or the Cal-Card Program within District procedures
and guidelines.
e. Approving Official: Person(s) designated by the District’s Representative to review,
approve, and/or certify monthly cardholder billing statements and adherence to District
purchasing and budgetary procedures; forwards monthly statements to the District’s
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accounting office.
f. Accounting Office Representative: Person designated within the District to receive and
process credit card statements and documentation.
g. Credit Card Limit: The transaction and spending limit established by the District
Representative for a Cardholder.
13.3 PROCEDURE:
Purchases made utilizing credit cards and/or Cal-Cards shall comply with the District’s
requirements, guidelines and procedures as defined within the District’s Purchasing Manual.
13.4 APPROPRIATE PURCHASES:
a. The General Manager or his/her designee shall determine which goods and services are
appropriate for purchase using credit cards and may, in the best interest of the District,
restrict where, when and how credit cards are utilized. The value of a purchase made using
credit cards is limited to the signatory authority of the General Manager and must be
categorized as one of the following:
1. Exempt from the requirement of a purchase order/contract,
2. Made under the auspices of a blanket purchase order,
3. Documented and approved in a form approved by the General Manager,
4. Made under an emergency declared by authority of the General Manager.
13.5 RESPONSIBILITIES UNDER THE CAL_CARD PROGRAM:
13.5.1 District’s Representative:
a. The General Manager or his/her designee is the District’s Representative relative to the Cal-
Card program.
b. The District’s Representative shall be responsible, for:
1. Completion and processing of State required documentation for participation in the Cal-
Card program,
2. Establishment of credit card limits (Credit card limits shall not exceed the purchasing
authority of the General Manager as granted by the Board of Directors and those limits
established by the General Manager under his/her Signatory Authority Delegation
Schedule),
3. Identification of Cardholders, Approving Officials, and Accounting Office
Representative,
4. Overseeing of the Cal-Card Program within the District,
5. Insuring adherence to the District’s purchasing policies, procedures and practice.
13.5.2 Cardholder:
a. The Cardholder shall be responsible for:
1. Adhering to the procedures and guidelines set herein,
2. Reviewing his/her monthly statements for accuracy,
3. Retaining, reconciling, and attaching sales slips and, when applicable, approved
requisitions to his/her monthly statement,
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4. Providing and documenting account code information on monthly statements by
transaction,
5. Submitting his/her reconciled statement, with attachments, to his/her Approving Official
in a timely manner.
13.5.3 Approving Official:
a. The Approving Official shall be responsible for:
1. Adhering to the procedures and guidelines set herein,
2. Reviewing and approving for payment the monthly statements for those cardholders
under his/her supervision,
3. Insuring that all information required for payment, including account coding, of monthly
statements is provided to the Finance Department,
4. Requesting additional documentation if necessary,
5. Forwarding all statements to the Finance Department in a timely manner.
13.5.4 Finance Department Representative:
1. The Finance Department Representative shall be responsible for:
1. Adhering to the procedures and guidelines set herein,
2. Receiving consolidated monthly statements,
3. Receiving reconciled statements from Approving Officials,
4. Reconciling statements in accordance with District procedures and policies governing
the accounts payable function.
Page 30 of 31
Appendix
1.Otay Water District Board of Directors Policy No. 21
2.Otay Water District Board of Directors Policy No. 31
3.Otay Water District Memorandum -Signatory Authority Delegation (Revised as necessary by the
General Manager)
Page 31 of 31
Revisions
1.Codified October 2009
2.October 2014 –Amend Section 12 - Disposal of Surplus Property by Board action,
3.April 2016 – Amend Section 7.2.8 Board Authorized Purchases Exceeding the General Manager’s
Authority by Board action.
4.August 2016 – Correction of minor spelling errors. Board action not required.
5.September 2016 – CUPCCAA adoption. Section 7 – Pricing/Bidding Requirements by Board action.
6.May 3, 2017 - Section 2 – Organization; 6.2.3 Cooperative/ Joint Purchases; Section 7 –
Pricing/Bidding Requirements; 7.2.8 Board Authorized Purchases Exceeding the General Manager’s
Authority; miscellaneous formatting by Board action.
7.June 7, 2017 – Added: Section 7.2.8, a, 8. Regulatory Fees
8.August 2, 2017 – Modified: Section 7.2.8, a, 7 Liability Insurance and other services added; Added:
Section 7.2.8, a, 9. Cityworks, 10. Enterprise Systems, 11. Antenna Lease Agreement; Modified:
Section 2 – Organization: Assistant GM deleted; Modified: Section 9 – Authorization to Purchase –
Signatory Authority: Assistant GM deleted
9.June 3, 2020 – Appended Section 7.2.8, a, 7 to include: Association of California Water Agencies –
Joint Powers Insurance Authority (ACWA-JPIA) or any other Board approved provider.
Insurance
Provider
Change
PROPERTY, LIABILITY, AND
WORKERS’ COMPENSATION
Eid Fakhouri, CPA Finance Manager
Otay Water District Insurance Programs
Current Provider: Special District Risk Management Authority (SDRMA)
Proposed New Provider -Association of the California Water Agencies/Joint Powers Insurance
Authority (ACWA-JPIA)
Karen Thesing, ACWA-JPIA, Director of Insurance Services
➢Property Coverage –(District Assets)
Reservoirs, pump stations, facilities, machinery, mobile equipment, automobiles
Money, securities, cash, business interruption, errors and omissions
➢Liability Coverage–(Includes Non-District Assets)
Bodily injury, 3rd party claims, property damage, accidental pollution
Employee dishonesty, errors and omissions, employee benefits administration
➢Workers’ Compensation –(Protects Employees)
Otay Water District Insurance Programs
Actions Necessary to Change Insurance Providers from SDRMA to ACWA-JPIA
➢Adopt Resolution No. 4381 consenting to enter the joint protection programs of the
Association of the California Water Agencies/Joint Powers Insurance Authority (ACWA-
JPIA) and hereby elects to join the Liability, Property, and Workers’ Compensation
Programs sponsored by the Authority.
➢Adopt Resolution No. 4382 authorizing application to the Director of Industrial Relations,
State of California for a certificate of consent to self-insure workers’ compensation
liabilities.
➢Approve modification to the District’s Purchasing Manual Section 7.2.8 “Board
Authorized Purchases Exceeding the General Manager’s Authority” to include insurance
services provided by ACWA-JPIA.
Otay Water District Insurance Programs
Actions Necessary to Change Insurance Providers from SDRMA to ACWA-JPIA
➢Authorize the General Manager to sign contracts and agreements as needed for
insurance program services on behalf of the District with the ACWA-JPIA.
➢Appoint a representative to the ACWA-JPIA Board, and an alternate.
Historical Cost of Insurance
SDRMA
Programs FY18 FY19 %FY20 %FY21 %
Property &
Liability (P&L)$ 650,906 $ 775,520 19.1 $ 908,948 17.2 $ 1,454,317 60.0
Workers'
Compensation
(WC)$ 319,226 $ 405,167 26.9 $ 608,624 50.2 $ 563,212 -7.5
FY21 Rate Comparison
FY21 Quotations ACWA-JPIA SDRMA Savings
Property & Liability (P&L)$ 1,103,925 $ 1,454,317 ($350,392)
Workers' Compensation (WC)$ 428,584 $ 563,212 ($134,628)
TOTAL $ 1,532,509 $ 2,017,529 ($485,020)
ACWA-JPIA
(Formed in 1979 as a Public Entity Risk Pool)
➢Only serves water agencies, currently made up of over 360 member agencies
including local agencies in San Diego County
➢Equivalent programs and coverages as SDRMA
➢Three-year program commitment
➢Retrospective Allocation Point or (RAP)
➢Member governed –Board representation
➢Risk management services, including on-site assessments, trainings, and best
practice recommendations to reduce loss
Proposed start date: July 1, 2020
District’s Purchasing Manual
Current Language:
7.2.8 Board Authorized Purchases Exceeding the General Manager’s Authority:
➢Item 7. Medical Service Benefits, Property Liability Insurance and other products
and services as provided by Special District Risk Management Authority (SDRMA)
Proposed Language:
➢Item 7.Health Benefits, Property,Liability Insurance, Worker’s Compensation and
other products and services as provided by Special District Risk Management
Authority (SDRMA), Association of California Water Agencies –Joint Powers
Insurance Authority (ACWA-JPIA) or any other Board approved provider.
Next Steps
1.Adopt Resolution No. 4381
2.Adopt Resolution No. 4382
3.Approve modification to the District’s Purchasing Manual
Section 7.2.8
4.Authorize the General Manager to sign contracts and
agreements as needed for insurance program services on
behalf of the District with the ACWA-JPIA
5.Appoint a representative to the ACWA-JPIA Board, and an
alternate
Questions?
STAFF REPORT
TYPE MEETING:Regular Board MEETING DATE: June 3, 2020
SUBMITTED BY:Kevin Koeppen, Assistant
Chief of Finance
PROJECT: DIV. NO.All
APPROVED BY: Joseph R. Beachem, Chief Financial Officer
Jose Martinez, General Manager
SUBJECT:Adopt Resolution No. 4383 Amending Policy No. 25, the Reserve
Policy, of the District’s Code of Ordinances Establishing a
Sewer Rate Stabilization Fund; and Approve the Transfer of
$175,000 from the Sewer General Fund to the Sewer Rate
Stabilization Fund.
GENERAL MANAGER’S RECOMMENDATION:
That the Board adopt Resolution No. 4383 amending Policy No. 25, the
Reserve Policy, of the District’s Code of Ordinances establishing a
sewer rate stabilization fund; and approve the transfer of $175,000
from the sewer general fund to the sewer rate stabilization fund.
COMMITTEE ACTION:
Please see Attachment A.
PURPOSE:
To present to the Board a revision of the Reserve Policy establishing
a sewer rate stabilization fund and to request that the Board approve
a transfer of $175,000 from the sewer general fund to the sewer rate
stabilization fund.
BACKGROUND:
In December of 2019, the Otay Water District Financing Authority
issued the 2019 Wastewater Revenue Bonds. The terms of financing
included provisions allowing the District’s sewer fund to establish a
rate stabilization fund (RSF) that may be used to meet covenanted
debt service coverage levels. The 2019 Wastewater Revenue Bonds are
the sewer fund’s only current debt obligation. Prior to its
issuance, the sewer fund had no outstanding debt obligations.
AGENDA ITEM 6
ANALYSIS:
Staff is recommending that the Board establish a sewer RSF for the
purpose of reserving amounts in years where the sewer fund’s net
revenues are stronger than expected. The funds can then be used to
mitigate “rate shock” in years where net revenues are weaker in order
to manage debt service coverage.
The fund is to be used for the purpose of minimizing rate increases
in response to one-time events and therefore stabilizing the rates
and charges imposed by the District to meet covenanted debt service
coverage levels. The RSF is not intended to be used to offset
regular rate increases needed to meet routine inflationary cost
increases in operations.
The RSF target balance shall be equal to the financial impact of two
(2) consecutive years of low winter water usage and the maximum fund
balance shall be equal to the financial impact of three (3)
consecutive years of low winter water usage. Currently the
calculated target balance is $315,000 and the maximum balance is
$470,000.
The District may budget for transfers to the RSF after payment of
operating expenses for the annual debt service obligations coming due
and payable in the fiscal year. The District may only deposit
amounts into the RSF after the payment of the fiscal year debt
service obligation has been paid.
In FY 2020, the District sold property which was intended to be used
as a shared sewer and water operations yard. Approximately $175,000
of the proceeds from the land sale were credited to the sewer fund.
The bond requires that the current year’s debt obligation be paid
prior to any funds being transferred into the RSF in a fiscal year.
The current fiscal year debt obligation has been paid and the other
sewer reserves are at target levels; therefore, staff is recommending
that $175,000 of proceeds from the land sale be transferred to the
RSF at this time.
The San Diego County Water Authority (CWA) has a RSF, which it has
used to ensure that the debt coverage requirements are met during
periods of financial distress. CWA has utilized its RSF to manage
its debt service coverage in years of reduced water sales due to
conservation during droughts or above average rainfall. CWA was also
evaluating the use of RSF funds to aid in offsetting the anticipated
adverse impacts of rate pressures in FY 2021.
The District’s current outstanding water bonds are parity bond
obligations whereby each bond issuance carries the same priority of
payment and debt service coverage is calculated on a combined
basis. None of the earlier water bond issuances included the RSF, so
it did not seem advantageous to add an RSF to new water bond issues
because the RSF could not be used in the combined coverage ratio
calculation. Staff will be evaluating the inclusion of rate
stabilization provisions in the water funds future bond
issuances. For a RSF to be an effective fund used to meet debt
coverage covenants, all the outstanding debt obligations must include
similar rate stabilization fund provisions. Therefore, a water RSF
would not be available to achieve debt coverage until the current
outstanding water bonds mature or are refinanced and include the RSF
provision.
FISCAL IMPACT:
Amendments to the Reserve Policy do not have any financial impact.
The $175,000 in proceeds from the sale of the land were not included
in the FY 2020 budget or six-year rate model. These unanticipated
revenues are being recommended to be transferred to the RSF because
they were unanticipated and all reserves are at or above target
levels.
STRATEGIC GOAL:
The District ensures its continued financial health through long-term
financial planning and debt planning.
LEGAL IMPACT:
None.
Attachments:
A) Committee Action
B) Resolution No. 4383
Exhibit I Strike-through Policy No. 25
C) Proposed Policy No. 25
ATTACHMENT A
SUBJECT/PROJECT:
Adopt Resolution No. 4383 Amending Policy No. 25, the
Reserve Policy, of the District’s Code of Ordinances
Establishing a Sewer Rate Stabilization Fund; and Approve
the Transfer of $175,000 from the Sewer General Fund to the
Sewer Rate Stabilization Fund.
COMMITTEE ACTION:
The Finance and Administration Committee recommend that the
Board adopt Resolution No. 4383 amending Policy No. 25, the
Reserve Policy, of the District’s Code of Ordinances
establishing a sewer rate stabilization fund; and approve the
transfer of $175,000 from the sewer general fund to the sewer
rate stabilization fund.
NOTE:
The “Committee Action” is written in anticipation of the
Committee moving the item forward for Board approval. This
report will be sent to the Board as a Committee approved item,
or modified to reflect any discussion or changes as directed
from the Committee prior to presentation to the full Board.
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RESOLUTION NO.4383
A RESOLUTION OF THE BOARD OF DIRECTORS OF
THE OTAY WATER DISTRICT AMENDING
RESERVE POLICY NO. 25 OF THE
DISTRICT’S CODE OF ORDINANCES
WHEREAS, the Otay Water District Board of Directors have
been presented with an amended Reserve Policy No. 25 of the
District’s Code of Ordinances for the financial management of
the Otay Water District; and
WHEREAS, the amended Reserve Policy has been reviewed and
considered by the Board, and it is in the interest of the
District to adopt the amended Reserve Policy; and
WHEREAS, the strike-through copy of the proposed policy is
attached as Exhibit 1 to this resolution; and
NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED by
the Board of Directors of the Otay Water District that the
amended Policy No. 25, incorporated herein as Attachment C, is
hereby adopted.
PASSED, APPROVED AND ADOPTED by the Board of Directors of
Otay Water District at a board meeting held this 3rd day of June,
2020, by the following vote:
Ayes:
Noes:
Abstain:
Absent:
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________________________
President
ATTEST:
____________________________
District Secretary
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1.0 The District
The Otay Water District is a California municipal water 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 their
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 provides water service within its boundaries, and
provides sewer and recycled water service within certain portions
of the District. As such, the District operates three distinct
business segments:
• Potable water
• Recycled water
• Sewer
Each of these business segments has an identifiable 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 the service costs relating to each of its four
customer service types. 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.
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1.1 The District’s Use of Financial Resources
All of the District’s expenditures fall into two broad categories:
operating costs and capital expenditures. The operating costs
include costs relating to 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 services. The District uses
various funds to support the operating and capital efforts.
Operations and maintenance is financed only by rates and charges,
also called pay-as-you-go, while capital infrastructure is
financed using two financing methods: pay-as-you-go and debt
issuance (requiring annual debt service). The Capital Improvement
Program (CIP) and the two funding methods support the
construction, betterment, and replacement of infrastructure in all
three business areas: potable, recycled, and sewer.
The District establishes different funds to track revenues
allocated to different activities. Once established, each fund
receives financial resources up to the levels defined in this
policy. Every 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 requirements and financial
resources are then evaluated to ensure that the existing fund
balances and additional revenues are sufficient within the current
budget cycle and for the next five years to maintain target fund
levels. If a deficit is identified, then options for transfers,
shifting CIP projects, debt, cost saving measures, and/or rate
increases are evaluated.
1.2 The District’s Capital Improvement Program (CIP)
The planning, design, and construction costs of all capital
facilities within the three business segments are allocated to
four cost types and corresponding fund categories: New Water
Supply, Expansion, Replacement, and/or Betterment. The allocation
to these four cost types is defined in the District’s Capital
Improvement Program (CIP) and is determined by an engineering
analysis that identifies which type of customer will benefit from
each facility, planned or existing. The costs of the capital
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improvements are borne by either existing users or by the
developing areas, or by a combination of the two, as applicable.
This Reserve Policy protects both the existing users and the
developing areas from incurring unwarranted costs. Developing
areas are not required to finance facilities that are replacement
or betterment and established areas are not required to replace
facilities before they are worn out because of new development.
However, to ensure a fair allocation of costs, each facility has
the potential to be classified into any or all of the four cost
types. In addition to these cost types there are occasional CIPs
that may be billable to a third party, if for example a third
party requires a District facility be relocated. Paragraphs a
through d below, describe how the costs of capital facilities are
financed through various fees.
a. New Water Supply
The portion of a new supply project that benefits new users
is financed from the reserves in the New Water Supply Fund
category. These reserves are primarily derived from proceeds
of the new water supply fee. The New Water Supply Fund is
restricted, meaning the amounts credited to this fund are
accounted for separately and are used solely for the
planning, design, and construction of the new water supply
expansion facilities. Debt financing may also be a temporary
financial resource to finance new water supply projects. The
District has a Debt Policy (Policy No. 45) that guides the
debt issuance process. Any debt proceeds used for this
purpose would be restricted in nature and tracked separately.
General use reserves may also be placed in the Designated New
Water Supply Fund and used for water supply projects.
b. Expansion
The portion of a CIP project that benefits new users is
financed from the reserves in the Expansion Fund category.
These reserves are primarily derived from proceeds of the
“incremental” portion of the capacity fees collected within
developing areas. Capacity fees are accounted for separately
and used for the planning, design, and construction of
expansion facilities. Additionally, expansion may be
financed by the “buy-in” portion of the capacity fee which is
restricted for CIP purposes, but not specifically for
expansion. Debt financing may also be a temporary financial
resource for expansion projects. General use reserves may
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also be placed in the Designated Expansion Fund and used for
expansion projects.
c. Replacement
The portion of a CIP project that benefits existing users by
replacing an existing facility is financed from the reserves
in the Replacement Fund category. Replacement of facilities
may be financed with proceeds of the “buy-in” portion of the
capacity fees, general use reserves held in the Designated
Replacement Fund, and debt proceeds. The various funding
sources available for replacement projects is anticipated to
provide the necessary flexibility to begin projects while any
necessary debt financing is being obtained.
d. Betterment
Facilities that improve reliability, meet new regulations, or
create increased levels of service are considered betterment
facilities that benefit existing users. The reserves in the
Betterment Fund category are used to finance these projects
or portions of projects. Proceeds of the “buy-in” portion of
the capacity fees may also be used to finance betterment
projects. General use reserves may be placed in the
Designated Betterment Fund and used for betterment projects.
1.21 Relocations
Occasionally, relocation of a District facility is required by a
third party. If the District has a superior easement the
relocation cost will be paid by the third party, but only to the
extent that the District does not benefit from the relocation.
When relocation is required, a CIP project may be created which is
wholly or partially financed by a third party. On occasion, the
District will require that its own facilities be relocated.
Depending on the nature of the facilities, the financial resources
for these projects could be from new water supply, expansion,
replacement, betterment or third party financing. Each project is
individually negotiated with the third party based on the facts
and circumstances of the relocation. Occasionally, the District
will improve the facilities that are being relocated. When
determining how to allocate costs to various funds the following
guideline is suggested: if a project has more than five years of
useful life remaining, an incremental cost view should be
considered; if the project has less than five years of useful life
remaining, a pro-rata cost approach should be considered. Also,
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the likelihood the District will benefit from an asset’s life
extension should be evaluated prior to allocating costs.
1.22 Oversizing
If deemed reasonable by the District, in connection with the
construction of backbone facilities, a developer may be required
to oversize new facilities for future development. The developer
is reimbursed for incremental oversizing costs as per Policy
No. 26. These reimbursements are not available for the
distribution system within a development which is an obligation
of the developer.
1.23 Exclusion of Developed Areas from Expansion Costs
Developed areas are assumed 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 financing costs are allocated to these areas so that they
will not incur any costs for newly developing areas, except for
capital projects that produce district-wide benefit or cost
savings.
1.24 Improvement Districts (IDs)
Improvement Districts (IDs) are established to facilitate the
financing of particular improvements by the specific
beneficiaries. The District has a number of improvement districts
that were established for General Obligation (GO) debt repayment.
Most GO debt has been paid off and it is unlikely that the
District will issue additional GO debt. Improvement districts
continue to be used for other purposes: 1) to distinguish sewer
customers from water customers on the county tax roll; or 2) to
place parcels on the county tax roll for the collection of
availability fees.
Over the years, the District moved to a district-wide perspective
of financing improvements. This philosophy is evident by the
district-wide capacity and annexation fees. The District also
uses district-wide water rates. As time goes on, it is expected
that IDs will continue to outgrow their purpose and their use will
diminish.
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1.3 The Purpose of the Policy
Public entities accumulate and maintain reserves to ensure both
financial stability and continuous availability of services.
Financial stability and the resulting improved credit quality
allow the public entity to weather times of uncertainty and the
impact of negative events, both major and minor. Reserves allow
for the ongoing maintenance of property and timely payment of
expenses even when such expenses exceed money available from 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 public entity.
A “reserve” has a number of meanings, as follows:
• Working capital is required to insure timely payment of
obligations.
• A buffer against volatility in revenues.
• Liquidity is required to obtain other goods and services
(e.g., bank services).
• Designated money to protect creditors.
• Money set aside to replace assets at the end of their useful
lives.
• Money set aside to repair or replace assets damaged or
destroyed at unanticipated times.
It is important to note that reserves, 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. In addition, the term fund balance was 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 finance contingent
future activities, whether known or unanticipated, operating or
capital in nature. The District’s Reserve Policy governs the
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management and use of these financial resources. 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
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 as well as the demand
for 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
Educational Revenue Augmentation Fund (ERAF) contributions or
changes in calculation methodology.
• Operating Costs - increases in operating and maintenance
costs because of inflation, labor agreement or other
modification.
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• 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 require short-
term borrowing in the absence of sufficient financial
resources.
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, Report No. 2003-137. All of
these recommendations have 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, including minimums and maximums, for the
accumulation of reserves.
• Identify the events or conditions that prompt the use of
reserves.
• Conform to plans to acquire or build capital assets.
• Receive Board approval and that it is 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 reserves.1
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.
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Specifically, the Constitution states that “each entity of the
government can establish contingency, emergency, unemployment,
reserve, sinking fund… or similar funds as it shall deem
reasonable and proper.”2 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 context for different
districts and different contingencies justifying reserves.
The Government Finance Officers Association (GFOA) in its
“Recommended Practice on Appropriate Level of Unreserved Fund
Balance in the General Fund” (2002) states that in
establishing a policy governing the level of unreserved fund
balance in the general fund, a government should consider a
variety of factors. These include:
• The predictability of its revenues and the volatility of
its expenditures (i.e., higher levels of the unreserved
fund balances 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 the 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 the unreserved fund balance to
2 California Constitution, Article XIII B, Section 5.
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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 has 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
levels to recover the cost of service. The District’s Reserve
Policy has been drafted with consideration of the GFOA, CSDA, and
State Auditor’s general guidelines as provided above. In
addition, the District has adopted the following principles in the
management of its financial resources:
• Reserves are held and used only for the purpose for which
they are collected. This is done to maintain equity among
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 operations and maintenance from capital
expenditures occurs within each of the service types. This
is done because the financing of these expenditures is often
on different timelines or use different reserves.
• The District will hold its reserves 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 reserves 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 long-term financing which spreads the
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cost of facilities over the life of the facilities. The
burden to pay for facilities is then paid by those who use
them. The District could amass significant reserves by pre-
collecting financial resources in a Replacement Reserve Fund
allowing the District to cash finance all replacements.
However, this would require significant rate increases
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 model on 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 fees charged. This
review also insures that reserves will be available to continue to
serve the District’s customers.
Financial Sources
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 financed by developers.
b. 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.
c. Water Annexation Fees (General Use)
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Annexation fees3 are collected as a condition of annexing
into the District’s potable or recycled water facilities.
Since the existing facilities have been built and maintained
by developers or customers within the District, the
annexation fee is calculated based on the present value of
all property taxes (1% property tax and availability fees)
paid by existing and prior customers. The annexation fee
reimburses existing customers for past contributions so that
all customers have contributed more equally to water
facilities. Proceeds of annexation fees are unrestricted and
may be used for any general fund purpose.
d. Sewer Annexation Fees (General Use)
A sewer annexation fee is collected when property is annexed
into an improvement district. Since the existing facilities
have been built and maintained by developers or customers
within a sewer IDs, the annexation fee is calculated based on
the present value of all availability fees paid by existing
and prior customers. The annexation fee reimburses existing
customers for past contributions so that all customers have
contributed more equally to sewer facilities. Proceeds of the
annexation fees are unrestricted and may be used for any
general fund purpose.
e. New Water Supply Fee (Restricted)
New water supply fees4 are based on the cost of the expansion
portion of new water supply projects divided by the number of
future equivalent dwelling units (EDU). The new water supply
fee covers the cost of planning, design, construction, and
financing associated with facilities for the District’s new
supply needs. These fees are paid by developers. The
proceeds of this fee may be used only for new potable or
recycled water supply projects. Although the fees collected
are not restricted separately, one portion for potable and
the other for recycled, they are tracked separately.
f. Water Capacity Fees (Restricted)
Water capacity fees4 are based on the value of existing and
future facilities divided by the number of existing and
future equivalent dwelling units. This method of calculating
3 Code of Ordinances, Section 9.
4 Code of Ordinances, Section 28
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capacity fees is called the combined method, where the “buy-
in” portion of the capacity fee covers costs to repay
existing customers for the facilities that they have built,
and where the “incremental” portion of the capacity fee
covers the cost of future expansion facilities. The “buy-in”
portion of the capacity fee is restricted to pay for
planning, design, construction, and financing associated with
expansion, replacement or betterment facilities. The “buy-
in” portion may be shifted back and forth between expansion,
betterment or replacement as the financing needs change. The
“incremental” portion of the capacity fee is limited to
planning, design, construction, and financing exclusively for
expansion facilities (excluding new water supply expansion).
g. Sewer Capacity Fees (Restricted)
Sewer capacity fees are based on the value of existing and
future facilities divided by the number of existing and
future equivalent dwelling units. This method of calculating
capacity fees is called the combined method, where the “buy-
in” portion of the capacity fee covers cost to repay existing
customers for the facilities that they have built, and where
the “incremental” portion of the capacity fee covers the cost
of future expansion facilities. The “buy-in” portion of
the capacity fee is restricted to pay for planning, design,
construction, and financing associated with expansion,
replacement or betterment facilities. The “buy-in” portion
may be shifted back and forth between expansion, betterment
or replacement as the financing needs change. The
“incremental” portion of the capacity fee is limited to
planning, design, construction, and financing exclusively for
expansion facilities. For parcels within a sewer ID the
calculation excludes the tax debt already paid by these
customers therefore, producing a lower fee than for parcels
outside of a sewer ID. The capacity fees are restricted to
pay for planning, design, construction, and financing
associated with the expansion, replacement, or betterment of
facilities.
Facility needs are based on projected land use planning. Changes
in anticipated future land use occur and can alter projected
facility requirements. Thus, both the anticipated facilities
needs and their projected costs change over time as regulatory
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agencies make changes to land use. The District periodically
reviews the capacity fee calculation to accommodate such
variations. These fees are paid by developers.
The District’s construction of infrastructure occurs prior to the
addition of EDUs. This sequence serves two purposes: one it
ensures that the District can serve the pending construction as it
is completed; and 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 reserves are
depleted.
The water capacity fee is calculated based on the combined
recycled and potable water systems’ needs. This methodology is
used because the two water systems work hand-in-hand. All
capacity fees can be used for either potable or recycled but must
be tracked to distinguish between the “buy-in” and “incremental”
portions as described above. So, while capacity fees are not
restricted separately by potable and recycled, they are tracked
separately.
2.1 Customers/Users
DEVELOPERS
Diagram 2.0: Flow of Funds - Developer Sources
Unrestricted and
Undesignated
(General Use) Funds
Meter
Installation
Charges
Developer
Deposits
Restricted Funds
Annexation
Fees
Capacity
Fees
New Water
Supply Fees
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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.
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 a charge 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.
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 costs from the County Water Authority (CWA) and the
Metropolitan Water District (MWD).
f. Special Rates and Charges (General Use)
In addition to the uniform water and sewer charges, the
District has a special sewer rate for the Russell Square lift
station. The Russell Square fee is for construction,
installation, maintenance or repair of the Russell Square
lift station. This fee is collected in accordance with the
Russell Square sewer charge (see Code of Ordinances Section
53.03B).
g. Temporary Meter Fees (General Use/Restricted)
Water charges, in lieu of capacity fees, are charged on
temporary meters. This is done because temporary meters use
system capacity but 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
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developers; however, general customers also use these for
various purposes.
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2.2 County-Collected Taxes and Fees
a. General Levy Property Tax Receipts (1% Property Tax)
(General Use)
In 1978, Proposition 13 limited the levy of ad valorem
property taxes on real property to one percent of the
assessed value of such property. 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.
Taxes received are for general use. Spending limits for the
District are governed by the 1979 passage of California
Proposition 4, Limitations of Government Appropriations (GANN
limit). Proposition 4 places an appropriation limit on most
spending from tax proceeds.
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
CUSTOMERS / USERS
Diagram 2.1: Flow of Funds - Customer Sources
Unrestricted and
Undesignated
(General Use) Funds
Monthly
System Fees
Restricted Funds
Energy
Charges
Penalties
Pass –Through
Fixed Charges
2x Water
Rate
Special Rates
and Charges
Uniform Rates
and Charges
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and any amount over $10 per parcel is restricted to be
expended in and for the improvement district (ID) within
which it is collected. Accordingly, the District may use
availability charges in excess of $10 toward costs of water
and sewer facilities which are either, expansion, betterment,
or replacement of facilities consistent with the purpose of
the ID in which they are collected. This portion of the
proceeds of availability charges is geographically restricted
and restricted by purpose. As costs are incurred on these
projects the respective IDs are charged, reducing the
reserves. To the extent that availability charges are not
used for the purpose for which they are collected, they must
be returned to the property owners that paid them. The
District has historically used these reserves for betterment
capital facilities thus, the restricted reserves are
accounted for in “sub-funds” of the Betterment Fund
(See 2.1 f.).
c. Improvement District General Obligation (GO) Bond
Assessments (Restricted)
The District has historically issued general obligation (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 special taxes or
assessments within the ID to pay the debt obligation. The
proceeds of the debt are restricted for the purpose as
defined in the bond documents.
COUNTY COLLECTED TAXES AND FEES
Unrestricted and
Undesignated
(General Use)
Funds
General Levy
Property Tax
Receipts
Availability
Charges
Restricted Funds
General Obligation
Bond Assessments
Diagram 2.2: Flow of Funds – County Collection Sources
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2.3 Miscellaneous Income
a. Miscellaneous Rents and Leases (General Use)
Revenues received from the rental and lease of District
property are general use revenues. Not only are they
periodic revenues, but there is also a one-time fee charged
with the setup of each new lease. The District incurs
expenses related to these rents and leases. The one-time
fees are calculated to recover the costs to setup the leases.
b. Sewer Billing Fees (General Use)
Sewer billing fees are general use revenues. The District
provides processing and billing services to the City of Chula
Vista to bill and collect from their customers for sewer
service. These fees are to recover the cost the District
incurs to provide this service.
c. Interest Income or Expense Allocation (General Use,
Designated, and Restricted)
Interest income (expense) will be allocated every month based
upon each fund's month-ending balance. In this way, each
fund receives credit for interest earned by that fund and
each fund with a negative balance is charged for the use of
the other fund’s reserves.
MISCELLANEOUS INCOME
Unrestricted and
Undesignated
(General Use) Funds
Miscellaneous
Rents and Leases
Sewer Billing
Fees
Restricted Funds
Interest Income or
Expense Allocation
Diagram 2.3: Flow of Funds – Miscellaneous Income Sources
Designated Funds
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2.4 Debt Issuance
a. Loans (General/Restricted Use)
As the District determines that additional financing 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 recommended to the Board
for action. As an option to bond indebtedness, loans are
available to satisfy short-term 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 general obligation 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
financing 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 (COPs) (Restricted)
General revenues of the District are pledged as security for
Certificates of Participation (COPs) indebtedness. If the
District determines that additional financing 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. This form of financing has become the
industry’s preferred form of financing as it does not require
a vote of the general public.
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2.5 Inter-fund Transfers
Each year in the budgeting process, future fund levels are
projected for the next six years. Based on these projections
transfers are recommended. Reserves may be transferred
between Unrestricted or Designated Funds and the General Fund
(see 4.0 “Funding Levels” and 4.1 “Fund Transfers”).
Reserves may not be transferred to or from any of the
restricted funds unless it is between two restricted funds
with a shared purpose.
Fund Types and Categories
3.0 General Funds
a. Purpose
The General Fund is neither restricted nor designated. The
District maintains one General Fund for each business segment
(water, sewer, and recycled). This fund holds the working
capital and emergency operating reserves. While the General
Fund has a short-term focus to finance the District’s annual
operations, it is supported by the six-year rate model. This
DEBT PROCEEDS
Unrestricted and
Undesignated
(General Use) Funds
Loans General
Obligation Bonds
Restricted Funds
Certificates of
Participation
Diagram 2.4: Flow of Funds – Debt Issuance Sources
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fund is primarily used to finance the operations of the
District; however, it can be used for any District purpose.
This fund can be used to supplement the District’s rates and
charges and be a temporary source of revenue to balance the
Operating Budget. This fund can also be used to avoid spikes
in the rates or significant and abrupt increases. It is an
industry practice to have a fund that can be used to
stabilize rates. This would only occur if there was a
temporary need for reserves that would smooth out a rate
spike or to ramp up what would otherwise be a dramatic rate
increase.
The General Fund also plays a role in the debt planning of
the District. 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 need a number of debt issuances over the years
and this fund will help the District not only to stabilize
rate fluctuations but also to access low cost financing for
future projects.
b. Sources
Meter installation charges, temporary meter fees, uniform
rates and charges, monthly system fees, energy charges,
penalties, pass-through fixed charges, general levy property
tax receipts, water annexation fees, availability charges,
miscellaneous rents and leases, sewer billing fees, interest
income or expense allocation, loans, and a portion of the
temporary water sales.
The sewer general fund receives sewer charges, penalties,
availability charges, sewer annexation fees, and interest
income or expense allocation.
c. Funding Levels
I. Minimum Level – The minimum reserve level for each
business segment of the General Fund is three
months of operating budget expenses (evaluated
separately for each segment).
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II. Maximum Level – The maximum reserve level for the
General Fund is nine 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 reserves 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 Other Post Employment Benefits (OPEB) Fund
a. Purpose
Designated Other Post Employment Benefits (OPEB) reserves are
“general use” reserves that have been set apart by Board
action to finance the medical benefits of qualified retirees
as outlined in the District’s benefits plan. This fund is
available to hold any Board designated OPEB funds. The
District also has a trust at CalPERS and is restricted for
the purpose of financing the OPEB liability. Money held in
the CalPERS trust restricts the funds from any use other than
OPEB. The two funds are considered jointly when looking at
target reserve levels. Every two years, actuarial study is
performed to update the annual financing requirements.
Changes in the actuarial valuation may result from changes in
benefit levels, employee population, health insurance costs,
or general market conditions.
b. Sources
The OPEB liability may be financed by general use reserves
coming from user rates and charges, either from an operating
budget expenditure or from interfund transfers. Transfers of
unrestricted reserves may come from the various designated
funds or from the General Fund. As a part of the normal
budget process, annual operating revenues have been
sufficient to finance the ongoing needs of this designated
fund. While debt financing is also an option, the District
has only used user rates and charges to finance this fund.
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c. Funding Levels
I. Minimum Level – The minimum reserve level for this
fund is equal to the District’s OPEB liability as
determined by the actuarial study. When
considering the reserve level of this fund, both
the District held OPEB reserves and CalPERS held
OPEB reserves must be considered jointly.
II. Maximum Level – The maximum reserve level for this
fund is equal to the District’s OPEB liability as
determined by the actuarial study. In the event
that the two funds, as described above, exceed the
OPEB liability, the District will reduce the annual
funding levels as defined by the actuarial study.
III. Target Level – The target reserve level for this
fund is equal to the District’s OPEB liability as
determined by the actuarial study. In the event
that the two funds, as described above, fall below
the OPEB liability, the District will increase the
annual funding levels as defined by the actuarial
study.
3.2 New Water Supply Fund Category
a. Purpose
The New Water Supply Fund category is to finance the
expansion portion of new water supply projects and is
therefore to be paid by developers. When considering the
reserve level of the New Water Supply category; the New Water
Supply Fund, the New Water Supply Debt Fund, and the
Designated New Water Supply Fund all work in concert and must
be considered jointly.
b. Sources
The New Water Supply Fund receives reserves only from the new
water supply fee. Other funds within the new water supply
category of funds receive debt proceeds and general use
reserves through a designation to this category.
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c. Funding Levels
I. Minimum Level – As the District matures the CIP
will move to purely replacement projects. As the
District moves through its lifecycle the need for
new water supply reserves will decrease and may be
reduced to zero.
II. Maximum Level – The maximum reserve level for the
new water supply category of funds is limited to
five years of the unfinanced new water supply
facilities as described in the District’s CIP
Budget. To determine the unfinanced amount, the
total new water supply financing needs must be
reduced by the projected new water supply revenues,
general fund designations, and bond financing. If
the combined new water supply reserves exceed the
target level, the District should consider
transferring designated reserves to meet other
purposes, reduce the new water supply fee, or
change the timing of the new water supply projects.
III. Target Level – In order to facilitate debt
financing of the new water supply, it is important
that the various new water supply funds retain an
overall reserve level of six months, prior to any
attempt to obtain debt financing. This reserve
level allows the District the time necessary to
issue additional debt without depleting new water
supply reserves. If the combined new water supply
reserve levels drop below six months of
expenditures, this would trigger a transfer of
general use reserves, a bond sale, or a change in
the timing of new water supply projects. Bond
proceeds would be placed in the Restricted New
Water Supply Debt Fund while transfers would be
placed in the Designated New Water Supply Fund.
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3.3 Expansion Fund Category
a. Purpose
The Expansion Fund category is to finance the expansion
portion of capital projects and therefore is to be paid for
by developers. When considering the reserve levels of the
expansion category, the following funds work in concert and
must be considered jointly: the Expansion Fund, Expansion
Debt Fund, Capital Improvement Fund, and the Designated
Restricted Funds
Unrestricted and
Undesignated Funding
Sources
Funding Source New Water
Supply Fees
Debt
Proceeds
Restricted Funds
Restricted Funds
Designated Funds
New Water
Supply Fund
Expansion
New Water
Supply Fund
Designated
New Water
Supply Fund
Debt Fund
General Fund – Rates and Charges
New Water
Supply Fund
Category
New Water
Supply
Debt Fund
Diagram 3.2: New Water Supply Fund Category
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Expansion Fund. Potable and recycled reserves are considered
jointly while sewer is evaluated separately.
b. Sources
The Expansion Fund is financed by water charges in lieu of
capacity fees (for temporary meters) and the “incremental”
portion of the capacity fee. The other funds in this
category may also be financed by debt proceeds, the “buy-in”
portion of the capacity fee, and the general fund through a
designation of reserves.
c. Funding Levels
I. Minimum Level – As the District matures the CIP
will move to purely replacement and betterment
projects. As the District moves through this
lifecycle the need for expansion reserves will
decrease and may be reduced to zero.
II. Maximum Level – The maximum reserve level for the
expansion category of funds is limited to five
years of unfinanced expansion facilities as
described in the District’s CIP Budget. To
determine the unfinanced amount, the total
financing needs must be reduced by the projected
expansion revenues, bond financing, and any
restricted or general fund revenues allocated to
this fund category. If the combined expansion
reserves exceed target levels, the District should
consider reducing capacity fees, reallocating
restricted or designated funds to meet other
purposes, or shifting the timing of expansion
projects.
III. Target Level – The target level is six months of
expansion expenditures. It is important that the
expansion reserves remain at a minimum of six
months of expansion expenditures. This reserve
level allows the District the time necessary to
issue additional debt without depleting expansion
reserves. If the combined expansion reserves drop
below six months of expenditures this would trigger
a transfer of general use reserves, a bond sale, an
adjustment to the timing of expansion projects, or
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a reallocation of restricted reserves. Bond
proceeds would be placed in the Restricted Bond
Fund, transfers of general use reserves would be
placed in the Designated Expansion Fund, and
transfers of restricted reserves would be placed in
the Expansion Capital Improvement Fund.
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Unrestricted and
Undesignated Funding
Sources
Diagram 3.3: Expansion Fund Category
Funding Source 2x Water
Rates
Capacity
Fees (1)
Restricted Funds
Restricted Funds
Designated Funds
Expansion
Fund
Expansion
Debt Fund
General Fund – Rates and Charges
Restricted Funds Expansion Capital
Improvement
Fund
Debt
Proceeds
Restricted Funds
Capital
Improvement
Fund
Bond
Debt
Expansion
Fund
Designated
Expansion
Fund
Expansion
Fund
Category
(1) For Water Capacity Fees 32.4% goes into the Expansion fund and 67.6% goes into
the Capital Improvement Fund. For Sewer Capacity Fees 100% goes into the
Capital Improvement Fund.
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3.4 Replacement Fund Category
a. Purpose
The Replacement Fund category is to finance replacement
projects. When considering the reserve levels of the
replacement category of funds, the following funds work
in concert and must be considered jointly: the Debt
Fund, Capital Improvement Fund, and the Designated
Replacement Fund. The purpose of these reserves is to
pay for the replacement of capital infrastructure and
capital purchases. These reserves are not to be used
for the replacement of non-capital items.
With the District’s development of its financial systems
and the greater need and ability to separate and track
reserves, the replacement reserves have 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 these are not
considered normal maintenance. When the cost is below
$10,000, the costs are financed annually as operational
maintenance. As charges are incurred on replacement
projects the reserves are deducted from the respective
Replacement Funds on a monthly basis.
b. Sources
The various funds in this category are financed by debt
proceeds, the “buy-in” portion of the capacity fee, and
general fund designations.
c. Funding Levels
I. Minimum Level – The minimum reserve level of this
category of funds is 3% of the historical value of
existing assets as identified in the District’s
current financial statements. Potable, recycled,
and sewer replacement are evaluated separately.
II. Maximum Level – The maximum reserve level of this
category of funds is 6% of existing assets. If the
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combined replacement reserves exceed target levels,
the District should consider transferring the “buy-
in” portion of the capacity fee to meet other
purposes. Another consideration would be to shift
the timing of replacement projects.
III. Target Level – The target reserve level of this
category of funds is 4% of existing assets. In the
event that the reserves fall below the recommended
target level, the District should consider
transferring the “buy-in” portion of the capacity
fee. The District should also consider shifting
the timing of replacement projects or issuing debt
to support the planned level of facility
replacement. The District will act based on the
annual six-year rate model, to insure that at the
end of that planning horizon the reserves exceed
the minimum level and is approaching the target
level.
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(1) For Water Capacity Fees 67.6% goes into the Capital Improvement Fund.
For Sewer Capacity Fees 100% goes into the Capital Improvement Fund.
3.5 Betterment Fund Category
a. Purpose
The Betterment Fund category is to finance the
betterment portion of capital projects with a portion
going to maintenance of the potable, recycled, and sewer
systems. The District maintains separate Betterment
Funding Source
Unrestricted and
Undesignated Funding
Sources
Capacity
Fees (1)
Diagram 3.4: Replacement Fund Category
Restricted Funds
Restricted Funds
Designated Funds
Capital
Improvement Fund
Replacement
Debt Fund
Designated
Replacement
Fund
General Fund – Rates and Charges
Debt
Proceeds
Debt Fund
Restricted Funds
Replacement
Capital
Improvement
Fund
Replacement
Fund
Category
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Fund categories, one for each improvement district. An
improvement district is a legally defined geographic
area usually established for the purpose of bond
financing of facilities. The betterment reserves within
these funds are restricted by law for use within the
improvement district in which the fees were collected
(Water Code 71631.6). However, the legal restriction of
this reserve depends upon the particular revenue source.
(See Section 2.2 b. for a review of the availability
fees).
When considering the reserve levels of the betterment
category of funds, the following funds work in concert
and must be considered jointly: the Betterment Fund,
Debt Fund, Capital Improvement Fund, and Designated
Betterment Fund.
b. Sources
The Betterment Fund category receives restricted
revenues by improvement district from availability fees
(the first $10 is unrestricted, while amounts over $10
are restricted) collected through the county tax roll.
Betterment may also be financed by debt proceeds, the
“buy-in” portion of the capacity fee, as well as the
general fund through a designation of reserves.
c. Funding Levels
I. Minimum Level – As the District matures the CIP
will move to purely replacement projects. As the
District moves through this lifecycle the need for
betterment reserves will decrease and may be
reduced to zero.
II. Maximum Level – The maximum reserve level for the
betterment category of funds is limited to five
years of unfinanced betterment facilities as
described in the District’s CIP Budget. To
determine the unfinanced amount, the total
financing need must be reduced by the projected
betterment revenues, bond financing, and general
fund designations. If this maximum is exceeded,
then the District should evaluate reductions in the
special water rates and availability fees,
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transferring designated reserves to meet other
purposes, or shifting the timing of betterment
projects.
III. Target Level – The target is six months of
betterment expenditures. It is important that the
betterment reserves remain at a minimum of six
months of betterment expenditures. This reserve
level allows the District the time necessary to
issue additional debt without depleting betterment
reserves. If the combined betterment reserves drop
below six months of expenditures this would trigger
a transfer of general use reserves, a bond sale, or
an adjustment to the timing of betterment projects.
Bond proceeds would be placed in the Betterment
Bond Fund while transfers would be placed in the
Designated Betterment Fund.
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Fund
Unrestricted and
Undesignated Funding
Sources
Diagram 3.5: Betterment Fund Category
Funding Source Capacity
Fees (2)
Restricted Funds
Restricted Funds
Designated Funds
Capital
Improvement
Fund
Betterment
Debt Fund
Betterment
Fund
General Fund – Rates and Charges
Availability
Charges (1)
Restricted Funds
Debt
Proceeds
Restricted Funds
Bond
Debt
Designated
Betterment
Fund
Betterment
Fund
Betterment
Capital
Improvement
Fund
Betterment
Fund
Category
(1) The portion of charges over $10 per parcel is restricted.
(2) For Water Capacity Fees 67.6% goes into the Capital Improvement Fund. For Sewer
Capacity Fees 100% goes into the Capital Improvement Fund.
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Diagram 3.6: Fund Targets
Fund or Fund
Category
Actions to Consider if
below Target Target Maximum
New Supply Fund
Category
New supply fee increase,
bond financing, or
transfer to designated or
CIF Funds
Total of all funds in fund
category = six months of
capital expenditures
Nexus of cost to fee
Expansion Fund
Category
Capacity fee increase,
bond financing, or
transfer to designated or
CIF Funds
Total of all funds in fund
category = six months of
capital expenditures
Nexus of cost to fee
Replacement Fund
Category
Bond financing, or
transfer to designated or
CIF Funds
Total of all funds in fund
category = 4% of
infrastructure
Nexus of cost to fee
Betterment Fund
Category
Bond financing, or
transfer to designated or
CIF Funds
Total of all funds in fund
category = six months of
capital expenditures
5 Five years unfunded
needs
Debt Reserve Fund Increase tax collection or
rates
One semi-annual
payment
Two semi-annual
payments
Rate Stabilization Fund Fund transfers from
legally available funds
The financial impact of
2two consecutive years
of low winter water
usage
The financial impact of
3three consecutive years
of low winter water
usage
OPEB Fund Fund transfers Full funding Full funding
General Fund Rate increase or fund
transfers
Three months of
operating budget
expenses
Nine months of
operating budget
expenses
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Additional Restricted Funds
4.0 Capital Improvement Fund
a. Purpose
The “Capital Improvement Fund’s sole purpose is to track the
“buy-in” portion of the capacity fee and to ensure these fees
are expended solely for the purpose for which they were
collected. In this case it is to pay for facilities that
were in existence at the time this fee was established.
These fees may be used for expansion, replacement, or
betterment projects or any debt related to these categories.
The water capacity fees may also be used for either the
potable or the recycled systems. As capacity fees are
collected, the “buy-in” portion of the fee is allocated as
needed to one of three capital improvement funds, one in each
of the Expansion, Replacement, and Betterment Fund
categories. These reserves are used to pay debt or offset
any negative balance within these three categories of funds.
For sewer, these fees fund the Expansion, Replacement, or
Betterment Fund categories. These fees may not be used to
finance the New Water Supply category, as there were no new
water supply facilities in existence at the time the new
methodology for capacity fees was established.
b. Sources
The “buy-in” portion of the capacity fee collected after
June 30, 2010 or after September 30, 2014 for sewer.
c. Funding Levels
There are no minimums, maximums, or target levels for these
reserves on an individual basis. The allocation of this fee
to the various capital improvement funds is dependent on the
overall reserve levels within each fund category.
4.1 Debt Reserve Fund
a. Purpose
The Debt Reserve Fund is established to hold the proceeds
from the various debt issuances. There are two types of
debt, General Obligation bonds and Certificates of
Participation bonds. The proceeds are transferred to the New
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Water Supply, Expansion, Replacement, or Betterment Debt
Funds as they are expended for various facilities within
those fund categories. As repayment of the debt occurs, the
balances within these individual funds are reduced so that
the financial impact of issuing debt is tracked within the
category for which the debt was issued.
b. Sources
Debt proceeds.
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c. Uses
There are no minimums, maximums, or target levels for this
fund on an individual basis. This fund is available on an as
needed basis to fund CIP projects for new water supply,
expansion, replacement, or betterment. From a funding level
perspective, these reserves are evaluated in the context of
all the various funds within each fund category.
4.2 Rate Stabilization Fund
a. Purpose
The Rate Stabilization Fund is established for the purpose of
minimizing rate increases in response to one-time events and
therefore stabilizing the rates and charges imposed by the
District to meet covenanted debt service coverage levels.
The Rate Stabilization Fund is not intended to be used to
offset regular rate increases needed to meet inflationary
cost increases in operations.
b. Sources
The District may budget for Rate Stabilization Fund deposits
from the Sewer Fund, amounts in excess of the annual debt
service coming due and payable in the fFiscal yYear, after
payment of operating expenses. The allowable amount that may
be deposited shall not be transferred prior to payment of the
annual debt service obligation.
c. Uses
There is no minimums level for this fund. The maximum level
shall be equal to the financial impact of three (3)
consecutive years of low winter water usage. The target
levels for this fund shall be equal to two (2) consecutive
years of low winter water usage. For the purposes of
calculating debt service, amounts transferred from the Rate
Stabilization Fund to the Sewer Fund will constitute Gross
Revenue in the fiscal year the transfer occurs. All interest
or other earnings on deposits in the Rate Stabilization
FundSRF will be withdrawn at least annually and will be
accounted for as operating revenue in the Sewer Fund.
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Fund Transfers
5.0 Funding Levels
As described in the preceding sections, the District maintains
reserves for its operating and capital activities. These reserves
can be of three types: 1) undesignated or general use reserves,
2) designated, and 3) restricted for a specific purpose. The
restricted reserves can be restricted geographically and/or by
purpose. The District maintains various funds to track the
various designations and restrictions. The source of the money
for each fund was discussed along with the purpose, source of
funds, and levels. Key characteristics 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 in light of the 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 or under the
target amount. This is not only acceptable but expected. The
rate model provides an empirical estimate of the conformance
between the projected District’s financial activities and the
guidelines of this policy.
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5.1 Fund Transfers
Reserves within the District’s various designated funds come from
interfund transfers of unrestricted general use reserves. It is
important to note that the District has the ability to use general
use reserves for any business purpose. General use reserves may
be transferred to and from any unrestricted fund for any business
need. Designated reserves are general use reserves which have
been set aside for a specific purpose by Board action. These
reserves can only be used for the purpose they were designated, or
with Board action they may be used for any other business purpose.
While general use reserves may be used for any restricted purpose
they may not be transferred to Restricted Funds due to the
sensitivity of the tracking of restricted reserves. If reserves
are needed for a restricted purpose they are transferred to a
Designated Fund within the fund category with that particular
purpose. Reserves restricted to a fund category may only be used
within that category and may not be transferred to another
category. For example, the new water supply fee and the
“incremental” portion of the capacity fee are restricted reserves
for a specific purpose, and may not be transferred to another
category as no other category has the same purpose. However, the
“buy-in” portion of the capacity fees are restricted for purposes
that are shared by more than one category of funds and may
therefore be transferred to a restricted fund within another fund
category as long as it shares the same purpose.
In many situations reserve transfers are expected as some fund
categories will exceed their maximums or drop below their
minimums. Only fund categories that are below the stated target
are eligible to receive transferred reserves. Fund categories
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 reserve
transfers out, but only when other options are not available.
The rationale for prioritizing reserve transfers is based on the
immediacy of the need and the availability of reserves from other
funding sources. For example, the General Fund is first to
receive reserves 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
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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 finance 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
financing options.
When making the determination of when transfers are necessary, all
funds within a fund category work as a group. The combined
balance of the restricted and designated funds is looked at when
determining whether the fund category requires additional funding
from the Restricted Capital Improvement Fund, Restricted Debt
Fund, or the General Fund. Because the Capital Improvement Fund
may finance expansion, replacement or betterment reserves may be
transferred between these fund categories, but only back and forth
within its own type of restricted fund.
As an example, if during the rate model update process it was
determined that the Expansion Funds (designated and restricted)
would drop and stay below the minimum during the six-year planning
horizon, this would trigger a bond sale, a transfer of general use
reserves, and/or a transfer of restricted reserves. If in the
cash planning process, it was anticipated that the General Fund
would remain above target during the planning horizon and that the
trend did not present a problematic underfunded status, then
General Fund reserves would be considered available for transfer
prior to making proceeds available from a bond sale. Also, if
during this period the Betterment Fund category was anticipated to
exceed its maximum, then reserves from either the Designated
Betterment Fund, or the Capital Improvement Fund would be
transferred to the corresponding Expansion Fund prior to a bond
sale. All funds are evaluated to determine which has the greatest
need or availability of reserves before any reserve transfer
recommendation is presented to the Board.
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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: When water service is requested for land outside
the boundaries of the District, the land to be serviced must first
be annexed. For sewer service the land must be annexed into an
improvement district within the District.
Assets: Resources owned or held by Otay Water District that has
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.
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.
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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.
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 payments, and other
infringements of the District’s Code of Ordinances.
1% Property Tax: In 1978, Proposition 13 limited general levy
property tax rates for all taxing authorities to a total rate of
1% of full cash value. Subsequent legislation, AB 8, established
that the receipts from the 1% levy were to be distributed to
taxing agencies according to approximately the same proportions
received prior to Proposition 13.
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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.
Russell Square: A sewer lift station constructed in 1983 that
serves four properties in the Russell Square Development.
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.
Tax Collection for Bond Debt: 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.
Unit: A Unit of water is 100 cubic feet or 748 gallons of water.
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. Effective in 2009, all non-
residential customers are charged for water based on a tiered rate
structure in which water rates are based on meter size and amount
of Units consumed.
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1.0 The District
The Otay Water District is a California municipal water 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 their
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 provides water service within its boundaries, and
provides sewer and recycled water service within certain portions
of the District. As such, the District operates three distinct
business segments:
•Potable water
•Recycled water
•Sewer
Each of these business segments has an identifiable 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 the service costs relating to each of its four
customer service types. 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.
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1.1 The District’s Use of Financial Resources
All of the District’s expenditures fall into two broad categories:
operating costs and capital expenditures. The operating costs
include costs relating to 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 services. The District uses
various funds to support the operating and capital efforts.
Operations and maintenance is financed only by rates and charges,
also called pay-as-you-go, while capital infrastructure is
financed using two financing methods: pay-as-you-go and debt
issuance (requiring annual debt service). The Capital Improvement
Program (CIP) and the two funding methods support the
construction, betterment, and replacement of infrastructure in all
three business areas: potable, recycled, and sewer.
The District establishes different funds to track revenues
allocated to different activities. Once established, each fund
receives financial resources up to the levels defined in this
policy. Every 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 requirements and financial
resources are then evaluated to ensure that the existing fund
balances and additional revenues are sufficient within the current
budget cycle and for the next five years to maintain target fund
levels. If a deficit is identified, then options for transfers,
shifting CIP projects, debt, cost saving measures, and/or rate
increases are evaluated.
1.2 The District’s Capital Improvement Program (CIP)
The planning, design, and construction costs of all capital
facilities within the three business segments are allocated to
four cost types and corresponding fund categories: New Water
Supply, Expansion, Replacement, and/or Betterment. The allocation
to these four cost types is defined in the District’s Capital
Improvement Program (CIP) and is determined by an engineering
analysis that identifies which type of customer will benefit from
each facility, planned or existing. The costs of the capital
improvements are borne by either existing users or by the
developing areas, or by a combination of the two, as applicable.
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This Reserve Policy protects both the existing users and the
developing areas from incurring unwarranted costs. Developing
areas are not required to finance facilities that are replacement
or betterment and established areas are not required to replace
facilities before they are worn out because of new development.
However, to ensure a fair allocation of costs, each facility has
the potential to be classified into any or all of the four cost
types. In addition to these cost types there are occasional CIPs
that may be billable to a third party, if for example a third
party requires a District facility be relocated. Paragraphs a
through d below, describe how the costs of capital facilities are
financed through various fees.
a. New Water Supply
The portion of a new supply project that benefits new users
is financed from the reserves in the New Water Supply Fund
category. These reserves are primarily derived from proceeds
of the new water supply fee. The New Water Supply Fund is
restricted, meaning the amounts credited to this fund are
accounted for separately and are used solely for the
planning, design, and construction of the new water supply
expansion facilities. Debt financing may also be a temporary
financial resource to finance new water supply projects. The
District has a Debt Policy (Policy No. 45) that guides the
debt issuance process. Any debt proceeds used for this
purpose would be restricted in nature and tracked separately.
General use reserves may also be placed in the Designated New
Water Supply Fund and used for water supply projects.
b. Expansion
The portion of a CIP project that benefits new users is
financed from the reserves in the Expansion Fund category.
These reserves are primarily derived from proceeds of the
“incremental” portion of the capacity fees collected within
developing areas. Capacity fees are accounted for separately
and used for the planning, design, and construction of
expansion facilities. Additionally, expansion may be
financed by the “buy-in” portion of the capacity fee which is
restricted for CIP purposes, but not specifically for
expansion. Debt financing may also be a temporary financial
resource for expansion projects. General use reserves may
also be placed in the Designated Expansion Fund and used for
expansion projects.
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c. Replacement
The portion of a CIP project that benefits existing users by
replacing an existing facility is financed from the reserves
in the Replacement Fund category. Replacement of facilities
may be financed with proceeds of the “buy-in” portion of the
capacity fees, general use reserves held in the Designated
Replacement Fund, and debt proceeds. The various funding
sources available for replacement projects is anticipated to
provide the necessary flexibility to begin projects while any
necessary debt financing is being obtained.
d. Betterment
Facilities that improve reliability, meet new regulations, or
create increased levels of service are considered betterment
facilities that benefit existing users. The reserves in the
Betterment Fund category are used to finance these projects
or portions of projects. Proceeds of the “buy-in” portion of
the capacity fees may also be used to finance betterment
projects. General use reserves may be placed in the
Designated Betterment Fund and used for betterment projects.
1.21 Relocations
Occasionally, relocation of a District facility is required by a
third party. If the District has a superior easement the
relocation cost will be paid by the third party, but only to the
extent that the District does not benefit from the relocation.
When relocation is required, a CIP project may be created which is
wholly or partially financed by a third party. On occasion, the
District will require that its own facilities be relocated.
Depending on the nature of the facilities, the financial resources
for these projects could be from new water supply, expansion,
replacement, betterment or third party financing. Each project is
individually negotiated with the third party based on the facts
and circumstances of the relocation. Occasionally, the District
will improve the facilities that are being relocated. When
determining how to allocate costs to various funds the following
guideline is suggested: if a project has more than five years of
useful life remaining, an incremental cost view should be
considered; if the project has less than five years of useful life
remaining, a pro-rata cost approach should be considered. Also,
the likelihood the District will benefit from an asset’s life
extension should be evaluated prior to allocating costs.
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1.22 Oversizing
If deemed reasonable by the District, in connection with the
construction of backbone facilities, a developer may be required
to oversize new facilities for future development. The developer
is reimbursed for incremental oversizing costs as per Policy
No. 26. These reimbursements are not available for the
distribution system within a development which is an obligation
of the developer.
1.23 Exclusion of Developed Areas from Expansion Costs
Developed areas are assumed 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 financing costs are allocated to these areas so that they
will not incur any costs for newly developing areas, except for
capital projects that produce district-wide benefit or cost
savings.
1.24 Improvement Districts (IDs)
Improvement Districts (IDs) are established to facilitate the
financing of particular improvements by the specific
beneficiaries. The District has a number of improvement districts
that were established for General Obligation (GO) debt repayment.
Most GO debt has been paid off and it is unlikely that the
District will issue additional GO debt. Improvement districts
continue to be used for other purposes: 1) to distinguish sewer
customers from water customers on the county tax roll; or 2) to
place parcels on the county tax roll for the collection of
availability fees.
Over the years, the District moved to a district-wide perspective
of financing improvements. This philosophy is evident by the
district-wide capacity and annexation fees. The District also
uses district-wide water rates. As time goes on, it is expected
that IDs will continue to outgrow their purpose and their use will
diminish.
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1.3 The Purpose of the Policy
Public entities accumulate and maintain reserves to ensure both
financial stability and continuous availability of services.
Financial stability and the resulting improved credit quality
allow the public entity to weather times of uncertainty and the
impact of negative events, both major and minor. Reserves allow
for the ongoing maintenance of property and timely payment of
expenses even when such expenses exceed money available from 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 public entity.
A “reserve” has a number of meanings, as follows:
• Working capital is required to insure timely payment of
obligations.
• A buffer against volatility in revenues.
• Liquidity is required to obtain other goods and services
(e.g., bank services).
• Designated money to protect creditors.
• Money set aside to replace assets at the end of their useful
lives.
• Money set aside to repair or replace assets damaged or
destroyed at unanticipated times.
It is important to note that reserves, 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. In addition, the term fund balance was 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 finance contingent
future activities, whether known or unanticipated, operating or
capital in nature. The District’s Reserve Policy governs the
management and use of these financial resources. Few policies
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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
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 as well as the demand
for 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
Educational Revenue Augmentation Fund (ERAF) contributions or
changes in calculation methodology.
• Operating Costs - increases in operating and maintenance
costs because of inflation, labor agreement or other
modification.
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• 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 require short-
term borrowing in the absence of sufficient financial
resources.
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, Report No. 2003-137. All of
these recommendations have 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, including minimums and maximums, for the
accumulation of reserves.
• Identify the events or conditions that prompt the use of
reserves.
• Conform to plans to acquire or build capital assets.
• Receive Board approval and that it is 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 reserves.1
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.
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Specifically, the Constitution states that “each entity of the
government can establish contingency, emergency, unemployment,
reserve, sinking fund… or similar funds as it shall deem
reasonable and proper.”2 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 context for different
districts and different contingencies justifying reserves.
The Government Finance Officers Association (GFOA) in its
“Recommended Practice on Appropriate Level of Unreserved Fund
Balance in the General Fund” (2002) states that in
establishing a policy governing the level of unreserved fund
balance in the general fund, a government should consider a
variety of factors. These include:
• The predictability of its revenues and the volatility of
its expenditures (i.e., higher levels of the unreserved
fund balances 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 the 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 the unreserved fund balance to
compensate for any portion of unreserved fund balance
already designated for a specific purpose).
2 California Constitution, Article XIII B, Section 5.
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In the preparation of this policy, each of the CSDA guidelines and
the GFOA recommendations has 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
levels to recover the cost of service. The District’s Reserve
Policy has been drafted with consideration of the GFOA, CSDA, and
State Auditor’s general guidelines as provided above. In
addition, the District has adopted the following principles in the
management of its financial resources:
• Reserves are held and used only for the purpose for which
they are collected. This is done to maintain equity among
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 operations and maintenance from capital
expenditures occurs within each of the service types. This
is done because the financing of these expenditures is often
on different timelines or use different reserves.
• The District will hold its reserves 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 reserves 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 long-term financing which spreads the
cost of facilities over the life of the facilities. The
burden to pay for facilities is then paid by those who use
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them. The District could amass significant reserves by pre-
collecting financial resources in a Replacement Reserve Fund
allowing the District to cash finance all replacements.
However, this would require significant rate increases
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 model on 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 fees charged. This
review also insures that reserves will be available to continue to
serve the District’s customers.
Financial Sources
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 financed by developers.
b. 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.
c. Water Annexation Fees (General Use)
Annexation fees3 are collected as a condition of annexing
into the District’s potable or recycled water facilities.
Since the existing facilities have been built and maintained
by developers or customers within the District, the
3 Code of Ordinances, Section 9.
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annexation fee is calculated based on the present value of
all property taxes (1% property tax and availability fees)
paid by existing and prior customers. The annexation fee
reimburses existing customers for past contributions so that
all customers have contributed more equally to water
facilities. Proceeds of annexation fees are unrestricted and
may be used for any general fund purpose.
d. Sewer Annexation Fees (General Use)
A sewer annexation fee is collected when property is annexed
into an improvement district. Since the existing facilities
have been built and maintained by developers or customers
within a sewer IDs, the annexation fee is calculated based on
the present value of all availability fees paid by existing
and prior customers. The annexation fee reimburses existing
customers for past contributions so that all customers have
contributed more equally to sewer facilities. Proceeds of the
annexation fees are unrestricted and may be used for any
general fund purpose.
e. New Water Supply Fee (Restricted)
New water supply fees4 are based on the cost of the expansion
portion of new water supply projects divided by the number of
future equivalent dwelling units (EDU). The new water supply
fee covers the cost of planning, design, construction, and
financing associated with facilities for the District’s new
supply needs. These fees are paid by developers. The
proceeds of this fee may be used only for new potable or
recycled water supply projects. Although the fees collected
are not restricted separately, one portion for potable and
the other for recycled, they are tracked separately.
f. Water Capacity Fees (Restricted)
Water capacity fees4 are based on the value of existing and
future facilities divided by the number of existing and
future equivalent dwelling units. This method of calculating
capacity fees is called the combined method, where the “buy-
in” portion of the capacity fee covers costs to repay
existing customers for the facilities that they have built,
and where the “incremental” portion of the capacity fee
covers the cost of future expansion facilities. The “buy-in”
portion of the capacity fee is restricted to pay for
4 Code of Ordinances, Section 28
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planning, design, construction, and financing associated with
expansion, replacement or betterment facilities. The “buy-
in” portion may be shifted back and forth between expansion,
betterment or replacement as the financing needs change. The
“incremental” portion of the capacity fee is limited to
planning, design, construction, and financing exclusively for
expansion facilities (excluding new water supply expansion).
g. Sewer Capacity Fees (Restricted)
Sewer capacity fees are based on the value of existing and
future facilities divided by the number of existing and
future equivalent dwelling units. This method of calculating
capacity fees is called the combined method, where the “buy-
in” portion of the capacity fee covers cost to repay existing
customers for the facilities that they have built, and where
the “incremental” portion of the capacity fee covers the cost
of future expansion facilities. The “buy-in” portion of
the capacity fee is restricted to pay for planning, design,
construction, and financing associated with expansion,
replacement or betterment facilities. The “buy-in” portion
may be shifted back and forth between expansion, betterment
or replacement as the financing needs change. The
“incremental” portion of the capacity fee is limited to
planning, design, construction, and financing exclusively for
expansion facilities. For parcels within a sewer ID the
calculation excludes the tax debt already paid by these
customers therefore, producing a lower fee than for parcels
outside of a sewer ID. The capacity fees are restricted to
pay for planning, design, construction, and financing
associated with the expansion, replacement, or betterment of
facilities.
Facility needs are based on projected land use planning. Changes
in anticipated future land use occur and can alter projected
facility requirements. Thus, both the anticipated facilities
needs and their projected costs change over time as regulatory
agencies make changes to land use. The District periodically
reviews the capacity fee calculation to accommodate such
variations. These fees are paid by developers.
The District’s construction of infrastructure occurs prior to the
addition of EDUs. This sequence serves two purposes: one it
ensures that the District can serve the pending construction as it
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is completed; and 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 reserves are
depleted.
The water capacity fee is calculated based on the combined
recycled and potable water systems’ needs. This methodology is
used because the two water systems work hand-in-hand. All
capacity fees can be used for either potable or recycled but must
be tracked to distinguish between the “buy-in” and “incremental”
portions as described above. So, while capacity fees are not
restricted separately by potable and 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.
DEVELOPERS
Diagram 2.0: Flow of Funds - Developer Sources
Unrestricted and
Undesignated
(General Use) Funds
Meter
Installation
Charges
Developer
Deposits
Restricted Funds
Annexation
Fees
Capacity
Fees
New Water
Supply Fees
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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 a charge 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.
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 costs from the County Water Authority (CWA) and the
Metropolitan Water District (MWD).
f. Special Rates and Charges (General Use)
In addition to the uniform water and sewer charges, the
District has a special sewer rate for the Russell Square lift
station. The Russell Square fee is for construction,
installation, maintenance or repair of the Russell Square
lift station. This fee is collected in accordance with the
Russell Square sewer charge (see Code of Ordinances Section
53.03B).
g. Temporary Meter Fees (General Use/Restricted)
Water charges, in lieu of capacity fees, are charged on
temporary meters. This is done because temporary meters use
system capacity but 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.
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2.2 County-Collected Taxes and Fees
a. General Levy Property Tax Receipts (1% Property Tax)
(General Use)
In 1978, Proposition 13 limited the levy of ad valorem
property taxes on real property to one percent of the
assessed value of such property. 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.
Taxes received are for general use. Spending limits for the
District are governed by the 1979 passage of California
Proposition 4, Limitations of Government Appropriations (GANN
limit). Proposition 4 places an appropriation limit on most
spending from tax proceeds.
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
CUSTOMERS / USERS
Diagram 2.1: Flow of Funds - Customer Sources
Unrestricted and
Undesignated
(General Use) Funds
Monthly
System Fees
Restricted Funds
Energy
Charges
Penalties
Pass –Through
Fixed Charges
2x Water
Rate
Special Rates
and Charges
Uniform Rates
and Charges
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expended in and for the improvement district (ID) within
which it is collected. Accordingly, the District may use
availability charges in excess of $10 toward costs of water
and sewer facilities which are either, expansion, betterment,
or replacement of facilities consistent with the purpose of
the ID in which they are collected. This portion of the
proceeds of availability charges is geographically restricted
and restricted by purpose. As costs are incurred on these
projects the respective IDs are charged, reducing the
reserves. To the extent that availability charges are not
used for the purpose for which they are collected, they must
be returned to the property owners that paid them. The
District has historically used these reserves for betterment
capital facilities thus, the restricted reserves are
accounted for in “sub-funds” of the Betterment Fund
(See 2.1 f.).
c. Improvement District General Obligation (GO) Bond
Assessments (Restricted)
The District has historically issued general obligation (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 special taxes or
assessments within the ID to pay the debt obligation. The
proceeds of the debt are restricted for the purpose as
defined in the bond documents.
COUNTY COLLECTED TAXES AND FEES
Unrestricted and
Undesignated
(General Use)
Funds
General Levy
Property Tax
Receipts
Availability
Charges
Restricted Funds
General Obligation
Bond Assessments
Diagram 2.2: Flow of Funds – County Collection Sources
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2.3 Miscellaneous Income
a. Miscellaneous Rents and Leases (General Use)
Revenues received from the rental and lease of District
property are general use revenues. Not only are they
periodic revenues, but there is also a one-time fee charged
with the setup of each new lease. The District incurs
expenses related to these rents and leases. The one-time
fees are calculated to recover the costs to setup the leases.
b. Sewer Billing Fees (General Use)
Sewer billing fees are general use revenues. The District
provides processing and billing services to the City of Chula
Vista to bill and collect from their customers for sewer
service. These fees are to recover the cost the District
incurs to provide this service.
c. Interest Income or Expense Allocation (General Use,
Designated, and Restricted)
Interest income (expense) will be allocated every month based
upon each fund's month-ending balance. In this way, each
fund receives credit for interest earned by that fund and
each fund with a negative balance is charged for the use of
the other fund’s reserves.
MISCELLANEOUS INCOME
Unrestricted and
Undesignated
(General Use) Funds
Miscellaneous
Rents and Leases
Sewer Billing
Fees
Restricted Funds
Interest Income or
Expense Allocation
Diagram 2.3: Flow of Funds – Miscellaneous Income Sources
Designated Funds
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2.4 Debt Issuance
a. Loans (General/Restricted Use)
As the District determines that additional financing 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 recommended to the Board
for action. As an option to bond indebtedness, loans are
available to satisfy short-term 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 general obligation 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
financing 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 (COPs) (Restricted)
General revenues of the District are pledged as security for
Certificates of Participation (COPs) indebtedness. If the
District determines that additional financing 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. This form of financing has become the
industry’s preferred form of financing as it does not require
a vote of the general public.
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2.5 Inter-fund Transfers
Each year in the budgeting process, future fund levels are
projected for the next six years. Based on these projections
transfers are recommended. Reserves may be transferred
between Unrestricted or Designated Funds and the General Fund
(see 4.0 “Funding Levels” and 4.1 “Fund Transfers”).
Reserves may not be transferred to or from any of the
restricted funds unless it is between two restricted funds
with a shared purpose.
Fund Types and Categories
3.0 General Funds
a. Purpose
The General Fund is neither restricted nor designated. The
District maintains one General Fund for each business segment
(water, sewer, and recycled). This fund holds the working
capital and emergency operating reserves. While the General
Fund has a short-term focus to finance the District’s annual
operations, it is supported by the six-year rate model. This
DEBT PROCEEDS
Unrestricted and
Undesignated
(General Use) Funds
Loans General
Obligation Bonds
Restricted Funds
Certificates of
Participation
Diagram 2.4: Flow of Funds – Debt Issuance Sources
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fund is primarily used to finance the operations of the
District; however, it can be used for any District purpose.
This fund can be used to supplement the District’s rates and
charges and be a temporary source of revenue to balance the
Operating Budget. This fund can also be used to avoid spikes
in the rates or significant and abrupt increases. It is an
industry practice to have a fund that can be used to
stabilize rates. This would only occur if there was a
temporary need for reserves that would smooth out a rate
spike or to ramp up what would otherwise be a dramatic rate
increase.
The General Fund also plays a role in the debt planning of
the District. 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 need a number of debt issuances over the years
and this fund will help the District not only to stabilize
rate fluctuations but also to access low cost financing for
future projects.
b. Sources
Meter installation charges, temporary meter fees, uniform
rates and charges, monthly system fees, energy charges,
penalties, pass-through fixed charges, general levy property
tax receipts, water annexation fees, availability charges,
miscellaneous rents and leases, sewer billing fees, interest
income or expense allocation, loans, and a portion of the
temporary water sales.
The sewer general fund receives sewer charges, penalties,
availability charges, sewer annexation fees, and interest
income or expense allocation.
c. Funding Levels
I. Minimum Level – The minimum reserve level for each
business segment of the General Fund is three
months of operating budget expenses (evaluated
separately for each segment).
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II. Maximum Level – The maximum reserve level for the
General Fund is nine 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 reserves 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 Other Post Employment Benefits (OPEB) Fund
a. Purpose
Designated Other Post Employment Benefits (OPEB) reserves are
“general use” reserves that have been set apart by Board
action to finance the medical benefits of qualified retirees
as outlined in the District’s benefits plan. This fund is
available to hold any Board designated OPEB funds. The
District also has a trust at CalPERS and is restricted for
the purpose of financing the OPEB liability. Money held in
the CalPERS trust restricts the funds from any use other than
OPEB. The two funds are considered jointly when looking at
target reserve levels. Every two years, actuarial study is
performed to update the annual financing requirements.
Changes in the actuarial valuation may result from changes in
benefit levels, employee population, health insurance costs,
or general market conditions.
b. Sources
The OPEB liability may be financed by general use reserves
coming from user rates and charges, either from an operating
budget expenditure or from interfund transfers. Transfers of
unrestricted reserves may come from the various designated
funds or from the General Fund. As a part of the normal
budget process, annual operating revenues have been
sufficient to finance the ongoing needs of this designated
fund. While debt financing is also an option, the District
has only used user rates and charges to finance this fund.
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c. Funding Levels
I. Minimum Level – The minimum reserve level for this
fund is equal to the District’s OPEB liability as
determined by the actuarial study. When
considering the reserve level of this fund, both
the District held OPEB reserves and CalPERS held
OPEB reserves must be considered jointly.
II. Maximum Level – The maximum reserve level for this
fund is equal to the District’s OPEB liability as
determined by the actuarial study. In the event
that the two funds, as described above, exceed the
OPEB liability, the District will reduce the annual
funding levels as defined by the actuarial study.
III. Target Level – The target reserve level for this
fund is equal to the District’s OPEB liability as
determined by the actuarial study. In the event
that the two funds, as described above, fall below
the OPEB liability, the District will increase the
annual funding levels as defined by the actuarial
study.
3.2 New Water Supply Fund Category
a. Purpose
The New Water Supply Fund category is to finance the
expansion portion of new water supply projects and is
therefore to be paid by developers. When considering the
reserve level of the New Water Supply category; the New Water
Supply Fund, the New Water Supply Debt Fund, and the
Designated New Water Supply Fund all work in concert and must
be considered jointly.
b. Sources
The New Water Supply Fund receives reserves only from the new
water supply fee. Other funds within the new water supply
category of funds receive debt proceeds and general use
reserves through a designation to this category.
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c. Funding Levels
I. Minimum Level – As the District matures the CIP
will move to purely replacement projects. As the
District moves through its lifecycle the need for
new water supply reserves will decrease and may be
reduced to zero.
II. Maximum Level – The maximum reserve level for the
new water supply category of funds is limited to
five years of the unfinanced new water supply
facilities as described in the District’s CIP
Budget. To determine the unfinanced amount, the
total new water supply financing needs must be
reduced by the projected new water supply revenues,
general fund designations, and bond financing. If
the combined new water supply reserves exceed the
target level, the District should consider
transferring designated reserves to meet other
purposes, reduce the new water supply fee, or
change the timing of the new water supply projects.
III. Target Level – In order to facilitate debt
financing of the new water supply, it is important
that the various new water supply funds retain an
overall reserve level of six months, prior to any
attempt to obtain debt financing. This reserve
level allows the District the time necessary to
issue additional debt without depleting new water
supply reserves. If the combined new water supply
reserve levels drop below six months of
expenditures, this would trigger a transfer of
general use reserves, a bond sale, or a change in
the timing of new water supply projects. Bond
proceeds would be placed in the Restricted New
Water Supply Debt Fund while transfers would be
placed in the Designated New Water Supply Fund.
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3.3 Expansion Fund Category
a. Purpose
The Expansion Fund category is to finance the expansion
portion of capital projects and therefore is to be paid for
by developers. When considering the reserve levels of the
expansion category, the following funds work in concert and
must be considered jointly: the Expansion Fund, Expansion
Debt Fund, Capital Improvement Fund, and the Designated
Restricted Funds
Unrestricted and
Undesignated Funding
Sources
Funding Source New Water
Supply Fees
Debt
Proceeds
Restricted Funds
Restricted Funds
Designated Funds
New Water
Supply Fund
Expansion
New Water
Supply Fund
Designated
New Water
Supply Fund
Debt Fund
General Fund – Rates and Charges
New Water
Supply Fund
Category
New Water
Supply
Debt Fund
Diagram 3.2: New Water Supply Fund Category
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Expansion Fund. Potable and recycled reserves are considered
jointly while sewer is evaluated separately.
b. Sources
The Expansion Fund is financed by water charges in lieu of
capacity fees (for temporary meters) and the “incremental”
portion of the capacity fee. The other funds in this
category may also be financed by debt proceeds, the “buy-in”
portion of the capacity fee, and the general fund through a
designation of reserves.
c. Funding Levels
I. Minimum Level – As the District matures the CIP
will move to purely replacement and betterment
projects. As the District moves through this
lifecycle the need for expansion reserves will
decrease and may be reduced to zero.
II. Maximum Level – The maximum reserve level for the
expansion category of funds is limited to five
years of unfinanced expansion facilities as
described in the District’s CIP Budget. To
determine the unfinanced amount, the total
financing needs must be reduced by the projected
expansion revenues, bond financing, and any
restricted or general fund revenues allocated to
this fund category. If the combined expansion
reserves exceed target levels, the District should
consider reducing capacity fees, reallocating
restricted or designated funds to meet other
purposes, or shifting the timing of expansion
projects.
III. Target Level – The target level is six months of
expansion expenditures. It is important that the
expansion reserves remain at a minimum of six
months of expansion expenditures. This reserve
level allows the District the time necessary to
issue additional debt without depleting expansion
reserves. If the combined expansion reserves drop
below six months of expenditures this would trigger
a transfer of general use reserves, a bond sale, an
adjustment to the timing of expansion projects, or
a reallocation of restricted reserves. Bond
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proceeds would be placed in the Restricted Bond
Fund, transfers of general use reserves would be
placed in the Designated Expansion Fund, and
transfers of restricted reserves would be placed in
the Expansion Capital Improvement Fund.
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Unrestricted and
Undesignated Funding
Sources
Diagram 3.3: Expansion Fund Category
Funding Source 2x Water
Rates
Capacity
Fees (1)
Restricted Funds
Restricted Funds
Designated Funds
Expansion
Fund
Expansion
Debt Fund
General Fund – Rates and Charges
Restricted Funds Expansion Capital
Improvement
Fund
Debt
Proceeds
Restricted Funds
Capital
Improvement
Fund
Bond
Debt
Expansion
Fund
Designated
Expansion
Fund
Expansion
Fund
Category
(1) For Water Capacity Fees 32.4% goes into the Expansion fund and 67.6% goes into
the Capital Improvement Fund. For Sewer Capacity Fees 100% goes into the
Capital Improvement Fund.
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3.4 Replacement Fund Category
a. Purpose
The Replacement Fund category is to finance replacement
projects. When considering the reserve levels of the
replacement category of funds, the following funds work
in concert and must be considered jointly: the Debt
Fund, Capital Improvement Fund, and the Designated
Replacement Fund. The purpose of these reserves is to
pay for the replacement of capital infrastructure and
capital purchases. These reserves are not to be used
for the replacement of non-capital items.
With the District’s development of its financial systems
and the greater need and ability to separate and track
reserves, the replacement reserves have 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 these are not
considered normal maintenance. When the cost is below
$10,000, the costs are financed annually as operational
maintenance. As charges are incurred on replacement
projects the reserves are deducted from the respective
Replacement Funds on a monthly basis.
b. Sources
The various funds in this category are financed by debt
proceeds, the “buy-in” portion of the capacity fee, and
general fund designations.
c. Funding Levels
I. Minimum Level – The minimum reserve level of this
category of funds is 3% of the historical value of
existing assets as identified in the District’s
current financial statements. Potable, recycled,
and sewer replacement are evaluated separately.
II. Maximum Level – The maximum reserve level of this
category of funds is 6% of existing assets. If the
combined replacement reserves exceed target levels,
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the District should consider transferring the “buy-
in” portion of the capacity fee to meet other
purposes. Another consideration would be to shift
the timing of replacement projects.
III. Target Level – The target reserve level of this
category of funds is 4% of existing assets. In the
event that the reserves fall below the recommended
target level, the District should consider
transferring the “buy-in” portion of the capacity
fee. The District should also consider shifting
the timing of replacement projects or issuing debt
to support the planned level of facility
replacement. The District will act based on the
annual six-year rate model, to insure that at the
end of that planning horizon the reserves exceed
the minimum level and is approaching the target
level.
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(1) For Water Capacity Fees 67.6% goes into the Capital Improvement Fund.
For Sewer Capacity Fees 100% goes into the Capital Improvement Fund.
3.5 Betterment Fund Category
a. Purpose
The Betterment Fund category is to finance the
betterment portion of capital projects with a portion
going to maintenance of the potable, recycled, and sewer
systems. The District maintains separate Betterment
Fund categories, one for each improvement district. An
Funding Source
Unrestricted and
Undesignated Funding
Sources
Capacity
Fees (1)
Diagram 3.4: Replacement Fund Category
Restricted Funds
Restricted Funds
Designated Funds
Capital
Improvement Fund
Replacement
Debt Fund
Designated
Replacement
Fund
General Fund – Rates and Charges
Debt
Proceeds
Debt Fund
Restricted Funds
Replacement
Capital
Improvement
Fund
Replacement
Fund
Category
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improvement district is a legally defined geographic
area usually established for the purpose of bond
financing of facilities. The betterment reserves within
these funds are restricted by law for use within the
improvement district in which the fees were collected
(Water Code 71631.6). However, the legal restriction of
this reserve depends upon the particular revenue source.
(See Section 2.2 b. for a review of the availability
fees).
When considering the reserve levels of the betterment
category of funds, the following funds work in concert
and must be considered jointly: the Betterment Fund,
Debt Fund, Capital Improvement Fund, and Designated
Betterment Fund.
b. Sources
The Betterment Fund category receives restricted
revenues by improvement district from availability fees
(the first $10 is unrestricted, while amounts over $10
are restricted) collected through the county tax roll.
Betterment may also be financed by debt proceeds, the
“buy-in” portion of the capacity fee, as well as the
general fund through a designation of reserves.
c. Funding Levels
I. Minimum Level – As the District matures the CIP
will move to purely replacement projects. As the
District moves through this lifecycle the need for
betterment reserves will decrease and may be
reduced to zero.
II. Maximum Level – The maximum reserve level for the
betterment category of funds is limited to five
years of unfinanced betterment facilities as
described in the District’s CIP Budget. To
determine the unfinanced amount, the total
financing need must be reduced by the projected
betterment revenues, bond financing, and general
fund designations. If this maximum is exceeded,
then the District should evaluate reductions in the
special water rates and availability fees,
transferring designated reserves to meet other
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purposes, or shifting the timing of betterment
projects.
III. Target Level – The target is six months of
betterment expenditures. It is important that the
betterment reserves remain at a minimum of six
months of betterment expenditures. This reserve
level allows the District the time necessary to
issue additional debt without depleting betterment
reserves. If the combined betterment reserves drop
below six months of expenditures this would trigger
a transfer of general use reserves, a bond sale, or
an adjustment to the timing of betterment projects.
Bond proceeds would be placed in the Betterment
Bond Fund while transfers would be placed in the
Designated Betterment Fund.
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Fund
Unrestricted and
Undesignated Funding
Sources
Diagram 3.5: Betterment Fund Category
Funding Source Capacity
Fees (2)
Restricted Funds
Restricted Funds
Designated Funds
Capital
Improvement
Fund
Betterment
Debt Fund
Betterment
Fund
General Fund – Rates and Charges
Availability
Charges (1)
Restricted Funds
Debt
Proceeds
Restricted Funds
Bond
Debt
Designated
Betterment
Fund
Betterment
Fund
Betterment
Capital
Improvement
Fund
Betterment
Fund
Category
(1) The portion of charges over $10 per parcel is restricted.
(2) For Water Capacity Fees 67.6% goes into the Capital Improvement Fund. For Sewer
Capacity Fees 100% goes into the Capital Improvement Fund.
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Diagram 3.6: Fund Targets
Fund or Fund
Category
Actions to Consider if
below Target Target Maximum
New Supply Fund
Category
New supply fee increase,
bond financing, or
transfer to designated or
CIF Funds
Total of all funds in fund
category = six months of
capital expenditures
Nexus of cost to fee
Expansion Fund
Category
Capacity fee increase,
bond financing, or
transfer to designated or
CIF Funds
Total of all funds in fund
category = six months of
capital expenditures
Nexus of cost to fee
Replacement Fund
Category
Bond financing, or
transfer to designated or
CIF Funds
Total of all funds in fund
category = 4% of
infrastructure
Nexus of cost to fee
Betterment Fund
Category
Bond financing, or
transfer to designated or
CIF Funds
Total of all funds in fund
category = six months of
capital expenditures
Five years unfunded
needs
Debt Reserve Fund Increase tax collection or
rates
One semi-annual
payment
Two semi-annual
payments
Rate Stabilization Fund Fund transfers from
legally available funds
The financial impact of
two consecutive years of
low winter water usage
The financial impact of
three consecutive years
of low winter water
usage
OPEB Fund Fund transfers Full funding Full funding
General Fund Rate increase or fund
transfers
Three months of
operating budget
expenses
Nine months of
operating budget
expenses
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Additional Restricted Funds
4.0 Capital Improvement Fund
a. Purpose
The “Capital Improvement Fund’s sole purpose is to track the
“buy-in” portion of the capacity fee and to ensure these fees
are expended solely for the purpose for which they were
collected. In this case it is to pay for facilities that
were in existence at the time this fee was established.
These fees may be used for expansion, replacement, or
betterment projects or any debt related to these categories.
The water capacity fees may also be used for either the
potable or the recycled systems. As capacity fees are
collected, the “buy-in” portion of the fee is allocated as
needed to one of three capital improvement funds, one in each
of the Expansion, Replacement, and Betterment Fund
categories. These reserves are used to pay debt or offset
any negative balance within these three categories of funds.
For sewer, these fees fund the Expansion, Replacement, or
Betterment Fund categories. These fees may not be used to
finance the New Water Supply category, as there were no new
water supply facilities in existence at the time the new
methodology for capacity fees was established.
b. Sources
The “buy-in” portion of the capacity fee collected after
June 30, 2010 or after September 30, 2014 for sewer.
c. Funding Levels
There are no minimums, maximums, or target levels for these
reserves on an individual basis. The allocation of this fee
to the various capital improvement funds is dependent on the
overall reserve levels within each fund category.
4.1 Debt Reserve Fund
a. Purpose
The Debt Reserve Fund is established to hold the proceeds
from the various debt issuances. There are two types of
debt, General Obligation bonds and Certificates of
Participation bonds. The proceeds are transferred to the New
Water Supply, Expansion, Replacement, or Betterment Debt
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Funds as they are expended for various facilities within
those fund categories. As repayment of the debt occurs, the
balances within these individual funds are reduced so that
the financial impact of issuing debt is tracked within the
category for which the debt was issued.
b. Sources
Debt proceeds.
c. Uses
There are no minimums, maximums, or target levels for this
fund on an individual basis. This fund is available on an as
needed basis to fund CIP projects for new water supply,
expansion, replacement, or betterment. From a funding level
perspective, these reserves are evaluated in the context of
all the various funds within each fund category.
4.2 Rate Stabilization Fund
a. Purpose
The Rate Stabilization Fund is established for the purpose of
minimizing rate increases in response to one-time events and
therefore stabilizing the rates and charges imposed by the
District to meet covenanted debt service coverage levels.
The Rate Stabilization Fund is not intended to be used to
offset regular rate increases needed to meet inflationary
cost increases in operations.
b. Sources
The District may budget for Rate Stabilization Fund deposits
from the Sewer Fund, amounts in excess of the annual debt
service coming due and payable in the fiscal year, after
payment of operating expenses. The allowable amount that may
be deposited shall not be transferred prior to payment of the
annual debt service obligation.
c. Uses
There is no minimum level for this fund. The maximum level
shall be equal to the financial impact of three (3)
consecutive years of low winter water usage. The target
level for this fund shall be equal to two (2) consecutive
years of low winter water usage. For the purposes of
calculating debt service, amounts transferred from the Rate
Stabilization Fund to the Sewer Fund will constitute Gross
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Revenue in the fiscal year the transfer occurs. All interest
or other earnings on deposits in the Rate Stabilization Fund
will be withdrawn at least annually and will be accounted for
as operating revenue in the Sewer Fund.
Fund Transfers
5.0 Funding Levels
As described in the preceding sections, the District maintains
reserves for its operating and capital activities. These reserves
can be of three types: 1) undesignated or general use reserves,
2) designated, and 3) restricted for a specific purpose. The
restricted reserves can be restricted geographically and/or by
purpose. The District maintains various funds to track the
various designations and restrictions. The source of the money
for each fund was discussed along with the purpose, source of
funds, and levels. Key characteristics 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 in light of the 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 or under the
target amount. This is not only acceptable but expected. The
rate model provides an empirical estimate of the conformance
between the projected District’s financial activities and the
guidelines of this policy.
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5.1 Fund Transfers
Reserves within the District’s various designated funds come from
interfund transfers of unrestricted general use reserves. It is
important to note that the District has the ability to use general
use reserves for any business purpose. General use reserves may
be transferred to and from any unrestricted fund for any business
need. Designated reserves are general use reserves which have
been set aside for a specific purpose by Board action. These
reserves can only be used for the purpose they were designated, or
with Board action they may be used for any other business purpose.
While general use reserves may be used for any restricted purpose
they may not be transferred to Restricted Funds due to the
sensitivity of the tracking of restricted reserves. If reserves
are needed for a restricted purpose they are transferred to a
Designated Fund within the fund category with that particular
purpose. Reserves restricted to a fund category may only be used
within that category and may not be transferred to another
category. For example, the new water supply fee and the
“incremental” portion of the capacity fee are restricted reserves
for a specific purpose, and may not be transferred to another
category as no other category has the same purpose. However, the
“buy-in” portion of the capacity fees are restricted for purposes
that are shared by more than one category of funds and may
therefore be transferred to a restricted fund within another fund
category as long as it shares the same purpose.
In many situations reserve transfers are expected as some fund
categories will exceed their maximums or drop below their
minimums. Only fund categories that are below the stated target
are eligible to receive transferred reserves. Fund categories
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 reserve
transfers out, but only when other options are not available.
The rationale for prioritizing reserve transfers is based on the
immediacy of the need and the availability of reserves from other
funding sources. For example, the General Fund is first to
receive reserves 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.
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On the other end of the spectrum, the Replacement Fund has a long-
term perspective and will be used to partially finance 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
financing options.
When making the determination of when transfers are necessary, all
funds within a fund category work as a group. The combined
balance of the restricted and designated funds is looked at when
determining whether the fund category requires additional funding
from the Restricted Capital Improvement Fund, Restricted Debt
Fund, or the General Fund. Because the Capital Improvement Fund
may finance expansion, replacement or betterment reserves may be
transferred between these fund categories, but only back and forth
within its own type of restricted fund.
As an example, if during the rate model update process it was
determined that the Expansion Funds (designated and restricted)
would drop and stay below the minimum during the six-year planning
horizon, this would trigger a bond sale, a transfer of general use
reserves, and/or a transfer of restricted reserves. If in the
cash planning process, it was anticipated that the General Fund
would remain above target during the planning horizon and that the
trend did not present a problematic underfunded status, then
General Fund reserves would be considered available for transfer
prior to making proceeds available from a bond sale. Also, if
during this period the Betterment Fund category was anticipated to
exceed its maximum, then reserves from either the Designated
Betterment Fund, or the Capital Improvement Fund would be
transferred to the corresponding Expansion Fund prior to a bond
sale. All funds are evaluated to determine which has the greatest
need or availability of reserves before any reserve transfer
recommendation is presented to the Board.
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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: When water service is requested for land outside
the boundaries of the District, the land to be serviced must first
be annexed. For sewer service the land must be annexed into an
improvement district within the District.
Assets: Resources owned or held by Otay Water District that has
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.
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.
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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.
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 payments, and other
infringements of the District’s Code of Ordinances.
1% Property Tax: In 1978, Proposition 13 limited general levy
property tax rates for all taxing authorities to a total rate of
1% of full cash value. Subsequent legislation, AB 8, established
that the receipts from the 1% levy were to be distributed to
taxing agencies according to approximately the same proportions
received prior to Proposition 13.
OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy
Number
Date
Adopted
Date
Revised
RESERVE POLICY 25 2/10/93 6/3/20
Page 43 of 43
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.
Russell Square: A sewer lift station constructed in 1983 that
serves four properties in the Russell Square Development.
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.
Tax Collection for Bond Debt: 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.
Unit: A Unit of water is 100 cubic feet or 748 gallons of water.
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. Effective in 2009, all non-
residential customers are charged for water based on a tiered rate
structure in which water rates are based on meter size and amount
of Units consumed.