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HomeMy WebLinkAbout07-18-18 F&A Committee Packet 1 OTAY WATER DISTRICT FINANCE AND ADMINISTRATION COMMITTEE MEETING and SPECIAL MEETING OF THE BOARD OF DIRECTORS 2554 SWEETWATER SPRINGS BOULEVARD SPRING VALLEY, CALIFORNIA BOARDROOM WEDNESDAY July 18, 2018 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 DISCUSSION ITEMS 3. CONSIDER THE AMENDED AND RESTATED REGIONAL WASTEWATER AGREEMENT BETWEEN THE CITY OF SAN DIEGO (CITY) AND PARTICIPATING AGENCIES (PA) IN THE METROPOLITAN SEWERAGE SYSTEM (AGREEMENT) AS PART OF A LONG-RANGE REGIONAL WATER REUSE PLAN WITH THE GOAL OF REALIZING A SECONDARY EQUIVALENT POINT LOMA WASTEWATER TREATMENT PLANT (PLWTP) AND A NEW LOCAL SUSTAINABLE WATER SUPPLY (KENNEDY) [5 minutes] 4. ADJOURNMENT BOARD MEMBERS ATTENDING: Mark Robak, Chair Mitch Thompson 2 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 July 13, 2018 I posted a copy of the foregoing agenda near the regular meeting place of the Board of Directors of Otay Water District, said time being at least 24 hours in advance of the meeting of the Board of Directors (Government Code Section §54954.2). Executed at Spring Valley, California on July 13, 2018. /s/ Susan Cruz, District Secretary STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: August 1, 2018 SUBMITTED BY: Bob Kennedy Engineering Manager PROJECT: S1502- 001000 DIV. NO. All APPROVED BY: Rod Posada, Chief, Engineering Mark Watton, General Manager SUBJECT: Amended and Restated Regional Wastewater Agreement Between the City of San Diego and Participating Agencies in the Metropolitan Sewerage System GENERAL MANAGER’S RECOMMENDATION: Consider the Amended and Restated Regional Wastewater Agreement between the City of San Diego (City) and the Participating Agencies (PA) in the Metropolitan Sewerage System (Agreement) as part of a long-range regional water reuse plan with the goal of realizing a secondary equivalent Point Loma Wastewater Treatment Plant (PLWTP) and a new local sustainable water supply. Staff are unable to provide a recommendation unless more information is provided to better understand and negotiate terms into the Agreement and to understand how it will be implemented by the City. COMMITTEE ACTION: Please see Attachment A. PURPOSE: On October 1, 2014, the Board approved a resolution in support of the City’s National Pollution Discharge Elimination System (NPDES) permit as part of a long-range regional water reuse plan with the goal of realizing a secondary equivalent PLWTP. The Pure Water San Diego Program (Pure Water), as a new local sustainable water supply, could also avoid or downsize future imported water projects. In order to comprehensively and equitably address the costs and revenues 2 associated with the Pure Water project and the related construction, expansion, and modification of the Metro wastewater facilities, the City and the PAs wish to amend and restate the Regional Wastewater Disposal Agreement. ANALYSIS: The Metropolitan Wastewater Joint Powers Authority (JPA) is a coalition of municipalities and special districts in the southern and central portions of San Diego County that share in the use of the City's regional wastewater collection and treatment facilities. Otay Water District is one of twelve (12) PAs party to agreements with the City for wastewater treatment. This coalition of PAs represents 35% of the flow and over $70 million of the annual budget in relation to the Metro wastewater system. Other JPA member agencies include the cities of Chula Vista, Coronado, Del Mar, El Cajon, Imperial Beach, La Mesa, National City, Poway, the County of San Diego Sanitation District, the Lemon Grove Sanitation District, and Padre Dam Municipal Water District. Otay Water District contributes approximately 0.5% of the wastewater flow to the Metro wastewater system. The City’s sewage system dates back to 1885, but a formal agreement between the PAs was not established until 1998. The Metropolitan Wastewater Commission (Metro Commission) was formed at that time pursuant to the terms of the first Regional Wastewater Disposal Agreement between PAs and San Diego. In 2001, the Metro Joint Powers Authority (Metro JPA) was formed to provide the PAs with a stronger voice in the operations of the Metro System, for which the PAs collectively pay approximately 35% of the operation and capital costs. Secondary Equivalency Members of the JPA believe that permanent acceptance of a smaller PLWTP as an advanced primary treatment plant can be achieved through development of a comprehensive, systematic regional water reuse plan to implement a variety of agency-specific and collaborative large- scale potable water reuse projects. These include indirect potable reuse (IPR) projects that could result in significant off-loading of the treatment demand on the PLWTP. The City’s PLWTP is currently permitted to treat 240-million gallons of wastewater per day (MGD) and allows treatment to an advanced primary level, but must obtain a waiver every five (5) years from the United States Environmental Protection Agency issued pursuant to the 3 Clean Water Act. The City has more than 20 years of ocean monitoring data demonstrating that the advanced primary PLWTP consistently protects the ocean. The City has estimated the cost of upgrading the PLWTP from advanced primary to Full Secondary Treatment Level to $3.5 billion. This high cost of the upgrade, combined with the projected high costs for creating a reliable potable water supply, has led the City to the conclusion that it is possible to divert flow from PLWTP and to treat a portion of this diverted flow to a level suitable for IPR and maintain PLWTP at Advanced Primary without impacting the ocean environment. The first phase of the Pure Water project is expected to produce 30 MGD of product water to be conveyed to Miramar reservoir. The ultimate goal of the Recycled Water Study outlines a concept to divert almost 100 MGD of wastewater that would otherwise have been treated. If this goal can be achieved, the lower flow to the PLWTP could preclude the need for upgrading to a Full Secondary Level, and use the diverted flow to offset the region’s future potable water import needs. To achieve any offloading of flow to PLWTP, a fail- safe design with full redundant infrastructure and a commitment by the City that the Pure Water infrastructure must operate continuously. To continue to operate the PLWTP at the advanced primary treatment level, the City is seeking passage of federal legislation, with support from the environmental community, the proposal called Ocean Pollution Reduction Act II (OPRA II). OPRA II will allow the City’s NPDES permit to be based on secondary equivalency with a commitment to implement potable reuse of wastewater. Until permanent federal legislation is adopted, to recognize secondary equivalence, there is uncertainty about the total financial cost strategy for wastewater associated with the Pure Water project. Pure Water Phase I cost projection dated March 2018 estimated the total cost are $1.4 billion. Metro Wastewater allocation is thirty nine percent (39%) of the overall estimated cost and City Water allocation is sixty one percent (61%). See Attachment B for the cost breakdown for this project. Amended and Restated Regional Wastewater Agreement On May 15, 2018, staff received a draft of the Agreement, however, it was incomplete with many of the exhibits missing and dollar values left blank. On May 17, 2018, District staff discussed the elements of the agreement with the ad hoc group for Metro Technical Advisory Committee’s (Metro TAC) working on the agreement. On June 22, 2018, staff received the latest version of the Agreement (see Exhibit A) 4 and also an explanation of some of the basic principles that are now incorporated into the agreement (see Exhibit B). Staff from the City’s Public Utilities Department and the City Attorney’s Office are continuing to work with Metro JPA staff on the Agreement and have come to conceptual agreement on most terms, however, the individual agencies that make up Metro JPA are waiting to receive more complete information on the Agreement. The District provided comments on the draft version of the Agreement to Metro JPA’s General Counsel, Best Best & Krieger LLP (BB&K). BB&K is planning to provide a joint meeting or conference call with all agencies to discuss the Agreement and provide an update on the revisions being negotiated. District’s staff has suggested clarification on what expenses will be included in a cap on the maximum capital Metro should contribute to the Pure Water project to assure the capital and operating costs don’t exceed the estimated cost for improvements at PLWTP to meet secondary treatment standards. Staff are also concerned about how the Pure Water project is designed. It must be built with the redundant equipment and operated as a “must-run” facility to offload flows permanently to PLWTP. On November 21, 2017, the Metro JPA provided comments on the City’s EIR/EIS (see Exhibit C) noting the City’s own environmental document states, “The NCPWF is not an essential facility.” On February 28, 2018, the Metro JPA provided comments on the draft Title 22 Engineers Report noting the project, as designed, would not benefit Metro JPA if the project doesn’t off-load PLWTP (see Exhibit D). This basic design and operating principle has not been resolved between the City and Metro JPA and the Agreement doesn’t address this adequately. Metro JPA Chairman prepared talking points (see Exhibit E) for a meeting between Board of Supervisor Greg Cox and Mayor Kevin L. Faulconer in May 2018. The chairman included his concerns about the aggressive timeline to bid construction contracts and noted that a secured agreement with the City may be difficult, if not impossible. He noted that mitigation of future costs is necessary, in the event secondary equivalency cannot be secured. He also noted that the North County wastewater agencies that include the San Elijo Joint Powers Authority, the Leucadia Wastewater District, and the Encina Wastewater Authority are currently paying less for full secondary treatment even before the Pure Water costs are added. At the last June 20, 2018 Metro TAC meeting, an updated Agreement is scheduled to be provided to the member agencies before their next meeting on July 19, 2018. The City is planning to request authorization for advertisement for construction of the first phase of the Pure Water project at the City’s September 2018 Environment 5 Committee meeting and the October 2018 City Council meeting. Current indications are that the City will request, at the Metro Commission meeting of August 2, 2018, the Commission’s approval or support of the Agreement. FISCAL IMPACT: Joe Beachem, Chief Financial Officer Unknown at this time. STRATEGIC GOAL: This Resolution supports the District’s Mission statement, “To provide high value water and wastewater services to the customers of the Otay Water District in a professional, effective, and efficient manner” and the General Manager’s Vision, “A District that is innovative in providing water services at affordable rates, with a reputation for outstanding customer service.” LEGAL IMPACT: Unknown at this time. BK/RP:jf P:\WORKING\CIP S1502 - City of San Diego Metro Water Issues\Staff Reports\Bd 08-01-18, Staff Report Metro JPA Restated Wastewater Agreement\BD 08-01-18, Staff Report, Metro JPA-Restated Wastewater Agreement, (BK-RP).docx Attachments: Attachment A – Committee Action Attachment B – Pure Water Phase I Cost Estimate Exhibit A – Draft Amended and Restated Regional Wastewater Agreement Exhibit B – Agreement Basic Principles Exhibit C – Metro Comments on Draft EIR/EIS Exhibit D – Metro Comments Title 22 Engineers Report Exhibit E – Metro JPA Chairman Meeting Talking Points ATTACHMENT A SUBJECT/PROJECT: S1502-001000 Amended and Restated Regional Wastewater Agreement Between the City of San Diego and Participating Agencies in the Metropolitan Sewerage System COMMITTEE ACTION: The Finance and Administration Committee (Committee) reviewed this item at a meeting held on July 18, 2018. The Committee supported staff's recommendation. NOTE: The “Committee Action” is written in anticipation of the Committee moving the item forward for Board approval. This report will be sent to the Board as a Committee approved item, or modified to reflect any discussion or changes as directed from the Committee prior to presentation to the full Board. Attachment B Pure Water Phase I Cost Estimate March 2018 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 Total Percent Wastewater: Morena PS & WW Force Main and Brine Conveyance 154,897$ 1,647,288$ 3,280,849$ 12,724,831$ 28,566,500$ 143,849,533$ 131,358,206$ 3,130,181$ 324,712,285$ North City Renewable Energy 49,669$ 644,998$ 692,614$ 701,367$ 1,295,182$ 6,174,097$ 20,680,418$ 3,556,439$ 33,794,784$ North City MBC Improvements 2,673$ 54,797$ 753,144$ 1,289,608$ 3,466,999$ 1,545,572$ 198,042$ 7,310,835$ North City WRP Expansion and PWF Influent Conveyance 268,778$ 2,349,630$ 3,482,119$ 9,960,999$ 29,070,517$ 76,220,181$ 45,525,116$ 10,005,502$ 176,882,842$ SDG&E 1,062,998$ 1,095,970$ 1,129,964$ 3,288,932$ Total Wastewater 473,344$ 4,644,589$ 7,510,379$ 24,140,341$ 61,284,805$ 230,806,780$ 200,239,276$ 16,890,164$ 545,989,678$ 39% Water: MorenaPump Station WW Force Main and Brine Conveyance 43,689$ 463,495$ 1,018,609$ 1,488,282$ 5,103,717$ 18,668,104$ 19,171,954$ 547,108$ 46,504,958$ North City Renewable Energy 142,073$ 1,844,930$ 1,854,764$ 5,623,764$ 14,444,516$ 57,630,529$ 12,479,552$ 94,020,128$ Miramar WTP Pump and Plant Improvements 402,526$ 404,390$ 1,651,678$ 2,097,217$ 4,555,811$ North City Pure Water Facility 356,066$ 3,499,605$ 5,366,161$ 30,237,545$ 69,296,681$ 221,267,199$ 153,848,727$ 37,780,301$ 521,652,285$ North City WRP Expansion and PWF Influent Conveyance 211,700$ 2,407,733$ 412,267$ 2,002,336$ 2,691,337$ 28,016,829$ 8,140,260$ 1,354,497$ 45,236,959$ North City Pure Water Pipeline 427,642$ 701,334$ 4,962,149$ 6,632,030$ 24,796,516$ 46,386,566$ 23,768,685$ 1,737,030$ 109,411,952$ North City Pure Water Pump Station 11,984$ 371,482$ 2,290,465$ 1,142,275$ 4,270,856$ 7,989,442$ 4,093,826$ 299,179$ 20,469,509$ Total Water 1,051,081$ 7,585,722$ 15,894,581$ 43,759,758$ 112,187,261$ 338,424,334$ 268,751,198$ 54,197,667$ 841,851,602$ 61% Total Project 1,524,425$ 12,230,311$ 23,404,960$ 67,900,099$ 173,472,066$ 569,231,114$ 468,990,474$ 71,087,831$ 1,387,841,280$ Shared Projects: Morena PS & WW Force Main and Brine Conveyance Wastewater 154,897$ 1,647,288$ 3,280,849$ 12,724,831$ 28,566,500$ 143,849,533$ 131,358,206$ 3,130,181$ 324,712,285$ 87% Water 43,689$ 463,495$ 1,018,609$ 1,488,282$ 5,103,717$ 18,668,104$ 19,171,954$ 547,108$ 46,504,958$ 13% 198,586$ 2,110,783$ 4,299,458$ 14,213,113$ 33,670,217$ 162,517,637$ 150,530,160$ 3,677,289$ 371,217,243$ North City Renewable Energy Wastewater 49,669$ 644,998$ 692,614$ 701,367$ 1,295,182$ 6,174,097$ 20,680,418$ 3,556,439$ 33,794,784$ 26% Water -$ 142,073$ 1,844,930$ 1,854,764$ 5,623,764$ 14,444,516$ 57,630,529$ 12,479,552$ 94,020,128$ 74% 49,669$ 787,071$ 2,537,544$ 2,556,131$ 6,918,946$ 20,618,613$ 78,310,947$ 16,035,991$ 127,814,912$ North City WRP Expansion and PWF Influent Conveyance Wastewater 268,778$ 2,349,630$ 3,482,119$ 9,960,999$ 29,070,517$ 76,220,181$ 45,525,116$ 10,005,502$ 176,882,842$ 80% Water 211,700$ 2,407,733$ 412,267$ 2,002,336$ 2,691,337$ 28,016,829$ 8,140,260$ 1,354,497$ 45,236,959$ 20% 480,478$ 4,757,363$ 3,894,386$ 11,963,335$ 31,761,854$ 104,237,010$ 53,665,376$ 11,359,999$ 222,119,801$ Exhibit A DRAFT – City of SD Comments 6/6/18 60409.00001\30914102.3 60409.00001\30914102.4 AMENDED AND RESTATED REGIONAL WASTEWATER DISPOSAL AGREEMENT BETWEEN THE CITY OF SAN DIEGO AND THE PARTICIPATING AGENCIES IN THE METROPOLITAN SEWERAGE SYSTEM 60409.00001\30914102.3 60409.00001\30914102.4 -i- AMENDED AND RESTATED REGIONAL WASTEWATER DISPOSAL AGREEMENT TABLE OF CONTENTS Page I. DEFINITIONS ................................................................................................................... 2 II. OWNERSHIP AND OPERATION OF THE METRO SYSTEM .................................... 4 III. PAYMENT AND MONITORING PROVISIONS ........................................................... 8 IV. CAPACITY RIGHTS ........................................................................................................ 9 V. SYSTEM OF CHARGES ................................................................................................ 10 VI. PLANNING ..................................................................................................................... 14 VII. FACILITIES SOLELY FOR NEW CONTRACT CAPACITY ..................................... 14 VIII. THE METRO COMMISSION ........................................................................................ 16 IX. DISPUTE RESOLUTION ............................................................................................... 17 X. INSURANCE AND INDEMNITY ................................................................................. 18 XI. INTERRUPTION OF SERVICE ..................................................................................... 19 XII. NOTICES REQUIRED UNDER AGREEMENT ........................................................... 19 XIII. EFFECTIVE DATE AND TERMINATION .................................................................. 19 XIV. GENERAL ....................................................................................................................... 20 Exhibits A. Metro Facilities B. Contract Capacities C. Allocation of Operating Reserves and Debt Service Coverage to Participating Agencies D. Notice Listing E. Reclaimed Water Distribution System F. Pure Water Cost Allocation and Commodity Rate G. Metro System Capacity Pool Allocation 60409.00001\30914102.3 -1- 60409.00001\30914102.4 AMENDED AND RESTATED REGIONAL WASTEWATER DISPOSAL AGREEMENT THIS AMENDED AND RESTATED REGIONAL WASTEWATER DISPOSAL AGREEMENT is made and entered into this _____ day of _________________, 2018, by and between the CITY OF SAN DIEGO, a municipal corporation (“the City”); and the CITY OF CHULA VISTA, a municipal corporation; the CITY OF CORONADO, a municipal corporation; the CITY OF DEL MAR, a municipal corporation; the CITY OF EL CAJON, a municipal corporation; the CITY OF IMPERIAL BEACH, a municipal corporation; the CITY OF LA MESA, a municipal corporation; the LEMON GROVE SANITATION DISTRICT, a political subdivision of the State of California; the CITY OF NATIONAL CITY, a municipal corporation; the CITY OF POWAY, a municipal corporation; the OTAY WATER DISTRICT, a political subdivision of the State of California; the PADRE DAM MUNICIPAL WATER DISTRICT, a political subdivision of the State of California; and the SAN DIEGO COUNTY SANITATION DISTRICT, a political subdivision of the State of California (the “Participating Agencies”). RECITALS WHEREAS, the City and the Participating Agencies are autonomous entities each having the authority to provide and to contract for the conveyance, treatment and disposal of wastewater; and WHEREAS, the City and the Participating Agencies (or their predecessors in interest) entered into that certain Regional Wastewater Disposal Agreement dated May 18, 1998 (the “1998 Agreement”), which provided, among other things, for certain contract rights to capacity in the Metropolitan Sewerage System, a system of wastewater conveyance, treatment, and disposal facilities (“Metro System”) and the establishment of a mechanism to fund the planning, design, construction, operation, and maintenance of the Metro System by the City and the Participating Agencies; and WHEREAS, the purposes of the 1998 Agreement were: (1) to replace the prior-existing sewage disposal agreements between the City and the Participating Agencies; (2) to provide certain contract rights to capacity in the Metro System to the Participating Agencies; (3) to establish a mechanism to fund the planning, design, construction, operation and maintenance of the Metro System by the City and the Participating Agencies as necessary to provide hydraulic capacity, and to comply with applicable law and with generally accepted engineering practices; and (4) to establish a system of charges which allocates the costs of the planning, design and construction of such new wastewater conveyance, treatment and disposal facilities as are necessary solely to provide for new capacity on a fair and equitable basis; and WHEREAS, on April 29, 2014 the San Diego City Council gave its approval and support for the Pure Water San Diego program by adoption of Resolution No. R-308906. The Resolution approved and supported the City’s efforts to develop an implementation strategy to accomplish secondary equivalency atoffload wastewater flow from the Point Loma Wastewater Treatment Plant through implementation of potable reuse, resulting in effluent discharged to the Pacific Ocean being equivalent to what would be achieved by upgrading the Point Loma Wastewater Treatment Plant to a secondary treatment plant (secondary equivalency); and -2- 60409.00001\30914102.3 60409.00001\30914102.4 WHEREAS, the City intends tois implementing a phased, multi-year program to produce up toat least 83 million gallons per day of safe, reliable potable water for the City using the new, expanded, or modified facilities, some of which will include Metro System facilities, in order to achieve secondary equivalency under the Clean Water Act at the Point Loma Wastewater Treatment Plant by offloading wastewater from the Point Loma plant; and WHEREAS, if secondary equivalency is recognized through federal legislation amending the Clean Water Act, the Pure Water Program will not only benefit the City by producing repurified water, but also the Participating Agencies and their wastewater customers, especially if secondary equivalency is recognized through federal legislation amending the Clean Water Act. Specifically, implementation of the Pure Water Program will reduce wastewater discharges to the Point Loma Wastewater Treatment Plant, part of the Metro System where a large portion of the Participating Agencies’ wastewater is currently treated and disposed by discharging it into the Pacific Ocean. By diverting wastewater from the Point Loma Wastewater Treatment Plant and reducing the effluent discharged into the Pacific Ocean, the City and the Participating Agencies will potentially avoid billions of dollars in unnecessary capital, financing, energy, and operating costs to upgrade the Point Loma plant to secondary treatment at full capacity. Avoiding such costs would result in significant savings for regional wastewater customers; and WHEREAS, Section XIV, subsection B, of the 1998 Agreement provided that the Parties may amend the Agreement by a written agreement between the City and all Participating Agencies stating the parties’ intent to amend the Agreement; and WHEREAS, in order to comprehensively and equitably address the costs and revenues associated with the Pure Water Program and the related construction, expansion, and/or modification of Metro System facilities, the City and Participating Agencies wish to amend and restate the Regional Wastewater Disposal Agreement as provided herein. THEREFORE, in consideration of the mutual promises set forth herein, the City and the Participating Agencies agree as follows: I. DEFINITIONS A. Annual Average Daily Flow is the number, in millions of gallons of wastewater per day (“MGD”), calculated by dividing total Flow on a fiscal year basis by 365 days. B. Capital Improvement Costs are costs associated with the planning, design, financing, construction, or reconstruction of facilities. C. Chemical Oxygen Demand or “COD” means the measure of the chemically decomposable material in wastewater, as determined by the procedures specified in the most current edition of “Standard Methods for the Examination for Water and Wastewater,” or any successor publication which establishes the industry standard. D. City Water Utility PW Costs are those Pure Water Program costs allocated to the City’s water utility and therefore which are excluded as Metro System costs -3- 60409.00001\30914102.3 60409.00001\30914102.4 under Exhibit F and are the responsibility of City’s water utility. E. Contract Capacity is the contractual right possessed by each Participating Agency to discharge wastewater into the Metro System pursuant to this Agreement up to the limit set forth in Exhibit B attached hereto. Contract Capacity is stated in terms of Annual Average Daily Flow. F. Flow is the amount of wastewater discharged by the City and each Participating Agency. G. Functional-Design Methodology shall mean the process of allocating Operation and Maintenance Costs and Capital Improvement Costs to Flow and Strength parameters recognizing the benefits of both the design criteria and the primary function of a unit process. H. Metro System Costs are those costs set forth in Section V.B.1. I. Metro System Revenues are those revenues set forth in Section V.B.2. I.J. Metro Wastewater JPA or Metro JPA shall mean the Joint Powers Authority created by agreement [on file, registered with State?] J.K. Metropolitan Sewerage System or Metro System shall mean and consist of those facilities and contract rights to facilities which are shown and/or described in Exhibit A attached hereto and incorporated by this reference, including any amendments thereto authorized by this Agreement. K.L. Municipal System shall mean the City’s wastewater collection system, which consists of pipelines and pump stations, that collects wastewater within the City of San Diego and conveys it to the Metropolitan Sewerage System for treatment and disposal. L.M. New Capacity is the capacity to discharge wastewater outside the Metro System, above the Contract Capacity set forth in Exhibit B attached hereto. M.N. New Contract Capacity is the capacity to discharge wastewater into the Metro System, above the Contract Capacity set forth in Exhibit B attached hereto. N.O. North City Water Reclamation Plant is the 30 million gallons per day (as of the date of this Agreement) wastewater treatment facility which includes four major processes: primary treatment, secondary treatment, tertiary treatment, and disinfection. O.P. Operation and Maintenance Costs are the costs of those items and activities required by sound engineering and management practices to keep the conveyance, disposal, treatment, and reuse facilities functioning in accordance with all applicable laws, rules, and regulations. -4- 60409.00001\30914102.3 60409.00001\30914102.4 P.Q. Point Loma Wastewater Treatment Plant or Point Loma WTP is the 240 million gallons per day (as of the date of this Agreement) advanced primary treatment plant which includes four major processes: screening, grit removal, sedimentation, and digestion. Q.R. Pure Water Program is the City’s phased, multi-year program to produce up toat least 83 million gallons per day of Repurified Water using new, expanded, or modified facilities, some of which will include Metro System facilities. R.S. Reclaimed Water (or Recycled Water) shall have the definition set forth in Title 22, Division 4 of the California Code of Regulations and shall mean water which, as a result of treatment of wastewater, is suitable for a direct beneficial use or a controlled use that otherwise could not occur. S.T. Reclaimed Water (or Recycled Water) Distribution System shall mean and consist of those eight (8) reclaimed water projects listed in Attachment B of the Stipulated Final Order for Injunctive Relief approved by the U.S. District Court on June 6, 1997 in U.S.A. v. City of San Diego, Case No. 88-1101-B, and attached hereto as Exhibit E. T.U. Repurified Water shall mean water which, as a result of advanced treatment of Rreclaimed wWater, is suitable for use as a source of domestic (or potable) water supply. U.V. Return Flow shall mean the effluent created by the dewatering of digested biosolids, which includes centrate. V.W. Reuse shall mean to use again, such as water which has been reclaimed or repurified, or sludge that has been converted to biosolids for beneficial use. W.X. South Bay Land/Ocean Outfall is the facility that is jointly owned by the International Boundary & Water Commission (U.S. Section IBWC) and the City of San Diego. The Outfall is planned to convey and discharge treated effluent from the IBWC’s International Wastewater Treatment Plant and treated effluent from the City’s South Bay Water Reclamation Plant and the South Bay Secondary Treatment Plant. As of the date of this Agreement, the Outfall has a current Average Daily Flow Capacity of 174 million gallons per day. As of the date of this Agreement, the City owns 39.94% of the capacity of the Outfall and the balance of the capacity is owned by the IBWC. X.Y. Strength means the measurement of Suspended Solids (SS) and Chemical Oxygen Demand (COD) within the wastewater Flow and any other measurement required by law after the date of this Agreement. Y.Z. “Suspended Solids” or “SS” means the insoluble solid matter in wastewater that is separable by laboratory filtration, as determined by the procedures specified in the most current edition of “Standard Methods for the Examination of Water and Wastewater,” or any successor publication which establishes the industry -5- 60409.00001\30914102.3 60409.00001\30914102.4 standard. Z.AA. Tertiary Component is that portion of the wastewater treatment process that currently filters the secondary treated wastewater effluent through fine sand and/or anthracite coal to remove fine Suspended Solids and disinfects it to meet the requirements of the California Administrative Code, Title 22, or its successor for filtered and disinfected wastewater. AA.BB. Water Repurification System shall mean any facilities, including treatment and conveyance facilities, the purpose of which is the production or conveyance of Repurified Water. Water Repurification System includes, but is not limited to: the Tertiary Component of the North City Water Reclamation Plant[1] to the extent being used to produce Repurified Water, the North City Advanced Water Purification Facility to be located across the street from the North City Water Reclamation Plant (“North City AWP Facility”); the Repurified Water conveyance system, which will transport Repurified Water from the North City AWP Facility and/or other facilities to the Miramar Reservoir or other alternative location(s) as determined by the City; and any other Repurified Water treatment or conveyance facilities which are part of the City’s 83 million gallons per day Pure Water Program. II. OWNERSHIP AND OPERATION OF THE METRO SYSTEM A.2.1 Rights of the Parties. The City is the owner of the Metro System, and of any additions to the Metro System or other facilities constructed pursuant to this Agreement. All decisions with respect to the planning, design, construction, operation and maintenance of the Metro System shall rest with the City, in consultation with the Metro Commission. The Participating Agencies shall have a contractual right to use the Metro System and to participate in its operation as set forth in this Agreement. Subject to the terms of this Agreement, and in conformance with all applicable laws, the City may transfer ownership of all or part of the Metro System at any time. In the event of a transfer, the City’s successor shall be bound by the terms of this Agreement. Subject to the terms of this Agreement, any Participating Agency may transfer or assign its rights and obligations under this Agreement. Any transfer shall first be approved by the City. No transfer may occur if the City determines, after consultation with the Participating Agencies involved, that the proposed transfer will imbalance, or will otherwise adversely impact the City’s ability to operate the Metro System. B.2.2 Metro System Services. 1.2.2.1 The City shall provide wastewater conveyance, treatment and disposal services to the Participating Agencies through the Metro System, under the terms set forth in this Agreement. 2.2.2.2 The City shall operate the Metro System in an efficient and economical manner, maintaining it in good repair and working order, all in accordance with recognized sound engineering and management practices. -6- 60409.00001\30914102.3 60409.00001\30914102.4 3.2.2.3 The City shall convey, treat, and dispose of or reuse all wastewater received under this Agreement in such a manner as to comply with all applicable laws, rules and regulations. C.2.3 Flow Commitment. 1.2.3.1 Absent agreement of the parties, all Flow from the Participating Agencies and the City, up to the capacity limits set forth in Exhibit B or any amendments thereto, shall remain in the Metro System. 2.2.3.2 This Agreement shall not preclude any Participating Agency from diverting Flow from the Metro System as a result of the construction of reclamation facilities or New Capacity outside of the Metro System. 3.2.3.3 Any Participating Agency may negotiate an agreement with the City to withdraw all Flow from the Metro System, which at a minimum requires the Agency to pay its proportionate share of Capital Improvement Costs. D.2.4 Funding Obligations. Nothing in this Section or in this Agreement shall obligate the City to make any payment for the acquisition, construction, maintenance or operation of the Metro System from moneys derived from taxes or from any income and revenue of the City other than moneys in or sewer revenues which go into the Sewer Revenue Fund for the Metro System and from construction funds derived from the sale of such sewer revenue bonds for the Metro System as are duly authorized. Nothing in this contract shall be construed to obligate the City to pay from its annual income and revenues any sum which would create an indebtedness, obligation or liability within the meaning of the provisions of Section 18 of Article XVI of the Constitution of the State of California. Nothing in this Section, however, or in this Agreement shall prevent the City, in its discretion, from using tax revenues or any other available revenues or funds of the City for any purpose for which the City is empowered to expend moneys under this Agreement. Nothing herein shall relieve the City from its obligations to fund and carry out this Agreement. Nothing in this Section or in this Agreement shall obligate any Participating Agency to make any payment which would create an indebtedness, obligation or liability within the meaning of the provisions of Section 18 of Article XVI of the Constitution of the State of California, or which is not authorized by law. E.2.5 Financial Statements. 1.2.5.1 The City shall keep appropriate records and accounts of all costs and expenses relating to conveyance, treatment, disposal, and reuse of wastewater, and the acquisition, planning, design, construction, administration, monitoring, operation and maintenance of the Metro System. 2.2.5.2 Said records and accounts shall be subject to reasonable inspection by any authorized representative of any Participating Agency at its expense. Further, said accounts and records shall be audited annually by an -7- 60409.00001\30914102.3 60409.00001\30914102.4 independent certified public accounting firm appointed by the City pursuant to generally accepted accounting principles. A copy of said report shall be available to any Participating Agency. F.2.6 Limitations on Types and Condition of Wastewater. 1.2.6.1 Each Participating Agency will comply with all applicable laws, rules and regulations including its regulatory obligations associated with the discharge of wastewater into its respective system and from such system into the Metro System. 2.2.6.2 Each Participating Agency will minimize to the maximum extent practicable, the infiltration and inflow of surface, ground or stormwaters into its respective wastewater systems. 3.2.6.3 Each Participating Agency will insure that all industrial users of its wastewater system are regulated by an effective industrial pretreatment program that conforms to all to all applicable laws, rules and regulations and that is acceptable to the City. Provided, however, that the City shall not require the Participating Agencies to take any actions beyond that which is required under applicable laws, rules and regulations that can be taken but are not being taken by the City. 4.2.6.4 The City and the Participating Agencies agree that nothing in this Agreement, including the termination of the existing sewage disposal agreements, shall affect the validity of the Interjurisdictional Pretreatment Agreements, or the separate transportation agreements that are currently in effect between or among the City and the Participating Agencies. 5.2.6.5 Each Participating Agency will not discharge a substantial amount of sewage originating outside its respective boundaries into the Metro System without the approval of the City. 6.2.6.6 Each Participating Agency shall be responsible for the violation of any applicable laws, rules or regulations associated with its respective discharge of wastewater into the Metro System. 7.2.6.7 In the event a regulatory agency imposes any penalty or takes other enforcement action relating to the conveyance, treatment, disposal or reuse of wastewater in or from the Metro System, the City shall determine whether the City or a Participating Agency or Agencies caused or contributed to such penalty or enforcement actions. The City shall allocate the penalty or other relief, including the costs of defense, to the party or parties responsible. Each responsible party, whether a Participating Agency or the City, shall be obligated to pay its share of such penalty or other relief, and any costs of defense. In the event that the City cannot make such an allocation, the cost of such penalty or other relief -8- 60409.00001\30914102.3 60409.00001\30914102.4 shall be shared by the Participating Agencies and the City proportionately based on Flow and Strength. G.2.7 Right of First Refusal. 1.2.7.1 The City shall not sell or agree to sell the Metro System without first offering it to the Participating Agencies. For the purposes of this section, “Participating Agencies” shall mean a Participating Agency, a group of Participating Agencies, or a third party representing one or more Participating Agencies. The term “sell” shall include any transfer or conveyance of the Metro System or of any individual treatment or reclamation facility or outfall within the Metro System. 2.2.7.2 The City and the Participating Agencies recognize that transfer of ownership of the Metro System is currently restricted by Sections 6.04 and 6.20 of the Installment Purchase Agreement between the City and the Public Facilities Financing Authority of the City, which inter alia restricts the transfer of ownership to the Metropolitan Wastewater Sewage District or other governmental agency whose primary purpose is to provide wastewater treatment. The City shall not seek to impose on bond holders a waiver of Section 6.04 or 6.20. Absent such a restriction, before the City sells or agrees to sell the Metro System, or any portion of it, the City shall offer to sell the Metro System to the Participating Agencies (“the Offer”) on the terms and at a price equal to that proposed for the sale of the Metro System to a third party. The Participating Agencies shall have thirty days from receipt of the Offer (“the Intent to Respond Period”) in which to notify the City of their intent to respond to the Offer. The Participating Agencies shall have five months from the expiration of the Intent to Respond Period in which to accept or reject the Offer. The Offer shall contain the name of the proposed purchaser, the proposed sale price, the terms of payment, the required deposit, the time and place for the close of escrow, and any other material terms and conditions on which the sale is to be consummated. 3.2.7.3 If the Participating Agencies give timely notice of their intent to respond and timely notice of their acceptance of the Offer, then the City shall be obligated to sell and the Participating Agencies shall be obligated to purchase the Metro System or any individual treatment or reclamation facility or outfall within the Metro System, as applicable, at the price and on the terms and conditions of the Offer. If the Participating Agencies do not give timely notice of their intent to respond or their acceptance of the Offer, or do not submit an offer on the same terms and conditions as the Offer, the City may, following the end of the Offer period, sell the Metro System, or any portion of it, at a price and on terms and conditions no less favorable to the City than those in the Offer. The City shall not sell the Metro System to any third party on terms or at a price less favorable to the -9- 60409.00001\30914102.3 60409.00001\30914102.4 City from the terms and price contained in the Offer absent compliance with the terms of this Section. 4.2.7.4 Nothing herein shall prevent the City from entering into a financing agreement which may impose limits on the City’s power to sell the Metro System to the Participating Agencies pursuant to Section H.2.7.1. if the City believes that such a financing agreement is in the City’s best interest. Neither the entry into such a financing agreement by the City nor the performance thereof by the City shall constitute a breach or default by the City hereunder. H.2.8 Pure Water San Diego Program. 1. Each new, expanded, or modified Metro System facility which is used in relation to the production of Repurified Water (in addition to the modification and expansion of the North City Water Reclamation Facility) shall be governed by this Agreement and Exhibit F, attached hereto and incorporated herein. The parties acknowledge and agree that additional amendments to Exhibit F will be necessary based on the actual Repurified Water processes selected and the nature of specific facilities. Therefore, notwithstanding Section XIV, subsection B14.2 (Amendment of Agreement), the City’s Mayor and the chief executive officer of eachCity and the Metro JPA, by a majority vote of the Participating Agenciesits member agencies[2], shall have the authority to execute ministerial amendments to Sections A.2 and B of Exhibit F which identify improvements to specific facilities or portions thereof as being Metro System Costs or City Water Utility PW Costs. For purposes of this provisionsection, a “ministerial amendment” is a written amendment that: (1) allocates costs related to new, expanded, or modified Metro System facilities in connection with the production of Repurified Water, and (2) is generally consistent with the cost allocation principles set forth in the originalin Section A.1 of Exhibit F, which is attached to this Agreement. 2. Nothing in this Agreement or Exhibit F limits or restricts the right of the City or the Participating Agencies to enter into separate agreements the purchase or sale of Repurified Water produced by the Water Repurification System or sharing in City Water Utility’s associated capital, debt, operation, and maintenance costs. Under such circumstances, the cost allocation and commodity rate delineated in Exhibit F will remain unchanged.[3] III. III PAYMENT AND MONITORING PROVISIONS A.3.1 Payment for Metro System Facilities. Through the system of charges set forth in Section Article V of this Agreement, each Participating Agency shall pay its share of the costs of planning, design and construction of all of the Metro System facilities which are identified in Exhibit A hereto, which is incorporated herein by reference. B.3.2 Payment for Additional Metro System Facilities. Through the system of charges set forth in Section Article V of this Agreement, each Participating Agency shall pay its share of the costs of acquisition, or planning, design and -10- 60409.00001\30914102.3 60409.00001\30914102.4 construction of such facilities in addition to those set forth on Exhibit A as are necessary for the Metro System to maintain compliance with applicable laws, rules and regulations, including the Ocean Pollution Reduction Act of 1994 and its successor(s), present and future waivers of applicable treatment standards at any Metro System treatment facility, and all facilities as are necessary to convey, treat, dispose, and reuse wastewater in the Metro System to provide the Contract Capacity set forth in Exhibit B, to maintain hydraulic capacity and as otherwise required by sound engineering principles. As a ministerial matter, the City shall amend Exhibit A from time to time to reflect such additional facilities and shall give notice of any amendments to the Participating Agencies. The City shall keep an updated version of Exhibit A on file with the City ClerkMetro JPA. Exhibit A may be amended to reflect other changes to the Metro System only as expressly provided in this Agreement. C.3.3 Payment for Operation and Maintenance. Through the system of charges set forth in Section Article V of this Agreement, each Participating Agency shall pay its share of the Operation and Maintenance Costs of all Metro System facilities. The Participating Agencies shall not pay for the Operation and Maintenance Costs of Water Repurification System, which are City Water Utility PW Costs. D.3.4 Charges Based on Flow and Strength; Exception.[4] 1.3.4.1 Except as otherwise described in this subsection D3.4, a Participating Agency’s share of the charges in this Section Article III shall be assessed pursuant to Section Article V of this Agreement based on its proportionate Flow in the Metro System and the Strength of its wastewater. 2.3.4.2 Notwithstanding the abovesection 3.4.1, or any other provision of this Agreement, a Participating Agency’s share of Pure Water Program Capital Improvement Costs and Pure Water Program revenues[5] attributable to the Metro System under Exhibit F shall be assessed or credited based on the parties’ “Metro Capacity Rights[6].,” which are based on projections of each party’s 2050 Flow. Metro Capacity Rights are based on projections of each party’s 2050 Flow as set forth in Exhibit G[7], which is attached hereto and incorporated herein. The City shall annually determine allocate the estimated and actual costs and revenues which are attributable to the Metro System under Exhibit F and take into account the above assessment methodusing Metro Capacity Rights when estimating quarterly payments and conducting year-end adjustments under Section Article V. 3.3.4.3 Each party recognizes that operation within respective Metro Capacity Rights is essential to the accurate allocation of costs and revenues under the Pure Water Program. In recognition of same, the parties agree as follows: a.3.4.3.1 If any party’s Flow exceeds the sum of its Metro Capacity Rights and its portion of the Reserve Capacity Pool (as shown in Exhibit G) for any continuous consecutive three (3) month period, -11- 60409.00001\30914102.3 60409.00001\30914102.4 such party shall pay for the use of such capacity from the Reserve Capacity Pool. Payment for such use of the Reserve Capacity Pool shall be made as part of the yearly billing adjustments under Section V.B5.2.4 and shall be credited to offset the other parties’ Pure Water Program Capital Improvement Costs. Such payments shall be based on the following amounts, which shall be annually adjusted each July 1 (starting on July 1, 2018) to reflect the annual percentage change in the Engineering News Record – Los Angeles construction cost index[8]: (1)3.4.3.1.1 $_____ per MGD (for use of any portion of the Reserve Capacity Pool up to four (4) times such party’s share of the Reserve Capacity Pool) (2)3.4.3.1.2 $_____ per MGD (for use of any portion of the Reserve Capacity Pool over four (4) times such party’s share of the Reserve Capacity Pool) b.3.4.3.2 Notwithstanding the amounts set forth in Exhibit G, the following parties will have the following Metro Capacity Rights until July 1, 2023: (1)3.4.3.2.1 Padre Dam: 2.48 MGD (2)3.4.3.2.2 San Diego County Sanitation District: 10.959 MGD (3)3.4.3.2.3 El Cajon: 7.8 MGD c.3.4.3.3 Notwithstanding the amounts set forth in Exhibit G, the following parties will have the following Metro Capacity Rights until July 1, 2028[9]: (1)3.4.3.3.1 San Diego County Sanitation District: 5.739 MGD (2)3.4.3.3.2 El Cajon: 7.8 MGD d.3.4.3.4 If any party’s Flow exceeds the sum of its Metro Capacity Rights and its portion of the Reserve Capacity Pool (as shown in Exhibit G) for any continuous consecutive six (6) month period, the City shall contract with an independent consultant (who shall be approved by a majority of the Metro Commission) to prepare an amendment to Exhibit G that accurately reflectsadjusts projections of 2050 Flow based on the amount of Flow that exceeds the party’s Metro Capacity Rights. The revised Exhibit G prepared by the consultantUpon approval by the Metro JPA, the City shall, as a ministerial matter, be adopted by the City within 180 days of such exceedanceamend Exhibit G to reflect the new projects of 2015 Flow. The City shall give notice of the amendment of Exhibit G to -12- 60409.00001\30914102.3 60409.00001\30914102.4 each Participating Agency, and shall provide copies of the amendment with the notice. The City shall keep an updated version of Exhibit G on file with the City ClerkMetro JPA. If the City and the Metro JPA cannot agree on an amendment to Exhibit G, the matter shall be submitted to dispute resolution pursuant to Article IX. e.3.4.3.5 If Exhibit G is amended to update one or more parties’ Metro Capacity Rights, the change in Metro Capacity Rights shall be retroactive in effect[10], and the City shall use the updated amounts in estimating quarterly payments and conducting year-end adjustments for Pure Water Program costs and revenues. Therefore, any party that underpaid based on previous Metro Capacity Rights (which were based on prior projections of 2050 Flow) shall pay the difference in its quarterly payments the following fiscal year; any party that overpaid based on previous Metro Capacity Rights shall receive a credit in its quarterly payments the following fiscal year. E.3.5 Monitoring Flow and Strength. 1.3.5.1 The City shall monitor wastewater that is discharged into the Metro System for Flow and Strength. The City shall own and operate as part of the Metro System monitoring devices which will measure the amount of daily wastewater discharged into the Metro System. These devices shall be installed at locations appropriate to accurately monitor Flow and Strength. The City may also monitor wastewater Flow and Strength at other locations as it deems appropriate. 2.3.5.2 In measuring Strength, the frequency and nature of the monitoring shall not be more stringent for the Participating Agencies than it is for the City. 3.3.5.3 The City shall provide its plans for the monitoring system and for the procedures it will use to determine Strength to the Participating Agencies for review and comment prior to implementation. 4.3.5.4 The City shall report Flow and Strength data to the Participating Agencies at least quarterly. IV.III. CAPACITY RIGHTS A.4.1 Contract Capacity. In consideration of the obligations in this Agreement, each Participating Agency shall have a contractual right to discharge wastewater to the Metro System up to the Contract Capacity set forth in Exhibit B. B.4.2 Transfers of Contract Capacity. -13- 60409.00001\30914102.3 60409.00001\30914102.4 The Participating Agencies and the City may buy, sell or exchange all or part of their Contract Capacity among themselves on such terms as they may agree upon. The City shall be notified prior to any transfer. Any transfer shall be first approved by the City. No Contract Capacity may be transferred if the City determines, after consultation with the Participating Agencies involved in the transaction, that said transfer will unbalance, or will otherwise adversely impact the City’s ability to operate the Metro System. Provided, however, that the Participating Agency seeking the transfer may offer to cure such imbalance at its own expense. Following the City’s consent, as a ministerial matter, the Contract Capacity set forth in Exhibit B shall be adjusted to reflect the approved transfer. C.4.3 Allocation of Additional Capacity. The parties recognize that the City’s applicable permits for the Metro System may be modified to create capacity in the Metro System beyond that set forth in Exhibit B as a result of the construction of additional facilities or as a result of regulatory action. This additional capacity shall be allocated as follows: 1.4.3.1 Except as provided in subsection section 4.3.2 below, in the event that the Metro System is rerated so that additional permitted capacity is created, said capacity shall be allocated proportionately based upon the Metro System charges that have been paid since July 1, 1995 to the date of rerating. 2.4.3.2 In the event that the additional permitted capacity is created as the result of the construction of non-Metro System facilities, or as the result of the construction of facilities pursuant to Section Article VII, such additional capacity shall be allocated proportionately based on the payments made to plan, design and construct such facilities. D.4.4 Deductions in Contract Capacity. The parties further recognize that the Contract Capacity in Exhibit B may be modified to comply with, or in response to, applicable permit conditions, or related regulatory action, or sound engineering principles. In the event that the capacity of the Metro System is rerated to a level below the total capacity set forth in Exhibit B, the Contract Capacity in Exhibit B shall be reallocated proportionately pending the acquisition or construction of new facilities. The City shall acquire or construct such facilities as necessary to provide the Contract Capacity rights set forth in Exhibit B, as planning and capacity needs require. The costs of such facilities shall be assessed pursuant to Section III.B. above3.2. E.4.5 Amendments to Exhibits B and C. As a ministerial matter, the City shall prepare amendments to Exhibits B and C to reflect any adjustment in Contract Capacity pursuant to this Section within ninety (90) days after the adjustment is made. The City shall give notice of the amendments to each Participating Agency, and shall provide copies of the amendments with the notice. The City shall keep an updated version of Exhibits B and C on file with the City ClerkMetro JPA. -14- 60409.00001\30914102.3 60409.00001\30914102.4 F.4.6 The South Bay Land/Ocean Outfall. Nothing in this Section shall limit the City’s right to transfer capacity service rights in that portion of the South Bay Land/Ocean Outfall which is not part of the Metro System. V. V. SYSTEM OF CHARGES A.5.1 Charges Authorized. The City agrees to implement and the Participating Agencies agree to abide by a new system of charges. This new system allows the City to equitably recover from all Participating Agencies their proportional share of the net Metro System Costs through the imposition of the following charges: 1.5.1.1 SSC (Sewer System Charge);[11] 2.5.1.2 NCCC (New Contract Capacity Charge). B.5.2 SSC (Sewer System Charge). The City shall determine the SSC based on the projected Metro System Costs (as defined below) for the forthcoming fiscal year, less all Metro System Revenues (as defined below). 1.5.2.1 Metro System Costs a.5.2.1.1 The following shall at a minimum be considered Metro System Costs for purposes of calculating the annual SSC: (1)5.2.1.1.1 Except as provided in Excluded Costs, subsection b.section 5.2.1.2 below(Excluded Costs), the annual costs associated with administration, operation, maintenance, replacement, annual debt service costs and other periodic financing costs and charges, capital improvement, insurance premiums, claims payments and claims administration costs of the Metro System, including projected overhead. Overhead shall be calculated using accepted accounting practices to reflect the overhead costs of the Metro System. (2)5.2.1.1.2 Fines or penalties imposed on the City as a result of the operation of the Metro System, unless the fine/penalty is allocated to the City or a Participating Agency as provided in Section II.F2.6.7. -15- 60409.00001\30914102.3 60409.00001\30914102.4 (3)5.2.1.1.3 Costs incurred by the City, including attorneys’ fees, that are [12]necessary to implement the terms of this Agreement. b.5.2.1.2 Excluded Costs. The following items shall not be considered Metro System Costs for purposes of calculating the annual SSC: (1)5.2.1.2.1 Costs related to the City of San Diego’s Municipal System as determined by reasonable calculations; (2)5.2.1.2.2 Costs related to the treatment of sewage from any agency which is not a party to this Agreement; (3)5.2.1.2.3 Costs related to the inspection and monitoring program for the industrial dischargers located in San Diego, including associated administrative and laboratory services; (4)5.2.1.2.4 Right-of-way charges for the use of public streets of the City or any Participating Agency. The City and the Participating Agencies agree not to impose a right-of- way charge for the use of its public rights-of-way for Metro System purposes. (5)5.2.1.2.5 Capital Improvement Costs of any non-Metro System facility. (6)5.2.1.2.6 Capital Improvement Costs for which an NCCC is paid. (7)5.2.1.2.7 City Water Utility PW Costs as defined in Exhibit F.[13] 2.5.2.2 Metro System Revenues. a.5.2.2.1 The following revenues shall be at a minimum considered Metro System Revenues for purposes of determining the annual SSC: (1)5.2.2.1.1 Any grant or loan receipts or any other receipts that are attributable to the Metro System, including, but not limited to, all compensation or receipts from the sale, lease, or other conveyance or transfer of any asset of the Metro System, and any grant, loan, or other receipts attributable to the Metro System components of the Pure Water Program[14]. -16- 60409.00001\30914102.3 60409.00001\30914102.4 (2)5.2.2.1.2 All compensation or receipts from the sale or other conveyance or transfer of any Metro System by- products, including, but not limited to gas, electrical energy, sludge products, and Reclaimed Water (excepting therefrom any receipts allocated pursuant to subsection 2.a.(3) belowsection 5.2.2.1.3); provided however, that this shall not include the Secondary Effluent Commodity Rate[15], which is specifically addressed in subsection 2.a.(6) below5.2.2.1.6. (3)5.2.2.1.3 The distribution of revenue from the sale of Reclaimed Water from the North City Water Reclamation Plant, including incentives for the sale of Reclaimed Water, shall first be used to pay for the cost of the Reclaimed Water Distribution System, then the cost of the Operation and Maintenance of the Tertiary Component of the North City Water Reclamation Plant that can be allocated to the production of Reclaimed Water, and then to the Metro System. (4)5.2.2.1.4 Any portion of an NCCC that constitutes reimbursement of costs pursuant to Section VII.A7.1.4. (5)5.2.2.1.5 Any penalties paid under Section VII.C7.3. (6)5.2.2.1.6 Proceeds from the Secondary Effluent Commodity Rate, as calculated under Exhibit F and allocated among the Participating Agencies in the proportions set forth in Exhibit G[16]. b.5.2.2.2 Excluded Revenue (1)5.2.2.2.1 Capital Improvement Costs for which an NCCC is paid; (2)5.2.2.2.2 Proceeds from the issuance of debt for Metro Ssystem projects. (3)5.2.2.2.3 Proceeds from the sale of Reclaimed Water used to pay for the Reclaimed Water Distribution System pursuant to subsection 2.a.(3)5.2.2.1.3 above. 3.5.2.3 Calculation of SSC Rates. a.5.2.3.1 Prior to the initial implementation of the new system of charges, the City shall prepare a sample fiscal year estimate setting forth the methodology and sampling data used as a base for Strength based billing (SBB) which includes Flow and Strength -17- 60409.00001\30914102.3 60409.00001\30914102.4 (Chemical Oxygen Demand (COD) and Suspended Solids (SS)). The analysis shall be submitted to each Participating Agency. b.5.2.3.2 The City shall determine the unit SSC rates by allocating net costs (Metro System Costs less Metro System Revenues) between parameters of Flow, COD and SS. This allocation is based on the approved Functional-Design Methodology analyses for individual Capital Improvement Projects (CIPs) and estimated Operation and Maintenance (O&M) Costs allocated to the three parameters. The City may revise the calculations to include any other measurement required by law after the effective date of this Agreement. c.5.2.3.3 The net cost allocated to each of the three parameters (Flow, COD and SS) shall be divided by the total Metro System quantity for that parameter to determine the unit rates for Flow, COD and SS. These unit rates shall apply uniformly to all Participating Agencies. 4.5.2.4 Estimate and Billing Schedule and Year End Adjustment a.5.2.4.1 Estimate - The City shall estimate the SSC rates on an annual basis prior to January 15. The City shall quantify the SSC rates by estimating the quantity of Flow, COD and SS for each party, based on that party’s actual flow and the cumulative data of sampling for COD and SS over the preceding years. If cumulative data is no longer indicative of discharge from a Participating Agency due to the implementation of methods to reduce Strength, previous higher readings may be eliminated. b.5.2.4.2 Costs of treating Return Flow for solids handling will be allocated to the Participating Agencies in proportion to their Flow and Strength. Return Flow will not be counted against the Participating Agencies’ Contract Capacity as shown in Exhibit B. c.5.2.4.3 SSC Billing Schedule - The City shall bill the Participating Agencies quarterly, invoicing on August 1 , November 1, February 1 and May 1. Each bill shall be paid within thirty (30) days of mailing. Quarterly payments will consist of the total estimated cost for each Participating Agency, based on their estimated Flow, COD and SS, divided by four. d.5.2.4.4 Year-End Adjustments - At the end of each fiscal year, the City shall determine the actual Metro System. Costs and the actual Flow as well as the cumulative Strength data for the City and each of the Participating Agencies. The City shall make any necessary adjustments to the unit rates for Flow, COD and SS based on -18- 60409.00001\30914102.3 60409.00001\30914102.4 actual costs for the year. The City shall then recalculate the SSC for the year using actual costs for the year, actual Flow, and cumulative Strength factors (COD, SS and Return Flow) for the City and for each Participating Agency. The City shall credit any future charges or bill for any additional amounts due, the quarter after the prior year costs have been audited. C.5.3 NCCC (New Contract Capacity Charge). If New Contract Capacity is required or requested by a Participating Agency, pursuant to Section Article VII, the Metro System shall provide the needed or requested capacity, provided that the Participating Agency agrees to pay an NCCC in the amount required to provide the New Contract Capacity. New Contract Capacity shall be provided pursuant to Section Article VII. D.5.4 Debt Financing. The City retains the sole right to determine the timing and amount of debt financing required to provide Metro System Facilities. E.5.5 Allocation of Operating Reserves and Debt Service Coverage.[17] The parties shall continue to comply with the 2010 Administrative Protocol on Allocation of Operating Reserves and Debt Service Coverage to Participating Agencies, attached hereto and incorporated herein as Exhibit C. VI. PLANNING A.6.1 Projected Flow and Capacity Report. Commencing on July 1, 1999, each Participating Agency shall provide the City and the Metro Commission with a ten-year projection of its Flow and capacity requirements from the Metro System. The Agencies shall disclose any plans to acquire New Capacity outside the Metro System. This “Projected Flow and Capacity Report” shall be updated annually. B.6.2 Other Planning Information. Each Participating Agency shall provide the City with such additional information as requested by the City as necessary for Metro System planning purposes. C.6.3 Ten-Year Capital Improvement Plan. The City shall prepare a Ten-Year Capital Improvement Plan for the Metro System that describes the facilities necessary to convey, treat, and dispose of, or reuse all Flow in the Metro System in compliance with all applicable rules, laws and regulations. The plan shall be updated annually. D.6.4 Notice to Metro Commission. -19- 60409.00001\30914102.3 60409.00001\30914102.4 In the event that the City is not able to include a facility in the Ten-Year Capital Improvement Plan, the City shall notify the Metro Commission as soon as possible before the detailed design or construction of such facility provided that the facility will significantly impact the Metro System. VII. FACILITIES SOLELY FOR NEW CONTRACT CAPACITY The Participating Agencies and City are obligated to pay for the acquisition or planning, design, and construction of new facilities in the Metro System that are needed solely to provide New Contract Capacity only under the terms provided below. A.7.1 Determination of Need for New Contract Capacity. 1.7.1.1 As part of its planning efforts, and considering the planning information provided to the City by the Participating Agencies, the City shall determine when additional facilities beyond those acquired or constructed pursuant to Section Article III above will be necessary solely to accommodate a need for New Contract Capacity in the Metro System, whether by the City or by the Participating Agencies. The City shall determine: (1) the amount of New Contract Capacity needed; (2) the Participating Agency or Agencies, or the City, as the case may be, in need of the New Contract Capacity; (3) the type and location of any capital improvements necessary to provide the New Contract Capacity; (4) the projected costs of any necessary capital improvements; and, (5) the allocation of the cost of any such facilities to the Participating Agency and/or the City for which any New Contract Capacity is being developed. The City shall notify the Participating Agencies of its determination within sixty days of making such determination. 2.7.1.2 The City or Participating Agency or Agencies in need of New Contract Capacity as determined by the City pursuant to Paragraph 1section 7.1.1 above, may choose, in their sole discretion, to obtain New Capacity outside of. the Metro System in lieu of New Contract Capacity. Under such circumstances, the Participating Agency or Agencies shall commit to the City in writing their intent to obtain such New Capacity. Upon such commitment, the City shall not be required to provide New Contract Capacity to such Agency or Agencies as otherwise required under this Agreement. 3.7.1.3 The Participating Agencies shall have six months from the date of notice of the determination within which to comment on or challenge all or part of the City’s determination regarding New Contract Capacity, or to agree thereto or to commit, in writing, to obtain New Capacity outside of the Metro System. Any Participating Agency objecting to the City’s determination shall have the burden to commence and diligently pursue the formal dispute resolution procedures of this Agreement within said six month period. The City’s determination shall become final at the close of -20- 60409.00001\30914102.3 60409.00001\30914102.4 the six month comment and objection period. The City’s determination shall remain valid notwithstanding commencement of dispute resolution unless and until set aside by a final, binding, determination of an arbitratorotherwise agreed pursuant to the dispute resolution process set forth in this Agreementin Article IX. 4.7.1.4 The City and the Participating Agency or Agencies which need New Contract Capacity shall thereafter enter into an agreement specifying the terms and conditions pursuant to which the New Contract Capacity will be provided, including the amount of capacity and the New Contract Capacity. Each party obtaining New Contract Capacity shall reimburse the Metro System for the costs of acquisition, planning, design, and construction of facilities necessary to provide the New Contract Capacity that have been paid by other parties under Section VII.B7.2.3. 5.7.1.5 The parties recognize that the City may acquire and plan, design and construct facilities that are authorized pursuant to both Section Article III and Section Article VII of this Agreement. Under such circumstances, the City shall allocate the costs and capacity of such facilities pursuant to SectionArticle III and Section VII.A7.1.1 as applicable. B.7.2 Charges for Facilities Providing New Contract Capacity 1.7.2.1 The expense of acquisition, planning, design, and construction of New Contract Capacity shall be borne by the City or the Participating Agency or Agencies in need of such New Contract Capacity. 2.7.2.2 Notwithstanding any provision in this Agreement, the City and the Participating Agencies shall pay for the Operation and Maintenance Costs of all facilities pursuant to the payment provisions of Section Article III, including those facilities acquired and constructed to provide New Contract Capacity in the Metro System. 3.7.2.3 Charges for the acquisition, planning, design and construction of facilities solely to provide New Contract Capacity shall be paid for by the Participating Agencies and the City pursuant to the payment provisions in Section Article III of this Agreement until an agreement is reached under Section VII.A7.1.4. or pending the resolution of any dispute relating to the City’s determination with respect to New Contract Capacity. 4.7.2.4 As a ministerial matter, the City shall prepare amendments to Exhibits A and B to reflect the acquisition or construction of facilities to provide New Contract Capacity pursuant to this SectionArticle. The City shall give notice of the Amendments to the Participating Agencies, and shall provide copies of the Amendments with the notice. C.7.3 Penalty for Failure to Pay. -21- 60409.00001\30914102.3 60409.00001\30914102.4 1.7.3.1 The parties recognize that appropriate capacity and long term planning for same are essential to the proper provision of sewerage service. In recognition of same, the parties agree that discharge beyond Contract Capacity should be penalized. Therefore, in the event that a Participating Agency exceeds its Contract Capacity after the City has given notice that New Capacity is required, said Participating Agency shall be assessed and pay a quarterly penalty until such time as the Participating Agency obtains the required New Capacity. The penalty shall be fifteen percent (15%) of the quarterly charges authorized pursuant to this Agreement times the amount of Flow which exceeds the Participating Agency’s Contract Capacity for the first quarter, twenty-five percent (25%) of such amount for the second quarter, thirty percent (30%) of such amount for the third quarter, and thirty-five percent (35%) of such amount for every quarter thereafter. 2.7.3.2 In the event that a Participating Agency fails to pay the charges imposed under this Article after the City has given notice that payment is required, said Participating Agency shall be assessed and shall pay a penalty of fifteen percent (15%) of the total outstanding charges each quarter until said charges are paid in full.[18] VIII. THE METRO COMMISSION A.8.1 Membership. The Metro Commission shall consist of one representative from each Participating Agency. Each Participating Agency shall have the right to appoint a representative of its choice to the Metro Commission. If a Participating Agency is a dependent district whose governing body is that of another independent public agency that Participating Agency shall be represented on the Metro Commission by a representative appointed by the governing body which shall have no more than one representative no matter how many Participating Agencies it governs. Each member has one vote in any matter considered by the Metro Commission. The Metro Commission shall establish its own meeting schedule and rules of conduct. Metro Commission meetings may be consolidated with meetings of the Metro JPA. The City may participate in the Metro Commission on an ex officio, non-voting, basis. -22- 60409.00001\30914102.3 60409.00001\30914102.4 B.8.2 Advisory Responsibilities of Metro Commission. 1.8.2.1 The Metro Commission shall act as an advisory body, advising the City on matters affecting the Metro System. The City shall present the position of the majority of the Metro Commission to the City’s governing body in written staff reports. The Metro Commission may prepare and submit materials in advance and may appear at any hearings on Metro System matters and present its majority position to the governing body of the City. 2.8.2.2 The Metro Commission may advise the City of its position on any issue relevant to the Metro System. IX. DISPUTE RESOLUTION This Section governs all disputes arising out of this Agreement. A.9.1 Voluntary Mandatory Non-Binding Mediation. If a dispute arises between the City and any Participating Agency relating to or arising from a party’s obligations under this Agreement that cannot be resolved through informal discussions and meetings, the City and the Participating Agency shall first endeavor to settle the dispute in an amicable manner, using mandatory non-binding mediation under the rules of JAMS, AAA, or any other neutral organization agreed upon by the parties before having recourse in a court of law.Upon notice to all of the parties involved, any dispute may be submitted to a mutually-acceptable mediator, including a consultant specializing in the subject matter of the dispute, for determination of the issue(s) raised. Unless the parties involved agree in writing otherwise, the decision of the mediator or consultant shall not be final and binding. In the event that there is no agreement to mediate the dispute, any party may proceed directly to Arbitration. B.9.2 ArbitrationSelection of Mediator. A single mediator that is acceptable to the City and the Participating Agency shall be used to mediate the dispute. The mediator will be knowledgeable in the subject matter of this Agreement, if possible, and chosen from lists furnished by JAMS, AAA, or any other agreed upon mediator. 9.3 Mediation Expenses. The expenses of witnesses for either side shall be paid by the party producing such witnesses. All mediation costs, including required traveling and other expenses of the mediator, and the cost of any proofs or expert advice produced at the direct request of the mediator, shall be Metro System Costs. 9.4 Conduct of Mediation. Mediation hearings will be conducted in an informal manner. Discovery shall not be allowed. The discussions, statements, writings and admissions will be confidential to the -23- 60409.00001\30914102.3 60409.00001\30914102.4 proceedings (pursuant to California Evidence Code Sections 1115 - 1128) and will not be used for any other purpose unless otherwise agreed by the parties in writing. The parties may agree to exchange any information they deem necessary. The City and the Participating Agency shall have representatives attend the mediation who are authorized to settle the dispute, though a recommendation of settlement may be subject to the approval of each agency’s boards or legislative bodies. Either party may have attorneys, witnesses or experts present. 9.5 Mediation Results. Any resultant agreements from mediation shall be documented in writing. The results of the mediation shall not be final or binding unless otherwise agreed to in writing by the parties. Mediators shall not be subject to any subpoena or liability and their actions shall not be subject to discovery.Arbitration shall be commenced by sending a Notice of Demand for Arbitration to the other party or parties to the dispute. A copy of the notice shall be sent to the City, all other Participating Agencies, and the Metro Commission. Notice shall be given in accordance with Section XII. After such notice, any party that fails to timely participate by giving notice within forty-five (45) days thereafter, shall be barred from the noticed action. The scope of the arbitrator’s jurisdiction shall not include the authority to amend the terms of this Agreement. 1. The arbitration shall be conducted by a mutually-acceptable dispute resolution entity which utilizes retired judges as arbitrators or arbitrators agreed to by the parties. If the parties cannot agree on such an entity, then the American Arbitration Association shall be used. 2. All arbitrations shall be conducted in accordance within California Code of Civil Procedure Sections 1282 et seq., provided, however, that in the event of a conflict between the Code of Civil Procedure arbitration provisions and the provisions of this Agreement, the provisions of this Agreement control. 3. Discovery regarding the subject matter of the arbitration shall be allowed as provided in Code of Civil Procedure Section 1283.05 (or its successors), except that depositions may be taken without first obtaining permission from the arbitrator. The arbitrator’s fee shall be paid in equal shares by the parties who participate in the arbitration. The arbitrator may award costs to the prevailing party, except, however, all costs incurred by the City for arbitration arising under Section VII shall be a Metro System cost and charged accordingly. The decision of the arbitrator shall be final and binding. C.9.6 Performance Required During Dispute. Nothing in this Section Article shall relieve the City and the Participating Agencies from performing their obligations under this Agreement. The City and the Participating Agencies shall be required to comply with this Agreement, including the performance of all -24- 60409.00001\30914102.3 60409.00001\30914102.4 disputed activity and disputed payments, pending the resolution of any dispute under this Agreement. X. INSURANCE AND INDEMNITY A.10.1 City Shall Maintain All Required Insurance. 1.10.1.1 The City shall maintain all insurance required by law, including workers’ compensation insurance, associated with the operation of the Metro System. 2.10.1.2 Throughout the term of this Agreement the City shall procure and maintain in effect liability insurance covering, to the extent reasonably available, any and all liability of the City, the Metro System and the Participating Agencies, including their respective officers, directors, agents, and employees, if any, with respect to or arising out of the ownership, maintenance, operation, use and/or occupancy of the Metro System and all operations incidental thereto, including but not limited to structural alterations, new construction and demolition, including coverage for those hazards generally known in the insurance industry as exploding, collapse and underground property damage. 3.10.1.3 Said insurance shall name the City, and its respective officers, employees, and agents, and shall have a limit of not less than $24,000,000 combined single limit per occurrence for bodily injury, personal injury and property damage suffered by any person. Said insurance may provide for a deduction from coverage, which deductible shall not be more than $1,000,000. Said limits and/or deductible may be adjusted from time to time. Said insurance may be evidenced by a policy or policies covering only the Metro System or by endorsement to bring the same within a blanket policy or policies held by the City covering other properties in which the City has an interest provided the policy or policies have a location aggregate provision. The City may satisfy the first $1,000,000 per occurrence with a self-insurance retention program for public liability claims. The policy or policies shall name the Participating Agencies as additional insureds with evidence of same supplied to each. Insurance premiums, claims payments and claims administration costs shall be included in the computation of the SSC. B.10.2 Substantially Equivalent Coverage. In the event of a transfer of the Metro System to a nonpublic entity pursuant to Section Article II, coverage substantially equivalent to all the above provisions shall be maintained by any successor in interest. XI. INTERRUPTION OF SERVICE -25- 60409.00001\30914102.3 60409.00001\30914102.4 Should the Metro System services to the Participating Agencies be interrupted as a result of a major disaster, by operation of federal or state law, or other causes beyond the City’s control, the Participating Agencies shall continue all payments required under this Agreement during the period of the interruption. XII. NOTICES REQUIRED UNDER AGREEMENT The City and each Participating Agency shall give notice when required by this Agreement. All notices must be in writing and either served personally, or mailed by certified mail. The notices shall be sent to the officer listed for each party, at the address listed for each party in Exhibit D in accordance with this SectionArticle. If a party wishes to change the officer and/or address to which notices are given, the party shall notify all other parties in accordance with this SectionArticle. Upon such notice, as a ministerial matter, the City shall amend Exhibit D to reflect the changes. The amendment shall be made within thirty (30) days after the change occurs. The City shall keep an updated version of Exhibit D on file with the City ClerkMetro JPA. The City shall provide a copy of the amended Exhibit D to all parties. XIII. EFFECTIVE DATE AND TERMINATIONEXPIRATION A.13.1 Effective Date. This Agreement shall be effective thirty (30) days after execution by the City and all of the Participating Agencies, and shall be dated as of the signature date of the last executing party. Upon the effective date of this Agreement, the 1998 Agreement shall be of no further force and effect.[19] B.13.2 Preferences. In the event one or more agencies which are subject to Wastewater Agreementsparties to the 1998 Agreement with the City before the effective date of this Agreement do not execute this Amended and Restated Agreement, the City agrees not to enter into any new agreements with said agency or agencies without first offering the Participating Agencies agreements under substantially the same terms and conditions for any proposed agreement covering the same subject matter and issues. C.13.3 TerminationExpiration. Subject to the rights and obligations set forth in Section XIII.C13.4. below, this Agreement shall terminate expire on December 31, 2065[20]. This Agreement is subject to extension by agreement of the parties. The parties shall commence discussions on an agreement to provide wastewater treatment services beyond the year 2065 on or before December 31, 2055. D.13.4 Contract Capacity Rights Survive TerminationExpiration. The Participating Agencies’ right to obtain wastewater treatment services from the facilities referred to in, or constructed pursuant to this Agreement shall survive the termination expiration of the Agreement. Provided however, upon expiration of this Agreement, the Participating Agencies shall be required to pay their proportional share based on Flow and -26- 60409.00001\30914102.3 60409.00001\30914102.4 Strength of all Metro System Costs (Capital Improvement Costs and Operation and Maintenance) to maintain their right to such treatment services. Provided further, that in the event that the Participating Agencies exercise their rights to treatment upon expiration of this Agreement, the City shall have the absolute right, without consultation, to manage, operate and expand the Metro System in its discretion. E.13.5 Abandonment. After December 31, 2065, the City may abandon the Metro System upon delivery of notice to the Participating Agencies ten (10) years in advance of said abandonment. Upon notice by the City to abandon the Metro System, the parties shall meet and confer over the nature and conditions of such abandonment. In the event the parties cannot reach agreement, the matter shall be submitted to arbitration mediation under the provisions of SectionArticle IX. In the event of abandonment, the City shall retain ownership of all Metro System assets free of any claim of the Participating Agencies. XIV. GENERAL A.14.1 Exhibits. 1. This Agreement references Exhibits A through G. Each exhibit is attached to this Agreement, and is incorporated herein by reference. The exhibits are as follows: Exhibit A Metro Facilities; Exhibit B Contract Capacities; Exhibit C Allocation of Operating Reserves and Debt Service Coverage to Participating Agencies; Exhibit D Notice Listing; Exhibit E Map of Reclaimed Water Projects; Exhibit F Pure Water Cost Allocation and Commodity Rate; and Exhibit G Metro System Capacity Pool Allocation B.14.2 Amendment of Agreement. Except as provided in this Agreement, and recognizing that certain amendments are ministerial and preapproved, this Agreement may be amended or supplemented only by a written agreement between the City and the Participating Agencies stating the parties’ intent to amend or supplement the Agreement. C.14.3 Construction of Agreement. 1.14.3.1 Drafting of Agreement -27- 60409.00001\30914102.3 60409.00001\30914102.4 It is acknowledged that the City and the Participating Agencies, with the assistance of competent counsel, have participated in the drafting of this Agreement and that any ambiguity should not be construed for or against the City or any Participating Agency on account of such drafting. 2.14.3.2 Entire Agreement The City and each Participating Agency represent, warrant and agree that no promise or agreement not expressed herein has been made to them, that this Agreement contains the entire agreement between the parties, that this Agreement supersedes any and all prior agreements or understandings between the parties unless otherwise provided herein, and that the terms of this Agreement are contractual and not a mere recital; that in executing this Agreement, no party is relying on any statement or representation made by the other party, or the other party’s representatives concerning the subject matter, basis or effect of this Agreement other than as set forth herein; and that each party is relying solely on its own judgement and knowledge. 3.14.3.3 Agreement Binding on All This Agreement shall be binding upon and shall inure to the benefit of each of the parties, and each of their respective successors, assigns, trustees or receivers. All the covenants contained in this Agreement are for the express benefit of each and all such parties. This Agreement is not intended to benefit any third parties, and any such third party beneficiaries are expressly disclaimed. 4.14.3.4 Severability 14.3.4.1 Should any provision of this Agreement be held invalid or illegal, such invalidity or illegality shall not invalidate the whole of this Agreement, but, rather, the Agreement shall be construed as if it did not contain the invalid or illegal part, and the rights and obligations of the parties shall be construed and enforced accordingly except to the extent that enforcement of this Agreement without the invalidated provision would materially and adversely frustrate either the City’s or a Participating Agency’s essential objectives set forth in this Agreement. 14.3.4.2 Should a court determine that one or more components of the allocation of costs set forth in this Agreement places the City or a Participating Agency in violation of Proposition 218 with respect to their ratepayers, such components shall no longer be of force or effect. In such an event, the City and the Participating Agencies shall promptly meet to renegotiate the violative component of the cost allocation to comply with Proposition 218, and use the dispute resolution process in Article IX if an agreement cannot be reached through direct negotiation.[21] -28- 60409.00001\30914102.3 60409.00001\30914102.4 5.14.3.5 Choice of Law This Agreement shall be construed and enforced pursuant to the laws of the State of California. 6.14.3.6 Recognition of San Diego Sanitation District as Successor to Certain Parties. The parties hereby acknowledge and agree that the San Diego County Sanitation District is a Participating Agency under this Agreement as the successor in interest to the Alpine Sanitation District, East Otay Mesa Sewer Maintenance District, Lakeside Sanitation District, Spring Valley Sanitation District, and Winter Gardens Sewer Maintenance District. D.14.4 Declarations Re: Agreement. 1.14.4.1 Understanding of Intent and Effect of Agreement The parties expressly declare and represent that they have read the Agreement and that they have consulted with their respective counsel regarding the meaning of the terms and conditions contained herein. The parties further expressly declare and represent that they fully understand the content and effect of this Agreement and they approve and accept the terms and conditions contained herein, and that this Agreement is executed freely and voluntarily. 2.14.4.2 Warranty Regarding Obligation and Authority to Enter Into This Agreement Each party represents and warrants that its respective obligations herein are legal and binding obligations of such party, that each party is fully authorized to enter into this Agreement, and that the person signing this Agreement hereinafter for each party has been duly authorized to sign this Agreement on behalf of said party. 3.14.5 Restrictions on Veto of Transfers and Acquisitions of Capacity Each party understands and agrees that this Agreement governs its respective rights and responsibilities with respect to the subject matter hereto and specifically recognizes that with respect to the transfer and acquisition of Contract Capacity (Section IV.B4.2) or the creation of New Contract Capacity for any Participating Agency (Section Article VII), no Participating Agency has a right to veto or prevent the transfer of capacity by and among other Participating Agencies or with the City, or to veto or prevent the creation or acquisition capacity for another Participating Agency or Agencies, recognizing that by signing this Agreement each Participating Agency has expressly preapproved such actions. The sole right of a Participating Agency to object to any of the foregoing shall be through expression of its opinion to the Metro Commission and, where applicable, through exercise of its rights under the dispute resolution provisions of this Agreement. -29- 60409.00001\30914102.3 60409.00001\30914102.4 4.14.6 Right to Make Other Agreements Nothing in this Agreement limits or restricts the right of the City or the Participating Agencies to make separate agreements among themselves without the need to amend this Agreement, provided that such agreements are consistent with this Agreement. Nothing in this Agreement or Exhibit F limits or restricts the right of the City or the Participating Agencies to enter into separate agreements for the purchase or sale of Repurified Water produced by the Water Repurification System or sharing in City Water Utility PW Costs. Such agreements shall not affect the cost allocation and commodity rate delineated in Exhibit F. 14.7 Limitation of Claims[22] Notwithstanding any longer statute of limitations in State law, for purposes of any claims asserted by the City or a Participating Agency for refunds of overpayments or collection of undercharges arising under this Agreement, the parties agree that such refunds or collections shall not accrue for more than four years prior to notice of such claim is received by the City or a Participating Agency. This also applies to any related adjustments to each Participating Agency’s share of net Metro System Costs resulting from the resolution of such claims. The City and the Participating Agencies hereby waive any applicable statute of limitations available under State law that exceed four years. 5.14.8 Counterparts This Agreement may be executed in counterparts. This Agreement shall become operative as soon as one counterpart hereof has been executed by each party. The counterparts so executed shall constitute one Agreement notwithstanding that the signatures of all parties do not appear on the same page. EXHIBIT A 60409.00001\30914102.3 60409.00001\30914102.4 EXHIBIT A METRO FACILITIES [INSERT CURRENT VERSION OF EXHIBIT A ON FILE WITH CITY CLERK] EXHIBIT B 60409.00001\30914102.3 60409.00001\30914102.4 EXHIBIT B CONTRACT CAPACITIES [INSERT CURRENT VERSION OF EXHIBIT B ON FILE WITH CITY CLERK, IF DIFFERENT FROM 1998 VERSION] EXHIBIT C 60409.00001\30914102.3 60409.00001\30914102.4 EXHIBIT C ADMINISTRATIVE PROTOCOL ON ALLOCATION OF OPERATING RESERVES AND DEBT SERVICE COVERAGE TO PARTICIPATING AGENCIES EXHIBIT D 60409.00001\30914102.3 60409.00001\30914102.4 EXHIBIT D NOTICE LISTING[23] City Manager City of Chula Vista 276 Fourth Avenue Chula Vista, CA 91919 Phone: 691-5031 Fax: 585-5612 City Manager City of La Mesa 8130 Allison Avenue La Mesa, CA 91942 Phone: 667-1101 Fax: 462-7528 City Manager City of San Diego 202 “C” Street San Diego, CA 92101 Phone: 236-5949 Fax: 236-6067 City Manager City of Coronado 1825 Strand Way Coronado, CA 92113 Phone: 522-7335 Fax: 522-7846 City Manager City of Lemon Grove 3232 Main Street Lemon Grove, CA 91945 Phone: 464-6934 Fax: 460-3716 Chief Administrative Officer County of San Diego 1600 Pacific Highway, Rm. 209 San Diego, CA 92101 Phone: 531-5250 Fax: 557-4060 City Manager City of Del Mar 1050 Camino Del Mar Del Mar, CA 92014 Phone: 755-9313 ext. 25 Fax: 755-2794 City Manager City of National City 1243 National City Blvd. National City, CA 91950 Phone: 336-4240 Fax: 336-4327 General Manager Otay Water District 2554 Sweetwater Springs Blvd. Spring Valley, CA 91977 Phone: 670-2210 Fax: 670-2258 City Manager City of El Cajon 200 E. Main Street El Cajon, CA 92020 Phone: 441-1716 Fax: 441-1770 City Manager City of Poway 13325 Civic Center Drive Poway, CA 92064 Phone: 679-4200 Fax: 679-4226 General Manager Padre Dam Municipal Water District 10887 Woodside Avenue Santee, CA 92071 Phone: 258-4610 Fax: 258-4794 City Manager City of Imperial Beach 825 Imperial Beach Blvd. Imperial Beach, CA 91932 Phone: 423-8300 ext. 7 Fax: 429-9770 EXHIBIT E 60409.00001\30914102.3 60409.00001\30914102.4 EXHIBIT E MAP OF RECLAIMED WATER PROJECTS EXHIBIT F 60409.00001\30914102.3 60409.00001\30914102.4 EXHIBIT F PURE WATER COST ALLOCATION AND COMMODITY RATE EXHIBIT G 60409.00001\30914102.3 60409.00001\30914102.4 EXHIBIT G METRO SYSTEM CAPACITY POOL ALLOCATION EXHIBIT B Pure Water Program Water/Wastewater Cost and Revenue Allocation Agreement Basic Principles 1. Water shall pay for all improvements after secondary treatment (ocean discharge standard). 2. Water shall pay for all costs for fail-safe disposal to include any cost associated with reservation of capacity at the PLWTP. 3. Water shall pay for portions of the preliminary treatment, primary treatment and secondary treatment process that have added costs to deal with increased treatment needed to accommodate Pure Water. a) NCWRP Preliminary and Primary Treatment - Wastewater shall pay for chemically enhanced primary treatment. b) NCWRP Primary Effluent Equalization - All wastewater cost. c) NCWRP Aeration - Water shall pay all capital costs for increased volume of aeration tanks for Pure Water. Wastewater shall pay for the aeration tank volume required for 52 MGD of capacity based on sizing criteria for the existing 30 MGD. Water shall also pay for a methanol feed system. d) NCWRP Secondary Clarifiers - Water shall pay for any demolition and replacement of existing tanks. Wastewater shall pay the cost to expand from 30 MGD to 52 MGD. 4. Water shall pay any costs for the demolishing and replacement with similar facilities of North City facilities needed to make space available. 5. Wastewater shall pay capital, debt, operations and maintenance costs for wastewater conveyance facilities to provide wastewater for replacement of centrate flows that cannot be treated at the North City Water Reclamation Plant (NCWRP) due to Pure Water needs. 6. Water shall pay all costs for brine disposal including pump stations, pipelines, retreatment, ocean outfall and monitoring. 7. Wastewater shall pay all treatment and conveyance costs for all return flows (Micro Filtration and tertiary backwash) based on flow, COD and SS. 8. Commodity Charge a) Water will pay a commodity charge for secondary treated wastewater that is used for potable reuse. b) If the total expenses for the wastewater potion of the Pure Water program to produce 83 MGD of potable reuse exceed the cost to upgrade 180 MDG of treatment to the secondary level at the Point Loma Wastewater Treatment Plant, then the commodity charge will be modified as necessary to mitigate costs above this level to the wastewater customer. Note: 1. These principles are based on the assumption that secondary equivalency is approved through Federal Legislation 2. Each new wastewater facility after NCWRP may require additional negotiation based on the actual process selected. Metro Wastewater JPA ^&K§=2*22fl 276 FourmAvenue Chulavista'CA91950 619-176-2557 www.melroipa.org Jerry Jones,Chair November 21,2017 VIA I .S.and Electronic Mail DSDEAS @ sandiego.gov Mr.Mark Brunette Senior Environmental Planner City of San Diego Department Services Center 1222 First Avenue,MS 501 San Diego,CA 92101 Re:Comments on Draft EIR/EIS for the Pure Water San Diego Program,North City Project—Project No.499621 /SCH No.2106081016 Dear Mr.Brunette: Metro JPA appreciates the opportunity to comment on the North City Project Draft EIR/EIS.Metro JPA is a joint powers authority organized pursuant to the California Joint Exercise of Powers Act,Government Code section 6500 et seq.for the purpose of representing its member agencies'interests in the operation and management of the San Diego regional sewer system.Metro JPA's member agencies are the cities of Chula Vista,Coronado, Del Mar,El Cajon,Imperial Beach,La Mesa,National City,and Poway;the Lemon Grove Sanitation District;the Padre Dam Municipal Water District and Otay Water District;and the County of San Diego Sanitation District (collectively,"Member Agencies"). Metro JPA has identified several aspects of the Draft EIR/EIS for the North City Water Reclamation Plant Project ("DEER")that the City of San Diego ("City")that Metro JPA requests the City reconsider and/or clarify to provide a complete analysis of the Project's impacts.Metro JPA's intent in providing these comments is to assist the City with development of a sound environmental analysis of the proposed project,and ensure that the project is constructed in a manner that makes the best use of the project's role in the metro system. The Joint Powers Authority Proactively Addressing Regional Wastewater Issues Chula Vista •Coronado ■Del Mar • El Cajon •Imperial Beach >La Mesa •Lemon Grove Sanitation District National City •Otay Water District •Poway •Padre Dam Municipal Water DistrictCountyofSanDiego,representing East Otay,Lakeside/A]pine,Spring Valley &Winter Gardens Sanitation Districts -1- COMMENTS The DEIR needs to assess the impact the North City Water Reclamation Plant Project will have on offloading of the E.W.Blom Point Loma Wastewater Treatment Plant The E.W.Blom Point Loma Wastewater Treatment Plant ("Point Loma Plant")operates pursuant to a modified National Pollution Discharge Elimination System ("NPDES")permit, which allows the Plant to discharge wastewater treated only to advanced primary standards into the ocean.The City operates the Point Loma Plant under a waiver from the United States Environmental Protection Agency ("EPA")issued pursuant to Clean Water Act section 301(h) and 40 CFR 125,Subpart G. The DEIR should consider the impacts that offloading the Point Loma Plant will have on the operation of the Plant and on the sufficiency of the conveyance system leading to the Plant. In particular,the City should consider whether fail-safe infrastructure at the North City Plant is adequate to ensure that the Point Loma Plant is permanently offloaded rather than serving as a back-up. Metro JPA and its Member Agencies are concerned that the North City Project will be constructed in a manner that continues to rely on the Point Loma Plant,and that in turn,brings into question the basis for the Point Loma Plant's Clean Water Act Waiver.Additionally,on page 2-20,the DEIR states that there is uncertainty whether EPA will continue to grant the Point Loma Plant Waiver.There is no basis for this statement,especially if the City constructs the North City Project as agreed.Metro JPA requests that the statement be removed from the DEIR. The Project should include appropriate failsafe mechanisms to protect the Point Loma Plant and the Environment As noted above,Metro JPA is concerned that the project as described in the DEIR does not adequately protect the Point Loma Plant to ensure that it is permanently offloaded.For example: •Section 3.5.2 Page 3-29 of the DEIR states:"In the event the NCPWF is shut down for any purpose,the Morena Pump Station will also be shut down and go into a by-pass mode directing flows to the Point Loma WWTP." •Page 3-32 of the DEIR states:"Power for the Morena Pump Station and MTBS would be supplied by SDG&E.Backup generators are not anticipated to be required." •Page 3-40 of the DEIR states:"The NCPWF is not an essential facility.In the rare event of simultaneous failure of the power generation facility at NCWRP and utility power,the majority of NCPWF will be shut down and flow to NCWRP will be reduced to meet Title 22 flows.Remaining raw sewage will be diverted to the Point Loma WWTP." The Joint Powers Authority Proactively Addressing Regional Wastewater Issues Chula Vista •Coronado •Del Mar • El Cajon •Imperial Beach •La Mesa •Lemon Grove Sanitation District National City •Otay Water District •Poway •Padre Dam Municipal Water District County of San Diego,representing East Otay,Lakeside/Alpine,Spring Valley &Winter Gardens Sanitation Districts -2- We request that the City define what shutdown of the North City Plant means.We would prefer to keep the facility running and find another place to use or dispose of the effluent instead of sending it to Point Loma.Further,we believe that emergency generators should be supplied at the Morena Pump Station to prevent spills,or unnecessary diversions.Lastly,we believe the NCPWF is an essential facility and should have emergency power generation.These protections should be included in the final North City Project and described in the final EIR. Location ofdischarge of non-spec water Pages 3-42 through 3-43 of the DEIR describe three options for managing flows in the event that the North City Plant produced non-spec water.Options A and B would send emergency flows into the North City Pipeline.Option C would allow flows to be discharged to local stormdrains and/or Carrol Canyon.Metro JPA requests that the City pursue Option C for management of these flows.Because the North City Plant is producing potable water,it is possible that the City could obtain cover under "General Waste Discharge Requirements for Discharges from Drinking Water Systems to Surface Waters (SWRCB Order No.2014-0194- DWQ,NPDES No.CAG140001)for these discharges. Option C would not require the flow to be retreated at Point Loma.This would save operation costs and reduce redundant treatment needs.Expanding the use of Option C for the entire flow to the AWPF would be the best option to reduce future costs.Since the water would be near distilled water quality and this discharge would happen very rarely the impacts would be minimal.If the volume of discharge was an issue multiple discharge points could be considered. The DEIR should clarify the volume of water that the North City Plant will add to the region's water supplyportfolio,and the corresponding demand Pages 3-45 and 5.17-2 of the DEIR describe the overall contribution the North City Project will have on the region's water supply portfolio between 2016 and 2035.We request that the City clarify in the DEIR that the 93,000 acre-feet per year that will be created by the Pure Water Project (including the North City Project)represents 20%of the current water use in the San Diego County Water Authority. The DEIR should discuss the original 15 MGD project and consider the IS MGD project as an Alternative As part of the waiver renewal process,the City entered into an agreement with certain non-governmental environmental organizations that requires the City to build a 15 MGD recycled water project by December 31,2023.In exchange,the environmental organizations agreed not to challenge the EPA waiver renewal for the Point Loma Plant.The City subsequently elected to incorporate a 30 MGD reuse project,with an accelerated compliance plan,in place of the 15 MGD recycled water project. The Joint Powers Authority Proactively Addressing Regional Wastewater Issues Chula Vista •Coronado ■Del Mar ■ El Cajon •Imperial Beach •La Mesa •Lemon Grove Sanitation District National City •Otay Water District •Poway •Padre Dam Municipal Water District County of San Diego,representing East Otay,Lakeside/Alpine.Spring Valley &Winter Gardens Sanitation Districts The DEIR does not include a discussion of the original 15 MGD water project in its history of project changes or as a project alternative.The 15 MGD project analysis is relevant to an adequate assessment of the scale of impacts the North City Project because the expansion has implications for flow volumes in the remainder of the system.The larger 30 MGD project could therefore have an impact on the operational and regulatory obligations which the Plant must meet. The DEIR does not adequately assess the relationship between the modified permit for the Point Loma Wastewater Treatment Plant and the Proposed Project The DEIR does not adequately assess the relationship between the modified NPDES permit for the Plant and the projected impact of the North City Project on the Plant's ability to meet applicable modified permit conditions.Specifically,the DEIR should address the Plant's ability to achieve Secondary Equivalency at the Point Loma Plant and the impact the North City Project might have on that ability. On May 15,2014,the City adopted Resolution 308906,"A Resolution of the Council of the City of San Diego Supporting the 'Pure Water San Diego Program"1.The Resolution memorialized the City's commitment to potable reuse via the Pure Water Program and to obtaining Secondary Equivalency at the Point Loma Plant. The Resolution memorializes the City Council's direction that the Pure Water Program be implemented in a manner that "secures long-term compliance with discharge standards at the Point Loma Wastewater Treatment Plant through potable reuse and secondary equivalency."The Resolution directs City staff to develop a legislative strategy to authorize secondary equivalency under the Clean Water Act,and importantly for Metro JPA and its member agencies,establish a financing plan and cost-sharing principles with other public agencies that use the City's wastewater system. The DEIR currently lacks a sufficient assessment of applicable regulatory requirements which are related to the Point Loma Plant or are implicated by,or dependent on,the Pure Water Program and North City Project.Without a full and detailed analysis of the Plant's NPDES permit and relationship to the North City Project (including Project Alternatives),the DEIR creates the appearance that the expanded,30 MGD project is necessary for the Point Loma Plant to meet the modified permit terms.The Metro JPA member agencies are concerned about this aspect of the DEIR because they have not yet agreed to help fund the larger project. Accordingly,the DEIR must provide a detailed and accurate relationship between the modified permit under which the Plant operates and the North City Project. Lastly,the DEIR should include a discussion of the City's plan to obtain a permanent waiver for Point Loma based on the Secondary Equivalency concept and completion of the North City Project.The only reason wastewater ratepayers can be required to help fund the North City project,and the Pure Water Project in general is if there is a nexus between the project and The Joint Powers Authority Proactively Addressing Regional Wastewater Issues Criula Vista •Coronado •Del Mar • El Cajon •Imperial Baach •La Mesa •Lemon Grove Sanitation District National City •Otay Water District •Poway •Padre Dam Municipal Water District County of San Diego,representing East Otay,Lakeside/Alpine,Spring Valley &Winter Gardens Sanitation Districts compliance at the Point Loma Plant.Metro JPA will not help fund a water supply project if there is still a risk that they may have to upgrade the Point Loma Plant in the future. The DEIR should provide a detailed discussion of the dilution impacts and ratios affecting Miramar and San Vicente Reservoirs The dilution effects of purified water releases under the DEIR's reservoir operating scenarios are inadequate for Metro JPA and its Member Agencies to fully understand and assess the impacts of the North City Project.For instance,the DEIR fails to provide detailed information with respect to the Miramar and San Vicente Reservoirs,including the manner in which reservoir size and volume will impact dilution of constituents in the recycled water to be stored there or the existing imported water already stored in the reservoir. Dilution factors used to assess the impacts of purified water introduced into the reservoirs may change over time.This dynamic does not appear to be considered at all.The EIR references a model produced to consider these issues,but the model is not included as an appendix,and the discussion of its findings is extremely limited.Without this information it is not possible for Metro JPA or its Member Agencies to fully understand the impact of the North City Project.To provide a complete analysis of the North City Project and its potential impacts, the DEIR must include a more detailed discussion of purified water impacts on dilution within the reservoirs. The DEIR does not address relevant legislation that could have a significant impact on wastewaterproduction and use The DEIR does not consider recently enacted green building requirements for the conversion of multifamily buildings by 2019,as well as all residential units when sold.This legislation could have a significant impact on the production and use of wastewater.Substantial declines in wastewater production and use call into question the viability of the North City Project at its current scale.Accordingly,it is difficult to properly consider the impact the Project will have without any information about relevant regulatory changes that will directly affect the production and use of wastewater. The DEIR does not assess the effects of seasonal flows to the North City Plant and corresponding demandfor recycled water The DEIR does not adequately account for seasonal flow variations of non-potable recycled water in any detail.Page 6.17-2 mentions a seasonal strategy in passing but the overall project should be analyzed in terms of seasonal need and demand.Without this information, Metro JPA and its Member Agencies cannot adequately assess how well North City Project will offload the Point Loma Plant or whether the North City Plant will over-produce recycled water. The DEIR should supply information related to the effect of seasonal flows as well as any anticipated swings this strategy is likely to create with regard to seasonal flows that may impact North City Project facility operations. The Joint Powers Authority Proactively Addressing Regional Wastewater Issues Ctiula Vista •Coronado •Del Mar • El Cajon •Imperial Reach •La Mesa •Lemon Grove Sanitation District National City •Otay Water District •Poway •Padre Dam Municipal Water District County of San Oiego,representing East Otay,Lakeside/Alpine,Spring Valley &Winter Gardens Sanitation Districts The DEIR should specify the roles and charges ofresearchers staffed at the anticipated Operating &Maintenance Facility The North City Project would require 60 new fulltime employees to operate the project, including 15 new fulltime employees at the North City Water Reclamation Plant ("NCWRF') and 45 at the NCPWF.Of those 45 employees at the NCPWF,the DEIR indicates that 12 would be "researchers."However,the DEIR provides no definition of researchers or indicates what roles and responsibilities such employees will have,other than that they are generally required for operation of the NCPWF. Without further detail,it is impossible for Metro JPA and its Member Agencies to adequately understand how the North City Project facilities will operate,and thus cannot sufficiently assess whether costs associated with these positions are appropriately attributed to water or wastewater operations.Metro JPA requests that the City clarify the roles of all employees working on the completed North City Project and whether their roles are related to wastewater treatment or water supply. Project Size Description In various places,the DEIR describes the North City Project as 34 MGD,42.5 MGD,and 90 MGD.The DEIR is not consistent and needs improved explanation of the project size.The DEIR needs to explain the project size and why that size is necessary to achieve the 34 MGD goal of the project. Non-Spec Water Corrective Action Report On page 2-18 Part 1 of the DEIR cites applicable California regulations that impose requirements on recycled water projects.In particular,22 CCR Division 4,Chapter 3,Articles 5.1 and 5.2,require the water agency (or agencies)proposing a recycled water project to submit a joint plan to the SWRCB and RWQCB outlining corrective actions to be taken in the event that a delivery of recycled wastewater to an augmented reservoir fails to meet required water quality criteria.Metro JPA requests a copy of this report if it has been completed. Other clerical and technical errors The DEIR must be revised to accurately identify critical data points required to assess the impacts of the Project.Without such accurate information,any impact determination is rendered speculative.For instance,discrepancies in data figures appear to exist in the following places: •AADF into Pump Station 2 is 180 MGD (Page 2-9),while AAFD to the Plant is 141 MGD (Page 2-7); •On Page 3-8,the DEIR indicates that the maximum production of the North City Plant will be 34 MGD,while elsewhere the DEIR indicates the figure is 30 MGD; The Joint Powers Authority Proactively Addressing Regional Wastewater Issues Chula Vista •Coronado •Del Mar • El Cajon •Imperial Beach •La Mesa •Lemon Grove Sanitation District National City •Otay Water District ■Poway •Padre Dam Municipal Water District County of San Diego,representing East Otay,Lakeside/Alpine,Spring Valley &Winter Gardens Sanitation Districts •For the pipeline to Miramar,the DEIR indicates daily flow will be between 23 MGD and 33MGD(i.e.not 34 MGD); •Annual flow rates on Page 5.11-24 do not appear to match current flows at the Plant, particularly when 30 MGD are moving away from the Plant;the figures should therefore reflect flows which will likely result if the Project is not completed;and • Projected project increases in potable water demand of 3 MGD on Page 3-49 are substantially lower that projected demand of 4.8 MGD inferred from the figures on Page 5.17-5 (i.e.8,195 AFY to 13,650 AFY by 2020.) CONCLUSION As noted above,Metro JPA intends these comments to be helpful in the overall evaluation of the North City Project.Metro JPA and its Member Agencies are concerned about the efficient use of resources and the value that the North City Plant brings in terms of regulatory compliance and water supply.Metro JPA believes that the project should maximize both and submits these comments in furtherance of that goal. The DEIR presents a daunting array of complex issues.Metro JPA and its Member Agencies understand that arriving at appropriate and supportable findings and conclusions is an iterative process.Metro JPA therefore appreciates the opportunity to participate in that process by proposing the above comments. IC.P.deSousa J.G.Andre Monette Best Best &Krieger LLP General Counsel,Metro Wastewater JPA 6040y.OUO0l\30262881.3 The Joint Powers Authority Proactively Addressing Regional Wastewater Issues Chula Vista ■Coronadu ■Del Mar • El Cajon ■Imperial Beach •La Mesa •Lemon Grove Sanitation District National City •Otay Water District •Poway ■Padre Dam Municipal Water DistrictCountyofSanDiego,representing East Otay,Lakeside/Alpine,Spring Vafley &Winter Gardens Sanitation Districts -7- EXHIBIT E Jerrold L Jones Chair, Metro Wastewater JPA/Commission 3232 Main Street Lemon Grove, CA 91945 May 20,2018 The Honorable Mayor Kevin Faulconer 202 C Street, 11th Floor San Diego, CA 92101 Mayor Faulconer, As financial partners of the City, Metro JPA's twelve member agencies support Pure Water and its significant environmental and sustainability benefits for the region. The 1998 Regional Wastewater Disposal Agreement between the City of San Diego and the Metro JPA members did not anticipate the complexity of the Pure Water project and must be updated prior to San Diego City Council's authorization of the $1.4B in Pure Water construction contracts. The updated/amended Disposal Agreement should define cost allocation for water and wastewater facilities prior to building these facilities. All plans and impacts moving forward must be clear to all stakeholders, including JPA wastewater ratepayers as well as San Diego's own wastewater ratepayers. Public Utilities staff and the City Attorney's Office have already been working for months with Metro JPA representatives on agreeable terms. While acceptable progress has been made, we are concerned that that a secured agreement within the City's aggressive timeline to bid construction contracts may be difficult if not impossible. JPA representatives would like to meet with you and your staff to discuss:  The importance of an updated disposal agreement and mechanism's or instruments that will address securing an updated agreement while maintaining the City's Pure Water timeline.  Mitigation of future costs through value engineering and planning in the event that federal legislation authorizing secondary equivalency cannot be secured. Even with secured secondary equivalency it is important to insure that we are not missing cost savings and design opportunities in Phase 1 by looking ahead to Phase 2. We are concerned that some North County agencies using the San Elijo and Encina plants are currently paying less for full secondary treatment than agencies using the advanced primary treatment of the Metro system, even before the costs of Pure Water are added. With or without secondary equivalency, JPA engineers believe that there are sound engineering options for a capacity and facility downsize of Point Loma that are more economically sound and environmentally responsible than maintaining current facility size, costs and capacity. JPA staff are currently working with City staff on a study to explore this. We believe it is vital that we share progress and our thoughts on this collaboration with you and your staff so that your input can be included early in this process. Jerry Jones Metro Wastewater JPA/Commission Chair