HomeMy WebLinkAbout01-22-18 EO&WR Committee PacketOTAY WATER DISTRICT
ENGINEERING, OPERATIONS & WATER RESOURCES COMMITTEE MEETING
and
SPECIAL MEETING OF THE BOARD OF DIRECTORS
2554 SWEETWATER SPRINGS BOULEVARD
SPRING VALLEY, CALIFORNIA
Board Room
MONDAY
January 22, 2018
12:30 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. APPROVE AN AGREEMENT BETWEEN THE SAN DIEGO COUNTY WATER AU-
THORITY AND OTAY WATER DISTRICT REGARDING COMPLETION OF THE
EAST COUNTY REGIONAL TREATED WATER IMPROVEMENT PROGRAM (MAR-
CHIORO) [5 minutes]
4. APPROVE THE TERMINATION OF A CONSTRUCTION AGREEMENT TO ORTIZ
CORPORATION FOR THE FUERTE DRIVE SEWER RELOCATION PROJECT (CIP
S2045) THAT WAS AWARDED AT THE SEPTEMBER 6, 2017, BOARD MEETING IN
AN AMOUNT NOT-TO-EXCEED $147,650.00 (MARTIN) [5 minutes]
5. SAN DIEGO COUNTY WATER AUTHORITY UPDATE (SMITH/CROUCHER)
[10 minutes]
6. ADJOURNMENT
2
BOARD MEMBERS ATTENDING:
Tim Smith, Chair
Gary Croucher
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 that would require accommodation in order to enable you to partici-
pate 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 January 19, 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 January 19, 2018.
/s/ Susan Cruz, District Secretary
STAFF REPORT
TYPE MEETING: Regular Board MEETING DATE: February 7, 2018
SUBMITTED BY: Jeff Marchioro
Senior Civil Engineer
Bob Kennedy
Engineering Manager
CIP./G.F. NO: P1503-
001000
DIV. NO. ALL
APPROVED BY:
Rod Posada, Chief, Engineering
Mark Watton, General Manager
SUBJECT: Approval of an Agreement Between the San Diego County Water
Authority and Otay Water District Regarding Completion of the
East County Regional Treated Water Improvement Program
GENERAL MANAGER’S RECOMMENDATION:
That the Otay Water District (District) Board of Directors
(Board) approves the Agreement Between the San Diego County
Water Authority and Otay Water District Regarding Completion of
the East County Regional Treated Water Improvement Program
(ECRTWIP).
COMMITTEE ACTION:
Please see Attachment A.
PURPOSE:
To obtain Board approval of an Agreement Between the San Diego
County Water Authority and Otay Water District Regarding
Completion of the East County Regional Treated Water Improvement
Program (see Attachment B for Agreement).
ANALYSIS:
On February 15, 2006, the San Diego County Water Authority
(Water Authority) approved an agreement with Helix Water
2
District (Helix), Padre Dam Municipal Water District (Padre
Dam), Otay Water District (Otay), and Lakeside/Riverview Water
Districts (Lakeside) regarding implementation of the East County
Regional Treated Water Improvements Program (ECRTWIP) that
significantly improved the local water treatment capacity in the
East County. The ECRTWIP is a comprehensive integrated program
of capital improvements and usage guarantees involving the Water
Authority, Helix, Otay, Padre Dam, and Lakeside. In order for
the regional benefit of the program to be developed, each party
involved in the program constructed the facilities designated as
its responsibility in the program, and each water-purchasing
agency purchased quantities of water as designated under the
East County Agreements. The capital investment by the Water
Authority in this program is being paid back by the cost
difference between the operating charges for treatment by Helix
and the Water Authority’s full melded treated water rates. This
new Agreement will terminate the 2006 ECRTWIP Agreement with the
minimum demand provision of 10,000 acre-feet per year and
replace it with this Agreement that will terminate once the
payment obligations with the Water Authority are met.
The growing difference between the operating charges from
treatment by Helix and the Water Authority’s full melded treated
water rate has accelerated the payback of the District’s portion
of the total Water Authority investment reducing the $9.987
million in capital expenditures to approximately $4.8 million at
the end of 2017. At this rate, the Water Authority will be paid
back in full sometime in 2022 which will trigger the termination
of this replacement agreement.
When the original agreement was prepared, it was expected 10,000
AFY would pay back the Water Authority about 40% of their
investment in this agreement and earlier agreements. It is the
growing difference between the Water Authority’s all in rate and
the actual cost of the treated water from Helix that allowed the
District to negotiate with the Water Authority for a replacement
agreement.
This replacement agreement eliminates the take or pay guarantee
and adds a termination date. This will eliminate monthly
reports to the Water Authority on estimated demands and annual
requests for an adjustment to the minimum take or pay due to the
droughts and conservation impacting demand. At the time the
original agreement was signed, demand in the north was about
13,500 AFY. For calendar year 2017, the District received 8,602
AF for the northern service area. Other benefits for the
District and the region include having the flexibility to take
3
water from other flow control facilities. This could improve
water quality on the Water Authority’s Pipeline Four if the
District is allowed to shift flows in the summer months.
FISCAL IMPACT: Joe Beachem, Chief Financial Officer
Each year the District was not able to meet the minimum 10,000
AFY take or pay amount, the District was able to negotiate an
adjustment so that the District did not have to compensate the
Water Authority per the terms of the original agreement. The
District has only met the 10,000 AFY minimum in calendar years
2012, 2013, and 2014. If the take or pay provision of the
original agreement was enforced, for calendar year 2017, the
additional cost to the District would have been approximately
$234,864.
This replacement agreement gives the District until December
2028 to satisfy the payback requirement, six years from the
projected payback date in the replacement agreement.
STRATEGIC GOAL:
This Project supports the District’s Mission statement, “To
provide high value water and wastewater services to the
customers of the Otay Water District in a professional,
effective, and efficient manner” and the General Manager’s
Vision, “A District that is at the forefront in innovations to
provide water services at affordable rates, with a reputation
for outstanding customer service.”
LEGAL IMPACT:
None.
JM/BK/RP/jf
P:\WORKING\CIP P1503 - Water Authority Issues\FCF No.14-ECRTWIP\Staff Report\BD 02-07-2018, Staff
Report, Amendment to the ECRTWIP.doc
Attachments: Attachment A – Committee Action
Attachment B – Agreement Regarding Completion of
the East County Regional Treated Water
Improvement Program
ATTACHMENT A
SUBJECT/PROJECT:
P1503-001000
Approval of an Agreement Between the San Diego County
Water Authority and Otay Water District Regarding
Completion of the East County Regional Treated Water
Improvement Program
COMMITTEE ACTION:
The Engineering, Operations, and Water Resources Committee
(Committee) reviewed this item at a meeting held on January 22,
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
Page 1 of 5.
AGREEMENT BETWEEN THE SAN DIEGO COUNTY WATER AUTHORITY AND OTAY WATER DISTRICT REGARDING COMPLETION OF THE EAST COUNTY REGIONAL TREATED WATER IMPROVEMENT PROGRAM
This agreement is made and entered into as of , 2018 between the
San Diego County Water Authority, a county water authority (Water Authority) and
Otay Water District, a water district established under the Municipal Water District Law
of 1911, (Otay), (collectively, the Parties), in view of the following facts:
RECITALS
A. The San Diego County Water Authority and four member agencies, by two party
agreements each between the member agency and the Water Authority (East
County Agreements), entered into the original East County Regional Treated
Water Improvement Program (ECRTWIP) in April 2006. Its purpose was to
significantly improve the regional water treatment capacity by maximizing
utilization of the R.M. Levy Water Treatment Plant (Levy WTP). The agencies
involved in this integrated plan included the Water Authority, Helix Water District
(Helix), Padre Dam Municipal Water District (Padre Dam), Otay, and Lakeside
Water District (Lakeside).
B. The ECRTWIP is a comprehensive integrated program of capital improvements
and usage guarantees involving the Water Authority, Helix, Otay, Padre Dam, and
Lakeside. In order for the regional benefit of the program to be developed, each
party involved in the program constructed the facilities designated as its
responsibility in the program, and each water-purchasing agency purchased
quantities of water as designated under the East County Agreements.
C. The 106 Million Gallon Per Day (MGD) Levy WTP is owned and operated by
Helix, and the Water Authority owns a capacity right in the plant of 36 MGD.
Water treated at Levy is delivered or caused to be delivered by the Water
Authority to Helix, Otay, Padre Dam, and Lakeside through new or modified
facilities constructed as part of the East County Agreements.
D. In consideration of increased delivery to Otay, the East County Agreements
addressed expanded capacity at the Otay 14 Flow Control Facility and a new 36-
Inch Reservoir Pipeline associated with Otay’s water distribution system and the
Los Coches Pump Station, Helix Fume, and expanded Levy WTP capacity rights
associated with Helix’s distribution system.
E. The Water Authority wishes to ensure that the regional capital investment
associated with the East County Agreements is fully recovered and maintain
capacity rights in the facilities constructed and secured in the East County
Agreements.
ATTACHMENT B
Page 2 of 5.
F. Otay wishes to terminate minimum demand commitment of 10,000 acre-feet
established in the East County Agreements; terminate its payment obligations
under this agreement once the Water Authority recovers Otay’s designated capital
investment responsibility, and ensure that all water delivered from the Water
Authority to Otay through the Levy WTP is at the same price for water as is regularly
charged to all other member agencies and under the same terms and conditions as other
member agencies for treated water service during the term of this agreement.
AGREEMENT
The Parties agree as follows.
A. Recitals and Exhibits. The foregoing Recitals are incorporated herein as a
substantive and enforceable part of the Agreement. All Exhibits attached to this
agreement constitute an integral part of this agreement and are fully incorporated
herein.
B. Termination of 2006 East County Agreement with Otay. The Parties agree that the
agreement between the San Diego Water Authority and Otay Water District regarding
implementation of the East County Regional Treated Water Improvement Program
executed on April 26, 2006 as amended is terminated and replaced by this Agreement.
C. Continued Use of Facilities Developed under East County Agreement with Otay. The
Water Authority agrees to continue to operate and maintain the Otay 14 Flow Control
Facility.
D. Continued Use of Conveyance Facilities Developed under East County Agreement with
Helix. The Water Authority agrees to retain conveyance capacity rights to convey treated
water from the Levy WTP to Otay as secured in the agreement between the San Diego
County Water Authority and Helix Water District regarding implementation of the East
County Regional Treated Water Improvement Program executed on April 26, 2006.
These improvements and capacity rights include 12 MGD through the Los Coches Pump
Station and Helix Flume as stated in Paragraphs 4 and 7 of the 2006 agreement with
Helix. The 10 MGD regional capacity secured at Levy WTP as part of the East County
Agreements, will also be retained by the Water Authority. Should the Water Authority
decide to pursue adjustments to its ownership or use of treatment plant capacity at the
Levy WTP, the Water Authority will coordinate with the affected East County
Agreement agencies regarding continued supply and conveyance, prior to any
modification or termination of the 2006 Helix agreement.
E. Financial Obligations of Otay
1. Capital cost allocation associated with the East County Agreements is provided in
Exhibit A and has been agreed to by the Parties. These costs represent the capital
investment that shall be recovered by the Water Authority and includes all capital
investments made by Water Authority per the terms of the East County Agreements
ATTACHMENT B
Page 3 of 5.
and all reimbursement payments made by the member agencies. Assignment of
capital cost allocation for facilities shared by the member agencies was calculated
based on a weighted percent of the total minimum annual commitments designated
in the East County Agreements.
2. The cost recovery methodology provided in Exhibit B has also been agreed to by the
Parties and shows reduction of Otay’s component of the remaining capital costs
based on actual and forecasted water deliveries limited to those detailed in Section F
below and other adjustments agreed to by the Parties. The calculation includes an
adjustment for regional treatment plant reliability and a credit for transportation rate
offsets. It also applies an annual interest component to capture the time-value of the
initial investments.
3. Exhibit B will be updated on an annual basis by the Water Authority per Section G
of this agreement. The Cumulative Net Balance w/ Interest shown in column pn can
be paid down through a cash payment by Otay, at its own discretion, to the Water
Authority at the end of any calendar year during the term of this agreement. A copy
of the annually updated Exhibit B shall be transmitted to Otay as required in Section
G below.
F. Water Deliveries Included in Net Cash Flow Calculation. Water deliveries applied to the
cost recovery methodology in Exhibit B, column an, shall include all deliveries through
the Otay 14 Flow Control Facility and those designated deliveries through Otay 11 Flow
Control Facility off the Water Authority’s Second Aqueduct as long as those designated
deliveries are agreed to by the Water Authority in advance. Designated deliveries from
the Water Authority’s Second Aqueduct shall include in lieu deliveries requested by the
Water Authority and those deliveries associated with management of water quality south
of the Water Authority’s Mission Trails Flow Regulatory Structure.
G. Annual Reporting of Deliveries and Financial Obligations. The Water Authority will
provide Otay an update of Exhibit B by February 28 every year during the term of this
agreement to capture actual water deliveries (an) for the previous calendar year ending
December 31 and updated Capital Modification Expenses (cn), Levy Treatment Rates
(dn), and Water Authority Treatment Surcharge (gn). Any comments or disputes shall be
presented to the Water Authority within 14 calendar days upon receipt of the update. The
Water Authority shall provide a response to comments/disputes and a revised Exhibit B,
if necessary, within 14 calendar days of receipt of comments or disputes.
H. Term; Expiration of Otay Financial Obligations. This agreement shall remain in effect
until terminated by mutual written consent of the Parties. Notwithstanding, Otay’s
financial obligations under this agreement shall expire when Otay zeroes out the
Cumulative Net Balance with Interest (nn) on Exhibit B, as updated by the Water
Authority per Section G above or December 31, 2028, whichever is sooner. Should a
balance remain on December 31, 2028, Otay agrees to pay the outstanding balance in full
to the Water Authority within 30 calendar days.
I. Purchase Cost of Water. For any water delivered by the Water Authority to a designated
Otay Flow Control Facility under this agreement, the Water Authority agrees to charge
ATTACHMENT B
Page 4 of 5.
Otay the same price for water as is regularly charged to all other member agencies for
treated water service, reflecting the total of the water supply, transportation, customer
service, storage, and treatment charge, or, in the case of a change to the Water Authority
rate structure, the identical applicable rates charged to its other member agencies for
similar service.
J. Indemnification. Otay and the Water Authority agree to mutually indemnify, defend
each at its own expense, including attorneys’ fees, and hold each other harmless from and
against all claims, costs, demands, losses, and liability of any nature whatsoever,
including but not limited to liability for bodily injury, sickness, disease or death, property
damage (including loss of use) or violation of law, caused by or arising out of any error,
omission, negligent act or willful misconduct of that party, its officers, directors,
employees, agents, volunteers or any other person acting pursuant to its control in
performing under this agreement. No party shall be indemnified for its sole or active
negligence.
K. Laws and Venue. This agreement will be interpreted in accordance with the laws of the
State of California. If any action is brought to interpret or enforce any term of this
agreement, the action shall be brought in a state or a federal court in the County of San
Diego.
L. Amendment. This agreement may be modified only by a subsequent written amendment
executed by both Parties.
M. Successors or Assigns. This agreement and any portion thereof shall not be assigned or
transferred, nor shall any of the duties be delegated, without the express written consent
of both Parties, which shall not be unreasonably withheld or delayed. Any attempt to
assign or delegate this agreement without the express written consent of both Parties shall
be void and of no force or effect.
N. Notices. Any notice or instrument required to be given or delivered by this agreement
may be given or delivered by depositing the same in any United States Post Office,
postage prepaid, addressed to:
Otay Water District
2554 Sweetwater Springs Boulevard
Spring Valley, CA 91978
Attention: General Manager
San Diego County Water Authority
4677 Overland Avenue
San Diego, CA 92123
Attention: General Manager
ATTACHMENT B
Page 5 of 5.
O. Signatures. The individuals executing this agreement represent and warrant that they
have the legal capacity and authority to do so on behalf of their respective legal entities.
IN WITNESS WHEREOF, the parties have executed as of the date written above.
San Diego County Water Authority Otay Water District
By: By:
Maureen A. Stapleton Mark Watton
General Manager General Manager
Approved as to form: Approved as to form:
By: By:
General Counsel General Counsel
EXHIBIT A ‐ Capital Cost Allocation
Project Total Project
Capital Cost
WA Cost To Be
Recovered
WA Payment
Years
MA Cost
Allocation Reimbursed Reimbursement
Years
Cost To Be
Recovered
MA Cost
Allocation Reimbursed Reimbursement
Years
Cost To Be
Recovered
MA Cost
Allocation Reimbursed Reimbursement
Years
Cost To Be
Recovered
Los Coches PS 2 ($9,604,290) ($5,083,575) 2006‐2009 $0 $0 ‐ $0 ($2,033,430) $0 ‐ ($2,033,430) ($3,050,145) $2,881,347 2010 ($168,798)
Helix Flume
Improvements1 ($4,482,878) ($4,482,878) 2006‐2010 ($642,597) $0 ‐ ($642,597) ($1,912,491) $0 ‐ ($1,912,491) ($1,927,791) $0 ‐ ($1,927,791)
WA Administration
(Planning)1 ($35,394) ($35,394) 2010 ($5,074) $0 ‐ ($5,074) ($15,100) $0 ‐ ($15,100) ($15,221) $0 ‐ ($15,221)
Levy WTP Capacity
Purchase ($10,607,882) ($10,607,882) 2008‐2011 ($1,520,584) $0 ‐ ($1,520,584)($4,525,547) $0 ‐ ($4,525,547) ($4,561,751) $0 ‐ ($4,561,751)
54" Transmission
Main Capacity
(Lakeside)
($300,000) ($300,000) 2008‐2011 ($300,000) $450,000 2011 $150,000 $0 $0 ‐ $0 $0 $0 ‐ $0
Helix Flume
Capacity (Otay) ($1,500,000) ($1,500,000) 2008‐2011 $0 $0 ‐ $0 ($1,500,000) $0 ‐ ($1,500,000) $0 $0 ‐ $0
Helix Flume
Capacity (Padre) ($600,000) ($600,000) 2008‐2011 $0 $0 ‐ $0 $0 $0 ‐ $0 ($600,000) $400,000 2010 ($200,000)
Otay 14 FCF
Expansion3 ($627,925) ($627,925) 2006‐2011 $0 $0 ‐ $0 ($627,925) $627,925 2010 $0 $0 $0 ‐ $0
Otay 14 FCF Temp.
Mod.($9,873) ($9,873) 2009‐2010 $0 $0 ‐ $0 ($9,873) $9,400 2010 ‐$473 $0 $0 ‐ $0
Otay 36" Reservoir
Pipeline
Improvement4
$0 $0 2008‐2011 $0 $0 ‐ $0 $0 $0 ‐ $0 $0 $0 ‐ $0
Lakeside 1 FCF ($230,753) ($230,753) 2006‐2011 ($230,753) $228,853 2011 ($1,900) $0 $0 ‐ $0 $0 $0 ‐ $0
Padre 7 FCF ($92,718) ($92,718) 2006‐2015 $0 $0 ‐ $0 $0 $0 ‐ $0 ($92,718) $84,843 2011 ($7,875)
($28,091,713) ($23,570,998) ($2,699,007) $678,853 ($2,020,154) ($10,624,365) $637,325 ($9,987,040) ($10,247,626) $3,366,190 ($6,881,436)
Notes:
1. MA Cost associated with Helix Improvement Projects (excluding Los Coches PS) allocated by weighting based on minimum take commitments and agreement designated reimbursement amounts
2. Los Coches PS Costs to be split 60/40 for Padre Dam and Otay, respectively, per K. Weinberg's email dated 8/31/16
3. Otay 14 FCF Expansion total project capital cost does not include the Water Authority's cost responsibility for the 4 cfs capacity implemented to replace Otay 8 FCF
4. Otay 36" Reservoir Pipeline Improvement was implemented by Otay and reimbursed by the Water Authority to replace capacity abandoned in the La Mesa Sweetwater Extension Pipeline
May 1, 2017
Helix Water District Improvement Projects
Helix Water District Capacity Purchases
Member Agency Improvements
Lakeside Water District Otay Water District Padre Dam Municipal Water District
L:\WR\DeptOnly\3231‐FACILITY PLANNING\Agreements\East County Agreements\Revised Agreements\Otay\Exhibit A ‐ Capital Cost Allocation.xlsx
EXHIBIT B ‐ Cost Recovery (Otay)Inflation Rate6 Interest Rate (IR)
Revised: 23‐Jun‐17 1.83% 3.09%
CY End Acre‐Ft 1 Capital Expenses Capital Mod.
Expenses 2
Levy Treatment
Rates 3 Operating Expenses Total Expenses WA Treatment
Surcharge Total Revenue
Twin Oaks WTP
Reliability Adjustment
(unit rate) 4
Transportation Rate
Credit 5
(unit rate)
Total Annual
Adjustment Cumulative Net Balance Interest
Cumulative Net
Balance w/ Interest
( an ) ( bn ) ( cn ) ( dn ) ( en ) = an*dn ( fn ) = bn+cn+en ( gn ) ( hn ) = an*gn ( in ) ( jn ) ( kn ) = (in+jn)*an ( ln ) = (nn‐1) +fn+hn+kn ( mn ) = ln*IR ( nn ) = ln+mn
‐ AF $ $ $/AF $ $ $/AF $ $/AF $/AF $ $ $ $
2006 0 ($322,663) $0 $0 $0 ($322,663) $0 $0 $0 $0 $0 ($322,663) ($9,974) ($332,637)
2007 0 ($989,007) $0 $78 $0 ($989,007) $147 $0 $0 $0 $0 ($1,321,644) ($40,852) ($1,362,496)
2008 0 ($3,642,243) ($9,371) $85 $0 ($3,651,614) $164 $0 $0 $0 $0 ($5,014,110) ($154,986) ($5,169,096)
2009 0 ($287,863) $0 $96 $0 ($287,863) $168 $0 $0 $0 $0 ($5,456,958) ($168,675) ($5,625,633)
2010 1215 $269,407 $0 $99 ($120,236) $149,170 $215 $261,225 ($39.77) $1.57 ($46,416) ($5,261,654) ($162,638) ($5,424,292)
2011 9612.84 ($5,014,671) $0 $92 ($880,776) ($5,895,447) $215 $2,066,761 ($44.10) $1.65 ($408,033) ($9,661,011) ($298,622) ($9,959,633)
2012 10071.15 $0 ($30,231) $90 ($909,526) ($939,757) $234 $2,356,649 ($48.81) $1.75 ($473,999) ($9,016,739) ($278,707) ($9,295,447)
2013 10238.46 $0 ($34,638) $92 ($941,426) ($976,064) $256 $2,621,046 ($43.17) $1.69 ($424,640) ($8,075,105) ($249,601) ($8,324,706)
2014 10533.79 $0 $0 $100 ($1,048,112) ($1,048,112) $274 $2,886,258 ($42.74) $1.68 ($432,518) ($6,919,077) ($213,869) ($7,132,946)
2015 8262.47 $0 ($23,499) $113 ($933,659) ($957,158) $278 $2,296,967 ($42.36) $1.66 ($336,269) ($6,129,406) ($189,460) ($6,318,866)
2016 8430.9 $0 ($71,496) $120 ($1,011,708) ($1,083,204) $280 $2,360,652 ($50.51) $1.78 ($410,811) ($5,452,229) ($168,528) ($5,620,757)
Subtotals:58365 ($9,987,040) ($169,234) ($5,845,444) ($16,001,718) $14,849,558 (2,532,685)$ ($1,935,912)
2017 8347 $0 ($31,973) $122 ($1,019,932) ($1,051,904) $290 $2,420,539 ($55.11) $1.81 ($444,858) ($4,696,981) ($145,184) ($4,842,164)
2018 8347 $0 ($32,558) $124 ($1,038,596) ($1,071,154) $300 $2,504,006 ($53.66) $1.83 ($432,650) ($3,841,963) ($118,755) ($3,960,718)
2019 8347 $0 ($33,154) $127 ($1,057,603) ($1,090,756) $305 $2,549,829 ($54.64) $1.84 ($440,706) ($2,942,351) ($90,948) ($3,033,299)
2020 8347 $0 ($33,760) $129 ($1,076,957) ($1,110,717) $311 $2,596,491 ($55.64) $1.86 ($448,909) ($1,996,434) ($61,710) ($2,058,144)
2021 8347 $0 ($34,378) $131 ($1,096,665) ($1,131,043) $317 $2,644,006 ($56.66) $1.88 ($457,262) ($1,002,442) ($30,985) ($1,033,427)
2022 8347 $0 ($35,007) $134 ($1,116,734) ($1,151,741) $323 $2,692,392 ($57.70) $1.89 ($465,768) $41,455 $0 $0
Totals:108445 ($9,987,040) ($370,064) ($12,251,930) ($22,609,034) $30,256,819 (5,222,836)$ ($2,383,494)
Notes:
1. Assumes average purchase amounts over the last two years from Otay 14 FCF & portions of Otay 11 FCF (PRIMA) for CY 2017 and beyond
2. Capital Expenses weighted for each Member Agency based on minimum commitment [i.e.: (10000/(3360+10000+10080) = 42.66%)]
3. Levy Treatment rates originally were based on FY. To convert these rates to CY, take previous FY and average with current FY.
4. Twin Oaks WTP Reliability Adjustment includes weighted costs for each facility (capital costs only) contributing to the WA's treated water surcharge.
5. Transportation costs attributed to the East County Agreements are represented as credits and include the debt service for periods through 2038
6. Inflation rate has been applied to the Capital Mod. Expenses, Levy and WA treatment rates, and all charges and credits beyond CY 2016.
Adjustment and Credit Equations:
Twin Oaks WTP Reliability Adjustment = WA Treated Water Surcharge * Twin Oaks Capital Cost Annual Debt Service / Projected Total Treated Water Cost
Transportation Rate Credit = (East County Agreement Transportation Annual Debt Service / Projected Total Water Deliveries) + Value of Future Debt Service through 2038
STAFF REPORT
TYPE MEETING: Regular Board
MEETING DATE: February 7, 2018
SUBMITTED BY:
Dan Martin
Engineering Manager
PROJECT: S2045-
001103
DIV. NO. 5
APPROVED BY:
Rod Posada, Chief, Engineering
Mark Watton, General Manager
SUBJECT: Termination of a Construction Contract to Ortiz Corporation
for the Fuerte Drive Sewer Relocation Project
GENERAL MANAGER’S RECOMMENDATION:
That the Otay Water District (District) Board of Directors (Board)
terminate a construction contract to Ortiz Corporation (Ortiz) for
the Fuerte Drive Sewer Relocation Project (CIP S2045) that was
awarded at the September 6, 2017 Board meeting in an amount not-to-
exceed $147,650.00 (see Exhibit A for Project location).
COMMITTEE ACTION:
Please see Attachment A.
PURPOSE:
To obtain Board authorization to terminate a construction contract to
Ortiz for the Fuerte Drive Sewer Relocation Project (CIP S2045).
ANALYSIS:
The Fuerte Drive Sewer Relocation Project is for the relocation of
approximately 255 linear feet of 8-inch sanitary gravity sewer
related to the County of San Diego (County) realigning Fuerte Drive
at the intersection of Alzeda Drive for safety issues. The original
schedule provided to the District for performing the project was from
November 21, 2017 to December 15, 2017. This time period, which was
included in the District’s bid documents for the project, was set by
2
the County in coordination with the relocation of other utilities in
the area including water, gas, electric and communications. In August
2017, after the bid opening for the project, but before the Board
authorization of the contract award, the County revised the
construction schedule for utility relocations. The County advised
the District that the District’s updated construction period would be
from January 15, 2018 to February 7, 2018. This schedule change was
conveyed to Ortiz before the Board meeting and Ortiz indicated that
they would accept the new construction timetable with no impacts to
their bid pricing.
During late fall 2017, the County advised the District that the
District’s utility relocation schedule would be moved into Spring
2018. On January 11, 2018, District staff communicated with County
staff and was informed that the District’s construction period for
utility relocation was moved to a period of April 9, 2018 to May 4,
2018. Staff followed up with Ortiz, as noted in Exhibit B on January
11, 2018, to verify their ability to meet the project schedule.
Ortiz indicated that they could not accommodate the new dates due to
other obligations and requested to terminate the contract. District
staff followed up with Ortiz to see if shifting the start date by a
month would assist in Ortiz’s ability to support the project. Ortiz
responded that they had just secured a couple of large projects and
are unable to support the revised timelines of the District’s
project.
The District will consider other alternatives for constructing the
project, including rebidding the project under the California Uniform
Public Construction Cost Accounting Act (CUPCCAA) procedures adopted
by the District.
FISCAL IMPACT: Joe Beachem, Chief Financial Officer
None.
STRATEGIC GOAL:
This Project supports the District’s Mission statement, “To provide
high value water and wastewater services to the customers of the Otay
Water District in a professional, effective, and efficient manner”
and the District’s Vision, “A District that is at the forefront in
innovations to provide water services at affordable rates, with a
reputation for outstanding customer service.”
LEGAL IMPACT:
None.
3
DM/RP:jf
P:\WORKING\CIP S2045 Fuerte Drive Sewer Relocation\Staff Reports\BD 02-07-18\BD-02-07-18, Staff Report,
Fuerte Drive Sewer Terminate Construction Contract, (SB-BK).docx
Attachments: Attachment A – Committee Action
Exhibit A – Location Map
Exhibit B – Response from Ortiz Corporation
ATTACHMENT A
SUBJECT/PROJECT:
S2045-001103 Termination of a Construction Contract to Ortiz Corporation
for the Fuerte Drive Sewer Relocation Project
COMMITTEE ACTION:
The Engineering, Operations, and Water Resources Committee
(Committee) reviewed this item at a meeting held on January 22, 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.
OTAY WATER DISTRICTFUERTE DR SEWER RELOCATIONLOCATION MAPEXHIBIT A CIP S2045F
P:\WORKING\CIP S2045 Fuerte Drive Sewer Relocation\Graphics\Exhibits-Figures\Exhibit A, Fuerte Dr Sewer Relocation, Aug 2017.mxd
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1
D Martin
From:Jose Ortiz <jose@ortizcorporation.com>
Sent:Thursday, January 11, 2018 12:55 PM
To:D Martin
Cc:brian@ortizcorporation.com; Vu Tran; 'Info'; 'Lucy Ortiz'
Subject:RE: Project S2045 Fuerte Drive Sewer Relocation
Attachments:594: S2045 Fuerte Sewer Project
Hi Dan,
Just read the email sent to Lucy Ortiz, Ortiz Corporation cannot accommodate the new dates due to other
obligations. At this point we regret to inform that we have to pass on this project. Thank you for the consideration on
the project.
Regards,
Jose Ortiz
Operations Manager
2000 McKinley Avenue
National City, CA 91950
t: (619) 434‐7925
f: (619) 434‐7931
From: D Martin [mailto:Dan.Martin@otaywater.gov]
Sent: Friday, August 18, 2017 5:38 PM
To: Jose Ortiz <jose@ortizcorporation.com>
Cc: brian@ortizcorporation.com; Vu Tran <Vu.Tran@otaywater.gov>; 'Info' <info@ortizcorporation.com>
Subject: RE: Project S2045 Fuerte Drive Sewer Relocation
Jose,
Thanks for your response and your time on the phone this afternoon. Based on our conversation, I understand that the
revised timeframe for the Otay Water District’s on‐site construction activities which are now to be completed between
January 15, 2018 and February 7, 2018 does not impact the bid pricing provided by Ortiz Construction. I will interpret
your response below as conformation of our phone conversation. Please don’t hesitate to let me know if I have
misstated your intent in any way within 2 business days from the date of this email.
Thanks
Dan
Dan Martin
Engineering Manager
dan.martin@otaywater.gov
2
2554 Sweetwater Springs Blvd
Spring Valley, CA 91978
Office: (619) 670-2243
Fax: (619) 670-6184
From: Jose Ortiz [mailto:jose@ortizcorporation.com]
Sent: Friday, August 18, 2017 5:12 PM
To: D Martin <Dan.Martin@otaywater.gov>; 'Info' <info@ortizcorporation.com>
Cc: brian@ortizcorporation.com
Subject: RE: Project S2045 Fuerte Drive Sewer Relocation
Hi Dan,
The revised time frame works.
Thanks
Jose
From: D Martin [mailto:Dan.Martin@otaywater.gov]
Sent: Friday, August 18, 2017 9:15 AM
To: Info <info@ortizcorporation.com>
Cc: jose@ortizcorporation.com; brian@ortizcorporation.com
Subject: RE: Project S2045 Fuerte Drive Sewer Relocation
Thank you for confirming receipt. As noted below, respectfully requesting that an email response be received from Ortiz
Corporation by 4pm this afternoon.
Dan
From: Info [mailto:info@ortizcorporation.com]
Sent: Friday, August 18, 2017 8:50 AM
To: D Martin <Dan.Martin@otaywater.gov>
Subject: RE: Project S2045 Fuerte Drive Sewer Relocation
Received
Ashley Garcia ‐ Administrative Assistant
General Engineering Contractors
3
2000 McKinley Avenue, National City, CA 91950
Ph: 619‐434‐7925/Fx: 619‐434‐7931
E‐Mail: info@ortizcorporation.com
From: D Martin [mailto:Dan.Martin@otaywater.gov]
Sent: Friday, August 18, 2017 8:49 AM
To: info@ortizcorporation.com
Subject: FW: Project S2045 Fuerte Drive Sewer Relocation
Ashley
From: D Martin
Sent: Wednesday, August 16, 2017 6:25 PM
To: 'jose@ortizcorporation.com' <jose@ortizcorporation.com>
Cc: Steve Beppler <Steve.Beppler@otaywater.gov>; Bob Kennedy <Bob.Kennedy@otaywater.gov>; Rod Posada
<RodP@otaywater.gov>; Vu Tran <Vu.Tran@otaywater.gov>; 'brian@ortizcorporation.com'
<brian@ortizcorporation.com>
Subject: Project S2045 Fuerte Drive Sewer Relocation
Mr. Ortiz,
As you know, Ortiz Corporation is the apparent low bidder for the Otay Water District’s (District) Fuerte Drive Sewer
Relocation project (S2045). Section 400 “CONTRACT COMPLETION TIME” of the District’s bid documents state that “On‐
site construction activities are to be completed between November 21, 2017 and December 15, 2017 in coordination
with the County of San Diego’s road realignment contract and other utility relocation contracts.”
This afternoon, the County of San Diego notified our agency that the County of San Diego has updated the scheduling for
the District’s on‐site construction activities. The Otay Water District’s on‐site construction activities are now to be
completed between January 15, 2018 and February 7, 2018 in coordination with the County of San Diego’s road
realignment contract and other utility relocation contracts.
Staff is preparing a recommendation to award the Fuerte Drive Sewer Relocation Project (S2045) to Ortiz
Corporation. However, should the County of San Diego’s updated schedule impact Ortiz Corporation’s submitted bid
pricing for the project, the District may need to consider not awarding the project. Please let me know if this change by
the County of San Diego has any impact on the bid submitted by Ortiz Corporation.
I can be reached at (619) 670‐2243 to answer any questions you may have. I respectfully request that you provide a
response to this email by 4pm on Friday August 18, 2017. I will call you tomorrow morning to confirm receipt of this
email.
Dan
Dan Martin
Engineering Manager
dan.martin@otaywater.gov
4
2554 Sweetwater Springs Blvd
Spring Valley, CA 91978
Office: (619) 670-2243
Fax: (619) 670-6184
Virus-free. www.avg.com
Click here to report this email as spam.
1
D Martin
From:Lucy Ortiz <lucy@ortizcorporation.com>
Sent:Thursday, January 11, 2018 12:07 PM
To:D Martin; dcook@alysoncorp.com
Cc:'Brian'; jose@ortizcorporation.com; guy@ortizcorporation.com; 'Project Engineering';
'Vanessa'
Subject:594: S2045 Fuerte Sewer Project
Dan, acknowledging email below. Thank you.
Doug, please get in touch with Brian who is our PM for this project. Thank you.
Thanks so much,
Maria Louisa Ortiz "Lucy"
General Engineering Contractors
2000 mckinley avenue, national city, ca 91950
t:(619) 434-7925 f:(619) 434-7931
e: lucy@ortizcorporation.com
From: D Martin [mailto:Dan.Martin@otaywater.gov]
Sent: Thursday, January 11, 2018 10:50 AM
To: dcook@alysoncorp.com
Cc: Lucy Ortiz <lucy@ortizcorporation.com>; Steve Beppler <Steve.Beppler@otaywater.gov>
Subject: S2045 Fuerte Sewer Project
Doug,
As mentioned, the County of San Diego has been coordinating the permits for the work on Fuerte Road. Thus far,
SDG&E, AT&T, Cox Communications, and Crown have performed utility relocation work. The Helix Water District is
beginning their water relocation work next week and are scheduled to complete the first week of April. The County has
notified the Otay Water District that they would like the planned sewer relocation work to occur starting on April 9,
2018 and completing by May 4, 2018.
The S2045 project that is currently contracted with Ortiz Corporation is intended to complete the District’s sewer
relocation work on Fuerte Drive. To date, the District has not issued the Notice to Proceed to Ortiz Corporation and they
have been very patient.
Please reach out to Ortiz Corporation to discuss the revised work window provided by the County of San Diego and
advise me if they can accommodate the revised timeline and if there are any concerns. Also, we should discuss a Notice
to Proceed date. Given the dates provided by the County of San Diego, I’m thinking that we would need to issue a
Notice to Proceed next month.
Dan
2
Dan Martin
Engineering Manager
dan.martin@otaywater.gov
2554 Sweetwater Springs Blvd
Spring Valley, CA 91978
Office: (619) 670-2243
Fax: (619) 670-6184