HomeMy WebLinkAboutPolicy 26 - District Administration of Reimbursement AgreementsOTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Policy
Number
Date
Adopted
Date
Revised
Subject
DISTRICT ADMINISTRATION OF
REIMBURSEMENT AGREEMENTS 26 02/10/93 06/01/16
Page 1 of 9
PURPOSE
This policy establishes guidelines for how the District will
administer reimbursement agreements for facilities, both Master
Plan and Non-Master Plan. It also describes when and how the
District will participate in the cost of such Regional
Facilities.
BACKGROUND
Policy 26 requires that a development which creates the need for
new facilities must bear all costs to construct and finance the
on-site, in-tract and off-site water, wastewater, and recycled
water systems.
“On-site” facilities are defined as those pipelines, pump
stations and reservoirs required within a development’s project
boundaries. “Off-site” facilities are those facilities located
outside a project's boundary that are required to serve the
project. “In-tract” facilities are defined as those non-
regional facilities that serve only the project being
constructed. In-tract facilities are the sole responsibility of
the developer/property owner until the facilities and all
required property easements are dedicated to, and accepted by,
the District pursuant to authority granted by the Board to the
General Manager.
The District's Master Plan includes all Regional Facilities
anticipated to be necessary to provide service throughout the
District. The District's capacity fees have been calculated to
pay for the cost of all the Regional Facilities identified in
the Water Facilities Master Plan including the
developer/property owner’s portion of such facilities. The
District does not subsidize development but it does undertake
responsibility to ensure that those Regional Facilities located
within a development are constructed and that the costs
associated with the construction of said facilities is fairly
distributed among all users.
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Policy
Number
Date
Adopted
Date
Revised
Subject
DISTRICT ADMINISTRATION OF
REIMBURSEMENT AGREEMENTS 26 02/10/93 06/01/16
Page 2 of 9
POLICY
A.Master Plan Regional Facilities-Reimbursement by the
District: The District may reimburse the developer/property
owner for construction and design costs on both on-site and off-
site Regional Facilities identified in the Master Plan, if the
project meets the following guidelines:
1.The project must be in the District’s approved five-year
Capital Improvement Program (CIP) at the time of the
request, and the construction and design costs shall not
exceed the CIP budget amount without prior Board approval.
2.The District has approved a Sub-Area Master Plan (SAMP)
that defines all In-tract, Off-Site, and On-Site facilities
required to serve the Development and includes any required
fire flow calculations, maps, and modeling upon which the
non-regional facilities are clearly described. As part of
the SAMP approval, the District will determine whether the
non-Regional Facilities need to be upsized to meet a
regional need. If needed, the District will require the
developer/property owner to upsize the non-Regional
Facilities to meet the regional need. These Regional
Facilities will be included in the approved SAMP. The
incremental increase between the non-Regional to Regional
Facilities will be the basis for the reimbursement
agreement. The District will amend the Water Facilities
Master Plan based upon the facilities included in the
Development’s SAMP.
3.The developer/property owner makes an irrevocable offer to
dedicate to the District the facilities and any easements
required for the operation and maintenance of the
facilities, which offer is accepted by the General Manager,
and all applicable language and documentation for the
dedication(s) is prepared and recorded, all in the manner
authorized by the Board.
4.The developer/property owner enters into an Agreement for
Construction of a Water System or Sewer System with the
District.
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Policy
Number
Date
Adopted
Date
Revised
Subject
DISTRICT ADMINISTRATION OF
REIMBURSEMENT AGREEMENTS 26 02/10/93 06/01/16
Page 3 of 9
5.The developer/property owner obtains three (3) bids from
qualified contractors and provides copies of the bids to
the District. The developer/property owner is responsible
for selecting the lowest responsive responsible bidder.
The developer/property owner will be reimbursed only for
the Regional Facility CIP portions of the project based on
the unit prices submitted with the lowest responsive
responsible bid.
6.The cost of addressing environmental issues, such as
burying a reservoir, shall not be reimbursable unless they
are addressed in the District's Master Environmental Impact
Report and CIP.
7.All soft costs, such as engineering, inspection, bonds,
etc., will be included in the reimbursement cost at five
percent of the construction costs.
8.Except as provided below, the District will pay 100 percent
of the reimbursement cost after the General Manager accepts
the project.
9.The District may elect to finance the facilities by
borrowing if, after analysis by the Finance Department, it
is determined that the borrowing fits into the District's
financial plan as outlined in Policy 25.
10.If, for any reason, reimbursement funds are not available
at the time the project is operationally complete, the
District may elect to defer or a portion of the
reimbursement the District determines is due to the
developer/property owner until the General Manager accepts
the dedication of the project and until all liens, claims
and/or bonds, as applicable, have been released in the
manner provided under the Agreement for Construction of a
Water System.
11.Funds for reimbursement shall be carried as a CIP until the
reimbursement is made.
12.Each Reimbursement Agreement requires approval by the
Board. A Staff Report will be prepared and reviewed with
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Policy
Number
Date
Adopted
Date
Revised
Subject
DISTRICT ADMINISTRATION OF
REIMBURSEMENT AGREEMENTS 26 02/10/93 06/01/16
Page 4 of 9
the Finance Department prior to presentation to the Board
for approval.
13.This type of Reimbursement Agreement ends five (5) years
after Board’s original approval. The reimbursement
agreement may be terminated prior to said (5) year term by
the General Manager upon a determination that the
developer/property owner has failed to comply with its
obligations under the Reimbursement Agreement or the
Agreement for Construction of a Water System or Sewer
System.
14.If the Reimbursement Agreement expires prior to the
acceptance of the facilities by the District or prior to
payment of reimbursement, the developer/property owner
shall no longer be entitled to reimbursement. The
Developer may submit new documentation and request that the
District enter into a new Reimbursement Agreement. If the
District agrees to enter into a new Reimbursement Agreement
for the facilities, however, the District may revise the
terms and amounts of reimbursement at its discretion based
on information available at the time of the request.
15.All reimbursement requests shall be submitted to the Board
for consideration and shall not be processed without prior
Board approval.
B.Non-Master Plan Facilities-Reimbursement to Developer by
Future Users: Occasionally, a developer/property owner requests
that the District administer a reimbursement agreement to
collect money from future customers who connect to the facility
built by the developer/property owner. If the District agrees,
the District collects the reimbursement amount from each
customer connecting to the facility, together with any other
District connection fees. The reimbursement portion of the
customer’s payment is forwarded by the District to the
developer/property owner as reimbursement.
The District may administer this type of reimbursement agreement
if the developer/property owner's project meets the following
criteria and guidelines:
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Policy
Number
Date
Adopted
Date
Revised
Subject
DISTRICT ADMINISTRATION OF
REIMBURSEMENT AGREEMENTS 26 02/10/93 06/01/16
Page 5 of 9
1.The developer/property owner demonstrates that the
facilities to be constructed have adequate capacity to
serve future customers.
2.The developer/property owner requests and executes a
Reimbursement Agreement, which is presented to the Board
for approval in conjunction with the presentation of an
Agreement To Construct.
3.The developer/property owner deposits with the District the
estimated cost for District staff to prepare a nexus study
and obtain Board approval for the Reimbursement Agreement.
District staff will provide a written estimate of the
required deposit to the developer/property owner within 15
days of the developer/property owner’s request.
4.The developer/property owner provides three (3) bids from
qualified contractors for the purpose of establishing the
cost of the facilities and the portion of the reimbursement
amount which is to be allocated to future connections.
5.A nexus study shall be performed by District staff to
identify which property owners may benefit from the
construction of the proposed facility and the amount the
District will reimburse the developer/property owner.
6.An informational staff report will be presented to the
Board before the public notice is sent to those property
owners affected by the Reimbursement Agreement,.
7.The District shall give notice to all property owners who
will be subject to the reimbursement charge. These
property owners will then be responsible to pay their fair
share of the cost of the facilities from the time they
connect to the system. The fair share will be based on
their Assigned Service Unit/Equivalent Dwelling Unit
(ASU/EDU) contribution to the total projected ASU/EDU to
use the system. The reimbursement charge will be in
addition to any other fees a property owner would pay to
the District to obtain service.
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Policy
Number
Date
Adopted
Date
Revised
Subject
DISTRICT ADMINISTRATION OF
REIMBURSEMENT AGREEMENTS 26 02/10/93 06/01/16
Page 6 of 9
8.Each Reimbursement Agreement requires approval by the
Board. Prior to presenting a Reimbursement Agreement to
the Board, staff must obtain two original Reimbursement
Agreements signed by an authorized representative of the
developer/property owner. In addition, a Staff Report must
be prepared and reviewed with the Finance Department prior
to presentation to the Board for approval.
9.This type of Reimbursement Agreement shall be valid for 10
years from the date of Board approval. After the 10 year
period has lapsed the collection of the reimbursement
amount by the District shall cease.
10.Concurrently with submission of a signed Reimbursement
Agreement, the developer/property owner shall pay an
administrative fee to the District, to defray costs related
to the review of the request and the negotiation and
execution of the Reimbursement Agreement. The amount of
the administrative fee will be calculated at the staff rate
existing at the time of said submission.
11.In addition, concurrently with payment of the fee described
above, developer must pay a fee to defray costs estimated
to be incurred for each connection to be established during
the term of the Reimbursement Agreement. The amount of
this fee will be calculated based on an estimated 5 man
hours of District Permit Technician work per connection.
The staff rate in existence at the time the Reimbursement
Agreement is executed will be used as a base and it will be
projected to change each year to account for changes in the
COLA, as determined by the District’s Finance Department.
12.The District will not distribute any reimbursement funds to
the developer/property owner until the project has been
accepted by the Board. The distribution of reimbursement
funds will occur as the District collects the funds from
new customers who connect to the facility, but not more
frequently than once per year.
13.District staff shall collect the reimbursement amount due
at the same time the standard District capacity fees for
the new service are collected.
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Policy
Number
Date
Adopted
Date
Revised
Subject
DISTRICT ADMINISTRATION OF
REIMBURSEMENT AGREEMENTS 26 02/10/93 06/01/16
Page 7 of 9
14.If the Reimbursement Agreement expires prior to acceptance
of the facilities by the District or prior to payment of
reimbursement, the developer/property owner shall no longer
be entitled to reimbursement. The developer/property owner
may submit new documentation and request that the District
enter into a new Reimbursement Agreement. If the District
agrees to enter into a new Reimbursement Agreement for the
facilities, however, the District may revise the terms and
amounts of reimbursement at its discretion based on
information available at the time of the request.
15.All reimbursement requests shall be submitted to the Board
for consideration and shall not be processed without prior
Board approval.
C.Non-Master Plan Facilities-Reimbursement to
Developer/Property Owner by the District: Normally the District
would not participate in the cost of facilities which are not
identified in the Master Plan. These facilities are of benefit
only to the adjoining property and should ordinarily be financed
solely by the developer/property owner proposing the new
facility. Nonetheless, there may be circumstances where the
General Manager determines that it is appropriate for the
District to participate in the cost of a non-Master Plan
facility. Typical reasons would be in order to accommodate
future growth or betterment of the system. In these instances,
the District may establish special fees to recover the
reimbursement costs from benefiting property owners as they
connect to the system.
The District may reimburse the developer/property owner for
construction costs if the project meets the following criteria
and guidelines:
1.The General Manager has determined that it is appropriate
for the District's customers to participate in the
construction of the project.
2.The developer/property owner shall obtain three (3) bids
from qualified contractors and provide copies of the
initial bids to the District. The developer/property owner
is responsible for selecting the lowest responsive bidder.
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Policy
Number
Date
Adopted
Date
Revised
Subject
DISTRICT ADMINISTRATION OF
REIMBURSEMENT AGREEMENTS 26 02/10/93 06/01/16
Page 8 of 9
The developer/property owner will be reimbursed for the CIP
portions of the project based on the unit prices submitted
with the lowest responsive bid.
3.A nexus study will be performed by the District to identify
property owners who may benefit from the construction of
the proposed facility.
4.Prior to the public notice being sent to the property
owners affected by the Reimbursement Agreement, an
informational Staff Report shall be presented to the Board.
5.The District shall provide notice to all property owners
which will be subject to the reimbursement charge. These
properties will then be responsible to pay their fair share
of the cost of the facilities, plus interest, at such time
as they connect to the system.
6.The developer/property owner shall request and execute the
Reimbursement Agreement with the District prior to awarding
any contracts for construction.
7.Each Reimbursement Agreement requires approval by the
Board. A Staff Report shall be prepared and reviewed with
the Finance Department prior to presentation to the Board
for approval.
8.Except as provided below, the District will pay 100 percent
of the reimbursement cost after the General Manager accepts
the project.
9.The District may elect to finance the facilities by
borrowing, if it is determined that borrowing is in the
best interest of the District's customers.
10.If for any reason reimbursement funds are not available at
the time the project is operationally complete, the
District may elect to defer the reimbursement until the
General Manager determines that it is appropriate to make
payments.
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Policy
Number
Date
Adopted
Date
Revised
Subject
DISTRICT ADMINISTRATION OF
REIMBURSEMENT AGREEMENTS 26 02/10/93 06/01/16
Page 9 of 9
11.Funds for reimbursement shall be carried as a CIP until the
reimbursement has been made.
12.This type of Reimbursement Agreement contains no end date
for the collection by the District of its contributed share
of the cost, and shall be the responsibility of all current
and subsequent property owners.
13.District staff shall collect the reimbursement amount due
at the same time the standard District capacity fees for
the new service are collected.
14.If the Reimbursement Agreement expires prior to acceptance
of the facilities by the District or prior to payment of
reimbursement, the developer/property owner shall no longer
be entitled to reimbursement. The developer/property owner
may submit new documentation and request that the District
enter into a new reimbursement agreement. If the District
agrees to enter into a new reimbursement agreement for the
facilities, however, the District may revise the terms and
amounts of reimbursement at its discretion based on
information available at the time of the request.
15.All reimbursement requests shall be submitted to the Board
for consideration and shall not be processed without prior
Board approval.