Fontana City Council
September 26, 2023

Regional Sewage Service Contract
With Exhibits
Dated _______, 2023

Table of Contents
i

SECTION 1 - DEFINITIONS ....................................................................................................2 SECTION 2 - RIGHTS AND OBLIGATIONS ..........................................................................8 SECTION 3 - COMMUNITY SEWER SYSTEMS ....................................................................8 SECTION 4 - RESERVED ........................................................................................................8 SECTION 5 - REQUESTS FOR REGIONAL INTERCEPTORS AND WASTEWATER TREATMENT PLANTS .....................................................................................8 SECTION 6 - REGIONAL SEWERAGE SYSTEM; PROHIBITED DISCHARGES .............. 10 SECTION 7 - REGIONAL PRETREATMENT PROGRAM ................................................... 12 SECTION 8 - RESERVED ...................................................................................................... 12 SECTION 9 - CAPITAL FINANCING OF REGIONAL SEWERAGE SYSTEM ................... 12 SECTION 10 - FORECASTING AND PLANNING ................................................................ 18 SECTION 11 - AVAILABILITY OF REGIONAL SYSTEM; IEUA’s PEFORMANCE ......... 21 SECTION 12 - EXTRA-TERRITORIAL SEWER SERVICE .................................................. 22 SECTION 13 - DELIVERY POINTS: CONNECTION COSTS .............................................. 23 SECTION 14 - DETERMINATION OF SEWAGE DELIVERIES: COSTS OF MEASURING EQUIPMENT ........................................................................... 24 SECTION 15 - CONTROL, PRODUCTION, AND DISPOSITION OF RECYCLED WATER ............................................................................................................ 25 SECTION 16 - RESERVED .................................................................................................... 28 SECTION 17 - SERVICE CHARGES FOR MAINTENANCE AND OPERATION OF THE REGIONAL SEWERAGE SYSTEM ....................................................... 28 SECTION 18 - RESERVED .................................................................................................... 30 SECTION 19 - REGIONAL SEWERAGE SYSTEM BUDGETS ............................................ 30 SECTION 20 - BILLING AND PAYMENT OF SERVICE CHARGES .................................. 32 Table of Contents
(continued)

SECTION 21 - RESERVED .................................................................................................... 34 SECTION 22 - RESERVED .................................................................................................... 34 SECTION 23 - GRANTS AND FINANCIAL ASSISTANCE .................................................. 34 SECTION 24 - REGIONAL POLICY COMMITTEE .............................................................. 35 SECTION 25 - REGIONAL TECHNICAL COMMITTEE ...................................................... 36 SECTION 26 - DISPUTE RESOLUTION ............................................................................... 37 SECTION 27 - EFFECTIVE DATE OF CONTRACT ............................................................. 38 SECTION 28 - TERM OF CONTRACT .................................................................................. 38 SECTION 29 - RENEWAL ..................................................................................................... 39 SECTION 30 - AUTHORIZATION AND EXECUTION OF SEWAGE SERVICE CONTRACT ..................................................................................................... 40 SECTION 31 - NOTICE .......................................................................................................... 41 SECTION 32 - PARTIAL INVALIDITY ................................................................................. 42 SECTION 33 - INCORPORATION OF RECITALS ................................................................ 42 SECTION 34 - COUNTERPARTS .......................................................................................... 42

RECITALS

A. WHEREAS, the parties previously entered into that certain Chino Basin Regional Sewage Contract, dated as of January 2, 1973, and amended April 12, 1984 and October 19, 1994; and B. WHEREAS, said contract provided an effective term of 50 years and lapsed on January, 2, 2023; and
C. WHEREAS, the parties wish to enter into a new Regional Sewage Service Contract effective immediately; and
NOW THEREFORE, the parties agree as follows:

SECTION 1 - DEFINITIONS
Unless otherwise required by the context, various terms used in this Contract , including the recitals, shall have the meanings set forth in this section. The singular number includes the plural and the plural the singular.
“Acquire” or “Acquisition” means to acquire or make the acquisition of one or more of the following:

A. Fee simple title to land.

B. Any interest in land by deed, easement, lease, sublease, contract or otherwise.

C. Title to or any interest in any existing facilities located upon land.

D. Interests or capacity rights in any land or facilities owned by others. “Capacity Demand ” means the volume and strength (i.e., biochemical oxygen demand and suspended solids) of sewage discharged from the Community Sewer System of a Contracting Agency into the Regional Sewerage System.
“Capital Capacity Reimbursement Account ” means the accounts established and maintained by the Contracting Agencies and to which are deposited or credited Capital Capacity Reimbursement Payments.
“Capital Capacity Reimbursement Payment ” means a deposit or credit made to the Capital Capacity Reimbursement Account of a Contracting Agency for new connections to its Community Sewer System.
“Chino Basin” means that area underlain by the Chino and Cucamonga groundwater basins and that portion of the Claremont Heights groundwater basin within San Bernardino County which groundwater basins are described in Bulletin No. 53 of the California Division of Water Resources, dated March, 1947, and entitled “ South Coastal Basin Investigation - Overdraft on Groundwater Basins.”

“Commercial Unit” means a building, establishment or premises where businesses selling goods or providing professional or other ser vices to the public or governmental offices are or will be located.
“Community Sewer System ” means all facilities owned, controlled or operated by a S ewage Collection Agency for the purpose of collecting and conducting sewage to a Delivery Point , including collector sewers conducting sewage from the originating premises, trunk sewers conducting sewage from tributary collector sewers or other trunk sewers and any facilities appurtenant to the foregoing.
“Contracting Agency” means any Sewage Collection Agency located, in whole or in part, within the boundaries of IEUA which has entered into this Regional Sewage Service Contract with IEUA. "Demand Deficit ” means the difference between the aggregate total Forecasted Demand of a Contracting Agenc y and the total aggregate Equivalent Dwelling Units connected to its Community Sewer System during an eight -year period commencing with the fifth fiscal year preceding the fiscal year for which IEUA is at the time of the determination of such difference preparing a Ten-Year Sewer Capital Forecast, and including the initial three fiscal years of such Ten-Year Sewer Capital Forecast.
“Delivery Point” means the transfer point at which Sewage is delivered from a Community Sewer System into the Regional Sewerage System.
“Dispose” or “Disposal” means any process or method for the elimination or beneficial use of Sewage and any Effluent or solid waste residuals thereof, including exportation from the Chino Basin.
“Effluent” means the liquid outflow at the discharge point of any Regional Treatment Plant. “Equivalent Dwelling Unit ” or “EDU” means a measure of sewage flow equivalent in quantity and strength to the daily flow of an average single -family household determined by resolution of the Board of Directors of IEUA and referred to as Exhibit “J” hereto.

“Expansion” means the acquisition or construction of new facilities for the Regional Sewerage System and the making of any replacements, betterments, additions or extensions of the Regional Sewerage System.
“Facilities” means any pipelines, buildings, structures, works, improvements, fixtures, machinery, equipment, or appliances and any real property, or interests therein, necessary or convenient for the construction, maintenance and operation of any of the Regional Sewerage System. “Fiscal Year” means a 12-month period commencing on July 1 and ending on the following June

30. “Forecasted Demand” means the yearly forecasted or estimated volume and strength of sewage discharged from the Community Sewer System of a Contracting Agency into the Regional Sewerage System as set forth in a Ten-Year Sewer Capital Forecast. “IEUA” means the Inland Empire Utilities Agency, a municipal water district. “Industrial Unit” means a building, establishment, or premises where manufacturing, fabrication or assembly operations or industrial or chemical processes are conducted. “Industrial Waste” means any wastewater and any water borne solid, liquid, or gaseous wastes resulting from any producing, manufacturing, or processing operations of whatever nature as more particularly defined, from time to time, by any federal, state, or regional agency authorized by law to prescribe quality standards for the discharge of sewage effluent and industrial waste effluent within the Chino Basin.
“Non-Domestic Waste” means waste or wastewater discharged into the Community Sewer System of a Contracting Agency which has a greater concentration of total dissolved solids or biochemical oxygen demand or any other constituents limited by IEUA than the waste or wastewater discharged from the typical single family domestic household in the Contracting Agency’s Service Area.

“Orange County Judgment ” means the judgment entered in the action entitled Orange County Water District v. City of Chino, et al. (Case No. 117628, Superior Court, County of Orange). “Recycled Water” means as defined in Title 22, Division 4, Chapter 3, Water Recycling Criteria, Section 60301.050 et seq., of the California Code of Regulations; water which is available as a result of the treatment of wastewater. Also as described in subdivision (n) of Section 13050 of the Water Code of the State of California, treated wastewater that is suitable for direct beneficial use or a controlled use that would not otherwise occur.
“Regional Interceptor ” includes, but is not limited to, pipelines, facilities and appurtenances which receive sewage from the most downstream trunk or collector sewer of a Community Sewer System, or a portion thereof, for the purpose of transmitting the sewage to a Regional Treatment Plant or to any other point of disposal, and any facilities appurtena nt thereto, or any sewer which is utilized for the transmission of the sewage of two or more Contracting Agencies to such a plant or point of disposal.
“Regional Policy Committee” means the committee provided for in Section 24 hereof “Regional Sewerage System” means all facilities owned, controlled, or operated by IEUA and any interest or capacity rights of IEUA in facilities owned, controlled, or operated by others, for the purpose of transmitting, treating and/or disposing of Sewage, including interceptor sewers, sewage treatment and disposal plants, facilities for the Disposal of Effluent and solid waste residuals and any facilities appurtenant to the foregoing. The Regional Se werage System does not include the Recycled Water system which is owned, operated, managed, and maintained by IEUA . T he Regional Sewerage System shall include all other disposal facilities which are required to meet the requirements of the National Pollutant Discharge Elimination System Permit or permits or Waste Discharge Requirements issued to IEUA by the Regional Water Quality Control Board, Santa Ana Region, for the operation of the Regional Treatment Plants. “Regional Technical Committee” means the committee provided for in Section 25 hereof.

“Regional Treatment Plant” means a sewage and wastewater treatment plant operated by IEUA as part of the Regional Sewerage System.
“Regional Wastewater Capital Improvement Fund ” means the fund of IEUA into whic h is deposited all Supplemental Capital Outlay Funds received by IEUA from the Contracting Agencies for the acquisition, construction, improvement, and expansion of the Regional Sewerage System.
“Residential Unit” means a single -family residence, a condomi nium unit, an apartment unit or other such structure or portion thereof which is equipped and suitable for human habitation or a mobile home space in a mobile home park, not including, however, transient lodging rooms in motels or hotels which are considered to be commercial units. “Santa Ana River (SAR) Base Flow Obligation ” means the obligation established under the Orange County Judgment and defined under the Prado Settlement, Stipulations and Orders of Dismissal re Certain Defendants and Cross-Defendants (filed April 17, 1969), and the October 2, 1968, CBMWD – WMWD Agreement re Satisfaction of Joint Obligation Prado Settlement (“Allocation Agreement ”), the October 28, 1968 Agreement between Chino Basin Municipal Water District and City of Pomona re the Prado Settlement, and the December 18, 1968 Agreement Between Western Municipal Water District of Riverside County and City of Corona in Regard to Prado Settlement (collectively “Settlement Agreement”) , which obligation defines the shared responsibility for a Base Flow obligation at Prado Dam between IEUA and Western Municipal Water District. IEUA implements the Chino Basin portion of the Settlement Agreement which is commonly referred to as the Santa Ana River (“SAR”) Base Flow obligation at Prado. “Service Area” means all territory now or hereafter served by the Community Sewer System owned, controlled or operated by any Contracting Agency. The IEUA service area includes the Cities of Chino, Chino Hills, Fontana, Montclair, Ontario, Upland, and the Cucamonga Valley Water District.
“Service Contract ” means this Chino Basin Regional Sewage Serv ice Contract and any substantially similar contract between IEUA and a Contracting Agency providing for the

Transmission, Treatment and Disposal of sewage from the Contracting Agencies by means of the Regional Sewerage System.
“Sewage” means any liquid waste and water borne solid waste resulting from residential, commercial, industrial, or institutional activities or uses. “Sewage Collection Agency” means any county, city or special district, other than IEUA, which is located in whole or in part within the IEUA Service Area and which is authorized to own, control and operate a Community Sewer System.
“Sewer” means any pipeline conducting sewage, either by gravity or by pressure, and any facilities appurtenant thereto.
“Sewer User Charge” means any charge, fee, rental, or rate, excluding property taxes and Capital Capacity Reimbursement Payments, which is imposed on and collected from the owner, lessee, or occupant of property for providing services and facilities of any Community Sewer System or the Regional Sewerage System, or both.
“Supplemental Capital Outlay Funds ” means contributions by a Contracting Agency from its Capital Capacity Reimbursement Account reserves to IEUA to supplement the funding of the planning, design and construction of Regional Sewerage System capital improvement projects. “Transmit” or “Transmission” means the conducting (i) of Sewage from any Delivery Point to a Regional Treatment Plant or other point of Disposal or (ii) of Effluent from a Regional Treatment Plant to a point of Disposal;
“Treat” or “Treating” or “Treatment” means any process or method for altering the quality of Sewage and/or Effluent to meet applicable regulatory standards for Disposal or beneficial reuse. “Wastewater Treatment Plant ” or “ WWTP” means a sewage and wastewater treatment plant constructed by a Contracting Agency and is not a part of the Regional Sewerage System.

SECTION 2 - RIGHTS AND OBLIGATIONS
The Contracting Agencies shall have the right to deliver all Sewage collected by its Communi ty Sewer Systems to the Regional Sewerage System and IEUA shall have the obligation to receive into the Regional Sewerage System all Sewage so delivered by the Contracting Agency subject to the provisions of this contract.

SECTION 3 - COMMUNITY SEWER SYSTEMS
Each Contracting Agency shall be responsible for all costs and expenses of the acquisition, construction, operation, and maintenance of its Community Sewer System.

A. Inspection of Facilities
Any authorized officer or employee of IEUA may enter and inspect any part of the Community Sewer System of any Contracting Agency during normal working hours on regular business days and upon the giving of not less than 24 hours prior notice of the inspection, except during emergencies.

SECTION 4 - RESERVED
SECTION 5 - REQUESTS FOR REGIONAL INTERCEPTORS AND

WASTEWATER TREATMENT PLANTS
Regional Interceptors are a part of the Regional Sewerage System and their design and construction or acquisition shall be financed as provided in Section 9 hereof. Separate from the Regional Sewerage System, a Contracting Agency may construct, own and operate a wastewater treatment plant (“WWTP”) or permit another person, firm or corporation to construct a WWTP which will be controlled and operated by the Contracting Agency when to do so is not detrimental to the operation of the Regional Sewerage System. The IEUA Board shall consider requests for Regional Interceptors and Contracting Agency construction of WWTPs pursuant to the following procedures:

A. Request To IEUA – Regional Interceptor and Contracting Agency Construction of WWTP.

1. Any Contracting Agency may make a written request to IEUA for a determination as to the location of a new Regional Interceptor, an acquisition of an existing Regional Interceptor, or the construction of a WWTP.

2. Notification. IEUA sh all provide the Regional Technical Committee notice of written request from the Contracting Agency within 45 days of its receipt.

3. Determination by IEUA. IEUA shall review and determine whether the action proposed in the request will be detrimental to the operation of the Regional Sewerage System and present an informational item with a recommendation to the Regional Technical Committee for the request.

4. Recommendation By Regional Technical Committee. The Regional Technical Committee shall review the request and determination by IEUA and shall provide a recommendation to the Regional Policy Committee as an informational item.

5. Review and Recommendation By Regional Policy Committee. The Regional Policy Committee shall review the recommendation from the Reg ional Technical Committee and issue its own recommendation to IEUA regarding the request.

B. Determination by the IEUA Board.

The IEUA Board shall review and consider the Regional Policy Committee’s recommendation for the request, and shall issue its final determination. The failure of the Regional Technical Committee or the Regional Policy Committee to take action on the request shall not preclude IEUA from taking action on the request.

C. Request For Hearing.

Any Contracting Agency, that disagrees with the determination may file a written request for a hearing before the IEUA Board.

D. Cost/Expense of Contracting Agency WWTP.

A Contracting Agency which constructs a WWTP shall be solely responsible for the cost and expense of the construction and maintenance and operation of said plant. Any such WWTP which is constructed and owned by a Contracting Agency shall not be operated by IEUA as a part of the Regional Sewerage System without the written consent of all other Contracting Agencies and IEUA.

E. Operation And Maintenance of Contracting Agency WWTP.

A Contracting Agency which constructs a WWTP may enter into a contract with IEUA for the maintenance and operation of the plant subject to the terms and conditions agreed to by the parties. In the event a C ontracting Agency and IEUA enter into such a contract, the budgeting and funding for the maintenance and operation of the plant shall be accounted for separately by IEUA in order to prevent any adverse impact on the Regional Sewerage System or any impact on the rates and charges imposed by IEUA under this Service Contract.

SECTION 6 - REGIONAL SEWERAGE SYSTEM; PROHIBITED DISCHARGES IEUA shall own and operate a Regional Sewerage System for the Transmission, Treatment and Disposal of Sewage delivered by any Contracting Agency. The Regional Sewerage System, including any interests or capacity rights of IEUA in facilities owned, controlled or operated by others, shall be as shown or described in the IEUA Wastewater Facilities Master Plan, as amended from time to time, and is intended to accept domestic waste.

Use of the Regional Sewerage System by industrial users discharging process wastewater shall be governed by Ordinance No. 109, or any successors thereof.

Except as may be specifically provided on a temporary basis, no Contracting Agency shall discharge or cause to be discharged in the Regional Sewerage System any waste which exceeds or results in the inability of the wastewater treatment plant effluent to meet the wastewater discharge

requirements presently established by any State or Federal regulatory agency, or which may be adopted in the future.

A Contracting Agency shall not discharge wastewater, in quantities or concentrations, alone or in conjunction with a discharge or discharges from other sources that cause the pH of the wastewater entering the headworks of any Regional Treatment Plant to decrease below 6.0 Standard Units at any time.

A Contracting Agency shall not discharge wastewater, in quantities or concentrations, alone or in conjunction with a discharge or discharges cause an increase in temperature of a Regional Treatment Plant’s influent to be above 90 degrees Fahrenheit , which normally occurs during the period of June through October, nor above 78 degrees Fahrenheit during the remainder of the year.

IEUA shall pay all costs and expenses incurred in the acquisition, construction, maintenance, and operation of the Regional Sewerage System. Each Contracting Agency shall, as provided in Section 17 hereof, pay to IEUA service charges representing a pro rata share of all net audited costs incurred by IEUA in the maintenance and operation of the Regional Sewerage System, and each Contracting Agency shall contribute Supplemental Capital Outla y Funds to IEUA for the improvement and expansion of the Regional Sewerage System as provided in Section 9 hereof.

Expansion of the Regional Sewerage System is done to accommodate growth and development within the respective Contracting Agency’s service area and is based largely on growth projections and requests for expansion from the Contracting Agencies. Accordingly, voluntary withdrawal of wastewater flows by one or more Contracting Agencies could be detrimental to the Regional Sewerage System by creating stranded assets and resulting in increase d costs to the remaining Contracting Agencies. Nevertheless, should a voluntary withdrawal of flows from the Regional Sewerage System occur, the impact of the withdrawal will be calculated by IEUA and an impact fee will be assessed against the withdrawing Contracting Agency.

SECTION 7 - REGIONAL PRETREATMENT PROGRAM
IEUA owns and operates the Regional Sewerage System facilities that are regulated by National Pollutant Discharge Elimination System ( NPDES) permits issued by the Regional Water Quality Control Board, and which are subject to numerical discharge limitations and requirements. Those permit regulations and discharge limitations require the control and restrictions to the discharge of industrial wastewater on Significant Industrial Users (SIUs). Furthermore, the permit regulations require IEUA to implement pretreatment regulations in all jurisdictions tributary to IEUA’s service area. The regional pretreatment program requirements between IEUA and the Contracting Agencies shall be established by resolution of the Board of Directors of IEUA and in Ordinance No. 109 and any successors thereof.

SECTION 8 - RESERVED
SECTION 9 - CAPITAL FINANCING OF REGIONAL SEWERAGE SYSTEM A. General
The Regional Sewerage System and any improvement or expansion of that system will provide benefits to the entire territory served by that system in that the entire territory will be benefited by the protection of public health, the protection of the quality of water sources, the improvement of water management through integrated use of all sources of water supply, including sewage treatment plant effluent, the improv ement of general conditions for individual, residential, commercial and agricultural development and the reduction in costs for the Transmission, Treatment, and Disposal of Sewage by the pro rata sharing of all costs incurred by IEUA in the maintenance and operation of the Regional Sewerage System.

The acquisition, construction, improvement, and expansion of the Regional Sewerage System shall be financed with real property tax revenues, revenues from capital capacity fees, sewage service charges levied by the Board of Directors of IEUA, grants and other financial assistance which may be available from any federal, state, local or other source, Supplemental Capital Outlay Funds contributed by the Contracting Agencies.

B. Taxes, Sewage Service Standby or Availability Charges The Board of Directors of IEUA may fix, levy, and collect sewage service standby or availability charges for the purpose of financing the acquisition, improvement, and expansion of the Regional Sewerage System. The IEUA Board of Directors will adopt a property tax allocation plan, which will remain in effect until amended in IEUA’s discretion. The IEUA Board of Directors may elect to add, consolidate, or rename funds as necessary to best manage the IEUA funds.

At the time of review of fund budgets , IEUA shall develop a plan that includes the basis for the tax allocation . IEUA shall inform the Regional Technical Committee and Regional Policy Committee of any proposed allocations of the property tax revenues intended for the Regional Wastewater Capital Improvement Fund and will consider input and recommendations from the committees prior to making a final determination.

C. Capital Capacity Reimbursement Account and Capital Capacity Reimbursement Payments

1. General
As a condition to sewage treatment service and for the purpose of providing Supplemental Capital Outlay Funds to IEUA, each Contracting Agency shall establish and maintain a Capital Capacity Reimbursement Account to which the Contracting Agency shall deposit or credit its Capital Capacity Reimbursement Payments. The amounts so deposited or credited by a Contracting Agency to its said account shall be used by the Contracting Agency only for the purpose of providing Supplemental Capital Outlay Funds to IEUA; provided that interest ea rned on such amounts shall not be so restricted and may be used by the Contracting Agency for any lawful purpose. The source of Capital Capacity Reimbursement Payments shall be at the discretion of each Contracting Agency.

2. Capital Capacity Reimbursement Payments
Each Contracting Agency shall have deposited or credited to its Capital Capacity Reimbursement Account a Capital Capacity Reimbursement Payment for each connection which has been or will

be made to its Community Sewer System or for each change in use of an existing commercial or industrial connection in an amount determined as follows:
a. The amount of the Capital Capacity Reimbursement Payment for each new connection to a Contracting Agency’s Community Sewer System and for each change in use of any existing Commercial Unit or Industrial Unit which results in an increase in volume or strength of Sewage therefrom shall be determined by computing the number of Equivalent Dwelling Units therefor as provided in that document approved by Resolution of the Board of Directors and identified as “Exhibit J” and made a part hereof and applying the then current Capital Capacity Reimbursement Payment amount as established by the IEUA Board to each such EDU.
b. Notwithstanding the preceding provisions, the amount which a Contracting Agency is required to have deposited in or credited to its Capital Capacity Reimbursement account for any such new connection or change of use shall be reduced by payments, if any, made by the Contracting Agency to IEUA for the new connection or change of use to support Supplemental Capital Outlay Payments, made at IEUA’s request.
c. A Capital Capacity Reimbursement Payment shall be deposited or credited to a Contracting Agency’s Capital Capacity Reimbursement Account for such a new connection or change of use at the time of the issuance of a building permit or a sewer connection permit, or for changes in the use of existing Commercial Units and Industrial Units, or the permits required therefor. Upon request by a Contracting Agency, IEUA will review , with support and consultation as needed from the Building Activity Report (BAR) Subcommittee, fee calculations and collections by any Contracting Agency for any errors, within 30 days from the receipt of the monthly building activity report, as further described herein, unless a more expedited review is requested by Contracting Agency. In the event a Contracting Agency fails to deposit Capital Capacity Reimbursement Payments into the Contracting

Agency’s Capital Capacity Reimbursement Account by the applicable deadlines, the Contracting Agency shall be required to make late payments in amounts which correspond to the adopted EDU rate in place at the time that said payments first became due and owing.

3. Capital Capacity Reimbursement Reports
a. Each Contracting Agency shall report monthly to IEUA, at such time as IEUA shall designate, the balance of the funds in its Capital Capacity Reimbursement Account as of the last day of the preceding month. Such monthly reports shall be in writing and shall include the calculation sheets and also contain the number of building permits and sewer permits which were issued in the Contracting Agency’s Service Area during the preceding month and estimated volume of Sewage flows for all residential, commercial, and industrial connections within the Contracting Agency’s Service Area for the current month and the cumulative total thereof. Commercial and industrial sewer connection permits shall be listed by individual permit with the number of fixture units and expected volume and strength of sewage for each permit.

IEUA shall have 30 days from receipt of said reports to contact the applicable Contracting Agency with any questions or requests for clarification regarding the connection fee calculations reflected in said report. b. IEUA shall maintain a summary accounting of the Capital Capacity Reimbursement Account reserves of all Contracting Agencies and shall make written semiannual reports to the Contracting Agencies on or before 1) July 15 (with actuals up to March 31) and January 15, (with actuals up to September 30) of each fiscal year. The reports shall include: (i) the amounts of the Capital Capacity Reimbursement Account reserves of all Contracting Agencies as of the last day of March and September respectively , (ii) the amount of the Regional Wastewater Capital Improvement Fund reserves as of the last day of March and September respectively , (iii) a summary of all expenditures from said fund incurred up to March and September respectively

for each Regional Sewerage System capital improvement project then in progress, (iv) an estimate of the amounts to be expended from said fund for each such project during the quarter then com mencing or in progress (the “current quarter”), (v) the estimated amount of Supplemental Capital Outlay Funds, if any, which will be necessary for the Contracting Agencies to contribute to IEUA during the current quarter in order to provide a working capital balance in said fund which shall not exceed $5,000,000 on the last day of the quarter next succeeding the current quarter, and (vi) the amount, if any, of the contribution of Supplemental Capital Outlay Funds for each Contracting Agency for the current quarter, determined as provided in subparts E and F of this Section.

D. Determination of Demand Deficits
At the time of the preparation of each Ten -Year Sewer Capital Forecast, pursuant to Section 10 hereof, IEUA shall determine each Contracting Agency's De mand Deficit, if any. The determination of Demand Deficits pursuant to this subpart is for the sole purpose of allocating shortages in Supplemental Capital Outlay Fund payments as provided in subpart F of this Section.

Except as provided in said subpart F, such determinations shall not result in the creation of an obligation or indebtedness on the part of any Contracting Agency to IEUA or other Contracting Agencies.

E. Supplemental Capital Outlay Fund Payments
On July 15, and January 15, of any fiscal year IEUA may require payment by each Contracting Agency from its Capital Capacity Reimbursement Account of Supplemental Capital Outlay Funds for the planning, design and construction of Regional Sewerage System capital improvement projects in the amount, if any, set forth for the Contracting Agency in the semiannual report due from IEUA on such date. Upon receiving such a demand from IEUA, each Contracting Agency shall pay the amount demanded to IEUA within 45 days of receipt of such demand. The amount of each Contracting Agency’ s proportionate share of the total amount of Supplemental Capital Outlay Funds demanded by IEUA from all Contracting Agencies shall be determined based on the

percentage which the amount of Supplemental Capital Outlay Funds demanded by IEUA from all Contracting Agencies is to the total amount of the current Capital Capacity Reimbursement Account reserves of all Contracting Agencies set forth in the semiannual report upon which the demand is based. The amount demanded by IEUA from each Contracting Agency on any such date shall be an amount determined by applying the percentage thus obtained to the balance of the reserves, not including interest, in the Contracting Agency’ s Capital Capacity Reimbursement Account set forth in the semiannual report upon which the demand is based. All amounts received by IEUA from the Contracting Agencies as Supplemental Capital Outlay Funds shall be deposited in or credited to the Regional Wastewater Capital Improvement Fund. All such amounts together with all interest earned thereon shall be available and utilized by IEUA solely for the purpose of financing the acquisition, improvement and expansion of the Regional Sewerage System.

F. Allocation of Supplemental Capital Outlay Fund Shortages If at the time of any demand by for Supplemental Capital Outlay Funds, pursuant to subpart E of this Section, there are not sufficient funds deposited or credited to the Capital Capacity Reimbursement Accounts of all Contracting Agencies to pay the full amount of the demand, each Contracting Agency which has a Demand Deficit shall pay the full balance then deposited or credited to its Capital Capacity Reimbursement Account plus an amount determined based on the percentage which the amount of its Demand Defic it is of the total Demand Deficit for all Contracting Agencies . The amount to be paid by each such Contracting Agency shall be determined by multiplying the difference between, the Supplemental Capital Outlay Fund demand and the total amount of the Capital Capacity Reimbursement Account balances of all Contracting Agencies by the percentage thus determined.

G. Audit Process
The audit process for collection of connection fees by Contracting Agencies is intended to verify accuracy and uniformity in practices regionwide and to improve future performance. The audit and BAR review processes may result in IEUA and the Contracting Agencies working collaboratively to reconcile any discrepancies in connection fees from the Residential, or

Commercial or Industrial Unit. Contracting Agencies may be audited by IEUA on an annual basis, as well as periodically through the Building Activity Reports Subcommittee as described below.

H. Building Activity Reports and Building Activity Reports Subcommittee There shall be created a Building Activity Reports ( “BAR”) Subcommittee comprised of a staff/employee representative from IEUA and also from of each Contracting Agency who elects to participate . The Contracting Agency representative may be changed by the applicable Contracting Agency at any time. IEUA will convene the BAR Subcommittee quarterly to complete a more extensive review of a percentage of applications for which connection fees have been calculated and collected. The percentage of applications to be reviewed will be determined by the BAR Subcommittee. The review by the BAR Subcommittee may include such reviews as, but not limited to, an in -depth look at the collection fee calculation methodology, approach for calculating connection fees for similar facilities (e.g. - facilities that have an embedded restaurant and other services), monthly sewer fee collections, for region wide consistency.

SECTION 10 - FORECASTING AND PLANNING
A. Contracting Agency Reports

1. Monthly Reports
On such date as IEUA may designate, each Contracting Agency shall submit to IEUA monthly reports of sewered building activity. Each such report shall contain the following information in a format which will allow tracking through the development process:
a. The number of building permits issued during the month for structures which will contribute sewage to the Regional Sewerage System; b. Estimate volume of sewage and EDUs for such building permits; c. The tract number and number of lots for each tentative tract map approved during the month;
d. The tract number and number of lots or dwelling units for each final tract map

recorded during the month;
e. The number of final inspections or certificates of occupancy issued during the month for structures which will c ontribute sewage to the Regional Sewerage System;
f. The estimate volume of sewage and EDUs for all such structures.

B. IEUA Reports

1. Annual Forecast
IEUA shall work collaboratively with the individual Contracting Agencies to ensure they are using the most recent planning and other documents and incorporating agency knowledge about their service area into the Annual Forecast. On a biennial basis , prior to the first regularly scheduled Regional Technical Committee meeting of that calendar year, IEUA shall provide to the Regional Technical Committee and the Regional Policy Committee the Regional Annual Forecast from the Regional Wastewater Demand Forecast Model or other mutually agreed upon forecasting methodology.

2. Ten-Year Sewer Capital Forecast
On a biennial basis, by no later than the end of June, IEUA shall prepare and deliver to the Regional Technical Committee and the Regional Policy Committee a T en-Year Sewer Capital Forecast which includes dates of commencement and completion of capital improvement projects necessary to enable the Regional Sewerage System to meet the forecasted Capacity Demands of all Contracting Agencies . Such forecasts, hereinafter referred to as the “ Ten-Year Sewer Capital Forecast,” shall include:
a. Projected dates for the commencement and completion of design and construction of capital improvement projects necessary to meet forecasted Capacity Demands;
b. Estimates for each Regional Treatment Plant of the Capacity Demand of each Contracting Agency which received sewerage service the previous F iscal

Year;
c. An estimate of the amoun t of available treatment capacity at the IEUA Regional Treatment Plants;
d. An estimate of the amount of treatment capacity to be added, if any; e. Projected annual expenditures for the design and construction of such projects;
f. The Demand Deficit, if any, of each Contracting Agency; C. Review by Regional Committees

1. Annual Forecast
To ensure accurate forecasting, u pon receipt of the Regional Annual Forecast, the Regional Committees shall review the proposed Capacity Demands and provide input to IEUA within 30 days regarding anticipated development.

2. Ten-Year Sewer Capital Forecast
Upon receipt of the Ten-Year Sewer Capital Forecast, the Regional Committees will have 30 days to review and provide input and the Forecast will be placed on the agenda of both commit tees to provide recommendations to IEUA. Prior to adoption, IEUA shall consider the recommendations of the Regional Policy Committee.

D. Reclaimable Industrial Waste
Proposed new industrial connections to Community Sewer Systems which are expected to discharge more than 25,000 gallons per day of reclaimable industrial waste shall be approved based on the conditions set forth in the Ordinance No. 109 and any successors thereof. The determination of permit requirements and discharge limitations of the reclaimable industrial waste to be discharged into the Regional Sewerage System through an appropriate connection point in a Contracting Agency’s Community Sewer System shall be made by IEUA through the regional pretreatment program, resolution of the Board of Directors of IEUA, and Ordinance No. 109 and

any successors thereof.

E. Major Construction Contracts
IEUA shall not proceed with the award of a construction contract for a budgeted Regional Sewerage System capital improvement project previously approved through the Ten-Year Sewer Capital Forecast, which will involve an expenditure in excess of $10,000,000 (adjusted every 5 years or as needed based on the Consumer Price Inde x beginning in the year 2025) , without informing and considering recommendations from the Regional Policy Committee unless IEUA determines the project is necessary for the safe and efficient operation of the Regional Sewerage System. The latest Ten -Year Sewer Capital Forecast and any requested project details including funding information shall be made available to assist in the Regional Policy Committee’s review.

SECTION 11 - AVAILABILITY OF REGIONAL SYSTEM; IEUA’s

PEFORMANCE
A. Contracting Agencies
The services and facilities of the Regional Sewerage System shall be available to any property within the IEUA Service Area, subject to such terms and conditions as may be prescribed by a Contracting Agency for connection to its Community Sewer System.

B. Other Sewage Collection Agencies
IEUA shall not make the services and facilities of the Regional Sewerage System available, other than on a temporary, emergency basis, to any sewage collection agency which is not a party to a Service Contract until such agency has entered into a Service Contract per Section 30. Prior to entering into any such Service Contract, IEUA shall present the proposed terms thereof to the Regional Technical Committee and Regional Policy Committee for review and comment. Any Contracting Agency may challenge services offered under this part B by invoking the procedures set forth in Section 26 of this Service Contract.

C. IEUA’s Performance
IEUA shall exercise its best effort to implement capital improvement projects necessary to enable the R egional Sewerage System to meet the Forecasted Demands of all Contracting Agencies are planned, designed and constructed in a timely manner and so that the Regional Sewerage System will at all times be able to provide for the Capacity Demands of all Contra cting Agencies. The Contracting Agencies recognize that the timing of the planning, design and construction of such capital improvement projects is largely dependent upon the Contracting Agencies making reasonable accurate projections of increased connections to and usage of their Community Sewer Systems.

SECTION 12 - EXTRA-TERRITORIAL SEWER SERVICE

12.1 SERVICE OUTSIDE THE BOUNDARIES OF IEUA SERVICE AREA A. Upon the Effective Date of this Contract
Any Contracting Agency which, upon the effective date of this contract was furnishing sewer service to any territory outside the boundaries of the IEUA Service Area, may continue to furnish such service and shall be entitled to the services and facilities of the Regional Sewerage System for that purpose. Each Contracting Agency providing sewer service to any such outside territory shall file a map or maps with the secretary of IEUA showing the boundaries of all such territory.

B. After the Effective Date of this Contract
Any Contracting Agency, after the effecti ve date of th is contract, may furnish sewer service to additional territory outside the boundaries of the IEUA Service Area. Prior to furnishing such sewer service, the Contracting Agency shall file a written request with IEUA. IEUA may consider the question of authorizing sewer service to the additional territory, subject to the authorization of the Local Agency Formation Commission for San Bernardino County, and the IEUA Board of Directors shall by resolution authorize sewer service to all or any part of the additional territory by the applicant or applicants unless it determines that such service is not in the public interest.

C. Annual Capital Outlay Charge for Territory Outside IEUA and the Service Area In addition to the payment of service charges, each Contracting Agency providing the services and facilities of the Regional Sewerage System to territory outside the IEUA Service Area shall be obligated to pay IEUA special capital outlay charges for such territory, as provided in subpart C or D of this Section or both such subparts , if both are applicable. Monies received by IEUA in payment of special capital outlay charges shall be deposited or credited to the Regional Wastewater Capital Improvement Fund and utilized, together with all interest earned thereon, solely for the purpose of financing the acquisition, improvement , and expansion of the Regional Sewerage System.

D. Annual Capital Outlay Charge
The Contracting Agency shall annually pay IEUA a special capital outlay charge in an amount equivalent to the amount of the property tax and other revenue which IEUA would have received during the fiscal year if such property were within the IEUA Service Area. Such charge shall be payable by the Contracting Agency during each fiscal year in the am ounts and at the times specified by IEUA.

SECTION 13 - DELIVERY POINTS: CONNECTION COSTS
Each Contracting Agency shall deliver sewage from its Community Sewer System into the Regional Sewerage System at such Delivery Points as may, from time to time, be requested by the Contracting Agency and approved by IEUA. The Delivery Point request may be made by the Contracting Agency or on behalf of a third party. In all Delivery Point requests, the Contracting Agency or third party shall pay applicable plan review and hydraulic/load modeling costs for the evaluation of the impact of the Delivery Point to the Regional Sewage System. The Contracting Agency or third party may also be required to submit a resolution confirming the authorization of annexation from the Local Agency Formation Commission for San Bernardino County or a resolution confirming an irrevocable annexation agreement to the Contracting Agency.

Upon consideration of the information submitted, IEUA may authorize the new Delivery Point.

IEUA shall provide written notice of its recommendation regarding the new Delivery Point at a regularly scheduled Regional Technical Committee meeting. Upon receipt of a favorable report and recommendation from the committee or upon failure of the committee to respond within a 30- day period, IEUA may authorize the new Delivery Point.

If the Regional Technical Committee recommends against a new Delivery Point for any Contracting Agency, they shall do so in writing including the technical basis for their dec ision.

The Contracting Agency may file a written request for a hearing with the secretary of the Board of Directors of IEUA. Upon receipt of such a request, said Board of Directors shall schedule and conduct a hearing in accordance with the provisions of S ection 26 hereof. All costs and expenses of making the connection between the Regional Sewerage System and the Community Sewer System of any Contracting Agency shall be borne by the Contracting Agency and/or third party.

SECTION 14 - DETERMINATION OF SEWAGE DELIVERIES: COSTS OF

MEASURING EQUIPMENT
IEUA shall determine the amount of sewage delivered to the Regional Sewerage System by all Contracting Agencies and shall maintain accurate and complete records thereof. The amo unt of sewage delivered to the Regional Sewer age System by each Contracting Agency shall be determined by IEUA based on a standard daily measurement or contribution per Equivalent Dwelling Unit methodology established by IEUA and the Regional Technical Committee from time to time.

If required by IEUA, a Contracting Agency shall install and maintain and operate at its expense, measuring devices and equipment for measuring the flow of sewage from the Contracting Agency’s Community Sewer System into the Regional Sewerage System. Prior to installation, IEUA shall approve the design of such measuring devices and equipment and shall inspect and approve their installation. Such measuring devices and equipment shall be examined, tested and serviced regularly, but not less than once a year, by IEUA to e nsure their accuracy. At any time IEUA or any Contracting Agency may inspect any such measuring device and equipment and all records and measurements taken therefrom.

The determination of sewage flow or contribution methodology per Equivalent Dwelling Unit contributed by each Contracting Agency shall be reviewed and updated if needed, or as requested by IEUA, but not less than every ten (10) years.

Once the EDU methodology is updated and adopted, EDU and equivalent EDU determinations will be made with the updated methodology. Adjustments in cost allocations among Contracting Agencies and users among customer classes (i.e.- residential, commercial, and industrial) resulting from the updated methodology and determination shall be implemented in consultation with the BAR Subcommittee.

SECTION 15 - CONTROL, PRODUCTION, AND DISPOSITION OF RECYCLED WATER
A. General
IEUA shall have ownership and control of all sewage delivered into the Regional Sewerage System for the purposes of Transmission, Treatm ent, and Disposal, and shall retain the exclusive right over the Recycled Water generated from the sewage delivered to IEUA from the Contracting Agencies, having sole discretion over its use , subject only to those contractual rights of the Contracting Agencies described in this Section 15. It is the intent of IEUA that Recycled Water be put to local beneficial use within the IEUA service area and the Chino Basin to the greatest extent practicable and allowed. The contractual right to purchase Recycled Water is established pursuant to this Section 15 while the terms and conditions regulating the sale, delivery, and use of Recycled Water shall be governed by Ordinance No. 112, or any successors thereof.

B. Contractual Right to Purchase Recycled Water

1. Right of First Purchase
Each Contracting Agency shall have the right of first purchase of Recycled Water as provided herein. The purchase of Recycled Water shall be voluntary and determined at the option of the Contracting Agency from year to year. The right of first purchase shall take

priority over any other Recycled Water purchase agreements between IEUA and customers that are not Contracting Agencies.

Each Contracting Agency shall have the right of first purchase from IEUA of Recycled Water in a total quantity not exceeding the base entitlement of the Contracting Agency.

The total base supply of Recycled Water which is subject to the right of first purchase from IEUA by the Contracting Agencies receiving sewerage service at any Regional Treatment Plant shall be the total quantity of sewage delivered into the Regional Sewerage System by all such Contracting Agencies, measured at the intake point of the Regional Treatment Plants, less normal processing losses resulting from the treatment of sewage, a nd less Recycled Water exported from the Chino Basin by IEUA to satisfy the SAR Base Flow Obligation if and to the extent deemed necessary by IEUA.

Each Contracting Agency shall have a monthly base entitlement to a portion of the total base supply of Recycled Water , said portion being in the proportion that the quantity of sewage delivered into the Regional Sewerage System by the Contracting Agency bears to the total quantity of sewage delivered into the Regional Sewerage System by all Contracting Agencies.

The Contracting Agencies have expressed a desire to achieve equitable distribution of Recycled Water deliveries, especially during periods of high demand. Each Contracting Agency shall manage its Recycled Water usage responsibly during periods of high demand so as not to impede other Contracting Agencies from utilizing all their base entitlement, and to prevent Contracting Agencies from using Recycled Water in excess of their base entitlement as calculated on a monthly basis. R ecycled Water demands in excess of a Contracting Agency’s monthly base entitlement shall not be allowed if it inhibits another Contracting Agency from developing a new Recycled Water use project that would be within their monthly base entitlement. Following the execution of this contract by all Parties, the Regional Technical and Policy Committees will develop an Exhibit “A”, Peak Flow Monitoring and Enforcement Criteria, to be incorporated into this contract, that will

detail the requirements for meeting base entitlement as calculated on a monthly basis .

Authorization of this Exhibit “A” will not require re-authorization of this contract through the Parties. Exhibit “A” shall become an authorized Exhibit of this contract by a two-thirds majority vote of the Regional Policy Committee and approval by the IEUA Board of Directors.

2. SAR Base Flow Obligation.

The Parties have differing views regarding the SAR Base Flow Obligation including, but not limited to the allocation of the obligation and the method and way the obligation is fulfilled. Historically there have been sufficient flows from IEUA Regional Treatment Plant discharges to satisfy base entitlement claims and satisfy the SAR Base Flow Obligation with Recycled Water and it is believed that such condition will continue for the next several years at a minimum. Although alternative sources of water for meeting the SAR Base Flow Obligation are not precluded, IEUA will con tinue its current practice of fulfilling the SAR Base Flow Obligation using Recycled Water from IEUA Regional Treatment Plants in conformity with established practice since inception of the Orange County Judgment, until an alternative acceptable to IEUA is determined. This topic will be reconsidered at the ten -year review provided for in Section 28 of this contract , or earlier upon unanimous consent of the Parties.

IEUA, within its discretion, may prioritize the usage of Recycled Water for meeting the SAR Base Flow Obligation when it is necessary to do so regardless of the effect on base supply for purchase. If the SAR Base Flow Obligation is not met in a given year, IEUA will determine the best course of action to satisfy the SAR Base Flow Obligation the following year, which may include reducing the available base supply. IEUA will satisfy the SAR Base Flow Obligation with the most cost- effective or practical source of water available and seek alternative means of satisfying the SAR Base Flow Obligation in order to maximize available local supplies.

3. Surplus Base Supply.

Surplus base supply is that portion of base supply remaining after each Contracting Agency has exercised its right of first purchase to purchase its base entitlement, or portion thereof.

During and following the end of each year IEUA shall determine the amount of surplus base supply available, if any, for purchase by Contracting Agencies, and s hall notify all Contracting Agencies of that amount, in writing. Each Contracting Agency shall have the option to purchase surplus base supply in an amount calculated utilizing the same ratio used to calculate base entitlement. However, if after offering s urplus base supply to all Contracting Agencies there remains surplus base supply, then a Contracting Agency may purchase from the remaining surplus base supply in an unrestricted amount subject to mutual agreement with IEUA. Nothing herein shall prevent Co ntracting Agencies from establishing agreements to purchase Recycled Water from other Contracting Agencies. The purchase of Recycled Water in excess of a Contracting Agency’s base entitlement in any given year shall not result in an increase in base entitlement for subsequent years.

4. Disposition by IEUA of Unclaimed Recycled Water.

To the extent that any of the Contracting Agencies fail to exercise their respective rights of first purchase of Recycled Water, IEUA may make any lawful use of such Recycled Water, including beneficial use, sale , or other disposition inside or outside the Chino Basin; provided, that, any funds generated by the sale of Recycled Water shall be deposited into the IEUA Recycled Water Fund. IEUA will inform the Contracting Agencies of the use or sale of any unclaimed Recycled Water within 30 days of the transaction.

SECTION 16 - RESERVED
SECTION 17 - SERVICE CHARGES FOR MAINTENANCE AND OPERATION

OF THE REGIONAL SEWERAGE SYSTEM
All Contracting Agencies shall pay service charges for all sewage delivered to the Regional Sewerage System. Each Contracting Agency shall pay its pro rata share of all net audited costs incurred by IEUA in the maintenance and operations of the system. Net audited costs consist of:

A. Maintenance and Operation
Costs of maintenance and operation of all transmission and treatment facilities comprising the Regional Sewerage System; and
B. Other Costs
Any other costs reasonably related to the maintenance and operation of the system; and C. Replacement and Unforeseen Costs
Based upon generally accepted engineering and accounting principles, reasonable reserves for the estimated costs and expenses of:

1. Replacement of any facilities where the costs and expenses of replacement are customarily considered a part of the costs and expenses of extraordinary maintenance which adds to the normal service life of facilities; and

2. Unforeseen contingencies; and

3. Actual costs and expenses incurred by IEUA for the Transmission, Treatment and Disposal of any byproduct resulting from the treatment of the Sewage delivered by a Contracting Agency.

D. Cost Of Service Study (“COSS”)
IEUA may, from time to time, conduct a COSS which shall be conducted in accordance with procedures normally utilized in the public rate setting process and in accordance with applicable law.

E. Proposed Service Charge Rate Adjustment (“Adjustment”) Prior to the imposition of a rate adjustment , IEUA shall conduct a rate workshop wherein Contracting Agencies may express comments and feedback on the matter for consideration by IEUA. Rate adjustments for each fiscal year shall be within the discretion of the IEUA Board of Directors and shall conform to the COSS and applicable law.

SECTION 18 - RESERVED
SECTION 19 - REGIONAL SEWERAGE SYSTEM BUDGETS
A. Fiscal Year Budgets
For each fiscal year, or on a biennial basis if utilized by IEUA, the IEUA Board of Directors shall cause to be prepared and shall adopt a budget, which includes the Regional Sewerage System budget.

B. Form and Content of Budgets
The budget shall contain a plan of financial operations for the Regional Sewerage System and shall contain an estimate of the requirements for expenditures, including provisions for any reserves, and the means of financing such requirements. The budget shall be itemized and shall show in reasonable detail the nature and purpose of each item of revenue and expense and the actual or estimated amount thereof. The budget shall include a plan of financial operations for the capital costs of the acquisition and construction of the Regional Sewerage System, and a plan of financial operation for the maintenance and operation of the system, prepared as follows:

1. Capital Improvement Fund Budget. The costs of the acquisition and construction of the Regional Sewerage System shall show:
a. The various items and amounts of capital costs and the total thereof; b. The total amount in the Regional Wastewater Capital Improvement Fund and the available an d unencumbered balance of such fund as of the commencement of the fiscal year and an estimate of the amount therein and the unencumbered balance thereof as of the end of the fiscal year; c. The amounts, if any, of IEUA revenues from sources other than property taxes which are or will be available for payment of capital costs and the total thereof; d. The estimated amount of property taxes to be received during the fiscal year; e. The projected amount of Supplemental Capital Outlay Fund contributions

required from each Contracting Agency during the fiscal year and the total thereof.

2. Maintenance and Operations Fund Budget. The part covering the maintenance and operation of the Regional Sewerage System shall show:
a. The various items and amounts of maintenance and ope ration expenses , including replacement and rehabilitation, and the total thereof; b. The total amount in any reserves theretofore established, and the available and unencumbered balance in such reserves as of the commencement and end of the fiscal year;
c. The amount of service charges payable by each Contracting Agency and the total paid or payable by all Contracting Agencies;
d. The amounts, if any, of revenue from sources other than services charges which will be available for payment of maintenance and operati on expenses and the total thereof;
e. The total amount required to be raised from service charges for payment of maintenance and operations expenses;
f. The rate of the service charge for the fiscal year(s); g. The amount of any surplus of service charges received by IEUA during the fiscal year preceding the fiscal year in progress in excess of the cost of maintenance and operation of the Regional Sewerage System for that year which was transferred to the Regional Sewerage System Operation and Maintenance Fund re serve for replacement of Regional Sewerage System facilities for such preceding fiscal year, or the amount, if any, of any shortage in the amount of service charges received by IEUA during such preceding fiscal year less than the cost of maintenance and op eration of the Regional Sewerage System for that year which was transferred from said reserve during the year then in progress for such preceding fiscal year;

C. Preparation and Approval of Proposed Budgets
Not later than April 1 of each budgeting year, the IEUA Board of Directors shall direct its General Manager, or such other person or persons as the Board may designate, to prepare and submit to the Board a proposed Regional Sewerage System budget for the next fiscal year (s). IEUA will conduct informational sessions with the Regional Technical and Policy Committees to inform the Committees of the proposed Regional Sewerage System budget and provide the Committees with opportunities for input. Said budget and the rate of service charge fo r the next fiscal year will be considered and adopted by IEUA no later than June 30 of each fiscal year. If the Board of Directors fails to adopt a budget by June 30 then, until such time as the Board shall adopt such budget, the budget last adopted shall constitute the budget for such fiscal year.

D. Adoption of Separate Budgets
Notwithstanding the preceding provisions of this section, the Board of Directors of IEUA may elect for any fiscal year to separately prepare and adopt a Capital Improvement Fund B udget and a Maintenance and Operation Fund Budget. If said Board elects to so proceed, each such separate budget shall be prepared in accordance with the provisions of this section which are applicable thereto. Both said budgets shall be processed and adopted in accordance with the procedures and pursuant to the time schedule set forth in this section.

SECTION 20 - BILLING AND PAYMENT OF SERVICE CHARGES
A. Monthly Billing Statements of Service Charges
Not later than 20 days after the end of each month, each Contracting Agency shall provide to IEUA a report with the number of billable Equivalent Dwelling Units billable to each Contracting Agency. IEUA shall provide a billing statement of service charges to each Contracting Agency, setting forth the number of billable Equivalent Dwelling Units during such month for the service charge rate applicable thereto and the total service charge due and payable to IEUA for said month.

Monthly service charges shall be based on the service charge rate adopted by the IEUA Board.

B. Payment of Statements; Interest on Overdue Payments
Each Contracting Agency shall pay the amount of the service charge set forth in any statement on or prior to its due date, namely, the thirtieth day following the date of the delivery of such statement. In the event that a Contracting Agency is delinquent in payment of bills for service charges, a penalty of ten (10) percent of the original unpaid invoice amount shall be added to any fee or charge that becomes delinquent. Interest at the maximum rate provided by California Government Code Section 926.10 as may be amended from time to time, shall accrue on the total of all delinquent fees or charges.

Additional charges provided herein for delinquent payments may be waived by the Board of Directors upon written request by the IEUA Customer upon a finding that the delinquency was caused by excusable neglect or circumstances beyond the control of the Cont racting Agency , provided that the delinquent Contracting Agency reimburses IEUA for all costs and penalties actually incurred by IEUA as a result of the delinquent payment.

Interest paid upon any delinquent amount shall be credited to the Regional Sewera ge System Maintenance and Operation Fund unless, by reason of such delinquency, IEUA shall have advanced the amount of the delinquency from other sources, in which case, the interest shall be credited to such fund as the IEUA Board of Directors may designate. A Contracting Agency shall not be entitled to withhold payment, in whole or in part, of the amount of any statement for service charges pending action pursuant to part C of this Section 20.

C. Adjustment for Overpayment or Underpayment
Upon disagreement between any Contracting Agency and IEUA over the amount of service charges or the discovery of an error in computation of service charges for a Contracting Agency, which is not resolved within 30 days of communication, IEUA shall request a recommendation from the Regional Technical committee. The IEUA Board of Directors shall consider the recommendation by the Regional Technical Committee and make its determination on service

charge adjustments, due dates and any interest due, and shall provide for the appropriate credit to or debit of any affected Contracting Agency’s service charge account.

D. Deposit of Payments in Maintenance and Operation Fund All monies received by IEUA in payment of service charges s hall be deposited in and credited to a separate fund or account in the treasury of IEUA, to be known as the “Regional Sewerage System Maintenance and Operation Fund. ” All monies in said fund and interest earned thereon shall be used and expended only for payment of maintenance and operation expenses paid or incurred by IEUA under the provisions, of this contract.

SECTION 21 - RESERVED
SECTION 22 - RESERVED
SECTION 23 - GRANTS AND FINANCIAL ASSISTANCE
IEUA and the Contracting Agencies shall exercise their best efforts to obtain the maximum amounts of grants and other financial assistance which may be available from any federal, state, local, or other source for defraying all or any part of the capital costs and the maintenance and operation expenses of the Regional Sewerage System. T he General Manager of IEUA, the Regional Policy Committee, and the Regional Technical Committee shall keep each other fully informed of any available grant or other financial assistance programs known to any of them.

In addition, IEUA shall on a semi -annual basis, submit a report to the Regional Technical Committee and the Regional Policy Committee, as an information item, on any proposed or pending applications (which may include updates on negotiation status) for grants or other financial assistance.

IEUA’s costs for the acquisition, construction, maintenance, or operation of the Regional Sewerage System shall be reduced by amounts of any grants or other non- repayable financial assistance received therefor by IEUA from the federal or state government.

SECTION 24 - REGIONAL POLICY COMMITTEE
The parties desire to provide for a Regional Policy Committee to advise IEUA of the needs and views of the Contracting Agencies concerning IEUA’s policies and activities in the financing, acquisition, construction, maintenance and operation of the Regional Sewerage System, to make reports and recommendations with respect thereto, and to inform the Contracting Agencies concerning such policies and activities. Committee membership shall be voluntary.

Each participating Contracting Agency shall appoint one regular member and one alternate member to the Regional Policy Committee. Such members shall be members of the Contracting Agency’s governing body. The regular and alternate members so appointed shall serve at the pleasure of the appointing agency. Each participating Contracting Agency shall give the secretary of IEUA immediate notice of all appointments and removals made by it , and of the name and contact information of each appointee. IEUA shall appoint one regular me mber and one or more alternates to the Regional Policy Committee. The members so appointed shall be members of the IEUA Board of Directors of IEUA and shall serve at the pleasure of IEUA. The IEUA member shall be entitled to participate at all regular and special meetings of the committee.

The Regional Policy Committee shall be chaired by a regular member of the Regional Policy Committee and shall rotate among its regular members on a biennial basis through all the Contracting Agencies. A Vice Chair shall also be designated to act in the Chair ’s absence. The Vice Chair shall be selected by a majority vote of the regular members. A quorum made up of a majority of members shall be required to conduct business.

Each regular member of the Regional Policy Co mmittee or the Contracting Agency’s alternates, shall have one vote. A majority of members voting shall be required to carry any matter before the committee.

The Regional Policy Committee shall hold a regular meeting quarterly or as needed in the determination of IEUA. The Regional Policy Committee may adopt such procedures and rules as it deems advisable concerning its officers, meetings and the manner and method of making its

reviews, reports and recommendations on any matter affecting the acquisition, c onstruction, maintenance and operation of the Regional Sewerage System.

IEUA shall, if requested by the Regional Policy Committee, provide the Regional Policy Committee with a meeting place and with the services, advice , and assistance of members of its staff. All records, reports, and other information of IEUA pertaining to the financing, acquisition, construction, maintenance and operation of the Regional Sewerage System shall be available for inspection by members of the Regional Policy Committee. IEUA a grees to maintain and make available to the Regional Policy Committee accurate records of all of its costs, disbursements, and receipts with respect to activities under this contract.

SECTION 25 - REGIONAL TECHNICAL COMMITTEE
The parties desire to provide for a Regional Technical Committee to advise the Regional Policy Committee on technical matters related to the Regional Sewerage System . Participation shall be voluntary. The members and alternate members of the Regional Technical Committee shall be appointed by their respective Contracting Agencies and IEUA shall be entitled to appoint one member and alternate member s with the same right of participation as other members. The committee shall hold regular meetings quarterly or as needed in the determination of IE UA.

Appointments and the number of alternates shall be determined in the sole discretion of each Contracting Agency and IEUA as applicable.

The committee may, and upon request by the Regional Policy Committee or IEUA shall, review and make recommendations concerning any of the following technical matters: the acquisition, design, construction, maintenance, operation, or financing of sewer facilities, sewage treatment, reclamation, or disposal facilities, sewage and effluent measuring devices and equipment, Community Sewer Systems and the Regional Sewerage System; sewer user charges; service charges; quality standards for sewage and any effluent; and any other technical matter related to any of the foregoing.

SECTION 26 - DISPUTE RESOLUTION
Members of the Regional Poli cy Committee are encouraged to raise pertinent issues concerning the Regional Sewerage Contract with the IEUA Board of Directors during the public comment period of a regularly scheduled meeting of the Board. To the extent that any provision of this contract authorizes a hearing under this Section 26, the following procedures will apply:

A. Notice of Dispute.

The Regional Policy Committee, through a majority vote of its members, may request a hearing before the IEUA Board of Directors on any dispute related t o the IEUA’s performance of this Contract or where the Contract authorizes a hearing by submitting a request in writing to the General Manager of IEUA, with the date of delivery of such request deemed the submission date. The request shall state the issue in dispute and a brief explanation of the Regional Policy Committee position on the matter.

B. Notice of Hearing.

Within 30 days of the submission date IEUA shall schedule a hearing to consider the matter. IEUA shall send written notice to all Contracting Agencies by First Class Mail and shall be deemed to have been given when so deposited in the United States Mail, postage prepaid. The notice shall set forth the date, time and location for the hearing. The hearing shall be conducted in conjunction with a special or regularly scheduled meeting of the IEUA Board of Directors and shall be published in conformity with Brown Act requirements. The hearing shall be scheduled on a date not more than 60 days from the submission date.

C. Hearing.

Any person may address the IEUA Board of Directors at the hearing. Any documentary evidence to be introduced by a party must be submitted to the Secretary of the IEUA Board of Directors no later than 10 days prior to the hearing date to ensure the documents are included in the agenda package and available for posting to the IEUA website.

D. Continuance.

The IEUA Board of Directors may, within its discretion, continue the hearing at the request of any person or the Board of Directors upon a showing of good cause , but in no event shall such continuance extend beyond 30 days.

E. Decision.

At the close of the hearing, the IEUA Board of Directors may confer and render a decision through a majority vote of its members , which shall be recorded upon the minutes of the meeting. The decision by the IEUA Board of Directors shall be deemed a final administrative action. The IEUA Board of Directors may continue the matter for up to 60 days for further discussion and consideration of the evidence.

SECTION 27 - EFFECTIVE DATE OF CONTRACT
This contract between IEUA and the undersigned Contracting Agency shall become effective (“Effective Date”) after the occurrence of both of the following events:

1. The authorization and execution of this contract by IEUA and the undersigned Contracting Agencies.

2. IEUA shall give written notice thereof to the undersigned Contracting Agency.

The notice shall specify a date, as deter mined by IEUA in accordance with this section, which shall be the Effective Date of this contract.

SECTION 28 - TERM OF CONTRACT
The term of this contract and any other Service Contract entered into between IEUA and any sewage collection agency, shall be 50 years fro m the Effective Date. It is the intent of the parties that all Service Contracts providing for the services and facilities of the Regional Sewerage System

shall have the same termination, date, without regard to the effective dates of the individual, contracts.

In order to provide for a periodic review and update, as necessary, of the provisions of this contract, IEUA and the Contracting Agencies agree to enter good faith discussions at intervals not exceeding ten years or at the request of the majority of the Contracting Agencies.

SECTION 29 - RENEWAL
No later than two years prior to the end of the term of this contract or any earlier termination or extension of this contract, the parties shall negotiate for the extension or renewal of this contract upon comparable terms and conditions. If the parties have been unable to agree thereon, then any Contracting Agency, by written notice given to IEUA at least 12 months prior to the expiration of said term, may elect to receive continued sewage treatment service after the expi ration of said term, on a temporary basis, through separate agreement, upon the following conditions:

A. Expansion.

If, by reason of continued service, no expansion is required in any facilities of the Regional Sewerage System in existence upon the expirat ion of the term of this contract, the Contracting Agency may deliver sewage into the system in any quantity and at any flow rates. If, by reason of continued service, such expansion shall be required, the annual quantity and flow rates of sewage to be deli vered into the Regional Sewerage System by the Contracting Agency shall not exceed the quantity and flow rates delivered by the agency during the last full fiscal year preceding the expiration of said term.

B. Service Charge.

The service charge rate shall be determined as provided in Section 17 hereof.

C. Quality.

The sewage quality standards shall be in accordance with those in effect during the last full fiscal year preceding the expiration of said term or any higher standards prescribed by any federal, state or regional agency authorized by law to prescribe quality standards for effluent discharges.

D. Physical Conditions.

IEUA shall maintain and operate the Regional Sewerage System under substantially the same physical conditions of service as prev ailed during the last fiscal year preceding the expiration of said term.

Other terms and conditions of continued service shall be reasonable and equitable and shall be mutually agreed upon and, if they provide for continued service for a specified number of years, a Contracting Agency shall have the option to receive further continued sewage treatment service upon the expiration of that and each succeeding period of continued service. Nothing herein shall extend the term established in Section 28 of this contract.

SECTION 30 - AUTHORIZATION AND EXECUTION OF SEWAGE SERVICE

CONTRACT
A. Authorization of Any Sewage Collection Agency.

All proposed contracts between IEUA and any sewage collection agency for the purpose of, (i) providing the agency with the service s and facilities of the Regional Sewerage System under a Service Contract, (ii) the acquisition by IEUA of any existing sewage treatment and disposal plant or interceptor sewer, or (iii), both (i) and (ii), shall be authorized for execution by IEUA. The agency shall furnish IEUA with a certified copy of the resolution authorizing execution by the agency, together with a certified Copy of the proposed contract referred to therein. The resolution shall contain all restrictions, limitations, and conditions, if any, which may have been imposed on the execution of the contract.

B. Amendment of Any Existing Contract; New Contracts with Subsequent Contracting Agencies.

If IEUA proposes (i) to amend or rescind any existing Service Contract with a Contracting Agency or (ii) to enter a new Service Contract or a contract for the transfer of any existing sewage facilities to IEUA, as part of the Regional Sewerage System, the IEUA Board of Directors shall adopt a resolution declaring its intention to do so and shall speci fy a time, not sooner than 60 days after the adoption of the resolution, and a place at which the Board will hold a hearing on the question of the proposed amendment, rescission or new contract, as the case may be. Immediately thereafter the secretary of IEUA shall deliver a copy of the resolution, together with a copy of the proposed amendment, rescission or new contract to the clerk or secretary of each Contracting Agency and to each member of the Regional Policy Committee. The Regional Policy Committee shall review the proposal and, not later than 10 days preceding the date of the hearing, shall submit its written report and recommendation thereon to the general manager of IEUA and to each Contracting Agency.

At the hearing on the proposal, the IEUA Board shall consider the report and recommendation of the Regional Policy Committee and shall hear representatives of any Contracting Agency, members of the committee, and any other interested persons. The IEUA Board may modify the proposal and, upon the conc lusion of the hearing, order the authorization for execution by IEUA of the proposed amendment, rescission, or new contract, as the case may be.

SECTION 31 - NOTICE
Notices authorized or required to be given by any provision of this contract shall be deemed to have been given upon delivery, if delivered personally, or upon deposit in the mail, if enclosed in a properly addressed envelope and deposited in the United States mail for delivery by registered or certified mail, or delivered via electronic mail.

Notice shall be given to the parties by delivery or mailing to the following officers of the parties at the following addresses:

IEUA
____________________________________
____________________________________
Undersigned Contracting Agency:
____________________________________
____________________________________
At any time, a party may give written notice to the other party of a change in the designated officer or address.

Notice to members of the Regional Policy Committee or the Regional Technical Committee shall be given to the persons and at the addresses designated in the notices of appointment filed with the Secretary of IEUA.

SECTION 32 - PARTIAL INVALIDITY
The invalidity of any provision of this contract shall not affect the validity of the remainder thereof which can be given effect without such invalid provision.

SECTION 33 - INCORPORATION OF RECITALS
The Recitals set forth above are incorporated herein an d made an operative part of this Service Contract.

SECTION 34 - COUNTERPARTS
This Service Contract shall be executed by all parties in duplicate originals, each of which shall be considered an original Service Contract.

Date of Execution

___________________________

ATTEST:

____________________________
Secretary of the Board of Directors

Date of Execution

___________________________

ATTEST:

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City Clerk

Date of Execution

___________________________

ATTEST:

____________________________
City Clerk

Inland Empire Utilities Agency

___________________________
President of the Board of Directors

City of Chino

___________________________
Mayor

City of Chino Hills

___________________________
Mayor

Date of Execution

___________________________

ATTEST:

____________________________
Secretary of the Board of Directors

Date of Execution

___________________________

ATTEST:

____________________________
City Clerk

Date of Execution

___________________________

ATTEST:

____________________________
City Clerk

Cucamonga Valley Water District

___________________________
Board President

City of Fontana

___________________________
Mayor

City of Montclair

___________________________
Mayor

Date of Execution

___________________________

ATTEST:

____________________________
City Clerk

Date of Execution

___________________________

ATTEST:

____________________________
City Clerk

City of Ontario

___________________________
Mayor

City of Upland

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Mayor