Agenda packet — La Mesa City Council, November 12, 2025 (part 3 of 4)

CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024
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20. RISK, UNCERTAINTIES & CONTINGENCIES
Grants
Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures that may be disallowed by the grantor cannot be determined at this time, although the government expects such amounts, if any, to be immaterial.

Successor Agency
Deductions (expenses) incurred by the Successor Agency for the year ended June 30, 2024 (and subsequent years in which the Successor Agency is in operation) are subject to review by various State agencies and the County in which the Successor Agency resides. If any expenses incurred by the Successor Agency are disallowed by the State agencies or County, the City, acting as the Successor Agency could be liable for the repayment of the disallowed costs from either its own funds or by the State withholding remittances normally paid to the City. The amount, if any, of expenses that may be disallowed by the State agencies or County cannot be determined at this time, although the Successor Agency expects such amounts, if any, to be immaterial.

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CITY OF LA MESA
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024
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21. PRIOR PERIOD ADJUSTMENT - RESTATEMENT
During fiscal year 2024, the City implemented GASB Statement No. 100, Accounting Changes and Error Corrections, resulting in the following adjustments to and restatements of beginning net position and fund balances, as follows:

Net position/fund
balance (deficit),
beginning of year, as
previously reported
Adjustment -
Change from major
to nonmajor fund Correction of error
Net position/fund
balance (deficit),
beginning of year,
as restated
Government-wide
Governmental activities 153,338,110 $ - $ (4,816,254) $ 148,521,856 $ Business-type activities 27,199,093 - 30,428 27,229,521 Total government-wide $ - 180,537,203 $ (4,785,826) $ 175,751,377 $ Governmental funds
Major funds
General fund 69,800,379 $ - $ (4,639,692) $ 65,160,687 $ Transportation CIP (1,922,836) 1,922,836 - -
Nonmajor funds 25,744,226 (1,922,836) 707,470 24,528,860 Total governmental funds $ - 93,621,769 $ (3,932,222) $ 89,689,547 $ Proprietary funds
Wastewater - Enterprise Fund 27,199,093 $ - $ 30,428 $ 27,229,521 $ Internal service funds 6,479,244 - 4,792,223 11,271,467 Fiduciary funds $ - (5,204,805) $ 175,996 $ (5,028,809) $ During fiscal year 2024, the City conducted a comprehensive review of its capital asset records and identified various errors in capital asset tracking records. A portion of these discrepancies was traced to data import errors that occurred during the implementation of the City’s new enterprise resource planning (ERP) system.

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REQUIRED SUPPLEMENTARY INFORMATION

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CITY OF LA MESA
Required Supplementary Information
Budgetary Information
For the Year Ended June 30, 2024
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The City follows these procedures in establishing the budgetary data reflected in the financial statements:
 The biennial budget adopted by the City Council provides for the general operation of the City. It includes proposed expenditures and the means of financing them.  The City Council approves total budgeted appropriations and any amendments to appropriations throughout the year. All transfers between funds, departments and/or activities shall be made by the City Council except that the City Manager may, on his own initiative and without prior approval of the City Council, transfer between budget accounts within a single department or activity to any other account or appropriation, or to the reserve, amounts determined to be in excess of actual requirements.

Budget figures used in the financial statements are the final adjusted amounts.  Formal budgetary integration is employed as a management control device during the year.

Commitments for materials and services, such as purchase orders and contracts, are recorded as encumbrances to assist in controlling expenditures.
 Budgets for the General and Special Revenue Funds are adopted on a basis substantially consistent with generally accepted accounting principles in the United States (GAAP). Accordingly, actual revenues and expenditures can be compared with related budgetary amounts without any significant reconciling items. No budgetary comparisons are presented for the Debt Service and Capital Projects Funds since no "annual" budget is adopted for these funds. No budgetary comparisons are presented for proprietary fund types, as the City is not legally required to adopt a budget for these types of funds.

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CITY OF LA MESA
Required Supplementary Information
Budgetary Comparison Schedule – General Fund
For the Year Ended June 30, 2024
‐83-
The following is a budget comparison schedule for the General Fund.

Variance
Actual with Final
Original Final Amounts Budget
Fund Balances - Beginning, as Restated $ 65,160,687 65,160,687 $ 65,160,687 $ - $ Resources (inflows):

Property taxes 18,734,383 18,734,383 19,583,792 849,409 Other taxes 35,207,680 35,207,680 37,155,025 1,947,345
Licenses and permits 1,749,800 1,749,800 2,258,450 508,650 Fines and forfeitures 469,000 469,000 546,276 77,276
Use of money and property 1,904,000 1,904,000 4,594,408 2,690,408 Intergovernmental 1,706,750 1,706,750 1,639,768 (66,982) Charges for services 2,536,650 2,536,650 2,640,725 104,075 Other revenues 5,498,688 5,458,688 975,290 (4,483,398)
Transfers from other funds 3,090,200 3,090,200 2,639,823 (450,377) Amount available for appropriations 136,057,838 136,017,838 137,194,244 1,176,406 Charges to appropriations (outflows):

General government 9,472,534 12,241,282 7,990,097 4,251,185 Police 26,140,091 26,236,421 24,205,997 2,030,424
Fire 15,953,892 16,228,706 16,207,678 21,028
Public works 12,401,891 13,258,258 10,642,214 2,616,044 Community development 3,614,061 3,668,322 2,300,928 1,367,394 Community services 2,652,446 2,757,615 2,472,055 285,560 Debt service:

Principal retirement - - 504,832 (504,832)
Interest and fiscal charges - - 20,745 (20,745)
Transfers to other funds 2,448,450 2,448,450 4,252,612 (1,804,162) Total charges to appropriations 72,683,365 76,839,054 68,597,158 8,241,896 Fund Balances - Ending $ 59,178,784 63,374,473 $ 68,597,086 $ 9,418,302 $ Budgeted Amounts

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CITY OF LA MESA
Required Supplementary Information
Budgetary Comparison Schedule – Miscellaneous Grants Fund For the Year Ended June 30, 2024
‐84-
The following is a budget comparison schedule for the Miscellaneous Grants Fund.

Variance
Budgeted Amounts Actual with Final
Original Final Amounts Budget
Fund Balances (Deficit) - Beginning $ (337,560) (337,560) $ (337,560) $ - $ Resources (inflows):

Use of money and property - - 161,088 161,088
Intergovernmental - 634,370 610,528 (23,842)
Amount available for appropriations (337,560) 296,810 434,056 137,246 Charges to appropriations (outflows):

Police 294,630 415,580 - 415,580
Community development 2,189,050 2,930,701 443,959 2,486,742 Transfers out - - 1,071,811 (1,071,811)
Total charges to appropriations 2,483,680 3,346,281 1,515,770 1,830,511 Fund Balances (Deficit) - Ending $ (3,049,471) (2,821,240) $ (1,081,714) $ 1,967,757 $

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CITY OF LA MESA
Required Supplementary Information Schedules of Changes in Net Pension Liability and Related Ratios Last Ten Years ‐85-
Miscellaneous Plan
6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023

TOTAL PENSION LIABILITY
Service Cost $ 1,605,289 1,725,483 $ 1,587,287 $ 1,736,333 $ 1,745,608 $ 1,735,047 $ 1,821,665 $ 1,895,297 $ 1,996,533 $ 2,084,057 $ Interest on Total Pension Liability 6,602,641 6,823,080 7,124,332 7,316,806 7,602,090 7,944,529 8,219,050 8,555,981 8,647,552 9,026,635 Difference Between Expected and Actual Experience - (1,101,092) 263,533 (5,847) 1,300,541 1,569,003 507,760 1,305,190 (1,125,062) 2,075,153 Changes of Benefit Terms - - - - - - - - - 181,935
Changes of Assumptions (1,539,484) - - 5,617,856 (661,183) - - - 3,393,444 - Benefit Payments, Including Refunds of Employee Contributions (4,351,133) (4,592,998) (4,896,950) (5,490,512) (5,923,785) (6,320,349) (6,462,046) (6,878,738) (7,336,269) (7,565,710) Net Change in Total Pension Liability 3,976,991 1,194,795 4,078,202 9,174,636 4,063,271 4,928,230 4,086,429 4,877,730 5,576,198 5,802,070 Total Pension Liability - Beginning 89,348,041 93,325,032 94,519,827 98,598,029 107,772,665 111,835,936 116,764,166 120,850,595 125,728,325 131,304,523 Total Pension Liability - Ending (a) 93,325,032 94,519,827 98,598,029 107,772,665 111,835,936 116,764,166 120,850,595 125,728,325 131,304,523 137,106,593

PLAN FIDUCIARY NET POSITION
Contributions - Employer 2,018,839 2,233,832 2,553,613 2,693,445 3,000,728 3,398,605 3,871,245 4,230,939 $ 4,676,417 $ 5,146,491 $ Contributions - Employee 793,357 699,783 727,594 761,773 739,434 751,231 790,692 852,004 847,804 876,819 Net Investment Income 10,477,342 1,548,306 378,797 7,561,152 6,214,843 5,041,276 4,031,596 18,659,358 (7,484,578) 5,612,868 Benefit Payments, Including Refunds of Employee Contributions (4,351,133) (4,592,998) (4,896,950) (5,490,512) (5,923,785) (6,320,349) (6,462,046) (6,878,738) (7,336,269) (7,565,710) Net Plan to Plan Resource Movement - - - - (180) - - - 1,326 - Administrative Expense (78,335) - (42,421) (100,879) (114,925) (55,269) (113,154) (82,296) (61,774) (66,040) Other Miscellaneous Income/(Expense) - - - - (218,244) 180 - - - - Net Change in Fiduciary Net Position 8,938,405 (189,412) (1,279,367) 5,424,979 3,697,871 2,815,674 2,118,333 16,781,267 (9,357,074) 4,004,428 Plan Fiduciary Net Position - Beginning 60,856,744 69,795,149 69,605,737 68,326,370 73,751,349 77,449,220 80,264,894 82,383,227 99,164,494 89,807,420 Plan Fiduciary Net Position - Ending (b) 69,795,149 69,605,737 68,326,370 73,751,349 77,449,220 80,264,894 82,383,227 99,164,494 89,807,420 93,811,848 Plan Net Position Liability - Ending (a) - (b) 23,529,883 $ 24,914,090 $ 30,271,659 $ 34,021,316 $ 34,386,716 $ 36,499,272 $ 38,467,368 $ 26,563,831 $ 41,497,103 $ 43,294,745 $ Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 74.79% 73.64% 69.30% 68.43% 69.25% 68.74% 68.17% 78.87% 68.40% 68.42%Covered Payroll $ 9,805,687 9,338,814 $ 10,775,401 $ 10,782,250 $ 9,713,133 $ 10,004,158 $ 9,771,136 $ 9,799,062 $ 10,158,798 $ 10,630,644 $ Plan Net Pension Liability as a Percentage of Covered Payroll 251.96% 254.08% 280.93% 315.53% 354.02% 364.84% 393.68% 271.09% 408.48% 407.26%Notes to Schedule:* Measurement period 2013-14 (fiscal year 2015) was the 1st year of implementation.Changes in Assumptions: Effective with the June 30, 2021 valuation date (2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining the long-term expected rate of return, CalPERS took into account long-term marketreturn expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated, combined with risk estimates, and are used to project compound (geometric) returns over the long term. The discount rate used to discountliabilities was informed by the long-term projected portfolio return. In addition, demographic assumptions and the inflation rate assumption were changed in accordance with the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. There were noassumption changes for 2021. For 2020, the Plan adopted a new amortization policy effective with the 2019 actuarial valuation. The new amortization policy shortens the period over which actuarial gains and losses are amortized from 30 years to 20 years with thepayments computed as a level dollar amount. In addition, the new policy does not utilize a five-year ramp-up and ramp-down on UAL bases attributable to assumption changes and non-investment gains/losses. The new policy also does not utilize a five-year rampdown on investment gains/losses. These changes apply only to new UAL bases established on or after June 30, 2019. There were no changes in assumptions in 2019. In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERSExperience Study and Review of Actuarial Assumptions December 2017. There were no changes in the discount rate in 2019. In 2017, the accounting discount rate was reduced from 7.65 percent to 7.15 percent. In 2016, there were no changes in the discount rate. In2015, amounts reported reflect an adjustment of the discount rate from 7.5 percent (net of administrative expense) to 7.65 percent (without a reduction for pension plan administrative expense). In 2014, amounts reported were based on the 7.5 percent discount rate.

Changes in Benefit Terms: There were no changes to benefit terms that applied to all members of the Public Agency Pool. Additionally, the figures above do not include any liability impact that may have resulted from Golden Handshakes that occurred after the June30, 2021 valuation date, unless the liability impact is deemed to be material to the Public Agency Pool.

Measurement date

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CITY OF LA MESA
Required Supplementary Information Schedules of Changes in Net Pension Liability and Related Ratios Last Ten Years (Continued)
‐86-
Safety Plan
6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023

TOTAL PENSION LIABILITY
Service Cost $ 2,407,587 2,511,204 $ 2,403,285 $ 2,727,872 $ 3,179,247 $ 3,150,403 $ 3,248,296 $ 3,343,416 $ 3,640,297 $ 4,029,923 $ Interest on Total Pension Liability 10,771,035 11,178,436 11,527,490 11,719,571 12,328,071 12,871,590 13,344,226 13,814,851 14,074,261 15,029,104 Difference Between Expected and Actual Experience - (161,921) (697,636) (1,952,708) 3,953,305 2,005,205 926,691 721,003 (2,888,155) 7,782,892 Changes of Benefit Terms - - - - - - - - - 110,883
Changes of Assumptions (2,742,320) - - 9,776,293 (937,052) - - - 7,636,111 - Benefit Payments, Including Refunds of Employee Contributions (7,575,744) (8,057,546) (8,589,274) (8,796,139) (9,561,683) (10,231,175) (10,543,526) (11,014,303) (11,572,811) (12,356,890) Net Change in Total Pension Liability 5, 2,624,236 706,495 4,643,865 13,474,889 8,961,888 7,796,023 6,975,687 6,864,967 10,889,703 14,595,912 Total Pension Liability - Beginning 146,146,054 151,852,549 154,476,785 159,120,650 172,595,539 181,557,427 189,353,450 196,329,137 203,194,104 214,083,807 Total Pension Liability - Ending (a) 151,852,549 154,476,785 159,120,650 172,595,539 181,557,427 189,353,450 196,329,137 203,194,104 214,083,807 228,679,719

PLAN FIDUCIARY NET POSITION
Contributions - Employer 2,864,566 3,238,613 3,767,485 4,477,395 4,559,719 5,192,920 5,934,636 6,493,887 7,265,481 8,027,346 Contributions - Employee 804,337 840,213 891,198 996,668 1,045,575 1,083,318 1,191,676 1,350,773 1,308,329 1,426,893 Net Investment Income 17,292,426 2,541,555 564,745 12,085,214 9,928,189 8,023,831 6,295,868 29,372,461 (11,830,172) 8,770,640 Benefit Payments, Including Refunds of Employee Contributions (7,575,744) (8,057,546) (8,589,274) (8,796,139) (9,561,683) (10,231,175) (10,543,526) (11,014,303) (11,572,811) (12,356,890) Net Plan to Plan Resource Movement - - - - (288) - - - (1,326) - Administrative Expense (126,940) - (68,743) (161,464) (183,818) (88,062) (179,578) (129,943) (97,275) (103,851) Other Miscellaneous Income/(Expense) - - - - (349,074) 288 - - - - Net Change in Fiduciary Net Position 13,385,585 (1,564,105) (3,434,589) 8,601,674 5,438,620 3,981,120 2,699,076 26,072,875 (14,927,774) 5,764,138 Plan Fiduciary Net Position - Beginning 100,973,923 114,359,508 112,795,403 109,360,814 117,962,488 123,401,108 127,382,228 130,081,304 156,154,179 141,226,405 Plan Fiduciary Net Position - Ending (b) 114,359,508 112,795,403 109,360,814 117,962,488 123,401,108 127,382,228 130,081,304 156,154,179 141,226,405 146,990,543 Plan Net Position Liability - Ending (a) - (b) 37, $ 41,681,382 493,041 $ 49,759,836 $ 54,633,051 $ 58,156,319 $ 61,971,222 $ 66,247,833 $ 47,039,925 $ 72,857,402 $ 81,689,176 $ Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 75.31% 73.02% 68.73% 68.35% 67.97% 67.27% 66.26% 76.85% 65.97% 64.28%Covered Payroll $ 9,288,796 9,120,009 $ 9,570,037 $ 9,992,870 $ 9,226,022 $ 9,535,932 $ 10,584,174 $ 10,463,333 $ 11,505,777 $ 12,204,552 $ Plan Net Pension Liability as a Percentage of Covered Payroll 411.11% 448.73% 519.95% 546.72% 630.35% 649.87% 625.91% 449.57% 633.22% 669.33%Notes to Schedule:

Measurement date
Changes in Assumptions: Effective with the June 30, 2021 valuation date (2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining the long-term expected rate of return, CalPERS took into account long-term marketreturn expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated, combined with risk estimates, and are used to project compound (geometric) returns over the long term. The discount rate used to discountliabilities was informed by the long-term projected portfolio return. In addition, demographic assumptions and the inflation rate assumption were changed in accordance with the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. There were no assumption changes for 2021. For 2020, the Plan adopted a new amortization policy effective with the 2019 actuarial valuation. The new amortization policy shortens the period over which actuarial gains and losses are amortized from 30 years to 20 years with thepayments computed as a level dollar amount. In addition, the new policy does not utilize a five-year ramp-up and ramp-down on UAL bases attributable to assumption changes and non-investment gains/losses. The new policy also does not utilize a five-year ramp-downon investment gains/losses. These changes apply only to new UAL bases established on or after June 30, 2019. There were no changes in assumptions in 2019. In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERSExperience Study and Review of Actuarial Assumptions December 2017. There were no changes in the discount rate in 2019. In 2017, the accounting discount rate was reduced from 7.65 percent to 7.15 percent. In 2016, there were no changes in the discount rate. In2015, amounts reported reflect an adjustment of the discount rate from 7.5 percent (net of administrative expense) to 7.65 percent (without a reduction for pension plan administrative expense). In 2014, amounts reported were based on the 7.5 percent discount rate.Changes in Benefit Terms: There were no changes to benefit terms that applied to all members of the Public Agency Pool. Additionally, the figures above do not include any liability impact that may have resulted from Golden Handshakes that occurred after the June 30, 2021 valuation date, unless the liability impact is deemed to be material to the Public Agency Pool.

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CITY OF LA MESA
Required Supplementary Information Schedules of Changes in Net Pension Liability and Related Ratios Last Ten Years (Concluded)
‐87-
PARS Retirement Enhancement Plan
6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023

TOTAL PENSION LIABILITY
Service Cost $ 3,000 3,000 $ 3,000 $ 3,000 $ 1,527 $ - $ - $ - $ - $ - $ Interest on Total Pension Liability 171,000 171,000 178,000 178,000 159,542 157,449 142,093 138,733 127,971 123,635Changes of Benefit Terms - - - - - - - - - - Difference Between Expected and Actual Experience - (1,000) - (154,000) - (215,926) - 17,508 - 74,745Changes of Assumptions 118,000 - - 77,000 - (7,519) - 60,325 - 12,585 Benefit Payments, Including Refunds of Employee Contributions (174,000) (178,000) (179,000) (187,000) (188,512) (192,282) (196,128) (200,051) (204,052) (209,516)Net Change in Total Pension Liability - 113,000 2,000 (83,000) (27,443) (258,278) (54,035) 16,515 (76,081) 1,449Total Pension Liability - Beginning 2,720,000 2,720,000 2,833,000 2,835,000 2,752,000 2,724,557 2,466,279 2,412,244 2,428,759 2,352,678Total Pension Liability - Ending (a) 2,720,000 2,833,000 2,835,000 2,752,000 2,724,557 2,466,279 2,412,244 2,428,759 2,352,678 2,354,127

PLAN FIDUCIARY NET POSITION
Contributions - Employer 106,000 105,800 118,000 118,000 125,000 125,000 125,000 125,000 - 80,000Contributions - Employee 1,000 1,000 2,000 1,000 1,127 - - - - -Net Investment Income 60,000 275,000 50,000 187,000 123,563 134,170 106,642 472,636 (328,943) 137,377Benefit Payments, Including Refunds of Employee Contributions (174,000) (178,000) (179,000) (187,000) (188,512) (192,282) (196,128) (200,051) (204,052) (209,516)Administrative Expenses (22,000) (22,000) (21,000) (8,000) (8,370) (8,556) (8,629) (8,859) (8,904) (8,405)Other Changes in Fiduciary Net Position - - - - - - - - - -Net Change in Fiduciary Net Position 186,000 (33,200) (30,000) 111,000 52,808 58,332 26,885 388,726 (541,899) (544)Plan Fiduciary Net Position - Beginning 2,124,000 2,310,000 2,276,800 2,246,800 2,357,800 2,410,608 2,468,940 2,495,825 2,884,551 2,342,652Plan Fiduciary Net Position - Ending (b) 2,310,000 2,276,800 2,246,800 2,357,800 2,410,608 2,468,940 2,495,825 2,884,551 2,342,652 2,342,108 Plan Net Position Liability / (Asset) - Ending (a) - (b) 410,000 $ 556,200 $ 588,200 $ 394,200 $ 313,949 $ (2,661) $ (83,581) $ (455,792) $ 10,026 $ 12,019 $ Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 84.93% 80.37% 79.25% 85.68% 88.48% 100.11% 103.46% 118.77% 99.57% 99.49%Covered Payroll $ 100,872 97,932 $ 103,896 $ 105,972 $ 108,096 $ 108,096 $ 113,544 $ 113,544 $ 113,544 $ 120,468 $ Plan Net Pension Liability / (Asset) as a Percentage of Covered Payroll 418.66% 551.39% 566.14% 371.99% 290.44% -2.46% -73.61% -401.42% 8.83% 9.98%Notes to Schedule:Changes in Assumptions for Measurement Date June 30, 2023:

None
Measurement date

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CITY OF LA MESA
Required Supplementary Information Schedule of Plan Contributions Last Ten Years ‐88-
Miscellaneous Plan
Fiscal Year
Actuarially Determined
Contribution
Contributions in Relation
to the Actuarially
Determined Contribution
Contribution
Deficiency
(Excess) Covered Payroll
Contributions as a
Percentage of
Covered Payroll
6/30/2015 2,018,839 $ (2,018,839) $ - $ 9,805,687 $ 20.59%6/30/2016 2,233,832 (2,233,832) - 10,775,401 20.73%6/30/2017 2,553,613 (2,553,613) - 10,782,250 23.68%6/30/2018 2,693,445 (2,693,445) - 9,713,133 27.73%6/30/2019 3,000,728 (3,000,728) - 10,004,158 29.99%6/30/2020 3,398,605 (3,398,605) - 9,771,136 34.78%6/30/2021 3,874,245 (3,874,245) - 9,799,062 39.54%6/30/2022 4,230,939 (4,230,939) - 10,158,798 41.65%6/30/2023 4,676,417 (4,676,417) - 10,630,644 43.99%6/30/2024 5,202,504 (5,202,504) - 11,331,709 45.91% Notes to Schedule:Actuarial Cost MethodAmortization Method/PeriodAsset Valuation MethodActuarial Assumptions:

Discount RateInflationSalary IncreasesMortality Rate TablePost Retirement Benefit Increase

2.50%Varies by Entry Age and ServiceThe probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries.The lesser of contract COLA or 2.30% until Purchasing Power Protection Allowance floor on purchasing power applies, 2.30% thereafter.

The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2023-24 were from the June 30, 2022 Funding Valuation Report.

Entry Age Actuarial Cost MethodFor details, see June 30, 2020 Funding Valuation Report.Fair Value of Assets6.90%

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CITY OF LA MESA
Required Supplementary Information Schedule of Plan Contributions Last Ten Years (Continued)
‐89-
Safety Plan
Fiscal Year
Actuarially Determined
Contribution
Contributions in Relation
to the Actuarially
Determined Contribution
Contribution
Deficiency
(Excess) Covered Payroll
Contributions as a
Percentage of
Covered Payroll
6/30/2015 6,864,566 $ (6,864,566) $ - $ 9,288,796 $ 73.90% 6/30/2016 3,238,613 (3,238,613) - 9,570,037 33.84%
6/30/2017 3,767,485 (3,767,485) - 9,992,870 37.70%
6/30/2018 4,477,395 (4,477,395) - 9,226,022 48.53%
6/30/2019 4,559,719 (4,559,719) - 9,535,932 47.82%
6/30/2020 5,192,920 (5,192,920) - 10,584,174 49.06%
6/30/2021 5,934,636 (5,934,636) - 10,463,333 56.72%
6/30/2022 6,493,887 (6,493,887) - 11,505,777 56.44%
6/30/2023 7,265,481 (7,265,481) - 12,204,552 59.53%
6/30/2024 8,362,610 (8,362,610) - 13,101,100 63.83%
Notes to Schedule:Actuarial Cost MethodAmortization Method/PeriodAsset Valuation MethodActuarial Assumptions:

Discount RateInflationSalary IncreasesMortality Rate Table

The actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2022-23 were from the June 30, 2021 Funding Valuation Report.

Entry Age Actuarial Cost MethodFor details, see June 30, 2020 Funding Valuation Report.Fair Value of Assets6.90%

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CITY OF LA MESA
Required Supplementary Information Schedule of Plan Contributions Last Ten Years (Concluded)
‐90-
PARS Retirement Enhancement Plan
Fiscal Year
Actuarially Determined
Contribution1
Contributions in Relation
to the Actuarially
Determined Contribution2
Contribution
Deficiency
(Excess) Covered Payroll
Contributions as a
Percentage of
Covered Payroll
6/30/2015 105,800 $ (105,800) $ - $ 100,872 $ 104.89%6/30/2016 118,300 (118,300) - 103,896 113.86%6/30/2017 - - - 105,972 0.00%6/30/2018 114,700 (125,000) (10,300) 108,096 106.11%6/30/2019 114,700 (125,000) (10,300) 108,096 106.11%6/30/2020 22,800 (125,000) (102,200) 113,544 20.08%6/30/2021 22,800 (125,000) (102,200) 113,544 20.08%6/30/2022 - (25,689) (25,689) 113,544 0.00%6/30/2023 - (80,000) (80,000) 120,468 0.00%6/30/2024 25,700 (55,000) (29,300) 120,468 21.33% Notes to Schedule:
1Actuarially Determined Contributions from the employer's financial statements.2Actual contributions from employer's financial statements.

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CITY OF LA MESA
Required Supplementary Information Schedule of Changes in the Net OPEB Liability and Related Ratios Last Ten Years* ‐91-
Fiscal Year 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 Measurement Period 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 Total OPEB Liability
Service cost 177,546 $ 189,976 $ 195,675 $ 210,776 $ 104,011 $ 180,768 $ 220,710 $ Interest 450,042 465,322 479,727 516,097 415,772 453,954 441,639 Differences between expected and
actual experience - - 514,636 (1,494,978) 588,094 (86,159) 381,603 Changes of assumptions - - (176,855) - 82,245 614,946 (543,748) Benefit payments (393,258) (450,210) (460,206) (566,820) (549,584) (510,878) (525,553) Net change in total OPEB liability 234,330 205,088 552,977 (1,334,925) 640,538 652,631 (25,349) Total OPEB liability - beginning 6,448,258 6,682,588 6,887,676 7,440,653 6,105,728 6,746,266 7,398,897 Total OPEB liability - ending (a) 6,682,588 6,887,676 7,440,653 6,105,728 6,746,266 7,398,897 7,373,548 Plan Fiduciary Net Position
Contributions – employer 673,038 744,210 910,206 1,046,550 1,034,864 883,007 1,021,725 Net investment income 240,564 216,245 221,144 155,315 1,279,360 (889,675) 399,722 Benefit payments (393,258) (450,210) (460,206) (566,820) (549,584) (510,878) (525,553) Administrative expense (1,213) (1,484) (1,653) (1,959) (1,763) (1,627) (1,751) Other expense - (3,534) - - - - -
Net change in plan fiduciary net position 519,131 505,227 669,491 633,086 1,762,877 (519,173) 894,143 Plan fiduciary net position - beginning 2,152,522 2,671,653 3,176,880 3,846,371 4,479,457 6,242,334 5,723,161 Plan fiduciary net position - ending (b) 2,671,653 3,176,880 3,846,371 4,479,457 6,242,334 5,723,161 6,617,304 Net OPEB liability - ending (a) - (b) 4,010,935 $ 3,710,796 $ 3,594,282 $ 1,626,271 $ 503,932 $ 1,675,736 $ 756,244 $ Plan fiduciary net position as a percentage
of the total OPEB liability 40.0% 46.1% 51.7% 73.4% 92.5% 77.4% 89.7% Covered payroll 20,699,310 $ 21,602,500 $ 22,439,700 $ 23,695,500 $ 30,502,020 $ 28,565,459 $ 29,252,762 $ Net OPEB liability as a percentage of covered payroll 19.4% 17.2% 16.0% 6.9% 1.7% 5.9% 2.6%

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CITY OF LA MESA
Required Supplementary Information Schedule of Changes in the Net OPEB Liability and Related Ratios Last Ten Years* (concluded)
‐92-
Notes to Schedule:

Valuation Date July 1, 2023Actuarial Cost Method Entry age normal, level percentage of payrollAmortization Methodology Straight-line amortization. For assumption changes and experience gains/losses: Expected Average Remaining Service Lifetime of all members that are provided with benefits. For asset gains and losses: 5 years.

Asset Valuation Method Market valueDiscount Rate 6.40% as of June 30, 2023 (for FY 2023/24) and 6.00% as of June 30, 2022 (for FY 2022/23 for accounting disclosure purposes
General Inflation 2.50%Medical Trend 8.0% for 2024, decreasing to an ultimate rate of 6.5% in 2030 and later yearsMortality Employees and retirees: SOA Pub-2010 General Headcount Weighted Mortality Table fully generational using Scale MP-2021.Surviving Spouses: SOA Pub-2010 Continuing Survivor Headcount Weighted Mortality Table fully generational using Scale MP-2021.Disabled Retirees: SOA Pub-2010 Safety Headcount Weighted Mortality Table fully generational using Scale MP-2021 Methods and Assumptions for 2022-2023 Actuarially Determined Contribution *Historical information is required only for measurement periods for which GASB 75 is applicable. Future years’ information will be displayed up to 10 years as information becomes available. Fiscal year 2017-18 was the first year of implementation.

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CITY OF LA MESA
Required Supplementary Information Schedule of OPEB Contributions Last Ten Years* ‐93-
Fiscal Year 2017-18 2018-19 2019-20 2020-21 2021-2022 2022-2023 2023-24Actuarially Determined Contribution (ADC) 564,577 $ 582,063 $ 588,161 $ 582,847 $ 549,584 $ 549,584 $ 508,730 $ Contributions in relation to the ADC 673,038 744,210 719,379 1,046,550 1,034,864 883,007 1,029,200 Contribution deficiency (excess) (108,461) $ (162,147) $ (131,218) $ (463,703) $ (485,280) $ (333,423) $ (520,470) $ Covered payroll 20,699,310 $ 21,602,500 $ 22,439,700 $ 23,695,500 $ 30,502,020 $ 28,565,459 $ 29,252,762 $ Contributions as a percentage of covered payroll 3.3% 3.4% 3.2% 4.4% 3.4% 3.1% 3.5% *Historical information is required only for measurement periods for which GASB 75 is applicable. Future years’ information will be displayed up to 10 years as information becomes available. Fiscal year 2017-18 was the first year of implementation.

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SUPPLEMENTARY INFORMATION

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NON‐MAJOR GOVERNMENTAL FUNDS

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CITY OF LA MESA
Combining Balance Sheet
Non-Major Governmental Funds
June 30, 2024
‐94-
Housing
Rehabilitation/
CDBG Transportation Street
Administration Gas Tax Improvement Parking
Assets
Cash and investments 231,015 $ 1,808,027 $ - $ 544,917 $ Restricted:

Cash and investments - - - -
Receivables:

Accounts - 282,570 - -
Loans 117,017 - - -
Grants - - 933,574 -
Lease - - - -
Land held for resale - - - -
Total assets 348,032 $ 2,090,597 $ 933,574 $ 544,917 $
Liabilities
Accounts payable - $ - $ - $ 17,023 $
Salaries payable - - - 3,328
Due to other funds - - 730,876 -
Unearned revenue - - - -
Total liabilities - - 730,876 20,351
Deferred Inflows of Resources
Unearned revenue - housing rehab loans - 117,017 - -
Unavailable revenue - grants - - 933,574 -
Leases - - - -
Total deferred inflows of resources - 117,017 933,574 - Fund Balances
Restricted for:

General government - - - -
Public safety - - - -
Capital outlays - 2,090,597 - -
Community services - - - -
Community development 231,015 - - 524,566
Debt service - - - -
Unassigned - - (730,876) -
Total fund balances (deficit) 231,015 2,090,597 (730,876) 524,566 Total liabilities, deferred inflows of resources
and fund balances 348,032 $ 2,090,597 $ 933,574 $ 544,917 $

SPECIAL REVENUE FUNDS

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(Continued)
‐95-
Community Public Supplemental
Environmental Service Safety County Drug Asset Law
Services Improvement Augmentation Housing Seizure Enforcement $ 125,490 57,547 $ 1,234,628 $ 767,151 $ 156,743 $ 636,194 $ - - - - - -
2,300 - 32,670 - - -
- - - - - -
- 1,088 - - - -
- - - - - -
- - - - - -
$ 127,790 58,635 $ 1,267,298 $ 767,151 $ 156,743 $ 636,194 $ $ - 9,344 $ - $ - $ - $ - $
- 11,700 - - - -
- 197,317 - - - -
- - - - - -
- 218,361 - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - 1,267,298 - 156,743 636,194
- - - - - -
127,790 - - - - -
- - - 767,151 - -
- - - - - -
- (159,726) - - - -
127,790 (159,726) 1,267,298 767,151 156,743 636,194
$ 127,790 58,635 $ 1,267,298 $ 767,151 $ 156,743 $ 636,194 $

SPECIAL REVENUE FUNDS

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CITY OF LA MESA
Combining Balance Sheet
Non-Major Governmental Funds
June 30, 2024
‐96-
Community
Service Public Safety CIP Donations
Grants Grants Grants Fund
Assets
Cash and investments 12,204 $ - $ - $ 7,151 $
Restricted:

Cash and investments - - - -
Receivables:

Accounts - - - -
Loans - - - -
Grants 14,950 176,643 3,521,641 -
Lease - - - -
Land held for resale - - - -
Total assets 27,154 $ 176,643 $ 3,521,641 $ 7,151 $
Liabilities
Accounts payable - $ 4,851 $ - $ - $
Salaries payable - 6,687 - -
Due to other funds - 501,006 7,805 -
Unearned revenue - - 847,954 -
Total liabilities - 512,544 855,759 -
Deferred Inflows of Resources
Unearned revenue - housing rehab loans - - - -
Unavailable revenue - grants - - 2,673,687 -
Leases - - - -
Total deferred inflows of resources - - 2,673,687 -
Fund Balances
Restricted for:

General government - - - 7,151
Public safety - - - -
Capital outlays - - - -
Community services 27,154 - - -
Community development - - - -
Debt service - - - -
Unassigned - (335,901) (7,805) -
Total fund balances (deficit) 27,154 (335,901) (7,805) 7,151 Total liabilities, deferred inflows of resources
and fund balances 27,154 $ 176,643 $ 3,521,641 $ 7,151 $

SPECIAL REVENUE FUNDS

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(Continued)
‐97-
DEBT

SERVICE
FUNDS
2006
CASP Road Maintenance PEG Transportation Housing Asset Certificates of Fund Fund Fund Fund Fund Participation
$ 2,158,209 107,993 $ 339,542 $ 36 $ 3,105,412 $ - $
- - - - - -
- 3,171 28,358 - - -
- - - - 225,000 -
- - - - - -
- - - - 341,779 -
- - - - 8,350,000 -
$ 2,158,209 111,164 $ 367,900 $ 36 $ 12,022,191 $ - $
$ - 80 $ 9,761 $ - $ - $ - $
- - - - 2,755 -
- - - - - 8,097
- - - - - -
- 80 9,761 - 2,755 8,097
- - - - 225,000 -
- - - 78,500 - -
- - - - 325,059 -
- - - 78,500 550,059 -
- - 358,139 - - -
- - - - - -
- - - - - -
2,158,209 111,084 - - - -
- - - - 11,469,377 -
- - - - - -
- - - (78,464) - (8,097)
2,158,209 111,084 358,139 (78,464) 11,469,377 (8,097)
$ 2,158,209 111,164 $ 367,900 $ 36 $ 12,022,191 $ - $

SPECIAL REVENUE FUNDS

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CITY OF LA MESA
Combining Balance Sheet
Non-Major Governmental Funds
June 30, 2024

‐98-

DEBT SERVICE
FUNDS
2016 Parks
Government Obligation Public Storm and
Refunding Bonds Building Drains Recreation
Assets
Cash and investments 4,588,303 $ - $ 508,195 $ - $
Restricted:

Cash and investments - - - 182,590
Receivables:

Accounts 11,499 - - -
Loans - - - -
Grants - - - -
Lease - 318,981 - -
Land held for resale - - - -
Total assets 4,599,802 $ 318,981 $ 508,195 $ 182,590 $
Liabilities
Accounts payable - $ 3,944 $ 919,471 $ 81,206 $
Salaries payable - - - -
Due to other funds - - - -
Unearned revenue - - - -
Total liabilities - 3,944 919,471 81,206
Deferred Inflows of Resources
Unearned revenue - housing rehab loans - - - -
Unavailable revenue - grants - - - -
Leases 273,771 - - -
Total deferred inflows of resources 273,771 - - -
Fund Balances
Restricted for:

General government - - - -
Public safety - - - -
Capital outlays - 41,266 - 101,384
Community services - - - -
Community development - - - -
Debt service 4,599,802 - - -
Unassigned - - (411,276) -
Total fund balances (deficit) 4,599,802 41,266 (411,276) 101,384 Total liabilities, deferred inflows of resources
and fund balances 4,599,802 $ 318,981 $ 508,195 $ 182,590 $

CAPITAL PROJECTS FUNDS

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(Concluded)
‐99-
Total
Misc Capital Asset Transportation Non-Major
Civic Capital Management CIP Governmental
Center Improvement Plan (formerly major) Funds
$ 324,393 94,557 $ 1,041,069 $ 215,289 $ 18,064,065 $
- - - - 182,590
- - - - 360,568
- - - - 342,017
- - - - 4,647,896
- - - - 660,760
- - - - 8,350,000
$ 324,393 94,557 $ 1,041,069 $ 215,289 $ 32,607,896 $
$ - - $ - $ 251,057 $ 1,296,737 $
- - - - 24,470
- - - - 1,445,101
- - - - 847,954
- - - 251,057 3,614,262
- - - - 342,017
- - - - 3,685,761
- - - - 598,830
- - - - 4,626,608
- - - - 365,290
- - - - 2,060,235
324,393 94,557 1,041,069 - 3,693,266
- - - - 2,424,237
- - - - 12,992,109
- - - - 4,599,802
- - - (35,768) (1,767,913)
324,393 94,557 1,041,069 (35,768) 24,367,026
$ 324,393 94,557 $ 1,041,069 $ 215,289 $ 32,607,896 $

CAPITAL PROJECTS FUNDS

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CITY OF LA MESA
Combining Statement of Revenues, Expenditures,
and Changes in Fund Balances
Non-Major Governmental Funds
For the Year Ended June 30, 2024
‐100-
Housing
Rehabilitation/
CDBG Transportation Street
Administration Gas Tax Improvement Parking
Revenues:

Property taxes $ - - $ - $ - $
Other taxes - - - -
Licenses and permits - - - -
Fines and forfeitures - - - 98,851
Use of money and property 37,438 11,336 (1,884) 339,292 Intergovernmental 1,940,102 - 398,705 -
Charges for services - - - -
Other revenues - - - -
Total revenues 1,977,540 11,336 396,821 438,143
Expenditures:

Current:

General government - - - 14,618
Police - - - 159,514
Fire - - - 896
Community development - 38,370 - 236,663
Community services - - - 4,640
Capital outlay - - - -
Debt service:

Principal retirement - - - -
Interest and fiscal charges - - - -
Total expenditures - 38,370 - 416,331
Excess (deficiency) of
revenues over (under) expenditures 1,977,540 (27,034) 396,821 21,812 Other financing sources (uses):

Transfers in - - - -
Transfers out (1,716,724) - (1,118,545) (126,300)
Total other financing sources (uses) (1,716,724) - (1,118,545) (126,300) Net change in fund balances 260,816 (27,034) (721,724) (104,488) Fund balances (deficit), beginning of year, as previously reported 1,964,918 258,049 (9,152) 629,054
Change within financial reporting entity (major to nonmajor) - - - - Correction of error (135,137) - - -
Fund balances (deficit), beginning of year, as restated 258,049 1,829,781 (9,152) 629,054 Fund balances (deficit), end of year 231,015 $ 2,090,597 $ (730,876) $ 524,566 $

SPECIAL REVENUE FUNDS

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(Continued)
‐101-
Community Public Supplemental
Environmental Service Safety County Drug Asset Law
Services Improvement Augmentation Housing Seizure Enforcement $ - - $ - $ - $ - $ - $
- - 418,635 - - -
- - - - - -
- - - - 41,098 -
2,599 50,208 (7,262) 15,885 15,396 3,591
- 181,076 - - - 186,159
- 416,345 - - - -
8,462 750 - 195,780 - -
11,061 648,379 411,373 211,665 56,494 189,750
- 855,663 - - - -
- - - - 55,747 -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- 855,663 - - 55,747 -
11,061 (207,284) 411,373 211,665 747 189,750
- - - - - -
- - - - - -
- - - - - -
11,061 (207,284) 411,373 211,665 747 189,750
116,729 47,558 855,925 555,486 155,996 446,444
- - - - - -
- - - - - -
116,729 47,558 855,925 555,486 155,996 446,444
$ 127,790 (159,726) $ 1,267,298 $ 767,151 $ 156,743 $ 636,194 $

SPECIAL REVENUE FUNDS

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CITY OF LA MESA
Combining Statement of Revenues, Expenditures,
and Changes in Fund Balances
Non-Major Governmental Funds
For the Year Ended June 30, 2024
‐102-
Community
Service Public Safety CIP Donations
Grants Grants Grants Fund
Revenues:

Property taxes $ - - $ - $ - $
Other taxes - - - -
Licenses and permits - - - -
Fines and forfeitures 2,284 - - -
Use of money and property - 252 - 149
Intergovernmental 650,009 9,987 633,742 -
Charges for services - - - -
Other revenues - - - -
Total revenues 652,293 10,239 633,742 149
Expenditures:

Current:

General government 87,332 - - -
Police 1,146,840 - - -
Fire - - - -
Community development - - - -
Community services - - - -
Capital outlay - - - -
Debt service:

Principal retirement - - - -
Interest and fiscal charges - - - -
Total expenditures 1,234,172 - - -
Excess (deficiency) of
revenues over (under) expenditures (581,879) 10,239 633,742 149 Other financing sources (uses):

Transfers in - - - -
Transfers out - - (1,128,347) -
Total other financing sources (uses) - - (1,128,347) -
Net change in fund balances (581,879) 10,239 (494,605) 149 Fund balances (deficit), beginning of year, as previously reported (64,325) 16,915 759,070 7,002
Change within financial reporting entity (major to nonmajor) - - - - Correction of error 310,303 - (272,270) -
Fund balances (deficit), beginning of year, as restated 16,915 245,978 486,800 7,002 Fund balances (deficit), end of year 27,154 $ (335,901) $ (7,805) $ 7,151 $

SPECIAL REVENUE FUNDS

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(Continued)
‐103-

DEBT SERVICE
FUNDS
2006
CASP Road Maintenance PEG Transportation Housing Asset Certificates of Fund Fund Fund Fund Fund Participation
$ - - $ - $ - $ - $ - $
- - 147,939 - - -
- - - - - -
- - - - - -
(28,916) 2,235 7,031 1,442 44,502 1,140
1,287,016 - - 354,493 - -
- 22,140 - - - -
- - - - 93,087 -
1,258,100 24,375 154,970 355,935 137,589 1,140
- - 103,936 - - 4,700
- - - - - -
- - - - - -
- 1,221 - - 113,489 -
- - - 78,488 - -
- - - - - -
- - 26,474 - - 385,000
- - 1,082 - - 80,013
- 1,221 131,492 78,488 113,489 469,713
1,258,100 23,154 23,478 277,447 24,100 (468,573)
- - - - - 464,883
(2,094,034) - - (382,255) - -
(2,094,034) - - (382,255) - 464,883
(835,934) 23,154 23,478 (104,808) 24,100 (3,690)
2,994,143 87,930 337,711 439,024 11,079,857 (4,407)
- - - - - -
- - (3,050) (412,680) 365,420 -
2,994,143 87,930 334,661 26,344 11,445,277 (4,407)
$ 2,158,209 111,084 $ 358,139 $ (78,464) $ 11,469,377 $ (8,097) $

SPECIAL REVENUE FUNDS

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CITY OF LA MESA
Combining Statement of Revenues, Expenditures,
and Changes in Fund Balances
Non-Major Governmental Funds
For the Year Ended June 30, 2024
‐104-

DEBT SERVICE
FUNDS
2016 Parks
Government Obligation Public Storm and
Refunding Bonds Building Drains Recreation
Revenues:

Property taxes $ - 1,894,647 $ - $ - $
Other taxes - - - -
Licenses and permits - - - 224,640
Fines and forfeitures - - - -
Use of money and property 81,540 368,129 10,523 22,839
Intergovernmental - - - -
Charges for services - - - -
Other revenues - - - -
Total revenues 81,540 2,262,776 10,523 247,479
Expenditures:

Current:

General government - 6,799 - -
Police - - - -
Fire - - - -
Community development - - - -
Community services - - - -
Capital outlay 957,256 - 2,029,641 2,413,118
Debt service:

Principal retirement - 890,000 - -
Interest and fiscal charges - 685,700 - -
Total expenditures 957,256 1,582,499 2,029,641 2,413,118 Excess (deficiency) of
revenues over (under) expenditures (875,716) 680,277 (2,019,118) (2,165,639) Other financing sources (uses):

Transfers in 77,910 - 1,515,053 2,623,012
Transfers out (51,593) - - -
Total other financing sources (uses) 26,317 - 1,515,053 2,623,012 Net change in fund balances (849,399) 680,277 (504,065) 457,373 Fund balances (deficit), beginning of year, as previously reported 890,665 3,919,525 92,789 (1,210,873)
Change within financial reporting entity (major to nonmajor) - - - - Correction of error - - - 854,884
Fund balances (deficit), beginning of year, as restated 3,919,525 890,665 92,789 (355,989) Fund balances (deficit), end of year 4,599,802 $ 41,266 $ (411,276) $ 101,384 $

CAPITAL PROJECTS FUNDS

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(Concluded)
‐105-
Total
Misc Capital Asset Transportation Non-Major
Civic Capital Management CIP Governmental
Center Improvement Plan (formerly major) Funds
$ - - $ - $ - $ $ 1,894,647
- - - - 566,574
- - - 238,551 463,191
- - - - 142,233
6,717 1,958 21,557 27,581 1,035,278
- - - - 5,641,289
- - - - 438,485
- - - - 298,079
-
6,717 1,958 21,557 266,132 10,479,776
- - - - 1,073,048
- - - - 1,362,101
- - - - 896
- - - - 389,743
- - - - 83,128
- - - 3,078,802 8,478,817
-
- - - - 1,301,474
- - - - 766,795
- - - 3,078,802 13,456,002
6,717 1,958 21,557 (2,812,670) (2,976,226)
- - 51,594 4,699,738 9,432,190
- - - - (6,617,798)
- - 51,594 4,699,738 2,814,392
6,717 1,958 73,151 1,887,068 (161,834)
317,676 92,599 967,918 - 25,744,226
- - - (1,922,836) (1,922,836)
- - - - 707,470
317,676 92,599 967,918 (1,922,836) 24,528,860
$ 324,393 94,557 $ 1,041,069 $ (35,768) $ 24,367,026 $

CAPITAL PROJECTS FUNDS

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INTERNAL SERVICE FUNDS

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CITY OF LA MESA
Combining Statement of Net Position
Internal Service Funds
June 30, 2024
-106-
Employee Workers' Equipment Liability Risk
Benefits Compensation Replacement Financing Total
Assets
Current assets:

Cash and investments 107,274 $ 5,889,804 $ 2,897,982 $ 518,369 $ 9,413,429 $ Accounts receivable, net 319 - - - 319
Total current assets 107,593 5,889,804 2,897,982 518,369 9,413,748 Noncurrent assets:

Restricted cash and investments 12,801 - - - 12,801
Capital assets:

Nondepreciable - - - - -
Depreciable, net - - 10,813,486 - 10,813,486
Total capital assets - - 10,813,486 - 10,813,486
Total noncurrent assets 12,801 - 10,813,486 - 10,826,287 Total assets 120,394 5,889,804 13,711,468 518,369 20,240,035 Liabilities
Current liabilities:

Accounts payable 2,463,502 8,470 74,342 105,622 2,651,936 Salaries payable - 4,385 - 4,385 8,770
Interest payable - - 5,317 - 5,317
Long-term liabilities - due in one year - - 49,056 - 49,056 Total current liabilities 2,463,502 12,855 128,715 110,007 2,715,079 Noncurrent liabilities:

Long-term liabilities - due in more than one year - - 596,115 - 596,115 Claims payable - 4,519,528 - 1,701,432 6,220,960
Total noncurrent liabilities - 4,519,528 596,115 1,701,432 6,817,075 Total liabilities 2,463,502 4,532,383 724,830 1,811,439 9,532,154 Net Position
Net investment in capital assets - - 10,168,315 - 10,168,315 Restricted 12,801 - - - 12,801
Unrestricted (2,355,909) 1,357,421 2,818,323 (1,293,070) 526,765 Total net position (deficit) (2,343,108) $ 1,357,421 $ 12,986,638 $ (1,293,070) $ 10,707,881 $

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CITY OF LA MESA
Combining Statement of Revenues, Expenses, and Changes in Net Position Internal Service Funds
For the Year Ended June 30, 2024
-107-
Employee Workers' Equipment Liability Risk
Benefits Compensation Replacement Financing Total
Operating Revenues:

Charges for services 4,182,888 $ 1,414,440 $ 2,090,508 $ - $ 7,687,836 $ Other operating revenues 101,196 252,408 - 225 353,829
Total operating revenues 4,284,084 1,666,848 2,090,508 225 8,041,665 Operating Expenses:

Salaries and payroll - 127,542 - 125,657 253,199
Professional services 5,864,173 872 412,530 470,704 6,748,279 Supplies and materials - 618,493 - 2,427 620,920
Insurance premiums and settlements - 619,874 - 2,314,340 2,934,214 Depreciation - - 1,131,298 - 1,131,298
Amortization - - 51,027 - 51,027
Total operating expenses 5,864,173 1,366,781 1,594,855 2,913,128 11,738,937 Operating income (loss) (1,580,089) 300,067 495,653 (2,912,903) (3,697,272) Nonoperating Revenues (Expenses):

Investment income (loss) 13,983 558,471 209,786 176,178 958,418 Interest expense - - (20,732) - (20,732)
Total nonoperating income (loss) 13,983 558,471 189,054 176,178 937,686 Income (loss) before transfers (1,566,106) 858,538 684,707 (2,736,725) (2,759,586) Transfers:

Transfers in - - - 2,196,000 2,196,000
Total transfers - - - 2,196,000 2,196,000
Change in net position (1,566,106) 858,538 684,707 (540,725) (563,586) Net position (deficit), beginning of year, as
previously reported 498,883 (777,002) 7,509,708 (752,345) 6,479,244 Correction of error - 4,792,223 - 4,792,223
Net position (deficit), beginning of year, as
as restated 498,883 (777,002) 12,301,931 (752,345) 11,271,467 Net position (deficit), end of year (2,343,108) $ 1,357,421 $ 12,986,638 $ (1,293,070) $ 10,707,881 $

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CITY OF LA MESA
Combining Statement of Cash Flows
Internal Service Funds
For the Year Ended June 30, 2024
-108-
Employee Workers' Equipment Liability Risk
Benefits Compensation Replacement Financing Total

CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from other funds 4,182,569 $ 1,444,181 $ 2,105,749 $ - $ 7,732,499 $ Cash payments to suppliers for goods and services - (2,105,743) (359,192) (370,432) (2,835,367) Cash payments to employees for services - (124,798) - (122,913) (247,711) Insurance premiums and settlements (4,064,276) 212,807 - (2,123,381) (5,974,850) Other operating revenues 101,196 252,408 - 688 354,292
Net Cash Provided (Used) by Operating Activities 219,489 (321,145) 1,746,557 (2,616,038) (971,137)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Transfers in - - - 2,196,000 2,196,000
Cash paid to other funds (126,198) - - - (126,198)
Net Cash Provided by Noncapital Financing Activities (126,198) - - 2,196,000 2,069,802

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Payment of interest - - (20,732) - (20,732)
Payments on notes/leases payable - - (184,935) - (184,935) Net Cash (Used) for Capital and Related Financing Activities - - (205,667) - (205,667)

CASH FLOWS FROM INVESTING ACTIVITIES
Investment income 13,983 558,471 209,786 176,178 958,418 Net Cash (Used) by Investing Activities 13,983 558,471 209,786 176,178 958,418 Net Increase (Decrease) in Cash and Cash Equivalents 107,274 237,326 1,750,676 (243,860) 1,851,416 Cash and Cash Equivalents - beginning of the year 5,652,478 12,801 1,147,306 762,229 7,574,814 Cash and Cash Equivalents - end of the year $ 5,889,804 120,075 $ 2,897,982 $ 518,369 $ 9,426,230 $

RECONCILIATION TO STATEMENT OF NET POSITION
Current assets:

Cash and cash equivalents 107,274 $ 5,889,804 $ 2,897,982 $ 518,369 $ 9,413,429 $ Cash and cash equivalents - restricted 12,801 - - - 12,801 Total cash and cash equivalents 120,075 $ 5,889,804 $ 2,897,982 $ 518,369 $ 9,426,230 $ Reconciliation of operating income (loss) to net cash provided (used) by operating activities:

Operating income (loss) (1,580,089) $ 300,067 $ 495,653 $ (2,912,903) $ (3,697,272) $ Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:

Depreciation expense - - 1,131,298 - 1,131,298
Amortization expense - - 51,027 - 51,027
Change in assets and liabilities:

Accounts receivable (319) 29,741 15,241 463 45,126
Accounts payable 1,799,897 (1,486,378) 53,338 102,699 469,556 Claims payable - 832,681 - 190,959 1,023,640
Salaries and benefits payable - 2,744 - 2,744 5,488
Net Cash Provided (Used) by Operating Activities 219,489 $ (321,145) $ 1,746,557 $ (2,616,038) $ (971,137) $ Noncash Financing Activities
Gain (loss) on disposition of assets - $ - $ - $ - $ - $

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REPORT to the MAYOR and MEMBERS of the CITY COUNCIL
From the CITY MANAGER
DATE: November 12, 2025
SUBJECT: A. RESOLUTION APPROVING SECOND AMENDED

AND RESTATED REGIONAL WASTEWATER

DISPOSAL AGREEMENT AND AUTHORIZING THE

MAYOR TO SIGN THE AGREEMENT
B. RESOLUTION APPROVING METROPOLITAN

SEWERAGE SYSTEM ADMINISTRATIVE AGREEMENT
NO. 1 FOR UNIFIED MANAGEMENT OF INDUSTRIAL

WASTE DISCHARGE PRETREATMENT AND

ENHANCED SOURCE CONTROL
ISSUING DEPARTMENT: Public Works
SUMMARY:

Issues:

Should the City Council approve the attached Resolutions? A. Approving the Second Amended and Restated Wastewater Disposal Agreement and authorizing the Mayor to sign the agreement.

B. Approving the Metropolitan Sewerage System Administrative Agreement No. 1 for Unified Management of Industrial Waste Discharge Pretreatment and Enhanced Source Control.

Recommendation:

Approve the resolutions (Attachments A and B):

A. Approving the Second Amended and Restated Wastewater Disposal Agreement and authorizing the Mayor to sign the agreement.

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Report to Mayor and Councilmembers
Date: November 12, 2025
Page: 2 of 7
B. Approving the Metropolitan Sewerage System Administrative Agreement No. 1 for Unified Management of Industrial Waste Discharge Pretreatment and Enhanced Source Control.

Fiscal Impact:

All charges are through the City’s wastewater enterprise fund. Per the City of San Diego, as part of the new agreement and subsequent billing system, the City’s wastewater treatment cost share will increase by an estimated 0.4% (estimated at $750,000 a year starting 2027).

City’s Strategic Goals:
 Invest in infrastructure to serve the needs of the community.  Ensure a strong financial outlook through careful planning, sustainable service levels, and fiscal sustainability.

Climate Action Plan Reduction Strategy
 W-2: Local Water Supply Resilience
BACKGROUND:

La Mesa/Metro Wastewater History
The City of La Mesa operates an independent City-owned and maintained wastewater system consisting of collector sewer pipes and larger trunk sewer mains serving resident and business sewage disposal needs. Historically, sewage flows have conveyed via gravity to the west and south, toward sewage infrastructure located in the City of San Diego. From there, sewage is pumped and treated in accordance with federal and state standards, and the treated effluent discharged in the Pacific Ocean via the Point Loma ocean outfall, which was constructed in 1963.

The City of La Mesa has historically been a party to various agreements with the City of San Diego to handle the sewage that residents and businesses produce. These agreements evolved over the decades and have always been based around the premise that San Diego’s infrastructure handles La Mesa’s sewage flows, and La Mesa pays treatment and transmission charges to the City of San Diego. La Mesa does not treat any sewage nor own any treatment infrastructure.

In the period from 1986 to 2002 a series of pollution related legal rulings precipitated upgrades to the major treatment facilities within City of San Diego. In 1998 it was decided

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Report to Mayor and Councilmembers
Date: November 12, 2025
Page: 3 of 7
that the major facilities in San Diego should be “regional” facilities and managed as such.

City of San Diego would own and maintain the “regional” facilities, and the Metro Participating Agencies would lease capacity and provide operating and maintenance funding.

In 1998, a Regional Wastewater Disposal Agreement was negotiated between the City of San Diego and the Metro Participating Agencies. This agreement outlined roles and responsibilities of the parties, a billing structure, and gave the Metro Participating Agencies an advisory role through the creation of the Metro Commission (a Commission of the City of San Diego, with each Participating Agency having one appointed representative). The 1998 Regional Wastewater Disposal Agreement included language that outlines the City of San Diego’s responsibility to allow Metro Commission to conduct due diligence and review shared costs related to the “regional” facilities, which were then renamed to “Metro” facilities.

In 2000, the Participating Agencies formed the Metro Wastewater Joint Powers Authority (Metro JPA) as a separate legal entity with the authority and responsibility to take actions and make decisions pertaining to the 1998 Regional Wastewater Disposal Agreement in the Participating Agencies’ mutual interests.

The Metro JPA currently has 12 participating agencies that use the Metro Wastewater System. The JPA meets monthly in a publicly noticed meeting with City of San Diego to approve costs, present updates, and discuss regional wastewater matters. La Mesa is an original member of the Metro JPA and has an appointee that represents the City on the Metro JPA Board.

In 2021, the City of San Diego and the Metro Participating Agencies amended the Regional Wastewater Agreement as a temporary measure while placing six items referred to as the “Parking Lot Items,” that would need to be resolved through good faith negotiations and one or more amendments in the future.

SARA Agreement
The Second Amended and Restated Regional Wastewater Disposal Agreement (SARA) (Attachment C) amends the 2021 Amended Agreement between the City of San Diego and the 12 participating agencies that use the Metro Wastewater System. The SARA agreement shall replace the amended agreement and shall be in place for the next 40 years (through 2065).
 SARA is the result of over four years of negotiations between the Participating Agencies and the City of San Diego.

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Report to Mayor and Councilmembers
Date: November 12, 2025
Page: 4 of 7
 SARA updates the legal document that governs our regional cooperation on wastewater treatment and recycled/repurified water planning.  SARA reorganizes the old agreement and modernizes the agreement language.  SARA resolves the six previously tabled “Parking Lot Items” that were left unresolved in 2021 including pretreatment and re-purified water income.  SARA provides more flexibility for future adjustments to keep the document relevant.

Pure Water San Diego Considerations
The Pure Water San Diego project is a dual use potable water/wastewater improvement project designed to offload sewer flows to Point Loma Treatment Plant, as well as provide a new regional potable water source. The 2021 Amended Agreement was deemed to be inadequate to address all the concerns of the JPA and the City of San Diego as related to repurified water therefore requiring the modifications described below.

Administrative Agreement No. 1
As part of the SARA process, a new framework was established for specific programmatic or ministerial type changes to be accomplished through Administrative Agreements. This prevents the future need to alter the SARA because of program changes. Each Administrative Agreement may be approved individually by a Participating Agency through a delegation of authority to that Participating Agency’s Metro Commissioner/Metro JPA Board Member and provided the approval threshold is reached, shall become part of the approved SARA.

Administrative Agreement No. 1 (Attachment E) addresses the pretreatment program conducted by the City of San Diego. The pretreatment program involves the inspection and permitting of facilities within a range of commercial and industrial classifications which have a wastewater discharge. The inspection and permitting has historically been conducted by City of San Diego. Changes under the Administrative Agreement No. 1 include:
 Inspection and permitting billing will now be administered by the City of San Diego.

Previously La Mesa was billed by San Diego and obligated to recoup costs from business owners. Now, San Diego will directly bill the business owners.  Legal language was clarified related to the responsibility of City of San Diego and each Participating Agency related to pretreatment.

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Report to Mayor and Councilmembers
Date: November 12, 2025
Page: 5 of 7
DISCUSSION:

The City of La Mesa’s representative to the Metro JPA is former Councilmember Mr.

William Baber, who has been in support of the SARA agreement goals and objectives throughout the four years of negotiations between the JPA and the City of San Diego. Mr.

Baber is also a member of the Pure Water Ad Hoc Committee which provided thorough review and guidance to the greater Metro Board regarding SARA and Pure Water items.

The City of La Mesa’s geographical location within the region necessitates conveyance treatment of our wastewater sewage via the Metro system and to the Point Loma Treatment Plant, operated by City of San Diego. This arrangement ensures wastewater treatment service for La Mesa residents is preserved without any operational or legal interruption. The ability for La Mesa to offload flows or construct its own treatment facilities is not economically feasible or realistic. Therefore, conveying flows to Metro facilities is the expected outcome for the City of La Mesa for the foreseeable future. The City’s best interests lie in partnership with the Metro JPA and the City of San Diego as related to wastewater treatment and transmission.

Costs
Increased costs to La Mesa are expected in the SARA agreement. A change from strength-based (SBB) type billing to a functional asset allocation (FAB) type billing results in a separate peak capacity charge. La Mesa’s system has an oversized peak capacity charge as compared to some other jurisdictions with newer sewer infrastructure, which is a disadvantage by increasing our fair-share cost.

Fortunately, this increase can be mitigated or eliminated in the future if modernization of La Mesa’s sewer system is able to limit peak flow capacity needs. City staff have been working on this issue through Wastewater Capital Improvements (CIP) for many years and the current Phase 6 Sewer Inflow and Infiltration project continues this work.

The graph below shows the current and anticipated cost changes for all agencies in Metro JPA.

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Report to Mayor and Councilmembers
Date: November 12, 2025
Page: 6 of 7
Data Provided by City of San Diego Consultant (Stantec) Benefits
The SARA renews the commitment to remain within the same framework for wastewater treatment between the Metro JPA and the City of San Diego. This ensures La Mesa shall have adequate treatment capacity, representation, and advisory authority for the next 40 years. It is in the best interests of the City to remain within the JPA and retain a strong agreement which outlines the legal requirements and operational expectations of all parties involved.

CONCLUSION:

Staff recommends that the Council adopt the attached resolutions.

A. Approving the Second Amended and Restated Wastewater Disposal Agreement and authorizing the Mayor to sign the agreement.

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Report to Mayor and Councilmembers
Date: November 12, 2025
Page: 7 of 7
B. Approving the Metropolitan Sewerage System Administrative Agreement No. 1 for Unified Management of Industrial Waste Discharge Pretreatment and Enhanced Source Control.

Reviewed by: Respectfully submitted by:
____________________ ____________________________
Greg Humora Michael Throne, PE
City Manager Director of Public Works
Attachments: A. Resolution SARA
B. Resolution Administrative Agreement No. 1
C. SARA Agreement
D. SARA Exhibits
E. Administrative Agreement 1

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RESOLUTION NO. 2025-

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA MESA

APPROVING THE SECOND AMENDED AND RESTATED WASTEWATER

DISPOSAL AGREEMENT AND AUTHORIZING THE MAYOR TO SIGN THE

AGREEMENT
WHEREAS, the City of La Mesa has a strategic goal to invest in infrastructure to serve the needs of the community;
WHEREAS, the 1998 Regional Wastewater Disposal Agreement between the City of San Diego and the participating agencies previously set planning, capacity rights and cost allocations of wastewater facilities in the Metro Wastewater System; WHEREAS, City of La Mesa Resolution 2018-078 passed July 24th 2018 approved the First Amended and Restated Wastewater Disposal Agreement which addressed amendments related to the Pure Water Program and allocation of costs and financial protection of wastewater rate payers;
WHEREAS, further adjustments deemed necessary precipitated a Second Amended and Restated Wastewater Disposal Agreement expanding on items related to the wastewater billing methodology, agency roles and responsibilities, and cost-sharding approaches for Phase 1 and Phase 2 of the Pure Water Program;
WHEREAS, the Second Amended and Restated Agreement was considered and approved by Metro Commission/Metro JPA on October 2nd 2025 with a vote of 11-1, and WHEREAS, each participating agency and the City of San Diego are required to approve the Agreement independently, with the implementation date July 1st following the last participating agency approval.

NOW, THEREFORE, BE IT AND IT IS HEREBY RESOLVED by the City Council of the City of La Mesa, California that the City Council approves the Second Restated Wastewater Disposal Agreement and authorizes the Mayor to sign the Agreement.

BE IT FURTHER RESOLVED should the Agreement be modified and if the modifications are non-substantive changes or Administrative Agreements with non-substantive impacts to the City of La Mesa then the Mayor is authorized to sign such a modified agreement at the discretion of the City Manager.

PASSED AND ADOPTED at a Regular meeting of the City Council of the City of La Mesa, California, held the 12
th day of November 2025, by the following vote, to wit:

AYES:

NOES:

ABSENT:

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CERTIFICATE OF CITY CLERK
I, MEGAN WIEGELMAN, City Clerk of the City of La Mesa, California, do hereby certify the foregoing to be a true and exact copy of Resolution No. 2025- , duly passed and adopted by the City Council of said City on the date and by the vote therein recited.

MEGAN WEIGELMAN, CMC, City Clerk
(SEAL OF CITY)

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RESOLUTION NO. 2025-

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA MESA

APPROVING METROPOLITAN SEWERAGE SYSTEM ADMINISTRATIVE
AGREEMENT NO. 1 FOR UNIFIED MANAGEMENT OF INDUSTRIAL WASTE

DISCHARGE PRETREATMENT AND ENHANCED SOURCE CONTROL

PROGRAMS
WHEREAS, the City of La Mesa has a strategic goal to invest in infrastructure to serve the needs of the community;
WHEREAS, the 1998 Regional Wastewater Disposal Agreement between the City of San Diego and the participating agencies previously set planning, capacity rights and cost allocations of wastewater facilities in the Metro Wastewater System; WHEREAS, City of La Mesa Resolution 2018-078 passed July 24th 2018 approved the First Amended and Restated Wastewater Disposal Agreement which addressed amendments related to the Pure Water Program and allocation of costs and financial protection of wastewater rate payers;
WHEREAS, further adjustments deemed necessary precipitated a Second Amended and Restated Wastewater Disposal Agreement expanding on items related to the wastewater billing methodology, agency roles and responsibilities, and cost-sharding approaches for Phase 1 and Phase 2 of the Pure Water Program; and
WHEREAS, Administrative Agreement No. 1 to the Second Amended and Restated Wastewater Disposal Agreement addresses specific programmatic details related to the Industrial Waste Discharge Pretreatment and Enhanced Source Control Program which is coordinated by City of San Diego.

NOW, THEREFORE, BE IT AND IT IS HEREBY RESOLVED by the City Council of the City of La Mesa, California that the City Council approves Administrative Agreement No. 1 to the Second Restated Wastewater Disposal Agreement, and authorizes the Mayor to sign the Administrative Agreement.

BE IT FURTHER RESOLVED for any future Metropolitan Sewerage Administrative Agreements with non-substantive impacts to the City of La Mesa, the Mayor is authorized to sign such a modified agreement at the discretion of the City Manager.

PASSED AND ADOPTED at a Regular meeting of the City Council of the City of La Mesa, California, held the 12
th day of November 2025, by the following vote, to wit:

AYES:

NOES:

ABSENT:

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MEGAN WEIGELMAN, CMC, City Clerk
(SEAL OF CITY)

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10-23-25
4907-3419-6844

SECOND AMENDED AND RESTATED

REGIONAL WASTEWATER DISPOSAL AGREEMENT

BETWEEN

THE CITY OF SAN DIEGO
AND

THE PARTICIPATING AGENCIES
IN

THE METROPOLITAN SEWERAGE SYSTEM

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4907-3419-6844

TABLE OF CONTENTS
Page

1. DEFINITIONS ....................................................................................................................3

2. OWNERSHIP AND OPERATION OF THE METRO SYSTEM......................................9

2.1 Rights of the Parties.................................................................................................9

2.2 Metro System Services ............................................................................................9

2.3 Flow Commitment.................................................................................................10

2.4 Funding Obligations ..............................................................................................10

2.5 Limitations on Types and Condition of Wastewater .............................................11

2.6 Enforcement Actions .............................................................................................11

2.7 Right of First Refusal.............................................................................................13

2.8 Uniform Enforcement of Pretreatment Program by City ......................................14

2.9 Wastewater Generated at Military Bases...............................................................16

3. CAPACITY RIGHTS........................................................................................................16

3.1 Contract Capacity ..................................................................................................16

3.2 Inter-Agency Transfers of Contract Capacity........................................................16

3.3 New Contract Capacity..........................................................................................17

3.4 Reductions in Metro System Capacity ..................................................................18

3.5 Restrictions on Veto of Transfers and Acquisitions of Capacity ..........................18

3.6 Amendments to Exhibits B....................................................................................18

3.7 The South Bay Ocean Outfall................................................................................18

4. FINANCE, BUDGETING, AND ACCOUNTING: PAYMENT AND MONITORING PROVISIONS....................................................................................................................18

4.1 Payment for Metro System Facilities ....................................................................18

4.2 Payment for Additional Metro System Facilities ..................................................19

4.3 Payment for Operation and Maintenance ..............................................................19

4.4 Charges Based on Flow, Strength and Fixed Capacity: Exception .......................19

4.5 Monitoring Flow and Strength...............................................................................21

5. FINANCE, BUDGETING, AND ACCOUNTING: SYSTEM OF CHARGES...............22

5.1 Charges Authorized ...............................................................................................22

5.2 Functional Allocated Billing (FAB) ......................................................................22

5.3 Metro System Costs...............................................................................................23

5.4 Excluded Costs ......................................................................................................23

5.5 Metro System Revenues and Allocations ..............................................................23

5.6 Excluded Revenue .................................................................................................24

5.7 Estimate and Billing Schedule and Year End Adjustment ....................................24

5.8 Financial Statements..............................................................................................25

5.9 Debt Financing.......................................................................................................25

5.10 Allocation of Operating Reserves and Debt Service Coverage.............................26

5.11 Amending the System of Charges .........................................................................26

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6. FINANCE, BUDGETING, AND ACCOUNTING: PURE WATER PROGRAM COST ALLOCATION AND REVENUES – PHASE 1 ..............................................................26

6.1 North City Water Reclamation Plant Modification ...............................................26

6.2 New, Expanded or Modified Metro System Facilities ..........................................26

6.3 Costs Excluded from Metro System Costs – Phase 1............................................26

6.4 North City Water Reclamation Plant Improvement Costs Included as Metro System Costs..........................................................................................................27

6.5 Reallocation of PWP Costs incurred since FY 2014 .............................................27

6.6 Revenue Sharing for Repurified Water .................................................................28

6.7 Capital Expense Rate.............................................................................................30

6.8 Amending Pure Water Program Cost Allocation and Revenues – Phase 1...........32

7. FINANCE, BUDGETING, AND ACCOUNTING: PURE WATER PROGRAM COST ALLOCATION AND REVENUES – PHASE 2 ..............................................................32

7.1 Pure Water Program – Phase 2 ..............................................................................32

7.2 Costs Excluded As Metro System Costs ...............................................................32

7.3 Revenue Sharing for Repurified Water – Phase 2 .................................................33

7.4 Capital Expense Rate – Phase 2.............................................................................33

8. FUTURE NEGOTIATIONS AND COOPERATION ......................................................34

9. THE METRO COMMISSION..........................................................................................34

9.2 Advisory Responsibilities of Metro JPA ...............................................................34

9.3 Delegation of Decision-Making Authority of the Metro JPA ...............................35

9.4 Standing .................................................................................................................35

10. DISPUTE RESOLUTION.................................................................................................35

10.1 Mandatory Non-Binding Mediation ......................................................................35

10.2 Selection of Mediator ............................................................................................35

10.3 Mediation Expenses...............................................................................................35

10.4 Conduct of Mediation ............................................................................................35

10.5 Mediation Results ..................................................................................................36

10.6 Performance Required During Dispute .................................................................36

11. INSURANCE ....................................................................................................................36

11.1 City Shall Maintain All Required Insurance .........................................................36

11.2 Substantially Equivalent Coverage........................................................................36

12. INTERRUPTION OF SERVICE ......................................................................................36

13. NOTICES REQUIRED UNDER AGREEMENT.............................................................37

14. EFFECTIVE DATE AND EXPIRATION........................................................................37

14.1 Effective Date ........................................................................................................37

14.2 Expiration ..............................................................................................................37

14.3 Contract Capacity Rights Survive Expiration........................................................37

14.4 Abandonment.........................................................................................................38

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15. ADMINISTRATIVE AGREEMENTS .............................................................................38

15.1 Use and Process for Administrative Agreements ..................................................38

16. GENERAL.........................................................................................................................39

16.1 Exhibits ..................................................................................................................39

16.2 Electronic Exhibits and Attachments.....................................................................39

16.3 Amendments to Agreement ...................................................................................40

16.4 Construction of Agreement....................................................................................43

16.5 Declarations Re: Agreement..................................................................................44

16.6 Right to Make Other Agreements..........................................................................44

16.7 Statute of Limitations to Resolve Billing Issues....................................................44

16.8 Counterparts and Electronic Signatures.................................................................45

16.9 Transparency..........................................................................................................45

16.10 Incorporation of Recitals .......................................................................................45

16.11 Joint Exercise of Power .........................................................................................45 ACRONYM LIST:

ARA Amended and Restated Regional Wastewater Disposal Agreement COD Chemical Oxygen Demand
CIP Capital Improvement Project(s)
CPM Construction Project Management
CWA San Diego County Water Authority
ECAWP JPA East County Advanced Water Purification Joint Powers Authority FAB Functional Allocated Billing
MBC Metropolitan Biosolids Center
MGD Millions of Gallons per Day
NCWRP North City Water Reclamation Plant
NPDES National Pollutant Discharge Elimination System
PLWTP Point Loma Wastewater Treatment Plant
PWP Pure Water Program
RSDP Reject Stream from Demineralization Process
SBOO South Bay Ocean Outfall
SBWRP South Bay Water Reclamation Plant
TSS Total Suspended Solids

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- 1 -
10-23-25
4907-3419-6844

SECOND AMENDED AND RESTATED REGIONAL WASTEWATER DISPOSAL

AGREEMENT

THIS SECOND AMENDED AND RESTATED REGIONAL WASTEWATER
DISPOSAL AGREEMENT (“Agreement”) is made and entered into this ___ day of ______________, 20___, by and between the CITY OF SAN DIEGO, a municipal corporation (the “City”), on the one hand; and the CITY OF CHULA VISTA, a municipal corporation; the CITY OF CORONADO, a municipal corporation; the CITY OF DEL MAR, a municipal corporation; the CITY OF EL CAJON, a municipal corporation; the CITY OF IMPERIAL BEACH, a municipal corporation; the CITY OF LA MESA, a municipal corporation; the LEMON GROVE SANITATION DISTRICT, a political subdivision of the State of California; the CITY OF NATIONAL CITY, a municipal corporation; the CITY OF POWAY, a municipal corporation; the OTAY WATER DISTRICT, a political subdivision of the State of California; the PADRE DAM MUNICIPAL WATER DISTRICT, a political subdivision of the State of California; and the SAN DIEGO COUNTY SANITATION DISTRICT, a political subdivision of the State of California (collectively, the “Participating Agencies”), on the other hand. The City and the Participating Agencies may be referred to herein individually as a “Party,” and collectively as the “Parties.”

RECITALS
WHEREAS, the City and the Participating Agencies (or their predecessors in interest) entered into that certain Regional Wastewater Disposal Agreement dated May 18, 1998 (the “1998 Agreement”), which provided, among other things, for certain contract rights to capacity in the Metropolitan Sewerage System, a system of wastewater conveyance, treatment, and disposal facilities (“Metro System”) and the establishment of a mechanism to fund the planning, design, construction, operation, and maintenance of the Metro System by the City and the Participating Agencies; and
WHEREAS, the purposes of the 1998 Agreement were: (1) to replace the prior-existing sewage disposal agreements between the City and the Participating Agencies; (2) to provide certain contract rights to capacity in the Metro System to the Participating Agencies; (3) to establish a mechanism to fund the planning, design, construction, operation and maintenance of the Metro System by the City and the Participating Agencies as necessary to provide hydraulic capacity, and to comply with applicable law and with generally accepted engineering practices; and (4) to establish a system of charges which allocates the costs of the planning, design and construction of such new wastewater conveyance, treatment and disposal facilities as are necessary solely to provide for new capacity on a fair and equitable basis; and WHEREAS, on April 29, 2014 the San Diego City Council gave its approval and support for the Pure Water San Diego program by adoption of Resolution No. R-308906, which approved and supported the City’s efforts to develop an implementation strategy to offload wastewater flow from the Point Loma Wastewater Treatment Plant through implementation of potable reuse, resulting in effluent discharged to the Pacific Ocean being equivalent to what would be achieved by upgrading the Point Loma Wastewater Treatment Plant to a secondary treatment plant (secondary equivalency); and

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WHEREAS, the City is implementing a phased, multi-year program designed to achieve compliance with the Clean Water Act and regionally produce up to 83 million gallons per day of safe, reliable potable water using new, expanded, or modified facilities, some of which will include Metro System facilities, in order to achieve secondary equivalency at the Point Loma Wastewater Treatment Plant; and
WHEREAS, the Pure Water Program will not only benefit the City by producing repurified water, but also the Participating Agencies and their wastewater customers, especially if secondary equivalency is recognized through federal legislation amending the Clean Water Act. Specifically, implementation of the Pure Water Program will reduce wastewater discharges to the Point Loma Wastewater Treatment Plant, part of the Metro System where a large portion of the Participating Agencies’ wastewater is currently treated and disposed by discharging it into the Pacific Ocean.

By diverting wastewater from the Point Loma Wastewater Treatment Plant and reducing the effluent discharged into the Pacific Ocean, the City and the Participating Agencies will potentially avoid billions of dollars in unnecessary capital, financing, energy, and operating costs to upgrade the Point Loma plant to secondary treatment at full capacity. Avoiding such costs would result in significant savings for regional wastewater customers and achieve environmental benefits by reducing ocean discharge; and
WHEREAS, on or around November 2019, the East County Advanced Water Purification Joint Powers Authority (the “ECAWP JPA”) was created to implement a potable reuse program to improve local and regional water supply reliability to supply advanced treated recycled water to East San Diego County through the East County Advanced Water Purification Project (the “ECAWP Project”). The ECAWP Project is planned to capture and treat approximately 15 million gallons per day of wastewater that would otherwise be disposed of in the Metro System to produce an annual average supply of approximately 11.5 million gallons per day of new local drinking water. By diverting some wastewater and wastewater content away from the Metro System, the ECAWP Project has the ability to aid and contribute towards the City and region’s efforts to produce a regional annual average of up to 83 million gallons per day of water suitable for potable reuse by December 31, 2035, as described in the Cooperative Agreement in Support of Pure Water San Diego executed by the City and certain environmental stakeholders on December 9, 2014. The ECAWP Project includes a residuals bypass system that will convey RSDP (as defined herein) from the advanced water purification facility, and Centrate from the solids dewatering process of the solids handling facility, to an existing regional sewage gravity pipeline owned and operated by the City for treatment and disposal; and
WHEREAS, effective on or around August 22, 2021, the City and the Participating Agencies amended the 1998 Agreement by executing an Amended and Restated Regional Wastewater Disposal Agreement (the “ARA”) to address the costs and revenues associated with Phase 1 of the Pure Water Program, including specific cost allocations related to the construction, expansion, and/or modification of Metro System facilities and Water Repurification System facilities designed to produce up to 30 million gallons per day of Repurified Water (“Phase 1”).

The ARA provided that within one year of its effective date, the Parties intended to meet and negotiate in good faith regarding one or more amendments to the ARA or to its Exhibits to address multiple outstanding items described in Section 2.9 of the ARA; and

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WHEREAS, Section 14.2 of the ARA provided that the Parties may amend the ARA by a written agreement between the City and all Participating Agencies stating the Parties’ intent to amend or supplement the agreement; and
WHEREAS, in an effort to address in good faith the outstanding items described in Section 2.9 of the ARA, and comprehensively and equitably address the costs, revenues, and billing system associated with the Pure Water Program and the related construction, expansion, and/or modification of Metro System facilities beyond Phase 1, the City and Participating Agencies wish to amend and restate the ARA as provided herein.

NOW, THEREFORE, in consideration of the mutual promises set forth in this Agreement, the City and the Participating Agencies restate and amend the ARA and agree as follows:

1. DEFINITIONS

1.1 Administrative Agreement shall refer to a formal binding contract, approved under the process set forth in Section 15 of this Agreement, which implements technical, administrative, operational, and/or procedural details of this Agreement.

1.2 Administrative Approval is an approval mechanism authorized by this Agreement that refers to a City administrative process by which the subject of a particular action is presented to the City’s Director of the Public Utilities Department or their designee for approval, based on discussion and evaluation according to sound engineering standards if applicable, and any additional requirements related to review for the action requiring the City’s Administrative Approval as set forth in this Agreement.

1.3 Annual Average Daily Flow is the number, in millions of gallons of wastewater per day (“MGD”), calculated by dividing total Flow on a fiscal year basis by the number of days in the applicable year, which is a term used for billing purposes.

1.4 ARA shall mean the Amended and Restated Regional Wastewater Disposal Agreement between the City and the Participating Agencies effective August 22, 2021.

1.5 Capital Expense Rate shall mean the same as the term is defined in Section 6.7.2.

1.6 Capital Improvement Costs means all costs of the planning, design, financing, construction, and/or replacement necessary to render a capital project facility fully operational, including upgrades and reconstruction, consistent with the City’s policies and procedures. This includes costs for planning and environmental work; procurement of consultants or contractors to perform such work; construction management; investigative studies and pre-design work; labor and materials; inspection and testing; and financing cost including interest on financial instruments.

1.7 Centrate shall mean the liquid byproduct that results from the dewatering of digested solids as part of wastewater treatment processes.

1.8 Chemical Oxygen Demand or COD means the measure of the chemically decomposable material in wastewater, as determined by the procedures specified in the most

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current edition of “Standard Methods for the Examination for Water and Wastewater,” or any successor publication which establishes the industry standard.

1.9 City shall mean and refer to the City of San Diego.

1.10 City’s Water Utility shall mean any and all facilities, properties, improvements and works at any time owned, controlled or operated by the City as part of the public utility system of the City for water purposes, for the development, obtaining, conservation, production, storage, treatment, transmission, furnishing and distribution of water and its other commodities or byproducts for public and private use (whether located within or without the City), and any related or incidental operations designated by the City as part of the Water System, including reclaimed and re-purified water.

1.11 City Water Utility PWP Costs are those Pure Water Program costs allocated to the City’s Water Utility and therefore excluded as Metro System Costs under Section 6.3 of this Agreement.

1.12 Contract Capacity is the contractual right possessed by each Participating Agency to discharge wastewater into the Metro System pursuant to this Agreement up to the limits set forth in Exhibit B, Distribution of Wastewater System Capacity Rights, attached hereto.

1.13 Contract Capacity Transfers shall refer to the capacity transfers initiated based on Metered Flow and Strength data using the methodology set forth in Exhibit E, Methodology for Contract Capacity Transfers, which change a Participating Agency’s Contract Capacity, as set forth more fully in Section 4.4.3.1 and 4.4.3.2. These changes will generally be made to a single Participating Agency’s annual Contract Capacity to correct capacity exceedances but can also be made to reduce a Participating Agency’s Contract Capacity.

1.14 CWA shall mean the San Diego County Water Authority.

1.15 ECAWP JPA shall mean the East County Advanced Water Purification Joint Powers Authority. The ECAWP JPA itself is not a Participating Agency or a Party to this Agreement.

1.16 ECAWP JPA Agencies shall mean collectively the City of El Cajon, the Padre Dam Municipal Water District, and the San Diego County Sanitation District.

1.17 ECAWP Project shall mean the ECAWP JPA’s project to capture and treat wastewater that would otherwise be disposed of in the Metro System to produce an annual average supply of approximately 11.5 MGD of new local drinking water, as well as other byproducts such as recycled water and energy recovery facilities.

1.18 Fixed Capacity shall mean the capacities for Monthly Average Daily Flow, Incremental Peak Flow, RSDP, COD and TSS for each agency as set forth in Exhibit B.

1.19 Fixed Capacity Charge shall mean the charges set forth in Exhibit B that are identified as “Fixed Capacity Charges” that represent the Parties’ proportional charges for

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maintaining the Metro System. Items such as debt service are also included in the Fixed Capacity Charges.

1.20 Flow shall refer to the flow of wastewater discharged by the City and/or one or more Participating Agency/ies into the Metro System.

1.21 Functional Allocated Billing or FAB shall mean the method for distributing all capital, operations, and maintenance Metro System Costs and Revenues on an annual basis by grouping expenses according to their purposes and the current approved Functional-Design Methodology.

1.22 Functional-Design Methodology shall mean the process of allocating fixed and variable Operation and Maintenance Costs and Capital Improvement Costs to Flow, RSDP and Strength parameters recognizing the benefits of both the design criteria and the primary function of a unit process.

1.23 Incremental Peak Flow shall mean the Peak Flow minus the Monthly Average Daily Flow.

1.24 Industrial Wastewater means all wastewater, excluding domestic wastewater, and shall include all wastewater from any producing, manufacturing, processing, institutional, commercial, service, agricultural, or other operation. These may also include wastes of human origin similar to domestic wastewater.

1.25 Industrial User means a discharger of Industrial Wastewater to a public sewer. A Participating Agency may be an Industrial User.

1.26 Joint Administrative Approval Process is an approval process authorized by this Agreement by which an Administrative Agreement may be created, revised, supplemented, replaced or terminated, subject to the review and approval process set forth more fully in Section 15.

1.27 MBC Return shall mean and refer to Centrate created at the Metropolitan Biosolids Center, 5240 Convoy St, San Diego, CA 92111. MBC Return shall contain Metered Flow, TSS and COD.

1.28 Metered Flow shall mean the amount or volume of wastewater captured by meters that exist throughout the Metro System, estimates from unit count areas, or agreed upon estimates of flows where unit counts are not appropriate. When meters are out of service, estimates can be used to fill in data gaps. These meters, which may or may not be owned by the City, are further defined in Exhibit F, Metro System Flow Formulas and Sampling Locations, which may be amended from time to time.

1.29 Metro Commission or Metro JPA is the advisory body described under Section 9.

1.30 Metro System Costs shall mean, at a minimum, those costs set forth in Section 5.3 and as otherwise set forth in this Agreement.

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1.31 Metro System Revenues are those revenues set forth in Section 5.5.

1.32 Metropolitan Sewerage System or Metro System shall mean and consist of those facilities which are listed, shown and/or described in Exhibit A, Metro Facilities (Electronic Exhibit); file name: [Enter]; time stamp of file, software used to open and view file including version; included herewith as CD-ROM/DVD-ROM, including any amendments thereto authorized by this Agreement. Exhibit A includes current constructed facilities and proposed future facilities.

1.33 Monthly Average Daily Flow is the number, in MGD, calculated by dividing total Flow on a monthly basis by the number of days in that month.

1.34 Municipal System shall mean the City’s wastewater collection system, consisting of pipelines and pump stations, which collects wastewater within the City of San Diego and conveys it to the Metropolitan Sewerage System for treatment and disposal.

1.35 New Contract Capacity shall mean capacity in excess of the Contract Capacity set forth in Exhibit B and authorized subject to Section 3.3.

1.36 North City Water Reclamation Plant or NCWRP is the wastewater treatment facility located at 4949 Eastgate Mall in San Diego, which includes four major processes: primary treatment, secondary treatment, tertiary treatment, and disinfection.

1.37 Operation and Maintenance Costs are the costs to operate, maintain, manage, repair, and keep the Metro System conveyance, disposal, treatment, and reuse facilities functioning in accordance with all applicable laws, rules, and regulations.

1.38 Participating Agencies shall mean all the local governments and agencies that executed this Agreement other than the City.

1.39 Peak Flow represents the wastewater flow in millions of gallons of wastewater per day that is captured in the highest 1-hour period in a fiscal year.

1.40 Point Loma Wastewater Treatment Plant or PLWTP is the main City wastewater treatment plant with a Monthly Average Daily Flow capacity of 240 million gallons per day and a peak flow capacity of 432 million gallons per day (as of the date of this Agreement).

It is an advanced primary treatment plant which includes four major processes: screening, grit removal, chemically enhanced sedimentation, and digestion.

1.41 Pooled Capacity shall refer to the capacity in the Metro system greater than that which has been designated in Exhibit B. Pooled Capacity amounts are shown in Exhibit E, Methodology for Contract Capacity Transfers, and may be recalculated from time to time as set forth more fully in this Agreement.

1.42 Postage Stamp Methodology is a methodology that can allocate a single uniform cost to any of the annual Contract Capacity cost parameters identified in Exhibit B. This methodology assumes that even though a particular discharger may not utilize all of the infrastructure, all dischargers into the Metro System benefit from the shared infrastructure.

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1.43 Projected Future Strength and Flow Amounts are the five (5) values described below:

1.43.1 Projected Future Metro Flow is the estimated amount of Monthly Average Daily Flow, stated in millions of gallons per day (MGD), that the City and each Participating Agency are projected to have in a designated future year – currently, the 2050 fiscal year. Projected Future Metro Flow for each Party is stated in Exhibit B.

1.43.2 Projected Future Incremental Peak Flow is the estimated amount of Annual Incremental Peak Flow, stated in millions of gallons per day (MGD), that the City and each Participating Agency are projected to have in a designated future year – currently, the 2050 fiscal year. Projected Future Incremental Peak Metro Flow for each Party is stated in Exhibit B.

1.43.3 Projected Future RSDP Flow is the estimated amount of RSDP Flow, stated in millions of gallons per day (MGD), that the City and each Participating Agency are projected to have in a designated future year – currently, the 2050 fiscal year. Projected Future RSDP Flow for each Party is stated in Exhibit B.

1.43.4 Projected Future COD Flows is the estimated amount of Chemical Oxygen Demand (COD), stated in pounds per day, that the City and each Participating Agency are projected to have in a designated fiscal year – currently, the 2050 fiscal year. Projected Future COD Flows for each Party are stated in Exhibit B.

1.43.5 Projected Future TSS Flows is the estimated amount of Total Suspended Solids (TSS) stated in pounds per day, that the City and each Participating Agency are projected to have in a designated fiscal year – currently, the 2050 fiscal year. Projected Future TSS Flows for each Party are stated in Exhibit B.

1.44 Pure Water Capital Melded Percentage is the proportionate share stated in Column 7 of Exhibit B (formerly Column 12 of Exhibit G of the ARA), by which Pure Water Program Capital Improvement Costs, Repurified Water Revenue, and the Capital Expense Rate will be allocated among the City and the Participating Agencies. The Pure Water Capital Melded Percentage is based on each Party’s proportionate share of Projected Future Metro Flow, Projected Future TSS Flows, and Projected Future COD Flows, which proportions are weighted as described in Footnote 5 of Exhibit B.

1.45 Pure Water Program or PWP is the City’s phased, multi-year program designed to produce up to 83 million gallons per day of Repurified Water using new, expanded, or modified facilities, some of which will include Metro System facilities.

1.46 PWP Phase 1 or Phase 1 shall mean the first phase of the Pure Water Program, which modifies/constructs Metro System and Water Repurification System facilities and is designed to produce an annual average of 30 million gallons per day of Repurified Water.

1.47 PWP Phase 2 or Phase 2 shall mean the second phase of the Pure Water Program which modifies/constructs Metro System and Water Repurification System facilities and is designed to produce up to an additional annual average of 53 million gallons per day of Repurified Water.

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1.48 Recycled Water shall have the definition set forth in Title 22, Division 4 of the California Code of Regulations and shall mean water which, as a result of treatment of wastewater, is suitable for a direct beneficial use or a controlled use that otherwise could not occur.

1.49 Reject Stream from Demineralization Process or RSDP is a flow reject stream and treatment byproduct from a demineralization process at a potable reuse facility. Separately conveyed, it bypasses all secondary wastewater treatment processes. This flow primarily contains liquid and salts.

1.50 Repurified Water shall mean water which, as a result of advanced treatment of Recycled Water, is suitable for use as a source of domestic (or potable) water supply.

1.51 Repurified Water Revenue is the cost savings that will be realized when the City’s Water Utility’s annual costs per-acre foot for Repurified Water, including City Water Utility PW Costs, are less than the purchase costs per-acre foot for comparable water from the San Diego County Water Authority, as further described in Section 6.

1.52 Residuals shall mean RSDP and Centrate. In the future, Residuals may include other waste byproducts if the Parties agree in writing that other byproducts may be discharged into the Metro System.

1.53 South Bay Ocean Outfall or SBOO is the facility that is jointly owned by the International Boundary & Water Commission (U.S. Section IBWC) and the City. The outfall conveys and discharges treated effluent from the IBWC’s International Wastewater Treatment Plant and treated effluent from the City’s South Bay Water Reclamation Plant. As of the date of this Agreement, the outfall has a current Average Daily Flow Capacity of 174 million gallons per day. As of the date of this Agreement, the City owns 39.94% of the capacity of the outfall and the balance of the capacity is owned by the IBWC.

1.54 South Bay Water Reclamation Plant or SBWRP is the wastewater treatment facility located at 2411 Dairy Mart Road in San Diego, which includes four major processes:
primary treatment, secondary treatment, tertiary treatment, and disinfection.

1.55 Strength means the measurement of Total Suspended Solids and Chemical Oxygen Demand within the Flow and any other measurement required by law after the date of this Agreement or necessary for the Functional Design Methodology.

1.56 Total Suspended Solids or TSS means the insoluble solid matter in wastewater that is separable by laboratory filtration, as determined by the procedures specified in the most current edition of “Standard Methods for the Examination of Water and Wastewater,” or any successor publication which establishes the industry standard.

1.57 Tertiary Component is that portion of the wastewater treatment process that currently filters the secondary treated wastewater effluent through fine sand and/or anthracite coal to remove fine suspended solids and disinfects it to meet the requirements of the California Administrative Code, Title 22, or its successor for filtered and disinfected wastewater used for recycled and repurified water.

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1.58 Two-Party Approval is an approval mechanism under this Agreement that requires the City’s Administrative Approval and a two-thirds (2/3) vote or greater of the Metro JPA Directors present at a duly noticed Metro JPA public meeting as described more particularly in Section 16.

1.59 Variable Costs shall refer to the portion of the Functional Design Methodology costs that are allocated based on Metered Flow and Strength.

1.60 Water Repurification System shall mean any facilities, including treatment and conveyance facilities, the purpose of which is the production or conveyance of Repurified Water.

Water Repurification System includes, but is not limited to: the Tertiary Component of the North City Water Reclamation Plant to the extent being used to produce Repurified Water, the North City Pure Water Facility; the Repurified Water conveyance system, which will transport Repurified Water from the North City Pure Water Facility and/or other facilities to the Miramar Reservoir or other alternative location(s) as determined by the City; and any other Repurified Water treatment or conveyance facilities which are part of the Pure Water Program. These facilities are constructed and maintained at the expense of the City water utility and are excluded Metro System Costs under this Agreement.

2. OWNERSHIP AND OPERATION OF THE METRO SYSTEM

2.1 Rights of the Parties. The City is the owner of the Metro System, and any additions to the Metro System or other facilities constructed pursuant to this Agreement. As more particularly set forth in this Agreement, and subject to the terms and conditions of this Agreement, the rights of the Parties generally include the following:

2.1.1 All decisions with respect to the planning, design, construction, operation and maintenance of the Metro System shall rest with the City, in consultation with the Metro JPA.

2.1.2 The Participating Agencies shall have a contractual right to use the Metro System and to participate in its operation.

2.1.3 The City may transfer ownership of all or part of the Metro System at any time. In the event of a transfer, including a sale under Section 2.7, the City’s successor shall be bound by the terms of this Agreement, and the Participating Agencies rights under this Agreement shall not be affected by such a transfer.

2.1.4 Any Participating Agency may transfer or assign its rights and obligations under this Agreement. Any transfer shall first be approved by the City. No transfer may occur if the City reasonably determines, after consultation with the Participating Agencies involved, that the proposed transfer will imbalance or adversely impact the City’s ability to operate the Metro System.

2.2 Metro System Services.

2.2.1 The City shall provide wastewater conveyance, treatment and disposal services to the Participating Agencies through the Metro System, under the terms set forth in this Agreement.

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2.2.2 The City shall operate the Metro System in an efficient and economical manner, maintaining it in good repair and working order, all in accordance with recognized sound engineering and management practices.

2.2.3 The City shall convey, treat, and dispose of or reuse all wastewater received under this Agreement in such a manner as to comply with all applicable laws, rules and regulations.

2.3 Flow Commitment.

2.3.1 Subject to the provisions of this Agreement and absent a separate agreement of the Parties, all Flow within the capacity limits set forth in Exhibit B or any amendments or changes thereto shall remain in the Metro System.

2.3.2 This Agreement shall not preclude any Party from diverting Flow as a result of the construction of reclamation/reuse facilities or New Capacity outside of the Metro System.

2.3.3 Any Participating Agency may negotiate an agreement with the City to reduce all or part of their Contract Capacity. If a Participating Agency reduces its Contract Capacity to zero, that Participating Agency’s rights shall terminate under this Agreement and that Participating Agency shall no longer be considered a member of the Metro JPA. However, the agreement between the City and Participating Agency shall provide that the Participating Agency pays its proportionate share of Capital Improvement Costs for the remainder of the useful life of the facility(ies) constructed during the time the Participating Agency possessed Contract Capacity in the Metro System. This shall include, but is not limited to, any remaining portions of outstanding debt that was incurred for capital facilities during the time the Participating Agency had the right to send Flow into the Metro System, and the cost to disconnect the Participating Agency’s system from the Metro System. Any Contract Capacity that a Participating Agency chooses to relinquish under this section shall be treated as Pooled Capacity after the effective date of an agreement between the City and that Participating Agency. This section does not apply to Inter-Agency transfers of Contract Capacity, which involve the relinquished Contract Capacity being assigned to and assumed by another Participating Agency or the City. Inter-Agency transfers are governed by Section 3.2

2.3.4 Flow Projections. Currently, the Projected Future Strength and Flow Amounts are projected to the year 2050 in order to allow the Parties time to plan for future development and growth. However, these projections may be amended from time to time through the Exhibit B amendment processes in this Agreement to more fairly align with actual flow and strength data. The parties shall begin discussion to recalculate the Projected Future Strength and Flow Amounts set forth in Exhibit B by no later than January 1, 2040.

2.4 Funding Obligations. The City shall fund the acquisition, construction, maintenance and/or operation of the Metro System from monies in (or sewer revenues which populate) the Sewer Revenue Fund for the Metro System, and/or from construction funds derived from the sale of duly authorized sewer revenue bonds for the Metro System. Nothing in this Section or Agreement shall (i) obligate the City to make any payment for the acquisition, construction, maintenance or operation of the Metro System from monies derived from taxes or any other income or revenue of the City; (ii) be construed to obligate the City or any Participating

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Agency to pay from its annual income and revenues any sum which would create an indebtedness, obligation or liability within the meaning of the provisions of Section 18 of Article XVI of the Constitution of the State of California and, in the City’s case, San Diego Charter Section 99; or (iii) prevent the City, in its discretion, from using tax revenues or any other available revenues or funds of the City for any purpose for which the City is empowered to expend moneys under this Agreement. For the avoidance of doubt, subsections (i) and (ii) shall not relieve the City from its obligations to fund the Metro System as provided in this Section 2.4.

2.5 Limitations on Types and Condition of Wastewater.

2.5.1 Each Participating Agency shall minimize to the maximum extent practicable, the infiltration and inflow of surface, ground or stormwaters into its respective wastewater systems.

2.5.2 Each Participating Agency will ensure that all Industrial Users of its wastewater system are regulated by and comply with the City’s industrial pretreatment program.

City shall not require the Participating Agencies to take any actions against such Industrial Users beyond that which are (1) required under applicable laws, rules and regulations, (2) taken by the City, or (3) that can be taken, but are not being taken by the City.

2.5.3 City and the Participating Agencies agree that the Interjurisdictional Pretreatment Agreements executed by and between the City and each Participating Agency, as applicable, shall terminate effective upon the date of this Agreement. However, the separate transportation agreements that are currently in effect between or among the City and the Participating Agencies shall remain in effect in accordance with their terms. Each Participating Agency will not discharge wastewater originating outside its respective boundaries into the Metro System without the approval of the City, which shall not be unreasonably withheld.

2.5.4 Each Participating Agency shall be responsible for the violation of any applicable laws, rules or regulations associated with its respective discharge of wastewater into the Metro System. Nothing in this Agreement shall affect or prohibit the ability of any Participating Agency to hold third parties responsible for such violations. However, City shall be responsible for enforcement actions related to the violation of any applicable laws, rules, or regulations associated with industrial waste dischargers regulated by City, though each Participating Agency shall collaborate with City when necessary, on any enforcement response for pretreatment violations within a Participating Agency’s jurisdiction. However, the City shall not be responsible for enforcement or monitoring related to a Participating Agency’s compliance with its own NPDES Permit.

2.5.5 Food establishments and dischargers of fats, oils, and grease (FOG) are regulated and monitored by individual Participating Agencies within their jurisdiction.

Participating Agencies are responsible for the provision of FOG programs, services, and enforcement within their jurisdiction. The City will not provide FOG-related services or programs outside of the City’s jurisdiction.

2.6 Enforcement Actions. In the event a regulatory agency, imposes any penalty or fine, or takes other enforcement action, or a private citizen brings a citizen enforcement action to enforce

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regulatory requirements, (collectively, “Enforcement Actions”) relating to the conveyance, treatment, or disposal of wastewater in or from the Metro System or operation of the Metro System, the City shall determine as part of its investigation and response to the notice of violation whether the City or a Participating Agency or Agencies caused or contributed to the violation for reasons which may include, without limitation, exceeding their Contract Capacity, the contents of their wastewater, or the failure to maintain or operate the Metro System or a Participating Agency’s system. Any costs associated with an Enforcement Action including but not limited to fines, penalties, corrective measures, and costs of defense (collectively, “Penalty(ies)”) shall be shared by the Participating Agencies and the City proportionately based on Fixed Capacity as set forth in the then current Exhibit B, unless the City determines, based on verifiable facts, that the violation for which the Penalty is imposed was caused by, or was the result of, gross negligence or willful misconduct of the City or a Participating Agency.

2.6.1 For any Enforcement Actions (1) related to sanitary sewer overflows of 10,000,000 gallons or more from the Metro System occurring after the effective date of this Agreement, or (2) that the City reasonably anticipates will result in the Participating Agencies’ collective responsibility for the Penalties imposed to exceed 10% of the Metro Participating Agencies combined annual operations and maintenance budget for the Metro System for the fiscal year in which the Penalty is imposed (“Threshold Amount”), the City’s determination will be subject to review by the Metro JPA as set forth in 2.6.1.1 through 2.6.1.8 below. The scope of the Metro JPA’s review shall be limited to whether the violation for which the Penalty is imposed was caused by, or was the result of, gross negligence or willful misconduct of the City or a Participating Agency, and if so, how the Penalty should be fairly allocated. For all other Enforcement Actions, the City’s determination related to the allocation of Penalty shall be final.

2.6.1.1 The City will provide a copy of any report submitted to a regulatory agency in response to an Enforcement Action to the Metro JPA within 30 days of submitting that report to the regulatory agency. In that same communication, the City will also provide a summary of the City’s findings regarding causation and preliminary determination regarding the allocation of any Penalties. If these determinations have not been made, the City will provide an anticipated date that the information will be provided.

2.6.1.2 If the Metro JPA disputes the City’s determination as to the allocation, as evidenced by a vote approved by two-thirds of the Metro JPA Directors present at a duly noticed meeting, it shall notify the City in writing of the same within 90 days of receiving the City’s preliminary allocation determination.

2.6.1.3 The City and representatives of the Metro JPA shall meet and confer to discuss the matter and try to reach an agreement on the appropriate allocation. To facilitate resolution, the meet and confer process shall be treated as a settlement discussion under the California Evidence Code and shall be a confidential process. The meet and confer process shall focus on whether the violation for which the Penalties are being imposed is the result, in whole or in part, of the gross negligence or willful misconduct of the City or a Participating Agency, and if so, how the Penalties shall be allocated.

2.6.1.4 If through the meet and confer process, the City determines that the Participating Agencies’ collective responsibility for the Penalties imposed will be less than the

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Threshold Amount, then the City will inform the Metro JPA of this determination and allocate the Penalty as such, and no further action by the Metro JPA is required.

2.6.1.5 If through the meet and confer process, the City and representatives of the Metro JPA reach an agreement, and the Participating Agencies’ collective responsibility for the Penalties imposed will be equal to or greater than the Threshold Amount, then that agreement shall be subject to the Two-Party Approval process. The City and representatives of the Metro JPA shall have an opportunity to present the proposed agreement to the Metro JPA before a vote on the determination.

2.6.1.6 If the City and representatives of the Metro JPA are unable to reach an agreement and Participating Agencies’ collective responsibility for the Penalties imposed is equal to or exceeds the Threshold Amount, the City will make a final determination regarding allocation of the Penalty and present the determination to the Metro Commission.

2.6.1.7 In the event that Two Party Approval is required but is not achieved, each Participating Agency shall pay the portion of the Penalty allocated to them at the time that it is invoiced, however, such payment may be made under protest. The Parties shall engage in the dispute resolution procedures under this Agreement to resolve the issue, prior to any Party having the right to initiate litigation.

2.6.1.8 Penalties in excess of the Threshold Amount shall be separated out in the reconciliation billing and notated as a spill penalty with reference to the first day of the spill associated with the penalty.

2.7 Right of First Refusal.

2.7.1 The City shall not sell or agree to sell the Metro System without first offering it to the Participating Agencies. For the purposes of this section, “Participating Agencies” shall mean a Participating Agency, a group of Participating Agencies, or a third party representing one or more Participating Agencies. The term “sell” shall include any transfer or conveyance of the Metro System or of any individual treatment, collection, or reclamation facility or outfall within the Metro System.

2.7.2 The City and the Participating Agencies recognize that transfer of ownership of the Metro System is currently restricted by Sections 6.04 and 6.20 of the Installment Purchase Agreement between the City and the Public Facilities Financing Authority of the City, which inter alia restricts the transfer of ownership to the Metropolitan Wastewater Sewage District or other governmental agency whose primary purpose is to provide wastewater treatment. The City shall not seek to impose on bond holders a waiver of Section 6.04 or 6.20. Absent such a restriction, before the City sells or agrees to sell the Metro System, or any portion of it, the City shall offer to sell the Metro System to the Participating Agencies (the “Offer”) on the terms and at a price equal to that proposed for the sale of the Metro System to a third party. The City shall provide all Participating Agencies with written notice of the Offer per Section 13 . The Participating Agencies shall have ninety (90) days from the date of mailing of the Offer (the “Intent to Respond Period”) in which to notify the City of their intent to respond to the Offer. If a Participating Agency or Agencies notify the City of their intent to respond to the Offer, that Participating Agency or those

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Agencies shall have five months from the expiration of the Intent to Respond Period in which to accept or reject the Offer. The Offer shall contain the name of the proposed purchaser, the proposed sale price, the terms of payment, the required deposit, the time and place for the close of escrow, and any other material terms and conditions on which the sale is to be consummated. If no Participating Agency or Agencies notifies the City of its (or their) intent to respond to the Offer within the Intent to Respond Period, the City may move forward with the sale of the Metro System without further notice to the Participating Agency in accordance with Section 2.7.3 below.

2.7.3 If the Participating Agencies give timely notice of their intent to respond and timely notice of their acceptance of the Offer, then the City shall be obligated to sell and the Participating Agencies shall be obligated to purchase the Metro System or any individual treatment, collection or reclamation facility or outfall within the Metro System, as applicable, at the price and on the terms and conditions of the Offer. If the Participating Agencies do not give timely notice of their intent to respond or their acceptance of the Offer, or do not submit an offer on the same terms and conditions as the Offer, the City may, following the end of the Offer period, sell the Metro System, or any portion of it, at a price and on terms and conditions no less favorable to the City than those in the Offer. The City shall not sell the Metro System to any third party on terms or at a price less favorable to the City from the terms and price contained in the Offer absent compliance with the terms of this Section. The City’s sale of the Metro System under Section 2.7, is a transfer of ownership subject to Section 2.1.3.

2.7.4 Nothing herein shall prevent the City from entering into a financing agreement which may impose limits on the City’s power to sell the Metro System to the Participating Agencies pursuant to Section 2.7.1 if the City reasonably believes that such a financing agreement is in the City’s best interest. Neither the entry into such a financing agreement by the City nor the performance thereof by the City shall constitute a breach or default by the City hereunder.

2.8 Uniform Enforcement of Pretreatment Program by City. The Parties have determined that it is in their best interests for a single agency to be responsible for management of the pretreatment program for the Metro System in order to: (a) Ensure protection of the entire Metro System, including the successful operation of the Pure Water Program; (b) Provide consistent and uniform regulation of Industrial Users, including those subject to pretreatment requirements; (c) Provide for transparent and fair cost recovery from all dischargers; and (d) Promote efficiency and accountability in the administration of the Metro System. For these reasons, the Parties are delegating pretreatment responsibilities to the City, except regulation of Food Establishments and FOG dischargers, as more fully set forth in this Agreement and in Administrative Agreement #1 Between City of San Diego and Participating Agencies for the Unified Management of Industrial Waste Discharge Pretreatment and Enhanced Source Control Programs (“Administrative Agreement #1”). Notwithstanding the above, the City may enter into supplementary agreements with an individual Participating Agency, or a group of Participating Agencies, relating to industrial waste discharge pretreatment and enhanced source control programs unique to such Participating Agency(ies), so long as the supplementary agreement incorporates a separate cost proportional to the participation of such Participating Agency or group of Participating Agencies that is the sole responsibility of such Participating Agency(ies).

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2.8.1 Delegation of Authority. Each Participating Agency shall and hereby does delegate to City full authority and responsibility to operate, manage, and enforce an effective pretreatment program throughout the Metro System to ensure that all Industrial Users are subject to uniform rules and regulations, with direct billing to Industrial Users by the City to begin on the first July 1 following execution of this Agreement.

2.8.2 Operations and Maintenance. Procedures relating to the operation, management, enforcement, and cost recovery for the pretreatment program are set forth in Administrative Agreement #1.

2.8.3 Amending Pretreatment Program Procedures. Administrative Agreement #1 may be amended from time to time as set forth in Section 15. In the event of any conflict between this Agreement and Administrative Agreement #1, the terms of this Agreement shall control.

2.8.4 Adoption of Local Ordinances. By no later than June 30 following the Effective Date of this Agreement, every Participating Agency shall adopt a local ordinance conforming with the sample ordinance contained in Administrative Agreement #1 and the City’s pretreatment ordinance, each as amended from time to time, to ensure consistency throughout the Metro System.

2.8.5 Identification of New Industrial Users. Participating Agencies shall notify the City of any identified potential new Industrial Users within their respective boundaries while the City will bear responsibility for inventory assessments on a regular basis as set forth in Administrative Agreement #1.

2.8.6 Permitting and Permit Compliance. Nothing in this Agreement shall be construed to relieve any discharger to the Metro System of the responsibility to obtain and comply with any required permits for, and to comply with rules and regulations applicable to, dischargers to the Metro System. If the City determines that an Industrial Wastewater Control Program Permit is required, it shall issue the permit subject to the City’s permit requirements. The City’s approval or denial of any application for, or revocation of, an Industrial User Permit shall be in accordance with Chapter 6, Article 4 of the San Diego Municipal Code as well as any other applicable federal, state or local regulations, any published City guidance related to the Industrial Wastewater Control Program, and the City’s Enforcement Response Plan, all as may be amended, renumbered, or renamed from time to time. The City and any Participating Agency may elect to coordinate and combine issuing their wastewater discharge permits to Industrial Users when deemed appropriate by both parties. Any agreement between the City and the Participating Agencies related to permitting under the Industrial Wastewater Control Program, shall not transfer responsibility to City for any other type of permitting outside of the City’s jurisdiction, or subject any local agency as that term is defined in California Government Code section 53090, to local building and zoning ordinances that the local agency is not otherwise legally subject to.

2.8.7 Inventory of Industrial Users. City shall create and maintain an inventory of all Industrial User within the Metro System as soon as reasonably practicable following execution of this Agreement. The Participating Agencies shall review the inventory and shall notify the City

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of an Industrial User(s) in its jurisdiction that is not identified on the inventory as set forth in Administrative Agreement #1.

2.8.8 Evaluation, Monitoring, Enforcement and Program Review. Upon the effective date of this Agreement, it shall be the City’s right and obligation to carry out pretreatment evaluation, permitting, monitoring and/or enforcement throughout the Metro System consistent with the procedures set forth in Administrative Agreement #1. The City’s pretreatment program review shall occur as necessary, but no less than once every five (5) years. Nothing herein shall be construed as prohibiting any Participating Agency from enforcement of its own pretreatment ordinance within its jurisdiction.

2.8.9 City’s Direct Billing of Industrial Users. The City shall directly bill Industrial User throughout the Metro System to recover costs associated with the pretreatment program as set forth in Administrative Agreement #1. The City Council shall set and approve such costs in a publicly noticed meeting pursuant to the procedures set forth in Administrative Agreement #1.

2.9 Wastewater Generated at Military Bases. The City may contract directly with federal military bases that are connected to the Metro System for wastewater services and capacity subject to the terms of this Section 2.9. If a United States military base is located within a Participating Agency’s jurisdiction, the Participating Agency may request that the City bill that military base directly as a separate and distinct customer. In the event the City agrees to accept the military’s wastewater and bill the military base as a separate and distinct customer, then (1) the Participating Agency shall have no billing obligations with respect to the military base; (2) each Participating Agency whose sewage line conveys the military base’s wastewater reserves the right to negotiate and charge the federal government a conveyance or transportation fee for use of that Participating Agency’s sewer line; (3) the City shall require that the military base comply with the applicable City pretreatment rules; and (4) the City agrees that the wastewater generated by the military base shall not be considered wastewater of the Participating Agency with respect to capacity once the City enters into an agreement with the military base. Any transfers of capacity that are appropriate or necessary to accommodate flow from military bases, if needed, would be governed by Section 3.2 herein, “Inter-Agency Transfers of Contract Capacity.”

3. CAPACITY RIGHTS

3.1 Contract Capacity. Each Participating Agency shall have the contractual right to discharge wastewater to the Metro System up to the limits set forth in Exhibit B (“Contract Capacity”). Each Party’s Contract Capacity as stated in Exhibit B, is used for the purpose of allocating the Metro System’s Pure Water Program Capital Improvement Costs, Repurified Water Revenue, and the Capital Expense Rate under this Agreement.

3.2 Inter-Agency Transfers of Contract Capacity. The Participating Agencies and the City may buy, transfer, sell or exchange all or part of their Contract Capacity among themselves on such terms as they may agree upon, subject to the following:

3.2.1 Any Party requesting to buy, transfer, sell, or exchange all or part of their Contract Capacity (“Inter-Agency Transfer”) shall provide a written proposal to the City

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including the proposed terms of such Inter-Agency Transfer. The Party requesting the InterAgency Transfer shall also provide notice to all other Participating Agencies under Section 13 concurrently with submitting the proposal to the City.

3.2.2 All Participating Agencies will have 45 days to provide any technical input to the City regarding the proposed Inter-Agency Transfer. Any Participating Agency providing technical input shall provide a copy of such input to all other Participating Agencies under Section 13 concurrently with submitting the input to the City.

3.2.3 Upon receipt of a request for an Inter-Agency Transfer, the City will review the request, consult with the affected Participating Agencies, and consider any technical input provided by other Participating Agencies.

3.2.4 All proposed purchases, transfers, sales or exchanges of Contract Capacity require the City’s Administrative Approval prior to becoming effective. No Contract Capacity may be transferred if the City determines that said transfer will imbalance, or will otherwise adversely impact the City’s ability to operate the Metro System. Provided, however, that the Participating Agency seeking the transfer may offer to cure such imbalance at its own expense. If the Participating Agency makes such an offer, the City may not unreasonably withhold Administrative Approval.

3.2.5 If the City approves the offer as proposed, the City shall adjust the Contract Capacity set forth in Exhibit B per Section 3.6 to reflect the approved changes. If the City determines, after taking the steps in Section 3.2.3 that an Inter-Agency Transfer may be approved if the request is modified, the City will provide a written notice to all Participating Agencies of the modified Inter-Agency Transfer under Section 13 no less than 30 days prior to the Inter-Agency Transfer becoming effective. Such modified Inter-Agency Transfer will become effective 30 days following the written notice being provided, and the City will prove an updated Exhibit B per Section 3.6 reflecting the approved changes.

3.2.6 If a Participating Agency reduces its Contract Capacity to zero through an Inter-Agency Transfer, that Participating Agency’s rights under this Agreement shall terminate and that Participating Agency shall no longer be a member of the Metro JPA. The Participating Agency shall remain responsible for all outstanding financial obligations under this Agreement, unless the Inter-Agency Transfer Agreement assigns those obligations to the Participating Agency accepting the transfer and that agency assumes those obligations. Outstanding financial obligations include, but are not limited to, a Participating Agency’s proportionate share of Capital Improvement Costs for the remainder of the useful life of the facility(ies) constructed during the time the Participating Agency possessed Contract Capacity in the Metro System, including any remaining portions of outstanding debt incurred for capital facilities during the time the Participating Agency had the right to send Flow into the Metro System, and the cost to disconnect the Participating Agency’s system from the Metro System.

3.3 New Contract Capacity. The Parties recognize that the Metro System may be modified to create capacity in the Metro System beyond that set forth in Exhibit B as a result of the construction of additional facilities, acquisition of facilities, increased flows, or as required by regulatory or similar such action. If capacity in excess of the Contract Capacity (“New Contract

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Capacity”) is required or requested by a Party, the Parties shall negotiate in good faith to provide the needed or requested capacity. If the Parties agree to provide New Contract Capacity, they shall memorialize the agreement for New Contract Capacity in an Administrative Agreement subject to the Joint Administrative Approval Process set forth in Section 15. If the parties execute an Administrative Agreement for New Contract Capacity, Exhibit B shall also be adjusted pursuant to Section 3.6 to reflect the New Contract Capacity.

3.4 Reductions in Metro System Capacity. The Parties further recognize that Metro System Capacity may be reduced to comply with, or in response to, applicable permit conditions, or related regulatory action, or sound engineering principles. In the event that the capacity of the Metro System is re-rated to levels below the numbers reflected in the Totals Line set forth in Exhibit B, then the Contract Capacity shall be reallocated proportionately among the Parties based on the percentages of fixed ownership set forth in Exhibit B at that point in time, subject to the City’s Administrative Approval and amendment of Exhibit B.

3.5 Restrictions on Veto of Transfers and Acquisitions of Capacity. Each Party understands and agrees that no Participating Agency has a right to veto or prevent the transfer of capacity between other Participating Agencies or the City, nor the creation or acquisition of new capacity for another Participating Agency or Agencies. By signing this Agreement, each Participating Agency is expressly preapproving such actions. The sole right of a Participating Agency to object to any of the foregoing shall be through expression of its opinion to the Metro JPA and, where applicable, through exercise of its rights under the dispute resolution provisions of this Agreement.

3.6 Amendments to Exhibits B. If the City determines that an amendment to Exhibit B is required for any reason other than a request from a Participating Agency under Sections 2.3.3 and Sections 3.2, and that reason only requires the City’s Administrative Approval, the City shall prepare and circulate to all Participating Agencies the proposed amendment to Exhibit B within 60 days of determining such an amendment is necessary. The Participating Agencies will have sixty (60) days to provide comments to the City, and all comments submitted to the City by a Participating Agency shall also concurrently be submitted to all other Participating Agencies. The City will review all comments received, prepare final amendments to Exhibit B to reflect adjustments in Contract Capacity, and circulate the final amended Exhibit B by no later than sixty (60) days after the City’s Administrative Approval. If the amendment to Exhibit B requires an approval process other than the City’s Administrative Approval, the Parties will follow the required approval process, and once that is completed, the City will prepare and provide the final version of Exhibit B within 60 days of the completion of the approval process. The City shall note each amendment and amendment date in the Exhibit List and shall keep an updated version of Exhibit B on file with the City Public Utilities Department at all times. An amendment to Exhibit B shall not be retroactive, except as provided in Section 4.4.3.3.

3.7 The South Bay Ocean Outfall. Nothing in this Agreement shall limit the City’s right to transfer capacity rights in assets that are not a part of the Metro System, including without limitation that portion of the South Bay Ocean Outfall which is not part of the Metro System.

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4. FINANCE, BUDGETING, AND ACCOUNTING: PAYMENT AND

MONITORING PROVISIONS

4.1 Payment for Metro System Facilities. Through the system of charges set forth in Section 5 of this Agreement, each Participating Agency shall pay its share of the costs of planning, design and construction of all of the Metro System facilities which are identified in Exhibit A .

4.2 Payment for Additional Metro System Facilities. Through the system of charges set forth in Section 5 of this Agreement, each Participating Agency shall pay its share of the costs of acquisition, planning, design and construction of such facilities, in addition to those set forth on Exhibit A, as are necessary to (a) convey, treat, dispose, and reuse wastewater in the Metro System; (b) provide the Contract Capacity set forth in Exhibit B; and (c) maintain hydraulic capacity as otherwise required by sound engineering principles. Each Participating Agency shall pay its share of the costs necessary to ensure the Metro System maintains compliance with applicable laws, rules and regulations, including the Ocean Pollution Reduction Act of 1994 and its successor(s), as well as present and future waivers of applicable treatment standards at any Metro System treatment facility. Exhibit A may be amended to reflect replaced or rehabilitated facilities, or changes in facilities, subject to the City’s Administrative Approval; however, if the City proposes to add a new Metro facility to Exhibit A, or convert a City facility to a Metro facility that will be added to Exhibit A, then each such amendment shall be (1) subject to the City’s Administrative Approval, in its sole discretion, when the addition or conversion is for the purpose of complying with applicable laws, rules, or regulations; or (2) supported by an independent third-party study setting forth the benefits to the Metro System of each new facility, including a cost allocation for capital and projected annual maintenance costs if the addition or conversion is for any other purpose. For any new Metro facility or conversion of a City facility to a Metro facility proposed to be added or converted under (2) above, any such proposal must be memorialized in an Administrative Agreement subject to the Joint Administrative Approval Process set forth in Section 15. Once approved, the City shall amend Exhibit A accordingly and shall give notice of any amendments to all Participating Agencies. The City shall keep an updated version of Exhibit A on file with the City Public Utilities Department. Exhibit A may be amended to reflect other changes to the Metro System only as expressly provided in this Agreement.

4.3 Payment for Operation and Maintenance. Through the system of charges set forth in Section 5 of this Agreement, each Participating Agency shall pay its share of the Operation and Maintenance Costs of all Metro System facilities. The Participating Agencies shall not pay for the Operation and Maintenance Costs of the Water Repurification System, which are City Water Utility PW Costs.

4.4 Charges Based on Flow, Strength and Fixed Capacity: Exception.

4.4.1 Except as otherwise described in this Section 4.4, a Participating Agency’s share of the charges in this Section 4 shall be based on its proportionate Flow, Strength, and Fixed Capacities as set forth in Exhibit B, as described more fully in Section 5.

4.4.2 Notwithstanding Section 4.4.1, or any other provision of this Agreement, a Participating Agency’s share of PWP Phase 1 Capital Improvement Costs, PWP Phase 1 Repurified Water Revenue, and Pure Water Program Capital Expense Rate attributable to the

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Metro System as described in Sections 6.6 and 6.7 shall be assessed or credited based on the Parties’ proportionate share of the Pure Water Capital Melded Percentages set forth in Column 7 of Exhibit B. The City shall annually allocate the estimated and actual PWP Phase 1 Capital Improvement Costs and revenues which are attributable to the Metro System in proportion to each Party’s Pure Water Capital Melded Percentages as set forth in Column 7 of Exhibit B when estimating quarterly payments and conducting year-end adjustments.

4.4.3 Each Party recognizes that operation within respective Projected Future Strength and Flow Amounts is essential to the accurate allocation of costs and revenues under the Pure Water Program. In recognition of same, the Parties agree as follows:

4.4.3.1 Contract Capacity Transfers – Increases in Fixed Capacity Components. Beginning in the next fiscal year after the effective date of this Agreement, if a Party exceeds their Capacity Rights or any individual component of the Capacity Rights set forth in Exhibit B, by any one of the following triggers based upon data available at the completion of a fiscal year: (1) Three percent (3%) in a fiscal year for any two consecutive fiscal years, (2) One MGD in a fiscal year for any two consecutive fiscal years, or (3) The equivalent Strength of one MGD in a fiscal year for any two consecutive fiscal years; then, the City shall prepare an amendment to Exhibit B that reflects a Contract Capacity Transfer for that Party based on the available information about such Party’s exceedance(s) and the methodology set forth in Exhibit E.

After Phase 2 is completed, if, due to contract capacity transfers or reductions in capacity, the Pooled Capacity drops to less than two percent (2%) of the total Contract Capacity, a capacity study shall be initiated to evaluate existing facilities for new capacity. The City shall thereafter amend Exhibit B under the process set forth in Section 3.6 to reflect the new Contract Capacity for all Parties. Any changes to the methodology in Exhibit E shall be made pursuant to an Administrative Agreement subject to the Joint Administrative Approval Process described in Section 15.

4.4.3.2 Contract Capacity Transfers – Decreases in Fixed Capacity Components. Beginning in the next fiscal year after the effective date of this Agreement, if a Party can show through an independent report that its Monthly Average Daily Flow, annual average pounds per day of COD, annual average pounds per day of TSS, Incremental Peak Flow, or RSDP is projected to decrease ten percent (10%) or more below their Projected Future Strength and Flow Amounts using data from a minimum of three (3) consecutive prior fiscal years as support, then City shall prepare a proposed amendment to Exhibit B that reflects the new Projected Future Strength and Flow Amounts for all Parties based on such Party’s decrease and other relevant information using sound engineering principles and the guidelines set forth in Exhibit E. The City’s proposed amendment shall be subject to the Two-Party Approval Process. If approved, the City shall thereafter amend Exhibit B using the process set forth in Section 3.6.

4.4.3.3 If Exhibit B is amended to update one or more Parties’ Projected Future Strength and Flow Amounts pursuant to Section 4.4.3.1 or 4.4.3.2, the change in Projected Future Strength and Flow Amounts shall be effective retroactively to the beginning of that fiscal year, and the City shall use the updated amounts in estimating quarterly payments and conducting year-end adjustments for Pure Water Program costs and revenues. Therefore, any Party that underpaid based on prior Exhibit B Fixed Capacity amounts (which were based on prior Projected Future Strength and Flow Amounts) shall pay the retroactive amount due in quarterly installments

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in its quarterly payments the following fiscal year; any Party that overpaid based on previous Exhibit B Fixed Capacity amounts shall receive a credit in quarterly installments in its quarterly payments the following fiscal year. Notwithstanding the preceding sentence, if the retroactive amount due exceeds 20% of a Party’s average annual Metro System payments for the previous four (4) fiscal years, such Party may elect to pay the retroactive amount due in its quarterly payments over the subsequent four (4) fiscal years, with interest, based on the most recent quarterly earnings rate of the City’s Treasurer’s Pooled Rate of Return; any Party that overpaid in an amount that exceeds 20% of their annual average Metro System payments for the previous four (4) fiscal years based shall receive a credit in its quarterly payments spread over the following four (4) fiscal years.

4.5 Monitoring Flow and Strength.

4.5.1 The City shall monitor Flow and Strength. The City shall own and operate as part of the Metro System monitoring devices which will measure the amount of Flow discharged into the Metro System, unless otherwise agreed by the City and a Participating Agency. These devices shall be installed at locations appropriate to accurately monitor Flow and Strength. The City may also monitor Flow and Strength at other locations as it deems appropriate. For all currently unmetered areas, unit counts or agreed upon flow estimates where unit counts are not appropriate shall be used. For adding or subtracting unit count areas, the average current Metro Flow per unit shall be used consistently for all Parties. These unmetered unit counts will be updated at least once every five (5) years. If the flow in an unmetered area is over 0.5 MGD at a specific connection point, then a meter shall be added for that area, if possible. Exhibit F provides the Flow formulas that shall be used to determine the payment obligation for each Party, or a grouping or subgrouping of Parties, as applicable. Exhibit F shall be distributed to all Parties with the budget estimates that are sent annually pursuant to Section 5.7.1. The City currently provides all Participating Agencies with access to their data from the Flow metering devices, including providing access to their raw data, and will continue to do so according to the Parties’ established practices on the Effective Date of this Agreement. Changes to Exhibit F may be made upon the City’s Administrative Approval.

4.5.2 In measuring Strength, the frequency and nature of the monitoring shall not be more stringent for the Participating Agencies than it is for the City. The frequency, nature, and locations of Strength measurements, as well as the procedures used to determine Strength, shall be reviewed at least once every five (5) years and if changes are appropriate or required, the City may change the Strength measurements subject to the Two-Party Approval process. When conducting sampling within a Participating Agency’s service area, the City shall follow appropriate safety and security measures. The City and Participating Agencies will coordinate with the Participating Agency’s operations staff to ensure facilities are not negatively impacted by inspections.

4.5.3 The City shall report Strength data to the Participating Agencies at least quarterly.

4.5.4 The City shall notify the Metro JPA’s Executive Director and any directly affected Participating Agency within 24 hours of any unpermitted or unlawful discharge or release of effluent from the Metro System which may be reportable to the Regional Board, or any other regulatory agency, and which may result in civil or criminal penalties or administrative

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enforcement proceedings pursuant to Water Code sections 13261, et seq., section 13300, et seq., Government Code section 54740 et seq., or other provisions of law. Upon request from the Metro JPA or a Participating Agency, City shall provide the Metro JPA or affected Participating Agencies with copies of all non-privileged related correspondence to and from the Regional Board. The City shall endeavor to confer with Metro JPA staff during the report preparation process and before any report is submitted to a regulatory or enforcement agency.

5. FINANCE, BUDGETING, AND ACCOUNTING: SYSTEM OF CHARGES

5.1 Charges Authorized. The City agrees to implement, and the Parties agree to abide by a system of charges called Functional Allocated Billing (FAB). This system allows the City to equitably recover from all Participating Agencies their proportional share of the net Metro System Costs described in this section:

5.2 Functional Allocated Billing (FAB). The City shall annually determine the FAB rate based on the projected Metro System Costs (as defined below) for the forthcoming fiscal year, less all Metro System Revenues (as defined below).

5.2.1 Calculation of FAB Rates.

5.2.1.1 The City shall determine the unit FAB rates by allocating net costs (Metro System Costs less Metro System Revenues) between the fixed and measured variable parameters of Capacity Rights, such as Monthly Average Daily Flow, Incremental Peak Flow, COD, TSS, and RSDP as set forth in Exhibit B. These allocations are based on the approved Functional-Design Methodology analyses for sewer system components and estimated Operation and Maintenance (O&M) Costs allocated to each parameter.

5.2.1.2 Beginning one (1) year after substantial completion of the final project of Phase 1 of the Pure Water Program for which sewer revenue funds were used, the City shall have the FAB, which includes the Functional Design Methodology, professionally reviewed at least once every five (5) years.

5.2.1.3 After conducting a professionally developed independent thirdparty report, the City may propose to change the FAB, including the Functional Design Methodology, to include any other parameter, or modify any term governed by this Section 5.2.1, by way of an Administrative Agreement subject to the Joint Administrative Approval Process set forth in Section 15. However, the City may revise the FAB, including the Functional Design Methodology at any time to include any other measurement required by law after the effective date of this Agreement subject to the City’s Administrative Approval, in its sole discretion. City will notify all Participating Agencies of any such review or revision no later than sixty (60) days after City’s Administrative Approval. Once approved, the FAB resulting from any review or revision under this Section will become the current approved version until it is revised by a future professional independent third-party study or a change in law.

5.2.1.4 Each of the parameters will have a fixed and variable O&M charge between 0% and 100%. Fixed Capacity Charges will be based on the Contract Capacity in Exhibit B. Variable charges will be based on measured parameters such as Metered Flow, Strength and RSDP.

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5.2.1.5 Costs for capital improvements, capital replacement, and rehabilitation costs including financing shall be based on the approved Functional-Design Methodology and the Contract Capacity in Exhibit B.

5.2.1.6 The net cost allocated to each of the parameters shall be divided by the total Metro System quantity for that parameter to determine the unit rates for each parameter.

These unit rates shall apply uniformly to all Parties.

5.3 Metro System Costs. The following shall at a minimum be considered Metro System Costs for purposes of calculating the annual FAB rate:

5.3.1 Except as provided in Section 5.4 (Excluded Costs), the annual Operation and Maintenance Costs and annual costs associated with administration, replacement, annual debt service costs and other periodic financing costs and charges, capital improvement, insurance premiums, claims payments and claims administration costs of the Metro System, including projected overhead, shall be calculated using generally accepted accounting practices to reflect the costs of the Metro System.

5.3.2 Fines or penalties imposed on the City as a result of the operation of the Metro System, unless the fine/penalty is allocated to the City or a Participating Agency as provided in Section 2.5.5.

5.4 Excluded Costs. The following items shall not be considered Metro System Costs for purposes of calculating the annual FAB rate:

5.4.1 Costs related to the City of San Diego’s municipal sewer, water (including City Water Utility PWP Costs), and/or stormwater systems as determined by City’s reasonable calculations consistent with sound engineering and best management practices.;

5.4.2 Right-of-way charges for the use of public streets of the City or any Participating Agency. The City and the Participating Agencies agree not to impose a right-of- way charge for the use of its public rights-of-way for Metro System purposes;

5.4.3 Capital Improvement Costs or Operations and Maintenance Costs of any non-Metro System facility not included in Exhibit A, including, but not limited to, any costs associated with the ECAWP Project;

5.4.4 Those costs otherwise identified as excluded costs in Section 6.3.

5.5 Metro System Revenues and Allocations. The following revenues shall be at a minimum considered Metro System Revenues for purposes of determining the annual FAB rate:

5.5.1 Any grant or loan receipts or any other receipts that are attributable to the Metro System or Metro System components of the Pure Water Program, including, but not limited to, all compensation or receipts from the sale, lease, or other conveyance or transfer of any asset of the Metro System or Metro System components of the Pure Water Program. Any such receipts attributable to the Metro System components of the Pure Water Program shall be allocated among

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the City and the Participating Agencies in the proportions set forth in Exhibit B Fixed Capacity amounts.

5.5.2 All compensation or receipts from the sale or other conveyance or transfer of any Metro System byproducts, including, but not limited to, gas, electrical energy, sludge products, and Recycled Water produced at the NCWRP and SBWRP and the future Central Area Plant.

5.5.3 Payments by the City’s Water Utility for the Capital Expense Rate, as calculated under provisions in Section 6.7. These proceeds shall be allocated among the City and Participating Agencies in the proportions set forth in Exhibit B Fixed Capacity amounts.

5.5.4 Those portions of Repurified Water Revenue attributable to the Metro System, as calculated under provisions in Section 6.6.3. These revenues shall be allocated among the City and Participating Agencies in the proportions set forth in Exhibit B Fixed Capacity amounts.

5.5.5 Any other non-operating revenues, including, but not limited to interest income included in the income credit portion of the annual audit.

5.6 Excluded Revenue. The following revenues shall be excluded from Metro System Revenues for purposes of determining the annual FAB rate:

5.6.1 Proceeds from the issuance of debt for Metro System projects.

5.7 Estimate and Billing Schedule and Year End Adjustment.

5.7.1 The City shall estimate the FAB rates on an annual basis prior to January 15 and provide budget estimates for the upcoming fiscal year to all Parties. The City shall quantify the FAB rates by estimating the quantity of Flow, Strength, and Fixed Capacity Charges for each Party, based on that Party’s Metered Flow for the past year and the cumulative data of sampling for Strength constituents such as COD and TSS over the preceding five years and Fixed Capacities set forth in Exhibit B. If the cumulative five-year Strength data is no longer indicative of discharge from a Party, and a Contract Capacity Transfer has been approved pursuant to Sections 4.4.3.1,

4.4.3.2, or 3.2, then the City may eliminate the previous higher readings subject to the City’s Administrative Approval.

5.7.2 Prior to March 1 of each year the City will provide a mid-year review of the current year’s Metro System Capital Improvement Costs and Operations and Maintenance Costs and offsetting non-operating revenues such as grant or loan proceeds, including fiscal year-end projections and provide such reviews to the Participating Agencies.

5.7.3 The City shall determine the volume of MBC Return on an annual basis and for billing purposes only. The costs of treating MBC Return shall be allocated to the Parties in proportion to their Metered Flow and Strength. If a Party’s Monthly Average Daily Flow plus MBC Return exceeds their Contract Capacity set forth in Exhibit B, it shall not be treated as an exceedance pursuant to Section 4.4.3.1.

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5.7.4 The City shall bill the Participating Agencies quarterly, invoicing on August 1, November 1, February 1 and May 1. Each bill shall be paid within thirty (30) days of mailing. Quarterly payments will consist of the total estimated cost for each Participating Agency, based on their estimated Flow, Strength, and Fixed Capacity Charges, divided by four.

5.7.5 At the end of each fiscal year, the City shall determine the actual Metro System Costs and the actual Metered Flow as well as the cumulative Strength data for the City and each of the Participating Agencies. The City shall make any necessary adjustments to the unit rates for Flow and Strength such as COD, TSS and Fixed Capacity Charges based on actual costs for the year as determined through the annual audit process in Section 5.8.2 of this Agreement. The City shall then recalculate the FAB rate for the year using actual audited costs for the year, actual Metered Flow, Residuals, MBC Return, cumulative Strength factors, and Fixed Capacity Charges for the City and for each Participating Agency. The City shall credit any future charges or bill for any additional amounts due against the quarter after the prior year costs have been audited.

5.8 Financial Statements.

5.8.1 The City shall keep records and accounts of all costs and expenses relating to conveyance, treatment, disposal, and reuse of wastewater, and production of Repurified Water, and the acquisition, planning, design, construction, administration, monitoring, operation and maintenance of the Metro System and Water Repurification System, and any grants, loans, or other revenues received therefor. The City shall keep such records and accounts for at least four (4) years after the completed audit, or for any longer period required by law or outside funding sources.

5.8.2 Annual Audit. Said records and accounts shall be subject to reasonable inspection by any authorized representative of any Participating Agency at its expense. Further, said accounts and records shall be audited annually by an independent certified public accounting firm appointed by the City. A copy of said report shall be available to any Participating Agency.

As part of said audit, the actual amount of City Water Utility’s PW Costs, Pure Water Program costs attributable to the Metro System, Repurified Water Revenue, and the Capital Expense Rate shall be determined and audited by the City’s external auditors and Participating Agency representatives, and a cumulative and annual summary of such amounts shall be included as a footnote or attached to the audit of the Metro System. Cost summaries shall include separate lines for Capital Improvement Costs and Operation and Maintenance Costs.

5.8.3 The City shall make a good faith effort to complete the annual audit, and any related adjustments under this Agreement as described in Section 5.8.2, by the end of the following fiscal year.

5.9 Debt Financing. The City retains the sole right to determine the timing and amount of debt financing required to provide Metro System Facilities. The annual debt service plus inprogress Capital Improvement Costs to maintain capacity in and of the Metro System shall be allocated to the Participating Agencies consistent with the Exhibit B Contract Capacity allocations effective on the date the debt is issued. If a Participating Agency wishes to prepay Capital Improvement Costs, and the City is able to accommodate such a request, then a Participating Agency may prepay their proportional share of Capital Improvement Projects. If a Participating Agency wishes to withdraw or reduce their Flows and/or Strengths from the Metro System per

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Section 2.3.3 of this Agreement, such agency will remain responsible for its pro-rata share of all outstanding debt incurred at the time the debt was issued until it is satisfied, irrespective of withdrawal, reduction in Flows and/or Strengths, or Agreement expiration. If the City refunds debt, it shall allocate such refunds consistent with the Exhibit B Contract Capacity allocations effective on the date the debt was issued.

5.10 Allocation of Operating Reserves and Debt Service Coverage. The Parties shall continue to comply with the protocol set forth in Exhibit C, Administrative Protocol on Allocation of Operating Reserves and Debt Service Coverage to Participating Agencies, which exhibit may be amended from time to time consistent with Section 5.11.

5.11 Amending the System of Charges. Except as otherwise provided in Section 5.2.1.6, the Parties may amend any provision in this Section 5 regarding the Finance, Budgeting, and Accounting System of Charges in an Administrative Agreement subject to the Joint Administrative Approval Process set forth in Section 15.

6. FINANCE, BUDGETING, AND ACCOUNTING: PURE WATER PROGRAM COST ALLOCATION AND REVENUES – PHASE 1

6.1 North City Water Reclamation Plant Modification. As part of Phase 1 of the Pure Water Program, the City intends to modify the North City Water Reclamation Plant (a Metro System facility) and expand its capacity to 52 MGD. In addition, the City intends to construct the North City Pure Water Facility on a nearby site to produce Repurified Water. This Section sets forth the costs and revenues associated with the Pure Water Program attributable to the Metro System. Exhibit A includes current constructed Metro System facilities and existing and proposed future Phase 1 facilities.

6.2 New, Expanded or Modified Metro System Facilities. Each new, expanded, or modified Metro System facility, which is part of the Pure Water Program, and is used in relation to the production of Repurified Water (in addition to the modification and expansion of the North City Water Reclamation Plant) shall be governed by this Section.

6.3 Costs Excluded from Metro System Costs – Phase 1. All of the following Pure Water Program costs, including Capital Improvement Costs, Operation and Maintenance Costs, and other related costs (including administration, insurance, claims, and overhead) shall be excluded from Metro System Costs for purposes of calculating the annual FAB rate.

6.3.1 General Exclusions:

6.3.1.1 Costs of the Water Repurification System and any Metro System facilities to the extent constructed, modified, expanded, or used for the purpose of treating wastewater beyond secondary treatment (ocean discharge standard under current law). This shall include costs for preliminary treatment, primary treatment, and secondary treatment to the extent such costs are higher than they would otherwise be due to the production of Repurified Water.

6.3.1.2 Costs for fail-safe disposal, if necessary, for design capacity for Repurified Water, including, but not limited to, any costs associated with the reservation of capacity at the Point Loma Wastewater Treatment Plant.

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6.3.1.3 Costs for the demolition or replacement of existing Metro System facilities with similar facilities for the purpose of making space available for Water Repurification System facilities. Such costs may consider the current asset value or market value of the existing Metro System facility.

6.3.2 Cost Exclusions Specific to North City Water Reclamation Plant Improvements:

6.3.2.1 Costs for increased aeration tank volume to the extent the new volume exceeds the amount necessary to provide 52 MGD capacity. Determination of sizing to provide 52 MGD capacity shall be based on the current tank volume necessary to provide 30 MGD capacity.

6.3.2.2 Costs for the methanol feed system.

6.3.2.3 Costs for RSDP disposal, including, but not limited to, pump stations, pipelines, retreatment, ocean outfall, and monitoring.

6.3.2.4 Costs for the use of existing tertiary water filters for Repurified Water purposes. Such costs may consider the depreciated value of such filters or use such other appropriate valuation methods as agreed by the City and authorized representatives of the Metro JPA. Costs under this section shall be reimbursed or credited by City’s Water Utility to the Metro System.

6.4 North City Water Reclamation Plant Improvement Costs Included as Metro System Costs. Notwithstanding the above exclusions, the City and the Participating Agencies have specifically agreed that the following Capital Improvement Costs and Operation and Maintenance Costs related to North City Water Reclamation Plant improvements shall be included as Metro System Costs for purposes of calculating the annual FAB rate (and therefore not qualify as City Water Utility PW Costs):

6.4.1 Costs for chemically enhanced primary treatment for up to 52 MGD capacity.

6.4.2 Costs for primary effluent equalization for up to 52 MGD capacity.

6.4.3 Costs for increased volume of aeration tanks that will provide up to, but not exceeding, 52 MGD capacity.

6.4.4 Costs to add secondary clarifier tanks sufficient for up to 52 MGD capacity.

6.4.5 Costs for wastewater conveyance facilities to provide wastewater for replacement of Centrate flows that cannot be treated at the North City Water Reclamation Plant due to the production of Repurified Water.

6.4.6 Costs for treatment and conveyance of all MBC Return (micro-filtration and tertiary backwash) based on Flow, COD, and TSS.

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6.5 Reallocation of PWP Costs incurred since FY 2014.

6.5.1 The allocation of Pure Water Program costs, retroactive to June 30, 2014, will be calculated the year the Agreement goes into effect, will be completed no less than two fiscal years following the production of 30 MGD by Phase 1 of the Pure Water Program.

6.5.1.1 All the O&M task orders, or costs that cannot be directly assigned to a PWP Phase 1 capital improvement project such as program management, environmental documents, etc., will be reallocated by the final water/wastewater cost split, and will include interest accruing since June 2014 at the interest rate earned by the City of San Diego for each applicable fiscal year as shown by the sample interest calculation included in Exhibit G, Sample of Interest Calculation. This postpones the reconciliation of costs until the substantial completion of all construction projects for Phase 1 (City Water Utility PW Costs and Metro). This reconciliation will be performed during the audit of the fiscal year in which substantial completion of all projects occurs.

6.5.1.2 All Phase 1 PWP CIP projects were bid and awarded by October 2022 which is FY2023. All shared Phase 1 CIP projects will be reallocated to the actual construction cost split once the project is awarded, and the cost loaded CPM is completed and negotiated between the City and the Participating Agencies during the FY2023 audit. All CIP soft costs incurred since 2014 will be reallocated like the O&M task orders during the audit of the year of substantial completion of the actual Phase 1 CIP projects. If interest is owed to the Metro System for soft costs starting in FY 2014, such interest shall be considered Metro System Revenues consistent with Section 5.5.5.

6.6 Revenue Sharing for Repurified Water.

6.6.1 Background. Initially, the Parties anticipate that the cost per acre foot associated with the production of Repurified Water will be more expensive than the cost per acre foot of untreated imported water. However, it is anticipated that Repurified Water produced under Phase 1 will be less expensive than untreated imported water sometime in the future. Once Repurified Water produced under Phase 1 becomes less expensive than the cost of untreated imported water, the Parties agree that there will be revenue from the Pure Water Program.

6.6.2 Calculation. Revenue sharing shall occur in each fiscal year during which the annual cost per acre foot associated with the production of Repurified Water is less than the cost of untreated water per acre foot from the San Diego County Water Authority (“CWA”). The annual cost difference shall be known as “Repurified Water Revenue.” Repurified Water Revenue shall be determined as follows:

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Annual cost per acre foot of CWA untreated water purchased by the City for delivery at Miramar Reservoir (which shall be determined based on the total costs for water actually billed to the City by CWA for water delivered at Miramar Reservoir in a fiscal year, divided by the number of acre-feet of CWA water delivered at Miramar Reservoir that year)
less
Annual cost per acre-foot of City Water Utility PW Costs (which shall be determined based on total annual City Water Utility PW Costs divided by the number of acre-feet of Repurified Water actually produced in that year) the result of which is multiplied by
The number of acre feet of Repurified Water produced by Pure Water Program facilities during the applicable fiscal year.

Exhibit H, Summary of Billings from County Water Authority Showing Costs for Untreated Water, is a summary of the most recent CWA rate structure and cost allocations to the City of San Diego for untreated water. The Parties agree that Exhibit H shall be referred to by the Parties in the future in determining how costs for water delivered at Miramar Reservoir are calculated. If no untreated water is delivered at Miramar Reservoir in a given year, then the closest point of delivery of untreated water to the City shall be used. The City shall annually update Exhibit H to reflect the most recent CWA rate structure and cost allocations to the City of San Diego.

The City shall estimate whether there will be Repurified Water Revenue in the upcoming fiscal year prior to January 15 of each year, and these amounts shall be incorporated into the budget estimates for the upcoming fiscal year to all Parties.

6.6.3 Revenue Sharing. Repurified Water Revenue shall initially be shared between the City’s Water Utility and the Metro System based on the relative actual Capital Improvement Costs for the Pure Water Program contributed by City’s Water Utility and the Metro System. Such Capital Improvement Cost contributions are currently estimated as 62% City’s Water Utility and 38% Metro System. The Metro System’s portion of the Repurified Water Revenue shall be applied to debt attributable to the Metro System first, until the debt attributable to the Metro System is fully paid.

Following full payment of debt attributable to the Metro System, Repurified Water Revenue shall be shared based on the relative actual Operation and Maintenance Costs for Pure Water Program facilities contributed by City’s Water Utility and the Metro System, calculated annually. Such Operation and Maintenance Costs are currently estimated as 76% City’s Water Utility and 24% Metro System on an annual basis.

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In all instances referred to in this Section 6.6.3, the Metro System portion of the Repurified Water Revenue shall be allocated among the City and the Participating Agencies consistent with Section 4.4.2.

6.6.4 Year-End Adjustment. At the end of each fiscal year during which there is Repurified Water Revenue, the City shall determine the actual cost per acre foot of CWA untreated water purchased by the City, the actual cost per acre foot of City Water Utility PW Costs, and the actual amount of Repurified Water produced at Pure Water Program facilities.

Based on the actual cost and production information, the City will recalculate the Repurified Water Revenue for the prior fiscal year. The City will credit any future charges or bill for any additional amounts due the quarter after the prior year costs have been audited.

6.6.5 Change in Potable Reuse Method. The Parties acknowledge that the Pure Water Program Phase 1 will initially use indirect potable reuse surface water augmentation. The use of CWA untreated water costs in calculating Repurified Water Revenue is intended to provide an appropriate point of comparison to costs for producing Repurified Water that will be introduced into surface water. The Parties agree that if the City desires to implement direct potable reuse (in which Repurified Water would be introduced directly into a water supply pipeline or facility), the Parties shall meet and negotiate in good faith regarding an amendment to this Section 6.6, to appropriately update the formula for Repurified Water Revenue, which form of amendment shall occur via an Administrative Agreement and shall be subject to the Joint Administrative Approval Process set forth in Section 15.

6.7 Capital Expense Rate.

6.7.1 Background. The Point Loma Wastewater Treatment Plant operates under a National Pollutant Discharge Elimination System (“NPDES”) permit modified under section 301(h) & (j)(5) of the Clean Water Act. If such modified permit were ever revoked or not renewed, the Parties agree that, under current law, the City would have an obligation to upgrade the PLWTP to secondary treatment. The Parties further agree that $1.8 billion is a fair and comprehensive estimation of the costs that could be incurred by the Metro System to meet the legal requirements related to the Metro System under current law. The estimate of $1.8 billion is based on the net present value of the capital cost to develop 180 MGD of secondary treatment at PLWTP as of November 15, 2018.

Therefore, the Parties agree that $1.8 billion represents the maximum amount of Capital Improvement Costs that the Metro System should be obligated to contribute to the Pure Water Program, the purpose of which is not solely the disposal of wastewater, but also the production of Repurified Water. The Parties agree that this $1.8 billion maximum contribution should apply whether or not the PLWTP is actually upgraded to secondary treatment to meet legal requirements in the future because, as of the date of the Agreement, the Parties have the option of upgrading the PLWTP to full secondary treatment for the cost of approximately $1.8 billion.

In light of the above, the Parties have agreed that if Metro System costs related to the Pure Water Program exceed the $1.8 billion, City’s Water Utility will pay a charge for each acre foot

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of secondary treated effluent produced by Metro System facilities and used for the production of Repurified Water.

6.7.2 Capital Expense Rate. Under the circumstances described in this Section 6.7, City’s Water Utility shall pay a charge (“Capital Expense Rate”) for each acre-foot of secondary treated effluent produced by Metro System facilities and used for the production of Repurified Water. The Capital Expense Rate costs or revenues attributable to the Metro System shall be assessed or credited consistent with Section 4.4.2. City’s Water Utility shall pay the Capital Expense Rate if the following costs alone, or in combination, exceed $1.8 billion (which amount shall be adjusted for inflation):

6.7.2.1 The sum of all Capital Improvement Costs and associated debt attributable to the Metro System components of the Pure Water Program under this Section 6.7.2; and/or

6.7.2.2 The sum of all Capital Improvement Costs and associated debt for the full or partial upgrading of the PLWTP to secondary treatment.

Notwithstanding the above, the Capital Expense Rate shall not apply if the PLWTP is actually upgraded to secondary treatment (or beyond) due to: (a) a change in federal or state statutory law making it necessary to upgrade the PLWTP to comply with such new discharge standard; or (b) a final decision by a state or federal court or a federal administrative agency of competent jurisdiction that an NPDES permit modified under section 301(h) & G)(5) of the Clean Water Act is thereby revoked or denied renewal due to a finding that the discharge from the PLWTP violates anti-degradation rules or regulations promulgated under section 403 of the Clean Water Act.

6.7.3 Calculation of Capital Expense Rate. The amount per acre-foot of the Capital Expense Rate shall be determined as follows:

The sum of all Capital Improvement Costs and associated debt attributable to (i) the Metro System components of the Pure Water Program under this Section 6 and (ii) upgrading of the PLWTP to secondary treatment (if any) less
$1.8 billion, as adjusted for inflation each July 1 (starting on July 1, 2019) to reflect the annual percentage change in the Engineering News Records – Los Angeles construction cost index
the result of which is multiplied by

1.42 (which estimates the total interest on a 30-year State Revolving Fund loan with an interest rate of 2.5%)
the result of which is divided by

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The total number of acre feet per year of secondary treated effluent that is expected to be produced by Metro System facilities for the production of Repurified Water over a period of thirty (30) years.

The City shall estimate whether the Capital Expense Rate shall apply to the upcoming fiscal year (and its amount) prior to January 15 of each year, and the estimated amount of the Capital Expense Rate shall be effective on July 1 of the upcoming fiscal year.

For purposes of this Section 6.7.3, Capital Improvement Costs and associated debt shall include such costs and revenue incurred by the Metro System prior to the effective date of the Agreement.

6.7.4 Year-End Adjustment. At the end of each fiscal year during which the Capital Expense Rate applies, the City shall determine the actual Capital Improvement Costs and associated debt attributable to the Metro System components of the Pure Water Program under this Section 6 and any upgrading of the PLWTP to secondary treatment, and the actual amount of secondary treated effluent produced by Metro System facilities and used for the production of Repurified Water.

Based on the actual cost, interest, and effluent information, the City will recalculate the Capital Expense Rate for the prior fiscal year. The City will credit any future charges or bill for any additional amounts due the quarter after the prior year costs have been audited.

6.7.5 Duration; Expiration. The Capital Expense Rate shall continue until the cost difference between (a) the actual sum of Pure Water Program Capital Improvement Costs and associated debt attributable to the Metro System under Section 6.7 and/or the costs to upgrade the PLWTP and (b) $1.8 billion (as adjusted for inflation), has been fully paid, or the Agreement expires, whichever is sooner. Notwithstanding, it is the express intent and desire of the City and the Participating Agencies that if the Agreement expires before the cost difference has been paid through the Capital Expense Rate, that the Capital Expense Rate continue in any extension of this Agreement negotiated by the Parties pursuant to Section 14.2 until the cost difference has been fully paid.

6.8 Amending Pure Water Program Cost Allocation and Revenues – Phase 1. Except as otherwise provided in Section 6.6.2, the Parties may amend any provision in this Section 6 regarding the Finance, Budgeting, and Accounting for the Pure Water Program Cost Allocation and Revenues for Phase 1 in an Administrative Agreement subject to the Joint Administrative Approval Process set forth in Section 15.

7. FINANCE, BUDGETING, AND ACCOUNTING: PURE WATER PROGRAM COST ALLOCATION AND REVENUES – PHASE 2

7.1 Pure Water Program – Phase 2. The Second Phase of the Pure Water Program (“Phase 2”) shall create up to an additional 53 MGD of Repurified Water at Phase 2 facilities. The Parties agree to incorporate all terms relating to Phase 2 into this Agreement through an Administrative Agreement subject to the Joint Administrative Approval Process set forth in Section 15, subject to the requirements set forth in this Section 7 below.

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7.2 Costs Excluded As Metro System Costs.

Costs Excluded from Metro System Costs for Phase 2 shall be identified in an Administrative Agreement subject to the Joint Administrative Approval Process and approvals set forth in Section 15. However, the Administrative Agreement must reflect that all of the following PWP Phase 2 costs, including Capital Improvement Costs, Operation and Maintenance Costs, and other related costs (including administration, insurance, claims, and overhead) shall be excluded from Metro System Costs for the purposes of calculating the annual Phase 2 FAB rate, and shall be City Water Utility PW Costs:

7.2.1 Costs of the Phase 2 Water Repurification System and any Metro System facilities to the extent constructed, modified, expanded, or used for the purpose of treating water beyond secondary treatment (ocean discharge standard under current law). This shall include costs for preliminary treatment, primary treatment, and secondary treatment to the extent such costs are higher than they would otherwise be due to the production of Phase 2 Repurified Water.

7.2.2 Costs for fail-safe disposal, if necessary, for design capacity for Phase 2 Repurified Water, including, but not limited to, any costs associated with the reservation of capacity at the Point Loma Wastewater Treatment Plant.

7.2.3 Costs for the demolition or replacement of existing Metro System facilities with similar facilities for the purpose of making space available for Phase 2 Water Repurification System facilities. Such costs may take into account the current asset value or market value of the existing Metro System facility.

7.2.4 Costs for the Phase 2 methanol feed system.

7.2.5 Costs for Phase 2 RSDP disposal including, but not limited to, pump stations, pipelines, retreatment, ocean outfall, and monitoring.

7.2.6 50% of the costs for the MBR Tanks and system for Phase 2.

7.2.7 All membrane integrity monitoring systems for Phase 2.

7.2.8 All Phase 2 systems downstream of MBR’s.

7.3 Revenue Sharing for Repurified Water – Phase 2. Terms regarding revenue sharing for Repurified Water for Phase 2 shall be identified in an Administrative Agreement subject to the Joint Administrative Approval Process set forth in Section 15. However, this Administrative Agreement must reflect terms related to Phase 2 revenue sharing for Repurified Water that conceptually mimic those terms set forth in Section 6.6. The Metro System portion of the Repurified Water Revenue for Phase 2 shall be allocated among the City and the Participating Agencies consistent with Section 4.4.2, as may be amended or updated to account for changes in PWP Phase 2.

7.4 Capital Expense Rate – Phase 2. Terms regarding the Capital Expense Rate for Phase 2 shall be identified in an Administrative Agreement subject to the Joint Administrative Approval Process and approvals set forth in Section 15. However, this Administrative Agreement

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must reflect terms that conceptually mimic the terms in Section 6.7, reflecting a continuation of the Capital Expense Rate through Phase 2 up until the PWP achieves up to 83 MGD of Repurified Water, taking into account production of water suitable for potable reuse occurring at all treatment processes for wastewater upstream from and at the PLWTP. The Pure Water Program Capital Expense Rate costs or revenues attributable to the Metro System shall be assessed or credited consistently with Section 4.4.2, as may be amended or updated to account for changes in PWP Phase 2.

8. FUTURE NEGOTIATIONS AND COOPERATION
This Agreement specifically contemplates Phase 1 and Phase 2 of the Pure Water Program, which consists of new, expanded, or modified Metro System and Water Repurification System facilities projected to produce up to 83 million gallons per day of Repurified Water. The Parties intend to meet and negotiate in good faith regarding the referenced Administrative Agreements identified in this Agreement. All items outside the scope of the Joint Administrative Approval Process shall be negotiated by the Parties through the amendment processes described in Section 16.3, if necessary.

9. THE METRO COMMISSION

9.1 Establishment and Membership. The 1998 Agreement created and established (and the ARA reestablished) the Metro Commission as a commission consisting of one representative from each Participating Agency. On October 25, 2000, the Participating Agencies entered into a Joint Exercise of Power Agreement which created a separate public entity, the Metro Wastewater Joint Powers Authority (“Metro JPA”), for the purpose, among others, of taking responsibility, actions, and making decisions pertaining to the 1998 Agreement on behalf of the Participating Agencies. The Metro Commission and the Metro JPA are and shall hereinafter be treated as one and the same entity for all intents and purposes under this Agreement, including for the purpose of accepting and executing the responsibilities delegated to the Metro JPA in this Agreement. Each Participating Agency shall have the right to appoint a representative of its choice to the Metro Commission/Metro JPA, and the Participating Agency’s appointee to the Metro Commission shall also serve as that Participating Agency’s representative on the Metro JPA Board of Directors. If a Participating Agency is a dependent district whose governing body is that of another independent public agency, that Participating Agency shall be represented on the Metro Commission/Metro JPA by a representative appointed by the governing body which shall have no more than one representative no matter how many Participating Agencies it governs. Each member has one vote in any matter considered by the Metro Commission/Metro JPA. The Metro Commission/Metro JPA shall establish its own meeting schedule and rules of conduct. The City may participate in the Metro Commission on an ex officio, non-voting basis. To the extent this Agreement expands or amends the powers or purposes set forth in the Metro JPA Joint Exercise of Powers Agreement, the Participating Agencies expressly agree to such expansion or amendment consistent with the terms of this Agreement.

9.2 Advisory Responsibilities of Metro JPA.

9.2.1 The Metro JPA shall act as an advisory body to the Mayor and City Council on policy issues and matters affecting and relating to the Metro System and shall be included in

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the City’s list of boards and commissions on the City’s website. The City shall present the position of the majority of the Metro JPA to the City’s governing body in written staff reports. The Metro JPA may prepare and submit materials in advance and may appear at any City hearings on Metro System matters and present its position to the governing body of the City.

9.2.2 The Metro JPA may advise the City of its position on any issue relevant to the Metro System.

9.3 Delegation of Decision-Making Authority of the Metro JPA. The Participating Agencies hereby delegate to the Metro JPA the authority to take certain actions pursuant to the approval processes provided in this Agreement, as permitted by law, including but not limited to Government Code 6506. The Participating Agencies agree that the Metro JPA has delegated authority to approve Administrative Agreements on behalf of each Participating Agency pursuant to the process set forth in Section 15. The Participating Agencies agree and acknowledge that the Metro JPA has authority to bind each Participating Agency to Administrative Agreements through the Joint Administrative Approval Process. All Participating Agencies agree to promptly execute Administrative Agreements after approval by the Metro JPA. By signing this Agreement, each Participating Agency is expressly preapproving such actions.

9.4 Standing. If a dispute arises among the Parties relating to or arising from a Party’s obligation under this Agreement or an associated Administrative Agreement, the Metro JPA shall have standing to enforce the terms of this Agreement against the City on behalf of two or more Participating Agencies if a majority of the Metro JPA votes to take action relating to this Agreement on behalf of two or more Participating Agencies.

10. DISPUTE RESOLUTION
This Section governs all disputes arising out of this Agreement and any associated Administrative Agreements.

10.1 Mandatory Non-Binding Mediation. If a dispute arises among the Parties relating to or arising from a Party’s obligations under this Agreement or an associated Administrative Agreement that cannot be resolved through informal discussions and meetings, the Parties involved in the dispute shall first endeavor to settle the dispute in an amicable manner, using mandatory non-binding mediation under the rules of JAMS, AAA, or any other neutral organization agreed upon by the Parties before having recourse in a court of law. Mediation shall be commenced by sending a Notice of Demand for Mediation to the other Party or Parties to the dispute. A copy of the notice shall be sent to the City, all other Participating Agencies, and the Metro JPA.

10.2 Selection of Mediator. A single mediator that is acceptable to the Parties involved in the dispute shall be used to mediate. The mediator will be knowledgeable in the subject matter of this Agreement, if possible, and chosen from lists furnished by JAMS, AAA, or any other agreed upon mediator.

10.3 Mediation Expenses. The expenses of witnesses for either side shall be paid by the Party producing such witnesses. All mediation costs, including required travel and other expenses

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of the mediator, and the cost of any expert advice produced at the direct request of the mediator, shall be Metro System costs.

10.4 Conduct of Mediation. Mediation hearings will be conducted in an informal manner.

Discovery shall not be allowed. The discussions, statements, writings and admissions and any offers to compromise during the proceedings will be confidential to the proceedings (pursuant to California Evidence Code sections 1115 - 1128 and 1152) and will not be used for any other purpose unless otherwise agreed by the Parties in writing. The Parties may agree to exchange any information they deem necessary. The Parties involved in the dispute shall have representatives attend the mediation who are authorized to settle the dispute, though a recommendation of settlement may be subject to the approval of each agency’s boards or legislative bodies. Either Party may have attorneys, witnesses or experts present.

10.5 Mediation Results. Any resultant agreements from mediation shall be documented in writing. The results of the mediation shall not be final or binding unless otherwise agreed to in writing by the Parties. Mediators shall not be subject to any subpoena or liability and their actions shall not be subject to discovery.

10.6 Performance Required During Dispute. Nothing in this Section shall relieve the City and the Participating Agencies from performing their obligations under this Agreement. The City and the Participating Agencies shall be required to comply with this Agreement, including the performance of all disputed activity and disputed payments, pending the resolution of any dispute under this Agreement.

11. INSURANCE

11.1 City Shall Maintain All Required Insurance.

11.1.1 Throughout the term of this Agreement the City shall procure and maintain in effect liability insurance covering Metro System assets and operations in the same manner, and to the same extent, as the City insures similar assets and operations of the City. Such insurance may be provided through separate policies for the Metro System, or by consolidating the Metro System with other City assets and operations for insurance purposes. If the Metro System is insured separately, policy limits, deductibles, and self-insured retentions shall be equivalent to what the City procures for other similar City assets and operations. The City shall maintain all insurance required by law, including workers’ compensation insurance, and may self-insure for certain losses when allowed by law. The proportionate cost of insurance for the Metro System shall be included in the computation of the FAB.

11.1.2 If the Metro System is insured separately, any policy or policies of liability insurance carried by the City for the Metro System shall name the Participating Agencies as additional insureds with evidence of same supplied to each upon request.

11.1.3 Upon request by the Metro JPA or a Participating Agency, the City shall promptly provide written coverage and policy information, including, but not limited to, the scope of coverage, policy limits, deductibles, and self-insured retentions, including information on any claims made against the policies and remaining limits and deductibles.

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11.2 Substantially Equivalent Coverage. In the event of a transfer of the Metro System to a nonpublic entity pursuant to Section 2.1, coverage substantially equivalent to all the above provisions shall be maintained by any successor in interest.

12. INTERRUPTION OF SERVICE
Should the Metro System services to the Participating Agencies be interrupted as a result of a major disaster, by operation of federal or state law, or other causes beyond the City’s control, the Participating Agencies shall continue all payments required under this Agreement during the period of interruption.

13. NOTICES REQUIRED UNDER AGREEMENT
The City and each Participating Agency shall give notice when required by this Agreement.

All notices required by this Agreement must be in writing and must be sent via email and either served personally or mailed via first class U.S. mail. The notices shall be sent to the officer listed for each Party, at the address and email address listed for each Party in Exhibit D, Notice Listing, in accordance with this Section. If a Party wishes to change the officer and/or address to which notices are given, the Party shall notify all other Parties in accordance with this Section. Upon such notice, the City shall amend Exhibit D to reflect the changes. The amendment shall be made within sixty (60) days after receipt of the Party’s notice regarding the change in officer and/or address.

The City shall keep an updated version of Exhibit D, notated with the most recent amendment date, on file with the City Public Utilities Department. The City shall provide a copy of the amended Exhibit D to all Parties by no later than sixty (60) days after amending Exhibit D.

14. EFFECTIVE DATE AND EXPIRATION

14.1 Effective Date. This Agreement shall be effective on July 1 of the fiscal year commencing after execution by the City and all of the Participating Agencies and shall be dated as of the signature date of the last executing Party. For example, irrespective of whether the last executing Party signs this Agreement on September 1, 2025, January 1, 2026, or June 30, 2026, the effective date of the Agreement would be July 1, 2026.

14.2 Expiration. Subject to the rights and obligations set forth in Section 14.3, unless amended, replaced, or terminated earlier by mutual consent of all the Parties, this Agreement shall expire on June 30, 2065. This Agreement is subject to extension by agreement of the Parties. The Parties shall commence discussions on an agreement to provide wastewater treatment services beyond the year 2065 on or before December 31, 2055, or at such time, if any, that the PLWTP is required to be upgraded to secondary treatment. The Parties may create, amend or terminate any associated Administrative Agreements addressing implementation of this Agreement, as provided in this Agreement.

14.3 Contract Capacity Rights Survive Expiration. The Participating Agencies’ Contract Capacity rights and rights to obtain wastewater treatment services from the facilities referred to in, or constructed pursuant to this Agreement shall survive the expiration of the Agreement. Provided, however, for any Participating Agency to exercise such rights, the Participating Agency shall comply with all the following requirements: (a) provide at least six months’ written notice prior to the expiration of this Agreement; (b) upon expiration of this Agreement, pay their proportional

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share of Metro System Costs according to the billing methodologies set forth in this Agreement in order to maintain their right(s) to such wastewater treatment services; and (c) agree to recalculate and pay proportional share of future Metro System Costs based on the City’s and all remaining Participating Agencies’ proportionate shares. In the event this Agreement expires and one or more Participating Agency(ies) continue to pay their proportional share of all Metro System Costs, the City shall have the right to continue managing, operating, and expanding the Metro System subject to the same terms set forth in this Agreement, unless otherwise agreed to in writing by and between the City and a Participating Agency. In the event one or more Participating Agency(ies) exercise its/their right(s) to maintain Contract Capacity and wastewater treatment services, such Participating Agency(ies) shall also maintain the right to continue receiving any and all revenues contemplated by this Agreement, including, but not limited to, Metro System Revenues.

14.4 Abandonment. After June 30, 2065, the City may abandon operation of the Metro System upon delivery of notice to the Participating Agencies ten (10) years in advance of said abandonment. Upon notice by the City to abandon the Metro System, the Parties shall meet and confer over the nature and conditions of such abandonment. In the event the Parties cannot reach agreement, the matter shall be submitted to mediation under Section 10. In the event of abandonment, the City shall retain ownership of all Metro System assets free of any claim of the Participating Agencies. Abandonment by the City with continued operation by a different entity shall not terminate or affect a Contract Capacity rights of a Participating Agency so long as that Participating Agency has continued to pay their proportional share of Capital Improvement Costs and Operation and Maintenance Costs according to the billing methodologies set forth in this Agreement. Nothing in this language shall be construed to require the City to continue as operator of the Metro System after the ten-year (10) notice period has run.

15. ADMINISTRATIVE AGREEMENTS

15.1 Use and Process for Administrative Agreements.

15.1.1 Purpose. Administrative Agreements are intended to implement the intent of the Parties in an efficient and effective manner without reopening or renegotiating the terms of this Agreement. Administrative Agreements are limited to addressing issues that are authorized by this Agreement. Administrative Agreements are separate and distinct from Exhibits to this Agreement, and are designed to address procedural, operational, technical, and administrative issues. Terms in this Agreement may only be modified through the Joint Administrative Approval Process if this Agreement expressly authorizes the use of an Administrative Agreement.

15.1.2 Amendments, Supplements, or Successors to Administrative Agreements.

Where this Agreement refers to an Administrative Agreement, such reference shall include any amendment(s) to that Administrative Agreement or supplemental or successor Administrative Agreement(s).

15.1.3 Function. Administrative Agreements are made among all the Parties but deal with a specific function or group of like functions, for the benefit of regional wastewater treatment within the Metro System, or for the implementation of this Agreement.

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15.1.4 Current Agreements. The Administrative Agreements which are approved and executed simultaneously with the execution of this Agreement are listed Exhibit I, List of Administrative Agreements. The City shall update Exhibit I each time an Administrative Agreement is approved, amended, revised or terminated pursuant to this Agreement.

15.1.5 Development and Joint Administrative Approval Process. Any Party can present an Administrative Agreement, or an amendment or supplement thereto, or termination thereof, to the City for approval by way of the Joint Administrative Approval Process set forth in this Section. The City will endeavor in good faith to respond within 60 days of submission of a proposed Administrative Agreement. If the City needs additional time to evaluate the proposed Administrative Agreement, it will advise all Participating Agencies in writing of the anticipated review time. Once an Administrative Agreement receives City’s Administrative Approval, then, with respect to the Participating Agencies, the proposed Administrative Agreement may be presented to the Metro JPA at a duly noticed meeting for review and a first reading. Sixty (60) days or more after the first reading, after the Metro JPA Directors have had opportunity to consult with their respective agency staff and governing boards, the Administrative Agreement may be presented at a duly noticed meeting for a second reading and approved upon an affirmative vote by no less than two-thirds of the members of the Metro JPA during a duly noticed public meeting (in other words, upon the affirmative vote of at least eight or more of the twelve members of the Metro JPA, irrespective of how many Metro JPA Directors are present at the meeting, unless the number of Participating Agencies changes). If the second reading does not occur within One Hundred and Twenty (120) days after the first reading, the proposed Administrative Agreement shall no longer be taken into consideration, unless the City and the Metro JPA Directors agree to a different timeline. An Administrative Agreement, amendment thereto, or termination thereof, must receive City’s Administrative Approval and at least a two-third affirmative vote by the Metro JPA Directors before it can become effective. Administrative Agreements are binding contracts as against the City and all Participating Agencies, irrespective of whether or not any Participating Agency’s particular Metro JPA Director voted to approve the agreement or not, or was absent or abstained. The Metro JPA has the authority to bind the Participating Agencies to Administrative Agreements pursuant to the delegated authority provided to the Metro JPA in Section 9.3 herein.

16. GENERAL

16.1 Exhibits.

16.1.1 Exhibit List. This Agreement references Exhibits A through J. Each exhibit is attached to this Agreement and is incorporated herein by reference. All exhibits to this agreement shall be listed in Exhibit J, Exhibit List. The City shall update the Exhibit List from time to time each time an Exhibit is amended or revised pursuant to this Agreement.

16.2 Electronic Exhibits and Attachments. Acknowledgement and Acceptance: The Parties hereby acknowledge and agree that the exhibit(s) and attachment(s) related to this Agreement, or any of its associated Administrative Agreements, indicated as an Electronic Exhibits above (collectively, the “Electronic Exhibits”) may be in an electronic format that cannot be readily or accurately converted into a physical or printed form. The Parties expressly agree that such Electronic Exhibits shall nonetheless be deemed to be valid and enforceable attachments to this Agreement and shall be incorporated by reference as if fully set forth herein.

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16.2.1 Identification and Access: All Electronic Exhibits shall bear the same Exhibit identifier and name (i.e., Exhibit A – Metro Facilities) set forth in the Exhibit List, and shall be clearly identified as an Electronic Exhibit in the Exhibit List, including a file name, a time stamp of file, and a note indicating the software used to open and view the file, including version.

The Electronic Exhibit shall be loaded on to a CD-ROM, DVD-ROM, or other electronic storage medium that is a write-once medium without the ability to further edit. Each Party shall receive an identical copy of the Electronic Exhibit(s) via identical storage mediums. The City shall ensure that all Participating Agencies have full and unrestricted access to Electronic Exhibits for the duration of the Agreement and any applicable retention period thereafter, including by providing access to any necessary software, applications, or systems required to view, interact with, or manipulate the Electronic Exhibits in their native format; such as through website access via the GIS Online platform: https://sandiego.maps.arcgis.com. No interaction or manipulation of any Electronic Exhibit shall in any way constitute a bona fide change or amendment to the Electronic Exhibit.

16.2.2 Storage and Security: Each Party shall be responsible for securely storing and maintaining the integrity of the Electronic Exhibits in their possession or control. This includes, but is not limited to, implementing and maintaining reasonable and appropriate technical, administrative, and physical safeguards to protect the confidentiality, availability, and integrity of the Electronic Exhibits, and to prevent unauthorized access, disclosure, alteration, or destruction thereof.

16.2.3 Authentication and Admissibility: The Parties hereby stipulate and agree that the Electronic Exhibits shall be deemed to be original documents and authentic for all purposes under applicable law, and that the Parties may rely upon and introduce such Electronic Exhibits as evidence in any proceeding arising out of or relating to this Agreement, without the need for further foundation, authentication, or certification.

16.2.4 Receipt and Completeness: Each Party hereby acknowledges and confirms that they have received, reviewed, and had a reasonable opportunity to inspect all Electronic Exhibits that are attached to and incorporated into this Agreement as of the Effective Date. By executing this Agreement, each Party represents and warrants that, to the best of their knowledge, the Electronic Exhibits are complete, accurate, and free from material errors, omissions, or defects.

The Parties further agree to notify the other Party promptly upon discovering any discrepancies or inaccuracies in the Electronic Exhibits, and to cooperate in good faith to resolve any such issues in a timely manner.

16.2.5 Amendments and Modifications to Electronic Exhibits: Any amendments or modifications to the Electronic Exhibits shall be made in accordance with the procedures set forth in this Agreement for amending or modifying the terms and conditions hereof, and any such amended or modified Electronic Exhibits shall be deemed to replace and supersede any prior version thereof. Amended Electronic Exhibits shall also be loaded onto a new and separate CDROM, DVD-ROM, or other electronic storage medium that is a write-once medium without the ability to further edit. Each Party shall receive identical copies of the Electronic Exhibits via identical storage mediums. Amended Electronic Exhibits shall bear identical Exhibit Identifiers as their predecessor exhibits, but with a different suffix (for example, Exhibit A, when amended, shall be identified as Exhibit A-1, a subsequent amendment shall be identified as Exhibit A-2, etc.).

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16.3 Amendments to Agreement. There shall be four (4) ways to amend, modify, and/or change the terms set forth in this Agreement:

16.3.1 Amendments. Except as set forth in Sections 16.3.2, 16.3.3, and 16.3.4, amendments to this Agreement require the approval of all Parties. Such amendments must be in writing and signed by a duly authorized representative from each Party. Unless specifically referenced as being subject to one of the approval mechanisms set forth in Sections 16.3.2, 16.3.3, or 16.3.4 below, any amendment, modification, and/or changes to the terms of this Agreement must occur pursuant to this Section 16.3.1. This provision controls over all other provisions in this Agreement.

16.3.2 Joint Administrative Approval Process. As set forth in this Agreement, the Joint Administrative Approval Process requires the approval described in Section 15.1.5. The following actions may be taken subject to the Joint Administrative Approval Process:
(a) Agreements for New Contract Capacity as specifically set forth in Section 3.3
(b) Addition of new Metro Facilities or conversion of City facility to a Metro facility as specifically set forth in Section 4.2 (c) Changes to Exhibit E (Methodology for Contract Capacity Transfers)
(d) Revisions to FAB as specifically set forth in Section 5.2.1.3, except as provided therein
(e) Changes to Finance, Budgeting, and Accounting System of Charges as specifically set forth in Section 5.11
(f) Changes to Costs Excluded from Metro System Costs – Phase 1 as specifically set forth in Section 6.3
(g) Amending the formula for Repurified Water Revenue as specifically set forth in Section 6.6.2
(h) Changes to Finance, Budgeting, and Accounting for the Pure Water Program Cost Allocation and Revenues for Phase 1 as specifically set forth in Section 6.8
(i) Certain terms relating to Phase 2 as specifically set forth in Section 7.1
(j) Changes to Costs Excluded from Metro System Costs – Phase 2 as specifically set forth in Section 7.2
(k) Terms regarding revenue sharing for Repurified Water for Phase 2 as specifically set forth in Section 7.3

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(l) Terms regarding the Capital Expense Rate for Phase 2 as specifically set forth in Section 7.4
(m) Creation, changes, amendments, modifications to, or terminations of any Administrative Agreements as specifically set forth in Article 15.

16.3.3 Two-Party Approval. As set forth in this Agreement, Two-Party Approval requires the City’s Administrative Approval and a two-thirds (2/3) vote or greater of the Metro JPA Directors present at a duly noticed Metro JPA public meeting. The following actions may be taken subject to Two-Party Approval:
(a) Determinations regarding liability as specifically set forth in Section 2.5.5
(b) Contract Capacity Transfers – Decreases as specifically set forth in Section 4.4.3.2
(c) Changes to Strength measurements as specifically set forth in Section 4.5.2

16.3.4 City Administrative Approval. As set forth in this Agreement, the City’s Administrative Approval requires discussion, evaluation, and approval by the Director of the City of San Diego’s Public Utilities Department or their designee. The City may, in the City’s sole discretion, refer a decision subject to the City’s Administrative Approval to the City Council for a recommendation, approval, or other action. No action is required on the part of a Participating Agency. The following actions may be taken subject to the City’s Administrative Approval:
(a) Transfers of Contract Capacity as specifically set forth in Section 3.2
(b) Reductions in Metro System Capacity as specifically set forth in Section 3.4
(c) Amending Exhibit B as specifically set forth in Section 3.6 (d) Amending Exhibit A as specifically set forth in Section 4.2 (e) Contract Capacity Transfers – Increases as specifically set forth in Section 4.4.3.1
(f) Changes to Exhibit F (Metro System Flow Formulas and Sampling Locations) as specifically set forth in Section 4.5.1
(g) Changes to FAB to include measurements required by law as specifically set forth in Section 5.2.1.3

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(h) Changes to Exhibit H if CWA changes their rate structure as specifically set forth in Section 6.6.2
(i) Changes to Exhibit D (Notice) as specifically set forth in Section 13.

16.4 Construction of Agreement.

16.4.1 Drafting of Agreement. It is acknowledged that the City and the Participating Agencies, with the assistance of competent counsel, have participated in the drafting of this Agreement and that no ambiguity should be construed for or against the City or any Participating Agency on account of such drafting.

16.4.2 Entire Agreement. The City and each Participating Agency represent, warrant and agree that no promise or agreement not expressed herein has been made to them, that this Agreement contains the entire agreement between the Parties, that this Agreement supersedes any and all prior agreements or understandings between the Parties unless otherwise provided herein, and that the terms of this Agreement are contractual and not a mere recital; that in executing this Agreement, no Party is relying on any statement or representation made by the other Party, or the other Party’s representatives concerning the subject matter, basis or effect of this Agreement other than as set forth herein; and that each Party is relying solely on its own judgement and knowledge.

16.4.3 Agreement Binding on All; No Third-Party Beneficiaries. This Agreement shall be binding upon and shall inure to the benefit of each of the Parties, and each of their respective successors, assigns, trustees or receivers. All the covenants contained in this Agreement are for the express benefit of each and all such Parties. This Agreement is not intended to benefit any third parties, and any such third-party beneficiaries are expressly disclaimed.

16.4.4 Severability.

16.4.4.1 Should any provision of this Agreement or any associated Administrative Agreement be held invalid or illegal, such invalidity or illegality shall not invalidate the whole of the Agreement, but, rather, the Agreement shall be construed as if it did not contain the invalid or illegal part, and the rights and obligations of the Parties shall be construed and enforced accordingly except to the extent that enforcement of the Agreement without the invalidated provision would materially and adversely frustrate either the City’s or a Participating Agency’s essential objectives set forth in this Agreement or the applicable Administrative Agreement.

16.4.4.2 Should a court determine that one or more components of the allocation of costs set forth in this Agreement or any associated Administrative Agreement places the City or a Participating Agency in violation of Article XIII D, Section 6 of the California Constitution with respect to their ratepayers, such components shall no longer be of force or effect.

In such an event, the City and the Participating Agencies shall promptly meet to renegotiate the violative component of the cost allocation to comply with Article XIII D, Section 6 of the California Constitution, and use the dispute resolution process in Section 10 of this Agreement if an agreement cannot be reached through direct negotiation.

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16.4.4.3 Should a state or federal agency provide a final, written determination that the method of allocating Pure Water Program Capital Improvement Costs under this Agreement violates the requirements of state or federal grants or loans which are, or will be, used to fund the wastewater components of the Pure Water Program, such allocation method will no longer be of any force or effect. In such an event, the allocation of Repurified Water Revenue and the Capital Expense Rate will continue to be based on the Parties’ actual payments to fund the Pure Water Program Capital Improvement Costs attributable to the Metro System. The City and the Participating Agencies shall also promptly meet to negotiate an alternative cost allocation method that would comply with such grant or loan funding requirements.

16.4.5 Choice of Law. This Agreement and any of its associated Administrative Agreements shall be construed and enforced pursuant to the laws of the State of California.

16.4.6 Recognition of San Diego Sanitation District as Successor to Certain Parties.

The Parties hereby acknowledge and agree that the San Diego County Sanitation District is a Participating Agency under this Agreement as the successor in interest to the Alpine Sanitation District, East Otay Mesa Sewer Maintenance District, Lakeside Sanitation District, Spring Valley Sanitation District, and Winter Gardens Sewer Maintenance District.

16.5 Declarations Re: Agreement.

16.5.1 Understanding of Intent and Effect of Agreement. The Parties expressly declare and represent that they have read the Agreement and that they have consulted with their respective counsel regarding the meaning of the terms and conditions contained herein. The Parties further expressly declare and represent that they fully understand the content and effect of this Agreement and they approve and accept the terms and conditions contained herein, and that this Agreement is executed freely and voluntarily.

16.5.2 Warranty Regarding Obligation and Authority to Enter Into This Agreement. Each Party represents and warrants that its respective obligations herein are legal and binding obligations of such Party, that each Party is fully authorized to enter into this Agreement, and that the person signing this Agreement hereinafter for each Party has been duly authorized to sign this Agreement on behalf of said Party.

16.6 Right to Make Other Agreements. Nothing in this Agreement limits or restricts the right of the City or the Participating Agencies to make separate agreements among themselves, including through joint powers agreements, without the need to amend this Agreement, provided that such agreements are consistent with this Agreement. Nothing in this Agreement or Section 6 limits or restricts the right of the City or the Participating Agencies to enter into separate agreements regarding the industrial pretreatment program, or for the purchase or sale of Repurified Water produced by the Water Repurification System, or sharing in City Water Utility PW Costs; however, such agreements shall not affect the cost allocation and Metro System revenues delineated in Section 5.

16.7 Statute of Limitations to Resolve Billing Issues. Notwithstanding any longer statute of limitations in State law, if the City or a Participating Agency wishes to dispute a bill (including, but not limited to, an audited bill or an audit reconciliation) on the basis of an alleged overpayment

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or underpayment arising under this Agreement, the Party alleging the dispute must provide written notice regarding the disputed bill to all Parties to this Agreement promptly upon discovery of such a billing issue. The written notice shall invoke or reference this Section. The Parties agree that such refunds or collections shall not accrue for more than three (3) years from the date that such billing is received by the Participating Agency, or one (1) year from the date that an audited reconciliation is received by the Participating Agency, whichever date is later. The City and the Participating Agencies hereby waive any applicable statute of limitations available under State law that exceed the time frames set forth in this Section 16.7. Upon receipt of the written notice regarding the billing dispute, any Participating Agency wishing to participate in the resolution of the dispute shall be allowed to do so and to present evidence to all Parties in support of their position. The involved Parties’ determination regarding the outcome of the billing dispute, including any related adjustments to each Participating Agency’s share of net Metro System costs or revenues resulting from the resolution of such billing issues, shall be final. Nothing in this section relieves a Participating Agency from its obligations to make timely payments under this Agreement irrespective of whether or not a bill is being disputed. If the Parties are unable to resolve a billing dispute, the Parties shall utilize the dispute resolution processes in this Agreement.

16.8 Counterparts and Electronic Signatures. This Agreement may be executed in counterparts. This Agreement shall become operative as soon as one counterpart hereof has been executed by each Party. The counterparts so executed shall constitute one Agreement notwithstanding that the signatures of all Parties do not appear on the same page. A faxed, .pdf, or other electronic copy of the fully executed original version of this Agreement shall have the same legal effect as an executed original for all purposes. Electronic signatures (including but not limited to signatures via DocuSign) shall be acceptable, enforceable, and shall have the same legal effect as an original signature.

16.9 Transparency. Upon request, the City shall promptly provide each Participating Agency with access to all records and information reflecting Flow and Strength of sewage in the Metro System, including, but not limited to, Flow data from all Metro System meters, worksheets or calculations that are used by City to develop cost information for any costs contemplated by this Agreement, and any Strength or other data utilized by the City when calculating annual sewage Flow and/or other costs imposed pursuant to this Agreement (including, but not limited to, pretreatment costs). The Parties shall work in good faith together to ensure the Participating Agencies have reasonable and full transparency under this Agreement.

16.10 Incorporation of Recitals. All of the recitals set forth in this Agreement, and all of the exhibits attached to this Agreement, are by this reference incorporated in and made a part of this Agreement as though fully set forth herein.

16.11 Joint Exercise of Power. It is the intent of the Parties that this Agreement is intended to exercise the governmental authority granted pursuant to Gov. Code Section 6500 et seq. which provides for the joint exercise of governmental powers.

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IN WITNESS WHEREOF, the Parties have executed this Second Amendment and Restated Regional Wastewater Disposal Agreement and the associated Administrative Agreements(s) identified herein as of the date first set forth above.

CITY OF CHULA VISTA
Name:

Title:

Approved as to Form:

Name:

Title:

CITY OF CORONADO
Name:

Title:

Approved as to Form:

Name:

Title:

CITY OF DEL MAR
Name:

Title:

Approved as to Form:

Name:

Title:

CITY OF EL CAJON
Name:

Title:

Approved as to Form:

Name:

Title:

CITY OF IMPERIAL BEACH
Name:

Title:

Approved as to Form:

Name:

Title:

CITY OF LA MESA
Name:

Title:

Approved as to Form:

Name:

Title:

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LEMON GROVE SANITATION DISTRICT
Name:

Title:

Approved as to Form:

Name:

Title:

CITY OF NATIONAL CITY
Name:

Title:

Approved as to Form:

Name:

Title:

OTAY WATER DISTRICT
Name:

Title:

Approved as to Form:

Name:

Title:

PADRE DAM MUNICIPAL WATER

DISTRICT
Name:

Title:

Approved as to Form:

Name:

Title:

CITY OF POWAY
Name:

Title:

Approved as to Form:

Name:

Title:

CITY OF SAN DIEGO
Name:

Title:

Approved as to Form:

Name:

Title:

SAN DIEGO COUNTY SANITATION

DISTRICT
Name:

Title:

Approved as to Form:

Name:

Title:

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EXHIBIT I

LIST OF ADMINISTRATIVE AGREEMENTS
NO. TITLE EFFECTIVE
DATE

AMENDMEN
T DATE

1. Agreement Between City of San Diego and
Participating Agencies in the Metropolitan Sewerage
System for Unified Management of Industrial Waste
Discharge Pretreatment and Enhanced Source
Control Programs

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EXHIBIT J

EXHIBIT LIST
Exhibit Name Amended Date
A
Metro Facilities (Electronic Exhibit); file name: 2025-10_Exhibit A Metro Facilities.aprx; time stamp of file: 10/23/2025 3:38 PM, software used to open and view file including version: ArcGIS Pro 3.5.0; included herewith as CD-ROM/DVD-ROM
B Distribution of Wastewater System Capacity Rights
C
Administrative Protocol on Allocation of Operating Reserves and Debt Service Coverage to Participating Agencies
D Notice Listing
E Methodology for Contract Capacity Transfers
F Metro System Flow Formulas and Sampling Locations
G Sample of Interest Calculation
H
Summary of Billings from County Water Authority Showing Costs for Untreated Water
I List of Administrative Agreements
J Exhibit List

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SARA EXHIBITS A-H
Accompanying SARA 10/23/25

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Exhibit A: Listing of Metro Facilities as of 10/23/2025 Metro Facilities (Electronic Exhibit);
file name: 2025-10_Exhibit A Metro Facilities.aprx
time stamp of file: 10/23/2025 3:38 PM
software used to open and view file including version:

ArcGIS Pro 3.5.

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EXHIBIT A
METRO FACILITIES AS OF 10/23/2025

TREATMENT FACILITIES
Point Loma Facilities (PLWWTP)
• Advanced Primary Treatment Plant
• Ocean Outfall
• Access Road
• Power Generation Facility
North City
• Water Reclamation Plant (NCWRP)
South Bay
• Water Reclamation Plant (SBWRP)
• South Bay Land/Ocean Outfall1

SLUDGE TREATMENT CONVEYANCE FACILITIES
• Metro Biosolids Center (MBC)
• Point Loma Digesters3
• Digested Sludge Pipeline: Point Loma to MBC
• Raw sludge pipeline: NCWRP to MBC
• Centrate Pipeline: MBC to NCWRP
• Raw sludge pipeline: SBWRP to South Metro Interceptor

CONVEYANCE
• Pump Station 1
• Pump Station 1 Force Main
• Pump Station 2

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1 The South Bay Land/Ocean Outfall is jointly owned by the International Boundary and Water Commission, U.S. Section (60.06%) and the City of San Diego (39.94%). The capacity of the City's portion of the outfall as of the date of this Agreement is 74 MGD average dry weather flow, of which the Metro System has a capacity right to 69.2 MGD and the City as an exclusive right to 4.8 MGD 2 Gravity pipeline connection between NCWRP and the North Metro Interceptor 3 Included separately from rest of treatment plant to acknowledge role in sludge treatment process. • Pump Station 2 Force Mains
• Pump Station 2 Backup Power Generation Facility
• South Metro Interceptor
• North Metro Interceptor
• Grove Avenue Pump Station
• Grove Avenue Pump Station Force Main
• Rose Canyon Parallel Trunk Sewer 2
• Second Rose Canyon Trunk Sewer 2
• East Mission Bay Trunk Sewer 2
• Morena Blvd. Interceptor 2
• Metro System Meters (including 88 billing meters and 14 operational meters) • North City Tunnel Connector
• West Point Loma Interceptor

OTHER FACILITIES
• Environmental Monitoring and Technical Services Laboratory (95% Metro Ownership)
• Metro Operation Center aka MOC (17% Metro Ownership)
• Dairy Mart Road & Bridge

FUTURE METRO FACILITIES
Phase 1 Pure Water (Under Construction – Percent ownership will be assigned after audit) • Expand NCWRP
• Morena Pump Station
• Morena Pump Station Force Main
• Centrate/RSDP Line (From NCWRP to North Metro Interceptor) • East Mission Gorge / East County residuals line (Water, Muni, and Metro combined assets)

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Phase 2 Pure Water Planned
• Phase 2 Pure Water (TBD)
• Phase 2 Pure Water Centrate Line (TBD)
Reserved Rights- Other Future Facilities
The facilities listed in this category will potentially be required as part of the Metro System for hydraulic capacity, good engineering practices and/or compliance with applicable law, rules or regulations, including compliance with OPRA, and continuation and maintaining the City’s Waiver of applicable treatment standards at the Point Loma Wastewater Treatment Plant (“Waiver”).
• South Bay Secondary Treatment Plant (21-28 MGD)
• South Bay Secondary Sewers & Pump Station (Sweetwater River) • South Bay Sludge Processing Facility
• Wet Weather Storage Facilities

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Exhibit B
Distribution of Wastewater System Capacity Rights

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1 2 3 4 5 6 7
Average Flow2,
MGD
Incremental
Peak Flow3,
MGD
RSPD4, MGD
Total Allowable
Flow3,
MGD
TSS2,
1,000 lbs.

COD2,
1,000 lbs. Pure Water Phase 15

18.33 19.52 0 37.85 22,082 38,419 11.699%

1.90 3.03 0 4.93 2,089 3,336 1.152%

0.00 0.30 0 0.30 0 0 0.020%

1.79 3.48 0 5.27 1,915 3,336 1.096%

1.29 19.93 0.602 21.82 2,196 3,052 0.497%

2.47 4.48 0 6.95 2,045 3,844 1.411%

5.29 23.90 0 29.19 4,668 9,636 2.823%

0.07 1.67 0.310 2.05 238 293 0.153%

2.40 4.51 0 6.91 2,289 4,387 1.395%

4.65 3.07 0 7.72 4,562 9,161 2.852%

0.38 0.57 0 0.95 984 835 0.457%

0.44 6.54 0.364 7.34 632 890 0.444%

3.10 8.80 0 11.90 3,113 5,073 1.869%

5.74 5.05 0 10.79 6,039 10,597 3.765%

0.02 1.08 0.080 1.18 65 80 0.044%

47.9 105.9 1.356 155.1 52,916 92,938 29.677%
124.05 136.16 0 260.21 130,032 252,818 70.323%
0 0 14.3 0.00 0 0 0
124.1 136.2 14.3 260.2 130,032 252,818 70.323%
- 82 - 82 - - -
171.9 324.1 15.7 497.4 182,948 345,756 100%

2. Based on monthly average flow and strength.

3. Based on hourly average flow.

ANNUAL FIXED CAPACITY RIGHTS1

DISTRIBUTION OF WASTEWATER SYSTEM CAPACITY RIGHTS
Lakeside/Alpine
AGENCY
Chula Vista
Coronado
Del Mar
East Otay Mesa
El Cajon
Imperial Beach
La Mesa

SUBTOTAL
Lemon Grove
National City
Otay
Padre Dam
Poway
Spring Valley
Wintergardens

SUBTOTAL

5. Pure Water Phase 1 Capital Melded Percentages as established in Exhibit G of the "Amended and Restated Regional Wastewater Disposal Agreement Between the City of San Diego and the Participating Agencies in the Metropolitan Sewerage System" memorialized here only for use in billing Pure Water Phase 1 capital expenses. The following fractions were used to calculate the Melded Percentage (Based on 5 year average and not subject to change except by agreement of the parties.)

FLOW SS COD

0.482 0.257 0.243

4. Reject Stream from Demineralization Process

1. Currently based on 2050 projected flows and strengths.

EXHIBIT B
Metro I&I
San Diego
Wastewater
Water
TOTAL

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Exhibit C
Administrative Protocol on Allocation of Operating
Reserves and Debt Service Coverage to Participating
Agencies

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Exhibit D
Notice Listing

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4914-3650-2326

EXHIBIT D

NOTICE LISTING
Maria Kachadoorian
City Manager
City of Chula Vista
276 Fourth Avenue
Chula Vista, CA 91919
Phone: (619) 691 5031
mkachadoorian@chulavista
ca.gov
Tina Friend
City Manager
City of Coronado
1825 Strand Way
Coronado, CA 92113
Phone: (619) 522-7335
[email protected]
Ashley Jones
City Manager
City of Del Mar
1050 Camino Del Mar
Del Mar, CA 92014
Phone: 755-9313 ext. 25
[email protected]
Graham Mitchell
City Manager
City of El Cajon
200 Civic Center Way
El Cajon CA 92020
Phone: (619) 441-1716
[email protected]
Tyler Foltz
Greg Humora
City Manager
City of La Mesa
8130 Allison Avenue
La Mesa, CA 91942
Phone: (619) 667-1101
[email protected]
Lydia Romero
City Manager
City of Lemon Grove
3232 Main Street
Lemon Grove, CA 91945
Phone: (619) 464-6934
[email protected]
Scott Huth
Acting City Manager
City of National City
1243 National City Blvd.

National City, CA 91950
Phone: (619) 336-4240
[email protected]
Chris Hazeltine
City Manager
City of Poway
13325 Civic Center Drive
Poway, CA 92064
Phone: (858) 679-4200
[email protected]
Mayor Todd Gloria
Chief Operating Officer
City of San Diego
202 "C" Street
San Diego, CA 92101
Phone: (619) 236-5949
[email protected]
Ebony Shelton
Chief Administrative Officer County
of San Diego
1600 Pacific Highway, Rm. 209
San Diego, CA 92101
Phone: (619) 531-5250
[email protected]
Jose Martinez
General Manager
Otay Water District
2554 Sweetwater Springs Blvd.

Spring Valley, CA 91977
Phone: (619) 670-2210
[email protected]
Kyle Swanson
CEO/General Manager
Padre Dam Municipal Water
District
9300 Fanita Pkwy
Santee, CA 92071
Phone: (619) 258-4673
[email protected]
City Manager
City of Imperial Beach
825 Imperial Beach Blvd.

Imperial Beach, CA 91932
Phone: (619) 423-8300 ext. 7
[email protected]

Page 432 of 505 ends

Exhibit E
Methodology for Contract Capacity Transfers.

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Last Updated: 5/29/2025

EXHIBIT E

METHODOLOGY FOR CONTRACT CAPACITY TRANSFERS
The following exhibit describes the methodology for transferring contract capacities from the Metro Pooled Capacity (summarized in the table below) to a Party’s contract capacity defined in Exhibit B.

POOLED CAPACITY
Average Flow,
mgd
Incremental Peak1,
mgd
TSS,
1,000 lbs.

COD,
1,000 lbs.

After Phase 1 Pure Water 0 10296,820 27,521
After Phase 2 Pure Water 10 20 96,820 27,521

1. At Point Loma WWTP

2. Assume system storage
If a transfer of contract capacity is initiated as set forth in Section 4.4.3.1, capacity will be taken from the Pooled Capacity and added to the Party in need of additional capacity. Thereafter, the above table of Pooled Capacity will be updated with the subject column reduced, and Exhibit B will be updated with the subject Party’s contract capacity correspondingly increased.

In lieu of transferring average flow capacity from the Pooled Capacity to a Party, the Party can choose to transfer Incremental Peak Flow Capacity to Average Flow Capacity keeping Total Allowable Flow the same, assuming the Party would still have sufficient Total Allowable Flow Capacity for their peak flows.

If a transfer of contract capacity as set forth in Section 4.4.3.2, the reverse shall occur and the subject Party’s contract capacity will be reduced in Exhibit B and the Pooled increased.

In lieu of transferring average flow capacity to the Pooled Capacity from a Party, the Party can choose to transfer Average Flow Capacity to Incremental Peak Flow Capacity keeping Total

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Last Updated: 5/29/2025
Allowable Flow the same, if they anticipate needing their current Total Allowable Flow for their peak flows.

The remainder of this Exhibit has examples of how these transfers would be performed and the estimated effect on a Party’s share of Metro System Costs under the FAB Billing System. Please note Metro System costs will change from time to time as well as Contract Capacities per Exhibit B, so the following are only examples and not meant to be exact. These examples are based on Exhibit B as of the signing of this agreement, not necessarily the last revision of this exhibit. These examples are currently based on FY24 unaudited costs and estimated FY27 billing units.

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EXHIBIT F –

METRO SYSTEM FLOW FORMULAS AND

SAMPLING LOCATIONS
JULY 2025
LEGEND
Billing and Sampling Meters
Billing Meters
Municipal Meter

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CHULA VISTA
Hollister
& Main
Meter
CV1
“J” ST
Meter
CV2
“G” ST
Meter
CV3
Autopark
&
Crossings
(0.025
mgd)
Waterpark &
Amphitheater
(0.031 mgd)
Lagoon
Drive
(0.011
mgd)
Bay Blvd
North
(106
EDUs)
Bay Blvd
South
(16
EDUs)
Gunpowder
Point
(51 EDUs)
Acacia
Ave
SV to CV
(4 EDUs)
Combined
Housecounts
(1,040
EDUs)
E. Flower
Street
Meter
CV5
Plaza
Bonita-1
Meter
CV6M
Plaza
Bonita-2
Meter
CV7M
Las Flores
Dr
Meter
CV8
N. Fifth
Ave
Meter
CV9
Acacia
Ave
Meter
CV10
Otay
Lakes
Road
Meter
CV11
Proctor
Valley
Meter
CV12
Main
Street
Meter
CV14
CHULA
VISTA
TOTAL

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CORONADO
Trans-Bay
Meter C1M
Amphibious
Base
Meter C2
North Island
Meter C3

CORONADO
TOTAL

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DEL MAR
Meter DM2
Riviera Del
Mar
(110 EDUs)
Connection
#1
(96 EDUs)
Connection
#2
(21 EDUs)
Del Mar
Estates
(27 EDUs)

DEL MAR
TOTAL

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EAST OTAY MESA
EOM1 Meter
East Otay Mesa
(55.4 EDUs)

EAST OTAY

MESA TOTAL

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EL CAJON
El Cajon Meter
EC1B
To LM Meter
LM4
To LM
(321.5 EDUs)
Winter Gardens
Meter WG1M
Winter Gardens
(1,383 EDUs)

EL CAJON
TOTAL

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IMPERIAL BEACH
9 th & Imp.

Meter IB1
Elder St.

Meter IB2M
Palm Ave.

Meter IB3M2
Georgia Street
(170.5 EDUs)
Palm Avenue
(29.5 EDUs)

IMPERIAL
BEACH
TOTAL

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LA MESA
La Mesa
North
LM3
Meter
Colorado
(16
EDUs)
73rd &
Sar.
(22
EDUs)
Alvarado
Trtmnt
Plant
(61 EDUs)
Alvarado
Lab
(27
EDUs)
Alvarado
Training
Ctr.
(2 EDUs)
Blue
Lake
(69
EDUs)
East
Lake
(349
EDUs)
Jackson
(279
EDUs)
Keeny
(28
EDUs)
Lake
Arago
(292.7
EDUs)
Lake
Murray
(119.8
EDUs)
La Mesa
South
LM1AM
Meter
LM7
Meter
68th &
Univ
(91
EDUs)
67th &
Valencia
(158.5
EDUs)
Rosefield
(20
EDUs)
Alamo
(4 EDUs)
Vigo
(204
EDUs)
69th &
University
(34 EDUs)
70th &
Colony
(551.5
EDUs)
73rd & El
Cajon
(15.6
EDUs)
To SV
(52
EDUs)
To SV
LM2
Meter
To SV
LM5A
Meter
To SV
LM8
Meter
To LG
(921.7
EDUs)
From EC
LM4
Meter
From EC
(311
EDUs)
LA
MESA
TOTAL

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LAKESIDE/ALPINE
Meter
LS2

LAKESIDE
ALPINE
TOTAL

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LEMON GROVE
Winnett &
Oriole St
LG1M
Meter
Akins &
69th
LG2M
Meter
Imperial &
Viewcrest
LG4
Meter
Total
Lemon
Grove to
SV
(1547.63
EDUs)
Net from
La Mesa
(921.7
EDUs)
69th &
Madera
LG3
Meter
Madera
(4 EDUs)
Calvacado
(121
EDUs)
69th &
Klauber
(3 EDUs)
Gold Lake
(48 EDUs)
Angelus
Avenue
(12 EDUs)
69th &
Evelyn
(4 EDUs)
College
Avenue
(498.6
EDUs)
Navy
Housing
(278 EDUs)
College
Grove
(25.6 EDUs)
69th &
Gibson
(3 EDUs)
College
Grove Way
(161 EDUs)
LEMON
GROVE
TOTAL

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NATIONAL CITY
33rd St
NC2
Meter
21st &
Hoover
NC3A
Meter
2262
Hoover
NC3B
Meter
West of
I5
NC3C
Meter
22nd &
Hoover
NC Yard
& HC
(2 EDUs)
7 th &
Wilson
NC5
Meter
Nordica
NC7M
Meter
Stockman
NC15
Meter
Southland
Ind. Park
(76.5
EDUs)
Rachael
Ave.

North
(46
EDUs)
Olive
Avenue
(6
EDUs)
Bonita
Paradise
(47
EDUs)
Rachel
Ave.

South
(43
EDUs)
NC to SV
Inter-Agency
Compromise
(36 EDUs)
Plaza
Bonita
NC8M
Meter
Sweetwater
Road
(52.72%)
NC13
Meter
Prospect
St
(39.16%)
NC16
Meter)
SV to NC I-A
Compromise
(144 EDUs)
Harbor
Drive
NC6
Meter
Delta St.

NC9M
Meter
Paradise
Val
NC10
Meter
Olive
Ave.

NC11
Meter
18th &
Rachael
NC12
Meter
Dalbergia
(26.3
EDUs)
Nordica
(36
EDUs)
Bryanview
(16 EDUs)
Lorenz
(42
EDUs)
Mariposa
(18
EDUs)
Ebbs
(291
EDUs)
Delta St
(100.5
EDUs)
Navy
Sports
Center
(7 EDUs)

NATIONAL
CITY
TOTAL

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NAVY
Amphibious Base
Meter (C2)
North Island
Meter (C3)

NAVY TOTAL

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OTAY
Otay Net
OTAY
TOTAL

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PADRE DAM
Padre Dam
Meter PD1B
Lakeside
Meter LS2
Simeon Dr.
(413 EDUs)
Padre Dam
Meter PD2
Cowles Mtn.
(270 EDUs)
Treviso
(186 EDUs)

PADRE DAM
TOTAL

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POWAY
Springhurst
PO2
Meter
La
Manda
(53
EDUs)
Camino
Del Norte
PO1
Meter
Holland
Canyon
PO3M
Meter
Eastview
Ct.

PO4
Meter
Highland
Ranch
PO5
Meter
Creek
Road
PO6
Meter
Springhurst
Street
(72 EDUs)
Stone
Canyon
(727.14
EDUs)
POWAY
TOTAL

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SPRING VALLEY
SubTotal Chula Vista to SV = Combined Housecounts – Acacia Ave + CV5 + CV6 + CV7M + CV8 + CV9 + CV10 + CV11 + CV12 + CV14
Brisbane
& 5th
SV8M
Meter
Lincoln
Acres/Alta
Drive
(84.4
EDUs)
Sweetwater
(52.72%)
NC13
Meter
Prospect
St
(39.16%)
NC16
Meter
SV to NC
Inter-Agency
Compromise
(144 EDUs)
NC to SV
Inter-Agency
Compromise
(36 EDUs)
From
NC
NC8M
Meter
SubTotal
Chula
Vista to
SV
To SV
LM2
Meter
To SV
LM5A
Meter
To SV
LM8
Meter
SubTotal
La Mesa
to SV
(52
EDUs)
SubTotal
Lemon
Grove to
SV
(1,547.63
EDUs)
Bonita
BO1
Meter
Manzana
Way
(439
EDUs)
Parkbrook
Street
(197
EDUs)
Noeline
Avenue
(109
EDUs)
Worthington
Street
(64 EDUs)
Innsdale
Avenue
(51
EDUs)
Greenridge
Avenue
(10 EDUs)
Ellenwood
Circle
North
(9 EDUs)
Delrose
Avenue
(109
EDUs)
Crestmore
Avenue
(8 EDUs)
Potrero
Street
(61
EDUs)
Carlsbad
Street
(41
EDUs)
Otay Net
SPRING
VALLEY
TOTAL

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WINTER GARDENS
Winter Gardens
Meter (WG1M)
WG House Count
1,383 EDUs
WINTER

GARDENS
TOTAL

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CITY OF SAN DIEGO
SD33
Meter
N. Harbor
Drive
(2,550.4
EDUs)
SD1E
Meter
SD2A
Meter
SD2B
Meter
Sports
Area
Blvd.
(498
EDUs)
SD3
Meter
Barnett
Avenue
(2551.6
EDUs)
SD5M
Meter
SD20
Meter
SD40M2
Meter
SD42M
Meter
SD7B
Meter
SD8
Meter
Commercial
Street
(1,458.6
EDUs)
SD12
Meter
SD6M
Meter
Del Mar
Net
Poway
Net
SD1B
Meter
EC1B
Meter
Padre
Dam Net
Lakeside
Net
LM
North to
San
Diego
Net
SD19
Meter
Anna
Street
(564
EDUs)
SD7A
Meter
SD7C
Meter
Coronado
Net
Beach
Street
(1,944.2
EDUs)
SD9
Meter
LG to
San
Diego
Net
LM
South to
San
Diego
Net)
SD9D
Meter
NC7M
Meter
NC9M
Meter

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CITY OF SAN DIEGO (Continued)
NC10
Meter
NC11
Meter
Olive
Ave.
(6
EDUs)
NC12
Meter
Rachael
Ave.

North
(46
EDUs)
NC6
Meter
San
Diego
HC
Through
NC Total
BO1
Meter
NC15
Meter
Bonita
Paradise
(47
EDUs)
Rachael
Ave.

South
(43 EDUs)
Alta
Drive
(84.4
EDUs)
San Diego
HC
Through
SPV Total
SD10
Meter
Waterpark &
Amphitheater
Autopark &
Crossings
PC1
Meter
IB2M
Meter
Georgia
Street
(170.5
EDUs)
Palm
Avenue
(29.5
EDUs)
IB3M2
Meter
SB1
Meter
SD11
Meter
SD11A
Meter
SD18
Meter
Small SD
House
Count
(694.3
EDUs)
Elm
Street
(1,455
EDUs)
USN4
Meter
USN5
Meter
USN8
Meter
USN11
Meter
SAN
DIEGO
TOTAL

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Exhibit G
Sample of the Interest Calculation

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Exhibit G - Sample of the Interest Calculation (Section 6.6) Purpose: To document assumptions used to account for the time value of money for shared Pure Water costs (Allocated Shared Costs) that were agreed to be reconciled at a later date based on final Phase 1 project costs.

This is discussed in Section 6.6: Reallocation of PWP Costs incurred since FY2014 and cited in Section 6.6.1.3. See the example" Calculator Spreadsheet" below and accompanying footnotes. .

C D E F G H I J K L M
50/ 50 Expenses from
That Year
Original
Metro Split
%
Original Water
Split %
Original
Metro Share
Original
Water Share
Metro Post
Allocation
Share
Amounts Subject
to Interest
(50% Cost - Metro
Share%)
Running Metro
Balance Subject to
Interest
(New Activity + Prior
Year Balance + Prior
Interest Earning)
Yearly Interest
Earnings
(Compounded
Monthly)
Estimated PA
share
( Average share of
Interest Earnings)
Annual Interest
Rate
(San Diego City
Treasurers)
FY 2014 $630,109 50% 50% $315,055 $315,055 $283,549 $31,505 $31,505.46 $138.27 $41.48 0.438% FY 2015 $2,476,617 50% 50% $1,238,309 $1,238,309 $1,114,478 $123,831 $155,474.59 $871.33 $261.40 0.559% FY 2016 $4,503,182 50% 50% $2,251,591 $2,251,591 $2,026,432 $225,159 $381,505.03 $2,971.03 $891.31 0.776% FY 2017 $7,398,893 50% 50% $3,699,447 $3,699,447 $3,329,502 $369,945 $754,420.72 $8,150.10 $2,445.03 1.075% FY 2018 $6,194,711 50% 50% $3,097,355 $3,097,355 $2,787,620 $309,736 $1,072,306.36 $14,783.19 $4,434.96 1.370% FY 2019 $7,844,738 50% 50% $3,922,369 $3,922,369 $3,530,132 $392,237 $1,479,326.46 $31,230.90 $9,369.27 2.091% FY 2020 $8,018,735 50% 50% $4,009,367 $4,009,367 $3,608,431 $400,937 $1,911,494.09 $43,708.61 $13,112.58 2.263% FY 2021 50% 50% $0 $0 $0 $0 $1,955,202.70 $29,649.45 $8,894.84 1.506% FY 2022 50% 50% $1,984,852.16 $16,257.11 $4,877.13 0.816% FY 2023 32% 68% $2,001,109.26 $35,993.15 $10,797.94 1.784% FY 2024 32% 68% $2,037,102.41 $59,323.71 $17,797.11 2.874% FY 2025 32% 68% TBD
FY 2026 32% 68% TBD
FY 2027 32% 68% TBD
Totals $37,066,985 $18,533,493 $18,533,493 $16,680,143 $1,853,349 $13,764,299 $243,077 $72,923 N/A Pending Final Audits:

Estimated Final Metro % of Pure Water Costs (Draft) 45% Estimated JPA % Share of Metro Expenses (Draft) 30%

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Exhibit G - Sample of the Interest Calculation (Section 6.6) (Continued) Procedures and Assumptions:

The City proposes the following procedures be used to allocate these costs. These costs will be allocated 1 year after substantial completion of Pure Water Phase 1, as part of the annual Audit of Metro costs (Projected to be annual audit of metro activity for Fiscal Year 2026). The City will prepare a yearly update to the calculator as part of the preparation for the yearly metro audit.

Column Description:

Cost Included (Column C) This column represents cost subject to this calculator. This includes Purchase Orders (and their associated expenditures) that have been split 50%/50% (50/50 POs) from 2014 to 2022 and have been included as part of each yearly audit of Metro JPA Pure Water costs. This sheet is prepared by the City and reviewed by the JPA's consultants on a yearly basis to determine samples for the Pure Water O&M costs. After awarding of all Pure Water construction contracts, new costs will use an updated percentage based on actual awarded construction contracts. This date will be called out on the purchase order sheet and a new line on the calculator will be added to track the change in percent allocation.

Open purchase orders using the 50/50 split will be separated on the calculator sheet until they are fully spent, closed or amended to the new split.

Original Splits % (Column D & E) These columns split the total costs of the 50/50 POs based on their original share between the water and Metro funds. This establishes each funds initial share of the costs Original Share (Column F & G) These columns split the total costs in Column C by the percentages in Columns D and E.

Metro Post Allocation Share(Column H) This column uses Metro funds final share of Phase 1 costs, as a percentage of total project costs, and applies it to costs included in Column C. This represents the actual share of costs based on the final allocation costs.

Amounts Subject to Interest (Column I) This column takes the difference between the initial splits for Metro (Column F) and the Metro post allocation share (Column H). These are the new expenditures from that fiscal year subject to the interest calculation.

Running Metro Balance Subject to This column takes any prior year balance in Column J, the prior year accrued interest in Column K and adds the new expenditures from Column I. This is the total balanced Interest (Column J) used to calculate each year's interest owed.

Yearly Interest Earnings (Column K) This column takes the annual interest earnings shown in Column M and assumed monthly compounding of Metro balance in Column J. Compounding period is consistent with the City's monthly interest earnings paid on City funds.

Estimated PA share (Column L) This column estimates the portion of interest earnings that is expected to be credited to the Participating Agencies. Individual Agencies will be credited during the audit following one year after the substantial completion of Pure Water Phase 1. Agencies will be credited at weighted average of costs from 2014 to one year after substantial completion of Phase 1, based on the PA's individual annual percent share of Metro costs.

Annual Interest Rate (Column M) This column shows the annual percent returns on funds invested by the City Treasurer. This is based on the Treasurers annual return on investments as invested under the City's investment policy. This is the rate used to calculate yearly interest owed.

Notes This calculator was designed to account for the time value of money related to (50/50 POs). If additional Phase 1item (CIP expenses, Revenue, etc.) need to account for the time value of money, the assumptions used in Columns I-K will remaining consistent in those calculations. Columns C through H and the associated percentages used will be adapted to fit the types of costs being allocated.

Page 464 of 505 ends

Exhibit H
Summary of Billings from County Water Authority
Showing Costs for Untreated Water

Page 465 of 505 ends

Fixed Charges Total ($)
CWA Customer Service Charge $ 933,611.00
CWA Emergency Storage Charge $ 2,197,725.00
CWA Infrastructure Access Charge $ 1,760,089.00
CWA Supply Reliability Charge $ 1,504,825.00
Supply Charges Volume (AF) Rate ($/AF) Total ($)
CWA Forced Delivery - Untreated 231.3 $ 1,200.00 $ 277,560.00 CWA Regular Meter Delivery - Treated 2,069.2 $ 1,600.00 $ 3,310,720.00 CWA Regular Meter Delivery - Untreated 12,973.7 $ 1,200.00 $ 15,568,440.00 Subtotal 15,274.2 $ 19,156,720.00
CYTD Volume (AF)
46,134.1
17,627.4
129,500.4
193,261.9
Net Deliveries Current Month Volume (AF) Adjustment Volume (AF) CYTD Volume (AF)
Tier 1 Total Treated Water Delivered 2,081.1 17,964.3
Tier 1 Total Untreated Water Delivered 7,970.5 96,706.3 Tier 1 Usage 10,051.6 114,670.6
Water Exchanges Volume (AF) Rate($/AF) Total ($)
CWA Total To Other Agencies Untreated Water (5,285.0) $ 1,200.00 ($ 6,342,000.00) CWA Total From Other Agencies Treated Water 11.9 $ 1,600.00 $ 19,040.00 CWA Total From Other Agencies Untreated Water 50.5 $ 1,200.00 $ 60,600.00 Subtotal (5,222.6) ($ 6,262,360.00)
CYTD Volume (AF)
(79,483.9)
336.9
473.1
(78,673.9)
Subtotal 10,051.6 $ 1,899,752.40
Generated Date: 01/10/2025 11:21 AM
19-6364
A Public Agency
4677 Overland Avenue, San Diego, California, 92123-1233 (858) 522-6673 FAX (858) 522-6561
December 2024
Invoice Summary
Billed to:

San Diego, City of
Mailed: 1/10/2025 Due Date: 2/14/2025
Invoice Number: 1224-15 Page 1 of 8
Service Address:
2797 Caminito Chollas
San Diego, CA 92105-
Sample Bill from the County Water
Authority for all city of San Diego
Water purchases for the month of
December 2024 to provide clarity for
any sewer only providers. Additional
documentation will be provided at a
later date walking from this bill to the
purified water calculation

Page 466 of 505 ends

Fixed Charges Total ($)
MWD Capacity Reservation Charge $ 287,980.00
MWD Readiness-to-Serve Charge $ 406,779.00
Subtotal $ 7,091,009.00
Current Balance $ 21,885,121.40
Previous Balance $ 17,919,593.50
Total Due And Payable $ 39,804,714.90
REMIT TO:

SAN DIEGO COUNTY WATER AUTHORITY
4677 Overland Avenue
San Diego, CA 92123-1233
Payment is due on the last business day of the month and shall be delinquent if not received in investable funds by 2 p.m. of the tenth business day of the following month.

Delinquency charges are 1% of the total amount if paid within five business days of the delinquency, 2% thereafter. Reference San Diego County Water Authority Ordinance No. 2007-03 Revenue Collection Policy for a complete explanation of billing and payment for water deliveries.

Generated Date: 01/10/2025 11:21 AM
19-6364
A Public Agency
4677 Overland Avenue, San Diego, California, 92123-1233 (858) 522-6673 FAX (858) 522-6561
December 2024
Invoice Summary
Billed to:

San Diego, City of
Mailed: 1/10/2025 Due Date: 2/14/2025
Invoice Number: 1224-15 Page 2 of 8
Service Address:
2797 Caminito Chollas
San Diego, CA 92105-
Variable Charges Volume (AF) Rate($/AF) Total ($)
Transportation Charge - Meter Delivery 15,274.2 $ 189.00 $ 2,886,823.80 Transportation Charge - Water Exchange (5,222.6) $ 189.00 ($ 987,071.40) Variable Charges Volume (AF) Rate($/AF) Total ($)
Transportation Charge - Meter Delivery 15,274.2 $ 189.00 $ 2,886,823.80 Transportation Charge - Water Exchange (5,222.6) $ 189.00 ($ 987,071.40)

Page 467 of 505 ends

Supply Charges
CWA
Forced Delivery - Untreated
Meter No Begin Read End Read 1000 CU. FT. AC. FT. Rate($/AF) Dollars($) Over Weir,WEIR 248,532 248,761 228 5.2 $ 1,200.00 $ 6,240.00 San Diego,02 2,012,753 2,022,602 9,849 226.1 $ 1,200.00 $ 271,320.00 Untreated Water Subtotal 231.3 $ 277,560.00
Regular Meter Delivery - Treated
Meter No Begin Read End Read 1000 CU. FT. AC. FT. Rate($/AF) Dollars($) San Diego, 27 197,491 210,099 12,609 289.5 $ 1,600.00 $ 463,200.00 San Diego, 30 3,079 3,080 2 0.0 $ 1,600.00 $ 0.00
San Diego,10 3,300,807 3,316,240 15,433 354.3 $ 1,600.00 $ 566,880.00 San Diego,11 11,413,060 11,461,025 47,966 1,101.1 $ 1,600.00 $ 1,761,760.00 San Diego,14 5,034,606 5,046,789 12,183 279.7 $ 1,600.00 $ 447,520.00 San Diego,15 3,837,922 3,839,738 1,816 41.7 $ 1,600.00 $ 66,720.00 SD 18/21 Bypass,
18/21 B/P 7,490 7,616 127 2.9 $ 1,600.00 $ 4,640.00
Treated Water Subtotal 2,069.2 $ 3,310,720.00
Regular Meter Delivery - Untreated
Meter No Begin Read End Read 1000 CU. FT. AC. FT. Rate($/AF) Dollars($) Generated Date: 01/10/2025 11:21 AM
19-6364
A Public Agency
4677 Overland Avenue, San Diego, California, 92123-1233 (858) 522-6673 FAX (858) 522-6561
December 2024
Invoice Detail
Billed to:

San Diego, City of
Mailed: 1/10/2025 Due Date: 2/14/2025
Invoice Number: 1224-15 Page 3 of 8
Service Address:
2797 Caminito Chollas
San Diego, CA 92105-

Page 468 of 505 ends

Water Exchanges
CWA
To Other Agencies Untreated Water
Exchange Location To Agency AC. FT. Rate($/AF) Dollars($) Comments DCFSV66 San Diego County Water Authority (4,974.8) $ 1,200.00 ($ 5,969,760.00) credit for no purchase Del Mar (NA) Del Mar, City of (78.9) $ 1,200.00 ($ 94,680.00) San Vicente Acct San Diego County Water Authority (231.3) $ 1,200.00 ($ 277,560.00) To Other Agencies Untreated Water Subtotal (5,285.0) ($ 6,342,000.00) Supply Charges
CWA
Leakage (SD-1),01 0 31 540 12.4 $ 1,200.00 $ 14,880.00
San Diego, 28 7,377,561 7,443,701 66,141 1,518.4 $ 1,200.00 $ 1,822,080.00 San Diego, DCFSV66 1,434,378 1,651,079 216,701 4,974.8 $ 1,200.00 $ 5,969,760.00 San Diego,05A 9,627,449 9,733,405 105,956 2,432.4 $ 1,200.00 $ 2,918,880.00 San Diego,05B 8,808,476 8,932,713 124,237 2,852.1 $ 1,200.00 $ 3,422,520.00 San Diego,05C 1,405,570 1,428,831 23,261 534.0 $ 1,200.00 $ 640,800.00 San Diego,06A 2,967,595 2,969,351 1,756 40.3 $ 1,200.00 $ 48,360.00 San Diego,06B WEIR 1,591,412 1,591,432 20 0.5 $ 1,200.00 $ 600.00 San Diego,20 11,002,113 11,028,633 26,520 608.8 $ 1,200.00 $ 730,560.00 Untreated Water Subtotal 12,973.7 $ 15,568,440.00
Supply Charges Subtotal 15,274.2 $ 19,156,720.00
Supply Charges Total 15,274.2 $ 19,156,720.00
Generated Date: 01/10/2025 11:21 AM
19-6364
A Public Agency
4677 Overland Avenue, San Diego, California, 92123-1233 (858) 522-6673 FAX (858) 522-6561
December 2024
Invoice Detail
Billed to:

San Diego, City of
Mailed: 1/10/2025 Due Date: 2/14/2025
Invoice Number: 1224-15 Page 4 of 8
Service Address:
2797 Caminito Chollas
San Diego, CA 92105-

Page 469 of 505 ends

Variable Charges
Transportation Charge - Meter Delivery
Meter No./Location AC. FT. Rate($/AF) Dollars($) Comments Leakage (SD-1),01 12.4 $ 189.00 $ 2,343.60
Over Weir,WEIR 5.2 $ 189.00 $ 982.80
San Diego, 27 289.5 $ 189.00 $ 54,715.50
San Diego, 28 1,518.4 $ 189.00 $ 286,977.60
San Diego, 30 0.0 $ 189.00 $ 0.00
San Diego, DCFSV66 4,974.8 $ 189.00 $ 940,237.20
Water Exchanges
CWA
From Other Agencies Treated Water
Exchange Location From Agency AC. FT. Rate($/AF) Dollars($) Comments El Camino Real Santa Fe I.D. 1.0 $ 1,600.00 $ 1,600.00
Highland Ct. Santa Fe I.D. 0.2 $ 1,600.00 $ 320.00
Otay TP Otay W.D. 10.7 $ 1,600.00 $ 17,120.00
From Other Agencies Treated Water Subtotal 11.9 $ 19,040.00 From Other Agencies Untreated Water
Exchange Location From Agency AC. FT. Rate($/AF) Dollars($) Comments Fletcher Well Helix W.D. 50.5 $ 1,200.00 $ 60,600.00
From Other Agencies Untreated Water Subtotal 50.5 $ 60,600.00 Water Exchanges Subtotal (5,222.6) ($ 6,262,360.00)
Water Exchanges Total (5,222.6) ($ 6,262,360.00)
Generated Date: 01/10/2025 11:21 AM
19-6364
A Public Agency
4677 Overland Avenue, San Diego, California, 92123-1233 (858) 522-6673 FAX (858) 522-6561
December 2024
Invoice Detail
Billed to:

San Diego, City of
Mailed: 1/10/2025 Due Date: 2/14/2025
Invoice Number: 1224-15 Page 5 of 8
Service Address:
2797 Caminito Chollas
San Diego, CA 92105-

Page 470 of 505 ends

Variable Charges
San Diego,02 226.1 $ 189.00 $ 42,732.90
San Diego,05A 2,432.4 $ 189.00 $ 459,723.60
San Diego,05B 2,852.1 $ 189.00 $ 539,046.90
San Diego,05C 534.0 $ 189.00 $ 100,926.00
San Diego,06A 40.3 $ 189.00 $ 7,616.70
San Diego,06B WEIR 0.5 $ 189.00 $ 94.50
San Diego,10 354.3 $ 189.00 $ 66,962.70
San Diego,11 1,101.1 $ 189.00 $ 208,107.90
San Diego,14 279.7 $ 189.00 $ 52,863.30
San Diego,15 41.7 $ 189.00 $ 7,881.30
San Diego,20 608.8 $ 189.00 $ 115,063.20
SD 18/21 Bypass, 18/21 B/P 2.9 $ 189.00 $ 548.10
Transportation Charge - Meter Delivery Subtotal 15,274.2 $ 2,886,823.80 Transportation Charge - Water Exchange
Meter No./Location AC. FT. Rate($/AF) Dollars($) Comments DCFSV66 (4,974.8) $ 189.00 ($ 940,237.20) credit for no purchase Del Mar (NA) (78.9) $ 189.00 ($ 14,912.10)
El Camino Real 1.0 $ 189.00 $ 189.00
Fletcher Well 50.5 $ 189.00 $ 9,544.50
Highland Ct. 0.2 $ 189.00 $ 37.80
Otay TP 10.7 $ 189.00 $ 2,022.30
San Vicente Acct (231.3) $ 189.00 ($ 43,715.70)
Transportation Charge - Water Exchange Subtotal (5,222.6) ($ 987,071.40) Generated Date: 01/10/2025 11:21 AM
19-6364
A Public Agency
4677 Overland Avenue, San Diego, California, 92123-1233 (858) 522-6673 FAX (858) 522-6561
December 2024
Invoice Detail
Billed to:

San Diego, City of
Mailed: 1/10/2025 Due Date: 2/14/2025
Invoice Number: 1224-15 Page 6 of 8
Service Address:
2797 Caminito Chollas
San Diego, CA 92105-

Page 471 of 505 ends

Fixed Charges
CWA
Customer Service Charge Annual ($) Monthly ($)
Annual Customer Service Charge for Calendar Year 2024 $ 11,203,332.00 Customer Service Charge December $ 933,611.00
Emergency Storage Charge Annual ($) Monthly ($)
Annual Emergency Storage Charge for Calendar Year 2024 $ 26,372,700.00 Emergency Storage Charge December $ 2,197,725.00
Infrastructure Access Charge Annual ($) Monthly ($)
Annual Infrastructure Access Charge for Calendar Year 2024 $ 21,121,068.00 Infrastructure Access Charge December $ 1,760,089.00
Supply Reliability Charge Annual ($) Monthly ($)
Annual Supply Reliability Charge for Calendar Year 2024 $ 18,057,900.00 Supply Reliability Charge December $ 1,504,825.00
MWD
Capacity Reservation Charge Annual ($) Monthly ($)
Annual Capacity Reservation Charge for Calendar Year 2024 $ 3,455,760.00 Capacity Reservation Charge December $ 287,980.00
Readiness-to-Serve Charge Annual ($) Monthly ($)
Annual Readiness-to-Serve Charge for Fiscal Year 2025 $ 4,881,348.00 Readiness-to-Serve Charge December $ 406,779.00
Fixed Charges Subtotal $ 7,091,009.00
Current Balance $ 21,885,121.40
Previous Balance $ 17,919,593.50
Total Due And Payable $ 39,804,714.90
Variable Charges Subtotal 10,051.6 $ 1,899,752.40
Variable Charges Total 10,051.6 $ 1,899,752.40
Generated Date: 01/10/2025 11:21 AM
19-6364
A Public Agency
4677 Overland Avenue, San Diego, California, 92123-1233 (858) 522-6673 FAX (858) 522-6561
December 2024
Invoice Detail
Billed to:

San Diego, City of
Mailed: 1/10/2025 Due Date: 2/14/2025
Invoice Number: 1224-15 Page 7 of 8
Service Address:
2797 Caminito Chollas
San Diego, CA 92105-

Page 472 of 505 ends

REMIT TO:

Generated Date: 01/10/2025 11:21 AM
19-6364
A Public Agency
4677 Overland Avenue, San Diego, California, 92123-1233 (858) 522-6673 FAX (858) 522-6561
December 2024
Invoice Detail
Billed to:

San Diego, City of
Mailed: 1/10/2025 Due Date: 2/14/2025
Invoice Number: 1224-15 Page 8 of 8
Service Address:
2797 Caminito Chollas
San Diego, CA 92105-

Page 473 of 505 ends

- 1 -
10-23-25
4932-9907-9020
ADMINISTRATIVE AGREEMENT #1

AGREEMENT BETWEEN CITY OF SAN DIEGO AND PARTICIPATING AGENCIES

IN THE METROPOLITAN SEWERAGE SYSTEM FOR UNIFIED MANAGEMENT OF

INDUSTRIAL WASTE DISCHARGE PRETREATMENT AND ENHANCED SOURCE

CONTROL PROGRAMS
This Administrative Agreement #1 (“Administrative Agreement”), Agreement Between City of San Diego and Participating Agencies in the Metropolitan Sewerage System for Unified Management of Industrial Waste Discharge Pretreatment and Enhanced Source Control Programs is entered by and among the CITY OF SAN DIEGO, a municipal corporation (“City”), on the one hand; and the CITY OF CHULA VISTA, a municipal corporation; the CITY OF CORONADO, a municipal corporation; the CITY OF DEL MAR, a municipal corporation; the CITY OF EL CAJON, a municipal corporation; the CITY OF IMPERIAL BEACH, a municipal corporation; the CITY OF LA MESA, a municipal corporation; the LEMON GROVE SANITATION DISTRICT, a political subdivision of the State of California; the CITY OF NATIONAL CITY, a municipal corporation; the CITY OF POWAY, a municipal corporation; the OTAY WATER DISTRICT, a political subdivision of the State of California; the PADRE DAM MUNICIPAL WATER DISTRICT, a political subdivision of the State of California; and the SAN DIEGO COUNTY SANITATION DISTRICT, a political subdivision of the State of California (individually a “Participating Agency” or collectively, the “Participating Agencies”), on the other hand, and shall be effective 30 days after execution by all Parties (the “Effective Date”).

City and each Participating Agency may be referred to herein individually as a “Party” and collectively as the “Parties.”
WHEREAS, City operates the Metro System, a regional wastewater system that collects, treats and disposes of wastewater generated from within City’s boundaries and from within the service areas of the Participating Agencies, in accordance with NPDES Permit No. CA107409 and California Waste Discharge Requirements; and
WHEREAS, City desires to carry out a uniform industrial waste disposal, pretreatment and enhanced source control program (“Industrial Pretreatment and Source Control Program,” as defined below) on behalf of itself and the Participating Agencies in the Metropolitan Sewerage System (“Metro System”) throughout the Metro System service area; and to help ensure that City can meet the requirements of its NPDES permits, including implementation of both indirect potable reuse under Phase 1 of Pure Water San Diego and a potential future direct potable reuse (“DPR”) program; and
WHEREAS City and Participating Agencies determined that the centralized operation of an Industrial Pretreatment and Source Control Program provides certain General Benefits (as defined below) to all users of the Metro System. Absent an Industrial Pretreatment and Source Control Program providing these General Benefits, the increased costs would be incurred as general treatment and disposal costs of the Metro System. Additionally, any Participating Agency with Industrial Users in their jurisdiction would also incur the costs of operating their own program; and

Page 474 of 505 ends

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10-23-25
4932-9907-9020
WHEREAS, pursuant to Government Code Sections 6502 and 6513, the Participating Agencies may delegate to City full authority to carry out a common Industrial Pretreatment and Source Control Program, on behalf of City and the Participating Agencies, which meets the requirements of federal and state law, including City’s required permits, and is consistent with the Industrial Pretreatment and Source Control Program ordinances enacted by City and each Participating Agency, as amended from time to time; and WHEREAS, pursuant to such delegation, City may issue industrial user permits or discharge authorizations to Industrial Users, levy and collect industrial waste Discharge, Pretreatment, and permitting fees, fines and penalties, and recover other costs of monitoring and enforcement from industrial and other users discharging to the Metro System on behalf of the Participating Agencies; and
WHEREAS, City and the Participating Agencies must ensure that all Industrial Users within the Metro System are regulated under an effective Industrial Pretreatment and Source Control Program that conforms to all applicable laws, rules and regulations; and WHEREAS, previously, City and the Participating Agencies individually entered into individual “Interjurisdictional Pretreatment Agreements” under which the Participating Agencies agreed to adopt and diligently enforce an ordinance which conforms to the minimum legal requirements contained in the Federal Pretreatment Regulations and other provisions of Federal and California law, including carrying out an industrial Pretreatment program and complying with all NPDES and waste discharge requirements issued to each Participating Agency; and WHEREAS, currently, the costs related to the industrial Discharges inspection, monitoring, and enforcement program within City’s boundaries, including related administrative and laboratory costs, are excluded from the amounts charged by City as Metro System Costs to City and the Participating Agencies pursuant to section 5.2.1.2.3 of the Amended and Restated Regional Wastewater Disposal Agreement (“ARA” as defined further herein), and WHEREAS, City and the Participating Agencies agreed, pursuant to section 2.9.1.3 of the ARA, to negotiate in good faith to allow certain costs relating to the Industrial Pretreatment and Source Control Program to be charged as Metro System Costs to City and Participating Agencies in recognition of the General Benefits that the program provides to the Metro System; and WHEREAS, based on the above, the Participating Agencies agree to delegate City, as the agent of each PA, and City agrees to accept, the authority and responsibility for diligently inspecting, monitoring and enforcing City’s Industrial Pretreatment and Source Control Program ordinances on behalf of the Participating Agencies within their respective boundaries through administrative or legal proceedings, with Participating Agencies working in coordination with City as necessary in enforcement efforts. The City shall not be responsible for, and does not accept authority or responsibility to inspect, monitor or enforce any source control program requirements for any Participating Agency’s NPDES permits, and
WHEREAS, City and Participating Agencies intend for all costs relating to the Industrial Pretreatment and Source Control Program be recovered, to the maximum extent permissible by law, through fees, costs, charges, and fines billed directly to Industrial Users subject to the

Page 475 of 505 ends

- 3 -
10-23-25
4932-9907-9020
Industrial Pretreatment and Source Control Program, and for such fees, costs, charges, and fines to be reviewed and updated periodically to ensure maximum cost recovery. These costs include, but are not limited to, costs of permitting, inspection, compliance monitoring, setting of Local Limits, source control, and enforcement.

NOW, THEREFORE IT IS AGREED:

1. RECITALS INCORPORATED. The foregoing recitals are true and correct and are hereby incorporated into this Administrative Agreement by reference.

2. DEFINITIONS. Terms in this Administrative Agreement shall have the same meaning as set forth in the Code of Federal Regulations [C.F.R.] at 40 C.F.R. 401.11 and 403.3.

The meaning of various other terms as used in this Administrative Agreement shall be as follows:
(a) “Act” means the Federal Water Pollution Control Act, also known as the Clean Water Act, as amended, 33 U.S.C. 1251 et seq.
(b) “ARA” means Amended and Restated Regional Wastewater Disposal Agreement executed by and between the City and the Participating Agencies. (c) “Categorical Pretreatment Standard,” “Categorical Standard,” “National Pretreatment Standard,” “Pretreatment Standard,” or “Standard” means any regulation containing pollutant discharge limits promulgated by the EPA in accordance with section 307(b) and (c) of the Act, which applies to Industrial Users. This term includes prohibitive discharge limits established pursuant to 40 C.F.R. 403.5.
(d) “C.F.R.” means the Code of Federal Regulations.
(e) “Discharge” or “Indirect Discharge” means the introduction of pollutants into the POTW from any nondomestic source regulated under section 307(b), (c), or (d) of the Act. (f) “EPA” means the United States Environmental Protection Agency. (g) “FOG” means Fats, Oils and Greases. Any substance such as a vegetable or animal product that is used in, or is a byproduct of, the cooking or food preparation process, and that turns or may turn viscous or solidifies with a change in temperature or other conditions. (h) "Food Establishment" means food facilities defined in California Retail Food Code (commencing with Health and Safety Code section 113700), and any commercial entity within the boundaries of City and the Participating Agencies, operating in a permanently constructed structure such as a room, building, or place, or portion thereof, maintained, used, or operated for the purpose of storing, preparing, serving, or manufacturing, packaging, or otherwise handling food for sale to other entities, or for consumption by the public, its members or employees, and which has any process or device that uses or produces FOG, or grease vapors, steam, fumes, smoke or odors that are required to be removed by a Type I or Type II hood, as defined in the California Retail Food Code. A limited food preparation establishment is not considered a Food Service Establishment when engaged only in reheating, hot holding or assembly of ready to eat food products and as a result, there is no wastewater Discharge containing a significant amount of FOG. A limited food preparation establishment does not include any operation that changes the form, flavor, or consistency of food.

Page 476 of 505 ends

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10-23-25
4932-9907-9020
(i) “General Benefits” mean and refer to the benefits provided to all users of the Metro System as the result of the Industrial Pretreatment and Source Control Program, including, but not limited to: a decrease in damage to and extended life of collection systems, pump stations and treatment systems by limiting Discharge of corrosive chemicals; consistency and efficiencies in enforcement, such as the provision of a database for potential violations of permit requirements and a reduction in time to identify sources of actual or potential violations; a decreased risk of permit violations that could result in fines and increased permitting costs to customers; the centralized conduction and management of strength and other sampling for agency billings, or as required for investigation of sewer system issues; increased regional awareness of impacts of Discharges of hazardous materials to the Metro Sewer System; a safer sewer system for wastewater employees; a reduction in illegal Discharges to the Metro System (because City will monitor and accept trucked waste and septage from septic tanks from customers throughout the county); and avoidance or reduction of Discharges to system that could result in plant upsets, bypass, spills, or other disruption of the system, including avoiding penalties or fines resulting from the same. (j) “General Benefits Costs” mean and refer to the costs associated with providing General Benefits to the Metro System, which are calculated as set forth herein. General Benefits Costs shall be charged to the City and the Participating Agencies based on their proportionate share of Flow and Strength, as defined in the SARA.
(k) “Industrial Pretreatment and Source Control Program” means an industrial waste Discharge, Pretreatment, and source control program that is sufficient to meet the requirements of federal and state law and the City’s NPDES Permit requirements relating to the Discharge to public sewers upstream of the Metro System. Such program may include, but not be limited to, permitting, inspection, compliance monitoring, Local Limits , source control mechanisms, laboratory work, enforcement, program administration and overhead, and claims relating to the program. The City’s program is known as the Industrial Wastewater Control Program or IWCP.
(l) “Industrial Wastewater” means wastewater from any producing, manufacturing, processing, institutional, commercial, service, agricultural, or other similar operation even if such wastewater is combined with domestic wastewater, and includes groundwater and surface run-on at project sites with active construction dewatering or groundwater remediation as defined in Chapter 6, Article 4, Division 2 of the San Diego Municipal Code. If the definition of Industrial Wastewater provided in Chapter 6, Article 4, Division 2 of the San Diego Municipal Code is modified during the term of this Agreement in a way that conflicts with this definition, the meaning in the San Diego Municipal Code shall supersede this definition, without the necessity of an amendment to this Agreement.
(m) “Industrial User” means a source of Indirect Discharge. (n) “Industrial Users’ Costs” means that portion of the Total Program Costs remaining to be allocated among Industrial Users in accordance with applicable law, after deducting the Trucked Waste Costs and the amount of the General Benefits Costs from the Total Program Costs.
(o) “Interference” means a Discharge which, alone or in conjunction with a discharge or discharges from other sources, both: (1) inhibits or disrupts the POTW, its treatment processes or operations, or its sludge processes, use or disposal; and (2) therefore is a cause of a violation of any requirement of the POTW’s National Pollutant Discharge Elimination System [NPDES]

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10-23-25
4932-9907-9020
permit (including an increase in the magnitude or duration of a violation) or of the prevention of sewage sludge use or disposal in compliance with the following statutory provisions and regulations or permits issued thereunder (or more stringent State or local regulations): Section 405 of the Clean Water Act, the Solid Waste Disposal Act [SWDA] (including title II, more commonly referred to as the Resource Conservation and Recovery Act [RCRA], and including State regulations contained in any State sludge management plan prepared pursuant to subtitle D of the SWDA), the Clean Air Act, the Toxic Substances Control Act, and the Marine Protection, Research and Sanctuaries Act.
(p) “Laboratory Services Costs” mean that portion of the laboratory services costs incurred by the City related to IWCP, determined by the number of IWCP samples processed compared to the number of total samples processed by the laboratory. For example, if the laboratory services processed 100 total samples in a year, and 40 of those samples were IWCP samples, then 40% of the City’s total Laboratory Services Costs would be part of the Total Program Costs as defined below.
(q) “Local Limit” means a numerical limit on a pollutant established by the City to implement the general and specific prohibitions currently set forth in San Diego Municipal Code section 64.0512, as may be amended, renumbered, or retitled from time to time. Such limits shall be technically based and shall require EPA and/or Regional Water Quality Control Board approval prior to implementation.
(r) “Metro System” means and consist of those facilities of the Metropolitan Sewerage System which are listed, shown and/or described in Exhibit A attached to the SARA, as may be amended from time to time.
(s) “Publicly Owned Treatment Works” or “POTW” means treatment works as defined by section 212 of the Act, which is owned by a State or municipality (as defined by section 502(4) of the Act). This definition includes any devices and systems used in the storage, treatment, recycling and reclamation of municipal sewage or industrial wastes of a liquid nature. It also includes sewers, pipes and other conveyances only if they convey wastewater to a POTW Treatment Plant. The term also means the municipality as defined in section 502(4) of the Act, which has jurisdiction over the Indirect Discharges to and the discharges from such a treatment works.
(t) “POTW Treatment Plant” means that portion of the POTW which is designed to provide treatment (including recycling and reclamation) of municipal sewage and industrial waste. (u) “Pretreatment” means the reduction of the amount of pollutants, the elimination of pollutants, or the alteration of the nature of pollutant properties in wastewater prior to or in lieu of discharging or otherwise introducing such pollutants into a POTW. The reduction or alteration may be obtained by physical, chemical or biological processes, process changes or by other means, except as prohibited by 40 C.F.R. 403.6 (d). Appropriate pretreatment technology includes control equipment, such as equalization tanks or facilities, for protection against surges or slug loadings that might interfere with or otherwise be incompatible with the POTW. However, where wastewater from a regulated process is mixed in an equalization facility with unregulated wastewater or with wastewater from another regulated process, the effluent from the equalization facility must meet an adjusted pretreatment limit calculated in accordance with 40 C.F.R. 403.6(e).

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(v) “Pretreatment Requirement” means any substantive or procedural requirement related to Pretreatment, other than a National Pretreatment Standard, imposed on an Industrial User.
(w) “SARA” means the Second Amended and Restated Regional Wastewater Disposal Agreement made and entered into by and between the CITY OF SAN DIEGO, a municipal corporation, on the one hand; and the CITY OF CHULA VISTA, a municipal corporation; the CITY OF CORONADO, a municipal corporation; the CITY OF DEL MAR, a municipal corporation; the CITY OF EL CAJON, a municipal corporation; the CITY OF IMPERIAL BEACH, a municipal corporation; the CITY OF LA MESA, a municipal corporation; the LEMON GROVE SANITATION DISTRICT, a political subdivision of the State of California; the CITY OF NATIONAL CITY, a municipal corporation; the CITY OF POWAY, a municipal corporation; the OTAY WATER DISTRICT, a political subdivision of the State of California; the PADRE DAM MUNICIPAL WATER DISTRICT, a political subdivision of the State of California; and the SAN DIEGO COUNTY SANITATION DISTRICT, a political subdivision of the State of California (collectively, the “Participating Agencies”), on the other hand. (x) “Total Program Costs” means all of the costs incurred by the City’s Public Utilities Department to staff, operate, and maintain the City’s Industrial Wastewater Control Program (or successor program if renamed in the future). Permissible program costs include but are not limited to personnel, permit issuance, monitoring and related programmatic and administrative costs including costs associated with reasonable overhead, regulatory compliance, and laboratory services.
(y) “Trucked Waste Costs” mean the costs associated with administering the City’s Industrial Wastewater Control Program and treating the wastewater disposed of into the wastewater system through delivery by a transport truck, which costs are charged directly to the trucking discharger.

3. ORDINANCE ADOPTION. No later than 60 days after the Effective Date of this Administrative Agreement, each Party to this Administrative Agreement shall begin the process of amending its Pretreatment ordinances or resolutions, as applicable, including providing public notices as may be required by law, as necessary to implement this Administrative Agreement.

Each Participating Agency shall adopt an ordinance delegating authority to City to implement, operate and enforce an Industrial Pretreatment and Source Control Program against Industrial Users in the Metro System, in a form substantially similar to the model ordinance attached to this Administrative Agreement as Attachment A. Each Participating Agency must provide a copy of its adopted ordinance to City. Each Party’s revised ordinances or resolutions (as applicable) governing Pretreatment shall be adopted and effective by no later than the effective date of the SARA as set forth in Section 14.1 of the SARA.

4. NOTICE AND AMENDMENTS. On or shortly after the Effective Date of this Administrative Agreement, City shall notify the Participating Agencies of any amendments to City’s ordinances or Municipal Code relating to Pretreatment, in order to develop and maintain, insofar as possible, a uniform set of wastewater disposal regulations at least as stringent as those adopted by City throughout the Metro System, including the established Local Limits and source control measures for protection of the Pure Water program. Throughout the life of this

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La Mesa City CouncilNovember 12, 2025

La Mesa City Council
November 12, 2025