CityCouncil_RegularSession_Attachments_03_15_2022 — Milpitas City Council, March 15, 2022 (part 1 of 5)

REGULAR MEETING OF THE MILPITAS

CITY COUNCIL

March 15, 2022 Milpitas City Council Agenda Page 1

AG E N D A
TUESDAY, MARCH 15, 2022
CITY COUNCIL CHAMBERS, 455 E CALAVERAS BLVD, MILPITAS, CA 6:00 PM (CLOSED SESSION)
7:00 PM (PUBLIC BUSINESS)

For assistance in the following languages, you may call:

Đối với Việt Nam, gọi 408-586-3122
Para sa Tagalog, tumawag sa 408-586-3051
Para español, llame 408-586-3232
The City Council meeting is held in the City Council Chamber at City Hall, 455 E. Calaveras Blvd., Milpitas and via teleconference/Zoom webinar.

You may watch the Council meeting without providing public comment by accessing it via links here.

Meeting shall be livestreamed - Go to:

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YouTube: https://www.ci.milpitas.ca.gov/youtube
Web Streaming: https://www.ci.milpitas.ca.gov/webstreaming

PUBLIC COMMENT INSTRUCTIONS
Oral public comments may be provided live during the City Council meeting in person or by registering for the zoom meeting in advance. To register you will need to provide an email address (not disclosed) and a name. To minimize technical difficulties, please make sure that you have the latest version of the Zoom Application. Below is the link to register for this meeting only:
https://ci-milpitas-ca-gov.zoom.us/webinar/register/WN_Fp7UfVV8SoCxSpICxS_Nbw After you register a link will be sent to you to join the City Council meeting in order to give your comments.

All registered meeting attendees who wish to speak must click on the “raise hand” icon when the Mayor calls for public comments. If participating by calling in on your phone, dial *9 to use the “raise hand” feature, and when you are called upon, hit *6 to unmute your phone. Your phone number will be displayed in the live meeting. The Mayor will call the speakers to begin.

All comments provided shall be limited to three minutes or less as determined by the Mayor. All members of the public will be limited to one comment per agenda item, and one comment for non-agenda items.

MILPITAS CITY COUNCIL CODE OF CONDUCT
 Be respectful and courteous (words, tone, and body language).  Model civility.
 Avoid surprises.
 Praise publicly and criticize privately.
 Focus on the issue, not the person.
 Refrain from using electronic devices while on the Council dais.  Disclose conflicts of interest and affiliations related to agenda items.  Separate governing from campaigning.
 The Council speaks with one voice after making policy on issues.  Respect the line between policy and administration.
 Council will hold one another accountable to comply with this Code of Conduct.

1 March 15, 2022 Milpitas City Council Agenda Page 2

CALL MEETING TO ORDER by Mayor and ROLL CALL by City Clerk (6:00 PM)

ADJOURN TO CLOSED SESSION
(a) CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION Pursuant to Government Code Section 54956.9(d)(1)
City as Plaintiff
County Sanitation District 2-3, West Valley Sanitation District, Burbank Sanitary District, Cupertino

(b) CONFERENCE WITH LEGAL COUNSEL - Anticipated Litigation Pursuant to Government Code Section 54956.9(d)(2)
City as Defendant - see attached letter

CLOSED SESSION ANNOUNCEMENT: (7:00 PM)
Report on action taken in Closed Session, if required per Government Code Section 54957.1, including the vote or abstention of each member present.

PLEDGE OF ALLEGIANCE
INVOCATION (Councilmember Dominguez)

PRESENTATIONS
 Chez the Ice Cream Man Appreciation Day (Proclamation) PUBLIC FORUM (7:05 PM)
Those in the audience and via Zoom are invited to address City Council on any subject not on tonight’s agenda. In-person speakers wishing to address the Council are requested, but not required to complete a Speaker Card and submit it to the Mayor. In-person speakers will then be asked to come up to the podium and state their name for the record. Those interested in speaking via Zoom may do so by following the instructions on page one (1) of the agenda. Comments may be limited to three (3) minutes or less at the Mayor’s discretion. As an item not listed on the agenda, no response is required from City staff or the Council and no action can be taken. The City Council may instruct the City Manager to place the item on a future meeting agenda.

NOTE: If a member of the public wishes to share any presentation materials for Council consideration, they must be submitted to the Clerk’s Office by email to [email protected] by 12:00 p.m. on the day of the meeting. No presentations will be accepted in person in the Council Chambers.

ANNOUNCEMENTS AND FUTURE AGENDA ITEMS (7:10 PM)
Members of the City Council or City Manager may make brief announcements at this time. Members of the City Council may also suggest future agenda items at this time. For future agenda items, the City Council shall not debate the topic or engage in discussion but shall simply state a “yes” or “no” as to whether to direct the City Manager to place the item on a future meeting agenda. If a majority of the City Council agrees to place an item on a future meeting agenda, the City Manager shall place the item on a future agenda for City Council discussion.

ANNOUNCEMENT OF CONFLICT OF INTEREST AND CAMPAIGN CONTRIBUTIONS

READING OF THE CITY COUNCIL CODE OF CONDUCT

APPROVAL OF AGENDA
CONSENT CALENDAR (7:20 PM)
Consent calendar items are considered to be routine and will be considered for adoption by one motion. There will be no separate discussion of these items unless a City Councilmember, member of the audience or staff requests the Council to 2 March 15, 2022 Milpitas City Council Agenda Page 3

remove an item from (or be added to) the consent calendar. Any person desiring to speak on any item on the consent calendar should ask to have that item removed from the consent calendar.

C1. Receive the City Council Calendars of Meetings for March and April 2022 (Staff Contact: Wendy Wood, City Clerk, 408-586-3001)
Recommendation: Receive the City Council Calendars of Meetings for March and April 2022.

C2. Approve the City Council Regular Meeting Minutes of March 1, 2022 (Staff Contact: Wendy Wood, City Clerk, 408-586-3001)
Recommendation: Approved the City Council Regular Meeting minutes of March 1, 2022.

C3. Receive the Preview List of Anticipated Items for the Next Regular City Council Meeting (Staff Contact: Wendy Wood, City Clerk, 408-586-3001)
Recommendation: Receive the list of anticipated agenda items for the next regular City Council meeting.

C4. Receive and Review the List of Agenda Items Requested by City Councilmembers (Contact:

Mayor and City Councilmembers, 408-586-3000)
Recommendation: Review the list of items that have been requested by City Councilmembers and provide direction to staff as necessary. No substantive discussion about any specific item shall occur and the City Council shall hold all debate about the item until it is scheduled as a full agenda item.

C5. Adopt a Resolution Granting Acceptance of the Public Improvements for the Ellison Park Residential Project Public Improvement Plan No. 2-1220; Approve a Reduction in the Performance Bond to $79,900.00 Which Shall Remain in Effect for the Duration of the One-Year Warranty Period; and Grant Authorization to the City Engineer to Release the Performance Bond After the One-Year Warranty Period Without Further City Council Action Provided All Required Warranty Work is Completed to the Satisfaction of the City Engineer (Staff Contact: Steve Erickson, Engineering Director/City Engineer, 408-586-3301) Recommendation: Adopt a resolution granting acceptance of the public improvements for the Ellison Park Residential Project Public Improvement Plan No. 2-1220; approve a reduction in the performance bond to $79,900.00 which shall remain in effect for the duration of the one-year warranty period; and grant authorization to the City Engineer to release the performance bond after the one-year warranty period without further City Council action provided all required warranty work is completed to the satisfaction of the City Engineer.

C6. Adopt a Resolution Granting Acceptance of the Completed Public Improvements for the Lucente Residential Project, Public Improvement Plans No. 2-1212, and Approve a Reduction of the Faithful Performance Bond to $85,500.00 Which Shall Remain in Effect for the Duration of the Warranty Period, and Grant Authorization to the City Engineer to Release the Performance Bond After the One-Year Warranty Period Without Further City Council Action Provided All Required Warranty Work has Been Completed to the Satisfaction of the City Engineer (Staff Contact: Steve Erickson, Engineering Director/City Engineer, 408-586-3301) Recommendation: Adopt a resolution granting acceptance of the completed public improvements for the Lucente Residential Project, Public Improvement Plans No. 2-1212, and approve a reduction of the faithful performance bond to $85,500.00 which shall remain in effect for the duration of the warranty period, and grant authorization to the City Engineer to release the performance bond after the one-year warranty period without further City Council action provided all required warranty work has been completed to the satisfaction of the City Engineer.
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C7. Adopt a Resolution Approving and Authorizing the City Manager to Execute a Six-year Sole- Source Services Agreement with Symbium Corporation for the Unlimited Use of Proprietary Web-based Tools (Symbium PlanCheck and Build Business) as a Cloud-based Service for the Not-To-Exceed Amount of $210,000.00 and Approve appropriation of $90,000.00 from Permit Automation Fund 506 for this project (Staff Contact: Ned Thomas, Planning Director, 408-586- 3273)
Recommendation: Adopt a resolution approving and authorizing the City Manager to execute a six-year sole-source services agreement with Symbium Corporation for the unlimited use of proprietary web- based tools (Symbium Plancheck and Build Business) as a cloud-based service for the not-to-exceed amount of $210,000.00. Approve appropriation of $90,000.00 from Permit Automation Fund 506 to this project.

C8. Adopt Resolutions Approving and Authorizing the City Manager to Execute the 2021 Amended and Restated Water Supply Agreement Between the City and County of San Francisco Wholesale Customers in Alameda County, San Mateo County, and Santa Clara County and Approving a Minimum Purchase Transfer Agreement from the City of Mountain View to the City of East Palo Alto (Staff Contact: Tony Ndah, Public Works Director, 408-586-2602)

Recommendation: Adopt a resolution approving and authorizing the City Manager to execute the 2021 amended and restated Water Supply Agreement between the City and County of San Francisco Wholesale Customers in Alameda County, San Mateo County, and Santa Clara County; and (2) Adopt a resolution approving a Minimum Purchase Transfer Agreement from the City of Mountain View to the City of East Palo Alto.

C9. Approve the Pickleball Pilot Program at Gill Park and related Budget Action (Staff Contacts:

Renee Lorentzen, Recreation and Community Services Director, 408-586-3409, Tony Ndah, Public Work Director, 408-586-2602)
Recommendation: Approve the Pickleball Pilot Program at Gill Park Handball Courts and appropriate $75,000 from the General Government CIP Fund to the Minor Sports Courts Rehabilitation Project C10. Amend Resolution 7779 Delegating Authority to the Public Works Director to Take Emergency Action and Receive a Report on the Emergency Repair of Pump at the Main Lift Sewer Pump Station; and Determine By a Four-Fifths Vote There is a Need to Continue the Emergency Repair (Staff Contact: Tony Ndah, Public Works Director, 408-586-2602) Recommendation: (1) Amend Resolution 7779 delegating authority to the Public Works Director to take emergency action and award emergency contracts without giving notice soliciting competitive bids; (2) Receive a report from the Public Works Director on the emergency repair of pump at the Main Lift Sewer Pump Station; and (3) Determine by a four-fifths vote that there is a need to continue the emergency action.

C11. Receive Monthly Report for Unhoused Services (Staff Contact: Sharon Goei, Building Safety and Housing Director, 408-586-3260)
Recommendation: Receive January 2022 report for unhoused services.

C12. Receive the 2021 Housing Element Annual Progress Report and Housing Successor Agency Annual Report and Authorize the Submittal of Both Reports to California Department of Housing and Community Development (HCD) and Governor’s Office of Planning and Research (OPR) (Staff Contact: Sharon Goei, Building Safety and Housing Director, 408-586-3260 and Robert Musallam, Housing and Neighborhood Services Administrator, 408-586-3275) 4 March 15, 2022 Milpitas City Council Agenda Page 5

Recommendation: Receive the 2021 Housing Element Annual Progress Report and Housing Successor Agency Annual Report and authorize the submittal of both reports to California Department of Housing and Community Development (HCD) and Governor’s Office of Planning and Research (OPR).

C13. Report on Bids and Award Construction Contract to Mercoza in the Amount of $327,680.00 for Citywide Sidewalk Repairs (Staff Contacts: Tony Ndah, Public Works Director, 408-586-2602 and Chris Schroeder, Purchasing Agent, 408-586-3161)
Recommendation: (1) Receive report on bids and award a construction contract to the lowest responsible bidder submitting a responsive bid, Mercoza, in the amount of $327,680.00 for the Citywide Sidewalk Repair Project; and (2) Authorize the City Manager to negotiate and execute contract change order(s) in an aggregate amount not to exceed $35,000.00 for the Citywide Sidewalk Repairs Project.

C14. Consider the Request Received by the City Clerk and Approve a Fee Waiver of $1,500.00 for the Milpitas Kiwanis Club Foundation Crab Feed on April 8, 2022 at the Milpitas Community Center and a Fee Waiver of $1,300.00 for the Milpitas Chamber of Commerce for an ADU Community Educational Event on April 30, 2022, at the Milpitas Community Center (Staff Contact: Wendy Wood, City Clerk, 408-586-3001)
Recommendation: Consider the request received by the City Clerk and approve a Fee Waiver of $1,500.00 for the Milpitas Kiwanis Club Foundation Crab Feed on April 8, 2022 at the Milpitas Community Center and a Fee Waiver of $1,300.00 for the Milpitas Chamber of Commerce for an ADU Community Educational Event on April 30, 2022, at the Milpitas Community Center.

C15. Accept Commissioner Resignation (Staff Contact: Wendy Wood, City Clerk, 408-586-3001) Recommendation: Accept the resignation of Commissioner Crystal Caidoy from the Parks, Recreation, and Cultural Resources Commission and direct the City Clerk to post the notice of the unscheduled vacancy.

C16. Consider the Recommendations from Mayor Tran for Appointments to City Commissions (Contact: Mayor Tran, 408- 586-3029)

Recommendation: Consider the recommendations from Mayor Tran and approve the appointments to City Commissions.

C17. Authorize and Approve Travel to Yosemite, CA for Councilmember Anthony Phan to Attend the 30th Annual Yosemite Policymakers Conference to be Held on March 17 – 20, 2022 for a Total Estimated Amount of $1,200.00 (Staff Contact: Ashwini Kantak, Assistant City Manager, 408- 586-3053)

Recommendation: Authorize and approve travel to Yosemite, CA for Councilmember Anthony Phan to attend the 30th Annual Yosemite Policymakers Conference to be held on March 17 – 20, 2022 for a total estimated amount of $1,200.00.

PUBLIC HEARINGS (7:25 PM)
Members of the public may be allotted up to three (3) minutes or less at the Mayor’s discretion, to comment on any public hearing item. Applicants/Appellants and their representatives may be allotted up to a total of ten (10) minutes for opening statements and up to a total of five (5) minutes maximum for closing statements. Items requested/recommended for continuance are subject to Council’s consent at the meeting.

18. 2022 Weed Abatement Public Hearing and Adopt a Resolution to Abate the Weeds (Staff Contact: Albert Zamora, Deputy Fire Chief / Fire Marshal, 408-586-3371) 5 March 15, 2022 Milpitas City Council Agenda Page 6

Recommendation: Conduct a Public Hearing and adopt a resolution directing the County of Santa Clara Consumer and Environmental Protection Agency- Weed Abatement Program to abate the nuisance, keep an account of the cost, and embody such account in a report and assessment list to the City Council in accordance with the Milpitas Municipal Code.

COMMUNITY DEVELOPMENT (7:45 PM)

19. Receive a Presentation and Provide Direction to Staff on a Draft Zoning Ordinance Amendment amending Sections of Title V, Chapter 100, and Title XI, Chapter 10, of the Milpitas Municipal Code Relating to Mobile Food Vending (Food Trucks) (Staff Contact: Ned Thomas, Planning Director, 408-586-3273 and Avery Stark, Associate Planner, 408-586-3288) Recommendation: (1) Receive a presentation from staff; and (2) Provide direction to staff on a draft Zoning Ordinance Amendment setting forth regulations related to mobile food vending.

COMMUNITY SERVICES AND SUSTAINABLE INFRASTRUCTURE (8:30 PM)

20. Review the Proposed Streets, Parks and Facilities Naming Policy and Provide Feedback to Staff (Staff Contact: Renee Lorentzen, Recreation and Community Services Director, 408-586-3409) Recommendation: (1) Review the proposed Streets, Parks and Facilities Naming Policy and provide feedback to staff; (2) Review the City Naming Lists and provide feedback to staff; and (3) Authorize staff to begin process for naming McCandless Park.

LEADERSHIP AND SUPPORT SERVICES (9:00 PM)

21. Receive Report on 2022 Citywide Community Engagement Survey (Staff Contact: Ashwini Kantak, Assistant City Manager, 408-586-3053 and Charmaine Angelo, Public Information Officer, 408-586-3055)
Recommendation: Receive a report on results of the 2022 Citywide Community Engagement Survey.

22. Provide Direction on American Rescue Plan Act (ARPA) Funding for Council Priority Items and Modifications to the ARPA Investment Plan and Provide Input on Proposed Process for Future Changes to the ARPA Investment Plan (Staff Contact: Ashwini Kantak, Assistant City Manager, 408-586-3053 and Lauren Lai, Director of Finance, 408-586-3111) Recommendations: (1) Consider Council priority items for American Rescue Plan Act (ARPA) funding and provide direction to staff on any required modifications to the ARPA Investment Plan to allow for the additional allocation; and (2) Review and provide input to staff on proposed process for future changes to the ARPA Investment Plan

23. Receive Report Regarding Mayoral/Council Term Limits and Provide Direction to Staff on Future Ballot Measures, If Any (Staff Contact: Christopher J. Diaz, City Attorney, 408-586-3040 and Ashwini Kantak, Assistant City Manager, 408-586-3053)
Recommendation: Receive report regarding Mayor/Council term limits and provide direction to staff on future ballot measures, if any.

REPORTS OF MAYOR & COUNCILMEMBERS (11:00 PM)

24. Per Councilmember Chua, Discuss the City’s Lobbyist Ordinance (Contact: Councilmember Chua, 408-586-3023)
ADJOURNMENT (11:30 PM)
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KNOW YOUR RIGHTS UNDER THE OPEN GOVERNMENT ORDINANCE
Government’s duty is to serve the public, reaching its decisions in full view of the public. Commissions and other City agencies exist to conduct the people’s business. This ordinance assures that deliberations are conducted before the people and City operations are open to the people’s review. For more information on your rights under the Open Government Ordinance or to report a violation, contact the City Attorney’s office at Milpitas City Hall, 455 E. Calaveras Blvd., Milpitas, CA 95035 e-mail:[email protected] / Phone: 408-586-3040

The Open Government Ordinance is codified in the Milpitas Municipal Code as Title I Chapter 310 and is available online at the City’s website www.ci.milpitas.ca.gov by selecting the Milpitas Municipal Code link.

Materials related to an item on this agenda submitted to the City Council after initial distribution of the agenda packet are available for public inspection at the City Clerk’s office at Milpitas City Hall, 3rd floor 455 E. Calaveras Blvd., Milpitas and on City website. City Council agendas and related materials can be viewed online: www.ci.milpitas.ca.gov/government/council/agenda_minutes.asp (select meeting date)

APPLY TO SERVE ON A CITY COMMISSION
Commission application forms are available online at www.ci.milpitas.ca.gov or at Milpitas City Hall.

Contact the City Clerk’s Office at 408-586-3001 for more information.

If you need assistance, per the Americans with Disabilities Act, for any City of Milpitas public meeting, please call the City Clerk at 408-586-3001 or send an e-mail to [email protected] prior to the meeting. You may request a larger font agenda.
7 4 North Second Street, Suite 1300 | San Jose, CA 95113 Phone: 408-280-2476 | lawfoundation.org | Tax ID 52-1014751

Sent via Electronic Mail to:

Mayor Rich Tran [email protected];
Vice Mayor Carmen Montano, [email protected]; Councilmember Evelyn Chua, [email protected];
Councilmember Anthony Phan, [email protected];
Councilmember, Karina Dominguez, [email protected]; City Manager Steven G. Harris, [email protected]; City Attorney, Christopher J. Diaz, Best Best & Krieger, [email protected];

Via facsimile to:

Jared Hernandez, Chief of Police, (408) 586-2488

February 28, 2022

RE: Request to Cancel Encampment Sweeps in the City of Milpitas

We write on behalf of the Law Foundation of Silicon Valley to ask that the City of Milpitas (“the City”) cancel its planned sweep of the Railroad Encampment scheduled for March 1, 2022. The Notices issued by the Milpitas Police Department (“MPD”) are insufficient notices and violate the fourth, eighth, and fourteenth amendment.

Irrespective of the sufficiency of the notices, we encourage the City to suspend all encampment sweeps during the COVID-19 pandemic as is recommended by the Center for Disease Control (CDC).1 Specifically, we ask the City to allow the unhoused residents of Milpitas to remain at their encampments through the duration of the COVID-19 public health crisis. During a pandemic, and certainly for the foreseeable future, sweeps will continue to pose a serious health crisis as they disrupt consistent access to services and ability for outreach and health workers to provide continuous care.

The unhoused members of our community are particularly harmed when their personal property is taken during encampment sweeps because they lose whatever practical tools they have for survival or to transition out of homelessness and are deprived of due process.

For these reasons, we, individuals and organizations who are part of and/or support the unhoused community in Milpitas, request that the City of Milpitas cancel its planned encampments sweeps until such time as it complies with all legal requirements and the State-Wide Covid-19 state of emergency has lifted.
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1 See Center for Disease Control, “Considerations for Encampments” at https://www.cdc.gov/coronavirus/2019- ncov/community/homeless-shelters/unsheltered-homelessness.html. 8 Item # (b)

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I. Factual Background

A. March 1, 2022 Notices

On or about February 18, 2022, the Milpitas Police Department (“MPD”) began posting warning notices on vehicles (“Vehicle Notices”) in or around the Railroad Homeless Encampment (“the Encampment”). These notices declared that vehicles were parked in violation of the law and subject to a fine and being towed. Said notice cited to three (3) different provisions of the Milpitas Municipal Code and declared that the vehicle “appears to be in violation of one or more of the above laws.” In addition to the Vehicle Notices, MPD also posted notices of clean-up and removal (“Sweep Notices”). The Sweep Notices state that the City will conduct a clean-up of “this area and remove all items found,” including “personal property, temporary shelters, and garbage.” They provided an additional warning:

ANY UNCLAIMED, PERSONAL PROPERTY FOUND AT THE TIME OF THE

CLEAN-UP WILL BE STORED BY THE MILPITAS POLICE DEPARTMENT FOR A PERIOD OF FOUR MONTHS. HOWEVER, ITEMS THAT APPEAR TO BE

ABANDONED OR THAT POSE A DANGER TO PUBLIC HEALTH OR SAFETY MAY BE IMMEDIATELY DESTROYED.

The Sweep Notices cite to no federal, state, or local statute under which the City seeks to confiscate and/or destroy the personal property of its citizenry. Both the Vehicle and Sweep Notices (collectively, “the Notices”) assert that the MPD will return on March 1, 2022 to enforce the warnings provided on the Notices.

II. Encampment sweeps premised on the Vehicle and Sweep Notices are unconstitutional under the Fourth and Fourteenth Amendments

A. Deprivation of property under the Notices without due process of law is violative of the Fourteenth Amendment.

In Lavan v. City of Los Angeles, the court declared that homeless people's property, "perhaps representing everything they own, must be considered `property' for purposes of [the Fourteenth Amendment] due process analysis." (Lavan v. City of Los Angeles (C.D. Cal. 2011) 797 F. Supp. 2d 1005, 1016, emphasis added, aff d, 693 F.3d 1022.) Accordingly, before a City “can seize and destroy” a homeless person’s property, “it must provide notice and an opportunity to be heard at a meaningful time and in a meaningful manner.” (Id. citing Mathews v. Eldridge (1976) 424 U.S. 319, 339-43, internal citations omitted.) Although a City may lawfully remove hazardous debris and trash, a homeless person’s property, “while it may look like ‘junk’ to some people, its value should not be discounted.” (Id. at 1016 citing Pottinger v. City of Miami (S.D.

Fla. 1992) 810 F. Supp. 1551, 1559.)

Moreover, vagueness may invalidate a law for two reasons under the Fourteenth Amendment: (1) it may fail to provide the kind of notice that will enable ordinary people to understand what conduct it prohibits; or (2) it may authorize or even encourage arbitrary and discriminatory enforcement. (See City of Chicago v. Morales (1999) 527 U.S. 41, 56.)

Any deprivation of property based on the Sweep Notices is violative of the Fourteenth Amendment. The Sweep Notices cites no federal, state, or local law under which the City may seize personal property of the residents of the Encampment. Accordingly, seizure of any property 9 Item # (b)

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pursuant to the Sweep Notices violates due process as it has failed to inform the resident under what authority and why their property is being seized. The Sweep Notices also dictates that “any unclaimed, personal property found at the time of the clean-up” will be seized by the MPD regardless of whether the items have been abandoned. Again, unless property is hazardous or trash, the City violates the Fourteenth Amendment by depriving its citizenry of their property without due process of law. In addition, the Sweep Notices are unconstitutionally vague. They indicate that the city will conduct a clean-up of “this area and remove all items found.” The Notice does not indicate the extent or range of what “this area” means for purposes of the sweep.

People finding the notice on or around their property must guess the range of the area that falls under the Sweep Notices.

Any deprivation of property based on the Vehicle Notices is also violative of the Fourteenth Amendment. The Vehicle Notices cite to three (3) separate provisions of the Milpitas Municipal Code and declares that the vehicles “appears to be in violation of one or more of the above laws.” The Vehicle Notices are unconstitutionally vague. Due process has not been provided if owners are left to speculate as to which laws they may have violated.

B. Seizure of property under the Notices is unreasonable in violation of the Fourth Amendment.

The Fourth Amendment protects against unreasonable searches and seizures. In considering whether seizure of property at homeless encampments is reasonable, the Lavan Court warned against treating the property of the homeless as “abandoned” or “trash” simply because the owner of said property is not present during the sweep. (Id. at 1012-1013 (“The Court is unpersuaded by the City’s argument that because the homeless in this case stepped away momentarily to, inter alia, get water or shower, they abandoned all their possessions.”) Abandonment is determined by the intent of the owner and should be determined based on the words, acts, or other objective indications that the person has abandoned the property. (Id. at 1013.)

Seizure of any property under the Sweep Notices violates the Fourth Amendment. The Sweep Notices declares that “any unclaimed, personal property found at the time of the clean- up” will be seized by the MPD and that “items that appear to be abandoned… may be immediately destroyed.” Such actions are expressly prohibited by the Fourth Amendment and Lavan, supra. Unclaimed property cannot simply be seized unless it has been deemed abandoned. In determining abandonment, MPD must rely on objective indicators not a blanket rule that property that “appears” to be abandoned will be destroyed.

III. The planned Vehicle and Encampment Sweep will likely violate the Eighth Amendment as it is cruel and unusual punishment to threaten criminal sanctions for someone who is unhoused without access to alternative shelter.

Encampment sweeps on public property are unconstitutional. The Ninth Circuit ruled in Martin v. City of Boise, that the cruel and unusual punishments clause of the Eighth Amendment precludes criminal enforcement against homeless individuals who are involuntarily sitting, lying, and sleeping on public property when they have no access to alternative shelters. 902 F.3d 1031, 1048 (9th Cir. 2018), opinion amended and superseded on denial of reh'g, 920 F.3d 584 (9th Cir. 2019). The decision was amended on denial of rehearing on April 1, 2019, solidifying that 10 Item # (b)

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localities cannot threaten prosecution for innocent conduct when homeless individuals do not have a single place where they can lawfully be. As a result, if encampment residents are forced to leave without providing them with adequate alternate shelter, this would violate Martin.

The City of Milpitas has no shelters within its borders for alternative short or long-term housing. The Sweep Notices nevertheless state the MPD will remove “all items found, including…temporary shelters.” The City seeks to displace its homeless residents without an alternative. As the court in Martin noted, “as long as there is no option of sleeping indoors, the government cannot criminalize indigent, homeless people for sleeping outdoors, on public property, on the false premise they had a choice in the matter.” (Id. at 617.) As the City has no shelters and has not provided meaningful offers of alternative housing that meets the needs of the indigent population at the Encampment, it violates the Eighth Amendment by seizing and destroying their property and levying fines and fees against them.

IV. Encampment sweeps will exacerbate the effects of the continuing COVID-19 Pandemic on the Unhoused Community.

Encampment sweeps have a destabilizing impact upon unhoused residents of a community, even without the added trauma of a public health crisis such as COVID-19. The Center for Disease Control has recognized that homelessness is closely connected to declines in physical and mental health; homeless persons experience high rates of health problems such as HIV infection, alcohol and drug abuse, mental illness, tuberculosis, and other conditions which can weaken a person’s immune system making that person highly susceptible to communicable diseases.2 Sweeps of homeless encampments while there is a public health crisis could lead to the loss of an unhoused person’s medications and other belongings, as well as the potential loss of contact with outreach workers, which could make it harder for them to get medical help.

Conducting encampment sweeps now would have an even greater impact upon the unhoused community. Many people who are unhoused cannot access healthcare and may have weakened immune systems due to ongoing health problems. If an unhoused person is exposed to the virus and is forced from their encampment and moved to another location, there is great risk that the virus will spread from one encampment to another and throughout the community.

V. Requests

A. We request that the City of Milpitas cancel the planned encampment sweeps.

The Law Foundation of Silicon Valley requests that the City of Milpitas cancel its planned encampments sweeps scheduled for March 1, 2022. Moving forward with the sweeps on March 1, 2022 will subject the City to liability under the Fourth, Eighth, and Fourteenth Amendments. Moreover, there are better and dignified alternative solutions to the City’s concerns.
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2 See Center for Disease Control, Interim Guidance for Homeless Shelters Plan, prepare and respond to coronavirus disease 2019. https://www.cdc.gov/coronavirus/2019- ncov/community/homeless-shelters/plan-prepare-respond.html 11 Item # (b)

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B. Provide access to hygiene facilities and trash pickup.

Maintaining personal hygiene and minimizing the transmission of germs can be challenging for households experiencing homelessness, particularly in communities with limited access to public bathrooms. Providing access to hygienic facilities for toileting, bathing, and handwashing can help minimize the impact of encampments and help reduce the spread of COVID-19. Community advocates have requested porta-loos and handwashing stations, as well as regular trash pickups in the past without success. We encourage the City to place trash cans, porta-potties, and handwashing stations or hand sanitizer dispensers at encampment sites and provide regular trash pickup to protect the health and safety of its residents and stem the spread of the pandemic.

C. MPD should not assist encampment sweeps.

After speaking with people living in encampments and other service providers who support them, they recommend that agencies send outreach workers who can connect encampment residents to services, particularly rapid re-housing services, instead of police officers. The presence of police officers at encampment sweeps heighten the stress level of the residents and may exacerbate residents’ mental health symptoms. The police officers are not trained mental health professionals – nor should they be required to act in that capacity. MPD enforcement of encampments sweeps provide a harsh short-term solution to a long-term problem. While the Law Foundation of Silicon Valley does not endorse any encampment sweeps, should they happen, we recommend that outreach workers from homeless service providers be sent instead of MPD to help link residents to services3, to deescalate conflict, and better coordinate with encampment leaders4 to keep everyone safe. These approaches are necessary for the duration of the current COVID-19 crisis, and are also best practices for the long term, from both a public health and fiscal policy perspective.

Sincerely,
/s/ Hai Dao
Hai Dao
Law Foundation of Silicon Valley

Community Partners:

Sasha Ellis, on behalf of Bay Area Legal Aid
E Conner, on behalf of National Lawyers Guild-SFBA
Right to Shelter Committee, National Lawyers Guild-SFBA

3 As the CDC recommends, “[l]ack of housing contributes to poor physical and mental health outcomes, and linkages to permanent housing for people experiencing homelessness should continue to be a priority.” https://www.cdc.gov/coronavirus/2019-ncov/community/homeless-shelters/unsheltered-homelessness.html. 4 “People with lived experiences of homelessness can help with planning and response. These individuals can serve as peer navigators to strengthen outreach and engagement efforts.” https://www.cdc.gov/coronavirus/2019- ncov/community/homeless-shelters/unsheltered-homelessness.html. 12 Item # (b)
Updated 3/11/22
Milpitas City Council Calendar
March 2022
Sunday Monday Tuesday Wednesday Thursday Friday Saturday 1 6:00 PM-Closed Session
7:00 PM-City Council
2 2:00 PM-Santa Clara VTA
Monthly Briefing - Northeast
Group (CM)
7:00 PM-Community Advisory
Commission (EC)
3 4:30 PM- Milpitas Chamber of
Commerce Board (EC)
5:30 PM- Santa Clara VTA Board
of Directors (CM)
4 5
6 7
7:00 PM-Parks, Recreation &
Cultural Resources Commission
(CM)
8 4:00 PM-Milpitas HOPE Suicide
Prevention Task Force
9 12:00 PM-Santa Clara Valley
Water District - Water
Commission (CM)
7:00 PM-Planning Commission
7:00 PM-Silicon Valley Clean
Energy Board of Directors (EC)
10 4:00 PM-Santa Clara VTA Policy
Advisory Committee (AP)
4:00 PM-Treatment Plant
Advisory Committee (CM)
6:00 PM-Community Town Hall:

Budget Meeting
7:00 PM-Cities Assoc of SCC
(CM)
11 3:00 PM-City Council
Transportation Subcommittee
(RT/CM)
*4:30 PM-City Council Finance
Subcommittee (RT/CM)
12 9:30 AM-
Milpitas
BART site
visit
(Council)
13 14
4:30 PM-Economic Development
and Trade Commission (KD)
6:00 PM-Housing Element
Community Workshop
7:00 PM- Special Youth Advisory
Commission (EC)
15 6:00 PM-Closed Session
7:00 PM-City Council
16 6:00 PM-Energy and
Environmental Sustainability
Commission (EC)
17 10:00 AM-VTA Congestion
Management Program Planning-

CMPP (CM)
11:30 AM-Special Santa Clara
VTA Board of Directors (CM)
5:30 PM-Measure F Oversight
Committee
6:30 PM-Bay Area Water Supply
Conserv Agency (CM)
7:00 PM-Public Safety and
Emergency Preparedness
Commission (KD)
18 19
20 21
5:30 PM-Science, Technology,
and Innovation Commission (RT)
7:00 PM-Library and Education
Commission (EC)
22 23
10:00 AM Grand Opening
Stratford School (Council)
7:00 PM-Planning Commission
24 4:00 PM-Silicon Valley Regional
Interoperability Authority
(SVRIA) (KD)
25 4:00 PM-City/School
Collaborative Subcommittee
(RT/CM)
26 27 28
7:00 PM-Arts Commission (RT)
29 30 31
Cesar Chavez Day
City Hall Closed
*Finance Subcommittee will only meet as needed
February 2022

S M T W T F S
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28
April 2022

S M T W T F S
1 2
3 4 5 6 7 8 9
10 11 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30
13 Item # C1.

Updated 3/11/22
Milpitas City Council Calendar
April 2022
Sunday Monday Tuesday Wednesday Thursday Friday Saturday 1 10:00 AM-Wastewater Facility
Site Visit (CM)
2 3 4
7:00 PM-Parks, Recreation &
Cultural Resources Commission
(CM)
5 ?:00 PM-Closed Session
7:00 PM-City Council
6 2:00 PM-Santa Clara VTA
Monthly Briefing - Northeast
Group (CM)
5:30 PM-Veterans Commission
(RT)
7:00 PM-Community Advisory
Commission (EC)
7 4:30 PM-Milpitas Chamber of
Commerce Board (EC)
5:30 PM-Santa Clara VTA Board
of Directors (CM)
6:00 PM-Community Outreach:

Budget Meeting
8 3:00 PM-City Council
Transportation Subcommittee
(RT/CM)
9 10 11
4:30 PM-Economic Development
and Trade Commission (KD)
12 4:00 PM-Milpitas HOPE Suicide
Prevention Task Force
13 7:00 PM-Silicon Valley Clean
Energy Board of Directors (EC)
7:00 PM-Planning Commission
14 4:00 PM-Treatment Plant
Advisory Committee (CM)
4:00 PM-Santa Clara VTA Policy
Advisory Committee (AP)
7:00 PM-Youth Advisory
Commission (EC)
7:00 PM-Cities Assoc of SCC
(CM)
15 *4:30 PM-City Council Finance
Subcommittee (RT/CM)
16 17 18
7:00 PM-Science, Technology,
and Innovation Commission (RT)
19 ?:00 PM-Closed Session
7:00 PM-City Council
20 6:00 PM-Energy and
Environmental Sustainability
Commission (EC)
21 10:00 AM-Santa Clara VTA
Congestion Mgmt Prog Planning
Comm-CMPP (CM)
6:30 PM-BAWSCA Board of
Directors Mtg (CM)
22 4:00 PM-City/School
Collaborative Subcommittee –
City hosting (RT/CM)
23 24 25 26
1:30 PM-Senior Advisory
Commission (EC)
27 5:30 PM-Cities Assoc. of SCC -
Recycling and Waste Reduction
Commission (AP)
7:00 PM-Planning Commission
28 29 30
*Finance Subcommittee will only meet as needed
May 2022

S M T W T F S
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30 31
March 2022

S M T W T F S
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30 31
14 Item # C1.

REGULAR MEETING OF THE MILPITAS

CITY COUNCIL

March 01, 2022 Milpitas City Council Agenda Page 1

AG E N D A
TUESDAY, MARCH 1, 2022

MILPITAS, CA
6:00 PM (CLOSED SESSION)
7:00 PM (PUBLIC BUSINESS)

The City Council of the City of Milpitas convened on the regular City Council meeting day of March 1, 2022, in the City Council Chamber at City Hall, 455 E. Calaveras Blvd., Milpitas, and via teleconference/Zoom webinar.

CALL MEETING TO ORDER by Mayor and ROLL CALL by City Clerk Mayor Tran called the regular City Council meeting to order at 6:00 PM. Roll Call was taken by City Clerk Wood.

PRESENT: Mayor Tran, Vice Mayor Montano, Councilmembers Chua, Dominguez, and Phan ABSENT: None

ADJOURN TO CLOSED SESSION
(a) DISCUSSION WITH LABOR NEGOTIATORS
Pursuant to Government Code Section 54957.6
Agency designated representative: Jeannine Seher, Human Resources Director Employee Organizations: MEA, Pro-Tech, Mid-Con

(b) CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION Pursuant to Government Code Section 54956.9(d)(1)
Deborah Logan v. City of Milpitas, et al.

Santa Clara County Superior Court Case No. 19CV347649

CLOSED SESSION ANNOUNCEMENT:

Report on action taken in Closed Session, if required per Government Code Section 54957.1, including the vote or abstention of each member present.

Attorney Merewitz stated there was no reportable action.

PLEDGE OF ALLEGIANCE
The Pledge of Allegiance was led by Mayor Tran.

INVOCATION
Councilmember Dominguez led the invocation.

15 Item # C2.

March 01, 2022 Milpitas City Council Agenda Page 2

PRESENTATIONS
Vice Mayor Montano presented commendations to Juliette Gomez, Demetress Morris, and Nyla Choates to recognize their involvement in the community. She also recognized Tshaka Campbell for being the Santa Clara County Honorary Poet Laureate.

Mayor Tran proclaimed the month of March as American Red Cross Month, National Women's Heritage Month, and Youth Art Month.

PUBLIC FORUM
Those in the audience and via Zoom are invited to address City Council on any subject not on tonight’s agenda. In-person speakers wishing to address the Council are requested, but not required to complete a Speaker Card and submit it to the Mayor. In-person speakers will then be asked to come up to the podium and state their name for the record. Those interested in speaking via Zoom may do so by following the instructions on page one (1) of the agenda. Comments may be limited to three (3) minutes or less at the Mayor’s discretion. As an item not listed on the agenda, no response is required from City staff or the Council and no action can be taken. The City Council may instruct the City Manager to place the item on a future meeting agenda.

The following people spoke under Public Forum:

1. Bob Livengood

2. Voltaire Montemayor

3. Howard Beale

4. Jacqueline Romero

5. Allysson McDonald

ANNOUNCEMENTS AND FUTURE AGENDA ITEMS
Members of the City Council or City Manager may make brief announcements at this time. Members of the City Council may also suggest future agenda items at this time. For future agenda items, the City Council shall not debate the topic or engage in discussion but shall simply state a “yes” or “no” as to whether to direct the City Manager to place the item on a future meeting agenda. If a majority of the City Council agrees to place an item on a future meeting agenda, the City Manager shall place the item on a future agenda for City Council discussion.

City Manager McHarris announced as of March 2, 2022, the Santa Clara County Public Health Department will no longer require indoor masking. They recommend everyone stay up to date on vaccinations and boosters.

Those not vaccinated or at high risk are strongly encouraged to wear masks indoors. The California Department of Public Health continues to require masking in higher risk settings such as public transit, health care facilities, and long-term care facilities.

Mayor Tran made the following requests:

1. A reform of the City’s Speed hump policy.

2. Fee waiver for the Kiwanis Annual Crab Feed.

3. Fee waiver for the Christian Worship Center’s Easter egg hunt.

4. Fee waiver for the Ayer High School Annual Reunion.

5. Add a mobile stage to the Juneteenth event.

6. Proclaim Saturday, March 19, 2022, as Chez the Ice Cream Man Appreciation Day.

Councilmember Chua recognized the Milpitas Community Theater Cast Members and requested the City Manager agendize an update to the Lobbyist Ordinance for the next meeting.

Councilmember Phan requested the meeting be adjourned in honor of Terry Sandoval.

Vice Mayor Montano thanked Bob Livengood for his work with Charity Bingo and commented on Women’s Heritage Month. She also made the following requests:

1. Fee waiver for the Chamber of Commerce for either the Oktoberfest or Arts and Wine festival. 16 Item # C2.

March 01, 2022 Milpitas City Council Agenda Page 3

2. Fee waiver for the Ayer High School annual reunion.

3. Create a plan for future solar paneling at City facilities.

4. Have the Police Department contact the Post Office to put something on the mailboxes to help stop mail theft.

Councilmember Dominguez commented on women leaders in the City and requested the Mayor give Keys to the City to Nyla Choates and Yolie Garcia from Hope for the Unhoused. She also spoke about attending the Ahmadiyya Muslim Women’s Auxiliary and requested a discussion be agendized in the next three meetings to implement a faith-based circle group for Milpitas that will meet quarterly.

City Manager McHarris stated that he will reach out to the faith-based group currently in Milpitas and provide an info memo or email to the Council.

Councilmember Chua requested a fee waiver for the Filipino American Real Estate Professional Association to hold an ADU workshop at the Community Center. She also announced today is the last day to apply for the $5,000 small business grant.

Mayor Tran announced the Milpitas Unified School District had its second capital fundraising event for the new innovation campus and thanked the Bay View Golf Club for sponsoring the event.

Councilmember Dominguez requested a fee waiver for the Filipino American South Bay Community to hold a pop-up resource fair at a City Park.

ANNOUNCEMENT OF CONFLICT OF INTEREST AND CAMPAIGN CONTRIBUTIONS Attorney Merewitz asked the Mayor and City Councilmembers if they had any personal conflicts of interest. By roll call, there were no conflicts of interest. Attorney Merewitz asked the Mayor and City Councilmembers if they had any reportable campaign contributions. By roll call, there were no reportable campaign contributions.

READING OF THE CITY COUNCIL CODE OF CONDUCT
Vice Mayor Montano read aloud the City Council Code of Conduct.

APPROVAL OF AGENDA
Councilmember Dominguez commented on the minutes and wanted to note her dissent for the request made under the Announcements and Future Agenda Items for the exploration of the encampment ordinances.

Mayor Tran asked that item 21 be moved after item C16.

Councilmember Dominguez asked to move item 20 after item 17.

Motion: to approve the March 1, 2022, regular meeting agenda and move Item 21 after C16 and move 21 after

17. Motion/Second: Mayor Tran / Vice Mayor Montano
Motion carried by a vote of: AYES: 5 NOES: 0

CONSENT CALENDAR
Consent calendar items are considered to be routine and will be considered for adoption by one motion. There will be no separate discussion of these items unless a City Councilmember, member of the audience or staff requests the Council to 17 Item # C2.

March 01, 2022 Milpitas City Council Agenda Page 4

remove an item from (or be added to) the consent calendar. Any person desiring to speak on any item on the consent calendar should ask to have that item removed from the consent calendar.

Motion: to approve the Consent Calendar.

Motion/Second: Mayor Tran / Councilmember Dominguez
Motion carried by the following roll call vote:

AYES: Councilmembers Chua, Dominguez, Phan, Vice Mayor Montano, Mayor Tran NOES: None
C1. Receive the City Council Calendar of Meetings for March 2022 (Staff Contact: Wendy Wood, City Clerk, 408-586-3001)
Received the City Council Calendar of Meetings for March 2022.

C2. Approve the City Council Regular Meeting Minutes of February 15, 2022 (Staff Contact: Wendy Wood, City Clerk, 408-586-3001)
Approved the City Council Regular Meeting minutes of February 15, 2022.

C3. Receive the Preview List of Anticipated Items for the Next Regular City Council Meeting (Staff Contact: Wendy Wood, City Clerk, 408-586-3001)
Received the list of anticipated agenda items for the next regular City Council meeting.

C4. Receive and Review the List of Agenda Items Requested by City Councilmembers (Contact:

Mayor and City Councilmembers, 408-586-3000)
Reviewed the list of items that have been requested by City Councilmembers.

C5. Approve and Authorize the City Manager to Execute Amendment No. 4 with PSOMAS for Mapping and Field Investigation of the Traffic Signal Intersection and Fiber Optic System in the City GIS for the total amount of $93,201, for a Total Not-To-Exceed Contract Amount of $339,529, for Technology Project, Project No. 3427 (Staff Contact: Steve Erickson, Engineering Director/City Engineer, 408-586-3301)
Approved and authorized the City Manager to Execute Amendment No. 4 with PSOMAS for Mapping and Field Investigation of the Traffic Signal Intersection and Fiber Optic System in the City GIS for the total amount of $93,201, for a total not-to-exceed contract amount of $339,529, for Technology Project, Project No. 3427.

C6. Approve and Authorize the City Manager to Execute a Design Services Agreement with Kimley- Horn in the Amount Not to Exceed $475,034.00 for Design Services for the Street Resurfacing Project 2023, Project No. 4303 (Staff Contact: Steve Chan, Transportation and Traffic Manager, 408-586-3324)
Approved and authorized the City Manager to execute a Design Services Agreement with Kimley-Horn in the amount not to exceed $475,034.00 for design services for the Street Resurfacing Project 2023, Project No. 4303.

C7. Adopt a Resolution Initiating Proceedings for the Annual Levy and Collection of Assessments and Ordering the Preparation of the Annual Engineer’s Report for Landscaping and Lighting 18 Item # C2.

March 01, 2022 Milpitas City Council Agenda Page 5

Maintenance Assessment District No. 95-1 (McCarthy Ranch) (Staff Contact: Steve Erickson, Engineering Director/City Engineer, 408-586-3301) Adopted Resolution No. 9123 Initiating the Proceedings for the Annual Levy and Collection of Assessments and ordering the preparation of the Annual Engineer’s Report for Landscaping and Lighting Maintenance Assessment District No. 95-1 (McCarthy Ranch).

C8. Adopt a Resolution Initiating Proceedings for the Annual Levy and Collection of Assessments and Ordering the Preparation of the Annual Engineer’s Report for Landscaping and Lighting Maintenance Assessment District No. 98-1 (Sinclair Horizon) (Staff Contact: Steve Erickson, Engineering Director/City Engineer, 408-586-3301) Adopted Resolution No. 9124 Initiating Proceedings for the Annual Levy and Collection of Assessments and Ordering the Preparation of the Annual Engineer’s Report for Landscaping and Lighting Maintenance Assessment District No. 98-1 (Sinclair Horizon) C9. Adopt a Resolution Amending and Restating the Wage Theft Procurement Policy (Staff Contact: Lauren Lai, Finance Director, 408-586-3111)
Adopted Resolution No. 9125 to amend and restate the City’s Wage Theft Procurement Policy C10. Approve Amendments to the Professional Services Agreement with Ascent Environmental for Consultant Services and Master Funding Agreement with the Metropolitan Transportation Commission for the Priority Development Area Planning Grant Program Related to Preparation of the Gateway/Main Street Specific Plan Update and Authorize the City Manager to Execute the Amended Agreements and Supplement to the Master Funding Agreement with the Metropolitan Transportation Commission (Staff Contact: Ned Thomas, Planning Director, 408-586-3273) Approved amendments to the Professional Services Agreement with Ascent Environmental for consultant services and Master Funding Agreement with the Metropolitan Transportation Commission for the Priority Development Area Planning Grant Program related to the preparation of the Gateway/Main Street Specific Plan Update and authorized the City Manager to execute the amended agreements and Supplement to the Master Funding Agreement with the Metropolitan Transportation Commission.

C11. Approve a Budget Appropriation in the amount of $103,931 to the Equipment Fund Non- departmental FY 2021-22 Operating Budget and Approve the Replacement Purchase of Two Police Vehicles Through a Sourcewell Cooperative Contract with National Auto Fleet Group (Staff Contact: Frank Morales, Police Captain, 408-586-2521) Approved a budget appropriation in the amount of $103,931 to the Equipment Fund Non-Departmental FY 2021-22 operating budget and approve the replacement purchase of two Police vehicles through a Sourcewell cooperative contract with National Auto Fleet.

C12. Award RFP No. 22-036 to JAM Services and Authorize the City Manager to Purchase Illuminated Overhead Street Signs for the Not-To-Exceed Amount of $104,535.86 (Staff Contact: Tony Ndah, Public Works Director, 408-586-2602)
Awarded RFP No. 22-036 to JAM Services and authorized the City Manager to purchase illuminated overhead street signs for the not-to-exceed amount of $104,535.86.

C13. Accept Committee Member Resignation (Staff Contact: Wendy Wood, City Clerk, 408-586-3001) 19 Item # C2.

March 01, 2022 Milpitas City Council Agenda Page 6

Accepted the resignation of Commissioner Harsh Patel from the Measure F Oversight Committee and direct the City Clerk to post the notice of the unscheduled vacancy.

C14. Adopt a Resolution Authorizing the City Manager or Designee to Donate Obsolete Fire Safety Personal Protective Equipment (Jackets, Pants, and Boots) to the City of Dagupan (Staff Contact: Lauren Lai, Finance Director, 408-586-3111 and Brian Sherrard, Fire Chief, 408-586- 2811)
Adopted Resolution No. 9126 Authorizing the City Manager or Designee to Donate Obsolete Fire Safety Personal Protective Equipment (Jackets, Pants, and Boots) to the City of Dagupan.

C15. Motion to Reconfirm Findings and Determinations Under Resolution No. 9105 and Assembly Bill 361 for the Continuation of Virtual Meetings (Staff Contact: Christopher J. Diaz, City Attorney, 408-586-3040)
Moved to reconfirm findings and determinations under Resolution No. 9105 and Assembly Bill 361 for the continuation of virtual meetings.

C16. Authorize and Approve Travel to Monterey, CA for City Manager Steve McHarris to Attend the Innovating Commerce Serving Communities (ICSC) Conference Scheduled for March 8 - 9, 2022 (Staff Contact: Ashwini Kantak, Assistant City Manager, 408-586-3053) Authorized and approved Travel to Monterey, CA for City Manager Steve McHarris to Attend the Innovating Commerce Serving Communities (ICSC) Conference scheduled for March 8 – 9, 2022.

COMMUNITY DEVELOPMENT

17. Provide Direction on Homelessness Task Force Recommendations (Staff Contact: Sharon Goei, Building Safety and Housing Director, 408-586-3260)
Building Safety and Housing Director Goei presented the staff report.

Mayor Tran stated support for the homelessness help center, safe parking areas, and prevention programs.

Vice Mayor Montano proposed a day work center and a feasibility study for a navigation center.

Councilmember Dominguez requested the City provide a dumpster or trash cans.

Councilmember Chua stated she supports everything except for the accountability item.

Councilmember Phan spoke about providing dumpsters and expanding the shower program.

The following people spoke during public comment:

1. Salman Siraj

2. Howard Beal

3. Christopher Denise

4. Loreto Dimaandal

5. Allysson McDonald

6. Norma Morales

7. Jacqueline Romero

8. Sanae Alexander

20 Item # C2.

March 01, 2022 Milpitas City Council Agenda Page 7

No motion was made for this item

COMMUNITY SERVICES AND SUSTAINABLE INFRASTRUCTURE

18. Review the Proposed Streets, Parks and Facilities Naming Policy and Provide Feedback to Staff (Staff Contact: Renee Lorentzen, Recreation and Community Services Director, 408-586-3409) This item was not heard.

LEADERSHIP AND SUPPORT SERVICES

19. Receive Report on 2022 Citywide Community Engagement Survey (Staff Contact: Ashwini Kantak, Assistant City Manager, 408-586-3053 and Charmaine Angelo, Public Information Officer, 408-586-3055)
This item was not heard.

20. Provide Direction on American Rescue Plan Act (ARPA) Funding for Council Priority Items and Modifications to the ARPA Investment Plan and Provide Input on Proposed Process for Future Changes to the ARPA Investment Plan (Staff Contact: Ashwini Kantak, Assistant City Manager, 408-586-3053 and Lauren Lai, Director of Finance, 408-586-3111) This item was not heard.
*21. Consider Resolution to Adopt Draft Goals and Performance Measures to Provide a Framework for Evaluating Potential City Participation in Middle-Income Workforce Housing Projects; and Consider Proposal to Convert the Turing Apartments to Low, Median, and Moderate Income Housing with Housing Bonds from the California Statewide Communities Development Authority Community Improvement Authority (Authority) (Staff Contact: Ashwini Kantak, Assistant City Manager, 408-586-3053)
* This item was taken out of order after item C16.

Assistant City Manager Kantak presented the staff report.

Co-Founder of Waterford Property Company, Sean Rawson, gave a presentation on the proposed project and answered questions from Council.

Council discussed the item, asked clarifying questions, and commented on concerns.

The following people spoke during public comment:

1. Lamar

2. Allysson McDonald

3. Sanae Alexander

4. Salman Siraj

5. Peter Zack
Senior Vice President from Fieldman Rolapp and Associates Un Chu Reardon provided clarifying information regarding the bonds.

After discussion, motion: to continue this item to the next meeting.

Motion/Second: Councilmember Dominguez / Councilmember Chua 21 Item # C2.

March 01, 2022 Milpitas City Council Agenda Page 8

Motion failed by the following vote: AYES: 2
NOES: 3 (Councilmember Phan, Vice Mayor
Montano, Mayor Tran)

After further discussion, motion: to approve Resolution No. 9127 adopting, Goals and Performance Measures to evaluate the City’s potential participation in future middle-income workforce housing projects; approve the proposal to convert the Turing Apartments located at 1355 McCandless Drive to low, median, and moderate income housing; approve Resolution No. 9128 authorizing the City to become a member of the CSCDA Community Improvement Authority; and authorize the City Manager to execute the Public Benefit Agreement without the blue line revisions included in Attachment 3 of the agenda packet.

Motion/Second: Councilmember Phan / Councilmember Dominguez Motion carried by the following roll call vote:

AYES: Dominguez, Phan, Mayor Tran

NOES: Councilmember Chua

ABSTAIN: Vice Mayor Montano

ADJOURNMENT

Mayor Tran adjourned the meeting at 11:52 PM.

22 Item # C2.

C:\Users\AzureAdmin\AppData\Local\Temp\tmp1F35.tmp

MILPITAS CITY COUNCIL

AGENDA PREVIEW LIST

April 5, 2022

CLOSED SESSION

INVOCATION (assigned to Councilmember Chua)

PRESENTATION
 Vietnamese-American Heritage Month (Proclamation)
 National Public Safety Telecommunications Week (Proclamation)

CONSENT CALENDAR

1. Receive City Council calendar for April 2022 (City Clerk) ,

2. Approve City Council Regular Meeting minutes of March 15, 2022 (City Clerk)

3. Preview list of items for April 19, 2022 (City Clerk)

4. Councilmember Request List (City Clerk)

PUBLIC HEARING

5. Conduct a public hearing to provide input on the FY2022-2025 draft Consolidated Plan and discuss funding allocations for FY2022-2023 Community Development Block Grant and the corresponding Annual Action Plan (Sharon Goei)

COMMUNITY DEVELOPMENT

COMMUNITY SERVICES

6. Receive a Presentation of Responses to Council Inquiries related to the 2023-27 Capital Improvement Program and Provide Direction to Staff (Steve Erickson)

7. Approve Updates to the City Facility Use Manual (Renee Lorentzen)

8. Receive a Presentation on the Draft Climate Action Plan Update and Provide Direction to Staff (Elaine Marshall)

9. Receive a Presentation of the Community Odor Study (Tony Ndah)

PUBLIC SAFETY

LEADERSHIP

REPORTS

23 Item # C3.

MILPITAS CITY COUNCIL

AGENDA ITEM REQUESTS
NOTE:

Deferred and
completed
items are not
listed
2022 OPEN
Request No. Topic Submitted by:

A, F, CM, or
CCM
Date
requested or
Rec'd Form
STATUS and/or DATE scheduled
on City Council meeting agenda:
1 Fee waiver for the Filipino American South Bay
Community to hold pop-up resource fair at a City
Park Dominguez A 3/1/2022
Staff has engaged with
representatives of the organization to
identify potential eligibility avenues
such as partnering with a Milpitas
based non-profit organization
consistent with the Policy.
2 Fee waiver for the Filipino American Real Estate
Professional Association to hold an ADU workshop
at the Community Center Chua A 3/1/2022
Staff engaged with representatives of
the organization to identify potential
eligibility avenues such as partnering
with a Milpitas based non-profit
organization consistent with the
Policy; scheduled for 3-15-2022
meeting
3 Requested a discussion be agendized in the next
three meetings to implement a faith-based circle
group for Milpitas that will meet quarterly Dominguez A 3/1/2022 The Pastor Fellowship group has
been meeting virtually and is planning
their first meeting in-person in April.

The group currently consists of 5-6
pastors, and the group is working
towards adding additional
representatives from more culturally
diverse parishes in the coming
months. Further, staff reached out to
a member of the group to discuss
potential areas of cooperation with
the City.
4 Police Department contact the Post Office to help
stop mail theft. Montano A 3/1/2022
As a matter of practice, the Police
Department regularly notifies the
Postal Inspector regarding cases of
mail theft.
24 Item # C4.

MILPITAS CITY COUNCIL

AGENDA ITEM REQUESTS
5 Create a plan for future solar paneling at City
facilities Montano A 3/1/2022
Scheduled for Spring Quarterly City
Council Workplan Items Prioritization
Discussion
6 Fee waiver for the Chamber of Commerce for either
the Oktoberfest or Arts and Wine festival Montano A 3/1/2022 Staff reached out to the Chamber.

The Chamber may seek a fee waiver
next fiscal year.
7 Agendize an update to the Lobbyist Ordinance for
the next meeting Chua A 3/1/2022
Scheduled for 3/15 City Council
Agenda
8 Proclaim Saturday, March 19, 2022, as Chez the
Ice Cream Man Appreciation Day Tran A 3/1/2022
Scheduled for 3/15 City Council
Agenda
9 Add a mobile stage to the Juneteenth event Tran A 3/1/2022 10 Fee waiver for the Christian Worship Center’s
Easter egg hunt Tran A 3/1/2022
Staff has engaged with
representatives of the organization.
11 Fee waiver for the Kiwanis Annual Crab Feed Tran A 3/1/2022 Scheduled for Council consideration
for the 3/15/2022.
12 A reform of the City’s Speed hump policy Tran A 3/1/2022 The review of the Speed Hump Policy
is an ongoing Council referral. Staff
will agendize the item for the April 8,
2022 Transportation Subcommittee
meeting
13 Requested a regional meeting of Police Chiefs to
address neighborhood safety Chua A 2/15/2022
Chief Hernandez discussed the
request at the February 17, 2022
Santa Clara County Police Chief
Association Meeting and there is no
interest from the contributing
agencies to participate in a
coordinated Neighborhood Public
Safety response at this time. The
Milpitas Police Department will
continue to provide our community
with evidence based crime prevention
Public Service Announcements
(PSA).
25 Item # C4.

MILPITAS CITY COUNCIL

AGENDA ITEM REQUESTS
14 Requested the City Attorney’s office explore
encampment ordinances form the City of Oakland,
Los Angeles, or other regional cities and would like
a discussion on the existing policies to be brought
back before the July recess. Tran A 2/15/2022
Scheduled for Spring Quarterly City
Council Workplan Items Prioritization
Discussion
15 Requested information on how early in the morning
trash collection can start and check if the time can
be pushed out so that it does not disrupt the nearby
neighborhood Dominguez A 2/8/2022
Staff will contact MSI review the
contract with MSI
16 Requested a program to help support the safety of
the shopping center, creating a partnership with the
businesses, and allocating at least $70,000 to
support security Dominguez A 2/1/2022
Post the pandemic lock-downs,
during the last six to nine months, the
Police Department has primarily
focused on crime prevention
community engagement events for
residential areas and has been in
process to expand such events to our
business community with crime
prevention information and events
anticipated to be scheduled for late
February/early March. The funding
allocation will be scheduled for the
Spring Quarterly City Council
Workplan Items Prioritization
Discussion.
17 Look into putting the City Hall address on the
building facade Montano A 2/1/2022
Staff will meet with Vice-Mayor
Montano to seek clarification
regarding this request
18 Designate the California Oak Tree as the City’s
official heritage tree Montano A 2/1/2022
Scheduled for Spring Quarterly City
Council Workplan Items Prioritization
Discussion
19 Evaluate reopening the childcare center with a non-
profit organization running the center Montano A 2/1/2022 20 Look into possible rebates for Commercial
businesses similar to Valley Water District’s
conservation rebate program for residents Montano A 2/1/2022 Staff will respond via email. 26 Item # C4.

MILPITAS CITY COUNCIL

AGENDA ITEM REQUESTS
21 Reduce the park rental fees for the Samuel Ayer
High School reunion Montano; Tran A
2/1/2022; ;
3/01/2022
Staff has engaged with
representatives of the organization to
identify potential eligibility avenues
such as partnering with a Milpitas
based non-profit organization
consistent with the Policy.
22 Requested an appropriation in an amount not to
exceed $250,000 to procure a contract to address
the streetlights that are pending fieldwork. Tran A 2/1/2022 At this time, staff has sufficient
Council approved resources to
address the remaining streetlight
outages; however, will bring relevant
actions for Council consideration, if
needed.
23 Requested a meeting for the subcommittee for the
Old Town Main Street be scheduled next month Montano A 1/18/2022 24 Requesting discussion on pickleball courts Chua A 1/18/2022 At the 1/25/2022 budget Study
Session direction was given to staff to
provide information at the CIP budget
meeting scheduled for 2/8/2022;
scheduled for approval on 3/15/2022
25 Requested that staff study the placement of a City
sign for the Milpitas Police Department and explore
the cost of a new sign Dominguez A 1/18/2021
Staff has been working on upgrading
signage and landscaping around the
Police Department and Public Works
Building.
26 Requested that Police Department work with
Safeway shopping center businesses, minority
owned small businesses, and the Chambers of
Commerce to provide a business watch
presentation Dominguez A 1/18/2021
Scheduled for Spring Quarterly City
Council Workplan Items Prioritization
Discussion
27 Explore a lease for the vacant land adjacent to the
Library for City use Tran A 1/18/2022
28 Requested staff to look into an ordinance for the
number of people allowed in a house. Montano A 12/7/2021 Scheduled for Spring Quarterly City
Council Workplan Items Prioritization
Discussion
27 Item # C4.

MILPITAS CITY COUNCIL

AGENDA ITEM REQUESTS
29 Requested staff check to see if the City has an
ordinance for house numbers Chua A 12/7/2021
Scheduled for Spring Quarterly City
Council Workplan Items Prioritization
Discussion
30 Requested staff to look at creating a pilot project to accommodate pickleball at Peter Gill
Park and would like a feasibility study with a goal of
making these courts multi-purpose Chua A 11/16/2021
Scheduled for Spring Quarterly City
Council Workplan Items Prioritization
Discussion
31 Request for the City to make the temporary third-
party food deliver fee caps permanent and add
additional provisions for enforcement Phan A 11/16/2021 Scheduled for Spring Quarterly City
Council Workplan Items Prioritization
Discussion
32 Staff to look into mural Art on Great Mall Parkway
on the VTA owned Light rail pillars Montano A 11/16/2021 Scheduled for Spring Quarterly City
Council Workplan Items Prioritization
Discussion
33 Look at creating an ordinance for a blanket
business permit that would grandfather and waive
all fees for any business started separate from their
original business if they are creating anything that is helping save lives during the pandemic. Dominguez A 11/2/2021 Scheduled for Spring Quarterly City
Council Workplan Items Prioritization
Discussion
34 Staff to look into County reimbursements to the City for the extra services provided to HomeKey. Chua A 11/2/2021 Staff to contact the County an issue
an Email/Information Memorandum
35 Host a Town Hall at City Hall in January, February,
and March for the community to share comments
about the issue of the unhoused. Tran A 11/2/2021
Scheduled for Spring Quarterly City
Council Workplan Items Prioritization
Discussion
28 Item # C4.

MILPITAS CITY COUNCIL

AGENDA ITEM REQUESTS
ACTIVE
Topic Submitted by:

A, F, CM, or
CCM
Date
requested or
Rec'd Form
STATUS and/or DATE scheduled
on City Council meeting agenda:
36 Park Champions Chua A 10/19/2021
Approved to move forward at the
1/11/2022 Council meeting
37 Have a picture of Albert Bogel Sr. put up in the
Senior Center Montano A 10/19/2021
Approved to move forward at the
1/11/2022 Council meeting
38 Requested that the City provide the Commissioners
with an appreciation gifts Chua A 10/19/2021
Approved to move forward at the
1/11/2022 Council meeting
39 Requested an agenda item on November 2 Council
meeting allowing the Council to rescind direction
given to 1355 California Circle and include direction
to allow the project application to move forward
without being tied to a specific plan Chua A 10/19/2021 At the 1/18/2022 council meeting,
Council voted 4-1 to rescind the
direction and direct staff and the
application to explore option one in
the presentation to amend the
General Plan and remove Council
policy for the preparation of a Specific
Plan
40 Requested the executive staff to look into reflective road markers as an effective way to reduce cars
doing donuts in the street Chua A 10/19/2021
At the 11/12/21 Transportation
Subcommittee, the Subcommittee
directed to bring back this request to
Council as part of the 2022-23 budget
process. Staff provided that
information at the CIP Study Session
on 2/8/2022.
41 Requested staff look into increasing the number of
Park and Recreation Commissioners from seven to
nine. Montano A 10/5/2021
Approved to move forward at the
1/11/2022 Council meeting
42 Requested Staff see if there is anything that can be done to address an increase in illegal dumping Phan A 10/5/2021 Staff issued an Information
Memorandum on February 25, 2022.
29 Item # C4.

MILPITAS CITY COUNCIL

AGENDA ITEM REQUESTS
43 Requested staff work with the Vice Mayor and
Mayor to explore and discuss building height limits
near the hillside by January 2022 Tran A 9/21/2021
Approved to move forward at the
1/11/2022 Council meeting
44 Requested the City extend the outdoor dining
options through March of next year Phan A 9/21/2021
Planning Director to provide
information on current outdoor dining
extension
45 Work with the school district to have a contest to
create art murals for the pillars on Main Street Montano A 9/7/2021 Approved to move forward at the
1/11/2022 Council meeting
46 Partner with the Rotary Club of Silicon Andhra to
promote the stem cell donor outreach with a
webinar and campaign to help increase the number
of donors Chua A 8/17/2021
Staff will include the stem cell donor
information in regularly scheduled
wellness event
47 Include a bust of Maria Lemire on the Mural in front of the Senior Center Montano A 8/17/2021
Approved to move forward at the
1/11/2022 Council meeting
48 Create an “Incentive Corner,” which will be a sub-
page with links to different freebies, grants, and
incentives from the City and the regions, including
the Water District and Silicon Valley Clean Energy Chua A 8/17/2021 Staff will implement this item in March
2022
49 City to highlight mental health resources on the
website Dominguez A 8/17/2021 Staff will issue an Email 50 Requested staff look into donating old, obsolete,
noncompliance items from the Fire Department to
Sister City Dagupan Chua A 8/9/2021
Approved to move forward at the
1/11/2022 Council meeting
51 Look into allowing outdoor music and would like the
ordinance brought back to Council. Montano A 8/5/2021
Approved to move forward at the
1/11/2022 Council meeting
52 Look into opening up the Senior Center on
Saturdays for half a day Chua A 8/5/2021
Approved to move forward at the
1/11/2022 Council meeting
53 Look into bringing back a roller rink Montano A 8/5/2021 Approved to move forward at the
1/11/2022 Council meeting
30 Item # C4.

MILPITAS CITY COUNCIL

AGENDA ITEM REQUESTS
54 Look into how the City can be a resource for small
businesses to help guide them on what to do in
terms of ADA (Americans with Disabilities Act)
requirements due to the quick changes made to
facilities during the pandemic Chua A 8/5/2021
SVEDA/SV Joint Venture hosted the
“SV Small Businesses & ADA
Compliance” webinar on 11/3/21.

Several Milpitas business reps, &
staff from Econ. Dev. & Building
participated. Staff met with reps from
CA Comm. on Disability Access to
discuss business education &
outreach.
55 Discussion in the next fiscal year, to have a sliding scale permitting program for seniors and low-
income residence for necessary safety renovations Tran A 5/4/2021 8/09/2021 Council voted 5-0 to move
this item forward and modify the
existing Milpitas Assistance program
to include seniors; Staff will bring this
item for funding consideration as part
of the FY 2022-23 budget process
56 Discussion to reduce the City’s Senior Center
facilities deposit Montano A 5/4/2021
8/09/2021 Council voted 5-0 to refer
this item as part of the development
of the FY 2022-23 Master Fee
Schedule
57 Requested that the City have mini-libraries in the
low-income areas of the City. Montano A 4/20/2021
8/09/2021 Council voted 3-1-1 to
move this item forward, staff to follow
up with Vice Mayor Montano on
specific vision. Staff met with the Vice
Mayor. The City will continue to
facilitate libraries as needed but will
not take a lead role in funding or
operating them.
58 Staff to create a plan on how to increase the
number of local businesses doing business with the
City Chua A 4/6/2021
At 8/9/2021 Council meeting, Council
voted that this item may have to come
back for additional discussion
because there may be some legal
considerations.
59 Staff to look into creating a rose garden with a
children’s memorial site Montano A 4/6/2021
8/09/2021 Council voted 4-1 to
discuss details with Vice Mayor
Montano and refer this item as part of
the development of the 2023-2027
CIP
31 Item # C4.

MILPITAS CITY COUNCIL

AGENDA ITEM REQUESTS
60 Staff to look into creating “Welcome to Milpitas”
signs in key areas of in the City Montano A 4/6/2021
8/09/2021 Council voted 5-0 to move
this item forward and Council
provided direction that the signs
should align with the efforts currently
underway with the Metro Plan and
Main Street Gateway Specific Plan
process and work with private
development. Staff was directed to
work with Vice Mayor on additional
clarification. In November, Vice Mayor
61 Staff to provide information to place a measure on
the ballot to change the directly elected Mayor to a
rotational at-large position Tran CCM 3/16/2021
To be brought forward in Spring of
2022, once new City Attorney is in
place; scheduled for 3/15/2022
62 Staff to provide information on a landmark policy for the City of Milpitas Tran A 3/16/2021
8/09/2021 Council voted 5-0 to move
this item forward; this item will be
included for funding consideration in
the development of the FY 2023-27
CIP for assessment of historical and
cultural resources and development
of landmark policy
63 Amendment to the existing ordinance for third-party
food delivery vendor services to prohibit regulatory
response fees Phan A 2/16/2021
Agendized for discussion on
3/16/2021, deferred to 4/06/2021; CC
direction for City Attorney to prepare a
report; At the 11/12/2021
Transportation Subcommittee, the
Subcommittee directed to bring back
this request to Council as part of the
FY 2022-23 budget process.
64 Ordinance to ban vaping in the City Montano A 12/15/2020 Ordinance regarding a ban on use in
certain areas adopted by Council on
6/15/2021. Policy related to access to
products will be brought forward in
Spring 2022
65 Review City policy on speed bumps Tran A 12/15/2020
Presented to Transportation
Subcommittee on 02/12/2021;voted
on 3/16/2021 to revisit this item;
Scheduled for April 8, 2022
Transportation Subcommittee
Meeting
32 Item # C4.

MILPITAS CITY COUNCIL

AGENDA ITEM REQUESTS
66 Consider change in term limits for Mayor +
Councilmembers Montano A 6/16/2020
8/4/2020: Voted 3 -2 to pursue;
2/02/2021 to agendize for a future
meeting; 3/16/2021 voted 3-1-1 to
move forward. Scheduled for
3/15/2022
33 Item # C4.

CITY OF MILPITAS

AGENDA REPORT
(AR)

Item Title: Adopt a Resolution Granting Acceptance of the Public Improvements for the Ellison Park Residential Project Public Improvement Plan No. 2-1220; Approve a Reduction in the Performance Bond to $79,900.00 Which Shall Remain in Effect for the Duration of the One-Year Warranty Period; and Grant Authorization to the City Engineer to Release the Performance Bond After the One-Year Warranty Period Without Further City Council Action Provided All Required Warranty Work is Completed to the Satisfaction of the City Engineer (Staff Contact: Steve Erickson, Engineering Director/City Engineer, 408-586-3301)

Category: Consent Calendar-Community Development
Meeting Date: 3/15/2022
Recommendation: Adopt a resolution granting acceptance of the public improvements for the Ellison Park Residential Project Public Improvement Plan No. 2-1220; approve a reduction in the performance bond to $79,900.00 which shall remain in effect for the duration of the one-year warranty period; and grant authorization to the City Engineer to release the performance bond after the one-year warranty period without further City Council action provided all required warranty work is completed to the satisfaction of the City Engineer.

Background:

On January 3, 2017, the City Council approved the Final Map for Tract No. 10372, Community Facilities District 2008-1 (Annexation No. 11), public improvement plans, and the Subdivision Improvement Agreement for the Ellison Park Residential Project located near 1757 Houret Court, and 231, 247 and 271 Houret Drive.

Public improvements completed as part of the Project included construction of curb, gutters, sidewalk, driveway aprons, storm water treatment facilities, utility laterals, streetlights, landscaping and other miscellaneous items of work along Montague Expressway, Houret Drive and Houret Court.

Analysis:

The Developer, New Home Company Northern California LLC, has completed all required public improvements in accordance with the approved plans and the Subdivision Improvement Agreement, and they are now ready for acceptance by the City Council and commencement of the 1-year warranty period.

Staff recommends the City Council adopt a Resolution (Attachment 1) granting acceptance of the public improvements, approve a reduction of the performance bond to $79,900.00, which is 10% of the security’s original value, and grant authorization to the City Engineer to release the performance bond after the one-year warranty period without further City Council action provided all required warranty work is completed to the satisfaction of the City Engineer.

Policy Alternatives:

Alternative 1:

Not approve resolution granting acceptance of public improvements.

Pros: None
34 Item # C5.

Cons: Not granting acceptance of the completed public improvements would violate the terms of the Subdivision Improvement Agreement and would limit public use of the improvements.

Reason not recommended: Granting acceptance of public improvements is the final step for the completion and close-out of the Project and would allow public use of sidewalk improvements. Staff recommends adoption of a resolution granting acceptance of public improvements.

Fiscal Impact:

The public improvements have been constructed by the Developer as a requirement of the Subdivision Improvement Agreement. The City will have perpetual maintenance responsibilities for the improvements following the acceptance of the project and completion of the 1-year warranty period. The Public Works Department provides future maintenance of newly accepted City infrastructure through budget appropriations as the Council adopts the operating budget.

California Environmental Quality Act:

Granting acceptance of public improvements and reducing faithful performance bond for public improvements are not considered projects under CEQA as there will be no direct or reasonably foreseeable indirect physical change in the environment. Further, environmental analysis of the construction of public improvements was analyzed at the time the overall project, including the Subdivision Improvement Agreement was considered and approved by the City Council.

Recommendation:

Adopt a resolution granting acceptance of the public improvements for the Ellison Park Residential Project Public Improvement Plan No. 2-1220; approve a reduction in the performance bond to $79,900.00 which shall remain in effect for the duration of the one-year warranty period; and grant authorization to the City Engineer to release the performance bond after the one-year warranty period without further City Council action provided all required warranty work is completed to the satisfaction of the City Engineer.

Attachments:

1. Resolution
35 Item # C5.

RESOLUTION NO. ______

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MILPITAS APPROVING ACCEPTANCE AND

REDUCING PERFORMANCE BOND FOR THE ELLISON PARK RESIDENTIAL PROJECT AND

GRANTING AUTHORIZATION TO THE CITY ENGINEER TO RELEASE THE PERFORMANCE BOND

AFTER THE ONE-YEAR WARRANTY PERIOD

WHEREAS, the City Council of the City of Milpitas on January 3, 2017, approved the plans and specifications for the Ellison Park Residential Project, (the “Project”) to be completed by The New Home Company Northern California, LLC as part of its Residential Project on 1757 Houret Court, and 231, 247 and 271 Houret Drive; and WHEREAS, the City of Milpitas has heretofore entered into a subdivision improvement agreement on January 3, 2017 with The New Home Company Northern California, LLC, for the Ellison Park Residential Project; and WHEREAS, The New Home Company Northern California, LLC , as Principal, and Philadelphia Indemnity Insurance Company, as Surety, executed and posted a certain Performance Bond No . PB02497500464 conditioned upon the faithful performance of the provisions of said subdivision improvement agreement and upon the faithful performance of all improvement work required thereunder; and
WHEREAS, said public improvements for the Ellison Park Residential Project have been completed and the subdivision improvement agreement provides that the security shall extend for a period of one year after the date of acceptance of said improvements to cover the warranty period of said improvements under said agreement; and WHEREAS, the City Council is willing to consent to a reduction in the penal sum of said security during said one- year warranty period; and
WHEREAS, the City Engineer of the City of Milpitas has made a final inspection of said improvemen ts for the Ellison Park Residential Project and recommends that the City Council of the City of Milpitas accept the same as constructed in accordance with the approved plans and specifications.

NOW, THEREFORE, the City Council of the City of Milpitas hereby finds, determines, and resolves as follows:

1. The City Council has considered the full record before it, which may include but is not limited to such things as the staff report, testimony by staff and the public, and other materials and evidence submitted or provided to it. Furthermore, the recitals set forth above are found to be true and correct and are incorporated herein by reference.

2. Those certain public improvements constructed as part of the Ellison Park Residential Project, are hereby accepted as constructed in accordance with the approved plans and specifications upon recommendation of the City Engineer of the City of Milpitas.

3. The penal sum of the faithful performance bond securing said improve ments may be reduced to the sum of $79,900.00, upon request of Principal and Surety, with said penal sum as reduced to apply from the date of completion and acceptance of said improvements and to extend for the balance of the term of one year of said security. Provided, however, that nothing herein contained shall in any way be deemed to be a waiver, release or relinquish by City of any obligations imposed upon the developer or his surety, or sureties, by law or by the above referend public improvement agreement, save and except as expressly set forth herein.

4. The City Council grants authorization to the City Engineer to release the performance bond after the one -year warranty period without further City Council action provided all required warranty work is completed to the satisfaction of the City Engineer.

36 Item # C5.

PASSED AND ADOPTED this _____ day of _________________, 2022, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

ATTEST: APPROVED:

____________________________ ___________________
Mary Lavelle, City Clerk Wendy Wood, City Clerk Rich Tran, Mayor

APPROVED AS TO FORM:

____________________________
Christopher J. Diaz, City Attorney
37 Item # C5.

CITY OF MILPITAS

AGENDA REPORT
(AR)

Item Title: Adopt a Resolution Granting Acceptance of the Completed Public Improvements for the Lucente Residential Project, Public Improvement Plans No. 2-1212, and Approve a Reduction of the Faithful Performance Bond to $85,500.00 Which Shall Remain in Effect for the Duration of the Warranty Period, and Grant Authorization to the City Engineer to Release the Performance Bond After the One-Year Warranty Period Without Further City Council Action Provided All Required Warranty Work has Been Completed to the Satisfaction of the City Engineer (Staff Contact: Steve Erickson, Engineering Director/City Engineer, 408-586-3301)

Category: Consent Calendar-Community Development
Meeting Date: 3/15/2022
Recommendation: Adopt a resolution granting acceptance of the completed public improvements for the Lucente Residential Project, Public Improvement Plans No. 2-1212, and approve a reduction of the faithful performance bond to $85,500.00 which shall remain in effect for the duration of the warranty period, and grant authorization to the City Engineer to release the performance bond after the one-year warranty period without further City Council action provided all required warranty work has been completed to the satisfaction of the City Engineer.

Background:

On January 11, 2016, the City Council approved the Final Map for Tract No. 10375 and the Subdivision Improvement Agreement and public improvement plans for the Lucente Residential Project located at 1256 Piper Drive. Public improvements to be constructed with the Project include curb, gutters, sidewalk, driveway aprons, storm water treatment facilities, utility laterals, streetlights, landscaping and other miscellaneous items of work along Piper Drive and Garden Street.

Analysis:

The Developer, KB Homes South Bay Inc. has completed all public improvements in accordance with the Subdivision Improvement Agreement and the approved public improvement plans. The completed public improvements are now ready for City Council acceptance and commencement of the 1-year warranty period.

Staff recommends the City Council adopt a Resolution (Attachment 1) granting acceptance of the completed public improvements, approve a reduction of the performance bond to $85,500.00 which is 10% of the security’s original value, and grant authorization to the City Engineer to release the performance bond after the one-year warranty period without further City Council action provided all required warranty work is completed to the satisfaction of the City Engineer.

Policy Alternatives:

Alternative 1:

Not approve resolution granting acceptance of public improvements.

Pros: None
38 Item # C6.

Cons: Not granting acceptance of the completed public improvements would violate the terms of the Subdivision Improvement Agreement and would limit public use of the improvements.

Fiscal Impact:

California Environmental Quality Act:

Recommendation:

Adopt a resolution granting acceptance of the completed public improvements for the Lucente Residential Project, Public Improvement Plans No. 2-1212, and approve a reduction of the faithful performance bond to $85,500.00 which shall remain in effect for the duration of the warranty period, and grant authorization to the City Engineer to release the performance bond after the one-year warranty period without further City Council action provided all required warranty work has been completed to the satisfaction of the City Engineer.

Attachments:

1. Resolution
39 Item # C6.

RESOLUTION NO. ______

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MILPITAS APPROVING ACCEPTANCE AND

REDUCING PERFORMANCE BOND OF THE LUCENTE RESIDENTIAL PROJECT AND GRANTING

AUTHORIZATION TO THE CITY ENGINEER TO RELEASE THE PERFORMANCE BOND AFTER THE

ONE-YEAR WARRANTY PERIOD

WHEREAS, the City Council of the City of Milpitas on January 11, 2016, approved the plans and specifications for the Lucente Residential Project, (the “Project”) to be completed by KB Home South Bay Inc., as part of its Residential Project on 1256 Piper Drive; and
WHEREAS, the City of Milpitas has heretofore entered into a subdivision improvement agreement on January 11, 2016 with KB Home South Bay, Inc, for the Lucente Residential Project; and WHEREAS, KB Home South Bay, Inc., as Principal, and The Hanover Insurance Company, as Surety, executed and posted a certain Performance Bond No. 1047968 conditioned upon the faithful performance of the provisions of said subdivision improvement agreement and upon the faithful performance of all improvement work required thereunder; and WHEREAS, said public improvements for the Lucente Residential Project have been completed and the subdivision improvement agreement provides that the security sh all extend for a period of one year after the date of acceptance of said improvements to cover the warranty period of said improvements under said agreement; and WHEREAS, the City Council is willing to consent to a reduction in the penal sum of said security during said one- year warranty period; and
WHEREAS, the City Engineer of the City of Milpitas has made a final inspection of said improvements for the Lucente Residential Project and recommends that the City Council of the City of Milpitas accept the same as constructed in accordance with the approved plans and specifications.

NOW, THEREFORE, the City Council of the City of Milpitas hereby finds, determines, and resolves as follows:

1. The City Council has considered the full record before it, which may include but is not limited to such things as the staff report, testimony by staff and the public, and other materials and evidence submitted or provided to it. Furthermore, the re citals set forth above are found to be true and correct and are incorporated herein by reference.

2. Those certain public improvements constructed as part of the Lucente Residential Project, are hereby accepted as constructed in accordance with the approved plans and specifications upon recommendation of the City Engineer of the City of Milpitas.

3. The penal sum of the faithful performance bond securing said improvements may be reduced to the sum of $85,500.00, upon request of Principal and Surety, with said p enal sum as reduced to apply from the date of completion and acceptance of said improvements and to extend for the balance of the term of one year of said security. Provided, however, that nothing herein contained shall in any way be deemed to be a waiver, release or relinquish by City of any obligations imposed upon the developer or his surety, or sureties, by law or by the above referend public improvement agreement, save and except as expressly set forth herein.

4. The City Council grants authorization to the City Engineer to release the performance bond after the one-year warranty period without further City Council action provided all required warranty work is completed to the satisfaction of the City Engineer.

40 Item # C6.

PASSED AND ADOPTED this _____ day of _________________, 2022, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

ATTEST: APPROVED:

____________________________ ___________________
Mary Lavelle, City Clerk Wendy Wood, City Clerk Rich Tran, Mayor

APPROVED AS TO FORM:

____________________________
Christopher J. Diaz, City Attorney
41 Item # C6.

CITY OF MILPITAS

AGENDA REPORT
(AR)

Item Title: Adopt a Resolution Approving and Authorizing the City Manager to Execute a Six- year Sole-Source Services Agreement with Symbium Corporation for the Unlimited Use of Proprietary Web-based Tools (Symbium PlanCheck and Build Business) as a Cloud-based Service for the Not-To-Exceed Amount of $210,000.00 and Approve appropriation of $90,000 from Permit Automation Fund 506 for this project (Staff Contact: Ned Thomas, Planning Director, 408-586-3273)

Category: Consent Calendar-Community Development
Meeting Date: 3/15/2022
Recommendation: Adopt a resolution approving and authorizing the City Manager to execute a six-year sole-source services agreement with Symbium Corporation for the unlimited use of proprietary web-based tools (Symbium Plancheck and Build Business) as a cloud-based service for the not-to-exceed amount of $210,000.00. Approve appropriation of $90,000 from Permit Automation Fund 506 to this project.

Background:

In 2020, the City of Milpitas entered into a three-year sole-source agreement with Symbium Corporation to use its cloud-based “Build” software to help Milpitas residents navigate the City’s zoning regulations for Accessory Dwelling Units (ADUs). Specifically, Build allows homeowners to quickly learn if they can build an Accessory Dwelling Unit (ADU) on their property, explore designs from ADU pros or sketch their own, and become informed on the cost and next steps for getting an ADU designed, approved, and built.

The City now proposes to expand its relationship with Symbium for access to two additional web-based tools called Plancheck and Build Business. These proprietary tools are eligible for sole-source procurement, and both will empower residents to easily access and apply local zoning requirements to their own properties. These tools will also increase staff efficiency by significantly reducing time spent repeatedly answering questions about site feasibility and selection. Interactive tools like Plancheck and Build Business do not replace personalized planning and zoning assistance in person, via email, or over the phone. Rather, these services will enhance customer service by adding a visual element to help City staff communicate more effectively with customers and provide clear feedback and instructions.

Implementation of Plancheck and Build Business will help achieve the following key goals of the City’s Economic Development Strategy (May 2020), IT Strategic Plan (June 2020), and the Development Services Study (April 2019):
 Improved Customer Services to both external in internal parties  Transition to electronic submittal for all development permit applications  Improved Staff Productivity
 Address delays and challenges in City permitting processes and permitting requirements 42 Item # C7.

 Facilitate efficient development review, zoning verification, permit scoping, and fee calculations.

In January 2022, the City of Milpitas was also awarded a free one-year license to Symbium Plancheck, through a no-cost pilot program offered through the Association of Bay Area Governments (ABAG). This will be in addition to the requested agreement; Symbium is still offering the City an additional year free of charge + the ABAG pilot. Thus, the City will get six years of service for the cost of four years, along with the Build Business module at no cost. ABAG also determined that Symbium was eligible for Sole Source.

See attachment 3.

Analysis:

After conducting a good faith review of the available sources and pursuant to Milpitas Municipal Code Section I-2-3.09 (Sole Source Procurement), the City’s Purchasing Agent has determined that Symbium Corporation is the only source to provide a range of cloud -based software-as-a-service (“SaaS”) solutions that allow End - Users to streamline specific planning, zoning permitting, or other government -facing and constituent facing processes.

The Planning Department does not currently have an online portal for residents, developers, or contractors to submit plan sets and other materials for review. The current system was set up as a temporary response to the pandemic and requires applicants to submit their development applications via email, which causes delays when required items are missing. Symbium Plancheck would upgrade and streamline the permit application system by facilitating the following online services:
 Initiate feasibility analysis and regulatory review of proposed development projects. This would include residential permit applications eligible for streamlined review under recent state legislation (SB 330, SB 35, SB 9).
 Identify appropriate application forms based on the proposed project and inform the applicant about specific information to submit for each type of permit.  Provide consistent feedback and analysis in response to inquiries from prospective applicants and store information in a location that is accessible to all staff members in the department  Allow online submittal of plans for residential, commercial, and industrial development projects, and other planning-related permits (tree removal, special events, ADUs, etc.).  Decrease training times by enabling new staff to easily filter through the most complex zoning codes and begin compliance reviews on day one.
 Integrate with permit tracking system by pulling in information (reduces duplicate entries).

Policy Alternatives:

Alternative 1: Do not enter into a contract with Symbium Corporation for use of their proprietary software (Plancheck and Build Business) to enhance customer service.

Pros: The City would save $210,000 in costs.

Cons: The City would miss an opportunity to achieve the customer service and process streamlining goals outlined in its strategic plans for Economic Development, IT, and the development review process.

Reason not recommended: The City has benefitted from its current sole-source agreement with Symbium Corporation for use of its online ADU site analysis tool. The purchase and implementation of Plancheck and Build Business will ensure that the City leads in technology-based solutions to enhance customer services and increase productivity.

43 Item # C7.

Fiscal Impact:

The City of Milpitas was awarded a free one-year license to Symbium Plancheck through a no-cost pilot program offered through the Association of Bay Area Governments (ABAG). A one-time fee of $210,000 covers configuration and maintenance for five years of service, with an additional year funded through the grant. This project will be funded by Permit Automation Fund 506 through the shifting of $210,000 IT staff cost to American Rescue Plan Act (ARPA) funding. The total contract of $210,000 was partially appropriated in the amount of $120,000, which leaves a remaining appropriation request of $90,000.

California Environmental Quality Act:

A contract for the use of cloud-based software services is not a project under CEQA. It is instead more akin to a continuing administrative activity pursuant to CEQA Guideline 15378(b)(2) which is defined to include the purchase of supplies and other administrative activities to ensure the organization has the tools available to provide various services to its residents.

Recommendation
Adopt a resolution approving and authorizing the City Manager to execute a six-year sole-source services agreement with Symbium Corporation for the unlimited use of proprietary web-based tools (Symbium Plancheck and Build Business) as a cloud-based service for the not-to-exceed amount of $210,000.00.

Approve appropriation of $90,000 from Permit Automation Fund 506 to this project.

Attachments:

1. Resolution

2. Symbium Corporation Exhibit A-2 – ORDER

3. Sole Source Justification Form

4. ABAG Letter confirming Milpitas’ Award of Free Plancheck License

5. ABAG Symbium Sole Source Justification Memo

6. BCF

44 Item # C7.

Resolution No.

RESOLUTION NO. _____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MILPITAS APPROVING AND

AUTHORIZING THE CITY MANAGER TO EXECUTE A SIX-YEAR SOLE-SOURCE SERVICES

AGREEMENT WITH SYMBIUM CORPORATION FOR UNLIMITED USE OF PROPRIETARY WEB-

BASED TOOLS (PLANCHECK AND BUILD BUSINESS) AS A CLOUD-BASED SERVICE FOR THE NOT-TO-EXCEED AMOUNT OF $210,000.00

WHEREAS, after conducting a good faith review of the available sources and pursuant to Milpitas Municipal Code Section I -2-3.09 (Sole Source Procurement), the City’s Purchasing Agent has determined that Symbium Corporation is the only source to provide a range of cloud-based software-as-a-service (“SaaS”) solutions that allow End- Users to streamline specific planning, zoning permitting, or other government -facing and constituent facing processes , and

WHEREAS, Symbium provides Services under the trade names identified in an applicable Order and described on Symbium’s Site.

NOW, THEREFORE, the City Council of the City of Milpitas hereby finds, determines, and resolves as follows:

Furthermore, the recitals set forth above are found to be true and correct and are incorporated herein by reference.

2. The City Manager, or his designee, is hereby authorized to execute, deliver, and perform the Agreement Between the Symbium Corporation and the City of Milpitas Granting Program Funds for the Symbium Build Business and Plancheck Funds, attached hereto as Exhibit A

3. The City Council hereby approves Symbium Corporation as the sole source provider for the procurement of Symbium Build Business and Plancheck pursuant to Milpitas Municipal Code Section I-2-3.09 (Sole Source Procurement).

4. The City Council hereby approves the purchase of the software-as-a-service from Symbium Corporation and authorizes the City Manager, or his designee, to execute the contract and related documents for the purchase in the Not-To-Exceed amount of $210,000.00.

PASSED AND ADOPTED this day of , 2022, by the following vote: AYES:

NOES:

ABSENT:

ABSTAIN:

ATTEST: APPROVED

__________________________________ ______________________________________ Wendy Wood, City Clerk Rich Tran, Mayor

APPROVED AS TO FORM:

_____________________________________
Christopher J. Diaz, City Attorney
45 Item # C7.

Page 1 of 2 ends

EXHIBIT A-2 – ORDER This Order, once executed, is governed by the Symbium Master Licensing Agreement between Symbium Corp. (“Symbium”) and the City of Milpitas (“Licensee”) (the “Agreement”). All fees set forth herein are due pursuant to the terms of the Agreement. All capitalized terms used but not defined herein will have the meaning assigned to them in the Agreement. This Order shall control in the event of any conflict between this Order and the Agreement. Prepared For: City of Milpitas Order No.: MILPITAS-002 Make Payment to: Symbium Corp. City of Milpitas Avery Stark City of Milpitas 455 E. Calaveras Blvd. Milpitas CA 95035 408-586-3288 [email protected] Initial Term: 6 years Symbium Corp. 912 Cole Street, #375 San Francisco, CA 94117 [email protected] Payment Frequency: Annually

Additional Terms and Conditions: 1. All fees due under this Order shall be paid pursuant to the Agreement. The initial fees due under this Order shall be due upon mutual execution. 2. Termination for Convenience. Notwithstanding Section 14 of the Agreement, Licensee (the City) may terminate this Order at any time without cause upon ninety (90) days’ prior written notice to Symbium. Symbium shall issue a refund of prepaid but unused fees to Licensee in the event Licensee terminates this Order for convenience. 3. 1Fees for year 1 of Plancheck shall be waived as part of the Association of Bay Area Governments (“ABAG”) Plancheck Pilot program. Fees for year 2 of Plancheck shall be waived so long as years 3-6 (4 years) are paid in advance. Fees for ongoing maintenance of Plancheck for years 7-9 shall not exceed $20,000/yr. 4. 2Fees for a subscription to Symbium Build Business are $20,000/year and shall be waived for the first 5 years so long as there is an active Plancheck subscription. 5. The commencement date of each licensed Service shall be the last signature date of this Order and the renewal dates for all Symbium Services, including those under previous Orders, shall be independent of this Order such that any prior Service renewals shall not be extended to run concurrently with the current Order. 6. Unless noted otherwise, the pricing above includes initial implementation and training to ensure proper use. 7. Any additional Solutions or Services requested by Licensee that exceed the scope of this Order shall be subject to a separate signed Order between the Parties. 8. Support is available by email: [email protected]. [Signature page follows] SaaS Solution / Service Description Billing Annually
Symbium Plancheck
• Development and implementation of a city planner-facing web application to streamline residential site plan reviews. • Option to connect to Symbium.com and accept public submissions of permit applications for residential projects. • Configured in collaboration with Licensee. • Quarterly maintenance and updates. $210,000 prepaid for 6 years with year 1 at no cost1
Symbium Build Business
• Configuration and public deployment of a public-facing business zoning tool for the City to answer whether a business is allowed at a particular address, which processes apply, and which forms to complete. • Configured in collaboration with Licensee. • Quarterly maintenance and updates. $02
Total Due in Advance $210,000
46 Item # C7.

Page 2 of 2 ends

ACCEPTED AND AGREED BY: Symbium Corp. City of Milpitas BY: DATE: BY: DATE: NAME: Leila Banijamali NAME: TITLE: CEO TITLE: EMAIL: [email protected] EMAIL:
47 Item # C7.

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CITY OF MILPITAS

SOLE SOURCE OR

SOLE BRAND (STANDARDIZATION) REQUEST

THIS FORM MUST BE COMPLETED AND APPROVED

PRIOR TO ANY PROCUREMENT
_____________________________________________________________________ ____
When a request is made for a sole source procurement or to restrict procurement to a specific brand (standardization) for the acquisition of supplies, equipment and materials or services (except for consultant services or contracts with other governmental agencies), as applicable, the requesting department must complete this form consistent with Section I-2-3.06 - Sole Source Procurement or Section I-2-3.14 - Standardization.

Per the aforementioned Municipal Code section, a sole source contract is authorized when the Purchasing Agent determines in writing, after conducting a good faith review of available sources, that only one viable source exists for the required supplies, material, equipment, or general service, or that there is a compelling reason for using only one source. The detailed information you are providing will facilitate such a determination.

Per the aforementioned Municipal Code section, a standardization of supplies, materials or equipment, including information and communication technology products and services and subsequent sole brand procurement is authorized, when the Purchasing Agent has determined that it is required for the health, safety or welfare of the people or employees of the City, or that cost savings have been demonstrated.

Among the fact ors that may be considered in determining to standardize on a single brand or trade name are that:
a) In order to acquire a specific product(s) for the purpose of conducting a field test or experiment to determine the product's suitability for use by the City. b) When it is required for proper operation or function to match other products with respect to the repair or expansion or completion of a system or program already in use by the City, including, but not limited to, technology purchases required to achieve interoperability with existing hardware, software, systems or programs.
c) In order to achieve significant cost savings based upon consideration of the following cost factors: (1) Timeliness and quality of installation, repair and maintenance; (2) Quality of user training; (3) Supplies and replacement parts; (4) Modification of existing equipment, materials or systems; (5) Future upgrades and updates; (6) Estimated amount and cost of reasonably foreseeable future 48 Item # C7.

V.011322

purchases of equipment that would be required t o be compatible or functional with the product which is the subject of the standardization determination; and/or (7) Administrative costs.

This form is not necessary for contracting for professional services or contracting with other governmental agencies.

Please answer in the space provided, or in an attachment address by specific reference, each question listed below in your justification. Be sure to answer each part of each question as each must be addressed; no response can be not applicable. Failure to respond fully to any of the questions may result in delay or rejection of the request due to inadequate justification. If additional information is necessary, please attach additional page(s) and/or documents, as needed.

1. This is a request for a (circle one) Sole Source Sole Brand exception.

2. Using appropriate detail, including brand name and model number, briefly describe the product you wish to procure. In the case of a general service use enough detail to clearly describe to someone not famili ar with your department’s operation what you are procuring.

If it is your assertion that the manufacturer or distributor is the only authorized source in the Bay Area, Northern California; or whatever the claim is; please substantiate that with a letter from the manufacturer or distributor. The letter must be on their stationary but can be sent via email. Attach a copy to this form.

Milpitas has an existing partnership and three-year term sole source agreement with Symbium for Build. This web-based app allows users to comprehend complex city planning regulations more easily. Specifically, Build allows property owners to easily learn if they can build an Accessory Dwelling Unit (ADU) on their land, explore designs from ADU pros or sketch their own, and become informed on the cost and next steps for getting an ADU designed, approved, and built.

The Planning Department is looking to expand that partnership to provide additional web-based services that are different products offered by Symbium, and suitable to the Sole Source procurement process. Discussed below is an outline of the two additional web-based tools the Department is requesting.

Symbium proposes configuring Symbium Plancheck
(https://symbium.com/plancheck) for the City of Milpitas. Plancheck is a web-based city planner and citizen-facing tool that streamlines residential site plan reviews.

City planners will enter an address into the tool and select any project scope. The tool will instantly display only the relevant zoning regulations that will impact the 49 Item # C7.

V.011322

project, often even performing an instant compliance check against non-discretionary regulations.

Symbium proposes to configure Symbium Build Business
(https://symbium.com/buildbusiness) for the City of Milpitas. Build Business is a webbased citizen facing tool the allows the public to understand what type of business is allowed at a particular address.

3. Please provide the total not -to-exceed amount of the purchase and/or agreement/contract as well as the requested term. (if buying software, the City’s standard term is five years)
Total Cost: $ 210.000.00 Term: 6 years
Detailed cost breakdown explanation per year:
• The City of Milpitas was awarded a free one-year license to Symbium Plancheck, through a no -cost pilot progr am offered through the Association of Bay Area Governments (ABAG). ABAG also determined that Symbium was eligible for Sole Source. See attachment F.

• A one-time fee of $ 210,000, which covers configuration and the maintenance for five years of service and any required updates due to zoning code changes;

4. For goods: What are the unique performance features of the product/brand requested that are not available in any other product/brand? For services: What unique qualifications, rights, degree s, certifications, licenses and/or experience does this vendor possess?
Characteristics Uniquely Positioning Symbium to Deliver these two services.

Symbium’s qualifications and experience, which make it uniquely positioned to deliver in the categories of process improvements and economic/real estate analysis, can best be measured by the following:
• Team. Developing these regulation-enabled Complaw systems requires a well- rounded team with complementary skills in law, planning, architecture, and logic programming.

50 Item # C7.

V.011322

• Experience. Symbium secured its position as a Complaw leader in the local planning space for cities and counties across California with the launches of Symbium Build (parcel-specific ADU feasibility in California) and Symbium Build+ (jurisdiction-wide ADU and economic insights). The company has been empowering the public via citizen-facing planning tools and now makes a giant leap forward with Symbium Plancheck and the tool’s ability to streamline compliance review and permit approvals across residential zoning codes.

• Recent Awards / Recognitions. Symbium has been awarded the 2021 Facebook grant for Housing Innovation, the 2021 GovTech 100, the American Bar Association’s 2021 Women of Legal Tech recognition, and the 2020 Ivory Prize for its work in housing innovation and transforming planning codes into intuitive web applications.

5. What other products/services have been examined and rejected, and why? (Please provide a specific meaningful explanation, one vendor and one feature at a time. For products be sure to clearly identify the product by name and model number and include the na me, address, email, and telephone number of the company representative whose product you tested.)
Symbium is the sole provider of Complaw tools that enable legal analysis of properties against local zoning codes. In the universe of permit streamlining tools, the closest applications that are currently available on the market include Bluebeam, OpenCounter, and Camino, all differentiated in further detail below:

• Bluebeam: This tool offers streamlining of drawing management and submittal review, with a strong focus on the actual building plans.The tool is used by various building and planning departments to mark up plans and manage workflows. However, it does not offer legal analysis on zoning, has a complicated integration process and does not streamline the compliance checks.

• Open Counter: This company has a residential portal that provides information about residential fees and required permits but it does not provide regulatory requirements. It is primarily a workflow tool.

• Camino: This company offers a land management tool, which is essentially a DIY configurable workflow to manage paper submissions. The jurisdiction, in this case, must perform the bulk of the work to get this configured and working. Though the tool does have a citizen-facing component, it does not have the ability to handle regulatory requirements and does not focus primarily on the needs of City planning departments.

Similar to Bluebeam and OpenCounter, this is primarily a workflow tool.

51 Item # C7.

V.011322

There are other tools that have not been identified in detail but also provide some aspect of permit streamlining, including Accela, TRACKiT, and EnerGov but those tools are strictly workflow-based permit tracking systems with no regulatory analysis component.

Further, Symbium Plancheck can be integrated into those tools (given an open API) to supercharge their capabilities for local planning departments.

52 Item # C7.

V.011322

6. If justification is based on matching and/or intermixing with existing equipment (standardization or sole brand only – (sole brand may only be used by authority of the City Council)), list the quantity, manufacturer, brand, and model of the existing equipment, and identify measurable cost savings co nsistent with the sole brand requirements identified on page one of the request form (attach calculations as necessary).

I HEREBY CERTIFY THAT:

1. I have read and understand the City's requirements for competitive bidding, as well as the criteria for justification for sole source and sole brand procurements.

2. I have gathered the required technical information and have made a concentrated effort to review comparable and/or equal equipment/service.

3. There is validity as to the information contained herein justifying my request for sole source or sole brand procurement and meeting the City's criteria.

4. A sole source or sole brand procurement in this case would withstand a possible audit or a vendor's protest.

Requestor: AVERY STARK Date:02-17-2022
Department Head: Ned Thomas Date:02-17-2022

53 Item # C7.

V.011322

SOLE SOURCE OR SOLE BRAND REQUEST
A. OVERVIEW
Purchasing recognizes that departments often invest a great deal of time and effort in selecting a source or brand, prior to submitting a requisition to Purchasing. Even though the departmental review process prior to the submittal of a requisition may be sound, it is highly recommended to quickly engage with Purchasing as soon and early in the process as possible to ensure all documentation and justifications for the request are consistent with the Municipal Code.

Likewise, Purchasing can be an effective partner in a competitive review process given adequate time and involvement in your requirement definition.

In an effort to expedite sole source or sole brand requisitions through Purchasing, you are directed to review the Sole Source or Sole Brand Request form herein. If the Department feels the request meets the criteria, follow the instructions in filling out the form and attach it to the requisiti on. After review, if Purchasing concurs with your sole source or sole brand justification, the requisition may be expedited without the competitive solicitation requirements.

This is an internal City review process. Departments are directed to use discret ion in their discussion with vendors so as to not compromise any competitive advantage that Purchasing may utilize; in the event the sole source or sole brand justification is rejected. Rather than merely a shift of the review burden, this process acknowle dges the significant effort a department may undertake when identifying a vendor or brand and provides you with the method by which to make requisitioning efforts more efficient adhering to the City’s Purchasing Ordinance.

In order for Purchasing to accept a request for sole source/sole brand, the certification form referenced is made a part of the Purchasing Agent’s written determination as provided by the Municipal Code must be signed by the Department Head. The completed form will remain on file for audit purposes.

Sole Source Requests Over $100,000
Sole Source requests over $100,000 require submission of an Agenda Report Sample - Sole Source Agenda Report and approval by City Council and require submission of a resolution as in the Sample - Sole Source Resolution. If you are making a second sole source purchase, over $100,000, within the five -year life of the original sole source purchase you are still required to submit an AR to City Council , and at a minimum, the report should confirm the findings in the prior sole source resolution are still accurate and that nothing has changed in the marketplace or elsewhere. If anything has changed, then a new resolution is required. If 54 Item # C7.

V.011322

nothing has changed, then the Department can rely on the prior resolution but should include language in the AR indicating that all previous findings and conclusions are still accurate, and staff is not aware of any new information that would change those findings or conclusions in the prior sole source resolution.

B. PROCEDURE Sole source or sole brand procurements are an exception to competitive solicitatio n requirements and, therefore, require a detailed justification. In processing sole source or sole brand requests for supplies, equipment and/or services (except for consultant services or contracts with other governmental agencies) , Purchasing adheres to and is governed by the principles set forth in City of Milpitas Municipal Code Section I-2-3.06 - Sole Source Procurement or Section I-2-3.14 - Standardization as approved by the City Council.

If the requesting Department is requesting a particular vendor, brand or product, staff must make this fact clear on your requisition. If approved, the request will then be restrictive and non-competitive and will fall into a sole source or sole brand category.

Such a request should not be made unless Department staff is co nfident that the request is reasonable and appropriately justified to meet the City’s requirements and withstand any possible audit or scrutiny. The City’s requirements and the format for submitting such requests are contained herein.

The following factors DO NOT apply to sole source requests and should not be included in any sole source and/or sole brand justification request. They will not be considered and only tend to confuse the evaluation process and delay the procurement.

1. Personal preference or experience with or for a particular product or vendor.

2. Cost, vendor performance, and/or local service (these are generally considered award factors in competitive bidding).

3. Features which exceed the minimum department requirements.

4. Explanation of the need and/or basic use for the equipment, unless the information relates to a request for “unique factors” (refer to question three from the Sole Source/Sole Brand Request form). In other words, it is not appropriate to only state the Department is requesting a specific tree trimmer so staff can trim trees, instead explain why this particular trimmer with these exact performance specifications is the only one that will meet the Department’s need(s).

5. A request for “no substitution” submitted without justification. This is just a sole source or sole brand request without justification and will be rejected 55 Item # C7.

1 Memorandum
DATE: January 13, 2022
TO: ABAG Housing Committee and BAHFA Oversight Committee FR: Executive Director
RE: Summary of Plancheck software pilot
On November 18, 2021, the ABAG Executive Board approved $500,000 of the Regional Early Action Planning (REAP) Grant funds to support a pilot of Symbium Plancheck Software.

Symbium will configure their Plancheck software for 10 local Bay Area jurisdictions with populations under 700,000 (“Eligible Jurisdictions”) as part of a 1-year pilot. The software helps streamline the residential permitting process by automating the legal analysis of properties against non-discretionary local zoning codes. Plancheck saves staff time by automating responses to routine questions, allowing them to focus on more complex, discretionary analyses. Plancheck also ensures that regulations are consistently applied and reduces the time needed to train new planning staff on complex regulations.

ABAG solicited letters of interest (“LOIs”) from all Eligible Jurisdictions to participate in the pilot and eight LOIs were received. Six responses were complete and met all application requirements, including a checklist to reflect the commitment of the local jurisdiction to accelerate housing production using the State’s criteria for the new Prohousing Designation and a narrative on how Plancheck would be used to reduce significant bottlenecks in permit processing in the jurisdiction. The six jurisdictions with complete applications are awarded pilot licenses as summarized below and will be invited to conduct follow-up work with Symbium to verify the compatibility of local codes with the Plancheck software. Two other jurisdictions submitted incomplete applications. Given that there are currently four unused licenses, ABAG will reopen the request for LOIs and the two jurisdictions with incomplete applications will be invited to reapply. ABAG’s contract with Symbium also guarantees favorable pricing to all Eligible Jurisdictions that choose to independently contract with Symbium outside of the pilot.

Jurisdiction Application Status Awarded
Campbell Complete Yes
Milpitas Complete Yes
Moraga Complete Yes
Palo Alto Complete Yes
San Pablo Complete Yes
Tiburon Complete Yes
Los Altos Incomplete No, invited to apply in 2nd round
Los Altos Hills Incomplete No, invited to apply in 2nd round

Therese W. McMillan
56 Item # C7.

TO: Therese W. McMillan, Executive Director DATE: October 14, 2021 FR: Heather Peters, Principal Regional Housing Planner
RE: Sole Source Justification: Symbium Corp. Plancheck Program Software Licenses

This memo is a sole source justification based on compelling business reasons to negotiate and enter into a not to exceed $500,000 contract with Symbium Corp. (“Symbium”) to provide Plan Check Program Software Licenses (“Project”) to 10 local jurisdictions. Symbium will configure their Plancheck program for 10 local jurisdiction members of the Association of Bay Area Governments (“ABAG”) as part of a 1-year pilot with each jurisdiction. Plancheck is a web-based planner-facing tool to streamline residential site plan reviews with an option to connect to an applicant-facing portal for permit application submissions. The Agreement shall be until December 31st, 2023 and will be funded with the non-federal Regional Early Action Planning (REAP) Grants fund source.

BACKGROUND AND PROJECT DESCRIPTION
The key to Symbium’s business is Complaw®, which is concerned with the representation of laws and regulations, such as planning codes, in a computable form. Symbium’s Complaw-enabled web applications make zoning regulations and large data sets easy to navigate and compute, empowering anyone to use their online tools to quickly assess what’s possible on a piece of property or across a jurisdiction. Symbium’s proprietary technology, which was developed by the founding team at Stanford, accelerates the development of complex Complaw enabled applications. Symbium is the sole provider of Complaw-enabled applications, which provide accurate and detailed regulatory analyses, and which can be configured and maintained in a lightweight manner. This translates to lower procurement costs and shorter timelines to both configure applications at the outset and update them when regulations change over time.

Symbium will configure their Plancheck program for 10 local jurisdiction members of the Association of Bay Area Governments (“ABAG”) as part of a 1-year pilot with each jurisdiction. Plancheck is a web- based planner-facing tool to streamline residential site plan reviews with an option to connect to an applicant-facing portal for permit application submissions. Pilot jurisdiction planners will be able to enter an address into the tool, select any project scope, and the tool will instantly display only the relevant zoning regulations that will impact the project, often even performing an instant compliance check against non-discretionary regulations. Symbium will offer an option to any Plancheck partner to connect to its public-facing portal, to be launched at Symbium.com, where applicants will also be able to perform initial feasibility checks on the zoning regulations for their projects and submit their complete DocuSign Envelope ID: DA8D16E4-4C86-43BC-BFE2-26E15F55552F 57 Item # C7.
applications for permits directly to the Partner for assignment to staff. At the Partner’s request, Symbium will deliver a link to the Partner to incorporate into the relevant place on their planning website, which applicants may use to streamline the feasibility of projects and delivery of permit applications.

UNIQUE EXPERIENCE AND SKILLS OF SYMBIUM:

The compelling business reason to negotiate and enter into a not to exceed $500,000 contract with Symbium to provide software licenses is that Symbium is a recognized expert in the local planning field and the good (software) is only available from a single source (Symbium). Symbium’s good (software) will provide a unique tool to enable local jurisdictions to streamline their residential site plan reviews.

Symbium is the sole provider of Complaw tools that enable legal analysis of properties against local zoning codes. In the universe of permit streamlining tools, the closest applications that are currently available on the market do not offer legal analysis on zoning, do not streamline the process, are complicated, do not have the same capacity or are not appropriate for what local jurisdictions need in this kind of tool. Symbium’s tool is not strictly a workflow-based permit tracking system like other systems on the market, it analyzes feasibility, filters through detailed zoning regulation, integrates into existing online permitting system, tracks time spent on projects, generates required forms and more.

Their sophisticated tool will drastically save local jurisdictions on staff time and enable them to efficiently go through their residential site plan reviews. It will also provide consistent interpretations of complex zoning codes to enhance predictability for applicants, reduce the risk of litigation, and greatly streamline the onboarding and training of new planning staff and consultants.

RECOMMENDATION
For the reasons above, Symbium Corp. is being recommended to be sole sourced for the Project. Staff will begin the contracting process to approve Symbium Corp. to provide 10 licenses for their Plancheck software in an amount not to exceed $500,000. The term of the agreement shall be until December 31st, 2023.

SUBMITTED

Matt Maloney, Director,
Regional Planning Program

DATE: ___________________

CONCUR

Alix Bockelman, Deputy
Executive Director, Policy

DATE: ___________________

APPROVED

Therese W. McMillan,
Executive Director

DATE: ___________________

DocuSign Envelope ID: DA8D16E4-4C86-43BC-BFE2-26E15F55552F 10/14/2021
10/15/2021
10/19/2021
58 Item # C7.

City of Milpitas, California

BUDGET CHANGE FORM

From* To*
Type of Change

Account

Amount

Account

Amount
Check one:

Budget Appropriation

Budget Transfer

506-2970

$90,000

506-5124237
506-1124241

$10,000
$80,000

Recommendation: Adopt a resolution authorizing the City Manager to execute a six-year sole-source services agreement with Symbium Corporation for the unlimited use of proprietary web-based tools (Symbium Plancheck and Build Business) as a cloud-based service for the not-to-exceed amount of $210,000.00. Approve appropriation of $90,000 from Permit Automation Fund 506 to this project.

Background:

These tools will also increase staff efficiency by significantly reducing time spent repeatedly answering questions about site feasibility and selection. Interactive tools like Plancheck and Build Business do not replace personalized planning and zoning assistance in person, via email, or over the phone. Rather, these services will enhance customer service by adding a visual element to help City staff communicate more effectively with customers and provide clear feedback and instructions.

Implementation of Plancheck and Build Business will help achieve the following key goals of the City’s Economic Development Strategy (May 2020), IT Strategic Plan (June 2020), and the Matrix Study (April 2019):
• Improved Customer Services to both external in internal parties • Transition to electronic submittal for all development permit applications • Improved Staff Productivity
• Address delays and challenges in City permitting processes and permitting requirements
• Facilitate efficient development review, zoning verification, permit scoping, and fee calculations.

As of February 11, 2022, the City of Milpitas was also awarded a free one-year license to Symbium Plancheck, through a no-cost pilot program offered through the Association of Bay Area Governments (ABAG). This will be in addition to the requested agreement; Symbium is still offering the City an additional year free of charge + the ABAG pilot, so we will essentially be getting six years of service for the cost of four years, and this also includes Build Business at no cost. ABAG also determined that Symbium was eligible for Sole Source. See attachment 3.

59 Item # C7.

Analysis:

After conducting a good faith review of the available sources and pursuant to Milpitas Municipal Code Section I-2-3.09 (Sole Source Procurement), the City’s Purchasing Agent has determined that Symbium Corporation is the only source to provide a range of cloud-based software-as-a-service (“SaaS”) solutions that allow End- Users to streamline specific planning, zoning permitting, or other government-facing and constituent facing processes.

The Planning Department does not currently have an online portal for residents, developers, or contractors to submit plan sets and other materials for review. The current system was set up as a temporary response to the pandemic and requires applicants to submit their development applications via email, which causes delays when required items are missing. Symbium Plancheck would upgrade and streamline the permit application system by facilitating the following online services:
• Initiate feasibility analysis and regulatory review of proposed development projects. This would include residential permit applications eligible for streamlined review under recent state legislation (SB 330, SB 35, SB 9).
• Identify appropriate application forms based on the proposed project and inform the applicant about specific information to submit for each type of permit. • Provide consistent feedback and analysis in response to inquiries from prospective applicants and store information in a location that is accessible to all staff members in the department • Allow online submittal of plans for residential, commercial, and industrial development projects, and other planning-related permits (tree removal, special events, ADUs, etc.). • Decrease training times by enabling new staff to easily filter through the most complex zoning codes and begin compliance reviews on day one.
• Integrate with permit tracking system by pulling in information (reduces duplicate entries).

Policy Alternative:

Alternative 1: Do not enter into a contract with Symbium Corporation for use of their proprietary software (Plancheck and Build Business) to enhance customer service.

Pros: None

Fiscal Impact:

The City of Milpitas was awarded a free one-year license to Symbium Plancheck through a no-cost pilot program offered through the Association of Bay Area Governments (ABAG). A one-time fee of $210,000, which covers configuration and maintenance for five years of service. This project will be funded by Permit Automation Fund 506 through the shifting of $210,000 IT staff cost to American Rescue Plan Act (ARPA) funding. The total contract of $210,000 was partially appropriated in the amount of $120,000, which leaves a remaining appropriation request of $90,000.

California Environmental Quality Act:

A contract for the use of cloud-based software services is not a project under CEQA.

Recommendations:

Adopt a resolution authorizing the City Manager to execute a six-year sole-source services agreement with Symbium Corporation for the unlimited use of proprietary web-based tools (Symbium Plancheck and Build Business) as a cloud-based service for the not-to-exceed amount of $210,000.00. The total contract of $210,000 was partially appropriated in the amount of $120,000, which leaves a remaining appropriation request of $90,000.
60 Item # C7.

Attachments:

1. Resolution

2. Symbium Corporation Exhibit A-2 – ORDER

3. Budget change form (if needed)

4. Sole Source Justification Form

5. ABAG Letter confirming Milpitas’ Award of Free Plancheck License

6. ABAG Symbium Sole Source Justification Memo

7. BCF

Check if City Council Approval required. Meeting Date: March 15, 2022

Requested by: Department Head: Ned Thomas Date: March 15, 2022 Reviewed by: Finance Director: Lauren Lai Date: March 15, 2022

Date approved by City Council, if required: Confirmed by:

FI/24786/V Form 30-222 (Rev. 1/92)
61 Item # C7.

CITY OF MILPITAS

AGENDA REPORT
(AR)

Item Title: Adopt Resolutions Approving and Authorizing the City Manager to Execute the 2021 Amended and Restated Water Supply Agreement Between the City and County of San Francisco Wholesale Customers in Alameda County, San Mateo County, and Santa Clara County and Approving a Minimum Purchase Transfer Agreement from the City of Mountain View to the City of East Palo Alto (Staff Contact: Tony Ndah, Public Works Director, 408-586-2602) Category Community Services and Sustainable Infrastructure Meeting Date: 3/15/2022
Recommendation: Adopt a resolution approving and authorizing the City Manager to execute the 2021 amended and restated Water Supply Agreement between the City and County of San Francisco Wholesale Customers in Alameda County, San Mateo County, and Santa Clara County; and (2) Adopt a resolution approving a Minimum Purchase Transfer Agreement from the City of Mountain View to the City of East Palo Alto.

Background:

In June 2009, the City of Milpitas entered into a new Water Supply Agreement (WSA) with the City and County of San Francisco (San Francisco) and Wholesale Customers in Alameda County, San Mateo County and Santa Clara County. The WSA establishes the terms by which the twenty-six Wholesale Customers, including the City of Milpitas, purchase water from the San Francisco Regional Water System (RWS).

When the WSA was developed, four agencies with access to sources of water supply not available to either San Francisco or the other Wholesale Customers at the time were required to purchase a “minimum annual quantity of water” from the RWS. Those four multi-source agencies are Alameda County Water District (ACWD), Milpitas, Mountain View, and Sunnyvale (Minimum Purchase Agencies). These four Minimum Purchase Agencies are subject to a “take or pay” Minimum Purchase requirement, which guarantees an ongoing financial stake in the RWS and ensures financial stability for all Wholesale Customers as well as San Francisco retail customers that rely on the RWS. These provisions are specified in Section 3.07 of the WSA.

In September 2017, the Bay Area Water Supply and Conservation Agency (BAWSCA) and the Water Management Representatives (WMRs) of the BAWSCA member agencies, of whom Milpitas is a member, began the process of negotiating potential amendments to the Minimum Purchase Quantities provisions.

Throughout 2017 and 2018, the WMRs held multiple meetings during which the four agencies currently subject to Minimum Purchase Quantity requirements shared their interests and concerns regarding changes to the Minimum Purchase Quantity requirements and allowing transfers of Minimum Purchase Quantities between BAWSCA member agencies.

On February 19, 2019, the Milpitas City Council by Resolution No. 8846 approved the 2018 Amended and Restated WSA which among other items clarified the process for redistribution of positive water allocations to BAWSCA members and established an administrative process for reconciling costs from the wholesale capital fund. The 2018 Amended and Restated WSA does not currently allow a Minimum Purchase Agency to transfer portions of its minimum purchase requirement and the associated financial obligation to another Wholesale Customer. During this amendment ratification process, the Wholesale Customers expressed a collective interest in working together to develop a process for the expedited and permanent transfer of Minimum Purchase Quantities. 62
Item # C8.

Under Article 3 of the 2018 Amended and Restated WSA, the San Francisco Public Utilities Commission (SFPUC) agrees to deliver up to 184 million gallons per day (MGD) to its Wholesale Customers, referred to as “Supply Assurance,”. Through BAWSCA, the Wholesale Customers have allocated shares of the Supply Assurance among themselves, referred to as Individual Supply Guarantees (ISG). Section 3.04 of the 2018 Amended and Restated WSA provides provisions which enables the temporary transfers of water supply between Wholesale Customers.

In 2019, the Wholesale Customers directed BAWSCA to draft a proposed amendment to the 2018 Amended and Restated WSA to provide procedures for expedited and permanent transfers of Minimum Purchase Quantities while safeguarding the financial and water supply interests of Wholesale Customers not participating in such transfers.

Mountain View and East Palo Alto Minimum Purchase Transfer Agreement In 2017, the City of Mountain View ("Mountain View") and the City of East Palo Alto ("East Palo Alto") were interested in transferring 1.0 million gallons per day ("MGD") of Mountain View's Minimum Purchase Quantity to East Palo Alto, however, at the time, there was no procedure in the WSA to effectuate such a transfer without amending the WSA. Therefore, the parties elected to execute a water rights transfer agreement by which East Palo Alto agreed to pay Mountain View $5 Million for the permanent transfer of all rights, title, interest to 1.0 MGD of Mountain View’s Individual Supply Guarantee (ISG) to East Palo Alto.

The Councils of East Palo Alto and Mountain View each approved the conversion of the 1.0 MGD of Mountain View's ISG sold to East Palo Alto in 2017 into a transfer of up to 1.0 MGD of Mountain View's Minimum Purchase Quantity to East Palo Alto, in increments of 0.25 MGD, subject to the City Councils' approval of an agreement for each incremental transfer and the approval of the Wholesale Customers and San Francisco.

East Palo Alto and Mountain View are authorized and prepared to execute a negotiated agreement memorializing a 0.25 MGD transfer of Mountain View's Minimum Purchase Quantity to East Palo Alto.

In conjunction with consideration of the proposed 2021 Amendment to the WSA, East Palo Alto and Mountain View propose the Wholesale Customers and San Francisco approve the terms and conditions for converting up to 1.0 MGD of Mountain View's ISG purchased by East Palo Alto in 2017 into at transfer of 1.0 MGD of Mountain View's Minimum Purchase Quantity to East Palo Alto, in 0.25 MGD increments, if Mountain View and East Palo Alto mutually agree to such incremental transfers in the future and provided the conditions outlined below are met. Because the 2017 Mountain View/East Palo Alto ISG transfer predates the Minimum Purchase Amendment, the Mountain View/East Palo Alto Minimum Purchase Transfer must be accomplished separately from the adoption of the Minimum Purchase Amendment.

Analysis:

The proposed amendment to the Water Supply Agreement and the Minimum Purchase Transfer Agreement from the City of Mountain View to the City of East Palo Alto do not affect the City’s ISG and minimum water purchase requirements with SFPUC. However, the proposed 2021 Amendment to Water Supply Agreement allows Wholesale Customers with ISGs to permanently transfer a portion of Minimum Purchase Quantity through an expedited procedure. The proposed amendment offers the following benefits:

1. Procedural safeguards built into the process by which a Wholesale Customer transfers a portion of its Minimum Purchase Quantity and ISG ensure that such transfers will not result in new or different risks to the water supply and financial interests of Wholesale Customers not participating in a transfer.

2. A Minimum Purchase Customer may transfer a portion of its Minimum Purchase Quantity within its respective ISG to reduce its financial obligation to pay for imputed sales for Minimum Purchase water that it did not use.

3. Intra-system water transfers are one potential solution to long term water reliability needs among the Wholesale Customers. This expedited, permanent transfer procedure will allow intra-system water transfers of Minimum Purchase Quantity to occur without a contract amendment approved by all the Wholesale Customers, thus removing administrative obstacles to such transfers. 63 Item # C8.

4. Expedited permanent intra-system transfers of portions of Minimum Purchase Quantity and ISG will facilitate the development of new water supplies by the SFPUC that are necessary to support the Cities of San Jose and Santa Clara becoming permanent Wholesale Customers.

5. The Wholesale Customers may increase the 6 MGD cap on the total aggregate amount of Minimum Purchase Quantity that may be transferred by all of the Minimum Purchase Customers over the course of one or multiple transfers if demand for Minimum Purchase Quantity transfers exceeds 6 MGD in the future.

San Francisco, acting by and through the SFPUC, approved the 2021 Amended and Restated Water Supply Agreement, as negotiated by BAWSCA, on January 26, 2021, pending approval by the requisite number (supermajority) of the Wholesale Customers. All twenty-six Wholesale Customers are now presenting the 2021 Amended and Restated Water Supply Agreement and associated resolution to their governing bodies for approval.

Milpitas has continuously met the minimum purchase requirement when drought water-use restrictions were not in place. As a result, there is no immediate or near-term need for the City to transfer any portion of its Minimum Purchase Quantity. Formalizing an expedited process of transfers ensures common understanding and protections among all parties, and allows certain agencies to access the process once the amendment is approved.

Mountain View and East Palo Alto Minimum Purchase Transfer Agreement The transfer agreement would provide advance approval for the conversion of up to 1.0 MGD of Mountain View's ISG, sold to East Palo Alto in 2017 into a transfer of up to 1.0 MGD of Mountain View's ISG plus up to

1.0 MGD of Mountain View’s Minimum Purchase Quantity to East Palo Alto, in 0.25 MGD increments, if all of the following terms and conditions are satisfied:

a. Mountain View will transfer up to 1.0 MGD of its Minimum Purchase Quantity to East Palo Alto, in increments of 0.25 MGD, subject to the Mountain View City Council's and the East Palo Alto City Council's approval of an agreement for each incremental transfer.

b. For each incremental transfer, a Temporary Modified Minimum Annual Purchase Quantity will be calculated for East Palo Alto that is equal to the City's five-year average water use from the SFPUC for the most recent non-drought years prior to the 2017 ISG purchase, plus the incremental transfer amount(s).

c. For each incremental transfer, Mountain View will maintain, and be responsible for paying any imputed sales for, its current Minimum Purchase requirement in effect at that time, as set forth in Attachment E of the WSA, including up to 1.0 MGD ISG transfer to East Palo Alto, until East Palo Alto's water use meets the Temporary Modified Minimum Annual Purchase Quantity for three consecutive years.

d. East Palo Alto will not be required to pay imputed sales associated with the Temporary Modified Minimum Annual Purchase Quantity for any incremental transfer of the 1.0 MGD of Mountain View's Minimum Purchase requirement.

e. For each incremental transfer, once East Palo Alto has met the Temporary Modified Minimum Annual Purchase Quantity for three consecutive years, the incremental portion of Mountain View's Minimum Purchase Quantity transferred to East Palo Alto will become East Palo Alto's Minimum Purchase Quantity, and Mountain View's Minimum Purchase Quantity will be reduced by an equivalent amount. East Palo Alto's new Minimum Purchase Quantity will be included in Attachment E and both cities' Individual Water Sales Contracts will be updated to reflect this transfer.

f. With exception of the incremental transfers that are the subject of this resolution and the agreement between East Palo Alto and Mountain View described herein, any additional transfers of Minimum 64 Item # C8.

Purchase Quantity, either from another Wholesale Customer or from Mountain View in excess of the

1.0 MGD, are subject to Section 3.04 of the 2021 WSA.

Policy Alternatives:

Alternative 1: City Council does not adopt the resolution approving the 2021 Amended and Restated Water Supply Agreement Between the City and County of San Francisco Wholesale Customers in Alameda County, San Mateo County, and Santa Clara County.

Pros: None
Cons: If more than one third of the Member Agencies fail to approve the proposed 2021 amendment, member agencies will lose the flexibility to manage their long term water supply and Minimum Purchase Guarantee commitments to ensure the best interests of individual communities are met.

Reason not recommended: Formalizing an expedited process of transfers ensures common understanding and protections among all parties, and allows certain agencies to access the process once the amendment is approved. Though unforeseen, this amendment would give the City the ability to negotiate and access a permanent water transfer should it be needed in the future.

Fiscal Impact:

None. The proposed amendment to the Water Supply Agreement and the Minimum Purchase Transfer Agreement from the City of Mountain View to the City of East Palo Alto do not affect the City’s ISG and minimum water purchase requirements with SFPUC.

California Environmental Quality Act:

By the definition provided in the California Environmental Quality Act (CEQA) Guidelines Section 15378(b)(5), this action does not qualify as a “project” for the purpose of CEQA as this action has no potential to result in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.

Recommendation:

1. Adopt a resolution approving and authorizing the City Manager to execute the 2021 amended and restated Water Supply Agreement between the City and County of San Francisco wholesale customers in Alameda County, San Mateo County, and Santa Clara.

2. Adopt resolution approving a Minimum Purchase Transfer Agreement between the City of Mountain View to the City of East Palo Alto.

Attachments:

1. Resolution Approving the 2021 Amended and Restated Water Supply Agreement

2. 2021 Amended and Restated Water Supply Agreement with Attachments

3. Redlined 2018 Amended and Restated Water Supply Agreement showing changes to Sections 3.04, 3.07, and 2.03.

4. Resolution Approving a Minimum Purchase Transfer from the City of Mountain View to the City of East Palo Alto.

5. Minimum Water Purchase Transfer Agreement Between the City of East Palo Alto and the City of Mountain View.

65 Item # C8.

Resolution No.__

RESOLUTION NO. _____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MILPITAS APPROVING AND

AUTHORIZING THE CITY MANAGER TO EXECUTE AN AMENDMENT TO THE

AMENDED AND RESTATED WATER SUPPLY AGREEMENT BETWEEN THE CITY AND

COUNTY OF SAN FRANCISCO AND WHOLESALE CUSTOMERS IN ALAMEDA COUNTY,

SAN MATEO COUNTY, AND SANTA CLARA COUNTY

WHEREAS, water supply agencies in Alameda, San Mateo, and Santa Clara Counties have purchased water from the City and County of San Francisco (San Francisco) for many years; and WHEREAS, the San Francisco Public Utilities Commission (SFPUC or Commission) operates the Regional Water System, which delivers water to communities in Alameda, San Mateo, and Santa Clara Counties, as well as to customers within San Francisco (collectively, “the Parties”); and WHEREAS, the Parties entered into the “Settlement Agreement and Master Water Sales Contract between the City and County of San Francisco and Certain Suburban Purchasers in San Mateo County, Santa Clara County and Alameda County” in 1984; and WHEREAS, in April 2003, water supply agencies in Alameda, San Mateo and Santa Clara Counties established the Bay Area Water Supply and Conservation Agency (BAWSCA), as authorized by Water Code Section 81300 et seq.; and
WHEREAS, upon expiration of the 1984 “Settlement Agreement and Master Water Sales Contract”, the Parties entered into the “Water Supply Agreement between San Francisco and Wholesale Customers in Alameda County, San Mateo County, and Santa Clara County” (“Water Supply Agreement”) on July 1, 2009, authorized by SFPUC Resolution No. 09-0069; and WHEREAS, in 2017, the Wholesale Customers directed BAWSCA to act as its authorized representative in discussions and negotiations with San Francisco to amend the Water Supply Agreement to address a number of substantive issues and these negotiations resulted in the Parties' adoption of the Amended and Restated Water Supply Agreement (Amended and Restated Water Supply Agreement) in 2018, authorized by SFPUC Resolution No. 18-0212, dated December 11, 2018; and WHEREAS, on February 19, 2019, Milpitas City Council adopted Resolution No. 8846 which approved the Amended and Restated Water Supply Agreement; and 66 Item # C8.

Resolution No.__

WHEREAS, under Article 3 of the Amended and Restated Water Supply Agreement, the SFPUC agrees to deliver water to the Wholesale Customers up to the amount of 184 million gallons per day (MGD), referred to as the “Supply Assurance,” and the Wholesale Customers have allocated shares of the Supply Assurance among themselves, referred to as Individual Supply Guarantees (“ISG”); and WHEREAS, Section 3.04 of the Amended and Restated Water Supply Agreement enables a Wholesale Customer that has an ISG to transfer a portion of its ISG to one or more other Wholesale Customers, subject to several conditions; and
WHEREAS, under Section 3.07 of the Amended and Restated Water Supply Agreement, four Wholesale Customers (Alameda County Water District and the Cities of Milpitas, Mountain View, and Sunnyvale, collectively, the “Minimum Purchase Customers”) may purchase water from sources other than the SFPUC, but they are each obligated to purchase a specific minimum annual quantity of water from the SFPUC, referred to as a “Minimum Purchase requirement”; and WHEREAS, if a Minimum Purchase Customer does not meet its Minimum Purchase requirement in a particular fiscal year, it must pay the SFPUC for the difference between its metered water purchases during the fiscal year and its minimum annual purchase quantity set forth in Attachment E of the Amended and Restated Water Supply Agreement; and WHEREAS, the Amended and Restated Water Supply Agreement does not currently allow a Minimum Purchase Customer to transfer a portion of its Minimum Purchase requirement and the associated financial obligation to another Wholesale Customer; and WHEREAS, in September 2017, BAWSCA and the Water Management Representatives (WMRs) of the BAWSCA member agencies began reviewing the issue of Minimum Purchase Quantities, as described in Section 3.07.C of the Water Supply Agreement, and discussing the creation of a process to transfer Minimum Purchase Quantities; and
WHEREAS, throughout 2017 and 2018, the WMRs held multiple meetings during which the agencies currently subject to Minimum Purchase Quantity requirements and the other Wholesale Customers shared their interests and concerns regarding changes to the Minimum Purchase Quantity requirements and allowing transfers of Minimum Purchase Quantities; and WHEREAS, at the time the Amended and Restated Water Supply Agreement was approved, the Parties expressed a collective interest in working together to develop a process for the expedited and permanent transfer of Minimum Purchase Quantities; and
67 Item # C8.

Resolution No.__

WHEREAS, in 2019, the Wholesale Customers directed BAWSCA to draft a proposed amendment to the Amended and Restated Water Supply Agreement to provide a procedure for expedited and permanent transfers of Minimum Purchase Quantities that safeguards the financial and water supply interests of Wholesale Customers not participating in such transfers; and WHEREAS, the Parties recognize that, both before and after the most recent statewide drought, after meeting drought-related conservation mandates, several BAWSCA member agencies were unable to meet their respective Minimum Purchase requirements described in Article 3.07 of the Amended and Restated Water Supply Agreement, which requires payment for water up to the required Minimum Purchase level even if such water is not delivered and used; and WHEREAS, several of the Wholesale Customers with Minimum Purchase requirements might be interested in transferring a portion of their Minimum Purchase Quantity within their respective ISGs to reduce the financial obligation to pay for imputed sales for Minimum Purchase water that is not used; and WHEREAS, with its Alternative Water Supply Program, the SFPUC is in the early stages of planning for fourteen projects to support the Wholesale and Retail Customers' ability to respond to climate change and address future water supply challenges and vulnerabilities, such as regulatory changes, earthquakes, disasters, emergencies, and increases in population and employment; and WHEREAS, the City of San Jose (San Jose) and the City of Santa Clara (Santa Clara) are temporary, interruptible Wholesale Customers of the SFPUC Regional Water System and both cities wish to become permanent Wholesale Customers; and
WHEREAS, pursuant to Section 4.06 of the Amended and Restated Water Supply Agreement, by December 31, 2028, San Francisco must complete any necessary California Environmental Quality Act (CEQA) review and must decide whether or not to make San Jose and Santa Clara permanent Wholesale Customers of the Regional Water System with a combined Individual Supply Guarantee (ISG) of 9 million gallons per day (MGD) allocated equally between the two cities, as well as how much water in excess of 9 MGD it will supply to San Jose and Santa Clara; and WHEREAS, Section 4.06 of the Amended and Restated Water Supply Agreement provides:
"San Francisco will make San Jose and Santa Clara permanent customers only if, and to the extent that, San Francisco determines that Regional Water System long term water supplies are available;" and WHEREAS, according to SFPUC's December 2021 Alternative Water Supply Planning Quarterly Update (Quarterly Update), "[f]or San Jose and Santa Clara to become permanent customers of 68 Item # C8.

Resolution No.__

the SFPUC, an additional 9 MGD of new, year-round supplies would be needed to meet historic demand levels and up to 15.5 MGD would be needed to meet planned demand through 2045;" and WHEREAS, according to its December Quarterly Update, SFPUC is planning with the “intention to be able to make San Jose and Santa Clara permanent customers,” but is prioritizing instream flow obligations to meet existing permanent customer demands, including drought supplies; and WHEREAS, SFPUC has budgeted $298.3 million over the next ten years to fund water supply projects; and
WHEREAS, SFPUC, San Jose, Santa Clara, and BAWSCA are actively working together to consider water supply projects that may offer potential sources of supply to support San Jose and Santa Clara as permanent Wholesale Customers; and
WHEREAS, BAWSCA and SFPUC have identified intra-system water transfers as one potential solution to long term water reliability needs among the Wholesale Customers; and WHEREAS, a Minimum Purchase Customer might be more inclined to transfer a portion of its ISG to another Wholesale Customer under Section 3.04 of the Amended and Restated Water Supply Agreement if it was able to include a simultaneous transfer of a portion of its Minimum Purchase requirement and the associated financial obligation; and WHEREAS, allowing simplified permanent intra-system transfers of portions of Minimum Purchase Quantity and ISG will facilitate the development of new water supplies by SFPUC that are necessary to support San Jose and Santa Clara as permanent Wholesale Customers; and WHEREAS, the Parties have developed a process to allow for the transfer of a Wholesale Customer's Minimum Purchase Quantity in conjunction with an ISG transfer pursuant to Section 3.04, which ensures that such transfers will not result in new or different risks to the water supply and financial interests of Wholesale Customers not participating in a transfer; and WHEREAS, the Parties agree that the total aggregate amount of Minimum Purchase Quantity that may be transferred by all of the Wholesale Customers subject to Minimum Purchase requirements as first specified in Attachment E of the Amended and Restated Water Supply Agreement, over the course of one or multiple transfers, is limited to 6 MGD; and
69 Item # C8.

Resolution No.__

WHEREAS, if demand for Minimum Purchase Quantity transfers exceeds 6 MGD in the future, the Parties agree to consider further amending Section 3.04 of the Amended and Restated Water Supply Agreement to increase the total aggregate cap on the amount of Minimum Purchase Quantity that may be transferred; and
WHEREAS, a proposed transfer that does not meet the requirements of Section 3.04 of the Amended and Restated Water Supply Agreement, as amended by this Resolution, may be presented as an amendment to the Amended and Restated Water Supply Agreement pursuant to Section 2.03 of the Amended and Restated Water Supply Agreement; and
WHEREAS, the Parties agree to consider a proposal by the City of Mountain View (Mountain View) and the City of East Palo Alto (East Palo Alto) to amend the Amended and Restated Water Supply Agreement to allow for the conversion of Mountain View's 2017 sale of 1 MGD of ISG to East Palo Alto into a transfer of 1 MGD of Mountain View's ISG that includes Minimum Purchase Quantity to East Palo Alto, over a period of time, and in a manner that protects the other Wholesale Customers' financial and water supply interests; and
WHEREAS, if such a conversion is approved by the Parties, the 1 MGD of Mountain View's Minimum Purchase Quantity would be counted towards the total aggregate 6 MGD cap on Minimum Purchase Quantity transfers; and
WHEREAS, the Parties now desire to adopt an amendment to the Amended and Restated Water Supply Agreement to permit Wholesale Customers with an ISG to transfer, or accept a transfer, of both a portion of a Wholesale Customer's ISG and its Minimum Purchase Quantity; and WHEREAS, an updated Amended and Restated Water Supply Agreement, reflecting this amendment, in the form negotiated by BAWSCA (2021 Amended and Restated Water Supply Agreement), was presented to and approved by SFPUC on January 26, 2021 pursuant to SFPUC Resolution No. 21-0009; and
WHEREAS, the amendment considered now is not a "project" for the purposes of CEQA as it involves an administrative activity that does not result in a direct change to the environment (see 14 CCR Section 15378(b)(5)), and would not result in a direct or reasonably foreseeable indirect physical change in the environment (see 14 CCR Section 15060(c)(2)); and NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Milpitas finds and resolves as follows:
70 Item # C8.

Resolution No.__

1. City Council approves the modifications included in the "2021 Amended and Restated Water Supply Agreement Between the City and County of San Francisco Wholesale Customers in Alameda County, San Mateo County, and Santa Clara County" dated January 2021 (2021 Amended and Restated Water Supply Agreement), attached hereto as Exhibit A.

2. The City Manager is authorized and directed to sign the 2021 Amended and Restated Water Supply Agreement, in the form previously approved by the San Francisco Public Utilities Commission and attached hereto as Exhibit A.

PASSED AND ADOPTED this (date here) by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

ATTEST: APPROVED:

Wendy Wood, City Clerk Rich Tran, Mayor

APPROVED AS TO FORM:

Christopher J. Diaz, City Attorney

71 Item # C8.
17162043.1
2021

AMENDED AND RESTATED

WATER SUPPLY AGREEMENT
between

THE CITY AND COUNTY OF SAN FRANCISCO
and

WHOLESALE CUSTOMERS
in

ALAMEDA COUNTY, SAN MATEO COUNTY AND

SANTA CLARA COUNTY
72 Item # C8.
i
2021 Amended and Restated WSA 17162043.1

TABLE OF CONTENTS
A
rticle 1. Parties, Effective Date, And Defined Terms .............................................................. 1

1.01. Definitions ................................................................................................................. 1

1.02. Parties ...................................................................................................................... 1

1.03. Effective Date ........................................................................................................... 2 Article 2. Term; Amendments During Term .............................................................................. 4

2.01. Term ......................................................................................................................... 4

2.02. Extension and Renewal of Term ............................................................................... 4

2.03. Amendments ............................................................................................................ 5 Article 3. Water Supply ............................................................................................................ 8

3.01. Supply Assurance ..................................................................................................... 8

3.02. Allocation of Supply Assurance ................................................................................. 9

3.03. Wholesale Customer Service Areas ........................................................................10

3.04. Permanent Transfers of Individual Supply Guarantees and Minimum Annual Purchase Quantities ................................................................................................12

3.05. Restrictions on Resale .............................................................................................16

3.06. Conservation; Use of Local Sources; Water Management Charge ..........................16

3.07. Restrictions on Purchases of Water from Others; Minimum Annual Purchases .......17

3.08. Water Quality ...........................................................................................................18

3.09. Completion of WSIP ................................................................................................19

3.10. Regional Water System Repair, Maintenance and Operation ..................................19

3.11. Shortages ................................................................................................................20

3.12. Wheeling of Water from Outside SFPUC System ....................................................22

3.13. Limits on New Customers ........................................................................................23

3.14. Measurement of Water ............................................................................................ 24

3.15. New Sources of Water Supply to Maintain Supply Assurance ................................. 26

3.16. New Sources of Water Supply to Increase Supply Assurance ................................. 27

3.17. Westside Basin Groundwater Storage and Recovery Project ..................................28

3.18. Water Supply Agreement Amendment Required. .................................................... 32 Article 4. Implementation of Interim Supply Limitation. ............................................................34

4.01. Interim Supply Limitation Imposed by SFPUC .........................................................34

4.02. Retail and Wholesale Customer Allocations Under Interim Supply Limitation ..........34

4.03. Transfers of Interim Supply Allocations ....................................................................34

4.04. Environmental Enhancement Surcharge ..................................................................35

4.05. San Jose/ Santa Clara Interim Supply Allocation and Process for Reduction/ Termination. .............................................................................................................37

4.06. San Francisco Decisions in 2028 Regarding Future Water Supply ..........................39 73 Item # C8.
ii
2021 Amended and Restated WSA 17162043.1

4.07. Retained Discretion of SFPUC and Wholesale Customers ......................................39 Article 5. Wholesale Revenue Requirement ...........................................................................41

5.01. Scope of Agreement ................................................................................................41

5.02. General Principles ...................................................................................................41

5.03. Capital Cost Recovery - Existing Regional Assets ...................................................43

5.04. Capital Cost Contribution - New Regional Assets ....................................................45

5.05. Water Enterprise Operation and Maintenance Expenses .........................................47

5.06. Water Enterprise Administrative and General Expenses .......................................... 49

5.07. Water Enterprise Property Taxes .............................................................................51

5.08. Hetch Hetchy Enterprise Expenses .........................................................................51

5.09. Hetch Hetchy Enterprise Capital Costs ....................................................................53

5.10. Additional Agreements Related to Financial Issues .................................................54

5.11. Classification of Existing System Assets. ................................................................. 57 Article 6. Integration of Wholesale Revenue Requirement with SFPUC Budget Development and Rate Adjustments .............................................................................................60

6.01. General ....................................................................................................................60

6.02. Budget Development ...............................................................................................60

6.03. Rate Adjustments ....................................................................................................60

6.04. Rate Structure .........................................................................................................62

6.05. Balancing Account ...................................................................................................63

6.06. Wholesale Revenue Coverage Reserve ..................................................................65

6.07. Working Capital Requirement ..................................................................................67

6.08. Wholesale Capital Fund ...........................................................................................68

6.09. SFPUC Adoption of Regional Water System 10-Year Capital Improvement Program .............................................................................................70 Article 7. Accounting Procedures; Compliance Audit ..............................................................75

7.01. SFPUC Accounting Principles, Practices ................................................................. 75

7.02. Calculation of and Report on Wholesale Revenue Requirement ..............................76

7.03. Appointment of Compliance Auditor .........................................................................77

7.04. Conduct of Compliance Audit ..................................................................................78

7.05. Issuance of Compliance Auditor’s Report ................................................................80

7.06. Wholesale Customer Review ...................................................................................81 A
rticle 8. Other Agreements of the Parties ..............................................................................82

8.01. Arbitration and Judicial Review ................................................................................82

8.02. Attorneys’ Fees ........................................................................................................86

8.03. Annual Meeting and Report .....................................................................................87

8.04. Administrative Matters Delegated to BAWSCA ........................................................88 74 Item # C8.
iii
2021 Amended and Restated WSA 17162043.1

8. 05. Preservation of Water Rights; Notice of Water Rights Proceedings .........................89

8.06. SFPUC Rules and Regulations ................................................................................89

8.07. Reservations of, and Limitations on, Claims ............................................................90

8.08. Prohibition of Assignment ........................................................................................92

8.09. Notices ....................................................................................................................93

8.10. Incorporation of Attachments ...................................................................................94

8.11. Interpretation ...........................................................................................................94

8.12. Actions and Approvals by San Francisco ................................................................. 94

8.13. Counterparts ............................................................................................................94

8.14. Limitations on Damages .......................................................................................... 95

8.15. Force Majeure .........................................................................................................95

8.16. No Third-Party Beneficiaries ....................................................................................96

8.17. Good Faith and Fair Dealing ....................................................................................96 Article 9. Implementation and Special Provisions Affecting Certain Wholesale Customers .....97

9.01. General; Individual Water Sales Contracts ..............................................................97

9.02. California Water Service Company ..........................................................................97

9.03. City of Hayward .......................................................................................................99

9.04. Estero Municipal Improvement District ................................................................... 100

9.05. Stanford University ................................................................................................ 100

9.06. City of San Jose and City of Santa Clara ............................................................... 101

9.07. City of Brisbane, Guadalupe Valley Municipal Improvement District, Town of Hillsborough........................................................................................................... 102 75 Item # C8.
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2021 Amended and Restated WSA 17162043.1

LIST OF ATTACHMENTS
A
B

C
D
E
E-1
E-2
F
G
H
I
J
K-1
K-2
K-3
K-4
K-5
L-1
L-2
L-3
M-1
Definitions
Wholesale Customer Regional Water System Purchases 2007-2008 (Section 1.03) List of Agencies and Individual Supply Guarantees (Section 3.02) Procedure for Pro Rata Reduction of Individual Supply Guarantees if Total Use Exceeds 184 MGD (Section 3.02)
Minimum Annual Purchase Quantities (Section 3.07.C)
Temporary Modified Minimum Annual Purchase Quantities (Sections 3.04 and

3.07.C)
Illustrations of a Transfer of a Portion of a Minimum Annual Purchase Quantity Pursuant to Sections 3.04 and 3.07.C
Sample Individual Water Sales Contract (Section 9.01)
Water Quality Notification and Communications Plan (2019 Update of 2017 Plan, Rev. 6) (Section 3.08.B)
Tier 1 Shortage Plan (Section 3.11.C)

NOT USED
Water Use Measurement and Tabulation (Section 3.14)
Wholesale Customers’ Share of Net Book Value of Existing Assets (Section 5.03) Wholesale Customers’ Share of the Revenue-Funded Capital Expenditures (Section

5.03)
Annual Payments for Wholesale Share of 6/30/09 Net Plant & CWIP (Water Assets) (Section 5.03)
Annual Payments for Wholesale Share of 6/30/09 Net Plant & CWIP (Hetch Hetchy Assets) (Section 5.03)
10-Year Payoff Schedules for Existing Rate Base (Section 5.03) Identification of WSIP Projects as Regional/Retail (Section 5.04) Certificate of Use of Proceeds (Section 5.04.A)
Annual Report on Expenditures of and Earnings on Proceeds (Section 5.04.A) Revenue-Funded Capital Additions (Section 5.04.B)
76 Item # C8.
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2021 Amended and Restated WSA 17162043.1
M
-2 Revenue-Funded Capital Annual Reporting Requirements (Section 5.04.B) M-3 Wholesale Capital Fund and Balancing Account Adjustment (Section 6.08) N-1 Balancing Account/Rate Setting Calculation Table (Section 6.03.A.3.a) N-2 W holesale Revenue Requirement Schedules (Section 6.03.A.3.b) N-3 Schedule of Projected Water Sales, Wholesale Revenue Requirement and Wholesale Rates (Section 6.03.A.3.c)
O Statement of Wholesale Revenue Requirement/Changes in Balancing Account (Section 7.02.B.1)
P Management Representation Letter (Section 7.02.B.5)
Q-1 San Jose Service Area (Section 9.06)
Q-2 Santa Clara Service Area (Section 9.06)
R Classification of Existing System Assets (Section 5.11) 77 Item # C8.
1 2021 Amended and Restated WSA 17162043.1

AMENDED AND RESTATED

WHOLESALE WATER SUPPLY AGREEMENT

Introductory Statement
Both San Francisco, as the Regional Water System owner and operator, and its Wholesale Customers share a commitment to the Regional Water System providing a reliable supply of high quality water at a fair price, and achieving these goals in an environmentally sustainable manner.

Article 1. Parties, Effective Date, And Defined Terms

1.01. Definitions
The capitalized terms used in this Agreement shall have the meanings set forth in Attachment A.

1.02. Parties
The parties to this Agreement are the City and County of San Francisco and such of the following entities (all of which purchase water from San Francisco) as have executed this Agreement:

Alameda County Water District
California Water Service Company
City of Brisbane
City of Burlingame
City of Daly City
City of East Palo Alto
City of Hayward
City of Menlo Park
City of Millbrae
City of Milpitas
City of Mountain View
City of Palo Alto
78 Item # C8.
2 2021 Amended and Restated WSA 17162043.1
C
ity of Redwood City
City of San Bruno
City of San José
City of Santa Clara
City of Sunnyvale
Coastside County Water District
Estero Municipal Improvement District
Guadalupe Valley Municipal Improvement District
Mid-Peninsula Water District
North Coast County Water District
Purissima Hills Water District
Stanford University
Town of Hillsborough
Westborough Water District
The entities listed above which have executed this Agreement shall be collectively referred to as the “Wholesale Customers.”

1.03. Effective Date
A. Except as provided in subsection C, this Agreement shall become effective only when it has been approved by San Francisco and by each of the entities listed in Section 1.02 and when San Francisco and each of those entities (except for the City of Hayward) have entered into an Individual Water Sales Contract as provided in Section 9.01.

B. If San Francisco and all of the entities listed in Section 1.02 approve this Agreement and (except for the City of Hayward) an Individual Water Sales Contract on or before July 1, 2009, the effective date shall be July 1, 2009. If San Francisco and all of the entities listed in Section 1.02 approve this Agreement and (except for the City of Hayward) an Individual Water Sales Contract after July 1, 2009 but on or before September 1, 2009, the effective date shall be the date on which the last entity listed in Section 1.02 approves this Agreement and, if required, an Individual Water Sales Contract.

C. If by September 1, 2009 this Agreement has been approved by fewer than all of the entities listed in Section 1.02 or fewer than all of such entities (other than the City of Hayward) have entered into an Individual Water Sales Contract, but it has been approved by entities representing at least 75% in number and 75% of the water purchased from SFPUC by 79 Item # C8.
3 2021 Amended and Restated WSA 17162043.1
al
l listed agencies during FY 2007-08 (i.e., 173.39 MGD), then San Francisco shall have the option to waive the requirement in subsection A that all listed agencies have approved this Agreement and an Individual Water Sales Contract as a condition precedent to this Agreement and any Individual Water Sales Contract becoming effective. San Francisco shall have 60 days from September 1, 2009 (i.e., until October 31, 2009) within which to decide whether or not to waive the condition. If San Francisco decides to waive the condition, those listed agencies that have approved this Agreement and Individual Water Sales Contract before October 31, 2009 will be bound thereby and this Agreement and Individual Water Sales Contracts will become effective as to them, as of the date of San Francisco’s waiver. For purposes of determining whether listed agencies that have approved this Agreement represent at least 75% of the water purchased during FY 2007-08, the quantity of water attributable to each listed entity shall be as set forth on Attachment B.

D. The provisions of Article 9 that apply to fewer than all Wholesale Customers (i.e., Sections 9.02 - 9.07) shall not become effective unless San Francisco and the entity to which the section applies have each approved (1) this Agreement, and (2) the underlying Individual Water Sales Contract, unless otherwise provided in Article 9. This provision does not affect the continued enforceability of provisions in those sections that derive from independently enforceable judgments, orders or agreements.
80 Item # C8.
4 2021 Amended and Restated WSA 17162043.1
Article 2. Term; Amendments During Term

2.01. Term
The term ("Term") of this Agreement shall be twenty five (25) years. The Term shall begin on July 1, 2009, regardless of whether the Effective Date is before or after that date, and shall end on June 30, 2034. Except as provided in Article 9, the term of all Individual Water Sales Contracts shall also begin on July 1, 2009 and end on June 30, 2034.

2.02. Extension and R enewal of Term
A. In December 2031, the SFPUC may provide written notice to the Wholesale Customers that it is willing to extend the Term of this Agreement. Between January 1, 2032 and June 30, 2032, any Wholesale Customer may accept the SFPUC's offer to extend the Term by providing a written notice of extension to the SFPUC. If such notices of extension are received from Wholesale Customers representing at least two-thirds in number as of June 30, 2032 and seventy five percent (75%) of the quantity of water delivered by the SFPUC to all Wholesale Customers during fiscal year 2030-31, the Term shall be extended for another five (5) years ("First Extension Term"), through June 30, 2039. No party to this Agreement which does not wish to remain a party during the Extension Term shall be compelled to do so by the actions of other parties under this section.

B. In December 2036, the SFPUC may provide written notice to the Wholesale Customers that it is willing to extend the Term of this Agreement. Between January 1, 2037 and June 30, 2037, any Wholesale Customer may accept the SFPUC's offer to extend the Term by providing a written notice of extension to the SFPUC. If such notices of extension are received from Wholesale Customers representing at least two-thirds in number as of June 30, 2037 and seventy five percent (75%) of the quantity of water delivered by the SFPUC to all Wholesale Customers during fiscal year 2035-36, the Term shall be extended for another five (5) years ("Second Extension Term"), through June 30, 2044. No party to this Agreement which does not wish to remain a party during the Extension Term shall be compelled to do so by the actions of other parties under this section.

C. After the expiration of the Term, and, if applicable, the Extension Terms, this Agreement may be renewed by mutual consent of the parties, subject to any modifications thereof which may be determined at that time. If fewer than all of the parties desire to renew this Agreement beyond its Term, with or without modifications, the SFPUC and the Wholesale 81 Item # C8.
5 2021 Amended and Restated WSA 17162043.1
Customers who wish to extend the Agreement shall be free to do so, provided that no party to this Agreement which does not wish to become a party to such a renewed Agreement shall be compelled to do so by the actions of other parties under this section.

2.03. Amendments
A. Amendments to Agreement; General

1. This Agreement may be amended with the written consent of all parties.

2. This Agreement may also be amended with the written consent of San Francisco and of Wholesale Customers representing at least two-thirds in number (i.e., 18 as of July 1, 2009) and seventy five percent (75%) of the quantity of water delivered by San Francisco to all Wholesale Customers during the fiscal year immediately preceding the amendment.

3. No amendment which adversely affects a Fundamental Right of a Wholesale Customer may be made without the written consent of that customer. Amendments to Article 5 which merely affect the allocation of costs between City Retail customers on the one hand and Wholesale Customers collectively on the other, and amendments to Articles 6 and 7 which merely alter budgetary, accounting and auditing procedures do not affect Fundamental Rights and may be made with the consent of parties meeting the requirements of Section

2.03.A.2.

4. When an amendment has been approved by San Francisco and the number of Wholesale Customers required in Section 2.03.A.2, San Francisco shall notify each of the Wholesale Customers in writing of the amendment's adoption. Notwithstanding any provision of law or this Agreement, any Wholesale Customer that claims that the amendment violates its Fundamental Rights under Section 2.03.A.3, shall have 30 days from the date San Francisco delivers the notice of its adoption in which to challenge the amendment’s validity through a judicial action. If no such action is filed within 30 days, the amendment shall be finally and conclusively deemed to have been adopted in compliance with this section.

B. Amendments to Article 9

1. Notwithstanding the provisions of Sections 2.03.A.2 and 2.03.A.3, any provision of Article 9 which applies only to an individual Wholesale Customer may be amended with the written concurrence of San Francisco and the Wholesale Customer to which it applies; 82 Item # C8.
6 2021 Amended and Restated WSA 17162043.1
provided that the amendment will not, directly or indirectly, adversely affect the Fundamental Rights of the other Wholesale Customers.

2. Before making any such amendment effective, San Francisco shall give notice, with a copy of the text of the proposed amendment, to all other Wholesale Customers.

The Wholesale Customers shall have 30 days in which to object to the amendment on the ground that it is not permissible under this subsection. If no such objection is received by San Francisco, the proposed amendment shall become effective. If one or more Wholesale Customers object to the amendment, San Francisco, the individual Wholesale Customer with which San Francisco intends to effect the amendment, and the Wholesale Customer(s) which lodged the objection shall meet to discuss the matter.

3. If the dispute cannot be resolved and San Francisco and the Wholesale Customer involved elect to proceed with the amendment, either San Francisco or the Wholesale Customer shall give written notice of such election to each Wholesale Customer that has objected. Any Wholesale Customer that has objected to such amendment shall have 30 days from receipt of this notice within which to commence an action challenging the validity of such amendment, and such amendment shall be deemed effective as of the end of this 30-day period unless restrained by order of court.

C. Amendments to Attachments. The following attachments may be amended with the written concurrence of San Francisco and BAWSCA on behalf of the Wholesale Customers:

Attachment Name
C Individual Supply Guarantees (amendments reflecting Section

3.04 transfers only)
E Minimum Annual Purchase Quantities (amendments reflecting Section 3.04 transfers only)
E-1 Temporary Modified Minimum Annual Purchase Quantities G Water Quality Notification and Communications Plan
(2019 Update of 2017 Plan, Rev. 6)
J Water Use Measurement and Tabulation
L-1 Identification of WSIP Projects as Regional/Retail
N-1 Balancing Account/Rate Setting Calculation Table
N-2 Wholesale Revenue Requirement Schedules
83 Item # C8.
7 2021 Amended and Restated WSA 17162043.1
N-3 Schedule of Projected Water Sales, Wholesale Revenue Requirement and Wholesale Rates
P Management Representation Letter
R Classification of Existing System Assets (subject to Section

5.11)
Amendments to these attachments shall be approved on behalf of San Francisco by the Commission and on behalf of BAWSCA by its Board of Directors, unless the Commission by resolution delegates such authority to the General Manager of the SFPUC or the Board of Directors by resolution delegates such authority to the General Manager/CEO of BAWSCA.

D. Amendments to Individual Water Sales Contracts. Individual Water Sales Contracts described in Section 9.01 may be amended with the written concurrence of San Francisco and the Wholesale Customer which is a party to that Individual Water Sales Contract; provided that the amendment is not inconsistent with this Agreement or in derogation of the Fundamental Rights of other Wholesale Customers under this Agreement.

84 Item # C8.
8 2021 Amended and Restated WSA 17162043.1
Article 3. Water Supply

3.01. Supply Assurance
A. San Francisco agrees to deliver water to the Wholesale Customers up to the amount of the Supply Assurance. The Supply Assurance is for the benefit of the entities listed in Section 1.02, irrespective of whether or not they have executed this Agreement. Water delivered by San Francisco to Retail Customers shall not be included in the Supply Assurance.

Until December 31, 2018, the foregoing commitment is subject to Article 4.

B. Both the Supply Assurance and the Individual Supply Guarantees identified in Section 3.02 are expressed in terms of daily deliveries on an annual average basis and do not themselves constitute a guarantee by San Francisco to meet peak daily or hourly demands of the Wholesale Customers, irrespective of what those peak demands may be. The parties acknowledge, however, that the Regional Water System has been designed and constructed to meet peak daily and hourly demands and that its capacity to do so has not yet been reached.

San Francisco agrees to operate the Regional Water System to meet peak requirements of the Wholesale Customers to the extent possible without adversely affecting its ability to meet peak demands of Retail Customers. This Agreement shall not preclude San Francisco from undertaking to meet specific peak demand requirements of individual Wholesale Customers in their Individual Water Sales Contracts.

C. The Supply Assurance is perpetual and shall survive the expiration or earlier termination of this Agreement. Similarly, the Individual Supply Guarantees identified in Section

3.02 and/or the Individual Water Sales Contracts are perpetual and shall survive the expiration or earlier termination of this Agreement or the Individual Water Sales Contracts.

D. Notwithstanding the Supply Assurance established by this section, the Individual Supply Guarantees identified in Section 3.02 and the Individual Water Sales Contracts, the amount of water made available by San Francisco to the Wholesale Customers is subject to reduction, to the extent and for the period made necessary by reason of water shortage, Drought, Emergencies, or by malfunctioning or rehabilitation of facilities in the Regional Water System. Any such reduction will be implemented in accordance with Section 3.11. The amount of water made available to the Wholesale Customers may not be reduced, however, merely because the water recycling and groundwater projects which the WSIP envisions to be constructed within San Francisco, or the conservation programs intended to reduce water use 85 Item # C8.
9 2021 Amended and Restated WSA 17162043.1
by Retail Customers that are included in the WSIP, do not generate the yield or savings (10 MGD combined) anticipated by San Francisco.

3.02. Allocation of Supply Assurance
A. Pursuant to Section 7.02 of the 1984 Agreement, a portion of the Supply Assurance has been allocated among 24 of the 26 Wholesale Customers. These Individual Supply Guarantees are also expressed in terms of annual average metered deliveries of millions of gallons per day and are listed in Attachment C.

B. Three Wholesale Customers do not have Individual Supply Guarantees. The cities of San Jose and Santa Clara do not have an Individual Supply Guarantees because San Francisco has provided water to them on a temporary and interruptible basis as described in Sections 4.05 and 9.06. The City of Hayward does not have an Individual Supply Guarantee because of the terms of the 1962 contract between it and San Francisco, as further described in Section 9.03.

C. If the total amount of water delivered by San Francisco to Hayward and to the Wholesale Customers that are listed on Attachment C exceeds 184 MGD over a period of three consecutive fiscal years (i.e., July 1 through June 30), then the Individual Supply Guarantees of those Wholesale Customers listed on Attachment C shall be reduced pro rata so that their combined entitlement and the sustained use by Hayward does not exceed 184 MGD. The procedure for calculating the pro rata reduction in Individual Supply Guarantees is set out in Attachment D.

1. The provisions of this subsection C are not in derogation of the reservation of claims to water in excess of the Supply Assurance which are contained in Section

8.07. Nor do they constitute an acknowledgement by Wholesale Customers other than Hayward that San Francisco is obligated or entitled to reduce their Individual Supply Guarantees in the circumstances described herein. The provisions of this subsection C shall, however, be operative unless and until a court determines that its provisions violate rights of the Wholesale Customers derived independently of this Agreement.

2. The foregoing paragraph is not intended to and shall not constitute a contractual commitment on the part of San Francisco to furnish more water than the Supply Assurance to the Wholesale Customers or a concession by San Francisco that the provisions of this subsection violate any rights of the Wholesale Customers. 86 Item # C8.
10 2021 Amended and Restated WSA 17162043.1
D. Notwithstanding the reservation of claims contained in Sections 3.02.C and 8.07, it shall be the responsibility of each Wholesale Customer to limit its purchases of water from San Francisco so as to remain within its Individual Supply Guarantee. San Francisco shall not be liable to any Wholesale Customer or be obligated to supply more water to any Wholesale Customer individually or to the Wholesale Customers collectively than the amount to which it or they are otherwise entitled under this Agreement due to the use by any Wholesale Customer of more water than the amount to which it is entitled under this Agreement.

E. San Francisco shall install such new connections between the Regional Water System and the distribution system of any Wholesale Customer that are necessary to deliver the quantities of water to which the Wholesale Customer is entitled under this Agreement. San Francisco shall have the right to determine the location of such connections, in light of the need to maintain the structural integrity of the Regional Water System and, where applicable, the need to limit peaking directly off of Regional Water System pipelines by a Wholesale Customer's individual retail customers, the need to ensure that a Wholesale Customer's individual retail customers have access to alternative sources of water in the event of a reduction in San Francisco's ability to provide them with water, and other factors which may affect the desirability or undesirability of a particular location. San Francisco's decisions regarding the location of new connections and the location, size and type of any new meters shall not be reviewable by a court except for an abuse of discretion or failure to provide a Wholesale Customer with connections and meters adequate to deliver the quantity of water to which it is entitled under this Agreement.

3.03. Wholesale Customer Service Areas
A. Each of the Individual Water Sales Contracts described in Section 9.01 will contain, as an exhibit, a map of the Wholesale Customer’s service area. A Wholesale Customer may not deliver water furnished to it by San Francisco outside the boundary of its service area without the prior written consent of San Francisco, except for deliveries to another Wholesale Customer on an emergency and temporary basis pursuant to Section 3.07.B.

B. If a Wholesale Customer wishes to expand its service area, it shall request San Francisco's consent to the expansion and provide information reasonably requested by San Francisco about the amount of water projected to be purchased from San Francisco to meet demand within the area proposed to be added to the service area. 87 Item # C8.
11 2021 Amended and Restated WSA 17162043.1
C. San Francisco may refuse a Wholesale Customer's request to expand its service area on any reasonable basis. If San Francisco denies a request by a Wholesale Customer to expand its service area, or fails to act on the request for six months after it has been submitted, the Wholesale Customer may challenge San Francisco's denial or delay in court. Such a challenge may be based on the Wholesale Customers’ claim, reserved in Section 8.07, that San Francisco is obligated under federal or state law to furnish water, included within its Individual Supply Guarantee, to it for delivery outside its then-existing service area and that it is entitled to enlarge its service area to supply water to such customers. San Francisco reserves the right to contest any such claim on any applicable ground. This subsection does not apply to San Jose and Santa Clara, whose maximum service areas are fixed pursuant to Section 9.06.

D. This section will not prevent San Francisco and any Wholesale Customer, other than San Jose and Santa Clara, from agreeing in an Individual Water Sales Contract or an amendment thereto that:
• the Wholesale Customer may expand its service area without subsequent San Francisco approval to a definitive size but no larger, or
• the Wholesale Customer will not expand its service area beyond its present limits without San Francisco approval
and waiving the provisions of this section with respect to any additional expansion.

E. If two or more Wholesale Customers agree to adjust the boundaries of their respective service areas so that one assumes an obligation to serve customers in an area that was previously within the service area of another Wholesale Customer, they may also correspondingly adjust their respective Individual Supply Guarantees. Such adjustments are not subject to the requirements of Section 3.04 and shall require only the consent of San Francisco and the Wholesale Customers involved, so long as the Supply Assurance and the Individual Supply Guarantees of other Wholesale Customers are not affected. Service area boundary adjustments that would result in the expansion of any California Water Service Company service areas are subject to the requirements of Section 9.02.D. Any adjustment of service area boundaries that would result in the supply of water in violation of this Agreement or the Act shall be void.

F. San Francisco acknowledges that it has heretofore consented in writing to deliveries of water by individual Wholesale Customers outside their service area boundaries and 88 Item # C8.
12 2021 Amended and Restated WSA 17162043.1
agrees that nothing in this Agreement is intended to affect such prior authorizations, which remain in full force and effect according to their terms. Such authorizations shall be identified in the Individual Water Sales Contracts.

3.04. Permanent Transfers of Individual Supply Guarantees and Minimum Annual Purchase Quantities
A. A Wholesale Customer that has an Individual Supply Guarantee may transfer a portion of it to one or more other Wholesale Customers, as provided in this section.

B. Transfers of a portion of an Individual Supply Guarantee must be permanent, as opposed to temporary or time-limited. Notwithstanding the previous sentence, a portion of an Individual Supply Guarantee that has been transferred under this section may be included in another transfer under this section at a later date. The minimum quantity that may be transferred is 1/10th of a MGD.

C. Transfers of a portion of a Minimum Annual Purchase Quantity may be included in transfers of a portion of an Individual Supply Guarantee and are subject to the same requirements for Individual Supply Guarantee transfers in this section as well as the following conditions:

1. Transferor of Minimum Annual Purchase Quantity. A Wholesale Customer subject to the minimum annual purchase requirements of Section 3.07.C may transfer both a portion of its Individual Supply Guarantee and a portion of its Minimum Annual Purchase Quantity to one or more Wholesale Customers that have an Individual Supply Guarantee. The process by which such a transfer may be proposed and approved is set forth in subparts D and E of this section. A Wholesale Customer that had a Minimum Annual Purchase Quantity at the start of the Term of this Agreement may not cumulatively transfer, over the course of one or multiple transfers, more than half (50%) of its Minimum Annual Purchase Quantity as first specified in Attachment E at the start of the Term of this Agreement. Wholesale Customers that had a Minimum Annual Purchase Quantity at the start of the Term of this Agreement may not cumulatively transfer, over the course of one or multiple transfers, more than 6 MGD of the total aggregate Minimum Annual Purchase Quantity specified in Attachment E at the start of the Term of this Agreement. A Wholesale Customer that received a Minimum Annual Purchase Quantity through a transfer under this section may cumulatively transfer, over the course of one or multiple transfers, a portion of or all of the Minimum Annual Purchase Quantity it received 89 Item # C8.
13 2021 Amended and Restated WSA 17162043.1
pursuant to this section. The effect of such a transfer will be a reduction in the transferor’s Individual Supply Guarantee, specified in Attachment C, and a reduction in the transferor’s Minimum Annual Purchase Quantity, specified in Attachment E. The SFPUC and BAWSCA will update Attachments C and E to reflect such changes, pursuant to Section 3.04.F. The reduction in the transferor’s permanent Minimum Annual Purchase Quantity shall become effective in the same fiscal year in which the transfer becomes effective.

2. Transferee of Minimum Annual Purchase Quantity. A Wholesale Customer that has an Individual Supply Guarantee may be the recipient, or transferee, of both a portion of Individual Supply Guarantee and a portion of Minimum Annual Purchase Quantity from another Wholesale Customer that has an Individual Supply Guarantee, whether or not the transferee is already subject to the minimum annual purchase requirements of Section 3.07.C.

When such a transfer is approved and effective, the transferee will initially have a revised Individual Supply Guarantee and a Temporary Modified Minimum Annual Purchase Quantity, which will be reflected on Attachments C and E-1, respectively, pursuant to Section 3.04.F. A Temporary Modified Minimum Annual Purchase Quantity will become effective in the same fiscal year in which the transfer becomes effective. The transferee’s Temporary Modified Minimum Annual Purchase Quantity will ultimately be replaced by a permanent Minimum Annual Purchase Quantity, as described in this sub-section, which will be reflected on Attachment E pursuant to Section 3.04.F.

3. Calculation of Temporary Modified Minimum Annual Purchase Quantity.

The Temporary Modified Minimum Annual Purchase Quantity that a transferee receives from a transfer under this sub-section is the sum of (1) the average annual (fiscal year) quantity of water purchased by the transferee from the SFPUC (plus Imputed Sales, if applicable) in the most recent five previous non-drought fiscal years, plus (2) the relevant reduction in the transferor's Minimum Annual Purchase Quantity. For this calculation, the five previous non- drought fiscal years need not be consecutive. Notwithstanding the preceding sentences in this paragraph, if a transferee has an existing Temporary Modified Minimum Annual Purchase Quantity at the time of a new transfer under this sub-section, the transferee’s new Temporary Modified Minimum Annual Purchase Quantity under the new transfer will be the sum of (1) the transferee’s existing Temporary Modified Minimum Annual Purchase Quantity, plus (2) the relevant reduction in the transferor’s Minimum Annual Purchase Quantity. Attachment E-2 contains sample calculations of the Temporary Modified Minimum Annual Purchase Quantity for 90 Item # C8.
14 2021 Amended and Restated WSA 17162043.1
transferees who are subject to, or not yet subject to, the minimum annual purchase requirements of Section 3.07.C.

4. Duration and Expiration of Temporary Modified Minimum Annual Purchase Quantity.
a. Once a transfer under this sub-section is approved and effective, the transferee is required to purchase from the SFPUC its Temporary Modified Minimum Annual Purchase Quantity until the quantity of water delivered annually to the transferee by the SFPUC meets or exceeds the Temporary Modified Minimum Annual Purchase Quantity for three consecutive fiscal years. It may take many years for the quantity of water delivered to meet or exceed this amount. The transferee’s Temporary Modified Minimum Annual Purchase Quantity is subject to waiver by the SFPUC as described in Section 3.07.C. However, even in the event of such a waiver, a fiscal year in which the transferee still purchases from the SFPUC an amount of water that meets or exceeds its Temporary Modified Minimum Annual Purchase Quantity will count as a fiscal year in which the transferee has met or exceeded its Temporary Modified Minimum Annual Purchase Quantity for the purposes of this paragraph. b. Once the quantity of water delivered to the transferee by the SFPUC reaches the milestone described in the preceding paragraph, the transferee will no longer be subject to the Temporary Modified Minimum Annual Purchase Quantity. Instead, the transferee will have a new permanent Minimum Annual Purchase Quantity, which will equal the sum of (1) its previous Minimum Annual Purchase Quantity, if applicable, plus (2) the relevant reduction in the transferor’s Minimum Annual Purchase Quantity. The transferee’s new permanent Minimum Annual Purchase Quantity will be reflected on Attachment E, and its expired Temporary Modified Minimum Annual Purchase Quantity will be removed from Attachment E-1, pursuant to Section 3.04.F. Any other Temporary Modified Minimum Annual Purchase Quantities of the transferee will remain in effect on Attachment E-1.

D. Transfers of portions of Individual Supply Guarantees, including transfers of portions of Minimum Annual Purchase Quantities, are subject to approval by the SFPUC.

SFPUC review is limited to determining (1) whether a proposed transfer complies with the Act, and (2) whether the affected facilities in the Regional Water System have sufficient capacity to accommodate delivery of the increased amount of water to the proposed transferee.

E. The participants in a proposed transfer shall provide written notice to the SFPUC and BAWSCA specifying (1) the amount of the Individual Supply Guarantee proposed to be 91 Item # C8.
15 2021 Amended and Restated WSA 17162043.1
transferred, (2) the proposed effective date of the transfer, which shall not be less than 60 days after the notice is submitted to the SFPUC, and (3) the Individual Supply Guarantees of both participants resulting from the transfer. If a proposed transfer includes the transfer of a portion of Minimum Annual Purchase Quantity, then the participants will provide additional written notice specifying (4) the amount of the Minimum Annual Purchase Quantity proposed to be transferred, (5) transferee's Temporary Modified Minimum Annual Purchase Quantity and permanent Minimum Annual Purchase Quantity under the transfer, and (6) the transferor's new Minimum Annual Purchase Quantity under the transfer. The SFPUC may require that the participants in any proposed transfer provide additional information reasonably necessary to evaluate the operational impacts of the proposed transfer and any additional information that will assist the SFPUC in its review of the proposed transfer. The SFPUC will not unreasonably withhold or delay its approval of a proposed transfer; if the SFPUC does not act on the written notice provided by the participants within 60 days, the transfer will be deemed to have been approved. An approved transfer becomes effective on the proposed effective date set forth in the written notice of the proposed transfer provided to the SFPUC and BAWSCA.

F. Within 30 days after the transfer has become effective, both the transferor and the transferee will provide written notice to the SFPUC and BAWSCA. By September 30 of each year during the Term, the SFPUC and BAWSCA will prepare an updated Attachment C, and updated Attachments E and E-1 where applicable, to reflect the effects of transfers occurring during the immediately preceding fiscal year. By September 30 of each year during the Term, the Individual Water Sales Contracts between San Francisco and any Wholesale Customers who are participants in a transfer under this Section will be amended with the written concurrence of San Francisco and those Wholesale Customers to reflect the effects of transfers occurring during the immediately preceding fiscal year, as necessary.

G. Amounts transferred will remain subject to pro rata reduction under the circumstances described in Section 3.02.C and according to the formula set forth in Attachment D.

H. A proposed transfer that does not satisfy the requirements of this section may be presented as an amendment to this Agreement pursuant to Section 2.03. 92 Item # C8.
16 2021 Amended and Restated WSA 17162043.1

3.05. Restrictions on Resale
Each Wholesale Customer agrees that it will not sell any water purchased from San Francisco to a private party for resale by such private party to others in violation of the Act.

Each Wholesale Customer also agrees that it will not sell water purchased from San Francisco to another Wholesale Customer without prior written approval of the SFPUC, except on a temporary and emergency basis as permitted in Section 3.07.B.2. The SFPUC agrees that it will not unreasonably withhold its consent to a request by a Wholesale Customer to deliver water to another Wholesale Customer for resale.

3.06. Conservation; Use of Local Sources; Water Management Charge A. In order to support the continuation and expansion of water conservation programs, water recycling, and development of alternative supplies within the Wholesale Customers’ service areas, the SFPUC will, if requested by BAWSCA, include the Water Management Charge in water bills sent to Wholesale Customers. The SFPUC will deliver all Water Management Charge revenue to BAWSCA monthly and shall deliver an annual accounting of Water Management Charge revenue to BAWSCA within 90 days after the end of each fiscal year. The SFPUC’s obligations to collect and deliver Water Management Charge revenue to BAWSCA under this subsection are conditioned on BAWSCA’s delivery to the SFPUC of an annual report describing the projects and programs on which Water Management Charge funds received from the SFPUC during the previous fiscal year were expended and an estimate of the amount of water savings attributable to conservation programs and of the yield of alternative supplies developed. This report will be due within 180 days after the end of each fiscal year during which Water Management Charge funds were received.

B. The SFPUC will work together with BAWSCA to explore ways to support water conservation programs, recycling projects, and conjunctive use alternatives outside the Wholesale Service Area, in particular projects and programs that have the potential to increase both flows in the lower Tuolumne River (downstream of New Don Pedro Reservoir) and water deliveries to the Regional Water System.

C. Each Wholesale Customer shall take all actions within its legal authority related to water conservation that are necessary to insure that the SFPUC (a) remains eligible for (i) state and federal grants and (ii) access to the Drought Water Bank operated by the California Department of Water Resources, as well as other Drought-related water purchase or transfer 93 Item # C8.
17 2021 Amended and Restated WSA 17162043.1
programs, and (b) complies with future legal requirements imposed on the Regional Water System by the federal government, the State, or any other third party as conditions for receiving funding or water supply.

D. San Francisco and each Wholesale Customer agree that they will diligently apply their best efforts to use both surface water and groundwater sources located within their respective service areas and available recycled water to the maximum feasible extent, taking into account the environmental impacts, the public health effects and the effects on supply reliability of such use, as well as the cost of developing such sources.

3.07. Restrictions on Purchases of Water from Others; Minimum Annual Purchases A. Each Wholesale Customer (except for Alameda County Water District and the cities of Milpitas, Mountain View and Sunnyvale) agrees that it will not contract for, purchase or receive, with or without compensation, directly or indirectly, from any person, corporation, governmental agency or other entity, any water for delivery or use within its service area without the prior written consent of San Francisco.

B. The prohibition in subsection A does not apply to:

1. recycled water;

2. water necessary on an emergency and temporary basis, provided that the Wholesale Customer promptly gives San Francisco notice of the nature of the emergency, the amount of water that has been or is to be purchased, and the expected duration of the emergency; or

3. water in excess of a Wholesale Customer’s Individual Supply Guarantee.

C. Alameda County Water District and the cities of Milpitas, Mountain View and Sunnyvale may purchase water from sources other than San Francisco, provided that San Francisco shall require that each purchase a minimum annual quantity of water from San Francisco. These Minimum Annual Purchase Quantities are set out in Attachment E and shall also be included in the Individual Water Sales Contracts between San Francisco and each of these four Wholesale Customers. Pursuant to Section 3.04, certain Wholesale Customers may also be required to purchase Temporary Modified Minimum Annual Purchase Quantities, set out in Attachment E-1, from San Francisco. Attachment E will be updated pursuant to Section 3.04 to reflect any reduction in existing Minimum Annual Purchase Quantities and any addition of 94 Item # C8.
18 2021 Amended and Restated WSA 17162043.1
new Minimum Annual Purchase Quantities when Temporary Modified Minimum Annual Purchase Quantities expire and are removed from Attachment E-1; Individual Water Sales Contracts between San Francisco and any Wholesale Customers who are participants in a transfer under Section 3.04 will similarly be amended, as necessary. After the end of each fiscal year, the SFPUC will send a written notice to each Wholesale Customer that is subject to the minimum annual purchase requirements of this section with a copy to BAWSCA. The notice will include: (1) the quantity of water delivered to the Wholesale Customer during the previous fiscal year; (2) whether or not the Wholesale Customer met its minimum annual purchase requirement under this section; (3) any Imputed Sales charged to the Wholesale Customer; and (4) the status of any Temporary Modified Minimum Annual Purchase Quantity of the Wholesale Customer, if applicable. The minimum annual purchase requirements set out in Attachments E and E-1 will be waived during a Drought or other period of water shortage if the water San Francisco makes available to these Wholesale Customers is less than its Minimum Annual Purchase Quantity, and may be waived during a state of emergency declared by the Governor of California that impacts water supply use or deliveries from the Regional Water System.

3.08. Water Quality
A. San Francisco shall deliver treated water to Wholesale Customers (except Coastside County Water District, which receives untreated water from Crystal Springs and Pilarcitos Reservoirs) that complies with primary maximum contaminant level and treatment technique standards at the regulatory entry points designated in the San Francisco Regional Water System Domestic Water Supply Permit (currently Permit No. 02-04-04P3810001) issued by the California Department of Public Health (CDPH).

B. San Francisco will provide notice to the Wholesale Customers in accordance with the Water Quality Notification and Communications Plan (2019 Update of 2017 Plan, Rev. 6), attached hereto as Attachment G. San Francisco will regularly update its plan in consultation with the Wholesale Customers and the CDPH. The next update will be completed one year after the Effective Date and include expanded coverage of secondary maximum contaminant level exceedances and water quality communication triggers. The plan will note that the Wholesale Customers will receive the same notification no later than the San Francisco water system (currently Permit No. 02-04-01P3810011) except for distribution-related issues.

C. San Francisco and the Wholesale Customers will establish a Water Quality Committee. The Water Quality Committee will meet at least quarterly to collaboratively address 95 Item # C8.
19 2021 Amended and Restated WSA 17162043.1
water quality issues, such as Water Quality Notification and Communications Plan updates, regulatory issues, and water quality planning studies/ applied research. San Francisco and each Wholesale Customer will designate a representative to serve on the committee. There will be a Chair and Vice Chair position for the Water Quality Committee. The Chair and Vice Chair positions will be held by San Francisco and the Wholesale Customers and rotate between them on an annual basis.

3.09. Completion of WSIP
San Francisco will complete construction of the physical facilities in the WSIP by December 30, 2021. The SFPUC agrees to provide for full public review and comment by local and state interests of any proposed changes that delay previously adopted project completion dates or that delete projects. The SFPUC shall meet and consult with BAWSCA before proposing to the Commission any changes in the scope of WSIP projects which reduce their capacity or ability to achieve adopted Level of Service Goals and Objectives. The SFPUC retains discretion to determine whether to approve the physical facilities in the WSIP until after it completes the CEQA process as set forth in Section 4.07.

3.10. Regional Water System Repair, Maintenance and Operation A. San Francisco will keep the Regional Water System in good working order and repair consistent with prudent utility practice.

B. San Francisco will submit reports to its Retail and Wholesale Customers on the "State of the Regional Water System," including reports on completed and planned maintenance, repair or replacement projects or programs, by September of every even- numbered year, with reports to start in September 2010.

C. San Francisco will cooperate with any audit of the SFPUC's asset management practices that may be initiated and financed by BAWSCA or the Wholesale Customers.

BAWSCA may contract with third parties to conduct the audits. San Francisco will consider the findings and recommendations of such audits and will provide a written response indicating agreement with the recommendations, or disagreement with particular recommendations and the reasons why, within 90 calendar days after receipt.

D. San Francisco will continue to operate its reservoirs in a manner that assigns higher priority to the delivery of water to the Bay Area and the environment than to the 96 Item # C8.
20 2021 Amended and Restated WSA 17162043.1
generation of electric power. The SFPUC, as the Regional Water System operator, is solely responsible for making day-to-day operational decisions.

3.11. Shortages
A. Localized Water Reductions. Notwithstanding San Francisco's obligations to deliver the Supply Assurance to the Wholesale Customers collectively and the Individual Supply Guarantees to Wholesale Customers individually, San Francisco may reduce the amount of water available or interrupt water deliveries to specific geographical areas within the Regional Water System service area to the extent that such reductions are necessary due to Emergencies, or in order to install, repair, rehabilitate, replace, investigate or inspect equipment in, or perform other maintenance work on, the Regional Water System. Such reductions or interruptions may be imposed by San Francisco without corresponding reductions or interruptions in the amount of water available to SFPUC water users outside the specific geographical area where reductions or interruptions are necessary, if the system's ability to supply water outside the specific geographical area has not been impaired. In the event of such a reduction or interruption, San Francisco will restore the supply of water to the specific geographical area as soon as is possible. Except in cases of Emergencies (during which oral notice shall be sufficient), San Francisco will give the affected Wholesale Customer(s) reasonable written notice of such localized reductions or interruptions, the reasons therefor, and the probable duration thereof.

B. System-Wide Shortages and SFPUC Response to Regional Emergencies.

Following a major system emergency event, the SFPUC will work closely with its Wholesale Customers to monitor customer demand, including the demand source. In the event that any individual Wholesale Service Area or Retail Service Area customer’s uncontrolled distribution system leaks could result in major water waste and endanger the supply provided by the Regional Water System as a whole, flow through some customer connections may need to be temporarily reduced or terminated. SFPUC will work closely with customers to assess the nature of the demand (e.g. fire-fighting versus leakage), so that public health and safety protection can be given top priority.

1. All emergencies that require use of non-potable source water will require use of chlorine, or other suitable disinfectant, if feasible. 97 Item # C8.
21 2021 Amended and Restated WSA 17162043.1

2. San Francisco will use its best efforts to meet the seismic reliability and delivery reliability Level of Service Goals and Objectives adopted by the Commission in conjunction with the WSIP. San Francisco will distribute water on an equitable basis throughout the Regional Water System service area following a regional Emergency, subject to physical limitations caused by damage to the Regional Water System.

3. San Francisco's response to Emergencies will be guided by the then- current version of the ERRP. The SFPUC shall periodically review, and the Commission may amend, the ERRP to ensure that it remains an up-to-date and effective management tool.

4. The SFPUC will give the Wholesale Customers notice of any proposal to amend the ERRP in a manner that would affect them. The notice will be delivered at least thirty days in advance of the date on which the proposal is to be considered by the Commission and will be accompanied by the text of the proposed amendment.

C. Shortages Caused by Drought; Acquisition of Dry Year Supplies.

Notwithstanding San Francisco's obligations to deliver the Supply Assurance to the Wholesale Customers collectively and the Individual Supply Guarantees to Wholesale Customers individually, San Francisco may reduce the amount of water available to the Wholesale Customers in response to Drought.

1. The Tier 1 Shortage Plan (Attachment H) will c ontinue to be used to allocate water from the Regional Water System between Retail and Wholesale Customers during system-wide shortages of 20% or less.

2. San Francisco and the Wholesale Customers may negotiate in good faith revisions to the Tier 1 Shortage Plan to adjust for and accommodate anticipated changes due to demand hardening in the SFPUC's Wholesale and Retail Service Areas. Until agreement is reached, the current Tier 1 Shortage Plan will remain in effect.

3. The SFPUC will honor allocations of water among the Wholesale Customers (“Tier 2 Allocations”) provided by BAWSCA or if unanimously agreed to by all Wholesale Customers. If BAWSCA or all Wholesale Customers do not provide the SFPUC with Tier 2 Allocations, then the SFPUC may make a final allocation decision after first meeting and discussing allocations with BAWSCA and the Wholesale Customers. For Regional Water System shortages in excess of 20%, San Francisco shall (a) follow the Tier 1 Shortage Plan allocations up to the 20% reduction, (b) meet and discuss how to implement incremental 98 Item # C8.
22 2021 Amended and Restated WSA 17162043.1
reductions above 20% with the Wholesale Customers, and (c) make a final determination of allocations above the 20% reduction. After the SFPUC has made the final allocation decision, the Wholesale Customers shall be free to challenge the allocation on any applicable legal or equitable basis.

4. San Francisco will use its best efforts to identify potential sources of dry year water supplies and establish the contractual and other means to access and deliver those supplies in sufficient quantity to meet a goal of not more than 20 percent system-wide shortage in any year of the design drought.

5. San Francisco will cooperate with BAWSCA to improve water supply reliability. As an example of such cooperation, San Francisco may invite a representative of BAWSCA to attend and participate in meetings with third parties for development of dry year water supplies. If San Francisco does not invite a BAWSCA representative to attend a specific scheduled meeting, it will promptly (within 30 days of any such meeting) provide BAWSCA with a written or oral report on the meeting, including any decisions reached at it, as well as information about planned subsequent meetings. Progress in securing dry year water supplies will be reported to the SFPUC and the BAWSCA board of directors during the first quarter of each calendar year.

3.12. Wheeling of Water from Outside SFPUC System
Subject to the Wheeling Statute, the SFPUC will not deny use of Regional Water System unused capacity for wheeling when such capacity is available for wheeling purposes during periods when the SFPUC has declared a water shortage emergency under Water Code Section 350 if the following conditions are met:

A. The transferor pays reasonable charges incurred by the SFPUC as a result of the wheeling, including capital, operation, maintenance, administrative and replacement costs (as such are defined in the Wheeling Statute).

B. Wh
eeled water that is stored in the Regional Water System spills first.

C. Wheeled water will not unreasonably: (1) impact fish and wildlife resources in Regional Water System reservoirs; (2) diminish the quality of water delivered for consumptive uses; or (3) increase the risk of exotic species impairing Regional Water System operations.

The transferor may at its own expense provide for treatment to mitigate these effects. 99 Item # C8.
23 2021 Amended and Restated WSA 17162043.1
D. Priority will be given to wheeling by Wholesale Customers or BAWSCA over arrangements for third-party public entities.

3.13. Limits on New Customers
A. New Wholesale Customers Prior to December 31, 2028. Until December 31, 2028, San Francisco will not enter into contracts to supply water to any entity other than a Wholesale Customer (whether permanent or temporary, firm or interruptible) unless:

1. It completes any necessary environmental review under CEQA of the proposed new wholesale water service obligations as provided in Section 4.07;

2. It concurrently completes any necessary environmental review under CEQA as provided in Section 4.07 and commits to make both San Jose and Santa Clara permanent customers with Individual Supply Guarantees equal to at least 9 MGD; and

3. This Agreement is amended to incorporate any commitments to proposed new wholesale customers and to San Jose and Santa Clara, and to address the effects, if any, of the new customer(s) on water supply reliability, water quality and cost to existing customers of the Regional Water System.

B. New Wholesale Customers After December 31, 2028. As of January 1, 2029, San Francisco will not enter into contracts to supply water to any entity other than a Wholesale Customer (whether permanent or temporary, firm or interruptible) unless:

1. It completes any necessary environmental review under CEQA of the proposed new wholesale water service obligations as provided in Section 4.07;

3. Doing so increases the reliability of the Regional Water System; and

4. This Agreement is concurrently amended (a) to reflect that increased reliability by means of an increased commitment by San Francisco to deliver water during Droughts and (b) to address the effects, if any, of the new customer(s) on water supply, water quality and cost to existing customers of the Regional Water System. 100
Item # C8.
24 2021 Amended and Restated WSA 17162043.1
C. New Retail Customers. San Francisco may enter into new retail water service obligations outside of the City and County of San Francisco:

1. Only in Alameda, San Mateo, Santa Clara, San Joaquin and Tuolumne Counties;

2. That are within or immediately adjacent to areas in which it currently serves other Retail Customers; and

3. Until the aggregate additional demand represented by the new retail customers reaches 0.5 MGD.

The limitations on serving new Retail Customers described in this subsection do not apply to historical obligations to supply water that may be contained in prior agreements between the SFPUC or its predecessor the Spring Valley Water Company, and individual users or property owners located adjacent to Regional Water System transmission pipelines.

D. Water Exchanges and Cost Sharing Agreements with Other Water Suppliers. Subject to completion of necessary environmental review under CEQA, San Francisco may at any time enter into water exchanges or cost sharing agreements with other water suppliers to enhance dry year or normal year water deliveries, provided that San Francisco cannot incur new water service obligations to such other water suppliers unless the requirements for taking on new wholesale customers in subsections A and B above are met.

3.14. Measurement of Water
A. The parties recognize that continuous and accurate measurement of water deliveries to and from the Regional Water System and maintenance of complete and accurate records of those measurements is necessary (1) for the costs of the Regional Water System to be allocated in accordance with this Agreement, (2) for implementation of other provisions of this Agreement, and (3) for effective operation and maintenance of a water system serving a large urbanized region.

B. It is the responsibility of the SFPUC to obtain and record these measurements.

To do so, the SFPUC shall install, maintain and operate measuring and recording equipment at the following locations: (1) inputs to the Regional Water System from all water sources (“System Input Meters”), (2) internal flow meters to support operation of the Regional Water System (“In- Line Meters”), (3) deliveries to the City at the San Francisco-San Mateo County line (“County- 101
Item # C8.
25 2021 Amended and Restated WSA 17162043.1
Line Meters”) and to three reservoirs in San Francisco (“In-City Terminal Reservoir Meters”), (4) deliveries to SFPUC Retail Customers located outside the boundaries of the City, and (5) deliveries to the Wholesale Customers, as described and illustrated in Attachment J.

C. The SFPUC shall inspect, test, service, and calibrate the measuring and recording equipment installed at the locations described in subsection B and will repair or replace them when necessary, in order to ensure that their accuracy is consistent with specifications provided in Attachment J.

D. The SFPUC shall continue to contract with a qualified independent metering consultant to perform periodic inspection, testing, servicing and calibration of the County-Line Meters, the In-City Terminal Reservoir Meters, and the System Input and In-Line Meters described in Attachment J, as well as the portion of the SFPUC’s Supervisory Control and Data Acquisition (SCADA) system that utilizes the flow signals produced by that measuring and recording equipment. The method, schedule and frequency for calibration and maintenance of the County-Line Meters and the In-City Terminal Reservoir Meters are specified in Attachment J. The SFPUC shall provide copies of the metering consultant's reports to BAWSCA.

E. System Input Meters measure water deliveries into the Regional Water System from sources such as Hetch Hetchy and the SFPUC’s water treatment plants. System Input Meters also measure deliveries from the Regional Water System to outside sources or from such sources to the Regional Water System through interties with the Santa Clara Valley Water District and the East Bay Municipal Utility District. In-Line Meters measure internal system flows and are located on the Bay Division Pipelines and other main transmission pipelines. These meters are collectively referred to as the “System Input and In-line Meters.” Similar to the County-Line Meters, the System Input and In-Line Meters have secondary metering equipment, such as differential pressure transmitters and flow recorders. The System Input and In-Line Meters, and all associated secondary metering equipment, shall be calibrated and maintained according to the method, schedule, and frequency specified in the Procedures Manual described in subsection G, below.

F. The locations of the smaller and more numerous meters described in subsection B (4) and (5) are not illustrated in Attachment J; however, they are also critical in the determination of cost allocations, and accordingly require continued maintenance and 102
Item # C8.
26 2021 Amended and Restated WSA 17162043.1
calibration. It is the responsibility of the SFPUC to maintain the accuracy of these meters and their secondary metering equipment.

G. The SFPUC will prepare a Procedures Manual which will describe in detail the procedures for periodic inspection, testing, servicing and calibration of the measuring and recording equipment described in subsection B. Once the Procedures Manual is completed, the SFPUC and BAWSCA may agree that it should supersede some or all of the requirements in Attachment J regarding the County-Line and the In-City Terminal Reservoir Meters. Unless and until such an agreement is reached and documented, however, the requirements in Attachment J, Section D will continue in force as minimum standards for meter maintenance and calibration of the County-Line and In-City Terminal Reservoir Meters (subject to modification under the circumstances described in Attachment J, Section A.4).

H. If BAWSCA and the SFPUC are unable to agree on the water use calculations required by Attachment J for a particular year, the Wholesale Customers may file a demand for arbitration challenging the SFPUC's determination of the Wholesale Revenue Requirement for that year on the basis of its reliance on disputed water use calculations. Such a challenge must be brought in the manner and within the time specified in Section 8.01.

3.15. New Sources of Water Supply to Maintain Supply Assurance A. Urgent Reductions of Existing Surface Water Supplies. Sudden and unanticipated events may require San Francisco to act promptly to protect the health, safety and economic well-being of its Retail and Wholesale Customers. Such sudden events include, but are not limited to drought, earthquakes, terrorist acts, catastrophic failures of facilities owned and operated by San Francisco, and other natural or man-made events. If such events diminish San Francisco’s ability to maintain the Supply Assurance, San Francisco may increase the Wholesale Revenue Requirement to pay for planning, evaluation and implementation of replacement sources of supply when such needs arise and without the prior approval of the Wholesale Customers. San Francisco will keep the Wholesale Customers informed of actions being taken under this subsection, progress made, and contingency actions the Wholesale Customers may need to consider taking. To the extent appropriate and applicable, San Francisco will act in accordance with Section 3.11 and the ERRP. Nothing in this subsection limits San Francisco’s obligations under Section 3.11 to pursue additional sources of supply to augment supplies available during drought.
103
Item # C8.
27 2021 Amended and Restated WSA 17162043.1
B. Non-Urgent Reductions of Existing Surface Water Supplies. Climate change, regulatory actions and other events may impact San Francisco’s ability to maintain the Supply Assurance from its existing surface water supplies, but on timescales long enough to permit San Francisco to collaborate with its Wholesale Customers on how best to address possible impacts to water supply. If such events diminish San Francisco’s ability to maintain the Supply Assurance, San Francisco may increase the Wholesale Revenue Requirement to pay for planning, evaluation and implementation of replacement sources of supply when such needs arise and without the prior approval of the Wholesale Customers. San Francisco will keep the Wholesale Customers informed of actions being taken under this subsection, progress made, and contingency actions the Wholesale Customers may need to consider taking. San Francisco will solicit input and recommendations from BAWSCA and the Wholesale Customers, and take those recommendations into consideration. Prior to Commission approval of plans or taking other actions that would impact the Wholesale Revenue Requirement, San Francisco will hold a public hearing to receive written and oral comments. Nothing in this subsection modifies San Francisco’s obligation to maintain the ability to provide the Supply Assurance under this Agreement.

3.16. New Sources of Water Supply to Increase Supply Assurance A. Surface Water Supplies From Existing Watersheds After 2018. The Commission action in SFPUC Resolution Number 08-0200, adopted October 30, 2008 requires certain decisions by San Francisco regarding whether to supply more than 265 MGD from its watersheds following 2018. Such decisions are to be made by December 31, 2018, subject to the exercise of San Francisco's retained CEQA discretion in Section 4.07. San Francisco's future decisions may include an offer to increase the Supply Assurance at the request of some or all of its Wholesale Customers. Costs associated with providing additional water from its existing water supplies in San Mateo, Santa Clara, Alameda, Tuolumne, and Stanislaus Counties shall be allocated to Wholesale and Retail Customers as described in Article 5.

B. New Water Supplies. If San Francisco seeks to develop additional water supplies from new sources to increase the Supply Assurance available to Wholesale Customers, studies and resulting water supply projects will be conducted jointly with BAWSCA under separate agreement(s) specifying the purpose of the projects, the anticipated regional benefits and how costs of studies and implementation will be allocated and charged. Nothing in this Agreement shall serve as precedent for the allocation of such new supply capital costs 104
Item # C8.
28 2021 Amended and Restated WSA 17162043.1
between Retail and Wholesale Customers or associated operational expenses, which shall only occur following approval of both parties and amendment of this Agreement, if necessary, under Section 2.03.

3.17. Westside Basin Groundwater Storage and Recovery Project In August 2014, the SFPUC approved a WSIP project called the Groundwater Storage and Recovery Project (“Project”), which authorized the SFPUC to enter into an agreement governing the operation of the Project with the Participating Pumpers entitled “Agreement for Groundwater Storage and Recovery from the Southern Portion of the Westside Groundwater Basin by and among the San Francisco Public Utilities Commission, the City of Daly City, the City of San Bruno, and California Water Service Company” (“Project Operating Agreement”), which became effective on December 16, 2014. The Project produces Regional benefits for all customers of the Regional Water System by making use of available groundwater storage capacity in the Southern portion of the Westside Basin through the supply of additional surface water (“In Lieu Water”) to the Participating Pumpers from the Regional Water System, in exchange for a corresponding reduction in groundwater pumping at existing wells owned by the Participating Pumpers. The new groundwater supply that accrues to storage as a result of delivery of In Lieu Water will be recovered from the SFPUC Storage Account during water shortages using new Regional Project Facilities or Shared Facilities operated by the Participating Pumpers and the SFPUC. Project mitigation capital costs and annual Project operations and maintenance expenses and water supplies shall be allocated as follows:

A. All In Lieu Water delivered to the Participating Pumpers shall be (1) temporary and interruptible in nature and (2) at the sole discretion of the SFPUC based on the total volume of water available to the Regional Water System.

B. All In Lieu Water delivered to the Participating Pumpers shall be considered a delivery of water to storage and shall not be construed to affect or increase the Individual Supply Guarantees of these Wholesale Customers or to otherwise entitle them to any claim of water in excess of their Individual Supply Guarantees.

C. In the event that it is necessary to reduce the Participating Pumpers’ aggregate designated quantity of groundwater production allocation pursuant to Section 4.7 of the Project Operating Agreement, the SFPUC may supply an annual maximum of up to 500 acre feet of Participating Pumper Replacement Water from the Regional Water System at a price 105
Item # C8.
29 2021 Amended and Restated WSA 17162043.1
comparable to the Participating Pumpers’ then-current groundwater cost, as may be adjusted annually as provided for in Section 4.7 of the Project Operating Agreement. Each of the Participating Pumpers may elect to take delivery of its share of Participating Pumper Replacement Water either as interruptible surface water deliveries from the Regional Water System or as a transfer of storage credits from the SFPUC Storage Account. All revenue received from such water sales or transfers shall be considered revenue related to the sale of water and allocated between Retail Customers and Wholesale Customers on the basis of Proportional Water Use. All volumes of Participating Pumper Replacement Water delivered shall not be construed to affect or increase the Individual Supply Guarantees of these Wholesale Customers or to otherwise entitle them to any claim of water in excess of their Individual Supply Guarantees.

D. Any operation and maintenance expenses incurred by the Participating Pumpers and the SFPUC that are related to the operation of Project Facilities and Shared Facilities for Project purposes shall be included as Regional pumping expenses under Section 5.05.B of this Agreement and included as part of the Wholesale Revenue Requirement. For rate setting purposes, estimated Project operation and maintenance expenses shall be used as set forth in Section 6.01 of this Agreement. Operation and maintenance expenses associated with the Participating Pumpers' Existing Facilities that do not provide Regional benefits shall not be included in the Wholesale Revenue Requirement. On a case-by-case basis, the SFPUC may include operation and maintenance expenses associated operation of the Participating Pumpers’ Existing Facilities in the Wholesale Revenue Requirement provided that such expenses (1) are solely attributable to Project operations for a Regional benefit and (2) are not caused by the Participating Pumper's failure to operate and maintain its existing wells in a reasonable and prudent manner consistent with water utility industry standards. The SFPUC shall provide the Wholesale Customers with copies of Project Operation and Maintenance Expenses documentation provided by the Participating Pumpers under Section 9.2 of the Project Operating Agreement.

E. The Project Mitigation, Monitoring and Reporting Program (“MMRP”) adopted by the SFPUC included mitigation measure HY-6 to prevent well interference impacts to the Irrigation Well Owners. In mitigation measure HY-6, the SFPUC agreed to provide standby supplies of Irrigation Well Owner Replacement Water from the Regional Water System, to alter Project operations, and implement other actions (e.g., well replacement) to avoid well interference impacts that require the consent of the Irrigation Well Owners. The SFPUC’s 106
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Project mitigation and other obligations to the Irrigation Well Owners are memorialized in substantially identical “Groundwater Well Monitoring and Mitigation Agreements” with one or more of the Irrigation Well Owners. For purposes of this Agreement, water supplies, and the capital costs and operations and maintenance expenses associated with providing Irrigation Well Owner Replacement Water and implementing other mitigation actions identified in the Project MMRP, shall be allocated as follows:

1. Irrigation Well Owner Replacement Water shall be limited to a cumulative maximum of 1.76 mgd and shall be delivered only in volumes necessary for mitigating well interference impacts as provided in the Project MMRP. The supply of Irrigation Well Owner Replacement Water by the SFPUC shall not be considered a new water supply commitment to Retail Customers or Wholesale Customers under Section 3.13 of this Agreement. The annual volume of Irrigation Well Owner Replacement Water supplied shall be metered and allocated as water from the Regional Water System during shortages between Retail Customers and Wholesale Customers in proportion to and consistent with the provisions of the Shortage Allocation Plan. All revenue received from Irrigation Well Owners for metered deliveries of Irrigation Well Owner Replacement Water shall be considered revenue related to the sale of water and allocated between Retail Customers and Wholesale Customers on the basis of Proportional Water Use.

2. All Project capital costs incurred by the SFPUC in complying with the mitigation measures in the Project MMRP shall be considered Regional capital costs under Section 5.04 of this Agreement.

3. Operations and maintenance expenses incurred by the SFPUC in maintaining Project mitigation assets described in the Project MMRP shall be considered Regional transmission and distribution expenses under Section 5.05.D of this Agreement. Well pumping expenses that are required to be paid by the SFPUC in the agreements with the Irrigation Well Owners shall be considered Regional pumping expenses under Section 5.05.B of this Agreement.

4. Any wheeling charges imposed by California Water Service Company for delivery of Irrigation Well Owner Replacement Water shall be considered Regional transmission and distribution expenses under Section 5.05.D of this Agreement.

F. The SFPUC will audit (1) operation and maintenance expenses submitted by the Participating Pumpers, and (2) well pumping expenses submitted by the Irrigation Well Owners, 107
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for reimbursement to confirm that such costs were incurred, respectively, as a result of (1) operating Project Facilities and Shared Facilities for a Regional benefit and (2) complying with mitigation obligations in the Project MMRP. Costs associated with the use of Project Facilities or Shared Facilities for Direct Retail or Direct Wholesale purposes, or that do not otherwise provide Regional benefits, shall not be included in the Wholesale Revenue Requirement. The SFPUC is responsible for resolving disputes with the Participating Pumpers and Irrigation Well Owners concerning expense allocations. Project expense documentation, including documentation of negotiation and settlement of disputed costs, will be available for review during the Compliance Audit described in Section 7.04 of this Agreement. The Wholesale Customers may dispute the SFPUC’s resolution of expense allocations through the arbitration provisions in Section 8.01 of this Agreement.

G. The SFPUC may direct the Participating Pumpers to recover water from the SFPUC Storage Account for any type of shortage referenced in Section 3.11 of this Agreement.

Water recovered from the SFPUC Storage Account using Project Facilities and Shared Facilities may be used for (1) the benefit of all Regional Water System customers; (2) Retail Customers; or (3) one or more of the Participating Pumpers. The Wholesale Revenue Requirement shall only include operation and maintenance expenses incurred due to the operation of Project Facilities and Shared Facilities for Regional benefits, including expenses incurred due to compliance with mitigation measures in the Project MMRP.

H. All water recovered during shortages caused by drought from the SFPUC Storage Account for Regional benefit, by the Participating Pumpers and by the SFPUC for delivery to Retail and Wholesale Customers, shall be used to free up a comparable volume of surface water from the Regional Water System for allocation in accordance with the Tier 1 Shortage Plan.

I. If the Project is terminated for any reason, including breach of the Project Operating Agreement by one or more of the Participating Pumpers or the SFPUC, a force majeure event as specifically defined by the Project Operating Agreement, or due to regulatory action or legal action, then:

1. Any water remaining in the SFPUC Storage Account shall be used for the benefit of all customers of the Regional Water System;
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2. Outstanding eligible operation and maintenance expenses, including costs incurred during recovery of remaining stored water, will be allocated as provided in this Section 3.17 of this Agreement; and

3. If Project Facilities are no longer capable of being used for a Regional benefit, the Wholesale Customers will be credited with their share of proceeds from disposition of Project Facilities or reimbursed their share of such capital costs for any Project Facilities which are retained by the SFPUC for Direct Retail benefit and not used for the benefit of the Wholesale Customers, on the basis of (a) original cost less depreciation and outstanding related Indebtedness or (b) original cost less accumulated depreciation for revenue funded Project Facilities.

J. In the event that a Participating Pumper establishes the occurrence of a force majeure event as defined in the Project Operating Agreement, the SFPUC may enter into negotiations with the Participating Pumper to take over the operation of the portion of any Shared Facilities used for Project purposes for continued Regional use. If the SFPUC cannot reach agreement regarding the continued use of Shared Facilities for ongoing Regional benefit, the Participating Pumper shall reimburse the SFPUC and the Wholesale Customers for their respective shares of previously incurred Project capital costs used to upgrade the Shared Facilities on the basis of (a) original cost less depreciation and outstanding related Indebtedness or (b) original cost less accumulated depreciation for revenue funded Shared Facilities. In the event that the SFPUC seeks to take over the operation of Shared Facilities for Direct Retail use, or one or more Wholesale Customers seeks to negotiate with a Participating Pumper to take over the operation of Shared Facilities for individual use or Direct Wholesale use, the party or parties benefiting from such transfer of Shared Facilities shall reimburse the other parties to this Agreement with their respective shares of previously incurred Project capital costs on the basis described in the previous sentence, or as the parties may otherwise agree.

3.18. Water Supply Agreement Amendment Required.

San Francisco may not change the existing condition of the Hetch Hetchy Reservoir by:

1. Abandoning or decommissioning O'Shaughnessy Dam; or

2. Draining Hetch Hetchy Reservoir, except for purposes of (i) repair, rehabilitation, maintenance, improvement, or reconstruction of O'Shaughnessy Dam or appurtenances, (ii) supplying water to the Bay 109
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Area during drought, or (iii) meeting water release requirements under the Raker Act, or federal or state law,
unless the parties enter into an amendment to the Water Supply Agreement, in full force and effect, adopted in accordance with Section 2.03.

The amendment shall state, or restate, as the case may be:

A. The level of service goals for seismic reliability and delivery reliability adopted by the Commission in conjunction with such proposed changes to the Regional Water System, provided such goals are at least as protective of the Wholesale Customers as the Level of Service Goals and Objectives;
B. The level of water quality to be delivered, which is currently provided for in Section 3.08, and
C. The specific cost allocation procedures, written as an amendment to Article 5, which apply to (1) the abandonment or decommissioning of O'Shaughnessy Dam, or (2) the draining of Hetch Hetchy Reservoir, and (3) the development, operation and maintenance of New Regional Assets that may be required to replace water supplied by Hetch Hetchy Reservoir and delivered to the Bay Area.

In the event that the parties are not able to agree upon and approve an amendment to the Water Supply Agreement as set forth above, San Francisco may not abandon or decommission O'Shaughnessy Dam or drain Hetch Hetchy Reservoir.

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Article 4. Implementation of Interim Supply Limitation.

4.01. Interim Supply Limitation Imposed by SFPUC
In adopting the WSIP in Res. No. 08-0200, the Commission included full implementation of all proposed WSIP capital improvement projects to achieve Level of Service Goals and Objectives relating to public health, seismic safety, and delivery reliability, but decided to adopt a water supply element that includes the Interim Supply Limitation. This article describes how the parties will implement the Interim Supply Limitation imposed by the SFPUC between the Effective Date and December 31, 2018, and how the SFPUC will conduct water supply planning after December 31, 2018.

4.02. Retail and Wholesale Customer Allocations Under Interim Supply Limitation The Interim Supply Limitation is allocated as follows between Retail and Wholesale Customers:

Retail Customers' allocation: 81 MGD
Wholesale Customers' allocation: 184 MGD
The Wholesale Customers' collective allocation of 184 MGD under the Interim Supply Limitation includes the demand of the cities of San Jose and Santa Clara, whose demand is not included in the Supply Assurance, as provided in Section 3.02.B. By December 31st, 2010, the Commission will establish each Wholesale Customer's Interim Supply Allocation at a public meeting.

4.03. Transfers of Interim Supply Allocations
A. Any Wholesale Customer, including Hayward, may transfer a portion of its Interim Supply Allocation to one or more other Wholesale Customers, as provided in this section. All Wholesale Customers are also eligible transferees, including California Water Service Company up to its Individual Supply Guarantee.

B. Transfers of a portion of an Interim Supply Allocation must be prospective. The duration of a transfer cannot be less than the balance of the fiscal year. The minimum quantity that may be transferred is 1/10th of a MGD.

C. Transfers of portions of Interim Supply Allocations are subject to approval by the SFPUC. SFPUC review is limited to determining (1) whether a proposed transfer complies with 111
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the Act, and (2) whether the affected facilities in the Regional Water System have sufficient capacity to accommodate delivery of the increased amount of water to the proposed transferee.

D. The participants in a proposed transfer shall provide notice to the SFPUC specifying the amount of the Interim Supply Allocation proposed to be transferred and the proposed effective date of the transfer, which shall not be less than 60 days after the notice is submitted to the SFPUC. The SFPUC may require additional information reasonably necessary to evaluate the operational impacts of the transfer. The SFPUC will not unreasonably withhold or delay its approval; if the SFPUC does not act on the notice within 60 days, the transfer will be deemed to have been approved.

E. Within 30 days after the transfer has become effective, both the transferor and the transferee will provide written notice to the SFPUC and BAWSCA.

F. Transfers of Interim Supply Allocations shall continue in effect until the earlier of (1) delivery of written notice to the SFPUC by the transfer participants that the transfer has been rescinded or (2) December 31, 2018.

4.04. Environmental Enhancement Surcharge
A. Establishment of Environmental Enhancement Surcharge. Beginning with wholesale water rates for fiscal year 2011-2012, and continuing for the duration of the Interim Supply Limitation, the Commission will establish the Environmental Enhancement Surcharge concurrently with the budget-coordinated rate process set forth in Article 6 of this Agreement.

The monetary amount of the Environmental Enhancement Surcharge per volume of water, such as dollars per acre-foot, will be equivalent for Retail Customer use in excess of 81 MGD and Wholesale Customer use in excess of 184 MGD. The Environmental Enhancement Surcharge will be simple to calculate so that Wholesale Customers can estimate potential surcharges for budgeting purposes and establish retail rates within their service areas.

B. Application of Environmental Enhancement Surcharge. Beginning in fiscal year 2011-12, the Environmental Enhancement Surcharge will be levied only if and when combined Retail Customer and Wholesale Customer purchases exceed the Interim Supply Limitation of 265 MGD and if the fund described in subsection D below has been established by the San Francisco Board of Supervisors. In that event, the Environmental Enhancement Surcharge will apply to Retail Customers for use in excess of 81 MGD and to individual 112
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Wholesale Customers for use in excess of their Interim Supply Allocations established by the Commission pursuant to Section 4.02.

1. Environmental Enhancement Surcharges related to the Retail Customers’ use in excess of their 81 MGD Retail Customer Allocation will be paid by the SFPUC, and no portion of such surcharges may be allocated to Wholesale Customers. The method of recovering the Environmental Enhancement Surcharges imposed upon Retail Customers shall be within the sole discretion of the SFPUC.

2. Environmental Enhancement Surcharges related to the individual Wholesale Customers’ use in excess of their respective Interim Supply Allocations will be paid to the SFPUC by individual Wholesale Customers.

C. Collection of Environmental Enhancement Surcharge. Notwithstanding the budget-coordinated rate setting process contemplated in Article 6 of this Agreement, the Environmental Enhancement Surcharge for any given year will be determined retrospectively based on actual annual usage during the fiscal year in excess of the Interim Supply Allocation and paid in equal monthly installments over the remainder of the immediately following fiscal year.

D. Establishment of Fund for Environmental Enhancement Surcharge Proceeds. Environmental Enhancement Surcharges paid by the SFPUC and by Wholesale Customers will be placed into a restricted reserve fund. The SFPUC will request the San Francisco Board of Supervisors to establish this fund by ordinance and, if adopted, the fund will be subject to the following restrictions:

1. Interest earnings will stay in the reserve fund.

2. The reserve fund shall (a) be subject to automatic appropriation; (b) require unexpended and unencumbered fund balances to be carried forward from year to year; and (c) not be transferred to the San Francisco General Fund.

3. The reserve fund may be used only for specific environmental restoration and enhancement measures for the Sierra and local watersheds, such as those included in the Watershed Environmental Improvement Program.

4. Environmental Enhancement Surcharge proceeds shall be expended in an expeditious manner. Any Environmental Enhancement Surcharge 113
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proceeds that remain in the reserve fund as of December 31, 2018 shall be used to complete projects previously approved under subsection E.

Upon completion of the identified projects, the balance of any unexpended sums in the reserve fund shall be distributed to BAWSCA and the SFPUC in proportion to the total amount of surcharges assessed to the Wholesale and Retail Customers, respectively.

E. Use of Environmental Enhancement Surcharge Proceeds. Specific uses of Environmental Enhancement Surcharges will be decided by the SFPUC and BAWSCA General Managers following input from environmental stakeholders and other interested members of the public. If parties are unable to agree, then they will jointly select a third person to participate in making the decision.

4.05. San Jose/ Santa Clara Interim Supply Allocation and Process for Reduction/ Termination.

San Francisco will supply a combined annual average of 9 MGD to the cities of San Jose and Santa Clara through 2028. Water supplied by San Francisco may only be used in the defined service areas of San Jose and Santa Clara shown on Attachment Q-1 and Q-2, respectively. San Francisco may reduce the quantity of water specified in this section when it establishes the Interim Supply Allocations for Wholesale Customers in Section 4.02. The establishment of Interim Supply Allocations for San Jose and Santa Clara shall not be considered a reduction of supply within the meaning of this section, provided that the Interim Supply Allocations assigned to San Jose and Santa Clara do not effect a reduction greater than the aggregate average reduction in Individual Supply Guarantees for Wholesale Customers that have such guarantees. The application of Interim Supply Allocations to San Jose and Santa Clara, and water supply planning after December 31, 2018, are subject to the following provisions:

A. In December 2010 and in each December thereafter through 2027, the SFPUC shall prepare and the Commission shall consider, at a regularly scheduled public meeting, a Water Supply Development Report detailing progress made toward (1) meeting the Interim Supply Limitation by June 30, 2018 and (2) developing additional water supplies that will allow the Commission to designate San Jose and Santa Clara as permanent Wholesale Customers of the Regional Water System with a combined Individual Supply Guarantee of up to 9 MGD by the end of the Term on June 30, 2034.
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B. The annual Water Supply Development Report shall be based on water purchase projections and work plans prepared by the SFPUC for the Retail Customers and by BAWSCA for the Wholesale Customers, respectively, and submitted to the Commission in June of each year beginning in 2010.

C. If the Commission finds that the projections in the Water Supply Development Report show that (1) the Interim Supply Limitation will not be met by June 30, 2018, as a result of Wholesale Customers' projected use exceeding 184 MGD, or (2) the purchases of the Wholesale Customers, including San Jose and Santa Clara, are projected to exceed 184 MGD before June 30, 2028, the Commission may issue a conditional ten year notice of interruption or reduction in supply of water to San Jose and Santa Clara.

D. Upon issuance of the conditional notice of interruption or reduction, the SFPUC will prepare a new analysis of water supply that will be utilized by the San Francisco Planning Department in its preparation of any necessary documentation under CEQA pursuant to Section

4.07 on the impacts of interrupting or reducing service to San Jose and Santa Clara.

E. Such notice of interruption or reduction will be rescinded if the Commission finds, based upon a subsequent annual Water Supply Development Report, that (1) sufficient progress has been made toward meeting the Interim Supply Limitation, or (2) projections show that the projected purchases of the Wholesale Customers, including San Jose and Santa Clara, will not exceed 184 MGD by June 30, 2028.

F. In no case shall any interruption or reduction of service to San Jose or Santa Clara pursuant to this section become effective less than two years from the completion of the CEQA process (not including resolution of any appeals or litigation) or ten years from the notice, whichever is longer. If the ten year notice is issued after 2018, such interruption or reduction would be effective after 2028.

G. If deliveries to San Jose and Santa Clara are interrupted, existing turnout facilities to San Jose and Santa Clara will remain in place for possible use during emergencies.

H. San Francisco and the cities of San Jose and Santa Clara will cooperate with BAWSCA and the Santa Clara Valley Water District in the identification and implementation of additional water sources and conservation measures for the cities’ service areas that are 115
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relevant to the water supply and the possible offer of permanent status for the two cities by the SFPUC.

4.06. San Francisco Decisions in 2028 Regarding Future Water Supply A. By December 31, 2028, San Francisco will have completed any necessary CEQA review pursuant to Section 4.07 that is relevant to making San Jose and Santa Clara permanent customers of the Regional Water System and will decide whether or not to make San Jose and Santa Clara permanent customers of the Regional Water System with a combined Individual Supply Guarantee of 9 MGD allocated equally between the two cities, as well as how much water in excess of 9 MGD it will supply to San Jose and Santa Clara. San Francisco will make San Jose and Santa Clara permanent customers only if, and to the extent that, San Francisco determines that Regional Water System long term water supplies are available. In the event that San Francisco decides to afford permanent status to San Jose and Santa Clara, this Agreement will be amended pursuant to Section 2.03.

B. By December 31, 2028, San Francisco will have completed any necessary CEQA review pursuant to Section 4.07 and will decide how much water, if any, in excess of the Supply Assurance it will supply to Wholesale Customers from the Regional Water System to meet their projected future water demands until the year 2040, and whether to offer a corresponding increase in the Supply Assurance as a result of these determinations.

4.07. Retained Discretion of SFPUC and Wholesale Customers A. This Agreement contemplates discretionary actions that the SFPUC and the Wholesale Customers may choose to take in the future that could result in physical changes to the environment ("Discretionary Actions"). The Discretionary Actions include decisions to:

1. Develop additional or alternate water resources by the SFPUC or one or more Wholesale Customers;

2. Implement the physical facilities comprising the WSIP by December 30, 2021;

3. Approve wheeling proposals by Wholesale Customers;

4. Approve new wholesale customers and water exchange or cost sharing agreements with other water suppliers;

5. Provide additional water to San Jose and/or Santa Clara;

6. Offer permanent status to San Jose and/or Santa Clara; 116
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7. R
educe or terminate supply to San Jose and/or Santa Clara;

8. Provide additional water to Wholesale Customers in excess of the Supply Assurance to meet their projected future water demands;

9. Offer a corresponding volumetric increase in the Supply Assurance; and

10. Implement the Hetch Hetchy Water and Power projects listed in A
ttachment R-2.

The Discretionary Actions may require the SFPUC or Wholesale Customers to prepare environmental documents in accordance with CEQA prior to the SFPUC or the Wholesale Customers determining whether to proceed with any of the Discretionary Actions. Accordingly, and notwithstanding any provision of this Agreement to the contrary, nothing in this Agreement commits the SFPUC or the Wholesale Customers to approve or carry out any Discretionary Actions that are subject to CEQA. Furthermore, the SFPUC’s or Wholesale Customers’ decisions to approve any of these Discretionary Actions are subject to the requirement that San Francisco and each Wholesale Customer, as either a “Lead Agency” (as defined in Section 21067 of CEQA and Section 15367 of the CEQA Guidelines) or a “Responsible Agency” (as defined in Section 21069 of CEQA and Section 15381 of the CEQA Guidelines) shall have completed any CEQA-required environmental review prior to approving a proposed Discretionary Action.

B. I
n considering any proposed Discretionary Actions, the SFPUC and Wholesale C
ustomers retain absolute discretion to: (1) make such modifications to any of the proposed Discretionary Actions as may be necessary to mitigate significant environmental impacts; (2) select feasible alternatives to the proposed Discretionary Actions that avoid significant adverse impacts; (3) require the implementation of specific measures to mitigate the significant adverse environmental impacts as part of the decision to approve the Discretionary Actions; (4) balance the benefits of the proposed Discretionary Actions against any significant environmental impacts before taking final actions to approve the proposed Discretionary Actions if such significant impacts cannot otherwise be avoided; or (5) determine not to proceed with the proposed Discretionary Actions.
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Article 5. Wholesale Revenue Requirement

5.01. Scope of Agreement
This Article shall be applicable only to the water rates charged by San Francisco to the Wholesale Customers. Nothing contained in this Agreement shall limit, constrain, or in any way affect the rates which San Francisco may charge for water sold to Retail Customers or the methodology by which such rates are determined.

5.02. General Principles
This Article sets forth the method by which the Wholesale Customers’ collective share of expenses incurred by the SFPUC in delivering water to them will be determined. This collective share is defined as the “Wholesale Revenue Requirement.” A. The SFPUC currently operates several enterprises, including the Water Enterprise, the Wastewater Enterprise, and the Hetch Hetchy Enterprise.

B. The Wastewater Enterprise is responsible for treating sewage within San Francisco and provides no benefit to the Wholesale Customers.

C. The Hetch Hetchy Enterprise is responsible for storing and transmitting water to the Water Enterprise, generating hydroelectric power and transmitting it to San Francisco, generating electric power within San Francisco, and distributing electricity and steam heat within San Francisco. Its water supply operations provide benefits to the Wholesale Customers.

D. The Water Enterprise delivers water to both Retail Customers, which are located both within and outside San Francisco, and to the Wholesale Customers, all of which are located outside San Francisco.

E. This Article implements two general principles as follows: (1) the Wholesale Customers should not pay for expenses of SFPUC operations from which they receive no benefit and (2) the Wholesale Customers should pay their share of expenses incurred by the SFPUC in delivering water to them on the basis of Proportional Annual Use unless otherwise explicitly provided in this Agreement.

F. To implement these general principles, the Wholesale Revenue Requirement will consist of, and be limited to, the Wholesale Customers’ shares of the following categories of expense:
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1. Capital cost recovery of Water Enterprise Existing Assets, and Hetch Hetchy Enterprise Existing Assets classified as Water-Only and the Water-Related portion of Joint assets (Section 5.03)

2. Contribution to the capital cost of Water Enterprise New Regional Assets (Section 5.04)

3. Water Enterprise operation and maintenance expenses, including power purchased from the Hetch Hetchy Enterprise that is used in the operation of the Water Enterprise (Section 5.05)

4. Water Enterprise administrative and general expenses (Section 5.06)

5. Water Enterprise property taxes (Section 5.07)

6. The Water Enterprise’s share of the Hetch Hetchy Enterprise’s operation and maintenance, administrative and general, and property tax expenses (Section 5.08)

7. The Water Enterprise’s share of the Hetch Hetchy Enterprise’s capital cost of New Assets classified as Water-Only and the Water-Related portion of Joint assets (Section 5.09)
In each of these cost categories, Direct Retail Expenses will be allocated entirely to Retail Customers. Direct Wholesale Expenses will be allocated entirely to the Wholesale Customers. Regional Expenses will be allocated between Retail Customers and Wholesale Customers as provided in this Article.

G. For purposes of establishing the rates to be charged Wholesale Customers, expenses will be based on the budget for, and estimates of water purchases in, the following fiscal year, as provided in Article 6. For purposes of accounting, the Wholesale Revenue Requirement will be determined on the basis of actual expenses incurred and actual water use, as provided in Article 7.

H. In addition, rates charged to Wholesale Customers may include the Wholesale Customers’ contribution to a Wholesale Revenue Coverage Reserve, as provided in Section

6.06, which is not included in the Wholesale Revenue Requirement itself. 119
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5.03. Capital Cost Recovery - Existing Regional Assets
A. SFPUC has previously advanced funds to acquire or construct Existing Assets used and useful in the delivery of water to both Wholesale Customers and Retail Customers.

The parties estimate that the Wholesale Customers’ share of the net book value of these assets, as of the expiration of the 1984 Agreement on June 30, 2009, will be approximately $366,734,424, as shown on Attachment K-1.

B. In addition, SFPUC has also previously advanced funds received from Retail Customer revenues to acquire or construct assets included in Construction-Work-In-Progress (CWIP) as of June 30, 2009. The parties estimate that the Wholesale Customers’ share of the book value of these revenue funded capital expenditures, as of the expiration of the 1984 Agreement on June 30, 2009, will be approximately $15,594,990, as shown on Attachment K-2.

The Wholesale Customers shall pay their share of the cost of Existing Assets and revenue- funded CWIP by amortizing the amounts shown on Attachment K-1 and Attachment K-2 over 25 years at an interest rate of 5.13 percent. The amounts to be included in the Wholesale Revenue Requirement pursuant to this section shall be the sum of the annual principal and interest amounts shown on Attachments K-3 (for Water Enterprise Regional Assets and the one Direct Wholesale Asset) and K-4 (for Hetch Hetchy Enterprise Water-Only Assets and the Water-Related portion [45 percent] of Joint assets) calculated on the basis of monthly amortization of principal as set forth on Attachments K-3 and K-4.

C. In addition, the Commission has previously appropriated funds, advanced through rates charged to Retail Customers, for construction of capital projects. Some of these projects are active, and have unexpended balances of appropriated funds that are not included in CWIP as of June 30, 2009. These projects, and the associated balances, are shown on Attachment K-5. Expenditures of funds from these balances during FY 2009-10, FY 2010-11 and FY 2011-12 will be reviewed in FY 2012-13. The SFPUC will prepare a report showing the amount expended in each year on each project and the total expended during all years on all projects that are categorized as Regional or, in the case of Hetch Hetchy Enterprise, are categorized as either Water-Only or Joint. The wholesale share of that total will be determined using the allocation principles in this Agreement based on Proportional Water Use during those three years. The result, plus accrued interest at the rate specified in Section 6.05.B, will be calculated by the SFPUC and its calculation reviewed by the Compliance Auditor as part of the Compliance Audit for FY 2012-13. The audited total will be paid based on a schedule of level 120
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annual principal and interest amounts over ten years at an interest rate of 4.00%, calculated on a monthly amortization basis. All or any portion of the balance may be prepaid. The first year’s payment will be included in the Wholesale Revenue Requirement for FY 2014-15.

D. The parties agree that the Wholesale Customers’ share of the net book values of Existing Regional Assets as of June 30, 2008 as shown on Attachment K-1 are accurate. The compliance audit conducted on the calculation of the FY 2008-09 Suburban Revenue Requirement required by the 1984 Agreement will determine the actual amounts of depreciation on, and capital additions to, plant in service during that fiscal year. Those amounts will be compared to the corresponding estimates shown on Attachments K-1 and K-2. The differences will be added to or subtracted from the estimated asset values shown on Attachments K-1 and K-2 and the amortization schedules in Attachments K-3 and K-4 will be recalculated. The wholesale allocation factors shall be fixed at 70.1% for the Water Enterprise Existing Assets and

64.2% for Hetch Hetchy Enterprise Existing Assets for both the preliminary and final payment schedules. The SFPUC will prepare and provide to the Wholesale Customers revised Attachments K-1 through K-4 based on the Wholesale Customers’ share of the net book value of the assets placed in service as of June 30, 2009 used to provide water service to the Wholesale Customers and the net book value of revenue-funded CWIP expended as of June 30, 2009. The revised Attachments K-1 through K-4 shall be approved by the General Manager of the SFPUC and the General Manager/CEO of BAWSCA and will be substituted for the original Attachments K-1 through K-4.

E. The original Attachments K-1 through K-4, based on estimates, shall be used for estimating the Wholesale Revenue Requirement for the fiscal year beginning July 1, 2009. The revised Attachments, based on audited actuals, shall be used to determine the actual Wholesale Revenue Requirement for FY 2009-10 and to determine the Wholesale Revenue Requirement(s) in all subsequent years, except as may be provided elsewhere in this Agreement.

F. The Wholesale Customers, acting through BAWSCA, may prepay the remaining unpaid Existing Assets principal balance, in whole or in part, at any time without penalty or early payment premium. Any prepayments will be applied in the month immediately following the month in which the prepayment is made and the revised monthly amount(s) will be used to calculate the Wholesale Revenue Requirement. Any partial prepayments must be in an amount at least equal to $10 million. In the event of a partial prepayment, an updated schedule for the 121
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remaining payments shall be prepared reflecting the unpaid balance after prepayment, amortized through the end of FY 2034, calculated as provided in this section. The updated schedule, approved by the General Manager of the SFPUC and the General Manager/CEO of BAWSCA, will be substituted for Attachment K-3 and/or Attachment K-4.

5.04. Capital Cost Contribution - New Regional Assets
A. Debt-Funded Capital Additions. The Wholesale Customers shall pay the wholesale share of Net Annual Debt Service for New Regional Assets. The Regional projects in the WSIP are identified in Attachment L-1.

1. The amount of Net Annual Debt Service for New Regional Assets will be determined for each series of Indebtedness issued. Until the proceeds of a particular series are Substantially Expended, the amount attributable to specific projects will be based on the expected use of proceeds shown in the “Certificate Regarding Use of Proceeds” executed by the SFPUC General Manager on behalf of the Commission in connection with the sale of the Indebtedness, provided such certificate identifies the use of proceeds at a level of detail equivalent to that shown on Attachment L-2, which is a copy of the certificate prepared for the 2006 Revenue Bonds, Series A. If a certificate does not identify the use of proceeds at that level of detail, the SFPUC General Manager shall prepare and execute a separate certificate which does identify the use of proceeds at the level of detail shown on Attachment L-2 and deliver it to BAWSCA within 15 days from the closing of the sale of the Indebtedness.

2. After the proceeds of a series are Substantially Expended, the SFPUC General Manager will prepare and execute a certificate showing the actual expenditure of proceeds at a level of detail equivalent to the initial General Manager certificate. The resulting allocation of Net Debt Service to New Regional Assets for a series of bonds will be used in the fiscal year in which the proceeds have been Substantially Expended and thereafter. Differences between the amount of Net Debt Service paid by Wholesale Customers prior to that year and the amount of Net Debt Service that they should have paid during that time based on the actual expenditure of proceeds will be taken into account in calculation of the balancing account for the fiscal year in which the proceeds were Substantially Expended. The application of the remaining proceeds shall be proportionate to the allocation of the Net Debt Service to New Regional Assets.

3. The Wholesale Customers’ share of Net Annual Debt Service for the New Regional Assets that are categorized as Direct Wholesale will be 100 percent. (None of the 122
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projects in the WSIP are categorized as Direct Wholesale.) The Wholesale Customers’ share of Net Annual Debt Service for all other New Regional Assets will be determined each year and will be equal to the Wholesale Customers’ Proportional Annual Use.

4. If Indebtedness is issued by the SFPUC to refund the 2006 Revenue Bonds, Series A or to refund any other long-term Indebtedness issued after July 1, 2009, the Net Annual Debt Service attributable to proceeds used for refunding will be allocated on the same basis as the Indebtedness being refunded.

5. The SFPUC will prepare an annual report showing for each issue of Indebtedness and through the most recently completed fiscal year: (1) net financing proceeds available to pay project costs, (2) actual earnings on proceeds, (3) actual expenditures by project. The report shall be substantially in the form of Attachment L-3 and shall be delivered to BAWSCA on or before November 30 of each year, commencing November 2009.

6. In addition to Net Debt Service, Wholesale Customers will pay a proportionate share of annual administrative costs associated with Indebtedness, such as bond trustee fees, credit rating agency fees, letter of credit issuer fees, San Francisco Revenue Bond Oversight Committee fees, etc., but only to the extent such fees are neither paid from proceeds of Indebtedness nor included in SFPUC operation and maintenance or administrative and general expenses.

B. Revenue-Funded Capital Additions. The Wholesale Customers shall pay the wholesale share of the appropriation contained in the SFPUC annual budget for each year to be used to acquire or construct New Regional Assets. If such appropriations are reimbursed from proceeds of Indebtedness, the Wholesale Customers will be credited for prior payments made under this Section 5.04.B.

The Wholesale Customers’ share of the annual appropriation for revenue-funded New Regional Assets that are categorized as Direct Wholesale will be 100 percent. (None of the Repair and Replacement projects in the SFPUC’s most recent capital improvement program updated on February 10, 2009, is categorized as Direct Wholesale.) The Wholesale Customers’ share of the annual appropriation for all other revenue-funded New Regional Assets will be determined each year and will be equal to the Wholesale Customers’ Proportional Annual Use in each fiscal y
ear. The amount appropriated in each fiscal year for the wholesale share of New Regional Assets shall be contributed to the Wholesale Capital Fund described in Section 6.08 and reported on and administered as shown in that section and Attachments M-1 through M-3. 123
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5.05. Water Enterprise Operation and Maintenance Expenses There are five categories of Water Enterprise Operation and Maintenance Expenses, described below:

A. Source of Supply

1. Description: This category consists of the costs of labor, supervision and eng
ineering; materials and supplies; and other expenses incurred in the operation and maintenance of collecting and impounding reservoirs, dams, wells and other water supply facilities located outside San Francisco; watershed protection; water supply planning; and the purchase of water.

2. Allocation: Direct Retail expenses, including water supply planning for Retail operations (such as City Retail water conservation programs), will be assigned to the Retail Customers. Regional expenses will be allocated between Retail Customers and Wholesale Customers on the basis of Proportional Annual Use. Direct Wholesale expenses will be assigned to the Wholesale Customers. (As of the Effective Date there are no Direct Wholesale expenses in the Source of Supply category.)
B. Pumping

1. Description: This category consists of the costs of labor, supervision and eng
ineering; materials and supplies; and other expenses incurred in the operation and maintenance of water pumping plants, ancillary structures and equipment and surrounding grounds; and fuel and power purchased for pumping water.

2. Allocation: Direct Retail expenses will be assigned to the Retail Customers. Regional expenses will be allocated between Retail Customers and Wholesale Customers on the basis of Proportional Annual Use. Direct Wholesale expenses will be assigned to the Wholesale Customers. (As of the Effective Date there are no Direct Wholesale expenses in the Pumping category.)
C. Treatment

1. Description: This category consists of the costs of labor, supervision and eng
ineering; materials and supplies and other expenses incurred in the operation and maintenance of water treatment plants and drinking water quality sampling and testing. The cost of water quality testing will not include expenses incurred on behalf of the Wastewater 124
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Enterprise. Any remaining costs, after adjusting for the Wastewater Enterprise, will be reduced by the amount of revenue received for laboratory analyses of any type performed for agencies, businesses and/or individuals other than the Water and Hetch Hetchy Enterprises.

1. Descri ption: This category consists of the cost of labor, supervision and engineering; materials and supplies; and other expenses incurred in the operation and maintenance of transmission and distribution pipelines, appurtenances, meters (other than those expenses payable by individual Wholesale Customers pursuant to Section 5.10.C.3), distribution reservoirs storing treated water, craft shops and auto shops servicing vehicles used for operation and maintenance of the Regional Water System rather than for Direct Retail facilities, and miscellaneous facilities related to the transmission and distribution of water.

2. Allocation: Direct Retail Transmission and Distribution expenses will be assigned to the Retail Customers. Regional Transmission and Distribution expenses will be allocated between Retail and Wholesale Customers on the basis of Proportional Annual Use.

Expenses incurred for the operation and maintenance of three terminal reservoirs, i.e., Sunset Reservoir (North and South Basins), University Mound Reservoir (North and South Basins), and Merced Manor Reservoir, as well as transmission pipelines delivering water to them, are classified as Regional expenses notwithstanding the location of the reservoirs within San Francisco. Direct Wholesale expenses will be assigned to the Wholesale Customers. (As of the Effective Date the only Direct Wholesale expenses in the Transmission and Distribution category are associated with the Palo Alto pipeline.)
E. Customer Services

1. Description: This category consists of labor; materials and supplies; and other expenses incurred for meter reading, customer record keeping, and billing and collection for the Water Enterprise.
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2. Allocation: Customer Services expenses will be allocated among the Water Enterprise, the Wastewater Enterprise, and Hetch Hetchy Enterprise in proportion to the time spent by employees in Customer Services for each operating department/enterprise. The Water Enterprise’s share of Customer Services expense will be allocated 98 percent to the Retail Customers and two percent to the Wholesale Customers, as illustrated on Attachment N- 2, Schedule 1.

5.06. Water Enterprise Administrative and General Expenses Administrative and General expenses consist of the Water Enterprise’s share of the cost of general government distributed through the full-cost Countywide Cost Allocation Plan, the services of SFPUC support bureaus, Water Enterprise administrative and general expenses that cannot be directly assigned to a specific operating and maintenance category, and the cost of the Compliance Audit. These four subcategories, and the method by which costs in each are to be calculated and allocated, are as follows:

A. Countywide Cost Allocation Plan

1. Description: This subcategory consists of the Water Enterprise’s share of the costs of San Francisco general government and other City central service departments which are not directly billed to the Water Enterprise or other operating departments. All San Francisco operating departments are assigned a prorated share of these costs through the full- cost Countywide Cost Allocation Plan (COWCAP) prepared annually by the San Francisco Controller.

2. Allocation: The Water Enterprise’s assigned share of central government costs as shown in the annual full-cost COWCAP prepared by the San Francisco Controller, will be allocated between Retail Customers and Wholesale Customers on the basis of the composite percentage of the allocated expenses in the five categories of operation and maintenance expense described in Section 5.05. The composite wholesale percentage shown on Attachment N-2, Schedule 1 is 42.07 percent, derived by dividing the wholesale share of Operation and Maintenance expenses ($46,573,883) by total Operation and Maintenance expenses ($110,700,133).

B. Services of SFPUC Bureaus

1. Description: This subcategory consists of the support services provided t
o the Water Enterprise by the SFPUC Bureaus, which presently consist of the General 126
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Manager’s Office, Business Services, External Affairs, and Infrastructure Bureau. Business Services presently includes Financial Services, Information Technology Services, Human Resource Services, Fleet Management, and Customer Services.

2. Allocation: There are three steps involved in determining the Wholesale Customers’ share of SFPUC Bureau costs.
a. Step One: Bureau expenses which have either been recovered separately or which provide no benefit to Wholesale Customers will be excluded. Examples of Bureau expenses recovered separately include (1) Customer Services expenses, which are recovered as provided in Section 5.05.E, and (2) Infrastructure expenses, which are assigned to individual projects and capitalized. An example of a Bureau expense that provides no benefit to Wholesale Customers is Information Technology Services expenses for support of the San Francisco Municipal Railway. In addition, the SFPUC will continue its practice of assigning City Attorney Office expenses charged to the General Manager's Office for projects or lawsuits that relate to only one enterprise directly to that enterprise. For example, costs related to a lawsuit involving the Wastewater Enterprise will not be assigned to the Water Enterprise. b. Step Two: Bureau expenses adjusted as provided in Step One will be allocated among the Water Enterprise, the Wastewater Enterprise and the Hetch Hetchy Enterprise on the basis of the actual salaries of employees in each enterprise or department, as illustrated on Attachment N-2, Schedule 7.
c. Step Three: The amount allocated to the Water Enterprise through Step Two will be allocated between Retail Customers and Wholesale Customers on the basis of Proportional Annual Use.

C. Water Enterprise Administrative and General

1. Description: This category includes expenses incurred by the Water Enterprise that are not readily assignable to specific operating divisions. This category includes the following expenses:
a. Water Administration: This includes the costs of labor and other expenses of the administrative section of the Water Enterprise, supervision and engineering expenses, professional services, travel and training, equipment purchases, and materials and supplies not directly assignable to a specific operating unit. b. Services Provided by Other City Departments: This includes charges of other San Francisco departments directly billed to the Water Enterprise 127
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administration by other San Francisco departments for services ordered by the Water Enterprise, such as legal services, risk management, telecommunications, employee relations, purchasing, mail services, and workers compensation claims paid. c. Litigation and Claims Paid: This includes charges incurred for attorney services and claims and judgments paid in litigation arising from the operation of the Water Enterprise.

2. Allocation: In each of these three subcategories, expenses that benefit only Retail Customers will be excluded. For example, the cost of claims and judgments resulting from a break in or leak from pipelines or reservoirs in the Retail Service Area (with the exception of the three terminal reservoirs and pipelines delivering water to them) will be assigned to the Retail Customers. Remaining Water Enterprise Administrative and General expenses will be allocated between Retail Customers and Wholesale Customers on the basis of the composite percentage of allocated operation and maintenance expense categories described in Section 5.05.

D. Compliance Audit. The cost of the Compliance Audit described in Section 7.04 will be assigned 50 percent to the Retail Customers and 50 percent to the Wholesale Customers.

5.07. Water Enterprise Property Taxes
A. Description: This category consists of property taxes levied against property owned by San Francisco located in Alameda, San Mateo and Santa Clara counties and used and managed by the SFPUC.

B. Allocation: All property taxes paid, net of (1) reimbursements received from lessees and permit holders, and (2) refunds from the taxing authority, are Regional expenses.

Net property taxes will be allocated between Retail Customers and Wholesale Customers on the basis of Proportional Annual Use.

5.08. Hetch Hetchy Enterprise Expenses
A. Introduction. There are two steps involved in determining the amount of the Wholesale Customers’ share of Hetch Hetchy Enterprise expenses. 128
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1. The first step is to determine the Water Enterprise’s share of Hetch Hetchy Enterprise operation expenses, maintenance expenses, administrative and general expenses, and property taxes.

2. The second step is to determine the Wholesale Customers’ share of expenses allocable to the Water Enterprise.

B. Determination of the Water-Related Portion of Hetch Hetchy Enterprise Expenses

1. Operation and Maintenance Expenses: This category consists of the cost of labor, materials and supplies, and other expenses incurred in operating and maintaining Hetch Hetchy Enterprise physical facilities.
a. Description: Expenses associated exclusively with the production and distribution of hydroelectric power (e.g., generating plants and power transmission lines and towers, transformers and associated electric equipment, purchased power, wheeling charges, rental of power lines, etc.) are categorized as Power-Only and are allocated to power.

Expenses associated exclusively with the operation and maintenance of facilities that serve only the water function (e.g., water transmission pipelines and aqueducts, activities related to compliance with federal and state drinking water quality laws, etc.) are categorized as Water- Only and are allocated entirely to water. Expenses associated with the operation and maintenance of facilities that serve both the water and power functions (e.g., dams, security programs, etc.) are categorized as Joint and are reallocated as 55 percent Power-Related and 45 percent Water-Related.

2. Administrative and General Expenses: There are three subcategories of Hetch Hetchy Enterprise Administrative and General expenses. a. Full-Cost Countywide Cost Allocation Plan: This subcategory consists of the cost of San Francisco general government and other City central service departments which are not directly billed to operating departments but allocated through the full- cost Countywide Cost Allocation Plan described in Section 5.06.A. Costs in this subcategory are classified as Joint, and are reallocated as 55 percent Power-Related and 45 percent Water- Related.
b. SFPUC Bureau Costs: This subcategory consists of the expenses described in Section 5.06.B. One hundred percent of Customer Services expenses allocated to the Hetch Hetchy Enterprise are categorized as Power-Only. The remaining amount of Bureau 129
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expenses allocated to the Hetch Hetchy Enterprise pursuant to Section 5.06.B will be reallocated between power and water in proportion to the salaries of Hetch Hetchy Enterprise employees assigned to each function as shown on Attachment N-2, Schedule 7.1. c. Other Administrative and General: This subcategory includes payments to the United States required by the Act, labor, supervision and engineering and other costs not readily assignable to a specific operation or maintenance function or program. Costs related to power administration (such as long range planning and policy analysis for energy development, administration of power contracts, and administration of work orders to City departments for energy services) are Power-Only costs. Costs related to water administration (such as legal and professional services for the protection of the City's water rights) are Water- Only costs and will be assigned to the Water Enterprise. Costs related to both power administration and water administration (such as general administration, office rents, office materials and supplies, and services of other City departments benefitting to both power and water are Joint administrative and general costs and are reallocated as 55 percent Power- Related and 45 percent Water-Related.

3. Property Taxes. This category consists of property taxes levied against property owned by San Francisco in Tuolumne, Stanislaus, San Joaquin, and Alameda counties and operated and managed by the Hetch Hetchy Enterprise.

Allocation: Property taxes are classified as Joint costs. They will be reallocated as 55 percent Power-Related and 45 percent Water-Related.

C. Calculation of Wholesale Customers’ Share of Hetch Hetchy Enterprise Expenses. The Water Enterprise’s share of Hetch Hetchy Enterprise expenses consist of 100 percent of Water-Only expenses and the Water-Related portion (45%) of Joint expenses.

The Wholesale Customers’ share of the sum of the Water Enterprise’s share of Hetch Hetchy Enterprise expenses determined under subsection B shall be calculated by multiplying that dollar amount by Adjusted Proportional Annual Use.

5.09. Hetch Hetchy Enterprise Capital Costs
A. Introduction. Wholesale Customers are also allocated a share of Hetch Hetchy Enterprise capital costs.

B. Components of Capital Costs. The components of Hetch Hetchy Enterprise capital costs are as follows:
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1. E xisting Assets Cost Recovery. The Wholesale Customers’ repayment of their share of Hetch Hetchy Existing Assets (Water-Only and the Water-Related portion [45 percent] of Joint assets) is shown on Attachment K-4 accompanying Section 5.03.

2. Debt Service on New Assets. The Water Enterprise will be assigned 100 percent of Net Annual Debt Service attributable to acquisition and construction of New Hetch Hetchy Enterprise assets that are Water-Only and the Water-Related portion (45 percent) of Net Annual Debt Service on New Hetch Hetchy Enterprise Joint assets. The provisions of Section

5.04.A apply to debt service on New Hetch Hetchy Enterprise assets.

3. Revenue-Funded Capital Additions. The Water Enterprise will be assigned 100 percent of capital expenditures from revenues for New Hetch Hetchy Enterprise assets that are Water-Only and the Water-Related portion (45 percent) of such expenditures for new Hetch Hetchy Enterprise Joint assets. The provisions of Section 5.04.B apply to the payment of New revenue-funded Hetch Hetchy Enterprise assets.

C. Calculation of Wholesale Customers’ Share of Hetch Hetchy Enterprise Capital Costs. The Wholesale Customers’ share of the Net Annual Debt Service and revenue funded capital expenditures determined under subsections B.2 and 3 shall be calculated by multiplying that dollar amount by Adjusted Proportional Annual Use.

5.10. Additional Agreements Related to Financial Issues A. Wholesale Customers Not Entitled to Certain Revenues. The Wholesale Customers have no entitlement to any of the following sources of revenue to the SFPUC.

1. Revenues from leases or sales of SFPUC real property.

2. Revenues from the other utility services such as the sale of electric power, natural gas and steam.

3. Revenues from the sale of water to customers and entities other than the Wholesale Customers.

4. Revenues earned from the investment of SFPUC funds other than funds contributed by the Wholesale Customers to the Wholesale Revenue Coverage Reserve described in Section 6.06 or the Wholesale Capital Fund described in Section 6.08. Wholesale Customers are also entitled to the benefit of earnings on proceeds of Indebtedness (through 131
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ex
penditure on New Regional Assets and /or application to Debt Service) and to interest on the Balancing Account as provided in Section 6.05.B.

5. Revenues not related to the sale of water.

B. Wholesale Customers Not Charged with Certain Expenses. The Wholesale Customers will not be charged with any of the following expenses:

1. Capital costs for assets constructed or acquired prior to July 1, 1984 other than Existing Asset costs that are repaid pursuant to Section 5.03.

2. Expenses incurred by the SFPUC for generation and distribution of electric power, including Hetch Hetchy Enterprise Power-Only expenses and the Power-Related share of Hetch Hetchy Enterprise Joint expenses. An exception to this is Regional energy costs incurred by the Water Enterprise, for which Wholesale Customers are charged on the basis of Proportional Annual Use.

3. Expenses incurred by SFPUC in providing water to Retail Customers.

4. Expenses associated with the SFPUC’s accruals or allocations for uncollectible Retail Water accounts.

5. Attorneys’ fees and costs incurred by the Wholesale Customers that a court of competent jurisdiction orders San Francisco to pay as part of a final, binding judgment against San Francisco as provided in Section 8.03.B.2.

6. Any expenses associated with funding any reserves (other than the required Wholesale Revenue Coverage Reserve described in Section 6.06) accrued and not anticipated to be paid within one year unless such reserve is established by mutual agreement of the SFPUC and BAWSCA.

7. Any expenses accrued in respect to pending or threatened litigation, damage or personal injury claims or other loss contingencies unless projected to be paid within one year. Otherwise, such expenses will be charged to the Wholesale Customers when actually paid.

8. Any expense associated with installing, relocating, enlarging, removing or modifying meters and service connections at the request of an individual Wholesale Customer.

9. The Retail Customers’ portion of any Environmental Enhancement Surcharges imposed to enforce the Interim Supply Limitation set forth in Section 4.04. 132
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C. Revenues Not Credited to Payment of Wholesale Revenue Requirement.

The following payments by Wholesale Customers, individually or collectively, are not credited as Wholesale revenues for purposes of Section 6.05.B:

1. Payments by individual Wholesale Customers of the Environmental Enhancement Surcharge imposed to enforce the Interim Supply Limitation set forth in Section 4.04.

2. Payments of attorneys’ fees and costs incurred by San Francisco that a court of competent jurisdiction orders the Wholesale Customers to pay as part of a final, binding judgment against the Wholesale Customers, as provided in Section 8.03.B.3.

3. Payments by individual Wholesale Customers for installation, relocation, enlargement, removal or modification of meters and service connections requested by, and charged to, a Wholesale Customer.

4. Payments applied to the amortization of the ending balance in the balancing account under the 1984 Agreement, pursuant to Section

6.05.A.

5. Payments of the Water Management Charge which are delivered to BAWSCA pursuant to Section 3.06.

6. Payments directed to the Wholesale Revenue Coverage Reserve pursuant to Section 6.06.

7. Prepayments authorized by Sections 5.03.C and 5.03.F.

D. Other

1. The Wholesale Customers will receive a proportional benefit from funds received by the SFPUC from (a) governmental grants, rebates, reimbursements or other subventions, (b) private-sector grants for Regional capital or operating purposes of the Water Enterprise and the Water-Only and Water-related portion of Joint Hetch Hetchy Water Enterprise expenses, or (c) a SFPUC use of taxable bonds.

2. The Wholesale Customers will receive a proportionate benefit from recovery of damages, including liquidated damages, by SFPUC from judgments against or settlements with contractors, suppliers, sureties, etc., related to Regional Water System projects and the Water-Only and Water-Related portion of Joint Hetch Hetchy Enterprise projects. 133
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3. The SFPUC will continue to charge Wholesale Customers for assets acquired or constructed with proceeds of Indebtedness on which Wholesale Customers paid Debt Service during the Term of this Agreement on the “cash” basis (as opposed to the “utility” basis) after the expiration or earlier termination of this Agreement. The undertaking in this Section 5.10.D.3 will survive the expiration or earlier termination of this Agreement.

5.11. Classification of Existing System Assets.

Existing System Assets of the Regional Water System include the water storage, transmission, and treatment systems owned and operated by San Francisco in Tuolumne, Stanislaus, San Joaquin, Alameda, Santa Clara, San Mateo and San Francisco Counties.

These assets are managed by either the Water Enterprise or the Hetch Hetchy Enterprise and the assets have been classified for purposes of cost allocation.

A. Water Enterprise Assets. Water Enterprise assets are currently managed, operated, and maintained by the Water Enterprise and are generally located west of Alameda East Portal, in addition to the treatment facilities located at Tesla and the Thomas Shaft Emergency Disinfection Facility. These assets are classified as Direct Retail, Direct Wholesale, or Regional.

B. Hetch Hetchy Enterprise Assets. Hetch Hetchy Enterprise assets are currently managed, operated and maintained by the Hetch Hetchy Enterprise and are generally located east of the Alameda East Portal of the Coast Range Tunnel in Sunol Valley, Alameda County.

These assets are classified as Power-Only, Water-Only, or Joint, in accordance with Sections

5.08 and 5.09. Through the Wholesale Revenue Requirement, the Wholesale Customers pay Existing System Asset capital costs and operating expenses in accordance with Section 5.02.F and do not pay capital costs or operating expenses associated with assets classified as Direct Retail, Power-Only, and the Power-Related portion of Joint assets.

C. Attachment R Documents Classifications. To facilitate WSA administration, Attachment R documents the classification of major Existing System Assets operated by the Hetch Hetchy Enterprise. Attachment R consists of three documents: R-1 Introduction, R-2 Special Classification of Discrete Projects for 2018 Amendment Purposes, and R-3 Major Hetch Hetchy Enterprise Existing System Assets. Attachment R may be modified as specified in Section 5.11.D and in the manner set forth in Section 2.03.C. 134
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D. Attachment R-3, Major Hetch Hetchy Enterprise Existing System Assets, is Not Exhaustive. Existing System Assets include, but are not limited to, land; fixed infrastructure such as dams, tunnels, buildings, water treatment plants and pipelines; equipment such as pumps and vehicles; and related appurtenances. Major Hetch Hetchy Enterprise Existing System Assets, and their classifications, are listed in Attachment R-3. Attachment R-3 does not include all assets of the Regional Water System, but represents the parties' best efforts to document major Hetch Hetchy Enterprise Existing System Assets that would incur capital costs and operating expenses subject to cost allocation. The classification of assets listed on R-3 may not be changed during the Term, any Extension Term, and any renewal of the Agreement, however, Attachment R-3 may be modified by mutual agreement in accordance with Section

2.03.C to (1) add an asset that was inadvertently omitted, (2) to add a new asset, and (3) remove a destroyed or obsolete asset. In the event that the parties cannot agree on the classification of any omitted or new assets, the dispute shall be subject to arbitration under Section 8.01.

E. Attachment R-3, Major Hetch Hetchy Enterprise Existing System Assets, Classifications are Fixed. The classification of the major Hetch Hetchy Enterprise Existing System Assets is fixed and shall control the allocation of capital costs and operating expenses for the remainder of the Term, any Extension Terms, and any renewal of the Agreement.

However, changes may be proposed in accordance with subsection G below. Capital costs and operating expenses are meant to be inclusive of all costs related to assets, including, but not limited to, any alterations, additions, improvements, rehabilitation, replacement of assets, and equipment that is appurtenant thereto. Since asset classifications are fixed in Attachment R-3, asset classifications may not be modified by mutual agreement in accordance with Section

2.03.C.

F. Attachment R-2, Special Classification of Discrete Projects for 2018 Amendment Purposes. Past, ongoing and future capital projects involving five Hetch Hetchy Enterprise Existing System Assets defined in Attachment R-2 have classifications that differ from the underlying asset classifications. These project-related classification changes shown on Attachment R-2, are part of the 2018 amendments to the Agreement and are not precedential for any other asset-related capital cost or operating expense. With the exception of the defined projects related to the five assets listed on R-2, the capital projects for all assets follow the asset classifications. Capital projects listed on Attachment R-2 must be approved by the SFPUC following necessary CEQA review.
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G. Five Year Notice of Intent to Renegotiate Cost Allocation. In the event San Francisco or the Wholesale Customers, which may be represented by BAWSCA, wish to propose and negotiate a change in Existing System Asset classifications, or a change in the Water-Related portion (45 percent) of Joint expenses, for the next Water Supply Agreement, such party must provide the other at least 5 years' written notice prior to the expiration of the Term or Extension Term, or the renewal of the Agreement. At a minimum, the noticing party must provide a comprehensive analysis of the financial and rate impacts of the proposed change at least two years prior to the expiration of the Term or Extension Term, or the renewal of the Agreement.

To meet this requirement, the parties may agree to jointly analyze, under a separate agreement, system capacity and usage and/or new assets, as well as other possible alternative cost allocation methodologies. Either party may also unilaterally initiate such studies by consultants of their choice and bear all their own costs. 136
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Article 6. Integration of Wholesale Revenue Requirement with SFPUC Budget Development and Rate Adjustments

6.01. General
A. The purpose of the allocation bases set forth in Article 5 is to determine the Wholesale Revenue Requirement for each fiscal year. The Wholesale Revenue Requirement can only be estimated in advance, based on projected costs and water deliveries. These projections are used to establish water rates applicable to the Wholesale Customers.

B. After the close of each fiscal year, the procedures described in Article 7 will be used to determine the actual Wholesale Revenue Requirement for that year, based on actual costs incurred, allocated according to the provisions of Article 5, and using actual water delivery data. The amount properly allocated to the Wholesale Customers shall be compared to the amount billed to the Wholesale Customers for the fiscal year, other than those identified in Section 5.10.C. The difference will be entered into a balancing account to be charged to, or credited to, the Wholesale Customers, as appropriate.

C. The balancing account shall be managed as described in Section 6.05.

6.02. Budget Development
The SFPUC General Manager will send a copy of the proposed SFPUC budget to BAWSCA at the same time as it is sent to the Commission. In addition, a copy of materials submitted to the Commission for consideration at meetings prior to the meeting at which the overall SFPUC budget is considered (including (a) operating budgets for the Water Enterprise and the Hetch Hetchy Enterprise, (b) budgets for SFPUC Bureaus, and (c) capital budgets for the Water Enterprise and the Hetch Hetchy Enterprise) will also be sent to BAWSCA concurrently with their submission to the Commission.

6.03. Rate Adjustments
A. Budget Coordinated Rate Adjustments. Adjustments to the rates applicable to the Wholesale Customers shall be coordinated with the budget development process described in this section except to the extent that Sections 6.03.B and 6.03.C authorize emergency rate increases and drought rate increases, respectively.

If the SFPUC intends to increase wholesale water rates during the ensuing fiscal year, it will comply with the following procedures:
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1. Adjustments to the wholesale rates will be adopted by the Commission at a regularly scheduled meeting or at special meeting, properly noticed, called for the purpose of adjusting rates or for taking any other action under the jurisdiction of the Commission.

2. The SFPUC will send a written notice by mail or electronic means to each Wholesale Customer and to BAWSCA of the recommended adjustment at least thirty (30) days prior to the date of the meeting at which the Commission will consider the proposed adjustment.

The notice will include the date, time and place of the Commission meeting.

3. The SFPUC shall prepare and provide to each Wholesale Customer and to BAWSCA the following materials: (a) a table illustrating how the increase or decrease in the Wholesale Revenue Requirement and wholesale rates were calculated, substantially in the form of Attachment N-1, (b) a schedule showing the projected expenses included in the Wholesale Revenue Requirement for the fiscal year for which the rates are being proposed, and supporting materials, substantially in the form of Attachment N-2, and (c) a schedule showing projected water sales, Wholesale Revenue Requirements and wholesale rates for the fiscal year for which rates are being set and the following four years, substantially in the form of Attachment N-3.

These materials will be included with the notification required by Section 6.03.A.2.

4. Rate adjustments will be effective no sooner than thirty (30) days after adoption of the wholesale rate by the Commission.

5. San Francisco will use its best efforts to provide the Wholesale Customers with the information described above. San Francisco's failure to comply with the requirements set forth in this section shall not invalidate any action taken by the Commission (including, but not limited to, any rate increase or decrease adopted). In the event of such failure, the Wholesale Customers may either invoke arbitration, as set forth in Section 8.01, or seek injunctive relief, to compel San Francisco to remedy the failure as soon as is reasonably practical, and San Francisco shall be free to oppose the issuance of the requested judicial or arbitral relief on any applicable legal or equitable basis. The existence of this right to resort to arbitration shall not be deemed to preclude the right to seek injunctive relief.

6. Because delays in the budget process or other events may cause San Francisco to defer the effective date of Wholesale Customer rate adjustments until after the beginning of San Francisco's fiscal year, nothing contained in this Agreement shall require San Francisco to make any changes in the water rates charged to Wholesale Customers effective at 138
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the start of San Francisco's fiscal year or at any other specific date. Nothing in the preceding sentence shall excuse non-compliance with the provisions of Section 6.02 and this section.

B. Emergency Rate Increases. The Commission may adjust the Wholesale Customers’ rates without complying with the requirements of Section 6.03.A in response to an Emergency that damages the Regional Water System and disrupts San Francisco’s ability to maintain normal deliveries of water to Retail and Wholesale Customers. In such an Emergency, the Commission may adopt an emergency rate surcharge applicable to Wholesale Customers without following the procedures set forth in this section, provided that any such rate surcharge imposed by the Commission shall be applicable to both Retail and Wholesale Customers and incorporate the same percentage increase for all customers. Any emergency rate surcharge adopted by the Commission shall remain in effect only until the next-budget coordinated rate- setting cycle.

C. Drought Rates. If the Commission declares a water shortage emergency under Water Code Section 350, implements the Tier 1 Shortage Plan (Attachment H) described in Section 3.11.C, and imposes drought rates on Retail Customers, it may concurrently adjust wholesale rates independently of coordination with the annual budget process. Those adjustments may be designed to encourage water conservation and may constitute changes to the structure of the rates within the meaning of Section 6.04. The parties agree, however, that, in adopting changes in rates in response to a declaration of water shortage emergency, the Commission shall comply with Section 6.03.A.1 and 2 but need not comply with Section 6.04.B.

Drought Rate payments and payments of excess use charges levied in accordance with the Tier 1 Shortage Plan described in Section 3.11.C constitute Wholesale Customer Revenue and count towards the Wholesale Revenue Requirement. The SFPUC may use these revenues to purchase additional water for the Wholesale Customers from the State Drought Water Bank or other willing seller.

6.04. Rate Structure
A. This Agreement is not intended and shall not be construed to limit the Commission’s right (a) to adjust the structure of the rate schedule applicable to the Wholesale Customers (i.e., the relationship among the several charges set out therein) or (b) to add, delete, or change the various charges which make up the rate schedule, provided that neither such charges nor the structure of the rate schedule(s) applicable to the Wholesale Customers shall be arbitrary, unreasonable, or unjustly discriminatory as among said customers. The 139
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SFPUC will give careful consideration to proposals for changes in the rate schedule made jointly by the Wholesale Customers but, subject to the limitations set out above, shall retain the sole and exclusive right to determine the structure of the rate schedule.

B. If the SFPUC intends to recommend that the Commission adopt one or more changes to the structure of wholesale rates (currently set forth in SFPUC Rate Schedule W-25), it shall prepare and distribute to the Wholesale Customers and BAWSCA a report describing the proposed change(s), the purpose(s) for which it/they are being considered, and the estimated financial effect on individual Wholesale Customers or classes of customers. Wholesale Customers may submit comments on the report to the SFPUC for sixty (60) days after receiving the report. The SFPUC will consider these comments and, if it determines to recommend that the Commission adopt the change(s), as described in the report or as modified in response to comments, the SFPUC General Manager shall submit a report to the Commission recommending specific change(s) in the rate structure. Copies of the General Manager’s report shall be sent to all Wholesale Customers and BAWSCA at least thirty (30) days prior to the Commission meeting at which the changes will be considered.

C. The SFPUC may recommend, and the Commission may adopt, changes in the structure of wholesale rates at any time. However, the new rate schedule implementing these changes will become effective at the beginning of the following fiscal year.

6.05. Balancing Account
A. Balancing Account Established Under 1984 Agreement. The amount of credit in favor of San Francisco as of the expiration of the term of 1984 Agreement (June 30, 2009) is not known with certainty as of preparation and execution of this Agreement. It will not be known with certainty until the Compliance Audit for FY 2008-09 is completed and disputes, if any, that the Wholesale Customers or the SFPUC may have with the calculation of the Suburban Revenue Requirement for that fiscal year and for previous fiscal years have been settled or decided by arbitration.

The parties anticipate that the amount of the credit in favor of San Francisco as of June 30, 2009 may be within the range of $15 million to $20 million.

In order to reduce the credit balance due San Francisco under the 1984 Agreement in an orderly manner, while avoiding unnecessary fluctuations in wholesale rates, the parties agree to implement the following procedure.
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1. In setting wholesale rates for FY 2009-10, SFPUC will include a balancing account repayment of approximately $2 million.

2. In setting wholesale rates for FY 2010-11 and following years, SFPUC will include a balancing account repayment of not less than $2 million and not more than $5 million annually until the full amount of the balance due, plus interest at the rate specified in Section

6.05.B, is repaid.

3. The actual ending balance as of June 30, 2009 will be determined, by the parties’ agreement or arbitral ruling, after the Compliance Audit report for FY 2008-09 is delivered to BAWSCA. That amount, once determined, will establish the principal to be amortized through subsequent years’ repayments pursuant to this Section 6.05.A.

B. Balancing Account Under This Agreement

1. Operation. After the close of each fiscal year, the SFPUC will compute the costs allocable to the Wholesale Customers for that fiscal year pursuant to Article 5, based on actual costs incurred by the SFPUC and actual amounts of water used by the Wholesale Customers and the Retail Customers. That amount will be compared to the amounts billed to the Wholesale Customers for that fiscal year (including any Excess Use Charges, but excluding revenues described in Section 5.10.C). The difference will be posted to a “balancing account” as a credit to, or charge against, the Wholesale Customers. Interest shall also be posted to the balancing account calculated by multiplying the amount of the opening balance by the average net interest rate, certified by the Controller as earned in the San Francisco Treasury for the previous fiscal year on the San Francisco County Pooled Investment Account. Interest, when posted, will carry the same mathematical sign (whether positive or negative) as carried by the opening balance. The amount posted to the balancing account in each year shall be added to, or subtracted from, the balance in the account from previous years. The calculation of the amount to be posted to the balancing account shall be included in the report prepared by the SFPUC pursuant to Section 7.02.

The opening balance for fiscal year 2009-10 shall be zero.

2. Integration of Balancing Account with Wholesale Rate Setting Process. If the amount in the balancing account is owed to the Wholesale Customers (a positive balance), the SFPUC shall take it into consideration in establishing wholesale rates. However, the SFPUC need not apply the entire amount to reduce wholesale rates for the immediately ensuing 141
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year. Instead, the SFPUC may prorate a positive ending balance over a period of up to three successive years in order to avoid fluctuating decreases and increases in wholesale rates. a. If a positive balance is maintained for three successive years and represents 10 percent or more of the Wholesale Revenue Requirement for the most recent fiscal year, the SFPUC shall consult with BAWSCA as to the Wholesale Customers’ preferred application of the balance. The Wholesale Customers shall, through BAWSCA, direct that the positive balance be applied to one or more of the following purposes: (a) transfer to the Wholesale Revenue Coverage Reserve, (b) amortization of any remaining negative balance from the ending balancing account under the 1984 Agreement, (c) prepayment of the existing asset balance under Section 5.03, (d) water conservation or water supply projects administered by or through BAWSCA, (e) immediate reduction of wholesale rates, or (f) continued retention for future rate stabilization purposes. In the absence of a direction from BAWSCA, the SFPUC shall continue to retain the balance for rate stabilization in subsequent years. b. If the amount in the balancing account is owed to the SFPUC (a negative balance), the SFPUC shall not be obligated to apply all or any part of the negative balance in establishing wholesale rates for the immediately ensuring year. Instead, the SFPUC may prorate the negative balance in whole or in part over multiple years in order to avoid fluctuating increases and decreases in wholesale rates.

6.06. Wholesale Revenue Coverage Reserve
A. The SFPUC may include in wholesale rates for any fiscal year an additional dollar amount (“Wholesale Revenue Coverage”), which for any fiscal year shall equal the following:

1. The lesser of (i) 25% of the Wholesale Customers’ share of Net Annual Debt Service for that fiscal year determined as described in Section 5.04.A, or (ii) the amount necessary to meet the Wholesale Customers’ proportionate share of Debt Service coverage required by then-current Indebtedness for that fiscal year, minus

2. A credit for (i) the actual amounts previously deposited in the “Wholesale Revenue Coverage Reserve” (as defined in subsection B below), (ii) accrued interest on the amounts on deposit in the Wholesale Revenue Coverage Reserve, and (iii) an amount equal to any additional interest that would have accrued on the actual amounts previously deposited in the Wholesale Revenue Coverage Reserve assuming no withdrawals had been made therefrom.
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B. During each fiscal year, the SFPUC will set aside and deposit that portion of revenue equal to Wholesale Revenue Coverage into a separate account that the SFPUC will establish and maintain, to be known as the “Wholesale Revenue Coverage Reserve.” Deposits into the Wholesale Revenue Coverage Reserve shall be made no less frequently than monthly.

The Wholesale Revenue Coverage Reserve shall be credited with interest at the rate specified in Section 6.05.B. The SFPUC may use amounts in the Wholesale Revenue Coverage Reserve for any lawful purpose. Any balance in the Wholesale Revenue Coverage Reserve in excess of the Wholesale Revenue Coverage amount as of the end of any fiscal year (as calculated in subsection 6.06(A) above) shall be applied as a credit against wholesale rates in the immediately following fiscal year unless otherwise directed by BAWSCA.

C. Within 180 days following the later of expiration of the Term or final payment of Debt Service due on Indebtedness issued during the Term to which Wholesale Customers were contributing, SFPUC shall rebate to the Wholesale Customers an amount equal to the Wholesale Revenue Coverage amount in effect for the fiscal year during which the Term expires or the final payment of Debt Service on Indebtedness is made based on each Wholesale Customer’s Proportional Annual Use in the fiscal year during which the Term expires or the final payment of debt service on Indebtedness is made.

D. SFPUC shall provide a schedule of debt issuance (with assumptions), and the Wholesale Customers’ share of Net Annual Debt Service (actual and projected) expected to be included in wholesale rates starting in 2009-10 through the expected completion of the WSIP.

The schedule is to be updated annually prior to rate setting. If estimated Debt Service is used in rate setting, the SFPUC must be able to demonstrate that the Water Enterprise revenues will be sufficient to meet the additional bonds test for the proposed bonds and rate covenants for the upcoming year.

E. Conditions in the municipal bond market may change from those prevailing in 2009. If, prior to expiration of the Term, the SFPUC determines that it would be in the best financial interest of both Retail Customers and Wholesale Customers of the Regional Water System for the Debt Service coverage requirement to be increased in one or more series of proposed new Indebtedness above 1.25%, or for the coverage covenant to be strengthened in other ways, it will provide a written report to BAWSCA. The report will contain (1) a description of proposed covenant(s) in the bond indenture; (2) an explanation of how savings are expected to be achieved (e.g., increase in the SFPUC’s credit rating over the then-current level; ability to 143
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obtain credit enhancement, etc.); (3) the estimated all-in true interest cost savings; (4) a comparison of the Wholesale Revenue Requirements using the Debt Service coverage limitation in subsection A and under the proposed methodology; and (5) a comparison of the respective monetary benefits expected to be received by both Retail and Wholesale Customers.

The SFPUC and BAWSCA agree to meet and confer in good faith about the proposed changes.

F. Any increase in Debt Service coverage proposed by the SFPUC shall be commensurate with Proportional Water Use by Retail and Wholesale Customers. If the SFPUC demonstrates that an increase in Debt Service coverage will result in equivalent percentage reductions in total Wholesale and Retail Debt Service payments over the life of the proposed new Indebtedness, based on Proportional Water Use, BAWSCA may agree to a modification of the Wholesale Revenue Coverage requirement in subsection A. If BAWSCA does not agree to a proposed modification in coverage requirements in the covenants for new Indebtedness, SFPUC may nevertheless proceed with the modification and the issuance of new Indebtedness.

Any Wholesale Customer, or BAWSCA, may challenge an increase in the Wholesale Revenue Requirement resulting from the modification in Debt Service coverage through arbitration as provided in Section 8.01.A. If the arbitrator finds that the increase in Debt Service coverage (1) did not and will not result in equivalent percentage reductions in total Wholesale and Retail Debt Service payments over the life of the proposed new Indebtedness, based on Proportional Water Use, or (2) was not commensurate with Proportional Water Use, the arbitrator may order the Wholesale Revenue Requirement to be recalculated both retrospectively and prospectively to eliminate the differential impact to Wholesale or Retail Customers, subject to the limitation in Section 8.01.C.

6.07. Working Capital Requirement
A. The SFPUC maintains working capital in the form of unappropriated reserves for the purpose of bridging the gap between when the SFPUC incurs operating expenses required to provide service and when it receives revenues from its Retail and Wholesale Customers.

The Wholesale Customers shall fund their share of working capital as part of the annual Wholesale Revenue Requirement calculation. The amount of wholesale working capital for which the Wholesale Customers will be responsible will be determined using the 60-day standard formula approach.

B. Applying this approach, annual wholesale working capital equals one-sixth of the wholesale allocation of operation and maintenance, administrative and general, and property tax 144
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expenses for the Water and Hetch Hetchy Enterprises. Wholesale working capital shall be calculated separately for the Water and Hetch Hetchy Enterprises.

C. Each month, the sum of the Water Enterprise and Hetch Hetchy Enterprise working capital components will be compared with the ending balance in the Wholesale Revenue Coverage Reserve to determine if the Wholesale Customers provided the minimum required working capital. If the Wholesale Revenue Coverage Reserve is greater than the total Water Enterprise and Hetch Hetchy Enterprise working capital requirement, the Wholesale Customers will have provided their share of working capital. If the Wholesale Revenue Coverage Reserve is less than the total Water Enterprise and Hetch Hetchy Enterprise working capital requirement, the Wholesale Customers will be charged interest on the difference, which will be included in the adjustment to the Balancing Account under Section 6.05.B for the subsequent fiscal year.

6.08. Wholesale Capital Fund
A. The SFPUC currently funds revenue-funded capital projects through annual budget appropriations that are included in rates established for that fiscal year and transferred to a capital project fund from which expenditures are made. Consistent with the San Francisco Charter and Administrative Code, the SFPUC appropriates funds in advance of construction in order to maintain a positive balance in the capital project fund. The capital project fund also accrues interest and any unspent appropriations in excess of total project costs. It is the SFPUC’s practice to regularly monitor the capital project fund balance to determine whether a surplus has accumulated, which can be credited against the next fiscal year’s capital project appropriation.

B. The SFPUC shall establish a comparable Wholesale Revenue-Funded Capital Fund (Wholesale Capital Fund) to enable the Wholesale Customers to fund the wholesale share of revenue-funded New Regional Assets. The Wholesale Capital Fund balance is zero as of July 1, 2009. The SFPUC may include in wholesale rates for any fiscal year an amount equal to the wholesale share of the SFPUC’s appropriation for revenue funded New Regional Assets for that year, which sum will be credited to the Wholesale Capital Fund. The wholesale share of other sources of funding, where legally permitted and appropriately accounted for under GAAP, will also be credited to the Wholesale Capital Fund, together with interest earnings on the Wholesale Capital Fund balance.
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C. The SFPUC will expend revenues appropriated and transferred to the Wholesale Capital Fund only on New Regional Assets. The annual capital appropriation included in each fiscal year’s budget will be provided to BAWSCA in accordance with Section 6.02 and will take into account the current and projected balance in the Wholesale Capital Fund, as well as current and projected unexpended and unencumbered surplus, as shown on attachment M-1, which will be prepared by the SFPUC each year.

D. Commencing on November 30, 2010 and thereafter in each fiscal year during the Term, the SFPUC will also provide an annual report to BAWSCA on the status of individual revenue-funded New Regional Assets, substantially in the form of Attachment M-2.

E. In order to prevent the accumulation of an excessive unexpended and unencumbered balance in the Wholesale Capital Fund, the status of the fund balance will be reviewed through the annual Compliance Audit, commencing in FY 2018-19. The FY 2018-19 Compliance Audit and the Wholesale Customer/BAWSCA review under Section 7.06 shall include Wholesale Capital Fund appropriations, expenditures and interest earnings for FY 2014- 15 through 2017-18 for the purpose of determining whether a Balancing Account transfer is required. If the June 30 unencumbered balance of the Wholesale Capital Fund exceeds the lesser of the following: (i) the Target Balance; (ii) the unencumbered remaining cumulative appropriations, the amount of such excess shall be transferred to the credit of the Wholesale Customers to the Balancing Account described in Section 6.05.

In order to avoid funding delays for New Regional Asset capital projects resulting from prior year transfers of excess Wholesale Capital fund balances to the Wholesale Customers, if the June 30 unencumbered balance of the Wholesale Capital Fund is below the lesser of the following: (i) the Target Balance; (ii) the unencumbered remaining cumulative appropriation, such deficiency shall be posted to the Balancing Account described in Section 6.05 as a charge to the Wholesale Customers. Notwithstanding the foregoing, no such charge to the Wholesale Customers shall exceed $4 million annually.

Amended Attachment M-3 illustrates the process for determining the Wholesale Capital Fund balance as of June 30, 2019.

F. Three years prior to the end of the Term, the SFPUC and BAWSCA will discuss the disposition of the Wholesale Capital Fund balance at the end of the Term. Absent 146
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agreement, any balance remaining in the Wholesale Capital Fund at the end of the Term shall be transferred to the Balancing Account, to the credit of the Wholesale Customers.

6.09. SFPUC Adoption of Regional Water System 10-Year Capital Improvement Program A. Established Level of Service Goals and Objectives. In approving the WSIP, the Commission adopted Level of Service Goals and Objectives that are, in part, used to develop capital programs related to water, including the 10-Year Capital Improvement Program for the Regional Water System (“10-Year CIP”). BAWSCA and the Wholesale Customers shall have the opportunity to review and provide written or oral comments on any changes to the Level of Service Goals and Objectives that may be submitted to the Commission for approval.

B. Submittal of an Asset Management Policy. Prior to December 31, 2020, the SFPUC shall develop and submit to the Commission for approval an Asset Management Policy applicable to the Regional Water System.

C. Coordination of 10-Year CIP and SFPUC Budget Meetings. The Commission annually reviews, updates, and adopts a 10-Year CIP pursuant to Section 8B.123 of the San Francisco Charter. At two-year intervals, the Commission holds two budget meetings concerning the 10-Year CIP. Over the course of the two budget meetings, the SFPUC reviews its budget priorities, potential changes to projects in the previously adopted 10-Year CIP, and the potential financial implications of such changes. In the event that Charter amendments are placed on the ballot that could alter or amend the City’s budget preparation and adoption efforts, BAWSCA shall be notified in advance of any proposed change that could result in a less robust CIP development effort, and BAWSCA and the SFPUC shall meet to consider BAWSCA’s comments on maintaining a robust CIP development effort.

D. Mid-cycle Changes to the 10-Year CIP. The SFPUC shall include within the Water Enterprise Capital Improvement Program Quarterly Projects Reports that it provides to the Commission (“CIP Quarterly Projects Reports”) discussion of any material changes proposed to projects that are included in the most recently adopted 10-Year CIP. The SFPUC defines a material change as a change that applies to a CIP project whose approved CIP budget is equal to or greater than $5,000,000 that results in one or more of the following:

1. Increases the cost of the CIP project by more than 10%.

2. Increases the schedule of the CIP project by extending said schedule by 12 calendar months or greater.
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3. Affects the SFPUC’s ability to meet the Level of Service Goals and Objectives.

The SFPUC shall also include within the CIP Quarterly Projects Reports discussion of any new capital project that is not included in the most recently adopted 10-Year CIP if the SFPUC has 1) begun spending on the project and 2) anticipates that it will require total funding in excess of $5,000,000. For such projects, the parties recognize that the work may be of an urgent nature and that details of those projects may be developing quickly to address a critical need. The SFPUC commits that, for these projects, an expanded discussion will be provided in quarterly reports generated 6 months following the creation of the project in the City’s finance and accounting system. At a minimum, the discussion will include: 1) a detailed scope of work, 2) schedule, 3) cost breakdown, and 4) proposed source of funding. This level of detail shall continue to be included in subsequent quarterly reports through either the completion of the work or until the work is included as part of an adopted 10-Year CIP.

E. BAWSCA and Wholesale Customer Notice and Review. Beginning in 2020, at least 30 days before the first budget meeting, the SFPUC shall provide BAWSCA and the Wholesale Customers with written notice of the dates of the two budget meetings. At least 30 days before the first budget meeting, the SFPUC shall also provide BAWSCA and the Wholesale Customers with a draft of the 10-Year CIP and meet with those same parties to review potential candidate projects that it is considering for inclusion in the 10-Year CIP. Final materials for the first budget meeting will be made available to BAWSCA and the Wholesale Customers no less than 14 days prior to that budget meeting. Final materials for the second budget meeting will be made available to BAWSCA and the Wholesale Customers on the same date that they are made available to the Commission. Prior to the Commission’s adoption of the 10-Year CIP at the second budget meeting, San Francisco shall respond, in writing, to all written comments by BAWSCA and the Wholesale Customers on the 10-Year CIP that were submitted prior to the date of the first budget meeting.

F. Contents of Draft 10-Year CIP – Projects in Years One and Two of 10-Year Schedule. The SFPUC’s CIP projects generally fall into three categories: defined projects, placeholder concepts that could become projects, and programmatic spending for expenses likely to be made but for which there is no schedule. Projects in the near-term years of the 10- Year CIP have more definition than those in the outer years, and as a result more detailed information is available for them. For each project listed that has significant expected 148
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expenditures identified in the first two years of the 10-Year CIP, the draft 10-Year CIP made available to BAWSCA and the Wholesale Customers shall include the following elements:

1. Project name.

2. Project description and justification.

3. Description of the project’s relationship to the Level of Service Goals and Objectives.

4. Project asset classification for cost-allocation purposes, pursuant to Attachment R for Hetch Hetchy Enterprise assets, or as Regional or Retail for Water Enterprise assets.

5. Project schedule where applicable, broken down by phase, through to completion.

6. Total project budget estimate including a proposed inflation rate.

G. Contents of Draft 10-Year CIP – Projects Listed After First Two Years of 10- Year Schedule. For each project that is listed in years three through ten of the 10-Year CIP, the draft 10-Year CIP made available to BAWSCA and the Wholesale Customers shall include the following elements:

1. Project name.

2. Project description and justification.

3. Description of the project’s relationship to the Level of Service Goals and Objectives.

4. Project asset classification for cost-allocation purposes, pursuant to Attachment R for Hetch Hetchy Enterprise assets, or as Regional or Retail for Water Enterprise assets.

5. Project schedule information that forms the basis for project planning if available.

6. Total project budget estimate.

H. Additional Contents of Draft 10-Year CIP. The draft 10-Year CIP made available to BAWSCA and the Wholesale Customers shall also include the following:

1. A discussion of any changes to projects in the previously adopted 10- Year CIP, the reasons for such changes, any impact of the proposed changes on the SFPUC’s ability to achieve the Level of Service Goals 149
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and Objectives, and the SFPUC’s proposal for meeting the specific Level of Service Goals and Objectives in question.

2. A discussion of factors that have influenced the 10-Year CIP budget or identified projects, or have the potential to influence the overall budget or the number, cost and scale of identified projects, such as rate increase considerations, local rate setting policies, etc.

3. A discussion of how the CIP will be staffed.

4. A cash flow estimate for each project included as part of the first five years of the 10-Year CIP that considers historical spending and changes in the amount of work to be done.

5. Project spreadsheets that separate new projects from existing projects.

6. A summary roll-up for Regional costs, including all programmatic costs budgeted in the 10-Year CIP.

I. Quarterly Reporting and Meetings.

1. CIP Quarterly Projects Reports. The SFPUC shall include within the CIP Quarterly Projects Reports a detailed status update of each Regional project in the 10-Year CIP that has an estimated cost greater than $5 million and a summary of the work completed to date for such projects. The CIP Quarterly Projects Reports shall focus on the first two years’ projects in the 10-Year CIP, but shall also demonstrate a connection to the 10-Year CIP asset classification and the Level of Service Goals and Objectives. The CIP Quarterly Projects Reports shall identify any Regional project in the 10-Year CIP with an estimated cost greater than $5 million that is behind schedule, and, for each project so identified, shall describe the SFPUC’s plan and timeline for either making up the delay or adopting a revised project schedule. In each fourth quarter of the fiscal year CIP Quarterly Projects Report, the SFPUC will also address the status of Regional projects in the 10-Year CIP that have an estimated cost of less than $5 million, noting any such projects that are behind schedule and describing the SFPUC’s plan and timeline for either making up the delay or adopting a revised project schedule.

2. Quarterly Meetings. If requested by BAWSCA, the SFPUC shall hold quarterly meetings with BAWSCA to review each CIP Quarterly Projects Report, during which the SFPUC shall present information and detail about the individual projects and overall implementation of the 10-Year CIP, as well as the need for re-prioritization and/or the proposal 150
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of new candidate projects for consideration as part of the next update of the 10-Year CIP. As part of the meeting held in each fourth quarter of the fiscal year, the SFPUC shall provide additional information and detail regarding the CIP development schedule and associated coordination proposed with BAWSCA.

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Article 7. Accounting Procedures; Compliance Audit

7.01. SFPUC Accounting Principles, Practices
A. Accounting Principles. San Francisco will maintain the accounts of the SFPUC and the Water and Hetch Hetchy Enterprises in conformity with Generally Accepted Accounting Principles. San Francisco will apply all applicable pronouncements of the Governmental Accounting Standards Board (GASB) as well as statements and interpretations of the Financial Accounting Standards Board and Accounting Principles Board opinions issued on or before March 30, 1989, unless those pronouncements or opinions conflict with GASB pronouncements.

B. General Rule. San Francisco will maintain the accounting records of the SFPUC and the Water and Hetch Hetchy Enterprises in a format and level of detail sufficient to allow it to determine the annual Wholesale Revenue Requirement in compliance with this Agreement and to allow its determination of the Wholesale Revenue Requirement to be audited as provided in Section 7.04.

C. Water Enterprise. San Francisco will maintain an account structure which allows utility plant and operating and maintenance expenses to be segregated by location (inside San Francisco and outside San Francisco) and by function (Direct Retail, Regional and Direct Wholesale).

D. Hetch Hetchy Enterprise. San Francisco will maintain an account structure which allows utility plant and operating and maintenance expenses to be segregated into Water Only, Power Only and Joint categories.

E. SFPUC. San Francisco will maintain an account structure which allows any expenses of SFPUC bureaus that benefit only the Wastewater Enterprise, the Power-Only operations of the Hetch Hetchy Enterprise or Retail Customers to be excluded from the Wholesale Revenue Requirement.

F. Utility Plant Ledgers. San Francisco will maintain subsidiary plant ledgers for the Water and Hetch Hetchy Enterprises that contain unique identifying numbers for all assets included in the rate base and identify the original cost, annual depreciation, accumulated depreciation, date placed in service, useful life, salvage value if any, source of funding (e.g., bond series, revenues, grants), and classification for purposes of this Agreement. 152
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G. Debt. San Francisco will maintain documentation identifying:

1. The portion of total bonded debt outstanding related to each series of each bond issue.

2. The portion of total interest expense related to each series of each bond issue.

3. The use of proceeds of each bond issue (including proceeds of commercial paper and/or other interim financial instruments redeemed or expected to be redeemed from bonds and earnings on the proceeds of financings) in sufficient detail to determine, for each bond issue, the proceeds and earnings of each (including proceeds and earnings of interim financing vehicles redeemed by a bond issue) and the total amounts expended on Direct Retail improvements and the total amounts expended on Regional improvements.

H. Changes in Accounting. Subject to subsections A thru G, San Francisco may change the chart of accounts and accounting practices of the SFPUC and the Water and Hetch Hetchy Enterprises. However, the allocation of any expense to the Wholesale Customers that is specified in the Agreement may not be changed merely because of a change in (1) the accounting system or chart of accounts used by SFPUC, (2) the account to which an expense is posted or (3) a change in the organizational structure of the SFPUC or the Water or Hetch Hetchy Enterprises.

I. Audit. San Francisco will arrange for an audit of the financial statements of Water and Hetch Hetchy Enterprises to be conducted each year by an independent certified public accountant, appointed by the Controller, in accordance with Generally Accepted Auditing Standards.

7.02. Calculation of and Report on Wholesale Revenue Requirement A. Within five months after the close of each fiscal year, San Francisco will prepare a report showing its calculation of the Wholesale Revenue Requirement for the preceding fiscal year and the change in the balancing account as of the end of that fiscal year. The first such report will be prepared by November 30, 2010 and will cover fiscal year 2009-10 and the balancing account as of June 30, 2010.

B. The report will consist of the following items:
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1. Statement of changes in the balancing account for the fiscal year being reported on, and for the immediately preceding fiscal year, substantially in the form of Attachment O.

2. Detailed supporting schedules 8.1 through 8.2 substantially in the form of Attachment N-2.

3. Description and explanation of any changes in San Francisco’s accounting practices from those previously in effect.

4. Explanation of any line item of expense (shown on Attachment N-2, schedules 1 and 4) for which the amount allocated to the Wholesale Customers increased by (a) ten percent or more from the preceding fiscal year, or (b) more than $1,000,000.

5. Representation letter signed by the SFPUC General Manager and by other SFPUC financial staff shown on Attachment P, as the General Manager may direct, subject to change in position titles at the discretion of the SFPUC.

C. The report will be delivered to the BAWSCA General Manager by the date identified in Subsection A.

Once the report has been delivered to BAWSCA, San Francisco will, upon request:

1. Provide BAWSCA with access to, and copies of, all worksheets and supporting documents used or prepared by San Francisco during its calculation of the Wholesale Revenue Requirement;

2. Make available to BAWSCA all supporting documentation and calculations used by San Francisco in preparing the report; and

3. Promptly provide answers to questions from BAWSCA staff about the report.

7.03. Appointment of Compliance Auditor
A. Purpose. The purpose of this section is to provide for an annual Compliance Audit by an independent certified public accountant of the procedures followed and the underlying data used by San Francisco in calculating the Wholesale Revenue Requirement for the preceding fiscal year. The annual Compliance Audit shall also determine whether the Wholesale Revenue Requirement has been calculated in accordance with the terms of the Agreement and whether amounts paid by the Wholesale Customers in excess of or less than 154
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the Wholesale Revenue Requirement have been posted to the balancing account, together with interest as provided in Section 6.05.

B. Method of Appointment. The Controller shall select an independent certified public accountant (“Compliance Auditor”) to conduct the Compliance Audit described below.

The Compliance Auditor may be the same certified public accountant engaged by the Controller to audit the financial statements of the Water and Hetch Hetchy Enterprises. Subject to approval by the Controller and the General Manager of the SFPUC, the Compliance Auditor shall have the authority to engage such consultants as it deems necessary or appropriate to assist in the audit. The terms of this Article shall be incorporated into the contract between San Francisco and the Compliance Auditor, and the Wholesale Customers shall be deemed to be third-party beneficiaries of said contract.

7.04. Conduct of Compliance Audit
A. Standards. The Compliance Auditor shall perform the Compliance Audit in accordance with Generally Accepted Auditing Standards. In particular, its review shall be governed by the standards contained in Section AU 623 (Reports on Specified Elements, Accounts or Items of a Financial Statement) of the AICPA, Professional Standards, as amended from time to time.

B. Preliminary Meeting; Periodic Status Reports; Access to Data. Prior to commencing the audit, the Compliance Auditor shall meet with San Francisco and BAWSCA to discuss the audit plan, the procedures to be employed and the schedule to be followed. During the course of the audit, the Compliance Auditor shall keep San Francisco and BAWSCA informed of any unforeseen problems or circumstances which could cause a delay in the audit or any material expansion of the audit’s scope. The Compliance Auditor shall be given full access to all records of the SFPUC and the Water and Hetch Hetchy Enterprises that the Auditor deems necessary for the audit.

C. Audit Procedures. The Compliance Auditor shall review San Francisco’s calculation of the Wholesale Revenue Requirement and the underlying data in order to carry out the purpose of the audit described in Section 7.03.A and to issue the report described in Section

7.05. At a minimum, the Compliance Auditor shall address the following:

1. Water Enterprise Operating and Maintenance Expenses. The Compliance Auditor shall review Water Enterprise cost ledgers to determine whether the 155
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recorded operating and maintenance expenses fairly reflect the costs incurred, were recorded on a basis consistent with applicable Generally Accepted Accounting Principles, and were allocated to the Wholesale Customers as provided in this Agreement.

2. Water Enterprise Administrative and General Expenses. The Compliance Auditor shall review Water Enterprise cost ledgers and other appropriate financial records, including those of the SFPUC, to determine whether the recorded administrative and general expenses fairly reflect the costs incurred by or allocated to the Water Enterprise, whether they were recorded on a basis consistent with applicable Generally Accepted Accounting Principles, whether SFPUC charges were allocated to the Water Enterprise in accordance with this Agreement, and whether the amount of administrative and general expenses allocated to the Wholesale Customers was determined as provided by this Agreement.

3. Property Taxes. The Compliance Auditor shall review Water Enterprise cost ledgers to determine whether the amount of property taxes shown on the report fairly reflects the property tax expense incurred by San Francisco for Water Enterprise property outside of San Francisco and whether there has been deducted from the amount to be allocated (1) all taxes actually reimbursed to San Francisco by tenants of Water Enterprise property under leases that require such reimbursement and (2) any refunds received from the taxing authority.

The Compliance Auditor also shall determine whether the amount of property taxes allocated to the Wholesale Customers was determined as provided in this Agreement.

4. Debt Service. The Compliance Auditor shall review SFPUC records to determine whether debt service, and associated coverage requirements, were allocated to the Wholesale Customers as provided in this Agreement.

5. Amortization of Existing Assets in Service as of June 30, 2009. The Compliance Auditor shall review both Water and Hetch Hetchy Enterprise records to determine whether the payoff amount for Existing Assets allocated to the Wholesale Customers as shown on Attachment K-1 through K-4 was calculated as provided in Section 5.03 of this Agreement.

6. Revenue-Funded Capital Appropriations/Expenditures. The Compliance Auditor shall review San Francisco’s calculation of actual expenditures on the wholesale share of revenue-funded New Regional Assets and remaining unexpended and unencumbered project balances in the “Wholesale Capital Fund” described in Section 6.08, to determine whether the procedures contained in that section were followed.
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7. Hetch Hetchy Expenses. The Compliance Auditor shall determine whether Hetch Hetchy Enterprise expenses were allocated to the Wholesale Customers as provided in this Agreement.

D. Use of and Reliance on Audited Financial Statements and Water Use Data

1. In performing the audit, the Compliance Auditor shall incorporate any adjustments to the cost ledgers recommended by the independent certified public accountant, referred to in Section 7.01.I, which audited the financial statements of the Water and Hetch Hetchy Enterprises. The Compliance Auditor may rely upon the work performed by that independent certified public accountant if the Compliance Auditor reviews the work and is willing to take responsibility for it as part of the compliance audit.

2. In performing the Compliance Audit and issuing its report, the Compliance Auditor may rely on water use data furnished by the Water Enterprise, regardless of whether the Wholesale Customers contest the accuracy of such data. The Compliance Auditor shall have no obligation to independently verify the accuracy of the water use data provided by San Francisco; however, the Compliance Auditor shall disclose in its report any information which came to its attention suggesting that the water use data provided by San Francisco are inaccurate in any significant respect.

E. Exit Conference. Upon completion of the audit, the Compliance Auditor shall meet with San Francisco and BAWSCA to discuss audit findings, including (1) any material weakness in internal controls and (2) adjustments proposed by the Compliance Auditor and San Francisco’s response (i.e., booked or waived).

7.05. Issuance of Compliance Auditor’s Report
A. S an Francisco will require the Compliance Auditor to issue its report no later than nine months after the fiscal year under audit (i.e., March 31 of the following calendar year). The Compliance Auditor’s report shall be addressed and delivered to San Francisco and BAWSCA.

The report shall contain:

1. A statement that the Auditor has audited the report on the calculation of the Wholesale Revenue Requirement and changes in the balancing account, and supporting documents, prepared by San Francisco as required by Section 7.02. 157
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2. A statement that the audit was conducted in accordance with auditing standards generally accepted in the United States of America, and that the audit provides a reasonable basis for its opinion.

3. A statement that in the Compliance Auditor’s opinion the Wholesale Revenue Requirement was calculated by San Francisco in accordance with this Agreement and that the change in the balancing account shown in San Francisco’s report was calculated as required by this Agreement and presents fairly, in all material respects, changes in and the balance due to (or from) the Wholesale Customers as of the end of the fiscal year under audit.

7.06. Wholesale Customer Review
A. One or more Wholesale Customers, or BAWSCA, may engage an independent certified public accountant (CPA) to conduct a review (at its or their expense) of San Francisco’s calculation of the annual Wholesale Revenue Requirement and a review of changes in the balancing account.

B. If a Wholesale Customer or BAWSCA wishes such a review to be conducted it will provide written notice to SFPUC within 30 days of the date the Compliance Auditor’s report is issued. The notice will identify the CPA or accounting/auditing firm that will conduct the review and the specific aspects of the Compliance Auditor’s report that are the subject of the review. If more than one notice of review is received by the SFPUC, the requesting Wholesale Customers shall combine and coordinate their reviews and select a lead auditor to act on their behalf for the purposes of requesting documents and conducting on-site investigations.

C. San Francisco will cooperate with the CPA appointed by a Wholesale Customer or BAWSCA. This cooperation includes making requested records promptly available, making knowledgeable SFPUC personnel available to timely and truthfully answer the CPA’s questions and directing the Compliance Auditor to cooperate with the CPA.

D. The Wholesale Customer’s review shall be completed within 60 days after the date the Compliance Auditor’s report is issued. At the conclusion of the review, representatives of San Francisco and BAWSCA shall meet to discuss any differences between them concerning San Francisco’s compliance with Articles 5 or 6 of this Agreement during the preceding fiscal year or San Francisco’s calculation of the Wholesale Revenue Requirement for the preceding fiscal year. If such differences cannot be resolved, the dispute shall be submitted to arbitration in accordance with Section 8.01.
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Article 8. Other Agreements of the Parties

8.01. Arbitration and Judicial Review
A. General Principles re Scope of Arbitration. All questions or disputes arising under the following subject areas shall be subject to mandatory, binding arbitration and shall not be subject to judicial determination:

1. the determination of the Wholesale Revenue Requirement, which shall include both the calculations used in the determination and the variables used in those calculations;

2. the SFPUC’s adherence to accounting practices and conduct of the Compliance Audit; and

3. the SFPUC’s classification of new or omitted assets for purposes of determining the Wholesale Revenue Requirement.

All other questions or disputes arising under this Agreement shall be subject to judicial determination. Disputes about the scope of arbitrability shall be resolved by the courts.

B. Demand for Arbitration. If any arbitrable question or dispute should arise, any Wholesale Customer or the SFPUC may commence arbitration proceedings hereunder by service of a written Demand for Arbitration. Demands for arbitration shall set forth all of the issues to be arbitrated, the general contentions relating to those issues, and the relief sought by the party serving the Demand. Within 45 days after service of a Demand upon it, any Wholesale Customer or the SFPUC may serve a Notice of Election to become a party to the arbitration and a Response to the issues set forth in the Demand. The Response shall include the party’s general contentions and defenses with respect to the claims made in the Demand, and may include any otherwise arbitrable claims, contentions and demands that concern the fiscal year covered by the Demand. If a timely Notice of Election and Response is not filed by any such entity, it shall not be a party to the arbitration but shall nonetheless be bound by the award of the arbitrator. If no party to this Agreement serves a timely Notice of Election and Response, the party seeking arbitration shall be entitled to the relief sought in its Demand for Arbitration without the necessity of further proceedings. Any claims not made in a Demand or Response shall be deemed waived.
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If a Demand or Notice of Election is made by the SFPUC, it shall be served by personal delivery or certified mail to each Wholesale Customer at the address of such customer as set forth in the billing records of the SFPUC. If a Demand or Notice of Election is made by a Wholesale Customer, service shall be by certified mail or personal delivery to the General Manager, SFPUC, 525 Golden Gate Avenue, 13th Floor, San Francisco, California 94102, and to each of the other Wholesale Customers. If arbitration is commenced, the Wholesale Customers shall use their best efforts to formulate a single, joint position with respect thereto.

In any event, with respect to the appointment of arbitrators, as hereinafter provided, all Wholesale Customers that take the same position as to the issues to be arbitrated shall jointly and collectively be deemed to be a single party.

C. Limitations Period. All Demands For Arbitration shall be served within twelve months of receipt by BAWSCA of the Wholesale Revenue Requirement Compliance Auditor’s Report for that year. If a party fails to file a Demand within the time period specified in this subsection, that party waives all present and future claims with respect to the fiscal year in question. If no such Demand is served within the twelve month period specified above, the SFPUC’s determination of the Wholesale Revenue Requirement for that year shall be final and conclusive. Whether any particular claim is barred by the twelve month limitations period provided for herein shall be for the arbitrator to determine. Prior to the expiration of the twelve month limitations period, the parties to the dispute may agree by written stipulation to extend the period by up to six additional months.

The Arbitrator may order the alteration or recalculation of underlying Water Enterprise and/or Hetch Hetchy Enterprise accounts or asset classifications. Such changes shall be used to calculate the Wholesale Revenue Requirement for the fiscal year in dispute and shall also be used to determine future Wholesale Revenue Requirements, if otherwise applicable, even though the existing entries in such accounts or the asset classifications, in whole or in part, predate the twelve month period described above, so long as a timely arbitration Demand has been filed in accordance with this subsection.

D. Number and Appointment of Arbitrators. All arbitration proceedings under this section shall be conducted by a single arbitrator, selected by the SFPUC and a designated representative of the Wholesale Customers or each group of Wholesale Customers that take the same position with respect to the arbitration, within 75 days after service of the Demand. If the parties to the arbitration cannot agree on an arbitrator within 75 days, any party may petition 160
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the Marin County Superior Court for the appointment of an arbitrator pursuant to Code of Civil Procedure Section 1281.6 (or any successor provision).

E. Guidelines for Qualifications of Arbitrators. The Wholesale Customers and the SFPUC acknowledge that the qualifications of the arbitrator will vary with the nature of the matter arbitrated, but, in general, agree that such qualifications may include service as a judge or expertise in one or more of the following fields: public utility law, water utility rate setting, water system and hydraulic engineering, utility accounting methods and practices, and water system operation and management. The parties to the arbitration shall use their best efforts to agree in advance upon the qualifications of any arbitrator to be appointed by the Superior Court.

F. Powers of Arbitrator; Conduct of Proceedings

1. Except as provided in this section, arbitrations under this section shall be conducted under and be governed by the provisions of California Code of Civil Procedure Sections 1282.2 through 1284.2 (hereinafter, collectively, “Code sections”), and arbitrators appointed hereunder shall have the powers and duties specified by the Code sections.

2. Within the meaning of the Code sections, the term “neutral arbitrator” shall mean the single arbitrator selected by the parties to the arbitration.

3. Unless waived in writing by the parties to the arbitration, the notice of hearing served by the arbitrator shall not be less than 90 days.

4. The lists of witnesses (including expert witnesses), and the lists of documents (including the reports of expert witnesses) referred to in Code of Civil Procedure Section 1282.2 shall be mutually exchanged, without necessity of demand therefore, no later than 60 days prior to the date of the hearing, unless otherwise agreed in writing by the parties to the arbitration. Upon application of any party, or on his or her own motion, the arbitrator may schedule one or more prehearing conferences for the purposes of narrowing and/or expediting resolution of the issues in dispute. Strict conformity to the rules of evidence is not required, except that the arbitrator shall apply applicable law relating to privileges and work product. The arbitrator shall consider evidence that he or she finds relevant and material to the dispute, giving the evidence such weight as is appropriate. The arbitrator may limit testimony to exclude evidence that would be immaterial or unduly repetitive, provided that all parties are afforded the opportunity to present material and relevant evidence.
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5. Within thirty days after the close of the arbitration hearing, or such other time as the arbitrator shall determine, the parties will submit proposed findings and a proposed remedy to the arbitrator. The parties may file objections to their adversary’s proposed findings and remedy within a time limit to be specified by the arbitrator. The arbitrator shall not base his or her award on information not obtained at the hearing.

6. The arbitrator shall render a written award no later than twelve months after the arbitrator is appointed, either by the parties or by the court, provided that such time may be waived or extended as provided in Code of Civil Procedure Section 1283.8.

7. The provisions for discovery set forth in Code of Civil Procedure Section 1283.05 are incorporated into and made part of this Agreement, except that: (a) leave of the arbitrator need not be obtained for the taking of depositions, including the depositions of expert witnesses; (b) the provisions of Code of Civil Procedure Section 2034.010 et seq., relating to discovery of expert witnesses, shall automatically be applicable to arbitration proceedings arising under this Agreement without the necessity for a formal demand pursuant to Section 2034.210 and the date for the exchange of expert discovery provided by Sections 2034.260 and 2034.270 shall be not later than 60 days prior to the date for the hearing; and (c) all reports, documents, and other materials prepared or reviewed by any expert designated to testify at the arbitration shall be discoverable. In appropriate circumstances, the arbitrator may order any party to this Agreement that is not a party to the arbitration to comply with any discovery request.

8. For the purposes of allocation of expenses and fees, as provided in Code of Civil Procedure Section 1284.2, if any two or more Wholesale Customers join together in a single, joint position in the arbitration, those Wholesale Customers shall be deemed to be a single party. If any Wholesale Customer or customers join together with the SFPUC in a single joint position in the arbitration, those Wholesale Customers and the SFPUC together shall be deemed to be a single party.

9. Subject to any other limitations imposed by the Agreement, the arbitrator shall have power to issue orders mandating compliance with the terms of the Agreement or enjoining violations of the Agreement. With respect to any arbitration brought to redress a claimed wholesale overpayment to the SFPUC, the arbitrator’s power to award monetary relief shall be limited to entering an order requiring that an adjustment be made in the amount posted to the balancing account for the fiscal year covered by the Demand. 162
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10. All awards of the arbitrator shall be binding on the SFPUC and the Wholesale Customers regardless of the participation or lack thereof by any Wholesale Customer or the SFPUC as a party to the arbitration proceeding. The parties to an arbitration shall have the power to modify or amend any arbitration award by mutual consent. The arbitrator shall apply California law.

8.02. Attorneys’ Fees
A. Arbitration or Litigation Between San Francisco and Wholesale Customers Arising under the Agreement or Individual Water Sales Contracts. Each party will bear its own costs, including attorneys’ fees, incurred in any arbitration or litigation arising under this Agreement or the Individual Water Sales Contracts between San Francisco and the Wholesale Customers. Notwithstanding the foregoing, and subject to the limitations contained herein, the SFPUC may allocate to the Wholesale Customers as an allowable expense, utilizing the composite rate used for allocating other Water Enterprise administrative and general expenses, any attorneys’ fees and costs incurred by the SFPUC in connection with arbitration and/or litigation arising under this Agreement and/or the Individual Water Sales Contracts. Attorneys’ fees incurred by the SFPUC for attorneys employed in the San Francisco City Attorney’s office shall be billed at the hourly rates charged for the attorneys in question by the San Francisco City Attorney’s Office to the SFPUC. Attorneys’ fees incurred by the SFPUC for attorneys other than those employed in the San Francisco City Attorney’s Office shall be limited to the hourly rates charged to the SFPUC for attorneys and paralegals with comparable experience employed in the San Francisco City Attorney’s office and in no event shall exceed the highest hourly rate charged by any attorney or paralegal employed in the City Attorney’s Office to the SFPUC.

B. Arbitration or Litigation Outside of Agreement Concerning the SFPUC Water System or Reserved Issues

1. The attorneys’ fees and costs incurred by the SFPUC in litigation between San Francisco and one or more of the Wholesale Customers arising from matters outside of the Agreement, including, without limitation, litigation and/or arbitration concerning the issues specifically reserved in the Agreement, shall be allocated between the Retail Customers and the Wholesale Customers utilizing the composite rate used for allocating other Water Enterprise administrative and general expenses.

2. If, in any litigation described in subsection B.1 above, attorneys’ fees and costs are awarded to one or more of the Wholesale Customers as prevailing parties, the 163
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FPUC’s payment of the Wholesale Customers’ attorneys’ fees and costs shall not be an allowable expense pursuant to subsection A.

3. If, in any litigation described in subsection B.1, the SFPUC obtains an award of attorneys’ fees and costs as a prevailing party against one or more of the Wholesale Customers, any such award shall be reduced to offset the amount of the SFPUC’s fees and costs, if any, that have already been paid by the Wholesale Customers in the current or any prior fiscal years pursuant to subsection B.1 and the provisions of Articles 5 and 6 of the Agreement.

4. Nothing contained in this Agreement, including this subsection, shall authorize a court to award attorneys’ fees and costs to a prevailing party as a matter of contract and/or the provisions of Civil Code Section 1717, in litigation between San Francisco and one or more of the Wholesale Customers arising from matters outside of the Agreement, including, without limitation, litigation and/or arbitration concerning the issues specifically reserved in the Agreement.

C. Attorneys' Fees and Costs Incurred by the SFPUC in Connection with the Operation and Maintenance of the SFPUC Water Supply System. All attorneys’ fees and costs incurred by the SFPUC in connection with the operation and maintenance of the SFPUC’s water supply system shall be allocated between Retail Customers and the Wholesale Customers utilizing the composite rate used for allocating other Water Enterprise administrative and general expenses.

8.03. Annual Meeting and Report
A. The parties wish to ensure that the Wholesale Customers may, in an orderly way, be informed of matters affecting the Regional Water System, including matters affecting the continuity and adequacy of their water supply from San Francisco.

For this purpose, the General Manager of the SFPUC shall meet annually with the Wholesale Customers and BAWSCA during the month of February, commencing February 2010. At these annual meetings, the SFPUC shall provide the Wholesale Customers a report on the following topics:

1. Capital additions under construction or being planned for the Regional Water System, including the status of planning studies, financing plans, environmental reviews, permit applications, etc.;
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2. Water use trends and projections for Retail Customers and Wholesale Customers;

3. Water supply conditions and projections;

4. The status of any administrative proceedings or litigation affecting San Francisco’s water rights or the SFPUC’s ability to deliver water from the watersheds which currently supply the Regional Water System;

5. Existing or anticipated problems with the maintenance and repair of the Regional Water System or with water quality;

6. Projections of Wholesale Revenue Requirements for the next five years;

7. Any other topic which the SFPUC General Manager places on the agenda for the meeting;

8. Any topic which the Wholesale Customers, through BAWSCA, request be placed on the agenda, provided that the SFPUC is notified of the request at least 10 days before the meeting.

B. The General Manager of the SFPUC, the Assistant General Manager of the Water Enterprise, and the Assistant General Manager of Business Services-CFO will use their best efforts to attend the annual meetings. If one or more of these officers are unable to attend, they will designate an appropriately informed assistant to attend in their place.

8.04. Administrative Matters Delegated to BAWSCA
A. The Wholesale Customers hereby delegate the authority and responsibility for performing the following administrative functions contemplated in this Agreement to BAWSCA:

1. Approval of calculations of Proportional Annual Water Use required by Section 3.14 and Attachment J, “Water Use Measurement and Tabulation”;

2. Approval of amendments to Attachments J and K-3 and K-4, “25-Year Payoff Schedules for Existing Rate Base”;

3. Agreement that the Water Meter and Calibration Procedures Manual to be prepared by the SFPUC may supersede some or all of the requirements in Attachment J, as described in Section 3.14;
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4. Conduct of Wholesale Customer review of SFPUC’s calculation of annual Wholesale Revenue Requirement/Change in Balancing Account described in Section 7.06;

5. Approval of an adjustment to Wholesale Revenue Coverage as described in Section 6.06.

B. A majority of the Wholesale Customers may, without amending this Agreement, delegate additional administrative functions to BAWSCA. To be effective, such expanded delegation must be evidenced by resolutions adopted by the governing bodies of a majority of the Wholesale Customers. In 2014, all twenty-six Wholesale Customers adopted resolutions delegating authority to BAWSCA to initiate, defend and settle arbitration for the matters that, pursuant to Section 8.01 of this Agreement, are subject to mandatory, binding arbitration.

C. Unless otherwise explicitly stated, the administrative authority delegated to BAWSCA may be exercised by the General Manager/CEO of BAWSCA, rather than requiring action by the BAWSCA Board of Directors. In addition, the Wholesale Customers may, with the consent of BAWSCA, delegate to BAWSCA the initiation, defense, and settlement of arbitration proceedings provided for in Section 8.01.

8.05. Preservation of Water Rights; Notice of Water Rights Proceedings A. It is the intention of San Francisco to preserve all of its water rights, irrespective of whether the water held under such water rights is allocated under this Agreement. Nothing in this Agreement shall be construed as an abandonment, or evidence of an intent to abandon, any of the water rights that San Francisco presently possesses.

B. San Francisco shall use its best efforts to give prompt notice to BAWSCA of any litigation or administrative proceedings to which San Francisco is a party involving water rights to the Regional Water System. The failure of San Francisco to provide notice as required by this section, for whatever reason, shall not give rise to any monetary liability.

8.06. SFPUC Rules and Regulations
The sale and delivery of all water under this Agreement shall be subject to such of the “Rules and Regulations Governing Water Service to Customers” of the Water Enterprise adopted by the Commission, as those rules and regulations may be amended from time to time, as are (1) applicable to the sale and delivery of water to the Wholesale Customers, (2) reasonable, and (3) not inconsistent with either this Agreement or with an Individual Water 166
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Sales Contract. The SFPUC will give the Wholesale Customers notice of any proposal to amend the Rules and Regulations in a manner that would affect the Wholesale Customers. The notice will be delivered at least thirty days in advance of the date on which the proposal is to be considered by the Commission and will be accompanied by the text of the proposed amendment.

8.07. Reservations of, and Limitations on, Claims
A. General Reservation of Raker Act Contentions. The 1984 Agreement resolved a civil action brought against San Francisco by certain of the Wholesale Customers.

Plaintiffs in that action contended that they, and other Wholesale Customers that are municipalities or special districts, were “co-grantees” within the meaning of Section 8 of the Act and were entitled to certain rights, benefits and privileges by virtue of that status. San Francisco disputed those claims.

Nothing in this Agreement, or in the Individual Water Sales Contracts, shall be construed or interpreted in any way to affect the ultimate resolution of the controversy between the parties concerning whether any of the Wholesale Customers are “co-grantees” under the Act and, if so, what rights, benefits and privileges accrue to them by reason of that claimed status.

B. Claims Reserved but not Assertable During Term or Portions Thereof. The following claims, which San Francisco disputes, are reserved but may not be asserted during the Term (or portions thereof, as indicated):

1. The Wholesale Customers’ claim that the Act entitles them to water at cost.

2. The Wholesale Customers’ claim that San Francisco is obligated under the Act or state law to supply them with additional water in excess of the Supply Assurance.

This claim may not be asserted unless and until San Francisco decides not to meet projected water demands of Wholesale Customers in excess of the Supply Assurance pursuant to Section

4.06. 3. The claim by San Jose and Santa Clara that they are entitled under the Act, or any other federal or state law, to permanent, non-interruptible status and to be charged rates identical to those charged other Wholesale Customers. This claim may not be asserted unless and until San Francisco notifies San Jose or Santa Clara that it intends to interrupt or terminate water deliveries pursuant to Section 4.05.
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4. T he Wholesale Customers’ claim that the SFPUC is not entitled to impose a surcharge for lost power generation revenues attributable to furnishing water in excess of the Supply Assurance. This claim may not be asserted unless and until SFPUC furnishes water in excess of the Supply Assurance during the Term and also includes such a surcharge in the price of such water.

5. Claims by Wholesale Customers (other than San Jose and Santa Clara, whose service areas are fixed) that SFPUC is obligated under the Act or state law to furnish water, within their Individual Supply Guarantee, for delivery to customers outside their existing service area and that Wholesale Customers are entitled to enlarge their service areas to supply those customers. Such claims may be asserted only after compliance with the procedure set forth in Section 3.03, followed by SFPUC’s denial of, or failure for six months to act on, a written request by a Wholesale Customer to expand its service area.

C. Waived Activities. The Wholesale Customers (and the SFPUC, where specified) will refrain from the following activities during the Term (or portions thereof, as specified):

1. The Wholesale Customers and the SFPUC will not contend before any court, administrative agency or legislative body or committee that the methodology for determining the Wholesale Revenue Requirement (or the requirements for (a) amortization of the ending balance under the 1984 Agreement, or (b) contribution to the Wholesale Revenue Coverage) determined in accordance with this Agreement violates the Act or any other provision of federal law, state law, or San Francisco’s City Charter, or is unfair, unreasonable or unlawful.

2. The Wholesale Customers will not challenge the transfer of funds by the SFPUC to any other San Francisco City department or fund, provided such transfer complies with the San Francisco City Charter. The transfer of its funds, whether or not permitted by the City Charter, will not excuse the SFPUC from its failure to perform any obligation imposed by this Agreement.

3. The Wholesale Customers and the SFPUC will not assert monetary claims against one another based on the 1984 Agreement other than otherwise arbitrable claims arising from the three fiscal years immediately preceding the start of the Term (i.e., FYs 2006-07, 2007-08 and 2008-09). Such claims, if any, shall be governed by the dispute resolution provisions of this Agreement, except that the time within which arbitration must be commenced shall be 18 months from delivery of the Compliance Auditor’s report. 168
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D. Other

1. This Agreement shall determine the respective monetary rights and obligations of the parties with respect to water sold by the SFPUC to the Wholesale Customers during the Term. Such rights and obligations shall not be affected by any judgments or orders issued by any court in litigation, whether or not between parties hereto, and whether or not related to the controversy over co-grantee status, except for arbitration and/or litigation expressly permitted in this Agreement. No judicial or other resolution of issues reserved by this section will affect the Wholesale Revenue Requirement which, during the Term, will be determined exclusively as provided in Articles 5, 6 and 7 of this Agreement.

2. Because delays in the budget process or other events may cause the SFPUC to defer the effective date of changes in wholesale rates until after the beginning of the fiscal year, this Agreement does not require the SFPUC to make changes in wholesale rates effective at the start of the fiscal year or at any other specific date.

3. T he Wholesale Customers do not, by executing this Agreement, concede the legality of the SFPUC’s establishing Interim Supply Allocations, as provided in Article 4 or imposing Environmental Enhancement Surcharges on water use in excess of such allocations.

Any Wholesale Customer may challenge such allocation when imposed and/or such surcharges if and when levied, in any court of competent jurisdiction.

4. The furnishing of water in excess of the Supply Assurance by San Francisco to the Wholesale Customers shall not be deemed or construed to be a waiver by San Francisco of its claim that it has no obligation under any provision of law to supply such water to the Wholesale Customers, nor shall it constitute a dedication by San Francisco to the Wholesale Customers of such water.

8.08. Prohibition of Assignment
A. This Agreement shall be binding on, and shall inure to the benefit of, the parties and their respective successors and permitted assigns. Each Wholesale Customer agrees that it will not transfer or assign any rights or privileges under this Agreement, either in whole or in part, or make any transfer of all or any part of its water system or allow the use thereof in any manner whereby any provision of this Agreement will not continue to be binding on it, its assignee or transferee, or such user of the system. Any assignment or transfer in violation of this covenant, and any assignment or transfer that would result in the supply of water in violation of the Act, shall be void.
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B. N othing in this section shall prevent any Wholesale Customer (except the California Water Service Company and Stanford) from entering into a joint powers agreement or a municipal or multi-party water district with any other Wholesale Customer (except the two listed above) to exercise the rights and obligations granted to and imposed upon the Wholesale Customers hereunder, nor shall this section prevent any Wholesale Customer (except the two listed above) from succeeding to the rights and obligations of another Wholesale Customer hereunder as long as the Wholesale Service Area served by the Wholesale Customers involved in the succession is not thereby enlarged.

8.09. Notices
A. All notices and other documents that San Francisco is required or permitted to send to the Wholesale Customers under this Agreement shall be sent to each and all of the Wholesale Customers by United States mail, first class postage prepaid, addressed to each Wholesale Customer at the address to which monthly water bills are mailed by the Water Enterprise.

B. All notices or other documents which the Wholesale Customers are required or permitted to send to San Francisco under this Agreement shall be sent by United States mail, first class postage prepaid, addressed as follows:

General Manager
San Francisco Public Utilities Commission
525 Golden Gate Avenue, 13th Floor
San Francisco, CA 94102

C. Each Wholesale Customer is a member of BAWSCA. San Francisco shall send a copy of each notice or other document which it is required to send to all Wholesale Customers to BAWSCA addressed as follows:

General Manager/CEO
Bay Area Water Supply and Conservation Agency
155 Bovet Road, Suite 650
San Mateo, CA 94402

The failure of San Francisco to send a copy of such notices or documents to BAWSCA shall not invalidate any rate set or other action taken by San Francisco. 170
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D. Any party (or BAWSCA) may change the address to which notice is to be sent to it under this Agreement by notice to San Francisco (in the case of a change desired by a Wholesale Customer or BAWSCA ) and to the Wholesale Customer and BAWSCA (in the case of a change desired by San Francisco).

The requirements for notice set forth in Section 8.01 concerning arbitration shall prevail over this section, when they are applicable.

8.10. Incorporation of Attachments
Attachments A through R, referred to herein, are incorporated in and made a part of this Agreement.

8.11. Interpretation
In interpreting this Agreement, or any provision thereof, it shall be deemed to have been drafted by all signatories, and no presumption pursuant to Civil Code Section 1654 may be invoked to determine the Agreement’s meaning. The marginal headings and titles to the sections and paragraphs of this Agreement are not a part of this Agreement and shall have no effect upon the construction or interpretation of any part hereof.

8.12. Actions and Approvals by San Francisco
Whenever action or approval by San Francisco is required or contemplated by this Agreement, authority to act or approve shall be exercised by the Commission, except if such action is required by law to be taken, or approval required to be given, by the San Francisco Board of Supervisors. The Commission may delegate authority to the General Manager in accordance with the San Francisco City Charter and Administrative Code, except for actions that this Agreement requires to be taken by the Commission.

8.13. Counterparts
Execution of this Agreement may be accomplished by execution of separate counterparts by each signatory. San Francisco shall deliver its executed counterpart to BAWSCA and the counterpart which each Wholesale Customer executes shall be delivered to San Francisco. The separate executed counterparts, taken together, shall constitute a single agreement.
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8.14. Limitations on Damages
A. Unless otherwise prohibited by this Agreement, general or direct damages may be recovered for a breach of a party’s obligations under this Agreement. No party is liable for, or may recover from any other party, special, indirect or consequential damages or incidental damages, including, but not limited to, lost profits or revenue. No damages may be awarded for a breach of Section 8.17.

B. The limitations in subsection A apply only to claims for damages for an alleged breach of this Agreement. These limitations do not apply to claims for damages for an alleged breach of a legal duty that arises independently of this Agreement, established by constitution or statute.

C. If damages would be an inadequate remedy for a breach of this Agreement, equitable relief may be awarded by a court in a case in which it is otherwise proper.

D. This section does not apply to any claim of breach for which arbitration is the exclusive remedy pursuant to Section 8.01.A.

8.15. Force Majeure
A. Excuse from Performance. No party shall be liable in damages to any other party for delay in performance of, or failure to perform, its obligations under this Agreement, including the obligations set forth in Sections 3.09 and 4.06, if such delay or failure is caused by a “Force Majeure Event.”
B. Notice. The party claiming excuse shall deliver to the other parties a written notice of intent to claim excuse from performance under this Agreement by reason of a Force Majeure Event. Notice required by this section shall be given promptly in light of the circumstances, and, in the case of events described in (c), (d) or (e) of the definition of Force Majeure Event only, not later than ten (10) days after the occurrence of the Force Majeure Event. Such notice shall describe the Force Majeure Event, the services impacted by the claimed event, the length of time that the party expects to be prevented from performing, and the steps which the party intends to take to restore its ability to perform.

C. Obligation to Restore Ability to Perform. Any suspension of performance by a party pursuant to this section shall be only to the extent, and for a period of no longer duration 172
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than, required by the nature of the Force Majeure Event, and the party claiming excuse shall use its best efforts to remedy its inability to perform as quickly as possible.

8.16. No Third-Party Beneficiaries
This Agreement is exclusively for the benefit of the parties and not for the benefit of any other Person. There are no third-party beneficiaries of this Agreement and no person not a party shall have any rights under or interests in this Agreement.

No party may assert a claim for damages on behalf of a person other than itself, including a person that is not a party.

8.17. Good Faith and Fair Dealing
San Francisco and the Wholesale Customers each acknowledge their obligation under California law to act in good faith toward, and deal fairly with, each other with respect to this Agreement.

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Article 9. Implementation and Special Provisions Affecting Certain Wholesale Customers

9.01. General; Individual Water Sales Contracts
A. As described in Section 1.03, San Francisco previously entered into Individual Water Sales Contracts with each of the Wholesale Customers. The term of the majority of Individual Water Sales Contracts will expire on June 30, 2009, concurrently with the expiration of the 1984 Agreement. Except as provided below in this Article, each of the Wholesale Customers will execute a new Individual Water Sales Contract with San Francisco concurrently with its approval of the Agreement.

B. The Individual Water Sales Contracts will describe the service area of each Wholesale Customer, identify the location and size of connections between the Regional Water System and the Wholesale Customer’s distribution system, provide for periodic rendering and payment of bills for water usage, and in some instances contain additional specialized provisions unique to the particular Wholesale Customer and not of general concern or applicability. A sample Individual Water Sales Contract is provided at Attachment F. The Individual Water Sales Contracts between San Francisco and the Wholesale Customers will not contain any provision inconsistent with Articles 1 through 8 of this Agreement except (1) as provided below in this Article or (2) to the extent that such provisions are not in derogation of the Fundamental Rights of other Wholesale Customers under this Agreement. Any provisions in an Individual Water Sales Contract which are in violation of this section shall be void.

9.02. California Water Service Company
A. The parties recognize that the California Water Service Company is an investor- owned utility company and, as such, has no claim to co-grantee status under the Act, which specifically bars private parties from receiving for resale any water produced by the Hetch Hetchy portion of the Regional Water System. Accordingly, the following provisions shall apply to the California Water Service Company, notwithstanding anything to the contrary elsewhere in this Agreement.

B. The total quantity of water delivered by San Francisco to the California Water Service Company shall not in any calendar year exceed 47,400 acre feet, which is the estimated average annual production of Local System Water. If San Francisco develops additional Local System Water after the Effective Date, it may (1) increase the maximum 174
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delivery amount stated herein; and (2) increase the Supply Assurance, but not necessarily both.

San Francisco has no obligation to deliver water to California Water Service Company in excess of the maximum stated herein, except as such maximum may be increased by San Francisco pursuant to this subsection. The maximum annual quantity of Local System Water set forth in this subsection is intended to be a limitation on the total quantity of water that may be allocated to California Water Service Company, and is not an Individual Supply Guarantee for purposes of Section 3.02. The maximum quantity of Local System Water set forth in this subsection is subject to reduction in response to (1) changes in long-term hydrology or (2) environmental water requirements that may be imposed by or negotiated with state and federal resource agencies in order to comply with state or federal law or to secure applicable permits for construction of Regional Water System facilities. San Francisco shall notify California Water Service Company of any anticipated reduction of the quantity of Local System Water set forth in this subsection, along with an explanation of the basis for the reduction.

C. Notwithstanding anything in Section 8.08 to the contrary, California Water Service Company shall have the right to assign to a public agency having the power of eminent domain all or a portion of the rights of California Water Service Company under any contract between it and San Francisco applicable to any individual district of California Water Service Company in connection with the acquisition by such public agency of all or a portion of the water system of California Water Service Company in such district. In the event of any such assignment of all the rights, privileges and obligations of California Water Service Company under such contract, California Water Service Company shall be relieved of all further obligations under such contract provided that the assignee public agency expressly assumes the obligations of California Water Service Company thereunder. In the event of such an assignment of a portion of the rights, privileges and obligations of California Water Service Company under such contract, California Water Service Company shall be relieved of such portion of such obligations so assigned thereunder provided that the assignee public agency shall expressly assume such obligations so assigned to it.

D. Should California Water Service Company seek to take over or otherwise acquire, in whole or in part, the service obligations of another Wholesale Customer under Section 3.03.E, it will so inform San Francisco at least six months prior to the effective date of the sale and provide information concerning the total additional demand proposed to be served, in order that San Francisco may compare the proposed additional demand to the then-current estimate of Local System Water. In this regard, California Water Service Company has notified 175
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the SFPUC that it has reached an agreement to acquire the assets of Skyline County Water District (“Skyline”) and assume the responsibility for providing water service to customers in the Skyline service area. California Water Service Company has advised the SFPUC that, on September 18, 2008, the California Public Utilities Commission approved California Water Service Company’s acquisition of Skyline. The SFPUC anticipates approving the transfer of Skyline’s Supply Guarantee as shown on Attachment C to California Water Service Company and the expansion of California Water Service Company’s service area to include the current Skyline service area before the Effective Date of this Agreement. All parties to this Agreement authorize corresponding modifications of Attachment C, as well as any of the Agreement’s other provisions, to reflect the foregoing transaction without the necessity of amending this Agreement.

E. Nothing in this Agreement shall preclude San Francisco from selling water to any county, city, town, district, political subdivision, or other public agency for resale to customers within the service area of the California Water Service Company. Nothing in this Agreement shall require or contemplate any delivery of water to California Water Service Company in violation of the Act.

F. Nothing in this Agreement shall alter, amend or modify the Findings of Fact and Conclusions of Law and the Judgment dated May 25, 1961, in that certain action entitled City and County of San Francisco v. California Water Service Company in the Superior Court of the State of California in and for the County of Marin, No. 23286, as modified by the Quitclaim Deed from California Water Service Company to San Francisco dated August 22, 1961. The rights and obligations of San Francisco and California Water Service Company under these documents shall continue as therein set forth.

9.03. City of Hayward
A. San Francisco and the City of Hayward (“Hayward”) entered into a water supply contract on February 9, 1962 (“the 1962 contract”) which provides, inter alia, that San Francisco will supply Hayward with all water supplemental to sources and supplies of water owned or controlled by Hayward as of that date, in sufficient quantity to supply the total water needs of the service area described on an exhibit to the 1962 contract “on a permanent basis.” The service area map attached as Exhibit C to the 1962 contract was amended in 1974 to remove an area of land in the Hayward hills and in 2008 to make minor boundary adjustments identified in SFPUC Resolution No. 08-0035.
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B. The intention of the parties is to continue the 1962 contract, as amended, in effect as the Individual Water Sales Contract between San Francisco and Hayward.

Accordingly, it shall not be necessary for San Francisco and Hayward to enter into a new Individual Water Sales Contract pursuant to this Article and approval of this Agreement by Hayward shall constitute approval of both this Agreement and an Individual Water Sales Contract for purposes of Section 1.03. The 1962 contract, as amended, will continue to describe the service area of Hayward, while rates for water delivered to Hayward during the Term shall be governed by Article 5 hereof. The 1962 contract, as amended, will continue in force after the expiration of the Term.

9.04. Estero Municipal Improvement District
A. San Francisco and the Estero Municipal Improvement District (“Estero”) entered into a water supply contract on August 24, 1961, the term of which continues until August 24, 2011 (“the 1961 Contract”). The 1961 Contract provides, inter alia, that San Francisco will supply Estero with all water supplemental to sources and supplies of water owned or controlled by Estero as of that date, in sufficient quantity to supply the total water needs of the service area described on an exhibit to the 1961 Contract.

B. The intention of the parties is to terminate the 1961 Contract and replace it with a new Individual Water Sales Contract which will become effective on July 1, 2009. The new Individual Water Sales Contract will describe the current service area of Estero. The Individual Supply Guarantee applicable to Estero shall be 5.9 MGD, rather than being determined as provided in the 1961 Contract.

9.05. Stanford University
A. The parties recognize that The Board of Trustees of The Leland Stanford Junior University (“Stanford”) operates a non-profit university, and purchases water from San Francisco for redistribution to the academic and related facilities and activities of the university and to residents of Stanford, the majority of whom are either employed by or students of Stanford. Stanford agrees that all water furnished by San Francisco shall be used by Stanford only for domestic purposes and those directly connected with the academic and related facilities and activities of Stanford, and no water furnished by San Francisco shall be used in any area now or hereafter leased or otherwise used for industrial purposes or for commercial purposes 177
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other than those campus support facilities that provide direct services to Stanford faculty, students or staff such as the U.S. Post Office, the bookstore and Student Union.

Nothing in this Agreement shall preclude San Francisco from selling water to any county, city, town, political subdivision or other public agency for resale to Stanford or to customers within the service area of Stanford.

B. Notwithstanding anything in Section 8.08 to the contrary, Stanford shall have the right to assign to a public agency having the power of eminent domain all or a portion of the rights of Stanford under this Agreement or the Individual Water Sales Contract between it and San Francisco in connection with the acquisition by such public agency of all or a portion of Stanford’s water system. In the event of any such assignment of all the rights, privileges, and obligations of Stanford under such contract, Stanford shall be relieved of all further obligations under such contract, provided that the assignee public agency expressly assumes Stanford’s obligations thereunder. In the event of such an assignment of a portion of the rights, privileges, and obligations of Stanford under such contract, Stanford shall be relieved of such obligations so assigned thereunder, provided that the assignee public agency shall expressly assume such obligations so assigned to it.

Nothing in this Agreement shall require or contemplate any delivery of water to Stanford in violation of the Act.

9.06. City of San Jose and City of Santa Clara
A. Continued Supply on Temporary, Interruptible Basis. During the term of the 1984 Agreement, San Francisco provided water to the City of San Jose (“San Jose”) and the City of Santa Clara (“Santa Clara”) on a temporary, interruptible basis pursuant to SFPUC Resolution No. 85-0256. Subject to termination or reduction of supply as provided in Section

4.05 of this Agreement, San Francisco will continue to supply water to San Jose and Santa Clara on a temporary, interruptible basis pending a decision by the Commission, pursuant to Section 4.05.H, as to whether to make San Jose and Santa Clara permanent customers of the Regional Water System. San Francisco will furnish water to San Jose and Santa Clara at the same rates as those applicable to other Wholesale Customers pursuant to this Agreement.

Water delivered to San Jose and Santa Clara after July 1, 2009 may be limited by the SFPUC’s ability to meet the full needs of all its other Retail and Wholesale Customers. The service areas of San Jose and Santa Clara set forth in their Individual Water Sales Contracts may not be 178
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expanded using the procedure set forth in Section 3.03. The combined annual average water usage of San Jose and Santa Clara shall not exceed 9 MGD. The allocation of that total amount between San Jose and Santa Clara shall be as set forth in their Individual Water Sales Contracts.

B. Reservation of Rights. In signing this Agreement, neither San Jose nor Santa Clara waives any of its rights to contend, in the event that San Francisco (1) elects to terminate or interrupt water deliveries to either or both of the two cities prior to 2028 using the process set forth in Section 4.05, or (2) does not elect to take either city on as a permanent customer in 2028, that it is entitled to permanent customer status, pursuant to the Act or any other federal or state law. Santa Clara's reservation of rights is limited to its existing Service Area A, as shown on Attachment Q-2. Service Area B, south of Highway 101, was added in 2018 solely for the operational convenience of Santa Clara. Santa Clara waives its right to make claims described in this Section 9.06.B and Section 8.07.B.3 with respect to Service Area B. In signing this Agreement, San Francisco does not waive its right to deny any or all such contentions.

9.07. City of Brisbane, Guadalupe Valley Municipal Improvement District, Town of Hillsborough
A. The parties acknowledge that San Francisco has heretofore provided certain quantities of water to the City of Brisbane (“Brisbane”), Guadalupe Valley Municipal Improvement District (“Guadalupe”) and the Town of Hillsborough (“Hillsborough”) at specified rates or without charge pursuant to obligations arising out of agreements between the predecessors of San Francisco and these parties, which agreements are referred to in judicial orders, resolutions of the SFPUC and/or the 1960 contracts between San Francisco and Brisbane, Guadalupe and Hillsborough. The parties intend to continue those arrangements and accordingly agree as follows:

1. Nothing in this Agreement is intended to alter, amend or modify the terms of SFPUC Resolution No. 74-0653 or the indenture of July 18, 1908 between the Guadalupe Development Company and the Spring Valley Water Company.

2. Nothing in this Agreement is intended to alter, amend or modify the Findings of Fact and Conclusions of Law and Judgment dated May 25, 1961 in that certain action entitled City and County of San Francisco v. Town of Hillsborough in the Superior Court of the State of California in and for the County of Marin, No. 23282, as modified by the Satisfaction of Judgment filed October 23, 1961 and the Compromise and Release between 179
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Hillsborough and San Francisco dated August 22, 1961. The rights and obligations of Hillsborough under these documents shall continue as therein set forth.

3. Nothing in this Agreement is intended to affect or prejudice any claims, rights or remedies of Guadalupe or of Crocker Estate Company, a corporation, or of Crocker Land Company, a corporation, or of San Francisco, or of their successors and assigns, respectively, with respect to or arising out of that certain deed dated May 22, 1884, from Charles Crocker to Spring Valley Water Works, a corporation, recorded on May 24, 1884, in Book 37 of Deeds at page 356, Records of San Mateo County, California, as amended by that certain Deed of Exchange of Easements in Real Property and Agreement for Trade in Connection Therewith, dated July 29, 1954, recorded on August 4, 1954, in Book 2628, at page 298, Official Records of said San Mateo County, or with respect to or arising out of that certain action involving the validity or enforceability of certain provisions of said deed entitled City and County of San Francisco v. Crocker Estate Company, in the Superior Court of the State of California in and for the County of Marin, No. 23281.
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ATTACHMENT A
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Attachment A - Definitions

“1984 Agreement” refers to the 1984 Settlement Agreement and Master Water Sales Contract between the City and County of San Francisco and certain Suburban Purchasers in San Mateo County, Santa Clara County and Alameda County, which expires on June 30, 2009. “Act” refers to the Raker Act, 38 Stat. 242, the Act of Congress, enacted in 1913, that authorized the construction of the Hetch Hetchy system on federal lands. “Adjusted Proportional Annual Use” means the respective percentages of annual water use, as adjusted to reflect deliveries of water by the Hetch Hetchy Enterprise to outside City Retail Customers. The adjustment is calculated each year as described in Section B of Attachment J and is shown on lines 18 and 19 of Table 1 of that Attachment. “Agreement” refers to this Water Supply Agreement, by and among San Francisco and the Wholesale Customers who approve this Agreement in accordance with Section 1.03. “BAWSCA” refers to the Bay Area Water Supply and Conservation Agency established pursuant to Division 31 of the California Water Code (Water Code §§81300-81461) or its successor and permitted assigns.
“CEQA” refers to the California Environmental Quality Act found at §§21000 et seq. of the Public Resources Code and the Guidelines for the California Environmental Quality Act found at §§15000 et seq. of Title 14 of the California Code of Regulations, as amended from time to time. “Commission” means the governing board of the SFPUC, whose members, as of the date of this Agreement, are appointed by the Mayor of San Francisco and confirmed by the San Francisco Board of Supervisors.
“Compliance Audit” refers to the annual audit of the Wholesale Revenue Requirement by the Compliance Auditor required by Sections 7.03 through 7.05. “Compliance Auditor” refers to the independent certified public accountant chosen by the San Francisco Controller to conduct each fiscal year’s audit of the SFPUC’s calculation of the Wholesale Revenue Requirement as provided in Section 7.03.B. 182
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“Countywide Cost Allocation Plan” refers to the full costs of the Water and Hetch Hetchy Enterprises’ prorated share of San Francisco city government expenses that are not directly billed to city departments, as determined by the Controller of the City and County of San Francisco.
“Debt Service” means principal and interest paid during a fiscal year on Indebtedness incurred by the SFPUC for the 2006 Revenue Bonds, Series A, and subsequently issued Indebtedness (exclusive of 2006 Revenue Bonds Series B and C), the proceeds of which are used or are scheduled to be used for the acquisition or construction of New Regional Assets or to refund such Indebtedness.
“Direct Retail” refers to Regional Water System capital or operating expenditures that are incurred to provide water service solely to Retail Customers. “Direct Wholesale” refers to Regional Water System capital or operating expenditures that are incurred to provide water service solely to one or more Wholesale Customers. “Drought” means a water shortage caused by lack of precipitation, as reflected in resolutions of the Commission calling for voluntary or mandatory water rationing based on evaluation of water stored or otherwise available to the Regional Water System, whether or not the Commission declares a water shortage emergency pursuant to Water Code §§ 350 et seq., as amended from time to time.
“Effective Date” refers to the date this Agreement will become effective in accordance with the terms of Section 1.03.
“Emergency” means a sudden, non-drought event, such as an earthquake, failure of Regional Water System infrastructure or other catastrophic event or natural disaster that results in an insufficient supply of water available to the Retail or Wholesale Service Areas for basic human consumption, firefighting, sanitation, and fire protection. “Encumbrance” or “Encumber” refers to the process by which the City Controller certifies the availability of amounts previously appropriated by the Commission for specifically identified SFPUC capital projects performed either by third parties or through work orders to other City departments.
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“Environmental Enhancement Surcharge” means the surcharge to be imposed by the SFPUC on individual parties to this Agreement whose use exceeds their Interim Supply Allocation when the collective use of water by all parties to this Agreement is in excess of the Interim Supply Limitation.
“ERRP” refers to a SFPUC document entitled Emergency Response and Recovery Plan:

Regional Water System (“ERRP”) dated August 23, 2003, and updated November 2006. “Excess Use Charges” are monthly charges set by the SFPUC, in the form of multipliers, that are applied to the Wholesale Customer water rates during times of mandatory rationing if a Wholesale Customer's water usage is greater than its shortage allocation. Excess Use Charges are further described in Section 4 of the Tier 1 Shortage Plan (Attachment H). “Existing Assets” refers to Regional and Hetch Hetchy Water-Only and Water-Related capital assets plant in service as of June 30, 2009.
“Existing System Assets” refers to all Water Enterprise and Hetch Hetchy Enterprise assets and assets that are components of, or appurtenances thereto. Existing Assets are a subset of the Existing System Assets for repayment of capital costs under Section 5.03. “Existing Facilities” means those wells and associated infrastructure owned by the Participating Pumpers and in existence as of the effective date of the Project Operating Agreement, and any replacements of Existing Facilities irrespective of location. “Force Majeure Event” means an event not the fault of, and beyond the reasonable control of, the party claiming excuse which makes it impossible or extremely impracticable for such party to perform obligations imposed on it by this Agreement, by virtue of its effect on physical facilities and their operation or employees essential to such performance. Force Majeure Events include (a) an “act of God” such as an earthquake, flood, earth movement, or similar catastrophic event, (b) an act of the public enemy, terrorism, sabotage, civil disturbance or similar event, (c) a strike, work stoppage, picketing or similar concerted labor action, (d) delays in construction caused by unanticipated negligence or breach of contract by a third party or inability to obtain essential materials after diligent and timely efforts; or (e) an order or regulation issued by a federal or state regulatory agency after the Effective Date or a judgment or order entered by a federal or state court after the Effective Date.
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“Fundamental Rights” of Wholesale Customers are their status as parties to this Agreement, their allocation of water recognized in Section 3.02, their protection against arbitrary, unreasonable, or unjustly discriminatory rates provided in Section 6.04, and any specific rights described in Article 9.
“Groundwater Storage and Recovery Project” refers to a WSIP project for groundwater storage and recovery in the Southern portion of the Westside Basin approved in SFPUC Resolution No. 14-0127 dated August 12, 2014.
“Hetch Hetchy Enterprise” refers to Hetch Hetchy Water and Power Enterprise, a SFPUC operating department.
“Imputed Sales” apply when a Wholesale Customer does not meet the minimum annual purchase requirements of Section 3.07.C, except in fiscal years in which a waiver of these requirements is in effect. Imputed Sales are calculated as the difference between (1) a Wholesale Customer’s metered water purchases during a fiscal year, from July 1 to June 30, and (2) the larger of (a) or (b) as follows: (a) the Wholesale Customer’s Minimum Annual Purchase Quantity, as specified in Attachment E, or (b) the Wholesale Customer’s Temporary Modified Minimum Annual Purchase Quantity, as specified in Attachment E-1. If a Wholesale Customer has more than one Temporary Modified Minimum Annual Purchase Quantity, the largest quantity is used for calculating Imputed Sales. Imputed Sales are considered wholesale water usage for the purposes of calculating the Proportional Annual Use, and any fees charged for Imputed Sales are considered wholesale revenues.
“In Lieu Water” refers to Regional Water System water, subject to the limitations set forth in Section 9.02 of this Agreement for water delivered to California Water Service Company, that the SFPUC delivers at no charge on an interruptible basis to the Participating Pumpers, to replace groundwater that the Participating Pumpers refrain from pumping using their Existing Facilities during storage periods under the Project Operating Agreement. “Include” and its variants mean “including but not limited to” whenever used in this Agreement, regardless of whether or not it is capitalized.
“Indebtedness” includes revenue bonds, bond anticipation notes, certificates of participation (excluding certificates of participation towards which SFPUC contributes debt service as an operating expense), and commercial paper.
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“Individual Water Sales Contract” refers to the contracts between each Wholesale Customer and San Francisco contemplated in Section 9.01 that details customer-specific matters such as location of service connections, service area maps and other matters specific to that customer. “Individual Supply Guarantee” refers to each Wholesale Customer’s share of the Supply Assurance, as shown in Attachment C.
“Interim Supply Allocation” refers to each Wholesale Customer’s share, to be established by the SFPUC pursuant to Section 4.02, of the Interim Supply Limitation. “Interim Supply Limitation” refers to the 265 MGD annual average limitation on water deliveries until December 31, 2018 from Regional Water System watersheds imposed by the SFPUC in its approval of the WSIP in Resolution Number 08-0200 dated October 30, 2008. “Irrigation Well Owners” refers to the Hills of Eternity, Home of Peace, and Salem Cemetery; Eternal Home Cemetery; Woodlawn Cemetery; Holy Cross Cemetery; Italian Cemetery; Olivet Cemetery; Cypress Lawn Cemetery; and the California Golf Club, located within the Southern portion of the Westside Basin.
“Irrigation Well Owner Replacement Water” refers to water supplied by the Regional Water System delivered on a standby basis by the SFPUC, or wheeled through California Water Service Company's South San Francisco District System, for delivery to Irrigation Well Owners as may be necessary under the MMRP.
“Joint,” when used in connection with Hetch Hetchy Enterprise assets or expenses, refers to assets used or expenses incurred in providing both water supply (“Water-Related”) and in the generation and transmission of electrical energy (“Power-Related”). “Level of Service Goals and Objectives” refers to the “Phased WSIP Goals and Objectives” adopted by the Commission in Resolution No. 08-0200 dated October 30, 2008 as part of the approval of the WSIP and any amendments that may be adopted by the Commission. “Local System Water” refers to Regional Water System water supplies developed in San Mateo, Alameda and Santa Clara Counties or otherwise not produced by the Hetch Hetchy Enterprise under rights of way granted by the Raker Act. 186
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“MGD” refers to an average flow rate of one million gallons per day over a specific time period, often a year. For example, one MGD is equal to 365 million gallons per year or 1,120 acre feet per year.
“Minimum Annual Purchase Quantity” means the minimum amount of water that a Wholesale Customer that has an Individual Supply Guarantee agrees to purchase from San Francisco annually, as specified in Attachment E, as may be amended from time to time pursuant to Section 2.03.C.
“Mitigation, Monitoring and Reporting Program or “MMRP” refers to the CEQA required program of mitigation and monitoring adopted by the SFPUC as part of Groundwater Storage and Recovery Project approval in Resolution No. 14-0127. “Net Annual Debt Service” refers to debt service less payments made from proceeds of Indebtedness (e.g., capitalized interest), earnings on bond proceeds (e.g., reserve fund earnings) used to pay Debt Service, and interest paid from renewed commercial paper, or from reserve fund liquidation.
“New Assets” refers to Regional and Hetch Hetchy Water-Only and Water-Related capital assets added to Regional Water System plant in service after June 30, 2009. “New Regional Assets” refers to New Assets placed in service on or after July 1, 2009 that are used and useful in delivering water to Wholesale Customers. The following four categories comprise New Regional Assets:

1. Water Enterprise Regional Assets

2. Water Enterprise Direct Wholesale Assets

3. Hetch Hetchy Water Only Assets

4. Water-Related portion (45 percent) of Hetch Hetchy Joint Assets “Participating Pumpers” refers to the Wholesale Customers pumping groundwater who are parties to the Project Operating Agreement; specifically, the cities of Daly City and San Bruno and the California Water Service Company, South San Francisco Service Area. “Participating Pumper Replacement Water” refers to the quantity of Regional Water System water that may be made available by the SFPUC to some or all of the Participating Pumpers in accordance with Section 4.7 of the Project Operating Agreement. 187
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“Power-Only,” when used with reference to Hetch Hetchy Enterprise capital costs and operating and maintenance expenses, means capital costs and expenses that are incurred solely for the construction and operation of assets used to generate and transmit electrical energy.
“Power-Related” refers to the power related portion (55%) of Joint Hetch Hetchy Enterprise assets or expenses.
“Prepayment” refers to payments of principal and interest amounts not due in the year the prepayment is made, as described in Section 5.03.
“Project Facility or Facilities” refers to all Groundwater Storage and Recovery Project assets, such as Project wells and all related fixed assets (e.g., real property, water treatment, connecting pipelines) that are acquired or constructed by the SFPUC pursuant to the Project Operating Agreement and operated as Regional Water System assets for the allocation of capital costs and operation and maintenance expenses under this Agreement. “Project Operating Agreement” refers to the “Agreement for Groundwater Storage and Recovery from the Southern Portion of the Westside Groundwater Basin by and among the San Francisco Public Utilities Commission, the City of Daly City, the City of San Bruno, and California Water Service Company,” dated as of December 16, 2014. “Proportional Annual Use” means the shares of deliveries from the Regional Water System used by City Retail Customers and by the Wholesale Customers in a fiscal year, expressed as a percentage. The percentages of annual use are calculated each year as described in Section B of Attachment J and are shown on lines 10 and 11 of Table 1 of that Attachment. “Proportional Water Use” refers the general principle of allocating Regional Water System costs based on the relative purchases of water by Retail and Wholesale Customers. “Regional,” when used with reference to Water Enterprise capital assets and operating expenses, refers to assets and expenses that benefit Wholesale and Regional Customers. “Regional Water System” means the water storage, transmission and treatment system operated by the SFPUC in Tuolumne, Stanislaus, San Joaquin, Alameda, Santa Clara, San Mateo and San Francisco counties, including projects constructed under the WSIP, but excluding Direct Retail and Direct Wholesale assets.
188
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“Retail Customers” means any customer that purchases water from San Francisco that is not a Wholesale Customer, whether located inside or outside of San Francisco. “Retail Service Area” means the areas where SFPUC sells water to Retail Customers. “Retail Water” means water sold by the SFPUC to its Retail Customers within and outside San Francisco.
“San Francisco” refers to the City and County of San Francisco. “SFPUC” refers to the San Francisco Public Utilities Commission as an operating department of San Francisco, the General Manager of which reports to the Commission. “SFPUC Bureaus” refers to the portions of the SFPUC that provide support services to the SFPUC Operating Departments. These presently consist of the General Manager’s Office, Business Services, and External Affairs.
“SFPUC Operating Departments” refers to the Water, Hetch Hetchy and Wastewater Program Enterprises under the control and management of the SFPUC pursuant to the San Francisco Charter.
“SFPUC Storage Account” refers to the book account maintained by the SFPUC showing the amount of water stored in the Southern Westside Basin pursuant to the Project Operating Agreement.
“Shared Facilities” refers to an Existing Facility that is owned by a Participating Pumper, as upgraded through the expenditure of Regional capital costs under Section 5.04 of this Agreement and operated in part as a Project Facility.
“Substantially Expended”: A bond issue series is substantially expended when 98% of the proceeds and investment earnings contributed to the project fund have been expended. “Supply Assurance” means the 184 MGD maximum annual average metered supply of water dedicated by San Francisco to public use in the Wholesale Service Area (not including San Jose and Santa Clara) in the 1984 Agreement and Section 3.01 of this Agreement. “Target Balance,” for purposes of determining the Wholesale Capital Fund unencumbered balance under Section 6.08.E and amended Attachment M-3 beginning in FY 2018-19, means 189
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17162158.1
the sum of (i) the current year (FY 2018-19) wholesale share of the revenue funded capital appropriation for New Regional Assets pursuant to Section 5.04.B times the quotient of 4 divided by 5; plus (ii) the wholesale appropriation for the prior year (FY 2017-18) times the quotient of 3 divided by 5; plus (iii) the wholesale appropriation for the 2nd year prior (FY 2016- 17) times the quotient of 2 divided by 5; plus (iv) the wholesale appropriation for the third year prior (FY 2015-16) times the quotient of 1 divided by 5. Such appropriations shall take into account any de-appropriations and/or reimbursements from bond proceeds or other sources.

The fiscal years in parentheses used in this definition are for illustration purposes only. “Temporary Modified Minimum Annual Purchase Quantity” means the minimum amount of water that a Wholesale Customer that has an Individual Supply Guarantee, which has received a permanent transfer of a portion of Individual Supply Guarantee and a portion of Minimum Annual Purchase Quantity pursuant to Section 3.04.C, agrees to purchase from San Francisco on a temporary annual basis, as described in Section 3.04.C and as specified in Attachment E- 1, as may be amended from time to time pursuant to Section 2.03.C. “Term” means the 25-year term commencing July 1, 2009, including one or both 5-year extensions authorized by Section 2.02.A and B.
“Tier 1 Shortage Plan” refers to the Water Shortage Allocation Plan (Attachment H) adopted by the SFPUC and the Wholesale Customers in conjunction with this Agreement describing the method for allocating water between the SFPUC and the Wholesale Customers collectively for shortages of up to 20% of deliveries from the Regional Water System, as amended from time- to-time.
“Water Enterprise” refers to the San Francisco Water Department (SFWD), an SFPUC Operating Department.
“Water Management Charge” refers to the charge collected by San Francisco on behalf of BAWSCA for local water resource development in the Wholesale Service Area pursuant to Section 3.06 of this Agreement.
“Water-Only,” when used with reference to Hetch Hetchy Enterprise capital costs and operating and maintenance expenses, means capital costs and expenses that are incurred solely for the construction and operation of assets used to protect water quality or to provide for the delivery of water for consumptive purposes.
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“Water-Related” refers to the water related portion (45%) of Joint Hetch Hetchy Enterprise assets or expenses.
“Water Supply Development Report” refers to the annual report prepared pursuant to Section

4.05, and submitted to the Commission for purposes of estimating whether Regional Water System demand will be within the Interim Supply Limitation by June 30, 2018. “Wheeling Statute” refers to Article 4 of Chapter 11 of the California Water Code, as amended from time to time.
“Wholesale Capital Fund” is the account established by the SFPUC for deposit of Wholesale Customer revenue that is used to fund the wholesale share of revenue-funded New Regional Assets, as described in Section 6.08.
“Wholesale Customer” or “Customers” means one or more of the 26 water customers identified in Section 1.02 that are contracting for purchase of water from San Francisco pursuant to this Agreement.
“Wholesale Revenue Coverage” refers to the additional dollar amount included in wholesale rates each fiscal year that is charged to Wholesale Customers by the SFPUC for their proportionate share of Debt Service coverage under Section 6.06.A. “Wholesale Revenue Coverage Reserve” refers to the account established by the SFPUC for deposit of Wholesale Revenue Coverage under Section 6.06.B. “Wholesale Revenue Requirement” means the calculated Wholesale Customer portion of SFPUC Regional Water System capital and operating costs as determined in accordance with the provisions of Article 5 of this Agreement, formerly called the “Suburban Revenue Requirement” in the 1984 Agreement.
“Wholesale Service Area” means the combined service areas of the Wholesale Customers, as delineated on the service area maps attached to each Individual Water Sales Contract. “WSIP” refers to the Water System Improvement Program approved by the Commission in Resolution No. 08-0200 on October 30, 2008, as amended from time to time. 191
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ATTACHMENT B
192
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ATTACHMENT B
WHOLESALE CUSTOMER REGIONAL WATER SYSTEM PURCHASES FY 2007-2008* (To determine 75% approval process for Section 1.02)
;,:;";":"""1"""""""";"''';''':':',;;/',,',/,''x"';"":::"';;""""J""'::c,,",_ . ..,,:..':"......., HWHOLESA'/E:G.I!STJ1MERo.:ja:ö ,i""""","",,
'"',..y,',:;,""'Y"'/;):I.';;:)'S:".'''::',:,,,,!,:;;'t";"'/"§,'i;t.'::-:.%Ù"",;"""',,,, .....,.:..'., :;,
Alameda County Water District 12.90
California Water Service Company 37.72
City of Brisbane 0.23
City of Burlingame 4.50
City of Daly City 4.49
City of East Palo Alto 2.16
City of Hayward 19.33
City of Menlo Park 3.69
City of Milbrae 2.46
City öf Milpitas 6.95
City of Mountain View 10.51
City of Palo Alto 12.72
City of Redwood City 11.01
City of San Bruno 1.86
City of San Jose 4.80
City of Santa Clara 3.49
City of Sunnyvale 10.52
Coastside County Water District 2.08
Estero Municipal Improvement District 5.51
Guadalupe Valley Municipal Improvement District 0.40
Mid-Peninsula Water District 3.25
North Coast County Water District 3.25
Purissima Hills Water District 2.31
Skyline County Water District 0.16
Stanford University 2.31
Town of Hillsborough 3.83
Westborough Water District 0.95
Total 173.39
*Source: SFPUC Commercial Division Records
Note: FY 2007-2008 was a Leap Year with 366 days.
1847951. 193
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ATTACHMENT C
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ATTACHMENT C

15074851.1

INDIVIDUAL SUPPLY GUARANTEES

(1) (2)

WHOLESALE CUSTOMER
100 Cubic
Feet (per
year)1
Million Gallons
Per Day (MGD)1
Alameda County Water District 6,714,439 13.760
California Water Service Company2 17,320,807 35.499
City of Brisbane 224,435 0.460
City of Burlingame 2,553,753 5.234
City of Daly City 2,094,386 4.292
City of East Palo Alto 1,689,713 3.463
City of Menlo Park 2,174,231 4.456
City of Millbrae 1,538,120 3.152
City of Milpitas 4,504,533 9.232
City of Mountain View 6,079,715 12.460
City of Palo Alto 8,087,730 16.575
City of Redwood City 5,333,115 10.930
City of San Bruno 1,583,899 3.246
City of Sunnyvale 6,138,122 12.580
Coastside County Water District 1,061,453 2.175
Estero Municipal Improvement District 2,878,807 5.900
Guadalupe Valley Municipal Improvement District 254,436 0.521 Mid-Peninsula Water District 1,898,707 3.891
North Coast County Water District 1,872,928 3.838
Purissima Hills Water District 792,832 1.625
Skyline County Water District 88,537 0.181
Stanford University 1,479,764 3.033
Town of Hillsborough 1,995,644 4.090
Westborough Water District 644,172 1.320
Total:3 79,004,278 161.913

Footnotes:

1. 100 Cubic feet per year = Million Gallons per Day / 0.00000204946. Figures in column (1) are calculated using unrounded MGD values and are more precise than the figures listed in column (2)

2. Includes quantities from Los Trancos County Water District and Palomar Park Water District.

3. Total does not equal sum of MGD figures due to rounding. Total is not 184 MGD because the table does not include the City of Hayward. Cordilleras Mutual Water Association is not a party to this Agreement, but it has its own Supply assurance of 3,007 hundred cubic feet (CCF). 195
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ATTACHMENT D
196
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ATTACHMENT D

PROCEDURE FOR PRO-RATA REDUCTION OF WHOLESALE CUSTOMERS' INDIVIDUAL

SUPPLY GUARANTEES
(SECTION 3.02).

The 23 wholesale customers listed on Attachment C have individual Supply Guarantees that total approximately 161.9 MGD.

If the amount of water purchased from SFPUC by Hayward exceeds 22.1 MGD for three consecutive fiscal years, the individual Supply Guarantees of each of those 23 wholesale customers will be reduced as described below.

STEP ONE:

Obtain the average annual excess purchases during the three fiscal year period. For example, assume Hayward uses 25.0 MGD, 24.2 MGD and 26.0 MGD in three consecutive years. The average annual excess use for that period is 2.9 MGD; calculated as follows:
(25.0 MGD + 24.2 MGD + 26.0 MGD) + 161.9 MGD = 186.9 MGD 3 186.9 MGD -184.0 MGD = 2.9 MGD
STEP TWO:

Allocate the excess purchases among the 23 Wholesale Customers in proportion to each customer's Supply Guarantee as a percentage of the total Supply Guarantees (161.9 MGD as of FY 2009-10).

For example, assume that Wholesale Customer A's Supply Guarantee is 12.0 MGD.

Wholesale Customer A's percentage share of the total individual supply guarantees is 0.074, calculated as follows:
'12.0 MGD
161.9 MGD = 0.074
and its share of the excess use is 0.22 MGD, calculated as follows:

2.9 MGD x 0.074 = 0.22 MGD
i 866408.4 197
Item # C8.

STEP THREE:

Determine Wholesale Customer's adjusted Supply Guarantee by subtracting the result of Step Two from the Wholesale Customer's Supply Guarantee:
12 MGD - 0.22 MGD = 11.78 MGD
**********
Adjustments will be made at intervals comprised of distinct three-year periods of use by Hayward in excess of 22.1 MGD rather than overlapping periods. For example, assuming that the first adjustment were to occur in FY 2014-15 (based on use during FY 2011-12, FY 2012-13 and FY 2013-14), a second adjustment will not occur earlier than three full fiscal years thereafter (Le., FY 2017-18, based on use by Hayward in FY 2014-15, FY 2015-16 and FY 2016-17). The figures used in the second and subsequent adjustments will reflect previous adjustments. For example, a second adjustment will use 158.9 MGD as the total of individual Supply Guarantees (161.6 MGD -

2.7 MGD = 158.9 MGD).

For purposes of simplicity, the volumetric units used in the foregoing example are MGD. For actual adjustment calculations, the unit employed will be hundreds of cubic feet ("ccf'), the unit by which the SFPUC measures water deliveries for billing purposes.

The procedure described and illustrated above is
independent of and unrelated to the establishment
by the SFPUC of Interim Supply Limitations
described in Article 4.

ATTACHMENT D Page 2
1866408.4
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ATTACHMENT E
199
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ATTACHMENT E

MINIMUM ANNUAL PURCHASE QUANTITIES
(Section 3.07.C)
Alameda County Water District
City of Milpitas
City of Mountain View
City of Sunnyvale
200
Item # C8.

ATTACHMENT E-1

TEMPORARY MODIFIED MINIMUM ANNUAL PURCHASE QUANTITIES

(Sections 3.04 and 3.07.C)

AGENCY

TEMPORARY MODIFIED

MINIMUM ANNUAL

PURCHASE QUANTITY
(IN MGD)

EFFECTIVE FISCAL

YEAR OF TEMPORARY

MODIFIED MINIMUM

ANNUAL PURCHASE

QUANTITY

201
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Attachment E‐2
Illustrations of a Transfer of a Portion of a Minimum Annual Purchase Quantity Pursuant to Sections 3.04 and 3.07.C Scenario 1: Transferee Not Already Subject to Temporary or Permanent Minimum Annual Purchase Requirements of Section 3.07.C A B C D = B + C E = A + C
Line # Wholesale Customer
Pre‐Transfer
Permanent Minimum
Purchase1
5 Previous Non‐
Drought‐Year
Average Usage
Minimum Purchase
Transfer
Temporary Modified
Minimum Purchase
Post‐Transfer
Permanent
Minimum Purchase
1 Transferor X 5.0 4.5 (1.0) N/A 4.0
2 Transferee Z N/A 6.0 1.0 7.0 1.0
Year 0
Pre‐Transfer
Year 1
Transfer Effective Year 2 Year 3
Year 4
1st Year Meeting
Temp Min
Year 5
Year 6
3rd Year Meeting
Temp Min
Year 7 Year 8
Transferor X
3 Applicable Minimum Purchase 2

5.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0
4 Annual Purchase 4.5 4.5 4.0 3.5 4.0 4.0 4.5 4.0 3.5 5 = 3 ‐ 4 Imputed Sales 0.5 ‐ ‐ 0 .5 ‐ ‐ ‐ ‐ 0 .5
6 = 4 + 5 Total Purchases 5.0 4.5 4.0 4.0 4.0 4.0 4.5 4.0 4.0 Transferee Z
7 Applicable Minimum Purchase N/A 7.0 7.0 7.0 7.0 7.0 7.0 1.0 1.0 8 Annual Purchase 6.0 6.0 6.5 6.5 7.0 7.0 7.5 7.0 7.5 9 = 7 ‐ 8 Imputed Sales ‐ 1 .0 0 .5 0 .5 ‐ ‐ ‐ ‐ ‐
10 = 8 + 9 Total Purchases 6.0 7.0 7.0 7.0 7.0 7.0 7.5 7.0 7.5 1 “Minimum Purchase” and "Permanent Minimum Purchase" are used in the tables in this Attachment E‐2 as shorthand references to the term Minimum Annual Purchase Quantity. 2 “Applicable Minimum Purchase” is used in the tables in this Attachment E‐2 to mean the larger of (a) or (b), as applicable: (a) the Wholesale Customer’s Minimum Annual Purchase Quantity, as specified in Attachment E, or (b) the Wholesale Customer’s Temporary Modified Minimum Annual Purchase Quantity, as specified in Attachment E-1. 1 of 3 202
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Attachment E-2
Illustrations of a Transfer of a Portion of a Minimum Annual Purchase Quantity Pursuant to Sections 3.04 and 3.07.C A B C D = B + C E = A + C
Line # Wholesale Customer
Pre‐Transfer
Permanent Minimum
Purchase1
5 Previous Non‐
Drought‐Year
Average Usage
Minimum Purchase
Transfer
Temporary Modified
Minimum Purchase
Post‐Transfer
Permanent
Minimum Purchase
1 Transferor X 5.0 4.5 (1.0) N/A 4.0
2 Transferee Z 1.0 6.0 1.0 7.0 2.0
Year 0
Pre‐Transfer
Year 1
Transfer Effective Year 2
Year 3
Meets Temp Min but
Not Consecutive
Year 4
Year 5
1st Year Meeting
Temp Min
Year 6
Year 7
3rd Consecutive
Year Meeting
Temp Min
Year 8
Transferor X
3 Applicable Minimum Purchase 2

5.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0
4 Annual Purchase 4.5 4.5 4.0 3.5 4.0 4.0 4.5 4.0 3.5 5 = 3 ‐ 4 Imputed Sales 0.5 ‐ ‐ 0 .5 ‐ ‐ ‐ ‐ 0 .5
6 = 4 + 5 Total Purchases 5.0 4.5 4.0 4.0 4.0 4.0 4.5 4.0 4.0 Transferee Z
7 Permanent Minimum Purchase 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 2.0 8 Applicable Minimum Purchase 1.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 2.0 9 Annual Purchase 6.0 6.5 6.5 7.0 6.5 7.0 7.5 8.0 7.5 10 = 8 ‐ 9 Imputed Sales ‐ 0 .5 0 .5 ‐ 0 .5 ‐ ‐ ‐ ‐
11 = 9 + 10 Total Purchases 6.0 7.0 7.0 7.0 7.0 7.0 7.5 8.0 7.5 1 “Minimum Purchase” and "Permanent Minimum Purchase" are used in the tables in this Attachment E‐2 as shorthand references to the term Minimum Annual Purchase Quantity. 2 “Applicable Minimum Purchase” is used in the tables in this Attachment E‐2 to mean the larger of (a) or (b), as applicable: (a) the Wholesale Customer’s Minimum Annual Purchase Quantity, as specified in Attachment E, or (b) the Wholesale Customer’s Temporary Modified Minimum Annual Purchase Quantity, as specified in Attachment E-1. 2 of 3
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Attachment E-2
Illustrations of a Transfer of a Portion of a Minimum Annual Purchase Quantity Pursuant to Sections 3.04 and 3.07.C A B C D E3 F = A + D
Line # Wholesale Customer
Pre‐Transfer
Permanent Minimum
Purchase1
5 Previous Non‐
Drought‐Year
Average Usage
Existing Temporary
Modified Minimum
Minimum Purchase
Transfer
Temporary Modified
Minimum Purchase4
Post‐Transfer
Permanent
Minimum5
1 Transferor X 5.0 4.5 N/A (1.0) N/A 4.0
2 Transferor Y 3.0 3.0 N/A (1.0) N/A 2.0
3 Transferee Z
4 Transfer 1: X ‐> Z N/A 4.0 N/A 1.0 5.0 1.0
5 Transfer 2: Y ‐> Z N/A N/A3 5.0 1.0 6.0 2.0
Year 0
Pre‐Transfer
Year 1
Transfer 1 Effective
Year 2
1st Year Meeting
Temp Min 1
Year 3
Transfer 2 Effective
Year 4
3rd Year Meeting
Temp Min 1
Year 5
1st Year Meeting
Temp Min 2
Year 6
Year 7
3rd Year Meeting
Temp Min 2
Year 8
Transferor X
6 Applicable Minimum Purchase2

5.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0
7 Annual Purchase 4.5 4.5 4.0 3.5 4.0 4.0 4.5 4.0 3.5 8 = 6 ‐ 7 Imputed Sales 0.5 ‐ ‐ 0 .5 ‐ ‐ ‐ ‐ 0 .5
9 = 7 + 8 Total Purchases 5.0 4.5 4.0 4.0 4.0 4.0 4.5 4.0 4.0 Transferor Y
10 Applicable Minimum Purchase 3.0 3.0 3.0 2.0 2.0 2.0 2.0 2.0 2.0 11 Annual Purchase 3.0 2.5 3.5 2.5 2.5 2.0 1.5 2.5 2.0 12 = 10 ‐ 11 Imputed Sales ‐ 0 .5 ‐ ‐ ‐ ‐ 0.5 ‐ ‐
13 = 11 + 12 Total Purchases 3.0 3.0 3.5 2.5 2.5 2.0 2.0 2.5 2.0 Transferee Z
14 Permanent Minimum Purchase N/A N/A N/A N/A N/A 1.0 1.0 1.0 2.0 15 Applicable Minimum Purchase N/A 5.0 5.0 6.0 6.0 6.0 6.0 6.0 2.0 16 Annual Purchase 4.0 4.5 5.0 5.0 5.5 6.0 6.0 6.5 6.0 17 = 15 ‐ 16 Imputed Sales ‐ 0 .5 ‐ 1 .0 0.5 ‐ ‐ ‐ ‐
18 = 16 + 17 Total Purchases 4.0 5.0 5.0 6.0 6.0 6.0 6.0 6.5 6.0 1 “Minimum Purchase” and "Permanent Minimum Purchase" are used in the tables in this Attachment E‐2 as shorthand references to the term Minimum Annual Purchase Quantity. 2 “Applicable Minimum Purchase” is used in the tables in this Attachment E‐2 to mean the larger of (a) or (b), as applicable: (a) the Wholesale Customer’s Minimum Annual Purchase Quantity, as specified in Attachment E, or (b) the Wholesale Customer’s Temporary Modified Minimum Annual Purchase Quantity, as specified in Attachment E-1. 3 The Temporary Modified Minimum Purchase for Transfer 1 is E = B + D; the Temporary Modified Minimum Purchase for Transfer 2 is E = C + D. 4 If a transferee already has a Temporary Modified Minimum Annual Purchase Quantity, the additional Minimum Annual Purchase Quantity from transfer 2 is added to the transferee's existing Temporary Modified Minimum Annual Purchase Quantity, not to the transferee's 5 non‐drought‐year average usage. 5 Cumulative total, including transfers 1 and 2.
3 of 3
Scenario 3: Transferee Already Subject to Temporary Minimum Annual Purchase Requirement 204
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ATTACHMENT F
205
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ATTACHMENT F

WATER SALES CONTRACT
This Contract, dated as of , 2009, is entered into by and between the City and County of San Francisco ("San Francisco") and
("Customer").

RECITALS
San Francisco and the Customer have entered into a Water Supply Agreement (UWSA"), which sets forth the terms and conditions under which San Francisco will continue to furnish water for domestic and other municipal purposes to Customer and to other Wholesale Customers. The WSA contemplates that San Francisco and each individual Wholesale Customer will enter into an individual contract describing the location or locations at which water will be delivered to each customer by the San Francisco Public Utilities Commission ("SFPUC"), the customer's service area within which water so delivered is to be sold, and other provisions unique to the individual purchaser. This Water Sales Contract is the individual contract contemplated by the WSA.

AGREEMENTS OF THE PARTIES

1. Incorporation of the WSA
The terms and conditions of the WSA are incorporated into this Contract as if set forth in full herein.

2. Term
Unless explicitly provided to the contrary in Article 9 of the WSA, the term of this Contract shall be identical to that provided in Section _ of the WSA. 1669591.1
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Item # C8.

3. Sèrvice Area
Water delivered by San Francisco to the Customer may be used or sold within the service area shown on the map designated Exhibit A attached .hereto. Except as provided in Section _ of the WSA, Customer shall not deliver or sell any water provided by San Francisco outside of this area without the prior written consent of the General Manager of the SFPUC.

4. Location and Description of Service Connections
Sale and delivery of water to Customer will be made through a connection or connections to the SFPUC Regional Water System at the location or locations shown on Exhibit A attached hereto and with the applicable present accoimtnumber, description, connection size, and meter size shown on Exhibit B attached hereto.

5. Interties With Other Systems.

Customer maintains interties with neighboring water systems at the location or locations. shown on Exhibit A attached hereto and with the connection size(s) as shown on Exhibit C attached hereto.

6. Billing and Payment
San Francisco shall compute the amounts of water delivered and bill Customer therefor on a monthly basis. The bill shall show the separate components of the charge (e.g., service, consumption, demand). Customer shall pay the amount due within thirty (30) days after receipt of the bilL.

If Customer disputes the accuracy of any portion of the water bill it shall (a) notify the General Manager of the SFPUC in writing of the specific nature of the dispute and (b) pay the undisputed portion of the bill within thirty (30) days after receipt. Customer shall meet with the General Manager of the SFPUC or a delegate to discuss the disputed portion of the bilL.

ATTACHMENT F, Page 2 1669591.2
207
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7.,8.,9,.. Other Specialized Provisions
(Certain Wholesale Customers will require additional provisions in their individual contracts addressed to issues such as minimum and/or maximum water delivery quantities, prior authorized wheeling arrangements, maximum expansion of the service area, etc. These and other provisions addressing issues unique to the particular Wholesale Customer may be added here, subject to the. provisions of Section 9.01 of the WSA.) IN WITNESS WHEREOF, the parties hereto have executed this Contract, to become effective upon the effectiveness of the WSA, by their duly authorized representatives.

CITY AND COUNTY OF SAN FRANCISCO
Acting by and through its Public Utilities
Commission
Date: _,2009
BY
Edward Harrington
General Manager

NAME OF WHOLESALE CUSTOMER
BY Date: _,2009
Name:

Title:

Note: This attachment is provided for the convenience of the prospective parties to the Water Supply Agreement and associated individual contracts. The format may be modified as desired by San Francisco and Wholesale Customer, subject to Section 9.01 of the WSA.

ATTACHMENT F, Page 3 1669591.2
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ATTACHMENT G
http://sfwater.org/cfapps/wholesale/detailPage.cfm?c_id=3739 209
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Water Quality Notifications and
Communications Plan
MARCH 2017 • REVISION 6

SFPUC WATER QUALITY DIVISION
UPDATED BY: AND
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ATTACHMENT H
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ATTACHMENT H

WATER SHORTAGE ALLOCATION PLAN

This Interim Water Shortage Allocation Plan (“Plan”) describes the method for allocating water between the San Francisco Public Utilities Commission (“SFPUC”) and the Wholesale Customers collectively during shortages caused by drought. The Plan implements a method for allocating water among the individual Wholesale Customers which has been adopted by the Wholesale Customers. The Plan includes provisions for transfers, banking, and excess use charges. The Plan applies only when the SFPUC determines that a system-wide water shortage due to drought exists, and all references to “shortages” and “water shortages” are to be so understood. This Plan was adopted pursuant to Section 7.03(a) of the 1984 Settlement Agreement and Master Water Sales Contract and has been updated to correspond to the terminology used in the June 2009 Water Supply Agreement between the City and County of San Francisco and Wholesale Customers in Alameda County, San Mateo County and Santa Clara County ("Agreement").

SECTION 1. SHORTAGE CONDITIONS

1.1. Projected Available SFPUC Water Supply. The SFPUC shall make an annual determination as to whether or not a shortage condition exists. The determination of projected available water supply shall consider, among other things, stored water, projected runoff, water acquired by the SFPUC from non-SFPUC sources, inactive storage, reservoir losses, allowance for carryover storage, and water bank balances, if any, described in Section 3.

1.2 Projected SFPUC Purchases. The SFPUC will utilize purchase data, including volumes of water purchased by the Wholesale Customers and by Retail Customers (as those terms are used in the Agreement) in the year immediately prior to the drought, along with other available relevant information, as a basis for determining projected system-wide water purchases from the SFPUC for the upcoming year.

1.3. Shortage Conditions. The SFPUC will compare the available water supply (Section 1.1) with projected system-wide water purchases (Section 1.2). A shortage condition exists if the SFPUC determines that the projected available water supply is less than projected system-wide water purchases in the upcoming Supply Year (defined as the period from July 1 through June 30). When a shortage condition exists, SFPUC will determine whether voluntary or mandatory actions will be required to reduce purchases of SFPUC water to required levels.

1.3.1 Voluntary Response. If the SFPUC determines that voluntary actions will be sufficient to accomplish the necessary reduction in water use throughout its service area, the SFPUC and the Wholesale Customers will make good faith efforts to reduce their water purchases to stay within their annual shortage allocations and associated monthly water use budgets. The SFPUC will not impose excess use charges during periods of voluntary rationing, but may suspend the prospective accumulation of water bank credits, or impose a ceiling on further accumulation of bank credits, consistent with Section 3.2.1 of this Plan.

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1.3.2 Mandatory Response. If the SFPUC determines that mandatory actions will be required to accomplish the necessary reduction in water use in the SFPUC service area, the SFPUC may implement excess use charges as set forth in Section 4 of this Plan.

1.4. Period of Shortage. A shortage period commences when the SFPUC determines that a water shortage exists, as set forth in a declaration of water shortage emergency issued by the SFPUC pursuant to California Water Code Sections 350 et seq. Termination of the water shortage emergency will be declared by resolution of the SFPUC.

SECTION 2. SHORTAGE ALLOCATIONS

2.1. Annual Allocations between the SFPUC and the Wholesale Customers. The annual water supply available during shortages will be allocated between the SFPUC and the collective Wholesale Customers as follows:

Level of System Wide
Reduction in Water Use
Required
Share of Available Water
SFPUC Share Wholesale Customers
Share

5% or less
6% through 10%
11% through 15%
16% through 20%

35.5%

36.0%

37.0%

37.5%

64.5%

64.0%

63.0%

62.5%

The water allocated to the SFPUC shall correspond to the total allocation for all Retail Customers. In the event that the SFPUC share of the available water supply in the above table results in Retail Customers having a positive allocation (i.e., a supply of additional water rather than a required percentage reduction in water use), the SFPUC’s percentage share of the available water supply in the table shall be reduced to eliminate any positive allocation to Retail Customers, with a corresponding increase in the percentage share of the available water supply allocated to the Wholesale Customers. For any level of required reduction in system-wide water use during shortages, the SFPUC shall require Retail Customers to conserve a minimum of 5%, with any resulting reallocated supply credited to storage for inclusion in calculation of projected available water SFPUC water supply in a subsequent year (Section 1.1).

The parties agree to reevaluate the percentages of the available water supply allocated to Retail and Wholesale Customers by May 1, 2028.

2.2 Annual Allocations among the Wholesale Customers. The annual water supply allocated to the Wholesale Customers collectively during system wide shortages of 20 percent or less will be apportioned among them based on a methodology adopted by all of the Wholesale Customers, as described in Section 3.11(C) of the Agreement. In any year for which the methodology must be applied, the Bay Area Water Supply and Conservation Agency (“BAWSCA”) will calculate each Wholesale Customer’s individual percentage share of the amount of water allocated to the Wholesale Customers collectively pursuant to Section 2.1. Following the declaration or reconfirmation of a water shortage emergency by the SFPUC, BAWSCA will deliver to the SFPUC General Manager a list, signed by the President of BAWSCA’s Board of Directors and 213
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its General Manager, showing each Wholesale Customer together with its percentage share and stating that the list has been prepared in accordance with the methodology adopted by the Wholesale Customers. The SFPUC shall allocate water to each Wholesale Customer, as specified in the list. The shortage allocations so established may be transferred as provided in Section 2.5 of this Plan. If BAWSCA or all Wholesale Customers do not provide the SFPUC with individual allocations, the SFPUC may make a final allocation decision after first meeting and discussing allocations with BAWSCA and the Wholesale Customers.

The methodology adopted by the Wholesale Customers utilizes the rolling average of each individual Wholesale Customer’s purchases from the SFPUC during the three immediately preceding Supply Years. The SFPUC agrees to provide BAWSCA by November 1 of each year a list showing the amount of water purchased by each Wholesale Customer during the immediately preceding Supply Year. The list will be prepared using Customer Service Bureau report MGT440 (or comparable official record in use at the time), adjusted as required for any reporting errors or omissions, and will be transmitted by the SFPUC General Manager or his designee.

2.3. Limited Applicability of Plan to System Wide Shortages Greater Than Twenty Percent. The allocations of water between the SFPUC and the Wholesale Customers collectively, provided for in Section 2.1, apply only to shortages of 20 percent or less. The SFPUC and Wholesale Customers recognize the possibility of a drought occurring which could create system-wide shortages greater than 20 percent despite actions taken by the SFPUC aimed at reducing the probability and severity of water shortages in the SFPUC service area. If the SFPUC determines that a system wide water shortage greater than 20 percent exists, the SFPUC and the Wholesale Customers agree to meet within 10 days and discuss whether a change is required to the allocation set forth in Section 2.1 in order to mitigate undue hardships that might otherwise be experienced by individual Wholesale Customers or Retail Customers. Following these discussions, the Tier 1 water allocations set forth in Section 2.1 of this Plan, or a modified version thereof, may be adopted by mutual written consent of the SFPUC and the Wholesale Customers. If the SFPUC and Wholesale Customers meet and cannot agree on an appropriate Tier 1 allocation within 30 days of the SFPUC’s determination of water shortage greater than 20 percent, then (1) the provisions of Section 3.11(C) of the Agreement will apply, unless (2) all of the Wholesale Customers direct in writing that a Tier 2 allocation methodology agreed to by them be used to apportion the water to be made available to the Wholesale Customers collectively, in lieu of the provisions of Section 3.11(C).

The provisions of this Plan relating to transfers (in Section 2.5), banking (in Section 3), and excess use charges (in Section 4) shall continue to apply during system-wide shortages greater than 20 percent.

2.4. Monthly Water Budgets. Within 10 days after adopting a declaration of water shortage emergency, the SFPUC will determine the amount of Tier 1 water allocated to the Wholesale Customers collectively pursuant to Section 2.1. The SFPUC General Manager, using the Tier 2 allocation percentages shown on the list delivered by BAWSCA pursuant to Section 2.2, will calculate each Wholesale Customer’s individual annual allocation. The SFPUC General Manager, or his designee, will then provide each Wholesale Customer with a proposed schedule of monthly water budgets based on the pattern of monthly water purchases during the Supply Year immediately preceding the declaration of shortage (the “Default Schedule”). Each 214
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Wholesale Customer may, within two weeks of receiving its Default Schedule, provide the SFPUC with an alternative monthly water budget that reschedules its annual Tier 2 shortage allocation over the course of the succeeding Supply Year. If a Wholesale Customer does not deliver an alternative monthly water budget to the SFPUC within two weeks of its receipt of the Default Schedule, then its monthly budget for the ensuing Supply Year shall be the Default Schedule proposed by the SFPUC.

Monthly Wholesale Customer water budgets will be derived from annual Tier 2 allocations for purposes of accounting for excess use. Monthly Wholesale Customer water budgets shall be adjusted during the year to account for transfers of shortage allocation under Section 2.5 and transfers of banked water under Section 3.4.

2.5. Transfers of Shortage Allocations. Voluntary transfers of shortage allocations between the SFPUC and any Wholesale Customers, and between any Wholesale Customers, will be permitted using the same procedure as that for transfers of banked water set forth in Section 3.4. The SFPUC and BAWSCA shall be notified of each transfer. Transfers of shortage allocations shall be deemed to be an emergency transfer and shall become effective on the third business day after notice of the transfer has been delivered to the SFPUC. Transfers of shortage allocations shall be in compliance with Section 3.05 of the Agreement. The transferring parties will meet with the SFPUC, if requested, to discuss any effect the transfer may have on its operations.

SECTION 3. SHORTAGE WATER BANKING

3.1. Water Bank Accounts. The SFPUC shall create a water bank account for itself and each Wholesale Customer during shortages in conjunction with its resale customer billing process.

Bank accounts will account for amounts of water that are either saved or used in excess of the shortage allocation for each agency; the accounts are not used for tracking billings and payments. When a shortage period is in effect (as defined in Section 1.4), the following provisions for bank credits, debits, and transfers shall be in force. A statement of bank balance for each Wholesale Customer will be included with the SFPUC’s monthly water bills.

3.2. Bank Account Credits. Each month, monthly purchases will be compared to the monthly budget for that month. Any unused shortage allocation by an agency will be credited to that agency’s water bank account. Credits will accumulate during the entire shortage period, subject to potential restrictions imposed pursuant to Section 3.2.1. Credits remaining at the end of the shortage period will be zeroed out; no financial or other credit shall be granted for banked water.

3.2.1. Maximum Balances. The SFPUC may suspend the prospective accumulation of credits in all accounts. Alternatively, the SFPUC may impose a ceiling on further accumulation of credits in water bank balances based on a uniform ratio of the bank balance to the annual water allocation. In making a decision to suspend the prospective accumulation of water bank credits, the SFPUC shall consider the available water supply as set forth in Section 1.1 of this Plan and other reasonable, relevant factors.

3.3. Account Debits. Each month, monthly purchases will be compared to the budget for that month. Purchases in excess of monthly budgets will be debited against an agency’s water bank account. Bank debits remaining at the end of the fiscal year will be subject to excess use charges (see Section 4).
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3.4. Transfers of Banked Water. In addition to the transfers of shortage allocations provided for in Section 2.5, voluntary transfers of banked water will also be permitted between the SFPUC and any Wholesale Customer, and among the Wholesale Customers. The volume of transferred water will be credited to the transferee’s water bank account and debited against the transferor’s water bank account. The transferring parties must notify the SFPUC and BAWSCA of each transfer in writing (so that adjustments can be made to bank accounts), and will meet with the SFPUC, if requested, to discuss any affect the transfer may have on SFPUC operations.

Transfers of banked water shall be deemed to be an emergency transfer and shall become effective on the third business day after notice of the transfer has been delivered to the SFPUC.

If the SFPUC incurs extraordinary costs in implementing transfers, it will give written notice to the transferring parties within ten (10) business days after receipt of notice of the transfer.

Extraordinary costs means additional costs directly attributable to accommodating transfers and which are not incurred in non-drought years nor simply as a result of the shortage condition itself. Extraordinary costs shall be calculated in accordance with the procedures in the Agreement and shall be subject to the disclosure and auditing requirements in the Agreement. In the case of transfers between Wholesale Customers, such extraordinary costs shall be considered to be expenses chargeable solely to individual Wholesale Customers and shall be borne equally by the parties to the transfer. In the case of transfers between the SFPUC and a Wholesale Customer, the SFPUC’s share of any extraordinary transfer costs shall not be added to the Wholesale Revenue Requirement.

3.4.1. Transfer Limitations. The agency transferring banked water will be allowed to transfer no more than the accumulated balance in its bank. Transfers of estimated prospective banked credits and the “overdrafting” of accounts shall not be permitted. The price of transfer water originally derived from the SFPUC system is to be determined by the transferring parties and is not specified herein. Transfers of banked water shall be in compliance with Section 3.05 of the Agreement.

SECTION 4. WHOLESALE EXCESS USE CHARGES

4.1. Amount of Excess Use Charges. Monthly excess use charges shall be determined by the SFPUC at the time of the declared water shortage consistent with the calendar in Section 6 and in accordance with Section 6.03 of the Agreement. The excess use charges will be in the form of multipliers applied to the rate in effect at the time the excess use occurs. The same excess use charge multipliers shall apply to the Wholesale Customers and all Retail Customers. The excess use charge multipliers apply only to the charges for water delivered at the rate in effect at the time the excess use occurred.

4.2 Monitoring Suburban Water Use. During periods of voluntary rationing, water usage greater than a customer’s allocation (as determined in Section 2) will be indicated on each SFPUC monthly water bill. During periods of mandatory rationing, monthly and cumulative water usage greater than a Wholesale Customer’s shortage allocation and the associated excess use charges will be indicated on each SFPUC monthly water bill.

4.3. Suburban Excess Use Charge Payments. An annual reconciliation will be made of monthly excess use charges according to the calendar in Section 6. Annual excess use charges will be calculated by comparing total annual purchases for each Wholesale Customer with its 216
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annual shortage allocation (as adjusted for transfers of shortage allocations and banked water, if any). Excess use charge payments by those Wholesale Customers with net excess use will be paid according to the calendar in Section 6. The SFPUC may dedicate excess use charges paid by Wholesale Customers toward the purchase of water from the State Drought Water Bank or other willing sellers in order to provide additional water to the Wholesale Customers. Excess use charges paid by the Wholesale Customers constitute Wholesale Customer revenue and shall be included within the SFPUC's annual Wholesale Revenue Requirement calculation.

SECTION 5. GENERAL PROVISIONS GOVERNING WATER SHORTAGE

ALLOCATION PLAN

5.1. Construction of Terms. This Plan is for the sole benefit of the parties and shall not be construed as granting rights to any person other than the parties or imposing obligations on a party to any person other than another party.

5.2. Governing Law. This Plan is made under and shall be governed by the laws of the State of California.

5.3. Effect on Agreement. This Plan describes the method for allocating water between the SFPUC and the collective Wholesale Customers during system-wide water shortages of 20 percent or less. This Plan also provides for the SFPUC to allocate water among the Wholesale Customers in accordance with directions provided by the Wholesale Customers through BAWSCA under Section 2.2, and to implement a program by which such allocations may be voluntarily transferred among the Wholesale Customers. The provisions of this Plan are intended to implement Section 3.11(C) of the Agreement and do not affect, change or modify any other section, term or condition of the Agreement.

5.4. Inapplicability of Plan to Allocation of SFPUC System Water During Non-Shortage Periods. The SFPUC’s agreement in this Plan to a respective share of SFPUC system water during years of shortage shall not be construed to provide a basis for the allocation of water between the SFPUC and the Wholesale Customers when no water shortage emergency exists.

5.5. Termination. This Plan shall expire at the end of the Term of the Agreement.. The SFPUC and the Wholesale Customers can mutually agree to revise or terminate this Plan prior to that date due to changes in the water delivery capability of the SFPUC system, the acquisition of new water supplies, and other factors affecting the availability of water from the SFPUC system during times of shortage.

SECTION 6. ALLOCATION CALENDAR

6.1. Annual Schedule. The annual schedule for the shortage allocation process is shown below.

This schedule may be changed by the SFPUC to facilitate implementation.

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6.1.1 In All Years Target Dates

1. SFPUC delivers list of annual purchases by each Wholesale Customer during the immediately preceding Supply Year
November 1

2. SFPUC meets with the Wholesale Customers and presents water supply forecast for the following Supply Year
February

3. SFPUC issues initial estimate of available water supply February 1

4. SFPUC announces potential first year of drought (if applicable) February 1

5. SFPUC and Wholesale Customers meet upon request to exchange information concerning water availability and projected system- wide purchases
February 1-May 31

6. SFPUC issues revised estimate of available water supply, and confirms continued potential shortage conditions, if applicable March 1

7. SFPUC issues final estimate of available water supply April 15 th or sooner if
adequate snow course
measurement data is available
to form a robust estimate on
available water supply for the
coming year.

8. SFPUC determines amount of water available to Wholesale Customers collectively
April 15
th or sooner if
adequate snow course
measurement data is available
to form a robust estimate on
available water supply for the
coming year.

In Drought Years Target Dates

9. SFPUC formally declares the existence of water shortage emergency (or end of water shortage emergency, if applicable) under Water Code Sections 350 et. seq.

April 15-30

10. SFPUC declares the need for a voluntary or mandatory response April 15-30

11. BAWSCA submits calculation to SFPUC of individual Wholesale Customers’ percentage shares of water allocated to Wholesale Customers collectively
April 15- 30

12. SFPUC determines individual shortage allocations, based on BAWSCA’s submittal of individual agency percentage shares to SFPUC, and monthly water budgets (Default Schedule)
April 25—May 10

13. Wholesale Customers submit alternative monthly water budgets (optional)
May 8-May 24

14. Final drought shortage allocations are issued for the Supply Year beginning July 1 through June 30
June 1

15. Monthly water budgets become effective July 1

16. Excess use charges indicated on monthly Suburban bills August 1 (of the beginning year) through June 30 (of the
succeeding year)

17. Excess use charges paid by Wholesale Customers for prior year August of the succeeding year

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ATTACHMENT I
[NOT USED]
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ATTACHMENT J
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ATTACHMENT J

DEFINITIONS AND FORMULAS FOR

CALCULATING PROPORTIONAL ANNUAL WATER USE

TABLE OF CONTENTS
"-
This Attachment contains four sections, three figures, and five tables.

Section A:

Section B:

Section C:

Section D:

Figure 1:

Figure 2:

Fi'gure 3:

Table 1:

Table 2:

Table 3:

Table 4:

Table 5:

Water Meters
Calculation of Proportional Annual Water Use
Data Requirements and Schedule
County Line and In-City Terminal Reservoir Meter
Calibration and Maintenance
Locations of SFPUC County- Line Meters and In-City
Terminal Reservoirs
Generalized Schematic of Lake Merced Pump Station
Locations of System Input and In-Line Meters
Base Usage and Allocation Rates
Locations of SFPUC County-line Meters and In-City
T eriinal Reservoirs
Locations of SFPNC System Input and In-line Meters
County-line Meters, In-City Terminal Reservoirs and
Associated Metering Equipment
Meter Calibration and Maintenance Frequency
Table 1 presents the format for the water usage and allocation rate calculations for reference and to ilustrate the definitions and formulas described in Sections A through C.

Tables 2 and 3 list the meters whose locations are shown on Figures 1 and 3, respectively. Table March i i, 2009
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4 identifies the type of meter and associated metering equipment for the County-line Meters and Terminal Reservoirs. Table 5 identifies the meter calibration and maintenance frequency for the meters and equipment listed in Table 4.

SECTION A. WATERMETERS

1. General
The Agreement provides that certain operating and maintenance expenses and the capital cost òf certain categories of utility plant in service are to be allocated between San Francisco and . i
the Wholesale Customer~ on the basis of proportionate ännual usage of the Regional Water' System. The purpose of this Attachment is to describe the meters) and ilustrate the method by which proportionate anual usage wil be calculated.

2. Units of Measurement, Rounding, Conversion
The SFPUC wil compile the usage data required to complete Table 1 anually.. The . units of measurement and'conventions for converting and rounding wil be as follows.

The data in the Table 1 will be presented, and the calculationS contemplated by this Attachment shown, in imits of milions of gallons per day (mgd), rounded tothe nearest tenth of an mgd~Percentages (e.g., the City and Wholesale usa~e rates) shall be carried to two digits to the right ofthedecimal point and reduction factors shall be carried to four digits to the right of the decimal point. Data compiled by the SFPUC in units of hundreds of cubic feet per year (cd) shall be converted to mgd by multiplying hundreds of cubic feet per year by 0.0000020493 (or

2.0493 x 10'6) for non-leap years and 0.0000020437 (or 2.0437 x 10'6) for leap years, In founding, if the rightmost digit dropped is 0 through 4, the preceding digit shall be left u!lchanged; if the rightmost digit dropped is 5 through 9, the preceding digit shall be increased by l.
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3. Location of Meters/Gauges
The SFPUC presently maintains meters and gauges that have been used to determine the proportionate usage of the Regional Water System, in accordance with the methods and calculations described in Exhibit J to the 1984 contract between San Francisco and the Wholesale Customers. These meters consist of "County-Line Meters," "In-City Terminal Reservoir Meters" and "System Input and In-line Meters" as described in the following subsections. As new capital improvement projects are designed and constructed by the SFPUC, it may be necessary for new meters to be installed to ensure continued accurate determinations of the proportionate usage of the Regional Water System. "Planned meters" are included in the following subsections where planed capital improvement projects are likely to require the installation of additional meters.
a. County-line Meters
The SFPUC presently maintains meters at or near the San Mateo-San Francisco County line to measure flow through all transmission pipelines entering the City ("County-line Meters").

The existing and planned County-line Meters are listed in Table 2 and shown on Figures 1 and 2.

Additional details pertaining to the County-line meters located at the Lake Merced Pump Station, and specifically to water deliveries from the pump station to Sunset Reservoir, Sutro Reservoir, and Lake Merced are provided below.
(1) County-Line deliveries to Sunsetand Sutro Reservoirs Water delivered to the City through the Sunset Supply Pipeline may be pumped from the Lake Merced Pump Station to either Sunset Reservoir or Sutro Reservoir located within the City. When water is pumped from the Lake Merced Pump Station to both Sunset and Sutro reservoirs simultaneously, the recording instrumentation on the Sunset and Sutro venturi meters are designed to record flows through both meters.

When water is pumped to Sutro Reservoir only (typically utilizing Pump NO.4 at the 3 March 11, 2009
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Lake Merced Pump Station), the source water is from the Sunset Reservoir (not the County-line), and the direction of flow through the Sunset venturi meter is reversed.

Under this pumping scenario, the recording instrumentation on the Sunset and Sutro venturi meters are designed to not record flow on their respective recorders such that the in-City transfer of water between Sunset and Sutro Reservoirs is not included as a County-line delivery to the City. Figure 2 provides a generalized schematic of the Lake Merced Pump Station and the typical direction of flow from the County-line, through the pump station.
(2) County-line deliveries to Lake Merced
In order to raise and maintain water levels in Lake Merced, the SFPUC occasionally delivers water directly from the Regional Water System to Lake Merced. Deliveries from the Regional Water System to Lake Merced are accomplished at the Lake Merced Pump Station. The procedure involves operating valves on the suction side of Sunset Pump NO.2 such that water may flow by gravity in the Sunset Supply Pipeline, from San Mateo County, across the County-line and into San Francisco, through Lake Merced Pump Station and into the Lake Merced wet welL. A 16-inch pipeline connection on the suction side of Sunset Pump NO.2 allows for deliveries of water to the wet well (see Figure 2). Water deliveries from the Regional Water System to Lake Merced are considered County-line deliveries and an in-City usage in the calculation of water allocation rates.
b. In-City Terminal Reservoirs
Water usage by the City includes water deliveries from the SFPUC's "terminal reservoirs." The terminal reservoirs are: 1) Sunset Reservoir, 2) University Mound Reservoir, and 3) Merced Manor Reservoir. The terminal reservoirs are shown on Figure 1. c. System Input and In-Line Meters
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The SFPUC presently measures water flow into and through the Regional System utilizing "System Input and In-Line Meters." The existing and planned System Input and In- Line Meters are listed in Table 3 and shown on Figure 3. d. Wholesale Customer Meters and City Retail Customer Meters Located Outside the Boundaries of the City
The SFPUC presently measures water deliv~ries from the Regional Water System to its Wholesale Customers at various locations where the water delivery systems of the individual Wholesale Customers tie into the Regional Water System. The meters at these locations are referred to as the Wholesale Customers' "master meters." The SFPUCalso measures water deliveries from the Regional Water System to other customers located outside of the boundaries of the City that are not Wholesale Customers. Water deliveries to the Wholesale Customers and Retail Customers outside the City's boundaries that receive water from the Regional Water System are accounted for by the SFPUC's Customer Service Division as described in Section B.

4. Replacement and Relocation of Meters, Gauges, and Recording Devices.

The SFPUC presently equips all of its large venturi meters with differential pressure transmitters. The smaller meters utilize other methods and equipment to register and record flows. The SFPUC will maintain the meters, gauges, and recording devices described above in subsections (a), (b), (c), and (d) unless and until such meters, gauges, and recording devices are replaced.

The SFPUC may replace the meters, gauges, and recording devices described above in subsections (a), (b), (c), and (d) or install new meters, gauges, and recording devices at new locations, provided that such changes do not diminish the accuracy of the water flow measurements or impair the ability of the SFPUC to separate direct City water use from water use by the wholesale customers. Maintenance and calibration procedures for new or replaced equipment may change. Modified maintenance and calibration procedures for new or replaced equipment will conform to industry standards set forth in A WWA Manual M33, the applicable 5 March 11, 2009
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Item # C8.
standards in the International Society of Automation, and will implement the manufacturer's instructions for maintenance and calibration. The SFPUC will provide BA WSCA with advance written notice of any such changes, together with a brief explanation of the reasons therefor and a description of the type and location of the replacement. Such notice shall automatically amend the list of meters, gauges, and recording devices set forth above in subsections (a), (b), (c), and (d).

5. Recording of Water Flow Data
a. Flow Data
The City shall record and maintain data measuring base water flow throughout the SFPUC Regional Water System as necessary to determine proportional annual water usage. b. Reservoir Data
The SFPUC shall record and maintain data measuring the levels of the terminal reservoirs described above in subsection A.3.b and shown on Figure 1 on an hourly basis. Flow values derived from reservoir level readings for all reservoirs in the SFPUC wholesale system shall be calculated using the tables contained in the SFPUC publication "Reservoir Data" (aka "The Weir Book"), which set forth the relationship between reservoir levels and water volumes, as such tables may be amended from time to time to reflect changes in the volumes of the various reservoirs. The tables to be used initially shall be those from the current edition of The Weir Book.

SECTION B. CALCULA TION OF PROPORTIONAL ANNUAL
USAGE
"Base rates" means the percentages of annual SFPUC deliveries attributed to the Wholesale Customers and to City Retail Customers.
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(1) "Gross San Francisco County line base deliveries" shall equal the total amount of water flowing into the City's distribution system through transmission pipelines entering the City, as measured by the County-Line Meters described in Section A.3.a. and shown on Figures 1 and 2.
(2) "Daly City base deliveries" shall equal the water flowing to Daly City through meter accounts provided downstream of the County-Line meters or through SFPUC's City Distribution Division. At present these accounts are:
(a) CSPLl/Macdonald Avenue Service (Account number 010084-01- 0)
(b) Guttenberg Street Service (Account number 010013-01-3) (c) Carter Street Service (Account numb.ers 284070-01-8 and 284071- 01-6)
These accounts represent a portion of the total deliveries to Daly City. The quantities of water delivered to these four Daly City accounts are reported monthly in Form MGT44 i by the SFPUC's Customer Service Division. These connections to meters are presently located within the City, and thus record water which has already been recorded by the SFPUC's master meters at the County line. So long as this condition continues, Daly City base deliveries shall be subtracted from "Gross San Francisco County line base deliveries." (3) "Net San Francisco base deliveries" shall equal the result of subtracting "Daly City base deliveries" from "Gross San Francisco County line base deliveries." 7 March i i, 2009
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Item # C8.
(4) "Other suburban raw water base deliveries" shall equal the sum of all deliveries of raw (untreated) water to customers of the SFPUC located outside the City other than deliveries to the Wholesale Customers. "Other suburban raw water base deliveries" include deliveries of raw water in Alameda and San Mateo Counties to SFPUC Retail Customers, City departments and commissions, and other users affiiated with San Francisco.
(5) "Other suburban treated water base deliveries" shall equal the sum of all deliveries of treated water to customers of the SFPUC located outside the City . other than deliveries to the Wholesale Customers. Other suburban treated water base deliveries include deliveries of treated water t6 the SFPUC's Retail Customers in San Mateo, Santa' Clara and Alameda Counties (such as NASA Ames Research Center and LLNL), to City departments and commissions and other users affiliated with San Francisco (such as the San Francisco International Airport, the San Francisco County Jail, and tenants ofland owned by the City Recreation and Park Deparment).
(6) "Other suburban base deliveries" shall equal the sum of "Other suburban raw water deliveries" and "Other suburban treated water deliveries." The combined amount of raw and treated water delivered to suburban entities other than the Wholesale Customers is reported monthly in Form MGT440 by the SFPUC's Customer Service Division,
(7) "Total City base usage" shall equal "Net San Francisco base deliveries" plus "Other suburban base deliveries."
(8) "Total wholesale base usage" shall equal the sum of all metered deliveries to the Wholesale Customers measured at their SFPUC master meters (including all deliveries to Daly City which are comprised of deliveries through meters located outside San Francisco and meters located inside San Francisco, deliveries through the latter of which are designated above in paragraph B.1.2 as "Daly City base 8 March I I, 2009
228
Item # C8.
deliveries"). The quantity of water delivered to the individual Wholesale Customers, and the combined amount of water delivered to all Wholesale Customers is reported monthly in Foml MGT440 by the SFPUC's Customer Service Division.
(9) "Total system base usage" shall equal "City base usage" plus "Wholesale base usage."
(10) "Wholesale base rate" shall equal the percentage obtained by dividing "Wholesale base usage" by "Total system base usage."
(11) "City base rate" shall equal the percentage obtained by subtracting "Wholesale base rate" from 100 percent.
(12). "Base system input" shall equal all amounts of water supplied to the SFPUC Regional Water System, which presently comes from the following sources:
(a) Hetch Hetchy water as measured at the venturi meters on the 58-inch, 61- inch, and 78.5-inch San Joaquin Pipeline Nos. 1,2, and 3 near Oakdale. (b) Water supplied by HHWPD to LLNL as measured at the customer meter.

Water delivered from the system to LLNL shall be deemed negative in sign for the purpose of determining "Base system input." (c) Hetch Hetchy water pumped from the Alameda siphons to San Antonio Reservoir as measured at the venturi meter on the 60-inch San Antonio pipeline. Water delivered from the system to San Antonio Reservoir shall be deemed negative in sign for the purpose of determining "Base system input."
9 March I 1, 2009
229
Item # C8.

March i i, 2009
(d) Sunol Valley Water Treatment Plant as measured at the meter on the 78- inch effluent pipeline.
(e) Harry Tracy Water Treatment Plant as measured at the venturi meters on the 60-inch and 78-inch effluent pipelines.
(f) Raw water deliveries to all SFPUCRetail Customers outside the City boundaries as measured at the customer meter. These deliveries are considered positive for the puroses of Table 1. Currently, raw water deliveries to the system are represented by the following account numbers contained in Form MGT440 prepared by the SFPUC's Customer Service Division:
266081-01-7 (Calaveras Nursery)
266081-02-5 (Calaveras Nursery)
264355-01-7 (Caltrans)
266084-02-9 (Color Spot Nursery)
272701-02-0 (Color Spot Nursery)
266069-02-0 (Crystal Springs Golf Course)
266078-02-1 (Dell Franklin)
266078-01-3 (Dells Nursery)
266084-01-1 (Hi-C Nursery)
272701-01-2 (Hi-C Nursery)
284112-01-8 (Hansen Aggregates)
266084-03-7 (Jeff Anhorn Nursery)
272701-03-8 (Jeff Anhorn Nursery)
266079-02-9 (Mission Valley Rock)
281043-01-8 (Mission Valley Rock)
267618~02-3 (Nagata Farms)
267618-01-5 (Nagata Farms)
266090-01-8 (Naka Nursery)
10 230
Item # C8.

March 11, 2009
266091-01-6 (Naka Nursery)
266090-02-6 (Naka Nursery)
266091-02-4 (Naka Nursery)
264315-02-9 (Pacific Nurseries)
266076-01-7 (Sunol Christmas Tree Farm)
266076-02-5 (Sunol Tree Farm)
276095-01-5 (Sunol Valley Golf & Recreation)
266077-02-3 (Ura Farm)
264352-01-4 (Ura, John)
266075-01-9 (Valley Crest)
268276-01-1 (Valley Crest Nursery)
266093-01-2 (Valley Crest Tree Company).
268426-02-0 (Valley Crest Tree Company)
266075-02-7 (Valley Crest Tree Company)
266093-02-0 (Valley Crest Tree Company)
268276-02:-9 (Valley Crest Tree Company)
266082-01-5 (Western Star Nursery)
266089-01-0 (Western Star Nursery)
267254-02-7 (Western Star Nursery)
266082-02-3 (Western Star)
266089-02-8 (Western Star)
267254-03-5 (Western Star)
(g) Raw water deliveries from Pilarcitos Reservoir and Crystal Springs Reservoir to Coastsid~ County Water District as measured at the customer meters. These deliveries are considered positive for the purposes of Table

1. Currently, raw water deliveries to Coastside County Water District from both reservoirs are represented under account number 010027-01-9 contained in Form MGT441 prepared by the SFPUC's Customer Service Division:
11 231
Item # C8.

March I I, 2009
(h) Crystal Springs Balancing Reservoir. The flow into or out of the Crystal Springs Balancing Reservoir shall be calculated based on the changes in the amounts of water stored in the reservoir. The amounts of water stored shall be determined by the use of water level sensors, and the application of water level readings to a water level-storage capacity table. Decreases in storage, which indicate a flow from the Balancing Reservoir into the system, shall be deemed positive in sign. Increases in storage, which indicate a flow into the Balancing Reservoir from the system, shall be deemed negative in sign. Over the period of a year, the total flows into and out of Crystal Springs Balancing Reservoir are nearly equivalent. As such, total sys.tem input from Crystal Springs Reservoir shall be deemed zero for calculating current base rates.
(i) Deliveries to Crystal Springs Reservoir as measured by the overflow weir at the Pulgas Pump Station. Deliveries from the system to Crystal Springs Reservoir ("spills") shall be deemed negative in sign for the purpose of determining "Base system input."
G) Terminal Reservoirs. The "terminal reservoirs" consist of Sunset Reservoir, University Mound Reservoir, and Merced Manor Reservoir, each located within the City of San Francisco. The flow into or out of the terminal reservoirs shall be calculated based on the changes in the amounts of water stored in them. The amounts of water stored shall be determined by the use of water level sensors, and the application of water levels to water level-storage capacíty tables. Over the period of a year, the total flows into and out of terminal reservoirs are nearly equivalent. As such, total system input from the terminal reservoirs shall be deemed zero for calculating base rates.
(k) Other Sources. Other sources of flow into, or from, the Regional Water System, shall be accounted for as "other sources." Examples of other 12 232
Item # C8.
sources of system input would include intertie water deliveries between the Regional System and the Santa Clara Valley Water District, and between the Regional System and the East Bay Municipal Utilities District, and deliveries of raw water from Crystal Springs Reservoir in the event of an emergency. Flows from the system shall be. deemed negative in sign for the purpose of determining "Base system input." (13) "Total base system input" shall equal the sum of the system inputs from the sources described in paragraph B. i .12. .
(14) "Joint system loss reduction factor" shall equal "Total system base usage" divided by "Total base system input." "Joint system loss reduction factor" shall not exceed 1.0.
(15) "Daly City reduction factor" shall equal "Net San Francisco base deliveries" divided by "Gross San Francisco County line base deliveries." "Daly City reduction factor" shall not exceed 1.0.
(16) "Total suburban base deliveries" shall equal "Other suburban base deliveries" plus "Total wholesale base usage."
(17) "Suburban reduction factor" shall equal "Wholesale base usage" divided by "Total suburban base deliveries." "Suburban reduction factor" shall not exceed

1.0. (18) "HHWPD Deliveries above Oakdale" shall equal the total amount of water delivered by the HHWPD to users located above the system input meters in Oakdale. Water users located above the system input meters in Oakdale are currently represented by Groveland Community Services District and the HHWPD facility at Moccasin.
13 March 11, 2009
233
Item # C8.
(19) "HH Reduction Factor" is calculated for the purpose of determining the Wholesale Customers' share of the Hetch Hetchy Assessment. The factor shall equal a fraction, the numerator of which is the total system input measured at the Oakdale meters (Table 1, line 12.a) and the denominator of which is the sum of the total system input measured at the Oakdale meters (Table 1, line 12.a) plus the total "HHWPD deliveries above Oakdale" (Table 1, line 18).

SECTION C. DATA REQUIREMENTS AND SCHEDULE

1. Collection and Dissemination of Data
The SFPUC presently compiles daily flow data for the County-line meters, System Input and In-Line Meters, and daily reservoir water level data, and provides copies of that data to the Wholesale Customers (through BA WSCA) on a monthly basis. Thè SFPUC also provides copies of wholesale "Suburban Resale" and City Retail water usage data to BA WSCA on a monthly basis. Additionally, the SFPUC provides BA WSCA aCcess to flow data for the meters as reported and recorded by the SFPUC's SCADAsystem.

The SFPUC shall continue to provide the flow and water usage data described above to BA WSCA on a monthly basis, and shall continue to allow BA WSCA access to the SCADA system data, so that a coordinated effort between the SFPUC and BA WSCA will allow for updating Table 1 of this Attachment annually on a timely basis.

It shall continue to be the SFPUC's responsibility to compile the data necessary to update Table 1 of this Attachment annually and the City shall deliver to BAWSCA, for review and approval, copies ofthe updated Table 1 by September 15 for the fiscal year ending the preceding June 30, as shown by the schedule contained in Section C.3. 14 March i i, 2009
234
Item # C8.

Upon reasonable notice to the General Manager of the SFPUC, BAWSCA shall be given access to all water flow ànd usage records compiled by the SFPUC, including raw data, at reasonable times during business hours and shall have the right to copy such records and data at its expense.

2. Lack of Data
The paries recognize that, because of human error, mechanical failure, or other unplanned events, portions ofthe data required for the calculation of the usage rates and ratios described in Sections B and C of this Attachment occasionally may be unavailable or incorrect.

In the event that such data are unavailable or inaccurate, the SFPUC shall make a reasonable estimate of the unavailable or incorrect data or use the most accurate alternative data that are available, and substitute the estimate therefor.

If the SFPUC uses an estimate of the unavailable or inaccurate data or alternative data, it shall provide BA WSCA with the following:
(1) a description of the unavailable or inaccurate data and the estimation or substitution of data used therefor;
(2) an explanation of the cause of the missing or inaccurate data and the reasons underlying the SFPUC's estimation or substitution of alternate data; and (3) a statement of how the error or malfunction that caused the unavailability or inaccuracy of the data will be avoided in the future.

The SFPUC shall provide this information to BA WSCA upon calculation by the SFPUC of the usage rates and ratios described in this Attachment for the fiscal year in question. 15 March i i, 2009
235
Item # C8.

3. Schedule for Completing the Annual Calculations of Water Usage Rates The paries recognize the importance of updating Table 1 of this Attachment anually in a timely maner, and that historically, doing so has required a coordinated effort between the SFPUC and BAWSCA. To assure timely completion of the anual calculations of water usage rates 'and ratios, the paries agree to adhere to the following schedule. (1) By August 15: The SFPUC shall forward to BA WSCA all data for the fiscal year ending the preceding June 30, necessary to make a determination ofthë base water usage and base allocation rates for the Wholesale Customers and the City. (2) By September 15. The City shall deliver to BAWSCA, for review and approval, draft copies of the updated Table 1 for the fiscal year ending the preceding June 30. (3) Between September 15 and October 15. The SFPUC and BAWSCA shall reconcile any discrepancies or inaccuracies in the draft calculations of water usage rates and shall reach agreement on a final updated Table 1 for the fiscal year ending the preceding June 30. (4) By November 1. The SFPUC shall deliver to BA WSCA a finalized updated Table 1, signed by the SFPUC General Manager, or appropriate designee, representing the water usage rates agreed upon by the SFPUC and BAWSCA, for the fiscal year ended June 30. (5) By November 15. BA WSCA shall return the finalized Table 1 to the SFPUC, counter-signed by the BA WSCA General Manager/CEO. If the SFPUC does not receive the countersigned Table 1 from BA WSCA by November 15, it may use the water use data as contained in the Table 1 delivered pursuant to paragraph (4) above, subject to arbitration as provided in section 8.01 of the Agreement.
16 . March 11, 2009
236
Item # C8.

SECTION D. COUNTY LINE AND IN-CITY TERMINAL RESERVOIR METER CALIBRA nON AND MAINTENANCE
i. General
This section refers only to the County-Line and In-City Terminal Reservoir Meters. The term "meter(s)" includes the primary meter.itself (most of the primary meters in the SFPUC's water system are Venturi-type flow meters) as well as any and all of the associated equipment used to measure, record, and transmit flow and water level data. The metering equipment associated with the primary metering device (also referred to as the secondary metering equipment) includes differential pressure transmitters, recorders, telecommunications equipment and the portion of the SFPUC's Supervisory Control and Data Acquisition (SCADA) System that is used to transmit flow and water level measurements from the water meter to the computer terminal that records the measured data.

The County-Line and In-City Terminal Reservoir meters, their general locations, and their associated metering equipment are listed in Table 4.

2. Frequency and Type of Work to be Performed
The meters, water level sensors, and associated metering equipment are to be inspected, tested, calibrated, and maintained according to the applicable meter calibration and maintenance frequency specified in Table 5.

3. Components of the Calibration and Maintenance Work
17 March i i, 2009
237
Item # C8.

The SFPUC will contract with an independent metering consultant to perform periodic inspections, testing, servicing and calibrations of the meters and metering equipment for the County-line meters and In-City Terminal Reservoirs. The metering consultant's calibration and maintenance work wil include the following components: . · Annual Pitot Tube Tests: Pitot tube flow tests shall be performed once a year on all . Venturi-type flow meters. See Sections 4.b and 4.c for further detaiL. · Quarterly Secondary Meter Equipment Testing and Calibration: The secondary metering equipment shall be tested for accuracy and calibrated quarterly at five input levels (0%, 25%, 50%,75% and 100% of the full range of flow). See Section 4.a for further detaiL. · Cleaning: Clean and remove dust, oils, dirt, etc. from all instruments. · Flushing: Flush and clean Venturi tube differential pressure (D/P) sensing lines. · Inspecting: Inspections for mechanical fatigue, leaky pipes and fittings, worn parts, and improper operation of electrical/electronic equipment.
· Lubrication: Mechanical parts shall be lubricated as needed.

4. Calibration Procedures
The metering consultant shall continue to calibrate and maintain the County-line meters and metering equipment listed in Table 4 in accordance with the frequency of work specified in Table 5. The work includes documenting meter readings and accuracy before and after calibration. Specific tasks to be completed by the metering consultant are as follows:
a) Quarterly testing and calibration. The secondary metering equipment shall be tested and calibrated quarerly using NIST Traceable test equipment, and a "dead weight tester." 18 March i i, 2009
238
Item # C8.

The system loop error for the secondary metering equipment is determined by connecting its output to the differential pressure transmitter and adjusting the dead weight tester to 5 places over the full range of flow: 0%, 25%, 50%, 75% and 100%, while all instruments in the loop are connected. For water level transmitters, provide simulated test head equal to full range of the transmitter being calibrated, comparing the simulated test head to its 4-20 miliamp output signal to determine transmitter error and calibration requirements.

The system loop error for the secondary metering equipment may not exceed +/-2%. The individual components of the secondary metering equipment shall also be tested at the same 5 input levels and calibrated as necessary to ensure the error of the system and individual components does not exceed +/- 2%.
b) Anual Pitot Tube Testing and Calibration. Annual Pitot tube testing shall be conducted for a comparison of flow totalized by the Pitot tube test equipment and the totalizer used by the SFPUC for water measurement and biling purposes. Annual Pitot tube flow testing shall be performed on all flow meters for assessment of Venturi error using the Annubar continuous flow method at 22%ofthe pipe radius. Pitot tube flow testing must be conducted continuously for a minimum of 30 minutes per test.

The Pitot tube flow tests are first performed before any of the secondary metering instruments are calibrated to determine the total system error (system consisting of the primary metering device and secondary metering equipment). Once the total system loop. error has been established, perform secondary loop instrument testing and calibration as per the quarterly testing and calibration procedures described in 4.a above. If the total system error exceeds +/- 2% after calibration of the secondary metering equipment, minor adjustments to the differential pressure transmitter shall be made to correct (calibrate) the error in the Venturi meter. Repeat Pitot tube testing must be performed after the individual instrument calibration and differential pressure transmitter adjustments have been performed to establish that total system loop error is within +/- 2%.
19 March 11, 2009
239
Item # C8.
c) Pitot tube testing shall be conducted at a flow rate representing the typical flow for the meter (and, if operationally possible, at three different flows ranging from a minimum to near maximum capacity flow).
d) The metering consultant shall perform the meter testing and calibration procedures utilizing the meter characteristic curves (for example, the pressure drop vs. flow for a Venturi meter) that have been obtained during previous meter calibration and maintenance work.
e) During each quarerly site visit, the metering consultant shall tnspect, assess and document the condition of all metering equipment, including meter, gauges, indicators, recorders, transmitters and other instrumentation, used in the measurement and recording offlow rates and cumulative flow totals and shall document all operational problems with. the calibration instruments and meters during the calibration process. Problems may include air entrainment, leakage, flow disturbance and unstable meter readings. f) Prior to each quarterly site visit, the metering consultant shall review prior calibration records and reports for each meter to determine if previously-identified errors or equipment deficiencies were corrected as previously recommended. g) Each quarter, the metering consultant shall submit a final report (See Section 6) containing all of the calibration results for each meter tested and calibrated during the quarter. The metering consultant's report shall include a narrative description of the work conducted on each meter and meter calibration reports for the individual metering equipment. The quarterly report shall also address deficiencies that were not previously corrected according to the recommendations made in the prior report.

5. Calibration Instruments
The instrument used for flow testing of the primary meter (Venturi) must meet the accuracy standards required by the American Water Works Association (AWWA), and be 20 March i i, 2009
240
Item # C8.
capable of measuring actual flows with an error of less than +/- 2%. If a particular calibration instrument is not rated for accuracy by the A WWA, its accuracy wil be determined by reference to its manufacturer's representations as to accuracy.

6. Calibration Reports
Within foureen (14) working days after the beginning of each quarter, the metering consultant shall submit a written progress report of the work performed during the previous quarter. Each quarterly report wil describe the results of the meter calibrations and any other tasks performed. The report wil also include comments regarding any observations of abnormal conditions and any recommendations regarding these meters and their related equipment.

The reports must include complete descriptions and status of meters and related equipment, dates and times of service, all calibration specifics, pipeline dimensions, range of flow rates and totalized volumes, before and after error analysis and accuracy levels achieved, testing equipmentused, and the name(s) of the person(s) that performed the work.

When appropriate and necessary, the metering consultant shall provide recommendations for improving the accuracy and reliability of the equipment and/or the methods of data collection. If, in the opinion of the metering consultant, the condition of a meter or its associated metering equipment is found to be defective, damaged, or otherwise in need of immediate repair or replacement, the metering consultant shall: 1) promptly notify the appropriate SFPUC personnel of the problem and recommend a solution to the problem so that the SFPUC can determine how to address it and, 2) include the problem description in its quarterly report. -
21 March 11,2009
241
Item # C8.

FIGURE 1
Golden Gate Bridge
Pacific Ocean
Bay Bridge
San Francisco
San Francisco
Bay
Lake
Merced

CITY AND COUNTY
4 OF SAN FRANCISCO 6

SAN MATEO COUNTY
Lake Merced
Pump Station
G),CI,~ .
(See detail )on Figure 2
San Pedro
Valve Lot
N
w.'
0 1.6
i
MILES
METER
1 2
3 4
5 6
A

PIPELINE
Sunset
Sutro
Lake Merced Outfall
San Andreas No. 2
Crystal Springs No. 1
Crystal Springs No. 2
San Andreas No. 3 (Planned)

LOCATION
Lake Merced Pump Station
Lake Merced Pump Station
Lake Merced Pump Station
Junipero Serra (Hwy. 280) South of Belle Ave.

PG&E Martin Service Center Yard
Tamasco Ct. South of Sunnydale Ave.

To be determined
METER
7 8
9 RESERVOIR
Sunset Reservoir
University Mound Reservoir
Merced Manor Reservoir

LOCATION
26th Avenue and Ortega
University Avenue and Bacon
23rd Avenue and Ocean
242
Item # C8.

JobFoldorJ2175JFlauni 2(122:i08Jdraftal
..'
S 0:
ëi;,
.0 ~
i- Vl
:; W
00:-- i-"- w
Vl
z::

Vl
CD
Sunset Venturi Meter_):
w
Z
:¡
".--"-
"-::
48" DISCHARGE TO SUNSET SUPPLY LINE ~
~~~ ~Sljç'r"" 3/0tV-~.. GATE VALVE Vl
~!l6A;', (TYPICALLY CLOSED)- 15
Súiy'"
SI:i-~
SÚf;'P'"~~,_~~~_
~/J11:
w
Z
:¡
".i-z:: ::
t.,I¡~8. "- 0:; uo !!-- u
"- z.i
0:"-
Z.i
Vl
Outfall Meter
NOTE:

Water enters Lake Merced Pump 5 tation from the 5 unset supply line (pipeline highlighted in yellow) and is discharged from the 5 unset Pumps (numbered 1,2, and 3) to 5 unset Reservoir located in 5 an Francisco, or to the suction side of the 5 utro Pumps (numbered 4,5, and 6).5 utro Pump Nos. 5 and 6 are typically on standby. 5 utro Pump NO.4 delivers water from the pump station to 5 utro Reservoir located in 5 an Francisco. Delivedes from the 5 F P UC water system to La ke Merced are accomplished by gravity through the 16-inch
pipeline that connects to the suction side of 5 unset
Pump NO.2.
õ1
e)
C::

Generalized Schematic of Lake Merced Pump Station 1mN
243
Item # C8.

WeMe,
METER
10 11
12 13
14 15
16 17
18 19
20 21
22 23
24 25
26 27
28 29
30 31
B
C
D & E
w+

STANFORD
TUNNEL
o 2.5 5
MILES

PIPELINE
San Joaquin Pipeline No.

San Joaquin Pipeline No.

San Antonio Pipeline
Sunol Valley WT Effuent
Calaveras Pipeline
Irvington . Bay Division Pipeline No. 1
Irvington . Bay Division Pipeline No. 2
Irvington . Bay Division Pipeline No. 3
Irvington . Bay Division Pipeline No. 4
Pulgas - Bay Division Pipeline No. 1
Pulgas . Bay Division Pipeline No. 2
Pulgas . Bay Division Pipeline No. 3
Pulgas . Bay Division Pipeline No. 4
Crystal Springs Reservoir Outfall
Harry Tracy WTP Effuent . Sunset Supply
Harry Tracy WTP Effuent . San Andreas Supply
Crystal Springs . san Andreas Pipeline
Crystal Springs Pump Station . Sunset Supply
Crystal Springs Pump Station . Crystal Springs No.

Crystal Springs Balancing Reservoir
Santa Clara Valley WD Intertie
San Joaquin Pipeline No. 4 (Planned)
East Bay MUD Intertie (Planned)
Bay Division Pipeline No. 5 (Planned)
(not shown on this map)
(not sho\M on this map)
(not shown on this map)
2 Supply
FIGURE 3

LOCATION
Albers Road, South of Oakdale in Slanislaus County
Sae as San Joaquin Pipeline No. 1
sae 8S San Joaquin Pipeline No. 1
Sa Antonio Pump Slatlon
Sa Antonio Pump Slation
Sunol Valley Water Treatment Plant
Driscoll Road in Fremont
sae as Irvington Bay Division Pipeline No.

Mission Boulevad in Fremont
sae as Irvington Bay Division Pipeline No.

Hassler Road at Pulgas Valve Lot
sae as Pulgas Bay Division Pipeline No.
sae as Pulgas Bay Division Pipeline No.
sae as Pulgas Bay Division Pipeline No.
canada Road near Pulgas Temple
Harr Tracy Water Treatment Plant
Harr Tracy Water Treatment Plant
Crstal Springs Pump Slation
Crstal Springs Pump Slation
Crstal Springs Pump Slation
canada Road near Pulgas Temple
Milpitas Boulevard in Milpitas
To be determined
To be determined
To be determined
. Lawrence L1vennore
National Laboratory
Connection to
San Joaquin Pipelines
~\"'~an Joaquin Pipeline Meters
- "";; 0;9":""' (i9),~ ,G3, fB
Located near Oa~
Calaveras
Reseroir
Locations of System Input and In-Line Meters
244
Item # C8.

Table 1
Base Usage (mgd) and Allocation Rates
(1 ) (2) (3) (4) (5) (6) (7) (8)
Usage Definition 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

1. Gross S.F. Co. line 8.1 79.5 78.3 75.7

2. Daly City portion 8.2 0.2 0.2 0.2

3. Net S.F. (1-2) 79.3 78.1 75.5

4. Other suburban raw water 8.4 0.4 0.5 0.7

5. Other suburban treated water 8.5 4.1 3.4 3.9

6. Total other suburban (4+5) 4.5 3.9 4.6

7. Total City usage (3+6) 83.8 82.0 80.1

8. Total wholesale usage 8.8 167.4 164.4 175.8

9. Total system usage (7+8) 251.2 246.4 255.9

10. Wholesale alloc. rate (819) 66.63% 66.72% 68.70%

11. City alloc. rate (100%-10) 33.37% 33.28% 31.30%
12a. HHWPD input (Oakdale) 8.12 194.7 202.6 227.3
12b. Deliveries to LLNL 8.12 -0.4 -0.9 -0.9
12c. HH to San Ant. Res. 8.12 -3.8 -1.8 -11.6
12d. Sunol ValleyWTP 8.12 28.5 29.4 17.6
12e. Harr Tracy WTP 8.12 45.2 40.4 41.2
12f. Raw water deliveries 8.12 0.4 0.4 0.7
12g. Deliveries to Coastside Co. WD 8.12 1.8 1.6 2.1
12h. Crys. Sprs. 8al. Res. 8.12 0.0 0.0 0.0
12i. Spil to CS Res. 8.12 -19.9 -42.6 -37.1
12j. Terminal Reservoirs 8.12 0.0 0.0 0.0
12k. Other sources 8.12 0.0 1.9 3.8

13. Total system input 8.13 246.5 231.0 243.1

14. Jt. sys. loss red. fact. (9113) 1.0000 1.0000 1.0000

15. Daly City red. factor (311 ) 0.9975 0.9974 0.9974

16. Total suburban (6+8) 171.9 168.3 180.4

17. Suburban red. factor (8116) 0.9736 0.9768 0.9745

18. HHWPD Deliveries above Oakdale 8.18

19. HH Reduction Factor 8.19 99.56%
245
Item # C8.

Meter
1 2
3 4
5 6
A
Meter
7 8
9 Table 2
Locations of SFPUC County-Line Meters and In-City Terminal Reservoirs County-Line Meters
Pipeline
Sunset
Sutro
Lake Merced Outfall
Location
Lake Merced Pump Station
Lake Merced Pump Station
Lake Merced Pump Station
San Andreas NO.2
Crystal Springs No. 1
Crystal Springs NO.2
JuniperD Serra (Hwy. 280) South of Belle Ave.

PG&E Martin Service Center Yard
Tamasco Ct. South of Sunny dale Ave.

San Andreas NO.3 (Planned) To be determined
In-City Terminal Reservoirs
Reservoir
Sunset Reservoir
University Mound Reservoir
Merced Manor Reservoir
Location
26th Avenue and Ortega
University Avenue and Bacon
23rd Avenue and Ocean
246
Item # C8.

Meter
10 11
12 13
14 15
16 17
18 19
20 21
22 23
24 25
26 27
28 29
30 31
B
C
D&E
Table 3
Locations of SFPUC System Input and In-Line Meters
Pipeline
San Joaquin Pipeline NO.1
San Joaquin Pipeline NO.2
San Joaquin Pipeline NO.3
San Antonio Pipeline
Sunol Valley WTP Effluent
Calaveras Pipeline
Irvington - Bay Division Pipeline NO.1
Irvington - Bay Division Pipeline NO.2
Irvington - Bay Division Pipeline NO.3
Irvington - Bay Division Pipeline NO.4
Pulgas - Bay Division Pipeline No. 1
Pulgas .. Bay Division Pipeline NO.2
Pulgas - Bay Division Pipeline NO.3
Pulgas - Bay Division Pipeline NO.4
Crystal Springs Reservoir Outfall
Harry Tracy WTP Effluent - Sunset Supply
Harry Tracy WTP Effluent - San Andreas Supply
Crystal Springs - San Andreas Pipeline
Crystal Springs Pump Station - Sunset Supply
Crystal Springs Pump Station - Crystal Springs NO.2 Supply Crystal Springs Balancing Reservoir
Santa Clara Valley WD Intertie
San Joaquin Pipeline NO.4 (Planned)
East Bay MUD Intertie (Planned)
Bay Division Pipeline NO.5 (Planned)
Location
Albers Road, South of Oakdale in Stanislaus County
Same as San Joaquin Pipeline No. 1
Same as San Joaquin Pipeline NO.1
San Antonio Pump Station
San Antonio Pump Station
Sunol Valley Water Treatment Plant
Driscoll Road in Fremont
Same as Irvington Bay Division Pipeline NO.1
Mission Boulevard in Fremont
Same as Irvington Bay Division Pipeline No,3
Hassler Road at Pulgas Valve Lot
Same as Pulgas Bay Division Pipeline No. 1
Same as Pulgas Bay Division Pipeline NO.1
Same as Pulgas Bay Division Pipeline NO.1
Canada Road nearPulgas Temple
Harry Tracy Water Treatment Plant
Harry Tracy Water Treatment Plant
Crystal Springs Pump Station
Crystal Springs Pump Station
Crystal Springs Pump Station
Canada Road near Pulgas Temple
Milpitas Boulevard in Milpitas
To be determined
To be determined
To be determined
247
Item # C8.

TABLE 4
SFPUC COUNTY~LINE METERS, IN-CiTY TERMINAL RESERVOIRS,

AND ASSOCIATED METERING EQUIPMENT
County-Line Meter Meter Type Location

1. Sunset 60" Venturi Lake Merced Pump Station
Associated Metering . Rosemount DIP transmitter
Equipment: . Honeywell recorder
. SCADA

2. Sutro 36" Venturi Lake Merced Pump Station
Associated Metering . Rosemount DIP transmitter
Equipment: . Honeywell recorder
. SCADA

3. Lake Merced Outfall 16" Mao. Meter Lake Merced Pump Station Associated Metering . Honeywell recorder
Equipment: . SCADA

4. San Andreas NO.2 36" Venturi Junipero Serra (Hwy. 280) south of Belle Avenue
Associated Metering . Yokogawa DIP transmitter
Equipment: . NLS display
. AGM electronics
. Honeywell recorder
. SCADA

5. Crystal Springs NO.1 44" Venturi PG&E Martin Service Center Yard
Associated Metering . Yokogawa DIP transmitter
Equipment: . NLS display
. AGM electronics
. Honeywell recorder
. SCADA

6. Crystal Springs NO.2 60" Venturi Tamasco ct. south of Sunnvdale Avenue
Associated Metering . Yokogawa DIP transmitter
Equipment: . NLS display
. AGM electronics
. SCADA
In-Citv Terminal Reservoirs

1. Sunset Pressure 26m Avenue and Ortega
Transducer
Associated Metering . Honeywell recorder
Equipment: . SCADA

2. Merced-Manor Pressure 23ra Avenue and Ocean
Transducer
Associated Metering . Honeywell recorder
Equipment: . SCADA

3. University Mound Pressure University Avenue and Bacon Transducer
Associated Metering . Honeywell recorder
.Equipment: . SCADA
248
Item # C8.

TABLES

METER CALIBRATION AND MAINTENANCE FREQUENCY

METERI FREQUENCY WORK TO BE PERFORMED
EQUIPMENT (See Work Codes Listed Below)
Quarterly Semi- Annual CA CL FL IN LU PT
Annual
Venturi Meters X X X X X
(1 ) (1 )
Magnetic Meters X X X X
(2) (2) (2)
Yokagowa DIP X X X X X
Transmitters
Rosemount DIP X X X X X
Transmitters
Honeywell X X X X
Recorders
Water Level Sensors X X X X
(Pressure Transducers)
SCADA Electronics X X
AGM Electronics X X
NLS Digital Displays X X
Electrostatic 24V DC X X
Power Supplies (3)
ASCO Solenoids X X X X
(4)
WORK CODES:

CA = CALIBRATE; CL = CLEAN; FL = FLUSH; IN = INSPECT; LU = LUBRICATE; PT = PITOT TUBE TEST.

NOTES:
(1) Inspection and flushing requirements for Venturi meters refer to the pressure tubing from the meter to the differential pressure transmitter.
(2) May calibrate using clamp-on meter where conditions allow. Inspection and cleaning requirements for magnetic meters refer to the sensors or probes that are inserted through the pipe walL. (3) Adjust voltage if necessary.
(4) Replace rubber ware as needed.
249
Item # C8.

ATTACHMENT K
250
Item # C8.

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ATIACHMENT K-2

WHOLESALE CUSTOMERS' SHARE OF THE BOOK VALUE OF REVENUE FUNDED CAPITAL EXPENDITURES "PRELIMINARY - TO BE SUBSTTUTED WITH FINAL 6/30/09 VALUES" ¡Seetlon 5.03)
(11 (2) 13) (4) (51 (6) (7J (B) (9)
Project CWIPasof FY 2008.09 Reduction for CWIPas Water Related Wholesale No. Project Description Rate Class 6/30/08 Expenditures 02A Funding 6/30/09 CWIP Share A. Water Enterprise
1 Regional Projects
CUW352 Alameda Creek Fishery Joint S 2,007,607 S 224,582 S 2,232,189 S S CUW353 Seismic Upgrade (§ Hayward Fault Joint S 3,129,234 S 1,967,625 S 5,096,859 S S CUW354 LOWER CRYSTAL SPRINGS DAM-REV-5FWD Joint S 7,046,944 S 1,086,262 S 8,133,206 S S CUW355 STANDBY POWER FACILITES Joint S 3,715,276 S 6,596,849 S 10,312,125 S S CUW357 Adit leak Repairs Joint S 783. S 1,129 S 1,912 S S CUW359 Irvington Tunnel Joint S 21,391,129 S 5,176,713 S 26,567,842 S S CUW359 Joint S 7,837,176 S S 7,837,176 S S
CUW361 Joint S 368,057 S 1,383,959 S 1,752,016 S S
CUW361 Joint S 1,255,545 S S 1,255,545 S S
CUW361 Pulgas Balancing Reservoir Joint S 1,248,002 S S 1,248,002 S S CUW361 Joint S 570,179 S S 570,179 S S
CUW361 Joint S 712.921 S .. S 712,921 S S
CUW363 SCADA Phase II Joint S 1,335,371 S 1,738,045 S 3,073,416 S S CUW363 Joint S 1,062,050 S S 1,062,050 S S
CUW365 Cross Connection Control Joint S 3.635,172 S 547,801 S 4,182,973 S S Capitalized in FY 200~-o9 CUW367 HTWP LT lmpr Joint S 8,011,348 S 2,479,731 S 10,491,079 S S CUW368;. , Joint S 23,640,601 S S 23,640,601 S S
CUW368 BDPL Hydraulic Capacity Joint S 17,556,905 S 4,200,442 S 21,757,347 S S CUW368 Joint S 2,579,847 S S 2,579,847 S S
CUW370 Pipeline Readiness Joint S 5,320,934 S 328,070 S 5,649,004 S S CUW371 CSPS and Pipeline Joint S 11,420,770 S 3,872,779 S 15,293,549 S S CUW372 University Mound (N) Joint S 4,624,981 S 1,068,147 S 5,693,128 S S CUW373 ~5JPL Joint S 19,479,341 S 6,023,849 S 25,503;190 S S CUW373 Joint S 7,199,051 S S 7,199,051 S S
CUW374 Calaveras Dam Joint S 31,171,669 S 4,314,430 S 35,486,099 S S CUW374 Joint S 2,366,343 S S 2,366,343 S S
CUW378 C5PL #2 Joint S 7,453,098 S 913,369 $ 8,366,467 S S CUW379 5APL #3 Joint S 5,728,934 S .588,346 S 6,317,280 S S CUW380 BDPK "3&4 Crossovers Joint S 3,855,357 S 1,083,888 S 4,939,245 S. S CUW381; . Joint S 5,450,995 S S 5,450,995 S S
CUW381 SVWTP Expansion Joint S 53,222 S 3,090,520 S 3,143,742 S S CUW381. . Joint S 97,373 S S 97,373 S S
CUW382 SVWTP Treated Water Reservoir Joint S 5,799,505 S 575 S 5,800,080 S S 'CUW384 Tesla Joint S 6,102,621 S 7,444,942 S 13,547,563 S S CUW386 SAPS X-CONNECT & PUMP IMP 96A UEa Joint S 1,374,491 S 971,625 S 2,346,116 S S CUW388fPEIR Joint S 896,476 S 1,641,717 S 2,538,193 S S CUW388 Joint S 1,331,676 S S 1,331,676 S S
CUW390 Desalination Pilot Joint S 175,165 S S 175,i65 S S CUW391 Baden/San Pedro Valve Lots Joint S 3,964,642 S 948,589 S 4,913,231 S S CUW392 Program Management Joint S 2,452,297 S 5,081,444 S 7,533,741 S S CUW393 BDPL 114 Condition Assessment Joint S 25.071 S 294,634 S 319,705 S S CUW394 Watershed Envirof!ent Improvement Joint S 142,924 S 96,027 S 238,951 S S Capitalized in FY 2008-09 CUW101 SAN ANDREAS PLANT EXPANSION #1 Joint S 182 S 96,027 S 96,209 S 67,443 CUW111 LOWER CRYSTAL SPRINGS DAM-REV-5FWD Joint S 40,436 S S 40,436 S 28,346 CUW151 Baden PS Joint S 921 S 26,760 S 27,681 S 19,404
CUW161 Water Treatment Facilities Joint S 75,801 S 605 S 76,406 S 53,561 CUW178 SAPS X-CONNECT & PUMP IMP 96A UEB Joint S 104,902 S S 104,902 S 73,536 CUW202 J Joint S 50,808 S S 50,808 S 35,616
CUW202 Replace pecp Joint S 285,003 S 64,256 S 349,259 S 244,831 CUW202 Joint S 2,365 S S 2,365 S 1,658
CUWl27 SCADA Joint S 50,029 S 2,481.274 S 2,531,303 S 1,774,443 CUW356 New Crystal Springs Bypass Tunnel Joint $ 13,992,264 S 5,560,862 16,028,397 S 3,524,729 S 2,470,835 CUW358 Sunset (N) Joint S 52,494,764 S 4,887,980 55,806,081 S 1,576,663 S 1,105,241 Capitalized in FV 2008-09 CUW387 Tesla Portal Disinfection Joint S 2,377,262 S (1,996) 1,223,945 S 1,151,321 S 807,076 'OW"') Joint S 45,413 S S 4.5,413 S 31,835
. CUW135 New Lines and Bypass Valves Joint S 153,983 S 620,156 S 774,139 S 542.671 CUW135 Joint S 8,860 S S 8,860 S 6,211
CUW143 Joint S 5,656 S S 5,656 S 3,965
CUW143 HH Water Treatment Plan Joint S 709,972 S 8,817 S 718,789 S 503,871 CUW143 Joint S 96,292 S S 96,292 S 67,501
CUW186 5VWTP IMPROVEMENT PROJECT -eP~-5FWD Joint S 3,604 S S 3,604 S 2,526 CUW206; Joint S 4,365 S S 4,365 S 3,060
CUW206 Tesla PortallThomas Shaft Emergency Disinfection Joint S 283,620 S 5,665 S 289,285 S 202,789 CUW206 Joint S 227,004 S S 227,004 S 159,130
CUW231 Millbrae labs Joint S 81,856 $ 34.685 S 116,541 S 81,695 CUW236 TEL5A/5JVH WQ MONITORING IMPR Joint S 152,963 S S 152,963 S 107,227 CUW366; . Joint S 16,523 S S 16,523 S 11,583
CUW366 HTWP ST Improvements Joint S 1,398,798 S 5,732,626 7,131,424 S S CUW366 . Joint S 1,452,901 S 1,452,901 S SCUW120 WATER QUALITY PLANNING STUDY Joint S 577 $ S 577 S 404 CUW164 WATER VULNERABILITY STUDY-UEB Joint S 479 S S 479 S 336 CUW181 5TAND8Y POWER FACILITIES Joint S 5,905 S S 5,905 S 4,139CUW210 Milbrae Administrative Bldg Remodel Joint S 7,803 S 321,553 S 329,356 S 230.879 CUW220 Calaveras Dam Evaluation Joint S 308,971 S S 308,971 S 216,589 . CUW227 Watershed Facilties and Fencing Joint S 190.552 S 206,448 S 397,000 S 278,297 CUW228 Watershed Roads Joint S 358,434 S 85,337 S 443,771 S 311,083 CUW232 Crystal Springs Dam Discharge Joint S 363,823 S S 363,823 S 255,040 CUW242J- .. Joint S 311,548 S 22,741 S 334,289 S 234,337Demolition of Unsafe StructuresCUW242 Joint S 315 S S 315 S 221 CUW261 Regional R&R - Storage Joint S 275,694 S 277,958 S 553,652 S 388,110 CUW262J- . Joint S 1,236,895 S 409,282 S 1,646,177 S 1,153,970Regional R&R - Treatement CUW262 Joint S 277,383 S S .27,383 S 194,445
'page 2 of 2 4/17/2009 252
Item # C8.
253
Item # C8.

ATTACHMENT K-3
25 YEAR PAYOFF SCHEÖULE FOR EXISITING RATE BASE

WATER ENTERPRISE REGIONAL ASSETS AND ONE DIRECT WHOLESALE ASSET **PRELIMINARY - TO BE SUBSTITUTED WITH FINAL 6/30/09 VALUES** (Section5.03)
Water Assets
6/30/09 Wholesale Share of Net Plant & CWIP (Attachment K-1) 358,452,207 Interest Rate: 5.13%
Term: 25
Monthly Principal & Interest Calculation: 2,004,277
Annual Wholesale Revenue Requirement: 24,051,326
Fiscal Yr Annual Year End
Ending Principal Interest Payment (Wtr) Balance
Jun-lO 6,848,259 17,203,067 24,051,326 331,603,948
Jun-11 7,207,954 16,843,372 24,051,326 .324,395,994
Jun-12 7,586,541 16,464,785 24,051,326 316,809,453
Jun-13 7,985,013 16,066,313 24,051,326 308,824,439
Jun-14 8,404,415 15,646,911 24,051,326 300,420,024
Jun-15 8,845,844 15,205,482 24,051,326 291,574,180
Jun-16 9,310,459 14,740,867 24,051,326 282,263,721
Jun-17 9,799,478 14,251,848 24,051,326 272,464,243
Jun-18 10,314,181 13,737,145 24,051,326 262,150,062
Jun-19 10,855,919 13,195,407 24,051,326 251,294,143
Jun-20 11,426,110 12,625,216 24,051,326 239,868,033
Jun-21 12,026,250 12,025,076 24,051,326 227,841,784
Jun-22 12,657,911 11,393,415 24,051,326 215,183,873
Jun-23 13,322,749 10,728,577 24,051,326 201,861,123
Jun-24 . 14,022,507 10,028,819 24,051,326 187,838,616
Jun-25 14,759,019 9,292,307 24,051,326 173,079,597
Jun-26 15,534,215 8,517,111 24,051,326 157,545,382
Jun-27 16,350;127 7,701,199 24,051,326 141,195,254
Jun-28 17,208,894 6,842,432 24,051,326 123,986,361
Jun-29 18;112,766 5,938,560 24,051,326 105,873,594
Jun-30 19,064,113 4,987,213 24,051,326 86,809,482
Jun-31 20,065,428 3,985,898 24,051,326 66,744,054
Jun-32 21,119,335 2,931,991 24,051,326 45,624,719
Jun-33 22,228,597 1,822,729 24,051,326 23,396,122
Jun-34 23,396,122 655,204 24,051,326 0
Totals: 338,452,207 262,830,943 601,283,150
Water . Page 4 of 1 4/17/2009
254
Item # C8.

ATTACHMENT K-4
25 YEAR PAYOFF SCHEDULE FOR EXISTING RATE BASE

HETCH HETCHY WATER ASSETS AND WATER-RELATED PORTION OF JOINT ASSETS **PRElIMINARY -TO BE SUBSTITUTED WITH FINAL 6/30/09 VALUES** (Section 5.03)
Hetch Hetchy
6/30/09 Wholesale Share of Net Plant & CWIP (Attachment K-1) 43,877,206 Interest Hate: 5.13%
Term: 25
Monthly Pr'incipal & Interest Calculation: 259,836
Annual Wholesale Revenue Requirement: 3,118,033
Fiscal Yr Annual Year End
Ending Principal. Interest Payment (HH) Balance
Jun-10 887,814 2,230,219 3,118,033 42,989,393
. Jun-11 934,445 2,183,588 3,118,033 42,054,948
Jun-12 983,525 2,134,507 3,118,033 41,071,423
Jun-13 1,035,183 2,082,849 3,118,033 ,40,036,239
Jun-14 1,089,555 2,028,478 3,118,033 38,946,685
Jun-15 1,146,782 1,971,250 3,118,033 37,799,903
Jun-16 1,207,015 1,911,017 3,118,033 36,592,887
Jun-17 1,270,412 1,847,621 3,118,033 35,322,475
Jun-18 . 1,337,138 1,780,,894 3,118,033 33,985,337
Jun-19 1,407,370 1,710,663 3,118,033 32577,967
Jun-20 1,481,290 1,636,743 3,118,033 31,096,678
Jun-21 1,559,092 1,558,940 3,118,033 29,537,585
Jun-22 1,640,981 1,477,051 3,118,033 27,896,604
Jun-23 1,727,172 1,390,861 .3,118,033 26,169,432
Jun-24 l,8i7,889 1,300,144 3,118,033 24,351,544
Jun-25 1,913,371 1,204,662 3,118,033 22,438,173
Jun-26 2,013,868 1,104,165 3,118,033 20,424,305
Jun-27 2,119,643 998,389 3,118,033 18,304,662
Jun-28 2,230,974 887,058 3,118,033 16,073,688
Jun-29 2,348,153 769,880 3,118~033 13,725,535
Jun-30 2,471,486 . 646,546 3,118,033 11,254,048
Jun-31 2,601,298 516,735 3,118,033 8,652,751
Jun-32 2,737,927 380,106 3,118,033 5,914,824
Jun-33 2,881,733 236,300 3,118,033 3,033,091
Jun-34 3,033,091 84,941 3,118,033 0
43,877,206 34,073,607 77,950,813
Hetch Hetchy Page 5 of 1 4/17/2009
255
Item # C8.
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Item # C8.
• REVISED ATTACHMENT K-1

WHOLESALE CUSTOMERS SHARE OF NET BOOK VALUE OF EXISTING ASSETS AS OF JUNE 30, 2009
• (Section 5.03)
Notes Water Hetch Hetchy Total
Regional System Net Plant as of 6/30/09 1, 5 $485,580,249 1 $63,528,861 2 $549,109,110 Regional Construction VVork in Progress as 6/30/09 2 $35,072,164 3 $7,507,984 3 $42,580,148 Total Net Plant and Construction Work in Progress $520,652,413 $71,036,845 $591,689,258 Regional System Allocation Factor 3 70.1% 64.2%
Wholesale Share of Regional System Net Plant $340,391,755 $40,785,529 $381,177,284 Wholesale Share of Construction Work inProgress 4 $11,025,550 $4,820,126 $15,845,676 Total Wholesale Share of Net Plant and CWIP $351,417,305 $45,605,655 $397,022,960 Interest Rate 5.13% 5.13%
Term (Yrs) 25 25
Monthly Principal & Interest $2,081,055 ' $270,072 $2,351,127 Annual Wholesale Revenue Requirement Amount $24,972,661 $3,240,861 $28,213,522 Notes

1. FAACS 120D Report as of 6/30/09

2. CWIP based on balance as 6/30/09, with adjustments from the Agreed-Upon Procedures Report. See K-2 for details.

3. Fixed allocation factors based on dollar weighted 5-year average of J-Table allocation factors (2003-04 through 2007-08) 4, Projects CUW127 SCADA, CUW687/934 525 Golden Gate, and CUW690 Customer Care and Billing are specially allocated, see K-2 for details

5. A rounding difference of $3,846 was identified by the SFPUC relating to various cumulative prior year differences in net utility plant.

Under Section 5.03D, the Parties agreed that the Wholesale Customers' share of net book values of existing regional assets as of 06/30/2008 are accurate. However, to match Attachment K to the FY08-09 Audited SRRC, the SFPUC will credit the 1984 Balancing Account for $79.

Original Rate Base, FY08-09 SRRC $19,367,641
Adjusted Rate Base $19,367,562
1984 Balancing Account Credit $79
APPROVED IN ACCORDANCE WITH ARTICLE V, SECTION 6.03D OF THE WATER SUPPLY AGREEMENT BETWEEN THE CITY & COUNTY OF SAN FRANCISCO & WHOLESALE CUSTOMERS:

CITY AND COUNTY OF SAN FRANCISCO
Acting by and through its Public Utilities Co mission
By:

Edward Harrington
General Manager
Date:
3 (4 ‚2011

BAY AREA WATER SUPPLY AND CONSERVATION AGENCY
Acting on behalf of the Wholesale Customers
By:

Date:

Arthur R. Jensen
General Manager
2011
•
Page lof 4
Revised Attachment K-1
257
Item # C8.

REVISED ATTACHMENT K-2

WHOLESALE CUSTOMERS SHARE OF REVENUE FUNDED CAPITAL EXPENDITURES CONSTRUCTION WORK IN PROGRESSAS OF JUNE 30, 2009
(Sectloh 6.03)
(1) (2) (3)
Rate
Project No. Project Description Class
(4)
CWIP as of
6130/09 .
(4a)
Adjustments
(4b) (5)
Adjusted
CWIP as of WatecrwR jeplated
06/30/09
(6)
Wholesafe
• Share Funding Source / Notes
A. Water Enterprise

1. Regional Projects .

CUW111/112 Lower Crystal Springs Dam Joint
CUW127 SCADA Joint
52, 615
30,952
o
0 52,615
30,952
36,883 ACP196A
13,951 ACP/98A Split 64.3%/35.9%. Joint/City
CUW135 New Lines and Bypass Valves Joint 69,818 (6,018) • 63,800 44.724 98A .

CUW143 HH Water Treatment J'oint - 1167 (1,167) 0 0 ACP CUW168 Alameda liCP -EISIEIR
Standbi Power Facilifies CUW181 Joint
26,428
5,905
o
0 26,428
5,905
18,526 ACP
4,139 ACP
CUVV202 Replace PCCP .

Thomas Shaft Roadway CUW205 Joint
414,754
530,329
0,
a
414,754
530,329
290,743 ACP/96A/98A
371,761 96A1988
CUW208 Lawrence -Livermore . City o ' o 0 0 ACP
CUW220 Calaveras Dam Evaluation Joint 308,971 0 308,971 216,588 ACP CUW227 Watershed Facilitiesind Fencing Joint
CUW228 Watershed Roads Joint
CUW231 Millbrae Labs Improvement Joint
235,658
443,771
58,081
0 0
0 235 ,658
443,771
58,081
165,19à ACP
311,083 ACP
40,715 ACP198B
CUW236 Tesla/SJVH WO Monitoring Joint 5,596 (6,596) 0 0 98B CUW242 Demolltion of Unsafe Structures *Joint 2534 a 2534 P CUW248 SunoUNiles Dam Removal Joint 81 ,111 0 81111 , 561,879 ACP CUW253 WQ Projects Joint 72,144 0 72,144 50,573 ACP
' CUW261 Regional R&R - Storage Joint 706,584 0 706 684 , 495,386 ACP CUW262 Reglonal R&R - Treatment
CUW263 Reglonal R&R - Transmission
Joint
Joint
CUW264 Watershed Roads • Joint
575 ,064
1,433,996 •
198,163
0 0
0 575 , oe4
1,433,993
298 163 ,
403,120 ACP
1,005,231 ACP,
138,912 ACP
CUW354 Lower Clystai Springs Dam
• CUW355 Standby Power Facilities
Joint
Joint •
857,235
37, 875
0 a
857,235
37, 875
600,922 ACP
26,550 ACP
CUW356 New Crystal Springs Bypass Tunnel Joint 3,671,856 0 3,671,856 2573,971 96A/98A 0UW359/0UW12- lrvington Tunnel Joint 2,095,122 0 2,095,122 1,468,681 ACP CUW388 BDPL Hydrautic Capacity Joint 1,612,592 0 1,812,592 1,130,427 ACP CUW371 CSPS and Pipeline Joint
CUW374 Calaveras Dam Joint
CUW382 SVWTP Treated Water Resevoir Joint .
2 52441 : 661980
3Z153
0 0
0 221,690
644,618
32,153
155,404 ACP
381,777 ACP
22,539 ACP
C11W384/C0W23i Tesla Disinfection ' Joint • 230,019 0 230,019 T 161,244 ACP CUW387 CSPL #2 . Joint 1,195,062 0 1,195,062 837,739 96A/28B • CUW392 Program Management
. Special 979,694 (979,694) 0 0 Special
CUW685 Emergency Operations Center Joint . 185 . 0 185 129 ACP CUW687I934 625 Golden Gate Joint . 15,797,879 0 1e97,679 0 will be paid for as iease in lieu of rent ,CUW690 Customer Care & Billing • Special 3,536,118 0 3,535,118 0 Note A W710 OCIP CU Special 2496,959 (2,496,959) 0
.
0 SpeCial
TOTAL REGIONAL PROJECTS 38,561,597 (3,489,434) ..... 35,072,164 eleeee 11,025,560

2. Wholesale Direct
None
B. Hetch Hetchy Water & Power
CUH703, . Priest Reservoir Bypass Joint 574 0 574 268 166 ACP CUI-1762 SJPL Repaira . Water 66,609 a 66,609 66,609 42,763 ACP CUH766 HH Security Improvements Joint 284,456 0 284,456 128,005 82,179 ACP CUI-1804 HH Roads Joint 567,503 0 .567,503 255,376 163,952 ACP CUH846 New Moccasin Penstock Power 543,074 0 543,074 0 0 ACP CUH931 Microwave Replacement Joint 4,156,642 D 4,156,642 1,870,489 1,200,854 ACP CUH941 HH SCADA Security & Control Joint 702,709 0 702,709 316,219 203,013 ACP CUH950 Penstock Renovation Power 561,636 0 561,536 0 0 ACP C1JI-1957 Moccasin Corrision Control Water 314,805 0 314,805 314,805 202,105 ACP CUH959 Moccasin Reservoir Water Quality Water 109,379 0 109,379 109,379 70,221 ACP CUI-1964 Watershed Land Purchase
Water 47,768 0 47,768 47,768 30,667 ACP
CUH976 HH Water R&R - Joint Facilities Joint 2,495,322 0 2,495,322 1,122,895 720,898 ACP CUH975 Fili Water R&R - Kirkwood Penstock Assessment Power 460,170 0 460,170 b 0 ACP OUH975 HH Water R&R - SJPL Rehabilitation/RR Lime Slaker Water 2,330,076 0 2,330,076 2,330,076 1,495,909 ACP CUH977 Facilities Maintenance - Water Joint 2,076,186 0 2,076,186 934,284 599,810 ACP CUI1998 Camp Mather Leach Field Joint 26,270 0 26,270 11,822 7,569 ACP TOTAL HETCH HETCHY WATER & POWER 14,743,078 0 14,743,078 7,507,984 4,820,126 TOTAL COMBINED WATER AND HHWP 53,304,675 (3,489,434) 49,815,242 7,507,984 15,845,676 !Vote A: CUW690 Qustomer Care & Billinq
This project will be specially allocated. SFPUC will refiect $70,702,36 ($3,535,117.97 x 2%) as an adjustment ta the Balancing Account in favor of the Retail customers.

Page 2 of 4 ends

Milpitas City CouncilMarch 15, 2022

Milpitas City Council
March 15, 2022