Finance Committee
February 28, 2022

D.5) AMERICANS WITH DISABILITIES ACT: By signing this Grant Agreement, Grantee assures State that it complies with the Americans with Disabilities Act (ADA) of 1990, (42 U.S.C. § 12101 et seq.), which prohibits discrimination on the basis of disability, as well as all applicable regulations and guidelines issued pursuant to the ADA.

D.6) APPROVAL: This Agreement is of no force or effect until signed by all parties to the agreement.

Grantee may not submit invoices or receive payment until all required signatures have been obtained.

D.7) AUDITS: State reserves the right to conduct an audit at any time between the execution of this Grant Agreement and the completion of Projects, with the costs of such audit borne by State.

After completion of the Projects, State may require Grantee to conduct a final audit to State’s specifications, at Grantee’s expense, such audit to be conducted by and a report prepared by an independent Certified Public Accountant. Failure or refusal by Grantee to comply with this provision shall be considered a breach of this Grant Agreement, and State may elect to pursue any remedies provided in Paragraph 12 or take any other action it deems necessary to protect its interests.

Pursuant to Government Code §8546.7, the Grantee shall be subject to the examination and audit by the State for a period of three years after final payment under this Grant Agreement with respect to all matters connected with this Grant Agreement, including but not limited to, the cost of administering this Grant Agreement. All records of Grantee or its contractor or subcontractors shall be preserved for this purpose for at least three (3) years after project completion or final billing, whichever comes later.

D.8) BUDGET CONTINGENCY: If the Budget Act of the current year covered under this Grant Agreement does not appropriate sufficient funds for the Proposition 1 Implementation Grant Program, this Grant Agreement shall be of no force and effect. This provision shall be construed as a condition precedent to the obligation of State to make any payments under this Grant Agreement. In this event, State shall have no liability to pay any funds whatsoever to Grantee or to furnish any other considerations under this Grant Agreement and Grantee shall not be obligated to perform any provisions of this Grant Agreement. Nothing in this Grant Agreement shall be construed to provide Grantee with a right of priority for payment over any other Grantee. If funding for any fiscal year after the current year covered by this Grant Agreement is reduced or deleted by the Budget Act, by Executive Order, or by order of the Department of Finance, State shall have the option to either cancel this Grant Agreement with no liability occurring to State, or offer a Grant Agreement amendment to Grantee to reflect the reduced amount.

D.9) CALIFORNIA CONSERVATION CORPS: As required in Water Code §79038(b), Grantee shall examine the feasibility of using the California Conservation Corps or community conservation corps to accomplish the habitat restoration, enhancement and protection activities listed in the Exhibit A, Work Plan, and shall use the services of one of these organizations whenever feasible.

D.10) CEQA: Activities funded under this Grant Agreement, regardless of funding source, must be in compliance with the California Environmental Quality Act (CEQA) (Public Resources Code §21000 et seq.). Information on CEQA may be found at the following links:

Environmental Information: http://resources.ca.gov/ceqa/ California State Clearinghouse Handbook:
https://www.opr.ca.gov/docs/SCH_Handbook_2012.pdf
#9..
- 270 -
Grant Agreement No. 4600012737

D.11) CHILD SUPPORT COMPLIANCE ACT: For any Grant Agreement in excess of $100,000, the Grantee acknowledges in accordance with Public Contract Code §7110, that:
a) The Grantee recognizes the importance of child and family support obligations and shall fully comply with all applicable state and federal laws relating to child and family support enforcement, including, but not limited to, disclosure of information and compliance with earnings assignment orders, as provided in Chapter 8 (commencing with §5200) of Part 5 of Division 9 of the Family Code; and
b) The Grantee, to the best of its knowledge is fully complying with the earnings assignment orders of all employees and is providing the names of all new employees to the New Hire Registry maintained by the California Employment Development Department.

D.12) CLAIMS DISPUTE: Any claim that the Grantee may have regarding performance of this agreement including, but not limited to, claims for additional compensation or extension of time, shall be submitted to the State’s Project Manager, within thirty (30) calendar days of the Grantee’s knowledge of the claim. State and Grantee shall then attempt to negotiate a resolution of such claim and process an amendment to this Agreement to implement the terms of any such resolution.

D.13) COMPETITIVE BIDDING AND PROCUREMENTS: Grantee shall comply with all applicable laws and regulations regarding securing competitive bids and undertaking competitive negotiations in Grantee’s contracts with other entities for acquisition of goods and services and construction of public works with funds provided by State under this Grant Agreement.

D.14) COMPUTER SOFTWARE: Grantee certifies that it has appropriate systems and controls in place to ensure that state funds will not be used in the performance of this Grant Agreement for the acquisition, operation, or maintenance of computer software in violation of copyright laws.

D.15) CONFLICT OF INTEREST: All participants are subject to State and Federal conflict of interest laws. Failure to comply with these laws, including business and financial disclosure provisions, will result in the application being rejected and any subsequent contract being declared void.

Other legal action may also be taken. Applicable statutes include, but are not limited to, Government Code, §1090 and Public Contract Code, §10410 and §10411, for State conflict of interest requirements.
a) Current State Employees: No State officer or employee shall engage in any employment, activity, or enterprise from which the officer or employee receives compensation or has a financial interest and which is sponsored or funded by any State agency, unless the employment, activity, or enterprise is required as a condition of regular State employment.

No State officer or employee shall contract on his or her own behalf as an independent contractor with any State agency to provide goods or services. b) Former State Employees: For the two-year period from the date he or she left State employment, no former State officer or employee may enter into a contract in which he or she engaged in any of the negotiations, transactions, planning, arrangements, or any part of the decision-making process relevant to the contract while employed in any capacity by any State agency. For the twelve-month period from the date he or she left State employment, no former State officer or employee may enter into a contract with any State agency if he or she was employed by that State agency in a policy-making position in the same general subject area as the proposed contract within the twelve-month period prior to his or her leaving State service.
#9..
- 271 -
Grant Agreement No. 4600012737

c) Employees of the Grantee: Employees of the Grantee shall comply with all applicable provisions of law pertaining to conflicts of interest, including but not limited to any applicable conflict of interest provisions of the California Political Reform Act, Government Code §87100 et seq.
d) Employees and Consultants to the Grantee: Individuals working on behalf of a Grantee may be required by the Department to file a Statement of Economic Interests (Fair Political Practices Commission Form 700) if it is determined that an individual is a consultant for Political Reform Act purposes.

D.16) DELIVERY OF INFORMATION, REPORTS, AND DATA: Grantee agrees to expeditiously provide throughout the term of this Grant Agreement, such reports, data, information, and certifications as may be reasonably required by State.

D.17) DISPOSITION OF EQUIPMENT: Grantee shall provide to State, not less than 30 calendar days prior to submission of the final invoice, an itemized inventory of equipment purchased with funds provided by State. The inventory shall include all items with a current estimated fair market value of more than $5,000.00 per item. Within 60 calendar days of receipt of such inventory State shall provide Grantee with a list of the items on the inventory that State will take title to. All other items shall become the property of Grantee. State shall arrange for delivery from Grantee of items that it takes title to. Cost of transportation, if any, shall be borne by State.

D.18) DRUG-FREE WORKPLACE CERTIFICATION: Certification of Compliance: By signing this Grant Agreement, Grantee, its contractors or subcontractors hereby certify, under penalty of perjury under the laws of State of California, compliance with the requirements of the Drug-Free Workplace Act of 1990 (Government Code §8350 et seq.) and have or will provide a drug-free workplace by taking the following actions:
a) Publish a statement notifying employees, contractors, and subcontractors that unlawful manufacture, distribution, dispensation, possession, or use of a controlled substance is prohibited and specifying actions to be taken against employees, contractors, or subcontractors for violations, as required by Government Code §8355(a)(1). b) Establish a Drug-Free Awareness Program, as required by Government Code §8355(a)(2) to inform employees, contractors, or subcontractors about all of the following:
i) The dangers of drug abuse in the workplace,
ii) Grantee’s policy of maintaining a drug-free workplace, iii) Any available counseling, rehabilitation, and employee assistance programs, and iv) Penalties that may be imposed upon employees, contractors, and subcontractors for drug abuse violations.
c) Provide, as required by Government Code §8355(a)(3), that every employee, contractor, and/or subcontractor who works under this Grant Agreement:
i) Will receive a copy of Grantee’s drug-free policy statement, and ii) Will agree to abide by terms of Grantee’s condition of employment, contract or subcontract.

D.19) FINAL INSPECTIONS AND CERTIFICATION OF REGISTERED PROFESSIONAL: Upon completion of the Project, Grantee shall provide for a final inspection and certification by the appropriate registered professional (California Registered Civil Engineer or Geologist) that the Project has #9..
- 272 -
Grant Agreement No. 4600012737

been completed in accordance with submitted final plans and specifications and any modifications thereto and in accordance with this Grant Agreement. Grantee shall notify the State’s Project Manager of the inspection date at least 14 calendar days prior to the inspection in order to provide State the opportunity to participate in the inspection.

D.20) GRANTEE COMMITMENTS: Grantee accepts and agrees to comply with all terms, provisions, conditions and commitments of this Grant Agreement, including all incorporated documents, and to fulfill all assurances, declarations, representations, and statements made by the Grantee in the application, documents, amendments, and communications filed in support of its request for funding.

D.21) GRANTEE NAME CHANGE: Approval of the State’s Program Manager is required to change the Grantee’s name as listed on this Grant Agreement. Upon receipt of legal documentation of the name change the State will process an amendment. Payment of invoices presented with a new name cannot be paid prior to approval of said amendment.

D.22) GOVERNING LAW: This Grant Agreement is governed by and shall be interpreted in accordance with the laws of the State of California.

D.23) INDEMNIFICATION: Grantee shall indemnify and hold and save the State, its officers, agents, and employees, free and harmless from any and all liabilities for any claims and damages (including inverse condemnation) that may arise out of the Projects and this Agreement, including, but not limited to any claims or damages arising from planning, design, construction, maintenance and/or operation of levee rehabilitation measures for this Project and any breach of this Agreement. Grantee shall require its contractors or subcontractors to name the State, its officers, agents and employees as additional insured on their liability insurance for activities undertaken pursuant to this Agreement.

D.24) INDEPENDENT CAPACITY: Grantee, and the agents and employees of Grantees, in the performance of the Grant Agreement, shall act in an independent capacity and not as officers, employees, or agents of the State.

D.25) INSPECTION OF BOOKS, RECORDS, AND REPORTS: During regular office hours, each of the parties hereto and their duly authorized representatives shall have the right to inspect and to make copies of any books, records, or reports of either party pertaining to this Grant Agreement or matters related hereto. Each of the parties hereto shall maintain and shall make available at all times for such inspection accurate records of all its costs, disbursements, and receipts with respect to its activities under this Grant Agreement. Failure or refusal by Grantee to comply with this provision shall be considered a breach of this Grant Agreement, and State may withhold disbursements to Grantee or take any other action it deems necessary to protect its interests.

D.26) INSPECTIONS OF PROJECT BY STATE: State shall have the right to inspect the work being performed at any and all reasonable times during the term of the Grant Agreement. This right shall extend to any subcontracts, and Grantee shall include provisions ensuring such access in all its contracts or subcontracts entered into pursuant to its Grant Agreement with State.

D.27) INVOICE DISPUTES: In the event of an invoice dispute, payment will not be made until the dispute is resolved and a corrected invoice submitted. Failure to use the address exactly as provided may result in return of the invoice to the Grantee. Payment shall be deemed complete upon deposit of the payment, properly addressed, postage prepaid, in the United States mail. Any claim that Grantee may have regarding the performance of this Grant Agreement including, but not limited to claims for additional compensation or extension of time, shall be submitted to the DWR Project Manager within thirty (30) calendar days of #9..
- 273 -
Grant Agreement No. 4600012737

Grantee’s knowledge of the claim. State and Grantee shall then attempt to negotiate a resolution of such claim and process an amendment to the Grant Agreement to implement the terms of any such resolution.

D.28) NONDISCRIMINATION: During the performance of this Grant Agreement, Grantee and its contractors or subcontractors shall not unlawfully discriminate, harass, or allow harassment against any employee or applicant for employment because of sex (gender), sexual orientation, race, color, ancestry, religion, creed, national origin (including language use restriction), pregnancy, physical disability (including HIV and AIDS), mental disability, medical condition (cancer/genetic characteristics), age (over 40), marital status, and denial of medial and family care leave or pregnancy disability leave. Grantee and its contractors or subcontractors shall ensure that the evaluation and treatment of their employees and applicants for employment are free from such discrimination and harassment. Grantee and its contractors or subcontractors shall comply with the provisions of the Fair Employment and Housing Act (Government Code §12990 (a-f) et seq.) and the applicable regulations promulgated there under (California Code of Regulations, Title 2, §7285 et seq.). The applicable regulations of the Fair Employment and Housing Commission implementing Government Code §12990 (a-f), set forth in Chapter 5 of Division 4 of Title 2 of the California Code of Regulations, are incorporated into this Agreement by reference and made a part hereof as if set forth in full. Grantee and its contractors or subcontractors shall give written notice of their obligations under this clause to labor organizations with which they have a collective bargaining or other agreement.

Grantee shall include the nondiscrimination and compliance provisions of this clause in all subcontracts to perform work under the Grant Agreement.

D.29) NO DISCRIMINATION AGAINST DOMESTIC PARTNERS: For contracts over $100,000 executed or amended after January 1, 2007, the Grantee certifies by signing this Grant Agreement, under penalty of perjury under the laws of State of California that Grantee is in compliance with Public Contract Code §10295.3.

D.30) OPINIONS AND DETERMINATIONS: Where the terms of this Grant Agreement provide for action to be based upon, judgment, approval, review, or determination of either party hereto, such terms are not intended to be and shall never be construed as permitting such opinion, judgment, approval, review, or determination to be arbitrary, capricious, or unreasonable.

D.31) PERFORMANCE AND ASSURANCES: Grantee agrees to faithfully and expeditiously perform or cause to be performed all Project work as described in Exhibit A (Work Plan) and to apply State funds received only to Eligible Project Costs in accordance with applicable provisions of the law.

D.32) PRIORITY HIRING CONSIDERATIONS: If this Grant Agreement includes services in excess of $200,000, the Grantee shall give priority consideration in filling vacancies in positions funded by the Grant Agreement to qualified recipients of aid under Welfare and Institutions Code §11200 in accordance with Public Contract Code §10353.

D.33) PROHIBITION AGAINST DISPOSAL OF PROJECT WITHOUT STATE PERMISSION: The Grantee shall not sell, abandon, lease, transfer, exchange, mortgage, hypothecate, or encumber in any manner whatsoever all or any portion of any real or other property necessarily connected or used in conjunction with the Projects, or with Grantee’s service of water, without prior permission of State. Grantee shall not take any action, including but not limited to actions relating to user fees, charges, and assessments that could adversely affect the ability of Grantee to meet its obligations under this Grant Agreement, without prior written permission of #9..
- 274 -
Grant Agreement No. 4600012737

State. State may require that the proceeds from the disposition of any real or personal property be remitted to State.

D.34) REMEDIES NOT EXCLUSIVE: The use by either party of any remedy specified herein for the enforcement of this Grant Agreement is not exclusive and shall not deprive the party using such remedy of, or limit the application of, any other remedy provided by law.

D.35) RETENTION: Notwithstanding any other provision of this Grant Agreement, State may, for each project, withhold five percent (5.0%) of the funds requested by Grantee for reimbursement of Eligible Costs. Each project in this Grant Agreement will be eligible to release its respective retention when that project is completed and Grantee has met requirements of Paragraph 17, “Submissions of Reports”, except in the case of the last project to be completed under this Grant Agreement, in which case retention for such project will not be disbursed until the “Final Report” is submitted to and approved by State. State shall disburse retained funds to the Grantee.

D.36) RIGHTS IN DATA: Grantee agrees that all data, plans, drawings, specifications, reports, computer programs, operating manuals, notes and other written or graphic work produced in the performance of this Grant Agreement shall be made available to the State and shall be in the public domain to the extent to which release of such materials is required under the California Public Records Act., Government Code §6250 et seq. Grantee may disclose, disseminate and use in whole or in part, any final form data and information received, collected and developed under this Grant Agreement, subject to appropriate acknowledgement of credit to State for financial support. Grantee shall not utilize the materials for any profit-making venture or sell or grant rights to a third party who intends to do so. The State shall have the right to use any data described in this paragraph for any public purpose.

D.37) SEVERABILITY: Should any portion of this Grant Agreement be determined to be void or unenforceable, such shall be severed from the whole and the Grant Agreement shall continue as modified.

D.38) STATE REVIEWS: The parties agree that review or approval of project applications, documents, permits, plans, and specifications or other project information by the State is for administrative purposes only and does not relieve the Grantee of their responsibility to properly plan, design, construct, operate, maintain, implement, or otherwise carry out the projects.

D.39) SUSPENSION OF PAYMENTS: This Grant Agreement may be subject to suspension of payments or termination, or both, and Grantee may be subject to debarment if the State determines that:
a) Grantee, its contractors, or subcontractors have made a false certification, or b) Grantee, its contractors, or subcontractors violates the certification by failing to carry out the requirements noted in this Grant Agreement.

D.40) SUCCESSORS AND ASSIGNS: This Grant Agreement and all of its provisions shall apply to and bind the successors and assigns of the parties. No assignment or transfer of this Grant Agreement or any part thereof, rights hereunder, or interest herein by the Grantee shall be valid unless and until it is approved by State and made subject to such reasonable terms and conditions as State may impose.

D.41) TERMINATION BY GRANTEE: Subject to State approval which may be reasonably withheld, Grantee may terminate this Agreement and be relieved of contractual obligations. In doing #9..
- 275 -
Grant Agreement No. 4600012737

so, Grantee must provide a reason(s) for termination. Grantee must submit all progress reports summarizing accomplishments up until termination date.

D.42) TERMINATION FOR CAUSE: Subject to the right to cure under Paragraph 11, the State may terminate this Grant Agreement and be relieved of any payments should Grantee fail to perform the requirements of this Grant Agreement at the time and in the manner herein, provided including but not limited to reasons of default under Paragraph 12.

D.43) TERMINATION WITHOUT CAUSE: The State may terminate this Grant Agreement without cause on 30 calendar days advance written notice. The Grantee shall be reimbursed for all reasonable expenses incurred up to the date of termination.

D.44) THIRD PARTY BENEFICIARIES: The parties to this Grant Agreement do not intend to create rights in, or grant remedies to, any third party as a beneficiary of this Agreement, or any duty, covenant, obligation or understanding established herein.

D.45) TIMELINESS: Time is of the essence in this Grant Agreement.

D.46) TRAVEL: Travel includes the reasonable and necessary costs of transportation, subsistence, and other associated costs incurred by personnel during the term of this Agreement. Travel and per diem expenses to be reimbursed under this Agreement shall be at the same rates the State provides for unrepresented employees in accordance with the provisions of Title 2, Chapter 3, of the California Code of Regulations and shall be reimbursed consistent with the rates current at the time of travel. These rates are published at:
http://www.calhr.ca.gov/employees/Pages/travel-meals.aspx, or its successor website. For the purpose of computing such expenses, Grantee’s designated headquarters shall be: 1331 Concord Ave, Concord, CA 94520. No travel outside the San Joaquin River Funding Area shall be reimbursed unless prior written authorization is obtained from the State’s Project Manager.

D.47) VENUE: The State and the Grantee hereby agree that any action arising out of this Agreement shall be filed and maintained in the Superior Court in and for the County of Sacramento, California, or in the United States District Court in and for the Eastern District of California. The Grantee hereby waives any existing sovereign immunity for the purposes of this Agreement.

D.48) WAIVER OF RIGHTS: None of the provisions of this Grant Agreement shall be deemed waived unless expressly waived in writing. It is the intention of the parties here to that from time to time either party may waive any of its rights under this Grant Agreement unless contrary to law. Any waiver by either party of rights arising in connection with the Grant Agreement shall not be deemed to be a waiver with respect to any other rights or matters, and such provisions shall continue in full force and effect.

D.49) WORKERS’ COMPENSATION: Grantee affirms that it is aware of the provisions of §3700 of the Labor Code, which requires every employer to be insured against liability for workers’ compensation or to undertake self-insurance in accordance with the provisions of that code, and Grantee affirms that it will comply with such provisions before commencing the performance of the work under this Grant Agreement and will make its contractors and subcontractors aware of this provision.
#9..
- 276 -
Grant Agreement No. 4600012737

EXHIBIT E

AUTHORIZING RESOLUTION
#9..
- 277 -
Grant Agreement No. 4600012737

#9..
- 278 -
Grant Agreement No. 4600012737

#9..
- 279 -
Grant Agreement No. 4600012737

EXHIBIT F

LOCAL PROJECT SPONSORS
Grantee has assigned, for each project, a Local Project Sponsor according to the roles of the participating agencies identified in the IRWM Plan. Local Project Sponsors may act on behalf of Grantee for the purposes of individual project management, oversight, compliance, and operations and maintenance. Local Project Sponsors are identified for each Sponsored Project below:

Sponsored Project Sponsor Agency Agency Address
Project 1 – Grant Proposal and
Administration Assistance
San Luis & Delta-Mendota
Water Authority
P.O. Box 2157
Los Banos, CA 93635
Project 2 – DAC Needs
Assessment
San Luis & Delta-Mendota
Water Authority
P.O. Box 2157
Los Banos, CA 93635
Project 3 – Grant Administration Contra Costa Water District P.O. Box H20 Concord, CA 94524
Project 4 – SJRFA IRWM Region
Coordination
Contra Costa Water District P.O. Box H20
Concord, CA 94524
Project 5 – DAC and URC Water
Education and Improvement
Project
Regional Water Authority

Environmental Justice
Coalition for Water
5620 Birdcage St #180
Citrus Heights, CA 95610
P.O. Box 188911
Sacramento, CA 95818-8911
Project 6 – Santiago Island Village
Water Consolidation Technical
Assistance
Contra Costa Water District P.O. Box H20
Concord, CA 94524
Project 7 – Evaluation of
Stormwater Management and
Groundwater Recharge projects
in Dry Creek Watershed
Stanislaus County
1010 Tenth Street, Suite 4200
Modesto, CA 95354
Project 8 – Eastern San Joaquin
Regional Planning Project
San Joaquin County P.O. Box 1810
Stockton, CA 95201-3018
Project 9 – Madera Regional
Planning Project
Madera County 200 West Fourth St.

Madera, CA 93637
Project 10 – Merced County Well
Survey and Database
Merced Irrigation District 744 W 20th St
Merced, CA 95340
Project 11 – Support for DAC
Involvement in Westside-San
Joaquin IRWM Planning
San Luis & Delta-Mendota
Water Authority P.O. Box 2157
Los Banos, CA 93635
Project 12 – SJRFA DAC Technical
Assistance
Contra Costa Water District P.O. Box H20
Concord, CA 94524
Project 13 – SJRFA DAC Capacity
Building
Contra Costa Water District P.O. Box H20
Concord, CA 94524
#9..
- 280 -
Grant Agreement No. 4600012737

EXHIBIT G

REPORT FORMATS AND REQUIREMENTS
The following reporting formats should be utilized. Please obtain State approval prior to submitting a report in an alternative format.

PROGRESS REPORTS
Progress reports shall generally use the following format. This format may be modified as necessary to effectively communicate information. For each project, discuss the following at the task level, as organized in Exhibit A (Work Plan):
• Estimate of percent work complete.
• Milestones or deliverables completed during the reporting period. • Discussion of work accomplished during the reporting period and submission of deliverables per Exhibit A.
• Scheduling concerns and issues encountered that may delay completion of the task. • Work anticipated for the next reporting period.
• Updated schedule or budget inclusive of any changes that have occurred.

FINAL REPORT
The Final Report shall generally use the following format. This format may be modified as necessary to effectively communicate information on the various projects in the IRWM Program funded by this Grant Agreement, and includes the following:

Executive Summary
The Executive Summary consists of a maximum of twenty (20) pages summarizing information for the grant as well as the individual projects.

Stakeholder Summary
• General description of water management needs of DACs, Economically Distressed Areas (EDAs), and underrepresented communities at the Funding Area learned from the activities performed in this program
• General summary of DACs, EDAs, and underrepresented communities involved in IRWM efforts through this Program
• Map(s) identifying all DACs, EDAs, and underrepresented communities with IRWM regions learned from the activities performed in this program
Involvement Activity Summary
• General description of involvement activities performed in this Program, including both successful and unsuccessful involvement activities
• Identification of projects developed from the DAC involvement activities, if applicable Findings
• Needs Assessment
o Narrative summary of community characteristics identified and specific community water management needs and resources (technical, managerial, and financial) to address the needs of DACs, EDAs, and underrepresented communities o Needs Assessment template table filled in (at the community level) • Identification of ongoing barriers for DAC involvement in IRWM efforts #9..
- 281 -
Grant Agreement No. 4600012737

• Recommendations for water managers on future DAC involvement activities in IRWM efforts
Looking into the Future
• Next steps for the IRWM regions to continue DAC involvement efforts References
#9..
- 282 -
Grant Agreement No. 4600012737

EXHIBIT H

REQUIREMENTS FOR STATEWIDE MONITORING AND DATA SUBMITTAL Surface and Groundwater Quality Data
Groundwater quality and ambient surface water quality monitoring data that include chemical, physical, or biological data shall be submitted to the State as described below, with a narrative description of data submittal activities included in project reports, as described in Exhibit G.

Surface water quality monitoring data shall be prepared for submission to the California Environmental Data Exchange Network (CEDEN). The CEDEN data templates are available on the CEDEN website. Inclusion of additional data elements described on the data templates is desirable.

Data ready for submission should be uploaded to your CEDEN Regional Data Center via the CEDEN website. CEDEN website: http://www.ceden.org.

If a project’s Work Plan contains a groundwater ambient monitoring element, groundwater quality monitoring data shall be submitted to the State for inclusion in the State Water Resources Control Board’s Groundwater Ambient Monitoring and Assessment (GAMA) Program Information on the GAMA Program can be obtained at:
http://www.waterboards.ca.gov/gama/geotracker_gama.shtml. If further information is required, the Grantee can contact the State Water Resources Control Board (SWRCB) GAMA Program.

Groundwater Level Data
Grantee shall submit to DWR groundwater level data collected as part of this grant. Water level data must be submitted using the California Statewide Groundwater Elevation Monitoring (CASGEM) online data submission system. Grantee should use their official CASGEM Monitoring Entity or Cooperating Agency status to gain access to the online submittal tool and submit data. If the data is from wells that are not part of the monitoring network, the water level measurements should be classified as voluntary measurements in the CASGEM system. If the grantee is not a Monitoring Entity or Cooperating Agency, please contact your DWR grant project manager for further assistance with data submittal. The activity of data submittal should be documented in appropriate progress or final project reports, as described in Exhibit G. Information regarding the CASGEM program can be found at http://www.water.ca.gov/groundwater/casgem/.
#9..
- 283 -
Grant Agreement No. 4600012737

EXHIBIT I

STATE AUDIT DOCUMENT REQUIREMENTS GUIDELINES FOR GRANTEES State Audit Document Requirements
The list below details the documents/records that State Auditors typically reviewed in the event of a Grant Agreement being audited. Grantees should ensure that such records are maintained for each State funded Program/Project. Where applicable, this list of documents also includes documents relating to the Grantee’s funding match which will be required for audit purposes.

Internal Controls:

1. Organization chart (e.g., Agency’s overall organization chart and organization chart for this Grant Agreement’s funded project.

2. Written internal procedures and flowcharts for the following:
a) Receipts and deposits
b) Disbursements
c) State reimbursement requests
d) State funding expenditure tracking
e) Guidelines, policy(ies), and procedures on State funded Program/Project

3. Audit reports of the Grantee’s internal control structure and/or financial statements within the last two years.

4. Prior audit reports on State funded Program/Project.

State Funding:

1. Original Grant Agreement, any amendment(s) and budget modification documents.

2. A list of all bond-funded grants, loans or subventions received from the State.

3. A list of all other funding sources for each Program/Project.

Contracts:

1. All subcontractor and consultant contracts and related, if applicable.

2. Contracts between the Grantee, member agencies, and project partners as related to the State funded Program/Project.

Invoices:

1. Invoices from vendors and subcontractors for expenditures submitted to the State for payments under the Grant Agreement.

2. Documentation linking subcontractor invoices to State reimbursement requests and related Grant Agreement budget line items.

3. Reimbursement requests submitted to the State for the Grant Agreement.

Cash Documents:

1. Receipts (copies of warrants) showing payments received from the State.

2. Deposit slips or bank statements showing deposit of the payments received from the State. #9..
- 284 -
Grant Agreement No. 4600012737

3. Cancelled checks or disbursement documents showing payments made to vendors, subcontractors, consultants, and/or agents under the Grant Agreement.

Accounting Records:

1. Ledgers showing receipts and cash disbursement entries for State funding.

2. Ledgers showing receipts and cash disbursement entries of other funding sources.

3. Bridging documents that tie the general ledger to reimbursement requests submitted to the State for the Grant Agreement
Administration Costs:

1. Supporting documents showing the calculation of administration costs.

Personnel:

1. List of all contractors and Grantee staff that worked on the State funded Program/Project.

2. Payroll records including timesheets for contractor’s staff and the Grantee’s staff Project Files:

1. All supporting documentation maintained in the Program/Project files.

2. All Grant Agreement related correspondence.
#9..
- 285 -

CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

February 28, 2022
February 9, 2022
TO: Finance Committee
David Wright, Chair
Rose Escutia-Braaton, Vice Chair
Bill Zoslocki, Member
FROM: William Wong, Director of Utilities
SUBJECT: Engineering Design Services Agreement with O’Dell Engineering for the Sonoma Sewer Trunk Phases 3 and 4 Projects
CONTACT: Jesse Franco, Engineering Division Manager, [email protected], (209) 571-5175
DESCRIPTION:

Consider approving an Agreement with O’Dell Engineering, Modesto, CA, for Engineering Design Services for the Sonoma Sewer Trunk Phases 3 and 4 Projects in the amount of $72,600.00 for the identified scope of services, plus $7,260.00 in additional services, if needed, for a total amount not to exceed $79,860.00, and forwarding to Council for approval. (Funding Source – Wastewater)
STRATEGIC PLAN ELEMENT:

The recommended action supports the 2020-2025 City’s Strategic Plan Initiatives, Goal D:

Provide safe, efficient, and reliable infrastructure through proactive community investment, maintenance and sustainability efforts.

BACKGROUND:

The Wastewater Collection System Master Plan identifies the Sonoma Trunk Extensions and Lift Station as a system that must be constructed to serve future development of the Roselle/Claribel Comprehensive Planning District located in the northeast area of the City.

Within this area is the proposed Tivoli Development, which currently has two phases in the Tentative Map phase and will require construction of the Sonoma Trunk Extensions.

The first phase of the Sonoma Trunk Extension has been constructed along Sylvan Avenue, from Wood Sorrel Drive to Aria Way. The second phase, which includes the lift station and sewer main improvements along Oakdale Road, is currently in the final design phase and is anticipated to begin construction in the summer of 2022. Phases 3 and 4, along the future Aria Way need to be designed, constructed, and coordinated with the anticipated development projects.
#10..
- 286 -
Finance Committee, February 28, 2022
Engineering Design Services Agreement with O’Dell Engineering for the Sonoma Sewer Trunk Phases 3 and 4 Projects

Sonoma Trunk Phases 3 and 4 includes engineering design and construction of installation approximately 2,900 feet of 24-inch diameter sewer trunk beginning on Aria Way, just north of Sylvan Avenue, and continuing northerly to the proposed alignment of Mable Avenue.

O’Dell Engineering (O’Dell) has been involved with preliminary engineering studies for the Tivoli Development and has assisted the City as well as the development groups. O’Dell is currently the design engineer for the first phase of the Tivoli Development which is located at Sylvan Avenue and Aria Way. Considering this development phase requires the third phase of the sewer trunk extension, staff coordinated with the Tivoli Development team on the partnering opportunity to utilize O’Dell to design the third and fourth phases of the Sonoma Trunk Extensions. O’Dell would design the sewer trunk extensions and incorporate into the subdivision plans. This option allows for the sewer trunk to be installed at the same time as the subdivision development and therefore experience scheduling, coordination, and cost efficiencies. The developer will construct the sewer trunk and be reimbursed through the City’s Wastewater fund. This approach was arranged for the Market Place development on Sylvan Avenue and proved to be efficient and successful.

Prior to construction, staff will coordinate with Finance and Community Development on the terms and structure of the reimbursement agreement.

DISCUSSION:

O’Dell’s involvement with the Tivoli Development, and familiarity and knowledge of City Standards, provides them with the project understanding that will benefit the design of the proposed Sonoma Sewer Trunk Phase 3 and 4 projects. O’Dell has rendered satisfactory services with the City on previous projects which includes the Sutter Trunk Rehabilitation and Highway Village Strengthen and Replace Water mains projects.

Administrative Directive 3.1 allows for a selection of a consulting firm if in the best interest of the City and if the firm has rendered satisfactory services with the City. Therefore, staff is recommending the use of O’Dell to increase project delivery efficiencies.

O’Dell will provide engineering design and project management services during the construction of the Sonoma Sewer Trunk Phase 3 and 4 projects. The scope of services to be provided under the agreement includes;
 Project Management
 Meetings with City staff
 Topographic Survey
 Preparation of Plans and Estimates
 Engineering Support During Construction
In accordance with Modesto Municipal Code 8-3.204(a) Exceptions to Formal Bidding Requirements, this agreement is for professional services and, therefore, exempt from the bid requirement.

FISCAL IMPACT:

The following accounts have been created to track expenses associated with these projects:
#10..
- 287 -
Finance Committee, February 28, 2022
Engineering Design Services Agreement with O’Dell Engineering for the Sonoma Sewer Trunk Phases 3 and 4 Projects

101370 – Sonoma Sewer Trunk Ext Ph 3
101371 – Sonoma Sewer Trunk Ext Ph 4

ANTICIPATED ENGINEERING EXPENDITURES
Approved by:

William Wong, Director of Utilities
Joseph P. Lopez, City Manager
Attachments:

1. O’Dell Agreement
Engineering Services Agreement – O’Dell Engineering $72,600 Additional Services (10%) if needed $7,260
City Staff – Engineering/Administration $10,000
TOTAL $89,860
#10..
- 288 -
#10..
- 289 -
#10..
- 290 -
#10..
- 291 -
#10..
- 292 -
#10..
- 293 -
#10..
- 294 -
#10..
- 295 -
#10..
- 296 -
#10..
- 297 -
#10..
- 298 -
#10..
- 299 -
#10..
- 300 -
#10..
- 301 -
#10..
- 302 -
#10..
- 303 -
#10..
- 304 -
#10..
- 305 -
#10..
- 306 -
#10..
- 307 -
#10..
- 308 -
#10..
- 309 -
#10..
- 310 -
#10..
- 311 -
#10..
- 312 -

CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

February 28, 2022
Date: February 7, 2022
TO: Finance Committee
David Wright, Chair
Rosa Escutia-Braaton, Vice-Chair
Bill Zoslocki, Member
THROUGH: Joseph P. Lopez, City Manager
FROM: Bill Sandhu, Public Works Director
SUBJECT: Accept “SB 1383 Collection Program and Compliance Options” Developed by R3 Consulting Group, Inc.

CONTACT: Myriah Hill, Solid Waste Administrative Services Technician, [email protected], 209-577-5458
DESCRIPTION:

Consider accepting “SB 1383 Collection Program and Compliance Options” report, accepting the recommended waste collection method therein, and forwarding to Council for approval. (Funding Source: Solid Waste Fund, Compost Fund)
STRATEGIC PLAN ELEMENT:

The recommended action is consistent with the Council’s Strategic Plan Area- Quality of Life:
“Engage partners across the community to ensure the safety, resilience, and attractiveness of Modesto;” Goal D: “Provide safe, efficient, and reliable infrastructure through proactive community investment, maintenance, and sustainability efforts.” BACKGROUND:

In September 2016, Governor Brown signed the Short-Lived Climate Pollution Reduction Act Senate Bill (SB 1383)1 into law, establishing emission reduction targets statewide by reducing organic waste to landfill by 75% and recovering 20% of edible food waste for human consumption by 2025. SB 1383 outlines extremely ambitious targets and specific details for implementation, monitoring, and documentation. As of 2022, the Department of Resources Recycling and Recovery (CalRecycle) monitors implementation and compliance with the following areas of SB 1383:
1 https://www.calrecycle.ca.gov/organics/slcp
#12..
- 313 -
Finance Committee, February 28, 2022
Accept “SB 1383 Collection Program and Compliance Options” Developed by R3 Consulting Group, Inc.

 Identifying, educating, and monitoring edible food generators and edible food recovery programs
 Residential and commercial organic collection services  Processing, sorting, and recycling of organic waste
 Procurement of recycled paper content products by the City and vendors  Donation of material produced at the City’s Composting Facility in compliance with a citywide organic procurement target
 Inspections and enforcement related to organic collection and recycling  Public education and outreach
On June 22, 2021, by Resolution 2021-227, Council approved an agreement with R3 Consulting Group, Inc. to provide a gap analysis between the City’s solid waste program and SB 1383 mandates and recommendations for future action to ensure compliance.

DISCUSSION:

The City chose to coordinate with an independent consultant with expertise in implementing SB1383 rather than developing a compliance plan internally, because SB 1383 could lead to significant changes in waste collection, waste processing, administrative responsibilities, and cost of service. Including a consultant in this process ensures that the City receives an impartial recommendation for changes that will impact Modesto’s residents and businesses.

R3 Consulting Group, Inc. has provided the attached report, “SB 1383 Collection Program and Compliance Options” detailing their analysis. The report includes the following collection options:

Option A: Two-container collection program, with a 96-gallon organic container that accepts yard, food, and paper waste, and a 96-gallon trash container that accepts other household trash. Commercial accounts would have the option of having a single bin that is sorted postcollection, or a designated organics bin if they produce more than two yards of organic waste.

Option B: Three-container collection program, with a 96-gallon organic container that accepts yard, food, and paper waste, a 96-gallon recycling container that accepts glass, some metals and plastics, and clean recyclable paper, and a 96-gallon trash container that accepts other household trash. The trash container would be serviced weekly, and the recycling and organic containers would be serviced bi-weekly. Commercial accounts that produce organic waste or recyclables would need another commercial bin or, in some cases where less waste is produced, would need a 96-gallon organic and/or recyclable container.

Option C: Preferred Option: Three-container collection program, with a 96-gallon organic container that accepts yard, food, and paper waste, a 96-gallon recycling container that accepts glass, some metals and plastics, and clean recyclable paper, and a 96-gallon trash container that accepts other household trash. The trash and organic containers would be serviced weekly, and the recycling container would be serviced bi-weekly. Commercial accounts that produce organic waste or recyclables would need another commercial bin or, in some cases where less waste is produced, would need a 96-gallon organic or recyclable container.

Option D: Three-container collection program, with a 96-gallon organic container that accepts yard, food, and paper waste, a 96-gallon recycling container that accepts glass, some metals #12..
- 314 -
Finance Committee, February 28, 2022
Accept “SB 1383 Collection Program and Compliance Options” Developed by R3 Consulting Group, Inc.

and plastics, and clean recyclable paper, and a 96-gallon trash container that accepts other household trash. All containers would be serviced weekly. Commercial accounts that produce organic waste or recyclables would need another commercial bin or, in some cases where less waste is produced, would need a 96-gallon organic or recyclable container.  Pro: Increase collection service by 50%; implements a residential and commercial recycling system, diverting recoverable materials from waste-to-energy or landfill.  Con: Requires customer source separation of recyclables; haulers must purchase and distribute new containers and potentially purchase more dump trucks, including additional wear on City roads and alleys; highest estimated cost increase.

FISCAL IMPACT:

Accepting R3’s report and recommended waste collection method would coincide with a rate increase for both residential and commercial garbage service. Option C, which City staff and R3 Consulting Group, Inc. recommend proceeding with, would necessitate between 27% to 36% increase in the residential rate, and between 27.0% and 44.4% increase in the commercial rate.

This increase would fund the collection method change as well as programs required by SB 1383 and detailed in “SB 1383 Collection Program and Compliance Options,” including:
education and outreach conducted by the City and haulers, organic waste processing to remove contamination, required improvements to the City’s Compost Facility, inspections and route reviews, enforcement programs for contamination or noncompliance, and food recovery programs.

City staff recommends rate changes be phased in, beginning with a rate increase effective in July 2022 and a second rate increase effective in January 2023. The following table represents the distribution of additional revenue to City funds to accommodate SB 1383 mandatory regulations following the January 2023 final rate change. Further, these revenue estimates are based on acceptance of the average of the fee range that R3 Consulting Group, Inc. recommends in their report.
#12..
- 315 -
Finance Committee, February 28, 2022
Accept “SB 1383 Collection Program and Compliance Options” Developed by R3 Consulting Group, Inc.

Approved by:

Bill Sandhu, Public Works Director
Joseph P. Lopez, City Manager
Attachments:

1. “SB 1383 Collection Program and Compliance Options”- Draft report submitting by R3 Consulting Group, Inc. on 2/2/22
#12..
- 316 -

FINAL DRAFT REPORT
City of Modesto
Submitted electronically: February 23, 2022
SB 1383 Collection Program
and Compliance Options
#12..
- 317 -
1512 Eureka Road, Suite 220, Roseville, CA 95661 | p 916.782.7821 | f 916.782.7824 | www.r3cgi.com February 23, 2022
Mr. Bill Sandhu, Public Works Director
City of Modesto
1010 10th Street, Modesto, CA 95354
submitted via email: [email protected]
SUBJECT: Final Draft Report – SB 1383 Collection Program and Compliance Options Dear Mr. Sandhu,
R3 Consulting Group, Inc. (R3) is engaged by the City of Modesto (City) to review the City’s current solid waste collection system and recommend pathways for compliance with Senate Bill (SB) 1383. This report provides the results of our analysis regarding option for the City’s compliance with the SB 1383 regulations. Of primary concern to the City is that it needs to establish an SB 1383 compliant organic waste collection program for residents and businesses. The City has four primary options for establishing such a program, which are described in this report.

The primary intention of this report is to support the City in deciding which option to use to achieve compliance with the regulations. To that end, this report includes estimated ranges of ratepayer costs for each option, as well as an assessment of the relative benefits and drawbacks of each. This report also provides details and estimated ratepayer costs for other necessary aspects for City compliance with the SB 1383 regulations, including: pre-processing of organic waste to remove contaminants prior to delivery to the City’s compost facility; needed improvements to the compost facility to meet regulatory requirements; hauler operation programs and services for SB 1383 compliance; and the City’s own implementation of SB 1383 regulations.

Overall, regardless of which organic waste collection program options the City decides to undertake, the City should anticipate increases to monthly residential rates on the order of $6.75 to $20.90 per month inclusive of the estimated SB 1383 compliant collection, organic waste pre-processing, compost facility improvements, hauler SB 1383 programs, and City implementation costs. For commercial (and multifamily ratepayers) the anticipated increases to monthly rates are estimated in the range of 18% to 56% (translating to an increase of $39.20 to $120.90 per month for commercial customers subscribing to four cubic yards of garbage weekly). Actual costs will depend on the collection program option selected by the City and the City’s subsequent finalization of operational details relating to the selected option. * * * * *
Thank you for the opportunity to help the City assess its SB 1383 compliance pathways. We look forward to working with the City in its next steps of presenting these findings to the City Council.

Sincerely,

Garth Schultz | Principal Claire Wilson | Sr. Project Analyst R3 Consulting Group, Inc. R3 Consulting Group, Inc.
510.292.0853 | [email protected] 916.782.7821 | [email protected] #12..
- 318 -

TABLE OF CONTENTS
City of Modesto | Final Draft Report – SB 1383 Collection and Compliance Options TOC

1. Executive Summary
page 1

2. SB 1383 Collection Program Options
page 8

3. SB 1383 Programs and Services
page 12

4. Organic Waste Pre-Processing
page 16

5. Compost Facility Improvements
page 17

6. City SB 1383 Implementation
page 20
Attachments

1. SB 1383 Compliance Analysis

2. SB 1383 Resource Gap Analysis

3. SB 1383 Implementation Record
#12..
- 319 -

1. EXECUTIVE SUMMARY
City of Modesto | Final Draft Report – SB 1383 Collection Program and Compliance Options 1 of 21 Introduction
The of Modesto (City) engaged R3 Consulting Group (R3) to provide an assessment of the City’s pathways towards compliance with SB 1383. SB 1383 requires every jurisdiction in California to provide organic waste collection services to all residents and businesses starting in 2022 and requires all residents and businesses to use an organic waste recycling service that meets the regulatory requirements. Organic waste as it is defined in SB 1383, includes food, green material, landscape and pruning waste, organic textiles and carpets, lumber, wood, paper products, printing and writing paper, manure, biosolids, digestate, and sludges.

The City hold two exclusive franchise hauler agreements with Bertolotti Disposal (Bertolotti) and Gilton Solid Waste (GSW) for residential, commercial (which includes multi-family and all references to commercial in this report should be taken to include multi-family), and industrial garbage, organic waste, and recycling services. GSW services approximately two thirds of the City and Bertolotti Disposal services the remaining third. The City is districted for each hauler by a Council-approved designated service area map. There are approximately 57,000 residential ratepayers and 2,500 businesses in the City. Residential ratepayers receive service in a 96-gallon container for garbage and recycling (black container) and a 96- gallon container for organic waste (green container). Via its organic waste program, the City accepts food waste, yard trimming, food soiled paper, paper, and cardboard in green containers. Commercial ratepayers receive service in containers ranging from two to six yards or utilize compactors.

Summary of Findings
The City needs to make important decisions around the future of its solid waste collection programs and services to comply with SB 1383. Consequently, residents and businesses should be prepared to see increases to their solid waste bills because of this largely unfunded State mandate. Overall, and depending on the collection service option selected by the City, monthly solid waste service rates are projected to increase between $6.75 and $20.90 for residential solid waste ratepayers, and 18% to 56% for commercial ratepayers ($39.20 to $120.90 per month for commercial customers subscribing to four cubic yards of garbage weekly). Such increases would primarily be the result of the cost of implementing an SB 1383 compliance two- or three-container organic waste collection program (described below), which will be capital and labor intensive regardless of the chosen option. While these are large increases, they are keeping with actual or projected rate increases in nearby communities and Statewide trends.

Please note that, for ease of comprehension, most of the tables in this Executive Summary present findings solely with respect to estimated impacts on monthly residential rates. Estimated commercial rate impacts are calculated in direct proportion to the residential rate findings and are shown in Tables 3 and 5 towards the end of the Executive Summary.

Findings in Detail
SB 1383 Collection Program
The City must arrange for an SB 1383 compliant organic waste collection container program option in the form of single-stream, two-container, or three-container, as described below:1 One-container:2 The one-container or single-stream option requires collection of mixed waste in a gray or black container and material must be processed at a high-diversion organic waste processing facility.

1 The City may use a combination of any of the collection service options. Additionally, split-containers are allowed for the twostream and three-stream collection methods. The City may also provide an additional separate, container for collection of source-separated food waste.
2 R3 did not prepare cost estimates or the pros and cons of a single-stream, one-container system as we did not receive information from the City’s haulers that would facilitate such an analysis. If the City decides to pursue a one-container SB 1383 #12..
- 320 -
Executive Summary
City of Modesto | Final Draft Report – SB 1383 Collection Program and Compliance Options 2 of 21 Two-container: Two-container collection system must be administered using either a separate green container for organic waste and a gray/black container for garbage and any organic waste not otherwise collected in the green container; or a separate blue container for recyclables and a gray/black container for garbage and organic waste. For two-stream collection to comply with SB 1383, the material collected in the gray/black container must be processed at a high diversion organic waste processing facility.3 The two-contain option is represented as Option A in this report.

Three-container: The three-container option requires the City to provide three separate containers for organic waste in green containers, recyclables in blue containers, and garbage in gray/black containers. The three-container system does not require the use of a high-diversion organic waste processing facility. This report contains three options for the three-container program: Option B that would involve bi-weekly collection of the green organic waste container and a blue recycling container; Option C that would involve weekly collection of the green organic waste container and bi-weekly collection of the blue recycling container; and Option D, that would include weekly collection of both the green organic waste container and blue recycling container collection.

It should be noted that Option B would include a reduction in the collection frequency for organic waste that may result in increased odors and could require approval from the Local Enforcement Agency (LEA). Option B could be initially conducted as a pilot program to determine whether it provides enough organic waste collection capacity for waste generators. Organic waste container collection frequency could be increased after completion of a pilot if more collection capacity is needed, if unresolvable odor issues arise, or if other issues make bi-weekly collection of green containers untenable.

While the City currently utilizes a two-container system for collection of garbage and organic waste, the City’s current collection program does not comply with the SB 1383 regulations because it does not utilize a high diversion organic waste processing facility for processing of garbage in order to recover organic waste. To comply with the regulations, the City must modify its collection service program.

R3 requested information from the City’s haulers to prepare estimated ranges of new residential monthly ratepayer costs that would be incurred for each collection program option, shown below in Table 1. 4 Table 1 includes cost estimates for collection only. Please refer to Tables 2 and 3 for full SB 1383 rate increases inclusive of all categories.

compliance collection program, additional analysis will need to be completed. If that becomes the case, R3 recommends that the City conduct a formal Request for Information (RFI) process with its haulers. 3 A high diversion organic waste processing facility is defined as a facility that: (1) is in compliance with the reporting requirements; and (2) meets or exceeds an annual average mixed waste organic content recovery rate of 50 percent between January 1, 2022, and December 31, 2024, and 75 percent after January 1, 2025. CalRecycle calculates the annual average mixed organic content recovery rate by using the recovery efficiency data reported to the Recycling and Disposal Reporting System on a quarterly basis.
4 Please note that all monthly ratepayer cost figures presented in this report are based on information provided by the City and its haulers and are rounded up to the nearest $0.10 per month. #12..
- 321 -
Executive Summary
City of Modesto | Final Draft Report – SB 1383 Collection Program and Compliance Options 3 of 21 Table 1: Estimated Monthly Residential SB 1383 Collection Program Costs Option A: Two-Container
Program
Option B: Three-Container
Program (Bi-Weekly
Organics and Recycling)
Option C: Three-Container
(Weekly Organics and BiWeekly Recycling)
Option D: Three-Container
(Weekly Organics and
Recycling)
Low High Low High Low High Low High
$13.10 5 $13.10 $3.70 $4.60 $7.00 $8.80 $10.30 $13.00
Regarding the two-container option, we should note R3 was unable to reproduce and verify haulerprovided estimates. Consequently, we provided our own estimates of ratepayer monthly costs for this option which were based on GSW’s estimated cost of $118 per ton to process garbage through a high diversion organic waste processing, and an estimated 79,000 tons of garbage per year that would be subject to processing.

R3 has a greater degree of confidence in the range of costs for the three-container options, in that we were generally able to recreate and verify the reasonableness of the hauler-provided estimates of increased ratepayer costs. Our confidence in these figures is underscored by the fact that the difference between the low- and high-end of the ranges for the three-container options is narrow. If the City decides to move forward with the two-container option, it will need to ensure it has a clear and accurate understanding of – and control over – its ratepayer costs for use of a high diversion organic waste processing facility.

One possibility for the two-container option is for the City to direct non-yard trimmings organic waste (such as food scraps and paper) to the black garbage containers instead of the current practice wherein those materials are included in the green organic waste container. In this scenario, the City could potentially reduce the frequency of collection for the green container from weekly to bi-weekly, which could save an estimated $3.30 to $4.20 per month in monthly collection costs, resulting in lower monthly amounts than shown in Table 1.

Hauler SB 1383 Programs and Services
In addition to arranging for an SB 1383 compliance collection program, the City may also arrange for other programs and services that may be best provided by the City’s haulers. These programs and services are described in more detail in Section 3 of this report, and generally include conducting route audits, contamination audits, outreach, and education, and reporting to the City. The estimated range of monthly residential ratepayer costs for these services are shown in Tables 2 and 3, are based on haulerprovided figures, and do not vary by collection program option. R3 finds this range to be reasonable, and in keeping with similar outcomes in other communities.

Organic Waste Pre-Processing
The City’s haulers currently deliver “green container” organic waste to the City’s compost facility that contains contaminants (such as garbage) that are costly for the City to process. The presence of these contaminants in the organic waste is inimical to cost-effective and efficient composting at the facility, and consequently the City desires for its haulers to “pre-process” (i.e., remove contaminants from) the organic waste prior to delivery. The estimated monthly ratepayer costs for these services are shown in Tables 2 and 3, and are based on hauler-provided figures for this service, and do not vary by collection program option.

5 Low end estimates provided to City were as low as ~$2.02 per month. Estimates used here are based on hauler-provided estimates of $118 per ton for use of a High Diversion Organic Waste Processing Facility, as R3 found that the $2.02 per month would not generate sufficient revenue to cover the projected costs for this option at $118 per ton. #12..
- 322 -
Executive Summary
City of Modesto | Final Draft Report – SB 1383 Collection Program and Compliance Options 4 of 21 Bertolotti provided an estimate for organic waste pre-processing of $10 per ton to clean and remove contaminates from the organic waste stream prior to delivery to the compost facility, which is the basis of the low estimates shown in Tables 2 and 3. The high estimates shown in Tables 2 and 3 are based on monthly residential ratepayer costs provided by GSW. In R3’s professional opinion – and based on our understanding that the actual cost to remove contamination from organic waste may be as high as the $71 per ton estimated by GSW – the City should anticipate costs for the organic waste pre-processing service towards the higher estimate. We should also note that, separate from or in addition to the organic waste pre-processing service, the City should consider enforcing proper source separation6 of garbage from organics by waste generators (i.e., residents and businesses) as well as monitoring and enforcing contamination standards and delivery requirements with the haulers.

Compost Facility Improvements
The City’s compost facility is an asset to the City’s solid waste system but is underfunded and requires improvements to be compliant with State regulations. At a minimum to achieve compliance with regulations and operate effectively, the City needs to complete grading, paving and drainage improvements to the site, remove accumulated stockpiles, and upgrade key operating equipment. The estimated monthly ratepayer costs for these improvements are shown in Tables 2 and 3 are based on City-provided figures, and do not vary by collection program option. These costs are not expressed as a range because their annual amount can be set at the City’s discretion, depending on the specific improvements to be undertaken, and the amortization lifetime of one-time expenses. This monthly cost is based on an estimated $8.8 million in one-time costs (amortized over seven years) for a total annual cost of approximately $1.26 million. Additional details on these costs are provided in Section 5 of this report.

City SB 1383 Implementation
Although we recommend that the City engage its haulers in providing key SB 1383 programs and services as described above, the City will retain primary responsibility for implementation of – and compliance with – the SB 1383 regulations. To that end, the City should expect to expend approximately $370,000 per year to comply with the regulations. These obligations are described in more detail in Section 6 of this report, and generally include: costs for program staff and supervisors; costs for design, printing and mailing of outreach and education materials; costs for enforcement of the City’s updated municipal code with respect to SB 1383; and costs to comply with SB 1383’s organic waste product procurement requirements.

The estimated monthly ratepayer costs for these improvements are shown in Tables 2 and 3, are based on figures calculated by R3, and do not vary by collection program option. These costs are not expressed as a range because their annual amount can be set at the City’s discretion, depending on the specific choices that the City makes with respect to its SB 1383 implementation obligations.

Estimated Cost Impacts in Total
Tables 2 and 3, below, demonstrate the overall estimated range of monthly residential ratepayer cost increases that the City may expect due to complying with SB 1383 including collection, post-collection, and programmatic costs.

6 Note that “source separation” in this document refers to the act of a waste generator (i.e., residential or business solid waste customer) separating their waste into separate containers, whereas “sorting” refers to having a solid waste company mechanically and manually separate waste materials from each other after they have been collected from customers. #12..
- 323 -
Executive Summary
City of Modesto | Final Draft Report – SB 1383 Collection Program and Compliance Options 5 of 21 Table 2: Estimated Overall Monthly Residential Costs to Comply with SB 1383 Option A: TwoContainer Program
Option B: ThreeContainer Program
(Bi-Weekly
Organics and
Recycling)
Option C: ThreeContainer (Weekly
Organics and BiWeekly Recycling)
Option D: ThreeContainer (Weekly
Organics and
Recycling)
Low High Low High Low High Low High
SB 1383 Collection Program $13.10 $13.10 $3.70 $4.60 $7.00 $8.80 $10.30 $13.00 Hauler SB 1383 Programs and Services $0.55 $1.00 $0.55 $1.00 $0.55 $1.00 $0.55 $1.00 Organic Waste Pre-Processing $0.30 $4.60 $0.30 $4.60 $0.30 $4.60 $0.30 $4.60 Compost Facility Improvements $1.70 $1.70 $1.70 $1.70 $1.70 $1.70 $1.70 $1.70 City SB 1383 Implementation $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50 Total $16.15 $20.90 $6.75 $12.40 $10.05 $16.60 $13.35 $20.80 Table 3: Estimated Overall Monthly Commercial/Multi-family Costs to Comply with SB 1383 (Based on 4 cubic yards of garbage collected once weekly with a cost of $216.36 per month) Option A: TwoContainer Program
Option B: ThreeContainer Program
(Bi-Weekly
Organics and
Recycling)
Option C: ThreeContainer (Weekly
Organics and BiWeekly Recycling)
Option D: ThreeContainer (Weekly
Organics and
Recycling)
Low High Low High Low High Low High
SB 1383 Collection Program $75.70 $75.70 $21.40 $26.60 $40.50 $50.90 $59.60 $75.20 Hauler SB 1383 Programs and Services $3.20 $5.80 $3.20 $5.80 $3.20 $5.80 $3.20 $5.80 Organic Waste Pre-Processing $1.80 $26.60 $1.80 $26.60 $1.80 $26.60 $1.80 $26.60 Compost Facility Improvements $9.90 $9.90 $9.90 $9.90 $9.90 $9.90 $9.90 $9.90 City SB 1383 Implementation $2.90 $2.90 $2.90 $2.90 $2.90 $2.90 $2.90 $2.90 Total $93.50 $120.90 $39.20 $71.80 $58.30 $96.10 $77.40 $120.40 The City may consider phasing in SB 1383 programs (and the resultant need for rate increases) over time, in accordance with differences in implementation timeframes. For example, while the City anticipates proceeding to conduct SB 1383 implementation efforts as early as July 1, 2022, implementation of the selected SB 1383 collection program will likely not be feasible until July 1, 2023, which is due to the need to order trucks and containers, which typically take 6-9 months or more to acquire. Given the above, increases to rates may proceed in phased approach, which are demonstrated in Tables 4 and 5, on the following page.
#12..
- 324 -
Executive Summary
City of Modesto | Final Draft Report – SB 1383 Collection Program and Compliance Options 6 of 21 Table 4: Estimated Increases in Monthly Residential Rates by Option Over Time Option A: TwoContainer
Program
Option B: ThreeContainer
Program (BiWeekly Organics
and Recycling)
Option C: ThreeContainer
(Weekly
Organics and BiWeekly
Recycling)
Option D: ThreeContainer
(Weekly
Organics and
Recycling)
Low High Low High Low High Low High
Current Rate $37.45 $37.45 $37.45 $37.45 $37.45 $37.45 $37.45 $37.45 Percentage Rate Increase 8.1% 20.8% 8.1% 20.8% 8.1% 20.8% 8.1% 20.8% Estimated July 1, 2022 Rate $40.50 $45.25 $40.50 $45.25 $40.50 $45.25 $40.50 $45.25 Percentage Rate Increase 32.3% 29.0% 9.1% 10.2% 17.3% 19.4% 25.4% 28.7% Estimated January 1, 2023 Rate $53.60 $58.35 $44.20 $49.85 $47.50 $54.05 $50.80 $58.25 Table 5: Estimated Increases in Monthly Commercial/Multi-Family Rates by Option Over Time Option A: TwoContainer
Program
Option B: ThreeContainer
Program (BiWeekly Organics
and Recycling)
Option C: ThreeContainer
(Weekly
Organics and BiWeekly
Recycling)
Option D: ThreeContainer
(Weekly
Organics and
Recycling)
Low High Low High Low High Low High
Current Rate (4 CY / Once Weekly) $216.36 $216.36 $216.36 $216.36 $216.36 $216.36 $216.36 $216.36 Percentage Rate Increase 8.2% 20.9% 8.2% 20.9% 8.2% 20.9% 8.2% 20.9% Estimated July 1, 2022 Rate $234.16 $261.56 $234.16 $261.56 $234.16 $261.56 $234.16 $261.56 Percentage Rate Increase 32.3% 28.9% 9.1% 10.2% 17.3% 19.5% 25.5% 28.8% Estimated January 1, 2023 Rate $309.86 $337.26 $255.56 $288.16 $274.66 $312.46 $293.76 $336.76 Pros and Cons of SB 1383 Collection Program Options
As shown above, the estimated monthly residential ratepayer costs for the City to comply with SB 1383 range from $6.75 per month, to a high of $20.90 per month. While cost is an important factor for the City to consider as it makes decisions regarding its SB 1383 programs, there are other factors that should be considered.

Considerations identified by R3 and City staff include, but are not limited to:

Certainty of Compliance with SB 1383: While both the two- and three-container program can be compliant with the regulations, the two-container program presents a risk of non-compliance.

The two-container program requires a high diversion organic waste processing facility to recover required amounts of organic waste from the mixed waste stream, and it is not yet clear whether facilities accessible to the City will be able to meet those requirements. The three-container is not subject to the same requirements and is thus effectively compliant with SB 1383 upon implementation of the program.
#12..
- 325 -
Executive Summary
City of Modesto | Final Draft Report – SB 1383 Collection Program and Compliance Options 7 of 21 Certainty of Cost Estimates and Future Operating Costs: As described in the earlier in this report, the range of projected costs for the two-container option are wide ranging and are planning level estimates. The high diversion organic waste processing facility necessary for that program does not yet exist, meaning that cost estimates can change over time. Moreover, in R3’s experience, the per ton costs to operate such a program exceed even the high range estimates that were used for the purpose of this analysis (the $118 per ton figure provided by GSW was used, whereas R3 has seen per ton costs for two-container program above $170 per ton).

Conversely, the projected range of costs for the three-container options are less uncertain, and thus more likely to be representative of the actual costs to the City’s ratepayers for implementation of those programs.

New Services for Increased Costs: Under the two-container program, the City’s ratepayers will not see changes in their solid waste collection services, since the process of removing organic waste from the mixed waste stream will occur at the high diversion organic waste processing facility, which will be invisible to ratepayers. Thus, via the two-container option, ratepayers will pay more with no visible changes in their service offerings. With the three-container options, however, ratepayers will see an increase in their solid waste service volumes via the introduction of a third (blue) container for collection of recyclables.

Ease of Participation: The primary benefit of the two-container program is that it does not require any new source separation of solid waste materials by residents or businesses – ratepayers would simply continue to participate in their existing solid waste collection programs, without the need to change their behaviors. The three-container options would require that ratepayers source separate their recyclables materials into a third container, separated from their garbage and organic waste containers. Additionally, the City experiences 10%-20% contamination in its current program and the City should anticipate more contamination to occur initially with a three-container program. Educating and training ratepayers to participate in such source separation will take some effort, though we should note that participation in such a threecontainer program is the standard for most of the State’s population. R3 recommends the City the City add a clause to its franchise agreements that requires the haulers to be responsible if loads are delivered with contaminated waste.
#12..
- 326 -
Executive Summary
City of Modesto | Final Draft Report – SB 1383 Collection Program and Compliance Options 8 of 21 Table 6, below, summarizes these considerations by collection program option.

Table 6: Pros and Cons of SB 1383 Collection Program Options SB 1383 Collection
Program Pros Cons
Option A: TwoContainer Program
No new customer source separation needed.

Estimated costs could be reduced $3.30 to $4.20
per month by directing non-yard waste organics
to garbage (black) containers and switching to biweekly collection of green container organics.

SB 1383 compliance not guaranteed.

Future costs not certain.

No increase in collection volume.

Wide range of cost estimates.

Option B: ThreeContainer Program
(Bi-Weekly Organics
and Recycling)
SB 1383 compliant collection service.

Lowest cost three-container collection program
option. Can be initially conducted as a pilot
program and transitioned to weekly service if
needed.

Requires customer source separation of recyclables.

Recyclables collected only bi-weekly.

Reduction in organic waste collection service frequency.

No increase in collection volume. Bi-weekly collection of organic waste may require input from Local Enforcement
Agency and may affect Compost Facility operations.

Option C: ThreeContainer (Weekly
Organics and BiWeekly Recycling)
SB 1383 compliant collection service.

Increased collection service volume.

Current and future cost estimates more certain.

Requires customer source separation of recyclables.

Recyclables collected only bi-weekly.

Option D: ThreeContainer (Weekly
Organics and
Recycling)
SB 1383 compliant collection service.

Current and future cost estimates more certain.

Doubly increased service volume.

Requires customer source separation of recyclables.

High estimated cost.
#12..
- 327 -

2. SB 1383 COLLECTION PROGRAM OPTIONS
City of Modesto | Final Draft Report – SB 1383 Collection Program and Compliance Options 9 of 21 Background
While the City currently utilizes a two-container program for collection of garbage and organic waste, the City’s current collection program does not comply with the SB 1383 regulations because it does not utilize a high diversion organic waste processing facility for processing of garbage to recover organic waste. To comply with the regulations, the City must modify its collection service program.

This section analyses the City’s options to proceed with an SB 1383 compliant two- or three-container collection program. While the City could also consider a one-container program, information made available to R3 was not conducive to providing cost estimates for such a program. If the City opts to consider a one-container program, further research and analysis will need to be completed to establish estimated costs for that program.

Analysis
Two-Container Program
To comply with the SB 1383 regulations, the City may consider keeping its current two-container program but start directing its garbage (black) container material to a high diversion organic waste processing facility. Under this model, the City would keep the same two-container program it already has for collection but would incur new costs for the processing of the garbage to recovery organics and recyclables. Figure 1, below, shows the proposed flow of material for the two-container program.

Figure 1: Flow of City Material Under Two-Container Program #12..
- 328 -
SB 1383 Collection Program Options
City of Modesto | Final Draft Report – SB 1383 Collection Program and Compliance Options 10 of 21 To provide estimates of the monthly residential ratepayer costs to implement a two-container program, R3 requested information from the City’s haulers.

GSW provided an estimated cost of $2.02 per month to implement the program, as well as an estimated processing cost of $118 per ton.

Bertolotti was unable to provide estimates for the cost of implementing the two-container program, as it does not contemplate owning or operating a high diversion organic waste processing facility.

Consequently, this analysis operates on the assumption that Bertolotti would direct garbage to GSW if the City were to proceed with a two-container program.

As noted in the Executive Summary, R3 finds GSW’s estimate of $2.02 per residential ratepayer per month to be unusually low for a two-container program. Taken over the City’s nearly 60,000 residential ratepayers, GSW would generate approximately $1.4 million per year to implement the two-container program. However, based on the estimated processing cost of $118 and the nearly 79,000 of black container garbage generated in the City annually, we conclude that over $9.3 million in processing costs would be incurred to implement the two-container program, yielding a residential ratepayer cost of $13.10 per month (which is the figure we used for the purpose of this analysis).

If the City opts to proceed with a two-container program, we suggest that the City plan to conduct a more formal costing and contract negotiation process with GSW (and/or other potential high diversion organic waste processing facility operators) to narrow down and provide greater cost certainty for this option.

Three-Container Program
An alternative to a two-container program would be for the City to implement to a three-container program, which would involve distribution of recycling (blue) containers to all waste generators for separate collection of recyclable materials such as bottles, cans, plastic, and metals.

Under this scenario, the City would have one container for garbage (black), one container for sourceseparated organic waste (green) and one container for source separated recyclables (blue). The blue recycling container could be collected bi-weekly (every other week) or weekly, with the former being somewhat less expensive to implement than the latter. Likewise, the City could consider bi-weekly collection for the green organic waste container (a reduction in collection frequency from the current weekly collection service), which would also achieve reductions in costs as shown in the Executive Summary Tables for Option B.

If the City were to consider bi-weekly collection of the green organic waste container per Option B, the City would need to be aware of the fact that this would result in a decrease in weekly collection capacity for organic waste material, would potentially result in new odor and vector concerns associated with the reduction in collection frequency of the putrescible (e.g., food scraps) organic waste collected in green containers, and also may require review and approval from the Local Enforcement Agency (LEA) as it may affect the City’s operations at its compost facility.

As described in SB 1383, if the City implements to a three-container program, there would not be a need to deliver mixed waste to a high diversion organic waste processing facility. Instead, black container material would go to landfill, blue container material would go to a material recovery facility (MRF), and green container material would go to a source-separated organic waste facility (such as the City’s compost facility).

To implement this option, the City’s haulers would need to purchase additional containers (carts and bins), and additional collection trucks, and would also need hire drivers to provide collection of the new recycling containers. Figure 2, on the following page, shows the proposed flow of material for the threecontainer program. #12..
- 329 -
SB 1383 Collection Program Options
City of Modesto | Final Draft Report – SB 1383 Collection Program and Compliance Options 11 of 21 Figure 2: Flow of City Material Under Three-Container Program As with the two-container option, R3 requested information from the City’s haulers to implement a threecontainer option, for both bi-weekly and weekly collection of recycling.

GSW’s monthly residential ratepayer cost estimates were $6.93 per month for bi-weekly blue recycling collection, and $10.22 per month for weekly collection. These same amounts were used for assumptions regarding the potential change from the current weekly collection of green organic waste to bi-weekly collection.

Bertolotti’s estimates were similar, at $8.72 per month for bi-weekly collection, and $12.97 per month for weekly collection. These same amounts were used for assumptions regarding the potential change from the current weekly collection of green organic waste to bi-weekly collection.

R3 finds these cost estimates to be appropriate and reasonable, in that our own cost estimation efforts yielded similar results. Moreover, our level of confidence in these figures is greater because they are similar to outcomes we’ve found in other communities. We also must note that it is more straightforward for the City’s haulers to provide estimates for a three-container program, as that program is effectively a #12..
- 330 -
SB 1383 Collection Program Options
City of Modesto | Final Draft Report – SB 1383 Collection Program and Compliance Options 12 of 21 collection and hauling program, and not the operationally complex garbage processing program that a two-container program would entail.

Recommendations
Irrespective of whether the City chooses the two-container or three-container collection program, the City will need to negotiate and execute amendments to its agreements with the haulers. That effort should be paired with a formal cost estimation and proposal process so that the City will have a greater degree of cost certainty and control relating to either option.

As the City pursues such amendments, we also suggest that the City seek to secure other terms and conditions that will be important to the City’s implementation of and compliance with SB 1383.

These are summarized below for the City’s consideration:

Requirements to provide SB 1383 programs and services as per Section 3 of this report.

Requirements to pre-process (i.e., “clean”) organic waste to remove contaminants prior to deliver of organic waste to the City’s compost facility (see Section 4 of this report for additional details).

Requirements to deliver all organic waste collected in the City to the City’s compost facility (and thus resolve current issues regarding delivery of committed waste, which can result in under collection of revenues at the compost facility).

Requirements that any residual from the processing of garbage under a two-container program be directed to the Covanta waste to energy facility pursuant to the City’s contractual commitments, and with the cost of any and all residual disposal being covered by the inbound tipping fees to the high diversion organic waste processing facility (i.e., not paid for separately by the City).

Requirements for haulers to indemnify the City regarding compliance SB 1383 requirements, especially if employing a two-container collection program, for which there may be a greater risk of future non-compliance if high diversion organic waste processing facility standards are not met. #12..
- 331 -

3. SB 1383 PROGRAMS & SERVICES
City of Modesto | Final Draft Report – SB 1383 Collection Program and Compliance Options 13 of 21 Background
In addition to arranging for an SB 1383 compliance collection program, the City must also arrange for other programs and services that may be best provided by the City’s haulers. These programs and services are described in this section may be provided by the haulers or the City. The City is ultimately responsible for SB 1383 compliance unless it delegates some or all of these tasks to the haulers.

Analysis
The City may seek to have its haulers provide the following programs and services to support its SB 1383 compliance efforts. While the City could conduct these activities itself (and would need to if the haulers were not to provide these services) the best practice in the solid waste industry is for haulers to provide these services as they are “operations adjacent” and thus more cost-effective for haulers to provide.

Education and Outreach
The City (or its haulers) should annually provide education and outreach to all generators and targeted edible food recovery outreach to commercial edible food generators. Education and outreach should contain all contents required by SB 1383 and may be distributed through digital media (e.g., website and social media), printed collateral (e.g., annual service notices, newsletters, and bill inserts), and technical assistance (e.g., site visits, trainings, tools, and resources such as compost pails, indoor container labels, posters, multi-family move in/ out guides, etc.).

Outreach and educational materials provided by the haulers should also include the following:

Organic waste generator requirements to properly source separate materials in appropriate containers and provide labeling and education to employees and tenants.

Methods for prevention of organic waste, recycling organic waste on site and sending material to community composting and any other local requirements.

Methane reduction benefits of reducing the landfill disposal of organic waste and the methods of organic waste recovery the organic waste collection service uses.

How to recover organic waste and a list of approved haulers.

Public health and safety and environmental impacts associated with the landfill disposal of organic waste.

Edible food recovery program details.

Self-haul requirements (if applicable).

Compliance & Contamination Monitoring and Inspections
The City (or its haulers) will be responsible for key compliance monitoring, inspections, and contamination monitoring. The City or haulers should address waiver applications from generators and conduct site visits to confirm applicability for a waiver before forwarding the recommendation to the City for approval.

The annual compliance review should be completed by the haulers or the City. If delegated, the haulers should develop a contamination monitoring and inspection protocol and contamination tags to be approved by the City for implementation.

Additionally, the City or haulers should conduct contamination monitoring according to the procedures and provide follow-up outreach and education in response to observed violations. Beginning in 2024, the haulers should provide the City with supporting documentation to assess administrative citations as necessary.

Recordkeeping and Reporting
To assist the City with recordkeeping and reporting requirements, the City’s haulers should provide monthly and quarterly reports that include records of waiver assessments, contamination monitoring, and documentation of violations as needed.
#12..
- 332 -
Hauler SB 1383 Program and Services
City of Modesto | Final Draft Report – SB 1383 Collection Program and Compliance Options 14 of 21 The haulers should provide annual reports to the City that include collection service information; a request for approval to transport organic waste to selected facilities and documentation about the acceptance of compostable plastics and bags by selected processing facilities; generator compliance data; contamination reporting including non-collection occurrences; diversion and disposal tonnage data; outreach and education records; and procurement records.

To estimate the monthly residential ratepayer costs for the hauler-provided SB 1383 programs and services, R3 provided the haulers with the draft contract language provided in the section below and requested their estimates to implement the desired programs and services. GSW provided an estimated monthly residential ratepayer cost of $0.55 per month. Bertolotti provided an estimated cost of $228,000 annually, which translated to approximately $1.00 per residential ratepayer per month based on an assumed 20,000 residential ratepayers subscribed to services with Bertolotti.

Overall, R3 finds the estimated range of $0.55 to $1.00 per residential ratepayer per month to be appropriate to meet the needs for the hauler-provided SB 1383 programs and services. We recommend that the City further refine and finalize the specific costs via the process of negotiating and amending the agreements with the haulers, as described in Section 2 of this report.

Recommendations
R3 recommends that the City seek to include a version of the following terms and conditions in its agreements with the haulers if the City delegates some of all of these tasks to the haulers.

Route Reviews
General Requirements
At least once annually, beginning in 2022, Haulers shall conduct a Route Review for each Hauler Route.

The number of Containers to review per Hauler Route shall be calculated based on the number of garbage accounts provided service by a specific Hauler Route for one week. For example, “Route A” collects garbage from 250 accounts, 4 days per week for a total of 1,000 accounts per week; include a minimum of 25 accounts for Route Review of “Route A”.

For each Route Review of a Hauler Route, Haulers shall inspect at least the following minimum number of Containers but may inspect more if Haulers deems necessary; and shall inspect all containers placed for collection (including recycling containers, organic waste containers, and garbage containers). Each inspection shall involve lifting the Container lid and observing the contents but shall not require Haulers to disturb the contents or open any bags. Haulers may select the Containers to be inspected at random, or (if mutually agreed with City) by any other method not prohibited under the SB 1383 Regulations. For the avoidance of doubt, Haulers shall not be required to annually inspect every Container on a Hauler Route.

Haulers shall include the results of each Route Review in its next regularly scheduled report to City.

Route Size
(# garbage accounts/ week)
Minimum Number
of Containers
Less than 1,500 25
1,500-3,999 30
4,000-6,999 35
7,000 or more 40
Notice of Contamination
If Haulers observes Prohibited Container Contaminants in a Container during a Route Review comprising ten percent or more of observable container volume, Haulers shall notify the customer of the violation in writing. The written notice shall include information regarding the requirement to properly separate materials into the appropriate Containers. The notice may be left on the customer’s Container, gate, or door at the time the violation is discovered, and/or be mailed, e-mailed, electronically messaged, or delivered personally to the customer within 30 days. Haulers may dispose of the contents of any #12..
- 333 -
Hauler SB 1383 Program and Services
City of Modesto | Final Draft Report – SB 1383 Collection Program and Compliance Options 15 of 21 Container found to contain Prohibited Container Contaminants and may charge a contamination fee. The notice shall be provided in English and Spanish and must be approved by the City prior to use.

Compliance Reviews
General Requirement
At least once annually, beginning in 2022, Haulers shall review the records of its Commercial and MultiFamily customers in the City that are subscribed for at least two (2) cubic yards per week of combined Solid Waste, Organic Waste and Recyclable Materials service, to determine whether such customers are subscribed for Organic Waste collection service or have an applicable waiver. Haulers shall include the results of each compliance review in its next regularly scheduled report to City.

Site Visit Requirement
Based on Haulers’ review of the list of customers requiring site visit and Haulers shall conduct an annual site visit to each Commercial and Multi-Family customer in City that is determined to not be enrolled in 3- container organic waste collection service and not be eligible for a waiver based on the City determination, to encourage those businesses to sign up for SB 1383 compliant organic waste service and provide educational material about the law’s requirements.

Education and Outreach
Prior to (set date), and annually thereafter, Haulers shall provide the following to all its customers under the Agreement:
– Information on the customer’s requirements to properly separate materials in appropriate containers.
– Information on methods for: the prevention of Organic Waste generation, recycling Organic Waste on-site, sending Organic Waste to community composting, and any other local requirements regarding Organic Waste.
– Information regarding the methane reduction benefits of reducing the landfill disposal of Organic Waste, and the methods of Organic Waste recovery contemplated by the Agreement.
– Information regarding how to recover Organic Waste.
– Information related to the public health and safety and environmental impacts associated with the landfill disposal of Organic Waste.

The above information will be provided, at a minimum, through print and/or electronic media, and may also be provided through workshops, meetings and/or on-site visits.

Educational materials provided pursuant to the above shall be translated into Spanish.

Haulers shall provide educational materials to customers discovered to be out of compliance with the SB 1383 Regulations requirements and report a list of such customers as well as actions taken to the City on a periodic basis as required by City.

Waivers
Haulers shall be responsible for the distribution, collection, and evaluation of waiver applications as appropriate and provide the City a recommendation to accept or deny waiver requests. Haulers shall develop waiver application forms and shall provide them to the City for City approval prior to use. Haulers shall evaluate requests for exemption or waiver from the Act’s requirements and provide the City periodic recommendations and supporting documentation to deny or approve waivers, including a site visit and reevaluation at least every five years as required by the SB 1383 Regulations.

Reporting
Haulers shall provide the following information to City by August 1, 2022, and annually, by March 1 of the year following the reporting year:
#12..
- 334 -
Hauler SB 1383 Program and Services
City of Modesto | Final Draft Report – SB 1383 Collection Program and Compliance Options 16 of 21 For information provided by Haulers pursuant to Section 8 above:
– Copies of all such information (including flyers, brochures, newsletters, invoice messaging, website and social media postings, emails, and other electronic messages). – The date the information was disseminated, or the direct contact made. For website and social media postings, this shall be the date posted.
– To whom the information was disseminated, or the direct contact made. For mass distributions such as mailings or bill inserts, Haulers may provide the type and number of accounts receiving the information, rather than listing each recipient individually.

For Route Reviews and Compliance Reviews:
– The date the review was conducted.
– The name and title of each person conducting the review. – A list of the account names and addresses covered by the review. – For Route Reviews, a description of each Hauler Route reviewed, including Haulers’ route number and a description of the Hauler Route area.
– For Route Reviews, the results of such review (i.e., the addresses where any Prohibited Container Contaminants were found), and any photographs taken. – For Compliance Reviews, the results of such review (i.e., Haulers’ findings as to whether the customers reviewed are subscribed for Organic Waste collection service, have an applicable waiver, or neither), and any relevant evidence supporting such findings (e.g., account records).
– Copies of any educational materials issued pursuant to such reviews.

Documentation relating to observed Prohibited Container Contaminants, whether observed during Route Reviews or otherwise:
– Copies of the form of each notice issued to customers for Prohibited Container Contaminants, as well as, for each such form, a list of the customers to which such notice was issued, the date of issuance, the customer’s name and service address, and the reason for issuance (if the form is used for multiple reasons). This information will also be provided monthly to any other government entity approved by the City. – The number of times notices were issued to customers for Prohibited Container Contaminants.
– The number of Containers where the contents were disposed due to observation of Prohibited Container Contaminants.
– A description of Haulers’ process for determining the level of Container contamination under the Agreement.

Reports to City on customers discovered to be out of compliance with the SB 1383 Regulations, including a list of the customers, the type of violation, actions taken to educate those customers, and contact information for those customers. Such reports shall be provided periodically as required by City.

Other Compliance
Section 18988.1 and 18988.2
Haulers are responsible for delivery of all Solid Waste to properly permitted disposal facilities, transfer stations, recyclable materials processing facilities, organics processing facilities, and C&D processing facilities. The list may be amended from time to time by Haulers, subject to City approval of the amended list. Failure to comply with this provision will result in the levy of an Administrative Charge or Penalty as specified in the City’s municipal code and may result in Haulers being in default under this Agreement.

City hereby approves delivery of Organic Waste to such facility(ies). Haulers shall comply with its obligations under this Amendment and the obligations that by operation of law are imposed upon it directly pursuant to Chapter 12 of the SB 1383 Regulations. #12..
- 335 -

4. ORGANIC WASTE PRE-PROCESSING
City of Modesto | Final Draft Report – SB 1383 Collection Program and Compliance Options 17 of 21 Background
The City’s haulers currently deliver organic waste to the City’s compost facility that contains amounts of contaminants (such as garbage) that are problematic for the composting operation and costly for the City to process. The presence of these contaminants in the organic waste is inimical to cost-effective and efficient composting at the facility, and consequently the City desires for its haulers to “pre-process” (i.e., remove contaminants from) the organic waste prior to delivery. Title 14 of the CCR requires less than 1% contamination in compost for the facility to operate. While not technically a requirement of SB 1383, the organic waste pre-processing is a necessary improvement to the City’s overall solid waste program as the organic waste delivered to the City’s composting facility has an estimated contamination rate of 10-20%.

Analysis
To estimate the monthly residential ratepayer costs, R3 requested estimates from the City’s haulers to pre-process organic waste prior to delivery to the City’s compost facility. Bertolotti provided an estimated additional $10 per ton7, which, taken over the approximately 20,000 ratepayers subscribed to service with Bertolotti, amounts to approximately $0.30 per residential ratepayer per month. GSW provided both an estimated $71 per ton, as well as an estimated monthly residential ratepayer of $4.60 per ton.

As with the estimates for the two-container collection program option this wide range of estimated costs conveys uncertainty regarding the costs the City may anticipate incurring for this service. In R3’s professional opinion – and based on our understanding that the actual cost to remove contamination from organic waste may be as high as the $71 per ton estimated by GSW – the City should anticipate costs at the high-end of this cost range.

Recommendations
The City will need to continue to work with its haulers, residents, and ratepayers to ensure contamination is limited from the beginning. The City should amend its agreements with the haulers to require cleaner material to be brought the facility. This would result in a smoother operation, less time sorting, less disposal costs associated with disposing of overs, and a better, more marketable product.

7 Note that Bertolotti’s estimate provided to R3 was $20 per ton, but that in discussion with the company’s General Manager, it was determined that $10 per ton is already covered in the company’s rate compensation, so only an additional $10 per ton would be needed.
#12..
- 336 -

5. COMPOST FACILITY IMPROVEMENTS
City of Modesto | Final Draft Report – SB 1383 Collection Program and Compliance Options 18 of 21 Background
R3 reviewed the current status of the City’s municipal composting facility at 7001 Jennings Road in Modesto and provided a high-level options analysis and recommendations for improvements. The compost facility was established in 1997 to start composting as a way to comply with Assembly Bill (AB) 939 and process biosolids from the nearby wastewater treatment plant.

The facility was relocated to its current location in 2013. The facility uses windrow technology to process organic material. The material that is delivered to the facility primarily originates from the City’s solid waste haulers. In addition to the City’s solid waste haulers, the City’s Forestry Division and some public customers deliver organic material to the facility for processing into compost.

The facility has a maximum design capacity of 43,332 cubic yards at any one time and 500 tons per day limit for an annual total of 120,000 tons per year. The facility is permitted to accept organic waste, including residential and commercial food waste. The facility has never exceeded its maximum permitted annual tonnage but can reach its maximum daily tonnage limit during the fall and winter months.

Over the last three years, the average incoming annual tonnage was 54,464 tons per year. The facility processes the material and creates about 20,000 tons of finished compost annually.8 Compost is sold by the ton, cubic yard, and periodically via bags (bagging operation is currently down). A small portion of the material is also donated to faith-based organizations, non-profits, etc. Customers are largely agricultural, but the facility does get some members of the public buying compost as well.

R3 conducted a site visit of the facility with City staff on September 28, 2021. This section provides the findings from our review.

Analysis
The City is at a decision point with respect to the future operations of the facility. While the facility represents a valuable asset as it has existing permits that allow it to process organic waste and aid to complying with SB 1383, significant site improvements are required to meet permit requirements. Existing equipment is past its useful life and needs to be replaced. Moreover, an effective equipment maintenance schedule needs to be developed and maintained.

If the City desires to maintain municipal operation of the facility, the City needs to make substantial investments in equipment, staff, and the site itself. This is true whether the facility continues to accept organic waste or limits future operations to a clean green facility accepting only clean green material.

Having a private sector operator take over operations and responsibilities for upgrading the facility could be an attractive option for the City if the City does not want to continue operating the facility. If the City does not want to continue to operate the facility and does not receive any interest from private operators pursuant to an RFP or sale process, the City could close the facility and sell the equipment.

If the City continues to operate the facility, whether municipally or via private contract or sale, resources will be needed to bring the facility into compliance with its permits and continue to process organic waste.

To meet conditions of its permits, upgrades to the facility are required. Specifically, the working surfaces must be paved with storm drains, per State Water Resource Control Board. Ponding was observed on site due to the site not being paved, which is a violation of the State Water Resource Control Board and CalRecycle.

Additionally, per the facility’s permit with CalRecycle, the facility cannot accumulate more than 43,332 CY of material on-site. However, this amount has typically been exceeded. During the site visit, R3 observed large amount of unfinished compost on-site (staff estimates 90,000 CY). This is largely due to the facility’s screen being down and other equipment failures, that were not able to be resolved quickly, and which resulted in accumulation of unfinished compost. Even when processing equipment is in good working order, the facility has limitations on the hours they can operate the machinery due to the Air Pollution Control District as well as City limitations to approve overtime for staff, which further contributes to the accumulation of unfinished compost.

8 Differences in inbound and outbound tonnage are due to evaporation and water loss, removal of contamination, shrinkage, and other factors.
#12..
- 337 -
Compost Facility Improvements
City of Modesto | Final Draft Report – SB 1383 Collection Program and Compliance Options 19 of 21 R3 has prepared cost estimates for the minimum improvements necessary for regulatory compliance, shown in the Table 7, below. For the purposes of this analysis, we assume a seven (7) year annual amortization period for the funding of one-time costs.

Table 7: Estimated Cost of Compost Facility Improvements One-Time
Costs Annual Costs
Stockpile Removal $910,000 $130,000
Site Compliance Improvements (densiometric
table, grading paving, drainage, etc.) $5,005,000 $715,000 Site Improvements (equipment, grading, paving,
etc.) $2,506,000 $358,000
Dump Truck $147,000 $21,000
Loader $35,000 $245,000
Total $8,813,000 $1,259,000
Per this analysis, the City should expect annual costs of approximately $1.4 million annually (at a sevenyear cost recover for one-time costs). Taken over the City’s approximate 62,000 solid waste ratepayers (inclusive of residential and commercial ratepayers) this amounts to approximately $1.70 per month per ratepayer.

Recommendations
The City’s compost facility is a valuable asset, particularly with respect to compliance with SB 1383 regulations. Given the value of having its own permitted composting facility, R3 recommends the City remain the owner and operator of its compost facility. If the City decides to maintain operations, the City must commit to providing on-going support and funding to ensure the facility operates in compliance with regulations and is cost-effective.

Future Site Redesign
In addition to the upgrades that are necessary for the facility to continue to operate, the City should consider a site redesign in the future. The Air Pollution Control District has provided feedback to staff that the City will need to move away from windrows and either blanket the windrows or move to aerated static pile system. This is particularly important as more food waste enters the City’s site (due to SB 1383), to control vectors. Aerated static piles are likely the best choice for the facility as the facility would be able to process the same or more material on a smaller footprint, better process food scraps, and use less water.

In addition to aerated static piles, the City could explore alternative technologies for processing food waste including organic separators like an OREX or THOR. However, these technologies would be in addition to the facility’s necessary updates to its current system, not an alternative. Overall cost estimates for a redesign and redevelopment of the site are in the range of $25 million.

Should the City decide to invest in its facility, the City may wish to explore opportunities for expansion as well as the facility sits on additional space. Additional permitting would likely be required to expand. Staff indicated on the site visit they have received several inquiries from jurisdictions in the area to explore bringing their material to the facility. The City could explore additional permitting to increase the tons per day (currently 500) to accept material from other regional jurisdictions. The increase in tons and additional revenue from tip fees may be able to help offset the costs of the facility improvements and upgrades. #12..
- 338 -
Compost Facility Improvements
City of Modesto | Final Draft Report – SB 1383 Collection Program and Compliance Options 20 of 21 SB 1383 Compliance Requirements
As the owner and operator of the facility, the City is responsible for the facility meeting the requirements of SB 1383. SB 1383 requires all compost operations and facilities to implement best available control technologies and practices to minimize odors; nuisances; and human contact with dust, particulates, and pathogenic organisms. Facilities must conduct random load checks of feedstocks, additives, and amendments for contaminants.

To prevent cross-contamination, operators must manage compostable materials that have been treated for pathogens to prevent contact with materials that have not undergone pathogen treatment. SB 1383 requires facility operators to transport contamination and refuse that has been removed from compost materials off-site to an appropriate facility within seven days. To protect the health and safety of the public and employees, compost facility operators must implement access controls to prevent unauthorized entry; provide fire prevention, protection, and control measures, including an adequate supply of water and temperature monitoring of windrows and piles; utilize ventilation systems for enclosed facilities; and control and manage leachate.

Compost facility operators must also conduct performance measurements to determine the percentage of organic materials contained in the waste stream sent to landfill disposal by sampling waste daily over ten consecutive operating days per quarter. The performance measurements require sorting a two-hundredpound sample representative of material removed from pre-processing and screening activities. Each sample must be sorted into two categories, organic and non-organic material and each sorted material category must be weighed. The ratio of organic material and non-organic material in each daily sample must be multiplied by the total quantity of material sent to landfill disposal to determine the tons of organic waste disposed.

After these steps have been repeated for ten consecutive operating days, operators must sum the tons of organic waste disposed and divide that sum by the total tons of material sent to disposal to calculate the quarterly percentage of organic waste sent to disposal.

The regulations require facility operators to maintain detailed records including, but not limited to documentation of special occurrences, material quantities and protocols, public complaints received, injuries, health incidents and staff training.

Material quantity records include:

1. Quarterly percentage of organic waste contained in materials sent to landfill disposal;

2. Daily outgoing weights of materials sent for landfill disposal;

3. Daily outgoing weights of compost or other chipped/ground material produced;

4. Daily incoming weights by material type; and

5. Weights of compostable material sent offsite to any destination other than an authorized permitted solid waste facility or operation.

Operators must submit records for quarterly reports through CalRecycle’s Recycling and Disposal Reporting System.

The facility must also achieve the following standards per the SB 1383 regulations:

A compostable material handling facility or operation that, pursuant to Section 17867(a)(16), demonstrates that the percentage of organic waste in the materials sent to disposal is:

On and after January 1, 2022, less than 20 percent.

On and after January 1, 2024, less than 10 percent.
#12..
- 339 -

6. CITY SB 1383 IMPLEMENTATION
City of Modesto | Final Draft Report – SB 1383 Collection Program and Compliance Options 21 of 21 Background
SB 1383 compliance will require enhancing public education activities, implementation of monitoring and enforcement activities, as well as other changes, all of which will require new levels of effort and thus resources from the City.

This section provides and overview of the activities that the City will need to undertake – further details are provided in Attachment 1. These activities are in addition to any responsibilities outlined in Section 3 that the City does not delegate to the haulers. Initial planning level cost estimates associated with required City activities necessary to comply with SB 1383 are included as Attachment 2. Please note that these are initial cost estimates subject to change based on, among other things, how the City will address various requirements (e.g., manage requirements using in-house staff, require haulers to handle, hire third-party Haulers).

Analysis
The City will need complete the following compliance tasks in order to implement and achieve compliance with SB 1383. Annual costs for completion of these activities are estimated by R3 to be approximately $370,000 per year, inclusive of $55,000 in staff time for program management, $125,000 annually for outreach and education, and $190,000 annually for procurement. Taken over the City’s approximate 62,000 solid waste ratepayers (inclusive of residential and commercial ratepayers) this amounts to approximately $0.50 per month per ratepayer.

Policies and Agreements: The City will revise policies and agreements including the Municipal Code (already complete), franchise agreement, formal designations to other entities such as the County, and the City’s purchasing policy.

Collection Service: The City will oversee compliance of franchised solid waste collection haulers and self-haulers. As a commercial generator, the city offices and facilities are required to implement compliant waste diversion programs, properly source separate materials in accordance with the collection program and monitor containers for contamination.

Education and Outreach: The City will continue to develop education and outreach to educate the public about how to participate in collection service by properly source separating waste materials and minimizing contamination.

Edible Food Recovery: The City will develop and implement an edible food recovery program in partnership with the County. The City’s role will include annually identifying commercial edible food generators and determining their compliance status. The City will develop edible food recovery education and outreach materials which may be distributed through combination of the City, hauler, and County communication channels annually. The City will develop and implement an inspection protocol for commercial edible food generators. Depending upon the results of the County’s edible food recovery capacity study, the City will support capacity expansion as needed.

Compliance Monitoring, Inspections and Enforcement: Compliance monitoring, inspection and enforcement activities will be completed by the City and haulers annually. The City’s role will include approving and issuing waivers to generators and accepting and investigating written complaints about non-compliance. Beginning in 2024, enforcement will include issuing a Notice of Violation and may progress to issuing administrative citation for repetitive offenses. The City may designate provision of Notices of Violation to haulers, but the City must administer the associated penalties.

Procurement: The City will analyze opportunities to use or give away the recovered organic waste products. This may include hosting compost giveaways, enforcing the City’s water efficient landscape ordinance, or applying compost or mulch to city properties to meet annual procurement targets. All City departments will be required to purchase recycled-content paper products under the conditions set forth in the City’s purchasing policy. This may result in the need to update purchasing contracts or preferences with contracted vendors. City staff will maintain records of purchases including receipts and invoices.

Recordkeeping and Reporting: The City will need to develop or acquire a program to manage records and aggregate data for reporting to CalRecycle. #12..
- 340 -
City SB 1383 Implementation
City of Modesto | Final Draft Report – SB 1383 Collection Program and Compliance Options 22 of 21 Recommendations
Develop a Procurement Plan and Update Purchasing Policies: The City’s Environmentally Preferable Purchasing Policy may require updates to include the specific requirements outlined above. This may result in the need to update purchasing contracts or preferences with contracted vendors. The policy should also address compliant paper product purchases made with employee purchasing cards. The City must include all documents supporting compliance with this requirement in the Implementation Record including receipts and invoices.

Develop an Inspection, Contamination Monitoring and Enforcement Program: The City will need to develop protocols to comply with SB 1383 requirements for waivers, contamination monitoring, investigation of complaints, inspections, and enforcement. Additionally, City offices and facilities will need to comply with commercial generator requirements. – Waivers: It will be necessary to re-verify commercial generators with AB 1826 waivers for applicability for a SB 1383 waiver. The City may designate its haulers or other entities to assess waiver applicability through site visits and provide supporting documentation.

Waivers must be issued by the City; approval authority may not be designated. – Contamination Monitoring: R3 recommends the route review method of container contamination monitoring. Route review container audits may be completed by visual inspections or remote monitoring. Visual audits must inspect all three container streams across all hauler routes. Education and outreach must be provided in response to observation of contamination. Note that our analysis assumes that the City’s haulers will conduct the contamination monitoring activities, included in the Hauler SB 1383 Programs and Services cost estimates.
– Investigation of Complaints: The City may adapt an existing Customer Request Management (CRM) system to receive public complaints about violations of SB 1383 requirements. The City must also conduct inspections of complaints and provide follow-up about the resolution for said violations.
– Inspections: The City will inspect Tier One and Tier Two commercial edible food generators and food recovery agencies.
– Enforcement: The City’s Municipal Code updates will outline the enforcement and penalty protocols. Beginning January 1, 2024, the City must provide Notices of Violation indicating penalties will be issued for non-compliance. The City may designate provision of Notices of Violation to haulers. However, the City must administer the associated penalties. – City Waste Diversion: Each City office/facility must participate in recycling and organic waste collection service or self-haul source separated material to an appropriate solid waste facility or recovery activity. R3 recommends notifying City department representatives of this requirement and hosting a training session and/or providing written guidance on how to properly source separate waste materials.

Assess Recordkeeping Software: R3 recommends the City consider utilization of a recordkeeping software as described above. Use of software will streamline recordkeeping activities and reduce the staff time needed to prepare EARs. Implementation of a digital reporting system also presents an opportunity to reduce staff time needed to regularly collect and aggregate hauler reports. A list of the recordkeeping requirements for the Implementation Record is provided in Attachment 3. CalRecycle also recently published a Model Implementation Record Tool available for download as a Microsoft Excel workbook.

Reporting: Reporting and documentation to CalRecycle is a required action by jurisdictions, like the type of reporting standards jurisdictions report annually as a part of its Electronic Annual Report (EAR). All jurisdictions currently use the State’s EAR system to submit compliance reports for AB 341 and AB 1826; and SB 1383 reporting will utilize the same system. #12..
- 341 -

CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

February 28, 2022
Date: February 17, 2022
TO: Finance Committee
David Wright, Chair
Rosa Escutia-Braaton, Vice-Chair
Bill Zoslocki, Member
FROM: Joseph P. Lopez, City Manager
SUBJECT: Fiscal Year 2021-22 General Fund Update Report CONTACT: Stephan Christensen, Budget Manager, [email protected], 209-577-5390
DESCRIPTION:

Consider accepting the informational Fiscal Year 2021-22 General Fund Update Report and forwarding the report and the recommended budget adjustments to major General Fund revenues on to Council for acceptance and approval. (Funding Source: General Fund) STRATEGIC PLAN ELEMENT:

This item supports the City of Modesto 2020-2025 Strategic Plan focus on Governance and Service Delivery under Goal H: Achieve Financial Sustainability.

BACKGROUND:

The Budget Division presents periodic updates to the Finance Committee and Council on the status of the General Fund. As the City continues to navigate the ups and downs of the COVID19 pandemic, the City Council, City Manager and Budget Division felt it was prudent to bring forward a status update to Council on the City’s General Fund. The purpose of this update is to summarize financial results and present any recommend adjustments to the operating revenue and expense budgets as needed as well as highlight any issues, concerns or items of interest for the City Council and the citizens of Modesto.

DISCUSSION:

The attached General Fund Update report for the City of Modesto’s General Fund focuses on the performances of the General Fund major revenue sources well as the various expenditures across all of its operating departments. The revenue data gathered through January 31, 2022 begins to show important trends in the revenue and expenditure data which has provided important insight into the projections that are described within the report for the General Fund’s fiscal year-end.

To date, the General Fund has receipted 47% of the budgeted revenues through January 31, 2022. This is not uncommon in terms of total revenues received at this point in the fiscal year #13..
- 342 -
Finance Committee, February 28, 2022
FY 2021-22 General Fund Update Report

as some revenues lag behind in terms of when they are receipted. Sales Tax falls in this category as it is receipted two months in arrears, meaning that the revenue received for the month of January will actually be for sales tax receipts for the month of November. This lag time contributes to some of the delay in revenues being receipted in terms of the overall percentages.

Overall expenditures show that the City departments are slightly ahead of their expenditure budgets when compared to the total amount expended as a percentage. The General Fund has expended 61% of the total expense budget. This is slightly higher than the expected amount of 58% for this point-in-time in the fiscal year. However, when looking into the expenditures a little more deeply there is more to the data. Public safety overtime expenditures have been higher than anticipated due to the COVID-19 pandemic. Budgeted overtime across both public safety departments was $6.3 million and actual expenditures through January 31, 2022 are $6.7 million. The pandemic continues to have a heavy impact on public safety departmental expenditures related to staff time.

FISCAL IMPACT:

Within this item there are multiple recommendations from staff to increase major General Fund revenue categories in line with the estimated projections for the fiscal year-end. The revenue increases/decreases that are recommended are as follows:

Category Current Budget
Recommended Increase/
Decrease Revised Amount
Property Tax - VLF Swap $ 19,374,039 $ 32,000 $ 19,406,039 Sales Tax $ 33,090,991 $ 4,100,562 $ 37,191,553
Utility User Tax $ 20,510,000 $ 200,000 $ 20,710,000
Business License/Mill Tax $ 13,401,800 $ 150,000 $ 13,551,800 Motor Vehicle Fees $ 330,000 $ 34,000 $ 364,000
First Responder Insurance Recovery Program Revenue $ 1,610,471 $ (901,864) $ 708,607 Grand Totals $ 88,317,301 $ 3,614,698 $ 91,931,999
The total recommended increases/decreases across the major General Fund revenues is $3,614,698 for Fiscal Year 2021-22 and are explained in more detail in the General Fund Update Report.

No increases/decreases are being recommended for General Fund expenditure budgets at this time.

Approved by:

Joseph P. Lopez, City Manager
Attachment:

1. Fiscal Year 2021-22 General Fund Update Report
#13..
- 343 -
FISCAL YEAR 2021-22
GENERAL FUND UPDATE:

As the City begins to emerge from the economic impacts felt from the COVID-19 pandemic that continues to impact its citizens health and wellbeing, the Budget Division through the City Manager’s Office felt it was prudent to provide a General Fund update concerning the health of the City’s General Fund as well as any adjustments to its revenues and/or expenditures. Information contained within this report seeks to provide data on the performance of the General Fund as the revenues are collected and the expenditures continue on through January of the current fiscal year.

Please note that the expenditures and revenues reported herein are through January 31, 2022 and may not reflect final figures for the month of January.

Created by the
Budget Division
#13..
- 344 -
Fiscal Year 2021-22 General Fund Mid-Year Update
1 | P a g e
General Fund Revenues
(Overview)
#13..
- 345 -
Fiscal Year 2021-22 General Fund Mid-Year Update
2 | P a g e
eneral Fund revenues are classified into three categories: tax revenues, fee revenues, and other departmental revenues. Through January 31st, 2022, the total General Fund revenues receipted are $73.3 million or approximately 47% of the total budgeted revenues for Fiscal Year 2021-22. This is representative of the normal rate of receipts at this time of the year for the General Fund. The main reason for the lag in terms of the percent received at this point in the fiscal year is due to the two months that the receipt of sales tax runs behind in terms of receipt of revenues as well as the timing of some of the large payments related to Franchise Fees and the sharper increase in Construction revenues that is typically seen in the spring months.

The revenues received to date are spread across all three major revenue types and are broken down further in the chart below:

Category Current Budget Actuals (as of Jan 31, 2022) Amount Outstanding % Received to Date Tax Revenues:

Property Tax - Property $ 19,850,000 $ 10,851,561 $ 8,998,439 55% Property Tax - VLF Swap $ 19,374,039 $ 9,703,251 $ 9,670,788 50% Sales Tax $ 33,090,991 $ 16,549,982 $ 16,541,009 50%
Utility Users Tax $ 20,510,000 $ 9,771,133 $ 10,738,867 48% Transient Occupancy Tax $ 3,266,575 $ 1,764,732 $ 1,501,843 54% Business License/Mill Tax $ 13,401,800 $ 6,977,489 $ 6,424,311 52% Cannabis Tax $ 5,200,000 $ 2,328,707 $ 2,871,293 45%
Total Tax Revenues $ 114,693,405 $ 57,946,855 $ 56,746,550 51% Fee Revenues:

Franchise Fees $ 4,852,284 $ 1,243,762 $ 3,608,522 26%
Motor Vehicle Fees $ 330,000 $ 364,135 $ (34,135) 110%
Construction Revenues $ 2,368,396 $ 1,468,078 $ 900,318 62% Total Fee Revenues $ 7,550,680 $ 3,075,975 $ 4,474,705 41% Other Revenues:

Departmental Revenues $ 31,994,387 $ 12,255,486 $ 19,738,901 38% Transfers In $ 628,640 $ - $ 628,640 0%
Total Other Revenues $ 32,623,027 $ 12,255,486 $ 20,367,541 38% Total Revenues $ 154,867,112 $ 73,278,316 $ 81,588,796 47% *Please note that Departmental Revenues category includes an amount of $5.1M in revenue for the Oakdale Fire Contract and an amount of $5.6M in revenue for the Ceres Fire Contract which is used to pay for offsetting expenditures.

Tax Revenues
Tax revenues represent 74% of the total General Fund operating revenue budget at $114.7 million of the total $154.9 million revenue operating budget for Fiscal Year 2021-22. As of January 31, 2022, $57.9 million of the budgeted $114.7 million has been received to date. This represents approximately 51% of the tax revenue budget being received. This is typical for this point-in-time for one main reason. There is a lag in the receipt of sales tax revenues of two months. This means that the sales tax received for the month of January is really for receipts for the month of November, two months prior.

Fee Revenues
Fee Revenues represent 5% of the total General Fund operating revenue budget at $7.6 million of the total $154.9 million revenue operating budget for Fiscal Year 2021-22. Many of the fee revenues are generated from Franchise Fees which are collected as “rent” paid for the use of public right of way. These are negotiated costs to allow utility companies (telecommunications, natural gas, garbage, etc.) to access structures like transmission towers, sewage systems, and roads. The G
#13..
- 346 -
Fiscal Year 2021-22 General Fund Mid-Year Update
3 | P a g e
City collects approximately $4.9 million in franchise fees annually. Through January 31, 2022, $1.2 million has been collected in this revenue category (26% of the budgeted amount). The reason for this low percentage collection at this time is that there are some larger Franchise Fee payments that are still outstanding from areas related to the Cable Franchise Fees (which come in February, May, and June) and the PG&E Franchise Fee (which is receipted in April).

Construction Revenues
Construction revenues are a sub-category of Fee Revenues and include all revenues collected in the Building Safety Division and the Planning Division in the Community and Economic Development Department (CEDD). These revenues represent approximately 1.5% of the total budgeted General Fund operating revenues for Fiscal Year 2021-22. They are budgeted at $2.4 million as of January 31, 2022.

Construction revenues received through January 31, 2022, are at approximately 62% of the budgeted amount. This is trending up from the amounts collected in the previous fiscal year. This is positive news as increased construction revenues mean that there is improvement in the building industry in the area. This is especially important as the City begins to emerge out of the economic depths of the COVID-19 pandemic.

Other Revenues
Other Revenues represent 21% of the total General Fund operating revenue budget at $32.6 million of the total $154.9 million revenue operating budget for Fiscal Year 2021-22.

Other revenues include any revenue source that is received by departments and is not included in the tax or fee revenues categories as well as transfers into the General Fund from other funds.

These revenues are accounted for under the generating department and include a wide range of revenue sources such as direct charge revenue (all departments), parking fines (Police), league and facility rental fees (Parks, Recreation & Neighborhoods), and the McHenry Tax Sharing Agreement revenues (Non-Departmental).
#13..
- 347 -
Fiscal Year 2021-22 General Fund Mid-Year Update
4 | P a g e
General Fund Revenues
(Analysis)
#13..
- 348 -
Fiscal Year 2021-22 General Fund Mid-Year Update
5 | P a g e
Property Tax Revenues Analysis
As of January 31, 2022, the first payment has been received in one of the sub-categories that makes up the property tax revenues, Property Tax – Property. The first payment for the second subcategory, Property Tax – Vehicle License Fee (VLF) Swap has also been received. These two payments are significant indicators of how the property tax revenues for the entire fiscal year will finish for the year. With both of these payments receipted a clearer picture can start to be made for this major tax revenue category for Fiscal Year 2021-22.

Property Tax – Property
In Fiscal Year 2021-22, the first installment of property tax was received in January in the amount of $9.5 million. This first payment is receipted under current year secured property taxes and is the bulk of the property tax revenue that is received. Other revenues that fall under Property Tax – Property include, current year unsecured, delinquent, delinquent unsecured, supplemental roll, and Redevelopment Property Tax Trust Fund (RPTTF) allocation. These revenue accounts make up the total amounts that sum up to the total Property Tax – Property amount received by the City.

With the first payment received, estimates for fiscal year-end 2021-22 show that the amounts for this revenue category are on track. Year-end estimates show that a total of $19.8 million is expected to be received based off the $9.5 million first payment which is exactly where the revenue is budgeted. With this in mind, this revenue category will continue to be monitored as there could be additional supplement roll and RPTTF revenue that could slightly increase the overall amount by fiscal year-end.

Staff is recommending no change to this category of revenue for Fiscal Year 2021-22.

Property Tax – VLF Swap
Property Tax – VLF Swap is the second portion of the revenues that makes up the total Property Tax category for the City. This revenue source came into effect with the passing of the State of California Budget in 2004 by then Governor Schwarzenegger. The budget included a swap of city and county vehicle license fee revenues for additional property tax share. These additional VLF backfill funds, which equate to a dollar-for-dollar like amount of property taxes, also increase annually in proportion to the growth in assessed valuation in the local jurisdictions.

The first Property Tax – VLF Swap payment for the City has been received in the amount of $9.8 million. The amount received in the first payment, is usually around 50% of the total payment that will be received for the year. With the Property Tax – Property revenue coming in as estimated, staff does not have any concern that this revenue source will be short of what is budgeted for the fiscal year and it could be slightly higher.

Staff is recommending a small increase to this category of revenue in the amount of $32,000 for Fiscal Year 2021-22.
#13..
- 349 -
Fiscal Year 2021-22 General Fund Mid-Year Update
6 | P a g e
Property Tax Charts:

Annual Property Tax
Annual Property Tax – Property
#13..
- 350 -
Fiscal Year 2021-22 General Fund Mid-Year Update
7 | P a g e
Annual Property Tax – VLF – Swap
The preceding property tax charts show the trends that have been occurring since fiscal year 2015.

There has been a steady growth in both the Property Tax and VLF swap categories of this revenue source. At this point, the growth is expected to continue as the housing market remains strong.

This revenue source will continue to be monitored as there is still an outstanding unknown as to what the long-term effect of the pandemic will be on the housing market in terms of possible foreclosures as well as any future rise to mortgage rates with looming talks of rising inflation. #13..
- 351 -
Fiscal Year 2021-22 General Fund Mid-Year Update
8 | P a g e
Sales Tax Revenues Analysis
As of January 31, 2022, Sales Tax revenues received to date are approximately $16.5 million. This represents 50% of the total Sales Tax budgeted for the fiscal year ($33.1 million). Sales Tax is received by the City on a monthly basis but is receipted with a two-month lag time, meaning that the receipts received in any particular month are for the actual sales tax receipts two months prior.

For example, sales tax revenues accounted for in the month of January are for actual sales tax receipts made in the month of November (two months prior). This continuous two-month lag time is something that is closely monitored by Budget Division staff as estimates are created for fiscal year-end.

Sales Tax categories that have been increasing in the last few quarters in Fiscal Year 2021-22 have been in the industries of general retail and transportation, which includes service stations. Certain sub-categories within the larger areas of industries that have seen growth in the third quarter of 2021 (covering the months of July through September). These areas included apparel stores, restaurants, and service stations.

Countywide Pool Sales Tax
The City continues to receive a significant portion of the County Pool related to the “origin sourcing” portion of sales tax. “Origin sourcing” is a sales tax practice under which sales tax for purchases of goods that are shipped to purchasers are generally sourced to the business location of the retailer where the sale originates.

Under current California Board of Equalization (BOE) regulations, a substantial portion of local use tax collections are allocated through a countywide pool to local jurisdictions, like Modesto, where the purchased property is put to its first functional use. Under the pool system, the tax is reported by the taxpayer to the countywide pool of use and then distributed to each jurisdiction in that county on a pro-rata share of taxable sales. If there is a situation where a county of use cannot be determined, then the allocation goes to the state pool for pro-rata distribution on a statewide basis.

The City of Modesto consistently receives anywhere between 32% to 38% of the allocation of the countywide pool described above. This share of sales tax can represent anywhere between $950 thousand to $1.6 million on a quarterly basis. These amounts contribute to the total sales tax figures that are shown in the annual figures reported by the City.

At this time current year-end projections are showing stronger sales tax figures than what was initially budgeted for the fiscal year when the budget was adopted. When the initial estimates for the current year were made, they were done with much uncertainty about the impacts of the COVID-19 pandemic still looming over the economy. The City has, fortunately, seen a much quicker recovery from the pandemic economically in terms of sales tax revenues and this has caused a revised estimate to be made for Fiscal Year 2021-22. Current fiscal year-end estimates are projecting strong holiday sales tax figures bolstered by online sales, along with a quicker recovery from the COVID-19 pandemic in the sales tax category, that will bring our total fiscal year-end figures up to $37.2 million. This is an increase of approximately $4.1 million over the current #13..
- 352 -
Fiscal Year 2021-22 General Fund Mid-Year Update
9 | P a g e
budget amount. While this may seem like a huge increase in sales tax and a windfall to the City, this adjustment is merely a correction to account for the actuals that were received in Fiscal Year 2020- 21 of $35.7 million and forecasting from those amounts. This projected increase is only $1.5 million over the actuals received in the prior year or a 4% increase.

Staff is recommending an increase of $4,100,562 for this category for Fiscal Year 2021-22.

Sales Tax Charts
Annual Sales Tax Chart
Quarterly Sales Tax Chart
#13..
- 353 -
Fiscal Year 2021-22 General Fund Mid-Year Update
10 | P a g e
Cannabis Tax Revenue Analysis
Cannabis Tax is the newest form of tax revenue that the City has been receiving. As this is a somewhat new source of revenue there are still some nuances being learned as to the seasonality/trends of how the revenue comes in on a monthly basis throughout the fiscal year.

When the revenue began to be receipted back in the latter half of fiscal year 2018-19, it started slowly as there were not the full amount of Council approved dispensaries up and running at the time. Over the next six to eight months the dispensaries began to gain steam and permitted dispensaries became fully operational. Revenues began to increase steadily over the next fiscal year and a half and have steadily risen to a consistent $400k+ per month in receipted revenues per month to the City.

The City currently has 8 permitted dispensaries up and running. These businesses are generating a significant amount of cannabis tax revenue for the City. Through the pandemic, this revenue category has continued to not be impacted and show steady growth. Going into the budget process for Fiscal Year 2021-22, cannabis tax revenues were budgeted with conservative growth estimates as we continue to get another year of revenues in to help build future estimates. The monthly receipts continue to be strong through the fiscal year and revenue estimates for fiscal year-end are on track with the adopted budget amount.

As of January 31, 2022, $2.3 million in Cannabis Tax revenue have been received for Fiscal Year 2021-22. This is approximately 45% of the budgeted amount of $5.2 million. Currently, the Budget Division is not recommending any increase in this revenue category. The revenues have experienced some downward trends in the months of September through November but have shown an uptick in December. It will continue to be monitored with focus on the months of March/April when there tends to be an increase in the revenues for Cannabis Tax.

Staff is recommending no change to this category of revenue for Fiscal Year 2021-22. #13..
- 354 -
Fiscal Year 2021-22 General Fund Mid-Year Update
11 | P a g e
Cannabis Tax Revenue Charts
Monthly Cannabis Tax Revenues
Annual Cannabis Tax Revenues
The preceding charts show the trends for Cannabis Tax revenues and the strong growth annually that has been seen. It is expected that Fiscal year 2021-22 will continue to show some growth over the prior fiscal year but we continue to watch this revenue as there has been some dips in the monthly revenue especially in the winter months.
#13..
- 355 -
Fiscal Year 2021-22 General Fund Mid-Year Update
12 | P a g e
Other Tax Revenues
Two additional areas that are seeing some positive trends in terms of actuals received to date are Utility User Tax (UUT) and Business License/Mill Tax. UUT is coming in at a rate that was seen in the previous fiscal year. To date, revenues received for UUT are at 48% of the total budgeted amount of $20.5 million. Revenues are estimated to be on par with the actuals received from the prior fiscal year which requires an increase to this revenue category in the amount of $200,000.

Business License/Mill Tax is tracking at a similar pace to the previous fiscal year as well. To date 52% of the total budgeted revenue of $13.4 million. With Business License/Mill Tax larger total payments are typically received in the months of February and January. January in Fiscal Year 2021-22 had a larger amount than what had been seen in prior fiscal year and this revenue source will continue to be watched closely as the February final amounts are receipted. Due to the somewhat uncertainty of February’s receipts and any possible correction for the larger receipts in January combined with the amount of actuals received to date, staff is recommending only increasing this revenue category to prior year actual levels. This will increase the revenue for Business License/Mill Tax by $150,000 for Fiscal Year 2021-22.

Staff is recommending an increase to the budgeted revenues for Utility User Tax in the amount of $200,000 and for Business License/Mill Tax in the amount of $150,000 for Fiscal Year 2021-22.

Departmental Revenue Analysis
Departmental revenues are one area where the Budget Division is recommending a decrease in budgeted revenue. As part of the Fiscal Year 2021-22 Adopted Budget, a First Responder Insurance Recovery Program was developed. The estimated amount of revenue from this program was anticipated to be approximately $1.6 million with an implementation date of September. The start of the collection of this fee from insurance companies related to Fire Department first response has been delayed and is not estimated to go into effect until March. With this in mind, the Budget Division is recommending that the amount of revenue for this program in the Fire Department be reduced to accurately reflect anticipated revenues with a March time frame for implementation.

Staff is recommending a decrease in departmental revenues in the amount of $901,864 for Fiscal Year 2021-22 in the Fire Department.

Summary of Recommended Revenue Changes
Category Current Budget
Recommended Increase/
Decrease Revised Amount
Property Tax - VLF Swap $ 19,374,039 $ 32,000 $ 19,406,039 Sales Tax $ 33,090,991 $ 4,100,562 $ 37,191,553
Utility User Tax $ 20,510,000 $ 200,000 $ 20,710,000
Business License/Mill Tax $ 13,401,800 $ 150,000 $ 13,551,800 Motor Vehicle Fees $ 330,000 $ 34,000 $ 364,000
First Responder Insurance Recovery Program Revenue $ 1,610,471 $ (901,864) $ 708,607 Grand Totals $ 88,317,301 $ 3,614,698 $ 91,931,999
#13..
- 356 -
Fiscal Year 2021-22 General Fund Mid-Year Update
13 | P a g e
General Fund Expenditures
(Analysis)
#13..
- 357 -
Fiscal Year 2021-22 General Fund Mid-Year Update
14 | P a g e
eneral Fund expenditures make up the total budgets from which departments pay for costs related to one of four expenditure categories. These categories include salary and benefit costs, internal service fund costs, discretionary costs, and transfers out to other funds. In the General Fund, there are 12 Operating Departments and one category for Transfers Out of the General Fund to other funds. The 12 Operating Departments make up a total General Fund operating expenditure budget of $159.4 million with the Transfers Out having a budget of $12.2 million. Including the variance rate of a credit of $5.8M, the total current General Fund operating expenditure budget in Fiscal Year 2021-22 is $165.8 million.

The table below shows the current budget and expenditures through January 31, 2022.

General Fund Department Expenditures
Department Current Budget Actuals (as of Jan 31, 2022) % of Budget Expended Police Department $ (72,206,723) $ (44,196,152) 61%
Fire Department $ (41,382,298) $ (28,844,251) 70%
Oakdale Fire Contract Expense $ (4,703,607) $ (3,022,653) 64% Ceres Fire Contract Expense $ (5,631,990) $ (2,767,530) 49% Parks, Recreation, and Neighborhoods $ (14,413,308) $ (7,555,528) 52% Community and Economic Development $ (6,753,103) $ (3,639,964) 54% City Council $ (472,902) $ (273,574) 58%
City Manager's Office $ (2,818,428) $ (1,795,602) 64%
Human Resources $ (1,750,153) $ (1,080,335) 62%
City Attorney's Office $ (1,889,736) $ (786,354) 42%
City Clerk's Office $ (588,202) $ (308,435) 52%
Office of the City Auditor $ (364,138) $ (74,889) 21%
Finance Department $ (5,940,360) $ (3,394,705) 57%
Non-Departmental $ (453,400) $ (123,986) 27%
Total Departmental Expenses $ (159,368,346) $ (97,863,958) 61% Transfers Out $ (12,219,049) $ (3,757,514) 31%
Variance Rate (5%) $ 5,785,126 $ - 0%
Total Department Expenses $ (165,802,269) $ (101,621,472) 61% At the point in time that the expenditure data was collected, one could expect an estimated expenditure rate of approximately 58% (7 months elapsed out of the fiscal year). The chart shows that the overall General Fund expenditures are slightly above this rate at 61% expended. Like last fiscal year, we are seeing an increased amount of costs coming from Public Safety related to overtime coverage. This is in large part caused by the pandemic and the need to cover for those affected by exposure. The other cost that is accelerating the rate of expenditure at this point in the year is a transfer out to the Employee Benefits Fund for the pension trust funding. This amount has been transferred out from the General Fund in the amount of $2 million and was approved by Council to be funded with General Fund carryover from the previous Fiscal Year 2020-21.

G
#13..
- 358 -
Fiscal Year 2021-22 General Fund Mid-Year Update
15 | P a g e
Below is a table that shows the breakdown of the expenditures from each department by appropriation unit category. As reminder the breakdown of expenditure categories is as follows:
 Appr Unit A – Salaries and Benefits
 Appr Unit AA – Intrafund Labor
 Appr Unit B – Internal Service Fund Charges
 Appr Unit C – Discretionary Charges
 Appr Unit C – Transfers Out
Department Current Budget Actuals (as of Jan 31, 2022) Amount Available % Expended City Attorney's Office
Salaries and Benefits (Appr Unit A) $ 605,386 $ 363,367 $ 242,019 60% ISF Charges (Appr Unit B) $ 139,352 $ 81,670 $ 57,682 59% Discretionary Charges (Appr Unit C) $ 1,144,998 $ 341,317 $ 803,104 30% City Attorney's Office Total $ 1,889,736 $ 786,354 $ 1,102,805 42% City Clerk's Office
Salaries and Benefits (Appr Unit A) $ 431,234 $ 222,398 $ 208,836 52% ISF Charges (Appr Unit B) $ 54,250 $ 31,727 $ 22,523 58% Discretionary Charges (Appr Unit C) $ 102,718 $ 54,310 $ 47,349 53% City Clerk's Office Total $ 588,202 $ 308,435 $ 278,708 52% City Council
Salaries and Benefits (Appr Unit A) $ 329,427 $ 194,658 $ 134,769 59% ISF Charges (Appr Unit B) $ 109,713 $ 64,172 $ 45,541 58% Discretionary Charges (Appr Unit C) $ 36,100 $ 14,744 $ 21,328 41% City Council Total $ 475,240 $ 273,574 $ 201,638 58%
City Manager's Office
Salaries and Benefits (Appr Unit A) $ 2,336,530 $ 1,410,962 $ 925,568 60% ISF Charges (Appr Unit B) $ 201,888 $ 118,082 $ 83,806 58% Discretionary Charges (Appr Unit C) $ 280,010 $ 266,559 $ (15,232) 95% City Manager's Office Total $ 2,818,428 $ 1,795,602 $ 994,143 64% Community & Economic Development
Salaries and Benefits (Appr Unit A) $ 5,219,622 $ 2,598,643 $ 2,620,979 50% Instrafund Labor (Appr Unit AA) $ (212,732) $ (135,918) $ (76,814) 64% ISF Charges (Appr Unit B) $ 890,933 $ 520,601 $ 370,332 58% Discretionary Charges (Appr Unit C) $ 855,280 $ 656,638 $ 184,901 77% Community & Economic Development Total $ 6,753,103 $ 3,639,964 $ 3,099,398 54% Finance Department
Salaries and Benefits (Appr Unit A) $ 4,175,444 $ 2,427,156 $ 1,748,288 58% Instrafund Labor (Appr Unit AA) $ (51,789) $ (29,973) $ (21,816) 58% ISF Charges (Appr Unit B) $ 495,714 $ 289,858 $ 205,856 58% Discretionary Charges (Appr Unit C) $ 1,320,991 $ 707,664 $ 570,328 54% Finance Department Total $ 5,940,360 $ 3,394,705 $ 2,502,655 57% Fire Department
Salaries and Benefits (Appr Unit A) $ 35,411,463 $ 25,347,488 $ 10,063,976 72% Instrafund Labor (Appr Unit AA) $ (4,472) $ - $ (4,472) 0% ISF Charges (Appr Unit B) $ 1,425,835 $ 831,933 $ 593,902 58% Discretionary Charges (Appr Unit C) $ 4,345,815 $ 2,664,831 $ 1,186,627 61% Transfers Out $ 203,657 $ - $ 203,657 0%
Fire Department Total $ 41,382,298 $ 28,844,251 $ 12,043,689 70% #13..
- 359 -
Fiscal Year 2021-22 General Fund Mid-Year Update
16 | P a g e
Fire Department - Ceres
Salaries and Benefits (Appr Unit A) $ 5,240,115 $ 2,677,679 $ 2,562,436 51% ISF Charges (Appr Unit B) $ 50,416 $ - $ 50,416 0%
Discretionary Charges (Appr Unit C) $ 341,459 $ 89,851 $ 222,239 26% Fire Department - Ceres Total $ 5,631,990 $ 2,767,530 $ 2,835,091 49% Fire Department - Oakdale
Salaries and Benefits (Appr Unit A) $ 4,135,215 $ 2,768,188 $ 1,367,027 67% ISF Charges (Appr Unit B) $ 172,698 $ 100,741 $ 71,957 58% Discretionary Charges (Appr Unit C) $ 395,694 $ 153,725 $ 227,620 39% Fire Department - Oakdale Total $ 4,703,607 $ 3,022,653 $ 1,666,604 64% Human Resources
Salaries and Benefits (Appr Unit A) $ 1,500,993 $ 939,755 $ 561,238 63% ISF Charges (Appr Unit B) $ 182,653 $ 106,886 $ 75,767 59% Discretionary Charges (Appr Unit C) $ 66,507 $ 33,694 $ 32,813 51% Human Resources Total $ 1,750,153 $ 1,080,335 $ 669,818 62% Non-Departmental
Discretionary Charges (Appr Unit C) $ 453,400 $ 123,986 $ 328,539 27% Non-Departmental Total $ 453,400 $ 123,986 $ 328,539 27% Office of the City Auditor
Salaries and Benefits (Appr Unit A) $ 285,181 $ 58,052 $ 227,129 20% ISF Charges (Appr Unit B) $ 27,972 $ 16,349 $ 11,623 58% Discretionary Charges (Appr Unit C) $ 50,985 $ 487 $ 50,498 1% Office of the City Auditor Total $ 364,138 $ 74,889 $ 289,249 21% Parks, Recreation & Neighborhoods
Salaries and Benefits (Appr Unit A) $ 7,389,963 $ 3,817,242 $ 3,572,721 52% Instrafund Labor (Appr Unit AA) $ (301,432) $ (239,772) $ (61,661) 80% ISF Charges (Appr Unit B) $ 1,548,295 $ 903,637 $ 644,658 58% Discretionary Charges (Appr Unit C) $ 5,776,482 $ 3,074,141 $ 2,589,743 53% Parks, Recreation & Neighborhoods Total $ 14,413,308 $ 7,555,248 $ 6,745,462 52% Police Department
Salaries and Benefits (Appr Unit A) $ 56,638,552 $ 35,361,620 $ 21,276,932 62% Instrafund Labor (Appr Unit AA) $ (415,022) $ (309,185) $ (105,837) 74% ISF Charges (Appr Unit B) $ 4,257,069 $ 2,483,290 $ 1,773,779 58% Discretionary Charges (Appr Unit C) $ 11,726,124 $ 6,660,426 $ 3,555,759 57% Police Department Total $ 72,206,723 $ 44,196,152 $ 26,500,632 61% Public Works
Discretionary Charges (Appr Unit C) $ (0) $ 279 $ (279) N/A Public Works Total $ (0) $ 279 $ (279) N/A
Transfers Out
Transfers Out $ 12,219,049 $ 3,757,514 $ 8,461,535 31%
Transfers Out Total $ 12,219,049 $ 3,757,514 $ 8,461,535 31% Grand Total $ 171,589,732 $ 101,621,472 $ 67,719,689 59% *Note that the chart above does not include the budget reduction as a result of the Variance Rate ($5.8M).

The main takeaway from the information above is in the area of public safety, specifically related to overtime spending. The pandemic continues to have large budgetary impacts on salary and benefit spending as it relates to overtime in public safety. Overtime costs and the impact to the Fire Department and the Police Department in terms of the need to backfill to cover for employees out for COVID related reasons, either directly or indirectly, has been extensive. In the Fire Department (inclusive of the Fire Services for Ceres and Oakdale contracts), overtime was budgeted at $3.8 million for the fiscal year. This amount has been expended beyond the budgeted amount and has reached actual expenditures of $4.9 million with 5 months in the fiscal year remaining. The Police Department has a budget of $2.5 million in overtime and has nearly reached that level with actuals #13..
- 360 -
Fiscal Year 2021-22 General Fund Mid-Year Update
17 | P a g e
of $1.8 million with 5 months remaining. Other departments are still being impacted by costs these overtime related issues as well, but public safety is in a unique situation due to staffing requirements.

Another area that has the potential to impact the fiscal year-end are the subsidies that are provided through transfers out to the Centre Plaza, Golf Fund and possibly the Parking Fund. These funds are experiencing heavy losses in revenues, in the areas of Centre Plaza and the Parking Fund. The General Fund provides subsidies to the Centre Plaza and Golf Fund on an annual basis. Should the Parking Fund fall into a negative fund balance, which occurred last fiscal year, any subsidy would need to be funded by the General Fund. For the Centre Plaza Fund, there could be some relief as there is a potential reimbursement from Federal Emergency Management Agency (FEMA) funds that could be received in the current fiscal year for when the Centre Plaza was used as a vaccination site.

These revenues and expenditures will continue to be monitored for each of these funds in the next few months for potential impacts on the General Fund.

Expenditure Conclusions
Overall expenditures are trending slightly higher than would be expected at this time in the fiscal year. This is being driven mainly by increased overtime expenditures and the increased transfer out for the Council approved pension trust funds. Overtime spending will continue to be monitored as well as the possibility of increased subsidy needs from the Centre Plaza and Parking Funds.

Staff is recommending no change to department expenditure budgets for Fiscal Year 2021-22 at this time.
#13..
- 361 -

CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

February 28, 2022
Date: February 7, 2022
TO: Finance Committee
David Wright, Chair
Rosa Escutia-Braaton, Vice-Chair
Bill Zoslocki, Member
THROUGH: Joseph P. Lopez, City Manager
FROM: Christina Alger, Director of Human Resources
SUBJECT: Amending the Position Allocation Plan
CONTACT: Christina Alger, Director of Human Resources
[email protected], 209-571-5126
DESCRIPTION:

Consider amending the Position Allocation Plan in three departments: adding one Administrative Office Assistant III allocation in the Modesto Fire Department; and reallocating two Senior Utility Service Workers to two Senior Plant Mechanics, three Plant Mechanic Trainees to three Plant Mechanic II’s, eliminating two Utilities Service Worker III’s, and amending the salary range of the Plant Maintenance Planner from 134 to 136 in the Utilities Department; and allocating two limited-term Administrative Analyst II’s, and reallocating one Housing Rehabilitation Specialist to a Community Development Program Specialist in the Community and Economic Development Department; and forwarding to Council for approval. (Funding Source: Various Funds)
STRATEGIC PLAN ELEMENT:

This item supports the 2020-2025 Strategic Plan’s Service and Delivery Goals & Strategies - Building a High-Performing Organization by Attracting and Retaining High Performance Employees.

BACKGROUND:

Personnel Rule 2.1 states, “The City Manager shall ascertain the duties and responsibilities of all positions in the City service, except those positions which are filled by appointees of the City Council and after appropriate consultation with employees and department heads, shall prepare a classification plan for such positions.” As business needs and market conditions change, there is a need to adjust certain positions to better meet these business needs or better conform to industry best practices. Positions may be adjusted or created through the City’s Classification Study policies and procedures. The City found it necessary to review several classifications. #14..
- 362 -
Finance Committee, February 28, 2022
Amending the Position Allocation Plan

Fire Department
The Fire Prevention division of the Modesto Fire Department provides services for construction projects throughout the City. Over the last few years, the department has experienced an increased demand for plan reviews and building inspections. The additional workload has been handled by adding a part-time administrative support staff. As workload increased, a second part-time support staff was brought aboard.

Utilities
Many Utilities studies have been conducted over the years. In 2015, a utilities study was conducted and the recommendation came forward to consolidate similar positions and eliminate specialty positions. Crew leaders were consolidated into the Utilities Service Worker series and became Senior Utilities Services Workers. At this time, Collection System Crew Leaders, who oversaw the Water Quality Control Technicians, were also reclassified to Senior Utilities Service Workers and Water Quality Control Technicians became Plant Mechanics. This mixed two classification series within the structure of one area of Utilities. The Senior Plant Mechanic job class was also created at this time to create a full series in Plant Mechanics.

Community and Economic Development
As an Entitlement Community, each year, the City receives Community Development Block Grant (CDBG), HOME Investment Partnerships Program (HOME), Emergency Solutions Grant (ESG), and Permanent Local Housing Allocation (PLHA) funding from the U.S. Department of Housing and Urban Development (HUD), and State of California (HCD) through a formula grant allocation.

In Program Year 2020-2021, the City’s CDBG allocation was $1,900,665, the City’s HOME allocation was $934,587, the City’s ESG allocation was $164,549, and the City’s PLHA allocation was $1,507,287.

In addition to the annual CDBG, ESG, and HOME entitlement funding, the City was awarded one-time grants to prepare, prevent, and respond to COVID-19 through the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The City received $2,385,772 in Community Development Block Grant -Coronavirus (CDBG-CV) and $3,928,372 in Emergency Solutions Grant - Coronavirus (ESG-CV). The 2020-2021 CAPER1 will report both entitlement and CARES Act funding accomplishments.

DISCUSSION:

Staff recommends position allocation additions and changes in three departments, Modesto Fire Department, Utilities, and Community and Economic Development due to changes in business needs.

Fire Department
The Fire Prevention division of the Fire Department has experienced an increased workload due to higher demands for plan reviews and building inspections. Currently the division is using two part-time Administrative Office Assistants. Using part-time staffing limits the department due to 1 Consolidated Annual Performance Evaluation Report
#14..
- 363 -
Finance Committee, February 28, 2022
Amending the Position Allocation Plan

CalPERS rules on hour limits per fiscal year. These limits require part-time staff to take a break in service once the limits are reached. In order to create stability in the services we provide, staff recommends adding one Administrative Office Assistant III allocation. The department will use the funds currently used to fund the two part-time positions and additional revenue generated from the increased demand to fund the full-time position.

Utilities
Because of the consolidation of positions, over the years the Senior Plant Mechanics have received salary range adjustments which are a separate series from the Utilities Services Worker series. The Senior Utilities Service Workers, who currently oversee the Plant Mechanic series, are tied to salaries within the Utilities Service Worker classification series. These positions have received different adjustments as they are utilized across the department in different capacities. This has created a salary discrepancy between the Senior Plant Mechanics and the Senior Utilities Service Workers.

In order to correct the misalignment, staff recommends reclassifying the Senior Utilities Service Workers in this area to Senior Plant Mechanics. This will bring them back into the series that is being utilized and create better succession structure. Staff also recommends combining the Plant Mechanic Trainee with the Plant Mechanic I/II series to allow for progression as experience is acquired and adjusting the Plant Maintenance Planner salary range to align with the duties and responsibilities.

Community and Economic Development
Over the last couple of years, the City has received an increased amount of funding both from the State and Federal government to support affordable housing and homelessness. To utilize this funding, there is a need for additional staff members to support the grant funding and programs. The positions are critical to development and facilitation of state and federally funded (PLHA, Homekey, CDBG, HOME & ESG) funded programs and projects, such as: The City’s Annual Action Plan; Public Service Request for Proposals; monitoring of the City’s subgrantees. Without adequate staffing and oversight, the City could be at risk of losing some of its HUD entitlement funds, State entitlement funds and/or required to use General Fund monies to reimburse HUD for ineligible programs and projects.

Staff recommends adding two Administrative Analyst allocations as limited term positions for three years and specialize respectively in affordable housing and homelessness. The positions will be reassessed at the end of the three-year term to determine potential ongoing funding and extend as appropriate. In addition, staff recommends reallocating one Housing Rehabilitation Specialist to one Community Development Program Specialist to support this increase in funding.

FISCAL IMPACT:

Fire Department
The fiscal impact of adding one Administrative Office Assistant III allocation to the Fire department is $75,928 in cost center 18510. This cost is recovered by combining the current cost of the part-time staff and the additional revenues from fire prevention generated by additional staffing.
#14..
- 364 -
Finance Committee, February 28, 2022
Amending the Position Allocation Plan

Utilities
The fiscal impact of the reallocating two Senior Utilities Workers to two Senior Plant Mechanics, reallocating three Plant Mechanic Trainees to three Plant Mechanic II’s, adjusting the range of the Plant Maintenance Planner from 134 to 136, and eliminating two Utilities Service Worker III’s will result in a salary savings of $51,813 in cost center 44314.

Community and Economic Development
The fiscal impact of adding two Administrative Analyst II allocations and reallocating one Housing Rehabilitation Specialist II to one Community Development Specialist II is $252,855 in cost center 14111. This cost will be funded by grants received for the identified programs.

Approved by:

Christina Alger, Director of Human Resources
Joseph P. Lopez, City Manager
#14..
- 365 -