Water Subcommittee
January 24, 2024

Wednesday, January 24, 2024
City of Rialto
Council Chambers
150 S. Palm Ave.

Rialto, CA 92376
Rialto City Hall, Council Chambers, 150 S. Palm Ave. Rialto CA 92376 Water Subcommittee
Regular Meeting - Final
1 January 24, 2024Water Subcommittee Regular Meeting - Final

CALL TO ORDER

ROLL CALL

PUBLIC COMMENTS

REVIEW/APPROVAL OF MINUTES
WS-24-1084 Minutes from the September 27, 2023 Meeting
WS-24-1084_Meeting Minutes.pdfAttachments:

PRESENTATIONS

REPORTS/DISCUSSION ITEMS
WS-24-1079 Request that the Water Subcommittee provide feedback on the City Council and Rialto Utility Authority Board entering into a not -to-exceed contract in the amount of $ 164,650 for 120Water to provide services in compliance with Federal Environmental Protection Agency ’s Lead and Copper Rule Revisions.
(ACTION)
WS-24-1081 Request that the Water Subcommittee provide feedback on Contract Amendment No. 1 with FG Solutions in the amount of $ 5,480 for the City’s Water and Wastewater Rate Study.
(ACTION)
WSC_01-24-2024_Provide Feedback on Contract Amendment with FG Solutions for Water and Sewer Rate Study_ATTACHMENT.docxAttachments:

WS-24-1083 Update on the Water Infrastructure Finance and Innovation Act (WIFIA) Loan Agreement by and between the City of Rialto /Rialto Utility Authority Board and Rialto Water Services.
(RECEIVE AND FILE)
WS-24-1082 Update on the placement on the City Council ’s agenda: 1) the Ratification of Accepting $ 402,237.74 for Water and $ 5,677,933.19 for Wastewater from the State Water Resources Control Board ’s California Water and Wastewater Arrearage Payment Program and Authorizing $13,168.01 in Water and $ 28,843.59 in Wastewater to return unused funds; and 2) Accepting $ 1,824,579.14 from the State Water Resources Control Board ’s California Extended Water and Wastewater Arrearage Payment Program.
(RECEIVE AND FILE)

2 January 24, 2024Water Subcommittee Regular Meeting - Final WS-24-1080 Request that the Water Subcommittee provide feedback on the City of Rialto and Rialto Utility Authority Board Issuing a Notice of Intent Letter to the County of San Bernardino of Rialto ’s Interest to Facilitate the Delivery of Water from the Cadiz Water Project to Disadvantaged Communities (25,000 Acre-Feet).
(ACTION)
WSC_01-24-2024_Provide Feedback on Cadiz Water Project to Disadvantaged Communities_ATTACHMENT.docxAttachments:

UPCOMING MEETINGS/OTHER DISCUSSION ITEMS

ADJOURNMENT

3 City of Rialto
Legislation Text
File #: WS-24-1084, Version: 1, Agenda #:

FOR: Water Subcommittee Meeting [January 24, 2024] TO: Honorable Water Subcommittee Members
APPROVAL: Stephen Dopudja, P.E., Interim Utilities Manager Nicole Hemmans, Senior Administrative Analyst
Minutes from the September 27, 2023 Meeting
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CITY OF RIALTO

REGULAR MEETING OF THE WATER SUBCOMMITTEE
September 27, 2023 - 10:00 A.M.

MINUTES

The Regular meeting of the Water Subcommittee of the City of Rialto was held in the Civic Center Council Chambers located at 150 S. Palm Avenue, Rialto, California 92376, on Wednesday, September 27, 2023.

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CALL TO ORDER Call to order at 10:01 A.M.

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ROLL CALL The roll call was taken by Senior Administrative Analyst , Nicole Hemmans.

Subcommittee Members / City Staff:

Mayor Deborah Robertson
Council Member Ed Scott
Robert Messinger, Deputy City Attorney
Tom Crowley, Utilities Manager
Toyasha Sebbag, Assistant to the CM
Nicole Hemmans, Senior Administrative Analyst

Additional Attendees:

Steve Dopudja, DWC Consultant
Peter Luchetti, RWS/Table Rock
Meagan Matson, RWS/Table Rock
Rolf Ohlemutz, RWS/Veolia
Art Griffith, FG Solutions
Branden Kfoury, Urban Futures, Inc.

Dr. June Hayes, Resident

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PUBLIC COMMENTS Public comment received on September 27, 2023:

 None

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APPROVAL OF MINUTES-
Regular Meeting of August 29, 2023

Minutes Prepared By: Nicole Hemmans, Sr. Administrative Analyst

Meeting Date: August 29, 2023 - Minutes Approved.
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NEW BUSINESS ITEMS

WS-23-865 – Update on the Extent
of Water and Wastewater Capital
Spending Over the Next 5 years.

Update on the Extent of Water and Wastewater Capital Spending Over the Next 5 Years Presented by Peter Luchetti.

Questions & Comments
 Mayor Robertson asked the Utility Manager, Tom Crowley, for his recommendation on the scope of recommended improvements presented by Peter Luchetti.
o Tom Crowley recommended completing the high priority core water and wastewater projects listed on the first year of the Capital Improvement Plan.

 Update was received by Water Subcommittee.

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WS-23-866 – Provide Feedback on
the Water and Wastewater Rate
Model.

Presentation on the Water and Wastewater Rate Model provided by Art Griffith.

Questions & Comments –
 Art Griffith provided proposed rate increase scenarios that captured the cost of inflation.
o Council Member Ed Scott requested that Griffith’s
scenarios comprehensively account for a realistic and
forward-thinking approach to our financial planning,
capturing a true increase in costs.

 Peter Luchetti requested the results of the professional consultant hired to confirm the energy savings associated with the microgrid project.
o Mayor Robertson requested the time frame for receiving the results of the energy saving?
o Tom Crowley advised that the consultants contract
expires on October 31, 2023, therefore we should have
the results by then.

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 Peter Luchetti requested an update on the City’s current position on the lending decision for the WIFIA loan, as the expiration date of the loan is approaching.
o Consultant, Branden Kfoury with Urban Futures advised that the term agreement of the WIFIA loan exceeds the
term of the Concession Agreement, presenting a
potential discrepancy that needs to be addressed.

Furthermore, Kfoury advised that his firm is actively
assessing the impact of this difference in term, as it
relates to the concession agreement.
o Mayor Robertson advised she would like to review the
results of Urban Futures’ evaluation when they become
available.

 Council Member Ed Scott requested for Art Griffith to develop and provide detailed scenarios concerning the impact of a rate increase, specifically in the context of the City’s potential repayment of $30 million to the Rialto Utility Authority (RUA).

 Council Member Ed Scott requested a meeting with internal staff and consultants to reach a conclusive decision regarding the proposed rate increase.

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WS-23-855 – Presentation on Lead
and Copper Rule Revisions
(LCRR).

Presentation on the New Lead and Copper Rule Revisions Mandate Provided by Rolf Ohlemutz, General Manager, RWS/Veolia.

Questions & Comments
 Water Subcommittee asked for this item to return on a future agenda when the following questions can be answered:

1) Are there lead pipes within our jurisdiction, and if so, could you provide information on their locations?
2) When conducting water sampling, is there evidence of lead contamination in the samples?
3) In the event that lead is identified on the customer's side, who assumes liability for the replacement of pipes?
4) Regarding the deadline for completing the inventory by 10/16/24, does this include schools, and if so, who will be responsible for repairs if they indicate financial constraints? Will the City take on the responsibility of seeking funding for them? 5) What is the anticipated cost associated with creating the inventory due on 10/16/24?
6) The Mayor mentioned the possibility of funding. Could you please confirm the availability of funding for this initiative? 7) If an inspection on a resident's property reveals galvanized pipes, will it be assumed that lead is present in those pipes? 7 4

8) How was the solicitation for vendors conducted, and were local vendors specifically invited to participate?
9) Under the Concession Agreement, is the responsibility for compliance with the Lead and Copper Rule vested in the City or RWS?
10) Can you provide information on the actions taken by other agencies in response to the Lead and Copper Rule revisions?

1) . Confirm.

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WS-23-861 – Utilities Manager
Update.

Utilities Manager Updates provided by Utilities Manager, Tom Crowley

Questions & Comments
Updates provided on:
 Water Fill-Stations & Drinking Fountains at City Facilities and Parks.

 Long Term Use of Stormwater Detention Basins in River Ranch .

Mayor recommended staff looking into iWorks for recruitment of labor.  Department of Water Resources and the Bureau of Reclamation AMI Grant.
o Mayor Robertson suggested staff look into iWorks
for labor recruitment.

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UPCOMING MEETINGS/OTHER

DISCUSSION ITEMS
 None

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ADJOURNMENT Meeting adjourned at 11:55 a.m.

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8 City of Rialto
Legislation Text
File #: WS-24-1079, Version: 1, Agenda #:

FOR: Water Subcommittee Meeting [January 24, 2024] TO: Honorable Water Subcommittee Members
APPROVAL: Stephen Dopudja, P.E., Interim Utilities Manager Toyasha Sebbag, Assistant to the City Manager
Rolf Ohlemitz, Rialto Water Services, General Manager
Request that the Water Subcommittee provide feedback on the City Council and Rialto Utility Authority Board entering into a not-to-exceed contract in the amount of $164,650 for 120Water to provide services in compliance with Federal Environmental Protection Agency’sLead and Copper Rule Revisions.
(ACTION)
BACKGROUND:

The Federal Environmental Protection Agency (EPA) published the Lead & Copper Rule Revisions (LCRR) to better protect communities from exposure to lead in drinking water and created new and revised obligations for community water systems. The LCRR requires systems to develop and submit (1) a comprehensive inventory of all service lines in their distribution system and (2) a replacement plan for any distribution system with unknown, lead, or galvanized service lines. Establishing an inventory of service line materials and identifying the location of any lead service lines is a key step in getting them replaced and protecting public health. The service line inventory, which includes both customer-owned and utility-owned portions of the service line, is the first step to eventually proving and certifying that our system is free of lead service lines. California utilities must build upon their utility service line inventories by characterizing customer-side service line material and submitting an updated combined inventory that adheres to the specifications of the EPA and Division of Drinking Water (DDW) by October 16, 2024.

ANALYSIS/DISCUSSION
On September 27, 2023, the Water Subcommittee heard a presentation from Rolf Ohlemitz, Rialto Water Services, General Manager about recommended actions for the Rialto Utility Authority (RUA) to comply with the LCRR by October 16, 2024. The recommendation was to enter into a contract with 120Water for $164,650 to complete the inventory.

Subsequently, on November 21, 2024, the Utilities Commission heard a similar presentation from Sohiel Sadighi, Veolia North American's, General Manager, asking for authorization to place the item on the agenda for City Council consideration. The Utilities Commission unanimously voted to move the item forward to the City Council for approval.

Before placement of this item on the City Council Agenda, staff wanted to return to the Water Subcommittee to answer the following questions raised by the Water Subcommittee at its September 27, 2023, meeting. In addition, the initial contract amount requested of $$205,081.96 has been City of Rialto Printed on 1/19/2024Page 1 of 5
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corrected to $164,650 due to a calculation error.

Please see responses in bold to questions 1 - 10 below:

1. Are there lead pipes within our jurisdiction? If so, could you provide information on their locations?
No. The Rialto Utility Authority does not have any lead pipes in our system.

2. When conducting water sampling, is there evidence of lead contamination in the samples? No. In compliance with the California Water Board’s Lead and Cooper Rule, RWS routinely samples for lead in our system, and lead concentrations have not exceeded 15 parts per billion nor have copper concentrations exceeded 1.3 parts per million in more than 10% of customer taps sampled.

3. In the event that lead is identified on the customer's side, who assumes liability for the replacement of pipes?
This is still influx and has not been finalized yet. The EPA stated this will be finalized and determined by or before 10/16/24.

4. Regarding the deadline for completing the inventory by 10/16/24, does this include schools, and if so, who will be responsible for repairs if they indicate financial constraints? Will the City take on the responsibility of seeking funding for them? Yes, the deadline includes schools. As the LCRR is written, schools are responsible for replacing their lead service lines and will be responsible for seeking funding for themselves.

5. What is the anticipated cost associated with creating the inventory due on 10/16/24? $165K. Staff is proposing to use 120water to provide (1) a comprehensive inventory of all service lines in RUA’s distribution system and (2) a replacement plan for any distribution system with unknown, lead, or galvanized service lines.

6. Mayor Robertson mentioned the possibility of funding. Could you please confirm the availability of funding for this initiative?
There is no funding for the inventory that is due on October 16, 2024. However, there will be funding available for the replacement requirements (i.e., Biden Infrastructure).

7. If an inspection of a resident's property reveals galvanized pipes, will it be assumed that lead is present in those pipes?
No.

8. How was the solicitation for vendors conducted, and were local vendors specifically invited to participate?
Veolia/RWS sought out various vendors, presentations were provided, and 3 quotes were obtained. Local vendors were not solicited because RWS/Veolia was unable to locate any local vendors that could facilitate the specialized work associated with the LCRR.

9. Under the Concession Agreement, is the responsibility for compliance with the Lead and City of Rialto Printed on 1/19/2024Page 2 of 5
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9. Under the Concession Agreement, is the responsibility for compliance with the Lead and Copper Rule vested in the City/RUA or RWS?
This is a “Change in Law” activity and is outside the scope of the Concession Agreement. Therefore, it is the City/RUA's responsibility.

10. Can you provide information on the actions taken by other agencies in response to the Lead and Copper Rule revisions?
Performing in-house
· Redlands, City of
· West Valley Water District (WVWD)
Agencies Outsourcing
· Colton, City of
· Corona, City of
· Fontana Water Company - initially, performing in-house, however, have encountered roadblocks, and have engaged 3rd party contractors/consultants for assistance. · Garden Grove, City of - utilizing 120Water
RWS/Veolia confirmed that updates to the inventory after the 10/16/24 deadline are fluid:
municipalities can continue to update their inventory even after the deadline. RWS/Veolia advised that this is very beneficial as municipalities can continue investigating/verifying lines to ensure any replacement activities under LCRI (10 years to replace all unknowns after the LCRR deadline) are confirmed and substantiated.

FINANCIAL IMPACT
The financial framework employed by 120Water adheres to a conventional subscription-based model.

An annual subscription fee, set at a fixed rate, recurs yearly and grants access to the comprehensive 120Water platform and the dedicated services team. The program is designed to institute a consistent communication schedule with the designated City of Rialto team to steer the program toward successful outcomes. The ensuing table delineates the anticipated annual rates tailored to fulfill the specified program requirements and unit rates for elements where precise quantities remain undetermined. It is imperative to highlight that a collaborative discussion transpired between the involved parties and DDW, during which the unique needs and prerequisites of the City of Rialto were thoroughly deliberated and formalized. After this discussion and DDW validation, the estimates presented in the pricing proposal have been meticulously adjusted to align seamlessly with the operational nuances of the City of Rialto's system.

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Budget Impact
The proposed action will not impact the Capital Improvement Budget. Funds are available in Contract Services Account No. 680-500-7960-2011.

RECOMMENDATION:

Request that the Water Subcommittee provide feedback on the City Council and Rialto Utility Authority Board entering into a not-to-exceed contract in the amount of $164,650 for 120Water to provide services in compliance with Federal Environmental Protection Agency’sLead and Copper Rule Revisions.

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13 City of Rialto
Legislation Text
File #: WS-24-1081, Version: 1, Agenda #:

FOR: Water Subcommittee Meeting [January 24, 2024] TO: Honorable Water Subcommittee Members
APPROVAL: Stephen Dopudja, P.E., Interim Utilities Manager Toyasha Sebbag, Assistant to the City Manager
Request that the Water Subcommittee provide feedback on Contract Amendment No. 1 with FG Solutions in the amount of $5,480 for the City’s Water and Wastewater Rate Study. (ACTION)
BACKGROUND:

On April 11, 2023, the City Council and Rialto Utility Authority Board awarded a sole source contract to FG Solutions, LLC, to provide a Water and Wastewater Rate Study for an amount not to exceed $138,297.

ANALYSIS/DISCUSSION
One of the tasks identified in the scope of work for the Water and Wastewater Rate Study included a series of Presentations and Meetings. The Professional Services Agreement (PSA) identified and budgeted for several Water Subcommittee, Utilities Commission, and City Council meetings to present the Revenue Analysis and Rate Study results and staff and consultant communication in preparation for those meetings. However, during the Rate Study, staff identified necessary additional services not contemplated in the April 11, 2023, PSA but were instrumental in determining several comprehensive rate scenarios to proceed with setting the Proposition 218 Hearing for February 27, 2024.

Additional services include assisting with the City’scapital project financing strategy development, which included multiple remote and in-person meetings with staff, the City’slegal counsel, financial advisor, and joint meetings with staff and Rialto Water Services (RWS). Also, for preparing documents for the City/RUA’sand RWS labor reset financial projections scheduled to begin in mid- 2024.

Amendment No. 1 adds $5,480 to the Task 9 Fee Estimate, as shown in the table below and ATTACHMENT 1. The fee estimates for the other tasks remain unchanged.

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FINANCIAL IMPACT
Operating Budget Impact
The original contract is for $138,297. As of December 2023, the amount invoiced to date is $119,553, with $18,744 remaining on the Purchase Order. The remaining funds are earmarked to complete Phase 2, Task 8: Final Draft and Final Reports, and Task 9: Meetings and Presentations. All costs are billed at the time and materials rate.

Funds are available in water and wastewater contract services operating accounts, with funds split based on the number of accounts served. Water accounts consist of approximately 12,500 services (37%), which accounts for $2,027.60 of Amendment No. 1 costs, and wastewater has approximately 21,470 services (63%), which accounts for $3,452.40 of Amendment No. 1 costs. The total Professional Services Amendment No. 1 is proposed to be adjusted to a total not-to-exceed cost of City of Rialto Printed on 1/19/2024Page 2 of 3
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$143,777.

Capital Improvement Budget Impact
The proposed action will not affect the Capital Improvement Budget.

RECOMMENDATION:

Request that the Water Subcommittee provide feedback on Contract Amendment No. 1 with FG Solutions in the amount of $5,480 for the City’s Water and Wastewater Rate Study.

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16 Proposed Amendment 1 to Professional Services Agreement Draft Page 1 of 2 December 31, 2023
City of Rialto
2023 Water and Wastewater Rate Study
Proposed Amendment 1 to Professional Services Agreement

Introduction
On April 11, 2023, the City of Rialto (“City”) and FG Solutions, LLC (“FG Solutions”) executed a Professional Services Agreement to complete the City’s 2023 Water Rate Study (“Rate Study”).

The Scope of Work for the Rate Study included a series of Presentations and Meetings. During the course of the Rate Study, City staff have identified necessary additional services that weren’t contemplated in the April 11, 2023 Profess ional Services Agreement. To recognize this change in scope , the following revisions to the Scope of Work and Fee Estimate are proposed in this Amendment 1, as described below.

Revised Scope of Work
Task 9
The following is added to the Task 9 Scope of Work:

Per request by City staff, FG Solutions performed services September 1, 2023 through December 31, 2023 as an expert reference associated with: (a) the City’s capital project financing strategy development, and (b) preparations for the 2024 Labor Reset.

Related to the City’s capital project financing strategy development, services included multiple remote and in-person meetings with City, the City’s legal counsel, the City’s Financial Advisor, and Rialto Water Services.

Related to the 2024 Labor Reset, services included p repared for and attendance at 12/12/23 meeting with City staff in City offices to prepar e for the 2024 Labor Reset. FG Solutions documented the results of this meeting and delivered documentation to City staff.

Fee Estimate
This Amendment 1 adds $5,480 to the Task 9 Fee Estimate as shown in the table below. The Fee Estimates for the other tasks remain unchanged.

The revised Fee Estimate for the 2023 Water and Wastewater Rate Study including Amendment 1 is shown in the table below.

17 Proposed Amendment 1 to Professional Services Agreement Draft Page 2 of 2 December 31, 2023

2023 Water and Wastewater Rate Study. Revised Fee Estimate Including Amendment 1 Total
April 11, 2023 Amendment 1 Revised
Task PSA Fee Estimate Fee Estimate Fee Estimate
Phase 1
Task 1: Project Management and Project Initiation $3,207 $3,207 Task 2: Water Revenue Requirement Analysis $19,140 $19,140 Task 3: Water Cost of Service and Rate Design $14,302 $14,302 Task 4: Wastewater Revenue Requirement Analysis $15,442 $15,442 Task 5: Wastewater Cost of Service and Rate Design $13,644 $13,644 Task 6: Draft Report $13,940 $13,940
Task 7: Water Subcommittee Meeting and Presentation $9,206 $9,206 Total Phase 1 $88,881 $88,881
Phase 2
Task 8: Final Draft and Final Reports $6,488 $6,488
Task 9: Meetings and Presentations $19,156 $5,480 $24,636 Task 10: Three Additional Meetings
Work Product Revisions $5,858 $5,858
Meeting Attendance $17,914 $17,914
Total Phase 2 $49,416 $5,480 $54,896
Total Phases 1 and 2 $138,297 $5,480 $143,777
Note 1: Hourly Rates, Calendar Year 2023 2023
Art Griffith, Principal and Project Manager $241.00
Debi Fortin, Principal and Senior Consultant $190.00
Hourly rates for services through 12/31/23 are billed using 2023 hourly rates.

FG Solutions adjusts its hourly rates on January 1 of each year.

Note 2:

Amendment 1 budget consists of time spent in September, October, November, and December 2023.

September (Invoice RIALTO-4006) $982.50
October (Invoice RIALTO-4007) $681.25
November (Invoice RIALTO-4008) $1,775.00
December (Invoice RIALTO-4009) $2,041.50
Total $5,480.25
Total, rounded to nearest dollar $5,480.00
18 City of Rialto
Legislation Text
File #: WS-24-1083, Version: 1, Agenda #:

FOR: Water Subcommittee Meeting [January 24, 2024] TO: Honorable Water Subcommittee Members
APPROVAL: Stephen Dopudja, P.E., Interim Utilities Manager Toyasha Sebbag, Assistant to the City Manager
Update on the Water Infrastructure Finance and Innovation Act (WIFIA) Loan Agreement by and between the City of Rialto/Rialto Utility Authority Board and Rialto Water Services. (RECEIVE AND FILE)
BACKGROUND:

On July 13, 2021, the City/Rialto Utility Authority (RUA) authorized Rialto Water Services (RWS) to submit a Water Infrastructure Finance Innovation Act (WIFIA) Letter of Intent (LOI) application for the 2021 funding cycle on behalf of the City/RUA. The application was authorized for the following projects: Lake Rialto, Rialto Microgrid, Advanced Metering Infrastructure (AMI), and Security for Utility Sites. RWS was further authorized to contract with Black and Vetch to assist them in preparing the LOI for a not-to-exceed amount of $30,000. The City/RUA agreed to share in the cost of preparing the LOI by splitting the cost with the City’s portion not exceeding $15,000.

In March 2022, RWS received notification from WIFIA that they were invited to submit a loan application for $68 million for the projects identified in the WIFA LOI.

On January 25, 2023, at the Water Subcommittee Meeting, staff and RWS/Veolia updated the list of Capital Improvement Projects that could be considered for the WIFIA and State Revolving Fund (SRF) Loan Applications. A presentation was provided on the list of projects and the updated cost estimates. The list proposed a 5-year Capital Improvement Project from 2024 to 2028 for $39,050,000 for water and $90,820,000 for wastewater, with a total proposed cost of $129,870,000.

On March 30, 2023, RWS submitted a joint RWS/RUA application to WIFIA to fund $67,789,073 in CIP. This amount would cover the total estimated eligible project cost of $138,345,046. The slightly higher cost than the January 25, 2023, list presented to the Water Subcommittee was due to fine- tuning cost estimates and project list from the original WIFIA LOI from 2021.

On December 12, 2023, the City Council authorized staff to set a Public Hearing for water and wastewater services for a rate structure that supports a 5-year Capital Improvement Project costs from 2024 to 2028 for $6,000,000 for water and $31,100,000 for wastewater, with a total proposed cost of $37,100,000 to be funded by a 30-year loan at 6% interest. This list is designated as the High- Priority CIP and consists of a subset of the projects listed in the March 30, 2023, WIFIA application.

ANALYSIS/DISCUSSION
Staff and RWS met on August 25, 2023, and December 1, 2023, to discuss the WIFIA financing City of Rialto Printed on 1/19/2024Page 1 of 2
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Staff and RWS met on August 25, 2023, and December 1, 2023, to discuss the WIFIA financing terms and the list of capital improvement projects.

Staff requests WIFIA loan documents from RWS that support High-Priority CIP with a WIFIA financing timeline of 18 years (one year less remaining on the Concession Agreement). The 18-year WIFIA financing timeline is preferred to the 30-year financing because the latter would require an extension of the Concession Agreement.

FINANCIAL IMPACT
The exact fiscal impact will be presented with the terms of the WIFIA loan agreement documents.

RECOMMENDATION:

Update on the Water Infrastructure Finance and Innovation Act (WIFIA) Loan Agreement by and between the City of Rialto/Rialto Utility Authority Board and Rialto Water Services.

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20 City of Rialto
Legislation Text
File #: WS-24-1082, Version: 1, Agenda #:

FOR: Water Subcommittee Meeting [January 24, 2024] TO: Honorable Water Subcommittee Members
APPROVAL: Stephen Dopudja, P.E., Interim Utilities Manager Toyasha Sebbag, Assistant to the City Manager
Update on the placement on the City Council’sagenda: 1) the Ratification of Accepting $402,237.74 for Water and $5,677,933.19 for Wastewater from the State Water Resources Control Board’s California Water and Wastewater Arrearage Payment Program and Authorizing $13,168.01 in Water and $28,843.59 in Wastewater to return unused funds; and 2) Accepting $1,824,579.14 from the State Water Resources Control Board’s California Extended Water and Wastewater Arrearage Payment Program.
(RECEIVE AND FILE)
BACKGROUND:

In 2021, funding was established by Assembly Bill No. 135 (Chapter 85, Statutes of 2021) for the California Water and Wastewater Arrearage Payment Program (CWWAPP). This program was administered by the State Water Board (SWRCB). The program allowed utility providers to apply directly to the SWRCB for their eligible residential and commercial customers. The funding covered water debt from residential and commercial customers accrued between March 4, 2020, and June 15, 2021. The application period for these funds ended on April 1, 2022, and the SWRCB disbursed over $385 million of the $985 million federal allocation to water and wastewater systems for residential and commercial arrearages.

Rialto Water and Wastewater Arrearages Allocation
As authorized by staff, Rialto Water Services (RWS)/Veolia identified 1,119 water accounts and 70 commercial accounts eligible for the program, for a total request of $402,237.74 submitted to the SWRCB for water accounts. This check was issued to the City on January 12, 2022. The check included a maximum of 3%, up to 1 million dollars, whichever was less, as administrative reimbursable costs. After the disbursement of money to the water accounts and administrative overhead costs, $13,168.01 was returned to the SWRCB on March 14, 2022.

As authorized by staff, RWS/Veolia identified 1,394 wastewater accounts and 67 commercial accounts eligible for the program, for a total request of $567,793.19 submitted to the SWRCB for wastewater accounts. This check was issued to the City on May 20, 2022. The check included a maximum of 3%, up to 1 million dollars, whichever was less, as administrative reimbursable costs.

After the disbursement of money to the wastewater accounts and administrative overhead costs, $28,843.59 was returned to the SWRCB on August 2, 2022.

The processing of funds, including acceptance, disbursement, and return, was not formally presented to the City Council for staff authorization. Staff requests feedback to officially acknowledge and endorse this procedure in an upcoming City Council Agenda to contribute to our financial processes City of Rialto Printed on 1/19/2024Page 1 of 2
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endorse this procedure in an upcoming City Council Agenda to contribute to our financial processes of continued transparency and efficacy.

ANALYSIS/DISCUSSION
On July 10, 2023, Governor Newsom signed a budget trailer bill expanding the Arrearages Program.

This new Extended Water and Wastewater Arrearage Payment Program extended the COVID-19 Relief Period from June 16, 2021, to December 31, 2022, with the state legislature allocating the remaining $600 million in federal funding for this Program. The new Extended Arrearage Program allows utility providers to include both water and wastewater debt from residential and commercial customers.

As authorized by staff, RWS/Veolia identified $760,272.59 in residential water accounts, $73,452.68 in commercial water accounts, $881,002.39 in residential wastewater accounts, and $94,258.47 in commercial wastewater accounts, $15,593.01 in 3% allocation of total arrearage request for a total of $1,824,579.14 in arrearages payment amount requested. This amount was submitted to the SWRCB on December 13, 2023.

The Extended Arrearage Program had a 60-day application period running from November 1, 2023, through December 31, 2023, for both water and wastewater arrearages. Disbursement of these funds is scheduled to begin immediately after.

Acceptance of these funds and their allocation to water and wastewater arrearages accounts is proposed to be formally presented to the City Council for staff authorization in an upcoming City Council Agenda to contribute to our financial processes of continued transparency and efficacy.

RECOMMENDATION:

Update on the placement on the City Council’sagenda: 1) the Ratification of Accepting $402,237.74 for Water and $5,677,933.19 for Wastewater from the State Water Resources Control Board’s California Water and Wastewater Arrearage Payment Program and Authorizing $13,168.01 in Water and $28,843.59 in Wastewater to return unused funds; and 2) Accepting $1,824,579.14 from the State Water Resources Control Board’s California Extended Water and Wastewater Arrearage Payment Program.

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22 City of Rialto
Legislation Text
File #: WS-24-1080, Version: 1, Agenda #:

FOR: Water Subcommittee Meeting [January 24, 2024] TO: Honorable Water Subcommittee Members
FROM: Stephen Dopudja, P.E., Interim Utilities Manager
Toyasha Sebbag, Assistant to the City Manager
Request that the Water Subcommittee provide feedback on the City of Rialto and Rialto Utility Authority Board Issuing a Notice of Intent Letter to the County of San Bernardino of Rialto’sInterest to Facilitate the Delivery of Water from the Cadiz Water Project to Disadvantaged Communities (25,000 Acre-Feet).
(ACTION)
BACKGROUND:

This item was placed on the Agenda for discussion and feedback by a member of the Water Subcommittee.

On November 1, 2023, Cadiz, Inc. entered into a binding agreement with San Bernardino County, Santa Margarita Water District (SMWD), and Fenner Gap Mutual Water Company (FGMWC) to provide priority rights to water supply from the Cadiz Water Conservation and Storage Project (Cadiz Project) to public water systems serving San Bernardino County communities.

Founded in 1983, Cadiz, Inc. (NASDAQ: CDZI) is a California water solutions company that describes itself as dedicated to providing access to clean, reliable, and affordable water for people through a unique combination of water supply, storage, pipeline, and treatment solutions with 45,000 acres of land in California, 2.5 million acre-feet of water supply, 220 miles of pipeline assets, and state that they have the most cost-effective water treatment technology in the industry.

ANALYSIS/DISCUSSION
2012 Memorandum of Understanding (MOU)
On October 1, 2012 (Item No. 1), the San Bernardino County Board of Supervisors (SBC Board) adopted Resolution No. 2012-176 and approved the Cadiz Project’s Groundwater Management, Monitoring and Mitigation Plan (Plan). The SBC Board provided in the MOU that public water systems within the SBC Board area could realize two significant benefits:

1. A priority right of up to 20% of the Project’s50,000 acre-feet of annual water supply for the life of the Project (up to 10,000 acre-feet per year for 50 years).

2. Up to 25,000 additional acre-feet of water for beneficial use (up to 500 acre-feet per year for 50 years) by the Inland Empire Utilities Agency (IEUA) or any agency as the County would subsequently designate.

After the SBC Board approved the MOU and the Cadiz Project’sPlan, Cadiz acquired a 220-mile pipeline (Northern Pipeline) running from the Cadiz property, approximately 45,000 acres of land in City of Rialto Printed on 1/19/2024Page 1 of 3
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23 File #: WS-24-1080, Version: 1, Agenda #:
pipeline (Northern Pipeline) running from the Cadiz property, approximately 45,000 acres of land in eastern San Bernardino County, through Newberry Springs, Daggett, and Barstow, enhancing the ability of future beneficial use to Cadiz Project water in areas currently reliant on local groundwater and State Water Project (SWP) imports. When fully operational, the Northern Pipeline is reported to have the capability to transport up to 25,000 acre-feet of water annually, equivalent to half of the Cadiz Project’s total annual water supply.
2023 Memorandum of Understanding (MOU) Amendment
The October 24, 2023, MOU amendment updated the designee eligible for the County reserved 25,000 acre-feet of water from the IEUA to Mojave Water Agency (MWA) and made the reserved water available at no cost.

The MOU amendment also added a priority right for public water systems in the county for 100% of the Project’stotal annual water yield that is not subject to a binding written agreement as of the date of the amendment. Based on this priority right, for Cadiz and FGMWC to deliver water for beneficial use outside of the county, they must first provide the County 60 days written notice of intention to execute a binding agreement allowing the County, within its complete discretion, to designate a County public water system within the county to execute a substitute binding agreement on substantially similar terms. If a substitute county public water supplier is not designated or the public water supplier fails to execute a substitute agreement promptly, the priority right is waived. The map below shows the Cadiz and California water infrastructure for potential conveyance connections.

Map of Rialto and Cadiz’s California Water Conveyance Infrastructure For water agencies to be eligible for the reserved water, they must notify San Bernardino County that they elect to participate in the project by facilitating 25,000 acre-feet of Project water delivery to disadvantaged communities. If water agencies do not elect to participate in the Project, then the County may continue making the water available to any party at its discretion. ATTACHMENT 1 is a City of Rialto Printed on 1/19/2024Page 2 of 3
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24 File #: WS-24-1080, Version: 1, Agenda #:

County may continue making the water available to any party at its discretion. ATTACHMENT 1 is a draft letter of intent for submittal to San Bernardino County.

FINANCIAL IMPACT
On October 24, 2023, the MOU amendment made the reserved water available to agencies at no cost, and sending a letter of intent does not bind the City or Rialto Utility Authority Board to any obligation of future funds.

Nevertheless, future costs remain uncertain due to a potential waiver of priority rights if a public water supplier fails to promptly execute a substitute agreement. Furthermore, the absence of detailed provisions on water allocation and marketing at the time of availability adds to the complexity. Any forthcoming binding costs or agreements will undergo scrutiny before the Water Subcommittee, Utilities Commission, and City Council.

For water agencies to be eligible for the reserved water, they must notify San Bernardino County that they elect to participate in the project by facilitating 25,000 acre-feet of Project water delivery to disadvantaged communities. If water agencies do not elect to participate in the Project, then the County may continue making the water available to any party at its discretion. ATTACHMENT 1 is a draft letter of intent to San Bernardino County for discussion and feedback.

Operating Budget Impact
On October 24, 2023, the MOU amendment made the reserved water available to agencies at no cost, and sending a letter of intent does not necessarily bind the City Council or Rialto Utility Authority Board to any obligation of future funds.

Nevertheless, future costs remain uncertain due to a potential waiver of priority rights if a public water supplier fails to promptly execute a substitute agreement. Furthermore, the absence of detailed provisions on water allocation and marketing at the time of availability adds to the complexity. Any forthcoming binding costs or agreements will undergo scrutiny before the Water Subcommittee, Utilities Commission, and City Council.

Capital Improvement Budget Impact
The requested action will not impact the Capital Improvement Budget at this time.

RECOMMENDATION:

Request that the Water Subcommittee provide feedback on the City of Rialto and Rialto Utility Authority Board Issuing a Notice of Intent Letter to the County of San Bernardino of Rialto’sInterest to Facilitate the Delivery of Water from the Cadiz Water Project to Disadvantaged Communities (25,000 Acre-Feet).

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25 February XX, 2024

Luther Snoke, Chief Executive Officer
County of San Bernardino
385 N. Arrowhead Avenue
San Bernardino, CA 92415-0120

Re: Notice of Intent to Facilitate the Delivery of Water from the Cadiz Water Project to Disadvantaged Communities (25,000 Acre-Feet)

Dear Mr. Snoke:

The City of Rialto, in conjunction with the Rialto Utility Authority (RUA), constitutes a Joint Powers Authority situated in San Bernardino County. Home to an approximate population of 104,000 residents, the city encompasses a significant proportion of disadvantaged communities, constituting 67% of its demographic makeup. The City /RUA provides water services to a designated section of the city, managing over 12,000 connections. Notably, the majority of RUA's water service connections are concentrated within the heart of Rialto's disadvantaged and severely disadvantaged communities. The remaining water connections, totaling over 14,000, are serviced by either the West Valley Water District or the Fontana Water Company.

We have been made aware that the County, at its discretion, may choose to make 25,000 acre-feet of water from the Cadiz Water Project available for use to interested public water service providers at “no cost” to the County.

On behalf of our residents and businesses, we want to identify the City of Rialto/RUA as being interested in this water supply for use in our service area. We realize the decision to apportion this water may be difficult for the County, but the Inland Empire requires clean and reliable water from sustainable sources to support our region’s economy, jobs, and housing.

Should you have any questions regarding the City of Rialto /Rialto Utility Authority ’s interest, please contact [ INSERT STAFF CONTACT NAME ] at [ INSERT EMAIL ADDRESS] or at [INSERT PHONE NUMBER].

Respectfully,

Deborah Robertson
Mayor of Rialto
President of Rialto Utility Authority

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