55411.00000\40655632.1
1 AGREEMENT FOR WASTEWATER TREATMENT SERVICES AND RECYCLED
WATER PURCHASES
This Agreement for Wastewater Treatment Services and Recycled Water Purchases (“Agreement”) is made and entered into as of July 1, 2022 by and between the City of San Clemente, a California municipal corporation (“City”), and the Santa Margarita Water District, a California water district (“SMWD”), each individually referred to as a “Party” and collectively referred to as the “Parties.”
RECITALS
A. The City owns and operates a wastewater collection and treatment system (“City System”), which includes a wastewater reclamation plant that treats wastewater and produces recycled water that complies with Title 22 of the California Code of Regulations (“Plant”).
The Plant currently has excess capacity available for wastewater treatment.
B. SMWD’s service area for water and wastewater collection and treatment is within the City, specifically, the Talega planned community and golf course (“Talega Area”). SMWD currently provides wastewater, potable-water, and recycled-water services to Talega Area residents.
C. SMWD’s system for the delivery and storage of recycled water (“SMWD System”) includes the Trampas Canyon Dam and Reservoir (“Trampas Reservoir”).
D. Government Code section 56133(e) allows local agencies to contract for the sale of nonpotable and non-treated water outside their jurisdictional boundaries.
E. SMWD and the City have determined that it would be mutually beneficial and efficient for SMWD to deliver wastewater flows from the Talega Area (and potentially other areas in the future) to the Plant for treatment utilizing the excess capacity in the Plant.
F. SMWD and the City desire to enter into a long term wastewater treatment service agreement to enable SMWD to have SMWD System wastewater treated at the Plant that will facilitate operational and capital planning for the Parties within their respective service areas and provide for greater utilization of the Plant over the remainder of its useful life, all as set forth with particularity in the terms and conditions that are set forth herein.
G. Additionally, SMWD desires the option to purchase from the City recycled water generated from the SMWD System flows that the City treats at the Plant, as well as any excess recycled water available from the Plant, and the City desires to sell such recycled water to SMWD.
H. The City has encountered occasional difficulty providing recycled water service to its customers and seeks to purchase recycled water from SMWD to provide that service to its customers during an interim 30-month period, to meet demands such as during Plant production outages and peak customer demand.
Attachment 1
55411.00000\40655632.1
2 I. The purpose of this Agreement is for the Parties to share in the capitalization of the improvements necessary for the services contemplated hereunder, to maximize the efficiency and quality of their collective wastewater treatment and water recycling infrastructure, and to enhance water conservation and water quality.
IN WITNESS WHEREOF, in consideration of the foregoing recitals and the mutual covenants, conditions, and agreements in this Agreement, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows.
1. Effective Date; Term; General Provisions.
1.1 Effective Date. This Agreement will become effective as of the date first set forth above and the obligations of the Parties shall become binding and enforceable as of that date.
1.2 Term. The term of this Agreement shall commence on the Effective Date and shall continue thereafter for an initial term of thirty (30) years (“Initial Term”). [SMWD herby delegates to its General Manager and the City hereby delegates to its City Manager the authority to] [The Parties may] extend the initial term for two (2) additional terms of ten (10) years each (“Extension Term”) on terms identical to the term set forth herein. The parties may otherwise extend this Agreement on different terms subject to the approval of their respective governing bodies. The Initial Term and any Extension Term are collectively referred to herein as the “Term.”
1.3 Contract Year. A contract year for the purposes of this Agreement will run from July 1 to June 30. Any reference in this agreement to a “year” or “per annum” will refer to a contract year.
1.4 Consumer Price Index (“CPI”). Certain costs in the Agreement are indicated as subject to annual increases based on the year over year change in the Consumer Price Index – Los Angeles-Long Beach-Anaheim (All Urban Consumers) from January through December. Unless otherwise noted, such increases will occur each July, commencing July 1, 2023.
1.5 Wastewater Treatment Service Option. During the Term of this Agreement, City shall provide SMWD the right to City wastewater treatment services of up to 0.65 MGD of the wastewater treatment capacity of the Plant based on average dry weather flows of untreated raw sewage from the SMWD System (“Reserved Capacity”). The City shall set aside the capacity for the treatment of SMWD wastewater effluent conveyed by SMWD to the Plant. SMWD flows may exceed the Reserved Capacity from time to time in the event of peak or emergency flows from weather-related or other events beyond the reasonable control of SMWD, provided, however, that such peak or emergency flows do not cause exceedances in the capacity of the Plant and conveyance system and that SMWD bears the additional proportional cost of the use of such excess capacity in the same manner as if SMWD had contracted for Additional Services as set forth in Section 1.6. 55411.00000\40655632.1
3 1.6 Additional Wastewater Treatment Services. During the Term of this Agreement, no later than March 1 of each year, City shall notify SMWD if City has additional Plant capacity in excess of the Reserved Capacity during the upcoming fiscal year. SMWD shall have sixty (60) days to notify City in writing of its desire to have City dedicate all or a portion of the additional capacity, on an as-needed basis, for City to set aside during the upcoming fiscal year. The amount of capacity which SMWD chooses to utilize will be referred to in this Agreement as the “Additional Capacity.” The determination Additional Capacity will be in the sole discretion of the City and the City may reserve or withhold capacity for its use or the use of third parties. The City and SMWD may agree to allocate Additional Capacity on a multi-year basis by mutual agreement. The use of Additional Capacity will be subject to all of the terms and conditions of this Agreement. The Reserved Capacity and the Additional Capacity allocated during any given contract year shall be the “SMWD Capacity” for that contract year which will require modifications to capacity allocations, such as, capital, fixed and variable.
2. Fees for Treatment.
2.1 Definitions.
2.1.1 “Aggregate Capacity” shall mean the total aggregate average day liquid treatment capacity of the Plant on the Effective Date, excluding any Plant expansion after the Effective Date, without regard to actual capacity usage as the same may change from time to time. The Plant’s current aggregate average day liquid treatment capacity is 6.976 MGD.
2.1.2 “Capital Repair and Replacement Costs” shall mean the annual costs of capital repairs, replacements and modifications to the Plant, whether on a planned or emergency basis, as the City deems necessary to maintain the operation of the Plant in good condition and repair and with discharge effluent in compliance with applicable federal and state laws, permits and approvals. Capital Repair and Replacement Costs shall exclude:
i. The cost of expanding the Plant’s capacity beyond the Aggregate Capacity,
ii. Maintenance and repair costs constituting Fixed O&M costs as defined below, and
iii. Maintenance and repair costs constituting Variable O&M Costs as defined below.
2.1.3 “Fixed O&M Costs” means those operating and maintenance costs and expenses incurred regardless of actual treatment activities. The schedule attached hereto as Exhibit A defines Fixed O&M Costs based on the City’s current cost categories. Labor costs for the Plant shall be based on the actual salary and benefit costs paid for all employees operating and maintaining the Plant. Equipment, materials and supplies shall be charged at actual cost. Fixed O&M Costs exclude non-cash items such as depreciation, recognition of changes in pension liabilities, 55411.00000\40655632.1
4 or any obsolescent charges or any reserves therefore, or amortization of intangibles or other bookkeeping entries of similar nature.
2.1.4 “Variable O&M Costs” means those costs incurred in wastewater treatment and disposal that are dependent on the quantity of the wastewater treated, which includes power, chemicals, solids disposal, and other consumables. The schedule attached hereto as Exhibit A defines Variable O&M Costs based on the City’s current cost categories.
2.1.5 “Volumetric Flow Measurement” Influent from SMWD shall be measured at the Pico Lift Station. The actual total influent flow to the Plant from SMWD shall be measured by the plant influent meter in Avenida Pico adjacent to the Pico Lift Station. The meter shall be calibrated for accuracy annually unless the Parties agree otherwise so that wastewater flow measuring is accurate within 5% of actual flow throughout the anticipated flow range. SMWD volumetric flow information will be provided to the City as indicated in Section 3.4 – Flow Monitoring.
2.2 SMWD Payment for Treatment.
2.2.1 Treatment Service Payments - Plant. SMWD shall make quarterly estimated treatment service payments as follows:
i. SMWD’s share of Fixed O&M Expenses at the Plant based on the proportion of the Reserved Capacity to the Aggregate Capacity of the Plant. For example, based on the Reserved Capacity only, the share of Fixed O&M Expenses would be 9.32% (0.65 MGD divided by 6.976 MGD) SMWD’s share of Fixed O&M will be initially based on 0.65 MGD, which is subject to increase only if SMWD’s three (3) year rolling average flows increases more than 0.05 MGD; and ii. SMWD’s share of Variable O&M Expenses based on the proportion of SMWD Volumetric Flows to the total volumetric flows of the Plant.
This will be calculated at the end of each year based on actual flows, and will initially be 18.21%, based on the Reserved Capacity of 0.65 MGD divided by 3.57 MGD, the estimated current City and SMWD total volumetric flows.
SMWD’s estimated treatment service payments shall be subject to the City Invoice Process described in Subsection 2.3 below, with information provided in form of Exhibit A.
2.2.2 Future Adjustments to Variable O&M Expenses and Fixed O&M Expenses.
i. The share of Variable O&M Expenses will be subject to review if the solid loadings in the SMWD flow increase or decrease relative to the solid loadings in the City’s flow over each five (5) year period, the 55411.00000\40655632.1
5 intent being that both the SMWD and the City solid loadings remain consistent with typical domestic wastewater flows over time. The baseline for the City and the SMWD solid loading will be established based on 2022 flows to the Plant. For example, if the SMWD solid loading concentrations during the first five (5) year period were to increase relative to the City solid loading concentrations by ten (10) percent, then in year six through ten, the percentage of the Variable O&M Expense payable by SMWD would be increased to take into account the higher burden placed on the Plant as a result of higher solid loading in the SMWD flows. Similarly, if the City solid loading were to increase relative to the SMWD solid loading, then the percentage of the Variable O&M Expense payable by SMWD would be decreased to take into account the lower burden placed on the Plant as a result of the higher solid loading in the City flows. In the event the parties wish to bill for flows and loadings separately, the parties may agree on a cost allocation methodology or commission a study by an independent consultant to develop the methodology. The cost of the study will be shared evenly by both parties.
ii. SMWD’s share of Fixed O&M Expenses will be payable regardless of whether SMWD treatment services require the entire Reserved Capacity. O&M expenses do not include annual or emergency capital expenditures for repair and replacement. The estimated Fixed O&M Expenses and Variable O&M Expenses for the first year are indicated in Exhibit A. Notwithstanding the statements above, the City and SMWD may adjust the annual average flow and loading to account for one-time emergency events.
2.2.3 Collection System Services - Payment. SMWD will make quarterly payments to cover its allocable share of costs for that portion of the City System used to convey wastewater from the interconnection point to the Plant (“City System Expenses”) as follows:
i. Los Molinos Pump Station – Operating Costs shall be based SMWD’s proportionate share of flows at the Pump Station, and amounts will be based on actual costs and flows. Initial costs are $29,745 based on costs as indicated in Exhibit B. Subsequent year costs shall be based initially on estimated costs by the City and subject to year-end actual reconciliation.
ii. Los Molinos Pump Station - Capital Contributions will equal $30,950 in the first fiscal year of the contract and increase annually based on CPI.
iii. Pico Trunk Sewer Line - $13,126 per year for operation, maintenance, and capital costs. Costs will increase annually based on CPI. 55411.00000\40655632.1
6 The City will provide SMWD with quarterly invoices for the costs for the Pico Trunk Sewer Line and Los Molinos Pump Station – Capital Contributions, including applicable CPI information. The costs for the Los Molinos Pump Station – Operating Costs shall be subject to the City Invoice Process described in Section 3.2, with cost information provided in the form of Exhibit B.
2.2.4 Capital Charge. SMWD will pay an annual capital charge for its exclusive rights to the Reserved Capacity only, which amount is intended to compensate the City for Capital Repair and Replacement Costs associated with the use of the Plant (“Capital Charge”). The Capital Charge for the first year of the Agreement will be One Hundred and Seventy-Five Thousand Dollars ($175,000).
The City will provide SMWD with quarterly invoices for the Capital Charge. The Capital Charge will increase each year by CPI, with a true-up of the Capital Charge to the average annual actual Capital Repair and Replacement Costs at the end of each five (5) year period. If the amount collected from SMWD in the prior five (5) year period differs from SMWD’s proportional share of the actual expenditures over such period, then the difference will be credited or added to SMWD’s next invoice(s) for Capital Charges. SMWD’s Capital Charge shall also be reset based on the actual proportional share average over the prior five (5) year period and will remain subject to CPI annual increases over the next five (5) year period.
The Capital Charge will be based on a combination of capacity and volumetric capital expenditures as defined in 2.2.1 and as adjusted in 2.2.2. Capacity capital expenses will be considered structures, electrical, liquid piping and instrumentation/SCADA.
Volumetric capital expenses are considered pumps, motors, piping related to moving solids, electrical associated solid handling equipment and aeration, and equipment associated with headworks, primary, secondary and solid handling treatment. The Capital Charge will not include the replacement of the entire plant or a substantial portion thereof.
2.2.5 Administration Costs. As fees for City services, SMWD will pay its proportional share of City administrative charges that are properly allocated to the Plant (not inclusive of the City’s general collections system) based on the Reserved Capacity (“Administrative Charge”). In no event will the Administrative Charge exceed fifteen percent (15%) of Fixed O&M and Variable O&M Expenses paid by SMWD pursuant to the Agreement in any given year. The following costs will be excluded from administrative charges: South Orange County Wastewater Authority, Utility Billing, and the salary and benefit costs of the Utility Director.
Administration Costs shall be subject to the City Invoice Process described in Section
2.3 below, with cost information provided in the form of Exhibit C.
2.3 City Invoice Process. Where specified herein, the City will invoice SMWD for service charges under this Agreement through the following process (“City Invoice Process”): At the end of each of the first three (3) fiscal quarters of each year, the City will provide SMWD an invoice of estimated service fees calculated based on 25% the relevant costs from the City’s adopted budget for the current year. For the fourth fiscal 55411.00000\40655632.1
7 quarter, the City will send SMWD an invoice based on its actual operating expenses throughout the year, reconciling any over- or under-payments in the previous three quarters. The City will send the fourth quarter invoice by August 31, which shall include detailed cost information utilizing the relevant referenced Exhibit or comparable form agreed to by the two parties. SMWD will pay all invoices within thirty (30) days of receipt.
2.4 Cost Information. The City will provide SMWD with the detailed information necessary, on an annual basis, for SMWD to validate the charges owed for the Fixed O&M Expenses, Variable O&M Expenses, City System Expenses, Capital Charge, and Administrative Costs.
3. General Terms of Use for City Treatment Services.
3.1 Delivery of Wastewater. SMWD will be responsible for all costs of delivery through the SMWD System and interconnection with the City System and the maintenance of such facilities to the interconnection point in Avenida Pico near the intersection of Avenida La Pata. The City will be responsible for the maintenance of its facilities to convey wastewater from the interconnection point through the City System to the Plant.
3.2 Quantity of Wastewater. The flow of SMWD wastewater to the interconnection point shall not exceed a maximum peak of two million gallons per day so as not to overload the City System between the interconnection point and the Plant. The City may agree in writing to take higher daily volumes if there is sufficient capacity.
3.3 Quality of Wastewater. SMWD wastewater delivered to the interconnection point with the City System shall be of the quality normally associated with predominantly domestic sewage and shall meet all federal, state and local laws, rules and regulations and shall not result in any violation of the permits and approvals of the Plant, including its NPDES permit.
It is anticipated that SMWD and the City will require industrial pre-treatment with respect to solid loading of a commercial or industrial nature. SMWD shall be solely responsible for any actual direct costs associated with the violation of the quality requirements set forth herein. In the event additional primary solids pretreatment is necessary due to near limit or exceeds of the treatment plants solid design capacity, SMWD will be required to pay associated costs, such as, chemically enhanced pretreatments or other capital costs to meet treatment regulatory requirements.
3.4 Flow Monitoring. Subject to completing a feasibility and procurement process for the interconnection site, SMWD will install a real time flow meter at the interconnection point and the City will have access to the data from such meter. SMWD will provide flow data to the City on a monthly basis until real time monitoring becomes available. Twice annually, samples will be taken from SMWD’s sampling manhole upstream of the interconnection point by SMWD and results will be provided to the City.
Samples will be tested for a range of particulates to be agreed upon from time to time by SMWD and the City. Periodically, there may be a need for additional sampling and testing. Changes in flow rates and loading will be measured to provide a basis for adjustments to the capacity and volumetric calculations as set forth in Sections 2 2.1 and
2.2.2. 55411.00000\40655632.1
8 3.5 Covenant on Industrial Discharge. Neither the City nor SMWD will issue a permit or approval to a customer for the discharge of industrial wastewater in excess of one hundred (100) gallons per day without giving the other Party no less than thirty (30) days written notice prior to taking final action on such permit.
4. Purchase of City Recycled Water
4.1 Definition of City Recycled Water. For the purposes of this Agreement, “City Recycled Water” means liquid effluent which has been treated at the City Plant and made available for non-potable use as further defined in Title 22 of the California Code of Regulations.
4.2 Definition of Modified Permits. As of the Effective Date of the Agreement, SMWD and the City expect to be pursuing a modification of its existing recycled water permits with the appropriate regulatory agencies (“Modified Permits”). The Modified Permits are required to be in place for SMWD to purchase the City’s recycled water, deliver the City’s recycled water to the Talega area, and to transport or store any recycled water pursuant to the City’s Trampas Capacity Right under Section 4.11. The City and SMWD shall coordinate and utilize best efforts to assist each other in procuring the Modified Permits not later than 30 months following the Effective Date of this Agreement.
4.3 Definition of City Recycled Water Quality Threshold. The City intends to construct an additional treatment facility (the “Advanced Water Treatment Facility” to reduce the Total Dissolved Solids (“TDS”) of the City recycled water produced at the Plant. SMWD shall require TDS of 800 mg/l or less for City recycled water to be used and stored in the SMWD system. As of the Effective Date of the Agreement, the City recycled water does not meet the maximum TDS 800 mg/l level (“Water Quality Threshold”).
4.4 Requirement to meet the Water Quality Threshold; Partial Agreement Termination.
The City commits to undertake best efforts to achieve the Water Quality Threshold. The City shall award a contract for the construction of an Advanced Water Treatment Facility at the Plant within 18 months following the Effective Date of this Agreement. Such contract shall be mutually acceptable to both the City and SMWD, as evidenced by mutual written concurrence.
Notwithstanding the foregoing, however, the City and SMWD may extend the 18-month timeframe by mutual written concurrence.
4.5 Recycled Water Purchase Option. The City hereby grants to SMWD the option to purchase one thousand (1,000) acre feet (AF) (“Base Purchase Amount”) of recycled water each year (“Base Purchase Option”). SMWD shall pay the Base Purchase Option amount annually on a “take or pay basis,” subject to the following conditions: If the Base Purchase Amount is produced and made available by the City, SWMD will pay the City for the full amount, irrespective of the actual quantity of Base Purchase recycled water SMWD may request for delivery. SMWD will not, however, be obligated to pay the Base Purchase Amount for recycled water to the extent the City is unable to produce or deliver such quantities at the desired TDS pursuant to the Modified Permits. 55411.00000\40655632.1
9 4.6 Right of First Refusal. In addition to the Base Purchase Option, SMWD will have the right of first refusal to purchase additional recycled water the City generates at the Plant in excess of the Base Purchase Amount and the recycled water the City uses for its own retail customers (“Excess Recycled Water”).
During the Term of this Agreement, no later than March 1 of each year, City will provide SMWD with an estimate of the Excess Recycled Water it anticipates having for delivery during the upcoming fiscal year. SMWD will have sixty (60) days to notify City in writing of its desire to purchase all or a portion of the Excess Recycled Water for the upcoming fiscal year. Any remaining portion of Excess Recycled Water not purchased by SMWD would remain subject to the City’s sole discretion for sale within the upcoming fiscal year. The amount of Excess Recycled Water that SMWD agrees to purchase will be referred to in this Agreement as the “Additional Recycled Water” and the City will deliver such Additional Recycled Water to SMWD during the upcoming fiscal year subject to availability based on actual influent flows.
SMWD acknowledges that the actual availability of Excess Recycled Water is based on an estimate of recycled water production and City retail customer demand, both of which may vary during the actual contract year. The purchase of Additional Recycled Water will be subject to all of the terms and conditions of this Agreement. The Base Recycled Water and the Additional Recycled Water shall be collectively referred to as the “Purchased Recycled Water” for a contract year.
4.7 Purchase Price for Recycled Water. Purchased Recycled Water shall be charged to SMWD based on the Base Purchase Amount, plus actual purchases of Excess Recycled Water on a per acre-foot basis, utilizing the City Invoice Process described in Section 2.3. The charges shall be based on certain of the City’s adopted budgeted costs in its recycled water system, as shown in further detail in Exhibit D. The charges will be based on the following components defined below:
A. Fixed Costs per AF
The Fixed Costs means those operating and maintenance costs and expenses that are incurred regardless of actual treatment capacity use. The schedule attached hereto as Exhibit D indicates the Fixed Costs based on the City’s current cost categories. Labor costs shall be based on the actual salary and benefit costs paid for all employees operating and maintaining the system. Equipment, materials, and supplies shall be charged at actual cost. Fixed Costs do not include the cost to construct the Advanced Water Treatment Facility, capital repairs and replacements of any sort, or any non-cash items such as depreciation, recognition of changes in pension liabilities, or any obsolescent charges or any reserves therefore, or amortization of intangibles or other bookkeeping entries of similar nature.
Fixed Costs per AF shall be calculated based on the total Fixed Costs in a given Contract Year divided by the system’s total recycled water production capacity.
Total production capacity is 4,932 acre-feet as of the Effective Date. 55411.00000\40655632.1
10 B. Variable Costs per AF
Variable Costs means those costs which are incurred for treating and moving of recycled water, including primarily costs for power, chemicals, other related volumetric-driven supplies and costs. The schedule attached hereto as Exhibit D indicates the Variable Costs based on the City’s current cost categories. To the extent the City’s Plant has a single power meter (covering both wastewater treatment and recycled water production), variable power costs shall be allocated appropriately to recycled water production.
Variable Costs per AF shall be calculated based on the total Variable Costs for a given Contract Year divided by the actual acre-feet of recycled water produced.
Variable Costs per AF shall be reduced by SMWD’s proportional share of production use for any rebates, subsidies, or other revenues received by the City for its production of recycled water, such as from the Local Resources Program of the Metropolitan Water District of Southern California unless they are directly attributed to SMWD.
For billing purposes, and subject to the City Invoice Process described in Section
2.3, the Variable Cost per AF may initially be based on the recycled water expected to be produced.
C. Annualized Capital Costs for Advanced Water Treatment Facility per AF (Base Purchase Option)
The City expects to construct an Advanced Water Treatment Facility to meet the Water Quality Threshold requirements described under Section 5.3 and to fund the Facility with grants and bond or loan financing. Debt service on said financing in any given Contract Year may be recovered as an “Annualized Capital Cost” as provided below.
To the extent the City funds any portion of the Facility construction with cash (excluding any grant funding), such cash funding shall be converted to an amortized annual amount and recovered as an Annual Capitalized Cost, subject to the Parties’ mutual written concurrence. To the extent SMWD pre-pays all or a portion of its share of Facility capital costs with cash up front, such cash contribution shall be converted to an amortized annual amount which shall offset SMWD’s Annualized Capital Cost Requirements, subject to the Parties’ mutual written concurrence.
SMWD’s share of Annualized Capital Costs shall be based on its proportionate share of Plant production, including its share of the Base Purchase Amount as calculated below. If SMWD purchases Additional Recycled Water, the costs of such Additional Recycled Water shall be calculated as provided in Subsection (D) below.
SMWD’s share of the Annualized Capital Costs for the Base Purchase Option shall be calculated based on the total Annualized Capital Costs of the Facility multiplied by a fixed 46.2% (based on the Base Recycled Water amount (1,000 AF) divided by the total Base Recycled Water plus the current recycled water produced for the City’s customers (approximately 1,165 AF)).
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11 D. Annualized Capital Costs for Advanced Water Treatment Facility per AF – Additional Recycled Water
If SMWD purchases Additional Recycled Water in a given year, SMWD shall pay additional Annualized Capital Costs for such water. Because a fixed percentage of such costs are recovered over the Base Purchase Option, the remaining amount owed for Additional Recycled Water will be calculated as follows:
1) SMWD’s percentage of total Plant recycled water production shall be determined as the total Additional Recycled Water purchased plus the Base Purchase Option, divided by the total Plant production in the given year.
2) SMWD’s total Annualized Capital Cost obligation shall be the product of the City’s total Annualized Capital Costs of the Facility and the percentage determined under 1)
3) SMWD’s net remaining Annualized Capital Costs owed shall be the amount determined under 2), reduced by the Annualized Capital Costs attributable to the Base Purchase Option.
4) SMWD’s net remaining Annualized Capital Costs determined under 3) shall be divided by the acre-feet of Additional Recycled Water purchased and included as a cost for the Additional Recycled Water.
The price for City recycled water paid by SMWD will depend on the total quantity delivered over a Contract Year based on the following formula:
• Tier 1 – Base Purchase Option
o Per AF for First 1,000 AF = [A] + [B] + [C]
• Tier 2 – Additional Recycled Water
o Per AF for Next 1,400 AF = [A] + [B] + [D]
4.8 Capital Repair and Replacement Costs for Advanced Water Treatment Facility.
In addition to its payments for recycled water described above, in accordance with Section
4.9 below, SMWD shall make a one-time payment to the City for SMWD’s proportionate share of capital repair and replacement projects related to the Advanced Water Treatment Facility, primarily expected to include membrane and filter replacements. The proportionate share shall be fixed at 46.2%, which is based on the Base Recycled Water amount (1,000 AF) divided by the total Base Recycled Water plus the current recycled water produced for the City’s customers (approximately 1,350 AF). Upon the completion of the Advanced 55411.00000\40655632.1
12 Water Treatment Facility, SMWD shall provide the City with an initial deposit of $30,000, which the City will deposit into a Short-Term Working Capital Fund (Fund). Additional funding required by SMWD for the Fund shall be determined annually based on an expected list of such repair and replacement projects developed by the City and agreed to by SMWD.
4.9 Existing System Capital Contribution.
No later than 60 days following the effective date, SMWD shall pay City $1,100,000 to fund future capital repair and replacement projects for the existing recycled water treatment facilities for the following thirty (30) years. The City may use these funds for capital repair and replacement at its discretion. However, if the City is unable to deliver the Base Purchase Right of 1,000 AF of recycled water to SMWD, it will repay SMWD three (3) percent of the original payment per year that Base Purchase Right is not delivered on each July 1 through and including 2052. If the project is not built, the City will repay SMWD $1,100,000 within 60 days upon written notice from SMWD 36 months after the Agreement is approved.
4.10 Delivery of Recycled Water.
4.10.1 SMWD will be responsible for all costs associated with the interconnection of the SMWD recycled water system with the City’s recycled water system. The City will be responsible for delivery of recycled water to the interconnection point with SMWD’s recycled water system pressurized from Reservoir 11 or equal. SMWD will be responsible for delivery from the interconnection to its customers or to storage.
Delivery of recycled water from the City to SMWD will be provided when there is capacity within the City’s system. During high demand periods throughout the summer months, the City may limit the delivery of recycled water to SMWD, but only as necessary to deliver water to City’s retail customers. City will provide SMWD with an estimate of delivery restrictions prior to the beginning of each month. The City and SMWD will communicate through a mutual control and communications system, which will be how the City indicates the volume per day of recycled water available, and how SMWD will indicate its daily call for recycled water. SMWD will operate the SMWD system such that a minimum water surface elevation in Reservoir 11 is maintained.
4.10.2 Recycled water delivered from the City to SMWD or from SMWD to City shall be measured at the interconnection point. The meters shall be calibrated for accuracy annually or at a mutually agreed upon lesser or greater frequency. Recycled water flow measuring shall be accurate within 5% of actual flow throughout the anticipated flow range.
4.11 Trampas Reservoir Capacity.
As additional consideration for the obligations of the City pursuant to this Section 4, and notwithstanding the Term of this Agreement, SMWD hereby grants to the City a right to storage capacity in the Trampas Reservoir of two hundred (200) AF (“Trampas Capacity Right”) for the useful life of the Reservoir. The City shall pay for the first one hundred (100) AF of this Capacity Right with a one-time capital contribution payment of $3,100,000 no later than sixty (60) days following the Effective Date. .Notwithstanding the Term of this Agreement, the City 55411.00000\40655632.1
13 shall retain its ownership of the first 100 AF of the Capacity Right for the useful life of the reservoir.
SMWD may use these funds at its discretion. However, if SMWD, once the Modified Permit is effective, is unable to store and transmit the City recycled water as contemplated under City’s Trampas Capacity Right, SMWD shall repay the City three (3) percent of the original payment per year that capacity is not provided on each July 1 through and including 2052. If the advanced recycled water quality project is not built, SMWD will repay the City $3,100,000 within 60 days upon written notice from SMWD 36 months after the Agreement is approved. .The City’s ledger for water delivered and stored in Trampas Reservoir will be subject to adjustment for losses incurred as a result of evaporation on an annual basis based on (i) data maintained and updated from time to time by SMWD; or (ii) such factors for evaporation loss as are generally utilized and accepted for use by public water agencies in the State of California.
At the signing of the agreement evaporation losses are estimated at 8%, annually.
4.12 Cost Allocations – Trampas and Recycled Water Conveyance System. The City will make quarterly payments to SMWD to cover its allocable share of the operational costs for the Trampas Reservoir, conveyance system, and pumping facilities. SMWD will provide the City with quarterly invoices basis, based on actual costs and operational usage, which shall include detailed backup information. The City will pay all invoices within thirty (30) days of receipt.
Payments shall be determined as follows:
i. Trampas Reservoir Storage Fee (Fixed, Variable, and Capital Components)
The City will pay fixed operating and maintenance costs for its proportionate share such costs based on its first 100 AF (2%) of capacity right. (Fixed operating and maintenance costs and expenses include those incurred regardless of actual use, including labor, equipment, materials and supplies, excluding any non-cash items such as depreciation, recognition of changes in pension liabilities, or any obsolescent charges or any reserves therefore, or amortization of intangibles or other bookkeeping entries of similar nature).
The City will pay variable operating and maintenance costs based on its proportionate share of water stored in Trampas Reservoir. Variable operating and maintenance costs will include those incurred for the storing and moving of water which are dependent on the quantity of water, for example costs of power, chemicals, and other material and supplies.
The City will also pay its proportionate share of capital repair and replacement costs at the Trampas Reservoir proportionate to its first 100 AF of capacity. ii. Pico Recycled Water Pump Station Costs (Power, Fixed, and Capital Components)
The City will pay for power costs based on its percentage share of actual metered water. 55411.00000\40655632.1
14 The City will pay for fixed operation and maintenance costs based on its ownership percentage of 24%, as described in Section 5. (Fixed operating and maintenance costs and expenses include those incurred regardless of actual use, including labor, equipment, materials and supplies, excluding any non-cash items such as depreciation, recognition of changes in pension liabilities, or any obsolescent charges or any reserves therefore, or amortization of intangibles or other bookkeeping entries of similar nature).
The City will pay for its proportionate share of capital repair and replacement costs based on its ownership percentage of 24%
4.13 Option to Repurchase. To the extent that SMWD has stored water purchased from the City in the Trampas Reservoir or another SMWD storage facility that SMWD has not contractually committed to provide to SMWD customers, the City will have the option, during a water emergency or such other event to be agreed upon with SMWD, to repurchase recycled water from SMWD in any given water year. The amount of recycled water that City repurchases and leaves in storage will be subject to adjustment for transportation and evaporation losses as determined pursuant to Section 4.11. The price for repurchased water will be the price paid by SMWD for the last tier of water acquired in the most recent calendar year as described in Section 4.7.D, plus the actual cost to deliver the recycled water back to the interconnection point with the City’s recycled water system. The quality of the repurchased water will be the quality of water held in the Trampas Reservoir.
5. Projects Under Construction and Future Coordination.
Pico Recycled Water Pump Station. SMWD has completed construction of the Pico Recycled Water Pump Station, which will facilitate the conveyance of recycled between the City and SMWD. The Pump Station consists of three pumps, one of which will specifically facilitate the City’s needs to provide recycled water service an area known as Bella Collina. In order for SMWD to provide recycled water from SMWD to the City, two pressure reducing valves have been incorporated into this pump station. The City shall pay SMWD $611,800 for an ownership share of 24% of the of the Pico Recycled Water Pump Station no later than sixty (60) days following the date that SMWD completes the project and provides the City with an invoice for its share of the final project costs. Notwithstanding the Term of this Agreement, the City shall retain its ownership in its share of the pump station for the useful life of the pump station. If the advanced recycled water quality project is not built, SMWD will repay the City $611,800 within 60 days upon written notice from SMWD 36 months after the Agreement is approved.
5.1 Coordination on Communication Systems. The City and SMWD contemplate coordinating the installation of mutually beneficial data gathering and telecommunication systems, such as antennae, metering, or other monitoring devices. The systems are intended to share information on the availability and movement of recycled water within the Talega Area, and to track usage and costs at the Pico Recycled Water Pump Station. The City and SMWD expect to grant mutual access to their respective facilities to install such systems in the area, as may be needed, to facilitate this mutually beneficial objective. SMWD will pay the cost for an antennae and installation on an existing tower at the City’s Reservoir 9 facility to complete a communications link between the City and the District for coordination of water recycled water 55411.00000\40655632.1
15 deliveries between the City and SMWD, and other operational communications. The antennae shall be acceptable to the City. The antennae is expected to be approximately 36-inch by 4- inch by 4-inch, with cable to switch box cabinet 16-inch by 12-inch by 6-inch. The City shall provide 120-volt ac power maximum 5 amps. Additional communications for the benefit of the City or the District may be provided through this antennae or other City or District facilities if mutually agreed upon.
5.2 Coordination on Mutually Beneficial Power Rates and Costs. The City and SMWD contemplate coordinating and pursuing the most advantageous power rates and costs for the Pico Recycled Water Pump Station and all other SMWD facilities related to the wastewater and recycled water intertie with the City in the Talega Area. The parties contemplate that, to the extent cost savings can be generated on facilities which the City does not pay a proportionate share of costs, the City would be entitled to receive up to 30% of such savings, in the form of an annual credit to charges owed to SMWD.
5.3 Financing of City Treatment Facility. The City contemplates constructing a new treatment facility adjacent to the Plant in order to meet the Water Quality Threshold, as discussed under Section 4. In the event the City seeks outside financing for the costs to construct the treatment facility, the Parties contemplate that SMWD and the City may seek to develop a mutually acceptable loan or financing arrangement. SMWD may consider loaning the City all or portion of the necessary funds, subject to repayment and legal provisions to be approved by the Parties’ governing bodies.
6. City Purchase of SMWD Recycled Water.
6.1 Definition of SMWD Recycled Water. For the purposes of this Agreement, “SMWD Recycled Water” will be liquid effluent which SMWD produces, stores, and delivers to the City for non-potable use as further defined in Title 22 of the California Code of Regulations.
6.2 Quantity of SMWD Recycled Water available to the City. For a period not to exceed 30 months from the effective date, the City shall inform SMWD, by March 1 of each year of its anticipated purchases for the upcoming Fiscal Year commencing July 1. SMWD commits to supply the City up to 200 AF of SWMD recycled water within each Fiscal Year. The quantity and timing requested of delivery of SMWD recycled water shall be at the discretion of the City but shall be subject to the delivery provisions and availability in Section 6.4. The purchase terms contained in Section 6 may be extended beyond the initial 30-month period, subject to mutual written agreement by the City and SMWD.
6.3 Purchase Price for SMWD Recycled Water. The City shall pay for water delivered based on the then-current SMWD recycled water rate charged for uniform commercial users ($2.51 per ccf or approximately $1,093 per AF as of January 1, 2022). SMWD shall provide the City with monthly invoices and payment shall be due within 30 days.
6.4 Delivery of Recycled Water by SMWD. SMWD will be responsible for delivery of SMWD recycled water to the interconnection point with SMWD’s recycled water system pressurized to the City upper pressure zone. Delivery of SMWD recycled water to the City will be provided when there is capacity within SMWD’s system, as determined by SMWD. 55411.00000\40655632.1
16 During high demand periods throughout the summer months, SMWD may limit the delivery of recycled water the City, but only as necessary to deliver water to SMWD’s retail customers. SMWD will provide the City with an estimate of delivery restrictions prior to the beginning of each month. The City and SMWD will communicate through a mutual control and communications system or other methods as may be mutually agreed upon.
6.5 Recycled water delivered from SMWD to City shall be measured at the interconnection point. The meters shall be calibrated for accuracy annually or at a mutually agreed upon lesser or greater frequency. Recycled water flow measuring shall be accurate within 5% of actual flow throughout the anticipated flow range.
7. Indemnity and Liability Provisions.
7.1 Indemnity by SMWD. SMWD hereby agrees, at its sole cost and expense, to indemnify, protect, hold harmless and defend City, its elected officials, officers, employees, agents, successors and assigns (collectively, the “SMWD Indemnified Parties”) from and against any and all claims, demands, damages, losses, liabilities, obligations, penalties, fines, actions, causes of action, judgments, suits, proceedings, costs, disbursements and expenses (including, without limitation, fees, disbursements and cost of attorneys, consultants and experts) (collectively "Damages") which may at any time be imposed upon, incurred, or suffered by, or asserted or awarded against, any SMWD Indemnified Party directly or indirectly relating to or arising from (i) the breach of the obligations of SMWD under this Agreement; (ii) the operation of the SMWD System; or (iii) the acceptance and treatment of wastewater from SMWD that is non-conforming with the quality requirements for wastewater set forth herein. This indemnity shall not apply to any Damages or Third Party Claims which result from the failure of the City to properly treat wastewater which conforms with the terms of this Agreement.
7.2 Indemnity by City. City hereby agrees, at its sole cost and expense, to indemnify, protect, hold harmless and defend SMWD, its elected officials, officers, employees, agents, successors and assigns (collectively, the “City Indemnified Parties”) from and against any and all Damages which may at any time be imposed upon, incurred, or suffered by, or asserted or awarded against, any City Indemnified Party directly or indirectly relating to or arising from (i) the breach of the obligations of City under this Agreement; (ii) the operation of the City System and the Plant; or (iii) the supply of recycled water to SMWD that does not meet the quality requirements for recycled water as described in this Agreement. This indemnity shall not apply to any Damages or Third Party Claims which are the responsibility of SMWD pursuant to Section 6.1.
7.3 Defense of Third Party Claims. Promptly following receipt of any written claim or legal proceeding asserted by a person or entity which is not a party to this Agreement (a “Third Party Claim”), the indemnified parties shall notify the indemnifying party. The indemnifying party shall have a period of 30 days (or such lesser period as may be required to timely respond to a Third Party Claim) following the receipt of such notice to undertake and diligently pursue the defense of the Third Party Claim with legal counsel reasonably acceptable to the indemnified parties. The indemnifying party shall reimburse the indemnified parties for any legal expense reasonably incurred by indemnified parties to 55411.00000\40655632.1
17 timely respond to a Third Party Claim prior to the indemnifying party assuming the defense thereof. The indemnifying party shall not consent to entry of judgment or enter into any settlement agreement, without the consent of the indemnified parties, which does not include a complete and unconditional release of the indemnified parties or which imposes injunctive or other equitable relief against the indemnified parties. If the indemnifying party fails to assume and diligently pursue the defense of a Third Party Claim, the indemnified parties may defend against such Third Party Claim in such manner as it may deem appropriate, including without limitation settlement thereof on such terms as the indemnified parties may reasonably deem appropriate, and to pursue such remedies as may be available to the indemnified parties against the indemnifying party.
8. Termination and Remedies. In the event of a material breach of any material term or provision of this Agreement by either party, and such breach is not cured within ninety (90) days after service of written notice of such breach upon the breaching party, then the non-breaching party shall have the right and option to terminate this Agreement, provided, however, that should the breaching party, prior to the expiration of the ninety (90) day cure period, diligently commences to cure such breach, but is unable to do so within the ninety (90) day period, then such period shall be extended for an additional ninety (90) day period. Default on the any of the following obligations shall not constitute a material breach of the Agreement and shall be subject to the specific remedies corresponding to these minor defaults, as described in the sections cited below:
8.1 The following shall be cause for termination of Section 4 of this Agreement by either Party and subject exclusively to the remedy of return of capital as prescribed under Sections
4.9, 4.11, and 5.1 within 30 days following termination:
8.1.1 The City’s and SMWD’s commitment to obtain Modified Permits as described in Section 4.2,
8.1.2 The City’s failure to award a contract for the construction of an Advanced Water Treatment Facility at the Plant within 18 months following the Effective Date Section 4 of the Agreement, which deadline may be extended by mutual written agreement of the Parties;
8.1.3 The City’s failure to complete the Advanced Water Treatment Facility within 36 months of the Approval of this Agreement;
8.1.4 The City’s commitment to achieve the Water Quality Threshold as described in Section 4.4;
8.1.5 The City’s commitment to deliver 1,000 AF of recycled water to SMWD pursuant to Section 4.5;
8.2 SMWD’s commitment to make Trampas Reservoir capacity available to the City pursuant to Section 4.11, subject exclusively to the remedies provided therein.
Except as noted above, each Party shall have all of the remedies available at law or equity for a breach of this Agreement by the other Party. Such remedies will include the remedy of 55411.00000\40655632.1
18 specific performance to enforce the terms of this Agreement. Notwithstanding the foregoing, neither Party shall be liable to the other for any special, indirect or consequential damages of any kind resulting from a breach of this Agreement, whether or not such damages were reasonably foreseeable by the other party.
8.3 Replacement of City Water Reclamation Plant, Los Molinos Pump Station and Pico Trunk Sewer Line. If during the Term it becomes necessary to do a major renovation or replacement of the Plant, the Los Molinos Pump Station or the Pico Trunk Sewer Line either as a result of a force majeure event or such facilities reaching the end of their normal design life, then City will give SMWD written notice of the need to undertake such renovation or replacement and SMWD will have the option to terminate the Agreement, continue a service arrangement on new terms agreed upon by the parties, or buy into the capacity of the Plant or other such facilities by paying its proportional share of the cost of such renovation or replacement. If SMWD has not given written notice of its election to the City within one hundred eighty (180) days of receipt of the City’s notice, then SMWD will be deemed to have elected to terminate.
9. California Law. In the event of a breach of any term or provision of this Agreement by either party, both parties shall have all rights and remedies granted by California law. Nothing contained in this Agreement shall be construed as limiting any of the rights and remedies of either party upon any breach of a term or provision of this Agreement.
10. Force Majeure. If by reason of acts of God, earthquakes, droughts, floods, storms, explosion, fires, labor troubles, strikes, insurrection, riots, acts of the public enemy, or federal, state, or local law, order, rule, or regulation, a Party is prevented, in whole or in part, from fulfilling its obligations under this Agreement, then such Party shall be excused from such non-performance for such reasonable period as is necessary to restore performance provided that the non-performing party is working diligently to mitigate the conditions created by the force majeure. Notwithstanding the foregoing, if the force majeure continues for a period in excess of one hundred eighty (180) days, then the other Party may terminate this Agreement.
11. Entire Agreement. This Agreement constitutes the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, both written and verbal, between the parties with respect to the subject matter hereof.
12. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties thereto and their successors and assigns. The Agreement may not be assigned by either party without the prior written consent of the other party.
13. Amendments. This Agreement may not be amended, altered or modified except in writing signed by the parties hereto. No waiver by either party of any breach by the other party of any provisions of this Agreement shall be construed as a waiver of any subsequent breach, whether of the same or of any different provision of this Agreement. No course of conduct or series of dealings shall constitute a waiver hereunder.
55411.00000\40655632.1
19 14. Notice. In the event that written notice must or may be given hereunder, such notice shall be sent via a commercial overnight courier such as Federal Express or UPS to the other party at the following address or such other address as a party may notify the other in writing:
If to City: Utilities Director
City of San Clemente
380 Avenida Pico, Building N
City of San Clemente, CA 92672
If to SMWD: General Manager
Santa Margarita Water District
26111 Antonio Parkway
Rancho Santa Margarita, CA 92688
Notice shall be sent to the above referenced persons unless the parties are otherwise notified in writing of a change in the name or address of the person to be notified.
15. Governing Law. This Agreement shall be governed by and construed under the laws of the State of California and venue for any action arising out of this Agreement shall be in the Superior Court of the State of California located in the County of Orange.
16. Attorney's Fees and Costs. The prevailing party in any action brought to enforce the terms of this Agreement in court or arbitration shall be entitled to an award of its reasonable attorney's fees and costs, including without limitation, the costs of discovery and expert witnesses in connection with any such action.
Signature Page Follows
55411.00000\40655632.1
20 IN WITNESS WHEREOF, the parties hereto have by their duly authorized officers or representatives executed this Agreement all on the day and year first above written.
CITY OF SAN CLEMENTE
Dated: _______________ By:__________________________
Its: __________________________
ATTEST:
_________________________________
City Clerk of the City of
San Clemente, California
SANTA MARGARITA WATER
DISTRICT
Dated: ________________ By:__________________________
Its:__________________________
ATTEST:
_________________________________
Board Secretary of the
Santa Margarita Water District
City Sewer Fund (472) Cost Items* Cost
Categories
FY 2023
Amounts
Allocation
Basis
Allocation % SMWD Share
472-41010-000-00000 SALARIES, REGULAR FULL TIME Personnel $796,953 Capacity 9.3% $74,321 472-41030-000-00000 SALARIES, HOURLY PART TIME Personnel $0 Capacity 9.3% $0 472-41310-000-00000 REGULAR OVERTIME Personnel $0 Capacity 9.3% $0 472-41320-000-00000 PREMIUM OVERTIME - REGULAR Personnel $83,835 Capacity 9.3% $7,818 472-41330-000-00000 HOLIDAY PAY Personnel $0 Capacity 9.3% $0 472-41350-000-00000 ACCRUED LEAVE PAYOFF Personnel $5,283 Capacity 9.3% $493 472-41410-000-00000 EDUCATION INCENTIVE PAY Personnel $256 Capacity 9.3% $24 472-41460-000-00000 ASSIGNMENT PAY Personnel $50,642 Capacity 9.3% $4,723 472-41535-000-00000 PHONE ALLOWANCE Benefits $275 Capacity 9.3% $26 472-41710-000-00000 EDUCATIONAL REIMBURSEMENT Benefits $6,793 Capacity 9.3% $633 472-41951-000-00000 FICA Benefits $57,345 Capacity 9.3% $5,348 472-41954-000-00000 MEDICARE Benefits $13,656 Capacity 9.3% $1,274 472-41957-000-00000 STATE DISABILITY INSURANCE Benefits $9,991 Capacity 9.3% $932 472-41958-000-00000 A.D.& D. INSURANCE Benefits $133 Capacity 9.3% $12 472-41959-000-00000 LONG TERM DISABILITY INSURANCE Benefits $2,739 Capacity 9.3% $255 472-41961-000-00000 STATE UNEMPLOYMENT INSURANCE Benefits $2,063 Capacity 9.3% $192 472-41963-000-00000 WORKERS COMPENSATION INS. Benefits $42,783 Capacity 9.3% $3,990 472-41965-000-00000 LIFE INSURANCE Benefits $1,595 Capacity 9.3% $149 472-41967-000-00000 MEDICAL INSURANCE Benefits $150,466 Capacity 9.3% $14,032 472-41975-000-00000 SAN CLEMENTE RETIREMENT PREM. Benefits $82,724 Capacity 9.3% $7,715 472-41976-000-00000 RETIREMENT PREMIUM (LEGACY) Benefits $69,100 Capacity 9.3% $6,444 472-41977-000-00000 RETIREMENT PREM-CALPERS (UAL) Benefits $34,350 Capacity 9.3% $3,203 472-41978-000-00000 RETIREMENT EXPENSE Benefits $244,565 N/A 0.0% $0 472-41984-000-00000 DEFERRED COMPENSATION - P/T Benefits $0 Capacity 9.3% $0 472-42010-000-00000 OFFICE SUPPLIES Operations $0 Capacity 9.3% $0 472-42030-000-00000 POSTAGE Operations $0 Capacity 9.3% $0 472-42150-000-00000 CHEMICAL SUPPLIES Operations $292,410 Volume 18.2% $53,240 472-42170-000-00000 LABORATORY SUPPLIES Operations $19,130 Capacity 9.3% $1,784 472-42190-000-00000 JANITORIAL SUPPLIES Operations $0 Capacity 9.3% $0 472-42280-000-00000 PROTECTIVE SUPPLIES Operations $7,809 Capacity 9.3% $728 472-42360-000-00000 EDUCATIONAL MATERIAL Operations $168 Capacity 9.3% $16 472-42380-000-00000 OFFICE FURNITURE/EQUIPMENT (NON-CAP) Operations $99 Capacity 9.3% $9 472-42390-000-00000 SMALL TOOLS AND EQUIPMENT Operations $7,180 Capacity 9.3% $670 472-42410-000-00000 CLOTHING AND UNIFORMS Operations $999 Capacity 9.3% $93 472-42490-000-00000 OTHER OPERATING SUPPLIES Operations $45,056 Volume 18.2% $8,204 472-42530-000-00000 PAINTING SUPPLIES Operations $0 Capacity 9.3% $0 472-42590-000-00000 OTHER MAINTENANCE SUPPLIES Operations $90,664 Capacity 9.3% $8,455 472-42610-000-00000 PURCHASED WATER Operations $195,291 Capacity 9.3% $18,212 472-43050-000-00000 PRINTING AND BINDING Operations $0 Capacity 9.3% $0 472-43060-000-00000 TRAVEL AND TRAINING Operations $4,358 Capacity 9.3% $406 472-43320-000-00000 NATURAL GAS Operations $28,040 Volume 18.2% $5,105 472-43330-000-00000 ELECTRICITY Operations $638,414 Volume 18.2% $116,238 472-43340-000-00000 WATER Operations $5,988 Capacity 9.3% $558 472-43370-000-00000 LANDFILL FEES Operations $373,775 Volume 18.2% $68,054 472-43410-000-00000 MAINTENANCE OF BUILDINGS Operations $374 Capacity 9.3% $35 472-43440-000-00000 MAINTENANCE OF AUTO EQUIPMENT Operations $0 Capacity 9.3% $0 472-43450-000-00000 MAINTENANCE OF OPERATING EQUIP Operations $148,026 Volume 18.2% $26,952 472-43690-000-00000 OTHER PROFESSIONAL SERVICES Operations $19,097 Capacity 9.3% $1,781 472-43730-000-00000 RENTAL OF EQUIPMENT Operations $13,530 Capacity 9.3% $1,262 472-43890-000-00000 OTHER CONTRACTUAL SERVICES Operations $35,970 Volume 18.2% $6,549 472-44110-000-00000 DUES AND SUBSCRIPTIONS Operations $4,520 Capacity 9.3% $422 472-44260-000-00000 LICENSES AND PERMITS Operations $29,219 Capacity 9.3% $2,725 472-44800-000-00000 DEPRECIATION Non-cash $1,415,654 N/A 0.0% $0 472-44801-000-00000 DEPREC. RESERVE CONTRIBUTION Non-cash $200,000 N/A 0.0% $0 472-45500-000-00000 MACHINERY & EQUIPMENT Operations $0 Capacity 9.3% $0 472-46080-000-00000 INFORMATION TECHNOLOGY CHARGES Operations $108,100 Capacity 9.3% $10,081 472-46110-000-00000 COMMUNICATIONS CHARGES Operations $3,710 Capacity 9.3% $346 472-46130-000-00000 FLEET RENTAL CHARGES Operations $102,700 Capacity 9.3% $9,577 472-46510-000-00000 GENERAL FUND OVERHEAD CHARGES Operations $277,990 Capacity 9.3% $25,924 472-47130-000-00000 TRANSFER TO FLEET MAINT. FUND Operations $0 Capacity 9.3% $0 Totals $5,723,819 Total SMWD Share $499,010
SMWD Quarterly Invoice Amount $124,753
Allocation Basis Calculations (Initial) Component
Type
% Allocation SMWD Flows
(MGD)
City Flows
(MGD)
City Treatment
Plant Capacity
SMWD Share of Treatment Capacity Capacity 9.3% 0.65 NA 6.97 SMWD Share of Treatment Flows Volume 18.2% 0.65 2.92 NA SMWD Share of Treatment Loadings Loadings 18.2% 0.65 2.92 NA Percentages in "% Allocation column" will fluctuate each year based on actual SMWD and City Flows. *Cost items indicated are based on City's current cost detail and are intended to illustrate the methodology governed by the Agreement.
Cost items and classifications may evolve over time based on City accounts and accounting practices.
Exhibit A - Leased Wastewater Costs
i. Los Molinos Pump Station - Operating Costs - Initial Calculation Basis Subsequent annual amounts will be based on actual costs and usage as defined in the Agreement.
Operating Cost Components FY 2021 Data Calculation Basis / Notes Power $21,120 Actual Flows and Actual Costs
O&M based on Work Order Costs $7,209 SMWD Capacity Share and Actual Costs 5% Escalation Factor $1,416
Total Year One Amount* $29,745
Quarterly invoice amount $7,436
*Subject to year-end true-up under City Invoice Process. Future amounts subject to change based on actual data and estimates. ii. Los Molinos Pump Station - Capital Contribution - Initial Year Calculation Basis / Illustrative Only Subsequent annual amounts increase annually as defined in the Agreement.
Equipment Life Replacement Annual Capacity Flow Discount / SMWD Cost Cost Ratio Adjustment Share*
Concrete 50 $2,300,000 $46,000 25.80% 50% $5,934
Electrical equipment 20 $1,250,000 $62,500 25.80% 50% $8,063 Pumps & motors 5 $200,000 $40,000 25.80% 0% $10,320
Piping 50 $2,000,000 $40,000 25.80% 50% $5,160
Totals $5,750,000 $188,500 $29,477
Total Year 1 Amount (+5%) $30,950
Quarterly invoice amount $7,738
iii. Pico Trunk Sewer Line Costs - Initial Year Calculation Basis / Illustrative Only Subsequent annual amounts increase annually as defined in the Agreement.
Pico Trunk Sewer Line Capital Calculation
Cost per SMWD Percent Flow
Sewer Pipeline Description: Length *Cost/LF (liner) Liner Life year 67% 11,700 linear feet Transmission main 11,700 $ 125 1,467,937 75 $19,572 $13,126 *escalated to January 2022 dollars Total Year 1 Amount $13,126 Quarterly invoice amount $3,282
Capacity Based on Flow
Pipeline Reach CSC Ave. SMWD Ave. CSC Share % SMWD Share % SC001 0.13 0.65 0.17 83%
SC002 0.26 0.65 0.29 71%
SC003 0.4 0.65 0.38 62%
SC006 0.61 0.65 0.48 52%
Average 0.33 67%
* Costs calculated based on estimated annualized replacement cost multiplied by capacity or flow (pumps and motors) with a 50% discount rate due to limited wear and tear on equipment from the City receiving additional flow.
Exhibit B - Los Molinos Pump Station and Pico Trunk Sewer Line Costs City Sewer Administration Fund (471) Cost Items* Initial City Amounts
Agreement
Reduction
Agreement
Reductions
Agreement FY
2023 Amounts
$347,261 Utility Director $127,899 $219,362
$0 $0
$85 $85
$7,868 $7,868
$2,100 $2,100
$292 $292
$18,708 $18,708
$5,061 $5,061
$3,255 $3,255
$66 $66
$1,125 $1,125
$772 $772
$7,646 $7,646
$807 $807
$52,370 $52,370
$32,431 $32,431
$29,890 $29,890
$0
$3,883 $3,883
$986 $986
$1,669 $1,669
$645 $645
$0 $0
471-42380-000-00000 OFFICE FURNITURE/EQUIPMENT (NON-CAP) $620 $620 $3,728 $3,728
$130 $130
$371 $371
$949 $949
$176,182 $176,182
$0 $0
$4,222 $4,222
$41,809 $41,809
$0 $0
$168,195 Utility Billing $127,899 $40,296
$21,830 $21,830
$2,549 $2,549
$2,292 $2,292
$2,428 $2,428
$6,976 $6,976
$182,377 SOCWA / Billing $176,111 $6,266
$0 $0
$1,655 $1,655
$598 $598
$750 $750
$210,770 $210,770 471-46050-000-00000 POSTAGE CHARGES $0 $0 471-46060-000-00000 DUPLICATING CHARGES $1,050 $1,050 471-46080-000-00000 INFORMATION TECHNOLOGY CHARGES $26,090 $26,090 471-46110-000-00000 COMMUNICATIONS CHARGES $19,930 $19,930 471-46130-000-00000 FLEET RENTAL CHARGES $7,510 $7,510 471-46340-000-00000 CHARGES FROM PARKS MAINTENANCE $0 $0 471-46510-000-00000 GENERAL FUND OVERHEAD CHARGES $124,260 Utility Billing $108,919 $15,341 Totals $1,524,190 $ 540,828 $ 983,361
*Cost items indicated are based on City's current cost detail and are intended to illustrate the methodology governed by the Agreement.
Cost items and classifications may evolve over time based on City accounts and accounting practices. $983,361
58%
$570,350
9.33%
$53,189
$13,297
471-41530-000-00000 AUTO ALLOWANCE
Exhibit C - Administrative Costs
471-41010-000-00000 SALARIES, REGULAR FULL TIME
471-41030-000-00000 SALARIES, HOURLY PART TIME
471-41320-000-00000 PREMIUM OVERTIME - REGULAR
471-41350-000-00000 ACCRUED LEAVE PAYOFF
471-41976-000-00000 RETIREMENT PREMIUM (LEGACY)
471-41535-000-00000 PHONE ALLOWANCE
471-41951-000-00000 FICA
471-41954-000-00000 MEDICARE
471-41957-000-00000 STATE DISABILITY INSURANCE
471-41958-000-00000 A.D.& D. INSURANCE
471-41959-000-00000 LONG TERM DISABILITY INSURANCE
471-41961-000-00000 STATE UNEMPLOYMENT INSURANCE
471-41963-000-00000 WORKERS COMPENSATION INS.
471-41965-000-00000 LIFE INSURANCE
471-41967-000-00000 MEDICAL INSURANCE
471-41975-000-00000 SAN CLEMENTE RETIREMENT PREM.
471-42130-000-00000 MEDICAL SUPPLIES
471-42360-000-00000 EDUCATIONAL MATERIAL
471-42410-000-00000 CLOTHING AND UNIFORMS
471-42490-000-00000 OTHER OPERATING SUPPLIES
471-41984-000-00000 DEFERRED COMPENSATION - P/T
471-42010-000-00000 OFFICE SUPPLIES
471-42030-000-00000 POSTAGE
471-42050-000-00000 DATA PROCESSING SUPPLIES
471-43690-000-00000 OTHER PROFESSIONAL SERVICES
471-43050-000-00000 PRINTING AND BINDING
471-43060-000-00000 TRAVEL AND TRAINING
471-43120-000-00000 PROPERTY INSURANCE
471-43410-000-00000 MAINTENANCE OF BUILDINGS
471-43420-000-00000 MAINTENANCE OF IMPROVEMENTS
471-43425-000-00000 MAINTENANCE OF LANDSCAPING
471-43450-000-00000 MAINTENANCE OF OPERATING EQUIP
471-43456-000-00000 MAINT. OF COMPUTER SOFTWARE
471-43480-000-00000 CONTRACTED CUSTODIAL SERVICES
471-43565-000-00000 ANSWERING SERVICE
471-43640-000-00000 OTHER LEGAL SERVICES
471-46030-000-00000 INSURANCE CHARGES
471-44260-000-00000 LICENSES AND PERMITS
471-44800-000-00000 DEPRECIATION
471-43750-000-00000 RENTAL OF UNIFORMS
471-43890-000-00000 OTHER CONTRACTUAL SERVICES
471-44015-000-00000 FINES & CITATIONS
471-44110-000-00000 DUES AND SUBSCRIPTIONS
6. Quarterly Invoice Amount (Step 5 *25%).
Steps for Allocating Administrative Costs to SMWD:
1. Determine applicable total amount, after deducting certain components as above.
2. Determine the proportion of the City's Treatment Costs (Fund 472) to the City's total Treatment Costs (472) + Collection System Costs (473).
3. Multiple the Step 1 amount by Step 2 percentage
4. Determine SMWD's share of City Plant treatment capacity (See Exhibit A)
5. Multiple Step 3 by Step 4 to get SMWD's share of Administrative Costs.
City Water Reclamation Fund (465) Cost Items* FY 2023 Amounts Cost Categories Allocation Basis Agreement Costs 465-41010-000-00000 SALARIES, REGULAR FULL TIME $265,180 Personnel Fixed Costs $265,180 465-41030-000-00000 SALARIES, HOURLY PART TIME $0 Personnel Fixed Costs $0 465-41310-000-00000 REGULAR OVERTIME $0 Personnel Fixed Costs $0 465-41320-000-00000 PREMIUM OVERTIME - REGULAR $33,613 Personnel Fixed Costs $33,613 465-41321-000-00000 PREMIUM OVERTIME - PART-TIME $0 Personnel Fixed Costs $0 465-41330-000-00000 HOLIDAY PAY $0 Personnel Fixed Costs $0 465-41350-000-00000 ACCRUED LEAVE PAYOFF $1,867 Personnel Fixed Costs $1,867 465-41410-000-00000 EDUCATION INCENTIVE PAY $45 Personnel Fixed Costs $45 465-41460-000-00000 ASSIGNMENT PAY $15,038 Personnel Fixed Costs $15,038 465-41535-000-00000 PHONE ALLOWANCE $49 Personnel Fixed Costs $49 465-41951-000-00000 FICA $18,888 Benefits Fixed Costs $18,888 465-41954-000-00000 MEDICARE $4,511 Benefits Fixed Costs $4,511 465-41957-000-00000 STATE DISABILITY INSURANCE $3,326 Benefits Fixed Costs $3,326 465-41958-000-00000 A.D.& D. INSURANCE $47 Benefits Fixed Costs $47 465-41959-000-00000 LONG TERM DISABILITY INSURANCE $667 Benefits Fixed Costs $667 465-41961-000-00000 STATE UNEMPLOYMENT INSURANCE $689 Benefits Fixed Costs $689 465-41963-000-00000 WORKERS COMPENSATION INS. $12,382 Benefits Fixed Costs $12,382 465-41965-000-00000 LIFE INSURANCE $547 Benefits Fixed Costs $547 465-41967-000-00000 MEDICAL INSURANCE $55,498 Benefits Fixed Costs $55,498 465-41975-000-00000 SAN CLEMENTE RETIREMENT PREM. $25,730 Benefits Fixed Costs $25,730 465-41976-000-00000 RETIREMENT PREMIUM (LEGACY) $20,180 Benefits Fixed Costs $20,180 465-42010-000-00000 OFFICE SUPPLIES $191 Operations Fixed Costs $191 465-42150-000-00000 CHEMICAL SUPPLIES $82,315 Operations Variable Costs $82,315 465-42170-000-00000 LABORATORY SUPPLIES $4,999 Operations Fixed Costs $4,999 465-42280-000-00000 PROTECTIVE SUPPLIES $2,384 Operations Fixed Costs $2,384 465-42390-000-00000 SMALL TOOLS AND EQUIPMENT $4,603 Operations Fixed Costs $4,603 465-42490-000-00000 OTHER OPERATING SUPPLIES $23,776 Operations Fixed Costs $23,776 465-42590-000-00000 OTHER MAINTENANCE SUPPLIES $30,984 Operations Fixed Costs $30,984 465-43060-000-00000 TRAVEL AND TRAINING $525 Operations Fixed Costs $525 465-43330-000-00000 ELECTRICITY $242,891 Operations Variable Costs $242,891 465-43450-000-00000 MAINTENANCE OF OPERATING EQUIP $45,387 Operations Fixed Costs $45,387 465-43450-000-00000 MAINTENANCE OF OPERATING EQUIP $45,387 Operations Fixed Costs $45,387 465-43690-000-00000 OTHER PROFESSIONAL SERVICES $2,475 Operations Fixed Costs $2,475 465-43691-000-00000 DEVELOPERS REIMBURSEMENTS $0 Operations N/A $0 465-43890-000-00000 OTHER CONTRACTUAL SERVICES $28,900 Operations Fixed Costs $28,900 465-44260-000-00000 LICENSES AND PERMITS $3,230 Operations Fixed Costs $3,230 465-44800-000-00000 DEPRECIATION $381,660 Operations N/A $0 465-44802-000-00000 DEPRECIATION - ASSET MODEL $23,000 Operations N/A $0 465-46080-000-00000 INFORMATION TECHNOLOGY CHARGES $7,460 Operations Fixed Costs $7,460 465-46110-000-00000 COMM CHARGES $620 Operations Fixed Costs $620 465-46130-000-00000 FLEET RENTAL CHARGES $14,020 Operations Fixed Costs $14,020 465-46510-000-00000 GENERAL FUND OVERHEAD CHARGES $67,790 Operations Fixed Costs $67,790 465-48170-000-00000 WATER FUND LOAN PRINCIPAL $649,785 Operations N/A $0 465-48470-000-00000 WATER FUND LOAN INTEREST $243,670 Operations N/A $0 Agreement Recycled Water Pricing Components: Cost Breakdown:
"A" Fixed Costs $740,987
"B" Variable Costs $325,205
Total Applicable Agreement Costs* $1,066,193
Total Recycled Water Capacity of the Plant 4,932 acre-feet Static / Not Expected To Change Total Actual AF produced by the City in FY 2021 1,165 acre-feet Changes Each Year Based On Actual Production Agreement Recycled Water Pricing Components: Cost Breakdown: $ per AF "A" Fixed Costs $150 Total Fixed Costs / Total RW Plant Capacity "B" Variable Costs $279 Total Variable Costs / Actual RW Production *Cost items indicated are based on City's FY 2021 actual category detail and are intended to illustrate the methodology governed by the Agreement.
Cost items and classifications may evolve over time based on City accounts and accounting practices. As indicated, Agreement costs shall not include any non-cash items such as depreciation or existing debt service allocated to the system. Certain costs, including power costs, may be based on an allocation of costs between wastewater treatment and recycled water production.
For Advanced Water Treatment Facility Cost Allocations, the Facility's Fixed and Variable Costs will be subsequently included in "A" and "B" components based on actual operating costs incurred. Annualized Capital Costs shall be a separate line item component based on actual such costs.
Agreement Cost Breakdown and Illustrative Per Acre-Foot Calculations:
Exhibit D - Recycled Water Costs