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HomeMy WebLinkAboutAgenda Packet 2003/06/03 NOTICE OF ADJOURNMENT Notice is hereby given that, at its Regular Meeting of June 3, 2003, the City Council adjourned said meeting to an Adjourned Regular Meeting on June 9, 2003, at 4:00 p.m. at the Corporation Yard, for the purpose of discussing the proposed budget, thence to the Regular Meeting of June 10, 2003, at 6:00 p.m. in the Council Chambers, thence to an Adjourned Regular Meeting on June 11, 2003, at 4:00 p.m. at the Corporation Yard, for the purpose of continuing discussion regarding the proposed budget, and thence to an Adjourned Regular Meeting on June 12, 2003, at 4:00 p.m. at the Corporation Yard, for the purpose of reviewing the annual report from the Growth Management Oversight Commission. Dated: June 4, 2003 JÆIMA kh~ Donna Norris, Assistant City Clerk r 1_ J:\Clerk\Agendas - Minutes - Notices\Notices\Cancelled-Adjourned Meetings\Backup of NOTICE OF ADJOURNMENT 06.wbk CITY COUNCIL AGENDA June 3, 2003 4:00 p.m. Council Chambers Public Services Building 276 Fourth Avenue, Chula Vista ~~I?- ~ r ~ ~ CllY OF CHUlA VISTA City Council Patty Davis John McCann Jerry R. Rindone Mary Salas Stephen C. Padilla, Mayor City Manager David D. Rowlands, Jr. City Attorney Ann Moore City Clerk Susan Bigelow ********** The City Council meets regularly on the first calendar Tuesday at 4:00 p.m. and on the second, third and fourth calendar Tuesdays at 6:00 p.m. Regular meetings may be viewed at 7:00 p.m. on Wednesdays on Cox Cable Channel 24 or Chula Vista Cable Channel 68 ********** CALL TO ORDER I declare under penalty of perjury that I am employed by the City of Chula Vista in the Office 01 the City Clerk and that I posted this ~lllân the bulletin board according to Brown Act requirements. Dated%~3 Sign June 3, 2003 ROLL CALL: Councilmembers Davis, McCann, Rindone, Salas, and Mayor Padilla PLEDGE OF ALLEGIANCE TO THE FLAG, MOMENT OF SILENCE SPECIAL ORDERS OF THE DAY · OATHS OF OFFICE: Donald Snider, Board of Appeals and Advisors · INTRODUCTION BY CLIFF SWANSON, DIRECTOR OF ENGINEERING, OF THE EMPLOYEE OF THE MONTH, ANTHONY CHUKWUDOLUE, CNIL ENGINEER, W ASTEW ATER ENGINEERING UNIT CONSENT CALENDAR (Items 1 through 10) The Council will enact the staff recommendations regarding the following items listed under the Consent Calendar by one motion, without discussion, unless a Councilmember, a member of the public, or City staff requests that an item be removed for discussion. If you wish to speak on one of these items, please fill out a "Request to Speak" form (available in the lobby) and submit it to the City Clerk prior to the meeting. Items pulled from the Consent Calendar will be discussed after Action Items. Items pulled by the public will be the first items of business. 1. APPROVAL OF MINUTES of May 13, May 20, and May 21,2003. Staff recommendation: Council approve the minutes. ,'. B. WRITTEN CORRESPONDENCE · . Memorandum from Councilmember Patty Davis, requesting an excused absence from the meeting of June 3, 2003. Staff recommendation: Council excuse the absence. 2. ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AMENDING THE CHULA VISTA MUNICIPAL CODE SECTION 13.l4.1l0(A), RELATING TO THE SEWER SERVICE CHARGES (SECOND READING AND ADOPTION) The sewer service charges are fees that every property owner or occupant of property connected to the sewer system in Chula Vista is required to pay for the operation and maintenance of the sewer system and other related costs. Adoption of the ordinance clarifies the mechanism for establishing the charge. (Director of Engineering) Staff recommendation: Council place the ordinance on second reading for adoption. 3. ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AMENDING ORDINANCE NO. 2881 AND AUTHORIZING THE LEVY OF A SPECIAL TAX IN IMPROVEMENT AREA B OF COMMUNITY FACILITIES DISTRICT NO. 06-I (EASTLAKE - WOODS, VISTAS AND LAND SWAP) PURSUANT TO AN AMENDED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX (SECOND READING AND ADOPTION) On May 21, 2003, a special election of eligible property owners was held at the City Clerk's office for the purpose of voting on the proposed modifications to the rate and method of apportionment and the annexation of territory for Improvement Area B of CFD No. 06-I. Adoption of the ordinance continues the formal proceedings. (Director of Engineering) Staff recommendation: Council place the ordinance on secpnd reading for adoption. 4. ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AMENDING THE CHULA VISTA MUNICIPAL CODE BY ADDING CHAPTER 8.21 RELATING TO THE REGULATION OF WHOLESALE FOOD WAREHOUSES (SECOND READING AND ADOPTION) Wholesale food warehouses are not adequately regulated by the State of California, and recent inspections of some of these food warehouses by the County of San Diego have revealed rodent infestations, mishandling of recalled food, and other conditions that could lead to food-borne illness. Pursuant to state and local law, the County of San Diego is the primary regulator of persons handling and storing food within the City. To address the concern mentioned above, the County wishes to institute a wholesale food warehouse permit and inspection program with consistent rules and regulations throughout the region. To do so, the County needs the City's authorization to conduct such a program within City boundaries and requests that the City adopt (by reference) the County's Wholesale Food Warehouse Ordinance. (Director of Planning and Building) Staff recommendation: Council place the ordinance on second reading for adoption. 5. ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AN AMENDMENT TO THE OTAY RANCH VILLAGE ELEVEN SECTIONAL PLANNING AREA PLAN TO ADD LANGUAGE TO THE PLANNED COMMUNITY DISTRICT REGULATIONS (SECOND READING AND ADOPTION) Brookfield Shea Otay, LLC applied to amend the Otay Ranch Village Eleven sectional planning area plan to add language to the Planned Community District Regulations. Adoption of the ordinance approves the request. (Director of Planning and Building) Staff recommendation: Council place the ordinance on second reading for adoption. Page 2 - Council Agenda 06/03/03 6. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE FORM OF THE FIRST AMENDMENT TO THE ACQUISITION/FINANCING AGREEMENT FOR COMMUNITY FACILITIES DISTRICT NO. 06-I (EASTLAKE-WOODS, VISTAS AND LAND SWAP) EastLake Company, LLC has requested that the City consider amending the acquisition/financing agreement for Community Facilities District (CFD) No. 06-I (EastLake - Woods, Vistas and Land Swap) in order to modify and clarify the list of eligible improvements for CFD 06-I financing. Adoption of the resolution approves the form of the first amendment to the acquisition/financing agreement for CFD 06-1. (Director of Engineering) Staff recommendation: Council adopt the resolution. 7A. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AN AGREEMENT BETWEEN THE CITY OF CHULA VISTA AND THE CITY OF SAN DIEGO FOR THE JOINT USE OF A CITY OF SAN DIEGO EASEMENT REQUIRED TO FACILITATE THE CONSTRUCTION, MAINTENANCE, AND OPERATION OF THE SALT CREEK GRAVITY SEWER INTERCEPTOR, AND AUTHORIZING THE MAYOR TO EXECUTE THE AGREEMENT ON BEHALF OF THE CITY B. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AN AGREEMENT BETWEEN THE CITY OF CHULA VISTA AND SAN DIEGO GAS AND ELECTRIC (SDG&E) COMPANY FOR THE JOINT USE OF AN SDG&E EASEMENT REQUIRED TO FACILITATE THE CONSTRUCTION, MAINTENANCE, AND OPERATION OF THE SALT CREEK GRAVITY SEWER INTERCEPTOR, AND AUTHORIZING THE MAYOR TO EXECUTE THE AGREEMENT ON BEHALF OF THE CITY The alignment of the Salt Creek Gravity Sewer Interceptor impacts existing utility easements currently held by the City of San Diego and San Diego Gas & Electric Company. In order to facilitate the construction, operation, and maintenance of the Salt Creek Sewer, the City is required to enter into joint use agreements with these two agencies. Council action is required to approve these agreements and to authorize the Mayor to execute the agreements on behalf of the City. (Director of Engineering) Staff recommendation: Council adopt the resolutions. 8. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA DECLARING THE CITY'S INTENTION TO AMEND THE MASTER FEE SCHEDULE BY UPDATING THE EXISTING SEWER RATE STRUCTURE, ADOPTING THE "WASTEWATER USER AND RATE RESTRUCTURING STUDY," AND SETTING A PUBLIC HEARING FOR JULY 22, 2003, AT 6:00 P.M. TO CONSIDER THESE ISSUES Page 3 - Council Agenda 06/03/03 On June 8, 1999, City Council approved a three-year sewer service charge rate plan for Fiscal Years 2000 through 2002, and six percent rate increases were implemented in each of those years. Subsequently, expenditures for both the maintenance and operation of the City's wastewater collection system, and for wastewater conveyance and treatment have continued to escalate from $15.7 million in Fiscal Year 2000 to an estimated $23.6 million in Fiscal Year 2003. At the current sewer rate level, necessary expenditures will exceed Fiscal Year 2004 revenues by $5.5 million and the deficit will continue to grow in subsequent years if no action is taken as the City continues to build, maintain, and operate the local and regional facilities necessary to support a growing population. (Director of Engineering) Staff recommendation: Council adopt the resolution. 9. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) AGREEMENTS FOR FISCAL YEAR 2003/2004 BETWEEN THE CITY OF CHULA VISTA AND VARIOUS COMMUNITY GROUPS, AND AUTHORIZING THE MAYOR TO EXECUTE SAID AGREEMENTS On May 6, 2003, the Council approved CDBG funds in the amount of $357,450 for twelve public service programs; $234,960 for three community project programs; $157,234 for five economic development programs; $129,000 for two non-profit capital improvement projects; $1,094,315 for seven City capital improvement projects; and $424,340 for administration and planning/coordination activities. The U.S. Department of Housing and Urban Development requires a written agreement between the City and each sub-recipient receiving CDBG and HOME funds. (Director of Community Development) Staff recommendation: Council adopt the resolution. 10. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORIZING TRANSFER OF $471,090 FROM THE COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) COMMUNITY HOUSING IMPROVEMENT PROGRAM (CHIP) FUND TO THE CDBG PROGRAM INCOME FUND When the CHIP program was created in the mid-1970's the primary source of funding came from the CDBG program. As loans were repaid, the funds were deposited into the CDBG CHIP fund. These program income funds need to be transferred from the CDBG CHIP fired to the CDBG Program Income fund. (Director of Commtmity Development) Staffrecommendation: Council adopt the resolution. ORAL COMMUNICATIONS Persons speaking during Oral Communications may address the Council on any subject matter within the Council's jurisdiction that is not listed as an item on the agenda. State law generally prohibits the Council from taking action on any issue not included on the agenda, but, if appropriate, the Council may schedule the topic for future discussion or refer the matter to staff. Comments are limited to three minutes. Page 4 - Council Agenda 06/03/03 ITEMS PULLED FROM THE CONSENT CALENDAR OTHER BUSINESS 11. CITY MANAGER'S REPORTS 12. MAYOR'S REPORTS 13. COUNCIL COMMENTS CLOSED SESSION Announcements of actions taken in Closed Session shall be made available by noon on Wednesday following the Council Meeting at the City Clerk's office in accordance with the Ralph M Brown Act (Government Code 54957. 7). 14. CONFERENCE WITH REAL PROPERTY NEGOTIATOR PURSUANT TO GOVERNMENT CODE SECTION 54956.8 Property: San Diego Gas & Electric - Gas and Electricity Franchise (Pertaining to Public Rights of Way throughout the City of Chula Vista) Agency negotiators: David Rowlands, Jr., Sid Morris, Michael Meacham, Glen Googins Negotiating Parties: City of Chula Vista, San Diego Gas & Electric Under Negotiation: Price and Terms of Payment 15. CONFERENCE WITH REAL PROPERTY NEGOTIATORS PURSUANT TO GOVERNMENT CODE SECTION 54956.8 Property: Brandywine Classics, Common Area Lots 1 - 4 of Chula Vista Tract No. 82-3 Agency negotiator: Ludlow Keeney Negotiating Parties: Ann Moore, Linda Bartz, Harry Burrowes, and George Krempl Under Negotiation: Price and Terms 16. CONFERENCE WITH LEGAL COUNSEL REGARDING INITIATION OF LITIGATION PURSUANT TO GOVERNMENT CODE SECTION 54956.9(c) . One case Page 5 - Council Agenda 06/03/03 ADJOURNMENT to an Adjourned Regular Meeting on June 9, 2003, at 4:00 p.m. at the Corporation Yard, thence to the Regular Meeting of June 10, 2003, at 6:00 p.m. in the Council Chambers, thence to an Adjourned Regular Meeting on June 11, 2003, at 4:00 p.m., and thence to an Adjourned Regular Meeting on June 12,2003, at 4:00 p.m. at the Corporation Yard. Page 6 - Council Agenda 06/03/03 May 30th, 2003 MEMO TO: FROM; XCUSED ABSENCE SUBJECT: As Councilmember Patty Davis will be in Sacramento next week, she would like to be excused from the regular City Council meeting of Tuesday, June 3rd, 2003. . Thank You. Encls. Cc: City Manager City Attorney City Clerk Page 1 of 1 Patty Wesp From: Deric Prescott [dericprescott@yahoo.com] Sent: Thursday, May 29, 2003 9:38 PM To: pwesp@cLchula-vista,ca.us Cc: dericprescott@yahoo.com Subject: Official Excuse for Councilmember Patty Davis Patty, I hope it's not too late to get a memo out excusing Councilmember Patty Davis for Tuesdays meeting. She will be in Sacramento all next week and asked me to give you a call or to emaiI you asking you to please excuse her officially. I have a doctor appt tomorrow at 8, and will not be able to call you when City Halls opens. So please do what you can at this last minute to get the memo out to the others, ok? Thanks Patty. Patty Prescott Do you Yahoo!? Free online calendar with sync to Outlook(TM). 5/30/03 ORDINANCE NO. R~O~ ~(;) ~(;)O ~~G~ AN ORDINANCE OF THE CITV~ULA VISTA, CALIFORNIA AMENDI~K.~~~'uLA VISTA MUNICIPAL CODE '~ECTION 13.14.1l0(A) RELATING TO THE SEWER SERVICE CHARGES WHEREAS, the Sewer Service Charges are fees that every property owner or occupant of any parcel of real property in the City of Chula Vista that is connected to the sewer system is required to pay for the operation and maintenance of the sewer system and other incidental related expenditures; and, WHEREAS, the establishment of the Sewer Service Charges set forth in the City ofChula Vista Municipal Code Section 13.14.110; and, WHEREAS, this ordinance will amend Section 13.l4.1l0(A) to clarify the mechanism by which City Council can establish said charge and to update City staff title; and, WHEREAS, this ordinance will clearly state the City's intention to establish the Sewer Service Charges by ordinance only if the City is required do so in order to place the fee on the Tax Bill; and, WHEREAS, this amendment to Section 13.14.l10(A) will avoid ambiguity or confusion in the interpretation of the law and will not affect the rate at which the Sewer Service Charges are assessed; and, WHEREAS, this ordinance will restate that the means of establishing the Sewer Service Charges will be by resolution unless an ordinance is necessary for tax roll purposes; and, WHEREAS, the City Council has determined that the approval of this ordinance will not result in the creation, increase or decrease of revenues. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CHULA VISTA DOES ORDAIN AS FOLLOWS: SECTION 1: That Section 13.14.110 of the City of Chula Vista Municipal Code shall be amended to read as follows: "13.14.110 Sewer Service Charges Designated - Payment Required - Domestic Purposes - Defined. ..<-1 Ordinance No. Page 2 A. Amount. In addition to other fees, assessments or charges provided by the City Code or otherwise, the owner or occupant of any parcel of real property which said parcel is connected to the sewer system of the City and to a water system maintained by the Sweetwater Authority, the Otay Water District or the California - American Water Company shall pay the Required Fee(s) for a Sewer Service Charge. The City Council shall establish said charge by resolution; or by ordinance onlv if reauired in order for the fee to be collected on the tax bill to be collected OR the tax bí11. B. Report. Every year the Director of EmáneerinQC ef Pllblie Works shall determine the Sewer Service Charge for the current fiscal year in accordance with paragraph A, above. The Director shall file a report with the City Clerk annually prior to August 10, setting forth the description of each property affected and the amount of the proposed Charge. C. Assessment and Collection. The charge shall be pro- rated for new or restored service, and shall be calculated and assessed pursuant to subdivision A hereof and collected in accordance with Section 13.14.150. D. All revenue derived from such charges shall be deposited into the Sewer Revenue Fund. E. For the purpose of this section, real property shall be deem to be used for domestic purposes when such property is used solely for domestic purposes when such property is used solely for single-family residences or the furnishing of lodging by the operation of hotels, auto courts, apartment houses, bungalow courts, housing units, rooming houses, motels, trailer parks, or the rental of property for lodging purposes." "<-2. Ordinance No. Page 3 SECTION 2: Effective Date. This ordinance shall take effect and be in full force thirty (30) days after its adoption. Presented by: , Approved as to Form by: Clifford L. Swanson o Director of Engineering City Attorney JSEngineer\SEWER~2003\Sewer Rate Study\Amendment to CVMC 13.14. I 10-Ordinance.sh doc ORDINANCE NO. 2.~\O~ O INA CE OF CITY CO CIL OF THE CITX aU ^ VIS ^, CALIFORNIA, AMENDING ORDINANCE NO. ~_~[)~)~D AUTHORIZING THE LEVY OF A SPECIAL TAX IN ~{~EMENT AREA B OF COMMUNITY FACILITIES DISTRICI~. 06-I (EASTLAKE - WOODS, VISTAS AND LAND SWAP) PURSUANT TO AN AMENDED RATE AND METHOD OF APPORTIONNiENT OF SPECIAL TAX WHEREAS, the City Council of the City of Chula Vista, California (the "City Council"), has initiated proceedings, held a public hearing, conducted an election and received a favorable vote from the qualified electors authorizing the levy of separate special taxes in separate improvement areas of a community facilities district, all as authorized pursuant to the terms and provisions of the "Mello-Roos Community Facilities Act of 1982", being Chapter 2.5, Part 1. Division 2, Title 5 of the Government Code of the State of California (the "Act") and the City of Chula Vista Community Facilities District Ordinance enacted pursuant to the powers reserved by the City of Chula Vista under Sections 3, 5 and 7 of Article XI of the Constitution of the State of California (the "Ordinance") (the Act and the Ordinance may be referred to collectively as the "Community Facilities District Law"). This Community Facilities District is designated as Community Facilities District No. 06-I (EASTLAKE - WOODS, VISTAS AND LAND SWAP) (the "District") and the improvement areas therein are designated as Improvement Area A and Improvement Area B (individually, an "Improvement Area" and collectively, the "Improvement Areas"); and WHEREAS, the City Council, acting as the legislative body of the District, previously enacted Ordinance No. 2881 to authorize the levy of special taxes within Improvement Area A and Improvement Area B pursuant to a separate rate and method of apportionment applicable to each respective Improvement Area; and WHEREAS, the City Council, has initiated proceedings, held a public hearing, conducted an election and received a favorable vote from the qualified electors of Improvement Area B authorizing the levy of special taxes therein pursuant to an amended rate and method of apportionment thereof. The City Council of the City of Chula Vista, California, acting as the legislative body of Community Facilities District No. 06-I (EastLake - Woods, Vistas and Land Swap), does hereby ordain as follows: SECTION 1. This City Council does, by the passage of this ordinance, authorize the levy of special taxes on taxable properties located in Improvement Area B pursuant to the Amended Rate and Method of Apportionment of Special Taxes as set forth in Exhibit "A" attached hereto and incorporated herein by this reference (the "Amended Rate and Method"). SECTION 2. This City Council, acting as the legislative body of the District, is hereby further authorized, by Resolution, to annually determine the special tax to be levied within Improvement Area B for the then current tax year or future tax years; provided, however, the 1 special tax to be levied in Improvement Area B shall not exceed the maximum special tax authorized to be levied pursuant to the Amended Rate and Method. SECTION 3. The special taxes herein authorized to be levied within Improvement Area B, to the extent possible, shall be collected in the same manner as ad valorem property taxes and shall be subject to the same penalties, procedure, sale and lien priority in any case of delinquency as applicable for ad valorem taxes; provided, however, the District may utilize a direct billing procedure for any special taxes that cannot be collected on the County tax roll or may, by resolution, elect to collect the special taxes at a different time or in a different manner if necessary to meet its financial obligations. SECTION 4. The special taxes authorized to be levied in Improvement Area B shall be secured by the lien imposed pursuant to Sections 3114.5 and 3 l l 5.5 of the Streets and Highways Code of the State of California, which lien shall be a continuing lien and shall secure each levy of the special tax. The lien of the special tax shall continue in force and effect until the special tax obligation is prepaid, permanently satisfied and canceled in accordance with Section 53344 of the Government Code of the State of California or until the special tax ceases to be levied by the City Council in the manner provided in Section 53330.5 of said Government Code. SECTION 5. This Ordinance shall, upon becoming effective, amend and supercede any and all provisions of Ordinance No. 2881 pertaining to the authorization to levy special taxes within improvement Area B of the District. All provisions of Ordinance No. 2881 pertaining to the authorization to levy special taxes within Improvement Area A of the District shall remain in full fome and effect. SECTION 6. This Ordinance shall be effective thirty (30) days after its adoption. Within fifteen (15) days after its adoption, the City Clerk shall cause this Ordinance to be published in a newspaper of general circulation in the City pursuant to the provisions of Government Code Section 36933. ATTEST APPROVED AS TO FORM: Cliff Swanson Ann Moore Director of Engineering City Attomey J:Attomey/Ordinance/Ord Auth Levy - Revised CFI) 061 IA B 2 WAREHOUSES WHEREAS, wholesale food warehouses are not adequately regulated by the State of California; and WHEREAS, recent inspections of some of these food warehouses by the County of San Diego (hereinafter "County~') have revealed rodent infestations, mishandling .of recalled food, and other conditions that could lead to food borne illness; and WHEREAS, the County responded to these problems by enacting Ordinance No. 9525 (New Series), which established a mandatory permit program, a permit fee, and regulatory requirement~ applicable to wholesale food warehouses; and WHEREAS, because the food stored in wholesale food warehouses is frequently distributed across city boundaries, an effective regional food warehouse permitting and regulatory program requires enactment of consistent regulatory ordinances throughout the County and cooperation between cities and the County to implement that ordinance; and WHEREAS, the County cannot enforce its wholesale food warehousing regulation in the City of Chula Vista (hereinafter "City") without the City adopting those regulations as its own; and WHEREAS, the City has an agreement in place with the County that provides for certain services related to public health and sanitation to be provided by the County within the City; and WHEREAS, the City desires that the County also implement the permitting and regulatory program established by this ordinance. NOW, THEREFORE, the City Council of the City of Chula Vista does hereby ordain: SECTION I. That Section 8.21.010 of the Chula Vista Municipal Code is amended to read: Chapter 8.21 WHOLESALE FOOD WAREHOUSES Sections: 8.2'1.010 Purpose and intent 8.21.020 Adoption of San Diego County Ordinance Regulating Wholesale Food Warehouses By Reference 8,2'1.030 Administration and enforcement 8.21.040 Fees SECTION II. The City already has an agreement in place with the County of San Diego that provides for certain, services related to public health and sanitation to be provided by the County within the City. The City desires that the County also implement the permitting and regulatory program established by this ordinance. The City Manager is hereby authorized to enter into any supplemental or modified agreement with the County of San Diego that may be needed to effect this purpose. SECTION III. This Ordinance shall take effect and be in full force on the thirtieth day from and after its adoption. Submitted by: Approved as to form by: Robert A. Leiter Ann Moore Planning and Building Director City Attorney ORDnWANCB NO. t,oO 1\Ol' ORmNANC CITY COUNCIL Cm L^ WSTA APPROVING AN AMENDMENT TO THE _O,.~CH VILLAGE ELEVEN SECTIONAL PLANNING AREA PLAN"~5 ADD LANGUAGE TO THE PLANNED COMMUNITY DISTRICT REGULATIONS. WHEREAS, the property which is the subject matter of this ordinance is identified as Exhibit "A" attached hereto and described on Chula Vista Tract 01-11 A, and is commonly known as Village 11 ("Property"); and, WHEREAS, a duly verified application to amend the Gray Ranch Village 11 SPA Plan Planned Community District Regulations was filed with the City of Chula Vista Planning and Building Department on July 29, 2002 by Brookfield Shea Gray LLC, ("Applicant"); and, WHEREAS, the amendment to the Gray Ranch SPA One Planned Community District Regulations is intended to ensure that the Otay Ranch SPA One Plan is prepared in accordance with the Gray Ranch General Development Plan (GDP), to implement the City of Chula Vista General Plan for eastern Chula Vista, to promote the orderly planning and long term phased development of the Gray Ranch GDP and to establish conditions which will enable the amended Gray Ranch Village 11 SPA Plan area to exist in harmony within the community ("Project"); and, WHEREAS, the amended Gray Ranch SPA One Plmmed Community District Regulations and Zoning District Map is established pursuant to Title 19 of the Chula Vista Municipal Code, specifically Chapter 19.48 (PC) Planned Community Zone, and are applicable to the Gray Ranch Village 11 Site Utilization Plan of the amended Village 11 SPA Plan; and, WHEREAS, the amended Otay Ranch SPA One Planned Community District Regulations enhances the pedestrian-oriented neighborhood design in the village by adding footnotes to the Planned Community (PC) District Regulations, Table II.3.3-2, "Residential Property Development Standards", to allow reduced minimum lot widths and reduced front yard setbacks for a "z-lot" and "zero lot-line" single-family design concept. The applicant proposes to apply for implementation of the z-lot configuration in Neighborhood R- 1. The reduced lot widths and front yard setbacks provide design flexibility and implement several Otay Ranch goals and principles; and, WHEREAS, the development of the Property has been the subject matter of a Sectional Planning Area Plan ("SPA Plan") previously approved by the City Council on October 23,2001 by Resolution No. 2001-363, wherein the City Council, in the environmental evaluation of said Village 11 SPA Plan, relied in part on the original Otay Ranch GDP Amendment/Village 11 Sectional Planning Area Plan, Final Environmental Impact Report ("FEIR 01-02"); and, WHEREAS, the City's Environmental Review Coordinator has reviewed the proposed project for compliance with the California Environmental Quality Act and has determined that the proposed project was adequately covered in previously adopted Otay Ranch GDP Amendment/ Village 11 Sectional Planning Area Plan FEIR 01-02. Thus, no further environmental review or documentation is necessary; and, WHEREAS, the Planning Commission set the time and place for a hearing on said Otay Ranch Sectional Planning Area (SPA) One Plan amendment (PCM-03-06) and notice of said heating, together with its purpose, was given by its publication in a newspaper of general circulation in the City and its mailing to property owners within 500 feet of the exterior boundaries of the Project site at least I0 days prior to the hearing; and, WHEREAS, the heating was held at the time and place as advertised, namely 6:00 p.m. May 14, 2003, in the Council Chambers, 276 Fourth Avenue, before the Planning Commission and said heating was thereafter closed. WHEREAS, by a vote of 4-0-0-2, the Planning Commission recommended approval of the project; and, WHEREAS, a public hearing was scheduled for May 27, 2003, before the City Council of the City of Chula Vista on the Otay Ranch Village 11 SPA Amendment to add language (footnotes) to the PC District Regulations to allow reduced setbacks for "z-lot" single-family residential lot configurations. NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of Chula Vista does hereby find, determine, resolve and order as follows: I. PLANNING COMMISSION RECORD The proceedings and all evidence introduced before the Planning Commission at the FEIR public hearing on the amended Village 11 SPA Plan held on May 14, 2003 and the minutes and resolutions therefrom, are hereby incorporated into the record of this proceeding. These documents, along with any documents submitted to the decision makers, shall comprise the entire record of the proceedings for any California Environmental Quality Act (CEQA) claims. II. ACTION The City Council hereby approves an amendment to the Village 11 SPA Planned Community District Regulations adding footnotes to the Planned Community (PC) District Regulations, Table I1.3.3-2, "Residential Property Development Standards", to allow reduced minimum lot widths and reduced front yard setbacks for a "z-lot" and "zero lot-line" single-family design concept, which implements several Otay Ranch goals and principles finding that they are consistent with the City of Chula Vista ,General Plan, the Otay Ranch General Development Plan, Otay Ranch Village 11 SPA Plan, and all other applicable Plans, and that the public necessity, convenience, general welfare and good planning and zoning practice support the FEIR approval and implementation. III. CERTIFICATION OF COMPLIANCE WITH CEQA The City Council hereby finds that the Project, as described and analyzed in the Otay Ranch GDP Amendment/Village 11 Sectional Planning Area Plan, FEIR 01-02, would have no new effects that were not examined in the Otay Ranch GDP Amendment/Village 11 Sectional Planning Area Plan, FEIR 01-02, [Guideline 15168 (c)(2)]. IV. CEQA FINDING REGARDING PROJECT WITHIN SCOPE OF PR/OR FEIR The City Council hereby finds that: (1) there were no substantial Changes in thc Project fi.om FEIR 01-02, which would require revisions of said report; (2) no substantial changes have occurred with respect to the circumstances under which the Project is 'undertaken since certification of FEIR 01-02; (3) and no new information of substantial importance to the Project has become available since the issuance and approval of FEIR 01-02; and that, therefore, no new effects could occur or no new mitigation measures will be required in addition to those already in existence and made a condition for Project implementation. Therefore, the City Council approves the Project as an activity that is within the scope of the project covered by FEIR 01-02 [Guideline 15168(c)(2)and 15162(a)]. V. INDEPENDENT JUDGMENT OF CITY COUNCIL The City Council hereby finds that the proposed project was adequately covered in previously adopted Otay Ranch GDP Amendment/Village 11 Sectional Planning Area Plan, FEIR 01-02. Thus, no further environmental review or documentation is necessary. VI. INCORPORATION OF ALL CONDITIONS, MITIGATION MEASURES AND ALTERNATIVES The City Council does hereby re-adopt and incorporate herein as conditions for this approval all applicable mitigation measures and alternatives, as set forth in the findings adopted in the Mitigation Monitoring Program for FEIR 01-02. VII. NOTICE WITH LATER ACTIVITIES The City Council does hereby give notice, to the extent required by law, that this Project was fully described and analyzed and is within the scope of the FEIR 01-02 adequately describes and analyzes this project for the purposes of CEQA [Guideline 15168(e)]. VIII. SECTIONAL PLANNING AREA (SPA) PLAN FINDINGS The proposed Project is consistent with the Otay Ranch Village 11 Sectional Planning Area Plan for the following reasons: A. THE PROPOSED SECTIONAL PLANNING AREA PLAN IS 1N CONFORMITY WITH THE GENERAL DEVELOPMENT PLAN OF THE P-C ZONE, ANY ADOPTED SPECI]3'IC PLANS, AND THE CITY OF CHULA VISTA GENERAL PLAN AND ITS SEVERAL ELEMENTS. The request to amend the Otay Ranch Village 11 SPA Plan to add language (footnotes) to the PC District Regulations to allow reduced setbacks for "z-lot" single-family residential lot configurations, reflects the land uses, circulation system, open space and recreational uses, and public facility uses consistent with the Otay Ranch General Development Plan and Chula Vista General Plan. B. THE PROPOSED SETIONAL PLANNING AREA PLAN WOULD PROMOTE THE ORDERLY, SEQUENTIALIZED DEVELOPMENT OF THE INVOLVED SECTIONAL PLANNING AREA. The Otay Ranch Village 11 SPA Plan amendment contains provisions and requirements to ensure the orderly, phased development of the project. The amendment does not modify any phased development of the project and must comply with all development phase thresholds identified in the Otay Ranch Village 11 SPA Plan. C. THE PROPOSED SECTIONAL PLANNING AREA PLAN WOULD NOT ADVERSELY AFFECT ADJACENT LAND USE, RESIDENTIAL ENJOYMENT, CIRCULATION OR ENVIRONMENTAL QUALITY. The land uses within Otay Ranch are designed to promote pedestrian-oriented neighborhoods. The amendment does not modify any surrounding land uses and is consistent with the residential land use policies as required by the General Plan and Otay Ranch General Development Plan. A comprehensive street network serves the project and provides for access to off-site adjacent properties. The proposed plan will be required to implement all mitigation measures specified in the Otay Ranch GDP Amendment/Village 11 Sectional Planning Area Plan, FEIR 01-02. These mitigation measures will minimize or reduce any identified impacts to land use, circulation and environmental quality. Presented by Approved as to form by Planning and Building Director City Attorney COUNCIL AGENDA STATEMENT Item Meeting Date 6/03/03 ITEM TITLE: Resolution o£ the City Council of the City of Chula Vista, California approving the form of the First Ame. ndment to the Acquisition/Financing Agreement for Community Facilities District No. 06-! (EastLake-Woods, Vistas and Land Swap). SUBMITTED BY: Director of Engfneering~/ Director o£ Finance REVIEWED BY: City Manager ~"r r) (4/5ths Vote: Yes No X ) EastLake Company, LLC has requested the City of Chula Vista to consider amending the Acquisition/Financing Agreement for Community Facilities District No. 06-I (EastLake - Woods, Vistas and Land Swap) ("CFD No. 06-I") in order to modify and clarify the list of eligible improvements for CFD 06-I financing and to provide minor clarifications to the acquisition procedure. Tonight, Council will consider approving the form of the First Amendment to the Acquisition/Financing Agreement (Attact~nent 2) for C. FD No. 06-I. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable. RECOMMENDATION: That Council adopt the Resolution approving the forn~ of the first Amendment to the Acquisition/Financing Agreement for Community Facilities District No. 06-I (EastLake-Woods, Vistas and Land Swap). DISCUSSION: Back~round EastLake Coinpany, .LLC has requested the City of Chula Vista to consider amending the Acquisition/Financing Agreement (A/F/A) for CFD No. 06-I. On November 12, 2002, City Council approved the form of the Acquisition/Financing Agreement for CFD No. 06-I that establishes the procedttre for acquiring the improvements from the developer that are to be financed from the proceeds of bonds secured by the levy of special taxes within CFD No. 06-I. The following are the proposed changes to the Acquisition/Financing Agreement. 1) As described in the Acquisition/Financing Agreement for CFD No. 06-I, for a base incremen! reimbursement for a roadway improvement to be made, all of the roadways components such as (i) grading, including site preparation and mobilization, (ii) wet and dry utilities within the right-of-way, (iii) storm drain facilities, (iv) paving, (v) curb, gutter, sidewalk, medians, (vi) traffic signals, (vii) lighting, (viii) landscaping, and (ix) all other appurtenant improvements must be substantially, complete. EastLake Company, LLC has requested that the landscape component of each roadway be a separate improvement. This will allow for a base increment reimbursement of a roadway to be eligible when all of the previously described components, other than the landscaping, are complete, This is similar to other recent Community Facility Page 2, Item Meeting Date 6/03/03 Districts in the City of Chula Vista and takes into account that landscaping completion lags well beyond the major roadway component completion. 2) EastLake Parkway Improvements is now presented as three separate Improvements in Exhibit A of the amended A/F/A (Attachment 2), as follows: i. Eastlake Parkway improvements related to the EastLake Village Center North traffic enhancements adjacent to EastLake Parkway. Typical improvements could include, but are not limited to, the roadway widening, turn lanes and pockets, and miscellaneous utility relocations for these facilities. This line item also includes the related Otay Lakes Road improvements for the same Village Center North project. ii. EastLake Parkway between EastLake Greens Planning Area R26 south to Olympic Parkway. iii. EastLake Parkway Landscaping consisting of the landscaping improvements between EastLake Greens Planning Area R26 south to Olympic Parkway. 3) Otay Lakes Road is now defined as three separate improvements consisting of the following: i. Widening of Otay Lakes Road between East "H" Street and Telegraph Canyon Road as required by a tentative map condition of approval of the EastLake iii project. ii. Widening of Otay Lakes Road between Hunte Parkway and Lake Crest Drive. iii. The Otay Lakes Road Landscaping component consists of the landscaping improvements between Hunte Parkway and Lake Crest Drive. 4) The cost estimates in Exhibit A of the A/F/A have been revised due to more recent and accurate cost analysis. 5) Exhibit D- 1 item I. has been slightly revised to provide an alternative procedure for verifying payment to contractors. Resolution There is only one resolution on today's agenda that, if adopted, will accomplish the following: The RESOLUTION OF THE CITY COUNCIL will approve the form of the First Amendment Agreement for Community Facilities District No. 06-I (EastLake-Woods, Vistas and Land Swap) and perform the following: · Landscape components for each roadway improvement will be designated as separate and distinct improvements as illustrated in Exhibit A of the amended A/F/A Agreement. Page 3, Item ~ Meeting Date 6/03/03 · Define EastLake Parkway as three separate improvements in Exhibit A of the amended A/F/A Agreement. · Define Otay Lakes Road as three separate improvements in Exhibit A of the amended A/F/A. · Update the cost estimates for those improvements listed Exhibit A of the A/F/A. · Approve minor modifications to the acquisition procedure. · Edit any relative text to the above changes in the A/F/A. The proposed resolution authorizes the City Manager, subject to the review of the City Attorney and Bond Counsel, to approve changes to such amendment deemed to be in the best interest of the City. In addition, the resolution authorizes the Mayor to execute the proposed amendment on behalf of the City. Future Actions None Fiscal Impact None, all costs related to this First Amendment to the AF/A for CFD No. 06-1 are being borne by the developer. Attachment 1: Original Acquisition/Financing Agreement for CFD No. 06-I Attachment 2: First Amendment to the Acquisition/Financing Agreement for CFD No. 06-I J2Engineer~LANDDEV~CFD's\CFD06hCAS 64/3-03 Acquisition Financing Agreement .doc [~.~i,,,, cop:. ATTACHMENT_ J ACQUISITION/FINANCINGf~ AGREEMENT THIS AGREEMENT, dated as o~' ~_ !~v.;~ /g-, 2002, is made and entered into by and between the CITY OF CHULA VISTA, a charter city duly organized and validly existing under the Constitution and laws of the State of California, (the ~'City"), COMMUNITY FACILITIES DIS'FRICT NO. 06-I (EASTLAKE - WOODS, VISTAS. AND LAND SWAP), a community facilities district formed and existing pursuant to the laws of the State of California (the "CFD No. 06-I") and THE EASTLAKE COMPANY, LLC, a California limited liability company (the D~ eloper ). WHEREAS, the Developer is the master developer of certain property known as the Woods, Vistas and Land Swap (the "Development Project") within that master planned community located within the City known as EastLake and Developer has obtained certain land use entitlements from the City which permit the development of the Development Project; and WHEREAS, the development of the Development Project pursuant to such land use entitlements is subject to certain conditions, including but not limited to, the requirement that the Developer construct certain public improvements to serve the Development Project including the improvements identified as Improvements Nos. 2 throunh 8 in Exhibit A attached hereto and inco¢orated herein by this reference (the "Development Project Improvements"); and WHEREAS, such land use entitlements also describe the threshold of building permits that may be issued for the Development Project as the result of traffic impacts on roadways within the City; and WHEREAS, the City's Growth Management Oversight Committee, in its annual threshold 'compliance report, noted that development in the eastern portion of the City which includes the Development Project was starting to strain the capacity of existing roadways resuking in added congestion and traffic delays; and WHEREAS, the City has determined that it is necessary to expedite the construction of certain traffic enhancement projects, including the Tele~aph Canyon Roadway Improvements defined below (individually, a "Traffic Enhancement Improvement" and collectively, the "Traffic Enhancement Improvements"), located in the eastern part of the City in order to ma/main the City's threshold standard and quality of life until the completion of more of the overall transportation network in the eastern part of the City; and WHEREAS, in order for the Developer and the master developers of other properties located in the City east of the 1-805 freeway to continue to receive building permits beyond the current thresholds identified in the existing land use entitlements for the Development Project and other developments in the eastern portion of the City, such developers must contribute to the financing of the construction of the Traffic Enhancement Improvements; and WHEREAS, in ~rder to provide for the financing of one of the Traffic Enhancement ._ Improvements, the Developer, together with certain other master developers (the "Other Master Execution Copy Developers"), have entered into that certain Agreement for the Construction of Roadway Improvements for Traffic Enhancement (the "Telegraph Canyon Traffic Enhancement A~eement") made as of , 2002, to establish a system for the financing and construction of certain improvements to Tele~aph Canyon Road identified in the Telegraph Canyon Traffic Enhancement Agreement (the "Telegraph Canyon Roadway Improvements"); and WHEREAS, the Developer requested that the City consider and the City did consider and form CFD No. 06-I and designated two improvement areas therein ("Improvement Area 'A'" and "Improvement Area 'B'", each an "Improvement Area" and collectively the "Improvement Areas") under the terms and conditions of the "Mello-Roos Community Facilities Act of 1982," as amended (Government Code Section 53311 and following) (the "Act"), for the purpose of financing the acquisition or construction of the Development Project Improvements and Developer's fair share of the cost of the acquisition or construction of the Traffic Enhancement improvements, together with appurtenances and appurtenant work (the Development Project Improvements and the Traffic Enhancement Improvements are referred to herein individually as an "Improvement" or collectively as the "Improvements"); and, WHEREAS, Developer, in order to proceed in a timely way with development of the Development Project, desires to construct certain of the 'Improvements that will, following the completion of the construction thereof, be acquired, owned, operated and maintained by the City; and, WHEREAS, Developer, in order to meet its obligations under the Telegraph Canyon Traffic Enhancement Agreement and under any future agreement which is mutually agreed to by the Developer and the City to finance the Developer's share, if any, of cost of the construction of other Traffic Enhancement Improvements ("Future Traffic Enhancement Agreement" - all references to "Future Traffic Enhancement Agreement" mean only an agreement that is mutually a~eed to by the Developer and the City), also deskes to finance its Fair Share (as such term is defined in the Telegraph Canyon Traffic Enhancement Agreement) of the cost of the design of, grading for and construction of the Telegraph Canyon Roadway Improvements and its fai~ share ("Additional Fair Share") as established by any Future Traffic Enhancement Agreement wkich is mutually agreed to by the Developer and the City of the cost of the construction of any other Traffic Enhancement Improvements; and, WHEREAS, the City, CFD No. 06-I and Developer agree that the Improvements to be constructed by the Developer may, upon the completion of the construction thereof, be acquired by the City through f'mancing provided by CED No. 06-I at prices determined pursuant to and in accordance with the provisions of this Agreement; provided, however, (a) if the Developer constructs any Telegraph Canyon Roadway Improvements only that portion of the cost of construction of such Telegraph Canyon Roadway Improvements representing the Developer's Fair Share of such costs shall be paid pursuant to the terms and conditions of this Agreement and the reimbursement to the Developer of the costs, if any, of construction of such Telegraph Canyon Roadway Improvements which are allocable to the Other Master Developers pursuant to the Telegraph Canyon Traffic Enhancement Agreement shall be governed by the terms and Copy 'conditions thereo£ and (b) if the Developer constructs any other Traffic Enhancemenl Irnprovemen! only that portion ol- the cost of construction of such Traffic Enhancement Improvement representing the Deve]opei's Future Fair Share of such costs shall be paid pursuant to the tern~s and conditions of this Agreement and the reimbursement to the Developer of the costs, if any, of construction of such Traffic Enhancement Improvement which are allocable to other parties pursuant to a Future Traffic Enhancementi.A~reement applicable to such Traffic Enhancement Improvement shall be governed by the terms and conditions thereof; and, WHEREAS, except for the reimbursement of (a) the costs of construction of Telegraph Canyon Roadway Improvements constructed by the Developer which are allocable to Other Master Developers pursuant to the Telegraph Canyon Traffic Enhancement Agreement or (b) the costs of construction of any other Traffic Enhancement Improvement constructed by the Developer which are allocable to any other party pursuant to a Future Traffic Enhancement Agreement applicable to such Traffic Enhancement Improvement, the City and the Developer further agTee that payment by the City for the acquisition of the Lmprovements shall be fUnded solely from the proceeds of bonds which shall be issued by CFD No. 06-I for each Improvement Area and which shall be secured by the levy of special taxes by CFD No. 06-I within each such Improvement Area; and, WHEREAS, it is the intent of this Agreement that Developer shall be entitled pursuant to the provisions of this Agreement to be paid for each of the Improvements constructed by the Developer at the prices as determined by the City pursuant to this Agreement upon: (a) the sale and delivery of bonds by CFD No. 06-I the proceeds of which shall be authorized and designated to make the payments to acquke such Improvements and (b) the completion of the construction of each such Improvement; and, WHEREAS, CFD No. 06-I is willing to finance the acquisition of and acquire the Improvements to be constructed by the Developer and to finance the Developer's Fair Share of the cost of the Telegraph Canyon Roadway Improvements if constructed by a party other than the Developer subject to the requirements of the Act, the City of Chula Vista Statement of Goals and Policies Regarding the Establishment of Community Facilities Districts adopted by the City Council (the "Goals and Policies"), this Agreement, the Telegraph Canyon Traffic Enhancement A~eement and any Future Traffic Enhancement A~eement and Developer desires that CFD No. 06-I so finance the acquisition and acquire such Improvements and finance Developer's Fair Share of the cost of the Tele~aph Canyon Roadway hnprovements and Developer's Future Fair Share, if any, of the cost of other Traffic Enhancement Improvements. NOW, THEREFORE, IT IS MUTUALLY AGREED between the respective parties as follows: SECTION 1. Recitals. The above recitals are all uae and correct. SECTION 2. Plans and Specifications. All plans, specifications and bid documents for the Improvements (the "Plans and Specifications") and all changes in the Plans and Specifications ._ necessitated by change orders shall be prepared by the Developer at the Developer's initial expense, subject to City approval. The costs of acquisition of such Improvements shall include [ Execution Copy costs of the preparation of the Plans and Specifications and all related documentation as set forth in Section 8 below. Developer shall not award bids for construction, commence construction or cause commencement of construction of an Improvement until the Plans and Specifications for such improvement have been approved by the City. .. SECTION 3. Design, Bid and Construction of Improvements. Developer covenants and agrees that each Improvement to be acquired from Developer pursuant to this A~eement shall be designed, bid and constructed (a) in substantial compliance with the approved Plans and Specifications for such Improvement; (b) in a good and workmanlike manner by well-trained adequately supervised workers; (c) ~n strict compliance with all governmental and quasi-goverrmaental roles, regulations, laws, building codes and all requirements of Developer's insurers and lenders; (d) free of any known design flaws and defects; and (e) in compliance with the requirements of Exh/bit C hereto which is incorporated herein by this reference. SECTION 4. Inspection and Acceptance of the Improvements. The construction activities relating to the Improvements shall be subject at ail reasonable times to inspection by author/zed representatives of City. Once an Improvement to be acquired by City is substantially completed in accordance with the approved Plans and Specifications, then such Improvement shall be eli~ble for payment of the Base Increment of the Purchase Price (as defined in Section 8 below) therefor. Prior to acceptance of any Improvement by City for purposes of paying the Retained Increment (as defined in Section 8 below) of the Purchase Pr/ce, the Developer shall provide to the City Engineer of the City, or his or her designee (the" ' ~' " C~ty Engineer ), the documentation set forth in this Section 4 and Section 8(c)(ii) below and obtain approval of as-built drawings for the Improvement in accordance with the process described below in this Section 4. The engineer of record for the Improvement ("En~neer of Record") shall file form PW-E-106 (Request for Release of Bonds) with the City En~neer. Within 20 working days of such filing, the field inspector of the City ("Field Inspector") or designee shall issue and transmit to the Engineer of Record a letter requesting (i) as-built drawings and soils reports (when applicable) and (ii) a punchlist of work to be completed or corrections to work to be completed before the Improvement will be eli~ble for payment of the Retained Increment. Within 20 working days of receipt of the Field Inspector's letter, the Engineer of Record shall prepare redline as-built Execution Copy drawings and submit them, together with any necessary soils reports, to the Field Inspector and · ~) 'the Developer shall complete the items of work and/or corrections specified in the punchlist. Within 10 working days of the Engineer of Record's submittal of the red lined as-built drawings, the Field Inspector shall review such drawings and provide comments. The Engineer of Record shall revise the redline as-built drawings per the Field Inspector's comments and resubmit within 10 working days. The Field Inspector shall make his final review within 5 working days of the Engineer of Record's resubrhittal and notify the Engineer of Record to prepare mylar as-built drawings and a microfiche copy and submit both to the Public Works Director or his designee and notify the Developer of any punchlist items which remain to be completed. The City and Developer shall make best efforts to perform within the time periods described above. The inability of City or Developer to perform within each time period, notwithstanding its best efforts, shall not constitute a breach of this Agreement. SECT/ON 5. Warranty of Improvements. At all times prior to the City's acceptance of an Improvement, the Developer shall be responsible for maintaining the Improvement. at the DeVeloper's expens/~. The Developer shall be obligated for the period of twelve (12) months immediately following the City's acceptance of an Improvement to repair or replace, at Developer's expense, any defects or failures resulting from the work of Developer, its contractors or agents. Upon the expiration of such twelve (12) month period, Developer shall assign to City and CFD No. 06-I its fights in and to any warranties, guarantees or other evidence of contingent obligations of third persons with respect to such Improvement. As a condition precedent to the pa~ent of the Retained Increment (as defined in Section 8 below) of the Purchase Price, Developer shall post a maintenance bond in a form reasonably approved by the City, cause such a maintenance bond to be posted, or assign Developer s n,hts under such a maintenance bond naming City on,or CFD No. 06-1 as beneficiary in an mount equal to fifteen percent (15%) of the Purchase Price of the Improvement in order to secure Developer's obligations pursuant to this Section. Upon posting of such maintenance bond, the City shall release any performance, labor and material bonds for such Improvement. SECTION 6. Notice of Completion and Lien Releases. Upon completion of the construction of an Improvement, Developer shall notify the City Engineer in writing of such completion and shall prepare and execute a Notice of Completion for such Improvement in the form prescribed by Section 3093 of the California Civil Code and shall record such notice in the Official Records of the County of San Diego. Developer shall cause its contractors to provide unconditional lien releases for such Improvement in accordance with Section 3262 of the Civil Code. Notwithstanding the foregoing, City may waive the requirement for a Notice of Completion and lien releases if City determines that as of the date of payment of the Retained Increment of the Purchase Price for an Improvement', title to such Improvement or portion thereof satisfies the requirements for Acceptable Title (as hereinafter defined). SECTION 7. Construction of the Telegraph Canyon Roadway Improvements or other Traffic Enhancement Improvements. If and to the extent that the provisions of the Telegraph Canyon Traffic Enhancement Agreement or Future Traffic Enhancement Agreement pertaining .. to the design, construction, acceptance and warranty of the Telegraph Canyon Roadway In~provements or any other Traffic Enhancem/ent ~}provements conflict with the provisions of Execution Copy this Agreement, the provisions of the Telegraph Canyon Traffic Enhancement A~eement or Future Traffic Enhancement Agreement, as applicable, shall prevail over the conflicting provisions of this Agreement. SECTION 8. Payment of Purchase Price. (a) Amount of Purchase Price. The amount to be paid by City for the Improvements to be constructed by and acquired from Developer (the "Purchase Price") shall, as to each such Improvement, (i) be determined by City in accordance with the provisions of this Section 8, (ii) equal the lesser of the cost or the value thereof, (iii) include the reasonable cost or value of eligible appurtenant public facilities, (iv) include the costs of the title insurance policy described in Section 11 (a), and (v) include all other costs of construction and incidental costs etigib]e under the Act and the Goals and Policies as a part of the cost of the Improvements; provided, however, the Purchase Pr/ce to be paid pursuant to this Agreement for (y) any Telegraph Canyon Roadway Improvements constructed by the Developer shall not exceed the Developer,s Fair Share of the cost of the construction of such Roadway In~provements determined pursuant to the provisions of the Traffic Enhancement Agreement or (z) any other Traffic Enlnancement Improvement constructed by Developer shall not exceed the Developer's Future Fair Share of the cost of construction of such Traffic Enhancement Improvement determined pursuant to the prox-isions of the applicable Future Traffic Enhancement Agreement, and provided further that the ag~egate Purchase Pr/ce for any Improvement included in the City's Traffic Development Impact Fee ("TDIF") program shall not exceed the aggregate TDIF obligation for the property within CFD No. 06-I. Incidental costs eligible to be included in the Purchase Pr/ce of any Improvement shall include the following: (i) Usual and customary design and engineering costs not to exceed the following percentages: a. Civil engineering - 7.5% of the cost of the construction of the Improvement for which the service was performed. b. Soils engineering - 15% of the cost of the gading for the Improvement. c. Landscape architecture - i0% of the cost of applicable landscaping and irrigation relating to the Improvement. d. Survey and co~struction staking - 2% of the combined cost of the construction and grading for the Improvement. e. Utility engineering/coordination - 3% of the cost of the construction of the applicable dry utilities. .. Execution Copy .(ii) Construction administration and supervision not to exceed, in ag~egate, 1.75% of the total construction cost of the Improvement. (iii) Special engineering studies related to "collector" or "transmission" facilities as reviewed and approved by the Public Works Direct.or. (iv) Plan check and inspection fees (less any refunds). (v) Capacity or connection fees related solely to the Improvement. (vi) Costs of acquisition of off-site rights-of-way and/or easements including the · following: a. Appraisal and title insurance costs. b. Costs of preparing acquisition plats. c. The appraised value or actual cost of right-of-way or easement, whichever is less. d. Legal fees and costs related to eminent domain proceedings approved by the City Attorney. (vii) Costs of environmental review, permitting and mitigation related to the Improvement. In no event shall the cost or value of the construction of the huprovements be deemed to exceed the construction contract prices set forth in the contracts and change orders approved by City ("Approved Change Orders") pursuant to the applicable provisions of Exhibit "C" hereto, which is incorporated herein by this reference, or otherwise authorized pursuant to this A~eement. Notwithstanding the foregoing, the ag~egate Purchase Price of the acquisition of all new utilities to be owned by a public utility or public utilities may not exceed 5% of the proceeds of the series of the Bonds to be utilized to pay such Purchase Price less that portion of the reserve fund, costs of issuance and other incidental costs allocable to such mount. (b) Incremental payment of Purchase Price of an Improvement other than a Traffic Enhancement Improvement. The Purchase Price for any Improvement constructed by the Developer, other than a Traffic'Enhancement Improvement, shall be payable in not to exceed two increments: the "Base Increment" which shall be an amount not to exceed 75% of the Purchase Price for such Improvement and the "Retained Increment" which shall be an amount not to exceed the remaining, unpaid portion of the Purchase Price for such Improvement determined ... .) pursuant to the provisions of (a) above. Execution Copy (c) Requisition for Incremental Payment of Purchase Price of an Improvement other than a · j) Traffic Enhancement Improvement. (i) Base Increment. The Developer may submit only one (1) written request Io the City Engineer for the payment of the Base Increment for an Improvement, other than a Traffic Enhancement Improvement, upon the substantial completion of the construction of such Improvement in accordance with the approved Plans and Specifications. The criteria for determining "substantial completion" of each such Improvement is described in Exhibit B and shall mean generally that construction, or work with respect to such Improvement has progressed to the point where it is sufficiently complete so that such Improvement can be utilized for the purpose for which it was intended. Substantial completion of such an Improvement shall also mean that all components of such Improvement are substantially complete, e.g., in the case of Improvement including streets (other than streets included in the Traffic Enhancement Improvements), the components are described in footnote 1 to Exhibit A. Each Base Increment payment request must be in the form attached hereto as Exhibit D - t, which is incorporated herein by this reference, and conform to the requirements of (d) below. The request for payment of the Base Increment for an Improvement shall be accompanied by a copy of the following documents related to the construction of such Improvement: (1) each constmction contract, (2) each change order, (3) each invoice submitted pursuant to such construction contracts, (4) evidence of payment of each such invoice such as copies of cancelled checks or other evidence of payment satisfactory to the City Engineer, and (5) written conditional lien releases executed by each applicable contractor, subcontractor and materialman in a form satisfactory to the City Attorney of the City (the "City Attorney") for such Improvement. (ii) Retained Increment. The Developer may submit only one (1) written request to the City En~neer for the payment of the Retained Increment for an Improvement, other than a Traffic Enhancement Improvement, in the form attached hereto as Exhibit D - 2, which is incorporated herein by this referen/e, upon the submission to the City Engineer of (1) as-built drawings or other equivalent plans and specifications for such Improvement in a form reasonably acceptable to the City, (2) evidence that the Developer has posted a maintenance bond for such Improvement as required by Section 5 hereinabove, (3) evidence of the satisfaction of the requirements of Section 10, hereinbelow directly related to such Improvement and (4) written unconditional lien releases from all contractors, subcontractors and materiaLmen satisfactory to the City Attorney for such Improvement. (d) Incremental Payment of Purchase Price of Traffic Enhancement Improvements. The Purchase Price for any Traffic Enhancement Improvement shall be payable in not to exceed two increments: the "Base Increment" which shall be an mount not to exceed 50% of (i) the Developer's Fair Share of the cost of the construction of such Telegraph Canyon Roadway Improvement or (ii) the Developer's Future Fair Share of the cost of construction of any other Traffic Enhancement Improvement, as applicable, and the "Retained Increment" which shall be an amount not to exceed the remaining, unpaid portion of (y) the Developer's Fair Share of the Execution Cop)' cost of the Telegraph Canyon Roadway Improvement or (z) the Developer's Future Fair Share of the cost of any other Traffic Enhancemem Improvement, as applicable. (e} Re0uisition for Incremental Payment of PUrchase Price of a Traffic Enhancement Iml~rovement. (i) Base Increment. The Developer may submit a written request to the City Engineer in the form attached hereto as Exhibit D - 3, which is incorporated herein by this refe?ence, for the payment of all or any portion of the Base Increment for a Traffic Enhancement Improvement upon the completion of fifty percent (50%) the construction by the Developer of such Traffic Enhancement Improvement. A Traffic Enhancement Improvement will be deemed to be 50% complete when the City Engineer has determined that the Developer has expended an amount equal to >0~ of the contract price for such Traffic Enhancement Improvement. (ii) Retained Increment. The Developer may submit a written request to the City Engineer for the payment of the Retained Increment for a Traffic Enhancement Improvement in the form attached hereto as Exhibit D - 4, which is incorporated herein by this reference, upbn the completion of the construction of such Traffic Enhancement Improvement and acceptance thereof by the City. (iii) Required Documentation. Any request for payment of the Base Increment, Retained Increment or any port/on thereof of the Purchase Price for a Traffic Enhancement Improvement constructed by the Developer shall be accompanied by a copy of the following documents related to the construction of such Traffic Enhancement Improvement and the payment requested in such request for payment: (1) evidence of payment of each invoice such as copies of cancelled checks or other evidence of payment satisfactory to the City En~-qneer upon which the request for payment is based and (2) written conditional lien releases executed by each applicable contractor, subcontractor and materialman in a form satisfactory to the City Attorney. (f) Documentation. Any payment request submitted by Developer shall be properly. executed and shall include copies of all supporting documents required by subsection (c)(i), (c), (d) or (e), as applicable. (g) Review of Payment Rec~uest for an Improvement. The City En~neer or his designee shall review each payment request and the supporting documentation accompanying such payment request. If the City En~neer finds that any such payment request is incomplete, improper or otherwise not suitable for appi'oval, the City En~neer shall inform Developer in writing within twenty (20) working days al[er receipt thereof, the reasons for his fmding. Developer shall have the right to respond to this finding by submitting further documentation after receipt of the denial. The City Engineer shall review any further documentation received from the Developer in support of a payment request and inform Developer of his approval or derfial of the payment request as supplemented in accordance with this Section within ten (10) Execution Copy working days after receipt of the supplemental documentation. A resubmittal of a payment request shall be deemed a new payment request for purposes of this Section. Subject to the limitations set forth herein, costs incurred under a constraction contract for an Improvement entered into pursuant to the requireme~,~ts of this Agreement, the Telegraph Canyon Traffic Enhancement Agreement or a Future Traffic Enhancement Agreement, as applicable, and Approved Change Orders shall be deemed to be reasonable and, subject to the other provisions of this Agreement, shall be included in the Purchase Price for such Improvement. The City Engineer shall, after the sale of the series of Bonds (defined in Section 20 below) pursuant to Section 20 the proceeds of which are intended to be used to acquire the subject Improvements and after his or her approval of a payment request, immediately forward a request to the Director of Finance of the City notifying the Director of Finance of his or her approval of the payment request and requesting that such payment be made to the appropriate payee. The Director of Finance shall process any such request of the City Engineer pursuant to the applicable procedures of the Finance Department and shall make or authorize such payment pursuant to such procedures and subsection (h) below. (h) Payment. (i) Priority of Paymeut of Cost of Construction or Purchase Price.for Improvements. The City and the Developer acknowledge and agree that the cost of acquisition or construction of all Improvements may exceed the aggregate amount of the Bond proceeds which will be available for the payment of that portion of cost of construction or the Purchase Price, as applicable, for ali of such Improvements eligible to be paid fi-om the proceeds of the Bonds. As a result the City and Developer agree that the payment of the cost of construction or the Purchase Price, as applicable, for Improvements shall be prioritized as follows: Priority 1: Improvement No. 1 ("Traffic Enhancement Improvements") in Exhibit A. Priority 2: Improvement Nos. 2-8 in Exhibit A. The cost of construction or Purchase Price for any lower priority Improvement shall not be paid until the cost of construction or Purchase Price for all higher priority Improvements has been paid or if sufficient proceeds of the Bonds are reasonably determined to be available to fully fired the cost of construction or Purchase Pn'oe of the higher priority Improvements, based upon the estimates of the cost of consm~ction or the estimates or approved Purchase Prices, as applicable, for such higher priority Improvements on Exhibit A. (ii) Tintiug of the Payment of the Purchase Price for alt Iinprovement. Subject to the limitations contained in (i) above and (iii) and (iv) below, the increment of the Execution Copy Purchase Price for each Improvement shall be paid to Developer within thirty (30) days after the date of the City Engineer's approval of the payment request for any such increment; provided, however, no Retained Increment for any Improvement other than Traffic Enhancement Improvements shall be paid earlier than thirty-five (35) days after . the recording ora Notice of Completion for such Im. provement. (iii) Sottrce of Pa),tnent. The Purchase Price or any increment thereof for an Improvement sliall be payable to the Developer solely from those proceeds ("Eligible Improvement Proceeds") of the sale of that series of Bonds as provided in Section' 20 hereof authorized and desi~ated for the payment for such Improvement, after all costs of fomaation of CFD No. 06-I and all costs of issuance of such Bonds have been paid and deposits of accrued and capitalized interest to the redemption fund and the initial deposit to the reserve fund have been made. (iv) ~qthholding of Paymen£ In addition to the foregoing, the City shall have the right to withhold payment of the Purchase Pr/ce or any increment thereof of any Improvement if (a) the Developer is delinquent in the payment of any assessment installments or special taxes levied by the City or a cormuunity facilities district established by the City on properties then owned by the Developer within CFD No. 06-I, (b) the City Engineer reasonably determines that the Developer is not then in substantial compliance with all applicable conditions and obligations imposed upon the Developer hereunder or upon the Development pursuant to the land use entitlements approved by the City for the Development, including but not limited to, payment of all applicable fees, dedication of all applicable r/ghts-of-way or other property and construction of ail applicable public improvements. The City Engineer shall provide written notice to the Developer of the decision to withhold any such payment and shall specify the reason for such decision. If the payment is withheld as a result of the delinquency in the payment of assessment installments or special taxes, the notice shall identify the delinquent parcels and the amount of such delinquency. If the payment is withheld as a result of substantial non-compliance with a condition or obligation, the notice shall specify such condition or obligation and what action will be necessary by the Developer to substantially comply with such condition or obligation. Upon receipt by the City Engineer of evidence reasonably satisfactory to the City Eng/neer 9f the payment of the delinquent special taxes or assessments or upon the determination by the City Engineer that the Developer has substantially complied with the subject condition or obligation, the City shall forthwith make any payment wlfich has been withheld pursuant to the provisions of this para~aph. SECTION 9. Financing of Developer's Fair Share or Future Fair Share. ('a) Financin~ Develoi~er's Fair Share of Tele~aph Canyon Roadway Iml)rovements. (i) Telegraph Canyon Roadway Improvement Account. Subject to adjustment as provided for in the following paragraph, a portion of the proceeds of the Bonds in an amount equal to the Developer's Fair Share, currently estimated to be $1,000,000 shall be deposited in a '- Execution Cop)' separate account (the "Telegraph Canyon Roadway Improvement Account") to be established pursuant to the bond indenture setting forth the terms and conditions pursuant to which the Bonds shall be issued and sold (the "Bond Indenture"). Pursuant to lhe requirements of this Section 9(a), the City may from time to time authorize the disbursement of funds on deposit in the Telegraph Canyon Roadway Improvement Account to pay for the acquisition or construction of the Telegraph Canyon Roadway Improvements in accordance with the provision hereof and the Telegraph Canyon Traffic Enhancement Agreement. (ii) Adjustment of De~,eloper's Fair Share. The Developer's Fair Share is subject to adjustment pursuant to the temas of the Telegraph Canyon Traffic Enhancement Agreement. If the Fair Share specified in the preceding paragraph is modified pursuant to the Telegraph Canyon Traffic Enhancement Agreement subsequent to the issuance of the Bonds, the portion of the proceeds of the Bonds deposited .in the Telegraph Canyon Roadway Improvement Account shall be increased or reduced, as applicable, to equal the Fair Share as modified. If the Fair Share is modified so that the amount on deposit in the Telegraph Canyon Roadway ImproYement Account then exceeds the Fair Share as modified, the City shall authorize the release of such excess amount from the Telegraph Canyon Roadway Improvement Account and the transfer of such amount therefrom pursuant to the provisions of the Bond Indenture. If the Fair Share is modified so that the amount on deposit in the Telegraph Canyon Roadway Improvement Account, together with all prior disbursements from the Telegraph Canyon Roadway · Improvement Account to pay Developer's Fair Share of the cost of construction of the Telegraph Canyon Roadway Improvements, is then less than the Fair Share .as modified, the City shall ) notify the Developer in writing of such deficit and request that the Developer deposit funds in the amount of such deficit with Director of Finance within fit~een (~5) business days of the date of such notice. If the Developer fails to deposit such funds with such time period, the City may authorize the transfer of an amount equal to such deficit from Eligible Improvement Proceeds to the Telegraph Canyon Roadway Improvement Account. (iii) Construction of Telegraph Canyon Roadway Improvements by Party Other than Developen If the Telegraph Canyon Roadway Improvements are constructed pursuant to the Telegraph Canyon Traffic Enhancement Agreement by a party other than the Developer, the City may request pursuant to the Telegraph Canyon Traffic Enhancement Agreement that the Fiscal Agent disburse funds from the Telegraph Canyon Roadway Improvement Account to pay Developer's Fair Share of the cost of conslamction of the Telegraph Canyon Roadway Improvements pursuant to the Traffic Enhancement Agreement. (iv) Surplus Funds. If funds remain on deposit in the Telegraph Canyon Roadway Improvement Account Upon completion of the construction or acquisition of Telegraph Canyon Roadway Improvements and the paymen, t of Developer's final Fair Share amount, such funds shall be released from the reservation established pursuant to this Section 9(a) and such funds shall be made available to pay the Purchase Price of other Improvements. In the event that the City elects not to require the construction or acquisition of all or some portion of the Telegraph Canyon Roadway Improvements, the funds then on deposit in the Telegraph Canyon Roadway Improvement Account and not then allocated or necessary to pay Execution Copy Dcveloper's Fair Share of the costs of the acquisition or construction of Telegraph Canyon Roadway Improvements shall be released from the reset,orion established pursuant to this Section 9(a) and such funds shall be made available to pay the Purchase Price of other Improvements. (v) Limitation on Use of Funds iu Telegraph Canyon Roadway Improvement Account. Except as provided in this Section 9(a), funds on deposit in the Telegraph Canyon Roadway Improvement Account may not be utilized to pay all or any portion of the Purchase Price of any other Improvements. (vi) Investment of Funds On Deposit in Telegraph Canyon Roadway Improvement Account. The Bond Indenture shall provide that all funds on deposit in the Telegraph Canyon Roadway Improvement Account shall be invested in such permitted invesWnents as may be established by the terms of the Bond Indenture. All earnings on such investments shall be deposited in the improvement fund established by the Bond Indenture and shall be available to pay for the acquisition or construction of the Improvements pursuant to the terms of such Bond Indenture and this Agreement. (b) Financin,~ Develol~er's Future Fair Share of other Traffic Enhancement Iml~rovements. (i) Traffic Enhancement Improvement Account. Subject to adjustment as provided for in the following paragraph, a portion of the proceeds of the Bonds in an amount equal to the Developer's Future Fair Share of the cost of the acquisition or construe[ion of other Traffic Enhancement Improvements may be depos, ited in the Traffic Enhancement Improvement Account. Pursuant to the requirements of this Section 9(b), the City may from time to time authorize the disbursement of funds on deposit in the Traffic Enhancement Improvement Account to pay for the acquisition or construction of other Traffic Enhancement Improvements in accordance with the provision hereof and the Future Traffic Enhancement Agreement. (ii) Adjustment of Developer's Future Fair Share. The Developer's Future Fair Share is subject to adjustment pursuant to the terms of the Future Traffic Enhancement · Agreement. If the Future Fair Share specified in the preceding paragraph is modified pursuant to the Future Traffic Enhancement Agreement subsequent to the issuance of the Bonds; the portion of the proceeds of the Bonds deposited in the' Traffic Enhancement Improvement Account shall be increased or reduced, as applicable, to equal the Future Fair Share as modified. If the Future Fair Share is modified so that the amount on deposit in the Traffic Enhancement Improvement Account then exceeds the Future Fair Share as modified, the City shall authorize the release of such excess amount from the Traffic Enhancement Improvement Account and the transfer of such amount therefi-om pursuant to the provisions of the Bond Indenture. If the Future Fair Share is modified so that the amount on deposit in the Traffic Enhancement Improvement Account, together with all prior disbursements from the Traffic Enhancement Improvement Account to pay Developer's Future Fair Share of the cost of construction of other Traffic Enhancement Improvements, is then less than the Future Fair Share as modified, the City shall notify the Developer in writing of such deficit and request that the Developer deposit funds in the amount of such deficit with Director of Finance within fifteen (15) business days of the date of such Execution Cop)' notice. If the Developer fails to deposit such funds with such time period, the City may authorize the transfer of an amount equal to such deficit from Eligible Improvement Proceeds to the Traffic Enhancement Improvement Account. (iii) Construction of Telegraph Canyon Roa.dway Improvements by Party Other than Developer. If other Traffic Enhancement Improvements are constructed pursuant to the Future Traffic Enhancement Agreement by a party other than the Developer, the City may request pursuant to the Future Traffic Enhancement Agreement that the Fiscal Agent disburse funds from the Traffic Enhancement Improvement Account to pay Developer's Future Fair Share of the cost of construction of other Traffic Enhancement Improvements pursuant to the Future Traffic Enhancement Agreement. (iv) Surplus Funds. If funds remain on deposit in the Traffic Enhancement Improvement Account upon completion of the construction or acquisition of Telegraph Canyon Roadway Improvements and the payment of Developer's final Future Fair Share amounl, such funds shall be released from the reservation established pursuant to this Section 9(b) and such funds shall be made available to pay the Purchase Price of other Improvements. In the event that the City elects not to require the construction or acquisition of all or some portion of other Traffic Enhancement Improvements, the funds then on deposit in the Traffic Enhancement Improvement Account and not then allocated or necessary to pay Developer's Future Fair Share of the costs of the acquisition or construction of Telegraph .~--.\ Canyon Roadway Improvements shall be released from the reservation established pursuant to this Section 9(b) and such funds shall be made available to pay the Purchase Price of other Improvements. SECTION 10.Audit. The authorized representatives of City shall have the right, upon two (2) days prior written notice to Developer and during normal business hours, to review all books and records of Developer pertaining to costs and expenses incurred by Developer in construction of the Improvements. SECTION I1. Ownership and Transfer of Improvements. The conveyance of the Improvements by Developer to City shall be in accordance with the following procedures: (a) Improvements Constructed on Land not Owned by City. As a condition to the payment of the Retained Increment of the Purchase Price, Developer shall cause an irrevocable offer of dedication to be made to City or an outright ~ant of a fee interest or easement interest as appropriate, in the sole discretion of 3.he City of the appropriate right, title and interest in and to the portion of the applicable property owned by the Developer related to the applicable Improvement, including any temporary construction or access easements. Developer, whether or not it is the entity constructing the Improvements, agrees to '.~...: execute and deliver to the City the documents required to complete the transfer of Acceptable Title for property owned by the Developer upon or within which such / Improvements are to be located. For purposes of tkis Agreement, the term "Acceptable Title" shall mean title to the portion of the property to be conveyed free and clear of all Execution Cop), taxes, liens, encumbrances, assessments, easements, leases, whether any such item is recorded or unrecorded, except (i) non-delinquent taxes and assessments and (ii) those non-monetary encumbrances and easements which are reasonably determined by the City not to interfere with the intended use of the portion of the property. As a further condition to the payment of the Retained Incre.ment of the Purchase Price for any Improvement, Developer at its sole initial cost and expense, subject to reimbursement pursuant to Section 8, shall cause to be issued a policy of title insurance for such portion of the property in an amount not to exceed the Purchase Price and in the form normally required by City in connection with the dedication of land for subdivision improvements and containing such title endorsements as may be reasonably requested by City. City's final acceptance of the portion of the property and the Improvements constructed thereon shall not be unreasonably withheld or delayed. (b) Improvements Constructed on Land Owned by Ci~. If Developer is authorized to construct an Improvement on land owned in fee by City or on land over which the City owns an easement Developer shall obtain the necessary encroachment permits to enter such land for purposes of constructing such Improvement. City shall cooperate with Developer in issuing such encroachment permits. The Improvements shall be inspected by City on an ongoing basis. SECTION 12. Grading and Subdivision Improvement Bonds. Except as provided below or as ", may be provided in the Traffic Enhancement A~eement or any Future Traffic Enhancement _f' A~eement, Developer shall be required to post or cause the posting of bonds or other security acceptable to the City to guarantee completion of the Improvements in accordance with City's standard subdivision requirements and conditions of approval of the Development (the "Conditions of Approval"). Labor and materials bonds shall also be required to be provided by the Developer's contractor for all Improvements to be constructed under this agreement. Such bonds shall name the City of Chula Vista as additional obligee and shall remain in effect until the final acceptance of the Improvements by the City Engineer. The presence of Bond proceeds shall not relieve the Developer of requiring th~s obh=atmn of the Developer s contractor. Performance and labor and material bonds for specific Improvements shall not be required or may be released if: (1) such Improvements constitute a portion of the required subdivision improvements, (2) Bond proceeds equal to 125% of the estimated cost to construct or acquire such Improvements are available and set aside for such purpose, and (3) the Improvements are to be constructed or acquired entirely with the proceeds of the Bonds. Provided that conditions (1) and (2) are satisfied, if an Improvement is to be constructed or acquired only in part with the proceeds of the Bonds, performance and labor and material bonds shall not be required for that portion of the Improvements to be so constructed or acquired except with respect to the portion that will not be acquired or constructed with Bond proceeds. In the event that the Bond proceeds that are available and may be set aside to fund the cost to construct or acquire an Improvement are less than 125% of the estimated cost thereof, the Developer shall ~ be required to provide a performance and labor and material bond or other security satisfactory to · the City Engineer and the City Attorney in the amount of such deficiency. City will cooperate with Developer in the termination or exoneration of any performance and labor and material '- Execution Copy bonds assuring completion oflmprovements for which bonds have been sold. The City Engineer shall be the sole judge of determining release of such bonds. SECTION 13. Indemnification by Developer. Developer shall defend, indemnify and hold harmless City, its officers, directors, employees and age. nts, and CFD No. 06-I, its officers, directors, employees and agents from and against any and all claims, losses, liabilities, damages, including court costs and reasonable attorneys' fees by reason of, or resulting from, or arising out of the design, engineering and construction of the improvements by the Developer, its employees, agents, independent contractors and/or representatives; provided that any claims which relate to the Improvements shall be limited to those arising out of personal injury or property damage caused by actions or omissions by Developer or Developer's employees, agents, independent contractors or representatives which occurred during the period prior to the transfer of title to the Improvements by City, whether or not a claim is filed prior to the date of acceptance of the Improvements. Nothing in this Section 13 shall limit in any manner the fights of the City and/or CFD No. 06-I against any of the architects, engineers, contractors or other consultants employed by the Developer which has performed work in connection with construction or financing of the Improvements. Notwithstanding the foregoing, Developer shall have no obligation to defend, indemnify or hold harmless the City, its officers, directors, employees and agents, CFD No. 06-I, its officers, directors, employees and agents, from and against any claims, liabilities, losses or damages (including court costs and attorneys' fees) , which result from or arise out of the sole negligence or willful misconduct of the City, its :- officers, directors, employees, or agents, or CFD No. 06-I, its officers, directors, employees, or ._) agents. Except as set forth in this Section 13, no provision of this Agreement shall in any way limit the extent of the responsibility of Developer for payment of damages resulting from the operations of the Developer, its agents, employees or contractors. SECTION 14. Obligation of City and CFD No. 06-1. Neither the City nor CFD No. 06-I has a Iegal or financial obligation to construct or finance the actual construction of the Improvements. Except with respect to any portion of the cost of the construction by the Developer of the Traffic Enhancement Improvements above an amount equal to the Developer's Fair Share or Future Fair Share which is reimbursable pursuant to the Traffic Enhancement Agreement or a Future Traffic Enhancement Agreement, all costs incurred for actual construction of the Improvements, including all incidentals thereto, shall be borne by Developer, and the obligations of the City and Community Facilities District are limited to the acquisition of the Improvements pursuant to the provisions of this Agreement. SECTION 15. Failure by Developer to Construct Improvements. (a) Improvements Other Than Traffic Enhancement Improvements. At any time following commencement of the construction 'of any Improvements, other than Traffic Enhancement Improvements, by Developer City determines that such construction is not · progressing within a reasonable time in accordance with the Conditions of Approval or the Developer fails to demonstrate a continuing ability to complete the construction of such Execution Cop)' Improvement in accordance with the Conditions of Approval, the City may give wriuen notice of such failure of performance to the Developer. Developer shall have sixty (60) days from the date of receipt of such notice to either (i) cure such failure of performance by demonstrating to the satisfaction of the City during such cure period reasonable progress in the construction of the Improvement and a continuing ability to complete the ~onstmction of such Improvement in accordance with the Conditions of Approval or (ii) reasonably demonstrate that such failure of performance is due to circumstances or conditions beyond Developer's reasonable control ("Force Majeure") including, without limitation, the City's actions, omissions or inaction which result in a delay of performance by Developer, labor disputes, acts of God, war, riots, insurrections, civil commotions, moratoriums, inability to obtain labor or materials or reasonable substitutes for either, fire, unusual delay in transportation, and adverse weather conditions. Should Developer fail to reasonably demonstrate such reasonable progress or such continuing ability to complete the construction of such Improvement or Force Majeure, the obligation of the City to pay the Purchase Price for the acquisition of such Imp~'ovement pursuant to this agreement may be terminated by the City by providing ten (10) days written notice.to the Developer. Upon termination, the City may in its sole discretion then proceed to advertise and bid the balance of the construction of such Improvement, and there will be no further obligation on the part of the City for payment of the Purchase Price for such Improvement due to Developer pursuant to this Agreement. In the event that the City chooses not to advertise and bid the balance of the construction of any such Improvement following such a termination, any. monies remaining in the improvement fund for CFD No. 06-I and set aside for the acquisition of such Improvement shall be transferred to the redemption fund for CFD No. 06-1 and used to call outstanding Bonds. (b) Traffic Enhancement Iml~rovements. Any delay in the construction by the Developer of the Telegraph Canyon Roadway Improvements shall be subject to and governed by the provisions of the Telegraph Canyon Traffic Enhancement Agreement. Any delay in the construction by the Developer of any other Traffic Enhancement Improvement shall be subject to and governed by the provisions of the applicable Future Traffic Enhancement Agreement. SECTION 16. Agreement Contingent. As a precondition to the sale of each series of the Bonds of CFD No. 06-I, Developer shall pay in cash to City an origination charge of 1.0% of the amount of the principal amount of such series of the Bonds ("Origination Payment"). Each such Origination Payment shall be at Developer's own expense and not recoverable from the proceeds of the special taxes or fi.om the proceeds of the Bonds: In the event that any series of the Bonds are, for any reason, not sold, the amount of the Origination Payment made for such series of the Bonds shall be returned to the Developer. This Agreement is contingent upon the successful sale of Bonds, and it shall be null and void if the first ser/es of Bonds are not sold within a three (3) year period following the date of this Agreement, or any mutually agreed extension; however, this time can be extended by request ~ of the Developer and concurrence of the legislative body. ._ Execution Cop3' The City may, at its option, suspend the performance of its obligations under this A~eement if any legal challenge is filed relating to the'validity or enfomeability o·f this Agreement, CFD No. 06-I proceedings or the issuance of the Bonds. The obligations of the City and CFD No. 06-I hereunder shall be reinstated upon the entry of a final judgment in any such proceedings upholding the validity and enforceability .of the Agreement, CFD No. 06-I proceedings and the issuance of the Bonds· In the event that a final judgment or other final and non-appealable resolution is entered invalidating or declaring unenforceable this Agreement, CFD No. 06-I proceedings or the issuance of the Bonds, the City and CFD No. 06-I may, at their option, terminate this Agreement. SECTION 17. Notice of Special Tax. Developer, or the successor or assigns of the Developer, shall provide written notice to all potential purchasers of lots in the form required pursuant to Government Code Section 53341.5 and/or such additional requirements as may be established by the City so advising the potential owner of the fact of CFD No. 06-1, with said document being executed by the potential purchaser. Such notice shall be provided to the potential purchaser a reasonable time before the potential purchaser becomes contractually committed to purchase the lot so that the potential purchaser may knowingly consider the impact of the special tax in the decision to pumhase the lot. A copy of all such notices executed by actual purchasers shall be sent to the City En~neer. SECTION 18. Limitation of Aggregate Taxes and Assessments. (a) Sales of Owner-occupied Residential Dwelling: Units. Developer aclmowledges that Developer has included in all existing agreements to sell all or any portion of the property to any person or entity for the purpose of constructing and marketing owner-occupied residential dwelling units (a "Builder") and Developer agrees to include in any such future agreement provisions requiring the inclusion of the following "escrow instractions" in all sales-by such Builder of owner-occupied residential dwelling units to residential home owners: (I) At or prior to the close of each such escrow with a residential homeowner, the escrow company shall apply a "calculation formula" previously approved by the City Engineer and deposited with the escrow company by the Builder to determine the aggregate of all annual ad valorem property taxes, all special taxes authorized to be levied to finance the construction or acquisition ofpubl/c facilities and all assessment installments authorized to be levied to finance the construction or acquisition of public facilities (the "Total Annual Taxes and Assessments") applicable to the parcel subject to such escrow (the "Applicable Parcel"). (2) If the Total Annual Taxes and Assessments exceed 2% of the sales price of the Applicable Parcel, the Escrow Company will make immediate written demand upon the Builder for deposit into the escrow of the funds necessary to partially prepay the special tax obligation .for CFD No. 06-I or any other community facilities district so that the Total Annual Taxes and Assessments will thereafter be equal to or less than 2% of the sales price of the Applicable Parcel. Such funds must be received by the escrow company prior to the close of escrow of the sale of the Applicable Parcel. If the Builder elects to prepay a portion of the CFD No. 06-I special tax obligation, the calculatioh of this prepayment amount shall be in accordance with the Execution Copy ' r~ethod of prepayment of special tax as set forth in the rate and method of apportionment of special taxes approved by the qualified e!ectors of CFD No. 06-I. Upon closing of such escrow, the amount so deposited by the Builder pursuant to this escrow instruction shall be sent by the escrow company to the Director of Finance, together with written instructions that such amount is to be (i) used to partially prepay the special tax obliga, tion of the Applicable Parcel for CFD No. 06-I or (ii) sent to the public agency which formed, the community facilities district for which the special tax obligation has been prepaid with similar written instructions. (3) The provisions of this Section 18(a) related to sales by Builders to residential homeowners shall also apply to any sale by Developer ora parcel to a residential home owner. (b) Sales of Custom Home Parcels. (1) At or prior to the close of the escrow for the sale by the Developer or the Developer's successor or assigns of a parcel on which a custom home is proposed to be built (a "Custom Home Parcel"), the, escrow company shall apply a "calculation formula" previously approved by the City Engineer and deposited with the escrow company by the Developer or the Developer's successor or assigns to determine the ag~egate of all annual ad valorem property taxes, all special taxes authorized to be levied to finance the construction or acquisition ofpubtic facilities and all assessment installments authorized to be levied to finance the construction or acquisition of public facilities (the "Total Annual Taxes and Assessments") applicable to such ,:~ ,~ Custom Home Parcel. (2) If the Total Annual Taxes and Assessments exceed 2% of the sales price of the Custom Home Parcel pius the Assumed Cost of Construction (defined below) (collectively, the "Custom Home Parcel Sales Price"), the Escrow Company will make immediate written demand upon the Developer, its successor or assign for deposit into the escrow of the funds necessary to partially prepay the special tax obligation for CFD No. 06-I or any other community facilities district so that the Total Annual Taxes and Assessments will thereafter be equal to or less than 2% of the Custom Home Parcel Sales Price for the applicable Custom Home Parcel. The Assumed Construction Cost shall be established by the City Engineer assuming the construction of a 3,200 square foot home at a cost of constr~ction per square foot determined by the City Engineer after consultation with the Developer and the Planning and Building Department of the City. Such funds must be received by the escrow company prior to the close of escrow of the sale of the applicable Custom Home Parcel. If the Developer elects to prepay in portion of the CFD No. 06-I special tax obligation, the calculation of this prepayment amount shall be in accordance with the method of prepayment of special tax as set forth in the rate and method of apportionment of special taxes approved by the qualified electors of CFD No. 06-I. Upon closing of such escrow, the amount so deposited by the Developer pursuant to this escrow instruction shall be sent by the escrow company to the Director of Finance, together with written instructions that such 'amount is to be (i) used to partially prepay the special tax obligation of the applicable Custom Home Parcel for CFD No. 06-I or (ii) sent to the public agency which formed the I community facilities district for which the special tax obligation has been prepaid with similar · ' written instructions. Execution Copy (c) Remedy. The purchaser of any Applicable Parcel or Custom Home Parcel to which the provisions of this Section 18 apply shall be deemed to be a third party beneficiary of Section 18. In addition to any other remedy provided for by law or in equity, such purchaser or the City may enforce the provisions of this Section 18 by an action for specific performance or injunctive relief or both. SECTION 19. Relationship to Public Works. This A~eement is for the construction and acquisition of certain Improvements by City and the sale of the Bonds for the payment of construction and acquisition costs for such Improvements and such other amounts as are herein provided, and is not intended to be a public works contract. In performing its obligations under this Agreement, Developer is an independent contractor and not the agent of City. City shall have no responsibility for payment to any contractor or supplier of Developer. Notwithstanding the foregoing, Developer may be subject to certain public contract requirements as provided in Section 3 of this Agreement. SECTION 20. Sale Of Bonds. CFD No. 06-I shall, immediately upon the execution of this Agreement by the parties hereto, proceed with the issuance and sale of bonds for Improvement Area A (the "Improvement Area A Bonds") secured by the levy of special taxes within Improvement Area A. CFD No. 06-I shall, immediately upon receipt of a written request from the Developer, proceed with the issuance and sale of bonds for Improvement Area B (the "Improvement Area B Bonds" and together with the Improvement Area A Bonds, the "Bonds") secured by the levy of special taxes within Improvement Area B. Each series of Bonds shall be siz~ so that as of the date of issuance of such series of Bonds the ag~egate appraised value of all taxable properties within the Improvement Area for which the Bonds are being issued shall be at least 4 times the Land Secured Debt (defined below) allocable to such properties, (ii) the appraised value of each property to be developed for which a final subdivision map has not been recorded shall be at least four (4) times the Land Secured Debt allocable to each such property and (iii) the appraised value of each taxable property within such Improvement Area shall be at least three (3) times the Land Secured Debt allocable to each such property. "Land Secured Debt" means as to any taxable property, the principal mount of all outstanding Bonds allocable to such property, together with the principal amount of any other indebtedness of any other community facilities district secured by the levy of special taxes which is allocable to such parcel and the principal amount of any fixed lien assessment levied against such property. The appraised value of taxable property for purposes of this paragraph shall be determined by an independent appraisal undertaken for the City utilizing appraisal assumptions approved by the CiLy and, as to each subsequent series of the Bonds, consistent with the applicable parity bonds requirements. The City may, in its sole discretion, accept a lower ratio of appraised value to Land Secured Debt or accept a form or forms of credit enhancement such as a letter of credit, cash deposit, Bond insurance or the escrow of Bond proceeds to offset a deficiency in the required value-to-debt ratio. The proceeds of each series of the Bonds shall be used in the following priority to (i) fund a reserve fund for the payment of principal and interest with respect to such Bonds; (ii) fund capitalized interest on such Bonds in an amount not to exceed the amount required to pay interest on such series of the Bonds until sufficient special taxes of the applicable Impi-ovement Area Execution Cop)' may be placed on the tax roll to pay the scheduled debt service on such series of the Bonds; (iii) pay for costs of issuance of such series of the Bonds including, without limitation, underwriter's discount, bond counsel fees, printing, and paying agent fees; (iv) pay for that portion of the costs of forming CFD No. 06-I allocable to the Improvement Area for which the Bonds have been 'issued, including reimbursement of advances of funds to the City by Developer and the Developer's legal, engineering and financial consulting expenses incurred relating to the formation of CFD No. 06-I and issuance of the Bonds; and (v) pay the portion of}he costs of the construction or acquisition of the Improvements allocable to the Improvement Area for which the Bonds have been issued pursuant to the provisions of this Agreement and consistent with the priorities set forth herein. The timing of the issuance and sale of each series of the Bonds shall be determined solely by the City. Additionally, the terms and conditions upon which each series of the Bonds shall be issued and sold, the method of sale of each series of the Bonds and the pricing thereof shall be determined solely by the City and shall conform to the Goals and Policies and this Agreement. The sale of each series of the Bonds shall be subject to receipt by the City of a Competitively bid or negotiated bond purchase agreement which is acceptable to the City. The amount of each series of the Bonds to be issued shall be determined in accordance with the Goals and Policies such that the maximum projected annual special tax revenues securing such series of the Bonds equals at least 110% of the projected annual gross debt sen, ice on all of the outstanding Bonds of such series. Developer agrees to provide all information regarding the development of the property within the Improvement Area for which a series of Bonds is proposed to be issued, including the financing plan for such development, which are necessary to ensure that the official statement for such Bonds complies with the requirements of Rule 15c2-12 of the Securities and Exchange Commission (the "Rule") and all other applicable federal and state securities laws. Additionally, Developer agrees to enter into a continuing disclosure a~eement to provide such continuing disclosure pertaining to the Community Facilities District, the development thereof and the Developer as necessary to ensure ongoing compliance with the continuing disclosure requirements of the Rule. Finally, Developer agrees to cause its counsel to provide an opinion of such counsel in a form satisfactory to the underwriter of such series of the Bonds and underwriter's counsel or disclosure counsel, as applicable. SECTION21. Development Impact Fee Credit, Payment and Reimbursement. The Improvements include public facilities that are included in several City development impact fee pro.m-ams (each, a "DIF Program"). Credits against the applicable DIF Program fees shall be ~anted in accordance with the applicable City ordinances, regulations and policies. SECTION 22. Conflict with Other Agreements. Except as specifically provided herein, nothing contained herein shall be construed as releasing Developer from any condition of development or requirement imposed by any other a~eement with City. Execution Cnpy 'SECTION 23. General Standard of Reasonableness. Any provision of this Agreement which requires the consent, approval, discretion or acceptance of any party hereto or any of their respective employees, officers or agents shall be deemed to require that such consent, approval or acceptance not be unreasonably withheld or delayed, unless such provision expressly incorporates a different standard. SECTION 24. Entire Agreement; Amendment. This Agreement and the agreements expressly referred to herein contains all of the agreements of the parties hereto with respect to the matters contained herein and no prior or contemporaneous agreement or understandings, oral or written, pertaining to any such matters shall be effective for any purpose. No provision of this Agreement may be modified, waiver, amended or added to except by a writing signed by the party against which the enforcement of such modification, waiver, amendment or addition is or may be sought. SECTION 25. Notices. Any notice, payment or instrument required or permitted bY this A~eemeht to be ~ven or delix;ered to either party shall be deemed to have been receiged when personally delivered or seventy-two (72) hours following deposit of the same in any United States Post Office in California, registered or certified, postage prepaid, addressed as follows: Developer: The EastLake Company, LLC 900 Lane Avenue, Suite 100 Chula Vista, CA 91914 Attn: William Ostrem City: City of Chula Vista 276 Fourth Avenue Chula Vista, CA 91910 Attn: City Manager Each party may change its address for delivery of notice by delivering written notice of such change of address to the other party. SECTION 26. Severability. If any provision of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent reasonably possible. SECTION 27. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. Developer may not assign its rights or obligations hereunder except upon written notice to City within ten (10) days of the date of such assignment indicating th~ name and address of the assignee. Upon such. notice and the assumption by the assignee of the rights, duties and obligations of the Developer arising under or from this Agreement, Developer shall be released by City fi-om all future duties or obligations rising under or fi'om this Agreement. Notwithstanding the preceding sentence, Developer may assign its rights and obligations hereunder as security to lenders for the purpose of obtaining Execution Copy ioans to finance development within. CFD No. 06-I, but no such assi=~nment shall release Developer from its obligations hereunder.to City. SECTION 28. Governing Law. This Agreement and any dispute arising hereunder shall be governed by and interpreted in accordance with the laws of the State of California, Additionally, this Agreement and the construction of the Improvements.shall be subject to all City ordinances and regulations relating to the requirement of improvement agreements, land division, improvement security or other applicable development requirements. SECTION 29. Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Agreement by any other party, or the failure by a party to exercise its rights under the default of any other party, shall not constitute a waiver of such party's right to insist and demand strict compliance by any other party with the terms of this Agreement thereafter. SECTION 30. Singular and Plural; Gender. As used herein, the singular of any work irlcludes the plural, and terms in the masculine gender shall include the feminine. SECTION 31. Counterparts. This Agreement may be executed in counterparts, each of which shall be dee/ned an original. SECTION 32. Construction of Agreement. This Agreement has been reviewed by legal counsel for both the City and the Developer and shall be deemed for all purposes to have been jointly drafted by the City and the Developer. No presumption or rule that ambiguities shall be construed against the drafting party shall apply to the interpretation or enfomement of this Agreement. The language in all parts of this Agreement, in all cases, shall be construed as a whole and in accordance with its fair meaning and not strictly for or against any party and consistent with the provisions hereof, in order to achieve the objectives of the parties hereunder. The captions of the sections and subsections of this Agreement are for converfience only and shall not be considered or referred to in resolving questions of construction. SECTION 33. Recitals; Exhibits. Any recitals set forth above and any attached exhibits are incorporated by reference into this A~eement. SECTION 34. Authority of Signatories. Each signatory and party hereto hereby represents and warrants to the other party that it has legal authority and capacity and direction from its principal to enter into this Agreement, and that all resolutions and/or other actions have been taken so as to enable such party to enter into this Agreement. [End of page. Next page is sig-nature page.] Execution Copy Signature Page to Acquisition/Financing Agreement by and between the City o£Chula Vista and The EastLake Company, LLC, EXECUTED by and between the parties hereto on the day .and year first hereinabove written. "CITY" CITY OF CHULA VISTA STATE OF CALIFORNIA ATTEST: APPROVED AS TO FORM: CITY CLERK JOHN KAHENY, CITY ATTORNEY CITY OF CHULA VISTA CITY OF CHULA VISTA STATE OF CALIFORNIA STATE OF CALIFORNIA "DEVELOPER" THE EASTLAKE COMPANY, LLC, a California limited liability company Its: ~J[~. ~(~'4 X ,,/~' S-1 Excculion Copy Exhibit "A" ACQUISITION AND FINANCING AGREEMENT FOR CFD 06-I (EASTLAKE - WOODS, VISTAS AND LAND SWAP) IMPROVEMENT D~SCRIPTION AND ES.T~MATED COSTS Improvement Improvement Description~ Cost Number Estimate" 1 Traffic Enhancement Improvements $1,000,000~ 2 East Olympic Parkway 6,628,979 3 West Olympic Parkway 14,827,891 4 Hunte Parkway 1,565,687 5 Otay Lakes Road 6,834,815 6 Proctor Valley Road 1,000,000 7 Telegraph Canyon Road Widenin~dTraffic Improvements 2,700,000 8 Traffic signals 1,441,784 Totals $35,999,156 Notes: Somces: Developer, McGill Martin Self, Inc. 1/ The description of the Improvements set forth in this Exhibit "A" is preliminary and genenl. The final plans and specifications may show substitutes or modifications to the proposed Improvements and proposed Improvements may be added or deleted with the consent of Developer and the City En~m~nfier. Components of all roadway improvements eligible for funding shall include (i) grading, including site preparation and mobilization, (ii) wet and dry utilities within the right-of-way, (ii/) storm drain facilities, (iv) paving, (v) curb, gutter, sidewalk, medians, (vi) traffic signals, (vii) lighting, (viii) landscaping and (ix) all other appurtenant improvements. 2/ Cost estimates are preliminary and may be modified from time to t/me w/th the consent of Developer and the City En~neer. 3/ Cost estimate for the Traffic Enhancement Improvements constitutes the estimated mount to be reserved .out of the proceeds of the Bonds equivalent to the Developer's Fair Share of the cost of construction of the Tele~aph Canyon Roadway Improvements as established pursuant to the provisions of the Telegraph Canyon Traffic Enhancement A~eement. Such amount shall be subject to revision pursuant to the provisions hereof, the Telegraph Canyon Traffic Enhancement A~eement and any Future Traffic Enhancement A~eement. [ Execution Copy EXHIBIT B SUBSTANTIAL COMPLETION CRITERIA FOR IMPROVEMENTS OTHER THAN TRAFFIC ENHANCEMENT IMPROVEMENTS General: 1. Substantial completion of an Improvement, other than a Traffic Enhancement Improvement, for purposes of determining the eligibility of such Improvement for the payment of the "Base Increment" (75% of the Purchase Price) therefore shall mean that the construction or work with respect to such Improvement, including each component of such Improvement, has progressed to the point where it is sufficiently com~plete so that it can be utilized for the purpose for which it was intended. Substantial completion criteria for each Improvement or component of an Improvement is further described below. 2. Payment for the remaining 25% ("Retained Increment") of the Purchase Price for an Improvement shall be in accordance with Section 7, paragraph (c)(ii) and shall be made after (a) the substantial completion of all landscaping included in any related Improvement and Co) submittal of a payment request form, as-built plans, posting of maintenance bonds, and submittal of lien release evidence. For example, the Retained Increment for the La Media Road South shall not be made until the substantial completion of the La Media Road South Landscaping. Substantial Completion Criteria: A. G_rading: Grading shall be deemed to be complete upon (1) completion of all preliminary ~ading work (mobilization, site clearing, remedial grading, overexcavation, installation of subdrainage systems) (2) certifi~ation of compaction by the geotechnical en~neer, quantity verification by the civil en~neer, and confirmation by the City inspector and (3) installation of all surface ~ading improvements (brow ditches, retaining walls, slope protection and similar improvements) and the certification thereof by the geotechnical engineer and confirmation by the City inspector. B. Sewer: Sewer construction shall be deemed substantially complete upon the installation, flushing, and testing of sewer main line, laterals, cleanouts, manholes, =d all other appurtenances of the sewer system as shown on the approved plans and specifications therefore and in accordance with the City standard plans and specifications and the verification of such installation by the civil eng/neer and confirmation of such installation by the City inspector. ' C. Storm Drain: Box cuiverts and headwall structures shall be deemed substantially complete upon installation as shown on the approved plans and specifications therefore and in accordance with the City standard plans and specifications and verification of such installation by the civil engineer, and confn-mation of such installation by the City inspector. ' D. Drainage Facilities Drainage structures including energy dissipation devices (rip-rap, drop Execution Copy structures, cut-off walls, etc), drainage diversion structures, facilities required as part of the environmental mitigation measures, .and other drainage channel appurtenances including drainage pipes connecting the brow ditches to the channel, shall be deemed substantially complete for payment of the Base Increment upon the installation thereof as shown on the approved plans and specifications therefore and in accordance with City standard plans and specifications and the verification of such installation by the civil engineer and confirmation of such installation by the City inspector. E. Dry Utility Backbone System: Dry utilities (electric, gas, telephone, CATV) shall be deemed substantially complete upon the installation of the conduits, junction boxes, payment of utility fees, and written acceptance of the facilities by the utility companies. F. Roadway Pavement and Roadway Drainage System: Roadway pavement and drainage improvements shall be deemed substantially complete upon the installation thereof as shown on the :ipproved improvement plans therefore and in accordance with City standard pla.ns and specifications and confirmation of such installation by the City inspector of all storm drain pipes, catch basins, drainage inlets and cleanouts for the roadway storm drain system, installation of roadway base material, concrete curb and gutterr and AC pavement including the preparation of the subgrade and base material. G. Other SWeet Surface Im-0rovements: Street surface improvements including street lights, · ,, traffic sig'nals and conduits, signal interconnect, street name signs, roadway si~maing and _..) striping, and appurtenances shall be deemed substantially complete when installed as shown on the improvement plans and in accordance with City standard plans and specifications and upon confirmation of such installation by the City inspector. H. Street Landscaoe Irri_*afion and Plantin.~: Parkway landscaping within the roadway fight of way including planting, irrigation, concrete sidewalks, median maintenance strip, pedestrian r'~'nps, channel maintenance roads and all associated subgrade and base material preparation shall be deemed substantially complete upon installation thereof as shown on the approved improvement plans therefore and in accordance with City standard plans and specifications ~.ud confLrmafion of such installation by the City inspector. I. Slope Landscaping: Landscape planting and irrigation knprovcments for the slopes outside of the roadway and channel tight of way and the regional trail (DG) and fencing shall be deemed substantially complete upon installation thereof as shown on the approved improvement plans therefore and in accordance with City standard plans and specifications and confirmation of such installation by the City inspector. Execution Copy EXHIBIT "C" DESIGN, BID, CONTRACT AND CHANGE ORDER REQUIREMENTS I. General These requirements shall be applied to all improvements proposed to be acquired through CFD No. 06-I. Any deviation from these requirements must be approved by the Public Works Director. References to the Public Works Director means the Public Works Director, City Engineer or their designee. The City reserves the fight to make the final determination of cost of the Improvements to be acquired in accordance with this Agreement. 2. Design Phase A. On!y design costs directly related to the public improvements to be acquired are eligible for inclusion. B. Bidding Documents. Two complete sets of bidding documents, including ' "? improvement plans, general provisions, and bid proposal forms shall be submitted to the Engineering Division for review and approval within 15 working days of submittal. Advertising for bids shall not take place until the bidding documents are approved in wr/ting by the City. Th/s procedure shall be followed for each contract proposed to be advertised. Unless otherwise noted, the bidding documents shall conform to the following minimum requirements: 1. Unless impractical due to the nature of the improvement, the bid proposal shall be unit pr/ced rather than lump sum. A.C. pavement, base and sub-base shall be bid on a square foot per inch thickness basis. 2. The bidding documents shall require the bidder/contractor to provide the following bonds: a. Bid Bond - 10% of the amount of the bid. b. Material and Labor Bond - 50% of the contract amount. c. Performance Bond - 100% of the contract amount. The Contractor shall post performance and labor and material bonds for ail improvements as part of the bid. The City of Chula Vista shall be named as additional obligee with the right to call such bonds if needed. Such bonds shall Execution Copy remain in effect until such time as all improvements are completed and accepted by the City Engineer. The City Engineer shall be the sole judge in determining the release of such bonds. 3. The bidding documents shall require the successful bidder to provide evidence &comprehensive or commercial general public liability insurance in the amount of at least $I,000,000 prior to the award of the contract. 4. Unless otherwise required by the City, the contractor is not required to pay prevailing wages. 5. The bi~lding documents must clearly state the time, date, and place where bids are to be submitted and opened. 6. The bidding documents shall clearly state the amount of time to complete the work. The time allowed must be reasonable for the amount of work. Accelerated construction time allowances must be supplementally bid, and are not eligible for public finance unless previously approved by the City Engineer. 3. Bidding Phase ~) A. The Notice inviting Sealed Bids shall be published in the Chula Vista Star News _. and the San Diego Daily Transcript. The notice inviting bids shall state where bidding documents are available. B. The bidding period following the advertisement of the Notice Inviting Sealed Bids shall be a minimum of 14 calendar days. C. Developer shall provide complete sets of bidding documents to all contractors, subcontractors, or suppliers requesting them. A reasonable price may be charged for bidding documents. D. Dex;eloper shall keep a log of all persons obtaining bidding documents, and their mailing address. E. Addenda shall be mailed by first class mail to all bidding document holders and the Public Works Director. If an addendum is required within five working days of the noticed bid opening date, the bid opening date shall be extended. F. Submitted bids shall be in sealed envelopes. G. Bids shall not be accepted after the stated time for submission. Exccution Copy H. Bid opening shall be conducted by the Developer at the Developer's place of business or other site mutually acceptable to the Developer and Public Works Director. E. Sealed bids shall be opened and read aloud immediately following the submission time. A City representative shal be invitedlto attend the bid opening. J, Conditioned bids, unless the bid proposal lists them for all to bid on, shall not be accepted. K. The bid proposals shall confom~ to all state and local laws governing the listing of subcontractors and suppliers. L. The arithmetic of the two lowest bid proposals received shall immediately be checked for errors. M. A tabulation of all bids received shall be provided to the Public Works Director within five working days of the bid opening. N. Award shall be made to the lowest responsible bidder within a reasonable period of time followi0g approval by the Public Works Director. ._ · O. A preconstruction meeting shall be held with the contractor prior to beginning the work. A City representative shall be invited to attend the meeting. P. The Notice to Proceed shall be issued within a reasonable period of time folIowing the contract execution. 4. Construction Phase A. The City shall be provided a copy of the construction schedule. B. Developer shall require the contractor to conduct weekly construction status meetings to which a City representative shall be invited. C. Any additional costs incurred for the benefit of the Developer, such as accelerating the construction schedule, shall not be eligible for public financing unless previously approved by the City Engineer. D. Any additional construction costs incurred due solely to delays caused by the Developer shall not be eligible for public financing. E. All contracts and construction related records shall be available to the City " as and when required for the final determination of eligible costs for the public Execution Copy financing. This shall include trip tickets and other confirmations of material delivered to the Improvement. 5. Change Orders A. No single change order for a TDIF Impmvetnent shall be eligible for inclusion in the Purchase Price for such Improvement that increases or decreases the original contract amount for the construction of such Improvement by more than $50,000 without City Council approval. B. All change orders shall be fully documented and be in a format consistent and be in a format consistent with the original bid items (i.e., show units, unit costs, extensions and total costs). The City Engineer, in his/her sole discretion shall determine the eligibility of each change order for inclusion in the Purchase Price for an Improvement.. C. The aggregate of all change orders for TDIF Improvements, including those for differences between estimated and actual quantifies shall not increase the contract amount by more than the amount specified below without City Council approval: Original Contract Range Maximum Aggregate Increase .) Up to $100,000 10% $100,001 to $1,000,000 $10,000 plus 7% of amoUnt over $I00,000 More than $1,000,000 $73,000 plus 5% of amount over $1,000,000 The aggregate of all change orders for any non-TDlF Improvement shall not increase the Purchase Price thereof so as to cause such Purchase Price to exceed the cost estimate for such Improvement as set forth in Exhibit A by more than 25% without City Council approval. D. All change orders inOolving changes in scope of the project, or increases of contract amounts greater than outlined in C. above shall be submitted to the City Council for approval aRer the constraction of the Improvement is completed, but before the payment of any portion of the Purchase Price for such Improvement is authorized by the City Engineer. Change orders that the Developer does not wish to include, in the Purchase Price for an Improvement do not need to go to City Council for approval. E. Negotiated set price change orders are acceptable where most of the items of work in the change order have unit prices from the bids, Where change orders are for work that does not have unit prices for a substantial portion of the work contained '~ within the bids, time and materials change orders are preferred. [ Execution Cop)' EXHIBIT "D-I" BASE INCREMENT PAYMENT REQUEST NO. __ (IMPROVEMENT OTHER THAN TRAFFIC ENHANCEMENT IMPROVEMENTS) The undersigned (the "Developer") hereby requests payment in the total amount ors for the Base Increment of the Purchase Price of the Improvements (as defined in the Acquisition/Financing Agreement by and among the City of Chula Vista (the "City") and Developer and described in Exhibit A to that Agreement), all as more fully described in Attachment 1 hereto. In connection with this Payment Request, the undersigned hereby cettifles, represents and warrants to the City as follows: A. He(she) is a duly authorized representative or signatory of Developer, qualified to execute this Payment Request for payment on behalf of Developer and is knowledgeable as to the matters set forth herein. B. The Improvements that are the subject of this Payment Request have been substantially completed in accordance with Exhibits A and B. C. The Purchase Price for the Improvements has been' calculated in conformance with the terms of the Agreement. All costs for which payment is requested hereby are eligible costs (as permitted in the Agreement) and have not been inflated in any respect. The Base Increment for which payment is requested has not been the subject of any prior payment request paid by the City. D. All items have been clearly delineated as DIF/Non-DIF eligible (all DIF's) and detailed backup and cost breakdown is provided supporting each item. E. Supporting documentation (such as third party invoices, change orders and checks) is attached with respect to each cost for which payment is requested. F. The Improvements for which payment is requested were constructed in accordance with the requirements of the Agreement. G. Developer is in compliance with the terms and provisions of the Agreement. H. No mechanics liens or other encumbrances have attached, or to the best .~____......knowledge 0f Developer, after due inquiry, will attach to the Improvements. ,. I. ~ copy of a letter of conditional lien release for the Improvements for which p/ayment is requested is included this request. In addition, a letter from the "contractor(s) stating that have been paid in full by the Developer for the ......... Improvements for which payment is requested is also included in this request. Execution Cop5' I h~reby declare under penalty of per-jury that the above representations and warranties are true and correct. DEVELOPER: Dated: CITY Payment Request Approved for Submission to Director of Finance Public Works Director · Dated: Execution Copy ATTACHMENT t SUMMARY OF IMPROVEMENTS TO BE ACQUIRED AS PART OF PAYMENT REQUEST NO. __ Improvement Purchase Price Base Increment Disbursement Requested [List here all Improvements for which payment is requested, and attach supporting documentation] Execution Cop)' EXHIBIT "D - 2" RETAINED INCREMENT PAYMENT REQUEST NO. __ (IMPROVEMENT OTHER THAN TRAFFIC ENHANCEMENT IMPROVEMENT) The undersigned (the "Developer") hereby requests payment in the total amount of S for the Retained Increment of the Purchase Price of the Improvements (as defined in the Acquisition/Financing Agreement by and among the City of Chula Vista (the "City") and Developer and described in Exhibit A to that Agreement), all as more fully described in Attachment I hereto. In connection with this Payment Request, the undersigned hereby certifies, represents and warrants to the City as follows: A. lie(she) is a duty authorized representative or signatory of Developer, qualified to execute this Payment Request for payment on behalf of Developer and is 'knowledgeable as to the matters set forth herein. B. Developer has submitted or submits herein to the City, if applicable, as-built drawings or similar plans and specifications for the Improvements and such drawings or plans and specifications, as applicable, are true, correct and complete. C. The Purchase Price for the Improvements has been calculated in conformance with the terms of the Agreement. All costs for which payment is requested hereby are eligible costs (as permitted in the Agreement) and have not been inflated in any respect. The Retained Increment for which payment is requested has not been the subject of any prior payment request paid by the City. D. Supporting documentation (such as th/rd party invoices, change ordersl lien releases and checks) is attached with respect to each cost for which payment is requested. E. The Improvements for which payment is requested were constructed in accordance with the requirements of the Agreement. F. Developer is in compliance with the terms and provisions of the Agreement. G. No mechanics liens or other encumbrances have attached,, or to the best knowledge of Developer, after one inquiry, will attach to the Improvements. Execution Cop)' I hereby declare under penalty of perjury that the above representations and warranties are true and correct. DEVELOPER: Dated: CITY Payment Request Approved for Submission to Dkector of Finance Public Works Director Dated: Execution Copy ATTACHMENT 1 SUMMARY OF IMPROVEMENTS TO BE ACQUIRED AS PART OF PAYMENT REQUEST NO. __ Improvement Purchase Price Base Increment Disbursement Requested [List here all Improvements for which payment is requested, and attach supporting documentation] Execution Copy EXHIBIT "D-3" BASE INCREMENT PAYMENT REQUEST NO. (TRAFFIC ENHANCEMENT IMPROVEMENTS) The undersigned (the "Developer") hereby requests payment in the total amount of S for the Base Increment of the Purchase Price of the Traffic Enhancement Improvements (as defined in the Acquisition~Financing Agreement by and among the City of Chula Vista (the "City") and Developer and described in Exhibit A to that Agreement), all as more fully described in Attachment 1 hereto. In connection with this Payment Request, the undersigned hereby certifies, represents and warrants to the City as follows: A. He(she) is a duly authorized representative or signatory of Developer, qualified to execute this Payment Request for payment on behalf of Developer and is knowledgeable as to the matters set forth herein. B. The Traffic Enhancement Improvements that are the subject of this Payment Request have been substantially completed in accordance with Exhibits A and B. C. The Purchase Price for the Traffic Enhancement Improvements has been calculated in conformance with the terms of the Agreement. All costs for which payment is requested hereby are eli~ble costs (as permitted in the Agreement) and have not been inflated in any respect. The portion of the Base Increment for which payment is requested has not been the subject of any prior payment request paid by the City. D. All items have been clearly delineated as DIF/Non-DIF eligible (all DIF's) and detailed backup and cost breakdown is provided supporting each item. E. Supporting documentation (such as third party invoices, change orders and check) is attached with respect to each cost for which payment is requested. F. The Traffic Enhancement Improvements for which payment is requested were constructed in accordance with the requirements of the applicable Traffic Enhancement Agreement. G. Developer is in compliance with the terms and provisions of the Agreement. H. No mechanics liens or other encumbrances have attached, or to the best knowledge of Developer, after due inquiry, will attach to the Traffic Enhancement Improvements. D-2-1 Execution Copy 1. A copy of a letter of conditional lien release for the Traffic Enhancement Improvements for which, payment is requested is included this request. In addition, a letter from the contractor(s) stating that have been paid in full by the Developer for the Traffic Enhancement Improvements for which payment is requested is also included in this request. I hereby declare under penalty of perjury that the above representations and warranties are tree and correct. DEVELOPER: Dated: CITY Payment Request Approved for Submission to Director of Finance Public Works Director Dated: D-3 -2 [ Execution Cop3' ATTACHMENT I SUMMARY OF TRAFFIC ENHANCEMENT IMPROVEMENTS TO BE ACQUIRED AS PART OF PAYME _NT REQUEST NO. __ Traffic Purchase Price Base Increment Disbursement Enhancement Requested Improvement [List here all Traffic Enhancement Improvements for which payment is requested, and attach supporting documentation] D-3 -3 Execution Cop3' EXHIBIT "D - 4" RETAINED INCREMENT PAYMENT REQUEST NO. (TRAFFIC ENHAN CEMENT IMPROVEMENT) The undersigned (the "Developer") hereby requests payment in the total amount of $ for the Retained Increment of the Purcliase Price of the Traffic Enhancement Improvements (as defined in the AcquisitionIFinancing Agreement by and among the City of Chula Vista (the "City") and Developer and described in Exhibit A to that Agreement), all as more fully described in Attachment 1 hereto. In cormection with this Payment Request, the Undersigned hereby certifies, represents and warrants to the City as follows: A. He(she) is a duly authorized representative or signato~ of Developer, qualified to execute this Payment Request for payment on behalf of Developer and is knowledgeable as to the matters set forth herein. B. The Traffic Enhancement Improvements have been accepted by the City. C. The Purchase Pr/ce for the Traffic Enhancement Improvements has been calculated in conformance with the ten-ns of the Agre. ement. All costs for which ) payment is requested hereby are eligible costs (as permitted in the Agreement) and have not been inflated in any respect. The Retained Increment for which payment is requested has not been the subject of any prior payment request paid by the City. D. Supporting documentation (such as third party invoices, change orders, lien releases and checks) is attached with respect to each cost-for which payment is requested. E. The Traffic Enhancement Improvements for which payment is requested were constructed in accordance with the requirements of the applicable Traffic Enhancement Agreement. F. . Developer is in compliance with the terms and provisions of the applicable Traffic Enhancement Agreement and the Acquisition/Financing A~eement. G. No mechanics liens or other encumbrances have attached, or to the best knowledge of Developer, after one inquiry, will attach to the Traffic Enhancement Improvemehts. D-4-1 Execution Cop)' I hereby declare under penalty of perjury that the above representations and warranties are true and correct. DEVELOPER: Execution Copy ATTACHMENT 1 SUMMARY OF TRAFFIC ENHANCEMENT IMPROVEMENTS TO BE ACQUIRED AS PART OF PAYMENT REQUEST NO. __ Traffic Purchase Price Base Increment Disbursement Enhancement Requested Improvement [List here all Traffic Enhancement Improvements for which payment is requested, and attach supporting documentation] D-4-3 RESOLUTION NO. 2003- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE FORM OF THE FIRST AMENDMENT TO THE ACQUISITION/FINANCING AGREEMENT FOR COMMUNITY FACILITIES DISTRICT NO. 06I (EASTLAKE - WOODS, VISTAS AND LAND SWAP) WHEREAS, the CITY COUNCIL of the CITY OF CHULA VISTA, CALIFORNIA, pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, has undertaken proceedings to form and has formed a community facilities district for the purpose of financing the acquisition of certain works of improvement, together with appurtenances, such special assessment district known and designated as COMMUNITY FACILITIES DISTRICT NO. 06I (Eastlake - Woods, Vistas and Land Swap) (the "Community Facilities District"); and, WHEREAS, the City Council did previously approve the form of an Acquisition/Financing Agreement (the "Acquisition/Financing Agreement") by and between the City of Chula Vista and The Eastlake Company, LLC, (the "Developer") to establish the terms and conditions upon which the Improvements (as defined in the Amended AcquisitiorffFinancing Agreement') would be acquired by the City; and WHEREAS, the Acquisition/Financing Agreement provides that the Developer would be entitled to the payment of the Base Increment for an Improvement, i.e., an amount not to exceed 75% of the Purchase Price as defined in the Acquisition/Financing Agreement for such Improvement upon the substantial completion of construction of such Improvement including all components of such Improvement; and WHEREAS, the Acquisition/Financing Agreement provides that landscaping associated with a roadway Improvement is a component of such an Improvement; and WHEREAS, such landscaping is frequently completed substantially after the completion of all other components of a roadway Improvement resulting in substantial delays in the payment of the Base Increment for such roadway Improvements; WHEREAS, the Eastlake Parkway roadway improvements and the Eastlake Parkway landscaping were included on the initial list of improvements identified by the City Council as part of the improvements to be financed by the Community Facilities District, however, such improvements were inadvertently omitted from Exhibit A to the Acquisition Agreement which contains a list of the Improvements; and WHEREAS, the Developer has requested that the Acquisition/Financing Agreement be amended to establish such landscaping associated with roadway Improvements as separate Improvements to enable the payment of the Base Increment of the roadway Improvements closer in time to the actual completion of the construction of such Improvements; WHEREAS, for such purpose and to otherwise clarify the description of and cost estimate for the Improvements, the City and the Developer desire to amend the Acquisition/Financing Agreement by entering into the First Amendment to the Acquisition/Financing Agreement, the form of which has been presented to the City Council (the "First Amendment"). WHEREAS, the City is willing to agree to such an amendment of the Acquisition Agreement to avoid a financial hardship to the Developer by unnecessarily delaying the payment of the Purchase Price for roadway Improvements and to remedy the inadvertent omission of the Eastlake Parkway roadway improvements and the Eastlake Parkway from the list of Improvements. NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS: SECTION 1. The above recitals are all true and correct. SECTION 2. The form of First Amendment to the Acquisition/Financing Agreement, herewith submitted, is approved substantially in the form submitted. The Mayor is hereby authorized to execute the final form of such agreement on behalf of the City. The City Manager, subject to the review of the City Attorney and Bond Counsel, is authorized to approve changes in such agreement deemed to be in the best interests of the City, approval of such changes to be evidenced by the execution of such agreement. PREPARED BY: APPROVED AS TO FORM BY: Clifford Swanson Ann Moore Director of Engineering City Attorney J:/attorney/reso/finance/l~Amend Acquisition-Financing Agreement THE ATTACHED AGREEMENT HAS BEEN REVIEWED AND APPROVED AS TO FORM BY THE CITY ATTORNEY'S OFFICE AND WILL BE FORMALLY SIGNED UPON APPROVAL BY THE CITY COUNCIL Ann Moore City Attorney Dated: May 28, 2003 First Amendment to Acquisition/Financing Agreement Execution Copy FIRST AMENDMENT TO ACQUISITIoN/FINANCING AGREEMENT THIS FIRST AMENDMENT TO ACQUISITION/FINANCING AGREEIvIENT, dated as of 1, 2003 (the "First Amendment"), by and between the City of Chula Vista, a charter city duly organized and validly existing under the Constitution and the laws of the State of California (the "City"), acting for and on behalf of itself and Community Facilities District No. 061 (EastLake - Woods, Vistas and Land Swap) (the "Community Facilities District"), and The EastLake Company, LLC, a California limited liability company (the "Developer") is entered into by the parties hereto to amend that certain Acquisition/Financing Agreement, dated as of November 17, 2002 (the "Acquisition Agreement"), by and between the City, acting for and on behalf of itself and the District, and the Developer. Capitalized terms used in this First Amendment shall have the meanings given such terms in the Acquisition Agreement unless otherwise provided for herein or the context of the use of any such capitalized term requires otherwise. RECITALS WHEREAS, the City and the Developer entered into the Acquisition Agreement to, among other things, establish the terms and conditions pursuant to which the City would acquire certain Improvements constructed by the Developer from proceeds of bonds issued by the Community Facilities District for such purpose; WHEREAS, the Acquisition Agreement provides that the Developer would be entitled to the payment of the Base Increment for an Improvement upon the substantial completion of construction of such Improvement including all components of such Improvement; and WHEREAS, the Acquisition Agreement provides that landscaping associated with a roadway Improvement is a component of such an Improvement; and WHEREAS, such landscaping is frequently completed substantially after the completion of all other components of a roadway Improvement resulting in substantial delays in the payment of the Base Increment for such roadway Improvements; WHEREAS, the EastLake Parkway roadway improvements and the EastLake Parkway landscaping were included on the initial list of improvements identified by the City Council as part of the improvements to be financed by the Community Facilities District, however, such improvements were inadvertently omitted from Exhibit A to the Acquisition Agreement which contains a list of the Improvements;'and WHEREAS, the Developer has requested that the Acquisition/Financing Agreement be amended (a) to establish such landscaping associated with roadway Improvements as separate Improvements to enable the payment of the Base Increment of Execution Copy the roadway Improvements closer in time to the actual completion of the construction of such Improvements and (b) to add the EastLake Parkway and the EastLake Parkway landscaping to the Improvements authorized to be financed by the Community Facilities District; and WHEREAS, the payment request forms attached as exhibits to the Acquisition Agreement which the Developer must use to requisition the payment of the Purchase Price for any improvement state that the Developer must submit both lien releases fxom contractors and letters from such contractors specifying that such contractor has been paid in full for all work undertaken by such contractor on such improvement; and WHEREAS, the City and the Developer fmd that the requirement for the Developer to provide such contractor letters in addition to lien releases is redundant and that obtaining such contractor letters sometimes long after the contractor has ceased work on an Improvement has proved very difficult and burdensome for the Developer thereby adding indirectly to the cost of the improvement; and WHEREAS, the City is willing to agree to such an amendment of the Acquisition Agreement to avoid a financial hardship to the Developer by mmecessarily delaying the payment of the Purchase Price for roadway Improvements and to remedy the inadvertent omission of the EastLake Parkway roadway improvements and the EastLake Parkway from the list of Improvements. NOW, THEREFORE, IT IS MUTUALLY AGREED between the respective parties as follows: SECTION 1. Recitals. The above recitals are all true and correct. SECTION 2. Amendment to Exhibit A. Exhibit A to the Acquisition Agreement is hereby amended in its entirety to read as set forth in Attachment 1 hereto which is incorporated herein by the reference. SECTION 3. Amendment to Section 8(h)(i). Section 8(h)i is hereby amended in its entirety to read as follows: "(h) Payment. (i) Priority of Payment of Cost of Construction or Purchase Price for Improvements. The City and the Developer acknowledge and agree that the cost of acquisition or construction of all improvements may exceed the aggregate amount of the Bond proceeds which will be available for the payment of that portion of cost of construction or the Purchase Price, as applicable, for all of such Improvements eligible to be paid from the proceeds of the Bonds. As a result the City and Developer agree that the payment of the cost of construction or the Purchase Price, as applicable, for Improvements shall be prioritized as follows: 2 Execution Copy Priority 1: Improvement No. 1 ("Traffic Enhancement Improvements") in Exhibit A. Priority 2: Improvement Nos. 2-15 in Exhibit A. The cost of construction or Purchase Price for any lower priority Improvement shall not be paid until the cost of construction or Purchase Price for all higher priority Improvements has been paid or if sufficient proceeds of the Bonds are reasonably determined to be available to fully fund the cost of construction or Purchase Price of the higher priority Improvements, based upon the estimates of the cost of construction or the estimates or approved Purchase Prices, as applicable, for such higher priority Improvements on Exhibit A." SECTION 4. Amendment to Exhibit B. Paragraph 2. of the section entitled "General" of Exhibit B is hereby modified in its entirety to read as follows: "2. Payment for the remaining 25% ("Retained Increment") of the Purchase Price for an Improvement shall be in accordance with Section 7, paragraph (c)(ii) and shall be made after submittal of a payment request form, as-built plans, posting of maintenance bonds, and submittal of lien release evidence." SECTION 5. Amendment to Exhibit D-1. Exhibit D-1 to the Acquisition Agreement is hereby amended in its entirety to read as set forth in Attachment 2 hereto which is incorporated herein by the reference. SECTION 6. Effect of this First Amendment on the Other Terms and Provisions of the Acquisition Agreement. All terms and provisions of the Acquisition Agreement shall remain in full force and legal effect except as expressly modified by the provisions of this First Amendment. SECTION 7. General Provisions (a) The Acquisition Agreement as amended by this First Amendment and the agreements expressly referred to herein contains all of the agreements of the parties hereto with respect to the matters contained herein and all other prior and contemporaneous agreements, representations, negotiations and understandings of the parties hereto, oral or written, are hereby superseded and merged herein. No provision of this First Amendment may be modified, waived, amended or added to except by a writing signed by the party against which the enforcement of such modification, waiver, amendment or addition is or may be sought. (b) This First Amendment has been reviewed by legal counsel for City and Developer and shall be deemed for all purposes to have been jointly drafted by City and Developer. No presumption or rule that ambiguities shall be construed against the drafting party shall apply to the 3 Execution Copy interpretation or enforcement of this First Amendment. The language in all. parts of this First Amendment, in all cases, shall be construed as a whole and in accordance with its fair meaning and not strictly for or against any party and consistent with the provisions hereof, in order to achieve the objectives of the parties hereunder. The captions of the sections and subsections of this First Amendment are for convenience only and shall not be considered or referred to in resolving questions of construction. (c) Except as expressly provided otherwise in this First Amendment, all provisions of Sections 22 through 34 of the Acquisition Agreemem shall apply to this First Amendment. [Remainder of this page intentionally left blank] 4 · Execution Copy IN WITNESS WHEREOF the parties hereto have executed this First Amendment on the date above written. "CITY" CITY OF CHULA VISTA MAYOR CITY OF CHULA VISTA STATE OF CALIFORNIA ATTEST: APPROVED AS TO FORM: CITY CLERK ANN MOORE, CITY ATTORNEY CITY' OF CHULA VISTA CITY OF CHULA VISTA STATE OF CALIFORNIA STATE OF CALIFORNIA "DEVELOPER" THE EASTLAKE CO.MPAlx~y.~ L. CC, Title: 01 aa ~ml/-&o, :~ 5 Execution Copy ATTACHMENT NO. 1 Amended - Exhibit "A" ACQUISITION AND FINANCING AGREEMENT FOR CFD 06-I (EASTLAKE - WOODS, VISTAS AND LAND SWAP) IMPROVEMENT DESCRIPTION AND ESTIMATED COSTS Improvement Number Improvement Description~ Cost Estimate2 1 Traffic Enhancement Improvements $ 1,000,000 2 East Olympic Parkway 4,478,776 3 East Olympic Parkway Landscaping 2,148,229 4 West Olympic Parkway 12,419,492 5 West Olympic Parkway Landscaping 3,297,106 6 Hunte Parkway 1,565,687 7 Otay Lakes Road between H and Telegraph 1,603,680 8 Otay Lakes Road between Hunte Parkway and Lake Crest Drive 5,664,143 9 Otay Lakes Road Landscaping 1,531,072 10 EastLake Parkway/Otay Lakes Road adjacent to 1,050,000 EastLake Village Center 11 EastLake Parkway Improvements 4,398,540 12 EastLake Parkway Landscaping 839,451 13 Proctor Valley Road 1,000,000 14 Telegraph Canyon Road Widening/Traffic Improvements 2,700,000 15 Traffic signals 1,983,136 Totals $45,679,312 Sources: Developer, McGill Martin Self, Inc. amended 5/15/03. The description of the Improvements set forth in this Exhibit "A" is preliminary and general. The final plans and specifications may show substitutes or modifications to the proposed Improvements and proposed Improvements may be added or deleted with the consent Developer and the City Engineer. Components of all roadway improvements eligible for funding shall include (i) grading, including site preparation and mobilization, (ii) wet and dry utilities within the right-of-way, (iii) storm drain facilities, (iv) paving, (v) curb, gutter, sidewalk, medians, (vi) traffic signals, (vii) lighting and (viii) all other appurtenant improvements. Cost estimates are preliminary and may be modified t~om time to time with the consent Developer and the City Engineer. Cost estimate for the Traffic Enhancement Improvements constitutes the estimated amount to be reserved out of the proceeds of the Bonds equivalent to the Developer's Fair Share the cost of construction of the Telegraph Canyon Roadway Improvements as established pursuant to the provisions of the Telegraph Canyon Traffic Enhancement Agreement. Such amount shall be subject to revision pursuant to the provisions hereof, the Telegraph Canyon Traffic Enhancement Agreement and any Future Traffic Enhancement Agreement. A-1 Execution Copy ATTACHMENT NO. 2 EXHIBIT "D-1" BASE INCREMENT PAYMENT REQUEST NO. __ (IMPROVEMENT OTHER THAN TRAFFIC ENHANCEMENT IMPROVEMENTS) The undersigned (the "Developer") hereby requests payment in the total amount of $ for the Base Increment of the Purchase Price of the Improvements (as defined in the Acquisition/Financing Agreement by and among the City of Chula Vista (the "City") and Developer and described in Exhibit A to that Agreement), all as more fully described in Attachment 1 hereto. In connection with this Payment Request, the undersigned hereby certifies, represents and warrants to the City as follows: A. He(she) is a duly authorized representative or signatory of Developer, qualified to execute this Payment Request for payment on behalf of Developer and is knowledgeable as to the matters set forth herein. B. The Improvements that are the subject of this Payment Request have been substantially completed in accordance with Exhibits A and B. C. The Purchase Price for the Improvements has been calculated in conformance with the terms of the Agreement. All costs for which payment is requested hereby are eligible costs (as permitted in the Agreement) and have not been inflated in any respect. The Base Increment for which payment is requested has not been the subject of any prior payment request paid by the City. D. All items have been clearly delineated as DIF/Non-DIF eligible (all DIF's) and detailed backup and cost breakdown is provided supporting each item. E. Supporting documentation (such as third party invoices, change orders and checks) is attached with respect to each cost for which payment is requested. F. The Improvements for which payment is requested were constructed in accordance with the requirements of the Agreement. G. Developer is in compliance with the terms and provisions of the Agreement. H. No mechanics liens or other encumbrances have attached, or to the best knowledge of Developer, after due inquiry, will attach to the Improvements. I. A copy(ies) of the letter(s) of unconditional lien release for the Improvements for which payment is requested is included in this request. Alternatively, a copy of a letter of conditional lien release for the Improvements for which payment is B-1 Execution Copy requested together with a letter fi.om the contractor(s) stating that they have been paid in full by the Developer for the Improvements for which payment is requested may be included in this request. I hereby declare under penalty of perjury that the above representations and warranties are true and correct. DEVELOPER: Dated: CITY Payment Request Approved for Submission to Director of Finance Director of Engineering Dated: B-2 · Execution Copy ATTACHMENT 1 SUMMARY OF IMPROVEMENTS TO BE ACQUIRED AS PART OF PAYMENT REQUEST NO. __ Improvement Purchase Price Base Increment Disbursement Requested [List here all Improvements for which payment is requested, and attach supporting documentation] B-3 COUNCIL AGENDA STATEMENT Item r~ Meeting Date 06/03/2003 ITEM TITLE: Resolution Approving ~ agreement between the City of Chula Vista and the City of San Diego for the joint use of a City of San Diego easement required to facilitate the construction, maintenance and operation of the Salt Creek Gravity Sewer Interceptor and authorizing the Mayor to execute the agreement on behalf of the City. Resolution Approving an agreement between the City of Chula Vista and San Diego Gas and Electric (SDO&E) Company for the joint use of an SDG&E easement required to facilitate the construction, maintenance and operation of the Salt Creek Gravity Sewer Interceptor and authorizing the Mayor to execute the agreement on behalf of the City. sUBMITTED BY: Director of Engineering/J_ REVIEWED BY: City Manage ,¥, ~[ (4/5tbs Vote: Yes No X ) BACKGROUND: The alignment of the Salt Creek Gravity Sewer Interceptor, impacts existing utility easements currently held by the City of San Diego and San Diego Gas 8,: Electric Company (SDG&E).In order to facilitate the construction, operation and maintenance of the Salt Creek Sewer, the City is required to enter into joint use agreements with these two agencies. Council action is required to approve these agreements and to authorize the Mayor to execute the agreements on behalf of the City. RECOMMENDATION: That Council approve: 1. Resolution approving an agreement (Exhibit 1) between the City of Chula Vista and the City of San Diego for the joint use of a City of San Diego easement required to facilitate the construction, maintenance and operation of the Salt Creek Gravity Sewer Interceptor and authorizing the Mayor to execute the agreement on behalf of the City. 2. Resolution approving an agreement (Exhibit 2) between the City of Chula Vista and San Diego Gas and Electric (SDG&E) Company for the joint use of an SDG&E easement required to facilitate the construction, maintenance and operation of the Salt Creek Gravity Sewer Interceptor and authorizing the Mayor to execute the agreement on behalf of the City. BOARDS/COMMISSIONS RECOMMENDATION: None rT-t Page 2, Item: Meeting Date: 06/03/2003 DISCUSSION: The Salt Creek Gravity Sewer Interceptor is a 13.5-mile trunk sewer line that is being built to serve some of the developments in the eastern territories and a portion of the developed portion of the City within the Main Street Basin. The trunk sewer varies in size from 15 to 48 inches in diameter, and is designated by nine individual segments (commonly referred to as Reaches 1 through 9). On June 4, 2002, City Council, by Resolution No. 2002-189, adopted Policy Option No. 3 as the Project Alignment for the construction of the Salt Creek Gravity Sewer Interceptor. This alignment generally begins just west of the Upper Otay Reservoir, then proceeds in a southerly direction parallel to Salt Creek and the Otay Valley River, then turns westerly along Otay Valley Road, continuing under 1-805 Freeway along Main Street to Industrial Blvd., after which it goes under I-5 Freeway and terminates at a junction structure that ties it to the City of San Diego's Metro Sewer Interceptor just west of Interstate 5 Freeway (see Exhibit No. 3). City of San Dieeo Easement A portion of the Salt Creek Gravity Sewer alignment runs parallel to the City of San Diego's South San Diego Pipeline No. 2 (see attached Exhibit No. 2). The City of San Diego's water pipeline is located within a 100' water easement that was previously granted to the City of San Diego by the Stephen & Mary Birch Foundation. Based on the adopted alignment, the Salt Creek Interceptor will be located within a 20' wide strip of the existing 100' easement. The project has been designed and located such that it is compatible with the existing water line along the path of the alignment. This was achieved through locating the sewer line with a minimum 1 O-foot horizontal separation from the water line, as required by the California Department of Health. The pipe location also meets vertical separation requirements. In addition, Staff worked with the City of San Diego to ensure that Salt Creek Sewer meets the City of San Diego's criteria and construction specifications, which are consistent with the Department of Health Services requirements, in order to reach an agreemem with the City of San Diego for compatible use. The proposed Joint Use Agreement is the result of that effort. Based on the discussions and coordination effort between staff in both agencies, there is concurrence that, the City of Chula Vista's project as designed, is compatible with the existing City of San Diego's Water pipelines within the alignment corridor. The Joint Use Agreement, the location of the existing utility easement, and the limits of the proposed sewer easement are shown in the attached Exhibit No 1. Page 3, Item: ! Meeting Date: 06/03/2003 San Dieeo Gas and Electric (SDG&E) Easement The Salt Creek Gravity Sewer Interceptor twice crosses an existing utility easement that was previously granted to San Diego Gas & Electric Company by Otay Land Company. The City needs to enter into a Joint Use Agreement with SDG&E to facilitate the construction, maintenance and operation of the Salt Creek Gravity Sewer within the SDG&E easement condor. The location of the existing utility easement and the limits of the sewer easement are delineated in the attached Exhibit No. 2. SUMMARY: These two Joint Use Agreements will define the terms under which all parties, shall construct, operate, and maintain their respective facilities. Environmental Status The Environmental Review Coordinator has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that there is no possibility that the activity may have a significant effect on the environment; therefore, pursuant to Section 15061(b)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary. FISCAL IMPACT The approval of these agreements will not result in any expenditure of project funds. However, upon completion of the project, the pipeline and associated facilities will require routine maintenance, which will be funded utilizing funds from the Sewer Facilities Replacement Fund. EXHIBITS: I. Joint Use Agreement between the City Of Chula Vista and the City of San Diego and the exhibits showing the Salt Creek Gravity Sewer alignment within the City of San Diego's easement. 2. Joint Use Agreement between the City Of Chula Vista and the City of San Diego and the exhibits showing the Salt Creek Gravity Sewer Alignment within the San Diego Gas and Electric's easement, 3. Exhibit showing the alignment of the Salt Creek Gravity Sewer Interceptor. J:\Engineer\Agenda\Salt-Creek-Right of Way-Joint-Use-Agreement.ac.doc (FILE NO.: 0735-10-SW219)5/27/03 2:43:51 PM RESOLUTION NO. 2003- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AN AGREEMENT BETWEEN THE CITY OF CHULA VISTA AND THE CITY OF SAN DIEGO FOR THE JOINT USE OF A CITY OF SAN DIEGO EASEMENT REQUIRED TO FACILITATE THE CONSTRUCTION, MAINTENANCE AND OPERATION OF THE SALT CREEK GRAVITY SEWER INTERCEPTOR AND AUTHORIZING THE MAYOR TO EXECUTE THE AGREEMENT ON BEHALF OF THE CITY. WHEREAS, the Salt Creek Gravity Sewer Interceptor is a 13.5-mile trunk sewer line being built to serve some of the developments in the eastern territories and a portion of the developed portion of the City within the Main Street Basin; and WHEREAS, on June 4, 2002, City Council, by Resolution No. 2002-189, adopted Policy Option No. 3 as the Project Alignment for the construction of the Salt Creek Gravity Sewer Interceptor; and WHEREAS, this Project Alignment begins west of the Upper Otay Reservoir terminating at a junction structure just west of Interstate 5 where it connects to the City of San Diego's Metro Sewer Interceptor; and WHEREAS, a portion of the Salt Creek Gravity Sewer alignment runs parallel to the City of San Diego's South San Diego Pipeline No. 2; and WHEREAS, the City of San Diego's water pipeline is located within a 100 foot water easement that was previously granted to the City of San Diego by the Stephen & Mary Birch Foundation; and WHEREAS, based on the adopted alignment, the Salt Creek Interceptor will be located within a 20 foot wide strip of the existing 100 foot easement; and WHEREAS, the project has been designed and located such that it is compatible with the existing water line along the path of the alignment and is located such as to meet vertical separation requirements; and WHEREAS, to facilitate the construction, operation and maintenance of the Salt Creek Sewer, the City is required to enter into a joint use agreement with the City of San Diego. NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Chula Vista does hereby approve the agreement between the City of Chula Vista and the City of San Diego for the joint use ora City of San Diego easement required to facilitate the construction, maintenance and operation of the Salt Creek Gravity Sewer Interceptor. BE IT FURTHER RESOLVED that the Mayor of the City of Chula Vista is hereby authorized to execute said agreement for and on behalf of the City of Chula Vista. Presented by Approved as to form by Cliff Swanson Ann~oor'?/p~ ~ Director of Engineering City Attorney J:/attomey/reso/agree/Salt Creek Easement Agreement THE ATTACHED AGREEMENT HAS BEEN REVIEWED AND APPROVED AS TO FORM BY THE CITY ATTORNEY'S OFFICE AND WILL BE FORMALLY SIGNED UPON APPROVAL BY THE CITY COUNCIL City Attorney Dated: Agreement between the~:C£ty of Chula Vista and the City of San Diego for joint use of a City of San Diego easement required to facilitate the construction, maintenance and operation Of the Salt Creek Gravity Sewer Interceptor Recording Requested by and When Recorded Return to: City Clerk City of Chula Vista 276 Fonrth Avenue Chula Vista, CA 91910 No transfer tax is due as this is a conveyance to a public agency of less than alee interest for which no cash consideration has been paid fr receivec~ > Above Space for Recorders Use Only > JOINT USE AGREEMENT BY AND BETWEEN THE CITY OF CHULA VISTA AND THE CITY OF SAN DIEGO This JOINT USE AGREEMENT ("Agreement") is made this __ day of ,2003, by and between the CITY OF CHULA VISTA, a municipal corporation ("CV"), and THE CITY OF SAN DIEGO, a municipal corporation ("SD") and is made with reference to the following facts: RECITALS A. WHEREAS, CV is engaged in the activity of maintaining sewer service and capacity to the environs of the City of Chula Vista, State of California, and desires to consfi-uct, operate and maintain the Salt Creek Gravity Sewer Interceptor sewer facilities and apptmenances, in, upon, over, under and across that certain 20 foot easement and right-of-way granted to CV for such purposes, as more particularly described in Document No. , filed on with the Office of the County Recorder, County of San Diego, California, a copy of which is attached hereto as Exhibit B. WHEREAS, SD is engaged in the activity of conveying water to the environs of the City of San Diego, State of California, and SD desires to construct, operate and maintain water facilities and appurtenances in, upon, over, under and across certain easements and rights- of-way granted to SD on property located in San Diego County, California. C. WHEREAS, portions of the easement obtained by CV for the Salt Creek Gravity Joint Use Agreemant/Chula Vista/San Diego Salt Creek Sewer Gravity lntemeptor Page 1 of 6 Sewer Interceptor is located on, about or under all or portions of certain rights-of-way and easements of SD used for its waterline known as the South San Diego Pipeline No. 2. The area which xvill comprise the same land is legally described in Exhibit "A~ and shown on those certain approved plans numbers 02025-34 through 02025-39 inclusive (Salt Creek Phase III Improvements) attached as Exhibit "B' hereto, which exhibits are incorporated herein by this reference. The 20 foot shared area described in ExhibWA' and as shown on Exhibit UB" is hereinafter referred to as the 'Joint Use Area.' D. WHEREAS, CV and SD desire to set forth their respecti~,e rights and obligations in the event of actual or potential present or future conflicts in the construction, operation or maintenance of their respective facilities within the Joint Use Area. NOW, THEREFORE, for valuable consideration, receipt of which is hereby acknowledged, the Parties hereby agree as follows: 1. Non-Interruption of Use or Operation of Facilities. Each Party agrees and covenants not to intermpt the use or operation of the other Party's facilities located within the Joint Use Area. Any temporary interference by one Party with the use or operation of an other Party's facilities shall be made only with the other Party's prior written consent. Each Party agrees and covenants to work in good faith with the other Party to permit such temporary interference, and the Party whose facilities are being interfered with shall not unreasonably withhold its consent to such interference. Any and all costs, expenses or losses incurred by the Party whose facilities are interfered with shall be borne by the Party causing the interference. 2. Future Relocation of Facilities. In the event that future construction (including expansion), operation or maintenance of SD or CV's facilities shall cause the need for relocation of some or all of the other's facilities, the Party causing the relocation shall bear all costs, expenses and losses of or resulting from the relocation. Any relocation shall not occur without the prior wriUen consent of the Party whose facilities are being relocated, which consent shall not be unreasonably withheld. 3. Effective Date. The effective date of this Agreement shall be the date it is executed by the last party to sign the Agreement. 4. Agreement Binding Upon Successors. This Agreement shall be binding upon and inure to the benefit of the representatives, agents, successors, assigns and interests of the Parties as to any or all of the Joint Use Area, until released by the mutual consent of the Parties. 5. Agreement Runs with the Land. The covenants and terms contained in this Agreement shall create equitable servitudes on the property described in Exhibit "A" and as shown in Exhibit "B". If such covenants are breached, both Parties shall have the fight to exercise all fights and remedies and to maintain any actions or suits at law or in equity or other Joint Usc Agrcemcnt]Chula VLgta/San Dicgo Salt Creek Sewer Gravity Interceptor Page 2 of 6 proper proceedings to enforce the curing of such breach to which either Party or any other beneficiaries of this agreement and the covenants may be entitled. 6. Quitclaim of Interests by CV. In the event that CV permanently terminates the use of the Joint Use Area for the purposes set forth herein, CV shall quitclaim its interests, at no cost or value, to SD. For purposes of interpreting this Agreement, the term "permanently terminates" shall mean a willful termination of the use as evidenced by written action or document of either the governing body or official or employee possessing appropriate authority of CV. 7. Written Consent fo~' Construction or Placement of Structures. No Party shall place or construct, or permit the placement or construction of, any structure, temporary or permanent, in, upon, under, over, or across the Joint Use Area, without the prior written consent of the other Party. 8. Emergency Repairs. Notwithstanding any contrary provision of paragraph 1 hereinabove, in the event of damage caused by an act of God, war, or other casualty, or damage caused under circumstances where it would be impractical or impossible for one Party to notify the other Party of the necessity for temporary interference with the other Party's facilities, the Party creating the temporary interference may, without notice, enter upon the Joint Use Area and make emergency repairs to restore its service. The Party creating the temporary interference shall, however, t~ake reasonable and prudent measures to protect the installations of the other Party and minimize such interference, as soon as practically possible, notify the other Party of such emergency repairs. If permanent repairs are required after such emergency repairs have been made, reasonable notice shall be given to the other party. In the event of any emergency situation, each Party will make all reasonable efforts to notify the other prior to such construction activities. 9. Mutual Indemnification. SD and CV agree that, except as provided in Paragraphs 12.e, 12.f, 12.g herein, any rights against the other, to be indemnified or held harmless from and against liability, loss, cost, damage and expense arising from (i) any negligent act or omission of the other, its employees, .agents, contractors, successors and assigns or (ii) the location and existence of the other's above-described facilities, whether defective or otherwise, including, but not limited to, any such loss, cost, damage, liability and expense arising from damage to or destruction of real and personal property or injury to or death of any person, shall be determined by the law in effect at the time of incident giving rise to such liability, loss, cost, damages or expense; provided, however, that liability and indemnification obligations shall not be limited in any way by any limitation on the amount or type of damages, compensation of benefits payable by or for the other under any Worker's Compensation Acts, Disability Benefit Acts or other Employee Benefit Acts. Liability to a third party(ies) shall be divided between SD and CV in pr6portion to the measure of SD and CV's liability. Notwithstanding the foregoing, each Party shall hold harmless the other against damage to or destruction of the indemnitor's facilities caused by an act(s) ora third party(ies): Joint Use Agreeraent/Chuta Vista/San Diego Salt Creek Sewer Gravity Interceptor Page 3 of 6 10. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be original and all of which shall constitute one and the same document. 11. Recording. The Parties hereto shall cause this Agreement to be recorded in the Official Records of the San Diego County Recorder's Office. 12. Miscellaneous Provisions. 12.a. Notices. Unless otherwise provided in this Agreement or by law, any and all notices required or permitted by this Agreement or by law to be served on or delivered to either Party shall be in writing and shall be deemed duly served, delivered, and ~-eceived when personally delivered to the Party to whom it is directed, or in lieu thereof, when three (3) business days have elapsed following deposit in the U.S. mail, certified or registered mail, return receipt requested, first-class postage prepaid, addressed to the address indicated in this Agreement. A Party may change such address for the purpose of this paragraph by giving written notice of such change to the other Party. CITY OF CHULA VISTA Department of Public Works/Engineering Division 276 Fourth Avenue Chula Vista, CA 91910 Attn: City Engineer CITY OF SAN DIEGO WATER DEPARTMENT 600 "B" Street, Suite 1300 San Diego, CA. 92101-4506 Attn: Water Department Director A Party may change such address for the purpose of this paragraph by giving written notice of such change to the other Parties in the manner provided in this paragraph. 12.b. Captions. Captions in this Agreement are inserted for convenience of reference and do not define, describe or limit the scope or intent of this Agreement or any of its terms. 12.c. Entire Agreement. This Agreement, together with any other written document referred to herein, embody the entire Agreement and understanding between the Parties regarding the subject matter hereof and any and all prior or contemporaneous oral or written representations, agreements, understandings, and/or statements shall be of no rome and effect. This Agreement is not intended to supersede or amend any other agreement between the Parties unless expressly noted. $oint Use Ag~eement/Chula Visla/San Diego Salt CreekSewer Gravitylnterceptor Page 4 of 6 12.d. Recitals; Exhibits. Any recitals set forth above and any attached exhibits are incorporated by reference into this Agreement. 12.e. Compliance with Laws. Each Party agrees to comply with all applicable laws, ordinances, governmental regulations or agreements, regarding the habitat, protected species, water quality, solid wastes, hazardous wastes, hazardous materials, toxic substances, and any and all other forms of pollution or nuisance control (herein collectively referred to as "Standards"). 12.1'. Mutual Indemnification for Abating Violation of Standards by Other Party. Each Party shall indemnify the other Party for all costs (including, but not limited to consulting, engineering, mitigation, clean-up, containment, disposal, and legal costs) incurred by the other Party a result of abating a violations of Standards in any proceeding before any authority or court, and paying any fines or penalties imposed because of a violation of any Standards, which result from a Party failing to comply with the Standards. 12.g. Mutual Hold Harmless by and between SD and CV. SD and CV hereby assumes liability for, and shall indemnify and hold harmless the other from any suit, enforcement action, or claim resulting from or relating to (1) any alleged violation of Standards, or (2) all injuries to or death of any persons and loss of or damages to property, including without limitation, employees and property of the other, and which relate to any alleged violation of Standards which would not have arisen but for the actions, or inactions, of the other. 12.h. Authority of Signatories. Each signatory and Party hereto hereby warrants and represents to the other Party that it has legal authority and capacity and direction from its principal to enter into this Agreement, and that all resolutions and/or other actions have been taken so as to enable said signatory to enier into this Agreement. 12.i. Modification. This Agreement may not be modified, terminated, or rescinded, in whole or in part, except by written instrument duly executed and acknowledged by the Parties hereto, their successors, or assigns and duly recorded in the Office of the San Diego County Recorder. 12.j. Severability. If any term, covenant or condition of this Agreement or the application thereof to any person or cimumstance shall, to any extent, be invalid or unenfomeable, the remainder of this Agreement, or the application of such term, covenant, or condition to person or ckcumstances other than those as to which it is held invalid or unenfomeable, shall not be affected thereby and each term, covenant, or condition shall be valid and be enforced to the fullest extent permitted by law. Joint U~e Agreement/Chula Vista/San Diego Salt Creel: Sewer Gravity Interceptor Page 5 of 6 ._ 12.k. Preparation of Agreement. No inference, assumption or presumption shall be drawn from the fact that a Part), or it~ attorney prepared and/or drafted this Agreement. It shall be conclusively presumed that both Parties participated equally in the preparation and/or drafting this Agreement. IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed the day and year first hereinabove set forth. CITY OF CHULA VISTA CITY OF SAN DIEGO By: By: ~ Mayor Larry Gardner Water Department Director Attest: Susan Bigelow, City Clerk Approved as to form: Approved as to form: Ann Moore, City Attomey Casey Gwinn, City Attorney By: By: Catherine Bradley Deputy City Attorney Deputy City Attorney Joint Use Agreement/Chula Vista/San Diego Salt Creek Sewer Gravity Interceptor Page 6 of 6 RESOLUTION NO. 2003- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AN AGREEMENT BETWEEN THE CITY OF CHULA VISTA AND SAN DIEGO GAS AND ELECTRIC (SDG&E) COMPANY FOR THE JOINT USE OF A SDG&E EASEMENT REQUIRED TO FACILITATE THE CONSTRUCTION, MAINTENANCE AND OPERATION OF THE SALT CREEK GRAVITY SEWER INTERCEPTOR AND AUTHORIZING THE MAYOR TO EXECUTE THE AGREEMENT ON BEHALF OF THE CITY. WHEREAS, the Salt Creek Gravity Sewer Interceptor is a 13.5-mile trunk sewer line being built to serve some of the developments in the eastem territories and a portion of the developed portion of the City within the Main Street Basin; and WHEREAS, on June 4, 2002, City Council, by Resolution No. 2002-189, adopted Policy Option No. 3 as the Project Alignment for the construction of the Salt Creek Gravity Sewer Intemeptor; and WHEREAS, the Salt Creek Gravity Sewer lnceptor twice crosses an existing utility easement that was previously granted to SDG&E by Otay Land Company; and WHEREAS, this Project Alignment begins west of the Upper Otay Reservoir terminating at a junction structure just west of Interstate 5 where it connects to the City of San Diego's Metro Sewer Interceptor; and WHEREAS, the alignment of the Salt Creek Sewer intemeptor impacts existing utility easements currently held by SDG&E; and WHEREAS, to facilitate the construction, operation and maintenance of the Salt Creek Sewer, the City is required to enter into a joint use agreement with SDG&E. NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Chula Vista does hereby approve entering into a Joint Use Agreement with SDG&E to facilitate the construction, maintenance and operation of the Salt Creek Gravity Sewer within the SDG&E easement corridor. BE IT FURTHER RESOLVED that the Mayor of the City of Chula Vista is hereby authorized to execute said agreement for and behalf of the City of Chula Vista. Presented by Approved as to form by Cliff Swanson ~ ~ Director of Engineering City Attorney J:/attomey/reso/agree/SDG&E Salt Creek Easement Agmt %/¥ THE ATTACHED AGREEMENT HAS BEEN REVIEWED AND APPROVED AS TO FORM BY THE CITY ATTORNEY'S OFFICE AND WILL BE FORMALLY SIGNED UPON APPROVAL BY THE CITY COUNCIL nn Moore City Attorney Agreement between the City of Chula Vista and SDG&E Company for the joint use of an SDG&E easement required to facilitate the construction, maintenance, and operation of the Salt Creek Gravity Sewer Interceptor. Recording Requested by City of Chula Vista When recorded, mail to: San Diego Gas & Electric 8335 Century Park Court, Suite 100 San Diego, CA 92123-1569 Attn: Kathy Babcock, CP11D SPACE ABOVE FOR RECORD~R'S USE APN: Portion of 644-080-09, 04 THE UNDERSIGNED DECLARES CONSIDERATION IS LESS THAN $100 AND TRANSFER TAX IS NONE. JOINT USE AGREEMENT THIS AGREEMENT, dated 2003, by and between SAN DIEGO GAS & ELECTRiC, a corporation (SDG&E), and THE CITY OF CHULA VISTA, a municipal corporation (CITY), is made with reference to the following facts: A. SDG&E is engaged in the business of transmitting and distributing gas and electricity within the City of Chula Vista, County of San Diego, State of California, and has facilities for such purposes located in, upon, over, under, and across those certain easements and fight-of-way granted to SDG&E per documents recorded August 8, 1997, File/Page No. 97-0380620 of Official Records. B. CITY is now acquiring or has acquired, easements for public sewer purposes in, upon, over and across the real property described in Exhibit "A", which is attached hereto and by this reference made a part hereof, and intends to construct, operate and maintain therein a public sewer, the location of which is shown on Exhibit "B" attached hereto and made a part hereof; and C. The sexver dedication referred hereto, shown on Exhibit "B", a copy of which is on file in the Office of the city Engineer of the City of Chula Vista. And, D. CITY and SDG&E desire to provide for the joint use of the area con,anon to both the SDG&E easement and right-of-way and the CITY's dedicated sewer right-of- way for the construction, operation, and maintenance of both parties' facilities in, over, under, and across the aforesaid common area. NOW, THEREFORE, for valuable consideration, receipt of which is hereby acknowledged, the parties hereby agree as follows: in lieu of dedication, SDG&E hereby consents that a public sewer may be constructed and maintained over, upon and across that portion of SDG&E's aforementioned easement and right- of-way lying within the limits of the proposed public sewer as shown on said Exhibit "B" hereinafter referred to as area subject to the following: (a) In the event that the future use or alteration of said area by the CITY for the sewer or public improvements incidental thereto shall at any time or times necessitate a rearrangement, relocation or reconstruction of any of SDG&E's facilities or the acquisition of additional property easements, or both, pursuant thereto, the same shall be performed by SDG&E, or by any other party with the consent of SDG&E, at the cost of the CITY. (b) In the event that the future use of SDG&E's easement or properties by SDG&E shall at any time or times necessitate a rearrangement, relocation, or reconstruction of the sewer or public improvements incidental thereto, the same shall be performed at the cost of SDG&E. (c) All uses of said area by either party shall be such as will not permanently interrupt the use or operation of the facilities therein of the other party; uses of said area by either party which temporarily interfere with the use of the Other party will be made only when reasonably necessary and will be promptly terminated as soon as the necessity therefore no longer exists. (d) SDG&E retains the right to review and approve of specific locations of all facilities within its easement to avoid conflict with existing and future SDG&E facilities. Such approvals shall be granted by SDG&E's "Letter of Permission for -2- Grading and Construction of Improvements" and approvals shall not be unreasonably withheld. (e) If the CITY shall hereafter vacate, in whole or in part, the area which is occupied by SDG&E's easement, the CITY shall, in the vacation proceedings, reserve to SDG&E all rights owned by SDG&E prior to the execution of this agreement. (f) Except as expressly herein set forth, this agreement shall not in any way alter, modify, or terminate any of SDG&E's rights in said area. IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed by duly authorized officers. SAN DIEGO GAS & ELECTRIC CO., CITY OF CHULA VISTA, a California~, oration a Municipal Corporation By: hn B~o~?~ ~]~ By: Jo Dave Rowland, City Manager Land ~agement Manager APPROVED as to form and legality This day of 2003. By: , John Kaheny, City Attomey By: Peggy McCarberg Deputy City Attorney DATE: 2/13/03 R/W NO.: 81198 DWG. NOS.: 8-3333~309 STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO ) On February 14, 2003 before me Connie P. Peacock , Notary Public, personally appeared John B. Burton, personally known to me to be the person whose name is subscribed to the within instrument and acknowledgement to me that he executed the same in his authorized capacity, and that by his signature on the instrument he or the entity upon which he acted, executed the instrument. WITNESS my hand and official seal. Connie P. Peacock, Notary Public ***OPTIONAL INFORMATION*** TITLE OR TYPE OF DOCUMENT DATE OF DOCUMENT NUMBER OF PAGES EXHIBIT 'A' PERMANENT EASEMENT LEGAL DESCRIPTION ALL THAT PORTION OF LOT 6 AND 7 OF OTAY RANCHO, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 862, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, FEBRUARY 7, 1900, AS DESCRIBED IN EASEMENT DEED TO SAN DIEGO GAS & ELECTRIC COMPANY RECORDED AUGUST 8, 1997 AS DOCUMENT NO. 1997-0380620, INCLUDED WITHIN A STRIP OF LAND, 20.00 FEET WIDE, LYING 10.00 FEET ON EACH SIDE OF THE FOLLOWING DESCRIBED CENTERLINE: BEGINNING AT A POINT ON THE WESTERLY BOUNDARY OF SAID LOT 6, DISTANT THEREON NORTH 18°41'58~' WEST 2501.93 FEET FROM THE SOUTHWEST CORNER OF SAID LOT, SAID POINT BEING ON A NON-TANGENT 2849.92 FOOT RADIUS CURVE, CONCAVE SOUTHEASTERLY, A RADIAL FROM SAID PO1NT BEARS SOUTH 64020'00TM EAST; THENCE NORTHEASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 9°45'40~', A DISTANCE OF 485.52 FEET, A RADIAL FROM SAID POINT BEARS SOUTH 54034'20'' EAST; THENCE NON-TANGENT TO SAID CURVE NORTH 52°28'21'' EAST 263.41 FEET; THENCE NORTH 12°28'21'' EAST 84.32 FEET; THENCE NORTH 28°45'39" WEST 305.02 FEET; THENCE NORTH 19°51'39'' WEST 411.55 FEET; THENCE NORTH 58°18'57'' WEST 303.70 FEET TO A POINT ON THE EASTERLY LINE OF PARCEL 3 AS DESCRIBED IN EASEMENT DEED TO THE CITY OF CHULA VISTA, RECORDED JANUARY 29, 1997 AS DOCUMENT NO. 1997-0038451 OF OFFICIAL RECORDS OF SAID COUNTY, SAID POINT BEING DISTANT THEREON NORTH 05°51 '30" EAST 8.43 FEET FROM THE SOUTHEAST CORNER OF SAID PARCEL 3. THE SIDELINES OF SAID 20.00 FOOT STRIP TO BE PROLONGED OR SHORTENED TO MEET AT ANGLE POINT INTERSECTIONS, AND TO TERMINATE AT THE WESTERLY BOUNDARY OF SAID LOT 6, AND THE EASTERLY AND SOUTHERLY LINE OF SAID PARCEL 3. SEE EXHIBIT "B" ATTACHED HERETO AND MADE A PART HEREOF BY THIS REFERENCE. 12/~0/02 STATE OF ) SS_ COUNTY OF ) On , before me (name, title of officer), appeared personally known to me proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature STATE OF ) SS. COUNTY OF ) On , before me (name, title of officer), appeared personally known to me proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within inslrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the inslnunent. WITNESS my hand and official seal. Signature EXHIBIT "B" s}rr., ~ S71.'58'15"W"LID ,-'-/~'7640.91'.y _ ' NO. BF-.AEING DISTANC[ ~ .., L1 S11'29'50'W 158.95' oT,,¥ /~:'~ L2 S49'2~'40"E 128.00' .;;;- ~.,;,'" APN:644-080-09 L4 N7118'O7'E 7~.00' No ~c.~ / L5 N29"59'43"E 60.20' EXISTING SEWER EASEMENT TO~..~.... /Y' I?.~-F --/ L6 N71"IS'OT"E 4,37.95' THE CITY OF CHULA VISTA REC.~~! ~ ' 1-29-1997 AS DOC. NO. '~ ~ // - 1997-0038451 L~~' NOIES: 1. ALL DII~ENSIONS SHOWN HEREON ARE ]~L~ ~ co,,,,ED fro, RECORO DA,A. 2. EXISTING PROPERTY BOUNDARIES AND u N~71 .,.,.,.,.,.,.,.,.,58,,~1'E~-~.'"~ AREAS SHOWN HEREON EXCLUDE ROAD, SEE SHEET 2 -- STREET & HIGHWAY EASEMENTS. 1120.g2' 5. EXISTING EASEMENTS TO THE KIMBALL- ~' BROTHERS WATER CO. REC. 10-14-1869 ,~// IN ~K. 7, ~G. 12l OF OE[OS. EX~CT LOCATION CANNOT BE DETERMINED FROM RECORD. 4, EXISTING EAS[Id£NT TO OlAY WAIER . DISTRICT REC. 11-02-1992 AS DOC. ,o. ,992-o6~7 oF OmC,AL ~ J\/JAP F-; ~-,~ RECORDS. EXACT LOCATION CANNOT BE -~, ~,~ DETERMINED FROk( RECORD. 5. RIGHTS AND EASEMENT FOR .' LO-/ ,5 NAVIGATION AND nSHERY WHICH MAY J EXIST OVER PORTIONS OF THE LAND ~J SHOWN HEREON LYING BENEATH THE WAT[RS OF TH[ OTAY RIVER NOTED IN PR£~MINARY TITL[ REPORT ORDER ~NO. 205071492 DATED 10-I0-2001. I.£OF~D: EXISTING PROPERTY UNE, EXCLUDES U.F. U.F. UNDERLYING FEE, INCLUDES EXISTING ROAD, STREET & HIGHWAY EASEMENTS S.F. SQUARE ~ PROPOSED PERMANENT EASEMENT PER SEPARATE DOCUMENT ~-/-'/-f-/-7-71 PROPOSED TEMPOP, ARY F_ASEM[NT DATE CAUFORNIA MOUNTAIN WATER COMPANY REC. 6-12-1912 IN BK.570, PG, 11-~ OF DE[DS, EXPIRES 12-~1-200~d~ OWNED IN FEE BY THE: CITY OF SAN DIE00,  ~RAm~C SC~u~ CZTY OF C~UCA V~s'rA 1000' O' 500' 1000' c~ ~ 7,.,z5~7 A.P.N. 644-090-04 ac 644-080-09 ~5 'r~ st,~ ~, ~.&~o,6, 1'= IOOO' ~ ,~, ,~ POR. LOTS 6 & 7 (,,h~flo.. cx 9z~4 '/,- ~ PER ~AP 862 EXHIBIT "B" R~IND~R * INDICAES AR~ OF PROPOSED ~S~E~S ~, T~ (~CLUg[S U.[. TE~PO~RY ~S~ENT DOES NOT P~SED OR~I~L ~ ~POSED (~UD[S U.F.) P~N~ ~) INCLUDE PROPOSED PER~NENT ~ * ~1,018 S.F. ~SEUENT AR~. ~S~E~ ~.88 ACRES ~8.~3 ACRES P~SED ~ 37,078 S.F. J PARCEL 3 OF EXISTING ~ Cl~ OF CHU~ VISTA REC. ~SE~ENT TO THE ~ 1-2g-Igc7 AS DOC. NO. ~.o~s[D ~o.oo' W~D[ ~ ~SE~T PER SEPA~TE D~U~ENT 8.43' PROPOSED ~.00' ~ APN: TEMPO~RY ~SE~ENT 644-080-09 CORNER OF PARCEL DOC. NO. ~SEMENT PER .~ISII~G S.D.G.&E.~SEPA~IE DOCUMENT , WIDE TE~PO~RY ~SE~ENT WE~RLY. ~UNDARY X~9~ LOT 6, POINT OF ~ APN:~-~O-04 ~PHIC BEGINNING ~0' O' l~' 200' CITY OF CHULA VISTA TEJ~PORARY EASD~ENT ACQUISITION A.P.N. 644-090-04 & 644-080-09 POR. LOTS 6 &'7 PER MAP 862 X COUNCIL AGENDA STATEMENT Item ~ , Page 1 Meeting Date 6/3/03 ITEM TITLE: Resolution declaring the City's intention to amend the Master Fee Schedule by updating the existing sewer rate structure; and adopting the "Wastewater User and Rate Restructuring Study"; and setting a public hearing for July 22, 2003 at 6:00 p.m. to consider these issues. SUBMITTED BY: Director of Engineeringff~ REVIEWED BY: City Manager/~' ,~e 94 4/5tbs Vote: (Yes: _ No: X. ) BACKGROUND: On June 8, 1999, City Council approved a three-year Sewer Service Charge rate plan for fiscal years 2000-2002 and 6% rate increases were implemented in each of those years. Subsequently, expenditures for both the maintenance and operation of the city's wastewater collection system, and for wastewatcr conveyance and treatment have continued to escalate from $15.7 million in fiscal year 2000 to an estimated $23.6 million in fiscal year 2003. At thc current sewer rate level, necessary expenditures will exceed fiscal year 2004 revenues by $5.5 million and the deficit will continue to grow in subsequent years if no action is taken, as the city continues to build, maintain and operate the local and regional facilities necessary to support a growing population. RECOMMENDATION: That City Council adopt a resolution declaring the City's intention to amend the Master Fee Schedule by updating the existing sewer rate structure; and adopting the "Wastewater User and Rate Restructuring Study"; and setting a public hearing for July 22, 2003 at 6:00 p.m. to consider these issues, BOARDS/COMMISSIONS RECOMMENDATIONS: Not applicable. DISCUSSION: In 1961, thc City of Chula Vista entered into an agreement with the City of San Diego that allows all of the wastewater flows generated by the city to be sent to San Diego's Point Loma Treatment Plant for treatment. The following year, City Council established a monthly Sewer Service Charge to be paid by every property owner or occupant of any parcel of real property in the City of Chula Vista that is connected to the sewer system. To ensure that the cost of sewer service is distributed fairly and equitably among thc City's residents, a comprehensive sewer pricing structure review and a long-range financial plan were prepared as part of the attached study, "Wastewater User andRate Restructuring Study". If this study's Item p , Page 2 Meeting Date 6/3/03 recommendations are adopted, the average single-family residence will pay a lower sewer service charge next year. The current and proposed charges are summarized below. Single Family Monthly Rate Comparison Current Proposed Consumption #of Users Charge Chargein FY04 Difference Low 2,148 $22.37 $7.99 - $14.38 2,145 $22.37 $9.89 -$12.48 2,340 $22.37 $11,78 -$10.59 2,694 $22.37 $13.68 -$8.69 2,913 $22.37 $15.58 -$6,79 3~033 $22137 $17.47 i-$4.90 i Average 2,839 $22.37 $19.37 -$3.00 2~488 $22i37 $2ii26 ~$1~11 i Median 2,304 $22.37 $23.16 $0.79 2,076 $22.37 $25.06 $2.69 1,682 $22.37 $26.95 $4.58 1,471 $22.37 $28.85 $6,48 1,251 $22.37 $30.74 $8.37 1,135 $22.37 $32.64 $10.27 947 $22.37 $34.54 $12.17 High 6,220 $22.37 $34.54 $12.17 While a significant number of single-family residents will have a lower sewer service charge based on their consumption, a portion of this user class will also see their overall sewer service charge go up. Under the proposed structure, single family will generate 60% of the revenue required to meet overall sewer costs, which is commensurate with the amount of wastewater they generate. Multi-family, commercial and industrial, will generate the remaining 40% of revenue. These will continue to be assessed based on their consumption levels, but at slightly increased rate levels. The basis for restructuring and calculating the charges are detailed in the following sections of this report. Item ~ , Page 3 Meeting Date: 6/3/03 CURRENT RATE STRUCTURE AND RATES Under the current rate structure, the method of collecting the Sewer Service Charge from the city's 41,218 accounts varies depending on user location within thc City: Geographic Billing Billing Method Users Water Company Location Frequency Pre-Annexation Sweetwater Authority Area Bi-Monthly Finance Dept 14,742 Sweetwater Authority Montgomery Area Annually Tax Roll 3,428 Cai-American Montgomery Area Annually Tax Roll 277 Otay Water District Primarily East of I~ 805 Monthly Otay Water District 22,771 Total Accounts 41,218 Revenue derived from the Sewer Service Charge is deposited into the Sewer Service Revenue Fund and is primarily used for: · Maintenance and operation of the city's wastewater collection system (i.e., trunk sewer lines, sewer mains and laterals, access holes, pump stations); · The annual City of San Diego Metropolitan Wastewater District (Metro) Sewer Capacity charge; and · The city's portion of Metro's maintenance and operation costs, debt service, capital costs, and other incidental treatment and conveyance costs. SEWER REPLACEMENT FEES AND STORM DRAIN FEES In addition to the uses listed above, the Sewer Service Charge also serves as a "pass through" vehicle for the collection of approximately $1 million in Sewer Replacement Fees and Storm Drain Fees, which are deposited into their respective funds and neither of which will be impacted by the proposed rate changes to the Sewer Service Charge. Because the City of San Diego (our treatment authority) has received Clean Water Grant funding in the past, certain state and federal regulations apply to Chula Vista's rate program. Chula Vista is required, for example, to set user charges at a sufficient level to offset system operation and maintenance costs. In addition, costs must be allocated to user classes fairly and equitably. Item <~ ,Page4 Meeting Date 6/3/03 Single-family residences make up 91% of the customer base and generate 63% of the flow. Single- family residential users are currently subject to aflat monthly rate of $22.37. A reduced flat monthly rate of $15.83 is available to low-income users, who meet the eligibility requirements as defined in the Housing and Urban Development's (HUD) "Very Low Income Limits for San Diego County" which is published annually. Under the current rate structure, single-family households are charged the flat fee irrespective of the amount of water consumed or sent to the wastewater collection system. Over the years, however, this large class of residents has persistently requested that the City explore the feasibility of a consumption-based rate structure that would allow them to see the benefits of their conservation efforts on the sewer bill. Commercial and industrial users and such institutional users as hospitals, nursing homes and schools, comprise 4% of the customer base and multi-family residential users make up an additional 5%. These two user classes currently generate 21% and 16% of the flow, respectively. Unlike single- family residential users, they pay a variable charge according to two criteria - water consumption (quantity) and strength (quality) of the wastewater they generate. The current average monthly usage charge for multi-family property occupants who are metered directly is set so as not to exceed the flat single family rate of $22.37 per month. Among institutional users, school districts apply for and receive variances under which the city applies parameters such as the number of school days, the number of occupants, etc., to determine the most appropriate and equitable rate. The City's Sewer Service Charge has been revised a number of times over the years to cover increased costs of wastewater treatment and system maifftenance. The most recent rate increase adopted by City Council took effect July 2001. No further rate increases have been implemented since that time. However, the city's treatment and system maintenance costs have continued to rise commensurate with population growth and the inevitable increases in service demand. Fiscal Year Metro Sewage Treatment Charges % (millions) Increase 2001 $12.4 2002 $14.1 14% 2003 $15.6 11% 2004 $18.4 18% In addition, the current rate structure has been in place since the establishment of the original fee, with only a single 1991 update. The city has maintained the current structure for a number of reasons including ease of billing, stability of revenue, and difficulties in creating a method to capture individual sewer water usage, and the complexity of facilitating a transition to a new rate structure. Item ~7 , Page 5 Meeting Date 6/3/03 The State Water Resources Control Board (SWRCB) is the governing body, which has provided and continues, to provide the guidelines for ensuring ongoing compliance with state, federal and other regulations relative to Chula Vista's rate structure. The current rate structure allocates costs to ratepayers based on a single strength component - suspended solids (SS). Recently, however, in conformance with SW'RCB guidelines, San Diego Metro revised the cost allocation to all participating agencies including the City of Chula Vista, to be based on both SS and a second strength component - biochemical oxygen demand (BOD). Therefore, for the City to conform to SWRCB guidelines, the city's existing rate structure is now subject to revision to include BOD as a strength component. In addition, in response to the numerous requests of residents, the rate structure was examined to determine the feasibility of a consumption-based rate rather than a flat rate for single-family residential customers. Proposed Changes In March 2002, the city retained a consultant, PBS&J, to prepare a comprehensive rate restructuring study for the City of Chula Vista. The primary purpose of the Wastewater User and Rate Restructuring Study (attached) was to develop a rate structure, which will enable the City to raise adequate revenues to: · Properly operate and maintain the Chula Vista sewerage system; · Meet current and future obligations to the City of San Diego for use of the Metro System; and · Provide a consumption-based rate structure as requested by single-family residents. In addition, the update will facilitate compliance with SWRCB guidelines that call for an enhanced rate structure. Long Range Financinff Plan A long-range financing plan was developed as a principal component of the rate study. The financing plan evaluates the Sewer Service Revenue Fund's balance of total annual expenditures to revenues in order to determine the revenue requirement of the fund. The revenue requirement serves as the basis for calculating the new Sewer Service Charge and to determine what additional monies will be required to meet expenditures. The long-range plan shows that for fiscal year 2004, expenditures are projected to total $27.2 million, of which $19.4 million (71%) will be spent to meet the City's Metro obligation for wastewatcr treatment, capital projects, maintenance and operation of the sewerage system, and debt financing. The city expects to spend an additional $7.4 million (27%) for maintenance and operation of the city's local collection system. The balance of the planned expenditures (2%) is allocated for supplies and services. Item ~ , Page 6 Meeting Date 6/3/03 The amount of revenue generated by the City's Sewer Service Charge should be sufficient to cover the costs detailed above. Historically, however, consumer charges alone have been insufficient to meet program costs. At the current rate level, a shortfall of approximately $4.4 million in revenues is projected for fiscal year 2004, based on the study. This shortfall is primarily due to a $2.8 million increase in the City of Sun Diego's Metro treatment costs, from $15.6 million in fiscal year 2003 to $18.4 million in fiscal year 2004. To partially offset the $4.4 million shortfall and to help ensure pacing with future Metro sewer charge increases, the consultant's study recommends a schedule of annual maximum increases of 9% in overall revenues over the next four years. City staff has thoroughly reviewed the study and its four-year plan und concur with its findings and recommendations. The recommended maximum 9% annual revenue adjustment includes two major components: · An increase to the Sewer Service Charge that consumers pay directly (as detailed in Appendix B of the study), and · A supplemental amount to be transferred in from the Trunk Sewer Capital Reserve Fund to balance anticipated expenditures with the requisite revenues. Trunk Sewer Capital Reserve Fund Transfers Issues concerning the use of Trunk Sewer Capital Reserve Funds will be discussed first. The Trunk Sewer Capital Reserve, which was established in 1985, is funded through the collection of fees for new connections to the City's sewer collection system. The $3,000 Sewerage Facility Participation fee is a one-time "buy in" fee that allows new customers to connect to the collection system, that existing users have been funding since the City first entered into the agreement with Metro and acquired capacity rights. Revenue from this fee has averaged $6 million annually. The trunsfer of funds from the Trunk Sewer Capital Reserve Fund to the Sewer Service Revenue Fund is consistent with provisions of the Municipal Code that allow funds to be used for the construction or enlargement of sewer facilities to enhance or increase capacity. With the demands of population growth, sewer capacity requirements continually increase and are being addressed by the City of Sun Diego's ongoing expansion of the Metro system. To finance these new capital facilities, all system participunts, including Chula Vista, incur a portion of the debt service, which is included annually in Chula Vista's payment to San Diego Metro: Fiscal Year 2003 2004 2005 2006 2007 Chula Vista's estimated Metro payment $15.6 $18.4 $19.0 $20.4 $21.0 Capital-related debt service portion $7.3 $8.3 $8.5 $9.3 $9.8 Planned transfers from Trunk Sewer Fund $4.6 $6.6 $5.9 $5.5 $4.0 Item ~ ,Page7 Meeting Date 6/3/03 It is therefore appropriate and justifiable to transfer funds from the Trunk Sewer Capital Reserve fund to pay for these capital expenditures. Moreover, availability of these funds will provide a level of stability in the Sewer Service Revenue Fund through the coming years as proposed changes to the rate structure take effect. By ingluding the proposed transfers as part of an annual maximum 9% planned revenue increase, the City will meet all of the fiscal criteria listed in the long-range plan, while maintaining a 45-day operating reserve of 12.5% in the Sewer Service Revenue Fund. Eventually, the long-range plan reduces by 40% the amount of the fund transfer now required from the Trunk Sewer Capital Reserve Fund. Finally, it is important to note that the study evaluated the City's future ability to acquire additional capacity bas. ed on the available fund balance in the Trunk Sewer Capital Reserve Fund and it was determined that the proposed transfers would not compromise the fund. Sewer ~ervice Charge Increase The recommended maximum 9% annual revenue requirement also includes a proposed increase to the Sewer Service Charge that consumers pay directly. The proposed rate increase is an inextricable part of the proposed structural refinements to the rate and will be discussed together with it. On behalf of residents, the City required that the single-family rate-restructuring request be one of the primary components of the study. As a result, a major recommendation of the study is the revision of the City's current rate structure for single-family residential consumers from a flat fee structure to a two-part structure: · A commodity charge that varies based on amount of water used · Afixed service charge for basic service provision To enable the City to implement the proposed changes and still retain a degree of stability in revenue generation, an "individualized flat rate" is recommended for single-family residents. As detailed in Table 2, this commodity charge would be partially based on a fixed rate per unit 9f water used, but would be allowed to vary according to each customer's average winter water consumption. Winter water usage is an industry standard for the implementation of this type of rate structure since it generally reflects the lowest amount of water consumption during the year. Readings are taken from November through April when most customers tum off sprinklers and irrigation water usage is at a minimum, reflecting mostly domestic water usage. The average winter water consumption is then used to calculate the commodity charge, which is annualized over the entire year for each individual residential customer. All other users will continue to be charged a variable rate based on amount of water usage and strength of flow, as described previously. Item ~ , Page 8 Meeting Date 6/3/03 The second component of the Sewer Service Charge - afixed service 'charge - would apply to all users including residential, commercial & industrial, and institutional users. This charge will allow the City to recover a portion of the fixed costs of service provision that the City incurs irrespective of the amount of flow that goes through the system (e.g., billing and administrative costs, certain portions of the maintenance costs and debt service). The fixed service charge will be based on meter size which ranges widely both in size and the resulting charge. It should be clarified that this is not an additional charge if compared to the existing rate structure; however it is a refinement, which breaks out a portion of the rate in a manner that allows the City to cover the fixed portion of its costs. It is estimated that the fixed service charge will generate 17% of the annual revenue requirement and is approximately equivalent to rates adopted by other agencies in Southern California with similar rate structures. Based on this new rate structure, while a significant number of single-family residents will have a lower sewer service charge based on their consumption, a portion of this user class will also see their overall sewer service charge go up. However, the average user in this user class will see a net reduction in their sewer bill based on this new structure. Moreover, the proposed average rate for City of Chula Vista consumers will remain favorable when compared to the average rates for other cities in San Diego County. City Average Rate Carlsbad $13.00 National City $16.08 Escondido $23.00 Poway $28.38 La Mesa $28.83 Oceanside $31.09 San Diego $43.79 FISCAL IMPACT: Council approval of the proposed sewer rate increase and adoption of the proposed rate structure will ensure that the City recovers sufficient revenues to meet projected sewer- related expenditures for fiscal years 2004 through 2007, including reimbursements to the General Fund ranging from $7.4 million in fiscal year 2004 to $8.6 million in fiscal year 2007 for critical City staff support services for the maintenance and operation of the City's sewer collection and treatment system. Attachments: Table 1 - Current Sewer Service Charge Rate Structure Table 2 - Proposed Sewer Service Charge Rate Structure for FY 2003-04 "Wastewater User and Rate Restructuring Study", by PBS&J J:\Engineer\AGENDA\A113 Rate Incr_July031.cb.doc Table 1. CURRENT Sewer Service Charge Rate Structure Strength Rate Type Sewer Service Rate ** Land Use Categories Categories Single-family Flat Rate $22.37/month Residential Single-family Residential $15.83/month (Low-income Rate) Multi-family Low Water Usage + $2.24/HCF Residential (<200ppm) Strength of Flow Low " $2.05/HCF (<200ppm) Commercial, Industrial, Medium $2.52/HCF and Institutional (>200 <600 ppm) High ,, $3.36/HCF (>600 ppm) High Volume Varies Rate Formula Dischargers based on SS ** Includes collection of Sewer Replacement Fee & Storm Drain Fee ppm: parts per million HCF: one hundred cubic feet of water used SS: suspended solids (a component of sewage strength or quality) ~ Table 2. PROPOSED Sewer Service Charge Rate Structure for FY2003-04 Sewer Service Rate ** Land Use Strength Commodity Commodity Categories Categories Charge Type Fixed Service Charge (water usage) (based on meter size) Rate Single-family SS & BOD Averaged Winter $6.10/month $l .90grlCF Residential Water Usage Single-family Resi~lential .... $6.10/month $1.33/HCF (Low-income rate) Multi-family Water Usage + Varies $1.90/HCF Residential Strength of flow (based on meter size) .... $1.90/HCF Commercial and .... $2.29/HCF Industrial " $3.78/HCF Institutional .... $1.90/HCF High Volume Varies (based on Dischargers .... strength >25,000 gal/day parameters) METER Service Charge ** Includes collection of Sewer Replacement Fee (70¢) and SIZE (FY04) Storm Drain Fee (70¢). 5/8" $6.10 3~4' $6.10 BOD: biochemical oxygen demand 1" $10.07 HCF: one hundred cubic feet of water used 1 1/2" $20.00 SS: suspended solids (a component of sewage strength or quality) 2" $31.92 4" $59.73 6" $99.46 8" $198.79 RESOLUTION NO RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA DECLARING THE CITY'S INTENTION TO AMEND THE MASTER FEE SCHEDULE UPDATING THE EXISTING SEWER RATE STRUCTURE; AND ADOPTING THE "WASTEWATER USER AND RATE RESTRUCTURING STUDY," AND SETTING A PUBLIC HEARING FOR JULY 15, 2003 AT 6:00 P.M. TO CONSDER THESE ISSUES. WHEREAS, in Mamh 2002, the City retained a consultant, PBS&J, to prepare a comprehensive rate restructuring study for the City of Chula Vista ("Wastewater User and Rate Restructuring Study") to develop a rate structure which will enable the City to raise adequate revenues to properly operate and maintain the Chula Vista sewerage system; and meet current and future obligations to the City of San Diego for use of the Metro System; and to consider a consumption-based rate structure as requested by single-family residents; and WHEREAS, the Sewer Service Charge serves as a "pass through" vehicle for the collection of approximately $1 million in Sewer Replacement Fees and Storm Drain Fees, which are deposited into their respective funds and neither of which will be impacted by the proposed rate changes to the Sewer Service Charge; and WHEREAS, expenditures for both the maintenance and operation of the City's wastewater collection system, and for wastewater conveyance and treatment have continued to escalate from $15.7 million in fiscal year 2000 to an estimated $23.6 million in fiscal year 2003; and WHEREAS, at the current sewer rate level, necessary expenditures will exceed fiscal year 2004 revenues by $4.9 million; and WHEREAS, the adoption of the proposed sewer rate structure will ensure that the City recovers sufficient revenues to meet projected sewer-related expenditures for fiscal years 2004 through 2007, including reimbursements to the General Fund ranging from $7.4 million in fiscal year 2004 to $$8.6 million in fiscal year 2007 for the maintenance m~d operation of the City's sewer collection and treatment system. NOW, THEREFORE, BE IT RESOLVED that the "Wastewater User and Rate Restructuring Study," a copy of which shall be kept on file in the City Clerk's Office, is hereby adopted; BE IT FURTHER RESOLVED that the City Council of the City of Chula Vista does hereby declare its intention to amend the Master Fee Schedule by updating the existing sewer rate structure and setting a public hearing for July 15, 2003, at 6:00 p.m. to consider these issues. Presented by Approved as to form by Cliff Swanson Ann 1M~drk Director of Engineering City Attorney J:/attorney/reso/sewer/amd master fee schedule CITY OF CHULA VISTA WASTEWATER USER AND RATE RESTRUCTURING STUDY May 2003 PBS&J Project No.: 621947 Prepared For: CITY OF CHULA VISTA 276 Fourth Ave Chula Vista, CA 919'10 P~epared By: 175 Calle Magdalena Encinitas, CA 92024 Karyn L. Keese Financial Services Manager City of Chula Vista Wastewater User and Rate Restructuring Study Acknowledgements PROJECT TEAM City of Chula Vista Cliff Swanson Director of Engineering 619-691-5142 Frank Rivera Deputy Director of 619-397-6118 Engineering Jack Griffin Asst. Director of Parks & 619-397-6048 Building Cathy Burciaga Administrative Services 619-409-5844 Manager Anthony Chukwudolue Civil Engineer - 619-397-6129 Wastewater Engineering Sandra Hernandez Assistant Engineer - 619-397-6116 Wastewater Engineering PBS&J: 760-753-1120 Karyn Keese Client Financial Services Manager Chrisell Jones Senior Analyst II City of Chula Vista Wastewater User and Rate Restructuring Study Table of Contents CHAPTER PAGE 1.0 Executive Summary ............................................................................... ..., 1 2.0 Wastewater Rate Determination ................................................................ 7 3.0 Recommendations ................................................................................... 30 TABLES 1-1 Chula Vista Proposed Four Year Rate Case .............................................. 4 1-2 Chula Vista Summary of Current Rate Structure and Rates ...................... 5 2-1 Chula Vista Number of Living Units (Single & Multi Family) Versus Sewerage Flow Generated by Each Customer Class .................... 7 2-2 Chula Vista Compilation of Published Data on Sewer User Strength Classifications .............................................................................. 8 2-3 Chula Vista Budget Summary and Cost Allocation for Fiscal Year 2004 ....................................................................... ~ .............. 12 2-4 Chula Vista Anticipated Single Family Monthly Rate Comparison ........... 26 2-5 Chula Vista Monthly Service Charge and Commodity Rates ................... 28 3-1 Chula Vista Proposed Four Year Rate Case ............................................ 32 FIGURES 1 Chula Vista Wastewater Utility Cost Allocation Flow Diagram ................. 13 2 Chula Vista Current Versus Proposed Revenue Responsibility Based on Flow, BOD, and Suspended Solids Loading ............................ 20 3 Chula Vista Single Family Rate Structure Alternatives ............................. 25 APPENDICES A City of Chula Vista Projected Five-Year Long Range Plan B City of Chula Vista Rate Structure for Fiscal Year 2004 C City of Chula Vista Budget Summary and Cost Allocation City of Chula Vista Wastewater User and Rate Restructuring Study Section 1 Executive Summary 1.0 Executive Summary To ensure that the cost of sewer service is distributed fairly and equitably among the City's residents, we have prepared a sewer pricing structure review and a long-range financial plan. As set forth more fully below, if this study's recommendations are adopted, average and median-single family residences will pay lower sewer service rates. Few things are more important in our country than ensuring that wastewater is properly treated and returned to the environment. We often take for granted the thousands of people who are employed daily in addressing this country's wastewater needs. From the Utility Managers who are responsible for making sure that proper wastewater services are provided to residents, businesses, and industries; to governing bodies who must ensure that customer interests are understood and that utilities properly address public concerns; to consultants who assist utilities in addressing financial, economic, engineering, and other professional requirements, a broad spectrum of people play a part in ensuring that appropriate wastewater services are provided to the public. A major challenge confronting the wastewater ihdustry is acquiring adequate funds to finance and operate capital equipment and facilities, and implementing appropriate pricing structures to ensure the self-sufficiency of the utility. Long range planning is important because it is necessary to make sure that appropriate facilities will be constructed to address environmental regulations and meet the service needs of customers. The financing vehicle that is used by the utility and the timing of the financing are crucial in ensuring that each generation of wastewater customers is appropriately paying for facilities that they need, and not inappropriately financing facilities for other generations of customers. It is a major goal of an effective financial plan to "match" economic impact on customers with benefits received by these customers. The financial requirements related to operations costs and capital facilities are identified · in this plan by year, and appropriate sources to finance these costs have been developed. During this development of appropriate sources of financing, economic impacts on utility customers were carefully identified and considered. In addition, the City requested a review of their current sewer service charge structures and billing formulas to ensure that Chula Vista will continue to maintain an effective pricing structure. This review was two-fold. The City's current rate structure and formulas were reviewed based on changes in industry standards from ChQla Vista's last rate study in 1991~. Additionally, the City wants to ensure their sewer pricing structure continues to achieve the goals and objectives of the community. 1 City of Chula Vista, Wastewater Rate Plan and Revenue Program, James M. Montgomery, May 1991. City of Chula Vista Wastewater User and PR~J Rate Restructuring Study Section 1 Executive Summary Upon the completion of the sewer pricing structure review and the long-range financial plan, we offer the following observations and recommendations. Observations: · The current user rate structure was implemented in 1991. Since that time the City has adjusted rates annually in an attempt to keep up with the cost of both their collection system maintenance costs as well as the City of San Diego's Metro costs for transportation, treatm6nt, and disposal of Chula Vista's wastewater. The current rate structure provides for a uniform flat rate for single family user and a flow based charge for multi-family, mobile homes, and nonresidential users. · Technically, the current rate structure is performing as anticipated. However, it has been requested that flow based rates should be addressed as part of this study. · Currently, the billing methodology varies among users in the City, based on their geo~aphic location. Those customers in Otay water District's jurisdiction are billed on a monthly basis for both water and sewer service on the same bill by Otay Water District. Those customers who live in the pre- annexation area of the City under Sweetwater Authority's jurisdiction are billed on a bi-monthly basis for sewer service by the City's Finance _~ Department. The other customers who reside in the Montgomery area who are either under Sweetwater Authority's jurisdiction or Cai-American's jurisdiction are billed on.an annual basis on the tax bill by the County of San Diego Assessors' Office. · There is a revenue shortfall of $5.5 million between the current sewer user rates and the fiscal year 2004 revenue requirement. · Changes in legal and industry standards for establishing sewer charges have occurred since May of 1991 when the last study was completed. o The City of San Diego, who provides wastewater treatment for the City of Chula Vista has commissioned two secondary wastewater treatment plants. These are the North City West and South Bay Water Reclamation Plants. o With the start-up of these facilities the City's commemial categories must be redefined. Sewage strengths must now be defined in both biochemical oxyggn demand (BOD)2 and suspended solids3. The City currently defines sewage strength to only include suspended solids. z Biochemical oxygen is defined as a pollutant of concern in wastewater treatment. Biodegradable organic materials are measured most commonly in terms of BOD. This determination inl~olves City of Chute Vista Wastewater User and ~"1~ Rate Restructuring Study 2 Section 1 Executive Summary Recommendations: · Modify Billing Structure - Chula Vista should adopt a revised billing formula for all user classes. The revised billing formula is composed of the following elements: o Fixed Annual Charge - An annual service charge to recover the fixed costs associated with the utility. The American Water Works Association (AWWA) standards suggest that fixed costs include costs directly associated with serving customers as well as the pure fixed costs of the utility. These fixed costs have to be paid whether or not usage materializes. This includes customer and support services costs, rents and leases, and the annual contribution to the Sewer Facility Replacement Fund. The addition of this component provides the City with more revenue stability. o Commodity Charge - A commodity charge that recovers costs that tend to vary with the quantity and strength of sewage, including treatment and energy costs. * Long Range Planning - Chula Vista should continue to use a long range planning approach to funding both operational and capital expenses. A copy of the City's projected five-year long-range plan is included in Appendix A. · Adopt A Four Year Financial Plan - Chula Vista should adopt the four-year rates for fiscal years 2004 to 2007 as shown in Table 1-1. This rate cgse provides the lowest cost to the City's _customers while meeting the City's wastewater treatment and local collection system maintenance and operations costs. In summary, we believe that the City adopted a practical structure for sewer charges in 1991. This study recommends basic structural refinements to conform to current industry standards and to provide for flow-based rates for all users. These structural adjustments, plus the adoption of the four-year financial plan, will provide for a continued program to be cached out to protect the citizens of the City of Chula Vista in an environmentally pro- active fashion. the measurement of the dissolved oxygen used by microorganisms in the biological oxidation of organic matter. ~ Suspended solids are defined as a pollutant of concern in wastewater treatment. Non-filoterable (suspended) solids can lead to the development of sludge deposits and anaerobic conditions when treated wastewater is discharged into the aquatic environment. .- City of Chula Vista Wastewater User and ~j~_t~ Rate Restructuring Study 3 Section 1 Executive Summary Table 1-1 City of Chula Vista Proposed Four-Year Rate Case Proposed Accounts FY04 FY05 FY06 FY07 Monthly Service Charges (S/Month) (1) 5/8" 39,541 $ 6.10 $ 7.20 $ 7.45 $ 7.71 3/4" 733 $ 6.10 $ 7.20 $ 7.45 $ 7.71 1" 459 $ 10.07 $ 11.91 $ 12.33 $ 12.76 1 1/2" 458 $ 20.00 $ 23.68 $ 24.51 $ 25.36 2" 13 $ 31.92 $ 37.80 $ 39.12 $ 40.49 4" 6 $ 59.73 $ 70.75 $ 73.22 $ 75.79 6" 8 $ 99.46 $ 117.82 $ 121.94 $ 126.21 8" 2 $ 198.79 $ 235.50 $ 243.74 $ 252.27 Total Users 41,218 Variable Commodity Rates (In Addition To Service Charge $/HCF) Residential: Single Family 37,687 $1.90 $1.99 $2.15 $2.34 Multi-Family 2,036 $1.90 $1,99 $2.15 $2.34 Mobile Homes I2 $1.90 $1.99 $2.15 $2.34 Commercial: Low 1,219 $1.90 $1.99 $2.15 $2.34 Medium 72 $2.29 $2.42 $2.63 $2.87 High 110 $3.78 $4.02 $4.40 $4.85 Golf Club House 3 $2.29 $2.42 $2.63 $2.87 Government 79_ $1.9,0 $1.99 $2.15 $2.34 Special User (2) 0 Varies Varies Varies Varies Total Users 41,218 (1) All single family users are considered to have a 5/8" water meter for service charge purposes. Multi-Family, mobile home and commercial users service charge is based on actual water meter size. (2) Special User rates are determined individual based on their sewage strengths 1.1 Background In 2002, the City of Chula Vista contracted with PBS&J to prepare a sewer user rate case to establish the rates for fiscal years 2004 to 2007. The purpose of this study is to: 1. Update the City's current sewer user rates to insure full cost recovery 2. Suggest any rate structure revisions required to meet the federal and state requirements as well as changes in industry standards since 1991. 3. Look at flow based alternatives for single family user rates. City of Chula Vista Wastewater User and Rate Restructuring Study Section 1 Executive Summary The City's current rate structure and rates were established in 1991 by a prior rate study. The study established user classes for residential, low-strength commercial (less than 200 milligram per liter suspended solids4), medium strength comrnemial (200 through 499 milligrams per liter suspended solids), high strength commercial (greater than 500 milligrams per liter suspended solids), and other categories, which include high volume users (wastewater discharge greater than 25,000 gallons per day) and septage, whose rates are determined individually. The sewage strength concentrations for these classes of users are taken from the State Water Resources Control Board (SWRCB) Revenue Program Guidelines. For large volume users that sample wastewater discharge, the sampling results are used in lieu of the SWRCB estimates. A copy of nonresidential users that fall in each of the three sewage strength categories is included in Section 2. The City's current user charge system is intended to distribute the cost of sewer service amongst their customers. Wastewater charges are currently applied to the City's residential customers on a per living unit basis. Table 1-2 reviews the current rates and rate structure. Table 1-2 City of Chula Vista Summary of Current Rate Structure and Ratess Single Family (S/Month per Living Unit) $22.37 Multi-Family ($/HCF) $2.24 Commercial/Industrial ($/H CF) (1) Low Strength $2.05 Medium Strength $2.52 High Strength $3.36 ~2) Commercial/Industrial rates are based on 90% monthly water through their water meter. The prior rate study has formed the basis of the City's current wastewater rate structure, since that time and most years, annual adjustments have occurred to cover increased operations, maintenance, and capital costs, especially those associated with sewage treatment provided by San Diego Metro. 4 Suspended solids are defined as a pollutant of concern in wastewater treatment. Non-filterable (suspended) solids can lead to the development of sludge deposits and anaerobic conditions when treated wastewater is discharged in the aquatic environment. s Include Stormdrain and Sewer Facilities replacement fees. City of Chula Vista Wastewater User and ~,~ Rate Restructuring Study 5 Section 1 Executive Summary Since the 1991 study was performed, several things have occurred (some of which were mentioned earlier) that have significant impacts on the City's user rates. One of these, the construction of two new secondary treatment facilities as part of the Metro system, necessitates the inclusion of BOD as a component of sewage strengths determination in non-residential rates. Also, to address the concerns of residents who wish to see the benefits of their water conservation efforts reflected in their sewer bill, the City wishes to explore revising their single family rate structures from an equivalent dwelling unit (EDU) to a flow based rate structure. The City currently assumes a flow of 265 gallons per day per single-family residence. All multi-family and commercial users currently have flow based rates, and it is assumed that 90 percent of their water consumption, as measured by their water meter, is discharged to the sewer system. Various methods of developing single family flow based rates are discussed in ensuing sections of this study. In addition, further refinements are discussed for the multi-family and commercial/industrial rate structures. City of Chula Vista Wastewater User and Rate Restructuring Study Section 2 Wastewater Rate Determination 2.1 Customer Characteristics The City of Chula Vista provides wastewater collection and treatment services to approximately 41,000 billing accounts. These accounts are further broken into residential and non-residential classes for the purpose of establishing wastewater user fees. The first step in recovering the costs of providing wastewater services to these customers is to identify them and the characteristics of their wastewater. The first step in the development of customer wastewater characteristics was to summarize their water consumption. Water Consumption of all classes of user's was reviewed and summarized for the study period. Table 2-1 summarizes the number of living units within the residential customer class and the number of accounts within the non-residential class, as well as the water consumption converted to sewage flow per user ~oup. The water consumption is shown on an annual basis for all user classes except for single family users where winter month water is utilized. Winter month water usage in single family rate determination is more fully discussed later in this Section. As Table 2-1 shows, single-family users represent 91 percent of the customers and generate 63 percent of the sewage flow, multi-family and mobile home users constitute 5 percent of the users and account for 16 percent of the sewage flow, and non-residential users represent 4 percent of the customers and generate 21 percent of the sewage flow. Table 2-1 City of Chula Vista Number of Living Units (Single & Multi-Family) and Accounts (Non- Residential) Versus Sewerage Flow Generated by Each Customer Class Num bet of Customers Sewage Flow Per Customer Class 4% 5% 21% 91% City of Chula Vista Wastewater User and Rate Restructuring Study Section 2 Wastewater Rate Determination The quality and quantity of effluent from different customer classes varies widely. This is an important fact, as wastewater system costs are dependent on both the quality and quantity of effluent from the customer classes. The quality and quantity parameters applicable to the C~ty's wastewater system include average wastewater flow, biochemical oxygen demand (BOD), and suspended solids (SS). The City provides only wastewater collection for their customers' sewage. Transportation, treatment, and disposal are provided by the City of San Diego's Metropolitan Wastewater Department (Metro). Published data is available on the typical quality of wastewater from different types of commercial and industrial establishments. Table 2-2 summarizes the discharge loading of residential and various common non-residential users normally found in a City. This data is from published sampling compilations from the City of San Jose, East Bay MUD, Monterey Regional Water Pollution Control Agency, Sacramento County Regional Sanitation District, and the County Sanitation Districts of Los Angeles County. The State Water Resources Control Board (SWRCB), the overseer of wastewater rates for all Environmental Protection Agency (EPA) grant and low interest loan funded agencies in the State, considers this data representative of most cities in California. All individual commercial discharge loadings used in this study are from this approved SWRCB data. Although the City does not have all of these types of users, the sewer user strength classifications are provided for reference in grouping the non-residential. Table 2-2 City of Chula Vista Compilation of Published Data on Sewer User Strength Classifications Proposed Strength (mg/I) Percent of Weighted Single User Classification Description BOD SS Average Family Strength Weighting Faotor 50% 50% Residential Single Family ! 200 200 200 100% Low I Strength: Soft Water Service 3 55 29 15% Office With Public Access 80 80 80 40% Car Wash 20 150 85 43% Veterinarian 130 80 105 53% Business Equipment Rental 130 80 10,5 53% Business Services -- Other 130 80 105 53% Office (Finance, Insurance, etc.) 130 80 105 53% Office (No Public Access) 130 80 105 53% Office (Medical Services) 130 80 105 53% Personal Services (Other) 130 80 105 53% Photo & Portrait Studies 130 80 105 53% Manufacturing - Textile Mill Products 115 115 115 58% Schools 130 100 115 58% City of Chula Vista Wastewater User and Rate Restructuring Study Section 2 Wastewater Rate Determination Table 2-2 City of Chula Vista Compilation of Published Data on Sewer User Strength Classifications Proposed Strength (mg/I) Percent of Weighted Single User Classification Description BOD SS Average Family Strength Weighting Factor 50% 50% Residential Single Family 200 200 200 100% Low II Strength: Laundromat-Public 150 110 130 65% Landscaping Services 150 150 150 75% Amusement & Recreation: indoor & Out 150 150 150 75% Auto Parking 150 150 150 75% Barber Shop 150 150 150 75% Beauty Shop 150 150 150 75% Chumh (No Kitchen) 150 150 150 75% Community Center (No Kitchen) 150 150 150 75% Grocery Market (No Butcher or Baker) 150 150 150 75% Health Spa 150 150 150 75% Kennel 150 150 150 75% Malls/Dept. Stores (No Food Svcs) 150 150 150 75% Manufacturing (Other) 150 150 150 75% Manufacturing (Apparel & Other Textiles) 150 150 150 75% Manufacturing (Furniture) 150 150 150 75% Membership Organizations 150 150 150 75% Museum/Art Gallery 150 150 150 75% Nursery/Greenhouse 150 150 150 75% Office (Construction) 150 150 150 75% Massage Parlor 150 150 150 75% Retail Apparel and Accessory Store 150 150 150 75% Retail Bldg. (Materials & Gardening) 150 150 150 75% Retail (Packaged) Food (No Sewer Disposal) 150 150 150 75% Retail Furniture & Home Furnishings 150 150 150 75% General Merchandise - Retail/Wholesale 150 150 150 75% Retail Trade - Misc. (Except Food/Drink) 150 1'50 150 75% Storage, Warehouse & Outdoor 150 150 150 75% Studio/Recording Sound Stage 150 150 150 75% Theater/Auditorium (No Food) 150 150 150 75% Low III (Residential) Strength: Convalescent Homes 250 100 175 88% Hospital 250 100 175 88% Other Health Services 250 100 175 88% Transp. & Utilities (SIC 400 through 489) 200 150 175 88% Agricultural Production 150 250 200 100% Agricultural Services - Other 250 150 200 100% Bar Without Restaurant 200 200 200 100% Restaurant -- Preprecessed Only 200 200 200 100% Social Services 200 200 200 100% Average Low Strength Per Low Class 200 200 200 100% City of Chula Vista Wastewater User and Rate Restructuring Study Section 2 Wastewater Rate Determination Table 2-2 City of Chula Vista Compilation of Published Data on Sewer User Strength Classifications Proposed Strength (mg/I) Percent of Weighted Single User Classification Description ROD SS Average Family Strength Weighting Factor 50% 50% Resideniial Single Family ~0 200 100% Medium I Strength: Hotel (No Restaurant) 310 120 215 108% Prison With Food Service 310 120 215 108% Auto Repair (No Steam Cleaning) 180 280 230 115% Auto Service Station (No Steam Cleaning) 180 280 230 115% Agricultural Services -~ Animal 350 150 250 125% Auto/Vehicle Sales 300 200 250 125% Repair Services -- Misc. 250 250 250 125% Manufacturing -- Rubber/Plastic Products 200 350 275 138% Medium II Strength: Manufacturing -- Electric/Electronic Equipment 300 350 325 163% Manufacturing - Instruments 300 350 325 163% Manufacturing -- Fabricated Metal Products 300 350 325 163% Manufacturing -- Transport Equipment 400 250 325 163% Laundromat, Commemial 450 240 345 173% Transportation -- Bus/Air Terminal 350 350 350 175% Medium III Strength: Mails/Shopping (Including Food Sales) 400 400 400 200% Manufacturing -- Machine Shops 290 550 420 210% Manufacturing -- Metal Industry 290 550 420 210% Manufacturing -- Lumber & Wood Products 431 431 431 216% Manufacturing -- Stone, Clay, Glass Products 200 700 450 225% Reproduction/Mailing Service 500 400 450 225% Hotel (With Restaurant) 500 600 550 275% Manufacturing -- Paper/Containers 700 500 600 300% Manufacturing -~ Printing & Publishing 700 500 600 300% Laundry (industrial) 670 680 675 338% Average Medium Strength Per User Class 400 400 400 200% City of Chula Vista Wastewater User and ~,~ Rate Restructuring Study 10 Section 2 Wastewater Rate Determination Table 2-2 City of Chula Vista Compilation of Published Data on Sewer User Strength Classifications Proposed Strength (mg/I) Percent of Weighted Single User Classification Description BCD SS Average Family High I Strength: Agricultural Production - Livestock 1,200 350 775 388% Mortuary 800 800 800 400% Grocery (W/Butcher or Baker) 800 800 800 400% Manufacturing -- Baked Foods 1,000 600 800 400% Restaurant/Bar (W/Food Preparation) 1.000 600 800 400% Manufacturing -- Beverages 1,500 300 900 450% Manufacturing -- Paint 1,300 1,100 1,200 600% Manufacturing -- Other Chemical Products 1,300 1,100 1.200 600% High II Strength: Manufacturing -- Dairy Products 2,369 922 1,646 823% Steam Cleaning -- Auto 1,150 2,150 1,650 825% Manufacturing -- Other Food Products 2,213 1,453 1.833 917% High III Strength: Septage 5,400 12,000 8,700 4350% Average Strength Per High Strength Class 1,000 600 800 400% To simplify administration, users are divided into classes based on the estimated strength of their wastewater for the purposes of this study. The City's users are classified into three classes of residential users (Single-Family, Multi-Family and Mobile Homes) and four classes of non-residential users (Low-Strength, Medium-Strength, High-Strength and Institutional). In the future, should the City have additional commercial or industrial customers that due to their unique characteristics and/or high volume usage do not fit within any of the established user categories, they should create a unique and separate user class for the customer. 2.2 Fiscal Year 2004 Wastewater Rate Revenue Requirement The costs of wastewater collection, treatment, and disposal, together with associated general and administration expenses, are the basis for wastewater rates. The City of City of Chula Vista Wastewater User and Rate Restructuring Study Section 2 Wastewater Rate Determination Chula Vista fiscal year 2004 total annual wastewater revenue requirement6 is established at $19.7 million as shown in Table 2-3. The wastewater rate revenues expected during fiscal year 2003 from the current wastewater rates is about $14.2 million. Therefore the revenue required from the fiscal year 2004 wastewater rates is $5.5 million lower than is required to meet the current operating and capital needs of the utility. In addition, the City collects the Storm Drain fee with the Sewer service fee as a matter of convenience. Table 2-3 City of Chula Vista Budget Summary and Cost Allocation for fiscal year 2004 Expenditures: Wastewater Engineering $403,034 $0 $0 $0 $403.034 $0 $0 $0 W astewater Operations Administ ration $109,038 $608 $7,236 $0 $101,194 $0 $0 $0 W astewater Maintenance $3,121,389 $3,608 $686 $0 $3.099,685 $0 $0 $17,410 Lift Station/Pool Maint. $495,493 $8,083 $69,392 $0 $376,719 $0 $0 $41,298 Sewer Service Expenditures $21,916.204 $6,983 $3,397,241 $0 $0 $0 $18,511,980 $0 Sewer Billing and Collection $115,342 $115,342 $0 $0 $0 $0 $0 $0 Sewer Service Risk Management $53,709 $0 $0 $0 $53,709 $0 $0 $0 Storm Drain Fund Revenue Transfer $513,719 $0 $0 $0 $0 $513,719 $0 $0 Sewer Facilities Replacement Fund Transfer $483.586 $0 $0 $0 $483,586 $0 $0 $0 Subtotal Ex~enditures $27,211,515 $134,625 $3,474,555 $0 $4,517,928 $513,719 $18,511,980 $58,708 Less Other Revenues ($7,504.177} ($66,950) ($236,900) $0 ($282,969) $0 ($6,917,358) $0 Revenue Requirement $19,707,338 $67,675 $3,237,655 $0 $4,234,959 $513,719 $11,594,622 $58,708 9% 0.3% 16.4% 21.5% 2.6% 58.8% 0.3% The annual revenue requirement is the amount of revenue that should be generated by wastewater rates in order to cover costs associated with operations arid maintenance (O&M) of the utility. This includes other financial needs such as capital replacement and debt service, with consideration of fund and reserve balances. The determination of the revenue requirement starts with the annual operations cost of the enterprise, including interfund transfers. To this planned capital expenditures are added, which, in this case, are represented by transfers to capital i'eserves. The revenues anticipated from other sources such as interest earnings and other service charges reduce this total expenditure requirement. The annual revenue requirement can be related to wastewater treatment parameters or functional cost categories. As a part of this rate study, a detailed cost-of-service analysis has been performed based upon the City's preliminary fiscal year 2004 budget. The costs associated with providing sewage collection and treatment to the City's customers has been further allocated to fixed, semi-variable, and variable components, which is fully discussed in the cost allocation steps. 6 The total annual revenue requirement is the amount of revenue required in one year to meet all capital and O&M expenditures incurred or obligated during the year. City of Chula Vista Wastewater User and ~IL~ Rate Restructuring Study 12 Section 2 Wastewater Rate Determination It is important to note that any change in the rate structure will affect the amounts paid by each customer. That is, with any type of rate structure change some customers will have a larger and some customers will have a smaller change in their wastewater bills. 2.3 Cost of Service Analysis The wastewater rates developed in this study are based on the cost of providing service. The wastewater rates discussed in this Section were first developed on a revenue neutral basis using the City's fiscal year 2003 wastewater enterprise fund budget and then updated to include the revenue requirement for fiscal year 2004. The cost of wastewater collection, treatment, and disposal, together with associated general and administration expenses are the basis for wastewater rates. The cost allocations are based on a full recovery cost-of-sei'vice philosophy. The cost allocation process is shown schematically ~n Figure 1, numerically in Table 2-3 and in greater detail in Appendix C. Figure 1 City of Chula Vista - Wastewater Utility Cost Allocation Flow Diagram % of Annual No. of Revenue Accounts Requirement 17% I Annual Revenue ~ Requirement Meters Estimated Sewage Flow 83% Estimated ~ Flow & Strenqths City of Chula Vista Wastewater User and ~ Rate Restructuring Study 13 Section 2 Wastewater Rate Determination 2.3.1 Step 1: identify Fixed and Variable Costs The total annual revenue requirements for wastewater collection, treatment, and disposal services include O&M expenses, capital costs, and other expenses, less other non- operating revenues. The distinction between fixed and variable costs depends on how these costs vary when an independent variable changes. For example, the system's flow is frequently considered to be the independent variable. However, it could just as easily be the vehicle miles driven to maintain the collection system, the hours of operation, or the quality of the sewage discharged by the City's users. If a cost is a function of the independent variable, the cost is said to be a variable cost. The change in cost per unit variable is known as the incremental cost. Cost of sewage treatment by Metro and utility costs such as electricity and gas are examples of variable costs. They increase in proportion to the volume and quality of the sewage discharged by the City's users. An additional category of cost is semi-variable cost. This type of cost increases by degrees. For example, materials, labor, and supervisory cost are stepwise functions of the number of operating shifts. If a cost is not a function of the independent variable, the cost is said to be a fixed cost. Rent, insurance, leases, property taxes, depreciation of assets, debt service, administrative overhead, and licenses are typical fixed costs. These costs will be incurred regardless of wastewater flow levels or quality. 2.3.2 Step 2: Define Components of a Service Charge And Fixed Versus Variable Costs The City currently only has a commodity charge for multi family dwellings and non- residential users. Most agencies are currently adding a service charge to recover at least a portion of their fixed costs. This provides for revenue stability and is viewed favorably by bond rating agencies. The wastewater service charge is established similar to a water sgrvice charge. Reviews with Staff have lead to the conclusion that the wastewater rate structure should incorporate a service charge component, and that it should reflect a percentage of the fixed capacity-related7 cost of providing service. The service charge is further defined to include the amount necessary to recover all customer-related costs. This is consistent with the fact that a material part of the operating and capital costs of a utility business is more directly and more closely related to the number of customers than to consumption or flow.8 The American Water Works Association (AWWA) defines a customer charge as those recovering metering, billing, 7 Capacity is defined, as the utility's ability to have resources available to meet the wastewater service needs of its customers. It represents the ability of the utility to meet the quantify, quality, peak loads, and other service needs of the various customer or classes of customers served by the utility. s Principles of Public Utility Rates, James C. Bonbriglat, Public Utilities Reports, Inc. 1988. City of Chula Vista Wastewater User and ~i~,~ Rate Restructuring Study 14 Section 2 Wastewater Rate Determination collection, administration, and accounting costs related to the customer. 9 Included are such expense accounts as office supplies, postage, and data processing. Also included in the service charge are those costs, which are incurred regardless of whether service is used (i.e. permit fees and debt service). Allocation of such fixed costs as depreciation to fund replacement reserve capital projects are appropriate (and defensible in purely economic terms), but may increase the service charge for low-usage customers. The remaining costs of operating the City's sewer collection and treatment systems were then allocated to the variable or commodity portion of the wastewater user rate. The establishment of a service charge is especially important for the City of Chula Vista in light of the proposed change to the single family user rate structure. Single family residents have historically provided approximately 63 percent of the revenue, which was all fixed revenue as they are currently billed on a flat rate system. Without the addition of a service charge for residential and non-residential users the City's revenue stream would convert to I00 pement variable which would make the City highly vulnerable to external factors such as drought, extreme wet weather, etc. A service charge would provide the City with $3.4 million in fixed revenue, which will cover 17 percent of their revenue requirement. In Southern California it is not unusual to have a service charge that recovers 30 percent or more of the annual revenue requirement. However this has a ~eater impact on the low end user. 2.3.3 Step 3: Define Wastewater System Parameters Once the revenue requirements of the City's wastewater utility have been allocated between fixed and variable, the next step in the cost allocation process is to allocate the City's wastewater facilities to the treatment parameters of flow, BOD, and TSS. All costs associated with the City's wastewater collection system are allocated 100 percent to flow. The treatment costs are allocated based upon Metro's functional-design based cost allocation. Costs associated with treatment are currently allocated 51.8 percent to flow, and 23.2 percent to BOD and 25 percent to SS to the City's users~°. The Metro functional-design based cost allocation is weighted very heavily to flow as a large portion of the Metro Facilities are water reclamation plants, pipelines, and pump stations. It should be noted that the City currently charges their customers based on flow and SS. This is due to the fact that when the City's last rate study was performed the only commissioned wastewater treatment plant in the Metro system was Point Loma, which is an advanced primary treatment plant. This is one of the major changes recommended by this study to keep the City in compliance with Federal and State regulations. Water Rates, American Water Works Assn., AWWA Manual MI, Fourth Edition, 1991. l0 Based on Table A for fiscal year 2003 from the Metro January 15,2002, budget estimates. City of Chula Vista Wastewater User and ~,~ Rate Restructuring Study 15 Section 2 Wastewater Rate Determination 2,3,4 Step 4: Residential and Non-residential Service Charge Determination Once revenue requirements and system parameters are determined, the costs are allocated to all residential and non-residential users of' the City. The service charge is comprised of fixed costs as discussed earlier. It is designed to recover the cost of customer service as well as a portion of other fixed costs. Customer and fixed costs incorporated into the service charge comprise 0.4 percent and 26.8 percent respectively of the City's fiscal year 2004 projected operating budget. Included in the fixed service charge are costs associated with customer and support services, as well as rents, leases, and the annual transfer to the sewer facility replacement fund. These costs are shown on Table 2-3. Calculation of the wastewater service charge is similar to a water service charge. First customer service costs are allocated on a per account basis. Then the capacity portion of the fixed costs included in the service charge is applied to all customer classes on a per meter basis. The service charge for all single family residents are assumed to be equivalent to a 5/8" meter as a larger water meter is normally only installed for exterior water usage or fire flow requirements. Therefore, the actual meter size is excluded from the single family wastewater fee calculation and is replaced by a 5/8" equivalent meter. For non-residential and multi-family users the fee is allocated based on the actual size of the installed water meter to create the "equivalent customer'']] portion of the service charge. This establishes the "fixed" or base portion of the wastewater fee. 2.3.5 Step 5: Residential and Non-Residential Flow and Class Determination To simplify the administration of the rate structure, all of the City's customers are grouped into customer classes and their wastewater characteristics were identified (this was discussed earlier in this Section).- These customer classes include single-family residential, multi-family residential, and various non-residential users. It should be noted that for purposes of this study the following categories are considered to not return water to the sewer and are therefore excluded in the rate structure modeling: fire/hydrant meter, construction, agriculture, and landscape. Water use characteristics (and conversely wastewater flows) are relatively homogeneous for single family and multi-family customers. However, single family customers exhibit greater seasonal variation in exterior water use. There are two basic methods to achieve the goal for single family use based rates; either a flat or variable commodity rate is added to the service charge discussed in Step 4, Both commodity rates utilize winter month water consumption. The winter months, primarily November through April, are considered to be the time of year when the majority of n This is the means of relating larger water meter size customers to a base customer, typically a single family unit or other small-use customer, such as a 5/8" water meter. It represents the composite of all elements of cost differences betwveen the base customer and the large-use customers to be served. It is expressed as a ratio of the base customer unit .... City of Chula Vista Wastewater User and ~..~ Rate Restructuring Study 16 Section 2 Wastewater Rate Determination water is used inside the home, for bathing, washing clothes, etc., and when far less water is used for outside irrigation~2. This means a higher percentage of water is returned to the sewerage system. Since sewerage system costs should be allocated to customers proportionate to their use, this is the fairest way to bill customers. Water use patterns vary greatly during the year and between users. Climate, lot size, amount of vegetation, number of occupants, plumbing type, and individual use patterns come into play. Since some of these relate to outdoor use, winter water use better reflects wastewater flow. The County of San Diego extensively studied the relationship of winter water use to wastewater flow. The conclusions and recommendations to this study state: "As part of this study, wastewater flows were metered at three manholes that contained flows from single family residences only. The flows were metered during the winter of 1993/94, and the period corresponded to when the water districts metered water use. Both the wastewater and water flows could then be compared. What is interesting is that the winter water use and wastewater flow varied directly among the sites. This su,~[ests that there is a direct correlation of flows to the sewer and metered winter water use. ,~3 The single family water consumption component was derived from usage in winter months. This study reviewed detailed water data of a per account basis for a period of 18 months. The eighteen-month period used for this study was between September 2000 and February 2002. Three ways were determined for establishing a winter month average for each customer: 1. Each customer's individual lowest ,reading during the study period. This lowest consecutive reading is then annualized and becomes the single family's discharge to the sewer. 2. The average of each customers txvo lowest consecutive reading's during the study period. This average is then annualized and becomes the single family's discharge to the sewer. 3. The single family's entire customer classes' lowest winter month during the study period. Once again this is then annualized and becomes the single family sewer classes sewage discharge. After review with staff, it was determined that the most equitable alternative to come up with single family winter month water usage is: to pick each customers two lowest months during the winter month period of November to April and then to convert them into an annual average for sewage flow generation. The single family winter water usage when annualized produces a flow of 5 million HCF or 10.2 MGD. On the other hand, multi-family and non-residential users are prone to fluctuations in interior water use due to seasonal variations and transient occupancy as opposed to ~2 Metcalf & Eddy, "Wastewater Engineering - Disposal & Reuse", Third Edition, 1992. ~3 John Carollo Engineers and The Keese Company: "Sewer Service Charges Study for the County of San Diego, May, 1994. City of Chula Vista Wastewater User and ~1~ Rate Restructuring Study 17 Section 2 Wastewater Rate Determination exterior fluctuations in irrigation. Therefore, the City's multi-family and mobile home wastewater flows were determined by establishing an annual use average based on the last eighteen months. About 60 to 85 percent of the per capita consumption of water becomes wastewater (the lower percentages are applicable to the semiarid region of the southwestern United States).~4 Based on the rate of return developed during the City' of Chula Vista's water usage study, a rate of return for multi-family during the study period was determined to be 79 percent and mobile homes 84 percent. This is a revision to the City's current multi-family and mobile home customer's rate structure. Historically the City has used 90 percent as their rate of return to the sewer. Incorporating these changes the multi-family wastewater flow is estimated to be 1.3 million HCF or 2.6 MGD. The mobile home wastewater flow is estimated to be 125,000 HCF or .25 MGD. The total residential wastewater flow is estimated to be 13 MGD during the study period. Non-domestic wastewater flow rates from non-residential sources vary with the type and size of the facility, the degree of water reuse, and on-site treatment methods, if any. For non-residential users without intemal recycling or reuse programs, it can be assumed that the majority of the water used in various operations and processes will become wastewater. The rate-of-return for the City's non-residential customers has historically been set at 90 percent. The City's non-residential wastewater flows were estimated using the same annual water consumption records as the single and multi-family users. This developed a rate-of-return of 89 percent, which validates the 1991 study's assumptions. Published data has determined that industries without internal recycling or reuse programs, it can be assumed that 85 percent to 95 percent or the water used in various operations and processes will become wastewater? This is based on the fact that most of the non-residential customers in a City either have separate landscape meters or minimal landscaping. After review of the data we determined that the correct rate of return for non-residential users is 90 percent based on their water usage characteristics as a class and the mass balance of the entire wastewater user system. The City's non-residential user category is further broken down into three classes of commercial, institutional, and special/industrial users. Annual water usage produced a non-residential user flow ot~ 1.9 million HCF or 3.6 MGD. This provides a total wastewater flow from all residential and non-residential users of 16.6 MGD based on water usage converted to sewage flow by using the discussed rates of return. ~4 Wastewater Engineering, Treatment, Disposal, and Reuse; Metcalf and Eddy, Inc., Third Edition, Page 25. ~s Wastewater Engineering, Treatment, Disposal, and Reuse; Metcalf and Eddy, Inc., Th/rd Edition, Page 27.  City of Chula Vista Wastewater User and Rate Restructuring Study 18 Section 2 Wastewater Rate Determination User Class Rate of Return Flow Generation (MGD) Residential Single-Family Winter Usage 10.2 Multi-Family 79% 2.6 Mobile Homes 84% 0.25 Non-Residential Commemial 90% 2.6 Total 16.65 The wastewater flows for the City were also determined by an analysis of the City's wastewater metering summaries. Using this data for residential and non-residential customers, the current residential and non-residential wastewater flows were estimated and compared to the water consumption data. The difference between the average of the metered flow discharged to the City's wastewater system and the water consumption data was less than 10 percent and was therefore considered non-material. The City's residential and commercial users have been classified into a two-dimensional matrix. The residential users have three wastewater flow-to-use categories and one BCD and SS concentration. The non-residential users have one wastewater-flow-to-water-use categories and three BCD and SS concentrations. The quantities and strengths delivered to the City's system by all categories of users were analyzed. The annual discharges of volume, BCD, and SS were documented for the customer classes in order to develop an equitable rate structure in which user charges were devised which was proportional to both the quantity and strength of the was_tewater discharged. The entire customer base and its respective discharges were then totaled. Figure 2 illustrates the proportional base of quantity and quality of sewage of each user class in relation to the total City wastewater discharged to the treatment plant. This shows that the single-family class is proportionally responsible for 60 percent, multi-family and mobile home customers 16 percent, and non-residential and special/industrial customers 24 percent of the quantity and quality of wastewater generated and therefore of the annual wastewater budget. As shown on the exhibit this is a change from the current distribution of revenue by customers classes. This is due to the inclusion of BCD in the user rates. High quality lower strength sewage costs, more to treat than residential sewage and therefore should be charged proportionately to the cost incurred. City of Chula Vista Wastewater User and ~h--llll~ Rate Restructuring Study 19 Section 2 Wastewater Rate Determination Figure 2 City of Chula Vista Current Versus Proposed Revenue Responsibility Based on Flow, BOD, and Suspended Solids Loading Current Recommended 4% 2% 3% 6% 12% 17% 9% 71% 2.3.6 Step 6: Final Wastewater Charge Determination The semi-variable, variable costs, and the remaining non-operating revenues are then allocated based on the parameters of 51.8 percent flow, 23.2 percent BOD, and 25 percent SS to the various user classes (residential, non-residential and special/industrial). This allocation was done in three basic steps to determine the commodity portion of the wastewater fee per user class: Step 1: The variable cost less variable revenues was allocated among the treaffnent parameters in proportion to the percentages of costs that the parameters represent. Step 2: The amounts determined in Step I were divided by the total annual volume of sewage produced by the users of the City's system. City of Chula Vista Wastewater User and  Rate Restructuring Study 20 Section 2 Wastewater Rate Determination Step 3: The unit costs~6 determined in Steps 1 and 2 were then multiplied by the volume of each user class, and an annual rate in proportion to the user's demand on the system was established. After these steps were taken it was determined that the requirements for each class of users based on the City's fiscal year 2004 budget is as shown in Figure 2. The revenue requirement by class reflects the funding of the additional revenue requirement for operational and capital costs as well as the inclusion for the first time of BOD in all users rates. 2.4 Alternative Wastewater Rate Structures Once the costs are allocated to each of the three user classes a final cost allocation step must be taken: a rate structure for each user class must be determined and a rate set by class. Rate structures may vary between customer classes depending on specific rate- setting objectives and practical considerations. In all cases, the cost allocation and rate design steps result in rates where costs are proportionately distributed among customer classes. The City's wastewater collection system and the Metro wastewater treatment plants are designed to serve differing demands placed upon it by its customers. To provide rate equity among users, it is necessary to allocate the costs of accommodating these demands to users in proportion to their wastewater discharge characteristics. One of the most important issues to be addressed in this wastewater rate study is to determine the most equitable cost allocation method. Wastewater rate structures can be furthe~ grouped into two generally accepted methods of cost recovery for wastewater agencies - an equivalent dwelling unit (EDU) or a flow based system, which takes into account wastewater strengths. These two methods are described briefly below along with their advantages and disadvantages. 2.4.1 Equivalent Dwelling Unit System In an equivalent dwelling unit (EDU) based system a single-family unit is considered to be one EDU. In the case of the City of Chula Vista one EDU is estimated to be 265 gallons per day (gpd) as shown below. Land use Average Daily Flow EDU Factor Single-Family 265 gpd 1 EDU ~6 A unit cost is defined as the cost of producing a unit of a product or service. An example is the cost of treating one HCF of wastewater discharged by the City's customers. City of Chula Vista Wastewater User and ~J~ Rate Restructuring Study 21 Section 2 Wastewater Rate Determination For other residential and non-residential users EDU's are computed by estimating the amount of flow generated and comparing that with the average residential flow. A commercial or industrial user's EDUs are calculated based on the building area established at the time that they take out a building permit. The City currently has a partial EDU based system of wastewater user charges for their residential users, while non-residential accounts are billed based on their annual water use and therefore fall into the "Flow Based System" described below. An EDU based system is only mom equitable than a flow based system when a wastewater agency does not have timely access to the water consumption data of its residents. This is not the case in Chula Vista. The advantages of an EDU system are: I. It is a relatively simple rate structure. EDUs are determined initially and then remain fixed. 2. The yearly wastewater fee is simple to calculate once a formula is determined. User charges remain stable from month to month maintaining a stable source of revenue for the City. The disadvantages of an EDU based system are: 1. It does not take into account changes in use ~)atterns among its users. 2. It is difficult to keep the information on the parameters required to determine the EDU's when they need to be updated. 3. Keeping track of growth or, in some cases, decline in existing activity is difficult. For example, in an EDU based system the user fee for a restaurant is normally determined on the number of seats assigned in their business license. If a restaurant expands and adds a few more seats, there is a good chance the City may not be apprised of the change and hence the EDUs for the user may not change. 4. It does not take into account variations between similar customers. For example, two restaurants with the same seating capacity would be charged the same monthly amount based on EDU's. However, if one restaurant was successful and generated much more wastewater than the other one it would still be charged the same based on an EDU system. 5. The inequity and inability to consider wastewater strengths appropriately. 2.4.2 Flow Based System with Appropriate Strengths A flow-based system, which takes into account industry standard wastewater strengths, provides a much more equitable system of charges than an EDU rate system. However, water usage for residential customers varies widely depending on usage of irrigation. The following is a discussion of several different methods of establishing wastewater rates based on metered water. These were reviewed in assessing the appropriateness of flow based rates for the City's wastewater customers and in meeting the City's rate objectives. City of Chula Vista Wastewater User and ~ Rate Restructuring Study 22 Section 2 Wastewater Rate Determination 2.4.3 Summary of Wastewater Commodity Rate Alternatives Once the cost per user class was developed, the var/able portion of the wastewater charge for users was established based on various alternatives. In the residential user classes both a variable and flat commodity rate structure combined with the service charge were explored. In the non-residential class only a variable commodity rate structure, adjusted for sewage strengths, combined with the service charge was considered. 2.4.3.1 Single Family Rate Determination Two of the overall objectives in this rate study were that rates should be fair. and equitable as well as sensitive to the cost of service for basic needs. The consultants reviewed several alternatives for single family rate structures with the City staff. Primary alternatives are discussed below. Other alternatives that were considered in lesser detail by the consultant are not presented herein. Alternative 1 - Uniform Flat Rate This rate is similar to the City's current quasi-EDU system, but is established based upon proportionate water usage of the single family user class rather than assumed gallonage. This method translates into a flat rate wastewater user charge of $27.98. The City's current flat rate is $22.37. The advantages of a uniform flat rate structure are: 1. All users pay an average rate and there is never a debate over water usage during the winter months. 2. It provides maximum revenue stability for the City and is easy to administer. 3. It can also be accommodated by the City's current utility billing system. The disadvantages of a uniform rate structure are: 1. A uniform flat rate does not take into account actual use patterns of the City's single-family residential customers and it does not protect base use affordability. Base use affordability is defined as providing sewer service to lower than average water use customers. · Alternative 2- Service Charge With Variable Commodity Rates As an alternative to one fiat rate based upon winter water usage, the consultant explored a service charge and variable commodity rate structure for single family users based upon metered winter water usage. This is similar to the rate structure proposed for multi-family and non-residential users later in this Section. The single-family customer would pay a monthly service charge plus a variable commodity charge of $1.90 per HCF. The commodity charge could either be City of Ghula Vista Wastewater User and ~ Rate Restructuring Study 23 Section 2 Wastewater Rate Determination subject to a cap based on each customer's individual winter month minimum water usage or an annual rate-of-return equal to the difference between low winter and high summer water usage. A minimum charge per billing cycle would be established equal to the service charge plus one HCF of commodity charge. This type of rate structure is the most popular form of billing multi-family and non-residential customers as those classes of users tend to have either limited exterior landscaping or a separate irrigation meter, and therefore minimal exterior water is captured in the wastewater commodity charge. And over the past ten years, this type of rate structure, in one of five basic forms has exceeded the flat rate structure in popularity. In studies prepared by the SWRCB 63 percent of wastewater agencies utilized some form of variable rate structure while 37 percent retained either and EDU or flow based flat rate structure. The advantages of some form of a variable rate structure include: 1. A major sense of equity between single-family users of the City's wastewater system. 2. It provides for more individualized wastewater rate determination and gives both the customer and the City ultimate flexibility. However a variable rate structure is not with out its disadvantages: 1. The first and most major is the rate of return determination: whether it is based on winter water usage, what form that winter water usage takes, and how the customer perceives their account has been adjusted to exclude outside irrigation. The fact that the customers are normally undercharged in the winter does not negate the situarion in their eyes. 2. This method of billing can also cause extreme revenue volatility, as the service charge does not recover all fixed costs. 3. This is the most administratively complex of the two form of rate structures and could require additional staff time. It could also require additional computer programming therefore, the City and Otay Water District will need to reprogram their billing systems to handle individual caps and annual rates-of-return. Figure 3 summarizes the pros and cons of each of the rate structures reviewed during the course of this study. City of Chula Vista Wastewater User and ~,..~ Rate Restructuring Study 24 Section 2 Wastewater Rate Determination 2.4.3.1(a) Preferred Single Family Wastewater Rate Structure review of altematives available to create consumption based rate structure for single multiple rate structures were reviewed with City staff. In addition, Table 2-4 illustrates the impact on single-family users of either a service charge with a variable commodity charge or a service charge with individual flat rates. The only difference between the two is that the service charge with variable commodity charge is allowed to change based on the actual water usage each billifig cycle up to the cap while individual rates are set once a year and remain constant during the entire fiscal year. Both rate structures are subject to a 15 HCF cap. That cap represents the 90th pementile of users, is the level, established by the State Water Resources Control Board of the State of California. It is recommended that the City adopt an "individual flat rate" structure for single-family users. This will allow single-family customers to plan for their sewer user billing. The rate is set once a year in July based on the two lowest consecutive usage readings (.monthly billing) or the lowest reading (bi-monthly). The billing formula for an individual flat rate structure is as follows: Table 2-4 City of Chula Vista Anticipated Single Family Monthly Rate Comparison Service Charge Commodity HCF Per % of Per Charge Per Month # of Users Users Month HCF Combined Current Difference $6.10 ;1.90 0 0 0% $6.10 ;0.00 $6.10 $22.37 ($16.27) 1 2,148 6% $6.10 ~ ;1.90 $7.99 $22.37 ($14.38) 2 2,145 6% $6.10 ;3.79 $9.89 $22.37 ($12.48) 3 2,340 6% $6.10 ;5.69 $11.76 $22.37 ($10.59) 4 2,694 7% $6.10 ;7.58 $13.68 $22.37 ($8.69) 5 2,913 8% $6.10 ' ;9.48 $15.58 $22.37 ($6.79) 7 2,839 8% $6.10 $13.27 $19.37 $22.37 {$3.00) 9 2,304 6% $6.10 $17.06 ;23.16 $22.37 $0.79 1,0 2,076 6% $6.10 $18.96 ;25.06 $22.37 $2.69 11 1,682 4% $6.10 $20.86 ;26.95 $22.37 $4.58 12 1,471 4% $6.10 $22.75 ;28.85 $22.37 $6.48 13 1,251 3% $6.10 $24.65 ;30.74 $22.37 $8.37 14 1,135 3% $6.10 $26.54 ;32.64 $22.37 $10.27 15 947 3% $6.10 $28.44 ;34.54 $22.37 $12.17 16+ 6,220 17% $6.10 $28.44 ;34.54 $22.37 $12.17 37,687 Average Winter Water U~ 100% 6.5 HCF Per account Median Winter Water Use: 8 HCF Per account City of Chula Vista Wastewater User and ~"~¥.'1~ Rate Restructuring Study 26 Section 2 Wastewater Rate Determination Single Family Billing Formula Determine lowest Determine lowest Total two consecutive billing cycle Annual Divide By Billable HCF Fixed Monthly months between or between Nov.- X 6 = HCF to 12 --= monthly × Rate + Service = Sewer Nov. - April (Otay April (Sweetwater Cap HCF Charge Charge Accounts Accounts 2.4.3.2 Multi-family Rate Determination The consultant reviewed additional refinements to the multi-family and mobile home customer rate structures with City staff. Currently the multi-farrfily and mobile home customer classes are charged a flow-based rate with a minimum of $22.37/Account and maximum of $22.37/Unit per month. It is recommended that a service charge should be added to a variable commodity rate structure that is similar to the way non-residential customers are billed. The revised rate structure would consist of a service charge based on the actual water meter size to recover customer service and fixed costs, and a variable commodity rote, which incorporates a rate of return to the sewer. A rate of tatum should be incorporated in the rate structure, as 100 percent of the water that flows through the water meter does not tatum to the sewer. The water usage study shows a rate of return of 79 pement multi- family and 84 pement for mobile homes. The service charges for fiscal year 2004 are shown on Table 2-5 for each meter size. The charge for residential strength sewage for fiscal year 2004 is $1.90 per HCF. The billing formula for multi-family and mobile home users would be as follows: City of Chula Vista Wastewater User and ~111~ Rate Restructuring Study 27 Section 2 Wastewater Rate Determination 2.4.3.3 Non-Residential Rate Determination As with the multi-family and mobile home user rates, we are recommending that the commercial and industrial user rates incorporate a service charge and a rate of return. This would establish a service charge based upon the actual water meter size to recover fixed costs and then add to it a variable commodity rate based not only upon the quantity but also the quality of sewage generated and discharged to the City's sewer system. As discussed earlier non-residential users have been classified into one wastewater-flow-to- water-use category and three BOD and SS concentrations. The water usage study shows a rate of return of 90 percent for commercial users. This produces variable commodity rates for fiscal year as shown in Table 2-5. The fiscal year 2004 service charges are the same as those applied to the single and multi-family users and are also shown on Table 2- 5. The billing formula for non-residential users would be as follows: Commercial Billing Formula Total HCF Rate Fixed Monthly Meter for X ROR X + Service = Sewer Readings Strength Charge Charge (Monthly) Class For special or industrial users the following billing formula is used to compute their rates in fiscal year 2004. Industrial Billing Formula Flow BOD SS Total A Annual Annual Annual Capacity Capacity Capacity Commodity $1,692.41 X in MG + $0.244025 X in Pounds + $0.260987 X in Pounds = Costs Once the annual commodity cost are known they can be converted to a per HCF charge by dividing the annual commodity costs by the anticipated HCF for that user adjusted for a rate of return. City of Chula Vista Wastewater User and ~_~ Rate Restructuring Study 29 Section 3 Recommendations 3.0 Summary of Recommendations In summary the following recommendations are made regarding the City's rates and rate structures: 1. The City should modify its current rate structure to bring it to industry and federal standards. Calculation of all components of the rate structure for fiscal year 2004 is included in Appendix B. a. The single family rate structure should be modified to include a base monthly service charge as well as a commodity rate established based on each customers two consecutive lowest month winter water usage. In the industry this is termed an "Individual Flat Rate". The billing formula for single family would be as follows: Single Family Billing Formula Determine lowest Determine lowest Total two consecutive billing cycle Billable Fixed Monthly months between or between Nov.- X 6 = Annual Divide By HCF monthly X + Service = Sewer HCF to 12 = Rate Nov. - Aprit (Otay April (Sweetwater Cap HCF Charge Charge Accounts Accounts b. The multi-family rate structure should be modified to include a monthly service charge based on the size of their actual water meter, plus a commodity charge based upon a 79 percent rate of return to the sewer for multi-family and 84 percent for mobile homes. The billing formula for multi-farmly and mobile home users would be as follows: City of Chula Vista Wastewater User and ~[1',.~ Rate Restructuring Study 30 Section 3 Recommendations Multi Family Billing Formula Total HCF Rate Fixed Monthly Meter X ROR X for Res. + Service = Sewer Readings (Monthly) Sewage Charge Charge c. The non-residential rate structure should be modified to include a monthly service charge in addition to a commodity charge, which incorporates BUD as well as suspended solids in determining sewage strengths. The City should continue to group their non-residential users into three sewage strength categories: low, medium, and high. The billing formula for non- residential users would be as follows: Commercial Billing Formula Total HCF Rate Fixed Monthly Meter for Readings X ROR X ~trength + Service = Sewer (Monthly) Class Charge Charge Industrial Billing Formula Flow BUD SS Total A Annual Annual Annual Capacity Capacity Capacity Commodity $1,692.41 X in MG + $0.244025 X in Pounds + $0.260987 X in Pounds = Costs 2. The City should adopt the sewer user monthly rates for the next four years as shown in Table 2-6. Included in Appendix A is a five-year projection of sources and uses of the City's operations and capital funds that assumes the user rates City of Chula Vista Wastewater User and ~.~ Rate Restructuring Study 31 Section 3 Recommendations shown in Table 3-1 will be adopted to fund an annual increase of 9 percent per year revenue requirement. Table 3-1 City of Chula Vista Proposed Four-?ear Rate Case Proposed Accounts F¥04 FY05 FY06 FY07 Monthly Service Charges (S/Month) (1) 5/8" 39,541 $ 6.10 $ 7.20 $ 7~45 $ 7.71 3/4" 733 $ 6.10 $ 7.20 $ 7.45 $ 7.71 1" 459 $ 10.07 $ 11.91 $ 12.33 $ 12.76 1 1/2" 458 $ 20.00 $ 23.68 $ 24.51 $ 25.36 2" 13 $ 31,92 $ 37.80 $ 39.12 $ 40.49 4" 6 $ 59,73 $ 70.75 $ 73.22 $ 75.79 6" 6 $ 99.46 $ 117.82 $ 121.94 $ 126.21 8" 2 $ 198.79 $ 235.50 $ 243.74 $ 252.27 Total Users 41,218 Variable Commodity Rates (In Addition To Service Charge $/HCF) Residential: Single Family 37,687 $1.90 $1.99 $2.15 $2.34 Multi-Family 2,036 $1.90 $1.99 $2.15 $2.34 Mobile Homes 12 $1.90 $1.99 $2.15 $2.34 Commercial: Low 1,219 $1.90 $1.99 $2.15 $2.34 Medium 72 $2.29 $2.42 $2.63 $2.87 High 110 $3.78 $4.02 $4.40 $4.85 Golf Club House 3 $2.29 $2.42 $2.63 $2.87 Government 79 $1.90 $1.99 $2.15 $2.34 Speciai User (2) 0 Varies Varies Varies Varies Total Users 41,218 (1) All single family users are considered to have a 5/8" water meter for service charge purposes. Multi-Family, mobile home and commercial users service charge is based on actual water meter size. (2) Sl~ecial User rates are determined individual based on their sewage strengths City of Chula Vista Wastewater User and ~,,~1~,.i~ Rate Restructuring Study 32 Appendix A City of Chula Vista Projected Five-Year Long Range Plan City of Chula Vista Wastewater User and Rate Restructuring Study City of Chula Vista - Wastewater Utility Multi-Year Financial Plan FY03 FY04 FYg5 FY06 FY07 FY08 Revenue Requirement Adjustment --> P% 9% 9% 9% 9% 9% Sewer Service Fund BeginninJT-of-YearBatsnce $ 5.906.556 $ 2,213,543 $ 2.191.368 $ 2,305,582 $ 2,495,582 $ 2.508,582 Revenues SewerRates $ 14,226.294 $ 19.707.338 $ 21.634.448 $ 23,683.923 $ 26.079.270 $ 28.502.171 Rate Slabilization Sale of Property $ $ $ $ $ $ Interest and Rents $ 338.221 $ 231,469 $ 238,413 $ 245.565 $ 252,932 $ 260.520 ]ndustdalWastePerrnits $ 9.009 $ 4.675 $ 4.815 $ 4.960 $ 5.108 $ 5.262 Indus~al Waste Compliance Costs $ 2.000 $ 2.060 $ 2.122 $ 2.185 $ 2,251 $ 2,319 Pump Station Maintenance $ 80.000 $ $ $ $ $ Reimb- CIP Projects $ 230,000 $ 236,900 $ 244,007 $ 251.327 $ 256.867 $ 266.633 DistdctAssessrnents $ 1.000 $ 51.500 $ 53.045 $ 54.636 $ 56,275 $ 57,964 Service Charge NR $ 65.000 $ 66.950 $ 68.959 $ 71,027 $ 73.158 $ 75.353 WastewatsrEngineering $ 97.900 $ 107,052 $ 110,264 $ 113.571 $ 116.979 $ 120.488 Past Due A/R General $ 143,000 $ 203,571 $ 209,678 $ 215.968 $ 222.448 $ 229.121 Other Revenues $ 131.198 $ $ $ 100.000 $ 103,000 $ 106.090 Transfer from Trunk Sewer Fund $ 4.605.000 $ 6,600.000 $ 5,900.000 $ 5.500,000 $ 4.000,000 $ 2.500.000 TotalRevenues $ 19.928.613 $ 27,211.515 $ 28.465.750 $ 30.243.165 $ 31.170.288 $ 32.125.920 Expenditures 29410- Supplies, Services. Capital $ 418,753 $ 283.449 $ 154.898 $ 159.545 $ 164.331 $ 169.261 29410-Support Services $ 6.709.023 $ 7.362.471 $ 7.951.469 $ 8.326.812 $ 8.596.445 $ 8.874.861 29410 - San Diego Metro $ 15,284,281 $ 18,421.413 $ 19,043.822 $ 20.419.420 $ 21,032.003 $ 21.662.963 29420-SswerBillingandCollectJon $ 111.983 $ 115.342 $ 118.803 $ 122.367 $ 126.038 $ 129,819 29430 - Sewer Service Risk Management $ 62.825 $ 53.709 $ 55,320 $ 56.980 $ 58.689 $ 60.450 Sewer Facilities Replacement Fund Revenue Tr, $ 469,501 $ 483,586 $ 498.094 $ 513.036 $ 528.428 $ 544.280 StorTn Drain Fund- Revenue Transfer $ 565~260 $ 513.719 $ 529.131 $ 545.004 $ 561.355 $ 578.195 TotslExpenditures $ 23,621,626 $ 27,233.690 $ 28.351.536 $ 30,143.165 $ 31.067.288 $ 32,019.830 Ending Balance $ 2,213~543 $ 2.191.368 $ 2,305.582 $ 2,405.582 $ 2.508,562 $ 2,614,672 AnnualSurplusl(Deficil) $ (3,693.013) $ (2~.175) $ 114.214 $ 100,~00 $ 103.000 $ 106.090 Opera,rig Fund/Reserve Benchmarks and Balances Operating Reserve (12.5%) $ 2.802.000 $ 3.258,000 $ 3.394,000 $ 3.813.000 $ 3.724.090 $ 3.838.000 Uncommitted Fund Balance* $ 813,543 $ 427.968 $ 504.112 $ 488.639 $ 590.042 $ 697.704 *includes fund balance from Sewer Income Fund City of Chula Vista - Wastewater Utility Multi-Year Financial Plan ' TRUNK SEWER C,~pITAE RESERVE City of Chula Vista - Wastewater Utility Multi-Year Financial Plan Income ^-3 Appendix B City of Chula Vista Rate Structure for Fiscal Year 2004 City of Chula Vista Wastewater User and Rate Restructuring Study City of Chula ~'~sta Summary of SeweF Service Customer~ Potential Rate impacts Based on Fixeol Cost Allocation Step 2A - Service Charge Calcuta~ion -" IIIII Multi-Family (MF09) 125 Mobile Homes (MH06) 12 SWA & Mont. Business (CL03) 984 Business (CM03) 48 Business (CH03) 83 gray Multi-Family 527 Industrial (IM04) 4 Industdal (IH04) 0 Government (GL05) 7g gray Business Low 23t gray Business Medium 24 gray Business High 27 Golf Courses (GM07) 3 Go~f Courses (GH07} ~ 0 Res. w/Fire Protection (RF17) '[ 5 Multi w/Fire Protection (MFt9) Total 0 39.541 733 459 458 13 6 6 2 41,218 Scaling Factor-> Hydraulic Cap, Factor 1.00 1.00 f.67 3,33 5,33 10,00 16,67 33,33 53,33 *includes Master. Metered Single Family & Manufactured homes **Otay meter size is 3/4" versus Sw~et~atar 5/8" meter size Number of E~uivalent (Hydraulic) Meters SWA &Mont. Residential 0 15,666 0 0 0 0 0 0 0 15,666 gray Residential 0 22,015 0 0 0 0 0 0 0 22,015 SWA & Mont. Multi-Family (MF08) 0 821 522 463 592 0 0 0 0 2,398 Multi-Family (MF09) 0 90 50 13 5 0 0 0 0 159 Mobile Homes (MH06) 0 0 7 27 0 0 0 0 0 33 SWA & Mont. Business (CL03) 0 711 198 290 357 0 0 g 0 1,557 Business (CM03) 0 22 12 30 53 0 0 0 0 117 Business (CH03) 0 42 20 43 85 0 0 0 0 191 gray Multi-Family 0 110 282 400 576 80 100 133 107 1,788 Industrial (IM04) 0 1 0 0 16 0 0 0 0 17 industrial (IH04) 0 0 0 0 0 0 0 0 0 0 Government (GL05) 0 8 17 43 256 0 0 0 0 324 Otay Business Low 0 45 92 147 427 50 0 67 0 827 Otay Business Medium 0 3 13 30 2t 0 0 0 0 68 Otay Business High 0 2 8 37 48 0 0 0 0 95 Golf Courses (GM07) 0 0 2 3 5 0 0 0 0 10 Golf Courses (GH07) 0 0 0 0 0 0 0 0 0 0 Res. w/Fire Protection (RF17) 0 5 0 0 0 0 0 0 0 5 Multi w/Fire Protection (MF19) 0 0 0 3 0 0 0 0 0 3 Total 0 39,541 1,222 1,530 2,443 130 100 200 107 45,272 45,272 B-4 Determination of Impact on Monthly Service Charge Customer/Meter Data Number of Customers 0 39.541 733 459 458 13 6 6 2 41,218 No. Of Equivalent Meters 9 39,541 1,222 1,530 2,443 130 100 200 107 45.272 Hydraulic Cap. Factor 1.00 1.00 1.67 3.33 5.33 10,00 16.67 33.33 53.33 Service Charge: Customer Costs $0.14 $0.14 $0.14 $0.14 $0.14 $0.14 $0.14 $0.14 $0.14 Capacity Costs $5.96 $5.96 $9.93 $19.87 $31.78 $59.60 $99.33 $198.65 $317.85 Total Monthly $6.10 $6.10 $10.07 $20.00 $31.92 $59.73 $99.46 $198.79 $317.98 Total Bi-Monthly $12.19 $12.19 $20.14 $40.00 $63.84 $119.47 $198.93 $397.58 $635.97 Customer Equiv. Factor 1.00 1.00 1.65 3.28 5.24 9.80 16.32 32.61 52.16 Summarv of Fixed Costs Customer Costs $67,675 Capacity Costs $3.237,655 $3.305,330 Number of E~lulvalent Customers SWA & Mont. Residential 0 15,666 0 0 0 0 0 0 0 15,666 Otay Residential 0 22,015 0 0 0 0 0 0 0 22.015 SWA &Mont. Multi-Family (MF08) 0 821 517 456 581 0 0 0 0 2,375 Multi-Family (MF09) 0 g0 50 13 5 0 0 0 0 15~ Mobile Homes (MH06) 0 0 7 26 0 0 0 0 0 33 SWA & Mont. Business (CL03) 0 711 197 285 351 0 0 0 0 1,544 Business (CM03) 0 22 12 30 52 0 0 0 0 115 Business (CH03) 0 42 20 43 84 0 0 0 0 188 Otay Multi-Farnily 0 1t0 279 394 565 78 98 130 104 1,759 Industrial (IM04) 0 1 0 0 16 0 0 0 0 17 Industrial (IH04) 0 0 0 - 0 0 0 0 0 0 0 Government (GL05) 0 8 17 43 251 0 0 0 0 319 Otay Business Low 0 45 91 144 419 49 0 65 0 813 Otay Business Medium 0 3 13 30 21 0 0 0 0 67 Otay Business High 0 2 8 36 47 0 0 0 0 93 Golf Coumes (GM07) 0 0 2 3 5 0 0 0 0 10 Gdf Courses (GH07) 0 0 0 0 0 0 0 0 0 0 Res. w/Fire Protection (RF17) 0 5 0 0 0 0 0 ~ 0 5 Multi w/Fire Protection (MF19) 0 0 0 3 0 0 0 0 0 3 0 39,541 1,211 1,506 2.398 127 98 195 104 45,181 45.181 B-4 Appendix C City of Chula Vista Budget Summary and Cost Allocation City of Chula Vista Wastewater User and Rate Restructuring Study · · ;;¡ .~ ;; · ~ ~ " e ;;¡ .:! .~ ¡¡; ~ ë " · ;;¡ ~ .~ · · c ,: ~ ~ . ë " v " · c ~ .2 . · <: ê ~ · . 0 , ~ 0 ¡¡; ;¡ u " v ~ · õ u i = ,:; · · '- ." · - u ~ ~ ~ ~ 0 b u õ ~ ~ 0 :; ~ 0 "- >- ~ ~ ~ "- ¡; ~ ~ ~ ë ë 0 ~ " ~ " 0 ~ >- ~ ~ ~ 0 "' .. 0 , , ~ .. ¡; " ~ ~ ~ 0 >- ~ ~ ~.... ~~~ ............ ~ ¡;; ~. ~ ~~~ v¡..",1/> V><F;<F>I;£, ~ g v"ffi<FIb .J5 ~ . 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'" 5' ~ ~ o ~ ¡if 8* <X{"<. 00 N _ ~- -'" õ: ~ Ñ K '" '" ~ ;::., & ã ~ c;.¡ U'ü ~ c;.¡ .. .~ it ª~ù ~ ~.E ~o :g~~ ¿¡¡ c;.¡ c E ?: ~ rc '"' '" ~'JJ(/) "' u o ~ o ~ ¡g ~ 1::lG\ ~.~ ~ ~{IJ (1J . W N ~ . . . ~ ~ ~ ~ = ~ = -. ~ \Ij ~ \Ij ~ = = ~ -: = -: _. ~ c- o ~ = ~ \Ij = ~ ~ ~ \Ij S ~ ~ ~ ~ 0 ~ ~ _. \Ij ~ ~ ~ = = \Ij = ~-1 ~ ~ ' I '11- ~ -: ~ Q.. = ~ = ~ Q. < _. ~ ~ ~ ~ ~ ~ = ~ c- ~ = ...... ~ ~ CITY COUNCIL AGENDA STATEMENT ITEM NO.: ~ MEETING DATE: 06/03/03 ITEM TITLE: RESOLUTION APPROVING THE COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) AGREEMENTS FOR FISCAL YEAR 2003-04 BETWEEN THE CiTY OF CHULA VISTA AND VARIOUS COMMUNITY GROUPS AND AUTHORIZING THE MAYOR TO EX~CUTE SAID AGREEMENTS 0 (~J SUBMITTED BY: COMMUNITY DEVELOPMENT,,~, DIRECTOR ~ REVIEWED BY: CITY MANAGER~F ~/ BACKGROUND On Ma), 6, 2003, the City Council opproved CDBG funds in the omount of $3S7,450 for twelve pu~01ic service programs; $234,960 for three community project programs; $157,234 for five economic development programs; $129,000 for two non-profit copital improvement proiects; planning/coordination activities. The U.S. Depar~ent of Housing and Urban Development (HUD) requires a wriften agreement between the City and each sub-recipient receMng CDBG and HOMF funds. Incorporated within the public services category were discretionary funds in the amount of $6,800 to be used by Council to fund additional programs or award a higher level of funding. These funds were allocated within the Public Services category, as follows: $6,000 to South Bay Senior Collaborative. and $800 to Thursdays Meal. Other changes to staff's funding recommendation, again within the Public Services category, included reducing the INFORM Chula Vista Collaborative from a funding recommendation of $17,300 to $9,325. The $7,975 in funds were then allocated to the Family Violence Collaborative in the amount of $6,975 and to the Veterans Home Support Foundation in the amount of $1,000. This item requests approval of the FY 2003~04 CDBG agreements implementing previous Council direction. RECOMMENDATION That the City Council adopt the resolution approving the Community Development Block Grant (CDBG) agreements for fiscal year 2003-04 between the City of Chula Vista and various community groups and authorizing the Mayor to execute said agreements. PAGE 2, ITEM NO.: -I MEETING DATE: 06/04/02 BOARDS/COMMISSIONS RECOMMENDATION Not applicable. DISCUSSION The agreements between the City and the sub-grantees cover the period from July 1, 2003 to June 30, 2004. Each agreement has several exhibits attached which are incorporated into the agreements. A sample Agreement and the exhibits are attached as follows: Exhibit A The Statement of Work and Performance Schedule describes the services the agency will be providing and the estimated number of people who will be provided each of these services each month. The performance schedule will be used to monitor each agency's progress in completing the scope of work. Exhibit B The Itemized Budget shows exadly how the agency intends to expend the CDBG funds. This itemized budget will be used to monitor expenditures through the year. Exhibit C The HUD Income Limits for the San D/ego Standard Metropolitan Statistical Area will be used to determine the number of Iow-income households/persons served. Each program is required to serve a minimum of 51 percent Iow-income households/persons. The agreements are with the following organizations for the purpose and amount stated: PUBLIC SERVICES Sharp HealthCare Foundation 20,000 LSS Communit~ & ~m~ily Emerg~ency Assistance 9,000 6,800 ~hula Vista Literacy Team ~ 9,000 INFORM Chula Vista 9,325 Veterans Home Support Foundation 3,500 TOTAL $357,450 PAGE 3, ITEM NO.: ~ MEETING DATE: 06/04/02 COMMUNITY PROJECTS Community', Preservation Pro~ram 150,460 TOTAL $234,960 ECONOMIC DEVELOPMENT SBCS - Teen Center 22,650 Economic Development Consultant 22,100 Southwestern College - Contrading OpporJunities Center , 10,751 TOTAL $157,234 NON-PROFIT CAPITAL IMPROVEMENT PROGRAM CJ~ula Vista American Liflle League 60,000 TOTAL $129,000 CITY CAPITAL IMPROVEMENT PROGRAM Emerson Strut Drainage 173,500 ADA Curl~ Cu~s Annual Pr 60,000 Judson Basin 150,000 TOTAL $1,094,315 ADMINISTRATION AND PLANNING Regional Task Force on tJ~e Homeless ~ 1,000 Fair Housing Council of San Diego 39,000 CDBG Operating 33,200 TOTAL $424,340 PAGE 4, ITEM NO.: '~ MEETING DATE: 06/04/02 FISCAL IMPACT These contracts, totaling $2,397,299, will be funded out of the City's 2003-04 CDBG entitlement of $2,383,000 and reallocated CDBG funds in the amount of $14,299. In the remote event that HUD should withdraw the City's CDBG funding, the agreements provide that the City is not obligated to compensate the sub-grantees for program expenditures. ATTACHMENTS A~tachment A: Sample CDBG Agreement with Exhibits C:~JUDY~Agendas\2003-04 CDBG Agreements.doc COUNCIL RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) AGREEMENTS FOR FISCAL YEAR 2003-04 BETWEEN THE CITY OF CHULA VISTA AND VARIOUS COMMUNITY GROUPS AND AUTHORIZING THE MAYOR TO EXECUTE SAID AGREEMENTS WHEREAS, the City participates in the Community Development Block Grant and HOME Investment Partnership (HOME) programs, a principal goal of which is to fund projects and services which will benefit Iow-income Chula Vista households; and WHEREAS, the City Council of the City of Chula Vista held a Public Hearing on April 1, 2003 to review and receive public comment on the draft Consolidated Annual Plan for fiscal year 2003-04; and WHEREAS, on May 6, 2003 the City Council of the City of Chula Vista approved the CDBG and HOME program budgets for fiscal year 2003-04; and WHEREAS, the City is desirous of having certain services for the benefit of Iow-income households performed by the sub-grantees; and WHEREAS, the sub-grantees warrant and represent that they are experienced and staffed in a manner such that they can prepare and deliver the services required by the Grantor within the timeframe herein provided all in accordance with the terms and conditions of this Agreement; and WHEREAS, in the event that HUD should withdraw the City's CDBG and HOME funding, the City is not obligated to compensate the sub-grantees for program expenditures. NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Chula Vista does hereby approve the following CDBG agreements and authorize the Mayor of the City of Chula Vista to execute said agreements for the purpose and amount stated on behalf of the City of Chula Vista. PUBLIC SERVICES Chula Vista Youth Services Network $126,500 Sharp HealthCare Foundation 20,000 South Bay Senior Collaborative 64,750 LS$ Community & Family Emergency Assistance 9,000 Chula Vista Family Violence 48,975 Thursdays Meal 6,800 Therapeutics Program 38,500 Chula Vista Literacy Team 9,000 Dress for Success 9,000 INFORM Chula Vista 9,325 SWC South County Career Center 12,100 Veterans Home Support Foundation 3,500 TOTAL $357,450 COMMUNITY PROJECTS Lutheran Social Services - Caring Neighbor $29,000 Community Preservation Program 150,460 SBCS - Community Development Program 55,500 TOTAL $234,960 ECONOMIC DEVELOPMENT South County Economic Development Council $13,833 SBCS - Teen Center 22,650 Development Fee Reduction Program 72,900 Economic Development Consultant $22,100 Economic Development Operating $5,000 Southwestern College - Contracting Opportunities Center 10,751 Southwestern College - International Trade Center 10,000 TOTAL $157,234 NON-PROFIT CAPITAL IMPROVEMENT PROGRAM Boys & Girls Club of Chula Vista - Restroom Renovation $69,000 Chula Vista American Little League 60,000 TOTAL $129,000 CITY CAPITAL IMPROVEMENT PROGRAM CMP Pipe Rehabilitation $325,000 Emerson Street Drainage 173,500 Sidewalk Annual Program 125,000 ADA Curb Cuts Annual Program 60,000 4th Avenue Street Improvements 156,000 Judson Basin 150,000 Fire Station #5 Site Analysis $104,815 TOTAL $1,094,315 ADMINISTRATION AND PLANNING South Bay Family YMCA- Human Services Council $23,940 Regional Task Fome on the Homeless 1,000 Child Care Coordinator 46,200 Fair Housing Council of San Diego 39,000 City Staff Administration 281,000 CDBG Operating $33,200 TOTAL $424,340 Presented by Approved as to form by Laurie Madigan Director of Community Development .~"~ty Attorney J:\COMMDEV~RESOS~2003-04 CDBG Agreements Resolution.doc Attachment A Sample CDBG Agreement AGREEMENT SETTING OUT TERMS AND OBLIGATIONS OF (Insert Name of Organization) IN REGARD TO THE EXPENDITURE OF CITY FUNDS APPROPRIATED THIS AGREEMENT is made this ,2003, for the purposes of reference only, and effective as of the date last executed between the parties, between the City of Chula Vista ("City") herein, a municipal corporation of the State of California, and South Bay Community Services, a non-profit organization ("Grantee"), and is made with reference to the following facts: RECITALS WHEREAS, the City participates in the Community Development Block Grant (CDBG) Program, a principal goal of which is to fund programs and services which will benefit low and moderate- income Chula Vista households; and, WHEREAS, the City has entered into a separate funding agreement with HUD for the City's annual CDBG entitlement. WHEREAS, the City Council of the City of Chula Vista held a public hearing on (Insert Month/Day), 2003 to receive public comment and testimony. CDBG entitlement funds were allocated on (Insert Month/Day) 2003, a portion of which was allocated for the Grantee; and, WHEREAS, the City is desirous of having those certain services for the benefit of low income households, hereinafter enumerated, performed by the Grantee; and, WHEREAS, HUD requires the execution of a written agreement setting the terms and obligations for the expenditure of CDBG funds by the Grantee; and, WHEREAS, Grantee warrants and represents that they are experienced and staffed in a manner such that they can prepare and deliver the services required of Grantee within the time frames hetbin provided all in accordance with the terms and conditions of this Agreement; NOW, THEREFORE, in consideration of the mutual obligations of the parties as herein expressed, the parties hereto agree as follows: 1. Term of Agreement. The term of this agreement shall be for a period of one (1) year, from July 1, 2003 through June 30, 2004. Any funds not reimbursed by the City to the Grantee prior to June 30, 2004 will revert back to the City. 2. Statement of Work Schedule. The Grantee shall perform those duties described in the Statement of Work in Exhibit A, attached 'hereto and incorporated herein. These services shall be provided during the term of this agreement and according to the Performance Schedule in Exhibit A, attached hereto and incorporated herein. 3. Low Income Rec~t/irement. The services to be performed by Grantee shall be provided primarily to persons of low income households. A minimum of 51 To of the persons provided services shall be of low income, as determined by the most current HUD Income Limits for the San Diego SMSA, a copy of which is attached hereto and incorporated herein (Exhibit C). Grantee shall use reasonable means to determine the income level of each person or family served. 1 4. Compensation and Budget. In consideration for Grantees performance of the work described in Section 2 hereof and on the condition the City receives sufficient CDBG funds and appropriates them for the purposes provided for in this Agreement, the City shall reimburse (insert name of organization) up to a maximum of (insert grant award amounO, payable as set forth in Section 5 below. An itemized budget for said reimbursable expenses is set forth in Exhibit B, attached hereto and incorporated herein by reference and includes itemized budgets for all organizations participating in the collaborative. 5. Reimbursement Payments. Payment of those City appropriated funds shall be made to Grantee in monthly or quarterly installments, in arrears, as determined by the Grantee as set forth in Exhibit B, following receipt of the "CDBG Expense Reimbursement Claim Form" from the Grantee. Expenses itemized on the "Expense Reimbursement Claim Form" shall be limited to actual expenses incurred during the period specified on said form, and shall not include any anticipated costs. Grantee shall attach Xeroxed copies of all source documentation, such as receipts, bills, time sheets, etc. and shall pfovide reasonable proof of actual expenses incurred. Reimbursement Claim Forms will not be processed unless accompanied by the required documentation. Spreadsheet formats are not acceptable. The Grantee understands and accepts that in the event that HUD should withdraw the City's CDBG and HOME funding, the City is not obligated to compensate said Gramee for its expenditures. 6. Reports. The Grantee shall provide the City with a quarterly report, submitted no later than 40 days after the last day of the previous quarter, which includes a narrative of the services provided and an itemized accounting of the expenditures of CDBG funds during the previous quarter. Failure to submit quarterly reports in a timely manner will result in withholding of CDBG funds until the report has been submitted. In addition, said report shall include the following statistical data for persons/households served during the previous quarter: Iai the total number of persons/households served; [b] the number of persons/households receiving each type of service provided; [c] of the persons/households served, the number of residents and non-residents of Chula Vista; Id] annual gross household income by standard categories, adjusted for family size (low, moderate, other); [el race or ethnicity according to standard categories (White; Black/African American; Asian; American Indian/Alaskan Native; Native Hawaiian/Other Pacific Islander; American Indian/Alaskan Native and White; Asian and White; Black/African American and White; American Indian/Alaskan Native & Black/African American; Other); [f] number of female-headed households served; [g] narrative of contract objectives (in Agreemen0 comparing current objectives vs. original objectives in Agreement. Provide explanation if not meeting original objectives. 7. Assignment. Because of its unique qualifications, City is looking solely to (insert name of organization) to perform the work designated in this Agreement. The performance of this Agreement may not, by sub-agreement, be assigned to any other entity without prior written consent of the City. 8. Financial Records and Audits. The Grantee shall maintain all financial records for three years following the term of this Agreement. The City, at its discretion may require the Grantee to provide or allow the City to undertake a complete financial and program audit of its records. Those records shall contain, at a minimum, the following information for each client served: income, residency, and ethnicity. The records shall also contain receipts or other proof of all expenditures made with City CDBG funds. 9. Representatives. The Community Development Director, or his/her designated representative, shall represent the City in all matters of this Agreement.. The Executive Director, or his/her designated representative, shall represem (insert organization) in all matters of the Agreement. 10. Uniform Administrative Requirements. The Grantee shall comply with the applicable uniform administrative requiremems as described in HUD regulation 24CFR 570.502. This HUD regulation requires compliance with certain sections of 24 CFR part 85 "Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments". 11. Other Program Requirements. The Grantee shall carry out each activity specified under this Agreement with all Federal laws and regulations described in 24 CFR 570, Subpart K, with the following exceptions: a) The Grantee does not assume environmental responsibilities described at 24 CFR 570,604; b) The Gramee does not assume responsibility for initiating the review process under the provisions of 24 CFR 570.612. 12. Accounting Procedure. The Grantee agrees to abide by the requirements of OMB Circular A-122 "Cost Principles for Non-Profit Organizations". The Grantee shall account for use of Block Grant funds separately from other funds so as to demonstrate that the funds are used for their designated purposes. 13. Program Income. Any program income derived from CDBG funds shall be reported to the City and shall only be used by grantee for the services funded under this Agreement. Program Income is defined as interest received on funds placed in an interest-bearing account with a financial institution. All provisions of this Agreement shall apply to the use of program income for said activities. Said program income shall be substantially disbursed for said services before the City will make additional reimbursements to the Grantee. If said program income is on hand when this agreement expires, or is received after expiration of this agreement, then said program income shall be paid to the City. 14. Conditions for Religious Organizations. If the Grantee is a religious entity, affiliated with a religious entity, or sponsor of religious activities, then Grantee shall abide by the HUD regulations 24 CFR 570.200(j) which prohibits discrimination on the basis of religion and prohibits the use of funds for religious activities, and places other restrictions and limitations on the Grantee. 15. Drug-free Workplace. The Gramee shall maintain a drug-free workplace at all times for the duration of this contract. 16. Lobbying of Federal Officials. The Grantee shall not use any funds provided under this Agreement to pay any person for influencing or attempting to influence an officer or employee of any Federal agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement. If Grantee utilizes any other funds for any of the aforementioned purposes, then the Grantee shall complete and submit Standard Form-LLL; "Disclosure Form to Report Lobbying", in accordance with its instructions. 17. Insurance. Grantee represents that it, its agents, and staff employed by it, are protected by the following insurance coverages: Worker's Compensation insurance, where applicable by law; and General Liability insurance inchiding bodily injury and property damage coverage to the extent required by this Agreement. Grantee will provide to the City, prior to commencement of the services required under this Agreement, the following certificates of insurance: a) Statutory Worker's Compensation coverage plus $1,000,000 Employer's Liability coverage; b) General Liability coverage to $1,000,000 combined single limit which names the City as an Additional Insured, and which is primary to any policy which the City may otherwise carry ("primary coverage"), and which treats the employees of the City in the same manner as members of the general public ("cross-liability coverage"); c) Automobile Liability coverage to $1,000,000 combined single limit, if Grantee, its agents, and staff employed by it, will utilize auto in the scope of its Agreement for the City. The insurance shall be issued by an Admitted insurer with an AM Best's raring of A-V or better, except as otherwise approved by the City at its sole discretion. In addition, if any work is being contracted through a subcontractor/consultant, Consultant shall require said subcontractor/consultant to have the same insurance coverage as identified in this paragraph or named as Additional Insured under Grantee's insurance policy. 18. Hold Harmless. Grantee shall defend, indemnify and hold harmless the City, its elected and appointed officers and employees, from and against all claims for damages, liability, cost and expense (including without limitation attorney's fees) arising out of the conduct of the Grantee, or any agency or employee, or others in connections with the execution of the work covered by this Agreement, except only for those claims arising from the sole negligence or sole willful misconduct of the City, its officers, or employees. Grantee indemnification shall include any and all costs, expenses, attorney's fees and liability incurred by the City, its officers and agents, or employees in defending against such claims, whether the same proceed to judgment or not. Further, Grantee at its own expense shall, upon written request by the City, defend any such suit or action brought against the City, its officer, agents, or employees. Grantee's indemnification of City shall not be limited by any prior or subsequent declaration by the Grantee and shall survive the termination of this agreement. 19. Suspension and Termination. In accordance with HUD regulation 24 CFR 85.43, Grantee may be suspended or terminated by the City after 30 days written notice to the Grantee due to default by the Grantee or Grantee's inability to perform, regardless of whether such inability is due to circumstances within or beyond the Grantee's control. The award may be terminated for convenience in accordance with 24 CFR 85.44. Settlement of any disputes shill be based on the laws of the State of California. 20. Agreement Modification. This Agreement may not be modified orally or in any manner other than by an agreement in writing signed by the parties hereto. 21. Breach of Contract. The parties reserve the right to pursue any remedy provided under California law for remedy in instances where contractors violate or breach contract terms. 22. Reversion of Assets. Upon expiration of this Agreement, Grantee shall transfer to the City any CDBG funds on hand at the time of expiration and any accounts receivable attributable to the use of CDBG funds, including any program income derived from CDBG funds. 23. Entire Agreement. This Agreement represents the entire agreement between the parties and supersedes any previous or contemporaneous written or oral agreements. IN WITNESS WHEREOF, City and Grantee have executed this Agreemem this day of 2003. CITY OF CHULA VISTA Steven C, Padilla Mayor, City of Chula Vista APPROVED AS TO FORM Ann Moore City Attorney ATTEST City Clerk (NAME OF ORGANIZATION PAGE 1, ITEM NO., MEETING DATE~ 06/03/03 CITY COUNCIL AGENDA STATEMENT ITEM TITLE: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORIZING TRANSFER OF $471,090 FROM THE CDBG COMMUNITY HOUSING IMPROVEMENT PROGRAM (CHIP) FUND TO THE CDBG PROGRAM INCOME FUND ~ j J SUBMITTED BY: COMMUNITY DEVELOPMENT,~. DIRECTOR "~ L REVIEWED BY: CITY MANAGER~'~ C)~/ 4/5THS VOTE, YES ~ NO ~ BACKGROUND When the Community Housing Improvement Program (CHIP) was created in the mid -1970's the original source of funding was the Community Development Block Grant (CDBG) program. The CHIP program provides grants and Iow-interest or deferred loans to Iow-income mobilehome residents and single-family homeowners to rehabilitate their hor~es. The CHIP prograrn is no longer funded by CDBG and is currently financed with a combination of Low and Moderate Income Housing funds and HOME program funds. Many of the CDBG funded loans were deferred until a change in title or a refinancing took place. As the loans were repaid, the CHIP proceeds were deposited in the CDBG Community Housing Improvement Program account. The purpose of this item is to authorize the transfer of funds from the CDBG Community Housing Improvement Program fund to the CDBG program income fund. Since CDBG funds were used to provide the loans, any proceeds from repayment is considered program income. RECOMMENDATION Authorizing transfer of $471,090 from the CDBG CHIP program fund to the CDBG program income fund. BOARDS/COMMISSIONS RECOMMENDATION Not applicable. PAGE 2, ITEM NO.: /~ MEETING DATL' 06/03/03 DISCUSSION When the Communi~, Housing Improvement Program (CHIP) was created in the mid - 1970's, the primary source of funding came from the CDBG program. Over the course of time, these CHIP loans were repaid and the proceeds deposited into the CDBG CHIP fund with an accumulated balance of $471,090. As part of the fiscal year-end clean up, staff recommends transfer of the $471,090 from the CDBG CHIP program fund to the CDBG program income fund. The $471,090 in CDBG program income funds is not budgeted within the fiscal year 2003-04 budget and is available to fund future programs and projects. FISCAL IMPACT Transfer of $471,090 from the CDBG CHIP program fund to the CDBG program income fund is considered administrative in nature and will have a positive impact on the CDBG program since additional funds will be available for future eligible CDBG projects or programs. J:\COMMDEV~STAFF.REP~06-03-03\CDBG Program Income Transfer Request.doc COUNCIL RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORIZING TRANSFER OF $471,090 FROM THE CDBG COMMUNITY HOUSING IMPROVEMENT PROGRAM (CHIP) FUND TO THE CDBG PROGRAM INCOME FUND WHEREAS, when the Community Housing Improvement Program (CHIP) was created in the mid-1970's the original source of funding came from the Community Development Block Grant (CDBG) program; and WHEREAS, when CHIP loans are repaid the proceeds are deposited into the CDBG CHIP fund; and WHEREAS, the U.S. Department of Housing and Urban Development (HUD) regulations stipulate that repayment of principal and interest on loans made with CDBG funds is considered program income; and WHEREAS, the accumulated program income in the CDBG CHIP fund needs to be transferred to the CDBG program income fund. NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Chula Vista does hereby authorize transfer of $471,090 from the CDBG CHIP fund to the CDBG program income fund. BE IT FURTHER RESOLVED Presented by Approved as to form by Laurie Madigan Ann~Moo~ Director of Community Development City Attorney J:\COMMDEV~RESOS\CC - Program Income Transfer Reso.doc