Notice and Agenda REGULAR MEETING BOARD OF DIRECTORS COUNTY SANITATION DISTRICT NO. 15

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1 Notice and Agenda REGULAR MEETING BOARD OF DIRECTORS COUNTY SANITATION DISTRICT NO. 15 To be held at the OFFICE OF THE DISTRICT 1955 Workman Mill Road, Whittier, California WEDNESDAY June 27, 2018 At 1:30 P.M. Governing Body Director Alternate ARCADIA TAY CHANDLER BALDWIN PARK LOZANO PACHECO BRADBURY BARAKAT (Chairperson) DUARTE FASANA FINLAY EL MONTE QUINTERO MARTINEZ INDUSTRY RADECKI MOSS IRWINDALE BRECEDA AMBRIZ LA PUENTE LEWIS HOLLOWAY MONROVIA ADAMS SHEVLIN MONTEBELLO DELGADO HADJINIAN MONTEREY PARK LAM CHAN PASADENA TORNEK ROSEMEAD LY CLARK SAN GABRIEL HARRINGTON COSTANZO SAN MARINO TALT HUANG SIERRA MADRE DELMAR SOUTH EL MONTE OLMOS ANGEL TEMPLE CITY MAN STERNQUIST WEST COVINA JOHNSON WU WHITTIER VINATIERI WARNER LOS ANGELES COUNTY KUEHL BARGER 1. Receive and Order Filed as Follows: (a) Certificate of Mr. Sho Tay, Presiding Officer of the City of Arcadia (b) Certificate of Mr. John Harrington, Presiding Officer of the City of San Gabriel (c) Action Appointing Ms. Juli Costanzo as Alternate Director of the City of San Gabriel (d) Certificate of Mr. Lloyd Johnson, Presiding Officer of the City of West Covina (e) Action Appointing Mr. Tony Wu as Alternate Director of the City of West Covina 2. Approve Minutes of Regular Meeting Held May 23, Approve April 2018 Expenses in Amount of $1,932, Summary: Local District expenses represent costs incurred for operations, maintenance, and capital projects that are the sole responsibility of the individual District. The District s share of allocated expenses represent its proportionate share of expenses made by District No. 2, the administrative District, on behalf of the individual districts that participate in either the Joint Administration Agreement or the Joint Outfall Agreement. These Agreements provide for the management of the operations, maintenance, and capital costs associated with all of the shared facilities along with the methodology for determining the proportionate costs for each participating district. This item is consistent with the Districts Guiding Principle of fiscal responsibility and prudent financial stewardship. Local District Expenses: Operations & Maintenance (O & M) $ 93, Capital 20, District No. 15 s Share of Allocated Expenses for O & M and Capital: Joint Administration (1) 230, Technical Support 374, Joint Outfall 1,213, Total Expenses $1,932, (1) Excludes a one-time credit of $341, Pursuant to fund restructuring related to the adoption of the District s Reserve Policy, the Joint Administration Operating Fund refunded excess funds resulting in a reduced amount of allocated expenses during this period. DIST JUNE 27, 2018 DOCUMENT NUMBER

2 REGULAR MEETING COUNTY SANITATION DISTRICT NO. 15 OF LOS ANGELES COUNTY 4. Approve and Order Executed Settlement Agreement and Mutual Release with Los Angeles Community College District (LACCD) Summary: When the state dissolved redevelopment agencies, their portion of ad valorem taxes was reallocated among the other taxing entities serving the redevelopment area. A number of school districts filed lawsuits contending that the allocation was incorrectly applied by the County of Los Angeles. After prolonged litigation, the Court found that the County had allocated insufficient amounts to the school districts and improperly distributed larger-than-owed amounts to the County and many other taxing entities, including the District. The County and the school districts agreed to a complex formula by which the school district could recover some of the moneys owed. The District, along with the other taxing entities, participated in negotiations in order to resolve the claims by the school districts. A settlement was reached which provides for a payment to each of the school districts to compensate for ad valorem taxes that were improperly distributed to the District. The District owes $5, plus interest to LACCD. This item is consistent with the Districts Guiding Principles of commitment to ethical, respectful, and honest behavior in all interactions. 5. Re: Wastewater Budget Matters for Fiscal Year (a) Establish by Resolution Appropriations Limit of $20,211,959 as Required by California Government Code Section 7910 Utilizing the Population Change within the County (b) Adopt Operating Fund Budget (c) Adopt Resolution Requesting Tax Levy of $7,424,000 (d) Authorize Appropriations per Budget Summary: A letter discussing fiscal year budgetary matters accompanies the agenda. This item is consistent with the Districts Guiding Principles of commitment to fiscal responsibility and prudent financial stewardship, and to plan for both short-term and long-term needs to minimize the need for significant rate increases. Adjourn Status Report: Public Comment: Document Requests: Prior to or during the regular meeting session, the Chief Engineer and General Manager may update the Directors on various matters concerning the Districts that may be of current interest to the Directors. Members of the public may address the Board of Directors on any item shown on the agenda or matter under the Board s authority. A Request to Address Board of Directors form is available in the foyer. In compliance with the Americans with Disabilities Act, if you require special assistance to participate in this meeting, please contact the Secretary to the Boards Office (562) , extension Notification 48 hours prior to the meeting will enable staff to make reasonable arrangements to ensure accessibility to this meeting. (28CFR et seq. ADA Title II). Links to supporting documents are available online at the time of posting. Agendas and supporting documents or other writings that will be distributed to Board members in connection with matters subject to discussion or consideration at this meeting that are not exempt from disclosure under the Public Records Act are available for inspection following the posting of this agenda at the office of the Secretary to the Boards of Directors located at the Districts' Joint Administration Building, 1955 Workman Mill Road, Whittier, California, or at the time of the meeting at the address posted on this agenda. DIST JUNE 27, 2018

3 COUNTY SANITATION DISTRICTS OF LOS ANGELES COUNTY 1955 Workman Mill Road, Whittier, CA Mailing Address : P.O. Box 4998, Whittier, CA T e I e phone : (56 2) , FAX : (56 2) GRACE ROBINSON HYDE Chief Engineer and General Manager June 20, 2018 Board of Directors County Sanitation District No. 15 of Los Angeles County Dear Directors: Wastewater Budget Matters for Fiscal Year The agenda for the Board meeting on June 27, 2018, contains an item relating to wastewater budget matters for fiscal year (FY) These matters include establishing an appropriations limit on the proceeds of taxes, adopting the sewerage system final budget, requesting the tax levy, and authorizing appropriations per the sewerage system budget. APPROPRIATIONS LIMIT The Constitution of the State of California places a limit on the authorization to expend the proceeds of taxes levied by state and local governments in California. In addition, the Government Code requires the governing body for each local jurisdiction to establish, by resolution, an appropriations limit for each fiscal year. The appropriations limit for FY has been determined by adjusting the previous limit for FY based upon population change factors for Los Angeles County and the change in the California Personal Per Capita Income. The appropriations limit has also been adjusted to include the increased operation and maintenance costs of secondary treatment needed to comply with federal requirements. All of this is in accordance with the procedures outlined in Article XIIIB of the Constitution and Section 7910 of the Government Code. The proposed appropriations limit and anticipated tax revenue are shown in Exhibit No. 1. This information has been available to the public at the Districts' Joint Administration Office in conformance with the requirement that the documentation used in the determination of the appropriations limit be available fifteen days prior to its establishment by the Board of Directors. FINAL BUDGET FOR FISCAL YEAR Enclosed for your review is the proposed final budget for FY , a list of proposed capital projects, and information on the monies set aside in various funds/reserves. These funds and reserves were established in accordance with the District's Wastewater Financial Reserve Policy adopted in October DOC ft Recycled Paper \~

4 Board of Directors 2 June 20, 2018 The final budget provides a comparison with the current budget and a breakdown of the items included in the budget. It is divided into three sections: anticipated expenses, projected revenues, and transfers to or from reserves. In preparing the budget, it is projected that the general revenue sources available to the District for meeting expenses during the coming fiscal year include a pro rata share of the ad valorem (property) taxes, service charges, industrial wastewater surcharges, grants, state low-interest loans, interest income, and contract revenue. In addition, monies will be transferred from the Capital Improvement Fund (a restricted fund for the accumulation of connection fees paid by new users) to cover the costs of expansion-related capital projects. Lastly any surplus will be transferred to the designated reserves to help fund future capital projects. In addition to the expenses directly incurred by each District for the facilities it owns, the final budget also includes each District's proportionate share of the costs associated with facilities and services jointly shared with other Districts. In accordance with the Joint Administration and Joint Outfall Agreements, Joint Administration and Joint Outfall costs are allocated to each signatory District according to the ratio of the number of sewage units in a District to the total number of sewage units in all the Districts signatory to each agreement. A sewage unit represents the average daily sewage flow and strength (measured in terms of chemical oxygen demand and suspended solids) from a single-family home. In the Joint Outfall System (JOS), there are approximately 1.9 million sewage units. This method of allocating costs considers flow as well as the strength of sewage from all types of users and is the most equitable way to distribute Joint Administration and Joint Outfall costs. In past years, certain non-operational expenses were categorized as either O&M-Joint Administration or O&M-Technical Services depending upon which Districts' Department incurred the expense. As part of the process of implementing a new accounting software system, staff has been evaluating those expenses and re-categorizing them according to whether they still provide broad administrative services to all Districts (i.e. accounting, purchasing) or more technical support (i.e. reuse and compliance, information technology). As a result, the Joint Administration budget has dropped significantly and the Technical Services budget has risen by a similar amount. However, in combination, the budget for these two items has remained nearly identical to last year's combined budget. As part of the new accounting system, changes have been made to the way interest income is recorded. In prior years, interest on funds in the designated reserves were credited to the reserve account and then transferred to the District's operating account for use as a revenue source. To simplify this process, all of the interest earned is now credited directly as a revenue source. SIGNIFICANT CAPITAL EXPENDITURES The issues outlined below relate to the Joint Outfall System (JOS). This is the system of trunk sewers and treatment plants jointly owned by the seventeen Districts signatory to the Joint Outfall Agreement. The costs discussed below are the combined total for the JOS, of which each District in the JOS is required to pay its proportionate share of the costs. In addition, a District may have costs related to sewers and pumping plants specifically owned by that District. Those costs are solely borne by that specific District. Sewer System Repair and Rehabilitation - One of the naturally occurring processes in sewer systems is the formation of hydrogen sulfide gas. Through a series of complex biological and chemical reactions this gas is transformed into sulfuric acid, which can lead to extensive corrosion of the sewers. In an effort to slow down the corrosion rate and to control odors, iron salts and sodium hydroxide are routinely added to the sewer system and the crowns of the sewer pipes are sprayed with acid-neutralizing DOC

5 Board of Directors 3 June 20, 2018 magnesium hydroxide. Although the chemical addition has reduced the rate of corrosion, it has not eliminated the problem. Where feasible, the Districts' sewer rehabilitation program utilizes technological advancements for the in-place repair of sewer lines by inserting corrosion-resistant liners into the sewers. These liners restore the structural integrity of damaged lines and represent a permanent solution as they prevent further corrosion from occurring. In some instances, corroded sewers are being replaced with pipelines containing corrosion-resistant material. For fiscal year , capital expenses related to the repair and rehabilitation of the sewers is estimated to be $33.8 million. This total, which is higher than what was shown in the preliminary budget, includes projects that were scheduled to be completed during fiscal year but have carried over to fiscal year Concrete Protection - The concrete at the various treatment plants is subject to corrosion in the same way that the sewers are. Liners were installed a number of years ago to protect concrete structures at the plants that were subject to significant corrosion. These liners have reached the end of their useful life. In order to preserve the structural integrity of the plants, it is necessary to remove the old liners, repair any existing damage, and then add new protective liners to prevent future corrosion. The proposed budget for fiscal year includes $10.1 million related to this work. Clearwater - Effluent from the Joint Water Pollution Control Plant (JWPCP) in Carson is conveyed to the ocean through two tunnels, one completed in 1937 and the other in Both tunnels have had continual flow in them and cannot be taken out of service under any condition. As has been discussed extensively with the Boards, construction of a third tunnel (the Clearwater Project) has been proposed. District No. 2, acting in its capacity as the administrative agent for the Joint Outfall System, previously approved prequalification of potential contractors for the Clearwater Project and entered into a Project Labor Agreement with the Los Angeles/Orange Counties Building and Construction Trades Council. The Clearwater Project will be funded with a combination of monies accumulated in the Capital Improvement Fund (fees paid by new users of the system and dedicated to capital projects) and debt financing. The Districts previously sold bonds in 1993 (which have subsequently been refinanced), with debt service that expires between 2021 and It is proposed to use the Capital Improvement Fund monies first and wait until the existing debt is retired before issuing the new debt. Because the two debts are fairly similar in size, the impact on the rates will be minimized. The total estimated construction cost of the Clearwater Project, scheduled to be completed in fiscal year , is $700 million, with $80 million to be spent in this next fiscal year. Flow Equalization at the San Jose Creek Water Reclamation Plant (WRP)- Influent flows at the treatment plants are not static; they vary over the course of the day with peaks and valleys occurring at different times. Unfortunately, flows are highest during the day when the demand for recycled water is lowest, meaning that water may be discharged to the San Gabriel River and go unused. Conversely, flows are lowest at night when the demand for recycled water is highest, meaning that some of the need may go unmet. An 8 million gallon storage tank is being constructed at the San Jose Creek WRP that will store the peak flows during the day and then feed them back into the plant during the low-flow periods. This will make more recycled water available and also improve the operational efficiency of the WRP. This project, which is already under construction, is scheduled to be complete in fiscal year , with estimated expenses in fiscal year of $20 million. Power Distribution System - This project involves the modernization of the power distribution systems at the various treatment plants to include redundant power feeds to improve the maintainability and reliability of those systems. $8.4 million budgeted for this work nextfiscal year. DOC

6 Board of Directors 4 June 20, 2018 Process Air Compressors - All of the upstream treatment plants bubble ambient air through the secondary treatment system to enhance the biological treatment process. This air is first compressed and then injected into the aeration tanks through a series of diffusers. As the equipment ages or as technology improves, the process air compressors (PACs) must be replaced to ensure maximum efficiency in the transfer of oxygen, which leads to lower overall operating costs. Scheduled replacement of the PACs will occur through fiscal year , with $4.9 million anticipated to be spent on this work next fiscal year. SUMMARY OF REQUIRED ACTIONS At the June 27, 2018 Board meeting, it will be recommended that the Board of Directors adopt a resolution establishing the appropriations limit on the proceeds of taxes, adopt the budget for FY , adopt a resolution requesting the tax levy, and authorize appropriations in the sewerage system budget, all as shown on the agenda. Very truly yours, GRH:gc Grace Robinson Hyde Enclosures DOC

7 Exhibit 1 I SUMMARY OF APPROPRIATIONS LIMIT FOR EACH SANITATION DISTRICT I APPRO. LMT. POPULATION APPRO. LMT.* APPRO. LMT APPRO. LMT. DISTRICT EXCLUDING CHANGE CHANGE EXCLUDING MANDATED INCLUDING NUMBER MANDATED COSTS FACTOR FACTOR MANDATED COSTS COSTS MANDA TED COSTS 1 $ 17,129, $ 17,849,200 $ 1,900,978 $ 19,750, ,452, ,688,840 2,861,221 33,550, ,731, ,601,976 2,200,106 23,802, ,664, ,830, ,830, ,341, ,161,570 3,299,075 48,460, ,115, ,456,590 1,131,483 9,588, ,042, ,086, ,086, ,163, ,185,441 12,387,463 62,572, ,115, ,834,111 2,377,848 20,211, ,955, ,457,776 1,315,728 13,773, ,671, ,741, ,072 1,910, ,904, ,446,497 1,556,331 15,002, ,051, ,263, ,686 5,699, ,973, ,609,464 12,755,111 53,364, ,207, ,273,735 1,920,486 53,194, ,437, ,917,439 1,601,850 13,519, ,765, ,007, ,754 6,210, , , , , ,022,076 54,190 1,076, , ,808 69, ,171 SBC 22,703, ,656, ,747 24,235,363 scv 20,129, ,974,884 2,430,000 23,404, N/A** NR N/A** ESTIMATED AD VALOREM TAX REVENUES DISTRICT NUMBER 3,058, ,349, ,755, , ,531, ,877, , , ,424, ,960, , ,564, ,252, , ,372, ,639, , , , , ,542,000 SBC 7,298,000 scv 34 NR *This column represents the net change resulting from the percent change in population and the percent change in Per Capita Income of3.67%. ** This District is not subject to an appropriations limit as it does not receive any proceeds of taxes. DOC

8 COUNTY SANITATION DISTRICT NO. 15 OF LOS ANGELES COUNTY SEWERAGE SYSTEM FINAL BUDGET FOR FY APPROPRIATIONS: O&M- Joint Administration O&M -Technical Services O&M - Local Facilities O&M -Joint Facilities Capital- Joint Administration Capital- Local Facilities Capital- Joint Facilities Bond Repayment Loan Repayment TOTAL BUDGET: $ 3,703,000 4,745, ,000 20,233, ,000 20,000 16,974,000 3,433,000 2,656, $ 52,831,000 $ 2,653,000 6,432, ,000 20,829, ,000 25,000 20,953,000 3,425,000 2,762, $ 58,604,000 ESTIMATED REVENUES: Taxes Service Charge Grants Loans Industrial Waste Interest and Contracts TOTAL REVENUES: $ 6,863,000 28,848, ,000 1,687,000 5,114,000 1,720,000 $ 44,802,000 $ 7,424,000 30,117, ,000 2,693,000 6,369,000 2,553,000 $ 50,066,000 TRANSFERS TO (FROM) RESERVES: Transfer to (from) Designated Reserves Transfer from Capital Improvement Fund NET TRANSFER TO RESERVES $ (2,900,000) (5,129,000) $ (8,029,000) $ 238,000 (8,776,000) $ (8,538,000)

9 COUNTY SANITATION DISTRICT N0.15 OF LOS ANGELES COUNTY PROPOSED CAPITAL PROJECTS JULY 1, 2018 THROUGH JUNE 30, 2019 JOINT ADMINISTRATION: $ 639,000 LOCAL FACILITIES: 1. Fawcett Avenue Pumping Plant Force Main Replacement $ 25,000 JOINT FACILITIES: $ 25, Clearwater Tunnel Project $ 8,776, Treatment Plant Related Capital Projects 3,713, Sewer System Repair and Rehabilitation 3,710, Flow Equalization at the San Jose Creek WRP 2,194, Power Distribution System Improvements 921, Treatment Plant Concrete Protection 1,106, Process Air Compressor Replacements 533,000 $ 20,953,000 TOTAL PROPOSED CAPITAL PROJECTS: $ 21,617,000

10 COUNTY SANITATION DISTRICT N0.15 OF LOS ANGELES COUNTY RESERVE SUMMARY JULY 1, 2018 THROUGH JUNE 30, 2019 UNRESTRICTED RESERVES: General Operating Fund $ 19,922,000 DESIGNATED RESERVES: Beginning Balance Transfer to Designated Reserves Ending Balance $ 49,800, ,000 $ 50,038,000 RESTRICTED RESERVES: Beginning Balance Projected Connection Fees Received Transfer from Capital Improvement Fund Ending Balance $ 47,262, ,000 (8,776,000) $ 38,948,000 TOTAL RESERVES $ 108,908,000