WEST VALLEY SANITATION DISTRICT OF SANTA CLARA COUNTY, CALIFORNIA AGENDA BOARD OF DIRECTORS REGULAR MEETING. 9:00 a.m., Wednesday, November 18, 2015

Transcription

1 WEST VALLEY SANITATION DISTRICT OF SANTA CLARA COUNTY, CALIFORNIA AGENDA BOARD OF DIRECTORS REGULAR MEETING 9:00 a.m., Wednesday, November 18, 2015 District Office East Sunnyoaks Avenue Campbell, California (408) Chairperson: Steven Leonardis Vice-Chairperson: Manny Cappello Staff Recommendation 1. Roll Call. Confirm Quorum 2. Approval of minutes of previous meeting. Action Staff Recommendation: Approve the minutes of the regular meeting of the Board of Directors of October 14, ORAL COMMUNICATIONS Information 3. This portion of the meeting is reserved for persons wishing to address the Board on any matter not on the agenda. WRITTEN COMMUNICATIONS Information 4. Letter from Ms. Kerrie Romanow, Director of Environmental Services, City of San Jose, on Master Agreement Amendments dated October 22, Letter to Mayor Jamie L. Matthews, Chair-Treatment Plant Advisory Committee, San Jose - Santa Clara Regional Wastewater Facility, and Ms. Kerrie Romanow, Director of Environmental Services, City of San Jose, on Request to Provide Presentation at November 19, 2015 Treatment Plant Advisory Committee ( TPAC ) Meeting, dated October 28, Letter dated November 10, 2015, to Ms. Kerrie Romanow, Director of Environmental Services, City of San Jose, regarding City of San Jose letter dated October 22, All items on the agenda are subject to action or change by the Board of Directors. In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the District Secretary at (408)

2 WVSD Agenda November 18, 2015 (Continued) REPORTS (Items to be taken in one motion) Action 7. San Jose/Santa Clara Regional Wastewater Facility: Minutes of the September 10, 2015 regular meeting of the Treatment Plant Advisory Committee. Staff Recommendation: Accept the report. 8. Investment of District funds: Report on commingled funds invested by the County of Santa Clara for West Valley Sanitation District, as of September 30, Staff Recommendation: Accept the report. 9. Consolidated Income and Expense Statement of West Valley Sanitation District for the period ended September 30, None. 11. None. Staff Recommendation: Accept the report. UNFINISHED BUSINESS PUBLIC HEARINGS CONSENT CALENDAR (Items to be taken in one motion) Action 12. Approval of payment of invoices, October 15, 2015 November 18, Staff Recommendation: Approve the payment of invoices. 13. Rainfall and flow monitoring services for fiscal year Staff Recommendation: Authorize the District Manager and Engineer to Issue Task Order to V&A Engineers for a not-to-exceed amount of $74,000 for rainfall and sewer flow monitoring services. NEW BUSINESS Action 14. Annual report of West Valley Sanitation District for Fiscal Year Staff Recommendation: Accept the Annual Report and the Memorandum on Internal Control and Required Communications of West Valley Sanitation District for Fiscal Year

3 WVSD Agenda November 18, 2015 (Continued) DIRECTORS' ITEMS Information 15. Directors reports, announcements, and questions. 16. District Manager s report. ADJOURNMENT 17. Adjournment. (Next meeting is scheduled for December 9, 2015, 6:00 p.m.) 3

4 WEST VALLEY SANITATION DISTRICT OF SANTA CLARA COUNTY, CALIFORNIA BOARD OF DIRECTORS MEETING October 14, 2015 AGENDA ITEM NO /18/15 The Board of Directors of West Valley Sanitation District of Santa Clara County, California, convenes this day in regular session at 6:02 p.m. at the district office, 100 East Sunnyoaks Avenue, Campbell, California. Roll Call 1. Present: Directors: Manny Cappello, Mike Kotowski, Ken Yeager and Steven Leonardis, Chairperson. Absent: Marshall Anstandig. Staff: Jon Newby, District Manager and Engineer; Edward H. Oyama, Director of Engineering and Operations; Sarah Quiter, Deputy District Counsel; and Lesha Luu, Secretary. Approval of Minutes of Previous Meeting 2. Approve the minutes of the regular meeting of the Board of Directors of September 16, Motion by/second by: Kotowski/Leonardis to approve the minutes of the previous meeting. Motion passed unanimously. Oral Communications 3. None. Written Communications 4. Letter to Ms. Kerrie Romanow, Director of Environmental Services, City of San Jose and Mr. Christopher de Groot, Director of Water & Sewer Utilities, City of Santa Clara, on Proposed Amendments to Master Agreements dated October 5, There were no questions or comments from Board or staff. Reports 5. San Jose/Santa Clara Regional Wastewater Facility: Minutes of the August 13, 2015 regular meeting of the Treatment Plant Advisory Committee. Motion by/second by: Cappello/Yeager to approve Minutes of the August 13, 2015 regular meeting of the Treatment Plant Advisory Committee. Motion passed unanimously. 1

5 WEST VALLEY SANITATION DISTRICT OF SANTA CLARA COUNTY, CALIFORNIA BOARD OF DIRECTORS MEETING October 14, 2015 Unfinished Business 6. None. Public Hearings 7. None. Consent Calendar (Items to be taken in one motion) 8. Approval of payment of invoices, September 17, 2015 October 14, District sale of surplus vehicles. Authorization to sell District surplus vehicles identified as 2003 Ford F-350 Service Truck (MV70) and 2004 Sterling Vactor Ramjet F8015 (MV72) through First Capitol Auction, Inc. to the highest bid received. Motion by/second by: Cappello/Kotowski to approve Consent Calendar, items 8-9. Motion passed unanimously. New Business 10. Final Budget for Fiscal Year Accept the amendments and approve the Final Budget for Fiscal Year Manager reported changes to the Final Budget for Fiscal Year include budget carryover, adjustments due to new or latest information, and additions for the recycled water pilot program. The most significant change includes a reduction in the District s revenue by replacing the long-term debt in an amount of $25 million with a $5 million short-term financing. In addition, the line item for providing 60 days Operating Reserve to City of San Jose has been eliminated to reflect the City s adopted budget. There were no questions or concerns from the Board. Motion by/second by: Yeager/Leonardis to accept the amendments and approve the Final Budget for Fiscal Year Motion passed unanimously. Closed Session 11. The Board adjourns at 6:06 p.m. to closed session - Conference with Legal Counsel - anticipated litigation initiation of litigation pursuant to Government Code (c) (one potential case). The following directors were present: Manny Cappello, Mike Kotowski, Ken Yeager and Steven Leonardis, Chairperson. Reconvene in Open Session 12. The Board reconvenes at 6:50 p.m. in open session. Nothing to report out. 2

6 WEST VALLEY SANITATION DISTRICT OF SANTA CLARA COUNTY, CALIFORNIA BOARD OF DIRECTORS MEETING October 14, 2015 Directors Items 13. There are no Directors reports, announcements, and questions. 14. There are no District Manager s reports. Adjournment 15. There being no further items of business, the meeting was adjourned at 6:50 p.m. The next Board Meeting is scheduled for November 18, 2015 at 9:00 a.m. Attest: STEVEN LEONARDIS, CHAIRPERSON Secretary 3

7 AGENDA ITEM NO /18/15 Environmental Services Department Office of the Director October 22, 2015 West Valley Sanitation District Board 100 E. Sunnyoaks Avenue Campbell, CA Re: Master Agreement Amendments West Valley Sanitation District Board Members: The City of San José has been working with staff from your agency since early 2014 to finalize a framework to fund and rebuild our aging Regional Wastewater Facility. This effort has comprised of over 20 meetings with staff from Santa Clara and the tributary agencies. Through this inclusive process, we are meeting objectives set forward by TPAC, including: Developing comprehensive cost projections for the first ten years of the Capital Improvement Program (CIP) Pursuing low cost financing, such as State Revolving Fund (SRF) loans, to mitigate impact on rate payers and achieve intergenerational equity Allowing time for all agencies to plan for future revenue needs and smooth out capital expenditures by proposing to procure short term, interim financing vehicles such as a commercial paper (CP) program Although a plan for long term bond financing was initially developed at the request of all agencies, tributary agency staff had concerns about the impact of funding reserves and wanted to evaluate other options such as a pooled financing. Also, it was originally envisioned that all agencies would participate in long term bond financing through the Clean Water Financing Authority. In a July 2015 Financing Update Information Memo it was communicated that, due to dedicated reserve requirements for financing through CWFA, San José would likely only participate in long term financing if all agencies were to participate. Since not all agencies are interested in a collective long term bond financing, the co-owners and tributary agencies will each need to develop its own plans if this type of financing is needed. Your agency staff have communicated to us that your agency does wish to participate in both SRF loans and a CP program. To enable your participation, please find attached a redlined Master Agreement for your review. Per prior direction from the Treatment Plant Advisory Committee (TPAC), the focus of this amendment is to facilitate obtaining 30 year term SRF loans and to establish a CP program in this fiscal year. The current Master Agreement term between San José, Santa Clara, and West Valley Sanitation District expires in In order for San José to enter into a SRF loan agreement for West Valley s share of the $100 million Digester and Thickener Facilities (Digester) project, the term of the existing Master Agreement will have to be extended to cover this loan agreement term. 200 E. Santa Clara Street, 10 th Floor San José, CA tel (408) fax (408)

8 West Valley Sanitation District Board October 22, 2015 Re: Master Agreement Amendments Page 2 Also, since we will be targeting SRF funding on other projects, the amended agreement term is intended to cover 30 year loan agreement terms for other projects in the ten year CIP. In order to have the SRF loan in place before the Digester project contract award in spring 2016, the Master Agreement amendments related to the term of the agreement and general financing terms need to be executed by January 2016 after approval by your Board, the Santa Clara City Council, and the San José City Council. San José does not require a CP program until FY 16-17, however, in order to assist your agency in meeting its funding needs this fiscal year; we are willing to accelerate the establishment of this program and to pay our share of the cost of this accelerated program. Of course, in order for us to proceed with establishing the CP program this fiscal year, we will need firm commitment from your agency, including execution of the Master Agreement amendment in January 2016 and subsequent financing agreement reflecting actual CP terms soon thereafter. To help you in your decision-making, we provided your staff with a CP term sheet in early July 2015; exact financing terms will be known at the time of program establishment. We request your preliminary feedback on the attached draft Master Agreement amendment by November 20, This will allow us to discuss any questions or comments and finalize the draft by December 15, 2015, in time for approval and execution by January Staff from your agency has indicated an interest in having additional modifications to the Master Agreement considered. As directed at the October 2015 TPAC meeting, we will be bringing forward a staff report on this topic to TPAC in November Despite the extensive discussions and correspondence with your staff, it appears that, at times not all relevant information has been communicated to the elected Board of your agency. We can appreciate that this is a complex topic and have routinely offered to present at your Board meetings. Given the importance of this topic and the confusion demonstrated in the letters received from your agency staff, we would like to request that this item be agendized at your next Board meeting so my staff and I can be available to directly respond to your questions or concerns. Thank you for your time and we look forward to continuing to work with you on the rebuilding of an essential facility that serves both our communities. Sincerely, /s/ Kerrie Romanow Cc: Jon Newby Rosa Tsongtaatarii San José City Attorney s Office Ashwini Kantak Environmental Services Department City of Santa Clara Mayor and City Council Chris degroot, Shilpa Mehta City of Santa Clara 200 E. Santa Clara Street, 10 th Floor San José, CA tel (408) fax (408)

9 AMENDMENT AND RESTATEMENT OF MASTER AGREEMENT FOR WASTEWATER TREATMENT BETWEEN CITIES OF SAN JOSE AND SANTA CLARA AND WEST VALLEY SANITATION DISTRICT This Amendment and Restatement of Agreement is made and entered into this day of, 2015, by and between the City of San José and the City of Santa Clara, both being municipal corporations of the State of California (hereinafter referred to as First Parties ), and West Valley Sanitation District (hereinafter referred to as West Valley or Agency ). WHEREAS, First Parties are co-owners of the San José-Santa Clara Regional Wastewater Facility, (the Plant ) formerly known as the San Jose/Santa Clara Water Pollution Control Plant ; and WHEREAS, First Parties and West Valley have previously entered into a Master Agreement for Wastewater Treatment dated March 1, 1983 (then known as County Sanitation District No. 4), a First Amendment to Master Agreement for Wastewater Treatment dated December 17, 1985, a Second Amendment to Master Agreement for Wastewater Treatment dated December 4, 1995, a Third Amendment to Master Agreement for Wastewater Treatment dated August 7, 2006, and a Fourth Amendment to Master Agreement for Wastewater Treatment dated June 16, 2009 (collectively referred to as the Original West Valley Master Agreement ) related to West Valley s use of the Plant; and WHEREAS, implementation of the Regional Wastewater Facility Plant Master Plan would require investment in long-term capital improvement projects to upgrade and rebuild the Facility over the next thirty to fifty years necessitating certain additional amendment to the Original West Valley Master Agreement; and WHEREAS, for convenience and ease of reference, the parties wish to amend and restate the Original West Valley Master Agreement; NOW, THEREFORE, the parties agree that the Original West Valley Master Agreement is hereby amended and restated to read as follows: PART I DEFINITIONS A. Administering Agency. The City of San José is and shall be the Administering Agency of this Agreement and Formatted: No widow/orphan control _2 1

10 as such shall execute and administer this Agreement in accordance with Section VIII of the 1959 Agreement excerpted in the attached hereto as Exhibit E. B. Agencies. The term Agencies shall be those tributary agencies discharging wastewater into the San José-Santa Clara Regional Wastewater FacilitySan José/Santa Clara Water Pollution Control Plant, previously referred to as "outside users in the 1959 Agreement. C Agreement. The term 1959 Agreement shall mean the Agreement between San José and Santa Clara, dated May 6, 1959 and entitled Agreement between San Jose and Santa Clara Respecting Sewage Treatment Plant, as such Agreement now reads or as it may here after from time to time be amended or renegotiated. D. Capacity. The term capacity shall mean the Mean Peak Five (5) Day Dry Weather Plant Treatment capacity as contained in Exhibit A, attached hereto and incorporated herein by reference as if fully set forth. E. Director. The term Director shall mean the Director of Water Pollution Control the Environmental Services Department for the City of San José. F. Engineering Study. The term Engineering Study shall mean those studies that the First Parties shall cause to be made when the Plan has reached eighty-five percent (85%) of its designed capacity, beginning with 167 MGD and for every incremental capacity increase thereafter. The first Engineering Study shall be performed when the mean peak fiveday dry weather flow to the Plant reaches 142 MGD. The Engineering Study shall include an analysis of capacity needs, the size, and nature of proposed facilities to be constructed, a construction timetable, and an estimate of total project costs, and an estimate of each participating agency s share of project cost. G. Exhibits. The term Exhibits shall mean those Exhibits attached to this Agreement and incorporated into this Agreement by reference as if fully set forth. These Exhibits may be modified as contract amendments or amended from time to time as necessary to reflect changes of fact. The Exhibits shall be reviewed annually, or at such other times as significant changes occur, by the Treatment Plant Advisory Committee, which body shall recommend any modifications or amendments required _2 2

11 H. First Stage Expansion. The term First Stage Expansion shall mean that portion, as is presently described in the report of CH2M Hill, engineers, entitled San José/Santa Clara Water Pollution Control Plant, Capital Improvement Program, Executive Summary, Revised June, 1982 and dated June 25, 1982, or as amended or revised, which consists of improvements to all areas of the Plant and expansion of the Liquid Process, Process Control System, Sludge Processing and Disposal and will provide a capacity of 167 mgd. I. Interest. Interest will be to the extent permitted by law, equal to the rate of interest set forth in the monthly report to the Council of the City of San José, prepared by the Director of Finance of San José, with respect to said City s portfolio and interest earnings thereon. J. Intermediate-Term Improvements. The term Intermediate-Term Improvements shall mean that portion, as is presently described in the report of CH2M Hill, engineers, entitled San José/Santa Clara Water Pollution Control Plant, Capital Improvement Program, Executive Summary, Revised June, 1982 and dated June 25, 1982, or as amended or revised, which consists of six (6) elements, as outlined in Chapter 2 of said report, which are designated to provide the Plant with a mean peak five (5) day dry weather treatment capacity of 143 mgd. K. Long-Term Improvements. The term Long-Term Improvements shall mean capital improvement projects identified in the Plant Master Plan dated March 2012 and approved by TPAC on November 14, 2013; Capital Improvement Program Validation Project Packages dated March 25, 2014; Ten-Year Funding Strategy dated February 2015 and approved by TPAC on May 14, 2015; and the Proposed Capital Improvement Program for the Water Pollution Control Plant approved by TPAC on May 14, 2015, collectively referred to as Project Documents, as these Project Documents may be amended or revised through the annual budget process, and periodic updates. The capital improvement projects identified in the Project Documents are to repair, replace, and upgrade the aging facilities and treatment processes at the Plant. The process areas include, but are not limited to, liquids treatment, solids treatment, energy and automation, and support facilities process areas. L. Operating and Maintenance Costs. Any and all costs and expenses incurred by the Administering Agency, for the administration, operation, maintenance and repair of the Plant, including but not limited to supplies and materials, labor, services, power, chemicals, laboratory control _2 3

12 and monitoring, insurance, general administration and incidental items incurred during normal operations. Also included are those expenditures for ordinary repairs necessary to keep the facilities in proper operating conditions. M. Parameters. The term parameters shall mean the four (4) treatment parameters of Flow, Biochemical Oxygen Demand (BOD), Suspended Solids (SS), and Ammonia (NH3) as expressed in terms of estimates, which are the common denominator for computing annual and/or daily loadings. N. Plant (Existing Treatment Plant). The term Plant shall mean the San José-Santa Clara Regional Wastewater Facility, formerly known as the San José/Santa Clara Water Pollution Control Plant.. O. Replacement Costs. All capital expenditures for obtaining and installing equipment, accessories or appurtenances which are necessary during the service life of the Plant to maintain the capacity and performance for which the Plant was designed and constructed except: 1. Major rehabilitation which will be needed as individual unit processes or other facilities near the end of their useful lives; 2. Structural rehabilitations; 3. Plant expansions or upgrades to meet future user demands. P. Replacement Fund. Replacement fund shall mean those monies deposited with the aadministering aagency for the replacement of capital facilitiesreplacement Costs at the Plant. Q. TPAC. The term TPAC shall mean the Treatment Plan Advisory Committee _2 4

13 PART II CAPACITY RIGHTS GRANTED TO AGENCY A. General. Commencing on the effective date of thisthe Original Agreement, and thereafter during the term of this Agreement, and subject to all the conditions, limitations, restrictions, terms and provisions contained in this Agreement, and Agency s faithful compliance with and performance of the same, First Parties hereby grant to Agency a right to discharge wastewater into the Plant and to have the same treated and disposed of in and by said Plant the same as wastewaters of First Parties. B. Capacity Rights. First Parties have designed the Plant to provide for capacity to treat and dispose the volume and strength of wastewater specified in Exhibit A. Agency shall be entitled for the duration of this Agreement to use the capacity as set forth in said Exhibit A. First Parties and Agency agree not to discharge more than its capacity in the parameters as is specified in said Exhibit A, except with the approval and agreement of the First Parties hereto in accordance with the terms and conditions hereinafter provided, or as provided in Part III. Any continuous and intentional violation of capacity rights will be considered a material breach of this Agreement and will be given priority in the claim of breach process as set forth in Part VII Section G. C. San José-Santa Clara Water Pollution Control PlantRegional Wastewater Facility Engineering Study. First Parties agree to make an Engineering Study to redefine all Agencies future needs as set forth in Part I, Section F. D. Restrictions and Regulations Respecting Nature, Kind, Type and Strength of Sewage. First Parties shall inform Agency of the Industrial Waste Ordinance of the City of San José concerning the type and condition of discharge, which would be detrimental to the Plant. Each party to this Agreement shall adopt and enforce ordinances, resolutions, rules, and regulations to conform to the restrictions of said Ordinance. Any waiver to the above must be authorized by written Resolution of both the Council of the City of San José and the Council of the City of Santa Clara. Each party to this Agreement shall also comply with the applicable statutes, ordinances, rules, and regulations of agencies of the United States of America, and the State of California. E. Reports, Data and Maps to be Provided by Agency. It is mutually agreed that all parties shall prepare and file with the Director reports, Formatted: No widow/orphan control _2 5

14 data and maps as deemed necessary by the Director and Agency. F. Area Restrictions. Agency, unless otherwise authorized by written resolutions of the governing boards of both the City of San José and the City of Santa Clara shall not, and agrees that it will not, discharge or cause, allow, permit or suffer to be discharged into the Plant, or into any sewer line or lines which convey either directly or indirectly any wastewater to the Plant, any wastewater which is produced in, or emanates, or comes from any territorial property situated outside the service area map attached as Exhibit F. First Parties and Agency further agree not to discharge, or cause to be discharged, any wastewater into any sewer line or lines of the other party, either directly or indirectly, conveying wastewater to the Plant without written authorization of the owner of the sewer line _2 6

15 PART III FUTURE DISCHARGE CAPACITY RIGHTS A. Redistribution of Capacity Rights. 1. In order to dispose of capacity, any Agency or First Parties may designate all or a portion of its capacity right as excess pooled capacity, which shall be available for disposal as hereinafter provided. 2. Any Agency or First Parties may acquire excess-pooled capacity as recommended by TPAC. Any Agency or First Parties may acquire excess pooled capacity at the replacement cost as described in Exhibit B plus that portion of the selling party s replacement balance remaining in the rreplacement Fund maintained by the Administering Agency. 3. If requests for excess pooled capacity total more than the excess pooled capacity available, then as set forth in Part VI, TPAC will allocate the pooled capacity actually available in a manner to most closely achieve the same planning horizon for all requesting parties. B. Acquisition of Additional Capacity Rights With Plant Expansion. Agency shall have the right to participate in Plant expansions for the purpose of increasing the capacity right into the expanded Plant, subject to the following terms and conditions: 1. Before commencing the design of any such additions, improvements or changes, First Parties shall give Agency written notice of their intention to expand the Plant, and the design year for the proposed expansion, as set forth in the Engineering Study prepared in accordance with Part II, Section C. 2. Within ninety (90) days from and after the giving of such notice, Agency shall notify First Parties in writing whether it wishes to participate in the proposed expansion, and the amount of capacity desired to serve until the design year. If Agency fails to give such notice within such time, it shall be deemed to have elected not to participate in such expansion. 3. If Agency elects not to participate in such expansion, it will pay no part of the cost of additions, improvements, and changes, which are made for the purpose of increasing the capacity of the Plant. 4. If Agency elects to participate in such expansion, it shall pay to First Parties that part of the total cost of such additions, improvements, and changes as defined in Part V, Section B. 5. If the needs of all parties are different than the next feasible increment of plant expansion capacity as described in the Engineering Study, then as set forth in _2 7

16 Part VI. TPAC, will allocate the capacity available in a manner to most closely achieve the same planning horizon for all requesting parties. C. Acquisition of Additional Capacity Rights Without First Parties Initiated Plant Expansion. If Agency should desire to increase its capacity right into the Plant at a time when no expansion of the Plant as described in the Engineering Study, is proposed by First Parties and no excess pooled capacity is available, then Agency may seek additional capacity by the following method: If requested by Agency, First Parties shall initiate a Special Engineering Study to determine the most feasible means to add to the Plant that capacity requested by Agency. When Agency agrees to pay for such increment, then First Parties shall expand the Plant by such increment. This right shall not be exercised within five (5) years of completion of the latest Engineering Study. D. Adjustment to Capacity Rights Due to Operating Conditions. 1. In the event of a major Plant facility failure caused by an earthquake, explosion, war, flooding or the like, reductions in operational capacity and any cost of restoration shall be borne by all Agencies, including San José/Santa Clara and Agency in accordance with Exhibit A, and the cost of restoration shall be borne proportionately. 2. Any changes in Plant capacity which either increase or decrease the capacity of the Plant, resulting from any means whatsoever, shall be proportioned to each agency including San José and Santa Clara in accordance with Exhibit A. 3. TPAC, as set forth in Part VI, shall determine annually, during the month of November, the operational capacity, and productive use of the Plant in all parameters for all parties and the remaining design capacity of the Plant. 4. Agency and First Parties shall not exceed the capacity rights agreed upon pursuant to Exhibit A. 5. If at any time, prior to the completion of the Intermediate-term Improvements, it becomes necessary to allocate connections to the sewer systems of the combined agencies; in that event, to the extent permitted by law, First Parties will receive forty percent (40%) of the connections of whatever type and all other dischargers will receive sixty percent (60%) of the connections of whatever type. Agency s share will be determined by Agreement among the Agencies. This paragraph shall only remain in effect until completion of the Intermediate-term Improvements _2 8

17 A. Participation. PART IV LAND Participation and rights in Plant land shall be as described in Exhibit C. B. Sale of Land. It is mutually agreed between First Parties and Agency that if First Parties should, during the term of this Agreement, sell or otherwise dispose of any of the lands of Exhibit C which is or are no longer needed for Plant purposes, Agency shall have the right to share in any revenue derived from such sale by First Parties proportionally in accordance with Exhibit C _2 9

18 PART V AMOUNTS PAYABLE BY AGENCY TO FIRST PARTIES A. Payments for Existing Capacity Rights In The Intermediate Term And First Stage Expansion Projects and Phase 1 Water Recycling Program. Payments for participation in the Intermediate-term and First Stage Expansion and Phase 1 Water Recycling Program shall be as described in Exhibit D attached hereto and incorporated by reference herein. B. Payments for Additional Capacity Rights. 1. Payments with Plant Expansion. All payments associated with a Plant expansion as outlined in Part III, Section B, shall be paid for in proportion to the capacity rights requested in the basic parameters or based upon appropriate ratios of Agency design parameters to total project design parameters times total project cost. 2. Payments Without Planned Expansion. Should Agency elect to obtain additional capacity rights at a time when First Parties do not intend to expand Plant as designated in Part III, Section B, the expenses associated with this addition of capacity rights shall be the sole responsibility of Agency. All payments for studies, designs, and construction to provide additional capacity shall be deposited with the Administering Agency. 3. Payments for Transfer of Capacity Rights. Transfers of capacity rights between First Parties and Agency or between Agency and Agencies, shall be recommended by the Treatment Plant Advisory CommitteeTPAC and approved by First Parties and based upon the pooled capacity costs determined in Part IV, Section A. Transfer of capacity rights shall be based upon written agreement between the participating parties. Payment shall be due and payable as provided in said agreement. C. Payments for Future Improvements. 1. All payments associated with future improvements at the Plant shall be made on the basis of Agency s existing capacity rights. Final payment shall be determined based upon actual project cost. This payment shall be a proportional share in accordance with Exhibit A. 2. First Parties shall, not later than March 1 st, of any fiscal year, provide Agency with a preliminary estimate of the amount of money required from Agency for future improvements or replacements for the ensuing fiscal year. D. Payments for Operation and Maintenance Costs. 1. First Parties, Agency, and Agencies shall bear the cost of the operations and _2 10

19 maintenance expenses of the Plant, including all reclamation facilities operated by the Plant. The cost of operation and maintenance of reclamation facilities shall be determined based upon the actual flow (in million gallons per day) of Agency s discharge into the Plant. All other operation and maintenance expenses of the Plant shall be determined based upon the parameters of Agency s actual discharge into the Plant. Agency shall provide to First Parties, by December 1 st of each year, data indicating expected flow and discharge for the ensuing fiscal year. 2. First Parties shall, not later than March 1 st of each year, provide Agency with a preliminary estimate of the amount of money required to operate and maintain the Plant, including all reclamation facilities operated by the Plant, for the ensuing fiscal year. In addition, First Parties shall indicate Agency s estimated annual share for operation and maintenance costs as apportioned to treatment parameters, and for operation and maintenance costs for reclamation as apportioned to flow. 3. Agency shall provide to First Parties a copy of Agency s adopted annual sewer revenue program by August 1 st of each year. This revenue program shall conform to all federal and/or state guidelines as now exist of may exist in the future. 4. During the firstsecond quarter of each fiscal year, TPAC shall review each Agency s total flow and total discharge to the Plant for the preceding fiscal year in terms of the parameters. Adjustments and costs, if any resulting from this review shall be made in accordance with Part V, Section E, Paragraph 3b herein. E. Method of Payment. 1. Capital and Land Acquisition. All payments for capital and land acquisition shall be on a quarterly basis, the first quarter beginning July 1 st. These invoices shall be presented at the beginning of the quarter in which the obligation is anticipated to occur. The date of financial obligations for capital expenses and land acquisitions shall be the date of award of contract. These payments shall be based upon the budget for capital costs for the Plant as recommended by TPAC and approved by the Administering Agency. 2. Operation and Maintenance Costs. All payments for operation & maintenance expenses shall be made on a quarterly basis, the first quarter beginning July 1 st. Invoices for these payments shall be presented at the beginning of the quarter in which the obligation is anticipated to occur. These payments shall be based upon the budget for operation and maintenance costs of the Plant as recommended by TPAC and approved by the Administering Agency. 3. General Information. a. All bills shall be paid to the Administering Agency within forty-five (45) days from presentation. Interest will be charged on any late or unpaid bills _2 11

20 F. Credits. b. Adjustments in any payment described above shall be on the basis of actual payment to actual expenditures and shall be made no later than the third quarter billing of the following fiscal year. A statement outlining the method of adjusting costs and actual adjustments shall be included. c. Any and all monies which Agency is herein required to pay to First Parties shall be paid to the Administering Agency. 1. Grants or Outside Financial Assistance. Any grants, recoveries, or outside financial assistance received, and any interest earned thereon, shall be credited to First Parties, Agencies and Agency in the quarter following receipt, along with a statement outlining the source of grant revenue and method of distribution. Grants or outside financial assistance shall be shared on the basis of the Agency s participation in the program for which the outside financial assistance is received. 2. Interest. Interest on moneys advanced, credits held for Agency or amounts due from Agency, shall be determined on a monthly basis. 3. Revenues and Income. If First Party should, during the term of this Agreement, receive any income or revenues related to land, products, or services at the Plant, then Agency shall be entitled to a share of the income. Agency s share shall be that proportion of such income based on Agency s contribution to the capital cost or O & M cost, which is applicable, during the fiscal year of receipt of such income. G. General. Payment to Agency of any moneys to which it may become entitled may be made by off-setting the amount of such moneys against any payments which Agency may be obligated to pay to First Parties under the provisions of this Agreement or Agency may request cash reimbursement of any credit balance. The request for cash reimbursement shall be honored by First Parties within forty-five (45) days following receipt of notice. Any additional payments requested from Agency shall be made with the third quarter payment. H. Payments for Operating Reserves. The Administering Agency s annual operation and maintenance budget for the Plant shall include an operating reserve as an operating cost as described in this subsection. First Parties and all Agencies shall contribute their proportionate share to fund the operating reserve in the minimum amount of sixty (60) days of annual operating and maintenance expenses for unanticipated operation and maintenance costs for the Plant ( Operating Reserve ) beginning in Fiscal Year Each Agency s contribution to the Operating Reserve shall be determined in proportion to the _2 12

21 Agency s estimated annual share of operation and maintenance costs of the Plant. The Operating Reserve contribution for each Agency shall be calculated as follows: annual Agency operation and maintenance allocation percentage multiplied by the total estimated annual Plant operation and maintenance budget amount, divided by 365 days, and then multiplied by 60 days. In each fiscal year following Fiscal Year , the calculation will take into account the amount held in the Operating Reserve as of the date of calculation. The Administering Agency shall provide each Agency on or before March 1 of each fiscal year, commencing in Fiscal Year for the amount of its estimated contribution to the Operating Reserve for the following fiscal year. Each Agency shall be billed for its contribution to the Operating Reserve following the Administering Agency s adoption of the annual operation and maintenance budget for the Plant for Fiscal Year , and each fiscal year thereafter. If the adopted annual budget for operation and maintenance costs of the Plant is greater than or less than the amount on which the Agencies respective contributions were calculated and paid into the Operating Reserve for the prior fiscal year, then the billing statement presented to each Agency will identify the revised contribution amount and specify the amount of the adjustment due if an Agency s contribution has increased or the amount subject to credit if an Agency s contribution amount has decreased. Agency shall make payment in full of the amount of its contribution to the Operating Reserve within forty-five (45) days of presentation of the billing statement. Any credit due to the Agency shall be applied to the Agency s first quarterly payment for operation and maintenance costs _2 13

22 PART VI SAN JOSE-SANTA CLARA TREATMENT PLANT ADVISORY COMMITTEE A. Creation and Membership. The San José-Santa Clara Treatment Plant Advisory Committee (TPAC), created by the 1959 Agreement, shall consist of nine (9) members. Three (3) of the members shall be members of the Council of the City of San José, shall be appointed by said Council, and shall serve at the pleasure of said Council. Two (2) of the members shall be members of the Council of the City of Santa Clara, shall be appointed by the Council of the City of Santa Clara, and shall serve at the pleasure of said Council. One (1) of the members shall be a member of the Council of the City of Milpitas, shall be appointed by said Council, and shall serve at the pleasure of said Council. One of the members shall be a member of the governing body of the County Sanitation District No. 4 of Santa Clara CountyWest Valley Sanitation District, shall be appointed by the governing body of the County Sanitation District No. 4West Valley Sanitation District, and shall serve at the pleasure of said body. One (1) of the members shall be a member of the governing body of the Cupertino Sanitary District, shall be appointed by the governing body of the Cupertino Sanitary District, and shall serve at the pleasure of said body. The ninth (9 th ) member shall be the City Manager of San José or a designated representative. No member shall have more than one (1) vote. B. Alternate Members. The Council of the City of San José may appoint three (3) of its Council members as alternative members of TPAC. The Council of the City of Santa Clara may appoint two (2) of its Council members as alternative members of TPAC. The Council of the City of Milpitas may appoint one (1) of its Council members as an alternative member of TPAC. The governing body of the County Sanitation District No. 4West Valley Sanitation District and the governing body of the Cupertino Sanitary District may each appoint one (1) of its members as an alternative member of TPAC. Said alternate members shall serve in the place and stead of any of the regular members whenever said regular member should be absent from a meeting of TPAC. C. Chair. At the first meeting of each fiscal yearits July meeting, the members of TPAC shall elect a Chair and Vice Chair of TPAC. The Chair and Vice Chair shall serve as such until the election of his or her successor, or until cessation of membership of the TPAC, whichever is earlier. Vacancies in the office of the Chair and Vice Chair occurring in-between regular elections may be filled by TPAC electing a Chair and Vice Chair elected to serve until the next regular election. The Chair, or the Vice _2 14

23 Chair in the Chair s absence, shall preside at all meetings. In the event the Chair and Vice Chair should both be absent from any meeting, the members of TPAC may elect a Chair pro tem to serve as Chair during the latter s absence. D. Secretary. The Administering Agency shall provide a secretary for TPAC. Said secretary shall keep minutes of TPAC proceedings and shall also have custody of all books, records and papers of TPAC. E. Meetings. Regular meetings of TPAC shall be held at a time and place to be determined by TPAC. Special meetings may be called at any time by the Chair, to be held at a reasonable time and place specified in the notice calling the special meeting, subject to applicable requirements of law. F. Procedure. Except as may otherwise be provided by Resolution of TPAC, the procedure to be followed by TPAC at its meeting shall be that set forth in Robert s Rules of Order. TPAC may act by resolution of motion; a motion duly passed by TPAC and entered at length on TPAC s minutes may be deemed to be a resolution. G. Power and Duties. TPAC shall have the following powers and duties with respect to those items to be considered. 1. Make recommendation to First Parties and Agencies with respect to policy relating to the Plant and its maintenance, repair, expansion, replacement, improvement, and operation. 2. Make recommendation to the legislative bodies of First Parties and Agencies with respect to proposed amendments and revisions to exhibits to this Agreement. 3. Make recommendations to both First Parties and Agencies with respect to the advisability of selling interests in the Plant. 4. Make recommendations to First Parties with respect to the advisability of entering into contracts with other entities desiring to use the Plant on a rental or other basis. 5. Make recommendations to the Administering Agency and Agencies as to type and amount of insurance to be purchased for the Plant. 6. Annually, during the month of May in each fiscal year, TPAC shall review and recommend to the legislative bodies of First Parties and Agencies, a proposed _2 15

24 budget for the ensuing fiscal year for the maintenance, expansion, replacement, improvement, and operation of the Plant. 7. Make recommendations to the Administering Agency with respect to the award of consultant, construction, or service contacts relating to the Plant. 8. Annually, TPAC shall file with the legislative bodies of First Parties and Agencies, a report on Plant capacity pursuant to Part III, Section D, paragraph Make recommendations to First Parties and Agencies with respect to the redistribution of pooled excess capacity pursuant to Part III, Section A, paragraphs 1 and Periodically, TPAC shall review and make current, long-range plans for expansion and/or improvement of the Plant to provide for the anticipated Plant capacity required to accommodate the general plans of San José, Santa Clara and Agencies and to meet current wastewater discharge requirements. 11. Make recommendations to the legislative bodies of First Parties and Agencies with respect to claim of breach proceedings pursuant to Part VII, Section C. H. Action Upon Recommendations. The legislative bodies of First Parties or the Agencies, shall not adopt any motion, Resolution or Ordinance that is contrary to any recommendation submitted to it by TPAC with respect to the Plant and its maintenance, repair, expansion, replacement, improvement and operation without a finding of fact or facts justifying such contrary action. The finding of fact or facts shall be submitted in writing to TPAC within fifteen (15) days after any contrary action. All policy matters as determined by the Director requiring an adoption of a motion, Resolution or Ordinance by the Council of the City of San José relating to the Plant and its maintenance, repair, expansion, replacement, improvement and operation, shall first be submitted to TPAC for its recommendation and in sufficient time, as determined by the Administering Agency, to allow TPAC to make a recommendation thereon. The Council of the City of San José shall not act upon any such policy matter until it has received the recommendation from TPAC. If TPAC does not submit its recommendation to the Council of the City of San José within the prescribed time, the City Council may adopt such a motion, Resolution or Ordinance. If a legislative body is presented with any evidence not considered by TPAC in the making of any recommendation, then, prior to the taking of action contrary to said recommendation, if time permits as determined by the Administering Agency, the legislative body shall refer the matter back to TPAC for a supplementary report. Said supplementary report shall be submitted by TPAC within thirty (30) days after reference, or such longer period as may be designated by the legislative body. If TPAC fails to make such supplementary report within the time specified, the legislative body is free to consider _2 16

25 such evidence without TPAC recommendations. In the event of an emergency as determined by the Director, the above procedure may be waived. I. Expenses. Members of TPAC shall be reimbursed for all expenses reasonably incurred by them in the performance of their duties, and that provision therefor, shall be made in the annual budget. Such expenses shall be considered as operating costs of the Plant _2 17

26 PART VII MISCELLANOUS PROVISIONS A. Effective Date and Duration of Agreement. It is hereby agreed that the effective date of this Agreement shall be the date on which all parties to this Agreement have executed same, and that this Agreement shall be in force and effect for a term beginning on said effective datemay 10, 1983 and extending to, and including, and ending on January 01, 2031June 30, 2065, or until sooner termination by mutual written agreement of the parties hereto or by operation of law or because of a material breach by one of the parties hereto. B. Extension, Renewal or Amendment to the Agreement. It is mutually agreed that the term of this Agreement may be extended or renewed only by mutual written agreement of the parties hereto and that this Agreement, including exhibits, may be amended or supplemented by a mutual written agreement of the parties hereto. This Agreement shall be reviewed in its entirety by First Parties and Agency in the year First Parties and Agency further agree that in the year , they will meet and confer in good faith to negotiate a revised or new Agreement. C. Use of Treatment PlantRegional Wastewater Facility After Expiration of Term. If for any reason the contact cannot be renewed in the year , or subsequent to the termination date, the discharging Agency shall have the right to continue to discharging to the Plant, provided all payments of Agency s share of Plant costs are made. All other rights under this Agreement shall cease. D. Termination. If for any reason this Agreement is terminated by mutual consent of both parties, then the discharging capacity rights of the Agency shall be considered excess pooled capacity pursuant to the terms of Paragraph III Section A. This capacity shall be reserved for the Agency and Agency shall continue to pay for all costs associated with such capacity until such time as that capacity is either purchased by other users pursuant to the terms of this Agreement, or until failure of the Plant to treat wastewater. E. Sale or Transfers by First Parties. Nothing in this Agreement contained shall be deemed to prohibit or restrict First Parties, or either of them, for selling, granting, assigning or otherwise transferring this Agreement or any part or interest therein, or the Plant or any part or interest therein, _2 18

27 or any right to discharge wastewater therein and to have the same therein treated and disposed of, to any corporation, district, governmental organization or entity or to any other person or persons, provided that any such transaction shall be subject to such rights and privileges as First Parties and Agency may have under and by virtue of the provisions of this Agreement. F. Industrial Waste Program. The Administering Agency agrees to maintain personnel for the specific purposes of assisting all parties with matters concerning industrial waste. Such responsibilities shall include industrial waste monitoring, sampling and analysis, technical advice and surveillance of all industrial discharges tributary to the Plant. The Administering Agency agrees to be responsible for issuing notices of nonconformance within Agency s service area for violations of the ordinance requirements in Part II, Section D. Agency shall be responsible for the adoption and enforcement of any Industrial Waste Ordinance requirements. The Administering Agency shall endeavor to keep all dischargers informed of federal, state, county and city laws, rules, regulations, standards, and ordinances relating to industrial waste requirements. G. Claims of Breach of Agreement or of Inequities. In the event any party to this Agreement should at any time claim that the other party has in any way breached or is breaching this Agreement, or that the Agreement is inequitable, the complaining party shall file with the legislative body or bodies of the other parties, and with TPAC, a written claim of said breach or inequity, describing the alleged breach or inequity and otherwise giving full information respecting the same. TPAC shall within two (2) months at a place specified by it, give all concerned parties full opportunity to be heard on the matter, and shall, upon conclusion of said hearing, give the legislative bodies of both parties a full report of its finding and recommendations. Said report, findings, and recommendations shall be deemed advisory only; shall not be deemed to establish any facts, either presumptively or finally. Upon receipt of said report and recommendations, if any party is dissatisfied with or disagree with same, the legislative bodies of all parties concerned shall jointly meet with each other within two (2) months at a place to be determined by them, for the purpose of resolving their differences. No action for breach of this Agreement, and no action for any legal relief because of any breach or alleged breach of this Agreement shall be filed or commenced, and nothing shall be done by either party to rescind or terminate this Agreement, unless and until the above provisions of this paragraph have been complied with and unless the complaining party has first given to the other party three (3) months from the conclusion of said joint meeting of said legislative bodies within which to cure any breach or alleged breach _2 19

28 H. Liability. It is mutually agreed that any liability of San José and/or Santa Clara, or of San José as the administrative agencyadministering Agency for any damage to any such person or property arising or resulting from any dangerous or defective condition in the Plant or any part or property thereof, or arising or resulting from any act or omission of San José or Santa Clara or their respective officers, agents, employees or contractors, in the control, administration, construction, expansions, installation, operation, maintenance or repair of said Plant or any part or property thereof, shall be mutually shared and paid for by First Parties and Agencies on the basis of operations and maintenance or capital costs, whichever is applicable. It is understood and agreed that First Parties in granting to Agencies certain discharge capacity rights in the Plant and to have wastewater treated and disposed of in said Plant, are not guaranteeing or warranting that the Plant will be able to satisfactorily treat such wastewater. In the event the Plant should for any reason other than by the gross negligence or intentional misconduct of First Parties be incapable of satisfactorily treating wastewater discharge into the Plant by Agency or First Parties, First Parties shall in no way be liable to Agency for any damages arising or resulting from or suffered because of the failure of the Plant to satisfactorily receive, hold, treat or otherwise dispose of wastewater. I. Compliance with Federal and State Laws and Regulations. Agency and First Parties agree to comply with any and all Federal, State, or local laws, the rules, regulations, standards and requirements of any Federal, State, or local board, commission, agency or similar body, and the decisions of any court or competent jurisdiction which must be complied with to enable First Parties to qualify for Federal or State grants for the construction, improvement, administration, operation, maintenance, or repair of the Plant. J. Assignment. Agency shall not assign or transfer any interest nor the performance of any of Agency s obligations hereunder without the prior written consent of First Parties, and any attempt by Agency to so assign this Agreement or any rights, duties or obligations arising hereunder without written consent shall be void and of no effect. K. Successors and Assigns. It is mutually agreed by all the parties hereto that the agreements, covenants, conditions, limitations, restrictions and undertakings herein contained shall, subject to _2 20

29 the provisions as to assignment, apply to and bind the successors and assigns of the respective parties hereto as if they were in all cases named. L. Waivers. One or more waivers of any term, covenant or condition by either party shall not be construed as a waiver of a subsequent breach of the same or any other term, covenant or condition and the consent or approval by either party to any act shall not be deemed to waive or render unnecessary either party s consent or approval for any subsequent similar act by the other party. M. Performance and Time to be of The Essence. It is understood and agreed that full and faithful compliance with and performance of each and every covenant and provision of this Agreement by the party or parties required to comply with or perform each such covenant or provision is and shall be of the essence; also that time is and shall be of the essence; also that such full and faithful compliance with and performance of each and every covenant and provision of this Agreement shall be deemed to be a material condition of this Agreement. N. Insurance. First Parties shall at all times maintain with responsible insurer or insurers sufficient insurance against loss or damage to the Plant as is customarily maintained with respect to loss and property of like character. Each party hereto shall be named as a co-insured. First Parties shall maintain with a responsible insurer or insurers, workmen s compensation insurance and insurance against public liability and property damage. The premiums on all such insurance shall be a part of maintenance and operating expenses. Comment [A1]: This provision does not reflect current practice, and will need to be modified prior to execution for accuracy. Risk Management must evaluate risk and loss if need to provide for change to current practice. O. Titles and Headings. The sub-heading and titles of this Agreement are inserted for the convenience of reference only and shall not be taken or considered as having any bearing on the interpretation thereof. P. Notices. All notices shall be mailed to the address designated beneath the signatures of the parties hereto or as subsequently designated in writing by the parties _2 21

30 A. Termination of Agreements. PART VIII SPECIAL PROVISIONS It is mutually agreed by all parties hereto that the following agreements heretofore entered into between the CITY OF SAN JOSE and the WEST VALLEY SANITATION DISTRICT (formerly COUNTY SANITATION DISTRICT NO. 4); or between the CITY OF SANTA CLARA and COUNTY SANITATION DISTRICT #4WEST VALLEY SANITATION DISTRICT; or between the COUNTY SANITATION DISTRICT #4WEST VALLEY SANITATION DISTRICT, and both the CITY OF SAN JOSE and the CITY OF SANTA CLARA relating to the Plant, and any and all supplements, addendums, changes, or amendments thereto, are herebyhave been terminated. 6. Agreement By and Between the Cities of San Jose, Santa Clara, and County Sanitation District No. 4 Providing Interim Allocation of Treatment Capacity, dated April 13, Settlement Agreement By and Between the Cities of San Jose, Santa Clara, and County Sanitation District No. 4, dated January 14, Agreement between Cities of San Jose, Santa Clara, and County Sanitation District No. 4 Relating to Sharing of Operating Costs of The Sewage Treatment Plant, dated April 29, Agreement Providing for the Sharing of Cost to be Incurred in Connection with the Employment of a Consultant for the Preparation of a Study for Ultimate Disposition of South San Francisco Bay Waste Water, dated May 26, Agreement Supplementing Agreements with CSD #4 and Cupertino Sanitary District and City of Santa Clara, dated June 1, Agreement between Cities of San Jose and Santa Clara and County Sanitation District No. 4 Relating to Sewage Treatment Plant, dated April 1, B. Annexation And Detachments 1. GENERAL. It is contemplated that territories within the boundaries of Agency will become either annexed, consolidated, or otherwise a part of either of the First Parties. It is agreed by First Parties and Agency that when any Agency territory becomes a part of either of the First Parties, Agency will do all that it can legally do to facilitate the detachment of such territory from Agency. In no event shall Agency be obligated to initiate detachment proceedings _2 22

31 2. TRANSFER OF CAPACITY RIGHTS. Agency shall, when any Agency territory becomes a part of either of First Parties and is detached from Agency, transfer to First Parties capacity rights as specified in Exhibit G. 3. PAYMENTS FOR TRANSFER OF CAPACITY RIGHTS. The capacity rights being used by existing developments in a territory being transferred from Agency to either of First Parties shall be computed using the parameters of Agency s actual discharge into the Plant and the amounts subtracted from the amounts of capacity rights to be transferred to determine the amount of unused capacity rights. First Parties shall pay Agency an amount as specified in Exhibit F G for the unused capacity rights transferred to either of the First Parties. Payment shall be made within ninety (90) days of detachment of territory from Agency. If the capacity rights being used by existing developments in a territory being transferred from Agency to either of First Parties exceeds the amount of capacity rights being transferred, First Parties shall be credited an amount as specified in Exhibit G for the excess used capacity. Credits shall be applied to future payments to be made by the First Parties to the Agency pursuant to this Section. IN WITNESS WHEREOF, FIRST PARTIES, and WEST VALLEY SANITATION DISTRICT have caused this AMENDMENT AND RESTATEMENT OF MASTER AGREEMENT as to be executed in their respective names and their respective seals to be affixed hereunto by their duly authorized officers, all as of the date first above written. APPROVED AS TO FORM ROSA TSONGTAATARII Senior Deputy City Attorney CITY OF SAN JOSE, a municipal corporation TONI TABER, CMC City Clerk 200 East Santa Clara Street San José, CA APPROVED AS TO FORM RICHARD E. NOSKY JR. City Attorney CITY OF SANTA CLARA, a municipal corporation ROD DIRIDON JR. City Clerk 1500 Warburton Avenue Santa Clara, CA _2 23

32 APPROVED AS TO FORM WEST VALLEY SANITATION DISTRICT _2 24

33 EXHIBIT A SAN JOSE-SANTA CLARA REGIONAL WASTEWATER FACILITY TREATMENT PLANT CAPACITY ALLOCATIONS Table MGD Plant, Intermediate Term Improvements and First Stage Expansion. Table 1 contains the Agencies and First Parties treatment plant capacities achieved by implementation of the Intermediate-term Improvements and First Stage Expansion. Increased capacity was allocated only to those Agencies that elected to participate in Plant expansion to 167 MGD. Milpitas was allocated 4 MGD of the 24 MGD expansion, and the First Parties share the remaining 20 MGD based on assessed valuation. BOD, SS, and Ammonia capacities were allocated in the same proportion as Flow. Table MGD Plant, after transfer of capacity to Milpitas from West Valley and Cupertino. Table 2 shows the Agencies and First Parties treatment plant capacities effective with the transfer of 0.75 MGD from Cupertino to Milpitas with prorated shares of Suspended Solids and Ammonia, but excludes any prorated share of Biochemical Oxygen Demand effective January 1, On July 1, 2006, West Valley Sanitation District transferred 1 MGD of flow with KLBS/Day Biochemical Oxygen Demand, KLBS/Day Suspended Solids, and KLBS/Day Ammonia capacity to Milpitas. The other Agencies capacities remain the same as in the 143/167 MGD Plant. Table MGD Plant, after annexations from West Valley and Sunol into San José. Table 3 shows the Agencies and First Parties treatment plant capacities effective June 30, 2014 with the transfer of capacity associated with annexations into San José from West Valley in , and Sunol in November 30, The other Agencies capacities remain the same as in the 143/167 MGD Plant _2 A-1

34 TABLE 1 SAN JOSE-SANTA CLARA REGIONAL WASTEWATER FACILITY 167 MGD PLANT SUMMARY OF CAPACITY ALLOCATION* (Intermediate-Term, First Stage Expansion & South Bay Water Recycling Improvements Implemented) AGENCY FLOW MGD BOD K LBS/DAY SS K LBS/DAY AMMONIA K LBS/DAY San José a Santa Clara a Subtotal b West Valley Cupertino Milpitas Burbank Sunol Subtotal TOTAL *The term capacity is defined as the mean peak five-day dry weather plant treatment capacity. Note(s): a. San José and Santa Clara allocations vary annually according to assessed property value; values shown are effective as of January 1, b. CSD 2-3 rents capacity from San José and Santa Clara. Allocations vary annually depending flow from CSD _2 A-2

35 TABLE 2 SAN JOSE-SANTA CLARA REGIONAL WASTEWATER FACILITY 167 MGD PLANT SUMMARY OF CAPACITY ALLOCATION* (After transfer of capacity to Milpitas from West Valley in July 1, 2006, and Cupertino in January 1, 2009) AGENCY FLOW MGD BOD K LBS/DAY SS K LBS/DAY AMMONIA K LBS/DAY San José a Santa Clara a Subtotal b West Valley Cupertino Milpitas Burbank Sunol Subtotal TOTAL *The term capacity is defined as the mean peak five-day dry weather plant treatment capacity. Note(s): a. San José and Santa Clara allocations vary annually according to assessed property value. The values shown are effective as of January 1, b. CSD 2-3 rents capacity from San José and Santa Clara. Allocations vary annually depending flow from CSD _2 Revised A-3

36 TABLE 3 SAN JOSE-SANTA CLARA REGIONAL WASTEWATER FACILITY 167 MGD PLANT SUMMARY OF CAPACITY ALLOCATION* (June 30, 2014) AGENCY FLOW MGD BOD K LBS/DAY SS K LBS/DAY AMMONIA K LBS/DAY San José a,c Santa Clara a Subtotal b West Valley c Cupertino Milpitas Burbank Subtotal TOTAL *The term capacity is defined as the mean peak five-day dry weather plant treatment capacity. Note(s): a. San José and Santa Clara allocations vary annually according to assessed property value. The values shown are effective as of June 30, b. CSD 2-3 rents capacity from San José and Santa Clara. Allocations vary annually depending flow from CSD 2-3. c. San José and West Valley Sanitation District allocations reflect the transfer of capacity associated with annexations from the District into San José from _2 Revised A-4

37 EXHIBIT B SAN JOSE-SANTA CLARA REGIONAL WASTEWATER FACILITY REPLACEMENT COST OF PLANT AND EQUIPMENT JUNE /18/15 ACQUISITION ORIGINAL REPLACEMENT FACILITY DATE COST COST Asset #1 - Original primary plant ,786,400 45,876,200 Asset #2 - Plant Additions ,370,200 15,269,000 Asset #3 - Plant Additions & New Secondary Facility ,166, ,656,700 Asset #4 - Final Tank ,183,000 11,053,800 Asset #5 - Digesters ,600 8,419,400 Other Projects: , , ,800 2,150, , , ,100 2,300, , , , ,000 Sludge Lagoons ,000 5,993,000 Foam Flotation Program , , /MGD Improvements ,809,400 35,865, /MGD Additions ,049, ,296,600 A.W.T.F ,810, ,021,500 Other Projects: ,500 2,599, , , ,421,100 4,292, ,962,300 4,992, ,200 1,325, ,777,765 3,770,200 CAPITAL IMPROVEMENT PROGRAM: Intermediate-term Improvement ,699, ,232,300 First Stage Expansion ,035,100 39,580, Capitalized Expenditures ,900 1,767, Capitalized Expenditures ,473 1,002, Capitalized Expenditures ,720 1,485, Capitalized Expenditures , , Capitalized Expenditures , , Capitalized Expenditures ,291,825 2,188, Capitalized Expenditures , , _2 B-1

38 1995 Capitalized Expenditures ,595,576 17,651, Capitalized Expenditures ,396,270 5,650, Capitalized Expenditures ,320,130 15,161, Capitalized Expenditures ,829,981 4,559, Capitalized Expenditures ,138, ,724, Capitalized Expenditures ,464,590 3,749, Capitalized Expenditures ,866,326 5,687, Capitalized Expenditures ,265 1,323, Capitalized Expenditures ,663,511 2,324, Capitalized Expenditures ,321,630 4,443, Capitalized Expenditures , , Capitalized Expenditures ,096,762 2,707, Capitalized Expenditures ,197,306 1,439, Capitalized Expenditures ,856,165 81,431, Capitalized Expenditures ,452,121 96,787, Capitalized Expenditures ,337,506 5,871, Capitalized Expenditures ,237,725 4,537, Capitalized Expenditures ,961,081 15,701, Capitalized Expenditures ,009,116 25,189, Capitalized Expenditures , ,000 TOTAL 624,951,452 1,498,533,500* (*) Plant and equipment replacement cost is distributed to parameters using the percentages contained in the most current Revenue Program (Form No. 8, Summary of the Distribution of Capital Costs). NOTE: A. Major plant facilities or equipment items shall be added to this Exhibit in the year purchased. Construction projects shall be added to this Exhibit in the year of acceptance at full construction value. B. Process related facilities and equipment that cost in excess of $2 million shall be allocated to parameters (flow, BOD, SS, Ammonia) based on engineering design. Capital costs that are less than $2 million and/or are not process related shall be allocated to parameters using the percentages contained in the most current Revenue Program (Form 8, Summary of Distribution of Capital Costs). C. This Exhibit shall not include replacement or rehabilitation costs. D. Facilities and equipment sold or otherwise disposed shall be deleted from this Exhibit. E. This Exhibit shall be updated annually using the June ENR (San Francisco) Construction cost index _2 B-2

39 EXHIBIT C SAN JOSE-SANTA CLARA REGIONAL WASTEWATER FACILITY LAND DISTRIBUTION 1. Table 1 includes the original land purchase price for each parcel purchased before June 30, 1982 ( Pre-1982 Land. ). The San José s average yearly rate of return for all investments was applied to this amount and compounded to establish a June 30, 1982 value for all Pre-1982 Land. 2. Land participation for Pre-1982 Lands was based upon the 167 MGD capacity of the Plant (Flow BOD, Suspended Solids and Ammonia). Percentage of participation in Pre-1982 Land is based upon the total acreage and not on an individual parcel basis. 3. Agencies which still owe San José and West Valley Sanitation District for their allocated share of cost for Pre-1982 Land shall pay all the costs of this land from sale, lease or rental revenues to be received from the Regional Wastewater Facility properties. Percentage of revenue shall be based upon each Agency s full capacity percentage. The Pre-1982 Land costs will be paid off only from sale, lease, or rental revenues of the Plant property and shall have no fixed term. Table 2 shows First Parties and Agencies allocations and amounts/credits due for Pre-1982 Land costs as of June 30, Table 3 shows the original purchase price, date of purchase and cost allocation for all land purchased on or after July 1, 1982 ( Post 1982 Land ). Cost allocation in Post 1982 Land was based on the flow and wastewater strength allocations for First Parties and participating Agencies, except for land purchased for recycled water facilities, which is based on flow allocation only. 5. Table 4 shows the percentage participation in Pre-1982 Land and Post-1982 Land for First Parties and Agencies effective June 30, 2014 including, the annexation of Sunol into San José on November 30, 2009, the annexation of territory from West Valley into San José from , the transfer of land equivalent to 0.75 MGD capacity _2 C-1

40 from Cupertino to Milpitas effective January 1, 2009, and the transfer of land equivalent to 1 MGD from West Valley to Milpitas effective July 1, Sale, lease or rental revenues from Regional Wastewater Facility property shall be first applied to an Agency s debt, and only upon completion of that debt, will revenues be passed on to the Agency. 7. If and when expansion of the facilities takes place in the future, land values shall again be adjusted based upon the new MGD denominator. Each Agency s percentage of participation in land shall, at that time, be recomputed based upon total land cost shown in the applicable Land Cost Allocation. 8. All purchases of land in the future shall be distributed to all Agencies in the percentage of discharge capacity at the Plant, except that land purchased for recycling improvements shall be based on the Agencies and First Parties purchased capacity in the 167 MGD Plant for the flow parameter only _2 C-2

41 SAN JOSE-SANTA CLARA REGIONAL WASTEWATER FACILITY LAND COST ALLOCATION METHODOLOGY 1. Attachment A is a Regional Wastewater Facility Property map. 2. Table 1 includes the original land purchase price for each parcel purchased before June 31, This amount was then applied to San José s average yearly rate of return for all investments and compounded to establish a June 30, 1982 value for the Pre-1982 Land. 3. Table 2 shows the First Parties and Agencies share of Pre-1982 land Costs. Table 2 also shows the amounts still due or owing by First Parties and Agencies for Pre-1982 Land Costs, as of June 30, Table 3 shows the land allocation for First Parties and Agencies for all land purchased on or after July 1, 1982, based on the amount actually paid by First Parties and Agencies for land purchased on or after July 1, Table 4 shows the land participation allocation for First Parties and Agencies as of June 30, 2014 including, the annexation of Sunol into San José on November 30, 2009, the annexation of territory from West Valley into San José from , the transfer of land equivalent to 0.75 MGD capacity from Cupertino to Milpitas effective January 1, 2009, and the transfer of land equivalent to 1 MGD from West Valley to Milpitas effective July 1, The transfer of capacity and adjusted land allocation percentages shall not affect the amounts due or owing by Agencies for Pre Land Costs _2 C-3

42 Attachment A Regional Wastewater Facility Property Map _2 C-4

43 TABLE 1 SAN JOSE-SANTA CLARA REGIONAL WASTEWATER FACILITY PRE-1982 LAND PURCHASES Pre-1982 Purchases Parcel Acres Original Cost Purchase Date Cost* Berger Williamson $ 15,284 8/49 $ 88,282 Coolidge Quitclaim / John R. Watrous ,043 7/54 490,206 John R. Medina ,067 8/54 73,106 Other Costs (Easement , ,183 Condemnation)* Curtner-Zanker.776 1,000 7/55 5,082 Los Altos Garbage ,000 8/55 4,692 James Clayton ,160 4/58 795,944 A. M. Standish / Spring Valley / Beatrice Standish ,109 7/62 202,258 Other Costs (Unallocated)* /65 2,048 Nine-Par ,515 1/68 596,405 A. L. Kricheberg ,170 4/69 452,708 Anselmo-Campi ,771 7/69 541,583 Casteel ,240 11/69 2,418,376 Chisolm-Hopham Parcel 5,232 8/70 12,738 Rankin-Gilman Parcel 600 8/70 1,461 Owens-Corning ,743 11/70 57,801 Standish ,831,034 4/71 6,892,016 Owens-Corning ,133 6/71 41,713 Phillips-Bosio Parcel 2,136 12/71 4,943 Zanker Ranch ,496,478 8/72 3,446,515 Garcia ,328 12/72 517,884 Martin-Moore ,446 1/73 439,257 Tempco ,153 7/75 566,730 County of Santa Clara Parcel 4, ,788 County of Santa Clara ,476 4/76 20,716 Brazil ,359 7/76 841,819 McCarthy (lst) ,880 12/76 793,479 McCarthy (2 nd ) ,879 4/77 793,478 McCarthy (3 rd ) ,879 1/78 743,861 Other Costs (Unallocated) , ,043 Calvo ,405 1/78 901,473 Leslie Salt Parcel 820 9/78 1,153 Graham-Cassin ,339,932 8/80 3,775,793 Geomax ,972 1/81 291,849 TOTAL 1,764.23** $13,271,823 $25,997,834 *Represents costs not allocable to a specific land purchase (e.g., appraisal of land not purchased). **Acreage has been and will be reduced by the following completed and pending conveyances: _2 C-5

44 Santa Clara Valley Water District - flood control easement dated November 25, State of California 14.8 acres for widening of State Route 237, Grant Deed dated March 17, PG&E - various completed and pending easements. Los Esteros Critical Energy Facility - access road easement conveyed November 3, 2003, pursuant to Conveyance Agreement dated November 22, 2002, as amended May 4, 2005; open space easement and pole line license pursuant to Conveyance Agreement dated pending as of March City of Santa Clara, Silicon Valley Power, electric transmission line easement pursuant to Conveyance Agreement dated July 15, 2003, pending as of March Various Agency sanitary sewer trunk line easements _2 C-6

45 TABLE 2 SAN JOSE-SANTA CLARA REGIONAL WASTEWATER FACILITY LAND COST ALLOCATION PRE-1982 PURCHASES AGENCY % SHARE AMOUNT SHOULD HAVE PAID 1982 DOLLARS AMOUND PAID 1982 DOLLARS AMOUNT PAYABLE <DUE> AS OF JUNE 30, 2014 San José a $17,287,000 $19,144,541 <$439,491> Santa Clara $4,060,862 $3,234,047 $0 West Valley a,b $1,822,188 $1,945,035 <$30,449> Cupertino b $1,160,283 $1,141,582 $0 Milpitas b $1,603,026 $523,426 $439,549 Burbank $64,475 $9,203 $30,391 TOTAL 100% $25,997,834 $25,997,834 County Sanitation District 2-3 rents capacity from San José and Santa Clara. The rental agreement does not entitle it to share in land revenue. Note(s): a. San José allocation reflects the annexation of Sunol into San José in November 30, 2009, and annexation of territory from West Valley into San José in b. Milpitas allocation reflects the capacity transfer from West Valley effective July 1, 2006, and from Cupertino effective January 1, _2 C-7

46 TABLE 3 SAN JOSE-SANTA CLARA REGIONAL WASTEWATER FACILITY LAND COST ALLOCATION POST-1982 LAND PURCHASES AGENCY SOUTH Bay Water Recycling Phase 1 easements $265,000; ) Moseley Tract (56 acres; $460,000; 9/96) McCarthy Ranch (6 acres; $6,534,000; 8/00) Cargill Pond A-18 (856 acres; $13,301,250; 10/05) Silver Creek Reservoir (4.839 acres fee; 1.97 acres permanent easement; $7,800,000; 3/05) San José a % % % % % Santa Clara % % % % % West Valley a,b 7.816% 6.928% 6.928% 6.928% 7.816% Cupertino b 5.150% 4.360% 4.360% 4.360% 5.150% Milpitas b 7.485% 6.040% 6.040% 6.040% 7.485% Burbank 0.240% 0.238% 0.238% 0.238% 0.240% TOTAL 100% 100% 100% 100% 100% County Sanitation District 2-3 rents capacity from San José and Santa Clara. The rental agreement does not entitle it to share in land revenue. Note(s): a. San José allocation reflects the annexation of Sunol into San José in November 30, 2009, and annexation of territory from West Valley into San José in b. Milpitas allocation reflects the capacity transfer from West Valley effective July 1, 2006, and from Cupertino effective January 1, _2 C-8

47 TABLE 4 SAN JOSE-SANTA CLARA REGIONAL WASTEWATER FACILITY AGENCY LAND PARTICIPATION ALLOCATION Pre-1982 Land (June 30, 2014) Moseley Tract, McCarthy, Cargill Pond A-18 South Bay Water San José a % % Santa Clara % % West Valley a,b % 7.217% Cupertino b % 4.701% Milpitas b % 8.533% Burbank % 0.240% TOTAL 100% 100% 100% County Sanitation District 2-3 rents capacity from San José and Santa Clara. The rental agreement does not entitle it to share in land revenue. Note(s): a. San José allocation reflects the annexation of Sunol into San José in November 30, 2009, and annexation of territory from West Valley into San José in b. Milpitas allocation reflects the capacity transfer from West Valley effective July 1, 2006, and from Cupertino effective January 1, _2 C-9

48 EXHIBIT D SAN JOSE-SANTA CLARA REGIONAL WASTEWATER FACILITY PARTICIPATION IN MAJOR PROCESS RELATED IMPROVEMENTS Intermediate Term Improvements and First Stage Expansion The construction and design cost of the Intermediate-term Improvement Project for restoration of the Plant capacity to 143 MGD was Eighty-Nine Million Three Hundred Thousand Two Hundred and Thirty Dollars ($89,300,230.00). The construction costs and design cost of the First Stage Expansion Project for expansion of Plant capacity to 167 MGD was Twenty-Seven Million Eighty-Four Thousand Eight Hundred and Four Dollars ($27,084,804.00). Agency has fully paid all amounts due for its capacity in the Intermediate Term Improvements and the First Stage Expansion Project. Water Recycling Improvements In October 1991, the Regional Water Quality Control Board (RWQCB) approved the San José Action Plan which included development of a reclamation program to reclaim a portion of the San José/Santa Clara Regional Wastewater Facility s (Plant) effluent, thereby providing an alternative to discharging treated effluent to South San Francisco Bay (Bay). In October 1993, the RWQCB incorporated the Action Plan into the Plant s NPDES permit. The South Bay Recycling Program (SBWRP) is intended to satisfy this permit requirement. Implementation of the SBWRP has been divided into two phases. Under the Phase 1, Water Recycling Program, approximately 9,000 acre-feet per year (up to 21.1 million gallons per day) of recycled water will be produced and distributed beginning in November The budgeted cost of Phase I was $139,840,000. Construction of Phase II is now underway, with an estimated cost of $100,000,000. On January 12, 1995, TPAC approved a cost sharing method whereby First Parties and Agencies would participate in payment for the Water Recycling Program based on their respective flows to the Plant. Table 1 contains First Parties and Agencies allocation of Phase 1 recycling costs, as of January 12, Table 2 contains First Parties and Agencies share of Phase 2 Recycling costs, as of January 12, The final Phase 2 cost allocation will be adjusted to reflect the actual cost when construction of the Phase 2 facilities is competed. First Party Santa Clara and Milpitas elected to cash fund their share of the Phase 1 Recycling Costs. However, effective January 1, 2009, Milpitas assumed the obligations of Cupertino, with respect to a portion of Cupertino debt service obligations for Recycling Cost. Table 3 shows the debt service allocation for the bond issued by San José for Phase 1 costs for First Party San José, and all Agencies including Milpitas, as of January 1, _2 D-1

49 Milpitas also elected to cash fund its share of the Phase 2 Recycling Costs. First Parties and all other Agencies chose to utilize State Revolving Loan Fund proceeds for their share of the Phase 2 Recycling costs. However, effective January 1, 2009, Milpitas assumed the obligations of Cupertino, with respect to a portion of Cupertino debt service obligations for Phase 2 Recycling Costs. Table 4 shows the debt service allocation for the SRLF proceeds, as of January 1, Long-Term Improvements On May 14, 2015, TPAC approved the San José -Santa Clara Regional Wastewater Facility Ten- Year Funding Strategy ( Funding Strategy ) whereby First Parties and Agencies participate in the funding of Long-Term Improvements proportionately based on their capacity allocations detailed in Table 1 of Exhibit A, as may be amended. The Funding Strategy contemplates the Administering Agency, pursuing Clean Water State Revolving Fund ( SRF ) loans to the maximum extent possible to finance the Long-Term Improvements. If Agency elects to finance its proportionate share of the costs of the Long-Term Improvements through SRF, short term financing, and long term financing obtained by First Parties or Administering Agency, Agency agrees to execute and deliver to the Administering Agency the necessary documentation to secure such financing and Agency s repayment thereof. In the event that all or a portion of financing for the Long-Term Improvements is secured through a short-term variable rate financing program, Agency acknowledges and agrees that any participating Agency will be responsible for its proportionate cost for establishing the financing program based on the total amount to be financed by Agency through the short-term variable rate financing program relative to the total dollar size of the program. Any Agency that requests participation in the program after the deadline established by the Administering Agency for participation may incur additional expenses associated with accommodating the Agency. Agencies that choose to participate in the program can cease their participation upon repayment of the funds and associated costs. Agency acknowledges and agrees that its participation in any financing obtained by First Parties or the Administering Agency, including amount financed, debt service and repayment scheduled shall be memorialized in a supplemental financing agreement. Any supplemental financing agreement shall be executed prior to or contemporaneous with the closing of the financing. Notwithstanding the terms and conditions of this Agreement, the process for asserting a claim for breach of the supplemental financing agreement such as nonpayment shall be governed by the provisions of the supplemental financing agreement. If Agency shall fail to make payment when due for their portion of the financing, Agency agrees First Parties shall have the right to institute an action for damages sustained as a result of any such default and shall have the right by mandamus or other proceeding at law or in equity to enforce their rights against Agency and to compel Agency and its officers or employees thereof to perform and carry out their obligations and duties under this Agreement, and any supplemental financing agreement. No remedy conferred upon or reserved to First Parties is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement, any supplemental financing agreement, existing at law or in equity or by statute. First Parties or San Jose, as the Administering Agency, _2 D-2

50 shall provide the Agency notice of payment past due at least thirty (30) calendar days prior to instituting an action for damages _2 D-3

51 TABLE 1 SAN JOSE-SANTA CLARA REGIONAL WASTEWATER FACILITY Participation in South Bay Water Recycling Program Phase 1 Capital Costs Agency Percent Phase 1 Budgeted Costs City of San José a,b % $89,507,389. City of Santa Clara b % $19,985,933 West Valley Sanitation District a,c 7.816% $10,929,894 Cupertino Sanitary District c 5.150% $7,201,760 City of Milpitas c 7.485% $10,467,024 County Sanitation District 2-3* 1.010% $1,412,384 Burbank Sanitary District.240% $335,616 TOTAL 100% $139,840,000 *County Sanitation District 2-3 (CSD 2-3) has entered into an agreement with FIRST PARTIES for sharing Regional Wastewater Facility costs on a different basis than the other AGENCIES. The agreement provides for adjusting payments to reflect changes in CSD 2-3 s flow and loadings. The agreement between CSD 2-3 and FIRST PARTIES do not affect the other AGENCIES participation in the South Bay Water Recycling Program Phase 1 capital costs. Note(s): a. San José allocation reflects the annexation of Sunol into San José in November 30, 2009, and annexation of territory from West Valley into San José in b. San José and Santa Clara allocations vary annually according to assessed property value; values shown are effective as of June 30, c. Milpitas allocation reflects the capacity transfer from West Valley effective July 1, 2006, and from Cupertino effective January 1, _2 D-3

52 TABLE 2 SAN JOSE-SANTA CLARA REGIONAL WASTEWATER FACILITY Participation in South Bay Water Recycling Program Phase 2 Capital Cost Agency Percent Phase 2 Estimated Costs City of San José a,b % $64,007,000 City of Santa Clara b % 14,292,000 West Valley Sanitation District a,c 7.816% 7,816,000 Cupertino Sanitary District c 5.150% 5,150,000 City of Milpitas c 7.485% 7,485,000 County Sanitation District 2-3* 1.010% 1,010,000 Burbank Sanitary District.240% 240,000 TOTAL 100% $100,000,000 *County Sanitation District 2-3 (CSD 2-3) has entered into an agreement with FIRST PARTIES for sharing Regional Wastewater Facility costs on a different basis than the other AGENCIES. The agreement provides for adjusting payments to reflect changes in CSD 2-3 s flow and loadings. The agreement between CSD 2-3 and FIRST PARTIES do not affect the other AGENCIES participation in the South Bay Water Recycling Program Phase 2 capital costs. Note(s): a. San José allocation reflects the annexation of Sunol into San José in November 30, 2009, and annexation of territory from West Valley into San José in b. San José and Santa Clara allocations vary annually according to assessed property value; values shown are effective as of June 30, c. Milpitas allocation reflects the capacity transfer from West Valley effective July 1, 2006, and from Cupertino effective January 1, _2 D-4

53 TABLE 3 SAN JOSE-SANTA CLARA REGIONAL WASTEWATER FACILITY PHASE 1 RECYCLING DEBT ALLOCATION Series 2005 A Refunding Bonds - Principal $54,020,000; last payment due November 15, 2016 Series 2005 B Refunding Bonds - Principal $27,130,000; last payment due November 15, 2020 San José a West Valley Cupertino Milpitas District 2-3 Burbank % % 6.734% 0.643% 1.436%.237% Series 2009 A Refunding Bonds - Principal $21,420,000; last payment due November 15, San José a Milpitas District 2-3 Burbank % 0.778% 1.737% 0.287% Note(s): a. San José allocation reflects the annexation of Sunol into San José in November 30, The 2009 Refunding Bonds were issued on January 29, 2009 in the Principal Amount of $21,420,000 for the purpose of refinancing the 2005B Refunding Bonds. On January 20, 2009, Cupertino made cash payment in the amount of ONE MILLION EIGHT HUNDRED TWENTY- SIX THOUSAND EIGHT HUNDRED FORTY-TWO DOLLARS ($1,826,842.00) to redeem its portion of the 2005B Refunding Bonds. Accordingly, Cupertino has no further obligation for 2005B Refunding Bonds and no obligation for 2009A Refunding Bonds. On January 20, 2009, West Valley made a cash payment in the amount of TWO MILLION EIGHT HUNDRED SEVENTY-FOUR THOUSAND ONE HUNDRED FIFTY-TWO DOLLARS and TWENTY CENTS ($2,874,152.20) to redeem its portion of the 2005B Refunding Bonds. Accordingly, West Valley has no further obligation for 2009A Refunding Bonds _2 D-5

54 _2 TABLE 4 SAN JOSE-SANTA CLARA REGIONAL WASTEWATER FACILITY STATE REVOLVING LOAN FUND DEBT ALLOCATION FY 1998 thru 2019 Annual Debt Annual Annual Annual Annual Annual Annual Annual Annual Service Repayment Payment San José Santa Clara Milpitas West Cupertino Sanitation District Burbank Sunol Valley 2-3 Period(s) % % % 0.000% 8.448% 5.567% 1.092% 0.259% 0.227% FY 1998/1999 $1,661,799 $1,146,608 $256,067 - $140,389 $92,512 $18,147 $4,304 $3,772 FY 1999/2000 $4,463,882 $3,079,989 $687,840 - $377,109 $248,504 $48,746 $11,561 $10,133 thru 2007/2008 Annual Debt Annual Annual Annual Annual Annual Annual Annual Annual Service Repayment Payment San José Santa Clara Milpitas West Cupertino Sanitation District Burbank Sunol Valley 2-3 Period(s) % % % 0.486% a 8.448% 5.081% 1.092% 0.259% 0.227% FY2008/2009 $4,463,882 $3,079,989 $687,840 $21,694 $377,109 $226,810 $48,746 $11,561 $10,133 Annual Debt Annual Annual Annual Annual Annual Annual Annual Annual Service Repayment Payment San José Santa Clara Milpitas West Cupertino Sanitation District Burbank Sunol Valley 2-3 Period(s) % % % 0.486% a 8.448% 5.081% 1.092% 0.259% 0.000% b FY2009/2010 $4,463,882 $3,090,122 $687,840 $21,694 $377,109 $226,810 $48,746 $11,561 - Thru FY2017/2018 FY 2018/2019 $1,804,020 $1,248,833 $277,981 $8,768 $152,404 $91,662 $19,700 $4,672 - Note(s): a. Milpitas shall be responsible for 0.486% of the debt service repayment, which is prorated share of the Cupertino payment due on or after January 1, b. San José allocation reflects the annexation of Sunol into San José in November 30, D-6

55 EXHIBIT E ADMINISTERING AGENCY A. San José to be Administering Agency. It is mutually agreed that the City of San José is and shall be the Administering Agency of this Agreement, and, as such, shall execute and administer this Agreement. B. Powers and Duties of Administering Agency, Scope, and Exercise. Subject to such limitations as may be imposed in this Agreement, the Administering Agency shall have the following powers and duties: 1. To maintain, repair, expand, replace, improve and operate the treatment Plant, and to do any and all things which it shall find to be reasonably necessary, with respect to its maintenance, repair, expansion, replacement, improvement and operation (subject to the provision of funds therefor in accordance with the provisions of this Agreement), to treat and dispose of all sewage (and by-products thereof) of San José and Santa Clara and of any and all "Outside Users" now or hereafter authorized to discharge or convey sewage into or to said treatment plant or any sewer lines leading thereto, so that said sewage and all effluent from said Plant will not pollute the waters of San Francisco Bay, or any other waters, and so that said sewage will be disposed of in a manner authorized by law. 2. To make, award and enter into contracts with third parties for the construction, improvement, replacement, expansion, or repair of the Treatment Plant or any part or parts thereof. 3. To acquire, by purchase, condemnation or otherwise, any and all real or personal property which it should find to be reasonably necessary for Treatment Plant purposes. 4. To receive, be the depository for, expend and disburse, for the purposes of this Agreement, any and all funds or monies advanced, contributed or paid by the parties hereto to said Administering Agency pursuant to the provisions of this Agreement, together with all income collected from "Outside Users", all other Treatment Plant income, and all other Treatment Plant funds. 5. To keep accurate accounts of all receipts and disbursements of the above-mentioned funds and monies. 6. To provide and supply any and all personnel and services, including, but not limited to, legal, engineering and accounting services, which it should find to be reasonably necessary for the maintenance, repair, expansion, replacement, improvement and operation of said Treatment Plant, the cost and expense of providing such personnel _2 E-1

56 and services to be charged to and shared by San José and Santa Clara as part of operating or other Treatment Plant costs as elsewhere provided in this Agreement. 7. To exercise any and all other powers, common to both San José and Santa Clara, with respect to the maintenance, repair, expansion, replacement, improvement and operation of the Treatment Plant. 8. To do any and all things reasonably necessary to treatment and dispose of all sewage entering the Treatment Plant in such manner as will comply with all applicable laws and regulations. 9. To do any and all other things which the Administering Agency is required or authorized to do by other provisions of this Agreement. C. Manner of Exercising Powers or Performing Duties. The manner in which the Administering Agency shall exercise its powers and perform its duties is and shall be subject to the restrictions upon the manner in which the City of San José could exercise such powers and perform such duties; and shall not be subject to any restrictions applicable to the manner in which the City of Santa Clara could exercise such powers or perform such duties. D. Expenses of Administering Agency. It is mutually agreed that the City of San José shall be reimbursed from Treatment Plant funds for all costs and expenses incurred by it as Administering Agency of this Agreement, including, but not limited to, salaries, and wages paid by San José to its officers and employees for services rendered by them for Treatment Plant purposes. It is further agreed that San José shall be paid, from Treatment Plant funds, an amount equal to seventeen and three hundred thirteen one thousandths per cent (17,313%) of all the above mentioned salaries and wages as and for the following overhead expenses incurred by San José in furnishing said services and in administering this Agreement, to wit: payments made by San José for retirement benefits, payments made by San José for medical and hospital insurance covering officers and employees, miscellaneous overhead expenses of the auditing, purchasing and engineering departments of San José. The percentage or amount of overhead allowance or expense payable to San José shall be increased or decreased from year to year to truly reflect actual overhead and incidental costs and expenses incurred by San José for Treatment Plant purposes to the extent that such costs and expenses are not included in other items of cost or expense for which San José is otherwise reimbursed from Treatment Plant Funds _2 E-2

57 EXHIBIT F _2 F-1

58 EXHIBIT G SAN JOSE-SANTA CLARA REGIONAL WASTEWATER FACILITY TRANSFER OF AND PAYMENT FOR CAPACITY RIGHTS ON ANNEXATION AND DETACHMENT OF TERRITORY Table 1 sets forth the amount of capacity rights to be transferred from Agency to First Parties on annexation of Agency territory by either of First Parties and detachment of territory from Agency. Table 1 SAN JOSE-SANTA CLARA REGIONAL WASTEWATER FACILITY AMOUNT OF CAPACITY RIGHT TO BE TRANSFERRED ON ANNEXATION AND DETACHMENT OF TERRITORY Capacity Parameter Flow BOD SS Ammonia Transfer Per Acre of Territory GD 1.44 lbs/day 1.37 lbs/day 0.19 lbs/day Table 2 sets forth the amount of payment by First Parties to Agency for unused capacity transferred to First Parties on annexation of Agency territory by either of First Parties and detachment of the territory from Agency. Table 2 SAN JOSE-SANTA CLARA REGIONAL WASTEWATER FACILITY AMOUNT PAYABLE FOR TRANSFER OF UNUSED CAPACITY RIGHTS ON ANNEXATION AND DETACHMENT OF TERRITORY Capacity Parameter Flow BOD SS Ammonia Transfer Per Acre of Territory $0.79 per GD $ per lbs/day $ per lbs/day $ per lbs/day _2 G-1

59 T A B L E O F C O N T E N T S PART I PART II PART III PART IV PART V PART VI DEFINITIONS.1 CAPACITY RIGHTS GRANTED TO AGENCY..5 A. General B. Capacity Rights C. San José/Santa Clara Regional Wastewater Facility Engineering Study D. Restrictions and Regulations Respecting Nature, Kind, Type and Strength.. of Sewage E. Reports, Data and Maps to be Provided by Agency F. Area Restrictions FUTURE DISCHARGE CAPACITY RIGHTS.. 7 A. Redistribution of Capacity Rights 7 B. Acquisition of Additional Capacity Rights With Plant Expansion C. Acquisition of Additional Capacity Rights Without First Parties Initiated Plant Expansion D. Adjustment to Capacity Rights Due to Operating Conditions LAND...9 A. Participation B. Sale of Land AMOUNTS PAYABLE BY AGENCY TO FIRST PARTIES. 10 A. Payments for Existing Capacity Rights In The Intermediate Term And... First Stage Expansion Projects and Phase 1 Water Recycling Program 10 B. Payments for Additional Capacity Rights C. Payments for Future Improvements D. Payments for Operation and Maintenance Costs E. Method of Payment F. Credits G. General H. Payments for Operating Reserves SAN JOSE-SANTA CLARA TREATMENT PLANT ADVISORY... COMMITTEE 14 A. Creation and Membership _2 i

60 B. Alternate Members C. Chair D. Secretary E. Meetings F. Procedure G. Power and Duties H. Action Upon Recommendations I. Expenses PART VII PART VIII MISCELLANOUS PROVISIONS A. Effective Date and Duration of Agreement 18 B. Extension, Renewal or Amendment to the Agreement C. Use of Regional Wastewater Facility After Expiration of Term D. Termination E. Sale or Transfers by First Parties F. Industrial Waste Program G. Claims of Breach of Agreement or of Inequities H. Liability I. Compliance with Federal and State Laws and Regulations J. Assignment K. Successors and Assigns L. Waivers M. Performance and Time to be of The Essence N. Insurance O. Titles and Headings P. Notices SPECIAL PROVISIONS...22 A. Termination of Agreements B. Annexation and Detachments _2 ii

61 EXHIBIT A EXHIBIT B EXHIBIT C EXHIBIT D EXHIBIT E EXHIBIT F EXHIBIT G ESTIMATED REPLACEMENT COST OF PLANT AND EQUIPMENT AGENCY TREATMENT PLANT CAPACITY ALLOCATION LAND DISTRIBUTION PARTICIPATION IN MAJOR PROCESS RELATED IMPROVEMENTS ADMINISTERING AGENCY SERVICE AREA TRANSFER OF AND PAYMENT FOR CAPACITY RIGHTS ON ANNEXATION AND DETACHMENT OF TERRITORY _2 iii

62 AGENDA ITEM NO. 5 11/18/15 October 28, 2015 Mayor Jamie L. Matthews Chair, Treatment Plant Advisory Committee San Jose - Santa Clara Regional Wastewater Facility 1500 Warburton Avenue Santa Clara, CA Kerrie Romanow 200 E. Santa Clara Street, 10 th Floor San Jose, CA Re: Request to Provide Presentation at November 19, 2015 Treatment Plant Advisory Committee ( TPAC ) Meeting Dear Mr. Chair and Ms. Romanow, The West Valley Sanitation District, Burbank Sanitary District, Cupertino Sanitary District, County Sanitation District 2-3, and the City of Milpitas (collectively, the Tributary Agencies ) submitted proposed redlined restated and amended Agreements to our respective Master Agreements for the City of San Jose s and the City of Santa Clara s review and consideration on October 5, At the October 8, 2015 TPAC meeting, it was decided by TPAC that the Master Agreements between the City of San Jose, Santa Clara and the Tributary Agencies be added to the agenda for the upcoming November 19, 2015 TPAC meeting. The Tributary Agencies request the opportunity to provide a presentation on the proposed amendments to the Master Agreements, submitted by the Tributary Agencies. This presentation would be conducted by staff of the Tributary Agencies in the form of a 20 minute presentation, similar to the time provided to the Administrative Agency staff (City of San Jose Staff) on a monthly basis for various agenda items. The presentation from the Tributary Agency staff would provide an overview of the recommended redlines found within the proposed amendments of the respective Master Agreements, submitted on October 5, Because these redlines were generated by the Tributary Agencies with intent to bring the Master Agreement up to date with the current state of the treatment plant, enable the funding and implementation of major rehabilitation through the capital improvement program, continue with open and transparent administration of the plant, and comply with all applicable regulations and laws, it s appropriate that an explanation on these redlines be provided by the respective agencies. The presentation will provide the

63

64 West Vaey Sanitation District AGENDA ITEM NO. 6 11/18/15 November 10, 2015 Kerrie Romanow City of San Jose 200 E. Santa Clara Street 10th Floor Tower San Jose, CA Re: City of San Jose letter dated October 22, 2015 Dear Ms. Roman ow, I received your letter dated October 22, 2015, related to the Master Agreement between the Cities of San Jose and Santa Clara, and West Valley Sanitation District. Your letter transmitted a redline of the City of San Jose's proposed amendments to the Master Agreement, in which you asked us to provide you with preliminary feedback by November 20, You also requested that the District agendize this redline at our next Board meeting so that you and your staff can address the Board's questions and concerns. As Chairperson of the Board, my most immediate concern is that your redline did not address any of the proposed amendments that District staff previously submitted to you on October 5, District staff spent many hours developing thoughtful and prudent amendments necessary to support the current and future plans of the Regional Wastewater Facility. Our Board fully supports the District's proposed amendments, and I was frankly discouraged to find that none of our amendments were incorporated into the City's redline. Therefore, my preliminary feedback is that the redline you provided on October 22, 2015 is incomplete. It is also premature for the Board to consider this redline at its next meeting. A redline that is ripe for Board consideration is a redline that reflects the contributions of all parties involved - San Jose, Santa Clara, and the District. Our Board fully expects that District staff will meet with San Jose and Santa Clara staff on several occasions to discuss and eventually reach agreement on all parties' requested changes. Good faith negotiation of amendments to any agreement especially a multi-party agreement that is thirty-two years old and is in critical need of a significant update is essential to the successful understanding and implementation of the agreement. I am aware that District staff already requested to meet with you to discuss its proposed amendments, but that such request has gone unanswered. A meeting of the minds between San Jose, Santa Clara, and District staff should occur before another redline is brought back to the Board for review. I encourage you to contact District staff to set up a meeting at your earliest convenience. Because all parties are invested in the longterrn_sap_erational health of the Regional Wastewater Facility, I am confident that we will find a mutually,agreeable oath towards resolution of any differences. Sincerely,. Steve Leonardis, Chair West Valley Sanitation District _ Cc: Norberto Duenas, City of San Jose - 0 East Sunnyoaks Ave. Campbell, CA West Valley Sanitation District of Santa Clara County Serving: City of Campbell -Town of Los Gatos. City of Monte Sereno City of Saratoga - Unincorporated Areas fax ww.westvalleysan.org

65 AGENDA ITEM NO. 7 11/18/15

66

67

68

69

70

71 INVESTMENT REPORT AS OF SEPTEMBER 2015 AGENDA ITEM NO /18/15 COMMINGLED FUNDS INVESTED BY THE COUNTY OF SANTA CLARA FOR WEST VALLY SANITATION DISTRICT OF SANTA CLARA COUNTY INTEREST FUND FUND BALANCE 7/1/15 TO DATE GENERAL (OPERATIONS) $ 26,643, $ 32, TRUST 460, (note 1) RESTRICTED HILLSIDE 685, RESTRICTED STORM 599, $ 28,390, $ 34, EARNED INTEREST RATES (%) FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR st Quarter (July-Sept) (note 2) 2nd Quarter (Oct-Dec) (note 2) 3rd Quarter (Jan-Mar) (note 2) 4th Quarter (Apr-June) (note 2) Note (1): Interest earned on the Trust Fund is posted to the General (Maintenance and Operations) Fund. Note (2): Interest on all funds is posted quarterly, following the quarter in which the interest is earned; i.e. interest earned in the first quarter is posted in the second quarter.

72 AGENDA ITEM NO. 9 11/18/15 WEST VALLEY SANITATION DISTRICT CONSOLIDATED EXPENSE STATEMENT BUDGET REPORT THREE MONTHS ENDED SEPTEMBER, 2015 YR TO DATE BUDGET PERCENT OF YEAR EXPIRED, 25 UNDER LESS FINAL YEAR TO DATE % (OVER) EXP. EXPENSES BUDGET EXPENDED EXPENDED BUDGET % SALARIES AND EMPLOYEE BENEFITS SALARIES $3,101, ,649 26% $2,293,397 74% BENEFITS 1,842, ,900 30% 1,297,038 70% TOTAL SALARIES & BENEFITS 4,943,984 1,353,549 27% 3,590,435 73% OPERATING EXPENSES DIRECTORS' FEES 13,800 1,200 9% 12,600 91% GASOLINE, OIL & FUEL 75,000 15,658 21% 59,342 79% INSURANCE 340,000 31,427 9% 308,573 91% MEMBERSHIPS 40,560 7,692 19% 32,868 81% OFFICE EXPENSE 57,750 5,512 10% 52,238 90% INFORMATION SERVICES 363, ,586 38% 225,314 62% CONTRACTUAL SERVICES 267,601 9,909 4% 257,692 96% TREATMENT PLANT 8,745,757 2,126,495 24% 6,619,262 76% PROFESSIONAL SERVICES 713,000 62,950 9% 650,050 91% PRINTING & PUBLICATIONS 19,200 1,437 7% 17,763 93% RENTS & LEASES 16,500 2,701 16% 13,799 84% REPAIRS & MAINTENANCE 370,750 44,719 12% 326,031 88% PROFESSIONAL DEVELOPMENT 101,950 10,618 10% 91,332 90% UTILITIES 154,000 17,158 11% 136,842 89% OTHER 11,050 6,322 57% 4,728 43% REVENUE BOND DEBT SERVICE 1,464, ,737 23% 1,121,597 77% COMMERCIAL PAPER 150, % 150, % TOTAL OPERATING EXPENSES 12,905,152 2,825,121 22% 10,080,031 78% GENERAL FIXED ASSETS 726,000 8,019 1% 717,981 99% SUBSURFACE LINES & MISC. CONSTRUCTION PROJ. 5,000, ,528 7% 4,673,472 93% SEPTIC SYSTEM ABANDONMENT PROGRAM 10, % 10, % SEPTIC SYSTEM ABANDONMENT PROJECTS 300, % 300, % TREATMENT PLANT & JOINT LINES 8,870, ,633 9% 8,070,611 91% TOTAL CAPITAL OUTLAY 14,906,244 1,134,180 8% 13,772,064 92% TOTAL EXPENDITURES $32,755,380 $5,312,850 16% $27,442,530 84%

73 WEST VALLEY SANITATION DISTRICT CONSOLIDATED INCOME STATEMENT BUDGET REPORT THREE MONTHS ENDED SEPTEMBER, 2015 YR TO DATE RCD. PERCENT OF YEAR EXPIRED, 25 (UNDER) LESS FINAL YEAR TO DATE % OVER BUDGET INCOME BUDGET RECEIVED RECEIVED BUDGET % OPERATING INCOME SEWER SERVICE CHARGES-TAX ROLL $21,423,747 $0 0% ($21,423,747) -100% SEWER SERVICE CHARGES-OTHER 1,183,198 1,059,565 90% (123,633) -10% CONNECTION FEES 1,025, ,115 51% (502,891) -49% PERMIT & INSPECTION FEES 408,807 90,383 22% (318,424) -78% LABOR AND OVERHEAD BILLED 25, % (25,000) -100% PLAN CHECKING FEES 4,000 4, % % TREATMENT PLANT CAPACITY FEES 500, ,884 34% (331,116) -66% STORM CLEANING FEES 86, % (86,162) -100% STORM FUND ADMINISTRATIVE FEE 7, % (7,564) -100% TOTAL OPERATING INCOME 24,663,484 1,845,721 7% (22,817,763) -93% NON-OPERATING INCOME INTEREST - COUNTY 139,000 33,534 24% (105,466) -76% SSAP PRINCIPAL & INTEREST 50, % (50,700) -100% OTHER NON-OPERATING REVENUE 3,825 94, % 90, % COMMERCIAL PAPER PROCEEDS 5,000, % (5,000,000) -100% TOTAL NON-OPERATING REVENUE 5,193, ,666 2% (5,065,859) -98% TOTAL INCOME 29,857,009 1,973,387 7% (27,883,622) -93% TOTAL EXPENDITURES 32,755,380 5,312,850 16% (27,442,530) -84% NET INCOME (EXPENDITURES) (2,898,371) (3,339,463) $ (441,092) CASH BALANCE JUNE 30, ,790,693 30,790,693 DECREASE (INCREASE) IN ACCOUNTS RECEIVABLE (768,943) CHANGE IN DUE TO (FROM) OTHER FUNDS 61,863 CHANGE IN DUE TO (FROM) OTHER ORGANIZATIONS (100,446) CASH BALANCE SEP. 30, 2015 $ 27,892,322 $ 26,643,704

74 Agenda Payments for Board Approval Board Date: 11/18/15 Agenda Item No. 12 Check No Pay Date Vendor Payment Description Payment Amount /16/2015 CalPERS Retirement: payroll 9/28-10/11/15 18, /16/2015 Carpenters Local 2236 Union Dues: payroll 9/14-10/11/ /16/2015 Hartford Life insurance Co Def Comp: payroll 9/28-10/11/15 10, /16/2015 State Distribution Unit Garn: payroll 9/28-10/11/ /16/2015 State Distribution Unit Garn: payroll 9/28-10/11/ /16/2015 West Valley Sanitation District Employee Contrib: payroll 9/14-10/11/ /23/2015 Adler Tank Rentals LLC Rental of Water Tank /23/2015 Airgas USA, LLC Gloves 1, /23/2015 All Car, LLC Annual Smog Checks /23/2015 Bartel Associates LLC Consulting Services - OPEB Valuation 7, /23/2015 Bartle Wells Assoc Consulting Services 8, /23/2015 Business Card Misc. Conf. and Office Expense 6, /23/2015 California Special Districts Assoc Annual Membership 1, /23/2015 Christopher Cumbo Expense Reimbursement /23/2015 County of Santa Clara Encroachment Permit /23/2015 CWEA Membership Renewals 1, /23/2015 FedEx Shipping /23/2015 Karen Brauns Retiree Medical Insurance 1, /23/2015 Kenny Rogers Plumbing Plumbing Repairs /23/2015 Los Gatos Swim & Racquet Club Refund of Storm Fee /23/2015 Meyers - Nave Legal Services 17, /23/2015 Occumetric Inc Fit for Duty Testing /23/2015 Pacific Gas & Electric Office Utilities 2, /23/2015 Pacific Gas & Electric Co WVCWP Office Utilities /23/2015 Patrick Salandro Expense Reimbursement /23/2015 Pitney Bowes Global Financial Svcs Postage Machine Lease /23/2015 Red Wing Shoe Store Safety Shoes /23/2015 Royal Brass, Inc Part - MV /23/2015 Slingshot Connections, LLC WVCWP Temporary Staffing 1, /23/2015 Slingshot Connections, LLC WVCWP Temporary Staffing 2, /23/2015 TelePacific Communications Office Telephones, Fax, Modem /23/2015 The Gardensmith Gardening Services /23/2015 Town of Los Gatos Encroachment Permits 1, /23/2015 US Healthworks Medical Group, PC Pre-Employment Physical/Inoculations /23/2015 US Healthworks Medical Group, PC Audiogram WVSD GL - Board Approval - Payments Thursday, November 12, 2015 Page 1 of 3 Payment

75 Check No Pay Date Vendor Payment Description Payment Amount /23/2015 Verizon Communications WVCWP Office Telephones/Internet /23/2015 Verizon Wireless Cell Phone Service /28/2015 City of Monte Sereno WVCWP Facilities Lease 1, /28/2015 Health Net Employee Medical Insurance 14, /28/2015 Health Net of California Inc Retirees' Medical Insurance 1, /30/2015 CalPERS Retirement: payroll 10/12-10/25/15 17, /30/2015 Hartford Life insurance Co Def Comp: payroll 10/12-10/25/15 10, /30/2015 State Distribution Unit Garn: payroll 10/12-10/25/ /30/2015 State Distribution Unit Garn: payroll 10/12-10/25/ /6/2015 A Tool Shed Inc Equipment Rental /6/2015 Alhambra & Sierra Springs WVCWP Office Water /6/2015 CASA Annual Membership Dues 15, /6/2015 Chay & Harris Painting Contractors Inc Painting Water Valve and Assembly 1, /6/2015 Copyco Final Budget Printing /6/2015 County of Santa Clara Employee/COBRA Dental Insurance 2, /6/2015 CWEA Membership Renewal /6/2015 CWEA Membership Renewal /6/2015 David J. Davila Mileage Reimbursement /6/2015 Delwood's Inc Sewer Connection Permits /6/2015 DKF Solutions Group LLC Safety Program/Training/Materials 2, /6/2015 Dukes Sales & Service, Inc Root Control Lateral and Main Lines 8, /6/2015 Everett Olson Retiree Medical Insurance /6/2015 International Training & Rehab Tech NASSCO PACP/MACP Training 1, /6/2015 Julie Schaer WVCWP Expense Reimbursement /6/2015 Kaiser Foundation Health Plan Inc Retirees' Medical Insurance /6/2015 Kaiser Foundation Health Plan Inc Retirees' Medical Insurance 5, /6/2015 Kaiser Foundation Health Plan Inc WVCWP Medical Insurance 20, /6/2015 Kelly Carroll WVCWP Expense Reimbursement /6/2015 Lesha Luu Expense Reimb. Calpelra, CalPERS Conf /6/2015 LeWiz Communications, Inc WVCWP IT Service and Support 1, /6/2015 Ollie Hurd Welding Class /6/2015 Phuong Vu Expense Reimb. CalPERS Conference /6/2015 Professional Cleaning Systems, Inc Janitorial Services 1, /6/2015 Royal Brass, Inc Hose Adapter/Cam Lock Emerg. Pump /6/2015 San Jose Water Co Fire Service /6/2015 San Jose Water Co Water for Sewer Cleaning /6/2015 Santa Clara County Fire Department WVCWP Urban Runoff Program 3, /6/2015 Slingshot Connections, LLC WVCWP Temporary Staffing /6/2015 Slingshot Connections, LLC WVCWP Temporary Staffing 1, /6/2015 Slingshot Connections, LLC WVCWP Temporary Staffing 1, /6/2015 State of Calif - Dept of Motor Vehicles Registration Renewal - Godwin Generator WVSD GL - Board Approval - Payments Thursday, November 12, 2015 Page 2 of 3

76 Check No Pay Date Vendor Payment Description Payment Amount /6/2015 State of Calif - Dept of Motor Vehicles Registration Renewal - Godwin Pump /6/2015 Stepford Inc Computer Hardware /6/2015 StormTek WVCWP Catch Basin Maint. 4, /6/2015 United Administrative Services Employee Life Insurance 2, /6/2015 US Postal Service - Postage-By-Phone Postage for Meter /6/2015 Vision Service Plan Employee Vision Insurance /6/2015 Wendy Newby for WVSD Petty Cash Petty Cash Imprest Fund /6/2015 Wilson Group Phone System Maintenance /6/2015 XL Vehicle Graphics & Digital Prints Clothing 1, /6/2015 XL Vehicle Graphics & Digital Prints Clothing and Gear /6/2015 XL Vehicle Graphics & Digital Prints Clothing and Gear /9/2015 County of Santa Clara City Lot File 1, /13/2015 CalPERS Retirement: payroll 10/26-11/8/15 18, /13/2015 Hartford Life Insurance Co Def Comp: payroll 10/26-11/8/15 11, /13/2015 State Distribution Unit Garn: payroll 10/26-11/8/ /13/2015 State Distribution Unit Garn: payroll 10/26-11/8/ Checks Total Amount to Approve: 252, WVSD GL - Board Approval - Payments Thursday, November 12, 2015 Page 3 of 3

77 WEST VALLEY SANITATION DISTRICT AGENDA ITEM NO /18/15 MEMORANDUM DATE: November 10, 2015 TO: FROM: Jon Newby, District Manager and Engineer Alan Kam, Senior Engineer SUBJECT: RAINFALL AND FLOW MONITORING SERVICES (2015/2016) Recommendation Authorize the District Manager to issue Task Order to V&A Engineers for a not-to-exceed amount of $74,000 for rainfall and sewer flow monitoring services. Background A part of the District's Sewer System Management Objectives is to improve the hydraulic flow modeling effort to increase the accuracy, predictability of flow patterns and long term projections of flows within the service area. This effort was initiated in 2006 by utilizing consultant services from RMC Water and Environment (RMC) to develop a computerized hydraulic model of the major trunk sewers 10-inches in diameter and larger. This model is used to simulate present and future flows in the sewer system under dry and wet weather conditions. In order to ensure accuracy of the model, the model is calibrated with actual measured flow data. On June 25, 2014 the Board approved Task Order to RMC to expand the model to include sewers less than 10- inches in diameter which serve large tributary areas. Upon completion of RMC's efforts, all of the District's large capacity sewer system, approximately 20% of the District's system, will be incorporated into the hydraulic model. Sewers which are identified as having or projected to have capacity deficiencies will be further analyzed by staff. Projects to address the deficiencies will be developed and incorporated into the CIP accordingly. Additional efforts related to the hydraulic model will consist of periodic calibration and updating of the model. Staff estimates the need for updating the model every 5 years in order to incorporate actual measured flows, development activity and land use changes. Discussion The efforts by RMC to calibrate the hydraulic model will require rainfall and flow monitoring services at strategic locations throughout the District's service area. The data will also be utilized to identify areas which allow rainfall or groundwater into the sewer system, also known as inflow and infiltration (I&I). Once these areas are identified, staff will develop a strategy and/or projects to further pinpoint the source of 1&I and prevent the water from entering the sewer system. With the anticipated forecast for a significant wet season, the proposed flow meters will provide valuable information on how the District's system reacts during rainfall. Rainfall meters at two locations and sewer flow meters at 12 locations will be installed and monitored by V&A Engineering for up to a 10 week period under Task Order

78 November 10, 2015 Rainfall and Flow Monitoring Services (2015/2016) V&A Engineering submitted a not-to-exceed proposal for installation and monitoring of the meters in the amount of $74,000. Staff reviewed this proposal and determined the costs are fair and reasonable. The per location cost of the 2015/2016 proposal is comparable to the previously completed 2014/2015 flow monitoring service. Recommend approval. Jon Newby, District Manager and Engineer 2

79 AGENDA ITEM NO /18/15 WEST VALLEY SANITATION DISTRICT MEMORANDUM DATE: November 12, 2015 TO: FROM: Board of Directors / on Newby, District Manager and Engineer SUBJECT: ANNUAL REPORT OF WEST VALLEY SANITATION DISTRICT FOR FISCAL YEAR Recommendation Accept the Annual Report and the Memorandum on Internal Control and Required Communications of West Valley Sanitation District for Fiscal Year Discussion Attached is the Annual Report of West Valley Sanitation District for Fiscal Year The annual report includes information produced by staff, as well as the independent auditor's report and the District's financial statements for the period ended June 30, Professional auditing standards, contained in Statement on Auditing Standards (SAS) No. 114, require auditors to communicate with the Board on a number of subjects. The enclosed letters satisfy those requirements, and are solely for use of the Board of Directors and management. Mr. Michael Djuroyic from the accounting firm of Chavan & Associates LLP will attend the Board meeting on November 18 to answer the Board's questions.

80 To the Board of Directors West Valley Sanitation District We have audited the basic financial statements of the West Valley Sanitation District as of and for the year ended June 30, 2015, and have issued our report thereon dated November 4, Professional standards require that we advise you of the following matters relating to our audit. Our Responsibility under Generally Accepted Auditing Standards and Government Auditing Standards As communicated in our engagement letter, our responsibility, as described by professional standards, is to form and express an opinion(s) about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in conformity with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your respective responsibilities. Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control over financial reporting. Accordingly, as part of our audit, we considered the internal control of the West Valley Sanitation District solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you. Other Information in Documents Containing Audited Financial Statements Pursuant to professional standards, our responsibility as auditors for other information in documents containing West Valley Sanitation District s audited financial statements does not extend beyond the financial information identified in the audit report, and we are not required to perform any procedures to corroborate such other information. Our responsibility also includes communicating to you any information which we believe is a material misstatement of fact. Nothing came to our attention that caused us to believe that such information, or its manner of presentation, is materially inconsistent with the information, or manner of its presentation, appearing in the financial statements. Planned Scope and Timing of the Audit We conducted our audit consistent with the planned scope and timing we previously communicated. Page Saratoga Ave, Suite 180, San Jose, CA Tel: E-Fax: info@cnallp.com

81 Qualitative Aspects of the Entity s Significant Accounting Practices Significant Accounting Policies Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by the West Valley Sanitation District is included in Note 1 to the financial statements. There have been no initial selection of accounting policies and no changes in significant accounting policies or their application during June 30, 2015 other than the implementation of Governmental Accounting Standards Board (GASB) statement no. 68 related to the net pension liabilities of the District for its pension plans, which is documented in Note 1 and Note 9 of the District s annual financial audit report. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Significant Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management s current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management s current judgments. The most sensitive accounting estimates affecting the financial statements include accumulated depreciation related to capital assets and unfunded liabilities and expenses based on assumptions in actuarial studies performed on defined benefit pension plans (GASB 68 and GASB 45). We evaluated the key factors and assumptions used to develop the identified estimates and determined that it is reasonable in relation to the basic financial statements taken as a whole and in relation to the applicable opinion units. Financial Statement Disclosures Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting West Valley Sanitation District s financial statements relate to: cash and investments, capital assets, long-term obligations and defined benefit pension plans. Significant Difficulties Encountered during the Audit We encountered no significant difficulties in dealing with management relating to the performance of the audit. Uncorrected and Corrected Misstatements For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and Page Saratoga Ave, Suite 180, San Jose, CA Tel: E-Fax: info@cnallp.com

82 communicate them to the appropriate level of management. None of the misstatements identified by us as a result of our audit procedures and corrected by management were material, either individually or in the aggregate, to the financial statements taken as a whole or applicable opinion units. In addition, professional standards require us to communicate to you all material, corrected misstatements that were brought to the attention of management as a result of our audit procedures. There were no material, corrected misstatements noted during the audit. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to the West Valley Sanitation District s financial statements or the auditor s report. No such disagreements arose during the course of the audit. Representations Requested from Management We have requested certain written representations from management, which are included in the attached letter dated November 4, Management s Consultations with Other Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters. Other Significant Findings or Issues In the normal course of our professional association with the West Valley Sanitation District, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, operating and regulatory conditions affecting the entity, and operational plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as the West Valley Sanitation District s auditors. This report is intended solely for the information and use of the Board and management of the West Valley Sanitation District and is not intended to be and should not be used by anyone other than these specified parties. November 4, 2015 San Jose, California Page Saratoga Ave, Suite 180, San Jose, CA Tel: E-Fax: info@cnallp.com

83 West Valley Sanitation District Management Letter June 30, 2015 Prepared by Chavan & Associates, LLP Certified Public Accountants Page Saratoga Ave, Suite 180, San Jose, CA Tel: E-Fax: info@cnallp.com

84 To the West Valley Sanitation District Introduction and Internal Controls In planning and performing our audit of the basic financial statements of West Valley Sanitation District, as of and for the year ended June 30, 2015, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, we considered West Valley Sanitation District s internal control over financial reporting (internal control) as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we do not express an opinion on the effectiveness of West Valley Sanitation District s internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control was for the limited purpose described in the first paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Recommendations As a result of the procedures performed during the June 30, 2015 audit, we made one recommendation to management that could increase the likelihood that misstatements will be prevented, detected and corrected in a timely basis related to capital assets. We recommended that the District perform an asset valuation on its subsurface lines to provide an improved method of tracking these assets for financial reporting purposes. The valuation can be performed by District staff or by a third party that specializes in this area. New Accounting Pronouncements The following is a summary of new accounting pronouncements from the Governmental Accounting Standards Board: 1. Implemented New Accounting Pronouncements a. GASB Statement No Accounting and Financial Reporting for Pensions - an amendment of GASB Statement No. 27 (Issued 06/12). The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for pensions. It also improves information provided by state and local Page Saratoga Ave, Suite 180, San Jose, CA Tel: E-Fax: info@cnallp.com

85 governmental employers about financial support for pensions that is provided by other entities. This Statement replaces the requirements of Statement No. 27, Accounting for Pensions by State and Local Governmental Employers, as well as the requirements of Statement No. 50, Pension Disclosures, as they relate to pensions that are provided through pension plans administered as trusts or equivalent arrangements (hereafter jointly referred to as trusts) that meet certain criteria. This Statement establishes a definition of a pension plan that reflects the primary activities associated with the pension arrangement-determining pensions, accumulating and managing assets dedicated for pensions, and paying benefits to plan members as they come due. This Statement has been implemented as of June 30, 2015 resulting in a prior period adjustment of $4,343,392. See Note 9 for information related to the financial statement impact of this statement. b. GASB Statement No. 69 In January, 2013, GASB issued Statement No. 69, Government Combinations and Disposal of Government Operations. This Statement establishes accounting and financial reporting standards related to government combinations and disposal of government operations. As used in this Statement, combinations include a variety of transactions referred to as mergers, acquisitions, and transfers of operations. There was no financial statement effect related to this Statement. c. GASB Statement No. 70 In April, 2013, GASB issued Statement No 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees. Some governments extend financial guarantees for the obligations of another government, a not-for-profit entity, or private entity without directly receiving equal or approximately equal value in exchange (a nonexchange transaction). The District does not participate in nonexchange financial guarantees. Therefore, this Statement had no financial statement effect. d. GASB Statement No. 71 In November, 2013, GASB issued Statement No 71, Pension Transition for Contributions Made Subsequent to the Measurement Date an amendment of GASB Statement No. 68. The objective of this Statement is to address an issue regarding application of the transition provisions of Statement No. 68, Accounting and Financial Reporting for Pensions. The issue relates to amounts associated with contributions, if any, made by a state or local government employer or nonemployer contributing entity to a defined benefit pension plan after the measurement date of the government s beginning net pension liability. The provisions of this Statement were required to be applied simultaneously with the provisions of Statement 68 and have been implemented as of June 30, See Note 9 for information related to the financial statement impact of this statement. 2. Upcoming New Accounting Pronouncements a. GASB Statement No. 72 In February, 2015, GASB issued Statement No 72, Fair Value Measurement and Application. This Statement addresses accounting and financial reporting issues related to fair value measurements. The definition of fair Page Saratoga Ave, Suite 180, San Jose, CA Tel: E-Fax: info@cnallp.com

86 value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This Statement provides guidance for determining a fair value measurement for financial reporting purposes. This Statement also provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements. The requirements of this Statement are effective for financial statements for periods beginning after June 15, 2015 (fiscal year ending June 30, 2016). The District is in the process of determining the impact this statement will have on the financial statements, but does not anticipate a material impact on its financial statements. b. GASB Statement No. 73 Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68. Effective date: the provisions in Statement 73 are effective for fiscal years beginning after June 15, 2015 except those provisions that address employers and governmental nonemployer contributing entities for pensions that are not within the scope of Statement 68, which are effective for fiscal years beginning after June 15, The objective of this Statement is to improve the usefulness of information about pensions included in the general purpose external financial reports of state and local governments for making decisions and assessing accountability. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for all postemployment benefits with regard to providing decision-useful information, supporting assessments of accountability and interperiod equity, and creating additional transparency. This Statement also clarifies the application of certain provisions of Statements 67 and 68. The District is in the process of determining the impact this statement will have on the financial statements, but does not anticipate a material impact on its financial statements. c. GASB Statement No. 74 Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans. Effective date: the provisions in Statement 74 are effective for fiscal years beginning after June 15, The objective of this Statement is to improve the usefulness of information about postemployment benefits other than pensions (other postemployment benefits or OPEB) included in the general purpose external financial reports of state and local governmental OPEB plans for making decisions and assessing accountability. This Statement replaces Statements No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans. It also includes requirements for defined contribution OPEB plans that replace the requirements for those OPEB plans in Statement No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, as amended, Statement 43, and Statement No. 50, Pension Disclosures. Management anticipates that this statement will not have a direct impact on the District s financial statements. Page Saratoga Ave, Suite 180, San Jose, CA Tel: E-Fax: info@cnallp.com

87 d. GASB Statement No. 75 Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. Effective date: the provisions in Statement 75 are effective for fiscal years beginning after June 15, The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for postemployment benefits other than pensions (other postemployment benefits or OPEB). It also improves information provided by state and local governmental employers about financial support for OPEB that is provided by other entities. This Statement replaces the requirements of Statements No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans, for OPEB. Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, establishes new accounting and financial reporting requirements for OPEB plans. The scope of this Statement addresses accounting and financial reporting for OPEB that is provided to the employees of state and local governmental employers. This Statement establishes standards for recognizing and measuring liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures. For defined benefit OPEB, this Statement identifies the methods and assumptions that are required to be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. Note disclosure and required supplementary information requirements about defined benefit OPEB also are addressed. The District is in the process of determining the impact this statement will have on the financial statements. e. GASB Statement No. 76 The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. Effective date: the provisions in Statement 76 are effective for reporting periods beginning after June 15, The objective of this Statement is to identify in the context of the current governmental financial reporting environment the hierarchy of generally accepted accounting principles (GAAP). The GAAP hierarchy consists of the sources of accounting principles used to prepare financial statements of state and local governmental entities in conformity with GAAP and the framework for selecting those principles. This Statement reduces the GAAP hierarchy to two categories of authoritative GAAP and addresses the use of authoritative and nonauthoritative literature in the event that the accounting treatment for a transaction or other event is not specified within a source of authoritative GAAP. This Statement supersedes Statement No. 55, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. The requirements of this Statement are effective for financial statements for periods beginning after June 15, 2015, and should be applied retroactively. Management anticipates that this statement will not have a material impact on the District s financial statements. f. GASB Statement No. 77 Tax Abatement Disclosures. Effective date: the requirements of this Statement are effective for reporting periods beginning after December 15, This Statement requires governments that enter into tax Page Saratoga Ave, Suite 180, San Jose, CA Tel: E-Fax: info@cnallp.com

88 abatement agreements to disclose the following information about the agreements: brief descriptive information, such as the tax being abated, the authority under which tax abatements are provided, eligibility criteria, the mechanism by which taxes are abated, provisions for recapturing abated taxes, and the types of commitments made by tax abatement recipients, the gross dollar amount of taxes abated during the period, and commitments made by a government, other than to abate taxes, as part of a tax abatement agreement. Management anticipates that this statement will not have a material impact on the District s financial statements. Purpose of Communication The purpose of this communication, which is an integral part of our audit, is to describe, for management and those charged with governance, the scope of our testing of internal control and the results of that testing. Accordingly, this communication is not intended to be and should not be used for any other purpose. November 4, 2015 San Jose, California Page Saratoga Ave, Suite 180, San Jose, CA Tel: E-Fax: info@cnallp.com

89 WEST VALLEY SANITATION DISTRICT OF SANTA CLARA COUNTY ANNUAL REPORT

90 WEST VALLEY SANITATION DISTRICT ANNUAL REPORT OF WEST VALLEY SANITATION DISTRICT SANTA CLARA COUNTY, CALIFORNIA FOR FISCAL YEAR EAST SUNNYOAKS AVENUE CAMPBELL, CALIFORNIA (408)

91 TABLE OF CONTENTS Board of Directors... 1 Administrative Officers... 2 Manager's Message... 3 West Valley Sanitation District Service Area... 4 Organization Chart... 5 Organizational Structure... 6 Administration and Information Services Division... 7 Engineering and Operations Division... 8 Wastewater Treatment and Disposal Sewer Extension Financing Programs District Participation Program Septic System Abandonment Program Service Charges and Fees Sources and Uses of Funds Independent Auditor s Report and Financial Statements... Appendix

92

93 BOARD OF DIRECTORS FISCAL YEAR City of Campbell Even Low January 23, December 1, 2014 Michael Kotowski January 6, Town of Los Gatos Steve Leonardis January 23, City of Monte Sereno Marshall Anstandig January 23, City of Saratoga Chuck Page February 14, December 2, 2014 Manny Cappello December 17, Santa Clara County Ken Yeager January 10, Board of Supervisor, District 4 1

94 ADMINISTRATIVE OFFICERS Jon Newby 7/9/12 Steven R. Meyers 6/1/10 Sarah Quiter 2/12/14 Lesha Luu 10/12/11 District Manager and Engineer District Counsel Deputy District Counsel District Secretary EX OFFICIO OFFICERS Emily Harrison Santa Clara County Director of Finance Lawrence E. Stone Santa Clara County Assessor 2

95 MANAGER S MESSAGE Fiscal year was the 67 th anniversary of West Valley Sanitation District. FY marks the second year of implementing the District s Five Year Strategic Plan with objectives and action items set forth for the fiscal year focused on continuous improvement with an emphasis on gaining efficiency, improving communication, staff development and training, fiscal and financial health, improving data and information management, and long range planning. The success of the District can be directly linked to the commitment to the public and striving to improve access and communication. This year the District received recognition for the Transparency Certificate of Excellence issued by the Special District Leadership Foundation. The District demonstrated completion of eight essential governance transparency requirements such as properly conducting open public meetings, adopting policies for public records act request, filing financial transactions and compensation reports to the State Controller s Office and fulfilling fifteen website requirements to provide easy access to information on board agendas and meeting minutes, current District budget, and the most recent financial audit. These and other requirements served to demonstrate the commitment of the District to transparency, communication, and openness to the public for participation in the development of District policies. The District was awarded the certificate in February The modernization and rehabilitation of the San Jose/Santa Clara Water Pollution Control Plant continues to be refined. The City of San Jose adopted a $2 billion Plant Master Plan that identifies improvements to be made to the treatment plant over the next thirty years with $1.5 billion planned in the first ten years. The District s share of the Plant Master Plan will exceed $130 million. To maintain the fiscal health of the District, a five-year rate plan was adopted in The rate plan identifies five rate increases starting with 10% in FY , followed by 10% rate increase in FY , 10% in FY , 9.5% in FY , and 9.0% in FY This year the second rate increase was adopted to ensure sufficient revenues to fund the District s portion of the improvements while funding the needs to maintain and operate the collection system. In addition to the rate increases, the District will need to secure debt financing to fund the large capital improvement projects that are expected in the next several years at the treatment plant. This year the District continues to explore and modify the CCTV (closed circuit television) program to improve efficiencies in pursuit of a system wide collection system inspection every 8 years. Annual CCTV footage continues to improve using existing staffing by staging the cleaning process in front of the CCTV work. Further refinements are still necessary to achieve the 8-year cycle goal. The additional data from the CCTV will allow the District to further refine its work order system and optimize its cleaning cycles with the goal of focusing on pipelines that have the greatest need of cleaning. The District must continue to modernize and update systems to maintain efficiency and effectiveness. The District completed a needs assessment for tracking and documenting permits to facilitate the preparing of the annual tax roll and ensuring compliance of discharges to the collection system. This has resulted in the development of an extensive work plan spanning the next five years to identify a flexible database platform and work efforts to migrate the physical permit records to an electronic database system. This new system will facilitate the analysis of the connected parcels and prepare the annual tax roll. The following pages present details on the District s administration and operation during the fiscal year The independent auditor s report on the examination of the District s financial statements and accounting procedures reveals a financially strong and competently administered District. Jon Newby District Manager and Engineer 3

96 WEST VALLEY SANITATION DISTRICT SERVICE AREA The District was formed in 1948 as County Sanitation District No. 4 of Santa Clara County under the provisions of the California County Sanitation District Act. In 1988, the District changed its name to West Valley Sanitation District of Santa Clara County, to reflect its geographical service area. Fiscal year was the District's 66th year of operation. Beginning with a population of 20,000 in 1948, the District now serves a population of approximately 109,000. The District's 1948 service area encompassed 35.9 square miles. As unincorporated areas were absorbed into the City of San Jose, the District's service area gradually decreased to its current level of 28.3 square miles. At the District's inception in 1948, its wastewater collection system consisted of twelve miles of sewer lines. As of June 30, 2015, the collection system maintained and operated by the District consists of approximately 415 miles of main and trunk sewers and 210 miles of sewer laterals, for a total of 625 miles of sewer lines. As of November 1, 2005, the District assumed ownership and maintenance responsibilities for the sewer system located within the Town of Los Gatos, including 3 pump stations. West Valley Sanitation District provides wastewater collection and disposal services for the cities of Campbell, Monte Sereno, Los Gatos, two-thirds of Saratoga, and the intervening unincorporated areas of the county. The population and distribution of sewer service is shown in the table below. CONNECTION AND POPULATION DISTRIBUTION SINGLE- MULTI- FAMILY FAMILY INDUSTRIAL/ TOTAL DWELLING DWELLING COMMERCIAL TOTAL POPULATION UNITS UNITS COMPLEXES CONNECTIONS SERVED* CAMPBELL 10,289 7,375 1,357 19,021 4,1857 LOS GATOS 8,977 3,537 1,022 13,536 30,505 MONTE SERENO 1, ,258 3,451 SARATOGA 8, ,963 24,655 SANTA CLARA CO. 2, ,241 9,335 TOTAL 31,520 11,764 2,735 46, ,803 In fiscal year , 633 sewer connection permits were issued for existing residences, 50 sewer connection permits for proposed residences, 28 permits for residential septic tank abandonment, 63 for existing commercial premises, and 6 permits for new commercial premises. *Note: Population data for Campbell, Los Gatos, and Monte Sereno are derived from the California Department of Finance. Population data for Saratoga and Santa Clara County are based on the number of connections and assumed household occupancy. 4

97 WEST VALLEY SANITATION DISTRICT FY ORGANIZATION CHART BOARD OF DIRECTORS DISTRICT MANAGER & ENGINEER Director of Engineering & Operations Director of Administration & Information Services Senior Civil Operations Information Svcs Senior Administrative Engineer Supervisor Coordinator Accountant Assistant II Assistant Engineer Supervising Asst. Engineer Senior Account Leadworker Permits/Mapping Clerk 5 Assc. Engineering Maintenance Maintenance Maintenance Maintenance Construction Account Technician Leadworker (S) Leadworker Leadworker (S) Leadworker (S) Inspector II Clerk II Construction Maintenance Maintenance Maintenance Maintenance Assc. Engineering Account Inspector I Worker II (S) Worker II (S) Worker II Worker II (S) Technician Clerk II Maintenance Maintenance Worker I Worker I Staffing 3 Executive Management 12 Operations (S) - Specialized 4 Engineering 9 Administration 6/30/ Total Positions

98 ORGANIZATIONAL STRUCTURE West Valley Sanitation District is governed by a five-member Board of Directors, and staffed by 28 employees. The District Manager and Engineer is responsible for the overall management of the District and implementation of board policies. The District staff is organized into two divisions: Administration and Information Services Division, and Engineering and Operations Division. The District is well staffed with outstanding and motivated employees, who are dedicated to provide prompt and cost-effective service to the community. Operation division staffs are available 24 hours a day, 7 days a week, to respond to sewer overflows, and the District s front counter personnel are always available during business hours to provide sewer connection information and to answer questions about service availability. Sewer maintenance productivity continues to exceed industry standards, and productivity in other areas, such as connection permits and inspections, have increased by measurable amounts. The District s performance incentive program continues to be successful in promoting employee achievement, goal-setting, and creative problem-solving. Jon Newby, District Manager and Engineer 6

99 ADMINISTRATION AND INFORMATION SERVICES The Administration and Information Services Division is responsible for the financial and administrative aspects of the District. Services provided by the Division include: Budget preparation and tracking Payroll, accounts payable and receivable Clerk of the Board of Directors Issuance of sewer connection permits Fiscal agent of the West Valley Clean Water Program Accounting and financial reporting Collection of sewer service charges Personnel and human resources Information systems management In fiscal year , the Administration and Information Services Division worked diligently to ensure the fiscal health of the District and improved public access to District information. The Division conducted an update of the District s financial assumptions including projected revenues, staffing, operation and maintenance, and capital costs. The District finances are challenged by the San Jose/Santa Clara Water Pollution Control (WPCP) operating and maintenance (O&M), and large capital improvement program costs. While the District s staffing and O&M costs are stable with projected annual increases of 3.5%, WPCP O&M costs have been averaging over double the District s increases. WPCP capital costs include implementation of a $2 Billion capital program and necessitate debt financing to provide rate stabilization. Rate increases that average 10% per year starting in 2013 and expected for the next 5 years are needed to meet the funding levels required by the WPCP. The Division continues to monitor and update projection based on the most current information available from WPCP and make adjustments to the District finances to meet all of its obligations. Critical to the District s values to Operate with Transparency and Commitment to public good, the need to lead by taking action has been demonstrated in the receipt of the District Transparency Certificate of Excellence issued by the Special District Leadership Foundation (SDLF). This award recognizes the District s outstanding efforts to promote transparency and good governance through completion of eight essential governance transparency requirements and fulfill fifteen website requirements such as providing board agendas, minutes, and financial information to the public. To maintain prudent fiscal management and ensure the highest integrity of the District s finances, Divisional staff engaged in the solicitation and selection of an independent auditing service for fiscal years 2015 to The independent auditing firm is responsible for reviewing the District financial records and provides the annual audit report regarding the condition of the District s finances, accounting systems and procedures. Back Row: Gil Acosta, Scott Boehm, Patrick Salandro Front row: Lesha Luu, Phuong Vu, Joe Presnell, Diane Spiteri, Amy Yav, Lil Iida, Wendy Newby 7

100 ENGINEERING AND OPERATIONS The Engineering and Operations Division is responsible for the overall management of the sanitary sewer system, including maintenance and repair, engineering design, construction management and inspection, closed-circuit television inspection and analysis, and long-range planning for sewer rehabilitation projects, as well as fleet management and building and grounds maintenance. The Division provides continuous on-call service response to sanitary sewer main and service lateral stoppages and overflows throughout the year. In addition, under agreements with the cities within the District service area, District crews perform a pre-winter inspection and cleaning of the cities storm sewer systems. The District s Sewer System Management Plan (SSMP) is a comprehensive document that describes the activities used by the District to effectively operate, maintain, and manage its wastewater collection system. In compliance with State Water Resources Control Board requirements, the District performed its bi-annual audit of its SSMP in May The SSMP was subsequently revised by incorporating the audit recommendations, in addition to other necessary updates, and then adopted by the District Board in April The current version of the SSMP is available for public review on the District s website at In fiscal year the District witnessed a significant increase in private development projects and commercial improvements reflecting the positive economic trend in the region. There were 15 large private development projects which added approximately 2,300 lineal feet of new sewer mains and other public sewer improvements requiring engineering review and inspection. Additionally, there were nearly 100 commercial/tenant improvements that required engineering review. Approximately $1.7 million was expended on the design and construction of Capital Improvement Program (CIP) projects or ongoing engineering studies. Significant projects include completion of the Blossom Hill Sewer Replacement project, point repairs at 35 locations Districtwide, repair or replacement of 38 customer sewer connections to accommodate the City of Campbell s Hacienda Avenue Green Street project and design of the Los Gatos Creek - Vasona Park Sewer Rehabilitation and Quito Basin 7 Areas 3 and 4 projects. Ongoing studies include Trunk Sewer Assessment, Risk Prioritization Modeling, and Hydraulic Modeling. In fiscal year over 1.8 million lineal feet of sewer mains and nearly 1,600 sewer laterals were cleaned, respectively. In this same period, more than 230,000 lineal feet of sewer line was inspected and evaluated through closed circuit television (CCTV). Through televising efforts a condition assessment is made of our collection system which serves as a critical component in the District s Risk Prioritization Model to help determine the priority of projects in the District s CIP. As part of the District s proactive lateral maintenance program which began in 2009, there has been an increased focus on lateral locating (GPS), mapping, and cleaning. Neighborhoods with historically recurring backup and overflow events were identified and prioritized for this effort. Once located and mapped, these laterals were cleaned and then put on a regular cleaning cycle. To date approximately 22,000 properties (70%) have been inspected and more than 6,500 cleanouts have been found and surveyed. Left to Right: Alan Kam, Ed Oyama, Teejay Deleon, Jason Cumbo, Jorge Picado 8

101 WVSD OPERATIONS ACTIVITIES Fiscal Year Ending June 30, 2015 ACTIVITY QUANTITY SERVICE CALLS: Service Calls Received Avg. Response (Public Calls) 964 ea 32 min MAIN LINE SEWERS: Stoppages 60 ea Overflows: Category 1 4 ea Category 2 0 ea Category 3 14 ea Cleaning 1,833,000 feet CCTV Inspections 232,000 feet LATERAL SEWER LINES: Stoppages 508 ea Overflows: Category 1 0 ea Category 2 0 ea Category 3 2 ea Private Lateral 2 ea Cleaning 1,550 ea CCTV Inspections 17,100 feet Cleanout Locating (GPS) 540 ea Front Row: Burt Cordera, Rob Panelli, Kelvin Hatchett, Mark Garrett Back Row: Michael Minchaca, Vandy VanDerPaardt, Doug Gillette, Paul Luis, Mark Bristow Not Pictured: Chad Pozas, Jason LaRosa 9