HomeMy WebLinkAboutItem 14 - Water and Wastewater Service Agreement with Cal Poly Board of Trustees Department Name: Utilities
Cost Center: 601 and 602
For Agenda of: June 16, 2020
Placement: Business
Estimated Time: 20 Minutes
FROM: Aaron Floyd Director
Prepared By: Jennifer Metz, Utilities Project Manager
Jennifer Thompson, Utilities Business Manager
SUBJECT: AUTHORIZATION FOR THE CITY MANAGER TO ENTER INTO
AGREEMENTS WITH THE BOARD OF TRUSTEES OF THE CALIFORNIA
STATE UNIVERSITY FOR WATER AND WASTEWATER SERVICE TO
CALIFORNIA STATE UNIVERSITY, SAN LUIS OBISPO
RECOMMENDATION
Adopt a Resolution (Attachment A) authorizing the City Manager to execute the 2020 Water and
Sewer Rate Agreement, 2020 Capacity Interest Agreement, and 2020 Capacity Memorandum of
Understanding with the Board of Trustees of the California State University (CSU) related to
water and wastewater service to California Polytechnic State University, San Luis Obispo (Cal
Poly).
DISCUSSION
Background
The City and Cal Poly, part of the CSU system, have a long-standing relationship, with the City
providing water and wastewater services to Cal Poly dating back to the 1960s. The City provides
Cal Poly with water and wastewater services via agreement because the University lies outside
the City limits. The Rate Agreement was last updated in 2012; the Capacity MOU was last
updated in 2007. Both documents are included in Attachment B.
Cal Poly 2035 Mater Plan
The City Council authorized entering into the Master Plan Memorandum of Understanding
(Master Plan MOU) with Cal Poly on March 17, 2020 (Attachment C). Related to water and
wastewater service from the City, the Master Plan MOU notes that the following items would be
addressed by agreement:
a) Develop mechanisms to confirm operational resiliency of Cal Poly’s water supply.
b) Cal Poly to secure additional, temporary non-potable water supply and wastewater capacity,
if needed, to support the development of on-campus housing.1
c) Reach agreement on Cal Poly fair-share financial contribution to support required upgrades
of City’s water treatment plant and distribution system.
1 The provision of a temporary non-potable water supply would require City Council approval of a General Plan
amendment which will be considered separately. At its Marc h 5, 2019 meeting, the City Council conceptually
supported the temporary non-potable water sales.
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d) Reach agreement on Cal Poly fair-share financial contribution towards required upgrades of
City’s water resource recovery facility and wastewater collection system.
e) Cal Poly to regularly inform City of progress towards reducing municipal sewer inflow and
infiltration.
f) Establish protocol and objectives for annual partnership meetings.
The City provided correspondence (Attachment D) on May 11, 2020 to the CSU Board of
Trustees for consideration during their proceedings to consider the Cal Poly Master Plan and
Environmental Impact Report (EIR).
City and Cal Poly staff, with assistance from HDR Engineering (the City’s water and wastewater
rate consultant) have reviewed existing agreements, analyzed current and projected costs,
culminating with the drafts included in Attachment A. Final agreements are anticipated in June
2020 with the Rate Agreement effective on July 1, 2020.
2020 Water and Sewer Rate Agreement
The updates proposed in the 2020 Water and Sewer Rate Agreement (2020 Rate Agreement)
meet the Cal Poly’s water and wastewater services needs while achieving equity with the City
water and wastewater rate payer.
Five-Year Rate Window and Annual Extensions
Like the existing rate agreement, rates are calculated annually based on a rolling five-year rate
window to determine the University’s appropriate percentage of water and sewer rates.
Maintaining the rolling five-year rate window continues to provide for rate smoothing and is
more responsive to changes in costs for both parties. For the 2020-21 rates, the following rate
window is utilized:
2020-21 Rate Window
The 2020 Rate Agreement provides for annual extensions to the term of agreement for five years,
as long as all conditions described remain the same. Like other City customers, monthly base
fees for water and wastewater service are charged based on meter size.
Operational Resiliency
Over the past ten years, Cal Poly’s average domestic water usage averaged 510-acre feet
annually and agriculture water use averaged 426-acre feet annually. The Whale Rock
Commission has an in-lieu water accounting practice that allows for exchanges of water
deliveries from other City supply sources. The current practice provides the City flexibility to
manage it water sources but does not fully recover the proportionate share of other supply source
operational expenses.
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The City uses a multi-source water supply (Whale Rock, Salinas, Nacimiento, and recycled
water) to meet the community’s needs; Cal Poly relies on its Whale Rock water supply.
Unanticipated events as well as anticipated capital projects, such as pump station replacements,
pipeline replacement, and intake valve replacement, will impact Whale Rock’s ability to deliver
water. As the water purveyor, the City does not want Cal Poly, an important economic driver and
community partner, to be without an available domestic water supply source. The City worked
with Cal Poly to identify a methodology to provide water supply operational resiliency for its
domestic water deliveries as reflected in the 2020 Rate Agreement.
Temporary Non-Potable Water Supply and Wastewater Capacity
Consistent with Council direction provided at its March 2019 Study Session (Attachment E), the
proposed 2020 Rate Agreement establishes a general framework for the City to provide
temporary non-potable water should the University need it to support the development of on-
campus housing. The temporary non-potable water from the City could offset Cal Poly’s current
use of its Whale Rock water supply used for agriculture irrigation.
The 2020 Rate Agreement also establishes a general framework for the City to provide
temporary wastewater capacity should Cal Poly need it to support the development of on -campus
housing ahead of completion of its on-campus water reclamation facility.
Annual Partnership Meetings
As described in the 2020 Rate Agreement, the City and Cal Poly have agreed to meet regularly
to address items such as service needs, system and facility upgrades and related capacity interest
payments, inflow and infiltration reduction, water meter data, water supply use/flow rates,
adaptive management of water supply storage, and other related water and wastewater matters.
2020 Capacity Interest Agreement and Capacity MOU
The 2020 Capacity Agreement and Capacity MOU identify the University’s fair share capi tal
contributions, and methodology used to calculate those costs, in the City Water Energy
Efficiency project at the Water Treatment Plant (WTP) and the Water Resource Recovery
Facility (WRRF) project. These projects are under construction with the project at the WTP
scheduled to be complete in 2021 and the WRRF project scheduled to be complete in 2023. Cal
Poly made payments toward capital upgrades at the WRRF and WTP in 1993. Current projects at
the WRRF and WTP are necessary to meet new regulatory requir ements and replace assets at the
end of their useful life; therefore, capital contributions are necessary to maintain Cal Poly’s
capacity interest at service levels identified in the Capacity MOU. The proposed Capacity MOU,
updating the Existing MOU from 2007, clarifies the University’s capacity interest in City
facilities including the WTP, Wastewater Collection (WWC) system, and WRRF.
Previous Council or Advisory Body Action
The City Council has conducted the following meetings with associated actions as it relates to
the City’s rate agreement with Cal Poly:
1. June 12, 2012 – City Council approved and authorized the Mayor to execute the 2012
agreement with Cal Poly regarding water and sewer rate setting (Attachment B).
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2. March 5, 2019 – City Council reviewed its policy for water deliveries outside of the City
and directed staff to return with a General Plan amendment to clarify that outside users
may receive non-potable water and recycled water. A proposed General Plan amendment,
not being considered at this time, is necessary for the City to supply Cal Poly short-term,
non-potable water supply (Attachment E).
3. March 17, 2020 – City Council authorized the City Manager to execute the proposed
MOU with Cal Poly and direct staff to continue to engage in the Cal Poly Master Plan
process to ensure that impacts on City services and infrastructure associated with build -
out of the Master Plan are properly identified and mitigated (Attachment C).
4. May 13, 2020 – The Planning Commission approved a resolution recommending the City
Council adopt amendments to the Land Use Element and Water and Wastewater
Management Element of the General Plan related to broadening an existing policy and
program related to delivering both recycled water and non-potable water outside the city
limits. City Council consideration of the amendments is planned for August 2020.
Policy Context
The proposed approach in the 2020 Rate Agreement related to operational resiliency, is
consistent with City General Plan, Water and Wastewater Management Element policy on use of
multiple water resources, including water from three surface water reservoirs, recycled water,
and groundwater to meet the community’s water supply needs. Having multiple sources to draw
from provides “operational resiliency” in the event of a water supply interruption.
WWME Program A2.3.1 addresses the collaborative nature of staff’s work with Cal Poly stating
that the City will “Work cooperatively on regional water issues and water resource planning
(Water Resource Advisory Committee, Whale Rock Commission, Groundwater Sustainability
Commission, etc.).”
The proposed approach in the 2020 Capacity Agreement and Capacity MOU related to the
University’s capacity interest in City facilities is consistent policies A 5.2.5 and B 2.2.3 in t he
Water and Wastewater Management Element of the General Plan. These policies address fair
share contributions to upgrades to water and wastewater facilities.
Public Engagement
In addition to public comment opportunities at the City Council meetings described above, the
30-day public comment period on Cal Poly’s 2035 Master Plan Environmental Impact Report
extended from December 2019 to January 2020. The City comment letter and the University’s
response is available at the following Cal Poly website:
https://afd.calpoly.edu/facilities/planning-capital-projects/ceqa/master-plan/docs/feir/2020-05-
01_cp2035mp-feir_00-rtc.pdf
Many of the water and wastewater issues raised by the City in its comment letter are addressed in
the attached Agreements.
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CONCURRENCE
The City’s Finance Department concurs with the recommendation in this report.
ENVIRONMENTAL REVIEW
Modification of rates by public agencies as proposed in the draft Water and Sewer Rate
Agreement is statutorily exempt from the California Environmental Quality Act (CEQA) under
Section 15273 of the Public Resources Code because the change in fees is not intended to fund
expansion of capital projects not otherwise evaluated under CEQA. Capital projects in the draft
2020 Capacity Interest Agreement and draft 2020 Capacity MOU were subject to prior CEQA
review as follows:
• The Community Development Department issued a Notice of Exemption on January 24,
2019 for the Water Energy Efficiency project per Section 15301, Class 1 – Existing
Facilities.
• The Environmental Impact Report for the Water Resource Recovery Facility Project was
certified by the City Council on August 16, 2016.
No additional environmental review is required for this item.
FISCAL IMPACT
Budgeted: No Budget Year: 2020-21
Funding Identified: No
Fiscal Analysis:
Funding Sources
Current
FY Cost
Annualized
On-going Cost
Total Project
Cost
General Fund N/A
State
Federal
Fees
Other: Water and Sewer Funds * * *
Total
*NOTE: Cal Poly pays the City for water and wastewater services by agreement last updated in 2012 (see
Attachment B).
The changes in the proposed 2020 Rate Agreement modify the applicable percentage of the
City’s per unit water rate to be paid by the University. For both water and wastewater, monthly
base fees are charged by meter size. Capital contributions are calculated based on maintaining
the University’s capacity interest in City facilities.
Water Wastewater
Current (2019-20) 2020-21 Current (2019-20) 2020-21
53% 53% 100% 100%
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Both the Water Fund and Sewer Fund will see an increase in revenue under the proposed 2020
Agreement. For FY 2020-21, this increase is estimated at $137,0002 in revenue for the Water
Fund. The 2020 Capacity Interest Agreement is estimated to generate $1.4 million for the Water
Fund and $13.9 million for the Sewer Fund. These changes will be incorporated into the fund
analyses for the City’s next Financial Plan.
ALTERNATIVES
1. Continue Consideration of the 2020 Agreements. The City Council could continue
consideration of the 2020 agreement for water and wastewater service to the University.
Council should provide staff with direction on changes or additional information needed to
decide on this item.
2. Do Not Adopt the Resolution. The City Council could direct staff not to enter into the 2020
agreements at this time. Direction should be provided if there are changes to the agreements
that would be sufficient to gain the support of a majority of Council Members.
Attachments:
a - Draft Resolution
b - COUNCIL READING FILE - 2012 Water and Sewer Agreement with Cal Poly
c - MOU with Cal Poly Executed 2020
d - Letter to CSU Board of Trustees dated May 11, 2020
e - COUNCIL READING FILE - Council Study Session on March 5, 2019
2 Revenue from water sales to Cal Poly is estimated at $900,000 in 2020-21. This is $100,000 less than the original
2020-21 budget because Cal Poly is expected to have limited operations until at least September. The estimated
increase in Water Fund revenue is from providing Cal Poly with water supply operational resiliency in the event
water from Whale Rock is unavailable. Historically, Whale Rock Reservoir is unavailable for an average of five
days annually ($137,000 = daily water supply cost x 5).
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R _____
RESOLUTION NO. _____ (2020 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, AUTHORIZING THE CITY MANAGER TO
ENTER INTO AGREEMENTS WITH THE BOARD OF TRUSTEES OF
THE CALIFORNIA STATE UNIVERSITY FOR WATER AND
WASTEWATER SERVICE TO CALIFORNIA STATE UNIVERSITY, SAN
LUIS OBISPO
WHEREAS, the City of San Luis Obispo has historically provided water and wastewater
service to California Polytechnic State University, San Luis Obispo (University); and
WHEREAS, the City of San Luis Obispo participated with the University on the
construction of Whale Rock Reservoir in the 1960s and continues its partnership with the
University on the Whale Rock Commission for reservoir operations; and
WHEREAS, on June 6, 2012 the City of San Luis Obispo and the University entered into
the current agreement on water and sewer rates (2012 Agreement); and
WHEREAS, on April 3, 2020 the City of San Luis Obispo and University entered into a
Memorandum of Understanding related to the University’s 2035 Master Plan noting certain
objectives to be addressed via amendments to existing agreements or establishment of new
agreements; and
WHEREAS, the City of San Luis Obispo has prepared a draft 2020 Water and Sewer Rate
Agreement (Exhibit A) as an update to the 2012 Agreement; and
WHEREAS, the City of San Luis Obispo has prepared a draft 2020 Capacity Interest
Agreement (Exhibit B) identifying the University’s contribution to upgrades at the City’s Water
Treatment Plant and Water Resource Recovery Facility to maintain a capacity interest in those
City facilities; and
WHEREAS, the City of San Luis Obispo has prepared a draft 2020 Capacity
Memorandum of Understanding (Exhibit C) as an update to the 2007 Capacity Memorandum of
Understanding to provide greater clarity on water and wastewater service terms.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
SECTION 1. The City Manager is hereby authorized and designated to sign, for and on
behalf of City of San Luis Obispo, the 2020 Rate Agreement, 2020 Capacity Interest Agreement,
the 2020 Capacity MOU, and any amendments thereto.
SECTION 2. The Director of Utilities, or designee, is hereby authorized and designated
to represent the City of San Luis Obispo in carrying out the City's responsibilities under the
agreements on behalf of City of San Luis Obispo and compliance with applicable state and federal
laws.
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SECTION 3. Any and all actions, whether previously or subsequently taken by City of
San Luis Obispo, which are consistent with the intent and purposes of the foregoing resolution,
shall be, and hereby are, in all respects, ratified, approved and confirm ed.
SECTION 4. Environmental Review. Modification of rates by public agencies is
statutorily exempt from the California Environmental Quality Act (CEQA) under Section 15273
of the Public Resources Code because the change in fees is not intended to fund ex pansion of
capital projects not otherwise evaluated under CEQA. Capital projects identified in the draft 2020
Capacity Interest Agreement and draft 2020 Capacity Memorandum of Understanding were
subject to prior environmental review. No additional environmental review is required for this
item.
Upon motion of _______________________, seconded by _______________________,
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2020.
____________________________________
Mayor Heidi Harmon
ATTEST:
____________________________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
_____________________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, on _____________________.
____________________________________
Teresa Purrington
City Clerk
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EXHIBIT A
AGREEMENT BETWEEN THE CITY OF SAN LUIS OBISPO
AND THE BOARD OF TRUSTEES OF THE CALIFORNIA STATE UNIVERSITY
REGARDING WATER AND SEWER RATES (“Agreement”)
THIS AGREEMENT, made on ______________, by and between the CITY OF SAN
LUIS OBISPO, CALIFORNIA (hereinafter referred to as "City"), and BOARD OF
TRUSTEES OF THE CALIFORNIA STATE UNIVERSITY (hereinafter referred to as
"University").
WITNESSETH:
WHEREAS, the City and the University entered into a Memorandum of
Understanding on March 17, 2020 agreeing to address a series of water and sewer
objectives by agreement; and
WHEREAS, the City and the University agree that this Agreement is solely for the
purpose of establishing appropriate water and sewer rate structures based on the
Agreement Between the City of San Luis Obispo and the Board of Trustees of the
California State University Regarding Capacity Interest in the Water and Sewer Systems
dated, 2020, and the 2020 Memorandum of Understanding Between the City of San Luis
Obispo and the Board of Trustees of the California State University Regarding Capacity
Interest in City Facilities collectively referred to as the “Agreement”; and
WHEREAS, the City and the University entered into a new methodology of
calculating rates in January 1993, and subsequently recalculated the rates in 1998, 2003,
2007, 2012; and
WHEREAS, the City and the University agreed at that time to a rate structure which
ties the University to the City’s approved non-residential rate structure, including monthly
fixed charges, and periodic rate review, while reflecting the University’s unique differences
from other City customers; and
WHEREAS, it is agreed that the University is exempt from all City Water Source
of Supply costs as it has its own source of supply in Whale Rock Reservoir and as a
member agency of the Whale Rock Commission pays separately for its water supply
costs; and
WHEREAS, it is agreed that the University will pay the City to provide water supply
operational resiliency when water from Whale Rock Reservoir is unavailable; and
WHEREAS, it is agreed that the University will maintain its capacity interest in the
City’s Water Treatment Plant by paying its percentage share of agreed upon capital costs
for the upgrade underway in 2020 thereby adjusting their water rate; and
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EXHIBIT A
WHEREAS, it is agreed that the University will maintain its capacity interest in the
City’s Water Resource Recovery Facility by paying its percentage share of agreed upon
capital costs for the upgrade underway in 2020 thereby adjusting their sewer rate; and
NOW, THEREFORE, in consideration of their mutual covenants, the parties hereto
agree as follows:
1. RATE STRUCTURE METHODOLOGY
Water Rate Structure
The University's rate structure for water shall be based on the current rate for City Non-
residential accounts as modified by a percentage ("ratio") that accounts for that part of the
rate structure that is applicable to the University.
Using only those expenses related to water treatment, and distribution, less any capacity
interest in the system purchased by the University, this ratio is based on the following
formula: The sum of (3 most recent fiscal years audited expenses + 1 current fiscal year
projected expenses + 1 upcoming fiscal year projected expenses) divided by 5 = annual
ratio. As an example, FY 2020-21 rate ratio calculation would be
(2017+2018+2019+2020+2021) / 5. It shall be established as outlined in paragraph 2 and
shall be recalculated annually by the City and provided to the University 30-days prior to its
Annual Partnership Meeting as described in part 4 of this agreement. The calculation of the
current ratio for water charges is shown in Schedule A to this agreement.
Sewer Rate Structure
The University's rate structure for sewer shall be based on the current rate for City Non-
residential accounts as modified by a percentage ("ratio") that accounts for that part of the
rate structure that is applicable to the University.
Using expenses divided appropriately according to operational, capital and debt service
expenses for three components: collection, pretreatment and treatment less any capacity
interest in the system purchased by the University, this ratio is based on the following
formula: The sum of (3 most recent fiscal years audited expenses + 1 current fiscal year
projected expenses + 1 upcoming fiscal year projected expenses) divided by 5 = annual
ratio. As an example, FY 2020-21 rate ratio calculation would be
(2017+2018+2019+2020+2021) / 5. It shall be established as outlined in paragraph 3 and
shall be recalculated annually by the City and provided to Cal Poly 30-days prior to its Annual
Partnership Meeting as described in part 4 of this agreement. The calculation of the current
ratio for sewer charges is shown in Schedule B to this agreement.
2. SETTING A WATER RATE RATIO
The ratio to be applied to the Non-residential water rate structure shall be determined by the
City. The City shall prepare a five-year analysis of the expenses for the City's water system.
These expenses shall be divided according to Operational, Capital, and Debt Service for
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EXHIBIT A
three components: Source of Supply, Treatment, and Distribution. The division of expenses
in this manner will therefore appear as a matrix (three columns labeled Source of Supply,
Treatment, and Distribution; five rows labeled Operations and Maintenance, Capital Outlay,
Debt Service – 2006 WTP, and Debt Service - Other).
The University's rate structure will be based only on those expenses related to water
treatment and distribution, less any capacity interest in the system purchased by the
University under separate agreement. The University shall not pay the percentage cost of
those components related to those Source of Supply costs as the University has its own
source of supply from Whale Rock Reservoir, except as described below related to short-
term non-potable water.
Schedule A sets forth this analysis for the period beginning with the execution of this
Agreement and extending until June 30, 2021, and shall serve as an example for
determining any changes to the ratio in subsequent annual periods. Schedule A to this
Agreement shows the current five-year expense analysis and related percentages as
described above and provides a step by step description of the ratio-setting method.
3. OTHER WATER CHARGES
The City will charge the University for water supply operational resiliency based on the
historical duration of Whale Rock outages (five days). The cost for 2020-21 will be
$137,000 and will be included as part of the University’s monthly water bill . In the event
of a longer duration Whale Rock outage, the University would be charged the respective
per acre foot water supply pumping cost. The annual water supply operational resiliency
cost will increase consistent with any approved water rate increase.
If requested, the University’s rate structure for short-term non-potable water will be based
on all current fiscal year City expenses related to Source of Supply. The University will make
its annual request for short-term non-potable water to the City in writing 30-days prior to its
Annual Partnership Meeting. Short-term requests will be considered for a rolling period no
longer than five years. The provision of short-term non-potable water to the University will
be interruptible during any declared City water shortage emergency and will only be made
available following the City’s established policies and procedures.
4. SETTING A SEWER RATE RATIO
The ratio to be applied to the non-residential sewer rate structure shall be determined by the
City. The City shall prepare a prospective five-year analysis of the expenses for the City's
sewer system. These expenses shall be divided according to Operational, Capital, and Debt
Service expenses for three components: Collection, Pretreatment, and Treatment. The
University’s rate structure will be based on the expenses for these components less any
capacity interest in the system purchased by the University under separate agreement. The
division of expenses in this manner will therefore appear as a matrix (three columns labeled
Collection, Pretreatment, and Treatment; four rows labeled Operations and Maintenance,
Capital Outlay, Debt Service – Prepaid, and Debt Service – Other.
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EXHIBIT A
Schedule B sets forth this analysis for the period beginning with the execution of this
Agreement and extending until June 30, 2021, and shall serve as an example for
determining any changes to the ratio in subsequent annual periods. Schedule B to this
Agreement shows the current five-year expense analysis and related percentages as
described above and provides a step by step description of the ratio-setting method.
5. OTHER SEWER CHARGES
If requested, the University’s rate structure for short-term wastewater collection system and
wastewater treatment capacity will be based on City expenses related to wastewater
collection and treatment, including financing costs. The University will make its annual
requests for short-term wastewater collection system and wastewater treatment capacity to
the City in writing 30-days prior to its Annual Partnership Meeting. Short-term requests will
be considered for a rolling period no longer than five years.
6. ANNUAL PARTNERSHIP MEETING
It is the intent of both parties to participate annually, no later than March each year, with
information shared 30-days prior to the meeting, to review and discuss in good faith the
following water and sewer rate and service issues.
City to provide:
1. Prior fiscal year’s rate analysis compared to actual expenses,
2. Sewer meter calibration report,
3. Water consumption and rate trends,
4. Data related to peak day water demand, dry weather daily wastewater flow, and
peak wastewater flow,
5. Status of City WTP and City WRRF projects and any planned projects,
6. Availability for short-term non-potable water, and available capacity for water
treatment, wastewater collection system, and wastewater treatment, and
7. Any major assumptions significantly changing the water and sewer rate ratios.
University to provide:
1. Progress on planned development, enrollment projections, planned Utility Master
Plan improvements, and planned water service connections, locations, and
required water and wastewater service for the coming year,
2. Annual efforts to reduce inflow and infiltration into its wastewater collection
system (feet of sewer pipe replaced, etc.),
3. Request for additional water treatment capacity, if peak daily water demand
exceeds WTP capacity interest,
4. Request for short-term non-potable water,
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EXHIBIT A
5. Request for short-term wastewater collection system and/or WRRF treatment
capacity (if average daily dry weather flow or peak flow exceed capacity interest),
and
6. Status of campus water reclamation facility and campus water storage projects.
6. AMENDMENTS TO THE RATIO
Exceeding Capacity Interest
The City will inform the University in writing when water demand from the WTP or
wastewater flows to the wastewater collection system or WRRF are within ten percent of the
University’s capacity interest. If the University exceeds its capacity interest in the WTP,
wastewater collection system, or WRRF the City will charge the University 100 percent of
the per unit Non-residential rate in effect at the time. This per unit rate will remain in effect
until the University purchases an additional capacity share in the City’s facilities, or reduces
its water demand or wastewater flows. A Partnership Meeting will be held within 30 days of
the exceedance for the City and University develop terms for the University to purchase of
additional capacity interest.
Resetting the Ratio
In the event the City and University cannot reach agreement on the proposed applicable
ratio for the next year, the ratio in existence at that time shall remain in effect until agreement
is reached. The parties agree to cooperate and use their best efforts to reach agreement on
the proposed ratio in an expeditious manner.
5. TERM OF AGREEMENT
Annual extensions to the term of this agreement shall be automatic, as long as all conditions
described (other than the five-year ratio) remain the same.
6. AMENDMENTS TO THIS AGREEMENT
Any amendment, modification, or variation from the terms of this Agreement shall be in
writing and shall be effective only upon approval by both parties.
7. COMPLETE AGREEMENT
This written Agreement, including the Memorandum of Understanding between the City of
San Luis Obispo and California Polytechnic State University Regarding Capacity Interest
in City Facilities dated , 2020, attached hereto as Attachment A, specifically
incorporated herein by reference, shall constitute the complete agreement between the
parties hereto. No oral agreement, understanding, or representation not reduced to writing
and specifically incorporated herein shall be of any force or effect, nor shall any such oral
agreement, understanding, or representation be binding upon the parties hereto.
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EXHIBIT A
8. NOTICE
The City shall provide the University with at least the same notice of proposed changes in
water and sewer rates as other City customers. All notices related to this agreement shall
be in writing and addressed as follows:
University City
Dennis Elliot Aaron Floyd
Director of Energy, Utilities Utilities Director
and Sustainability City of San Luis Obispo
Cal Poly State University 879 Morro Street
San Luis Obispo, CA 93407 San Luis Obispo, CA 93401
Cody Van Dorn
Executive Director
Cal Poly State University
San Luis Obispo, CA 93407
8. JOINT WORK PRODUCT
This agreement is the joint work product of both parties; accordingly, in the event of
ambiguity no presumption shall be imposed against either party by reason of document
preparation.
9. RELATIONSHIP OF PARTIES
City and the agents and employees of City in the performance of this agreement shall act
in an independent capacity and not as officers or employees or agents of University. The
employees of University who participate in the performance of this agreement are not
agents of the City.
10. AUTHORITY TO EXECUTE AGREEMENT
Both City and University do covenant that each individual executing this agreement on
behalf of each party is a person duly authorized and empowered to execute Agreements for
such party.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed the day and year first above written.
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EXHIBIT A
ATTEST: CITY OF SAN LUIS OBISPO,
A Municipal Corporation
_________________________, By: _____________________________,
Teresa Purrington, City Clerk Derek Johnson, City Manager
APPROVED AS TO FORM:
__________________________,
J. Christine Dietrick, City Attorney
CONCUR: UNIVERSITY:
__________________________ By: ______________________________
Dennis Elliot, Director Cody Van Dorn, Executive Director
Energy, Utilities, Sustainability
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EXHIBIT A
SCHEDULE A. WATER
Steps to setting Cal Poly’s appropriate share of the Non-Residential Water Rate
Annually the City shall prepare a rolling five-year schedule of expenses related to the City’s provision
of water service. The schedule will include actual expenses for the three most recent audited fiscal
years and projected expenses for both the current and next fiscal year.
These expenses shall be divided appropriately according to operational, capital, or debt service. Each
of these categories will be further divided according to whether it is a source of supply, treatment, or
distribution expense. The information for each year will be shown in a matrix, at the bottom and right of
which will appear the totals for that row and that column.
Expenses applicable to Cal Poly will be shaded.
The percentage of the shaded expenses to the total expenses will be calculated each year on the line
labeled “Percent Applicable to Cal Poly”.
The five annual percentages will be totaled and then divided by five to determine the average
percentage of the rate applicable to Cal Poly, based on the five-year schedule of expenses. This is the
percentage of the Non-residential rate that will be charged to Cal Poly for the upcoming year. Each
year, the oldest year will be moved out of the schedule, the most recent audited fiscal year expenses
will be added and a new year of projected expenses will be added after which a new five year average
will be calculated. This “rolling average” will determine each new year’s ratio
Formula: (3 most recent fiscal years audited expenses) + (1 current fiscal year projected expenses) +
(1 upcoming fiscal year projected expenses) divided by 5 = annual ratio
The Non-residential rate itself will vary according to the rates set by City Council each year.
DEFINITIONS:
Operations and Maintenance
The portion of the budget that pertains to daily operations and delivery of basic governmental services
related to provision of water service. The six water program budgets in the City’s financial plan form the
Water Fund’s operating budget.
Capital Outlay
The portion of the budget that pertains to maintaining or replacing existing public facilities and assets, and
for building or acquiring new ones as set forth in the City's capital improvement plan. For the purpose of
the Cal Poly ratio-setting model, any project that is debt-financed will not show in the capital outlay expense
category. It will show in debt service.
Debt Service
Payments of principal and interest on bonds and other debt instruments according to a pre-determined
schedule.
Source of Supply
Those water expenses directly related to the City’s water supply from Whale Rock, Salinas, and Nacimiento
Reservoirs, and recycled water. It also includes water conservation expenses, as this has been the key to
reducing City water demand, effectively creating more water by reducing the need to create additional water
supply. Development of new water supply projects fall into this category.
Distribution
The cost to deliver potable water from the Water Treatment Plant to customers and fire hydrants via the
distribution infrastructure.
Treatment
The cost to treat raw water from the City’s sources to meet potable water standards, and deliver it into the
water distribution system.
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EXHIBIT A
SCHEDULE A. WATER
Water Rate
Cal Poly State University
NOTE: Expenses applicable to Cal Poly’s water rate are shaded.
Water Rate Percentage for FY 2020-21 (5-year Average): 57 + 54 + 51 + 56 + 48 / 5 = 53%
Source of Supply Treatment Distribution Total
Operation & Maintenance 9,771,604$ 4,651,165$ 2,366,449$ 16,789,218$
Capital Outlay 1,627,979$ 727,646$ 5,060,450$ 5,788,096$
Debt Service - 2006 WTP -$ 1,030,948$ 0 1,030,948$
Debt Service - Other 525,457$ 572,000$ 65,400$ 637,400$
Total 11,925,040$ 6,981,759$ 7,492,299$ 24,245,662$
Total applicable to Cal Poly -$ 6,409,759$ 7,492,299$ 13,902,058$
Percent applicable to Cal Poly 0%26%31%57%
Source of Supply Treatment Distribution Total
Operation & Maintenance 9,387,467$ 4,617,479$ 3,540,420$ 17,545,366$
Capital Outlay 298,367$ 856,148$ 2,502,471$ 3,656,986$
Debt Service - 2006 WTP -$ 1,033,548$ 0 1,033,548$
Debt Service - Other 525,457$ 569,600$ 65,427$ 1,160,484$
Total 10,211,291$ 7,076,775$ 6,108,318$ 23,396,384$
Total applicable to Cal Poly -$ 6,507,175$ 6,108,318$ 12,615,493$
Percent applicable to Cal Poly 0%28%26%54%
Source of Supply Treatment Distribution Total
Operation & Maintenance 8,832,927$ 3,007,759$ 2,866,779$ 14,707,465$
Capital Outlay 278,911$ 1,194,569$ 2,500,806$ 3,974,286$
Debt Service - 2006 WTP -$ 898,802$ 0 898,802$
Debt Service - Other 525,457$ 571,600$ 74,669$ 1,171,726$
Total 9,637,294$ 5,672,730$ 5,442,254$ 20,752,278$
Total applicable to Cal Poly -$ 5,101,130$ 5,442,254$ 10,543,384$
Percent applicable to Cal Poly 0%25%26%51%
Summary of Water Cost Components for 2019-20
Source of Supply Treatment Distribution Total
Operation & Maintenance 10,013,682$ 4,402,995$ 3,734,808$ 18,151,485$
Capital Outlay 169,289$ 4,279,474$ 3,490,332$ 7,939,095$
Debt Service - 2006 WTP -$ 883,900$ 0 883,900$
Debt Service - Other 2,465,256$ 567,800$ 28,111$ 3,061,167$
Total 12,648,227$ 10,134,169$ 7,253,251$ 30,035,647$
Total applicable to Cal Poly -$ 9,566,369$ 7,253,251$ 16,819,620$
Percent applicable to Cal Poly 0%32%24%56%
Source of Supply Treatment Distribution Total
Operation & Maintenance 10,675,781$ 4,775,029$ 3,163,874$ 18,614,684$
Capital Outlay 55,092$ 186,141$ 2,191,665$ 2,432,898$
Debt Service - 2006 WTP -$ 892,300$ 0 892,300$
Debt Service - 2002 Bond & SST -$ 1,349,853$ 28,410$ 1,378,263$
Total 10,730,873$ 7,203,323$ 5,383,949$ 23,318,145$
Total applicable to Cal Poly -$ 5,853,470$ 5,383,949$ 11,237,419$
Percent applicable to Cal Poly 0%25%23%48%
Summary of Water Cost Components for 2016-17
Summary of Water Cost Components for 2017-18
Summary of Water Cost Components for 2018-19
Summary of Water Cost Components for 2020-21
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EXHIBIT A
SCHEDULE B. SEWER
Steps to setting Cal Poly’s appropriate share of the Non-Residential Sewer Rate
The City shall prepare a five-year schedule of expenses for the City’s sewer system. The five-year
period will include the three most recent historical years, the current year, and one prospective year.
These expenses shall be divided appropriately according to operational, capital or debt service. Each
of these categories will be further divided according to whether it is a collection, pretreatment or a
treatment expense. The information for each year will be shown in a matrix, at the bottom and right of
which will appear the totals for that row and that column.
Expenses applicable to Cal Poly will be shaded.
The percentage of the shaded expenses to the total expenses will be calculated each year on the line
labeled “Percent Applicable to Cal Poly”.
The five annual percentages will be totaled and then divided by five to determine the average
percentage of the rate applicable to Cal Poly, based on the five-year schedule of expenses. This is the
percentage of the Non-residential rate that will be charged to Cal Poly for the five-year period.
The Non-residential rate itself will vary according to the rates set by City Council each year.
DEFINITIONS
Operations and Maintenance
The portion of the budget that pertains to daily operations and delivery of basic governmental services. The
four sewer program budgets in the City’s financial plan form the Sewer Fund’s operating budget.
Capital Outlay
The portion of the budget that pertains to maintaining or replacing existing public facilities and assets, and
for building or acquiring new ones as set forth in the City's capital improvement plan. For the purpose of
the Cal Poly ratio-setting model, any project that is debt-financed will not show in the capital outlay expense
category. It will show in Debt Service.
Debt Service
Payments of principal and interest on bonds and other debt instruments according to a pre-determined
schedule.
Collection
Those sewer expenses directly related to the collection and transportation of wastewater from its various
sources to the Water Resource Recovery Facility.
Pretreatment
The cost of the program whose goal is to prevent toxic waste from entering the wastewater collection system
at Non-residential and industrial sources.
Treatment
The cost to treat and dispose of municipal wastewater. All disposal must strictly comply with the State
Health and Regional Water Quality board’s requirements for discharge into the creek or disposal of
biosolids.
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EXHIBIT A
SCHEDULE B. SEWER
Sewer Rate
Cal Poly State University
NOTE: Expenses applicable to Cal Poly’s sewer rate are shaded.
Sewer Rate Percentage for FY 2020-21 (5-year Average): 100+100+100+100+100 / 5 = 100%
Summary of Sewer Cost Components for 2016-17
Collection Pretreatment Treatment Total
Operations and Maintenance 1,619,200 416,500 6,853,200 8,888,900
Capital Outlay - Adjusted 1,842,900 0 2,749,000 4,591,900
Debt Service - Prepaid 0 0 0 0
Debt Service - Other 784,618 0 618,544 1,403,163
Total 4,246,718 416,500 10,220,744 14,883,963
Percent Applicable to Cal Poly 24%3% 73% 100%
Summary of Sewer Cost Components for 2017-18
Collection Pretreatment Treatment Total
Operations and Maintenance 1,428,200 366,300 5,917,900 7,712,400
Capital Outlay - Adjusted 1,790,400 0 7,075,500 8,865,900
Debt Service - Prepaid 0
Debt Service - Other 782,950 0 618,363 1,401,313
Total 4,001,550 366,300 13,611,763 17,979,613
Percent Applicable to Cal Poly 22%2% 76% 100%
Summary of Sewer Cost Components for 2018-19
Collection Pretreatment Treatment Total
Operations and Maintenance 1,751,800 421,300 7,157,700 9,330,800
Capital Outlay - Adjusted 4,058,800 0 3,515,700 7,574,500
Debt Service - Prepaid 0 0 0 0
Debt Service - Other 780,505 0 618,177 1,398,682
Total 6,591,105 421,300 11,291,577 18,303,982
Percent Applicable to Cal Poly 36%2% 62% 100%
Summary of Sewer Cost Components for 2019-20
Collection Pretreatment Treatment Total
Operations and Maintenance 1,549,100 409,600 6,381,500 8,340,200
Capital Outlay - Adjusted 755,600 35,600 499,100 1,290,300
Debt Service - Prepaid 0 0 0 0
Debt Service - Other 737,011 0 618,177 1,355,188
Total 3,041,711 445,200 7,498,777 10,985,688
Percent Applicable to Cal Poly 28%4% 68% 100%
Summary of Sewer Cost Components for 2020-21
Collection Pretreatment Treatment Total
Operations and Maintenance 1,639,600 402,700 6,603,500 8,645,800
Capital Outlay - Adjusted 2,369,800 0 300,500 2,670,300
Debt Service - Prepaid 0 0
Debt Service - Other 739,468 617,787 1,357,255
Total 4,748,868 402,700 7,521,787 12,673,355
Percent Applicable to Cal Poly 37%3% 59% 100%
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Item #2758
EXHIBIT B
AGREEMENT BETWEEN THE CITY OF SAN LUIS OBISPO AND
THE BOARD OF TRUSTEES OF THE CALIFORNIA STATE UNIVERSITY
REGARDING CAPACITY INTEREST IN THE WATER AND SEWER SYSTEMS
THIS AGREEMENT, dated _____________, by and between the CITY OF SAN LUIS
OBISPO, CALIFORNIA (hereinafter referred to as "City"), and the BOARD OF
TRUSTEES OF THE CALIFORNIA STATE UNIVERSITY (hereinafter referred to as
"University").
WITNESSETH:
WHEREAS, the City and the University entered into a Memorandum of
Understanding on March 17, 2020 agreeing to address a series of water and sewer
objectives by agreement including fair share contributions to the City’s Water Treatment
Plant and Water Resource Recovery Facility; and
WHEREAS, the City and the University have a long-standing relationship
participating on the Whale Rock Commission related to the operation of Whale Rock
Reservoir,
WHEREAS, the City and the University also have a long relationship with regard
to the City’s Water Treatment Plant, Wastewater Collection System, and Water Resource
Recovery Facility; and
WHEREAS, it is the desire of both parties to continue that relationship; and
WHEREAS, the City is upgrading both its Water Treatment Plant and Water
Resource Recovery Facility; and
WHEREAS, the University is interested in maintaining a capacity interest in the
City's Water Treatment Plant and Water Resource Recovery Facility; and
NOW, THEREFORE, in consideration of their mutual covenants, the parties hereto
agree as follows:
1. WATER SYSTEM
The University wishes to maintain a capacity interest at the City’s Water Treatment Plant
equivalent to 1,000 acre feet/year at a daily volume not to exceed 0.893 million gallons
daily (mgd) not to exceed a flow rate of 1.44 mgd.
A. Water Treatment Plant
The City’s Water Energy Efficiency project at its Water Treatment Plant will ensure
continuing compliance with drinking water quality regulations as well as modernize
certain components of the facility. The University agrees to pay the percentage
obtained by the division of 1.44 mgd (University's capacity) by 16.0 mgd (plant
capacity), or 9.0 percent, of the total project cost. The cost to the University is
$1,548,180 which will be finalized by letter when project construction is complete,
subject to the total contribution ceiling noted in paragraph three of this agreement.
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EXHIBIT B
B. Water Distribution System and Potable Water Storage
The University has not purchased a capacity interest in the City ’s water distribution or
potable water storage system outside of the Water Treatment Plant. Prior to the University
adding demand to the City’s water distribution system, the University and City will work to
identify water service needs, and design and construct necessary mitigation, including
University capital contributions, to avoid impacts to the City’s water distribution or treated
water storage system. Service cannot be provided to the University when downstream
City customers could be adversely affected.
2. SEWER SYSTEM
The University wishes to maintain its capacity interest in the upgraded Water Resource
Recovery Facility equivalent to 0.471 mgd. The current capacity interest in the wastewater
collection system is a peak flow rate of 1.2 mgd, required due to infiltration and inflow and
wet weather peak flows.
A. Water Resource Recovery Facility
The upgrades to the Water Resource Recovery Facility are mandatory to
meeting regulatory discharge requirements. The capacity of the plant will
expand from 5.1 mgd to 5.4 mgd. The University agrees to pay the
percentage obtained by the division of 0.471 mgd (University's interest) by
5.1 mgd (existing plant capacity), or 9.24 percent, or by the division of 0.471
(University’s interest) by 5.4 mgd (future plant capacity), or 8.72 percent, of
the total project cost, as detailed in Attachment 1. The estimated cost to the
University is $13,997,193, which will be refined upward or downward by
letter when project construction is complete, subject to the total contribution
ceiling noted in paragraph three of this agreement.
B. Wastewater Collection System
No upgrades are planned at this time to the relief sewer main, therefore,
there is no additional cost at this time for the University to maintain its
capacity interest in the City’s wastewater collection system at the peak flow
rate of 1.2 mgd level.
3. RECEIPT OF FUNDS
To maintain a capacity interest in the City's Water Treatment Plant and Water Resource
Recovery Facility, the University's contribution must be received by December 31, 2022.
The estimated costs set forth in paragraphs one and two may be adjusted between
categories based upon actual costs provided. The total University contrib ution for the
Water Treatment Plant and Water Resource Recovery Facility will not exceed
$15,545,373. Exercising this option will be reflected in the percentage ratio of the non -
residential rate structure as set forth in the Agreement between the City and the University
regarding water and sewer rates following receipt of the University’s contribution. The
adjusted water ratio is described in Exhibit A of that Agreement; and the adjusted sewer
ratio is described in Exhibit B of that Agreement.
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EXHIBIT B
4. NOTICE
All notices related to this agreement shall be in writing and addressed as follows:
University City
Dennis Elliot Aaron Floyd
Director of Energy, Utilities Utilities Director
and Sustainability City of San Luis Obispo
Cal Poly State University 879 Morro Street
San Luis Obispo, CA 93407 San Luis Obispo, CA 93401
Cody VanDorn
Executive Director
Cal Poly University
San Luis Obispo, CA 93407
5. AGREEMENT CONTAINS ALL UNDERSTANDINGS
This document represents the entire and integrated Agreement between the City and the
University, and supersedes all prior negotiations, representations, or Agreements, either
written or oral, except as described the 2020 Capacity Interest Memorandum of
Understanding by and between the parties. This document may be amended only by
written instrument, signed by both City and University. All provisions of this Agreement
are expressly made conditions. This Agreement shall be governed by the laws of the
State of California.
IN WITNESS WHEREOF, CITY and UNIVERSITY have executed this Agreement the day
and year first above written.
University City
________________________ __________________________
Attest:
________________________
Approved as to Form
________________________
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ITEM #2758
EXHIBIT B
ATTACHMENT 1: 2020 Water Resource Recovery Facility Project Cost
Facility ID Description Capacity
Related A Estimated Cost B Capacity
Percentage C Cal Poly Share D Cal Poly Share +
Contingency E
5 Site Work No $7,917,752 9.24%$731,600 $804,760.36
6 Yard Piping No $8,556,058 9.24%$790,580 $869,637.72
7 Landscape Yes $1,112,303 8.72%$96,993 $106,692.13
9 Site Electrical No $6,325,651 9.24%$584,490 $642,939.19
11 Air Gap Building No $179,106 9.24%$16,549 $18,204.37
14 Equalization Pond Yes $2,893,797 8.72%$252,339 $277,573.01
15 Headworks No $679,338 9.24%$62,771 $69,047.95
16 Ferric Chloride Facility No $96,566 9.24%$8,923 $9,814.92
17 Vactor Truck Facility Yes $717,211 8.72%$62,541 $68,794.89
20 Primary Clarifiers No $1,916,038 9.24%$177,042 $194,746.12
64 Filtrate Equalization Pump Station No $350,320 9.24%$32,370 $35,606.53
22 Sludge Pump Station No $612,707 9.24%$56,614 $62,275.51
27 Primary Effluent Diversion Box Yes $498,587 8.72%$43,477 $47,824.44
28 Primary Effluent Screens Yes $3,531,853 8.72%$307,978 $338,775.38
29 Calcium Hydroxide Facility No $35,450 9.24%$3,276 $3,603.10
30 Bioreactor 1 & 2 Modifications Yes $4,868,143 8.72%$424,502 $466,952.29
35 Bioreactor 3 & 4 Yes $7,812,882 8.72%$681,283 $749,411.65
36 Chemical Storage Yes $1,558,325 8.72%$135,886 $149,474.52
40 MBR Yes $23,320,401 8.72%$2,033,539 $2,236,892.82
44 Switchgear Building No $3,893,354 9.24%$359,746 $395,720.46
51 Chemical Storage Yes $118,951 8.72%$10,373 $11,409.79
53 UV Area Electrical Building Yes $1,480,284 8.72%$129,081 $141,988.83
54 UV Disinfection Yes $6,160,467 8.72%$537,193 $590,911.97
55 Chlorine Contact Basin No $25,545 9.24%$2,360 $2,596.44
100 Mobilization No $5,799,597 9.24%$535,883 $589,471.06
68 Effluent Cooling Yes $4,299,648 8.72%$374,929 $412,422.27
92 Headworks Electrical Enclosure No $1,251,923 9.24%$115,678 $127,245.45
70 Sludge Blend Tank No $1,016,841 9.24%$93,956 $103,351.72
72 Thickening No $2,522,050 9.24%$233,037 $256,341.12
73 Solids Electrical Building No $1,471,744 9.24%$135,989 $149,588.06
80 Digester No. 1 No $595,791 9.24%$55,051 $60,556.15
82 Digester No. 2 No $2,027,191 9.24%$187,312 $206,043.68
83 Digester Building No $2,687,269 9.24%$248,304 $273,134.05
84 Cogeneration No $46,701 9.24%$4,315 $4,746.67
85 Digested Sludge Storage Tank No $1,259,220 9.24%$116,352 $127,987.08
86 Dewatering Building No $745,590 9.24%$68,893 $75,781.81
88 Odor Control Facility No $1,523,675 9.24%$140,788 $154,866.37
90 MCC-A Building No $276,264 9.24%$25,527 $28,079.46
91 MCC-B Building No $179,438 9.24%$16,580 $18,238.05
94 MCC-G Building No $32,244 9.24%$2,979 $3,277.25
97 MCC-J Building No $79,219 9.24%$7,320 $8,051.78
98 PG&E Revenue Meter Switchgear No $380,531 9.24%$35,161 $38,677.17
$110,856,024.40 $9,939,557.82 $10,933,514
$30,989,858.00 9.24%$2,863,462.88 $3,063,679
$12,803,021 $13,997,193
Total Construction Cost F
Program Soft Costs G
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EXHIBIT B
ATTACHMENT 2: 2020 Water Energy Efficiency Project
Design WTP Backup
Generator Construction Total Cost
Total Project Cost 902,000$ 2,000,000$ 14,300,000$ 17,202,000$
Cal Poly Share (9.0%)81,180$ 180,000$ 1,287,000$ 1,548,180$
City Share (91.0%)820,820$ 1,820,000$ 13,013,000$ 15,653,820$
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ITEM # 2758
EXHIBIT C
2020 MEMORANDUM OF UNDERSTANDING (“MOU”) BETWEEN
THE CITY OF SAN LUIS OBISPO (“City”) AND THE BOARD OF TRUSTEES OF
THE CALIFORNIA STATE UNIVERSITY (“University”)
REGARDING CAPACITY INTEREST IN CITY FACILITIES
This MOU is made on ___ , 2020 by and between the City and the University.
Recital
This MOU documents the University’s capacity interest (referenced in prior agreements
as an “equity interest”) in the City’s Water Treatment Plant, potable water distribution
system and treated water storage, wastewater collection system and wastewater
treatment facility (Water Resource Recovery Facility or WRRF). This 2020 MOU replaces
prior agreements regarding the University’s capacity interest in City fac ilities including the
May 1, 2007 MOU, and the 1993 Agreement between the City of San Luis Obispo and
California Polytechnic State University Regarding Water and Sewer Rates dated January
5, 1993, exhibit A, the Agreement between the City of San Luis Obisp o and California
Polytechnic State University Regarding Optional Equity Interest in the Water and Sewer
Systems dated January 5, 1993, exhibit B, and the Memorandum of Understanding
between the City of San Luis Obispo and California Polytechnic State University dated
January 6, 1993, exhibit C.
Capacity
The City and University agree to communicate in the planning and development of
facilities to ensure that adequate capacity in the City’s Water Treatment Plant, potable
water distribution and storage system, wastewater collection system, and wastewater
treatment facility (Water Resource Recovery Facility) is available to meet the University’s
current and projected needs. The University agrees to provide the City with its
development and population projections annually which shall include an analysis of the
University’s water treatment, potable water distribution and storage system, and
wastewater collection system and treatment capacity needs as planned and projected for
the next five years. The City shall consider the University’s projections in its own mas ter
planning to better understand the University’s capacity needs in future facility upgrades
and expansions.
Capacity Interest
The University has historically maintained a capacity interest in the City’s Water
Treatment Plant, wastewater collection system, and Water Resource Recovery Facility
sufficient to serve current and projected University needs. The University has done so by
financially participating in required facility upgrades and expansions via capital
contribution based on the University’s desired capacity percentage share of the facilities.
Maintenance of said capacity interest, through fair share capital contributions, ensures
that the City maintain available capacity to serve the University’s needs up to the amount
of the capacity interest. As set forth in the Water and Sewer Rate Agreement, these
capital contributions are reflected in the University’s rates.
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EXHIBIT C
The University’s capacity interest in the City’s Water Treatment Plant shall be calculated
as 1,000 acre feet annually (893,000 gallons daily; peak day maximum flow rate of 1.44
million gallons)1. As the City’s Water Treatment Plant can treat up to 16 million gallons
daily, the University’s capacity share is 9.0 percent of the facility. Maintenance of this
capacity interest is subject to future capital contributions at 9.0 percent under separate
agreement.
As of 2020, the University has not purchased a capacity interest in the City’s water
distribution or potable water storage system outside of the Water Treatment Plant. Prior
to the University adding demand to the City’s water distribution system, the University
and City will work to identify water service needs, and design and construct necessary
mitigation, including University capital contribution s, to avoid impacts to the City’s water
distribution or treated water storage system.
With prior payments to the City in 1993, the University’s capacity interest in the City’s
wastewater collection system is a peak flow rate of 1.2 million gallons per day.
Maintenance of this capacity interest is subject to future capital contributions.
With prior payments to the City in 1993, the University’s capacity interest in the City’s
Water Resource Recovery Facility shall be calculated as a maximum totalized dry
weather flow2 of 0.471 million gallons per day. As the City’s Water Resource Recovery
Facility can discharge up to 5.1 million gallons of treated effluent daily (up to 5.4 million
gallons daily in 2022), the University’s capacity share is 9.24 percent of the facility
(reducing to 8.72 percent in 2022). Maintenance of this capacity interest is subject to
future capital contributions at 8.72 percent under separate agreement.
Authority to Execute Memorandum of Understanding
Both the City and University agree that each individual execu ting this MOU on behalf of
each party is a person duly authorized and empowered to execute agreements for such
party.
The parties hereto have caused this MOU to be executed the day and year first above
written.
UNIVERSITY CITY OF SAN LUIS OBISPO,
A Municipal Corporation
By: _____________________________ By : _____________________________
Cody Van Dorn, Executive Director Derek Johnson, City Manager
1 Cal Poly’s capacity interest of 1.44 million gallons in the City’ Water Treatment Plant.
2 In the City of San Luis Obispo, dry weather wastewater flows occur between April and November. Wet weather flows
occur from December through March.
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MEMORANDUM OF UNDERSTANDING
BETWEEN
CALIFORNIA POLYTECHNIC STATE UNIVERSITY
AND
THE CITY OF SAN LUIS OBISPO
This Memorandum of Understanding (“MOU”) is by and between California Polytechnic State
University (“Cal Poly”) and the City of San Luis Obispo (“City”).
I. Background
Cal Poly and the City of San Luis Obispo have a long and successful history of working together to
achieve shared objectives and solve problems. Evidence of this can be found in various agreements
including those addressing transit bus service, fire protection, water and wastewater, as well as
cooperative policing. Numerous other points of collaboration large and small are indicative of a strong
and growing “town-gown” relationship. In 2016, the City and Cal Poly received a prestigious award for
the shared effort of creating the San Luis Obispo Neighborhood Wellness/Community Civility Effort
(Civility Report). The Civility Report remains an important guiding document that supports resident
quality of life and student success.
The City and Cal Poly have been similarly engaged in a process to understand the impacts of the
Cal Poly 2035 Master Plan as identified in its Draft Environmental Impact Report, and the
infrastructure and service needs, including water, wastewater and transportation, for both Cal Poly
and the City. The parties understand that maintaining a high level of partnership will contribute to
more effective outcomes as Cal Poly and the City continue to grow. Recognizing the importance of
this overarching objective, the purpose of this MOU is limited to documenting certain key objectives
identified by the parties as critical to accommodating further development on campus.
II. Goals and Principles
a. The parties enter this MOU to promote cooperation, and further develop their growing
relationship.
b. The parties will endeavor to improve communication by sharing information consistently and
meeting regularly.
c. This MOU is a statement of broad policy objectives and interests of the parties that will inform
future discussions and negotiations between Cal Poly and the City and is not intended to create
any contractual commitments.
d. In the event the parties identify projects or services requiring legal and/or financial commitments
between each other, the parties will negotiate in good faith toward written agreements.
III. Water and Wastewater
The parties have enjoyed a longstanding partnership around water as reflected in various
agreements including those addressing water and wastewater treatment as well as shared supply
(e.g., Whale Rock Commission). Over the past year, staff from both entities have collaborated closely
to develop strategies to ensure the availability and reliability of Cal Poly’s water supply and
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wastewater capacity in support of development planned in the 2035 Master Plan. The following
objectives will be addressed via amendment of existing agreements or establishment of new
agreements:
a. Develop mechanisms to confirm operational resiliency of Cal Poly’s water supply
b. Secure additional, temporary non-potable water supply and wastewater capacity for Cal Poly if
needed to support the development of on-campus housing
c. Reach agreement on Cal Poly fair-share financial contribution to support required upgrades of
City’s water treatment plant and distribution system
d. Reach agreement on Cal Poly fair-share financial contribution towards required upgrades of City’s
water resource recovery facility and wastewater collection system
e. Cal Poly to regularly inform City of progress towards reducing municipal sewer inflow and
infiltration
f. Establish protocol and objectives for annual partnership meeting to address items such as
anticipated facility upgrades and related fair share contributions, inflow and infiltration reduction
projects, smart meters installation to track water supply use/flow rates, adaptive management of
water supply storage and other related water and wastewater matters.
IV. Transportation
The City and Cal Poly recognize the opportunity to increase their level of partnership around
transportation planning and programs. Coordination of effort is essential to adapting and building
systems that are responsive to growing populations and evolving transportation trends.
The value of collaboration in this area has long been realized with respect to the City’s transit system,
which provides excellent service to both the City and Cal Poly populations. Continued efforts to evaluate
and, where appropriate, expand transit service and Transportation Demand Management (TDM) policies
at the Cal Poly campus will play an essential role in supporting Cal Poly’s robust TDM program and in the
City’s overarching climate action and sustainability goals to reduce Vehicle Miles Traveled (VMT) and
greenhouse gas emissions. Cal Poly and City agree that continued cooperation is essential to achieve these
goals and are deeply engaged in discussions around an expanded form of partnership with the shared
objective of building a more dynamic, sustainable, and mutually beneficial transportation program.
In addition to transit service, which is critical to the parties’ transportation plans and objectives, other
specific areas that would benefit from intentional partnership include traffic safety (on and off campus),
regional transit, and increased support for active transportation projects and programs. For example, City
and Cal Poly recently initiated a collaborative effort to assess and procure a bike share program to serve
the entire community.
The parties have identified the following interests and actions for near-term implementation:
a. Ensure the City is informed and consulted as Cal Poly develops and implements its TDM Program
b. Scale and optimize transit services available to the Cal Poly community in accordance with
changing population and utilization, with the objective of reducing VMT
c. Consolidate and/or coordinate active transportation projects to optimize results and avoid
conflicts between vehicles, bicycles and pedestrians
d. Collaborate on initiatives to improve mobility and safety off campus
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e. Identify potential mechanisms for Cal Poly to participate financially towards implementation of
transportation safety and mobility improvements that directly benefit university students, staff
and visitors.
f. Collaborate on strategies to address concerns related to campus spillover parking within adjacent
residential neighborhoods
g. Establish protocols and objectives to address transportation planning, TDM program evaluation
issues, and potential transportation enhancement projects, including trip monitoring, ongoing
evaluation of VMT reduction, transit service enhancements, and programs/projects to enhance
active transportation and mobility safety.
V. Housing
Since 2000, Cal Poly has tripled its student occupancy on campus, investing more than half a billion
dollars into student housing facilities without the use of any state funds. During that same period, Cal
Poly enrollment has grown by just over 4,300 students while the university has added more than 5,100
beds to its housing inventory. Cal Poly has provided additional housing capacity for all student enrollment
growth since 2000. Despite Cal Poly’s enrollment increases, there were approximately 658 fewer students
living off campus in the fall of 2019, as compared to the fall of 2000, because Cal Poly increased the
percentage of students living on campus from 17% to 37%.
The Cal Poly 2035 Master Plan sets an even more ambitious goal of housing on-campus more than
60% of anticipated enrollment. As part of the Master Plan, Cal Poly is preparing to provide for California’s
critical higher education needs by increasing headcount enrollment by 4,056 students. As it has done over
the last two decades, Cal Poly plans to house all of its enrollment growth, as well as significantly reduce
the number of students living off campus. With Cal Poly’s planned increase of 7,200 on -campus beds
articulated in the 2035 Master Plan, the university is working to reduce the number of students living off
campus by more than 3,100 students.
Cal Poly has elasticity in its current on-campus bed capacity within residence halls. When necessary
and feasible, Cal Poly will evaluate whether increased bed density should be implemented to
accommodate enrollment growth.
The parties have identified the following interests and actions for near-term implementation:
1. The parties understand the importance of the university’s next student housing project and
the related enabling projects (i.e. on-campus WRF to support water/wastewater capacity).
The University is actively working on the university’s next student housing project to build
1600-2000 new student beds.
2. Cal Poly to regularly inform the City of progress towards constructing additional housing on
campus and share its five-year capital plan, housing occupancy rates, and enrollment targets.
3. Establish protocol and objectives for annual partnership meeting to address issues related to
university and city growth and best accomplish transportation, public service and other
resource planning.
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City and Cal Poly leadership hereby commit to act in good faith in pursuit of these shared objectives.
CITY CAL POLY
_____________________________ ____________________________
____________ ____________
Date Date
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City of San Luis Obispo, Community Development, 919 Palm Street, San Luis Obispo, CA, 93401-3218, 805.781.7170, slocity.org
May 11, 2020
Board of Trustees
California State University
c/o Office of the Chancellor (via e‐mail)
401 Golden Shore
Long Beach CA 90802
Re: Cal Poly San Luis Obispo Master Plan
Members of the CSU Board of Trustees,
The City of San Luis Obispo has been actively engaged with the university since the first draft of the
Master Plan was published. The City stands ready to assist the university with implementation of the
Master Plan, as outlined in the recently executed Memorandum of Understanding (MOU). The MOU
identifies core areas of collaboration, including transportation, water supply resiliency, and
wastewater collection and treatment. In addition to those areas of work, the City and Cal Poly will
continue to promote coordination and grow our partnership across a wide variety of topics including
emergency response and law enforcement, neighborhood wellness and civility, information
technology, and economic development to name a few.
The City believes that, when successfully implemented, the Master Plan will help Cal Poly reduce its
impact on the local housing market (even as enrollment continues to grow) by providing beds for a
larger share of its students on campus. However, there are several hurdles for the campus ahead. As
described in the MOU, the City will assist the campus with its plans to create operational resiliency
with respect to its water supply – no small task and one that will rely on Cal Poly reaching agreement
with the City. In addition, plans to grow the campus will create mobility opportunities and constraints
for students and others as they travel to and from campus. To address this, the City will continue to
partner with the university on transit services and support the campus in its effort to implement
successful Trip Demand Management plans.
The City of San Luis Obispo appreciates the work of all the staff on campus who spent countless hours
meeting to discuss issues associated with growth under the Master Plan. Next steps have already
begun with the negotiation of a new rate agreement for water and wastewater services. This is a
good start, and the City is looking forward to working closely with the university as individual projects
under the Master Plan are proposed in the future.
Sincerely,
Michael Codron
Michael Codron
Community Development Director
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