HomeMy WebLinkAbout01/05/1993, C-10 - AGREEMENTS WITH CAL POLY REGARDING WATER AND SEWER RATES4II11�1MI 1111I��II= ��1111 City Of s l � lis OB1SpO MEETING DATE:
January 5, 1993
COUNCIL AGENDA REPORT ITEM NUMBER: /►_lO
FROM: William Statler, Director of Finance '
John Moss, Acting Director of Utilities /y�
Prepared by: Sue Baasch, Administrate eI, (Analyst .
SUBJECT: AGREEMENTS WITH CAL POLY REGARDING WATER AND SEWER RATES
CAO RECOMMENDATION
1. By motion, approve and authorize the Mayor to execute the following agreements with
California Polytechnic State University:
a. Agreement Regarding Water and Sewer Rates;
b. Agreement Regarding Optional Equity Interest in the Water and Sewer.
Systems.
2. By motion, approve and authorize the City Administrative Officer to execute the
Memorandum of Understanding.
DISCUSSION
Background
In the June 1992 review of the Water Fund, staff explained that negotiations were currently
underway with California Polytechnic State University to increase the University's water and sewer
rates. The University's water rate structure was last modified in 1964 and the sewer rate structure
in 1986. Any change in the University's rate structure must be the result of mutual agreement
between the City and the University.
The University has historically had a unique rate structure because each time major upgrades have
been made to the City's water and sewer systems, the University has elected to make equity
contributions to the projects, purchasing a percentage of ownership in the system to reflect its use
of each system. Also, the University is unique among the City's water customers because it is a
co -owner of Whale Rock Reservoir, and thus has its own water supply and pays its prorata share
of all costs of the Whale Rock operations.
Discussions have resulted in the attached agreements. One establishes a water and sewer rate
structure, one provides the option of continuing an equity position in the water and sewer systems,
and the memorandum of understanding simply memorializes the first two. The basic rate
agreement provides for either alternative, a rate structure without equity contribution and a rate
structure with equity contribution. It assumes no equity contribution until such time as the
University actually pays the equity contribution. If the University wishes to proceed with an equity
contribution, and such funding is available to the University, the second agreement contains the
understandings regarding the appropriate level of participation and the related portion of the total
project colt.
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COUNCIL AGENDA REPORT
University Water and Sewer Rates
Page 2
Agreement Regarding Water and Sewer Rates
Integral to the development of this agreement was the desire to develop a methodology that would
tie the University to the City's approved rate structure and periodic rate reviews and adjustments,
while reflecting the University's unique differences from other utility customers. As proposed, the
rates are based on the rate for City commercial accounts as modified by a percentage (or ratio)'that
accounts for o y that part of the rate structure that is applicable to the University.
Water Rate - Developing a Percentage of City Commercial Rate Applicable to University
Staff developed a percentage of the City's commercial rate applicable to the University, following
the preparation of a five year projection of the revenue requirements for the City's water system.
These revenue requirements were divided according to operational, capital and debt service
requirements for the three components of the water system: source of supply, treatment and
distribution. The appropriate percentage of total revenue requirements was assigned to each of the
components. The University's rate structure was based on the revenue requirement for treatment
and distribution only, as it has its own source of supply.
In the proposed agreement, analysis showed that 4817c represented the five year average of the total
revenue requirement attributable to treatment and distribution. Based on that, the University's
percentage of the commercial water rate will be 48 % until 1996/97, at which time, a new analysis
of the water fund revenue requirements will set the new percentage. Each new percentage will
remain in place for a five year period. Due to the financial impact of implementing the new rate,
the agreement sets forth a five year phasing schedule. By 1996/97, the University will be paying
the full 48 %. In each of the years prior to that, beginning July 1, 1993, a portion of the total
increase is implemented, in even increments.
If the University makes an equity contribution, it will be relieved of a portion of the revenue
requirement related to debt service. At this time, it is estimated that the applicable ratio would be
reduced from 48% to approximately 39%.
Sewer Rate - Developing a Percentage of City Commercial Rate Applicable to University
The University's applicable percentage of the City's commercial sewer rate was analyzed in the
same manner as the proposed water rate structure. The revenue requirements for the sewer system
were divided according to the operational, capital and debt service requirements for three
components: treatment, collection, and pre - treatment. The appropriate percentage of total cost was
assigned to each of the components. Since all three components were applicable to the University,
the appropriate percentage of the City commercial sewer rate for the University was 100 %.
As with the water rate, this percentage will be fully realized by 1996/97 and implemented according
to a five year phasing schedule.
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i WM1Q@ COUNCIL AGENDA REPORT
University Water and Sewer Rates
Page 3
If the University makes an equity contribution, it will be relieved of a portion of the,revenue
requirement related to debt service. At this time, it is estimated that the applicable ratio would be
reduced from 100% to approximately 70%.
Agreement Regarding Optional Equity Interest in the Water and Sewer Systems
The University may execute this agreement acknowledging its desire to continue its practice of
equity ownership and agreeing that such contribution must be paid to the City by June 30, 1995;
however, this does not bind the University to the equity contribution. The rate structure assumes
no equity contribution until such time as it is made. The total contribution for continuing an equity
position in both the water and sewer systems has been estimated at $4,004,000.
In summary, making this contribution is solely at the discretion of the University, since the
proposed rate structure fully recovers their share of costs assuming that this contribution is not
made.
The following is a brief overview of the improvements for which the University may chose to make
an equity contribution:
Water System Improvements
The City is currently proposing to make significant improvements to its water treatment plant to
meet drinking water quality regulations and to modemize the facility. Staff and the University
agree that if the University desires to continue its past practice of an equity interest in the water
system to equal its anticipated demand on the system, the University would require 1.44 million
gallons per day (mgd) capacity in the plant. This translates into 8.93% of the total project cost.
The estimated cost to the University will be $1,020,000.
Sewer System Improvements
The City currently is making modifications to its sewer system to assure continuing compliance
with State of California effluent discharge requirements. These modifications are occurring in three
phases, one phase building a relief sewer main and two phases upgrading the treatment plant. Staff
and the University agree that if the University desires to continue its past practice of an equity
interest in the sewer system equal to its anticipated demand on the system, the University would
require .471 million gallons per day (mgd) capacity in the treatment plant. This level of capacity
translates into 9.24% of the total cost of the treatment plant improvements. The estimated cost to
the University would be $2,700,000. Continuing the University's equity interest in the collection
system at the 1.2 mgd level would require the University to pay 7% of the total cost of the relief
sewer main, estimated at $284,000.
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1 COUNCIL AGENDA REPORT
University Water and Sewer Rates
Page 4
Memorandum of Understanding
In recognition that the University desires to make an equity contribution to the water and sewer
systems as previously described, but that this funding is dependent on approval of capital funding
by the voters, the University has asked that the City sign the Memorandum of Understanding,
Exhibit C to this report.
CONCURRENCES
The Utilities and Finance Department have mutually developed these agreements with the
University and therefore concur with the recommendations in this report.
It is important to note that under our existing agreements, the University must agree with any rate
changes or increases. Given this constraint, we believe that the proposed agreement provides an
excellent basis for implementing a rate structure that recognizes where the University is similar —and
not similar —to other City customers. In addition to this basic equity issue, the proposed agreements
provide for ongoing rate increases equal to those experienced by other customers without requiring
case -by -case negotiations with the University.
FISCAL IMPACT
Approval of the recommended agreements will increase the University's monthly water and sewer
rates as shown below:
Sewer
Assuming metered effluent flow of 138,000 ccf per year or 11,500 ccf per month:
Existing rates - $ 6,015 per month
1996 -97 rates* - $26,500 per month
* This assumes no equity contribution and approved rate adjustments.
Water
Assuming water demand of 180,000 ccf per year or 15,000 ccf per month:
Existing rates - $ 2,625 per month
1996 -97 rates ** - $17,670 per month
** This assumes no equity contribution or rate adjustments.
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�������►i��llll�lll� °� °�9�1111 CItY Of San _JIS OBISPO
i MoZe COUNCIL AGENDA REPORT
University Water and Sewer Rates
Page 5
ATTACHMENTS
Exhibit A - Agreement between the City of San Luis Obispo and California Polytechnic State
University Regarding Water and Sewer Rates
Exhibit B - Agreement between the City of San Luis Obispo and California Polytechnic State
EXHIBIT A
AGREEMENT BETWEEN
THE CITY OF SAN LUIS OBISPO
AND CALIFORNIA POLYTECHNIC STATE UNIVERSITY
REGARDING WATER AND SEWER RATES
THIS AGREEMENT, made this day of , 1992, by and between
the CITY OF SAN LUIS OBISPO, CALIFORNIA (hereinafter refered to as "City "), and
CALIFORNIA POLYTECHNIC STATE UNIVERSITY (hereinafter referred to as
"University ").
WITNESSETH:
WHEREAS, the City and the University have a long- standing and unique
relationship with regard to the co- development of water and sewer systems; 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 Sewer
Treatment /Collection Systems; and
WHEREAS, other City utility customers have experienced periodic rate increases
due to changing costs; and
WHEREAS, the University's rate structure has not been modified since 1986
for sewer and 1964 for water; and
WHEREAS, both the City and University have met and agreed to update the rate
structure to reflect changing costs and the new capital projects; and
WHEREAS, the City and University have agreed to a new rate structure
methodology which ties the University to the City's approved rate structure and
periodic rate reviews, while reflecting the University's unique differences from other
utility customers.
NOW, THEREFORE, in consideration bf their mutual covenants, the parties
hereto agree as follows:
RATE STRUCTURE METHODOLOGY
The University's rate structure for both water and sewer shall be based on whatever
the current rate is for City commercial accounts as modified by a percentage ( "ratio ")
that accounts for that part of the rate structure that is applicable to the University.
This ratio shall be established as outlined in paragraphs 2 and 3, and reviewed every
five years.
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Rate Agreement
Page 2
2. SETTING A WATER RATE RATIO
The ratio to be applied to the commercial water rate structure shall be determined by
the City. The City shall prepare a prospective five year projection of the revenue
requirements for the City's water system. These revenue requirements shall be
divided appropriately according to operational, capital and debt service requirements
for three components: source of supply, treatment and distribution. The appropriate
percentage of total revenue. requirements shall be assigned to each of the
components. The University's rate structure will be based on the revenue
requirements for these components less any equity interest in the system purchased
by the University.
The University's option to maintain an equity interest in the water system is defined
in a separate agreement with the City, dated
Exhibit A sets forth this analysis for the period July 1, 1992 through June 30, 1997,
and shall serve as an example for determining any changes to the ratio in subsequent
five year periods.
3. SETTING A SEWER RATE RATIO
The ratio to be applied to the commercial sewer rate structure shall be determined by
the City. The City shall prepare a prospective five year projection of the revenue
requirements for the City's sewer system. These revenue requirements shall be
divided appropriately according to operational, capital and debt service requirements
for three components: treatment, collection and pre- treatment. The University's rate
structure will be based on the revenue requirements for these components less any
equity interest in the system purchased by the University.
The University's option to maintain an equity interest in the sewer system is defined
in a separate agreement with the City, dated
Exhibit B sets forth this analysis for the period July 1, 1992 through June 30, 1997,
and shall serve as an example for determining any changes to the ratio in subsequent
five year periods.
4. EFFECTIVE DATE FOR THIS RATE STRUCTURE
This rate structure shall be effective July 1, 1992. The City agrees that, due to the
significant financial impact, the University may implement this change by phasing in
the total increase over a five year period. It is the City's understanding that the
University cannot change its budget for 92/93, so the total increase is divided evenly
in the four following years. By 1996/97, the University shall be paying the full
commercial rate times the applicable ratio for water and for sewer. Water charges will
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Rate Agreement
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WATER RATIO
FIVE YEAR PHASE IN
July 1, 1992 Current rate structure
Ratio applied against
City standard rates
for commercial accounts
July 1, 1993 21%
July 1, 1994 30%
July 1, 1995 39%
July 1, 1996 48%
Table 1
SEWER RATIO
FIVE YEAR PHASE IN
Current rate structure
Ratio applied against
City standard rates
for commercial accounts
40%
60%
80%
100%
be assessed according to metered water flow. Sewer charges will be assessed
according to metered effluent discharge flow. Table 1 sets forth the phase -in
schedule of the ratios to be used per paragraphs two and three of this Agreement.
5. HOLD HARMLESS
In recognition that the University's vested interest is limited to the upgrading of the
facility, and that the University does not actively participate in the management of the
services being provided by the facility, the City of San Luis Obispo will indemnify,
defend and save harmless the Trustees of the California State University, its officers,
agents, and employees from any and all claims and losses accruing or resulting to any
person(s), firm(s), or corporation(s) who may be injured or damaged as a result of the
service being provided by the City of San Luis Obispo through its facility described
herein, except for any such injury or damage caused by any act, omission, or
negligence of University
6. AMENDMENTS TO THE RATIO
In the event the City and University cannot reach agreement on the proposed
applicable ratio for the next five years, 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.
7. 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.
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Rate Agreement
Page 4
All notices related to this agreement shall be in writing and addressed as follows:
University
Norm Jacobson, Energy Coordinator
Facilities Administration
Cal Poly State University
San Luis Obispo, CA 93407
Ray Macias, Director
Support Services
Cal Poly State University
San Luis Obispo, CA 93407
Citv
City Clerk
City of San Luis Obispo
P.O. Box 8100
San Luis Obispo, CA 93406
8. AGREEMENT CONTAINS ALL UNDERSTANDINGS
This document (including all exhibits referred to above and attached hereto) 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 in a separate Memorandum of Understanding by and
between the parties herein. 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 OF SAN LUIS OBISPO
By By
Director of Support Services Mayor Peg Pinard
Ray Macias
ATTEST:
Diane Gladwell, City Clerk
APPROVED AS TO FORM:
Aieu7d�,4 00k\
ey . J ge en, City Attorfiey
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Rate Agreement
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EXHIBIT A
UNIVERSITY'S APPLICABLE PERCENTAGE (RATIO)
OF APPROVED WATER RATE STRUCTURE
As required in Paragraph 2, the City has developed a five year revenue projection for
the water system. The components and applicable percentages of the total revenue
requirement for FY 92/93 through FY 96/97 are shown on Schedules A -1 and A -2.
1. Applicable Components to the University
The University shall not pay the percentage cost of those components related to
Source of Supply, as the University has its own source of supply at Whale Rock. The
University shall pay the percentage cost of treatment and distribution, less any cost
for debt service related to the continuing equity investment in a portion of the water
system.
2. Applicable Water Rate Ratio for the period beginning July 1, 1992 and ending
June 30, 1997
The City is currently proposing to make significant improvements to its water
treatment plant to meet drinking water quality regulations and to modernize the
facility. It is expected that the City will debt - finance this project using lease
revenue bonds over a period of 20 to 30 years. The University may choose to
participate in the financing or pay its capital share of the revenue requirements
directly. The appropriate ratio to be applied against the City's commercial rates
will depend upon which of these options the University selects.
A. Percentage of rate structure for 199211997, without capita/ contribution
for equity interest in Water Treatment Plant Upgrades
The University shall pay the average of the five year percentage cost of
treatment and distribution, or 48 percent of the city -wide commercial rate,
assuming it does not make a direct equity contribution to the proposed Water
Treatment Plant improvements. The table below summarizes the detail on
Schedule A -1:
NO EQUITY CONTRIBUTION
92/93
51%
93/94
56%
94/95
48%
95/96
42%
96/97
43%
5 YR AVG 48%
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Rate Agreement
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B. Percentage of rate structure for 1992 11997, with capita/ contribution for
equity interest in Water Treatment Piant�Upgrade
The University may elect to make an equity contribution to the Water
Treatment Plant upgrade. The City will adjust the percentage indicated in
paragraph A above as necessary, if the University elects this option and when
payment is received. The City anticipates the applicable percentage of city-
wide commercial rate will be reduced to approximately 39 percent, but this
percentage will be refined when project costs and applicable debt service is
established. In the event that the University chooses this option, this
Agreement will be amended to reflect the revised ratio. The table below
summarizes the detail on Schedule A -2.
EQUITY CONTRIBUTION
92/93
48%
93/94
43%
94/95
37%
95/96
33%
96/97
5 YR AVG 39%
Rate Agreement
Page 7
PPLICABLE RATIO - NON - EQUITY CONTRIBUTION
SUMMARY OF WATER COST COMPONENTS FOR 1992 -93
SUMMARY OF WATER COST COMPONENTS FOR 1993 -94
Source of Supply
;Treatment
Distribution,:
Total
Operations and Maintenance
S2,727,837
5954,513
51,109 70i
$4,792,051
Capital Outlay
SO
$0 ..
5600,OOD >
$600,000
Debt Service
$269,200
51.;89,400 >
$222 SOD 1'
S681,200
TOTAL
$2,997,037
51,143 913'::
St,932;3o
$6,073,251
SUMMARY OF WATER COST COMPONENTS FOR 1993 -94
SUMMARY OF WATER COST COMPONENTS FOR 1994 -95
Source of Supply
;rations and Maintenance 53,664,789
Capital Outlay SO
Debt Service $869,200
TOTAL S4,533,989
SUMMARY OF WATER COST COMPONENTS FOR 1995 -96
Total
$6,163,676
$500,000
$2,044,700
$8,708,376
Source of Supply
€ Treatn.eni
Distr�buUOR
Total
Operations and Maintenance
$2,984,693
51,316,140 .
$1,130,477;::
$5,431,310
Capital Outlay
SO
S0"
5500,000:
$500,000
Debt Service
$269,200
$952,900
5222,600 <
$1,444,700
TOTAL
$3,253,893
52,269,040 ;;.,,,
57,853;077 i,
$7,376,010
SUMMARY OF WATER COST COMPONENTS FOR 1994 -95
Source of Supply
;rations and Maintenance 53,664,789
Capital Outlay SO
Debt Service $869,200
TOTAL S4,533,989
SUMMARY OF WATER COST COMPONENTS FOR 1995 -96
Total
$6,163,676
$500,000
$2,044,700
$8,708,376
SUMMARY OF WATER COST COMPONENTS FOR 1996 -97
Source of Supply
Treatment
Distnbutiort!
Total
Operations and Maintenance
$4,822,812
51,357,002.
Si,165 575 :
$7,345,389
Capital Outlay
$0
$0 ;;
$500,000-
5500,000
Debt Service
$869 200
' .....
.:.::..:.:::....:..::.:S.
': >zi ;;,.22Z ":. ::
.....,600::;;
2
$ ,044,700
TOTAL
$5,692,012
52,309,902t.888.7.75,n:
$1 ,949,551.
$9.890.089
SUMMARY OF WATER COST COMPONENTS FOR 1996 -97
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Source of Supply
Treatment
Dstnbutron <:;
Total
Operations and Maintenance
$4,989,771
$1,428,458
51,226 951 ?
$7,645,180
Capital Outlay
SO
SD '
S500,00D
$500,000
Debt Service
$869,200
59.52,900:
5222,fi0ff
$2,044,700
TOTAL
$5,858,971
$2,3.81,358
$1 ,949,551.
510,189,880
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Rate Agreement
Page 8
APPLICABLE RATIO - - EQUITY CONTRIBUTION
SUMMARY OF WATER COST COMPONENTS FOR 1992 -93
SUMMARY OF WATER COST COMPONENTS FOR 1993 -94
Source of Supply , :
Treatment
Distnbuhon
Total
Operations and Maintenance
$2,727,837
5954 5t3
51,109,701`;
S4,792,051
Capital Outlay
SO
$0
i 5600,000
$600,000
Debt Service
S269,200
$189,400 : <`
;:::;522.2;600;;::
$681,200
TOTAL
$2,997,037
S1, 143, 913 <<€
<> < i^ $1 .9 932; ......
$6,073,251
SUMMARY OF WATER COST COMPONENTS FOR 1993 -94
Capital Outlay $0 SO $500,000.' $500,000
Debt Service $269,200 $952,900
222. 600 51,444,700
TOTAL $3,253,893 S2, 269, 040 OTl . $7,376,010
SUMMARY OF WATER COST COMPONENTS FOR 1994 -95
Source of Supply TreafRienY < " >; > > >' >:Distriputioriia « Total
PP y i:i:
Operations and Maintenance $3,664,789 51,344,258 57,1542629:: $6,163,676
Capital Outlay SO 50 $500,000 $500,000
Debt Service $869,200 5952,900 i ?<;rv!5222600:. S2,044,700
TOTAL 54,533.989 $2.297,158 > ? =i` >?i <!:S�877229 <<>. S8,708,376
SUMMARY OF WATER COST COMPONENTS FOR 1995 -96
Source of Supply ;;;;' <T;re'atmant >? ; >; i;.,�str..butro ..: >...._., otal
Operations and Maintenance $4,822,812 57,357,002 57,765,5!5.; $7,345,389
Capital Outlay $O 50 $500,000:: $500,000
Debt Service 5869,200 $952,900 ; €;' `:;:;:;;;'5222;600:::: S2,044,700
TOTAL $5,692,012 $2,309,902 888775 $9,890,089
SUMMARY OF WATER COST COMPONENTS FOR 1996 -97
Source of upP Y ?' >:> regimen. Yi? ? € ?«;; €:a<::.IStn..uho.n..;: Total
r .1' > $7,645,180
Oe in n Min n n 4 1 s ;:'22695...
at o sad Maintenance a ce S 989 77 ''' a €428' 458' =�< <` > > <>':i...5.
Capital Outlay SO $0 5500,000 . $500,000
Debt Service $869,200 S952,900 $222600 S2,044,700
TOTAL $5,858,971 52,381,358 $71 9494551 :i S10,189,880
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Source of Supply T
Treatment D
Distnbuaon T
Total
Operations and Maintenance $
$2,984,693 S
q:: > 7
4.... is $
$5.431,310
SUMMARY OF WATER COST COMPONENTS FOR 1994 -95
Source of Supply TreafRienY < " >; > > >' >:Distriputioriia « Total
PP y i:i:
Operations and Maintenance $3,664,789 51,344,258 57,1542629:: $6,163,676
Capital Outlay SO 50 $500,000 $500,000
Debt Service $869,200 5952,900 i ?<;rv!5222600:. S2,044,700
TOTAL 54,533.989 $2.297,158 > ? =i` >?i <!:S�877229 <<>. S8,708,376
SUMMARY OF WATER COST COMPONENTS FOR 1995 -96
Source of Supply ;;;;' <T;re'atmant >? ; >; i;.,�str..butro ..: >...._., otal
Operations and Maintenance $4,822,812 57,357,002 57,765,5!5.; $7,345,389
Capital Outlay $O 50 $500,000:: $500,000
Debt Service 5869,200 $952,900 ; €;' `:;:;:;;;'5222;600:::: S2,044,700
TOTAL $5,692,012 $2,309,902 888775 $9,890,089
SUMMARY OF WATER COST COMPONENTS FOR 1996 -97
Source of upP Y ?' >:> regimen. Yi? ? € ?«;; €:a<::.IStn..uho.n..;: Total
r .1' > $7,645,180
Oe in n Min n n 4 1 s ;:'22695...
at o sad Maintenance a ce S 989 77 ''' a €428' 458' =�< <` > > <>':i...5.
Capital Outlay SO $0 5500,000 . $500,000
Debt Service $869,200 S952,900 $222600 S2,044,700
TOTAL $5,858,971 52,381,358 $71 9494551 :i S10,189,880
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SUMMARY OF WATER COST COMPONENTS FOR 1995 -96
Source of Supply ;;;;' <T;re'atmant >? ; >; i;.,�str..butro ..: >...._., otal
Operations and Maintenance $4,822,812 57,357,002 57,765,5!5.; $7,345,389
Capital Outlay $O 50 $500,000:: $500,000
Debt Service 5869,200 $952,900 ; €;' `:;:;:;;;'5222;600:::: S2,044,700
TOTAL $5,692,012 $2,309,902 888775 $9,890,089
SUMMARY OF WATER COST COMPONENTS FOR 1996 -97
Source of upP Y ?' >:> regimen. Yi? ? € ?«;; €:a<::.IStn..uho.n..;: Total
r .1' > $7,645,180
Oe in n Min n n 4 1 s ;:'22695...
at o sad Maintenance a ce S 989 77 ''' a €428' 458' =�< <` > > <>':i...5.
Capital Outlay SO $0 5500,000 . $500,000
Debt Service $869,200 S952,900 $222600 S2,044,700
TOTAL $5,858,971 52,381,358 $71 9494551 :i S10,189,880
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SUMMARY OF WATER COST COMPONENTS FOR 1996 -97
Source of upP Y ?' >:> regimen. Yi? ? € ?«;; €:a<::.IStn..uho.n..;: Total
r .1' > $7,645,180
Oe in n Min n n 4 1 s ;:'22695...
at o sad Maintenance a ce S 989 77 ''' a €428' 458' =�< <` > > <>':i...5.
Capital Outlay SO $0 5500,000 . $500,000
Debt Service $869,200 S952,900 $222600 S2,044,700
TOTAL $5,858,971 52,381,358 $71 9494551 :i S10,189,880
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Rate Agreement
Page 9
EXHIBIT B
UNIVERSITY'S APPLICABLE PERCENTAGE (RATIO)
OF APPROVED SEWER RATE STRUCTURE
As required in Paragraph 3, the City has developed a five year revenue projection for
the sewer system. The components and related percentages of the total revenue
requirement for FY 92/93 through FY 96/97 are shown on Schedules B -1 and B -2.
1. Applicable Components to the University
The University shall pay the applicable percentage cost of treatment, collection and
pretreatment, less any cost for debt service related to the continuing equity
investment in a portion of the sewer system.
2. Applicable Sewer Ratio for the period beginning July 1, 1992 and ending June
30, 1997
The City is currently making modifications to its sewer system to assure continuing
compliance with State of California effluent discharge requirements. These
modifications are being performed in three phases, each of which has been approved
for low interest loan funding through the State Revolving Loan Fund administered by
the State Water Resources Control Board, Division of Clean Water Programs. The
University may choose to participate in the financing or pay its capital share of the
revenue requirements directly. The appropriate ratio to be applied against the City's
commercial rates will depend upon which of these options the University selects.
A. Percentage ofrate structure for 199211997, without capita/ contribution
for equity interest in Sewer System Upgrade
The University shall pay the average of the five year percentage cost of
treatment and collection and pretreatment, or 100 percent of the city -wide
commercial rate, if it does not continue its equity interest in the sewer system.
The table below summarizes the detail on Schedule B -1:
NO EQUITY CONTRIBUTION
92/93 100%
93/94 100%
94/95 100%
95/96 100%
96/97 100%
5 YR AVG 100%
r
C -1d -14
Rate Agreement
Page 10
B. Percentage of rate structure for 199211997, with capital contribution for
equity interest in Sewer System Upgrade
The University may elect to make an equity contribution to the sewer system
upgrade. The City will adjust the percentage indicated in paragraph A above
as necessary, if the University elects this option and when payment is received.
The City anticipates the applicable percentage of city -wide commercial rate will
be reduced to approximately 70 percent, but this percentage will be refined
when project costs and applicable debt service is established. In the event that
the University chooses this option, this Agreement will be amended to reflect
the revised ratio. The table below summarizes the detail on Schedule B -2.
EQUITY CONTRIBUTION
92/93
93%
93/94
63%
94/95
64%
95/96
65%
96/97
66%
5 YR AVG 70%
G'' -10-15
Rate Agreement
Page 11
PPLICABLE RATIO - NON - EQUITY CONTRIBUTION
SUMMARY OF SEWER COST COMPONENTS FOR 1992 -93
Operations and Maintenance
Capital Outlay
Debt Service
TOTAL
SUMMARY OF SEWER COST COMPONENTS FOR 1993 -94
Operations and Maintenance
Capital Outlay
Debt Service
TOTAL
SUMMARY OF SEWER COST COMPONENTS FOR 1994 -95
;rations and Maintenance
t,apital Outlay
Debt Service
TOTAL
SUMMARY OF SEWER COST COMPONENTS FOR 1995 -96
Operations and Maintenance
Capital Outlay
Debt Service
TOTAL
SUMMARY OF SEWER COST COMPONENTS FOR 1996 -97
Operations and Maintenance
Capital Outlay
Debt Service
TOTAL
Rate Agreement
Page 12
APPLICABLE RATIO - EQUITY CONTRIBUTION
SUMMARY OF SEWER COST COMPONENTS FOR 1992 -93
Operations and Maintenance
X567,770
$T64546
5r,lua,5tia
sl,a4i,ypp
Capital Outlay
$0
$0
$535,SDD ;
5535.80D
Debt Service
$251,500 ,
$0
$0 <;
-
5251,500
TOTAL
$819,270:
1 :;,..51; ??s774.
� ,._ 74 "384>
$3,729,200
SUMMARY OF SEWER COST COMPONENTS FOR 1993 -94
Operations and Maintenance
$596,]58
$172;;774
52,320,063`;
5..3,088,995;
Capital Outlay
SO
..
$0
5452,032
'5452,032;
Debt Service
$ 251, 500
TOTAL
S1,848,600
$2,100,100
TOTAL
$847,658
1 :;,..51; ??s774.
$4,620,695
$5,641,127
SUMMARY OF SEWER COST COMPONENTS FOR 1994 -95
Operations and Maintenance
�:<,> rn ;:, : � 6:2.:: 5 .:.
> °•
7
Capital Outlay......
$0
:;: ><:...::......:::,:::::_
453> 313
....... ..... .._:
Debt Service
$251,500
$0'
$1,866,400
TOTAL
$877,466 ? >';!;`S:i81412>
>?;51.90486<
54,755,780
SUMMARY OF SEWER COST COMPONENTS FOR 1995 -96
Operations and Maintenance
° '° "° °° >
> °•
2 7` 68
Capital Outlay
$0
50
5454,646
Debt Service
5251,500 _'; ><.
-!i
$1,866,400
TOTAL
S908,763 <`_`
>?;51.90486<
$4,878,914
SUMMARY OF SEWER COST COMPONENTS FOR 1996 -97
S2,117,900
$5,814,658
$2,117,900
$5,978.163
$2,117,900
$6,158,830
C -/0 -17
°..° pliection <
Pretreatrnent
Treatnn
Operations and Maintenance
'' .5689,427
5199';808
$2,695,663
Capital Outlay
$0
$0 '
...... 32
Debt Service
$251,500
50 .
$1,866,400
TOTAL
$940, 927
r<r;S1.99:808:
55,018,095
S2,117,900
$5,814,658
$2,117,900
$5,978.163
$2,117,900
$6,158,830
C -/0 -17
EXHIBIT B
AGREEMENT BETWEEN
THE CITY OF SAN LUIS OBISPO
AND CALIFORNIA POLYTECHNIC STATE UNIVERSITY
REGARDING OPTIONAL EQUITY INTEREST
IN THE WATER AND SEWER SYSTEMS
THIS AGREEMENT, made this day of , 1992, by and between
the CITY OF SAN LUIS OBISPO, CALIFORNIA (hereinafter referred to as "City "), and
CALIFORNIA POLYTECHNIC STATE UNIVERSITY (hereinafter referred to as
"University ").
WITNESSETH:
WHEREAS, the City and the University have a long- standing and unique
relationship with regard to the co- development of water and sewer systems; 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 sewer
treatment /collection systems; and
WHEREAS, the University wishes to update prior agreements regarding its
operational needs and related equity interest in the City's water and sewer system;
and
WHEREAS, maintaining an equity interest in the City's water and sewer
systems is solely at the option of the University.
NOW, THEREFORE, in consideration of their mutual covenants, the parties
hereto agree as follows:
1. WATER SYSTEM -
The anticipated modifications to the Water Treatment Plant will assure continuing
compliance with drinking water quality regulations as well as modernize the facility.
The University wishes to purchase an equity interest equivalent to 1000 acre feet /year
or .9 mgd. The plant design allows a factor of 1.6 for peaking requirements.
Multiplied by .9 mgd, the University would require 1.44 mgd capacity in the 16.0 mgd
plant.
646gd
Optional Equity Interest Agreement
Page 2
If it chooses to maintain an equity interest in the plant at the required level, the
University agrees to pay the percentage obtained by the division of 1.44 mgd
(University's equity) by 16.0 mgd (plant capacity), or 8.93 %, of the total project cost.
The estimated cost to the University is $ 1,020,000, which will be refined upward or
downward by letter when the project construction is complete, subject to the total
contribution ceiling noted in paragraph three of this agreement.
2. SEWER SYSTEM
The current upgrade to the sewer system has three phases. One phase upgrades the
collection system ( "relief sewer main "). The other two phases upgrade the Treatment
plant. The upgrades to the Wastewater Treatment Plant relate to meeting discharge
requirements. The capacity of the plant will remain at 5.1 mgd. The University
wishes to purchase an equity interest in the Treatment Plant equivalent to .471 mgd.
The current equity interest in the collection system is 1.2 mgd, required due to
infiltration and inflow and wet weather peak flows.
A. Treatment Plant
If it chooses to maintain an equity interest in the plant at the required level, the
University agrees to pay the percentage obtained by the division of .471 mgd
(University's interest) by 5.1 mgd (plant capacity), or 9.24 %, of the total
project cost.
The estimated cost to the University is $2,700,000, 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. Collection System
If it chooses to maintain an equity interest in the collection system at the 1.2
mgd level, the University agrees to pay 7% of the total cost for the relief sewer
main.
The estimated cost to the University is $284,000, 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.
The availability of funds for this agreement is contingent upon the approval by the
Legislature and Governor of necessary funding in the State budget for the fiscal years
included in this agreement.
C -l�-Iq
Optional Equity Interest Agreement
Page 3
3. RECEIPT OF FUNDS
If the University chooses to exercise its option to maintain an equity interest in either
the City's water or sewer systems, the University's contribution must be received by
June 30, 1995. The estimated costs set forth in paragraphs one and two may be
adjusted between categories based upon actual costs provided. The total University
contribution for the water and sewer system upgrades will not exceed $4,004,000.
Exercising this option will reduce the percentage ratio of commercial rate structure
owed by the University as set forth in the Agreement between the City and the
University regarding water and sewer rates, dated . The
adjusted water ratio is described in paragraph 2B of Exhibit A of that Agreement; and
the adjusted sewer ratio is described in paragraph 213 of Exhibit B of that Agreement.
4. NOTICE
All notices related to this agreement shall be in writing and addressed as follows:
University
Norm Jacobson, Energy Coordinator
Facilities Administration
Cal Poly State University
San Luis Obispo, CA 93407
Ray Macias, Director
Support Services
Cal Poly State University
San Luis Obispo, CA 93407
Citv
City Clerk
City of San Luis Obispo
P.O. Box 8100
San Luis Obispo, CA 93406
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 in a separate 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.
0 -10 -ao
Optional Equity Interest Agreement
Page 4
IN WITNESS WHEREOF, CITY and UNIVERSITY have executed this Agreement
the day and year first above written.
UNIVERSITY
Directo of Support Services
Ray Macias
ATTEST:
Diane Gladwell, City Clerk
APPROVED AS TO FORM:
s�•_ksen, City Attorne
CITY OF SAN LUIS OBISPO
By
Mayor Peg Pinard
EXHIBIT C
MEMORANDUM
To: John Dunn Date;
City Administrative Officer
City of San Luis OZo From: Frank Lebens ��' ZZ
Interim Vice President for Business Affairs
California Polytechnic State University
Subject: MEMORANDUM OF UNDERSTANDING
Water and Sewer Rates /Water and Sewer Systems
WHEREAS, the City of San Luis Obispo and California Polytechnic State
University have a longstanding and unique relationship with regard to the co-
development of water and sewer systems; and
WHEREAS, it is the desire of both parties to continue that relationship; and
WHEREAS, the City of San Luis Obispo is upgrading both its Water Treatment
Plant and Sewer Treatment /Collection Systems; and
WHEREAS, other City of San Luis Obispo utility customers have experienced
periodic rate increases due to changing costs; and
WHEREAS, both the City of San Luis Obispo and California Polytechnic State
University have met and agreed to update the rate structure to reflect changing costs
and the new capital projects; and
WHEREAS, Cal Poly State University wishes to update prior agreements
regarding its operational needs and related equity interest in the City of San Luis
Obispo's water and sewer system; and
WHEREAS, maintaining an equity interest in the City of San Luis Obispo's
water and sewer systems is solely at the option of the University:
NOW, THEREFORE, agreements setting the conditions and terms for this
relationship have been developed by both parties wherein a payment schedule has
been agreed to by both parties which would be funded through California Polytechnic
State University's Major Capital Outlay Program, such funding expected to be
approved for fiscal year 1994 -95.
C-16-01a
TERMS AND CONDITIONS:
The funding formula set forth in the referenced agreements by California Polytechnic
State University assumes no equity contribution to the City of San Luis Obispo for the
upgrading of its Water Treatment Plant and Sewer Treatment /Collection Systems.
If the University chooses to maintain an equity interest and funding is available, the
fees will be recalculated as stated in paragraph 2B of Exhibit A and paragraph 2B of
Exhibit B of the Agreement Regarding Water and Sewer Rates.
If this Memorandum of Understanding is acceptable, please sign, date, and return the
attached copy to me. Thank you.
ACCEPTED:
City of San Luis Obispo
by:
Dunn
Administrative Officer
Date
e-16-'a5