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HomeMy WebLinkAbout2022-04-26 - Board of Directors Meeting Agenda PacketYorba Linda Water District AGENDA YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS SPECIAL MEETING Tuesday, April 26, 2022, 4:00 PM 1717 E Miraloma Ave, Placentia CA 92870 1. PARTICIPATION INSTRUCTIONS Due to the continuing state of emergency declared by the California Governor related to preventing the spread of Coronavirus (COVID-19), and pursuant to California Government Code Section 54953(e), this meeting will be facilitated in a hybrid format. As such, Directors and members of the public may choose to participate in person or by video/teleconference. Information for accessing this meeting by telephone or internet-based service is provided below. For questions regarding participation, please call the Board Secretary at (714) 701-3020. Computer/Mobile Device: https://us06web.zoom.us/m/86737627695 Telephone: (669) 900-6833 or (346) 248-7799 Meeting ID: 867 3762 7695 Live -stream: https://www.ylwd.com/youtube 2. CALL TO ORDER 3. PLEDGE OF ALLEGIANCE 4. ROLL CALL J. Wayne Miller, PhD, President Brooke Jones, Vice President Trudi DesRoches, Director Phil Hawkins, Director Tom Lindsey, Director 5. PUBLIC COMMENTS Any individual wishing to address the Board (or Committee) is requested to identify themselves and state the matter on which they wish to comment. If the matter is on the agenda, the Chair will recognize the individual for their comment when the item is considered. No action will be taken on matters not listed on the agenda. Comments are limited to three minutes and must be related to matters of public interest within the jurisdiction of the Water District. (GC 54954.3) 6. DISCUSSION ITEMS This portion of the agenda is for matters that cannot reasonably be expected to be concluded by action of the Board (or Committee) at the meeting, such as technical presentations, drafts of proposed policies, or similar items for which staff is seeking advice and counsel. Time permitting, it is generally in the District's interest to discuss these more complex matters at one meeting and consider formal action at another meeting. This portion of the agenda may also include items for information only. 6.1. Summary of Draft Budget for Fiscal Year 2022-23, Updated Variable Expenses, Supplies and Services, and Salaries and Related Expenses 7. ACTION CALENDAR (BEGINNING AT 6:00 PM) This portion of the agenda is for items where staff presentations and Board (or Committee) discussions Page 1 of 82 are needed prior to formal action. 7.1. Due Process Hearing Regarding Award of Construction Contract for the Hidden Hills Booster Pump Station Improvements Project Recommendation: Based on staff's bid review and reference check, and after the Board considers the attached written documents (Exhibits 1 and 2) and hears oral testimony from Project bidder, MMC, Inc., staff recommends that the Board determine MMC, Inc. is not a responsible bidder; so, it would not be in the District's best interests to award the Project contract to low bidder, MMC, Inc. Instead, it is in the District's best interest to award the contract to second low bidder, Pacific Hydrotech Corp., as discussed in Item No. 7.2 of this agenda. 7.2. Award of Construction Contract for the Hidden Hills Booster Pump Station Improvements Project. Recommendation: Pending the results of the due process hearing in Item No. 7.1 of this Board meeting agenda, staff recommends that the Board of Directors award the Construction Contract for the Hidden Hills Booster Pump Station Improvements Project to Pacific Hydrotech Corporation for $2,443,9 10. 00, Job Nos. J-2020-20 and J-2018-27. 7.3. Fourth Amendment to the Water and Sewer Facilities Agreement Between the Yorba Linda Water District and North County, BRS, LLC (now Lennar Homes of California LLC) for the Cielo Vista Development Project Recommendation: That the Board of Directors approve the Fourth Amendment to the Cielo Vista Project Water and Sewer Facilities Agreement dated August 1, 2018, conditioned on the Property Owner's signature to the Fourth Amendment within 30 days of this approval. 8. ADJOURNMENT 8.1. The next regular Board meeting is scheduled Tuesday, May 10, 2022. Closed Session (if necessary) will begin at 5:30 p.m. and regular business at 6:30 p.m. Items Distributed to the Board Less Than 72 Hours Prior to the Meeting- Non-exempt eetingNon-exempt materials related to open session agenda items that are distributed to a majority of the Board of Directors (or Committee Members) less than seventy-two (72) hours prior to the meeting will be available for public inspection in the lobby of the District's Administrative building located at 1717 E Miraloma Ave, Placentia CA 92870 during regular business hours. When practical, these materials will also be posted on the District's website at https://ylwd.com/. (GC 54957.5) Accommodations for the Disabled Requests for disability -related modifications or accommodations, including auxiliary aids or services, required for participation in the above posted meeting should be directed to the Board Secretary at (714) 701-3020 at least 24 hours in advance. (GC 54954.2(a)) Page 2 of 82 ITEM NO. 6.1. Yorba Linda Water District /_[r]=1►1I7_\V=1161AI MEETING DATE: April 26, 2022 TO: Board of Directors FROM: Doug Davert, Interim General Manager STAFF CONTACTS: Delia Lugo, Finance Manager Paige Appel, Budget Analyst SUBJECT: Summary of Draft Budget for Fiscal Year 2022-23, Updated Variable Expenses, Supplies and Services, and Salaries and Related Expenses Staff will provide the attached presentation during the meeting. ATTACHMENTS: 1. Presentation 2. Revised Presentation Page 3 of 82 Yorba Linda Water District Page 4 of 82 Overview • Supplies & Services • Salaries & Related Expenses • Non -Operating Expenses • Debt Service • Revised Budget • Summary of FY2022-23 Budget • Summary of Rates& Other Considerations • Revised CIP 4/26/2022 Page 5 of 82 YL ,W� Page 6 of 82 Supplies & Services Analysis 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 � 2021 Actuals � 2022 Projections 0 2023 Budget --W-2021 Rate Study Historic Trends - Supplies & Services FY21, FY22 Projections, FY23 Budget YL SIL 252,843 W555,422 340,893 529,772 i3a,�oa i 351,708 � � 48,973 104,815 � _ Communicati Contractual Data District Dues & Fees & ons Services Processing Meetings & Memberships Permits Insurance Maintenance Materials Events 164,667 715,712 311,867 24,031 87,809 362,050 274,975 800,876 719,502 140,985 551,996 322,529 34,995 103,366 441,182 284,869 1,576,275 714,317 193,000 614,039 421,614 45,500 97,522 467,990 434,590 1,911,900 1,001,300 252,843 555,422 340,893 48,973 104,815 529,772 351,708 738,268 725,679 Variances Explanations for Impactful Expenses - 2023 Budget to 2022 Projections Contractual Services -The increase of 11%from FY22 Projections is due to new contracts for janitorial and landscaping services that will beat a higher cost than the current contracts. These expenses were originally budgeted for FY22 but are now being moved to FY23 Budget. The increase is also due to mailing and printing of backflow inserts to customers. Data Processing -The increase of 31% from FY22 Projections is due to additional software licenses from Microsoft and to purchase additional Dell support. Insurance - The increase of 53% from FY22 Projections is due to increase in premium rates, ACWA-JPIA Property insurance coverage for the PFAS Treatment Plant and Cybersecurity Insurance. Maintenance - The increase of 21% from FY22 Projections is due to pavement program costs inherited from City of Yorba Linda and Placentia, maintenance of root control, building 4 lobby door replacement, chlorine building roof repair, concrete work at Lakeview Reservoir and SCADA AGB Earthquake Testing. Materials - The increase of 40% from FY22 Projections is due to the completion of capitalized grant project and will resume regular maintenance schedule and increase cost of meter replacements. The increase is also due to replacing 5 methane sensors at various sites. 4/26/2022 Page 7 of 82 4 Supplies & Services Analysis Cont. 1,800,000 Professional Developmen 1,600,000 Board Services 1,400,000 e Accounts 35,857 1,200,000 45,362 1,385,819 1,000,000 1,713,760 65,738 800,000 600,000 11,338 171,510 400,000 194,213 61,500 200,000 10,000 39,093 0 137,000 1,422,000 50,147 Non Capital Office 394,728 Equipment Expense � 2021 Actuals 197,846 39,759 � 2022 Projections 167,579 41,817 1 2023 Budget 204,300 42,300 - 2021 Rate Study 194,213 39,093 Historic Trends - Supplies & Services FY21, FY22 Projections, FY23 Budget Professional Professional Developmen Vehicle Board Services t e Accounts 35,857 1,025,746 45,362 1,385,819 85,550 1,713,760 65,738 1,007,226 Travel & Uncollectibl Utilities Vehicle Board PFAS Conferences e Accounts Expenses Election 10,248 15,907 202,964 469,612 43,529 11,338 171,510 408,341 61,500 119,330 10,000 224,000 538,550 137,000 1,422,000 50,147 10,196 212,508 394,728 94,156 819,467 Variances Explanations for Impactful Expenses - 2023 Budget to 2022 Projections Professional Services - The increase of 24% from FY22 Projections is due to the Water Master Plan and Hydraulic Modeling, Cyber Security Analysis and Compensation Study. Travel & Conferences - The increase of 174% from FY22 Projections is due to less COVID restrictions for conferences and events. Vehicle Expenses -The increase of 32% from FY22 Projections is due to gas and diesel prices increasing. 4/26/2022 Page 8 of 82 5 Supplies & Services - Rate Study Comparison 202iRate Study Assumptions FY2020-21 FY2021-22 FY2022-23 Supplies & Services - Water $ 4,651,466 $ 4,959,410 $ 5,533,227 FY23 Budget Supplies & Services Supplies & Services - Sewer 1,323,233 982,065 1,002,617 $12,000,000 $6,535,844 $ 5,974,699 $ 5,941,475 $ 6,535,844 $10,000,000 $8,000,000 $5,974,699 $5,941,475 $6,000,000 Historic & Future $4,000,000 Prior Year Projected Budget $2,000,000 ' FY2020-21 FYE2021-22 FY2022-23 423 Supplies & Services - Water $ 4,465,134 $ 5,486,003 $ 8,376,801 Prior Year Projected Budget FY2020-21 FYE2021-22 FY2022-23 Supplies & Services - Sewer 994,289 1,021,305 1,307,444 Supplies & Services - Water � Supplies & Services - Sewer $ 5,459,423 $ 6,507,308 $ 9,684,245 f 2021 Rate Study Assumptions Variance from Assumptions Rate Study Variance $ $ Variance (515,276) $ 565,833 $ 3,148,401 -9% 10% 48% 4/26/2022 Page 9 of 82 6 Supplies & Services — Off Trend Expenses Description: Off trend expenses are expenses that have not been consistent annual operating expenditures. This is to help compare supplies and services of the District from year to year. Off Trend Expenses Description Board Election Additional Cost - City of Yorba Linda & Placentia Pavement Program Water Master Plan & Hydraulic Modeling Compensation Study Total Supplies & Services without Off Trend Expenses Supplies & Services — Total Expenses Off Trend Expenses (Minus) Variance Increase/Decrease Year to Year Variance $ Variance Department Board of Directors Engineering Engineering Human Resources Amount $ 137,000 544,000 500,000 60,000 $ 1,241,000 Projections Budget FYE2021-22 FY2022-23 $ 6,507,311 0 $ 6,507,311 $ 9,684,245 (1,241,000) $ 8,443,245 FY22 Projections to FY23 Budget $ 1,935,934 30% Variance Explanation The cost of operating the PFAS treatment plant is projected to be s61,soo for FY22 Projections and budgeted at $1,422,000 for FY23. This makes up the majority of the increase in the total budget between the two years. YL W l J 4/26/2022 Page 10 of 82 7 W N,'/' Salary Related 1 Expenses IWO. -W Salary Related Expenses - Rate Study Comparison 202iRate Study Assumptions FY2020-21 Salary Related - Water $ 10,156,647 $ Salary Related - Sewer 1,738,874 $ 11,895,521 $ FY2021-22 FY2022-23 11,893,405 $ 12,770,939 2,041,083 2,191,322 13,934,488 $ 14,962,261 Variance Explanation PARS Contributions is included in the Rate Study amounts $1,o87,325 for FY23 and s1,go6,291 for FY22. Historic & Future FY23 Budget Salary Related Prior Year Projected Budget Expenses FY2020-21 FYE2021-22 FY2022-23 $20,000,000 Salary Related - Water $ 9,389,188 $ 10,174,107 $ 11,359,392 $13,934,488 $14,962,261 $15,000,000 $11,895,521 Salary Related - Sewer 1,558,707 1,728,653 1,872,417 $ 10,947,895 $ 11,902,760 $ 13,231,809 $10,000,000 Total: Total: Total: $5,000,000 $9,389,188 $10,174,107 $11,359,392 $- Prior Year Projected Budget Variance from Assumptions FY2020-21 FYE2021-22 FY2022-23 Rate Study Assumptions $ (947,626) $ (2,031,728) $ (1,730,452) Salary Related - Water Salary Related - Sewer Variance % -8% -15% -12% f 2021 Rate Study Assumptions 4/26/2022 Page 12 of 82 9 W N,'/' Non -Operating 1 Expenses Non -Operating Expenses - Rate Study Comparison 2021 Rate Study Assumptions FY2020-21 FY2021-22 FY2022-23 Interest Expense $ 1,499,381 $ Other Expense 150,889 $ 1,650,270 $ Historic & Future 1,438,919 $ 1,374,681 153,907 156,985 1,592,826 $ 1,531,666 Prior Year Projected Budget FY2020-21 FYE2021-22 FY2022-23 Interest Expense $ 1,293,830 $ 1,248,225 $ 2,436,750 Other Expense 859,403 20,703 18,135 $ 2,153,233 $ 1,268,928 $ 2,454,885 Variance from Assumptions Rate Study Assumptions $ 502,963 $ (323,898) $ 923,219 Variance % 30% -20% 60% 4/26/2022 Page 14 of 82 11 YL ,W� Page 15 of 82 Debt Service Ratio For Water Fund 2021 Rate Study Assumptions FY2020-21 FY2021-22 FY2022-23 Debt Service $ 2,729,381 Ratio 1.75 Per Policy 2.25 Historic & Future $ 2,728,919 2.14 2.25 $ 3,107,326 2.98 2.25 Prior Year Projected Budget FY2020-21 FYE2021-22 FY2022-23 Debt Service $ 2,729,381 $ 2,728,919 $ 3,686,750 Ratio 2.38 1.57 1.89 Per Policy 2.25 2.25 2.25 Variance from Assumptions Rate Study Assumptions 0.63 (0.57) (1.09) Variance % 36% -27% -37% 4/26/2022 Page 16 of 82 13 Debt Coverage Analysis Current Rates - g% Increase - $35 million of Debt - Does not meet policy debt coverage. - The district will not meet the policy debt coverage and the reserve will not meet the minimum balance until FY2025-26. 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Water Revenue Adjustments & Debt Coverage 3.00x 2.50x — 2.00x 1.50x — 1.00x 0.50x — 0.0ox FY 2023 FY 2024 FY 2025 FY 2026 D Water Rev Adjustments Water Debt Coverage (excl. LOC) • • • Min Debt Coverage - 1.25x 0 Alert Coverage Policy Debt Coverage - 2.25x $60 $50 $40 $30 $20 $10 $0 Projected Ending Balances (excl Debt Proceeds) $20 1 $23 FY 2023 FY 2024 D Unrestricted Ending Balances • • • Min Targets FY 2025 Target Balances • Alert Balances FY 2026 4/26/2022 Page 17 of 82 Debt Coverage Analysis Cont. Rate Increase to Meet Coverage - 12% Increase - $35 million of Debt - Meets policy debt coverage in FY2023-24. - The district meets the policy debt coverage and minimum reserve balance. Water Revenue Adjustments & Debt Coverage 14.0% 4.50x 12.0% 4.00x 10.0% 3.50x 3.00x 8.0% 2.50x 6.0% 2.00x 4.0% ..... ..... ..... 1.50x 1.00x 2.0% 0.50x 0.0% — O.00x FY 2023 FY 2024 FY 2025 FY 2026 Water Rev Adjustments Water Debt Coverage (excl. L0, • • • Min Debt Coverage - 1.25x • Alert Coverage Policy Debt Coverage - 2.25x N $60 c $50 $40 $30 $20 $10 $0 Projected Ending Balances (excl Debt Proceeds) .............. $21 FY 2023 FY 2024 D Unrestricted Ending Balances • • • Min Targets FY 2025 FY 2026 Target Balances • Alert Balances 4/26/2022 Page 18 of 82 15 YL ,W� Page 19 of 82 Revised - Revenue Revision Explanation Revenue has been adjusted because of a small calculation error and to include the OCWD Treatment Plant reimbursement from FY2021-22. Net effect of revision is $214,029 increase in revenue. 2021 Rate Study Assumptions Prior Year Projected Budget FY2020-21 FY2021-22 FY2022-23 FY2022-23 Operating Revenue $ 36,924,220 $ 40,843,348 $ 43,675,424 $ 43,675,424 Non -Operating Revenue 2,795,846 2,883,985 2,885,451 2,885,451 $ 39,720,066 $ 43,727,333 $ 46,560,875 $ 46,560,875 Historic & Future Revenue 4/26/2022 Page 20 of 82 17 Prior Year Projected Budget Revised Budget FY2020-21 FYE2021-22 FY2022-23 FY2022-23 Operating Revenue $ 39,250,600 $ 38,426,328 $ 42,108,065 $ 42,260,299 Non -Operating Revenue 3,568,724 5,784,790 5,936,972 5,998,767 $ 42,819,324 $ 44,211,118 $ 48,045,037 $ 48,259,066 Rate Study Variance $ $ 3,099,258 $ 483,785 $ 1,484,162 $ 1,698,191 Variance % 8% 1% 3% 4% 4/26/2022 Page 20 of 82 17 Revised -Variable Costs Detail 2021 Rate Study Assumptions Historic & Future Variable Costs FY2020-21 FY2021-22 FY2022-23 FY2022-23 Groundwater Purchases $ 4,367,687 $ 4,491,632 $ 6,998,164 $ 6,998,164 OCWD Annexation Fee 521,476 531,906 542,544 542,544 Power Costs 1,222,191 1,283,301 1,347,466 1,347,466 Import Water Purchases 10,285,918 10,562,707 5,447,368 5,447,368 MWDOC Fixed Costs 807,812 832,046 857,008 857,008 MWDOC Fixed Costs $ 17,205,084 $ 17,701,592 $ 15,192,550 $ 15,192,550 Historic & Future Variable Costs Rate Study Variance $ Variance % 4/26/2022 $ 1,433,387 $ 3,065,207 $ 1,845,553 $ 2,493,524 8% 17% 12% 16% Page 21 of 8218 Prior Year Projected Original Budget Revised Budget FY2020-21 FYE2021-22 FY2022-23 FY2022-23 Groundwater Purchases $ 5,221,074 $ 3,387,389 $ 8,008,387 $ 8,214,485 OCWD Annexation Fee 521,476 645,141 670,947 670,947 Power Costs 1,541,594 1,187,160 1,868,066 2,189,451 Import Water Purchases 10,573,060 14,526,451 5,391,950 5,442,283 MWDOC Fixed Costs 781,267 1,020,658 1,098,752 1,168,908 $ 18,638,471 $ 20,766,799 $ 17,038,102 $ 17,686,074 Rate Study Variance $ Variance % 4/26/2022 $ 1,433,387 $ 3,065,207 $ 1,845,553 $ 2,493,524 8% 17% 12% 16% Page 21 of 8218 PME=q YL L-- W Page 22 of 82 Financial Summary - Consolidated Prior Year Projected Budget Revenue FY2020-21 FYE2021-22 FY2022-23 Revenue (Operating) $ 39,250,600 $ 38,426,328 $ 42,260,299 Revenue (Non -Operating) 3,568,724 5,784,790 5,998,767 Total Revenue $ 42,819,324 $ 44,211,118 $ 48,259,066 Rate Study Assumptions $ 39,720,066 $ 43,727,333 $ 46,560,875 Variance % 8% 1% 4% Expenses Expenses (Operating): Variable Costs $ 18,638,471 $ 20,766,799 $ 17,686,074 Salary Related Expenses 10,947,895 11,902,760 13,231,809 Supplies & Services 5,459,423 6,507,308 9,684,245 Expenses (Non -Operating) 2,153,233 1,268,928 2,454,885 Total Expenses $ 37,199,022 $ 40,445,795 $ 43,057,013 Rate Study Assumptions $ 37,955,574 $ 40,460,380 $ 39,954,965 Variance % -2% 0% 8% Net Position Before Capital Contributions & Depreciation $ 5,620,302 $ 3,765,323 $ 5,202,053 4/26/2022 Page 23 of 82 20 Financial Summary -Water Revenue Prior Year FY2020-21 Revenue (Operating) $ 36,374,319 Revenue (Non -Operating) 3,459,038 Total Revenue $ 39,833,357 Rate Study Assumptions $ 36,914,814 Variance % 8% Expenses Expenses (Operating): Variable Costs Salary Related Expenses Supplies & Services Expenses (Non -Operating) Total Expenses Rate Study Assumptions Variance Net Position Before Capital Contributions & Depreciation $ 18,638,471 9,389,188 4,465,134 2,137,203 $ 34,629,996 $ 34,860,572 -1 Projected FYE2021-22 $ 35,120,509 5,588,271 $ 40,708,780 $ 40, 519, 621 0% $ 20,766,799 10,174,107 5,486,003 1,256,936 $ 37,683,845 $ 37,403,679 Budget FY2022-23 $ 38,471,900 5,928,772 $ 44,400,672 $ 42,892,602 4% $ 17,686,074 11,359,392 8,376,801 2,449,100 $ 39,871,367 $ 36,726,802 9% $ 5,203,361 $ 3,024,935 $ 4,529,305 YL LWT Debt Service $ 2,729,381 $ 2,728,919 $ 3,686,750 Ratio 2.38 1.57 1.89 Per Policy 2.25 2.25 2.25 4/26/2022 Page 24 of 82 21 Financial Summary - Sewer Prior Year Projected Budget Revenue FY2020-21 FYE2021-22 FY2022-23 Revenue (Operating) $ 2,876,281 $ 3,305,819 $ 3,788,399 Revenue (Non -Operating) 109,686 196,519 69,995 Total Revenue $ 2,985,967 $ 3,502,338 $ 3,858,394 Rate Study Assumptions $ 2,805,252 $ 3,207,712 $ 3,668,273 Variance % 6% 9% 5% Expenses Expenses (Operating): Salary Related Expenses $ 1,558,707 $ 1,728,653 $ 1,872,417 Supplies & Services 994,289 1,021,305 1,307,444 Expenses (Non -Operating) 16,030 11,992 5,785 Total Revenue $ 2,569,026 $ 2,761,950 $ 3,185,646 Rate Study Assumptions Variance % Net Position Before Capital Contributions & Depreciation $ 3,095,002 $ 3,056,701 $ 3,228,163 -175va -10% _1% $ 416,941 $ 740,388 $ 672,748 �YL L � J 4/26/2022 Page 25 of 82 22 p�! Summary of Rates & Other „J y, Considerations .O. W Effect on Customer Bill Avg Monthly Bill w/o CFC $ 100.20 $ 109.85 $ 110.60 $ 111.57 Avg Monthly Bill w/ CFC $ 109.66 Other Considerations Pass -Through Power Cost with $0.04 on Commodity Pass -Through Power Cost with $0.09 on Commodity Remove Townsend Grant Service expense of $24k. Remove all travel and conferences of $119k. Remove "Loss of Revenue" Coverage Increase Insurance Deductible Already removed — PARS Contributions $ 120.17 Commodity Rate from $2.88 to $2.92 Commodity Rate from $2.88 to $2.97 N/A N/A N/A TBD N/A $ 120.89 $ 121.79 Increase operating revenue by $275,890 or 0.65% Increase operating revenue by $620,752 or 1.5% Reduce supplies & services by $24,000 or 0.25% Reduce supplies & services by $119,330 or 1.2% Reduce supplies & services by $25,000 or 0.26% TBD Reduced salary related expenses by $1,087,325 or 8% 4/26/2022 Page 27 of 82 24 FY2022-23 Proposed Rates Water Rates AM Sewer Rates 5/8 3/4 1 11/2 2 3 4 6 Residential — SFR Residential Master Metered — MFR Commercial 4/26/2022 $ 30.14 $ 30.14 $ 47.02 $ 89.17 $ 139.45 $ 299.96 $ 536.03 $ 1,353.89 $ 10.99 $ 10.57 $ 10.99 Meter Size Capital Finance Charge 5/8 $ 74.28 3/4 $ 74.28 1 $ 123.84 11/2 $ 247.44 2 $ 395.64 3 $ 865.20 4 $ 1,557.00 6 $ 3,954.24 Tier 1 (0-7 ccfs per month) Tier 2 (8+ ccfs per month) 4 $ 8.56 6 $ 22.43 8 $ 46.37 10 $ 82.37 $ 0.00 $ 0.43 Page 28 of 82 25 YL ,W� Page 29 of 82 Revised - 5 -Yr CIP FY23 Budget to PROJECT NAME FY23 FY24 FY25 FY26 FY27 TOTAL Hidden Hills BPS Upgrades 1,407,603 - 1,407,603 Timber Ridge BPS Pump Replacement 4,199,550 1,399,850 5,599,400 Well 22 Equipping 1,901,208 - 1,901,208 BNSF Crossing -Weir Canyon / YL Blvd 134,655 134,655 BNSF Crossing -Veteran's Village and Highland 1,975,557 - - - - 1,975,557 Resiliency Improvements to District Facilities (AWIA) 220,000 275,000 275,000 275,000 11045,000 Site and Security Upgrades at District Facilities (AWIA) 220,000 275,000 275,000 275,000 11045,000 Well Rehabilitation Project 165,000 165,000 165,000 165,000 660,000 Lakeview BPS Piping 330,000 - - - - 330,000 Waterline Replacement *Based on AMP and Leak History 10,000 2,877,600 1,210,000 1,210,000 1,210,000 6,517,600 PRS Rehabilitation Project *Based on AMP and Asset Scores - 803,100 1,320,000 1,320,000 1,320,000 4,763,100 Golden Ave Waterline 266,805 - - - 266,805 Santiago BPS Rehab - 1,819,070 - 1,819,070 Well 23 Drilling & Equipping 549,500 1,185,400 2,705,000 - - 4,439,900 Total Water CIP $ 10,508,073 $ 8,956,825 $ 5,950,000 $ 3,245,000 $ 3,245,000 $ 31,904,898 Main Street and YL Pines Sewer 813,000 - - - - 813,000 Green Crest Lift Station Rehab - 385,500 385,500 Sewer System Rehabilitation and Replacement Project 396,000 440,000 836,000 Sewer in LDS Temple Parking Lot - - - - Buena Vista Sewer Main Flow Reversal - - 1,130,500 1,130,500 Total Sewer CIP $ 813,000 $ 781,500 $ - $ 440,000 $ 1,130,500 $ 3,165,000 CIP Total $ 11,321,073 $ 9,738,325 $ 5,950,000 $ 3,685,000 $ 4,375,500 $ 35,069,898 CAPITAL OUTLAY FY23 FY24 FY25 FY26 FY27 TOTAL Network Redesign 30,000 - - - - 30,000 Records Scanner 8,000 - - - - 8,000 Operations Department 1,725,000 516,000 505,000 710,000 820,000 4,276,000 Outlay Total $ 1,763,000 $ 516,000 $ 505,000 $ 710,000 $ 820,000 $ 4,314,000 Grand Total $ 13,084,073 $ 10,254,325 $ 6,455,000 $ 4,395,000 $ 5,195,500 $ 39,383,898 Page 30 of 82 4/26/2022 27 Yorba Linda Water District Page 31 of 82 Overview • Supplies & Services • Salaries & Related Expenses • Non -Operating Expenses • Debt Service • Revised Budget • Summary of FY2022-23 Budget • Summary of Rates& Other Considerations • Revised CIP 4/26/2022 Page 32 of 82 YL ,W� Page 33 of 82 Supplies & Services Analysis 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 � 2021 Actuals � 2022 Projections 0 2023 Budget --W-2021 Rate Study Historic Trends - Supplies & Services FY21, FY22 Projections, FY23 Budget YL SIL 252,843 W555,422 340,893 529,772 i3a,�oa i 351,708 � � 48,973 104,815 � _ Communicati Contractual Data District Meetings & Dues & Fees & Insurance Maintenance Materials ons Services Processing Events Memberships Permits 164,667 715,712 311,867 24,031 87,809 362,050 274,975 800,876 719,502 140,985 551,996 322,529 34,995 103,366 441,182 284,869 1,576,275 714,317 193,000 614,039 421,614 45,500 97,522 467,990 434,590 * 2,032,733 1,001,300 252,843 555,422 340,893 48,973 104,815 529,772 351,708 738,268 725,679 Variances Explanations for Impactful Expenses - 2023 Budget to 2022 Projections Contractual Services -The increase of 11%from FY22 Projections is due to new contracts for janitorial and landscaping services that will beat a higher cost than the current contracts. These expenses were originally budgeted for FY22 but are now being moved to FY23 Budget. The increase is also due to mailing and printing of backflow inserts to customers. Data Processing -The increase of 31% from FY22 Projections is due to additional software licenses from Microsoft and to purchase additional Dell support. Insurance - The increase of 53% from FY22 Projections is due to increase in premium rates, ACWA-JPIA Property insurance coverage for the PFAS Treatment Plant and Cybersecurity Insurance. Maintenance -The increase of 29% from FY22 Projections is due to pavement program costs inherited from City of Yorba Linda and Placentia, maintenance of root control, building 4 lobby door replacement, chlorine building roof repair, concrete work at Lakeview Reservoir and SCADA AGB Earthquake Testing. Materials - The increase of 40% from FY22 Projections is due to the completion of capitalized grant project and will resume regular maintenance schedule and increase cost of meter replacements. The increase is also due to replacing 5 methane sensors at various sites. 4/26/2022 *Amounts have been updated from posted agON a4 of 82 4 Supplies & Services Analysis Cont. 1,800,000 Professional Developmen 1,600,000 Board Services 1,400,000 e Accounts 35,857 1,200,000 45,362 1,385,819 1,000,000 1,713,760 65,738 800,000 600,000 11,338 171,510 400,000 194,213 61,500 200,000 10,000 39,093 0 137,000 1,422,000 50,147 Non Capital Office 394,728 Equipment Expense � 2021 Actuals 197,846 39,759 � 2022 Projections 167,579 41,817 1 2023 Budget 204,300 42,300 - 2021 Rate Study 194,213 39,093 Historic Trends - Supplies & Services FY21, FY22 Projections, FY23 Budget Professional Professional Developmen Vehicle Board Services t e Accounts 35,857 1,025,746 45,362 1,385,819 85,550 1,713,760 65,738 1,007,226 Travel & Uncollectibl Vehicle Board Conferences e Accounts Utilities Expenses Election PFAS 10,248 15,907 202,964 469,612 43,529 11,338 171,510 408,341 61,500 119,330 10,000 224,000 538,550 137,000 1,422,000 50,147 10,196 212,508 394,728 94,156 819,467 Variances Explanations for Impactful Expenses - 2023 Budget to 2022 Projections Professional Services - The increase of 24% from FY22 Projections is due to the Water Master Plan and Hydraulic Modeling, Cyber Security Analysis and Compensation Study. Travel & Conferences - The increase of 174% from FY22 Projections is due to less COVID restrictions for conferences and events. Vehicle Expenses -The increase of 32% from FY22 Projections is due to gas and diesel prices increasing. 4/26/2022 Page 35 of 82 5 Supplies & Services - Rate Study Comparison 202iRate Study Assumptions FY2020-21 FY2021-22 FY2022-23 Supplies & Services - Water $ 4,651,466 $ 4,959,410 $ 5,533,227 $12,000,000 Supplies & Services - Sewer 1,323,233 982,065 1,002,617 $ 5,974,699 $ 5,941,475 $ 6,535,844 $10,000,000 $8,000,000 $6,000,000 Historic & Future $4,000,000 Prior Year Projected Budget $2,000,000 FY2020-21 FYE2021-22 FY2022-23 Supplies & Services - Water $ 4,465,134 $ 5,486,003 $ 8,467,358 Supplies & Services - Sewer 994,289 1,021,305 1,337,720 $ 5,459,423 $ 6,507,308 $ 9,805,078 Variance from Assumptions Rate Study Variance $ $ (515,276) $ 565,833 Variance % -9% 10% 4/26/2022 $ 3,269,234 50% FY23 Budget Supplies & Services $6,535,844 $5,974,699 $5,941,475 Prior Year Projected Budget FY2020-21 FYE2021-22 FY2022-23 Supplies & Services - Water � Supplies & Services - Sewer f 2021 Rate Study Assumptions P e 36 of 82 *Amounts have been updated from posted agence 6 Supplies & Services — Off Trend Expenses Description: Off trend expenses are expenses that have not been consistent annual operating expenditures. This is to help compare supplies and services of the District from year to year. Off Trend Expenses Description Board Election Additional Cost - City of Yorba Linda & Placentia Pavement Program Water Master Plan & Hydraulic Modeling Compensation Study Total Supplies & Services without Off Trend Expenses Supplies & Services — Total Expenses Off Trend Expenses (Minus) Variance Increase/Decrease Year to Year Variance $ Variance Department Board of Directors Engineering Engineering Human Resources Amount $ 137,000 664,833 550,000 60,000_ $ * 1,411,833 Projections Budget FYE2021-22 FY2022-23 $ 6,507,308 $ 9,805,078 0 (1,411,833) $ 6,507,308 $ * 8,393,245 FY22 Projections to FY23 Budget $ * 1,885,934 29% Variance Explanation The cost of operating the PFAS treatment plant is projected to be s61,soo for FY22 Projections and budgeted at $1,422,000 for FY23. This makes up the majority of the increase in the total budget between the two years. YL W l J Pa 4/26/2022 *Amounts have been updated from posted agence 37 of 82 7 W N,'/' Salary Related 1 Expenses IWO. -W Salary Related Expenses - Rate Study Comparison 2021 Rate Study Assumptions FY2020-21 FY2021-22 FY2022-23 Salary Related - Water $ 10,156,647 $ 11,893,405 $ 12,770,939 Salary Related - Sewer 1,738,874 2,041,083 2,191,322 $ 11,895,521 $ 13,934,488 $ 14,962,261 Historic & Future Prior Year FY2020-21 Salary Related - Water $ 9,389,188 $ Salary Related - Sewer 1,558,707 $ 10,947,895 $ *Variance Explanation PARS Contributions is included in the Rate Study with the amount of $1,o87,325 for both FY22 and FY23. There have been no PARS Contributions for PriorYear FY21, Projections FY22 or Budget FY23. $16,000,000 $14,000,000 Projected Budget FYE2021-22 FY2022-23 $12,000,000 $10,000,000 10,174,107 $ 11,359,392 $8,000,000 1,728,653 1,872,417 $6,000,000 11,902,760 $ 13,231,809 $4,000,000 $2,000,000 Variance from Assumptions Rate Study Assumptions Variance % 4/26/2022 $ (947,626) $ (2,031,728) $ (1,730,452) -8% -15% -12% FY23 Budget Salary Related Expenses $ $13,934,488 14,962,261 $11,895,521 FY2020-21 FY2021-22 FY2022-23 Salary Related - Water Salary Related - Sewer • 2021 Rate Study Assumptions *Amounts have been updated from posted ageNR of 82 9 9 W N,'/' Non -Operating 1 Expenses -W Non -Operating Expenses - Rate Study Comparison 2021 Rate Study Assumptions FY2020-21 FY2021-22 FY2022-23 Interest Expense $ 1,499,381 $ Other Expense 150,889 $ 1,650,270 $ Historic & Future 1,438,919 $ 1,374,681 153,907 156,985 1,592,826 $ 1,531,666 Prior Year Projected Budget FY2020-21 FYE2021-22 FY2022-23 Interest Expense $ 1,293,830 $ 1,248,225 $ 2,436,750 Other Expense 859,403 20,703 18,135 $ 2,153,233 $ 1,268,928 $ 2,454,885 Variance from Assumptions Rate Study Assumptions $ 502,963 $ (323,898) $ 923,219 Variance % 30% -20% 60% 4/26/2022 Page 41 of 82 11 YL ,W� Page 42 of 82 Debt Service Ratio For Water Fund 2021 Rate Study Assumptions FY2020-21 FY2021-22 Debt Service $ 2,729,381 Ratio 1.75 Per Policy 2.25 Historic & Future $ 2,728,919 2.14 2.25 Prior Year Projected FY2020-21 FYE2021-22 Debt Service $ 2,729,381 $ 2,728,919 Ratio 2.38 1.57 Per Policy 2.25 2.25 Variance from Assumptions Rate Study Assumptions 0.63 (0.57) Variance % 36% -27% 4/26/2022 FY2022-23 $ 3,107,326 2.98 2.25 Budget FY2022-23 $ 3,686,750 1.86 2.25 (1.12) -38% *Amounts have been updated from posted ag�c a3 of 82 �3 Debt Coverage Analysis FY2022-23 Proposed Rates - g% Increase from PriorYear - $35 million of Debt - The District is projected to exceed policy debt coverage and the minimum target reserve balances by FY2025-z6. Water Revenue Adjustments & Debt Coverage 10.0% 3.00x 8.0% 2.50x 2.00x 6.0% — 1.50x 4.0% ..... ..... ..... _ 1.00x 2.0% 0.50x 0.0% — O.00x FY 2023 FY 2024 FY 2025 FY 2026 D Water Rev Adjustments Water Debt Coverage (excl. LOC • • • Min Debt Coverage - 1.25x Policy Debt Coverage - 2.25x $60 $50 $40 $30 $20 $10 $0 Projected Ending Balances (excl Debt Proceeds) FY 2023 FY 2024 FY 2025 FY 2026 D Unrestricted Ending Balances • Min Targets Target Balances • Alert Balances 4/26/2022 Page 44 of 82 Debt Coverage Analysis Cont. Rate Increase Needed to Meet District Policies - 12% Increase in FY2022-23 then g% in the following years. - $35 million of Debt - The District is projected to meet policy debt coverage and the minimum target reserve balances by FY2o24-25. 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Water Revenue Adjustments & Debt Coverage FY 2023 FY 2024 FY 2025 FY 2026 3.50x 3.00x 2.50x 2.00x 1.50x 1.00x 0.50x O.00x C� Water Rev Adjustments Water Debt Coverage (excl. LOC) Min Debt Coverage - 1.25x Policy Debt Coverage - 2.25x— N $60 c $50 $40 $30 $20 $10 $0 Projected Ending Balances (excl Debt Proceeds) .... .... 1 0 • $32 $21 FY 2023 FY 2024 D Unrestricted Ending Balances • • • Min Targets FY 2025 i arget tsaiances • Alert Balances $41 FY 2026 4/26/2022 Page 45 of 82 15 YL ,W� Page 46 of 82 Revised - Revenue Revision Explanation Revenue has been adjusted because of a small calculation error and to include the OCWD Treatment Plant reimbursement from FY2021-22. Net effect of revision is an increase in revenue of $214,029. 2021 Rate Study Assumptions Operating Revenue Non -Operating Revenue FY2020-21 $ 36,924,220 2,795,846 $ 39,720,066 Historic & Future Revenue Operating Revenue Non -Operating Revenue Rate Study Variance $ Variance FY2021-22 $ 40,843,348 2,883,985 $ 43,727,333 FY2022-23 $ 43,675,424 2,885,451 $ 46,560,875 FY2022-23 $ 43,675,424 2,885,451 $ 46,560,875 4/26/2022 Page 47 of 82 17 BudgetFY2022-23 Prior Year Projected Presented on Revised Budget FY2020-21 FYE2021-22 3/22/22 FY2022-23 $ 39,250,600 $ 38,426,328 $ 42,108,065 $ 42,260,299 3,568,724 5,784,790 5,936,972 5,998,767 $ 42,819,324 $ 44,211,118 $ 48,045,037 $ 48,259,066 $ 3,099,258 $ 483,785 $ 1,484,162 $ 1,698,191 8% 1% 3% 4% 4/26/2022 Page 47 of 82 17 Revised -Variable Costs Detail 2021 Rate Study Assumptions Historic & Future Variable Costs FY2020-21 FY2021-22 FY2022-23 FY2022-23 Groundwater Purchases $ 4,367,687 $ 4,491,632 $ 6,998,164 $ 6,998,164 OCWD Annexation Fee 521,476 531,906 542,544 542,544 Power Costs 1,222,191 1,283,301 1,347,466 1,347,466 Import Water Purchases 10,285,918 10,562,707 5,447,368 5,447,368 MWDOC Fixed Costs 807,812 832,046 857,008 857,008 MWDOC Fixed Costs $ 17,205,084 $ 17,701,592 $ 15,192,550 $ 15,192,550 Historic & Future Variable Costs Rate Study Variance $ $ 1,433,387 $ 3,065,207 $ 1,845,553 $ 2,493,524 Variance % 8% 17% 12% 16% 4/26/2022 Page 48 of 8218 Prior Year Projected Budget FY2022-23 Revised Budget FY2020-21 FYE2021-22 Presented on 3/22/22 FY2022-23 Groundwater Purchases $ 5,221,074 $ 3,387,389 $ 8,008,387 $ 8,214,485 OCWD Annexation Fee 521,476 645,141 670,947 670,947 Power Costs 1,541,594 1,187,160 1,868,066 2,189,451 Import Water Purchases 10,573,060 14,526,451 5,391,950 5,442,283 MWDOC Fixed Costs 781,267 1,020,658 1,098,752 1,168,908 $ 18,638,471 $ 20,766,799 $ 17,038,102 $ 17,686,074 Rate Study Variance $ $ 1,433,387 $ 3,065,207 $ 1,845,553 $ 2,493,524 Variance % 8% 17% 12% 16% 4/26/2022 Page 48 of 8218 PME=q YL L-- W Page 49 of 82 Financial Summary - Consolidated Prior Year Projected Budget Revenue FY2020-21 FYE2021-22 FY2022-23 Revenue (Operating) $ 39,250,600 $ 38,426,328 $ 42,260,299 Revenue (Non -Operating) 3,568,724 5,784,790 5,998,767 Total Revenue $ 42,819,324 $ 44,211,118 $ 48,259,066 Rate Study Assumptions $ 39,720,066 $ 43,727,333 $ 46,560,875 Variance % 8% 1% 4% Expenses Expenses (Operating): Variable Costs $ 18,638,471 $ 20,766,799 $ 17,686,074 Salary Related Expenses 10,947,895 11,902,760 13,231,809 Supplies & Services 5,459,423 6,507,308 9,805,078 Expenses (Non -Operating) 2,153,233 1,268,928 2,454,885 Total Expenses $ 37,199,022 $ 40,445,795 $ 43,177,846 Rate Study Assumptions $ 36,725,574 $ 39,170,380 $ 38,222,320 Variance % 1% 3% 13% Net Position Before Capital Contributions & Depreciation $ 5,620,302 $ 3,765,323 $ 5,081,220 Capital Contributions 2,051,988 8,966 - Depreciation 7,858,355 8,769,648 9,500,000 Total Net Income (Loss) $ (186,065) $ (4,995,359) $ (4,418,780) RMMM YL LWT la 0 of 82 4/26/2022 *Amounts have been updated from posted a ghu20 Financial Summary -Water Prior Year Projected Budget Revenue FY2020-21 FYE2021-22 FY2022-23 Revenue (Operating) $ 36,374,319 $ 35,120,509 $ 38,471,900 Revenue (Non -Operating) 3,459,038 5,588,271 5,928,772 Total Revenue $ 39,833,357 $ 40,708,780 $ 44,400,672 Rate Study Assumptions $ 36,914,814 $ 40,519,621 $ 42,892,602 Variance % 8% 0% 4% Expenses Expenses (Operating): Variable Costs $ 18,638,471 $ 20,766,799 $ 17,686,074 Salary Related Expenses 9,389,188 10,174,107 11,359,392 Supplies & Services 4,465,134 5,486,003 8,467,358 Expenses (Non -Operating) 2,137,203 1,256,936 2,449,100 Total Expenses $ 34,629,996 $ 37,683,845 $ 39,961,924 Rate Study Assumptions $ 33,630,572 $ 36,113,679 $ 34,994,157 Variance % 3% 4% 14% Net Position Before Capital Contributions & Depreciation $ 5,203,361 $ 3,024,935 $ 4,438,748 Capital Contributions 1,297,379 8,966 - Depreciation 6,380,976 7,282,836 8,005,000 Total Net Income (Loss) $ 119,764 $ (4,248,935) $ (3,566,252) Debt Service Ratio Per Policv 4/26/2022 $ 2,729,381 $ 2,728,919 $ 3,686,750 2.38 1.57 1.86 2.25 2.25 2.25 YL LWT *Amounts have been updated from posted agghlua1 of 82 21 Financial Summary - Sewer Prior Year Projected Budget Revenue FY2020-21 FYE2021-22 FY2022-23 Revenue (Operating) $ 2,876,281 $ 3,305,819 $ 3,788,399 Revenue (Non -Operating) 109,686 196,519 69,995 Total Revenue $ 2,985,967 $ 3,502,338 $ 3,858,394 Rate Study Assumptions $ 2,805,252 $ 3,207,712 $ 3,668,273 Variance % 6% 9% 5% Expenses Expenses (Operating): Salary Related Expenses $ 1,558,707 $ 1,728,653 $ 1,872,417 Supplies & Services 994,289 1,021,305 1,337,720 Expenses (Non -Operating) 16,030 11,992 5,785 Total Revenue $ 2,569,026 $ 2,761,950 $ 3,215,922 Rate Study Assumptions Variance % Net Position Before Capital Contributions & Depreciation Capital Contributions Depreciation *Total Net Income (Loss) $ 3,095,002 $ 3,056,701 $ 3,228,163 -175vo -10% 0% $ 416,941 $ 740,388 754,609 - 1,477,379 1,486,812 $ (305,829) $ (746,424) $ 642,472 1,495,000 $ (852,528) �YL L � J *Amounts have been updated from posted aPaqqgerrua 2 of 82 22 4/26/zozz p p�! Summary of Rates & Other „J y, Considerations 0_.. A*". W * Effect on Customer Bill FY2022-23 Billing FY2021-22 w/ 9% Wtr & 15% Swr Adj1111 Avg Monthly Bill w/ CFC $ 109.66 $ 120.17 $ 120.53 $10.8] *Other Considerations 9.9:L% Pass -Through Power Cost with $0.02 on Commodity Commodity Rate from Increase operating revenue by $137,945 or 0.28% $2.88 to $2.90 Remove Townsend Grant Service expense of $24k. N/A Reduce supplies & services by $24,000 or 0.25% Remove all travel and conferences of $119k. N/A Reduce supplies & services by $119,330 or 1.2% Remove "Loss of Revenue" Coverage N/A Reduce supplies & services by $25,000 or 0.26% Already removed — PARS Contributions N/A Reduced salary related expenses by $1,087,325 or 8% 4/26/2022 *Amounts have been updated from posted ages 4 of 82 �4 FY2022-23 Proposed Rates Water Rates Sewer Rates Meter Type Tr Monthly Service Charge Residential — SFR $ 10.99 Residential Master Metered — MFR $ 10.57 Commercial $ 10.99 4/26/2022 4 $ 8.56 6 $ 22.43 8 $ 46.37 10 $ 82.37 Tier 1 (0-7 ccfs per month) $ 0.00 Tier 2 (8+ ccfs per month) $ 0.43 *Amounts have been updated from posted ages 5 of 82 �5 Meter Size Meter Size Annual Capital $ 2.88 5/8 $ 30.14 5/8 $ 74.28 3/4 $ 30.14 3/4 $ 74.28 1 $ 47.02 1 $ 123.84 * ' 11/2 $ 89.17 11/2 $ 247.44 Through 2 $ 139.45 2 $ 395.64 $ 2.90 3 $ 299.96 3 $ 865.20 4 $ 536.03 4 $ 1,557.00 6 $ 1,353.89 6 $ 3,954.24 Sewer Rates Meter Type Tr Monthly Service Charge Residential — SFR $ 10.99 Residential Master Metered — MFR $ 10.57 Commercial $ 10.99 4/26/2022 4 $ 8.56 6 $ 22.43 8 $ 46.37 10 $ 82.37 Tier 1 (0-7 ccfs per month) $ 0.00 Tier 2 (8+ ccfs per month) $ 0.43 *Amounts have been updated from posted ages 5 of 82 �5 YL ,W� Page 56 of 82 Revised - 5 -Yr CIP FY23 Budget PROJECT NAME FY2022-23 FY2023-24 Hidden Hills BPS Upgrades 1,407,603 - Timber Ridge BPS Pump Replacement 4,199,550 1,399,850 Well 22 Equipping 1,901,208 - BNSF Crossing -Weir Canyon / YL Blvd 134,655 FY26 BNSF Crossing -Veteran's Village and Highland 1,975,557 - Resiliency Improvements to District Facilities (AWIA) 30,000 220,000 Site and Security Upgrades at District Facilities (AWIA) - 220,000 Well Rehabilitation Project 165,000 Lakeview BPS Piping 330,000 - Waterline Replacement *Based on AMP and Leak History 10,000 2,877,600 PRS Rehabilitation Project *Based on AMP and Asset Scores - 803,100 Golden Ave Waterline 8,000 266,805 Santiago BPS Rehab - 1,819,070 Well 23 Drilling & Equipping 549,500 1,185,400 Total Water CIP $ 10,508,073 $ 8,956,825 $ Main Street and YL Pines Sewer 813,000 - Green Crest Lift Station Rehab - 385,500 Sewer System Rehabilitation and Replacement Project 396,000 Sewer in LDS Temple Parking Lot - Buena Vista Sewer Main Improvements - - Total Sewer CIP $ 813,000 $ 781,500 $ CAPITAL OUTLAY Network Redesign Records Scanner Operations Department 4/26/2022 FY2024-25 275,000 275,000 165,000 1,210,000 1,320,000 2,705,000 51950,000 $ FY2025-26 FY2026-27 TOTAL 275,000 275,000 165,000 1,210,000 1,320,000 3,245,000 $ 440,000 - $ 440,000 $ 275,000 275,000 165,000 1,210,000 1,320,000 3,245,000 $ 1,130,500 1,130,500 $ 1,407,603 5,599,400 1,901,208 134,655 1,975,557 1,045,000 1,045,000 660,000 330,000 6,517,600 4,763,100 266,805 1,819,070 4,439,900 31,904,898 813,000 385,500 836,000 1,130,500 3,165,000 CIP Total $ 11,321,073 $ 9,738,325 $ 5,950,000 $ 3,685,000 $ 4,375,500 $ 35,069,898 FY23 FY24 FY25 FY26 FY27 TOTAL 30,000 - - - - 30,000 8,000 - - - - 8,000 1,725,000 516,000 505,000 710,000 820,000 4,276,000 Outlay Total $ 1,763,000 $ 516,000 $ 505,000 $ 710,000 $ 820,000 $ 4,314,000 Grand Total $ 13,084,073 $ 10,254,325 $ 6,455,000 $ 4,395,000 $ 5,195,500 $ 39,383,898 Page 57 of 82 27 ITEM NO. 7.1. ' rba Linda Water District /_1r]=161197_11N=1a*]AI MEETING DATE: April 26, 2022 TO: Board of Directors FROM: Andrew B. Gagen, General Counsel STAFF CONTACTS: Doug Davert, Interim General Manager Rosanne Weston, Engineering Manager SUBJECT: Due Process Hearing Regarding Award of Construction Contract for the Hidden Hills Booster Pump Station Improvements Project RECOMMENDATION: Based on staff's bid review and reference check, and after the Board considers the attached written documents (Exhibits 1 and 2) and hears oral testimony from Project bidder, MMC, Inc., staff recommends that the Board determine MMC, Inc. is not a responsible bidder; so, it would not be in the District's best interests to award the Project contract to low bidder, MMC, Inc. Instead, it is in the District's best interest to award the contract to second low bidder, Pacific Hydrotech Corp., as discussed in Item No. 7.2 of this agenda. SUMMARY: As a County Water District, the District is not required to contract with the lowest bid and responsible bidder. Instead, the District (i) has the right to award the construction contract to a bidder other than the lowest bidder and (ii) reserves the right to reject any bid. Even though the District is not statutorily required to procure construction contracts using competitive bidding, the District should (not "must") conduct a hearing and make a finding that low bidder, MMC, is not a responsible bidder so the District may award the contract to the second low bidder, Pacific Hydrotech Corp., as discussed in Item No. 7.2 of this agenda. FISCAL IMPACT: Budgeted: Yes Total Construction Cost: $2,443,910 District's Construction Cost: $1,136,418 Developer's Construction Cost: $1,307,492 Funding Source: Capital and Developer Funded Job Nos: J-2020-20 and J-2018-27 BACKGROUND, PROCEDURE, AND ANALYSIS: On February 9, 2022, the District received three bids for construction of the Hidden Hills Booster Pump Station Improvements Project. The three bidders from the lowest to highest Page 58 of 82 bids are (1) MMC, Inc., (2) Pacific Hydrotech Corp, and (3) Environmental Construction, Inc. The bids expire on May 10, 2022. The District's engineering staff completed a bid review and reference check of the apparent low bidder, MMC, Inc. The results of the bid review and reference check are memorialized in a Memorandum dated April 7th, which is attached as Exhibit 1. Based on the bid review and reference check, the recommendation is that MMC, Inc. is not a responsible bidder and that it would not be in the District's best interests to award the Project contract to MMC, Inc. On April 7th the District notified MMC of its recommendation and provided MMC with a copy of the April 7th Memorandum. The District gave MMC two opportunities to rebut the adverse evidence and to present evidence of MMC's qualifications. In response, MMC submitted two letters dated April 8th and April 15th, which are attached collectively as Exhibit 2. Even though the District is not statutorily required to procure construction contracts using competitive bidding, as described below, the District should (not "must") conduct a hearing and make a finding that low bidder, MMC, is not responsible so the District may award the contract to the second low bidder. Described in Exhibit 1 is the District's evidence and recommendation that MMC is not a responsible bidder, which is based on staff's review of MMC's bid documents and multiple negative references. At the hearing, representative(s) from MMC, Inc. may present evidence to the Board of MMC's qualifications and to rebut the District staff's recommendation. In accordance with (a) caselaw, (b) the District Purchasing Policy, and (c) Project bid documents, the District (i) has the right to award the construction contract to a bidder other than the lowest bidder and (ii) reserves the right to reject any bid. Here is the relevant language from those three (a) -(c) authorities. A. CASELAW The District is a County Water District under Water Code § 30000 et seq. so it is not required to procure construction contracts using competitive bidding, which means the District is able to award construction contracts in its sole discretion. The District is required only to make a good faith effort to support the competitive selection process described in Section 7 of the District's Purchasing Policy, which is provided next. B. PURCHASING POLICY 7.4 Rejecting Competitive Responses - In response to an Invitation to Bid, RFQ, or RFP, the District may reject a bid or other response which is in any way ... unqualified, conditional or otherwise not in compliance with the solicitation documents in all material respects, and in accordance with law.... 7.5 RFPs and RFQs - The General Manager and the Board reserve the right to award Contracts based upon the best interests of the District, as determined by the District in its sole discretion. 11.0 County Water District Status - The District is a County Water District and therefore is not mandated by State law to competitively bid any purchases, including those for Public Works projects and/or capital expenditures. The District has discretion to enter into non -bid Contracts for Public Works, to procure Services and Materials, to contract for design -build work, to utilize job -order contracting and to enter into Cooperative Purchasing arrangements for the design, construction and maintenance of Page 59 of 82 Public Works, or undertake any other form of contracting determined to be in the District's best interest, except as otherwise expressly restricted by law. Notwithstanding this lack of legal mandate and contractual discretion, District staff shall make a good faith effort to support the Competitive Selection Process described in Section 7. C. PROJECT BID DOCUMENTS 1. Information For Bidders OWNER'S RESERVED RIGHTS: The Owner reserves the right, in its sole discretion, to reject any or all Bids .... AWARD OF CONTRACT: In accordance with both Owner's Purchasing Policy and the Contract Documents, award of a Contract, if it be awarded, will be based primarily, but not exclusively, on the lowest overall cost to the Owner, and will be made to a responsible Bidder whose Bid is responsive to the bid requirements prescribed in the Contract Documents.... The Owner reserves the right, in its sole discretion, to award the Contract to other than the lowest Bidder pursuant to its discretionary authority under its Purchasing Policy and the County Water District Law and in the interests of the Owner. 2. Project Bid The Owner reserves the right, in its sole discretion, to (1) reject any and all Bids, (2) waive any informality or irregularity, and (3) award the Contract to other than the lowest Bidder if in the best interests of the Owner. The Bidder will accept an award and enter into an Agreement for all Work scheduled herein on which it submits a Bid. The awards for such Work are to be entirely at the discretion of Owner after evaluation of the submitted Bids. PRIOR RELEVANT BOARD ACTION: On June 22, 2021, the Board of Directors approved the Hidden Hills Booster Pump Station Improvements Project as part of the FY21-22 Annual Budget Document. STRATEGIC PLAN INITIATIVES: G1 4A - Address infrastructure needs by updating/implementing the Asset Management Plan. G3 2B -Address the District's future infrastructure needs. ATTACHMENTS: 1. Exhibit 1 2. Exhibit 2 Page 60 of 82 Yorba Linda Water District Serving the Community Since 1909 MEMORANDUM To: Rosanne Weston, PE, PMP From: Ammar Tohmeh, PE and Danielle Logsdon, PE, PMP Subject: Award Recommendation for Hidden Hills Booster Pump Station Project regarding MMC Date: 4/7/2022 On February 9, 2022, the District received three (3) bids for construction of the Hidden Hills Booster Pump Station — Project No. J-2018-27. The bid results are shown in the summary below: No. Contractor Total Bid Amount 1 MMC, Inc. $2,378,250.00 2 Pacific Hydrotech Corp. $2,443,910.00 3 Environmental Construction, Inc. $2,632,868.90 A bid review and reference check of the apparent low bidder, MMC, Inc., was completed. The results of the bid review and reference check are as follows: With regards to the bid documents review, there were no errors in the schedule of bid items, and MMC, Inc. submitted all of the required documents. However, MMC, Inc. did not list subcontractors for either the HVAC or Roofing scope of work. Jay Mehta with MMC, Inc. stated that they will be self -performing the majority of that work and that the remaining work performed by the subcontractors for the HVAC and Roofing was less than 0.5% of the total bid, which is why they were not listed. It should be noted that 0.5% of the total bid equals $11,891.25 and that the Bid Schedule Item amounts for HVAC and Roofing are $35,000 and $75,000, respectively. The District informed MMC, Inc. that per the Contract Documents, Technical Specifications Section 07534 — EPDM Roofing, the bidder is required to "Engage experienced installer to perform Work of this Section who has specialized in installing roofing similar to that required for this Project; who is approved, authorized, or licensed by the roofing system Manufacturer to install PO Box 309, Yorba Linda CA 92885 714-701-3000 www.ylwd.com J. Wayne Miller, PhD Brooke Jones Trudi Kew Des Roches Phillip D. Hawkins Tom Lindsey President Vice President Director Director Director Page 61 of 82 Manufacturer's product; and who is eligible to receive the standard roofing Manufacturer's warranty." Jay responded with a quote from Saddleback Roofing, Inc., which totaled $11,000. With regards to the reference check, an attempt was made to contact a total of fourteen (14) references; five (5) of the references answered or returned the call. The first project was an instrumentation project that had a contract amount of approximately $3,000,000, which started in September 2019 and was completed January 2022. John Vrsalovich with Metropolitan Water District (MWD) stated that MMC, Inc. had completed several jobs for MWD in the past decade, that they get the work done, but that there have been delays. He stated that MWD did not assess liquidated damages for the delays but that they just worked the delays out with MMC, Inc. The second project was a well equipping project and treatment plant improvements project that had a contract amount of approximately $6,400,000, which started in March 2020 and, according to the reference document submitted by MMC, Inc., was completed in June 2021. However, Adriana Figueroa with the City of Paramount stated that the project was still on-going and that she did not want to discuss it with me at this time. The third project was a storm water capture project that had a contract amount of approximately $4,350,000, which started in March 2018 and, according to the reference document submitted by MMC, Inc., was completed in June 2019. Rommel Garcia with the Los Angeles County Sanitation District (LACSD) stated that the project has yet to be closed out and that there is a dispute involved in the project, but did not give any details with regards to the dispute. The fourth and fifth projects were two (2) separate sewer lift station projects for the City of Huntington Beach. One project had a contract amount of approximately $4,000,000, started in May 2020, and according to the reference document submitted by MMC, Inc., was completed in April of 2021. The other project had a contract amount of approximately $3,700,000, started in June 2020, and according to the reference document submitted by MMC, Inc., was completed in June 2021. John with the City of Huntington Beach stated that each project has over 6 months of delays and that the City of Huntington Beach was going to assess liquidated damages of over $150,000 for each project. He stated that MMC, Inc. is typically responsive but that they struggle with safety and do not always have a foreman on-site. He also stated that in their bid documents, they claimed that they were going to self -perform certain work but brought in an unlisted subcontractor during the project to perform the work instead. Finally, he Page 62 of 82 stated that the City of Huntington Beach is taking steps to prevent MMC, Inc. from bidding on future projects with them. The sixth project was a sewer lift station project that had a contract amount of approximately $2,200,000, which was completed in June 2020. Saila Potukuchi with the City of Redondo Beach, stated that MMC, Inc. was the second low bidder, but that the first low bidder withdrew. She also stated that the project went well and that there were delays but most of the delays were caused by Southern California Edison. Per the Contract Documents, the District has a right to award the Contract to other than the lowest bidder. In addition, the District reserves the right to reject the bid of any bidder who does not pass the District's evaluation of the bidder's ability and qualifications to complete the work to the satisfaction of the District. Per the Contract Documents, Information for Bidders, Award of Contract section, "The Owner reserves the right, in its sole discretion, to award the Contract to other than the lowest Bidder pursuant to its discretionary authority under its Purchasing Policy and the County Water District Law and in the interests of the Owner." Also per the Contract Documents, Information for Bidders, Competency of Bidders section, "In selecting the lowest responsible Bidder, consideration will be given not only to the financial standing but also to the general competency of the Bidder for the performance of the Work covered by the Bid. By submitted a Bid, each Bidder agrees that the Owner, in determining the successful Bidder and its eligibility for the award may consider the Bidder's experience and facilities, conduct and performance under other contracts, financial condition, reputation in the industry, and other factors which could affect the Bidder's performance of the Work." and "...the Owner reserves the right to reject the Bid of any Bidder who does not pass any such evaluation to the satisfaction of the Owner." Based on the bid review and reference check, the recommendation is that MMC, Inc. is not a responsible bidder and that it would not be in the District's best interests to award the project to MMC, Inc. Page 63 of 82 MMC, INC. LIC. #573635 5901 Fresca Drive. La Palma, CA 90623 Phone: (714)521-2022. Fax: (714) 521-2440 April 8, 2022 Yorba Linda Water District PO Box 309 Yorba Linda, CA 92885 Attn: Rosanne Weston, PE Ammar Tohmeh, PE Daniella Logsdon PE Subject: Award Recommendation for Hidden Hills Booster Pump Station Project MMC Inc. is in receipt of the memorandum dated 04/07/22 regarding the award recommendation for the Hidden Hills Booster Pump Station project, wherein, the district recommends that MMC Inc. is not a responsible bidder and it is not in the district's best interest to award the project to MMC Inc. MMC Inc.'s response is as follows: MMC adheres to the fact that we will self- perform the majority supporting work of the HVAC or Roofing work. (MMC has provided the cost of roofing work from the vendor) The remaining work that will be performed by a subcontractor will be less than 0.5% of the total bid. In regards to the reference check for projects completed, there have definitely been delays caused, however, MMC Inc. was not solely responsible for all the delays. Please keep in mind, all the projects that have referenced in the memorandum, have either begun before the covid pandemic and had been on-going during the pandemic. We are all aware of the unforeseen conditions and situations caused by the global pandemic. There were covid delays to MMC to manufacturers, to suppliers, to vendors, shortage of staff/personnel and to the public owners. For the first project mentioned, with MWD, delays have been caused on both sides due to the covid pandemic and submittal processes. For the second project- well equipping and treatment plant improvements, the delay was by the design and additional arsenic being found in the well water. This required new chemical treatment to complete the project and it is still in the design phase. The third project mentioned, with LACSD, the delay was again by the covid pandemic, by the owner and with over $50K of extra work As for the fourth and fifth project with city of Huntington Beach, once again delays due to covid pandemic and additional change orders. Having talked to John, he has completely denied that the city is going to prevent MMC from bidding for future projects (which you have stated in the memorandum) Page 64 of 82 All the references are subjective. MMC cannot be held responsible for delays in each of these projects. MMC has been a general contractor for over 30 years. None of the information the district has presented demonstrates that MMC is not a "responsible" bidder nor that MMC lacks "competency" in performing the work. If the district has obtained references from Pacific Hydrotech (second lowest bidder) MMC Inc. requests a copy to review those references. Additionally, MMC requests the district to provide copies of their Purchasing Policy that give the district "sole discretion" to award to other that the lowest bidder. If so, is this policy consistent with Public Contract Code? Lastly, MMC requests that this contract be awarded to us, it will demonstrate that this decision is fair and impartial. Awaiting your response Regards, Cal l J ga . eh Page 65 of 82 MMC, INC. LIC. #573635 5901 Fresca Drive, La Palma, CA 90623 Ph: (714) 521-2022; Fax: (714) 521-2440 April 15, 2022 Doug Davert: Assistant General Manager Yorba Linda Water District P.O. Box 3019, Yorba Linda, CA 92885 Subject: Award Recommendation of Hidden Bills Booster Pump Station Project Regarding MMC, Memorandum dated 4/7/2022 and Email dated 4/13/2022 Dear Mr. Davert, In your email of 4/13/22, you state that, "District is a County Water District under Water Code § 30, 000 et seq. so it is not required to procure construction contracts using competitive bidding. " The issue, however, is not that the District elected to utilize competitive bidding or did not elect to utilize competitive bidding. The issue is that the District elected to utilize competitive bidding and chose not to award to the lowest responsive and responsible bidder. The Yorba Linda Water District Purchasing Policy (3010-007-POL), § 7.2 reads, in part, "Public Works Contracts let by an Invitation to Bid shall be awarded to the lowest responsive, responsible bidder in accordance with State law and the District's standard Public Works contract documents." Note that state law always supersedes contract language and that illegal contracts are unenforceable. Regardless, it's not the case that the District has "sole discretion" in the award as is stated in your email of 4/13/22. The District is bound to California state law as is delineated in California's Public Contract Code and to secs. 10500 — 10506 of the Public Contract Code in particular. It is our position that MMC is "responsive" and is a "responsible bidder" per California Public Contract Code and that the District's determination to the contrary is based on faulty and insufficient information without merit. It is little more than hearsay. The district has not come close to demonstrating that MMC is not a responsible bidder. MMC clearly meets the requirements of being a responsible bidder: 1. State of California Contractor's License demonstrates minimum knowledge and experience to perform the work. 2. Bonds verify financial capacity. 3. Insurance shows that an insurance company is willing to assume certain contractor risks. 4. MMC has successfully performed many projects of similar size and scope. The District should not in anyway construe from any of MMC's communications to have waived "MMC's right to a due process hearing to present rebuttal evidence or evidence of qualifications." Please provide information as to how MMC can receive a due process hearing. Thank you and please do not hesitate to contact me with any questions you may have. Regards, Ja eh a F `— Page 66 of 82 ITEM NO. 7.2. Yorba Linda Water District /_1(r]=1►1I7_\V=1161AI MEETING DATE: April 26, 2022 TO: Board of Directors FROM: Doug Davert, Interim General Manager STAFF CONTACTS: Rosanne P. Weston, Engineering Manager Danielle Logsdon, Principal Engineer Ammar Tohmeh, Senior Engineer SUBJECT: Award of Construction Contract for the Hidden Hills Booster Pump Station Improvements Project. RECOMMENDATION: Pending the results of the due process hearing in Item No. 7.1 of this Board meeting agenda, staff recommends that the Board of Directors award the Construction Contract for the Hidden Hills Booster Pump Station Improvements Project to Pacific Hydrotech Corporation for $2,443,910.00, Job Nos. J-2020-20 and J-2018-27. SUMMARY: On January 7, 2022, the District solicited bids for improvements to the Hidden Hills Booster Pump Station. These improvements include the replacement of an existing pump, a natural gas backup generator, a new electrical room, a security fence and gate, a retaining wall, and paving for improved site access. The booster pump station site is on Hidden Hills Road in the City of Yorba Linda. On February 9, 2022, sealed bids were received from three contractors. The three bids are shown in the summary below. No. Contractor Total Bid Amount 1 MMC, Inc. $2,378,250.00 2 Pacific Hydrotech Corp. $2,443,910.00 3 Environmental Construction, Inc. $2,632,868.90 After reasonable inquiry and evaluation, staff does not recommend awarding the project to the lowest bidder, MMC, Inc., because staff found MMC not to be a "responsible" bidder due to the documented record of problems reported by other agencies. Therefore, it would not be in the District's best interest to award the project to MMC, Inc. Staff recommends awarding the Hidden Hills Booster Pump Station Improvements Project to the second lowest bidder, Pacific Hydrotech Corporation, for $2,443,910.00. 19 6'�a_1>! 1►yi l :7_T91IF Page 67 of 82 Budgeted: Yes Total Construction Cost: $2,443,910 District's Construction Cost: $1,136,418 Developer's Construction Cost: $1,307,492 Funding Source: Capital and Developer Funded Job Nos: J-2020-20 and J-2018-27 BACKGROUND: This project was initiated due to the new Cielo Vista development, which will be constructed within the City of Yorba Linda. The Developer funded portion will include the replacement of an existing pump to meet anticipated demands and increase fire protection. The District funded portion will include improvements to enhance site security, resiliency, and reliability per America's Water Infrastructure Act of 2018 (AWIA), and to improve operations. The project will also provide increased fire protection in the nearby wildfire -prone areas. This project was identified in the District's 2018 Asset Management Plan. PRIOR RELEVANT BOARD ACTION: On June 22, 2021, the Board of Directors approved the Hidden Hills Booster Pump Station Improvements Project as part of the FY21-22 Annual Budget Document. STRATEGIC PLAN INITIATIVES: G1 4A - Address infrastructure needs by updating/implementing the Asset Management Plan. G3 2B - Address the District's future infrastructure needs. Page 68 of 82 ITEM NO. 7.3. Yorba Linda Water District /_[r]=1►1I7_\V=1161AI MEETING DATE: April 26, 2022 TO: Board of Directors FROM: Doug Davert, Interim General Manager STAFF CONTACTS: Rosanne Weston, Engineering Manager SUBJECT: Fourth Amendment to the Water and Sewer Facilities Agreement Between the Yorba Linda Water District and North County, BRS, LLC (now Lennar Homes of California LLC) for the Cielo Vista Development Project RECOMMENDATION: That the Board of Directors approve the Fourth Amendment to the Cielo Vista Project Water and Sewer Facilities Agreement dated August 1, 2018, conditioned on the Property Owners' signatures to the Fourth Amendment within 30 days of this approval. SUMMARY: Submitted for the Board's consideration and approval is the Fourth Amendment to the Water and Sewer Facilities Agreement ("Facilities Agreement") between the Yorba Linda Water District and North County BRS, LLC (now Lennar Homes of California LLC) for the Cielo Vista Development Project. FISCAL IMPACT: Developer Funded Project Job No: J-2018-12 BACKGROUND: The owner of the Cielo Vista property and development is Lennar Homes of California LLC. The Existing Offsite Facility Improvements, which are discussed below, consist of: (a) an extension of the water pipeline in Stonehaven; and (b) an upgrade and expansion of the pumping capacity of the Hidden Hills Booster Pump Station ("Hidden Hills BPS"). The Facilities Agreement is amended a fourth time to: 1. authorize YLWD to construct the Existing Offsite Facility Improvements, and Developer to fund its share of the cost to construct the Existing Offsite Facility Page 69 of 82 Improvements prior to the Effective Date, which will not occur until summertime; 2. accurately reflect the parties' prior agreement for allocating costs to construct the Hidden Hills BPS; 3. memorialize the allocation between the parties for Engineering Services Costs for the Hidden Hills BPS as 46.5% to YLWD and 53.5% to Developer; 4. revise the cost estimate to construct the Hidden Hills BPS since receiving bids to construct the Hidden Hills BPS; 5. revise the engineer's cost estimate, due to inflation, to extend the water pipeline in Stonehaven; 6. allow Developer to make more than one lump sum payment for its share of costs to construct the Existing Offsite Improvements, but the Developer is subject to liquidated damages if it fails to pay the District such costs on certain deadlines; and 7. update the project milestones and the project schedule due to the lapse of time between the Third Amendment and the Fourth Amendment. 1UNIQ:AN=1I=1%1►kA-1107_1VI7_TOIIf] kiA • On October 13, 2021, the Board of Directors approved the Third Amendment to the Water and Facilities Agreement between the Yorba Linda Water District and North County BRS, LLC for the Cielo Vista Development Project. • On November 10, 2020, the Board of Directors approved the Second Amendment to the Water and Facilities Agreement between the Yorba Linda Water District and North County BRS, LLC for the Cielo Vista Development Project. • On August 27, 2019, the Board of Directors approved the First Amendment to the Water and Facilities Agreement between the Yorba Linda Water District and North County BRS, LLC for the Cielo Vista Development Project. • On May 22, 2018, the Board of Directors approved the Terms and Conditions for Water and Sewer Service with North County BRS Project, LLC for Tract 17341. • On July 24, 2018, the Board of Directors approved the Cielo Vista Project Water and Sewer Facilities Agreement Between the Yorba Linda Water District and North County BRS Project, LLC. ATTACHMENTS: Fourth Amendment to the Cielo Vista Project Water and Sewer Facilities Agreement Page 70 of 82 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: For Recorder's tJse Only FOURTH AMENDMENT TO CIELO VISTA PROJECT WATER AND SEWER FACILITIES AGREEMENT BETWEEN YORBA LINDA WATER DISTRICT AND LENNAR HOMES OF CALIFORNIA, LLC 4857-6484-0475.3 372956.00020/4-15-22/jcc/bsb Page 71 of 82 FOURTH AMENDMENT TO CIELO VISTA PROJECT WATER AND SEWER FACILITIES AGREEMENT BETWEEN YORBA LINDA WATER DISTRICT AND LENNAR HOMES OF CALIFORNIA, LLC This FOURTH AMENDMENT to the Cielo Vista Project Water and Sewer Facilities Agreement ("Fourth Amendment") is made, entered into, and effective, on April 12, 2022 ("Effective Date"), by and between the Parties. RECITALS A. The Parties previously entered into the Agreement titled Cielo Vista Project Water and Sewer Facilities Agreement, which has an Agreement Date of August 1, 2018. The Parties subsequently entered a (1) First Amendment, which has an effective date of August 27, 2019, (2) Second Amendment, which has an effective date of August 1, 2020, and (3) Third Amendment, which has an effective date of August 1, 2021. The reasons for those three Amendments are stated in the Recitals of those Amendments. B. Capitalized terms used in this Fourth Amendment, without being separately defined herein, shall have the same meaning as defined in the Agreement and its Amendments. C. Pursuant to Section 17 of the Agreement, all amendments to the Agreement must be in writing and signed by the Parties. D. The Parties previously agreed to apportion the construction cost to construct the Hidden Hills Pump Station, which is one of the Existing Offsite Facility Improvements, for the reasons stated in Exhibit L.2. Subsection (i) of section 5.C. of the Agreement is contrary to that agreement so the Parties desire to amend subsection (i) of section 5.C. to accurately reflect that agreement. The Parties agreed upon apportionment is reflected in the percent allocation stated in Exhibit GA to this Fourth Amendment. The more detailed apportionment between the Parties in Exhibit GA supersedes the table, only, in Exhibit L.2 that lists the "major project elements" and assigns financial responsibility of each element to either Party. E. Consistent with both Section 5.C.i as amended and the percent allocation between the Parties in Exhibit GA, the Parties desire for (1) the costs for engineering services, construction support services, construction management services, inspection services, and other related services required only for the Hidden Hills Pump Station ("Engineering Services Costs") to be allocated between the Parties with 46.5% allocated to YLWD and 53.5% allocated to Developer, and (2) any Engineering Services Costs due to change orders to the Scope of Work to be allocated between the Parties in accordance with Exhibit GA. F. Due to the repeated extensions of the Effective Date term, YLWD elects to construct the Existing Offsite Facility Improvements prior to the Effective Date and Developer agrees, prior to the Effective Date, to fund its share of the cost of the Existing Offsite Facility Improvements in two or three installments and one final payment. 4857-6484-0475.3 372956.00020/4-15-22/jcc/bsb Page 72 of 82 G. The Parties desire to establish a procedure in which Developer will fund its allocated amount of change orders to the Scope of Work for the Existing Offsite Facility Improvements. H. In January and February 2022, YLWD solicited and received bids to upgrade and expand the pumping capacity of the Hidden Hills Pump Station. These bids, which have been shared with Developer, provide a more accurate cost estimate, versus the engineer's cost estimate, of the construction costs to upgrade and expand the pumping capacity of Hidden Hills Pump Station. To (1) reflect this more accurate construction cost estimate and (2) account for anticipated increased construction costs due to inflation to extend the water pipeline in Stonehaven, which is the other Existing Offsite Facility Improvements, the Parties desire to replace Exhibit 11G.3" to the Third Amendment. L YLWD's budget to construct the Existing Offsite Facility Improvements is solely dependent on Developer funding the Existing Offsite Facility Improvements. If Developer does not pay YLWD the cost to construct the Existing Offsite Facility Improvements in a timely manner, then YLWD will not have the budgeted funds to construct the Existing Offsite Facility Improvements, which may cause, among other things, construction to stop on the Existing Offsite Facility Improvements, YLWD to defer other capital improvement projects, or YLWD to go out to the bond market to finance the Existing Offsite Facility Improvements. The cost to YLWD of such actions is extremely difficult to ascertain. Accordingly, Developer will pay YLWD $1,000 per day if Developer fails to deposit the second, third (if any) and final payments by the deadlines noted below, not as a penalty but as liquidated damages for breach of Agreement as amended for each and every day that Developer is in breach. The amount of liquidated damages has been fixed and agreed upon by and between the Parties because of the impracticability and extreme difficulty of fixing and ascertaining the actual damages YLWD would sustain during such a breach; and said amount is agreed to be the amount of monetary damages sustained by YLWD. J. For the avoidance of doubt, the Parties wish to make clear that the following acts of YLWD and the Developer constitute each Party's satisfaction of the condition in Exhibit K 4 that the Hidden Hills Pump Station is "under construction": (i) YLWD's issuance of a Notice to Proceed for construction of the Hidden Hills Pump Station and (ii) Developer's deposit of the first installment of the Developer's share to construct the Existing Offsite Facility Improvements. K. Due to the lapse of time between the Third Amendment and this Fourth Amendment, Developer requested and YLWD agreed to update the Project milestones in Exhibit "J.3" to the Second Amendment and the Project schedule in Exhibit 11K.3" to the Third Amendment. Exhibit K.3 is also updated to delete (i) Psomas' obligation to complete the final design plans and specifications for the Stonehaven water main project, and (ii) Developer's obligation to update to the bid documents to reflect YLWD's update to the standard specifications for the Stonehaven project since both (i) and (ii) have been accomplished to the satisfaction of the Parties. AGREEMENT NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which is hereby acknowledged and accepted, the Parties agree as follows: 4857-6484-0475.3 372956.00020/4-15-22/jcc/bsb -2- Page 73 of 82 The Agreement is amended as follows: A. Subsection (i) of section S.C. in the Agreement is hereby deleted and replaced in its entirety as follows: Exhibit GA, which may be amended from time to time, is a preliminary estimate and the final costs may change up or down after construction completion of the Existing Offsite Facility Improvements. Developer shall pay to YLWD 100% of the costs to construct the Existing Offsite Facility Improvements, except for the construction cost allocated to YLWD to construct the Hidden Hills Pump Station as provided in Exhibit GA as amended from time to time. Using funds paid to YLWD from Developer for its allocated share, along with YLWD's own funds for its allocated share, YLWD shall pay to all third parties, who will design and construct the Existing Offsite Facility Improvements, the costs of designing and constructing the Existing Offsite Facility Improvements, except for costs incurred by Developer for third -party consultants such as Psomas to design and construct the Existing Offsite Facility Improvements. 2. The Second Amendment is amended as follows: A. Section 3 in the Second Amendment is hereby deleted and replaced in its entirety by Section 3 below in this Fourth Amendment: The Third Amendment is amended as follows: A. To (i) reflect the construction cost to construct the Hidden Hills Pump Station as allocated between the Parties, (ii) reflect the more accurate construction cost estimate to upgrade and expand the pumping capacity of Hidden Hills Pump Station, and (iii) account for anticipated increased construction costs due to inflation to extend the water pipeline in Stonehaven, Exhibit 11G.3" to the Third Amendment is hereby deleted and replaced in its entirety by Exhibit 11G.4" to this Fourth Amendment. B. Pursuant to Section 5.B.iii of the Agreement and to reflect a change in the Project milestones, Exhibit "J.3" to the Third Amendment is replaced by Exhibit "J.4" to this Fourth Amendment. C. Pursuant to Section 5.B.iii of the Agreement and to reflect a change in the Project schedule, Exhibit "K.3" to the Third Amendment is replaced by Exhibit "K.4" to this Fourth Amendment. D. The table, only, in Exhibit L.2, which lists the "major project elements" and assigns financial responsibility of each element to either Party, is hereby deleted and superseded by Exhibit G.4. 4857-6484-0475.3 3 72 95 6.00020,4-15-22/jcc/bsb -3- Page 74 of 82 4. Within 5 days of YLWD's delivery of a fully executed Fourth Amendment, Developer shall deposit, in the Existing Offsite Facility Improvements Escrow as provided in Section 5.0 of the Agreement, half of Developer's allocated amount of the costs to construct the Existing Offsite Facility Improvements provided in Exhibit G.4 of this Fourth Amendment and the other half within four months of YLWD's Notice to Proceed for construction of the Hidden Hills Pump Station. The final costs, not covered by Developer's two payments of Developer's allocations to construct the Existing Offsite Facility Improvements, shall be paid to YLWD within 30 days of written notice to Developer that the second of two Notices of Completion for the two Existing Offsite Facility Improvements has been submitted for recording with the County Recorder's Office. If the awarded bid amount for the Stonehaven pipeline is more than 10% higher than the engineer's estimate to construct the Stonehaven pipeline, which is provided in Exhibit G.4, then Developer shall deposit an additional installment to the Existing Offsite Facility Improvements Escrow for the entire monetary difference between the engineer's estimate and the awarded bid amount. Developer shall deposit this additional installment to YLWD within 30 days written notice, which shall include a written invoice of the amount owed, to Developer of the bid award to construct the Stonehaven pipeline A. Developer's failure to deposit either (i) all two or three installments; or (ii) Developer's allocation of the final costs by the deadlines in Section 4 above is a breach of the Agreement as amended, which will cause YLWD to assess Developer, and Developer shall pay, liquidated damages in the amount of $1,000 per day, which shall be triggered upon Developer's failure to pay either deposit described in (i) or (ii) of this Section 4.A. to YLWD within 30 days of receipt of the written notice specified above, and YLWD's providing a written invoice of the amount owed. Because of the extreme difficulty to ascertain damages to YLWD, as described in the Recitals above, if Developer does not pay to YLWD either deposit described in (i) or (ii) of this Section 4.A by the deadlines in Section 4, Developer shall pay to YLWD the above daily amount, not as a penalty but as liquidated damages for breach of the Agreement as amended. YLWD may deduct the amount of such liquidated damages from the Existing Offsite Facility Improvements Escrow or collect it directly from Developer. 5. All Engineering Services Costs not due to change orders to the Scope of Work for the Hidden Hills Pump Station shall be allocated between the Parties with 46.5% allocated to YLWD and 53.5% allocated to Developer. Any Engineering Services Costs due to change orders to the Scope of Work for the Hidden Hills Pump Station shall be allocated between the Parties in accordance with Exhibit G.4, as may be amended from time to time. And any such Engineering Services Costs due to change orders that are allocated to Developer shall be deposited by Developer into the Existing Offsite Facility Improvements Escrow within 30 days written notice, which shall include a written invoice of the amount owed, of YLWD's change order approval. 6. The following acts of YLWD and Developer constitute each Party's satisfaction of the condition in Exhibit K.4 that the Hidden Hills Pump Station is "under construction": (i) YLWD's issuance of a Notice to Proceed for construction of the Hidden Hills Pump Station and (ii) Developer's deposit of the first installment of the Developer's share to construct the Existing Offsite Facility Improvements. 7. This Fourth Amendment shall be recorded with the Orange County Recorder's Office. 4857-6484-0475.3 372956.00020/4-15-22/jcc/bsb -4- Page 75 of 82 8. The Agreement and its Amendments shall remain in full force and effect in accordance with its terms and provisions except as amended by this Fourth Amendment. The Parties hereby confirm and ratify each of the provisions of the Agreement and its Amendments as amended by this Fourth Amendment. 9. This Fourth Amendment may be executed in one or more counterparts, all counterparts shall be valid and binding on the Party executing them and all counterparts shall together constitute one and the same document for all purposes. IN WITNESS WHEREOF, the Parties have executed this Fourth Amendment on the Effective Date above. The Parties have caused this Fourth Amendment to be executed on their behalf and the signatories represent that they have been duly authorized to enter into this Fourth Amendment on behalf of their respective Parties. Yorba Linda Water District, a public agency ("YLWD") By: Doug Davert, Interim General Manager APPROVED AS TO FORM: Kidman Gagen Law, LLP Bv: Andrew B. Gagen, General Counsel REVIEWED BY: YLWD By: Rosanne P. Weston, Engineering Manager 4857-6484-0475.3 372956.00020/4-15-22/jcc/bsb Lennar Homes of California, LLC ("Developer") By: \ Title: �!/ % Ltr ?, rw t % r ->+C -j IK— APPROVED AS TO FORM: 0 -5- Attorneys for Developer Page 76 of 82 8. The Agreement and its Amendments shall remain in full force and effect in accordance with its terms and provisions except as amended by this Fourth Amendment. The Parties hereby confirm and ratify each of the provisions of the Agreement and its Amendments as amended by this Fourth Amendment. g. This Fourth Amendment may be executed in one or more counterparts, all counterparts shalt be valid and binding on the Parry executing them and al counterparts shall together constitute one and the same document for all purposes. IN WITNESS WHEREOF, the Parties have executed this Fourth Amendment on the Effective Date above. The Parties have caused this Fourth Amendment to be executed on their behalf and the signatories represent that they have been duly authorized to enter into this Fourth Amendment on behalf of their respective Parties. Yorba Linda Water District, a public agency ("YLWD") By: Lennar Homes of California, LLC ("Developer") M. Doug Davert, Interim General Manager Title: APPROVED AS TO FORM: Kidman Gagen Law, LLP By: Andrew B. Gagen, General Counsel REVIEWED BY: YLWD By: Rosanne P. Weston, Engineering Manager 4837-6484.0475.3 372956.0002014.15-22ijccAnb APPROVEED AS TO FORM: L L� +� I'LL _1.1 S JCL ri+aw�l lc- lv^� $ N St 5 LLQ By:�J _ J,Fkl% Attorneys for Developer Page 77 of 82 ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of Orange On April 19, 2022 before me, Peggy R. Yazloff, Notary Public (insert name and title of the officer) personally appeared Brian Bencz who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. ' ..:. PEGGY R. YAZLOFF WITNESS my hand and official seal. COMM. #2323881 o; ; ' o Notary Public • California Z Orange County My Comm. E ires Mar. 124 2024 Signature (Seal) Page 78 of 82 EXHIBIT "G.4" EXISTING OFFSITE FACILITIES FEE SUMMARY AND ALLOCATION OF COSTS FOR EXISTING OFFSITE FACILITY IMPROVEMENTS Existing Offsite Facilities Fee Summary Description Length (LF) Cost per LF ($) Existing Water Allocation Fees.......................................................................................... $ 290,217 Existing Sewer Allocation Fees....................................................................................... $ 109,242 Water& Sewer Total...................................................................................................... $ 399,459 AnnexationFees' .......... ................................... ...................................... I ...... I.............. $ 15,644 TotalAll Fees............................................................................................................... $ 415,103 Fee per Dwelling Unit (74 DUs)....................................................................................... $ 5,609.50 AMIFacilities'............................................................................................................ $ 40,000 Developer Share of Existing Offsite Facility Improvements Description Length (LF) Cost per LF ($) Cost ($) 12" Stonehaven Drive Watermain2 1300 758,800 Hidden Hills Pump Station Upgrades" 1,289,885 Subtotal..................................................................................................................... 2,048,6851 YLWD Share of Existing Offsite Facility Improvements Description Length (LF) Cost per LF ($) Cost ($) 12" Stonehaven Drive Watermain 1300 0.00 Hidden Hills Pump Station Upgrades5 1,121,115 Subtotal..................................................................................................................... 1,121,115 Footnotes: 1) Annexation Fees per October 24, 2017 memorandum from Brett R. Barbre to John Lewis. 2) 12" watermain in Stonehaven Drive from just east of Davonport Circle to Project entrance just east of Via de la Roca Drive. The cost is based on an enginee's estimate, only, as of the Effective Date of the 4 1 Amendment, and said cost may be revised in accordance with Section 5.C.(i) as amended by the 4`h Amendment. 3) Fee for AMI Facilities previously paid per original Agreement and not included in Fee per Dwelling Unit. 4) Based on 53.5 percent allocation of $2,411,000 estimated amount, including 10 percent contingency. 5) Based on 46.5 percent allocation of $2,411,000 estimated amount, including 10 percent contingency. Page 79 of 82 EXHIBIT "G.4" EXISTING OFFSITE FACILITIES FEE SUMMARY AND EXISTING OFFSITE FACILITY IMPROVEMENTS (CONT.) HIDDEN HILLS BOOSTER PUMP STATION Item Description City. Unit District Allocation Developer Allocation 1 .c mobilization. .and Permits 1 LS 46.50% 53.50% 2 cementation, Disinfection, and Erosion Control/Compliance with SWPPP Requirements 1 LS 46.50% 53.50% 3 Nor. Itrol Measures 1 LS 46.50% 53.50% 4 Verification of Utility Locations. Field Dimensions, and Existing Electrical Work 1 LS 46.50% 53.50% 5 Startup and Testing 1 LS 46.50% 53.50% 6 Record Documents, O&M Manuals and Warranties 1 LS 46.50% 53.50% 7 Spare Parts 1 LS 46.50% 53.50% 8 Training 1 LS 46.50% 53.50% 9 Structural, Mechanical and Electrical Demolition 1 LS 0.00% 100.00% 10 Clearing and Grubbing, Site Demolition, and Soil Preparation 1 LS 46.50% 53.50% 11 Cutting of Existing System Water Mains and Removal and Disposal of Existing Piping where Shown 1 LS 0.00% 100.00% 12 Rehabilitation of Existing Concrete Masonry Unit BPS Building for New Electrical Room 1 LS 0.00% 100.00% 13 Construction Work for BPS Roof 1.0 LS 0.00% 100.00% 14 Miscellaneous Steel and Aluminum Construction Work 1 LS 0.00% 100.00% 15 HVAC Work 1 LS 46.50% 53.50% 16 Yard Conduit and Wiring and Electrical and Lighting Work 1 LS 46.50% 53.50% 17 VFD Motor Control Center 1 LS 0.00% 100.00% 18 Automatic Transfer Switch 1 LS 100.00% 0.00% 19 Instrumentation, Telemetry, and Control System 1 LS 46.50% 53.50% 20 SCE Transformer Replacement 1 LS 0.00% 100.00% 21 350 kW Natural Gas Generator 1 LS 100.00% 0.00% 22 Site Paving, Concrete Curb & Gutter, and Flatwork 1 LS 100.00% 0.00% 23 Perimeter Fencing and Motorized Swing Gate 1 LS 100.00% 0.00% 24 Masonry Retaining Walls 1 LS 100.00% 0.00% 25 Connect to Existing Piping 1 LS 46.50% 53.50% 26 Yard Piping and Fittings 1 LS 46.50% 53.50% 27 Valves 1 LS 0.00% 100.00% 28 Installation of pre -purchased Magnetic Flow Meter (see Appendix E) and appurtenances 1 LS 100.00% 0.00% 29 Vertical Turbine Water Pump and Motor (Pump #4) 1 LS 0.00% 100.00% 30 Chlorine Analyzer 1 LS 100.00 % 0.00 31 Unknown Underground Obstruction 1 LS 46.50% 53.50% 32 Additional Cast 1 LS 46.50% 53.50% 33 Contingency 10.00% 46.50% 53.50% Al Flow Meter Vault 1 LS 100.00% 0.00% A2 Allowance for Reimbursement for Permit Fees 1 LS 46.50% 53.50% A3 Allowance for Reimbursement for YLWD Power Service and Transformer 1 LS 0.00%1 100.00% c0 STONEHAVEN DRIVE WATERMAIN (D DEVELOPER ALLOCATION - 100% CD O DISTRICT ALLOCATION - 0% O Co N EXHIBIT "J.4" CIELO VISTA OFF-SITE WATER IMPROVEMENTS SCHEDULE* �otiti o�ti c� �J� P� E 1 week �� O`�ope, �JatJ �a Stonehaven Pipeline I I Advertise & Award District Award (6/14/2022) I I District Issue NTP Submittals 1 I I Mobilization Pipe Construction Paving I I YLWD Approved & Operational Hidden Hills Pump Station I I District Award (4/27/2022) District Issue NTP Submittals 1 I Mobilization 1 Construction I Punch List & Testing YLWD Approved & Operational 1 LEGEND Grading Started March 2022 YLWD CONTRACTOR Production Homes Start Est. May 2023 I � Model Homes Start Est. January 2023 *This construction schedule reflects the current dates for Board meetings, which may change, and the schedule is contingent on Board approval and the contractor's completion schedule. v c0 m w 0 w N 4/12/2022 EXHIBIT "K.4" Schedule for YLWD to Provide Access to Water Project Rough Grading: YLWD shall provide temporary access to water for the Property through an existing hydrant for Developer to commence Project rough grading, following the Effective Date and YLWD's receipt of Developer's deposit Pursuant to Section 5.C. of the Agreement as amended. Developer shall apply for a temporary construction meter, procure a reduced pressure backflow device to attach to the temporary construction meter, comply with all YLWD testing and reporting procedures, and pay all applicable fees, including water usage fees. 2. Drop Lumber and Residential Framing for Model Homes: Before any lumber drop for Project framing and construction of the model homes, the Stonehaven water main (listed in Exhibit 11G.4" and illustrated on Exhibit "H.1") and the Subdivision Facilities up to the hydrant(s) serving the model homes shall be constructed, complete and operational, tested and approved. The Parties shall use all commercially reasonable efforts as necessary to complete the Stonehaven water main in time to provide access to construction water for lumber drop and residential framing of the model homes in accordance with the schedule in Exhibit "J.4". Based on typical construction practices and since it can be ready to go to bid when necessary and assuming YLWD (not Developer) constructs the Stonehaven water main, the Stonehaven water main can be constructed in the same timeframe as the onsite water facilities for the Project and all efforts will be made to coordinate the construction schedule of the Stonehaven water main with the Project onsite water facilities. Developer must notify YLWD in a timely manner to provide YLWD sufficient time to complete the Stonehaven water main project according to schedule. 3. Drop Lumber, Residential Framing and Construction of Remainder of Project Homes: The Developer may construct the Project's residential homes in phases. Before any lumber drop for framing and construction of the residential homes in each Project phase, the segment of the Subdivision Facilities serving such phase of residential homes shall be constructed, complete and operational, tested and approved, and the Hidden Hills Pump Station improvements (listed in Exhibit "G.4" and illustrated on Exhibit "I") shall be under construction. The Parties shall use all commercially reasonable efforts as necessary to commence construction prior to lumber drop and residential framing of the first phase of Project homes in accordance with the schedule in Exhibit "J.4". In addition to the scheduling contingencies in Section 5.B.iii in the original Agreement, this schedule is also contingent upon Psomas completing the Hidden Hills Pump Station final design plans and specifications and receiving YLWD acceptance in accordance with the schedule in Exhibit "J.41'. Assuming YLWD (not Developer) constructs the Hidden Hills Booster Pump Station, Developer must notify YLWD in a timely manner to provide YLWD sufficient time to complete the Hidden Hills Booster Pump Station project according to schedule. Page 82 of 82