CITY OF MODESTO COST SHARE PROGRAM EVALUATION SUMMARY REPORT VOLUME TWO

Transcription

1 CITY OF MODESTO COST SHARE PROGRAM EVALUATION SUMMARY REPORT VOLUME TWO February 6, 2012

2 CITY OF MODESTO COST SHARE PROGRAM EVALUATION SUMMARY REPORT - VOLUME TWO February 6, 2012 Submitted to: City of Modesto Public Works Department Wastewater Division, Wastewater Collections Section 1221 Sutter Avenue Modesto, CA Prepared by: Nolte Associates, Inc. (a Nolte Vertical Five company) 1215 West Center Street, Suite 201 Manteca, CA (209) (209) (Fax)

3 TABLE OF CONTENTS Chapter: Executive Summary... ES-1 1 Background Review of Agency Sewer Lateral Programs Summary of City Cost Share Program Comparison with Other Similar Agency Cost Share Programs Insurance Policies for Sewer Laterals Suggested Modifications to City Cost Share Program Alternative Method for Offsetting Sewer Lateral Costs Legal Review Regarding Cost Share Program Future Strategy References Appendices (Volume Two): A B C City of Modesto Sewer Lateral Standards Scope of Services City of Fresno Septic System Loan Program D Maps Illustrating Locations of CSP Applicant Sites, E F G H I J K L Sewer Lateral Certificate Programs for the cities of Berkeley, Richmond, and Sausalito California Association of Sanitation Agencies Proposed Legislation Brochures for Insurance Policies Potential Budget Impact for Implementing Recommended Modifications and Alternatives City of Modesto Low Income and Disabled Access Grant/Loan Programs for Home Repairs CRF Contract Loan Servicing Proposal Alternative Methods for Offsetting Sewer Lateral Costs City of Merced Staff Input Regarding Requirements for Contractor Licensure when Working in the Right of Way Modesto Cost Share Program TC-1 MTB Summary Report February 2012 n:\mtb020301\documents\final summary report\volume 1.doc

4 LIST OF TABLES Table 2-1 City of Modesto Cost Share Program Evaluation Comparison of Central Valley Cities Sewer Lateral Policies Table 3-1 City of Modesto Cost Share Program Evaluation City Time and Cost Estimates for Program Implementation Table 3-2 City of Modesto Cost Share Program Evaluation CSP Summary, Table 3-3 City of Modesto Cost Share Program Evaluation Typical City Costs in Responding to Sewer Lateral Overflows Table 3-4 City of Modesto Cost Share Program Evaluation Summary of Perceived Program Issues Table 4-1 City of Modesto Cost Share Program Evaluation Review of Bay Area Agency Sewer Lateral Programs Table 5-1 City of Modesto Cost Share Program Evaluation Comparison of Insurance Programs Table 6-1 City of Modesto Cost Share Program Evaluation Summary of Potential Streamlining Recommendations Table 6-2 City of Modesto Cost Share Program Evaluation CSP Cost Summary, Table 6-3 City of Modesto Cost Share Program Evaluation Potential CSP Costs for Increased Participation Table 6-4 City of Modesto Cost Share Program Evaluation Average Lateral Repair Costs, By Type of Repair Table 6-5 City of Modesto Cost Share Program Evaluation Potential CSP Costs for Increased Participation and Complete Lateral Repair Table 6-6 City of Modesto Cost Share Program Evaluation Potential Budget Impact for Implementing Suggested Modifications and Alternatives Table 7-1 City of Modesto Cost Share Program Evaluation Loan Program Assumptions Table 7-2 City of Modesto Cost Share Program Evaluation Summary of Loan Program Budget Analysis LIST OF FIGURES Figure 1-1 Flow Diagram Illustrating Approach Figure 3-1 Current Organizational Chart Figure 3-2 Diagram Illustrating Current City Cost Share Program Process Figure 4-1 Diagram Illustrating Effective Sewer Lateral Program Modesto Cost Share Program TC-2 MTB Summary Report February 2012 n:\mtb020301\documents\final summary report\volume 1.doc

5 APPENDIX A CITY OF MODESTO SEWER LATERAL STANDARDS

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7 APPENDIX B SCOPE OF SERVICES

8 CITY OF MODESTO COST SHARE PROGRAM EVALUATION AND RECOMMENDATIONS SCOPE OF SERVICES JULY 2011 The City of Modesto (City) Public Works Department, Wastewater Division (PWD-WD) would like to evaluate the Cost Share Program established in September 1990 under Council Resolution and Council Policy Residential sewer laterals in need of repair can be a significant source of I/I to the municipal wastewater collection system. Excess wet weather flows can contribute to surcharged sewers and potential sewer overflows resulting in regulatory violations. The incremental cost of treating combined flows also represents an additional disadvantage to the City. Unfortunately, the cost of lateral repairs can be a substantial burden to property owners and an impediment to action. In an effort to assist residents in financing repairs of house sewer lines (laterals), the City is seeking an evaluation and recommendations to the existing guidelines to the Cost Share Program from Nolte Associates, Inc. (Consultant). The scope of services for the program evaluation is presented as follows: SCOPE OF SERVICES Program evaluation, recommendations and program will include the following tasks: 1. Prepare Cost-Benefit analysis of current Cost Share Program and evaluate alternatives 2. Evaluate and describe each step in the Cost Share Program 3. Evaluate sewer lateral inspection policies 4. Provide funding recommendations for the recommended wastewater division Cost Share Program 5. Provide recommendations for the distribution of funds to citizens for repairs offered through program 6. Evaluate options for administration of program 7. Assess options for contractor procurement/determination of reimbursable costs 8. Prepare legal opinion of any recommended program changes 9. Prepare agenda report and assist in presentation to City Economic Development Committee 10. Project Management Each task is described below. TASK 1 PREPARE COST-BENEFIT ANALYSIS OF CURRENT COST SHARE PROGRAM AND EVALUATE ALTERNATIVES Task 1 includes the following subtasks: City of Modesto Cost Share Program 1 MTB July 2011 n:\mtb020301\contract docs\workplan scope and fee.docx

9 1.1 Create database Create data base that summarizes historical information on cost share program including location, age of residential sewer, type of repair, scope of improvement, and construction cost. 1.2 Designate improvements on collection system map Designate improvements on collection system maps to derive potential correlation between lateral repair and reduced infiltration/inflow within sewer shed. 1.3 Review collection system master plan Review collection system master plan assumptions regarding infiltration/inflow allowances and the impacts of various sewer rehabilitation techniques. 1.4 Research maintenance records/summarize histories Research maintenance records and summarize call-out/overflow histories in areas with significant lateral repairs. Identify maintenance trends as a function of sewer shed boundaries. Estimate City unit costs associated with mitigating excessive infiltration/inflow. 1.5 Compare costs of rehabilitation Compare costs of lateral rehabilitation with reduced or avoided maintenance costs. Summarize results in cost-benefit ratio. 1.6 Summarize scope of insurance policies Summarize scope of insurance policies offered by service providers such as Utility Services Partners and HomeServe USA. Contact agencies participating in these types of programs and research history to determine level of success and satisfaction. Analyze benefits to agency and local homeowners and quantify potential costs and royalties. Develop cost-benefit ratio for comparison to City cost share program and provide recommendations. Task 1 Deliverables: Technical memorandum detailing cost benefit analyses for current program and future options including potential insurance program TASK 2 EVALUATE AND DESCRIBE EACH STEP IN THE COST SHARE PROGRAM Task 2 includes the following subtasks: 2.1 Prepare flow chart of process Prepare flow chart of process based on interviews with staff from CED, PWD-WD, and UPP. Review flow chart with City staff and confirm correctness. Solicit feedback on possible improvements designed to streamline program. City of Modesto Cost Share Program 2 MTB July 2011 n:\mtb020301\contract docs\workplan scope and fee.docx

10 2.2 Summarize responsibilities and staff accountabilities Summarize specific responsibilities and staff accountabilities associated with each step in cost share program from determination of eligibility to final sign-off on construction work. 2.3 Compare cost share process from similar agencies Compare the cost share process from similar agencies and identify best practices and how these practices could be folded into the City program. Summarize recommendations for streamlining each step in the program considering specific goals for timeliness and user documentation. Task 2 Deliverables: Flow chart depicting each step in program, summary of specific responsibilities for use in Task 6, technical memorandum presenting recommendations for streamlining program TASK 3 EVALUATE SEWER LATERAL INSPECTION POLICIES Task 3 includes the following subtasks: 3.1 Research inspection policies from similar agencies Research sewer lateral inspection policies from similar agencies and identify triggers for subsequent repairs to defective sewer laterals at the time of sale or when home improvements are constructed. Summarize typical staffing requirements and administrative costs associated with implementation of a sewer lateral inspection policy. 3.2 Describe benefits of sewer lateral inspections Describe potential benefits a sewer lateral inspection might have to the City as well as residents responsible for the condition of the house sewer line. 3.3 Description of how a sewer lateral inspection policy could be incorporated Describe how a sewer lateral inspection policy could be incorporated into the cost share program or insurance program including a summary of fiscal impacts, appropriate personnel, recommended administrative procedures, and staffing requirements. Task 3 Deliverables: Technical memorandum summarizing recommendations for a sewer lateral inspection policy TASK 4 PROVIDE FUNDING RECOMMENDATIONS FOR THE RECOMMENDED WASTEWATER DIVISION COST SHARE PROGRAM Task 4 includes the following subtasks: City of Modesto Cost Share Program 3 MTB July 2011 n:\mtb020301\contract docs\workplan scope and fee.docx

11 4.1 Estimate potential participation in cost sharing program Estimate potential participation in cost sharing program considering suggested revisions to City practices consistent with successful programs in other communities. 4.2 Quantify City costs Quantify City costs associated with cost sharing program. In consideration of the cost-benefit ratio developed under Task 1, analyze potential benefits associated with a more robust program to justify City investment. 4.3 Develop budget funding recommendations Develop budget funding recommendations for the future cost sharing program. Funding recommendations will be presented in one year increments for a five year horizon reflecting implementation of program revisions and increased participation by local residents. Task 4 Deliverables: Budget funding recommendations to be incorporated into technical report completed under Task 9. TASK 5 PROVIDE RECOMMENDATIONS FOR THE DISTRIBUTION OF FUNDS TO CITIZENS FOR REPAIRS OFFERED THROUGH PROGRAM Task 5 includes the following subtasks: 5.1 Review fund disbursement options employed by other communities Review fund disbursement options employed by other communities including revolving loan funds and grants. Summarize advantages and disadvantages of various alternatives both for citizens and the agency particularly in terms of timeliness, cash flow, administrative requirements, and incentives for participation. 5.2 Assess implementation requirements Assess implementation requirements including staffing needs for reimbursement program administration. 5.3 Develop program recommendations for reimbursement Develop program recommendations for reimbursement to citizens including potential funding expenditure cap, tiered level of participation as a function of the lateral repair, and phasing. Task 5 Deliverables: Technical memorandum presenting framework for recommended reimbursement plan. City of Modesto Cost Share Program 4 MTB July 2011 n:\mtb020301\contract docs\workplan scope and fee.docx

12 TASK 6 EVALUATE OPTIONS FOR ADMINISTRATION OF PROGRAM Task 6 includes the following subtasks: 6.1 Analyze alignment of departmental skills vs. program requirements Analyze best alignment of departmental skill sets versus program requirements and develop preliminary recommendations for future staffing. 6.2 Summarize administrative procedures Summarize administrative procedures for cost sharing programs in other agencies and identify best practices. 6.3 Assess administrative practices Assess applicability of best administrative practices to Modesto cost sharing program and recommend specific departmental roles in administration and oversight of the City program. Task 6 Deliverables: Technical memorandum summarizing recommendations for future program administration. TASK 7 ASSESS OPTIONS FOR CONTRACTOR PROCUREMENT/ DETERMINATION OF REIMBURSABLE COSTS Task 7 includes the following subtasks: 7.1 Determine goals and objectives for contractor screening/selection Meet with City staff and determine goals and objectives for contractor screening and selection. Identify desired contractor qualifications and pricing guidelines. Outreach to contractor community. 7.2 Develop rationale for classification of emergencies Develop rationale for classification and justification of repairs as emergency. 7.3 Assist in development of RFP to contractors Assist in development of RFP that incorporates desired contractor qualifications, pricing guidelines, and eligible repairs. Task 7 Deliverables: Technical memorandum with recommended components for City RFP. City of Modesto Cost Share Program 5 MTB July 2011 n:\mtb020301\contract docs\workplan scope and fee.docx

13 TASK 8 PREPARE LEGAL OPINION Task 8 includes the following subtasks: 8.1 Summarize legal justifications Summarize legal justification for current City Cost Share Program. 8.2 Review ordinances Review current ordinances, resolutions, and policies as evidenced in other cost sharing program documents. 8.3 Review State/Federal laws Review any current and proposed State or Federal law which may be applicable to the program. 8.4 Review suggested changes, flag potential issues, suggest potential revisions to avoid conflicts Review suggested changes to program in view of current City policies and flag potential issues. Suggest program revisions to avoid conflicts with ordinances. Review legal issues related to preparing a draft agreement for successful bidders for City RFP. Task 8 Deliverables: Legal basis for recommended program modifications. TASK 9 PREPARE AGENDA REPORT AND ASSIST IN PRESENTATION TO CITY ECONOMIC DEVELOPMENT COMMITTEE Task 9 includes the following subtasks: 9.1 Summarize conclusions/recommendations in technical memorandum Summarize conclusions and recommendations for cost sharing program in a draft technical report and submit to City staff. The technical report will include a discussion of problems in the current cost share program; a summary of the cost benefit analysis completed under Task 1; a review of alternatives to improve program delivery, citizen participation, and overall satisfaction; and future budget recommendations. Meet with staff to receive comments and revise the draft technical report. 9.2 Prepare agenda report and assist City staff in presentation to Economic Development Committee Based on the final technical report, prepare an agenda report and assist City staff in a presentation to the City of Modesto Economic Development Committee on October 10, An administrative draft agenda report is anticipated under this task with the final agenda report reflecting comments from City management staff. City of Modesto Cost Share Program 6 MTB July 2011 n:\mtb020301\contract docs\workplan scope and fee.docx

14 9.3 Meeting with City Staff to confirm input/next steps Following the presentation to the Economic Development Committee, meet with City staff to confirm input and direction along with next steps. Prepare an addendum to the earlier technical report that captures the recommended program implementation activities. Task 9 Deliverables: Draft and final technical report, draft and final agenda report, addendum to technical report TASK 10 PROJECT MANAGEMENT Task 10 includes the following subtasks: 10.1 Supervision of staff and consultants, correspondence, monthly status reports Supervise and schedule project staff. Review work prepared by staff and City consultants. Correspond with City staff and other stakeholders. Monitor budget and prepare monthly status reports Monthly status review meetings Conduct monthly status review meetings with City staff. Typical agenda items will include status of all tasks and deliverables, key milestone events, upcoming schedule, and budget status. Meeting minutes will be prepared and submitted to City staff within three days following the meeting. Task 10 Deliverables: Monthly progress reports, status review meeting minutes, updated project schedules City of Modesto Cost Share Program 7 MTB July 2011 n:\mtb020301\contract docs\workplan scope and fee.docx

15 APPENDIX C CITY OF FRESNO SEPTIC SYSTEM LOAN PROGRAM

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37 APPENDIX D MAPS ILLUSTRATING LOCATIONS OF CSP APPLICANT SITES,

38 A-1 A-2 B-1 B-2 B-3 C-1 C-2 C-3 D-1 D-2 D-3 E-1 E-2 Legend Parcel Cost Share Participant Canal River Rail Road Figure D-1 City of Modesto Cost Share Program Evaluation Index Map - Cost Share Participants Ü Miles

39 CARVER RD DALE RD BANGS AVE PRESCOTT RD STODDARD RD W RUMBLE RD BANGS AVE PELANDALE AVE W RUMBLE RD STANDIFORD AVE Legend Parcel Cost Share Participant Canal River Rail Road SS Line Figure D-2 City of Modesto Cost Share Program Evaluation Map A-1 Ü Miles HIGHWAY 99

40 CLARATINA AVE MABLE AVE COFFEE RD SYLVAN AVE BANGS AVE STANDIFORD AVE Legend Parcel Cost Share Participant Canal River Rail Road SS Line Figure D-3 City of Modesto Cost Share Program Evaluation Map A-2 Ü Miles PELANDALE AVE

41 PRESCOTT RD DALE RD CARVER RD G ST N CARPENTER RD KEARNEY AVE D ST W BRIGGSMORE AVE W ORANGEBURG AVE HIGHWAY 99 W RUMBLE RD STANDIFORD AVE Legend Parcel Cost Share Participant Canal River Rail Road SS Line Figure D-4 City of Modesto Cost Share Program Evaluation Map B-1 Ü Miles

42 ROSE AVE COLLEGE AVE SUNRISE AVE COFFEE RD COFFEE RD FLOYD AVE E BRIGGSMORE AVE E BRIGGSMORE AVE E ORANGEBURG AVE E RUMBLE RD W BRIGGSMORE AVE W BRIGGSMORE AVE W ORANGEBURG AVE Legend Parcel Cost Share Participant Canal River Rail Road SS Line Figure D-5 City of Modesto Cost Share Program Evaluation Map B-2 Ü Miles W RUMBLE RD

43 OAKDALE RD SONOMA AVE CLAUS RD ROSELLE AVE FLOYD AVE MERLE AVE E BRIGGSMORE AVE E ORANGEBURG AVE Legend Parcel Cost Share Participant Canal River Rail Road SS Line Figure D-6 City of Modesto Cost Share Program Evaluation Map B-3 Ü Miles

44 D ST N CARPENTER RD CARVER RD KEARNEY AVE W ORANGEBURG AVE COLDWELL AVE HIGHWAY 99 Legend Parcel Cost Share Participant Canal River Rail Road SS Line Figure D-7 City of Modesto Cost Share Program Evaluation Map C-1 Ü Miles BLUE GUM AVE

45 COFFEE RD COLLEGE AVE SUNRISE AVE ROSE AVE HIGH ST BODEM ST E ORANGEBURG AVE SCENIC DR BURNEY ST LA LOMA AVE G ST H ST W ORANGEBURG AVE COLDWELL AVE TERMINAL AVE L ST K ST 9TH ST 14TH ST Legend Parcel Cost Share Participant Canal River Rail Road SS Line Figure D-8 City of Modesto Cost Share Program Evaluation Map C-2 Ü Miles BEECH ST

46 EL VISTA AVE CLAUS RD OAKDALE RD SONOMA AVE E ORANGEBURG AVE SCENIC DR Legend Parcel Cost Share Participant Canal River Rail Road SS Line Figure D-9 City of Modesto Cost Share Program Evaluation Map C-3 Ü Miles

47 N CARPENTER RD S CARPENTER RD PARADISE RD PARADISE RD Legend Parcel Cost Share Participant Canal River Rail Road SS Line Figure D-10 City of Modesto Cost Share Program Evaluation Map D-1 Ü Miles

48 L ST LA LOMA AVE BURNEY ST 14TH ST D ST D ST 9TH ST H ST G ST HIGHWAY 99 Legend Parcel Cost Share Participant Canal River Rail Road SS Line Figure D-11 City of Modesto Cost Share Program Evaluation Map D-2 Ü Miles K ST PARADISE RD

49 EL VISTA AVE CLAUS RD D ST MITCHELL RD Legend Parcel Cost Share Participant Canal River Rail Road SS Line Figure D-12 City of Modesto Cost Share Program Evaluation Map D-3 Ü Miles

50 PARADISE RD S CARPENTER RD Legend Parcel Cost Share Participant Canal River Rail Road SS Line Figure D-13 City of Modesto Cost Share Program Evaluation Map E-1 Ü Miles

51 HIGHWAY 99 Legend Parcel Cost Share Participant Canal River Rail Road SS Line Figure D-14 City of Modesto Cost Share Program Evaluation Map E-2 Ü Miles

52 APPENDIX E SEWER LATERAL CERTIFICATE PROGRAMS FOR THE CITIES OF BERKELEY, RICHMOND, AND SAUSALITO

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63 CITY OF BERKELEY PRIVATE SEWER LATERAL PROGRAM EFFECTIVE OCTOBER 1, 2006 A COMPLIANCE GUIDE FOR PROPERTY OWNERS, SELLERS, BUYERS, AND CONTRACTORS Revision 3

64 TABLE OF CONTENTS What Is the Private Sewer Lateral Program?...1 Who Has to Comply With This Ordinance?...1 Property Owner s Responsibility...2 How to Use This Guide...4 What Triggers Compliance?...4 Sale of Property...4 Major Remodeling Projects...5 The City Finds Nonconforming Connections...6 Who Can Perform Repair or Replacement Work?...6 Who Can Produce Closed Circuit Television (CCTV) Videos?...7 Application Procedures...7 Engineering Review...8 Issuance of Sewer Lateral Certificate...9 Appendix S1: Standards and Requirements for Closed Circuit Television Surveys Appendix S2: Standards for Obtaining a Sewer Lateral Certificate for Replacement or Repair Appendix S3: Guidelines for Permits and Inspections for Replacement of Sewer Laterals Appendix F1: Plumbing Sewer Lateral Checklist Appendix F2: Engineering Permit Application Appendix F3: Sample Application for Sewer Lateral Certificate Appendix F4: Sample Sanitary Sewer Lateral Certificate of Compliance Appendix F5: Declaration of Sewer Lateral Escrow Deposit Appendix F6: Sample Sewer Lateral Deficiency Report July 2011 City of Berkeley Private Sewer Lateral Program Compliance Guide Page ii

65 WHAT IS THE PRIVATE SEWER LATERAL PROGRAM? To protect the water quality of creeks, watersheds, and the San Francisco Bay, the City of Berkeley recently passed a law related to private property sewer laterals. Half of the water that enters the City s sewers during wet weather comes from deficient private sewer laterals (lines) and from downspouts and yard area drains. Effective October 1, 2006, property owners are required to obtain a Sewer Lateral Certificate prior to selling a property or obtaining a permit for major remodeling projects. WHO HAS TO COMPLY WITH THIS ORDINANCE? All property owners must comply with this ordinance. This includes property owners of all commercial, industrial, and residential properties including as condominiums and townhouses. While single family or multifamily homes can be straightforward in identifying the location and owner of the upper sewer lateral or backyard lateral, it becomes a bit more challenging when dealing with condominiums and townhouses. It should be noted, however, that the principles apply to all these scenarios. For example, consider a single building that houses six condominiums and all units share the same sewer lateral. If a condominium should come up for sale, then the owner would comply with the steps described in this guideline and would either apply for a certificate by providing documentation as to the recent repair or replacement of the upper lateral or provide a CCTV video inspection. The Certificate of Compliance would be issued to the property. This may be advantageous for other unit owners who want to sell later as they will be able to verify the compliance of the lateral. July 2011 City of Berkeley Private Sewer Lateral Program Compliance Guide Page 1

66 PROPERTY OWNER S RESPONSIBILITY A typical sanitary sewer lateral consists of two sections: 1. The lower lateral is the section of pipe that runs from the sewer main in the street to a cleanout at or near your property line at the curb, as shown in Figure 1. The City maintains and repairs the lower lateral connected to your property. 2. The upper lateral is called the private sewer lateral. The property owner is responsible for maintaining, repairing, and replacing the upper lateral. Figure 1. Typical Sanitary Sewer Lateral July 2011 City of Berkeley Private Sewer Lateral Program Compliance Guide Page 2

67 When a building sewer connects to a rear yard sewer main, the entire building s sewer lateral, including the connection to the main sewer, shall be considered a private sewer lateral. Figure 2 below illustrates this condition. Figure 2. Typical Sanitary Backline Sewer Lateral July 2011 City of Berkeley Private Sewer Lateral Program Compliance Guide Page 3

68 HOW TO USE THIS GUIDE Refer to the Table of Contents for specific information on various aspects of the Private Sewer Lateral Program. The appendices include standards, guidelines, applications, and samples of applications related to this program. You can download an application for the Private Sewer Lateral Certificate from the City s web page or you can get copies from the Finance Customer Service Center at 1947 Center Street, 1 st Floor, or from Public Works Engineering at 1947 Center Street, 4 th Floor. WHAT TRIGGERS COMPLIANCE? There are two events that trigger compliance: 1. The sale of property; or 2. A remodeling project that costs more than $50,000 The requirements for each of these events are listed below. SALE OF PROPERTY If you re planning on selling your property, the City will issue a Private Sewer Lateral Certificate if you can provide one of the following documents as verification of compliance: Evidence that your sewer lateral is less than 20 years old; or A copy of a plumbing permit for replacement or significant repair, including details of the work completed, for your lateral performed within the last 10 years. (Please review the City s Standard in Appendix S2 for additional information.) If your sewer lateral does not comply with the above, you must have it inspected by closed circuit television (CCTV). A California state licensed plumbing contractor or licensed sanitation sewer contractor can perform the CCTV work. It is important that the contractor is aware of the correct way to handle the inspection of the property. This information is available at Public Works Engineering. The cost of the CCTV inspection, including the video, may range between $75 and $350. Please see Appendix S1 for the required standards for completing a CCTV inspection and a sample of a properly completed log to accompany the CCTV inspection. In most cases, all repair or replacement work must be completed prior to the transfer of title. Alternately, if requested, the City may determine that the work is not sufficiently urgent and allow you to retain funds in escrow or post a bond to complete the work within 6 months of the close of escrow. (See Deadlines for Owners Selling Property below for details.) July 2011 City of Berkeley Private Sewer Lateral Program Compliance Guide Page 4

69 Deadlines for Owners Selling Property You must complete all repair or replacement work and obtain a Sewer Lateral Certificate (SLC) before the transfer of title. You may request the City to determine if the work is urgent. If the work is not urgent, you may do one of the following: Allow funds to be held in escrow; or Post a bond to finish the work within 6 months of the close of escrow Complete the form entitled Declaration of Sewer Lateral Escrow Deposit, submit form at Finance Customer Service, 1947 Center St, First floor. It is recommended that you start this process as soon as possible after you list the property for sale. If the work is not completed within 6 months of the close of escrow the funds shall be forfeited and transferred to the City To obtain a refund after the SLC is obtained submit a copy of the SLC with an Escrow Refund Claim form to Finance Customer Service MAJOR REMODELING PROJECTS Are you planning a major remodeling project? The new law affects you if your remodeling project costs more than $ 50,000. July 2011 City of Berkeley Private Sewer Lateral Program Compliance Guide Page 5

70 You are required to submit a SLC from the Public Works Department before receiving a building permit for your remodeling project(s). To obtain a SLC you must provide one of the following: Evidence that the sewer lateral is less than 20 years old; A copy of a plumbing permit for replacement or repair work within the last 10 years. (Please review the City s Standard in Appendix S2 for additional information.) If your sewer lateral does not comply, you must have it inspected by closed circuit television (CCTV). A California state licensed plumbing contractor or licensed sanitation sewer contractor can perform the CCTV work. It is important that the contractor is aware of the correct way to handle the inspection of the property. This information is available at the Public Works Department. The cost of the CCTV inspection, including the video, may range between $75 and $350. Please see Appendix S1 for the required standards for completing a CCTV inspection and a sample of a properly completed log to accompany the CCTV inspection. Building Permit Applications. You will have to provide a copy of a SLC from the Public Works Department when you apply for a building permit from the Permit Service Center. For additional reference, see AS3 (Guidelines for Permits and Inspections for Replacement of Sewer Laterals) or AF1 (Plumbing Sewer Lateral Checklist). THE CITY FINDS NONCONFORMING CONNECTIONS If the City discovers that there are nonconforming connections (such as terminations of area or roof drains) to the private sewer lateral, then the City will mandate corrective actions to bring the property into compliance. WHO CAN PERFORM REPAIR OR REPLACEMENT WORK? Repair or replacement work in the public right-of-way must be done by a California state licensed plumbing contractor (C-36 license), a sanitation sewer contractor (C-42 license), or a general engineering contractor. Work on private property for single- and two-family residences may be done by the C-36 or C- 42 contractors, a general building contractor (Class B) or by the homeowner. Homeowners may perform work on their own property only if work is done in compliance with the owner-builder provisions of State law. July 2011 City of Berkeley Private Sewer Lateral Program Compliance Guide Page 6

71 WHO CAN PRODUCE CLOSED CIRCUIT TELEVISION (CCTV) VIDEOS? The City will accept only CCTV videos and CCTV Reports which are completed by a California licensed plumbing contractor or a licensed sanitation sewer contractor. Please note that the video must be current and have been completed within 30 days of the application for certificate. See Appendix S1 for the required standards for completing a CCTV inspection and a sample of a properly completed CCTV Sanitary Sewer Report form to accompany the CCTV inspection. SEWER LATERAL CERTIFICATE APPLICATION PROCEDURES 1. Complete the Application for Sanitary Sewer Lateral Certificate. Applications may be obtained from the Public Works Department, 1947 Center Street, 4 th Floor or from the Finance Department, 1947 Center Street, 1 st Floor. Applications can also be downloaded from the City s website. 2. Attach to the application one of the following: Documentation that the lateral has been replaced within 20 years of the date of application or has had significant repairs within the last 10 years. (Please review Appendix S2, Standards for Obtaining a Sewer Lateral Certificate Based on Repair) or A closed circuit television (CCTV) video of the entire portion of the private sewer lateral that demonstrates it is in compliance. (A CCTV Sanitary Sewer Report form signed by the Contractor complete with required information must accompany the submitted video. See Appendix S1.) A copy of a plumbing permit signed off by the Building and Safety Division of the Planning Department or confirmation in electronic files maintained by the City. 3. Submit application materials to the Finance Customer Service Center at 1947 Center Street, 1st Floor. There is a $150 fee for all PSL applications. Please allow 5 business days for the processing and review of your application. July 2011 City of Berkeley Private Sewer Lateral Program Compliance Guide Page 7

72 The total costs for repairing or replacing non-complying sewer laterals, including for permits, inspections and construction, may range between $3,000 and $4,500. ENGINEERING REVIEW The approval process for the Sewer Lateral Certificate (SLC) requires the City to review: 1. The SLC application for completeness and signature. Appendix F3 is a sample of a properly completed application. The closed circuit television (CCTV) video of the existing lateral for completeness and conformance with the City s standards for CCTV inspections. The standards are detailed in Appendix S1. The CCTV Sanitary Sewer Report form for completeness and conformance to the City s standards. Please review Appendix S1, Standards and Requirements for Closed Circuit Television Surveys. A sample of a properly completed inspection log is included in this guide in Appendix S1. 2. All documentation for full replacement and significant repairs, including the following: The plumbing/sewer lateral permit signed off by a Building Inspector from the Building and Safety Division; The scope of work performed and the date of its completion. Refer to Appendix S2 for the standards for obtaining a sewer lateral certificate. 3. All documentation and determine if the work done complies with the City s guidelines as shown in Appendix S2. If the City finds that the information submitted adequately addresses the minimum requirements for a repair/replacement, then the City will issue a SLC. A sample of this document is available as Appendix F4. If the submitted documentation IS NOT in compliance, the City will issue a Deficiency Notice (see sample document in Appendix F6). The applicant will have 90 calendar days to resubmit adequate documentation. Failure to obtain a SLC within 120 calendar days of application submission will result in the City considering the property to be out of compliance with the law. Staff will follow up with code enforcement actions. Such enforcement action will be pursuant to Berkeley Municipal Code Section July 2011 City of Berkeley Private Sewer Lateral Program Compliance Guide Page 8

73 ISSUANCE OF SEWER LATERAL CERTIFICATE The City will issue a Sewer Lateral Certificate after you meet all requirements for compliance. The City will maintain a record of this certificate; however, you are encouraged to keep a copy for your own records. The Sewer Lateral Certificate is valid for the following timeframes: 1. If the sewer lateral is entirely replaced, the certificate will be valid for 20 years from the date of replacement. 2. If the sewer lateral had point repairs done but was not completely replaced, the certificate will be valid for 7 years from the date of repair. 3. If the sewer lateral is shown by CCTV inspection to be in compliance and without defect, then the certificate will be valid for 7 years from the date of the video. The expiration date will be shown on the certificates as well as be archived in City records. July 2011 City of Berkeley Private Sewer Lateral Program Compliance Guide Page 9

74 CITY OF RICHMOND SANITARY SEWER DISTRICT NUMBER 1 SEWER LATERAL COMPLIANCE PLAN SEWER LATERAL COMPLIANCE PLAN Standards & Procedures /04/09

75 Sewer Lateral Compliance Plan TABLE OF CONTENTS Section 1 - Purpose & Applicability page 3 Section 2 - Definitions page 4 Section 3 - Compliance Inspection page 6 Section 4 - Compliance page 8 Section 5 - Lateral Work page 9 Section 6 - Fees, Permits and Inspections page 11 Section 7 - Certification of Sewer Laterals page 12 Section 8 - Long Term Compliance page 13 Section 9 - Appeal of City Engineers Assessment page 14 Section 10 - Failure to Comply page 15 Section 11 - Notification to the Property Owner page 16 07/04/09 2

76 Sewer Lateral Compliance Plan Section 1 Purpose and Applicability Overall this plan will reduce the leakage of sewage into public receiving waters and the infiltration and inflow (I & I) of storm, ground and tidal waters from private laterals into the City of Richmond s (COR) publicly owned sanitary sewer collection system. The primary result of a poorly operating or failed lateral allowing I & I is hydrological overloading (surcharging) of the COR sanitary sewer collection system during rain events contributing to sanitary sewer overflows. Additionally, the lack of their integrity promotes ex-filtration causing standing sewage on private and public property, discharges of sewage to the storm drains, public health, general nuisance and wellbeing problems. There are approximately 18,000 private laterals in the Richmond Municipal Sewer District, an estimated miles in total length. Following the guidelines from the California Regional Water Quality Control Board, San Francisco Bay Region (CRWQBSFB) Resolution number R , In Support of Program for Inspection and Rehabilitation of Private Sewer Laterals, and the direction of CRWQCBSFB Resolution Number R , In Support of Collaboration between the Regional Board and Bay Area Clean Water Agencies to Report and Manage Sanitary Sewer Overflows, is the purpose of this plan, and to collectively maintain the beneficial use of all receiving waters. The purpose of this plan is to establish fair and consistent policies and procedures for the testing, repair, and replacement of all defective sewer laterals. To effect the purposes of this plan, the COR may enter upon private property for inspecting, testing, and repair of the sewer laterals. A sewer lateral is defined as the portion of the sewer serving a property starting at the structure or building and running to and including the connection to the COR s main line. The sewer lateral is owned by the property owner, who paid for the installation and therefore is also responsible for its maintenance and repair; at no time has the COR accepted transfer of the ownership of a private lateral. This plan does not reduce, negate, change, modify, or eliminate this basic understanding. 1. Estimated 80 feet per lateral length average 07/04/09 3

77 Sewer Lateral Compliance Plan Section 2 Definitions The following terms apply to this chapter and augment definitions found in the Uniform Plumbing Code. (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) Backflow Valve shall mean a valve that is opened by the flow of sewage exiting a structure but closes when the flow reverses, preventing sewage from backing into the structure. All backflow valves shall conform to the specifications set forth in the Uniform Plumbing Code and all guidelines and policies established by the City Engineer to implement this Chapter. Building sewer shall have the same meaning as lateral, defined below. Certificate of Lateral Compliance shall mean the certificate issued by the City Engineer certifying that a lateral complies with the standards set forth in this Chapter. A Certificate of Compliance is valid only for the lateral at the address specified in the Certificate and for a period of fifteen (15) years. City authorized representative shall mean the City Engineer or his or her designee. City of Richmond or City shall mean the City of Richmond and shall include Richmond Municipal Sewer District Number 1. City s fee and rate schedule shall mean a list of all City of Richmond service, penalty, interest, and permit fees, and hourly personnel and equipment rates, as amended from time to time. Cleanout shall mean a segment of pipe connected to a sewer lateral and rising to the surface, providing access to the lateral for purposes of inspection and removal of obstructions. (See also two-way cleanout, defined below.) Lateral, building sewer, or service lateral shall mean the sewer pipeline conveying wastewater from the premises of a user to the City s sewer system. "Main or sewer main shall mean any sewer pipe within a public or private street or right-of-way receiving or intended to receive the discharges of one or more sewer lateral(s). No sewer main constructed after the effective date of this Chapter shall be less than eight inches (8 ) in diameter nor be laid or constructed in any city street, easement or right-ofway under the control of the City, except to the lines, grades, and specifications approved by the City Engineer. Maintenance shall mean routine flushing or rodding of a sewer to maintain a free flowing condition. 07/04/09 4

78 Sewer Lateral Compliance Plan (k) (l) "Overflow device shall mean a device designed to relieve the pressure created when a gravity sewer is flowing full. All overflow devices require the approval of the City Engineer for proper application before their installation. Person shall mean any individual, partnership, firm, company, corporation, association, Joint Stock Company, trust, estate, governmental entity or any other legal entity, or their legal representative, agents or assigns. The masculine gender shall include the feminine, the singular shall include the plural where indicated by context. (m) Plumbing fixtures shall mean sinks, baths, showers, toilets, bidets, and all fixtures and appliances, such as dishwashers and washing machines, from which water or wastewater are discharged. (n) (o) (p) (q) (r) (s) (t) (u) (v) Repair shall mean physical exposure of a section of pipe and/or appurtenances for the purpose of resuming proper operating condition. Replacement shall mean removal and replacement of existing pipe and/or appurtenances. Sanitary sewer system shall have the same meaning as publicly owned treatment works as that term is defined at Richmond Municipal Code Section Service lateral shall have the same meaning as lateral, defined above. "Sewage shall mean water carrying wastes from residences, business buildings, institutions and industrial establishments; together with such other waters as may be present, or any combination of such wastes and water. Sewer facilities shall mean and include the sanitary and storm sewage collection systems owned and operated by the City, all appurtenances thereto, and all portions thereof. Storm sewer or storm drain shall mean a pipe or conduit which carries storm and surface waters and drainage, but excludes sewage and polluted industrial wastes. Subdivide shall mean to cause land to be divided into separate developed or developable lots that are or may be owned by different persons. Two-way cleanout shall mean a Y - or V -shaped segment of pipe connected to a sewer lateral and rising to the surface, providing access to the lateral in both directions for purposes of inspection and removal of obstructions. (w) User shall mean and include any person who causes or permits a discharge of sewage into the City s sanitary sewer system. 07/04/09 5

79 Sewer Lateral Compliance Plan Section 3 Compliance Inspection Testing may be accomplished by either a water ex-filtration test or an air test or Closed Circuit Video recording observation. If a Closed Circuit Video recording observation is selected as the preferred method of inspection then the video shall meet the following requirements: 1) shall be in DVD format 2) shall be in color (any black & white, cloudy, fuzzy, or otherwise unclear video will be returned for resubmission) 3) shall show the address of the lateral 4) shall show the date the video was taken 5) shall clearly show the cleanout or access point used to insert the cameral into the lateral 6) shall have a running foot or time marker clearly visible on the screen 7) where joints are present, shall briefly stop the camera at each to clearly indicate their integrity 8) shall have the date the DVD was submitted to the City written on the DVD along with the address of the inspection site and telephone number for the point of contact At the City Engineer s discretion, the video may be returned for resubmission in accordance with the above requirements if any of the above requirements are not strictly adhered to. The selected inspection method can be performed by contractors who have a current state license. The City Engineer will notify the property owner(s) and tenants regarding when a sewer lateral inspection is required except when it is required due the sale of property, otherwise the inspection is initiated as part of all applicable sections of Richmond Municipal Code Chapter (RMC) The inspection of the lateral may be initiated by any of the following: Capital Improvement Project Sewer Rehabilitation The project-by-project inspection program will not preclude the COR from testing sewer laterals in conjunction with other projects anywhere in the City of Richmond. It does not preclude a property owner from testing their sewer lateral at any time and making repairs at their expense. Repair of the Sewer Lateral 07/04/09 6

80 Sewer Lateral Compliance Plan Whenever a sewer lateral fails during normal usage or is broken into before making any repair to the sewer lateral. Sale of Property Whenever a property is to be sold or there is a transfer of title, a sewer Certificate of Lateral Compliance must be obtained. The procedures herein must be followed by the property owner to obtain a Certificate of Lateral Compliance. Upgrades and Remodeling Whenever property located in the City of Richmond is remodeled to include the addition of two or more plumbing fixtures that discharge into a sanitary sewer system, the sewer lateral(s) to the property shall be tested. Before final building inspection, all repairs or replacements necessary to bring a lateral into compliance shall be performed. Issuance of a Building Permit When a building permit is issued by the City or County requires compliance with all applicable Codes Evidence of a improper sewer connection Failure of the property owner to comply with RMC section or may require them to conduct testing by direction of the City Engineer and obtain a Certificate of Lateral Compliance at anytime. (RMC ) Home Owners Associations and Cooperatives The City of Richmond Engineering Division has become aware of the need to clarify sanitary sewer lateral inspections as it relates specifically to Homeowners Associations and Cooperatives during property sales. Each property owner is responsible for obtaining a Certificate of Lateral Compliance of a single family dwelling, or an arrangement between the property owners and the cooperative or homeowners association for ensuring compliance in the stated regulatory time frames for property sales will need to be provided to the City Engineer. If the lateral is jointly shared then an arrangement between the property owners and the cooperative or homeowners association for ensuring compliance in the stated regulatory time frames for property sales will need to be provided to the City Engineer. The mains servicing the development will need to be tested every fifteen (15) years by an arrangement between the property owners and the cooperative or homeowners association. All arrangements between the cooperative or homeowners associations for compliance of this ordinance need to be on record with the City Engineer. 07/04/09 7

81 Sewer Lateral Compliance Plan As of March 20, 2007 arrangements between the property owners and the cooperative or homeowners association for ensuring compliance in the stated regulatory time frames for property sales will need to be provided to the City Engineer for review by April 1, After a satisfactory review and approval of the arrangement the lateral inspections and any subsequent repairs or required unified plumbing updates need to be completed and the Certificate of Lateral Compliance obtained no later than April 1, 2009 and every fifteen year thereafter. Waiver of Inspections: 1. The house/dwelling/structure lateral was constructed within the last 15 years, and a Certificate of Lateral Compliance was obtained within 5 years of its construction. 2. The lateral was completely replaced within the last 5 years. (have the receipts/invoices from the contractor that show the repair/replacement done.) 3. Have previously obtained a Certificate of Lateral Compliance The waiver of inspection still requires the issuance of a Certificate of Lateral Compliance to record the 15 year inspection requirement in the City s database. 07/04/09 8

82 Sewer Lateral Compliance Plan Section 4 Compliance The sewer lateral will be evaluated based upon a review and evaluation of the test results. COR designated staff will perform this evaluation and determine if the lateral complies with RMC , Lateral Certification. Broken pipe, offset and/or distorted joints, root intrusion, lack of cleanouts, all constitute deficiencies that do not comply with Standard Specifications and will require either repair or replacement. Repairs or replacements will be required prior to the close of escrow in the case of property transfer, or within one month of the lateral test results. Properties in escrow The COR has no intention of holding up sales transactions for properties in escrow. However, an extension of 60 days to obtain a Certificate of Lateral Compliance will be verbally granted by the City Engineer on a case by case need. The extension is documented in the escrow addendum. The property owner is responsible to ensure the documentation occurs stating who will complete the compliance action and the timetable of compliance. Generally monies can be left in escrow by the seller to pay the contractor s fees for any necessary repairs. If the buyer elects to assume all responsibility for obtaining a Certificate of Lateral Compliance a notarized letter or a statement in the escrow addendum stating that the requirements will be met sixty (60) days after the close of escrow is necessary. A copy of the signed addendum or notarized letter must be received by the City Engineer s office no later than the close of escrow. Upgrades and Remodeling Extension Currently extensions of up to one year to complete this requirement for upgrades or remodeling are available upon approval by the City Engineer. This is the responsibility of the property owner. 07/04/09 9

83 Sewer Lateral Compliance Plan Section 5 Lateral Work The property owner shall be responsible for making any and all repairs and replacements of the sewer lateral. All work shall be done according to standards in the latest edition of the Uniform Plumbing Code as adopted by the COR in its Standard Specifications and Drawings, and any standards issued by the City Engineer. Repairs must bring the lateral into full compliance with these standards. Shared Sewer Lateral Corrections General: When any repairs or replacements are done to those laterals that are jointly shared by more than one building or structure from different properties, each shall require a discrete connection to the City s sanitary sewer main as part of the repair. If a property with two buildings or structures with plumbing fixtures requiring drainage is subdivided, each building or structures shall require a discrete connection to the City s sanitary sewer main as a condition of subdividing (RMC ). At the discretion of the City Engineer a statement of agreement between the subject property owners will be filed with the escrow/title company, County Clerk or on record with the deed stating who is responsible for any necessary repairs as required by RMC. This statement of agreement, approved by the City Engineer can supersede the requirement to install discrete connections. If the sewer lateral is shared with other properties or structures, the necessary repairs, separation of the system, or relocation of the system will be as approved by the City Engineer. Such work shall be done according to standards issued by the City Engineer, and in the latest edition of the Unified Plumbing Code and COR s Standard Specifications and Drawings. Exceptions: If a letter of agreement exists with the property deed explaining that joint responsibilities between property owners or the following: The City will need to have a record of the notarized agreement that is filed with the finalized deed. It is recommended the agreement should at least state: 1. The location of any private easement on the subject easement property 2. What section or sections of the joint lateral each property owner is responsible to individually maintain and pay associated costs. 07/04/09 10

84 Sewer Lateral Compliance Plan 3. What section or sections of the joint lateral that the maintenance and associated costs are shared by both or all involved parties. 4. The duration of the agreement 5. The right to terminate the private easement agreement in writing and within a reasonable timeframe for the purpose of property improvements or plumbing relocation by the subject private easement property owner. Backflow valve or overflow device required When any repairs are done to lateral that does not have an existing backflow valve or overflow device, the property owner shall install the appropriate valve or device. It shall be the responsibility of the property owner to maintain the backflow valve or overflow devise in proper operating condition (RMC ). 07/04/09 11

85 Sewer Lateral Compliance Plan Section 6 Fee, Permits and Inspections Permits The property owner, or property owner s contractor, must obtain a Sewer Permit from the COR before any work is done on sewer laterals. Failure to obtain the Permit shall subject the property owner to a monetary penalty as set forth in the Richmond Municipal Code and/or such further and different penalties as set forth by the City Engineer. The property owner is responsible for obtaining permits. Encroachment Permits from the City Engineer may also be needed if any work is performed in the public right-of-way. Inspection Inspection procedures and requirements shall be according to standards issued by the City Engineer and the COR s Standard Specifications. The City Engineer can require the inspection of a lateral at any time in order to protect, sewage from entering receiving waters. Right of entry The City Engineer will give written note to property owner and occupants ten (10) business days to prior entering the property in order to conduct an inspection, or collect wastewater samples and test any buildings, structures, or premises to secure compliance or prevent a violation. (RMC ) Fees Fees and charges for the Permit, inspection, penalties, and issuance of Certificates Lateral of Compliance shall be in accordance with the City s fee and rate schedule. This lists of all city services, penalty associations, interest, permit fees, and hourly personnel and equipment rates and is kept on file with the City Clerk. 07/04/09 12

86 Sewer Lateral Compliance Plan Section 7 Certification of Sewer Laterals Certificate of Lateral Compliance A Certificate of Lateral Compliance will be issued by the City Engineer when a lateral complies with Specifications as determined upon completion of a successful test. The City will maintain a record of all certificates issued, including the date of issuance. A Certificate will be valid until subsequent testing is performed and a new Certificate issued for the following periods of time: Point of Sale Not to exceed fifteen (15) years or more if constructed before this period of time. The COR has no intentions of holding up the escrow process, and will allow extension of up to 60 days past the close of escrow. General Requirements All properties shall be tested by the property owner at a minimum fifteen (15) years unless the dwelling was a new construction within the previous two years. A Certificate of Lateral Compliance will be issued after a sewer lateral has been satisfactorily tested, without repair, or repaired and/or replaced. This Certificate will be valid until a subsequent inspection is performed and a new Certificate issued, or fifteen (15) years which ever comes first. Certificates will be filed with the COR Engineering Services Department. Exceptions: If the property construction was completed and signed off within the last 2 years the certificate is issued at no cost since the fees were collected with the construction permit. 07/04/09 13

87 Sewer Lateral Compliance Plan Section 8 Long Term Compliance It is the intent of the COR that the testing, repair, and replacement of the sewer laterals are a continual and ongoing program. The COR may, at any time, evaluate the level of infiltration and inflow from properties and, if it is determined that excessive infiltration and inflow exists, all sewer laterals within the property requires compliance with applicable RMC. 07/04/09 14

88 Sewer Lateral Compliance Plan Section 9 Appeal of City Engineer s Assessment All decisions of the City Engineer can be challenged in writing to the City Engineer within two (2) days prior to the date required to complete the inspection and or repairs and or subsequent citations. The appeal must be in writing and must state the basis of the appeal. 07/04/09 15

89 Sewer Lateral Compliance Plan Section 10 Failure to Comply General Should any property owner(s) fail to repair or replace their sanitary sewer lateral within the time limits set forth by Section 7, the City Engineer is hereby authorized to proceed with all necessary work to bring the lateral in compliance, including but not limited to hiring of contractors, and entering upon private property. 07/04/09 16

90 Sewer Lateral Compliance Plan Section 11 - Notification to Property Owner Prior to proceeding with the necessary work, the City Engineer shall notify the owner of the intent to proceed with such work. Such notice shall be served personally on the owner or by mailing such notice to the owner addressed to the post office address last shown on the Contra Costa County secured assessment rolls, and by positing a copy of such notice on the property. Notice shall be given at least ten (10) days prior to the commencement of the work. No further notice need be given. (RMC ) 07/04/09 17

91 APPENDIX F CALIFORNIA ASSOCIATION OF SANITATION AGENCIES LEGISLATION

92 SENATE/ASSEMBLY BILL CASA PSL Task Force DRAFT 05/27/09 No. Introduced by 2010 An act to add section to the Health and Safety Code, relating to inspection and repair of private sewer laterals. The people of the state of California do enact as follows: SECTION 1. The Legislature finds and declares all of the following: (a) Sanitary sewer laterals may comprise as much as half of the total length of sewer pipe in a community wastewater collection system. (b) Privately-owned sewer laterals are a significant cause of sanitary sewer overflows in many communities. (c) As a result of tree roots growing into private sewer laterals through cracks, breaks, or joints in the lines, sewer line blockages occur on both private property and the public sewer, causing a backup into the residence or business, or resulting in spills on private property or in the public right of way. (d) Other contributors to sanitary sewer overflows include the overburdening of the sewer system during rainstorms, as a result of rainwater infiltration through cracks, breaks, or joints in private sewer lines, which can result in wastewater overflowing out of manholes, or overburdening wastewater treatment plants. (e) On May 3, 2006, the State Water Resources Control Board adopted Order WQ , which requires all public agencies that own or operate sanitary sewer systems of one mile, or more, in length to comply with significant new requirements for sewer system operation and management and for reporting sanitary sewer overflows. (f) While publicly-owned sanitary sewer systems are now subject to the 2006 detailed statewide waste discharge requirements, no comparable requirements exists for addressing management of private sewer laterals. (g) Private sewer laterals are out-of-sight, out-of-mind, and therefore, most property owners only make repairs when there is a crisis. (h) The authority for local agencies to enact private sewer lateral ordinances is unclear for some types of agencies. (i) Few local public agencies with existing authority to enact ordinances over the management of private sewer laterals have exercised that authority. SECTION 2. Section is added to the Health and Safety Code, to read: It is the intent of the Legislature that public entities exercise authority pursuant to this chapter to enact ordinances that require inspection/testing and repair/replacement of private sewer laterals at the time real property is sold or if the public entity determines the private sewer lateral poses a nuisance or threat to public health.

93 CASA PSL Task Force DRAFT 05/27/09 (a) Any public entity responsible for the operation of collection systems that include connections of private sewer laterals are hereby granted, and shall exercise, the authority granted under this section to establish an ordinance requiring the inspection or testing of private sewer laterals at the time of transfer or sale of real estate, or if the public entity determines the private sewer lateral poses a nuisance or threat to public health. (b) Such ordinances must require owners of any real property to obtain, at the property owner s expense, a certificate of inspection verifying that the privately-owned portion of the sewer lateral serving the property has been inspected/tested, as defined by the public entity. The certificate of inspection shall state whether the private sewer lateral meets specific criteria, such as for water tightness, as defined by the public entity by indicating a pass or fail of the inspection criteria. The cost of services required to obtain a certificate of inspection shall be borne by the individual property owner, unless otherwise provided by the public entity. (c) The ordinances shall require property owners to obtain a certificate of inspection (i) prior to the time of sale or transfer of the property, or (ii) within 30 days of notification by the public entity that the lateral poses a nuisance or threat to public health (d) The ordinances will require that private sewer laterals not meeting the criteria established by the public entity, i.e. those private sewer laterals that fail inspection/testing must be repaired or replaced, at the property owner s expense, within 180 days of the issuance of the initial certificate of inspection. Completion of repairs or replacement shall be deemed adequate by a subsequent certificate of inspection indicating that the private sewer lateral meets the criteria for water tightness, as defined by the public entity ( pass ). (e) A certificate of inspection indicating pass shall be deemed valid for not more than 10 years from the date of issuance, except in the instance that the public entity determines the private sewer lateral poses a nuisance or threat to public health, in which case a previously issued certificate will no longer be deemed valid. (f) The requirement to enact ordinances pursuant to this chapter shall not apply to a public entity if that entity (i) serves a population of fewer than 2,500 residents, or (ii) adopts a resolution stating that private sewer laterals do not pose a significant detrimental impact on the successful operation of the collection system of the public entity, or any downstream collection system or publicly owned treatment works. Such a resolution shall be valid for no more than five years from date of adoption. (g) For the purposes of this section, sale or transfer means the sale or transfer of an entire real property estate or the fee interest in that real property estate and does not include the sale or transfer of a partial interest, including a leasehold. (h) This section shall not apply to any of the following: (i) Transfers by a fiduciary in the course of the administration of a decedent s estate, guardianship, conservatorship, or trust. (ii) Transfers from one co-owner to one or more other co-owners, or from one or more co-owners into or from a revocable trust, if the trust is for the benefit of the grantor or grantors. (iii) Transfers made by a trustor to fund an inter vivos trust.

94 CASA PSL Task Force DRAFT 05/27/09 (iv) Transfers made to a spouse, to a registered domestic partner as defined in Section 297 of the Family Code, or to a person or persons in the lineal line of consanguinity of one or more of the transferors. (v) Transfers between spouses or registered domestic partners resulting from a decree of dissolution of marriage or domestic partnership, or a decree of legal separation or from a property settlement agreement incidental to a decree.

95 APPENDIX G BROCHURES FOR INSURANCE POLICIES

96 NLC Service Line Warranty Program May 2009

97 Who Is USP Headquartered in Canonsburg, PA, Utility Service Partners, Inc. (USP) is one of the largest independent providers of service line warranties in North America with a portfolio of over 400,000 products in the U.S. USP is a portfolio company of Macquarie Capital, part of Macquarie Group Limited, one of the world's largest owners and managers of utility and infrastructure assets with over $300 billion in assets under management worldwide USP is proud to have been selected as an NLC Enterprise Programs Partner 2

98 USP Qualifications USP was formed in September 2003 to purchase Columbia Service Partners from Columbia Energy USP has pioneered partnerships with city/municipal governments and utilities to provide utility line warranties to their customers USP s management team has a deep rooted understanding of brand management, customer service, and relationship management having developed the utility service line warranty program at CNG in the mid-1990s 3

99 NLC Service Line Warranty Program Products External water line and sewer line warranties Provide repairs on broken or leaking outside water or sewer lines typically not covered by homeowners insurance No restrictions on the number of repairs performed full benefit of coverage provided on every repair Low monthly cost NO deductibles or service fees 4

100 Benefits to City NLC Service Line Warranty Program provides your constituents with a value-added program to address sewer and water line problems that are not the responsibility of city Peace of mind for your residents Fewer citizen complaints Affordable rates for residents All repairs performed to local code 5

101 Benefits to City Service from trusted contractors 24/7 customer service NO COST for the city to participate Easy implementation Generates revenue for your city 6

102 Benefits to Citizen Cost-Effective Eliminates potentially high financial hardship/burden on citizens Peace of Mind Easy access to repair hotline dispatchers 24/7, year round Convenient No need to examine contractors and bids; only local, certified repair professionals dispatched Service Satisfaction Over 9 out of 10 customers would recommend us to a friend or relative 7

103 What Citizens Are Saying I recently had a huge problem with my sewer line and I cannot begin to express how helpful it was to have this coverage. It gets increasingly difficult to keep up with repairs. Having the warranty made it easy. Marsha B., New Brighton, PA After my recent home fire, it was very comforting to contact SLW and be told that my line would be immediately repaired. The fast service was truly appreciated, and I highly recommend your service - I have already recommended SLW to all my family and friends. James H., Charleston, WV 8

104 What Citizens Are Saying I want to thank you for the wonderful, professional job that you did to repair my water line. I want to tell everyone about it and tell them to call you and sign-up! Thank you and I will be your customer for as long as I live. Linda P., Ringgold, GA 9

105 Program Testimonial A PARTNERSHIP WITH BECKLEY, WEST VIRGINIA On USP s turnkey solution: Working with USP is really easy. They take care of everything marketing, billing, and customer service. All we had to do was review and approve the letter to customers. First campaign results: We were delighted with the response from our citizens providing a service to our residents which helps them avoid costly repairs, that s something they really appreciate. Beckley Mayor Emmett Pugh 10

106 Warranty Program Market Projection ENROLLMENTS/ROYALTY PAYMENTS Modesto, CA External Sewer Line 3,112 5,295 6,689 7,400 8,047 External Water Line 3,624 6,251 8,043 9,127 9,598 Accumulated Year End Enrollments 6,736 11,546 14,732 16,526 17,645 Warranty Penetration Percentage 9.62% 16.49% 21.05% 23.61% 25.21% Royalty Payment $13,316 $48,157 $72,523 $88,003 $96,174 Total Royalty over 5 Years $318,172 Note: Penetration based on total customer base of 70,000 11

107 NLC Service Line Warranty Program Contact Information: Brad Carmichael Vice President, Business Development Utility Service Partners 11 Grandview Circle, Suite 100 Canonsburg, PA Telephone Website: 12

108 Utility Partnership Program for Water Service Line and Sewer Lateral Protection

109 Costly Repairs The cost of unanticipated home utility repairs can be devastating to your customers especially in these difficult economic times. The HomeServe warranty and emergency repair programs free your customers of the worry of unexpected home emergencies. 2

110 You Can be Their Solution As their trusted utility company, you can offer your valued customers a suite of low cost warranties that cover the costs of repairs and give them a fast, easy process for having their problems solved. No deductibles, no call out fees, no hidden charges, no forms to fill out. 3

111 Water and Sewer Line Products Our mission is to free our members from the worry of home emergencies Plumbing & Drains Domestic Water Pipes Sewer Line Water Service Line 4

112 Water and Sewer Line Products Water Service Line Coverage Up to $3,500 per claim coverage for water service line emergencies Up to two claims annually Up to $7,000 coverage per year Sewer/Septic Line Coverage Up to $5,000 per claim coverage for Sewer/Septic line emergencies Up to two claims annually Up to $10,000 coverage per year 5

113 Core Product Features Toll-free emergency number members can call 24 hours a day, 365 days a year Locally based, fully licensed, and qualified contractors rapidly dispatched to the customer s emergency No deductibles, no call out fees, or forms to fill in at the completion of the job Guaranteed repairs No pre-inspection before joining 6

114 No Work No Cost No Risk HomeServe can be your outsourced partner and do virtually all the work at NO COST to you. From marketing to complete claims handling, we administer and fund the entire program. And we even give you back a handsome share of the revenues. 7

115 Overview: Our Company Part of HomeServe plc London Stock Exchange traded company in the top 150 companies by market capitalization World leader in providing emergency repair solutions to major business partners 2009 revenue of $800 million and over 10.2 million home protection contracts Operations in US, UK, France, Belgium and Spain working with more than 50 utilities More than 5,200 employees 8

116 Overview: Our Success in the US Market 17 years experience HomeServe established operations in the US in Now has: Fifteen utility partners covering 20 million households across more than 30 states Headquarters in Miami, FL and Stamford, CT where all key functions are based Annual contract growth of over 100%, and currently services over 1,200,000 utility branded contracts 9

117 HomeServe Business Model: A Complete end-to-end Solution Service Contract Marketing HomeServe Business Model Service Delivery Quality Control & Reporting Full partner control over marketing collateral Leverage customer data for consistent communication HomeServe team handle sales, CRM and administration Currently Fully licensed handling and 1.5 bonded million contractors repairs per year worldwide Currently Locally based handling and 1.5 licensed million repairs contractors per year supervised worldwide by Area Network Managers All Locally service based contracts contractors backed supervised by an A Rated by Area insurance Network company Managers Full Full partner partner control control over over service standards service standards 48 hour call backs to all customers ensure quality Comprehensive reporting each month to partner No investment required by the City at any part of the process 10

118 Marketing: The key driver of growth Our marketing strategy is designed to deliver outstanding growth for our utility partners Program growth will be driven by: Tested and proven direct marketing techniques Focus on high value products Deliberate approach to product line sequencing High and sustained marketing spend by HomeServe 11

119 Marketing Customized creatives 12

120 Market Demand for Home Emergency Products Homeowners Face a Real Challenge in Plumbing and Drainage Emergencies 7 out of 10 homeowners say they have experienced a plumbing or drainage problem at some point. 4 out of 10 have experienced more than one problem.* 8 out of 10 report burst/leaky pipes/valves as their greatest worry.* Most homeowner insurance policies do not cover the cost of the actual repair and generally don t provide a qualified emergency plumber service. Finding a plumber can be a real challenge for homeowners, particularly if they have to resort to the telephone directory after hours, over weekends, or on a holiday. The cost of plumbing emergencies can be high e.g. repairing a segment of water line can cost in excess if $2,000 and simply locating and repairing a leak can cost over $1,400. When the service lines rupture or fail, the cost to fix them can be quite expensive and is a bit of a surprise to our customers. Rick Fox, VP Customer Operations, Aqua America *Opinion Dynamics

121 Market Demand for Home Emergency Products Many Homeowners View Their Plumbing and Drainage Problems as the Water Utility s Problems Who would you get to fix a water service line emergency? * Who would you get to fix a clogged drain outside your home? * Call a repair contractor 4% Call the insurance company 1% Call a plumber 29% Fix it myself 19% Call the water utility 47% Fix it myself 30% Call the insurance company 1% Call a repair contractor 9% Call the water utility 25% Call a plumber 35% Homeowners in plumbing and drainage emergencies place a burden on the resources of a water utility, especially the call center and field staff. Many water utilities have no option but to send their customer to the telephone directory, which can be a traumatic experience for the customer, especially for seniors. *Opinion Dynamics

122 Percentage response (%) Market Demand for Home Emergency Products Leads to Improved Customer Satisfaction Scores Actual Experience Question: How does knowing your utility offers emergency repair service coverage affect your confidence in the utility? 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Service Agreement Holder 75% Much more confident Slightly more confident Indifferent Slightly less confident Not at all confident % Non-Service Agreement Holder Offering home emergency contracts increases confidence and satisfaction in their utility

123 Market Demand for Home Emergency Products Why Offer Emergency Home Repair Programs? Opportunity to leverage core business values and enhance the image of the utility as a service provider Extension of Core Service as a drinking water supplier View customer infrastructure as part of distribution system Aligns with the environmental, reliability, and responsibility values Customers more demanding of service providers Differentiated service Value added services Trend to service orientation Boomers moving to retirement Convenience no hassle focus Bottom-line Provides solution to customer problem Strengthens the relationship with the customer Improves overall customer satisfaction Provides new source of income 16

124 Market Demand for Home Emergency Products California Water Case Study In November 2007, HomeServe USA purchased 26,000 water service line contracts from California Water with an up front cash payment; mailings commenced in February 2008 Cal Water increased its earnings stream after partnering with HomeServe compared to running the program in-house Campaign statistics: Available products Exterior Water Line Protection Exterior Sewer/Septic Line Protection Interior Plumbing and Drainage Protection Interior Electrical Line Protection Protect Your Water Service Line 429,978 households in the California territory mailed Secured over 102,000 enrolments, a 292% increase since inception Over 28% penetration rate In 2010 HomeServe will be launching Cooling, Heating, and Water Heater coverage products 17

125 Market Demand for Home Emergency Products Louisville Water Case Study The Partner Agreement was signed in November 2007 Mailings commenced in February 2008 Campaign statistics: Water Service Line product 246,145 households in the Louisville territory mailed Secured over 60,000 enrolments Almost 28% penetration rate Protect Your Water Service Line 18

126 HomeServe Business Model Benefits Customer Benefits Low price point Bill on the utility bill One number to call 24 hour service Reliable service Warranty on repairs Screened repair network Broad product selection Utility Benefits Broad product range covering all major systems in the home Solution for customer home emergencies Improved customer satisfaction Brand awareness Revenue share Control of customer communication Increased contact points with customers Expand New Sales 19

127 HomeServe Business Model Roles and responsibilities HomeServe Provide a toll free number to HomeServe members Develop mailing list Design and mail creatives Enroll customers Answer customer inquiries Handle claims requests Manage collection issues Prepare monthly performance report for the City Utility Partner Allow use of brand Approve marketing materials Approve customer communications Provide customer data Bill customers Submit cash to HomeServe less commission earned 20

128 Next Steps Next Steps Address any questions Prepare an action plan 21

129 Contact Information HomeServe USA 5301 Blue Lagoon Drive Suite 400 Miami FL East Main Street Suite 850 Stamford CT Rick van den Dungen Bille Regional Director of Business Development

130 Service Line Protection Program Page 1 of 1 10/6/2011 Service Line Protection Program You may not realize it, but as a homeowner, you are responsible for paying for repairs to the water and sewer lines running from your home to the street, and plumbing repairs that occur within the home. In many cases, those lines were put in place years ago when your home was originally built. American Water Resources, Inc., a subsidiary of American Water, provides specialized water line, sewer line and in-home plumbing protection services that help to insulate you from the unexpected high repair costs associated with water or sewer line failures and in-home plumbing repairs. At any time, normal wear and tear can cause water lines to leak or break and the sewer line to block or clog from natural aging, seasonal changes and root invasion from trees. You may experience a clogged bathroom sink, blocked or overflowing toilet, or a burst frozen water pipe. Worst of all, most homeowner insurance policies do not cover this type of damage. The Water Line, Sewer Line and In-Home Plumbing Protection Programs* will cover these unexpected costs and provide you with peace of mind. This means that you won't have to spend hours searching for a qualified repair contractor - you can leave that to the experts. The Water Line, Sewer Line and In-Home Plumbing Protection Programs allow customers to enjoy: Peace-of-mind protection from the most experienced water resource manager in the country Convenience of fast and professional expert plumbing service - no hassle of searching for a qualified contractor Affordable payment terms with convenient monthly billing on customer water bills, or via check or credit card Claim coverage amounts up to $5,000** for your water line and $8,000** for your sewer line Enroll Now and start protecting your home and property from unwanted repair costs! For more information on the Water Line, Sewer Line and In-Home Plumbing Protection Programs* and their availability in your area, please call or contact us at [email protected]. *In CA this program is offered through American Water Resources Insurance Services. In CA and VA, this program is insurance provided by Virginia Surety Company, Inc. ** Coverage amounts vary by region 2011 American Water. "American Water" and the star logo are the registered trademarks of American Water Works Company, Inc. All rights reserved. Privacy Policy Terms of Use Site Map Powered by SilverTech, Inc.

131 SEWER LINE INSURANCE POLICY Virginia Surety Company, Inc 1000 N Milwaukee Glenview, IL Please read this Policy and retain it for Your records. DEFINITIONS Administrator means American Water Resources, Inc. doing business as American Water Resources Insurance Services, 1410 Discovery Parkway, Alton, Illinois Toll-Free Confirmation Letter means the acknowledgement letter You will receive from the Administrator. The Confirmation Letter will include the following information: Your Name Your Covered Address Your Policy Number Your Term of Coverage Your Policy Premium Customer-Owned Sewer Line means the section of the lateral sewer service line You own that collects and conveys household wastewater from Your home to the Wastewater Collection System. This Policy covers the portion of Your Customer-Owned Sewer Line that is the most direct line between the exterior foundation wall of Your home and Wastewater Collection System. It does not include any connections or extensions such as lines to or from septic systems, leach fields or nonconforming drain lines and does not include any pumps or other mechanical devices that may be connected to Your Customer-Owned Sewer Line. In addition, it does not include any section of the sewer service line owned by others outside of this Policy to which Your Customer- Owned Sewer Line is attached. Effective Date means the date coverage begins under this Policy, which is thirty (30) days after Your Enrollment Date. Enrollment Date means the date Your enrollment is received, processed, and confirmed by the Administrator. Renewal Effective Date means the first day after the expiration of the previous in force annual period of coverage this Policy is renewed. Service Fee means the $50 fee You must pay each time the Administrator dispatches an authorized service provider to Your home to investigate, clear or repair a blockage of Your Customer-Owned Sewer Line. Term of Coverage means the twelve (12) months from the Policy Effective Date or Policy Renewal Effective Date. Wastewater Collection System means the sewage collection system owned by Your local Wastewater Service Provider to which Your Customer-Owned Sewer Line is connected. Wastewater Service Provider means Your local utility company or municipal sewer authority that owns and is responsible for maintaining the Wastewater Collection System that receives wastewater from Your home. We, Us, and Our means Virginia Surety Company, Inc N Milwaukee, Glenview, IL You and Your means the Policy holder named in the Confirmation Letter. A. COVERAGE This Policy is between Us and You. We agree to arrange for a contractor to clear or repair a blockage in Your Customer-Owned Sewer Line due to normal wear and tear. B. ELIGIBILITY You must be a residential homeowner of, and owner of the residence to which the Customer-Owned Sewer Line is attached. The Customer-Owned Sewer Line must be free of clogs or blockages and in working order prior to Your Effective Date. Homeowners of multi-unit dwellings such as condominiums, town homes or duplexes are eligible only if You have ownership and maintenance responsibility for coverage provided under this Policy as described under Section A - Coverage. This Policy is not available to any tenant who rents or leases a single-family residential home. C. COVERAGE PERIOD Coverage under this Policy will begin thirty (30) days after Your Enrollment Date. Your coverage will continue for the Term listed on Your Confirmation Letter. Page 1 of 2 CA SL A VSC-AMR-SEWER-CA (05/2006) CASLCC10000C D. RENEWALS Your Policy will automatically be renewed provided You make payment to Us for the then-current annual Policy premium. If payment is received before the expiration date of Your current Policy annual Term of Coverage, then this Policy will automatically be renewed on the first day after this Policy expires. If no payment is received by the expiration date of this Policy, then this Policy expires on the last day of Your current annual Term of Coverage. If You renew this Policy, the Renewal Effective Date will be the first day after the expiration of the previous in force annual period of coverage. Your new Term of Coverage will then be twelve (12) months from the Renewal Effective Date. E. YOUR RESPONSIBILITIES If You suspect there is a blockage, call Your Wastewater Service Provider to investigate the source of the problem. In the event Your Wastewater Service Provider determines that the blockage is to Your Customer-Owned Sewer Line, then You must contact the Administrator at toll-free to request a repair. The Administrator will arrange to have an approved, independent contractor call You to set up a time to come out to Your home. After that call the contractor will be dispatched to Your home within 24 hours to clear or repair a blockage of Your Customer-Owned Sewer Line. Meaningful service will be initiated within 48 hours from the time You call the Administrator and completed as soon as reasonably possible. If no meaningful service is initiated within said time limits and You have been available during that time, then You may engage Your own licensed contractor at Our expense. If the cost to clear or repair a blockage of Your Customer-Owned Sewer Line exceeds the Policy limit of $5,000, it is Your responsibility to pay any additional costs over $5,000. If a permit is required for a public sidewalk or road opening repair and the cost to repair exceeds the additional Policy limit of $5,000, it is Your responsibility to pay any additional costs over $5,000. Any costs in excess of the Policy limits will be stated to You before work is performed and the Administrator will send You an invoice for all expenses over any Policy limit. It is also Your responsibility to pay the Service Fee to the authorized service provider immediately upon completion of service to investigate, clear or repair a blockage of Your Customer-Owned Sewer Line. It is Your responsibility to secure permission (right-of- way) associated with gaining access to repair Your Customer-Owned Sewer Line that may pass through property that You do not own. F. LIMIT OF LIABILITY The maximum amount We will pay for any covered repair under the Policy is $5,000 per occurrence. Before the sewer line is repaired, if a permit is required, the Administrator will arrange for proper permitting before work will commence. The Administrator, one time only, will arrange for filling in, raking, and reseeding to the repaired area once the repair work is completed. All repairs to Your Customer- Owned Sewer Line will comply with local code requirements. Any subsequent service We provide to clear or repair a blockage of Your Customer-Owned Sewer Line that occurs within sixty (60) days of a prior-covered blockage service, will be considered as part of that prior-covered blockage service and limited to the $5,000 per occurrence limit. If a permit is required to commence work on Your Customer-Owned Sewer Line and requires a public sidewalk or public road to be cut, excavated and repaired, known as a public Sidewalk or Road Opening, this Policy provides an additional limit of $5,000 for a public Sidewalk or Road Opening. Only expenses directly related to a Sidewalk or Road Opening are paid under this separate limit. This additional limit, if applicable, does not add any additional coverage to the basic $5,000 per occurrence limit to clear or repair a blockage of Your Customer- Owned Sewer Line. You will not, unless at Your own expense, engage a contractor or otherwise incur costs to clear or repair a blockage of Your Customer-Owned Sewer Line on Our behalf. G. THIS POLICY DOES NOT COVER A Customer-Owned Sewer Line 1) not connected to a public or municipal sewer system; 2) with a connection to or from a septic system, tank or leach field; 3) with a connection to or from any nonconforming drain line such as a basement or storm drain system. SAMPLE A blocked Customer-Owned Sewer Line 1) incurred or existing prior to Your Policy Effective Date; 2) caused by the actions or negligence of You or third parties; 3) caused by natural disasters, or acts of nature, including, but not limited to, earthquakes, floods, landslides, sinkholes or any other insurable cause. Any section of the sewer service line owned by others outside of this Policy to which Your Customer-Owned Sewer Line is attached. Blocked lift stations, ejector pumps, grinder pumps or any other mechanical devices connected to Customer- Owned Sewer Line. Any portion of Customer-Owned Sewer Line located inside or under Your home. Any blockage service required as a result of any local, city or state agency inspection of Your Customer-Owned Sewer Line. Any damage to the inside of Your home due to the backup of Your Customer-Owned Sewer Line. Restoration of trees, shrubs, structures, or sidewalks, driveways, or other paved surfaces. Restoration of non-public sidewalks/roadways or public sidewalks/roadways that are not required by permit to be repaired. Removal of debris necessary to access and clear or repair a blockage of Your Customer-Owned Sewer Line, including but not limited to temporary structures, old cars, trash, storage, rocks or materials. Any rental dwellings for which the Policy enrollment is in the name of the tenant or any dwellings used for commercial purposes. (Unit owners please refer to Section B - Eligibility.) Updating non-blocked lines to meet code, law or ordinance requirements or changes thereto. Movement of working sewer lines for any reason. Any consequential, incidental or special damages You incur, regardless of whether they are caused by delays, failure to service or for conditions beyond the control of the Administrator. For example, this Policy does not cover 1) the cost of cleaning up, repairing or replacing property (other than clearing or repairing a blockage of Your Customer-Owned Sewer Line and basic site restoration as provided above) which is damaged due to the backup of Your Customer-Owned Sewer Line; 2) costs and expenses incidental to the backup of Your Customer-Owned Sewer Line such as loss of time, loss of use of Your home and other property, costs to stay at a hotel or to rent a home and costs to move and store property outside Your home; 3) any cost or expense relating to the clean-up or remediation of any hazardous substance or pollutant, including but not limited to asbestos, asbestos fibers or products containing asbestos; and 4) damages You incur due to any special circumstances or conditions. H. PREMIUM AND/OR PROVISION CHANGES We reserve the right to modify Your Policy premium and/or the Policy provisions with thirty (30) days written notice to You prior to implementation. You may terminate coverage by giving written notice at any time prior to the effective date of the change. You grant the Administrator the right to obtain Your customer of record information from either California American Water or Your Wastewater Service Provider limited to Your name, address and telephone or other contact number. This information will be provided to Virginia Surety Company, Inc., the issuer of this insurance Policy and will be kept confidential by the Administrator and Us. This information will not be sold to any outside marketing companies. I. CANCELLATION This Policy shall be: 1. Cancelable by You at any time by calling or by mailing a cancellation request to the Administrator, Attention: Administrator, 1410 Discovery Parkway, Alton, Illinois If You cancel, the effective date of cancellation is the date the Administrator receives Your request. You have thirty (30) days from Your Enrollment Date to cancel and receive a full refund of any premium payments made. If You cancel more than thirty (30) days after Your Enrollment Date You will receive a pro-rata refund of the Policy premium, less the cost of any service performed under this Policy. 2. This Policy shall be non-cancelable by Us, except for: a) Nonpayment of Policy premiums; or b) Fraud or misrepresentation; or c) The event that Your property is not eligible for coverage under this Policy, Our only obligation is to refund any premium payments made by You to Us. Once We have paid You this refund, the Policy will be voided as of Your Enrollment Date.

132 3. Your Policy will be subject to cancellation once You are thirty (30) days past due on any payment for this Policy. If Your Policy has been cancelled due to nonpayment, You may re-enroll and receive a new Enrollment Date and new Effective Date. Any refund as a result of the cancellation of the Policy by either You or Us, will be determined on a pro-rata basis less the cost of any service performed under the Policy. If You are owed a refund, it will be processed via the enrollment payment method You chose to pay for the Policy. Notice of cancellation by Us will be in writing and will include the reason and effective date of cancellation. J. TRANSFER OF POLICY You may neither transfer this Policy to a new owner of the covered property nor transfer this Policy to a different residence owned by You. K. POLICY PAYMENT ARRANGEMENTS Payment of Policy premium may be done in one of the following ways: 1. You may make payment for this Policy by check. In the event that Your check is returned for non-sufficient funds, Your Policy will be terminated as of the latter of Your Enrollment Date or Your most recent Renewal Effective Date. 2. You may make payment for this Policy by authorizing a charge to Your credit card account (Visa/MasterCard/Discover only). The charge to Your credit card account will be for a full year s premium for the Policy. For credit card customers only, this Policy will be extended automatically for successive twelve (12) month Terms. You grant Us the right to automatically charge Your credit card each year for the then-current annual Policy premium amount until You mail a cancellation request to the Administrator as set forth above in the Section I Cancellation provision. You may cancel the automatic charge to Your credit card and make payment for this Policy by check by mailing a request and Your payment to the Administrator, Attention: Administrator, 1410 Discovery Parkway, Alton, Illinois If Your credit card charge is not valid for any reason, Your Policy will be terminated as of the latter of Your Enrollment Date or Your most recent Renewal Effective Date. In the event of cancellation as provided above, the refund described in Section I Cancellation will be credited to Your credit card account.4 SAMPLE Page 2 of 2 CA SL A VSC-AMR-SEWER-CA (05/2006)

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134 AHS :: American Home Shield Protection Page 1 of 2 9/19/2011 National average replacement cost: + Built-in Microwave $309 Dishwasher $423 Clothes Dryers $449 Hot Water $587 What is the AHS 3x3 SM Protection Plan? Trade Service Call Fee Options With the new, innovative AHS 3x3 Protection Plan, you can cover the repair or replacement of your home system components, appliances or both. AHS 3x3 gives you more options and allows you to tailor coverage to your needs. We ve included many items and conditions not available as standard before, such as mismatched systems, improper installations and many more. Choose from 3 plans to match your home and budget COMBO The Systems Plan covers your critical home systems. Here s what it protects: SYSTEMS APPLIANCE Air Conditioning w/ductwork Heating w/ductwork Electrical Doorbells Smoke Detectors Ceiling Fans Plumbing incl. stoppages Water Heaters Garbage Disposals Instant Hot/Cold Water Disp. Central Vacuum(s)

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140 APPENDIX H POTENTIAL BUDGET IMPACT FOR IMPLEMENTING RECOMMENDED MODIFICATIONS AND ALTERNATIVES

141 APPENDIX H TABLE H-1 CITY OF MODESTO COST SHARE PROGRAM EVALUATION DESCRIPTIONS OF CITY STAFF ROLES ASSUMED FOR ESTIMATING POTENTIAL BUDGET IMPACTS Director Supervisor Project Engineer City Attorney Title Program Role Description Deputy director, City Engineer, or other lead supervisory position who is responsible for the operations of a department and should be involved in any major decision or policy changes and should be included in review process for modifications to Cost Share Program. Supervisor of staff, such as a Senior Civil Engineer, Construction Inspection Supervisor, Manager, or othe department supervisor whose staff will be involved in the Cost Share Program and who will be called to make decisions if any issues arise with the program. Staff person who will be responsible for majority of work involved in developing unit costs and assist in review of procurement document and bidding process for contracting with a loan service agency. City Attorney who will be responsible for reviewing documents for legal issues. Project Assistant Administrative Assistant or Technician who is involved in adminstering element(s) of the Cost Share Program, such as processing applications, responding to inquiries, reviewing loan applications, and contacting the various departments involved in the program. N:\MTB020301\excel\Final Summary Report\Appendix H-budget impact for suggested modifications.xls

142 APPENDIX H TABLE H-2 CITY OF MODESTO COST SHARE PROGRAM EVALUATION POTENTIAL BUDGET IMPACT FOR IMPLEMENTING SUGGESTED MODIFICATIONS & ALTERNATIVES CITY COSTS CONSULTANT COSTS Director Supervisor Project City Proj Total Total Total TOTAL TASKS Engineer Attorney Asst City Hrs City Dollars Consultant Dollars COSTS $150 $123 $103 $75 $40 by Task by Task by Task BY TASK TASK # 1 Update Cost Share Program guidelines and materials 1.1 Incorporate Cost Share Program evaluation modifications $1,658 $10,344 $12, City review & follow-up meeting $2,836 $1,724 $4, Finalize Cost Share Program guidelines and materials $2,098 $4,088 $6,186 Subtotal Task $6,592 $16,156 $22,748 2 Develop Standard Operating Procedure for Administration of Cost Share Program 2.1 Develop standard operating procedure $1,958 $11,048 $13, Update City forms for program $1,798 $3,404 $5, City review & follow-up meeting $4,036 $1,724 $5, Finalize standard operating procedure $1,498 $4,928 $6,426 Subtotal Task $9,290 $21,104 $30,394 3 Establish unit costs 3.1 Develop protocol and documentation for establishment of unit costs $7, City review $5, Finalize unit costs for reimbursement $2,354 Subtotal Task $15,122 TOTAL TASKS $31,004 $37,260 $68,264 4 Develop loan option for Cost Share Program 4.1 Develop loan criteria $1,772 $4,528 $6, Develop RFP for procuring loan service agency $1,922 $6,424 $8, RFP bidding process $3,024 $2,152 $5, Evaluation of bids and summary report $1,728 $1,552 $3,280 Subtotal Task $8,446 $14,656 $23,102 N:\MTB020301\excel\Final Summary Report\Appendix H-budget impact for suggested modifications.xls

143 APPENDIX H TABLE H-2 CITY OF MODESTO COST SHARE PROGRAM EVALUATION POTENTIAL BUDGET IMPACT FOR IMPLEMENTING SUGGESTED MODIFICATIONS & ALTERNATIVES CITY COSTS CONSULTANT COSTS Director Supervisor Project City Proj Total Total Total TOTAL TASKS Engineer Attorney Asst City Hrs City Dollars Consultant Dollars COSTS $150 $123 $103 $75 $40 by Task by Task by Task BY TASK TASK # 5 Annual update to establish unit costs 5.1 Update unit prices for reimbursement $5,072 $5, City review of updated unit prices $3,426 $3, Finalize unit costs for reimbursement $1,370 $1,370 Subtotal Task $9,868 $9,868 6 Additional annual staff time required for administering of loan option Additional staff time per year, assumes 40 applications per year and 1 hr of additional project assistant time per loan application, and 1 hr of supervisor time for every 10 applications Pro-rated costs for procuring loan service agency, once every 5 years $2,092 $2, $1,840 $130 $1,970 Subtotal Task $3,932 $130 $4,062 Task 6 average cost per application processed $98.30 $3.25 $ Notes: Costs per hour for Supervior (Senior Civil Engineer) and Project Engineer (Associate Civil Engineer) assume an overhead rate mark-up of 1.3. Costs per hour for City Attorney are rounded and include salary and benefits only. Reimbursable cost for Task 6.2 is a one-time loan setup fee with a loan service agency. Per CSP quotation included in Appendix J, fee is $650. Assumed that contract with loan service agency would be for a 5 year term ($650/5 = $130) N:\MTB020301\excel\Final Summary Report\Appendix H-budget impact for suggested modifications.xls

144 APPENDIX I CITY OF MODESTO LOW INCOME AND DISABLED ACCESS GRANT/LOAN PROGRAMS FOR HOME REPAIRS

145 THE PROGRAM The City of Modesto Parks, Recreation and Neighborhoods Department administers the Home Repair Program/Disabled Access Program (HRP/DAP). This program is designed to repair or eliminate critical health and safety hazard conditions in homes, and to provide assistance for disabled persons in making their homes more accessible. EXAMPLES OF ELIGIBLE REPAIRS Roofing and weatherization Heating, plumbing, and electrical systems Structural integrity of dwelling Ramps and handrails Alteration or installation of health and sanitary facilities Repair of other hazardous conditions that threaten the health and safety of disabled occupants Widening of doorways Lowering of counter tops Other repairs approved by the Parks, Recreation and Neighborhoods Department WANT MORE INFORMATION? For more information on City of Modesto Housing Rehabilitation Programs Contact: City of Modesto Parks, Recreation and Neighborhoods Department P.O. Box Tenth Street Suite 4300 Modesto, CA Spanish speaking staff available TDD(209) HOME REPAIR PROGRAM AND DISABLED ACCESS PROGRAM Low Interest Loans to Correct Health and Safety Hazards and Provide Disabled Access Assistance

146 ELIGIBILITY Applicant must be the owner-occupant of a home located within the City limits of Modesto. Applicant must have legally recorded title to the property. Applicant s total gross annual household income may not exceed those shown on the eligible income chart (amended annually). FINANCIAL ASSISTANCE Financial Assistance is available In the form of a low interest loan, secured by the property. *Very low-income applicants may qualify for a 3% Deferred Payment Loan (DPL) on which no payments are required for 20 years, unless the house is sold, the title is transferred, or the borrower no longer occupies the home. **Low-income applicants may qualify for a 3% interest, Direct Payment Loan (DL), payable in monthly installments for 15 years. ELIGIBLE INCOME LIMITS Household *Very Low **Low Size Income Income 1 $21,400 $34,250 2 $24,450 $39,150 3 $27,500 $44,050 4 $30,550 $48,900 5 $33,000 $52,850 6 $35,450 $56,750 7 $37,900 $60,650 8 $40,350 $64,550 TECHNICAL ASSISTANCE City staff offers technical assistance to property owners, involving them in each step. The City s Housing Rehabilitation Specialist prepares the specifications for the work to be done, develops repair plans, cost estimates, and provides bidding assistance. The property owner selects the contractor from qualified bids, but the contractor must meet City requirements for licensing, insurance, and work references. City staff will assist with contract preparation. After a contract for the work is in place, the loan will be submitted to the City s Housing Rehabilitation Loan Committee for review. After the loan is approved and closed, the contractor will receive an order to proceed with the work. During the course of the work, inspections by City staff will ensure that the work is done correctly. Progress payments will be made to the contractor from the loan proceeds. Each progress payment requires written authorization from the property owner.

147 APPENDIX J CRF CONTRACT LOAN SERVICING PROPOSAL

148 Community Reinvestment Fund, USA SERVICING CRF Contract Loan Servicing PROPOSAL City of Modesto Sewer Lateral Cost Share Loan Program Prepared by: Colleen A. Schwarz, Vice President of Sales Community Reinvestment Fund, USA Phone Community Reinvestment Fund, USA 801 Nicollet Mall, Suite 1700 West Minneapolis, Minnesota / tel fax

149 Community Reinvestment Fund, USA 801 Nicollet Mall, Suite 1700 West Minneapolis, Minnesota / tel fax September 15, 2011 Dear Evangelina: Contract Loan Servicing Customized Proposal and Pricing for City of Modesto Sewer Lateral Cost Share Loan Program Thank you for the opportunity to earn your contract loan servicing business. Community Reinvestment Fund, USA presently provides contract loan servicing for more than 4,700 loans among more than 35 client organizations. Since 1996, CRF has been providing loan servicing with a dedicated, seasoned staff, managing all administrative, compliance and reporting activities. Our staff is experienced in working with all types of borrowers, including those with credit difficulties or who are in challenged communities all while providing high-touch, customized service. These are often the types of portfolios that large-scale servicing operations aren t interested in or are unable to serve. We look forward to working with you and others at your company to service your loans through a collaborative approach that protects your trusted relationships. Your contract loan servicing needs Servicing loans in house taxes staff and internal resources. It s difficult to generate accurate, timely reports. It s difficult to get accurate, timely information to manage the portfolio. Staff are not trained or experienced at loan servicing; activities may slip through the cracks. The CRF solution Support a creative solution to your residents without creating the need for a loan servicing staff in-house. Utilize an experienced servicer to assure an excellent customer service experience. Access 24/7 reports on the loans via a webportal without placing demands on the City Information Technology Department for support. Effectively manage cash flow, from processing payments to handling collections to managing delinquency rates.

150 The following proposal provides each of our recommendations in detail. You can contact me at or with any questions. Sincerely, Colleen A Schwarz Vice President of Sales

151 Table of Contents Contract Loan Servicing Pricing...1 Why Trust Your Loan Servicing to CRF?... 5 About Community Reinvestment Fund, USA... 6 Filling the Need for Servicing Non-traditional Portfolios... 7 Master Servicing... 8 Affordable Loan Servicing with 24/7 Access to Reports... 9 Comprehensive Capabilities and Efficient Operations so You Can Stay Focused on Your Core Mission Specialized Reporting to Meet Your Diverse Requirements Servicing with Heart. High-level Experience for High-Touch Portfolios Clients: Industry Success Stories The CRF Team of Experienced Loan Servicers Certifications, Designations, and Licenses Services in Addition to Loan Servicing Standard Contract Loan Servicing Reports... 24

152 Contract Loan Servicing Portfolio Details City of Modesto 15-Sep-11 Your Contract Loan Servicing proposal is based on the following information about your portfolio. Portfolio Description Sewer Lateral Loan Share Program Type Loan: Residential Residential Number of Loans 20 Outstanding Principal Balance $100,000 Average Balance $5,000 Approximate Average Age of Loan (Months) 0 Amortization Term (Months) 60 Interest Rate: Fixed vs. Adjustable Rate Lien Position Fixed Junior Deferred Loans, if any (Number) - Deferred Loans Term (Months) - Deferred Loans - Forgivable? If so, under what circumstances? - Deferred Loans - Subordination Allowed? Fee? - States in which loans are located California Percentage of Loans Utilizing Payment Coupons 0% Percentage of Loans Utilizing ACH (Automatic Payment Drafting) 100% Percentage of Loans with Escrow Accounts 0% for Taxes and Insurance Real Estate Tax Payment Status Monitored for Non-Escrowed Loans? (Yes/No) Insurance Coverage Status Monitored for Non-Escrowed Loans (Yes/No) Pledged Cash Reserves or other assets to ensure performance of portfolio? (Yes/No) Due diligence or annual financial statement reviews performed on the loans? Please provide information regarding the scope of the review process and CRF's role in that process, if servicer. Yes Yes No None CRF Contract Loan Servicing Proposal City of Modesto 9/15/2011 1

153 Contract Loan Servicing Portfolio Details City of Modesto 15-Sep-11 Specialized Reporting Requirements in addition to loan trial balances and remittance reports? Please provide descriptions or examples, if available None Percent of Portfolio Past Due 0% Desired Approach to 30+ Past Due Loans - Primary Borrower Contact Servicer to be performed by: Servicer vs. Client Estimated Portfolio Growth (Number of New Loans Per Year) 20 Other Special Loan Characteristics or Handling CRF Contract Loan Servicing Proposal City of Modesto 9/15/2011 2

154 Contract Loan Servicing Proposal City of Modesto 15-Sep-11 Number of Loans Per Loan Amount Annualized Amount Total for Year One Time Fee ONE TIME FEES Loan setup Audit documents to verify consistency with loan profile. Set up payment coupons or ACH payment structure. Print and mail mail letters of introduction to borrowers. 20 $ $650 MONTHLY FEES 20 $8 $96 $1,920 - Monthly loan servicing fee Post payments and make deposits. Reconcile all accounts. Verify loan conditions. Generate portfolio reports. Issue delinquency reports. Address customer inquiries. Monitor and mitigate losses. Make collection calls and send past-due notices. File updates with credit bureaus. File Uniform Commercial Code updates. Maintain accurate information to comply with annual IRS reporting requirements. Maintain required licensing and adhere to federal and state regulations. Host all required infrastructure and systems. Manage portal access for client information access and reporting. Manage technical support and system maintenance. Handle data storage and system backups. Monthly fee for Monitoring of Taxes and Insurance 20 $2 $24 $480 - SUBTOTAL 20 $2,400 $650 CRF Contract Loan Servicing Proposal City of Modesto 9/15/2011 3

155 Contract Loan Servicing Proposal City of Modesto 15-Sep-11 Number of monthly payment loans - 20 Number of escrowed loans - 0 Number of Loans Per Loan Amount Annualized Amount Total for Year One Time Fee PER EVENT FEES Loan Payoff Processing Calculate payoff amount. Receive payment funds. Prepare documents and send to appropriate parties. TBD $25 TBD TBD ADDITIONAL SERVICES FEES Payment coupons in lieu of ACH payments 0 $2 $24 $0 Loans 30+ days past due, where CRF provides default 0 $15 $0 $0 services Mail and phone contact with borrower. Participate in loan modification and loan workout plans (based on your direction). OTHER SERVICES Available at your request. Please speak with your account manager for pricing. TERMS: Above pricing honored if accepted within 45 days (date). CRF Contract Loan Servicing Proposal City of Moedsto 9/15/2011 4

156 Why Trust Your Loan Servicing to CRF? CRF loan servicing lets you focus your energy and talent on your core mission and your strengths of identifying and originating loans. We offer high-touch servicing for Communities and mission-driven lenders so you can: Substantially reduce your overall investment in loan servicing. Eliminate your need to purchase servicing software. Increase staff productivity within your organization. Rest assured knowing all administrative, compliance, and reporting activities are handled accurately and on time. Our collaborative approach emphasizes the value of protecting your trusted relationships. More than 30 cities, economic development agencies, and CDFIs around the country trust CRF to manage their loan transactions with skill, efficiency, and care. These nonprofits count on CRF to provide hands-on customer service that supports organizational objectives and respects the integrity of valued borrower relationships. We specialize in the complexities of non-traditional portfolios that include small business loans, residential mortgages, and financing for community facilities even federal initiatives like the Neighborhood Stabilization Program. Combined with CRF-owned loans, we currently service more than 5,600 deferred and amortizing loans with a total value of approximately $605 million. Since 1996, CRF has quietly built a loan servicing function that is second to none. Whether your portfolio is a few borrowers or hundreds, CRF staff delivers unmatched personalized service. Too often, large-scale servicing operations show no interest in working with small accounts. They are not able to provide the kind of high-touch service to minority and small business owners and low-income residential borrowers that characterize CRF s loan servicing operations. CRF loan servicing staff is experienced in working with borrowers with credit difficulties or who are in challenged communities. CRF strikes the perfect balance between the need to keep loans current while being respectful, flexible, and creative in helping borrowers stay in their homes and keep their businesses growing. CRF is licensed and experienced to manage all administrative, compliance and reporting activities with a dedicated, seasoned staff and the latest technology designed specifically for non-traditional loan servicing. Our flexible process lets you choose the specific loans to be serviced your entire portfolio, a specific portion of your portfolio, or loans as they originate. We tailor our approach to the unique needs of each engagement, whether it s customized reporting, collection policies, or special borrower relationships. CRF uses industry best practices including sophisticated cash management techniques, ACH direct deposit, and secure lockbox facilities. Flexible reporting gives you routine reports plus any custom reports you need to monitor activity and make smart decisions. Our process is completely transparent, with full access to all loan details available 24/7 through a secure online portal. CRF Contract Loan Servicing Proposal City of Modesto September 15,

157 About Community Reinvestment Fund, USA Dedicated to improving low-income communities Community Reinvestment Fund, USA (CRF) is a Minnesota-based national nonprofit that funnels capital from private investors to low-income communities. CRF accomplishes this by purchasing loans from community-based nonprofit lenders, which replenishes their loan funds with new capital to lend. CRF purchases loans originated to finance small businesses, minority and women-owned businesses, community facilities, and affordable housing. Every loan CRF purchases undergoes a rigorous credit process which includes a review of the sponsoring lender s credit package, a full underwriting by CRF staff, and signatory or loan committee approval process. CRF replenishes its funds by assembling the loans it purchases into pools and issuing assetbacked securities using the loans as collateral, holding a subordinate piece of every transaction. CRF supports community lenders with back-office support, allowing community organizations to focus staff resources on more outwardly focused mission activities. Supporters include Chase, Citigroup, Prudential, Wells Fargo, U.S. Bank, Bank of America/JP Morgan, MacArthur Foundation, Fannie Mae Foundation, Ford Foundation, F.B. Heron Foundation, Metropolitan Life, Piper Jaffray, and HSBC Bank. OUR MISSION: To transform the community development finance system by accessing capital markets on behalf of local lending partners so they can increase their impact on people and their communities. By the numbers: Since its inception, CRF has purchased more than $1 billion in loans from over 150 community-based lenders in more than 30 states. Since some lenders span multiple states, CRF has actually purchased loans in almost 50 states. CRF presently provides contract loan servicing for more than 4,700 loans among more than 35 client organizations. Our total loan servicing portfolio of 5,600 includes 900 loans which are owned by CRF. CRF has helped create or retain more than 40,000 jobs (more than 4,000 for minorities or women), financed over 500 Woman/Minority Owned Businesses, developed more than 16,000 affordable housing units, and served almost 200,000 total families. Among community development lenders focused solely on small businesses, CRF is one of the nation s largest recipients of New Markets Tax Credit (NMTC) allocations, being awarded $597.5 million in tax credit investment authority since the program s inception in CRF has issued 19 series of Community Reinvestment Revenue Notes backed by business loans and two series of affordable housing securities. Our last three series were rated high by Standard & Poor s. CRF Contract Loan Servicing Proposal City of Modesto September 15,

158 Loan Types Filling the Need for Servicing Non-traditional Portfolios In 1996, we expanded our existing loan servicing capacities built to manage CRF s portfolio of loans and introduced CRF Contract Loan Servicing, a comprehensive package of services offered to outside organizations. Our broad array of payment processing, collections, and related operations is designed to address the loan servicing needs of local community development and affordable housing lenders. We fill a servicing need for lenders whose volume of loans is too small to support the cost of in-house servicing staff, or whose portfolio is too specialized to appeal to traditional loan servicers. Uniquely customized servicing for a wide range of loan types CRF s comprehensive approach to servicing streamlines the process and provides high-touch support to borrowers. We welcome the opportunity to service an entire portfolio of loans, a specific portion of a portfolio, or loans as they originate. CRF is a perfect fit for clients who have hundreds of loans, as well as lenders with small and growing portfolios. With more than 20 years experience as a direct and master servicer, all focused on economic development and affordable housing lending, CRF is uniquely suited to manage loan servicing for portfolios with any of the following configurations: Loan Type Small business loans Economic development financing Commercial real estate Community facility loans Single-family residential mortgages Supplemental financing such as housing assistance loans Fully drawn lines of credit Multiple-draw loans Multi-family mortgage loans Equipment loans Loan Term Amortized Deferred Interest-only Principal forgiven over time First or subordinated positions Blended loans CRF Contract Loan Servicing Proposal City of Modesto September 15,

159 Master Servicing As a Standard and Poor s rated servicer, CRF is qualified both as a direct servicer and a master servicer, giving you even more flexibility and choice. CRF performs master servicing duties for all loans we purchase and securitize (more than 800 to date). Since our inception in 1988, we have set up and served as manager and master servicer for 25 structured finance facilities. These facilities include highly structured rated securities, multiple investors, and leveraged loan pool structures owned by some of the largest financial institutions in the country. CRF is familiar with complex structures such as multiple tranches, cash waterfalls, reserve funds, and trigger events. CRF also oversees a network of more than 30 sub-servicers and 35 contract servicing relationships. We manage, share best practices, and help improve the underlying capabilities so the group is prepared to perform at the highest standards. CRF master servicing capabilities include: Accounting Reporting and communication Controllership Financial audits Relationship management CRF Contract Loan Servicing Proposal City of Modesto September 15,

160 Technology Affordable Loan Servicing with 24/7 Access to Reports Using the best mortgage software product in the industry, we can keep your costs affordable while delivering excellent, seamless service to you and your borrowers. What s more, you will have anytime access to a variety of reports through your own secure portal. The robust software few can offer CRF Contract Loan Servicing uses Harland Financial Systems Interlinq MortgageWare. Among its many features, this software provides detailed reports and communications in all common file formats. With CRF you gain the benefits of sophisticated technology: Loan servicing is more efficient than purchasing your own system, paying for annual updates, and training your staff to use it. You can replace the maze of Excel spreadsheets typically used for loan servicing with the ability to receive data and reports in your preferred format. You ll be able to keep up with reporting requirements, from monthly internal financials to required IRS filings and stakeholder reports. Cash flow management runs smoothly, from processing payments to handling collections and managing delinquency rates. Anytime access using your contract loan servicing portal To provide you with 24/7 access to your information, two secure web portals let you access all pertinent information and reports related to your loan portfolio. This feature also gives you necessary information to help you stay in contact with any borrowers you wish. Your online access allows you to: View seven standard reports. Reports show current and historical monthly data. View reports on-screen, download to your system, and print or to your stakeholders. View reports of all your data segmented by portfolio or the criteria you select. View real-time data on every loan. Your monthly reports are updated to your portal within five days of month-end cut-off (or a convenient date of your choice). Reports are available in PDF, Excel, CSV, and other formats as requested. Your client access portal links directly to CRF s Interlinq MortgageWare system so any loan information you need for customer service inquiries, new lending decisions or internal reports is always available and accurate to the minute. Information security Portal security is protected with the use of Hypertext Transfer Protocol Secure (HTTPS) during the user log-in process. Our portal utilizes an SSL certificate issued by a trusted certificate authority to verify our identity and yours. To safeguard your data, CRF employs redundant systems. All loan servicing information is backed up offsite to our main data center in Minnesota, operated by one of our technology partners. The system is also backed up to a secure location in California and available via the Internet should any data in Minnesota be destroyed. CRF Contract Loan Servicing Proposal City of Modesto September 15,

161 Process Comprehensive Capabilities and Efficient Operations so You Can Stay Focused on Your Core Mission Contract loan servicing from CRF covers a full spectrum of activities and frees your internal resources to concentrate on technical assistance to borrowers, community relations, or other initiatives central to your mission. There is no need to purchase expensive software, struggle with unwieldy spreadsheets, worry about reporting and compliance, or devote your staff to paperwork. We make sure the transition is smooth and the process is seamless for you and your borrowers. Whether we service your entire portfolio, a specific portion, or loans as they originate, we can tailor our approach to the unique needs of each engagement, whether it is customized reporting, collection policies, or special borrower relationships. Best practices to ensure consistent high quality: Loan set up within 3 days of receipt. Access to real-time information and reporting. Timely and complete information for inquiries and customer service. Multiple means of collecting loan payments from borrowers. Creative solutions to support borrowers in troubled situations. Maximum payment collections within loan terms. Sophisticated cash management techniques such as ACH direct deposit and secure lock box facilities. Flexible investor reporting offering routine reports and ad hoc custom reports. A sharp eye on loss mitigation practices CRF takes a special interest in helping business borrowers remain in their facilities and families stay in their homes, while minimizing costs and losses. We work closely with you so that collection practices align with your goals and objectives. All loss mitigation practices for your program are defined and customized per your direction. These practices are determined at the start of your loan servicing program and are strictly enforced. We can manage the following activities for you or you may choose to manage any of these options yourself. Mailing notices of delinquent payments. Phone contact or meetings with borrowers to determine the reason for default. Negotiation of payment plans or re-amortization of delinquent payments, property sale, or application of third party funds to cure a default. Education and counseling for the borrower. CRF will move to legal remedies only after you direct us. Loss mitigation is always our first approach to solving problems. CRF Contract Loan Servicing Proposal City of Modesto September 15,

162 Process Making it easy for you to stay in compliance Meeting compliance requirements among laws that often change demands specialized skills, a time commitment, and adequate systems. Without the proper resources, you create an undo strain on your staff and put your organization at great risk. CRF stays on top of all compliance requirements for you. Our Interlinq MortgageWare system contains all the formulas necessary to accurately calculate and monitor the status of compliance activity. Our process includes RESPA (Real Estate Settlement Procedures Act) compliant escrow analyses to determine exact monthly payment amounts so that taxes and insurance are paid on time. The government enforces strict regulations in this area with no room for error. CRF gives you the confidence your compliance obligations are accurately met. All the activities necessary to properly service your loans We perform all administrative, compliance, and reporting activities involved with loan servicing Monthly Accounting & Reconciliation Mail monthly statements or coupons Post payments received Deposit payments Reconcile accounts Set up new loans Verify loan conditions Collections Monitor and mitigate losses Make collection calls Send past-due notices Escalate collections Negotiate workouts Reporting & Communications Generate monthly portfolio reports Issue delinquency reports Issue reports to board and stakeholders Generate updates for internal meetings and presentations Meet ad hoc or specialized reporting requirements Compliance Enforce Enforce property property insurance requirements Collect Collect and and disburse property property tax tax payments File File updates updates with with credit credit bureaus bureaus File File Uniform Uniform Commercial Code Code updates updates Conduct RESPA RESPA compliant escrow escrow analyses Comply Comply with with annual annual IRS IRS reporting requirements Secure Secure annual annual financial financial updates updates from from borrowers Licensing Maintain required required licensing Adhere Adhere to to federal federal and and state state regulations Maintain errors errors and and omissions, and and fidelity fidelity bond bon insurance policies policies Systems Host Host all all required required infrastructure and and systems systems Manage Manage technical support support and and system system maintenance Handle Handle data data storage storage and and system system backups. CRF Contract Loan Servicing Proposal City of Modesto September 15,

163 Reporting Specialized Reporting to Meet Your Diverse Requirements Loan servicing from CRF includes detailed standard and customized reports in all common file formats including PDF, Excel, CSV, and others. Reports group your loans into pools, portfolios or categories that you define, so you can quickly review just the data you want to see. Compliance will be easier for you with our flexible in-house capabilities to create specialized ad hoc reports as well. We use the most robust software in the loan servicing industry, Harland Financial Systems Interlinq MortgageWare. This system is designed to keep your costs affordable while providing seamless and excellent service to borrowers, lenders, and investors. Standard monthly reports include: Trial balances Principal and interest collection New loans Unscheduled principal Aged delinquencies Payoff foreclosure collections Invoices A secure web portal lets you access all pertinent information and reports related to your loan portfolio. This feature also gives you necessary information to help you stay in contact with any borrowers you wish. Quarterly and annual investor reporting CRF can relieve you of the time-consuming burden of investor reporting by creating all the routine and ad hoc custom reports you may need. We are prepared to coordinate the collection of quarterly and annual development partner reporting as well as aggregating and publishing the quarterly and annual investor reports. A draft report will be created for review by our staff and then finalized after receiving your input. See appendix for sample reports CRF Contract Loan Servicing Proposal City of Modesto September 15,

164 Customer Service Servicing with Heart. High-level Experience for High-Touch Portfolios Because we focus on small business borrowers and disadvantaged communities, we understand that loans are more than just numbers. These loans, many with special terms and special borrower requirements, become a critical part of community relations and every borrower s outcome counts. Loan servicing for mission-driven programs: Cities, counties, and regional economic development agencies Community and governmental loan funds Community Development Financial Institutions (CDFIs) Trustees on S&P-rated bond issues Investor-funded portfolios Foundations and nonprofit organizations Neighborhood Stabilization Program participants Partial client list of housing assistance organizations: Greater Metropolitan Housing Corporation Dayton s Bluff Neighborhood Services Habitat for Humanity Center for Energy and the Environment Home Ownership Center California cities of Modesto and Glendale Minnesota cities of Anoka, Blaine, Coon Rapids, Fridley, Hopkins, Minneapolis, Oakdale, and Wayzata CRF Contract Loan Servicing Proposal City of Modesto September 15,

165 Clients: Industry Success Stories CRF Contract Loan Servicing Proposal City of Modesto September 15,

166 CRF Contract Loan Servicing Proposal City of Modesto September 15,

167 CRF Contract Loan Servicing Proposal City of Modesto September 15,

168 CRF Contract Loan Servicing Proposal City of Modesto September 15,

169 Staff The CRF Team of Experienced Loan Servicers CRF has developed a robust loan servicing department comprised of highly experienced professionals. Four of our members hold at least 20 years of experience each and work with a seasoned support staff well versed in best practices. Your loan servicing team will consist of the following individuals Richard (Dick) Hebl, Vice President, Servicing and Operations Mary Sullivan, Loan Servicing Manager Dawn Johnson, Asset and Portfolio Manager Richard (Dick) Hebl, Vice President, Servicing and Operations Dick Hebl provides overall direction to the loan servicing department. Prior to joining CRF, he served as Senior Vice President, Loan Administration for Knutson Mortgage Corporation. In this role, Dick was responsible for a portfolio of 130,000 loans aggregating $10 billion, as well as overseeing a staff of 150 people in 15 specialized departments. Prior to that, he was First Vice President, Cash Control, responsible for supervising a staff of 30 and managing 500 institutional relationships. Other previous roles for Dick include Vice President, Systems Development, Knutson Mortgage and Vice President, Information Systems and Corporate Accounting, Meritor Mortgage Corporation. Dick began his career as an Audit Manager with Peat, Marwick, Mitchell & Co. In addition to his work in corporations, Dick served on the national Fannie Mae panel dealing with solutions to property flipping. Mary Sullivan, Loan Servicing Manager Mary Sullivan manages the operations areas within the loan servicing department, including investor reporting, payment processing, loan set up, and customer service. For two years prior to joining CRF, Mary was a vice president in the commercial loan division of Wells Fargo Bank, responsible for the loan servicing of the third party investor loan portfolio. Mary came to Wells Fargo when it acquired Towle Financial Services, a prominent Minnesota commercial mortgage banking firm, where she was Loan Servicing Manager for three years. Prior to Towle, Mary was Cash Control Manager at Knutson Mortgage Corporation. Dawn Johnson, Asset and Portfolio Manager Dawn Johnson directs the asset management process, monitoring CRF s economic development and affordable housing loan portfolios. Prior to joining CRF, Dawn served 12 years at American Express Financial Corporation as an asset manager of a multi-billion dollar commercial mortgage portfolio. She also served there as Director of Equity Investments, establishing a program to invest in income property on behalf of IDS Life Insurance Company. Prior to her employment with American Express, Dawn served as Operations Analyst for troubled loans in ITT Commercial Finance. CRF Contract Loan Servicing Proposal City of Modesto September 15,

170 Staff Additional executive staff Frank Altman, President and Chief Executive Officer Frank Altman is cofounder and president of CRF, which he has led since its inception in Prior to founding CRF, he served as Assistant Commissioner for Financial Management at the Minnesota Department of Energy and Economic Development, where he administered several loan programs designed to create jobs in energy-related industries, promote energy conservation in public and private buildings, and finance manufacturing facilities in small communities. In that capacity, Frank issued numerous series of industrial revenue debt securities on behalf of small businesses. He also has served as Manager of Energy Conservation and Residential Financing Programs at the Minnesota Energy Agency and earlier in his career worked as a program officer at the Minnesota Housing Finance Agency. Frank holds a masters degree in public administration from the Hubert H. Humphrey Institute of Public Affairs at the University of Minnesota and an AB degree from Brown University where he graduated Phi Beta Kappa. He was named Small Business Advocate of the Year in 1993 by the U.S. Small Business Administration. Colleen Schwarz, Vice President of Sales Colleen brings to CRF more than 17 years of experience in locating, underwriting and approving investments in economic development and affordable housing projects. Previous positions include Vice President/Senior Vice President of Capmark and Deputy Executive Director for Production at the Colorado Housing and Finance Authority (CHFA). Colleen has played an integral role in CRF s loan production through the development of new loan programs. At CRF, she is a member of the product development committee and has introduced a program for CDFIs. At CHFA, she developed a number of small business loan programs including Rural Development Loan Program, which received a national honor from the U.S. Chamber of Commerce. At Capmark, Colleen developed and launched a private label student loan program which was sold to an affiliate company. Scott Young, Senior Vice President and Chief Financial Officer Scott provides his expertise in strategic planning, managing treasury and accounting functions, and pricing financial assets to further the CRF mission. He brings to CRF 20 years experience in mortgage banking and asset-backed securities. Immediately prior to joining CRF, Scott served as Chief Financial Officer at GE Home Finance, a national retail mortgage originator and subsidiary of General Electric Capital, which he co-founded from concept to a 450-person firm. Prior to this, Scott held various executive positions, including Chief Financial Officer and Senior Vice President at Conseco, where he worked in the mortgage and servicing divisions. Earlier in his career, Scott served as Managing Director and Controller at GMAC Residential Funding Corporation. CRF Contract Loan Servicing Proposal City of Modesto September 15,

171 Staff Daniel (Dan) Komarek, Chief Credit Officer Dan oversees credit and risk management functions, including credit policy and loan underwriting operations for CRF and its affiliates. He is responsible for directing the credit approval processes, conducting detail review of all credits, chairing internal loan committee meetings, and facilitating credit presentations and reporting to the external loan committees and Board of Trustees. Prior to joining CRF in 2005, Dan spent 14 years with U.S. Bancorp in several management positions of increasing responsibility, most recently as a senior portfolio risk manager with the Credit Administration Department. Prior to joining U.S. Bancorp, Dan was a senior investment manager at ITT Capital Resources Group for three years, and also spent 10 years in senior audit and consulting positions with KPMG, Peat Marwick, and Grant Thornton. He also has several years experience serving on the boards of nonprofit organizations. CRF Contract Loan Servicing Proposal City of Modesto September 15,

172 Certifications, Designations, and Licenses Appropriate certifications, designations, and licenses reflect our good standing as a qualified servicer. Community Development Financial Institution (CDFI) CRF received designation as a Community Development Financial Institution in June 2009 from the U. S. Department of the Treasury. Fannie Mae and Standard and Poor s rated servicer CRF is an active Fannie Mae-approved servicer for residential mortgages and a Standard and Poor s rated servicer for commercial finance, business-based, real estate loans. AA-Rated by CARS Since 2007, CRF has received CARS rating from the Opportunity Finance Network (OFN). CARS, the CDFI Assessment and Rating System, is a comprehensive third-party analysis of CDFIs in the areas of Impact Performance and Financial Strength and Performance. CRF scored a high rating of AA, stating that CRF has clear alignment of mission, strategies, activities, and data that guides its programs and planning and accurately tracks appropriate output data that indicate resources are being effectively used to benefit target populations or communities in line with its mission. The CARS review further confirmed, The majority of CRF s activities reaches economically disadvantaged populations. Residential mortgage licenses CRF is licensed by the State of Minnesota and the Department of Corporations under the California Residential Mortgage Lending Act. Licensing is easily obtained in any other state for which we choose to serve. Insurance coverage In compliance with required licensing, CRF maintains errors and omissions, and fidelity bond insurance policies. CRF Contract Loan Servicing Proposal City of Modesto September 15,

173 Services in Addition to Loan Servicing Underwriting CRF offers underwriting services for loans within your portfolio. We are prepared to review and qualify new borrowers for loans, and if needed, re-qualify existing borrowers for new loans or advances. We leverage the information you obtain to evaluate these borrowers, complete a thorough credit analysis of each borrower, and develop a credit presentation and recommendation for your investment committee. The process is completed by CRF staff using the same disciplined process we employ for our own loan products. As part of the underwriting process, we perform annual reviews of borrowers to assess their financial performance and help identify any material changes in their risk profile. Asset Management CRF manages every loan portfolio to minimize delinquency and defaults, negotiates solutions to loan modification requests in accord with investor requirements, and pursues creative foreclosure and bankruptcy strategies to minimize loss. We can demonstrate superior portfolio performance with a unique capability to work constructively with end borrowers, intermediaries, and investors to ensure workout solutions are fair and maximize value across various stakeholder priorities. Risk Rating System CRF can help you develop a comprehensive risk rating system for your program. It employs qualitative and quantitative assessments of individual risk factors and weightings, which are then combined into a single scale to assess risk. The risk rating system is used to evaluate and assess relative risk within each loan request, and supports the review and decision process of your loan committee at the time of original approval. Once the loan is approved and closed, the risk rating can be re-assessed based on the ongoing performance of the borrower and used to track and report on changes in the loan portfolio. Collections Collection and loss mitigation services are available to you for managing loans over 30 days delinquent. Costs are based on an hourly rate in accordance with your directions. CRF Contract Loan Servicing Proposal City of Modesto September 15,

174 Consulting You may find our consulting services helpful in any number of ways from assistance in pursuing new business to the guidance of key staff members in preparing negotiations with special entities. When difficult to estimate the number of hours, services can be provided on an hourly basis. In this way, you can choose the extent of the assistance. Below is our consulting rate schedule. Position Hourly Rate CFO...$ VP of Sales...$ Chief Credit Officer...$ VP of Servicing...$ Asset Manager...$ Manager of Partner Services...$ Credit Analyst...$ Credit Policy Development A strong credit policy helps provide the proper framework and standards for evaluating your loan requests. It aids and helps focus the underwriting process to provide clear guidance, create a structured framework for your policies, and assure that your organization and CRF have a shared understanding of policy. CRF provides you with a complete policy manual, describing the standards by which loans will be originated. The policy may include the following example sections: General policies Loan criteria Credit analysis Credit presentations/underwriting documentation Loan pricing Loan approval process Commitment letter standards Policy management Certified Development Financial Institution Application As a CDFI, we understand every phase of the application process for CDFI status. We can help you establish your organization as a CDFI, from the preparation and delivery of an overview of the CDFI fund and certification application to guidance in assembling all required documentation, both in paper form and electronically. CRF Contract Loan Servicing Proposal City of Modesto September 15,

175 Standard Contract Loan Servicing Reports Contract Loan Servicing Portal Cash flow management and reporting run smoothly with standard, customized, and adhoc reports that meet your organization s specific requirements. All contact loan servicing customers have 24/7 access to your monthly reports through our secure contract loan servicing web portal. Log in and select the report you wish to review. CRF Contract Loan Servicing Proposal City of Modesto September 15,

176 Trial Balance Report A monthly accounts receivable update to reconcile with your general ledger Review monthly totals to reconcile loan balances with your general ledger. 2. View individual loans and subtotals by portfolio categories that you designate. CRF Contract Loan Servicing Proposal City of Modesto September 15,

177 Principal and Interest Collections Report Monthly payment information for each loan View payment details by borrower name or loan ID number. 2. Review payments as applied to principal on interest. CRF Contract Loan Servicing Proposal City of Modesto September 15,

178 New Loans Report Details for new loans added since the previous month View details on newly added loans, grouped in categories you define. 2. See itemized balances for principal, escrow, and other key areas. CRF Contract Loan Servicing Proposal City of Modesto September 15,

179 Unscheduled Principal Collections Report Additional loan payment activity to help you monitor early payoff dates Review borrower payments of additional principal during the previous month. 2. View subtotal grouped by portfolio categories you define. CRF Contract Loan Servicing Proposal City of Modesto September 15,

180 Aged Delinquents by Investor Report Delinquent loans for the previous month Actively monitor delinquent and potential at-risk loans in your portfolio. 2. Calculate past due percentages and delinquent balances. 3. Institute appropriate collection procedures through CRF or utilizing your own staff or agency. CRF can manage the process for any portion of your portfolio based on your instructions. CRF Contract Loan Servicing Proposal City of Modesto September 15,

181 Payoff/Foreclosure Collections Report Loans no longer serviced due to payoff, foreclosure or other circumstance See individual loans and subtotal by portfolio for all loans removed from servicing. 2. View clear descriptions of loan specifics including payoff, foreclosure or collections. CRF Contract Loan Servicing Proposal City of Modesto September 15,

182 Real-Time Loan Details Contract Loan Servicing Client Access In addition to your monthly reports, a second, secure web portal gives you 24/7 access to all pertinent information on your loan portfolio, pulled directly and in real-time from CRF s robust servicing system. Log in and choose the loan you want to review Search for loans by Loan ID Number or borrower details. CRF Contract Loan Servicing Proposal City of Modesto September 15,

183 Loan Details View crucial and time sensitive data on any loan Review loan terms, current balances and past due amounts. CRF Contract Loan Servicing Proposal City of Modesto September 15,

184 Loan History Access loan and payment history Access loan details and activity for customer service inquiries and new lending decisions. 2. View annual interest, taxes and other payment details. 3. Find helpful borrower activity for consideration in making new loan decisions. CRF Contract Loan Servicing Proposal City of Modesto September 15,

185 Tax and Insurance Information Monitor tax and insurance obligations Ensure insurance requirements are met. 2. Review itemized tax payments. CRF Contract Loan Servicing Proposal City of Modesto September 15,

186 Comments Track all activity associated with the loan, including borrower contact Review all loan activity conducted by CRF staff. 2. See detailed notes from CRF staff. 3. Access relevant details for timely customer service inquiries from borrowers. CRF Contract Loan Servicing Proposal City of Modesto September 15,

187 APPENDIX K ALTERNATIVE METHODS FOR OFFSETTING SEWER LATERAL COSTS

188 Appendix K Table K-1 Modesto Cost Share Program Summary Report Estimated Budget Impact of a Loan Program Scenario 1: 40 CSP grants for 50% of lower-lateral repair cost, 40 loans for remaining 50% of cost Assumptions Basis Average loan amount: $2,000 Average cost for repair of lower lateral from was $3,600 Average grant amount: $2,000 Average cost for repair of lower lateral from was $3,600 Interest: 8% Set by and payable to the City Amortization term: 24 months Set by the City Monthly payments by participant: $ $ $90.45 loan payment plus $8 to $12 montly loan service costs City administrative costs per loan application Projected total City administrative costs per application (w/ loan program): $ per application Refer to Appendix H, Task 6, Average cost per application processed. Loan Service Costs (paid by City) One time loan setup fee $ per time period of agreement with loan service agency (assumed one every 5 years, with future costs included in City administrative costs, Appendix H) Loan Service Costs (paid by customer) One-time loan setup fee: $15 per loan One-time early pay-off fee (only paid if loan is to be paid off early): $25 per loan Monthly loan servicing fee: $8 per loan Monthly fee for monitoring taxes and insurance (City option): $2 per loan Monthly fee for coupon (waived for automatic withdrawal): $2 per loan Total monthly loan service costs per month: $8 - $12 per loan Costs associated with default Monthly loan collection fee (paid by City): $15 per loan Fee to loan service company for collections activities on loans 30+ days past due Duration of collection efforts: 6 months Set by the City % loan principle lost to default: 10% CRF estimated historical default rate: 4% Fiscal Year 1 July August September October November December January February March April May June Total # of loans/grants approved # of loans being paid Total amount loaned $8,000 $6,000 $6,000 $8,000 $6,000 $6,000 $8,000 $6,000 $6,000 $8,000 $6,000 $6,000 $80,000 Income from monthly payments $0 $0 $362 $543 $814 $1,176 $1,357 $1,628 $1,990 $2,171 $2,442 $2,804 $15,286 Administrative cost to the City for loan program $406 $305 $305 $406 $305 $305 $406 $305 $305 $406 $305 $305 $4,062 Loan Service Costs (paid by City) $650 $650 Principle lost to default $2,000 $2,000 $2,000 $6,000 Loan collection service fees $15 $15 $15 $30 $30 $30 $30 $30 $30 $30 $255 Total loan expenditures $9,056 $6,305 $5,958 $7,879 $5,506 $5,159 $7,079 $4,707 $4,345 $6,265 $3,893 $3,531 $69,681

189 Appendix K Table K-1 Modesto Cost Share Program Summary Report Estimated Budget Impact of a Loan Program Scenario 1: 40 CSP grants for 50% of lower-lateral repair cost, 40 loans for remaining 50% of cost Fiscal Year 2 July August September October November December January February March April May June Total # of loans/grants approved # of loans being paid Total amount loaned $8,000 $6,000 $6,000 $8,000 $6,000 $6,000 $8,000 $6,000 $6,000 $8,000 $6,000 $6,000 $80,000 Income from monthly payments $2,985 $3,256 $3,618 $3,799 $4,070 $4,432 $4,613 $4,884 $5,246 $5,427 $5,698 $6,060 $54,089 Administrative cost to the City for loan program $406 $305 $305 $406 $305 $305 $406 $305 $305 $406 $305 $305 $4,062 Principle lost to default $2,000 $2,000 $2,000 $2,000 $8,000 Loan collection service fees $30 $30 $30 $30 $30 $30 $30 $30 $30 $30 $30 $30 $360 Total expenditures $5,451 $3,078 $2,717 $4,637 $2,264 $1,903 $3,823 $1,450 $1,089 $3,009 $636 $274 $30,333 Fiscal Year 3 July August September October November December January February March April May June Total # of loans/grants approved # of loans being paid Total amount loaned $8,000 $6,000 $6,000 $8,000 $6,000 $6,000 $8,000 $6,000 $6,000 $8,000 $6,000 $6,000 $80,000 Income from monthly payments $6,241 $6,512 $6,512 $6,512 $6,512 $6,512 $6,512 $6,512 $6,512 $6,512 $6,512 $6,512 $77,877 Administrative cost to the City for loan program $406 $305 $305 $406 $305 $305 $406 $305 $305 $406 $305 $305 $4,062 Principle lost to default $2,000 $2,000 $2,000 $2,000 $8,000 Loan collection service fees $30 $30 $30 $30 $30 $30 $30 $30 $30 $30 $30 $30 $360 Total expenditures $2,195 -$178 -$178 $1,924 -$178 -$178 $1,924 -$178 -$178 $1,924 -$178 -$178 $6,545 Fiscal Year 4 July August September October November December January February March April May June Total # of loans/grants approved # of loans being paid Total amount loaned $8,000 $6,000 $6,000 $8,000 $6,000 $6,000 $8,000 $6,000 $6,000 $8,000 $6,000 $6,000 $80,000 Income from monthly payments $6,512 $6,512 $6,512 $6,512 $6,512 $6,512 $6,512 $6,512 $6,512 $6,512 $6,512 $6,512 $78,149 Administrative cost to the City for loan program $406 $305 $305 $406 $305 $305 $406 $305 $305 $406 $305 $305 $4,062 Principle lost to default $2,000 $2,000 $2,000 $2,000 $8,000 Loan collection service fees $30 $30 $30 $30 $30 $30 $30 $30 $30 $30 $30 $30 $360 Total expenditures $1,924 -$178 -$178 $1,924 -$178 -$178 $1,924 -$178 -$178 $1,924 -$178 -$178 $6,273

190 APPENDIX L CITY OF MERCED STAFF INPUT REGARDING REQUIREMENTS FOR CONTRACTOR LICENSURE WHEN WORKING IN THE RIGHT OF WAY

191 QUESTIONNAIRE FOR CITY OF MERCED STAFF REGARDING REQUIREMENTS FOR CONTRACTOR LICENSURE WHEN WORKING IN THE RIGHT OF WAY QUESTIONS: 1. History of why they started this requirement? 2. What level of effort was required to enforce this requirement? 3. What type of feedback have you received from the contracting community and residents? a. Do you have any recommendations for making this process smoother for enacting this type of requirement? 4. Requirements/Paperwork required for a contractor to work within the Right of Way a. What type of license? b. Bonding? c. Insurance? d. Restrictions? 5. Do you have to reapply or is this a one-time process? ********************* Spoke to Stuart England on November 2, He is a Building Plans Examiner for the City of Merced Development Services Department. His contact information is direct 1. The City of Merced initiated the requirement to have a Class A and a Class C-12 license for working in the City ROW for the following reasons: a. Trouble with plumbers resurfacing, compacting and patching street. City crew would have to come out and repair weeks, and sometimes months later patchwork that had sunk due to improper compaction, asphalt that was not the right temperature when laid or rolled properly b. Quality of patchwork was a constant struggle to get the quality desired by the City even after repeated contact with plumbers. c. Merced staff looked to the Contractor Board on plumbing license scope, and according to Mr David Fogt, Chief Enforcement for the Contractor State License Board and he told Merced staff that plumbers CAN do patchwork under their contractor license. (David Fogt, Chief Enforcement for Contractor State Lic Board / [email protected] d. Because it is legal for plumbing contractors to do patchwork, the City of Merced took into their own accord and made an executive decision to only allow plumbing contractors to work on curb and gutter, since curb and gutter has not been an issue for them. However, Mike Stevenson, the acting Building Chief official for the City of Merced, made the executive decision to only allow Class A contractors and C-12 contractors to work on patching N:\MTB020301\Research Documents\Contractor Requirements for City of Merced\Questions to ask City of Merced regarding Contractor requirments in the right of way.doc

192 asphalt. This decision was based on the years of subpar work performed by plumbing contractors and the repeated amount of times the City crews have gone out to re-repair asphalt. 2. The level of effort required to make the decision was simple. After constant communication with the Contractors State Lic Board (CSLB) and the Merced Chief building official, the City made the executive decision to have the requirement for a Class A/C-12 license for working in the right of way. No City Council input needed, no legal opinion needed. According the Mr. Stuart England, Merced Building Plans Examiner, the decision was made in-house. According to the CSLB, they were ok with the City of Merced s decision to limit the plumbing contractors jursidiction based on the history of quality of pavement work. The license legally allows them to do pavement, but if a local jurisdiction limits that the board was ok with it based on that the decision was based on sound professional judgment by the local building official. CSLB said that no legal opinion was needed for City to make such a decision and that it was of the City of Merced s best interest. 3. No feedback from residents has been received to date. However, many plumbing contractors are not happy with requirement and have voiced their opinions. Contractors feel that there are too many requirements to do a cost effective job, and that now that they are required to have a Class A or C-12 license that they will pass on the added costs to their customers. So far the City of Merced has not seen an increase in costs to residents. In Mr. Englands opinion, the economy has made plumbers to quote competitively to get jobs and he has not noticed residents complaining on costs for repairs, in his opinion they are still the same. a. Plumbers can still do curb and gutter. There have been no issues to necessitate making that a Class A/C-12 task. b. Merced feels that enacting the requirement went smoothly and it mainly was because they kept plumbers informed of what was going to happen and why. In fact, they started telling the plumbing contractors that the City was going to require a Class A/C-12 license about 6 months before it was decided officially. Plumbers were not happy but understood that because of their shabby patching work this was being done. City inspectors reminded plumbing contractors during patchwork that they will no longer be able to do that work because of the quality of patching that was produced. Plumbers were generously warned about the changes months before it became a decision. They enacted the decision at the start of the fiscal year on July 1 st Plumbers got plenty of warning so they could accommodate customers with property quotes and estimates on work. c. It took about 2 weeks to make the determination that the Class A /C-12 license was going to be enforced on work in the Public ROW. The two weeks were mainly discussions with the CSLB and brief online research on any legal issues, but according to CSLB they were not going to stop the City from making such a decision since it was a sound reason to produce quality work. 4. Inspectors are the ones that usually verify if the proper license is being used on the job. All inspectors are familiar with the plumbers working on projects. Inspectors N:\MTB020301\Research Documents\Contractor Requirements for City of Merced\Questions to ask City of Merced regarding Contractor requirments in the right of way.doc

193 will ask questions on who is doing the patching work and most inspectors will know what type of license they have already. No official license check is done on subcontractors but if there is an issue, that issue is usually seen by the inspector and will be enforced ASAP. 5. This is not necessarily a process that requires extra paperwork, no paperwork is required. But inspectors will be on the look out to make sure that the proper contractor is doing patchwork. This City requirement will give them more leverage to make sure that quality work is being done and that their own City crews will not need to go out and re-repair the work at the City cost. N:\MTB020301\Research Documents\Contractor Requirements for City of Merced\Questions to ask City of Merced regarding Contractor requirments in the right of way.doc