April 14, Board of Directors East Orange County Water District 185 N. McPherson Road Orange, California Dear Members of the Board,

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1 April 14, 2015 Board of Directors East Orange County Water District 185 N. McPherson Road Orange, California Dear Members of the Board, Please be advised that a regular meeting of the Board of Directors of the East Orange County Water District will be held on Thursday, April 16, 2015, at 5:00 p.m. in the offices of the East Orange County Water District, 185 N. McPherson Road, Orange, California. Enclosed please find the agenda for the meeting. Very truly yours, EAST ORANGE COUNTY WATER DISTRICT By: Joan C. Arneson Secretary JCA/ Enclosures cc: Mailing List

2 AGENDA EAST ORANGE COUNTY WATER DISTRICT (EOCWD) Thursday, April 16, :00 p.m. 1. Call Meeting to Order and Pledge of Allegiance President VanderWerff 2. Public Communications to the Board 3. Addition of Items Arising After Posting of Agenda Requiring Immediate Action (Requires 2/3 vote or unanimous vote if less than 2/3 of members are present) Recommended Motion: THAT IT BE DETERMINED THAT THE NEED TO TAKE IMMEDIATE ACTION ON [SPECIFY ITEM(S)] CAME TO THE DISTRICT S ATTENTION AFTER POSTING OF THE AGENDA AND THAT SUCH ITEM(S) BE ADDED TO THE AGENDA 4. General Manager s Report (Exhibit A ) Recommended Motion: THAT THE GENERAL MANAGER S REPORT BE RECEIVED AND FILED 5. Approval of Minutes of March 19, 2015 Meeting (Exhibit B ) 6. Operation, Management and Construction Matters A. Finding of water shortage, declaration of water shortage phase and related actions (Exhibit C ) Recommended Motion: THAT RESOLUTION NO. BE ADOPTED, ENTITLED: RESOLUTION OF THE BOARD OF DIRECTORS OF THE EAST ORANGE COUNTY WATER DISTRICT DECLARING WATER CONSERVATION PHASE II TO BE IN EFFECT AND AUTHORIZING IMPLEMENTATION; THAT STAFF BE AUTHORIZED TO RETAIN ZANJERO SERVICES THROUGH A PART-TIME EMPLOYEE POSITION OR SHARED SERVICES ARRANGEMENT AT A COST NOT-TO-EXCEED $15,000; AND THAT THE EXECUTION OF AMENDMENT NO. 2 TO THE CONTRACT WITH COMMUNICATIONSLAB BE AUTHORIZED, PROVIDING FOR TARGETED DROUGHT COMMUNICATIONS ASSISTANCE FOR A SIX-MONTH PERIOD AT A COST NOT-TO-EXCEED $30,000 (Next available Resolution No: 752)

3 B. Rate study consultant services (Exhibit D ) Recommended Motion: THAT A CONTRACT BE AWARDED TO RAFTELIS FINANCIAL CONSULTANTS IN AN AMOUNT NOT-TO-EXCEED $35,000 TO PERFORM A WATER RATES, FEES AND CHARGES STUDY C. Revisions to Sewer Transfer Plan of Service (Exhibit E ) Recommended Motion: THAT THE GENERAL MANAGER BE DIRECTED TO MAKE REVISIONS AS NEEDED TO UPDATE THE SEWER TRANSFER PLAN OF SERVICE IN ACCORDANCE WITH MOST CURRENT TECHNICAL AND FINANCIAL INFORMATION AND SUBMIT SUCH REVISED PLAN TO LAFCO, AND EXECUTE AMENDMENT NO. 1 TO THE LOCAL SEWER FACILITIES TRANSFER AGREEMENT D. Change in meter charge designation (Exhibit F ) Recommended Motion: THAT THE METER CHARGES SHALL BE DESIGNATED AS PRESENTED 7. Financial Matters A. Approval of schedules of disbursements (Exhibit G ) B. Report on investments/ ratification of investment activity (Exhibit H ) C. Receipt and filing of financial statements (February 28) (Exhibit I ) Recommended Motion: THAT THE SCHEDULES OF DISBURSEMENTS BE APPROVED AS SUBMITTED, THAT THE SCHEDULES OF INVESTMENTS BE RATIFIED AND APPROVED, AND THAT THE FINANCIAL STATEMENTS BE RECEIVED AND FILED D. Engagement of auditor (Exhibit J ) Recommended Motion: THAT THE ENGAGEMENT OF THE PUN GROUP FOR AUDIT SERVICES FOR THE FISCAL YEARS , AT A TOTAL AMOUNT NOT TO EXCEED $37,500 ($12,500 PER YEAR) BE APPROVED 8. Miscellaneous Matters A. Reports from committees and representatives to organizations B. Directors reports on meetings attended C. Authorization of conference attendance (Exhibit K )

4 D. Local sewer service transfer (Orange County San #7 reorganization) - status report (Exhibit L ) E. Wholesale and retail water usage report (Exhibit M ) Recommended Motion: THAT THE WHOLESALE AND RETAIL WATER USAGE REPORT BE RECEIVED AND FILED F. Drought response report (Exhibit N ) Recommended Motion: THAT THE DROUGHT RESPONSE REPORT BE RECEIVED AND FILED 9. Informational Items A. General interest publications (Exhibit 1 ) 10. Adjournment The scheduled date of the next Regular Meeting of the Board of Directors is May 21, 2015, at 5:00 p.m., in the offices of the East Orange County Water District, 185 N. McPherson Road, Orange, California ************ Availability of agenda materials: Agenda exhibits and other writings that are disclosable public records distributed to all or a majority of the members of the East Orange County Water District Board of Directors in connection with a matter subject to discussion or consideration at an open meeting of the Board are available for public inspection in the District s office, 185 N. McPherson Road, Orange, California ( District Office ). If such writings are distributed to members of the Board less than 72 hours prior to the meeting, they will be available at the reception desk of the District Office during business hours at the same time as they are distributed to the Board members, except that if such writings are distributed less than one hour prior to, or during, the meeting, they will be available in the meeting room of the District Office. Disability-related accommodations: The East Orange County Water District Board of Directors meeting room is wheelchair accessible. If you require any special disability-related accommodations (e.g., access to an amplified sound system, etc.) please contact Sylvia Prado in the District Office at (714) during business hours at least seventy-two (72) hours prior to the scheduled meeting. This agenda can be obtained in alternative format upon written request to Sylvia Prado in the District Office, at least seventy-two (72) hours prior to the scheduled meeting

5 EAST ORANGE COUNTY WATER DISTRICT GENERAL MANAGER S REPORT April 2015 The following report is a summary of the District s activities over the past month. GENERAL MATTERS Reviewed correspondence, conferred with customers regarding billing issues and vendors/other interested parties regarding business with the District, and met with staff members regarding daily activities and on-going projects. SEWER A. OCSD Transfer See Agenda Item WHOLESALE ZONE A. Peters Canyon (6 MG) Reservoir Status Update Security System Staff met with the AT&T contractor on April 8 th to review access and hours of work during the construction of the fiber-optic conduit from Jamboree Road up to the District s 6 MG reservoir site. The contractor will begin boring April 13 th and expects to be completed with the installation of the conduit by the end of April. A separate contractor will install the fiber optic cable once this work is completed. Once the fiber-optic cable is in place, staff will coordinate with Unified Physical Security to make the final connections and to bring the security system online. Reservoir Inspection As part of the Master Plan condition assessment, Carollo Engineering inspected the interior of the 6 MG reservoir on April 9 th. Carollo will be providing a options for rehabilitation or replacement of the 6 MG reservoir and roof. B. Master Plans and Treatment Plant Feasibility Study Update 1. Master Plan Status: a) Non-destructive testing of selected pipes has been deferred due to the high cost of the bids received (~$100,000) and/or that the low cost proposal doesn t gauge well the condition of the bulk of the majority of the pipe we have (asbestos cement). b) Water demands and scenarios for modeling work have been completed. ID Modeling has been given notice to proceed with modeling studies. c) Discussions and development of scope for corrosion testing continued with V&A Consulting Engineering. Upcoming work will be to finalize corrosion studies scope for V&A and begin the corrosion studies. 1

6 d) Other work upcoming includes developing cost estimates for the Capital Improvement Program for the hot spots projects, develop cost estimate for repairs to Peters Canyon Reservoir roof 2. Feasibility Study: a) Process evaluation and selection was presented to the Engineering Committee on March 2 nd ; and to the Board on March 19 th. The Board approved proceeding with Conceptual Design of the conventional treatment train. b) Next work: continue with preparation of Conceptual Design. c) The schedule for the treatment plant was updated; completion is scheduled for September, C. WZ Connection Permits None to Report RETAIL ZONE 1) Well / Booster Station Operations East Well No issues to report. 100% of the Retail Zone demand is being met by this well. OCWD Coastal Pumping Transfer Program (CPTP) Participation Beginning in May 2014, the RZ has been participating in the CPTP, a program that has coastal producers pumping below the Basin Production Percentage (70% of their demand) and some inland producers pumping above the BPP so that the net basin pumping is neutral. The CPTP is designed to reduce water losses to LA County as well as the gradient that encourages seawater intrusion. MET has been storing 44,000 AF of water in the Orange County Groundwater Basin and now wants to use it this means that additional pumping will be required by other inland pumpers over and above the 70%, because the agencies that have been participating in the CPTP can t meet the additional demand. The RZ participation means that we will pay $115/AF less for MET water due to incentives from OCWD and the mitigation value that additional pumping will have on the MET Ready-to-Serve Charge. West Well and Stoller Booster Pump Repair Project The West Well and booster station have been offline since February 2013 due to worn pump assemblies; the East Well can and has been meeting our entire RZ demand. As mentioned in the previous months General Manager s reports, staff has delayed sending out RFPs for the West Well and Stoller booster pump repair over concerns with the declining water levels in the groundwater basin and the fact that well companies are very busy at this time. Well water levels have been recovering over the last month from 290 to 280 feet (below ground surface). 2) Water Smart Home Certification Program MWDOC is asking all member agencies to continue promoting the program in an effort to increase participation, particularly in light of Governor Brown s emergency water reduction executive order. 2

7 The District has 20 customers participating in this MWDOC sponsored program; this is unchanged from November The customers apply online to have a home inspection performed by the Mission Conservation District (MCD). The customers, located on Circula Panorama, Crawford Canyon Road, Miriam Place, Panorama View, Via Aventura, Via Del Cerro, Barrett Lane, El Roy Drive, View Ridge, St. Jude, Daniger Road, Greenwald Lane, Carmel Way and Kassy Drive met with District and MCD representatives between November 2013 and July 2014 to go through each interior and exterior plumbing fixture and evaluate their water efficiency. Eighteen customers have received a water use report with recommendations on how to make their home water efficient. In order to achieve a Water Smart Home certification, the customer must have an efficiency score of 100. The high possible score is 120 which will give the home Gold certification status. The scores so far have ranged between 40 and 71 points. The customer then has 90 days to implement the recommendations and provide proof to MWDOC by providing invoices, receipts, and photographs. If all program criteria are met, the homeowner will receive a certificate stating that their home has been certified as being water efficient. 3) System Leaks On Thursday, April 2, staff responded to a reported leak on Martin Lane. Staff potholed and found that there was a leak on the 8 x 4 mainline reducer fitting. A 4 portion of main was removed and replaced with a section of new pipe and a new reducer fitting. It appeared roots were the cause of the leak as there was a large cluster which had pushed the pipe fitting off one end of the pipe. Anecdotally, we have noticed a substantial increase in system leaks since the beginning of August when the increased drought awareness and public outreach began; this appears consistent with what other agencies are experiencing also. As realized during the drought, system use patterns may be changing (watering on one day per week during the same time of the day as neighbors) and it may be stressing the system. We are noting this information for the condition assessment/hydraulic element of the Master Plan Study, so that the engineers can assess the long-term impacts on the system and suggest operational changes and/or effective capital improvements to mitigate these impacts. 4) Water Availability Request None to report. Joint System (WZ & RZ) Activities A. Drought Report Please see related agenda item; this item will be included as a standing report until the drought emergency regulations are rescinded. B. Monthly Operations Activities Repaired mainline leak on Martin Lane Completed backfill and clean up on customer property for isolation valve project. Hired contract for tree pruning and landscape clearing at various sites. Hired contractor for asphalt work at McPherson Yard. Completed flushing of 31 dead-end hydrants. 3

8 Job shadowed OCSD staff in area 7 (Superintendent). Set up and coordinated interior inspection of 6 MG reservoir with Carollo Engineering. Attended job walk with AT&T for Fiber line at 6 MG reservoir (Superintendent). Weed Abatement at the 6MG, 11.5 MG, 1 MG, and Barrett reservoir sites. Perform Vehicle and equipment maintenance Cleanup and organize shop Arrange haul off of spoils from Yard and Newport reservoir sites. Tested backup generators and emergency pumps at Daniger and Vista Panorama Sidehill. Met with IRWD contractor on Jamboree to review work and deliver meter and ups system. Final Reads St. Thomas Drive(1), Crawford Canyon Rd. (1). High Water Bills Vista Panorama (1). Customer Leaks Greenwald Lane (1), Mittman Lane (1), Barrett Lane (1). Low Pressure Baja Panorama (1). High Pressure Carmel Way (1). Completed Annual Reports and submitted to SWRCB for the Retail and Wholesale Systems. Submitted data for 2014 Consumer Confidence report to MWDOC consultant. Reviewed new SEDARU reports and how to create custom reports. Weekly Tasks Attend weekly safety meetings (All field staff) Performed weekly water quality sampling Measure static and pumping water levels in wells. Performed USA locations Responded to utility requests from the County and city of Orange Picked up water quality supplies and changed reagent bottles Clean-up, organize and restock service trucks Clean-up and organized shop Vehicle maintenance Monthly Tasks Attend monthly staff meeting with General Manager (all employees) Attend committee meetings Operations and Engineering (Superintendent) Prepared monthly CDPH water quality reports Prepared monthly CRWQCB report for well discharge Report retail water system production to State Performed dead-end flushing Read WZ meters Check WZ meter data; assist with preparation of WZ Billing Delivered Board agenda packages Participated in WEROC radio test 4

9 MINUTES OF THE REGULAR MEETING OF THE BOARD OF DIRECTORS OF EAST ORANGE COUNTY WATER DISTRICT March 19, Call to Order. A Regular Meeting of the Board of Directors of the East Orange County Water District was called to order by WILLIAM VANDERWERFF, President of the Board of Directors, at 5:00 p.m. on Thursday, March 19, 2015, in the offices of the East Orange County Water District, 185 N. McPherson Road, Orange, California. JOAN ARNESON, Secretary, recorded the minutes of the meeting. The following Directors were present: RICHARD BELL, DOUGLASS DAVERT, JOHN DULEBOHN and WILLIAM VANDERWERFF. Also present were: LISA OHLUND JOAN ARNESON WILLIAM EVEREST ART VALENZUELA SYLVIA PRADO GRAHAM JUBY General Manager District Secretary and Legal Counsel Consultant City of Tustin District Administrative Assistant Carollo Engineers 2. Public Communications to the Board. ART VALENZUELA was recognized, and said that while very supportive of the evaluation of a treatment plant, it is important to focus on who the plant s end users will be, to be certain there will be sufficient subscribers of the capacity. 3. Items Arising After Posting of Agenda. None. 4. General Manager s Report. Ms. OHLUND said she did not have anything to add to the written report. There were no comments or questions. ACTION TAKEN: Upon a motion duly made, seconded and carried unanimously (Everett absent), the General Manager s Report was received and filed. 5. Minutes. ACTION TAKEN: Upon a motion duly made, seconded and carried unanimously (Everett absent), the minutes of the meeting of February 19, 2015 were approved as submitted

10 Operation, Management and Construction Matters. A. Strategic Planning. It was the consensus that April 11 be selected as the date for a workshop discussion on the strategic planning initiative. B. Peters Canyon Treatment Plant Feasibility Study. Ms. OHLUND said this study was being conducted by Carollo Engineers, and that an important decision on the direction of the study was proposed this evening. GRAHAM JUBY made a slide presentation on the basis of design and the screening and ranking of treatment trains, and said the recommendation was that the conventional train be selected for further analysis. ACTION TAKEN: Upon a motion duly made, seconded and carried unanimously (Everett absent), the recommended conventional treatment process was selected as the preferred treatment approach for the next phases of Carollo Engineers Peters Canyon Treatment Plant feasibility study. 7. Financial Matters. A. Schedule of Disbursements. Schedules of disbursements in the following amounts were presented: $372, from Wholesale and Retail Operating Funds, $2, for directors payroll, and $38, for employees payroll. B. Investment Activity. Schedules of investments were presented. C. Financial Statements (January 31). The financial statements were presented. On behalf of the Finance Committee, Director DULEBOHN recommended approval of the schedule of disbursements and investment schedules, and receipt and filing of the financial statements. ACTION TAKEN: Upon a motion duly made, seconded and carried unanimously (Everett absent), the schedules of disbursements were approved as submitted, the schedules of investments were ratified and approved, and the financial statements were received and filed. 8. Miscellaneous Matters. A. Reports from Committees and Representatives to Organizations. None. B. Directors Reports on Meetings Attended. None

11 C. Authorization of Conference Attendance. Ms. OHLUND said she planned to attend the ACWA Spring conference. None of the Directors requested authorization to attend. D. Orange County Sanitation District #7 Local Sewer Service Reorganization Status Report. Ms. OHLUND said she had nothing to add to the report. E. Water Demand Status Report. Ms. OHLUND reported on the State Water Resources Control Board s March 17 action to extend and augment its July, 2014 emergency conservation regulations. She said a primary focus will be on enforcement. ACTION TAKEN: Upon a motion duly made, seconded and carried unanimously (Everett absent), the Water Demand Status Report was received and filed. F. Drought Response Report. Ms. OHLUND reported that MWD is expected to consider an allocation, and that staff will be bringing recommended actions to the Board. ACTION TAKEN: Upon a motion duly made, seconded and carried unanimously (Everett absent), the Drought Response Report was received and filed. 9. Informational Items. A. General Interest Publications. Included were LA Times op-ed California has about one year of water left; MyNewsLA.com Water board spends $71 million battling drought; San Diego Union-Tribune op-ed Desalination makes sense for Orange County. 10. Adjournment. ACTION TAKEN: Upon a motion duly made, seconded and carried unanimously (Everett absent), the meeting was adjourned at 6:15 p.m., to Saturday, April 11, 2015, at 8:00 a.m., to be held in the Offices of the East Orange County Water District, 185 N. McPherson Road, Orange, California. Respectfully submitted, Joan C. Arneson

12 TO: FROM: SUBJECT: BOARD OF DIRECTORS GENERAL MANAGER MEMO PROPOSED REPSPONSE TO EMERGENCY WATER REDUCTION EXECUTIVE ORDER DATE: APRIL 16, 2015 BACKGROUND On April 1, 2015 Governor Brown signed an Executive Order that directed the State Water Resources Control Board (State Board) to implement mandatory water reductions across California to reduce potable urban water usage by 25 percent statewide; the savings amount to approximately 1.3 million acre feet (MAF). The new water reduction regulations apply to urban water suppliers (excluding wholesalers) and includes investor-owned water utilities. They include prohibitions on irrigation of ornamental turf on public street medians, prohibitions on new home construction that doesn t include drip or micro-spray systems and specific restrictions on commercial, industrial and institutional irrigation uses. The State Board is expediting the development of these regulations and released a proposed regulatory framework on April 7 th with comments due April 13 th. The District s comments are attached to this memo. The State Board will consider these regulations at their meeting on May 5-6. The draft regulatory framework also includes provisions that segregate the 411 urban water suppliers into four categories of required reduction based upon an agency s September 2014 R-GPCD (Residential- Gallons Per Capita Per Day) Note that 165 GPCD is considered the statewide average : September 2014 R-GPCD Conservation Required Under 55 10% % % Over % The District s R-GPCD for September 2014 was putting us in the 35% reduction category. It should be noted that the District meets the definition of a small supplier under the Water Code Section 10617, and during the first phase of the Emergency Regulations enacted on July 16, 2015, we asserted this status and were told to submit reports by State Board staff. Staff intends to formally assert our small supplier status, however, under the proposed new regulations, all small suppliers must achieve a 25% water savings as compared to It should also be noted that the State Board will use all of the same enforcement tools, including daily fines up to $10,000 per day, to ensure that small suppliers meet the 25% reduction mandate. PLAN OF ACTION Staff proposes a three-pronged approach to meeting the emergency reduction regulations: 1. Increase Conservation Ordinance phase from Level 1 (11-20% reduction) to Level 2 (21-30% reduction) and set the Allocation Level to 75% (25% reduction). 2. Hire a P/T employee or see out a shared service with another agency, to provide zanjero services. 3. Amend the Communications Lab contract to provide focused drought outreach and multi-media support.

13 Board Memo: Implementation of April 1, 2015 Emergency Reduction April 16, 2015 Staff does not currently have the resources to effectively meet the requirements of this mandate. We currently have one full-time administrative position vacant and may soon have a vacant field position also. The Conservation Ordinance (attached) requires extensive outreach be made informing customers of the Board s action to impost Conservation Level 2. Additionally, because of the real potential for fines, extensive outreach is necessary so that customers have adequate notice and resources available to enable their compliance. 2 The following table shows Conservation Level 1 compared to Conservation Level 2: Conservation Measure Level 1 Level 2 Permanent Mandatory Conservation Measures: Limits on Watering Duration (no more than 10 minutes/valve/day (exempts drip) No excessive water flow or runoff New residential automated irrigation systems must be smart meters & have rain sensor Dedicated irrigation meters must be smart meters with rain sensors Line Breaks/leaks/malfunctions must be fixed within 3 days of notification No hosing down of hard or paved surfaces except for sanitary or safety reasons No hosing or washing down vehicles if no hose with positive shut-off valve All decorative fountains and water features must be recirculating No water from fire hydrants without a meter Water served only upon request at restaurants Water efficient devices required in commercial kitchens No defrosting with water Scoop sinks set at minimum water flow and shut-off during non-working hours Commercial car washes and laundries must recirculate wash water No single-pass cooling system Recycled or non-potable water must be used at construction sites if available No water used for soil compaction or dust control if recycled or non-potable available No indiscriminate water use Limits on water days 3/week from April-October; 2 days/week from November to March Exemptions to watering day limits for hand-watering, drip, fruit trees & vegetables Other prohibited uses as deemed necessary by the Board Limits on water days -2 days/week from April-October; 1 day/week from November-March No filling or refilling of ornamental lakes and ponds (except for aquatic life exemptions) No filling or refilling of uncovered residential pools/spas (covered pools/spas ok to 1 ft/wk) No hosing down or washing vehicles except at a commercial car wash facility that recycles Optional water conservation programs residential water budget program with penalties Commercial customer percentage reduction requirements Staff estimates that at least a six-month part-time or shared service effort targeted at customers that are exceeding their water budget is necessary, additionally this position would provide zanjero or water overseer services to transit the district and look for water waste/leaks/malfunctions/etc. The zanjero would also make penalty recommendations, based upon the progressive fines authorized in the Ordinance, to the General Manager. The public outreach requirements are many and varied and include website, graphic design and printing requirements that are outside of staff s ability. To meet this need, we have requested a proposal from Communications Lab (attached). This is a menu -type of proposal wherein we can see what various types of services would cost. While the proposal totals to $71,000, staff is requesting a not-to-exceed $30,000 budget that would allow us to select the services that would provide the most value for the

14 Board Memo: Implementation of April 1, 2015 Emergency Reduction April 16, 2015 dollars spent. In view of the seriousness of the drought, in light of the Governor s Executive Order for small suppliers to reduce demand by 25% or face fines of up to $10,000/day, and in recognition that the Board of the Metropolitan Water District of Southern California (MET) will be considering instituting an allocation program of at least 15% and that will include charges up to $2,960/AF for exceeding allocations, staff is recommending the Board take the following actions: 3 RECOMMENDATIONS: The Board: 1. Find that pursuant to the requirements of our Conservation Ordinance, a water shortage exists and declare Water Conservation Level 2 to be in effect and authorize implementation of a 75% allocation (25% reduction) in demand effective May 15, Authorize staff to retain, via shared service or the employment of a part-time employee, dedicated zanjero services to ensure compliance with the Conservation Ordinance s Level 2 provisions for a six-month period at a not-to-exceed cost of $15, Authorize Amendment #2 to the Communications Lab contract for a not-to-exceed $30,000 to provide targeted drought communications assistance for a six-month period.

15 April 13, 2015 Ms. Jessica Bean State Water Resources Control Board th Street Sacramento, CA Subject: Comments Re: April Emergency Conservation Executive Order Dear Ms. Bean, DIRECTORS Richard B. Bell Douglass Davert John Dulebohn Seymour B. Everett III William Vanderwerff Lisa Ohlund General Manager Thank you for the opportunity to comment. We have carefully considered the state s concerns and goals as we submit the following comments: Take additional time to consider the unintended consequences of levying reduction requirements in excess of 25% without considering the legal, economic, environmental and operational consequences. Our district has spent substantial funds developing new local supplies and funding conservation efforts to prepare for drought and to reduce demand on the Delta; the 35% proposed reduction not only doesn t recognize those efforts, it prevents us from accessing these local supplies and strands this investment. Address the inequities of the R-GPCD methodology. Every agency has high R- GPCD users, but high rates of multi-family housing hides them; because of this, only some agencies are being singled out and penalized for a high R-GPCD this is a patently inequitable situation. Ensure that per capita water use is being accurately measured. Before implementing reductions, the state should standardize the calculation of the R- GPCD metric; some agencies are reporting water sales rather than water production (as we are); by reporting sales, they are eliminating non-revenue water loss and lowering their R-GPCD calculation. Additionally, we are aware that some agencies subtract out dormitories, jail/prison and senior living centers as commercial demand, but include the residents in their population calculation, also reducing the R-GPCD. 185 N McPherson Road Orange, CA Ph: (714) Fax: (714) Include an offset for Indirect Potable Reuse (IPR) in the R-GPCD calculation. Agencies investing in IPR should be recognized for financing an expensive technology that reduced demand on the Delta. By not including this offset in the calculation, the state is providing an unintended disincentive to investing in IPR and penalizing agencies for preparing for drought Use the existing 5-year base period thresholds established through compliance with SBx7-7 requirements (20x2020); this threshold takes into account climate variability and pre-2013 conservation achievements. Use of gallons per capita per day using a single snapshot in time is bad science and results in punishing customers that live in a hotter climate and who have spent the last two decades reducing their water demand.

16 Ms. Jessica Bean April 13, 2015 Comments Re: April 1, 2015 Emergency Conservation Executive Order Page 2 Revise the non-compliance penalty to a per acre-foot unrealized rather than a $10,000/day fine. Consider all actions that an agency has taken to reduce overall demand when enforcing the regulations. If fines are levied, the state should provide a mechanism whereby all or most of the fine can be used for local conservation projects within the agency that is being fined (similar to mandatory minimum penalty program that the Regional Water Quality Control Boards allow for sewer spills). Again, thank you for the opportunity to comment. Sincerely, Lisa Ohlund General Manager Cc: Rob Hunter, MWDOC Joe Berg, MWDOC

17 RESOLUTION NO. RESOLUTION OF THE BOARD OF DIRECTORS OF THE EAST ORANGE COUNTY WATER DISTRICT DECLARING WATER CONSERVATION LEVEL 2 TO BE IN EFFECT AND AUTHORIZING IMPLEMENTATION WHEREAS, Ordinance No , East Orange County Water District Retail Zone, An Ordinance To Conserve The Available Water Supply, was adopted on June 18, 2009 and amended on August 7, 2014 (the Ordinance ); and WHEREAS, the Ordinance requires this Board of Directors to make findings of shortages and to declare the applicable water conservation level for the East Orange County Water District ( EOCWD ) Retail Zone by resolution, including, (i) if applicable, additional regulations or rationing measures as may be determined by the Board to be necessary in response to a water supply shortage in such level and (ii) the percentage of the required reduction in a customer s water use and the corresponding base period for purposes of measuring any excess use constituting a violation subject to surcharges in such phase; and WHEREAS, on March 17, 2015, the State Water Resources Control Board (SWRCB) revised and readopted its July, 2014 emergency regulations to support water conservation, based on the Governor s January and April 2014 proclamations finding that continuing severe drought conditions require the reduction of water use, and the SWRCB s finding that severe drought conditions are continuing into 2015; and WHEREAS, on April 1, 2015, the Governor issued Executive Order B-29-15, containing, among other matters the following: stating that California s water supplies continue to be severely depleted; finding that conditions of extreme peril to the safety of persons and property continue to exist due to water shortage and drought conditions; requiring the SWRCB to impose restrictions to achieve a statewide 25% reduction in potable urban water usage through February 28, 2016 and requiring water suppliers to achieve the reductions in proportion to per capita water usage; requiring the SWRCB to impose restrictions requiring commercial, industrial and /

18 institutional users to achieve the same level of reduction; and requiring the SWRCB to direct urban water suppliers, through emergency regulations as necessary, to develop pricing mechanisms, including, but not limited to surcharges, fees and penalties to maximize water conservation consistent with statewide water restrictions; and WHEREAS, the SWRCB has issued a schedule for the adoption of additional emergency regulations to implement the April 1, 2015 Executive Order, anticipating adoption in May, 2015; and WHEREAS, the SWRCB has issued proposed regulatory framework tiers for urban water suppliers to achieve an overall 25% use reduction in proportion to suppliers respective per capita per day uses; and WHEREAS, the Metropolitan Water District of Southern California has adopted an allocation of its supplies, effective July 1, 2015, increasing the surcharges for over-allocation use to up to $2,960 per acre foot, and such allocation will be implemented by Municipal Water District of Orange County on the imported water supplies delivered to its contracting agencies including EOCWD, subjecting EOCWD to the payment of imported water surcharges on overallocation deliveries; NOW, THEREFORE, the Board of Directors of the East Orange County Water District DOES HEREBY RESOLVE, DETERMINE AND ORDER as follows: Section 1. Based on the matters recited above in this Resolution, this Board of Directors hereby finds that a water shortage condition exists affecting water use in the Retail Zone of EOCWD, and declares that Water Conservation Phase 2 shall be in effect. The start date of Water Conservation Level 2 shall be May 15, Section 2. During the declared Conservation Phase, no person shall make, cause, use or permit the use of water for any purpose in excess of seventy-five percent (75%) of their normal (100%) indoor and outdoor water budget allocation. Section 3. All restrictions set forth in the Ordinance for a Conservation Phase 2 shall be in effect: /

19 1) Permanent water conservation measures identified in Section VI of the Ordinance 2) Watering of lawns, landscaping and other vegetated areas is limited to no more than two (2) days per week from April-October, and no more than one (1) day per week from November-March. 3) Loss of water through breaks, leaks or other malfunctions must be fixed within two (2) days following notification from the District. 4) Filling or refilling of ornamental lakes and ponds is prohibited with limited exceptions. 5) Filling or refilling of uncovered residential swimming pools or uncovered outdoor spas is prohibited. Covered pools and spas may be refilled up to one (1) foot of water per week. Limited exceptions to this policy are allowed. 6) No hosing or washing down of vehicles is allowed outside of commercial car washing facilities that recycles its wash water. Section 4. The Board hereby authorizes and directs staff to take all actions deemed necessary to implement and enforce the declaration, restrictions and requirements adopted in this Resolution. Section 5. The Secretary is hereby directed to cause this Resolution to be published in accordance with the Ordinance. Pursuant to the Ordinance, this Resolution shall become effective immediately upon such publication. ADOPTED, SIGNED AND APPROVED this day of President EAST ORANGE COUNTY WATER DISTRICT and of the Board of Directors thereof Secretary EAST ORANGE COUNTY WATER DISTRICT and of the Board of Directors thereof /

20 STATE OF CALIFORNIA ) ) ss COUNTY OF ORANGE ) I, JOAN C. ARNESON, Secretary of the Board of Directors of the EAST ORANGE COUNTY WATER DISTRICT, do hereby certify that the foregoing Resolution No. was duly adopted by the Board of Directors of said District at a Regular Meeting of said District held on, 2015, and that it was so adopted by the following vote: AYES: NOES: ABSENT: ABSTAIN: Secretary EAST ORANGE COUNTY WATER DISTRICT and of the Board of Directors thereof /

21 2009 RETAIL ZONE WATER CONSERVATION PROGRAM ORDINANCE Table of Contents June 2009 Page 1 of 22

22 EOCWD Water Conservation Ordinance No Proposed Water Conservation & Water Supply Shortage Ordinance Page Section I. Title 3 Section II. Findings 3 Section III. Declaration of Purpose and Intent of Ordinance 5 Section IV. Definitions 5 Section V. Application of Ordinance 7 Section VI. Permanent Water Conservation Measures 7 Section VII. Level 1 Water Supply Shortage (Water Supply Alert) 11 Section VIII. Level 2 Water Supply Shortage (Water Supply Warning) 12 Section IX. Level 3 Water Supply Shortage (Water Emergency) 15 Section X. Other Provisions 17 Section XI. Declaration & Notification of Water Shortages & Emergencies 17 Section XII. Hardship Waiver 18 Section XIII. Non-Compliance Charges and Penalties 19 Section XIV. Severability 22 Page 2 of 22

23 EOCWD Water Conservation Ordinance No ORDINANCE NO AN ORDINANCE OF THE BOARD OF DIRECTORS OF THE EAST ORANGE COUNTY WATER DISTRICT ESTABLISHING A RETAIL ZONE WATER CONSERVATION PROGRAM Section I. Title East Orange County Water District Water Retail Zone Conservation Ordinance ( Ordinance ) Section II. Findings 1. A reliable minimum supply of water is essential to the public health, safety and welfare of the people and economy of Southern California. 2. Southern California is a semi-arid region, largely dependent on imported water supplies from Northern California and the Colorado River. Population growth, drought, climate change, environmental concerns, government policy changes, restrictions on pumping and other factors in our region, in other parts of the State and in the western U.S. make Southern California highly-susceptible to water supply reliability issues. 3. Careful water management requires active conservation measures not only in times of drought but at all times. It is essential to ensure a reliable minimum supply of water to meet current and future water supply needs. 4. California Constitution Article X, Section 2 declares for the general welfare: a. Water resources be put to beneficial use b. Prevention of water waste and unreasonable water use or methods of water use c. Full exercise of water conservation with a view to reasonable and beneficial water use Page 3 of 22

24 EOCWD Water Conservation Ordinance No California Water Code Section 375 authorizes water suppliers to adopt and enforce a comprehensive water conservation program to reduce water consumption and conserve supplies. 6. California Water Code Section sets forth the public notification, public meeting and public hearing requirements for water providers proposing the establishment of a water conservation program, ordinance or resolution. 7. California Water Code Sections 350, et. seq., sets forth the determination and notification procedures for water suppliers seeking to declare a water shortage or a water emergency. 8. California Water Code Section 356 allows for the adoption of regulations and restrictions that include discontinuance of service as an enforcement option where a water shortage emergency condition has been declared. 9. California Water Code Section 377 authorizes water suppliers to enforce a comprehensive water conservation program to reduce water consumption through establishment of non-compliance charges and other penalties, subject to advance notification to water users. 10. Health and Safety Code Section 5471 authorizes the District to apply charges or fees to persons or entities that fail to comply with any provision of this Water Conservation Ordinance in order to recover administrative and enforcement costs due to non-compliance (including but not limited to notices, postings, hearings, shut offs, account management, data collection). 11. California Water Code Section 370, et. seq., authorizes water suppliers to adopt water allocation programs for water users and allocation-based conservation water conservation pricing. 12. California Water Code Sections and declare a statewide policy that the use of domestic water for irrigation purposes when reclaimed (recycled) water is available constitutes a waste or unreasonable use of water within the meaning of the State Constitution. 13. The adoption and enforcement of a Water Conservation Ordinance is necessary to manage the District s water supply short- and long-term and to minimize and/or avoid the effects of drought and water shortage within the District. Such a program is essential to ensure a reliable and sustainable minimum supply of water for public health, safety and welfare. 14. The proposed Ordinance shall replace the District s Ordinance No , adopted March 21, Page 4 of 22

25 EOCWD Water Conservation Ordinance No Section III. Declaration of Purpose and Intent 1. To minimize or avoid the effect and hardship of potential shortages of water to the greatest extent possible, this Ordinance establishes a Water Conservation Program for the Retail Zone designed to: a. Reduce water consumption (demand) through conservation b. Enable effective water supply planning c. Assure reasonable and beneficial use of water d. Prevent waste of water and maximize efficient use in the District 2. The Ordinance establishes: a. Permanent water conservation standards designed to alter behaviors related to water-use efficiency during non-shortage conditions b. Three levels of potential response to escalating water supply shortages which the East Orange County Water District Board may choose to implement during times of declared water shortage or water emergency. The three levels of response consist of increasing water use restrictions as a result of worsening drought conditions, emergencies, and/or decreasing supplies. Section IV. Definitions 1. General a. The District means East Orange County Water District. b. The Board means the East Orange County Water District Board of Directors. c. Retail Zone means that sub-portion of the District to which the District directly provides local and imported water supplies to residential and commercial customers. d. Wholesale Zone means that sub-portion of the District to which the District provides imported water supplies to five retail entities: the City of Orange, the City of Tustin, the Irvine Ranch Water District, the Golden State Water Company and the Retail Zone of the East Orange County Water District. Page 5 of 22

26 EOCWD Water Conservation Ordinance No Irrigation e. Person means any person or persons, corporation, public or private entity, governmental agency or institution, or any other user of water provided by the District. f. Water means water that is suitable for drinking. g. Water Waste refers to uses of water that are limited or prohibited under the Ordinance because they exceed necessary or intended use and could reasonably be prevented, such as runoff from outdoor watering. h. Billing Unit is equal to 100 cubic feet (1 CCF) of water, which is 748 gallons. Water use is measured in units of 100-cubic-feet and multiplied by applicable water usage rates for billing. Also known as a Unit of Water. i. Undue Hardship is a unique circumstance in which a requirement of the Ordinance would result in a disproportionate impact on a water user or property upon which water is used compared to the impact on water users generally or similar properties or classes of water use. j. Imported Water Supply refers to the District s total imported water supply over a given period, e.g. calendar year or fiscal year, or as defined by the Metropolitan Water District of Southern California (Met), or as defined by a regulatory agency k. Local Water Supply refers to the District s total local water supply over a designated non-drought/non-allocation period, e.g. calendar year or fiscal year, or as defined by a regulatory agency. l. Covered Pool or Covered Spa refers to pools and/or spas that have a cover that minimizes evaporation. a. Automatic Shut-Off Nozzle refers to a water-efficient nozzle for use with residential or commercial hoses that has a feature that must be pressed to start the flow or releasing the feature stops the flow of water. - b. Irrigation Controller is the part of an automated irrigation system that instructs the valves to open and close to start or stop the flow of water. 1. Sensor-based irrigation controller operates based on input from a combination of sensors (rain, solar, soil moisture) installed in or around the landscaped area. 2. Weather-based irrigation controller operates automatically based on evapo-transpiration rates and historic or real-time weather data. Page 6 of 22

27 EOCWD Water Conservation Ordinance No Other c. Irrigation System refers to a manual or automated watering system consisting of pipes, hoses, spray heads and/or sprinkler devices or valves. Also known as a Landscape Irrigation System. d. Positive Shut-Off Valve refers to a water-efficient valve for residential or commercial hoses that users can quickly and positively start or stop the flow of water. A ball valve would satisfy this requirement. e. Valves refer to the part of an irrigation system that opens and closes manually or electronically to start or stop the flow of water. a. Pre-Rinse Kitchen Spray Valves refer to highly water-efficient sprayers that commercial kitchens use to rinse dishes in the sink before washing and for other preliminary cleaning purposes. b. Single-Pass Cooling System refers to an air conditioning, refrigeration or other cooling system that removes heat by transferring it to a supply of clean water and dumping the water down the drain after a single use. This type of cooling system is extremely water-inefficient compared to systems that re-circulate the water. Section V. Application of Ordinance 1. Ordinance provisions apply to any person or entity using water provided by the District. This includes individuals, persons, corporations, public or private entities, governmental agencies or institutions, or any other users of District water. 2. The provisions of the Ordinance may not apply to the following: a. Water use necessary to protect public health and safety or for essential government services, such as police, fire and similar services. b. Recycled water use for irrigation. Use of recycled water requires a permit that has specific use restrictions, many of which focus on water efficiency. Given such permits and the interest in promoting the use of recycled water as a means to preserve, recycled water is exempt from all requirements of this Ordinance. c. Water used by commercial nurseries and growers to sustain plants, trees, shrubs, crops or other vegetation intended for commercial sale. 3. This Ordinance is intended solely to further the conservation of water. It is not intended to implement any provision of federal, state or local statutes, ordinances or regulations relating to protection of water quality or control of Page 7 of 22

28 EOCWD Water Conservation Ordinance No drainage or runoff. Refer to the local jurisdiction or Regional Water Quality Control Board for information on storm water ordinances or management plans. Section VI: Permanent Mandatory Water Conservation Measures The following Permanent Mandatory Water Conservation Measures are in effect at all times, whether or not there is a water supply shortage or emergency. 1. General Restrictions Residential, Commercial and Public Customers a. Limits on Watering Duration 1. Watering or irrigating with a device or system that is not continuously attended is limited to no more than 10 minutes per valve, per day. 2. This applies to lawns, landscaping and all other vegetated areas. 3. The following irrigation systems are exempt: a. Low-flow drip-type systems that will achieve the conservation goals of this Ordinance. b. Systems equipped with weather-based controllers or streamrotor sprinklers that meet a 70% efficiency standard b. No Excessive Water Flow or Runoff: It is prohibited to water lawns, landscaping and vegetated areas in a manner that causes or allows excessive water flow or runoff onto an adjoining sidewalk, driveway, street, alley, gutter or ditch. c. Automatic Rain Shut-Off for Automated Irrigation Systems 1. New residential automated irrigation systems must be equipped with: a. Rain sensors that shut off the system when it rains, or b. Smart controllers or evapo-transpiration sensors that use weather-based data to set efficient watering schedules 2. As of July 1, 2010, new and existing automated irrigation systems connected to dedicated irrigation meters must be equipped with: a. Rain sensors that shut off the system when it rains, or b. Smart controllers or evapo-transpiration sensors that use weather-based data to set efficient watering schedules d. Obligation to Fix Leaks, Breaks or Malfunctions in lines, fixtures or facilities Page 8 of 22

29 EOCWD Water Conservation Ordinance No Excessive use, loss or escape of water through breaks, leaks or malfunctions in the water user s plumbing or distribution system: a. Is prohibited for any period of time after such water waste should have reasonably been discovered and corrected b. Must be immediately shut-off upon District notification, unless Undue Hardship occurs c. Must be corrected within no more than three (3) days of District notification e. No Hosing or Washing Down Hard or Paved Surfaces 1. It is prohibited to hose or wash down hard or paved surfaces, such as sidewalks, walkways, driveways, parking areas, tennis courts, patios or alleys. 2. When it is necessary hose or wash down hard or paved surfaces to alleviate safety or sanitary hazards, the following may be used: a. Hand-held bucket or similar container b. Hand-held hose equipped with a positive shut-off valve. c. Low-volume high-pressure cleaning machine or water broom f. No Hosing or Washing Down Vehicles 1. It is prohibited to use water to hose or wash down a motorized or non-motorized vehicle, including but not limited to automobiles, trucks, vans, buses, motorcycles, boats or trailers. 2. The following are exempt from this restriction: a. Use of a hand-held bucket or similar container b. Use of a hand-held hose equipped with a positive shut-off valve c. Commercial car washing facility g. Re-Circulating Decorative Water Fountains and Features: Effective January 1, 2011, all decorative water fountains and water features must re-circulate water -- or users must secure a waiver from the District. h. Unauthorized Use of Fire Hydrants Prohibited 1. No person may use water from any fire hydrant for any purpose other than fire suppression or emergency aid without first: a. Requesting and posting the appropriate fees at the District. Page 9 of 22

30 EOCWD Water Conservation Ordinance No b. Obtaining a hydrant meter to record all water consumption for a specified project. Absent a meter, water theft and meter tampering fees will be applied as appropriate. 2. Commercial Food-Serving & Lodging Requirements a. Water Served Only Upon Request. Eating or drinking establishments, including but not limited to restaurants, hotels, cafes, bars or other public places where food or drinks are sold, or served or offered for sale, are prohibited from providing drinking water to any person unless requested. b. Option Not To Have Towels/Linens Laundered. Hotels, motels and other commercial lodging establishments must provide guests the option of not having their used towels and linens laundered. Lodging establishments must prominently display notice of this option in each room and/or bathroom, using clear and easily understood language. 3. Commercial Kitchen Requirements a. Water-Efficient Pre-Rinse Kitchen Spray Valves. Food preparation establishments, such as restaurants, cafes and hotels, are prohibited from using non-water efficient kitchen spray valves, as follows: 1. New kitchen spray valves must use 1.6 gallons or less per minute. 2. Effective January 1, 2010, existing kitchen spray valves must be retrofitted to models using 1.6 gallons of water or less per minute. b. Best-Available Water-Conserving Technology. All water-using equipment in new or remodeled commercial kitchens must use the best-available, water-conserving technology, for example, technologies cited on the California Urban Water Conservation Council (CUWCC) website. c. No Defrosting With Water. Defrosting food with running water is prohibited. d. Scoop Sinks. Scoop sinks shall be set at minimum water flow at all times of use and shut off during non-working hours. e. Automatic Shut-Off Nozzles. When hosing or washing kitchen or garbage areas or other areas for sanitary reasons as required by the Health Dept., hoses shall be equipped with positive shut-off valve. Page 10 of 22

31 EOCWD Water Conservation Ordinance No Commercial Water Recirculation Requirements a. Car Wash and Laundry System Requirements: All new commercial carwash and laundry facilities and systems must re-circulate the wash water -- or secure a waiver of this requirement from the District. b. No Single-Pass Cooling Systems: Buildings requesting new water service or being remodeled are prohibited from installing single-pass systems. 5. Construction Site Requirements a. Recycled or non-potable water must be used, when available. b. No water may be used for soil compaction or dust control where there is a reasonably-available source of recycled or non-potable water approved by the Dept. of Public Health and appropriate for such use. c. Water hoses shall be equipped with automatic shut-off valves, given such devices are available for the size and type of hoses in use. 6. Indiscriminate Water Use. Upon notice by the District, persons shall cease to cause or permit the indiscriminate use of water not otherwise prohibited above which is wasteful and without reasonable purpose. 7. Public Health and Safety. These regulations shall not be construed to limit water use which is immediately necessary to protect public health and/or safety. Section VII: Level 1 Water Supply Shortage (Water Alert) 11% to 20% shortage in imported water supplied to the District and/or 11% to 20% reduction needed in consumer demand 1. Level 1 Water Supply Shortage a. A Level 1 Water Supply Shortage exists when the District Board of Directors, at its sole discretion, determines that a reduction in consumer demand is necessary due to drought or water supply cutbacks in order to make more efficient use of water and appropriately respond to existing water conditions. b. The type of event that may prompt the Board to declare a Level 1 Water Supply Shortage could include, among other factors, a finding that a regional water provider has reduced allocations to the District from 11% to 20% of the District s regular Imported and/or Local Water Supply. At this water allocation level, the District could experience a shortage in supplies between 11% to 20%. Page 11 of 22

32 EOCWD Water Conservation Ordinance No Mandatory Permanent Water Conservation Measures identified in Section VI remain in effect. 3. Level 1 Water Conservation Measures take effect upon declaring a Level 1 Water Supply Shortage and apply for the duration of the shortage: a. Limits on Watering Days 1. No more than three (3) days per week from April October and no more than two (2) days per week from November March. This applies to lawns, landscaping and all other vegetated areas. The District will establish and post the new watering schedules. 2. The following are exempt from these restrictions: a. Watering with a hand-held bucket or similar container. b. Watering with a hand-held hose equipped with a positive shut-off valve. c. Irrigation systems that exclusively use low-flow drip type systems that will achieve the conservation goals of this Section. d. Fruit trees and vegetable gardens, providing steps are taken to meet the conservation goals of this Section. 4. Other Prohibited Uses: The District may implement other prohibited water uses as deemed necessary, after notice to customers. Section VIII: Level 2 Water Supply Shortage (Water Supply Warning) 21% to 30% shortage in imported water supplied to the District and/or 21%- 30% reduction needed in consumer demand 1. Level 2 Water Supply Shortage a. A Level 2 Water Supply Shortage exists when the District Board of Directors, at its sole discretion, determines that an additional reduction in consumer demand is necessary due to drought or water supply cutbacks in order to make more efficient use of water and appropriately respond to water conditions. b. The type of event that may prompt the Board to declare a Level 2 Water Supply Shortage could include, among other factors, a finding that a regional water provider has reduced allocations to the District from 11% to 20% of the District s regular Imported and/or Local Water Supply. At this water allocation level, the District could experience a shortage in supplies between 21% to 30%. 2. The following mandatory water conservation measures remain in effect during a Level 2 Water Supply Shortage: Page 12 of 22

33 EOCWD Water Conservation Ordinance No a. Permanent Water Conservation Measures identified in Section VI b. Level 1 Water Conservation Measures identified in Section VII 3. The following water conservation measures take effect upon declaration of a Level 2 Water Supply Shortage and apply for the duration of the Shortage: a. Additional Limits on Watering Days 1. Watering lawns, landscaping and other vegetated areas is limited to no more than two (2) days per week from April October. This is one (1) day less than required during a Level 1 Water Shortage. The number of watering days permitted from November March will be no more than one (1) day per week. 2. The District will establish and post the new watering schedule. b. Shorter Timeframe to Fix Leaks, Breaks or Malfunctions in water users pipelines, fixtures or facilities. 1. Excessive use, loss or escape of water through breaks, leaks or other malfunctions in the water user s plumbing or distribution system must be fixed in no more than two (2) days following notification from the District unless other arrangements are made with the District. 2. This shorter timeframe is one (1) day less than required under Permanent Water Conservation Measures, Section VI. c. No Filling or Refilling Ornamental Lakes and Ponds 1. Filling or refilling ornamental lakes and ponds is prohibited. 2. Exempt are ornamental lakes and ponds that sustain aquatic life -- provided such life is of significant value and was actively managed in the water feature prior to declaring the shortage. d. No Filling or Refilling Residential Pools or Spas 1. Filling or refilling uncovered residential swimming pools or uncovered outdoor spas is prohibited. Refilling of covered pools and/or outdoor spas of up to one (1) foot of water per week is allowed. 2. Exempt are individuals who, due to health reasons or medical conditions, find it necessary to fill or refill their pools or spas. Persons desiring to claim such exemption shall apply for a Hardship Waiver under the provisions contained in Section XII. Page 13 of 22

34 EOCWD Water Conservation Ordinance No e. No Hosing or Washing Down Vehicles: It is prohibited to use water to hose or wash down a motorized or non-motorized vehicle, including but not limited to automobiles, trucks, vans, buses, motorcycles, boats or trailers. The only exemption from this restriction is washing vehicles at a commercial car washing facility that recycles its wash water. 4. Other Prohibited Uses: The District may implement other prohibited water uses as deemed necessary, following notification of customers. 5. Optional Water Conservation Programs a. The District Board of Directors, at its sole discretion, may establish Optional Water Conservation Programs, during a Level 2 Water Supply Shortage and/or during a Level 3 Water Shortage Emergency. b. If any of the following Optional Water Conservation Programs is established, public notification will precede program implementation. c. Water Allocation or Water Budget Program 1. The District Board of Directors, at its sole discretion, may establish water allocations or water budgets for properties served by the District using a method that does not penalize persons for either the implementation of the conservation method or installation of water-saving devices and includes the User s Base Consumption. 2. Following the effective date of a water allocation or budget program, any person using water in excess of the allocation or budget will be subject to a penalty as determined by the District rate schedule. 3. The penalty for excess water use will be cumulative to any other remedy or penalty imposed for violation of this Ordinance. d. Increased Water Usage Rates: The District Board of Directors, at its sole discretion, may increase water usage rates, by an amount deemed necessary, as determined by the District s rate schedule. e. Percentage-Use Reduction for Commercial Customer: The District Board of Directors, at its sole discretion, may require commercial customers to reduce water use by a certain percentage, as determined by the District. Page 14 of 22

35 EOCWD Water Conservation Ordinance No Section IX. Level 3 Water Shortage (Water Emergency) 31% to 40% shortage in imported water supplied to the District and/or 31% to 40% reduction needed in consumer demand 1. Level 3 Water Supply Shortage Emergency a. A Level 3 Water Supply Shortage exists when the District Board of Directors, at its sole discretion, determines that a further additional reduction in consumer demand is necessary due to drought or water supply cutbacks in order to make more efficient use of water and appropriately respond to existing water conditions. b. The type of event that may prompt the Board to declare a Level 3 Water Supply Shortage could include, among other factors, a finding that a regional water provider has reduced allocations to the District from 11% to 20% of the District s regular Imported and/or Local Water Supply. At this water allocation level, the District could experience a shortage in supplies of up to 40%. 2. The following mandatory water conservation measures remain in effect: a. Permanent Water Conservation Measures identified in Section VI b. Level 1 Water Conservation Measures identified in Section VII c. Level 2 Water Conservation Measures identified in Section VIII 3. The following mandatory water conservation measures take effect upon declaring a Level 3 Water Emergency and apply for the duration of the Emergency: a. Additional Limits on Watering Days 1. Watering lawns, landscaping and other vegetated areas is limited to no more than one (1) days per week from April October. This is one (1) day less than required during a Level 2 Water Shortage. The number of watering days permitted from November March remains the same at no more than one (1) day per week. 2. The District will establish and post the new watering schedule. 3. Exempt from this restriction are the following: a. Public works projects and actively-irrigated environmental mitigation projects b. Maintenance of vegetation, trees and shrubs using (subject to hour restrictions in Section VII.4.a): 1. A hand-held bucket or similar container 2. A hand-held hose equipped with a positive shut-off valve. Page 15 of 22

36 EOCWD Water Conservation Ordinance No Irrigation systems that exclusively use low-flow drip type systems that will achieve the conservation goals of this Section. c. Maintenance of (subject to hour restrictions, Section VIII.4.a): 1. Existing landscaping necessary for fire protection and/or soil erosion control 2. Plant materials identified as rare or essential to the well being of endangered/rare species 3. Fruit trees and vegetable gardens provided steps are taken to meet the conservation goals of this Section. b. Shorter Timeframe to Fix Leaks, Breaks or Malfunctions in pipelines, fixtures or facilities. 1. Excessive use, loss or escape of water through breaks, leaks or malfunctions in the water user s plumbing or distribution system must be fixed in no more than one (1) day following District notification unless other arrangements are made with the District. The timeframe is one (1) day less than for Level 2. c. No New Water Service 1. During a Level 3 Water Emergency, the District will not provide: a. New water service b. New water meters (temporary or permanent) c. Will-serve letters 2. The District will only issue will-serve letters in the following cases: a. Projects necessary to protect public health, safety & welfare b. Projects that have a valid, unexpired city or county building permit c. Projects in which applicants can provide -- to the satisfaction of the District -- substantial evidence of an enforceable commitment that water demands will be offset prior to the provision of a new water meter(s) 3. This prohibition does not preclude resetting or turning-on meters to restore or continue water service interrupted for one month or less. 4. Discontinue Service: Per Water Code Section 356, 1 the District, in its sole discretion, may discontinue service to customers who willfully violate Section IX provisions. 1 Water Code Section 356 allows for the adoption of regulations and restrictions that include discontinuance of service as an enforcement option where a water shortage emergency condition has been declared. Page 16 of 22

37 EOCWD Water Conservation Ordinance No Other Prohibited Uses: The District may implement other prohibited water uses as deemed necessary, following notification of customers Section X. Other Provisions 1. Customer Water Conservation Plans: a. Customers with high annual water usage. During Level 1, Level 2 or Level 3 Water Shortages or Emergencies, the District Board of Directors, at its sole discretion and by written request, may require residential, commercial and/or public customers using five thousand (5,000) or more billing units per year to submit a Water Conservation Plan to the District and to submit quarterly progress reports on such plan. The conservation plan must make recommendations for increased water savings, including increased use of recycled water based on feasibility. Quarterly progress reports must include status on implementation of recommendations. Section XI. Declaration & Notification of Water Shortages/Emergencies 1. Declaration of Level 1 & Level 2 Water Shortages: The District Board of Directors may declare a Level 1 or Level 2 Water Shortage and adopt a water shortage resolution at a regular or special public meeting in accordance with State law. Thereafter, penalties and violations under Section XIII.1 shall apply. 2. Declaration of Level 3 Water Shortage Emergency: The District Board of Directors may declare a Level 3 Water Shortage Emergency in accordance with the procedures specified in Water Code Sections 351 and 352. Thereafter, penalties and violations under Section XIII.2 shall apply. 3. Notification of Declared Water Shortages and Emergencies a. The District must publish a copy of the water shortage/emergency resolution in a newspaper used for the publication of official notices within the jurisdiction of the District within ten (10) business days of the date that the shortage level is declared. b. Additional mandatory conservation requirements will take effect on the fifteenth (15) business day after the date that the shortage level is declared 4. Notification of Declared Water Allocation or Water Budget Program a. If the District Board of Directors, at its sole discretion, establishes a water allocation or water budget program during a Level 2 Water Shortage or Level 3 Water Emergency: Page 17 of 22

38 EOCWD Water Conservation Ordinance No Section XII. Hardship Waiver 1. The District will provide notice of the program to customers via U.S. mail, other mailings in which the District customarily sends billing statements, and/or outreach and/or automated calling. 2. The program will take effect on the date of the notification mailing or at such later date as specified in the notice. 1. Undue and Disproportionate Hardship: If, due to unique circumstances, a specific requirement of the Ordinance would result in undue hardship to a person using water or to property upon which water is used, that is disproportionate to the impacts to water users generally or to similar property or classes of water users, then the person may apply for a waiver to the requirements as provided in this section. 2. Written Finding: The waiver may be granted or conditionally granted only upon a written finding of the existence of facts demonstrating an undue hardship. a. Application for a Waiver: Application for a waiver must be on a form prescribed by the District and accompanied by a non-refundable processing fee in an amount set by the District. b. Supporting Documentation: The application must be accompanied by photographs, maps, drawings, and other information, including a written statement of the applicant. c. Required Findings for Waiver: Based on the information and supporting documents provided in the application, additional information provided as requested, and water use information for the property as shown by the records of the District, the District General Manager in making the waiver determination will take into consideration the following: 1. That the waiver does not constitute a grant of special privilege inconsistent with the limitations upon other residents and businesses; 2. That because of special circumstances applicable to the property or its use, the strict application of this Ordinance would have a disproportionate impact on the property or use that exceeds the impacts to residents and businesses generally; 3. That the authorizing of such waiver will not be of substantial detriment to adjacent properties, and will not materially affect the ability of the District to effectuate the purpose of this Ordinance and will not be detrimental to the public interest; and Page 18 of 22

39 EOCWD Water Conservation Ordinance No That the condition or situation of the subject property or the intended use of the property for which the waiver is sought is not common, recurrent or general in nature. d. Approval Authority 1. The District General Manager or his designee(s) must act upon any completed Application for a Waiver no later than ten (10) business days after receipt by the District. 2. The General Manager or his designee(s) may approve, conditionally approve, or deny the waiver and the decision will be final. 3. The applicant requesting the waiver must be promptly notified in writing of any action taken. Unless specified otherwise, at the time a waiver is approved, it will apply to the subject property for the duration of the water supply shortage or emergency. Section XIII: Non-Compliance Charges and Penalties 1. Non-Compliance with Permanent, Level 1 & Level 2 Mandatory Conservation a. The following will apply to persons or entities that fail to comply with any provision of the Ordinance for Permanent, Level 1 and Level 2 mandatory water conservation measures. 1. First Instance of Non-Compliance: The District will issue a written warning and send it and a copy of the Ordinance by mail 2. Second Instance of Non-Compliance: A second instance of noncompliance with the Ordinance within the preceding twelve (12) calendar months is punishable by a non-compliance charge not to exceed fifty dollars ($50). 3. Third Instance of Non-Compliance: A third instance of noncompliance with the Ordinance within the preceding twelve (12) calendar months is punishable by a non-compliance charge not to exceed one hundred dollars($100) 4. Fourth and Subsequent Instances of Non-Compliance: A fourth or any subsequent instance of non-compliance with this Ordinance is punishable by a non-compliance charge not to exceed two hundred fifty dollars ($250). Page 19 of 22

40 EOCWD Water Conservation Ordinance No b. Misdemeanor: Pursuant to water Code Section 377, any instance of noncompliance with the Ordinance may be prosecuted as a misdemeanor punishable by imprisonment in the county jail for not more than thirty (30) days or by a fine not exceeding one thousand dollars ($1,000) or by both. c. Separate Offenses: Each day that a person or entity is non-compliant with the Ordinance is a separate offense after the initial citation is issued. 2. Non-Compliance with Level 3 Mandatory Conservation Measures a. Non-Compliance Charges: The following will apply to persons or entities failing to comply with any provision of the Ordinance for Level 3 mandatory water conservation measures: 1. First Instance of Non-Compliance: The District will issue a written warning and send it and a copy of the Ordinance by mail. 2. Second Instance of Non-Compliance: A second instance of noncompliance with the Ordinance within the preceding twelve (12) calendar months is punishable by a non-compliance charge not to exceed two hundred and fifty dollars ($250). 3. Third Instance of Non-Compliance: A third instance of noncompliance with the Ordinance within the preceding twelve (12) calendar months is punishable by a non-compliance charge not to exceed five hundred dollars ($500). b. Water Flow Restrictor and/or Termination of Service 1. Water Flow Restrictor Device. In addition to any non-compliance charges, the District may install a water flow restrictor device. If the District determines to install a water flow restrictor, installation of the flow restrictor would follow written notice of intent to the customer and would be in place for a minimum of forty eight (48) hours. 2. Termination of Service: In addition to any non-compliance charges and the installation of a water flow restrictor, the District may disconnect and/or terminate a customer s water service, pursuant to Water Code Section Costs for Water Flow Restrictors and Service Disconnection a. A person or entity in non-compliance with this Ordinance is responsible for payment of the District s charges for installing and/or removing any flow restricting device and for disconnecting and/or reconnecting service per the District s schedule of charges then in effect. Page 20 of 22

41 EOCWD Water Conservation Ordinance No b. The charge for installing and/or removing any flow restricting device must be paid to the District before the device is removed. c. Nonpayment will be subject to the same remedies as nonpayment of basic water rate c. Misdemeanor: Pursuant to Water Code Section 377, any instance of noncompliance with the Ordinance may be prosecuted as a misdemeanor punishable by imprisonment in the county jail for not more than thirty (30) days or by a fine not exceeding one thousand dollars ($1,000) or by both. 3. Separate Offenses: Each day that a person or entity is non-compliant with the Ordinance is a separate offense. 4. Notice of Non-Compliance/ Appeal and Hearing Process a. The District will issue a Notice of Non-Compliance by mail or personal delivery at least ten (10) business days before taking enforcement action. The notice will describe the violation and the date by which corrective action must be taken. b. A customer may appeal the Notice of Non-Compliance by filing a written Notice of Appeal with the District no later than the close of business on the day before the date scheduled for enforcement action. A customer appeal shall state the grounds for the appeal. 1. Any Notice of Non-Compliance not timely appealed will be final. 2. Upon receipt of a timely appeal, the District will schedule a hearing on the appeal and mail written notice of the hearing date to the customer at least ten (10) business days before the hearing. 3. The District General Manager or his designee(s) will hear the appeal and issue a written Notification of Decision within ten (10) days of the hearing. c. A customer may appeal a Hearing Determination to the District Board of Directors by written request for a hearing within ten business (10) days after the certified date of delivery or date of first class mailing of the Notification of Decision. The request shall state the grounds for appeal. At a public meeting, the Board shall review the appeal and, at its sole discretion, may affirm, reverse or modify the Hearing Determination. The decision of the Board is final. Page 21 of 22

42 EOCWD Water Conservation Ordinance No d. Pending receipt of a written appeal or pending a hearing pursuant to an appeal, the District may take appropriate steps to prevent the unauthorized use of water given the nature and extent of the violations and the current declared water shortage level condition, including restricting the level of water use until the appeal is heard. Section XIV: Severability: If any section, subsection, sentence, clause or phrase in this Ordinance is for any reason held invalid, the validity of the remainder of the Ordinance will not be affected. The District Board of Directors hereby declares it would have passed this Ordinance and each section, subsection, sentence, clause or phrase thereof, irrespective of the fact that one or more sections, subsections, sentences, clauses, or phrases thereof is declared invalid. Section XV: Repeal of Ordinance No : Ordinance No is hereby repealed in its entirety. Section XVI: Effective Date: This Ordinance shall take effect 30 days after its passage. The Secretary shall certify to the passage and adoption of this Ordinance and shall cause the same to be published according to law. THE FOREGOING ORDINANCE was introduced at a meeting of the board of Directors of EOCWD held on April 16, 2009, following a public hearing, notice of which was published on April 3 and April 10, PASSED AND ADOPTED by the Board of Directors of the East Orange County Water District at a regular meeting held on the 18 th day of June, William VanderWerff President EAST ORANGE COUNTY WATER DISTRICT and the Board of Directors thereof Joan C. Arneson Secretary EAST ORANGE COUNTY WATER DISTRICT and the Board of Directors thereof Page 22 of 22

43 East Orange Water District Draft Communications Plan Executive Summary: Communications LAB has been working with East Orange County Water District (EOCWD) for several months to support the District s application before LAFCO to obtain the sewers in Area #7 as part of a transfer agreement from the Orange County Sanitation District (OCSD). In addition to Communications LAB continuing to provide strategic planning and advocacy to achieve success on this issue, the EOCWD board indicated during its Strategic Planning Session that it would like broader communications support to enhance the District s role in the community and effectively communicate its track record of success. To accomplish that board goal, our firm has developed a draft Communications Plan for the board s consideration. It will address the following communications issues that we believe would help achieve the board s goal of raising the agency s profile both with key political and water industry stakeholders as well as effectively communicating water use efficiency tips to EOCWD s 1,200 retail customers to encourage behavior change. The key tactics we propose includes: Website update to include information about water restrictions and water use efficiency tips. Social Media development and management. Budget advertising for EOCWD service territory customers. Bill Inserts to provide customers direct information and tips while driving them online for additional information. Project Brochure to be mailed to all 1,200 EOCWD retain customers. Community Coffees to be held on Saturday mornings in neighborhoods throughout the EOCWD retail service area. Speakers Bureau for local service clubs as well as industry presentations. Media Relations to assist with the education of reporters and editorial board staff. Draft op-ed articles for board submittal and monitor media and blogs. Video Production to communicate clearly and succinctly about water use efficiency tips video public service announcements that are suitable both for cable TV as well as on the EOCWD website and social media page. Fact Sheets / FAQ developed for board members. Assign board members to participate in various water industry boards and committees as availability allows. Strategic Partnerships with organizations and agencies that already have water use efficiency tips and programs available including the cities of Orange and 1

44 Tustin, the Orange County Garden Friendly program, MWDOC s OCWaterSmart program, etc. Efficient Service and Quality Staffing Communications LAB is dedicated to providing EOCWD with an outreach plan that is both effective and efficient. As you may know, our firm has provided EOCWD services at an hourly rate that offers a discount from our already low public agency rate. We propose to continue providing communications consulting services at the same low rate we proposed last year. We consistently provide effective and quality service and have come in under budget each month. We are committed to continued service to the District at a low rate that does not burden the District with permanent staffing, pensions or any benefit obligations. Brian Lochrie, President of Communications LAB, will continue to serve as the strategic advisor and will coordinate directly with the staff and board on all issues related to the strategic communications plan. Senior Account Manager David Cordero will provide day-to-day project management service and execution of the work plan. Cordero brings 16 years of experience in public affairs including more than a decade as the Government Affairs Director of the Municipal Water District of Orange County. He brings with him relationships that are unparalleled in the water community. Other key staff members that may be involved in the effort include our Creative Director and Graphic Designer Mike Schnell, our Web Designer Arianna Barrios, our Social Media Director Francisco Barajas and Account Coordinator who will assist the team in administration of the contract Monet Eaves. Communications Plan: Due to the Governor s order for mandatory water restrictions that is particularly punitive to East Orange County Water District (EOCWD) customers, it is incumbent upon EOCWD to conduct a community outreach and public education campaign among its 1,200 retain customers emphasizing the importance of water use efficiency. The messaging will emphasize the EOCWD past successes and frugal stewardship as well as the water use efficiency tips that will help drive behavior change. The budget numbers associated with each task items are based on annual development and management estimates and may vary based on the prioritization of the tactics by the EOCWD board and staff. Website Revisions / Management $7,500 Our in-house web designer will review the EOCWD website and provide suggestions to enhance both the design as well as the functionality of the drought page. New information is needed. A blog where updated information can be posted might be effective as well. Our budget includes a $1,500 initial update of information and $500 per month maintenance and update fee. Social Media $7,000 2

45 Our social media expert, Francisco Barajas, will develop the EOCWD Facebook page and create a social media calendar for staff approval. Our team will then post articles, updates and teasers to the Facebook page to encourage engagement and Facebook shares. The cost breakdown is $1,000 for the development of the Facebook page and $500 per month to post articles and information. Francisco Barajas would serve as the manager, however, several CommLAB staff members would also be administrators to the page. In addition to the development, maintenance and updates to the page, we recommend a modest social media advertising budget targeted to the EOCWD service territory that is identified separately within the expense section of the budget. Bill Inserts $2,500 Communications LAB will design bill inserts to go in water bills that are already going to EOCWD customers. These bill inserts will provide both tips for water use efficiency as well as website information to learn more about rebates on water use efficiency materials including drip irrigation systems, California Friendly plants, rain barrels, etc. The bill insert will also address head-on the consequences for not engaging in behavior change (i.e. significant water rate increases). The $2,500 budget noted here is related to the development of the messaging and the design of the bill insert. Any required printing would be separately addressed within the expense section of the budget. Project Brochure $3,500 Communications LAB will design and print project brochures for EOCWD s 1,200 retail customers. The brochures would address the urgency of the need to conserve water and include several water use efficiency tips. These brochures would be mailed to each customer and include a postage-paid business reply card that includes a box that says they would like a home inspection where a staff member could visit and suggest water use efficiency changes. A second box to be checked would say the customer pledges to adopt water use efficiency behaviors. Extra brochures would be printed in order to use them as handouts at community events and community coffees. The $3,500 budget includes the development of the copy, the design and two rounds of edits and revisions prior to printing. The printing of the brochure is separately addressed within the expense section of the budget. Community Coffees $15,000 Communications LAB will hold up to six Community Coffee informal gatherings on Saturday mornings in the neighborhoods of the EOCWD customers. We will go door-to-door the week prior notifying them of the event through door-hanger 3

46 invitations. Then at 9:00 am on Saturday mornings, we will provide coffee and donuts along with water use efficiency material such as nozzles, water timers, and perhaps California Friendly plants at no charge to encourage water use efficiency. The giveaway items are not included within this budget and would be obtained through MWDOC or the city water departments. The $15,000 budget includes the outreach prior to the community coffees and staffing the Saturday morning community coffees. The budget also includes the design of the door-hanger invitations. The printing of the door-hangers is separately addressed in the expenses section of the budget. Speakers Bureau $7,500 Local service clubs like Rotaries, Kiwanis, Chambers of Commerce and other community organizations are filled with key community stakeholders who are influencers in the community. We will coordinate with the schedulers in these groups and service organizations to offer an EOCWD representative to speak about the latest water restrictions and provide water use efficiency tips and brochures for them to take home. We will develop a PowerPoint for the presentations and in sensitivity to staff time, we will offer to provide the presentations as needed. Media Relations $6,000 Once the Community Coffees are fully implemented, we will reach out to the local community newspapers (Tustin News, Orange City News, Foothills Sentry) as well as the environmental and science reporter at the OC Register (Aaron Orlowski) to invite them to attend the community coffees and communicate the importance of encouraging the community to adhere to the new water restrictions. We will monitor the media and respond as needed by developing op-ed articles and/or letters to the editor. Video Tips $3,000 Communications LAB has developed three half-minute Don t Doubt the Drought water use efficiency video tips for Santa Margarita Water District to communicate key messages through a video medium. In order to limit the production cost and minimize post-production costs, we suggest approaching SMWD to ask for the rights to use the concepts and content of the three videos and change the logo and content as needed to make the videos EOCWD-specific. The noted budget includes post-production edits and minor production fees for the three videos. We would also export the video files at a level that could be used for broadcast television as well as online. Should SMWD not wish to release the concepts and content at no charge, EOCWD may wish to contemplate offering a modest fee for the rights to obtain the video for its own use. 4

47 The potential cost to obtain the rights to the videos are contemplated under the expenses section of the budget. Fact Sheets / FAQ $4,000 Communications LAB will develop a Fact Sheet and Frequently Asked Questions as it relates to water use efficiency and the water restrictions enacted upon EOCWD by the state. The information will be developed in memorable, bitesized chunks that will enhance the board s communications efforts. The documents will be dynamic and can be changed on an as-needed basis. Creative Director Mike Schnell will create an attractive template so they can be used as leave-behind informational sheets as well. Strategic Partnerships $4,000 Communications LAB will approach the various municipalities, water districts and county programs to investigate the potential for partnerships and the use of existing collateral material, messaging and other content. We will also suggest that EOCWD be represented on the material that these public agency partners are disseminating. TOTAL PROFESSIONAL FEES (12 months): $60,000 Expense fees: The expenses, or hard costs, associated with this Communications Plan would be minimal and would include the following estimated costs: Social Media advertising ($100 per month) $1,200 Bill Inserts $2,000 Project Brochures (printing, mailing, BRC) quantity 2,500 $3,500 Community Coffee door hangers (six printings) $1,500 Community Coffee expenses (donuts, coffee) $ 300 Video Production Rights from SMWD (negotiated fee) $3,000 Total Expenses (ESTIMATED): $11,500 Total one-year budget (Professional Fees / Expenses) $71,500 5

48 Client Rate Sheet EOCWD Chief Executive Officer $190/hour $175/hour President $185/hour $165/hour Senior Account Manager $175/hour $150/hour Account Manager $150/hour $140/hour Account Executive $125/hour $115/hour Administrator $100/hour $ 75/hour Intern $ 75/hour $ 50/hour

49 MEMO TO: BOARD OF DIRECTORS FROM: GENERAL MANAGER SUBJECT: PROPOSITION 218 WATER RATE STUDY DATE: APRIL 16, 2015 BACKGROUND In the Fall of 2009, the District participated in a MWDOC project that sought and received grant funding for agencies that were willing to incorporate water budgets into their billing system. This grant paid for 60% of the costs incurred to develop water budgets (using a process called aerial thermography) for our Retail Zone customers; Raftelis Financial Consultants performed this work for the District. After significant effort, water budgets were incorporated into the District s Retail Zone billing system in In the Fall of 2010, faced with mandatory water allocations from MET, and declining revenues, the District solicited a proposal from Raftelis to perform a Retail Zone Water Rate Study and retained them at a cost of $23,085. Under Proposition 218, water rate studies must be developed in a very prescribed manner and also include a significant public information effort, along with a public hearing. In their scope of work, Raftelis held two Board workshops and then developed a rate model that examined several rate structures, including inclining tiers as well as uniform rates. At that time, preparation of the administrative record or the written Cost of Service Analysis was performed by district staff, not Raftelis. Ultimately, the Board decided to retain the uniform rate structure and settled upon a three-year rate increase recommended by Raftelis that commenced in June, 2011 and concluded in June, Because of the rapidly and exponentially increasing cost of water, along with reduced water sales that will occur because of the drought and mandatory reductions, staff solicited proposals to retain a consultant to perform a water rate study within the next six months. The scope of work for this effort was expanded from the 2010 effort (which only examined Retail Zone water rates) to include three additional items: 1) Review of Wholesale Zone Rates and Fees 2) Review of Retail Zone connection and miscellaneous fees 3) Preparation of a Financial Plan and Cost of Service Analysis Report Three firms were prequalified to receive the Request for Proposal: 1) Raftelis Financial Consultants, 2) NBS and 3) The Willdan Group. Two proposals were received; the Willdan Group did not respond to our request. The proposals were evaluated pursuant to the attached evaluation form. Five specific evaluation criteria were established and weighted as follows (Note, cost was not considered until after the technical evaluation was completed:

50 Memo re: Proposition 218 Water Rate Study April 2, 2015 Weight 1. Completeness of response 15% 2. Firm & Team Qualifications/Experience with like-sized water agencies 20% 3. Approach to Work 15% 4. Quality of References 20% 5. Cost 30% 2 Based upon the proposal analysis, Raftelis submitted the most responsive proposal (achieving a score of 97 out of 100). While theirs was not the lowest cost proposal, upon evaluation it was ranked higher due to: 1) Raftelis experience with wholesale water agencies (MWDOC, Western Municipal Water District, Eastern Municipal Water District, and 2) the greater number of hours Raftelis estimates for the preparation of the Administrative Record/COSA (40) versus NBS (26). The importance of thorough documentation of the ratemaking process was highlighted in the Capistrano Taxpayers Association v. City of Capistrano water rate case. The value of this effort exceeds the $3,280 differential in cost. The Finance Committee reviewed this issue at their April 2 nd meeting and recommended that the Board approve the contract with Raftelis Financial Consultants. RECOMMENDATION The Board approve a contract with Raftelis Financial Consultants to prepare a Water Rates, Fees & Charges Study at a not-to-exceed cost of $35,000.

51 2015 Water Rate Study Services Proposal Evaluation Form Proposals were evaluated based upon the evaluation criteria as stated below. The cost proposal was not considered until after the qualifications points were awarded. Points Rating 9-10 Excellent response 8-7 Insightful response 6-5 More than adequate response 4-3 Adequate response, no special insights 2-1 Inadequate response 0 No response given Factor Weight Response was complete and met RFP requirements 15% Professional qualifications of firm & team & 20% experience with like sized water agencies Approach to work/value added Items 15% Quality of references 20% Cost 30% Evaluation Criteria NBS Raftelis R W R W 1. Completeness of Response Firm & Team Qualifications/ Experience with like-sized water agencies Approach to Work/Value Added Items Quality of References Cost TOTAL SCORE R = Rating W = Rating with Weighted Factor Applied Firm Name Not-to- Exceed Cost Ranking Raftelis $35,000 1 NBS $31,720 2

52 201 S. Lake Avenue Suite 301 Pasadena, CA Phone Fax Ms. Lisa Ohlund General Manager East Orange County Water District 185 N. McPherson Road Orange, CA March 30, 2015 Subject: Proposal for the Preparation of Water Rates, Fees & Charges Study Dear Ms. Ohlund: Raftelis Financial Consultants, Inc. (RFC) is pleased to submit this proposal to assist the East Orange County Water District (District) with conducting a Water Rates, Fees, and Charges Study (Study). RFC has the largest utility consulting practice in California and the nation specializing in utility financial planning and rate studies. We believe our unique combination of resources, local presence, experience, and knowledge will ensure a value-added study that will benefit the District and the project. Based on our review of the RFP and our experience with similar projects, the primary objective of the study is to develop a sustainable and sufficient long-term financial plan and establish equitable water rates, fees, and charges. The newly designed rates may possibly include drought surcharges and other rate tools to encourage compliance with mandatory rationing requirements for the District s wholesale and retail water services. Specifically, the District will benefit from the following advantages offered by RFC: Depth of Local Resources: As the largest utility financial practice in California and the nation, RFC will ensure the project is completed on time or with an accelerated schedule, if needed. Experience: RFC staff have assisted more than 500 water, wastewater, and recycled water utilities across the country on financial, rate, and management consulting engagements. Industry Leadership: Our senior staff is involved in shaping industry standards by chairing various committees within the American Water Works Association (AWWA) and Water Environment Federation (WEF). Modeling Experts: The model developed for this project will be built from scratch. Our model will be customized for concise presentations at workshops to help facilitate agreement on financial and rate policies associated with the project. Focus: RFC s services are solely focused on providing financial, rate, and management consulting services to water, wastewater, recycled water, and stormwater utilities. Client Satisfaction: RFC strives to develop strong relationships with each of our clients and have earned new work through positive references from existing clients and a solid industry reputation. Your success is our success. We are excited about this opportunity to assist the District with this important study. If you have any questions, please do not hesitate to contact me. Sanjay Gaur, Project Manager (Vice President) 201 S. Lake Avenue, Suite 301, Pasadena, CA P: / F: / E: sgaur@raftelis.com Very truly yours, RAFTELIS FINANCIAL CONSULTANTS, INC. Sanjay Gaur Vice President

53 SCOPE OF WORK The East Orange County Water District (EOCWD) provides wholesale water service to 15 different connections and retail water service to 1,207 residential and non-residential connections in a portion of the cities of Tustin and Orange, Irvine Ranch Water District, Golden State Water Company, and the unincorporated community of Panorama Heights. The District purchases imported water from the Municipal Water District of Orange County (MWDOC) for its wholesale and retail water demand. For the past two years California has experienced one of the most severe droughts in State history. To address water supply issues, on January 20, 2015, MWDOC adopted a methodology to determine the allocation to its member agencies. Member agencies, such as the District, can purchase water above the allocation, but such purchases are subject to severe penalties. The District is particularly concerned about the impacts that the MWDOC water allocation will have and desires to examine, and possibly incorporate, drought penalties or some other rate tool to encourage conservation. Furthermore, the District would like to determine and mitigate the resulting financial impacts due to the reduction in water sales. In light of these goals, it is crucial that a highly qualified consultant is able to conduct a water rates, fees, and charge study that can provide sustainable and sufficient revenues, while remaining consistent with the District s policies and cost of service principles. The utility industry consistently seeks RFC as an advisor to lead the national discourse concerning rate structures. RFC adds value to the rate design process not only through the high level of technical expertise that results from deep experience, but the ability to glean the best ideas and strategies through the collaborative process. TASK 1 PROJECT INITIATION, FRAMEWORK DEVELOPMENT WORKSHOP, AND DATA COLLECTION AND REVIEW RFC will communicate and work with District staff to collect, research, and review relevant data for the Study including, but not limited to: current rates, current and projected water demands, current reserve policies, budgeted documents for revenues and expenses, capital replacement program and infrastructure development, water supply, power costs, and MWDOC drought allocation. During the web-based Kick-Off and Framework Workshop, RFC will discuss the District s current challenges, project goals and expectations, and other important issues to ensure mutual agreement among project participants. RFC will work closely with District staff to discuss and develop the framework of the Study, including but not limited to: reserve policies; water sales reduction goals by customer class for each of the MWDOC drought allocation stage; drought impact mitigation policies; and rate design to promote conservation and achieve the District s water reliability goals while maintaining/enhancing revenue stability and providing water affordability during drought. Task Deliverables: Data request list to District staff prior to Kick-Off and Framework Workshop Review of provided data Presentation materials to guide the discussion for the Kick-Off and Framework Workshop with District staff in Microsoft PowerPoint 2013 Meeting(s) / Conference(s): One (1) web-based Kick-Off Meeting and Framework Workshop with District staff TASK 2 FINANCIAL PLAN DEVELOPMENT FOR WHOLESALE AND RETAIL SERVICES RFC will develop a non-proprietary interactive Financial Plan Model (FPM) for wholesale and retail services to develop a forecast of water revenue requirements over the planning horizon. The FPM will take into consideration estimates of operating and non-operating revenues, projections of operations and maintenance (O&M) expenses, and capital replacement program and infrastructure development. These projections are based on historical results and current economic trends such as the Consumer Price Index (CPI), other inflation factors, and price elasticity of demand assumptions. Using the FPM, RFC will then identify and quantify financial impacts of MWDOC drought allocations and determine the drought-related costs to be mitigated via drought surcharges and develop the multi-year sustainable and sufficient financial plan. The financial plan will be presented in an easy-to-understand format on an interactive Dashboard which shows the impacts of various assumptions so that decisions regarding revenue adjustments, capital financing through pay-go or debt, and reserve balances can all be made quickly and efficiently. Several features of the FPM include (as shown in the Dashboard on the following page): Inputs for key variables (item #1 in Dashboard on the following page) including revenue adjustments, drought revenue requirement (item #2), water demand scenario (item #3), selections for capital program scenarios (item #4) and funding sources [ 1 ] RAFTELIS FINANCIAL CONSULTANTS, INC.

54 Features of the Dashboard denoted with letters and numbers in the model below are described in the text D A&B C E Graphical presentations of projected operating costs and revenue streams, reserve balances, and target levels according to District policies and different funding sources of CIP (PAYGO or debt financed) with flagging features for insufficiency and errors within the Model (items A-E in Dashboard above) Numerical results summarized in pro-forma format for wholesale and retail services Graphical and numerical summary of the results for the whole District The Dashboard is the graphical interface which displays the Model s results in an easily understandable format. As denoted with corresponding letters in the figure above, the Dashboard contains several features, including the ability to show or indicate: A. Revenue adjustments required for the next five (or more) years in order to meet debt coverage and target reserve balance(s) (blue bars in the Revenue Adjustments and Debt Coverage chart) B. Drought fees required to recover the drought-related costs (green bars in the Revenue Adjustments and Debt Coverage chart) at selected Water Demand Scenarios that mimics the Drought Stages set in the Utility s Water Conservation Plan C. Projected operating costs and revenue streams (shown in the Water Operating Financial Plan chart) D. Different funding sources of CIP, PAYGO, or debt financed (shown in the CIP and Funding Sources for Water Funds chart) E. Reserve balances and target levels according to District policies (shown in the Projected Ending Fund Balances) with flagging features when projected balances fall below target levels Following development of the Financial Plan Model, RFC will hold a web-based Financial Plan Workshop with District staff to review the assumptions made and the FPM results, and to develop a financial plan scenario to be used for the rate determination. Task Deliverables: Financial Plan Model in Microsoft Excel 2013 Presentation materials to guide the web-based Financial Plan Workshop with District staff in Microsoft PowerPoint 2013 Meeting(s) / Conference(s): One (1) web-based Financial Plan Workshop with District staff TASK 3 COST OF SERVICE ANALYSIS FOR WHOLESALE AND RETAIL WATER SERVICES Water rates for retail services are subject to Proposition 218 requirements, which require a nexus between the cost of providing water service and the water rates, fees, and charges. To equitably allocate the revenue requirements EAST ORANGE COUNTY WATER DISTRICT [ 2 ]

55 Features of the Dashboard denoted with numbers in the model below are described in the text to each customer class and determine the cost of providing water service to each of these classes, the cost of service analysis will be conducted according to the following process as defined by the industry standards provided in Manual M1: Principles of Water Rates, Fees and Charges, 6th Edition (Manual M1) published by the AWWA: review customer class usage patterns, allocate costs to functional cost categories, and allocate functional costs to customer classes. Throughout the cost allocation process, RFC will comply with the District s policy considerations, procedures, and guidelines applicable to charges for water service and ensure that proposed rates are in compliance with Proposition 218. This analysis provides one of the critical components necessary to establish a defensible administrative record for cost-based water rates. Task Deliverables: Cost of service summary tables to be incorporated into the rate calculations and report Meeting(s) / Conference(s): None TASK 4 RATE CALCULATIONS AND CUSTOMER IMPACT ANALYSES The residential customers have been allocated water budgets, however, there are no penalty rates for exceeding allocations. To promote conservation and be in compliance with Proposition 218, RFC will develop a Water Rate Model to calculate wholesale and retail water rates using the cost of service summary from Task 3. The Model will have the ability to: Evaluate the different fixed/variable revenue structures to enhance revenue stability Examine the inclusion of a residential penalty tier for exceeding water budgets to promote conservation based on marginal water supply costs Calculate drought rate/surcharges that mimics the different water stages of the District s emergency water supply shortage plan to ensure sufficient cost recovery for operations and other programs The Dashboard, which displays key variables and results in real-time on screen, will facilitate discussion to reach a consensus quickly. As part of this task, RFC will also review, recommend changes if appropriate, and update the connection fees. To help facilitate informed decision making, the Model will also include a summary of financial impacts on customers resulting from the proposed rate structure. The key variables and results described in the following correspond to the numbers on the sample Dashboard shown above. Key Variables 1. Cost Allocations to Different Rate Components The total revenue requirement is distributed amongst the various costs such as water supply, delivery, conservation, billing and customer service, capacity, etc. 2. Water Supply Costs Information for Incremental / Marginal Water Supply Rate Components The supply costs for the next available source of water supply which [ 3 ] RAFTELIS FINANCIAL CONSULTANTS, INC.

56 is a primary driver of pricing for higher tier usage. 3. Cost Recovery in Tiers How the costs to provide service are distributed between tiers. Results 4. Resulting Proposed Rates The proposed rates based on the parameters set with the key variables. 5. Sample SFR Bills Impacts at Various Usage Levels A graphical representation of how the proposed rate structure will impact customers bills. Note the ability to change the meter size, lot size, zone, and the billing period for the bill calculations. This tool has proven particularly useful for public outreach campaigns and during the Proposition 218 process. 6. Overall Customer Impact A summary of how customers will see changes in their bills if the proposed rate structure is adopted. This is an invaluable tool to facilitate informed decision making. Task Deliverables: Water Rate Model in Microsoft Excel 2013 Meeting(s) / Conference(s): None TASK 5 RATE DESIGN WORKSHOPS WITH DISTRICT STAFF AND DISTRICT BOARD Following the completion of the Model, RFC will hold a web-based Rate Design Workshop with District staff to develop different rate scenarios. The goal of this workshop is to identify the water rates that will be presented at the rate workshop with the District s Board. Changes and suggestions from staff will be incorporated into the analysis prior to presenting the final results during a subsequent workshop with the Board. In the Rate Design Workshop with the District Board, Sanjay Gaur, the Project Manager, will present the results of the financial plan and proposed rates and discuss the benefits and challenges associated with each proposed rate alternative. The presentation will summarize the evaluated policy options, the methodology and approach used for the analyses, and modeling results and recommendations on water rates, fees, and charges. On the same day of the Board Workshop, RFC will conduct a half-day Model Use Training Session for District staff. Presentation materials used during the Training Session will be provided to District staff for future reference. Task Deliverables: Presentation materials for Rate Design Workshops and Model Training in Microsoft PowerPoint 2013 and meeting minutes for the Workshops to summarize the policy issues discussed and directions provided by the District Meeting(s) / Conference(s): One (1) web-based Rate Design Workshop with District staff One (1) on-site Rate Design Workshop with District Board One (1) half-day on-site Model Use Training session (same day as Board Workshop) TASK 6 REPORT DEVELOPMENT AND RATE PROPOSAL WORKSHOP WITH DISTRICT BOARD The process for developing the financial plan and proposed rate structures along with preliminary rate recommendations will be described in a draft report of findings and recommendations. This draft report will be submitted after the Rate Design Workshop with District Board (Task 5) to incorporate their input into the final results. As a means to ensure that the study includes a thorough administrative record, the Final Report will include an exhibit listing all rate design assumptions and methodologies used to develop the financial plan and rates. Comments from District staff will be incorporated into the Final Report and the Model will be refined to reflect appropriate issues or concerns raised. The Report will be submitted to the District and will include appropriate supporting data from the Model to address the requirements of Proposition 218. Prior to providing public notification of the proposed water rates, RFC will present the final results and report to the District Board in a Rate Proposal Workshop format. Task Deliverables: Draft report, final report in Microsoft Word 2013 and PDF Presentation materials for the Rate Proposal Workshop with District Board Meeting(s) / Conference(s): One (1) conference call with District staff to review the draft report One (1) on-site Rate Proposal Workshop with District Board TASK 7 OPTIONAL TASKS Task 7-1: On-going Technical Support RFC will be available to provide on-going technical support for the use of the Financial Plan and Rate Models and/or other analysis upon request on time and material basis. Task 7-2: Proposition 218 Public Hearings Upon request, RFC will prepare a presentation summarizing the alternatives and proposed rates and present the results of the Study at the Public Hearing to adopt the recommended rates and will be available to answer any questions from the public. The services will be provided on time and material basis. The estimated cost per meeting is shown in the Estimated Hours and Costs section. EAST ORANGE COUNTY WATER DISTRICT [ 4 ]

57 FIRM OVERVIEW In 1993, Raftelis Financial Consultants, Inc. (RFC) was founded to provide services that help utilities function as sustainable organizations while providing the public with clean water at an affordable price. Depth of Resources: RFC has the largest and one of the most respected water industry financial and rate consulting practice in California and the nation. Our depth of resources will allow us to sufficiently staff this project with the qualified personnel necessary to efficiently and expeditiously meet the objectives of the District. Local & National Experience: RFC staff have assisted more than 500 water and/or wastewater utilities across the country on financial, rate, and management consulting engagements. These utilities include some of the largest and most complex utilities in the country. In addition, we have worked with numerous utilities throughout the State of California on hundreds of studies, including financial plans, cost of service, and pricing. Our extensive national and local experience will allow us to provide innovative and insightful recommendations to the District, and will provide validation for the proposed methodology ensuring that industry best practices are incorporated. Industry Leadership: Our senior staff is involved in shaping industry standards by chairing various committees within the AWWA and WEF. RFC s staff members have authored and co-authored many industry standard books regarding utility rate setting, and RFC publishes the national Water and Wastewater Rate Survey, which is co-published with AWWA, and the CA-NV Water Rate Survey, which is co-published with the CA-NV AWWA. Being so actively involved in the industry will allow us to keep the District informed of emerging trends and issues, and to be confident that our recommendations are insightful and founded on sound industry principles. subject for the Association of California Water Agencies (ACWA), California Society of Municipal Finance Officers (CSMFO), and CA-NV AWWA. In addition, we are frequently called on to be expert witnesses regarding these regulatory matters. This expertise will allow the District to be confident that our recommendations take into account all of these regulatory requirements. Modeling Expertise: RFC has developed some of the most sophisticated yet user-friendly financial/rate models available in the industry. Our models are custom-built on a client-by-client basis, ensuring that the model fits the specific needs and objectives of the client. Our models are tools that allow us to examine different policy options and cost allocations and their financial/customer impacts in real time. Our models are non-proprietary and are developed with the expectation that they will be used by the client as financial planning tools long after the project is complete. Rate Adoption Expertise: RFC has assisted numerous agencies with getting proposed rates successfully adopted. Our experience has allowed us to develop an approach that effectively communicates with elected officials about the financial consequences and rationale behind recommended rates to ensure stakeholder buy-in and successful rate adoption. This includes developing a message regarding the changes in the proposed utility rates that is politically acceptable, and conveying that message in an easy-to understand manner. Focus: RFC s services are solely focused on providing financial, pricing, and management consulting services to water-industry utilities. This focus allows RFC professionals to develop and maintain knowledge and skills which are extremely specialized to the services that we provide, and will allow us to provide the District with independent and objective advice. Experts on California Regulatory Requirements: The regulatory environment in California has become more stringent due to Proposition 218 and Government Code Section RFC staff are very knowledgable about these regulations and have made presentations on this [ 5 ] RAFTELIS FINANCIAL CONSULTANTS, INC.

58 PROJECT TEAM Our Project Team consists of some of the most knowledgeable and skilled financial consulting professionals in the water utility industry. In addition to our dedicated Project Team, the District will have the support of RFC s full staff of 50 utility financial and management consultants for this project. Below, we have included brief profiles for some of our key Project Team members, and more detailed resumes can be found in Appendix A. SANJAY GAUR PROJECT MANAGER: Vice President ROLE ON EOCWD PROJECT: Mr. Gaur will manage the day-to-day VICTOR SMITH aspects of the project ensuring it is within budget, on schedule, and effectively meets the District s objectives. He will also lead the consulting staff in conducting analyses and preparing of project deliverables. Mr. Gaur served in this role on past projects for EOCWD. PROFILE: Mr. Gaur has 18 years of public-sector consulting experience, primarily focusing on providing financial and rate consulting services to water and wastewater utilities. His experience includes providing rate structure design, cost of service studies, financial analysis, cost benefit analysis, connection/development fee studies, conservation studies, and demand forecasting for utilities spanning the west coast. Mr. Gaur is considered one of the leading experts in the development of conservation rate structures. He has often provided his insight into utility rate and conservation-related matters for various publications and industry forums, including: authoring articles in Journal AWWA; being quoted in various newspaper articles including the Los Angeles Times and the New York Times; participating in a forum regarding the future of water in Southern California sponsored by the Milken Institute; being quoted on National Public Radio; speaking at various industry conferences including American Water Works Association (AWWA), the Utility Management Conference, Association of California Water Agencies, and California Society of Municipal Finance Officers; and, co-authoring several industry guide books including AWWA s Manual M1 Principles of Water Rates, Fees and Charges, 6th Edition as well as AWWA s Water Rates, Fees, and the Legal Environment, Second Edition. Mr. Gaur co-authored a chapter entitled, Understanding Conservation and Efficiency Rate Structures, for the Fourth Edition of the industry guidebook, Water and Wastewater Finance and Pricing: The Changing Landscape. Mr. Gaur is also active in a number of utility-related associations, including serving as a member of AWWA s Rates and Charges Committee. SUDHIR PARDIWALA, PE PROJECT DIRECTOR / TECHNICAL REVIEWER: Executive Vice President ROLE ON EOCWD PROJECT: Mr. Pardiwala will be responsible for overall project accountability, and will be available to provide insights into various cost of service and rate-setting matters. He will also provide quality control oversight for the project. PROFILE: Mr. Pardiwala has 37 years of experience in financial studies and engineering. He has extensive expertise in water and wastewater utility financial and revenue planning, valuation and assessment engineering. He has conducted numerous water, storm water, reclaimed water and wastewater rate studies involving conservation, drought management, risk analysis, as well as system development fee studies, and has developed computerized models for these financial evaluations. He has assisted several utilities with State Revolving Fund and Water Reclamation Bond loans. Mr. Pardiwala authored the chapter on reclaimed water rates in the Water Environment Federation s (WEF) Manual of Practice, Financing and Charges for Wastewater Systems, and a chapter entitled, Recycled Water Rates, for the Fourth Edition of the industry guidebook, Water and Wastewater Finance and Pricing: The Changing Landscape. He was vice-chairman of the CA-NV AWWA Business Management Division and Chairman of the Financial Management Committee. CONSULTING STAFF EOCWD PROJECT MANAGER SANJAY GAUR STAFF CONSULTANTS KHANH PHAN AKBAR ALIKHAN JOHNATHAN CRUZ STEVE GAGNON, PE KEVIN KOSTIUK HANNAH PHAN PROJECT DIRECTOR / TECHNICAL REVIEWER SUDHIR PARDIWALA, PE ROLE ON EOCWD PROJECT: Our Team will be supported by seven of RFC s talented consulting staff from our Pasadena office. These consultants almost 30 years of combined utility rate consulting experience. Our Project Team will also have the support of RFC s full staff of 50 utility financial, rate, and management consultants. EAST ORANGE COUNTY WATER DISTRICT [ 6 ]

59 REFERENCES RFC has provided financial, rate, and/or management consulting services to more than 500 utilities in the U.S., including some of the largest and most complex water, wastewater, and stormwater utilities in the nation. and California. In the past year alone, RFC worked on more than 400 financial, rate, and management, and operational consulting projects for over 250 water, wastewater, and/or stormwater utilities in 38 states, the District of Columbia, Canada, and Puerto Rico, including projects for more than 75 California utilities. Below, we have provided detailed descriptions of several similar projects along with references. EL TORO WATER DISTRICT (CA) REFERENCE: Michael Grandy, Asst. GM/CFO Los Alisos Blvd., Lake Forest, CA / P: / E: mgrandy@etwd.com RFC has assisted El Toro Water District (District) with the development of its rates on an ongoing basis since At that time, the District had not updated its water and wastewater rates or rate structure in more than 10 years and was operating at a deficit. RFC prepared a 12-year financial plan evaluating the operating and capital expenses, debt service, and reserve requirements. A cost of service analysis was conducted to review the equity of the rates and existing rate structures. The adopted rates, resulting from the cost of service study in 2006, unbundled rate components to convey the true cost of various service components and to continue to equitably pass on the cost of water, wastewater, and recycled water services to users. In 2009, the District engaged RFC to design a water budget rate structure for its residential and irrigation accounts to help promote water-use efficiency. RFC designed a water budget rate structure which ensured revenue stability, financial sufficiency, and provided the appropriate price signal for different supply costs and conservation program funding for the District. The following outlines the methodology used to develop the water budget rate structure: Indoor allocations varied by the number of occupants and outdoor allocations varied based on weather data and irrigable area The irrigable area was determined by taking the total parcel area less the building area acquired from the Assessors Secured Roll The allocation budgets considered irrigation efficiency and type of landscape Next, RFC developed a water budget rate model that allowed the District to quickly view the impacts of alternative rates and budgets, to aid policy makers in making well-informed decisions in a timely manner. This tool proved invaluable when presenting the results in a graphical format to the District Board of Directors because it enabled them to easily see the impacts of different water budgets on their customers in real-time. As a result, the Board adopted the water budget rate structure in June To minimize rate shock to upper-tier users, RFC developed a three-phase implementation plan that slowly phased in Tier 3 and Tier 4 rates. The rate unbundling and phase-in implementation plan were found beneficial and useful for the District during public outreach and rate implementation. The findings and recommendations resulting from the Study were summarized and documented in the Study Report. Since the Water Budget Rate Study in 2009, each year RFC was retained by the District to conduct the cost of service annual study to update its water and wastewater rates. In 2012, the District engaged RFC to conduct a recycled water financial plan study to evaluate the impacts of the recycled water expansion on the Water and Wastewater Enterprises. In late 2014 and early 2015, California has experienced one of the most severe droughts in state history. The District currently purchases 100 percent of its potable water supply from the Metropolitan Water District of Orange County (MDWOC), a wholesale customer of the Metropolitan Water District of Southern California (MWD). To address water supply issues, MWD developed the Water Supply Allocation Plan (WSAP) which provides reduced allocations to wholesale customers within MWD s service area. In turn, on January 20, 2015, MWDOC adopted a methodology to determine the allocation to its member agencies. Member agencies, such as the District, can purchase water above the allocation, but such purchases are subject to severe penalties. The District engaged RFC in a Drought Rate Study to determine the indoor and outdoor drought factor adjustments necessary to encourage conservation among its residential and irrigation customers and to develop penalty rates for commercial customers in order to achieve the required reductions in consumption under increasing levels of drought. As part of the Study, RFC conducted financial impact analyses on revenues, expenditures, and net revenues for each drought stage. The Study analyzed the impacts if: 1) customers continued to consume at normal (non-drought) levels, or 2) customers reduced consumption by the amount required. The methodology and results of the Study were documented in the Drought Study Report and submitted to the District to support the adoption of the District s Water [ 7 ] RAFTELIS FINANCIAL CONSULTANTS, INC.

60 Conservation & Water Supply Shortage Ordinance in March of ALAMEDA COUNTY WATER DISTRICT (CA) REFERENCE: Michael Yee, Financial Services Manager S. Grimmer Blvd., Fremont, CA / P: / E: Michael.Yee@acwd.com In 2011, the Alameda County Water District (District) engaged RFC to conduct a water conservation rate study. They had recently seen a significant reduction in demand, which caused a decrease in revenue. The District was interested in developing a conservation rate structure that would assist them in meeting the regulatory requirements of SBx7-7, promote efficiency, and create revenue stability. The District s existing rate structure consisted of a fixed service charge and uniform commodity rates for all customer classes. RFC examined and evaluated inclining tiered rate structures and water budget-based rate structures. Each potential rate structure had numerous variations associated with them. Factors examined included: historical vs. real-time weather factors for designing the tier widths for budget-based rates and inclining tiered rates; different methodologies for determining residential landscape areas which were used to determine outdoor water budgets; indoor and outdoor drought factors; and gallons per capita per day for each residential household member. In early 2012, the District commissioned RFC to develop a 25-year Financial Plan Model (Model) to assess risk in water supply variance and capital spending plans, and evaluate the associated potential financial impacts. RFC presented the Model to the District Board to show the District s financial health under various scenarios related to water supply, water sales, and expenditures. In the same year, the District retained RFC to conduct the financial impact analysis of the outcomes of the union negotiation. RFC worked closely with District staff to develop the Union Negotiation Module which was used to demonstrate the financial impacts of the negotiated labor and benefits contracts on the District. Since 2012, the District has retained RFC annually for support on updating the Financial Plan and other financial and rate analyses. In 2014, the District engaged RFC to conduct a drought rate study to evaluate the financial impacts of the recent severe and ongoing drought and to develop a drought rate schedule to help mitigate its financial impacts. The Drought Study Report, which summarized the methodology and results of the Study, was submitted to the District and adopted by the District Board in April In late 2014, the District once again retained RFC to conduct a long-term financial plan and cost of service analysis to develop rates that: would maintain financial sufficiency; are consistent with the District s policies; comply with general cost of service principles; and are in compliance with Proposition 218 requirements. During the course of the Study, the financial plan model (FPM) considered numerous different drought scenarios and different financial outcomes. The scenarios covered included normal no-drought conditions, a mild drought ending in one year (2015 drought only), a medium drought ending after two years (medium), and a severe drought spanning three years (extended dry period). In addition, as part of the Study, RFC evaluated and presented two bi-monthly fixed service charge options to the Board of Directors during the December 2014 Public Workshop. One of the goals when developing a fixed charge is to better align fixed charge revenues with fixed cost and to align commodity revenues with variable costs. The drought surcharge, which was developed in the drought rate study and adopted in July of 2014, will continue to mitigate the effects of reduced demand until the provisions of the Drought Surcharge Sunset criterion are met. As part of the Study, RFC developed the Comprehensive Water Rate Report (Report) to be used as an administrative record. The Report highlighted the major issues and decisions made during the course of the Study, provided an overview of operations, CIP, and the financial plan, and discussed and explained the cost of service analysis and methodology used to develop the final rates. The explanation of the methodology found within the Report demonstrates that the rates are equitable, reflect the District s policies and values, and are driven by the District s revenue requirements. The Final Report was submitted to the District in March 2015 for the Public Hearing in April Rates are expected to be adopted on May 1, CITY OF SAN JUAN CAPISTRANO (CA) REFERENCE: Keith Van Der Maaten, Public Works and Utilities Director Paseo Adelanto, San Juan Capistrano, CA / P: / E: kvandermaaten@sanjuancapistrano.org The City of San Juan Capistrano was recently sued by its ratepayers regarding a tiered rate structure developed by the City s previous rate consultants. The plaintiffs were concerned that the previous rate structure did not meet the cost of service test per the requirements of Proposition 218. The courts determined the administrative records were not sufficient to establish a clear nexus for the rates. The City selected RFC to assist with resolving this matter. One factor in the City s decision for selecting RFC was the rigorous nature of our approach for defensible rate structures as compared to many practitioners in the industry. In the case of the City and other agencies, a common practice has been to base tier prices on multipliers. This leaves agencies exposed to courts opining that their multiplier approach violates the arbitrary and capricious provision of Proposition 218. EAST ORANGE COUNTY WATER DISTRICT [ 8 ]

61 In resolving the City s matter, RFC implemented its approach for satisfying a clear nexus for the rates; there needs to be a clear justification of the tiers and pricing. RFC achieved this nexus by developing rate components which were used to justify the various tiers for the proposed rate structure. RFC s work withstood the rigorous scrutiny of several City Council meetings, including a multi-hour discussion confirming the defensibility of RFC s cost of service approach. The rates were approved and adopted in SAN GABRIEL COUNTY WATER DISTRICT (CA) REFERENCE: Barbara Carrera, General Manager 8366 Grand Avenue, Rosemead, CA, / P: (626) / E: barbara@sgcwd.com San Gabriel County Water District (District) provides water service to 45,000 residents and more than 900 businesses within the City of San Gabriel as well as areas within Temple City, the City of Rosemead, and surrounding unincorporated areas. As a result of recent legal cases and increased public scrutiny, utilities and public agencies have become more transparent, including ensuring that they have a clear administrative record which clearly establishes the nexus between the cost of providing the services and the rates assessed to ratepayers. In 2014, the District engaged RFC to conduct a water rate study (Study) to develop a solvent financial plan for the water enterprise and to establish water rates that are equitable and in compliance with Proposition 218. The study involved developing a long-term financial plan to ensure financial sufficiency for the operational and capital expenditures, conducting cost of service analysis, designing an equitable and defensible conservation rate structure to enhance revenue stability while also promoting water conservation, and conducting the customer impact analysis of the proposed rates. Recent court cases have emphasized the importance for a thorough administrative record and defensible methodology to support the final rates. As part of the Study, RFC developed the Comprehensive Water Rate Report (Report) to be used as an administrative record. The Report highlighted the major issues and decisions made during the course of the Study, provided an overview of operations, CIP, the financial plan, and discussed and explained the cost of service analysis and methodology used to develop the final rates. The explanation of the methodology found in the Report demonstrates that the rates are equitable, reflect the District s policies and values, and are driven by the District s revenue requirements. LA HABRA HEIGHTS COUNTY WATER DISTRICT (CA) REFERENCE: Tammy Wagstaff, Treasurer Hacienda Rd., La Habra Heights, CA / P: / E: tammy@lhhcwd.com In 2011, RFC was engaged by La Habra Heights County Water District (District) to develop a wholesale rate for water transported to Rowland Water District (Rowland) through the District s transmission system. Rowland sought to use the District s facilities to transport 2,000 acre-foot (AF) of water per year to its service area. The groundwater rights are owned by Rowland; thus, they would only need to pay for their fair share of costs in utilizing the District s facilities. RFC calculated the wheeling rate using the Utility Approach recommended by AWWA, which focuses on three primary cost components: 1) a proportionate share of the annual depreciation expense associated with the assets that provide service to wholesale customers; 2) a proportionate share of the operating and maintenance (O&M) expenses related to these assets; and 3) a rate of return applied to the utility s investment in these assets. In addition, RFC developed the wheeling rate under two scenarios. Scenario 1 included all capital assets used in the transportation of the water to Rowland, assuming that the District would be responsible for the repair and replacement of those assets. Scenario 2 assumed that Rowland would be responsible for the repair and replacement of the wells and pumping plants, as part of the agreement. In 2012, the District faced significant challenges, mainly arising from increased water supply costs, in addition to rising operating costs and a significant Capital Improvement Program (CIP). In FY 2011 the District received approximately 98 percent of its water supply as groundwater from the Water Replenishment District and imported the remaining two percent (approximately) from the Central Basin Municipal Water District (Central Basin). The Water Replenishment District increased its replenishment assessment charge from $205 per acre-foot (AF) in FY 2011 to $244 per AF in FY 2012, an increase of 19 percent. To address these changes and ensure the financial stability of the water enterprise, the District engaged RFC to perform a water rate study (Study), which included developing the financial planning model (Model) and developing a set of proposed water rates and recommendations. RFC developed the Model as a tool to assess risk in water supply variance, capital spending plans, and evaluate associated potential financial impact. As part of the Study, RFC developed the Comprehensive Water Rate Report (Report) to be used as an administrative record. The Report highlighted the major issues and decisions made during the course of the Study, provided an overview of operations, CIP, the financial plan, and discussed and explained the cost of service analysis and methodology used to develop the final rates. The 10-year financial plan and 5-year water rates were adopted by the Board to be effective July of each year from July 2012 to July [ 9 ] RAFTELIS FINANCIAL CONSULTANTS, INC.

62 PROJECT SCHEDULE RFC will complete the scope of work within the timeframe shown in the schedule below. The proposed schedule assumes the needed data will be available in a timely manner and we will be able to schedule meetings with EOCWD as necessary. Task Task Descriptions Project Initiation, Framework Development Workshop and Data Collection and Review Financial Plan Development for Wholesale and Retail Services Cost of Service Analysis for Wholesale and Retail Services Rate Calculations and Customer Impact Analyses Rate Design Workshops with District Staff and District Board Report Development and Rate Proposal Workshop with District Board Apr 2015 May 2015 Jun 2015 Jul 2015 Aug 2015 Deliverable(s): Data request list, review of provided data, Presentation materials and meeting minutes for the Kick off/ Framework Workshop with District staff Deliverable(s): Financial Plan Model in M Excel 2013 and Presentation materials and meeting minutes for the Financial Plan Workshop with District staff Deliverable(s): Cost of service summary tables to be incorporated into the rate calculations and Report Deliverable(s): Water Rate Model in Microsoft Excel 2013 Deliverable(s): Presentation materials for Rate Design Workshops and Model Training in Microsoft PowerPoint 2013 and meeting minutes for the Workshops Deliverable(s): Draft Report, Final Report in Microsoft Word 2013 and PDF and Presentation materials for the Rate Proposal Workshop with District Board Web based Kick off Meeting Delivery of Report and/or Drafts In Person Workshop / Training Web Meeting ESTIMATE OF HOURS AND COST RFC proposes to complete the scope of work outlined in this proposal for a lump sum fee of $35,000 including related administrative expenses. The following work plan provides a breakdown of the estimated level of effort required for completing each task described. We have also included a separate estimate for optional tasks. No of No of Hours Requirements Total Fees Task Task Descriptions Webinars No of Meetings No of SP SG Hours Requirements SC Admin Total & Total Expenses Fees Task Task Descriptions HOURLY RATES Webinars Meetings $300 SP $270 SG $190 SC Admin $70 Total & Expenses Project Initiation, Framework Development 1 HOURLY RATES 1 $300 $270 6 $190 8 $ $3,440 Project Workshop Initiation, and Data Framework Collection Development and Review $3,440 Workshop Financial Plan and Development Data Collection for and Wholesale Review and $7,990 Financial Retail Services Plan Development for Wholesale and $7,990 Retail Cost of Services Analysis for Wholesale and Retail $3,990 Services Cost of Service Analysis for Wholesale and Retail $3,990 Services Rate Calculations and Customer Impact Analyses $8,240 4 Rate Calculations Design Workshops and Customer with District Impact Staff Analyses and $8,240 $6,110 Rate District Design Board Workshops with District Staff and $6,110 6 District Report Development Board and Rate Proposal Workshop $10,050 Report with District Development Board and Rate Proposal Workshop $10,050 with District TOTAL BoardESTIMATED MEETINGS / HOURS TOTAL ESTIMATED PROFESSIONAL MEETINGS / HOURS FEES No 3 of No 3 of $1,200 4 $14, Hours $22,040 Requirements 116 $280 4 $37, Total Fees Task Task Descriptions SP Sudhir Pardiwala (Project Director/Technical PROFESSIONAL Reviewer FEES Exec. Webinars No VP) of Meetings No of $1,200 SP $14,310 SG Hours $22,040 Requirements FC Admin $280 Total $37,830 Total Fees & Total $37,830 Expenses Fees Task Task Descriptions SP SG Sudhir Sanjay Pardiwala Gaur (Project (Project Manager Director/Technical VP) HOURLY Reviewer RATES Exec. Webinars VP) Meetings $300 SP $270 SG $190 FC Admin $70 Total & Expenses Total Total Expenses Fees $37,830 $1,990 SG SC Staff Sanjay Optional Consultants Gaur (Project Proposition Manager 218 Public VP) Hearings HOURLY RATES $300 $270 $190 $ $2,590 SC Admin Staff (per Optional Administration Consultants meeting) Proposition 218 Public Hearings TOTAL FEES Total & EXPENSES Expenses $39,820 $1, $2,590 Admin (per Administration meeting) TOTAL ESTIMATED MEETINGS / HOURS TOTAL FEES & EXPENSES $39,820 TOTAL ESTIMATED PROFESSIONAL MEETINGS / HOURS FEES 0 1 $0 0 $1,620 6 $760 4 $0 0 $2, SP Sudhir Pardiwala (Project Director/Technical PROFESSIONAL Reviewer FEES Exec. VP) $0 $1,620 $760 $0 Total $2,380 Fees $2,380 SG SP Sudhir Sanjay Pardiwala Gaur (Project (Project Manager Director/Technical VP) Reviewer Exec. VP) Total Total Expenses Fees $2,380 $210 SG SC Staff Sanjay Consultants Gaur (Project Manager VP) Total Expenses $210 TOTAL FEES & EXPENSES $2,590 SC Admin Staff Administration Consultants TOTAL FEES & EXPENSES $2,590 Admin Administration EAST ORANGE COUNTY WATER DISTRICT [ 10 ]

63 EOCWD Request for Proposal for Water Rates, Fees & Charges Study March 17, 2015 EXHIBIT "E" (Submit with Proposal) ACKNOWLEDGMENT OF INSURANCE REQUIREMENTS AND CERTIFICATION OF ABILITY TO PROVIDE COVERAGES SPECIFIED Sanjay Gaur Representative (President, Secretary, Partner, Owner or Representative) Raftelis Financial Consultants, Inc. (Name of Company or Corporation or Owner) certify that the Insurance Requirements set forth in the accompanyi ng District Sample Agreement have been read and understood, and that our insurance company(ies) Cincinnati Insurance Company (fill in name of insurance company) is/are able to provide the coverages specified. Signature of President, Secretary, Partner, Owner or Representative March 30, 2015 Date Page 21 21

64 PROJECT TEAM RESUMES TECHNICAL SPECIALTIES Model development Financial analysis Cost of service studies Conservation rate structure design Connection/development fee studies Economic analysis Cost benefit analysis Demand forecasting Econometric analysis PROFESSIONAL HISTORY Raftelis Financial Consultants, Inc.: Senior Manager (2012-present); Manager ( ) Red Oak Consulting, Division of Malcolm Pirnie ( ) MuniFinancial ( ) A & N Technical Services ( ) United States Peace Corps, Bulgaria ( ) EDUCATION Master of Public Administration, Public Administration/International Development, Kennedy School of Government - Harvard University (2003) Master of Science, Applied Economics - University of California, Santa Cruz (1994) Bachelor of Arts, Economics and Environmental Studies - University of California, Santa Cruz (1992) PROFESSIONAL MEMBERSHIPS American Water Works Association - Rates and Charges Committee California Society of Municipal Finance Officers PROFESSIONAL RECOGNITIONS Who s Who in America, 63rd Edition (2009) Finalist, National Venture Competition (2003); Goldman Sachs Foundation SANJAY GAUR PROJECT MANAGER Vice President PROFILE Mr. Gaur has 18 years of public-sector consulting experience, primarily focusing on providing financial and rate consulting services to water and wastewater utilities. His experience includes providing rate structure design, cost of service studies, financial analysis, cost benefit analysis, connection/development fee studies, conservation studies, and demand forecasting for utilities spanning the west coast. His project experience includes engagements with the Metropolitan Water District of Southern California, San Diego County Water Authority, Eastern Municipal Water District, Alameda County Water District, and East Bay Municipal Water District, among many others. Mr. Gaur is considered one of the leading experts in the development of conservation rate structures. He has often provided his insight into utility rate and conservation-related matters for various publications and industry forums, including: authoring articles in Journal AWWA; being quoted in various newspaper articles including the Los Angeles Times and the New York Times; participating in a forum regarding the future of water in Southern California sponsored by the Milken Institute; being quoted on National Public Radio; speaking at various industry conferences including American Water Works Association (AWWA), the Utility Management Conference, Association of California Water Agencies, and California Society of Municipal Finance Officers; and, co-authoring several industry guide books including AWWA s Manual M1 Principles of Water Rates, Fees and Charges, 6th Edition as well as AWWA s Water Rates, Fees, and the Legal Environment, Second Edition. Mr. Gaur co-authored a chapter entitled, "Understanding Conservation and Efficiency Rate Structures," for the Fourth Edition of the industry guidebook, Water and Wastewater Finance and Pricing: The Changing Landscape. Mr. Gaur is also active in a number of utility-related associations, including serving as a member of AWWA s Rates and Charges Committee. RELEVANT PROJECT EXPERIENCE EAST ORANGE COUNTY WATER DISTRICT (CA) Mr. Gaur served as the Project Manager in assisting East Orange County Water District in evaluating a water budget rate structure. Mr. Gaur educated the Board of Directors on the benefits of water budget rate structure; developed a water budget model to determine the associated rates and customer impacts. CITY OF HUNTINGTON BEACH (CA) Mr. Gaur served as Project Manager for a sewer cost-of-service and rate design study. The engagement called for the redesign of rates EAST ORANGE COUNTY WATER DISTRICT [ 12 ]

65 to achieve City s policy goals associated with improving inter-class equity, reducing administrative burden, and maintaining revenue stability, while adhering to cost-ofservice principles. Mr. Gaur also served as the Project Manager in evaluating a water budget rate structure for the City. This included workshop with staff on developing a water budget framework that is consistent with City policy and the development of a water budget model that can calculate the associated rates and estimate customer impacts. EL TORO WATER DISTRICT (CA) Mr. Gaur assisted El Toro Water District in the development and implementation of a water budget rate structure. This included facilitating the discussion on the policy options associated with the allocation factors for indoor and outdoor needs with staff and the Board, the development of a water budget model, and ensuring the billing system is compatible with the new requirements associated with the water budget rate structure. The new rate structure was adopted in June WESTERN MUNICIPAL WATER DISTRICT (CA) Mr. Gaur served as Project Manager for the implementation of a water budget rate study, which included facilitating and leading a discussion on the policy options associated with the development of a water budget rate study. Based on these policy options, a water budget model was developed that can evaluate different allocation factors for indoor and outdoor water use, determine price ratios for the corresponding tiers, and develop the corresponding rates and customer impacts. Mr. Gaur served as the Project Manager for the development of a financial model for the District. The model has the ability to examine the 14 different fund centers of the District, develop and save different Capital Improvement Plan scenarios, examine the financial consequences of these scenarios and compare the results. In addition the model has the ability aggregate the fund centers by water, wastewater or by the whole District. The model is currently being utilized by the District to examine long term health of the District. ALAMEDA COUNTY WATER DISTRICT (CA) Alameda County Water District (District) currently has a uniform rate structure and is interested in developing a conservation rate structure that will assist them in promoting water efficiency, comply with regulatory requirements of SBx7-7, achieve revenue stability and is equitable. Mr. Gaur served as the Project Manager and led a series of workshop with the Executive Management and the Board of Directors in evaluating and identifying the proper rate structure that meets their objectives. Based on this outcome, RFC developed a conservation rate structure that can compare different types of inclining and water budget rate structure and evaluate the customer impacts associated with these rate structures. EASTERN MUNICIPAL WATER DISTRICT (CA) Mr. Gaur served as Project Manager for rate structure evaluation study by assisting Eastern Municipal Water District (EMWD) managers and Board in the evaluation and assessment of the feasibility of implementing a water budget rate structure. Mr. Gaur also moderated a series of three interactive workshops to examine a water budget rate structure and its ability to meet EMWD policy goals such as equity, conservation and revenue stability. EMWD was successfully able to implement a water budget rate structure in April RANCHO CALIFORNIA WATER DISTRICT (CA) Mr. Gaur assisted Rancho California Water District (District) in the development of a water budget rate structure. The project required the consultant to develop a flexible water budget model that could do multiply block with allocation and determine the appropriate revenue within a month. The team was successfully able to accomplish this task and assisted the District in implementing the new water budget rate structure. The rates where successfully adopted in November Mr. Gaur also assisted the District in the development of a New Water Demand Offset Fee. The New Water Demand Offset Program is a form of funding of conservation measures that will help to create sustainable, zero water footprint development. New developments will pay fees called New Water Demand Offset Fees to create potable water savings in the existing system to support water demand generated by new developments. Water savings can be achieved by converting irrigation accounts to recycled water or installing high efficiency retrofits to replace inefficient fixtures for existing accounts in RCWD. This fee is expected to be adopted in February AMERICAN WATER COMPANY (CA) The City of Monterey s water rate structure allowed for water budget programs determined by household size, lot size, zip code, and the number of large animals in the service area. Mr. Gaur examined and developed a water rate model for the service area. He also assisted in the design of various water budget structures that allowed for accountability and examined customer impact of different rate structures. Results were presented at the California Public Utility Commission. CITY OF CALEXICO (CA) Mr. Gaur performed a water and sewer rate study for the [ 13 ] RAFTELIS FINANCIAL CONSULTANTS, INC.

66 city and examined the implication of Proposition 218 on lifeline rates. He assisted in the development of a rate model to determine the appropriate rates for meeting future capital and reserve needs. Mr. Gaur facilitated a rate workshop and presented final results to City Council. The City Council adopted both the recommended water and sewer rates, which will pay for capital projects associated with water and sewer. CITY OF CHOWCHILLA (CA) Mr. Gaur served as a Project Manager for the City of Chowchilla, Water and Wastewater study. There are two major areas of the study; the first is the development of a financial plan that can fund their mandatory CIP, while meeting their reserve requirements. The second part of the study is the development of a fair and equitable rate structure, given that the majority of the customers do not have meters. CITY OF CORONA (CA) Mr. Gaur served as a Project Manager for the City of Corona, Water Budget Rate study. He facilitated a workshop on the policy options associated with the development of a water budget rate structure. Based on these policy options, a water budget model was developed that can conduct sensitivity analysis on allocation factors, price ratios, revenue requirements and customer impacts. CITY OF HOLLISTER (CA) Mr. Gaur developed a sewer rate and impact model to examine the rate and impact fee implication of $120 million treatment project. He also conducted a workshop and presented final results to City Council. The Council adopted the recommended sewer rates, which will finance the $120 million treatment plant project. INLAND EMPIRE UTILITIES AGENCY (CA) Mr. Gaur conducted a series of workshops for Inland Empire Utilities Agency on the different types of conservation rate structure and how they can assist them in meeting the requirements of SBx7-7, achieving revenue stability and promoting equity. INDIO WATER AUTHORITY (CA) Mr. Gaur served as Project Manager for user fee study to evaluate current user fees and their ability to recover associated administrative and other operational costs. He developed a new schedule of user fees to meet City s policy objectives of fairness and defensibility. Mr. Gaur also conducted a water rate study and presented results to City Council. The Council adopted the recommended water rates, which provided an equitable allocation of cost between fixed and variable rates. IRVINE RANCH WATER DISTRICT (CA) Mr. Gaur evaluated the District s conservation program by conducting econometric analysis that controlled for exogenous factors, such as weather conditions. The results from the study provided information on which conservation program provided the greatest return on investment. CITY OF LOMITA (CA) Mr. Gaur conducted a water rate workshop with concerned citizens to explain how rates were assessed and calculated, using laymen s terminology to foster understanding among community members. City Council adopted the recommended rates. LOS ANGELES DEPARTMENT OF WATER AND POWER (CA) Mr. Gaur performed a econometric analyses on daily demand based on deviation from mean temperature. Results from the study helped redesign engineer estimates on sizing of water lines. CITY OF LYNWOOD (CA) Mr. Gaur developed a cost allocation model to determine the appropriate amount of transfer ($3 million) between the Water Enterprise Fund and the City General Fund. The report met the requirements associated with Proposition 218. CITY OF MERCED (CA) Mr. Gaur completed a water and sewer rate and impact fee study, including examination of financing options associated with a $200 million treatment plant. The engagement included the development of a rate and impact fee model that explored and assessed different capital project scenarios. He also conducted a workshop and presented final results to City Council. The council adopted the recommended impact fees for water and sewer. METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA (CA) Mr. Gaur developed a drought allocation model for Metropolitan Water District of Southern California member agencies. The allocation is based on severity of drought, historical usage, and demand-hardening factor. The model served as a tool to guide decision making process in determining fair and equitable allocations. Mr. Gaur also served as project manager for long-range financial plan study and facilitated workshops with management, member agencies, and stakeholders to assess the economic, political, and technical feasibility of a growth-related infrastructure charge. He also led seminars to inform participants of the prevailing industry standards for adhering EAST ORANGE COUNTY WATER DISTRICT [ 14 ]

67 to cost-of-service principles and navigating California s complex legal environment. Lastly, Mr. Gaur served as the project manager to evaluate Metropolitan Water District of Southern California cost of service methodology to confirm it is consistent with industry standards, policy objectives that the Board of Directors has adopted and is being implemented as intended. MONTEREY PENINSULA WATER MANAGEMENT DISTRICT (CA) Mr. Gaur provided an evaluation of the conservation impact of a toilet conservation pilot program for Monterey Peninsula Water Management District using an econometric analysis that was controlled for seasonal and weather conditions. The study confirmed expected savings estimates. PASADENA WATER AND POWER (CA) Mr. Gaur served as Project Manager for comprehensive water cost-of-service and rate design study. Developed long-range financial plan with evaluation of recycled water program, rate stabilization fund, and drought scenarios. He also performed a cost-of-service analysis and redesigned rates to adhere to cost-of-service principles and the legal requirements of California Proposition 218. MUNICIPAL WATER DISTRICT OF ORANGE COUNTY (CA) Mr. Gaur developed an optimization model for conservation programs. The results guided the District in developing a master plan for conservation programs. PACIFIC INSTITUTE (CA) Mr. Gaur developed an audit model for water agencies which determines the amount of greenhouse gases produced by source of water and the associated energy requirement. The model has the ability to examine different scenario options and compare them to the base case. CITY OF PORT HUENEME (CA) For this engagement, Mr. Gaur performed a water and solid waste study and workshop for City Council. The Council immediately adopted solid waste rate recommendations and water rates are under consideration. CITY OF RENO (NV) Mr. Gaur served as Project Manager for sewer rate and connection fee study and included the development of a longrange financial plan for sewer fund with evaluation of several different capital improvement program scenarios, debt/cash funding combinations and reserve funds. As part of the study, Mr. Gaur also performed a cost-of-service analysis and developed sewer rates and connection fees to meet policy goals of revenue stability and fairness. SAN DIEGO COUNTY WATER AUTHORITY (CA) Mr. Gaur examined SDCWA s prior practices, made recommendations, and developed an index model that determined the appropriate inflation and escalation factor for capital projects. A Monte Carlo simulation was used with the escalation factor of the index model to develop distribution estimates. Mr. Gaur also developed a rate model for the water authority which allocated resources and costs to member agencies. The model was used to develop different allocation scenarios based on historical and spatial factors and served as a tool to guide decision making process in determining fair and equitable allocations. SANTA CLARA VALLEY WATER DISTRICT (CA) Mr Gaur evaluated the effect of a water softener pilot program on conservation. He also conducted billing analysis to estimate savings, using a control group to account for exogenous factors. The results confirmed engineering estimates on savings potential. SOUTH COAST WATER DISTRICT (CA) Mr. Gaur assisted the District in evaluating a water budget rate structure. Currently the District has a five tiered inclining rate structure. RFC developed a model that compared the usage pattern between the current rate structure and a water budget, to determine how equitable the current rate structure is, given lot size. Mr. Gaur presented the finding to the Board of Directors. CITY OF SOUTH GATE (CA) Mr. Gaur performed a water impact fee analysis for the city and presented results to City Council. The Council adopted the recommended water impact fee, which provides additional resources for expansion projects. CITY OF VISTA (CA) As Project Manager for a sewer rate and connection fee study, Mr. Gaur developed a long-range financial plan for City of Vista Sanitation and Buena Sanitation District, including financing of a $300 million capital improvement program. The project required a cost-of-service analysis and redesign of the sewer rate structure and connection fee schedule to adhere to cost-of-service principles while meeting escalating revenue requirements. Mr. Gaur fine-tuned rates to meet the City s policy goals of equity, defensibility, and minimal customer impact. WALNUT VALLEY WATER DISTRICT (CA) Mr. Gaur developed a water rate model for the District as [ 15 ] RAFTELIS FINANCIAL CONSULTANTS, INC.

68 well as examined indexing practices and determined appropriate rates for meter and variable charges. YORBA LINDA WATER DISTRICT (CA) Mr. Gaur served as the Project Manager for conducting a water rate study for Yorba Linda Water District. This study included the development of a financial plan that examined different CIP scenarios, cost of service study and development of a conservation rate structure. RFC developed a conservation rate model that evaluated an inclining tiered rate and a water budget rate structure, that can determine the associated rate structure and estimate customer impacts. Mr. Gaur will present the finding of the study to the Board and make the associated recommendation. TOWN OF BUCKEYE (AZ) Mr. Gaur performed an impact fee study that identified and examined possible facility types and explored different financial options for funding facility types. He also examined the benefits of zonal impact fees. Mr. Gaur educated developers in the process of assessing impact fees and the role of credits. TOWN OF CLARKDALE (AZ) Mr. Gaur identified and examined facility types for impact fee and discussed policy implications of impact fees. TOWN OF GILBERT (AZ) Mr. Gaur was engaged by the Town of Gilbert to determine the true cost of providing fire services for the town. He also examined the economic impact of potential legislation on expanding service to a county island. He served as expert witness and presented findings on behalf of the city which assisted in the Town s winning case. OTHER RELEVANT PROJECT EXPERIENCE City of Livingston (CA) - Water Rate Study La Habra Heights County Water District (CA) Wheeling Rate Study City of Newport Beach (CA) Water Rate Study City of Rio Vista (CA) - Water and Sewer Rate and Impact Fee Study RECENT PUBLICATIONS AND PRESENTATIONS Gaur, S., Adelman and Morris Factor Analysis of Developing Countries, The Journal of Policy Modeling, Vol. 19, Issue 4, pp , August Gaur, S., Water Rate Setting, presented at the Annual 2006 Conference of the California Society of Municipal Finance Officers, Palm Springs, California. Gaur, S., Water Rate Setting, presented at the following: California Society of Municipal Finance Officers Chapters: Central Los Angeles, Channel Counties, Imperial County, San Gabriel Valley, South Bay and Twenty Nine Palms Gaur, S., Designing Water Rate Structures, presented at a workshop for Urban Water Institute, San Jose, California. February 17, Gaur, S. How Much Should Water Cost? Theoretical and Practical Approach in Developing Water Rates. Guest lecturer at University of California, Santa Barbara, Course: Water Policy, Bren School of Environmental Science and Management. November, 7, Gaur, S. Designing Water Rates, All day seminar at the Center for Water Education. Hemet, California. January 12, Gaur, S. Policy Objectives in Designing Water Rates, Journal of American Water Works, 99:5 May 2007 p Gaur, S. Corssmit, K. and Hotchkiss, D. Water Rates Defining Cost of Service Proposition 218 Implications, presented at the Association of California Water Agencies, May 7, 2008 Spring Conference, Monterey, California. Gaur, S. Moving Beyond the Public Workshop, presented at the Municipal Management Association of Southern California, July 1, 2008 Summer Conference, La Jolla, California. Gaur, S. Evolution of Water Rates, presented at the Association of California Water Agencies, December 3, 2008 Fall Conference, Long Beach, California. Gaur, S. Managing Drought Scenarios, presented at the Association of California Water Agencies, December 4, 2008 Fall Conference, Long Beach, California. Gaur, S. Corssmit, K., Hildebrand, M. and Hotchkiss, D. Defining Latest Trends in Conservation Rate Design, presented at the Utility Management Conference, February 18, 2009, New Orleans, Louisiana. Gaur, S. Conservation Rate Structures, presented at the International Water Efficiency Conference, April 1, 2009 Newport Beach, CA Gaur, S. Developing a Water Budget Rate Structure: Eastern MWD Experience, presented at the CA/NV AWWA Section, April 9, 2009, Santa Clara, CA Gaur, S. and Summers, L. New M1 Chapter: Water Budget Rates presented at American Water Works Association, Annual Conference and Exposition 10, June 23, 2010, Chicago, IL Contributing Author to Water Rates, Fees and the Legal Environment 2nd Edition American Water Works Association 2010 Editor: C.(Kees) W. Corssmit EAST ORANGE COUNTY WATER DISTRICT [ 16 ]

69 TECHNICAL SPECIALTIES Cost of service rate studies Conservation and drought management studies Economic analyses Water and wastewater utility cost accounting Valuation Financial and revenue planning Assessment engineering Reviewing/obtaining capital improvement funding Computer modeling PROFESSIONAL HISTORY Raftelis Financial Consultants, Inc.: Executive Vice President (2013-present); Vice President ( ) Black & Veatch: Principal Consultant ( ) MWH: Principal Engineer ( ) CF Braun: Senior Engineer ( ) PFR Engineering Systems: Research Engineer ( ) EDUCATION Master of Business Administration - University of California, Los Angeles (1982) Master of Science in Chemical Engineering - Arizona State University (1976) Bachelor of Science in Chemical Engineering - Indian Institute of Technology, Bombay (1974) PROFESSIONAL REGISTRATIONS Registered Professional Engineer: CA (Chemical (1981) and Civil (1988)) PROFESSIONAL MEMBERSHIPS American Water Works Association Water Environment Federation California Municipal Finance Officers Association SUDHIR PARDIWALA, PE PROJECT DIRECTOR / TECHNICAL REVIEWER Executive Vice President PROFILE Mr. Pardiwala has 37 years of experience in financial studies and engineering. He has extensive expertise in water and wastewater utility financial and revenue planning, valuation and assessment engineering. He has conducted numerous water, storm water, reclaimed water and wastewater rate studies involving conservation, drought management, risk analysis, as well as system development fee studies, and has developed computerized models for these financial evaluations. Mr. Pardiwala has assisted public agencies in reviewing and obtaining alternate sources of funding for capital improvements, including low interest state and federal loans and grants. He has assisted several utilities with State Revolving Fund and Water Reclamation Bond loans. Mr. Pardiwala authored the chapter on reclaimed water rates in the Manual of Practice, Financing and Charges for Wastewater Systems, published by the Water Environment Federation (WEF) and presented papers at various conferences. He also authored a chapter entitled, Recycled Water Rates, for the Fourth Edition of the industry guidebook, Water and Wastewater Finance and Pricing: The Changing Landscape. He was vice-chairman of the CA-NV AWWA Business Management Division and Chairman of the Financial Management Committee. RELEVANT PROJECT EXPERIENCE CITY OF BEVERLY HILLS (CA) Mr. Pardiwala served as Project Manager for RFC s engagement with the City of Beverly Hills (City) water and wastewater rate studies. RFC was engaged by the City to develop a rate and financial planning model that would be used to evaluate alternative rate structures and to provide more detailed forecasts to assist in the preparation of updating rates in future years. RFC modeled numerous alternative rate structures and reviewed customer and revenue impacts before recommending that the City modify its current three tiered rate structure to include a fourth tier that targets large irrigation usage. In addition, RFC recommended that the costs of service based on flow and strength. RFC continues to provide biennial updates to the City model so that rates may be projected in future years. CITY OF VENTURA (CA) Mr. Pardiwala served as Project Manager for a water, wastewater, and recycled water cost of service and rate study for the City of Ventura (City). The City had not updated its rate structure in 20 years. Additionally, the City was under a cease and desist order that required the City to carry out improvements estimated at more than $55 million, and which the City wanted to start funding to mitigate impacts. The goal of the study was to develop conservation-oriented rates consistent with cost of service to recover adequate revenues to pay for necessary capital improvements, meet debt service coverage requirements, as well [ 17 ] RAFTELIS FINANCIAL CONSULTANTS, INC.

70 as maintaining sufficient reserve requirements. The study included a comprehensive review of the City s revenue requirements and allocation methodology, review of the City s user classification, usage patterns, a cost of service analysis, and rate design for City users. RFC developed long-range financial plans so that the water and wastewater utilities could be financially stable and save costs in the long run. We also assisted the City with developing different water and wastewater rate alternatives with various scenarios as well as calculating outside-city rates. The study was conducted with several meetings and input from stakeholders comprised of customers within the City. RFC educated the Citizen Advisory Committee on the basics of rates, cost allocations, and rate design to obtain their buy-in through the use of the dashboards in the rate models we developed for them to demonstrate the impacts of various revenue adjustments on the long-term financial stability of the enterprises. RFC also developed a schedule for funding a major wastewater program required by environmental groups. Recommended rates were implemented for two years in July CITY OF SAN DIEGO (CA) Mr. Pardiwala conducted numerous studies for the City of San Diego (City), including a water, wastewater and reclaimed water rate study. The entire wastewater rate study was conducted with extensive stakeholder group involvement because of the changes required in the wastewater rate structure to meet regulatory requirements. In addition, Mr. Pardiwala served as project manager for the City s reclaimed water rate study, impact fee studies for both water and wastewater, and a transportation charges study for agencies contributing to the City s regional wastewater facility. Mr. Pardiwala also managed a water demand study which involved statistical analysis of historical water consumption to model projections based on weather, economic activity, population, inflation, etc. Mr. Pardiwala evaluated the feasibility of a water budget rate structure for the City. He assisted the City with the Proposition 218 noticing and public outreach. CITY AND COUNTY OF SAN FRANCISCO (CA) The City conducts water, wastewater and stormwater studies every five years to ensure that charges are consistent with cost of service and conforms with the City s Propositions. Mr. Pardiwala served as Project Manager for two cycles of rate studies for the City. The City has a combined wastewater and stormwater system and costs for stormwater are integrated with wastewater. The City was engaging in a multi-billion dollar capital improvement program that would have significant impact on rates. The City has unique microclimates and RFC analyzed the water usage characteristics of single family and multi-family users to develop a rate structure that would provide incentives for conservation. RFC evaluated incentives to encourage low impact development, reviewed stormwater practices to provide credits for best management practices to reduce stormwater generation. RFC performed an overhead cost allocation study consistent with federal requirements of OMB Circular A-87 to assign costs appropriately to different departments in order to obtain federal reimbursement for projects that are eligible for federal assistance. CITY OF SACRAMENTO (CA) Mr. Pardiwala managed a wastewater rate study to examine the charges associated with different types of residential and non-residential customers. The study included a comprehensive review of the City s revenue requirements and allocation methodology, review of City s user classification, a cost of service analysis, and rate design for City users. Sacramento is one of the few large Cities in the State that does not meter residential and a significant number of non-residential customers. The strength and flow allocation to these customers was revised. The resultant rates were fair and equitable and met the fiscal needs of the City s wastewater utility in the context of the City s overall policy objectives and were designed for simplicity of administration, cost effective implementation and ease of communication to customers. CITY OF LOS ANGELES (CA) Mr. Pardiwala was Project Manager on studies to develop rates and rate models for solid waste and wastewater utilities. The City wanted to have a planning tool in-house to evaluate what if scenarios, impacts and determine rates for various customers. The model incorporated many user friendly features to assist the City update rates and prepare financial plans on an annual basis. Solid waste rates included non-residential customers based on size of containers and frequency of collection. Wastewater rates to the 27 subscribing agencies discharging to the City s wastewater treatment facilities were also determined. This involved complex calculations and allocations to wastewater loadings, conveyance distance, etc. Connection or impact fees were also included in the model. User training, model documentation, regular updates and ongoing service were also included in this project. Mr. Pardiwala also served as Project Manager on a wheeling charges study for the Los Angeles Department of Water and Power. The City was interested in determining the appropriate charges to be levied on various customers that may wish to use the extra capacity in the City s system from the Los Angeles Aqueduct to the distribution network to transfer water. EAST ORANGE COUNTY WATER DISTRICT [ 18 ]

71 CITY OF ONTARIO (CA) Mr. Pardiwala served as Project Manager on a water, wastewater and solid waste rate study. The study included a comprehensive review of the City of Ontario s revenue requirements and allocation methodology, review of user classifications, a cost of service analysis, and rate design for City users. RFC designed tiered water rates, recycled rates and wastewater rates considering IEUA rates. Solid waste rates were designed to recover costs. RFC provided the City with a model that is used for planning purposes by the City. The City has engaged RFC multiple times to update these rates. NAPA SANITATION DISTRICT (CA) Mr. Pardiwala was Project Manager for a recycled water rate study for the District. The District was required to restrict summer discharge of its wastewater into the river. The District had made improvements to its treatment plant to produce recycled water and provided incentives to recycled water customers to use the water. Agreement with customers were to end within a couple of years and the District wanted to enlarge the recycled water facilities and enroll new customers into the recycled water program. The District wanted to review the economics of the improvements and determine the impacts resulting from implementing new recycled water rates. RFC developed a financial and rate model that considered the new customers and revised rates and the impact of providing discounted rates on wastewater customers. The District held meeting with the recycled water users and obtained input on issues of concern to them. RFC provided support to the District and evaluated the results of the surveys conducted to define the rates. CITY OF REDLANDS (CA) Mr. Pardiwala has managed several financial projects for the City of Redlands (City) including water, wastewater and reclaimed water projects. The studies were conducted with extensive stakeholder input. The first rate studies involved significant rate adjustments as well as rate structure adjustments to ensure financial stability, meet debt coverage and regulatory requirements. The analysis included calculation of outside-city charges and impact fees. The City received user-friendly working rate models for future updates. Mr. Pardiwala assisted the City with State Revolving Fund loans for reclaimed water and potable water. He helped them find grants for the reclaimed water project. JURUPA COMMUNITY SERVICES DISTRICT (CA) Mr. Pardiwala served as Project Manager for Jurupa Community Services District (District) in conducting a comprehensive water and wastewater rate study in order to ensure financial sufficiency in the District. The District s water rate structure included a monthly service charge and a four-tiered commodity rate that was applied to all customers and the current wastewater rate structure includes a base charge and capital charge based on EDU and a quantity charge based on the previous year s winter water usage. The fixed charges for both water and wastewater were very high and burdensome to small customers. One of the main goals of the study was to restructure the water and wastewater rates to be more equitable and reflect the diversity in the District. RFC reviewed the District s customer classification, revenue requirements, and cost allocation methodology, and recommended appropriate alternative water and wastewater rate structures that would meet the District s goals and objectives. Throughout the process, RFC conducted numerous workshops with the District Board to obtain their input and feedback to ensure successful implementation. Equity issues among different customer classes were analyzed to ensure compliance with Proposition 218. Due to the diversity of the customers within the District s service area, the District desired to provide better allocations to customers and review the implementation of a water budget rate structure. RFC developed water budget models for both the water and wastewater rates. GOLETA WEST SANITARY DISTRICT (CA) Mr. Pardiwala has been Goleta West Sanitary District s (District) financial consultant for more than 10 years. During that time he has assisted the District with financial planning, development and financing their replacement and refurbishment program, developing a rate structure, annexation fees, connection fees, miscellaneous fees, reserves policy development, and other financial issues. The District charges customers on the tax roll. RFC developed the data to be included on the tax roll and the District now manages it. CITY OF PALO ALTO (CA) Mr. Pardiwala was Project Manager for a study for the City of Palo Alto (City) to determine the cost of service rates consistent with Proposition 218. The study involved review of fire service charges, booster pumping rates, strict adherence to cost of service principles. The study was conducted with the participation of a citizens advisory committee. RFC developed an user friendly rate model, provided City staff training on use of the model. The proposed rates were implemented July 1, BEAUMONT-CHERRY VALLEY WATER DISTRICT (CA) Mr. Pardiwala served as Project Manager on a cost of service water rate study for the Beaumont-Cherry Valley Water Dis- [ 19 ] RAFTELIS FINANCIAL CONSULTANTS, INC.

72 trict (District). The region was experiencing rapid growth, as much as 20-30%, and the District wished to ensure that its rate structure allowed them to recover all appropriate costs, support the rapid growth, and provide fair and equitable rates. RFC conducted a cost of service analysis to calculate rates for different classes of customers. The District s water supply in the local groundwater basin was limited and the basin was in overdraft. As a result, the District was considering recycled water projects and importing water into the region. Mr. Pardiwala developed system capacity charges for new customers taking into consideration the new infrastructure needed as well as the additional water supplies needed to provide service to new and existing customers. CITY OF NORTH LAS VEGAS (NV) Mr. Pardiwala was the Project Manager for the water and sewer financial planning and rate study conducted for the City of North Las Vegas (City). At the time, the City had experienced rapid growth and had a significant amount of capital projects including construction of their own treatment plant. The City faced many financial challenges at a time when there were signs of a slowing economy. RFC conducted a multi-year financial plan that examined various customer growth, capital funding, and rate revenue assumptions. RFC prepared rate models for both water and wastewater and trained City staff on their use. The models provided dashboards for ease of use and decision making. CITY OF PORTLAND (OR) The City of Portland (City) wanted a financial planning and rate model to determine rates for its wholesale and retail customers. Mr. Pardiwala served as Project Manager for this study. The City provided wholesale water to 19 agencies under old agreement that were expiring soon. The City was finalizing long-term agreements with explicit terms on rate setting. The City wanted to develop rates consistent with the new agreement for the wholesale agencies, review rate structure alternatives for its retail customers, review impacts and provide flexibility for planning for the next 20 years. The City s existing retail rate structure consisted of an increasing 3-tier rate structure for all customers with fixed tiers for single family customers and tiers based on the average usage in the preceding 12-month period for the remaining customers. The current retail rates applied to all classes and did not take into account peaking which factors can vary significantly from class to class. RFC developed alternative rate structure options for retail customers and explore the creation of more classes to increase equity and fairness and encourage conservation. Alternative rate structures included uniform volume rates, seasonal rates, increasing and V or U shaped block rates, and a range of individualized block rates with cutoffs based on average account usage, seasonal usage, or customer characteristics. RFC provided the City with the computer model and provided training and a manual in the user of the model. In 2012, Mr. Pardiwala managed a bond feasibility study for the City s Bureau of Environmental Services. The City needed to issue bonds for several hundred million dollars to meet regulatory requirements related to its wastewater and stormwater systems. RFC met with City staff and reviewed the CIP, business processes, rates and rate setting procedures, and provided a certificate of parity showing that the City could meet its coverage requirements under the current rates so that the City could sell bonds with a good rating. CLARK COUNTY WATER RECLAMATION DISTRICT (NV) Mr. Pardiwala is Project Manager for a cost of service study for the Clark County Water Reclamation District (District) to help evaluate the current system of rates and charges to ensure that users were being charged appropriately. The District has not updated its rate structure system for many years and the current system based on fixture units is believed to need restructuring. RFC is managing the sampling and wastewater flow monitoring from different types of users to determine the definition of an equivalent dwelling unit and the flows from different types of users. There are multiple outreach meetings with member agencies and interested stakeholders to educate them on the process and to obtain buy-in. CITY OF HENDERSON (NV) Mr. Pardiwala served as Project Manager for the engagement with the City of Henderson (City). In Phase I, RFC assisted the City in conducting a water and wastewater financial assessment. RFC developed a financial vision which will ultimately shape the utilities for the next 10 years. As part of our conceptual design process, RFC recommended several alternative rate philosophies to be evaluated as part of Phase II. The Model was also developed to evaluate certain rate philosophies and user charge structure modifications focused on improving the equitable recovery of costs from different user classes, legal defensibility of the rates and system development charges, revenue predictability, and conservation incentives. RFC developed an allocation or budget for different meter sizes to ensure that the tiered rates set up would fairly collect revenues from customers. RFC updated the City s financial plan by participating in the City s rate implementation process. This included presentations of final findings and recommendations to City Council and the Citizen s Advisory Committee. EAST ORANGE COUNTY WATER DISTRICT [ 20 ]

73 CITY OF TACOMA (WA) Mr. Pardiwala was Project Manager for a study to develop financial plans and rate models for the City s Environmental Services including wastewater, surface water and solid waste utilities. The study involved development of user friendly financial and rate planning models that would allow the City to update rates on an annual basis, quickly make changes, and review rates. The model also provided capability to compare the status of the CIP, and actual revenues and expenses against budgets on a month by month basis. To make this process easy, the model was integrated with the City s SAP and E Builder system. The financial plan and rates were reviewed with input from the City s Environmental Services Commission. RFC turned over the models to the City, provided training and computer manuals in the use of the models. Mr. Pardiwala also provided financial planning models to the City s water utility, which included user-friendly features and benchmarking tools to maximize improvements in operations and management. CITY OF PASADENA (CA) Mr. Pardiwala was Project Manager for a study for the City of Pasadena (City) to determine roll-out charges for solid waste services provided by the City. Certain customers in the City needed assistance with rolling out their containers and replacing them again. Mr. Pardiwala analyzed the costs associated with this service and set up a charge for it. OTHER RELEVANT EXPERIENCE City of Anaheim (CA) Water Rate Study City of Atwater (CA) - Water and Wastewater Rate Study City of Banning (CA) - Recycled Water Revenue Program City of Brea (CA) - Water Rate Study, Connection Fees and Related Fees and Charges Study City of Burbank (CA) - Bond Feasibility Study, Reclaimed Water Study, and Water and Wastewater Rate Study City of Carlsbad (CA) - Asset Replacement Study and Water, Wastewater and Reclaimed Water Revenue Program Casitas Municipal Water District (CA) - Water Rate Study Castroville Water District (CA) Water and Wastewater Rate Study City of Chino (CA) - Valuation Study City of Chowchilla (CA) Water and Wastewater Rates Study City of Cloverdale (CA) - Water and Wastewater Connection Fees and Rate Study City of Corona (CA) - Water and Wastewater Rate Study El Toro Water District (CA) Water Budget and Wastewater Rate Studies and Connection Fees City of Encinitas (CA) - Water and Wastewater Rate Study City of Escondido (CA) - Valuation Study, Water and Wastewater Rate Study City of Glendora (CA) - Water and Wastewater Financial Planning and Rate Study Goleta Water District (CA) Water and Wastewater Rates and Connection Fees Studies, Asset Management, and Financing Plan City of Livingston (CA) Water, Wastewater and Solid Waste Rates Study and Litigation Support City of Madera (CA) - Water and Wastewater Rate Study Metropolitan Wastewater Joint Powers Authority (CA) - Wastewater Valuation Study and Capacity Valuation Study Olivenhain Municipal Water District (CA) Water and Wastewater Financial Planning Studies and Recycled Water Rate Study Palmdale Water District (CA) Water Budget Rate Study City of Poway (CA) Wastewater Rate Structure Analysis City of Rialto (CA) SRF Funding and Water and Wastewater Rate Study County of San Bernardino (CA) - Water and Wastewater Rate Study and Connection fees San Diego County Water Authority (CA) - Capacity Valuation, Rate Analysis, Valuation Study, and Wheeling Charge Study City of San Fernando (CA) Water and Wastewater Rates Study San Gorgonio Pass Water Agency (CA) - Financing Plan City of San Jose (CA) - Sewer Service Related Fees and Charges City of San Luis Obispo (CA) - Stormwater Financial Feasibility Study Santa Fe Irrigation District (CA) - Wastewater Treatment Plant Cost Evaluation, Water Connection Fees Study, and Water Rate Study and Update City of Santa Monica (CA) - Wastewater Rate Study City of Scottsdale (AZ) - Impact Fee Study City of Springfield (OR) Wastewater Rates Model Tacoma Public Utilities (WA) Business Planning Assistance and Financial Model City of Upland (CA) - Valuation Study Town of Windsor (CA) - Impact Fee Review, State Revolving Fund Loan Application Assistance, Water and Wastewater Connection Fees and Rates Study, and Water and Water Reclamation Rate Studies [ 21 ] RAFTELIS FINANCIAL CONSULTANTS, INC.

74 TECHNICAL SPECIALTIES Utility cost of service Rate structure studies Financial plan studies Economic feasibility studies Conservation rate studies Water budget rate studies PROFESSIONAL HISTORY Raftelis Financial Consultants, Inc.: Senior Consultant (2008-present) Avery Dennison: Research Chemist ( ) EDUCATION Master of Business Administration in Finance - California State University, Los Angeles (2007) Bachelor of Science in Chemical Engineering - University of California, Berkeley (2003) KHANH PHAN STAFF CONSULTANT Senior Consultant (RFC) PROFILE Ms. Phan has served as Lead Consultant or Deputy Project Manager on numerous water and wastewater studies including rate, cost of service, reserve policy, financial planning, connection fee, conservation rate, and water budget rate studies. Her specific experience includes projects for the following utilities in California: Alameda County Water District, El Toro Water District, Elsinore Valley Municipal Water District, Mesa Consolidated Water District, Mojave Water Agency, Western Municipal Water District, Yorba Linda Water District, and the Cities of Camarillo, Glendora, Huntington Beach, Riverside, San Clemente, and Santa Cruz. She possesses strong analytical and management skills acquired from her background, education, and experience. Ms. Phan has advanced computer skills and is an excellent modeler. Ms. Phan also co-authored a chapter entitled, Understanding Conservation and Efficiency Rate Structures, for the Fourth Edition of the industry guidebook, Water and Wastewater Finance and Pricing: The Changing Landscape. RELEVANT PROJECT EXPERIENCE EAST ORANGE COUNTY WATER DISTRICT (CA) In 2011, East Orange County Water District (District) engaged RFC in several studies including water budget analysis, and cost of service analysis for its retail water services. To convey the concept of water efficiency use, the District asked RFC to develop a Water Budget Model to evaluate different policy options associated with setting the efficiency benchmark for residential water use within the District s retail service areas. In the same year, the District requested RFC s assistance in conducting cost of service analysis and developing a Rate Model to be updated annually by the District staff to calculate new rates. Ms. Phan was the lead analyst and modeler in all engagements with the District. ALAMEDA COUNTY WATER DISTRICT (CA) In early 2012, Alameda County Water District (District) commissioned RFC to conduct a financial plan study including developing a 25-year Financial Plan Model (Model) to assess risk of fluctuations in water supply demand, capital improvement plan scenarios, and to evaluate the potential financial impacts. As Lead Consultant, Ms. Phan developed the customized Model which featured a scenario analysis tool and a user-friendly dashboard. This Model was instrumental in effectively communicating the financial impacts to stakeholders. RFC presented the Model to the District Board to show the District s financial health under various scenarios related to water supply, water sales, and expenditures. In the same year, the District retained RFC to conduct the financial impact analysis of the outcomes of the union negotiation. As Deputy Project Manager, Ms. Phan worked closely with District staff to develop the Union Negotiation Module (Module) to be used in the Union Negotiations. In early January 2013, the Module was used to assess the financial impacts on the District of the union negotiated contracts for labor and benefits. Ms. Phan also enhanced the Model with additional features including a scenario manager, which enabled users to EAST ORANGE COUNTY WATER DISTRICT [ 22 ]

75 save and compare various scenarios within the Financial Plan Module and Rate Module to determine the new rates and customer impacts resulting from the cost of service analyses and the financial plan. Since 2012, the District has annually retained RFC for support on updating the financial plan and other financial and rate analyses. Ms. Phan has been the Lead Consultant on various engagement with the District. In late 2014, the District again retained RFC to conduct the long-term financial plan and cost of service analysis to develop rates that: would maintain financial sufficiency; are consistent with the District s policies; comply with general cost of service principles; and are in compliance with Proposition 218 requirements. During the course of the study, the financial plan model (FPM) considered many different drought scenarios and different financial outcomes. The scenarios included normal non-drought conditions, mild drought conditions ending in one year (2015 drought only), medium drought conditions ending after two years (medium), and severe drought conditions spanning three years (extended dry period). In addition, as part of the Study, RFC evaluated and presented two options of bi-monthly fixed service charges to the Board of Directors during the December 2014 Public Workshop. One of the goals when developing a fixed charge is to better align fixed revenues with fixed costs and align commodity revenues with variable costs. The drought surcharge, which was developed in the drought rate study and adopted in July of 2014, will continue to mitigate the effects of reduced demand until the provisions of the Drought Surcharge Sunset criterion are met. As Lead Consultant, Ms. Phan developed an interactive Rate Model to conduct various water rate scenarios and evaluate the associated customer impacts for each of the rate alternatives to assist the District in making informed decisions. EL TORO WATER DISTRICT (CA) In 2009, RFC completed a comprehensive cost of service study for El Toro Water District (District). Ms. Phan is responsible for developing a rate model to examine new water and sewer rates for the District to reflect the increased water cost from Metropolitan Water District of Orange County and the increased operating costs for the District s water and sewer systems. The model analyzes projected revenues, budgeted O&M costs, cost of service, the District s financial plan and customer impacts as a result of proposed rate increases. In 2010, Ms. Phan completed the water budget rate study scheduled to be implemented on July 1st, This involves integrating the District s account data with the assessor s parcel data and ultimately determining the parcel area and landscape area of each parcel to be used in water budget rate design and in the implementation of the new rate structure. Ms. Phan is responsible for developing a water budget rate model to evaluate policy options, to assess the associated customer impacts. A variance form for individual water budget adjustments is also provided to the District as an implementation assistance tool. The District has engaged RFC annually to assist in its water and wastewater rate updates. In addition, the District also commissioned RFC to evaluate the financial impacts of the Recycled Water expansion in May Ms. Phan developed an advanced, user-friendly Financial Plan Model with easy to understand graphics to communicate the financial impacts and the sensitivity analyses of the expansion on the Water and Sewer Enterprises. The Report was submitted to the District in July To address the recent severe and ongoing drought in California, the District engaged RFC in a Drought Rate Study to determine the indoor and outdoor drought factor adjustments necessary to encourage conservation among its residential and irrigation customers and penalty rates for commercial customers to achieve the required reductions in consumption under increasing levels of drought. As part of the Study, RFC conducted financial impact analyses on revenues, expenditures, net revenues for each drought stage if 1) customers continue to consume at normal (non-drought) levels or 2) customers reduce consumption by the amount required. As lead analyst, Ms. Phan developed interactive excel Model to conduct financial impact analyses for each of the projected drought stages. WESTERN MUNICIPAL WATER DISTRICT (CA) RFC has been assisting Western Municipal Water District (District) with several projects including the development of a water budget rate structure for its retail customers, the development of a long-term financial plan for each cost center with in the District, a review and analysis of the annual water rate update, and a water budget web calculator to be used as a public outreach tool. As a Lead Consultant, Ms. Phan consulted the District in the development of an equitable and defensible water budget structure for retail customers for their two cost centers Riverside Treated Service and Murrieta Treated Service. She performed thorough analyses on usage, revenue and customer impacts associated with proposed water budget rates. In 2010, RFC assisted the District in its annual water rate update study to ensure revenue sufficiency to recover the increasing costs of imported water and to en hance revenue [ 23 ] RAFTELIS FINANCIAL CONSULTANTS, INC.

76 stability by designing a rate structure that will reduce the District s dependency on property tax to fund its operations. As Lead Consultant, Ms. Phan thoroughly analyzed the customer impacts of different proposed rates and levels of property tax dependency. The proposed rates were approved by District Board in May In order to better financially manage all 14 enterprises, the District needed a compre hensive, yet user-friendly financial plan model which can be used to facilitate com munications between staff and the District s Board of Directors about the financial implications of different financial policies and capital projects. In 2011, as a lead consultant, Ms. Phan developed a customized 30-year Financial Plan Model (Model) with the ability to conduct scenario analyses. The interactive dashboard of the Model displays the Long-Term Financial Plan of the 14 enterprises in graphical format. A CIP manager was de veloped to save a customized CIP scenario to be used for financial implication evaluations. The built-in scenario manager enabled the Model users to save, load, and compare the results of different assumptions, inputs and CIP scenarios. Cus tomized financial reports in preset printed format can be generated at individual enterprise level and at aggregate level for the whole District. The District has engaged RFC several times after the completion of the Model for technical support and model enhancements to accommodate for arising issues. In 2012, the District engaged RFC to develop the connection fees for its retail water, wastewater, and recycled water services. The District updated its Master Plans for Retail Water in Riverside service area, Riverside Recycled Water, and for Wastewater in 2009, but has not incorporated them into the current connection fees. In addition, the District currently does not assess connection fees for recycled water and desired to develop one to recover the capital cost to support the associated growth. Ms. Phan developed the connection fees Model to evaluate different policy options related to allocations of tertiary recycled water treatment values to potable, wastewater, and recycled water and to calculate the connection fees for retail water, wastewater, and recycled water based on the framework established through close collaboration with District staff. RANCHO CALIFORNIA WATER DISTRICT (CA) In 2009, RFC conducted a Water Budget Rate Study for the Rancho California Water District (District). As a Lead Consultant, Ms. Phan assisted the District as they established an equitable and defensible water budget structure for residential and irrigation customers for both Rancho and Santa Rosa Divisions. She performed thorough analyses on different methodologies of allocating water sources to different customer classes and determining landscape area caps for residential accounts and on usage, revenue and customer impacts associated with proposed water budget rates. She assisted the District in preparation of a presentation of the study results to District Board in order to facilitate their informed policy decision process. In December 2009, RFC assisted the District in conducting New Water Demand Offset Fee Study as part of the connection fees assessed to new connections added to the District s water system. Due to recent regulatory drought in California, the District declared Stage 3 Water Warning under the District s Water Shortage Contingency Plan. The New Water Demand Offset Program is a form of funding conservation measures that will help to create sustainable, zero water footprint new development. In addition to the conventional capital facility fees, the new developments will also pay fees called New Water Demand Offset Fees to fund the conservation and recycled program in order to generate potable water savings in the existing system to support new water demand generated by new developments. Ms. Phan assisted the District in calculating the New Water Demand Offset Program Cost and the New Water Demand Offset Fees and documenting the nexus between the fees and the program cost to ensure the compliance with the requirements specified in California Government Code Section or AB The District s current water capital facilities financing program estimates $323 million to be spent by the end of Due to the significant amount of capital spending expected, in November 2011, the District commissioned RFC to evaluate its existing capacity fee methodology and update the fee to ensure that new customers pay an equitable share when joining the District s system. Ms. Phan, a lead consultant, developed the Capacity Fees Model to calculate proposed capacity fees based on the updated asset values and adjusted Capital Improvement Plan values (from the 2005 Water Facilities Master Plan Update), which will benefit future development, and estimated incremental demand. Utilizing the methodologies used in the 2011 Water Budget Update Study, RFC estimated the yearly demand for a residential user with a ¾-in meter (or 1 equivalent dwelling unit, EDU) for both divisions. Meter equivalence ratios based on AWWA hydraulic capacities (AWWA M6) are used to project water demand estimates for customers of varying meter sizes. The results were summarized in the Water Capacity Fee Study Report and presented to the Board in March In 2012 and 2014, the District again engaged RFC to update the Water Budget Rate Models to address arising EAST ORANGE COUNTY WATER DISTRICT [ 24 ]

77 issues and challenges. For the past several years, due to hotter climate, the efficient outdoor water sales exceeded projected sales, and the District had experience inadequate cost recovery for marginal water supply costs. In the 2014 Study, RFC updated the Water Budget Rate Model to fine tune the water allocation factors and the allocation of water supply to projected sales in tiers to address better align available water supply and water demand in tiers and to reduce the risk exposure of purchasing more expensive water for Tiers 1 and 2 sales. CITY OF CAMARILLO (CA) In 2011, City of Camarillo (City) engaged RFC to conduct a comprehensive water and wastewater rate study to independently assess and evaluate existing water and wastewater rates for compliance with industry standards and California regulations, and to develop a financial plan to ensure financial sufficiency while minimizing rate impacts to the greatest degree possible. Ms Phan was responsible to develop the Water and Wastewater Rate Models with Dashboard functionality for scenario analyses for alternative capital financing and to facilitate communication and decision makings with City Council. The Study included a comprehensive review of the water and wastewater enterprises revenue requirements, a review of the City s user classification and usage patterns, a cost of service analysis, the development of water and wastewater connection fees, the designing of water and wastewater rates and the analysis of customer impacts along with a rate survey of neighboring agencies. The City had significant capital improvement projects scheduled in the immediate future (FY 2012 to FY 2014); to smooth out customer impacts while sufficiently maintaining the utility s systems, RFC developed water and wastewater financial plan Models to evaluate different CIP scenarios, financing options and associated financial impacts. RFC recommended water and wastewater rate schedules for a two-year period effective January 2012 and 2013, which was approved by the City Council in November Since 2012, the City commissioned RFC to conduct the annual rate update study to assess the financial health of the Water and Wastewater Enterprises after its rate adoption in January Ms. Phan updated the Water and Wastewater Financial Plan Models with new key financial information, including operating and capital budgets. The results were communicated annually with the City Council. CITY OF SANTA CRUZ (CA) City of Santa Cruz Water Department (Department) is currently providing water services to population of approximately 60,000. Increasing operation and maintenance costs along with projected intensive capital program in the next ten years and volatile water sales in recent years has driven the Department to develop financial policies to mitigate potential risks and to establish sound financial management practices, and conduct a long-range financial plan to ensure financial sufficiency and sustainability of the Department s water system. In 2012, the Department commissioned RFC to develop the Financial Plan Model as a tool to access the financial implications of different financial policies. As lead consultant, Ms Phan was responsible for developing the custom-built Financial Plan Model and prepared a White Paper summarizing the recommended financial policies for the Department. CITY OF GLENDORA (CA) In 2012, to promote water efficiency within its service area, the City of Glendora (City) commissioned RFC to evaluate the benefits of water budget rates and conduct the Water Budget Rate Study to develop the water budget tiered rates for its single family residential customers. As lead consultant, Ms Phan developed a custom-built Water Budget Rate Model to evaluate different water budget policy options associating with weather data and landscape area definitions. In addition, the City s account data and the Assessor s parcel data were integrated to retrieve the lot size and other parcel data relevant to be used to determine the landscape areas for single family residential parcel. The Model also included the Rate Module to calculate the resulting water rates for both water budget and non-water budget customers based on the revenue requirements determined by the City s budget and cost of service analyses. The Water Budget Allocation Model was presented to the Water Commission in October 2012 along with the results from the billing system assessments and cost and benefits analyses of water budget rate implementation. The Water Budget Rate Model was presented to the Water Commission in the summer of YORBA LINDA WATER DISTRICT (CA) Starting 2010, RFC is currently assisting Yorba Linda Water District in conducting the cost of service and conservation rate study for the water enterprise. This study involves development of the long-term financial plan, evaluation of different conservation rate structures, including inclining tiered and water budget tiered rate structures, review and design of new defensible and equitable rate structure that enhances revenue stability, ensures financial sufficiency and promotes conservation and water use efficiency. Ms. Phan is responsible for developing the financial plan and water budget rate models to evaluate policy options, to assess the associated customer impacts. The District has requested RFC assistance in its rate updates since the initial engagement and as deputy project manager, Ms. Phan was the key personnel assisting the District. [ 25 ] RAFTELIS FINANCIAL CONSULTANTS, INC.

78 RELEVANT PROJECT EXPERIENCE City of Banning (CA) Water Rate Study and Connection Fees Clark County (NV) Wastewater Rate Study Elsinore Valley Municipal Water District Financial Plan Study City of Escondido (CA) Water Budget Evaluation Goleta West Sanitary District (CA) Reserve Policy Study and Financial Plan Study City of Huntington Beach (CA) Water Budget Rate Study Jurupa Community Services District (CA) Water Rate Study, Financial Plan and Water Budget Rate Study La Cañada Irrigation District (CA) Cost of Service Study City of Livingston (CA) Water Rate Study Mesa Consolidated Water District Financial Plan Study Mojave Water Agency Financial Plan Study Olivenhain Municipal Water District Wastewater Financial Plan Palmdale Water District (CA) Water Budget Rate Study City of Redlands (CA) Valuation Study City of Riverside (CA) Water Capital Facility Fees City of San Clemente Water, Wastewater and Recycled Water Financial Plan Study and Rate Update City of San Diego (CA) Water Rate Study, Water Budget Evaluation San Dieguito Water District (CA) Water Rate Study City of Signal Hill Financial Plan Study and Water Lease Market Analysis City of Simi Valley Wastewater Rate Study South Coast Water District (CA) Water Budget Feasibility Study City of Thousand Oaks Water and Wastewater Financial Plan and Rate Study City of Torrance (CA) Cost of Service Study EAST ORANGE COUNTY WATER DISTRICT [ 26 ]

79 TECHNICAL SPECIALTIES Utility cost of service and rate structure studies Financial planning studies State revolving fund assistance PROFESSIONAL HISTORY Raftelis Financial Consultants, Inc.: Senior Consultant (2009-present); Staff Consultant ( ) Merati Economic Group: Economics Analyst ( ) EDUCATION Master of Business Administration - California State University, Los Angeles (2007) Bachelor of Science, Business Administration California State University, Los Angeles (2006) HANNAH PHAN STAFF CONSULTANT Senior Consultant (RFC) PROFILE Ms. Phan has served as a consultant and/or lead consultant on numerous water, wastewater, and recycled water rate studies, cost of service studies, connection fee studies, and valuation studies. Her specific experience includes projects for the Cities of San Diego, Ventura, Palo Alto, Santa Barbara, Santa Monica, Anaheim, Ontario, Escondido, Redlands, and Banning, the Goleta West Sanitary District and Carpinteria Sanitary District, and the City of North Las Vegas, Nevada and Tacoma Environmental Services Department in Washington. Ms. Phan has an MBA and is an experienced modeler with strong analytical skills. RELEVANT PROJECT EXPERIENCE CITY OF BEVERLY HILLS (CA) The City of Beverly Hills (City) engaged RFC to develop a rate and financial planning model that would be used to review customer classes, evaluate alternative rate structures and to provide more detailed forecasts to assist in the preparation of updating rates in future years. The City s water rate structure consisted of a three-tiered increasing block water rate structure with no differentiation among customer types. RFC modeled numerous alternative rate structures and reviewed customer and revenue impacts before recommending that the City modify its current three tiered rate structure to include a fourth tier that targets large irrigation usage. The City s wastewater rates were restructured to more equitably recover the costs of servicing the different customer classes to conform to EPA regulations. RFC continues to provide updates to the City so that the enterprise funds can continue to be financially stable. Ms. Phan assisted in conducting the pricing objectives to determine the objectives most important to the City s stakeholders and developed the water and wastewater rate models to determine the appropriate rates and rate structure for the City s utility services. CITY OF SAN DIEGO (CA) RFC assisted the City of San Diego (City) in conducting a water, wastewater, and recycled water rate study to evaluate the costs of providing utility services and the rates to charge customers. The study included a comprehensive review of the City s revenue requirements and allocation methodology, review of the City s user classification, an analysis of cost-of-service and rate design for City users. The rate structure was modified to provide a more equitable sharing of costs consistent with regulatory requirements. The recycled water rate study involved evaluation of various scenarios involving capital projects with increased sales, cost sharing between water and wastewater, phasing in rates, repayment of past costs incurred by water to fund the recycled water program. Ms. Phan assisted in building the rate models, preparing the scenarios and conducting economic analyses of the alternative scenarios. [ 27 ] RAFTELIS FINANCIAL CONSULTANTS, INC.

80 CITY OF VENTURA (CA) RFC recently completed a water, wastewater, and recycled water cost of service and rate study for the City of Ventura (City). The City had not updated its rate structure in 20 years. Additionally, the City was under a cease and desist order that required the City to carry out improvements estimated at more than $55 million, and which the City wanted to start funding to mitigate impacts. The study included a comprehensive review of the City s revenue requirements and allocation methodology, review of the City s user classification, usage patterns, a cost of service analysis, and rate design for City users. RFC developed long-range financial plans so that the water and wastewater utilities could be financially stable and save costs in the long run. We also assisted the City with developing different water and wastewater rate alternatives with various scenarios as well as calculating outside-city rates. Ms. Phan served as the lead consultant for this project, responsible for building the rate models, preparing the scenarios and conducting economic analyses of the alternative scenarios. CITY OF ANAHEIM (CA) The City of Anaheim (City) engaged RFC to conduct a water cost of service rate study. To address the financial objectives of the City and identify a water rate structure that is fair and equitable while sufficiently recover the costs of providing water service, RFC developed a water rate and financial planning model to calculate and forecast cost justified water rates appropriate to recover the operating and capital costs of the wastewater enterprise over a twenty (20) year planning period. NAPA SANITATION DISTRICT (CA) Ms. Phan served as lead analyst for a recycled water rate study for the Napa Sanitation District (District). The District was required to restrict summer discharge of its wastewater into the river. The District made improvements to its treatment plant to produce recycled water and then provided incentives to customers to use the recycled water. The agreement with customers was ending in two years, but the District wanted to enlarge the recycled water facilities and enroll new customers into the recycled water program. The District also wanted to review the improvements and determine the impact of the new recycled water rates. RFC developed a financial and rate model that considered the new customers and revised rates and the impact of providing discounted rates on wastewater customers. The District held a meeting with the recycled water users and obtained input on issues of concern to them. RFC provided support to the District and evaluated the results of the conducted surveys to define the rates. CASTAIC LAKE WATER AGENCY (CA) Ms. Phan served as lead analyst for a financial plan wholesale water rate study for the Agency. As part of the project, RFC developed a comprehensive financial plan that evaluated various financial alternatives to minimize financial risks to the Agency. The Agency received a significant portion of its revenue stream from property tax, which it used to fund capital improvement projects and costs related to its Buena Vista/ Rosedale Rio Bravo (BV/RRB) water supply. The current wholesale water rate only recovered operating costs of the system. The Agency was concerned that property tax revenue would significantly decrease in the future, which would severely impact its operations and require significant rate increases. Thus, RFC analyzed several alternatives to gradually fund more of the BV/RRB costs from the wholesale water rate so that it wouldn t be as dependent on property tax revenues. RFC also reviewed and evaluated numerous alternative wholesale water rate structures to enhance revenue stability and promote conjunctive water use in the Santa Clarita Valley among the four purveyors within the system. Since the current wholesale water rate was 100% variable, one of the objectives of the Agency was to enhance revenue stability by incorporating a fixed charge in its wholesale rate structure to ensure recovery of a portion of its fixed costs. RFC presented four rate structure alternatives to the Board, and the Agency implemented a fixed and variable rate structure in which the fixed costs were recovered based on each purveyor s previous three-year average of total water demand. CITY OF SOUTH PASADENA (CA) Ms. Phan assisted the City in conducting a financial plan and rate study for its water and wastewater enterprises as the lead analyst. The City had expressed some concerns about financial stability and anticipated significant capital expenses associated with water and sewer line replacement in the upcoming years, as well as necessary improvements to meet state regulations. As a part of the financial plan development process, RFC evaluated the City s existing accounts and consumption patterns as well as its existing rate structure to evaluate and project revenues. These revenues were compared to existing and projected revenue requirements, including operating and capital expenses as well as existing debt service obligations. The results of the study included a financial plan dashboard which allowed the City to evaluate various financial plan scenarios, including the necessary levels of revenue adjustments required and capital funding options available in order to meet its required coverage ratios and target reserve balances. CITY OF PALO ALTO (CA) The City of Palo Alto (City) engaged RFC to conduct a water cost of service and rate study. The study included a EAST ORANGE COUNTY WATER DISTRICT [ 28 ]

81 comprehensive review of the City s revenue requirements and allocation methodology, review of the City s user classification, usage patterns, a cost of service analysis, and rate design for City users. The study also included a review of the peaking characteristics of different customer classes, an analysis of the master-metered MFR customers, and a review of separate charge for higher elevations customers. RFC conducted the study with input from the Utilities Advisory Commission made up of City residents. Ms. Phan assisted in conducting the cost of service analysis and customer impacts. OLIVENHAIN MUNICIPAL WATER DISTRICT (CA) Ms. Phan assisted the Olivenhain Municipal Water District (District) in conducting a water financial plan study and a recycled water rate study to determine the recycled water rates charged to customers. The water financial planning model was developed to assist the District in evaluating different financing alternatives to minimize rate impacts and ensure financial stability. The water model was effectively used in Board meetings and presentations to evaluate the impacts of various scenarios. The recycled water rate study was conducted to determine the recycled water rates charged to customers given that the District obtains recycled water from four different sources: the City of San Diego, Vallecitos Water District, Rancho Santa Fe Community Services District, and the 4S Regional Recycled Water System. The existing agreements defined the costs of different sources of recycled water to the District. To address all of those issues and concerns, RFC developed a recycled water financial and rate model to determine the costs of providing service and the required revenue to be collected from customers. In addition, the model is built to evaluate when the District is able to take over the 4S Regional Recycled Water System, as stated in the agreement with the developer. GOLETA WEST SANITARY DISTRICT (CA) The Goleta West Sanitary District (District) was evaluating several alternatives regarding constructing their own wastewater treatment plant and expanding the current facility at Goleta Sanitary District, where the District has been sending their wastewater for treatment. RFC built a financial planning model for the District to find the most economically effective option. Furthermore, the District engaged RFC in conducting a miscellaneous fee study to evaluate the current fee structures to better represent the cost of service. Ms. Phan assisted in conducting economic analyses of the alternatives and developing the miscellaneous fee model for the District. TACOMA ENVIRONMENTAL SERVICES (WA) RFC is currently conducting a comprehensive wastewater, surface water, and solid waste financial plan and cost of service study for Tacoma Environmental Services (Tacoma). A key objective of the project is to provide Tacoma with a financial model that can be linked with the SAP system so that future annual updates can be automatic. The model also has ability to conduct sensitivity analyses on several different issues, such as debt refinancing, varying levels of increases in assessments costs, etc. The study also included a long-range financial plan to ensure financial stability for all three utilities. Ms. Phan served as the lead consultant on this project, responsible for building the rate models, preparing presentations and conducting sensitivity analyses. OTHER RELEVANT PROJECTS City of Banning (CA) Water, Wastewater, and Recycled Water Rate and Connection Fees Study Beaumont-Cherry Valley Water District (CA) Water Rate Study Carpinteria Sanitary District (CA) Wastewater Rate Study Clark County Water Reclamation District (NV) Sewer Cost of Service Study City of Escondido (CA) Water and Wastewater Rate and Fees and Connection Fees Study, and Water Budget Study Jurupa Community Services District (CA) Water and Wastewater Rate Study City of North Las Vegas (NV) Water and Wastewater Rate Studies City of Ontario (CA) Water, Wastewater, and Solid Waste Rate Studies City of Redlands (CA) Water, Wastewater and Connection Fees Cost of Service Study City of Santa Barbara (CA) Water and Wastewater Rate Study City of Santa Monica (CA) Wastewater Cost of Service Study Tacoma Water Department (WA) Water Financial Plan Study [ 29 ] RAFTELIS FINANCIAL CONSULTANTS, INC.

82 TECHNICAL SPECIALTIES Utility cost of service and rate structure studies Conservation rate studies Economic feasibility studies Wastewater rate studies Capital recovery/capacity fee studies Survey research of water and wastewater utility characteristics and rates PROFESSIONAL HISTORY Raftelis Financial Consultants, Inc.: Senior Consultant (2014-present) APTwater, Inc. (Now Ultura): Project Manager ( ) PBS&J (Now ATKINS): Project Manager Utility Finance ( ) Earth Tech (now AECOM): Senior Project Manager ( ) Malcolm Pirnie, Inc. (now ARCADIS): Consultant ( ) National Parks Conservation Association Business Plan Initiative: Business Plan Consultant (2000) U.S. Army Corps of Engineers New England Division: Project Manager ( ) Geophex, Limited: Graduate Research Assistant (1994) EDUCATION Master of Business Administration - University of Southern California (2001) Master of Science in Environmental Engineering - University of Massachusetts (1995) Bachelor of Science in Civil Engineering - University of Massachusetts (1994) PROFESSIONAL MEMBERSHIPS American Water Works Association STEVE GAGNON, PE STAFF CONSULTANT Senior Consultant PROFILE Mr. Gagnon has 15 years of experience in financial analysis environmental engineering. He has worked for leading engineering consultants as well as the federal government. His broad range of experience includes water and wastewater pricing studies, capacity fees and utility valuations. His specific experience includes water and wastewater rate studies for the City of Anaheim, La Habra Heights County Water District, Rowland Water District, Walnut Valley Water District, Sweetwater Authority, Helix Water District and Otay Water District. He has also performed strategic financial analysis of water sourcing alternatives and costing of ground water remediation alternatives, asset inventory and condition assessments, utility performance metrics, earned value analysis, and Superfund remediation. UTILITY RATE STUDIES AND LONG-RANGE PLANNING EXPERIENCE CITY OF ANAHEIM (CA) Mr. Gagnon prepared a commercial and residential wastewater rate study for the City of Anaheim (City). The proposed rate structure was based on water consumption to replace the antiquated structure based on the number of toilets. Proper water use and wastewater return to sewer analysis is required to ensure proper revenue generation for the City. COUNTY OF SAN DIEGO (CA) Mr. Gagnon prepared integrated financial models for a landmark study for the County of San Diego. The study will not only be updating the sewer user, capacity, and annexation fees for the nine dependent sewer districts but will also include the economic analysis of creating one super sanitation district. Long-range financial plans will be prepared for all of the districts as well as the super district including 10 years of operational and capital costs. WESTERN MUNICIPAL WATER DISTRICT (CA) Mr. Gagnon prepared a long-range financial plan to help ensure the Western Municipal Water District s (District) financial health. Based on the District s five-year CIP, inflationary water rate adjustments, and reserve policies, the plan showed that a debt issue was needed to execute the CIP and maintain adequate reserves. RAINBOW MUNICIPAL WATER DISTRICT (CA) Mr. Gagnon created water conservation based sewer rates to complement the Rainbow Municipal Water District s (District) conservation based water rate structure. These rates will be based on the actual water usage of each customer within the District. In addition, appropriate sewage strengths will be incorporated into the District s sewer user rates. EAST ORANGE COUNTY WATER DISTRICT [ 30 ]

83 WALNUT VALLEY WATER DISTRICT (CA) Mr. Gagnon performed the Walnut Valley Water District s (District) first professional rate study which included updating the rate structure. Mr. Gagnon created a threetier residential rate structure to help decrease discretionary consumption and ensure the District avoids or reduces water purchase surcharges from the Metropolitan Water District. He presented his findings to District staff and the District s Board of Directors. FALLBROOK PUBLIC UTILITY DISTRICT (CA) With water shortages looming in Southern California, this progressive water and sewer district asked for help creating water conservation-based sewer rates to complement their conservation based water structure. Mr. Gagnon created rates based on the actual water usage of each customer within the Fallbrook Public Utility District (District). In addition, appropriate sewage strengths were incorporated into the District s sewer user rates. OTAY WATER DISTRICT (CA) The Otay Water District (District) performs an update to their capacity and annexation fees every five years. In this update they changed their capacity fee from an incremental fee based on future costs to a combined fee structure using replacement costs less depreciation. They are also revised their annexation fee to recover taxes and availability charges paid by existing users who are currently inside the District s boundaries. In addition they added a new water supply fee to recover the expansion costs of their water system. This is a new fee that addresses the issue of new development bringing their own water supply or pay for offsets. Mr. Gagnon was also the lead economist on a fast track study to assist the District in adding further conservation incentives into their potable and reclaimed water user rates. Specifically he added rate blocks into their non-residential and landscaping user rate structures based on specific base extra capacity cost allocations per user class. In addition, he assisted the District in the preparation of a drought/shortage rate structure that overlays their new conservation rate structure. This drought rate structure is based on the guidelines provided by the Metropolitan Water District of Southern California and the San Diego County Water Authority. ROWLAND WATER DISTRICT (CA) Mr. Gagnon updated the Rowland Water District s (District) water rates for the second time. The District had several concerns for the most recent study which included a large debt issue for a recycled water system as well as staff increases and wholesale water rate increases. The model helped the district size its debt issue by performing a rate sensitivity analysis to the size of the debt issue. SWEETWATER AUTHORITY WATER RATE STUDY (CA) Mr. Gagnon recently restructured Sweetwater Authority s (Authority) water rates resulting in customer bills that are more proportional to consumption and reducing the monthly bill for low use customers. He also prepared drought water rates to help the Authority remain financially sound during periods of drought induced decreased water consumption. OLIVENHAIN MUNICIPAL WATER DISTRICT (CA) Mr. Gagnon created a drought rate model to help the Olivenhain Municipal Water District (District) develop a drought rate ordinance. The model calculated commodity rate adjustments for four drought stages. It allowed for customer voluntary cutbacks in consumption as well as cutbacks due to higher water prices using the price elasticity of water. The model will help ensure the District maintains adequate revenue in times of drought. Mr. Gagnon helped the District update their wastewater rates and developed a customized model for its unique rate structure. The District s residential rates are a flat charge per Equivalent Dwelling Unit (EDU) and the commercial rate structure includes a service charge per EDU and a variable rate based on measured water consumption. Mr. Gagnon also prepared valuation calculations for the system capacity required for update of water and wastewater connection and annexation fees for the District. The analysis showed that the District would benefit by changing capacity fee calculation methodologies from a growth method to a combined method, thereby imposing less restrictions on the use of capacity fee revenue. Mr. Gagnon modeled the long-term cost of several different water sources for the District. Options included purchasing treated water, expanding their water treatment plant and purchasing untreated water from the Metropolitan Water District or partnering with other local agencies to desalinate ocean water. The model contained many variable inputs to allow what-if scenario analysis. Although purchasing treated water was the least costly option, the authority favored plant expansion due to other benefits such as reliability of water supply. CITY OF POWAY (CA) Mr. Gagnon completely rebuilt the City of Poway s water and wastewater rate models to reflect the latest rate setting practices. HELIX WATER DISTRICT (CA) Mr. Gagnon created an economic model to add life-line and a water waster tier to the Helix Water District s (District) [ 31 ] RAFTELIS FINANCIAL CONSULTANTS, INC.

84 three-tier rate structure. In addition, budget-based water rates were created for all irrigation accounts. The District is transitioning slowly to budget-based rates due to staffing limitations. In 2010 they will implement budget-based rates for all commercial accounts. Mr. Gagnon also performed all of the economic modeling in the preparation of the District s first Capacity Fee Study. The capacity fee was designed to collect a buy-in portion based on replacement costs of the District s current water system and the incremental cost of adding a new water supply, the El Monte Valley Ground Water Recharge project. CITY OF CORONADO (CA) Mr. Gagnon is helping restructure the City of Coronado s wastewater rates from a flat parcel-based fee for residential users to one with a consumption-based charge and a fixed charge. CITY OF LEMON GROVE (CA) Mr. Gagnon helped update the commercial and residential wastewater rates for the City of Lemon Grove. The rate structure included 20 different user classes for residential, commercial, and institutional customers. JULIAN AND PINE VALLEY SANITATION DISTRICTS (CA) Mr. Gagnon updated the wastewater rates and connection fees for both sanitation districts. The wastewater fees had not been updated for several years in one district and over 15 years in the other necessitating large rate increases. He developed a few different scenarios which included postponing CIP projects or lowering reserve balances, to ease ratepayers into higher rates. SAN ANTONIO WATER SYSTEM (TX) Mr. Gagnon prepared a sewer impact fee economic model and study for the City of San Antonio. This included a valuation of the system s facilities using several asset based approaches. Ultimately the total net book value without depreciation was selected as the basis for the valuation of the System s assets. In addition an equity residual model was prepared that included the allocation of the present value of past and future debt service payments. The study also analyzed a number of impact fee structures to determine the most fair and equitable fee. LA HABRA HEIGHTS COUNTY WATER DISTRICT (CA) Mr. Gagnon assisted with the update in water user rates, capacity charges, and long-range financial plan for the La Habra Heights County Water District (District). The 2001 study set the District s user rates for five years and expired in The District had recently completed an updated Water Master Plan and wished to incorporate the new cost of replacement capital facilities for the next ten years into their long-range financial plan and user rates. CITY OF LA HABRA (CA) Mr. Gagnon helped prepare the City of La Habra s (City) first professional sewer user rate study. This study followed industry standards and an EPA approved rate structure. The City plans to create a formal enterprise fund for their sewer utility to properly finance their sewer operations and maintenance. He developed the long-range financial plan modeled year-end cash reserves to ensure execution of the City s $21 million capital improvement program and to fund operations and maintenance. CITY OF FULLERTON (CA) Mr. Gagnon conducted a field audit to determine appropriate return to sewer flows as well as fats, oils and greases surcharge rates for the top 50 industrial water customers in the City of Fullerton. TOWN OF QUARTZSITE (AZ) Mr. Gagnon performed a third party rate review of a recently completed water and wastewater rate study for the Town of Quartzsite (Town). The Town is concerned with insuring that their winter RV population is paying their fair share of the water and sewer expenses. TOWN OF PARKER (AZ) Mr. Gagnon updated the Town of Parker s (Town) water rates. One of the Town s main concerns was the fairness and equity of water system cost distribution given the Town s large population of Native Americans who do not pay sales or utility taxes yet benefit from Town parks and other Town amenities. He also helped the Town establish operating and capital reserves. CITY OF WEBSTER (TX) Mr. Gagnon is constructing a stormwater model for the City of Webster (City). The rates are based on the impervious surface of each parcel. The City plans using water meters to bill customers. CITY OF NORMAN (OK) Mr. Gagnon is constructing a stormwater rate model for the City of Norman. The model is constructed in several different ways to allow the city council to choose from alternative rate structures, including the contentious issue of whether or not Oklahoma University, which owns large parcels of impervious surface area, will support the stormwater utility. BOXELDER COUNTY (CO) Mr. Gagnon assisted Boxelder County (County) in the EAST ORANGE COUNTY WATER DISTRICT [ 32 ]

85 determination of how they will finance their required stormwater improvements. They plan to create a stormwater utility through diverse funding sources including impact and user fees, a community financing district, and grants and loans. The goal of this study was to identify and size a system of improvements which will achieve the greatest defined economic benefit (both local and regional) per dollar of cost, based on the 100-year floodplain extents. OTHER FINANCIAL AND MANAGEMENT STUDIES TOWN OF PARKER (AZ) Mr. Gagnon is performing a benchmarking analysis of the Town of Parker s (Town) water, parks and recreation and streets departments due to efficiency concerns. The study will compare the Town s cost efficiency with other small towns. MARINE CORPS BASE CAMP PENDLETON (CA) Mr. Gagnon led an asset inventory and condition assessment of the water and wastewater systems on Marine Corps Base Camp Pendleton. The inventory included field visits and literature reviews to document and describe the extent and condition of all utility assets. Asset data was compiled in a database and linked to GIS mapping. OLIVENHAIN MUNICIPAL WATER DISTRICT (CA) Mr. Gagnon developed an economic model that evaluates the cost benefit analysis of four different water supply options including desalinization, increased use of recycled water, and expansion of their existing water treatment plant using membrane technology. Proposed funding levels were prepared for the long-range financial plan to match projects against the revenue levels necessary to support them. CONFIDENTIAL FORTUNE 500 AEROSPACE CORPORATION (CA) Mr. Gagnon created an excel based financial model to cost and budget one of the largest corporate environmental liabilities a nine-mile long plume of rocket fuel-related contamination underlying several cities in southern California. Remediation strategies were constantly changing and, thus, the model simulated costs for numerous remediation alternatives. The model also allowed for monthly and yearly budgeting and total clean-up expenditures. areas including QA/QC, client feedback, staff allocation, etc. The plan also included performance measures to evaluate client satisfaction, program success, and failures. OTAY WATER DISTRICT (CA) Mr. Gagnon assisted in facilitating performance metric workshops with the Otay Water District management staff. The workshops discussed performance metric basics, analyzed dozens of performance metrics, how to calculate them, and eventually helped staff narrow down the metrics they believed were best for their utility. KEWEENAW NATIONAL HISTORICAL PARK, NATIONAL PARK SERVICE (MI) Mr. Gagnon coauthored a business plan submitted to the U.S. Congress to seek additional funding to expand a national park in Michigan. The business plan included a historical cost accounting analysis of prior fund use and projected future fund needs. U.S. ARMY SUDBURY ANNEX SUPERFUND SITE (MA) Mr. Gagnon was the Project Manager for the remediation and real estate transfer of a 2,000-acre army ammunition depot and research installation in central Massachusetts. Mr. Gagnon oversaw project funds, environmental studies, and construction contracts with consulting firms and partnered with the U.S. EPA to determine clean-up goals and strategies. OTHER RELEVANT PROJECT EXPERIENCE Blue Plains Wastewater Treatment Plant (DC) - Valuation Study Metro Wastewater Joint Powers Authority (CA) - Valuation of Treatment Capacity City of Pico Rivera (CA) - Valuation of Groundwater Pumping Rights EARTH TECH (CA) Mr. Gagnon developed an Operation Excellence Plan to ensure client satisfaction on the execution of a multimillion dollar Master Services Agreement with a Fortune 500 Aerospace Corporation. The plan provided guidance in many [ 33 ] RAFTELIS FINANCIAL CONSULTANTS, INC.

86 TECHNICAL SPECIALTIES Data analysis Environmental Policy Analysis Strategic Planning PROFESSIONAL HISTORY Raftelis Financial Consultants, Inc.: Consultant (2014-present) Turner New Zealand, Inc.: Director of Operations ( ); Accounting Manager ( ) Lesley, Thomas, Schwarz & Postma, Inc.: Staff Accountant (2007) EDUCATION Master of Environmental Management Duke University (2014) Bachelor of Arts in Business-Economics; History University of California, Santa Barbara (2006) KEVIN KOSTIUK STAFF CONSULTANT Consultant PROFILE Mr. Kostiuk has a background in economics and accounting and possesses extensive analytical skills. His expertise lies in financial accounting, analysis of water supply reservoir operations and management, environmental policy, environmental quality, and product development; as well as United States Army Corps of Engineers (USACE) water supply and flood control policy. RELEVANT PROFESSIONAL EXPERIENCE CRESCENTA VALLEY WATER DISTRICT (CA) Mr. Kostiuk performed an economic analysis for the Crescenta Valley Water District (District) to determine the feasibility of offsetting imported water supply with the production of local groundwater. Mr. Kostiuk created a customized model for the District to use under different scenarios of capital requirements, lease options, and contract lengths. As part of the study, he reviewed the District s prior consultant s work, determined internal rate of returns, calculated the net present value of district savings, and determined the cost at which the District should lease water rights for groundwater production. CITY OF RIVERSIDE (CA) Mr. Kostiuk completed a study for the City of Riverside (City) to determine the value of an elevation fee credit for present and future customers in a special district. The project required calculation of asset replacement values for infrastructure serving the special district, specific to booster capacity, and within the context of a historical assessment. The findings from the study will be used to defend the City s move to assess its elevation fee schedule. EAST VALLEY WATER DISTRICT (CA) Mr. Kostiuk is assisting the East Valley Water District with construction and implementation of budget-based water rates for their 23,000 accounts. The study includes creation of long-term financial plans and full cost of service studies for both water and sewer services. CITY OF RALEIGH PUBLIC UTILITIES DEPARTMENT- AMERICAN RIVERS Mr. Kostiuk served as project leader for a study of alternatives to meet Raleigh s long term water supply shortfall. The project examined four options in extending the life of the existing federal reservoir, thereby postponing capital expenditures on a new raw water supply. Results were delivered to city staff, their consultants and USACE in June, LOWER CAPE FEAR WATER QUALITY TRADING PROGRAM THE NATURE CONSERVANCY To reduce nutrient loading and decrease utility costs, the Nature Conservancy proposed a WaterFund to improve water quality through improved agricultural practices on private landholdings in the watershed. Mr. Kostiuk was in charge of researching comparable programs and providing options for a financial mechanism and governance approach between various stakeholders in the region including utilities, agriculture, environmental organizations and community groups. EAST ORANGE COUNTY WATER DISTRICT [ 34 ]

87 TECHNICAL SPECIALTIES Financial modeling Financial planning Utility rate studies PROFESSIONAL HISTORY Raftelis Financial Consultants, Inc.: Consultant (2014-present) City of Thousand Oaks, Public Works Analyst ( ); Acting Assistant to the City Manager (Jan 2014 May 2014) EDUCATION Master of Public Administration Cornell University (2010) Bachelor of Science in Applied Economics & Management Cornell University (2009) AKBAR ALIKHAN STAFF CONSULTANT Consultant PROFILE Mr. Alikhan has a background in economics, public policy and community outreach with a keen emphasis on public speaking and writing for non-technical audiences. His expertise lies in the areas of financial modeling, public works operations and benchmarking, and public utilities. RELEVANT PROFESSIONAL EXPERIENCE TRIUNFO SANITATION DISTRICT (CA) As the financial consultant for both the recycled water and wastewater enterprises, Mr. Alikhan developed updated models that had initially been created by RFC in The updated recycled water model better aligned seasonal purchase and resale prices of recycled water from the District s regional wholesaler. CITY OF VISTA / BUENA SANITATION DISTRICT (CA) In summer 2014, Mr. Alikhan performed the wastewater rate study update for the City of Vista Wastewater & Buena Sanitation District. Although both are administered by the same governing body, the entities are two distinct enterprises. The model required the inclusion of the City s multiple State Revolving Fund loans for ongoing projects and other sources of debt for larger scale capital replacement projects. CENTRAL CONTRA COSTA SANITARY DISTRICT In June 2014, the District retained RFC to perform a Wastewater Rate Study and Organizational Staffing Needs Assessment Study. Mr. Alikhan served as the consultant assigned to the Staffing Needs Assessment component of the engagement. Throughout the study, Mr. Alikhan has been in over 50 individual and group interviews with District staff, conducted and reported results of an employee survey, and worked with the General Manager and Executive Team to develop a staffing roadmap for the District s future needs. The project is slated for completion in February CITY OF THOUSAND OAKS: PUBLIC WORKS ANALYST ( ) During his tenure at the City of Thousand Oaks, Mr. Alikhan served as the primary analyst for the Public Works Director. His core duties included management of the City s Landscaping & Lighting Assessment District No. 79-2, developing feasibility models for energy efficiency projects, and supervision of all staff reports for Public Works activities. Mr. Alikhan also served as the Assistant to the City Manager during the first half of 2014, with leadership roles in such events as the Amgen Tour of California. [ 35 ] RAFTELIS FINANCIAL CONSULTANTS, INC.

88 TECHNICAL SPECIALTIES Utility rate studies Financial planning studies PROFESSIONAL HISTORY Raftelis Financial Consultants, Inc.: Associate Consultant (2014-present) EDUCATION Master of Arts in Economics University of California, Riverside (2012) Bachelor of Arts in Economics/Administrative Studies with a concentration in Finance University of California, Riverside (2010) JOHNATHAN CRUZ STAFF CONSULTANT Associate Consultant (RFC) PROFILE Mr. Cruz has a background in finance and economics and possesses extensive analytical skills. His primary expertise includes: financial and econometric modeling, dynamic pricing, as well as compiling and analyzing data. Since joining RFC, he has worked on both water and wastewater rate studies including the South Mesa Water District, Upper San Gabriel Valley MWD, the Cities of San Gabriel and Reno, and South Bay Water Recycling Program. RELEVANT PROJECT EXPERIENCE CITY OF SAN GABRIEL (CA) As a financial consultant for a new sewer rate study, Mr. Cruz designed a set of new sewer rates for the City of San Gabriel, which would allow them to begin collecting revenue for their sewer system. The project required an analysis of the City s finances and implementation of a new sewer rate in order to meet escalating revenue requirements. Mr. Cruz developed the financial model that would allow the City to begin meeting revenue requirements while adhering to the principals of equity, defensibility, and minimal customer impact. UPPER SAN GABRIEL VALLEY MUNICIPAL WATER DISTRICT (CA) The Upper San Gabriel Valley Municipal Water District engaged RFC to conduct a comprehensive water and recycled water rate study. The study required development of a financial plan which ensured financial sufficiency, particularly with regard to a large indirect potable reuse project which required immediate funding to begin construction and once online would cause significant changes to the District s revenue and expense positions. Mr. Cruz assisted with developing a dynamic model which would allow the District to evaluate a variety of funding and cost scenarios. SOUTH MESA WATER COMPANY (CA) South Mesa Water Company engaged RFC to conduct an extensive water rate and connection fee study. Mr. Cruz analyzed the Company s current assets and developed a system of connection fees that would help the Company to maintain its financial sufficiency. Mr. Cruz also contributed to dynamic elements of the model created for the study, specifically developing a selection-based construction expense calculation, which allowed Company Board members to make informed decisions about annual construction allocations and the feasibility of future projects in real time. CITY OF RENO (NV) The City of Reno retained RFC to develop a wastewater rate study for its residential customers, which would determine the feasibility of implementing a new usage-based sewer rate in place of its existing fixed rate. The study required the merger of two separate county data sets with the City s own account data. As the financial consultant for the wastewater study, Mr. Cruz developed a methodology for merging the three data sets into a master customer usage list which ultimately allowed the City EAST ORANGE COUNTY WATER DISTRICT [ 36 ]

89 to begin feasibility discussions. The new master list had the added benefit of identifying misclassified customers and other accounting inconsistencies which accounted for previously uncollected revenue. SOUTH BAY WATER RECYCLING (CA) The City of San Jose engaged RFC to develop a financial model that would serve as the starting point for rate increase talks with customers and nearby water districts. As the financial consultant, Mr. Cruz developed a financial model that combined several funding and revenue scenarios into a single financial plan. Mr. Cruz s model allowed for infinitely adjustable discount based rates, which could be phased-in over a user-selected time period. [ 37 ] RAFTELIS FINANCIAL CONSULTANTS, INC.

90 TECHNICAL SPECIALTIES Financial Modeling PROFESSIONAL HISTORY Raftelis Financial Consultants (2014-present) EDUCATION Master of Environmental Management Duke University (2014) Bachelor of Arts in Asian Studies (Chinese)/ Peace, War, and Defense University of North Carolina, Chapel Hill (2011) VICTOR SMITH STAFF CONSULTANT Associate PROFILE Mr. Smith joined RFC in 2014 as an Associate Consultant after graduating from Duke University with a Masters of Environmental Management. In addition to his expertise in financial modeling, Mr. Smith has a background in environmental and energy economics. RELEVANT PROFESSIONAL EXPERIENCE CITY OF BEVERLY HILLS (CA) The City of Beverly Hills engaged RFC to develop a financial model to calculate connection fees for new developments and redevelopment. As the financial consultant, Mr. Smith developed a model that combined data from several sources and calculated appropriate connection fees based on the buy-in methodology. CITY OF REDLANDS (CA) The City of Redlands engaged RFC to develop a water and wastewater financial plan model. As an associate consultant, Mr. Smith developed the City s Water and Wastewater Development Impact Fees. CITY OF CHINO HILLS (CA) The City of Chino Hills engaged RFC to develop a financial plan model to accompany an asset management study from GHD. As the project s lead financial consultant, Mr. Smith developed a 100 year financial model based on analysis of the City s current finances including water acquisition costs, capital and asset management costs, and water sales revenues. CITY OF BREA (CA) The City of Brea engaged RFC to develop a financial plan model for a water rate study. Mr. Smith built a 5-year financial model of the City s water enterprise. This model will be used by the City to develop future rate increases. CITY OF WATSONVILLE (CA) The City Watsonville engaged RFC to develop a water, wastewater and solid waste financial plan model. Mr. Smith built a 5-year financial model of the City s three utility enterprises. This model will be used by the City to develop future rates for all three enterprises. EAST ORANGE COUNTY WATER DISTRICT [ 38 ]

91 MEMO TO: FROM: BOARD OF DIRECTORS GENERAL MANAGER SUBJECT: REVISIONS TO SEWER TRANSFER PLAN OF SERVICE/EXTENSION OF TRANSFER AGREEMENT WITH OCSD DATE: APRIL 16, 2015 BACKGROUND At the April 11 th Board Workshop, staff reviewed proposed revisions to the Plan of Service that was filed on March 27, 2014 with OCLAFCO. As noted during the workshop, these revisions were based upon information that wasn t available when the document was being prepared last year, as well as information that has been developed through field services coordination with OCSD. Pending Board approval, Staff proposes to submit the revisions to OCLAFCO on April 17 th. It should be noted that OCLAFCO staff have advised that submission of these revisions will delay their transfer review and cause their schedule for Commission consideration of our transfer application to slip to their June 10 th meeting. In a related matter, the original Transfer Agreement with OCSD didn t anticipate the extensive time it has taken to process the application through OCLAFCO; the agreement had a December 31 st termination date. Staff requests that the Board authorize the General Manager to execute the attached Amendment; OCSD is scheduled to consider this at their April 22 nd meeting. RECOMMENDATION The Board direct General Manager to: 1) make such modifications to the District s Sewer Area #7 Plan of Service as is necessary to update it based upon the most current financial and technical information available and submit it to OCLAFCO and, 2) execute Amendment No. 1 to the Local Sewer Facilities Transfer Agreement.

92 FIRST AMENDMENT TO LOCAL SEWER FACILITIES TRANSFER AGREEMENT THIS FIRST AMENDMENT TO LOCAL SEWER FACILITIES TRANSFER AGREEMENT ("Agreement") is made this day of, 2015 ("Effective Date") by and between the ORANGE COUNTY SANITATION DISTRICT ("OCSD"), a duly organized County Sanitation District existing pursuant to California Health and Safety Code section et seq., and the EAST ORANGE COUNTY WATER DISTRICT ("EOCWD"), a duly organized County Water District existing pursuant to California Water Code section et seq. OCSD and EOCWD are sometimes hereinafter individually referred to as "Party" and hereinafter collectively referred to as "Parties". RECITALS WHEREAS, OCSD and EOCWD are parties to that certain Local Sewer Facilities Transfer Agreement, dated, 2014 ( the Agreement ), in which the parties set forth their intent to cooperate in the transfer of ownership in and the assumption of responsibility for certain local sewer facilities from OCSD to EOCWD; and WHEREAS, the transfer process requires the approval of the Orange County Local Agency Formation Commission ("LAFCO"), and, although that process commenced in a timely manner, the LAFCO process has taken longer than the parties anticipated; and WHEREAS, the parties therefore desire to amend the Agreement to extend the timelines and termination date to reflect the current status of the LAFCO process. AGREEMENT NOW, THEREFORE, in consideration of the mutual promises set forth herein, the Parties agree as follows: 1. Extension of Timelines. In order to reflect the changed circumstances with regard to the timeline for completion of the transfer, December 1, 2014 in subsections 2.a. and 3.d. shall be amended to read December 31, 2015 ; and July 1, 2015 and Fiscal Year in subsection 3.f.i. shall be amended to read, respectively, July 1, 2016 and Fiscal Year. 2. Amendment to Section 6. Section 6 shall be amended to read as follows: Page 1 of 8

93 6. Term. This Agreement shall commence on the Effective Date and continue in full force and effect through December 31, The parties may mutually agree in writing to extend the term of this agreement. The Agreement shall automatically terminate if LAFCO disapproves the proposal. IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the dates set forth below. ORANGE COUNTY SANITATION DISTRICT By Jim Herberg General Manager Date ATTEST: Maria Ayala Clerk of the Board APPROVED AS TO FORM: Brad Hogin General Counsel EAST ORANGE COUNTY WATER DISTRICT By Lisa Ohlund General Manager Date ATTEST: APPROVED AS TO FORM: Joan Arneson General Counsel Page 2 of 8

94 MEMO TO: BOARD OF DIRECTORS FROM: GENERAL MANAGER SUBJECT: REDESIGNATION OF "METER CHARGE" TO "SERVICE CHARGE" DATE: APRIL 16, 2015 Background The District s Rules & Regulations for Water Service and Rate Schedule includes three fee/charge categories: 1. Commodity (Water) Charge calculated based on water usage. 2. Meter Charge calculated on a monthly basis based on the size of the customer s meter 3. Capital Projects Fee Flat monthly fee While the names of the charges seem to be self-explanatory, many customers call in asking about the Meter Charge and question when it will be paid off, or why they have to pay for their meter; after inquiries about the amount of their bill, this is the most common billing question we receive from customers. The Meter Charge is actually a charge for water service it represents the recovery of most of the fixed costs for the operations and maintenance of the water system. Staff proposes that the Meter Charge be renamed the Service Charge. The Meter Charge designation appears in Sections 1.2, 3.5 and of the Rules and Regulations and in two places on the Rate Schedule (attached); the changes required to incorporate the name change are shown marked-up in the documents. Recommendation The Board approve changing the designation of Meter Charge to Service Charge.

95 RULES AND REGULATIONS FOR WATER SERVICE APPROVED: NOVEMBER 15,

96 CONTENTS APPROVED:... 1 SECTION 1 GENERAL INTRODUCTION DEFINITIONS SERVICE AREA SERVICE CONDITIONS CUSTOMER RECORDS ESTABLISHMENT OF RATES GUIDELINES AND INTERPRETATIONS SEVERABILITY SECTION 2 CONDITIONS FOR SERVICE ACCESS TO PREMISES OPERATION BY THE DISTRICT EMPLOYEES DAMAGE TO SYSTEM THE DISTRICT'S RIGHT TO INTERRUPT SERVICE DISTRICT LIMITS OF RESPONSIBILITY AND LIABILITY VIOLATIONS AND ENFORCEMENT RIGHT OF APPEAL SECTION 3 WATER BILLING AND CUSTOMER SERVICE RESPONSIBILITY FOR ACCOUNT Responsibility FOR UNPAID CHARGES TENANT RESPONSIBILITY NEW ACCOUNTS CLOSING Of ACCOUNTS BILLING Billing Disputes

97 3.6.2 BILLING FOR DAMAGES PAYMENTS Payments Made at District Office Payments Made by Mail AUTOMATIC Electronic Funds Transfer Payments Payments Made by Credit/Debit Cards THROUGH THE DISTRICT WEBSITE Payments Returned by Bank Extensions DELINQUENCIES Delinquent Bills Notice of Planned SHUTOFF of Water Service shutoff of Water Service for Nonpayment Restoration of Water Service DEPOSITS CUSTOMER INQUIRIES AND COMPLAINTS Meter Inquiries and Testing High Water Use and Investigations Water Quality Inquiries BANKRUPTCIES SECTION 4 WATER FACILITIES AND APPURTENANCES APPLICATION PROCESS Plan Check Process Issuing the Permit Water Service Agreement Fees and Charges CONNECTION Charges Bonds and Conditions for Release of Bonds

98 4.1.7 Document of Conveyance and Guarantee CONSTRUCTION OF WATER FACILITIES Underground Service Alert Safety Requirements Charges for Damages Valves and Water Main Shutdowns The District Inspection Size, Location and Installation of Water Services SERVICE LATERAL, Meter Installation, Fees Single Meter Policy Submetering and Prohibited Practices Automatic Fire Sprinkler Service Connections Section 5 TEMPORARY WATER SERVICES TEMPORARY CONNECTIONS HYDRANT METERS PAYMENT Regular Monthly Bills Delinquent Bills Section 6 CROSS CONNECTION AND BACKFLOW PREVENTION INTRODUCTION GENERAL PROVISIONS Protection Backflow Prevention Devices Unprotected Cross Connections New Service Requests Protection Required Before Granting Service Protect All Water Lines

99 6.3 WHERE PROTECTION IS REQUIRED Premises Having An Auxiliary Water Supply Premises Handling Processed Water PREMISES HAVING OR POSSIBLY HAVING CROSS CONNECTIONS TYPE OF PROTECTION Type of Backflow Device APPLICATION Structures of More Than Two Stories In Height Recirculating Water Five or More Units Health or System Hazard From Auxiliary Water Supply Sewage and Storm Drain Facilities Hospitals, Mortuaries, Etc Commercial or Industrial Buildings Fireline Services Irrigation Services INSTALLATION Only The District Approved Devices Installation Specifications Replacement of Obsolete Devices Testing New Devices Right to Reject INSPECTION AND TESTING Original Test Annual Test by Certified Tester Random Tests and Inspections of Devices On-Premise Inspection by The District

100 6.8.5 More Frequent Inspection Duty of Tester Testing Methods TERMINATION Basis for Termination Termination Procedures Section 7 ENFORCEMENT New Service Connections existing Service Connections TERMINATION OF WATER SERVICE CIVIL AND CRIMINAL ACTIONS

101 SECTION 1 GENERAL 1.1 INTRODUCTION The East Orange County Water District (District) is a County Water District operating pursuant to the County Water District Law (Section and following of the California Water Code). The Board, as authorized by Section of the Water Code, has established these Rules and Regulations for the retail sale, distribution and use of water. 1 The District provides water service to all Applicants, subject to the availability of water and/or the facilities necessary to provide the service, conditional upon receipt of all required fees and charges, and in accordance with these Rules and Regulations. All terms, conditions, rates and requirements contained herein are subject to change by actions of the Board. 1.2 DEFINITIONS Whenever the following terms, or pronouns used in their place, occur in these Rules and Regulations, or in any documents that these Rules and Regulations govern, the intent and meaning shall be interpreted as follows: Abandoned Service - shall mean any service where the meter, the meter angle stop, curb stop or gate valve, and all tubing, have been removed. The service saddle and the corporation stop may or may not have been removed. Air-Gap Separation - shall mean a physical separation between the free flowing discharge end of a water supply pipeline and an open or non-pressure receiving vessel. The separation shall be at least double the diameter of the supply pipe measured vertically above the overflow rim of the vessel, and in no case less than one-inch. The design shall be to the satisfaction of the General Manager or authorized agent and the Appropriate Regulatory Agencies. Applicant - shall mean any person, persons, firm, corporation, association or agency that desires and applies to obtain water service from the District. Application for Water Service - shall mean a contractual agreement applied for by a person, persons, firm, corporation, association or agency who desires to obtain water service through an established meter. Application for Temporary Water Service - shall mean a contractual agreement applied for by a person, persons, firm, corporation, association or agency who desires to obtain temporary water service for use during construction. Appropriate Regulatory Agencies - shall mean those public agencies legally constituted to protect the public health and water quality such as, but not limited to, the California Department of Health Services, the Santa Ana Regional 1 The District s sale of water at wholesale, to entities that provide retail water service in the portions of the District s service area outside the District s Retail Zone, is governed by separate contracts and other requirements, and not by these Rules and Regulations. 7

102 Water Quality Control Board, the Orange County Health Care Agency and the Orange County Building and Safety Department. Backflow - shall mean the flow of water or other liquids, mixtures, gases or any other substances into the distributing pipes of a Potable Water supply from any source or sources other than the District s sources. Backflow Prevention Device - shall mean a specially designed and certified device, such as, but not limited to, the Reduced Pressure Principle Backflow Prevention Device and the Double Check Valve Assembly, that is used in protecting the Potable Water system from contamination that originated downstream of the device. The device shall be recognized and approved as such by the General Manager or authorized agent and the Appropriate Regulatory Agencies. Board - shall mean the elected Board of Directors of the East Orange County Water District. Business Day - shall mean Monday - Friday 7:30 am to 4:00 pm excluding holidays. Connection Charge - shall mean a fee charged to a Retail Zone Applicant in connection with a Water Service Agreement or charged to an existing customer for an increase in demand for Potable Water service (increasing the size of the service meter), as set forth in the Schedule of Rates, Fees and Charges, together with the District s applicable wholesale connection charge. A Connection Charge shall be charged for property not previously served by the District or property with an existing water service requiring an increase in demand for water service. The Connection Charge includes a retail water system capacity charge but does not include the cost of meter setting, service lateral, any main extension or reimbursement for main extension. 2 Capital Projects Fee shall mean the monthly fee, referred to in the schedule of rates as the Monthly Fee for Existing Water System Capital Projects or similar term, levied for the cost of repairing, rehabilitating, replacing and/or improving capital facilities in the water system. Connected Capacity Demand (CCD) - shall mean the total estimated demand for water service, expressed in terms of gallons per minute, as calculated using the procedures specified in the California Plumbing Code. Construction Use - shall mean an approved use of water to support construction activities such as soil compaction and dust control. Contractor - shall mean the party entering into contract with the Applicant for performance of the work for which the District issues a permit. The Applicant and the Contractor may or may not be one and the same. Cross Connection - shall mean any unprotected, actual or potential connection between any part of a Potable Water system used to supply water for drinking purposes and any source or system containing water or substance that is not or cannot be approved by the District as safe, wholesome and potable. By-pass arrangements, jumper connections, removable sections, swivel or changeover devices, or other devices through which Backflow could occur, shall be considered to be Cross Connections. Customer - shall mean any person, persons, firm, corporation, association or agency receiving retail water or services from the District. 2 The Connection Charge as defined herein does not include the District s separate Wholesale Zone Connection Charge established and charged within the entire service area of the District, including the Retail Zone. 8

103 Customer Control Valve - shall mean a valve with a lever-type turn handle, manufactured of bronze, installed on the outlet side of a water meter. Customer of Record - shall mean the person, persons, firm, corporation, association or agency that owns the property and has entered into a Water Service Agreement or other contractual agreement with the District for water service or is the successor and/or assignee to a Water Service Agreement or such other contractual agreement; and/or the property tenant who is the Applicant in an Application for Water Service or Application for Temporary Water Service. The contractual agreement may include, but is not limited to, the Water Service Agreement, the Application for Water Service permit, the Application for Temporary Water Service permit, and a request for any of these received at the District by phone, mail or in person. The Customer and Customer of Record may or may not be one and the same. The Customer of Record is responsible for payment of all moneys owed on accounts for which the Customer of Record has entered into a contractual agreement. Deposit - shall mean any money held by the District for the purpose of guaranteeing payment of money owed to the District. Deposits are applicable only to the account(s) for which the money was collected. Deposits are refunded only to the Customer of Record, unless the depositor has made a written request and has received permission from the District to do otherwise. District - shall mean the East Orange County Water District or an authorized agent. District s Engineer - shall mean the engineer designated by the District or an authorized agent. District Inspector - shall mean any person authorized by the District to perform inspections of either onsite or offsite facilities prior to construction, during construction, after construction or during operation. District Office - shall mean the District business office currently located at 185 N. McPherson Road, Orange, California Drawings - shall mean the plans, working drawings, detail drawings, profiles, typical cross sections and supplemental drawings or reproductions thereof, approved by the District, which show locations, character, dimensions or details of the work or modifications to be performed. General Manager - shall mean the General Manager of the District or an authorized agent. Main or Mainline - shall mean water distribution pipelines located in streets, highways, public ways or private right-of-ways used to deliver or transmit water. Meter - shall mean the District approved primary measuring device, owned by the District, which is used for the purpose of accurately recording the consumption of water at a property, properties or on a portion of a property. The meter is typically the ending Point of Ownership. Meter Charge - shall mean a fixed charge based on meter size levied to fund the ongoing day-to-day fixed costs of the water system. Owner - shall mean any holder of legal title to a property to which the District provides water service or has entered into a Water Service Agreement. Property shall mean any real property owned, leased, rented, or otherwise controlled, utilized, or inhabited by any person, including any corporation or partnership of any form holding a water account with the District. 9

104 Point of Ownership The point where the District s ownership and control of water system facilities ends, which shall be the outlet (downstream) side of the water meter or the control valve upstream of the backflow device. By written agreement only, the District may designate another location as the ending Point of Ownership. Potable Water - shall mean water that is approved for human consumption by the federal, State and local Appropriate Regulatory Agencies. Potable Water System - shall mean the facilities that produce, convey and store Potable Water. Pulled Meter - shall a meter that has been removed, where the service line is still in place. Record Drawings - shall mean the design drawings that have been marked to show all construction changes for a given project to the best of available knowledge. Retail Zone - shall mean the portion of the District s service area where the District provides both wholesale and retail water services to the Customers. See Section 1.3. Rules and Regulations - shall mean the Rules and Regulations for Water Service as adopted, and amended, by the District. Schedule of Rates, Fees and Charges shall mean the District s Retail Zone Monthly Meter Charges/Service Charges and Delivered Water Service Charges, as adopted and in effect at the relevant time. Service Charge - shall mean a fixed monthly charge based on meter size levied to fund the ongoing day-to-day fixed costs of the water system. Standard Specifications and Standard Drawings for the Construction of EOCWD Water Facilities - shall mean the latest edition of the District s publication. Tenant - shall mean the person, persons, firm, corporation, association or agency that is renting or leasing property, to which the District provides water service, from an Owner. Violation - shall mean noncompliance with any condition or conditions of these Rules and Regulations by any person, action or occurrence, whether willfully or by accident. Water Charge shall mean the any of the commodity rates, service charges, meter charges, and other fees and charges levied for water service. Water Service -- shall mean retail water service provided by the District. Water Service Agreement - shall mean an agreement entered into between the District and a person, persons, firm, corporation, association or agency, or their successors and assignees, who has already, or desires to, install, remove, alter or replace, or cause to be installed, removed, altered, or replaced, any water facility or appurtenance for the purpose of supplying water to a property. Water Service Permit shall mean a permit issued by the District upon approval by the District of a map or plans for the installation, removal, alteration or replacement, of any water facility or appurtenance, and upon receipt of required fees and charges, including Connection Charges. 1.3 SERVICE AREA 10

105 The District was formed on December 1, 1961 to provide imported water service to the then- unincorporated areas of the East Orange area. The District provides imported water (wholesale) service to parts of the Cities of Tustin and Orange, the Irvine Ranch Water District and the Golden State Water Company. The District provides local groundwater and imported water service (retail) to the unincorporated county area of East Orange. 1.4 SERVICE CONDITIONS Water service shall be available only in accordance with the District Rules and Regulations, as well as applicable Federal, State, and local statutes, ordinances, regulations, and contracts, and other requirements including, but not by way of limitation, the California Water Code, the California Administrative Code and regulations imposed by State and local health departments, as well as the terms of any service agreement and/or permit issued by the District. Any such permit may be revoked by the District, and thereupon, all such water service shall cease in the manner provided in these Rules and Regulations. As a condition of service, the District reserves the right to require any Applicant to construct any water facility that the District deems essential, including the over-sizing or extension of water facilities. 1.5 CUSTOMER RECORDS The District will provide information on customers in accordance with Government Code Section the California Public Records Act. The request for records shall be submitted at the District Office. It is preferred that the request be made in writing to streamline the process and to ensure that the correct records are transmitted 1.6 ESTABLISHMENT OF RATES In accordance with the California Water Code, the District's Board fixes the water rates and other related fees and charges. Periodically, the Board reviews and adjusts the rates, fees and charges. 1.7 GUIDELINES AND INTERPRETATIONS The General Manager shall have the authority to adopt additional guidelines or generate written interpretations of these Rules and Regulations where necessary for day-to-day operations and/or may submit a question to the Board for clarification. 1.8 SEVERABILITY If any section, subsection, sentence, clause or phrase of these Rules and Regulations is for any reason held to be invalid or unconstitutional, such decision shall not affect the remaining portions of these Rules and Regulations. The Board hereby declares that it would have passed these Rules and Regulations by section, subsection, sentence, clause or phrase thereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid or unconstitutional. 11

106 SECTION 2 CONDITIONS FOR SERVICE 2.1 ACCESS TO PREMISES Authorized employees of the District, upon presentation of credentials and during reasonable or necessary hours, shall have free access including gate codes and keys or key cards, to any premises supplied with water by the District, for the purpose of reading meters and/or making repairs, inspections, examinations or tests of the water system upon said premises and to ensure compliance with these Rules and Regulations. If any authorized employee is refused admittance to any premises, or is hindered or prevented from reading meters, making repairs or inspections, examinations or tests, the District may cause the water service to said premises to be turned off after giving twenty-four hours notice to the owner or occupant of said premises of the intention to do so. In the case of major violations, operational emergencies on the property, or health hazards the District may cause the water to be turned off without notice. 2.2 OPERATION BY THE DISTRICT EMPLOYEES All of The District's water system, including but not limited to, water pipelines, reservoirs, fire hydrants, manholes, pumping stations, valves, connections, treatment facilities and other appurtenances and property, shall be under the management and control of the General Manager. No other persons, except authorized employees of the District, shall have any right to enter upon, inspect, operate, adjust, change, alter, move or relocate any portion of the foregoing or any of the District's property without the written consent of the General Manager or an authorized representative of the manager. In the event that an unauthorized person(s) enters upon, inspects, operates, adjusts, changes, alters, moves or relocates any facilities without written consent from the General Manager or an authorized representative of the General Manager, the District reserves the right to prosecute such an unauthorized person to the fullest extent of the law. In addition, the District shall be entitled to recover damages as provided in Section and penalties as provided in Section DAMAGE TO SYSTEM Except to shut off water to prevent damage, no person other than an authorized District employee shall at any time or in any manner, operate or cause to be operated, any valve in or connected with a water Main, service connection or fire hydrant or tamper or otherwise interfere with any water meter, check valve or other part of the District's water system, except the Customer Control Valve. In the event a person, for any reason, digs out or uncovers a corporation stop, angle meter stop or valve controlling a water supply, lifts or removes a meter box cover or its center piece or causes or suffers any such act to be done, such person will be subject to penalties as provided in Section 2.2 and will be held liable to the District for any injury or damage occasioned thereby or resulting there from. In addition, the Customer of Record will be held liable to the District for any costs incurred for repairing, replacing or adjusting any meter or other appurtenances which have been damaged due to negligence or carelessness, including but not limited to, damages caused by hot water or steam from a boiler. See Section THE DISTRICT'S RIGHT TO INTERRUPT SERVICE The District reserves the right at any and all times to shut off water service to any property(s) for emergency, operational or maintenance purposes. 12

107 The District will make reasonable efforts to minimize negative impacts and provide appropriate notice to the affected Customer(s) when shutdowns occur. However, the District assumes no liability for damages to property or for personal injury or any other liability as a result of shutdowns. 2.5 DISTRICT LIMITS OF RESPONSIBILITY AND LIABILITY The District assumes no responsibility for the maintenance and/or operation of the Customer's water system downstream of the Point of Ownership. The District assumes no responsibility or liability for damage or injury resulting from any violation of these Rules and Regulations by the Customer, Customer of Record, owner or other person. As provided in Section 2.4, the District assumes no liability for damages to property or for personal injury or any other liability as a result of interruptions in water service. 2.6 VIOLATIONS AND ENFORCEMENT The District shall have the right to discontinue service to any Customer or property who fails to comply with the District's Rules and Regulations. Such discontinuance of service shall occur after the Customer of Record has been given notice to remedy such noncompliance and/or to cease and desist from such violation or infraction, and a reasonable opportunity thereafter within which to comply with said notices. Such time may be specified in the notice to comply/desist. No such notice need be given where the noncompliance, violation or infraction of any rule or regulation by the Customer results, or is likely to result, in a dangerous or unsanitary condition or a health, pollution or system hazard on the Customer's premises and/or in the District's water system or elsewhere, or where discontinuance of service is necessary to protect The District from fraud, loss or abuse. The General Manager may assess a fine to the Customer of Record for each violation of the District's Rules and Regulations and for each incidence involving the intentional and improper taking of water (see Section 7.4.). Each day that a violation of these Rules and Regulations continues, or each day such intentional and improper taking of water continues, shall be treated as a separate violation of this provision. No further water service shall be provided to such Customer or property until such charge has been paid or otherwise satisfied. If the charge is paid under protest, the Customer of Record can file a written appeal to the Board. 2.7 RIGHT OF APPEAL Notwithstanding any of the provisions of the Rules and Regulations concerning water service, any aggrieved Customer or Customer of Record, who is dissatisfied with the final decision of the General Manager in administering the Rules and Regulations, can appeal, in writing, such final decision to the Board. The Board shall hear such appeal and render its decision. The decision of the Board shall be final. 13

108 SECTION 3 WATER BILLING AND CUSTOMER SERVICE 3.1 RESPONSIBILITY FOR ACCOUNT The Customer of Record is responsible for all bills or invoices. See Section 3.5 regarding procedure for closing account. 3.2 RESPONSIBILITY FOR UNPAID CHARGES If, after the application of the deposit to the final billing, any charges remain unpaid, the Customer of Record shall not be relieved of his or her responsibility for unpaid water charges for the subject property, and the District may secure and collect the unpaid charges as permitted by law. 3.3 TENANT RESPONSIBILITY Tenants may submit an Application for Water Service and arrange to become the Customer of Record with the permission of the property owner. Tenants must provide a copy of the lease or rental agreement that indicates the Owner s name, contact information and permission for tenant billing; the District will verify it before the account name is changed. Upon closing of a water service account established in a Tenant s name, from that point on, billing will revert to the Owner as Customer of Record. 3.4 NEW ACCOUNTS Water service will be provided upon request where there is a service line and meter. Requests must be made at least one business day in advance of the business day service is to commence. If the District determines that water may run uncontrolled at a property and no one is at the property, the water will not be turned on. 3.5 CLOSING OF ACCOUNTS The Customer of Record is responsible for all bills or invoices. Should a Customer of Record wish to discontinue water service, the District customer service staff must be informed at least one business day before the date service is to be discontinued. The Customer of Record will be responsible for payment for all water registering on the meter up to and including the day the final meter reading is obtained. The water service shall be turned off and the meter will be locked until a new Customer of Record has applied for service. A closing bill will be prepared, which reflects the charges for all water registering on the meter at the time of final reading, Service Meter Charges and Capital Projects Fees, and any previous balances owed (including prior bills, fees and charges). Any deposit retained by the District on the account shall then be credited to the account. The Customer of Record will be billed for any amounts over the deposit, in accordance with the Schedule of Rates, Fees and Charges. The closing bill will include a due date. If payment in full is not received by this date, a closing delinquent bill will be sent. If payment in full is not received, the District may send the outstanding balance to a collection agency for collection or pursue other lawful collection measures. 3.6 BILLING 14

109 Bills cover a specified period of service, which is stated on the water bill. Bills for water service will be based on meter readings or in some cases estimated usage. Invoices for construction water or other services provided by the District shall be billed according to the fees, charges and conditions outlined in the Schedule of Rates, Fees and Charges. All bills and invoices are due and payable upon receipt. Unpaid bills and invoices are considered delinquent if payment is not received by the due date shown on the bill or invoice. For all Customers, the due date shall be not less than twenty-five days from the date of billing BILLING DISPUTES Any dispute by the Customer of the amount owed on a bill or invoice must be raised within twenty days of the date of billing printed on the bill or invoice, or the bill or invoice will be considered correct and payable. Only the disputed portion of the bill may be set aside by the District pending resolution of the dispute. The Meter Service Charge and the Capital Projects Fee, plus any outstanding balance, charges or deposits must be paid. The undisputed portion of the bill must be paid in accordance with the provisions of the Rules and Regulations governing undisputed bills or invoices BILLING FOR DAMAGES Recoverable costs of damages to any District facility will be billed to the party that causes the damage. Damages can occur from many causes, for example, traffic accidents, construction projects, or hydrant meter use. Any damage to District property resulting from any authorized or unauthorized work on, in or around District facilities also will result in billing for damages, including District staff time for inspection of damages plus the District's standard labor overhead rate. In the event that District staff repairs the property damage, the causing party will be billed to recover the costs of the repair. These costs will include, but are not limited to, the actual cost of replacement parts and the cost of District staff labor required to complete the repair, plus the District's standard labor overhead rate. In the event that the District hires a contractor for the repair work, the causing party will be billed for the costs of the repairs plus administrative fees. Payment is due 30 days from the invoice date. A bill will be delinquent if the District does not receive payment by the due date shown on the bill. A late fee on the unpaid balance will be charged. If payment is not received in full, The District may refer the account to a collection agency. If the outstanding balance is referred to a collection agency, the customer is responsible for payment of the outstanding balance plus collection agency fees and administrative fees. The District expects payment to recover all of the costs for damages at one time. However, the causing party may petition the District for payment arrangements, which will be reviewed and may be approved by the General Manager. If the General Manager approves payment arrangements, the requesting party must complete and return a signed and notarized promissory note that will detail the payment agreement. 15

110 3.7 PAYMENTS Cash payments for all services provided by the District must be made at the District Office on a Business Day. No payment by any method will be accepted by District personnel away from District Office. Payments received without sufficient information to properly credit the Customer's account may be returned without being processed and may be subject to late charges as provided for in the Schedule of Rates, Fees and Charges PAYMENTS MADE AT DISTRICT OFFICE Payments made at the District Office may be in the form of cash, check, cashier's check, or money order. For a fee, credit card payments may be made at the District Office or via the District website. Payments made by 4:00 p.m. on a Business Day will be credited to the account that same day. Payments received in the night drop box by the opening of business on the next regular business day will be credited to the account that business day. CASH PAYMENT SHOULD NOT BE MADE VIA THE NIGHT DROP BOX IT IS NOT SECURE AND THE DISTRICT WILL NOT BE RESPONSIBLE FOR LOST OR STOLEN PAYMENTS. Customers are advised that payments via check that are left in the night drop box are also subject to theft and loss; the District does not warrant the security of the night drop box. Processing charges will apply if service has been discontinued for non-payment (see Section 3.8.4) PAYMENTS MADE BY MAIL Payments made by mail will be credited to the Customer's account on the same day received at the District Office AUTOMATIC ELECTRONIC FUNDS TRANSFER PAYMENTS Customers may initiate automatic, pre-authorized payment of their water bills by electronic funds transfer (EFT) from an account at their financial institution by completing an authorization agreement on a form provided by the District, subject to applicable transaction fees if any. A Customer must submit a completed, signed authorization agreement for each water account that is to be paid by this method. All transfers made in accordance with the authorization agreement will be subject to the Rules, Regulations, and Guidelines of the Automated Clearing House and the agreements between the District and its Originating Depository Financial Institution (ODFI). The first EFT will occur with the next billing after the District has received and processed the properly completed authorization agreement from the Customer. If desired, the District will or mail, via the U.S. Postal Service, a copy of the paid water bill to the Customer. Should a Customer have an EFT returned by the ODFI twice within a two-year period the Customer will no longer be eligible for the EFT option. 16

111 In the event of a dispute regarding the amount owed on a bill, the rules and regulations specified in Section 3.6.1, Billing Disputes, shall apply. In the event the Customer is entitled to a credit, the District will issue a check on its next normal check printing date or, if the Customer prefers, a credit may remain on the water account PAYMENTS MADE BY CREDIT/DEBIT CARDS THROUGH THE DISTRICT WEBSITE The District accepts payments by credit/debit card through a third-party administrator that receives a transaction fee paid by the Customer for this service. Payment can be made using a credit card through the District s website at Payments made by credit/debit card will be credited to the Customer s account on the date of transaction, if made before 9:00 a.m., and on the next business day if made after 9:00 a.m PAYMENTS RETURNED BY BANK Should a check or an electronic fund transfer (EFT) or credit card charge rendered for payment be returned by the bank for any reason, the Customer will be notified and a fee will be charged against the account(s) to which the check/eft had been credited. The fee will be in accordance with the Schedule of Rates, Fees and Charges. Should a Customer have two returned checks or EFTs in a one-year period, the District may require all payments be made by cash, cashier's check, money order or credit/debit card EXTENSIONS Arrangements may be made between the District and the Customer prior to the due date to extend a due date for a short period (no more than one week) of time, if the Customer s payment record within the past year shows no late charges. However, the Customer must adhere to the terms of the arrangement. Failure to do so will subject the account to the District's rules and regulations on delinquencies. A fee for delinquent payment will be charged in accordance with the late fee provisions of the Schedule of Rates, Fees and Charges. 3.8 DELINQUENCIES A bill is delinquent if the District has not received payment by the due date shown on the bill. A fee will be charged in accordance with the Schedule of Rates, Fees and Charges DELINQUENT BILLS A delinquent bill will be mailed to the Customer if payment is not made by the due date indicated on the water bill and a fee will be imposed in accordance with the Schedule of Rates, Fees and Charges (See Section 5.3.2). The delinquent bill will have a due date. If payment in full is not received by this date, water service to the property concerned will be subject to disconnection. Once disconnected, water restoration will be subject to Section Restoration of Water Service NOTICE OF PLANNED SHUTOFF OF WATER SERVICE 17

112 If payment is not received by the due date of the delinquent bill, a notice of planned shutoff of water service (Notice) will be mailed at least 15 days prior to the planned shutoff date and not earlier than 19 days from the mailing of the bill. The Notice will show a service shutoff date. Additionally, if payment of all water bills, fees, charges and deposits is not received by this date, the District will mail or post a Notice at least 48 hours prior to shutoff. The District will also make a reasonable effort, using the contact information supplied by the Customer of Record to the District - to contact an adult person residing at the premises by telephone, at least 24 hours prior to shutoff. If payment of all water bills, fees, charges and deposits is not received by the end of this time (24 or 48 hours, as applicable) water service may be discontinued without further notice. Where the account provides water service to more than one premise (for example, apartment buildings), when practical, a Notice will be delivered to each location benefiting from the service. If this step is not feasible, copies of the Notice(s) shall be posted in each common area accessible to residents and point of access to the structure. Additional fees will be charged for this service, in accordance with the Schedule of Rates, Fees and Charges. The Notice will inform the tenants that they have the right to become Customers of Record of the District without paying the delinquent amount due on the landlord s account, the requirements for preventing the shutoff or reestablishing service, the estimated monthly cost of service, the title, address, and telephone number of a representative of the District who can assist the residential occupants in continuing service; and the address and telephone number of a legal services project, as defined in Section 6213 of the Business and Professions Code, which has been recommended by the local county bar association Fees for the Notice of planned shutoff of water service will be in accordance with the Schedule of Rates, Fees and Charges SHUTOFF OF WATER SERVICE FOR NONPAYMENT When water service is terminated for nonpayment, the meter shall be locked, where possible, and a shut off fee assessed. Fees and charges associated service shutoff are shown in the Schedule of Rates, Fees and Charges. Tampering with the lock or turning the water back on, or in any other manner interfering or tampering with the District's property, is prohibited (See Section 2.3). Penalties for such interference will be charged and the matter may be referred to the appropriate law enforcement agency at the discretion of the District in accordance with Section RESTORATION OF WATER SERVICE All amounts owed, including all bills, fees, charges, and deposits, must be paid or otherwise satisfied before service will be restored. If the meter has been removed, all fees must be paid before the meter is re-installed. Fees for the restoration of service during normal working hours and limited after-hours processing are shown in the Schedule of Rates, Fees and Charges. If payment is not received within ten days of service shutoff, the account will be closed and the balance owed may be turned over to a collection agency for collection. 3.9 DEPOSITS Deposits will be required prior to initiation of service, based on creditworthiness as determined by the District in accordance with criteria established by the General Manager. The amount of the initial deposit to commence water service will be equal to 2 times the average amount billed per billing cycle (excluding any amount attributable to a verified water leak) for the property during the previous 24 months. However, the amount of the deposit may be set differently at the discretion of the District's General Manager in an amount sufficient in his/her judgment to ensure that future bills will be paid when presented, not to exceed 2 times the amount estimated to be billed for the average billing period. 18

113 Additional deposits may be required when: 1) A Notice of planned shutoff of water service is delivered to the service address for a second time; 2) A service is shutoff for nonpayment; 3) Service is requested to be reinstated after nonpayment and shutoff of water service and the original deposit was used to satisfy payment for the water bill; 4) Water has been used, but the Customer has not notified the District that he/she is assuming responsibility for the water service; 5) Any other instance where the Customer's creditworthiness comes into question. The additional deposit will be set at the discretion of the General Manager in an amount sufficient in his/her judgment to ensure that future bills will be paid when presented, as permitted by law. The District will credit fifty percent (50%) of the Customer s deposit to the account, if all bills have been paid by the due date of the first notice, for the previous 24 calendar months; the balance of the deposit will be used to pay any outstanding amount. Interest will not be earned on deposits held by the District. Unused deposits will be credited to the final bill. The deposit held cannot be used for payment or to offset any fines or charges for any regular bill CUSTOMER INQUIRIES AND COMPLAINTS All Customer inquiries and complaints will be handled as expeditiously as possible. In some instances, extensive research will be required, thus extending the time required for resolution, and the Customer will be so informed. Please refer to Section for billing disputes METER INQUIRIES AND TESTING If a Customer is concerned that their meter wasn't read correctly, the Customer can request the meter to be read a second time. If the new reading indicates the original reading was in error, an adjustment will be made to the original usage charges. If the new reading indicates the original reading was correct the Customer will be responsible for the original usage charges. If a Customer is concerned that the meter is not operating correctly or is not accurate, upon written or request from the Customer, the District will test the meter for accuracy. Prior to the removal of the meter for testing, the District shall require a meter test deposit in accordance with the Schedule of Rates, Fees and Charges. Meter test deposits will be refunded if the meter is determined to be outside the prescribed limits for meter accuracy. If the meter is found to be registering 3% or more in excess of the actual quantity flowing through the meter, the District will replace the defective meter, refund the meter test deposit and refund to the Customer the full amount of the overcharge based on the corrected meter readings for the previous period, not exceeding six months, that the meter was in use. If the meter is not defective and does not register 3% or more excess, the meter test deposit shall be forfeited to the District and the water bill shall be paid as rendered. 19

114 If the District discovers an inaccurate or inoperable meter, the meter will be replaced and the Customer will be billed based on the average consumption for at least twelve preceding months during which the meter was in use and registering correctly HIGH WATER USE AND INVESTIGATIONS Customers may experience high water use due to a leak or other planned or unplanned event (construction, pool filling, new plantings). No billing adjustment is allowed for leaks or planned or unplanned water consumption; the District must pay for the water regardless of the intended or unintended use of the water and that cost must be passed along to the Customer of Record. Customers may request that the District assist them in the detection of leaks or other conditions, which may result in higher than normal water usage. Walk-through inspections may be arranged to survey the home or business to assist Customers in determining leaks and/or isolate probable areas of concern. Such requests will be handled by appointment only. Appointments may be arranged by contacting the District's customer service staff WATER QUALITY INQUIRIES The District strives to provide Customers with high quality water at all times. If a Customer suspects any problem with the quality of water provided the Customer may contact the District and a representative will arrange to meet with the Customer at home or business to investigate the concern. Information regarding analyses of the District's water is available to the public via a published report that is mailed to each Customer annually. The District shall not be liable for any damage by water or resulting from defective plumbing, broken or faulty services or water mains; or resulting from any condition of the water itself, or any substance that may be mixed with or be in the water as delivered to any Customer. All Applicants and Customers shall be required to accept such conditions of pressure and service as are provided by the distribution system at the location of the proposed service connection and to hold the District harmless from all damage arising from low pressure or high pressure conditions BANKRUPTCIES When the District receives notice that a Customer of Record has filed for bankruptcy, the Customer of Record's account(s) will be closed, whenever possible, as of the date of the bankruptcy filing and the deposit applied to the balance due. Any outstanding balances as of that time will be considered covered in the bankruptcy proceedings and the District may file a claim accordingly with any remaining owners, including mortgage holders. Service will not be terminated and a new account will be created for the Customer of Record to reinstate service. A deposit will be charged in accordance with Section 3.9. SECTION 4 WATER FACILITIES AND APPURTENANCES 4.1 APPLICATION PROCESS Any person, firm, or corporation who wishes to install, remove, alter or replace, or cause to be installed, removed, altered, or replaced, any water facility or appurtenance must obtain a permit from the District to do such work. 20

115 Any person legally entitled to apply for and receive the permit shall complete the District supplied Water Service Agreement form. The Applicant shall submit an Application for Water Service Permit/Change form, a complete subdivision map when applicable and a water facility construction plan showing the proposed service connection thereon, signed by a civil engineer registered in the State of California. All maps and plans shall be of the size and drawn on material specified in the District's current Standard Specifications and Standard Drawings for the Construction of EOCWD Water Facilities. A processing fee shall be charged pursuant to the Schedule of Rates, Fees and Charges. Whenever reference is made herein to a requirement to be carried out or performed by an Applicant s or Customer s Contractor, then to the extent the Contractor and Applicant or Customer are not one and the same, such reference shall be deemed to state a requirement that the Applicant or Customer shall cause its Contractor to carry out or perform such requirement. The Applicant or Customer shall be solely responsible for the fulfillment of and compliance with any requirements of these Rules and Regulations by any Contractor or any other party acting on the Applicant s or Customer s behalf PLAN CHECK PROCESS Plan checking and inspection fees shall be computed by the District according to the Schedule of Rates, Fees and Charges and shall be deposited with the District prior to plan approval. After payment of a plan check fee, the District's Engineer, or an authorized representative, and/or other appropriate staff, will review said map and plans and either approve it or return said plans to the Applicant with notations showing required changes. All plans must conform to the District's current Standard Specifications and Standard Drawings for the Construction of EOCWD Water Facilities and other requirements specified by the District, the Orange County Fire Authority and Appropriate Regulatory Agencies before they will be approved. If the plans are returned to the Applicant with notations showing required changes to be made, the Applicant shall complete all of the required changes and then resubmit a corrected set of plans. The corrected set of plans will not be accepted unless the Applicant shall return the previous set of plans containing the notations showing required changes along with the corrected set of plans ISSUING THE PERMIT Upon approval of said map or plans, and upon receipt of required fees and charges, including Connection Charges, the District shall validate and issue a Water Service Permit. The Permit shall be valid for a period of one year from the date of issuance. If construction has not commenced within said year, the Permit shall automatically become invalid and the Applicant shall forfeit all moneys, except Connection Charges, paid to the District in connection with the Application for a Water Service Permit. The Applicant will be required to reapply for a new permit and comply with all requirements as if it was the first time an application had been submitted WATER SERVICE AGREEMENT Before water service is provided, the Applicant shall enter into a Water Service Agreement with the District regarding the terms under which the District shall provide water service to the Applicant. The Applicant shall complete, sign and submit a Water Service Agreement. The District shall enter into the Water Service Agreement only upon approval of the development project and payment by the Applicant of required fees and charges set forth in the Water Service Agreement. No water 21

116 service shall be provided by temporary water service or by any other means until the Water Service Agreement has been signed by the District and the Applicant FEES AND CHARGES The District staff will determine the fees and charges for new development in accordance with the Schedule of Rates, Fees and Charges CONNECTION CHARGES The District has adopted Connection Charges in the amounts specified in the Schedule of Rates, Fees and Charges. The fees will be used to assist the District in paying for the facilities and improvements to the District's water system required by this development. Provisions in this Section based upon a difference in Connection Charges corresponding to a difference in meter size shall apply only to the extent District adopted Connection Charges that vary by meter size at the time of an Applicant s or property s initial connection CALCULATING THE CONNECTION CHARGE As herein provided, the amount of any Capacity Charge shall be determined by the District s engineer, or an authorized representative, subject to appeal to the General Manager or Board of Directors. The Connection Charge shall be assessed in accordance with the Schedule of Rates, Fees and Charges. At the time the Applicant requests meters to be installed, the District will review the assessed Connection Charge. If there have been changes in the project, which affect the Connection Charges, additional Connection Charges will be assessed or a refund will be credited to the meter costs. The meters will not be installed until both the meter costs and any additional Connection Charges have been paid. No Connection Charges will be assessed if an Applicant is removing a meter and is replacing it with a meter of the same size, providing that one of the following conditions is also satisfied: 1) The new meter is installed on the same service line from which the old meter is removed; or 2) The new meter is installed on a new service line and the existing service line is abandoned when the old meter is removed. The District does not assess Connection Charges for automatic fire sprinkler service connections or temporary service connected to fire hydrants CALCULATING CONNECTION CHARGE CREDITS ON METERS PULLED AT THE TIME OF REDEVELOPMENT The District will apply a Connection Charge credit on an account for meters that will be pulled at the time the property is redeveloped, providing one of the following conditions is satisfied: 22

117 1) The old meter is pulled and the existing service line is permanently abandoned. Any new meters of a larger size will be installed on new service lines and will be subject to Connection Charges based upon their size. Any new meters of a smaller size will be installed on new service lines and will be subject to Connection charges based upon their size. The District s engineer or an authorized representative will determine the Connection Charge credit on the meter that is pulled. The credit will be based on the Connection Charge in effect for the meter size being pulled according to the building classification and water use type the meter presently serves. If the Connection Charge credit exceeds the Connection Charge calculated on the new meters, the excess credit may be carried forward with the property for additional development. The excess credit will be discounted five percent each year that it is carried and at the fifteenth year, the credit can no longer be used. Any excess credit may only be used once. Subsequent excess credit cannot be carried forward. The number of years used for Connection Charge credit will be determined by calculating the number of years between the date the Application For Water Service Permit was issued for the redevelopment project for which the credit originated and the date of completion for the redevelopment project for which the Applicant wishes to use the credit CALCULATING CONNECTION CHARGE CREDITS ON METERS PULLED PRIOR TO REDEVELOPMENT The District will apply a Connection Charge credit on meters pulled prior to the redevelopment of the property providing that all of the following conditions are satisfied: 1) The service line to which the meter was once connected is still connected to the District's water system and is in very good to excellent condition; and 2) The Pulled Meter was recorded and the record is on file at the District; and 3) The new meters that will be installed is a downgrade from the meters that were pulled prior to the redevelopment of the property; and 4) A new meter can be installed on the service line to which the meter was once connected because the condition of the service line is very good to excellent. The District will not apply a Connection Charge credit for meters where both the meter and the service line were abandoned prior to the redevelopment of the property. The District s engineer or an authorized representative will determine the appropriate credit amount. The credit on the Pulled Meter will be based on the fee in effect for the meter size being replaced according to the building classification and water use type the meter previously served. The credit is subject to a five percent reduction for each year that the meter was pulled prior to the Application for Water Service Permit. No credit will be given for meters that were pulled 15 years or more prior to the date the Application for Water Service Permit is issued. 23

118 The number of years that will be used for the reduction in Connection Charge credit will be determined by calculating the difference between the date on file at the District that the meter was pulled and the date the Application for Water Service Permit is issued. In the case where the new meters being installed are the same size as the meters that were pulled, the District will apply a discount on the amount of the Connection Charge calculated on the new meters, providing all of the following conditions are satisfied: 1) The service line to which the meter was once connected is still connected to the District's water system and is in very good to excellent condition; and 2) The Pulled Meter was recorded and the record is on file at the District; and 3) A new meter can be installed on the service line to which the meter was once connected due to its very good to excellent condition. The amount of the discount will be based on the length of time since the meter was pulled. The length of time will be determined by calculating the difference between the date on file at the District that the meter was pulled and the date the Application for Water Service Permit is issued APPLICATION OF CONNECTION CHARGES TO PUBLIC AGENCIES For purposes of this section "Public Agency" shall have the same meaning as set forth in Government Code Section (c) or any successor section thereto. Any development or application to the District for new or increased water service by any Public Agency shall be subject to a Connection Charge. The amount of such Connection Charge shall be determined on a case by case basis. The determination of the Connection Charge with regard to an individual Public Agency development project shall be made based on the same criteria and methodology applicable to the Connection Fee for non-public Applicants. The assessment of the Connection Charge on any school district, county office of education, community college district, the California State University, the University of California or state agency, as defined in Government Code Section (g), (collectively referred to as "School/State Agency" for the purposes of this Section) shall be subject to the following: The Connection Charge shall be paid by such School/State Agency in an amount equal to the actual construction costs of that portion of the District's water system actually providing, or needed to provide, service to such School/State Agency. To the extent that the appropriate Connection Charge to such School/State Agency is in excess of the amount equal to the actual construction costs, the assessment and collection of said Connection Charges may be adjusted on a case-by-case basis by the District's General Manager BONDS AND CONDITIONS FOR RELEASE OF BONDS As security for guarantee against defective material or work quality and as security for guarantee of the completion of the proposed project, the Applicant shall deliver to the District a construction performance bond in accordance with the rate specified in the Standard Specification and Standard Drawings for the Construction of EOCWD Water Facilities. The bond must be received and approved by the District prior to the District's final approval of plans or issuance of the permit. 24

119 The District will accept only a cash bond as payment for the bond if the construction estimate for the water facilities is less than $15,000. If the construction estimate for the water facilities is $15,000 or greater, the District will accept a surety bond provided the following conditions are met: (a) (b) The developer is charged a 1% bond administration fee. All bonds are processed on a bond form that will be approved by the District. The bond, whether a cash or a surety bond, will be eligible for release one year after all of the following conditions have been satisfied: 1) All fees and charges are paid current; 2) The project has been completed to the satisfaction of the District; and 3) The District has received and has recorded with the County Recorder's office all necessary documents of conveyance and guarantees. Approximately one year after all of the above conditions have been satisfied, the District will conduct a follow-up inspection of the water facilities. If the facilities are free from defective material and work quality, and all fees and charges are current, the bond will be released. The bond will stay in effect until all conditions are met DOCUMENT OF CONVEYANCE AND GUARANTEE Within 30 days after the completion of construction and testing of water facilities, the Applicant shall deliver to the District an appropriate document of conveyance. The document will transfer to the District all interest and title to said system and appurtenances, guaranteed free of all liens, together with necessary rights-of-way for future maintenance and upkeep. For a period of one year after acceptance of the work by the District, repair and/or replacement of any and all dedicated facilities that may prove to be defective in work quality and/or materials, together with any other works that may be displaced in so doing, shall be at the sole cost and expense of the Applicant. Such repair and/or replacement shall be without expense whatsoever to the District unless the repair and/or replacement were the result of ordinary wear and tear or unusual abuse or neglect by the District. In the event of an emergency, as determined by the District, the District shall notify the Applicant of any defect and shall immediately proceed to have the defects repaired and/or replaced at the expense of the Applicant, who shall pay the costs and charges upon demand. In the event that the District becomes aware of a defect in material or work quality, which does not involve an emergency, the District shall notify the Applicant and the Applicant shall undertake to accomplish the necessary repair or replacement. If within one week from the date of notification the Applicant has not accomplished the necessary corrective procedures or made satisfactory arrangements thereof, the District shall proceed to have the defects repaired and/or replaced at the expense of the Applicant, who shall pay the costs and charges upon demand by the District. In the event that the Applicant fails to pay for the costs and charges resulting from repairs and/or replacements of the facilities as provided in this section, the District reserves the right to reduce the amount of, or draw upon, the Applicant's security bond by the amount necessary to cover any such costs and charges. 4.2 CONSTRUCTION OF WATER FACILITIES 25

120 The Applicant is encouraged to perform construction with the assistance of a Contractor; however, the Applicant may request the District to perform the work. It will be the responsibility of the Contractor to furnish all materials that meet the specifications contained in the then current edition of the District's Standard Specifications and Standard Drawings for the Construction of EOCWD Water Facilities. It also will be the responsibility of the Contractor to provide all labor and equipment necessary to install the water facilities in conformance with the approved plans and the specifications contained in the latest edition of the Standard Specifications and Standard Drawings for the Construction of EOCWD Water Facilities. The District may construct facilities at the District's cost upon approval of the General Manager. The District shall prepare a cost estimate of the construction. The Applicant must pay a deposit in the amount of the cost estimate before the District will begin construction. After the work has been completed, the actual cost of the construction will be determined and excess funds from the deposit will be refunded or the Applicant shall be required to pay the costs in excess of the deposit UNDERGROUND SERVICE ALERT The Contractor shall be responsible for researching utility records and indicating the location of all known utilities on the plans. At least two business days (48 hours) before beginning the work, the Contractor shall call U.S.A. (Underground Service Alert) for utility owners to mark the location of substructures, except for public sewers and storm drains. It shall be the Contractor's responsibility to determine the true location and depth of all utilities and service connections. The Contractor shall become familiar with the type, material, age and condition of any utility that may be affected by the work. The Contractor shall not interrupt the service function or disturb the supporting base of any utility without authority from the utility owner or on order from the District. Where protection is required to ensure support of utilities, the Contractor shall furnish and place the necessary protection at the Contractor's expense. The Contractor shall immediately notify the District s engineer and the utility owner if the Contractor disturbs, disconnects or damages any utility SAFETY REQUIREMENTS The Contractor must adhere to all appropriate CAL/OSHA safety requirements while on the job site. The Contractor shall have, at the job site, copies or suitable extracts of Construction Safety Orders, Tunnel Safety Orders and General Industrial Safety Orders issued by the California State Division of Industrial Safety. The Contractor shall comply with provisions of these and all other applicable laws, ordinances and regulations CHARGES FOR DAMAGES It will be the Contractor's responsibility to "protect in place" all the District facilities. In the event it becomes necessary for the District to provide assistance to the Applicant, the Contractor or any third party, or to make repairs to the District's facilities damaged by any of the above, the District will charge the Applicant, Contractor or third party for the actual cost of assistance and/or repairs plus the District's standard overhead rate VALVES AND WATER MAIN SHUTDOWNS

121 It shall be the Contractor's responsibility to keep all valves exposed and accessible at all times. If a water Main shutdown is required, only the District personnel are authorized to perform shutdown operations. The Contractor shall notify the District staff and affected users at least 48 hours in advance in areas where shutdown is requested THE DISTRICT INSPECTION All new water facilities shall be subject to inspection by the District or its authorized agent(s). Such facilities shall be installed in accordance with the latest version of the District's Standard Specifications and Standard Drawings for the Construction of EOCWD Water Facilities. The Contractor shall notify District staff at least two business days (48 hours) prior to the commencement of construction of any water facilities. Contractors requiring inspection outside the District's normal working hours shall pay the costs of such inspections prior to installation of water meters. These costs shall include the District's standard overhead rate and overtime rate SIZE, LOCATION AND INSTALLATION OF WATER SERVICES The District reserves the right to determine the size of the meter and service connection and determine location of the meter and service connection in relation to boundaries of the premises to be served. The District reserves the right to limit the number of houses or buildings, or the area of the land that is under one ownership, to be supplied by one service connection. When property provided with a service connection is subdivided, the service connection shall be considered as belonging to the lot or parcel of land that it directly enters. A service connection shall not be used to supply an adjoining property. If a service connection relocation is more than five feet laterally from the existing service connection, it will be considered a new service connection SERVICE LATERAL, METER INSTALLATION, FEES All meters shall be provided and installed by the District, either separately or in conjunction with the installation of a service lateral, and shall remain the property of the District at all times, though committed to a particular service connection, and shall be maintained, repaired, replaced and read by District personnel. The Applicant shall pay the cost of installing meters before any meters will be installed. The fees for meter installation will be in accordance with the rates in the Schedule of Rates, Fees and Charges. Service laterals, from the point beginning on the customer side of the meter, are the responsibility of the Applicant SINGLE METER POLICY The District's standard metering policy is that individually owned units should be individually metered. Furthermore, all developments that have five or more units whether individually metered or not, shall install a separate irrigation meter. However, the District recognizes that there may be local and individual conditions that make individual metering not feasible. Therefore, the Board delegates to the General Manager the authority to waive the single meter per unit policy on a case by case basis according to the following standards: 27

122 1) The District's policy of appropriate distribution of costs to all consumers still applies. For example, regardless of whether a party occupies the traditional single-family residence or occupies a condominium unit, the same Meter Service Charges and Connection Charges, plus the cost of the water would apply. 2) A development shall be billed on the greater of the following: The cost of water used, plus the Service Meter Charge plus the Connection Charge based upon actual meter size, or number of individual units multiplied by the Service Charge and Connection Charge for the size of meter that would have been installed at each unit, if the variance had not been granted. 3) In addition, the District shall require a letter signed by the appropriate officer or agent stating that the appropriate entity accepts full responsibility for payment of all water bills, and that in the event of transfer of ownership, the new owner(s), or owners association, accepts full responsibility for payment. The District s engineer shall review each case and make recommendations to the General Manager. The General Manager shall report to the Board about each variance granted, the location, owner and conditions SUBMETERING AND PROHIBITED PRACTICES APPLICATION This rule pertains to multi-family residential units or mobile home parks located within the District's service boundaries to which the District provides water service. For purposes of this rule, multi-family residential units shall mean two or more residential units served from one water meter PROHIBITED PRACTICES In the case of multi-family residential units or mobile home parks that install or utilize submeters or a submetering system in order to allocate the costs of water to tenants, subtenants, lessees or similar persons or parties, the following practices shall be prohibited (unless authorized in advance in writing by the Board, or by the General Manager at the direction of the Board): 1) No Customer, or contractor to a Customer, shall represent to any submetered tenant, subtenant, lessee or similar person or party that such Customer (or such contractor) is a provider of water service or water services; and 2) No Customer, or contractor to a Customer, shall terminate, or threaten to terminate, water service to any submetered tenant, subtenant, lessee or similar person or party by reason of nonpayment of any allocated costs for water. A violation of this rule occurs whenever the District becomes aware of a violation of Rule (1) or (2), as set forth above. Upon the District becoming aware that such a violation has occurred, the District shall provide written notice to the Customer of Record to cure such violation, and the notice shall include; (1) a statement of the nature of the violation, (2) the date upon which the District became aware of the violation, and (3) a date by which the Customer of Record shall cure such violation. If such violation is not cured by the date stated in the notice, the provisions of Rule 2.3 of the District's Rules and Regulations shall apply. Any such violation shall be reported by the General Manager to the Board of Directors, in writing, together with a description of the action(s) taken to compel enforcement of these Rules and Regulations as soon thereafter as shall be practical. 28

123 Customers of Record that have submeter systems attached to the District's water system shall comply with all applicable laws, statutes and regulations of the State of California and the city in which they are located, or the County of Orange, as applicable. The District encourages conservation efforts, including submetering, to support and promote conservation of water use within its service boundaries; however, the District does not encourage, favor or support any submetering system or process that is used to generate revenue(s) over and above the fair and reasonable cost of installation of such system, fairly allocated costs of water and reasonable administrative costs AUTOMATIC FIRE SPRINKLER SERVICE CONNECTIONS When an automatic fire sprinkler service connection (AFSSC) is installed, the control valve will be left closed and sealed until a written order to turn on the water is received by the District from the Customer of Record. After an AFSSC is activated, the District shall not be liable for damages of any kind whatsoever that may occur on or to the premises served, due to the installation, maintenance, or use of such AFSSC, or due to pressure fluctuations or interruption of water supply. The District will not approve any request for an AFSSC be shut off, unless approval is received from the Chief of the appropriate Fire Authority Water is not to be used through an AFSSC for any purpose other than the extinguishing of fires, or a purpose related thereto. The District shall have the right to shut off the entire supply of water to the premises through the AFSSC when improper use occurs or for nonpayment of bills. The District will notify the appropriate fire department or authority prior to any such shutoff. Should water be used through an AFSSC for an unauthorized purpose, the Customer of Record shall be charged for the unauthorized taking of water in accordance with the Schedule of Rates, Fees and Charges DOWN-STREAM RESIDENTIAL FIRE SPRINKLER SYSTEMS Certain residential dwelling units located within the District's service area may have installed, or may in the future install, fire sprinkler systems that are connected down-stream of the District's service meter (Point of Ownership) (for purposes of this Section, a "System"). The District hereby provides notice that it is not responsible, and assumes no liability of any kind, for the installation, ownership, operation or use of any such System. The provisions of Sections 2.4 and 2.5 of these Rules and Regulations shall apply to any such System. The District expressly declines to provide, or guarantee, any particular water service, or pressure, to a District Customer, or customer account, that has such a System, and no contractual obligation therefore shall arise, whether through a Water Service Agreement or otherwise, without the express prior written agreement of the Board. The District assumes no liability whatsoever for any injuries or damages, of whatever nature, that arise or occur based on the installation, ownership or use of any such System. The provisions of this Section shall be in addition to, and not in derogation of, The District's statutory protections applicable to such matters FIRE HYDRANT INSTALLATION The appropriate fire department or authority having jurisdiction shall designate the size and location of all fire hydrants to be installed. Fire hydrants shall be installed in the parking and/or sidewalk area adjacent to the curb. Upon request and approval by the appropriate fire agency the District will change the location of fire hydrants when necessary. 29

124 WATER MAIN EXTENSIONS, ENLARGEMENTS AND OTHER SYSTEM IMPROVEMENTS The District will extend its water distribution Mains to individual developers at the expense of the property owner. If the District deems it necessary to install larger Mains for future use, the District may enter into a development agreement and may share a portion of the cost of the extension or may enter into a benefited property agreement (Section ) BENEFITED PROPERTY AGREEMENT In the event that a mainline extension or a new mainline will benefit adjacent properties and/or future use, at its discretion, the District may enter into a benefited property agreement with developer(s) of the adjacent properties. All terms and conditions of such a benefited property agreement will be subject to approval by the District s Board of Directors REGULATION OF BOOSTER PUMPS When it becomes necessary, due to low water pressure or special operating conditions, to install a booster pump on the service to any premise, such pump shall be equipped with a low pressure cut-off switch designed to shutoff the pump when a water pressure gauge on the inlet side indicates 25 pounds per square inch or lower. It shall be the duty of the Customer of Record to maintain the cut-off device in proper working order and certify to the District, at least once a year that the device is operable. A person deemed competent by the District shall execute low-pressure cut-off device certification METER DOWNSIZING REQUESTS No refund of connection charges for changes under this section. The District will entertain a request for downsizing of a residential meter under the following conditions: A Customer of Record who wishes to change the meter size of an installed meter and does not have an Automatic Fire Suppression Sprinkler System (AFSSC) served by their meter shall submit a Meter Downsizing Request form, along with a processing fee pursuant to the Schedule of Rates, Fees and Charges. Within 30 days of submittal of the application, the District General Manager shall review such application and make a determination whether to allow the requested meter size for the property. Such decision may be appealed to the District Board of Directors, provided requesting party submits a request for hearing within 45 days of General Manager s initial determination. SECTION 5 TEMPORARY WATER SERVICES 5.1 TEMPORARY CONNECTIONS On a case-by-case basis, the District will allow the use of temporary connections to the District's water system when water service is needed only for construction purposes. The District reserves the right to require the Applicant to use an existing service connection whenever feasible. 30

125 The District reserves the right at any time to set a meter on any temporary service connection and collect the required deposits, and thereafter charge the regular metered rate for the kind of service to be rendered. All meters set on temporary service connections will be read by the District on a monthly basis, and all temporary service accounts will be billed monthly. 5.2 HYDRANT METERS Water may be procured from fire hydrants for construction or other purposes only in the manner prescribed in these Rules and Regulations. When water is to be procured from a fire hydrant, the Applicant shall sign a Rules For Hydrant Meters For Construction Water Service form and also a Hydrant Meter Activity Report and Permit, wherein the Applicant shall specify the location of the fire hydrant to be used, the anticipated length of use and shall agree to make the required deposit to the District. Copies of both forms shall be issued to the Applicant and shall constitute authority to procure and make such limited use from the fire hydrant therein designated, through a the District supplied hydrant meter. The hydrant permit shall be valid for one (1) month and must be renewed for each additional month. Illegal use of a hydrant meter, including without limitation the failure to renew the permit, is subject to the penalties in Section 7. Only District personnel are allowed to install or remove fire hydrant meters unless the fire hydrant meter is being installed on a private hydrant, with prior approval of the District s engineer and the General Manager. If the fire hydrant meter is being placed on a private hydrant, The District staff will monitor the placement of the fire hydrant meter upon the private hydrant. The District shall not assume any liability for damage to private hydrants. Prior to installation of the meter, the permit holder must pay a construction meter charge in accordance with the Schedule of Rates, Fees and Charges. The permit holder is required to give the District at least one business day (24 hours) notice when requesting the installation of a fire hydrant meter. Unless the Applicant has applied for, and has been granted, a permit for a roving fire hydrant meter, only the District staff may relocate a fire hydrant meter. The permit holder must give the District at least one business day (24 hours) notice when requesting meter relocation or a relocation fee will be assessed. The construction meter charge will be in accordance with the rates listed in the Schedule of Rates, Fees and Charges. The permit holder of a roving fire hydrant meter account shall inform the District as to the location of the meter at all times. Failure to do so may result in additional charges. The permit holder is responsible for paying the costs of repairing any damages to the meters or hydrants. These costs will be the actual cost of repairs plus the District's standard labor overhead rate. 5.3 PAYMENT REGULAR MONTHLY BILLS Payment is due 25 days from the billing date. Closing bills are due upon receipt. 31

126 5.3.2 DELINQUENT BILLS A bill will be delinquent if the District does not receive payment by the due date shown on the bill. A late fee on the unpaid balance will be charged. If payment is not received in full, the District may refer the account to a collection agency. If the outstanding balance is referred to a collection agency, the customer is responsible for payment of the outstanding balance plus collection agency fees and administrative fees. 32

127 SECTION 6 CROSS CONNECTION AND BACKFLOW PREVENTION 6.1 INTRODUCTION The District recognizes that it has a responsibility to take all reasonable precautions to protect the public water supply. Thus, in the exercise of this responsibility, the District must take all reasonable precautions to protect the District's water system from the hazards originating on the premises of its Customers that may degrade the water in the District's water system. To affect such precautions, the District, has adopted these Rules and Regulations pursuant to the State of California Administrative Code, Title 17 - Public Health entitled "Regulations Relating to Cross Connections." In addition to the District's Rules and Regulations for Water Service, the Customer must comply with Public Law the Safe Drinking Water Act and its amendments, all state and local regulations including but not limited to Title 17 - Regulations Relating to Cross Connections, and the latest edition of the Manual of Cross Connection Control from the Foundation for Cross Connection Control and Hydraulic Research, University of Southern California. These Rules and Regulations were written to assist the District in safeguarding the District's Potable Water supply. The District cannot, and will not, be held liable for actions by others that are beyond the District's control, including, but not limited to, willful sabotage, deceptive or fraudulent activities and acts of nature. These Rules and Regulations do not provide regulatory measures for protection of water users from the hazards of Cross Connection within the water users own premises. 6.2 GENERAL PROVISIONS PROTECTION Protection shall be accomplished by isolating within the premises, any and all used, degraded, contaminated or polluted water or other liquids, mixtures or substances. The District recognizes that there are varying degrees of potential and actual hazards; consequently, the degree of protection shall be commensurate with the degree of hazard BACKFLOW PREVENTION DEVICES Backflow prevention devices shall be provided and maintained by the Applicant, owner or Customer of Record at his/her expense. Such devices shall be located on the premises of the property served and shall not be installed on the District's portion of the water system UNPROTECTED CROSS CONNECTIONS Unprotected Cross Connections to the public water supply are prohibited NEW SERVICE REQUESTS The District shall review all requests for new service to determine if Backflow protection is needed. Plans and specifications must be submitted to the District for review of possible Cross Connection hazards as a condition of service for new service connections PROTECTION REQUIRED BEFORE GRANTING SERVICE 33

128 Whenever Backflow protection is found necessary, the District will require the Customer of Record or Applicant to install an approved Backflow prevention device at the Customer's expense for continued services or before a new service is approved PROTECT ALL WATER LINES Wherever Backflow protection is necessary on a water supply line entering a Customer's premises, any and all water service lines from the District's Mains entering such premises, buildings or structures shall be protected by an approved Backflow prevention device. The type of device to be installed will be in accordance with the requirements of these Rules and Regulations. 6.3 WHERE PROTECTION IS REQUIRED PREMISES HAVING AN AUXILIARY WATER SUPPLY Premises that have an auxiliary water supply shall be protected against Backflow of water from the premises into the public water system, unless the auxiliary water supply is accepted as an additional source by the District and is approved by the public health agency having jurisdiction PREMISES HANDLING PROCESSED WATER Premises on which any substance is handled in such fashion that it may allow its entry into the water system, shall be protected against backflow of the water from the premises into the public water system. Such substances include, but are not limited to, the handling of processed waters and waters originating from the District s water system subjected to deterioration in sanitary quality. 6.4 PREMISES HAVING OR POSSIBLY HAVING CROSS CONNECTIONS Premises that have any one of the following shall be protected against Backflow of the water from the premises into the public water system: 6.5 TYPE OF PROTECTION 1) Internal Cross Connections; 2) Intricate plumbing and piping arrangements susceptible to Cross Connection; or 3) Where entry to all portions of the premises is not readily accessible for inspection purposes, making it impracticable or impossible to ascertain whether or not Cross Connections exist TYPE OF BACKFLOW DEVICE The type of approved Backflow prevention device shall depend upon the degree of hazard. The decision as to when, where and which device to be used shall be made at the discretion of the District and shall depend upon the facts of each particular situation. In determining the degree of hazard and the type of approved Backflow device required, the following principles shall apply: 34

129 HEALTH OR SYSTEM HAZARD An approved air-gap separation or an approved reduced pressure principle Backflow prevention device shall be used where there is an existing or potential health or system hazard POLLUTION HAZARD A double check valve assembly is to be used where there is an existing or potential pollution hazard only. 6.6 APPLICATION STRUCTURES OF MORE THAN TWO STORIES IN HEIGHT At the service connection to any premises, where there are more than two stories in height above the service connection, an approved Backflow prevention device shall protect the District water supply. Devices may be required for residential buildings on a case-by-case basis RECIRCULATING WATER At the service connection to any premises containing recirculating water systems (hot or cold), the District water supply shall be protected by an approved Backflow prevention device FIVE OR MORE UNITS At the service connection to any premises where there are multiple units or dwellings that have five or more individual units being serviced through one metering system, the District water supply shall be protected by an approved Backflow prevention device HEALTH OR SYSTEM HAZARD FROM AUXILIARY WATER SUPPLY At the service connection to any premises, where there is an auxiliary water supply that may constitute a health or system hazard, an approved air-gap separation or an approved reduced pressure principle Backflow assembly, or both, shall be installed SEWAGE AND STORM DRAIN FACILITIES At the service connection to any wastewater treatment plant, wastewater pumping station or storm water pumping station, the District water supply shall be protected by an approved air-gap separation. All piping between the meter and the receiving vessel shall be entirely visible. If, in the opinion of The District, an air-gap separation provides insufficient protection, The District may require installation of an additional approved Backflow prevention device(s) HOSPITALS, MORTUARIES, ETC. 35

130 At the service connection to hospitals, medical and dental buildings, mortuaries and other premises where special hazards exist, the District water supply shall be protected by an approved reduced pressure principle Backflow prevention assembly COMMERCIAL OR INDUSTRIAL BUILDINGS At the service connection to any premises containing commercial or industrial buildings subject to varying and unknown use, the District water supply shall be protected by an approved Backflow prevention device FIRELINE SERVICES Approved Double Check Detector Assembly (DCDA) shall be installed on all fireline services, except where, in the opinion of The District, the DCDA does not provide sufficient Backflow protection. In this case, The District will require the installation of an approved Reduced Pressure Principle Detector Assembly (RPDA) IRRIGATION SERVICES Meters serving only irrigation systems shall be protected by an approved reduced pressure principle Backflow prevention device. 6.7 INSTALLATION ONLY THE DISTRICT APPROVED DEVICES Only Backflow prevention devices that have been approved by the District and the California Department of Public Health Office of Drinking Water shall be acceptable for installation on a service connection. Upon request, the District will provide a list of approved Backflow prevention assemblies INSTALLATION SPECIFICATIONS Backflow prevention devices shall be installed in a manner prescribed in Section 7603, Title 17 of the California Administrative Code and they shall be installed on the Customer's side of, and as close to the service connection as is practical. The device shall be installed a minimum of twelve inches (12") and a maximum of thirty-six inches (36") above final grade measured from the concrete pad to the bottom of the device and with a minimum of twelve inches (12") clearance on either side. The device shall be installed so that it is readily accessible for maintenance and testing. The District shall have the final authority in determining the required location of a Backflow prevention device REPLACEMENT OF OBSOLETE DEVICES The Customer of Record must replace obsolete Backflow prevention devices when notified by the District that the device is no longer appropriate or acceptable. An obsolete device may be upgraded provided that a factory manufactured upgrading kit is available. The upgraded Backflow prevention device must be approved by the District and the California Department of Public Health Office of Drinking Water TESTING NEW DEVICES 36

131 As soon as the installation of the Backflow prevention device has been completed, the Customer of Record shall have the device tested by a certified tester, and submit the test results to the District within ten days of the test date. An Orange County Health Department approved list of local certified testers may be obtained at the District's offices RIGHT TO REJECT The District reserves the right to reject any installation or device. 6.8 INSPECTION AND TESTING ORIGINAL TEST All Backflow prevention devices shall be inspected, tested and certified as operational when the device is originally installed or relocated. All tests shall be conducted by a certified tester who shall prepare a report certifying that the device has been tested and is operating satisfactorily ANNUAL TEST BY CERTIFIED TESTER At the expense of the Customer of Record, all Backflow prevention devices shall be inspected, tested and certified as operational at least once a year. All tests shall be conducted by a certified tester who shall prepare a report certifying that the device has been tested and is operating satisfactorily FIRST NOTIFICATION The District will notify each Customer of Record and supply the necessary forms for Backflow prevention device testing when it is time for the annual Backflow prevention test. The Customer of Record shall have 30 days to comply with the Backflow prevention device testing requirements. The District will not accept test results on unapproved forms or from unapproved Backflow prevention device testers SECOND NOTIFICATION A second notice shall be sent to each Customer of Record who does not have the Backflow prevention device tested within the 30-day period as prescribed in the first notice. The second notice will give the Customer of Record a two-week period to have the Backflow prevention device tested. If no action is taken within the two-week period, the District may terminate water service to the Customer's premises until the subject device is tested and the necessary certification provided to the District CUSTOMER OF RECORD'S RESPONSIBILITY The Customer of Record shall cause annual tests to be made of the device at the expense of the Customer of Record. Defective devices shall be repaired, overhauled or replaced immediately at the expense of the Customer of Record. As a courtesy the District provides a notice of annual testing, but failure to receive such notice shall not relieve the Customer of Record of requirements under this section. 37

132 REPORTS Reports of inspections, tests, repairs, overhauling of the device and corrections made shall be submitted to the District within ten days of the test date by the certified tester. Such reports shall be submitted to the District on forms supplied by the District. No other forms will be accepted RANDOM TESTS AND INSPECTIONS OF DEVICES The District will maintain a program of random or spot testing of various Backflow prevention devices at no cost to the Customer of Record. This testing may be done at the time of installation and periodically thereafter. This testing will in no way relieve the Customer of Record from responsibility for maintaining functional devices, but will serve to help assure that the program is serving its intended purpose ON-PREMISE INSPECTION BY THE DISTRICT The District may, at its discretion, require an on-premises inspection for Cross Connection hazards on any property to which it serves water. The District will transmit a written notice requesting an inspection appointment to each Customer of Record. Any Customer or Customer of Record who cannot or will not allow an on-premise inspection of the piping system shall be required to install any Backflow prevention device that the District considers necessary MORE FREQUENT INSPECTION Where successive annual reports indicate defective operation of a Backflow prevention device, the District may require more frequent inspections and/or require replacement of the device DUTY OF TESTER The certified tester shall be responsible for the competency of inspections, corrective actions and the accuracy of reports required under this Section and the District's code of conduct for Backflow assembly testers TESTING METHODS Test results of Backflow prevention devices will only be accepted if performed in accordance with the methods used by the Foundation for Cross Connection Control and Hydraulic Research at the University of Southern California and County of Orange/Health Care Agency/Environmental Health. 6.9 TERMINATION BASIS FOR TERMINATION The District may immediately discontinue service to any premises where an actual or potential Cross Connection or other hazard to the District's water supply is found to exist. Any Customer who violates any of the provisions of these Rules and Regulations or alters, bypasses or renders inoperative, or removes any installed Backflow prevention device, or fails to test the device as required, shall be subject to immediate termination of water service. Conditions that create a basis for water service termination shall include, but are not limited to, the following items: 38

133 1. Refusal to install a required Backflow prevention device. 2. Refusal to test a Backflow prevention device. 3. Refusal to repair a faulty Backflow prevention device. 4. Refusal to replace a faulty Backflow prevention device. 5. Direct or indirect connection between the District s water system and a sewer line. 6. Unprotected direct or indirect connection between the District's water system and a system or equipment containing contaminants. 7. Unprotected direct or indirect connection between the District's water system and an auxiliary water system. 8. A situation that presents an immediate health hazard to the District's water system. 9. Failure to comply with other provisions of the District's Rules and Regulations for Water Service TERMINATION PROCEDURES For conditions 1 through 4 stated in Section 6.9.1, the District will terminate service to a Customer's premises after two written notices have been sent specifying the corrective action needed and the time period in which it must be taken. If no action is taken within the allowed time period, water service may be terminated without further notice. For conditions 5 through 9 stated in Sections the District will make a reasonable effort to advise the Customer of the intent to terminate water service before termination. SECTION 7 ENFORCEMENT 7.1 NEW SERVICE CONNECTIONS No new service connections shall be completed, nor meters installed, until all provisions of the Rules and Regulations have been satisfied. 7.2 EXISTING SERVICE CONNECTIONS Existing service connections shall comply with all provisions of the Rules and Regulations. If it is found that the service is out of compliance, the service will be brought into compliance with all provisions of the Rules and Regulations when the Customer of Record is notified by the District. Failure to comply shall result in termination of water service. 7.3 TERMINATION OF WATER SERVICE The District may terminate service for violation of these Rules and Regulations, including termination as provided under Section 2.6 and Section

134 Water service shall not be restored until hazards are eliminated and/or violations have been corrected to the satisfaction of the District. Nor shall water service be restored until the District has received reimbursement for any costs incurred in terminating the water service and advance payment for the cost of service restoration. The District will pursue recovery of actual costs including legal fees and any penalties. 7.4 CIVIL AND CRIMINAL ACTIONS Violation of these Rules and Regulations may constitute a public nuisance within the meaning of Health and Safety Code Section 4036 and Penal Code Section 372. Violators may be subject to civil actions for abatement and/or damages (Civil Code Section 3479, et seq.) and Criminal Penalties of up to $500 or both (Penal Code Section 29). Customers may also be assessed a fine of $500 per day by the District for violation of the Rules and Regulations. 40

135 EAST ORANGE COUNTY WATER DISTRICT RETAIL ZONE MONTHLY METER CHARGES/SERVICE CHARGES AND DELIVERED WATER SERVICE CHARGES (Inclusive of Changes Effective August 18, 2014) Domestic Delivered Water Rate, per 100 cubic feet (CCF) (748 gallons) Monthly ServiceMeter Charge: 518" Meter /4" Meter " Meter /2" Meter " Meter " Meter Monthly Fee for Existing -Water System Capital Projects Construction Water, per CCF (748 gallons) Flat Rate per month for 3 Construction Meter Refundable Construction Meter Deposit...1, Service Establishment: Deposit...two times average bill for previous 24 months at service address Meter Test Deposit Meter Downsizing Request Processing Fee Service Charges: Processing charge for service discontinued for non- payment (normal working hours) Additional after-hours processing charge for service discontinued for non-payment (applies between 4:00 p.m. and 8:00 p.m.; no processing after 8:00 p.m.) Electronic Funds Transfer (EFT) or Credit Card... 1% Fee for Notification of Tenants of Lessor Delinquent Charges Fee for Notice of Planned Shutoff...actual personnel hourly rate plus overhead cost Delinquency Penalty (after 30 days) Collection Processing Charge (Applies to accounts turned over to collection service for collection)... 35% New Connection Charge, Per Residential Unit (Includes retail water system capacity charge; does not include cost of meter setting, service lateral, main extension or reimbursement for main extension) Service Lateral Installation Charge, Per Residential Unit (Includes 1-inch meter setting; extra charge for larger meter, based on cost; installation of up to fifteen ( 15) feet of lateral, from meter box to main; extra charge for additional length or non-standard site conditions, based on cost) Dishonored Check or EFT or Credit Card Charge Plan Check/Construction Inspection Deposit (Percentage of estimated cost of water improvements constructed; if actual plan checking and inspection costs exceed deposited amounts, additional deposit(s) will be required, and if actual costs are less than deposited amount(s), excess will be refunded without interest) Amount up to $25, % Amount over $25, % Minimum Fee (non-refundable)

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141 EAST ORA.NBE COUNTY \l'1l.u.'f'e!]t OHSTRlCT April 13, 2015 Treasurer's Report Board of Directors East Orange County Water District DIRECTORS Richard E. Barrett Richard B, Bell Douglass S, Davert John Dulebohn William Vanderwerff Lisa Ohlund General Manager The accompanying information contained in Schedule 1, Distribution of Investment Activity for the month March 2015, and Schedule 2, Investment Portfolio, as of March 31, 2015 (which are presented only for supplementary analysis purposes) have been prepared by management who is responsible for their integrity and objectivity. These schedules have not been compiled, reviewed or audited by outside accountants. East Orange County Water District maintains a system ofintemal accounting control designed to provide reasonable assurance that assets are safeguarded and that transactions are properly executed, recorded and summarized to produce reliable records and reports. To the best of management's knowledge and belief, the schedules and related information were prepared in conformity with generally accepted accounting principles, and are based on recorded transactions and management's best estimates and judgments. Carl R. Schoonover Treasurer 185 N Mc Pherson Road Orange, CA Ph: (714) Fax: (714)

142 EAST ORANGE COUNTY WATER DISTRICT SCHEDULE 1 - INVESTMENT ACTIVITY MONTH OF MARCH 2015 BEGINNING BALANCES MARCH 1, 2015 LOCAL AGENCY INVESTMENT FUND RAYMOND JAMES-CDs DUE TO FROM OTHER FUNDS US TREASURY OBLIGATIONS!rl. f )~ ACTIVITY ADDITIONS DEPOSIT TO LAIF-FROM CHECKING DEPOSIT TO LAIF-INTEREST DEPOSIT TO RAYMOND JAMES-FROM CHECKING DEPOSIT TO RAYMOND JAMES-INTEREST SOLD MS LS US TREAS TRANSFERS BETWEEN FUNDS REDUCTIONS TRANSFER FROM LAIF TO CHECKING TRANSFERS BETWEEN FUNDS TRANSFERS TO CHECKING TRANSFER TO RAYMOND JAMES SOLD US TREASURY BOND MATURITY OF US TREASURY NOTE PURCHASE US TREASURY BOND FED STRIP ENDING BALANCES MARCH 31, 2015 LOCAL AGENCY INVESTMENT FUND RAYMOND JAMES-CDs and CASH DUE TO FROM OTHER FUNDS US TREASURY OBLIGATIONS "~ii' '~,'II" ~, ~I SECURITY TYPE DEMANDLAIF DEMAND BROKERAGE DUE TO/FROM US TREASURY '"Ii 'J!! DEMANDMM DEMANDLAIF DEMANDLAIF DEMAND BROKERAGE DEMAND BROKERAGE MUTUAL FUND DUE TO/FROM DEMAND LAIF DUE TO/FROM DEMANDMM DEMANDMM US TREASURY BOND/NOTE US TREASURY NOTE TREASURY BOND DEMAND LAIF CERTIFICATES OF DEPOSIT DUE TO/FROM US TREASURY ~.~ i\! ' "'" t:~, ~ BOOK VALUE o o oo 1,623 oo o o oo o o o

143 EAST ORANGE COUNTY WATER DISTRICT SCHEDULE 2 -INVESTMENT PORTFOLIO "MARCH 31, 2015 SECURITY TYPE PURCHASE I MATURITY INTEREST MARKET PURCHASE PREMIUM OR ACCRUED FACE %TO NAME AND NUMBER DATE DATE STATED I YIELD VALUE PRICE (DISCOUNT) * INTEREST" VALUE PORTFOLIO LAIF DEMAND N/A N/A 0.278% 0.278% 6,460,042 6,460, ,460, % RJ-CD AMERICAN EXPRESS 10/25/12 07/27/ % 1.000% 100, , , % RJ-CD BMW BANK OF N AMERICA 11/19/12 11/12/ % 2.000% 100, ,937 2, , % RJ-CD CIT BANK 03/06/13 03/06/ % 1.100% 145, , , % RJ-CD DISCOVER BANK 10/17/12 10/17/ % 1.200% 101, , , % RJ-CD DISCOVER BANK 02/20/ / % 1.100% 149, , , % RJ-CD EVERBANK 01/30/15 11/15/ % 1.740% 147, ,818-1, , % RJ-CD GE MONEY BANK 10/25/12 08/31/ % 1.650% 101, , , % RJ-CD GE CAPITAL RETAIL BANK 11/19/12 11/09/ % 1.350% 100, , , % RJ-CD GE CAPITAL RETAIL BANK 02/22/13 02/22/ % 1.100% 149, , , % RJ-CD GOLDMAN SACHS BANK 02/13/ % 1.200% 149, , , % RJ-CD GOLDMAN SACHS BANK 10/11/12 10/03/ % 1.550% 100,852 99, , % RJ-CD SYNCHRONY BANK 01/30/15 01/30/ % 1.800% 150, , , % RJ CASH N/A N/A 0.000% 0.020% 38,426 38,426 38, % I 0.484% $7,995,399 $7,996,736 $2,492 $823 $7,993, % LAIF=LOCAL AGENCY INVESTMENT FUND RJ=RAYMOND JAMES * Monthly adjustments to interest income should be made to amortize accrued interest and premiums/discounts to face value at maturity. CERTIFICATION I CERTIFY THAT (1) ALL INVESTMENT ACTIONS EXECUTED SINCE THE LAST REPORT HAVE BEEN MADE IN FULL COMPLIANCE WITH THE DISTRICT'S INVESTMENT POLICY AND,(2) THE DISTRICT WILL MEET ITS EXPENDITURE OBLIGATIONS FOR THE NEXT SIX MONTHS AS REQUIRED BY CALIFORNIA GOVERNMENT CODE SECTIONS 53646(b)(2) AND (3), RESPECTIVELY. CARL R. SCHOONOVER, TREASURER

144 Wholesale Zone Financial Summary For Period Ending February 28, 2015 YTD Operating Income $ 4,042,122 YTD Operating Expense $ 3,983,517 Revenue vs. Expenses Water Purchased Budget vs. Actual 800,000 1,200, , , ,000 1,000, , , , , ,000 Revenue Expense 600, , ,000 Budget Expense Salaries & Benefits Budget vs. Actual CIP Budget & Actual 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 Budget Expense 700, , , , , , ,000 Budget Expense O&M Budget vs. Actual 250, , , ,000 Budget Expense 50,000

145 EAST ORANGE COUNTY WATER DISTRICT STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS MONTH: FEBRUARY 2015 REVENUE WHOLESALE ZONE MONTHLY YTD ANNUAL BUDGET $ PERCENT ACTUAL ACTUAL OVER OF BUDGET DESCRIPTION REVENUE REVENUE BUDGET (UNDER) EXPENDED 1 OPERATING REVENUE: 2 WATER SALES 167,543 2,932,052 4,900,985 (1,968,933) 59.83% 3 FIXED CHARGES 50, , ,135 (184,947) 67.50% 4 EOCWD FIXED CHARGES 24, , ,136 (106,437) 64.65% 5 REIMBURSED EXP-IRWD - (6,314) 25,000 (31,314) % 6 OTHER CHARGES ,652 11,388 10, % 7 TOTAL OPERATING REVENUE: 242,003 3,526,278 5,807,645 (2,281,367) 8 NON-OPERATING REVENUES (EXPENSES): 9 PROPERTY TAXES 2, , ,000 (273,216) 59.46% 10 RENTAL INCOME - CELLULAR ANTENNAS 8, , ,000 (5,308) 94.99% 11 INTEREST & INVESTMENT EARNINGS 2,572 13,817 20,141 (6,324) 68.60% 12 NOTE RECEIVABLE - AMP ,000 (19,858) 0.71% 13 MISCELLENOUS INCOME (EXPENSE) (90) 81.97% 14 TOTAL NON-OPERATING REVENUES, NET 13, , ,641 (304,797) 15 NET OPERATING INCOME 255,821 4,042,122 6,628,285 (2,586,164) EXPENSES MONTHLY YTD ANNUAL BUDGET $ PERCENT ACTUAL ACTUAL OVER OF BUDGET DESCRIPTION EXPENSES EXPENSES BUDGET (UNDER) EXPENDED 16 OPERATING EXPENSE: 17 SOURCE OF SUPPLY 167,431 2,930,846 4,900,984 (1,970,138) 59.80% 18 MET/MWDOC FIXED CHARGE 32, , ,462 (120,370) 67.06% 19 EOCWD FIXED CHARGE 18, , ,050 (66,590) 68.60% 20 ENERGY 132 1,273 2,600 (1,327) 48.95% 21 OPERATIONS & MAINTENANCE 44, , ,456 (289,182) 51.52% 22 GENERAL & ADMINISTRATIVE 17, , ,176 (153,965) 52.51% 23 TRANSFER TO CAPITAL PROJECTS EXPENSE & RESERVES 22, , ,391 (44,270) 79.91% 24 DEPRECIATION & AMORTIZATION % 25 MARKET VALUE ADJUSTMENT ON INVESTMENTS (1,872) 7,239-7, % 26 TOTAL OPERATING EXPENSE 300,328 3,983,517 6,622,119 (2,638,603) 27 NET INCOME FROM OPERATIONS (44,507) 58,605 6, , PRIOR YEARS INCOME (EXPENSES) - - (6,167) 6, NET INCOME (LOSS) (44,507) 58,605 (0) 46,272 Page 2

146 Wholesale Zone February 2015 Variance Report 66% of Budget Year Expended Income(I) Expense (E) YTD Amount Percent Received/ Spent Account Number Account Name Comments New SAC LINE R&M E 16, % YTD is high due to higher maintenance fees than expected Ongoing LATE CHARGE I % YTD is high due to unanticipated revenue MET-MWDOC CHOICE-WS I 8, % Yearly payment made in July REIMBURSED EXPENSES-IRWD I (6,314) % YTD is negative due to billing IRWD in Prior Year REFUNDS I 11, % Unanticipated MWDOC refund for Tier 2 water relating to PY TAXES-UNSECURED I 18, % YTD is high due to underbudgeting the account TAXES SUPPLEMENTAL ROLL I 10, % YTD is high due to underbudgeting the account MISCELLANEOUS INCOME I % YTD is high due to unanticpated revenue RENT INCOME- CROWN CASTLE I 64, % YTD is high due to payment received relating to prior years EOCF #2 NONINTERR OC 48 E 842, % YTD is high due to time of year (selling more water) REGULATORY PERMITS E 3, % YTD is high due to unanticipated SWRCB Fees SERVICE CONNECTIONS R&M E 4, % YTD is high due to replacement of production IRWD production meter RESERVOIRS R&M E 20, % YTD is high due to tree services EQUIPMENT RENTAL E 13, % YTD is high due to generator rental COMPUTER CONSULTING E 1, % YTD is high due to under budgeted account PAYROLL TAXES- SUI & ETT E % YTD is high due to timing of the year MCPHERSON FAX E % YTD is high due to underbudgeting the account MCPHERSON OFFICE PHONES E 1, % YTD is high due to underbudgeting the account MILEAGE E % YTD is high due to underbudgeting the account OUTSIDE SERVICES E 5, % YTD is high due to Public Relations fees LEGAL E 41, % YTD is high due to underbudgeting the account OFFICE EQUIPMENT R&M E % YTD is over budget due to work performed by KMS Network Solutions Capital Projects New Ongoing C-2 REPLACE BACKHOE E 40, % YTD is high due to expenses being higher than anticipated Page 3

147 Page 4 EAST ORANGE COUNTY WATER DISTRICT FOR WHOLESALE MONTH: FEBRUARY 2015 ANNUAL BUDGET $ PERCENT MONTHLY YTD OVER OF BUDGET DESCRIPTION ACTUAL ACTUAL BUDGET (UNDER) EXPENDED REVENUE 1 WATER SALES 167,543 2,932,052 4,900,985 (1,968,933) 59.83% 2 METER CHARGE 177 1,441 2,961 (1,520) 48.66% 3 LATE CHARGE (5) 90.00% 4 CONNECTION FEES - 2,300 16,136 (13,836) 14.25% 5 EOCWD RESERVE FUND CHARGE 19, , ,000 (73,714) 67.67% 6 EOCWD READINESS TO SERVE CHARGE 4,764 38,113 57,000 (18,887) 66.87% 7 RETAIL SERVICE CONNECTIONS 18, , ,050 (66,590) 68.60% 8 MET-MWDOC READINESS TO SERVE 17, , ,000 (73,990) 66.67% 9 MET-MWDOC CAPACITY CHARGE 14,896 90, ,085 (44,367) 67.16% 10 MET-MWDOC CHOICE-WS - 8,377 8,377 (0) % 11 REIMBURSED EXPENSES-IRWD - (6,314) 25,000 (31,314) 25.25% 12 REFUNDS - 11,789-11, % 13 Total OPERATING REVENUE: 242,003 3,526,278 5,807,645 (2,281,367) 14 NON OPERATING INCOME 15 INTEREST EARNED-DEMAND ACCOUNTS % 16 INTEREST EARNED-MORGAN STANLEY % 17 INTEREST-MORGAN STANLEY- CONT % 18 INTEREST EARNED-LAIF - 2,120 3,409 (1,289) 62.20% 19 INTEREST EARNED-U.S. TREASURY BONDS % 20 INTEREST US TREASURY BOND % 21 INTEREST EARNED-COUNTY OF ORANGE % 22 INTEREST EARNED-ACWA % 23 INTEREST EARNED - RAYMOND JAMES 2,572 11,696 16,732 (5,035) 69.90% 24 TAXES-SECURED - 330, ,000 (254,101) 56.56% 25 TAXES-UNSECURED - 18,884 15,000 3, % 26 TAXES SUPPLEMENTAL ROLL 2,713 10,222 5,000 5, % 27 TAXES PRIOR YEARS 263 4,968 15,000 (10,032) 33.12% 28 TAXES HOMEOWNER'S SUBVENTION - 2,220 4,000 (1,780) 55.51% 29 TAXES PUBLIC UTILITY - 5,532 10,000 (4,468) 55.32% 30 TAXES TUSTIN RDA - 28,058 40,000 (11,942) 70.15% 31 TAXES MISC % 32 TAXES ACCRUED % 33 STATE TAXES CONFISCATED % 34 PROCEEDS IN-LIEU TAXES % 35 RENT INCOME- AT&T 4,490 35,844 55,000 (19,156) 65.17% 36 RENT INCOME- CROWN CASTLE 3,731 64,848 51,000 13, % 37 AMP SALE INSTALLMENTS ,000 (19,858) 0.71% 38 MISCELLANEOUS INCOME (90) 81.97% 39 Total NON OPERATING INCOME: 13, , ,641 (304,797) 40 Total OPERATING REVENUE 255,821 4,042,122 6,628,285 (2,586,164) 41 NET OPERATING INCOME: 255,821 4,042,122 6,628,285 (2,586,164)

148 Page 5 EAST ORANGE COUNTY WATER DISTRICT FOR WHOLESALE MONTH: FEBRUARY 2015 ANNUAL BUDGET $ PERCENT MONTHLY YTD OVER OF BUDGET DESCRIPTION ACTUAL ACTUAL BUDGET (UNDER) EXPENDED EXPENSES 42 EOCF #2 NONINTERR OC ,108 1,473,786 (848,678) 42.42% 43 EOCF #2 NONINTERR OC 48 11, , ,199 (136,905) 86.02% 44 WATER PURCHASED AMP 155,610 1,463,443 2,447,999 (984,555) 59.78% 45 WATER PURCHASED % 46 WATER PURCHASED IN-LIEU % 47 WATER PURCHASED-IN LIEU CREDIT % 48 AMP_FAP LEASE EXPENSE 1,250 10,000-10, % 49 MET-MWDOC CHOICE BUDGET - 11,475 8,377 3, % 50 MET-MWDOC READINESS TO SERVE 17, , ,000 (79,100) 64.37% 51 MET-MWDOC CAPACITY FEES 14,896 90, ,085 (44,367) 67.16% 52 MWDOC RETAIL SERVICE CONNECT 18, , ,050 (66,590) 68.60% 53 UTILITY- SCADA RTU 132 1,273 2,600 (1,327) 48.95% 54 SMALL TOOLS 338 2,265 3,500 (1,235) 64.72% 55 GASOLINE, OIL & DIESEL FUEL 184 2,524 5,413 (2,889) 46.63% 56 REGULATORY PERMITS 309 3,665 5,000 (1,335) 73.30% 57 NPDS PERMIT % 58 PROF SERV WATER QUAL. CONTROL 540 8,761 25,000 (16,239) 35.05% 59 SCADA REPLACEMENTS / UPGRADES ,198 (9,105) 1.01% 60 OPERATIONS REPORTING SOFTWARE 320 3,585 19,845 (16,260) 18.07% 61 METER PURCHASE/REPAIR ,000 (14,174) 5.51% 62 PRESSURE REGULATORS R&M ,000 (4,485) 10.30% 63 R/M- MAINS 291 1,591 25,000 (23,409) 6.36% 64 DAMAGE REPAIR- CAL EMA % 65 SERVICE CONNECTIONS R&M - 4,337 1,500 2, % 66 RESERVOIRS R&M - 20,435 20, % 67 R/M- VAULTS ,000 (9,479) 5.21% 68 R/M- CATHODIC PROTECTION 110 1,232 20,500 (19,268) 6.01% 69 MAINTAIN & OPERATE EOCF#2 1,417 11,333 50,000 (38,667) 22.67% 70 METER TESTING ,000 (2,738) 8.72% 71 SAC LINE R&M 16,889 16,889 10,000 6, % 72 EQUIPMENT RENTAL 1,260 13,904 11,150 2, % 73 EQUIPMENT MAINTENANCE ,571 (3,223) 42.81% 74 VEHICLE MAINTENANCE 254 1,782 2,723 (941) 65.45% 75 MAINTENANCE-BUILDINGS AND GROUNDS 706 1,413 3,750 (2,337) 37.69% 76 WAGES 15, , ,633 (62,680) 70.52% 77 PAYROLL TAXES- FICA & MEDICARE 1,252 12,057 17,737 (5,680) 67.98% 78 RETIREMENT- PERS 1,906 16,573 36,048 (19,476) 45.97% 79 PAYROLL TAXES- SUI & ETT % 80 HEALTH & ACCIDENT INSURANCE 2,436 24,772 63,478 (38,706) 39.02% 81 DENTAL INSURANCE 222 2,136 4,687 (2,551) 45.58% 82 VISION INSURANCE ,205 (766) 36.41% 83 LIFE INSURANCE (688) 22.99% 84 WORKER'S COMP INSURANCE 404 3,249 7,589 (4,340) 42.81% 85 UNIFORMS ,232 (1,452) 34.97%

149 Page 6 EAST ORANGE COUNTY WATER DISTRICT FOR WHOLESALE MONTH: FEBRUARY 2015 ANNUAL BUDGET $ PERCENT MONTHLY YTD OVER OF BUDGET DESCRIPTION ACTUAL ACTUAL BUDGET (UNDER) EXPENDED 86 DISTRICT WEBSITE - - 2,250 (2,250) 0.00% 87 MCPHERSON FAX (52) 82.83% 88 MCPHERSON INTERNET ,000 (1,545) 22.74% 89 MCPHERSON OFFICE PHONES 262 1,810 2,300 (490) 78.70% 90 ANSWERING SERVICE (123) 50.73% 91 PHONE CIRCUITS TO CTRL EQUIP 386 2,664 4,851 (2,187) 54.93% 92 CELLPHONES 134 1,153 2,000 (847) 57.63% 93 UNDERGROUND SERVICE ALERT (210) 50.65% 94 TRAINING/SCHOOLS ,732 (5,763) 14.39% 95 CONSERVATION EDUCATION ,000 (15,000) 0.00% 96 TRAVEL- CONF/SEMINARS 420 3,299 9,500 (6,201) 34.73% 97 MILEAGE % 98 DUES & MEMBERSHIP- ACWA - 2,350 3,750 (1,400) 62.66% 99 DUES & MEMBERSHIPS- OCWA (50) 33.33% 100 DUES & MEMBERSHIPS- AWWA (400) 0.00% 101 DUES & MEMBERSHIP- FCA (20) 0.00% 102 DUES & MEMBERSHIP- CSDA - 1,501 3,500 (1,999) 42.89% 103 DUES- ISDOC/URBAN WTR ,100 (750) 31.82% 104 MISCELLANEOUS EXP (212) 57.70% 105 DIRECTOR- R. BARRETT % 106 DIRECTOR- W. VANDERWERFF 463 4,288 6,000 (1,713) 71.46% 107 DIRECTOR- D. CHAPMAN % 108 DIRECTOR- J. DULEBOHN 213 1,163 3,600 (2,438) 32.29% 109 DIRECTOR- R. BELL 150 1,725 3,600 (1,875) 47.92% 110 DIRECTOR- D. DAVERT % 111 DIRECTOR- W. EVERETT ,600 (2,900) 19.44% 112 BOARD MEETING EXPENSE ,000 (2,335) 22.17% 113 POSTAGE ,400 (3,180) 6.47% 114 OFFICE SUPPLY/FURN/SMALL EQUIP 208 1,527 7,000 (5,473) 21.81% 115 PUBLICATIONS & LEGAL NOTICES ,000 (4,591) 8.19% 116 COPIER CONTRACT (431) 31.02% 117 BANK CHARGES 163 1,308 3,000 (1,692) 43.60% 118 OUTSIDE SERVICES 2,599 5,985 5, % 119 AUDITING - 4,424 8,200 (3,776) 53.95% 120 TAX COLLECTION FEES ,000 (5,084) 15.27% 121 TREASURER ,205 7,000 (5,795) 17.21% 122 ACCOUNTING- SERRANO 3,219 18,668 25,000 (6,332) 74.67% 123 LEGAL 2,158 41,196 50,000 (8,804) 82.39% 124 COMPUTER CONSULTING - 1,835 2,500 (665) 73.40% 125 ENGINEERING-WS 3,900 13,778-13, % 126 LAFCO - 5,683 40,000 (34,317) 14.21% 127 INSURANCE-AUTO & GEN LIABILITY 797 6,621 12,000 (5,379) 55.18% 128 INSURANCE-PROPERTY 231 1,846 3,750 (1,904) 49.23% 129 INSURANCE-EMP. FIDELITY BOND (225) 39.33% 130 OFFICE EQUIPMENT R&M % 131 UTILITIES-DUMPSTER ,000 (797) 20.30%

150 Page 7 EAST ORANGE COUNTY WATER DISTRICT FOR WHOLESALE MONTH: FEBRUARY 2015 ANNUAL BUDGET $ PERCENT MONTHLY YTD OVER OF BUDGET DESCRIPTION ACTUAL ACTUAL BUDGET (UNDER) EXPENDED 132 UTILITIES- THE GAS CO.- OFFICE % 133 UTILITIES- OFFICE- ELECT & WTR 246 2,321 3,375 (1,054) 68.78% 134 SECURITY ,500 (1,303) 13.14% 135 ELECTION EXPENSE - 26,449 64,000 (37,551) 41.33% 136 DEPRECIATION EXP % 137 TRANS. TO WRCI-CAPITAL PROJECT % 138 TRANS TO CAPITAL PROJECTS 2,729 21,835 32,753 (10,918) 66.67% 139 TRANSFER TO (FROM) RESERVES 19, , ,638 (33,352) 82.23% 140 MARKET VALUE ADJUST-INVESTMENT % 141 MARKET VALUE ADJUST-INVESTMENT (1,872) 7,239-7, % 142 MARKET VALUE ADJUST-INVESTMENT % 143 Total EXPENSES: 300,328 3,983,517 6,622,119 (2,638,603) 144 NET INCOME FROM OPERATIONS: (44,507) 58,605 6,166 52, OTHER INCOME AND EXPENSE 146 PRIOR YEARS INCOME (EXPENSES) - - (6,167) 6, % 147 Total OTHER INCOME AND EXPENSE - - (6,167) 6, % 148 NET INCOME (LOSS) (44,507) 58,605 (0) 46,272

151 EAST ORANGE COUNTY WATER DISTRICT STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS MONTH: FEBRUARY 2015 REVENUE MONTHLY YTD ANNUAL BUDGET $ PERCENT ACTUAL ACTUAL OVER OF BUDGET DESCRIPTION REVENUE REVENUE BUDGET (UNDER) EXPENDED 1 FUNDS PROVIDED BY RESERVE % 2 CAPITAL PROJECTS REVENUE 3 INTEREST EARNINGS - 3,904 15,000 (11,096) 26.03% 4 INTEREST RECEIVABLE- AMP SALE ,000 (13,000) 0.00% 5 REIMBURSEMENT FROM IRWD ,000 (200,000) 0.00% 6 REIMBURSEMENT FOR STORM DAMAGE REPAIRS % 7 REIMBURSEMENT FOR SECURITY UPGRADES % 8 TRANSFER FROM OPERATING EXPENSES 2,729 21, ,000 (203,165) 9.70% 9 NET OPERATING INCOME 2,729 25, ,000 (427,261) EXPENSES WHOLESALE ZONE CAPITAL PROJECTS MONTHLY YTD ANNUAL BUDGET $ PERCENT ACTUAL ACTUAL OVER OF BUDGET DESCRIPTION EXPENSES EXPENSES BUDGET (UNDER) EXPENDED 10 CAPITAL PROJECTS EXPENSES 11 CAPITALIZED ACCOUNTING COSTS - - 5,000 (5,000) 0.00% 12 SECURITY GATE AT 6 MG SITE-CONST ,000 (11,000) 0.00% 13 SECURITY SYSTEM AT PETERS CANYON RESERVOIR ,000 (20,000) 0.00% 14 BACKUP GENERATOR AT OC70 PUMP STATION ,000 (81,000) 0.00% 15 PIPELINE INSPECTIONS-ENGINEERING ,000 (26,000) 0.00% 16 MASTER PLAN/CONDITION ASSESSMENT 65,098 74, ,000 (50,625) 59.50% 17 FEASABILITY ENVIRONMENTAL % 18 6 MG RESERVOIR ROOF REPAIRS - 10,971 1,320,000 (1,309,029) 0.83% 19 6 MG RESERVOIR - LANDSCAPE/V-DITCH ,000 (36,000) 0.00% 20 CATHODIC PROTECTION - PIPELINES ,000 (31,000) 0.00% 21 MCPHERSON OFFICE/YARD IMPROVEMENTS ,000 (13,000) 0.00% MG RESERVOIR CATHODIC PROTECTION SYSTEM ,000 (36,000) 0.00% 23 USED VEHICLE TO SUPPLEMENT FLEET ,000 (15,000) 0.00% 24 6 MG TREATMENT PLANT - 2, ,000 (302,931) 0.68% 25 SECURITY UPGRADES-ANDRES RESERVOIR ,000 (15,000) 0.00% 26 VALVE REPLACEMENTS (12" - 27") ,000 (23,000) 0.00% 27 REPLACE BACKHOE - 40,150 25,000 15, % 28 NEWPORT RESERVOIR MIXING SYSTEM ,000 (31,000) 0.00% 29 ISOLATION VALVES & 1 MG RESERVOIRS - ENGINEERING ,000 (41,000) 0.00% 30 FINANCIAL SOFTWARE - 8,230 25,000 (16,770) 32.92% 31 OC33 RECONNECTION ,000 (45,000) 0.00% 32 VULNERABILITY UPGRADES-OC-70 TURNOUT & PUMP STATION ,000 (12,000) 0.00% 33 VULNERABILITY UPGRADES-PETER'S CANYON RESERVOIR ,000 (70,000) 0.00% 34 VULNERABILITY UPGRADES-OC-48 MET TURNOUT - - 3,000 (3,000) 0.00% 35 UWMP UPDATE ,000 (30,000) 0.00% 36 TOTAL OPERATING EXPENSE 65, ,364 2,344,000 (2,207,636) 37 NET INCOME FROM OPERATIONS (62,369) (110,624) (1,891,000) 1,780, PRIOR YEARS INCOME (EXPENSES) NET INCOME (LOSS) (62,369) (110,624) (1,891,000) 1,780,376 Page 8

152 Page 9 FOR WHOLESALE MONTH: FEBRUARY 2015 ANNUAL BUDGET $ PERCENT MONTHLY YTD OVER OF BUDGET DESCRIPTION ACTUAL ACTUAL BUDGET (UNDER) EXPENDED REVENUE FUNDED BY RESERVES INTEREST- RAYMOND JAMES % 2 INTEREST-MORGAN STANLEY-CAP % 3 INTEREST-LAIF-CAP - 3,904 15,000 (11,096) 26.03% 4 INTEREST-US TREASURY BOND % 5 INTEREST INCOME-AMP SALE ,000 (13,000) 0.00% 6 REIMBURSEMENT FROM IRWD ,000 (200,000) 0.00% 7 REIMBURSEMENT- STORM DAMAGE % 8 REIMBURSEMENT-SECURITY UPGRADE % 9 TRANSFER FROM WZ OPERATIONS 2,729 21, ,000 (203,165) 9.70% 10 Total NON OPERATING INCOME: 2,729 25, ,000 (427,260) 11 Total OPERATING REVENUE 2,729 25, ,000 (427,260) 12 NET OPERATING INCOME: 2,729 25, ,000 (427,260) EXPENSES 13 CAPITALIZED ACCOUNTING COSTS - - 5,000 (5,000) 0.00% 14 SECURITY GATE AT 6 MG SITE-CONST (WZ PORTION) ,000 (10,000) 0.00% 15 SECURITY GATE AT 6 MG SITE-LABOR (WZ PORTION) - - 1,000 (1,000) 0.00% 16 SECURITY SYSTEM AT PETERS CANYON RESERVOIR-CONSTRUCTION ,000 (15,000) 0.00% 17 SECURITY SYSTEM AT PETERS CANYON RESERVOIR-LABOR - - 5,000 (5,000) 0.00% 18 BACKUP GENERATOR AT OC70 PUMP STATION-CONST ,000 (80,000) 0.00% 19 BACKUP GENERATOR AT OC70 PUMP STATION-LABOR - - 1,000 (1,000) 0.00% 20 PIPELINE INSPECTIONS-ENGINEERING (CARRYOVER) ,000 (25,000) 0.00% 21 PIPELINE INSPECTIONS-LABOR - - 1,000 (1,000) 0.00% 22 MASTER PLAN/CONDITION ASSESSMENT 65,098 74, ,000 (50,625) 59.50% 23 FEASABILITY AND ENVIRONMENT % 24 6 MG RESERVOIR ROOF REPAIRS-CONSTRUCTION - - 1,150,000 (1,150,000) 0.00% 25 6 MG RESERVOIR ROOF REPAIRS-ENGINEERING - 10, ,000 (139,029) 7.31% 26 6 MG RESERVOIR ROOF REPAIRS-LABOR ,000 (20,000) 0.00% 27 6 MG RESERVOIR - LANDSCAPE/V-DITCH-CONSTRUCTION ,000 (30,000) 0.00% 28 6 MG RESERVOIR - LANDSCAPE/V-DITCH-ENGINEERING - - 5,000 (5,000) 0.00% 29 6 MG RESERVOIR - LANDSCAPE/V-DITCH-LABOR - - 1,000 (1,000) 0.00% 30 CATHODIC PROTECTION - PIPELINES-CONSTRUCTION ,000 (25,000) 0.00% 31 CATHODIC PROTECTION - PIPELINES-ENGINEERING - - 5,000 (5,000) 0.00% 32 CATHODIC PROTECTION - PIPELINES-LABOR - - 1,000 (1,000) 0.00% 33 MCPHERSON OFFICE/YARD IMPROVEMENTS-CONSTRUCTION ,000 (10,000) 0.00% 34 MCPHERSON OFFICE/YARD IMPROVEMENTS-LABOR - - 3,000 (3,000) 0.00% MG RESERVOIR CATHODIC PROTECTION SYSTEM-CONSTRUCTION ,000 (25,000) 0.00% MG RESERVOIR CATHODIC PROTECTION SYSTEM-ENGINEERING ,000 (10,000) 0.00% MG RESERVOIR CATHODIC PROTECTION SYSTEM-LABOR - - 1,000 (1,000) 0.00% 38 VEHICLE TO SUPPLEMENT FLEET ,000 (15,000) 0.00% 39 6 MG TREATMENT PLANT FEASIBILITY STUDY-ENGINEERING - 2, ,000 (272,931) 0.75% 40 6 MG TREATMENT PLANT -LABOR - - 5,000 (5,000) 0.00% 41 6 MG TREATMENT PLANT - ENGINEERING ,000 (25,000) 0.00% 42 SECURITY - ANDRES RESERVOIR-CONSTRUCTION - - 9,000 (9,000) 0.00% 43 SECURITY -ANDRES RESERVOIR-ENGINEERING - - 5,000 (5,000) 0.00% 44 SECURITY -ANDRES RESERVOIR-LABOR - - 1,000 (1,000) 0.00% 45 VALVE REPLACEMENTS (12" - 27")-CONSTRUCTION ,000 (12,000) 0.00% 46 VALVE REPLACEMENTS (12" - 27")-ENGINEERING - - 5,000 (5,000) 0.00% 47 VALVE REPLACEMENTS (12" - 27")-LABOR - - 6,000 (6,000) 0.00% 48 REPLACE BACKHOE - 40,150 25,000 15, % 49 NEWPORT RESERVOIR MIXING SYSTEM - ENGINEERING - - 5,000 (5,000) 0.00% 50 NEWPORT RESERVOIR MIXING SYSTEM - CONTSTRUCTION ,000 (25,000) 0.00% 51 NEWPORT RESERVOIR MIXING SYSTEM - LABOR - - 1,000 (1,000) 0.00% 52 ISOLATION VALVES & 1 MG RESERVOIRS - ENGINEERING - - 5,000 (5,000) 0.00% 53 ISOLATION VALVES & 1 MG - CONSTRUCTION ,000 (30,000) 0.00% 54 ISOLATION VALVES & 1 MG - LABOR - - 6,000 (6,000) 0.00% 55 FINANCIAL SOFTWARE - 8,230 25,000 (16,770) 32.92% 56 CONTSTRUCTION- OC33 RECONNECTION ,000 (25,000) 0.00% 57 ENGINEERING - OC 33 RECONNECTION ,000 (10,000) 0.00% 58 LABOR - OC33 RECONNECTION ,000 (10,000) 0.00% 59 VULNERABILITY UPGRADES-OC-70 TURNOUT & PUMP STATION-CONSTRUCTION ,000 (12,000) 0.00% 60 VULNERABILITY UPGRADES-PETER'S CANYON RESERVOIR-CONSTRUCTION ,000 (70,000) 0.00% 61 VULNERABILITY UPGRADES-OC-48 MET TURNOUT-CONSTRUCTION - - 3,000 (3,000) 0.00% 62 UWMP UPDATE-LABOR (WS PORTION) - - 5,000 (5,000) 0.00% 63 UWMP UPDATE-ENGINEERING (WS PORTION) ,000 (25,000) 0.00% 64 Total EXPENSES: 65, ,364 2,344,000 (2,207,636) 65 NET INCOME (LOSS) (62,369) (110,624) (1,891,000) 1,780,376

153 Retail Zone Financial Summary For Period Ending February 28, 2015 YTD Operating Income $ 1,153,953 YTD Operating Expense $ 992,718 Revenue vs Expenses Water Purchased Budget vs. Actual 400,000 60, , ,000 50, ,000 40, , , ,000 Revenue Expense 30,000 20,000 Budget Expense 50,000 10, Salaries & Benefits Budget vs. Actual CIP Budget vs. Actual 60, ,000 50, ,000 40,000 30,000 20,000 Budget Expense 100,000 80,000 60,000 40,000 Budget Expense 10,000 20, Electrical Budget vs. Actual O&M Budget vs. Actual 16, ,000 14, ,000 12,000 10,000 8,000 6,000 4,000 Budget Expense 140, , ,000 80,000 60,000 40,000 Budget Expense O&M O 2,000 20, (20,000)

154 EAST ORANGE COUNTY WATER DISTRICT STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS MONTH: FEBRUARY 2015 REVENUE RETAIL ZONE MONTHLY YTD ANNUAL BUDGET $ PERCENT ACTUAL ACTUAL OVER OF BUDGET DESCRIPTION REVENUE REVENUE BUDGET (UNDER) EXPENDED 1 OPERATING REVENUE: 2 WATER SALES 115, ,171 1,102,160 (412,989) 62.53% 3 METER CHARGE 59, , ,000 (121,090) 66.36% 4 OTHER CHARGES (45) 8,639 8, % 5 TOTAL OPERATING REVENUE: 175, ,720 1,470,785 (534,065) 63.69% 6 NON-OPERATING REVENUES (EXPENSES): 7 PROPERTY TAXES 1, , ,200 (160,324) 56.93% 8 INTEREST & INVESTMENT EARNINGS 3 1, % 9 MISCELLENOUS INCOME - 3, , % 10 MARKET VALUE ADJUSTMENT ON INVESTMENTS % 11 DISPOSAL OF ASSET GAIN (LOSS) % 12 TOTAL NON-OPERATING REVENUES, NET 1, , ,615 (156,382) 13 NET OPERATING INCOME 176,998 1,153,953 1,844,400 (690,447) EXPENSES MONTHLY YTD ANNUAL BUDGET $ PERCENT ACTUAL ACTUAL OVER OF BUDGET DESCRIPTION EXPENSES EXPENSES BUDGET (UNDER) EXPENDED 14 OPERATING EXPENSE: 15 SOURCE OF SUPPLY 15, , ,704 (330,308) 37.88% 16 MET/MWDOC FIXED CHARGE 1,057 8,459 12,500 (4,041) 67.67% 17 WZ FIXED CHARGE 1,385 11,082 15,660 (4,578) 70.77% 18 PIPELINE CAPACITY LEASE 3,799 28,342 45,500 (17,158) 62.29% 19 ENERGY 8,251 82, ,500 (36,124) 69.52% 20 OPERATIONS & MAINTENANCE 35, , ,711 (248,401) 59.13% 21 GENERAL & ADMINISTRATIVE 14, , ,275 (114,556) 48.69% 22 TRANSFER TO CAPITAL PROJECTS EXPENSE 13, , ,550 (54,850) 66.67% 23 RETAIL OPERATIONS CONTINGENCY FUND 6,250 50,000 75,000 (25,000) 66.67% 24 FUNDED TO/BY RESERVE 4,167 33,333 50,000 (16,667) 66.67% 25 DEPRECIATION & AMORTIZATION % 26 TOTAL OPERATING EXPENSE 103, ,718 1,844,400 (851,682) 27 NET INCOME FROM OPERATIONS 73, , , PRIOR YEARS INCOME (EXPENSES) NET INCOME (LOSS) 73, , ,235 Page 2

155 Retail Zone February 2015 Variance Report - 66% of Budget Year Expended Income(I) Expense (E) YTD Amount Percent Received/ Spent Account Name Comments Operating New LATE CHARGE I 8, % Late Charges are negative in the current month due to refunds given INTEREST INCOME-MM I % YTD is high due to receiving more interest than expected EQUIPMENT RENTAL E 10, % YTD is high due to unplanned generator rental PAYROLL TAXES- SUI & ETT E % YTD is high due to timing of tax payments MCPHERSON OFFICE PHONES E 1, % YTD is high due to underbudgeting the account Ongoing LATE CHARGE I 8, % YTD is high due to revenue being higher than expected INTEREST-LAIF-OP I 1, % YTD is high due to receiving more interest than expected TAXES UNSECURED I 10, % YTD is high due to more revenue than expected in this account TAXES SUPPLEMENTAL ROLL I 5, % YTD is high due to more revenue than expected in this account MISCELLANEOUS INCOME I 3, % YTD is high due to an ACWA insurance refund and reimbursement for an auto accident OCWD- REPLENISH ASSESSMENT E 200, % YTD is high due to more pumping than purchased water REGULATORY PERMITS E 4, % YTD is high due to unanticipated SWRCB Fees STOLLER RESERVOIR/BOOSTER R&M E 5, % YTD is high due to the purchase of measurement control systems R&M VISTA PANORAMA RESERVOIR E 6, % YTD is high due to work performed by Hidden Valley Pumps CHLORINE GENERATOR E 3, % YTD is high due to unanticipated expenses R/M- MAINS E 24, % YTD is high due to unexpected main leaks SERVICE LATERALS R&M E 12, % YTD is high due to work performed by Hardy & Harper METER TESTING E 1, % YTD is high due to unanticipated expenses BANK CHARGES E 5, % YTD is high due to credit card fees being higher than anticipated MCPHERSON FAX E % YTD is high due to fees being higher than anticipated MILEAGE E % YTD is high due to more expenses than expected POSTAGE E 3, % YTD is high due to more expenses than expected COMPUTER BILLING (RZ BILLS) E 4, % YTD is high due to yearly CUSI fees OFFICE EQUIPMENT R&M E % YTD is high due to unanticipated expenses UTILITIES- OFFICE- ELECT & WTR E 2, % YTD is high due to fees being higher than anticipated Capital New Ongoing REPLACE BACKHOE-CONSTRUCTION E 40, % YTD is high due to expenses being higher than anticipated Page 3

156 Page 4 EAST ORANGE COUNTY WATER DISTRICT FOR RETAIL MONTH: FEBRUARY 2015 ANNUAL BUDGET $ PERCENT MONTHLY YTD OVER OF BUDGET DESCRIPTION ACTUAL ACTUAL BUDGET (UNDER) EXPENDED REVENUE 1 WATER SALES 115, ,171 1,102,160 (412,989) 62.53% 2 METER CHARGE 59, , ,000 (121,090) 66.36% 3 LATE CHARGE (45) 8,469 11,400 (2,931) 74.29% 4 RETURNED CHECK CHARGE (830) 12.63% 5 TURN OFF CHARGE ,400 (1,350) 3.57% 6 OTHER CHARGES % 7 UNCOLLECTIBLE ACCOUNTS - - (5,125) 5, % 8 TURN ON NEW SERVICE % 9 REFUNDS % 10 SERVICE UPGRADE FEE % 11 Total OPERATING REVENUE: 175, ,720 1,470,785 (534,065) 12 INTEREST INCOME-MM % 13 INTEREST-MORGAN STANLEY-OP % 14 INTEREST-LAIF-OP - 1, % 15 INTEREST- US TREASURY BOND % 16 INTEREST INCOME-CTY OF ORANGE % 17 TAXES SECURED - 188, ,000 (137,649) 57.78% 18 TAXES UNSECURED - 10,719 13,000 (2,281) 82.46% 19 TAXES SUPPLEMENTAL ROLL 1,544 5,818 2,200 3, % 20 TAXES PRIOR YEARS 150 2,834 8,000 (5,166) 35.43% 21 TAXES HOMEOWNER'S SUBVENTION - 1,264 3,000 (1,736) 42.13% 22 TAXES PUBLIC UTILITY - 2,889 5,000 (2,111) 57.78% 23 TAXES TUSTIN RDA ,000 (20,000) 0.00% 24 TAXES MISC % 25 TAXES ACCRUED - - (5,000) 5, % 26 STATE TAXES CONFISCATED % 27 PROCEEDS IN-LIEU TAXES % 28 MISCELLANEOUS INCOME - 3, , % 29 Total NON OPERATING INCOME: 1, , ,615 (156,382) 30 Total OPERATING REVENUE 176,998 1,153,953 1,844,400 (690,447) 31 NET OPERATING INCOME: 176,998 1,153,953 1,844,400 (690,447) EXPENSES 32 WATER PURCHASED ,704 (314,017) 0.22% 33 WATER PURCHASED IN-LIEU % 34 WATER PURCHASED IN LIEU CREDIT % 35 OCWD- REPLENISH ASSESSMENT 15, , ,000 (16,291) 92.49% 36 MET-MWDOC READINESS TO SERVE 2,455 20,589 30,500 (9,911) 67.50% 37 MET-MWDOC CAPACITY FEES 1,343 7,754 15,000 (7,246) 51.69% 38 MWDOC RETAIL SERVICE CONNECT 1,057 8,459 12,500 (4,041) 67.67% 39 EOCWD WR READINESS TO SERVE 277 2,216 3,300 (1,084) 67.17% 40 EOCWD WR RESERVE FUND CHARGE 1,108 8,866 12,360 (3,494) 71.73% 41 UTILITY STOLLER RESERVOIR 4,150 37,105 53,100 (15,995) 69.88% 42 UTILITY VISTA PANORAMA BOOSTER 249 2,942 7,500 (4,558) 39.23% 43 ULITILITIES- WELLS- EAST/WEST 3,852 42,328 57,900 (15,572) 73.11% 44 SMALL TOOLS 338 2,304 3,500 (1,196) 65.83% 45 GASOLINE, OIL & DIES-RZ % 46 GASOLINE, OIL & DIESEL FUEL 358 3,873 6,712 (2,839) 57.71% 47 REGULATORY PERMITS 277 4,347 5,500 (1,153) 79.04% 48 NPDS PERMIT % 49 PROF SERV WATER QUAL. CONTROL 233 6,364 20,000 (13,636) 31.82% 50 CHLORINE GENERATOR/SALT PURCH ,400 (731) 47.77% 51 WEST WELL MAINTENANCE ,250 (2,987) 8.09% 52 EAST WELL MAINTENANCE ,250 (2,731) 15.96%

157 Page 5 EAST ORANGE COUNTY WATER DISTRICT FOR RETAIL MONTH: FEBRUARY 2015 ANNUAL BUDGET $ PERCENT MONTHLY YTD OVER OF BUDGET DESCRIPTION ACTUAL ACTUAL BUDGET (UNDER) EXPENDED 53 STOLLER RESERVOIR/BOOSTER R&M - 5,838 6,000 (162) 97.30% 54 VISTA PANORAMA BOOSTER R&M ,200 (4,155) 1.08% 55 R&M VISTA PANORAMA RESERVOIR 82 6,160 5, % 56 CHLORINE GENERATOR 300 3,729 3, % 57 SCADA REPAIR/UPGRADE ,402 (5,321) 1.50% 58 OPERATIONS REPORTING SOFTWARE 709 5,224 11,655 (6,431) 44.82% 59 HYDRANT REPAIR & REPLACEMENTS 1,099 3,747 16,100 (12,353) 23.27% 60 METER PURCHASE REPAIR 556 6,234 9,200 (2,966) 67.76% 61 PRV- R & M ,050 (1,753) 14.49% 62 R/M- MAINS ,290 23,000 1, % 63 DAMAGE REPAIR- CAL EMA % 64 SERVICE LATERALS R&M - 12,047 20,000 (7,953) 60.24% 65 RESERVOIRS R&M ,000 (1,581) 20.94% 66 R/M- VAULTS ,500 (1,118) 43.51% 67 R/M- CATHODIC PROTECTION - - 5,000 (5,000) 0.00% 68 METER TESTING - 1,838 1, % 69 EQUIPMENT RENTAL 2,818 10,804 11,150 (346) 96.90% 70 BACKHOE R&M ,429 (3,954) 10.72% 71 VEHICLES R&M 293 2,333 3,377 (1,044) 69.08% 72 BUILDING/GROUNDS R&M ,750 (3,296) 12.10% 73 WAGES 17, , ,696 (90,212) 65.79% 74 PAYROLL TAXES- FICA & MEDICARE 1,430 13,876 21,997 (8,121) 63.08% 75 RETIREMENT- PERS 2,184 18,982 39,981 (20,999) 47.48% 76 PAYROLL TAXES- SUI & ETT (66) 93.35% 77 HEALTH & ACCIDENT INSURANCE 5,224 39,758 78,722 (38,964) 50.50% 78 DENTAL INSURANCE 431 3,253 5,813 (2,559) 55.97% 79 VISION INSURANCE ,495 (817) 45.34% 80 LIFE INSURANCE ,107 (799) 27.81% 81 WORKER'S COMP INSURANCE 504 4,095 9,411 (5,316) 43.51% 82 UNIFORMS 117 1,211 2,768 (1,557) 43.74% 83 DISTRICT WEBSITE - - 2,250 (2,250) 0.00% 84 MCPHERSON FAX % 85 MCPHERSON INTERNET ,000 (3,545) 11.37% 86 MCPHERSON OFFICE PHONES 262 1,810 2,300 (490) 78.69% 87 ANSWERING SERVICE (123) 50.73% 88 PHONE CIRCUITS TO CTRL EQUIP 227 1,560 2,849 (1,289) 54.76% 89 CELLPHONES ,000 (1,013) 49.37% 90 UNDERGROUND SERVICE ALERT (210) 50.65% 91 TRAINING/SCHOOLS - 1,062 6,268 (5,206) 16.95% 92 CONSERVATION EDUCATION 558 2,685 4,000 (1,315) 67.13% 93 TRAVEL-CONF/SEMINARS 420 3,299 9,500 (6,201) 34.73% 94 MILEAGE % 95 DUES & MEMBERSHIPS- ACWA - 2,350 3,750 (1,400) 62.67% 96 DUES & MEMBERSHIPS- OCWA (50) 33.33% 97 DUES & MEMBERSHIPS- AWWA (400) 0.00% 98 DUES & MEMBERSHIP- FCA (20) 0.00% 99 DUES & MEMBERSHIP-CSDA - 1,911 3,500 (1,589) 54.59% 100 DUES- ISDOC/URBAN WTR ,100 (750) 31.82% 101 MISCELLANEOUS EXP (392) 21.65% 102 DIRECTOR- R. BARRETT % 103 DIRECTOR- W. VANDERWERFF 463 4,288 6,000 (1,713) 71.46% 104 DIRECTOR- D. CHAPMAN % 105 DIRECTOR- J. DULEBOHN 213 1,163 3,600 (2,438) 32.29% 106 DIRECTOR- R. BELL 150 1,725 3,600 (1,875) 47.92% 107 DIRECTOR- D. DAVERT % 108 DIRECTOR- W. EVERETT ,600 (2,900) 19.44% 109 BOARD MEETING EXPENSE ,000 (1,350) 32.51% 110 POSTAGE 579 3,296 3,400 (104) 96.94% 111 OFFICE SUPPLY/FURN/SMALL EQUIP 208 1,562 6,750 (5,188) 23.15% 112 PUBLICATIONS & LEGAL NOTICES ,550 (6,862) 9.12% 113 COPIER CONTRACT (431) 31.02%

158 Page 6 EAST ORANGE COUNTY WATER DISTRICT FOR RETAIL MONTH: FEBRUARY 2015 ANNUAL BUDGET $ PERCENT MONTHLY YTD OVER OF BUDGET DESCRIPTION ACTUAL ACTUAL BUDGET (UNDER) EXPENDED 114 VERSATERM CONTRACT (RZ BILLS) ,750 (3,200) 14.67% 115 BANK CHARGES 895 5,135 4, % 116 OUTSIDE SERVICES 2,329 4,900 6,000 (1,100) 81.67% 117 AUDITING - 4,076 8,200 (4,124) 49.71% 118 TAX COLLECTION FEES ,000 (4,482) 10.35% 119 COMPUTER BILLING (RZ BILLS) 402 4,747 7,000 (2,253) 67.82% 120 TREASURER 488 1,205 7,000 (5,795) 17.21% 121 ACCOUNTING- SERRANO 3,219 18,668 25,000 (6,332) 74.67% 122 LEGAL 1,330 12,154 35,000 (22,846) 34.73% 123 COMPUTER CONSULTING - 1,695 2,500 (805) 67.80% 124 ENGINEERING-RZ 675 5,623-5, % 125 LAFCO - 2,398 4,590 (2,192) 52.25% 126 INSURANCE-AUTO & GEN LIABILITY 554 4,601 7,750 (3,149) 59.37% 127 INSURANCE-PROPERTY ,000 (2,385) 20.51% 128 INSURANCE-EMP. FIDELITY BOND (271) 32.36% 129 OFFICE EQUIPMENT R&M % 130 UTILITIES-DUMPSTER ,000 (797) 20.30% 131 UTILITIES- THE GAS CO.- OFFICE % 132 UTILITIES- OFFICE- ELECT & WTR 246 2,792 3,375 (583) 82.74% 133 SECURITY ,500 (1,303) 13.14% 134 ELECTION EXPENSE - 5,806 16,000 (10,194) 36.29% 135 INTEREST EXPENSE DWR % 136 DISPOSAL OF ASSET GAIN (LOSS) % 137 DEPRECIATION EXP % 138 PRIOR YEAR ADJUSTMENTS % 139 TRANS TO CAPITAL PROJECT AF % 140 TRANS TO CAPITAL PROJECTS 13, , ,550 (54,850) 66.67% 141 RZ- CONTINGENCY FUND 6,250 50,000 75,000 (25,000) 66.67% 142 FUNDED TO/BY RESERVE-RZ 4,167 33,333 50,000 (16,667) 66.67% 143 MARKET VALUE ADJUST-INVESTMENT % 144 TOTAL OPERATING EXPENSES: 103, ,718 1,844,400 (851,682) 145 NET INCOME FROM OPERATIONS: 73, , , PRIOR YEARS INCOME (EXPENSES) % 147 PRIOR YEARS INCOME (EXPENSES) % 148 Total OTHER INCOME AND EXPENSES NET INCOME (LOSS) 73, , ,235

159 EAST ORANGE COUNTY WATER DISTRICT STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS MONTH: FEBRUARY 2015 REVENUE MONTHLY YTD ANNUAL BUDGET $ PERCENT ACTUAL ACTUAL OVER OF BUDGET DESCRIPTION REVENUE REVENUE BUDGET (UNDER) EXPENDED 1 FUNDS PROVIDED BY RESERVE ,750 (313,750) 0.00% 2 CAPITAL PROJECTS REVENUE 3 CAPITAL PROJECTS FEES 47, , ,000 (86,232) 68.87% 4 CONNECTION FEES - 7,135 10,450 (3,315) 68.27% 5 INTEREST EARNINGS (326) 34.71% 6 TRANSFER FROM OPERATING EXPENSES 13, , ,550 (54,850) 66.67% 7 FUNDS BORROWED FROM WHOLESALE ZONE % 8 REIMBURSEMENT- RZ BILL RATE STUDY % 9 NET OPERATING INCOME 61, , ,250 (458,474) EXPENSES RETAIL ZONE CAPITAL PROJECTS MONTHLY YTD ANNUAL BUDGET $ PERCENT ACTUAL ACTUAL OVER OF BUDGET DESCRIPTION EXPENSES EXPENSES BUDGET (UNDER) EXPENDED 10 CAPITAL PROJECTS EXPENSES 11 RZ CAPITALIZED ACCOUNTING COST - - 5,000 (5,000) 0.00% 12 BETTERMENT & REPLACEMENT PLAN 27,911 40,721 81,000 (40,279) 50.27% 13 MCPHERSON OFFICE/YARD IMPROVEMENT ,000 (15,000) 0.00% 14 CATHODIC PROTECTIONS - - 5,500 (5,500) 0.00% 15 USED VEHICLE TO SUPPLEMENT FLEET ,000 (15,000) 0.00% 16 VP VAULT PIPING/METER UPGRADE ,000 (27,000) 0.00% 17 VISTA PANORAMA RESERVOIR REPAIR ,000 (120,000) 0.00% 18 VP PUMP REBUILD - - 5,250 (5,250) 0.00% 19 VALVE RAISING-CRAWFORD CANYON ,000 (18,000) 0.00% 20 VALVE REPLACEMENTS- SYSTEM ,000 (20,000) 0.00% 21 ALLOW FOR SYSTEM RELOCATION ,000 (110,000) 0.00% 22 BACKUP GENERATOR FOR VP BOOSTER ,000 (50,000) 0.00% 23 REPLACE BACKHOE - 40,150 25,000 15, % 24 FINANCIAL SOFTWARE - 8,023 25,000 (16,977) 32.09% 25 BACKUP SYSTEM PRV - CIRCULA PANORAMA ,000 (50,000) 0.00% 26 SECURITY IMPROVEMENTS - RESERVOIR SITES ,000 (15,000) 0.00% 27 JOINT WELL - ENGINEERING ,000 (30,000) 0.00% 28 WELL DISINFECTION CONVERSION ,500 (57,500) 0.00% 29 WEST WELL REHABILIATION -REPLACEMENT ,000 (72,000) 0.00% 30 SIDEHILL BOOSTER - 19,602-19, SCADA SYSTEMS SITE ADDITIONS - VP SIDEHILL AND RZ FIRE PUMP ,000 (20,000) 0.00% TOTAL OPERATING EXPENSE 27, , ,250 (657,754) 33 NET INCOME FROM OPERATIONS 33, , , PRIOR YEARS EXPENSES NET INCOME (LOSS) 33, , ,280 Page 7

160 FOR RETAIL MONTH: FEBRUARY 2015 ANNUAL BUDGET $ PERCENT MONTHLY YTD OVER OF BUDGET DESCRIPTION ACTUAL ACTUAL BUDGET (UNDER) EXPENDED REVENUE 1 FUNDED BY RESERVES ,750 (313,750) 2 WATER SALES-CAPITAL PROJECTS 47, , ,000 (86,232) 68.87% 3 CONNECTION FEES - 7,135 10,450 (3,315) 68.27% 4 INTEREST INCOME- CHAPMAN AVE % 5 INTEREST-MORGAN STANLEY-CAP % 6 INTEREST-LAIF-CAP (326) 34.71% 7 INTEREST US TREASURY BOND % 8 REIMBURSEMENT- RZ BILL RATE STUDY % 9 TRANSFER IN CAPITAL PROJECTS 13, , ,550 (54,850) 66.67% 10 Total NON OPERATING INCOME: 61, , ,250 (458,474) 11 Total OPERATING REVENUE 61, , ,250 (458,474) 12 NET OPERATING INCOME: 61, , ,250 (458,474) EXPENSES 13 RZ CAPITALIZED ACCOUNTING COST - - 5,000 (5,000) 0.00% 14 BETTERMENT & REPLACEMENT PLAN ,000 (10,000) 0.00% 15 BETTERMENT & REPLACEMENT PLAN 27,911 40,721 70,000 (29,279) 58.17% 16 BETTERMENT & REPLACEMENT PLAN - - 1,000 (1,000) 0.00% 17 MCPHERSON OFFICE/YARD IMPROVE-CONST ,000 (10,000) 0.00% 18 MCPHERSON OFFICE/YARD IMPROVE-LABOR - - 5,000 (5,000) 0.00% 19 CATHODIC PROTECTIONS-CONST ,000 (5,000) 0.00% 20 CATHODIC PROTECTION-LABOR (500) 0.00% 21 USED VEHICLE TO SUPPLEMENT FLEET ,000 (15,000) 0.00% 22 VP VAULT PIPING/METER UPGRADE-CONST ,000 (20,000) 0.00% 23 VP VAULT PIPING/METER UPGRADE-ENG ,000 (5,000) 0.00% 24 VP VAULT PIPING/METER UPGRADE-LABOR - - 2,000 (2,000) 0.00% 25 VISTA PANORAMA RESERVOIR REPAIR-CONST ,000 (100,000) 0.00% 26 VISTA PANORAMA RESERVOIR REPAIR-ENG ,000 (15,000) 0.00% 27 VISTA PANORAMA RESERVOIR REPAIR-LABOR - - 5,000 (5,000) 0.00% 28 VP PUMP REBUILD-CONST ,000 (5,000) 0.00% 29 VP PUMP REBUILD-LABOR (250) 0.00% 30 VALVE RAISING-CRAWFORD CANYON-CONST ,000 (17,000) 0.00% 31 VALVE RAISING-CRAWFORD CANYON-ENG (500) 0.00% 32 VALVE RAISING-CRAWFORD CANYON-LABOR (500) 0.00% 33 VALVE REPLACEMENTS- SYSTEM CONST ,000 (15,000) 0.00% 34 VALVE REPLACEMENTS- SYSTEM LABOR - - 5,000 (5,000) 0.00% 35 ALLOW FOR SYSTEM RELOCATION-CONST ,000 (100,000) 0.00% 36 ALLOW FOR SYSTEM RELOCATION-ENG ,000 (5,000) 0.00% 37 ALLOW FOR SYSTEM RELOCATION-LABOR - - 5,000 (5,000) 0.00% 38 BACKUP GENERATOR FOR VP BOOSTER-CONST ,000 (50,000) 0.00% Page 8

161 FOR RETAIL MONTH: FEBRUARY 2015 ANNUAL BUDGET $ PERCENT MONTHLY YTD OVER OF BUDGET DESCRIPTION ACTUAL ACTUAL BUDGET (UNDER) EXPENDED 39 REPLACE BACKHOE-CONSTRUCTION - 40,150 25,000 15, % 40 FINANCIAL SOFTWARE - 8,023 25,000 (16,977) 32.09% 41 BACKUP SYSTEM PRV - CIRCULA PANORAMA-CONSTRUCTION ,000 (30,000) 0.00% 42 BACKUP SYSTEM PRV - CIRCULA PANORAMA-ENGINEERING ,000 (10,000) 0.00% 43 BACKUP SYSTEM PRV - CIRCULA PANORAMA-LABOR ,000 (10,000) 0.00% 44 SECURITY IMPROVEMENTS - RESERVOIR SITES-CONSTRUCTION ,000 (10,000) 0.00% 45 SECURITY IMPROVEMENTS - RESERVOIR SITES-LABOR - - 5,000 (5,000) 0.00% 46 JOINT WELL - ENGINEERING ,000 (25,000) 0.00% 47 JOINT WELL - LABOR - - 5,000 (5,000) 0.00% 48 WELL DISINFECTION CONVERSION -CONST/EQUIP ,000 (45,000) 0.00% 49 WELL DISINFECTION CONVERSION-ENGINEERING ,000 (10,000) 0.00% 50 WELL DISINFECTION CONVERSION - LABOR - - 2,500 (2,500) 0.00% 51 WEST WELL REHABILIATION -REPLACEMENT-CONSTRUCTION ,000 (70,000) 0.00% 52 WEST WELL REHABILITATION -REPLACEMENT-LABOR - - 2,000 (2,000) 0.00% 53 SIDEHILL BOOSTER-CONSTRUCTION - 18,562-18, % 54 SIDEHILL BOOSTER-LABOR - 1,040-1, % 55 SCADA SYSTEMS SITE ADDITIONS - VP SIDEHILL AND RZ FIRE PUMP ,000 (20,000) 0.00% 56 TOTAL OPERATING EXPENSES: 27, , ,250 (657,754) 57 Net Income (Loss): 33, , ,280 Page 9

162 MEMO TO: BOARD OF DIRECTORS FROM: GENERAL MANAGER SUBJECT: FY AUDIT SERVICES AWARD OF CONTRACT DATE: APRIL 2, 2015 BACKGROUND For the past nine years the firm of Charles Z. Fedak & Company (CZF) has provided independent auditor services to the District; most recently their contract was renewed in While we have been pleased with CZF s performance, good financial controls dictate that it is prudent to change firms periodically. Accordingly, a Request for Proposal was developed and proposals were solicited from four pre-qualified CPA firms that have audited water and wastewater special districts. The RFP was reviewed with the Finance Committee and proposals solicited from four firms: Meyer Hoffman McCann Irvine, CA Lance, Soll & Lunghard Brea, CA The Pun Group Santa Ana, CA White Nelson Diehl Evans, LLP Irvine, CA Proposals were received from two of the four firms; Meyer Hoffman McCann and Lance Soll & Lunghard did not respond. The proposals were evaluated pursuant to the attached evaluation form. Five specific evaluation criteria were established and weighted as follows (Note, cost was not considered until after the technical evaluation was completed: Weight 1. Completeness of response 15% 2. Firm & Team Qualifications/Experience with like-sized water agencies 20% 3. Approach to Work 15% 4. Quality of References 20% 5. Cost 30% Based upon the proposal analysis, The Pun Group submitted the most responsive proposal (achieving a score of 97 out of 100). While theirs was not the lowest cost proposal, upon evaluation the cost differences were minimal for two reasons: 1) Meyer Hoffman McCann didn t include the cost of attending a Board Meeting to present the audit, and 2) The Pun Group included a cyber-security component that would review and test our financial IT security environment (valued at ~$750.00). The Finance Committee reviewed this issue at their April 2 nd Meeting and recommend that the Board approve the contract with The Pun Group. RECOMMENDATION The Committee recommend that the Board approve a contract with The Pun Group for the Fiscal Years at a cost of $37,500 ($12,500 per fiscal year).

163 FY Audit Services Proposal Evaluation Form Proposals were evaluated based upon the evaluation criteria as stated below. The cost proposal was not considered until after the qualifications points were awarded. Points Rating 9-10 Excellent response 8-7 Insightful response 6-5 More than adequate response 4-3 Adequate response, no special insights 2-1 Inadequate response 0 No response given Factor Weight Response was complete and met RFP requirements 15% Professional qualifications of firm & team & 20% experience with like sized water agencies Approach to work/value added Items 15% Quality of references 20% Cost 30% Evaluation Criteria White Nelson Diehl Evans LLP The Pun Group R W R W 1. Completeness of Response Firm & Team Qualifications/ Experience with like-sized water agencies Approach to Work/Value Added Items Quality of References Cost TOTAL SCORE R = Rating W = Rating with Weighted Factor Applied Firm Name Total 3-Year Cost Ranking White Nelson $12,000 $12,000 $12,245 $36,245 2 The Pun Group $12,500 $12,500 $12,500 $37,500 1

164 East Orange County Water District Orange, California Proposal to Provide Professional Audit Services For the Fiscal Years Ending June 30, 2015 through June 30, 2017 March 30, 2015 PROPOSAL Kenneth H. Pun, CPA, CGMA Managing Partner 200 East Sandpointe Avenue, Suite 600 Santa Ana, California Phone: (949) Fax: (949) California CPA License Number: PAR 7601 Federal Identification Number:

165

166 East Orange County Water District Proposal to Provide Professional Audit Services TABLE OF CONTENTS Transmittal Letter... 1 Section I Independence... 3 Section II License to Practice in California... 3 Section III Firm Qualifications and Experience About The Pun Group, LLP... 4 Staff Consistency... 4 Experience. Principles. Knowledge. Commitment. Capacity. Diversity Most Recent External Quality Control Review... 6 Federal or State Desk Review... 7 Disciplinary Action... 7 Section IV Partner, Supervisory and Staff Qualification and Experience... 8 Section V Similar Engagements with other Government Entities Section VI Specific Audit Approach Section VII Identification of Anticipated Potential Audit Problems Section VIII Bidding Proposal Benefits of Choosing The Pun Group, LLP Thank you Appendix: Proof of Insurance... 33

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168 March 30, 2015 East Orange County Water District Ms. Lisa Ohlund, General Manager 185 N. McPherson Road Orange, CA Dear Ms. McCullough: Please allow us to introduce our firm and share our qualifications and proposed audit plan for the East Orange County Water District (the District ) pursuant to your Request for Proposals to Provide Professional Audit Services for the fiscal years ending June 30, 2015 through June 30, The Pun Group, LLP, formerly known as Pun & McGeady LLP (the Firm ), due to consolidation, has the knowledge and experience necessary to become the District s next public accounting firm, and the work plan to ensure a smooth audit process. This letter is an acknowledgement of the Firm s understanding of the work to be performed. We hereby offer our commitment to perform all of the required work, complete the audit and, issue the necessary auditor s report, and within the time periods outlined by the District. We are secure in affirming our commitment because we have: 1. A lengthy legacy of serving California governmental special districts and municipalities; 2. Prodigious experience serving governmental and not-for-profit entities; and 3. An efficient, lower-cost approach to auditing that focuses on high-risk areas. I will serve as your primary contact for contract negotiations. I am a partner of the Firm and have been authorized to legally bind the Firm. My contact information follows: Name: Mr. Kenneth H. Pun, CPA, CGMA Position: Managing Partner Address: 200 East Sandpointe Avenue, Suite 600 Santa Ana, California Telephone: (949) ken.pun@pungroup.com You may also contact the following partner, who is authorized to represent the Firm: Name: Mr. Paul J. Kaymark, CPA Position: Audit Partner Address: 200 East Sandpointe Avenue, Suite 600 Santa Ana, California Telephone: (949) paul.kaymark@pungroup.com 200 East Sandpointe Avenue, Suite 600, Santa Ana, California Tel: Toll Free: Fax:

169 East Orange County Water District Ms. Lisa Ohlund, General Manager Page 2 The Pun Group is the right choice for East Orange County Water District because we are focused on your industry. We have audited and consulted many California special districts. We have assisted many clients in earning the GFOA Certificate of Achievement for Excellence in Financial Reporting. The depth of resources and specific government experience are substantial, we are committed to deploy these resources and experience to the District. Simply put, the District will remain one of our most important clients, and receive the priority service you deserve. We are committed to performing all of the work outlined in the District s Request for Proposal within the time periods established by the District, in accordance with the District s contract terms. Our goal for this audit is to complete the process in accordance with regulations while minimizing disruption to the District s daily operations. The Firm will: Develop solid familiarity with the District s operations. Create a detailed audit plan during initial stages of the audit. Maintain open communication lines between the Engagement Team and the District s Management. Assign duties to qualified staff members. This method ensures that the audit process will be performed steadily, communicated clearly, and completed efficiently. Detail explanation of the Specific Audit Approach can be found on pages 19 to 23, under this proposal. Our Orange County office, located at 200 East Sandpointe Avenue, Suite 600 Santa Ana, California will perform the requested services for the District. However, we may assign additional staff from our San Diego, Walnut Creek, or La Quinta, California offices to the engagement, at no additional cost to the District. No subcontractors will be used. The Firm is an Equal Opportunity Employer and complies with all Federal and State hiring requirements. This proposal meets the requirements of the District s Request for Proposal. This letter and the accompanying proposal represent a firm and irrevocable offer valid until June 30, If you have any questions about the proposal or the Firm, please contact us. We look forward to speaking with you. Sincerely, The Pun Group, LLP Certified Public Accountants and Business Advisors Kenneth H. Pun, CPA, CGMA Managing Partner 2

170 East Orange County Water District Proposal to Provide Professional Audit Services Section I Independence The Pun Group, LLP (the Firm ) requires all employees to adhere to strict independence standards in relation to the Firm s clients. These independence standards exceed, in many instances, the standards promulgated by the American Institute of Certified Public Accountants (AICPA). The Pun Group, LLP certifies that it is independent of East Orange County Water District (the District ). The Firm meets independence requirements defined by the United States Government Accountability Office s (U.S. GAO s) Government Auditing Standards, and the American Institute of Certified Public Accountants (AICPA). The Firm had no professional relationships involving the District for the past five (5) years. Section II License to Practice in California The Firm and all key professional staff are licensed by the State of California to practice as Certified Public Accountants, and meet the Continuing Professional Education requirements under U.S. GAO s Government Auditing Standards to perform the proposed audits. 3

171 East Orange County Water District Proposal to Provide Professional Audit Services Section III Firm Qualifications and Experience About The Pun Group, LLP The Pun Group, LLP, formerly known as Pun & McGeady LLP, Certified Public Accountants and Business Advisors, founded in 2012, is a limited liability partnership. The full-service accounting firm comprises thirty (30) professionals on full-time basis who provide auditing, accounting, and advisory services. Of the thirty (30) professionals, twenty (20) of them focus in the Government Assurance Practice. The Firm has offices in Orange County, San Diego, La Quinta, and Walnut Creek, California. The Firm has served hundreds of governmental agencies since 1989, under the umbrella of its predecessor firm, Caporicci & Larson, where all key personnel assigned provided outstanding services to governmental entities throughout California. The combination of hands-on experience and practical knowledge of our audit professionals makes the Firm unique in the field. Our technical knowledge and thorough understanding of current regulations and issues along with the Firm s commitment to hard work, integrity, and teamwork on every engagement enable us to help our clients flourish. Our Governmental Partners Group which includes partners Kenneth H. Pun, Paul J. Kaymark, Gary M. Caporicci and Jack F. Georger has provided auditing, accounting, and advisory services to numerous governmental entities throughout the United States. Our more than one hundred-twenty (120) years of combined experience in the government industry have made us a trusted business partner with our clients, and we have become well-respected as one of the most socially responsible accounting firms. In addition to annual financial audits, team members undertake special studies in financial management, accounting, cost-accounting-system analysis, internal audit services, and internal control documentation and testing. By participating in industry associations and activities, we are always up to date on the latest industry changes and the impact they will have on your operations. We will keep you and our colleagues in the Firm, fully informed of these developments. Our team is committed to bringing the full breadth and depth of our expertise to the audit of the District at an outstanding value to you. While many accounting firms can perform an audit, not all can build a great working relationship with their clients. The Pun Group, LLP develops lasting, personal relationships with clients. Our hands-on partner involvement and low personnel turnover will make you appreciate our firm more every day we work together. Staff Consistency The Firm is committed to maintaining staff continuity throughout audit engagements. While we cannot guarantee that our staff members will stay with the Firm, we encourage loyalty by paying competitive wages, offering opportunities for promotion, using state-of-the-art equipment, and providing excellent working conditions. We also offer benefits including retirement plans, medical plans, profit-sharing programs, and continuing education. The Firm is an equal-opportunity employer and complies with all federal and state hiring requirements. The Firm also supports affirmative-action philosophies and works hard to provide opportunities for self-enhancement to members of disadvantaged groups. We guarantee that the partners assigned to this audit will be involved throughout the entire engagement term, and that assigned staff members will return to the District in future years if they are still with the firm. One of our primary audit concerns is staff continuity, and our hands-on partner involvement ensures that qualified and experienced professionals will perform audits efficiently and effectively every year of the engagement. 4

172 East Orange County Water District Proposal to Provide Professional Audit Services AT THE PUN GROUP, LLP WE WORK TOGETHER WITH OUR CLIENTS TO ADDRESS A EXPERIENCE. PRINCIPLES. KNOWLEDGE. COMMITMENT. CAPACITY. DIVERSITY VARIETY OF CHALLENGES LIKE: Reporting and Compliance Requirements Risk and Internal Controls Operational Transformation Technology Consulting We understand our clients have broad and complex needs. That s the number one reason our solutions are developed to specifically address these unique needs. This is why we have such a high retention rate. Some of our clients have been with us for over a decade. The following is the most current list of our Assurance Clients: GFOA CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING: 100% of our clients that have submitted their reports to the GFOA have received the Certificate of Excellence. UNPARALLELED PARTNERS SUPPORT: Hands-on partner involvement always available to address our client s needs and answer questions. OUR SERVICES INCLUDE: Financial statement audits Performance audits Single audit (OMB Circular A- 133) Employee benefit plan audits Internal controls evaluations Cities and Towns: City of Arcadia City of Arvin City of Bradbury City of Calexico City of Cerritos City of Clovis City of Desert Hot Springs City of Encinitas City of Gardena City of Hermosa Beach City of Lakewood City of Monterey Park City of National City City of Placerville City of Poway City of Ridgecrest City of Stockton Town of Andrews Town of Danville Transportation Authorities/Agencies: Washington Metropolitan Area Transit Authority San Diego Metropolitan Transit System SunLine Transit Agency Shasta Regional Transportation Agency Ventura County Transportation Commission 5 Health Centers: Alliance Medical Center Anderson Valley Health Center, Inc. Fallbrook Healthcare District Family Health Centers of San Diego Marin City Health and Wellness Center McCloud Healthcare District Redwood Coast Medical Services Ritter Center Shingletown Medical Center Tulare Community Health Clinic United Health Centers of San Joaquin Valley Special Districts/Others: Las Virgenes Municipal Water District Marina Coast Water District Newport Coast Elementary Foundation Orange County Business Council Palmdale Water District Shanghai Jiao Tong University Foundation of America Southwestern Community College District Valley Sanitary District Orange County City Hazardous Material Emergency Response Authority West Valley Water District Palmdale Water District

173 East Orange County Water District Proposal to Provide Professional Audit Services Most Recent External Quality Control Review The Firm participates in the AICPA Peer Review Program, which is designed to identify weaknesses in accounting-service policies, practices, and procedures. In 2013, an independent reviewer assessed the Firm s quality-control policies, reviewed administrative records, interviewed professional personnel, and inspected the Firm s working papers and reports from a representative sample of accounting and auditing engagements, including governmental audits. The reviewer concluded that the Firm fully complies with the AICPA s stringent standards for quality control. A quality-control reviewer considers, among other things, a firm s policies regarding hiring, training, supervision, delegation of responsibilities, and access to technical resources. The reviewer determined that the Firm s accounting and auditing work and internal quality-control system meet the AICPA s guidelines for professional standards. The Firm s participation in the Peer Review Program demonstrates our commitment to quality. We also affirm our dedication to excellent client service through our voluntary memberships in the AICPA including the AICPA s Governmental Audit Quality Center and CalCPA. 6

174 East Orange County Water District Proposal to Provide Professional Audit Services Federal or State Desk Review No federal or state desk reviews or field reviews have been undertaken of any audits performed by the Firm or any of its partners, managers, or professionals during the past three (3) years. Disciplinary Action No disciplinary action has been taken by state regulatory bodies or professional organizations against the Firm or any of its partners, managers, or professionals during the past three (3) years. The Firm has no conditions such as bankruptcy, pending litigations, planned office closures, mergers or any organizational conflict of interest that may affect the ability of the Firm to perform the required duties requested by the East Orange County Water District. 7

175 East Orange County Water District Proposal to Provide Professional Audit Services Section IV Engagement Partner, Manager/Supervisory and Staff Qualification and Experience The Engagement Team is carefully chosen to provide the District with all services needed to successfully complete the audit. The Engagement and Concurring Partners are personally involved in the audit, and the Engagement Team has significant experience in governmental auditing. Our broad experience and technical capabilities allow us to provide technical support, interpret findings, and offer effective solutions to any issues. East Orange County Water District GASB 68/71 Specialist Gary M. Caporicci CPA, CGFM, CFF Engagement Partner Paul J. Kaymark, CPA Concurring Partner Kenneth H. Pun CPA, CGMA Compliance Manager Frances Kuo CPA, CGMA Engagement Manager Melissa Ochoa, CPA Cyber Security Expert John K. Aurelius Supervisor David Siris CPA Professional Staff Deana Ilagan The personnel assigned to this engagement are fully qualified to perform an effective and efficient audit of the District, and their extensive experience will be invaluable to the audit process. Our professionals are familiar with the complexities of governmental accounting, auditing, and financial reporting, including but not limited to, all GASB pronouncements, the Single Audit Act, OMB Circular A-133, and fund operations. If the Firm changes key personnel for reasons other than those specified in the Proposal, we will provide the District with written notification and will only be changed with the express prior written permission of the District. Other audit personnel may be changed with replacement that has substantially the same or better qualifications or experience. 8

176 East Orange County Water District Proposal to Provide Professional Audit Services Paul J. Kaymark, CPA Engagement Partner Paul is an assurance partner with the Government and Not-for Profit Practice of the Firm who has over twentyyears of public accounting experience. He specializes in auditing special district governments and not-for-profit organizations. Paul will directly oversee the Engagement Team, and he will be responsible for the delivery of all services to East Orange County Water District. In addition, he will manage engagement planning and fieldwork, and he will review and approve the work papers and reports. Kenneth H. Pun, CPA, CGMA Concurring Partner Ken is an assurance partner and the Partner In-Charge of Government and Not-for Profit Practice at the Firm who has over fifteen years of public accounting experience. He specializes in audits and management consulting for government organizations. Ken will act as the Concurring partner. Gary M. Caporicci, CPA, CGFM, CFF GASB 68/71 Specialist As an assurance partner with over forty years of experience, Gary has provided financial and compliance audit and consultation services to governmental clients including cities, counties, transportation agencies, and school districts, as well as various not-for-profit entities. He provides advice and consultation regarding complex accounting matters, assists engagement teams in audit matters. Gary will be responsible in providing advice and consultation for the implementation of these new pension standards. Melissa Ochoa, CPA Engagement Manager Melissa will work closely with Paul Kaymark and Gary Caporicci, directing the audit team in its daily activities. She is an assurance services/audit manager and has extensive experience auditing local government entities including special districts, cities, counties, not-for-profit and healthcare entities. Frances Kuo, CPA, CGMA Compliance Manager Working with Melissa, Frances will direct the audit team in compliance-related matters. She is an assurance services/audit manager in the Firm whose extensive auditing experience includes special districts, cities, counties, transportation agencies, and not-for-profit entities. John K. Aurelius Cyber Security Expert With more than 30 years experience, John has experience leading IT department, performing IT audits and business process improvement reviews, providing compliance management services, and developing and implementing scalable, business-valued, cost-efficient solutions that effectively leverage information technology. John will be responsible for the planning, testing, documentation and review of the IT environment in support of the financial audit. John will report to the audit partner. David Siris, CPA Supervisor David will direct the audit staff, coordinate with East Orange County Water District personnel, and implement the audit approach. Deana Ilagan Professional Staff Deana is qualified to perform financial and compliance audits of special district and other governmental agencies. This ensures that the staff quality will be consistent throughout the engagement term. Because we support both staff development and engagement continuity, we encourage senior and staff accountants to take increased responsibilities on their previous engagements as they advance professionally. 9

177 East Orange County Water District Proposal to Provide Professional Audit Services Quality-Control System The quality of our practice is extremely important to the Firm, as well as to our clients and the people who rely on our reports. We are meticulous about meeting professional standards, and we are careful to form professional relationships only with individuals who have strong integrity. Our quality-control system, which is designed to meet our own elevated standards and those of the AICPA, includes the following professionaldevelopment activities: Professional Development Each Engagement Team member is up-to-date with continuing professional education requirements. The Firm encourages staff members to participate in the continuing education programs offered by the AICPA and the CalCPA Education Foundation. These classes include, among others: Basic Concepts of Governmental Accounting, Financial Reporting and Auditing Government Auditing Standards GASB Basic Financial Statements for State and Local Governments Single Audits: OMB Circular A-133 Governmental and Nonprofit Annual Update Governmental Accounting and Auditing: The Annual Update Auditing Standards: A Comprehensive Review In addition, the Firm provides comprehensive in-house training for all levels of staff. The program includes seminars developed by the Firm, educational programs developed by the AICPA and CalCPA, and on-the-job training. Every year, all professional and administrative staff members receive an annual overview and review of topics such as these: Principles of accounting and financial reporting for state and local governments Governmental fund types Newly issued U.S. generally accepted auditing standards and government auditing standards Internal control evaluation approaches, including COSO Internal Control Framework Updates on recent governmental accounting and reporting guidelines and pronouncements Single Audit requirements and approaches Risk based audit approaches Working paper techniques Current issues facing the governmental community These ongoing continuing education activities and training programs ensure the Engagement Team is highly educated, well prepared, and fully able to perform an efficient and effective audit of the District. Engagement Team Resumes East Orange County Water District deserves experienced professionals who work as a team. The Pun Group, LLP will provide qualified employees to perform the audit; no subcontractors will be used. Resumes for key Engagement Team members follow. 10

178 East Orange County Water District Proposal to Provide Professional Audit Services Paul J. Kaymark, CPA* Engagement Partner EDUCATION BS Degree in Business Administration, emphasis in Accountancy from Cal State University Long Beach AREAS OF EXPERTISE Audits Reviews Federal Compliance 200 E. Sandpointe Avenue, Suite 600 Santa Ana, California *Licensed by the State of California Paul J. Kaymark is an Audit Partner with the Governmental and Not-for-Profit Practice of The Pun Group, LLP. Prior to joining our firm, Mr. Kaymark spent over twenty-years with KPMG, McGladrey and CZFCPA in these firms governmental and not-for-profit audit services practice. Mr. Kaymark has also provided significant other services to various governmental and not-for-profit entities. In these engagements, he has been involved in the strategic planning processes, design and implementation of policies and procedures manuals and operational and organizational reviews of accounting departments. He has also been involved in the implementation of performance management budgeting and planning processes, financial reviews, trend analysis, cash management practices and utility rate setting. PROFESSIONAL & CIVIC AFFILIATIONS Member, American Institute of Certified Public Accountants (AICPA) Member, California Society of Certified Public Accountants (CalCPA) Member, Government Finance Officers Association (GFOA) Member, California Society of Municipal Finance Officers (CSMFO) GFOA Certificate for Excellence in Financial Reporting Reviewer PROFESSIONAL EXPERIENCE Metropolitan Water District of Southern California San Diego County Water Authority Imperial Irrigation District Los Angeles County Sanitation District City of Los Angeles Department of Water & Power County of Los Angeles City of Glendale Water & Power City of Long Beach City of Pasadena City of South Pasadena City of Santa Monica Mojave Water Agency Casitas Municipal Water District Hi-Soledad-Mission Water District North Marin Water District Palmdale Water District Rincon del Diablo Municipal Water District West Valley Water District Big Bear City Community Services District Stallion Springs Community Services District Monterey Regional Water Pollution Control Agency Various Airport, Cemetery, Fire and Park & Recreation Special Districts Various Not-For-Profit organizations throughout California CONTINUING PROFESSIONAL EDUCATION Various municipal accounting courses offered by the CalCPA Education Foundation including: o Governmental and Nonprofit Annual Update o Government Auditing Standards o GASB Basic Financial Statements for State and Local Governments o Single Audits: OMB Circular A-133 Has met the current CPE educational requirements to perform audits of governmental agencies. 11

179 East Orange County Water District Proposal to Provide Professional Audit Services Kenneth H. Pun, CPA*, CGMA Concurring Partner EDUCATION BS Degree in Business Administration, emphasis in Accounting from the University of California, Riverside AREAS OF EXPERTISE Audits Reviews Federal Compliance Litigation Support 1655 North Main Street, Suite 355 Walnut Creek, California *Licensed by the State of California Kenneth H. Pun is the Partner In-Charge of the Governmental and Not-for-Profit Practice and the Founder of The Pun Group, LLP. Prior to founding his own practice, Mr. Pun spent over twelve years with Caporicci & Larson, a specialty CPA firm recognized as one of California s foremost experts in governmental and not-for-profit accounting, auditing, and advisory services. Ken has more than fifteen years of public-accounting experience and has achieved with a high level of expertise from successfully working with the governmental, private, and not-for-profit sectors. Clients often engage Ken because he provides premier service, commits to completing projects quickly and accurately, and introduces innovative methods of increasing operational efficiencies and reducing costs. Mr. Pun is a trusted advisor and a leader of accounting services to governmental and not-for-profit organizations. In addition to working with clients, Ken provides the audit teams with direction and technical guidance to ensure adherence to the Firm s quality controls, and he assists with the development of the Assurance Services practice. Ken also speaks publicly on topics related to audits and quality control and shares his expertise with clients through annual educational seminars. PROFESSIONAL & CIVIC AFFILIATIONS Member, American Institute of Certified Public Accountants (AICPA) Member, California Society of Certified Public Accountants (CalCPA) Member, CalCPA Governmental Accounting and Auditing Committee Member, Government Finance Officers Association (GFOA) Member, California Society of Municipal Finance Officers (CSMFO) Speaker, CSMFO Conference (2014) GFOA Certificate for Excellence in Financial Reporting Reviewer Speaker, California Education Foundation Long Beach and Orange County Chapter Fall Series 2014 PROFESSIONAL EXPERIENCE City of Arcadia City of Calexico City of Cerritos City of Chula Vista City of Clovis City of Soledad-Mission Hot Springs City of Fairfield City of Gardena City of Placerville City of Poway City of Stockton North County Transit District San Diego Metropolitan Transit System San Diego Association of Governments Town of Danville CONTINUING PROFESSIONAL EDUCATION Various municipal accounting courses offered by the CalCPA Education Foundation and local universities including: o Governmental and Nonprofit Annual Update o Government Auditing Standards o GASB Basic Financial Statements for State and Local Governments o Single Audits: OMB Circular A-133 Has met the current CPE educational requirements to perform audits of governmental agencies. 12

180 East Orange County Water District Proposal to Provide Professional Audit Services Gary M. Caporicci, CPA*, CGFM, CFF GASB 68/71 Specialist Gary M. Caporicci has more than forty years of diversified business experience, including a specialization in audit and management consulting for government organizations. Gary s clients include public and private universities and colleges, city and county governments, state agencies, joint power authorities, healthcare agencies, transportation agencies, and special Districts. Known for his expertise in the areas of construction and government, Gary wrote the AICPA audit guides on these topics, and he has authored many audit and accounting courses for professional groups, as well as academic institutions. He frequently speaks and lectures at many professional organizations, governmental seminars, and conferences held by industry associations, other accounting firms, and universities. In addition, he authors white papers for the California Committee on Municipal Accounting. EDUCATION BS Degree in Accounting and Finance from the Armstrong University AREAS OF EXPERTISE Audits Reviews Federal Compliance Litigation Support Prior to working with the Firm, Gary founded his own accounting practice. He also spent eleven years with a Big Eight professional services firm, where he was an Audit Manager and gained broad experience in a wide range of industries such as government, construction, manufacturing, mutual funds, and insurance. Prior to that, Gary held a consultant position with a Big Four practice and was Vice President of a national insurance and financial services company. PROFESSIONAL & CIVIC AFFILIATIONS Member and Instructor, American Institute of Certified Public Accountants (AICPA) Member, Author and Instructor, California Society of Certified Public Accountants (CalCPA) Past Chair, CalCPA Governmental Accounting and Auditing Committee Chair and Speaker, CalCPA Governmental Accounting and Auditing State Conferences Member, CalCPA Council Chair, California Committee on Municipal Accounting (CCMA) Member, Government Finance Officers Association (GFOA) Member, California Society of Municipal Finance Officers (CSMFO) Member, Governmental Accounting Standards Board (GASB), Member, Deposit and Investment Risks Disclosure Task Force (GASB No. 40) National Reviewer and Speaker, Government Finance Officers Association Adjunct Professor, National University Past Member, Texas Governmental Accounting and Auditing Committee GFOA Certificate for Excellence in Financial Reporting Reviewer CONTINUING PROFESSIONAL EDUCATION 200 E. Sandpointe Avenue, Suite 600 Santa Ana, California gary.caporicci@pungroup.com Author and instructor of various municipal accounting courses offered by CalCPA Education Foundation and local universities including: o Governmental and Nonprofit Annual Update o Government Auditing Standards o GASB Basic Financial Statements for State and Local Governments o Single Audits: OMB Circular A-133 Has met the current CPE educational requirements to perform audits of governmental agencies *Licensed by the State of California 13

181 East Orange County Water District Proposal to Provide Professional Audit Services Melissa Ochoa, CPA* Engagement Manager Melissa Ochoa is a Manager in The Pun Group, LLP s Assurance division. Melissa has over fifteen years of accounting and auditing experience working with governmental agencies, not-for-profit entities, and private for profit entities. Melissa also has particular expertise in conducting financial audits under GAO Yellow Book standards and compliance audits in accordance with OMB Circular A-133. Melissa has performed audits and other attestation services for several governmental agencies throughout California including: special districts, airports, financing authorities, water, sewer, flood and sanitation districts. She has assisted these clients with publishing their Comprehensive Annual Financial Reports in compliance with GASB Statement No. 34. Melissa develops training materials and shares her expertise internally with other Firm professionals. Melissa is a frequent speaker at in-house seminars on topics related to government auditing standards and Single audits. PROFESSIONAL & CIVIC AFFILIATIONS EDUCATION BA Degree in Business Administration, Emphasis in Accounting, from California State University, Fullerton AREAS OF EXPERTISE Audits Reviews Federal Compliance 200 East Sandpointe Avenue, Suite 600 Santa Ana, California melissa.ochoa@pungroup.com *Licensed by the State of California Member, American Institute of Certified Public Accountants (AICPA) Member, California Society of Certified Public Accountants (CalCPA) Member, Member of Government Finance Officers Association (GFOA) Member, California Society of Municipal Finance Officers (CSMFO) RELEVANT PROJECT EXPERIENCE Castaic Lake Water Agency Monterey Regional Water Pollution Control Agency North Marin Water District El Toro Water District East Orange County Water District Trabuco Canyon Water District Hi-Soledad-Mission Water District Casitas Municipal Water District Soquel Creek Water District Santa Maria Airport District Gold Coast Transit Oxnard Harbor District Rancho Santa Fe Fire Protection District Coachella Valley Mosquito and Vector Control District West Valley Mosquito and Vector Control District Injured Marine Semper Fi Fund Festival of Arts of Laguna Beach Laguna Beach Seniors Irvine Chamber of Commerce Quality Drug Holdings Corporation Oschin Family Foundation Compilations and Reviews of several private entities CONTINUING PROFESSIONAL EDUCATION Various municipal accounting courses offered by the AICPA, CalCPA Education Foundation and local universities including: o Governmental and Nonprofit Annual Update o Government Auditing Standards o GASB Basic Financial Statements for State and Local Governments o Single Audits: OMB Circular A-133 o Financial Accounting Standards Board Annual Updates o Statement on Standards for Accounting and Review Services Updates Has met the current CPE educational requirements to perform audits of governmental agencies. 14

182 East Orange County Water District Proposal to Provide Professional Audit Services Frances Kuo, CPA*, CGMA Compliance Manager EDUCATION BS Degree in Business Administration, Emphasis in Accounting, from University of California, Riverside BA Degree in Economics from University of California, Riverside AREAS OF EXPERTISE Audits Reviews Federal Compliance Frances Kuo is a Manager in The Pun Group, LLP s Assurance division. Frances has over ten years of accounting and auditing experience working with governmental agencies, not-for-profit entities, and employee benefit plans. Frances also has particular expertise in conducting financial audits under GAO Yellow Book standards and compliance audits in accordance with OMB Circular A-133. Frances has performed audits and other attestation services for several municipalities throughout California including cities, counties, redevelopment agencies, public financing authorities, housing authorities, transportation agencies, and special Districts. She has assisted these clients with publishing their Comprehensive Annual Financial Reports in compliance with GASB Statement No. 34. Frances is the in-house instructor who provides training, both theoretical and onthe-job training, to lower level staff. She has developed training materials on the risk based audit approach, GASB Statement No. 34 reporting, Single Audits, and employee benefit plan audits. PROFESSIONAL & CIVIC AFFILIATIONS Member, American Institute of Certified Public Accountants (AICPA) Member, California Society of Certified Public Accountants (CalCPA) Member, California Society of Municipal Finance Officers (CSMFO) RELEVANT PROJECT EXPERIENCE City of Arcadia City of Bradbury City of Cerritos City of Soledad-Mission Hot Springs City of Gardena City of Monterey Park City of Ridgecrest Conejo Recreation and Park District Las Virgenes Municipal Water District Marina Coast Water District Mountains Recreation and Conservation Authority San Diego Transit Corporation Retirement Plan Tulare Community Health Clinic San Diego Metropolitan Transit System San Diego Association of Governments Southwestern Community College District Valley Sanitary District CONTINUING PROFESSIONAL EDUCATION 200 E. Sandpointe Avenue, Suite 600 Santa Ana, California frances.kuo@pungroup.com *Licensed by the State of California and Virginia Various municipal accounting courses offered by the AICPA, CalCPA Education Foundation and local universities including: o Governmental and Nonprofit Annual Update o Government Auditing Standards o GASB Basic Financial Statements for State and Local Governments o Single Audits: OMB Circular A-133 Has met the current CPE educational requirements to perform audits of governmental agencies. 15

183 East Orange County Water District Proposal to Provide Professional Audit Services John Aurelius is the Contracted Technology Specialist. He is a well-rounded information and technology professional experienced in analysis, design, development and management in high technology manufacturing, hardware and software companies. His broad base of experience provides him the ability to understand projects and create solutions from both general and specific perspectives. He is able to manage internal projects as well as develop and manage new customer relationships. He is also a developer who has experience in a wide range of programming languages and environments. EXPERIENCE HIGHLIGHS John Aurelius Cyber Security Expert AREAS OF EXPERTISE Technology Engineering Application Development Data Processing Programmer Analyst Placer County Sheriff s Office (Law Enforcement) Volunteer Service for the past 15 years SAR Communications Unit Leader (Search and Rescue) Designed and supervised the construction of the Mobile Command Center encompassing video and encrypted data satellite systems with secure access to CAD with DMV, criminal history, NCIC and other services. Combined with GIS and two dispatch positions, the 14 radios communicate with local, county, state and federal government radio systems. MCS Education Services (Financial Services) Chief Technology Officer Led a team of computer system developers and operators who were creating applications to support financial reporting requirements for over 70% of California s school districts. Aurand (Product Development Contract Services) Founder and CEO Director of Development Developed hardware and software systems for Voice Mail, Information on Demand, Fax on Demand, Satellite ground station control, International Callback, Web Services, Near Field Communications, Debit and Credit Card Processing, Medical Systems, Financial, Insurance and Payment Systems. Alta Research (Systems Integration) Vice President of Engineering Responsible for hardware and software design and development of telecommunications systems for Voice Mail, and Interactive Voice Response. NEC Electronic Arrays (Semiconductor Manufacturing) Management Information Systems Manager Interfaced with department level and executive management to lead a transition from centralized data processing to user managed distributed processing with central controls. Developed financial management systems to complement the production management systems Data Processing Section Head Responsible for total company computer operations staff including development, programming, training, documentation and data entry. Programmer Analyst Responsible for development and implementation of production and inventory management software in a semiconductor manufacturing environment. Led conversion from outside services to in-house systems jaurelius@528media.com IOMEC (Computer Peripheral Manufacturing) Systems Supervisor Responsible for computer operations, user education and continuing development of production and inventory management systems using company produced computer products. Production Control Analyst Responsible for analysis of inventory and production requirements of electronic and mechanical components used in computer manufacturing. Programmer Analyst Responsible for development and implementation of inventory and production management software. Developed Material Requirements Planning (MRP) software under the direction of the Director of Materials. 16

184 East Orange County Water District Proposal to Provide Professional Audit Services David Siris, CPA* Supervisor David Siris is a Supervisor for The Pun Group, LLP. He has more the seven (7) years of governmental experience that ranges from GASB audit/reporting, Internal Controls/COSO Framework, and Single Audit. David has been involved in providing significant services to various government entities and actively contributed and participated in the planning process, implementation of the audit work plan, supervision of staff, compliance testing for the Single Audit, and preparation of the Comprehensive Annual Financial Reports and other various reports. PROFESSIONAL & CIVIC AFFILIATIONS Member, American Institute of Certified Public Accountants (AICPA) Member, California Society of Certified Public Accountants (CalCPA) EDUCATION BS Degree in Finance from Cal State University Fullerton AREAS OF EXPERTISE Audits Reviews Federal Compliance Litigation Support RELEVANT PROJECT EXPERIENCE City of Arcadia California Municipal Finance Authority City of Cerritos City of Gardena City of Hermosa Beach City of Lawndale City of Loma Linda City of Lomita City of Redding City of San Clemente City of San Gabriel City of Santa Barbara County of Santa Cruz City of Santa Clarita City of Stockton United Health Centers of San Joaquin Valley CONTINUING PROFESSIONAL EDUCATION Various municipal accounting courses offered by the California Society of CPAs and local universities including: o Governmental Financial Reporting Standards and Practices o Yellow Book: Government Auditing Standards o Municipal Accounting o Single Audit Has met the current CPE educational requirements to perform audits of governmental agencies. 200 E. Sandpointe Avenue, Suite 600 Santa Ana, California david.siris@pungroup.com *Licensed by the State of California 17

185 East Orange County Water District Proposal to Provide Professional Audit Services Deana Ilagan Professional Staff Deana Ilagan is a Professional Staff for The Pun Group, LLP. She has more than six (6) years of public-accounting experience with governmental, private, and not-for-profit sectors. Governmental experience ranges from GASB audit/reporting and Internal Controls/COSO Framework. In various engagements, Deana has been involved in providing significant services to various government entities and actively contributed and participated in the planning process, implementation of the audit work plan, and preparation of the Comprehensive Annual Financial Reports and other various reports. PROFESSIONAL & CIVIC AFFILIATIONS Member, California Society of Certified Public Accountants (CalCPA) EDUCATION BS Degree in Business Administration, emphasis in Accounting from California State University, Long Beach AREAS OF EXPERTISE Audits Reviews RELEVANT PROJECT EXPERIENCE City of Garden Grove City of Palm Springs Castaic Lake Water Agency Chino Basin Water Conservation District Chino Basin Watermaster Big Bear City Community Services District Gold Coast Transit Hi-Soledad-Mission Water District Lake Hemet Municipal Water District Monterey Regional Water Pollution Control Agency Palmdale Water District Port of Hueneme Oxnard Harbor District San Lorenzo Valley Water District Scotts Valley Water District Solano Irrigation District Stallion Springs Community Services District Victor Valley Wastewater Reclamation Authority The Farm Mutual Water Company Nature Reserve of Orange County Orange County Coastkeepers Semper Fi Fund Bi-Bett Corporation Ujima Family Recovery Services CONTINUING PROFESSIONAL EDUCATION 200 E. Sandpointe Avenue, Suite 600 Santa Ana, California deana.ilagan@pungroup.com Various municipal accounting courses offered by the California Society of CPAs and local universities including: o Governmental Financial Reporting Standards and Practices o Yellow Book: Government Auditing Standards o Municipal Accounting Has met the current CPE educational requirements to perform audits of governmental agencies 18

186 East Orange County Water District Proposal to Provide Professional Audit Services Section V Similar Engagement with Other Government Entities The following engagements are ranked based on total staff hours. Please contact the following governmental agencies to learn more about their experiences working with us. Reference No. 1 Governmental Client Name: Palmdale Water District Contact Individual: Mr. Dennis Hoffmeyer Phone No: (661) Address: 2029 East Avenue Q, Palmdale, CA Year: Present Description of Services Provided: Audit and preparation of the Basic Financial Statements Reference No. 2 Governmental Client Name: El Toro Water District Contact Individual: Ms. Neely Shahbakht Phone No: (949) x 240 Address: Los Alisos Blvd., Lake Forest, CA Year: Present Description of Services Provided: Audit of the Basic Financial Statements Quarterly Agreed-Upon Procedures Engagement Reference No. 3 Governmental Client Name: Marina Coast Water District Contact Individual: Ms. Kelly Cadiente Phone No: (831) Address: 11 Reservation Road, Marina, CA Year: Present Description of Services Provided: Audit of the Basic Financial Statements Audit of Expenditures of Federal Awards in accordance with OMB Circular A-133 Reference No. 4 Governmental Client Name: Las Virgenes Municipal Water District Contact Individual: Mr. Joseph Lillio, Finance Manager Phone No: (818) Address: 4232 Las Virgenes Road, Calabasas, CA Year: Present Description of Services Provided: Audit of the Comprehensive Annual Financial Report (CAFR). Las Virgenes-Triunfo Joint Powers Authority (JPA) Reference No. 5 Governmental Client Name: San Dieguito Water District Contact Individual: Ms. Cindy Choquette, Sr. Financial Analyst Phone No: (760) Address: 505 S. Vulcan Avenue, Encinitas, CA Year: Present Description of Services Provided: Audit and preparation of the Basic Financial Statements. 19

187 East Orange County Water District Proposal to Provide Professional Audit Services Section VI Specific Audit Approach Understanding of the Scope The East Orange Water District ( District ) is requesting proposals from qualified certified public accounts to audit its financial statements for the fiscal year ending June 30, 2015, and the following two (2) years. The Firm will: Perform an audit of the general purpose financial statements, as well as supporting documentation and schedules in accordance with auditing standards generally accepting in the United States of America, and standards applicable to financial audits contained in Government Audit Standards issued by the Controller General of the United States. Issue a separate management letter that includes recommendations for improvements in internal control, operations and procedures, other significant observations that are considered to be nonreportable conditions, and management response to the recommendations. Render an opinion on the financial statements as to whether they present fairly, in all material respects, the financial position of the District and the changes in financial position in conformity with generally accepted accounting principles (GAAP), and issue an independent auditors' report stating this opinion. Test internal control over financial reporting and compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters, in accordance with Government Auditing Standards, and issue a report on their considerations. The firm will communicate immediately and in writing all irregularities and illegal acts, or indications of illegal acts, of which they become aware, to the Board President and General Manager. The partner in charge of the audit will attend two (2) meetings at which the audit report will be discussed. The auditor will assist the District in providing more meaningful and concise financial statements by seeking improved methods of reporting. Working Paper Retention and Access to Working Papers The Firm will retain, at its own expense, all working papers and reports for a minimum of (7) seven years (California Law), unless the District notifies the Firm writing of the need to extend the retention period. Upon request, the Firm will make working papers available to East Orange County Water District or other governmental agencies included in the audit of federal grants. The Firm will comply with reasonable inquiries from successor auditors and allow them to review working papers that relate to matters of continuing accounting significance. 20

188 East Orange County Water District Proposal to Provide Professional Audit Services Proposed segmentation of the engagement The audit will be performed in four phases: Initial Planning Meeting: The Engagement Partner and Manager will meet with District s Management to get up to speed with District policies and procedures, establish any specific requirements Management may have identification of unique transactions, implementation of new GASB pronouncements and develop the audit work plan for the engagement. Interim: The Engagement Team including the Engagement Partner will assess accounting policies adopted by the District, obtain an understanding of the District and its operating environment, review internal controls on all significant transaction classes, perform walkthroughs and/or tests of internal control, perform preliminary analytical procedures, evaluate Single Audit compliance (if needed), identify any audit issues, and prepare confirmation correspondence. The Engagement Team and District Management will establish expectations including responsibilities and assignments for the year-end audit, and will hold a progress status meeting at the end of the Interim phase. Year-End: The Engagement Team including the Engagement Partner will conduct audit procedures on account balances in the general ledger, finish confirmation procedures, perform preliminary analytical procedures, search for unrecorded liabilities, perform substantive analytical review procedures, complete work on compliance with Federal Assistance, and conclude fieldwork. The Engagement Team and District Management will hold an exit conference at the end of the Year-End phase. Reporting: The Firm will review and prepare audit reports and perform quality control procedures in accordance with the Quality Control Standards issued by the AICPA. We will also review reports for compliance with GFOA reporting guidelines at no additional cost. Any comments will be issued in a letter to Management. At the District s request, the Engagement Partner, Concurring Partner, and Managers will present the audit to the District s governing body. The Firm will complete the audit fieldwork and issue all reports within the established timeframe, assuming no internal or external (CalPERS GASB No. 68 Reporting) District circumstances delay the audit. Objectives of Our Services Our primary objective for the proposed audit is to examine the District s financial statements and express our opinions on their fairness of presentation, in accordance with generally accepted accounting principles. Other objectives that will benefit the District include the following: To offer beneficial observations and recommendations about policies and procedures for accounting and operating controls. To identify opportunities to make District operations more efficient and reduce costs. To perform the audit efficiently and effectively, so disruption to office operations is minimized. To provide continuing advisory services to help the District implement recommendations. To meet these objectives at no additional cost to the District. The Engagement Team will perform the audit in accordance with the Firm s quality-control procedures, which include following standard audit programs, careful planning, using industry-standardized software for auditing and internal control documentation, and welcoming an objective review of audit work. The Firm will supply portable computers and second monitors to the onsite staff members. Our audit approach emphasizes careful planning, open communication, and proper assignment of responsibilities. This method ensures that audit requirements will be met with minimal disruption of the District s daily operations, and that the audit will proceed efficiently with full understanding between the Engagement Team and the District. 21

189 East Orange County Water District Proposal to Provide Professional Audit Services Project Schedule In order to accomplish our audit objectives and meet your deadlines for delivery, the sequence and timing of our procedures are critical. Interim work is to be performed during May - June (District preference of dates); final fieldwork to be performed and completed during August September (District preference of dates); and delivery of the Final Drafts of auditor s opinions on the financial statements and Management Letter no later than October 15 th per District requirements. The delivery of the final auditor s report and management letter is to be delivered by December. Timing April - June (schedule meeting during this period) During May - June (2 to 3 days scheduled during this period at the District's convenience) During August - September (2 to 3 days w orking days during this period) By October 15th By December Activity Conduct audit entrance conference. Perform preliminary procedures including: transition efforts, initial control assessments, minute and contract/major agreement review, major transaction review, conduct EDP review, final controls assessment, determination of specific audit procedures, provide finance department w ith audit plan and listing of audit schedules required, conduct progress conference w ith key Finance personnel. Commence audit fieldw ork and execute detailed audit plan, conduct progress conference w ith key Finance personnel. Present drafts of the Annual Financial Report Opinions, Management Report, Other Letters and conduct an exit conference. Present report to the Board of Directors and Management Deliver five (5) copies of the Financial Statements, related reports, and management letters. Present Final Financial Statements to the Board of Directors Level of staff and number of hours to be assigned to each proposed segment of the engagement We understand that the District is looking for value in the professional relationship they have with their auditors. Value comes from the knowledge, experience and dedication that the auditing firm employs. We stress employ because all of the knowledge and expertise shown on paper will not benefit you unless it is applied. This application equates to time spent. We have developed an hours plan that we feel will accomplish the objectives of the District and meet your particular needs. We have used the information you have shared with us and our experience over the years auditing other governmental entities including cities of a similar size and nature to develop an effective and efficient plan for all major areas. 22

190 East Orange County Water District Proposal to Provide Professional Audit Services Total Hours: Staff Classification Performing Work Estimated Hours Annually Partners 10 Managers 30 Supervisory Staff 38 Professional Staff 10 Total Annual Hours: 88 Hours by Audit Phase Hours Phase I - Planning 8 Phase II - Interim 25 Phase III - Year End 35 Phase IV - Reporting 20 Total Annual Hours: 88 Extent to which statistical sampling is to be used in this engagement and the sample size In our audit approach, statistical sampling is used in conjunction with our skilled judgment and knowledge of each situation. The population size and assurance level needed from any given test will determine the sample size used in our testing. Type and extent of analytical procedures to be used in the engagement We use analytical procedures during the interim phase to set up expectations for the year-to-date results and balances and compare them with budgeted and prior-year amounts. This allows us to forecast year-end amounts, reducing the workload during the year-end phase and allowing us to focus on areas of concern. We also use trend and ratio analysis to identify any uncertain or unusual events. In order to perform these analysis, our firm performs a survey of special districts and counties and develops benchmarks on certain key financial indicators, such as cost of services to tax revenues ratios, average general fund balance, capital assets, debt per capital, general fund unassigned fund balance to total general fund expenditures, etc. Our staff members have the knowledge and experience to effectively use analytical procedures to the District s benefit. Approach to be taken to gain and document an understanding of East Orange County Water District s internal control structure Audit risk assessment will be established by an internal control review, combined with the Engagement Team s understanding of the District s operations and accounting software. Using the Committee of Sponsoring Organizations (COSO) Framework, staff members will evaluate the District s processes and identify any control deficiencies. These diagnostic review procedures allow the Engagement Team to evaluate the District s systems and controls and to provide constructive feedback to District Management. The Engagement Team will perform a walkthrough of the District s accounting systems, including processes for financial reporting, revenue recognition and cash receipts, purchasing/contract management and cash disbursements, and payroll and related liabilities, etc. Auditors will document the process with flowcharts or narrative summary. 23

191 East Orange County Water District Proposal to Provide Professional Audit Services Approach to be taken in determining laws and regulations that will be subject to audit test work The Firm stays continually up to date with audit requirements including new regulations, compliance supplements, state guidelines, and pertinent contracts to ensure that we conduct audits in accordance with applicable laws and regulations. We test transactions for compliance with the Single Audit Act and California Government Code provisions of applicable grant guidelines, requirements of local measures, etc. For example, the Single Audit Act requires that we determine which grants to include in our audit and select transactions from those grants for detailed testing. While most transactions are tested as part of the Interim phase, we cannot determine which grants to test for the Single Audit until the Year-End phase of audit. Our compliance audits of cash, investments, debt covenants, and other areas are performed in accordance with the California Government code, which has many provisions and regulations covering investments. Approach to be taken in determining audit samples for purposes of compliance testing. To test compliance, we follow the AICPA s Audit Sampling Considerations of Circular A-133 Compliance Audits. We will select an appropriate sample size based on our professional judgment and knowledge. Any deviations from control and compliance requirements will be documented. 24

192 East Orange County Water District Proposal to Provide Professional Audit Services Section VII Identification of Anticipated Potential Audit Problems While we do not expect any problems with the audit, we will carefully investigate and monitor the following common problem areas: Investments: o Compliance with GASB 31 and GASB 34 o Authorization and approval process for District investments o Controls to assure District s compliance with investment limitations and types of specific investments o Monitoring by the District of its investments Financial Reporting: o CAFR compliance with current reporting and disclosure requirements issued by GASB o CAFR eligibility for financial reporting conformance awards issued by GFOA o Compliance with the various GASBs in effect o Compliance with infrastructure obligations and regulatory provisions Internal Control Structure: o District s internal control functions and compliance with proper internal control philosophies o Computer-system processes and controls, and adequacy of the control environment Over the period of this proposal, several new GASB pronouncements will become effective. The Engagement Team will pay specific attention to the following new and upcoming pronouncements, and any others that become effective during the proposal period, in order to determine proper implementation procedures: GASB 68 Accounting and Financial Reporting for Pensions an amendment of GASB Statement No. 27 GASB 69 Government Combinations and Disposals of Government Operations GASB 71 Pension Transition for Contributions Made Subsequent to the Measuring Date GASB 68 and 71 Implementation Gary M. Caporicci, the Engagement Concurring Partner, has tremendous expertise in assisting clients with the implementation of GASB Statement No. 68, Accounting and Financial Reporting for Pensions, and Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date an amendment of GASB Statement No. 68. Clients of the Pun Group will benefit from his expertise during the entire process of implementation of these Standards throughout the engagement. Description: Designed to present the New Pension Standards from the Governmental Auditing Standards Board (GASB). These standards are effective for fiscal years beginning after June 15, 2014 and are applicable to all State and Local government agencies. This program will cover the following standards, as well as any updates. o o GASB No. 68, Accounting and Financial Reporting for Pensions GASB No 71, Pension Transition for Contributions Made Subsequent to the Measurement Date an amendment of GASB Statement No. 68 Objectives: Understand the accounting depth and financial reporting impact of the New Pension Standards Review the accounting and financial reporting of significant accounts including: Total Pension Liability Net Pension Liability Deferred Outflows and Deferred Inflows of Resources Net Fiduciary Position Pension Expense Present and thoroughly review the audit implications and solutions for the retirement systems auditor s and the local government agencies auditor. 25

193 East Orange County Water District Proposal to Provide Professional Audit Services Major Topics: Accounting and financial reporting, including expanded Note Disclosures and Required Supplementary Information Identify and explain critical dates for implementation Understand and describe the actuary s role as to key dates and actuarial information Client Training Seminar Also, every year, the Firm hosts a conference to update governmental clients on new technical accounting and financial issues. The day-long session held in Clovis, San Diego, Cerritos, and Danville qualifies for eight hours of CPE with the California Board of Accountancy. Participants in the most recent training seminar received a high-level examination of numerous technical issues, including the following: New and anticipated Pronouncements issued by Governmental Accounting Standards Board (GASB) and future issues under consideration by GASB Fraud in Government Current Development in Marijuana Dispensaries and Related Internal Control Concerns What you need to know, as an auditee, for your 2014 Single Audits, including the OMB Circular A-133 Compliance Supplement Discussion of GASB Statements No. 67 and 68, Accounting and Financial Reporting for Pension Plans Overview of the Survey of Cities and Counties Importantly, all of our clients are invited to attend to the Pun Group, LLP client training seminar FREE OF CHARGE. 26

194 East Orange County Water District Proposal to Provide Professional Audit Services Section VIII Bidding Proposal Certification We are committed to the performance of a high quality audit at the most reasonable fee level possible, both initially and throughout the engagement. Also, both partners will provide advice and consultation as needed, at no additional cost to the East Orange County Water District. Name of Firm: The Pun Group, LLP Certified Public Accountants and Business Advisors 200 East Sandpointe Avenue, Suite 600 Santa Ana, California Certification: Kenneth H. Pun is entitled to represent the Firm, empowered to submit the bid, and authorized to sign a contract with the East Orange County Water District. Total All-Inclusive Maximum Price Following are our total not-to-exceed fees for each of the three (3) years of the engagement (FY ), per District s request: Service East Orange County Water District Financial Audit, and related reports $ 12,000 $ 12,000 $ 12,000 Annual State Controllers' Report Preparation $ 500 $ 500 $ 500 Total for fiscal year (not-to-exceed) $ 12,500 $ 12,500 $ 12,500 Rates for Professional Services Below is detailed information regarding the estimated number of hours and rates to be dedicated to the City s engagement, delineated by staffing level. Financial Audit Hours Rate Fee Partner 10 $ $ 1,750 Manager 30 $ ,500 Supervisor 38 $ ,750 Staff 10 $ ,000 Grand Total 88 $ 12,000 27

195 East Orange County Water District Proposal to Provide Professional Audit Services Rates for Additional Professional Service The Firm s policy is to maintain flexible billing rates in order to meet the needs of clients and help them control costs. In the interest of the start of our long-term relationship, we will absorb all costs required to familiarize ourselves with the operations and accounting systems, as well as, travel, typing, clerical and printing costs. Additionally, our Partners will be available to provide advice and consultation as necessary to the East Orange County Water District. These costs will also be absorbed by the Firm. Any supplemental reports, audits, or agreed-upon procedures not covered by this proposal may be added in a written addendum/agreement prior to commencing audit work. The Firm and the District shall discuss and approve the scope and associated costs of these tasks. Any additional work will be performed at the same rates set forth on the schedule of fees and expenses included in the above cost proposal. Manner of Payment Engagement Team members are required to maintain timesheets detailing the date, number of hours, and work performed for every audit task. The Firm will collect these timesheets and bill East Orange County Water District, at the rates outlined in this proposal, in three stages: at the conclusion of the interim phase, at the conclusion of the Year-End phase, and after presentation and acceptance of the final audit reports. Billing is based on a percentage of completion of content. Interim billings will cover a period not less than a calendar month. The billing amounts generally break down as follows: Work Performed % of Proposal Amount For Planning 10% For Interim w ork 40% For year end w ork 40% At Presentation and Acceptance of Final Reports 10% Total 100% 28

196 East Orange County Water District Proposal to Provide Professional Audit Services Benefits of Choosing The Pun Group, LLP The Pun Group, LLP is known for its professionalism, integrity, and ability to guide clients through their unique challenges. Firm policy emphasizes providing personalized client service, so our carefully chosen engagement teams are led by an experienced partner who is directly involved in the work. This philosophy allows us to provide a superior level of service. We trust that this proposal has given you the information you need about the Firm, the Engagement Team members, overall audit approach, cost-saving measures, and audit fees. We are committed to exceeding your expectations, and we look forward to bringing our experience and expertise to the East Orange County Water District and providing you with the excellent level of service that you expect and deserve. Thank You Thank you for giving us the opportunity to introduce the Firm and submit our qualifications to provide you with audit services. Please direct inquiries to: Mr. Kenneth H. Pun, CPA, CGMA Managing Partner 200 East Sandpointe Avenue, Suite 600 Santa Ana, California ken.pun@pungroup.com (949) Sincerely, The Pun Group, LLP Certified Public Accountants and Business Advisors 29

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198 APPENDIX Proof of Insurance 31

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200 East Orange County Water District Proposal to Provide Professional Audit Services 33

201 PRINCIPLES EXPERIENCE KNOWLEDGE COMMITMENT

202 MEMO TO: BOARD OF DIRECTORS FROM: GENERAL MANAGER SUBJECT: CONFERENCE AND MEETING ATTENDANCE REQUEST DATE: APRIL 16, 2015 BACKGROUND Pursuant to District Resolution No. 658, prior authorization for Board Member conference/meeting attendance and travel is required. There are two upcoming events that Board Members may wish to attend: MWDOC Elected Officials Forum Wednesday, April 29, 2015 Registration: Free Location: MWDOC Office, Fountain Valley Association of California Cities- Friday, June 12, 2015 Orange County, Infrastructure Registration: $ Summit Location: Hilton Hotel, Costa Mesa Information regarding the Forum and the Infrastructure Summit is attached. RECOMMENDATION The Board approve attendance at the MWDOC Elected Officials Forum for designated Board Members as desired.

203 Please Join Us We would like to invite you to join us for our semiannual Elected Officials' Forum on Thursday, April 29, This meeting will focus on: MWDOC Annual Budget for Fiscal Year (You can access our budget using this link: We strive to provide an educational and relevant experience for all attendees and we are soliciting your input. In addition to the agenda items above, we would like to know what other topics interest you. If you have additional items you would like to discuss, please let us know through the registration link. ~Please register all attendees~ When: Register Now Thursday, April 29, :00 p.m. to 8:00 p.m. *Due to the hour, a modest meal will be provided. Where:

204 Logistics We request that each City and Water District designate one elected official to attend the meeting as their official representative. Other elected officials or staff are of course, welcome to attend. We will be providing a modest meal of sandwiches, beverages, and light snacks. The meeting will begin at 6:00 p.m. In order to provide name plates and sufficient seating, please register all attendees using the link provided in the sidebar, or contact Pat Meszaros at (714) or pmeszaros@mwdoc.com. Who We Are The Municipal Water District of Orange County (MWDOC) is the wholesale water provider and resource planning agency for all of Orange County (with the exception of the cities of Anaheim, Fullerton, and Santa Ana). Our efforts focus on sound planning and appropriate investments in water supply development, water use efficiency, public information, water education, emergency preparedness, and legislative advocacy, including Metropolitan representation and rate development. MWDOC serves Orange County through twenty-seven water retailers and the Orange County Water District. Learn More. MWDOC Board Room Ward Street Fountain Valley, CA Directions RSVP Contact: Pat Meszaros Senior Executive Assistant (714) pmeszaros@mwdoc.com Additional Questions or Suggestions: Rob Hunter General Manager (714) rhunter@mwdoc.com Stay Connected

205 Association of California Cities- Orange County PRESENTS Friday June 12, :30 AM to 1:30 PM Hilton Orange County/ Costa Mesa 3050 Bristol St, Costa Mesa, CA EARLY BIRD RATE Ends April 15 Early Bird ACC-OC Member Ticket: $115 Early Bird Non-Member Ticket: $ Your Future is Now featuring infrastructure panels Street Cars for Orange County Now Desalination: Beyond Water 101 Planning Ahead for Regional Infrastructure REGULAR RATE Begins April 16 and Ends May 31 ACC-OC Member Ticket: $135 Non-Member Ticket: $172 LATE RATE Begins June 1 ACC-OC Late Member Ticket: $150 Non-Member Late Ticket: $192 Sponsorship Opportunities Available For more information or to RSVP please contact Randall Avila at events@accoc.org or (949) In Collaboration with Sponsored by

206 Featured Panels *More panelists to be announced Street Cars for Orange County Now Desalination: Beyond Water 101 Planning Ahead for Regional Infrastructure Hon. Miguel Pulido Mayor of Santa Ana Natalie Meeks Public Works Director of Anaheim Joe Geever Surfrider Foundation of California Scott Maloni Poseidon Water Hon. Mark Kersey San Diego City Councilmember Darrell Johnson OCTA CEO Dr. Allan Bernstein Tustin City Councilmember MODERATED BY Hon. Curt Pringle Former Speaker of the California State Assembly and Former Mayor of Anaheim Event Sponsors PLATINUM GOLD SILVER

207 Sponsorship Opportunities Platinum Sponsor $3,000 Four (4) Event Tickets: One (1) head table seat with a key transportation leader and three (3) general admission tickets One (1) Copy of the ACC-OC City Directory Two-page company ad in the event program Company logo featured on all 2015 City Infrastructure Summit s One vendor booth Company logo on event signage Company logo featured on screens throughout the event Verbal recognition during the event program Gold Sponsor $2,000 Three (3) Event Tickets: One (1) head table seat with an ACC- OC Board Member and two (2) general admission tickets Two-page company ad in the event program One vendor booth Company logo on event signage Company logo featured on screens throughout the event Verbal recognition during the event program Silver Sponsor $1,000 Two (2) Event Tickets One-page company ad in the event program One vendor booth Company logo on event signage Company logo featured on screens throughout the event Verbal recognition during the event program Bronze Sponsor $500 One (1) Event Ticket Half-page company ad in the event program One vendor booth Company logo on event signage Company logo featured on screens throughout the event Verbal recognition during the event program SPONSOR AND INDIVIDUAL TICKET REGISTRATION Friday, June 12, :30 AM to 1:30 PM YES! I/We would like to sponsor/attend the 2015 City Infrastructure Summit: Platinum Sponsor ($3,000) Gold Sponsor ($2,000) Silver Sponsor ($1,000) Bronze Sponsor ($500) I would like to attend, please reserve tickets. Name Company Title Address City State Zip Phone To contribute by credit card, please circle/check and complete the following: Amex Discover Mastercard Visa Name on Card Amount $ Card Number Exp. Date Security Code For more information on sponsorships, please contact Randall Avila at events@accoc.org or (949)

208 MEMO TO: BOARD OF DIRECTORS FROM: GENERAL MANAGER SUBJECT: LOCAL SEWER TRANSFER MARCH STATUS UPDATE DATE: APRIL 16, 2015 ACTIVITIES UPDATE Outreach & Communications On March 25th, President VanderWerff, Director Davert and General Manager Ohlund met with Mesa Water Board Members Shawn Dewayne and Ethan Temianka and General Manager Paul Shoenberger to discuss, among other items, the District s application for the transfer of Sewer Area #7 sewers. OCSD Superintendent Mendzer continues to meet with OCSD field supervisor Doug Rech on at least a weekly basis to review the prior week s work and contractor performance. General Manager Ohlund discussed the District s application and review status with OCLAFCO with OCSD General Manager Jim Herberg. OC LAFCO President VanderWerff and General Manager Ohlund attended the March 20 th OCLAFCO Strategic Plan Meeting. LAFCO staff reviewed their workplan for the upcoming year including key focus areas in the unincorporated islands, South Orange County governance, the Fiscal Trends Program and the next round of Municipal Service Reviews. LAFCO staff s schedule anticipates that the EOCWD sewer transfer application will come before the Commission in May. RECOMMENDATION Information item only; no action required.

209 MEMO TO: BOARD OF DIRECTORS FROM: GENERAL MANAGER SUBJECT: WHOLESALE AND RETAIL ZONE WATER DEMANDS MARCH 2015 DATE: APRIL 16, 2015 Wholesale Zone Water Demands Attached is a graphical representation of the Wholesale Zone water demand through March 31, Total water sales for the month of March totaled AF; total year-to-date sales are 3, AF. This is a 41 AF or 11% increase in demand from March, Retail Zone Water Demands Please note that MWDOC has changed the format of the Retail Zone Water Usage Report effective November 1, Page 1 of the report is an overview of the sources of water supply and our monthly usage. Currently, all water used for the RZ is groundwater. Since the beginning of the 2014/15 water year, imported water has provided only 2% of the total supply, while groundwater provides 98%. Due to the EOCWD participating in the Coastal Pumping Transfer Program (CPTP), our groundwater usage is much higher currently than it has been historically. Page 2 of the report depicts our 10-year water usage and how much of this was groundwater versus imported water. As shown on this graph, after several years of declining water demand, last year s demand is approaching our 10 year average. We expect that this will decrease this year due to the enhanced conservation required under the drought. Page 3 provides a comparison of water demand versus precipitation, water demand versus average high temperature and water demand versus unemployment rates. As would be expected, generally in wet years, demand is lower than in dry years, whereas average temperature doesn t have as much of a cause/effect relationship. There does appear to be a slight relationship between unemployment rates and water demand, with increasing demand occurring as unemployment rates decrease. As shown on Page 4, total demand for the month of March was 72 AF; this is 3 AF (5%) higher than our demand for February 2014 and 5 AF or (7%) higher than our average demand for the last 6 years. Also attached are graphs depicting the Retail Zone s water demand; they have deleted Page 5 that graphed our historic water use by year and added a table that shows "gallons per capita per day" or GPCD. The table shows our residents per person, per day water consumption for the month of March 2015 (234) compared to the March 2014 (223). This number is derived by dividing the total amount of water used by the population (a number calculated by the Center for Demographics at Cal State Fullerton). For comparison, the average GPCD for the South Coast area of California is 176 GPCD (Source: Department of Water Resources).

210 Wholesale Zone Water Demand Total Monthly Sales for March, 2014 =389.41AF Total YTD Sales for July - March 2015 = 3, AF EOCWD GSWC IRWD Orange Tustin Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 2/1/205 Mar-15

211 East Orange County Retail Zone Water Usage Report East Orange County Retail Zone Overview of Usage FY Monthly Water Use Type of Supply July August September October November December January February March April May June Total MWDOC OCWD Pumped GW Total MWDOC Usage Sources of Water Supply MWDOC Calendar Year and Fiscal Year Purchases OCWD Pumped GW 72% MWDOC 28% ACRE FEET Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Total Water Supply Sources Monthly Usage (AF) July August September October November December January February March April May June OCWD Pumped GW MWDOC prepared by Municipal Water District of Orange County * Numbers are Subject to Change 4/10/2015

212 East Orange County Retail Zone Water Usage Report Annual Water Usage Type of Supply Average MWDOC OCWD Pumped GW Total 1,105 1,120 1,233 1,186 1,151 1, ,011 1,037 1,073 1,091 1, Year Water Supply Sources 10 Year Average 1,091AF 1,200 1,000 Total Usage (AF) Year Average 1, , , , , , , , , , OCWD Pumped GW MWDOC 10 Year Average prepared by Municipal Water District of Orange County * Numbers are Subject to Change 4/10/2015

213 East Orange County Retail Zone Water Usage Report Water Usage Variables Type of Supply Average Rain Fall (inches) Avg High Temp (F) LA Unemployment % 5.5% 4.6% 4.4% 5.5% 9.1% 11.6% 11.7% 10.9% 9.5% 8.2% 8.1% Total Water Usage 1,105 1,120 1,233 1,186 1,151 1, ,011 1,037 1,073 1,091 1, Year Water Usage VS Precipitation (SNA #121 Station) 35 Total Usage (AF) 1,200 1,100 1, Precipitation (Inches) Total Water Usage Rain Fall (inches) Total Usage (AF) 1,300 1,200 1,100 1, Year Water Usage VS Average High Temperature (Santa Ana Fire Station) Temperature (F) Total Water Usage Avg High Temp (F) 1,300 1, Year Water Usage VS L.A. Metro Annual Average Unemployment Percentages 0% 2% Total Usage (AF) 1,100 1, % 4.6% 4.4% 5.5% 9.1% 11.6% 11.7% 10.9% 9.5% 8.2% 4% 6% 8% 10% 12% Unemployment % Total Water Usage LA Unemployment % 14% prepared by Municipal Water District of Orange County * Numbers are Subject to Change 4/10/2015

214 East Orange County Retail Zone Water Usage Report East Orange County Retail Zone Detailed Usage 10 Year Monthly (Fiscal Year, July-June) Fiscal Year July August September October November December January February March April May June Total Usage , Usage , Usage , Usage Usage , Usage , Usage ,073 Average of Last 6 FYs ,044 Monthly Usage Percentage 11% 11% 10% 9% 8% 5% 7% 5% 6% 8% 9% 10% 100% Water Usage By Source Imported July August September October November December January February March April May June Total MWD via EO Wholesale CPTP Imported Total Local July August September October November December January February March April May June Total OCWD Pumped GW Less CPTP (27.1) (28.6) (21.6) (26.3) (21.2) (11.4) (15.8) (15.5) (20.2) (187.7) Local Total Total Usage FY versus FY % -4% -8% -1% -14% -38% -27% -16% +5% Water Usage VS Water Usage Last FY Current FY 6-Year Average 100 ACRE FEET July August September October November December January February March April May June prepared by Municipal Water District of Orange County * Numbers are Subject to Change 4/10/2015