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Reso 1222-06/2004RESOLUTION NO. 1222 RESOLUTION OF THE BOARD OF DIRECTORS OF THE VALLECITOS WATER DISTRICT APPROVING AMENDMENT OF THE REVISED BASIC AGREEMENT TO ADDRESS PHASE V COST ALLOCATION WHEREAS, the Encina Wastewater Authority ("EWA") is proceeding with design and construction of an expansion of the Encina Water Pollution Control Facility in order to increase the capacity of the Joint System, known as Phase V; and, WHEREAS, section 17 of the "Revised Basic Agreement for Ownership, Operation and Maintenance of a Joint Sewage System" ("RBA") provides for allocation of capital expenses among the member agencies; and, WHEREAS, section 11.1.2 of the RBA provides that it is the responsibility of the Joint Advisory Committee to review and make recommendations regarding the proposed expansion of the Joint System to the governing bodies of the member agencies; and, WHEREAS, the RBA makes no provision for the allocation of the capital costs of Phase V facilities; WHEREAS, it is in the best interests of the member agencies that a cost allocation for Phase V facility construction costs be included in the RBA; and WHEREAS, the Board of Directors of Encina Wastewater Authority unanimously adopted EWA's Resolution No. 2004-16 amending the RBA to include the provision for said cost allocation; NOW, THEREFORE, BE IT RESOLVED: 1. The Vallecitos Water District approves the following amendments to the RBA: a. Section 17.3 is hereby added to the RBA to read: 17.3 Phase V Expansion. Phase V contract expenses approved by the Operator/Administrator shall be paid once a month based on invoices from the contractor or contractors, engineers, construction manager and any other consultants. Unless otherwise specified, capital expenses shall be paid on a quarterly basis by the member agencies. The Operator/Administrator shall notify the member agency financial representatives of the amounts needed, and whether supplemental capital billings will be required. Upon completion and acceptance of all work authorized by the Operator/Administrator as part of the Phase V Expansion, a final adjustment shall be calculated and paid in accordance with Exhibit D. Exhibit D is hereby added to the RBA to read as provided in "Exhibit D," attached hereto. Resolution No. 1222 Page 2 These amendments shall be effective as of the first date that all member agencies have granted approval. A certified copy of this resolution shall be forwarded to EWA immediately upon its approval. PASSED, APPROVED AND ADOPTED by the Board of Directors of the Vallecitos Water District at a regular meeting held on the 16th day of June, 2004 by the following roll call vote: AYES: NOES: ABSTAIN: ABSENT: ATTEST: CRUZ, DAVY, HANNAN, FERGUSON Margar E. Ferguson, esi en Board ~f~DEirectors Vallecitos Water District William W. Rucker, Secretary Board of Directors Vallecitos Water District Resolution No. 1222 Page 3 Encina Wastewater Authority Revised Basic Agreement Exhibit D Allocation of Phase V Capital Improvements The cost of Phase V Capital Improvements shall be allocated by unit process and among flow, Bio-chemical Oxygen Demand (BOD) and Total Suspended Solids (TSS) in the manner recommended for revenue programs by the State Water Resources Control Board as amended by action of the Encina Wastewater Authority (EWA) member agencies, Joint Advisory Committee and Board of Directors and as follows: 1. The replacement value of the existing Unit I and Unit J facilities at the mid-point of construction shall be determined and, in addition, each member agency's share thereof shall be determined. a. Replacement value shall be calculated for all Unit I and Unit J facilities remaining in service at Phase V project acceptance including: Pre-Phase III; Phase III; Phase IV including interim flow equalization facilities transitioning from Unit J to Unit I; and, Post Phase IV including the Building Program and Joint Use Flow Equalization. b. The replacement value of each facility shall be calculated by multiplying the original cost of that facility by the percentage change in the Engineering News Record Construction Cost Index for Los Angeles (ENRLA) from the year that facility was placed in service then adding the resulting product to the original cost of the subject facility. c. Mid-Point of Construction shall be the date half-way between the date EWA issues a Notice to Proceed on the largest single Phase V Project construction contract and the date the EWA Board of Directors takes action to accept that contract as completed. d. Each member agency's current ownership percentage (COP) of the replacement values for existing facilities shall be calculated by multiplying total Unit I Flow, Unit I Solids and Unit J Disposal replacement values by each member agency's Unit I Liquid, Unit I Solids or Unit J Disposal percentage capacity rights as stated in Section 9.1 of the RBA. 2. Based upon wastewater flow projections developed and refined by the member agencies, required ownership percentages (ROP) shall be determined and, in addition, each member agency's share of existing facilities at replacement value determined in Step 1 shall be restated to conform to their respective ROP. a. Flow projections shall be provided by the member agencies and shall not be changed to alter the allocation of Phase V costs hereunder after the member agencies have unanimously approved this amendment to the Revised Basic Agreement (RBA). b. ROP shall be calculated by dividing a member agency's wastewater flow projection by the total of all member agencies wastewater flows. c. Each member agency's share of the replacement values for existing facilities shall be calculated by multiplying total Unit I Flow, Unit I Solids and Unit J Disposal replacement values by each member agency's ROP of Unit I Liquid, Unit I Solids or Unit J Disposal. 3. An estimated debit or credit shall be calculated for each member agency to pay for, or receive payment or credit for, investments in existing Unit I and Unit J facilities and thereby reallocate ownership of existing facilities at replacement value among the member agencies in conformance with their respective ROP as determined in Step 2. a. Where any member agency's ROP for Unit I Liquid, Unit I Solids or Unit J Disposal is greater than its COP for Unit I Liquid, Unit I Solids or Unit J Disposal, an estimated debit shall be calculated and assessed to that member agency's account for that unit process. Resolution No. 1222 Page 4 b. Where any member agency's ROP for Unit I Liquid, Unit I Solids or Unit J Disposal is less than its COP Unit I Liquid, Unit I Solids or Unit J Disposal, an estimated credit shall be calculated and credited to that member agency's account for that unit process. c. The debit or credit shall be calculated by subtracting each member agency's share of the replacement values for existing facilities (determined in Step 1 d ) by unit process from that member agency's share of the ROP (determined in Step 2c) by unit process. d. Upon conclusion of this step for each unit process, each member agency's estimated share of all Pre- Phase III, Phase III, Phase IV and Post-Phase IV Unit I and Unit J costs for facilities placed into, and remaining in, service as of the most recent fiscal year end prior to Phase V project acceptance shall be combined with the Phase V Project construction costs estimated in Step 4, to determine each member agency's estimated Phase V Project cash requirements. The total cost of the Phase V facilities at mid-point of construction shall be estimated by the design engineer. As of July 1,2004 Phase V facilities construction costs are estimated at $36.1 million. These costs shall be allocated to member agencies on the basis of each member agency's ROP. Each member agency's share of the total cost of the Phase V Project shall be calculated by adding the member agency's debit or credit as determined in Step 3 with the member agency's share of Phase V costs as determined in Step 4. These amounts as of July 1,2004 are as follows (amounts in thousands of dollars): Estimated Estimated Total Estimated Replacement Existing Phase V Cash Value of Existing Facilities Debit or Estimated Phase Required by Ownership (Credit) V Facilities Costs Member Agency Vista $43,309 $7,270 $8,938 $16,209 Carlsbad $49,724 $(1,088) $ 8,595 $7,507 Buena $16,742 $(2,521 ) $2,513 $(8) Vallecitos $40,565 $4,789 $8,590 $13,379 Leucadia $40,998 $(7,294) $5,956 $(1,338) Encinitas $9,689 $(1,156) $1,508 $352 Total $201,026 $0 $36,100 $36,100 Final Phase V cost allocations shall be determined, and member agency accounts shall be adjusted in accordance with Section 17.3 of the RBA, following completion of Phase V construction and shall use the method described hereinabove except that actual figures shall be used including: existing facilities based on the most recently completed independent financial audit; project costs based on actual amounts paid according to EWA's financial records; and, actual ENRLA at the defined mid-point of construction.