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17-0701_MUNICIPAL WATER DISTRICT OF ORANGE COUNTY_Agenda Report_E12TO : FROM : City of San Juan Capistrano Agenda Report Honorable Mayor and Members of the City Council ~n Siegel, City Manager SUBMITTED BY : Steve May, Public Works & Utilities Director ,dfUA._ PREPARED BY: Noreen Swiontek, Senior Management Analyst DATE : August 1, 2017 8/1/2017 E12 SUBJECT: Consideration of an Agreement Addendum and an Amendment Discontinuing Participation in Municipal Water District of Orange County Turf Removal Rebate Program and Continuing Other Water Conservation Programs RECOMMENDATION: 1. Approve and authorize submittal of Addendum 3B to the Water Conservation Participation Agreement with the Municipal Water District of Orange County (MWDOC) discontinuing participation in the MWDOC Turf Removal Rebate Program; and 2. Approve and authorize the City Manager to execute Amendment No. 1 to the Water Conservation Participation Agreement with MWDOC revising provisions for water conservation programs. EXECUTIVE SUMMARY: In August 2015 the City entered into a Water Conservation Participation Agreement with the Municipal Water District of Orange County (MWDOC) whereby MWDOC provides funding for water conservation programs and the City assists with administering the programs. MWDOC is requesting an Amendment to the Agreement to revise provisions for the various water conservation programs. In addition, staff is recommending an Addendum to the Agreement to discontinue the Turf Removal Rebate Program. The original Agreement, Amendment No. 1, and Addendum 3B are included as Attachments 1, 2, and 3, respectively. City Council Agenda Report August 1, 2017 Page 2 of 3 DISCUSSION/ANALYSIS: The Regional Turf Removal Rebate Program administered by MWDOC has been active since 2011. In May 2014, the base rebate was increased from $1.00 to $2.00 per square foot. This increased rebate level resulted in a surge in applications. The City has historically participated in the program, which was initially easy to administer and became most popular during Fiscal Year 2015-2016 when the rebate was $2.00 per square foot. Unfortunately, the funding ran out, MWDOC stopped taking new applications in January 2016, and audits of the MWDOC program uncovered flaws in the amount of money distributed for turf rebates to several other agencies. The MWDOC Turf Program Audit Report is included as Attachment 4. Subsequently, in Fiscal Year 2016-2017, MWDOC changed the requirements for the turf program and it became very complicated, costly, and time consuming for small agencies to participate. Due to the lack of funding, the turf program paused in July 2016 when MWDOC was only accepting waitlist applications, and the program was not reinstated until January 2017. Interest in the Turf Removal Rebate Program has dropped significantly as customers have found the turf rebate process too rigid and time consuming, and most customers that wanted to take advantage of the program already have done so. San Juan Capistrano had only eight customers interested during Fiscal Year 2016-2017 . The majority of these customers proceeded with their landscape projects regardless of the rebate offered. The City had contracted with MWDOC in previous years to conduct pre and post turf removal inspections for the Turf Removal Program. In the past year, MWDOC discontinued management of the inspection process and now requires agencies to utilize in-house staff or to contract with a third-party vendor to do inspections. Although MWDOC will provide a vendor, they will not manage the oversight or responsibility of the vendor performance. Given the extensive time and costs involved in administering the program, and the declining interest from San Juan Capistrano residents, staff recommends discontinuing participation in the regional Turf Rebate Program by submittal of Addendum 38 to the MWDOC Agreement. This action would not restrict residents from applying for the vast majority of other water saving rebates and programs outlined in Attachment 5, which is a list of regional rebate programs. MWDOC recently presented Amendment No. 1 to the master Agreement to introduce alterations to the administrative procedures for various water conservation programs. Staff recommends that the City Council approve Amendment No. 1. FISCAL IMPACT: The recommended action will have no fiscal impact. City Council Agenda Report August 1, 2017 Page 3 of 3 ENVIRONMENTAL IMPACT: This action is not subject to the California Environmental Quality Act ("CEQA") pursuant to Section 15060(c)(3) of CEQA Guidelines because the activity is not a project as defined in Section 15378 of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, and the activity has no potential for resulting in physical change to the environment, directly or indirectly. PRIOR CITY COUNCIL REVIEW: • On April 7, 2015, the City Council approved an application for Turf Removal Rebate funding for a City median strip. • On August 4, 2015, the City Council approved participation in the MWDOC Turf Removal Rebate Program, Spray -to-Drip Irrigation Rebate Program, and MWDOC 1 0-year Water Conservation Participation Agreement. COMMISSION REVIEW AND RECOMMENDATIONS: • On March 17, 2015, the Utilities Commission recommended participation in the Turf Removal Rebate Program for a City pilot project. • On July 21, 2015, the Utilities Commission was presented an update on the Turf Removal Rebate Program and issues resulting from the change in rebate funding levels. • On July 18, 2017, the Utilities Commission recommended that the City Council discontinue participation in the regional Turf Removal Rebate Program. The Utilities Commission appointed Commissioner Hunt as the Representative and Vice Chairman Miller as the Alternate Representative to attend the City Council meeting to represent the views of the Commission on the recommendation provided. NOTIFICATION: Municipal Water District of Orange County ATTACHMENTS: Attachment 1: Water Conservation Participation Agreement with MWDOC Attachment 2: Amendment No. 1 to the Water Conservation Participation Agreement Attachment 3: Turf Removal Rebate Program Participation Addendum 38 Attachment 4: MWDOC Turf Rebate Program Audit Report Attachment 5: List of regional rebate programs .Water Conservation Participation Agreement between the Municipal Water District of Orange County and City of San Juan Capistrano This Water Conservation Participation Agreement ("Agreement") is made between the Municipal Water District of Orange County ("MWDOC") ancfity of San Juan Caplstrano("Participant Agency"). MWDOC and Participant Agency may be collectively referred to as "Parties" and individually as "Party." Recitals A. The Metropolitan Water District of Southern California ("Metropolitan") provides incentive funding to residential, commercial, and industrial water users in its service area for a variety of water conservation activities, including, but not limited to, rebates for the purchase and installation ofwater~saving devices ("Metropolitan Base Incentives"). B. MWDOC is a member agency of Metropolitan and has agreements with Metropolitan that enable residential, commercial, and industrial water users in MWDOC's service area, and for the benefit of MWDOC' s member agencies, to participate in and take advantage of Metropolitan's Base Jncentives. C. Participant Agency, as a MWDOC member agency or a direct Metropolitan member agency, may elect to participate in MetropoUtan's program to replace non-conserving items within its service area. D. The Metropolitan Base Incentives amounts for each eligible device or program available to MWDOC and Metropolitan member agencies are listed in the attached Addendums I A and I B. It is expected that Metropolitan will establish funding for additional water conservation items and to change some or all ofthe existing funding rates throughout the term of this Agreement. Any such changes will be incorporated herein by amendment to Addendums 1 A and 1 B. E. Metropolitan and MWDOC each have fiscal responsibility to manage their individual budgets, and hence may have a need to limit availability of funds. F. MWDOC and Metropolitan member agencies may also choose to provide additional supplemental funding of their own to augment the Metropolitan Base Incentives. Based on the terms and conditions of this Agreement, MWDOC will facilitate supplemental funding for Participant Agency through the Metropolitan rebate contractor ("Rebate Contractor") or MWDOC directly. Metropolitan member agencies will coordinate any supplemental funding directly with Metropolitan. G. In addition to the Metropolitan Base Incentives, MWDOC has developed and arranged additional local, state, and federal grant funding ("Grant Funding") for eligible devices in a number of water conservation programs ("MWDOC Administered Programs") that MWDOC offers to Participant Agency and Metropolitan member agencies. This grant funding may be used to enhance the Metropolitan Base Incentives. Granting agencies Page II Attachment 1 Page 1 of 15 include, but are not limited to , the Department of Water Resources and the United States Bureau of Reclamation. H . Participant Agency may also operate customized, local water conservation inc.entive programs in their respective service areas ("Participant Agency Administered Programs) and may have access to the Metropolitan Base Incentives and Grant Funding for such , subject to MWDOC and Metropolitan approval and the terms and conditions of this Agreement and any MWDOC and/or Metropolitan agreements. l. The purpose of this Agreement is to create a master water conservation participation agreement between MWDOC and Participant Agency that combines all of the conservation programs and incentives ("Programs") into one agreement. Addendums to this Agreement will be issued for changes involving Metropolitan approved items, MWDOC Board approved items, Grant Funding, adding and subtracting MWDOC Administered Programs and Participant Agency Administered Programs as identified in Section 2, and changes to incentive programs, including funding and incentive levels. NOW THEREFORE, in consideration of the promises and covenants hereinafter set fotth, the Parties do agree as follows: Secti o n 1: Al!re e me nt Te rm and A dministrati o n 1.1 This Agreement will be effective on July I, 2015 or upon execution of this Agreement by · all Parties, whichever is later, and shall terminate on June 30 , 2025 ('Term"). Continuance of this Agreement will be subject to annual budget approval by MWDOC's Board ofDirectors. 1.2 This Agreement may be amended at any time by written mutual agreement of the Parties, or by Addendums issued by MWDOC as set f01th in Recital I. 1 .3 This Agreement may be terminated by either Party for any reason upon thirty (30) days written notice to the other Party. 1.4 All Addendums are enforced for the duration of this Agreement unless the Addend urns are amended or terminated by either Party. 1.5 In the event the Agreement is tem1inated early, Participant Agency is responsible for payment of any funding contributions required by this Agreement that that were initiated prior to the effective date of the termination. For purposes of this Agreement, an application is deemed initiated when an application has been received by Metropolitan's rebate vendor, EGIA , by MWDOC, or a reservation has been made within any of MWDOC's online application portals that is pursuant to any of the programs described within this Agreement and the attached Addendums. 1.6 Notwithstanding any other provision in this Agreement, funds for all of the programs described within this Agreement and the attached Addendums are conditioned upon the Page 12 Attachment 1 Page 2 of 15 availability of funds and MWDOC is under no obligation to provide funding for any of the programs if MWDOC determines, in its own discretion, that such funding is exhausted, reduced, eliminated, or unavailable from any funding source, for any reason. Section 2: Program Funding 2. I Supplemental Funding 2.1.1 In addition to the Metropolitan Base Incentives, Participant Agency may provide additional funding to augment the Metropolitan Base Incentives amounts for those programs and devices that Participant Agency identifies, and in the amounts indicated, in the appropriate locations in Addendums 2A, 2B, and 2C ("Supplemental Funding"). The Supplemental Funding listed in Addendums 2A through 2C shall specify the amount of Supplemental Funding Pa1ticipant Agency will provide per device or program, as well as the total maximum Supplemental Funding amount committed to each category of device or program. If the Participant Agency does not complete, sign, and return Addendums 2A through 2C to MWDOC, notwithstanding any other provision ofthis Agreement, the Participant Agency will not be bound by this Section or the provisions in Addendums 2A through 2C. In general, Supplemental Funding Addendums submitted by the 1 51h of a month will become effective the first of the following month. 2.1 .2 If Participant Agency elects to provide Supplemental Funding or enhanced incentives under this Agreement for any device or program, Participant Agency is responsible for tracking the use of and the remaining availability of those funds. MWDOC will assist, in every way possible, but the ultimate responsibility for tracking all Participant Agency funding is the responsibility of Participant Agency. Pat1icipant Agency will ultimately be responsible for any overuse of Participant Agency Supplemental Funding. 2.1.3 Any requests for changes or revisions to Participant Agency's Supplemental Funding, including funding transfers between Programs, must be submitted by Participant Agency to MWDOC in the fom1 of revised Addendum 2s listing the new funding amounts/limits. 2.1.4 The Participant Agency may eJect to participate in the Supplemental Funding Program and be bound by the provisions ofthis Section 2.1, Sections 3, 5, 6, 7, and 8 of this Agreement, and Addendum 2A through 2C by having its authorized representative complete and sign Addendum 2A through 2C in the spaces provided. 2.2 MWDOC Administered Programs 2.2.2 Participant Agency may elect to take advantage of the MWDOC Administered Programs by having its authorized representative complete and sign Addendums 3A through 3C in the spaces provided. If Participant Agency completes and signs Addendums 3A through 3C, Participant Agency agrees to be bound by the provisions of this Section 2.2, Sections 3, 5, 6, 7, and 8 ofthis Agreement, and Addendums 3A through Page 13 Attachment 1 Page 3 of 15 3C. If the Participant Agency does not complete, sign, and return Addendums 3A through 3C, notwithstanding any other provision of this Agreement, the Participant Agency will not be bound by this Section or the provisions in Addendums 3A through 3C. 2.3 Participant Agency Administered Programs 2.3.1 From time to time, funding may be made available for Participant Agency to operate a customized member agency administered local water conservation incentive program or programs ("Participant Agency Administered" "PA" or "MAA Program") in its service area and access the Metropolitan Base Incentives for such, subject to MWDOC approval of the program and the terms and conditions of this Agreement and Addendum 4. The Participant Agency Administered Program(s) and requirements in connection with it are described in more detail in Addendum 4. 2.3 .2 Upon receipt of approval of a Participant Agency Administered Program by MWDOC, Participant Agency is bound by the provisions of Sections 3, 5, 6, 7, and 8 of this Agreement and Addendum 4. 2.4 Exhaustion of Funding 2.4.1 In the event Patticipant Agency provided funding for any Program or device is exhausted, and Participant Agency does not elect to add additional funding or transfer available funding from another Program or device, MWDOC will discontinue offering the additional rebate funding for that Program or device in Participant Agency's service area. Notwithstanding any other provision in this Agreement, MWDOC may terminate this Agreement as it relates to Section 2 at any time without prior notice in the event that MWDOC determines that funding for any device or program on Addendums 2 through 4 or MWDOC Grant Funding is exhausted, reduced, eliminated, or unavailable from any · funding source, for any reason. Section 3: Participant Agency Responsibility and Ownership 3.1 Participant Agency, at its sole discretion, may independently contract with its own agents under separate agreements for program administration and management for any Participant Agency Administered Program provided that doing so does not compromise program performance, create or present a confiict of interest, or violate the terms of this Agreement. 3.2 Participant Agency and/or its agent shall provide all necessary services and materials for such Participant Agency Administered Programs including, but not limited to the following: program administration, promotion, marketing materials, data collection, and analysis, installation verification, and reporting. 3.3 All materials and supplies necessary to implement a Participant Agency Administered Program shall be the exclusive property of Participant Agency. MWDOC shall have no Page 14 Attachment 1 Page 4 of 15 ownership, right, title, security interest, or other interest in any Participant Agency Administered Program materials or supplies, nor any rights duties, or responsibilities, therefor. 3.4 Participant Agency is responsible for assuring that any Participant Agency Administered Program complies with all federal, state, and local requirements. 3.5 Participant Agency agrees to cooperate with MWDOC's data management activities related to assessing device saturation and program success. 3.6 As part of any Participant Agency Administered Program, Participant Agency shall use, maintain, and submit to MWDOC within the designated timeframe an electronic database, to be approved by MWDOC prior to use, for any conservation items installed, distributed, or rebated by Participant Agency or its agents to avoid duplicate distributions and to determine the saturation rate of items by the appropriate geographic delineation. 3. 7 Participant Agency is solely responsible for the performance of its staff or representatives in complying with the terms of this Agreement and for the proper allocation and appropriate use of funds provided by Metropolitan and/or MWDOC for the purpose of achieving water conservation savings under this Agreement. Section 4: MWDO s Obligations 4.1 MWDOC will be responsive to Participant Agency for ensuring that timely reports on the Programs' results are prepared by MWDOC's staff. 4.2 MWDOC will develop a database of information regarding participation in the Programs and provide monthly electronic and/or written reports of activity to Participant Agency. 4.3 MWDOC will invoice Participant Agency for any Participant Agency funding obligations on a monthly basis for rebates issued in the previous month. 4.4 MWDOC does not guarantee any minimum number of rebates will be available for Participant Agency's service area. Section 5 Marketing. 5. I Participant Agency agrees to assist in the marketing of programs it participates in under this Agreement. With regard to Participant Agency Administered Programs, Participant Agency will be solely responsible for marketing its Participant Agency Administered Program to customers in its service area. Section 6: Jnstallation Veri11cation 6.1 Participant Agency shall be responsible for conducting installation verifications of items installed, distributed, and/or rebated by Participant Agency under Participant Agency Page 15 Attachment 1 Page 5 of 15 Administered Programs, and/or for paying all costs associated with this verification. Installation verification measures for program devices must be designed to ensure that materials, installation verifications of eligible program devices, and services meet requirements established by Metropolitan, which requirements will be provided to Participant Agency by MWDOC. 6.2 Participant Agency may be responsible for conducting installation veritications of items installed, distributed, and/or rebated by Participant Agency or MWDOC under MWDOC Administered Programs, and/or for paying all costs associated with this verification. Installation verification measures for program devices must be designed to ensure that materials, installation verifications of eligible program devices, and services meet requirements established by Metropolitan, which requirements will be provided to Participant Agency by MWDOC . 6.3 MWDOC reserves the right to conduct installation verification of items within Participant Agency's service area. 6.4 Participant Agency acknowledges that any device receiving funding from Metropolitan may be subject to an installation verification to be performed by Metropolitan, or its agent(s), at Metropolitan's discretion. 6.5 Pa1ticipant Agency shall promptly refund to MWDOC any amounts paid under any Participant Agency Administered Program or MWDOC Administered Program for installed or distributed devices in the event MWDOC or Metropolitan establishes via installation verification that the program devices were not installed. Section 7 : Reporting and Invoicing 7.1 For any and all Supplemental Funding provided by Participant Agency and/or Participant Agency provided funding or inspection costs under the MWDOC Administered Programs pursuant to Section 2 of this Agreement, and as more particularly described in Addendums 2 and 3, MWDOC will invoice Participant Agency on a monthly basis for the cost of such funding, and Participant Agency must pay the full amount of such invoice within thirty (30) days of receipt of any such invoice . 7.2 For any and all Participant Agency Administered Program(s), Participant Agency will invoice MWDOC on a monthly basis, by the 1 01h of each month, for any approved funding and costs associated with the Participant Agency Administered Program(s) as indicated in and subject to the provisions of Addendum 4. MWDOC is under no responsibility to reimburse Participant Agency for any costs incurred by Participant Agency that are not approved by MWDOC consistent with the terms and conditions of this Agreement and Addendum 4. The invoice package shall include a fully completed, to the satisfaction of MWDOC, Excel customer/applicant spreadsheet showing program activity, and an invoice, signed by the General Manager or designee of Participant Agency, certifying the information provided as accurate. Participant Agency shall use the Excel customer/applicant spreadsheet and Invoice forms approved by MWDOC. Page 16 Attachment 1 Page 6 of 15 7.3 Participant Agency shall maintain al1 Pa11icipant Agency Administered Program information, including Participant Agency applications, water bills, and purchase receipts, for a period of seven years from the end date of this Agreement. 7.4 Payment of Participant Agency invoices shall be in the form of either a credit on MWDOC's water bill to Participant Agency or a check made payable to Participant Agency. Method of payment shall be at MWDOC's discretion. Section 8: Confidentiality 8.1 MWDOC agrees to maintain the confidentiality of Participant Agency's customer names, addresses, and other information gathered in connection with this Agreement. MWDOC will not cause or permit the disclosure of such information expect as necessary to carry out any of the MWDOC Administered or Participant Agency Administered Programs, or as required by law. To the extent that MWDOC contracts with third party contractors to carry out all or any portion of any of the Programs, MWDOC will require such contractors to maintain the confidentiality of such customer information. 8.2 Notwithstanding anything to the contrary in this Agreement, Participant Agency acknowledges and agrees that MWDOC may request and use historical water consumption data for purposes of satisfying any grant water use and water quality evaluation requirements of any of the Programs. Participant Agency also acknowledges and agrees that MWDOC may also tequest to use Program applicant information, such as . name, mailing address, site photos, and email address to market other water use efficiency programs to past applicants. A similar provision will be required of every individual applicant. Section 9. Indemnification. 9.1 The parties agree that each Party shall be responsible for its own actions, and the actions of its officers, employees, and agents, in performing services under this Agreement. Except as provided in this Agreement and its Addendums, each Party agrees to indemnify and hold the other Party and its officers and agents harmless and agrees to defend the other Party against any claim or asserted liability arising out of its actions, either willful or negligent, or the actions of its officers, employees, and agents, in performing services pursuant to this Agreement. Such indemnity will include any losses relating to any claim made, whether or not a court action is filed, and will include attomey fees and administrative and overhead costs related to or arising out of such claim or asserted liability. 9.2 Participant Agency shall include the following language in its agreement with any consultant or contractor retained by Participant Agency to work on any of the Program" "(Consultant) agrees at is sole cost and expense to protect, indemnifY, defend, and hold harmless Metropolitan, MWDOC, and their associated Boards of Directors, officers, representatives, agents and employees from and against any and all claims and liability Page 17 Attachment 1 Page 7 of 15 of any kind (including, but not limited to, any claims or liability for injury or death to any person, damage to property, natural resources or to the environment, or water quality problems) that arise out of or related to Participant Agency's approval, construction, operation, repair, or ownt:rship of any Program. Such indemnity shall include all damages and losses related to any claim made, whether or not a court action is filed, and shall include attorneys' fees, administrative and overhead costs, engineering and consulting fees, and all other costs related to our arising out of such claim or asserted liability." Section 10. Cet·ti-fication re Lobbving (43 CFR 18) 1 0.1 The undersigned hereby certifies on behalf of Participant Agency that no Federal appropriated funds have been paid OJ' will be paid, by or on behalf of the Participant Agency, to any person for influencing or attempting to influence an officer or employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement. If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress in connection with a Federal contract, grant, loan, or cooperative agreement, the undersigned shall complete and submit Standard Form LLL, "Disclosure Form to Report Lobbying" in accordance with its instructions. To the extent federal funds are involved, the Participant Agency shall require that the language of this certification be included in the awards documents for any sub-awards by the Patticipant Agency at all tiers (including sub-contracts, sub-grants, and contracts under grants, loans and cooperative agreements) and that sub-recipients, if any, shall certify accordingly. Section 1 J . Other Terms 11.1 Any alteration or variation of the terms of this Agreement wi II not be valid unless made in writing and signed by both Parties. 11.2 This Agreement will inure to the benefit of and be binding upon the Parties and their respective successors. 11.3 The partial or total invalidity of one or more parts of this Agreement will not affect the intent or validity of this Agreement. 11.4 This agreement shall be deemed a contract made under the laws of the State of California, and for all purposes will be interpreted in accordance with such laws. The Parties hereby agree and consent to the exclusive jurisdiction of the courts of the State of California, and that the venue of any action brought hereunder will be in Orange County, California. Ill Ill Page J8 Attachment 1 Page 8 of 15 11.5 This Agreement constitutes the entire agreement between the Parties. IN WITNESS WHEREOF, the parties hereto have executed this Agreement. MUNICIPAL WATER DISTRICT OF ORANGE COUNTY By : Date: Page 19 PARTICIPANT WATER AGENCY By: Date: Derek Reeve Mayor . City of San Juan Capistrano Approved as to Form: Attachment 1 Page 9 of 15 Addendum 3A FY 15-16 Smart Timer Rebate Program Participant Agency Funding Authorization With regard to the Smart Timer Rebate Program, Participant Agency Is eligible for additional Grant Funding from MWOOC ("MWDOC Smart Timer Funding"), when funding is available , only if Participant Agency provides supplemental funding for the Smart Timer. Residential Smart Timers: Participant Agency agrees to provide funding for the Smart Timer Rebate Program In the amount specified in Table 1 below per residential weather based irrigation controller or soil moisture sensor system (Res Smart Timer). Funding will be provided on a per device basis up to the "Not to Exceed" funding limit: Table 1 Category Participant Agency Not to Exceed Funding Limit Fundi~g Amount For Fiscal Year 2015-2016 Res Smart Timer $75 per Res Smart Timer $ Commercial Smart Timers: If Participant Agency elects to provide additional funding for commercial weather based irrigation controllers, central computer irrigation controller, or soil moisture sensor system (CII Smart Timer), Table 2 below shall list the Participant Agency's funding amount per Cll Smart Timer station. Cll Smart Timer rebates are calculated on the Cll Smart Timer's station capacity, and Participant Agency's funding amounts shall be in addition to the per station amount provided by Metropolitan. Table 2 Category Participant Agency Not to Exceed Funding Limit For Funding Amount Fiscal Year 2015-2016 Cll Smart Timer $ per Station $ This funding authorization is effective only for the designated period or until a new authorization is received and approved by MWDOC. Each form submitted shall include the total authorization of the Agency for the specified time period. Supplemental funding forms received by MWDOC by the 151h of a month will be sent to Metropolitan by the 20th of a month. Funding forms received by Metropolitan by the 201h of a month shall become effective on the first day of the following month unless a later Start Date is specified. Incentives will not be applied retroactively. Participant Agency is obligated to pay supplemental funding for any on-line commitments made while this authorization is in effect. By signing, Participant Agency agrees to these terms. Date received: Date sent to Metropolitan, if applicable: Date Approved by Attachment 1 Page 10 of 15 Addendum 38 FV 15-16 Turf Removal Rebate Program Participant Agency Funding Authorization (Page 1 of 3) Site Inspection; Election by Participant. Participant Agency must either (1) conduct pre-and posHurf removal site inspections for all Program Applications submitted to MWDOC from within the Participant's service area, or (2) provide funding to MWDOC, as set forth below, for the cost of MWDOC 's site installation inspection consultant, Mission Resource Conservation District (MRCD), to conduct both pre-and post-turf removal inspections. If Participant Agency elects to perform the pre-and post-turf removal inspections, Participant Agency shall be responsible for the activities described below: For pre-turf removal inspections: • Schedule and conduct the pre-turf removal inspection, • Complete the pre-turf removal work order, as provided by MWDOC, with the required data and site photographs • Establish that the applicant's proposed project and site are consistent with the intent of the Program. • Notify MWDOC If any site is being irrigated with recycled water. • Submit the completed work order and site photographs to MWDOC. • Recommend to approve or deny the application. If MWDOC staff agrees with the recommendation, it shall approve the application , designate the site as an eligible Program turf removal project, and issue a Notice to Proceed to the applicant, or reject the application and issue a Participation Denial Notice to the applicant. The final decision on a Notice to Proceed lies with MWDOC. For post-turf removal inspections: • Schedule and conduct the post-turf removal inspection • Complete the post-turf removal wor!< order, as provided by MWDOC, with the required data, site photographs, and receipts • Establish that the applicant's completed project and site are consistent with the intent and guidelines of the Program, including the following. o The site 's precise turf removal area in square feet that was removed . This shall be the basis for calculating the amount of each site's rebate , not to exceed initial pre-turf removal inspection measurements, and the total turf removal project cost. o The site's turf removal area does not include any live turf or turf-looking grasses. o The project area must include some plants. o The converted area's irrigation system , if any , is a low flow system (drip, bubblers, or low-precipitation high-efficiency rotating nozzles). If part of a lawn is converted, the sprinkler system must be properly modified to provide adequate coverage to the remaining lawn without spraying the converted area. o All exposed soil in the converted area is covered with a 2-3" layer of mulch, except in areas planted with creeping or rooting groundcovers. Attachment 1 Page 11 of 15 Addendum 38 FY 15~16 Turf Removal Rebate Program Participant Agency Funding Authorization (Page 2 of 3) o Converted area is permeable to air and water. Weed barriers must be permeable. Pavers must have sufficient spacing to allow water to permeate project area. Concrete, plastic sheeting or other impermeable surfaces do not qualify for incentives under the Program . o No invasive plant species are used. At the time of this Addendum, the residential turf removal inspection cost as charged to MWDOC by MRCD is $105 per residentia l inspection. The total cost for both pre and post-turf remova l residentia l inspections is thus $210.00. The current commercial inspection cost as charged to MWDOC by MRCD is approximately $165.36 per inspection , based on an average of four (4) hours for a small commercial site at $37.84 per hour, plus $28 per hour for inspection verification administration. Again, two commercia l inspections are required, for a total estimated cost of $330.72. Should the MRCD costs decrease or increase, MWDOC will pass these changes through to Participant Agency. By its initials below, City of San Juan Capistrano either: Name of Participant Agency {1) Conduct Its own Inspections: or (2) Provide funding to MWDOC to conduct inspections: Not to exceed funding amount to conduct Inspections hereby elects to Initials Here Initials Here $ 40,000 Participant has the option to provide supplemental funding to customers in its service area to further lncentivize turf removal program participation. By completing Table 3 below, Participant Agency elects to provide supplemental funding for turf removal rebate incentives Program Residential Turf Removal Cll Turf Removal Table 3 -Turf Removal Supplemental Funding Not To Exceed Funding for Fiscal Year 15-16 $ Participant Agency Funding Amount per Square Foot $ $ Notes/Special Considerations Attachment 1 Page 12 of 15 Addendum 38 FV 15-16 Turf Removal Rebate Program Participant Agency Funding Authorization (Page 3 of 3) This funding authorization is effeCtive only for the designated period or until a new authorization is received and approved by MWDOC. Each form submitted shall include the total authorization of the Agency for the specified time period. Supplemental funding forms received by MWDOC by the 151h of a month will be sent to Metropolitan by the 20th of a month. Funding forms received by Metropolitan by the 20 1h of a month shall become effective on the first day of the following month unless a later Start Date is specified. Incentives will not be applied retroactively. Participant Agency is obligated to pay supplemental funding for any on-line commitments made while this authorization is in effect. By signing, Participant Agency agrees to these terms. Date received : Date sent to Metropolitan, if applicable: Approved by Attachment 1 Page 13 of 15 Addendum 3C FV 15-16 Spray to Drip Irrigation Rebate Program Participant Agency Funding Authorization (Page 1 of 2) Site Inspection; Election by Participant. Participant Agency must either (1) post-drip conversion site inspections for all Program Applications submitted to MWDOC from within the Participant's service area, or (2) provide funding to MWDOC, as set forth below, for the cost of MWDOC's site installation inspection consultant, Mission Resource Conservation District (MRCD), to conduct the post-drip conversion inspections. If Participant Agency elects to perform the post-drip conversion inspections, Participant Agency shall be responsible for the activities described below: For post-turf removal inspections: • Schedule and conduct the post-drip conversion inspection • Complete the post-drip conversion work order, as provided by MWDOC, with the required data, site photographs, and receipts • Establish that the applicant's completed project and site are consistent with the intent and guidelines of the Program, including the following. o Property type (residential/commercial) o Verified number of pressure regulation/filtration components o Verified project area in square footage. At the time of this Addendum, the residential post-dr ip conversion inspection cost as charged to MWDOC by MRCD is $105 .00 per residential post-drip conversion insp e ction . The current commercial inspection cost as charged to MWDOC by MRCD is approximately $165.36 per inspection, based on an average of four (4) hours for a small commercial site at $37.84 per hour, plus $28 per hour f or inspection verification administration. Should the MRCD costs decrease or increase , MWDOC will pass these changes through to Participant Agency. By its initials below, City of San Juan Capistrano either: Name of Participant Agency (1) Conduct its own inspections: or (2) Provide funding to MWDOC to conduct inspections: Not to exceed funding amount to conduct Inspections hereby elects to Initials Here Initials Here $ 10 ,000 Attachment 1 Page 14 of 15 Addendum 3C FV 15-16 Spray to Drip Irrigation Rebate Program Participant Agency Funding Authorization (Page 2 of 2) Participant has the option to provide supplemental funding to customers in its service area to further incentivize spray to drip conversion program participation. By completing Table 4 below, Participant Agency elects to provide supplemental funding for spray to drip conversion rebate incentives Table 4-Spray to Drip Rebate Supplemental Funding Not To Exceed Participant Program Funding for Fiscal Agency F unding Notes/Special Considerations Amount per Year 15-16 Sguare Foot Residential Spray $ $ to Drip Cll Spray to Drip $ $ This fund i ng authorization is effective only for the designated period or until a new authorization is received and approved by MWDOC. Each form submitted shall include the total authorization of the Agency for the specified time period. Supplementa l funding forms received by MWDOC by the 15th of a month will be sent to Metropolitan by the 20th of a month. Funding forms received by Metropolitan by the 20th of a month sh all become effective on the first day of the following month unless a later Start Date is specified. Incentives will not be applied retroactively. Participant Agency is obligated to pay supplemental funding for any on-line commitments made while this authorization is in effect. By signing, Participant Agency agrees to these terms. Date received : Date se nt to Me t ropolita n, if applicable : Approved by Attachment 1 Page 15 of 15 FIRST AMENDMENT TO WATER CONSERVATION PARTICIPATION AGREEMENT This First Amendment to Water Conservation Participation Agreement ('First Amendment") is effective on July 1, 2016 ("Effective Date"), by and between the Municipal Water District of Oran ge County ("MWDOC") and ( 'Pa1ticipant Agency") MWDOC and Participant Agency may be co ll e tiveJy referred to as Parties" a nd individually as "Party." RECITALS A. MWDOC and Participating Agency entered into a Water Conservation Participation Agreement regarding the Participating Agency's participation in certain water conservation programs ("Agreement"). B. The Parties now desire to amend the Agreement to make certain changes to provisions regarding verification of the installation of items and devices installed as part of certain water conservation incentive programs. TERMS For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree to amend the Agreement as follows: I. Amendment. Section J is added to the Recitals to read as follows: "J. The purpose of this Agreement is also to acknowledge that Participating Agency is participating in MWDOC's Choice Water Use Efficiency Program ("WUE Program") and in doing so is agreeing to pay for its proportionate share ofMWDOC's administrative and direct program costs of the WUE Program." 2. Amendment. Section I .7 is added to the Agreement to read as follows: "1. 7 Participating Agency understands that by entering into this Agreement it is participating in MWDOC's Choice Water Use Efficiency Program ("WUE Program") and agrees to pay MWDOC for its proportionate share of MWDOC's costs for administering the WUE Program based on Participating Agency's level of participation in the WUE Program. MWDOC will annually invoice Participating Agency. 5540 I 00001\28806550 I Attachment 2 Page 1 of 26 3. Amendment. Section 6 is amended in its entirety to read as follows: "Section 6: Installation Verification/Inspection 6.1 Participant Agency shall be respon ible tor conducting installation verifications/inspections of items and devices installed, di tributed, and/or rebated by Participant Agency under Participant Agency Administered Programs to ensure compliance with program requirements and/or for paying all costs associated with this verification/inspection. Installation verification/inspection measures must be designed to ensure that materials, installation v rifications /in pection of e li gible program items and devices and service meet requirements established by Metropolitan and MWDO which requirement will be provided to Participant Agency by MWDOC as Attachment A. 6.2 Participant Agency shall be responsible for conducting installation verifications/inspections of items or devices installed di tributed, and/or rebated by Participant Agency or MWD C under MWDOC Administered Program to en ure compliance with program r quirements and/or for paying all costs associated with this verification/inspection. Installation verification/inspection measures for program items and device mu I be designed to ensure that materials, installation verifications/insp ctions of eligible program items and devices, and services meet requirements established by Metropolitan and MWDOC, which requirements will be provided to Participant Agency by MWDOC as Attachment A. 6.3 Participant Agency may elect to (1) conduct its own installation verifications/inspections by either utilizing its in-house staff or contracting with a third party vendor of its choice; or (2) utilize MWDOC's installation verification/insp ction contractor to conduct the installation veritication/inspections. If Participant Agency elects to utilize MWDOC's verification/inspection vendor, Participant Agency may elect to contract directly with MWDOC's verification/inspection vendor. If Participant Agency elects not to enter into such contract, MWDOC, in MWDOC's sole discretion, may require that Participant Agency contract directly with MWDOC's verification/inspection vendor. 55401 00001\28806550 I 6.3.1 Notwithstanding any other provision in this Agreement, Participant Agency under tands and agrees that if Participant Agency utilize MWDO verification/inspection vendor Pru·ticipant Agency must still comply ith all ofthe requirement ofthi Agreement, including the refund requirements in Section 6.6, and MWDOC is in no way liable or responsible for the acts or omissions of such vendor and makes no 2 Attachment 2 Page 2 of 26 representations or warranties regarding the quality of such vendor's work. Participant's sole recourse as to any action, claims or damages arising out of the acts or omissions ofMWDOC's verification/inspection vendor is with the vendor and not with MWDOC. 6.4 MWDOC reserves the right to conduct installation verification/inspection of items and devices within Participant Agency's service area . 6.5 Participant Agency acknowledges that any item or device receiving funding from Metropolitan may be subject to an installation verification/inspection to be performed by Metropolitan, or its agent(s), at Metropolitan's discretion. 6.6 Participant Agency shall promptly refund to MWDOC any amounts paid under any Participant Agency Administered Program or MWDOC Administered Program for installed or distributed items or devices, including any grant funds, in the event MWDOC or Metropolitan establishes via installation verification/inspection and/or audit that the program items or devices were not installed in compliance with the requirements established by Metropolitan and MWDOC pursuant to this Agreement. If such a refund is not provided to MWDOC within thirty (30) days of request, the requested amount may be debited by MWDOC on Participating Agency's next water service invoice. 6.7 "Items" and "devices" includes, but is not limited to, plumbing fixtures, irrigation devices, turf (removal and replacement), and any other items, devices or materials that are installed in connection with a program covered by this Agreement. 4. Authority to e llter into First Amendment. Each Party represents to the other that the person executing this First Amendment has the requisite power and authority to execute the First Amendment and to bind each respective Party. 5. Continuing Effect of Agreement. Except as amended by this First Amendment, all other provisions of the Agreement remain in full force and effect. From and after the date of this First Amendment, whenever the term "Agreement" appears in the Agreement, it shall mean the Agreement as amended by this First Amendment. 6. Execution in ounterparts. This First Amendment may be executed in duplicate counterparts, each of which shall be deemed an original. MWDOC and Participating Agency have each caused this First Amendment to be executed by its duly authorized representative as of the date set forth below the authorized signature. 5540 I 0000 I \28806550 I 3 Attachment 2 Page 3 of 26 IN WITNESS WHEREOF, the Parties hereto have executed this First Amendment. MUNICIPAL WATER DISTRICT OF ORANGE COUNTY By: Date: Robert Hunter General Manager Approved as to Form : Joseph Byrne General Counsel Date: -------------------- 5540 I 0000 I \28806550 I 4 PARTICIPANT AGENCY By: Name ------------------Title Date: Approved as to Form: General Counsel Date: ------------------- Attachment 2 Page 4 of 26 Attachment A MUNICIPAL WATER DISTRICT OF ORANGE COUNTY INSPECTION AND VERIFICATION PROCEDURES Attachment 2 Page 5 of 26 Table of Contents I. Purpose of this document ................................................................................................................ 2 II. Program Implementation Process ................................................................................................... 2 Application Package ......................................................................................................................... 2 Invoice Submission ........................................................................................................................... 3 LaborCosts ....................................................................................................................................... 3 Federal, State, and Local Laws and Ordinances ............................................................................... 3 Supplemental Inspections ................................................................................................................ 4 Inspection Confirmation Quality Control ......................................................................................... 4 Ill. Device-Based Inspection Procedures ............................................................................................... 4 Residential Devices .......................................................................................................................... 4 Commercial Devices ......................................................................................................................... 5 Spray to Drip-Residential ............................................................................................................... 9 IV. Area-Based Programs .................................................................................................................... 11 Turf Removal Participation Procedure ........................................................................................... 11 General Inspection Procedures ...................................................................................................... 12 Pre-Inspection Procedures-Turf Removal ................................................................................... 12 On-Site Inspections for Area-Based Rebates ................................................................................. 13 Measuring Large Sites by GIS ......................................................................................................... 13 Condition of Turf at Pre-Inspection ............................................................................................... 13 Multiple Applications under same Site .......................................................................................... 14 Modifications to Initial Project Area .............................................................................................. 14 Post-Inspection Procedures-Turf Removal .................................................................................. 14 Project Extensions .......................................................................................................................... 15 Spray to Drip-Commercial ............................................................................................................ 15 V. Measurement Techniques ............................................................................................................. 17 Non-Uniform Rectangular .............................................................................................................. 18 Irregular Rhombus or Widening Rectangular ................................................................................ 18 Non-Uniform Round ....................................................................................................................... 19 Non-Uniform Ellipses ...................................................................................................................... 20 Non-Uniform Ellipses Alternate ...................................................................................................... 21 1 Attachment 2 Page 6 of 26 I. Purpose of this document It is the practice of the Municipal Water District of Orange County (MWDOC) to ensure that public funds used to administer Rebate Programs are utilized for its intended purposes. Therefore, the purpose of this Inspection and Verification Procedures document (Inspection Procedures) is to establish a clear set of inspection procedures to be followed by MWDOC and/or and its member agencies (hereafter "Participant Agency") and inspection contractors when conducting pre-and/or post-installation verification inspections for all MWDOC-Administered and or Participant Agency-Administered Rebate Programs. These procedures are required regardless of the funding source (Grant funded, Metropolitan Water District of Southern California funded (Metropolitan), or fully funded by Participant Agency, etc.) and/or regardless of program administrator (MWDOC or Participant Agency). This Inspection Procedures document will be updated as needed to reflect new or modified inspection requirements, techniques, or procedures as they arise. II. Program Implementation Process For ease of explanation, this document categorizes the MWDOC Rebate Programs into the following rebate program types: • Device -Based Rebate Programs o Residential o Commercial o Spray to Drip-Residential • Area-Based Rebate Programs o Turf Removal o Spray to Drip -Commercial The inspection procedures contained in this document have been developed in coordination with requirements from Metropolitan pursuant to its Residential and Commercial Water Conservation Funding Agreements and Addendums thereto, MWDOC, and/or supplemental grant funding agreements. The following general rules apply for all programs types. Application Package When receiving an application package, all components should be examined before requesting an inspection. The application package currently requires, at a minimum, a fully completed application signed by the property owner and containing the following: • Current water bill to determine o Participant Agency is participating in the program o Project site is located within Orange County o Payee name matches the application name • Device eligibility, if a device-based program • Site plan for area-based rebates o Indicate the project area, location, and project intent • Pictures of the site for area-based and spray-to-drip rebates. Pictures to show 2 Attachment 2 Page 7 of 26 o Current site condition o Complete area to be removed o Area complies with eligibility criteria It is recommended that the application, terms and conditions, and program guidelines each contain language stating that on-site inspections will be performed and are required for participation in any rebate programs. Invoice Submission Rebates may not exceed the total project/equipment costs nor the reserved rebate amount. For a receipt/invoice to be considered eligible it must include the following: • Dated within the project period • Scope of work performed • Signed by the customer/applicant/property owner and references site location (if applicable) • Itemized to include make, model, sku, quantity, price per item, total price • If labor is to be considered, it must be listed on a separate line item and must be accompanied by the California State Contractor License Board (CSClB) contractor license number Once projects are completed, invoices and receipts are submitted to the program administrator and MWDOC, all invoices and receipts are to be carefully tabulated by program administrator and MWDOC to prevent payment for materials/costs not associated with the program; specific program eligible material/costs are based on program type. Labor Costs Due to California state law, all sites that are invoiced at $500.00 or more require that work be performed by a contractor licensed by the California State Contractor License Board (CSClB). If labor costs are invoiced by someone who is not licensed, those costs are not eligible. This labor cost provision is consistent with state law but, most importantly, protects Orange County consumers from unlicensed contractors. Materials utilized by the unlicensed contractor may be considered eligible costs. Additionally, there have been some instances where costs for landscape architectural drawings were submitted, but the drawings were not performed by a California State licensed landscape Architect. Those costs are also not rebate-eligible. Federal, State, and Local Laws and Ordinances All projects, including projects at historic sites, are subject to the terms of their local agency's ordinances and must comply with all applicable federal, state, and local laws, as well as applicable Covenants, Conditions & Restrictions (CC&R) and/or Homeowners Association (HOA) restrictions. Applicants should obtain any necessary approvals for their projects from their city's/county's code enforcement and/or HOA/CC&R board . It is the responsibility of the each applicant to ensure their project is in compliance. Customers must agree to adhere to their local rules and provisions in order to accept funding. Questions from program participants regarding compliance with any of 3 Attachment 2 Page 8 of 26 the above laws, ordinances, and/or restrictions will be directed to Participant Agency for guidance. Supplemental Inspections Some sites may need to be re-inspected by MWDOC and/or Metropolitan when unique circumstances arise. At these times, communication with the customer is vital in order to remain in adherence with the program intent while ensuring that projects are successfully completed. All inspection and verification procedures and invoice criteria described in this document must be adhered to. Inspection Confirmation Quality Control Each Participant Agency performing their own inspections/verifications will be required to adopt these Inspection Procedures as their own or, alternatively, to develop and submit for approval by Metropolitan and/or MWDOC Participant Agency's own inspection and verification procedures document in line with the requirements and procedures contained in this document. All projects that require inspection must be inspected prior to Participant Agency invoicing MWDOC. MWDOC/Metropolitan may request inspection reports from Participant Agency at any time. Installation vendors hired for project implementation cannot inspect their own installations. Metropolitan and/or MWDOC reserve the right to verify and perform onsite inspections of any projects at any time. This can be before, during, and/or after project installation, and/or after the rebate payment, and results of these inspections may affect payment made to Participant Agency or require a refund to be paid by Participant Agency to MWDOC. If installation cannot be verified, Participant Agency must reimburse MWDOC and/or Metropolitan depending on the source of funds. Ill. Device-Based Inspection Procedures For residential and commercial devices rebated through Metropolitan's regional rebate program, device-based inspections will be conducted solely by Metropolitan, at its discretion. For devices rebated through a MWDOC and/or a Participant Agency-Administered Program (MAA Program), the inspection procedures are set forth below. Residential Devices Residential device inspections must satisfy both the Metropolitan and MWDOC inspection procedures in place at the time of the post-inspection or issuance of the rebate check. Currently, those inspection procedures are as follows: In order for Participant Agency to be reimbursed for incentives from MWDOC/Metropolitan, Participant Agency must certify on each invoice that the terms and conditions within each project have been met, all devices have been installed, and all work has been performed. The party signing each invoice must have signing authority to certify the invoice. For residential device-based MAA Programs, Participant Agency will utilize the sample size calculator provided by MWDOC to assist in determining the appropriate number of devices to 4 Attachment 2 Page 9 of 26 ·. inspect to ensure a 98% installation rate given the overall quantity of devices. Participant Agency must report verification/inspection method employed on each invoice submitted. Participant Agency must: a. Validate quantity of devices installed. b. Verify new device type, make, and model with Project information. c. Verify Installation address or specific locations within the address with Project documentation. d. With permission from the customer, take photographs relating to the devices installed to be included in Inspection report. i. Indoor Inspection: Indoor inspection includes detailed fixture count of toilets and clothes washer(s). Access to fixture locations (such as bathrooms and laundry facilities) are required to perform the inspection, and property owner/applicant person should be made aware of this through the application. ii. Outdoor Inspection: Outdoor inspection includes detailed fixture counts of installed and operating landscape devices such as rain barrels, cisterns, irrigation controllers, residential drip, and nozzles. For irrigation controllers, inspect the model to ensure it matches the rebate application, verify that it is operating as a "smart device" and is communicating with the onsite weather station or is receiving offsite/remote weather data and, if possible, have the contact person show the inspector how the controller has been programmed, and confirm quantity of stations of timer model. Commercial Devices Commercial MAA Program device inspections must satisfy both the Metropolitan and MWDOC inspection procedures in place at the time of the post-inspection or issuance of the rebate check. Metropolitan may require Participant Agency to submit inspection reports for specific projects, and Metropolitan/MWDOC reserves the right to perform onsite inspections of projects/sites prior to payment. To determine the amount of inspections required for commercial devices, Participant Agency must apply the following criteria (a-e below) to the project(s): a. Automatic Inspection: Regardless of the 5% rule listed in Section d below, Participant Agency must first determine if any site within the MAA Program Project requires an Automatic Inspection. Automatic Inspections are triggered when any site within an MAA Program Project has been approved for Metropolitan's funding in excess of $10,000. All sites receiving $10,000 or more in funding must be automatically inspected by Participant Agency. Participant Agency must also notify MWDOC/Metropolitan within 3 to 5 business days of upcoming inspection by Participant Agency for site(s) exceeding $10,000. MWDOC, Metropolitan or a designated representative may attend inspection. Notification of upcoming inspection to be sent to bfah l @mwdoc .com and mac on se rvation@mwdh2o .com 5 Attachment 2 Page 10 of 26 To determine how many devices need to be inspected at a $10,000+ site, follow the next two points. i. If the site triggering an Automatic Inspection also meets the criteria for a Large Project , as described below, then Participant Agency must inspect a minimum of 10% of the devices installed. ii. If the site triggering an Automatic Inspection does not meet the criteria for a Large Project , then the Participant Agency must inspect 100% of devices at the site. b. Large Project/Sites: Participant Agency must next determine if any of the sites meet the definition of a Large Project/Site. Regardless of the 5% rule listed in Section d below, any site with less than $10,000 in funding but that receives the designation of Large Project/Site must be inspected. The total number of devices to be i nspected for Large Projects/Sites will be a minimum of 10% of the total devices installed at each site . If any site within your overall MAA Program Project installs any combination of the following number of devices, you must conduct an inspection of a minimum 10% of any combination of the devices installed. Large Projects/Sites are defined as : i. For plumbing devices-50 device units or more at one installation address. ii. For irrigation controllers-20 controllers or more at one installation address . Note that irrigation controllers may be installed in different landscape areas inside a single complex . iii. For sprinkler nozzles-100 nozzles or more at one installation address. c. Regular Projects/Sites : For sites not meeting: (a) $10,000+ in funding per site or (b) the Large Project/Site criteria above, Participant Agency must inspect 100% of devices at the site . d. For each MAA Program Project that Participant Agency submits a Request for, Participant Agency must physically inspect a minimum of 5% of the value of each device-based MAA Program Project approved by MWDOC/Metropolitan before invoicing. For example if the MAA Program Project is approved for $100,000, then a minimum of $5,000 worth of devices must be inspected per MAA Program Project. e. Inspections for Regular Projects/Sites, sites defined as Automatic Inspections (mandatory), as well as those defined as Large Projects/Sites (mandatory) count towards the 5% (section d above) minimum of the value of each device-based MAA Program Project to be inspected. Partic i pant Agency will report progress toward the 5% inspection requirement on each invoice for all inspections required by MWDOC/Metropolitan. The party signing each invoice must have signing authority to certify the invoice . In specti o n Re q u iremen t s Participant Agency inspection at a minimum will: a. Validate quantity of devices installed . 6 Attachment 2 Page 11 of 26 b. Verify new device type, make, and model with Project information. c. Verify Installation address or specific locations within the address with Project documentation. d. With permission from the customer, take photographs relating to the devices installed to be included in Inspection report. i. Indoor Inspection: Indoor inspection includes detailed fixture count of toilets, urinals, dry vacuum pumps, food steamers, ice machines. Access to bathrooms, kitchens, eating facilities, and medical facilities are required to perform the inspection and property owner/applicant should be made aware of this at the application stage. ii. Outdoor Inspection: Outdoor inspection includes count of installed and operating landscape devices such as irrigation controllers and nozzles; and cooling tower controllers. Access to either landscape area or rooftop is required to perform the inspection . For irrigation controllers, inspect the model to ensure it matches the rebate application, verify that it is operating as a "smart device" and is communicating with the onsite weather station or is receiving offsite/remote weather data and, if possible, have the contact person show the inspector how the controller has been programmed, and confirm quantity of stations of timer model. Potential Inspection Results a. Partial fail: Inspection completed with discrepancies between Project information and inspection process. Participant Agency to only bill MWDOC for verified quantity. b. Device(s) installed at a different location: the installation must be inspected prior to billing MWDOC. A substitute device cannot be included. If installation is verified at the different location, Project information must be revised to reflect new information. c. Device count is different from the application: i. If the count is more, only the amount approved in the Project will be reimbursed. ii. If the inspection count is less, only the verified count will be billed to MWDOC. For Large Projects where the inspection count is less, the Participant Agency inspector will increase the inspection from 10% to 20% of total installations. The percentage found to be installed for Large Projects will be applied against the total and the total quantity will be reduced by that percentage. For example, after inspecting 20% of the total installations of 100 toilets, 15 out of 20 toilets were verified installed (75% installed); then the final approved count would be 75 toilets (75% of the 100 = 75), rather than 100. If inspection reveals a discrepancy as described in the example, Participant Agency may choose to inspect 100% of the project, otherwise the extrapolation as shown on the example must be taken and the amount revised prior to billing MWDOC. 7 Attachment 2 Page 12 of 26 d. The make/model is different from the application: verify that different make/model is a Metropolitan approved device. If so, inspect as usual and revise information on Project documentation prior to billing MWDOC. e. Failed inspections will not be billed to MWDOC Reasons for failure: • Device(s) not installed • Device(s) installed, but no working properly • For "smart" irrigation controllers, device(s) not operating as a "smart" device • Installed device(s) has been removed • Access to property not allowed • Device(s) installed at a different site. MWDOC/Metropolitan reserves the right to verify and inspect any approved projects at any time. If installation cannot be verified, Participant Agency must reimburse MWDOC. MAA Program Type Commerc1al Dev1ce Primary Inspection Criteria Listed in order from A to C (must do (C) below even if (A) and/or (B) exists) (AI $10,000 or more (B) Large Site (C) Inspected less than 5% of Total Project$ < 8 Secondary Inspection Criteria Large S1te Non-Large Site Less than $10,000, but sat1sf1es the Large S1te def1n1t10n Number of Inspections Required M1n1mum 10 % 1nspect1ons of each qualifying s1te 100% mspect1ons of each qual1fy1ng s1te Mm1mum 10% 111Spect1ons of each qual1fym g s1te Number S1tes up to 5% of Total Project S Attachment 2 Page 13 of 26 Spray to Drip-Residential The residential portion of the Spray-to-Drip Rebate Program is a device-based program with different inspection requirements and criteria than other device-based inspections. The inspection requirements for residential Spray-to Drip Rebate projects are described below: Pre -Inspection Procedure Once an application is received, a project cannot be accepted and no funding is reserved until a "pre-inspection" is conducted, as follows: MWDOC reviews the application to confirm: • Program application is completed in full • A copy of a current water bill is attached and confirms that o Participant agency is participating in the program o Project site is located within Orange County o Payee name matches the application name • Applicant has attached 3 to 5 photos of the project area taken with the existing sprinkler system turned on. Photos must clearly show the sprinkler system in use and that the spray heads are functional. Photos must also contain identifying features (house in background, unique landscape/decorating features, etc.) to confirm that photos submitted are for the property/site listed in the application. • The number of drip "kits" the applicant is applying/eligible for. • A simple site plan has been attached indicating the proposed spray-to-drip conversion areas • Any supplemental documents included have been reviewed. Once MWDOC confirms that the application is complete and satisfies the above requirements, MWDOC forwards the application to the Participant Agency to conduct its own review and approval utilizing the steps listed above. If the application has satisfied all of the above requirements, a Project Approval Notice is generated by MWDOC/Participant Agency and emailed to the applicant. The funding is reserved at this point and cannot increase. However, the funding amount may decrease if the applicant installs less drip equipment than was specified on the application or if the costs of the equipment are less than anticipated. Should the application fail the pre-inspection process, the application will be denied. MWDOC reserves the right to conduct, or to require Participant Agency to conduct, an on-site pre-inspection of any Spray-to Drip application should MWDOC, in its best judgment, deem it necessary to do so. Post -Inspection Procedure Once the Spray-to-Drip Project is complete, applicant completes the Spray to Drip Completion form to request an on-site post-inspection. Prior to scheduling the post-inspection, the Completion Form will be reviewed by MWDOC to confirm the following: • Completion Form is completed in full. • Payee Name and Mailing Address for Rebate Check is provided. • Applicant has attached at least 3 completed conversion area pictures showing: 9 Attachment 2 Page 14 of 26 o Wide angle view of completed project area(s) o Close-up(s) of installed pressure regulation/filtration component(s) o Close-up(s) of installed drip tubing • Applicant has attached copies of any project related receipts or invoices. For a receipt/invoice to be considered eligible it must include the following: o Dated within the project period. o Signed by the customer/applicant/property owner and includes the site location, scope of work, and costs. o Itemized to include make, model, sku, quantity, price per item, total price. o The actual quantity of drip "kits" purchased and the quantity of kits eligible for rebate. o Labor is not reimbursable and must be listed as a separate line item. If the Completion Form is missing or does not comply with the requirements of any of the above, MWDOC/Participant Agency shall work with the applicant to obtain the information and or appropriate photos/documents prior to scheduling the post-inspection. If applicant is unable to provide receipts/invoices that meet the requirements set forth above, the post-inspection will be considered a fail, the application will be denied, no rebate will be issued, and no on-site post- inspection should be scheduled. If the Completion Form has satisfied all of the above requirements, MWDOC/Participant Agency and/or its inspector will work with Applicant to schedule the mandatory on-site post-inspection. The purpose of the on-site post-inspection is to serve as an independent verification of the information contained in the Completion Form. As part ofthe on-site post-inspection, Participant Agency/inspector must verify the following: • That drip irrigation equipment has been installed. For residential on-site post-inspection, if microspray, point-source emitters, or any other type of drip irrigation other than embedded emitter tubing has been installed, this must be noted and photographed. Only embedded emitter tubing installations are eligible for rebates in residential settings. • That pressure regulation/filtration components have been installed as part of the drip conversion. Manufacturer/make, model, model number/sku, and quantity should be documented, and the equipment should be photographed. • That drip tubing has been installed. The drip tubing should be photographed. If covered, a minimum of a 10-foot section must be uncovered for the photograph. • That spray irrigation is no longer functional in the drip conversion area(s). Any remaining spray heads in the conversion area must be capped (no exceptions). Once the on-site post inspection is complete, Participant Agency will complete the Rebate Check Authorization form, in full, and upload all photos and documentation. Once the Check Authorization form has been submitted, it will be reviewed by MWDOC, along with copies of all 10 Attachment 2 Page 15 of 26 receipts and invoices, and if the spray-to-drip project has satisfied all the terms, conditions, guidelines, and requirements of the program, the application will be processed for rebate. If all the terms, conditions, guidelines, and requirements of the program have not been satisfied, the post-inspection will be considered a fail, and the application will be denied and no rebate funds will be issued. MWDOC reserves the right to conduct or attend any on-site post-inspection of any Spray-to Drip application should MWDOC, in its best judgment, deem it necessary to do so. IV . Area-Based Programs Area-based programs include any program where the rebate amount is determined by an area measurement. Such programs currently include, but are not limited to, residential and commercial Turf Removal and commercial Spray to Drip. Turf Removal Participation Procedure The Turf Removal Rebate Process, as it currently exists, is depicted in the following chart. The process flow is broken down into 11 distinct steps starting with the Customer Application Submittal and ending with Metropolitan and Participant Agency Invoicing. The 11 steps are as follows: Step 1: On-line Application and Document Submittal Process Performed by the Customer Step 2: Application Review Process and Pre Inspection Distribution Performed by MWOOC Step 4: Pre-Installation Inspection Process Performed by Participant Agency or Inspection Vendor and sent to MWOOC for review Step 5: Notice to Proceed or Denial Letter to Customer Process Performed by MWDOC Step 6: Participant Project Installation and Project Completion Notification Performed by Customer Step 7: Initial Project review, Post-Work Order Generation and Distribution Performed by MWDOC Step 8: Post-Installation Inspection Process Performed by Participant Agency, MWDOC, or Inspection Vendor and sent to MWDOC for review Step 9: Application Approval or Denial and Invoice Review Process Performed by MWDOC 11 Attachment 2 Page 16 of 26 Step 10: The Rebate Check Run and W-9 Request Process Performed by MWDOC Step 11: Metropolitan Water District and Participant Agency Invoicing Process Performed by MWDOC General Inspection Procedures For all customer types, all sites will be measured by the Participant Agency and or its inspector for 100% of the sites for 100% of the project areas during both the pre-and post-inspections. Required minimum techniques for area measurements are described in Section V- Measurement Techniques. All inspection procedures/verifications must adhere to the following additional inspection and certification requirements: • Residential Area-Based Inspections: For residential area-based customers with an approved Metropolitan rebate amount exceeding $5,000, Participant Agency or inspection vendor must notify MWDOC/Metropolitan within 3 to 5 business days of upcoming post-inspection(s) by Agency. MWDOC, Metropolitan or a designated representative may attend inspection. Notification of upcoming inspection to be sent to tu rfremoval@ mwdoc.com . • Commercial Area-Based Inspections: For commercial area-based customers with an approved Metropolitan rebate amount exceeding $10,000, Participant Agency must notify MWDOC/Metropolitan 3 to 5 business days prior to upcoming post-inspection(s) by Agency. MWDOC, Metropolitan or a designated representative may attend inspection. Notification of upcoming inspection to be sent to t urfre mova l @mwdoc.c o m. • Participant Agency will only bill MWDOC/Metropolitan for the square footage measured. • Participant Agency must adopt these Inspection Procedures as their own or, alternatively, to develop and submit for approval by Metropolitan and/or MWDOC Participant Agency's own inspection and verification procedures document in line with the requirements and procedures contained in this document. MWDOC/Metropolitan will require Participant Agency to submit them. MWDOC/Metropolitan may perform onsite inspections of projects prior to payment. Result of the inspection may affect payment made to Participant Agency • All projects that require inspection must be inspected prior to Participant Agency invoicing MWDOC. MWDOC may request inspection reports from Participant Agency at anytime. Pre -Inspection Procedures-Turf Removal After an application is received and the information has been verified, a project cannot be accepted and funding is not reserved until a "pre-inspection" is conducted by the Participant 12 Attachment 2 Page 17 of 26 Agency or by a vendor inspector. The pre-inspection on-site visit is a means to determine confirmation of eligibility. The pre-inspection process verifies that the project area contains live turf or sufficient evidence that live turf recently existed and that the requested square footage to be removed seems reasonable and consistent with the physical inspection . This requirement applies to both residential and commercial turf removal areas unless otherwise noted. When establishing that areas are eligible, careful inspection with accurate, and precise measurements, as described in Section V, are always requ i red . For Turf Removal, during the pre- inspection the total project area square footage is measured. Any non-eligible square footage is removed, such as non-turf areas including bare soil, trees, shrubs, mulch, paving, and utility box footprint, etc. Refer to specific program terms and conditions for eligibility criteria. The square footage listed on the application is to be used as a reference, the initial project area is to be based on the square footage as measured during the pre-inspection. Once the initial project area square footage has been determined, that number is used to reserve funding, and a letter to proceed is generated and sent to the customer. On-Site Ins p ections for Area-Based Re bates Unless the program guidelines specifically state otherwise, on-site eligibility verification and area measurement for the pre-inspection is the method to be utilized by the inspection vendor as well as any Participant agency conducting its own inspection . Measu ri ng Large Sites by GIS With extremely large sites (in excess of 50,000 sf) where physical measurements are difficult, aerial imagery is often employed to measure the site. In these circumstances a GIS measurement may only be used to measure the project area and a pre-inspection site visit is still required to ensure that the site meets all program conditions and requirements and is eligible to participate. This method is often referred to as a "spot-check" since the sites are checked for existing turf during the inspection, but measured separately using GIS. If a site is measured by GIS, rather than through an on-site measurement technique, it must explicitly be noted on a work order or through an equivalent form for written communication from the Participant Agency/vendor inspector to MWDOC. Digital imagery must be saved and sent tp MWDOC. There must still be confirmation that the site/area to be rebated contains live turf and that the requested footage to be removed seems reasonable and consistent with the aerial inspection Condit ion of Turf at Pre-Inspection If bare areas were included by the customer, the inspector must subtract those areas. In many cases, due to the drought or season, dormant or dead brown grass is present. Dormant or dead brown grass that appears to have been maintained in the recent past is still eligible. However sites where there is bare soil that appears compact and no turf was present in the recent past, are not eligible. In addition, moss areas where there is no turf or areas that have grown or mowed weeds would be ineligible. A lawn with weeds would still remain eligible. Photo documentation of the turf is required in order to approve the site . Photos of the entire area and detailed photos should 13 Attachment 2 Page 18 of 26 be taken showing turf and bare soil conditions. For large sites with multiple separated areas (or sub-areas), a map must be submitted identifying the area measured for each separate sub-area. Mu ltiple Applications unde r same Site Residential sites have a lifetime maximum. Commercial sites have an annual maximum. Modification s to Initial Project Area In some instances a customer may want to swap turf removal areas/locations after a letter to proceed has already been sent and construction has begun. This is common in HOAs, Golf Courses, Parks, and other large sites, but occasionally occur with residential projects. There are many reasons for changes such as: HOA board decisions, public outcry, irrigation system delineation restrictions, or even finding out that some part of the property belongs to another entity (as is common in parkways along sidewalks, and around common area parks). When these changes occur, ifthe customer is simply removing an area to be renovated, no action is required. However, if a decision is made to swap an area with another, additional documentation and a second pre- inspection must occur and is required to ensure that the site is eligible and matches the area measurements. This documentation must include a new site plan and photos of the intended areas. At this point, because a letter to proceed has already been sent and construction has begun, the site eligible for a rebate may not increase in size. If construction has not begun, and the customer would like to increase the area of turf to be removed within program maximum square footage guidelines, a second pre-inspection must occur and is required to ensure that the site is eligible and matches the area measurements. If the swapping of one area for another occurs during the construction phase of the project and is not previously approved by MWDOC, the swapped area will not be eligible for rebate as it was not subject to the mandatory pre-inspection . Post-Inspection Procedures-Turf Removal For both residential and commercial projects, unless otherwise noted, once the letter to proceed has been issued, the initial project area square footage may not increase; however, it may decrease if the customer decides to remove less turf than what was measured. After the customer has completed their project, a second on-site inspection (post-inspection) occurs to ensure that the renovated areas are in compliance with the program. Entire (100%) project re-measurement should occur during the post-inspection, utilizing the same techniques as employed during the pre-inspection measurement, with the exception of GIS . Negative deviations between the pre-and post-inspections area measurements, as well as swapped areas occurring without a proper pre-inspection and approval from MWDOC, will result in a reduction of the rebate eligible area (meaning the lesser area measurement will be the basis for the rebate). All projects must be inspected prior to Participant Agency invoicing MWDOC. When establishing that areas are eligible, careful inspection with accurate, and precise measurements, as described in Section V, are always required. For Turf Removal, during the post-inspection the total converted area square footage must be measured. Any non-eligible square footage is removed, such as remaining-turf areas, bare soil, or non-permeable area including hardscape and pools. Refer to specific program terms and conditions for eligibility criteria. 14 Attachment 2 Page 19 of 26 The initial project area square footage established during the pre-inspection is to be used as a reference, the final project area is to be based on the square footage as measured during the post-inspection. Once the final project area square footage has been determined, that number is used to determine the actual potential rebate amount, so long as it does not exceed the total eligible project costs. Only that final project square footage measured by the Participant Agency/inspection vendor may be included in the payment request to MWDOC. Project Extensi o ns In some instances, projects may experience delays. As all projects either have a 60 day deadline or 90 day deadline to complete their project, an extension may be requested. In all cases, extensions may only be granted to sites who are making progress to complete their project. Documentation or a site visit is often required for the purposes of verifying that progress is being made at a site. Examples of documentation are signed contracts with a landscape contractor, photos ofthe site with turf removed and work under way, or canceled checks to a contractor. This is an important step; if a site is not showing progress and there is no motivation to complete, it may be cancelled to allow the funding of other, more motivated, rebate customers. Spray to Drip-Commercial The commercial portion of the Spray-to-Drip Rebate Program is administered in a similar way to the residential portion, with the exception of the post-inspection requirements which are area- based. The inspection requirements for commercial Spray-to Drip Rebate projects are described below: Pre -I nspection Procedure Once an application is received, a project cannot be accepted and no funding is reserved until a "pre-inspection" is conducted, as follows: MWDOC reviews the application to confirm: • Program application is completed in full. • A copy of a current water bill is attached and confirms that o Participant agency is participating in the program o Project site is located within Orange County o Payee name matches the application name • Applicant has attached 5 to 10 photos ofthe project area taken with the existing sprinkler system turned on. Photos must clearly show the sprinkler system in use and that the spray heads are functional. Photos must also contain identifying features (buildings in the background, unique landscape/decorating features, etc.) to confirm that photos submitted are for the property/site listed in the application. • Applicant has provided the square footage of the proposed spray-to-drip conversion area. • A simple site plan has been attached indicating the proposed spray-to-drip conversion areas. • Any supplemental documents included have been reviewed. 15 Attachment 2 Page 20 of 26 Once MWDOC confirms that the application is complete and satisfies the above requirements, MWDOC forwards the application to the Participant Agency to conduct its own review and approval utilizing the steps listed above . If the application has satisfied all of the above requirements, a Project Approval Notice is generated by MWDOC/Participant Agency and emailed to the applicant. The funding is reserved at this point and cannot increase. However, the funding amount may decrease if the applicant installs less drip equipment than was specified on the application or if the costs of the equipment are less than anticipated. Should the application fail the pre-inspection process, the application will be denied. MWDOC reserves the right to conduct, or to require Participant Agency to conduct, an on-site pre-inspection of any Spray-to Drip application should MWDOC, in its best judgment, deem it necessary to do so. Po st-Ins pection Pr oced u re Once the Spray-to-Drip Project is complete, applicant completes the Spray to Drip Completion form to request an on-site post-inspection. Prior to scheduling the post-inspection, the Completion Form will be reviewed by MWDOC to confirm the following: • Completion Form is completed in full. • Payee Name and Mailing Address for Rebate Check is provided. • Applicant has attached at least 5 completed conversion area pictures showing: o Wide angle view of completed project area(s) o Close-up(s) of installed pressure regulation/filtration component(s) o Close-up(s) of installed drip tubing • Applicant has attached copies of any project related receipts or invoices. For a receipt/i nvoice to be considered eligible it must include the following: o Dated within the project period o Signed by the customer/applicant/property owner and includes the site location, scope of work, and costs. o Itemized to include make, model, sku, quantity, price per item, total price. If microspray or point source emitters have been installed, the flow rate for each must be 2.5 gallons per hour or less, or per the terms and conditions of the Program. o Labor is not reimbursable and must be listed as a separate line item. If the Completion Form is missing or does not comply with the requirements of any of the above, MWDOC/Participant Agency shall work with the applicant to obtain the information and or appropriate photos/documents/invoices prior to scheduling the post-inspection. If applicant is unable to provide photos/documents/invoices that meet the requirements set forth above, the post-inspection will be considered a fail, the application will be denied, no rebate will be issued, and no on-site post -inspection should be scheduled. If the Completion Form has satisfied all of the above requirements, Participant Agency and/or its inspector will work w ith Applicant to schedule the mandatory on -site post-inspection. The purpose of the on-site post-inspection is to serve as an independent verification of the 16 Attachment 2 Page 21 of 26 information contained in the Completion Form. As part of the on-site post-inspection, Participant Agency/inspector must verify the following: • The actual square footage of the conversion area. All commercial spray-to-drip sites will be measured by the Participant Agency and or its inspector for 100% of the sites for 100% of the spray-to-drip conversion areas during the post-inspections. The required minimum techniQues for area measurements are described in Section V -Measurement Techniques. • That drip irrigation equipment has been installed. The type of drip equipment (embedded emitter tubing/microspray/point source emitters must be noted and photographed. • That pressure regulation/filtration components have been installed as part of the drip conversion. Manufacturer/make, model, model number/sku, and quantity should be documented, and the equipment should be photographed. • That drip tubing has been installed. The drip tubing should be photographed. If covered, a minimum of a 20-foot section must be uncovered for the photograph. • That spray irrigation is no longer functional in the drip conversion area(s). Any remaining spray heads in the conversion area must be capped (no exceptions). Once the on-site post inspection is complete, Participant Agency will complete the Rebate Check Authorization form, in full, and upload all photos and documentation. Once the Check Authorization form has been submitted, it will be reviewed by MWDOC, along with copies of all receipts and invoices, and if the spray-to-drip project has satisfied all the terms, conditions, guidelines, and requirements of the program, the application will be processed for rebate. If all the terms, conditions, guidelines, and requirements of the program have not been satisfied, the post-inspection will be considered a fail, and the application will be denied and no rebate funds will be issued. MWDOC reserves the right to conduct or attend any on-site post-inspection of any Spray-to Drip application should MWDOC, in its best judgment, deem it necessary to do so. V . Measurement Techniques When measuring sites, tape measurers remain the most accurate method of measurement. Measuring wheels are nearly as accurate when rolling on a flat surface such as concrete or asphalt. Measuring wheels on turf or shrub areas run the risk of being inaccurate. Tape measurers are recommended whenever uneven surfaces are encountered. For large sites, a map should be provided indicating all the turf areas intended for removal and all project areas should be measured and noted with square footage. Odd shapes are often hard to measure accurately. A series of methods of measuring odd shapes have been reviewed and below are a listing of acceptable measurement techniques of odd shapes. Alternative measuring techniques must be submitted to MWDOC for review and approval prior to implementation and must be at least as be at least as accurate as the techniques listed here. 17 Attachment 2 Page 22 of 26 Non -Uniform Rectangular First measure the length ofthe longest axis of the area (line AB). This is called the length line. Next, divide the length line into equal sections, for example 13ft. At each of these points, measure the distance across the area in a line perpendicular to the length line at each point (lines C through G). These lines are called offset lines. Finally, average the lengths of all offset lines and multiply the result times line AB (65ft. in this example). This is most notably different from the Non-Uniform Ellipse method in that exactly one of the left or right edges is measured, in this case line "C." Irregular Rhombus or Widening Rectangular Exa mpl e: Non-Uniform Rectangu lar Le ngth line (AB) =65ft Distance between offset lines is 13 ft apart Length of each offset line : C = 20 ft F = 20 ft D = 1 0 ft G = 25 ft E=15ft H=20ft Average length of offset lines (C + D + E + F + G + H) (Number of offset lin es) = (20 + 10 + 15 + 20 + 25 + 20) I 6 =18 .3ft Total Area= (Length line) x (Average length of offset lines) =65ftx18.3ft = 1192 ft 2 A fast way to measure irregular rhombi is shown in the example below. Stake one end of the measuring tape at point (A, B); measure lined and then line B. Without removing the stake measure line c and then line A. Using those four measurements you will be able to find line a and line b. The areas of triangle (ad), triangle (cb), and rectangle cd) can now be calculated . 18 Attachment 2 Page 23 of 26 Non-Uniform Round Example: Irregular Rhombus or Widening Rectangular Length of each line: A = 20 ft c = 18 ft B = 25 ft d = 21 ft Line (f) = A-c Line (e) = B -d = 20ft-18ft =2ft Area ( cd) = c x d =18ftx2lft = 378 ft2 Area(cb)=(cxe)/2 =(18ftx4ft)/2 = 36 ft 2 Area (fd) =(fx d) /2 =(2ftx21 ft)/2=21 ft 2 = 25 ft-21 ft =4ft Total Area= Area (cd) +Area (ce) +Area (fd) = 378 ft 2+ 36 ft 2 + 21 ft 2 = 435 ft 2 First measure 16 evenly spaced radii from the same center point (point A). This is called the center point. Next take the average of all the radii (B + C + D + E + F + G + H + I + J + K + L + M + N + 0 + P + Q) I 16. Use the average radii to calculate the area of a circle. (12.25 ft. in this example). Board used for measuring 19 Attachment 2 Page 24 of 26 Example: Non-Uniform Round Length of each offset line: B=IOft E=12ft H=IOft K=9ft N=J6ft Q =9ft C=15ft F =15ft 1=1Sft L=8ft 0=10ft D=lOft G=l3ft J=17ft M=l5ft P=I2ft Number of radii= 16 Average length of offset lines = (B + C + D + E + F + G + H + I + J + K + L + M + N + 0+ P + Q) I (Number of radii) = ( 10 + I 5 + 10 + 12 + I 5 + 13+ I 0 + 1 5 + 17 + 9 + 8 + 1 5 + 16 + I 0 + 12 + 9) /16 = 12.25 ft Total Area= n x 12.25 2 ft = 3.)4 X 12.25 ft X 12.25 ft = 471 ft 2 Non-Uniform Ellipses The method used for irregular shaped areas is called the "offset method". First measure the length of the longest axis of the area (line AB). This is called the length line. Next, divide the length line into equal sections, for example 10ft. At each of these points, measure the distance across the area in a line perpe,ndicular to the length line at each point (lines C through G). These lines are called offset lines. Finally, add the lengths of all offset lines and multiply the result times the distance that separates these lines (10 ft. in this example). This is most notably different from Non-Uniform Rectangular in that neither the left or right edges of the shape are measured in the ellipse. 20 Example: Non-Uniform ElliJ>se Length line (AB) =60ft Distance between offset lines is 10ft apart Length of each offset line C = 15 ft F = 25 ft D = 10 ft G = 20 ft E =15ft Total length of offset lines = C + D + E + F + G = 15+ 10+ 15+25+20 =85ft Total Area= (Distance between offset lines) x (sum of the length of offset lines) = I 0 ft X 85 ft = 850 ft 2 Attachment 2 Page 25 of 26 . . Non-Uniform Ellipses Alternate An alternate method of measuring non-uniform ellipses is by dividing the ellipses in uniform parts and utilizing the non-uniform round method as described above. An example is shown below . 21 Attachment 2 Page 26 of 26 Addendum 38 FY 17-18 Turf Removal Rebate Program as of July 1, 2017 Participant Agency Participation Authorization (Page 1 of 3) Election to Participate/Not Participate in Turf Removal Rebate Program. By checking the box below, -----:-:-----------hereby elects to either: Name of Participant Agency Not participate in the Turf Removal Rebate Program or Participate in the Turf Removal Rebate Program Residential/Commercial/Public Agency Residential Only Commercial Only Public Agency Only D D D D D Site Inspection; Election by Participant. Participant Agency must conduct mandatory, on site pre-turf and post-turf removal verifications/inspections on 100% of participating sites in its service area, as described in Amendment 1 to the Water Conservation Participation Agreement and the MWDOC Inspection and Verification Procedures document. Participant Agency may elect to (1) conduct its own pre-turf and post-turf removal verifications/inspections by utilizing its in-house staff (2) contract with a third party vendor of its choice to conduct the pre-turf and post-turf removal verifications/inspections; or (3) utilize MWDOC's installation verification/inspection contractor to conduct the pre-turf and post-turf removal verifications/inspections. If Participant Agency elects to utilize MWDOC's verification/inspection vendor, Participant Agency may elect to contract directly with MWDOC's inspection vendor. Participant Agency understands and agrees that if Participant Agency utilizes MWDOC's verification/inspection vendor, Participant Agency must still comply with all of the requirements of the Water Conservation Participation Agreement and all Amendments thereto, including the refund requirements in Section 6, and that MWDOC is in no way liable or responsible for the acts or omissions of such vendor and makes no representations or warranties regarding the quality of such vendor's work. Participant's sole recourse as to any action, claims or damages arising out of the acts or omissions of MWDOC's verification/inspection vendor is with the vendor and not with MWDOC. By its initials below,---------------hereby elects to either (choose one): Name of Participant Agency Attachment 3 Page 1 of 3 Addendum 38 FY 17-18 Turf Removal Rebate Program as of July 1, 2017 Participant Agency Participation Authorization (Page 2 of 3) (1) Conduct its own inspections: (2) Contract with its own third-party inspector: (3) Allow MWDOC to invoice Participant Agency monthly for previous month's inspections: Initial Here Initial Here Initial Here An Authorized Representative(s) of Participant Agency must approve all pre-turf and post-turf removal verificat ion/ins pection work orders, whether conducted by Participant Agency, a third-party vendor, or MWDOC 's inspection contractor. Participant Agency shall designate its Authorized Representative(s) by completing Table-1 below. All Authorized Representative(s) identified in Table 1 must have signing authority with Participant Agency to certify that all info rmatio n contained in the pre-turf and post-turf removal verification/inspection work orders is true and correct and to approve all rebate funding amounts. It is the responsibility of the Participant Agency's Authorized Representative to access the Droplet online portal weekly to approve all verification/inspection work orders and provide the approved work orders to MWDOC . Table 1 Designation by Participant Agency of Authorized Representative(s) Name Title Election to Provide Supplemental Funding. Participant has the option to provide supplemental funding to customers in its service area to further incentivize participation in the Turf Removal Rebate Program. By completing Table 2 below , Participant Agency elects to provide supplemental funding for turf removal rebate incentives . Participant Agency acknowledges that it is responsible for managing its own rebate funding budget via the Droplet online portal. MWDOC will not be tracking the status of Participant Agency 's funding. Attachment 3 Page 2 of 3 ·. Addendum 38 FY 17-18 Turf Removal Rebate Program as of July 1, 2017 Participant Agency Participation Authorization (Page 3 of 3) Table 2 Turf -Removal Rebate Supplemental Funding Participant Agency Participant Agency Supplemental Turf Removal Rebate Providing Supplemental Funding Amount per Square Foot Funding of Turf Removed (X) Residential Turf Removal $ /sf (One application per property DYes D No Maximum of 2,000/sf address per lifetime) Commercial Turf Removal $ /sf (One application per customer per DYes D No _y_earl Maximum of 25,000/sf Public Agency Turf Removal $ /sf (One application per customer per DYes D No Maximum of 50,000/sf year) By signing below, Participant Agency understands that it is obligated to pay any supplemental rebate funding amounts and vendor inspection fees, if selected, for any applications initiated during the term of this Addendum 3B, regardless of when the project is completed and the rebate check is issued. This funding authorization is effective for applications received by MWDOC on or after July 1, 2017 and continues through June 30, 2018 or until a replacement Addendum is approved and implemented by MWDOC, whichever comes first. All invoicing shall be pursuant to the terms of the Water Conservation Participation Agreement. Incentives will not be applied retroactively. This funding authorization is effective only for the designated period or until a new authorization is received and approved by MWDOC. Each form submitted shall include the total authorization of the Agency for the specified time period . Su pple mental funding forms received by MWDOC by the 15 1h of a month shall become effective on the first day of the following month unless a later Sta rt Date is specified. By signing, Participant Agency agrees to these terms. Participant Agency _______________ _ Authorizing Sign ature General Manaf!er /Desif!u ee Date Date received : Approved by Attachment 3 Page 3 of 3 MWDOC TURF REMOVAL REBATE PROGRAM AUDIT REPORT EXECUTIVE SUMMARY The Municipal Water District of Orange County (MWDOC) implements a Turf Removal Rebate Program (Program) to incentivize property owners to remove turfgrass and install less water-intensive permeable landscaping material. This program appeals to homeowners and property managers looking for water savings and drought relief within their landscapes. Application activity is influenced by both marketing and rebate level. During the last two fiscal years, the influx of funding resulted in greatly enhanced Program promotion and participation . As MWDOC is a member agency of the Metropolitan Water District of Southern California (Metropolitan), the base rebate for the MWDOC Program is funded through the Metropolitan budget. In response to the unprecedented and continuing drought, during Metropolitan's biennial budget for the fiscal years 2014- 15 and 2015-16, $369 million dollars were designated to conservation related programs. Of that, $252 million dollars were appropriated to turf removal projects, and $27.6 million (11%) was implemented within the MWDOC service area. The drought remained a headline and media outlets promoted the unprecedented conservation budget and the "new California landscape." local businesses further promoted the Program as a way to garner business of their own. Within Orange County, the MWDOC Program benefitted from increased promotion as a cross-market (television, radio, newspapers, etc. are within a joint market with the greater los Angeles region). In order to ensure public funds are appropriately utilized, MWDOC regularly reviews its rebate programs for their efficiency, effectiveness, and accuracy. These reviews occur during normal program pauses, typically coinciding with the end of a funding or grant award term. This allows for an adaptive approach to implement lessons learned prior to the reinstatement of a program . This audit of the MWDOC Turf Removal Rebate Program seeks to verify the areas of the Program's implementation process that may result in less than desired amounts of turf removed , which could have resulted in over-payment. On -site landscape measurement (i.e . turf area in square feet) can be achieved through a number of techniques . To determine what constitutes a measurement error that is reasonably acceptable, MWDOC's Audit conducted an analysis of measurement differences between multiple auditors. Through this analysis, at the same single measurement area, with measurements conducted on-site by independent auditors utilizing different measurement techniques, a square footage difference up to 10% is within the limit accuracy. Audit measurement findings are categorized as satisfactory, under-measured, and over-measured. Satisfactory audit measurements are within 10% of the recorded Program post-conversion measurement . Under-measurement findings occur when the audit re -measurement is greater than the Program post- lJP age Attachment 4 1 of 18 conversion measurement. Conversely, over-measurement occurs when the audit re-measurement is less than the Program post-conversion measurement. It is possible for a site to result in an over-measurement finding without over-payment; within the MWDOC Program, rebates are limited by the total project costs . Overall, the MWDOC Audit revealed more under-measurement than over-measurement (positive net measurement variance). In total, 76% of the sites had either satisfactory or under-measurements where more turf was removed than was recorded during the Program. Further, greater number of sites and square footage resulted in under-measurement as compared to over-measurement. The additional benefits attained through the ancillary landscape conversion from under-measurement is an indication of a successful rebate program . Nonetheless, the Audit resulted in a somewhat bell-shaped distribution. Therefore, over-measurement (and over-payment) remains a concern when implementing an area measurement-based rebate program . The over-measurement results highlighted a number of issues related to measurement practices. To assist in the elimination of measurement issues, MWDOC has developed and implemented comprehensive inspection and verification procedures. As part of this Audit process, it was identified that MWDOC's existing inspection procedures resulted in too much ambiguity for the inspection process. Therefore, to standardize the protocol, MWDOC updated its inspection and verification procedure with specific details. Additional quality control efforts recommended for MWDOC Program implementation include semi-annual inspections measurement training, such as ride-along training/observation of both agency staff and contractor inspections. Any site with a deviation of greater than 10% measurement error and an over-payment greater than the established thresholds ($500 for commercial sites and $150 for residential sites) was flagged for reimbursement. No fraud was detected within the MWDOC audit; however, the audit did f i nd $325,600 in overpayments were made to 33 program participants in 13 retail water agency service areas . MWDOC has requested reimbursement from retail agencies totaling nearly $325,600 of Metropolitan funds. Reimbursement has been completed at all three of the Metropolitan Audit sites, which has already resulted in the return of $107,200 of Metropolitan funds. The balance of $218,400 is currently in the process of being recovered. 21Page Attachment 4 2 of 18 CONTENTS Executive summary ....................................................................................................................................... 1 Introduction .................................................................................................................................................. 4 Program Activity Growth .......................................................................................................................... 6 Turf Removal Rebate Program Process ........................................................................................................ 8 Program Process ....................................................................................................................................... 8 Why Audits are Conducted ........................................................................................................................... 9 Purpose of this Audit ................................................................................................................................. 9 How the Audit was Conducted ................................................................................................................... 10 How Audit Sites were Selected ............................................................................................................... 10 Quality Control Measures within the Audit ............................................................................................ 10 What is a "Good Enough" Measurement ................................................................................................... 11 Conclusions ................................................................................................................................................. 12 How to Understand the Findings ............................................................................................................ 12 Variables of lnterest ................................................................................................................................ 13 Overall Conclusions ................................................................................................................................. 13 Commercial Site Results .......................................................................................................................... 14 MWDOC's Metropolitan Audit Sites ................................................................................................... 15 Residential Site Results ........................................................................................................................... 15 Lessons Learned and Implemented Changes .............................................................................................. 16 Next Steps ............................................................................................................................................... 17 Reimbursement of Funds .................................................................................................................... 17 Water-Savings Benefit Analysis ........................................................................................................... 17 3IPage Attachment 4 3 of 18 INTRODUCTION The Municipal Water District of Orange County (MWDOC} has implemented a Turf Removal Rebate Program (Program) since 2007. The purpose of the Program is to incentivize property owners to remove turfgrass and install less water-intensive permeable landscaping material. This program appeals to homeowners and property managers looking for water savings and drought relief within their landscapes, and California Friendly sustainable landscapes are becoming mainstream in landscape design. MWDOC's 2015 Water Use Efficiency Master Plan estimated that approximately 50% of MWDOC's water demand is attributed to outdoor landscape purposes, and turfgrass is a staple in the Orange County landscape. Per square foot, turfgrass is the single highest water consuming common landscape plant in Southern California. On average, removing one square foot of turfgrass is estimated to save approximately 45.6 gallons of water per year. Further, removal of turfgrass, when replaced with a permeable landscape, has been linked to a reduction in dry-weather runoff. Since the inception of the Turf Removal Program and prior to fiscal year (FY) 2014-15, activity within the Program remained steady, with an average of $1 million of annual funding within MWDOC's Program. However, in the last two years, activity surged as a result of an influx of funding and more intense marketing. In response to the unprecedented and continuing drought, during Metropolitan's biennial budget for the fiscal years of FY 2014-15 and FY 2015- 16, $369 million dollars were designated to conservation-related programs. Of that, $252 million dollars were appropriated to turf removal projects, and $27.6 million (11%) was implemented within the MWDOC service area. Figure 1 illustrates the rebate activity by MWDOC Divisions during that time period. 41P a g e Attachment 4 4 of 18 •Metropolitan Dollars Paid ~Square Feet Turf Removed FIGURE 1. PROGRAM ACTIVITY BY DIRECTOR DIVISION . SIPage Attachment 4 5 of 18 PROGRAM ACTIVITY GROWTH Both marketing and rebate level influence application activity. During the last two fiscal years, the influx of funding resulted in increased Program recognition beyond agencies promoting the Program as a landscape drought-relief conservation tool. As the drought remained a headline, media outlets promoted the unprecedented conservation budget and the "new California landscape." Local businesses further promoted the Program as a way to garner business of their own. Within Orange County, the MWDOC Program benefitted from increased promotion as a cross-market (television, radio, newspapers, etc.) within the greater Los Angeles region. MWDOC's Turf Removal Rebate Program has gone through various iterations since its 2007 inception. Over the years, Metropolitan has provided rebate levels as low as $0.30 per square foot (ft2) and up to $2.00 per ft2 • Thirty cents per square foot is the calculated cost effective program rate, meaning that $0.30 per ft2 is the water savings equivalent to $195 per acre-foot (the Metropolitan avoided cost rate utilized for conservation programs). However, it has also been identified that the turf removal rebate level should be at least $1.00 per ft2 to garner a meaningful level of Program participation activity. Higher rebate levels will result in even higher participation rates. Further, within the MWDOC and Metropolitan Program, retail agencies have the ability to provide supplemental funding. During the MWDOC Audit time period, the maximum level of supplemental funding provided by a retail agency within the MWDOC Program was $3.00 per square foot1 . In response to the drought and to encourage program participation, in May 2014 the Metropolitan Board increased the base rebate from $1.00 to $2.00 per square foot . This enhanced rebate level and increased media presence resulted in an exponential surge in activity, a growth of approximately 2,000% within one year. In May 2015, to help sustain the allocated funding, as well as curb the amount of funding any single site could receive, Metropolitan instituted per-site funding caps based on program sector: $6,000 residential, $25,000 commercial, and $50,000 public agency. Figure 2 illustrates MWDOC Program activity, based on application date. In this graph, a number of Program factors are observed . Key points in time: The moderate slope increase during early 2014 occurred immediately following the Governor's drought declaration, as compared to 2013 activity, and the steeper slope began following the rebate level increase to $2.00 per square foot in May 2014. There is a small dip during late 2014, which concurs with natural program behavior of lesser activities during the winter months. The steep decline in activity occurred following the July 2016 program pause. Large Project Effect: The divergence between the lines (data lines being out of sync) highlights large commercial projects (e.g. few projects, but large areas removed). Conversely, the convergence of the data line in early summer 2015 illustrates the implementation of the caps. 1 The highest level of incentive was provided by the Moulton Niguel Water District, where a site could receive, on top of the $2.00 per square foot of Metropolitan funding, an additional $1.50 per square foot for turf removal plus $1.50 per square foot when installing synthetic grass . 6IPage Attachment 4 6 of 18 ..c. ~ c: 0 ~ .... QJ Q. ""0 Q) > 0 E QJ 0:: ~ QJ Q) LL QJ .... Rl ::::J CT IJ') 71Page PROGRAM ACTIVITY FROM AUGUST 2010-MAY 2016 3,000,000 1400 ..c. .... c: 0 2,500,000 1200 ~ .... QJ Q. 2,000,000 1000 Ill c: 0 Program ~ Rl 1,500,000 1,000,000 500,000 Drought Declaration Large Project Effect $2.00 -Square Feet Removed --Number of Applications FIGURE 2. PROGRAM ACTIVITY OVER TIME FOR THE FY 2014·15 AND FY 2015·16 PERIOD. Pause I 800 .!:! a. a. <t ...... 600 0 .... QJ ..0 E 400 ::::J z Attachment 4 7 of 18 TURF REMOVAL REBATE PROGRAM PROCESS The MWDOC Program is considered a sub-program of the regional Turf Removal Program funded by the Metropolitan Water District of Southern California (Metropolitan). Sub-programs, such as the MWDOC Program, are referred to as Metropolitan-funded Member Agency-Administered programs because the member agency (e.g. MWDOC) assumes the administrative burden of the participation process, rather than relying on the contractor utilized by Metropolitan for rebate program administration. PROGRAM PROCESS Table 1 outlines the basic steps within the MWDOC Program. The MWDOC Program varies from the Metropolitan Program process. The MWDOC Program meets or exceeds all requirements for implementing Metropolitan-funded Member Agency-Administered programs. A number of the quality control efforts that MWDOC implements are more easily managed at a local level. TABLE 1. BASIC TURF REMOVAL PROGRAM STEPS. Metropolitan MWDOC Process Requirement I 1. Participant applies ../ ../ 2. Application reviewed for site/project eligibility ../ ../ 3. On-site pre-landscape conversion inspection, site/project eligibility verification, and large sites only All sites measurement of project area 4. Letter to proceed provided to participant ../ ../ 5. On-site post-landscape conversion inspection, site/project eligibility verification, and large sites only All sites measurement of project area 6. Review of project invoices/receipts ·--·------------All sites 7. Multi-level internal review of project package ../ ../ 8. Rebate issued to participant ../ ../ As illustrated in Table 1, the MWDOC Program requires an inspection before a participant begins a project. This confirms the existence of turf and that the project meets the minimum eligible area for turf removal. After the project has been completed, the project area is measured and inspected to determine the eligible square footage of turf removed, and receipts are submitted to determine eligible costs for reimbursement. Within the MWDOC Program, the rebate paid cannot exceed the eligible project costs. For both pre-landscape conversion inspection and post-landscape conversion inspection measurements, agencies either utilize their own staff, utilize Mission Resource Conservation District through MWDOC, or hire their own contractor. Results are then submitted to MWDOC via a standardized form. The MWDOC Program includes a number of project requirements in order to achieve eligibility. These requirements are provided to each participant through the Program Application Terms and Conditions SIPage Attachment 4 8 of 18 document. MWDOC implements three specific requirements to ensure the maximum level of benefit is achieved through the Program: • Bare soil identified during the pre-landscape conversion inspection is not rebate eligible (bare soil areas are subtracted from the pre-landscape conversion inspection measurement) • Completed project area must include efficient irrigation equipment or the complete removal of the irrigation system • Project rebate cannot exceed project costs (identified through collection and review of project related receipts) WHY AUDITS ARE CONDUCTED In order to ensure public funds are utilized appropriately, MWDOC OVER-MEASURED vs. regularly reviews its rebate programs for efficiency, effectiveness, and OVER-PAYMENT accuracy. These reviews occur during normal program pauses, Over-measurement refers to typically coinciding with the end of a funding or grant award term. an inaccurate measurement This allows for an adaptive approach to implement lessons learned where the square footage prior to the reinstatement of a program. recorded during the Program PURPOSE OF THIS AUDIT This audit of the MWDOC Turf Removal Rebate Program (MWDOC Audit) seeks to identify the areas of the Program's implementation process that may result in over-measurement with over-payment. To identify the difference between over-measured projects and is greater than what was actually removed as observed during the Audit re- measurement. Based on Metropolitan funding rule caps and MWDOC Program measurement-error, this evaluation will also assess the inherent criteria that prohibit the measurement error between inspectors. Any proficiencies or deficiencies in the method of managing the program, as well as associated solutions, are identified within the last section of this document. Concurrently, the Metropolitan Internal Auditor is conducting an independent audit of the regional Turf Removal program rebate to exceed the total project cost, it is possible for a site to receive over- measurement without over- payment. (Metropolitan Audit). The Metropolitan Audit is comprehensive as it includes both the program administered by Metropolitan on behalf of member-agencies participating in the regional rebate program, as well as sub-programs implemented by member-agencies (e.g. MWDOC's Program). Within the Metropolitan Audit, turf removal sites of particular concern have been identified and re-measured for accuracy. Any sites within the Metropolitan Audit that also fell within the MWDOC service area were included within the MWDOC Audit. Attachment 4 9 of 18 HOW THE AUDIT WAS CONDUCTED The MWDOC Audit sample was composed of a stratified sample set of 188 sites, from both commercial and residential sectors . The Audit re-measurement occurred at a time period after the rebate check had been issued. These sample sets were identified to achieve a statistically valid sample size 2 • The actual number of sites selected within each retail agency was proportional to their level of activity. HOW AUDIT SITES WERE SELECTED Sites were selected using a stratified random approach, with the number of sites selected within each agency based on the proportionate level of Program activity (i.e. agencies with more sites within the Program had more sites selected within the Audit). The categories or strata included distribution of repetitive traits within the dataset, such as rebate amount, project area (square footage), and multiple sites with the same landscape contractor. Table 2 identifies the audit sample in relation to the Program in total. For example, the MWDOC Audit sample of commercial sites represented 14% of the applications, but 63% of the turf removed and 68% of MWDOC's Metropolitan funding within that sector. TABLE 2. AUDIT SAMPLE DISTRIBUTION BY SECTOR. Total Program d . 1 1. . Percentage of Percentage Turf Percentage of Au 1t Samp e App 1cat10ns A 1. . (f 2) d' ( ) pp 1cat1ons t Fun mg Commercial Sector Residential Sector FVs 14-16 650 7,400 14% (n=94) 1% (n=94) 63% 1% 68% 1% Two inspection contractor companies were selected to perform MWDOC's in -field Audit inspections. Careful consideration was taken to ensure that the inspection contractor performing the audit measurement did not perform the original in-program inspections. MWDOC provided training and quality control monitoring of these inspectors as described below. QUALITY CONTROL MEASURES WITHIN THE AUDIT To ensure the quality of the MWDOC Audit measurements, staff implemented the following control procedures: • On-site training by qualified MWDOC staff on landscape auditing measurement techniques • On-site observation by MWDOC staff at 5% of the MWDOC Audit sites, resulting in approximately 10% of the re-measured square footage Results of the MWDOC Audit measurements conducted by the Audit inspectors were submitted to MWDOC via a standardized form. To address quality assurance concerns regarding sub-areas and project boundaries, sites were revisited following communication with site personnel to assist in project area recognition. 2 The sample size had a confidence level of 95% and a 10% margin of error. 10 I Page Attachment 4 10 of 18 Sites with multiple applications or phases were closely examined. Effort was taken to ensure that the audit results were not skewed by including other areas which may have been included on a separate application. Additionally, MWDOC Audit measurements resulting in an over-measurement in excess of 25% were reviewed, and a re-measurement of the site was conducted by MWDOC staff to verify the Audit inspector's measurement. WHAT IS A "GOOD ENOUGH 11 MEASUREMENT? On-site landscape measurements can be achieved through a number of techniques. Differences in measurement techniques include: • Equipment-such as measuring tape versus wheel • Methodology -such as geometry utilized to measure irregularly shaped areas At the onset of MWDOC's Audit, analysis was performed to determine the difference between measurements of replicated sites by multiple auditors. This means the same single measurement area was measured by different people a number of times to establish an acceptable measurement difference. In total, three large commercial sites (large-sites) were broken into 140 smaller single measurement areas. The measurements were replicated by three independent auditors (Auditors A, B, and C), from three different agencies, with a variety of appropriate equipment and measurement techniques. Breaking a large-site into single measurement areas is a common and often necessary practice. The 140 single measurement areas ranged from approximately 65 ft2 to 27,000 ft2, with an average project \ Measuring equipment examples area of 2,400 ft2• The single measurement areas were indicative of the average residential and commercial project sizes. Two factors were considered during this analysis: • Are the deviations in the measurement areas at each of the three large-sites considered statistically significant? o This tells us if there was something different at one of the large-site locations that may have influenced the measurements there, thereby resulting in a difference • Are deviations in the auditors' single measurement area measurements considered statistically significant? HI Page o This tells us if there was something that one of the auditors may have been doing that makes their measurements different Attachment 4 11 of 18 Upon analysis of the large-sites, if there was a statistical difference between the three large-sites, then the analysis of the single measurement areas would need to be performed for each large-site independently. As the three large-sites were found to have no measurement difference at the 95% confidence level, the 140 single measurement areas can all be analyzed together. The measurements by Auditors A and B were not found to be statistically different, meaning that while there could be a percentage difference found between these two Auditors, they are actually considered to be the same based on a 95% confidence level. The measurements by Auditor C was found to be statistically different and therefore excluded from the rest of the analysis. Taking the sample set of the two agencies that are statistically the same and excluding all outliers (any measurement deviations with points outside of the Box-Plot whiskers 3 ) resulted in a difference between area measurements with a mean of 11% and a median of 9%. This means at the same single measurement area, with measurements conducted on-site by two independent auditors utilizing varied 4 measurement techniques, a square footage difference of up to approximately 10% could be expected. Additionally, a monetary value was set, below which the deviation in measurement was deemed inconsequential. These levels correspond to approximately 10% of the median rebate received by sector. This over-payment threshold was set at $500 for commercial sites and $150 for residential sites. Therefore, a square foot measurement difference of up to 10% will be considered an acceptable Audit re- measurement error. However, any site with a deviation of greater than a 10% measurement error and an over-payment greater than the established thresholds was flagged for reimbursement. CONCLUSIONS HOW TO UNDERSTAND THE FINDINGS The MWDOC Audit looked at the measurement of sites following the completion of the project. The focus of the results are on determining satisfactory measurements and levels of over-measurement. The balance between over-measurement and under-measurement will also be observed to note the comprehensive Program benefits. Satisfactory results are Audit measurements within 10% of the project post-landscape conversion inspection measurement value. The analysis of acceptable error is detailed in the section above. KEY FINDINGS To understand the results, measurements of each site were categorized as either satisfactory, over- measured, or under- measured. Over-measurement refers to an inaccurate measurement where the square footage recorded during the Program is greater than what was removed (with a difference greater than 10%), as 3 The box-plot (a.k.a. box and whisker diagram) is a standardized way of displaying the distribution of data based on the five number summary: minimum, first quartile, median, third quartile, and maximum, with the whiskers indicating the minimum and maximum. 4 While the specific measurement techniques are selected for use at the discretion of the Auditor, all were considered appropriate for the geometry of the area. 12 I Page Attachment 4 12 of 18 observed during the Audit measurement. Based on Metropolitan funding rule caps and MWDOC Program criteria, which precludes the rebate from superseding the total project cost, it is possible for a site to result in over-measurement without over-payment. Under-measurement refers to an inaccurate measurement where the square footage recorded during the Program is less than what was removed (with a difference greater than 10%), as observed during the Audit measurement. Under-measurement may result from additional landscape conversion occurring beyond what was originally planned and included in the pre-landscape conversion inspection. In fact, the purpose of this, and all rebate programs, is the carry-over effect where, as a result of a rebate, the promoted activity continues without additional incentive, yielding ancillary benefits. VARIABlES OF INTEREST VARIABLES OF INTEREST Inspector type (agency staff versus contractor) and project size (large versus small) are two variables of interest. These variables were examined to see if they influenced the results. To gain insight into the MWDOC Audit results, analysis was performed to identify interactions between satisfactory measurement values and variables of interest. The variables of interest include inspector type (agency staff versus contractor) and project size (large versus small). These variables were examined to see if they influenced the results. Correlation was found between Audit results and program inspector type only at commercial sites. This means at commercial sites the inspector type who performed the measurement (either agency staff versus inspection contractor) had a statistical influence on whether the Audit measurement more often resulted in satisfactory findings. There was no influencing relationship between inspector type found at residential sites. Further, a statistical difference was observed when considering project size and Audit results for small and large sites. The smallest (commercial and residential) sites were more likely to yield a satisfactory result, whereas the large sites were more likely to result in unsatisfactory measurements. However, for mid-sized projects (commercial and residential), the project size does not affect the likelihood of satisfactory result. OVERAll CONClUSIONS Overall, the MWDOC Audit resulted in a positive net measurement variance, meaning that more turf was removed than recorded during the Program and incentivized through rebates. In total, 76% of the sites had either satisfactory or under-measurements with ancillary landscape conversion. Further, a greater number of sites and square footage resulted in under-measurement as compared to over-measurement. The additional benefits attained through the ancillary landscape conversion from under-measurement is an indication of a successful rebate program. The relatively bell-shaped curve in Figures 3 and 4 illustrates the somewhat even occurrences of both over-and under-measurements. Nonetheless, over-measurement remains a concern when implementing a rebate program. The over-measurement results (24% of total Audited sites) highlighted a number of issues related to measurement practices: 13IPage Attachment 4 13 of 18 • Difference in measurement equipment • Difference in measurement methodology (geometry) • Difficulty in delineating exact project areas over time (due to mulching and plant growth, etc.) • Potential missed or added project areas may result in inaccurate re-measurement • Due to time passing and staff changes, some site contacts could not recall the specific project areas • Difference in inspection technique by inspector type (agency versus inspection contractor) Many of these issues deal with the concept of single measurement areas or sub-areas that makeup the total project area. Large projects are commonly composed of many single measurement areas. This is especially of concern when the project area was adjacent to non-turfgrass landscape material prior to the landscape conversion (for example, areas within a Homeowners Association greenbelt). No fraud was detected within the MWDOC audit; however, the audit did find $325,600 in overpayments were made to 33 program participants in 13 retail water agency service areas. COMMERCIAL SITE RESULTS The MWDOC Audit of commercial sites resulted in 26% of non-satisfactory over-measurement. While the over-measurement difference between Program and MWDOC Audit measurements resulted in nearly 575,000 square feet, the over-payment resulted in approximately $317;200 of Metropolitan funding. Over-payment is less than over-measurement due to MWDOC's criteria of limiting rebates up to the project costs. The under-measurements resulted in nearly $548,000 of unrebated conversion and more than 380,000 square feet, providing an ancillary water savings of 53 acre-feet per year. 1'.1 30 2~ .. ~ "' u .20 < 0 .. l':J I1 f' Jl) c, 0 ·RO If '"r"M1y r~ ..... ..,.,.,.,,o~ ~.!0/ WJ 1 '.It•". 2 ·1 ill t:•:.. \ Over measured 1 • -$ '17 7.00 ·60"' 40"' 70''' Satisfactory 10" o·.~. ) 0'" 4 ()''/., Jl ~llO.:~ Undermeasured $548,000 1 00'\f FIGURE 2. COMMERCIAL SITE RESULTS OF PERCENT DIFFERENCE BETWEEN PROGRAM AND AUDIT MEASUREMENTS. 14 I Page Attachment 4 14 of 18 MWDOC's METROPOLITAN AUDIT SITES Three of MWDOC's Commercial sites were also included in the concurrent Metropolitan Audit. The landscape conversions at these sites were all performed within the same single retail agency service area and by the same single contractor. To note, this contractor was responsible for the greatest proportion of turf removal within the MWDOC Program. While the findings of these three sites were encompassed within the MWDOC Audit, when isolating these three sites the results highlight over-measurement. It is notable that two of the three site are categorized as extremely large, and the third is mid-sized. Therefore, the findings of the larger sites are consistent with the statistical correlation trend observed (that larger sites will more likely result in over- measurement). RESIDENTIAL SITE RESULTS The MWDOC Audit of residential sites resulted in 22% of non-satisfactory over-measurement. While the over-measurement difference between Program and Audit measurements resulted in nearly 4,400 square feet, the total over-payment resulted in approximately $8,400 of Metropolitan funding. To note, for residential sites resulting in over-measurement and over-payment, the average amount is $400 per site. Here, too, the over-payment liability is imbalanced with the over-measurement and primarily limited by the Metropolitan funding caps. The under-measurements resulted in more than 31,500 square feet of turfgrass removed and, therefore, an ancillary water savings of 4.4 acre-feet per year. For residential sites, which mostly occur in the small size range, a greater percentage of under-measurement occurred than over-measurement. \{) .. -.. l'i "" iJ !J /U .. e i I c . ' ~ 0 r, u ~!U .. I IJ I) FIGURE 3. RESIDENTIAL SITE RESULTS OF PERCENT DIFFERENCE BETWEEN PROGRAM AND AUDIT MEASUREMENTS. 15 II' d r: e Attachment 4 15 of 18 LESSONS LEARNED AND IMPLEMENTED CHANGES Inspection and Process gaps resulted in non-satisfactory measurement. These gaps primarily resulted from non-specific inspection procedures. Results imply retail agency staff may not have performed on- site measurement at all sections of all sites during both the pre-landscape conversion inspection and the post-landscape conversion inspection. Additionally, MWDOC allowed retail agencies to define their own inspection and measurement methods, and did not provide retail agencies with detailed inspection procedures that clearly defined minimum requirements for post-landscape conversion inspections and documentation. To assist in the elimination of measurement issues, MWDOC has developed and implemented comprehensive inspection and verification procedures as part of the current Water Conservation Participation Agreement between MWDOC and its service area retail agencies. The modifications to the inspection and verification process for MWDOC's Turf Removal Program remain in compliance with all new Metropolitan-funded Member Agency-Administered program requirements as stated within Addendums 17-B to the Residential and Commercial Water Conservation Funding Agreements between Metropolitan and MWDOC. As part of this Audit process, it was identified that the MWDOC's existing inspection procedures resulted in too much ambiguity within the inspection process. Therefore, to standardize the protocol, MWDOC's updated inspection and verification procedures now specifically detail: • On-site inspections protocols for area-based rebates • Conditions of turf at pre-landscape conversion inspections and conditions of project at post- landscape conversion inspections • Measurement techniques for non-uniform shaped areas • How to handle case-specific issues o Multiple applications under same site o Modifications to initial project area o Project extensions Further, within the Water Conservation Participation Agreement between MWDOC and the retail agencies, a retail agency shall refund to MWDOC any amounts paid for landscape conversion that MWDOC or Metropolitan establishes as not converted. This includes specific language relating to retail agency staff signature authority; responsibility for checking of work and approving the recorded measurements, whether the data is entered by agency staff or their inspection contractor; and reimbursement protocol, when applicable. Additional quality control efforts recommended for MWDOC Program implementation include: • Semi-annual inspections measurement training • Ride-along training/observation of both agency staff and contractor inspections • "Inspect the Inspector" re-measurements confirming no more than 10% acceptable error at a time near the post inspection (this will help alleviate area identification barriers) 16 I Page Attachment 4 16 of 18 To attain data quality assurance, questionable sites should be verified through correspondence with the inspector, and some cases may require re-measurement by MWDOC staff. Measurements that may indicate concern include: • Commercial sites where pre-landscape conversion inspection and post-landscape conversion inspection measurements are the same • Large sites where invoice total matches the exact calculated rebate amount • Sites where measurements are the same as the caps • Very even, round numbers (e.g. 4,000 ft2) NEXT STEPS REIMBURSEMENT OF FUNDS Commercial and residential sites identified through the MWDOC Audit process to have over- measurement resulting in over-payment ($500 for commercial sites and $150 for residential sites) yields a reimbursement request as the site is not in compliance with the program terms for that area . In accordance with the Water Conservation Participation Agreement between MWDOC and its service area retail agencies, MWDOC has requested reimbursement from 13 retail agencies totaling nearly $325,600 of Metropolitan funds (Table 3). Reimbursement has been completed at all three of the Metropolitan Audit sites, which has already resulted in the return of $107,200 of Metropolitan funds. WATER-SAVINGS BENEFIT ANALYSIS Simultaneously, MWDOC is in the process of completing its planned Program impact evaluation in cooperation with Metropolitan. An impact evaluation explicitly focuses on the realized benefits of the Program (e.g. water savings). This analysis will verify or update the Southern California industry accepted water savings rate for landscape conversion. MWDOC has also requested that the water savings metric for Orange County be specifically identified. 17 I Page Attachment 4 17 of 18 TABLE 3. APPROXIMATE REIMBURSEMENT AMOUNT BY RETAIL AGENCY FOR OVER-MEASURED SITES RESULTING IN OVER-PAYMENT. Rebate Average Average Total Sector Retail Agency Total Paid Difference Difference Reimbursement IFYs 14-16) per Site (fe) per Site{%) Amount * El Toro Water District $718,000 1,073 -15% Golden State Water Company $513,000 8,340 -26% ~0 Huntington Beach, City of $552,000 16,782 -15% ~ ~ Irvine Ranch Water District $5,283,000 29,131 -17% Q) -Moulton Niguel Water District $6,087,000 4,134 -16% E r-... E ;;:1 Newport Beach, City of $690,000 17,239 -49% 0"\/l-u Santa Margarita Water District $1,727,000 12,744 -24% South Coast Water District $498,000 17,657 -12% Westminster, City of $94,000 4,231 -38% . El Toro Water District $181,000 211 -30% Golden State Water Company $900,000 17 -14% Huntington Beach, City of $927,000 171 -24% iii Irvine Ranch Water District $2,013,000 49 -17% :o:;o laguna Beach Co. Water District $169,000 523 -59% c 0 QJ<;t Mesa Water District $702,000 187 -14% -c -·-00 $4,582,000 lf)"lll-Moulton Niguel Water District 201 -18% ex: Newport Beach, City of $225,000 135 -30% San Clemente, City of $579,000 297 -33% Santa Margarita Water District $1,353,000 251 -32% Yorba linda Water District $956,000 298 -27% Total *Values rounded to the nearest $100, actual reimbursement will be based on non-rounded values. **Of this amount, $107,200 has already been reimbursed to Metropolitan. 18 I Page $3,800 $700 $33,600 $210,700 $8,300 $7,100 $13,500 $35,300 $4,200 $400 $200 $1,300 $400 $1,000 $200 $1,900 $300 $1,600 $500 $600 $325,600** Attachment 4 18 of 18 Addendum 1A FY 17-18 Metropolitan Base Incentive List-Residential (as of July 1, 2017) Regional Residential Program Metropolitan Incentive* 1 High Efficiency Clothes Washer {HECW) (Must be CEE tier one or better) $85 2 Premium High-Efficiency Toilet {PHET) 4 Liter (single-family) $40 3 Rotating Nozzles (For Pop -Up Spray Head Retrofits-Minimum 30 per home) $2 Weather Based Irrigation Controller {WBIC) 4 -WBIC Less than one irrigated acre $80 5 -WBIC One irrigated acre or larger $35 per station Soil Moisture Sensor System {SMSS) 6 -SMSS Less than one irrigated acre $80 7 -SMSS One irrigated acre or larger $35 per station 8 Rain Barrel (max 2 per home) $35 per barrel 9 Cistern (200-500 gallons) $250 10 Cistern {501-999 gallons) $300 11 Cistern {1,000+ gallons) $350 Other Incentives Metropolitan Eligible in MWD-Funded/Member Agency Administered Incentive Program Incentive* Residential Surveys -Single -Family Indoor Survey-Member agency provides on-site visit, written survey for the 12 customer listing recommendations on improvements, and review of find ings report with $12.50 customer. Survey can be combined with either irrigation evaluation (w/o timer) or irrigation evaluation (with timer}, but not both. -Irrigation Evaluation (w/o timer)-Member agency provides the customer the findings of 13 the evaluation, makes recommendations on improvements to the irrigation system and $8 provides a watering schedule. 14 -Irrigation Evaluation (with timer) -Member agency provides the customer the findings of the evaluation and provides recommended irr igation schedule. $18 Customized Residential Projects 15 Projects that result in water savings through customized s ite improvements. Metropolitan $195 funding is limited to $195 per acre-foot of estimated water savings based on project life and up per acre -foot to one-half of the eligible project costs. * Incentives are subject to the following: • Effective July 1, 2017, unless other stated above • Paid on a first come, first served basis • Subject to available funding • • Limited to the cost of the device when applicable Must be a Metropolitan-approved device Attachment 5 Page 1 of 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Addendum 18 FY 17-18 Metropolitan Base Incentive List-Cll (as of July 1, 2017) (Page 1 of 2) Regional Cll Program Plumbing Flow Control Valve (Minimum 10 required) Laminar Flow Restrictors (Minimum 10 required) Commercial Premium High Efficiency Toilet {PHET)-4-liter Rebates are for matching bowls and complete flushometer valves (valve "kits" are ineligible) Multi-Family Premium High Efficiency Toilet {4-Liter) Zero Water Urinals {ZWU) ZWU units must replace existing urinals flushing at 1.5 gpf or greater. Ultra Low Water Urinal {ULWU) Rebates are for matching bowls and flushometer valves (valve "kits" are ineligible} Must flush at< 0.125 gpf, and must replace existing urinals flushing at 1.5 gpf or greater. Metropolitan Incentive* $5 per valve $10 per restrictor $40 $40 $200 $200 WBIC and CC/C: Upgrades to existing equipment that enable functionality as a WBIC/CCIC may qualify for incentives provided they meet program terms and conditions. Weather-Based Irrigation Controller {WBIC) $35 per station Central Computer Irrigation Controller {CCIC) $35 per station Soil Moisture Sensor System {SMSS) $35 per station Large Rotary Nozzles $13 per set Minimum 8 sets (2 each) per site Rotating Nozzles $2 per nozzle For Pop-up Spray Heads Retrofits -Minimum 30 units per site. In-Stem Flow Regulator $1 per regulator Minimum 25 units per site pH-Cooling Tower Controller {pH-CTC) $1,750 Cooling Tower Conductivity Controller {CTCC) $625 Dry Vacuum Pump $125 per 0.5 HP Maximum 2 Horsepower {HP} motor. Connectionless Food Steamers $485 per compartment Ice Making Machines $1,000 Other Incentives Metropolitan Eligible in MWD-Funded/Member Agency Administered Program Incentives* Large Landscape Surveys Member Agency's landscape survey program shall contain the following elements for each survey site: 1} Irrigation system evaluation; 2) Development of a water budget and irrigation schedule; $200 and 3} Survey report provided on-site to the recipient or customer. per acre Incentives are limited to the full cost of the survey; no restriction on application for additional landscape device rebates. Project information data is required. Attachment 5 Page 2 of 3 19 20 21 22 23 24 Addendum 18 FY 17-18 Metropolitan Base Incentive List-Cll (as of July 1, 2017) (Page 2 of 2) Water Use Accountability Incentive Applies to professional landscape irrigation training and management. This incentive is available for a maximum of five years and up to one-half of project cost. Large residential (lot sizes one acre or more) and Clllandscapes must be metered to be eligible for Water Use Accountability (WUA) funding, and new construction sites are ineligible . If a weather- based irrigation controller (WBIC} is installed on a site, that site is not eligible for WUA funding . Multi-Family Residential Sub-Metering Sub -metering existing individual dwelling units within existing multifamily properties Customized Projects Projects that save water through customized site improvements. Metropolitan's funding is limited to $195 per acre-foot of estimated water savings based on project life, and up to one-half of eligible project costs. Additional Regional Programs Public Agency Landscape Program Upfront, enhanced incentives for public agencies to install water-efficient landscape devices. This program will run through June 30, 2018. Weather-Based or Central Computer Irrigation Controller, Soil Moisture Sensor System Large Rotary Nozzles Minimum 8 sets (2 each) per site Rotating Nozzles For Pop-up Spray Heads Retrofits -Minimum 30 units per site. $3.50 per acre/month $100 per unit $195 per acre-foot Metropolitan Incentives* $55 per station $13 per set $3 per nozzle *Incentives are subject to the following: • Effective July 1, 2017 • Paid on a first come, first served basis • Subject to available funding • • Limited to the cost of the device when applicable Must be a Metropolitan-approved device Attachment 5 Page 3 of 3