19-0820_CC_F1a_PowerPointUtilities Reorganization:
Memorandum of Understanding
Item F1a
August 20, 2019
Status of Utilities Reorganization
•Memorandum of Understanding (MOU) –An important milestone
•Formal council approval of major deal points
•Annexation agreement will build upon MOU with additional detail
2
Infrastructure Investment
•Use best efforts to invest $25 million over next ten years
3
Infrastructure and Other Assets
•Infrastructure (pipelines and facilities) transfer to SMWD
•Land and easements used in operations transfer to SMWD
•Memberships in regional authorities transfer to SMWD
4
Water Rights
•Water rights transfer to SMWD
•Reduces risk of City entanglement in any future litigation
5
Pension Costs
•SMWD to pay the full cost of pension benefits associated with
utility employees
•General Fund incurs no additional pension cost as a result of the
reorg
6
Rate Setting
•Average bill to receive modest overall initial reduction
•In amount of total bill (water and sewer combined)
•Long-term rate setting
•Rate study
7
Employees
•City to transfer 16 of 20 full-time employees to SMWD
•Four full-time Utilities employees are anticipated to be laid
off as part of the transfer
•Details regarding the impacts of the transfer are currently
under discussion with SMWD and the City’s employee
associations
8
Local Presence
•SJC customers can continue to make payment at City Hall
•SMWD will reimburse City for use of City staff to collect
payments at City Hall
•Minimum of two years
9
Governance
•SJC voters will participate in at-large elections
•If transition to by-district elections:
•Boundaries will be drawn so not dilute SJC voting strength
10
Next Steps
•SMWD board consideration on August 23
•Move forward with annexation agreement and LAFCO
application
•Provide to LAFCO staff in fall
•Take to LAFCO Board shortly thereafter
•Execute transfer in Spring 2020
11
Thank you
QUESTIONS?
12