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SAN JUAN CAPISTRANO , CITY OF (2)OPERATIONS AND MAINTENANCE AGREEMENT This Operations and Maintenance Agreement (hereinafter "Agreement") is made this day of , 1997, by and between the CITY OF SAN JUAN CAPISTRANO (herein er "City"), and the CAPISTRANO VALLEY WATER DISTRICT (hereinafter "District"). RECITALS: WHEREAS, District desires to retain the management and operation services of City to operate District governmental functions on a day-to-day basis; and WHEREAS, District is a water district formed and organized under Water Code Sections 55000, et seq.; and WHEREAS, District is empowered to contract for a wide variety of services to meet its statutory functions and duties; and WHEREAS, City possesses the administrative and operational expertise to provide day-to-day operations on behalf of District, and WHEREAS, City and District find and determine that City, acting as an independent contractor, on behalf of District will provide operational and management efficiencies not previously available to District, NOW, THEREFORE, be it resolved between City and Agency as follows: Section 1. Scope of Work. City shall assume all responsibilities of direct management and control in carrying out all of the governmental and propriety functions of District (as set forth in Water Code sections 55000 et seq.) under this operations and maintenance agreement to the extent permitted by law. More particularly, the Scope of Work to be performed by City on behalf of District shall be the scope of work as identified in Exhibit A, attached and incorporated herein by reference. c:\wp-ui60\,pd—\waterbp—"_agr -1- 07101197 Section 2. Handling of Assets and Liabilities. Under this independent contractor agreement, all assets and liabilities of District shall continue to be the assets and liabilities of District, except as provided for in this Agreement. Assets, including but not limited to District revenue, shall be managed and controlled by City, so as to enable City to perform all of the Scope of Work identified in Exhibit "A". Section 3. Term and Termination. The term of this Agreement shall commence upon the date of its execution and continue until mutually terminated by the parties. Section 4. Reimbursement to City. (a) In consideration of the services provided by City, District shall reimburse City for its overhead and related expenses in performing the Scope of Work set forth in Exhibit "A". The Parties shall, following execution of this Agreement, agree upon exact financial costs and reimbursement formulae to implement this section of the Agreement. (b) In addition, District and City agree that no sooner than one year from execution of this Agreement, the City and District will jointly conduct a study to determine what other expenses have accrued, or will accrue, to City by reason of the impacts District's water operations will have on City -owned facilities. Section 5. Independent Contractor. It is agreed that City shall act and be an independent contractor and not an agent or employee of District. Section 6. Compliance with Law. City shall comply with all applicable laws, ordinances, codes and regulations of federal, state and local government. Section 7. Transfer of District Employees. The parties intend that current District employees be transitioned to the City work force such that said employees will become employees of City. The terms and conditions of said transition are set forth in Exhibit "B", attached and incorporated herein by reference. c:\wpwm60\wpdoca\water\operate.agr -2- 07/01/97 0 0 Section 8. Indemnitv. City agrees to protect, defend and hold harmless District and its appointed officials from any and all claims, liabilities, expenses, or damages of any nature, including attorney's fees, for injury or death of any person or damage to property or interference with use of property and for errors and omissions committed by City arising out of or in connection with City's, its agents, employees and subcontractors, performance of its obligations under this Agreement, except that this indemnity does not apply as to: 1)liability that does not arise out of premises or operations under the direct management and control of City, and 2) liability that arises out of the sole negligence of any person or organization other than City, or Protected Parties, as that term is defined in City's JPIA insurance pool agreement. Section 9. Insurance. (a) City shall maintain adequate levels of general comprehensive liability, auto, and fire insurance coverages through the Southern California Joint Insurance Pool with respect to the performance of its obligations under this agreement to the extent permitted under the "protected contract" provisions of the City's JPIA insurance pool agreement. (b) To the extent that City cannot obtain insurance coverages with respect to potential liability of District and its appointed officials, then District shall obtain appropriate levels of liability insurance coverage to insure that there are no uninsured activities of District under this agreement. Section 10. Notice. All notices shall be personally delivered or mailed to the below listed addresses, or to such other addresses as may be designated by written notice. These addresses shall be used for delivery of service of process: To City: City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, CA 92675 Attn: Director of Administrative Services CAWP-in60\wpd-4&t--*-atc.av -3- 07/01197 To District: Capistrano Valley Water District 32450 Paseo Adelanto San Juan Capistrano, CA 92675 Attn: Public Works Director Section 11. Delegation of Powers. To the extent permitted by law, District hereby delegates all administrative powers and quasi -legislative powers to City to carry out the objectives of this Agreement, namely, that City be empowered in the most efficacious manner possible to administer the governmental functions of District on a day-to-day basis. Section 12. Entire Agreement. This Agreement constitutes the entire understanding and agreement between the parties and supersedes all previous negotiations between them pertaining to the subject matter thereof. IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first written above. CITY OF SAN JUAN CAPISTRANO By: David A Sw rdlin, Mayor ATTEST: Cheryl J&46n, Gfty Clerk APPROVED AS TO FORM: 04,�_ John R. $fiaw, City Attorney «,rip.Nuso�wpaoca�wecerbperaie.ag -4- 07/01197 0 0 CAPISTRANO VALLEY WATER DISTRICT By: 'x�'- a444 Ray Auerbach, General Manager ATTEST: Board,6eore'Ann Scott, APPROVED AS TO FORM: John iaw, District Counsel c:\wpwu"kwpd—\w0-e 0parate.eg -5- 07/01/97 0 0 EXHIBIT "A" SCOPE OF WORK Operations and Maintenance Agreement The City of San Juan Capistrano shall perform basic District governmental propriety functions required of District under Water Code Sections 55000 et seq, and shall in addition utilize the following performance standards as guidelines in carrying out the day-to-day functions of the District: ADMINISTRATION • Plan, organize and direct the operation, maintenance, capital improvement and replacement programs of the CVWD in accordance with all governing provisions of state and federal law and provide the same or enhanced levels of service as currently provided by CVWD. • Maintain active participation with the Municipal Water District of Orange County (MWDOC), all local and state water agencies, local and regional water associations and committees and work cooperatively to affect intergovernmental agency participation. • Continue active participation in Joint Powers Authorities (San Juan Basin Authority and South Orange County Reclamation Authority) to affect optimum use of local groundwater supplies and to optimize the use of non -potable and reclaimed water in District. • Maintain compliance with federal, state and local agency mandates including water quality, preparation and update of plans and reporting to state agencies. • Prepare annual budget proposal and five (5) year projections for the Water Enterprise Fund and sub -funds. • Provide staff support to the Water Advisory Commission and prepare meeting agendas, take minutes of meetings and convey recommendations to the City Council. • Comply with the Political Reform Act, Government Code Section 87100 et. seq. • Maintain official minutes of CVWD Board of Directors meetings. • Maintain and provide telephone, facsimile and modem services. ACCOUNTING/BANKING/BUSINESS • Select, maintain and operate computer systems for applications such as utility billing, accounting, word processing, desk top publishing, spreadsheets, CAD, GIS, database management and backflow program. 0 Exhibit "A" da • Perform all accounting and related bookkeeping services. 0 • Issue monthly budget report. Issue monthly financial statements. • Conduct all banking services. • Conduct all investment services with earnings allocation. • Provide all necessary insurance coverage. • Provide all payroll and personnel related services. • Manage the issuance and control of purchase orders. • Provide and arrange for audit services. WATER CONSERVATION • Continue management of CV WD's water conservation program following the guidelines of the CV WD Urban Water Management Plan (UWMP) and the California Urban Water Conservation Council's (CWWCC) Best Management Practices (BMPs). Update the CVWD UWMP and report on progress on BMPs as required by the California Department of Water Resources and the CWWCC. PUBLIC AFFAIRS • Maintain CVWD's current Public Affairs program including periodic news releases, bill stuffers, annual water quality report and participation in MWDOC's Public Affairs Workgroup and School Education Program. CUSTOMER SERVICF, ENHANCEMENT • Provide training to new and existing employee to enhance the levels of customer service. Continue monthly customer service surveys, followup and employee feedback to promote enhanced customer service and identify problem areas. WATER BILLING AND CUSTOMER SERVICE PROGRAM • Maintain the current schedule of monthly meter reads by contract with SDG&E, monthly billings and payment processing, at a minimum, maintain current bill content. 0 0 Exhibit "A" -3 - • Maintain tiered rate billing system and investigate addition of commercial and industrial customers to the tiered rate system. • Maintain current investigations of over -reads, under -reads, no reads, unusual bills and customer complaints including followup with customer. • Continue use of reminder bills and turn-off notices prior to shut-off for non-payment. • Perform request and delinquent turn -ons and shut -offs of water service orders. • Maintain a collection procedure for delinquent accounts through tracing and contacting customers and maintain a "write-off' percentage goal of less than 0.25 percent (1/4%). • Investigate automated bill payment through local banks. • Maintain office hours of 8:00 AM through 5:00 PM, Monday through Friday, excluding holidays, and maintain a payment drop box for after hours payment of bills. EMERGENCY PREPAREDNESS PROGRAM • Provide twenty-four (24) hour, on-call response to emergency calls within forty-five (45) minutes. Provide after-hours water turn -on services. Integrate CVWD personnel and operations into the City's Emergency Preparedness Program by December 31, 1997. Maintain the Volunteer Emergency Preparedness Organization (VEPO) emergency radio system and actively participate in VEPO activities with other Orange County water agencies including participation in disaster exercises. TECHNICAL SERVICES • Process and conduct Underground Service Alerts (USA) for field marking of water facilities. Process requests for marking of other utilities prior to water repairs and construction, Maintain and implement South Coast Air Quality Management District requirements. Maintain or obtain discharge permits under both the California Regional Water Quality Exhibit "A" -4- Control 4 - Control Board (Santa Ana Region) and the Orange County Environmental Management Agency requirements. • Review proposed City projects, utility projects and proposed developments for impacts to the water system and its customers. • Inspect all projects which do, or may have, water related impacts. • Complete the development of the Geographic Information System (GIS) program and maintain updated information on water system facilities. • Perform project administration and inspection for various water improvement and replacement projects. • Provide technical review and support for the operations and maintenance activities of the water system including assistance during emergencies. • Complete the Master Plans for the District's potable and non -potable water systems by December 31, 1997. • Prepare, maintain and modify design standards, standard drawings, specifications and procedures. WATER QUALITY • Ensure that the District's water meets or exceeds all applicable water quality standards imposed by the California Department of Health Services (DOHS) and the Environmental Protection Agency (EPA). • Manage the District's water sampling program to meet DOHS requirements. • Operate the water blending facility at Hollywood Well No. 2 to ensure water introduced into the distribution system meets all applicable standards. • Review all water sampling test results and prepare all required reports for submission to DOHS. • Facilitate and assist with routing DOHS inspections. • Produce and distribute the annual water quality report as required by DOHS. • Investigate all water quality complaints, take appropriate action and provide feedback to 0 0 Exhibit "A" -5- the 5 - the customer. CROSS CONNECTION PROGRAM • Maintain a Cross Connection Program, as mandated by DOHS, including, but not limited to, the following: • Conduct water system analysis of proposed new connections to the water system for cross connections and backflow prevention device requirements • Review of plans and/or site inspection must be conducted for new connections to determine the degree of hazard prior to requirement of a backflow prevention device for meter protection. • Inspect installation of backflow prevention devices. Installation shall be in accordance with CVWD specifications. • Cooperate with Orange County Health Services, Cross Connection Survey Program to further their efforts of commerciallindustrial internal inspections. • Notify customers, maintain records, files and technical standards on State regulated requirements to ensure compliance with annual testing of backflow devices. WATER PRODUCTION • Operate, maintain and repair all wells, reservoirs, pumping stations, pressure reducing stations, imported water connections and related production facilities as follows: • Conduct and program automated operation of CVWD wells, booster pumps and reservoirs with the use of the Supervisory Control and Data Acquisition System (SCADA). • Operate the water system within the current water pressure and reservoir level parameters. • Maintain adequate storage capacity in reservoirs to ensure fire protection and system demand. • Conduct repairs of all facility equipment and appurtenances in a timely and responsible manner to maintain maximum booster and well production capacity. 0 Exhibit "A" N • Respond immediately to all facility emergencies generated through the SCADA alarm system and problem reports from the public. • Maintain an Engine Maintenance Program including all appurtenances in accordance with standards as recommended by the manufacturer and CVWD's established program. • Maintain an Automated Valve Program in accordance with standards as recommended by the manufacturer and CVWD's established program. • Document, update and implement safety procedures and regulations including OSHA and Confined Space Entry procedures. Participate in monthly safety meetings. • Maintain a Motor Maintenance Program including adjustment, lubrication and maintenance of motors, exhaust fans, security lighting, and miscellaneous motor drive equipment at water production facilities in accordance with standards as recommended by the manufacturer, and CVWD's established program. • Perform vehicle maintenance on all CVWD vehicles in accordance with manufacturers recommendation. • Provide landscape maintenance and weed abatement for all CVWD property and facilities • Maintain all CVWD buildings in an acceptable condition including plumbing, electrical and lighting, structural, painting and related work. WATER DISTRIBUTION • Maintain, repair and install water mains, fire hydrants, water meters and water services including, but not limited to the following: • Locate and exercise valves per for following schedule: • 12 -inch and larger, annually • Smaller than 12 -inch, every three (3) years • Exercise all wet barrel hydrants every two (2) years • Exercise all dry barrel hydrants every year Exhibit "N' 7 - Replace meters as required to maintain accuracy and readability. • Operate and maintain air and vacuum valves throughout the water system in accordance with standards as recommended by the manufacturer. • Repair all leaks on water mains and services in a timely manner with as little disruption to customers as practical. • Replace leaking plastic services with new copper services. • Document, update and implement safety procedures including OSHA and confined space entry procedures. Participate in monthly safety meetings. P:\ADMMMERGER\O&MEXBA W PD • AGENDA ITEM 0 July 1, 1997 • TO: Honorable Board of Directors �PRO ;, 7 fl FROM: Ray A. Auerbach, General Manager Lj, SUBJECT: Operation and Maintenance Agreement between the Capistrano Valley Water District and City of San Juan Capistrano SITUATION Last month the City Council and the District's Board of Directors directed the staff to develop an Operation and Maintenance Agreement that would allow the arranged merger of the two agencies' budgets, equipment, facilities and staff. The merger would realize cost savings and general efficiencies from the elimination of duplication and the creation of economies of scale. Under the terms of the proposed agreement, the City will perform all operations of the District including rate setting and budgeting. Assets and liabilities of the District shall continue as assets and liabilities of the District, however, District assets will be managed by the City. A detailed Scope of Work to be performed by the City will be presented prior to the Council meeting as Exhibit "A". • District employees will be transitioned to the City work force. The terms and conditions of the transition to City work force are set in Exhibit "B" which will also be presented prior to the Council meeting of July 1. The agreement provides that the District shall reimburse City for all its related expenses including overhead. Additionally, the agreement provides that the District and the City will conduct a study to determine what other expenses the City will accrue as a result of the water operation. FINANCIAL CONSIDERATIONS Adoption of the Operation and Maintenance agreement will initially reduce the cost of water service by $198,000 and the cost of the general City operation by $88,000. ALTERNATE ACTION 1. Adopt the attached Operation and Maintenance Agreement between the Capistrano Valley Water District and the City of San Juan Capistrano. • 2. Reject the attached Operation and Maintenance Agreement. 3. Request additional information from staff. r AGENDA ITEM Operation and Maintenance Agreement 40 RECOMMENDATION July 1, 1997 By motion, adopt the attached Operation and Maintenance Agreement between the Capistrano Valley Water District and the City of San Juan Capistrano. Respectfully submitted, Ray A. Auerbach General Manager • • 2 \ADMN\MERGER\O&MAGR.DOC 0 EXHIBIT "B" TRANSFER OF EMPLOYEES Operations and Maintenance Agreement As of the effective date of this agreement, each and every Capistrano Valley Water District (CVWD) employee, below the level of General Manager, shall become an employee of the City of San Juan Capistrano (City). The terms and conditions of employment of the transferred employees shall be governed by the existing and applicable Memoranda of Understanding between the City and respective employee associations, provided however, that said employees shall be given credit for seniority for lay-off purposes, all earned benefits shall be transferred, and accrual rates for benefits shall be retained as if all years of service at the CVWD were at the City. The City agrees to preserve existing, earned and vested severance pay as of June 30, 1997, for all Capistrano Valley Water District employees, as follows: Subject to concurrence by the Orange County Retirement System ("OCRS"), it is the City's intent that the benefits set forth in the District's "Agreement for Supplemental Benefits" with OCRS (District/OCRS Agreement") remain in effect and be incorporated into the City's Agreement with OCRS, (which agreement is still being negotiated and relates to supplemental benefits funded by a portion of the Vested Severance Employee Name Benefit on 6/30/97 Ando, Stacie $ 6,476.61 Ando, Steve $ 5,894.70 Bauman, Eric $ 7,250.70 Best, John $25,070.59 Boessler, Harry $15,887.74 Brady, Karen $ 1,108.33 Brand, Neil $ 9,936.56 Clark, Bob $15,230.74 David, Conrad $ 6,574.78 Ducharm, Donna $ 4,720.62 Harris, Craig $ 4,882.74 Johnson, Tom $ 3,042.66 LaMothe, Jay $10,662.76 Martinez, Angel $ 172.84 Romero, Jeff $ 4,890.03 Scott, Georg'Ann $ 7,706.97 Smith, Mike $ 5,622.28 Vaughn, Ray $ 8,119.65 Vasquez, Rueben $29,395.82 Villalpando, Manny $13,281.61 Widner, Jim $ 7,830.60 Williams, Greta $ 4,536.66 Subject to concurrence by the Orange County Retirement System ("OCRS"), it is the City's intent that the benefits set forth in the District's "Agreement for Supplemental Benefits" with OCRS (District/OCRS Agreement") remain in effect and be incorporated into the City's Agreement with OCRS, (which agreement is still being negotiated and relates to supplemental benefits funded by a portion of the Exhibit "B" Operations and Maintenance Agreement Page 2 "Remaining Transferred Funds" referred to in the District/OCRS Agreement). In furtherance of that intent, the District Additional Benefit Account ("DABA") shall be transferred to the City's Additional Benefit Account when agreement is reached between City and OCRS, for the purpose of funding the District employee's supplemental benefits after transfer to City employment. Until the City and OCRS reach agreement for supplemental benefits for City employees, City and District agree that City shall be considered to be District's successor with respect to the DABA and District employees eligible to receive the supplemental benefit shall receive it from the DABA; provided, however, that years of service as City employees shall not be used to calculate the supplemental benefit unless and until provided for in the City's Agreement with OCRS. 3. The City will retain its Retiree Health Benefit until such time as implementation of an Agreement for supplemental benefits between the City and OCRS. The City also recognizes that the Retiree Health Benefit is important to its retirees and has agreed to investigate alternative health coverage options that would cover retirees without as severe an impact on rates or overall ability to insure. 4. The City shall pay the costs of required memberships and certifications, for all employees, including the District Engineer's registration and the costs associated with maintaining a Notary Public. Required memberships and certifications shall be those required as a condition of employment by the City. 5. The City shall modify its rules on overtime to pay double time after 12 hours work in one day. 6. The City shall make changes to the Personnel Rules and Regulations to clarify that the City's practice is to calculate pay in 15 minute increments. 7. The City shall conduct a survey of CVWD positions which seem similar to City positions, for consistency of duties and salary. 8. Employees hired by the CVWD prior to April 1, 1986, were exempt from Medicare tax. Upon transfer to City employment those employees will lose their exemption from Medicare taxes, pending IRS ruling presently being sought by the City. 9. In the event that the City of San Juan Capistrano enters into negotiations with a private provider of water services, the City agrees to include in those negotiations issues associated with the transfer of employees from City to private employment, including, but not limited to, benefits and terms and conditions of employment.