san diego iroc packet oct 18, 2010

8/8/2019 San Diego IROC Packet Oct 18, 2010

http://slidepdf.com/reader/full/san-diego-iroc-packet-oct-18-2010 1/50

For information, please contact Ernie Linares, IROC Committee Contact, 9192 Topaz Way, San Diego, CA 92131, email: [email protected], 858-292-

6309 Last update: 10/14/2010 4:21:15 PM

City of San Diego

Independent Rates Oversight Committee (IROC)

AGENDA

October 18, 2010

10:00 – 12:00 Noon Metropolitan Operations Complex, Auditorium

9192 Topaz Way, San Diego, CA 92123

* This portion of the agenda provides an opportunity for members of the public to address the Commission. Comments are limited to three (3) minutes per

individual. Please complete a Speaker’s Slip in advance of the start of the meeting /or f the item you wish to speak on and give it to the IROCAdministrative Assistant. For alternative format or disabled accommodations, please call Monica Musaraca at (858) 292-6305.

† Action may be taken by the Committee on items listed on this agenda, whether or not the item is marked as "action requested."

†

ACTION REQUESTED

ITEM PRESENTER EST. TIME

1.Roll Call

Items 1-3

5 Min.

2. Non-Agenda Public Comment*

X 3. Approval of Minutes from 9/20/10

4. Chair Updates Jim Peugh 5 Min.

5. City Staff Updates

Announcements

Informational Updates

Monthly Reports to Natural Resource & CulturalCommittee

Sewage Spills/Water Main Breaks Update

Advanced Metering Infrastructure (AMI) Update

Water Rate Drivers Analysis Update

Department Staff 10 Min.

6. Metro/JPA - Report Out Don Billings 5 Min.

7. Public Utilities FY10 Annual Capital ImprovementProgram Status Report

Guann

Hwang/James

Nagelvoort

25 Min.

8 Presentation on the Dedicated Reserve for Efficiencies andSavings (DRES)

Alex Ruiz and LeeAnn Jones-Santos

20 Min.

9. Wastewater Treatment and Disposal Efficiency Study Chris McKinney 10 Min.

BREAK5 Min.

10. Sub Committee Reports:

a. Finance

b. Environmental & Technical

c. Public Outreach, Education & Customer Service

Andy Hollingworth

Todd Webster

Gail Welch

5 Min.

5 Min.

5 Min.

11. Discussion on the IROC Strategic Planning Ad HocMeeting

Jim Peugh 5 Min.

12. Discussion on the FY2010 IROC Annual Report

Development Process

Jim Peugh 10 Min.

13. Proposed Agenda Items for Next IROC Meeting Jim Peugh 5 Min.

14. IROC Members’ Comments 5 Min.



Item 3



Independent Rates Oversight Committee – IROCSeptember 20, 2010

DRAFT M I N U T E S

Page 1 of 1210/14/2010

1. Roll CallChairperson Peugh brought the meeting to order at 10:07 a.m. Monica Musaracacalled the roll and a quorum was declared. Attendance is reflected below:

2. Non-Agenda Public CommentThere were no non-agenda public comments.

3. Approval of Minutes from 8/9/2010

Chairperson Peugh asked for a motion to approve the Minutes of August 9, 2010.Committee Member Hollingworth noted a correction to the minutes, page 9. Heclarified a short paragraph on page 9, 1st paragraph, starting with “Committee

Member Hollingworth explained MWD was established by an act of theLegislature”, and changed the paragraph to read: “Committee MemberHollingworth explained MWD was established by an act of the Legislature, and istherefore subject to mandates enacted through the State budget. The legislaturehas used budget language to mandate audits of other types. He gave examples of the CalPers and State Parks System audits which he participated in; and notedthey have not previously mandated a study through the State budget of theMetropolitan Water District.”

Chairperson Peugh asked for a motion to accept the corrections as stated.Committee Member Hollingworth made a motion to approve the Minutes withsaid corrections, Committee Member Billings seconded the motion, withCommittee Member Dull abstaining, all others were in favor to approve theMinutes with said corrections.

4. Chair Updates – Chairperson Peugh

Would like to take the time to set a meeting of perhaps consisting of thethree Subcommittee Chairs and himself, to discuss past, present and future

Member Present Absent

Jim Peugh, Chair X

Don Billings X

Tony Collins X

Christopher Dull X

Andy Hollingworth X

Jack Kubota X

Irene Stallard-Rodriguez X

Todd Webster X

Gail Welch X

ExOfficios

Augie Caires, Metro JPA X

Mark Robak, Metro JPA, Alternate X

Ken Williams, City 10 X

Yen Tu, City 10, Alternate X




DRAFT M I N U T E S

Page 2 of 1210/14/2010

success of IROC, as well as what we have learned, and what ourexpectations are for the future.

Items 6 and 7 will be tabled to the next IROC meeting.

Committee Member Hollingworth expressed to Mr. Ruiz he wanted to ask about abudget subject. He stated he calculated that it appears the Department is carryingreserves equal to 19% of annual expenditures. He asked for an explanation of thelarge percentage. Mr. Ruiz suggested an item next month with a presentation onour reserves, since there are several individual reserve categories. Some arerestricted, operating, emergency reserves, etc., for example. Committee MemberBillings asked if this is done, please concentrate on water and wastewateragencies with similar profiles, to include benchmarking information. Mr. Ruizconcurred.

5. City Staff Updates , Alex Ruiz, Interim Director Before the Natural Resources & Culture Committee (NR&C) of the CityCouncil on September 8.

o Permanent Use Restrictions being proposed by Council MemberFrye proposing the permanent year-round restrictions of non-watering days. He added this has always been a part of our waterconservation program, and continues to encourage customers. Weare in support of her recommendations. The Committee moved itforward and will be considered at Council in the near future. Henoted the requirements Councilmember Frye presented at IROC inAugust have been modified after her workshop efforts and

feedback from stakeholders, due to the concern regarding makingthe days of the week mandatory on a year-round basis.

o Presentation on Budget Based Billing Program. A pilot researcheffort in the ability of the Utility to build based upon water budgetas opposed to fixed tiers. Engaging a consultant in this work andexpect to move forward on this.

o Briefing on the pending 5.86% Rate Increase. This will equallyaffect all customers (approximately a $3.39 increase). He notedthe disagreement from Councilmember DeMaio, regarding thebasis for this increase. This pass through is solely due to theincrease of the cost of wholesale water. Councilmember DeMaio

did not vote in support of the Prop. 218 Notice, therefore, it wasmoved to be forwarded to Council without a recommendation.

Continue to meet conservation targets that are in place for this fiscal year,and are doing just about as well as last year. He feels we are on track forthe target reduction.

Due to the number of inquiries from media and a variety of stakeholdersand interested parties with regard to different elements of our budget,expenditures, rate case, etc. It is a challenge for our staff, during this timeof preparing the 5-year financing plan, to respond to all of the requests for




DRAFT M I N U T E S

Page 3 of 1210/14/2010

information. We want to be accurate in getting the information back. If there are questions regarding budget type items, please give us theopportunity to understand what the actual issues are to address, as there

may be already developed information to share.Briefing to the Audit Committee on September 13 with regard to theresults of the Brown & Caldwell Study.

Next Monday, September 27th

, we will have our new Director, RogerBailey. He comes from Glendale, Arizona. Currently, he is their UtilityDirector, is a registered Engineer and comes to us will a lot of experience,from Florida and Arizona, regarding water, wastewater and reclaimedwater issues. He will be at the next IROC meeting.

6. Advanced Metering Infrastructure (AMI) – Head End System Request forProposal and Project Financing Plan

This item was tabled to the next scheduled IROC meeting of October 18, 2010.

7. Advanced Metering Infrastructure Project Grant OpportunityThis item was tabled to the next scheduled IROC meeting of October 18, 2010.

8. Water Conservation Program – Request for Proposal for Public OutreachCampaign Chris Robbins and Jana Vierola from the Water Conservation section presentedthis item. Mr. Robbins stated they are here to present their selection andrecommendations for approval of a Contract for public information and outreachconsulting services for the Water Conservation Program, with Collaborative

Services, Inc.

He stated the Public Utilities and Purchasing & Contracting Departments issued aRequest for Proposals on May 13, 2010, whereas 7 proposals were received onthe deadline by June 18. They were reviewed by a selection committee whichconsisted of three City staff, both Water Conservation and Public Information,and an outside employee from the Otay Water District, as well as an IROCmember, Gail Welch. He acknowledged her work in this effort.

Mr. Robbins gave an overview, including photos taken, of the deliverables whichincluded “No Time to Waste, No Water to Waste” campaign, Annual Children’s

Poster Contest, Annual Film Contest, Newsletters and Partnerships Program, andmore.

Requested Actions are to support the consultant agreement with CollaborativeServices, Inc., Support the expenditure of funds; not to exceed $200,000 per year.The Contract Durations is three (3) years from the date of award with the optionto renew for two (2) additional one (1) year periods. He opened for questions.

Committee Member Kubota asked if the San Diego professional sport teams orHigh School sports teams have the ability to advertise our water shortage for




DRAFT M I N U T E S

Page 4 of 1210/14/2010

public outreach? He also asked about the radio and television advertising. Mr.Robbins stated yes, they are all included in public outreach, with exception of thehigh schools. He indicated this was a great approach, and he would take this idea

to the Mayor’s staff, the Consultant, and Water Conservation group.

Mr. Ruiz added this is an award winning program, AWWA and WEF forexample, recognized it as Leading the Charge in terms of getting the word out onconservation. This is action now, however, as customers change their behaviorbecause it is important to do, they will adapt to it as a way of life, as water is aprecious thing. Committee Member Billings concurred, and supports this publiceducation, it is a huge payoff in many ways, to conserve water.

Mr. Robbins then explained the process of the As Needed contract using up to$200,000. If less is needed, no funds need to be expended.

Chairperson Peugh asked for a motion to support approval of the Contract withCollaborative Services, Inc. Committee Member Billings moved, CommitteeMember Dull seconded, all others were in favor.

9. Draft IROC Report on the Metropolitan Water District and County WaterAuthority Rate IncreasesCommittee Member Hollingworth pulled this item, he indicated it was moot atthis point.

10. Adoption of an external audit scope of work for the Department, on behalf of

IROC, to be performed by the Office of the City Auditor ($100,000 budget)Chairperson Peugh indicated this item was discussed previously in today’sFinance Subcommittee.

Chris Constantin, Audit Manager with the Office of the City Auditor (OCA),introduced himself and Erin Noel, Supervising Auditor in charge of the teamwhich conducted the Risk Assessment. He recapped his prior meetings withIROC, and provided handouts in the packet which outlined a group of 9 differentitems within 5 categories where they believe value can be added in terms of auditwork. They are looking for IROC’s recommendation as to which option, or group

to be focused upon.

He then referred to the handouts and explained the process that took place indeveloping the options. Mr. Constantin stated they looked at trends amongstbudgetary costs and FTE, interviews with constituents, IROC, staff, etc. toidentify where it is believed risks within this organization existed. He added,when an audit is selected, it will be conducted within accordance withgovernment auditing standards. He stated they need to know exactly what thescope will be in which specific area. He then explained the process. Ultimately,at the end of this process, IROC will receive a written document that articulatestheir justification for recommendations and what those recommendations are.




DRAFT M I N U T E S

Page 5 of 1210/14/2010

Subsequently, they will conduct a 6 month follow-up period for allrecommendations until the administration fully implements them, which includesstatus reports. He opened for questions and/or preference(s) from the provided

spreadsheet Appendix A:

Committee Member Hollingworth indicated one of the reasons IROC was formedwas due to the concern of cost shifting onto the enterprise and bond funds. Heshared his personal experience with examples of large entities shifting costs whenthey are in a troubled situation, and because of this expressed item number 9should be considered.

He stated his preference is item number 9, although item number 7 is alsoimportant.

Committee Member Billings mentioned there are a variety of ways to use thisresource in the short run. He concurred with Committee Member Hollingworthand added IROC’s role is to be honest and speak its mind, stepping back from the politics, but foremost to protect the rate payer’s interest in the long run andproperly invest to maintain the existing infrastructure in a way to maximize theeffective life of existing assets and to operate it as efficiently as possible as abusiness. But not to starve it of resources, which can cause catastrophic events.

He stated his preference is item number 7. This regards Capital Projects which iswhere most of the money is spent, due to catching up on investments that werenot made in prior years because of actions of prior elected officials and others.

He added in reference to item 9, he personally feels false tales of pension benefitsbeing the driver of rate increases, should not be supported. The driver of rateincreases is to build the infrastructure and catch up on water main replacementsthat were not completed in prior years, which does not have anything to do withthe management of this Department.

Committee Member Kubota stated he agrees with Committee Member Billings,and his preference would be item number 7 as being the most important. Heexpressed the chaos that occurs when pipes burst or break putting customerswithout water for lengths of time. He feels the Capital Projects are most

important and the sooner the better.

Committee Member Dull concurred with Committee Members Billings andKubota. He stated his choice would be item number 7 which he indicated has abigger impact to the rate payers.

Chairperson Peugh stated he would like to have an amalgam of audit options 5and 7. He stated that prioritization and planning of capital projects are alsoimportant for the Department. He asked Mr. Constantin if this is a doable auditgiven the timeframe and audit hours.




DRAFT M I N U T E S

Page 6 of 1210/14/2010

Mr. Constantin agreed that OCA can also address prioritization and long-termplanning in audit option 5 with audit option 7 which focuses on efficiency and

oversight of capital projects, but this will reduce the depth of the audit. He alsostated that throughout the audit planning process, OCA staff will meet with IROCand other key officials to further refine and define what the actual risk areas arebefore moving to field work, testing, and analysis. While OCA cannot writepolicies because the performance of management functions are precluded bygovernment auditing standards, based on the audit findings OCA will makespecific recommendations for improving efficiencies and reducing risks.

Committee Member Hollingworth reiterated his belief that item number 9 shouldbe considered because it would restore confidence with some members of theCouncil and the public and IROC representing as rate payers, although he does

feel item number 7 is important.

Committee Member Hollingworth then made a motion to support the selection of item number 9. Chairperson Peugh asked for a second to the motion. There wasno second motion.

Ex-Officio Williams asked for a clarification in selecting multiple items. Mr.Constantin indicated he recommended focusing on the CIP area which coverslong-term planning, project prioritization, compliance with regulations andrequirements, and efficiency and oversight. He stated some review of overheadrate charges that relate to CIP may be able to be included the audit scope,

however there will be less hours available to actually do the prioritization,compliance and project efficiency and oversight parts of the scope. He reiteratedwhen choosing multiple selections, the hours will be spread out, which candiminish depth in focusing on one or the other as a whole. Mr. Constantin alsoadded they are continuously conducting audits, and if focusing on one area at thistime, this does not mean they cannot come back and do further work. He statedhe wants this to be an ongoing relationship.

Ex-Officio Williams concurred with Item 7 being very important, and alsobelieves Item 9 is important, and should not be ignored, as it pertains to thecreation of the IROC. He personally would like to see an employee compensation

survey included, providing the rate payers satisfaction that the compensationbeing paid to the large number of employees is appropriate.

Committee Member Billings commented he understands the importance of Item9, it is important the public have confidence in this Department. However, heindicated his reluctance is it may be a waste of time in the long run. Due toindividuals with political aspirations making false accusations, this is not a gooduse of time. He indicated he serves the rate payers and respects telling them thetruth and staying the course, helping the Department plan and execute a long termprogram in the benefits of ratepayers. Chairperson Peugh concurs, however there




DRAFT M I N U T E S

Page 7 of 1210/14/2010

is a perception problem, and believes the compensation should be looked at largerthan the overhead level. Mr. Billings reiterated CIP should be the main focus.

Committee Member Hollingworth stated if Item 9 is not covered in this selection,he will personally look into the controls on the CIP Program, as part of his work plan for the Finance Subcommittee. He indicated the public’s confidence in theDepartment and IROC is very important. Chairperson Peugh added Items 5 and 7should be combined.

Ex-Officio Robak referred to a memorandum to Jim Peugh, dated September 14,2010: Performance Audit of San Diego Public Utilities Department, from AugieCaires, recommending IROC include listed topics outlined in the memo, in the2010 Performance Audit of the Public Utilities Department. He asked if Mr.Constantin had seen this. Mr. Constantin did not have it with him and reviewed

it. He answered, regarding the listed topics recommended in the memorandum,they can possibly touch upon the first 3 topics (Prioritization, control and fundingof mandated capital projects, overhead rates and interdepartmental changes, andCIP Program oversight). It will be important to identify an area during the auditprocess that is raising some risks which can be highlighted and considered in afuture audit, coming back the following year if this relationship is continued, as apriority. He reiterated he is looking for some guidance as to what area IROC islooking for of potential concern. Then the audit scope can be tailored, and canidentify key risks and concerns.

Ms. Erin Noel, Office of the City Auditor, added because of the current City CIP,

they have a lot of background and knowledge on the issues, and who the contactpeople are. This information is very helpful because they can get startedimmediately into the field work.

Committee Member Billings moved to proceed with an audit of CIP with specificemphasis on long-term planning and project prioritization as well as efficiency of oversight of capital projects. Committee Member Hollingworth asked if thisincludes Item 7-4? Mr. Constantin indicated that by identifying the overall auditarea, such as CIP, instead of specifically one of the nine options, the audit’s largeraudit scope would allow audit staff to determine the specific areas, such asplanning and prioritization, and depth of review that can be done based on the

available audit hours. The Auditor Office will work through the audit risk assessment and determine what aspects of CIP can be value added. Ms. Noeladded it would be very likely it would be covered.

Committee Member Dull seconded, with Committee Member Hollingworthopposing, and no abstentions, all others were in favor to proceed with an audit of CIP with specific emphasis on long-term planning and project prioritization aswell as efficiency of oversight of capital projects.




DRAFT M I N U T E S

Page 8 of 1210/14/2010

11. State Revolving Fund (SRF) Low Interest Loans for the Sewer PipelineRehabilitation Project Richard Enriquez, filling in for Jeanne Cole, presented. Mr. Enriquez referred to

the handouts provided. He gave an overview and the history of the Clean WaterAct, as amended in 1987, which provides for establishment of a Clean WaterState Revolving Fund Program. The current modified SRF loan interest rate is2.7%, which is based upon one-half of the most recent State General ObligationBonds. He noted the SRF loans are paid back over a 20 year period from thededicated net revenues of the Wastewater Enterprise fund.

He indicated the loan would be used to fund the Sewer Pipeline RehabilitationProject. The State has determined a funding amount of $80 million for theProject. The SRF Loan Program offers a lower interest rate compared totraditional bond funding. He noted by utilizing an SRF loan for this Project, the

savings would be approximately $58.4 million over a 20 year term.

The requested action is to authorize entering into an SRF Funding Agreement anrelated ordinance items, including dedicated source of revenue and reimbursementrequirements as requested by the State Water Resources Control Board asconditions of financing. He added staff plan on taking this item to the CityCouncil within the next month, to obtain the necessary ordinance and Councilapproval to enter into an agreement for this loan.

Committee Member Hollingworth asked if there are shovel-ready projects nowthat would benefit from this loan program. Mr. Enriquez said yes, and would be

ready to begin in April, 2011.

Committee Member Billings moved approval, Committee Member Hollingworthseconded, all others were in favor.

12. Bid to Goal Program UpdateMr. Crane, Assistant Director, presented. He stated the intent is to go to the RulesCommittee in October to seek approval of the MOU’s for Water and Wastewater

(amended) previously briefed to IROC who agreed to take forward. If approved,would then move to full City Council as soon as possible. The Third Party GoalReview (Executive Summary provided). He reminded the review has been

completed, and had them review 100% of the goals, rather than 50%. Thefindings was: 48 of the 70 Goals were approved with minor or no revisions, 15Goals were recommended for inclusion in the Program with significant revisions,and 7 Goals were judged to lack justification for inclusion, but recommended tobe carried as goals but not be part of the Incentive Award Program.

Based on Brown & Caldwell’s recommendations after the 15 Goals were

identified, a letter has been received concluding they have reviewed the revisedgoals and have agreed we have met the intent of their recommendations so wenow have 63 approved Goals for the FY11 Program.




DRAFT M I N U T E S

Page 9 of 1210/14/2010

Mr. Crane added this item was brought to the Audit Committee last Monday. TheCommittee moved to have the OCA perform an audit of the audit, asking them to

look at 3 areas for efficiency in the Third Party Audit, from their perspective. Hestated a memorandum has been sent out by Mr. Ruiz, asking staff to keep movingforward toward achievement of these goals for this fiscal year.

Chairperson Peugh asked for comments from Mr. Constantin or Ms. Noelregarding this item. Mr. Constantin added his understanding is CouncilmemberCarl DeMaio wanted the OCA to look at each of the goals and ensure they aremeasurable, and what the metric is behind how it is to be evaluated. When thescope is refined, another performance audit will be done for Public Utilities,working with the Consultant to accomplish that goal.

Chairperson Peugh asked if the changes were what were expected. Ms. Noelindicated yes, the Department did in fact implement all of the recommendations(Performance Audit) made with the exception of one goal, which was partiallyimplemented, in regard to how gain-sharing goals are getting front line input fromemployees. The recommendation is to put a system in place for ensuringemployees are doing that. All others were fully implemented.

Mr. Ruiz shared his frustration with regard to the repeated audits of the audits, forinstance. He indicated Mr. Crane was diplomatic in outlining the results of theBid to Goal Program. He then gave a recap of the diligent steps taken to get thisfar. The B&C Report stated their review placed the Public Utilities Department

among the very top tier of Public Utilities promoting a performance culture.Other Public Utilities of similar size and complexity would likely not do as wellunder the same level of scrutiny. He stated they were very complimentary of thework and rigor with which we had developed these goals, as well as the efficiencyof the Program. He stated there were some recommendations of not includingsome of the goals, and we accept this and are not including those within theprogram. Now, there is yet another audit of the third party audit. At some pointyou either accept the reports that have come back and rely on the work of theindividuals that have come before you, or you don’t. He added we are supporting

the OCA’s review as was requested and is our responsibility and commitment.

This Program has returned value to our customers and will continue to.However, we need to move on, so our employees are not constantly wonderingthere is faith in them as individuals for dedication in achieving savings. He alsopointed out the cost of the Program are borne specifically from savings, and itshould be supported

Committee Member Billings added he supports the Program, it does not cost therate payers, it saves the ratepayers and this is the reason it should be supported.He concurs it has been through all of the appropriate reviews, and all goals benefitthe rate payers. He noted this Program turns employees, through a disciplined




DRAFT M I N U T E S

Page 10 of 1210/14/2010

process, into knowing what is expected of them and makes them proud. He hopesthe Union Tribune be more accurately next time.

Committee Member Webster inquired about the cost to the City for the third partyreview. Mr. Ruiz stated the first 50% was $60,000 and the remainder wasapproximately $30,000 with a total of approximately $90,000. In the proposedBid to Goal program, Mr. Ruiz stated these costs will be taken out of theemployees share of the savings.

Ex-Officio Williams asked if with the meet and confer requirements with theUnions, what is the City’s commitment regarding this Program and the Unions?

Mr. Crane stated the Unions ratified the conditions in the MOU’s. The MOU’s

now have to be approved by the City Council, which is the last action item. Inaccordance, the Mayor then has the option to accept or not accept the bid that the

Water Branch has made, which meets the requirements of the MOU. Weanticipate this would be accepted. There is a commitment from July 2009, andthe employees have been working to meet these goals, still awaiting approval.Wastewater’s MOU is still effective and would remain effective, as is theCustomer Support Division’s MOU. But there is no time requirement.

Committee Member Hollingworth asked if there is a dollar savings listed for eachgoal. Mr. Crane stated he did not believe so generally savings are generated byprocess change. Committee Member Hollingworth asked why certain goals seemlike they should be part of a normal routine of a given job. Mr. Crane stated thesegoals are over and above the employee’s assigned tasks and have not been able to

accomplish some of the goals due many reasons beyond their control, such asconsolidation, new evolution and changes of computer programs, mergingprocesses, downsizing, etc. Mr. Ruiz added to emphasize that the goals are meantto stretch the employees above and beyond their normal work load, in the contextof everything else we are asking them to do in a given year.

Committee Member Robak commented he has seen the Bid to Goal Programreported at the Metro JPA for over 12 years and continue to get periodic updates.He feels it has been very positive, but has wanted to know if there will ever by a“real” bid to the private sector. Mr. Crane stated it is very difficult for businesses to want to use their enterprise money to bid against the City. It would be too

difficult to find a company who would risk such a large amount of money to bidon such a project. He added the goal we receive from the Consultant is verycompetitive for us, so it is very real. Committee Member Billings added there isalready plenty of outsourcing.

13. Water Operations Efficiency StudyMr. Crane gave a brief overview of this process. He stated the first year of theplanning was to consolidate the Business Support Branches, and this has beendone. The second year of the plan was to look at the Operating Divisions (Water,Collections, Treatment & Disposal). One on one interviews of Senior Managers




DRAFT M I N U T E S

Page 11 of 1210/14/2010

took place to get feedback on their perspective of how to make the operation moreefficient, and how to do a job better, etc. An efficiency package was put together.He then introduced Jim Fisher, Assistant Director, Water Operations. He referred

to his slides and summarized the 9 efficiency study areas which are: 1) CorrosionControl - was completed in conjunction with Bid-to-Goal and resulted in 1position reduction; 2) Cooperative Yard Support - to work in conjunction withoverall Facilities Master Plan in consolidating 2 yards into 1; 3) Crew size forconstruction, valve and other crew types - which is completed in conjunction withBid-to-Goal, resulting in 32 position reductions; 4) Metershop relocation – completed in 10/2009, now looking into making things more efficient; 5) WaterTreatment Plant optimization – all plants currently producing high water qualityand surpassing established goals and awards have been given; 6) Central StoresOpen Purchase Orders – concerns raised about City’s open purchase order process, Auditor’s Office issued Performance Audit of Purchasing and

Contracting in March 2010. Six recommendations have been given andconcurred; 7) Consolidation of Electricians and Instrumentation Technicians – 2areas looked at separately, should the classifications be combined into a singleclassification. For Public Utilities, it was not the best idea. The second part wasto look at these positions to consolidate the work activities. This will be presented next month with Treatment and Disposal’s Efficiency Study; 8)Department Emergency Services and Standby Response – Both systems had thesegroups. As a result of this study it was determined and accepted by the SteeringCommittee that no changes would occur as a result of the study. 9) Water SystemTechnician – is this classification still valid. This is on hold and will be addressedin the future.

Committee Member Billings asked if the City Council is aware of the work goingon with this? Mr. Ruiz indicated it has not been briefed in detail. There is a lot of work put into this and commended Mr. Fisher as he has identified positionreductions continuously through this effort, resulting in a net reduction of 387position from FY07 when the rate case started.

14. Sub-Committee Reportsa. Finance – Subcommittee Chair Hollingworth

2011 Budget

OCA’s scope discussion. In October, the Department will have the

monthly Water and Wastewater Report describing finances of theDepartment.

b. Environmental & Technical – Subcommittee Chair Webster

Update on the recent water main break and sewage spills. Askedthe Department come back regularly with recent breaks. Mostseem to be caused by old cast iron pipe reaching its lifetimecapacity.

Strategic Plan, measures and methods of implementation.




DRAFT M I N U T E S

Page 12 of 1210/14/2010

Follow up discussion regarding CWA’s involvement with the De-sal Plant and purchase from Poseidon and what the City’s positionis on this, and what the rate increase could possibly be.

c. Public Outreach, Education & Customer Service – Subcommittee

Chair Welch

Nothing to Report.

15. Metro JPA – Report OutThis item was not heard.

16. Proposed Agenda Items for the Next IROC MeetingPlease send comments to Chairperson Peugh or Ernie Linares via email.

17. IROC Members’ Comments Committee Member Hollingworth asked when the Strategic Planning meetingwould occur so it can be discussed what IROC’s workload is, what issues will beaddressed and how IROC will report these issues and more timely inject into thepolicy making process. He would like to work on the advise portion of IROC’s

duties. After discussion it was decided an Ad-Hoc would be formed with theChair of IROC and the 3 Subcommittee Chairs.

Committee Member Kubota pointed out the new Public Utilities Director, RogerBailey, will be coming aboard and commends the Executive Team and City staff for the diligent work since Jim Barrett’s departure.

Adjournment of IROCAt approximately 12:22 Chairperson Peugh adjourned the meeting.

Recording Secretary: _______________________________________Monica Musaraca



Item 7



CIP Status Report

Fiscal Year 2010

The photo to the right is the

36-inch micro tunneling

parallel to I-8 under Taylor

Street in South Mission

Valley.

The left photo shows the 60-

inch diameter boring machine in

the receiving pit after a

successful Jack and Bore

operation approx. 30 ft below

Interstate I-8 in Mission Valley.

This work is part of the South

Mission Valley Trunk Sewer.

Submitted by

Guann Hwang & James Nagelvoort



Mission Statement

To ensure the quality, reliability, and sustainability of water and wastewaterservices for the benefit of the ratepayers and citizens served



TABLE OF CONTENTS

Purpose …………………………………………………………………….…1

CIP Project Highlights …………………………………………….………….1 - 3

Regulatory Requirements and Department Goals ……………………..….….4 - 6

Program Expenditures & Schedules ………………………………………….7 - 20

Appendix 1 Sample P6 Schedule

Appendix 2 Sewer & Water CIP Projects in Construction during FY 2010 by Council

District

Appendix 3 Sample Notice to Proceed and Beneficial Occupancy/Use Certificate



1

The three tanks contain Liquid Oxygen (LOX)

while the towers are ambient air vaporizers that

convert the LOX to gas.

PURPOSE

This report provides summary of financial and progress information of the Capital Improvements

Program between July 1, 2009 and June 30, 2010.

CIP PROJECT HIGHLIGHTS

WATER PROJECTS

Rancho Peñasquitos Pump Station

The new Rancho Peñasquitos Pump Station is designed tohandle an increased capacity of 32 million gallons per day

(MGD). This project replaced the 25 MGD pump station

originally built in 1963.

This project was completed prior the Department of PublicHealth compliance date of June 30, 2010.

Miramar Water Treatment Plant Upgrade and Expansion

The Miramar Water Treatment Plant Upgrade and Expansion

provides for upgrades to and the expansion of the Miramar WaterTreatment Plant, including construction of state-of-the-art filters,

rapid mix and de-aeration facilities, chlorine and chemical

facilities, four flocculation and sedimentation basins, an ozone

structure with generation equipment, site paving, landscaping, andan administration building.

With exception of the landscaping and site paving, the upgradeand expansion to the Miramar Water Treatment Plant have been

completed.

This project earned the California Construction Best of 2008 Award and the American Public Works

Association (APWA) Project of the Year Awards in 2009 and 2010.

3012 Design/Build Water

Water Group Job 3012 is a Design/Build project that will replace nearly eight

miles (42,020 linear feet) of existing old and deteriorating cast iron water mains

located underground. Some of the mains in Pacific Beach to be replaced by this

project date back to 1933.

Construction is scheduled to begin in the September 2010 and is estimated tocomplete by summer of 2013.



2

New Pumps to increase station capacity from

1,000 gpm to 1,800 gpm.

WASTEWATER PROJECTS - Municipal Sewage System Projects

South Mission Valley Trunk Sewer

The existing 30-inch VC (vitrified clay) trunk sewer pipe isfrom the original 1947 installation. Most of the existing

pipe has reached its design life and is to be replaced with a

36-inch to meet accommodate future flows.

The project is currently under construction and estimated to

be completed in August 2011.

Lake Murray Trunk Sewer

The Lake Murray Trunk Sewer project consists of replacing nearly

three miles (14,942 linear feet) of trunk sewer main using a

combination of open-trench construction and tunnel boring

methods.

The project is estimated to be completed by the summer of 2012.

Citywide Pump Station Upgrades - Group I (North County

Sewer Pump Station Upgrades)

Pump Stations Upgrades PS Group I project involves theimprovement to seven existing sewer pump stations 71, 73, 74, 75,

76 and 80 in the Rancho Bernardo community.

This project started construction on July 13, 2009 and scheduled

to finish November 2010.

Sewer Pump Station 79

This pump station upgrades consists of replacing the pumps andmotors, installing a storage tanks, completing electrical

upgrades, improving odor control, adding SCADA controls and

alarms, and installing a redundant force main approximately8,230 feet.

This pump station upgrades was completed in April 2010.



3

WASTEWATER PROJECTS - Metropolitan Wastewater System Projects

Metro Biosolids Center – Water Systems Improvements

This Design/Build project will improve the facilities potable water, process water, utility water, andreclaimed water systems that are critical to the plant’s biosolids

processing operations.

This project to be awarded in August with an estimated completion bySeptember 2011.

Grit Processing Improvements at the Point Loma

Wastewater Treatment Plant

This proposed Grit Processing Improvements Project will

construct an interim Grit Processing Facility to allow plantoperations to continue while the original facility is demolished

and the new facility is constructed.

The project is anticipated to begin construction in March 2011

and complete in January 2014.



4

REGULATORY REQUIREMENTS AND DEPARTMENT’s GOALS

The Public Utilities Department’s funding is provided by the water and sewer rates to replace,

upgrade and expand infrastructure. These improvements also include projects contained in the

Compliance Order from the California Department of Public Health (DPH) for water and

Environmental Protection Agency (EPA) Consent Decree projects for the wastewater system.

WATER – Department of Public Health (DPH) Compliance Order for Contract Award.

The DPH compliance order requires the completion of eight pump stations, ten

reservoirs/standpipes, nine treatment related projects, four pipelines, and awarding ten miles of

Cast Iron (CI) main replacement per fiscal year.

As of June 30, 2010, all eight pump stations, ten reservoirs/standpipes, and four pipelines were

completed. Of the nine treatment related projects, six have been completed. The remaining three

projects are currently under construction.

The following table and graph show the awarded and completed CI main replacement for fiscal

years 2008 through 2010. To ensure a continued supply of water to customers and reduce the

number of water main breaks, Public Utilities Department has increased the awarding of CI main

replacement from 10 to 20 miles for fiscal years 2008 through 2010 and will further increase this

mileage from 20 to 35 miles in fiscal year 2011.

Notes:

1. Completed water miles lag behind the Awarded water miles due to the length of time necessary to construct the new watermains. The typical construction schedules can vary between 9 to 18 months. Also, some water projects have been executedthrough Design Build Contracts which can result in longer construction schedules.

Footnotes:

a) Awarded miles are based on the Notice to Proceed issued by Purchasing Department.b) Completed miles are based on the Notice of Completion issued by Field Engineering Division.

FiscalYear

DPH Compliance

Order(Miles)

Department’s

Goal(Miles) Awarded

a

(Miles) Completed

b

(Miles)

FY08 10 20 18.66 0 FY09 10 20 20.94 10.23 FY10 10 20 20.10 18.39

FY11 10 35



5

0.0 0.2

4.2 4.2

5.8

8.0

8.0

9.0 9.0

14.2 14.2

20.0

0.0

1.0 1.0

1.0

3.1

7.6

9.5 9.5 9.5

13.413.4

20.1

0.0

5.0

10.0

15.0

20.0

25.0

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

M i l e s

FY10 Awarded CI Water Mains

Forecasted

Awarded

DPH Compliance Order (10 miles )

Department's Goal (20 miles )

WASTEWATER – Environmental Protection Agency Consent Decree for Contract Completion

The EPA Consent Decree mandates the repair, replacement, and rehabilitation of 450 milesof aged sewer pipes, upgrade and replace of 17 trunk sewers and 26 pump stations (PS) by

June 2013. Below is a list of mandated project updates as of June 30, 2010.

333.88 of the 450 miles had already been completed.

Of the 17 trunk sewers, four have been completed, four in construction, and the other nine

trunk sewers are in design and on-schedule to be completed by June 2013.

10 of the 26 pump stations have been completed. One is currently under design and the

other remaining 15 pump stations are either in the award or construction phase.



6

Starting in fiscal year 2010, Public Utilities increases the mileage for sewer main replacement from

45 to 60 miles.

Notes:

(1) Includes 14.1 credited miles.

Footnotes:

a) Awarded miles are based on the Notice to Proceed issued by Purchasing Department.

b) Completed miles are based on the Beneficial Occupancy/Beneficial Use (BO/BU) issued by Field

Engineering Division.

2.3 4.76.5

10.2

13.815.1

17.3

22.4

27.7

32.6

40.4

60.0

7.7

11.0

14.4 16.9

17.819.4

20.8

25.3

31.2

38.9

50.1

58.2

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

M i l e s

FY10 Completed Sewer Miles

Baseline

Completed

EPA Consent Decree (45 miles )

Depar tment's Goal (60 miles )

FiscalYear

EPA Consent

Decree(Miles)

Department’s

Goal(Miles)

Awardeda

(Miles)Completed

b

(Miles)

FY08 30 30 39.35 30.1(1)

FY09 45 45 45.20 49.5

FY10 45 60 42.37 58.22

FY11 45 60



7

PROGRAM EXPENDITURES AND SCHEDULES

Forecasted and actual expenditures for project management, design and construction of CIP

projects for the 2007 Rate Case (July 1, 2007 – June 30, 2011).

The City was out of the public bond market during 2003 through December 2008 due to the lack of

audited financial statements. This had a significant impact on the City’s capital program and

ultimately resulted in the loss of city engineers and other necessary staff for executing the CIP

program. During this timeframe, Water and Wastewater funds were forced to reduce their capital

program and finance only legally mandated projects with cash and private financing. Although

Water and Wastewater funds had access to private financing in 2008, CIP execution was hampered

by the necessary ramp-up of E&CP in addition to City transitional issues due to the Business

Process Re-engineering.

Also, when the rate case was prepared back in 2007, design & construction cost were significantly

higher than today. It was anticipated that design & construction cost would gradually increase

from 2007 through 2011. However, the opposite has happened. Design and Construction cost

have dramatically reduced due to the weak economy.

These factors have led to significant CIP execution variances between actual expenditures for

Water and Wastewater funds and projected CIP expenditures in the Water and Wastewater 2007

rate cases.

WATER

The first chart below shows the FY08 thru FY11 rate case and actual expenditures. The second

chart shows the FY10 budgeted and actual expenditures by categories: Pipelines, Treatment Plants,

Pump Stations, Storage Facilities, Reclaimed Water Pipelines, Groundwater, and Miscellaneous.

$158$163

$144$122

$55

$155$115

$585

$0

$100

$200

$300

$400

$500

$600

$700

FY2008 FY2009 FY2010 FY2011

M i l l i o n s

Water

Rate Case FY08‐FY11

Rate Case Actual Rate Case (Cumm) Actual (Cumm)



8

$0

$10

$20

$30

$40

$50

$60

$70

$ 4 7

$ 6 5

$ 1

$ 7

$ 1

$ 7 $

9

$ 3 5 . 4

$ 6 3 . 2

$ 5 . 9

$ 1 . 0

$ 0 . 8

$ 0 . 8

$ 3 . 2

M i l l i o n s

FY2010 Water

Rate Case

Actual

WASTEWATER

The charts below show the FY08 thru FY11 rate case and actual expenditures for the entire

Wastewater System, the Metropolitan Wastewater System, and finally the Municipal Sewage

System Projects.

$96 $119$185 $184

$30$49 $80

$585

$0

$100

$200

$300

$400

$500

$600

$700

FY2008 FY2009 FY2010 FY2011

M i l l i o n s

Wastewater





9

WASTEWATER - Metropolitan Wastewater System Projects

$19 $27$28

$33

$3 $5 $10

$107

$0

$20

$40

$60

$80

$100

$120

FY2008 FY2009 FY2010 FY2011

M i l l i o n s

Watewater ‐Metro



WASTEWATER - Municipal Sewage System Projects

$77 $92

$157 $151

$27 $44 $70

$478

$0

$200

$400

$600

FY2008 FY2009 FY2010 FY2011

M i l l i o n s

Wastewater‐ Muni





10



11



12



13



14



15



16



17



18



19



20



21



22



#0

UT

Pacific Ocean

5

5

15

15

52

56

52

163

805

®

Council District 1Sewer & Water CIP Projects

in Construction during FY 2010

Sewer & Water CIP Projects not shown on map due to various locations

11000380, El Monte Valve ReplacementB00135, Fault Crossing Retrofits to Lg Pipelines

B00136, Landslide / Liquefaction Pipeline Mitigation

S00067, Dulzura Conduit Concrete Covers

B00347, Sewer Main Rehab Phase J-1B

B00464, Rehabilitation Phase "D-1"B00468, Pipeline Rehabilitation Phase "G-1"

B00471, Sewer Main Rehab Phase J

B00520, Sewer Main Pipeline Rehab. PH I-1 GRC, Part 1

B00525, Sewer Main Rehab Phase I-1D

B00529, Sewer Main Rehab Phase J-1A

S00341, Pipeline Rehabilitation Phase "F-1"

S00030, Otay Water Treatment Plant Phase 1

S00031, Otay WTP Upgrades Phase 2 (CLO2, GAC & PAC)

S00077, Fluoridation Facilities Project @ Otay WTP

S00303, PS Group I - North County SPS Upgrades

S00306, PS Group IV (Mission Bay Comfort Pump Stations)



#0

Pacific Ocean

5

5

8

15

15

52

75

75

52

163

805

163

163

282

®



Legend

#0 B10147, Stairway Project at PLWTP

B00310, Old Rose Canyon TS Reloc.

B00326 Sewer Group 665

B00514, Bayside/Capistrano Sewer Accel

B00071, 3000 - Wtr GJ 753 CIB00482 Crown Point TS EPA (S)

(S) = Sewer (W) - Water

B00510, Quincy Street & Wilbur Ave. (S)

B00440, Bird Rock Sewer Impvmnts






B00464, Rehabilitation Phase "D-1"

B00468, Pipeline Rehabilitation Phase "G-1"


B00520, Sewer Main Pipeline Rehab. PH I-1 GRC, Part







S00303, PS Group I - North County SPS UpgradesS00306, PS Group IV (Mission Bay Comfort Pump Stations)



8

5

15

15

15

15

805

805

163

163

®





















5

54

94

54

15

15

805

805

®





















#0

UTUTUT

15

15

52

56

163

805

®

Portion of Council District 5Sewer & Water CIP Projects



11000380, El Monte Valve Replacement

B00135, Fault Crossing Retrofits to Lg Pipelines

















#0

8

15

15

5252

163

805

163

163

805

®





















#0#0#0#0#0

UTUTUT

8

5

94

52

94

15

15

15

15

15

52

125

805

163

805

163

163

282

805

®











B00525, Sewer Main Rehab Phase I-1DB00529, Sewer Main Rehab Phase J-1A





S00303, PS Group I - North County SPS UpgradesS00306, PS Group IV (Mission Bay Comfort Pump Stations)



#0

Pacific Ocean

5

5

5

54

54

75

15

15

75

75

805

805

805

®

Portion of Council District 8Sewer & Water CIP Projects









B00520, Sewer Main Pipeline Rehab. PH I-1 GRC, P









san diego iroc packet oct 18, 2010

Documents