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HomeMy WebLinkAbout1998-12 DRAFT MINUTES OF COMBINED MEETING OF STEERING AND AD HOC COMMITTEES Wednesday, December 16, 1998 at 5 p.m. A meeting of the Steering Committee of the Orange County Sanitation District was held on Wednesday, December 16, 1998 at 5 p.m., in the District's Administrative Office. (1) The roll was called and a quorum declared present, as follows: STEERINGIAD HOC COMMITTEE MEMBERS: OTHERS PRESENT: Directors Present: Thomas L. Woodruff, General Counsel Jan Debay, Chair of the Board Ryal Wheeler Peer Swan, Vice Chair Pat McGuigan, Chair, OMITS Committee Norm Eckenrode, Chair, PDC Committee STAFF PRESENT: Tom Saltarelli, Chair, FAHR Committee Donald F. McIntyre, General Manager John Collins, Past Chair of the Boards Blake Anderson, Asst. General Manager Bill Steiner, County Supervisor Jean Tappan, Committee Secretary Bob Ghirelli, Director of Technical Services Directors Absent: David Ludwin, Director of Engineering None Mike Peterrnan, Director of Human Resources Michelle Tuchman, Director of Communications Jim Herberg, Engineering Supervisor Jim Colston, Regulatory Specialist (2) APPOINTMENT OF CHAIR PRO TEM `« IN THE UFFICF Or THE iECRETARI ORANGE COUNTY SANITATION DISTRICT No appointment was necessary. JAN 27 1999 (3) PUBLIC COMMENTS BY / There were no public comments. (4) RECEIVE, FILE AND APPROVE MINUTES OF PREVIOUS MEETING The minutes of the Steering Committee Meeting of November 18, 1998 were approved as drafted. (5) REPORT OF THE COMMITTEE CHAIR Chair Debay announced that there will be a Strategic Plan Ad Hoc Committee meeting on Wednesday, January 6, 1999, starting at 5 p.m. and a Directors Workshop on Saturday, January 9, from 9 a.m. to noon. OCSD . P O.Bw 8127 • FwMain V&ky,CA 92728-8127 • (714) 962-2411 e Minutes of the Steering Committee Meeting Page 2 December 16, 1998 (6) REPORT OF THE GENERAL MANAGER One of the changes resulting from consolidation is that the council, rather than the mayor, appoints the representative to the District's Board of Directors. General Manager McIntyre indicated that letters have been mailed to the cities in the service area recommending continuing the existing representation. A February 24, 1999 joint meeting with the OCWD's Board is being discussed to consider approving the EIR for the Groundwater Replenishment System project. This would be before the regular Board meeting on that same date. Before this meeting, it was suggested that staff contact the new Board member from Anaheim to present the project and answer questions. Blake Anderson and staff provided updates on the Kem County Biosolids Ordinance, due diligence on the Wheeler Ridge site, the July 21 spill in Newport Beach, and made a presentation on continuing watershed management activities. The Committee members approved the staff recommendations to continue participation in the Santa Ana River Watershed Group (SARWG); to consider a future role for the District in SAWPA governance and to monitor related activities in the watershed; to explore new opportunities with OCWD; to continue to participate in POTW associations such as CASA, AMSA, and SCAP; and to support effective Clean Water Act Amendments. Don McIntyre also reported on the SAWPA Directors Retreat that he attended. The Board appears to be more project oriented at this time. There does not appear to be any interest in serving on each others boards. It was suggested that a Steering Committee study session be held on the regional watershed issues. This will be discussed again in January. (7) REPORT OF GENERAL COUNSEL General Counsel Tom Woodruff updated the members on the Sacramento Regional CSD lawsuit and possible impacts on other agencies and indicated that a more detailed report would be made at tonight's Board meeting. (8) STEERING COMMITTEE DISCUSSION ITEMS (Items A-F) A. Steering Committee/EMT Retreat The dale and discussion issues were discussed. Michelle Tuchman will revise the list of proposed issues before finalizing the agenda. Saturday, February 20, is the tentative meeting date. B. Update on Status of SPMT Negotiations This item was not discussed. Minutes of the Steering Committee Meeting Page 3 December 16, 1998 C. Report on Trammel Crow Negotiations Director Swan and Don McIntyre met with Trammel Crow representatives. The results of those discussions will be discussed in Closed Session at the Board Meeting. D. Report on SAWPA Retreat Mr. McIntyre discussed this earlier in the meeting. E. Five-year Retrospective Michelle Tuchman proposed the preparation of a document that would list the agency's accomplishments over the past five years, determine where we are at this time and what still needs to be done, and outline a plan to accomplish those goals. This report would be presented at a future Board meeting. It was suggested that this document be discussed in more detail at the retreat. F. Review General Manager's Annual Performance Objectives This issue will be re-agendized for discussion in January in order to set definitions for the various levels of accomplishment. (9) REPORT OF THE AD HOC COMMITTEE CHAIR Chair Collins did not make a report. (10) COMBINED STEERING AND AD HOC COMMITTEES DISCUSSION ITEMS A. Hearthside Homes (formerly Koll Development in Boise Chica Jim Herberg discussed the agreement that provides for annexation to the District and sewer service for this area and the developer's request to have a third-party provide water and sewer services. The possibility of constructing facilities that would serve both the City of Huntington Beach and Hearthside Homes was also discussed. Because of the many issues that still need to be resolved, no recommendation was made. B. The Strategic Plan Activity Calendar for the next quarter was reviewed. (11) OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY There were no other business, communications, or supplemental agenda items. Minutes of the Steering Committee Meeting Page 4 December 16, 1998 (12) MATTERS WHICH A DIRECTOR WOULD LIKE STAFF TO REPORT ON AT A SUBSEQUENT MEETING There were none. (13) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR ACTION AND STAFF REPORT There were none. (14) CONSIDERATION OF UPCOMING MEETINGS The list of meetings was briefly reviewed. There will be an Ad Hoc Committee re Strategic Plan meeting on Wednesday, January 6 and a Directors Workshop on Saturday, January 9. The CASA 1999 Mid-year Conference is scheduled for January 21-23, 1999, in Ranch Mirage. The next Steering Committee meeting will be held on Wednesday, January 27, 1999 at 5 p.m. The next combined meeting of the Steering and Ad Hoc Committees is scheduled for Wednesday, March 24, 1999 at 5 p.m. (13) CLOSED SESSION There was no closed session. (14) ADJOURNMENT The Chair declared the meeting adjourned at 6:33 p.m. Submitted by: Ten Tappan ring Committee Secretary re .p.m.�<.�sroe:,y corennre.esoearz roes mm�re.es STATE OF CALIFORNIA ) )SS. COUNTY OF ORANGE ) Pursuant to California Government Code Section 54954.2, 1 hereby certify that the Notice and the Agenda for the joint meeting of the Steering and Ad Hoc Re Strategic Plan Committees held on Wednesday, December 16, 1998, was duly posted for public inspection in the main lobby of the District's office on Tdu;sdayl, December 1998. IN WITNESS WHEREOF, I have hereunto set my hand this 16th day of December, 1998. 2z Penny Kyle, Sec ary of the Boar f Direc tors of Orange County nitation District / . Posted: December ' 1998'. 3 up.m. By. -- "Signature ORANGE COUNTY SANITATION DISTRICT BOARD SECRETARY (2) phone: (7141962-2411 ,nailing adma.: P0. Bar 8127 Fountain Valley CA 92728-8127 NOTICE OF COMBINED MEETING .treat address: OF THE 10944 Ellis Avenue Faantein Valley,GA STEERING COMMITTEE AND 9270E-7018 AD HOC COMMITTEE RE STRATEGIC PLAN Member ORANGE COUNTY SANITATION DISTRICT Agencies • MI.. WEDNESDAY, DECEMBER 16, 1998 - 5 P.M. Anaheim Brea Buena Perk C�preaa DISTRICT'S ADMINISTRATIVE OFFICE Fountvin Valley Fullartan 10844 ELLIS AVENUE Bagcon Beach FOUNTAIN VALLEY, CALIFORNIA 92708 Huni3ct n Beech Irvine Le Habra La Palma Les Alamitos Newport Beach Brenye A regular meeting of the Steering Committee of the Board of Directors of Placentia Santa An Orange County Sanitation District, will be held at the above location, date Saul Beach and time. The Ad Hoc Committee re Strata is Plan will meet with the Stamm 9 main Steering Committee to discuss issues of mutual interest. Ville Perk %rba Linda Caunty at Orange Sanitary Si.cricta Costa Mesa Midway city Water Siatriete Irvine Ranch 'T Protect the Public Health and Me Environment through Excellence,e Wastewater Systems' STEERING COMMITTEE AND BOARD MEETING DATES FOR THE NEXT YEAR Wednesday, December 16, 1998 Wednesday, January 27, 1999 Wednesday, February 24, 1999 Wednesday, March 24, 1999 Wednesday, April 28, 1999 Wednesday, May 26, 1999 Wednesday, June 23, 1999 Wednesday, July 28, 1999 Wednesday, August 25, 1999 Wednesday, September 22, 1999 Wednesday, October27, 1999 Wednesday, November 17, 1999 Wednesday, December 15, 1999 ROLL CALL (1) Roll Call: Meeting Date: December 16. 1998 Meeting Time: 5 p.m. Meeting Adjourned: Steerina Committee and Ad Hoc Committee Members Jan Debay, Chair......................................................— John J. Collins, Past Joint Chair............................... Peer A. Swan, Vice Chair......................................... Tom Saltarelli, Chair, FAHR Committee.................... - Norm Eckenrode, Chair, PDC Committee................. - Pat McGuigan, Chair, OMITS Committee.................. Bill Steiner, Supervisor............................................. Others Thomas L. Woodruff, General Counsel .................... - Staff Present Donald F. McIntyre, General Manager..................... Blake P. Anderson, Assistant General Manager.......— Bob Ghirelli, Director of Technical Services.............. - David Ludwin, Director of Engineering...................... Mike Peterman, Director of Human Resources.........— Michelle Tuchman, Director of Communications.......— Jim Herberg, Engineering Supervisor....................... Jim Colston, Regulatory Specialist ........................... Jean Tappan, Committee Secretary......................... c: Debbie Lecuna mm AGENDA COMBINED MEETING OF THE STEERING AND AD HOC COMMITTEES ORANGE COUNTY SANITATION DISTRICT WEDNESDAY, DECEMBER 16, 1998 AT 5 P.M. ADMINISTRATIVE OFFICE 10844 Ellis Avenue Fountain Valley, California (1) ROLL CALL (2) APPOINTMENT OF CHAIR PRO TEM. IF NECESSARY (3) PUBLIC COMMENTS All persons wishing to address the Combined Steering and Ad Hoc Committees on specific agenda items or matters of general interest should do so at this time. As determined by the Chairman, speakers may be deferred until the specific item is taken for discussion and remarks may be limited to five minutes. Matters of interest addressed by a member of the public and not listed on this agenda cannot action taken by the Committees except as authorized by Section 54954.2(b). (4) APPROVE MINUTES OF PREVIOUS MEETING A. Approve draft minutes of the November 18, 1998 Steering Committee meeting. (5) REPORT OF STEERING COMMITTEE CHAIR ,r -2- December 16, 1998 Agenda , (6) REPORT OF GENERAL MANAGER A. Report of Assistant General Manager 1. Update on Kern County Biosolids Ordinance 2. Update on Due Diligence on Wheeler Ridge 3. Update on July 21 Spill in Newport Beach 4. Update on Continuing Watershed Management Activities (7) REPORT OF GENERAL COUNSEL A. Update on Sacramento Regional CSD Lawsuit (8) STEERING COMMITTEE DISCUSSION ITEMS (Items A-F) A. Steering Committee/EMT Retreat (Don McIntyre/Michelle Tuchman) 1. Date 2. Agenda Discussion Items B. Update on Status of SPMT Negotiations (Don McIntyre/Mike Peterman) C. Report on Trammel Crow Negotiations (Director Swan/Don McIntyre) D. Report on SAWPA Retreat (Don McIntyre) E. Five-year Retrospective (Michelle Tuchman) F. Review General Manager's Annual Performance Objectives (Don McIntyre) (9) REPORT OF THE AD HOC COMMITTEE CHAIR (10) COMBINED STEERING AND AD HOC COMMITTEES DISCUSSION ITEMS (Items A-B) A. Hearthside Homes (formerly Koll) Development in Boise Chica/Huntington Beach (David Ludwin/Jim Herberg) B. Strategic Plan Activity Calendar for January—March 1999 (Jim Herberg) It 1) OTHER BUSINESS COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY (12) MATTERS WHICH A DIRECTOR WOULD LIKE STAFF TO REPORT ON AT A SUBSEQUENT MEETING -3- December 16, 1998 Agenda (13) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR ACTION AND STAFF REPORT (14) FUTURE MEETING DATES A. Ad Hoc Committee re Strategic Plan, Wednesday, January 6, 1999 B. Directors Workshop, Saturday, January 9, 1999 C. CASA 1999 Mid-year Conference, January. 21.23, 1999, at Rancho Mirage, CA. Contact Jean Tappan at 714/593-7101 by December 17 if planning to attend. D. The next Steering Committee Meeting is scheduled for 5 p.m., Wednesday, January 27, 1999. E. The next combined meeting of the Steering and Ad Hoc re Strategic Plan Committees is scheduled for 5 p.m., Wednesday, March 24, 1999. (15) CLOSED SESSION During the course of conducting the business set forth on this agenda as a regular meeting of the Steering Committee, the Chair may convene the Committee in closed session to consider matters of pending real estate negotiations, pending or potential litigation, or personnel matters, pursuant to Government Code Sections 54956.8, 54956.9, 54957 or 54957.6, as noted. Reports relating to (a) purchase and sale of real property; (b) matters of pending or potential litigation; (c) employment actions or negotiations with employee representatives; or which are exempt from public disclosure under the California Public Records Act, may be reviewed by the Directors during a permitted closed session and are not available for public inspection. At such time as final actions are taken by the Board on any of these subjects, the minutes will reflect all required disclosures of information. A. Convene in closed session, if necessary B. Reconvene in regular session C. Consideration of action, if any, on matters considered in closed session. (16) ADJOURNMENT jt H%w doP gendaWEERING COMAA iEeBB M121698 Agenda lo,Seeang-Ad Hoc Comm dx r -4- December 16, 1998 Agenda Notice to Committee Members: For any questions on the agenda or to place items on the agenda,Committee members should contact the Committee Chair or the Secretary ten days in advance of the Committee meeting. Committee Chair: Jan Debay (949)645-0919 Secretary: Jean Tappan (714)593-7101 (714)962-0356(Fax) E-mail: ¢appan@ocsd.com b DRAFT MINUTES OF STEERING COMMITTEE MEETING Wednesday, November 18, 1998 at 3 p.m. A meeting of the Steering Committee of the Orange County Sanitation District was held on Wednesday, November 18, 1998 at 3 p.m., in the District's Administrative Office. (1) The roll was called and a quorum declared present, as follows: STEERING COMMITTEE MEMBERS: OTHERS PRESENT: Directors Present: Thomas L. Woodruff, General Counsel Burnie Dunlap, Chair of the Board Peer Swan, Vice Chair Pat McGuigan, Chair, OMTS Committee STAFF PRESENT: Jan Debay, Chair, PDC Committee Donald F. McIntyre, General Manager George Brown, Outgoing Chair, FAHR Committee Blake Anderson, Asst. General Manager John Collins, Past Chairman of the Boards Jean Tappan, Committee Secretary Bill Steiner, County Supervisor Bob Ghirelli, Director of Technical Services Tom Saltarelli, Incoming Chair, FAHR Committee Ed Hodges, Director of General Services Admin. David Ludwin, Director of Engineering Directors Absent: Bob Oolen, Director of Operations and None Maintenance Greg Mathews, Asst. to the General Manager Patrick Miles, Director of Information Technology Mike Peterman, Director of Human Resources Gary Streed, Director of Finance Michelle Tuchman, Director of Communications (2) APPOINTMENT OF CHAIR PRO TEM Vice Chair Swan was appointed Chair Pro Tem. Chair Dunlap arrived after the star of the meeting. (3) PUBLIC COMMENTS There were no public comments. (4) RECEIVE. FILE AND APPROVE MINUTES OF PREVIOUS MEETING The minutes of the Steering Committee Meeting of October 28, 1998 were approved as drafted. 0050 • P.O.Box 8127 . Fountain Valley.CA 9272E-9127 , (714) 962-2411 Minutes of the Steering Committee Meeting Page 2 November 18, 1998 (5) REPORT OF THE COMMITTEE CHAIR Chair Pro Tem Swan reported on his visit to the Wheeler Ridge property that is being considered for purchase as a composting site. He also drove the roads that the biosolids haulers use and found only one that was in bad shape. The OMTS Committee is recommending exercising the option to purchase this property at tonight's Board meeting as a long-term disposal option. Mr. Swan also announced that the EIR for the Groundwater Replenishment System has been released. The public hearing is scheduled for December 8, 1998 at the Orange County Water District. (6) REPORT OF THE GENERAL MANAGER General Manager Don McIntyre announced that staff is still working with CDM on the capital improvement report associated with the Strategic Plan. The first cut with costs was very high because of the GWR project and staff is reviewing to see if some projects can be delayed to flatten out expenditures. Because there is still a lot of work to do on the report, the December 5 workshop and the December 3 PAC meeting will be delayed until January. Mr. Swan also mentioned that a new directors workshop should be scheduled as soon as possible for January. He also suggested that a Steering Committee workshop on the Strategic Plan should also be held in January with a workshop for the full Board in February. It was suggested that the Steering Committee Workshop be held in place of either the January OMTS or PDC Committees, as they are not meeting. (7) REPORT OF GENERAL COUNSEL General Counsel did not make a report. (8) STEERING COMMITTEE DISCUSSION ITEMS A. The action items scheduled to be considered by the working committees at their meetings in December were reviewed. (9) OTHER BUSINESS COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY There were no other business, communications, or supplemental agenda items. (10) MATTERS WHICH A DIRECTOR WOULD LIKE STAFF TO REPORT ON AT A SUBSEQUENT MEETING There were none. Minutes of the Steering Committee Meeting Page 3 November 18, 1998 (11) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR ACTION AND STAFF REPORT There were none. (12) CONSIDERATION OF UPCOMING MEETINGS The next Steering Committee meeting is scheduled for December 16, 1998 at 5 p.m. (13) CLOSED SESSION The Committee convened in Closed Session with members of the Management Negotiating Team at 3:20 p.m. pursuant to Government Code Section 54957.6. Confidential Minutes of the Closed Session held by the Committee have been prepared in accordance with California Code Section 54957.2 and are maintained by the Board Secretary in the Official Book of Confidential Minutes of Board and Committee Closed Meetings. Director Collins left the Closed Session at the beginning of the discussion on SPMT negotiations. At 6:05 p.m., the Committee reconvened in regular session. (14) ADJOURNMENT The Chair declared the meeting adjourned at 6:06 p.m. Submitted by: J Tappan Bring Committee Secretary NMvp lblpwWelS iEEFM'LpIWiTElIWNONfIt/p/mNbi.MC f STEERING COMMITTEE F M-moowl.T TO BC.of pr. 12/16M u AGENDA REPORT Item NmW Ittm Number Nu Orange County Sanitation District FROM: Blake P. Anderson, Assistant General Manager Originator: James Colston, Regulatory Specialist -Water SUBJECT: UPDATE ON CONTINUING WATERSHED MANAGEMENT ACTIVITIES GENERAL MANAGER'S RECOMMENDATION: Informational Item Authorize staff to continue its efforts in regional water quality and environmental management initiatives that include: 1. Participate in the activities of the Santa Ana River Watershed Group (SARWG), especially as they relate to the management of biosolids, manure, and other waste materials and the protection of water supplies in Orange County. 2. Monitor changes in SAWPA governance, mission, and activities and report back to the Board at a future meeting to consider a role for the District in SAWPA governance. 3. Explore new opportunities with the Orange County Water District to enhance reclamation, conservation, groundwater protection, and other projects of mutual interest. 4. Continue to participate in the Southern California Association of POTWs (SCAP), California Association of Sanitation Agencies (CASA) and Association of Metropolitan Sewerage Agencies (AMSA), especially as their activities concern legislative proposals impacting District's operations. 5. Work to support effective amendments to the Clean Water Act. SUMMARY The attached report reviews watershed activities in the Santa Ana River Watershed in light of the District's Mission, the regional context of issues, national and statewide emerging issues, and external and internal organizational changes. Watershed issues overlap each other and cross agency and jurisdictional boundaries. This fact hampers solutions when viewed through traditional parochial institutions. New relationships and activities should be considered to forge effective solutions. The report ends with recommendations, detailed above, for the Board's consideration. A 15rpprinp Conmpae ABmCa Redd WalenlA ManaQerTnr Gd Page 1 i PROJECT/CONTRACT COST SUMMARY N/A •� BUDGETIMPACT ❑ This item has been budgeted. (Line item: ) ❑ This item has been budgeted, but there are insufficient funds. ❑ This item has not been budgeted. ® Not applicable (information item) ADDITIONAL INFORMATION See the attached Report ALTERNATIVES N/A CEQA FINDINGS N/A ATTACHMENTS 1. Update on Continuing Watershed Activities JC:jt ♦lSleerm9 Cwmrrllx PgmEa Repo,l Waler4a0 Mmepimenl Ml Re.oea ivaee Page 2 1 December 10, 1998 UPDATE ON CONTINUING WATERSHED ACTIVITIES Summary This report reviews watershed activities in the Santa Ana River Watershed in light of the District's Mission, the regional context of issues, national and statewide emerging issues, and external and internal organizational changes. Watershed issues overlap each other and cross agency and jurisdictional boundaries. This fact hampers solutions when viewed through traditional parochial institutions. New relationships and activities should be considered to forge effective solutions. The report ends with recommendations for the Board's consideration. District's Mission The District's Mission to protect public health and the environment includes a commitment to the community and other agencies to work together to move forward on issues of mutual concern. The District has historically had a broad vision of involvement in the Santa Ana River Watershed. 1972 SARI Agreement-The District and the Chino Basin Municipal Water District received federal funding to build the Santa Ana River Interceptor to receive and treat non-reclaimable wastewaters from upstream in the watershed. Historic agricultural activities and ongoing dairy farming have resulted in degradation of the groundwater in the Chino Basin. This agreement became the first of many activities designed to improve basin management and prevent further degradation. The Santa Ana Watershed Project Authority (SAWPA) became Chino's successor to this agreement. Increasing groundwater problems associated with salt and nitrate loadings have demonstrated the forward thinking and importance of this agreement. The SARI line is viewed as a key component of salt management for the Southern California area. 1989 Master Plan -The District committed itself to view its actions broadly including impacts to water, land and air with a focus on conservation, reclamation and reuse of resources. The District moved to 100% beneficial reuse of biosolids and an increase in its historic reclamation of wastewater effluent. Water Quality Protection - In advance of the Clean Water Act, the District moved to protect water quality by building a deep ocean outfall and conducting comprehensive shoreline monitoring. In the early 1970s, the District began its comprehensive shoreline and ocean monitoring program 1 I 1 designed to demonstrate protection of the ocean environment and f compliance with wastewater regulations. The District's nationally award winning Source Control Program has helped to reduce toxic pollutants to the point that the District meets all effluent limits for toxics at the influent to the treatment plants. This commitment has helped to make large-scale water recycling and biosolids reuse a reality. • Groundwater Replenishment System (GWRS) -The District is moving forward with GWRS in partnership with the Orange County Water District (OCWD). This program will help to recycle a significant amount of wastewater effluent for groundwater recharge and non-potable reuse. The program also provides relief for high flow events, offsets future demands for potable water necessary to accommodate growth, and rehabilitates the local groundwater basin facing increasing levels of salts (called total dissolved solids or "TDS") and nitrates. Regional Context of Issues OCSD operates within a large watershed that extends from the mountains to the seashore including over 4.4 million residents. The Santa Ana Watershed has generated reams of litigation, and external pressures from beyond our historical service area are affecting the way we do business. The District's role as a provider of wastewater collection, treatment, and disposal services within the coastal plain of the watershed is changing. We find our reach now extending inland to the upper Santa Ana Watershed as water quality, salt loading, land use, urban runoff, dairy waste, and other issues have an impact on our operations and the community we serve. • Population Increases -The Orange County residential population is projected to exceed 3 million by the year 2020, a near 50% increase over current levels. Even with water conservation and recycling, this will cause substantial demands for"new"water. The District's efforts to assure a high quality and reliable supply of local water are a key component to meeting future demands. This will require a multi-pronged approach including protection and rehabilitation of local resources, water conservation, and water recycling. • Salt Management -The Metropolitan Water District recently published a Salt Management Strategy that details the problem and solutions of salt loading in the Southern California area. Imported water supplies and local use continually adds salts to local groundwater supplies. Increases in TDS can substantially impact local groundwater aquifers as TDS "builds-up" in the system. Increases make the water less desirable for municipal and industrial uses and groundwater recharge, and ultimately forces suppliers to take costly measures to use the local waters including blending, desalting or alternative sources. 2 The District has been participating in the NitrogenrrDS Task Force with 20 other local water and wastewater agencies and the RWQCB staff to increase protection or enhancement of local groundwaters and encourage recycling of wastewater effluent. The Task Force has drafted a Reclamation Guidance Document slated for future adoption by the local Regional Board. This document will help agencies to conduct long-term planning, permit reclamation projects, and spend resources wisely. This effort will assist the District in current and future activities related to the GWRS. • Limited Access to Imported Water— Since the 1920's, southern California communities have relied upon imported water supplies to meet new demands. Currently, environmental pressures, such as those involving the CALFED Bay-Delta process, may prevent or limit access to future water transfers from Northern and Central California. Also, the federal government is forcing California to limit its annual use of Colorado River water to its 4.4 million acre feet (maf) annual allocation. When this happens, southern California will lose approximately 1 maf of water per year. However, these processes may offer funding opportunities for projects such as the GWRS and brine disposal to encourage the development of local sources of water. • Endangered Species -A number of threatened and endangered species live within the Santa Ana River Watershed including the Least Bells Vireo, Kangaroo Rat, Santa Ana Sucker, and others. Measures proposed to protect the habitats of these species may impact the ability of agencies to transport and use waters that pass through the habitats of these species. This may limit or require instream flows; prevent, alter, or delay proposed projects; and require local resources to assure protection of the species. Currently, nearly all flows (except excess storm flows) are captured from the Santa Ana River for reuse. • Wetlands Preservation/Banking -The Army Corps of Engineers (ACE) and EPA have significantly increased regulatory authority over the destruction or modification of wetlands, including isolated wetlands (those not directly attached to a waterway). They have somewhat offset these onerous provisions with mitigation banking provisions which allow for some wetlands to be modified or destroyed if others are created or rehabilitated. Banking usually requires a ratio of three or more acres created for each acre altered. Like concerns for endangered species, this can create significant regulatory hurdles for any proposed project, but it also offers a link to protection of habitat for species. • Reconnaissance in Santa Ana River-The Army Corps of Engineers (ACE) has been experimenting with a new mission beyond traditional flood control and management of navigable waterways. Nationally, the ACE is funding reconnaissance studies to determine whether there is a federal interest in developing and promoting activities to rehabilitate a local watershed. Once a federal interest is determined, the ACE will provide a significant federal share if state and local agencies provide some matching funds. Projects are then 3 proposed, prioritized, and completed as funding allows. The ACE has just begun a reconnaissance study along the Santa Ana River in the Prado Dam area. The ACE is asking for local participation to assure that the study captures the best information about the local watershed. Participation in a proposed reconnaissance study will help to assure federal monies for future projects that could involve the District. • Fish Kills -The Winter 1998 El Nino rains flooded the Chino dairies causing highly polluted dairy washwater to drain into the Santa Ana River. The substantial increase in organic loading caused the local lakes owned by the Orange County Water District(OCWD)to become nearly anaerobic. This caused an enormous fish kill of locally stocked fish that were to be used by a concessionaire of the OCWD to generate revenue. These types of activities have very negative ramifications for local businesses and hurt the image of water reuse for the OCWD (although there were no impacts to public health from the groundwater recharge of these polluted waters). However, if the public develops a negative perception of the water managers in Orange County it could reduce their confidence in our ability to adequately manage GWRS. • Floods-The threat of flooding along the Santa Ana River is both a historic reality and a future concern. It has resulted in a proposal to raise the Prado Dam and impacts how the Corps of Engineers controls releases from the dam. This is important since the OCWD attempts to capture as much of the streamflows as they can to percolate to the groundwater aquifers. Raising of the dam and control of releases are also intimately tied to the issues of endangered species, wetlands, and a federal interest in funding the project. Each issue adds a strand to the fabric of watershed concerns, and a picture of their interdependence emerges. Portions of our Santa Ana River Interceptor sewer are located in the river bottom. The newer capacity of Prado to release water will scour the riverbed and endanger our sewer. • OCWD Participation in Dairy Cleanup Project Funding - The OCWD is providing subsidy monies to lower the cost of manure removal for Chino Dairy farmers. The OCWD believes it is in its interest to assist the farmers in removing manure that may otherwise impact local surface and ground waters, lowering the quality of local water supply for Orange County. • Nuisance Water/Urban Runoff- Nationally and locally, regulators are aggressively reviewing surface water impacts from slormwater, urban runoff, and nonpoint sources of pollution (such as farms and grazing areas). Locally, the RWQCB is amending the local Basin Plan to mandate reductions of nutrients, sediments, and pathogenic indicator bacteria (fecal colifonn) in the Newport Bay. This process will continue to other local waters including the beaches, harbors, and inland surface waters like the Santa Ana River. These regulations can have significant impacts on the activities of dischargers such POTWs, flood control agencies, cities, counties, businesses, developers, and farmers (including nurseries). Impacts include forcing dischargers to reduce 4 loadings for some pollutants, new monitoring requirements, and limits on new growth or expansion. There will be pressure to send some of these waters to our regional sewer system during some portions of the year. The District's staff is reviewing all ongoing activities and participating in these processes whenever feasible and desirable. • Bans/Restrictions on Biosolids -The District has been beneficially reusing 100% of its biosolids since 1991. However, Kern County and other counties have proposed or enacted local ordinances to severely restrict or ban the reuse of biosolids on lands under their jurisdiction. These restrictions may result in significant cost increases or limit our ability to continue 100% reuse. As detailed in other reports, the District's staff has aggressively defended the responsible reuse biosolids on numerous regulatory and public fronts. This strategy is important to the District's global vision of comprehensive pollution prevention and reduction across all media. • Monies to Construct Infrastructure - Since many of the problems detailed in this report cross regulatory and political boundaries, solutions can be difficult to fund. The District is committed to working with other agencies and the public to enact cooperative solutions to the many problems facing the Watershed. The District must look beyond traditional horizons when considering projects for action and funding. For example, the District is participating in a project that will demonstrate the technical and financial feasibility of sewering several dairies in the Chino Basin. • Mounting Manure Problem - In addition to the problems caused by flooding of the Chino Dairy farms, the current stockpiling of manure in the region poses significant long term problems for local water quality and land use. Currently, the are in excess of 3 million tons of raw manures on the ground in Chino, and about 600,000 new tons are created each year. Currently, less than half of the new tonnage is exported from the Watershed. Manure reuse can offer great benefits to farmers, much as biosolids does. Groundwater pollution is occurring as the salts from the manure leach downward. These salts eventually find their way into the Santa Ana River. The District is exploring means to work with the farmers to solve this issue for both groups. National and Statewide Emerging Issues • Clean Water Act changes in 1999 - Senator Chafes, Chairman for the Committee on Environment and Public Works, has already committed the 1061" Congress to amend and update the Clean Water Act (CWA); however, many people near to the federal legislation process fear another year of stalemate between parties and factions will occur. While most legislators and interested persons agree that amendments are greatly needed, there is widespread disagreement among stakeholders on issues such as wetlands, wet weather issues, and nonpoint source controls. Funding is always a 5 contentious issue with the Act, despite its importance for supporting good science, good regulations and good projects. • Nonpoint Sources of Pollution/CAFOs/AFOs -As water quality problems associated with farming have attained nationwide status, there is increasing pressure on EPA to place greater restrictions on Concentrated Animal Feeding Operations (CAFOs/AFOs). This has generated widespread controversy and opposition by farmers. EPA is working with the U.S. Department of Agriculture, and the President has put forth his Clean Water Action Plan. The Plan was fully funded by Congress. Controls over nonpoint sources are important since nonpoint sources of pollution are the main cause of impairment to over 60% or currently polluted waterbodies. To rehabilitate these waters, regulators must be able to control these sources. • TMDLs -Total Maximum Daily Loads (TMDLs) are required by the federal Clean Water Act after it is determined that a waterbody is impaired (water quality does not support its designated uses such as recreation and fishing). TMDLs allocate the amount that point sources (such as POTWs, industry, and permitted stormwater dischargers) and nonpoint sources (such as unpermitted farms) can discharge. They also limit growth and new development that would result in a discharge of the pollutants causing impairment. This is of great concern for POTWs, municipalities and developers. • Pollution Trading - In order to allow for growth, especially if a TMDL has been imposed on a watershed and placed caps on the amount of allowable discharge, some regulators allow dischargers to trade pollution credits. By example, a POTW might pay a farmer to reduce nitrogen loadings to a local river rather than building expensive infrastructure to remove more nitrogen from the treatment plant influent. EPA has not yet adopted a formal policy or regulation on trading. • Biosolids Statewide EIR -The State Water Resources Control Board is conducting a statewide EIR to demonstrate the safety and environmental impacts from biosolids land application. This EIR will establish minimum requirements for permits from the Regional Boards to continue beneficial reuse of biosolids. • Blosolids FED -The federal government is working to support continued land application of biosolids, and they are also attempting to get more states to takeover control of the programs for their states. Efforts have also been underway to form a dialogue between farmers, who produce manure, and biosolids generators. Farmers out produce biosolids, with manure, by about 100 to 1, and coordinated solutions could benefit both groups. • Failed Waterbond -The California Legislature was unable to compromise on a waterbond this year. Ironically, one of the most contentious issues was the lining of the All American Canal to facilitate wheeling of water through 6 Metropolitan Water District's aqueduct to the City of San Diego. However, the Legislature was able to pass a late bill which did provide funding for this project. A Water Bond is important to help solve the water quality and supply issues in the state, especially the CALFED Bay-Delta process. Changes in the Legislature offer opportunities for interested parties in the Santa Ana River Watershed to promote local projects in a Water Bond proposal for the year 2000 primary election. • Source Water Protection - Under the amended federal Safe Drinking Water Act, water suppliers are conducting a comprehensive review of threats to local water supplies. Upstream activities could be required to change to protect downstream water users. It is unknown at this time how this will occur in highly urbanized areas like Southern California. • Clean Water Action Plan -The Plan focuses EPA's efforts towards watersheds in critical need of action to protect waters. Since EPA has identified nonpoint sources as the single greatest cause of waterbody impairment, much attention is focused on improving farming practices to prevent water quality degradation. • National Research Council (NRC) Report on Watersheds -The newly published, New Strategies for America's Watersheds, focuses attention on solving problems on a watershed basis, "Managing water resources at the watershed scale, while difficult, offers the potential of balancing the many, sometimes competing, demands we place on water resources." Blake Anderson served on the committee that wrote the report. The watershed approach acknowledges linkages between uplands and downstream areas, and between surface and ground water, and reduces the chances that attempts to "solve problems in one realm will cause problems in others." The NRC visited the Santa Ana River Watershed, while drafting this report, on a tour hosted by the OCSD. External and Internal Organizational Changes on the Horizon • SAWPA Governance - SAWPA's new General Manager, Joe Grindstaff, recently gave a presentation to the SAWPA Board of Directors on The Strategic Future of SAWPA. There are various opinions on the purpose of SAWPA. Should it focus on planning, salt removal, or act as a facilitator for water reclamation? These are some of the suggestions. The current mission of SAWPA: "SAWPA develops and maintains regional plans, programs, and projects that will protect the Santa Ana River basin water resources to maximize beneficial uses within the watershed in an economically and environmentally responsible manner." Strategic Plan Workshops will focus on ongoing activities, immediate activities, long term actions and governance. OCSD staff is considering the role that that our agency will play in the future of SAWPA and its governance. 7 The SARI line and GWRS project provide a critical link to the activities of SAWPA. Coordinated action, where appropriate, would likely work to enhance the viability and success of proposed projects. And Joe Grindstaff foresees SAWPA taking a leadership role in the Santa Ana Watershed Group, as outlined below. • SARWG - Since there is no single agency or leader for watershed issues the Santa Ana River Watershed Group was established earlier this year to collaboratively address public concerns and opportunities among stakeholders. Participants include POTWs, water agencies, cities, counties, environmentalists, the Santa Ana Regional Water Quality Control Board, SAWPA, conservation districts, and state and federal agencies. SARWG supports dialogue, project development, action and funding support. Initiatives include flood control and infrastructure, water quality and quantity protection and enhancement, manure and biosolids reuse, habitat and species conservation, and the development of permanent funding structures. Recently, through SARWG, federal funding was obtained for drainage improvements upstream of the Chino dairies and state loan commitments for sewering of several dairies. • Blending of Water and Wastewater Missions, Goals, Projects -As the District and the OCWD move forward on GWRS, the two Boards recognize the increasing crossover of goals and projects related to water and wastewater use, reuse and disposal. Protection and enhancement of local water supplies is an important component of the need to develop "new water projects for future growth. Recommendations for Board of Directors District staff is participating in many of the programs discussed in this report and is monitoring the progress of others. In the coming months, both SARWG and SAWPA will be looking at their work programs, resource needs, and governance issues to support cooperative projects among watershed stakeholders. In the meantime, the General Manager recommends that the Board authorize staff to continue to: 1. Participate in the activities of the SARWG, especially as they relate to the management of biosolids, manure, and other waste materials and the protection of water supplies in Orange County. 2. Monitor changes in SAWPA governance, mission, and activities and report back to the Board at a future meeting to consider a role for the District in SAWPA governance. 3. Explore new opportunities with the Orange County Water District to enhance reclamation, conservation, groundwater protection, and other projects of mutual interest. 8 4. Continue to participate in the Southern California Association of POTWs (SCAP) California Association of Sanitation Agencies (CASA) and Association of Metropolitan Sewerage Agencies (AMSA), especially as their activities concern legislative proposals impacting District's operations. 5. Work to support effective amendments to the Clean Water Act. AlConlinuing Watershed AeUvitiee.dw 9 Steering Committee Agenda Item 7.A. CALIFORNIA ASSOCIATION of SANITATION AGENCIES 0 925 L Street,Suite 1400 Sacramento.CA 95814 TEL:(916)4460388-FAX:(916)4484808 110 TO: CASA Members / FROM: Jim Bewley, CASA President RE: CASA Intervention into Sacramento Regional County Sanitation District's Lawsuit DATE: November 9, 1998 BRIEF CONCLUSION On November 6, 1998,upon the recommendation of the CASA Litigation Task Force,the CASA Executive Board authorized CASA's immediate intervention into the lawsuit against the State Water Resources Control Board(SWRCB) filed by Sacramento Regional County Sanitation District(SRCSD). The Executive Board also selected Fulbright&Jaworski as the law firm to represent CASA and adopted a proposed litigation budget of up to $75,000. BACKGROUND At the August 1998 CASA conference, the Attorney's Committee recommended to the Executive Board that if CASA were to become involved in the SRCSD litigation related to violations of Sections 303(d) and 305(b) of the federal Clean Water Act, intervention would be the appropriate course to follow. As a result,the Executive Board convened a Litigation Task Force' to discuss the possibility, feasibility and benefits of CASA becoming a party to (i.e., intervening in)the lawsuit filed by SRCSD against the SWRCB. The SRCSD lawsuit alleges that the S WRCB's adoption of the 1998 Impaired Water Bodies list as required under section 303(d)of the Clean Water Act(CWA)violated state law requirements under the California Porter-Cologne Water Quality Control Act, the California Environmental Quality Act, and the California Administrative Procedures Act This list is commonly known as the"303(d) List" ' The CASA Litigation Task Force consists of the following people:Jim Bewley,Melissa Thomte,Colin Leonard, Kent Alm,Chris Risseno.Dick Marsh.Rich Luthy,Jerry Smith,Margie Nellor,Sharon Green,Adam Olivieri,and Jim Colston. Bobbi Larson,Bob Shanks,and Tom Grovhoug acted as Task Force advisors. CASA Litigation Memo page I November 9, 1998 The SRCSD lawsuit also alleges that the S WRCB improperly completed and issued another report required under section 305(b)of the CWA(e.g.,"305(b)Report"). This report requires the State to: 1. describe the water quality in g1l waters of the State; 2. analyze whether uses are being met; 3. if uses are not being met,then analyze the actions necessary to meet the desired water quality; 4. estimate the environmental impact, economic and social costs and benefits of taking the actions necessary to meet the desired water quality; 5. estimate a date when desired water quality will be achieved; and 6. describe the necessary nonpoint source controls and costs of implementing such controls. The SRCSD lawsuit alleges that the State has not properly addressed each of the 305(b)Report requirements. The suit also alleges that the requirements of the 305(b)Report must be met before a proper 303(d) list may be developed and adopted. CASA's goal for intervention would not be to duplicate the efforts of SRCSD,but to coordinate our litigation strategies to achieve the best possible results for CASA members in the most cost- effective manner. To this end,other causes of action could be added to the lawsuit upon CASA's intervention, such as challenging the state's receipt of federal grant funding under Section 106(e) of the Clean Water Act since 1974 due to failure by the SWRCB to properly prepare the state's 305(b) Report. POTENTIAL IMPACTS TO CASA MEMBERS OF IMPROPER STATE ACTION One of the charges of the Litigation Task Force was to determine if there were any real or potential impacts to CASA members as a result of the S WRCB's adoption of the 303(d) List,or as a result of the S WRCB's failure to properly prepare the State's 305(b)Report. The following outlines a summary of the types of impacts that could affect CASA member agencies. It was determined that such impacts could affect CASA members in numerous regions of the State,as the 1998 303(d) List(prior to EPA approval)included 472 waterbodies and nearly 1,400 listed constituents or other types of pollution(ex. exotic species, trash,etc.). TYPES OF IMPACTS: Many of the types of pollutants/conditions included on the 303(d)list as causing impairment (e.g., elevated nutrients and/or algal growth(i.e. eutrophication), low dissolved oxygen,other conventional pollutants,minerals,toxic pollutants(metals,pesticides, organics),pathogens, flow (too much or too little)may be discharged by Publicly Owned Treatment Works (POTWs). Once a waterbody is listed as impaired,the State must develop and adopt Total Maximum Daily Loads(TMDLs) for each constituent listed as causing impairment. TMDLs include a wasteload allocation(WLA)portion for all point sources discharging into the impaired water. A WLA may likely require POTWs to implement new source controls and/or end-of-pipe controls to achieve the assigned load reduction. CASA Litigation Memo Page 2 November 9, 1998 • Without properly following State law and the requirements of CWA section 305(b),the 303(d) listing process and the subsequent TMDL process do not properly consider the costs and benefits of achieving water quality deemed to be"unimpaired." • Because of a lack of funding for the SWRCB to adopt TMDLs, POTWs will likely be asked to (and perhaps be required to)pay for additional monitoring and studies to determine ambient conditions in the waterbody. POTWs may also be asked or required to pay for studies identifying sources of pollutants on 303(d) list and/or models depicting the loading rates into the waterbody. • Current law prohibits new discharges and new sources from being added to an impaired waterbody between time the water is listed on the 303(d)List and the time that the TMDL is being developed implemented. In a worst case scenario,this prohibition could be applied to treatment plant expansions,which could seriously impact planning for future service provision and could effectively prohibit growth if TMDLs are incorporated into POTW permits as stringent mass limitations. • Under current EPA policy,POTWs and other point sources may be required to bear the burden of all load reductions adopted in a TMDL if there are not"reasonable assurances"that non- point source load reductions will be achieved. ALTERNATIVES TO LITIGATION During its consideration of moving forward with possible intervention in the SRCSD's 303(d)/305(b) litigation by Sacramento Regional against the SWRCB,the Litigation Task Force weighed other potential alternatives against the benefits and costs of litigation. The other alternatives included: • Discussions and meetings with the SWRCB,the Regional Boards,and EPA regarding proper development of 305(b) Report, 303(d) list and Total Maximum Daily Loads(TMDLs). • Petitioning the agencies for new rules relating to the performance of its duties under CWA 303(d)and 305(b). • Comment on the S WRCB's revised 303(d)listing guidance for the year 2000 listing cycle. • Sponsor State or Federal Legislation to"fix"to TMDL process. • No Action by CASA. The Litigation Task Force determined that many of these alternatives(except for the"no action" alternative)could and probably should be pursued in conjunction with participating in the SRCSD litigation. However,none of these alternatives standing alone could guarantee that the issues raised in the litigation would be addressed in a manner that would be advantageous to POTWs. CASA Litigation Memo Page 3 November 9, 1998 PROS AND CONS OF CASA PARTICIPATION IN LITIGATION ` The other policy consideration undertaken by the Litigation Task Force was to determine the potential advantages and disadvantages that CASA member agencies could expect if CASA were to intervene into the SRCSD litigation. The disadvantages included potential retaliatory action from the regulatory agencies(e.g.,refusal to meet with our representatives on other issues)and potential embarrassment if CASA were to ultimately lose at trial.However,the Litigation Task Force determined that the advantages of involvement in the lawsuit outweighed the potential disadvantages. The benefits of involvement were determined to be as follows: • - Reovirine the State to consider economics and other public interest factors prior to developing TMDLs A court decision in 1994,which overturned the Inland Surface Waters and Enclosed Bays and Estuaries Plans,confirmed that the S WRCB and regional boards must meaningfully consider economics and other factors before adopting water quality objectives. Current 303(d) listing practices are"end-Homing"that determination and will allow regulatory requirements(in the form of wasteload allocations and subsequent permit limitations)to be imposed upon CASA members without the consideration of the factors required under state law. The objective of the litigation is to ensure that economics are considered in the 305(b)Report as well as at the time the 303(d)List is developed. • Requiring the State to adopt a more focused 303(d)List that will mioritize the allocation of scarce State funding sources and allow Pmater stakeholder involvement in TMDL development. Current State 303(d) listing practices ignore the CWA requirement that waters of concern be listed separately from those where adopted water quality standards are not met. As a result,TMDLs under the 1998 303(d)List will be required for a lengthy list of 469 waterbodies. The SRCSD litigation may require the SWRCB to adopt a more refined,narrow 303(d)list that would allow for greater stakeholder involvement in the TMDL process. CASA has long supported stakeholder. based watershed programs as the proper forum for developing TNIDLs. The alternative is a longer list where environmental groups sue to force TMDL development under prescribed time schedules and where there will be little or no opportunity for public participation. • Ensuring that TMDL targets are well-defined. The current 303(d) list consists of waters listed for vague,ill-defined listing criteria(e.g.,using vague standards such as elevated fish tissue levels,regional board"concern,""and anti- degradation). Without well-defined listing criteria, it is difficult to assess the target of the TMDL (i.e., the specific water quality to be attained after implementation of the TMDL). The lawsuit would require clearly defined bases for placing waters on the 303(d)List.The litigation could also invalidate the S WRCB 303(d) listing guidance,which allows the use of vague listing criteria, as an "underground"improperly adopted regulation. CASA Litigation Memo Page 4 November 9, 1998 • Increasing the likelihood of successfully winning the litigation. CASA's participation in the lawsuit will enhance the likelihood of success by adding a statewide perspective and ensuring that relief will not be limited to those waters directly affecting SRCSD. Furthermore,CASA's involvement will help to shield SRCSD from retaliatory actions currently being taken against the District by both state and federal regulatory agencies. • Ensuring that CASA Has a Voice in Settlement Discussions. If CASA doesn't participate in the lawsuit,it is conceivable that a SRCSD settlement of the Sacramento River/Delta issues could leave other important matters,such as the 305(b)Report and 303(d) listing criteria,unresolved. • Providing Additional"Clout"on Future Regulatory Matters. CASA members are becoming increasingly concerned about the apparent futility of seeking change through the administrative review,comment and hearing procedures. POTW input seems to be routinely ignored or disregarded,particularly on the question of economics and reasonableness of regulation. By participating in the lawsuit, CASA can show the S WRCB that it means business, and that it will not hesitate to seek redress if the State does not take CASA's point of view seriously. DECISION After a lengthy discussion of the issues involved,the CASA Executive Board approved CASA's intervention into the SRCSD lawsuit. Further discussion of the lawsuit,including funding issues, and an update of the litigation status will occur at the January CASA conference in Palm Springs. Any questions related to CASA's participation in the lawsuit can be directed to me at 650-594- 8411, ext. 124. CASA Litigation Memo Page 5 November 9, 1998 C a l i f o r n i a E n v i r o n m e n t a l P r o t e c t i o n A g c n c y NEWS RELEASE State Water Resources Control Board For Immediate Release Contact: SWRCB-Stuart Lott Nov. 5, 1998 (916) 657-1821 California's Waters May Be 'Threatened By Year 2000 Microchip Problem Sacramento - In an effort to head off major problems that could affect California's waters in the year 2000, the State Water Resources Control Board (SWRCB) strongly urges wastewater dischargers and others in the industry to check their electronic devices and computer systems. At the heart of the problem are embedded microchips that are not compliant with the date change from December 31, 1999 to January 1, 2000 — in short, the Year 2000 (Y2K) "bug." Some of the devices in question include timers, valves, monitoring equipment, meters and switches in many settings, including devices that treat wastewater. If the chip is "non-compliant" it may cause the device it controls to quit working or work improperly on the first day in the year 2000. A wide variety of toxic discharges to the state's waters could result from valves or other equipment failures. Based on observations and the experiences of experts in the field, the embedded microchip problem is considered a more serious threat to the public's health and safety than the computer programs that may fail to operate correctly after January 1, 2000. "Clean water is essential to our survival. Those responsible for wastewater treatment should do their best to identify and correct non-compliant programs and microchip processors," said Walt Pettit, Executive Director of the SWRCB. On October 28 the SWRCB sent a questionnaire to all waste dischargers requesting information on the status of Y2K remediation efforts and contingency plans in case critical systems fail or suppliers are unable to provide critical services or products. Based on the number and completeness of the responses, the SWRCB will determine if further action is required. The questionnaire, due back November 20, will also become part of the official record in the event that penalties are eventually assessed for violations. To provide information to wastewater dischargers, the SWRCB offers its website as a clearinghouse for information on the Y2K problem as it affects water quality. The site offers a much needed venue where water dischargers can post their experiences with embedded chip problems and share this information with others in the industry. There are also links and information from other Internet sites that will assist industry persons in their efforts to address their noncompliant devices. The web page can be found at http://www.swrcb.ca.gov/y2k/y2k.htmi. 30- Steering Committee WOODRUFF,SPRADLIN &SMART Agenda Item B.B. V APporvoorw Cwavnox MEMORANDUM T0: Michael Pelerman, Director of Human Resources Orange County Sanitation District FROM: General Counsel DATE: December 2, 1998 RE: Legal Opinion; November 16, 1998 Memorandum From Senior Engineers L. Kraemer and D. Tunnicliff, and Engineering Supervisor J. Herberg Regarding Supervisory Management and Professional Representation Units Mike, you have related the following facts conceming which you have requested our legal opinion: BACKGROUND On January 16, 1991, the District's General Manager created a "Management Team-Supervisory Staff" ('SMT") Representation Unit consisting of 19 job classifications and a "Management Team-Professional Staff" ("Professional") Representation Unit consisting of 12 classifications. On January 30, 1991, a secret ballot representation election was conducted by the California Department of Industrial Relations for the SMT Unit and the Professional Unit. The result of that election for the SMT Unit was that the "Orange County Employees Association" received 20 votes and "No Organization" received 22 votes. The result of the election for the Professional Unit was that the "Orange County Employees Association" received 17 votes and "No Organization' received 20 votes. There have been no subsequent representation elections in either of those two Units. Nevertheless, the District has engaged in a form of bargaining with employee representatives of the two Units in the recent past. The "negotiations" have had the appearance of meet and confer sessions, and in fact, specified terms and conditions of employment for employees within both of these Units have been reduced to writen Memoranda of Understanding ("MOUs") and agreed to by the District. The most recent MOU covers both Units and purports to recognize the"Supervisor and Professional Group as the exclusive recognized employee organization." On November 16, 1998, you received a memorandum from a member of the SMT Unit and two members of the Professional Unit which asserted essentially that (1) inasmuch as the so-called "Supervisor and Professional Group" has never been elected as the exclusive bargaining agent for either Unit, it has no standing to bargain and enter 2=.iw 71M 1 M y 4+ Michael Peterman, Director of Human Resources Orange County Sanitation District December 2, 1998 Page 2 binding MOUs for those Units, and (2)the authors of the memorandum have a right to form their own employee organization and bargain for employees in the Units in question, (or a modified unit thereof.) You have asked that we review the contentions in that memorandum in light of the District's past history, its Resolutions establishing guidelines for employee relations, and the Meyers-Milias-Brown Act ("MMBA") governing public agency employee relations, and provide you with our legal opinions. OPINIONS 1. In the absence of a majority vote conferring "recognition" on the "Supervisor and Professional Group", that organization has no legal authority to bargain, to the exclusion of any other organization, for all employees in either the SMT Unit or the Professional Unit. 2. Although not free from doubt, the District is not obligated to bargain with any employee organization unless and until such organization wins a secret ballot election by majority vote of the employees in the respective Units. 3. In view of the history of bargaining with the "Supervisor and Professional Group', a court could conclude that the District must bargain with that organization on behalf of its members in the two Units and with any other organization on behalf of that other organization's members. ANALYSIS 1. MMBA is the governing law in this area. It begins at Government Code Section 3500. One of its purposes is to provide "a uniform basis for recognizing the right of public employees to join organizations . . . and be represented . . . in their employment relationships with public agencies." Section 3500. Another stated purpose set forth in Section 3500 is to establish "uniform and orderly methods of communication between employees and the public agencies by which they are employed." Public agencies are required to negotiate only with "recognized employee organizations." Relvea v. Ventura Co. Fire Protection Dist., 2 Cal. App. 4th 875 (1992). Section 3507 allows public agencies, such as the District, to adopt "reasonable rules" to implement the provisions of MMBA. Subsection (c) permits the adoption of rules for"recognition of employee organizations." Similarly, subsection (d) permits the adoption of rules for "exclusive recognition pursuant to a vote of the employees of . . . an 2M-1W 71M 1 ,y Michael Peterman, Director of Human Resources Orange County Sanitation District December 2, 1998 Page 3 appropriate unit". (emphasis added)The difference between exclusive and non-exclusive recognition is that the exclusive representative has the right, and obligation, to bargain for all employees in the representation unit— regardless of whether the employees are dues- paying members. An MOU with the exclusively recognized representative is binding on all unit employees. Conversely, a non-exclusive representative bargains only for its members. Section 3507 also states: "No public agency shall unreasonably withhold recognition of employee organizations." Pursuant to Section 3507, the District adopted Resolution No. 75-127, (re-adopted as Resolution No. OCSD 98-34 as part of District consolidation) which sets forth, among other things, the rules for granting "recognition" to employee organizations. The Resolution has a provision for exclusive recognition. It has no provisions either prohibiting or permitting non-exclusive recognition. Section 3(L) defines "recognition" to mean "acknowledgment by the Districts' General Manager that an employee organization is the exclusive representative of all the employees in an appropriate unit . . . . (emphasis added) Subsection (M) defines "recognized employee organization" to mean "an employee organization which has been granted recognition by the Districts' General Manager and the employee organization which has the right to meet and confer in good faith as the exclusive organizational representative of all members of an appropriate unit . . . ." (emphasis added) Then, Section 6(A) provides that"[a]n employee organization that seeks recognition for the purpose of meeting and conferring in good faith as the representative of all the employees in an appropriate unit shall file a petition with the Districts' General Manager containing [specific information concerning the name of the employee organization, its officers, bylaws, job classifications in the unit claimed to be appropriate, and written evidence that a majority of employees in the proposed unit have designated the organization to represent them]." (emphasis added) Section 6(B) then provides that, upon compliance with the foregoing requirements, the General Manager may grant recognition"for purposes of meeting and conferring" after determining "the majority status of the employee organization by either. (1) Having a secret ballot election . . ., or (2) By any other reasonable method based upon written proof . . . ." (emphasis added) 2W2-1W 71M 1 d Michael Peterman, Director of Human Resources Orange County Sanitation District December 2, 1998 Page 4 The second method in the District's Resolution for granting exclusive recognition, namely, "any other reasonable method based upon written proof, is no longer legally permitted. Three years after the District's adoption of Resolution No. 75-127, the Supreme Court decided Covina Azusa Firefighters v. City of Azusa, 81 Cal. App. 3d 48 (1978). In that case the Court held that "unless and until [a public agency] adopts rules and regulations pursuant to Government Code Section 3507, providing for exclusive recognition following an employee vote, it must recognize all employee organizations representing at least some employees and must meet and confer with each of them . . . ." (emphasis added) As originally enacted, MMBA did not authorize exclusive recognition. As a result, many employers were obligated to meet and confer with both a majority and minority representative of employees in the same bargaining unit. Thus, different employee organizations could be bargaining for the wages, hours, and working conditions of employees in the same classifications. A 1971 amendment to Section 3507 permitted employers to provide for exclusive recognition in their local rules. Not only has the District done so in Resolution No. 75-127, it has provided further that exclusive recognition is the only form of recognition permitted by the District. In our view, such a provision appears to be consistent with the purpose of MMBA to establish "uniform and orderly methods of communication" concerning wages, hours, and working conditions. The legal issue is whether a rule that requires either exclusive recognition or no recognition (as opposed to a rule that would permit more than one recognized employee organization to bargain for its members within a single bargaining unit) is "reasonable" within the meaning of Government Code Section 3507. We believe that it is. That belief is based upon the above-referenced observation that exclusive recognition is more consistent with the establishment of uniform and orderly methods of communication and for the additional reason that the National Labor Relations Act, governing private employment, permits exclusive representation only. In order for a court to determine that such a local rule was unreasonable, it, in effect, would have to disregard more than 50 years of private sector labor law. The foregoing may be summarized as follows: 1. MMBA allows the District to adopt "reasonable" rules and regulations for administering employment relations, including rules providing for exclusive recognition by a vote of the employees. 2N2-iw 71 a r Michael Peterman, Director of Human Resources Orange County Sanitation District December 2, 1998 Page 5 2. District Resolution No. 75-127 (now Resolution No. OCSD 98-34) has adopted reasonable rules and regulations. 3. District Resolution No. 75-127 (now Resolution No. OCSD 98-34) provides for exclusive recognition as the only form of recognition permitted. 4. The Resolution allows for a majority vole to determine exclusive recognition. 5. Even though the Resolution also permits exclusive recognition without an election, that provision and any resulting attempted recognition would be invalid under MMBA. 6. Section 13(B) of the Resolution contains a "severability" clause that states, "if any provision ... is held invalid ... the remainder of this Resolution ... shall remain in full force and effect." 7. Thus, properly interpreted, the Resolution permits exclusive recognition only, pursuant to a majority vote of the employees in the unit. 8. The granting of exclusive recognition only is reasonable, since it is consistent with the National Labor Relations Act and it promotes "uniform and orderly methods of communication between employees and public agencies". 9. There was a vote in each unit and the employees voted for "No Organization". 10. There has been no subsequent election to select an exclusive representative. 11. Therefore no employee organization has been recognized to exclusively represent either the SMT Unit or the Professional Unit. Finally, although the"Supervisor and Professional Group" has no legal authority to be the exclusive representative of all employees in the two Units in question, we recognize that, in view of the bargaining history with that Group, a court could conclude that the District has a de facto form of non-exclusive recognition regardless of the provisions of Resolution No. 75-127. In other words, even though Resolution No. 75-127 defines "recognition" as an acknowledgment by the General Manager that an employee organization "is the exclusive representative of all the employees in an appropriate unit", vMAW 71 s i 'r Michael Peterman, Director of Human Resources Orange County Sanitation District December 2, 1998 Page 6 since Section 6(B) allows the General Manager to grant "recognition" by majority vote or 'any other reasonable method based upon written proof executed within the preceding six months' a court could conclude — particularly in view of the District's past practice of negotiating with the "Supervisor and Professional Group', whoever they are — that the District's written and unwritten policies permit non-exclusive representation. In such a case, the result would be that a group of employees who file a petition containing the information set forth in Section 6(A) (1) through (12), (name of the organization, its officers, bylaws, members, etc.) must be recognized as an employee organization authorized to negotiate for unit employees who are members of that organization. In conclusion, the "Supervisor and Professional Group" has no legal authority to bargain for all members of the SMT Unit, nor does it have authority to bargain for all members of Professional Unit. As a result of that conclusion, the District has two options. It may decline to bargain further with any employee organization unless and until that organization has been "recognized" pursuant to a majority vote of the employees in the respective Units. Alternatively, it must recognize, and bargain with, any employee organization that has as members, any employees in the respective Units and has complied with the procedural requirements of Section 6(A) of Resolution No. 75-127. We believe either of those two alternatives would be legally defensible. The option of continuing to recognize the "Supervisor and Professional Group" as the representative for all Unit employees would not be. If you have any additional questions concerning this matter, please do not hesitate to call. THOMAS L. WOODRUFF GENERAL COUNSEL By: cdl--- 'ItRRI C. ANDRUS TCA:mrs cc: �Mr. Donald F. McIntyre Mr. Blake P. Anderson Thomas L. Woodruff, Esq. 2M-1W ]1% 1 ` Steering Committee Agenda Item S.F. November 24, 1998 MEMORANDUM TO: Jan Debay Chair of the Board of Directors FROM: Donald F. McIntyre General Manager SUBJECT: Performance Objectives for 98-99 Fiscal Year Enclosed is a copy of our standard Performance Review Form that includes in Section 2, page 4, my suggested performance objectives for the current fiscal year. These come primarily from the performance measures in the General Manager's budget with the addition of#5—the lowering of the ratio of supervisors to employees salaries. If I don't hear from you, I will place it on the December Steering Committee agenda for their approval. Obviously this is late in the game for approval, but the entire evaluation process for me was delayed several months. Please don't hesitate to call if you have questions or suggestions. DFM.jt N M euuemin��Wvn��MeNEFSCN>L�Wrres89�t�}a88 m�.9BBe ogen.es ax Enclosure dfm Section 2. Performance Objectives Planning List performance objectives developed at the end of last fiscal year(Section 6 of last fiscal year form). Monitoring: Communicate throughout the year regarding performance and changes of core responsibilities;discuss tentative ratings. Objective 1 Ensure Treatment Cost per Million Gallons($1MG)does not exceed 94661MG by year's end. Measurement Standard • Meets Performance identified by achieving target. Exceeds performance by achieving 95%-99%of target Outstanding performance by achieving 94%or less of target. Supporting Comments • Objective within GM's Office FY 98199 Budget document. _Needs Improvement _Meets Expectations _Exceeds Expectations _Outstanding Objective 2 Ensure the District meet the adopted 5-year staffing plan position count of 521.5 FTEs by end of fiscal year 1998199. Measurement Standard Meets Performance identified by achieving target. Exceeds by achieving less than target. Outstanding by achieving 98%or less than target. Supporting Comments • Objective within GM's Office FY 98199 Budget document. _Needs Improvement _Meets Expectations _Exceeds Expectations _Outstanding Objective 3 Maintain 100%Compliance with Permit Measurement Standard • Meets Performance by achieving objective. Exceeds performance must include achievement of objective#1 and#2. Outstanding performance measured by achieving objectives#143 and AMSA Gold Award. Supporting Comments • Objective within GM's Office FY 98199 Budget document. _Needs Improvement _Meets Expectations _Exceeds Expectations _Outstanding Continued 4 `o Section 2. Performance Objectives(Continued) , Objective 4 Ensure the District's Departments meet 80%of their budgetary performance objectives as well as Strategic Goals workplan tasks In FY 98/99. Measurement Standard Meets Performance by achieving one of two 80%targets. Exceeds performance by achieving both. Outstanding performance by achieving 85%+In both. Supporting Comments • Objective within GM's Office FY 98199 Budget document. _Needs Improvement _Meets Expectations _Exceeds Expectations _Outstanding Objective 5 Lower the"supervisor salary to total employee salary" ratio to 20.5%by end of FY 98199. Measurement Standard • Meets Performance by lowering to 21.5% (currently at 23% in 7198). Exceeds performance by achieving objective. Outstanding performance by reaching 20%or below. Supporting Comments • Objective within Human Resources Administration's FY 98/99 Budget document. _Needs Improvement _Meets Expectations _Exceeds Expectations _Outstanding Objective 6 Ensure 95%+of all Agenda Items are approved(as opposed to returned for further work or rejected) by subcommittees and Board upon initial staff submission. Measurement Standard Meets Performance by achieving objective. Exceeds by achieving 96.5%+. Outstanding by achieving 98%+. Supporting Comments • Objective within GM's Office FY 98/99 Budget document. Needs Improvement _Meets Expectations _Exceeds Expectations _Outstanding 5 ,q Overall Performance _Needs Improvement _Meets Expectations _Exceeds Expectations _Outstanding Section 3. Employee Comments Employee Signature Date Section 4. Reviewer Comments Reviewer Signature Date 6 STEERING COMMITTEE taeeengMe Tosa.of Dr. 12/16/98 AGENDA REPORT Item Numtte Rem NumW 1o.a Orange County Sanitation District FROM: David Ludwin, Director of Engineering Originator: Jim Herberg, Engineering Supervisor SUBJECT: UPDATE ON ALTERNATIVES FOR BOLSA CHICA DEVELOPMENT SEWER SERVICE GENERAL MANAGER'S RECOMMENDATION: Information Item SUMMARY The District is bound by a 1991 preannexalion agreement to annex and provide regional sewer service to the Boise Chica Planned Community. In 1997, the District conducted a study of the regional collection system in Revenue Area No. 11. The study developed alternatives for addressing collection system deficiencies in the northwest Huntington Beach area, including the currently undeveloped area referred to as Bolsa Chica. These alternatives were presented to the District No. 11 Board in February 1998. A decision on which alternative to pursue was deferred, pending the developer's application for annexation into the District. An application for annexation of Boise Chica into the District has not yet been filed. The developer must construct a pump station to convey wastewater from the Boise Chica development to the District's Warner Avenue Trunk. Three of the alternatives in the 1997 study would combine the development's pump station into a joint regional facility that would handle flows from the Bolsa Chica development and portions of the City of Huntington Beach. The joint pump station alternatives allows the City of Huntington Beach to abandon one or more of their aging pump stations that are in need of replacement. If such a joint facility were pursued, a cost sharing agreement amongst the developer, the City and the District would be required. Staff has been discussing these alternatives with the developer, Hearthside Homes, and the City over the last several months. Staff will give the Steering Committee an update on the status of the Bolsa Chica development and will discuss the process required for development of a joint pump station. Although this report provides two alternative methods of serving the development, clearly Alternative 2 is the best alternative solution for all parties involved. It particularly benefits Huntington Beach because they can replace old, inefficient pumping facilities and presumably would mean annexation of the area to Huntington Beach. However, this would require their cooperation by making about a $500,000 investment in the new facilities. Given the long, antagonistic history of this project, that may not be acceptable to Huntington Beach. R« a Page 1 From our perspective, we can serve the area with either alternative. And, in fact, under Alternative 1 OCSD would not own or operate the pump station, since it would be the property of a private water company. A summary of events related to the proposed Boise Chica development involving the District is included in the additional information section of this report. PROJECT/CONTRACT COST SUMMARY Information Item BUDGET IMPACT ❑ This item has been budgeted. (Line item: ) ❑ This item has been budgeted, but there are insufficient funds. ❑ This item has not been budgeted. ® Not applicable (information item) ADDITIONAL INFORMATION The following is a summary of the activities regarding the District's service for Bolsa Chica development: 10/91 Sewer Service Agreement for Boise Chica between County Sanitation District No. 11 and Signal Boise Corporation was executed. O6194 The second of two preannexation payments totaling $750,000 for construction of the Slater Pump Station was made by the developer. 01/98 District No. 11 Regional Sewer System Study evaluating alternatives for sewer service for Boise Chica was completed. 02/98 Sewer service alternatives were presented to District No. 11 Board. 10198 Southern California Water Company applied to California Public Utilities Commission (CPUC) for a Certificate of Public Convenience and Necessity to provide local water and waste water service to the Bolsa Chica Planned Community. 11/98 The City of Huntington Beach filed a protest with the CPUC against SCWC application for Certificate of Public Convenience and Necessity for water and sewer service for Bolsa Chica. 12198 City of Huntington Beach completed a study on Annexation of Boise Chica to the City. 01/99 A ruling is expected on an appeal filed by the Developer(now Hearthside Homes) on challenges to the Boise Chica Coastal Program Permit. If the appeal is successful, the development can continue to move forward. If the challenges to the Permit are upheld, the developer must start the Coastal Program Permit process again. Page 2 Upcoming Actions Related to Bolsa Chica Sewer Service • The developer must apply for annexation into the District and pay the remaining annexation fees of approximately $1,100,000. • The District Board and LAFCO must take action on annexation to the District. • The District must construct a new Warner Avenue Relief Sewer to accommodate increased Flows. • A pump station must be constructed to convey wastewater from Boise Chica to the Warner Avenue Relief Sewer. Two options are under discussion: 1. The pump station will be a private pump station constructed by the developer who will be responsible for all costs. Wastewater from Bolsa Chica and the City of Huntington Beach would be pumped into the District's system through separate pump stations. On-going maintenance and operational costs would be the responsibility of the local sewering entity (not the District). OR 2. The pump station could be a joint facility that is constructed by the developer and is owned and operated by the District. This joint facility would serve both Boise Chica and portions of the City of Huntington Beach, allowing the City's aging lift station "D" to be abandoned. If a joint facility is to be constructed, a cost sharing agreement amongst the City of Huntington Beach, Hearthside Homes, and the District must be executed. • The City of Huntington Beach must decide whether to annex Boise Chica. ALTERNATIVES Information Item CEQA FINDINGS Information Item ATTACHMENTS December 9, 1998 Letter from Hearthside Homes, Inc. JDH:jam G:WglobaMgeM Drafl ReportsWeering C=m eelbo1sechica1216N.doc.&t R. aaa•a Page 3 HF,AKrHslDEHoNEs,INc. December 9, 1998 James D. Heiberg, P.E. ORANGE COUNTY SANITATION DISTRICT P.O. Box 8127 Fountain Valley, CA 92728-8127 Dear Jim: I want to thank you, Chuck Wmsor and Dave Ludwin for meeting with Jon Austin of IWA Engineers and myself over the past several months to sort through the issues surrounding wastewater collection and conveyance for the Boise Chica Planned Community (BCPC). Your assistance and cooperation in developing and evaluating alternatives for the BCPC wastewater system is greatly appreciated. As you know, our discussions initially focused on the responsibilities of Hearthside Homes and the Sanitation District under the terms of the 1991 Sewer Service Agreement for Bolsa Chip as it relates to construction of facilities and the timing of annexation to the District. As our discussions evoked and the District completed its study of sewer capacity in the Huntington Harbour area, it became apparent that an opportunity existed for the District, with the cooperation of Hearthside Homes, to possibly address the need for improvements to neighboring sewer facilities In conjunction with our development. Based on the results of our meetings thus far, we have identified two basic alternative approaches to wastewater collection for BCPC. Alternative 1 is essentially the approach contemplated in the 1991 Sewer Service Agreement. Under the terms of the agreement Hearthside Homes would pay the balance of annexation fees owed to the District and construct a "stand alone" onsite wastewater collection system solely for the purpose of capturing wastewater flows from the new development Wastewater from the development would gravity flow to an onsite sewage lift station and force main from which the wastewater is pumped into the Sanitation District trunk sewer in Los Patos Avenue. The responsibilities of the District are to initiate proceedings with LAFCO to annex the property and take whatever actions are necessary, if any, to ensure that adequate capacity is available in District trunk sewer to accommodate the additional flows from BCPC. Ownership, operation and maintenance of the entire onsite system would be the responsibility of Hearthside Homes or its designee, in this case Southern California Water Company, an investor owned public utility. 6 EXECUTIVE CMCLa, SUM 250, IRVINE, CALIFORNIA 92614 (949) 250-7700 FAX (949) 250-7705 Mr. James Herberg Page 2 N December 9, 1998 Atemative 2 is broader in scope in that it takes into consideration deficiencies In existing sewer facilities in Huntington Beach adjacent to our development. The District would essentially act as 'lead agency' in developing a sewer lift station that serves a regional need. Under this alternative, the city's lift station "D" in Wamer Avenue would be abandoned and additional capacity built into the new lift station at BCPC to accommodate flows from both BCPC and the city system. Hearthside Homes would design and construct the expanded lift station to the standards of the District. The incremental coal for design and construction of the additional capacity necessary to accommodate city wastewater flows would be credited to Hearthside Homes against annexation fees owed to the District. Upon completion of construction, Hearthside Homes would dedicate the lift station to the District and the District would assume responsibility for ongoing operations and maintenance. Either altemative outlined above is acceptable to our company provided certain design and aesthetic issues can be resolved concerning Alternative 2. However, in order to meet our infrastructure construction schedule, we must commence design work on the lift station early next year. Since the lift station design is dependent on which alternative is selected, we need notification from the District by February 1, 1999 if the District wishes to pursue Alternative 2. In order to facilitate decision making on the part of'both Hearthside and the District, let me suggest that we continue to meet over the next few weeks to determine whether we can resolve the design and aesthetic issues associated with Alternative 2 (i.e., the lift station constructed entirely below grade). If we can arrive at a mutually satisfactory design, the District and Hearthside could then draft an agreement setting forth the specific terms for design, construction and financing of a District lift station. On a related subject, you have asked for our company's thoughts on the prospects for working out a pre-annexation agreement with the City of Huntington Beach in view of the recent fiscal impact report completed by the City which indicates that annexing our property prior to development would generate revenues to the City in excess of the cost to provide municipal services. Quite frankly we are not optimistic that an agreement regarding annexation can be reached with the City in the short term. Given the need for us to commence design work on the lift station early next year, it doesn't appear that a pre- annexation agreement with the City is a viable substitute for an agreement between the District and Hearthside Homes if the District elects to pursue Alternative 2. Mr. James Herberg Page 3 December 9, 1998 Again, I appreciate your cooperation and assistance in working with us. Please let me know as soon as you can how you wish to proceed on this matter. I can be reached at(949) 250-7760 if you have any questions. Sincerely, (HEAR/TjHSIDE Ho INC. Ed Mountford Senior Vice President EM:js Cc! Jon Austin, IWA Engineers