*FINANCE COMMITTEE MEETING AGENDA*

Transcription

1 WESTERN MUNICIPAL WATER DISTRICT Meridian Parkway, Riverside, CA Committee Members President Brenda Dennstedt Director S.R. Al Lopez August 18, :30 a.m. to 11:30 a.m ORAL COMMUNICATIONS Any person may address the Committee upon any subject within Western's jurisdiction, which is not on the agenda, at this time. However, any nonagenda matter that requires action will be referred to staff for a report and action at a subsequent Board meeting. Any person may also address the Committee on any agenda matter at the time that matter is discussed, prior to Board Action. 2. CONSENT CALENDAR: Consent Calendar items are expected to be routine and non-controversial and are to be acted upon by the Committee at one time without discussion. If any Committee member, staff member, or interested person requests that an item be removed from the Consent Calendar, it will be moved to the first item on the Action Agenda. A. Approve Minutes from July 14, 2014 Finance Committee Meeting 3. UPCOMING BOARD ITEMS/RECOMMENDATIONS TO BE MADE TO THE FULL BOARD: A. Transfer of Unclaimed Monies to District s General Fund (September 3 rd Board Meeting) B. Mills Gravity Pipeline Service Rights Agreement (August 20 th Board Meeting) C. Second Reimbursement Agreement Between Western and Centex Homes Regarding CFD 15 (August 20 th Board Meeting) D. Arlington Desalter Water Rate (August 20 th Board Meeting) 4. REPORTS The following agenda items are reports. They are placed on the Agenda to provide information to the Committee and the public. There is no action called for in these items. A. CFO Report 1. Update on VEBA Trust Investment Returns A Revenue Bonds Letter of Credit Renewal B. GM Report 5. ADJOURNMENT *FINANCE COMMITTEE MEETING AGENDA* Upon request, this agenda will be made available in appropriate alternative formats to persons with disabilities, as required by Section 202 of the Americans with Disabilities Act of Any person with a disability who requires a modification or accommodation in order to participate in a meeting should direct such request to Jean Perry at (951) at least 48 hours before the meeting, if possible. Pursuant to Government Code Section , any writing that (a) is a public record; (2) relates to an agenda item for an open session of a regular meeting of the Finance Committee; (3) is distributed less than 72 hours prior to that meeting, will be made available for public inspection at the time the writing is distributed to the Committee. Any such writing will be available for public Inspection at the District offices located at Meridian Parkway, Riverside, CA In addition, such writing may also be posted on the District's website.

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3 WESTERN MUNICIPAL WATER DISTRICT Meridian Parkway, Riverside, CA FINANCE COMMITTEE MEETING Committee Members President Brenda Dennstedt Director S.R. Al Lopez MINUTES 9:30 a.m. July 14, 2014 COMMITTEE MEMBERS PRESENT: President Brenda Dennstedt, Director S.R. Al Lopez STAFF/OTHERS PRESENT: Rod LeMond (Assistant General Manager/CFO), Kevin Mascaro (Director of Finance), Greg Duecker (Director of Administration), Anna Briones (Senior Accountant), Helen Jones (Accounting Technician II), Daisy Banuelos (Associate Analyst II), Jean Perry (Executive Assistant) Director Lopez called Western Municipal Water District s Finance Committee Meeting to order at 9:30 a.m. 1. ORAL COMMUNICATIONS: None 2. CONSENT CALENDAR: A. Minutes from June 16, 2014 Finance Committee meeting approved. 3. DISCUSSION/INFORMATIONAL ITEMS: A. Investment Management Services: Kevin Mascaro provided the Committee with background information on the contract with the District s investment manager, Chandler Asset Management, and stated the current contract has been in place since late Mr. Mascaro informed the Committee that Chandler s service level is high and their performance level has exceeded the benchmark. In order to ensure the best value at the lowest rate, the Committee asked that a Request for Proposal process for investment management services be conducted a year from now. 4. UPCOMING BOARD ITEMS/RECOMMENDATIONS TO BE MADE TO THE FULL BOARD: A. Crown Castle Cell Tower Lease Agreement: Greg Duecker presented the new agreement proposed by Crown Castle Company to the Committee. He explained the changes over the existing agreement and provided the Committee with historical information regarding the existing agreement. The five changes in the agreement include the lease period, annual lease payment rate of increase, interference provisions, cancellation clause, and a negotiated administration fee. The Committee requested additional information and asked that this item be brought before the Engineering, Operations, and Water Resources Committee before taking this item to the Board. 5. REPORTS: A. CFO Reports: i. Fiscal Year Arlington Desalter: 1 P age

4 Rod LeMond informed the Committee that the proposed rate is $839 per acre foot effective July 1, This is a 2.3% increase over the prior year rate. He also updated the Committee that we are currently waiting for Norco to approve the rate. ii. Report Regarding Western Water Recycling Facilities Operating Fund: Rod LeMond briefly informed the Committee on the content of the presentation for the July 30 th Public Hearing Meeting. B. GM Reports: i. Letter of Intent for the Formation of a Santa Rosa Joint Powers Authority (JPA): Rod LeMond updated the Committee that the Rancho California Water District (Rancho) Board has already signed the letter of intent to form a JPA that would own and operate the Santa Rosa Water Reclamation Facility currently owned and operated by Rancho. The JPA would consist of three agencies: Rancho, Western and Elsinore Valley Municipal Water District. Mr. LeMond also stated to the Committee that this item will be going to Western s Board on July 16, ADJOURNMENT: There being no further business for review, Director Lopez adjourned the meeting at 10:38 a.m. 2 P age

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6 August 18, 2014 TO THE FINANCE COMMITTEE: Director Brenda Dennstedt, President Director S.R. Al Lopez, Secretary-Treasurer FROM: Rod LeMond, Assistant General Manager/CFO AUTHORIZE THE TRANSFER OF UNCLAIMED MONIES TO THE DISTRICT S GENERAL FUND RECOMMENDATION: Staff recommends that the Finance Committee recommend the Board of Directors approve the transfer of unclaimed monies from calendar year 2010 to the District s General Fund. BUDGET IMPACT: There is no impact to the budget. However, miscellaneous revenue will increase by $2, from the unclaimed monies. BUSINESS PLAN REFERENCE: No specific Business Plan reference; this action is part of the District s routine business activities. DETAIL: Government Code Sections allow the District to make unclaimed monies (uncashed checks) available for general use after the monies have remained unclaimed on the District s books for a period of three years or more. The District has accumulated these monies primarily as a result of refunds related to the closing of water accounts and developer deposits. These amounts remained outstanding due to undeliverable mail, business closing, bankruptcies, and other reasons. The payments were researched to determine if the payee was a current customer of the District, or known by our Development Services department. The Government Code specifies that before a transfer for general use can take place, appropriate notice must be given in a local newspaper, and the Board of Directors must authorize the transfer. The notice to the public included a listing of the payee and dollar amount for each unclaimed check, and was published on July 14, 2014, and on July 21,

7 Finance Committee August 18, 2014 Page , in the Press-Enterprise newspaper. Claimants had 45 days from the first publication to file a verifiable claim. All valid claims will be paid and removed from the attached listing after August 28, The unclaimed monies will be presented to the Board at the September 3, 2014 meeting. ROD LeMOND Assistant General Manager/CFO RL:ld Attachment: 1. Unclaimed Monies Listing

8 Attachment 1 Unclaimed Money Calendar Year 2010 VENDOR NAME AMOUNT 3M MOBIL ADRIANA DEANA ANGELA SHANLEY ANGELA TAYLOR ARLANDO VERA AUDRA COLLIER BERTHA GONZALEZ CHARLOTTE MORTON CHRISSY GAMAR CHRISTOPHER BATTEN DEE WENDLER FRANK VOSMANN JAIME WRIGHT JAMES HOLLAND JENNIFER COSSA JOSE VARGAS KAHLED ABOUELNOOR KAREN DE GROOT KAY COOKSON KENS FEED KEVIN PHONG KRISTINA WILLIAMS MARK STRAZZERI MICHELLE JAMESON MIGUEL LANDEROS MONICA ESCOLA PALMAS DEL MAR LP PAMELA SANCHEZ PRIVATE CLIENT GROUP REALTY WILIAMS RICHARD CRESPIN ROBERTO ESPINOZA SCOTT SCHOETTLIN SOUTHERN CALIFORNIA REO HOUSING FUND LP VERIST BARNES VIVENCIO GALLARDO WESTCOE REALTORS WILLIAM SAULT $ 2,487.61

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10 August 18, 2014 TO THE FINANCE COMMITTEE: Director Brenda Dennstedt, President Director S.R. Al Lopez, Secretary-Treasurer FROM: Rod LeMond, Assistant General Manager/CFO CONSIDER APPROVAL OF AGREEMENT FOR CONSENT TO USE SERVICE RIGHTS IN THE MILLS GRAVITY PIPELINE RECOMMENDATION: Staff recommends that the Finance Committee recommend to the Board of Directors approval of a three-party agreement between Western, Lee Lake Water District (Lee Lake), and Elsinore Valley Municipal Water District (Elsinore Valley), specifically providing consent for Lee Lake to serve water from the Mills Gravity Pipeline outside its service area for the benefit of Elsinore Valley. BUDGET IMPACT: None. BUSINESS PLAN REFERENCE: No specific Business Plan reference; this action is part of Western s ongoing business activities. SUMMARY: Elsinore Valley and Lee Lake wish to enter into an asset exchange agreement which would temporarily allow Elsinore Valley to utilize Lee Lake s owned Service Rights in the Mills Gravity Pipeline ( Pipeline ). However, based on earlier Service Right agreements between Western and Lee Lake, distributing water from the Pipeline outside of Lee Lake s service area boundary is prohibited without the consent of Western. The three-party agreement addressed in this Committee letter gives consent from Western for Lee Lake to serve water outside of Lee Lake s boundaries which will result from Elsinore Valley s temporary use of a certain amount of Lee Lake s unutilized owner Service Rights in the Pipeline. DETAIL: Elsinore Valley wishes to divest itself of the ownership and operation of a portion of a non-potable agricultural water system known as the Temescal Water Company Agricultural Water System ( TWCAWS ) Infrastructure to Lee Lake. In exchange for the

11 Finance Committee August 18, 2014 Page 2 transfer of the TWCAWS Infrastructure, Lee Lake agrees to allow the temporary use of their unutilized Service Rights in the Mills Gravity Pipeline ( Pipeline ). Lee Lake s ownership of the Service Rights entitles it to receive imported water from Metropolitan Water District at Reaches A through F in the Mills Gravity Line. The temporary use of Lee Lake s Service Rights will enable Elsinore Valley to take delivery of imported water via those rights in the Pipeline. The temporary use of Lee Lake s Service Rights continues until Elsinore Valley recovers the value of the transferred assets which has been estimated at $2.6 million. The temporary use of the service rights are valued at $ per day per cubic feet per second based on the pipeline lease capacity agreement Western has with Elsinore Valley dated August 23, The consent for Lee Lake to serve water outside of its service area applies only to the asset exchange/transfer agreement referred to above and only for as long as it takes to recover the estimated asset value of the TWCAWS Infrastructure by Elsinore Valley. Per previous agreements with Lee Lake, Western s consent shall not be unreasonably withheld or conditioned. ROD LeMOND Assistant General Manager/CFO RL/krg Attachment: 1. Agreement for Consent to Use Service Rights Mills Gravity Pipeline

12 AGREEMENT FOR CONSENT TO USE SERVICE RIGHTS MILLS GRAVITY PIPELINE THIS AGREEMENT ("Agreement") is made this day of, 2014, ( Effective Date ) by and between the Western Municipal Water District, a municipal water district ("Western"), Lee Lake Water District, a California water district ( Lee Lake ), and Elsinore Valley Municipal Water District, a municipal water district ( Elsinore Valley ). Western, Lee Lake and Elsinore Valley are sometimes hereinafter individually referred to as "Party" and hereinafter collectively referred to as the "Parties." RECITALS A. Lee Lake purchases water from Western, which is delivered through the State Water Pipeline known as the Mills Gravity Pipeline. Beginning with an agreement dated September 3, 1986 ( September 1986 Agreement ), Lee Lake began to purchase service rights from Western whereby Western is obligated to deliver to Lee Lake certain amounts of treated State Water Project Water ( Service Rights ), measured in cubic feet per second ( cfs ). The September 1986 Agreement also provides that all water delivered pursuant to said agreement shall be used only on land within the present boundaries of Lee Lake. B. Beginning with an agreement dated May 23, 1989 ( May 1989 Agreement ), Lee Lake began to obtain from Western options and rights-of-first-refusal to purchase up to certain amounts of additional Service Rights. The May 23, 1989 Agreement also provides, among other things, for the following: (i) The definition of Service Right as a right to receive treated water at a continuous flow of water at a specified continuous rate at a particular delivery point; (ii) that water service will be subject to availability of water and Western s rules and regulations; and (iii) that Lee Lake will not serve water purchased from Western outside its boundaries without the prior consent of Western. C. Western and Lee Lake entered into an agreement dated April 20, 2004 ( April 2004 Agreement ) which provides, among other things, for the purchase of additional Service Rights by Lee Lake. The April 2004 Agreement was amended by way of an Amendment, dated October 19, 2004, which provides for the purchase of Service Rights pursuant to a right-of-first-refusal. D. Western and Lee Lake entered into an agreement dated June 4, 2014 ( June 2014 Agreement ) in order to document the completion and full exercise of all options and/or rightsof-first-refusal for the purchase of Service Rights. Upon performance of the June 2014 Agreement, Lee Lake is deemed to have the following Owned Service Rights: (a) Owned Service Rights In Reaches A Through E of the Mills Gravity Pipeline cfs; and (b) Owned Service Rights In Reach F cfs. The June 2014 Agreement also provides that the provisions of the September 1986 and May 1989 Agreements remain in effect. Such provisions include the condition that Lee Lake will not serve water purchased from Western outside its boundaries without the prior consent of Western. E. Lee Lake and Elsinore Valley entered into an agreement, dated 2014 ( Transfer Agreement ) which provides, among other things, for the transfer of certain assets from Elsinore Valley to Lee Lake and in exchange, Lee Lake will allow Elsinore Valley the temporary use of a -1-

13 certain amount of Lee Lake s unutilized Owned Service Rights. The assets are referred to in the Transfer Agreement as the Temescal Water Company Agricultural Water System Infrastructure ( TWCAWS Infrastructure ) and the parties to the Transfer Agreement have thereby agreed that the value of the TWCAWS Infrastructure shall be deemed to be $2,644, ( TWCAWS Infrastructure Value ). F. The Parties desire to enter into this Agreement in order to set forth the terms and conditions upon which Western will provide its consent for Lee Lake to serve water outside of Lee Lake s boundaries, which will result from Elsinore Valley s temporary use of a certain amount of Lee Lake s unutilized Owned Service Rights. AGREEMENT NOW, THEREFORE, the Parties agree as follows: 1. Western s Consent For Lee Lake To Serve Outside Of Its Boundaries - Western hereby grants its consent for Lee Lake to serve water outside of Lee Lake s boundaries which will result from Elsinore Valley s temporary use of a certain amount of Lee Lake s unutilized Owned Service Rights. Western s consent shall only apply to the value of Lee Lake s unutilized Owned Service Rights, or other available Owned Service Rights, utilized by Elsinore Valley which reach 7,300 cfs-days, which is deemed under the Transfer Agreement to be equal to the TWCAWS Infrastructure Value. The term cfs-days shall be as defined in the Transfer Agreement. In the event Lee Lake wishes to serve water outside of its boundaries under the Transfer Agreement, or any other agreement with Elsinore Valley, in an amount greater than the TWCAWS Infrastructure Value as set forth herein, Lee Lake shall be required to obtain the further consent of Western, by way of a separate agreement or an amendment to this Agreement. Western s consent shall not be unreasonably withheld or conditioned. 2. Prior Notice - Lee Lake shall provide at least thirty (30) days prior written notice to Western of any request for Western s consent for additional utilization of the Owned Service Rights under the Transfer Agreement, or any other agreement with Elsinore Valley. Lee Lake shall provide at least thirty (30) days written notice to Western prior to the effective date of any amendment, revision, extension, termination or expiration of the Transfer Agreement, or any other agreement with Elsinore Valley for the use of the Owned Service Rights. 3. Acknowledgements It is hereby acknowledged and agreed that the price or value of the Owned Service Rights which may be utilized by Elsinore Valley shall be set from time to time by Western in accordance with Western s rules and regulations and shall be based on a certain dollar amount per day per cfs. Provided, however, that nothing in this Agreement shall be deemed to modify the 7,300 cfs-days of Mills Gravity Pipeline capacity use to which EVMWD is entitled under the Transfer Agreement. By signing this Agreement, Elsinore Valley hereby acknowledges and agrees that Western s consent, as set forth herein, and the other terms and conditions for the use of Owned Service Rights, shall apply to any use of Lee Lake s Owned Service Rights. -2-

14 4. General Provisions (a) Term The term of this Agreement shall be from the Effective Date to the date of full performance, expiration, or termination of the Transfer Agreement or any other agreement between Lee Lake and Elsinore Valley for the use of any of the Owned Service Rights. (b) Indemnification: Each Party ( Indemnitor ) hereby agrees to defend, indemnify and hold free and harmless each of the other Parties ( Indemnitees ) and Indemnitees elected and appointed officials, officers, and employees from and against any and all liability, expense, including defense costs and legal fees, and claims for damages of any nature whatsoever, arising from or connected with Indemnitor s activities under this Agreement. (c) Amendment; Modification - No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing and signed by all Parties. (d) Waiver - No waiver of any default shall constitute a waiver of any other default or breach, whether of the same or other covenant or condition. No waiver, benefit, privilege, or service voluntarily given or performed by a Party shall give the other Party any contractual right by custom, estoppel, or otherwise. (e) Invalidity; Severability - If any portion of this Agreement is declared invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect. (f) Incorporation of Recitals The Recitals set forth above are incorporated herein and made an operative part of this Agreement. IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their respective duly authorized officers. [signatures are on the following page} -3-

15 WESTERN MUNICIPAL WATER DISTRICT OF RIVERSIDE COUNTY LEE LAKE WATER DISTRICT By: By: John V. Rossi Jeff Pape General Manager General Manager ELSINORE VALLEY MUNICIPAL WATER DISTRICT By: John Vega General Manager -4-

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17 August 18, 2014 TO THE FINANCE COMMITTEE: Director Brenda Dennstedt, President Director S.R. Al Lopez, Secretary-Treasurer FROM: Rod LeMond, Assistant General Manager/CFO CONSIDER APPROVAL OF SECOND REIMBURSEMENT AGREEMENT BETWEEN WESTERN AND CENTEX HOMES REGARDING RIVERSIDE UNIFIED SCHOOL DISTRICT COMMUNITY FACILITIES DISTRICT NO. 15 IMPROVEMENT AREA 3 RECOMMENDATION: Staff recommends that the Finance Committee recommend to the Board of Directors: 1. Authorize the Board President to sign an agreement entitled Second Reimbursement Agreement Between Western Municipal Water District of Riverside County and Centex Homes Regarding the Mission Ranch Project and Improvement Area No. 3 of Community Facilities District No. 15 (Mission Ranch) of Riverside Unified School District. 2. Authorize the General Manager to pay the reimbursements upon full execution of the Reimbursement Agreement by Centex. BUDGET IMPACT: The reimbursements for this agreement will be paid from Community Facilities District No. 15 Improvement Area No. 3 Bond proceeds being held in the Water Account at US Bank. There is no budget impact on Western. BUSINESS PLAN REFERENCE: No Business Plan reference; this action is part of Western s routine business activities. SUMMARY: Centex Homes is the developer of Tract No ( TR ), which consists of 116 lots and is located in Western s retail service area and in the City of Riverside. TR and certain other property are located in and are parts of the Mission Ranch Project. TR is within Community Facilities District ( CFD ) No. 15 (Mission

18 Finance Committee August 18, 2014 Page 2 Ranch) of Riverside Unified School District and within Area No. 3 of the CFD. On April 25, 2013, bonds were issued (Series C Bonds) by CFD No. 15 for Improvement Area No. 3 and funds in the amount of $2,188,725 were deposited in the Water District Facilities Account of the Improvement Fund and are available to Western to finance the Water and Sewer Facilities for this area of the Mission Ranch Project. Staff has prepared a reimbursement agreement in order to provide for the disbursement of these funds to the various parties involved. DETAIL: In April 2004, Western entered into a Joint Community Facilities Agreement ( JCFA ) with Riverside Unified School District ( RUSD ) regarding a proposed community facilities district bond issuance for expenses related to the construction of a variety of facilities and payment of fees associated with the Mission Ranch Development. This was a $50,000,000 bond authorization, of which approximately $13,300,000 was for water and sewer facilities and fees. The Mission Ranch development was proposed to be developed in three major phases and the bonds sold in three corresponding issuances. RUSD is the lead agency of CFD No. 15 and bonds have been issued for Improvement Area 1, Area 2 and a portion of Area 3. The subject of this Reimbursement Agreement is for a portion of Area 3. Area 3 includes 344 lots of the entire 1,245-lot Mission Ranch development. Of the 344 lots in Area 3, a total of 252 lots have been completed. The initial Reimbursement Agreement provided reimbursement of the infrastructure necessary to build out the sewer and water facilities to support the first 136 lots. To provide the infrastructure necessary to support these next 116 homes in Area 3, Centex Homes and other involved developers built out the necessary sewer and most of the water facilities identified in the CFD No. 15 Facilities Report. The sewer facilities included gravity and force mains, and the Gamble Lift Station. Over the years there were other agreements between Western and developers of Mission Ranch that have impacted CFD No. 15 Improvement Areas and the reimbursement agreements associated therewith. The CFD No. 15 Improvement Area No. 3 Reimbursement Agreement would allow for the following to occur: Reimbursements from CFD No. 15 Improvement Area No. 3 Bond proceeds being held in the Water Account at US Bank 1. Western will receive $85,975 representing the developed 116 lots in Improvement Area No. 3 s share of the Parson Road Sewer obligation pursuant to a September 19, 2003 agreement between Western and Mission Ranch Partners. This amount represents 116/1,245 th of the total amount Western paid

19 Finance Committee August 18, 2014 Page 3 plus accrued interest (6% since February 2005) for a sewer in Parsons Road benefiting all of Mission Ranch. 2. Centex Homes will receive $1,229,701 as reimbursement for construction expenses related to eligible sewer facilities they constructed for Improvement Area 3. Centex has provided all receipts and the facilities built are consistent with those identified in the original Facilities Report approved by Western s Board in April Depending on the submittal of their final paperwork, Standard Pacific Homes will receive approximately $344,712 as reimbursement for Water and Sewer connection fees paid for 44 lots. Connection fees for the other 72 lots out of the 116 were reimbursed to Standard Pacific in August ROD LeMOND Assistant General Manager/CFO RL:sh Attachment: 1. Second Reimbursement Agreement Between WMWD and Centex Homes Regarding the Mission Ranch Project & Improvement Area No. 3 CFD 15 (Mission Ranch) of Riverside Unified School District

20 SECOND REIMBURSEMENT AGREEMENT BETWEEN WESTERN MUNICIPAL WATER DISTRICT OF RIVERSIDE COUNTY AND CENTEX HOMES REGARDING THE MISSION RANCH PROJECT AND IMPROVEMENT AREA NO. 3 OF COMMUNITY FACILITIES DISTRICT NO. 15 (MISSION RANCH) OF RIVERSIDE UNIFIED SCHOOL DISTRICT THIS AGREEMENT is entered into as of the day of, 2014, by and between WESTERN MUNICIPAL WATER DISTRICT OF RIVERSIDE COUNTY, a public agency ( District ), and CENTEX HOMES, a Nevada general partnership ( Centex ). RECITALS: (A) Centex was the developer of the land in Tract No ( Tract No ) which is located in District's retail water service area and in the City of Riverside. Tract No and certain other property are located in and are parts of the Mission Ranch Project (the Project ). After completing the Sewer Facilities and Water Facilities (defined in Recital F), Centex sold Tract No to a developer who subsequently sold the property to Standard Pacific Homes ( Builder ). The Builder is in the process of constructing and selling 116 homes in Tract No In connection with the construction of such homes and the provision by District of water and sewer service to such homes, Builder has paid North Area Facilities Charges and Sewer Added Facilities Fees in the total amount of approximately $873,248 (the Connection Fees ) for the 116 homes in Tract No (B) The Project and Tract No are within Community Facilities District No. 15 (Mission Ranch) of Riverside Unified School District, County of Riverside, State of California ( CFD No. 15 ). Tract No is located within and comprises a portion of the land within Improvement Area No. 3 of CFD No. 15 ( Improvement Area No. 3 ). Also located within Improvement Area No. 3 is the land that is within and subject to Tract No , which has 136 homes built and sold, and the land that is within and subject to Tract No , which has been approved for the construction of 92 homes. (C) District has entered into an agreement with Riverside Unified School District entitled Joint Community Facilities Agreement Between Riverside Unified School District and Western Municipal Water District of Riverside County, dated as of April 1, 2004 (the Joint Agreement ). The Joint Agreement provides for the financing with the proceeds of the sale of the bonds of CFD No. 15 of certain water and sewer system facilities of District. (D) On November 5, 2009, a first series of bonds of CFD No. 15 was issued for Improvement Area No. 3 (the Series A Bonds ) in the aggregate principal amount of $5,465,000. Proceeds of the sale of the Bonds in the amount of $1,966, were deposited in the Water District Facilities Account of the Improvement Fund established pursuant to the Fiscal Agent Agreement for the Bonds and are available to District, together with investment earnings thereon, to finance water and sewer facilities of District for the benefit of the property owners in Improvement Area No \

21 (E) On April 25, 2013, bonds were issued by CFD No. 15 for Improvement Area No. 3 (the Series C Bonds ) in the aggregate principal amount of $6,165,000. Proceeds of the sale of the Series C Bonds in the amount of $2,188,725 were deposited in the Water District Facilities Account of the Improvement Fund, and are available to the District to finance the Sewer Facilities and Water Facilities (the, Water District Facilities Amount ). (F) District, Centex and certain other parties have entered into an agreement entitled Agreement Providing for Construction and Reimbursement of Costs of Master Plan Facilities and North Area Facilities Charges and Sewer Charges From Proceeds of the Sale of Bonds of Community Facilities District No. 15 (Mission Ranch) of Riverside Unified School District for Improvement Area No. 1, dated as of April 7, 2004 (the Prior Agreement ). The Prior Agreement provides for the allocation of certain costs in percentage shares among Improvement Area No. 1, Improvement Area No. 2 and Improvement Area No. 3, and provides for certain other matters. Provisions of the Prior Agreement govern the construction of the facilities that are therein and hereinafter identified as the Sewer Facilities and the Water Facilities. (G) Centex has completed the construction of the Sewer Facilities and the Water Facilities, including the water and sewer system facilities that are necessary for District to provide water service and sewer service to homes in Improvement Area No. 3. The cost incurred by Centex for the construction of the sewer system facilities that are necessary for District to provide sewer service to homes in Improvement Area No. 3 which has not previously been reimbursed is approximately $1,582,864 (the Sewer Facilities Reimbursement Amount ). Centex has advised District that the actual cost incurred by Centex for the construction of the Sewer Facilities was approximately $3,732,649. In August 2013, the Builder was paid $528,536 to partially reimburse connection fees paid on the 116 homes, leaving a balance due to the Builder of approximately $344,712 ($873,248 less $528,536). As of July 30, 2014, the remaining balance of the Water District Facilities Amount was $1,660,388 (the Water District Facilities Amount Balance ). (H) Pursuant to the Prior Agreement and the Reimbursement Agreement, dated 2011 (the First Reimbursement Agreement ), District agreed to reimburse the cost of the oversizing of the Sewer Facilities to provide capacity for the development of lands outside of CFD No. 15 and District has reimbursed all of the cost of such oversizing (the Sewer Facilities Oversizing Reimbursement ) and all of the Gamble Lift Station Oversizing Reimbursement. (I) Recital (I) of the Prior Agreement provides as follows: (I) District and Mission Ranch Partners, L. P. ( Mission Ranch Partners ), have entered into an agreement entitled Mission Ranch Area Sewer Pipeline Installation and Security Agreement dated as of September 19, 2003, which provides for the construction of and cost sharing with respect to a 18- inch diameter sewer main which District has constructed in Parsons Road (the Parsons Road Sewer Main ) and pursuant to which Mission Ranch Partners is responsible for ninety-six percent (96%) of the Total Project Costs with respect to the Parsons Road Sewer Main ( Developer s Share ). Mission Ranch Partners and Mission Ranch East have common partners. District has determined that the estimated Total Project Costs (as identified in the Parsons Agreement) with respect to the Parsons Road Sewer Main is $925,000, and that the estimated amount of Developer s Share is therefore $890,000. The Parsons Road Sewer Main benefits \

22 Improvement Area No. 1, Improvement Area No. 2 and Improvement Area No. 3 of CFD No. 15. Each such Improvement Area should therefore be responsible for the payment of its proportionate share of the Developer s Share. The percentage share of Improvement Area No. 1 of the Developer s Share, based on the ratio of the single family residences that will be constructed in Improvement Area No. 1 to the single family residences that will constructed in all of CFD No. 15 (i.e., 498 to 1,245), is forty percent (40%). (J) The share of Improvement Area No. 3 of the Developer s Share (as defined in paragraph (I) of the recitals to the Prior Agreement), based on the ratio of single family residences that will be constructed in Improvement Area No. 3 to the single family residences that will be constructed in all of CFD No. 15 (i.e., 344 to 1,245) is twenty-seven and sixty-three hundredths percent (27.63%) (the Improvement Area No. 3 Share ). The cost of the construction of the Parsons Road Sewer Main was $657, and the Developer s Share thereof was $631, The Improvement Area No. 3 Share of the Developer s Share is $174, District has applied $14, of interest earnings on the amount of the proceeds of the bonds that were issued for Improvement Area No. 1 of CFD No. 15 and deposited in the Water District Facilities Account for that improvement area to the Improvement Area No. 3 Share, and the remainder thereof is $159, (the Remaining Improvement Area No. 3 Parsons Road Sewer Main Share ). The portion of the Remaining Improvement Area No. 3 Parsons Road Sewer Main Share that is allocable to the 116 single family residences that were constructed in Tract No is thirty-three and seventy-two hundredths percent (33.72%) or $53,942 (the Tract No Parsons Road Sewer Main Share ). The Tract No Parsons Road Sewer Main Share, plus an amount representing interest thereon at the rate of six percent (6.00%) per annum from February of 2005 in the amount of $32,033 (a total of $85,975) will be withdrawn by District from the Water District Facilities Account (and deducted from the Water District Facilities Amount) and retained by District in partial reimbursement of the Remaining Improvement Area No. 3 Parsons Road Sewer Main Share. (K) During District review of North Area Facilities Charges and Sewer Added Facilities Fees ( District Fees ) paid for the Project, the District identified an unpaid amount of $342,902 for Improvement Area No. 2 District Fees ( Outstanding Connection Fees ). Centex agrees to pay the Outstanding Connection Fees to District within 10 days of Centex receiving payment pursuant to Section 4 hereof. (L) The purpose of this agreement is to provide for the allocation of the Water District Facilities Amount Balance (i.e., $1,660,388, including interest earnings) (i) for the reimbursement to District of the Tract No Parsons Road Sewer Main Share in the amount of $85,975, (ii) for the reimbursement to Centex of a portion of the Sewer Facilities Reimbursement Amount of $1,229,701, and (iii) for the reimbursement to Builder of Connection Fees in the amount of approximately $344,712. NOW, THEREFORE, in consideration of the preceding recitals and the covenants hereinafter contained, the parties agree as follows: 1. Definitions. As used herein the following terms are defined as follows: Bonds means the bonds of CFD No. 15 that were issued for Improvement Area \

23 No. 3. CFD No. 15 means CFD No. 15 of Riverside Unified School District. Connection Fees means the North Area Facilities Charges and the Sewer Facilities Fees paid by Builder to District in connection with the construction of homes in Tract No , as referred to in paragraph (A) of the recitals to this Agreement, in the total amount of approximately $873,248. Improvement Area No. 3 means Improvement Area No. 3 of CFD No. 15. Joint Agreement means the agreement referred to in paragraph (C) of the recitals to this Agreement. North Area means an area of District that includes the Project, CFD No. 15 and Tract No North Area Added Facilities Account means the account of District into which North Area Facilities Charges paid by property owners and developers of land in the North Area of District are deposited and held to pay the cost of the design, construction and acquisition of master plan water system facilities for the North Area. Outstanding Connection Fees means the amount of $342,902 referred to in paragraph (K) of the recitals to this Agreement. Prior Agreement means the agreement referred to in paragraph (E) of the recitals to this Agreement. No. 15. Project means the Mission Ranch Project that has been developed within CFD Sewer Facilities means the sewer system facilities that were constructed by Centex pursuant to the Prior Agreement to provide sewer service to the homes that were to be constructed in the Project. Sewer Facilities Reimbursement Amount means the amount of $1,582,864 referred to in paragraph (G) of the recitals to this Agreement. Area No. 3. Tract No means Tract No that is located within Improvement Tract No Parsons Road Sewer Main Share means the amount of $85,975 referred to in paragraph (J) of the recitals to this Agreement. Water District Facilities Account means the account by that name established in the Improvement Fund pursuant to the Fiscal Agent Agreement with respect to the Bonds. Water District Facilities Amount Balance means the amount of $1,660,388 that \

24 as of July 30, 2014 remained on deposit in Water District Facilities Account, together with any additional interest earnings thereon. Water Facilities means the water system facilities that were constructed by Centex pursuant to the Prior Agreement to provide water service to the homes that were to be constructed in the Project. 2. Reimbursement From Water District Facilities Amount Balance. District shall withdraw from the Water District Facilities Account and retain the amount of the Tract No Parsons Road Sewer Main Share ($85,975) in partial reimbursement of the Remaining Improvement Area No. 3 Parsons Road Sewer Main Share. Thereafter, District shall withdraw from the Water District Facilities Account and pay to Centex the amount of $1,229,701 to reimburse a portion of the Sewer Facilities Reimbursement Amount. The District shall withdraw from the Water District Facilities Account and pay Builder any unreimbursed Connection Fees related to Tract No The balance of the Sewer Facilities Reimbursement Amount shall be reimbursed from the proceeds of the sale of any subsequent series of bonds of Improvement Area No. 3 of CFD No. 15, when and if such bonds are sold. District and Centex agree that the outstanding Sewer Facilities Reimbursement Amount of $353,163 (i.e., $1,582,864 $1,229,701 = $353,163) shall be reimbursed from any future bond proceeds received by the District related to Improvement Area No. 3 after the receipt by the District of the Parsons Road Sewer Main Share for Tract No , but prior to the payment of any other amounts. 3. Sources of Funds. The sole source of funds for the reimbursement to Centex of the Sewer Facilities Reimbursement Amount, as provided in Section 2 hereof, shall be from funds on deposit in the Water District Facilities Account (including future amounts that may be deposited in such account as a result of the issuance of any additional series of bonds for CFD No. 15), and District shall not be obligated to reimburse such amounts to Centex from any other source of funds. 4. Timing of Payments. District has already received the reimbursement package of Centex, and all payments to be made by District to Centex hereunder shall be made within 30 days following the approval of this Agreement by the Board of Directors of District and the execution of this Agreement by Centex and District. Centex agrees to pay the Outstanding Connection Fees within 10 days of receipt of payment of the Sewer Facilities Reimbursement of $1,229,701, as referenced in Section 2 of this Agreement. 5. Legal Fees. In the event of the bringing of any action or suit by a party against another party to this Agreement by reason of any breach of any of the covenants, conditions, agreements or provisions on the part of such other party arising out of this Agreement, the party in whose favor final judgment shall be entered shall be entitled to have and recover of and from the other party all costs and expenses of suit, including reasonable attorneys fees (or, in the event of any action to enforce this Agreement, the prevailing party shall be entitled to recover all of its costs and expenses of the action, including reasonable attorneys fees), as determined by a court of competent jurisdiction. 6. Notices. Except as otherwise specified herein, all notices or other communication provided for in this Agreement shall be in writing, and shall be delivered \

25 personally, sent by reputable overnight mail equivalent carrier, or sent by registered or certified mail, return receipt requested, postage prepaid, addressed to the person to receive such notice or communication at the following addresses and shall be effective upon receipt or refusal to accept delivery: If to District: If to Centex: Western Municipal Water District of Riverside County Attention: Assistant General Manager/COO Meridian Parkway Riverside, CA Centex Homes Attention: Darren Warren Puerta Real, Suite 300 Mission Viejo, CA Notice of change of address shall be given by written notice in the manner set forth in this section. 7. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties and their respective heirs, executors, administrators, successors and assigns. 8. Required Actions. District and Centex agree to execute all instruments and documents and to take all actions as may be required in order to consummate the transactions contemplated by this Agreement. 9. Entire Agreement. This Agreement contains the entire agreement between the parties concerning the subject matter of this Agreement and supersedes any prior agreements, understandings or negotiations (whether oral or written). No addition or modification of any term or provision shall be effective unless set forth in writing and signed by District and Centex. 10. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one and the same instrument. 11. Severability. If any portion of this Agreement shall be declared by any court of competent jurisdiction to be invalid, illegal or unenforceable, such portion shall be deemed severed from this Agreement, and the remaining parts of this Agreement shall remain in full force and effect, as fully as though such invalid, illegal or unenforceable portion had never been part of this Agreement. 12. Headings. Headings at the beginning of each section and subsection are solely for convenience of reference and are not a part of this Agreement. 13. Construction. Whenever the context of this Agreement requires the same, the singular shall include the plural and the masculine, feminine and neuter shall include the others. Without limitation, any defined term used in the plural shall refer to all members of the relevant class, and any defined term used in the singular shall refer to any member of the relevant \

26 class. This Agreement shall not be construed as if it had been prepared by one of the parties, but rather as if all parties had prepared it. Unless otherwise indicated, all references to sections and subsections are to this Agreement. If the day on which any party is required to take any action under the terms of this Agreement is not a business day, the action shall be taken on the next succeeding business day. Any reference in this Agreement to an agreement or other instrument shall mean such agreement or instrument as it may from time to time be supplemented, modified, amended and extended in accordance with the terms of this Agreement. This Agreement is executed and delivered in the State of California and shall be construed and enforced in accordance with, and governed by, the laws of the State of California. 14. No Waiver. No waiver by a party of any default by another party under this Agreement shall be implied from any omission or delay by the nondefaulting party to take action on account of the default if the default persists or is repeated. Any waiver of any covenant, term or condition contained in this Agreement must be in writing. Any such express written waiver shall not be construed as a waiver of any subsequent breach of the same covenant, term or condition, nor shall it affect any default other than the default expressly made the subject of the waiver. Any such express waiver shall be operative only for the time and to the extent stated in the waiver. The consent or approval by a party to or of any act by the other party shall not be deemed to waive or render unnecessary consent or approval to or of any subsequent act. 15. Relationship Between Parties. District and Centex agree that the relationship between them is intended to be and shall at all times remain, in connection with the transactions contemplated by this Agreement, that of a private developer as to Centex and a public agency as to District, and no party is intended to be or shall be construed as a partner, joint venturer, alter ego, manager, controlling person or other business associate or participant of any kind of any other party or any of its affiliates and no party intends to ever assume such status. 16. Third Party Beneficiaries. This Agreement shall not be deemed to confer any rights upon any individual or entity which is not a party hereto, and the parties hereto expressly disclaim any such other third-party benefit \

27 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first above written. WESTERN MUNICIPAL WATER DISTRICT OF RIVERSIDE COUNTY By: President of the Board of Directors ATTEST: Secretary of the Board of Directors CENTEX HOMES, a Nevada general partnership By: Centex Real Estate Corporation, a Nevada Corporation, its Managing Partner By: Name: Title: \

28 3D

29 August 18, 2014 TO THE FINANCE COMMITTEE: Director Brenda Dennstedt, President Director S.R. Al Lopez, Secretary-Treasurer FROM: Rod LeMond, Assistant General Manager/CFO CONSIDER ADOPTION OF RESOLUTION 2883 ESTABLISHING THE ARLINGTON DESALTER WATER RATE RECOMMENDATION: Staff recommends the Finance Committee recommend approval of Resolution 2883 by the Board of Directors. Resolution 2883 will establish the Arlington Desalter water rate charged to the City of Norco effective as of July 1, BUDGET IMPACT: The proposed rate established in Resolution 2883 was developed during the Fiscal Year and biennial budgeting process. The revenues produced will cover the Arlington Desalter projected operating expenses, debt service and asset replacement reserve. BUSINESS PLAN REFERENCE: No specific Business Plan reference; this action is part of Western s routine activities. EXECUTIVE SUMMARY: Resolution 2883 sets the rate for water sold from the Arlington Desalter at $889 per acre foot, a 1.3% decrease from the prior year rate. In previous years, Norco reimbursed Western for capital asset replacement costs. For Fiscal Year , Norco has agreed with Western to establish an asset replacement reserve and include a reserve component in the water rate. Of the $889 per acre foot rate, $56 is the portion for the asset replacement reserve and is expected to fund a reserve amount of $280,000 during Fiscal Year The new rate is effective retroactively as of July 1, The City of Norco has agreed to purchase 5,000 acre feet of Arlington Desalter water from Western. The proposed rate and effective date have been reviewed and agreed to by City of Norco Staff, the Arlington Desalter s primary customer.

30 Finance Committee August 18, 2014 Page 2 In May 2013, an interconnection was completed allowing Western to deliver discretionary Arlington Desalter water to the City of Corona (Corona); any water delivered to Corona will also be at $889 per acre foot. DETAIL: On July 1, 2003 SAWPA and Western entered into a water purchase agreement with the City of Norco (Norco) for water treated and delivered from the Arlington Desalter. Section 8.a. of the agreement entitled Rate Objective states, The rates established hereunder for the sale of Potable Water from the Arlington Desalter are based on PC 9 s Cost of Service to provide Potable Water. Throughout the term of this Agreement, considering the expected periodic annual fluctuations in the Total Remaining Costs, PC 9 shall use its best efforts to create uniform annual adjustments in the rates established for the purchase of Potable Water. The Agreement also allows Western to include any deficit carryover in the budget or over a period of time. Carryover is defined in the Agreement as Actual Annual Revenues minus Actual Annual Project Costs. The proposed water rate for Fiscal Year is $889 per acre foot. This rate is made up of three components an operating component, a debt service component and a capital component. A brief explanation of the rate components is as follows: The operating component is set to recover the cost of service to provide water. It includes both fixed and variable costs. The debt service component is set to recover the cost of initial capital investment. The capital component is set to recover the cost of replacing the facility infrastructure. The capital portion was billed on a cost-reimbursement basis in previous years based on actual expenditures. For Fiscal Year , it becomes a part of the water rate and will fund an asset replacement reserve as explained in this letter. Continued on next page.