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HomeMy WebLinkAbout05.G. Finance MASTER SERVICES MEMORANDUM OF UNDERSTANDING THIS MEMORANDUM OF UNDERSTANDING is made and entered into by and between the City of San Bernardino, a charter city (City), and the Board of Water Commissioners of the City of San Bernardino (Board), who agree that the City shall provide services to the City of San Bernardino Municipal Water Department (Department), for which the Board will compensate City as follows: 1. SUPPORT SERVICES. The City provides the City of San Bernardino Municipal Water Department (Department) the services of its City departments in support Department operations. 2. POLICE AND FIRE SAFETY SERVICES. The City provides public safety services to safeguard property and lives located within the City. Private residents and businesses as well as the public infrastructure and employees benefit from these public safety services. The Water & Sewer Enterprise benefit from public safety services in a variety ways. Police presence helps deter(1)tampering with well sites, valves, instrumentation, and other controls; (2) vandalism and theft of salvageable materials (a significant current concern in light of economic distress and high values paid for scrap metal); (3) theft of water; and (4) introduction of contaminants into source water and other acts of terrorism. Police personnel are available to investigate acts of tampering, vandalism, theft, and terrorism. Police and fire personnel are also available to respond to emergencies such as main breaks, hydrant damage, and natural disasters that could interrupt water system operations. These public safety services are in addition to the security services that are included in the Water & Sewer Enterprise and that should also be funded by water rates. Funding for public safety services is derived from a variety of sources, of which tax revenue is the primary source. Absent from these funding sources is reimbursement from the Water & Sewer Enterprises for its share of the cost of the public safety services from which it benefits. The Water & Sewer Enterprise's share of the cost of public safety services should be commensurate with the benefits received. These benefits are proportionate to the value of Water & Sewer Enterprise property as compared to the value of all public and private property within the City which benefits from those public safety services. Exhibit A shows how the Water & Sewer Enterprise's share of the public safety budget is derived based on the relative value of the Water& Sewer Enterprise assets compared with the value of all assets in the City. The Police budget was reduced to eliminate programs that provide no benefit to the Water Enterprise; no similar reductions were required for the Fire budget. Based on the Water & Sewer Enterprise's share of property in the City, the Water Enterprise is allocated $1,604,413 and the Sewer Treatment Enterprise has an allocation of$107,784. 3. RIGHT OF WAY & STREET MAINTENANCE FEES. Right-of-way usage and street maintenance encompasses a variety of activities ranging from use of dedicated right-of-way for underground utilities, pavement management to mapping, fencing, and real estate. Because the City has already purchased the right-of-way used by the utilities, the majority of the budget associated with these two items is devoted to pavement maintenance. Any service with buried infrastructure located within the City's rights of way benefits from well-constructed and maintained pavement, which protects against vehicle and environmental impacts such as MASTER SERVICES MEMORANDUM OF UNDERSTANDING erosion and subsidence. When buried infrastructure is constructed, the costs of excavation and pavement repair are included in the construction cost. Hence, when a water main is installed, the cost of the installation is covered by water rates. Subsequent to the construction, the City incurs ongoing pavement construction and maintenance expenses that are at least related to the presence of buried infrastructure. For example, trench excavations disturb the soil. If backfill and compaction is imperfect, subsidence and differential settlement can occur, particularly where vehicle loads are greatest. When excessive settlement occurs, pavements are weakened, allowing water to intrude, which shortens the pavement service life. The cost of this ongoing pavement construction and maintenance expense is borne by the Department of Public Works, which typically does not seek direct reimbursement from the specific buried infrastructure that is the source of premature pavement deterioration. The Water Enterprise's buried infrastructure is a portion of the City's entire buried infrastructure. In turn, the City's buried infrastructure is a portion of the total buried infrastructure, which also includes gas, electric, and telephone services. The presence of this infrastructure can shorten the service life of pavement. Initial installation of the infrastructure disturbs soil and subsequent maintenance (e.g., repairs) will result in trench cuts that further shorten the life of the pavement. As a result, buried infrastructure receives a benefit for which it should provide funding. The analysis attached as Exhibit B shows the steps involved in determining the Water Enterprise's share of pavement repair, which is the predominant component of right-of-way maintenance. These repayments can be viewed both as a cost the Water Enterprise imposes on the streets program and as rental of the land beneath city streets for the benefit of the Water Enterprise. From this data, a right-of-way and street maintenance fees was established for FY 2014-15 and 2015-16, the fees are$476,941 and $1,077,535 respectively. 4. ANNUAL FRANCHISE FEE. The above sections of the MSA define the costs associated with support services, public safety, right-of-way and direct billed services. Total costs during this agreement are as follows: Fiscal Year Public Safety Right-of-Way Street Totals Maintenance FY 2014-15 $1,71 T,198 $476,883 $1,077,535 $3,266,616 FY 2015-16 $1,712,198 $476,883 $1,077,535 $3,266,616 5. TERM. This Memorandum of Understanding, as it pertains to the items listed above shall terminate as of June 30, 2016 unless tenninated by either party at least thirty(30)days prior to July 1, 2016. 2 MASTER SERVICES MEMORANDUM OF UNDERSTANDING FIRST AMENDMENT TO MASTER SERVICES MEMORANDUM OF UNDERSTANDING By and between the City of San Bernardino and the Board of Water Commissioners of the City of San Bernardino for the provision of City services for Fiscal Year 2014/2015 and 2015/2016. BOARD OF WATER COMMISSIONERS OF THE CITY OF SAN BERNARDINO Date: Toni Callicott,President Robin L. Ohama, Secretary CITY OF SAN BERNARDINO Date: Allen Parker, City Manager APRROVED AS TO FORM: ATTEST: Gary D. Saenz, City Attorney B :!-� � Robin L. Ohama, Secretary 3 MASTER SERVICES MEMORANDUM OF UNDERSTANDING THIS MEMORANDUM OF UNDERSTANDING is made and entered into by and between the City of San Bernardino, a charter city (City), and the Board of Water Commissioners of the City of San Bernardino (Board), who agree that the City shall provide services to the City of San Bernardino Municipal Water Department (Department), for which the Board will compensate City as follows: 1. SUPPORT SERVICES. The City provides the City of San Bernardino Municipal Water Department (Department) the services of its City departments in support Department operations. 2. POLICE AND FIRE SAFETY SERVICES. The City provides public safety services to safeguard property and lives located within the City. Private residents and businesses as well as the public infrastructure and employees benefit from these public safety services. The Water & Sewer Enterprise benefit from public safety services in a variety ways. Police presence helps deter(1)tampering with well sites, valves, instrumentation, and other controls; (2) vandalism and theft of salvageable materials (a significant current concern in light of economic distress and high values paid for scrap metal); (3) theft of water; and (4) introduction of contaminants into source water and other acts of terrorism. Police personnel are available to investigate acts of tampering, vandalism, theft, and terrorism. Police and fire personnel are also available to respond to emergencies such as main breaks, hydrant damage, and natural disasters that could interrupt water system operations. These public safety services are in addition to the security services that are included in the Water & Sewer Enterprise and that should also be funded by water rates. Funding for public safety services is derived from a variety of sources, of which tax revenue is the primary source. Absent from these funding sources is reimbursement from the Water & Sewer Enterprises for its share of the cost of the public safety services from which it benefits. The Water & Sewer Enterprise's share of the cost of public safety services should be commensurate with the benefits received. These benefits are proportionate to the value of Water& Sewer Enterprise property as compared to the value of all public and private property within the City which benefits from those public safety services. Exhibit A shows how the Water & Sewer Enterprise's share of the public safety budget is derived based on the relative value of the Water& Sewer Enterprise assets compared with the value of all assets in the City. The Police budget was reduced to eliminate programs that provide no benefit to the Water Enterprise; no similar reductions were required for the Fire budget. Based on the Water & Sewer Enterprise's share of property in the City, the Water Enterprise is allocated $1,604,413 and the Sewer Treatment Enterprise has an allocation of$107,784. 3. RIGHT OF WAY & STREET MAINTENANCE FEES. Right-of-way usage and street maintenance encompasses a variety of activities ranging from use of dedicated right-of-way for underground utilities, pavement management to mapping, fencing, and real estate. Because the City has already purchased the right-of-way used by the utilities, the majority of the budget associated with these two items is devoted to pavement maintenance. Any service with buried infrastructure located within the City's rights of way benefits from well-constructed and maintained pavement, which protects against vehicle and environmental impacts such as Jr MASTER SERVICES MEMORANDUM OF UNDERSTANDING erosion and subsidence. When buried infrastructure is constructed, the costs of excavation and pavement repair are included in the construction cost. Hence, when a water main is installed, the cost of the installation is covered by water rates. Subsequent to the construction, the City incurs ongoing pavement construction and maintenance expenses that are at least related to the presence of buried infrastructure. For example, trench excavations disturb the soil. If backfill and compaction is imperfect, subsidence and differential settlement can occur, particularly where vehicle loads are greatest. When excessive settlement occurs, pavements are weakened, allowing water to intrude, which shortens the pavement service life. The cost of this ongoing pavement construction and maintenance expense is borne by the Department of Public Works, which typically does not seek direct reimbursement from the specific buried infrastructure that is the source of premature pavement deterioration. The Water Enterprise's buried infrastructure is a portion of the City's entire buried infrastructure. In turn, the City's buried infrastructure is a portion of the total buried infrastructure, which also includes gas, electric, and telephone services. The presence of this infrastructure can shorten the service life of pavement. Initial installation of the infrastructure disturbs soil and subsequent maintenance (e.g., repairs) will result in trench cuts that further shorten the life of the pavement. As a result, buried infrastructure receives a benefit for which it should provide funding. The analysis attached as Exhibit B shows the steps involved in determining the Water Enterprise's share of pavement repair, which is the predominant component of right-of-way maintenance. These repayments can be viewed both as a cost the Water Enterprise imposes on the streets program and as rental of the land beneath city streets for the benefit of the Water Enterprise. From this data, a right-of-way and street maintenance fees was established for FY 2014-15 and 2015-16, the fees are$476,941 and $1,077,535 respectively. 4. ANNUAL FRANCHISE FEE. The above sections of the MSA define the costs associated with support services, public safety, right-of-way and direct billed services. Total costs during this agreement are as follows; Fiscal Year Public Safety Right-of-Way Street Totals Maintenance FY 2014-15 $1,712,198 $476,883 $1,077,535 $3,266,616 FY 2015-16 $1,712,198 $476,883 $1,077,535 $3,266,616 5. TERM. This Memorandum of Understanding, as it pertains to the items listed above shall terminate as of June 30, 2016 unless terminated by either party at least thirty(30)days prior to July 1, 2016. 2 MASTER SERVICES MEMORANDUM OF UNDERSTANDING FIRST AMENDMENT TO MASTER SERVICES MEMORANDUM OF UNDERSTANDING By and between the City of San Bernardino and the Board of Water Commissioners of the City of San Bernardino for the provision of City services for Fiscal Year 2014/2015 and 2015/2016. BOARD OF WATER COMMISSIONERS OF THE CITY OF SAN BERNARDINO Date: Toni Callicott,President Robin L. Ohama, Secretary CITY OF SAN BERNARDINO Date: Allen Parker, City Manager APRROVED AS TO FORM: ATTEST: Gary D. Saenz, City Attorney Robin L. Ohama, Secretary 3