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HomeMy WebLinkAbout09- Finance 9.a ��gNARDI,�, o _ Consent Calendar 0 r � c a� City of San Bernardino Request for Council Action c 0 y Date: June 21, 2017 U To: Honorable Mayor and City Council Members d From: Mark Scott, City Manager eu m By: Brent A. Mason, Finance Director E Subject: Approval of Master Services Agreement between City of San Bernardino and San Bernardino Municipal Water Department a for Fiscal Year 2016/17 - Transfer of$3,266,000 0 d Recommendation r Adopt a Resolution of the Mayor and City Council of the City of San Bernardino, California, approving the Master Services Agreement ("MSA") with the San Bernardino Municipal Water Department ("Water Department") and authorizing the City Manager or his designee to execute the agreement with the Water Department for the provision of 'o City services for Fiscal Year 2016-17, in the amount of$3,266,000. a a Backaround M For many years, the City and the Water Department have entered into agreements inLO which the Water Department agrees to share in the cost of various services/benefits provided to the Department by the City. Originally, these amounts were negotiated 0 between the two parties. More recently, a study has been performed that documents w the costs for services provided. Within the limits of the identified costs, an agreement is entered into for the amount of funding to be provided by the Water Department. In this ; instance, the amount is proposed to be the same as it has been each of the last two 3 years, which is what was included in the 2016/17 Budget presented to the Mayor and City Council for adoption. 3 a Discussion A study of the various services/benefits provided to the Water department was originally0 completed by Urban Futures, Incorporated in conjunction with their efforts associated c with the bankruptcy. Then, with the annexation of the Fire Department into the County a Fire Protection District, those costs needed to be removed. An updated study includes a the costs associated with the provision of Police Services for the protection of utility assets in the City streets and right-of-way, as well as utility assets attached to utility E r r a Packet Pg. 83 9.a properties. Additionally, the study identifies costs associated with City street repairs = and maintenance benefitting utility infrastructure assets. c With this study, the City is able to support, and thus comply with applicable state law, relative to the transfer of resources from a rate supported entity (such as the Water Department). This transfer also encompasses the services/benefits provided to the 00 Water Department's Sewer Treatment operation. Starting with the next fiscal year, the transfer will be expanded to include the Sewer Collection operation. For 2016/17, those c costs were transferred internally, also supported by the UFI study. _ U c Only a one year agreement is proposed at this time because the Water Department has undertaken the additional function of running the Collection System effective April 1, 2017. Staff from each of the agencies has agreed that a new study in which both sides m T share in the cost, should be made and approved by both parties. That may occur during the 2017/18 fiscal year and its results will become the supporting documentation E for the next several years of annual transfers between the Water Department and the City. Q h d V Fiscal Impact The 2016/17 budget anticipated receiving $3,266,000, consistent with the two prior v, years, from the Water Department to reimburse the City for its costs incurred associated w with the services provided to the Water Department. The transfer from the Sewer Collection Fund occurred prior to the transfer of operations to the Water Department. w Therefore, approval of this item has no further impact on the budget beyond that 0 anticipated in the current year's adopted budget > a a Conclusion Q It is recommended that the Mayor and City Council adopt the Resolution approving the M Master Services Agreement with the San Bernardino Municipal Water Department. Ln Attachments 0 0 Attachment 1 — Resolution approving the MSA with San Bernardino Municipal Water W Department °C Attachment 2 — MSA with San Bernardino Municipal Water Department ; 3 L Ward: N/A 3 Q N w �a 0- E E L V t6 r.+ a.+ Q Packet Pg. 84 9.b RESOLUTION NO. 0 1 RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA, APPROVNG THE MASTER SERVIES AGREEMENT m 2 ("MSA") WITH THE SAN BERNARDINO MUNICPAL WATER DEPARTMENT AND 3 AUTHORIZING THE CITY MANAGER TO EXECUTIE THE AGREEMENT WITH ,N THE WATER DEPARMENT FOR THE PROVISION OF CITY SERVICES FOR ;, 4 FISCAL YEAR 2016-17 IN THE AMOUNT OF 53,266,000.00. v _ a� 5 WHEREAS, The City of San Bernardino ("City")provides certain services to the Water Department("Department") for which the Department compensates the City: and � 6 m T _ 7 WHEREAS, it is the desire of the City and the Water Department to enter into an E agreement to memorialize these services; 8 a 9 NOW,THEREFORE, BE IT RESOLVED by the Mayor and City Council of the City of San Bernardino as follows: 10 SECTION 1. The Master Services Agreement between the City and the Water 11 Department setting forth the services that are to be provided by the City to the Water 12 Department and the compensation to be paid therefore, a copy of which is attached hereto and Z incorporated herein as Exhibit "A" for FY 2016-17, is hereby adopted. o 13 `° 0 SECTION 2. That the implementation date of the FY 2016-17 Master Services a 14 Agreement is July 1, 2016 to June 30, 2017. a 15 M SECTION 3. The costs for the services to be provided by the City to the Water 16 Department in FY 2016-17 is $3,266,000.00 17 Z SECTION 4. The City Manager is hereby authorized and directed to execute on behalf of g 18 said or his designee the Master Services Agreement. _ U Q 19 /! a 20 ` // 21 !! r 22 /! a Cn 23 /! 0 24 !! o 25 !! a 26 // E 27 28 1 a Packet Pg. 85 9.b RESOLUTION NO. a 0 c =6 1 RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA, APPROVNG THE MASTER SERVIES AGREEMENT m 2 ("MSA") WITH THE SAN BERNARDINO MUNICPAL WATER DEPARTMENT AND c=n 3 AUTHORIZING THE CITY MANAGER TO EXECUTIE THE AGREEMENT WITH w THE WATER DEPARMENT FOR THE PROVISION OF CITY SERVICES FOR Y 4 FISCAL YEAR 2016-17 IN THE AMOUNT OF $3,266,000.00. v c as 5 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and 6 00 City Council of the City of San Bernardino at a meeting thereof, held on the day of 0 7 8 , 2017, by the following vote,to wit: a 9 Council Members: AYES NAYS ABSTAIN ABSENT 10 MARQUEZ d 11 BARRIOS 12 0 13 VALDIVIA c a 14 SHORETT a 0 15 NICKEL o 16 RICHARD z 17 w MULVIHILL x 18 Q 19 a 20 Georgeann Hanna, CMC, City Clerk 21 The foregoing Resolution is hereby approved this day of , 2017. 3 22 co 23 R. Carey Davis,Mayor City of San Bernarodino 0 �o 24 0 25 Approved as to form: a Gary D. Saenz, City Attorney a 26 By: t 27 28 2 a Packet Pg. 86 9.c EXHIBIT"A" MASTER SERVICES AGREEMENT R c THIS MASTER SERVICES AGREEMENT is made and entered into by and m between the City of San Bernardino, a charter city (City), and the Water Board of the City of San Bernardino (Board), who agree that the City shall provide services to the City of San N 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 "ater Department (Department) the services of its City d departments in support of Department operations. m c m 2. POLICE AND FIRE SAFETY SERVICES: The City provides public safety E services to safeguard property and lives located within the City. Private residents and businesses as well as the public infrastructure and employees benefit from Q 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 N 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 c 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 C are included in the Water & Sewer Enterprise and that should also be funded by water rates. M 0 LO Funding for public safety services is derived from a variety of sources, of which N tax revenue is the primary source. Not included in these funding sources is w reimbursement from the Water & Sewer Enterprises for its share of the cost of the g public safety services from which it directly benefits. The Water & Sewer v 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 Q & Sewer Enterprise property as compared to the value of all public and private property within the City which benefits from those public safety services. The attached Appendix 1 demonstrates how the Water & Sewer Enterprise's 3 share of the public safety budget is derived based on the relative value of the Q Water & Sewer Enterprise assets compared with the value of all assets in the N City. The Police budget was reduced to eliminate programs that provide no 0 benefit to the Water Enterprise. 0 0 a CL Q r c m E t R Q Packet Pg. 87 9.c EXHIBIT"A" -� c ca MASTER SERVICES AGREEMENT = �a F Based on the Water & Sewer Enterprise's share of property in the City, the Water m Enterprise is allocated $2,543,377 and the Sewer Treatment Enterprise has an allocation R of$129,750.00, cn w 0 3. RIGHT OF WAY & STREET MAINTENANCE FEES: Right-of-way usage and r street maintenance encompasses a variety of activities ranging from use of dedicated v right-of-way for underground utilities, pavement management, mapping, fencing, and 0) real estate administration. Because the City has already purchased the right-of-way A used by the utilities, the majority of the budget associated with these two items is m devoted to pavement maintenance. Any service with buried infrastructure located c within the City's rights of way benefits from well-constructed and maintained E pavement, which protects against vehicle and environmental impacts such as 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, N 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 c to intrude,which shortens the pavement service life. 0 The cost of this ongoing pavement construction and maintenance expense is borne by a the Department of Public Works, which typically does not seek direct reimbursement a from the specific buried infrastructure that is the source of premature pavement M deterioration. The Water Enterprise's buried infrastructure is a portion of the City's entire buried infrastructure. In tum, 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 w installation of the infrastructure disturbs soil and subsequent maintenance (e.g.,repairs) x will result in trench cuts that further shorten the life of the pavement. As a result, v Q buried infrastructure receives a benefit for which it should provide funding. The analysis included in Appendix 1 shows the steps involved in determining the Water a 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 r streets for the benefit of the Water Enterprise. From this data, right-of-way and street 3 maintenance fees were established for FY 2016-17; the calculation of the total cost, N based on budgeted expenditures at the time of the study result in an allocation of $1,520, 115, Of this amount, only $592,873 is proposed to be allocated to the Water 0 Department through the MSA. This is due to lighter expenditures anticipated to be c incurred for pavement construction and maintenance than budgeted during the period. a 0. a c d E r v Q Packet Pg.88 9.c EXHIBIT "A" -a c MASTER SERVICES AGREEMENT =a �a c a� m 4. RATE SETTING AUTHORITY: This Master Services Agreement shall authorize the Water Board, on the behalf of the Mayor and City Council, the authority to study, analyze and establish utility enterprise rates for Water, Sewer Collection, and Sewer 0 Treatment. v c m 5. TERM: This Master Services Agreement shall be effective July 1,2016 through June 30,2017. m r 6. ANNUAL FRANCHISE FEE: The above sections of the MSA define the costs associated with support services, public safety, right-of-way and direct billed 4) services. Total costs during this agreement are as follows: a, a ROW & Street v) Fiscal Year Public Safety Maintenance Totals w FY 2016-17 $2,673,127.00 $592,873.00 $3,266,000.00 w 0 0 a a Q 0 M O N N H Z W 2 U a Q m A t 3 a w 0 0 CL 0. a r C m E s U R Q Packet Pg. 89 9.c EXHIBIT "A" c �a MASTER SERVICES AGREEMENT °c R F By and between the City of San Bernardino and the Water Board of the City of San Bernardino for m the provision of City services for Fiscal Year 2016/2017. c R 0 WATER BOARD OF THE Y CITY OF SAN BERNARDINO c m m 4) Date: Toni Callicott, President m r c m E m Date: Robin L. Ohama, Secretary a, CITY OF SAN BERNARDINO Q d it d Date: Mark Scott,City Manager d N t0 APPROVED AS TO FORM: o �a 0 0. By: Gary D. 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