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HomeMy WebLinkAboutAGENDA BACKUP 10-02-86 . Centra~'-':ontra Costa Sanitary --'istrict dOARD OF DIRECTORS PAGE 1 OF 1 NO. v. CONSENT CALENDAR 12 POSITION PAPER BOARD MEETING OF SUBJECT DATE ADVISE THE BOARD OF THE a.OSE OUT OF DISlRICT PROJ ECT 2773, ULFINIAN WAY, AND RETURN $317 TO THE SEWER roNSlRUCTION FUND Se tember 23 1986 TYPE OF ACTION INFORMATIONAL SUBMITTED BY INITIATING DEPT./DIV. Jay S. McCoy, Construction Div. Mana er ./Construction Div. ISSUE: All work has been completed on the Ulfinian Way Project and this project can now be closed. BACKGROUND: A portion of the 01 d Martinez sewer system in the area of Ulfinian Way was located under two buildings. The Ulfinian Way Sewer Project was created for the purpose of relocating the existing sewers frcm under the buildings. The maj ori ty of the fiel d survey desi gn and easement acqui si ti on for the proj ect was performed under Project No. 27Z3. The actual construction of the sewer relocation was recently completed under another project. The total budget for Project No. 2773 was $16,378. The total cost of the work performed under this project was $16,061. The remaining balance of $317 is being returned to the sewer construction fund and District staff will now take action to close out the proj ect. REroM~NDATION : is necessa ry. This item is presented to the Board for information. No action REVIEWED AND RECOMMENDED FOR BOARD ACTION f1rfiJ RAB . Centra. Contra Costa Sanitar District .. BOARD OF DIRECTORS PAGE 1 OF 1 NO. v. CONSENT CALENDAR 13 POSITION PAPER BOARD MEETING OF SUBJECT DATE ADVISE THE BOARD OF THE QOSE OUT OF DISTRICT PROJ ECT 4267, ~NTE V ISTA SEWER REOONSTRUCTION, AND RETURN $4,947 TO THE SEWER OONSTRUCTION FUND TYPE OF ACTION INFORMATIONJ'L SUBMITTED BY INITIATING DEPT.lDIV. , Construction Div. Mana er ./Construction Di ISSUE: All work has been completed on the Monte Vista Sewer Project and this proj ect can now be closed. BACKGROUND: A property Ot/ner, Frederic Miller, is building his hane at 51 Monte Vista Road in Orinda. The lot is very small and the new hane was located on the edge of the existing ten foot wide sanitary sewer easement. The Ot/ner had pier hol es dri 11 ed for the foundati on of the hane along the edge of the easement. The existing sewer pipeline was broken at three of the pier locations. The al ignment of the existing sewer was checked in the field and found to be outside of the easement. Once the location was confirmed, a project was created to immediately address the probl Em and mi nimize the del ays to the Ot/ner's work. A $10,000 General Manager-Chief Engineer authorization was initiated to pay for the reconstruction of the existing sewer. Roto-Rooter did the work which is complete. The total cost of the project was $5,053. Staff is closing out the project which will result in $4,947 being returned to the Sewer Construction Fund. REOOMMENDATION: This item is presented to the Board for information. No action is necessary. REVIEWED AND RECOMMENDED FOR BOARD ACT/ON RAB . Centra~ ~ontra Costa Sanitary."listrict tJOARD OF DIRECTORS PAGE 1 OF 1 POSITION PAPER BOARD MEETING OF October 2, 1986 NO. v. CONSENT CALENDAR 14 SUBJECT EXEQJTE GRANT Of EASE~NT FROM CX>NTRA CX>STA CX>UNTY fOR PROPERTY RIGHTS IN WALNUT CREEK, DANVILLE, AND SAN RAMON ,GREAS; PARCELS 15,16,32,49 lHROUGH 55,57, 59, 61 THROUGH 66, DISTRICT PROJ ECT 3733 FOR FUTURE TRUNK SEWERS IN lHE S. P. R. R. RIGHT-Of-WAY DATE Se tember 24, 1986 TYPE OF ACTION APPROVE EXECUTION OF EASEMENT SUBMITTED BY INITIATING DEPTJDIV. Jay S. McCoy, Construction Div. Manager Construction Div./Engineering Dept. ISSUE: It is necessary to execute the subj ect document to create permanent easement rights for the District's existing trunk sewers and future trunk sewers in the old Southern Pacific Railroad (S.P.R.R.> Right-of-Way fran Walden Road to Ygnacio Valley Road and fran Hartz Avenue to the Larwin Pump Station. BACKGROUND: All of the District's sewer facil ities located within the S.P.R.R. Right-of-Way were installed under License Agreements with the Southern Pacific Rail road Company. The District pays annual fees for this use. After Southern Pacific ceased operations in their "San Ramon Branch," the District determined that permanent easemen1s for our sewer faciliti es had to be acqui red. Contra Costa County, other publ ic agenci es, and uti 1 ity compani es desi red to purchase rights in the S.P.R.R. Right-of-Way as a north-south transportation and util ity corridor. By mutual agreement, the County took the lead in purchasing the entire right-of-way and on December 3, 1985, granted the District easement rights through Walnut Creek into Danvi1le. At the same time, the County and the District executed a Purchase Agreement for the granti ng of additi onal easements in other areas to the District after the fee title was acquired by the County. The District acquired the first portion of the additional easements in May of this year. The County has now acquired fee title for the majority of the remaining additional easement areas, and it is now appropriate to process the subject Grant of Easement. The previous Purchase Agreement establ ished a purchase price of $2,150,000 for this Grant of Easement. funds for this purchase were authorized by the Board on December 3, 1985. The granting of this easement will establ ish permanent sanitary sewer easement rights fran Monument Boulevard south to the Larwin Pump Station except for small areas in Pleasant Hill and Danville which are still in the process of being acquired by the County. At the conclusion of this transacti on, the Di stri ct w ill have pai d the county $5,300,000 of the total $5,400,000 purchase price establ ished in the Purchase Agreement. RECX>MNDATION: Approve the executi on of the subj ect Grant of Easement, receive said easement for recording and adopt a resolution to that effect. REVIEWED AND RECOMMENDED FOR BOARD ACTION . Centr Contra Costa Sanita, District BOARD OF DIRECTORS PAGE 1 OF POSITION PAPER BOARD MEETING OF October 2. 1986 NO. VI. ENGINEERING 1 SUBJECT AUTHORIZE $45,390 IN SEWER CONSTRUCTION FUNDS FOR LEGAL ASSISTANCE DURING AUDIT OF THE ST~E SA-I AND SA-II PROJ ECTS DATE September 26. 1986 TYPE OF ACTION AUTHORIZE FUNDS SUBMITTED BY Curtis W. Swanson Principal Engineer INITIA TING DEPT./DIV. Engineering Department/ Engineering Division ISSUE: Additional funds are required for continued legal assistance during audit of the Stage 5A-I and 5A-II Projects. BACKGRClJND: Over a th ree-year peri od the Di stri ct negotiated an agreement to terminate federal and state grants for the Stage 5A-I and 5A-II projects with the Environmental Protection Agency (EPA) and State Water Resources Control Board (SWRCB) . The grant Terminati on Agreement was negoti ated simul taneously with the Stage SA-I constructi on cl aim settl ement between Peterson/Simpson, BrOfin and Caldwell, and the District. Under the Termination Agreement, which was approved by EPA on December 12, 1985, the District is eligible to receive $54,315,000 and $14,545,000 in federal and state grant funds for the two projects. The Termination Agreement is subject to audit by EPA. The audit needs to be completed so that an EPA final determination is made by December 1, 1986, the date by when funds must be paid among the three parties of the Stage 5A-I construction claim settl ement. In January 1986 the Board authorized $140,000 from the Sewer Construction Fund for force account, legal, and consultant services during the audit. An additional $45,390 is needed for audit-related services through December 1986. The original authorizati on, current expenditures, and anti ci pated expenditures are summarized in Attachment 1. Legal services exceeded the original budget due to the unanti ci pated efforts necessary to conv ince EPA and SWRCB to expedite the audit process. These efforts w ill conti nue over the next two months. Legal serv ices have and w ill be requi red to respond to the auditors' questi ons regardi ng the claim settlement and grant termination process. The level of services from the financial and engineering consultants will be belOfi that approved by the Board in January. Staff proposes to use a portion of the funds originally authorized for these consultants to cover part of the legal costs over the next three months. In addition to this transfer of funds, an additional $45,390 will be requi red for legal assistance during the audit through December 1986. RECOMMENDATION: Authorize $45,390 in Sewer Construction Funds for continued legal assistance during the audit of the Stage 5A-I and 5A-II Projects. REVIEWED AND RECOMMENDED FOR BOARD ACTION 1302...9/85 CWS JEC DRW RAB N \; f ~ A),tuj P1JP Attachment 1 CENlRAL CONlRA COSTA SANITMY DISlRICT STAGE SA-I GRANT AlJUNISlRATION SUMMARY OF FUNDS REQUESTED Ori 9i nal Anticipated Additional Budget Expended Through Funds ll!!!! 1/16/86 To Date 12/86 Total RElQ uested Consul tants Mai n Hurcinan $ 30,000 $ 4,324 $ 10,800 $ 15,124 ($14,876) Larry Walker Associates 18,000 6,883 5,700 12,583 ( 5,417) Aubrey C. Russell 16,500 2,120 9,600 1l,720 ( 4,780) Thomas Kawaguchi 5,000 380 800 1,180 ( 3,820) Lega 1 25,000 34,366 80,320 114,686 89,686 Force Account District Staff 29,000 13 ,929 13 ,680 27,609 ( 1,391> Temporary Clerical 3,500 1,760 -0- 1,760 ( 1,740) Supplies/Services 1,500 428 300 728 ( 772) Conti ngency 11 ,500 11 ,500) $140,000 S64,190 $121,200 S185,390 $45,390 . Centrl. Contra Costa Sanitar. District BOARD OF DIRECTORS PAGE 1 OF 2 POSITION PAPER BOARD MEETING OF October 2, 1986 NO. VI. ENGINEERING 2 SUBJECT AUTHORIZE THE GENERAL MANPGER-CHIEF ENGINEER 10 EXECUTE AN PGREEtvf:NT WITH THE OONTRA OOSTA WATER DISTRICT AND CWC-HDR, INC.; AUTHORIZE $88,566 FROM THE SEWER CONSTRUCTION FUND FOR WATER RECLAMATION STUDY, DISTRICT PROJ ECT 20026 DATE September 26, 1986 TYPE OF ACTION AUTHORIZE PGREEMENT AUTHORIZ E FUNDS SUBMITTED BY INITIATING DEPT.lDIV. James M. Kelly, Planning Division Mgr. Engineering Dept./Planning Division ISSUE: Board approval is required to authorize sewer construction funds for a joint study of water reclamation with Contra Costa Water District (CCWD). Board approval is also required to execute an agreement with CCWD and CWC-HDR, Inc. (formerly Culp, Wesner, and Culp) for the joint study and engineering services. BACKGROUND: Portions of the Stage SA Project were originally planned and designed as a water recl amati on facil ity because of a State Water Resources Control Board (SWRCB) and Environmental Protection Agency (EPA) requirement to implement reclamation. Although the reclamation facilities were constructed, implementation of a large-scale reclamation project has not been possible for a variety of reasons. The District has negotiated a termination agreement for the Stage SA Grant with the EPA and the SWRCB. One of the conditions of this agreement was that the District study and promote the cost-effective use of reclaimed water and, if possibl e, make use of the recl amation facil ities funded under the Stage SA Grant. The Board has previously authorized $20,000 to cover staff and other costs to develop a scope of work for a water reclamation study. The District has proposed to CCWD that a joint project be undertaken to study water reclamation within each agency's service area as a step toward implementing a practical joint water reclamation project. A joint task force of CCWD and District staff has worked together to develop a scope of work and a project management approach for the water recl amati on study. The consul tant fi rm of CWC-HDR, Inc. with James M. Montgomery Consulting Engineers, Inc. (JMM) as a subcontractor has been selected to conduct the water reclamation study. The CWC-HDR, Inc./JMM team was selected based upon their successful completion of water reclamation related projects for both CCCSD and CCWD. The water reclamation study will satisfy the grant termination conditions for the Stage SA project. The study incl udes reviewing past local and regional successful reclamation projects, making contact with State water officials and potential users, defining water qual ity criteria required by type of use, identifying markets for reclaimed water, and investigating funding sources for a reclamation project. If the study identifies a viable water reclamation project, a follow-up REVIEWED AND RECOMMENDED FOR BOARD ACTION :J~NKT/DIV. 1m? 130211.9/85 JMK RAB AN SUBJECT AUTHORIZE lHE GENERAL MANJlGER-CHIEF ENGINEER TO EXECUTE AN NJREEMENT WITH THE (x)NTRA (X)STA WATER DISTRICT AND CWC-HDR, INC.; AUTHORIZE $88,566 FROM THE SEWER CONSTRUCTION FUND FOR WATER REClAMATION STUDY, DISTRICT PROJ ECT 20026 POSITION PAPER PAGE 2 OF 2 DATE September ~6, 1986 project will be required. This follow-up project would pilot test the potential water treatment process and coul d incl ude a full-scal e demonstration of water reclamation for industrial cooling water. The proposed agreement between the District and CCWD calls for all consultant costs to be evenly divided, and for the technical direction of the project be jointly conducted by Robert A. Baker for the District and John Gregg, acting General Manager for CCWD. A lump sum contract of $117,132 has been negotiated with CWC-HDR, Inc./JMM for the study phase of the water reclamation project. The District's share of the contract is $58,566. There is a $30,000 request for District force account cost, to bring the total authorization requested from the Sewer Construction Fund for the Study to $88,566. Including a previous $20,000 authorization, the total authorization for the project would be $108,566. This project is included in the 1986-87 Capital Improvement Plan (CIP) under the tit1 e Wastewater Recl amati on. The proj ect is descri bed on the next to the 1 ast page of Priority A projects in the CIP. RECOMMENDATION: Authorize the General Manager-Chief Engineer to execute an agreement with CCWD and CWC-HDR, Inc. for the water recl amation study. Authorize $88,566 from the Sewer Construction Fund. '-------. 13028-9/85 . Centr&. Contra Costa Sanitar District . BOARD OF DIRECTORS PAGE 1 OF23 POSITION PAPER BOARD MEETING OF NO. October 2, 1986 VII. PERSONNEL 1 SUBJECT AUTHORIZE THE ADOPTION OF A RESOLUTION TO APPLY FOR EXCLUSION OF EMPLOYEE RETIREMENT CONTRIBUTIONS FROM EMPLOYEE GROSS INCOME UNDER THE PROVISIONS OF INTERNAL REVENUE CODE, SECTION 414 (H) (2) AND THE CALIFORNIA GOVERNMENT CODE, SECTION 31581.2 DATE September 24, 1986 TYPE OF ACTION ADOPT RESOLUTION SUBMITTED BY INITIATING DEPT./DIV. Paul Morsen, Deputy General Manager Administrative Department ISSUE: Board adoption of a resolution is necessary to authorize an application to the Internal Revenue Service which, if approved, woul d excl ude employee contributions to the retirement system from employee gross income and defer taxes on such contributions. BACKGROUND: The County Retirement Plan, in which the District is a participant, has appl ied to the Internal Revenue Service <IRS) for a ruling that woul d enabl e the exclusion of employee contributions to the retirement from employee gross income. If this application is approved--and we are told by county officials that approval is expected and imminent--those entities, such as the District, who participate in the County's retirement plan, would have the option to apply to the IRS (under Revenue Taxation Code Section 414 <H> <2>) for approval to have employee contributions to the retirement plan excluded from gross income. The result of this change woul d be that employees woul d not have federal and state income taxes withheld from their portion of contributions to the retirement plan and would have such contributions excluded from their wages reported on W-2 forms. Section 414 (H) (2) of the Internal Revenue Code and the California Government Code Section 31581.2 authorizes the "pick up" of reti rement contributions by the District on behalf of employees for the sole purpose of deferring income taxes thereon. The amount "picked up" shall be recouped through an offset against the sal ary of each employee whose contribution is "picked up." This offset is akin to a reduction in salary and shall be made solely for purposes of income tax reporting and withhol di ng. The employee contributi on "picked up" by the Di strict shall be treated as compensation paid to employees for all other purposes. The Myers - Mili as - Brown Act requi res that pri or to maki ng a change in employee hours, wages or working conditions, it is necessary to meet and confer with representatives of employee bargaining units. The change in the retirement plan involves employee salary and therefore requires meet and confer prior to implementation. Board representatives have met and conferred with all three bargaining groups. Representatives of the Central Contra Costa Sanitary District Employees Association Local #1, Management Support/Confidential Group, and the Management Group, have signed letters with District representatives indicating their willingness to have this program implemented. REVIEWED AND RECOMMENDED FOR BOARD ACTION SUBJECT AUTHORIZE THE ADOPTION OF A RESOLUTION TO APPLY FOR EXCLUSION OF EMPLOYEE RETIREMENT CONTRIBUTIONS FROM EMPLOYEE GROSS INCOME UNDER THE PROVISIONS OF INTERNAL REVENUE CODE, SECTION 414 (H) (2) AND THE CALIFORNIA GOVERNMENT CODE, SECTION 31581.2 POSITION PAPER PAGE ? OF 23 DATE Seotember 24, 1986 County officials have told District staff that all of the County bargaining units have signed-off with the exception of one unit, and that sign-off from this unit is expected in the next several days. Consequently, it is anticipated that the County's application will go forward in the very near future. If the Board approves this recommended action, the District Counsel and the Finance Officer will complete the appl ication to the IRS for implementation of this program. A copy of the IRS application is attached for the Board's information. It is anticipated that the effective start-up date will be January 1,1987. There will be no costs to the District for this program. RECOMMENDATION: Adopt the attached resolution and authorize District staff to apply to the IRS under IRS Code Section 414 (H) (2) to allow employee contribution to the retirement system to be excluded from gross income. --------- 13028-9/85 RESOLUTION NO. A RESOLUTION EXCLUDING EMPLOYEE RETIREMENT CONTRIBUTIONS FROM EMPLOYEE GROSS INCOME UNDER THE PROVISIONS OF THE INTERNAL REVENUE CODE OR THE CALIFORNIA GOVERNMENT CODE WHEREAS, Secti on 414( h) (2) of the Internal Revenue Code, empowers employers to "pick up" retirement contributions on behalf of employees; and WHEREAS, such contributions are not included in the employee's gross income in the year in which such amounts are contributed by the employer, and WHEREAS, such amounts are incl udabl e in the gross income of the employee, or beneficiary, in the taxable year in which such amounts are distributed; and WHEREAS, ~ 17501 of the Revenue and Taxation Code incorporates the provisions of IRC ~ 414(h)(2); and WHEREAS, Government Code ~ 31581.2 authorizes the District to "pick up", for the sole purpose of deferring income taxes thereon, the normal contributions made by District employees NOW, THEREFORE, BE IT RESOLVED THAT: The District finance officer shall implement the "pick up" of District-paid member contributions to the Contra Costa County Employees' Retirement Association Retirement System effective on the earliest payday acceptable to the administrator of the Contra Costa County Employees' Retirement Association Retirement System and further provided that an IRS letter of qualification of the Retirement Plan and an IRS ruling letter have been received by the District prior to that date. 1. The District shall make member contributions on behal f of district-paid employees which shall be in lieu of contributions by said employees to the Contra Costa County Employees' Retirement System. Such contributions shall be treated as employer contributions for purposes of reporting and wage withholding under the Internal Revenue Code and the Revenue and Taxation Code. 2. The amount "picked up" under ~ 414 (h)(2), shall be recouped through an offset against the salary of each employee for whom the District "picks up" member contributions. This offset is akin to a reduction in salary and shall be made solely for purposes of income tax reporting and withholding. The member contributions "picked up" by the District shall be treated as compensation paid to employees for all other purposes. 3. District-paid employer contributions to the Contra Costa County Employees Retirement System shall be paid from the same source of funds as used in paying the salaries of the affected emp 1 oyees. 4. No employee shall have the option to receive the District employer contri buted amounts di rectl y instead of hav ing them paid to the Contra Costa County Employees' Retirement System. 5. The District paid member contributions shall be reported to the Contra Costa County Employees' Retirement System as employer-paid normal contributions; such contributions will be credited to the employee's account in the Contra Costa County Employees' Retirement Fund. This Resol uti on shall remain in effect until superseded, or until such time as employer paid employee retirement contributions are no longer excludable from employee gross income under the provisions of the Internal Revenue Code or the California Government Code. PASSES AND ADOPTED this 2nd day of October, 1986, by the District Board of the Central Contra Costa Sanitary District by the following vote: AYES: MEMBERS: NOES: MEMBERS: ABSENT: MEMBERS: President of the Board of Directors, Central Contra Costa Sanitary District, County of Contra Costa, State of California COUNTERSIGNED: Secretary of the Central Contra Costa Sanitary District, County of Contra Costa, State of California Approved as to October 3, 1986 Internal Revenue Service Mr. Alan Pipkin, Chief Rulings and Qualifications Branch 1111 Constitution Avenue, N .W. Washington, DC 20224 SUBJECT: CENTRAL CONTRA COSTA SANITARY DISTRICT EMPLOYEES' AND CONTRA COSTA COUNTY EMPLOYEES' RETIREMENT PLAN Dear Sir: This office, on behalf of Central Contra Costa Sanitary Dis- trict, respectfully requests the issuance of a ruling on the applicability of Sec. 414(h) (2) of the Internal Revenue Code (26 USCA SS414 (h) (2) to employee contributions made to the Contra Costa County retirement system ("PLAN"). This request is made pursuant to the provisions of Revenue Proce- dure 80-24 (Internal Revenue Cumulative Bulletin 1980, p. 658, et seg.) and, in conformance with Sec. 6.01 of Revenue Procedure 80-24, is submitted in duplicate. , . STATEMENT OF RELEVANT FACTS Contra Costa County has established and maintained the PLAN for its officers and employees and officers and employees of special districts and agencies governed by the County Board of Supervisors in accordance with the provisions of the Coun- ty Employees' Retirement Law of 1937, as amended (California Government Code Section 31450 et seg.). The plan is also maintained for officers and employees of other public agen- cies within Contra Costa County, including Central Contra Costa Sanitary District. Contra Costa County has applied for a ruling for its employees and officers in a separate re- quest, therefore, this request is made solely on behalf of Central Contra Costa sanitary District employees and offi- cers. You are asked to assume that the pension PLAN meets the criteria of Sec. 401 (a) of the Internal Revenue Code (26 USCA Sec. 401{a}) defining qualified pension plans. Contra Costa County Employees' Retirement Association is currently in the process of seeking a qualification letter from the San Francisco District Office concerning the PLAN. The plan requires participation of all permanent employees scheduled to work at least one half of full time. County participants earn benefits under the PLAN in accor- dance with one of three levels, and/or duties and age at Mr. Alan Pipkin, ~nief Re: Retirement Plan october 3, 1986 Page 2 entry. All Central Contra Costa Sanitary District partici- pants earn benefits under the same benefit level, for adminis- trative purposes known as "First Tier General Category". The employee contribution rates range from 6.54 percent through 8.00 percent of compensation, depending upon entry age. This request pertains to the question of the applicability of Sec. 414 (h) (2) to employee contributions made by the Cen- tral Contra Costa Sanitary District on behalf of participat- ing employees, as hereinafter discussed. At present, the amount of the employee contribution is included within gross income and constitutes taxable income to the employee for the year in which it is paid. Central Contra Costa Sanitary District presently pays one-half (1/2) of the basic contribu- tions required of the employees for the Contra Costa County Employees' Retirement Association Plan. Central Contra Costa Sanitary District has passed a resolution and adopted side letters to permit Central Contra Costa Sanitary District, as employer, to pick up the balance of employee contributions to the retirement system by means of an equivalent reduction in salary. This will result in the exclusion of such amounts from the computation of the employee's gross income, and in the deferred taxation of such amounts. The implementation of this resolution is dependent upon a ruling by the Internal Revenue Service that, pursuant to Sec. 414(h) (2) of the Internal Revenue Code, such amounts may be excluded from the computation of the employee's gross income and taxation de- ferred on such contributions until distributed. A copy of the Resolution is attached. In summary, the Salary Resolution and side letters to Memoran- da of Understanding of Central Contra Costa sanitary District provide that Central Contra Costa Sanitary District, as em- ployer, may pick up employee contributions through a reduc- tion in employee salary. This issue is not being considered in any field office of the Internal Revenue Service in connection with an active examina- tion or audit of a tax return already filed. The district office of the Internal Revenue Service with jurisdiction over the tax return filed by County employes is located in San Francisco, CA. The Central Contra Costa Sani- tary District taxpayer identification number is 94-6000257. RULINGS REQUESTED The following rulings are requested: Mr. Alan Pipkin, Cnief Re: Retirement Plan October 3, 1986 Page 3 1. No part of the amount of the pick-up by Central Con- tra Costa Sanitary District, as employer , constitutes gross income to the employee on whose behalf the pick- up is made. 2 . No part of the amount of the pick-up by Central Con- tra Costa Sanitary District constitutes wages from which Central Contra Costa Sanitary District, as employ- er, must deduct and withhold a tax in accordance with Sees. 3401-3404 of the Internal Revenue Code. 3. A distribution of the pick-up, ei ther through a re- tirement distribution of employer contributions or a lump sum paYment, is taxable under Sec. 402 of the code. 4. The pick-up may be made through a reduction in salary or through an offset against future salary increases or a combination of both, and does not have to be made in any particular manner. 5. The language contained in the proposed salary resolu- tion and side letters satisfy the requirements of Sec. 414(h) (2) of the Internal Revenue Code. AUTHORITY FOR THE DETERMINATION We believe that legal authority for the requested determina- tion is contained in Sec. 414 (h) of the Internal Revenue Code. House Report 93-807 (1974 U.S. Code Congo & Ad. News 4670, at 4810) which addressed the provisions of Sec. 414(h) (2), states in relevant part, as follows: "However, some state and local government plans desig- nate certain amounts as being employee contributions even though statutes authorize or require the relevant governmental units or agencies to 'pick up' some of all of what would otherwise be the employee's contribution. In other words, the governmental unit pays all or part of the employee's contribution, but does not withhold this amount from the employee's sala- ry. In this situation the portion of the contribution which is 'pick up' by the government is, in substance, an employer contribution for purposes of Federal tax law, notwithstanding the fact that for certain purposes of State law the contribution may be designated as an employee contribution. Accordingly, the bill provides in the case of a government pick-up plan, that the portion of the contribution which is paid by the govern- Mr. Alan Pipkin, vnief Re: Retirement Plan October 3, 1986 Page 4 ment , with no withholding from the employee's salary, will be treated as an employer contribution under the tax law." Previous rulings of the Internal Revenue Service also support the determination requested. In particular, Revenue Rul ing 81-36 established two criteria for determining whether employ- ee contributions may be treated as employer contributions for the purposes of Sec. 414(h))2) of the Internal Revenue Code. Firstly, the employer must specify that the contribu- tions are paid in lieu of contributions by the employee. Secondly, the employee must not be given an option to receive such amounts directly rather than having such amounts paid by the employer into the pension plan. The resolution and side letters of Central Contra Costa Sanitary District clearly indicate that the employer pick-up, when implemented, is in lieu of employee contributions to the plan. Participation in the retirement system is mandatory for permanent employees, scheduled to work at least 1/2 of full time, and, once partic- ipating in the system, employees would not have the option of receiving contributory amounts directly. Revenue Ruling 81-35 distinguishes the situation where the employee may exercise an option to have funds contributed to a pension plan or to receive them directly. Revenue Ruling 81-35 is not applicable to the PLAN since an option would not exist under the provisions of the proposed resolution and side letters to the Memoranda of Understanding. SUPPORTING DOCUMENTATION Enclosed with this request is a copy of the Central Contra Costa Sanitary District Salary Resolution. In addition, enclosed is a copy of a letter dated January 14, 1873, from William T. Allen, Chief, Employee Plans, Technical Branch, of the Internal Revenue Service Office in washington, D.C., to the Office of the County Counsel of Los Angeles. In this letter, Mr. Allen gives a favorable determi- nation ruling to a Los Angeles County request which is nearly exact in content to this request. Both the Los Angeles Coun- ty Employees' Retirement Association plan and Contra Costa County Employees' Retirement Association PLAN are enacted and administered pursuant to the provisions of the County Employ- ees' Retirement Law of 1937, as amended (California Govern- ment Code Sec. 31450 et seg.). Also enclosed is a copy of a letter dated December 14, 1983 to Sacramento County giving similar rulings. Sacramento is also covered by the County Employees' Retirement Law of 1937. Therefore, consistent Mr. Alan Pipkin, Chief Re: Retirement Plan October 3, 1986 Page 5 application of the Internal Revenue Service Code would seem to require a similarly favorable determination ruling upon this request. DECLARATIONS Enclosed on separate sheets are the necessary attestation and Statement of Proposed Deletions. Very truly yours, Walter Funasaki Finance Officer CENTRAL CONTRA COSTA SANITARY DISTRICT WF: Is Enclosures STATEMENT OF PROPOSED DELETIONS None of the information contained in this request is confiden- tial, and, therefore, no information needs to be deleted other than the taxpayer identification numbers. By: Walter Funasaki, Finance Officer CENTRAL CONTRA COSTA SANITARY DISTRICT DECLARATION Under penalty of perjury, I declare that I have examined this request, including accompanying documents, and to the best of my knowledge and belief, the facts presented in support of the requested ruling or determination letter are true, cor- rect, and complete. Date: By: Walter Funasaki, Finance Officer CENTRAL CONTRA COSTA SANITARY DISTRICT Central Contra Costa Sanitary District 5019 Imhoff Place, Martinez, CA 94553-4392 (415)689-3890 ROGER J. DOlAN Genera' Manager Chief Engineer August 27, 1986 JAMES L HAZARD Counsel tor the District (4151938-1430 JOYCE E McMlUAN ~retary of the District Mr. James Belcher President Management Support/Confidential 5019 Imhoff Place Martinez, CA 94553 G rou p Dear Mr. Belcher: This side letter confirms an agreement to add the following provisions to the existing Memorandum of Understanding between the parties hereto. 1. Pursuant to the existing Memorandum of Understanding the Central Contra Costa Sanitary District presently pays one-hal f of the contri buti ons requi red of its employees for the Contra Costa County Employees' Retirement System. The District proposes to assume payment of the balance of each employee's required contributions to the Contra Costa County Employees' Retirement System by the means of an equivalent reduction in each employee's salary. Such contributions are treated as employer contributions for federal income tax purposes if approved by the I.R.S. under Sections 401 and 414(h)(2) of the Internal Revenue Code. The proposed salary reduction is intended to result in the exclusion of the reduced amounts from the computation of the employees' gross income for tax purposes and in the deferred taxation of such amounts when they are pai d to the employees. The proposed acti on constitutes a wage adj ustment. The proposed payment of reti rement contri but ions by the employer for the employee is hereinafter referred to as a "pickup." 2. Contra Costa County has appl ied for a determination by the Internal Revenue Service as to whether or not the Contra Costa County Employees' Retirement System is qualified under Section 401 of the Internal Revenue Code. (26 U.S.C. S401a) 3. Central Contra Costa Sanitary District will apply to the I.R.S. for a rul ing on the appl icabil ity of Section 414( h)(2) of the Internal Revenue Code to the proposed plan set forth below for pick-up of employee contributions to the Retirement Fund. The following specific rulings will be sought concerning the plan. a) No part of a proposed pick-up by the District, employer, constitutes gross income to the employee on whose behal f the pickup is made. Mr. James Belcher Page 2 August 27, 1986 b) No part of the amount of the pick-up by the District constitutes wages from which the Di strict, as employer, must deduct and w ithhol d a tax in accordance with Secs. 3401-3404 of the Internal Revenue Code. c) A distribution of the pick-up to the employee either through a retirement distribution of employer contributions of a lump sum payment is taxable under Section 402 of the Code. d) The pick-up may be made through a reduction in sal ary, or through an offset against future salary increases or a combination of both, and does not have to be made in a particular manner. e) The language contained in a proposed Board of Directors resolution satisfies the requirements of section 414(h)(2) of the Code. 4. The plan requires that all permanent employees scheduled to work at least half time participate. 5. The pick-up of employee contributions by the employer under this pl an will be pai d from the same source of funds as used in paying the wages of affected employees. 6. Employer payments under the plan on account contributions will be treated for all other purposes, taxation, in the same way and to the same extent contributions made prior to the implementation of the plan. 7. No provision of the plan shall be construed so as to permit or extend to affected employees a right to directly receive the contributions made by the employer under this plan, instead of having them paid to the retirement fund. of employee other than as employee 8. The plan will provide that when an employee separates from the District and collects his or her contribution or receives a pension, he or she will be required to pay federal and state taxes on the contri butions made pursuant to the pl an which were not taxabl e at the time the contributions were made. 9. This plan will be implemented only as long as the District pick-up of employee contributions continues to be excludable from gross income of the employee under the provisions of the Internal Revenue Code and is otherwise permitted by law. 10. Application for approval of the plan and implementation thereof will be made by the District if and only if all recognized employee organizations execute this side letter which incorporates these provisions in the memorandum of understanding. Implementation of the plan is contingent upon approval by the I.R.S. Mr. James Belcher Page 3 August 27, 1986 If the organization, below. foregoing is agreed to by the above-named employee please show its acceptance by an authorized signature Dated 1/2;'/& Approved: Central Contra Costa Sanitary District ::nagement SUPPO~~~l Group By Central Contra Costa ::nf~t Central Contra Costa Sanitary District 5019 Imhoff Place, Martinez, CA 94553-4392 (415)689-389O September 25, 1986 ROGER J. DOLAN c;"neral Mana~r Chief Engineer JAMES L HAZARD Counsel for the Di'tria 1415)938-1430 JOYCE E McMIllAN Secretary of the Distria Mr. Dave Williams Management Group 5019 Imhoff Place Martinez, CA 94553 Dear Mr. Williams: This side letter confirms an agreement to add the following provisions to the existing Memorandum of Understanding between the parties hereto. 1. Pursuant to the existing Memorandum of Understanding the Central Contra Costa Sanitary District presently pays one-hal f of the contributions required of its employees for the Contra Costa County Employees' Retirement System. The District proposes to assume payment of the balance of each employee's required contributions to the Contra Costa County Employees' Retirement System by the means of an equivalent reduction in each employee's salary. Such contributions are treated as employer contributions for federal income tax purposes if approved by the 1. R. S. under Secti ons 401 and 414( h)(2) of the Internal Revenue Code. The proposed salary reduction is intended to result in the exclusion of the reduced amounts fram the computation of the employees' gross income for tax purposes and in the deferred taxation of such amounts when they are paid to the employees. The proposed action constitutes a wage adjustment. The proposed payment of retirement contributions by the employer for the employee is hereinafter referred to as a "pickup." 2. Contra Costa County has applied for a determination by the Internal Revenue Service as to whether or not the Contra Costa County Employees' Retirement System is qualified under Section 401 of the Internal Revenue Code. (26 U.S.C. S401a) 3. Central Contra Costa Sanitary District will apply to the I.R.S. for a ruling on the applicability of Secti on 414( h) (2) of the Internal Revenue Code to the proposed plan set forth below for pick-up of employee contributions to the Retirement Fund. The following specific rulings will be sought concerning the plan. a) No part of a proposed pick-up by the District, employer, constitutes gross income to the employee on whose behal f the pickup is made. Mr. Dave Williams Page 2 August 27, 1986 b) No part of the amount of the pick-up by the District constitutes wages from which the District, as employer, must deduct and withhol d a tax in accordance with Secs. 3401-3404 of the Internal Revenue Code. c) A distribution of the pick-up to the employee either through a retirement distribution of employer contributions of a lump sum payment is taxable under Section 402 of the Code. d) The pick-up may be made through a reduction in salary, or through an offset against future salary increases or a combination of both, and does not have to be made in a particular manner. e) The language contained in a proposed Board of Directors resolution satisfies the requirements of section 414(h)(2) of the Code. 4. The plan requires that all permanent employees scheduled to work at least half time participate. 5. The pick-up of employee contributions by the employer under this plan will be paid from the same source of funds as used in paying the wages of affected employees. 6. Employer payments under the plan on account contributions will be treated for all other purposes, taxation, in the same way and to the same extent contributions made prior to the implementation of the plan. of employee other than as employee 7. No provision of the plan shall be construed so as to permit or extend to affected employees a right to directly receive the contributions made by the employer under this plan, instead of having them paid to the retirement fund. 8. The plan will provide that when an employee separates from the District and collects his or her contribution or receives a pension, he or she will be required to pay federal and state taxes on the contributions made pursuant to the plan which were not taxable at the time the contributions were made. 9. This plan will be implemented only as long as the District pick-up of employee contributions continues to be excludable from gross income of the employee under the provisions of the Internal Revenue Code and is otherwise permitted by law. 10. Application for approval of the plan and implementation thereof will be made by the District if and only if all recognized employee organizations execute this side letter which incorporates these provisions in the memorandum of understanding. Implementation of the plan is contingent upon approval by the I.R.S. Mr. Dave Williams Page 3 August 27, 1986 If the organization, be 1 ow. foregoing is agreed to by the above-named employee please show its acceptance by an authorized signature Dated _~W'k." c29, /98& Approved: Central Contra Costa Sanitary District Management Group Central Contra Costa Sanitary District By ;{)a-tA:d~' tu'~~ BydocJ~.mc~ By Central Contra Costa Sanitary District 5019 Imhoff Place. Martinez, CA 94553-4392 (4151689-3890 August 27, 1986 ROGER J. DOlAN General Manager ChIef Engineer JAMES L HAZARD Counsel for the Distria (4151931H430 JOYCE E. McMILlAN Secretary of the Oj'tria Mr. Paul Morsen Deputy General Manager Central Contra Costa Sanitary District 5019 Imhoff Place Martinez, CA 94553 Dear Mr. Morsen: This side letter confirms an agreement to add the following provisions to the existing Memorandum of Understanding between the parties hereto. 1. Pursuant to the existing Memorandum of Understanding the Central Contra Costa Sanitary District presently pays one-hal f of the contributions required of its employees for the Contra Costa County Employees' Retirement System. The District proposes to assume payment of the balance of each employee's required contributions to the Contra Costa County Employees' Retirement System by the means of an equivalent reduction in each employee's salary. Such contributions are treated as employer contributions for federal income tax purposes if approved by the I.R.S. under Sections 401 and 414(h)(2) of the Internal Revenue Code. The proposed salary reduction is intended to result in the .exclusion of the reduced amounts from the computation of the employees' gross income for tax purposes and in the deferred taxation of such amounts when they are paid to the employees. The proposed action constitutes a wage adj ustment. The proposed payment of reti rement contri buti ons by the employer for the employee is hereinafter referred to as a "pickup." 2. Contra Costa County has applied for a determination by the Internal Revenue Service as to whether or not the Contra Costa County Employees' Retirement System is qualified under Section 401 of the Internal Revenue Code. (26 U.S.C. S401a) 3. Central Contra Costa Sanitary District will apply to the I.R.S. for a ruling on the applicability of Section 414(h)(2) of the Internal Revenue Code to the proposed plan set forth below for piCk-up of employee contri buti ons to the Ret; rement Fund. The foll ow ;ng speci fic rulings will be sought concerning the plan. a) No part of a proposed pick-up by the District, employer, constitutes gross income to the employee on whose behal f the pickup is made. Mr. Paul Morsen Page 2 August 27, 1986 b) No part of the amount of the pick-up by the District constitutes wages from which the District, as employer, must deduct and withhold a tax in accordance with Secs. 3401-3404 of the Internal Revenue Code. c) A distribution of the pick-up to the employee either through a retirement distribution of employer contributions of a lump sum payment is taxable under Section 402 of the Code. d) The pick-up may be made through a reduction in sal ary, or through an offset against future salary increases or a combination of both, and does not have to be made in a particular manner. e) The language contained in a proposed Board of Directors resolution satisfies the requirements of section 414(h)(2) of the Code. 4. The plan requires that all permanent employees scheduled to work at least half time participate. 5. The pick-up of employee contributions by the employer under this pl an will be pai d from the same source of funds as used in pay ing the wages of affected employees. 6. Employer payments under the plan on account contributions will be treated for all other purposes, taxation, in the same way and to the same extent contributions made prior to the implementation of the plan. of employee other than as employee 7. No provision of the plan shall be construed so as to permit or extend to affected employees a right to directly receive the contributions made by the employer under this plan, instead of having them paid to the retirement fund. 8. The plan will provide that when an employee separates from the District and collects his or her contribution or receives a pension, he or she will be required to pay federal and state taxes on the contributions made pursuant to the plan which were not taxable at the time the contributions were made. 9. This plan will be implemented only as long as the District pick-up of employee contributions continues to be excludable from gross income of the employee under the provisions of the Internal Revenue Code and is otherwise permitted by law. 10. Application for approval of the plan and implementation thereof will be made by the District if and only if all recognized employee organizations execute this side letter which incorporates these provisi ons in the memorandum of understandi ng. Impl ementati on of the plan is contingent upon approval by the I.R.S. Mr. Paul Morsen Page 3 August 27, 1986 If the foregoing is agreed to by the above-named Incumbent Deputy General Manager, pl ease show its acceptance by an authorized si gnature be 1 ow. Dated ~ ~ P!of, Approved: Central C Incumbe sta Sanitary District General Manager Central Contra Costa Sanitary District By r-- By ~j aiR ~lLta4'-' () Central Contra Costa Sanitary District 5019 Imhoff Place, Martinez, CA 94553-4392 (415}689-3890 August 27, 1986 ROGER J. DOLAN General Manager Chief Engineer JAMES L HAZARD Counsel for the Oi.trla (415)93&-1430 JOYCE E. McMIllAN Secretary of the Oi.tria Mr. Dave Platt Assistant General Manager Employees' Association, Local 1 P. O. Box 222 Martinez, CA 94553 Dear Mr. Platt: This side letter confinms an agreement to add the following provisions to the existing Memorandum of Understanding between the parties hereto. 1. Pursuant to the existing Memorandum of Understanding the Central Contra Costa Sanitary Di strict presently pays one-hal f of the contri butions requi red of its employees for the Contra Costa County Employees' Retirement System. The District proposes to assume payment of the balance of each employee's required contributions to the Contra Costa County Employees' Retirement System by the means of an equivalent reduction in each employee's salary. Such contributions are treated as employer contributions for federal income tax purposes if approved by the I. R. S. under Secti ons 401 and 414( h)(2) of the Internal Revenue Code. The proposed salary reduction is intended to result in the exclusion of the reduced amounts from the computation of the employees' gross income for tax purposes and in the deferred taxation of such amounts when they are pai d to the employees. The proposed action constitutes a wage adj ustment. The proposed payment of reti rement contri buti ons by the employer for the employee is hereinafter referred to as a "pickup." 2. Contra Costa County has applied for a detenmination by the Internal Revenue Service as to whether or not the Contra Costa County Employees' Retirement System is qualified under Section 401 of the Internal Revenue Code. (26 U.S.C. S401a) 3. Central Contra Costa Sanitary District will apply to the I.R.S. for a rul ing on the applicability of Section 414( h) (2) of the Internal Revenue Code to the proposed plan set forth below for piCk-Up of employee contributions to the Retirement Fund. The following specific rulings will be sought concerning the plan. a) No part of a proposed piCk-up by the District, employer, constitutes gross income to the employee on whose behalf the pickup is made. Mr. Dave Platt Page 2 August 27, 1986 b) No part of the amount of the pick-up by the District constitutes wages from which the District, as employer, must deduct and withhold a tax in accordance with Secs. 3401-3404 of the Internal Revenue Code. c) A distribution of the pick-up to the employee either through a retirement distribution of employer contributions of a lump sum payment is taxable under Section 402 of the Code. d) The pick-up may be made through a reduction in sa1 ary, or through an offset against future salary increases or a combination of both, and does not have to be made in a particular manner. e) The language contained in a proposed Board of Directors resolution satisfies the requirements of section 414(h)(2) of the Code. 4. The plan requires that all permanent employees scheduled to work at least half time participate. 5. The pick-up of employee contributions by the employer under this plan will be paid from the same source of funds as used in paying the wages of affected employees. 6. Employer payments under the plan on account of employee contributions will be treated for all other purposes, other than taxation, in the same way and to the same extent as employee contributions made prior to the implementation of the plan. 7. No provision of the plan shall be construed so as to permit or extend to affected employees a right to directly receive the contributions made by the employer under this plan, instead of having them paid to the retirement fund. 8. The plan will provide that when an employee separates from the District and collects his or her contribution or receives a pension, he or she will be required to pay federal and state taxes on the contributions made pursuant to the p1 an which were not taxab1 e at the time the contributions were made. 9. This plan will be implemented only as long as the District pick-up of employee contributions conti nues to be exc1 udab1 e from gross income of the employee under the provisions of the Internal Revenue Code and is otherwise permitted by law. 10. Application for approval of the plan and implementation thereof will be made by the District if and only if all recognized employee organizations execute this side letter which incorporates these provisions in the memorandum of understanding. Implementation of the plan is contingent upon approval by the I.R.S. Mr. Dave Platt Page 3 August 27, 1986 If th e organizati on, below. foregoing is agreed to by the above-named employee please show its acceptance by an authorized signature Dated tcd~~ I, / J ~~ , Approved: District Central Contra Costa sani~ict By ~/!, 1 - { By . Centrc._ Contra Costa Sanitar ~ District BOARD OF DIRECTORS PAGE 1 OF 4 POSITION PAPER BOARD MEETING OF October 2, 1986 NO. IX. REPORTS 4a. SUBJECT DATE September 3D, 1986 CONSIDER RECOMMENDATION OF THE ANNEXATION COMMITTEE CONCERNING PROPOSED RESOLUTION REGARDING ANNEXATION POLICY TYPE OF ACTION CONSIDER PROPOSED ANNEXATION POLICY sU9~gt~D ~tMi 11 an, Secretary of the Di strict James Hazard, Counsel for the District INITIATING DEPT./DIV. Administrative Department ISSUE: In past years the Central Contra Costa Sanitary District has issued resolutions and agreements dealing with District and local government entity annexations. It is now appropriate to issue a comprehensive and superseding policy statement concerning annexation. BACKGROUND: Over a number of months Members McNulty and Clausen, members of the Annexation Committee, have met with staff to review this issue. The attached proposed Resol uti on Regardi ng Annexati on Pol icy was developed. The Di strict currently has existing annexation agreements with the City of Walnut Creek, the City of Concord, and the City of Martinez. The proposed resolution has been reviewed with Walnut Creek City Manager Tom Dunne and Concord City Attorney Ken Scheidig. Both have expressed the opinion that their respective city councils would support and accept such a resolution as an appropriate superseding resolution to the existing agreements. The 1967 Martinez Annexation Agreement has been reviewed as well. Staff has met with representatives of the City of Martinez. It was the consensus of the Committee and the representatives of the City of Martinez, that modifications to the 1967 Agreement be addressed in conjunction with the Martinez Sewer Improvement Project. RECOMMENDATION: Review the proposed Resolution Regarding Annexation Policy, modify as appropriate, and authorize distribution to all city councils within the District's jurisdiction and to LAFCo for their comments. Schedule the proposed Resolution Regarding Annexation Policy for adoption on November 6, 1986. REVIEWED AND RECOMMENDED FOR BOARD ACTION INITIATING DEPT./DIV. Draft No. 11 september 26, 1986 PROPOSED RESOLUTION REGARDING ANNEXATION POLICY WHEREAS the CENTRAL CONTRA COSTA SANITARY DISTRICT recognizes the legal authority of the Contra Costa County Local Agency Formation Commission to establish spheres of influence for local governmental entities within the County, including incorporated cities; and WHEREAS the CENTRAL CONTRA COSTA SANITARY DISTRICT recognizes the legal authority of incorporated cities to provide General Plans for areas within their spheres of influence as created by the Local Agency Formation Commission; and WHEREAS the CENTRAL CONTRA COSTA SANITARY DISTRICT has had a long-standing policy to cooperate with all local government planning agencies to coordinate the District's activities, including its future plant and sewer service system expansion, with the appropriate local planning agencies; and WHEREAS In past years the CENTRAL CONTRA COSTA SANITARY DISTRICT has issued previous resolutions and agreement dealing with District and local government entity annexations; and WHEREAS the CENTRAL CONTRA COSTA SANITARY DISTRICT now desires to issue a comprehensive and superseding policy statement concerning annexation; and WHEREAS the CENTRAL CONTRA COSTA SANITARY DISTRICT recognizes that in the vast majority of cases the Local Agency Formation Commission, through its legal authority to change boundaries of all governmental entities by annexation and reorganization, has the final legal authority to grant or deny annexations to local government entities within the County; and WHEREAS the CENTRAL CONTRA COSTA SANITARY DISTRICT has accepted federal grants for the expansion of its sewage treatment plant, and pursuant to the conditions of said grants is required to provide sewer service to the City of Concord service area, including the City of Concord and the City of Clayton and all areas annexed to or served by the District prior to January 1, 1982; and WHEREAS the CENTRAL CONTRA COSTA SANITARY DISTRICT is committed to federal grant policy regarding conditions that may be imposed on persons requesting sewer service from the District; and WHEREAS it is the desire of the CENTRAL CONTRA COSTA SANITARY DISTRICT to support the obj ecti ve of the Contra Costa County Local Agency Formation Commission in discouraging urban sprawl and encouraging the orderly development of efficient and responsive local government entities (incorporated city governments); and WHEREAS, the CENTRAL CONTRA COSTA SANITARY DISTRICT recognizes the desire of each incorporated city government that land within its sphere of influence be developed following annexation, in accordance with its general plan; and NOW THEREFORE be it resolved that it is the policy of the CENTRAL CONTRA COSTA SANITARY DISTRICT to recommend that the Local Agency Formation Commission accept, encourage and approve -2- annexation of territory to local government entities within their respective LAFCO-created Spheres of Influence; and IT IS FURTHER RESOLVED that it is the policy of the CENTRAL CONTRA COSTA SANITARY DISTRICT to recommend that the Local Agency Formation Commission, when it provides for the annexation of new territory to the District I s boundaries and when the new territory is within the Sphere of Influence of other incorporated city governments, that the Local Agency Formation commission also provide for annexation to those applicable incorporated city governments. PASSED AND ADOPTED ON: By Vote President -3-