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CAPITAL PROJECTS AGENDA 12-06-11
11 Central Contra Costa Sanitary District SPECIAL MEETING OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT CAPITAL PROJECTS COMMITTEE Chair McGill Member Hockett Tuesday, December 6, 2011 4:00 p.m. BOARD OF DIRECTORS: BARBARA D HOCKETT President JAAIES A NEJEDLY President Pro Tent MICHAEL R AICGILL MARIO Al. AIENESINI DAVID R WILLIAMS PHONE: (925) 228 -9500 FAX: (925) 676 -7211 www.centralsan.org Collection System Operations Department (CSOD) Facility Conference Room 1250 Springbrook Road Walnut Creek, California INFORMATION FOR THE PUBLIC ADDRESSING THE COMMITTEE ON AN ITEM ON THE AGENDA Anyone wishing to address the Committee on an item listed on the agenda will be heard when the Committee Chair calls for comments from the audience. The Chair may specify the number of minutes each person will be permitted to speak based on the number of persons wishing to speak and the time available. After the public has commented, the item is closed to further public comment and brought to the Committee for discussion. There is no further comment permitted from the audience unless invited by the Committee. ADDRESSING THE COMMITTEE ON AN ITEM NOT ON THE AGENDA In accordance with state law, the Committee is prohibited from discussing items not calendared on the agenda. You may address the Committee on any items not listed on the agenda, and which are within their jurisdiction, under PUBLIC COMMENTS. Matters brought up which are not on the agenda may be referred to staff for action or calendare d on a future agenda. AGENDA REPORTS Supporting materials on Committee agenda items are available for public review at the Reception Desk, 5019 Imhoff Place, Martinez. Reports or information relating to agenda items distributed within 72 hours of the meeting to a majority of the Committee are also available for public inspection at the Reception Desk. During the meeting, information and supporting materials are available in the Conference Room. AMERICANS WITH DISABILITIES ACT In accordance with the Americans With Disabilities Act and state law, it is the policy of the Central Contra Costa Sanitary District to offer its public meetings in a manner that is readily accessible to everyone, including those with disabilities. If you are disabled and require special accommodations to participate, please contact the Secretary of the District at least 48 hours in advance of the meeting at (925) 229 -7303. Capital Projects Committee December 6, 2011 Page 2 1. Call Meeting to Order 2. Public Comments *3. Review preliminary 2012 Ten -Year Capital Plan and Fiscal Year 2012 -13 Capital Budget Staff Recommendation: Review the preliminary Ten -Year Capital Plan and FY 2012 -13 Capital Budget and provide direction to staff if needed. This same information with any Committee input will be presented to the full Board at the December 15, 2011 Capital Improvement Budget Planning Workshop. 4. Review of 2011 -12 Capital Improvement Budget and Plan preliminary revenue projections and requirements to meet planned expenditures Staff Recommendation: Review the revenue requirements and provide direction to staff if needed. *5. Review draft Position Paper adopting Resolution 2011 -XXX revising General Manager authority and rescinding prior Resolution 2010 -090; authorizing revision to Table 3, "Capital Improvement Program Authorization Limits," of the 2011 -12 Capital Improvement Budget as recommended; and authorizing revision to the chapter entitled "Approvals and Authorizations" and chapter entitled "District Projects" of the District's Purchasing Policies and Procedures Manual as recommended. Staff Recommendation: Recommend Board adoption of the Resolution and authorization of revisions, and provide direction to staff if needed. (The Budget and Finance Committee reviewed proposed revisions to the General Manager's claims - handling authority only at its November 14, 2011 meeting and recommended proposed revisions for Board approval.) *6. Discuss potential El Toyonal — Alta Vista — Dos Osos Contractual Assessment District (CAD) and the District's funding alternatives Staff Recommendation: Recommend Board approval of initiating the formation of the potential CAD and provide direction to staff regarding the District's funding alternatives. Capital Projects Committee December 6, 2011 Page 3 7. Update and discussion on selected Capital Projects: Seismic Program: Budget update and discussion of Headquarters Office Building seismic upgrade alternatives and recommended approach Future Facilities: Review of plant site contaminated soils issue and impact on cost of future treatment facilities Information Technology Plan: Discuss incorporating Board input into Information Technology Plan and Budget Other Projects as time permits Staff Recommendation: Receive update and provide input to staff as appropriate. 8. Reports and Announcements 9. Adjournment * Attachment 3 Central Contra Costa Sanitary District December 2, 2011 TO: BOARD OF DIRECTORS VIA: JAMES M. KELLY, GENERAL MANAGER FROM: ANN E. FARRELL, DEPUTY GM /DIRECTOR OF ENGINEERINGO—K TAD J. PILECKI, CAPITAL PROJECTS DIVISION MANAGER SUBJECT: REVIEW PRELIMINARY 2012 TEN YEAR CAPITAL PLAN AND FISCAL YEAR 2012 -13 CAPITAL BUDGET RECOMMENDATION Staff recommends that the Board support the preliminary expenditures for the Capital Budget and Plan as proposed in this memo. Setting a conceptual budget for capital expenditures resolves one variable and simplifies the financial planning process. These figures are then used as District staff more fully develops and refines financial planning scenarios based on current information on operations and maintenance costs. Scenarios to be evaluated this year as part of the overall financial planning process include those associated with paying down the unfunded liability for pensions and retiree health care as well as any scenarios that emerge from the ongoing discussions regarding negotiating new contracts with the District's bargaining groups. Although the rate increase for the upcoming year has already been noticed and confirmed by the Board, future rate increases are still of concern and will be considered during the financial planning process. BACKGROUND In preparation for the first fiscal year (FY) 2012 -13 Capital Planning Workshop on December 15, 2011, staff has summarized the material we will be covering in this memo. Much of this information, with additional detail, will be reviewed with the Board Capital Projects Committee on December 6, 2011. We routinely hold a Capital Planning Workshop in the fall to set an estimated dollar amount for our capital program for the following ten years. We have found this approach to be very helpful in narrowing the scenarios and considerations for the winter Financial Planning Workshop (to be held February 16, 2012). By fixing the level of capital expenditures, which comprise approximately 30 - 40 percent of District overall spending, depending on the size of the Capital Budget that year, the possible budgeting scenarios become more refined and understandable. If the scenarios in February lead to some concerns about capital revenue and expenditures, adjustments can be made at that time and incorporated into the draft Capital Improvement Budget and Plan, which is brought to the Board in a second FY 2012 -13 Capital Planning Workshop in April. HISTORICAL PERSPECTIVE As our District assets age, renovation and replacement is necessary to keep them functioning properly. For budgeting purposes, the amount of annual investment in renovation and replacement must be estimated. In January 2000, without a formal condition assessment and asset management plan, staff developed and recommended a baseline for investment in our capital facilities which assumed replacement of all assets every one hundred years. This equates to a reinvestment rate of 1 % of the estimated replacement value. At that time, the total replacement value of our facilities was estimated at $2.1 billion and therefore the annual investment was set at $21 million. This target amount has been increased for inflation at 3% per year and has reached approximately $30 million in 2012 dollars for FY 2012 -13. Since January 2000, staff has invested significant resources in developing more sophisticated asset management programs for the collection system and treatment plant to provide the data for a more rigorous assessment of the appropriate baseline budgetary figure for asset renovation and replacement. These investigations support an annual investment of approximately 1 % of replacement value as a reasonable amount for the collection system. In fact, due to the relatively good condition of our system and limited number of line segments needing capacity upgrades, we have been able to include the known renovation and capacity needs for the collection system in the 1 % target budget amount as well as selected collection system capacity improvements. A higher annual investment rate may be necessary for mechanical equipment/pressure piping systems /electrical equipment at the treatment plan and pumping stations. Staff expects to continue to better define this reinvestment rate. Until that effort is complete, a renovation budget rate of 1 % of replacement value for the treatment plant and pumping stations will continue to be used to set recommended minimum funding levels for the Ten Year Capital Improvement Plan. The historical District philosophy for funding ongoing renewal and replacement has been to do so out of ongoing capital revenues sources and not to bond finance. Bond financing has been limited and has been reserved for large one time projects which benefit all rate payers, existing and future, and can logically be funded by spreading the payments over current and future rate payers. Using this philosophy, the ongoing renewal and replacement targeted expenditures of $30 million per year in 2012 dollars should be funded from annual revenue receipts and this should be the minimum level of funding for the capital program. As introduced above, expenditures for significant projects to increase capacity or address changing regulations or construct recycled water projects should be viewed as in addition to the budget for renovation, renewal and replacement. For several years in the recent past, budgeted expenditures for needed capacity and regulatory projects were increased to take advantage of increased revenues from a number of sources, principal among them being capacity fees for new connections. However, more recently, revenues have significantly decreased and the size of the capital program has been reduced. A number of the projects that had been initiated when revenues were higher were ready for construction. These projects targeted needed reliability, capacity and building improvements that had been contemplated for many years. They included the Solids Handling Improvements to allow hauling of sludge in the event of incinerators being out of service, and Dry/Wet Weather Improvements to allow bypass to Walnut Creek when the outfall is being inspected and when outfall capacity is exceeded and the wet storage ponds are full. Also included were Standby Page 2 Power Improvements to replace the old engine generators that were unreliable and finally a new Collection System Operations Department Administration, Crew and Warehouse facility. In early 2009, staff recommended and the Board concurred that bonds netting $30 million should be sold to enable completion of these needed projects. Staff is happy to report that these needed projects have been essentially completed at this time and very cost effectively, given the extremely competitive bid climate over the last several years. The following capital expenditure figure shows historical District capital expenditures since 1990 -91. Annual capital spending has ranged from a low of $17 million to a high of $40 million. This wide variation has been due to the conscious effort to defer needed projects in the late 1990's during a period of no rate increases and in FY 2001 -02 through FY 2003 -04, when the permanent loss of ad valorem tax was feared, and then escalate projects when the revenue picture improved with rapid build out of the Dougherty Valley and associated capacity fees. In 2002, bonds were issued for approximately $16.5 million to supplement capital revenue and fund construction of some capacity improvements needed to serve the Dougherty Valley area of San Ramon in advance of receiving the capacity fees generated upon connection of the completed homes and businesses. Those fees peaked in FY 2004- 05 when there were almost 2000 new connections in the Dougherty Valley alone. The Ten Year Capital Plan was developed based partially on anticipated revenues from the Dougherty Valley. The following property tax and capacity fee trend figure shows the extreme variability of these two sources of capital revenue over the years. As development slowed and the economy deteriorated, anticipated revenues did not materialize. As noted above, because a number of needed projects were under design and ready to be constructed and the bidding climate was very competitive, staff recommended in October 2009 that bonds netting $30 million be sold to supplement capital revenues. Capital revenues are collected and held in the Sewer Construction Fund (SCF). The SCF balance is an important tool in funding daily District operations. In addition to funding the capital program, the SCF balance is used to meet the cash flow needs of the District. The District receives its sewer service charge and property tax revenue from the County two times per year. In between revenue receipt, the District must pay its bills from the funds on hand. Based on the current District operating and maintenance and capital budgets, a SCF balance of approximately $30 to $35 million is necessary to pay the bills between revenue receipts. The SCF balance was projected to fall below the needed level in early 2009 if we continued the capital program at its budgeted level. Therefore, as noted above, a net $30 million in bonds were sold to allow continuing with construction of needed projects. The only capital revenue source completely within the control of the District is the capital component of the sewer service charge. The capital component of the sewer service charge had been sharply reduced in recent years to avoid raising the overall sewer service charge amount and still fund needed operation and maintenance activities. Last year the Board approved a two year rate increase of $30 each year, a portion of which was designated to renew the funding of the capital program. A table showing the sewer service charge components for the last twelve years and that proposed for FY 2012 -13 follows. 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ANNUAL SERVICE CHARGE PER RUE Fiscal Year Operations Component Capital Comp onent Total Sewer Service Charge per RUE 2000 -01 $185 $15 $200 2001 -02 $204 $20 $224 2002 -03 $207 $41 $248 2003 -04 $218 $54 $272 2004 -05 $204 $76 $280 2005 -06 $234 $46 $280 2006 -07 $213 $76 $289 2007 -08 $242 $58 $300 2008 -09 $260 $51 $311 2009 -10 $292 $19 $311 2010 -11 $300 $11 $311 2011 -12 $302 $39 $341 2012 -13 (2011 Ten Year Plan $322 $49 $371 2012 -13 (Prelim 2012 Ten Year Plan) $332 $39 $371 (Additional funding needed for pensions so capital component will be reduced) 2012 -13 (Sustainable Capital Component) $322 $84 $406 (Needed to fully fund the Capital Program with no draw -down of Sewer Construction Fund Balance PROJECTED SEWER SERVICE CHARGE CAPITAL COMPONENT The capital component was increased significantly last year and was recommended to be further increased this next fiscal year. Unfortunately, increases in the unfunded liability for pensions have resulted in higher operating costs and it is anticipated there will be no funds available to increase the capital component this next fiscal year. In any case, the funding level is still far from adequate. Based on expenditures of $30 million per year for renovation, renewal, replacement and known capacity projects and approximately 166,000 residential unit equivalents paying sewer service charge and revenue from other sources of approximately $16 million, the capital component would need to be $84 to fully fund the capital program. This $84 dollar capital component represents a continued increase from the $39 that will be achievable with the two year $30 rate increase noticed for FY 2011 -12 and FY 2012 -13. Of course this calculation could overstate or understate the needed increase because of the impact of an improving or declining economy on property tax, interest and capacity fee revenues. Because we are carrying a balance somewhat higher than the funds required of $30 -$35 million, rate increases to fully fund the capital program can continue to be phased in over several more years, but still represent a significant commitment. Page 6 PROJECTED FISCAL YEAR 2011 -12 EXPENDITURES /REVENUES /SCF BALANCE For the current FY 2011 -12, expenditures were budgeted to exceed revenue. While the deficit spending was significantly reduced from the previous fiscal year, due to the $30 sewer service charge increase, there was still a conscious decision to deficit spend and utilize the $30 million in bond funds that had been deposited in the Sewer Construction Fund for specific projects, such as Standby Power Improvements, Sludge Hauling Improvements, Dry/Wet Weather Bypass Improvements and the Collection System Operations Department Facility. These projects will all have been completed by the end of the fiscal year. In addition to the budgeted deficit spending, two additional expenditures were recommended by staff and approved by the Board which are expected to increase the deficit. One, with the extraordinary bidding climate being experienced on District projects, staff recommended and the Board concurred that the demolition of the old primary tanks and lime silos, budgeted in FY 2015 -16, should be moved up in time. This resulted in an unbudgeted expenditure of approximately $1.2 million. Second, the District received a commitment of grant funds from State Proposition 84 for the construction of the unbudgeted Concord Landscape Irrigation Project. The Districts portion of the design and construction cost is expected to be approximately $3 million with $600,000 in unbudgeted expenditures expected in FY 2011 -12. Potentially offsetting the increased expenditures is an increase in capital revenue year to date. Capital revenue is currently approximately $2 million more than budgeted due to some large apartment complexes that have paid capacity fees in recent months. It is difficult to predict if this trend will continue. For the purposes of this discussion, a range of revenues has been shown in the projected figures. The following table shows the budgeted and projected expenditures for FY 2011 -12. FY 2011 -12 CAPITAL PROGRAM BUDGETED PROJECTED Total expenditures $25.9 million $27.7 million Total revenue $22.2 million $22.2 - 24.2 million Variance -$3.7 million — $3.5 - $5.5 million SCF Balance 6/30/12 (Beginning balance 6/30/11 $52.1 million $48.4 million $ 46.6 - $48.6 million As part of the past debt financing, the District has pledged revenues to first pay its debt obligations. Second, revenue is assigned to Operations and Maintenance costs, including the Self Insurance Fund. Lastly, revenues are available for the Capital Improvement Program. As discussed above, the District draws on the SCF balance to fund its operation and maintenance functions as well as the capital program. The cash flow needs for this self - funding dictate that the Sewer Construction Fund balance be maintained between $30 -$35 million. Thus, FY 2012 -13, for which we are preparing this budget, will start with an estimated balance of $46.6 — 48.6 million, which is only approximately $10 — 15 million greater than the minimum funds required to meet District cash flow needs. Page 7 RECOMMENDED 2012 CAPITAL IMPROVEMENT PLAN FY 2012 -13 TO FY 2021 -22 The proposed 2012 Ten Year Capital Improvement Plan is summarized in the following table. It contains a moderate baseline plan of $258 million in improvements over the next ten years. The baseline program addresses needed reliability, capacity and building improvement projects, including renovating 100% of the high priority defective sewers identified to date, and provides $10.2 million to address needed seismic improvements and $12.2 million for improvements to the sludge dewatering equipment and multiple hearth incinerators. Recent studies of our solids handling technology have concluded that it is a good investment to improve our current facilities and extend their life by 10 -20 years before deciding upon a new solids handling technology. However, no money has been budgeted for seismic retrofit of the existing solids conditioning building. Because it is likely that we will convert to another solids handling technology, such as fluidized bed incinerators or anaerobic digesters in 10 -20 years, a significant investment in seismic retrofit of the existing incinerator building is not recommended. In addition to the $258 million baseline, the total $358 million Ten Year Capital Plan includes $20 million to remediate contaminated soils in the area where new nitrification facilities would be located and $70 million to construct nitrification facilities. It also includes a $7 million allowance for alternative energy to either replace our existing cogeneration system, which is inefficient compared to current technology, or convert to solar energy. Finally, in the tenth year of the plan, $3.5 million is budgeted to begin permitting /pre- design of a new fluidized bed incinerator or pre- design of anaerobic digestion and to begin planning /pre- design to replace our ultraviolet disinfection system with ozone, to better treat for contaminants of emerging concern. Funding for the $358 million Ten Year Capital Plan is from traditional sources of capital revenue, including property taxes, capacity fees and contributions from the City of Concord. Any funding deficit must be made up by increasing the sewer service charge capital component or by selling bonds. As noted previously in the memo, the two significant rate increases the Board approved last year were a good first step, but do not restore the capital component of the sewer service charge to a sustainable level. It is estimated that another $45 per RUE is needed beyond that planned for FY 2012 -13 to bring the capital component to a level sufficient to fund a $30 million per year Capital Program. Projections of the needed increases in the sewer service charge capital component to fund the recommended Ten Year Capital Plan will be further discussed with the Capital Projects Committee on December 6 and with the full Board at the December 15, 2011 Capital Budget Workshop. RECOMMENDED FISCAL YEAR 2012 -13 CAPITAL IMPROVEMENT BUDGET The recommended FY 2012 -13 Capital Improvement Budget totals $32.3 million of which $28.9 million is for renewal and replacement and routine capacity improvements. This amount is close to the $30.0 million annual investment recommended to accomplish a once per 100 year's replacement of all District assets. In addition an expenditure of $3.4 million is budgeted for the Concord Recycled Water Landscape Irrigation Project. Approximately $1 million of this will be reimbursed through a State Proposition 84 grant. The following table breaks down the expenditures by program. Page 8 C a C E 0 L CL E "a 'a V L cc 0 1 C r V 0 0 0 C. 0 L IL tU ca n_ w 8 vO1i 0 `n° w 0 8 cmp 1°p1 co o pN� N t0 O aD (D I' O f7 O) N (D aD LO N N 0 M O O co co pOp O co N N m 10 r N N m N p p O O O O O O Op O N Q co oO O O OO 8 GOp t0 pOp m w N t00 t0 w Oi eO{ aD 10 pO O N pO S N a°D 7 N LOU) 1(f n CO ac�1 N N C M N N ° N R O co O W p co �pdp 10 O w to b N O ( t0 O f7 t0 O 8O In 8O Ln O v ppbp C 6 N p8 U, pG1 O N c7 IO f2 f7 m a R co O N N N t0 pp t�! 8 1P1 8 111 7 Cpq Q N {p� In ci co N of O N v aD r �L� R O Ld 01 O C5 CO O 1°n O ° O O O 1n v_ O N O O O ° t0 O N O 8 to O g to O C v O O O 1°n 1n pO Ln to O n tff O c7 Q v N P l9 co co pp pp pp S O 8 O 8 O 8 O 5 O 8 O pp O p O pp O pp O p O pp O O n pp to p N t0 O t0 n N p f7 tm0- �pn N w 8 w co w N U, to v N V n ^ M O CM r 7 ONI r N O p� S off_ 1n g In w 1°n to Ln !n 9 CV V I� N R N M t0 ci O O O ° b b 8 O b d O b O C O c3 10 Q N e V O pp t0 N v to to On N r 01 1Nn C� pp t+f at _ O to p 8 to On v t� V 10n to p M to r- m acwt 't N CV Ln N ° O O_ O O O O a N N Og tp to tOpp N ° 1n O N to /D too O O a r N Di to N Ch RR N O v m O 8 O f` 8 P, N tn0 v_ p�p�� t0 c�� 01 i O 1n v c0 to 1n 8 N In S N cv n 0 n r N O O O O 6 O O g g to 9 g�� 1n m o Lq 8 0 m r o o v tn co tn N 03 CD m Ln P/ to ►. m M N m W 3 3 a a a m `ca t'n m tin E CD IEO o d w to E m H¢ C C m m o > E F' O o > m cc .� C w E m Gl o V .t0 > g cc is c C ro to 0 V d cc .� C e 2. w E a C m > O 1`0 m 0> c d a m y O m € c 0 2 a w �' ¢� g' a tU ca n_ FY 2012 -13 CAPITAL IMPROVEMENT BUDGET TOTAL Treatment Plant Baseline $ 7.4 million Collection System Baseline $13.7 million General Improvements Baseline* $ 7.3 million Recycled Water Baseline $ 0.5 million Concord Landscape Irrigation $3.4 million Total Baseline $28.9 million Total Baseline + Concord REW $32.3 million *Includes $4.75 million for one time seismic retrofit projects which are considered renovation and so have been considered baseline but will not be recurring. Staff will be working to develop the detailed budget document using the above preliminary figures as modified by the December 2011 Capital and February 2012 Financial Board Workshops. Many of the projects have already been defined. Others will evolve and emerge as we prepare the budget document over the next six months in anticipation of the second Board Capital Workshop in April 2011, when the detailed draft Capital Improvement Budget is reviewed with the Board. A review of the preliminary FY 2012 -13 Capital Improvement Budget for major projects and areas of emphasis follows. TREATMENT PLANT PROGRAM Preliminary estimates of baseline expenditures for the FY 2012 -13 Treatment Plant Program can be grouped into two major categories: one time renovation and recurring renovation. Each of the major projects is described briefly after the table. FY 2012 -13 TREATMENT PLANT PROGRAM CATEGORY PROJECT ANNUAL EXPENSE One Time Renovation Pump & Blower Building Seismic Imp. $3,000,000 Primary Treatment Renovation $1,000,000 Outfall Inspection and Renovation $ 815,000 Recurring Renovation Piping Renovation Phase 6 $ 526,000 Piping Renovation Phase 7 $ 700,000 All Other $1,395,000 Total Baseline $7,436,000 Pump and Blower Seismic Improvements: The recently completed seismic analysis of treatment plant structures indicated that the Pump and Blower Building (PBB) would sustain significant damage /potential collapse during a major quake on the Concord fault. The PPB houses critical equipment such as the primary and final effluent pumps, aeration air blowers and service air compressors. Treatment plant operations would cease with the loss of any of this equipment. This project will develop a final design /cost to upgrade the building to Page 10 withstand a major seismic event. Board approval will be sought prior to award of a construction contract for the proposed improvements. Primary Treatment Renovations: Most of the piping and equipment in the Primary Treatment area was installed in the early to mid 1970's and is more than 30 years old. Much of the piping has shown signs of corrosion and some of the process equipment is reaching the end of its service life. This project will evaluate /replace water and air supply piping, grit handling equipment, scum and grease removal and thickening systems, the electrical system and the sludge collectors /piping /pumping. Outfall Inspection and Renovations: The Outfall was last inspected in 2003 and it is time to re- inspect both the land and submarine portions of the outfall as allowed by the current NPDES permit. The current plan is to retest the land portion of the outfall in a similar fashion to the work in 2003, and install new seals as necessary. The submarine portion will have rock added to provide additional ballast and protection from boat anchors in Suisun Bay. During inspection the treatment flow will be diverted to Walnut Creek through the Dry/Wet Weather Bypass Structure, which was just recently completed. Piping Renovations Phase 6 & Phase 7: A significant portion of the piping systems on the plant site are over 30 years old and some have already begun to fail. The Piping Renovations Program is systematically evaluating the piping systems and addressing problem areas before pipe failures adversely affect the treatment processes. The Piping Phase 6 project will replace scrubber water piping, some centrate piping, leaking connections at the cake feed pumps, sludge blending tank piping, leaking hypochlorite piping in several areas and air headers, air diffusers and valves in the pre- aeration tanks. It will also install baffles in the primary sedimentation tanks to improve solids capture. The Piping Phase 7 project will evaluate and renovate or replace hypochlorite and RAS piping in the RAS pump stations. It will also replace the ash hopper dust collector and other piping throughout the treatment plant. This project also includes improvements to the sludge truck loading building to improve indoor air quality for the operators. COLLECTION SYSTEM PROGRAM The major FY 2012 -13 projects planned for the proposed $13,723,000 Collection System Program can be grouped into five categories: renovations to existing sewers, pumping stations, developer services, capacity /renovation driven projects, and Contractual Assessment Districts (CAD's). A description of the major programs /projects follows the table of estimated expenditures. FY 2012 -13 COLLECTION SYSTEM PROGRAM CATEGORY PROJECT ANNUAL EXPENSE Renovation program Walnut Creek Ph 9, North Orinda $ 10,310,000 Ph 4, Lafayette Ph 8, Concrete and Corrugated Pipe Renovation, TV inspect on and others Capacity /Renovations Grayson Creek Trunk in Pleasant $ 500,000 Hill Page 11 Pumping Stations San Ramon Pump Station $ 1,335,000 Upgrades /Bypass pump, Buchanan South Removal Developer services Developer Services $ 681,000 Contractual Current CADs — Vista Del Orinda, Assessment Districts St. Mary's Road, Harper Lane, $ 500,000 Smith Road All others $ 397,000 Total $13,723,000 Renovation Program: The renovation program continues the District's efforts to renovate /replace sewers indentified by the TV Program as being in poor condition. This year's renovation program focuses on Walnut Creek, North Orinda, and Lafayette where approximately 35,000 feet of sewer mains will be renovated /replaced. In addition, design and right -of -way acquisition efforts for next year's program will commence. The Concrete and Corrugated Metal (CM) Pipe Renovation Project will install approximately 12,100 feet of cured in place pipe in concrete and CM pipe ranging in size form 18 to 42 inches. The majority of the concrete pipe to be renovated is downstream of force mains that comprise the Martinez Pump system. The CM pipe was installed in the 1950's in Walnut Creek and recent CCTV work has shown extensive corrosion. Capacity /Renovations: In May 2010, the update of the Collection System Master Plan was completed and a list of priority capacity replacement projects was developed. The first of the identified projects, the new trunk sewer in Pleasant Hill Road near Acalanes High School in Lafayette, was completed in FY 2011 -12. This next fiscal year design will begin on the Pleasant Hill Grayson Creek Trunk, which will install approximately 5600 feet of 18 to 24 inch line in Pleasant Hill between the intersection of Pleasant Hill Road and Mercury Way to the Pleasant Hill Relief Interceptor in Ardith Drive. Pumping Stations: The primary focus of this program for FY 2012 -13 is the installation of larger dry weather pumps in the San Ramon Pump Station and the procurement/installation of an emergency bypass pump dedicated to this station. When the San Ramon Pump Station was upgraded in 2003, the District decided to reduce the cost of the project by replacing only two of the 4 pumps with new 250 HP pumps. The two remaining 100 HP pumps would be replaced once the flows to the station increased. Over the past year, the flows at the station have increased to the point where one of the small dry weather pumps cannot handle peak dry weather flow. The decommissioning of the Buchanan South pumping station is also planned. With some rerouting of sewers, this small pumping station can be eliminated. Developer Services: This project provides for appropriate capitalization of District force account labor and other expenses for planning, design, and construction of developer installed and contributed main sewer facilities in FY 2012 -13. Contractual Assessment Districts (CAD): The CAD program provides a financing mechanism for property owners to extend public sewers into areas which are currently served by septic systems. The program requires participating property owners to fund the cost for the non - participating property owners. The participating property owners can elect to have the District finance their costs and pay them back over a ten year period with interest. Page 12 The District has funded 24 CAD's using this approach over the years and has already been paid back the majority of the funds, with interest. The District also utilized a different approach in Alhambra Valley where the public good was served by the District funding the non - participants share to accelerate connections and reimbursement of District funds used to construct a trunk sewer. Recently the District has been approached by a group of property owners in the El Toyanol area of Orinda to utilize a similar approach to the Alhambra Valley and fund the non - participants share due to the extremely high cost of installing sewers and the environmental threat posed by failing septic tanks in the East Bay Municipal Utility District reservoir watershed. From a financial perspective, agreeing to fund the non - participants share would essentially mean that the District would be reimbursed over a potentially much longer time frame than the ten years provided by the CAD approach. Based on staff's knowledge of potential CAD's in the service area, a budget of $500,000 per year or $5 million over the ten year plan has been suggested. Regardless of whether or not the Board agrees to fund the non - participants costs, staff recommends this budget. If the Board were to agree to fund the non - participants share of some of these CAD's, the time elapsed before the funds were completely reimbursed would be longer. There is further discussion of this matter in a separate memo to the Board. GENERAL IMPROVEMENTS PROGRAM General Improvements in FY 2012 -13 are proposed at $ 7,254,000 and will include the traditional equipment budget, information technology budget and items associated with miscellaneous District facilities. The largest proposed expenditure is the $4.5 million budgeted for seismic retrofit of the District Headquarters Office Building (HOB). This budget includes approximately $500,000 for carpet, paint and other minor upgrades in addition to the retrofit work. Final design /construction of any seismic improvements to HOB will be brought to the Board for consideration once the preliminary design /cost estimates are completed. In order to facilitate the seismic retrofit, staff is proposing that the building be vacated during construction. The logistics of this will be further discussed with the Board at upcoming meetings. Staff is also planning to move forward with seismic improvements on the 4737 warehouse based on recent discussions with the Board Real Estate Committee. These improvements, budgeted at $250,000, are currently under design and will come back to the Board for award once the project has been bid. The General Improvements Program also recommends significant investment in Information Technology (IT) next year. A place holder of $500,000 has been budgeted for IT development. Staff will be seeking Board input on the types of improvements they would like to see as we assess the state of the industry and where the District needs to go to be a leader in the use of technology, as suggested by the Board in their recent strategic planning session. In particular staff is planning to upgrade and modernize the existing geographic data integration (GDI) system which is used to display our collection system maps and link them to a variety of data bases within the District. Staff is also researching a replacement for our collection system maintenance scheduling software. The goal is to have a real time scheduling system which will support wireless field applications and real time work flow routing for collection system operations crews. A budget of $500,000 is recommended for the GDI /maintenance scheduling modernization project. Page 13 RECYCLED WATER PROGRAM Recycled Water Program spending includes the baseline budget needed for recycled water planning and continued implementation of cost effective Pleasant Hill Zone 1 connections. This planning includes funds for staff time and consultant and lobbying efforts to continue to pursue Title 16 funding for the Concord Landscape Irrigation project construction as well as pursue partners and support for a large -scale recycled water project to serve the Martinez refineries. The baseline also includes $100,000 for the District share of the Feasibility Study for the Martinez Refinery Project, for which we recently received Title 16 funding. In addition to the baseline, $3.4 million is budgeted for construction of the Concord Landscape Irrigation project. The District will receive a reimbursement of approximately $1 million from State Proposition 84 funds to construct this project. RECOMMENDATION Staff recommends that the Board support the preliminary expenditures for the Capital Budget and Plan as proposed in this memo. Setting a conceptual budget for capital expenditures resolves one variable of the financial planning process. These figures are then used as District staff more fully develops and refines financial planning scenarios as they gather current information on operations and benefits costs. Finally, a comprehensive rate planning document is prepared for distribution to the Board in late January and will be discussed at a workshop on February 16, 2012. During this same time period, staff will be providing the Board with various financial planning scenarios related to ongoing negotiations of new contracts for the different bargaining units. As benefit costs are a significant part of the District budget, it is expected that the Board will want to evaluate different benefit funding scenarios. In order to simplify this process, it is important to agree upon the Ten Year Capital Plan budgetary figures that can be included in the budgeting scenarios. Following the February Financial Planning Board Workshop, the Capital Budget and Plan expenditure figures are finalized and the comprehensive Capital Budget and Plan developed for Capital Projects Committee and full Board consideration in April. Page 14 Central Contra Costa Sanitary Districtrj BOARD OF DIRECTORS • POSITION PAPER Board Meeting Date: December 15, 2011 DRAFT Subject: RESOLUTION SETTING FORTH AND DELEGATING CERTAIN AUTHORITIES TO THE GENERAL MANAGER, AND RESCINDING PRIOR RESOLUTION Submitted By: Elaine R. Boehme Initiating Dept./Div.: Administration Secretary of the District REVIEWED AND RECOMMENDED FOR BOARD ACTION. E. Boehme K. Alm James M. Kelly, General Manager ISSUE: Revisions to the General Manager authority are recommended to increase certain authority limits and other minor changes. RECOMMENDATION: Adopt Resolution 2011 -XXX (attached) and rescind the prior General Manager Authority Resolution 2010 -090. FINANCIAL IMPACTS: None. ALTERNATIVES /CONSIDERATIONS: The Board may decide it does not wish to adopt an updated resolution, or may wish to change current General Manager authority. BACKGROUND: On November 19, 2009 the Board adopted Resolution 2009 -106, consolidating and clarifying General Manager authority which was contained in various historical resolutions and documents, and rescinding prior resolutions. On October 10, 2010, Resolution 2009 -106 was rescinded and replaced with Resolution 2010 -090, which amended the General Manager authority by stating that his or her authority regarding the District's Emergency Operations Plan is contained separately within Resolution 2010 -089 and the Plan document itself. Staff is proposing several changes to the current resolution, summarized below. Section 6 Staff is recommending revising the General Manager's claims settlement authority to allow, compromise or settle claims against the District from the current $25,000 to $50,000, with the understanding that settlements between $25,000 and $50,000 would be reported to the District Board as information items at a following District Board meeting. Page 1 of 3 POSITION PAPER Board Meeting Date: December 15, 2011 subject. RESOLUTION It is also proposed that the Board delegate to the General Manager the authority to act on its behalf pursuant to Government Code Sections 910, et seq. to reject, return as insufficient, or return as untimely any claims against it, and to provide any notices authorized under those statutes on behalf of the District These proposed revisions have been reviewed by the Budget and Finance Committee, which recommends approval. Section 7 The authority to sign Joint Powers Agreements is proposed to increase from $50, 000 to $100, 000. Section 8 This section refers to authorities for Capital Improvement Budget and Operations and Maintenance Budgets. It is proposed to increase General Manager approval authority to a consistent $100,000 for all types of consultant agreements and amendments, construction projects and construction project change orders and equipment purchases. A revised Table 3 of the 2011 -12 Capital Budget is attached showing proposed changes in strikeout. A reference to the authorities contained in the most recent Operations and Maintenance Budget has been included. A revised Chapter 3 entitled "Approvals and Authorizations" and a revised Chapter 12 entitled "District Projects" of the District's Purchasing Policies and Procedures are enclosed with proposed changes shown in strikeout. A copy of the proposed amended Resolution 2011 -XX incorporating the above changes is attached in strikeout. To be adopted, this resolution must be passed by a four -fifths vote of the Board of Directors. RECOMMENDED BOARD ACTION: (1) Adopt a resolution revising General Manager authority as recommended and rescinding Resolution 2010 -090; Page 2 of 3 POSITION PAPER Board Meeting Date: December 15, 2011 subject RESOLUTION (2) Authorize revision to Table 3, "Capital Improvement Program Authorization Limits ", of the 2011 -12 Capital Improvement Budget as recommended; and (3) Authorize revision to the chapter entitled "Approvals and Authorizations" and chapter entitled "District Projects" of the District's Purchasing Policies and Procedures Manual as recommended. Page 3 of 3 RESOLUTION NO. 2011 -XXX A RESOLUTION OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT SETTING FORTH AND DELEGATING CERTAIN AUTHORITIES TO THE GENERAL MANAGER AND RESCINDING RESOLUTION 2010 -090 WHEREAS, the proper functioning of the Central Contra Costa Sanitary District ( "District ") requires that the General Manager and his or her staff have adequate authority to carry out both the routine and reoccurring functions as well as the emergency functions of the District; and WHEREAS, in past years the District Board of Directors "Board" has provided for delegation of certain authority to prior General Managers and staff to carry out a variety of necessary functions of the District; and WHEREAS, the Board has also provided and continues to provide both delegation of authority and limitations on staff authority through the approval and adoption of certain other documents, such as the District Purchasing Policy,_-apA the Capital Budget and the Operations and Maintenance Budget; and WHEREAS, adopting a new resolution which consolidates the delegation authorized in prior resolutions and other documents will clarify the authority of the General Manager and his or her designee and help to ensure the efficient operation of the District. THEREFORE, the Board hereby resolves that the General Manager and his or her designee shall have the authority to carry out the functions of the District as follows: Section 1: General Authorization - The General Manager is authorized to execute all deeds, contracts, warrants, releases, receipts and similar documents for and on behalf of the District in accordance with California Health and Safety Code Section 6487, including all documents prepared and circulated as part of the public competitive bidding process, with the exception of financial transactions as defined set forth in Government Code Section 53995. Section 2: Emergency Power Authorization a. Pursuant to Public Contract Code Section 22050(b)(1 )(note: this requires four affirmative votes), the Board delegates its power to the General Manager to take any directly - related and immediate action required by an emergency, as defined in Public Contract Code Section 1102, and to procure the necessary equipment, services, and supplies for those purposes, when the expenditures exceed $15,000, without giving notice for bids to let contracts. Resolution 20101- XXX090 Page 2 of 5 b. In the event of an emergency, as defined, the General Manager shall report to the OistFiGt Board not later than seven (7) days after the action, or at its regularly scheduled meeting if that meeting will not occur later than fourteen (14) days after the action, the reasons justifying why the emergency will not permit a delay resulting from a competitive solicitation for bids and why the action is necessary to respond to the emergency. C. In the event of an emergency, as defined, the s+strist Board shall initially review the emergency action not later than seven days after the action, and at least at every regularly scheduled meeting thereafter until the action is terminated, to determine, by a four -fifths (4/5) vote, that there is a need to continue the emergency action, unless the General Manager has terminated that action prior to the Ois#rist Board's review of that action. d. Upon its review of the emergency action, the Distrist Board shall terminate that action at the earliest possible date that conditions warrant so that the remainder of the emergency action necessitated by the emergency may be completed by giving notice for bids to let contracts. Section 3: District Emergency Operations Plan The General Manager is designated as the Director of Emergency Services and has the authority set forth in Resolution 2010 -089, or as set forth in the most recently adopted Emergency Operations Plan resolution or as amended by State law. Section 4: Authorization for Easements Acquisitions a. The General Manager is authorized to purchase easements and offers of dedication in favor of the District and prepare the documentation as may be required for recording the property rights with the County Recorder's Office, and to take other such action as may be required to implement the purposes of the District in acquiring said easements and offers of dedication. b. The Board shall retain the sole power to accept by resolution, any and all easements and offers of dedication received by the District. After acceptance of an easement or dedication by the Board, the General Manager shall have the authority to record said easements and offers of dedications for purposes of giving notice to subsequent property owners. The General Manager is authorized to purchase or otherwise obtain rights of entry, approve restoration agreements, encroachment permits and similar agreements affecting access to or use of real property deemed necessary or prudent for the carrying out of District activities. C. The funding for the purchase of easements, offers of dedication and similar rights of entry-type agreements delegated to the General Manager will be included in Resolution 20191 -XXXON Page 3 of 5 the District's Capital Improvement Budget, which the D+str'ct Board approves each year. Section 5: Authorization for Use of Small Claims Court a. The General Manager is authorized to file suit in Small Claims Court without additional specific authorization by the Pistrist Board to pursue civil remedies against persons or entities for claims within the general subject matter areas enumerated below and where the amount of the District's claim (amount in controversy) does not exceed the monetary limits of the jurisdiction of California Small Claims Court. This power includes the power to seek judgments and any other remedies available within the jurisdiction of Small Claims Court, and to take other administrative actions necessary to pursue appropriate remedies in Small Claims Court, including appearing on behalf of the District. 1. Failure to obtain a District permit or violation of any District permit condition; 2. Failure to perform work in conformance with the District's Standard Specifications, either on District facilities or facilities which are or will be connected to the District sewerage system; 3. Failure to comply with inspection requirements of the District with regard to either private or public sewer facilities; 4. Failure to timely pay fees, lease payments, and charges of the District, including penalties and interest that may accrue as a result of the delinquent payments; 5. Damage to, or obstruction of, District facilities, equipment, or property; or 6. Violation of the District Code or failure to comply with any other lawful resolution or order of the District Board of B+resters. Section 6: Claims Handlings° #�4en4e-nt Authority = The Board delegates to the General Manager the authority to act on its behalf pursuant to Government Code Sections 910, et seq. to reject, return as insufficient, or return as untimely any claims against it, and to provide any notices authorized under those statutes on behalf of the District. Pursuant to Government Code Section 935.4, the Board delegates the authority to the General Manager to allow, compromise or settle claims against the District not exceeding $25,000 $50,000 with the understanding that settlements between $10,000 $25,000 and $25,000 $50,000 would be reported to the B+strist -Board as information items at a following District -Board meeting. Section 7: Execution of Joint Powers Agreements — The General Manager is authorized to execute Joint Powers Agreements with cities, counties, special districts and other government entities relating to Board - approved construction projects, such as paving or landscaping, where the funds exchanged in the agreement do not exceed $00;000 $100,000.. Resolution 20191- XXXG9G Page 4of5 Section 8: Additional Delegations and Limitations on Authority - The General Manager has the authorizations set forth in the most recent Capital Improvement Budget and Operations and Maintenance Budget (approved by the Board each year), the authorizations set forth in the Chapter 0 entitled, "Approvals and Authorizations" and the Chapter entitled "District Projects" of the District's Purchasing Policies and Procedures (adopted by the Board), and the authorizations set forth in District Code 2.08.030 to execute all contracts, warrants, releases, receipts, and similar documents for and on behalf of the District in accordance with California Health and Safety Code Section 6487, and such authority is incorporated herein by reference, including any subsequent amendments to any of the above documents as approved by the Board or as required fir' law• Section 9: Rescission of Prior Resolutions - As of the effective date of this resolution, the existing District Resolution 200910 - 4-06090 is rescinded. PASSED AND ADOPTED this XX7th day of December9etebe -r, 20101, by the Board of Directors of the Central Contra Costa Sanitary District by the following vote: AYES: Members: , NOES: Members: Nene ABSENT: Members: None .Barbara D. Hockett President of the Board of Directors Central Contra Costa Sanitary District County of Contra Costa, State of California COUNTERSIGNED: Elaine R. Boehme, CIVIC Secretary of the District - Central Contra Costa Sanitary District County of Contra Costa, State of California Approved as to form: Kenton L. Alm, Esq. Resolution 20191- XXX999 Page 5 of 5 Counsel for the District TABLE 3: CAPITAL IMPROVEMENT PROGRAM AUTHORIZATION LIMITS Revised November 9, 2011 ACTION GENERAL BOARD OF MANAGER DIRECTORS Approve Capital Plan None No limit Authorize Capital Program budgets None No limit Allocate funds to individual roject budgets p g Total program budget No Board authorization plus contingency' required Professional Consulting Services 0 $100,000 or Greater than $58009 Authorize less $100,000 Technical Consulting Services $50,000 $100,000 or Greater than $50,000 Consultant Contracts less $100,000 Professional Engineering Services $50,000 $100,000 or Greater than $50,000 less $100,000 Allocate funds from program contingency accounts to $25,000 $100,000 or Greater than $25,000 projects not included in the CIB less per p roject $100,000 Individual equipment items and equipment contingency $45,000 $100,000 or Greater than $15,900 less $100,000 Authorize supplemental funds to program budgets/ Not applicable Sewer Construction contingency accounts Fund balance Allocate funds for j roect budget overruns p 15% of final project Greater than 15% of bud et2,3 final project bud eta Award construction contracts4 $15,000 $100,000 or Greater than $15,000 less $100,000 Authorize Additive $50,000 $100,000 or Greater than $50,000 less $100,000 construction Deductive No limit No Board authorization change orders required All substitutions unless Substitutions protested Subcontractor substitutions protested by by subcontractor subcontractor Informational Construction project acceptance All projects announcement to the Board Informational memo Close out project All projects provided to the Board at end of fiscal year 1 Limited by the remaining balances of the applicable program budget and contingency account. 2 Limited by the remaining balance of the applicable program contingency account. 3 Final project budget is established at time of award of construction contract. 4 Bid protests and rejection of all bids must go to Board regardless of dollar amount Previous authority 1i Revised authority limit or item. CHAPTER THREE APPROVALS AND AUTHORIZATIONS 3.1 Purpose To define authority for signing requisitions, agreements, contracts, invoices, change orders and other such documents. 3.2 Policy All signature authority must be delegated in writing and approved by the Department Director, the District's Controller and the General Manager. 3.3 General Requirements Designated District employees have been delegated approval authority for specified District documents within stipulated maximum limits. The delegated authority is subject to the scope of authority defined by the Board of Directors or the General Manager. Those documents include, but are not limited to: a. Contractor Progress Payments b. Contracts and Agreements c. Contract Change Orders d. Agreement Amendments e. Invoices f. Requisitions g. Payment Authorizations h. Petty Cash Authorizations i. Procurement Card j. Blanket Purchase Orders Approval authority is granted by means of an Authorized Signature List and Approval Limits Form. The form requires a sample signature of the employee and is approved by the Department Director, the General Manager and the Controller. The Authorized Signature List and Approval Limits Form is used by Finance, Accounting and Purchasing to verify that documents bear proper approval. The Board of Directors requires that contracts and amendments return to the Board for approval at certain specified levels. Procedures for processing the Authorized Signature List and Approval Limits Form, as well as Contract and Contract Amendment limits, are included in this chapter. 3.4 Authorized Signature List and Approval Limits Form a. Department Directors and Managers will initiate a separate Authorized Signature List and Approval Limits Form for each employee and forward the form, bearing their approvals, to the Controller for review. b. The Controller will review the form for general consistency with maximum approval limits and forward the form to the General Manager for approval. c. Upon approval by the General Manager, the Controller will retain the original form for use in Finance and Accounting and forward a copy of the approved form to the Department Manager, the Purchasing Manager and the employee. d. When a manager or supervisor will be absent from the District for twenty - four hours or more, signature authority will be automatically transferred to another manager or supervisor, or other designated employee based on the Automatic Delegation of Authority matrix maintained by the Accounting Division. Managers or supervisors who will be absent from the District on planned leave may choose to prepare a delegation of authority memo that amends the automatic signature authority listed in the matrix. e. The Controller will initiate an annual review of the Authorized Signature List and Approval Limits to ensure accuracy. 3.5 Approval of Agreements and Agreement Amendments 3.5.1 Types of Agreements. Generally, there are three types of agreements: Professional Consulting Services, Technical Consulting Services and Professional Engineering Services. Each is defined below. a. Professional Consulting Services Agreement (PCS): Used to contract for needed services of a non - engineering nature wherein the collection, analysis and /or translating of information is the consultant's primary function with the end product being a written document, training and /or recommendation. For example, auditors, trainers, professional psychologists, attorneys and financial advisors. b. Technical Consulting Services Agreement (TCS): Used to contract for needed services when physical work is being performed such as surveying and soils investigation. Note: If soils investigation data is being interpreted, a Professional Engineering Services contract is required. c. Professional Engineering Services Agreement (PES): Used to contract for needed services when professional engineering, planning, design, construction management, construction inspection and /or architectural services are being performed. 3.5.2 Approval of Agreements. Approval of agreements and amendments to agreements shall conform to the following approval matrices. FIGURE 3.A Staff Authorization Limit for the Approval of Professional Consulting Agreements, Technical Consulting Agreements and Professional Engineering Agreements Professional Authorization Limits* Services Technical Consulting Services $50100,000 $50100,000 Professional Engineering Services $50100,000 $50100,000 *Note: The amounts listed are the maximum amounts for which staff has been delegated authority. Individual staff members, based on their position, may have a lower authority limit. Agreements in an amount greater than the limits listed in the table above require Board approval of the agreement prior to authorization and commencement of work. 3.5.3 Amendments to Agreements. Board approval is required for amendments to Professional Consulting, Technical Consulting and Professional Engineering Agreements under the following conditions: a. The amendment is greater than 15% of the original agreement amount -$r ,:"G"eVer as greater. -. Note: For agreements in an amount less than the staff authority limits listed above, staff can make amendments up to the staff authority limits without applying the 15% or $10,088 criteria. b. The amendment will cause the agreement to exceed agreement authorization limit (see table above) and the original agreement did not have prior Board approval because it fell below the listed authorization limits. 3.6 Approval of Contracts and Contract Change Orders All contracts and contract change orders that are not professional services as defined by Government Code Section 4535 (see 3.5 above) and are not District Projects as defined by Public Contract Code 20801 are within staff authority to approve and award regardless of the dollar amount. These contracts must be approved by the General Manager or the Purchasing Manager, or designee however staff reserves the right to bring these to the Board when appropriate.: District Project contracts that exceed $100,000 require Board approval of the contract prior to authorization and commencement of work. District Project contracts less than or equal to $100,000 may be approved by staff members based on their authority limits as long as the contract is let to the lowest responsible bidder. For all District Projects, regardless of dollar amount, the Board, in its discretion may reject any bids presented and readvertise. In addition, if two or more bids are the same and the lowest, the Board may accept the one it chooses. If no bids are received, the Board may have the project done without further complying with the formal bid reauirements. The General Manager or his /her designee can approve individual contract change orders of up to $50100,000 for District Projects. The Board of Directors must approve individual change orders where the amount is greater than $50100,000 for District Projects. 3.7 Equipment Budget Expenditures The General Manager approves equipment budget items of up to $100,000 per item. The Board of Directors must approves equipment budget items over $100,000 . Overruns for the equipment budget are addressed in a similar fashion to all other capital projects. As long as there are sufficient funds remaining in the General Improvement Program of the Capital Budget, the General Manager can approve an equipment purchase of less than $100,000, even if it causes the total equipment budget to exceed the figure approved in the Capital Budget. in additien, • 11,51 a an 1.11111111111EPURTMI .. -. ITAT6 4 JIM.. CHAPTER TWELVE DISTRICT PROJECTS 12.1 Purpose To provide a uniform procedure for obtaining quotations or bids for District Projects. 12.2 Policy District Projects of $15,000 or less do not require that a formal sealed bid process be initiated. However, a minimum of two written quotes will be obtained when the estimated value of the procurement is greater than $3,500. In accordance with the California Public Contract Code, District Projects with a value greater than $15,000 require that a formal sealed bid process be initiated. Any District Project that includes contractor - provided labor requires that the prevailing rate of per diem wages be paid for work valued at more than $1,000. 12.3 General Requirements Note: Most of the projects classified as District Projects of a value greater than $15,000 are managed by the Engineering Department. As such, the Purchasing Division does not as a general rule issue the Invitations to Bid, also known as a Bid Request, or Requests for Proposals for these projects. However, Purchasing is always available to assist with these projects or to serve as a resource to the department. The title "Project Manager" shall be used in place of the title "Purchasing Manager" when the project is managed by the Engineering or Operations Departments. See the Engineering Department Project Procedures Manual for specific procedures for projects managed by the Engineering Department. 12.3.1 Definition of District Project. According to the Public Contract Code, Section 20801 — 20806, a District Project is defined as "any construction, reconstruction, alteration, enlargement, renewal or replacement of sewer facilities which the District is authorized to do, including, but not limited to, the furnishing of supplies or materials for any such work." The definition of a District Project includes repairs to District sewer facilities. 12.3.2 Definition of Sewer Facility. Sewer Facility is defined as any plant, building, permanent structure, ground facility, sewer line or appurtenance, pump station or other portion of the collection and treatment works, including in -place machinery and electronics. 12.3.3 Definition of Repair. A repair shall be considered a District Project when the primary reason for the work undertaken constitutes an improvement to a sewer facility, or when the work is not of a usual, routine and recurring nature associated with maintenance and would ordinarily be capitalized under District policies on capitalization of expenditures. 12.3.4 Definition of Maintenance. Work that is considered maintenance, i.e., that which is routine, recurring and usual for the preservation or protection of any publicly owned or publicly operated facility for its intended purposes, is exempted from the requirement to formally bid. Maintenance work includes the following: a. Minor Repainting. b. Landscape Maintenance including mowing, watering, trimming, pruning, planting, replacement of plants and the servicing of irrigation and sprinkler systems. c. Work performed to keep, operate and maintain the District's sewage collection and treatment systems. 12.3.5 Annual Contracts. The establishment of Annual Contracts through unit price bidding is an acceptable means of complying with the bidding requirements set forth in this policy regarding District Projects, so long as the initial unit price contract is bid in compliance with the formal provisions of this policy. Unit price bidding refers to letting a contract for the purchase of goods or services at a set price over a designated period of time, without specifying the exact amount of goods or services to be purchased. Annual Contracts are generally established for a period not to exceed one year, with a specified number of one -year contract renewals. Extensions or renewals are granted only in the event the original bid request specifically provides for such extensions or renewals. 12.3.6 Lease and Rental of Goods and Authorizations for Services. Lease and rental of goods and authorizations for services are not excluded from the formal bidding process related to District Projects merely because there is no purchase. Lease or rental of goods, as well as service authorizations, are subject to the same formal bidding requirements as purchases and construction when the lease, rental or service is related to a specific District Project. Additionally, lease or rental costs of equipment or services to be used for a particular District Project must be included in the cost of that project when determining whether the District Project meets the monetary limit for formal competitive bidding. In determining the estimated lease or rental cost for a District Project, the total amount of the entire lease or service period, if fixed, shall be included. In the event the contract is for an undetermined period, then the estimated cost shall be based on the reasonably anticipated length of the required rental or service. Leases, rental contracts and authorizations for services subject to formal bidding shall not be extended for periods of time for which the total estimated cost of the extension exceeds the $15,000 limit amount, without adherence to the formal competitive bidding process. Provisions for potential extensions may be included in the initial bid request in order to eliminate the necessity of a formal competitive bid for subsequent extensions or renewals. 12.3.7 Segmenting of District Projects into Multiple Units. A District Project may not be split, divided or separated into small work orders or projects segmented into separate phases for the purpose of evading the competitive bidding requirements. However, nothing herein shall prevent District undertakings from being divided into manageable units that are otherwise appropriate and advantageous to the carrying on of District operations. The issue of whether formal competitive bidding is required must be incidental and unrelated to the discretion used in determining the scope, phasing or segmenting of any District undertaking. The granting of extensions on District annual contracts and on rentals or leases cannot be intentionally phased so as to permit a series of extensions, which individually are fifteen thousand dollars ($15,000) or less and cumulatively are in excess of that amount, in order to avoid a need for formal competitive bidding of the contract or lease extension. 12.3.8 Use of District Force Account Labor. District Force Account Labor is defined as work undertaken by District employees, rather than by an independent consultant or employees of an independent contractor. District Force Account Labor may be used on a District Project under any of the following circumstances: a. In the case where anticipated expenditure is fifteen thousand dollars ($15,000) or less as calculated using direct labor costs (including labor wages, project supervisor wages and directly attributable overhead), costs of materials and costs of equipment purchased or rented specifically for the project. General administrative, use charges for District -owned equipment and materials previously purchased by competitive bidding may be excluded from the project cost for purposes of this provision. Engineering and administration costs, which would not have been included in the construction contract if it had been let by competitive bidding, may also be excluded. b. In the case where the anticipated number of hours required to be expended by District employees does not exceed four hundred (400) man - hours. This alternative may be used under circumstances where the equipment to be used is District property, or has otherwise been acquired in accordance with formal competitive bidding requirements and the materials have been previously purchased through a formal competitive bid. c. In the case of an emergency due to a failure or threat of failure of any sewer collection or treatment facility or portion thereof. d. In the case of an emergency due to damage to a District -owned building or District -owned property, for work and remedial measures which are required immediately, when such emergency is occasioned by an act of Nature including, but not limited to, damage by storm, flood, fire or earthquake. e. In the case of maintenance of District property. f. In the case where a District project has been awarded to an independent contractor, however portions of the work to be performed required interfacing with District personnel including, but not limited to, circumstances including: 1. Safety interfaces. 2. Instrumentation, electrical or control interfaces. 3. Significant or sophisticated interfacing required with existing operating systems. 4. Circumstances where District personnel have specialized expertise required to efficiently complete the work. g. If, at any time after approval of the plans, specifications and estimates of costs, the General Manager or his /her designee deems that the advertising or awarding of a contract or the acceptance of a bid or the acceptance of any further bids after the rejection of all submitted bids, is not in the best interest of the District, District forces may then be used to undertake the project. Where plans and specifications have been prepared for a District project for formal bid, and subsequently, the District elects to perform the work with District Force Account Labor, the District shall perform the work in accordance with the plans and specifications. Revisions of the plans and specifications may only be made after the General Manager has approved a justification, detailing the specific reasons for the change or changes. h. In the case of unique circumstances where it is in the best interest of the District to have District employees undertake the work. 12.3.9 Change Orders. Change orders made subsequent to the execution of a contract originally subject to the competitive bidding procedures may be negotiated without complying with the formal competitive bidding process under the following circumstances: a. When the change order relates to an increase in the amount of units on a unit price bid and the prospective bidders on the original contract should have reasonably known the potential of such increase. b. When the change order is due to a change of circumstances or physical conditions not specifically taken into account in the District specifications, and the change order work is incidental to the carrying out of the original scope of work. c. Where the change order relates to work reasonably within the general scope of work in the original contract; however, the necessity of such extra work only becomes known to the District, for whatever reason, after the execution of the original contract and the impossibility or impracticality of contracting with a different contractor, not party to the original contract, would make competitive bidding of such work impractical and not in the public's interest. d. Where the original contract and /or specifications contain provisions for the potential performance of such extra work and furnishing of materials by the contractor as the District may require for the proper completion or construction of the whole or that which was originally contemplated. The General Manager or his /her designee can approve individual change orders of up to $59100,000 for District Projects. The Board of Directors must approve individual change orders where the amount is greater than $50100,000 for District Proiects. 12.3.10 Preference for Materials. District personnel shall not draft or cause to be drafted, specifications for bids in connection with construction, alteration or repair of public works in such a manner as to limit the bidding, directly or indirectly, to any one specific concern unless the specification lists at least two brands or trade names of comparable quality or utility and is followed by the word "or equal" so that bidders may furnish any equal material, product or thing or service. In those cases involving a unique or novel product application required to be used in the public's interest, or where the District knows of only one brand or trade name, it may list only one. The requestor that specifies a preference for a specific material shall substantiate the need and the justification of the preference. Specifications shall provide a period of time of at least thirty -five (35) days after the award of the contract for submission of data substantiating a request for a substitution of an "or equal" item. 12.3.11 Pre - Qualification and Other Alternative Bidding Procedures. The District may devise and use a system to ease the administrative burden of determining the responsiveness of bidders to specifications on significant equipment purchases. A pre - qualification procedure compliant with the Local Agency Public Construction Act (California Public Contracts Code Section 20100 et Seq.) may be used which would provide for advertisement of the pre - qualification proceedings similar to the advertising required for formal competitive bidding. The pre - qualification procedure shall require the preparation of an informational pre - qualification package which shall be delivered to each potential bidder responding to the advertisement or otherwise known to the District. Pre - qualification submittals pursuant to the Local Agency Public Construction Act may be required from the responding potential bidders and such submittals shall be evaluated by staff and /or District consultants for the purpose of determining whether or not each of the responding potential bidders may be a responsive /responsible bidder. This initial determination shall be based on the District's specifications set forth in the District's informational qualification package. The District's initial determination during this pre - qualification process that a prospective bidder is a responsible bidder shall not be an irrevocable determination binding the District during subsequent procurement procedures. The District may devise and use such other systems as may be available by law that may serve to ease the administrative burden of determining the responsiveness of bidders and /or the suitability of products for District use. These systems may include, but are not limited to, forms of evaluative bidding and bidding based on estimated life cycle costs of the goods sought and are frequently accomplished through the use of Requests for Proposals. 12.4 District Proiects Less than or Equal to $15.000 District Projects of $15,000 or less do not require that a formal bid process be initiated. However, in accordance with the State of California Labor Code Section 1771, any District Project that includes contractor - provided labor requires that the prevailing rate of per diem wages be paid for work valued at more than $1,000. The Purchasing Manager or Project Manager will contact contractors or suppliers for price quotes by e-mail, telephone or facsimile or by written invitation. If a department obtains quotes for the work, copies of the quotes should be forwarded to Purchasing. A job walk may be held in order to allow the contractor or supplier an opportunity to view the proposed work. The number of contractors or suppliers contacted will vary depending on the dollar amount of the purchase, the number of available contractors or suppliers and the time available to complete the purchase. Normally, a minimum of two contractors or suppliers is contacted. Award is made to the supplier who provides the lowest responsive and responsible quote for the specified item or service. 12.5 District Projects Greater than $15,000 12.5.1 In accordance with Public Contracts Code 20801 et Seq., District Projects with a value greater than $15,000 require that a formal bid process be initiated and prevailing rates of wages be paid. As a part of the formal bid process, potential bidders are notified a minimum of ten (10) days prior to bid opening by advertisement in the District designated newspaper, trade journals and other media. The Notice Inviting Bids must be published at least twice, not less than five days apart and at least ten days prior to the bid opening. Written bids are solicited for purchases in this range and known contractors or suppliers providing the required item will be sent a bid package. The bid documents include a standard form on which contractors or suppliers must respond with their bid, or offer to provide the requested goods or services. In addition, any District Project that includes contractor - provided labor requires that the prevailing rate of per diem wages be paid for work valued at more than $1,000. Bids are submitted to the District under sealed cover and are opened by the Secretary of the District, or her designee, in a public place and at a pre- determined time. The District then makes the award to the contractor or supplier submitting the lowest bid — assuming the bid is responsive to the specifications and is made by a responsible bidder. District Project contracts that exceed $100,000 require Board approval of the contract prior to authorization and commencement of work. District Proiect contracts less than or equal to $100,000 may be approved by staff members based on their authority limits as long as the contract is let to the lowest responsible bidder. For all District Projects, regardless of dollar amount, the Board, in its discretion may reject any bids presented and readvertise. Staff does not have the authority to reiect bids without going to the Board for approval. In addition, if two or more bids are the same and the lowest, the Board may accept the one it chooses. If no bids are received, the Board may have the project done without further complying with the formal bid requirements. Bids are "take it or leave it" propositions and as a general rule, negotiations do not occur. 12.5.2 Invitation to Bid /Bid Request. An Invitation to Bid, also known as a Bid Request, is utilized when the District is able to fully state its requirements through the inclusion of specifications and drawings within the bid document. Formal bids include complete specifications and contractual terms and conditions applicable to the procurement, including, but not limited to, the place, date and time of the bid opening. The contract is awarded to the lowest responsive, responsible bidder. The following conditions apply to the formal bid process known as the Invitation to Bid. 12.5.3 Requisition. Using the District's Financial Management System, the requesting department must issue a requisition to the Purchasing Division. Note: A requisition is necessary to issue a contract for work, except in the case of contracts developed and issued by the Engineering Department for construction of District Projects. 12.5.4 Specifications. The requesting department is to develop and provide specifications and /or drawings or work with the Purchasing Division to develop the specifications. If the specifications are developed solely by the department, Purchasing will review the specifications to insure that the specifications are open and non - proprietary, thus ensuring competition. Unless otherwise specifically provided in the bid, reference to any equipment, material or supplies by trade name, make or catalog number shall be regarded as establishing a standard of quality and shall not be construed as limiting competition. Specifications contained in the bid will, where practical, be nonrestrictive so as to provide an equal basis for competition and participation by an optimum number of qualified bidders. Note: Purchasing does not review specifications or bid packages for District Projects managed by the Engineering Department. An architect or Registered Engineer shall prepare all specifications and /or drawings for formal construction projects. 12.5.5 Advertisement. Notify the General Manager of the intent to advertise via a memo and a Project Approval to Advertise form. Prior to advertising, the General Manager shall notify the Board of Directors of the District's intent to advertise. The Notice Inviting Bids (Notice to Bidders) shall be signed by the Secretary of the District and shall be advertised at least twice, not less than five (5) days apart in the District - designated newspaper at least ten (10) days prior to bid opening. Such Notice shall be provided to various Builders' Exchanges, a list of which is maintained by the Engineering Department. The Notice may also be published in trade publications or other printed matter of general circulation. The public notice shall state the bid item and the place, date and time of the bid opening. As a practical matter, three to four weeks are allowed between the time bids are advertised and opened. Tear sheets or other proof of publication shall be requested of the newspaper and such proof shall become a part of the bid /project file. 12.5.6 Pre -Bid Conference. Pre -bid conferences and job walks contribute to a climate of competition and provide the forum to discuss the District's needs and purposes and the specific requirements of the solicitation. Consideration will be given to conducting a pre -bid conference and /or job walk with potential suppliers or contractors if the specifications are complex or unique, or if the nature and the size of the project warrant a pre -bid conference or job walk. It shall be the Project Manager's decision as to whether or not a pre -bid conference and /or job walk is held, however, prior adequate notification of the pre -bid conference and /or job walk must be provided to contractors. A record of all attendees should be made and retained in the project/bid file. Detailed minutes of the pre -bid conference and /or job walk should be taken to assist in the preparation of an addendum, if necessary, and for file documentation. 12.5.7 Addenda. Changes to the bid are issued in the form of an addendum to everyone who received the original bid documents. Addenda are issued to: (1) provide prospective bidders answers to questions concerning bid documents (2) clarify or correct ambiguous, incomplete or erroneous information contained in the bid documents (3) address issues or concerns that arise a s a result of a pre -bid conference and /or job walk or throughout the bidding process. Addenda should not be used to finalize designs as all design review activities are to be completed prior to the printing of the bid documents. Addenda shall be mailed no later than five (5) calendar days prior to bid opening. Receipt of the addenda should be acknowledged by the contractor on the bid proposal sheet. 12.5.8 Form of Bid. To receive consideration, bids shall be made on the forms provided by the District. All bids must be in ink or typewritten. All changes must be initialed in ink. An authorized representative of the contractor or supplier must sign the bid. In addition, in accordance with Public Contract Code Section 3300, the bidder must possess at the time of award a valid and current contractor's license. The right is reserved by the District to waive any informality or irregularity in the bids. 12.5.9 Receipt and Control of Bids. Bids may be submitted by hand, by courier or by U.S. Mail. Delivery of bids shall be made at the office specified in the Notice Inviting Bids (Notice to Bidders). Bids are received, logged and kept unopened in a secure location until the time of bid opening. Prior to bid opening, the Project Manager shall check with the Warehouse to ensure that there are no bids waiting to be delivered by the Warehouse. 12.5.10 Late Bids. Late bids will not be considered and shall be returned unopened to the bidder. The District's official time clock for the purposes of accepting bids is located at the Receptionist desk in the District's Headquarters Office Building. The District shall not be responsible for any delays in mail or by common carriers or for bids delivered to other than the site designated in the Notice Inviting Bids nor for mistaken delivery. Deliveries made before the date and time due, but to the wrong District office, will be considered non - responsive unless re- delivery is made to the office specified before the date and time due specified in the Notice Inviting Bids (Notice to Bidders). 12.5.11 Bid Opening. Bids shall be opened publicly and read aloud in the presence of attendees, if any, at the time and place designated in the bid. The amount of each bid and other relevant information deemed appropriate, together with the name of each bidder, shall be recorded; the record of bid prices as well as each bid shall be open to public inspection at the bid opening and after an award decision has been made. However, bid information will not be available for public review until the District has verified bid content and accuracy. 12.5.12 Insufficient Number of Bid Copies. If it is in the District's best interest, the District may accept a bid from a bidder who has not submitted the proper number of copies of the bid. A bidder who does not submit the proper number of copies as designated in the bid, may be allowed one (1) working day from the time of the bid opening, or sufficient time as deemed necessary by the District, to supply the proper number of copies. 12.5.13 Bid Acceptance and Bid Evaluation. Bids shall be unconditionally accepted without alteration or correction, except as authorized in this chapter. Bids shall be evaluated based on the requirements set forth in the bid, which may include criteria to determine acceptability such as inspection, testing, quality, workmanship, delivery, and suitability to a particular purpose. Those criteria that will affect the bid price and will be considered in evaluation for award shall be objectively measurable, such as discounts, transportation costs and total or life cycle costs. All contracts shall be based strictly upon the face value of the bids received. No secret rebates and other considerations can be accepted. Award shall be made to the lowest responsive and responsible bidder based upon the criteria set forth in the bid such as: a. The cost, including the effect of term discounts (not less than twenty (20) calendar days after receipt of goods or after receipt of correct invoices, whichever is later) and taxes. Prices may be determined by life cycle costing. b. Compliance with bid requirements, terms and conditions. c. The ability, capacity and skill of the bidder to perform the contract or provide the services required. d. The character, integrity, reputation, judgment, experience and efficiency of the bidder. e. Whether the bidder can perform the contract within the time specified. f. The quality of performance of previous contracts. g. The previous and existing compliance by the bidder with the laws relating to the contract or services. h. Safety record of the contractor. L Servicing resources, capability and capacity. Uniformity or interchangeability, if such factors are important. k. Other information required by the bid that has a bearing on the decision to award the contract. An Invitation to Bid sets forth the specific requirements of the District and the method by which the bids will be evaluated. The evaluation and selection process shall consist of determining which bidder meets the specifications at the lowest responsive, responsible level. For each specific requirement, a basic "yes" or "no" answer is required. There is no "fully ", "barely ", "almost" or "exceeded" level of evaluation. 12.5.14 Mistakes in Bid Detected Prior to Bid Opening. Mistakes in the bid detected prior to bid opening may be corrected by the bidder by withdrawing the original bid and submitting a corrected bid before the date and time set for bid opening. The request to withdraw the original bid must be made by written notice or by the personal presentation of the person signing the bid. The notice must be received by the Secretary of the District prior to the time set for bid opening. If there is not sufficient time prior to bid opening to withdraw the original bid and submit a corrected bid, the bidder or an authorized representative may correct the mistake on the face of the original bid, provided that the official opening time has not yet been reached. A corrected bid must be time - stamped upon re- submission. Mistakes discovered before the bid opening may only be modified or withdrawn. 12.5.15 Mistakes in Bid Detected after Bid Opening. After bids have been opened, corrections in bids shall be permitted only to the extent of resolving arithmetic discrepancies and conflicts in the bid as follows: a. In the event of discrepancies between unit price and extended price, the unit price will govern and be used to correct the extension of the extended price. b. Apparent errors in the addition of lump sum and extended prices will be corrected. c. If no monetary symbol is entered with a unit price, lump sum or extension, a dollar sign will be assumed to be the bidder's intent. d. In the event that there is a discrepancy in the bid between the lump -sum price or unit price written in words and those indicated in figures, the price written in words shall govern. e. No changes in bid prices or other provisions of bids prejudicial to the interest of the District or fair competition shall be permitted. 12.5.16 Relief of Bidders. In accordance with California Public Contract Code Section 5103, if the bidder submits evidence in writing to the Secretary of the District that a mistake has been made by the bidder in the calculation of his /her bid, the District may allow the bid to be withdrawn, provided the claim of mistake and the evidence in support thereof is made and provided within five (5) calendar days after the bid has been opened. Compliance with this section, within the specified time limit, may relieve the bidder of forfeiture of the bid bond. The District Board of Directors shall make final determination of relief of bidders.for bids that exceed $100,000. The General Manger shall make final determination of relief of bidders for bids of $100,000 or less. — Should the District Board of Directors or General Manager accept the bidder's claim for relief, the bidder will be released from all obligations and further requirements and its bid security will be returned as applicable. 12.5.17 Minor Informalities and Irregularities in Bids. A minor informality or irregularity is one which is merely a matter of form or is some immaterial variation from the exact requirements of the Invitation for Bids having no effect or merely a trivial or negligible effect on total bid price, quality, quantity or delivery of supplies or performance of the contract, and the correction or waiver of which would not affect the relative standing of, or be otherwise prejudicial to, bidders. The District shall either give the bidder an opportunity to cure any deficiency resulting from the minor informality or irregularity in a bid or waive any such deficiency when it is to the advantage of the District. Examples of minor informalities include, but are not limited to: a. Failure of a bidder to return the number of copies of the signed bids required by solicitation. b. Failure of a bidder to furnish the required information concerning the number of the bidder's employees or failure to make a representation concerning its size. c. Failure of bidder to sign its bid, but only if the firm submitting the bid has formally adopted or authorized the execution of the documents by typewritten, printed or rubber stamped signature and submits evidence of such authorization, and the bid carries such a signature or the unsigned bid is accompanied by other such material indicating the bidder's intention to be bound by the unsigned document, such as the submission of a bid guarantee with the bid or a letter signed by the bidder with the bid referring to and identifying the bid itself. d. Failure of a bidder to acknowledge receipt of an addendum to a solicitation, but only if the bid received indicates in some way that the bidder received the addendum or the addendum has no effect or merely a trivial or negligible effect on price, quality, quantity, delivery or the relative standing of bidders, such as an amendment correcting a typographical mistake. e. Failure of a bidder to furnish an affidavit concerning affiliates. f. Failure of a bidder to furnish cut sheets or product literature. g. Failure of a bidder to furnish financial statements. h. Failure of a bidder to furnish references. 12.5.19 Background Review of Contractors. The District reserves the right to conduct a background review of potential contractors. It shall be the responsibility of any District official authorized to execute contracts or to enter into agreements on behalf of the District, to identify contracts that shall require a background review as an element to be included in Requests for Proposals, Invitations to Bid, Bid Request or contracts. Such officials, as indicated above, shall evaluate each contract to determine the appropriateness of a Background Review using the following criteria: the amount of contract, the term of contract, the extent of potential District liability related to the contract and the technical complexity of the services or item being purchased. When deemed appropriate, the following language shall be included in an Invitation to Bid, Request for Proposal or Contract: "The District reserves the right to conduct a background inquiry of each proposer /bidder that may include collection of appropriate criminal history information, contractual and business associations and practices, including prompt payment of subcontractors and material suppliers, employment histories and reputation in the business community. By submitting a proposal /bid to the District, the proposer /bidder consents to such an inquiry and agrees to make available to the District such books and records the District deems necessary to conduct the inquiry. " The above clause, or a clause that substantially mirrors the above clause, is required for all construction contracts issued by the Engineering Department. In addition, the potential contractor will then be required to respond to questions concerning criminal history, contractual or business practices and pending civil litigation. 12.5.20 Partial Award. As applicable to the purchase of goods, materials and supplies, Purchasing shall have the discretion to award on an "all -or- nothing" basis or to accept any portion of the items bid, excluding others unless the bidder stipulates "all -or- nothing" on his /her bid. 12.5.21 Tie Bids. If two or more bids are the same and the lowest, the District Board may accept the one it chooses. 12.5.22 Exception to Award to Lowest Responsive Responsible Bidder. Whenever there is a reason to believe that the lowest acceptable bid is not the best price obtainable, the District Board in its discretion may reject any bids presented and re- advertise. 12.5.23 Cancellation of Bid or Rejection of All Bids. The District reserves the right to reject all bids or to cancel a bid. However, every effort will be made to guard against such an occurrence. Examples of reasons for cancellation of a bid or rejection of all bids are: a. Inadequate or ambiguous specification. b. Specifications have been revised. c. Supplies or services being processed are no longer required. d. Change in District requirements. e. All bids are deemed unreasonable. f. Bids were not independently arrived at or were submitted in bad faith. g. A determination has been made that all the necessary requirements of the bid process have not been met. h. Insufficient competition. For reasons that indicate the cancellation or rejection of all bids is clearly in the best interest of the District. The District may reject any or all bids presented and may, at its discretion, re- advertise for other bids. If, at any time after approval of the plans, specifications and estimates of costs, the General Manager or his /her designee deems the advertising or awarding of a contract, the acceptance of a bid or the acceptance of any further bids after the rejection of all submitted bids, is not in the best interests of the District, District forces may be used to undertake the project. Where plans and specifications have been prepared for a District project for formal bid, and subsequently, the District elects to perform the work with District Force Account Labor, the District shall perform the work in accordance with the plans and specifications. Revisions of the plans and specifications may only be made after the General Manager has approved a written justification, detailing the specific reasons for the change or changes. 12.5.24 Notice of Cancellation or Rejection of Bids. In the event of a cancellation of the bid, all participating bidders will be notified. If all bids are rejected, the reason(s) will be documented in the bid or project file. 12.5.25 Disclosure of Bid Results. After award, the bids of all bidders shall be open to public inspection by appointment, during normal business hours. However, the District will not make public any confidential information submitted by bidders. The District assumes no responsibility for the confidentiality of information offered in a bid. Note: Bids managed by the Engineering Department are maintained by that Department. All information, questions and requests related to those bids managed by the Engineering Department shall be directed to the Engineering Department and the associated Project Manager. 12.5.26 Award of Contract. The contract shall be awarded with reasonable promptness by appropriate written notice. Award shall be made to the most responsive, responsible bidder whose bid meets the requirements and criteria set forth in the Invitation to Bid and whose bid is determined to be the most advantageous to the District. A responsible bidder is one who has the capability, financial capacity and integrity to perform the contract and meets the District's safety requirements, i.e., safety record. A responsive bidder is one who commits to all of the material terms (e.g., price, quantity, quality and delivery) of the Invitation to Bid. The contract file shall contain a written explanation of the award decision in the form of a spreadsheet and notes to the file. If the bid requires award by the District's Board of Directors, a position paper will be prepared and a copy of the position paper will be inserted into the bid file. Any contract for a District Project in an amount greater than $15100,000 requires Board of Director approval. 12.5.27 Bid Bonds and Contract Bonds. When deemed necessary by the District or to meet the requirements of the Public Contract Code, a bidder's security payable to the District may be required. Such a requirement will be included as a part of the Notice Inviting Bids. The Bid Security may be in the form of a certified check, cashiers check or surety bond payable to the District, in an amount not less than ten percent (10 %) of the bid total. The bid security will be retained by the District until the related contract is executed. A successful bidder shall forfeit their bid security upon refusal or failure to execute the contract within ten (10) days after receipt of the notice of award. If the successful bidder fails to enter into the contract when offered, the proceeds of the bond will be paid to the District as liquidated damages. The District may also require the contractor to supply the District with bonds covering faithful performance and labor and materials. In accordance with the State of California Civil Code Section 3247, a labor and materials bond is required for all public works involving an expenditure in excess of $25,000. See Chapter Seventeen - Insurance and Bonds for more details. 12.5.28 Appeals. Because it is essential that bidders, offerors and contractors have confidence in the procurement procedures for soliciting and awarding contracts, it is the policy of the District to offer all bidders, offerors and contractors the opportunity to appeal award of purchases or contracts. The following procedures shall apply in regard to appeals by prospective bidders, offerors or contractors: a. Any actual or prospective bidder, offeror or contractor who is aggrieved in connection with the solicitation or award of a contract may protest to the Secretary of the District. Appeals must be submitted in writing within forty - eight (48) hours of bid opening. If the forty -eight (48) hour deadline falls on a Saturday or Sunday or District - recognized holiday, then the written appeal must be submitted by the close of business on the following business day. b. Appeals shall be submitted to the Central Contra Costa Sanitary District, Attention: Secretary of the District, 5019 Imhoff Place, Martinez, CA 94553 -4392. Appeals should address only areas regarding bid contradictions, procurement errors, quotation rating discrepancies, legality of procurement context, conflict of interest in rating process and inappropriate or unfair competitive procurement grievance regarding the bid process. c. The District's Purchasing Manager (Project Manager) or Department Director (Administrative, Engineering or Operations) shall have the authority to settle and resolve a protest of an aggrieved bidder, offeror or contractor, actual or prospective, concerning the solicitation or award of contract. The Purchasing Manager (Project Manager) will provide a written response to the complainant within three (3) working days of receipt of complaint unless the complainant is notified that more time is required. d. If the protest cannot be resolved by mutual agreement, or if the protesting bidder is not satisfied with the decision of the Purchasing Manager (Project Manager) and /or Department Director (Administrative, Engineering or Operations) he /she shall have the right to appeal to the District's General Manager within three (3) business days after notification of the Purchasing Manager's (Project Manager's) decision. The decision of the General Manager shall be a final determination of appeal. e. If the protesting bidder is not satisfied with the decision of the District's General Manager, the supplier may address the District's Board of Directors at a regularly scheduled meeting by providing written notification to the District. In general, the filing of a protest should cause the solicitation proceedings, which are subject to protest, to be halted until the appeal is resolved. In order to allow essential District functions to continue, the District may proceed with the solicitation or award of contract, despite the protest, upon an adequate determination in writing by the District's Purchasing Manager (Project Manager) or Department Director (Administration, Engineering or Operations), with subsequent concurrence by District Counsel, that such action is necessary. It is expected that such determination will occur only in those few circumstances where it is necessary to protect a substantial interest of the District. In an effort to limit frivolous protests, protesters who file two (2) protests within twelve (12) calendar months, whose protests are not resolved in their favor, may be debarred pursuant to Chapter Seven — Supplier Relations and Supplier Performance. 12.6 Inspection of Plant and Audit of Records 12.6.1 Right to Inspect Plant. The District may at reasonable times, inspect the part of the plant or place of business of a contractor or any subcontractor that is related to the performance of any contract awarded or to be awarded by the District. 12.6.2 Audit of Cost or Pricing Data. The District may, at reasonable times and places, audit the accounting records of any person who has submitted cost or pricing data to the extent that such books and records relate to such cost or pricing data. Any person who received a contract, change order or contract modification for which cost or pricing data is required shall maintain such books and records that relate to such cost or pricing data for three (3) years from the date of final payment under the contract unless a shorter period is otherwise authorized in writing. 12.6.3 Contract Audit. The District shall be entitled to audit the books and records of a contractor or any subcontractor under any negotiated contract or subcontract, other than a firm fixed -price contract, to the extent that such books and records relate to the performance of such contract or subcontract. The contractor shall maintain such books and records for a period of three (3) years from the date of final payment under the prime contract and by the subcontractor for a period of three (3) years from the date of final payment under the subcontract unless a shorter period is otherwise authorized in writing. 12.7 Exemptions to Competitive Bidding Specific circumstances may make formal competitive bidding impractical and to the detriment of the District as well as the public's interest. Accordingly, certain District expenditures do not require formal competitive bidding and the circumstances which do not require formal competitive bidding are set forth as follows: a. Emergency Purchases. In accordance with California Public Contract Code Section 20806, when goods or services are immediately necessary for the preservation of public health, welfare or safety or the protection of District property and /or personnel. In accordance with the Code, the District Board must pass a resolution by a four -fifth (4/5) vote declaring that an emergency exists to eliminate the necessity for competitively bidding such emergency contracts or purchases under circumstances where such purchases or contracts would otherwise require competitive bidding. However, in accordance with Public Contract Code Section 22050(b)(1), the Board has delegated to the District's General Manager, through Board Resolution 96 -107, the authority to take any directly related and immediate action required by an emergency to procure the necessary equipment, services and supplies, without giving notice for bids to let contracts. b. Extraordinary Circumstances. In unusual or extraordinary circumstances, the District's Board of Directors or General Manager may determine that the best interests of the District would not be served by securing competitive bids or issuing a request for proposal. c. Best Interest of the District. When, in exceptional factual circumstances, the competitive pricing process works an incongruity or does not produce an advantage and is unavailing as affecting the final result or where it is practically impossible to obtain what is required by observing such formality. d. Governmental Agencies. When the contract is with a Federal, State or local government entity. This includes the purchase of goods from the California Department of Corrections, Division of Prison Industries or services that can be provided by sheltered workshops or disabled industries in accordance with Section 19404 of the State of California Welfare and Institutions Code. e. Cooperative and "Piggyback" Purchases. Cooperative and "piggyback purchasing provides a means for the District to join with other public agencies for the purpose of collectively preparing specifications, and requesting and receiving bids, quotations or proposals, or utilizing the quotations and bids obtained by other governmental agencies. The advantages of cooperative purchasing are greater economy and efficiency, leading to lower unit costs. Examples of cooperative or piggyback purchasing include, but are not limited to, purchases made using another agency's contract, joint buying within a metropolitan area, participation in the State of California CMAS and statewide commodity contracts and the utilization of contracts negotiated by municipal leagues or organizations such as the National Association of Counties and the US Communities Purchasing Program. Under certain circumstances, it may be necessary to create a Joint Powers Agreement between the participating agencies. As such, with the exception of those District Projects managed by the Engineering Department, any effort to purchase cooperatively or "piggyback" another agency's bid or quotation should be coordinated through the Purchasing Division. f. Unique Goods and Sole Source Purchases. When a single source is deemed to be the only one practicably available and advertising would be pointless, or when a product, good or service is unique, competitive bidding may be waived. In order for an item to be recognized as unique, there must be no equivalent product or service available. The unique status must be based on material differences in the function and usefulness of the product. Departments shall be required to justify, in writing, the need for a sole source procurement. g. Standardization. In some instances, the District may elect to standardize the equipment, supplies or materials that it purchases. Standardization is a process whereby agreement has been established on the quality, design and composition of the materials and equipment to be purchased by the District. Standardization is generally undertaken in an effort to increase savings through productivity, lower maintenance costs, training issues, safety issues, volume discounts, etc. Departmental requests to standardize are to be supported with documentation that demonstrates the justification and need to standardize. Once an item has been standardized the purchase of nonstandard items will require a justification from the requestor indicating why the standard item is not suitable for the purpose intended. h. Proprietary Source. When competition can be obtained, as a practical matter, only on the basis of specification of a good or service produced or marketed by one having an exclusive legal right. Multiple suppliers may be authorized to sell a product or service, and all should be permitted to compete. This method is often used in cases where the District has standardized on a specific product or item. Trade or Brand Name Item to Match Existing Items. When a brand name is necessary due to the project goods being designed to match other goods already in use or already purchased in the course of completion of a District project, provided the product is only available through a sole source. Every attempt should be made to obtain competitive pricing when trade name items are available from multiple suppliers. j. Purchase for Field Test or Pilot Test. Expenditures for (1) the purchase of a particular material or service which has been designated by the Board of Directors or the General Manager as a purchase for experimental purposes or (2) for trial use of the specific product or (3) a demonstration project for new construction techniques, do not require application of competitive pricing procedures. k. Purchase of Replacement Parts. When a component or replacement part for a product that is already in use and for which there is no adequate substitute, provided the product is only available through a sole source. Every attempt should be made to obtain competitive pricing when trade name items are available from multiple suppliers. I. Purchases and Leases of Real Property. The law generally regards parcels of real property as unique, and, therefore, competitive pricing procedures would not normally apply. Advice of District Counsel should be sought in regard to both acquisitions and sales of real property. m. Utility Services. The purchase of utility services, such as Internet service providers, telephone, water, gas and electricity do not require formal competitive bidding. 23 Central Contra Costa Sanitary District November 30, 2011 TO: CAPITAL PROJECTS COMMITTEE VIA: JAMES M. KELLY, GENERAL MANAGER ANN FARRELL, PFPUTY GENERAL MANAGER/DIRECTOR OF ENGINEERING Arm JARRED MIYAMOTO- MILLS, PROVISIONAL ENVRIONMENTAL SERVICES DIVISION MANAGER 3. zotx FROM: RUSSELL B. LEAVITT, ENGINEERING ASSISTANT III raKI SUBJECT: POTENTIAL EL TOYONAL -ALTA VISTA -DOS OSOS CONTRACTUAL ASSESSMENT DISTRICT SUMMARY: Mr. Russell Cohn, a coordinating property owner for a potential CAD in the El Toyonal area of the City of Orinda, asked that the Board consider providing greater District financial support for the CAD than is allowed under the current CAD policy. Specifically, Mr. Cohn requests that the District (rather than the initial participants) cover the non - participants' shares of sewer main construction costs, as is done in the Alhambra Valley Assessment Districts (AVADs). Greater District support would reduce the cost to initial participants, which would likely increase the chances of forming a successful CAD. Consideration of this request is scheduled for the December 15, 2011 Board meeting. BACKGROUND: The potential CAD to serve the El Toyonal -Alta- Vista -Dos Osos neighborhood in Orinda currently has about four to six potential Initial Participants. The CAD would install 1,600 to 2,300 feet of new sewer in El Toyonal, Alta Vista and Dos Osos (on the El Toyonal hill). Staff has been working with this group since before 2005. Mr. Cohn recently requested the District cover CAD non - participants' shares (as we did for AVADs) to improve the likelihood that a CAD could be formed and that sewers could be installed next year. Mr. Cohn has stated that those willing to initially participate cannot afford the $60,000 to $100,000 per owner that it would cost for them to pay for the non - participants' share. Staff informed Mr. Cohn that the AVADs were a special case; the District extended a trunk sewer into the valley and covered non- participants' shares in tributary AVADs to encourage a more rapid rate of connection and reimbursement of the District's trunk sewer costs. Depending how far up the hill a project extended, costs are estimated to range between $312,000 to $533,000 (to reach the Cohn property and the 10 -12 intervening properties between the existing public sewer and the Cohn's property), and $540,000 to $825,000 (to reach the last property on Alta Vista and the 20 -25 intervening properties, including Potential El Toyonal -Alta Vista -Dos Osos CAD November 30, 2011 Page 2 of 6 those owned by the Cohn's group). With the addition of more side streets, the total cost to serve the 25 developed and 20 vacant properties identified on Figure 1 would be about $1.4 million. While Section 6520.5 of the Sanitary District Act of 1923 states: "...(District) Revenues may be used for any purpose except the acquisition or construction of additional local street sewers or laterals which are an augmentation to an existing sewer system ", Section 6.20.400 District Code addresses this issue by requiring reimbursement of any District funds used to "...design and construct public sewage facilities for an existing or proposed development" (including local street sewers). It states: In certain cases, the public interest and public safety may require the District itself to design and construct public sewage facilities for an existing or proposed development. In order to comply with applicable law concerning use of District revenues, the District shall adopt a reimbursement fee structure to provide for full reimbursement of any and all costs associated with installation of local street sewers. Reimbursement fees to reimburse the District for other sewer facilities may also be imposed. Reimbursement fees for District costs shall be calculated in the same or similar manner set forth in this chapter for installers in order to provide for full recapture of District costs. Such costs shall be placed in reimbursement accounts, pursuant to the same provisions and requirements for installers. (emphasis added) Mr. Cohn's group believes that the El Toyonal -Alta Vista -Dos Osos CAD can be considered a "special" case because: 1) The project is in the EBMUD drinking watershed (San Pablo Reservoir); 2) Existing septic tanks perform poorly due to the El Toyonal hill's clay soil and steep topography; 3) Contra Costa Environmental Health has had a moratorium on development of new septic tanks in the area since 1970 (repair and replacement of existing septic systems is allowed); 4) Extending public sewers before property owners replace old septic systems with new "enhanced" (high cost) systems is an advantage to all (property owners and the District). Once an enhanced system is installed the owner of that property is unlikely to participate in a future sewer extension project, making it even more difficult for remaining property owners to afford extending the public sewer; 5) Sewer installation in El Toyonal is exceptionally expensive since the road is steep, narrow and windy, and City encroachment permits require severely limited working hours as it is the only practical route up and down the hill for upslope residents. Potential El Toyonal -Alta Vista -Dos Osos CAD November 30, 2011 Page 3 of 6 Note: In this area, El Toyonal is a public (City of Orinda) road and the other roads (Alta Vista, Camino Del Monte and Dos Osos) are private. Generally, we rely on the participants "appurtenant" access and utility easement rights for installation and maintenance of District sewers. Participants are required to sign a road maintenance agreement that ensures that the road will be adequately maintained for sewer maintenance access. While pavement restoration in the area of the sewer trench is considered an allowable CAD project cost, any extraordinary road reconstruction undertaken at the time of sewer installation are paid for by those property owners with access and utility rights in the road. County Environmental Health, the City of Orinda, EBMUD and District staff agree that elimination of septic tanks on the hill would be beneficial to public health and the environment. CONSIDERATIONS Fiscal Impact — If the District were to cover the non - participants' share of project costs, as requested and as it has done under the AVAD Financing Program, the financial impact would be one of extended cash flow, rather than one of initial funds needed for project construction. The total amount needed for an El Toyonal CAD (if approved) would be the same, regardless of the Board action on Mr. Cohn's request. Under the current CAD policy, the District's investment in the CAD would be reimbursed to the District by the initial participants within ten years. (The Initial Participants then would receive reimbursement from any non - participant that connects within twenty years.) If the District were to cover the non - participants' share, however, each participant's share would be reduced to the lowest possible amount. It is possible that a lower cost would encourage more property owners to participate. As is generally the case with CADs, some participants would pay off their assessment upfront and some would finance over ten years. There would be no predetermined end -date for reimbursement to the District from non - participants; that is, reimbursements to the District would continue until all non - participating properties had connected to the public sewer. Since some properties adjacent to proposed CAD sewer routes may not connect to the public sewer for many years (or ever), it is possible that the District would not be fully reimbursed by non - participants unless the number of properties assumed to benefit from the project are limited and the calculation of the "project- cost - share - per - property" includes only those lots that are reasonably likely to connect in the next 10 -20 years. To compensate for lost investment opportunity costs, the District could annually increase the non - participants' reimbursement fee by the annual yield (interest rate) Potential El Toyonal -Alta Vista -Dos Osos CAD November 30, 2011 Page 4 of 6 earned by funds placed in the Local Agency Investment Fund (LAIF), plus one percent (the same approach that is used for AVADs. The District could consider increasing the rate of reimbursement by requiring payment in full upon sale of participating properties, and offering financing to non - participants beyond the initial signup period for the CAD (as was also done with AVADs. It would also be possible to reduce the cost of annual assessments for those participants who finance their share of project costs by extending the financing period beyond the 10 -years allowed under the existing CAD policy. For example, AVADs are financed over 15 years. As an example, a $30,000 assessment at 6 percent interest, would cost $4,033 per year over 10 years, $3,061 per year over 15 years, and $2,596 per year over 20 years. A longer repayment period might encourage more property owners to participate, but would also extend the period for repayment of the initial participants' share of project costs. Extending the CAD repayment period could be offered instead of, or in addition to, Mr. Cohn's requested District coverage of non- participants' share of project costs. Financial Status of CAD and AVAD Programs — By the end of this fiscal year, the District will be fully reimbursed for 12 of the 23 CADs approved by the Board between 1997 and 2004. The remaining principal owed from the other 11 CADs is $757,000, which will be completely reimbursed to the District by the end of fiscal year (FY) 2014- 15. The District has also funded six AVADs, which have a 15 -year financing period, compared to the 10 -year financing period for CADs. Of the approximately $5 million the District has funded in AVAD expenses (including the Alhambra Valley Trunk Sewer), the District has been reimbursed about $700,000. The remaining principal owed from current AVAD participants is about $1.7 million, which will be completely reimbursed to the District by the end of FY 2025 -26. The balance of $2.6 million will be paid by AVAD non - participants and future, indirect connectors to the Trunk Sewer beyond the boundaries of existing AVADs, as they connect over time. Going forward, the District has identified the potential for about $5 million of future CAD projects and those funds are included in the District's 10 -Year Capital Improvement Plan. Changing the CAD policy as discussed in this memo would not change the total cost of future CADs, only the rate at which the District is reimbursed for the CAD funds expended. Precedent — If the Board chooses to cover the non - participants' share of project costs in this case, other future CAD participants could request a similar consideration. These requests could be handled on a case -by -case basis, though the Board may want to establish criteria for evaluating these requests. These criteria could include proximity to a drinking watershed, elimination of septic systems, Environmental Health septic system moratorium areas, high sewer construction costs, high cost - per - property, necessity for Potential El Toyonal -Alta Vista -Dos Osos CAD November 30, 2011 Page 5 of 6 individual residential pumps (added property owner expense), and /or urgency of project implementation. CEQA — Historically, District CADs have been exempt from the California Environmental Quality Act (CEQA) due largely to the relatively short distances involved and required compliance with District mitigating construction specifications. The method of CAD financing would not affect its CEQA status. OPTIONS 1. Maintain the existing CAD policy that requires participants to cover the cost of non - participants. 2. Grant the Cohn group's request that the District cover the non - participants' share for an El Toyo nal -Alta-Vista- Dos Osos CAD only. 3. Review the CAD policy to identify criteria under which the requested level of District participation would be acceptable for other future CADs. RBL:JM2:sdh Attachments: • Figure 1 • November 17, 2011 Letter from Russell Cohn, Orinda Property Owner 0 U N O N O N 0 in m M m Q m� >, N O O M W � � �� o � cfl a� 0 o m a.za P H a J Q J Q z O O H J w z a LL O U) W �U a� ON ao tI) �- Z �w U. w� zw w cn 00 cn �a J J aj wa O� az Ov N WO =O QO JD r W D C7 LL November 17, 2011 RE: Agenda item for December 15, 2011 meeting — El Toyonal Area Update Dear CCCSD Board Members, We are asking for your consideration to provide financial assistance in building the long- overdue sanitary sewer system for the El Toyonal area in Orinda. This area is unique in that a septic moratorium was imposed in 1970 due to concerns about failing septic systems fouling the drinking water held in the local reservoirs. However, since 1970 many pre - existing septic systems continue to operate in the area. Furthermore, the existing home owners with septic systems have opposed bringing a sewer system into the area due to their opposition to developing the relatively few remaining open lots. The financial burden of building a sewer system in the area has therefore been placed largely on the backs of the owners of vacant lots. This situation has led to a 40 -year period of gridlock with regard to moving ahead with the public health issue of providing a sanitary sewer to the northwest section of Orinda. We, the pro -sewer homeowners in the area, have just now culminated another two -year cycle of meetings with CCCSD, organizing property owners and the examination of multiple CAD's to try to piece together a sewer system to serve the area. The final result of this effort, as the many that have come before, is that the financial burden to build the system is too prohibitive for the initial subscribers. After examining the options, we are asking the Board to consider a financing structure that has previously been used in the Alhambra area where the CCCSD provided financing for the property owners who chose to delay their participation in the sewer project. We greatly need your leadership to complete this project and thank you for your consideration. Sincerely, Russell Cohn, Orinda Property Owner