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HomeMy WebLinkAboutMETROPOLITAN WATER DISTRICT 3 . N-2005-079 AGREEMENT NO. 66657 FY 2005-15 THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA'S COMMERCIAL/INDUSTRIAL/INSTITUTIONAL WATER CONSERVATION ITEM FUNDING AGREEMENT BETWEEN THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA AND CITY OF SANTA ANA AGREEMENT NO. 66657 FY 2005-15 THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA'S COMMERCIAL/INDUSTRIAL/INSTITUTIONAL WATER CONSERVATION ITEM FUNDING AGREEMENT BETWEEN THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA AND CITY OF SANT A ANA T ABLE OF CONTENTS Section Page Recitals....................................................................................................................... ......................2 Section 1: Agreement Term. ..... ............ ............. .,. ...... ......................... ................ ... ... ... ... ...............3 Section 2: Agreement Administrators................................................. ............................................3 Section 3: Reporting Requirements ................................................................................................3 Section 4: Installation Verification .................................................................................................3 Section 5: Incentive Amount and Payment.....................................................................................3 Section 6: Responsibilities and Ownership.....................................................................................4 Section 7: Rate Structure Integrity..................................................................................................5 Section 8: Notice.............................................................................................................................6 Section 9: Other Terms ...................................................................................................................7 Section 10: Evaluation, Audit and Record Retention .....................................................................7 Exhibits Exhibit A: Metropolitan cn Program Incentives Exhibit B: Additional cn Incentives by Member Agency Exhibit C: Member Agency Not Using Metropolitan's Vendor City of Santa Ana -1- Agreement No. 66657 . AGREEMENT NO. 66657 FY 2005-15 THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA'S COMMERCIAL/INDUSTRIAL/INSTITUTIONAL WATER CONSERVATION ITEM FUNDING AGREEMENT BETWEEN THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA AND CITY OF SANTA ANA THIS AGREEMENT (Agreement) is made and entered into as ofJanuary 1, 2005 by and between The Metropolitan Water District of Southern California (Metropolitan) and City of Santa Ana, a member public agency of Metropolitan, hereinafter referred to as Member Agency. Metropolitan and Member Agency may be collectively referred to as "Parties" and individually as "Party". Recitals A. Pursuant to Board Letter 9-1, dated January 13, 2004, Metropolitan adopted a long-term regional Commercial/Industrial/Institutional (CII) conservation retrofit program (Program). Under the Program, Metropolitan entered into an agreement with a Vendor to provide centralized marketing and incentive administration to its Member Agencies' end use CII customers. The Program also provides an option for Member Agency to implement retrofits on their own without Metropolitan's Vendor. B. Under the Program, Metropolitan has established fixed-rate incentives for a number of water-conservation retrofits implemented by commercial, industrial and institutional users of municipal water supplies within Metropolitan's service area. Metropolitan expects to establish incentives in the future for additional water conservation retrofits and may also change existing funding rates. Metropolitan has fiscal responsibility to manage its budget, and hence may limit availability of funds or the number of items that qualify for funding. C. At its sole discretion, Member Agency can also choose to supplement Metropolitan's incentives. City of Santa Ana -2- Agreement No. 66657 - NOW, THEREFORE, in consideration of the promises and covenants hereinafter set forth, the Parties do agree as follows: Section 1: Agreement Term 1.1 This Agreement will be effective on January 1, 2005, and shall terminate on December 31,2015 (Term). Continuance of this Agreement will be subject to annual budget approval by Metropolitan's Board. 1.2 This Agreement may be amended at any time by written mutual agreement executed by both of the Parties. 1.3 This Agreement may be terminated by either Party for any reason after 30 days written notice to the other Party as provided in Section 8. Within 90 days of the termination date, Metropolitan will provide a Final Program Report to Member Agency. Section 2: Agreement Administrators 2.1 Mr. Jose Vergara is appointed Agreement Administrator for Metropolitan for the purpose of administering this Agreement and making any decisions in connection therewith on behalf of Metropolitan. Concerns regarding the Program should be addressed to Mr. Vergara. 2.2 Mr. Thomas Dix is appointed Agreement Administrator for Member Agency for the purpose of administering this Agreement and making any decisions in connection therewith on behalf of Member Agency. 2.3 The designated Agreement Administrators may be changed by providing written notice to the other Party as outlined in Section 8. Section 3: Reporting Requirements 3.1 Metropolitan shall provide Member Agency with an annual Program report that includes a summary of Program activity within Member Agency's and its participating retail agencies' service areas. 3.2 Metropolitan shall provide Member Agency with Program activity data within Member Agency and its participating agencies' service area through designated on-line access to reports. Section 4: Installation Verification 4.1 Metropolitan, at its own expense, shall conduct an independent verification of fixture retrofits and conduct interviews with end-use cn customers regarding their experience with the Program to randomly selected Program participants throughout Metropolitan's service area. Section 5: Incentive Amount and Payment 5.1 Under the Program, Metropolitan has established fixed-rate financial incentives for a number of water-using devices as shown in Exhibit A and Member Agency has City of Santa Ana -3- Agreement No. 66657 , established additional incentives as shown in Exhibit B, which exhibits are attached hereto and incorporated herein by this reference. The combined financial incentives from Exhibits A and B per device will be paid by Metropolitan to Member Agency's cn customers for accomplished installations, compliant with Metropolitan's Program. 5.2 Metropolitan, through its Board, expects to establish incentives in the future for additional water conservation retrofits and may also change existing incentive rates. Metropolitan has fiscal responsibility to manage its budget, and hence may limit availability of funds or the number of items that qualify for incentives. To the extent Metropolitan's Board determines to change or eliminate the existing incentives listed in Exhibit A, an Addendum to Exhibit A will be issued from Metropolitan and that Addendum will identify the changes as ofthe Addendum's effective date. 5.3 At its sole discretion, Member Agency may choose to supplement Metropolitan's incentives. Member Agency's supplemental incentives are identified in Exhibit Band may be revised by addendum upon written notice from Member Agency to Metropolitan at any time during the term ofthis Agreement. Every Exhibit B Addendum shall constitute the respective agency's entire financial commitment under this Agreement and shall fully replace the prior Exhibit B. Revisions may apply only to the service areas of certain retail agencies within Member Agency or to the Member Agency's entire service area. It is the responsibility of Member Agency to identify boundaries of the respective service areas it proposes in an Exhibit B addendum in a format that supports practical implementation ofthe Program. Upon receipt of an Exhibit B addendum, Metropolitan, shall establish an effective date for implementing the changes if in its sole determination it concludes that the changes are consistent with its program implementation approach. Metropolitan shall notify Member agency of its determination and the effective date of every Exhibit B addendum it receives. 5.4 After incentives pursuant to Exhibit B are issued by Metropolitan to customers in Member Agency's service territory, a debit of equal amount will be posted on Member Agency's ensuing water bill from Metropolitan. Ifthere is subsequently a correction, it will be posted on an ensuing Member Agency water bill from Metropolitan. Section 6: Responsibilities and Ownership 6.1 Member Agency elects to participate in Metropolitan's Program to provide financial incentives for water-efficient devices within its service area. This Agreement identifies the specific incentive amounts that are in effect in the individual Member Agency's service territory. 6.2 If Member Agency elects not to use Metropolitan's Vendor but rather will administer the Program itself or through its own vendor, the provisions in Exhibit C will apply. 6.3 Member Agency agrees to allow Metropolitan and Vendor to market and administer commercial incentives in its service territory and assist Vendor in implementing Program in their area. Marketing activities undertaken by the Vendor specific to a Member Agency are subject to the approval ofthe Member Agency. 6.4 Metropolitan and Member Agency each agree that it is responsible for its own actions under this Agreement; agree to indemnify and hold the other party and their officers and agents harmless; and agree to defend the other party against any claim or asserted liability City of Santa Ana -4- Agreement No. 66657 arising out of its actions, either willful or negligent, or its actions in implementing the program (including, but not limited to, any claims or liability for injury or death to any person, damage to property, natural resources or the environment, or water quality problems). Such indemnity will include any losses relating to any claim made whether or not a court action is filed, and will include attorney's fees, and administrative and overhead costs related to or arising out of such claim or asserted liability. Section 7: Rate Structure Integritv 7.1 Member Agency agrees and understands that Metropolitan's rate structure as of January 1, 2004 ("Existing Rate Structure") provides the revenue necessary to support the development of new water supplies by local agencies through incentive payments in the Local Resources Program (LRP), Conservation Credits Program (CCP), and the Seawater Desalination Program (SDP). In particular, the Water Stewardship Rate is the component of Existing Rate Structure that provides revenue for the LRP, CCP and SDP. Further, Member Agency acknowledges that Existing Rate Structure and all components within that rate structure were developed with extensive public input and member agency participation, and that the elements of Existing Rate Structure have been properly adopted in accordance with Metropolitan's rules and regulations. 7.2 (a) Member Agency agrees that Metropolitan's rates set under the Existing Rate Structure may be reset throughout the term ofthis Agreement to account for the cost of service, and that Member Agency will address any and all future issues, concerns and disputes relating to Existing Rate Structure, through administrative opportunities available to them pursuant to Metropolitan's public board process. As such, Member Agency agrees if they file or participate in litigation or support legislation to challenge or modify Existing Rate Structure, including changes in overall rates and charges that are consistent with the current cost-of-service methodology, Metropolitan may initiate termination of this agreement consistent with Section 7.4 below. Metropolitan agrees that any change in Existing Rate Structure, including changes in cost-of-service philosophy or methodology would be enacted only after collaboration and discussion with its member public agencies, and Metropolitan's public board review and approval process. (b) Notwithstanding the foregoing, Member Agency retains the right to file and/or participate in litigation and/or to support legislation without triggering the termination of this agreement if there are material changes to Existing Rate Structure or changes in cost-of-service methodology used to set rates by future Metropolitan board action. Member Agency also retains the right to file and/or support litigation should Metropolitan, in setting rates under Existing Rate Structure, fail to comply with public notice, open meeting, or other legal requirements associated with the process of setting water rates and related taxes, fees, and charges. Member Agency agree that they will not file or participate in litigation, nor will they support legislation affecting Metropolitan's rate structure after any such change in rate structure or violation of the law regarding rate setting processes until, and unless, they have exhausted all administrative opportunities available to them pursuant to Metropolitan's public board process. City of Santa Ana -5- Agreement No. 66657 7.3 Member Agency agrees that all users ofthe Metropolitan conveyance and distribution system should support the LRP, CCP, and SDP, that such projects provide benefits to Metropolitan and the users ofthe system by making existing distribution and conveyance capacity available for additional delivery, and that under Existing Rate Structure, the Water Stewardship Rate is an element of charges properly adopted by the Metropolitan Board and properly applied to water wheeled through the Metropolitan conveyance and distribution system. 7.4 Should Member Agency file or support litigation, or sponsor or support legislation, that would challenge or be adverse to Existing Rate Structure, as described in Paragraph (a) of Section 7.2, Metropolitan's Chief Executive Officer may file a 90-day notice of intent to terminate this Agreement with Metropolitan's Executive Secretary, with copies to all members of Metropolitan's Board of Directors, and contemporaneously provide Member Agency with a copy of the notice. Within 30 days ofreceipt of such notice, Member Agency shall have the right to request, in writing, mediation of the dispute by a neutral third party with expertise in finance and rate setting. The mediator shall be selected by agreement of the parties, or failing agreement within 60 days of such request for mediation, a mediator shall be selected by the Metropolitan Board of Directors from a list of at least four candidates, one each from Member Agency, and two of which will be supplied by Metropolitan's Chief Executive Officer. The cost of the mediation shall be borne equally by the parties. The request for mediation shall also serve to stay the 90-day notice of intent to terminate, but for no more than 90 days beyond the filing of the notice of request for mediation, unless otherwise agreed in writing by the parties. If mediation does not result in an agreement acceptable to each party to this Agreement within the time provided herein, the notice of intent to terminate shall be reinstated. The Metropolitan Board of Directors shall act to approve or disapprove termination ofthis Agreement, and all of Metropolitan's obligations hereunder shall terminate if approved, on or before the ninetieth day following filing of the notice to terminate or, if mediation has been requested as described above, the ninetieth day following the request for mediation (or other date agreed in writing by the parties.) 7.5 Metropolitan and Member Agency agree that should litigation or legislation brought forth or sponsored by third parties result in changes to Existing Rate Structure, this Agreement will continue in effect unless mutually agreed in writing by the parties. 7.6 Should Metropolitan and its member agencies agree on an alternative rate and revenue structure that obviates the need for this section on Rate Structure Integrity, this section shall be amended or deleted to conform to such action. 7.7 The effective date ofthis Section is April 15, 2005. If Metropolitan's Board of Directors adopts provisions regarding rate structure integrity for inclusion in LRP, CCP and SDP agreements, which differs from that contained above in this Section, the Parties agree that the new provisions shall apply to this Agreement. Section 8: Notice 8.1 Any communication required to administer this Agreement shall be in writing and will be deemed received upon personal delivery or 48 hours after deposit in any United States City of Santa Ana -6- Agreement No. 66657 mail depository, first class postage prepaid, and addressed to the Party for whom intended, as follows: Ifto Metropolitan: The Metropolitan Water District of Southern California Post Office Box 54153 Los Angeles, CA 90054-0153 Attention: Mr. Jose Vergara If to Member Agency: City of Santa Ana 220 S. Daisy Avenue Bldg. MD-85 Santa Ana, CA 92703 Attention: Mr. Thomas Dix Either Party may change such address or Agreement Administrators by giving notice to the other Party as provided herein. Section 9: Other Terms 9.1 Any alteration or variation of the terms of this Agreement will not be valid unless made in writing and signed by both Parties. 9.2 This Agreement will inure to the benefit of and be binding upon Metropolitan, Member Agency, and their respective successors. 9.3 The partial or total invalidity of one or more parts of this Agreement will not affect the intent or validity of this Agreement. 9.4 This Agreement will be deemed a contract made under the laws of the State of California, and for all purposes will be interpreted in accordance with such laws. Metropolitan and Member Agency hereby agree and consent to the exclusive jurisdiction ofthe courts of the State of California, and that the venue of any action brought hereunder will be in Los Angeles County, California. 9.5 This Agreement constitutes the entire agreement between both Parties. Section 10: Evaluation. Audit and Record Retention 10.1 Metropolitan and Member Agency agree to provide access to their and their authorized representatives' books, documents, papers, computer files and records that are directly pertinent to this Agreement for the purpose of making Program evaluation, audit, examination, excerpts, and transcriptions. Metropolitan and Member Agency will retain all required records for a period of three Fiscal Years following termination of this Agreement. City of Santa Ana -7- Agreement No. 66657 IN WITNESS WHEREOF, the Parties hereto have executed this Agreement. Jeffery Kightlinger General C~sel ~ By: .(/X4!fy~ Senior Deputy General Counsel Date: 7 It;?-- Jt) .;;- I I THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA Dennis B. Underwood CEO/General Manager By: .p.~ k~ In. OA'~. Stephen N. Arakawa, Manager Water Resource Management r Date: ,\ \'"'1.-1 6,/ APPROVED AS TO FORM: APPROVED AS TO FORM: Joseph W. Fletcher City Atto~ey ^ . \ By: It \ y--<..- Mi d1ael vigliot. a Assistant City t Y ~\ APRROVAL AS TO FORM. k James G. Ross o Executive Director - P CITY OF SANTA ANA By: ,/ /)> 2" " / // ,/' l:Z,.//:J J . 6~"_"___ David N. Ream CitYM:?~ ATTESG '. ~<' PATRICIA E. HEALY Clerk ofthe Council ~1J In Duplicate 0: IA IS\ContractlA GREEICII/Maste/Santa Ana/Santa Ana CII Master Agreement City of Santa Ana -8- Agreement No. 66657 . CII Exhibit A Metropolitan CommercialfIndustrialfInstitutional Program Incentives Water-Efficient Device/Equipment Incentive/device ULF Toilets (includes flush-valve and gravity type) I $60 Dual-Flush (DF) Toilets" $80 Urinals (water efficiene / non -water consuming)" $60 X-Ray Re-circulation System' $2,000 Cooling Tower Conductivity Controller (CTCC)" $500 High Efficiency Commercial Clothes Washer7 $100 Water Broom' $100 Pre-Rinse Self-Closing Spray HeadY $50 I Qualifying ULF Toilets have a maximum flush of 1.6 gallonslflush (per ANSI). 2 Qualifying DF Toilets have a maximum flush of 1.6 gallons/flush and a reduced flush mode of 1.1 (per ANSI). 3 Qualifying Water Efficient Urinals have a maximum flush of 1.0 gallonslflush. 4 Qualifying Non-Water Consuming Urinals convey liquid without the use of water (per ANSI). S Qualifying X-Ray Re-circulating systems must reduce water usage by 98%. 6 Qualifying CTCC must automatically maintain conductivity or IDS level below a user-defined value by actuating the solenoid valve on the bleed line. 7 Qualifying HECW's have a water factor of9.5 or less (per Consortium for Energy Efficiency). 8 Qualifying Waterbrooms must be able to use high-pressure, low volume spray using only water with no cleaning agents at an average usage of 0.006 gallons/square feet. 9 Qualifying Spray Valves must demonstrate a flow rate that does not exceed 1.6:t. 0.1 gallons per minute (per CUWCC). City of Santa Ana -1- Agreement No. 66657 CII Exhibit B Additional Commercial/IndustrialJInstitutional Incentive by Member Agency (subagency) Water-Efficient Device/Equipment Additional CII Incentive/device (Member Al!encv/Local Al!encv) ULF Toilets (includes flush-valve and gravity type)JO $0 Dual-Flush (DF) Toilets" $0 Urinals (water efficient'"/ non -water consuming) 13 $0 X-Ray Re-circulation System" $0 Cooling Tower Conductivity Controller (CTCC)l' $0 High Efficiency Commercial Clothes Washer16 $0 Water Broom17 $0 Pre-Rinse Self-Closing Spray Head '" $0 Up to Total Dollars: Submitted by (name): $O/Y ear Mr. Thomas Dix Date: Agreement Administrator Signature: Member Agency: City of Santa Ana Local Agency and service area19 (if applicable): Metropolitan's Use Only Received by Metropolitan (date): Effective date of Exhibit/Addendum: Approved by: 10 Qualifying ULF Toilets have a maximum flush of 1.6 gallonslflush (per ANSI). 11 Qualifying DF Toilets have a maximum flush of 1.6 gallonslflush and a reduced flush mode of 1.1 (per ANSI). 12 Qualifying Water Efficient Urinals have a maximum flush of 1.0 gallonslflush. \3 Qualifying Non-Water Consuming Urinals convey liquid without the use of water (per ANSI). 14 Qualifying X-Ray Re-circulating systems must reduce water usage by 98%. 15 Qualifying CTCC must automatically maintain conductivity or TDS level below a user-defined value by acmating the solenoid valve on the bleed line. 16 Qualifying HECW's have a water factor of9.5 or less (per Consortium for Energy Efficiency). 17 Qualifying Waterhrooms must be able to use high-pressure, low volume spray using only water with no cleaning agents at an average usage of 0.006 gallons/square feet. 18 Qualifying Spray Valves must demonstrate a flow rate that does not exceed 1.6:1: 0.1 gallons per minute (per CUWCC). 19 Please illustrate service area by attaching a map, or a list of cities, or a list of zip codes. City of Santa Ana -2- Agreement No. 66657 . CII Exhibit C Member Agency Not Using Metropolitan's Vendor If a Member Agency elects not to use Metropolitan's Vendor, indicate in the box below and sign where indicated. By doing so, Member Agency agrees to the following: Program Tracking: Member Agency shall develop, provide and implement a master record-keeping database in Geographic Information Systems (GIS) format, to record and track all elements of the Program, including but not limited to: o rebate application for tracking purposes o date of rebate application o type of participating end user and NAICS code (North American Industry Classification) o type of facility in which device/equipment was installed (restaurant, market, distribution center, laundromat, etc.) o end-user (customer) name, billing address including zip code, and contact name and phone number o retail water agency name and water account number o Metropolitan member agency name o installation location address including separate fields for address, city, and zip code. o Installation location county code o device/equipment specification (types, brands, models, etc.) o number of devices/equipment installed at installation location o acre-feet of water savings (annual and lifetime) o rebate amounts for each device/equipment and payee name, address, and telephone number; source ofrebate funds o date of rebate check issuance and check number o any other fields that may be required by Metropolitan (up to 10 additional fields). Compensation: Payment to Member Agency will consist of reimbursement of rebates from Metropolitan consistent with Exhibit A and consistent with Section 5: Incentive Amount and Payment ofthis Agreement. There will be no need for an Exhibit B to this Agreement. Member Agency shall submit invoices to the Agreement Administrator monthly or more frequently if needed, whose mailing address is P.O. Box 54153, Los Angeles, California 90054- 0153. Each invoice shall include the following information: o Member Agency's name and mailing address, o Metropolitan's name and agreement number o device and equipment installation totals (current reporting period and total cumulative) segregated by customer category based on the NAICS code (to 4 digits) for each sub-agency and retail agency (if different) o lifetime acre-feet of water saved (current reporting period and total cumulative) City of Santa Ana -3- Agreement No. 66657 , CII Exhibit C o rebate applications completed (current reporting period and cumulative) o rebate amounts paid (current reporting period, total cumulative, amount previously reimbursed by Metropolitan) Member Agency's invoices shall be signed and certified to be true and correct to the best of Member Agency's knowledge. Reporting: Member Agency shall be responsible for the timely submittal to Metropolitan of annual reports and shall include the following: a. Annual Report shall summarize all prior-reporting periods, which shall conclude on December 31 of each calendar year. An administrative draft ofthe first annual report shall be submitted to Metropolitan for review and comment by January 30, 2006. Member Agency shall prepare and submit its final version of the first annual report by February 28, 2006. Similarly, an administrative draft and a final report for each following year's annual report shall be submitted for review and comment by end of January and February respectively of that year. b. Annual Reports will include summary information including, but not limited to: I. device and equipment installation totals segregated by customer category based on the NAICS code (to 4 digits) for each sub-agency and retail agency (if different) 2. lifetime acre-feet of water saved 3. rebate applications completed 4. rebate amounts paid (Member Agency and Metropolitan) o I will not participate in Metropolitan's centralized marketing and incentive program and agree to the above. APPROVED AS TO FORM: By: By: General Manager Date: Date: Metropolitan's Use Only Received by Metropolitan (date): Effective date of Exhibit/Addendum: Approved by: City of Santa Ana -4- Agreement No. 66657 r l1li ~:ngPOLlTAN WA TER DISTRICT DF SOUTHERN CALIFORNIA ',,~, ~s BOARD "" '!E';'; ACTION . . Board of Directors Water Planning, Quality and Resources Committee January 13, 2004 Board Meeting 9-1 Subject Authorize long-term regional CommerciallIndustrial/Institutional rebate program and additional $2.5 million to fund existing pilot program until new vendor agreement is executed Description This letter proposes a strategy to transition Metropolitan's Regional CommerciallIndustrialInstitutional (CII) Pilot Rebate Program (Pilot Program) into a long-term program. The Pilot Program has demonstrated an effective approach in providing financial incentives to motivate the business sector to conserve water. In order to assure there is no gap between the Pilot Program and the proposed long-term program, a six-month extension to the existing vendor agreement is needed. Water Resources Opportunity Prior to the Pilot Program, the CII sector had been largely an untapped market for water use efficiency. Within Metropolitan's service area, CII water consumption is estimated to be 900,000 acre-feet per year or approximately 25 percent of total retail demand. Since the Pilot Program's inception, more than 37,000 rebates for water-efficient retrofits such as clothes washers, cooling tower controllers, and ultra-low-flush toilets have been issued. The rebates were established using the $154/AF savings benchmark for conservation, and increased under the Pilot Program to jump-start the CII market and to test rebate levels and customer participation. These retrofits have resulted in water savings of more than 5,000 AFY. Significant opportunity remains to conserve more water through additional device retrofits. By the end of the program, based on trends in the Pilot Program, the rebates are projected to yield between 15,000 and 25,000 AFY. Even after the program, savings will continue to be generated, based upon estimated equipment life that can range up to 20 years. In addition to this program, staff is also working with member agencies to develop other improved approaches to conserving industrial process water and using recycled water in business applications. Pilot Program In March 2000, the Board authorized a three-year consultant services contract for up to $2.5 million with Honeywell DMC Services (Honeywell) for implementation of the Pilot Program. Honeywell was selected through a publicly advertised competitive process. Under the Pilot Program, businesses have received incentives to retrofit equipment with water-efficient devices. Introducing a regional approach, the Pilot Program successfully increased the business sector response to conservation incentives compared to the prior ell program. The Pilot Program has allowed Metropolitan to leverage its funding by receiving more than $2.3 million in co-funding since its inception from the California Public Utilities Commission, the Department of Water Resources, and the United States Bureau of Reclamation. In addition, member agencies and their retailers have co-funded rebates for their CII customers by more than $1 million. Total outside co-funding has almost doubled the program funding level. In May 2002, the Board approved an additional $5.4 million to fund the Pilot Program through June 2004. At that time, staff indicated that it would return to the Board with a long-term regional program founded on experience gained from the Pilot Program and member agency input. r , January 13, 2004 Board Meeting 9-1 Page 2 Evaluation of Pilot Program With the assistance of a qualitative research firm, staff evaluated the Pilot Program's strengths and weaknesses. Four focus groups with member agencies and program participants were formed. Additionally, businesses that expressed interest but did not participate in the program were interviewed. Lastly, water agencies outside of Metropolitan's service area were interviewed to gain insight on how other CII programs operate. The focus groups indicated high customer and member agency satisfaction from Pilot Program participants. All of the focus groups supported the one-stop-shop concept, where businesses can call a toll-free number to obtain program information, applications, and rebates, because it makes participation simple and easy. Focus groups also supported the Pilot Program's flexibility, which allows member agencies to customize and include additional rebate funding within their service areas. Proposed Program Staff worked with the member agencies to design a long-term program that sustains achievements and momentum generated by the Pilot Program and incorporates findings provided by the focus groups. Recommended concepts to be incorporated into a new scope of work include expansion of web-based services, participant recognition through awards or public acknowledgment, and targeted program marketing. Attachment 1 provides a description of the proposed long-term program. The Pilot Program received outside grant funding to increase the rebates for a few conservation measures. When the outside grant funding was exhausted, the Board approved continuing the higher rebate amounts with funding above the $154/ AF savings benchmark. These higher rebates were initiated to jump-start the Cll market and to test rebate levels and customer participation. The long-term program will return to rebates based on $J54/AF savings and focus on program design to sustain and enhance customer response. A comparison of rebates provided under the Pilot Program and those proposed for the long-term program is provided in Attachment 2. These incentives are also available for member agencies which choose to implement their own program. Future agreements with member agencies that participate in the Pilot Program will be modeled after our new master conservation agreements. The new agreement will provide longer terms, flexibility to add and delete eligible device retrofits and support improved administrative efficiency. Vendor Services A RFP would be issued for program management for a period of five years. Staff will bring back the proposed consultant services contract terms to the Board for consideration. Like the Pilot Program, the long-term Cll program will select a vendor through a competitive RFP process to implement the new long-term program. The vendor will market and manage the program. The vendor will also manage and coordinate all rebates, which include funding from Metropolitan, member and retail agencies, and grants. Metropolitan will pay to the vendor the total rebate amount plus its service fees. Service fees would be paid out of Metropolitan's Operation and Maintenance budget. Metropolitan's rebates would be paid out ofa Conservation Credits budget. Metropolitan would then recover payments from member agencies and grant-providing agencies for their share of the incentive. The service fees, which total approximately $750,000 since inception of the Pilot Program, are 12 percent of the program's overall expenditures. Focus group members emphasized the importance of a long-term commitment to lend stability and credibility to the program. To ensure that there is no interruption in customer service, staff recommends a six-month extension of the current Honeywell vendor agreement through December 2004 or until a new agreement is executed, whichever is earlier. This extension is estimated to cost about $2.5 million and will span the time needed to accommodate issuance of the RFP, proposal evaluation, vendor selection, board approval, and contract execution without interrupting the current interest and participation of the business community. The extension would raise the contract total to $10.4 million. Approximately 12 percent of the increased cost would be for vendor services to administer and market the program, and the remainder would be a pass-through of Metropolitan's incentives to the customer. . January 13,2004 Board Meeting 9-1 Page 3 Policy By Minute Item 42609, dated Sept. 9, 1997, the Board approved the CIl Conservation Program and authorized the General Manager to enter into agreements with member agencies to participate in the Program. By Minute Item 43928, dated March 14, 2000, the Board authorized the current Pilot Program, services of Honeywell up to $2.5 million and accepted a grant of$150,000 from the Bureau of Reclamation. By Minute Item 44577, dated August 20, 2001, the Board authorized new incentive rates and an additional $4 million over three years to allow Metropolitan's Pilot Program to continue until February 2004. By Minute Item 44870, dated May 14,2002, the Board authorized an increase in the Honeywell contract from $2.5 million to $7.9 million through June 2004. California Environmental Quality Act (CEQA) CEQA determination for Option # I: The proposed actions are categorically exempt under the provisions of CEQA and the State CEQA Guidelines. The proposed actions involve rebates for installation of conservation measures (e.g., ULF toilets, high-efficiency clothes waters, water brooms, etc.) at existing public or private facilities involving negligible or no expansion of use and no possibility of significantly impacting the physical environment, within the context of extending the existing Pilot CIl Rebate Program as well as the creation of a long-term Cll Rebate Program. Accordingly, the proposed actions qualiry under a Class I Categorical Exemption (Section 15301 of the State CEQA Guidelines). In addition, the fiscal aspects of the rebates themselves and the extension of the existing agreement with Honeywell are not subject to CEQA because they involve the creation of government funding mechanisms or other government fiscal activities, which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment (Section 1 5378(b)(4) of the State CEQA Guidelines). The CEQA determination is: Determine that pursuant to CEQA, the proposed actions qualiry under a Categorical Exemption (Class I, Section 15301 of the State CEQA Guidelines). In addition, the fiscal aspect of the rebates and the extension of the existing agreement are not subject to CEQA (Section l5378(b)(4) of the State CEQA Guidelines). CEQA determination for Option #2: The proposed actions are categorically exempt under the provisions of CEQA and the State CEQA Guidelines. The proposed actions involve rebates for installation of conservation measures (e.g., ULF toilets, high-efficiency clothes washers, water brooms, etc.) at existing public or private facilities involving negligible or no expansion of use and no possibility of significantly impacting the physical environment, by authorizing a RFP in conjunction with the creation of a long-term CIl Rebate Program. Accordingly, the proposed actions qualify under a Class I Categorical Exemption (Section 1530 I of the State CEQA Guidelines). Board Options/Fiscallmpacts Option #1 Adopt the CEQA determination and a. Authorize a long-term regional CIl program; and b. Increase current Honeywell contract by $2.5 million through December 2004. Fiscal Impact: $2.5 million in FY 2004/05 to extend current vendor contract. Full program costs will be defined when new vendor is selected and proposed consultant agreement terms are presented for board consideration. . January 13,2004 Board Meeting 9-1 Page 4 Option #2 Same as Option # 1, but do not increase current Honeywell contract thereby ending the Pilot Program prior to commencement of the long-term program. Fiscal Impact: Full program costs will be defined when new vendor is selected and proposed consultant agreement terms are presented for board consideration. Staff Recommendation Option #1 ~f(). ~ Stephen N. Arakawa Manager, Water Resource Management ~~:?~ Chief Executive Officer 12/22/2003 Date 12/23/2003 Date Attachment 1 - Description of Metropolitan's long-term regional Commercial/lndustrial/lnstitutional rebate program Attachment 2 - Pilot Program vs. Long-Term Program Rebate Comparison BLA#2411 . " January 13,2004 Board Meeting 9-1 Attachment I, Page I of I Description of Metropolitan's long-term regional Commercial/Industrial/Institutional rebate program The objective of the program is encouraging businesses through financial incentives offered by Metropolitan and its member agencies to conserve water by retrofitting particular water-using devices. The ell rebate program incorporates the use of a vendor to provide business participants with a single point of contact through a toll-free number. That number is currently (877) SA V A BUe. Under Metropolitan's contract, the vendor provides a complete customer interface that includes: . answering questions . sending out rebate applications . processing the rebates and issuing checks . maintaining a comprehensive database oftninsactions The database will track the varied additional incentive amounts provided by the individual agencies, the addition of new technologies receiving rebates, and the member agency participants in the program. At Metropolitan's direction, the vendor provides various marketing efforts that range from brochures to public appearances at trade shows or professional association meetings. This includes specific sector marketing outreach efforts and the incorporation of web-based technology for customer use. All of this is in coordination with and managed by Metropolitan staff. The vendor provides regular activity updates to Metropolitan, which in turn consults with participating member agencies. ~ . \ January 13,2004 Board Meeting 9-1 Attachment 2, Page 1 of 1 Pilot Program vs. Long-Term Program Rebate Comparison Pilot Program Long-Term Program Rebate Rebate' ULF Toilets Most ULF Toilets $ 60 $ 60 Flush- Valve in high-use areas $ 120 $ 60 Gravity type in high use areas $ 90 $ 60 Urinals: water efficient/ no water $ 60 $ 60 X-Ray Recirculation System $ 2,000 $ 2,000 Cooling Tower Conductivity Controller $ 500 $ 500 High Efficiency Commercial Clothes $ 250 $ 100 Washer -. Water Broom $ 100 $ 100 - Water Efficient Urinal $ 60 $ 60 * Metropolitan rebate amounts - Greater amounts would be provided to accommodate incentives from member agencies, third parties or to make use of outside grants.