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Agenda Packet - September 26, 2011 - UB
_ trw; AZUSA LIGHT HATER AGENDA REGULAR MEETING OF AZUSA UTILITY BOARD AZUSA LIGHT & WATER SEPTEMBER 26,2011 729 N. AZUSA AVENUE 6:30 P.M. AZUSA, CA 91702 AZUSA UTILITY BOARD KEITH HANKS CHAIRPERSON ANGEL CARRILLO JOSEPH R. ROCHA VICE CHAIRPERSON BOARD MEMBER URIEL E. MACIAS ROBERT GONZALES BOARD MEMBER BOARD MEMBER 6:30 P.M. Convene to Regular Meeting of the Azusa Utility Board • Call to Order • Pledge to the Flag • Roll Call A. PUBLIC PARTICIPATION 1. (Person/Group shall be allowed to speak without interruption up to five (5) minutes maximum time, subject to compliance with applicable meeting rules. Questions to the speaker or responses to the speaker's questions or comments shall be handled after the speaker has completed his/her comments. Public Participation will be limited to sixty (60) minutes time.) 1 001 B. UTILITIES DIRECTOR COMMENTS C. UTILITY BOARD MEMBER COMMENTS D. CONSENT CALENDAR The Consent Calendar adopting the printed recommended action will be enacted with one vote. If Staff or Councilmembers wish to address any item on the Consent Calendar individually, it will be considered under SPECIAL CALL ITEMS. 1. Minutes. Recommendation: Approve minutes of regular meeting on July 25, 2011 as written. July Minutes.pdf 2. Automation of Payment Interface Process. Recommendation: Approve award of contract to Systems & Software in amount not-to-exceed $16,000 to automate the process of uploading/downloading payment files from Azusa Light & Water's three payment vendors. Software Svcs.pdf 3. Ratification of Contract for Underground Electric Conduit Repair. Recommendation: Ratify the award of contract to AAJ Incorporated in amount not-to-exceed $12,745 for urgent repairs of the underground electric conduit that runs along the north end of Avenida Conejo and onto the property of Azusa Green Golf Course, north of Sierra Madre Avenue. Elec Conduit Repair.pdf 4. Award of Contract for Roof Repair at 1020 W. 10th Street. Recommendation: Award contract to Best Contracting Services in amount not-to-exceed $112,345 for refurbishing the existing roof at the Electric Division Yard (1020 W. 10`h Street). E Roof Repair Bid Award.pdf 2 002 5. Ratification of Water Leases for FY 2010-2011. Recommendation: Ratify the water rights leases to the Sunny Slope Water Company and Miller-Coors and ratify signature of the leasing documents signed by Sunny Slope Water Company as allowed by Resolution No. 09-C69 approved by the Utility Board on July 27, 2009. Water Right Leases.pdf 6. Approval of bid by Ironman to Retrofit Water Utility Trucks. Recommendation: Approve the bid by Ironman in the amount of$61,981.00 to retrofit four(4) Water Division diesel trucks with Particulate Matter (PM) Traps pursuant to Azusa Municipal Code 2-523. KM Truck Retrofits.pdf 7. Approval of Proposal to Provide Auditing Services for FARECaI. Recommendation: Approve the proposal of Moss, Levy, & Hartzheim, LLP in amount not-to-exceed $19,845 to provide auditing services to the Financing Authority for Resource Efficiency of California (FARECaI) pursuant to agreement with FARECaI approved by the Utility Board on November 22, 2010. FARECaI Auditing FareCal Audit Svcs Rpt.pdf Proposal.pdf E. SCHEDULED ITEMS 1. Execution of Memorandum of Understanding for the Assignment of San Juan Unit 3 Entitlement Rights. Recommendation: Authorize the Director of Utilities to sign a Memorandum of Understanding (MOU) for the layoff and sale of Azusa Light & Water's interest in the San Juan Project to the Utah Association of Municipal Power Systems (UAMPS). SJ Staff Rpt.pdf UAMPS MOU.pdf Prior Staff Rpt.pdf 2. Amendment to the Azusa Risk Management Policy. Recommendation: Approve the amendments to the Azusa Risk Management Policy as shown in the attachments to this report, including Exhibit A and Appendix D-1. Risk Mgt Poly Risk Mgt Poly Risk Mgt Poly Admt-Rpt.pdf Table.pdf Doc.pdf 3 003 3. Authorization to Solicit Proposals for Financial Advisor. Recommendation: Approve Request for Proposal (RFP) scope of work and authorize staff to issue RFP to solicit proposals from Financial Advisors to consider options to refinance long term debt of water utility related to the purchase of Azusa Valley Water Company. sk- Rpt RFP for FA.pdf Chart MMD AAA Chart MMD AA Yields.pdf Yields.pdf F. STAFF REPORTS/COMMUNICATIONS 1. Fourth Quarter Budget Report for Electric and Water Funds, FY 2010-2011 4th Qtr Fin Rpt.pdf Elec-4thQtrly-Bud-Rp Water-4th- t.pdf Qtrly-Bud-Rpt.pdf G. ADJOURNMENT 1. Adjournment. "In compliance with the Americans with Disabilities Act, if you need special assistance to participate in a city meeting, please contact the City Clerk at 626-812-5229. Notification three (3) working days prior to the meeting or time when special services are needed will assist staff in assuring that reasonable arrangements can be made to provide access to the meeting." "In compliance with Government Code Section 54957.5, agenda materials are available for inspection by members of the public at the following locations: Azusa City Clerk's Office - 213 E. Foothill Boulevard, Azusa City Library- 729 N. Dalton Avenue, and Azusa Light& Water-729 N.Azusa Avenue,Azusa CA." 4 004 Utility Board, , ow , .• , 40t)* Meeting .... . „ .., , t 4. 400). , , ., , . „a.. !pi a 4.aiw 40,00e, ,„0 „ 0, 14,t.. . .,. .. .. . ,.... •I '1 IMP 411111C ' 4 111.111111.001100 v i .� � r � Yr � +SIV illir .. l 1 ; if, lc, ...e 11 a a ♦ t September 26, 2011 Chair Keith Hanks AZUSA Consent Agenda July 25, 2011 minutes Automation of Payment Interface Process ($16,000) Underground Electric Conduit Repair ($12,745) Electric Yard Roof Repair ($112,345) FY11 Water Lease Ratification Contract for Retrofit of Water Trucks ($61,981) Auditing Services for FARECaI ($19,845) San Juan Memorandum of U ,i, ;. 1,,, ,411 le rill.. 1 1 w i ,.. r, ,.. , „ , , ., .. , 4‘4111r4 R Azusa Utility Board September 26 , 2011 ......",. sp..", AZUSA Background In 1993 , Azusa procured 30 MW of San Juan power through SCPPA On September 27 , 2010, the Utility Board authorized the Utilities Director to seek buyers for San Juan The Utah Associated Municipal Power Systems ( DAMPS) was identified as a possible buyer of Azusa's SJ interests AZUSA Bases for Divestiture SJ provides about 80% of Azusa's power Azusa is —20% over-resourced, increasing to —40% with Lodi Energy Center and over 50% with required renewable additions SJ costs have increased significantly over the past few years with declining performance CAISO market changes make much of SJ difficult to deliver without price risk Numerous environmental initiatives are expected to adversely impact SJ economics Azusa's share of EPA ordered SCR installation for NOX would be about $14 million AZUSA UAMPS Established in 1980 under Utah law Composed of 51 members across 8 states About 15 current power projects/programs UAMPS has 7 % rights in San Juan Unit 4 Subset of members have " baseload " needs ItaME5 0.6~ iew otan n„«,ao-anm, ;pm vow . .y,i ms 6 AZUSA MOU UAMPS would acquire all of Azusa/Banning SJ interests ( -50MW) Two phases: — Phase 1 : "Layoff' beginning by July 1 , 2012 — Phase 2: Ownership transfer as early as 2015 or as late as 2020 UAMPS would be responsible for SCR costs after January 2012 Contingent on UAMPS acquiring needed transmission Azusa/Banning to purchase up to 20 MW of wind energy from UAMPS for 3 to 10 years at cost (MOU to be updated from 10 MW) Definitive agreement(s) to be completed by March 1 , 2012 AZUSA Fiscal Impact Operational * GHG SCR Mine Other A ZUS A Recommendation Authorize Director of Utilities to execute final MOU and incur additional legal expenses to develop/negotiate definitive agreement( s ) related to San Juan divestiture 0,t.3/41Tr "„, A "LUSA Risk Management Policy (Electric) . . ,„ ,„ . . . . • . . . Azusa Utility Board September 26, 2011 10 AZUSA 8 N 4 T z R Background In 1999, the Utility Board approved the Azusa Risk Management Policy. The Policy was amended in 2006. The Policy grants ranges of authority to Staff to engage in purchases, sales and hedging of energy, capacity, natural gas and transmission products. Recent RPS and GHG legislation makes it appropriate to modify the Policy to provide for trading of REC's and GHG allowances AZUSA Transaction Limits Exhibit A: Table 4-1 Transaction Authorization & Limits (Revised 912612011) Assistant Director 1 Real Time Resource Power Resource of Resource Director of Light and Schedulers Schedulers Coordinator Management Water Department Purchases to Purchases to Purchases to meet Purchases to meet Purchases to meet Type meet load, meet load, load, covered load, covered load, covered sales, covered sales covered sales sales. hedges sales, hedges hedges -r-- Hourly to , Day ahead to Balance of Quarter ahead Balance of year Term balance of day balance of month quarter and p and balance of and year ahead quarter ahead__J. year Largest Largest Transaction requirement to requirement to 25 MW 50 MW 75 MW Volume (11.. meet load, sales meet load. sales from excess from excess Up to 100% of Up to 1100% of Up to 100% of Up to 110% of Up to 110%of Total Volumeestimated estimated estimated { estimated estimated (2): requirement or requirement or requirement or y requirement or requirement or available available available ! available available From pre- From pre- From pre-approved Gaunter-parry: From pre-approved From pre-approved approved credit approved credit credit list or with credit credit list credit list 1 list list Letter of Credit 12 AZUSA Appendix D- 1 D.1 AUTHORIZED TRADING PRODUCTS & GEOGRAPHIC MARKETS Physical Markets • Electric Power (energy. capacity, and transmission) • US markets accessible to Azusa for physical delivery of power Financial Instruments Electricity: • Fixed for floating swaps on underlying physical markets • Basis swaps on locations traded in the physical markets • Options (puts and calls) for caps. collars, and floors on underlying physical markets Natural Gas: • Fixed for floating swaps on underlying physical markets • Physical as (natural and bio-gas) Compliance instruments • GHG allowances • GHG offsets • Renewable Energy Credits ( RECs/TRECs) 13 AZUSA Recommendation That the Utility Board approve the proposed amendments to the Risk Management Policy 14 AZUti ,q Financial Advisor Services ,„ mt Azusa Utility Board September 26 , 2011 15 AZUSA Background • In 1993, Azusa issued $24,075,000 in revenue bonds to buy Azusa Valley Water Company • These bonds were refinanced in 2003 by the issuance of$20,370,00 in Certificates of Participation • Recent bond market trends indicate possible savings (perhaps $60 to 70K per year) by refinancing • Current debt service is $1.255 million per year with an average yield of 4.78% ,-w 16 � / i YE i d Historical Change in MMD A' Yields'A January 1, 200.3 thi'oi, /, September 21, 2011 •••■••MMD 'AA' 10-Year Yields 4••1.1••MMD 'AA' 30-Year Yields . 6. . _ J_.. _._._ __-. _ ......._ _ . . ..-.,- _. .___._._._.. _. _ . . . _ .__ - _.... 00 .__ ... _........ . ___ ._.. .___........ . 4 (....0 ._. _. . .. . . . . . .. . 1111\ii•3.00 H- 1 - 1 1 I 1 1 \"N ; N 1 Lk `1Ntiter ;` ‘N1, \" `"` `• `4- �. ` L� :` .,NN.. `• s ��- 1� ;� :'� �� ' �1 :�.. fit` • ��` �".'. ` ;41' OW, t \�'' `. `e:..` ```` • ' •N` \1`% `N'• ` ``• .`.•` \`N.'• ;`• '' ``t `;. \.) k*.) `` , \��, \` , ' 10101%0 17 AZUSA Financial Advisor Scope Analyze the 2003 debt to validate savings potential Develop strategy to implement refinancing Assist bond counsel to develop necessary documents Obtain updated rating from credit rating agencies Advise City during sale proceedings/closing AZUSA Recommendation That the Utility Board authorize issuance of an RFP to solicit the services of a Financial Advisor for possible bond refinancing ii‘ c , , 44. ) ~Ns. ( . ioro se..,•%0 "a", ) ...._ ..____ 19 AZUSA FY11 Year End Financial Report 6 V� Azusa Utility Board June 27, 2011 ._ \ Zt ; '1 Background Staff regularly reviews the financial status of the Water and Electric funds Numbers are preliminary and unaudited -** •16 AZUSA Water The Water utility ended FY 11 with $26 . 3M cash reserve ($25M minimum ). Quarterly sales dropped 6 .0% from prior year and 26% from FY07 Debt service coverage of 1 . 33 is adequate ( 1 .25 goal ) AZUSA Consumption and Reserve Info Prior FY End 4th Qtr Ended Perce' Consumption - CCF: 7,853,732 7,384,003 94°o Cash and Investments:'' $22,174,445 S26,327,036 119°o FY 2010-2011 Budget Information Budget Actual Thru Percent of 10-11 4th Qtr Budget Revenues Retail Billing, Amounts '`' $17,521,365 $16,600,100 95% Other Revenues(3' 519,300 1,139,714 219% Interest Income'4' 500,000 373,309 ,)°a Total Revenues $18,540,665 $18,113,123 98% Water Expenses Production $3,203,403 $2,434,702 76°0 Purchased 1Vater"' 3,212,415 2,829,210 88°0 Transmission and Distribution 2,544,170 2,486,783 98% Customer Accounting and Sales fb' 4,089,705 3,736,928 92°0 Administrative and Engineering 983,105 574,315 58% Franchise Fees 390,665 341,033 87% Subtotal Expenses $14,423,465 $12,423,170 86% Capital Expenditures / Debt Service: Debt Service Payments "' $4,;14 170 $4,518,170 14 oo Capital Improvement Budget`s' 2,293,320 1,443,95 63% Capital Projects Funded by Bond 0 (131,016) na Total Expenses (Less Bond Funding) 521,234,955 518,234,280 8000 Adjustments Transfers Out''9 $0 $0 IVa , , ti Total Expenditures and Transfers Out 521,234,955 518,234,280 8600 � iirra Ash V �, ki �, i.eerk, Net Change in Cash (Negative) (52_,694.290) $121,137) 4°0 clW ..4-,':..;.- Debt Coverage Ratioi10i 1.00 1.33 / 41111111' , V y 23 AZUSA Electric Positive cashflow of $323K Reserve level is $11 .7 million. ($12.6 target) Debt coverage of 5.6 is good Sales declined 2.8% from prior year through second quarter and 5.6% from two years ago Consumption and Reserve Info Prior FY End 4th Qtr Ended Percent 6/30/11 Consumption - kWh: 253,116,501 238,728,205 94.32% Cash/Reserve Prior Fiscal Year End" 511,439,529 $11,762,713 103% FY 2010-2011 Budget Information Budget Actual Thru Percent of 10-11 6/30/11 Budget Revenue Retail Billing Amounts'2' $31,513,900 $32,829,429 104% Resale Revenue13, 6,364,023 x,919 793 93°0 Other Miscellaneous Revenue 303,300 491,004 162% El Interest Income 245,715 2S1,269 114°° er i c Total Revenues 538,428,940 $39,521,494 103% Expenses Purchased Power'31 $25,564,120 5,169,035 98% Transmission/Dispatching 3,942,015 3,895,619 99°.; Operations and Maintenance 3,408,553 3,075,333 90% Administrative and Genera114' 2,2_7 4,650 2,026,990 89°x:, Franchise and In-Lieu-Tax 3,456,260 3,339,256 97°c, Subtotal Expenses $38,645,600 537,306,256 97% Capital Expenditures / Debt Service Long Term Debt Service" $948,615 $945,615 100% Capital Outlays and Projects(' 1,932,7 49 738,672 38'0 Total Expenditures 541,326,964 $39,193,543 'o Adjustments Transfers Chit''' 9,430 4,767 50% Total Expenditures and Transfers Out 541,536,414 $39,198,311 94°0 iii Change in Cash/Reserve ($3,107,474) ' 323,184 3°0 v or....„ Debt Coverage Ratio's) 3.42 5.64 1"0".0 NOW illik 4.4•.,.. All* 25 A Z U S A _ a6 4 Si NA ? c Year-end Water Electric FY CCF Sales Billings FY kWh Sales Billings 04-05 9,044,164 $14,999,030.55 04-05 251,265,870 $26,782,803.01 05-06 9,086,631 $14,302,731.65 05-06 245,181,632 $27,355,549.89 06-07 9,971,443 $15,912,914.52 06-07 255,560,858 $28,484,177.67 07-08 8,502,994 $15,641,966.31 07-08 252,240,704 $29,809,429.15 08-09 8,333,649 $13,988,554.48 08-09 253,116,501 $31,274,785.04 09-10 7,853,732 $15,303,212.62 09-10 245,616,149 $30,099,991.50 10-11 7,384,003 $16,600,100.14 10-11 238,728,205 $32,829,428.60 iii , :, k' I OWi 26 AZUSA Questions/Comments 27 AZUSA l G 4! b WA E P ;,. 47244� .�.;.� 0 Er • • *'1, Zt 1 W' �y' . „:k ., nd .,',7; _ j ; � ' c 7�, : momomme .4?�, �T4 -,, � . y _ " r ' S " 74i'Wt • A_ZU, •S.AAA. ..IGNT 8 CITY OF AZUSA MINUTES OF THE REGULAR MEETING OF THE AZUSA UTILITY BOARD/CITY COUNCIL MONDAY, JULY 25, 2011 — 6:30 P.M. The Utility Board/City Council of the City of Azusa met in regular session, at the above date and time, at the Azusa Light and Water Conference Room, located at 729 N. Azusa Avenue, Azusa, California. Chairman Hanks called the meeting to order. Call to Order Assistant to the Director of Utilities Kalscheuer led in the Flag Salute. Flag Salute ROLL CALL Roll Call PRESENT: BOARD MEMBERS: GONZALES, CARRILLO, HANKS, ROCHA ABSENT: BOARD MEMBERS: MACIAS ALSO PRESENT: Also Present City Attorney Carvalho, City Manager Delach, Assistant City Manager Makshanoff, Director of Utilities Morrow, Assistant to the Director of Utilities Kalscheuer, Assistant Director of Customer Service Vanca, Senior Management Analyst Del Toro, City Engineer Hassel, Public Works Director/Assistant City Manager Haes, Assistant Director of Electric Operations Langit, Captain Momot, City Clerk Mendoza, Deputy City Clerk Toscano. PUBLIC PARTICIPATION Pub Part Mr. Art Morales addressed the Board Members with comments regarding the safety barricades and notice of A. Morales street closure at the Foothill Boulevard Crosswalk Project. Comments UTILITIES DIRECTOR COMMENTS Dir Comment Director of Utilities Morrow stating that he is waiting for the environmental ruling from the EPA on August 5th G. Morrow with regard to the San Juan plant. San Juan UTILITY BOARD MEMBER COMMENTS Brd Mbr Com None. None The CONSENT CALENDAR consisting of Items D-1 through D-3, were approved by motion of Board Consent Cal Member Carrillo, seconded by Board Member Gonzales and unanimously* carried. Appvd 005 1. The minutes of the regular meeting of June 27, 2011, were approved as written. Minutes 2. SPECIAL CALL ITEM. Spec Call 3. Approval was given for a contract with Systems & Software to convert 1 1 1 reports using the new Systems& reporting software that is compatible with the enQuesta Customer Information System upgrade in the Software amount of$23,040. SPECIAL CALL ITEM Spec Call Item Professional Services Agreement with Huls Environmental Management LLC. PSA Huls Env Assistant to the Director of Utilities Kalscheuer responded to comments on the item stating that there are many C. Kalscheuer program requirements and the guidelines to follow are very detailed and technical,and noted the consultant is Comments specialized in administering this type of program. Chairperson Hanks addressed the item suggesting that in the future,if feasible,staff consider using in-house or Hanks volunteer organization to assist in administering programs provided by the City. Comments Moved by Chairman Hanks,seconded by Board Member Carrillo and unanimously*carried to waive formal PSA Huls Request for Qualifications (RFQ) and award a three-year Professional Services Agreement with Huls Administer Environmental Management, LLC in the amount of$6,380 per year for the administration of oil payment Oil Payment program. Program SCHEDULED ITEMS Sched Items Safety Manual for Electric Division and Safety Audit for Water and Electric Operations. Safety Manual Assistant Director of Electric Operations Langit and Director of Utilities Morrow addressed the Board F. Langit Members detailing the issues regarding the Safety Manual and Audit stating that there is a need for a formal G. Morrow adoption of the American Public Power Association safety manual and conduct an independent safety audit as Presentation a way to find safety deficiencies, if any. Moved by Board Member Carrillo,seconded by Board Member Gonzales and unanimously*carried to adopt Adopt Safety the Safety Manual for the electric Division and authorize staff to solicit proposals from an independent third Manual & party to perform a safety audit of its water and electric field operations. Safety audit Electric Yard Improvements. Elect Yard Imp Assistant Director of Electric Operations Langit presented the item detailing the improvements which F. Langit consisted of roofing solutions due to leaking and rear property fencing/block wall to prevent vandalism and Comments burglary. Discussion was held between Board Members and staff regarding the fencing portion of the project,i.e.chain Discussion link, wrought iron or block wall. Moved by Board Member Carrillo,seconded by Board Member Rocha and unanimously*carried to approve Plans Roof& plans to refurbish existing roof and perimeter fence of the electric Yard at 1020 West Tenth Street, and Fence Elect authorize the City Clerk to advertise Notice Inviting bids. yard Participation in Hydroelectric Feasibility Study. Hydro-Electric Study Director of Utilities Morrow addressed the issue presenting background regarding the addition of hydro units G. Morrow on SGVMWD pipeline as well as a short video with information on San Gabriel Valley Municipal Water Presentation District. He detailed the item. 07/25/11 PAGE TWO 000 Moved by Board Member Rocha, seconded by Board Member Gonzales and unanimously* carried to Update authorize the Director of Utilities to consummate arrangements with the San Gabriel Valley Municipal Water Hydroelectric District(SGMWD)to pay 35%of the costs to perform an update Hydroelectric Feasibility Study with Azusa's Feasibility share not-to-exceed $15,000, and further, to obtain legal review of an agreement for first right of refusal to Study purchase energy from SGMWD. Adoption of Legislative Positions. Legislative Positions Director of Utilities Morrow presented and detailed each Legislative Bill and recommendations of staff as G. Morrow follows: AB 316 Copper Theft- Support,AB 341 Solid Waste-Oppose, AB 403 Water Quality- Support, Presentation AB 723 Public Goods Charge— Support, AB 1027 Pole Attachments—Oppose, SB 34 Water Surcharge— Oppose,and SB 859 EV Disclosure—Support. Discussion was held regarding SB 859 Vehicle Disclosure. Moved by Board Member Carrillo,seconded by Board Member Gonzales and unanimously*carried to adopt Legislative Legislative positions referenced and authorize the Mayor to sign letter addressed to legislators to advocate the Positions adopted positions. Adopted STAFF REPORTS/COMMUNICATIONS Staff Rpts Utility Bill Postage Update Utility Postage Director of Utilities Morrow addressed the item stating that in re-evaluating postage cost options,it was found Rates changed that if actual rates were used instead of presorted mail rates the city would save approximately$8,100;hence a To"actual change was made to "actual basis"effective July 1, 2011. basis" Lodi Energy Center Update Lodi Update Director of Utilities Morrow addressed the item stating that the city has a large investment in the project and Scheduled to provided an update on construction scheduled to open in June 2012. He stated that the heat stack is coming Open in June from Norway and the logistics to move the equipment require significant planning. of 2012 AB 939 Compliance Update AB 939 Corn Assistant to the Director of Utilities Kalscheuer presented the AB 939 2010 Annual Report stating that Azusa C. Kalscheuer disposed of 4.3 pounds per person per day, about 12% lower than the reported 4.9 pounds per day in 2009, Comments which he believes is down due to the economy. He presented the Diversion History and detailed the diversion programs. Moved by Board Member Carrillo, seconded by Board Member Gonzales and unanimously* carried to Adjourn adjourn. TIME OF ADJOURNMENT: 7:27 P.M. SECRETARY NEXT RESOLUTION NO. 11-C60. * Indicates Macias absent. 07/25/11 PAGE THREE 007 F"`" 0 et 42 4 I `f ii I AZUSA tIGIT PATER CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES DATE: SEPTEMBER 26, 2011 SUBJECT: REQUEST APPROVAL FOR PROGRAMMING TO AUTOMATE PAYMENT INTERFACE PROCESS RECOMMENDATION It is recommended that the Utility Board approve award of a contract to Systems & Software to automate the process of uploading/downloading payment files from our three payment vendors in amount not-to-exceed $16,000. BACKGROUND Over the past few years, Utility Customer Service has offered a variety of bill payment options for customers. This has caused Customer Service work to be increasingly more technical. Each business day, customer files must be uploaded to each vendor's secure file transfer protocol (FTP) internet site and payment files downloaded to Azusa. This is in addition to verifying that payments have been correctly and timely applied to customer accounts. Automating the process of uploading and downloading files to our three payment vendors -- Infosend, Inc., RT Lawrence Corporation, and Paymentus -- would save time and increase accuracy and the utility could be guaranteed it would occur automatically at a specific time each business day. This is a sole source request due to the proprietary nature of the utility's billing software. Staff has reviewed the quote by Systems & Software to do the programming and feel that it is reasonable. Contracted work would also include interfacing with the three payment vendors to configure and test the automated FTP process. FISCAL IMPACT The cost of this work will not exceed $16,000 and sufficient funds are budgeted in Account Number 31-40-711-903-6415. Prepared by: Karen Vanca, Assistant Director - Customer Care & Solutions 008 IV-tkft3 p AZUSA r.ur R v.taro CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES iAri DATE: SEPTEMBER 26, 2011 SUBJECT: RATIFY AWARD OF CONTRACT FOR REPAIR OF UNDERGROUND ELECTRIC CONDUIT ALONG AVENIDA CONEJO NORTH OF SIERRA MADRE AVENUE RECOMMENDATION It is recommended that the Utility Board ratify the award of a contract to AAJ Incorporated in the amount not-to-exceed $12,745 for urgent repairs on the existing conduit that runs along the north end of Avenida Conejo and onto the property of Azusa Green Golf Course, north of Sierra Madre Avenue. BACKGROUND In May 2011, electric crews were called to restore power to a few residential customers located near Calle De Las Estrellas along Avenida Conejo north of Sierra Madre Avenue. Crews diagnosed that a portion of an old underground cable failed and had to be replaced in order to restore power. Shortly thereafter, electric crews planned on pulling out the remaining aged underground cables, upstream from the location of the original failure. The crew discovered a portion of the old cable was stuck inside the conduit. After several exploratory excavations, it was found that tree roots had managed to penetrate and grow inside the electric conduit irreparably damaging the cable. The affected electric conduit and cables needed replacement on an expedited basis to ensure electric reliability in the area. As a result, Staff solicited informal quotes from contractors who specialize in conduit installation. Three informal quotes were obtained as follows: 009 Conduit Repair—AAJ Incorporated September 26, 2011 Page 2 Company Amount 1)AAJ, INC. $ 12,745 2) PERRY C. THOMAS, INC. $ 22,226 3) MJ STARLITE, INC. $ 23,540 Staff awarded the conduit repair contract to the lowest cost company. Due to the cancellation of the August Utility Board meeting and nature of work to be performed, a contract for the system maintenance work was executed by the City Manager as provided for by Azusa Municipal Code Section 2-523. FISCAL IMPACT This urgent conduit repair is covered under the Electric Division's Annual Operating Budget and funds were available in account# 33-40-735-940-6473 under Maintenance. Prepared by: Federico Langit Jr., Assistant Director—Electric Operations Hien K. Vuong, Electrical Engineer 010 .GNI 6 „SA A CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES kc° (1V DATE: SEPTEMBER 26, 2011 SUBJECT: AWARD A CONTRACT TO BEST CONTRACTING SERVICES FOR REFURBISHING THE EXISTING ROOF AT ELECTRIC DIVISION YARD, AND AUTHORIZE THE CITY MANAGER TO SIGN CONTRACT RECOMMENDATION It is recommended that the Azusa Utility Board: 1) Award a contract to Best Contracting Services in the amount not-to-exceed $112,345 for refurbishing the existing building roof at the Electric Division Yard (1020 W. 10th Street). 2) Authorize the City Manager to sign the contract with Best Contracting Services. BACKGROUND At its July 25 meeting, the Azusa Utility Board authorized Staff to solicit public bids for refurbishing a substantial portion of the existing metal roof on the Electric Division Yard building located at 1020 W. 10th Street. The Notice Inviting Bids was advertised in August, 2011. Thereafter the following bids were publicly opened at the City Clerk's office on September 13, 2011: Base Bid Company Amount 1) Best Contracting Services $112,345 2) Tecta America $132,000 3) Midwest Roofing, Inc. $158,674 4) Four Seasons Roofing Inc. $187,001 oil Award Roof Contract—Best Contracting Services September 26, 2011 Page 2 Staff reviewed the lowest bid submitted by Best Contracting Services and found it to be in compliance with the approved roof refurbishing plan and specifications. Best Contracting has previously performed work for the Department and their previous roof repair contract performance was satisfactory. Thus staff is recommending the award to the lowest responsible bidder. FISCAL IMPACT The fiscal impact of this project is $112,345 and funding is available in the approved Electric Fund Capital Improvement Project budget under project#73012-A. Prepared by: F. Langit Jr. - Assistant Director of Electric Operations Steven Yang— Senior Management Analyst 01. 2 atc,4,4Sowt 2.1.11j AZUSA LIGHT 6. RATER CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES E 1 DATE: SEPTEMBER 26, 2011 SUBJECT: ANNUAL WATER RIGHTS TRANSACTIONS CONDUCTED BY WATER DIVISION RECOMMENDATION It is recommended that the Utility Board ratify water rights leases to the Sunny Slope Water Company and Miller-Coors and ratify signature of the leasing documents signed by the Sunny Slope Water Company as allowed by Resolution No.09-C69 approved by the Utility Board on July 27, 2009. BACKGROUND The City of Azusa produces water from the Main San Gabriel Basin which is controlled by a Judgment entered into the Court records January 4, 1973, which has been periodically amended thereafter. The Judgment requirements are enforced by the Main San Gabriel Basin Watermaster office, with Court oversight. In 1993, the City of Azusa purchased the Azusa Valley Water Company along with the substantial water rights owned and controlled by Azusa Valley. Furthermore, the City of Azusa ("City") has a controlling interest in the Azusa Agricultural Irrigating Company ("Azusa Ag.") and by contract with the Miller-Coors Brewing Company, the City controls those water rights belonging to Miller-Coors that equal the Miller demand on the City's water system. Water produced by the Hsu Water Filtration Plant is also a use of Azusa's Basin Water Rights that is monitored by the Watermaster office. The City is the owner of record and otherwise beneficially controls, or is the duly authorized and acting agent for, the ownership of 8.11334 percent of the Production Rights (not including Miller-Coors) in the Main San Gabriel Basin as adjudicated in the case of"Upper San Gabriel Valley Municipal Water District vs. City of Alhambra et al." In order to keep the Basin replenished under the Judgment, each year in May the Watermaster Board sets the Safe Yield for the following year and also sets the prices and assessments to be applied to the water produced in the current year. This year the price of USGVMWD replenishment water was set at $512/Acre- 013 Water Rights Lease Agreements September 26, 2011 Page 2 foot ($587 last year) and SGVMWD replenishment water was set at $130/Acre-foot ($130 last year). The amount of water rights that the above entities possess varies with the Safe Yield for the Basin. In Fiscal Year 2010-2011 the Basin Safe Yield was set at 170,000 acre feet (AF). Of that 170,000 AF, the City of Azusa has the water rights to produce 8.11334 percent of 170,000 AF (13,793 AF) plus 3,800 in Diversion Rights. Including Miller-Coors' water rights this year, the City has approximately 20,621 AF of water right. This Fiscal Year, 2011-2012, the Basin Safe Yield has been set at 210,000 AF which will increase the City's corresponding water rights. In a typical year, the water rights controlled by the City are transferred between the City entities to offset overproduction with no exchange of money and Azusa purchases a small amount of Replacement Water. However, because the Main San Gabriel Basin has been in distress due to lack of rainfall and the inability of Metropolitan Water District of Southern California to deliver Replenishment Water to the Basin, Watermaster has temporarily suspended certain rules concerning water rights transfer that has allowed the City of Azusa to make some extraordinary water rights transfers to other Basin water producers. The Watermaster stipulation each year is that all leases be finalized and notarized by the end of day June 30. The effect of the temporary change in Watermaster water rights transfers is to allow the City to purchase a maximum amount of replenishment water from SGVMWD at $130/AF (7,112.00 AF @ $130/AF; $924,560.00) which allows the City to conserve approximately 5,844 AF of its own water rights. The City is then able to lease some of those rights (1,085 AF) to willing lessees, in this case the Sunny Slope Water Company, at 93.25%of$512/AF (1,000 AF at 93.5%of$512; $477,440.00); and Miller- Coors at 92% of$512 /AF (85 AF at 92% of$512; $40,038.00). Since Miller—Coors had a base water right of 2,043.24 AF in 2010-2011, and used 1,535.76 AF of Azusa Water, by contract with the City of Azusa, Miller transferred 1,535.76AF back to the City for no cost. The benefit to the parties to these transactions is that they can offset their pumping in the Main Basin at a savings of between 6.5% and 8% of$512/ AF, and the City of Azusa retains approximately 4,759.39 AF of water right to be used in Fiscal Year 2011-2012. Lease revenue realized by the City of Azusa for FY 2010-2011 total $517,478. Considering the cost of Replacement Water at $130/AF for 1,085 AF ($141,050) and total assessments on water rights and production ($14,105.00), the net gain on leasing by the City for FY 2010-2011 is $362,323.00. The Safe Yield set by Watermaster for FY year 2011-2012 is 210,000 AF, which will increase the City's production rights, and the 4,759.39 AF of Production Right that the City retains will provide a buffer against possible future water rate increases. If Watermaster continues the suspension of the Water Rights Transfer restrictions, similar transactions may be a possibility by June of 2012. Q14 Water Rights Lease Agreements September 26, 2011 Page 3 FISCAL IMPACT The fiscal impact of ratifying the water rights leases with the Sunny Slope Water Company and Miller-Coors is $517,478.00 in revenue with a net of approximately $362,323.00 considering purchase of water from SGVMWD, and water assessments, with approximately 4,759.39 AF of carryover water rights remaining for use in fiscal year 2011-2012. Prepared by: Chet Anderson, Assistant Director- Water Operations 015 D . 6 , ; "'�sL� '. �'. �," �c' rid` r'°.tee `tum4 ': . r.. AZUSA LIGHT 8 WATU CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES ki (911‘DATE: SEPTEMBER 26, 2011 SUBJECT: RETROFIT OF WATER DIVISION DIESEL TRUCKS WITH PARTICULATE MATTER TRAPS TO COMPLY WITH CALIFORNIA AIR RESOURCES BOARD REQUIREMENTS RECOMMENDATION It is recommended that the Utility Board approve a bid by Ironman in the amount of$61,981 to retrofit four (4) Water Division diesel trucks with Particulate Matter (PM) Traps pursuant to Azusa Municipal Code 2-523. BACKGROUND In 2005, the California Air Resources Board (CARB) approved a regulation pursuant to title 13, California Code of Regulations (CCR), sections 2020, 2022, and 2022.1, the fleet rule for Public Agencies and Utilities. This rule requires a municipality or utility that owns, leases, or operates an on-road diesel-fueled heavy-duty vehicle greater than 14,000 pounds gross vehicle weight rating (GVWR) with a 1960 to 2006 model year medium or heavy duty engine to install best available control technology(BACT)to reduce particulate emissions. The regulation requires that 20 percent of the fleet be retrofitted with BACT by 2008, and then 50 percent by 2009. The installed BACT should reduce toxic diesel Particulate Matter (PM) emissions to 0.01 gram per brake horsepower hour (g/bhp-hr) or to lowest emission level possible for a specific engine without jeopardizing the original engine warranty. In 2009, the Water Division identified ten (10) diesel trucks weighing over 14,000 pounds that fall under this regulation. Of those ten (10) trucks, three (3) were exempt from the regulatory requirements due to low annual mileage, and three (3) non-exempt trucks were modified in 2009 following Utility Board approval of a $41,295.57 funding request at the April 27, 2009 Board meeting. The four (4) trucks remaining could not be modified until the equipment required for those trucks had been re-certified by the CARB for installation. If the equipment had been installed and later not re-certified, the installed de-certified equipment would have had to be removed and certified equipment installed. 01f Diesel Truck Retrofits September 26, 2011 Page 2 Based on prior quotes obtained in January 2008 and April 2009,it was determined that Ironman was the lower price of two bidders for this type of retrofit equipment and installation work. Given the compliance deadline for these retrofits, the Water Division sought to affirm the 2009 low bid, to install the required equipment on the four(4)remaining trucks. The price quote of$61,981.00 was affirmed by Ironman in attached letter,including sales taxes,and staff is recommending that this bid be accepted pursuant to Azusa Municipal Code Section 2-523—Alternative Purchasing Procedure— as being in the best interest of the City. FISCAL IMPACT The award of$61,981.00 will be paid for using fiscal year 2011-2012 operating budget account 32-40-723-761-7140 following administrative approval of budget transfers from other accounts. Prepared by: Chet F. Anderson, Assistant Director-Water Operations 017 Air Resources Board . Mary D. Nichols, Chairman ' 1001 I Street•P.O Box 2815 Matthew Rodriquez Sacramento, California 95812•www arb.ca.gov Edmund G. Brown Jr. Secretary for Governor Environmental Protection E EI CV August 15, 2011 AUG 20'1 AZUSA LIGHT(SU,WATER Mr. George Morrow Azusa Light &Water 729 N. Azusa Ave. Azusa, California 91702 Dear Mr. Morrow: The State of California Air Resources Board (ARB) has the authority to audit the records of fleets with heavy-duty diesel vehicles. These audits are conducted to verify that vehicles with heavy-duty diesel engines operating in California are in compliance with applicable ARB regulations. This letter is to advise you that your company is being audited for compliance with the regulations listed below. PUBLIC AGENCIES AND UTILITIES The Public Agencies and Utilities Regulation applies to: trucks with a gross vehicle weight rating greater (GVWR)than 14,000 pounds; with engine model years (MY) 1960 through 2006; that do not collect solid waste or recyclables; and are not emergency vehicles, school buses, urban buses, or transit fleet vehicles. These regulations are codified in Title 13, CCR, 2020 et seq. and Section 2022.1(1), and require PAUs to provide ARB, upon request, records pertaining to the PAU fleet. The regulation requires all PAUs to install ARB verified emission control devices known as Best Available Control Technology(BACT), to reduce diesel emissions from non-exempt vehicles through 2011. These regulations also required the reporting of retrofitting and other strategies used to meet compliance deadlines. ARB is requesting compliance records for each terminal in your fleet. Input your information on the Record Keeping Forms provided on the ARB Public Agencies and Utilities Vehicle website at: http://www.arb.ca;qov/msproq/publicfleets/compliancetools.htm. Once completed, please email your report to ajuarez ac arb.ca.gov. The following information, specific to all PAUs, must also be included: (1) Total number of PAU vehicles in your fleet. Please be sure to provide this information by terminal. (2) Total number of vehicles in Group 1 (engine MY 1960-1987); Group 2 (engine MY 1988-2002); and Group 3 (engine MY 2003-2006). The energy challenge facing California is real. Every Californian needs to take immediate action to reduce energy consumption. For a list of simple ways you can reduce demand and cut your energy costs,see our website:http.//www arb.ca.aov. California Environmental Protection Agency Printed on Recycled Paper 018 Mr.Morrow August 15,2011 Page 2 (3)The number of vehicles and the strategy that was used to bring the Group 1,2,and 3 vehicles into compliance(sold out-of-state,scrapped,retrofitted,reassigned as backup,or replaced with alternative fuel vehicles)by December 31,2007. (4)Copies of documentation for all vehicles that were scrapped,sold out-of-state,or reassigned to backup service. (5)For retrofitted vehicles provide the following; • license plate number, • vehicle identification number(VIN), • model year, • engine family name,and • retrofit installed. "Nate: Be sure to provide the correct engine family name,specific diesel emission control strategy(DECS),manufacturer name,and the DECS family name(e.g., CA/MMM/YYYY/PM#/NO#/ON/SYS##). PERIODIC SMOKE INSPECTION PROGRAM The Periodic Smoke Inspection Program(PSIP)became operative on July 1, 1998. Under this program,owners of California-based fleets with two or more vehicles are required to perform annual smoke opacity tests on their heavy-duty diesel vehicles that are four years old and older with GWVR greater than 6,000 pounds(13 CCR 2190,et seq.). To verify compliance with this program,ARB will need to review smoke test records for the most recent two consecutive years for each diesel-powered vehicle that fits the above criteria and is registered in the State of California. Pursuant to Assembly Bill 1488(Mendoza),beginning January 1,2010,some diesel vehicles between 6,000 and 14,000 gross vehicle weight rating,will now fall under the Smog Check Program administered by the Bureau of Automotive Repair. Please refer to the enclosed Enforcement Advisory 351 to determine compliance. EMISSION CONTROL LABEL PROGRAM The Emission Control Label Program(ECL)was implemented in 2007. This program requires vehicles operating within California—including those in transit from Mexico,Canada, or any other state—to be equipped with engines meeting emission standards at least as stringent as Federal emission standards for the model-year that the engine was manufactured (13 CCR 2183,et seq). Additionally,all heavy-duty vehicle engines must have a legible manufacturer's ECL properly affixed to the engine showing this equivalency. To verify compliance with this program,the enclosed"ECL Statement of Facts"must be completed, signed,and submitted to the ARB. It should be noted that this does not preclude the ARB from conducting an inspection to verify that the ECL is affixed to the vehicle's engine. For vehicles in your fleet that are subject to the PSIP and ECL program requirements,please provide the following documentation to the ARB: (1) Smoke Test Record copies for the two most recent consecutive years as of the date of this letter for each heavy-duty vehicle registered in California; • 019 - Mr. Morrow August 15, 2011 Page 3 (2) Vehicle Registration copy for each vehicle; (3) "ECL Statement of Facts"(http.//www.arb.ca.gov/enf/hdvip/eci_statement_of_facts.pdf); (4) "PSIP & ECL Audit Table"(http://www.arb ca.gov/enf/hdvip/psip_audit_table.xls), which must include all of the following information: • List all vehicles in your fleet subject to ECL & PSIP program requirements. Note: if there is more than one terminal in California, include information for vehicles from ALL terminals in California, by terminal. • Vehicle Unit Number; • License Plate Number; • Vehicle Identification Number(VIN); • Engine Make, Model, and Year; • ECL information ('Axed', 'Not Affixed', and/or 'Non-Operational); and • Smoke Test Record information—subject to PSIP program (Yes'or' No), date tested, and test results ('Pass'or 'Fail). Y Note: This is in addition to the smoke test record copies. OFF-ROAD DIESEL VEHICLE REGULATION The off-road diesel vehicle regulation (13 CCR 2449, et seq.) imposed limits on idling, buying older off-road diesel vehicles, and selling vehicles in 2008; and in 2009, all off-road vehicles were required to be reported to ARB and properly labeled. For vehicles in your fleet that are subject to the off-road diesel regulation: (1) Register all the off-road diesel vehicles (ORDV) in your fleet with the ARB Diesel Off-road On- line Reporting System (DOORS) at https:/lsecure.arb.ca.gov/ssldoors/doors_reporting/reporting.php; (2) Affix ARB Equipment Identification Number (EIN) to each ORDV; and (3) Submit the following documents to the ARB: • Certificate Of Reported Compliance; • "EIN Statement of Facts" (http-//www.arb.ca.gov/enf/hOvip/ein_statement_ofiacts.pdf); and • Written No-idling Policy (for medium or large fleets). All of the documentation listed above should be submitted to the ARB, at the mail or email address below, no later than September 16, 2011: Andrea Juarez, Air Pollution Specialist California Air Resources Board Enforcement Division 9480 Telstar Ave., Suite 4 El Monte, CA 91731 • ajuarezfa,arb.ca.gov 020 Mr. Morrow August 15, 2011 Page 4 Fleets that are out of compliance with these regulations are subject to civil penalties. To avoid potential citation and penalties, you must provide the requested information to the ARB no later than September 16, 2011. Failure to provide the requested documents, or failure to contact the ARB regarding this request, will result in a determination that you are out of compliance with the regulations and appropriate penalties will be assessed. The California Department of Motor Vehicles may also refuse the registration, renewal, or transfer of registration if ARB violations are left unresolved, pursuant to section 4755 of the California Vehicle Code. Further, if one or more citations remain un-cleared, vehicles are subject to removal from service by the California Highway Patrol, as requested by the Air Resources Board (per 13 CCR 2187). To obtain information regarding ARB's enforcement of these and other programs, please visit our website at http://www arb.ca.gov/enf/diesel.htm. Should you have any questions regarding this matter, please contact Andrea Juarez at phone number (626) 450-6158, or e-mail at ajuarezarb.ca.gov. Sincerely, Les Simonson, Manager Heavy-Duty Diesel Enforcement Section, On-Road Programs cc: Ms Andrea Juarez, HDDES On-Road Programs Mr. Eric Brown, HDDES Off-Road Programs Mr. Eloy Florez, MSCD Enclosures: (1) ECL Statement of Facts (2) Regulation Booklet (13 CCR 2180-2194) (3) Enforcement Advisory 351 (4) Off-Road Diesel Vehicle Regulation Overview (5) Public Agencies and Utilities Regulations (13 CCR 2020, 2022 & 2022.1) 021 • ikriPRTANT INFORMATION - .......... ............... I�'OR TRUCK AND BUS DRIVERS! Regarding California's Anti-IdlingRegulations _:,„, ,,,„- DOES � � DOES YOUR DIESEL TRUCK HAVE A GROSS VEHICLE WEIGHT RATING GREATER THAN 10,000 POUNDS? If yes, then the following applies to you. IDLING FOR MORE THAN 5 MINUTES IS PROHIBITED WITHIN CALIFORNIA'S. BORDERS. AS OF JANUARY .", 2008, THIS PROHIBITION ALSO APPLIES TO SLEEPER BERTH TRUCKS DURING PERIODS OF SLEEP AND REST. WHY IS THERE AN IDLING LIMIT? Unnecessary idling: • Produces emissions that contribute to cancer, premature death, and other serious health problems. • Wastes fuel and contributes to global warming. WHAT ARE THE VIOLATION PENALTIES? • Fines start at $300 and can be as much as $1000 per day. Violators may also face criminal charges, IF I CAN'T IDLE, WHAT CAN I DO ABOUT CAB COMFORT? Here is a list of some available idle reduction technologies: • Battery-Powered Auxiliary Power Systems • Fuel-Fired Heaters (restrictions apply - visit wwvi.arb,ca qov/noidle for details) • Diesel-Fueled Auxiliary Power Systems (restrictions apply - visit PIWw.arb.ca.gov/noidle for details) • Truck stop infrastructures that provide heating, cooling, electricity, and/or other services at various locations throughout California • Visit wvvw arb.ca.gov/cabcomfort for information on these and other idle reduction technologies. ARE THERE SITUATIONS WHEN IDLING IS ALLOWED? Yes, idling under the following situations is acceptable: • You are stuck in traffic. • When idling is necessary for inspecting or servicing your vehicle. • You are operating a power take-off device. a You cannot move because of adverse weather conditions or mechanical failure. • You are queuing (must be beyond 100 feet from any residential area). • Your truck's engine meets the optional NOx idling emission standard and your truck is located beyond 100 feet from any residential area. • Please visit www.arb.ca,aovinoidle for a complete list of exemptions. ARE THERE RESTRICTIONS THAT APPLY TO IDLE REDUCTION TECHNOLOGIES? Yes, here are some restrictions that apply: • You cannot operate a diesel-fueled auxiliary power system for more than 5 minutes if you are located within 100 ft of a residential area. • If your truck has a 2007 or newer model year engine, your diesel-fueled auxiliary power system or fuel-fired heater must meet additional equipment requirements. • Please visit www.ar b.ca.gov/noidle for more information. DOES MY TRUCK NEED A NEW LABEL? A special hood label is required if: • Your truck has a 2007 or newer model year engine and you operate an engine-based auxiliary power system within California, or • Your truck's engine meets the optional NOx idling emission standard and you idle for more than 5 minutes within California. WHERE CAN I GET MORE INFORMATION? • Contact the California Air Resources Board at 1-800-END-SMOG (1-800-363-7664) • Visit Our Program Webpage at: wviw._arb.ra.r.ovincidt.. Other laws, regulations, and restrictions may apply. Nothing in this fact sheet or in the referenced regulation sections allows idling in excess of other applicable laws, regulations, and restrictions. 022 • : 4°1 ° MAN �` {es Quote# i:. ;1"•' Page 1 of 2 Customer !Azusa Light&Water I Name Ken Godbey Date 9/14/2011 Address PO Box 9500 Order No. City Azusa Stale CA ZIP 91702 I Rep Joe Pashman/mc Phone (626)823-5086 FOB Email Qty Description I Unit Price I TOTAL ESTIMATED PRICING FOR BUDGETARY PURPOSES ONLY-PENDING PRE-INSTALLATION COMPATIBILITY RESULTS.THIS QUOTE DOES NOT COVER CUSTOM DESIGN MODIFICATIONS OR RELOCATION OF EXISTING COMPONENTS THAT MAY BE REQUIRED TO PROVIDE SPACE TO ACCOMMODATE A RETROFIT. Pre-Installation Compatibility Assessment Pre-install compatibility testing of candidate engine and DECS based on California Code of 4 Regulations,Title 13 as required and enforced by ARS. $ 500.00 Included Vehicles#WE-37,#WT-38,WT-41 &WT-42 4 Cleaire Horizon Retrofit Device(Active)Up to 370HP $11,335.00 $ 45,340.00 4 Installation of Retrofit Device by Ironman's Mobile Installation Team(s)' $ 2,380.00 $ 9,520.00 4 Installation Parts Kit-brackets,tubing,hardware,etc. $ 725.00 $ 2,900.00 Price quoted above includes: "CARS Versed level 3+Diesel Particulate Filter Installation of the DPF©customer's designated facilities. Pre-installation compatibility testing,datalog,assessment and other engine review: "installation parts *taxes `Pre-Installation Compatibility Testing and Installations to be performed at the Customer's designated facilities.Customer agrees to make vehicle(s)available on date/times agreed upon with Ironman Customer agrees to make at least one(1)bay,equipped with air and power, available for Ironman's mobile installers to perform work. OPTIONAL SAVINGS:Installations to be performed at Ironman's facility located at 2500 North Alameda Street,Compton,CA 90222 Customer is responsible for equipment transportation -300.00 to/from lronman's facility.Installation pricing and tax rate will be based on the installation being done at lronman's Compton location. Cancellation:Cancelled orders are subject to cancellation and/or restocking fee up to 20%. Custom orders are subject to the costs incurred up to the time of cancellation,with a minimum of 20%cancellation fee. Sales tax to be adjusted based upon delivery location and tax rate at time of sale. Pricing Is valid for 30 calendar days Please Refer to Page 2 for Acceptance of Terms and Conditions SubTotal $ 57,760.00 Shipping Payment ! Tax Rate(s) 8.75% $ 4,221.00 20%deposit Is due at lime of order,with the full payment Comments balance due at installation appointment. TOTAL $ 61,981.00 Name Office Use Only Expires 2535 Anselmo Drive, Corona,CA 92679 (951)735-3710 Fax: (951)734-5833 023 AZUSA D sr . LIGHT 8 WATER CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD , pk FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES�` 0fn DATE: SEPTEMBER 26, 2011 SUBJECT: APPROVAL OF PROPOSAL BY MOSS, LEVY & HARTZHEIM, LLP, TO PROVIDE AUDITING SERVICES TO THE FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA (FARECa1). RECOMMENDATION It is recommended that the Utility Board approve proposal by Moss, Levy& Hartzheim in amount not-to-exceed $19,845 to provide auditing services to FARECa1 pursuant to agreement with FARECa1 that was approved by Utility Board on November 22, 2010. BACKGROUND The City of Azusa is a member of the Financing Authority for Resource Efficiency of California (FARECaI) which was formed on July 1, 1993, to issue debt on behalf of its members to finance utility infrastructure. In 2003, Azusa Light & Water issued debt through FARECa1 to refund the purchase of the Azusa Valley Water Company and construct the Kirkwall Substation. In order to help FARECa1 carry out its fiduciary responsibilities, the City of Azusa entered into an agreement with FARECa1,which was approved by the Utility Board in November 2010. The City of Azusa agreed to assist FARECa1 with the preparation of accounting records and financial reports to fulfill legal reporting requirements of the joint powers agency. In November 2010,the Utility Board also authorized staff to issue RFPs for accounting and auditing services on behalf of FARECa1. An RFP was issued for accounting services and Vasquez & Company LLP was selected to perform those services for FARECa1. At this time, the accounting work has been completed for FY 2005-06 through FY 2010-11,and the accounting records are now ready to be audited. 024 FARECal Auditing Services September 26, 2011 Page 2 Therefore, on August 25, 2011, staff issued an RFP for auditing services and received three proposals as summarized below: Firm Not to Exceed Amount 1. Moss, Levy& Hartzheim, LLP $19,845 2. Vicenti Lloyd & Stutzman, LLP $27,000 3. Nicholson & Olson $33,000 The proposals each provide for auditing services and preparation of biennial reports for FARECaI for FYs ending June 30th,2007,2009 and 2011,and each firm appears qualified to perform the scope of work outlined in our RFP. The proposal by Moss, Levy & Hartzheim, LLP, is discounted for a proposed completion date of February 15,2012. This timeframe appears acceptable to FARECa1 and will help save over$7,000. FISCAL IMPACT The approval of this proposal by the Utility Board is the first step in the approval process, as the auditing services proposal must also be approved by FARECa1. Following approval by the Utility Board and FARECa1, a budget amendment in the amount of $19,845 will be administratively processed to pay for the professional auditing services. Azusa will then seek reimbursement from FARECa1 for each member's fair share of the cost. Prepared by: Cary Kalscheuer, Assistant to the Director of Utilities 025 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA PROPOSAL FOR PROFESSIONAL BIENNIAL AUDITING SERVICES For the Biennial Fiscal Years Ending June 30,2007,2009,and 2011 Submitted By: Moss,Levy&Hartzheim,LLP 5800 Hannum Avenue, Suite E Culver City, CA 90230 Phone: (310)670-2745 Fax: (310)670-1689 Email: mlhbh@mlhcpas.com Website:www.mlhcpas.com Submitted On: September 19, 2011 Contact Person: Craig A.Hartzheim, CPA: Partner Ron A. Levy, CPA: Partner Hadley Y. Hui, CPA: Partner 026 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA AUDIT PROPOSAL TABLE OF CONTENTS Transmittal Letter i Technical Proposal: Company and Staff/Qualifications/License/Desk Reviews 1 Work Plan and Schedule 7 Data Request 10 Scope Exclusions/Addenda 10 Deliverables 11 Not-To-Exceed Fee 11 Fee Schedule/Hourly Rates 11 Other Commitments 11 Other 11 Appendices: Appendix A—Peer Quality Review Report 12 Appendix B—Current and/or Recently Completed Governmental Audits 13 Appendix C—References 15 Appendix D—Organization Chart 16 Appendix E—Segmentation and Budgeted Hours by Segment 17 Appendix F—Resumes 18 Appendix G—Data Request 28 Appendix H—Not-to-Exceed Fee 29 Appendix I—Fee Schedule/Hourly Rates 3 I 027 MOSS, LEVY & HARTZHEIM LLP CERTIFIED PUBLIC ACCOUNTANTS PARTNERS COMMERCIAL ACCOUNTING 8 TAX SERVICES GOVERNMENTAL AUDIT SERVICES RONALD A LEVY,CPA 9107 WILSHIRE BLVD.SUITE 500 5800 E.HANNUM,SUITE E CRAIG A HARTZHEIM,CPA BEVERLY HILLS,CA 90210 CULVER CITY,CA 90230 HADLEY Y HUI,CPA TEL: 310.273.2745 TEL: 310.670.2745 FAX:310.670.1659 FAX: 310.670 1689 www.mlhcpas.com www.mlhcpas.com George F.Morrow FARECaI President and Director of Utilities Azusa Light& Water 729 N.Azusa Ave. Azusa,CA 91702 Dear Mr.Morrow, We are pleased to respond to the Financing Authority for Resource Efficiency of California's (FARECa1) Request for Proposal for independent auditing services. We have prepared our proposal to address each of the specifications included in the FARECaI's Request for Proposal. After 54 years in public accounting and 34 years of performing local governmental and non-profit audits, it is extremely gratifying to witness the continued growth of Moss, Levy & Hartzheim, LLP. The firm is a regional full service public accounting firm with offices in Beverly Hills, Culver City, and Santa Maria and clients throughout the State of California, as well as thirty-one other states. We and the entire staff are pleased with not only the continuing development of the firm but also the progress and economic health of our clients. We understand that governmental accounting is a specialized industry with its own accounting standards and requirements, and that is why we strive to constantly improve the quality of our professional services. This degree of dedication, coupled with our ability to inform our clients of any new accounting and auditing issues,is paramount to our success. We feel that our size is such that we are large enough to provide a broad spectrum of services and experience backed by an in-house training program, professional development courses, and an extensive professional library, yet not so large as to become impersonal and rigid. Our informal style allows us to be flexible enough to complete our engagements in a timely manner that is the most convenient for each client. Also, this style allows us to be more accessible to our clients when our clients have questions or concerns. It is our understanding that we will perform an audit of the FARECaI's basic financial statements in accordance with auditing standards generally accepted in the United States of America with the objective of expressing an opinion on the fair presentation of the basic financial statements, which will be in full compliance with Governmental Accounting Standards Board (GASB) Statements No. 34, 45, 54 and the GFOA's Blue Book. We will express an "in-relation-to" opinion on the combining and individual fund financial statements and supporting schedules based on the auditing procedures applied during the audit of the basic financial statements. In addition to the procedures deemed necessary to express our opinion on the basic financial statements, we understand that we will also be responsible for performing certain limited procedures involving the management's discussion and analysis (MD&A) and the required supplementary information (RSI) required by the Governmental Accounting Standards Board,as mandated by auditing standards generally accepted in the United States of America. Our audits would be conducted in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards(1994 Revision), issued by the Comptroller General of the United States. It is our understanding that we will be responsible for issuing the following reports: an independent auditor's report on the fair presentation of FARECaI's basic financial statements, in conformity with accounting principles generally accepted in the United States of America; an independent auditor's report on internal control over financial reporting and on compliance and other matters based on an audit of FARECaI's basic financial statements performed in OFFICES:BEVERLY HILLS•CULVER CITY•SANTA MARIA MEMBER AMERICAN INSTITUTE OF C.P.A.'S•CALIFORNIA SOCIETY OF MUNICIPAL FINANCE OFFICERS•CALIFORNIA ASSOCIATION OF SCHOOL BUSINESS OFFICIAL 2 8 accordance with Government Auditing Standards; a letter of Communication to the Board of Directors, in accordance with Statement on Auditing Standards No. 114;and a management letter. We also understand that we will be responsible for preparing, editing, typing, printing, and delivering the FARECaI's financial statements. We will provide the FARECaI with eighteen (18) copies of the financial statements plus one camera ready copy and a PDF file of the report. We will keep FARECaI informed of any state and national accounting and auditing policy developments, including new GASB pronouncements related to municipal utility finance and reporting that might directly affect FARECaI. All significant deficiencies found during the audit will be communicated in writing. In the required reports on compliance and internal controls,we shall communicate any significant deficiencies found during the audit. Significant deficiencies that are also material weaknesses will be identified as such in the reports. All irregularities and illegal acts or indications of illegal acts of which we become aware during the course of our audit will be immediately reported, in writing,to the FARECaI President,Board of Directors,and FARECal's Attorney. The not-to-exceed service fee for the audit to be completed by December 31a, 2011 is $9,990 per biennial audit, and the not-to-exceed service fee for the audit to be completed by February 15`h, 2012 is$6,615 per biennial audit. Moss, Levy & Hartzheim, LLP will perform the audit work within the specified time period, pending no unforeseen circumstances which the FARECaI imposes on our work. The percentage of the audit work we expect to accomplish for the audit, by month, is shown below: Option One:Audit to be completed by December 31,2011 October November December Total 5% 75% 20% 100% Option Two: Audit to be completed by February 15,2012 December January February Total 5% 75% 20% 100% This proposal for auditing services is an irrevocable offer until December 19,2011. Thank you for your consideration and please do not hesitate to contact the authorized representatives listed below with any questions,problems,or concerns. (1) Craig A. Hartzheim,CPA (2) Ron A. Levy,CPA (3) Hadley Hui, CPA Partner Partner Partner 5800 Hannum Avenue 5800 Hannum Avenue 5800 Hannum Avenue Suite E Suite E Suite E Culver City,CA 90230 Culver City, CA 90230 Culver City, CA 90230 (310)670-2745 (310)670-2745 (310)670-2745 chartzheim@mlhcpas.com rlevy@m1hcpas.com hhui@mlhcpas.com Sincerely, ‘' )4-e . Craig .Hartzheim,C.P.A. Partner Moss,Levy&Hartzheim,LLP is an Equal Opportunity Employer. ii t. 029 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA TECHNICAL PROPOSAL COMPANY AND STAFF/QUALIFICATIONS/LICENSE/DESK REVIEWS COMPANY AND STAFF Moss, Levy & Hartzheim, LLP is a regional firm that performs audits of governmental and non-profit entities throughout the State of California, from the Oregon border to the Mexico border. We also perform review and compilation engagements as well as tax and consulting services to clients throughout the United States. The firm currently employs 32 professionals, all of whom are trained in governmental auditing, and has annual gross revenues in excess of 3.7 million dollars. The firm has three offices in California: Beverly Hills, Culver City, and Santa Maria. The audit work will be completed by staff from our Culver City office, which is also our principal place of business: 5800 Hannum Avenue, Suite E Culver City, CA 90230 Phone: (310) 670-2745 Fax: (310)670-1689 Email: mlhbh(a�mlhcpas.com Website:www.mlhcpas.com We are proposing no other firm or subconsultant for this engagement. Nine certified public accountants (three partners, three managers, and three senior accountants) currently staff the Culver City office. In addition, the Culver City office employs fourteen managers, seniors, and staff accountants. All certified public accountants, managers, senior accountants, and staff accountants are part of the governmental and non-profit audit practice. The Financing Authority for Resource Efficiency of California (FARECaI) will have one partner and two seniors assigned to the audit on a full-time basis. In addition, one staff accountant will be assigned to the audit on a full-time basis.These employees will not be changed except due to unforeseen circumstances. We have extensive knowledge in auditing computer systems. We have assisted numerous clients with the implementation of accounting software and database business systems. This assistance has provided our firm with a thorough background in computer systems in both the software applications aspect and also insight into auditing such systems. It is our policy to have a computer specialist as part of the audit team. This individual assists the audit team in documenting the computer system internal control structure and highlighting strengths and weaknesses relating to the computer structure of the FARECaI. Our firm currently provides the following services: Audits: Governmental(special districts,cities, single audits, and school districts) Non-Profit Commercial Compliance Transient Occupancy Tax Pensions Accounting Services: Reviews Compilations Management Advisory Services(Non-Audit Clients): Data Processing Services Business Consultation Pension and Profit Sharing Plan Assistance Acquisition and Mergers 1 • 030 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA TECHNICAL PROPOSAL COMPANY AND STAFF/QUALIFICATIONS/LICENSE/DESK REVIEWS(CONTINUED) COMPANY AND STAFF(CONTINUED) Our firm currently provides the following services(Continued): Income Tax Services: Preparation Planning Tax Audits and Negotiations with Internal Revenue Service and Other Taxing Authorities Please see Appendix A—Peer Quality Review Report for a copy of our firm's December 31, 2008 quality review report,which includes a review of governmental and non-profit engagements. QUALIFICATIONS Our firm has an extensive background in auditing special districts and municipalities with over thirty-four years of experience in these specialized fields. We currently perform over seventy-five special district audits (including joint power authorities), thirty city audits,thirty-five school district and related audits,and numerous other governmental audits. The firm currently audits the County Sanitation Districts of Los Angeles County (all 25 districts) and the County of San Diego's Redevelopment Agency. We have recently completed monitoring of over two hundred (200) contractors for the County of Los Angeles, for contract compliance and fiscal monitoring. Additionally, we are also on the master lists and have signed master contracts with the County of San Diego and the County of Los Angeles for Compliance and Financial Audits. Therefore, our firm has experience in auditing and preparing financial statements for all types of governmental agencies. Please see Appendix B — Current and/or Recently Completed Governmental Audits for a list of recent governmental audits performed by the firm. In addition to those auditing experiences listed above, the firm's recent local auditing experience includes the following: 1. CSMFO and GFOA Award Programs The firm has or is currently auditing the following entities that have participated in and have received the CSMFO and/or GFOA Award Programs: City of Bellflower City of Pacifica City of Brawley City of Paso Robles City of Calabasas City of Scotts Valley City of Campbell City of Susanville City of Culver City City of Tracy City of Dinuba City of Watsonville City of El Centro City of Westlake Village . City of Eureka City of Whittier City of Hercules City of Winters City of Indio City of Yuba City City of Laguna Hills County Sanitation Districts of City of Lathrop Los Angeles County City of Lompoc Encina Wastewater Authority City of Lynwood - Los Angeles County Flood Control District 2 031 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA TECHNICAL PROPOSAL COMPANY AND STAFF/QUALIFICATIONS/LICENSE/DESK REVIEWS (CONTINUED) QUALIFICATIONS (CONTINUED) 2. Joint Powers Authorities We have audited the following joint powers authorities(JPAs): County of San Diego—Emergency Services Organization Encina Wastewater Authority Exclusive Risk Management Authority of California North Coast Emergency Medical Services Public Agency Self Insurance System San Diego Geographic Information System Santa Barbara Water Purveyors Joint Powers Agency Santa Barbara County Special Education Local Plan Area Joint Powers Agency Transportation Authority of Marin County Tracy Area Public Facilities Financing Authority West Contra Costa Integrated Waste Management Authority In addition to the joint powers authorities listed above, the vast majority of our governmental clients are members of joint powers authorities. As such, our firm has experience in reviewing WA statements and disclosing the appropriate JPA information in the financial statements for each governmental client. 3. OMB Circular A-133 We have performed compliance audits in accordance with Office of Management and Budget (OMB) Circular A-133, Audits of State, Local Government and Nonprofit Organizations, for our municipal clients who are required to have compliance audits (which is the majority of our municipal clients)and for all of our school district clients. 4. Federal and State Grant Programs and the Single Audit Each of our municipal clients, the majority of our special district clients, and all of our school district clients receive federal and state grants which require compliance audits. Some of our most commonly audited programs are as follows: Municipal Major Programs: Community Development Block Grant Funds(CDBG) Federal Emergency Management Act Funds (FEMA) Section 8 Housing Assistance Payments Transportation Enhancement Act(TEA) Airport Improvement Program(ALP) Economic Development Grants(EDA) HOME Capitalization Grants for State Revolving Funds Surveys, Studies,Investigations, and Special Purpose Grants Other Common Municipal Programs: COPS Grants(including LLEBG) Asset Seizure Funds Retired Senior Volunteer Program 3 032 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA TECHNICAL PROPOSAL COMPANY AND STAFF/QUALIFICATIONS/LICENSE/DESK REVIEWS (CONTINUED) QUALIFICATIONS (CONTINUED) 4. Federal and State Grant Programs and the Single Audit(Continued) Other Major Programs: Senior Nutrition Programs Child Nutrition Programs Title I Title VI Migrant Education Vocational Education Special Education 5. Special Districts Currently our firm audits in excess of seventy-five special districts including the County Sanitation Districts of Los Angeles County (all 25 Districts), park and recreation districts, utility districts, cemetery districts, community services districts, sanitary districts, water districts,fire districts, ambulance services districts,airport districts,and vector control districts. 6. State Controller's Report and Street Reports We have prepared State Controller's Reports, Transit, and Street Reports for numerous special districts, cities, and redevelopment agencies. We feel this experience allows us to assist our clients in their preparation of the State Controller's Reports or prepare the reports as a separate engagement for our clients. 7. Other Audits The firm has recently concluded auditing lease agreements between the County of Los Angeles and a lessee for a period of 15 years. The firm has assisted several cities in reviewing franchise financial statements as part of reviewing franchise requests for rate increases. In addition, the firm has performed transient occupancy audits for ten municipalities and has performed various audits of operating lease charges(such as use of a sewage treatment plant based on percentage of use by our client and actual expense as recorded by the treatment plant operator). The firm has also performed franchise audits of Comcast, AT&T, a local sports park, and others for municipal clients who have requested them. 8. Redevelopment Agencies We have audited the Redevelopment Agency of the County of San Diego for the fiscal years ended June 30, 2004-2011. We have also performed audits of redevelopment agencies for nearly all of our municipal clients. Each redevelopment agency audit is conducted in accordance with Guidelines for Compliance Audits of California Redevelopment Agencies issued by the State Controller, Division of Local Government Fiscal Affairs and Section 33080.1(a) of the Health and Safety Code and Title 2.5, Chapter 6 of the California Administrative Code. 9. School Districts Currently our firm audits thirty-five school districts and related schools throughout the State of California, including four charter schools. We have also performed audits of student bodies for nearly all of our school district clients. 4 033 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA TECHNICAL PROPOSAL COMPANY AND STAFF/QUALIFICATIONS/LICENSE/DESK REVIEWS (CONTINUED) QUALIFICATION (CONTINUED) 10. Bond Reporting The firm has assisted many of our clients in properly reporting and accounting for bond issuance costs and discounts or premiums, as well as reviewing debt covenant requirements. Many of our clients' audited statements have been included in official debt issuance statements. 11. Investment Compliance In addition to financial statement audits, we also review our clients' compliance with their investment policies and examine investment types, including, but not limited to, an evaluation of maturity dates (short-term or long-term), types and category, and collateral to ensure proper disclosure of risk in the basic financial statements. 12. Income Tax Services The firm provides tax services such as planning, preparation, and tax audits as well as negotiations with the Internal Revenue Service and other taxing authorities on behalf of our clients. Please see Appendix C—References for a list of recent governmental audits performed by the firm. It is the firm's policy to have our partners involved in the managing function of our governmental audits. Having both the partner and audit manager involved in the engagement allows FARECaI to receive immediate response to questions about accounting and audit topics,concerns, and findings. It is expected that Mr. Ron Levy would be the technical (concurring) partner in charge of the FARECaI audit. He will be responsible for reviewing FARECaI's basic financial statements and all other required statements and reports. He may also be responsible for addressing any FARECaI questions or concerns that arise during the year. He has assisted numerous special districts and joint powers authorities and has also prepared award- winning CAFRs. Mr. Craig Hartzheim will be the engagement partner and manager assigned to the audit. As engagement partner and manager, he will oversee the day-to-day operations of the audit, review all audit areas, and be on-site for a majority of the fieldwork. He has assisted many special districts and joint powers authorities and has prepared numerous award-winning CAFRs. Mr. Edward Eisenhauer and Mr. Wilson Lam will be the senior auditors assigned to the audit. As senior auditors, it will be their responsibilities to oversee the staff accountants, do preliminary reviews of audit sections,and perform more difficult audit sections. Mr. David Ortiz will be the computer specialist assigned to the audit, when needed. Mr. Ortiz has extensive knowledge in auditing EDP functions. Mr. Ortiz may also perform the statistical sampling procedures for the audit and also document and test the internal control structure of the computer systems. In addition to the aforementioned supervisory staff, one staff accountant will be assigned to the audits. All staff accountants have degrees from accredited colleges or universities, have received in-house governmental audit training, and at present, have at least one year of governmental auditing experience. All staff accountants will be directly supervised by the senior accountants and manager assigned to the audit at all times. All partners, managers, and staff members have worked on numerous governmental engagements together. Consistently working together will provide FARECa!with a knowledgeable,proficient, and efficient audit team. 5 034 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA TECHNICAL PROPOSAL COMPANY AND STAFF/QUALIFICATIONS/LICENSE/DESK REVIEWS (CONTINUED) QUALIFICATIONS (CONTINUED) The firm conducts an annual firm-wide two-day training seminar to update all governmental auditors on new pronouncements and improved audit techniques. In addition to this firm sponsored seminar, each governmental auditor attends the annual governmental accounting conference and many other continuing education courses and is updated on current accounting/auditing issues through our journals and supplements, which we receive on a regular basis. Moss, Levy & Hartzheim, LLP is an equal opportunity employer who employs people of many different ethnic backgrounds. We staff our audits according to qualifications of personnel and the needs of our clients. Please see Appendix D— Organization Chart for the hierarchy of all personnel to be assigned to perform the audit work required by this RFP. Please see Appendix E—Segmentation and Budgeted Hours by Segment for a schedule of the level of staff and number of hours to be assigned to each segment of the engagement. The firm will maintain staff continuity on the engagement throughout planning, audit fieldwork, and report preparation, barring any terminations, illnesses, or other unforeseen circumstances (departure from the firm, promotion, or assignment to another office). At the written request of FARECaI,any Moss, Levy& Hartzheim, LLP employee assigned to the audit can be removed and replaced by another qualified employee. The Financing Authority for Resource Efficiency of California retains the right to approve or reject replacements. Our firm experiences relatively low turnover in employees as can be seen on individual resumes, so that even our staff auditors have more experience than most other firms can offer. The firm will not use FARECaI as a training ground for its employees. Please see Appendix F—Resumes for each individual's qualifications and experience. LICENSE Moss, Levy &Hartzheim, LLP is a properly licensed certified public accounting firm in the State of California. All certified public accountants engaged in the audit of the Financing Authority for Resource Efficiency of California are licensed to practice in the State of California and have received at least the minimum number of governmental continuing professional education hours required by the State Board of Accountancy and Government Auditing Standards to perform governmental audits. Moss, Levy & Hartzheim, LLP is independent of FARECaI and FARECaI's members as defined by auditing standards generally accepted in the United States of America, the U.S. General Accounting Office's Government Auditing Standards, the U.S. Securities and Exchange Commission, and all other authoritative bodies with standard or rule making authority over the auditing profession. Moss,Levy& Hartzheim, LLP has not entered into a professional relationship involving FARECAL or its members in the last five years. The firm uses checklists and questionnaires to determine that staff members are independent of each client being audited. We also have each staff member sign a personal independence declaration prior to commencing work on an audit client. The partner in charge of the audit reviews all independence work papers prior to staffing each audit. 6 035 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA TECHNICAL PROPOSAL COMPANY AND STAFF/QUALIFICATIONS/LICENSE/DESK REVIEWS (CONTINUED) DESK REVIEWS Moss, Levy & Hartzheim, LLP has never been the object of any disciplinary action from any federal or state regulatory body or professional organization during the past three years. Our firm, or any employee of the firm, has never had a record of substandard audit work. WORK PLAN AND SCHEDULE If convenient for the FARECaI's staff,the approximate target dates for the FARECaI audit would be as follows: Option One: (1) Planning meeting and entrance conferences—October 10th (2) Entrance conference and fieldwork—Week of November 14th (3) Exit conference with the FARECaI and Members—November 18`h (4) Draft Audit Reports and Management Letter—No later than December 12th (5) Final Audit Reports—Within five business days of final corrections and no later than December 315t (6) Board Presentation—Open Option Two: (1) Planning meeting and entrance conferences—January 9th (2) Entrance conference and fieldwork—Week of January 16th (3) Exit conference with the FARECa1 and Members—January 2152 (4) Draft Audit Reports and Management Letter—No later than February 6th (5) Final Audit Reports—Within five business days of final corrections and no later than February 15th (6) Board Presentation—Open During the first year of the engagement, we will utilize the prior year's financial statements, the current year's budget, and our knowledge of the FARECa1's systems to determine materiality for the different audit sections. Each year, we will select a sample of transactions to determine to what extent the systems are functioning as described to us. The extent of our sample size will depend upon our assessment of the internal control structure and the results of our assessment in accordance with Auditing Standards. These standards require auditors to perform tests of controls and transactions based on a risk approach. The selection of transactions for testing will be made using a combination of random, systematic, and haphazard sampling techniques. We will identify the strength of the systems upon which we can rely in planning our substantive tests. Our internal control review will meet all the requirements of AICPA Statement on Auditing Standards (SAS) No. 55, Consideration of the Internal Control Structure in a Financial Statement Audit, as amended by SAS No. 78, SAS No. 99 Consideration of Fraud in a Financial Statement Audit, SAS No. 106, Audit Evidence, SAS No. 107, Audit Risk and Materiality in Conducting an Audit, SAS No. 108,Planning and Supervision, SAS No. 109, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement, and SAS No. 110, Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained. 7 036 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA TECHNICAL PROPOSAL WORK PLAN AND SCHEDULE (CONTINUED) It is estimated that the sampling size for transaction testing for compliance with systems as actually implemented would be as follows: I. Minimum of 30 disbursement items, including automatic and manual checks and bank debits II. Minimum of 5 payroll checks, including direct deposits III. Minimum of 30 receipt items In addition, all of our staff is equipped with networked notebook computers. These computers are equipped with not only word processing and spreadsheet capabilities, but various functional software, such as Adobe Acrobat, the Governmental Accounting Research System Program, the GFOA Blue Book, random sampling software, Lacerte Tax Program, Easy Accounting Software, which contains amortization programs and depreciation programs, and other applications as well. As part of our audit procedures, we usually request a working trial balance in excel format and access to view general ledger detail directly from the software system. We will also perform preliminary analytical review procedures using the prior year's audited statements and the current year's budget. In the preliminary stage, we will adopt ratio analysis procedures to compare the relationships between account balances and classes of transactions between prior periods and against budgets and industry statistics. This will help us to identify the source of individual fluctuations. This may include budgets,trail balance, and/or draft financial statements. Then, we will adopt trend analysis to compare current data with prior periods. This method is particularly useful for analyzing revenue and expenditures. Any unexpected trends or deviations will be discussed with relevant FARECaI staff to obtain explanations. We will also review the following documents in order to determine compliance with applicable laws and regulations: 1. Minutes of the governing body with special attention to: indications of new revenue sources, including federal and state grants; expenditure authorizations and related appropriations, including any special or restrictive provisions; appropriation transfers; authorization for bank or other debt incurred; awards to successful bidders; authorization for new leases entered into; changes in licenses, fines, or fees; authorization for fund balance designations or reservations in accordance with GASB Statement No. 54; and authorization for significant new employees hired. 2. New agreements and amendments to agreements including but not limited to: grant agreements; debt and lease agreements; labor agreements; joint venture agreements; disposition and development agreements; and other miscellaneous agreements. 3. Administrative Code 4. Investment Policy The main extent of our work would be what is required to enable us to express an opinion on the basic financial statements in accordance with: 1. AICPA Industry Audit Guide for State and Local Governmental Units 2. AICPA Audit Standards 3. Minimum Audit Requirements and Reporting Guidelines for California Special Districts 4. National Committee on Governmental Accounting, Auditing and Financial Reporting (Amended)Publication 5. Laws of the State of California 6. Requirements of Office of Management and Budget's (OMB) Circular A-133,Audits of State, Local Governments and Nonprofit Organizations 7. GAO Standards for Audit of Governmental Organizations, Activities and Functions, the Guidelines for Financial and Compliance Audits of Federally Assisted Programs 8. Our firm's own additional standards and procedures 8 037 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA TECHNICAL PROPOSAL WORK PLAN AND SCHEDULE (CONTINUED) The audit will be conducted in accordance with auditing standards generally accepted in the United States of America. The primary purpose of the audit is to express opinions on the basic financial statements,and such an audit is subject to the inherent risk that material errors or fraud may exist and not be detected by us. If conditions are discovered which lead to the belief that material errors, defalcations, or fraud may exist,or if any other circumstances are encountered that require extended services,we will promptly advise the FARECal. Our audit would begin when it is convenient for the FARECa1's staff. We estimate that in the second week of October(or second week or January for Option Two)we will perform fieldwork for the audit. Each year, the partner or manager of the firm will contact the FARECaI personnel. The purpose of this contact will be to discuss the scope and timing of the annual audit, to review any accounting issues known at that time, and to address any FARECaI personnel's concerns about the impending audit. We will schedule approximately one week of fieldwork. During the first year of the engagement, we will modify our narrative flow charts and other documentation of the internal control structure and of the major systems, such as revenue and cash receipts, purchasing and cash disbursements, payroll and personnel, inventory, property and equipment, grant compliance, investment activities, and the budget process. We will gain this information through discussions with appropriate FARECaI staff and the review of available documented policies, organizational charts, manuals, programs, and procedures. Once we obtain this information, we will evaluate the systems of internal controls and revise our standard governmental audit programs. In October (or January for Option Two), we will contact you to provide our detailed audit plan for the fieldwork. We will also discuss with you any matters that may impact our audit procedures or your financial reporting. The audit work will begin with an analytical review of all significant balance sheet and revenues and expense accounts for each fund, which includes a comparison of prior year's financial statements and current year's budget to the year-end trial balance. It is our firm's policy to perform substantive tests on all balance sheet accounts. Analytical procedures will be used to supplement the substantive tests, not supplant them. We will perform analytical procedures during interim and year-end fieldwork on all balance sheet and revenue and expense accounts. The primary objective of the year-end audit work is to audit the final numbers that will appear in the FARECaI's basic financial statements and report on compliance with laws, regulations, and grant agreements. Our fieldwork would also consist of procedures required under SAS No. 99, Consideration of Fraud in a Financial Statement Audit. We will perform procedures such as: (a) Confirmations by positive and negative circularization including but not limited to all cash and investment accounts; selected receivable and revenue balances; all bonds, loans,notes payable, and capital leases; all notes receivable; all insurance carriers; all legal firms employed on FARECaI business;and other miscellaneous confirmations deemed necessary (b) Physical verifications and observations (c) Analysis and review of evidential material (d) Interviews and investigative efforts (e) Electronic data processing testing for computer and software reliability (f) Numerous other procedures 9 038 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA TECHNICAL PROPOSAL WORK PLAN AND SCHEDULE (CONTINUED) The year-end fieldwork should be completed no later than November 18th (or January 2151 for Option Two) for the audit. The Governmental Accounting, Auditing and Financial Reporting (GAAFR), issued by the Government Finance Officers Association(the"Blue Book")and other GFOA publications are often used as additional tools when preparing and reviewing the financial statements of our governmental clients. The finn has and uses its extensive library of current AICPA,GFOA,and GASB publications and pronouncements. As part of our audit engagements, we issue our clients management letters if we note certain observations or recommendations that we feel need to be disclosed. Our firm's philosophy regarding the management letter is that the management letter is to help management improve its internal control and accounting procedures and not to criticize the management in charge. This is why we present our management letters to management in draft form for open discussion prior to issuance. The workpapers for this engagement are the property of Moss, Levy & Hartzheim, LLP and constitute confidential information. However, we may be requested to make certain workpapers available to any California State Controller pursuant to authority given to it by law or regulation. If requested, access to such workpapers will be provided under the supervision of Moss,Levy&Hartzheim,LLP's personnel.Furthermore, upon request we may provide photocopies of selected workpapers to the California State Controller. The California State Controller may intend, or decide, to distribute the photocopies or information contained therein to others,including other governmental agencies. The workpapers and related audit reports for this engagement will be retained for a minimum of seven(7)years after the date the auditor's report is issued or for any additional period requested by the parties designated by the Federal or State government or by FARECa1 for audit. If we are aware that the auditee is contesting an audit finding, we will contact the auditee for guidance prior to destroying the workpapers. We do not anticipate any problems with the audit except for items listed in past management letters. In the event of a problem, the FARECaI President, Board of Directors, and FARECaI Attorney will be immediately notified in writing of any fraud, other illegal acts, or indications of illegal acts found during the course of our audit work. All other discrepancies or weaknesses in the internal control system that we become aware of will be communicated to management through discussion and the management recommendation letter. DATA REQUEST Please see Appendix G — Data Request for a list of additional documents that we would like FARECaI's accounting firms or members to provide to fulfill the obligations of this RFP. SCOPE EXCLUSIONS/ADDENDA None noted. DELIVERABLES 1. Draft reports of financial statements and management report in PDF format 2. Final reposts of financial statements (eighteen copies of the required reports plus one camera ready copy and a"cd"containing a PDF file of the report) 3. One management report 10 O39 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA TECHNICAL PROPOSAL NOT-TO-EXCEED FEE Please see Appendix H—Not-to-Exceed Fee for the proposed cost of our services. FEE SCHEDULE/HOURLY RATES Please see Appendix I—Fee Schedule/Hourly Rates for the proposed rates of our services. OTHER COMMITMENTS All the key staff assigned to the audit will be available to fulfill the needs of this engagement in a professional and timely manner. The list below outlines a list of other clients that are currently being served by the firm's staff that would be assigned to this engagement: • City of Culver City • City of Eureka • City of Healdsburg • City of Indio • City of Laguna Hills • City of Los Alamitos • City of Westlake Village • Valley County Water District OTHER We have no additional information to be dedicated in this section. Under penalties of perjury, I declare that I am an authorized signer and that there are no and have never been any financial interests between any officials or employees of the Financing Authority for Resource Efficiency of California and Moss,Levy&Hartzheim,LLP. Respectfully submitted, Craig .Hartzheim,C.P.A. Partner Moss,Levy&Hartzheim,LLP is an Equal Opportunity Employer. 11 040 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA APPENDIX A—PEER QUALITY REVIEW REPORT Jessie C. Powell,CPA 45 PO\1/ELL& SPAI=FOPD, I-LP Pairicl D.Spofford,CPA ,: ., CFT-H IED PUBLIC ACCOUNTANTS i i,,,,.,.i i,,,n,.r.,i,i,,,,r,,,.a,a V„. ,i,n,,, • tIi<„\,,,.r„n,,i,,.ide..rc.m,i,d r„tw,:Ar,,,,,a,,,1, System Review Report To the Partners of Moss,Levy&Hartzheim,LLP and the Peer Review Committee of the State of California We have reviewed the system of quality control for the accounting and auditing practice of Moss,Levy& Hartzheim,LLP(the firm)in effect for the year ended December 31,2008. Our review was conducted in accordance with standards for Performing and Reporting on Peer Reviews established by the Peer Review Board of the American Institute of Certified Public Accountants. The finn is responsible for designing a system of quality control and complying with it to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. Our responsibility is to express an opinion on the design of the system of quality control and the firm's compliance therewith based on our review. The nature, objectives, scope, limitations of, and the procedures performed in a System Review are described in the standards at www.aicoa.orglprsummaiy. As required by the standards, engagements selected for review included engagements performed under Government Auditing Standards and audits of employee benefit plans. In our opinion,the system of quality control for the accounting and auditing practice of Moss, Levy& Hartzheim,LLP in effect for the year ended December 31,2008, has been suitably designed and complied with to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. Firms can receive a rating of pass,pass with deficiency(ies)or fail. Moss,Levy&Hartzheim,LLP has received a peer review rating of pass. ,,, ,e,4",,k/g-e-7-4 , Iv.,r,./.' July 24,2009 • 66-1 W BIrcl,Cour! • San Bernardino,CA 92410 • P.O.BoN 8847 • PecIIancJs,CA 92375 Telep6ane 909-885-7721 • fas 909-885.75.11 12 041 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA APPENDIX B-CURRENT AND/OR RECENTLY COMPLETED GOVERNMENTAL AUDITS COUNTIES FIRE PROTECTION DISTRICTS Los Angeles County,CA(Master List) Cayucos Fire Protection District,CA San Diego County,CA(Master List) Lakeport Fire Protection District,CA Orcutt Fire Protection District,CA SANITATION DISTRICTS OTHER DISTRICTS Carpinteria Sanitation District,CA Cayucos Sanitation District,CA Beach Cities Health District County Sanitation Districts of Los Angeles County,CA County of San Diego Emergency Services Organization -All 25 Districts County of San Diego First 5 Commission Encina Wastewater Authority,CA County of San Diego In-Home Supportive Services Montecito Sanitation District,CA Public Authority Orange County Sanitation District,CA-Internal Audits County of San Diego Health and Human Services Agency Child Development Program Grant UTILITY DISTRICTS County of San Diego MIOCR Grant County of San Diego RLETC Grant Georgetown Divide Public Utility District County of Los Angeles Delta Sigma Theta,Head Start Program,Inc. WATER/IRRIGATION DISTRICTS County of San Diego DA Office of Auto Ins.Fraud Grant,Urban Auto Fraud Grant,WC Ins Fraud Grant Aldercroft Heights County Water District,CA Los Angeles County Flood Control District Foothill Municipal Water District,CA Los Angeles Watershed Conservation Authority Main San Gabriel Basin Watermaster,CA Marin/Sonoma Mosquito and Vector Control District Marina Water District,CA San Diego Geographic Information Source North Marin Water District,CA Tracy Area Public Facilties Financing Agency Sweetwater Springs Water District,CA West Contra Costa Integrated Waste Management Valley County Water District,CA Authority Valley of the Moon Water District,CA TRANSPORTATION DEVELOPMENT ACT AMBULANCE SERVICES DISTRICT Arroyo Grande,CA Cambria Community Healthcare District Beaumont,CA North Coast Emergency Medical Services Brawley,CA Calexico,CA CEMETERY DISTRICTS El Centro,CA Grover Beach,CA Arroyo Grande Cemetery District,CA Holtville,CA Atascadero Cemetery District,CA Paso Robles,CA Gridley-Biggs Cemetery District,CA San Luis Obispo County and Cities Area Planning San Miguel Cemetery District,CA Council: Santa Maria Cemetery District,CA Local Transportation Fund State Transit Assistance Fund COMMUNITY SERVICES DISTRICTS South County Area Transit,CA South County/San Luis Obispo Transit,CA Cambria Community Services District,CA Transportation Agency for Monterey County, CA Cuyama Community Services District,CA Transportation Authority of Marin Groveland Community Services District,CA Association of Monterey Bay Area Governments Heritage Ranch Community Services District,CA Santa Cruz Regional Transportation Commission Los Alamos Community Services District,CA Nice Community Services District,CA TRANSIENT OCCUPANCY TAX AUDITS Rancho Murieta Community Services District,CA Santa Ynez Community Services District,CA Represented the following municipalities and/or counties Vandenberg Village Community Services District,CA in the audit,of the hotel "bed tax"records: RECREATION AND PARK DISTRICTS Arroyo Grande,CA Bellflower,CA Conejo Recreation and Park District,CA Bishop,CA Isla Vista Recreation and Park District,CA Calexico,CA Mountains Recreation and Conservation Authority,CA Cannel,CA Rancho Simi Recreation and Park District,CA Ojai,CA Hayward Recreation and Park District,CA Pismo Beach,CA Santa Maria,CA BUILDING AUTHORITY South Lake Tahoe,CA Whittier,CA County of San Diego Regional Building Authority,CA 13 042 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA APPENDIX B-CURRENT AND/OR RECENTLY COMPLETED GOVERNMENTAL AUDITS CITIES AND REDEVELOPMENT AGENCIES SCHOOL DISTRICTS Adelanto,CA Acton-Agua Dulce Unified School District Arcata,CA Ballard School District Arroyo Grande,CA Bellflower Unified School District Beaumont,CA Beverly Hills Unified School District Bellflower,CA Blochman Union School District Brawley,CA Bradley Elementary School District Calabasas,CA Buellton Union School District Campbell,CA Calaveras County Schools Camarillo,CA-Internal Control Audits Calexico Unified School District Capitola,CA Calipatria Unified School District County of San Diego Redevelopment Agency,CA Carpinteria Unified School District Culver City Casmalia School District El Centro,CA Castaic Union School District Eureka,CA Cayucos Elementary School District Fillmore,CA Coast Unified School District Fort Bragg,CA Cold Springs School District Grover Beach,CA College Elementary School District Gustine,CA Eastside School District Healdsburg,CA El Segundo Unified School District Hercules,CA Garvey School District Holtville,CA Goleta Union School District Hughson,CA Graves School District Imperial,CA Heber School District Indio,CA Hughes-Elizabeth Lakes Union School District Laguna Hills,CA Kappa]Union School District Lathrop,CA Lancaster School District Lompoc,CA Magnolia Union School District Los Alamitos,CA Manhattan Beach Unified School District Lynwood,CA Mark Twain Union Elementary School District Morgan Hill,CA Meadows Union School District Oakdale,CA Mission School District Ojai,CA Monrovia Unified School District Pacifica,CA Montecito Union School District Paso Robles,CA Mulberry School District Santa Maria,CA Novato Unified School District Susanville,CA Orcutt Union School District Taft,CA Pacific Unified School District Town of Paradise,CA Palmdale School District Tracy,CA Pleasant Valley Union School District Watsonville,CA San Ardo Elementary School District Westlake Village,CA San Lucas School District Whittier,CA San Miguel Joint Union School District Winters,CA Santa Maria Joint Union High School District Yuba City,CA Shandon Unified School District Solvang Elementary School District PUBLIC FINANCING AUTHORITIES Temple City Unified School District Torrance Unified School District The majority of our Municipalities issue debt and do Vallecito Union School District so through an established Public Financing Authority. Westmoreland Elementary School District Wilsona School District OTHER SCHOOL ENTITIES Academia Semillas del Pueblo Charter School Albert Einstein Academy Antelope Valley Schools Transportation District Bright Star Secondary Charter Academy East Bay Regional Occupational Program Garr Academy of Mathematics and Entrepreneurial Studies Pacoima Charter School Santa Ynez Valley Charter School Southern California Regional Occupational Center Stella Middle Charter Academy Synergy Charter Academy Tri-Valley Regional Occupational Program 14 043 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA APPENDIX C—REFERENCES COUNTY SANITATION DISTRICTS OF LOS ANGELES COUNTY Audit of basic financial statements(all 25 districts),Financing Authority, Commerce Refuse to Energy Authority,and Single Audit Report 2003 to Present Craig A.Hartzheim,CPA and Hadley Hui, CPA Contact: Thomas Mueller(562) 699-7411,ext. 1103 Received GFOA Certificate of Achievement in Financial Reporting ENCINA WASTEWATER AUTHORITY Audit of basic financial statements 2004 to 2010 Craig A.Hartzheim, CPA Contact:Kathy McHorney,(760)438-3941 Received GFOA Certificate of Achievement in Financial Reporting VALLEY COUNTY WATER DISTRICT Audit of basic financial statements 2009 to Present Craig A. Hartzheim,CPA Contact: Lynda Noriega,(626)338-7301 FOOTHILL MUNICIPAL WATER DISTRICT Audit of basic financial statements 2009 To Present Craig A. Hartzheim, CPA Contact: Karen Oblak, (818)790-4036 LOS ANGELES WATERSHED CONSERVATION AUTHORITY Audit of basic financial statements 2010 to present Craig A.Hartzheim,CPA Contact: Jane Beesley, (626) 815-1019 15 044 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA APPE_NDIX D-ORGANIZATION CHART Craig A.Hartzheim,CPA Partner Edward R,aipplumer,CPA Waco Lain..CPA Seni047 Acconnont senior Ageowant • .SW4.econt.ont, • 16 045 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA APPENDIX E-SEGMENTATION AND BUDGETED HOURS BY SEGMENT Estimated Hours Partner/ Technical AUDIT SEGMENTS Clerical Staff/Specialist Senior Manager Partner Total Planning I 1 Risk Assessment 5 2 7 Audit Conferences (Preliminary, Progress, end Exit) I 1 Correspondence 2 1 3 6 Review/Documentation of Internal Controls: Documentation of systems 1 3 3 7 Testing of systems 5 9 14 Compliance Testing 3 6 2 11 Year End Balances Testing 6 13 4 23 Revenue and Expenditure/Expense Analysis(Analytical Procedures) 3 4 7 Preparation,Review, and Findings 7 3 7 10 27 GRAND TOTAL 10 24 50 0 20 104 17 046 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA APPENDIX F—RESUMES Ron A. Levy,C.P.A.—Partner • California licensed C.P.A. with 34 years of audit experience with governmental and non- profit entities. • Technical partner (concurring) in charge of all governmental and non-profit audits, currently including 75 special district audits, 33 municipal audits, and 35 school districts and related audit. • Has assisted governmental clients with year-end closing, key position interviews, preparation of award winning CAFRs,and preparation of State Controller's Reports. • Has met or exceeded all continuing education requirements, including recent courses in the following: 2011, 2010, and 2009 Governmental Accounting Conference 2011, 2010, and 2009 School District Conference GASB 34 Training Seminars Planning a Governmental Audit Engagement Auditor's Reports on Audits of Local Governments Governmental Accounting Update Audits of State and Local Governments Compliance Auditing,Auditing Sampling, and Concluding the Audit The Single Audit Act • Member of the following: American Institute of Certified Public Accountants California Society of Municipal Finance Officers California Society of Certified Public Accountants California Association of School Business Officials Kiwanis Club • Bachelor of Science degree from Oregon State University conferred in 1977. • Taught accounting courses at a branch of LaVerne College and Chapman College. • Knowledgeable about all areas of tax law including non-profit tax issues. • Mr.Levy's ancestry is of Hispanic descent. 18 047 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA APPENDIX F—RESUMES Craig A.Hartzheim,C.P.A.—Partner • California licensed C.P.A. with 27 years of audit experience with governmental, non- profit,and commercial entities. • Engagement partner for governmental and non-profit audits (Culver City office), currently including 40 special district audits (including Los Angeles County Flood Control District and the County Sanitation Districts of Los Angeles County), 17 municipal audits, and 12 school districts and related audits. • Has assisted governmental clients with year-end closings, key position interviews, preparation of award winning CAFRs,and preparation of State Controller's Reports. • Has met or exceeded all continuing education requirements including recent courses in the following: 2011, 2010, and 2009 Governmental Accounting Conference 2011, 2010, and 2009 School District Conference Audits of States and Local Governments Preparing Governmental Financial Statements Yellow Book, Government Auditing Standards GAAS Guide Other Comprehensive Basis of Accounting(OCBOA)Statements Audit Standards update Implementing SAS 112 Implementing SAS 114 Auditing update Grants Management • Bachelor of Science degree in Accounting from Marquette University conferred in 1982. • Member of the following: American Institute of Certified Public Accountants California Society of Certified Public Accountants • Knowledgeable about all areas of tax law including non-profit and payroll tax issues. 19 04R FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA APPENDIX F—RESUMES Hadley Y.Hui,C.P.A.—Partner • California licensed C.P.A. with 13 years of audit experience with governmental, non- profit,and commercial entities. • Partner in charge of 26 special district audits, 11 municipal audits,20 school districts and related audits, and 8 special audits for the County of San Diego. • Supervisor for the CSS and DPSS Monitoring Projects for Los Angeles County. • Has met or exceeded all continuing education requirements including recent courses in the following: 2011, 2010, and 2009 Governmental Accounting Conference 2011, 2010, and 2009 School District Conference 2006&2005 Single Audit Compliance GASB 34 Training Seminars Risk-Based Auditing Part 1, Part 2 2009 Accounting and Auditing Update Guide to Auditing Control Course 1, Course 2 • Extensive knowledge of database systems,networking, and various accounting software. • Bachelor of Arts degree in Economics with a minor in Accounting from University of California—Los Angeles was conferred in 1997. • Member of the following: American Institute of Certified Public Accountants California Society of Certified Public Accountants • Knowledgeable about all areas of tax law including non-profit and payroll tax issues. 20 049 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA APPENDIX F—RESUMES Derek Ram pone—Manager • Manager with 11 years of audit experience with governmental, non-profit, and commercial entities. • Manager for 21 special district audits (including Los Angeles County Flood Control District), 9 municipal audits,4 school district audits, and 5 joint power authority audits. • Supervisor for the CSS and AAA Monitoring Projects, and Rancho Business Park Lease Audit. • Field Supervisor for all County of Los Angeles engagements. • Has met or exceeded all continuing education requirements including recent courses in the following: 2011, 2010, and 2009 Governmental Accounting Conference 2011, 2010, and 2009 School District Conference 2008 Accounting and Audit Update • A Bachelor of Arts degree in Business Economics with an emphasis in Accounting from University of California—Santa Barbara was conferred in 1999. David Yang, C.P.A.—Manager • California licensed C.P.A. with 9 years of audit experience with governmental, non- profit,and commercial entities. • Manager for 27 special district audits, 14 municipal audits, and 10 school district audits. • Supervisor for the County of Los Angeles DMH, CSS, and DPSS Monitoring Projects, and the Rancho Business Park Lease Revenue audit. • Has met or exceeded all continuing education requirements including recent courses in the following: 2011, 2010, and 2009 Governmental Accounting Conference 2011, 2010, and 2009 School District Conference 2009 Accounting and Auditing Standards update:Risk Assessment Standards 2009 Advanced Audit Standards Workshop: Understanding Risk Assessment • Bachelor of Arts degree in Business Economics with a minor in Accounting from University of California—Los Angeles was conferred in 2003. 21 050 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA APPENDIX F—RESUMES Jay Siegel,C.P.A.—Manager • Manager with 33 years of audit experience with governmental, non-profit, and commercial entities. • Manager for various municipal and special district audits. • Has met or exceeded all continuing education requirements. • Bachelor of Science degree in Accounting from California State University—Long Beach was conferred in 1978. MS Degree in Taxation from Golden Gate University was conferred in 1991. • Member of the Boards of Accountancy in California, Texas, and Washington D.C. Derek Vuong Bui,C.P.A. —Manager • California licensed C.P.A. with 5 years of audit experience with governmental and commercial entities. • Auditor for 3 special district audits,3 municipal audits, and 5 school district audits. • Staff accountant for the Los Angeles County DMH, CSS and DPSS Monitoring Projects. • Has met or exceeded all continuing education requirements including recent courses in the following: 2011, 2010, and 2009 Governmental Accounting Conference 2011, 2010, and 2009 School District Conference 2008 Accounting and Audit Update • Bachelor of Arts Degree in Finance from California State University — Fullerton was conferred in 2002. 22 051 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA APPENDIX F—RESUMES Edward R. Eisenhauer, C.P.A.—Tax Manager/Senior Accountant • California licensed CPA with 25 years of experience, and 7 years of audit experience with governmental,non-profit, and commercial entities. • Auditor for 3 special district audits and 7 municipal audits. • Has met or exceeded all continuing education requirements including recent courses in the following: 2011, 2010, and 2009 Governmental Accounting Conference 2011, 2010, and 2009 School District Conference 2009 Accounting and Auditing Standards Update:Risk Assessment Standards 2009 Advanced Audit Standards Workshop: Understanding Risk Assessment 2009 GAAS Update Auditors'Responsibilities for Detection of Fraud Internal Control and Fraud in Governmental Engagements Government Auditing Standards—Yellow Book Implementing SAS 112 & 114 Advanced Fraud Techniques Grants Management • Bachelor of Science degree in Accounting from University of Wisconsin — Whitewater conferred in 1982. • Knowledgeable about all areas of tax law including non-profit and payroll tax issues. 23 052 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA APPENDIX F—RESUMES Pearl Tsui, C.P.A.—Senior Accountant • California licensed C.P.A. with 5 years of audit experience with governmental and commercial entities. • Auditor for 6 special district audits, 9 municipal audits, and 4 school district audits. • Staff accountant for the Los Angeles County DMH and CSS Monitoring Projects. • Has met or exceeded all continuing education requirements including recent courses in the following: 2011, 2010, and 2009 Governmental Accounting Conference 2011, 2010, and 2009 School District Conference 2009 Accounting and Auditing Standards update:Risk Assessment Standards 2009 Advanced Audit Standards Workshop: Understanding Risk Assessment • Bachelor of Science degree in Management Science from University of California— San Diego was conferred in 1999. Michael Pei—Senior Accountant • Auditor with 5 years of audit experience with governmental and commercial entities. • Auditor for 8 special district audits, 11 municipal audits, and 6 school district audits. • Passed all 4 parts of the C.P.A. examination. • Staff accountant for the Los Angeles County DMH,CSS and DPSS Monitoring Projects. • Has met or exceeded all continuing education requirements including recent courses in the following: 2011, 2010, and 2009 Governmental Accounting Conference 2011, 2010, and 2009 School District Conference 2008 Accounting and Audit Update • Bachelor of Arts degree in Business Economics with a minor in Accounting from University of California—Los Angeles was conferred in 2005. In Sook Han —Senior Accountant • Auditor with 5 years of audit experience with governmental and commercial entities. • Auditor for 7 special district audits, 9 municipal audits,and 5 school district audits. • Staff accountant for the County of Los Angeles Rancho Business Park Lease Revenue audit. • Staff accountant for the Los Angeles County DMH,CSS and DPSS Monitoring Projects. • Has met or exceeded all continuing education requirements including recent courses in the following: 2011, 2010, and 2009 Governmental Accounting Conference 2011, 2010, and 2009 School District Conference • Bachelor of Social Science from In-Ha University in Korea was conferred in 2002. • Master of Business Administration in Accounting from Pacific State University was conferred in 2006. 24 053 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA APPENDIX F—RESUMES Ricky Tzu-Wei Kuo—Senior Accountant • Auditor with 4 years of audit experience with governmental and commercial entities. • Auditor for 3 special district audits,6 municipal audits,and 4 school district audits. • Staff accountant for the Los Angeles County DMH Monitoring Projects. • Has met or exceeded all continuing education requirements including recent courses in the following: 2011, 2010, and 2009 Governmental Accounting Conference 2011, 2010, and 2009 School District Conference • Bachelor of Science in Business Administration with an emphasis in Accounting from California State University—Los Angeles,was conferred in 2005. Bin Zeng—Senior Accountant • Auditor with 3 years of audit experience with governmental and commercial entities. • Auditor for 4 special district audits,6 municipal audits,and 8 school district audits. • Staff accountant for the Los Angeles County DMH Monitoring Projects. • Has met or exceeded all continuing education requirements including recent courses in the following: 2011, 2010, and 2009 Governmental Accounting Conference 2011, 2010, and 2009 School District Conference • Bachelor of Arts degree in Business Economics from University of California — Los Angeles was conferred in 2007. Wilson Lam, C.P.A.—Senior Accountant • California licensed C.P.A. with 3 years of audit experience with governmental and commercial entities. • Auditor for 3 special district audits,3 municipal audits,and 6 school district audits. • Has met or exceeded all continuing education requirements including recent courses in the following: 2011, 2010, and 2009 Governmental Accounting Conference 2011, 2010, and 2009 School District Conference • Bachelor of Arts in Accounting and Finance from California State University- Fullerton was conferred in 2005. 25 054 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA APPENDIX F—RESUMES Susan Chin—Staff Accountant • Auditor with 4 years of audit experience with governmental and commercial entities. • Auditor for 3 special district audits,3 municipal audits, and 4 school district audits. • Staff accountant for the Los Angeles County DMH Monitoring Projects. • Has met or exceeded all continuing education requirements including recent courses in the following: 2011, 2010, and 2009 Governmental Accounting Conference 2011, 2010, and 2009 School District Conference • Bachelor of Arts from University of California—Los Angeles was conferred in 1992. Jumy Chan—Staff Accountant • Auditor with 3 years of audit experience with governmental and commercial entities. • Auditor for 2 special district audits, 6 municipal audits, and 2 school district audits. • • Has met or exceeded all continuing education requirements including recent courses in the following: 2011 and 2010 Governmental Accounting Conference 2011 and 2010 School District Conference • Master of Accountancy from Golden Gate University was conferred in 2009. • Bachelor of Science degree in Mathematics/ Economics from University of California — Los Angeles was conferred in 2006. Thieng Hanh Lam—Staff Accountant • Auditor with 1 year of audit experience with governmental and commercial entities. • Has met or exceeded all continuing education requirements including recent courses in the following: 2011 Governmental Accounting Conference 2011 School District Conference • Bachelor of Arts degree in Economics from University of California—Los Angeles was conferred in 2010. 26 055 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA APPENDIX F—RESUMES Ted Liu—Staff Accountant • Auditor with 1 year of audit experience with governmental and commercial entities. • Has met or exceeded all continuing education requirements including recent courses in the following: 2011 Governmental Accounting Conference 2011 School District Conference • Bachelor of Arts degree in International Studies with a minor in Accounting from University of California—Irvine was conferred in 2009. David Ortiz—Computer Specialist • Auditor with 21 years audit experience with governmental and commercial entities. • Computer specialist—with emphasis in fund accounting software. • Extensive knowledge of database systems,networking, and accounting software. • A Bachelor of Science degree in Business Administration with an emphasis in Accounting from California Polytechnic State University, San Luis Obispo. 27 056 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA APPENDIX G—DATA REQUEST The following items are additional documents that we would like FARECaI's accounting firms or members to provide, if applicable: Accounts payable list at year end per fund AP Check registers for periods subsequent to year end AP Check registers for all accounts for years under audit AP Cancelled checks AP Signature card for bank accounts-showing authorized signers for both payroll and accounts payable accounts AP/PR Accounts receivable list at year end per fund AR Utility billing registers AR Fee schedules approved by Board/Council AR All investments and reconciliations Cash Cash receipts for periods subsequent to year end CR Cash receipts journals and supporting documentation for the year CR Preliminary trial balance showing current year vs.prior year and budget to actual of current year Analytical Final detail general ledger FS Council/Board minutes General Confirmations General Engagement letter(provided by MLH,signed by client) General Insurance information (policies)general liability,worker's compensation,property and auto General PERS contribution information(pink slips and correspondence from PERS) General Journal Entries General Budget(original and final budget) General Inventory Sheets with count and cost Inv Lease documents LTD Loan documents LTD Loan receivable documents LR Fixed assets schedules and depreciation schedules if applicable,with additions and deletions PPE Compensated absences at year end with year end wage calculation broken out by fund PR Position schedule or pay rate per position PR Payroll accrual calculations at year end PR Payroll registers PR 941's and DE-6 payroll forms PR Time cards/sheets for pay periods of the fiscal year being audited PR W-4,I-9's,employee applications,and personal action forms for employees selected or paychecks selected PR Personnel policies General Form 700s General Gann/Appropriations Limit, if applicable FS Investment Policies FS Contracts General Legal expenditure general ledger detail Legal Organization chart General Schedule of advances to/from other funds,with corresponding agreements between the funds Interfund Schedule of transfers in/out to/from other funds Interfund Schedule of due to/from other funds Interfund MOSS,LEVY&HARTZI IEIM,LLP 28 057 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA APPENDIX H-NOT-TO-EXCEED FEE TOTAL ALL-INCLUSIVE MAXIMUM PRICE The annual fee, after a 10% discount, for each of the years in this proposal shall not exceed the following: Option One: Audit to be completed by December 31,2011 Labor Costs: Two Fiscal Years Ending Two Fiscal Years Ending Two Fiscal Years Ending June 30,2007 June 30,2009 June 30,2011 Hourly Hourly Hourly Rates Hours Cost Rates Hours Cost Rates Hours Cost Position:Partner $200 20 $ 4,000 $200 20 $ 4,000 $200 20 $ 4,000 Position: Senior Accountant 100 50 5,000 100 50 5,000 100 50 5,000 Position: Staff Accountant 75 24 1,800 75 24 1,800 75 24 1,800 Position: Clerical 30 10 300 30 10 300 30 10 300 Sub-total Hours/Labor Costs 104 11,100 104 11,100 104 11,100 Other Costs: Sub-total Other Costs Less:Discount- 10% 1,110 $ 1,110 $ 1,110 Maximum Total Cost to Complete the Financial Audit: $ 9,990 $ 9,990 $ 9,990 Option Two: Audit to be completed by February 15,2012 Labor Costs: Two Fiscal Years Ending Two Fiscal Years Ending Two Fiscal Years Ending June 30,2007 June 30, 2009 June 30, 2011 Hourly Hourly Hourly Rates Hours Cost Rates Hours Cost Rates Hours Cost Position: Partner $135 20 $ 2,700 $ 135 20 $ 2,700 $ 135 20 $ 2,700 Position: Senior Accountant 65 50 3,250 65 50 3,250 65 50 3,250 Position: Staff Accountant 50 24 1,200 50 24 1,200 50 24 1,200 Position: Clerical 20 10 ` 200 20 10 200 20 10 200 Sub-total Hours/Labor Costs 104 7,350 104 7,350 104 7,350 Other Costs: Sub-total Other Costs Less:Discount- 10% 735 $ 735 $ 735 Maximum Total Cost to Complete the Financial Audit $ 6,615 $ 6,615 $ 6,615 29 058 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA APPENDIX H—NOT-TO-EXCEED FEE DISCOUNT Due to the current economic environment, Moss, Levy & Hartzheim, LLP has accepted the fact that in order for government entities to survive some of the revenue cutbacks, contractors will need to reassess their hourly fees or total estimate of costs. Therefore, we are reducing our total estimate fee by 10%to assist FARECaI in these challenging economic times. MANNER OF PAYMENT Progress payments will be made on the basis of hours of work completed during the course of the engagement and out-of-pocket expenses incurred in accordance with the firm's cost proposal. Interim billings shall cover a period of not less than one calendar month. • 30 059 FINANCING AUTHORITY FOR RESOURCE EFFICIENCY OF CALIFORNIA APPENDIX I—FEE SCHEDULE/HOURLY RATE RATES FOR PROFESSIONAL SERVICES Auditor's Standard Hourly Billing Rates POSITION RATE Partner $ 200 Manager 150 Senior Accountant 100 Staff Accountant 75 Clerical 30 Fees and charges listed above are effective for the duration of the contract period following contract award. Any additional work agreed to between FARECaI and/or the City of Azusa and the firm shall be performed at the same rates set forth in the schedule of fees and expenses included in proposer's response to this RFP. 31 060 £ 1 . * AZ LISA . CHT & A'A11.1 AGENDA ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES col DATE: SEPTEMBER 26, 2011 SUBJECT: AUTHORIZE EXECUTION OF A MEMORANDUM OF UNDERSTANDING FOR THE ASSIGNMENT OF SAN JUAN UNIT 3 ENTITLEMENT RIGHTS AND OWNERSHIP INTEREST TO THE UTAH ASSOCIATION OF MUNICIPAL POWER SYSTEMS RECOMMENDATION It is recommended that the Azusa Utility Board authorize the Director of Utilities to sign a Memorandum of Understanding (MOU) for the layoff and sale of Azusa Light & Water's interest in the San Juan Project to the Utah Association of Municipal Power Systems (UAMPS). BACKGROUND As per Utility Board direction on September 27, 2010, one of Azusa Light & Water's strategic power supply objectives has been to seek a potential buyer for all or a part of AL&W's approximately 30 MW rights and obligations related to the San Juan Unit 3. AL&W's interests related to the San Juan project are obtained pursuant to the San Juan Unit 3 Project Power Sales Contract dated January 1, 1993 with the Southern California Public Power Authority (SCPPA). The City of Banning, also a SCPPA member, has expressed a similar strategic goal for its 20 MW portion of San Juan Unit 3. The Utah Association of Municipal Power Systems presently has an ownership interest in San Juan Unit 4 and desires to obtain additional "baseload" power supplies for a subset of its members with needs for such a power resource in their portfolio. UAMPS was established in 1980 under the Utah Interlocal Cooperation Act, and is a political subdivision of the State of Utah. UAMPS' purposes include the planning, financing, development, acquisition, construction, operation and maintenance of various projects for the generation, supply, transmission and management of electric energy for the benefit of its 51 Members across 8 states. UAMPS presently has involvement in 15 different power supply projects. 061. San Juan MOU September 26, 2011 Page 2 The first step toward consummating definitive, binding contract arrangements with UAMPS related to the sale of San Juan is the negotiation and execution of a Memorandum of Understanding. The MOU provides a roadmap for the development of a final, definitive agreement between the parties. Key terms of the Azusa/Banning/UAMPS Memorandum of Understanding are as follows: • UAMPS will acquire the entirety of Azusa's and Banning's 50 MW rights in San Juan with the final level subject to confirmation of subscription interest by UAMPS members. • The transaction will be in two phases. o The first phase is for the "layoff' of San Juan capacity and energy to UAMPS with a projected start date of not later than July 1, 2012. UAMPS would pay all costs related to the seller's interest in San Juan during Phase 1. o The second phase would involve the permanent transfer of ownership rights to UAMPS. This phase cannot occur when Azusa/Banning has debt service related to outstanding bonds. As such, the timing of Phase 2 could be as early as January 1, 2015 or as late as March 1, 2020. • UAMPS would be responsible for all EPA required expenditures on selective catalytic reduction (SCR) equipment on and after January 1, 2012. • Azusa/Banning would transfer their share of San Juan related transmission delivery rights to UAMPS, but initiation of the Phase 1 is contingent on UAMPS obtaining needed transmission services for deliveries to its members. • San Juan related reserve funds contributed by Azusa would be returned to Azusa as more fully provided in the final agreement. UAMPS and Azusa/Banning will strive to consummate definitive/final/binding agreements by March 1, 2012. The cities are utilizing member service agreements available from SCPPA for legal services on the proposed transaction. Lead counsel for contract development will be Fulbright &Jaworski who is SCPPA's bond counsel and who has been involved in SCPPA's San Juan Unit 3 arrangement from day one. In addition to BB&K, an attorney with broad industry power supply background from Cooper & Bruning LLP will provide assistance. A copy of the proposed Azusa/Banning/UAMPS Memorandum of Understanding is attached. Any minor modifications that may be needed prior to execution will be reviewed and approved by legal counsel. (A copy of the September 27, 2010 Utility Board report on San Juan is also attached as additional background.) FISCAL IMPACT The legal costs related to the proposed San Juan transaction may be significant ($100+K). Such costs are being shared on pro rata basis with Banning based on San Juan ownership shares (60% Azusa and 40% Banning). Legal costs are billed by SCPPA to the cities as a project expense. Prepared by: George F. Morrow, Director of Utilities 062 DRAFT 9/15/11 MEMORANDUM OF UNDERSTANDING ACQUISITION OF RIGHTS IN SAN JUAN 3 BACKGROUND Southern California Public Power Authority("SCPPA") owns a 41.8% undivided interest in Unit 3 of the San Juan Generating Station ("SJ3"), a 20.9% undivided interest in the facilities common to San Juan Units 3 and 4, and a 12.71% interest in the facilities common to all four units at the San Juan Generating Station("SCPPA's SJ3 Ownership Interest"). SCPPA's SJ3 Ownership Interest is held pursuant to the Amended and Restated San Juan Project Participation Agreement, dated March 23, 2006 (the "Participation Agreement") among the several owners of interests in the San Juan Generating Station (the "SJ Participants"). SCPPA's SJ3 Ownership Interest represents approximately 208 MW of capacity. SCPPA has sold all of the capacity and energy from SCPPA's SJ3 Ownership Interest to several of its members under the San Juan Unit 3 Project Power Sales Contracts, dated as of January 1, 1993 (the "Power Sales Contracts"). Under the Power Sales Contracts,Azusa and Banning have Purchaser Shares equal to 14.707% and 9.8047%, respectively, of the capacity and energy of SCPPA's SJ3 Ownership Interest and the corresponding obligation to pay for, on a take-or-pay basis, a corresponding percentage of all costs of SCPPA's SJ3 Ownership Interest ("SJ3 Entitlement Rights"). The SJ3 Entitlement Rights of Azusa and Banning represent approximately 30.5 MW and 20.3 MW of capacity, respectively of the capacity of SJ3 which in turn represents a 10.2452% undivided interest in SJ3, a 5.1226% undivided interest in the facilities common to San Juan Units 3 and 4, and a 3.1152% interest in the facilities common to all four units at the San Juan Generating Station (the "Transferred Ownership Interest"). SCPPA has outstanding bonds that financed SCPPA's SB Ownership Interest; the San Juan Power Project Revenue Bonds, 2002 Refunding Series A, which have a final maturity on January 1, 2014, and San Juan Power Project Revenue Bonds, 2005 Refunding Series A, which have a final maturity on January 1, 2020 (collectively, the "Bonds"). The 2005 Refunding Series A Bonds are subject to optional redemption by SCPPA at par (plus accrued interest) on January 1, 2015. SCPPA, Azusa and Banning have each agreed that they will not take any action that will adversely affect the tax exempt status of interest on the Bonds. INTENT OF PARTIES Azusa and Banning ("Cities") desire to assign and sell, and Utah Associated Municipal Power Systems ("UAMPS") desires to accept and purchase, SJ3 Entitlement Rights in accordance with the terms set forth below ("Terms"), subject to the development of definitive agreements consistent with the Terms. 063 TERMS 1. Transaction will be completed in two steps or phases. Phase 1 (contemplated to be implemented by not later than July 1, 2012) would include assignment to and the assumption by UAMPS of all of the Cities' SJ3 Entitlement Rights under the Power Sales Contracts. Phase 2, contemplated to be completed as early as January 1, 2015 but no later than March 1, 2020 (i.e., promptly following the redemption, retirement or defeasance date of all of the Bonds and the transfer by SCPPA of the appropriate amount of SCPPA's SJ3 Ownership Interest to the Cities), would entail the sale of the Transferred Ownership Interest to UAMPS, and the assumption by UAMPS of obligations and liabilities relating to the Transferred Ownership Interest under the terms of the Participation Agreement. 2. Following the assignment to UAMPS of the Cities' SJ3 Entitlement Rights under the Power Sales Contracts, the Cities will consult with UAMPS and would take all practicable actions, to the extent possible under existing agreements, to effectuate the directions of UAMPS with respect to SJ3 Entitlement Rights. 3. Following the assignment to UAMPS of the Cities' SJ3 Entitlement Rights, all SCPPA charges relating to Cities' SJ3 Entitlement Rights (no markup or adders by Cities) will be paid by UAMPS until transfer of the Transferred Ownership Interest to DAMPS. 4. Costs, if any, related to the addition of selective catalytic reduction and associated systems and facilities ("SCR") to SJ3 that are paid by the Cities prior to January 1, 2012, shall be the responsibility of the Cities. Costs, if any,related to SCR additions to SJ3 that are paid by the Cities on or after January 1, 2012, shall be refunded to the Cities by UAMPS at the time of (and contingent upon) the implementation of Phase 1, and all SCR related costs shall be paid by UAMPS thereafter. 5. The assignment of SJ3 Entitlement Rights and the sale of the Transferred Ownership Interest are each on an "as is"basis—no representations or warranties regarding SJ3 by the Cities. 6. As part of the SJ3 Entitlement Rights, Cities will transfer to UAMPS the right to accept delivery of San Juan Unit 3 energy at points of delivery available to Cities from time to time pursuant to the Amended and Restated Interconnection Agreement between Tucson Electric Power Company and Century Power Corporation (as assigned to SCPPA). Presently, those points include the Westwing 500KV Switchyard, the PVNGS 500 KV Switchyard, the Four Corners 345 KV Switchyard and the San Juan 345 KV Switchyard. 7. The assignment of the SJ3 Entitlement Rights and sale of the Transferred Ownership Interest shall not result in "private business use" or otherwise adversely affect the tax exempt status of interest on the Bonds under laws and regulations applicable to tax exempt indebtedness, as concluded by SCPPA's bond counsel. • 8. The Cities and UAMPS agree to take all commercially reasonable steps to execute definitive documents to effectuate the assignment of SJ3 Entitlement Rights and the sale of the Transferred Ownership Interest consistent with these Terms no later than March 1, 2012. -2- 064 9. UAMPS' obligation to enter into the transactions contemplated by this Memorandum of Understanding is contingent upon (a) the execution of long-term, take-or-pay power sales contracts between UAMPS and participating member municipal utilities providing for the purchase and sale of all of the capacity and energy from the SJ3 Entitlement Rights and the Transferred Ownership Interest, and (b) UAMPS obtaining sufficient transmission rights to deliver the capacity and energy related to SJ3 Entitlement Rights to UAMPS loads. UAMPS shall make necessary third party application(s) for transmission service as early as possible but not later than October 31, 2011. 10. The Cities agree not to market their SJ3 Entitlement Rights to any third parties and UAMPS agrees not to pursue acquisition of other power resources in lieu of this transaction for the UAMPS members identified in the UAMPS Fiscal 2012 Operating Budget Resource San Juan Unit 3 Coal Study. 11. The Parties will continue discussions related to the possible acquisition of up to 10 MW of power by Azusa and Banning from UAMPS' Horse Butte Wind Project. 12. The proposed business arrangements hereunder are contingent upon a San Juan 3 configuration as it exists on the date of this Memorandum of Understanding. If a fundamental change occurs in the configuration of San Juan 3, any party can call a meeting of the other parties to discuss whether this Memorandum of Understanding needs to be modified to accommodate such a change. 13. To reduce credit risk to UAMPS during Phase 1, the Cities will hold UAMPS harmless, to the extent permitted by law, with respect to any costs or liabilities arising from or with respect to a payment default by other SCPPA members under the Power Sales Contract. 14. To reduce credit risk to the Cities during Phase 1, UAMPS will post collateral (with a collateral agent mutually agreeable to the parties) in an amount equal to the estimated aggregate payments for the time period UAMPS will be granted to cure any failure to make payments before the Cities will have the right to reclaim the SJ3 Entitlement Rights assigned to UAMPS. Any collateral so posted will be returned to UAMPS upon the completion of Phase 2. 15. There are a number of San Juan related reserve funds held by SCPPA for the benefit of the Cities. The portion of these reserve funds paid by the Cities as contributions shall be returned to the Cities in their entirety. The portion of the reserve funds funded by Bond proceeds shall be shared between the Cities and UAMPs on a basis reflecting the proportionate level of Bond principal paid by each party for that particular reserve fund. As to timing, an amount equal to the Cities' share of funds in the Operating Fund and the Reserve & Contingency Fund at the beginning of Phase 1, shall be paid by UAMPS to the Cities within 60 days of the start of Phase 1. Thereafter, the funds in these accounts shall inure to the benefit of UAMPS. Similarly an amount equal to the Cities' share of the Debt Service and Debt Service Reserve Accounts shall be paid to the Cities by UAMPS concurrent with the start of Phase 2 or such earlier date that such funds become available for a particular Bond issue. To the extent other SJ3 reserve funds exist, the parties will review and address the appropriate treatment of these funds in the definitive agreements referenced in the last paragraph hereunder. -3- . 065 16. Under the Participation Agreement, any agreement reached by UAMPS and the Cities regarding the sale of the Transferred Ownership Interest may be subject to the consent of, or a right of first refusal by, Public Service Company of New Mexico and other parties to the Participation Agreement. UAMPS and the Cities shall cooperate with one another to obtain any consents, waivers or approvals required under the Participation Agreement. 17. This Memorandum of Understanding shall remain in effect unless or until one of the parties provides written notice to the other parties stating the Memorandum of Understanding has been terminated and the reasons for such termination. Upon termination of this Memorandum of Understanding, all obligations of the parties shall cease, each party shall bear its own costs incurred hereunder and no party shall have any further liability or obligation to any other party. This Memorandum of Understanding represents the good-faith intentions of the parties hereto as to the key terms and conditions of the assignment of SJ3 Entitlement Rights and the sale of the Transferred Ownership Interest, and the good-faith commitments of the parties to expeditiously develop and execute definitive agreements consistent with the above Terms to complete this transaction. Dated as of , 2011. Utah Associated Municipal Power Systems By: City of Azusa, California By: City of Banning, California By: -4- 066 • 1g- lir ;Pip v, ?,44"•`- dZ - :,rs u„, ro.� ry' W A7tUS.A l IGNT 4 'BATT R SCHEDULED ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE •. .SA UTILITY BOARD FROM: GEORGE F. MORROW,DIRECTOR OF UTILITIES // DATE: SEPTEMBER 27, 2010 SUBJECT: STRATEGIC DISCUSSION REGARDING AZUSA'S SAN JUAN RIGHTS RECOMMENDATION It is recommended that the Utility Board authorize the Director of Utilities to take the following actions: (a) seek potential buyers and engage in negotiations regarding the potential sale of all or a portion of Azusa's interest in San Juan Unit 3; and (b)retain legal support through the Southern California Public Power Authority to assist in preparing necessary transactional documents in an amount not to exceed $50,000. Any potential buyer or transaction would be subject to future consideration and approval by the Utility Board/City Council. BACKGROUND In 1993, Azusa procured 30 MW of power from San Juan Unit 3 (San Juan) for the remaining life of the project. Azusa's rights are obtained via a Power Purchase Agreement executed with Southern California Public Power Authority who issued bonds to purchase interest in San Juan from Century Power Corporation. San Juan is a "mine mouth" coal-fired unit which became operational in 1976. It is operated and maintained by Public Service Company of New Mexico (PNM). Participants include PNM (50%), SCPPA (41.8%) and Tri-State G&T Association(8.2%). Presently, San Juan provides enough energy to serve about 83% of Azusa's retail load. The projected average cost for San Juan energy in FY11 is $56/MWI-I, The average price was $72/MWH in FY10 due to a prolonged maintenance outage. Estimated price going forward for San Juan is about$60/MWH. Staff has been reviewing the appropriateness of continuing its involvement in San Juan at the present level. Key considerations are as follows: -!IA) n67 San Juan Unit 3 Strategic Discussion September 27,2010 Page 2 • Azusa is currently resourced at 120% of its retail load. All resource commitments are take and pay with no ability to modify schedules to conform with load and/or market conditions. • Prior to 2020 (with some intermediate steps), Azusa will need to add new renewable power commitments equal to about 15% of load in order to comply with renewable resource regulations in California. • To comply with AB 32 carbon reduction climate change mandates currently under development by the California Air Resources Board, the utility will need to dramatically reduce its carbon "footprint" by 2020 (with some intermediate steps). The addition of renewables (at a premium price) as noted above is expected to partially aide in meeting carbon reduction mandates but the need for more reductions is contemplated. • Over the past several years, the price of San Juan power has risen from the $40-50/MWH range to the$55 to 70/MWH range.The existing coal contract expires in 2017. • The San Juan owners are currently addressing a lawsuit filed by the Sierra Club alleging that the dumping of ash and sludge from the power generating station into unlined pits at the San Juan mine is polluting the groundwater and causing damage to human health, livestock and wildlife. The San Juan project manager denies the claims. • As a result of regional haze studies, the New Mexico Environmental Department is recommending that all units at San Juan install NOx controls called SCR — Selective Catalytic Reduction. The project manager of the plant estimates the cost of SCR to be $700 million to $1 billion. SCPPA's share would be $90- $125 million with Azusa's obligation being 14.71% of SCPPA's share or $13-18 million. This money would be spent over 5 years thus increasing Azusa's project cost by—$3 million per year or about$15MWH. • The potential for having to make similar environmental improvements at the adjacent coal- fired Four Corners Units 4 and 5 has precipitated an announcement by the participants in these units that they will likely retire the units in 2015 rather than make new investments, Southern California Edison has a large interest in these units. • Standard/prudent electric utility resource practice promotes diversity in resources. Typically, utilities have ensured that their "largest single hazard" is as small as possible, usually no more than 25% of its load mix. Azusa has significant exposure given that San Juan is over 70% of its resource mix and is made up of only one"shaft"or machine. • Azusa has limited ability to transmit San Juan energy risk-free to the southern California load center given recent changes in CAISO markets. The bulk of Azusa's San Juan energy is sold to other utilities east of California at spot market prices. Market prices over the past year or so have been in the$25-$45/MWH range—well under the cost of energy from San Juan. • The current short to mid term bulk power market is the softest anyone has seen in quite some time. If Azusa were to need to replace San Juan energy in the near term, there is a high probability it could do so at a cost savings. . 068 San Juan Unit 3 Strategic Discussion September 27,2010 Page 3 • Azusa is participating in the Lodi Energy Center. Its entitlement is 7.8 MW or about 55 GWH per year. This has the capability to provide about 20% of Azusa's load requirements and replace about a quarter of Azusa's share of San Juan. • California entities with coal participation (most southern California public power agencies plus Modesto, Santa, Clara and Redding in the north) are seeking buyers for their coal entitlements including the City of Los Angeles which has interests in several coal projects. LADWP's current policy is to divest itself of all coal by 2020. • The bonds issued by SCPPA to purchase an interest in San Juan will be paid off in 2020 — this will reduce San Juan costs by about $12/MWH after that point. The present SCPPA- Azusa Power Sales Agreement expires in 2030. In conclusion, staff feels that it may be in the best long-term interest of the Azusa electric utility to seek buyers for all or a portion of its interest. The San Juan resource was attractive historically to the utility, but the changing landscape of the industry, additional operational costs and challenges while operating under the CAISO model, and environmental regulations support reconsideration. FISCAL IMPACT Legal services through SCPPA to assist with documentation will not exceed $50,000 without further authorization by the Utility Board. Prepared by: George F.Morrow,Director of Utilities 069 FRP 3, AZUSA EIGXT d WATER AGENDA ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES (.--se 6111 DATE: SEPTEMBER 26, 2011 SUBJECT: AUTHORIZATION TO SOLICIT PROPOSALS FOR FINANCIAL ADVISOR TO EVALUATE AND FACILITATE REFUNDING OF LONG TERM DEBT FOR WATER UTILITY RECOMMENDATION It is recommended that the Utility Board approve request for proposals (RFP) scope of work and authorize staff to issue RFP to solicit proposals from Financial Advisors to consider options to refinance long term debt of water utility related to purchase of Azusa Valley Water Company. BACKGROUND In 1993, the City of Azusa purchased the Azusa Valley Water Company by issuing$24,075,000 in revenue bonds. In 2003, Azusa Light & Water refinanced the 1993 debt by issuing certificates of participation(COP)in the amount of$20,370,000. Payoff of the Series A 2003 COP is scheduled to occur in 2023. However, recent bond market trends indicate that there may be an opportunity to lower our interest expense over the next 10 years by refinancing. See attached Municipal Market Data Charts for 10 and 30 year yields for both 'AAA' and 'AA' rated issues, and note that we may refinance using the shorter term. Currently, there is about $11 million of outstanding debt associated with the Series A 2003 COP. The annual debt service of the Series A COP is about$1.255 million per year,based on an estimated average yield of 4.78%. It appears that the City may be able to refinance the outstanding debt at a lower coupon rate, possibly around 4.1%. If the water utility is able to refinance its debt at a lower rate, and utilize the shorter term, it may be possible to save$60,000 to $70,000 per year on interest expense. Staff believes that potential savings is worth exploring with the assistance of a Financial Advisor capable of analyzing and coordinating the refinancing. 074 • RFP for Financial Advisor September 26,2011 Page 2 For the aforementioned reasons, it is recommended that the Utility Board approve of the following scope of work for a Financial Advisor and authorize staff to issue a request for proposals: Draft Scope of Work For Financial Advisor 1. Conduct analysis of Azusa Light & Water's long term debt with regard to Series A — Certificates of Participation issued in 2003 and determine if refinancing would provide sufficient savings to the Utility to justify refinancing. 2. Identify all parties necessary to implement refinancing,i.e.,bond counsel,disclosure counsel, technical consultants,underwriter,issuer,credit rating agencies,and prepare a schedule and detailed description of the responsibilities of each team member and update this schedule, with refinements, as necessary, as the work progresses. 3. Develop and implement successful financing strategy and timetable for the debt issue relating to the refinancing; coordinate, and assist where appropriate, in the preparation of the legal and disclosure documents; monitor the progress of all activities leading to the sale of debt. 4. At the City's request, the Financial Advisor may assist the City in the selection of bond counsel,disclosure counsel,underwriter(s),technical consultant(s),bond insurer,trustee,and other applicable professional service providers pertinent to this financing. 5. Assist bond counsel and/or other legal advisors in the drafting of the respective financing resolutions, notices and other legal documents; monitor document preparation for a consistent and accurate presentation of the recommended business terms and financing structure of the debt issue,with understanding,however,that the services shall in no manner be construed as the Financial Advisor engaging in the practice of law. 6. Work with the underwriters and City's staff to design a financing structure for the debt issue relating to debt refinancing that is consistent with the City's objectives,that coordinates the transaction with outstanding issues and that reflects current conditions in the capital markets. 7. Develop a plan for presenting the financing program to the rating agencies and the investor community and assist the City in coordinating the presentation activities with the rating agencies to obtain the most favorable credit rating possible prior to the sale of debt issuance. The Financial Advisor shall consider the implications of existing debt and existing repayment covenants as they may relate to this refinancing and credit ratings. 8. Provide regular summaries of current municipal market conditions,trends in the market and how these may favorably or unfavorably affect the City's proposed refinancing. 9. Advise the City in the sale of bonds, including an option to conduct a competitive sale through a Notice of Sale Inviting Bids; coordinate with the underwriters(s) to execute the most cost effective financing structure; provide different bond sales options to City to demonstrate viability of options. 10. Based upon activities outlined above, recommend to accept or reject offers to purchase the debt issue; Financial Advisor shall not recommend acceptance of an offer from an affiliated underwriting firm in which they have a financial interest; if the City elects to award the debt issue,the Financial Advisor will instruct all parties and help facilitate the actions required to formally consummate the award. 075 RFP for Financial Advisor September 26,2011 Page 3 11. Assist in arranging for the closing of financing;assist counsel in assuming responsibility for such arrangements as they are required,including arranging for or monitoring the progress of bond printing, qualification of issues for book-entry status, signing and final delivery of the securities; settlement of the costs of issuance; and documents delivery to trustee. FISCAL IMPACT If the City were to issue debt, it is likely the Financial Advisor cost would be about $40,000 to $50,000. Other costs of refinancing include underwriter's discount and attorney fees. Total transaction cost of refinancing would probably be around$250,000 and most of these costs would be paid for out of the refinancing. After factoring in these costs,savings from refinancing may be about 5% of remaining debt service obligation, or about $600,000 to $700,000. Prepared by: Cary Kalscheuer, Assistant to the Director of Utilities 076 Historical Change in MMD 'AA' Yields January 1, 2003 through September 21, 2011 MMD'AA' 10-Year Yields ... ....MMD'AA' 30-Year Yields 7.00 6.00 -+ 3v Lir. 5.00 • -- - 4.00 — 3.00 — — . I 1 yr 2.00 • 1.00 — O� O) 4. Off` O� O`� Off' Ob k O^ O� O� (NC) O9 ., 10 .l1 N1. otic otic otic o�� o3 o�\ tion ,\\ tion tion o�\ o�\ o^\ o�vo^\ o�\ o^\ o^\ O'`� e o\� o'\� O\� 6\� o\\ � O'`.\ e o'`\ &� d\� \� &� e o'`� e O Historical Change in MMD 'AAA' Yields MMD'AAA' 10-Year Yields MMD'AAA'30-Year Yields 7.00 6.00 ., � - 3 0 Li 5.00 — 4.00 - — — _ . ,LAIN& . Ai Illr 3.00 _ __._ Io yr 2.00 -- 1.00 — —-- — -- I 0.00 I -- -- - 03 _ o� o� o° o° o`� o`� o� o� o^ o'` o`� o� o`� o`� do �o titi �ti otic 6-1, otic o' o�� o�� tion 1�� tion tion o�� o�� o'�� o'�� o�� o�� o�� o�� o\� 6N, o,\ cc" 6, o,\\ o\� c ' v o'"\ 6N., 6`\ o'`\ o�\ c c' ' o'`N o`� .7 PIO • LIGHT d 'WATER INFORMATION ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES p 6 DATE: SEPTEMBER 26, 2011 SUBJECT: FOURTH QUARTER BUDGET REPORT FOR WATER AND ELECTRIC FUNDS FOR FISCAL YEAR 2010-11 Attached reports include unaudited budget information regarding the water and electric funds through June 30, 2011. Footnotes are provided to indicate data sources and adjustments. In general, the electric fund had a positive net cash flow for fiscal year ending June 30, 2011 of about $300,000. Retail sales of electricity for FY 2010-11 were lower than the prior 6 years. See below table for sales and billing trend for electric utility since FY 04-05: 4th Quarter Electric Sales/Billings FY kWh Sales Billings 04-05 251,265,870 $26,782,803.01 05-06 245,181,632 $27,355,549.89 06-07 255,560,858 $28,484,177.67 07-08 252,240,704 $29,809,429.15 08-09 253,116,501 $31,274,785.04 09-10 245,616,149 $30,099,991.50 10-11 238,728,205 $32,829,428.60 The power cost adjustment mechanism that went into effect July 1, 2010, increased revenues despite declining sales, and although the electric fund has not accomplished the reserve target of $12.6 million, progress was made given the positive cash flow and the reserve is estimated at $11.76 million for FY ending June 30, 2011. 01 9 Quarterly Financial Report September 26,2011 Page 2 Budgeting for electric utility expenses was tightly controlled and actual expenses for most line items were 97% of budget. The financial performance of electric fund has allowed it to exceed the minimum debt coverage requirement of 1.10 with estimated debt coverage of 5.64 for the period. See footnotes for more details. The sales trend for water utility is similar to the electric utility. Below table shows sales and billing trend for water utility since FY 04-05 through the end of FY 2010-11: 4th Quarter Water Sales/Billings FY CCF Sales Billings 04-05 9,044,164 $14,999,030.55 05-06 9,086,631 $14,302,731.65 06-07 9,971,443 $15,912,914.52 07-08 8,502,994 $15,641,966.31 08-09 8,333,649 $13,988,554.48 09-10 7,853,732 $15,303,212.62 10-11 7,384,003 $16,600,100.14 Water sales were 6% below the forecast for fiscal year 2010-11, and so retail revenues naturally came in lower than expected. Although the water utility cash flow for FY 2010-11 is slightly negative by about $121,000, the water utility exceeded its reserve target of $25 million due to water right leasing during the past two fiscal years, including $517,478 in revenue during FY 2010-11. While debt service payments for the water fund are far greater than the electric fund, the financial performance of water fund has allowed it to exceed the minimum debt coverage requirement of 1.25 with estimated debt coverage of 1.33 for the period. This was due, in part, to holding spending to about 86% of budget for most operating expenses. Prepared by: Cary Kalscheuer, Assistant to the Director of Utilities Elec-4thQtrly-Bud-Rp Water-4th- t.pdf Qtrly-Bud-Rpt.pdf 080 Electric Utility Quarterly Budget Report 4th Quarter Ended June 30,2011 (UNAUDITED) 4th Qtr Ended Consumption and Reserve Info Prior FY End Percent 6/30/11 Consumption-kWh: 253,116,501 238,728,205 94.32% Cash/Reserve Prior Fiscal Year End") $11,439,529 $11,762,713 103% FY 2010-2011 Budget Information Budget Actual Thru Percent of 10-11 6/30/11 Budget Revenue Retail Billing Amounts(2) $31,515,900 $32,829,429 104% Resale Revenue(3) 6,364,025 5,919,793 93% Other Miscellaneous Revenue 303,300 491,004 162% Interest Income 245,715 281,269 114% Total Revenues $38,428,940 $39,521,494 103% Expenses Purchased Power(3) $25,564,120 25,169,038 98% Transmission/Dispatching 3,942,015 3,895,619 99% Operations and Maintenance 3,408,555 3,075,353 90% Administrative and General(4) 2,274,650 2,026,990 89% Franchise and In-Lieu-Tax 3,456,260 3,339,256 97% Subtotal Expenses $38,645,600 $37,506,256 97% Capital Expenditures/Debt Service Long Term Debt Service(5) $948,615 $948,615 100% Capital Outlays and Projects(6) 1,932,749 738,672 38% Total Expenditures $41,526,964 $39,193,543 94% Adjustments Transfers Out(7) 9,450 4,767 50% Total Expenditures and Transfers Out $41,536,414 $39,198,311 94% Change in Cash/Reserve ($3,107,474) $323,184 3% Debt Coverage Ratio(8) 3.42 5.64 (1)Source:FY 2009-10,CAFR,Unrestricted Cash and Rate Stabilization Fund. Reserve Policy is$12.6 million. (2)Actuals represent amounts billed based on Customer Information System report thru June 30,2011. (3)Source:Power Resources Division. (4)Fund 31 actual and encumbrances plus CIS upgrade multipled by 35%for Electric Fund's share. (5)Based on annual debt service payments for Series B and C,2003 Certificates of Participation. (6)Capital Outlay Accts and Capital Improvement Project budget figures. (7)Interest Income is transferred after fiscal year end if there is positive net income. (8)Total Revenue less Cost for Purch'd Pwr,Trans,O&M,and A&G,divided by debt service. Minimum debt coverage requirement is 1.10 per bond financing agreements. This is preliminary d/c ratio and it may vary with Disclosure Report prepared after the audited financial reports are available, around December 2011. n81 Water Utility Quarterly Budget Report Fourth Quarter Ended June 30, 2011 (UNAUDITED) Consumption and Reserve Info Prior FY End 4th Qtr Ended Percent Consumption-CCF: 7,853,732 7,384,003 94% Cash and Investments:(l) $22,174,445 $26,327,036 119% FY 2010-2011 Budget Information Budget Actual Thru Percent of 10-11 4th Qtr Budget Revenues Retail Billing Amounts(2) $17,521,365 $16,600,100 95% Other Revenues(3) 519,300 1,139,714 219% Interest Income) 500,000 373,309 75% Total Revenues $18,540,665 $18,113,123 98% Expenses Production $3,203,405 $2,434,702 76% Purchased Water(5) 3,212,415 2,829,210 88% Transmission and Distribution 2,544,170 2,486,783 98% Customer Accounting and Sales(6) 4,089,705 3,756,928 92% Administrative and Engineering 983,105 574,515 58% Franchise Fees 390,665 341,033 87% Subtotal Expenses $14,423,465 $12,423,170 86% Capital Expenditures/Debt Service: Debt Service Payments(7) $4,518,170 $4,518,170 100% Capital Improvement Budget(8) 2,293,320 1,443,956 63% Capital Projects Funded by Bond 0 (151,016) n/a Total Expenses(Less Bond Funding) $21,234,955 $18,234,280 86% Adjustments Transfers Out(9) $0 $0 n/a Total Expenditures and Transfers Out $21,234,955 $18,234,280 86% Net Change in Cash (Negative) ($2,694,290) ($121,157) 4% Debt Coverage Ratio(10) 1.00 1.33 Notes: (1)Source:Cash and Investments from FY 2009-10 CAFR,plus$3.3 million in water right lease revenue received in July and August of 2010. Reserve Policy is$25 million. (2)Based on Customer Information System Billing Amounts through June 30,2011. (3)Includes water right lease revenues of$517,478,plus other misc development fee revenue. (4)$300,000 added to reflect estimate by Finance Dept of Fund 31 interest income transfer. (5)Includes water right lease pymt to City of about$1.3 million,and accrued purchased water costs of about$1.2 million. (6)Customer Service Allocation to Water Fund. (7)Principal and Interest on 2003 COP and 2006 Revenue Bonds thru 4th quarter of fiscal year. (8)Multi-year capital projects. (9)Half of Interest Income may be transferred by policy if there is positive net income. (10)Total Revenues less Production,Purch'd Wtr,T&D,Cust Acctg,&A&G divided by Debt Svc Pymnts. Minimum debt coverage requirement is 1.25 per bond financing agreements. 082 .