FOCUSED MUNICIPAL SERVICE REVIEW

Transcription

1 10/10/2018 FOCUSED MUNICIPAL SERVICE REVIEW City of San Juan Capistrano Water and Wastewater Utilities ORANGE COUNTY LOCAL AGENCY FORMATION COMMISSION ATTACHMENT 1 - Page 1 of 230

2 TABLE OF CONTENTS I. INTRODUCTION... 1 MSR Background and Determinations... 2 Focused MSR Overview... 4 Governance Alternatives... 7 Affected Agencies Profiles... 8 II. FOCUSED MSR DETERMINATIONS III. PLAN FOR SERVICE..45 IV. MSR Assessments (See Appendices 1 and 2) LIST OF EXHIBITS AND APPENDICES Exhibit 1: City of San Juan Capistrano Vicinity Map...5 Exhibit 2: City of San Juan Capistrano Population Exhibit 3: City of San Juan Capistrano Profile Exhibit 4: City of San Juan Capistrano Sphere of Influence Map Exhibit 5: Moulton Niguel Water District Profile Exhibit 6: Moulton Niguel Water District Sphere of Influence Map Exhibit 7: Santa Margarita Water District Profile Exhibit 8: Santa Margarita Water District Sphere of Influence Map Exhibit 9: South Coast Water District Profile Exhibit 10: South Coast Water District Sphere of Influence Map Appendix 1: Focused MSR Infrastructure Assessment Appendix 2: Focused MSR Fiscal Assessment i P a g e ATTACHMENT 1 - Page 2 of 230

3 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 I. INTRODUCTION The City of San Juan Capistrano Focused Municipal Service Review (MSR) contains seven key sections: MSR Background and Determinations, Focused MSR Overview, Governance Alternatives, Affected Agencies Profiles, Focused MSR Determinations, Plan for Service, and the Focused MSR Assessments (Infrastructure and Fiscal). To provide an overview of the MSR s content and organization for the reader, a general description of each section is summarized below: MSR Background and Determinations provides the background on the history and legislative requirements for MSRs and brief discussion of each of the MSR determinations. This section also summarizes the MSR processes conducted by Orange County Local Agency Formation Commission (OC LAFCO) since the early 2000s. Focused MSR Overview provides an overview of the following: 1) application submitted by the City of San Juan Capistrano to explore the potential transfer of its water and wastewater operations and facilities to a public successor agency; and, 2) discussion of the focus study area s location, land use, and population and the history of the City s utility systems. Governance Alternatives provides a discussion of the existing provision of water and wastewater services within the MSR focus area and an overview of the potential governance alternatives that may improve service efficiency in accordance with Government Code Section 56430(b). Affected Agencies Profiles provides operational profiles for the City of San Juan Capistrano (CSJC) and each of the alternative service providers included in the MSR: Moulton Niguel Water District (MNWD), Santa Margarita Water District (SMWD), and South Coast Water District (SCWD). The profiles provide a snapshot of each agency s key services, service area map, and an overview of the governance structure. This section also includes data on each agency s water and wastewater infrastructure system. Focused MSR Determinations includes the written statement of determinations required for MSRs in accordance with Government Code Section This section of the report includes a discussion of the MSR determinations for the CSJC and each of the three alternative service providers reviewed in the focused MSR. 1 P a g e ATTACHMENT 1 - Page 3 of 230

4 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 Plan for Service includes the requirements of a plan for service in accordance with Government Code Section and other recommended areas to be addressed by the three alternative service providers relative to the potential annexation of the CSJC s utility systems. Focused MSR Assessments provides in-depth analyses of the CSJC and three alternative service providers in the following areas and are intended to inform OC LAFCO, CSJC and affected agencies as to options regarding transferring of CSJC s systems and services: 1) Infrastructure Assessment (Appendix 1) an assessment of the CSJC s water and wastewater infrastructure systems that is also intended to inform the OC LAFCO and CSJC as to options regarding the transferring of these infrastructure and operations to a public successor agency. This assessment focuses on MSR Determination #3, the present and planned capacity of public facilities and adequacy of public services, including infrastructure needs or deficiencies. 2) Fiscal Assessment (Appendix 2) an assessment of the present fiscal conditions of the CSJC s systems and potential alternative service providers. This assessment focuses on MSR Determination #4, the financial ability of an agency to provide services and MSR Determination #6, accountable and efficient governance structure and operational efficiencies, as related to the potential transfer of the CSJC s utility systems. MSR BACKGROUND AND DETERMINATIONS In 1997, the State Legislature convened a special commission to study and make recommendations to address California s rapidly accelerating growth. The Commission on Local Governance for the 21 st Century focused their energies on ways to empower the already existing County LAFCOs, originally established in One of the major new responsibilities of LAFCOs that came out of the effort of this Commission was to begin conducting regional studies of municipal services (Municipal Service Reviews, or MSRs) every five years. MSRs are a way to assist agencies and residents by: (1) evaluating existing municipal services and relevant alternatives, and (2) identifying any future constraints or challenges that may impact service delivery in the future. 2 P a g e ATTACHMENT 1 - Page 4 of 230

5 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 The Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 requires that LAFCOs review municipal services before updating the spheres of influence and to prepare a written statement of determination with respect to each of the following: 1) Growth and population projections for the affected area. 2) The location and characteristics of any disadvantaged communities within or contiguous to the sphere of influence. 3) Present and planned capacity of public facilities, adequacy of public services, and infrastructure needs or deficiencies related to sewers, municipal and industrial water, and structural fire protection in any disadvantaged, unincorporated communities within or contiguous to the sphere of influence. 4) Financial ability of agencies to provide services. 5) Status of, and opportunities for, shared facilities. 6) Accountability for community service needs, including governmental structure and operational efficiencies. 7) Any other matter related to effective and efficient service delivery, as required by commission policy. To meet these statutory requirements, OC LAFCO has conducted multiple MSRs involving Orange County cities, special districts, the County and other municipal service providers. MSRs for the City of San Juan Capistrano and the three potential alternative service providers (Moulton Niguel Water District, Santa Margarita Water District and South Coast Water District) were conducted as a part of these processes. Information from these past studies, where relevant, were considered in completing this service review. The MSR process does not require OC LAFCO or an affected agency to initiate changes of organization based on service review findings; it only requires that OC LAFCO make determinations regarding the provision of public services per Government Code Section MSRs are not subject to the provisions of the California Environmental Quality Act (CEQA) because they are only feasibility or planning studies for possible future action that OC LAFCO has not approved (Cal. Pub. Res. Code 21150). The ultimate outcome of conducting a service review, however, may result in OC LAFCO updating a single or multiple spheres of influence and may be used in subsequent consideration by the Commission of a proposal for a change of organization or reorganization. 3 P a g e ATTACHMENT 1 - Page 5 of 230

6 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 FOCUSED MSR OVERVIEW On August 22, 2016, the City of San Juan Capistrano submitted an application to OC LAFCO requesting an MSR focusing on the potential transfer of the City s water and wastewater facilities and operations to one or more public agencies. In the application, the City acknowledged that this process may involve the potential sale, transfer or lease of the infrastructure and operations. This focused MSR assesses the City s systems and the potential transfer of the systems to one or a combination of the three independent special districts with service boundaries adjacent to the City: Moulton Niguel Water District (MNWD), Santa Margarita Water District (SMWD), and South Coast Water District (SCWD). This report is considered a focused MSR, in that it concentrates on specific municipal services, the water and wastewater utilities of the City of San Juan Capistrano, while performing the review and analysis necessary to make the determinations defined by state law for MSRs under Government Code The review and analysis for this focused MSR required two studies: (1) an infrastructure assessment of the City s and the alternative service providers systems and facilities, and (2) a fiscal assessment of the City s system and the alternative service providers. As specialized technical expertise was required for these analyses, OC LAFCO commissioned independent professional consultants to perform these assessments. On December 13, 2017, after conducting a competitive selection process, the Commission approved agreements with Policy Consulting Associates to perform the infrastructure assessment and Berkson Associates to conduct the fiscal assessment. Those assessments and the associated scopes of work are key components of this report and the assessments are provided as Appendices 1 and 2. STUDY AREA LOCATION, LAND USE AND POPULATION The City of San Juan Capistrano, which was incorporated in 1961, encompasses 14.4 square miles. The City is the site of the oldest settlement in Orange County, the Mission San Juan Capistrano, and is proud of its strong roots in its Spanish, Mexican and early Californian heritage. The area attracts tourists and visitors to its ocean views, historic landmarks and the many cultural events and activities that are sponsored year-round. The City is located in southern Orange County, approximately one-half mile inland from the Pacific Ocean. The City is bordered by the City of San Clemente to the southeast, the City of Dana Point to the southwest, the City of Laguna Niguel to the west, the City of Mission Viejo to the north, and unincorporated area including Ladera Ranch and Rancho Mission Viejo to the northeast. Exhibit 1 provides a vicinity map of the City. 4 P a g e ATTACHMENT 1 - Page 6 of 230

7 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 EXHIBIT 1: SAN JUAN CAPISTRANO VICINITY MAP 5 Page ATTACHMENT 1 - Page 7 of 230

8 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 The land use in the City is primarily residential development and open space with small areas dedicated to commercial, agricultural and public or institutional use. The City s General Plan, which was adopted in 1999 and amended in 2002, defines the various land uses within the City. According to the California Department of Finance projections, the current population of the City of San Juan Capistrano is 36,262. The following chart also provides the City s projected populations from the Center for Demographic Research s Modified 2014 Orange County Projections: EXHIBIT 2: CITY OF SAN JUAN CAPISTRANO POPULATION - CURRENT AND PROJECTED City of San Juan Capistrano 36,262 39,435 39,470 39,562 39,572 HISTORY OF UTILITY SYSTEMS The City s utility has provided domestic and recycled water to the areas within the City s boundaries and a small portion of the City of Dana Point since Prior to that, the service was provided by the Capistrano Valley Water District (CVWD), which operated as a subsidiary district of the City. The merger of the CVWD and the City was approved by OC LAFCO in 1998 and the dissolution of the CVWD was recorded in There are 14 connections within the City s boundaries, on Camino Capistrano, Rancho Capistrano, and Peppertree Bend, where Moulton Niguel Water District provides water services. The utility also currently provides wastewater services throughout the City s incorporated territory. The system was originally constructed in the 1920 s with the bulk of the mains constructed between 1960 and There are areas within the City which are serviced by other agencies. Moulton Niguel Water District serves the areas known as Hidden Creek Estates and the Hamilton Oaks Winery and several connections along Camino Capistrano, Rancho Capistrano, and Peppertree Bend. Additionally, South Coast Water District serves 143 parcels within the city limits, as well as through a connection to the Chiquita Land Outfall for brine disposal. The Infrastructure Assessment in Appendix 1 provides maps and details of the operations and facilities of the City s water and wastewater systems. 6 P a g e ATTACHMENT 1 - Page 8 of 230

9 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 GOVERNANCE ALTERNATIVES Government Code Section 56430(b) provides that the Commission may assess various alternatives for improving efficiency and affordability of infrastructure and service delivery within and contiguous to the sphere of influence, including the consolidation of governmental agencies. Over the past several months, OC LAFCO staff and the two independent consultants, Policy Consulting Associates and Berkson Associates, have worked with the representatives of the key stakeholders (City of San Juan Capistrano, Moulton Niguel Water District, Santa Margarita Water District, and South Coast Water District) to gather the data and information necessary to prepare the MSR. The following summarizes agency positions and interests related to the San Juan Capistrano s Water and Wastewater Utilities: The City of San Juan Capistrano, the current service provider, is considered the status quo alternative. However, the City filed an application expressing an interest to divest itself of the responsibilities and liabilities of the water and wastewater utilities. In the application, the City specified that the potential transfer be to another public agency. MNWD was identified by the City in its application as a potential successor agency for these services. The agency staff participated in the analysis process by attending the initial group stakeholder meetings, responding to data questionnaires from the consultants, providing clarifying information to the consultants through phone conversations and correspondence, and attending meetings with OC LAFCO staff and the consultants to review the administrative draft report. The agency is reviewed in this report as an alternative service provider. SMWD was identified by the City in its application as a potential successor agency for these services. The agency staff participated in the analysis process by attending the initial group stakeholder meetings, responding to data questionnaires from the consultants, providing clarifying information to the consultants through phone conversations and correspondence, and attending meetings with OC LAFCO staff and the consultants to review the administrative draft report and the district s comment letter. The agency is reviewed in this report as an alternative service provider. SCWD was identified by the City in its application as a potential successor agency for these services. The agency staff participated in the analysis process by attending the initial group stakeholder meetings, responding to data questionnaires from the consultants, providing clarifying information to the consultants through phone conversations and correspondence, 7 P a g e ATTACHMENT 1 - Page 9 of 230

10 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 and attending meetings with OC LAFCO staff and the consultants to review the administrative draft report and the district s comment letter. The agency is reviewed in this report as an alternative service provider. Irvine Ranch Water District (IRWD) was identified by the City in its application as a potential alternative provider for these services. The IRWD staff participated in the initial group stakeholder meetings; however, in a letter dated December 19, 2016, IRWD informed OC LAFCO that it was not interested in being considered as a potential service provider for water or wastewater service to the City. AFFECTED AGENCIES PROFILES The following governmental entities are the affected agencies reviewed in this focused MSR: The City of San Juan Capistrano Moulton Niguel Water District Santa Margarita Water District South Coast Water District The agency profiles, together with the sphere of influence maps, are provided as Exhibits 3 through P a g e ATTACHMENT 1 - Page 10 of 230

11 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 CITY OF SAN JUAN CAPISTRANO (CSJC) EXHIBIT 3: CITY OF SAN JUAN CAPISTRANO PROFILE General Information Agency Type General Law City Address Paseo Adelanto, San Juan Capistrano, CA Date Incorporated 1961 Key Services Administration, Planning & Zoning, Building & Safety, Code Enforcement, Public Works, Water, Wastewater, Parks and Recreation, Fire (Orange County Fire Authority), Police (Orange County Sheriff), Animal Control (County of Orange), and Library (County of Orange). Service Area Location Square Miles 14.4 Land Uses South Orange County, bordered by the City of San Clemente to the southeast, the City of Dana Point to the southwest, the City of Laguna Niguel to the west, the City of Mission Viejo to the north, and unincorporated area including Ladera Ranch and Rancho Mission Viejo to the northeast. Primarily residential; also includes commercial, industrial, institutional and open space uses. Population Served 36,262 (State Department of Finance, 2017) Last MSR/SOI Review 2/3/2013 Water Utility Connections Domestic: 11,572 Recycled: 70 Water Distributed Wastewater Utility Connections 9,590 Miles of Lines 125 Domestic: 5.44 million gallons per day Recycled: 0.27 million gallons per day Average Flows 2.18 million gallons per day Governance Governing Body Five-member City Council; District voting was adopted in 2016 and after 2018 the City will be completely voting by district. Meetings Website Agency Contact First and Third Tuesdays of every month at 5:00 p.m. City Hall, Paseo Adelanto, San Juan Capistrano Benjamin Siegel, City Manager 9 P a g e ATTACHMENT 1 - Page 11 of 230

12 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 EXHIBIT 4: CITY OF SAN JUAN CAPISTRANO SPHERE OF INFLUENCE MAP 10 P a g e ATTACHMENT 1 - Page 12 of 230

13 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 MOULTON NIGUEL WATER DISTRICT (MNWD) EXHIBIT 5: MOULTON NIGUEL WATER DISTRICT PROFILE General Information Agency Type Independent Special District Address La Paz Road, Laguna Niguel, CA Principal Act California Water District Law, Division 13 of the Water Code of the State of California, commencing with Section Date Formed 1960 Key Services Water and recycled water distribution and wastewater collection. Service Area Location Serving the cities Aliso Viejo, Laguna Niguel, and portions of Laguna Hills, Mission Viejo, Dana Point, and San Juan Capistrano. Square Miles 37 Land Uses Primarily residential; also includes commercial, industrial, institutional and open space uses. Population Served 173,280 (Annual Report to the Drinking Water Program 2016) Last MSR/SOI Review 2/13/2013 Water Service Connections Domestic: 54,075 Recycled: 1,307 Water Distributed Domestic: million gallons per day Recycled: 5.75 million gallons per day Wastewater Service Connections 51,200 Miles of Lines 540 Average Flows 9.44 million gallons per day Governance Governing Body Seven-member Board of Directors elected at-large to serve fouryear terms. Meetings Third Thursday of every month at 6:00 p.m. MNWD Main Office Board Room La Paz Rd, Laguna Niguel, CA Website Agency Contact Joone Lopez, General Manager 11 P a g e ATTACHMENT 1 - Page 13 of 230

14 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 EXHIBIT 6: MNWD SPHERE OF INFLUENCE MAP 12 P a g e ATTACHMENT 1 - Page 14 of 230

15 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 SANTA MARGARITA WATER DISTRICT (SMWD) EXHIBIT 7: SANTA MARGARITA WATER DISTRICT PROFILE General Information Agency Type Independent Special District Address Antonio Parkway, Rancho Santa Margarita, CA Principal Act California Water District Law, Division 13 of the Water Code of the State of California, commencing with Section Date Formed 1964 Key Services Water and recycled water distribution and wastewater collection; operates advanced treatment facilities. Service Area Location General Date Formed Residential; Serving portions of the cities of Mission Viejo and Rancho Santa Margarita, San Clemente/Talega, and the communities of Las Flores, Coto de Caza, Ladera Ranch, Rancho Mission Viejo Sendero/Esencia. Square Miles 97.9 Land Uses Primarily residential; also includes commercial, industrial, institutional and open space uses. Population Served 165,000 (SMWD website - Last MSR/SOI Review 2/13/2013 Water Service Connections Domestic: 54,214 Recycled: 1,534 Water Distributed Domestic: million gallons per day Recycled: 7.28 million gallons per day Wastewater Service Connections 51,269 Miles of Lines 630 Average Flows million gallons per day Governance Governing Body Five-member Board of Directors elected at-large to serve four-year terms. Meetings First Wednesday of every month at 7:00 p.m. and Second Friday after first Wednesday at 7:30 p.m. SMWD District Office Board Room Antonio Parkway, Rancho Santa Margarita, CA Website Agency Contact Dan Ferons, General Manager 13 P a g e ATTACHMENT 1 - Page 15 of 230

16 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 PEXHIBIT 8: SMWD SPHERE OF INFLUENCE MAP 14 P a g e ATTACHMENT 1 - Page 16 of 230

17 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 SOUTH COAST WATER DISTRICT (SCWD) EXHIBIT 9: SOUTH COAST WATER DISTRICT PROFILE General Information Agency Type Independent Special District Address West Street, Laguna Beach, CA Principal Act California Water District Law, Division 13 of the Water Code of the State of California, commencing with Section Date Formed 1932 (Consolidated in 1999) Key Services Service Area Location Square Miles 8.3 Water and recycled water distribution and wastewater collection; operates advanced treatment facilities. Serving Dana Point, South Laguna, portions of San Clemente and San Juan Capistrano. Land Uses Primarily residential; also includes commercial, industrial and institutional uses. Population Served 35,000 (SWRCB Sanitary Survey, 2016) Last MSR/SOI Review 2/13/2013 Water Service Connections Domestic: 12,360 Recycled: 192 Water Distributed Domestic: 4.55 million gallons per day Recycled: 0.74 million gallons per day Wastewater Service Connections 17,801 Miles of Lines 140 Average Flows Governance Governing Body Meetings 2.96 million gallons per day Five-member Board of Directors elected at-large to serve four-year terms. Second and Fourth Thursday of every month: Second Thursday Meeting at 6:30 p.m. City of Dana Point Council Chambers at Golden Lantern, Dana Point, CA Website Agency Contact Fourth Thursday Meeting at 6:00 p.m. District Administrative Office, West Street, Laguna Beach, CA Rick Shintaku, Acting General Manager 15 P a g e ATTACHMENT 1 - Page 17 of 230

18 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 EXHIBIT 10: SOUTH COAST WATER DISTRICT SPHERE OF INFLUENCE MAP 16 P a g e ATTACHMENT 1 - Page 18 of 230

19 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 II. FOCUSED MSR DETERMINATIONS The potential transfer of the City of San Juan Capistrano s water and wastewater utility systems to a public agency would require an agency sphere of influence review and update and annexation. In order to update an agency sphere of influence, the Commission, in accordance with Government Code Section 56430, is required to conduct a municipal service review and prepare a written statement of determinations for the MSR focus area. The statement of determinations for each of the agencies discussed in this focused MSR report is presented below. DETERMINATION I GROWTH AND POPULATION PROJECTIONS FOR THE AFFECTED AREA. According to data provided by the California Department of Finance, the current population of the City of San Juan Capistrano is 36,262. The expected growth within the City will be modest over the next 15 years, increasing by 3,310 residents by 2035, according to the California State University, Fullerton, Center for Demographic Research. The MNWD and SCWD service territories are largely built out and SMWD is expected to serve approximately 35,000 more people by The following chart includes both city and agency service populations for agencies discussed in this focused MSR report. OC LAFCO noted no issues related to population growth for the focused area. J MSR Focused Area Population Agency Current 2035 San Juan Capistrano 36,262 39,572 Moulton Niguel WD 173, ,539 Santa Margarita WD 165, ,000 South Coast WD 35,000 37,495 Focused Area Population 17 P a g e ATTACHMENT 1 - Page 19 of 230

20 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 DETERMINATION II THE LOCATION AND CHARACTERISTICS OF ANY DISADVANTAGED UNINCORPORATED COMMUNITIES WITHIN OR CONTIGUOUS TO THE SPHERE OF INFLUENCE OC LAFCO confirmed that there are no disadvantaged unincorporated communities (DUCs) 1 within or contiguous to the spheres of influence of any of the affected agencies discussed in this focused MSR. Therefore, no issues related to DUCs were noted. However, in its Housing Element, the City recognizes that, according to the Comprehensive Housing Affordability Strategy prepared by the US Department of Housing and Urban Development, more than 11 percent of the City s total households are classified as extremely low income (0-30% of average monthly income (AMI)), another 11 percent of the City s total households are classified as very low income (31-50% of AMI), and 16 percent are classified as low income (51%- 80% of AMI). 2 In its Housing Element, the City identifies programs to meet the housing needs of residents of all income levels. DETERMINATION III PRESENT AND PLANNED CAPACITY OF PUBLIC FACILITIES, ADEQUACY OF PUBLIC SERVICES, AND INFRASTRUCTURE NEEDS OR DEFICIENCIES INCLUDING NEEDS OR DEFICIENCIES RELATED TO SEWERS, MUNICIPAL AND INDUSTRIAL WATER, AND STRUCTURAL FIRE PROTECTION IN ANY DISADVANTAGED, UNINCORPORATED COMMUNITIES WITHIN OR CONTIGUOUS TO THE SPHERE OF INFLUENCE. A central component of this focused MSR includes an infrastructure assessment prepared by Policy Consulting Associates. In general, the infrastructure assessment finds that each of the three potential successor agencies (MNWD, SMWD, and SCWD) efficiently provide water and wastewater services to their respective service populations. Any recommendation of an agency as the successor agency for the City s water and wastewater systems is not a reflection of a deficiency on the part of the other districts. A summary of the assessment s findings relative to this 1 The term disadvantaged unincorporated community (DUC) is defined as a fringe, island, or legacy community in an unincorporated territory in which the median household income is 80 percent or less than the statewide median household income. US Census data was used from the American Communities Survey, Five-Year Estimates. 2 City of San Juan Capistrano, Housing Element, adopted 1/21/14 and revised 9/19/17, page P a g e ATTACHMENT 1 - Page 20 of 230

21 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 determination for each of the agencies discussed in the focused MSR follows. CITY OF SAN JUAN CAPISTRANO (CSJC) The assessment found the following for the City of San Juan Capistrano s water and wastewater systems: Water: While CSJC s domestic water system has sufficient infrastructure capacity to adequately serve all existing connections, insufficient fire flow to meet fire code requirements at several locations is a capacity concern. While the recycled water system has sufficient system capacity within the system to provide services to existing connections, the CSJC is operating under recycled water supply constraints and must blend the recycled water with groundwater in order to serve all customers. As a result of the shift from relying on importing to pumping local groundwater, the CSJC now has more flexibility with its water sources to shift resources as needed. Therefore, it can be determined that the CSJC sources of domestic water supply are acceptable to serve current and future population projections, in addition to weathering a three-year drought. Expansion of the recycled water system will be necessary to meet future demands; however, any plans for expansion of the recycled water system will be dependent upon availability of funding, such as grant funds and availability of a reliable recycled water supply. Generally, the CSJC meets standards defined for adequately operated water systems with regard to distribution system integrity, drinking water quality, degree of water reserves for emergency purposes, and preventative maintenance practices. Improvements to the system should be made to ensure adequate fire flows throughout the system. Additionally, the CSJC should implement a tracking system of response times to customer reports of issues and the number and type of complaints related to water services. The CSJC has appropriately identified and planned for its water related capital improvement needs in the Recycled Water Master Plan, the HDR report, and the citywide Capital Improvement Plan; however, capital planning does not assure that adequate funding is allocated to fund all necessary projects. 19 P a g e ATTACHMENT 1 - Page 21 of 230

22 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 There are indications of deferred maintenance in the City s water system. The most significant infrastructure needs for the system are improvements to the joint regional water supply, pump station component replacements and line realignment, and relocation of two segments of pipeline. Additionally, approximately 14.5 percent of the domestic distribution system is beyond its useful life standard as defined by the CSJC, approximately 88 percent of the pump stations' mechanical and electrical equipment have exceeded their useful age, and nearly all of the reservoirs exceed useful life ranges. The CSJC has identified 30 miles of pipeline that is in need of replacement over the next 20 years. Wastewater: The CSJC s wastewater system has sufficient collection system capacity and treatment capacity to serve existing and anticipated projected demand. The CSJC s wastewater services are considered to be adequate based on the low rate of sanitary sewer overflows, high regulatory compliance, and preventative maintenance practices. Improvements are necessary to mitigate the City s high rate of infiltration and inflow. In the next 10 years, approximately 12 percent of all of CSJC s pipes will require renewal and 11 percent of all manholes will require minor renewals. CSJC is also responsible for a share of capital improvements at the SOCWA Jay B. Latham Treatment Facility. Full details of each area noted above are referenced in the infrastructure assessment report. MOULTON NIGUEL WATER DISTRICT (MNWD) Moulton Niguel Water District encompasses approximately 37 square miles, serving 173,280 in population. With most of its service area nearly built out, the District operates over 700 miles of domestic water distribution pipelines and 30 pump stations. The District s recycled water system consists of 150 miles of distribution pipelines and 13 pump stations. The District owns and maintains approximately 540 miles of wastewater pipelines and 19 lift stations. MNWD has planned for its water and wastewater infrastructure through: the Urban Water Management Plan, 20 P a g e ATTACHMENT 1 - Page 22 of 230

23 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 capital improvement programs, and other local policies. The infrastructure assessment identifies MNWD as one of the potential agencies to assume the CSJC s water and wastewater systems. Relative to this determination, the assessment cites the following key factors to support MNWD as a potential successor agency: As a larger agency, MNWD has the operational capacity to take on additional systems and population based on its system size, water reserves, and the management of the adequate and reliable condition of the District s current system. MNWD is exploring options involving diversifying water supply which may result in a more reliable water supply and economies of scale for City residents. MNWD makes use of remote meter reading technology for efficiency, which could benefit city residents by lowering costs and increasing access to water use data. MNWD s customer satisfaction rate demonstrates that it is a responsive agency. MNWD has detailed adopted policies for its governance and operations. MNWD currently provides water and wastewater services within a portion of the City of San Juan Capistrano, in addition to delivering imported and recycled water to the City. The transfer of the City s utility systems to MNWD would require an application and plan for service for a sphere of influence amendment and annexation to the District. In accordance with Government Code Section 56653, the plan for service shall generally include the level range and financing of services, an indication of upgrades to sewer and water facilities and when services can feasibly be extended. Specific and additional components of a plan for service for the transfer are included in a separate section (Plan for Service) of this review. Additionally, OC LAFCO may impose terms and conditions as part of any change of organization or reorganization. 21 P a g e ATTACHMENT 1 - Page 23 of 230

24 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 SANTA MARGARITA WATER DISTRICT (SMWD) Santa Margarita Water District encompasses approximately 62,674 acres, serving 165,000 in population. Expected to grow to 200,000 customers served by 2035, the District owns and operates 626 miles of potable water mains, 34 storage tanks, 21 pump stations, and other facilities. The District s recycled water system includes 129 miles of main, eight storage tanks, two open reservoirs, and 14 pump stations. The District owns and operates 630 miles of sewer lines, 21 lift stations, two wastewater treatment plants with advanced water treatment for recycling, and capacity in three reclamation plants. SMWD also operates two water reclamation plants on behalf of other agencies and four urban return flow water recovery facilities. SMWD has planned for its water and wastewater infrastructure through: the Urban Water Management Plan, capital improvement programs, and other local policies. The infrastructure assessment identifies SMWD as one of the potential agencies to assume the CSJC s utility systems. Relative to this determination, the assessment cites the following key factors to support SMWD as a potential successor agency: As a larger agency, SMWD has the operational capacity to take on additional systems and population based on its system size, water reserves, and the management of the adequate and reliable condition of the District s current system. SMWD is exploring options involving diversifying water supply, which may result in a more reliable water supply and economies of scale for City residents. SMWD shares a common interest with the City regarding groundwater and the City s Groundwater Recovery Plant (GWRP). SMWD s groundwater recharge project could utilize and maximize the GWRP s capacity to process added groundwater, which may lessen the City s reliance on imported water. SMWD s customer satisfaction rate demonstrates that it is a responsive agency. SMWD currently provides the following services to the City: delivery of imported and recycled water, meter reading, and emergency services. 22 P a g e ATTACHMENT 1 - Page 24 of 230

25 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 The transfer of the City s utility systems to SMWD would require an application and plan for service for a sphere of influence amendment and annexation to the District. In accordance with Government Code Section 56653, the plan for service shall generally include the level range and financing of services, an indication of upgrades to sewer and water facilities and when services can feasibly be extended. Specific and additional components of a plan for service for the transfer are included in a separate section (Plan for Service) of this review. Additionally, OC LAFCO may impose terms and conditions as part of any change of organization or reorganization. SOUTH COAST WATER DISTRICT (SCWD) South Coast Water District encompasses approximately 10 square miles, serving 35,000 in population. Largely built-out, the District s water distribution system is comprised of 158 miles of pipe, 13 reservoirs, nine pump stations, and a groundwater recovery facility. The District s recycled water system includes 20 miles of pipe, three pump stations, two reservoirs, and a wastewater treatment and reclamation facility. The District owns and maintains 140 miles of sewer lines, 13 lift stations, three miles of force mains, and a two-mile interceptor line. The District s long-term capital budget is based on 100-year projections for future rehabilitation and replacement of the system and proposes a combination of capital reserves and bond financing to finance the long-term infrastructure needs of the system. The infrastructure assessment identifies SCWD as one of the potential agencies to assume the CSJC s utility systems. The infrastructure assessment notes the following key factors relative to this determination and SCWD s assuming of the City s utility systems: SCWD s system is similar to the City s utility system in the types of systems (water, recycled water, groundwater and wastewater), size of operations, and population served. SCWD is exploring options to diversify its water supply, which may result in a more reliable water supply and economies of scale for City residents. SCWD has experience in operating wells and groundwater treatment facilities. The close proximity of SCWD s operational headquarters to the City 23 P a g e ATTACHMENT 1 - Page 25 of 230

26 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 may allow for faster response times to complaints and emergencies. SCWD s customer satisfaction rate demonstrates that it is a responsive agency. SCWD currently operates the Joint Regional Water Supply System, which delivers MWDSC imported water over 30 miles to the City and MNWD. SCWD provides wastewater services within a portion of the City and receives the City s wastewater into its collection system. SCWD sees the potential of mutual benefits for the District and the City, as the sole agency leading the proposed Doheny Ocean Desalination Project, which may lessen the region s reliance on imported water. However, the infrastructure assessment also notes that transferring of the City s utility systems would immediately double the size of SCWD and may have an effect on the District s resource capacity to accommodate the City s water and wastewater system, which requires maintenance to improve its integrity. The assessment further notes that economies of scale and greater capability to integrate the City s system may be better realized through an agency with a larger size of operations. The transfer of the City s utility systems to SCWD would require an application and plan for service for a sphere of influence amendment and annexation to the District. In accordance with Government Code Section 56653, the plan for service shall generally include the level range and financing of services, an indication of upgrades to sewer and water facilities and when services can feasibly be extended. Specific and additional components of a plan for service for the transfer are included in a separate section (Plan for Service) of this review. Additionally, OC LAFCO may impose terms and conditions as part of any change of organization or reorganization. DETERMINATION IV FINANCIAL ABILITY OF AGENCIES TO PROVIDE SERVICES. A central component of this focused MSR includes a fiscal assessment prepared by Berkson Associates. The assessment notes that current issues such as: the drought, water supply, conservation efforts, governmental 24 P a g e ATTACHMENT 1 - Page 26 of 230

27 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 regulations, retirement liabilities and catastrophic events, may each present future uncertainties for the City s water and wastewater utility systems. This determination highlights the findings of the fiscal assessment s discussion of the conditions and resources of the CSJC and each of the alternative service providers relative to: 1) average household bills, 2) property tax revenues, 3) capital planning and expenditures, 4) outstanding debt, coverage and financial capacity, 5) pension obligations, 6) reserves, and 7) employees, salaries and benefits. In general, the fiscal assessment finds all three of the alternative service providers noted in this MSR to be generally in a better position than CSJC to address water/wastewater financing needs, if the CSJC system is annexed. The two larger alternative service providers, MNWD and SMWD, due to their size, will typically realize economies of scale and service improvements to CSJC without significantly expanding existing planning, operations, and administrative staff. Resulting efficiencies could help to improve funding of reserves and capital improvements needed by the CSJC system. The magnitude of these savings was not analyzed as part of this work and may be studied further by the potential successor agency or agencies. Below is a summary of the key findings for the City and the alternative providers relative to this determination: 1) Average Household Bills Lower rates and utility bills benefit residents and provide capacity to finance improvements. Low rates of alternative service providers improve the potential to annex CSJC without significant impacts on ratepayers of the alternative provider. Each agency's rates are highly dependent on a number of local conditions such as topography, age of the system, and offsetting of costs by property tax revenues. Average bills also depend on individual household demand and conservation. CITY OF SAN JUAN CAPISTRANO (CSJC) CSJC average household water and wastewater charges are estimated at $146 monthly per household, partly influenced by the lack of significant property tax available to cover fixed costs, unlike the alternative service providers. MOULTON NIGUEL WATER DISTRICT (MNWD) MNWD's average household water and wastewater charges are estimated to be $79, partly the result of its property tax revenues reducing the need for rate revenue. 25 P a g e ATTACHMENT 1 - Page 27 of 230

28 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 SANTA MARGARITA WATER DISTRICT (SMWD) SMWD's average household water and wastewater charges are estimated at $99 monthly. SOUTH COAST WATER DISTRICT (SCWD) SCWD's average monthly bills are estimated at $134 monthly ($168 monthly after penalties). 2) Property Tax Revenue A strong property tax revenue base (each agency s share of the 1% general levy) reduces utility rates and improves a district's ability to address financial needs without significant ratepayer burdens. Property taxes reduce the need to generate revenue from rates and charges. Property tax revenue can be used for any purpose, unless allocated to specific purposes by the district. However, it is noted that if legislative efforts succeed to reduce property tax revenues to special districts, funding of districts operations and capital improvements may be adversely affected. CITY OF SAN JUAN CAPISTRANO (CSJC) CSJC receives approximately $1.06 million of property tax annually, or about 4 percent of total water enterprise revenues. It is likely that any of the City s property tax received on behalf of the former Capistrano Valley Water District and allocated to utility debt and lease obligations would be transferred to an annexing agency. However, further legal review is necessary to verify constraints, if any, on the allocation and use of this property tax. MOULTON NIGUEL WATER DISTRICT (MNWD) MNWD receives approximately $27.6 million of property tax revenue, or 30 percent of total revenues. SANTA MARGARITA WATER DISTRICT (SMWD) SMWD receives approximately $7.5 million of property tax revenue, or 9 percent of total revenues. SOUTH COAST WATER DISTRICT (SCWD) SCWD receives approximately $4.4 million of property tax revenue, or 12 percent of total revenues. 26 P a g e ATTACHMENT 1 - Page 28 of 230

29 Focused MSR for City of San Juan Capistrano Utility Systems October 10, ) Capital Planning and Expenditures Capital expenditures should keep pace with system depreciation. Low expenditures may reflect either a relatively new system, or inadequate system replacement. A high ratio may indicate catch-up to remedy deferred maintenance. CITY OF SAN JUAN CAPISTRANO (CSJC) CSJC has appropriately identified needed improvements, including replacement of aging system components, in its current CIP; however, improvements are funded annually on a "pay as you go" basis with minimal reserves available for future needs. The CSJC budget notes that the water and sewer capital replacement programs will require additional funding from water and sewer ratepayers to meet the capital improvement needs of the City's water and sewer system. The City could require at least eight years of positive and growing cash flows in order to build its reserves to recommended levels while also funding capital improvements. ALTERNATIVE PROVIDERS (MNWD, SMWD, AND SCWD) All of the alternative service providers have Capital Improvement Programs extending four years to ten years into the future. MNWD's average expenditures represent about ten percent of MNWD's net asset value of their assets; SMWD average expenditures represent about 2 percent of the District s net asset value of its assets; and SCWD s average expenditures represent about 7 percent of the net asset value of the District s assets. Additionally, all districts undertake long-term financial planning and forecasting which can be found in agenda reports and budget documents posted on district websites. MNWD prepares a separate financial forecast document that is easily accessible on their website. 4) Outstanding Debt, Coverage, and Financial Capacity Debt capacity provides the ability to fund capital improvements and amortize the costs over time, minimizing impacts on rates. CITY OF SAN JUAN CAPISTRANO (CSJC) CSJC's debt coverage ratio currently exceeds the minimum required for its debt. In prior years its coverage was inadequate, and its credit rating was downgraded (e.g., to S&P 'A-'), reducing debt capacity 27 P a g e ATTACHMENT 1 - Page 29 of 230

30 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 by requiring greater revenues to pay higher interest rates. In 2017, Fitch affirmed its A rating. ALTERNATIVE PROVIDERS (MNWD, SMWD, AND SCWD) All of the alternative service providers' debt coverage ratios exceed minimum standards: MNWD (2.4), SMWD (13.5) and SCWD (3.3). Each of the potential providers should be able to provide adequate coverage for existing CSJC utility debt that may be assumed by an alternative service provider, assuming CSJC property tax and other revenues required for debt payment are transferred to the new provider along with the debt. MNWD, SMWD, and SCWD have a strong financial rating (e.g., S&P 'AA+'). 5) Pension Obligations Pension obligations are likely to increase in future years, reducing revenues available for services and/or requiring rate increases. Unfunded liabilities increase the potential for future cost increases. CITY OF SAN JUAN CAPISTRANO (CSJC) CSJC's pension liability is 69 percent funded for all City employees; additional analysis will be required to determine liabilities attributable to any employees transferred as a result of an annexation. ALTERNATIVE PROVIDERS (MNWD, SMWD, AND SCWD) Pension liabilities vary among the alternative providers, including: MNWD ($17.6 million liability, 74.6% funded), SMWD ($27.2 million liability, 68.2% funded), and SCWD ($7.8 million liability, 84.3% funded). 6) Reserves Adequate reserves are essential to rate stability and to meet debt obligations while minimizing interest rates. Reserves also are necessary to assure funding of needed major repairs and infrastructure replacement, and for dealing with contingencies. CITY OF SAN JUAN CAPISTRANO (CSJC) CSJC reserves are currently inadequate and do not meet CSJC targets. ALTERNATIVE PROVIDERS (MNWD, SMWD, AND SCWD) All three alternative providers maintain reserves adequate to absorb the 28 P a g e ATTACHMENT 1 - Page 30 of 230

31 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 CSJC system and maintain reserves for the larger system. All three agencies' unrestricted reserves exceed 100 percent of one year of operating expenditures: MNWD (111%), SMWD (107%), SCWD (177%). Any proposed use of reserves to fund transition or other costs associated with the transfer of the CSJC system should be described in the District s Plan for Service. 7) Employees, Salaries and Benefits CITY OF SAN JUAN CAPISTRANO (CSJC) AND ALTERNATIVE SERVICE PROVIDERS (MNWD, SMWD AND SCWD) CSJC utility employees total 26 positions (approximately 20 operational positions), although some of their time is shared with non-utility departments. This is the fewest number of employees compared to all of the alternative service providers. The feasibility of retaining current CSJC utility staff following an annexation depends on the alternative service providers willingness, as well as collective bargaining agreements, and other agency rules and policies. DETERMINATION V STATUS OF, AND OPPORTUNITIES FOR, SHARED FACILITIES. The following is a list of shared opportunities and facilities and agreements involving the City s utility systems and MNWD, SMWD, and SCWD: South Orange County Wastewater Authority (SOCWA) the CSJC, MNWD, SMWD, and SCWD are participating members and there are various SOCWA agreements. San Juan Basin Authority (SJBA) the CSJC, MNWD, SMWD, and SCWD are participating members and there are various SJBA agreements including agreements with SMWD to provide financial and accounting services for the SJBA and with SCWD to provide well maintenance, data logging and well reading services. CSJC agreement with San Juan Hills Golf Club to provide irrigation water supplemented with domestic water. Recycled Water Purchase Agreement between the CSJC and MNWD. Licenses for wastewater system interconnections between CSJC and MNWD. Agreement for water interconnections between CSJC and MNWD. 29 P a g e ATTACHMENT 1 - Page 31 of 230

32 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 Agreement for sewer services by the City to approximately four parcels within MNWD s service area. Water purchase agreement from MNWD by the CSJC. Emergency water interconnection agreements between CSJC and SCWD. Emergency water interconnection agreement between CSJC and SMWD. Emergency water interconnection between CSJC and City of San Clemente. A joint exercise of powers agreement to operate and maintain the joint transmission facilities. Capacity agreements for the Allen-McColloch Pipeline. Agreements for service between MNWD and the CSJC for Hidden Creek Estates and the Hamilton Oaks Winery. Contract for Meter Reading Services between CSJC and SMWD. Agreement for Capacity in SMWD's Upper Chiquita Reservoir. South County Pipeline Operation and Maintenance Agreement. Service Connection No. 4 Agreement with SMWD. Settlement agreement between CSJC, SJBA, and San Juan Hills Golf Club. SMWD provides emergency response services to CSJC and MNWD has provided emergency response services to CSJC. CSJC is currently in discussions with SMWD for formal agreement for the following services: cleaning, video, and inspection of its wastewater system. SCWD provides wastewater services to 143 parcels within the CSJC. SCWD provides maintenance services for the CSJC storm drain system. Agreement for SCWD to operate the Joint Regional Water Supply System (JRWSS) providing water to CSJC and MNWD. MNWD established a smart water meter network that may provide CSJC with the ability to easily convert from manual meters to smart meters. The majority of the agreements involve the CSJC and the three districts addressed in this focused MSR and will need to be addressed as part of the process to transfer the CSJC utility systems. Additional shared services opportunities, facilities and agreements identified by the districts include: MNWD led the creation of the California Data Collaborative, which focuses on compiling water industry data and developing standards for that data. This work enables better collaboration, helps public agencies make informed decisions and facilitates leading research and private sector volunteer work. MNWD organized a working group, including five local cities, the County of Orange, and local non-governmental environmental organizations to disseminate lessons learned in urban runoff reduction and evaluate the 30 P a g e ATTACHMENT 1 - Page 32 of 230

33 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 impact of new strategies to reduce irrigation over-watering. SMWD provides operational services by contract for the Rancho Mission Viejo Private Domestic Water System, including all regulatory reporting. SMWD provides operational services by contract for the Nichols Institute water and wastewater systems, including all regulatory reporting. SMWD provides management, financial and engineering services to the Fenner Valley Water Authority by agreement. SMWD provides management and financial services to the Dana Point Authority by agreement. SMWD provides joint trench safety training with the Orange County Fire Authority. SCWD provides Operation & Maintenance of the Salt Creek Ozone Facility to the City of Dana Point by agreement since SCWD provides sewer lift station inspection and cleaning services and sand trap cleaning services by agreement at Strands Beach for the City of Dana Point. SCWD provides sewer maintenance services by agreement for the City of Dana Point Community Center. SCWD provides Treatment Facility Operation Services for the Poche Clean Beach Project to the County of Orange by agreement since SCWD provides bi-annual maintenance and inspection services by agreement (lift stations and sewer collection system) at Doheny State Beach for the California Department of Parks and Recreation. SCWD provides quarterly sewer maintenance and cleaning services to private establishments and utilities on a time and materials basis. DETERMINATION VI ACCOUNTABILITY FOR COMMUNITY SERVICE NEEDS, INCLUDING GOVERNMENTAL STRUCTURE AND OPERATIONAL EFFICIENCIES. CITY OF SAN JUAN CAPISTRANO (CSJC) The City was incorporated under the general laws of the State of California in 1961 and is governed by a five-member City Council. The City is currently transitioning to district elections, whereby each of five districts within the City will elect a council member. This process began with the election in Council members serve staggered, four-year terms. The Mayor and Mayor Pro Tem are selected by the City Council members and serve a one-year term. The City Manager is appointed by the City Council to carry out the policies and direction of the City Council, and to oversee the day-to-day operations of the City and appoint department 31 P a g e ATTACHMENT 1 - Page 33 of 230

34 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 heads. The City Council meets the 1 st and 3 rd Tuesday of every month at 5 p.m. The City maintains a comprehensive and resourceful website with access to City Council agendas, financial reports, and other City information. MOULTON NIGUEL WATER DISTRICT (MNWD) MNWD is an independent special district established in 1960 as a California Water District under the provisions of the state of California Water Code. MNWD is governed by a seven-member publicly elected Board of Directors who are elected at-large for four-year terms. The Board meets on the third Thursday of each month at 6 p.m. at the District s main offices in Aliso Viejo. The District maintains a comprehensive and resourceful website with access to District agendas, financial reports, and other District information. SANTA MARGARITA WATER DISTRICT (SMWD) SMWD is an independent special district established in 1964 as a California Water District under the provisions of the state of California Water Code. SMWD is governed by a five-member publicly elected Board of Directors who are elected at-large for four-year terms. The Board meets on the first Wednesday of each month at 7 p.m. and the second Friday after the first Wednesday of each month at 7:30 a.m. at the District s main offices in Rancho Santa Margarita. The District maintains a comprehensive and resourceful website with access to District agendas, financial reports, and other District information. SOUTH COAST WATER DISTRICT (SCWD) SCWD is an independent special district established in 1999 as a California Water District under the provisions of the State Water Code. SCWD is governed by a five-member publicly elected Board of Directors who are elected at-large for four-year terms. The Board meets on the second and fourth Thursday of each month. The meeting on the second Thursday of the month is held at 6:30 p.m. in the City Council Chambers in Dana Point. The meeting of the fourth Thursday of the month is held at 6:00 p.m. at the District s Administrative Office in Laguna Beach. The District maintains a comprehensive and resourceful website with access to District agendas, financial reports, and other District information. CSJC residents would represent a minority following integration with two of the alternative service providers, or about percent of total residents of a combined MNWD/CSJC or SMWD/CSJC. In the case of integration with SCWD, CSJC residents would comprise about 50 percent of the population of the combined areas. If MNWD, SMWD, or SCWD switch to a system of division elections, CSJC representation could be affected if annexed; potential changes are 32 P a g e ATTACHMENT 1 - Page 34 of 230

35 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 unknown at this time. DETERMINATION VII ANY OTHER MATTER RELATED TO EFFECTIVE OR EFFICIENT SERVICE DELIVERY, AS REQUIRED BY COMMISSION POLICY. This determination includes a discussion of each of the potential alternative service providers participation in efforts and projects involving water reliability that may potentially impact and provide benefits to the CSJC s residents currently or as part of a future change of organization or reorganization. These discussions include efforts involving the San Juan Basin Authority, the San Juan Watershed and other water reliability projects. It should be noted that the potential impacts and benefits of these efforts and projects were not analyzed as part of this MSR. 1) San Juan Basin Authority (SJBA) The mission of the SJBA is to develop and maintain a reliable, high quality, economical local water supply for the residents in the San Juan Basin by maximizing water use through management of the local ground and surface water of San Juan Creek and its tributaries, with due consideration for preservation, enhancement, and conservation of the environment, including, but not limited to, the natural resources, fish and wildlife, infrastructure improvements, and the cultural heritage of the area. The SJBA was created in 1971 as a joint powers authority and members are the City of San Juan Capistrano (CSJC), Moulton Niguel Water District (MNWD), Santa Margarita Water District (SMWD), and South Coast Water District (SCWD). 3 MOULTON NIGUEL WATER DISTRICT (MNWD) The following includes a summary of MNWD s involvement in the SJBA s projects 4 : a. Active Member of the SJBA MNWD currently is an active contributing member of the San Juan Basin Authority and holds a seat on its Board of Directors. The San Juan Basin Authority provides the Salt Nutrient Monitoring Plan, which is a regulatory requirement for the MNWD s recycled water program. MNWD has continued to follow and support the August 8 Response from MNWD. 33 P a g e ATTACHMENT 1 - Page 35 of 230

36 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 development of various efforts the San Juan Basin Authority is leading. Efforts to study the basin and the current and future yield of the basin are critical given the City s historic investments into the San Juan Groundwater Basin. As a proponent of data-driven policy decisions, MNWD is working with the County of Orange and local cities to develop tools for adaptive planning and customer engagement to reduce urban return flows and their impact on the watershed. These tools would be extremely beneficial to the San Juan Basin Authority and the City of San Juan Capistrano. They would facilitate future planning activities, reduce regulatory compliance costs, and improve the environmental health of the watershed. b. Real-Time Watershed Smart Network MNWD is working collaboratively to deploy a real-time watershed smart network with 15-minute interval flow data in the Aliso Watershed, with sensors in creeks and storm drain channels. This network, which would serve as a scalable pilot program could better inform decisions relating to investments for the San Juan Watershed. Most of the flow monitoring in South Orange County for watershed planning was done many years ago. Better real-time data enables adaptive decision-making to right size infrastructure to meet changing demands. Currently, South Orange County watershed flows in both the Aliso and San Juan Watersheds are dominated by urban runoff caused by over-irrigation during most of the year, with very little intermittent precipitation. Streams in South Orange County would only naturally flow a month or two in an average year without urban runoff, but presently flow year-round. With the State of California recently enacting legislation to make conservation a California way of life and requirements to reduce and eliminate unnatural flows into streams and the ocean, developing better data sets to understand the change in urban return flows into local creeks and streams will assist the San Juan Basin Authority and the City of San Juan Capistrano with their future capital investment decisions. MNWD takes its stewardship of ratepayer funds seriously and would hold the same commitment for the ratepayers of the City of San Juan Capistrano. The investments related to the deployment and use of real-time data come at a fraction of the cost of traditional capital infrastructure projects. This datadriven approach has saved District customers over $20 million. That financial commitment was previously earmarked for seasonal recycled water storage, but was found to be unnecessary based on 34 P a g e ATTACHMENT 1 - Page 36 of 230

37 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 data analysis that was conducted by scientists at Netflix. Netflix is one of the California Data Collaborative partners MNWD works with. With urban runoff trending downward and statewide regulatory agencies efforts to further reduce runoff, it is imperative that the San Juan Basin Authority continue to identify and develop tools that will provide adaptive planning and help the Authority make the best informed and cost-effective decisions. SANTA MARGARITA WATER DISTRICT (SMWD) The following includes a summary of SMWD s involvement in the SJBA s projects 5 : a. San Juan Bedrock Barrier Investigation This project was identified by District staff based on the information developed during the development of the San Juan Watershed project. The identification of the existence of a subsurface hydraulic barrier will create improved opportunities for both South Coast Water District and the City of San Juan Capistrano s groundwater recovery projects. The barrier, if it exists, may allow SCWD the ability to pump the near ocean groundwater basin significantly harder without the concern that it may be inducing sea water intrusion on the inland groundwater basins. This barrier would also allow the CSJC the ability to pump their portion of the basin harder due to reduced or eliminated concern of negative impacts on SCWD s ability to receive and pump groundwater. Due to the significant beneficial impacts to the existing uses and the possible future increased groundwater harvesting associated with the San Juan Watershed Project that could occur if this barrier does exist, the District has contributed over $85,000 towards the construction of two new monitoring wells on either side of the assumed barrier location and is actively involved in developing the pump testing of the respective sides of the barrier and monitoring the results of this pumping. b. South Orange County Wastewater Authority (SOCWA) Triennial Review SOCWA is the permit holder for recycled water in the Region and the District works in conjunction with and in addition to SOCWA s efforts. The District has been the lead member agency in forwarding the Regional Water Quality Control Basin s Triennial Review process and the prioritization of efforts that further the use of recycled water in the San Juan Watershed. The effort expended to date is allocating District resources, including an outside consultant, to meet with Regional 5 August 9 Response from SMWD. 35 P a g e ATTACHMENT 1 - Page 37 of 230

38 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 Board staff, present to the Regional Board at public meetings and develop a methodology which will ultimately lead to the Board acting to address various constraints on expanding the use of recycled water within the Watershed. c. WEI 2017 San Juan Basin Monitoring Contract The District has been and continues to be a very active participant in advocating expanded monitoring in the San Juan Basin to establish a baseline to be used for the redefining of the amount of water in storage within the basin, the amount of water that may be introduced into the usable portion of the Basin from runoff within the Watershed, the quality of the surface and groundwater that currently exists and is predicted to occur following implementation of various land use plans and water facility projects. d. South Orange County Watershed Management Area (SOCWMA) Membership The District is an active member of SOCWMA for providing input relating to the land area of the Watershed that is located within the District and what the impacts may be from the implementation of various land developments or facilities that may be constructed in the upstream portions of the Watershed. The District has been successful in developing a variety of projects that are beneficial to the Basin which is demonstrated by obtaining numerous grants through SOCWMA to assist in the implementation of the projects. All these projects have been in collaboration with other water districts and/or municipal entities located within the Watershed. e. Salt and Nutrient Management Plan (SNP) Cooperative Agreement/Participation Through participation in SOCWA and the SJBA, the District has been the lead in continuing the completion of the requirements associated with the Salt and Nutrient Management Plan for the San Juan Basin. The initial SNMP was prepared through SOCWA with the on-going requirements identified in the SNMP being transitioned to the SJBA. The District has been spearheading these efforts and recently completed the Water Quality and Antidegradation Analysis for the Middle San Juan Hydrologic Sub-Area to fulfill one of the four requirements that were outline in the original SNMP. 36 P a g e ATTACHMENT 1 - Page 38 of 230

39 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 SOUTH COAST WATER DISTRICT (SCWD) The following includes a summary of SCWD s involvement in the SJBA s projects 6 : a. Joint Groundwater Monitoring Program and Annual Report (based on the collection of surface water, groundwater, biotic and climate data gathered in the field with data from reliable sources) The groundwater-monitoring program is an ongoing project that primarily consists of labor hours for the remote gathering of data from level data logging probes and measuring groundwater levels with a manual sounder to verify the data. The other part of this project is to repair and/or replace equipment as necessary that is used for the level data logging. b. Provide Technical Input as part of the Adaptive Pumping Management (APM) Plan The purpose of the APM Plan is to allow for groundwater pumping while protecting water quality and the environment. The APM Plan is updated as needed by the SJBA hydrogeologist. The hydrogeologist makes recommendations to the technical advisory group of the SJBA, which SCWD is a participant of, and the technical advisory group analyzes this information and makes recommendations to the SJBA Board of Directors. Water levels and key water quality constituents are routinely monitored (via monitoring wells) throughout the basin. This comprehensive data set is used to update the APM plan, as needed. c. Monitor and Maintain Seven Groundwater Monitoring Wells Complete with Level Data Logging Probes SCWD drilled and outfitted seven monitoring wells in These monitoring wells were constructed to help monitor the groundwater levels in compliance with regulatory permits. The monitoring wells utilize level, temperature and conductivity logging probes that must be uploaded, calibrated and maintained according to manufacturer recommendations. In addition to the data logging probes, the wells are manually sounded whenever the probes are uploaded to verify data logger reads. The wells also require maintenance of the wells themselves that could include mechanical brushing, chemical cleaning and video logging. The wells normally require this type of maintenance every three to five years depending on the groundwater 6 August 8 Response from SCWD. 37 P a g e ATTACHMENT 1 - Page 39 of 230

40 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 water quality. SCWD pays its share of the above costs to the San Juan Basin Authority. SCWD s FY share is budgeted at $76,369. The funding source is the SCWD operating budget, which is garnered from the consumers as part of their rate structure. In addition to the above programs, SCWD also takes part in the dayto-day business of the SJBA. For example, the SJBA recently voted to become a voting member of the South Orange County Watershed Management Area (SOCWMA). This decision was rendered after the technical advisory group made a recommendation, the board members investigated, public comments were heard and finally a vote was taken. The board voted unanimously to pursue becoming a voting member of SOCWMA. 2) San Juan Watershed The San Juan Watershed Project is a multi-phase project that will enhance water reliability by capturing local storm water runoff as well as directing recycled water into temporary storage and using it to recharge the underground aquifer. When completed, the San Juan Watershed Project will be able to provide about 5.6 billion gallons of additional local, reliable water. That s enough water for 50,000 families each year. 7 MOULTON NIGUEL WATER DISTRICT (MNWD) The following includes a summary of MNWD s involvement in the San Juan Watershed 8 : a. Past and Future Involvement in the San Juan Watershed About a third of the District s geographical territory is within the San Juan Watershed. Although MNWD is not currently a partner in the San Juan Watershed Project, many of the services and programs that MNWD offers do benefit residents, businesses, and the environment in the San Juan Watershed. If MNWD were to acquire the San Juan Capistrano water utilities, the District would expand its interest in that watershed and re-evaluate opportunities to become partners in the San Juan Watershed Project and other projects that the City of San Juan Capistrano might recommend August 8 Response from MNWD. 38 P a g e ATTACHMENT 1 - Page 40 of 230

41 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 MNWD also recognizes the importance of the Groundwater Reclamation Plant to the City of San Juan Capistrano. Given the City s investments and assets, it deserves to receive the full benefit, both operationally and financially, of the Groundwater Reclamation Plant. b. Innovative Partnerships and Applications Benefit Local Watersheds MNWD has developed applications and partnerships that have direct benefit to local watersheds. The District is looking to target its outreach and water efficiency programs to help encourage the adoption of efficient watering practices to reduce overwatering, which will result in less urban runoff and improved water reliability. Additionally, staff are organizing a working group across local cities, the County of Orange, and non-governmental environmental organizations to disseminate lessons learned and evaluate the impact of different strategies to reduce irrigation over-watering. The watershed programs and collaborations MNWD supports have applicability and benefits for all watersheds in South Orange County, including San Juan Creek, Aliso Creek and Salt Creek. SANTA MARGARITA WATER DISTRICT (SMWD) The following includes a summary of SMWD s involvement in the San Juan Watershed 9 : a. San Juan Watershed Project Phase 1 Install three (3) rubber dams in San Juan Creek to increase percolation of urban runoff and storm water flows into the basin. Cost ~ $26.4 million. Amount of water generated ~ 700-acre feet per year (afy). b. San Juan Watershed Project Phase 2 - Involves installing up to seven (7) additional rubber dams in San Juan Creek and installing recycled water pipelines and outlets to discharge recycled water behind these new dams and behind the three dams constructed for Phase 1. Cost ~ $86.4 million. Amount of water generated ~ 6,120 afy. c. San Juan Watershed Project Phase 3 - Involves constructing recycled water pipelines and outlets to discharge recycled water along 9 August 9 Response from SMWD. Additional information concerning the San Juan Watershed Project proposed by Santa Margarita Water District in partnership with the City of San Juan Capistrano and South Coast Water District is available at: 39 P a g e ATTACHMENT 1 - Page 41 of 230

42 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 San Juan Creek to serve as live stream recharge. Cost ~ $30 million. Amount of water generated ~ 3,550 afy. d. Upper San Juan Basin Water Harvesting Construct hydromodification facilities necessary for development to increase recharge of San Juan Basin. Cost ~ $5 million. Amount of water generated ~ 540 afy. e. Trampas Canyon Reservoir Augmentation Involves using the Trampas Canyon Reservoir to blend local groundwater with recycled water and constructing water treatment facilities to meet Potable Reuse water for consumption. Cost ~ $30 million. Amount of water generated ~ 4,000 afy. f. RMVMWC Potable Water Treatment Construction of a well field collection pipeline and surface water treatment plant that will treat up to 2,500 afy of groundwater to drinking water standards. Cost ~ $10 million. Water generated ~ 2,250 afy. g. Oso Barrier Treatment Provide treatment for the water captured and recycled by the Oso Barrier. Cost ~ $5 million. Improves water quality within the basin for ~ 1,000 afy. h. Water Quality and Antidegradation Analysis for the Middle San Juan Hydrologic Sub-Area This project is being undertaken to study the existing conditions of this area and the underlying groundwater basin and project the impacts of increased recycled water use on the basin. The purpose is to identify those impacts of additional recycled water use and methods to reduce or eliminate those impacts that may be identified. i. Lake Mission Viejo Pump Back Treatment The installation of a pump and some minor piping from Lake Mission Viejo to the Lake Mission Viejo Advanced Water Treatment Facility will allow for lower quality lake water to be treated and return higher quality water back to the lake. Through Public/Private Partnership, cost is $0. Removes over 730 tons of salt from the San Juan Watershed per year. SOUTH COAST WATER DISTRICT (SCWD) The following includes a summary of SCWD s involvement in the San 40 P a g e ATTACHMENT 1 - Page 42 of 230

43 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 Juan Watershed 10 : a. San Juan Watershed Project (SJWP) Phase 1 - Storm Water Capture: o Phase 1 of the SJWP will enhance water reliability for South Orange County by capturing local storm water runoff, by constructing and implementing rubber dams to capture and filter storm water runoff. Please refer to SMWD staff for additional project details. o Santa Margarita Water District (SMWD) as a member of the San Juan Basin Authority (SJBA) is leading this project. To date, SCWD is the only agency partner. The SCWD Board approved a 20% cost share of Phase 1. o SCWD has $400,000 budgeted for the project in FY and $3,000,000 planned for FY The funding source is the SCWD operating budget, which is garnered from the consumers as part of their rate structure. 3) Other Water Reliability and New Water Supply Projects MOULTON NIGUEL WATER DISTRICT (MNWD) The District has invested over $70 million in water system reliability projects since 2008, which has improved the ability of the District to provide service in times of emergency. Together, these projects have increased water supply availability during emergency periods from 1.5 days to 24 days. The District s Board adopted a policy to reach 31 days of reliability and is also engaged in evaluating and implementing a variety of future local water supply initiatives that are cost-effective 11 : a. Expansion of the District s Recycled Water System The District recently completed a Recycled Water Masterplan identifying upwards of 1,300 AF of existing irrigation accounts that could be cost-effectively converted to reliable recycled water accounts. The final analysis with specified customer accounts, and their corresponding connections, that can be converted is scheduled to be released in Fall MNWD is a leader in recycled water development, with 50 years of proven experience. The City of San Juan Capistrano currently does not treat any of its wastewater to recycle for irrigation use. MNWD s leadership in recycled water 10 August 8 Response from SCWD. 11 August 8 Response from MNWD. Additional information on projects available at 41 P a g e ATTACHMENT 1 - Page 43 of 230

44 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 development would be a key asset to the City s customers in further expanding recycled water use in the City of San Juan Capistrano. b. Partnership with Orange County Water District MNWD has been actively working with the Orange County Water District to better understand available capacity in its groundwater basin and pilot a program for emergency supplies that could ultimately benefit a variety of Orange County agencies. The Orange County Water District is planning to update its Orange County Groundwater Basin Storage and Operational Strategy this year, as well as address water storage program requests being made by MNWD and other agencies. c. Support of Ocean Water Desalination Projects As part of MNWD s 2014 Long Range Water Reliability Plan, MNWD evaluated new desalination projects which were in various stages of planning at the time. A conceptual desalination project was evaluated and assumed to be developed at either the Huntington Beach and/or Dana Point facility, which would provide MNWD with up to 14,000 AFY. The supply would be delivered directly or in-lieu into MNWD s service area, providing both water supply and system reliability benefits. d. Use of Local Groundwater in the Aliso Creek Watershed The District is in the process of developing test wells to evaluate the groundwater yield in the Aliso Watershed and potential for use as a local water supply. The District is in the conceptual stage and is expecting preliminary results in mid MNWD is eager to collaborate with the City of San Juan Capistrano based on the City s existing expertise in groundwater pumping and using groundwater as a non-potable water supply which would provide mutual benefits. e. Urban Run-off and Stormwater Diversions to Treatment Plants Local cities and the County of Orange are faced with upwards of $1 billion in new regulatory MS4 compliance costs associated with keeping unnatural flows away from local creeks and the ocean in South Orange County. The District is currently studying the potential to divert urban and storm flows into the excess wastewater treatment capacity owned by the District. These diversions would reduce compliance costs as well as provide a local new water supply source. In the Aliso Watershed, the District is estimating that approximately 1,200 AF/Year in new water supplies can be produced. 42 P a g e ATTACHMENT 1 - Page 44 of 230

45 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 f. Exploring Direct Potable Reuse Water Supply The State of California recently released a framework to develop standards for direct potable reuse by The District has historically aggressively pursued the expansion of its recycled water system. However, after the remaining 1,300 AF of irrigation water demand is converted, the most cost-effective utilization of the District's remaining wastewater would be through direct potable reuse. MNWD is committed to working with the State and local agencies to explore the feasibility and cost-effectiveness of direct potable reuse and implement it when possible. Successful implementation would provide approximately 3,000 AF/Year of new, local potable water. SANTA MARGARITA WATER DISTRICT (SMWD) The following includes a summary of SMWD s involvement in other water reliability projects 12 : a. Cadiz Valley Water Conservation, Recovery and Storage Project SMWD is the lead agency for the Cadiz Water Project which will provide a new Southern California water supply by actively managing a groundwater basin that is part of a 1,300-square-mile watershed in eastern San Bernardino County. Water that would otherwise evaporate will be collected and conserved for beneficial use. The project will then convey the conserved water to SMWD and to other Southern California water agencies to enhance their water supply reliability. A future phase of the project could include the ability to store water underground in the Cadiz aquifer so that it could be used during dry years. SMWD will purchase at least 5,000 acre-feet of water annually from the Cadiz Water Project. The 5,000 acre-feet of water represents approximately 20% of the District s overall water supply. b. Recycled Water Conversion Projects SMWD is expanding the recycled water production and distribution systems within the City of Rancho Santa Margarita. Cost ~ $13 million. Amount of potable water saved ~ 1,000 afy. The District is actively pursuing additional conversion projects in the City of Mission Viejo, Community of Las Flores and Coto de Caza. SMWD is also working with the City of San Clemente to intertie the recycled water systems for additional supply. 12 September 19 Response from SMWD. Additional Information is available at the SMWD website: 43 P a g e ATTACHMENT 1 - Page 45 of 230

46 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 c. Potable Reuse Project The District is preparing preliminary designs for potable reuse of recycled water. The current planning is exploring the use of the Lake Mission Viejo Advanced Water Treatment Facility as a research facility to determine water quality treatment alternatives; exploration of reservoir augmentation projects utilizing the District s recycled water storage reservoirs and groundwater recharge in the upper and lower San Juan Watershed. d. Ocean Desalination SMWD has an existing non-binding letter of intent for participation in the Poseidon Huntington Beach Ocean Desalination Plant and included the SCWD Doheny Desalination Plant in the District s Integrated Resources Plan. The District is actively reviewing both projects with their proponents to determine the level of participation in the future. e. Groundwater Storage SMWD has groundwater stored in the Chino Basin and an existing agreement with Cucamonga Valley Water District for additional groundwater. The District is reviewing the project for delivery of the water through several alternatives including exchange agreements and water transfers. SOUTH COAST WATER DISTRICT (SCWD) The following includes a summary of SCWD s involvement in the other water reliability projects 13 : Doheny Ocean Desalination Project 14 o The Project objectives include: (1) development of a droughtproof, reliable potable water supply; (2) further diversification of the District s water supply portfolio, adding to SCWD s aggressive water conservation, recycling, and groundwater programs; and (3) providing emergency backup water supplies from a disruption of imported water supplies (e.g., earthquake, longer term MWD system shutdowns, etc.). o Phase 1 of the project would include an initial capacity of up to 5 million gallons per day (MGD), with potential for future 13 August 8 Response from SCWD. 14 Additional information on the Doheny Ocean Desalination Project is available at: 44 P a g e ATTACHMENT 1 - Page 46 of 230

47 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 expansions up to 15 MGD. o The desalination facility would be built on existing SCWDowned property in close proximity to primary water transmission pipelines and an existing ocean outfall, minimizing construction costs and environmental impacts. o The Project would use slant wells buried beneath the ocean floor to ensure protection of marine life; an advancement preferred by environmentalists and state regulators. o The brine, which is the salty water left over from the desalination process, would be combined with treated wastewater in the existing San Juan Creek Ocean Outfall pipeline, and discharged to the ocean. This is also the preferred method by state and federal regulators and consistent with the State Board s Ocean Plan Amendment. o The EIR was released for public review, with the comment period recently ending on August 6, o Funding Sources: SCWD has received a commitment for a $10 million Prop 1 desalination grant from the State of California for the project. SCWD is applying for a low interest State Revolving Fund loan (approx. 2% interest rate for 30 years) to fund the remaining capital cost SCWD is applying for a Local Resources Program (LRP) funding of $475 per AF for 15 years, to offset annual operating costs. III. PLAN FOR SERVICE The transfer of the City s utility systems to MNWD, SMWD or SCWD would require an application for a sphere of influence amendment and plan for service for the annexation to the District. In accordance with Government Code Section 56653, the plan for service shall generally include the level and range of services, an indication of any improvement or upgrading of structures, roads, sewer and water facilities, an indication of when services can feasibly be extended, and information on how the services will be financed. Additionally, OC LAFCO may impose terms and conditions as part of any change of organization or reorganization. In addition to the requirements of Government Code Section 56653, the plan for service submitted by an alternative service provider should specifically 45 P a g e ATTACHMENT 1 - Page 47 of 230

48 Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 address the following: a) Specific methods of financing improvements to the CSJC system. b) Transfer of existing CSJC s assets and liabilities, including utility s share of property tax, existing debt obligations, and reserves. c) Integration of all existing agreements for the utility systems to ensure that the rights of parties, including private entities, are protected and appropriately addressed. d) Consideration of formation of improvement district or zone to create nexus between CSJC rates and CSJC costs. e) Plans for the GWRP, including operations and staffing, sources of water, ability to assume repayment of GWRP debt and lease obligations. f) Plans for projects that may result in a more reliable water supply for CSJC ratepayers and identification of associated cost impacts to CSJC and district ratepayers. g) Potential transfer of staff from CSJC to the alternative provider and continuity of benefits (i.e., pension benefits) and disposition of unfunded pension and OPEB obligations. h) Identification of funding sources for costs associated with the transfer of the CSJC system. i) Identification of impacts on CSJC existing rates for services. j) Identification of impacts on District s existing rates for services. k) The format for CSJC participation and input into the annexation and integration process. 46 P a g e ATTACHMENT 1 - Page 48 of 230

49 APPENDIX 1: CITY OF SAN JUAN CAPISTRANO FOCUSED MSR INFRASTRUCTURE ASSESSMENT October 10, 2018 Prepared for the Orange County Local Agency Formation Commission by Policy Consulting Associates, LLC. & QK ATTACHMENT 1 - Page 49 of 230

50 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment TABLE OF CONTENTS ACRONYMS... 4 PREFACE... 6 CONTEXT...6 CREDITS...6 EXECUTIVE SUMMARY... 7 BACKGROUND...7 WATER AND WASTEWATER UTILITIES...8 RESTRUCTURING OPTIONS CONCLUSIONS WATER SYSTEM ASSESSMENT WATER SYSTEM OVERVIEW PRESENT AND PLANNED CAPACITY INFRASTRUCTURE NEEDS AND DEFICIENCIES SERVICE ADEQUACY DETERMINATIONS WASTEWATER SYSTEM ASSESSMENT WASTEWATER SYSTEM OVERVIEW PRESENT AND PLANNED CAPACITY INFRASTRUCTURE NEEDS AND DEFICIENCIES SERVICE ADEQUACY DETERMINATIONS RESTRUCTURING OPTIONS OPTIONS OVERVIEW POTENTIAL SUCCESSOR AGENCIES COMPATIBILITY CONCLUSIONS APPENDIX 1:TABLE OF CONTENTS 1 ATTACHMENT 1 - Page 50 of 230

51 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment LIST OF FIGURES FIGURE ES-1: CITY OF SAN JUAN CAPISTRANO POTENTIAL SUCCESSOR AGENCIES FIGURE 1-1: CITY OF SAN JUAN CAPISTRANO WATER SERVICE AREA FIGURE 1-2: CITY OF SAN JUAN CAPISTRANO RECYCLED WATER SYSTEM FIGURE 2-1: CITY OF SAN JUAN CAPISTRANO WASTEWATER SERVICE AREA FIGURE 3-1: MOULTON NIGUEL WATER DISTRICT FIGURE 3-2: SANTA MARGARITA WATER DISTRICT FIGURE 3-3: SOUTH COAST WATER DISTRICT FIGURE 3-4: CITY OF SAN JUAN CAPISTRANO AND MOULTON NIGUEL WATER DISTRICT WATER SYSTEMS FIGURE 3-5: CITY OF SAN JUAN CAPISTRANO AND MOULTON NIGUEL WATER DISTRICT RECYCLED WATER SYSTEMS FIGURE 3-6: CITY OF SAN JUAN CAPISTRANO AND MOULTON NIGUEL WATER DISTRICT SEWER SYSTEMS FIGURE 3-7: CITY OF SAN JUAN CAPISTRANO AND SOUTH COAST WATER DISTRICT WATER SYSTEMS FIGURE 3-8: CITY OF SAN JUAN CAPISTRANO AND SOUTH COAST WATER DISTRICT RECYCLED WATER SYSTEMS FIGURE 3-9: CITY OF SAN JUAN CAPISTRANO AND SOUTH COAST WATER DISTRICT SEWER SYSTEMS FIGURE 3-10: CITY OF SAN JUAN CAPISTRANO SANTA MARGARITA WATER DISTRICT WATER SYSTEMS FIGURE 3-11: CITY OF SAN JUAN CAPISTRANO SANTA MARGARITA WATER DISTRICT RECYCLED WATER SYSTEMS FIGURE 3-12: CITY OF SAN JUAN CAPISTRANO SANTA MARGARITA WATER DISTRICT SEWER SYSTEMS FIGURE 3-13: CITY OF SAN JUAN CAPISTRANO REGIONAL TOPOGRAPHY TABLE 1-1: PROJECTED WATER SUPPLIES BY YEAR ( ) TABLE 1-2: PERCENTAGE OF POSITIONS BUDGETED TO THE WATER FUND ( ) TABLE 1-3: WELL INVENTORY TABLE 1-4: POTABLE WATER PUMP STATIONS TABLE 1-5: POTABLE WATER RESERVOIRS TABLE 1-6: DOMESTIC WATER PIPELINE INVENTORY TABLE 1-7: RECYCLED WATER WELLS INVENTORY TABLE 1-8: RECYCLED WATER RESERVOIRS TABLE 1-9: RECYCLED WATER PIPELINE INVENTORY TABLE 1-10: WATER SYSTEM 20-YEAR CIP FORECAST, 2018 $ TABLE 1-11: WATER SYSTEM INTERCONNECTIONS TABLE 2-1: WASTEWATER PIPELINE INVENTORY TABLE 2-2: WASTEWATER LIFT STATIONS TABLE 2-3: JBLWTP FLOW ALLOCATION TABLE 2-4: OCEAN OUTFALL FACILITIES FLOW ALLOCATION TABLE 2-5: PERCENTAGE OF POSITIONS BUDGETED TO THE WASTEWATER FUND ( ) TABLE 2-6: WASTEWATER SYSTEM 20-YEAR CIP FORECAST, 2018 $ TABLE 3-1: AGENCY SCOPE OF OPERATIONS TABLE 3-2: DISTRICT SHARED SERVICES AND INFRASTRUCTURE WITH CSJC TABLE 3-3: ACTUAL DISTRICT WATER SUPPLY BY SOURCE, UWMP TABLE 3-4: MNWD NORMAL YEAR WATER SUPPLY AND DEMAND TABLE 3-5: SMWD NORMAL YEAR WATER SUPPLY AND DEMAND TABLE 3-6: SCWD NORMAL YEAR WATER SUPPLY AND DEMAND TABLE 3-7: AGENCY STAFFING LEVELS TABLE 3-8: CUSTOMER COMPLAINTS, TABLE 3-9: WATER SYSTEM INTEGRITY INDICATORS TABLE 3-10: WATER QUALITY ASSESSMENT RESULTS TABLE 3-11: ISO FIRE FLOW TEST RATE TABLE 3-12: AGENCY WATER STORAGE CAPACITY TABLE 3-13: EMERGENCY RESPONSE TIMES TABLE 3-14: SANITARY SEWER OVERFLOWS, TABLE 3-15: PEAKING FACTORS (PEAK DAY WET WEATHER FLOW/AVERAGE DAY FLOW), APPENDIX 1: LIST OF FIGURES 2 ATTACHMENT 1 - Page 51 of 230

52 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment TABLE 3-16: COLLECTION SYSTEM VIOLATIONS AND ENFORCEMENT ORDERS IN 2016 AND TABLE 3-17: INSPECTION AND MAINTENANCE TABLE 3-18: EMERGENCY RESPONSE TIMES TABLE 3-19: COMPARATIVE ANALYSIS CRITERIA FOR POTENTIAL SUCCESSOR AGENCIES CHART 1-1: CITY OF SAN JUAN CAPISTRANO PRODUCTION AND BILLING ( ) CHART 1-2: DOMESTIC WATER PIPELINE AGE INVENTORY CHART 1-3: RECYCLED WATER PIPELINE INVENTORY CHART 2-1: CITY WASTEWATER FLOW (12/ /2017) CHART 2-2: JBLWTP WASTEWATER FLOW (12/ /2017) CHART 2-3: WASTEWATER COLLECTION SYSTEM AGE INVENTORY APPENDIX 1: LIST OF FIGURES 3 ATTACHMENT 1 - Page 52 of 230

53 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment ACRONYMS AF: AFY: AMP: AWT: AWWA: CCF: CCTV: CIP: CSC: CSJC: CVWD: CY: DDW: DWR: EPA: FTE: FY: GIS: GM: GP: GPM: GWRP: ILI: I/I: IRWD: ISO: JPA: JBLWTP: JRWSS: OC LAFCO: MCL: MG: MGD: MNWD: MSR: MWDOC: MWDSC: NA: NP: NPDES: OCFA: OOF: RTP: RWQCB: Acre feet Acre feet per year Allen-McColloch Pipeline Advanced Wastewater Treatment American Water Works Association Hundred cubic feet Closed Circuit TV Capital Improvement Plan City of San Clemente City of San Juan Capistrano Capistrano Valley Water District Calendar Year Division of Drinking Water California Department of Water Resources Environmental Protection Agency Full Time Equivalent Fiscal Year Geographic Information Systems General Manager General Plan Gallons per minute Ground Water Recovery Plant Infrastructure Leakage Index Infiltration and Inflow Irvine Ranch Water District Insurance Services Office Joint Powers Authority J.B. Latham Wastewater Treatment Plant Joint Regional Water Supply System Orange County Local Agency Formation Commission Maximum Contaminant Limit Million gallons Million gallons per day Moulton Niguel Water District Municipal Services Review Municipal Water District of Orange County Metropolitan Water District of Southern California Not applicable Not provided National Pollutant Discharge Elimination System Orange County Fire Authority Ocean Outfall Facilities Regional Treatment Plant Regional Water Quality Control Board APPENDIX 1: ACRONYMS 4 ATTACHMENT 1 - Page 53 of 230

54 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment SCADA: SCP: SCWD: SDCWA: SERRA: SJBA: SMP: SMWD: SOCWA: SOI: SR: SSMP: SSO: SWP: SWRCB: TDH: UWMP: WMP: Supervisory Control and Data Acquisition South County Pipeline South Coast Water District San Diego County Water Authority Southeast Regional Reclamation Authority San Juan Basin Authority Sewer System Master Plan Santa Margarita Water District South Orange County Wastewater Authority Sphere of influence State Route Sewer System Management Plan Sanitary Sewer Overflow State Water Project State Water Resources Control Board Total dynamic head Urban Water Master Plan Water Master Plan APPENDIX 1: ACRONYMS 5 ATTACHMENT 1 - Page 54 of 230

55 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment PREFACE This report is prepared pursuant to legislation enacted in 2000 that requires the Orange County Local Agency Formation Commission (OC LAFCO) to conduct a comprehensive review of municipal service delivery and update the spheres of influence (SOIs) of all agencies under LAFCO s jurisdiction. Prepared for OC LAFCO, this report is the infrastructure assessment portion of a municipal services review (MSR) a state-required comprehensive study of services within a designated geographic area. This assessment focuses on the water and wastewater utility infrastructure operated by the City of San Juan Capistrano. The City of San Juan Capistrano is evaluating the potential of reorganizing its water and wastewater utilities. The intent of the assessment is to assess options for restructuring the provision of utility service set up. CONTEXT Orange County LAFCO is required to prepare MSRs by the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (Government Code 56000, et seq.), which took effect on January 1, The MSR reviews services provided by public agencies whose boundaries and governance are subject to LAFCO. Government Code requires LAFCOs to conduct a review of municipal services provided in the county, and prepare a written statement of determination with respect to seven topics, of which the focus of this review is the present and planned capacity of public facilities and adequacy of public services, including infrastructure needs or deficiencies. CREDITS The authors extend their appreciation to staff at the City of San Juan Capistrano, Moulton Niguel Water District, Santa Margarita Water District, and South Coast Water District for several phone meetings (and in person meetings with city staff), answering questionnaires, and providing documents essential to completing this review. Orange County LAFCO staff provided project coordination. This report was prepared in conjunction by Policy Consulting Associates, LLC and QK, and was co-authored by Jennifer Stephenson, Oxana Wolfson, Ken Bonesteel, and Jerome Keene. Jennifer Stephenson served as project manager. APPENDIX 1: PREFACE 6 ATTACHMENT 1 - Page 55 of 230

56 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment EXECUTIVE SUMMARY This report is an infrastructure assessment of the City of San Juan Capistrano s water and wastewater systems. The report is designed to meet the requirements of a section of the Municipal Service Review (MSR) on the City and simultaneously inform the City as to options regarding restructuring its utility service setup. City of San Juan Capistrano Service Area B ACKGROUND The City s service area is made up of primarily residential development and open space with small areas dedicated to commercial, agricultural and public/institutional use. The City is the site of the oldest settlement in Orange County and is proud of its strong roots in its Spanish, Mexican and early Californian heritage. The area attracts tourists and visitors to its ocean views, historic landmarks and the many cultural events and activities that are sponsored year-round. The City has been primarily developed in the sub-basins of the San Juan Groundwater Basin adjacent to the San Juan and Trabuco Creeks, which trisect the area. Surrounding the valley to the north, west and east are the coastal foothills that reach elevations of up to 880 feet above sea level. The San Diego Freeway (Interstate 5), which is the primary route between San Diego and Los Angeles, traverses the length of the City. Other major transportation arteries include Ortega Highway (State Highway 74) and Pacific Coast Highway (State Highway 1). The Metrolink and Amtrak rail line between Los Angeles and San Diego also passes through the City. A well-used passenger station with regularly scheduled stops is located just southwest of the Mission San Juan Capistrano. The City is situated in Orange County, approximately 60 miles south of Los Angeles and one-half mile inland from the Pacific Ocean within a scenic coastal valley. The water service boundary covers an area of approximately 14.0 square miles mostly within the corporate boundaries of the City. The City service area extends into the northeastern portion of the City of Dana Point, an area of approximately 0.40 square miles. A map of the City with the water service area boundaries is shown on Figure ES-1. Land Use The City s service area can best be described as a predominately residential single and multi-family community located in the south Orange County coastal foothills just inland from the coast. The City s latest General Plan was adopted in December 1999 and amended in May The General Plan defines the various land uses within the City, which is predominantly residential development. Commercial land use is typical along Camino Capistrano and Ortega Highway, the central downtown area, and in isolated pockets along Rancho Viejo Road. Future development is planned to occur in the foothills to the east and consist primarily of estate and low-density residential uses. APPENDIX 1: EXECUTIVE SUMMARY 7 ATTACHMENT 1 - Page 56 of 230

57 Population Projections Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment According to California Department of Finance projections, the population of the City of San Juan Capistrano was 36,262 as of January 1, While both Orange County and the City of San Juan Capistrano are expected to experience more growth during the next 30 years, future growth will be significantly lower than past growth. According to data provided by the California State University, Fullerton Center for Demographic Research, the expected growth within the City will be modest over the next 17 years with an average annual growth rate of 0.36 percent, increasing by approximately 3,310 residents by By comparison, each of the City s planning documents make use of different population projections depending on the year that the projections were developed. The plans for the water and wastewater systems are based on anticipated demand as defined by the population projections. While the projections vary somewhat, there is not a large discrepancy in the projected 2040 population, which ranges from 38,500 to 42,000 depending on the referenced report. Population estimates projected in the UWMP forecast approximately 3,000 new residents to the City by The Water and Sewer Master Plans estimate a buildout of each system at 41,725 and 38,520, respectively. Chart ES-1: City Population Projections 43,000 42,000 41,000 Projected Population 40,000 39,000 38,000 37,000 36,000 35,000 34, Housing Element UWMP Water MP Sewer MP CDR WATER AND WASTEWATER U TILITIES The City provides domestic and recycled water to areas within the City s boundaries and a small portion of Dana Point. Wastewater services are provided generally throughout the City s incorporated territory. Moulton Niguel Water District supplies water and/or wastewater by agreement within a small portion of the City that includes the Hidden Creek Estates, Hamilton Oaks Winery, and areas along Camino Capistrano, Rancho Capistrano, APPENDIX 1: EXECUTIVE SUMMARY 8 ATTACHMENT 1 - Page 57 of 230

58 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment and Peppertree Bend. Additionally, Santa Margarita Water District provides meter reading services to the entirety of the City, and South Coast Water District provides sewer services to 143 parcels within the city limits. The City s water and wastewater utilities have been assessed to come to determinations regarding 1) the present and planned capacity of the City s water and wastewater facilities, 2) the adequacy of the water and wastewater utility services, and 3) the water and wastewater system infrastructure needs and deficiencies for inclusion in a focus MSR on the City of San Juan Capistrano. It was found that the City of San Juan Capistrano s domestic water and wastewater systems both have sufficient infrastructure capacity to adequately serve existing demand. However, there is a capacity constraint in the domestic water system that has resulted in insufficient fire flow to meet fire code requirements at several locations, which needs to be addressed. Additionally, there are supply constraints to the recycled water system as the amount of recycled water that is being imported does not meet demands and must be blended with groundwater in order to serve all customers. The City has achieved greater flexibility in its water supply with the Groundwater Recovery Plant, which has minimized the City s reliance on imported water. Based on the City s UWMP projections, it can be determined that the City sources of water supply are acceptable to serve current and future population projections, as well as weather a three-year drought. Expansion of the recycled water system and acquirement of a reliable recycled water supply will be necessary to meet future demands for recycled water. The City appears to have sufficient wastewater collection system capacity to serve existing demand, based on the City s nominal use of its allocated treatment capacity, the City s thorough inspection and renewal program, and appropriate master planning to accommodate demand of its planning area. Given that over the last seven years the City has only used 65 percent of its treatment capacity, and that wastewater flows continue to decline throughout the region, it is evident that the City has more than sufficient treatment capacity to serve existing and anticipated projected demand. Generally, the City meets standards defined for adequately or well operated water systems with regard to distribution system integrity, drinking water quality, degree of water reserves for emergency purposes, and preventative maintenance practices. Improvements to the system could be made to ensure adequate fire flows throughout the system. Additionally, the City should implement a tracking system of response times to customer reports of issues and the number and type of complaints related to water services. Based on the low number of sanitary sewer overflows, high regulatory compliance rate, and proper inspection and preventative maintenance practices, the City s wastewater services are considered to be adequate. It is recommended that the City initiate a program to track all complaints related to wastewater services. Improvements are also necessary to mitigate the City s high rate of infiltration and inflow. The City is planning to identify a means to address this issue through smoke testing. The City has appropriately identified and planned for its water and wastewater related capital improvement needs in the Recycled Water Master Plan, the engineering report APPENDIX 1: EXECUTIVE SUMMARY 9 ATTACHMENT 1 - Page 58 of 230

59 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment prepared by HDR, Inc. (HDR report) assessing the utility system, and the citywide Capital Improvement Plan. Figure ES-1: City of San Juan Capistrano Potential Successor Agencies APPENDIX 1: EXECUTIVE SUMMARY 10 ATTACHMENT 1 - Page 59 of 230

60 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment R ESTRUCTURING O PTIONS In 2016, the City of San Juan Capistrano began evaluating the potential of reorganizing its water and wastewater utilities in an effort to minimize the financial liabilities on the City and the administrative burden on the staff of running these operations. The City is looking for an organizational structure that will, to the greatest degree, protect its long-term interests and fiscal condition, lead to greater rate stability or lower rates for residents, and ensure ongoing citizen participation in the utility. Options available to the City consist of status quo, which would mean the City retains ownership and operations of the systems or a neighboring provider could take over the assets and operations of the systems. The City chose to apply to OC LAFCO to consider options related to the sale or transfer of the utility systems to a neighboring public entity. The neighboring special districts that are under consideration as potential successor agencies consist of Moulton Niguel Water District, Santa Margarita Water District, and South Coast Water District, due to their relative nearness to the City and associated water and wastewater systems. The location of these districts in relation to the City of San Juan Capistrano is shown on Figure ES-1. The districts were evaluated on several service level and compatibility indicators in an effort to identify the recommended successor agency. The indicators assessed include: 1) Proximity of the utility systems to the City, 2) Proximity of the administrative headquarters to City residents, 3) Similarity with the City in size and scope of operations, 4) Water supply reliability, 5) Potential future water supplies, 6) System capacity to handle additional water demand, 7) Water source capacity, 8) Staffing levels, 9) Staffing transferability, 10) Customer satisfaction, 11) Water service levels based on unaccounted for water loss, water quality violations, ability to meet fire flow requirements, degree of emergency water reserves, preventative maintenance practices, level of deferred maintenance, and speed of response to emergency issues. 12) Wastewater service levels based on sanitary sewer overflow rates, degree of infiltration and inflow, regulatory compliance with Regional Water Quality Control Board permits, inspection and maintenance practices, level of deferred maintenance, and speed of response times to emergency issues. 13) Detriments and benefits of consolidation as identified by the agencies, 14) Plans for expanded use of the Groundwater Recovery Plant, and 15) Familiarity/experience with the reorganization process. APPENDIX 1: EXECUTIVE SUMMARY 11 ATTACHMENT 1 - Page 60 of 230

61 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment CONCLUSIONS The City of San Juan Capistrano is pursuing reorganization of its water and wastewater utilities. This report is intended to evaluate the option of transferring the systems to a successor agency. The potential successor agencies have been thoroughly evaluated to determine compatibility with the City based on various criteria. However, the transfer of the City s utility systems requires the preparation of a Plan of Service by the potential successor agency or agencies, which would be further reviewed by the City and analyzed by the OC LAFCO. The criteria were chosen as the best indicators of a smooth restructuring process and successful future operations. The three potential successor agencies have proven to be outstanding service providers each in their own arena. MNWD is a highly responsive and well-managed agency that makes use of predictive modeling, has a low rate of customer complaints, and a low rate of infiltration and inflow (I/I). SMWD maintains excellent system integrity with a low rate of leakage and breaks and substantial water reserves that greatly exceed standards. SCWD has a low rate of water loss that is indicative of a top performer, met fire flow standards at 100 percent of sampled hydrants, and aggressively inspects its wastewater system. A recommendation of an agency as the successor agency for the City s water and wastewater operations is not a reflection of a deficiency on the part of the other districts. While all three of the districts identified as potential successors have many similarities with the City s water and wastewater services and operations, there are certain critical areas where some districts are more compatible with the City than others. The accompanying matrix summarizes the various similarities and differences that each district has with the City of San Juan Capistrano. To recap, the primary qualities that all four agencies have in common are the general regional location, close proximity to each other, significant reliance on imported water, and general adequate working condition of each agency s water and wastewater systems. None of the districts reported any agreement transferability constraints that may hinder the restructuring process. There are, however, key differences amongst the three districts that may make one district best suited for the City s consideration over another. Similarity in operations and level of services with the City are not necessarily indicators of the most suitable choice of a successor agency. For example, SCWD is the most similar to the City in the size of its operations and population served, staffing level for water operations, degree of I/I, use of groundwater and groundwater recovery facilities, and wastewater system inspection practices. SCWD has notable experience in operating wells and groundwater treatment plants, which sets it apart from SMWD and MNWD. SCWD s operational headquarters are the nearest to the City, which would allow for faster response time to complaints and emergencies. SCWD is the trustee of the JRWSS and operates and maintains the system, which feeds water to the Eastern Transmission Main, which provides imported water to the City. SCWD currently receives the City s wastewater into its collection system, and also sees the potential of mutually benefitting from the joint utilization of the proposed Doheny Ocean Desalination Plant. Additionally, SCWD has the most experience with restructuring and providing services on behalf of other agencies in the role of a successor or a contractor, as an agency and through individual staff, which may make the transition of services from the City to itself more seamless. Despite these advantages and similarities, if named a APPENDIX 1: EXECUTIVE SUMMARY 12 ATTACHMENT 1 - Page 61 of 230

62 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment successor agency, SCWD would be taking on operations that would immediately double its own size. Taking on a system of a similar size would have an effect on SCWD s resource capacity as it works to accommodate the City s water and wastewater systems, which already require additional maintenance to improve their integrity. SCWD has doubled its size in the past through two similar reorganizations; however, these processes involved two smaller sized agencies. The existing size of the City and SCWD exponentially increases the amount of effort that would be required for reorganization. An agency with larger operations, that is already capitalizing on economies of scale, may have greater capability to integrate the City s operations into its own, making for a more suitable successor agency. To illustrate, because MNWD s system is dissimilar to the City s in that its system size, served population, and water reserves are significantly larger than those of the City, the District appears to be in a better position in terms of operational capacity to take on additional systems and population that are a fraction of its own. In addition, MNWD is a well-run and well-managed agency, according to a high customer satisfaction rate, detailed adopted policies for its governance and operations, and application of innovative technology for better decision-making and increased efficiency. As a result, MNWD has demonstrated that it is a highly responsive agency that is equipped to address issues that may come with systems that require additional attention to improve their integrity, such as the City s systems. The District s water and wastewater systems are adequate and reliable in condition, based on analysis of the breaks and leaks, low SSO rate, and degree of I/I. The District is exploring options of diversifying its potable water supply to include desalinated water, recycled water, groundwater recharge, and groundwater, which would extend the benefit of a more reliable water supply to city residents. MNWD currently operates and maintains the Eastern Transmission Main, which provides imported water to the City. Concentrating ownership and control of such critical infrastructure in the hands of the service provider increases supply reliability and economies of scale. Additionally, MNWD s infrastructure extends into the City s boundaries to the greatest degree amongst the three districts. MNWD has extensive experience with agency reorganizations, as a district and through individual staff, which will promote a smoother restructuring process. SMWD serves a greater population and operates significantly larger water and wastewater systems than the City, with extensive water reserves. SMWD water and wastewater systems have high integrity based on low real water losses and ILI, leak and break rates, SSO rates, and I/I. Additionally, SMWD already provides services to the City in several capacities, including delivery of imported water through its South County Pipeline, a contractual relationship with the City for meter reading and emergency services, and delivery of recycled water. Concentrating ownership and control of such critical infrastructure in the hands of the service provider increases supply reliability and economies of scale. A common interest of the City and SMWD is groundwater and the City s GWRP. The City s GWRP is presently underutilized because of insufficient groundwater sources. Development and maximization of the San Juan Watershed through SMWD s groundwater recharge project could enable utilization of the unused GWRP capacity to process the added groundwater. SMWD is proposing to operate the groundwater system and help absorb the cost of the City s treatment plant. Use of the GWRP would be dependent on negotiations with the City s successor agency. APPENDIX 1: EXECUTIVE SUMMARY 13 ATTACHMENT 1 - Page 62 of 230

63 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment To summarize, although SCWD has the most commonalities with the City s operations and services, their comparable sizes may be a hindrance to consolidation as it would double the demand on SCWD. Becoming a part of a larger well-managed organization with additional capacity has a higher potential of benefitting city residents. An agency, such as MNWD or SMWD, will be able to extend its operational and service efficiencies to cover the much smaller San Juan Capistrano service area without sacrificing much of its own capacity. A larger well-established agency with minimal internal operational and capacity concerns and sufficient resources is better equipped to accommodate the changes that come with service reorganization, such as staffing needs, administrative facilities, and planning efforts, to name a few. MNWD s infrastructure system extends into San Juan Capistrano, which makes establishing new connections significantly easier and cheaper. On the other hand, SMWD already provides services to the City in several capacities, which has led to a working relationship between the two agencies; moreover, SMWD has a plan for maximizing the productivity of the City s GWRP. Both MNWD and SMWD appear to be well positioned to take on this project of further District-City water and wastewater integration and potential reorganization. Although the City s water and wastewater operations may theoretically be separated and succeeded by two different districts, based on situational analysis it does not appear efficient to separate the two services for the following reasons: 1) all of the potential successor agencies provide both services, 2) having two legislative bodies creates an unnecessary layer of governance with no anticipated benefits to residents, and 3) some portions of operations and administration would be duplicative for each connection (i.e., billing). Additionally, two parallel restructuring processes would be required. It is recommended that whichever district is chosen as a successor agency, that a single agency take over both the water and wastewater utilities. APPENDIX 1: EXECUTIVE SUMMARY 14 ATTACHMENT 1 - Page 63 of 230

64 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment 1. WATER SYSTEM ASSESSMENT The City of San Juan Capistrano (CSJC) owns and operates the water system that provides domestic water and recycled water to the residents of the City. Infrastructure WATER S YSTEM OVERVIEW The City s service area is approximately 14 square miles that includes nine reservoirs, nine active pump stations (three decommissioned pump stations), two imported water connections, 12 emergency interconnections, and 11 wells one domestic water well, three recycled water wells, six wells that feed into the Ground Water Recovery Plant, and one that provides irrigation water to a golf club. The City operates a 6.2-million gallon per day (MGD) Ground Water Recovery Plant (GWRP). In total, the City has approximately 200 miles of conveyance water mains for providing potable water service throughout the City s water service area 1. There are areas where the City provides services outside its boundaries. The City provides domestic water distribution in a portion of Dana Point. There are also areas where other agencies provide services within the City. Moulton Niguel Water District supplies water to 14 connections on Camino Capistrano, Rancho Capistrano, and Peppertree Bend. There are 11,572 current customer active and inactive service connections in the City s water distribution system with all existing connections metered. For the fiscal year , the system provided approximately 6,400-acre feet (AF) of water to the connections within the service area. Approximately 61 percent of the City s potable water demand is residential, while commercial, industrial and governmental connections account for nine percent of the potable demand. The balance of the water usage, which is approximately 30 percent, is attributed to centralized landscaping and various miscellaneous uses and loss through leaks. The City does not sell water to other agencies. 2 1 City of San Juan Capistrano, Arcadis, 2016 APPENDIX 1: WATER INFRASTRUCTURE ASSESSMENT 15 ATTACHMENT 1 - Page 64 of 230

65 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Figure 1-1: City of San Juan Capistrano Water Service Area APPENDIX 1: WATER INFRASTRUCTURE ASSESSMENT 16 ATTACHMENT 1 - Page 65 of 230

66 Water Sources and Agreements Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment The City receives its potable water from multiple sources. These sources include importing water from the Metropolitan Water District of Southern California (MWDSC) through the Municipal Water District of Orange County (MWDOC), groundwater extraction through municipal wells and treatment at its GWRP, and water from the City s own recycled water system. The City s current primary source is imported water from MWDSC via MWDOC, as it accounts for almost two-thirds of the City s current total supply. Table 1-1: Projected Water Supplies by Year ( ) Projected Water Supply (AF) Water Supply Provider Groundwater City Ground Water Recovery Plant 4,800 4,800 4,800 4,800 4,800 Groundwater Domestic Well Imported Water MWDOC from MWDSC 1,918 1,918 1,918 1,918 1,918 Recycled Water Recycled Water System 1,400 1,470 1,470 1,470 1,470 TOTAL 8,618 8,688 8,688 8,688 8,688 The City wells are located within the San Juan Basin (Basin). The California Statewide Groundwater Elevation Monitoring Program and Groundwater Sustainability Prioritization 2014 has given the Basin a priority ranking of Low in regard to groundwater overdraft. The Basin is currently monitored by the San Juan Basin Authority (SJBA) of which the CSJC is a participating member. Through the 2002 Implementation Agreement with the SJBA, the City is allowed to produce 5,800 acre feet per year (AFY) from groundwater pumping from the Basin 3. Recycled water for irrigation purposes is obtained through interconnections with MNWD and SMWD as well as the City s untreated groundwater supply. The City is also subject to a capacity agreement for the Allen-McColloch Pipeline for conveyance purposes with MWDOC. Imported water from the Allen-McColloch Pipeline is delivered through the SMWD s South County Pipeline to Service Connection No. 4. Staffing Levels According to the City s most recently adopted budget for Fiscal Year , the Public Works and Utilities Department currently employs a total of 42 people to oversee the Utilities Department s operations. Of those employees, the Utilities Operations Division has approximately 30 positions that support water services to some degree, including vacancies. Based on billing percentages per each of those 30 positions to the water fund, approximately 21.4 full-time equivalent (FTEs) hours (based on a 40-hour work week) are dedicated to water services, with the primary positions consisting of nine total utility operators for distribution, two utility operators for production, a maintenance mechanic, a chief plant operator and an assistant director that reports to the Public Works and Utility Director. Less the administrative personnel, there are approximately FTE dedicated to the operations of the water system. 3 Arcadis, 2016 APPENDIX 1: WATER INFRASTRUCTURE ASSESSMENT 17 ATTACHMENT 1 - Page 66 of 230

67 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Table 1-2: Percentage of Positions Budgeted to the Water Fund ( ) Public Works Utilities Director 45% Assistant Utilities Director 75.5% Senior Management Analyst 75% Administrative Coordinator 71% Associate Civil Engineer 70% Associate Engineer 64.5% Associate Engineer 100% Chief Plant Operator 98.65% Water and Sewer Construction Inspector 92.5% Maintenance Mechanic 99.8% Utilities Superintendent 82% Utilities Operator II 88% Utilities Operator I 91% Utilities Operator II 65% Utilities Operator II 91% Utilities Operator II GWRP 97% Utilities Operator I 95% Utilities Operator II 90% Utilities Operator II 93% Utilities Operator III 93% Utilities Operator III GWRP 99% Utilities Operator III 93% Water Conservation Coordinator (Vacant) 100% Utilities Operator I (Vacant) 97% Utilities Operator III GWRP (Vacant) 98% Customer Service Supervisor 80% Customer Service Representative (Vacant) 30% Customer Service Representative 90% Customer Service Representative 75% P/T Cashier 55% Total Filled FTEs According to the City, there are no anticipated staff hiring needs as operations are sufficiently staffed. Additionally, considering that growth of the City is projected to be relatively unchanged in the coming years up to 2040, staff levels should correspond to the similar need by remaining static 4. 4 Arcadis, 2016 APPENDIX 1: WATER INFRASTRUCTURE ASSESSMENT 18 ATTACHMENT 1 - Page 67 of 230

68 Infrastructure Capacity Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment P RESENT AND P LANNED C APACITY The 2004 Water Master Plan (WMP) originally estimated that approximately 85 percent of the service area was already built out in 2004 with a total of an additional 1,673 dwelling units being constructed by After 2011, the WMP does not anticipate any additional dwelling units or population growth due to the existing planned uses being completely built out. The final or ultimate population count the WMP anticipated for the water service area was 41,725 residents, which also included approximately 3,000 residents from Dana Point. In addition to dwelling units, the WMP anticipated approximately 2.6 million square feet of commercial and industrial development to be constructed within the remaining 15 percent of available land area within the City. These estimates and projections were based on the 1994 General Plan land use map and accompanying densities. Since then, amendments to the General Plan were adopted by the City in 2002 that addressed a variety of elements. Therefore, it does not appear that there would be any discrepancies with the perceived land uses and assumptions made in the WMP that would otherwise allow for significantly larger densities beyond those that were analyzed. Based on water supply information provided by the Utilities Department, the water system has been producing an average of 7,768 AFY over the past six fiscal year period. This supply information includes both imported water from the MWDOC as well as the water produced by the City wells and GWRP 5. During the period of June 2015 thru April 2017, the City reduced the water demand by 20 percent compared to its 2013 baseline in response to water restrictions imposed by the drought conditions and mandatory restriction implemented by the State. According to the UWMP, the City s demands for potable, raw, and recycled water were 8,531 AF in The projected UWMP water demand for 2020 is 8,618 and increases to 8,688 AFY for 2025 thru In both FY and , the City s actual consumption was less than projections estimated in the UWMP due to the drought mandates. The average demand for this period was approximately 765 AFY less than the projected consumption forecasted in the UWMP. 5 City of San Juan Capistrano, APPENDIX 1: WATER INFRASTRUCTURE ASSESSMENT 19 ATTACHMENT 1 - Page 68 of 230

69 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Chart 1-1: City of San Juan Capistrano Production and Billing ( ) 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, Produced Billed Water Source Capacity The City s future water sources are outlined in Table 1-1 (previously shown on page 17) and indicate that the City sources may provide up to 8,688 AFY of water to residents throughout the water service area by 2025, including recycled water. The City s existing water use differs from the projected uses outlined in Table 1-1 as the City continues to rely more heavily on imported water than anticipated. The agreement in place with MWDOC provided the majority of water used for domestic use within the water service area, totaling approximately 64 percent of the City s total water supply in FY While the City completed the GWRP in 2004 and expanded the capacity from 6,727 AFY to 8,340 AFY in 2013, the City s ability to pump groundwater is limited by its agreement with the San Juan Basin Authority, which allows for the extraction of up to 5,800 AFY under Permit The GWRP is the foundation for future water capacity but is dependent upon a good groundwater supply. To meet the 4,800 AFY from the GWRP projected in the UWMP, a groundwater replenishment program needs development and implementation. The City has joined in a partnership with SMWD and SCWD on the San Juan Watershed Project which, when completed will address this issue. During the past drought, the groundwater was at the lowest level in 120 years. While the GWRP allows the City to be less reliant on imported water during drought conditions, it is the agreement with MWDSC that will provide the needed backup water supply through MWDOC. As a result of the shift from reliance on importing to pumping groundwater, the City now has more flexibility with its water sources to shift supplies as needed. Therefore, it can be determined that the City sources of water supply are acceptable to serve current and future population projections and can withstand a three-year drought per the City s UWMP. APPENDIX 1: WATER INFRASTRUCTURE ASSESSMENT 20 ATTACHMENT 1 - Page 69 of 230

70 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment I NFRASTRUCTURE N EEDS AND D EFICIENCIES Existing Conditions Domestic Water System The City acquired full operation of the water system in 2004 from the Capistrano Valley Water District (CVWD). Since the acquisition, the City has made improvements necessary to provide for the City s growing demand. Recently, with the implementation of water conservation policies, actual water demand has stabilized and is forecasted in the UWMP to experience a slight increase by 2020 and then remain constant through According to available GIS data, the water system mains have an average age of approximately 33.7 years. This data was available for approximately 85.5 percent of the water mains contained within the GIS data provided by the City. As shown in Chart 1-2, the distribution of ages indicates older infrastructure that appears to need maintenance and/or replacement as it nears the end of its useable life expectancy. 6 In essence, approximately 14.5 percent of the existing system of water mains for the City have exceeded the recommended assigned useful life defined within the Water Master Plan Chart 1-2: Domestic Water Pipeline Age Inventory 1000 Number of pipelines Age in Years In 2016, HDR prepared a utility asset summary to review the City s existing infrastructure and to develop a capital improvement program for potential replacement projects. The report also identified projects for capital improvements for wells, water reservoirs, pump stations, reservoir lining repairs, and mechanical equipment replacement. From analysis of GIS data for patterns of leaks by location, material type, and surface features, 15 miles of pipeline were identified for replacement in the next 10 years. Additionally, 24 pipeline replacement projects were identified for pipe ranging from 14 to 6 Useful life expectancy was identified as 50 years in the Water Master Plan for pipes when properly protected APPENDIX 1: WATER INFRASTRUCTURE ASSESSMENT 21 ATTACHMENT 1 - Page 70 of 230

71 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment 24 inches in diameter. This is a reasonable rate of replacement for the system considering the ages of the existing pipe, and this rate will used for the 20-year forecast. There is one well that pumps directly into the potable system. In addition, there are six wells that supply the GWRP. The age of these wells is unknown and will need ongoing maintenance. Inspections of well equipment and motors every seven years and removal of column pipe and bowls for inspection repairs every 14 years are recommended. Table 1-3: Well Inventory Wells Type System Flow (gpm) ID North Open Space Potable Distribution System 400 DWWL2 CVWD #1 Nonpotable GWRP 1,000 DWWL4 Dance Hall Nonpotable GWRP 900 DWWL5 Kinoshita Nonpotable GWRP 500 DWWL6 SLBA #2 Nonpotable GWRP 500 DWWL10 SJBA #4 Nonpotable GWRP 1,000 DWWL11 Well #5A Nonpotable GWRP 800 DWWL13 The GWRP desalter facility includes a reverse osmosis plant, an intertie with SMWD for brine disposal, a pump station, parking areas and a 10,000 square foot building for the desalter. The GWRP provides treated water for the potable system. The following are treatment processes involved: v Pretreatment: removes or stabilizes manganese, iron, and hardness; v Primary Treatment: reverse osmosis process; and v Post Treatment: disinfection, aeration and adjustment of ph. The replacement cost for the GWRP facilities over the next 20 years will be attributable to the mechanical and electrical equipment. The pressure vessels in the system have a life expectancy of 50 years. Most of the potable water booster pump stations were constructed by the CVWD prior to acquisition by the City. Ongoing maintenance has kept these pump stations operational, but many will need complete replacement. The replacement stations will greatly reduce power consumption and maintenance costs. The reduction in operating costs comes from more efficient pumps and motors along with new control systems. The useful age within the Water Master Plan of pump stations ranges from 20 years for mechanical and electrical equipment to 60 years for the structures. Approximately 88 percent of the pump stations mechanical and electrical equipment have exceeded their useful age. APPENDIX 1: WATER INFRASTRUCTURE ASSESSMENT 22 ATTACHMENT 1 - Page 71 of 230

72 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Table 1-4: Potable Water Pump Stations Potable Water Pump Stations Install Date Age Flow Capacity Status ID Mission Hills ,000 Operational DWPU03 Captain's Hill ,500 Operational DWPU11 Toyon Non- Operational DWPU13 Bear Brand (Aguacate) ,000 Operational DWPU07 Capistrano Royal ,200 Operational DWPU05 Zone Operational DWPU09 Hidden Mountain ,500 Operational DWPU12 Connamara ,750 Non- Operational DWPU06 Bear Brand (Peppertree Bend) ,500 Operational DWPU08 Zone ,000 Operational DWPU17 Strawberry Hill ,200 Operational DWPU01 El Nido Private DW0459 A summary of the reservoirs is listed in Table 1-5. Many of these reservoirs were constructed in the 1970s and early 1980s. While there has been ongoing maintenance, additional preventive maintenance and possible replacement will be required in the next 20 years. The useful age of reservoirs as identified in the Water Master Plan ranges from 40 to 50 years depending on the material used to construct the facility. Three of the reservoirs are above the highest recommended useful age outlined in the Water Master Plan, with another four exceeding the lower end of the recommended range. Only one reservoir has not exceeded the lower recommended age but will within the next calendar year. Table 1-5: Potable Water Reservoirs Potable Water Reservoirs Install Date Capacity Status ID 760 South-A ,000,000 Operational DWRV01 Zone #2 (Krum Rectangular) ,000 Non-Operational DWRV04 High West Side # ,000 Operational DWRV06 Reed Zone #21B ,740,000 Operational DWRV02 Zone #3 #2 (Lower Hunt Club) ,000 Operational DWRV09 Terminal # ,110,000 Non-Operational DWRV05 Zone 2 #2B (Krum Circular) ,000 Non-Operational DWRV03 High West Side # ,000 Operational DWRV07 Mission Hills ,000 Operational DWRV11 Zone #3 #1 (Upper Hunt club) ,000 Operational DWRV10 Cooks ,200,000 Operational DWRV08 Terminal # ,000,000 Operational DWRV12 APPENDIX 1: WATER INFRASTRUCTURE ASSESSMENT 23 ATTACHMENT 1 - Page 72 of 230

73 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Based on the HDR report, the City has an average of 25 water main breaks per year, which averages to about 12 breaks per 100 miles of pipe per year. This is lower than the national average of between 21 and 27 breaks per 100 miles of pipe per year; however, there are still areas that need replacement. The HDR report identified approximately 15 miles of pipelines that should be considered for replacement in the next 10 years. Recycled Water System Table 1-6: Domestic Water Pipeline Inventory Water Pipelines Diameter (inches) Feet under 6 48, , , , , , , , , unknown 5,989 Total 1,062,836 In 1989, the City developed a non-domestic system that was converted to the recycled water system. The goal of the program was to conserve potable supplies and to utilize marginal quality groundwater for landscape irrigation of golf courses, parks, recreation areas, greenbelts, school yards, highway medians, and industrial uses. Water supply for the recycled system is from a combination of groundwater and imported recycled water from SMWD and MNWD. From FY 14 to FY 17, SMWD and MNWD provided an average of 240 and 114 AF of recycled water to the City respectively. In the tables below are summaries of the facilities which make up the recycled water system. These facilities include water wells, a storage reservoir, and distribution system. According to available GIS data, the recycled water system mains have an average age of approximately 12 years. This data was available for approximately 47 percent of the recycled water mains contained within the GIS data provided by the City. As shown in Chart 1-3, the distribution of ages trends more towards younger infrastructure that appears to be approaching the initial phase of maintenance. Many of the mains still have over half of their useable life remaining, which was identified as between 35 years for cast iron and steel pipes and 50 years for all others in the Recycled Water Master Plan. In essence, only about 0.4 percent of the recycled water mains for the City have exceeded the recommended assigned useful life within the Recycled Water Master Plan. APPENDIX 1: WATER INFRASTRUCTURE ASSESSMENT 24 ATTACHMENT 1 - Page 73 of 230

74 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Chart 1-3: Recycled Water Pipeline Inventory Number o Pipes Age in Years The recycled water system is relatively new compared to the potable system. It also has a much lower failure rate than the potable system. The recycled system typically delivers between 400 to 700 AF per year with recycled water from SMWD and MNWD. In addition to the imported water, the City relies on marginal quality groundwater to blend with the imported water for irrigation purposes. The groundwater comes from three wells that are considered non-potable, as described in Table 1-7. Table 1-7: Recycled Water Wells Inventory Recycled Water Wells Type ID Mission Street Non-potable RWWL3 Hollywood 2A Non-potable RWWL4 Rosenbaum No. 1 Non-potable RWWL7 The recycled water system has one storage reservoir shown in the following table. The reservoir was originally built in 1962 and rehabilitated in The useful age within the Recycled Water Master Plan of reservoirs ranges from 40 to 50 years depending on the material used to construct the facility. Considering that this reservoir was rehabilitated in 1992, it has an additional 14 years of useful life before it begins to approach the lower end of the useful life estimate and 24 years at the higher end of the estimate. Table 1-8: Recycled Water Reservoirs Recycled Water Reservoir Type Built/Rehabilitated Gallons Reed Trapezoidal 1965/ ,000 The recycled system is much more limited in size than the domestic system with only miles of distribution pipelines. As the system is relatively new, there are few needs associated with aging or deteriorating pipelines. APPENDIX 1: WATER INFRASTRUCTURE ASSESSMENT 25 ATTACHMENT 1 - Page 74 of 230

75 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Table 1-9: Recycled Water Pipeline Inventory Recycled Water Pipelines Diameter (inches) Feet under 6 13, , , , , ,291 Unknown 2,147 Total 119,141 APPENDIX 1: WATER INFRASTRUCTURE ASSESSMENT 26 ATTACHMENT 1 - Page 75 of 230

76 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Figure 1-2: City of San Juan Capistrano Recycled Water System APPENDIX 1: WATER INFRASTRUCTURE ASSESSMENT 27 ATTACHMENT 1 - Page 76 of 230

77 Redundancy and Safeguard Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment The potable water system is supplied by various sources with many interconnections and emergency connections. This gives a reasonably good safe guard to maintain service. The majority of the booster stations are older and do not have the same level of redundancy as the distribution system. These older pump stations need to be replaced with more efficient equipment. The recycled water system can utilize supply from a number of sources. The three groundwater wells provide the majority of the water. There are also connections for delivery of recycled water from SMWD s Chiquita Water Reclamation Plant, the Trampas Canyon Recycled Reservoir currently under construction and just outside of the City limits, and from MNWD. And lastly, the supply can be augmented with potable water. The system has 500,000 gallons of storage capacity. Together these system features allow for a flexible operation to meet the demands. The City is working to increase recycled water supplies to reduce the amount of potable water required. Expansion of the recycled system provides benefits through reduction in potable demand, which reduces the need for storage. Estimated Costs Based on the existing condition of the water system, a 20-year outlook for capital improvements was developed. The forecast is based upon the previously prepared reports and after review of unit rates used in the estimates. Estimates for the GWRP and other additional facilities were prepared for this review. The following table summarizes these capital costs showing low end costs as the lowest conservative estimate and high end as the highest possibility of costs. Table 1-10: Water System 20-year CIP Forecast, 2018 $ CIP Forecast (Low End) CIP Forecast (High End) Water Mains $27,720,000 $47,520,000 Pump Stations $1,600,000 $4,000,000 Reservoirs $7,500,000 $13,000,000 GWRP $2,000,000 $5,000,000 Wells $900,000 $3,200,000 Recycled Water system $4,400,000 $7,800,000 Total Water System $44,120,000 $80,520,000 Since the recycled water system is relatively new and the facilities useful life is expected to exceed 50 years, much of the infrastructure would appear to be in good working order. There also have been a low number of leaks reported for this system. The range of the 20- year CIP forecast is from $4,400,000 to $7,800,000. The City s plans for expansion of the recycled water system will be dependent upon availability of funding, such as grant funds, and availability of reliable recycled supply. Plans for expanding the system are outlined in the Recycled Water Master Plan and is supported by the City s current CIP. The existing system cannot meet additional future demands without construction of significant APPENDIX 1: WATER INFRASTRUCTURE ASSESSMENT 28 ATTACHMENT 1 - Page 77 of 230

78 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment additional infrastructure. 7 Anticipated needs to meet additional demand are described with a cost estimate in the Recycled Water Master Plan. S ERVICE A DEQUACY This section reviews indicators of water service adequacy, including distribution system integrity, drinking water quality, fire flow pressure, degree of water reserves for emergency purposes, preventative maintenance practices, speed of response times to customer reports of issues, and the number and type of complaints related to water services. Whenever available, City and/or industry standards are used to determine the level of services provided. In lieu of adopted standards, the report also makes use of generally accepted industry best practices or benchmarking with comparable providers. System Integrity Water system integrity is defined for the purposes of this report by the degree of unaccounted for water loss from the system, meaning the amount of water that goes missing between the supply sources and the distribution points, the Infrastructure Leakage Index, and the number of breaks or leaks per 100 miles of mains (previously described in the Existing Conditions section). Some loss is expected due to meter error, as well as system flushes and checks, among other reasons. The ratio of water loss that occurs due to factors such as breaks, leaks, and illegal connections is a gauge of the system s integrity. The City conducts an annual audit of its water loss to determine the extent of any integrity issues. The water audit typically traces the flow of water from the site of water withdrawal or treatment, through the water distribution system, and into customer properties. The water audit is a spreadsheet that details the variety of consumption and losses that exist in the water system. The water balance summarizes the components and provides accountability, as all of the water placed into a distribution system should equal all of the water taken out of the distribution system. Industry standards define an acceptable level of unaccounted loss as being less than 10 percent of the amount of water supplied from the sources. 8 Most recently, in FY 16-17, the City experienced total water losses of 6.8 percent of the amount supplied in that year. Excluding apparent water losses attributed to customer metering inaccuracies and system data handling errors, the City experienced a real water loss of 3.5 percent, which is well below the industry standard. Another performance indicator of water system integrity was developed by the International Water Association the Infrastructure Leakage Index (ILI). The ILI is defined as a ratio of the current annual real losses to the unavoidable annual real losses of the system. An ILI of 1.0 or less is considered the highest performance of leakage control. An ILI of 1.0 to 3.0 may indicate effective leakage controls. 9 The City had an ILI of 1.26 in FY 16-17, which is considered to be an indicator of highly effective leakage control. 7 AKM Consulting Engineers, AWWA, EPA, December 2016 APPENDIX 1: WATER INFRASTRUCTURE ASSESSMENT 29 ATTACHMENT 1 - Page 78 of 230

79 Water Quality Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment The State Water Resources Board Division of Drinking Water (DDW) implements the Safe Drinking Water Act in California. DDW requires public water systems to perform routine monitoring for regulated contaminants. To meet water quality standards and comply with regulations, a water system with a contaminant exceeding a maximum contaminant limit (MCL) must notify the public and remove the source from service or initiate a process and schedule to install treatment for removing the contaminant. Health violations occur when the contaminant amount exceeds the safety standard (MCL) or when water is not treated properly. In California, compliance is usually determined at the wellhead or the surface water intake. Monitoring violations involve failure to conduct or to report in a timely fashion the results of required monitoring. For the purposes of this report, drinking water quality is assessed by a combination of historical violations reported by the Environmental Protection Agency (EPA) since 2007 and the percent of time that the City was in compliance with Primary Drinking Water Regulations in The EPA documents health and monitoring violations for each public water system in the U.S. Since 2007, the City has had no health violations and eight monitoring violations (two in 2013, four in 2012, two in 2011) for various contaminants. This equates to approximately 0.69 violations per 1,000 connections served. 10 The City was in compliance with drinking water regulations 99.4 percent of the time in 2016, with two violations of the coliform maximum contaminant level (MCL) (violations at eight testing sights on one day and violations at two testing sights the following day). In 2017, the City was in compliance with drinking water regulations 100 percent of the time, with no violations. By comparison, the industry standard for compliance with Primary Drinking Water Regulations is 99 percent (361 days) of the year. Fire Flow Urban water systems must maintain adequate pressure in order to provide adequate fire flow. Adequate fire flows for the City are established by the Orange County Fire Authority, which are based upon Appendix III-A of the 2000 Uniform Fire Code. The code identifies fire flow requirements based on building area, construction type and occupancy. Required fire flow ranges from 1,500 gpm to 8,000 gpm from two or more hydrants depending on the type of construction and fire area in square feet. For example, a residential single-family dwelling unit requires a fire flow of 2,000 gpm for four hours at a pressure of 20 pounds per square inch (psi). 11 The Insurance Services Office (ISO) conducts fire flow testing to classify fire service levels for insurance purposes. In 2016, the City underwent ISO fire flow testing. Of the 23 sites tested, 12 sites or 52 percent failed to maintain the necessary flow to meet the Uniform Fire Code. In comparison, other agencies that were tested at the same time had a 10 Based on 11,572 connections in the City s water system. 11 AKM Consulting Engineers, 2004 APPENDIX 1: WATER INFRASTRUCTURE ASSESSMENT 30 ATTACHMENT 1 - Page 79 of 230

80 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment failure rate of 23 percent. The estimated costs for flow related improvements are included in the totals listed in Table 1-9. Water Reserves The storage necessary for a potable water system consists of three components: regulatory storage, fire suppression storage and emergency storage. Each service zone should have dedicated regulatory and fire suppression storage. Emergency storage may be provided system-wide if the facilities for moving the water to all zones in the service area exist. Urban water suppliers are expected to address catastrophic disruptions of water supplies with plans reviewing the vulnerability of source and delivery and distribution systems to events such as regional power outages and system failures. In the event of an emergency that limited or stopped a provider s supply of water, the system would rely on stored water in the short term. Water reserves for the City are comprised of a combination of reservoir storage and the capability of the GWRP. The emergency storage criteria selected by the City is to provide the equivalent of five times the average day demand, which is almost 36 million gallons for the existing system, provided that no other sources are available during the interruption of the primary supply. 12 The City reservoirs have a combined storage of 25.8 mg while the GWRP can provide a five-day supply of 30 mg. The supply from the GWRP can be delivered throughout the system. Additionally, the City has capacity for emergency use (50 AF/16.3MG) in SMWD s Upper Chiquita Reservoir. The City s existing storage tank capacity for domestic water does not meet the required five-day emergency supply in the event of a disruption of supply. However, the City has two sources of water supply import water and groundwater production. It is also reasonable to expect that, should one of the City s sources of water experience a disruption, the other source would be available. In that case, the required emergency storage would be reduced by the amount available from the remaining source. With the City s GWRP in production, the City would require just over 10 million gallons of storage capacity while the City has more than twice that amount. The SMWD Upper Chiquita Reservoir can deliver water in emergencies through existing connections. There are also 12 interconnections with neighboring water districts which can supply water in case of an emergency. There are formal agreements with South Coast Water District and Santa Margarita Water District which cover six of the connections. The other six connections are covered by informal agreement with Moulton Niguel Water District, South Coast Water District, and the City of San Clemente (CSC). These interconnections will provide additional supplies in case of a prolonged emergency. 12 Ibid, p 6-4. APPENDIX 1: WATER INFRASTRUCTURE ASSESSMENT 31 ATTACHMENT 1 - Page 80 of 230

81 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Table 1-11: Water System Interconnections Emergency Connections SCWD - AMMCO SCWD - Del Obispo SCWD - Palo SMWD - Reata SMWD -Antonio SMWD -La Pata CSC - Activo CSC - Via California CSC - Peregrino MNWD Via Escolar SCWD - Costco SCWD - Stone Hill Formal agreement Formal agreement Formal agreement Formal agreement Formal agreement Formal agreement Informal agreement Informal agreement Informal agreement Informal agreement Informal agreement Informal agreement Preventative Maintenance Preventative maintenance minimizes costs associated with replacing infrastructure as well as costs associated with the damage of large-scale incidents such as a broken main. The water system is monitored via a supervisory control and data acquisition (SCADA) system. Maintenance of the water facilities includes water lines, water meters, fire hydrants, reservoirs, groundwater recovery plant, water wells, and pump stations. The City has developed an Operations and Maintenance Plan per the requirements of the SWRCB Division of Drinking Water (DDW). During the most recent inspection, DDW described the City s valve exercising program and cross connection programs as adequate. Additionally, the inspection found that the water distribution system was in good sanitary condition and is operated and maintained in accordance with standards, indicating appropriate preventative maintenance practices. Response Times The City has not adopted a response time standard defining a time frame within which staff will be on scene at a major break or other incident. Additionally, the City does not track how long it takes for it to respond to calls for emergency services, such as main breaks. Consequently, it is unknown how long on average it takes for city staff to be on scene to an emergency call. Customer Complaints Should a customer have questions or complaints regarding water services, the City makes available a customer service number for water and wastewater services, and has addresses specific to the kind of complaint or question, which are available on the Department s website. The personnel responsible for the resolution of the complaint is dependent upon the type of complaint submitted. However, ultimately, the Director of the Department is responsible for ensuring that each complaint is resolved to completion. The APPENDIX 1: WATER INFRASTRUCTURE ASSESSMENT 32 ATTACHMENT 1 - Page 81 of 230

82 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment City does not track the total number of complaints, but instead tracks only complaints associated with major issues such as water quality complaints and line breaks. It is unknown how many complaints the City received in 2017 related to its water services. Additionally, the City is in the midst of litigation that was prompted by water service ratepayers. The class action lawsuit by ratepayers could impact the recovery of the Water Fund and is still outstanding. 13 No estimates are available about potential costs, if any, from the outcome of the litigation. 13 CSJC City Manager Weekly Update, Sept. 21, APPENDIX 1: WATER INFRASTRUCTURE ASSESSMENT 33 ATTACHMENT 1 - Page 82 of 230

83 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment D ETERMINATIONS According to California Government Code 56430, OC LAFCO is required to come to seven determinations in its Municipal Service Reviews. This section will propose determinations covering: 1) the present and planned capacity of the City s water facilities, 2) the adequacy of the water utility services, and 3) the water system infrastructure needs and deficiencies for inclusion in a comprehensive MSR on the City of San Juan Capistrano. v While the City of San Juan Capistrano s domestic water system has sufficient infrastructure capacity to adequately serve all existing connections, insufficient fire flow to meet fire code requirements at several locations is a capacity concern. v While the recycled water system has sufficient system capacity within the system to provide services to existing connections, the City is operating under groundwater capacity constraints and blends recycled water with groundwater and imported water. Additional recycled water supply will be required in order to serve all customers. v As a result of the shift from relying on importing to pumping local groundwater, the City now has more flexibility with its water sources to shift resources as needed. Therefore, it can be determined that the City sources of domestic water supply are acceptable to serve current and future population projections, in addition to weathering a three-year drought. v Expansion of the recycled water system will be necessary to meet future demands; however, any plans for expansion of the recycled water system will be dependent upon availability of funding, such as grant funds, and availability of a reliable recycled water supply. v Generally, the City meets standards defined for adequately operated water systems with regard to distribution system integrity, drinking water quality, degree of water reserves for emergency purposes, and preventative maintenance practices. Improvements to the system could be made to ensure adequate fire flows throughout the system. Additionally, the City should implement a tracking system of response times to customer reports of issues and the number and type of complaints related to water services. v The City has appropriately identified and planned for its water related capital improvement needs in the Recycled Water Master Plan, the HDR report, and the citywide Capital Improvement Plan. Ability to finance the capital improvements will be addressed in the Fiscal Assessment report. v There are indications of deferred maintenance in the City s water system. The most significant infrastructure needs for the system are improvements to the joint regional water supply, pump station component replacements and line realignment, and relocation of two segments of pipeline. Additionally, approximately 14.5 percent of the domestic distribution system is beyond its useful life standard as defined by the City, approximately 88 percent of the pump stations' mechanical and electrical equipment have exceeded their useful age, and nearly all of the reservoirs exceed useful life ranges. The City has identified 30 miles of pipeline that is in need of replacement over the next 20 years. APPENDIX 1: WATER INFRASTRUCTURE ASSESSMENT 34 ATTACHMENT 1 - Page 83 of 230

84 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment 2. WASTEWATER SYSTEM ASSESSMENT The CSJC owns and operates the wastewater collection system that provides wastewater collection to the residents of the City and transmission to a regional treatment plant outside of the City s boundaries. Infrastructure WASTEWATER S YSTEM OVERVIEW The City's wastewater collection system was originally constructed in the 1920 s with the bulk of the sewer mains constructed between 1960 and The City maintains the system, which is comprised of approximately 125 miles of pipeline and two lift stations. The City has areas outside the city limits where it services singular parcels through agreement. Conversely, there are also areas within the City which are serviced by other agencies. MNWD provides wastewater service to Hidden Creek Estates, as well as the Hamilton Oaks Winery and several connections along Camino Capistrano, Rancho Capistrano, and Peppertree Bend. SCWD provides sewer services to 143 parcels within the city limits and a connection to the Chiquita Land Outfall for brine disposal. The City operates and maintains the wastewater collection system for the City s service area. The City s collection system is part of a larger collection and treatment system operated by the South Orange County Wastewater Authority (SOCWA). SOCWA is a joint powers authority comprised of 10 regional members that collects, treats, and disposes of wastewater and sludge from the service area. The City is one of the four member agencies that own capacity at the J.B. Latham Wastewater Treatment Plant (JBLWTP). The City s wastewater is conveyed through city infrastructure to other portions of the system that lead to the treatment plant. SOCWA also operates the San Juan Creek Ocean Outfall that discharges secondary treated effluent from this plant (and three others) to the Pacific Ocean under NPDES Permit Number CA Capacity is allocated to member agencies to discharge from the Outfall. 15 The Latham Facility is a conventional activated sludge wastewater treatment facility with secondary treatment and solids handling capacities of 13 MGD and 18.5 MGD, respectively. The City owns 4.0 MGD of liquid capacity treatment (30.8 percent of the total 13.0 MGD capacity) and 5.55 MGD of solids handling capacity (30 percent of the total 18.5 MGD) in the Latham Facility. 16 The outfall NPDES permit authorizes a not-to-exceed total average effluent flow of MGD, of which 13.0 MGD is allocated to the Latham Plant and 2.2 MGD is allocated to the GWRP. The City owns percent of the outfall capacity Issued December 11, Tetra Tech, Inc., HDR, HDR, 2016 APPENDIX 1: WASTEWATER INFRASTRUCTURE ASSESSMENT 35 ATTACHMENT 1 - Page 84 of 230

85 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Figure 2-1: City of San Juan Capistrano Wastewater Service Area APPENDIX 1: WASTEWATER INFRASTRUCTURE ASSESSMENT 36 ATTACHMENT 1 - Page 85 of 230

86 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment The list of primary wastewater facilities was derived using the City's wastewater asset registry as listed in the HDR report from The wastewater system consists of approximately 125 miles of pipeline, ranging in diameter from four inches to 30 inches, and two lift stations. Table 2-1: Wastewater Pipeline Inventory Sewer Lines Diameter (inches) Feet , , , , , , , , Unknown Length 557 TOTAL 663,607 The Rosenbaum Lift Station, which was originally constructed in 1973, was completely upgraded in 2000 with new pumps, mechanical equipment, electrical, instrumentation, piping, a new water well, a new valve vault, and site work. The station has two submersible vortex pumps each rated at 455 gallons per minute (gpm) at 45 feet of total dynamic head (TDH). The lift station is equipped with a permanent natural gas generator for emergency power during electric power outages. The lift station pumps into a six-inch force main then discharges to a gravity sewer. The Avenida De La Vista Lift Station was constructed in The station has two submersible pumps each rated at 650 gpm at 33 feet of TDH, which are housed in a fiberglass enclosure. The station is equipped with a transfer switch that enables the station to be powered by one of the City s portable generators during an electrical power outage. The lift station pumps into an eight-inch force main that discharges to a gravity sewer 18. Table 2-2: Wastewater Lift Stations Lift Stations Install/Rehabilitation Capacity (Est. gpm) Avenida De La Vista Rosenbaum 1973/ HDR, 2016 APPENDIX 1: WASTEWATER INFRASTRUCTURE ASSESSMENT 37 ATTACHMENT 1 - Page 86 of 230

87 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Wastewater Flow According to flow records obtained from City staff, the City s wastewater flows through the conveyance system averaged approximately 2.61 MGD from December 2010 to December The City has a maximum daily capacity of 4.0 MGD at the JBLWTP 19. During this period, no single month exceeded the allotted capacity; however, there were daily events where flows exceeded the daily allotment. The dates on which flow allocation was exceeded appear to correspond with local storm events where flows were impacted by infiltration and inflow of the system. According to staff, there may be storm drains overflowing into the sewer system. These problems are slated to be addressed and mitigated when the City implements a smoke testing program for the sewer system in late The extent of infiltration and inflow is discussed in greater depth in the Service Adequacy section of this chapter. Chart 2-1: City Wastewater Flow (12/ /2017) MGD /20/2011 4/3/2011 7/23/2011 9/24/ /5/2011 2/7/2012 5/28/2012 8/5/ /7/ /27/2012 1/21/2013 3/24/2013 5/29/2013 8/2/ /2/ /29/2013 2/3/2014 4/5/2014 6/7/2014 8/9/2014 9/29/ /30/2014 2/5/2015 4/5/2015 6/7/2015 9/24/ /21/2015 1/25/2016 3/19/2016 5/22/2016 6/13/2016 8/9/ /4/ /24/ /16/2016 2/12/2017 3/6/2017 3/28/2017 4/19/2017 5/11/2017 6/2/2017 6/24/2017 7/16/2017 8/7/2017 8/29/2017 9/20/ /12/ /3/ /25/ /17/2017 From a more regional perspective, the JBLWTP has a maximum design capacity of 13.0 MGD for all users. The combined flows at the plant averaged 8.07 MGD during the same period (December 2010 to December 2017) as discussed for the City, which is well below the design capacity. Additionally, the flows have generally decreased annually overtime, as shown in Chart 2-1. Staff attributes this fact to conservation and potentially other districts diverting wastewater flows from the Treatment Facility to their individual water recycling plants. These actions have lowered the average flows to the Treatment Plant by approximately 30 percent from 2010 to City of San Juan Capistrano, Bauman, Correspondence, 2018 APPENDIX 1: WASTEWATER INFRASTRUCTURE ASSESSMENT 38 ATTACHMENT 1 - Page 87 of 230

88 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Chart 2-2: JBLWTP Wastewater Flow (12/ /2017) MGD /1/2010 1/24/2011 3/19/2011 5/12/2011 7/5/2011 8/28/ /21/ /14/2011 2/6/2012 3/31/2012 5/24/2012 7/17/2012 9/9/ /2/ /26/2012 2/18/2013 4/13/2013 6/6/2013 7/30/2013 9/22/ /15/2013 1/8/2014 3/3/2014 4/26/2014 6/19/2014 8/12/ /5/ /28/2014 1/21/2015 3/16/2015 5/9/2015 7/2/2015 8/25/ /18/ /11/2015 2/3/2016 3/28/2016 5/21/2016 7/14/2016 9/6/ /30/ /23/2016 2/15/2017 4/10/2017 6/3/2017 7/27/2017 9/19/ /12/2017 Treatment Capacity Agreements Treatment and discharge agreements were developed in 1973 and 1977 respectfully. The treatment agreement is known as the SOCWA/Jay B. Latham Regional Treatment Plant PC 2 Agreement (PC 2). This 1973 agreement provided for the acquisition of the of the JBLWTP facilities by the Southeast Regional Reclamation Authority (SERRA) from the City of San Juan Capistrano and the Dana Point Sanitary District, which is now the South Coast Water District. In 1998, an amendment to the PC 2 Agreement established the current allocation of liquids and solids capacities among the PC 2 members. The following table defines the breakdown of capacities amongst the member agencies. SOCWA operates the JBLWTP for its members. Table 2-3: JBLWTP Flow Allocation PC 2 Liquid Members Treatment Capacity (MGD) % Solids Handling Capacity (MGD) % CSJC SMWD MNWD SCWD Total A second agreement executed in 1977 known as the SOCWA/San Juan Creek Outfall PC 5 Agreement (PC 5) was created for the purpose of construction and operation of the APPENDIX 1: WASTEWATER INFRASTRUCTURE ASSESSMENT 39 ATTACHMENT 1 - Page 88 of 230

89 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Ocean Outfall Facilities (OOF). The OOF are operated by SOCWA for the PC 5 members to receive effluent from the JBLWTP or from treatment plants operated by members. Table 2-4: Ocean Outfall Facilities Flow Allocation PC 5 Members PC 5 Outfall Capacity Ownership (%) PC 5 Estimated Peak Flow Outfall Capacity (mgd) PC 5 Permitted ADWF Outfall (mgd) City of San Juan Capistrano City of San Clemente Moulton Niguel Water District Santa Margarita Water District South Coast Water District Total Staffing Levels According to the City s most recently adopted budget for Fiscal Year , the Public Works and Utilities Department currently employs a total of 42 people to oversee the Utilities Department s operations. Of those employees, the Utilities Operations Division has 23 positions that support wastewater services to some degree, including vacancies. Based on billing percentages per each of those 23 positions to the wastewater fund, approximately 1.12 FTEs hours (based on a 40-hour work week) are dedicated to wastewater services. Less the administrative personnel, there are approximately 0.83 FTE dedicated to the operations of the wastewater system. The City maintains a minimal staffing level for wastewater services as it has no treatment plant and contracts out for sewer cleaning services. Table 2-5: Percentage of Positions Budgeted to the Wastewater Fund ( ) Public Works Utilities Director 15% Assistant Utilities Director 4% Senior Management Analyst 8% Administrative Coordinator 7% Associate Civil Engineer 10% Associate Engineer 0.5% Chief Plant Operator 1.35% Water and Sewer Construction Inspector 2% Maintenance Mechanic 0.2% Utilities Superintendent 10% Utilities Operator II 7% Utilities Operator I 3% Utilities Operator II 28% Utilities Operator II 3% APPENDIX 1: WASTEWATER INFRASTRUCTURE ASSESSMENT 40 ATTACHMENT 1 - Page 89 of 230

90 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Utilities Operator II GWRP 3% Utilities Operator I 1% Utilities Operator II 3% Utilities Operator II 1% Utilities Operator III 2% Utilities Operator III GWRP 1% Utilities Operator III 2% Utilities Operator I (Vacant) 3% Utilities Operator III GWRP (Vacant) 2% Total Wastewater FTEs (less vacant) 1.12 According to the City, there are no anticipated staff hiring needs as operations are sufficiently staffed. Additionally, considering that growth of the City is projected to be stagnant and/or decline in the coming years up to 2040, staff levels should correspond to the similar need by remaining static. 21 Infrastructure Capacity P RESENT AND P LANNED C APACITY The sewer system for the City was originally projected out with an ultimate population capacity of 38,520 residents or 13,639 total dwelling units. The 2004 Sanitary Sewer System Master Plan (SMP) originally estimated that approximately 80 percent of the service area was already built out in 2002 with a total of an additional 2,207 dwelling units being constructed by After 2011, the SMP did not anticipate any additional dwelling units or population growth, due to the existing planned uses being completely built out. The final or ultimate population count for which the SMP anticipated for the sewer service area was 38,520 residents. This population estimate does not appear to include approximately 3,000 residents from Dana Point that were included in the WMP projections despite the fact that the City is conveying sewer service to the area 22. In addition to dwelling units, the SMP anticipated that approximately 30 percent of the total land uses of the City would be commercial and industrial development and the remaining 35 percent would be open space and recreational uses. These estimates and projections were based on the 1994 General Plan land use map and accompanying densities. Since then, amendments to the General Plan were adopted by the City in 2002 that addressed a variety of elements. Therefore, it does not appear that there would be any discrepancies with the perceived land uses and assumptions made in the SMP that would otherwise allow for significantly larger densities beyond those that were analyzed. At the time of the SMP, the City was producing an average of approximately 3.4 MGD in It was estimated that the implementation of the SMP with the associated land uses in 21 Arcadis, Tetra Tech, Inc., 2004 APPENDIX 1: WASTEWATER INFRASTRUCTURE ASSESSMENT 41 ATTACHMENT 1 - Page 90 of 230

91 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment the General Plan would increase the sewer flows by approximately 20 percent to 4.1 MGD ultimately 23. Based on sewer flow information provided by the Public Works Department, the sewer system has been producing an average of 2.61 MGD between 2011 and Additionally, the sewer flows of the City have been declining since 2011, as shown in Chart 2-2. In comparison with the flows in 2004, the City s average daily flow rate has decreased approximately 36 percent, from 3.4 MGD in 2004 to 2.18 MGD in 2017, despite increases in population. This decline, according to staff, can be attributed to implementation of conservation measures, and possibly less inflow and infiltration through the drought years. As the City has a reserved capacity of flow at the JBLWTP of 4.0 MGD, the City has ample infrastructure capacity to accommodate their current service area as well as anticipated projected growth. I NFRASTRUCTURE N EEDS AND D EFICIENCIES In 2004, the City prepared a Sanitary Sewer System Master Plan. This plan evaluated the existing conditions through inspections of the City facilities. This master plan set decision making criteria for an ongoing inspections and evaluations. According to this evaluation, approximately 17 percent of pipes were identified for renewal and 16 percent of manholes were identified for minor renewal work ranging from installing new rungs, raising manholes, and applying epoxy coatings. In 2014, the City updated its Sanitary Sewer Management Plan. The updated plan outlined rules for inspection and evaluation of the entire system for structural deficiencies once every four years. This strategy has worked well for the City for locating and repair of problem areas. According to available GIS data, the sewer system mains have an average age of approximately 36.5 years. This data was available for approximately 97.1 percent of the sewer mains contained within the GIS data provided by the City. As shown in Chart 2-3, the distribution of ages is generally evenly balanced. Only a small portion of the collection system is approaching or exceeding its life expectancy of 75 years as defined in the Sewer Master Plan. In essence, approximately 4.2 percent of the City s existing system of sewer mains exceeded the recommended assigned useful life within the Sewer Master Plan. 23 Ibid APPENDIX 1: WASTEWATER INFRASTRUCTURE ASSESSMENT 42 ATTACHMENT 1 - Page 91 of 230

92 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Chart 2-3: 350 Wastewater Collection System Age Inventory Number of pipes Age in Years Estimated Costs Based on the 2016 HDR report, in the next 10 years about 12 percent of all pipes will require renewal and about 11 percent of all manholes will require minor renewal. It is estimated that over the next 20-year period, the capital cost of necessary improvements for the wastewater system will range between $12,500,000 and $21,000,000. This estimate is based on the assumption that minor levels of deterioration will typically occur in collection systems, the City will practice preventative maintenance by continuing its four-year inspection and renewal program, and that some renewal has already occurred as part of the Sewer Master Plan. The two lift stations were constructed in 1984 and The life expectancy of both stations as outlined in the Sewer Master Plan is 25 years. Therefore, the De La Vista Lift Station has exceeded its life expectancy and requires replacement. The Rosenbaum Lift Station is approaching its life expectancy in another eight years. The replacement cost of these facilities is included in Table 2-6. Table 2-6: Wastewater System 20-year CIP Forecast, 2018 $ CIP Forecast (Low End) CIP Forecast (High End) Sewer Mains $12,000,000 $20,000,000 Pump Stations $500,000 $1,000,000 Total $12,500,000 $21,000,000 APPENDIX 1: WASTEWATER INFRASTRUCTURE ASSESSMENT 43 ATTACHMENT 1 - Page 92 of 230

93 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment S ERVICE A DEQUACY This section reviews indicators of wastewater service adequacy, including collection system integrity, regulatory compliance, preventative maintenance practices, speed of response times to customer reports of issues, and the number and type of complaints related to wastewater services. Whenever available, City and/or industry standards are used to determine the level of services provided. In lieu of adopted standards, the report also makes use of generally accepted industry best practices or benchmarking with comparable providers. Sewer System Integrity There are several measures of integrity of the wastewater collection system, including sanitary sewer overflows, peaking factors as a result of infiltration and inflow (I/I), and efforts to address infiltration and inflow. Sanitary Sewer Overflows All wastewater agencies are required to report sanitary sewer overflows (SSOs) to SWRCB. Sewer overflows are discharges from sewer pipes, pumps and manholes. Overflows reflect the capacity and condition of collection system piping and the effectiveness of routine maintenance. The sewer overflow rate is calculated as the number of overflows per 100 miles of collection piping per year. The City reported three overflows during the period from January 1, 2016 to December 31, 2017 (two in 2016 and one in 2017), which equates to less than one spill (0.8) per 100 miles of main pipelines annually on average. Going back further, over the last 12 years, 16 SSO events have been reported by the City to SWRCB. The report showed the average volume of the spills was approximately 104 gallons. Of the 16 events one was a Category 1 recovering 65 percent with 35 gallons reaching surface water. The remaining 15 events were Category 3 and had complete recovery with none reaching any surface water. During this period, the City reported an average of 1.3 SSO events per year. The events were mitigated in a timely manner and have not negatively impacted public health or the environment. By comparison, other wastewater agencies in California averaged 4.73 SSOs per 100 miles per year. 24 Infiltration and Inflow Wastewater flow includes not only discharges from residences, businesses, institutions, and industrial establishments, but also infiltration and inflow. Infiltration refers to groundwater that seeps into sewer pipes through cracks, pipe joints and other system leaks. Inflow refers to rainwater that enters the sewer system from sources such as yard and patio drains, roof gutter downspouts, uncapped cleanouts, pond or pool overflow drains, footing drains, cross-connections with storm drains, and even holes in manhole covers. Infiltration and inflow tend to affect older sewer systems to a greater degree. Infiltration and inflow rates are highest during or right after heavy rain. They are the 24 SWRCB, March 26, 2016, p 16. APPENDIX 1: WASTEWATER INFRASTRUCTURE ASSESSMENT 44 ATTACHMENT 1 - Page 93 of 230

94 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment primary factors driving peak flows through the wastewater system and a major consideration in capacity planning and costs. The peaking factor is the ratio of peak day wet weather flows to average dry weather flows. The peaking factor is an indicator of the degree to which the system suffers from I/I, where rainwater enters the sewer system through cracks, manholes or other means. A peaking factor of up to three is generally considered acceptable based on industry practices. The City reported that a storm event in 2017 caused a peaking factor of approximately five, which is indicative of I/I concerns. The City reported that it will be doing smoke testing to identify key areas of where the I/I is occurring. Regulatory Compliance RWQCB enforces the Clean Water Act, permit conditions and other requirements of wastewater providers. Violations of State requirements for wastewater providers and treatment facilities are recorded by SWRCB. The Board may levy fines or order the provider to take specific actions to comply with water quality regulations. Because the City does not own or operate a wastewater treatment plant, it does not have a permit for treatment and discharge that more often results in violations of required conditions. The City does, however, operate under a general permit for all collection systems in the region that was adopted by RWQCB (Order R ). The City has not received any violations or enforcement orders of this permit order in the last two years. In addition to the wastewater facilities, the City is responsible for discharges from the GWRP. The City has received two informal enforcement actions regarding the GWRP in the last two years (2016 and 2017). In April 2016, the City received a staff enforcement letter for deficient reporting. In August 2016, the City received another staff enforcement letter due to violation of order conditions. 25 Preventative Maintenance Preventative maintenance activities are essential in lowering the cost of capital replacements resulting from deferred maintenance. Additionally, preventative maintenance minimizes the chance of an SSO occurring. Agencies that provide wastewater services in California are required to adopt a Sewer System Management Plan that identifies the operation and maintenance program, including the regular maintenance activities. Preventative maintenance activities are outlined in the City s Sewer System Management Plan, which was last updated in The City contracts out a majority of its cleaning, video, and inspection. Problem areas are cleaned on a bi-monthly basis. There are 11 hot spot manholes that are inspected three times a week and cleaned if needed. Additionally, there are approximately 70 sections comprising approximately 2.1 miles of the system lines that are considered as "hot spots" that require cleaning every 2 months. 26 Manholes are regularly inspected and all damage identified in the field report. The City is 25 Ciwqs.waterboards.ca.gov 26 Bauman, Correspondence, June 26, APPENDIX 1: WASTEWATER INFRASTRUCTURE ASSESSMENT 45 ATTACHMENT 1 - Page 94 of 230

95 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment currently in discussions with SMWD for formal agreement on the provision of these services by the District. SMWD is currently on call for emergency response. The EPA recommends closed circuit television (CCTV) inspection of sewer lines as the most cost-efficient and effective inspection approach. Nationwide, the average wastewater provider conducts CCTV inspection of seven percent of its system annually and cleans 30 percent of the system annually, according to a study by the American Society of Civil Engineers. Collection system problems tend to be concentrated in older areas; it is most important to inspect lines more than 20 years old. The City inspects 25 percent of its system on average every year. The entire system is inspected every four years. The videoed sections are cleaned in that year as well. The CCTV videos are then connected to the City s GIS mapping and can be viewed by clicking on the map location. This inspection program allows the City to identify structural deficiencies in the collection system. The deficiencies are prioritized for rehabilitation and integrated into the City s capital improvement plan. Response Times The City has developed a Sanitary Sewer Overflow Emergency Response Plan (SSOERP) that defines how the City will respond to SSOs. The City has a 24-hour, 7-day per week emergency callout program. Reporting hotlines are published for SSOs during all hours. There are no adopted standards or goals by the City defining within what period staff will respond to an SSO; however, response procedures are outlined in the SSOERP as mentioned. The City does not track its response times to emergency issues such as SSOs. Recently, SMWD started providing backup emergency call out services for the City. Customer Complaints As mentioned, the City makes available a customer service number for water and wastewater services, and has addresses specific to the kind of complaint or question, which are available on the Department s website. The City does not track the total number of complaints, but instead tracks only complaints associated with major issues such as SSOs. It is unknown how many complaints the City received in 2017 related to its wastewater services. APPENDIX 1: WASTEWATER INFRASTRUCTURE ASSESSMENT 46 ATTACHMENT 1 - Page 95 of 230

96 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment D ETERMINATIONS According to California Government Code 56430, OC LAFCO is required to come to seven determinations in its Municipal Service Reviews. This section will propose determinations covering: 1) the present and planned capacity of the City s wastewater facilities, 2) the adequacy of the wastewater utility services, and 3) the wastewater system infrastructure needs and deficiencies for inclusion in a comprehensive MSR on the City of San Juan Capistrano. v The City s wastewater system has sufficient collection system capacity to serve existing demand, based on the City s nominal use of its allocated treatment capacity, the City s thorough inspection and renewal program, and its appropriate master planning to accommodate demand of its planning area. v Given that over the last seven years the City has only used 65 percent of its treatment capacity, and that wastewater flows continue to decline throughout the region, it is evident that the City has more than sufficient treatment capacity to serve existing and anticipated projected demand. v Based on the low number of sanitary sewer overflows, high regulatory compliance rate, and proper inspection and preventative maintenance practices, the City s wastewater services are considered to be adequate. It is recommended that the City initiate a program to track all complaints related to wastewater services. v Improvements are necessary to mitigate the City s high rate of infiltration and inflow. The City is planning to identify a means to address this issue through smoke testing. v The collection system has reasonable infrastructure needs given normal deterioration of the system combined with an effective preventative maintenance program. Approximately 4.2 percent of the sewer mains have exceeded the recommended assigned useful life adopted within the Sewer Master Plan. In the next 10 years, about 12 percent of all pipes will require renewal and about 11 percent of all manholes will require minor renewal. APPENDIX 1: WASTEWATER INFRASTRUCTURE ASSESSMENT 47 ATTACHMENT 1 - Page 96 of 230

97 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment 3. RESTRUCTURING OPTIONS In 2016, the City of San Juan Capistrano began evaluating the potential of reorganizing its water and wastewater utilities in an effort to minimize the financial liabilities on the City and the administrative burden on the staff of running these operations. Water and wastewater utilities are highly regulated and costly to operate. State and federal regulations have become increasingly more demanding, with higher costs to conform. The cost of maintaining infrastructure and replacing aging pipes, pumps, reservoirs and lift stations has increased dramatically, and routine operating expenses are also rising. There is the potential that an agency that focuses on these utilities may capitalize on greater economies of scale than the City. The City is looking for an organizational structure that will, to the greatest degree, protect its long-term interests and fiscal condition, lead to greater rate stability or lower rates for residents, ensure ongoing citizen participation in the utility, and protect the City s investment in utility infrastructure. O PTIONS OVERVIEW The City limited the consideration of alternatives to those involving other public agencies, like neighboring water districts. The four restructuring options considered were: v Sale or transfer to a public entity, i.e., a Special District in the area that already provides water and wastewater services and has a locally elected board of directors, v Contracting with another public entity to provide these services, but maintaining City ownership of the utilities, v Creation of a new Special District to serve the City, and v Maintaining and improving current utility operations. The City chose to apply to Orange County LAFCO to consider options related to the sale or transfer of the utility systems to a public entity. The advantages of this option as identified by the City are: 1) OC LAFCO oversees the process and provides recommendations, 2) The City divests itself of all responsibilities of owning, operating and maintaining utilities, 3) There is the potential for improved efficiency of operations and management, and 4) Public control of utilities would be maintained. There are also disadvantages to this option, including the following: 1) OC LAFCO may impose conditions on the reorganization, 2) The City relinquishes all assets, and 3) The City relinquishes its decision-making powers. APPENDIX 1: RESTRUCTURING OPTIONS 48 ATTACHMENT 1 - Page 97 of 230

98 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment P OTENTIAL S UCCESSOR A GENCIES The neighboring special districts that are under consideration as potential successor agencies consist of Moulton Niguel Water District, Santa Margarita Water District, and South Coast Water District, due to their relative nearness to the City and associated water and wastewater systems. The following provides an overview of the service area and operations for each of the three districts. Moulton Niguel Water District Moulton Niguel Water District (MNWD) is located to the north and west of the City of San Juan Capistrano. The District provides potable water, recycled water, and wastewater services. The District s service area encompasses approximately 23,680 acres, serving 173, in population within the cities of Laguna Niguel, Aliso Viejo, and portions of the Cities of Laguna Hills, Mission Viejo, San Juan Capistrano, and Dana Point. The District distributes water to approximately 54,075 accounts, 51,200 of which also receive wastewater service. Most of the service area is single family residential (about 85 percent). As the District is nearly built-out, new development is primarily related to infill and denser utilization of lands. These new infill and increased density projects will replace vacant or low density commercial and residential areas. The District s current water needs are met by a combination of imported potable water and recycled water. The recycled water supply is locally sourced and has steadily increased to account for 21 percent of the overall water supply in the District. Potable Water System The District operates and maintains over 700 miles of domestic water distribution pipelines. In addition, the District has 26 steel and two pre-stressed concrete operational storage reservoirs for a District-wide total potable water storage capacity of approximately 70 million gallons. The District also operates 30 pump stations to pump water from lower pressure zones to the higher-pressure zones and 20 pressure reducing stations and flow control facilities to convey water from high to low zones. The District owns capacity rights in several adjoining water agencies reservoirs and pipelines, such as El Toro Water District R-6 Reservoir, the Santa Margarita Water District Upper Chiquita Reservoir, the Joint Transmission Main (a joint powers agreement between MNWD and other water agencies), Eastern Transmission Main jointly owned by MNWD and the City of San Juan Capistrano, SMWD s South County Pipeline, which conveys water from the Allen McColloch Pipeline to several south county water agencies, and the Irvine Ranch Water District Interconnection, a regional facility serving multiple agencies that is jointly owned with Irvine Ranch Water District. 27 SWRCB - Division of Drinking Water, 2017, p4 APPENDIX 1: RESTRUCTURING OPTIONS 49 ATTACHMENT 1 - Page 98 of 230

99 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Figure 3-1: Moulton Niguel Water District APPENDIX 1: RESTRUCTURING OPTIONS 50 ATTACHMENT 1 - Page 99 of 230

100 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment MNWD imports all of its potable water from the Metropolitan Water District of Southern California (MWDSC) through its member agency, the Municipal Water District of Orange County (MWDOC), a wholesale importer of water from MWDSC. The District is a member agency of MWDOC and, as such, is entitled to receive water from available sources of MWDSC. MWDSC s sources of water primarily include water imported from the Colorado River and from the State Water Project. In an average year, approximately 43 percent of the District s imported water supply is delivered via the State Water Project and the remaining 57 percent is delivered via the Colorado River Aqueduct. All of the District s potable water is treated at either the Diemer Filtration Plant in Yorba Linda or the Baker Water Treatment Plant (Baker WTP) in Lake Forest, California. The Diemer Filtration Plant is owned and operated by MWDSC and supplies approximately two-thirds of the District s treated potable water. MNWD has capacity at the Baker WTP, which is owned by Irvine Ranch Water District and was completed in October Baker WTP provides approximately one-third of the treated potable water to the District. The Baker WTP capacity is owned by the District in partnership with four other water agencies. MNWD owns 13 cubic feet per second of capacity in this new plant at the existing Irvine Ranch Water District (IRWD) Baker Filtration Plant site. All potable water is delivered through three major transmission facilities, including the South County Pipeline (SCP), East Orange County Feeder #2 (EOCF#2), and the Allen-McColloch Pipeline (AMP). Recycled Water System The District encourages the utilization of recycled water for any approved purpose to the maximum extent possible under the laws of the State of California. The recycled water system consists of 150 miles of recycled water distribution pipelines with five pre-stressed concrete and six steel storage reservoirs to service the recycled water system. In addition, the District owns 1,000 acre-feet of capacity rights in the Upper Oso recycled water reservoir owned by the Santa Margarita Water District. The District operates 13 recycledwater pump stations. MNWD has two Advanced Wastewater Treatment (AWT) facilities providing recycled water to landscaped areas in the District one at the Joint Regional Wastewater Treatment Plant with 9 MGD capacity, operated by SOCWA, and another at the Plant 3A facility with 2.4 MGD capacity, operated by SMWD. Wastewater System MNWD maintains approximately 540 miles of wastewater pipelines ranging in diameter from eight inches to 39 inches. The District s wastewater system has 19 lift stations that pump wastewater over the ridge lines to the various treatment plants for disposal or recycling. Service laterals range in diameter from four inches to eight inches. All lift stations are designed to utilize commercial electrical power, and are equipped with either auxiliary power equipment (natural gas or propane) or overflow pipelines to a neighboring district's facilities. In addition, seven of the MNWD s critical lift stations have auxiliary wet wells that provide additional storage in the event of an emergency condition that restricts the pumping capacity of the lift stations. These stations also have emergency bypass connections on their force mains so that portable pumps can be used to bypass the stations. APPENDIX 1: RESTRUCTURING OPTIONS 51 ATTACHMENT 1 - Page 100 of 230

101 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment MNWD collects wastewater via a network of gravity lines, lift stations, and force mains throughout the service area. Wastewater is primarily residential in nature, with only approximately 22 percent of total wastewater collected from commercial customers. The District is a member of the South Orange County Wastewater Authority (SOCWA), a joint powers agency comprised of 10 governmental agencies, which owns and operates three regional treatment plants and two ocean outfalls. The District s cost to SOCWA for wastewater treatment and disposal is for operations and maintenance costs for SOCWA and a pro-rata share of the capital costs based on the type and location of each project. The District also owns a fourth wastewater treatment plant, Plant 3A, with the Santa Margarita Water District currently providing contract operations services for the treatment plant. Treated effluent throughout the service area is conveyed to two gravity flow ocean outfalls operated by SOCWA, Aliso Creek Outfall and San Juan Creek Outfall. The Aliso Creek outfall has a capacity of 33.2 MGD and extends 1.5 miles offshore near Aliso Beach in the City of Laguna Beach. The San Juan Creek outfall has a capacity of 36.8 MGD and extends 2.2 miles offshore near Doheny Beach in the City of Dana Point. Full secondary treatment is provided at all wastewater treatment plants, with most plants exceeding this level of treatment when the water is beneficially reused as recycled water. SOCWA s Coastal Treatment Plant (CTP) in Aliso Canyon, Laguna Niguel has a 6.7 MGD capacity and receives wastewater from the City of Laguna Beach, Emerald Bay Services District (EBSD), and South Coast Water District (SCWD). MNWD also owns treatment capacity at the plant. Effluent is treated to secondary or tertiary levels depending on the disposal method, ocean outfall or beneficial reuse. Recycled water is treated to Title 22 standards at the Advanced Water Treatment Plant (AWT) owned by SCWD, and operated by SOCWA, located adjacent to the CTP. Treated effluent that is not recycled is disposed of through the Aliso Creek Ocean Outfall. Waste sludge is sent to the Regional Treatment Plant (RTP) in Laguna Niguel. The SOCWA RTP has a 12 MGD liquid capacity and 24.6 MGD solids handling capacity. The RTP treats wastewater from MNWD's service area to secondary or tertiary levels. Secondary effluent is conveyed to the Aliso Creek Ocean Outfall via the SOCWA Effluent Transmission Main. SOCWA J. B. Latham Treatment Plant (JBL), located in the City of Dana Point, has a capacity of 13 MGD and treats wastewater from MNWD, City of San Juan Capistrano, Santa Margarita Water District (SMWD), and SCWD to secondary effluent standards. The secondary effluent is conveyed directly to the San Juan Creek Outfall as the plant does not have tertiary treatment. MNWD's Plant 3A located in the City of Mission Viejo has a maximum capacity of six MGD and treats wastewater received from MNWD and SMWD. Plant 3A is currently operated by SMWD, as was mentioned earlier. Effluent is treated to secondary or tertiary levels. Secondary effluent is conveyed to the San Juan Creek Outfall via the 3A Effluent Transmission Main. MNWD owns 22.7 MGD of secondary treatment capacity in the wastewater treatment plants and has 11.4 MGD of tertiary treatment capacity in compliance with Title 22 Recycled Water requirements. The District currently does not use any capacity in the Coastal Treatment Plant. APPENDIX 1: RESTRUCTURING OPTIONS 52 ATTACHMENT 1 - Page 101 of 230

102 Litigation Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment MNWD is currently in litigation with SOCWA, City of Laguna Beach, South Coast Water District, and Emerald Bay Service District. The four agencies (each of which is listed as a plaintiff in the complaint) filed a lawsuit against MNWD on May 30, 2017 for failure to pay its contractual obligations for capital improvements of the Coastal Wastewater Treatment Plant since July The plaintiffs claimed that the District was delinquent at that time on at least $755,871 in unpaid costs needed to fund multi-year maintenance and capital improvement projects that had already been awarded and were necessary to ensure the plant could continue its operations within the required standards. The plaintiffs contend that the current delinquent unpaid costs as of June 2018 total $1,658,982 and continue to escalate each quarter. 28 MNWD countersued in August 2017 claiming that the dues for capital improvements on the WTP were illegally imposed and not owed since the said improvements would extend the life of the plant beyond the term of the WTP agreement. The District stated that it did not consent to the proposed project budget for capital improvements, and therefore according to the JPA agreement should not be financially responsible for the project not approved by a unanimous vote. The litigation has not yet been resolved. The case is currently pending before the Superior Court of California, County of Riverside, Case No. RIC , and is set for trial on October 12, Santa Margarita Water District Santa Margarita Water District (SMWD), is formed in 1964 and provides water and wastewater services. It is located to the north and east of the City of the San Juan Capistrano. The service area of the District is about 62,674 acres, which includes approximately the easterly half of the City of Mission Viejo, most of the City of Rancho Santa Margarita, the Talega community within the City of San Clemente and the unincorporated communities of Coto de Caza, Ladera Ranch, Las Flores, and the Villages of Sendero and Esencia. SMWD s current water needs are met by a combination of imported potable water and recycled water. The recycled water supply is locally sourced and has steadily increased from 21.8 percent in 2015 to account for 28 percent of the overall water supply in the District in SMWD is divided into eight improvement districts that encompass approximately 52,424 acres of land (83.5 percent of the District). The remaining 10,250 acres within the District include the County of Orange Ronald W. Caspers Wilderness Park, Prima Deshecha Landfill and Starr Ranch, and Audubon Society preserve. Improvement districts function as operating units of SMWD, and each improvement district s facilities are funded with its own bonds, so residents of older neighborhoods don t have to pay for facilities in new neighborhoods. These districts also allow SMWD to meet the diverse needs of specific service areas, factoring in land use, topography, ownership lines, water supply and wastewater treatment needs. 28 SOCWA Attorney Jeremy Jungreis via correspondence with SCWD on June 20, Correspondence from MNWD, 5/2/18. APPENDIX 1: RESTRUCTURING OPTIONS 53 ATTACHMENT 1 - Page 102 of 230

103 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Figure 3-2: Santa Margarita Water District APPENDIX 1: RESTRUCTURING OPTIONS 54 ATTACHMENT 1 - Page 103 of 230

104 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment The District has a current population of over 165, It is estimated that by 2035, the District will serve approximately 70,000 households and have a population of approximately 200,000 people. SMWD receives its water from four main sources including imported drinking water from MWDSC, imported groundwater, non-domestic urban return flows, and treated wastewater. Potable Water System SMWD owns and operates 626 miles of potable water mains, 34 storage tanks, 21 pump stations, the Upper Chiquita Reservoir, the IRWD intertie, and the El Toro R-6 Reservoir. Nearly all of the District s water supply is purchased from the Metropolitan Water District of Southern California through MWDOC. Water is delivered to the region from Northern California via the State Water Project and from the Colorado River via the Colorado River Aqueduct and then purified and tested at the Diemer Filtration Plant or the Baker Filtration Plant. SMWD has capacity in the Baker WTP, owned by Irvine Ranch Water District, which was completed in October The Baker WTP capacity is owned by SMWD in partnership with four other water agencies. SMWD owns 13 cubic feet per second of capacity in this new plant at the existing Irvine Ranch Water District (IRWD) Baker Filtration Plant site. All potable water is delivered through three major transmission facilities, including the South County Pipeline (SCP) operated by SMWD, East Orange County Feeder #2 (EOCF#2), and the Allen-McColloch Pipeline (AMP). The SCP, which is jointly owned by SMWD and the MWDSC, is operated by SMWD and provides service to CSJC, MNWD, City of San Clemente, SCWD and Trabuco Canyon Water District. Recycled Water System The District s recycled water system consists of 129 miles of mains, eight storage reservoirs, two open reservoirs, and 14 pump stations. Recycled water accounts for about 22 percent of SMWD's total water supply. 31 Sources include non-domestic urban return flows and treated wastewater, and non-domestic water from Irvine Ranch Water District (IRWD), Rancho Mission Viejo (RMV), 32 and MNWD. 33 Currently, the District has the capacity to produce up to 7.8 million MGD of recycled water, meeting the requirements of Title 22 of the California Code of Regulations. The recycled water supply is from highly treated wastewater and urban return flows and is primarily used for irrigation and construction purposes. Recycled water is produced at one of the District s three wastewater reclamation plants and stored in the Upper Oso Seasonal Storage Reservoir, as well as other reservoirs throughout the District, including the Portola 30 SMWD, 31 Arcadis - SMWD, 2015, Table Groundwater. 33 Arcadis - SMWD, 2015, p APPENDIX 1: RESTRUCTURING OPTIONS 55 ATTACHMENT 1 - Page 104 of 230

105 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Recycled Seasonal Storage Reservoir and the Trampas Canyon Recycled Seasonal Storage Reservoir upon its completion in SMWD has operated urban return flow facilities in the San Juan Watershed since 1979 with the construction of the Oso Barrier in Oso Creek to protect the City of San Juan Capistrano water wells from influence of recycled water. The Oso Barrier is in Mission Viejo, Arroyo Trabuco is located in Las Flores, Gobernadora is located in Coto de Caza and the Horno Basin is located in Ladera Ranch. Tick Canyon is a joint project with the Trabuco Canyon Water District and the Audubon Starr Ranch which protects the native habitat in Starr Ranch from urban runoff. The District s seasonal storage and recycled water distribution systems have allowed for the diversion of flow that would otherwise impact Doheny Beach and lower San Juan Creek. By putting the water to reuse, it also reduces the need for imported water for irrigation and supplements the recycled water production. The District, in collaboration with Rancho Mission Viejo and the County of Orange, constructed the Gobernadora Multipurpose Basin to capture urban return flows, develop a wetlands treatment process and reduce peak storm flow rates generated in Coto de Caza. The project diverts low flows into an upper basin and the flows transverse a series of basins to settle debris and continue through wetlands for collection and reuse in the irrigation system. The project provided approximately 215 AF of new supply to the District, thus reducing demand for imported water. In addition, the facility is connected to the recycled water system allowing for conversion of the Portola Reservoir to recycled water. The water is delivered to parks, medians, slopes, golf courses and schools in Mission Viejo, Coto de Caza, Las Flores, Ladera Ranch, the Village of Sendero, Village of Esencia, the Talega community, and the City of San Juan Capistrano. In 2017, the District completed the award-winning (WateReuse Association Chapter, State and National Awards for Innovation) Lake Mission Viejo Advanced Water Treatment Facility, which can produce up to 300 AF of highly treated water for delivery to Lake Mission Viejo. This project is the first in the U.S. to provide highly-treated, recycled water for a man-made lake for recreational purposes, such as swimming. Wastewater System The District owns and operates an extensive sewage collection system of 630 miles of sewer lines and 21 lift stations, two wastewater treatment plants, and capacity in three reclamation plants. The District is also a member of SOCWA, a Joint Powers Authority, which operates regional treatment plants. The District owns or owns a portion of the capacity in the following six wastewater treatment plants, four out of which it also operates: v Jay B. Latham Wastewater Treatment Plant operated by SOCWA; v 3A Water Reclamation Plant, owned by MNWD and operated by SMWD; v Chiquita Water Reclamation Plant, owned and operated by the District; v Oso Creek Water Reclamation Plant, owned and operated by the District; v Nichols Water Reclamation Plant, a small plant operated by the District under contract with Quest Diagnostics; and APPENDIX 1: RESTRUCTURING OPTIONS 56 ATTACHMENT 1 - Page 105 of 230

106 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment v Los Alisos Water Reclamation Plant, operated by IRWD. The District is located in a series of hills and valleys and requires the operation of 21 sewage lift stations to pump wastewater to the various treatment plants. The lift stations are regularly maintained and tested to ensure continuous operation. Back-up power supplies are also maintained by the District in case of outages. All of the treatment plants, except for the Los Alisos Plant and Nichols Plant, are connected to the SOCWA Dana Point Ocean Outfall for disposal of secondary effluent if the water is not recycled. South Coast Water District South Coast Water District (SCWD), established in 1932, provides water and wastewater services to approximately 35, residents and 1,000 businesses in south coastal Orange County, California. The District is located to the south of the City of San Juan Capistrano. Figure 3-2 shows the District s OC LAFCO-approved boundary and sphere of influence, as well as the City of Laguna Beach area outside of the District s boundary that is receiving water distribution and wastewater collection services. The District currently serves an area of about 10 square miles that includes the majority of the City of Dana Point, a portion of the City of Laguna Beach (known as South Laguna Beach), and parts of the Cities of San Clemente and San Juan Capistrano. During normal hydrologic years, the District is 85 percent dependent on imported water. The remaining 15 percent is comprised of local groundwater sourced from the 1- MGD Groundwater Recovery Facility and recycled water. Since 2000, the District has operated, maintained, and administered the Joint Regional Water Supply System (JRWSS) that distributes imported drinking water from MWDSC throughout south Orange County. The system includes over 30 miles of water transmission mains and two reservoirs in San Clemente that hold a total of 60 million gallons of water. The JRWSS is jointly owned by and provides water to South Coast Water District, Irvine Ranch Water District, El Toro Water District, Moulton Niguel Water District, the City of San Juan Capistrano, the City of San Clemente, and three agencies of the San Diego County Water Authority (SDCWA), which are San Onofre Nuclear Generating Station, Camp Pendleton, and San Onofre State Park. 34 SWRCB - Division of Drinking Water, 2017, p1. APPENDIX 1: RESTRUCTURING OPTIONS 57 ATTACHMENT 1 - Page 106 of 230

107 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Figure 3-3: South Coast Water District APPENDIX 1: RESTRUCTURING OPTIONS 58 ATTACHMENT 1 - Page 107 of 230

108 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment The District also manages a unique sewer tunnel and main in South Laguna, which transports an average of 1.2 MGD of wastewater from Dana Point and South Laguna Beach to the Coastal Treatment Plant located to the east of Laguna Beach in unincorporated County land (Aliso and Wood Canyons Wilderness Park). SCWD is largely built out. Land use within the District is primarily residential with some commercial development associated with the destination resort communities. The projected resident population is anticipated to increase by approximately 3,264 people from 2015 to 2040, representing a total population growth of about 9.3 percent. Potable Water System The District's potable water distribution system is comprised of 158 miles of pipe, 13 reservoirs with 21.6 mg capacity, nine pump stations, and a Groundwater Recovery Facility with production capacity of 0.85 MGD. Additional storage is available from the Joint Regional Water Supply System, with 12.8 million gallons in the Bradt Reservoir; Santa Margarita Water District, with 16.6 million gallons in the Upper Chiquita Reservoir; and Moulton Niguel Water District, with 0.98 million gallons in Reservoir 1-E. The District s pipes are asbestos cement, transite, cast/ductile iron, steel, or PVC ranging in diameter from four to 24 inches. The District s design requirements limit the minimum pipeline size to eight-inch diameter. SCWD s standard is to maintain service pressures at an average of 65 psi. The existing potable water distribution system consists of the former SCWD (serving north) and Capistrano Beach (serving south) distribution systems. These two water systems operate as separate service areas under two separate State of California drinking water permits. There are emergency interconnections between the two water systems and with other nearby water agencies to enhance the District s water system reliability. The District receives its potable water supply from two main sources, consisting of local well water from the San Juan Groundwater Basin, under its own Water Rights Permit issued by the State Water Resources Control Board through agreement with the San Juan Basin Authority (SJBA), and imported water from MWDOC. The sources of the imported water supplies are the Colorado River and the State Water Project (SWP). The imported water is treated by MWDSC and delivered by MWDOC through the major conveyance systems serving south Orange County, including the Joint Regional System operated by SCWD and the South County Pipeline operated by SMWD. SCWD incorporated local groundwater into its water supply portfolio in 2008 with the construction of the 1- MGD Groundwater Recovery Facility (GRF). SCWD currently operates several water treatment facilities and has extensive experience with many different types of advanced treatment procedures. The District constructed a 1-MGD Groundwater Recovery Facility (GRF) in 2007 that produces potable water into the distribution system. The facility incorporates a reverse osmosis system and the District was awarded the Outstanding Membrane Plant of the Year in 2013 from the Southwest Membrane Operators Association. SCWD staff also operate and maintain 10 reservoir management systems that circulate potable water reservoirs, measure the chloramine disinfection levels and add chlorine and/or ammonia as needed to maintain the desired chloramine residual throughout APPENDIX 1: RESTRUCTURING OPTIONS 59 ATTACHMENT 1 - Page 108 of 230

109 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment reservoir. These facilities house units that generate the sodium hypochlorite solution onsite. SCWD also maintains seven groundwater monitoring wells with logging transducers. The information from these wells is provided to several hydrogeologists throughout the area. SCWD personnel provide technical input and guidance for the San Juan Basin Authority, Technical Advisory Group that oversees the groundwater basin. Recycled Water System Water recycling became a part of the District s operation in The recycled water system is comprised of 20 miles of recycled water pipes, three pump stations, two reservoirs (RW-1 with 2 million gallons of storage and RW-2 with 1.7 million gallons of storage), as well as the Advanced Wastewater Treatment (AWT) facility and Aliso Creek Water Reclamation Facility (ACWRF) with a combined maximum production capacity of 2,250 gallons per minute. Additionally, the recycled water system has the right to store up to 1 MGD of recycled water in the Moulton Niguel Water District Reclaimed Water Reservoir RW-3. The District operates the ACWRF an ultrafiltration and reverse osmosis membrane system that treats creek water and/or recycled water to lower the overall total dissolved solids (TDS) of the recycled water. The ACWRF was constructed in 2014 and treats 500,000 gpd. SCWD s and MNWD s recycled water systems are interconnected via Recycled Water Reservoir #3 (RW3), providing recycled water flows to both agencies as necessary. Recycled water is used to irrigate parks, golf course, various private properties, sports fields, and greenbelts. Over the past three years, SCWD was awarded two separate Proposition 84 grants to extend their recycled water system to the Dana Point Harbor area and relieve the hydraulic bottleneck in the recycled water system in the Pacific Coast Highway. Both of these projects have been completed. Wastewater System The District owns and operates a wastewater collection system comprised of 13 lift stations, 140 miles of pipe, 3.2 miles of force mains, and a two-mile 24-inch sewer interceptor line housed within a tunnel. The wastewater collection system consists of three separate service areas that operate independently, including the South Coast System, the Dana Point System, and the Capistrano Beach System. The South Coast System collects wastewater from areas along Pacific Coast Highway (PCH) from south Laguna Beach to the northern part of the City of Dana Point. Sewer lift stations 1 and 3 through 6 are located along PCH to convey flows from sewer subbasins to lift station 2 where flows are pumped to the 6.7-mgd Coastal Wastewater Treatment Plant. The Dana Point System collects wastewater through lift station 8 through 11 and conveys wastewater to the 13-mgd J.B. Latham Treatment Plant. The Capistrano Beach System includes lift stations 13 and 14 along the coast and conveys wastewater to lift station 12, where it is pumped to the J.B. Latham Treatment Plant. APPENDIX 1: RESTRUCTURING OPTIONS 60 ATTACHMENT 1 - Page 109 of 230

110 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment In 2001, the District joined nine other sewer agencies and cities to form SOCWA as a joint power authority to treat wastewater. The District has approximately 6 MGD of capacity in Coastal Treatment Plant and J.B. Latham Plant owned by SOCWA. The District treats secondary effluent from SOCWA in its Advanced Wastewater Treatment plant operated by SOCWA adjacent to the Coastal Treatment Plant. Surface Water Treatment System SCWD is contracted to operate and maintain two storm-water runoff treatment facilities. The County of Orange Poche Clean Beach Facility uses filtration and UV disinfection to remove pathogens from urban runoff before the water enters the ocean. The City of Dana Point Salt Creek Ozone Treatment Facility also uses filtration and ozone disinfection to remove pathogens from urban runoff before the water enters the ocean. SCWD personnel provide all maintenance and operation services for these facilities. Litigation As was previously mentioned in the Moulton Niguel Water District section, South Coast Water District along with SOCWA, City of Laguna Beach and Emerald Bay Service District filed a lawsuit against MNWD in 2017 for failure to pay its contractual obligations for the Coastal Wastewater Treatment Plant. Each of the four agencies was listed as plaintiffs in the complaint. MNWD countersued. The parties are still in litigation as of the drafting of this report. The case is currently pending before the Superior Court of California, County of Riverside, Case No. RIC , and is set for trial on October 12, Proximity Infrastructure/Connections COMPATIBILITY All four agencies have infrastructure that is in close proximity to each other or, in several cases, already provides some connection to the City s infrastructure systems. In many cases, the districts have infrastructure that extends into the City and serves city residents, including the following: v Both MNWD/City-owned (Eastern Transmission Main) and SMWD-owned (SMWD s South County Pipeline) and maintained pipelines provide imported water to the City. v The City maintains emergency interconnections with SMWD (three), SCWD (five), and MNWD (one). v MNWD provides water services to 14 connections along Camino Capistrano, Rancho Capistrano, and Peppertree Bend. v MNWD provides wastewater service to Hidden Creek Estates, as well as the Hamilton Oaks Winery and several connections along Camino Capistrano, Rancho Capistrano, and Peppertree Bend by agreement. 35 Correspondence from MNWD, 5/2/18. APPENDIX 1: RESTRUCTURING OPTIONS 61 ATTACHMENT 1 - Page 110 of 230

111 v One of SMWD s sewer mains extends into the City. Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment v SCWD provides sewer services to 143 parcels within the city limits. Both sewer and water conveyance infrastructure appear to run parallel or directly connect in various locations near the north, northwestern part of the City. The following figures provide illustrations as to the proximity of all the infrastructure systems of adjacent agencies in relation to the City s various systems. Based on GIS analysis, of all the districts adjacent to the City, MNWD has the most infrastructure that extends into the City. Administrative and Operational Headquarters Proximity also relates to where the District has its administrative and operational headquarters in relation to the City. It would be inconvenient for city customers to drive long distances to visit the billing office or to attend a governing body meeting. The districts are all about equidistant from the City s existing utility administrative building. SCWD s administrative office is 6.9 miles from the City office, while its operational headquarters is less than one mile from the City s office. SMWD is 8.1 miles and MNWD is 8.8 miles away. However, the drive time is about 15 minutes to any of the three administration offices, so it appears that in regard to proximity of administration, the three districts are equally positioned to serve the City s constituents. With regard to operations, SCWD s operational headquarters is the nearest to the City from which it would be responding to emergencies or requests for services. Additionally, every other SCWD board meeting is held in Dana Point, which would be the nearest governing body meeting locale for city residents. APPENDIX 1: RESTRUCTURING OPTIONS 62 ATTACHMENT 1 - Page 111 of 230

112 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Figure 3-4: City of San Juan Capistrano and Moulton Niguel Water District Water Systems APPENDIX 1: RESTRUCTURING OPTIONS 63 ATTACHMENT 1 - Page 112 of 230

113 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Figure 3-5: City of San Juan Capistrano and Moulton Niguel Water District Recycled Water Systems APPENDIX 1: RESTRUCTURING OPTIONS 64 ATTACHMENT 1 - Page 113 of 230

114 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Figure 3-6: City of San Juan Capistrano and Moulton Niguel Water District Sewer Systems APPENDIX 1: RESTRUCTURING OPTIONS 65 ATTACHMENT 1 - Page 114 of 230

115 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Figure 3-7: City of San Juan Capistrano and South Coast Water District Water Systems APPENDIX 1: RESTRUCTURING OPTIONS 66 ATTACHMENT 1 - Page 115 of 230

116 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Figure 3-8: City of San Juan Capistrano and South Coast Water District Recycled Water Systems APPENDIX 1: RESTRUCTURING OPTIONS 67 ATTACHMENT 1 - Page 116 of 230

117 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Figure 3-9: City of San Juan Capistrano and South Coast Water District Sewer Systems APPENDIX 1: RESTRUCTURING OPTIONS 68 ATTACHMENT 1 - Page 117 of 230

118 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Figure 3-10: City of San Juan Capistrano Santa Margarita Water District Water Systems APPENDIX 1: RESTRUCTURING OPTIONS 69 ATTACHMENT 1 - Page 118 of 230

119 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Figure 3-11: City of San Juan Capistrano Santa Margarita Water District Recycled Water Systems APPENDIX 1: RESTRUCTURING OPTIONS 70 ATTACHMENT 1 - Page 119 of 230

120 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Figure 3-12: City of San Juan Capistrano Santa Margarita Water District Sewer Systems APPENDIX 1: RESTRUCTURING OPTIONS 71 ATTACHMENT 1 - Page 120 of 230

121 Topography Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment The City and surrounding districts are located along the Pacific Ocean coast and the base of the Saddleback formation section of the Santa Ana Mountains. The elevation for the area slopes from east to west at about 1,000 feet above sea level down to sea level at the Pacific Ocean. The City is located within a relatively flat portion of the region with the adjacent districts having more of the varying terrain formations, such as small hills or ridges (Figure 3-13). As shown in the Proximity section of this chapter, there are existing instances where the City s infrastructure runs either parallel or directly connects to adjacent districts various systems. All of these connections generally follow areas that are relatively flat, where there may be other infrastructure already installed, such as roads or highways. These connections generally occur at the north and south sections of the City along Interstate 5 and the northeastern portion of the City along Highway 74. Generally speaking, most infrastructure utilizes gravity for flows in order to lower pumping and electricity costs. It is cost prohibitive to pump water or effluent to higher elevations. Therefore, areas that show more topographic variation would be prohibitive to establishing new connections. Both MNWD and SMWD wastewater treatment facilities are located at higher elevation and would require lifting of the City s wastewater. Because SCWD provides wastewater collection services to a portion of the City, that flow is collected and transferred to the treatment plant through its own system via the most efficient route. Thus, the existing system is likely most efficient as it exists with primarily gravity flows to the jointly-owned JBL Plant. For water purposes, the agencies have already located their emergency interconnections with the City system in the preferred topographic locations. Imported water is gravity fed through the two pipelines serving the City. Additionally, MNWD s water system extends into the City s boundaries and serves parcels where topographically logical in the northern portion of town along Interstate 5. SMWD maintains connections on the east side of Interstate 5 and has higher pressure zones allowing the District to utilize gravity for domestic water, recycled water, and emergency supply to the City. While SCWD is topographically similar to the City, it maintains five interconnections with the City at points where it is able to provide emergency water flow via pumping or gravity. APPENDIX 1: RESTRUCTURING OPTIONS 72 ATTACHMENT 1 - Page 121 of 230

122 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Figure 3-13: City of San Juan Capistrano Regional Topography APPENDIX 1: RESTRUCTURING OPTIONS 73 ATTACHMENT 1 - Page 122 of 230

123 Size and Scope of Operations Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment A successor agency should have a size and scope of operations that is at least comparable to that of the City to better understand the issues and challenges to running a system of that size. However, at the same time the agency will need to have a sufficient size of operations in order to handle taking on the City s system and related demand for services. Table 3-1 details the size of the operations of the City and each of the potential successor agencies. CSJC is most comparable in size to SCWD for both the water and wastewater systems. MNWD and SMWD serve five times more water and wastewater connections than the City, which is reflected in the significantly larger size of their systems and related capacity, including pipeline mileage, storage capacity, and treatment facilities. The City and SCWD are also similar in that they supplement their water supply with groundwater and both own and maintain groundwater recovery plants, which demonstrates SCWD s particular experience in operating wells and groundwater treatment plants, which sets it apart from SMWD and MNWD. Unlike all three of the potential successor agencies, the City does not own or operate a wastewater treatment facility or advanced wastewater treatment plant to supplement the operations of the joint regional facilities. The City also does not develop any of its own recycled water, save for the non-potable well water that is blended with imported recycled water. All three of the districts offer experience in building and expanding recycled water systems that could benefit the City. Additionally, all three of the districts offer experience in water distribution operations and expansion of distribution systems. Table 3-1: Agency Scope of Operations Infrastructure and Scope of Operations MNWD SCWD SMWD SJC Estimated Population (2017) 173,280 35, ,000 36,262 Domestic System Connections 54,075 12,360 54,214 11,572 Miles of Water Mains Maximum Storage Capacity (MG) Tanks and Storage Reservoirs Wells Pump Stations Groundwater Recovery Facility APPENDIX 1: RESTRUCTURING OPTIONS 74 ATTACHMENT 1 - Page 123 of 230

124 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Flow (MGD) (2017) MNWD SCWD SMWD SJC Recycled System Connections 1, , Miles of Water Mains Maximum Storage Capacity (MG) , Tanks and Reservoirs Pump Stations Advanced Wastewater Treatment Plant (owned) Flow (MGD) (2017) MNWD SCWD SMWD SJC Sewer System Connections 51,200 17,801 51,269 9,590 Miles of Sewer Line Lift Stations Treatment Plants (owned) Treatment Capacity (MGD) Average Flows (MGD) (2017) FY One at SOCWA JRTP and one at Plant 3A operated by SOCWA and SMWD respectively. 38 Consisting of the AWT at the CTP operated by SOCWA and the Aliso Creek Water Reclamation Facility at the CTP. 39 SMWD makes use of five wastewater treatment plants, two of which it solely owns and operates and are within its service area and one of which it jointly owns with MNWD and operates on behalf of both districts. Tertiary treated effluent from all three plants owned by SMWD is used for recycled purposes within its service area. 40 FY SMWD makes use of five wastewater treatment plants, two of which it solely owns and operates and are within its service area and one of which is owned by MNWD and operated by SMWD on behalf of both districts. APPENDIX 1: RESTRUCTURING OPTIONS 75 ATTACHMENT 1 - Page 124 of 230

125 Agreement Transferability Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment It is essential that the successor agency be capable of taking on the existing agreements to which the City is party. Based on review of the agreements and agency responses for information, it appears that there are no known constraints that would limit the ability to transfer the various agreements to any of the three potential successors. The agreements reviewed included the following: v Various SOCWA agreements, v Joint powers agreement forming the San Juan Basin Authority and other related agreements, v Settlement agreement between CSJC, SJBA, and San Juan Hills Golf Club, v Recycled Water Purchase Agreement Between the CSJC and MNWD, v Licenses for wastewater system interconnections between CSJC and MNWD, v Agreement for water interconnections between CSJC and MNWD, v Agreement for sewer services by the City to areas within MNWD, v Water purchase agreement from MNWD by the CSJC, v Emergency water interconnection agreements between CSJC and SCWD, v Emergency water interconnection agreement between CSJC and SMWD, v A joint exercise of powers agreement to operate and maintain the joint transmission facilities, v Agreement for an emergency interconnection between CSJC and City of San Clemente, v Capacity agreements for the Allen-McColloch Pipeline v Agreements for service between MNWD and the City at tentative parcel map , v Contract for Meter Reading Services between SMWD and City, v Agreement for Capacity in SMWD's Upper Chiquita, v South County Pipeline Operation and Maintenance Agreement, and v Service Connection No. 4 Agreement with SMWD. There are a substantial number of agreements to account for the intermingling of the various systems and multiple regional joint efforts. However, a majority of the agreements are with one or many of the three potential successor agencies; therefore, the districts are all experienced with the voluminous web of agreements in place. Additional analysis and discussions may be warranted to ensure that the rights of private entities, such as the San Juan Hills Golf Club and others in the City would be protected and appropriately accounted for if the City s water and capacity rights were to be transferred. (The City has an agreement with the Golf Club to provide irrigation water from the City s Well #5, supplemented with domestic water as may be needed.) APPENDIX 1: RESTRUCTURING OPTIONS 76 ATTACHMENT 1 - Page 125 of 230

126 Shared Services Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment As already mentioned and outlined in Table 3-2, each of the districts share infrastructure and provide services to the City in various manners. Table 3-2: District Shared Services and Infrastructure with CSJC MNWD SMWD SCWD Importing of water via district-owned pipeline Emergency interconnection Water and wastewater services to select parcels within city limits Provision of recycled water Collection of city wastewater through a district-owned sewer line Responded to city emergency requests Installation of remote meter reading tower on CSJC s building Importing of water via district-owned pipeline Emergency interconnections Contract meter reading services Emergency response services Sharing of reservoir capacity Provision of recycled water In contract negotiations to provide other sewer maintenance services Developing additional recycled water sources for the City Emergency interconnections Wastewater services to select parcels within city limits Receives City s wastewater for select parcels into its collection system Maintenance of the City s storm drain system In addition to cooperative and sharing agreements with the City, each of the districts makes efforts at collaboration on a regional level. The three agencies are members of several regional agencies, including the San Juan Basin Authority, SOCWA, MWDOC, JRWSS, and the Water Emergency Response Organization of Orange County (WEROC), which provides for shared services during emergencies. Furthermore, as described in the overview of each district s water and wastewater systems, the districts make substantial efforts to capitalize on regionally shared facilities through regional agencies and individual agreements between neighboring districts. In addition, each agency has undertaken resource sharing efforts as described below. MNWD SMWD 1. Led the creation of the California Data Collaborative, which focuses on compiling water industry data and developing standards for that data. This work enables better collaboration, helps public agencies make informed decisions and facilitates leading research and private sector volunteer work. 2. Organized a working group, including five local cities, the County of Orange, and local non-governmental environmental organizations to disseminate lessons learned in urban runoff reduction and evaluate the impact of new strategies to reduce irrigation over-watering. 1. Providing financial and accounting services for the San Juan Basin Authority by contract agreement. APPENDIX 1: RESTRUCTURING OPTIONS 77 ATTACHMENT 1 - Page 126 of 230

127 SCWD Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment 2. Providing operational services by contract for the Rancho Mission Viejo Private Domestic Water System, including all regulatory reporting. 3. Providing operational services by contract for the Nichols Institute water and wastewater systems, including all regulatory reporting. 4. Providing management, financial and engineering services to the Fenner Valley Water Authority by agreement. 5. Providing management and financial services to the Dana Point Authority by agreement. 6. Joint trench safety training with Orange County Fire Authority. 1. SCWD provides well maintenance, data logging and well reading services to the San Juan Basin Authority. 2. SCWD operates the Joint Regional Water Supply System (JRWSS) by contract for its member agencies. Water is provided via the JRWSS system to CSJC and MNWD via the Eastern Transmission Main and the Joint Transmission Main. 3. SCWD provides Operation & Maintenance of the Salt Creek Ozone Facility to the City of Dana Point by agreement since SCWD provides sewer lift station inspection and cleaning services and sand trap cleaning services by agreement at Strands Beach for the City of Dana Point. 5. SCWD provides sewer maintenance services by agreement for the City of Dana Point Community Center. 6. SCWD provides Treatment Facility Operation Services for the Poche Clean Beach Project to the County of Orange by agreement since SCWD provides bi-annual maintenance and inspection services by agreement (lift stations and sewer collection system) at Doheny State Beach for the California Department of Parks and Recreation. 8. SCWD provides quarterly sewer maintenance and cleaning services to private establishments and utilities on a time and materials basis. Water Supply Reliability Moulton Niguel Water District (MNWD) MNWD has adopted a policy to evaluate and develop reliability projects and demand management measures that will provide 31 days of average demand water supply to MNWD customers. Since 2008, MNWD has achieved more than 75 percent of the stated target (24 days) with the implementation of the Baker WTP, and other water reliability projects and demand management programs. MNWD does not currently have any exchange or transfer agreements in place. However, MNWD is always evaluating opportunities for local and regional exchanges to provide greater system and long-term reliability. APPENDIX 1: RESTRUCTURING OPTIONS 78 ATTACHMENT 1 - Page 127 of 230

128 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Although pipeline capacity rights do not guarantee the availability of water, they do guarantee the ability to convey water when it is available to MNWD s distribution system and, therefore, operate in tandem with water entitlements and/or contracts to receive supplemental water for purposes of demonstrating not only water supply reliability, but also physical delivery system reliability. MNWD is part of an emergency interconnection agreement with IRWD to supply treated Phase 1 water at 10.6 MGD with a maximum flow rate of 15.6 cfs for 30 days. The maximum incident volume IRWD will supply is 1,768 AF. The agreement also provides emergency water to the City of San Clemente, Laguna Beach County Water District, SMWD, and SCWD. Under the agreement, IRWD and the participating agencies jointly constructed various projects to transfer water to the Aufdenkamp Transmission Main and Joint Transmission Main. MNWD has capacity rights of 52 percent and is responsible for the same percentage of project costs and ongoing operations and maintenance. Water delivered through the interconnection is MWDSC water or locally produced water exchanged for MWDSC water. The option is not designed to address droughts, but only to be used during emergency conditions when MWDSC facilities are disrupted due to seismic events or unplanned outages. The capacity right decreases over time, ultimately reaching zero in 2030 per the agreement. MNWD - Reliability of Water Supply MNWD s recycled water supply is a highly reliable supply; however, various factors have the potential to affect the availability and reliability of MNWD s imported supply from MWDSC, including water quality, climate change, regulatory and operational changes, project construction and implementation issues, infrastructure reliability and maintenance, and demographic and growth uncertainty. 42 Because MNWD has relied on imported water supplies (in addition to recycled water) to meet its demands, the reliability levels during all hydrologic year types reflect MWDSC s determination of its ability to reliably meet the demands of its member agencies. Notably, the MWDSC 2015 UWMP determines that MWDSC is able to meet the current and projected full service demands of its member agencies under all three hydrologic conditions through In accordance with MNWD s internal analysis and based on the 2015 UWMPs prepared by MWDSC and MWDOC, MNWD is capable of meeting its customers demands in all hydrologic year types through 2040, even with a potential bump in dry year demands. MNWD - Potential Future Water Supply As part of MNWD s 2014 Long Range Water Reliability Plan, MNWD evaluated new desalination projects amongst a variety of stages of planning. A conceptual desalination project was evaluated and assumed to be developed at either the Huntington Beach and/or Dana Point facility, which would provide MNWD with up to 14,000 AFY. The supply would be delivered directly or in-lieu into MNWD s service area, providing both supply and system reliability benefits. 42 UWMP p. 60 APPENDIX 1: RESTRUCTURING OPTIONS 79 ATTACHMENT 1 - Page 128 of 230

129 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Expansion of MNWD s existing recycled water system for non-potable reuse can reduce the need for treated imported water and improve reliability. Part of the ongoing District s Recycled Water Master Plan is to serve the remaining irrigation customers currently supplied with potable water with recycled water. The District recently completed a Recycled Water Master Plan identifying upwards of 1,300 AF of existing irrigation accounts that could be cost-effectively converted to reliable recycled water accounts. The final analysis with specified customer accounts, and their corresponding connections, that can be converted is scheduled to be released in Fall The State of California recently released a framework to develop standards for direct potable reuse by The District has historically aggressively pursued the expansion of its recycled water system; however, after the remaining 1,300 AF of demand is converted, the District has determined that the most cost-effective utilization of its remaining wastewater would be through direct potable reuse, which could provide approximately 3,000 AF per year of local potable water. The District is currently evaluating watershed projects in the Aliso Watershed through a stakeholder process and integrated planning efforts. Local cities and the County of Orange are faced with upwards of $1 billion in regulatory compliance costs associated with keeping unnatural flows from local creeks and the ocean in South Orange County. The District is currently studying the potential to divert urban and storm flows into the excess wastewater treatment capacity owned by the District. These diversions can potentially both reduce the overall compliance costs as well as provide a local new water supply source. The District is in the process of developing test wells to evaluate the groundwater yield in the Aliso Watershed and potential for use as a local water supply. The District is in the conceptual stage and is expecting preliminary results in mid MNWD sees potential to collaborate with the City of San Juan Capistrano based on the City s existing expertise in groundwater pumping and using groundwater as a non-potable water supply which would provide mutual benefits. MNWD has been working with the Orange County Water District to better understand available capacity in its groundwater basin and pilot a program for emergency supplies that could ultimately benefit a variety of Orange County agencies. The Orange County Water District is planning to update its Orange County Groundwater Basin Storage and Operational Strategy this year, as well as address water storage program requests being made by MNWD and other agencies. Santa Margarita Water District SMWD - Reliability of Water Supply Every urban water supplier is required to assess the reliability of their water service to its customers under normal, dry, and multiple dry water years. SMWD depends on a combination of imported and local supplies to meet its water demands and has taken numerous steps to ensure it has adequate supplies including participation in the Baker Treatment Plant, the IRWD intertie, the development of the Upper Chiquita Reservoir, and the El Toro Reservoir. Development of various local water augmentation projects will increase the reliability of the imported water system. There are various factors that may impact reliability of supplies such as legal, environmental, water quality and climate, which are discussed below. The water supplies are projected to meet full-service demands; MWDSC s 2015 UWMP finds that MWDSC is able to meet, full-service demands of its APPENDIX 1: RESTRUCTURING OPTIONS 80 ATTACHMENT 1 - Page 129 of 230

130 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment member agencies starting 2020 through 2040 during normal years, single dry year, and multiple dry years. MWDSC s 2015 Integrated Water Resource Plan (IRP) update describes the core water resources that will be used to meet full-service demands at the retail level under all foreseeable hydrologic conditions from 2020 through The foundation of MWDSC s resource strategy for achieving regional water supply reliability has been to develop and implement water resources programs and activities through its IRP preferred resource mix. This preferred resource mix includes conservation, local resources such as water recycling and groundwater recovery, Colorado River supplies and transfers, SWP supplies and transfers, in-region surface reservoir storage, in-region groundwater storage, out-ofregion banking, treatment, conveyance and infrastructure improvements. In the event of a local source not available at a consistent level of use, it will be supplemented with imported water from MWDSC through MWDOC SMWD - Potential Future Water Supply SMWD has actively pursued water supply reliability through water transfers. Water transfers are a reliable and cost-effective means to provide supply for specific purposes such as supplementing dry year supplies. SMWD will continue to pursue water transfers as an alternative water supply and is currently working with MWDOC and other agencies to investigate possible transfers. SMWD is the lead agency in the Cadiz Water Project and has rights to purchase 5,000 AFY with an option for additional 10,000 AFY once completed, Supplemental Dry Year Agreements are transfer agreements that are triggered under specific conditions when supplies from MWDSC are limited. The District is currently working with MWDOC, Inland Empire Utilities Agency, Cucamonga Valley Water District (CVWD), and Golden State Water Company (GSWC) to potentially deliver water to the Santa Ana River for infiltration and ultimate extraction through the Orange County Groundwater Basin, subject to agreement with Orange County Water District (OCWD). In dry years, CVWD will deliver up to 4,250 AFY of water and GSWC will deliver up to 2,000 AFY of water to SMWD. Additionally, SMWD is in partnership with CSJC and SCWD in the San Juan Watershed Project, which will involve recharge of stormwater flows, urban run-off and tertiarytreated wastewater storage into the San Juan groundwater basin to enhance safe yield and provide new local water to the participants. The CEQA documentation for the first phase is being finalized. SMWD also has a long-standing letter of intent to purchase water from the Poseidon Huntington Beach Desalinization project once that project is completed. In addition, as part of its current Strategic Plan, the District is considering additional projects including participation in the proposed SCWD Doheny Desalination Plant; development of direct potable reuse including a research project with University of California, Irvine for treatment options; and development of a drinking water supply from additional groundwater through the Upper San Juan Basin. MWDOC continues to help its retail agencies develop transfer and exchange opportunities that promote reliability within their systems. Therefore, MWDOC will look to help its retail agencies navigate the operational and administrative issues of transfers within the MWDSC distribution system. APPENDIX 1: RESTRUCTURING OPTIONS 81 ATTACHMENT 1 - Page 130 of 230

131 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment SMWD s Integrated Resources Plan includes water storage opportunities being considered by the District, including Orange County Water District Groundwater Basin agreements and expansion of the existing intertie agreement. In addition, the District is considering storage in the Irvine Lake for supplemental flows to the Baker Water Treatment Plant. The District is also considering water banking opportunities and the formation of the South Orange County Water Storage Coalition with other South County Agencies. The banking opportunities include IRWD s Strand Ranch in Bakersfield, the Chino Basin Water Bank, and water storage in the Fenner Valley. SMWD has a commitment to recycling 100 percent of its wastewater, collection of urban return flows and inter-agency agreements for additional supply. The District is currently constructing the 5,000 AF Trampas Recycled Water Seasonal Storage Reservoir, which, coupled with the 4,000 AF Upper Oso Reservoir and 500 AF Portola Reservoir, will provide peak summer supplies for SMWD as well as the City of San Juan Capistrano. In addition, the District developed a master plan to expand the treatment capacity of the Chiquita Water Reclamation Plant, and the jointly owned 3A Water Reclamation Plant with identified supplies of 700 AF for the City of San Juan Capistrano. SMWD is also finalizing an agreement with the City of San Clemente to purchase its excess recycled water similar to the agreement in place with IRWD and MNWD. SMWD and the City have reviewed the City s master plan and planned for a backbone system interconnecting the recycled systems and providing recycled water to new users in the City primarily construction of a supply watermain along San Juan Hills Road to supply a large portion of the existing demands for approximately $28/AF in capital costs. South Coast Water District SCWD - Reliability of Water Supply SCWD depends on a combination of imported and local supplies to meet its water demands and has taken numerous steps to ensure it has adequate supplies. SCWD performed its own Water Reliability Study and also created a Water Reliability Working Group. MWDSC s 2015 UWMP finds that MWDSC is able to meet the full-service demands of its member agencies from 2020 through 2040 during normal years, single dry year, and multiple dry years. MWDSC s 2015 Integrated Water Resources Plan (IRP) update describes the core water resources that will be used to meet full-service demands at the retail level under all foreseeable hydrologic conditions from 2020 through SCWD is part of a regional emergency interconnection agreement with IRWD to supply treated water. The maximum incident volume IRWD will supply is 1,768 AF. The agreement also provides emergency water to the City of San Clemente, Laguna Beach County Water District, SMWD, and SCWD. Under the agreement, IRWD and the participating agencies jointly constructed various projects to transfer water to the Aufdenkamp Transmission Main and Joint Transmission Main. SCWD has capacity rights of eight percent and is responsible for the same percentage of project costs and ongoing operations and maintenance. Water delivered through the interconnection is MWDSC water or locally produced water exchanged for MWDSC water. The option is not designed to address droughts, but only to be used during emergency conditions when MWDSC APPENDIX 1: RESTRUCTURING OPTIONS 82 ATTACHMENT 1 - Page 131 of 230

132 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment facilities are disrupted due to seismic events or unplanned outages. The capacity right decreases over time, ultimately reaching zero in 2030 per the agreement. SCWD - Potential Future Water Supply MWDOC continues to help its retail agencies develop transfer and exchange opportunities that promote reliability within the system. Therefore, MWDOC will look to help its retail agencies navigate the operational and administrative issues of wheeling water through the MWDSC distribution system. Currently, there are no transfer or exchange opportunities. SCWD proposes to develop an ocean water desalination facility in Dana Point at Doheny State Beach (Doheny Ocean Desalination Project). The Doheny Ocean Desalination Project and other planned supply reliability and enhancement projects are identified in the District s Five-Year Capital Improvement Program and Final 2017 Infrastructure Master Plan. The Doheny Ocean Desalination Project objectives include: (1) development of a drought-proof, reliable potable water supply; (2) further diversification of the District s water supply portfolio, adding to SCWD s aggressive water conservation, recycling, and groundwater programs; and (3) providing emergency backup water supplies from a disruption of imported water supplies (e.g., earthquake, longer term MWD system shutdowns, etc.). Phase1 of the project would include an initial capacity of up to five MGD, with potential for future expansions up to 15 MGD. The EIR was released for public review, with the comment period ending on August 6, Committed funding sources for the project include a $10 million Proposition 1 desalination grant from the State. SCWD is also applying for a low interest State Revolving Fund loan and a Local Resources Program (LRP) funding. In addition to Doheny Ocean Desalination as a future water supply, the District has two additional future water supply projects as follows: 20 percent partner in the San Juan Watershed Project Phase 1 and additional recycled water expansion projects. Phase1 of the SJWP will enhance water reliability for South Orange County by capturing local storm water runoff, by constructing and implementing rubber dams to capture and filter stormwater runoff. SMWD is the lead agency for this project. The SCWD Board approved a 20 percent cost share of Phase 1. SCWD has $400,000 budgeted for the project in FY18-19 and $3,000,000 planned for FY The funding source is the SCWD operating budget, which is garnered from the consumers as part of their rate structure. In summary, as shown in Table 3-3, each of the districts rely heavily on imported water with recycled water for non-potable uses making up a majority of the remainder. SCWD makes use of some local groundwater. All three of the districts have indicated several potential projects that aim at diversification of their water portfolios to minimize reliance on a single water source. Table 3-3: Actual District Water Supply by Source, UWMP 2015 MNWD SMWD SCWD CSJC Groundwater 0% 0% 2.6% 30.1% Imported 77.1% 78.2% 84.7% 64.0% Recycled 22.9% 21.8% 12.7% 5.9% APPENDIX 1: RESTRUCTURING OPTIONS 83 ATTACHMENT 1 - Page 132 of 230

133 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment System Capacity for Additional Flow While combining any of the three districts facilities with CSJC may not provide for any additional flow capacity, it will provide opportunities for limited improved flow conditions in some areas. The most significant advantage of combining the systems will be the increased pipeline capacity rights. This could provide more opportunities for water delivery management that increase efficiency and reduce operational costs. In all sectors, water usage decreases from 2015 until Usage from 2025 to 2030 slightly increases. This is due to the tightening of water budgets until 2025 that will then remain constant through 2030 and continued moderate population increases. 43 Water Source Capacity Moulton Niguel Water District The following Table 3-4 from MNWD s UWMP 2015 presents a comparison between projected MNWD water demands and the availability of future supplies to meet these demands under normal or average years through Supply totals reflect imported water and recycled water. The projected imported supply is based on projected average year water purchases from MWDOC. This is added to the approximately 8,000 AFY of recycled water availability. Notably, both MWDSC and MWDOC have documented that they can reliably meet the full demands of their respective member agencies over the next 20 years and beyond during average/normal year periods. Table 3-4: MNWD Normal Year Water Supply and Demand Normal Year Supply and Demand Comparison Supply Totals 40,929 44,178 44,938 45,391 45,391 Demand Totals 35,915 35,701 35,158 35,154 35,225 Difference 5,014 8,477 9,781 10,237 10,166 Santa Margarita Water District The following Table 3-5 from SMWD s UWMP 2015 details the District s future water supply portfolio through Additionally, the District s projected supply and demand under various hydrological conditions are compared to determine the District s supply reliability for the planning horizon. Notably, both MWDSC and MWDOC have documented that they can reliably meet the full demands of their respective member agencies over the next 20 years and beyond during average/normal year periods. 43 SMWD Demand Forecast, M.Cubed, January APPENDIX 1: RESTRUCTURING OPTIONS 84 ATTACHMENT 1 - Page 133 of 230

134 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Table 3-5: SMWD Normal Year Water Supply and Demand Normal Year Supply and Demand Comparison Supply Totals 40,785 41,511 41,330 39,865 39,715 Demand Totals 37,273 37,992 37,816 36,360 36,210 Difference 3,512 3,519 3,514 3,505 3,505 South Coast Water District Table 3-6, from SCWD s UWMP 2015, has documented that the water supply is 100 percent reliable for normal year demands from 2020 through The District has entitlements to receive imported water from MWDSC through MWDOC via connections to MWDSC 's regional distribution system. Although pipeline and connection capacity rights do not guarantee the availability of water, per se, they do guarantee the ability to convey water when it is available to the MWDSC distribution system. All imported water supplies are assumed available to the District from existing water transmission facilities. The UWMP report states that for a single dry year and multiple dry year period, SCWD is capable of meeting all customers demands with significant reserves held by MWDSC, local groundwater supplies, and conservation during multiple dry years from 2020 through 2040 with a demand increase of nine percent from normal demand. Notably, both MWDSC and MWDOC have documented that they can reliably meet the full demands of their respective member agencies over the next 20 years and beyond during average/normal year periods. Table 3-6: SCWD Normal Year Water Supply and Demand Normal Year Supply and Demand Comparison Supply Totals 8,515 8,735 8,735 8,735 8,735 Demand Totals 6,609 6,853 7,220 7,569 7,645 Difference 1,906 1,882 1,515 1,166 1,090 Staffing Levels Moulton Niguel Water District The District has 36.5 full-time equivalents (FTEs) dedicated to the water system operation and maintenance and another 21.5 FTEs dedicated to the wastewater system. MNWD currently has 139 total FTE employees performing the various roles defined in 112 different job classifications. MNWD delivers potable water services to 54,075 connections with 36.5 dedicated full-time equivalents (1,482 connections per FTE). The District APPENDIX 1: RESTRUCTURING OPTIONS 85 ATTACHMENT 1 - Page 134 of 230

135 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment provides wastewater services to 51,200 connections with 21.5 dedicated full-time equivalents (2,381 connections per full-time equivalent). Santa Margarita Water District SMWD has 44 FTEs dedicated to its water system, and another 44 FTEs dedicated to the wastewater system. The staffing level is equivalent to 1,267 water connections per FTE and 1,165 wastewater connections per FTE. The District emphasizes cross-training and staffing at a level to accomplish the work required, meaning many of the staff are capable of working on both utility systems. SMWD does not have an adopted staffing standard, but instead evaluates its staffing levels based on the proposed projects and business planning annually. Certain goals drive the staffing of some positions, such as meter reading and valve turning. South Coast Water District SCWD maintains 15 FTE employees dedicated to the Water Distribution Department and 11 FTEs dedicated to the Collection System Department. In addition, many district positions split their time between the Water Distribution Department and Sanitary Collection Department, including the Chief Operations Officer, Assistant Chief Operations Officer, Water Quality Technician, Senior Electrical Technician, SCADA Automation Programmer, CMMS Administrator, and O & M Technician. For the purposes of this report, these seven positions are assumed to spend their time equally working for each department adding another 3.5 FTEs to each department s employee allocation. Based on these staffing levels, SCWD has a ratio of 668 water connections per FTE and 1,228 wastewater connections per FTE. SCWD does not appear to have a staffing level standard that it strives to maintain; however, the District has completed a Cost of Service analysis and follows AWWA/WEFTEC effective utility management standards for system staffing. Table 3-7: Agency Staffing Levels MNWD SCWD SMWD City Total Staff Water Operations Staff 36.5 FTEs 18.5 FTEs 44 FTEs FTEs Wastewater Operations Staff 21.5 FTEs 14.5 FTEs 44 FTEs 0.83FTEs 45 Water Connections per FTE 1, , Wastewater Connections per FTE 2,381 1,228 1,165 11, Number of Water and/or Wastewater funded positions in the Utilities Department 45 The City makes use of minimal staff for operation of the wastewater system as it does not operate a treatment plant, maintains just the collection system, contracts out a majority of its cleaning, video, and inspection, and makes use of SMWD for contract emergency response services. APPENDIX 1: RESTRUCTURING OPTIONS 86 ATTACHMENT 1 - Page 135 of 230

136 Staffing Transferability Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Required staffing levels by any of the potential successor agencies, in order to adequately handle any increase in demand resulting from taking on the City s utility services, is yet to be determined. While there is the likelihood that any of the districts would necessitate additional staffing in order to take on the City s services, specific integration of staffing, if applicable, would be further discussed in a plan for service prepared by a successor agency. Each of the three districts noted that they were open to bringing on current city staff and retaining their operational knowledge, but would need to conduct their own assessment of staffing needs based on several performance metrics before identifying how many staff, in addition to existing district staff, would be necessary to continue city utility operations. Continuity of employee benefits was the primary constraint noted by the Districts, but not an insurmountable challenge. SCWD reported that it had been able to retain a total of 23 staff from Dana Point SD and Capistrano Beach WD after consolidation. Customer Satisfaction The volume of customer complaints is often indicative of customer satisfaction and level of service adequacy. It is essential that a utility provider have an established process for tracking and addressing complaints. All three districts and the City have processes in place to address public complaints, requests and inquiries. Similarly, the districts track every received complaint to completion. While the City tracks and records certain types of complaints, such as water quality complaints and reports of line breaks and sanitary sewer overflows, it does not track and record all complaints received. The districts have more specific systems of documenting all complaints and outcomes compared to the City. For the purposes of defining customer satisfaction, the Division of Drinking Water s (DDW) Annual Sanitary Survey was used as a consistent and structured source of customer complaints for each of the districts. While every data source will have nuances, this is the most consistent and reliable source of complaints amongst the districts being reviewed. While each of the districts may have completed similar customer surveys, the surveys differ between the agencies making the information not comparable between the agencies. The number and type of complaints received are documented in each agency s 2016 Annual Report to the DDW for the Year Ending December 31, The report breaks down complaints by taste and odor, color, turbidity, visible organisms, pressure, water outages, illnesses, and other. Number and type of complaints may vary between the agencies depending on the degree of the inquiry and whether action was initiated by the agency or a customer. SMWD included water outage notifications for planned outages in its report that were not otherwise included by the other districts; for this reason, 112 complaints that were reported for planned and unplanned water outages where customers were notified were removed from SMWD s total complaints for the year. The complaints by district are shown in Table 3-8. APPENDIX 1: RESTRUCTURING OPTIONS 87 ATTACHMENT 1 - Page 136 of 230

137 Table 3-8: Customer Complaints, 2016 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment MNWD Complaints Taste and Odor 16 Various problems on customer s side of the meter. Also, customers dissatisfaction with water taste and odor. Corrective actions included customer education and customer performed repairs. Color 11 Problems on customer s side of the meter. Also, some color issues related to valve exercising, line repairs and dead ends. Corrective actions included flushing and customer education. Illnesses (Waterborne) 1 Test results showed no abnormalities. Other 3 Various inquiries or complaints that related to rocks in irrigation, sand in plumbing, sediments in aeration screens. Corrective actions included customer education. Total 31 Complaints/1,000 capita 0.2 SMWD Complaints Taste and Odor 10 Complaints either due to odor emanating from drain or chlorine issue. Color 4 Typically caused by customer water softener. Turbidity 1 Type of complaint not described. Visible Organisms 2 Caused by customer filtration unit. Illnesses (Waterborne) 1 Customer complained of rash. No other complaints received. Other 21 Primarily questions about water hardness 46 and general water quality questions. Total 39 Complaints/1,000 capita 0.2 SCWD Complaints 47 Type Number Cause Taste and Odor 6 Internal plumbing problem; dead end line was flushed, and samples results were in normal range Color 5 Due to hydrant flushing in that area; air problem and internal plumbing problem Turbidity 1 Internal plumbing problem Other 3 Hard water complaints 48 but sample results were normal range Total 15 Complaints/1,000 capita The region usually imports the majority of its water from the Colorado River, which is high in dissolved solids resulting in hard water. 47 Combined from the 2016 Sanitary Surveys for the Capistrano Beach and South Coast water systems. 48 The region usually imports the majority of its water from the Colorado River, which is high in dissolved solids resulting in hard water. APPENDIX 1: RESTRUCTURING OPTIONS 88 ATTACHMENT 1 - Page 137 of 230

138 Moulton Niguel Water District Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Complaints received by MNWD are tracked and processed using the work order module of JD Edwards, Enterprise Resources Planning System. The District generally responds to complaints within 24 hours. Staff with the appropriate skills and authority are assigned to investigate and resolve complaints, as well as provide remedies, and identify improved practices. All complaint resolutions may be concluded in person, by phone, or door hanger and finalized within the work order module to document the close of an issue. On average, MNWD receives approximately 2.5 complaints per month. Complaints are generally related to odor concerns. Additionally, the District receives approximately one to two inquiries each month from customers regarding the cleaning or video inspection of the wastewater system. These inquiries typically occur when the District staff are conducting maintenance or inspection activities on the particular customer s street. The two main issues that triggered complaints for the District in 2016 were water taste and odor and water color, as shown in Table 3-6. Santa Margarita Water District As SMWD staff receives telephone calls, s or letters, the customer s account is notated. Generally, the customer relations specialist will provide answers to the customer inquiries and enter a note on the account regarding the response. The inquiry/request may be elevated to the lead/supervisor for review, and the response is then also documented. It is the SMWD business policy to respond to inquiries within 24 hours if possible, unless other demands take a higher priority. Unresolved issues are forwarded to the customer relations manager for review and direction. Responses are coded by type of inquiry/response and can be tracked through the customer information billing database. SMWD s Rules and Regulations contain procedures for accepting and responding to complaints regarding bill disputes and billing errors. A number of the District s customer complaints over the last year have been from the Village of Esencia regarding the Chiquita Water Reclamation Plant odor control. The subdivision has been constructed adjacent to the existing treatment plant, and the District proactively solicited public comments concerning odors from the plant. SMWD has made a significant effort to resolve the issue, including neighborhood public meetings with senior management from the District, frequent regular updates on progress, and development of chemical treatment and plant infrastructure upgrades. South Coast Water District SCWD documents customer complaints with a work order in the CIS billing system. The information documented in a work order includes the name of the person with the complaint, the address or area of the complaint, the nature of the complaint, and the final resolution or response. SCWD reports that it receives only a few complaints per year related to wastewater services and they generally are regarding odors. In 2016, the majority of the comments for the District were water pressure related, due to customer regulator or internal plumbing at the customer s residence. The District customer service staff responded to the residents concerns and offered guidance on corrective actions. APPENDIX 1: RESTRUCTURING OPTIONS 89 ATTACHMENT 1 - Page 138 of 230

139 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Each month, SCWD mails survey cards to customers that received various types of services from district personnel (i.e. water leaks, start/stop service, pressure checks) that month. The results are tracked and reported monthly as a customer service satisfaction metric. As an example, percent of the customers surveyed checked the box for excellent service for the period July 1, February 28, SCWD reportedly also takes customers input into decisions, such as the Recycled Water Bottleneck Project and daily through social media updates Water Service Level Similar to the Service Adequacy section in Chapter 1, this section evaluates the water service levels of the potential successor agencies with a focus on unaccounted for water loss, drinking water quality, fire flow pressure, degree of water reserves for emergency purposes, preventative maintenance practices, and the speed of response times to customer reports of issues. Unaccounted for Water Loss Unaccounted for water loss, specifically the amount of water lost due to system breaks and leaks, as well as illegal connections, is a measure of the water system s integrity. All four agencies monitor their water losses, real and apparent, 49 annually and conduct water loss audits. Table 3-9: Water System Integrity Indicators Agency MNWD SCWD SMWD City Distribution Loss Rate Total 10.3% (FY 17) 3.4% (FY 16) 5.5% (FY 17) 10% (FY 17) Real 9.4% 2.2% 5% 3.5% Infrastructure Index (ILI) Leakage Main Breaks and Leaks 17 (2016) 5 (2016) 3 (2016) 25 (annual average) Breaks and Leaks per 100 miles of mains Similar to the City, MNWD, SCWD, and SMWD perform annual comprehensive water loss audits to identify the components of revenue and non-revenue water. Industry standards in California define an acceptable level of unaccounted for loss as being less than 49 Apparent losses are the non-physical losses that occur in utility operations due to customer meter inaccuracies, systematic data handling errors in customer billing systems and unauthorized consumption. Real losses are the physical losses of water from the distribution system, including leakage and storage overflows. These losses inflate the water utility's production costs and stress water resources since they represent water that is extracted and treated, yet never reaches beneficial use. APPENDIX 1: RESTRUCTURING OPTIONS 90 ATTACHMENT 1 - Page 139 of 230

140 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment 10 percent of the amount of water supplied from the sources. 50 As shown in Table 3-7, only the City and MNWD were close to the acceptable maximum for total water loss rate; however, their real losses were below the industry standard. SCWD and SMWD rates were well below the industry standard, which is an indicator of integrity of their respective water systems. Another performance indicator of water system integrity was developed by the International Water Association the Infrastructure Leakage Index (ILI). The ILI is defined as a ratio of the current annual real losses to the unavoidable annual real losses of the system. An ILI of 1.0 or less is considered the highest performance of leakage control. An ILI of 1.0 to 3.0 may indicate effective leakage controls. 51 Amongst the three districts, SCWD has the lowest ILI of 0.45 and MNWD has the highest ILI of The four agencies attempt to track and repair their breaks and leaks to minimize water losses. Because of how each of the agencies reported their breaks and leaks, it is difficult to perform comparison analysis of their reported numbers. As a common ground for comparison the number of water main breaks and leaks per 100 miles of pipe was used to perform the analysis. The highest ratio of breaks per pipeline mileage belongs to the City of San Juan Capistrano, followed by SCWD, as can be seen in Table 3-9. Both MNWD and SMWD have relatively low ratios, which speaks of the integrity of their water mains. Water Quality As was already discussed in the Water System Assessment chapter of this report, for the purposes of this study water quality is assessed by the number of days that an agency was in compliance with Primary Drinking Water Regulations in 2017 and the number of historical violations reported by the Environmental Protection Agency (EPA) since The results of the assessment are shown in Table According to the table, all four agencies were in full compliance with Primary Drinking Water Regulations in In regard to historical violations, EPA reports that MNWD and SCWD had no violations from 2007 through Both, the City and SMWD received violations, with the City having a significantly higher number of violations and violations rate per 1,000 connections. SMWD received a Monitoring and Reporting Violation in 2009 for failure to conduct required coliform testing; the District subsequently returned to compliance. Table 3-10: Water Quality Assessment Results MNWD SCWD SMWD City Days in full compliance (2017) 365 (100%) 365 (100%) 365 (100%) 365 (100%) EPA Violations ( ) Violations/1,000 connections California Urban Water Conservation Council 51 EPA, December 2016 APPENDIX 1: RESTRUCTURING OPTIONS 91 ATTACHMENT 1 - Page 140 of 230

141 Fire flow Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment As already mentioned, urban water systems must maintain adequate pressure in order to provide adequate fire flow. Adequate fire flows for the three districts and the City are established by the Orange County Fire Authority (OCFA), which are based upon Appendix III-A of the 2000 Uniform Fire Code. Required fire flow ranges from 1,500 gpm to 8,000 gpm depending on the type of construction and fire area in square feet. The Insurance Services Office (ISO) conducts fire flow testing to classify fire service levels for insurance purposes. In 2016, the City and three districts underwent ISO fire flow testing. The City maintained the necessary flow at 11 of the 23 sites tested. By comparison, for this particular set of tests, the pass rate ranged from 62 percent for MNWD to 100 percent for SCWD. Table 3-11: ISO Fire Flow Test Rate MNWD SMWD SCWD CSJC Number of test locations Met flow requirements Pass rate 62% 81% 100% 48% MNWD performs fire flow tests in support of new development, and collaborates closely with the OCFA to confirm that fire flow requirements can be met. All new developments require fire flow tests, and the District utilizes the OCFA Water Availability Form to document the potable system s performance during fire flow scenarios. The District relies on its potable hydraulic model to perform most fire flows, but will occasionally perform a physical fire flow to validate/calibrate the hydraulic model, or when a fire flow is called for on a closed pressure zone (unsupported by a reservoir). Fire flows are limited to the lesser of either i) flow that can pass through the hydrant service at no more than 10 feet per second, or ii) flow available at a 20-psi residual. During fire flow conditions, MNWD reported that the minimum pressure of 20 psi is maintained, but the actual pressure is generally higher than that throughout the system. Overall, 30 percent of the reservoir storage capacity is reserved for fire protection, though with the use of reservoir management systems, which are installed at every potable reservoir in the District, the percentage of water available for fire flow is higher than 30 percent. Based on the ISO testing, MNWD had a pass rate of 62 percent as certain hydrants along Marguerite Parkway did not meet the required flows. SMWD s fire flow requirements are outlined in the District s Design Criteria and Standard Drawings for Water and Sewer Facilities. The District has modeled its entire system, including writing its Plans of Works, with the aim of ensuring its infrastructure meets all fire flow requirements for each area it serves. SMWD s system is designed to meet or exceed fire flow requirements; however, ISO tests conducted in 2016 of regional hydrants show that hydrants in the area of La Paz Road and Veterans Way did not meet APPENDIX 1: RESTRUCTURING OPTIONS 92 ATTACHMENT 1 - Page 141 of 230

142 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment flow requirements and are in need of improvement. SMWD had pass rate of 81 percent at the sites selected for the 2016 ISO testing. SCWD reported that its every day practice is to maintain a minimum pressure of 40 psi during normal system operation and a minimum pressure of 20 psi during maximum day plus fire flow demand. The District has adopted design criteria in its 2017 Infrastructure Master Plan Update, which is a minimum pressure of 50 psi during peak hour demand, maximum pressure of 120 psi during average day demand, and minimum pressure of 20 psi during maximum day plus fire flow demand. Given that SCWD has budgeted for fire flow improvements in FY in the amount of $770,000, it is assumed that there are some areas in the distribution system where minimum fire flows are a concern or are nearing minimum design standards. SCWD had pass rate of 100 percent at the sites selected for the 2016 ISO testing. Water Reserves Urban water suppliers are expected to address catastrophic disruptions of water supplies with plans reviewing the vulnerability of source and delivery and distribution systems to events such as regional power outages and system failures. In the event of an emergency that limited or stopped a provider's supply of water, the system would rely on stored water in the short term. MWDSC recommends a minimum emergency storage of seven days for agencies in its service area. Table 3-12: Agency Water Storage Capacity MNWD SCWD SMWD City Water Tanks and Reservoirs Storage Capacity mg 52 mg 398 mg 42.1 mg Days of Storage MNWD maintains 28 potable water reservoirs that range from 0.5 to 10 million gallons. Total operational capacity of these reservoirs is MG, which represents about 3.9 days of storage based on the 2017 average day demand. Additionally, the District has MG of emergency storage capacity in SMWD s Upper Chiquita Reservoir, El Toro Water District s R-6 Reservoir, and 5B Reservoir. In the event of a planned MWDSC outage, concerted water rationing, and conservation measures could stretch the total storage capacity to 24 to 31 days of reduced demand. In addition to its storage capacity, MNWD has several emergency interties to weather emergency outages of MWDSC imported water delivery facilities. MNWD has an emergency interconnection agreement with IRWD to supply treated Phase 1 water at 10.6 MGD with a maximum flow rate of 15.6 cfs for 30 days. The maximum incident volume IRWD will supply is 1,768 AF. The District also maintains 10 emergency interconnections with adjacent water agencies including ETWD, SMWD, SCWD, CSJC, and LBCWD. Additionally, six new interconnections that are constructed or being constructed will provide the south Orange County water agencies including the IRWD, SMWD, SCWD, APPENDIX 1: RESTRUCTURING OPTIONS 93 ATTACHMENT 1 - Page 142 of 230

143 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment LBCWD, ETWD, Trabuco Canyon Water District, CSJC, and the City of San Clemente with an adequate interconnection system. SMWD has 34 water storage tanks and reservoirs with a combined capacity of 398 mg. The District gets a substantial portion of its emergency storage capacity from its allocated capacity in the El Toro R-6 Reservoir (219 AF) and the Upper Chiquita Reservoir (285 AF), which is owned and operated by the District. The District s combined storage provides over 23 days in emergency storage based on the District s average daily demand in SMWD reported that in the event of a planned outage the stored water can be stretched out to last between 46 and 69 days depending on conservation efforts. This amount of emergency storage is well beyond industry standards. In addition, SMWD also participates in the interconnection agreement with IRWD noted above to supply treated Phase 1 water for 30 days. SMWD maintains interconnections with adjacent local water suppliers including MNWD, IRWD, TCWD, ETWD, City of San Juan Capistrano, and City of San Clemente. These interconnections serve as an emergency source of supply and to collectively increase the water supply delivery reliability for interconnected agencies. SCWD relies on 13 water storage reservoirs with a combined storage capacity of 52 mg, which provides the District approximately 11.4 days of storage based on 2017 average daily flows. SCWD has capacity in the SMWD s Upper Chiquita Reservoir for emergency supply. SCWD also relies on 13 interconnections with other agencies to share water supplies during short term emergency situations or planned shutdowns of major imported systems. The District maintains numerous emergency interconnections with Laguna Beach (two), MNWD (four), CSJC (five), and CSC (two). Maintenance Practices Similar to the City of San Juan Capistrano, MNWD, SCWD and SMWD have extensive preventative maintenance programs that minimize the costs associated with replacing or repairing water infrastructure. All four agencies have developed Operations and Maintenance Plans per the requirements of the SWRCB Division of Drinking Water (DDW). Recent DDW inspections found the water systems of all four agencies to be in good sanitary condition, indicating appropriate preventative maintenance practices. Moulton Niguel Water District Maintenance practices for the MNWD water system are based on AWWA Standards and tracked using the District s Computerized Maintenance Management System (CMMS). Maintenance activities include exercising isolation, altitude and pressure reducing valves, routine service of the District s various pumps, routine inspection of storage tanks, and regular service of the various reservoir management systems. The maintenance schedules range from daily, weekly, to monthly, depending on the type of asset and the specific service requirements. The District regularly evaluates the maintenance programs and scheduled preventative maintenance activities to ensure assets are being utilized fully. This year, the District has initiated a project to replace the CMMS software. The goals for the project are to implement a program that allows for full integration with the District s Geographic Information System (GIS) to better track activities associated with the various infrastructure assets while further advancing a comprehensive Asset Management APPENDIX 1: RESTRUCTURING OPTIONS 94 ATTACHMENT 1 - Page 143 of 230

144 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Program. Ultimately, the District s Asset Management Program will allow for life-cycle analysis of individual assets to better inform maintenance activities and development of the capital improvement program. Santa Margarita Water District SMWD tracks its preventive maintenance through its Computerized Maintenance Management System. Maintenance activities include exercising isolation, altitude and pressure reducing valves, routine service of the District s various pumps, routine inspection of storage tanks, and regular service of the various reservoir management systems. The maintenance schedules range from daily, weekly, to monthly, depending on the type of asset and the specific service requirements. SMWD operates multiple crews that are cross-trained in the areas of distribution of water, pump station maintenance and mainline repairs. The District can perform emergency construction and repair of water mains and has a valve and hydrant crew that focuses on ensuring that all the valves are operational and hydrants are properly maintained for fire protection. The other crews that engage in preventative maintenance include mechanics, electricians, and supervisory control and data acquisition (SCADA) technicians and operators. South Coast Water District SCWD staff visit each site or asset, including pump stations, valves, fire hydrants, air vacs, and meters, a minimum of once a year and often more frequently to conduct preventative maintenance as needed. Deferred Maintenance All three of the potential successor districts have adopted capital improvement programs to address necessary water infrastructure improvements. MNWD, SCWD, and SMWD reported no unfunded water projects in addition to what is already included in their respective CIPs. Typically, significant unbudgeted projects are incorporated into the districts overall CIPs as they are recognized and as part of regular CIP review and updates. As discussed under maintenance practices, DDW inspections found the water systems of all four agencies to be in good sanitary condition, indicating a lack of significant deferred maintenance. Response Times All the potential successor districts reported that their response times typically depended on the nature of customer requests. Generally, MNWD, SCWD and SMWD will respond to emergencies within 30 minutes. Districts on-duty personnel are available to respond on a 24-hour seven days a week basis. MNWD and SCWD have adopted appropriate policies regarding their emergency response times. Non-emergency requests are generally addressed within several hours or the next business day. The City does not have a policy or goal regarding emergency response times, and does not track the time taken to respond to emergencies so it unknown how the City compares to the other providers. APPENDIX 1: RESTRUCTURING OPTIONS 95 ATTACHMENT 1 - Page 144 of 230

145 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Table 3-13: Emergency Response Times MNWD SCWD SMWD City Emergency Response Time Within 30 minutes minutes Under 30 minutes Unknown Policy Within 30 minutes minutes None None Wastewater Service Level Similar to the Service Adequacy section in Chapter 2, this section evaluates the wastewater service levels of the potential successor agencies with a focus on the sanitary sewer overflow rate, infiltration and inflow, regulatory compliance, preventative maintenance practices, speed of response times to customer reports of issues, and the number and type of complaints related to wastewater services. Sanitary Sewer Overflows As was explained earlier in the Wastewater System Assessment chapter of this report, the sewer overflow rate is calculated as the number of sanitary sewer overflows (SSOs) per 100 miles of collection piping per year. During the calendar years of 2016 and 2017, MNWD s SSO rate per 100 miles was also the lowest. The highest SSO rate is exhibited by SCWD; the District s rate is lower than other wastewater agencies in California. 52 The City s SSO rate is slightly higher than the rates of MNWD and SMWD. In regard to the total volume of sanitary sewer overflows, MNWD had the largest amount of total spillage compared to the other agencies, while the City encountered the lowest SSO volume during 2016 and 2017, as shown in Table The situation is similar to the average spilled volume per SSO where MNWD had the highest volume per spill and the City had the lowest volume per spill. Table 3-14: Sanitary Sewer Overflows, MNWD SCWD SMWD City SSO Rate per 100 Miles of Collection Piping 0.37 (2 SSOs) 1.4 (2 SSOs) 0.47 (3 SSOs) 0.8 (3 SSOs) Total Volume of SSOs 14, , Volume Recovered 1,239, Net Volume of SSO (gal) Average Volume per SSO (gal) 7, The average state-wide rate is about 4.73 SSOs per 100 miles per year. 53 MNWD recovered additional fluid beyond the estimated amount of the spill as it entered surface water. APPENDIX 1: RESTRUCTURING OPTIONS 96 ATTACHMENT 1 - Page 145 of 230

146 Infiltration and Inflow Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment The peaking factor is, for the purpose of this report, defined as the ratio of peak day wet weather flows to average daily flows. 54 The peaking factor is an indicator of the degree to which the system suffers from infiltration and inflow (I/I), where rainwater enters the sewer system through cracks, manholes or other means. A peaking factor of up to three is generally considered acceptable based on industry practices. Peaking factors can vary based on the time frame used to determine peak wet weather flows. This report makes use of the peak day wet weather flow, which is the total volume of flows for a 24-hour period when a peak event has occurred. All three districts provided information regarding their respective peak day wet weather flows and average daily flows for each of the wastewater treatment plants that they utilize. Based on the data provided, the peaking factors were calculated and are shown in Table In addition to the peak day flows provided by each of the agencies, SOCWA also provided instantaneous peak flow for a 15-minute time frame for each of its three plants Regional, JB Latham, and Coastal. The peaking factors calculated based on the instantaneous peak flows show an accentuated level of I/I for each of the districts and the City. However, as this information was not available for all plants, and to maintain consistency for comparison purposes, the peak day wet weather flow was chosen as an easily provided timeframe for which wastewater meters would generally be tracked and the data maintained. While I/I during storm events is admittedly a concern for the City of San Juan Capistrano, the three districts indicated that I/I was a minor problem in their systems. However, SOCWA, as the operator of three of the wastewater plants, reported relatively high instantaneous peak flows on the part of all three of the districts and the City during a significant rain event in January The large volume of wastewater flows as a result of the storm caused a spill at the Regional Wastewater Plant, and JB Latham Wastewater Plant reached maximum capacity for approximately six to seven hours. Coastal Wastewater Plant stayed within operating parameters. With peak flows that meet or exceed treatment capacities of the plants during wet weather events, it is apparent that I/I can be significant for all three of the districts and the City depending on the duration of the event. SOCWA noted that the additional flow during a wet weather event is predominantly due to inflow 55 in the region, given the lack of groundwater to contribute to infiltration. 56 MNWD reported that there are no specific areas prone to I/I, but manholes with excessive I/I may be found throughout the service area. When operators find excessive I/I in a manhole or within the collection system, it is documented and repaired. Because MNWD and SMWD have a combined meter at the JB Latham plant, a peaking factor is unable to be calculated for that portion of MNWD s system. SOCWA reported a combined peaking factor of 3.9 (based on peak day wet weather flow) at the JB Latham plant, which is indicative of I/I on the part of MNWD and/or SMWD in that part of their systems. 54 While it is standard practice to use peak hour wet weather flow to calculate a peaking factor, the peak day wet weather flow was the most readily and consistently available flow information for each of the agencies. The relative degree of I/I is still identifiable based on these numbers. 55 Stormwater that enters into sanitary sewer systems at points of direct connection to the systems. 56 Groundwater that enters sanitary sewer systems through cracks and/or leaks in the sanitary sewer pipes. APPENDIX 1: RESTRUCTURING OPTIONS 97 ATTACHMENT 1 - Page 146 of 230

147 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment SCWD similarly reported that it does not generally have significant I/I; however, lowlying areas (i.e. Aliso Creek, Coast Highway and Dana Point Harbor) are more prone to it. SMWD s system is relatively new with a majority of the collection system being constructed from PVC, reducing the potential for I/I. The main difficulty lies in the topography of the region that consists of a series of hills and valleys. Trunk sewers have been naturally constructed parallel to the creek and occasionally in open spaces these facilities are mostly prone to I/I. The District has utilized manhole inserts to limit the potential. Because MNWD and SMWD have a combined meter at the JB Latham plant, a peaking factor is unable to be calculated for that portion of SMWD s system. SOCWA reported a combined peaking factor of 3.9 (based on peak day wet weather flow) at the JB Latham plant, which is indicative of I/I on the part of MNWD and/or SMWD in that part of their systems. Table 3-15: Peaking Factors (Peak Day Wet Weather Flow/Average Day Flow), Plant MNWD SCWD SMWD CSJC Regional 1.9 3A JB Latham Unknown Unknown Coastal Chiquita Water Reclamation Plant 2 Oso Water Reclamation Plant Regulatory compliance with RWQCB permits Because the CSJC and SCWD do not own or operate wastewater treatment plants, these agencies do not have permits for treatment and discharge that often result in violations of required conditions. As was already described earlier, SMWD operates three wastewater treatment plants, including Chiquita Water Reclamation Plant, Oso Creek Water 57 Calculated based on peak day wet weather and average daily flows as reported by the districts, unless otherwise noted. 58 MWND and SMWD have a combined meter at the JB Latham plant; therefore, it cannot be determined the degree of I/I that is attributable to each district. SOCWA reported a combined peaking of factor of Provided by SOCWA. 60 MWND and SMWD have a combined meter at the JB Latham plant; therefore, it cannot be determined the degree of I/I that is attributable to each district. SOCWA reported a combined peaking of factor of The City reported a peaking factor of approximately 5 based on instantaneous peak flow data. 62 Provided by SOCWA. 63 The plant has a design flow of 3 MGD and measured flows of 1.8 MGD and it bypasses flow automatically when that flow is reached. APPENDIX 1: RESTRUCTURING OPTIONS 98 ATTACHMENT 1 - Page 147 of 230

148 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Reclamation Plant, and 3A Water Reclamation Plant, for all of which the District holds permits for treatment and discharge. The 3A Water Reclamation Plant is owned by MNWD and operated by SMWD. SOCWA and SMWD hold a permit for treatment and discharge at this plant. The 3A Water Reclamation Plant reportedly has always been in violation for manganese levels. SMWD, which is the operator of the plant, has been monitoring the levels monthly and the results have been consistently over 0.05 milligrams per liter (mg/l) and averaging around mg/l, compared to the permitted daily limit of 0.05 mg/l and annual average of 0.06 mg/l. In 2017, the plant was in violation of manganese levels 12 times. Additionally, on December 13, 2017, the cbod 64 result at the 3A plant was not valid because duplicate dilutions were out of specifications and did not pass quality control. The Oso Creek Water Reclamation Plant received one violation on May 21, 2017 for total coliform levels at 1,600 MPN/100 ml. Chiquita Water Reclamation Plant was in violation on April 17 and 18 for high total suspended solids. SMWD was out of compliance its NPDES permit twice in 2017 for San Juan Creek Ocean Outfall once on April 8 at the 3A plant for turbidity and on April 17 at the Chiquita plant for total suspended solids. Additionally, the three districts and the City operate under a general permit for all collection systems adopted by RWQCB. As is clear from Table 3-16, the City was the only agency that did not receive any violations or enforcement orders in the last two years. Table 3-16: Collection System Violations and Enforcement Orders in 2016 and 2017 Agency MNWD SCWD SMWD City Violations 1 in 2016 for SSO None None None Enforcement Orders None 1 Enforcement Letter in 2016; still active 65 1 Enforcement Letter in 2016; still active None Maintenance Practices Preventative maintenance activities are outlined in the legally required Sewer System Management Plans (SSMP) adopted by each of the four agencies. The SSMP for MNWD was last updated in 2013, while SCWD, SMWD and the City of San Juan Capistrano updated their respective plans in Each of the four agencies has an extensive maintenance and inspection program, as outlined below. As shown in Table 3-17, SCWD inspects the largest 64 Carbonaceous biochemical oxygen demand or CBOD is a method defined test measured by the depletion of dissolved oxygen by biological organisms in a body of water in which the contribution from nitrogenous bacteria has been suppressed. CBOD is a method defined parameter is widely used as an indication of the pollutant removal from wastewater. It is listed as a conventional pollutant in the U.S. Clean Water Act. 65 SCWD reports that this Enforcement Letter was issued in error and it is working to correct the action. APPENDIX 1: RESTRUCTURING OPTIONS 99 ATTACHMENT 1 - Page 148 of 230

149 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment portion of its system every year, while SMWD inspects about three percent of its system annually. The City inspects slightly less than SCWD, but a much larger portion than both SMWD and MNWD. MNWD inspects about seven percent of its system annually. San Juan Capistrano inspects its entire system every four years, which is more frequently than any of the districts. The frequency of SCWD s whole system inspections is slightly longer than the City s but overall more comparable than that of MNWD or SMWD. Table 3-17: Inspection and Maintenance Mains Inspected MNWD SCWD SMWD City ,200 ft. (7%) 260,000 ft. (36%) 95,040 ft. (3%) 25% ,200 ft. (7%) 210,000 ft. (29%) 95,040 ft. (3%) 25% Entire system CCTV inspection goal Every 10 years Every 5 years Every 8 years Every 4 years Moulton Niguel Water District The District s Sewer System Management Plan sets a goal to clean all gravity sewer lines 12-inch and smaller every 12 months, and conduct a CCTV inspection of the entire system. As operators are cleaning sewer lines, they also inspect and assess the condition of the manholes. Collection crews use a GIS-based software to document line cleaning and condition assessment of manholes based on a standard grading methodology. District staff also video inspects lines larger than 12-inches as needed. All lift stations are maintained in good order and are inspected one to three times per day. Each lift station has several pumps to allow for system redundancy. Pumps are removed for inspection and maintenance on a regular basis to ensure proper operation. All large lift stations have stationary backup generators, while the smaller stations have a connection for one of the several portable generators in the event of a power outage. MNWD has a dedicated video inspection truck, and inspects on average 40 miles of pipe a year, and is currently evaluating opportunities to increase miles inspected per month. The entire system was last completely video inspected in At this time, it is 90 percent complete and on track to be finished in late Santa Margarita Water District The District s sewer lift stations are continuously monitored by a SCADA system, which tracks pump operation, wet well levels, alarms, and other critical operational parameters. If SCADA detects an unusual condition or fault in operation, an alarm is automatically sent to system operators so corrective action can be taken. Lift stations are visited for a visual inspection up to seven times a week with a minimum of five times a week. District sewer mains are cleaned biennially (every other year) utilizing high-pressure water jetting equipment. Where it has been determined that large deposits of debris, root growth, grease and/or other material which require more than routine jetting, then heavy equipment such as root cutters, or high-pressure/high volume jetting equipment will be used to facilitate cleaning and removal of such deposits. APPENDIX 1: RESTRUCTURING OPTIONS 100 ATTACHMENT 1 - Page 149 of 230

150 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Areas where visual or video inspections indicate repeated or unusual accumulation of grease, grit or other debris or in areas with a past history of sewage blockages are considered trouble spots. Trouble spots are cleaned as frequently as necessary to prevent sewer line blockages and spills; however, in no case are the intervals greater than once every year. The District's responsibility for sewer line maintenance is limited to the main line in the street. As is typical for most wastewater providers, the customer is responsible for the cleaning obstructions of the lateral connection to the District's main line. The District uses a sewer video camera and recording device to inspect the condition of its sewer system, with a goal of completing a system-wide inspection once every eight years. If the inspection reveals a defect in the pipe, staff will decide if repairs must be made immediately or if the rehabilitation can be deferred. Per year, SMWD inspects 18 miles (or three percent of the system) with CCTV, hydro cleans 214 miles (34 percent of the system), and cleans 41 miles of trouble spots (seven percent of the system). South Coast Water District SCWD collection system staff cleans the entire sewer system with a jetter annually, with known root infiltration areas cleaned biannually, and hot spots cleaned quarterly. Crews cleaned nearly one million feet of sewer main in FY (about 130 percent) and approximately 906,000 feet in FY (124 percent). Crews inspect the 13 lift stations at least three times per week, with regular maintenance scheduled as necessary to maintain continuous operations with minimal interruption in service. Twenty percent or more of the system is video inspected annually via CCTV, with the entire system video inspected no less than every five years. Crews inspected over 210,000 feet (29 percent) of sewer mains in FY and 260,000 feet (36 percent) in FY Deferred Maintenance All three of the potential successor districts have adopted capital improvement programs to address necessary sewer infrastructure improvements. MNWD, SMWD and SCWD reported no unfunded wastewater system projects; significant unbudgeted projects are typically incorporated into the districts overall CIPs as they are recognized and as part of regular CIP review and updates. Emergency Response Times Table 3-18: Emergency Response Times Agency MNWD SCWD SMWD City Response Time Within 30 minutes minutes 30 minutes Unknown Policy Within 30 minutes minutes Immediate None All the three districts reported that they generally respond to emergencies within 30 minutes of the call. MNWD, SCWD and SMWD have adopted appropriate policies requiring immediate response to emergency situations. Non-emergency response is typically APPENDIX 1: RESTRUCTURING OPTIONS 101 ATTACHMENT 1 - Page 150 of 230

151 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment scheduled. All four agencies, including the City of San Juan Capistrano have 24-hour seven day per week on-duty personnel that respond to emergencies. Benefits of Restructuring All three of the possible successor agencies recognized potential benefits as well as certain challenges in undergoing the proposed service restructuring. The common benefit identified is achieving economies of scale, including reduced administrative costs and maximized capacity in existing assets. SCWD noted that it currently receives wastewater into its collection system from the City, which would likely make for a smooth operational transition between the two agencies and would not require any immediate need for new respective infrastructure. Another mutually beneficial factor seen by SCWD is the joint utilization of the proposed Doheny Ocean Desalination Plant, which would increase the City s water supply reliability and decrease its dependency on imported water. On the other hand, it would benefit the District by providing additional demand from City residents lowering the unit cost of this supply and making the project economically advantageous. MNWD believes that it would be able to benefit City residents and lower cost per service connection by applying its big data analysis and predictive modeling process to better inform decision-making and resource management. MNWD helped create the California Data Collaborative, an organization representing 21 million Californians, which focuses on leveraging data to enhance water management. Through the District s unique partnership, Moulton Niguel saved $20 million in less than one year. By applying predictive modeling tools and analytics, the District was able to better forecast recycled water usage to guide its investment in infrastructure. MNWD also currently operates and maintains the Eastern Transmission Main, which provides imported water to the City of San Juan Capistrano. In addition, MNWD established an advanced metering infrastructure network ( smart meter network ) that provides coverage for most of South Orange County to provide remote meter reading. MNWD received a permit to place a tower on the City of San Juan Capistrano facilities to enable better coverage in that area for MNWD customers. This smart meter network provides the ability to easily convert the City of San Juan Capistrano s existing manually read meters to smart meters so that they could be read wirelessly. This improvement would represent an important leap forward that would provide real-time access to water usage data for the City s water customers. The District also has a customer portal that sends daily leak alerts to customers to provide information to them before they get their next bill. This saves customers money and potential property damage. MNWD was recently recognized by Amazon on a global level for the innovative way it shares water usage data through its Amazon Web Services platform. SMWD believes that a primary benefit is its common interest with the City in development and maximization of the San Juan Watershed. The District is proposing to operate the groundwater system and help absorb the cost of the City s treatment plant to enhance the overall system reliability by expanding the use of recycled water in the City and potential recharge of the groundwater basin. Additionally, SMWD provides water to the City through its South County Pipeline, has a contractual relationship with the City for APPENDIX 1: RESTRUCTURING OPTIONS 102 ATTACHMENT 1 - Page 151 of 230

152 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment meter reading, and provides interconnections for recycled water, which sets the stage for ease of further integration of services. The three districts indicated that due to their geographic proximity to the City, the transition/restructuring would most likely not have any major challenges. However, all of them recognize that restructuring would require further analysis for integration of agencies finances, rate plans, and capital improvement programs and thorough understanding of the City s current infrastructure state. An additional challenge would be resources necessary for the community and stakeholder outreach generally required for a prompt and successful completion of such project. Plans for Groundwater Recovery Plant SMWD has the most extensive plans regarding the City s GWRP out of the three potential successors. SMWD is developing the San Juan Watershed Project that would add recharge water to the basin by the capture and infiltration of rainwater, recycled water discharge, and urban runoff, and that could use the GWRP to process the added groundwater. SMWD has indicated that it would like to move ahead with using the GWRP with the Watershed Project regardless of whether SMWD would become the successor agency. Use of the GWRP would be subject to negotiation with the alternative service provider if an agency other than SMWD is chosen by the City. The first phase contemplates the joint use of the GWRP by some of the San Juan Basin Authority members that include SMWD, SCWD, and the City of San Juan Capistrano. SCWD is also involved in the San Juan Watershed Project as a co-proposer, but currently does not have any other plans regarding the GWRP. SCWD indicated that it would potentially conduct an operational and condition assessment to determine and prioritize any changes in use of the GWRP. MNWD similarly does not have any specific plans, however, sees a potential to maximize the investment that has already been made in the Groundwater Recovery Plant, which could include partnering with neighboring agencies to share capacity in the plant so that its benefits and costs can be shared on a broader, more regional basis. Familiarity with Restructuring All three potential successor agencies are familiar to one degree or another with an agency restructuring process. Among the three, SCWD has the most experience. In 1976, SCWD first started providing sewer service with approximately 2,300 connections when the South Laguna Sanitary District was dissolved. 66 In October 1998, Orange County LAFCO adopted a resolution 67 effective January 1, 1999 that provided for the consolidation of the South Coast Water District (6,420 water connections and 4,700 wastewater connections) and the Capistrano Beach Water District (5,228 water connections and 3,472 wastewater connections), and the dissolution of the Dana Point Sanitary District (approximately 6,000 wastewater connections). SCWD was established as a successor agency. In March 2000, by another OC LAFCO resolution, 68 SCWD was 66 RO RO RO APPENDIX 1: RESTRUCTURING OPTIONS 103 ATTACHMENT 1 - Page 152 of 230

153 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment designated the contract operator for future operations and maintenance of the system and facilities of the former Tri-Cities Municipal District (TCMWD), which was legally consolidated with Coastal Municipal Water District, the successor agency. The net assets of TCMWD transferred over to the participating agencies, equal to their respective ownership percentages, were assigned to SCWD to be held in trust and used for the benefit of the agreement participants. Additionally, in 1999, the portion of the original SCWD that lies within the City of Laguna Beach was annexed to the City of Laguna Beach. The agreement between the District and the City provides for SCWD to continue both water and sewer services to this area unless the agreement is terminated by either party. In 1997, the Laguna Sur/Monarch Point area was detached from SCWD and annexed into MNWD. SCWD continues to provide sewer service to the reorganized area through contract with MNWD. As part of the terms and conditions of the reorganization, MNWD continues the prior SCWD practice of collection of the sewer service charges and rates on the tax roll, and then remits the charges and rates to SCWD. MNWD also provides wastewater services through a contract to the Rossmoor Corporation for 24 residential parcels on Tract 8800 within El Toro Water District s service area. Additionally, a number of MNWD s staff has experience with annexations and reorganizations, including prior legal consulting to OC LAFCO on annexation and reorganization agreements and resolutions, and engineering and financial analyses associated with potential integration of water and wastewater infrastructure as well as the financial analyses for rate development related to agency consolidation. SMWD was involved in the formation of the Fenner Valley Mutual Water Company and the Fenner Valley Water Authority as part of a new water reliability project. The District has also worked with the neighboring cities and districts to develop joint operations in the water and wastewater systems. The most recent annexation to SMWD took place in the late 1980s and added a portion of the City of Mission Viejo (Improvement District No. 8), which was detached from the Trabuco Canyon Water District. SMWD staff have participated in several acquisitions and divestitures of utility systems around the country. Specific to LAFCOs and California State law, staff have participated in two reorganizations or acquisitions/divestitures in California. APPENDIX 1: RESTRUCTURING OPTIONS 104 ATTACHMENT 1 - Page 153 of 230

154 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment CONCLUSIONS The City of San Juan Capistrano is pursuing reorganization of its water and wastewater utilities. This report is intended to evaluate the option of transferring the systems to a successor agency. The potential successor agencies have been thoroughly evaluated to determine compatibility with the City based on various criteria. However, the transfer of the City s utility systems requires the preparation of a Plan of Service by the potential successor agency or agencies, which would be further reviewed by the City and analyzed by the OC LAFCO. The criteria were chosen as the best indicators of a smooth restructuring process and successful future operations. The three potential successor agencies have proven to be outstanding service providers each in their own arena. MNWD is a responsive and well-managed agency that makes use of predictive modeling, has a low rate of customer complaints, and a low rate of infiltration and inflow (I/I). SMWD maintains excellent system integrity with a low rate of leakage and breaks and substantial water reserves that greatly exceed standards. SCWD has a low rate of water loss that is indicative of a top performer, met fire flow standards at 100 percent of sampled hydrants, and aggressively inspects its wastewater system. A recommendation of an agency as the successor agency for the City s water and wastewater operations is not a reflection of a deficiency on the part of the other districts. While all three of the districts identified as potential successors have many similarities with the City s water and wastewater services and operations, there are certain critical areas where some districts are more compatible with the City than others. The accompanying matrix summarizes the various similarities and differences that each district has with the City of San Juan Capistrano. To recap, the primary qualities that all four agencies have in common are the general regional location, close proximity to each other, significant reliance on imported water, and general adequate working condition of each agency s water and wastewater systems. None of the districts reported any agreement transferability constraints that may hinder the restructuring process. There are, however, key differences amongst the three districts that may make one district best suited for the City s consideration over another. Similarity in operations and level of services with the City are not necessarily indicators of the most suitable choice of a successor agency. For example, SCWD is the most similar to the City in the size of its operations and population served, staffing level for water operations, degree of I/I, use of groundwater and groundwater recovery facilities, and wastewater system inspection practices. SCWD has notable experience in operating wells and groundwater treatment plants, which sets it apart from SMWD and MNWD. SCWD s operational headquarters are the nearest to the City, which would allow for faster response time to complaints and emergencies. SCWD is the trustee of the JRWSS and operates and maintains the system, which feeds water to the Eastern Transmission Main, which provides imported water to the City. SCWD currently receives the City s wastewater into its collection system, and also sees the potential of mutually benefitting from the joint utilization of the proposed Doheny Ocean Desalination Plant. Additionally, SCWD has the most experience with restructuring and providing services on behalf of other agencies in the role of a successor or a contractor, as an agency and through individual staff, which may make the transition of services from the City to itself more seamless. Despite these advantages and similarities, if named a APPENDIX 1: RESTRUCTURING OPTIONS 105 ATTACHMENT 1 - Page 154 of 230

155 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment successor agency, SCWD would be taking on operations that would immediately double its own size. Taking on a system of a similar size would have an effect on SCWD s resource capacity as it works to accommodate the City s water and wastewater systems, which already require additional maintenance to improve their integrity. SCWD has doubled its size in the past through two similar reorganizations; however, these processes involved two smaller sized agencies. The existing size of the City and SCWD exponentially increases the amount of effort that would be required for reorganization. An agency with larger operations, that is already capitalizing on economies of scale, may have greater capability to integrate the City s operations into its own, making for a more suitable successor agency. To illustrate, because MNWD s system is dissimilar to the City s in that its system size, served population, and water reserves are significantly larger than those of the City, the District appears to be in a better position in terms of operational capacity to take on additional systems and population that are a fraction of its own. In addition, MNWD is a well-run and well-managed agency, according to a high customer satisfaction rate, detailed adopted policies for its governance and operations, and application of innovative technology for better decision-making and increased efficiency. As a result, MNWD has demonstrated that it is a responsive agency that is equipped to address issues that may come with systems that require additional attention to improve their integrity, such as the City s systems. The District s water and wastewater systems are adequate and reliable in condition, based on analysis of the breaks and leaks, low SSO rate, and degree of I/I. The District is exploring options of diversifying its potable water supply to include desalinated water, recycled water, groundwater recharge, and groundwater, which would extend the benefit of a more reliable water supply to city residents. MNWD currently operates and maintains the Eastern Transmission Main, which provides imported water to the City. Concentrating ownership and control of such critical infrastructure in the hands of the service provider increases supply reliability and economies of scale. Additionally, MNWD s infrastructure extends into the City s boundaries to the greatest degree amongst the three districts. MNWD has extensive experience with agency reorganizations, as a district and through individual staff, which will promote a smoother restructuring process. SMWD serves a greater population and operates significantly larger water and wastewater systems than the City, with extensive water reserves. SMWD water and wastewater systems have high integrity based on low real water losses and ILI, leak and break rates, SSO rates, and I/I. Additionally, SMWD already provides services to the City in several capacities, including delivery of imported water through its South County Pipeline, a contractual relationship with the City for meter reading and emergency services, and delivery of recycled water. Concentrating ownership and control of such critical infrastructure in the hands of the service provider increases supply reliability and economies of scale. A common interest of the City and SMWD is groundwater and the City s GWRP. The City s GWRP is presently underutilized because of insufficient groundwater sources. Development and maximization of the San Juan Watershed through SMWD s groundwater recharge project could enable utilization of the unused GWRP capacity to process the added groundwater. SMWD is proposing to operate the groundwater system and help absorb the cost of the City s treatment plant. Use of the GWRP would be dependent on negotiations with the City s successor agency. APPENDIX 1: RESTRUCTURING OPTIONS 106 ATTACHMENT 1 - Page 155 of 230

156 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment To summarize, although SCWD has the most commonalities with the City s operations and services, their comparable sizes may be a hindrance to consolidation as it would double the demand on SCWD. Becoming a part of a larger well-managed organization with additional capacity has a higher potential of benefitting city residents. An agency, such as MNWD or SMWD, will be able to extend its operational and service efficiencies to cover the much smaller San Juan Capistrano service area without sacrificing much of its own capacity. A larger well-established agency with minimal internal operational and capacity concerns and sufficient resources is better equipped to accommodate the changes that come with service reorganization, such as staffing needs, administrative facilities, and planning efforts, to name a few. MNWD s infrastructure system extends into San Juan Capistrano, which makes establishing new connections significantly easier and cheaper. On the other hand, SMWD already provides services to the City in several capacities, which has led to a working relationship between the two agencies; moreover, SMWD has a plan for maximizing the productivity of the City s GWRP. Both MNWD and SMWD appear to be well positioned to take on this project of further District-City water and wastewater integration and potential reorganization. Although the City s water and wastewater operations may theoretically be separated and succeeded by two different districts, based on situational analysis it does not appear efficient to separate the two services for the following reasons: 1) all of the potential successor agencies provide both services, 2) having two legislative bodies creates an unnecessary layer of governance with no anticipated benefits to residents, and 3) some portions of operations and administration would be duplicative for each connection (i.e., billing). Additionally, two parallel restructuring processes would be required. It is recommended that whichever district is chosen as a successor agency, that a single agency take over both the water and wastewater utilities. APPENDIX 1: RESTRUCTURING OPTIONS 107 ATTACHMENT 1 - Page 156 of 230

157 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment Table 3-19: Comparative Analysis Criteria for Potential Successor Agencies ATTACHMENT 1 - Page 157 of 230 District System Size Services Provided to City Water Supply Reliability - Future Projects MNWD Serving larger population than the City. Water and wastewater systems larger than City's; higher water and sewer flows. SCWD Serving similar population sizes, similar number of connections, size of water and wastewater systems, and storage. Does not own any WTPs, but similar owned treatment capacity. SMWD Serving larger population than the City. Water and wastewater systems larger than City's; higher volume of water and sewer flows. Importing of water via districtowned pipeline Emergency interconnection Water and wastewater services to select parcels within city limits Provision of recycled water Collection of city wastewater through a district-owned sewer line Responded to city emergency requests Installation of remote meter reading tower on CSJC s building Emergency interconnections Wastewater services to select parcels within city limits Receives City s wastewater for select parcels into its collection system Maintenance of the City s storm drain system Importing of water via districtowned pipeline Emergency interconnections Contract meter reading services Emergency response services Sharing of reservoir capacity Provision of recycled water In contract negotiations to provide other sewer maintenance services Developing additional recycled water sources for the City 1) Desalination 2) Recycled water for irrigation and potable use 3) Groundwater recharge 4) Groundwater 1) Water transfers 2) Desalination 3) Groundwater recharge 4) Recycled water 1) Groundwater 2) Groundwater recharge 3) Water transfers 4) Desalination 5) Enhanced storage 6) Water banking 7) Recycled water for potable reuse Groundwater/GWRP Litigation Currently groundwater is not part of water supply, but may start using groundwater as potential future source. MNWD has no plans regarding the City's Groundwater Recovery Facility, but may get involved in sharing plant capacity with other agencies. Groundwater is part of the District's water supply. Owns a groundwater recovery facility. The District is coproposer with SMWD in the San Juan Watershed Project. No current plans regarding the City's Groundwater Recovery Facility. Makes use of imported groundwater for irrigation purposes. Developed plans regarding the City's Groundwater Recovery Facility. Developing the San Juan Watershed Project. Currently developing plans to convert groundwater for potable use. In litigation with SOCWA, City of Laguna Beach, SCWD, and Emerald Bay Service District for MNWD alleged delinquency on maintenance costs for Coastal Wastewater Treatment Plant. SCWD along with SOCWA, City of Laguna Beach and Emerald Bay Services District is in litigation with MNWD. The litigation has not yet been resolved. None. WASTEWATER INFRASTRUCTURE ASSESSMENT 108

158 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment 109 District Staffing Customer Complaints Water System Integrity Water Quality Fire Flow MNWD Total: 139 FTEs Water: 36.5 FTEs (1,482 connections per FTE compared to SJC's 610/FTE) WW: 21.5 FTEs (2,381 connections per FTE compared to 11,554/FTE) Complaint rate: 0.2 complaints per 1,000 population High real water losses (9.4%) compared to other districts but within industry standards. Moderate rate of main breaks and leaks. 100% compliance in that throughout the system. 62% pass rate for ISO testing - certain hydrants along Marguerite Parkway did not meet the required flows. MNWD reported that the minimum No violations pressure of 20 psi is maintained, but the actual pressure is generally higher than SCWD Total: 85 Water: 18.5 FTEs (668 connections per FTE compared to SJC's 610/FTE) WW:14.5 FTEs (1,228 connections per FTE compared to SJC's 11,554/FTE) Complaint rate: 0.2 complaints per 1,000 capita Water main breaks and leaks per 100 miles of pipe is significantly lower than the City. ILI is indicative of a top performer with minimal water loss. 100% compliance in are some areas in the distribution system where minimum fire flows are a concern or are nearing minimum design standards. 100% ISO pass rate. Given that SCWD has budgeted for fire No violations flow improvements in FY in the amount of $770,000, is assumed that there ATTACHMENT 1 - Page 158 of 230 SMWD Total: 144 Potable water: 44 FTEs (1,267 connections per FTE compared to SJC's 610/FTE) WW: 44 FTEs (1,165 connections per FTE compared to SJC's 11,554 per FTE) Complaint rate: 0.4 complaints per 1,000 capita Maintains excellent system integrity based on ILI and rate of main breaks and leaks. 100% compliance in One violation between 2007 and Violation rate of 0.02 per 1,000 connections served. ISO tests conducted in 2016 of regional hydrants show that hydrants in the area of La Paz Road and Veterans Way did not meet flow requirements and are in need of improvement. 81% ISO pass rate. WASTEWATER INFRASTRUCTURE ASSESSMENT

159 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment 110 District Water Reserves MNWD 9.5 days of storage compared to 8.3 days in SJC Deferred Maintenanc e No deferred maintenance reported. SSO I/I Inspection Practices Benefits of Restructuring Restructuring Experience Lower SSO rate (0.37) than 0.8 in SJC. Peaking factor of less than 2 for Plant 3A, 1.9 for Regional Plant, and unknown for JB Latham. Inspected annually: 7% of ww system Goal for entire system inspected: every 10 years Compared to SJC: Lower percentage (25%) and less frequently (4 years). Will benefit the City through big data application. MNWD operates and maintains the Eastern Transmission Main, which provides imported water to the City. MNWD has remote meter reading technology that will increase efficiency and water usage data access for residents. Has extensive experience with reorganizations: -Annexing and returning former district as a contractual service provider; -Serves as a contract sewer provider; -MNWD staff has experience with reorganizations. SCWD 11.4 days of storage compared to 8.3 days in SJC No deferred maintenance reported. Higher SSO Rate (1.4) than 0.8 in SJC. Peaking factor of 2.4 at JB Latham and 1.5 at Coastal. Inspected annually: 29-36% of ww system Goal for entire system inspected: every 5 years Compared to SJC: About the same inspection rate as the City annually (25%). The entire system is inspected within similar frequency as the City (4 years). Currently receives wastewater into its collection system from the City. Potential joint utilization of the proposed Doheny Ocean Desalination Plant. Has the most familiarity with restructuring among the districts: -Appointed successor agency after consolidation; -Designated a contract operator for another consolidated agency; -Continues to provide water and wastewater services through contract after detachment; -Operates JRWSS by contract with member agencies. ATTACHMENT 1 - Page 159 of 230 SMWD 23.2 days of storage compared to 8.3 days in SJC No deferred maintenance reported. Lower SSO rate (0.47) than 0.8 in SJC. Peaking factor of 1.4 at 3A, 1.8 at Oso Water Reclamation Plant, 2 at Chiquita, and unknown at JB Latham. Inspected annually: 3% of the ww system Goal for entire system inspected: every 8 years Compared to SJC: Lower percentage (25%) and less frequently (4 years). Development and maximization of the San Juan Watershed. The District is proposing to operate the groundwater system and help absorb the cost of the City s treatment plant. Additionally, SMWD already provides water to the City through its South County Pipeline, has a contractual relationship with the City for meter reading, and provides interconnections for recycled water. Has experience with reorganizations: -Was involved in formation of a water company and a water authority; -Annexation; -Acquisition/divestiture staff experience; -Collaboration with neighboring agencies. WASTEWATER INFRASTRUCTURE ASSESSMENT

160 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment 111 WORKS REFERENCED ATTACHMENT 1 - Page 160 of 230 AECOM. (2017). Memo Re: Capistrano Valley Water District Groundwater Recovery Plant. AECOM. (2017). SCWD Infrastructure Master Plan Update. AKM Consulting Engineers. (2004). City of San Juan Capistrano Water Master Plan Update. AKM Consulting Engineers. (2006). City of San Juan Capistrano Non-domestic/Recycled Water Master Plan Update. Arcadis - SCWD. (2015). SCWD 2015 Urban Water Management Plan. Arcadis - SMWD. (2015). SMWD 2015 Urban Water Management Plan. Arcadis. (2016). City of San Juan Capistrano 2015 Urban Water Management Plan. AWWA. (2013). Water Loss Control: An Emerging Issue, The ABCs of the Water Loss Control Committee Report. Bauman, E. (2018, January 24). Correspondence. City of San Juan Capistrano. Bauman, E. (2018, January 22). Correspondence. City of San Juan Capistrano, CA: City of San Juan Capistrano. Black and Veatch. (2009). Revenue Requirements, Cost of Service Allocations, and Rate Design for the Water and Wastewater Utilities for City of San Juan Capistrano. California Department of Health Services. (2003). Water Permit No P-011 and Engineering Report Issued to SMWD System No California Urban Water Conservation Council. (n.d.). City Administrative Office. (2016). City of San Juan Capistrano Adopted Budget - Fiscal Years and City of San Juan Capistrano: City of San Juan Capistrano. City of San Juan Capistrano. (1978). Special Provisions for the Construction of Sanitary Sewers. WASTEWATER INFRASTRUCTURE ASSESSMENT

161 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment ATTACHMENT 1 - Page 161 of 230 City of San Juan Capistrano. (2006, Last revised 2012). Standard Specifications for the Construction of Domestic Water and Recycled Water Facilities. City of San Juan Capistrano. (2009, Last Updated 2014). Sewer System Managment Plan. City of San Juan Capistrano. ( ). Water Production and Billing Reports - FY City of San Juan Capistrano: City of San Juan Capistrano. City of San Juan Capistrano. (2016). Capital Improvement Plan in Budget FY City of San Juan Capistrano. (2016). Ordinance No Fire Code. City of San Juan Capistrano. (2017) Water Quality Report. City of San Juan Capistrano. (2017). City Peaking Flows 1/1/2010 to 12/31/2017. City of San Juan Capistrano: City of San Juan Capistrano. City of San Juan Capistrano. (2018, March 20). Water Service GIS Data. San Juan Capistrano, CA. City of San Juan Capistrano. (n.d.). Water Loss Audit EPA. (December 2016). Best Practices to Consider When Evaluating Water Conservation and Efficiency as an Alternative for Water Supply Extension. HDR. (2016). Utility Asset Summary for San Juan Capistrano. City of San Juan Capistrano: City of San Juan Capistrano. ISO. (2016). Hydrant Flow Summary for Ocfa Division 3, Orange County. MNWD. (1994, Last Revised 2017). Rules and Regulations for Recycled Water. MNWD. (2009). Sewer System Managment Plan. MNWD. ( ). Water Loss Audit MNWD. ( ). Water Quality Report. MNWD. (2015). Urban Water Management Plan MNWD. (2016). Article IV Rules and Regulations. WASTEWATER INFRASTRUCTURE ASSESSMENT 112

162 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment ATTACHMENT 1 - Page 162 of 230 MNWD. (2018). LAFCO MSR Request for Information and Questonnaire. MNWD. (2018). Standard Specifications for the Construction of Domestic Water, Sewer and Recycled Water Facilities. OC LAFCO. (2005). South Orange County Municipal Service Review and Sphere of Influence Study. OC LAFCO. (2007). South Orange County II Municipal Service Review and Sphere of Influence Study. OC LAFCO. (2013) Municipal Service Review and Sphere of Influence Updates for Orange County's Cities and Special Districts. Raftelis Financial Consultants, Inc. (2014). City of San Juan Capistrano Comprehensive Water, Non-Potable Water and Sewer Rate Study. Regional Water Quality Control Board. (2007). Investigative Order No R For SMWD Discharge of Untreated Sewage within the City of San Juan Capistrano. RWQCB Region 9. (2007). Order R Waste Discharge Requirements for Sewage Collection Agencies. SCWD. (2009, Last Revised 2014). Sewer System Management Plan. SCWD. (2018). LAFCO MSR Request for Information and Questionnaire. SCWD. (FY 17-21). Capital Improvement Plan. SMWD. (2013). Revised Plan of Works. SMWD. (2013, Amended on 2017). Policies and Procedures Handbook. SMWD. ( ). Water Loss Audit. SMWD. (2015). Rules and Regulations for Water, Recycled Water and Wastewater Services. SMWD. ( ). Water Quality Reports. SMWD. ( ). SMWD Water Reliability Projects Master Schedule. SMWD. (2018). Chiquita Action Plan Update. SMWD. (2018). LAFCO MSR Request for Information and Questionnaire. WASTEWATER INFRASTRUCTURE ASSESSMENT 113

163 Orange County LAFCO City of San Juan Capistrano Infrastructure Assessment 114 SMWD. (FY 2019). 5 Year Capital Replacement Program. SMWD. (January 2015). Sewer System Management Plan. SWRCB - Division of Drinking Water. (2017) Sanitary Survey for MNWD. SWRCB - Division of Drinking Water. (2017) Sanitary Survey for SCWD. SWRCB - Division of Drinking Water. (2017) Sanitary Survey for SMWD. SWRCB - Division of Drinking Water. (2017). CSJS 2016 Sanitary Survey. SWRCB. (2006). Order No Statewide General Waste Discharge Requirements for Sanitary Sewer Systems. SWRCB. (2018). SSO Public Report. California Integrated Water Quality System Project. SWRCB. (2018). Violations and Enforcement Reports. SWRCB. (March 26, 2016). Sanitary Sewer Overflow Reduction Program Annual Compliance Report. Tetra Tech, Inc. (2004). City of San Juan Capistrano Final Report - Sanitary Sewer System Master Plan. ATTACHMENT 1 - Page 163 of 230 WASTEWATER INFRASTRUCTURE ASSESSMENT

164 APPENDIX 2 CITY OF SAN JUAN CAPISTRANO FOCUSED MUNICIPAL SERVICE REVIEW FISCAL ASSESSMENT Prepared by Berkson Associates October 10, 2018 richard@berksonassociates.com ATTACHMENT 1 - Page 164 of 230