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CONTRACT 2676 OtherAGREEMENT BETWEEN THE CITY OF LOS ANGELES AND THE CITY OF EL SEGUNDO FOR THE CONVEYANCE, TREATMENT AND DISPOSAL OF WASTEWATER AGREEMENT RECITALS DEFINITIONS ........ "Agency" or "Agencies" "Amalgamated System" , .. . . "Amalgamated System Expenses" ......... "Amalgamated System Revenues" . . ... . ...... "Amalgamated System Sewerage Facilities Charge" "Amalgamated System Sewerage System Charge" . "Available Treatment Plant Effluent" .......... "Biochemical Oxygen Demand" or "BOD" ..... "Boundary Line Connection" . "By-product" .................... . "Capital Improvement Program" ...... . "Commercial Discharger" ......... "Contracting Entity" "Date of Execution" or "Execution" "Default" .................... . "Entity" or "Entities" ............. . "Fiscal Year (FY)" ............... "Flow Year" of Contents "General Fund Reimbursement Charge" "Incremental Cost Approach" "Industrial Discharger" ......... , "Local System" "Los Angeles" .,.,,..,, „ „, „.,, "Los Angeles' Wastewater Treatment and Collection System” or "System” . "Amalgamated System” .. . "Local System" ......... "MGD- miles" ........... . "Net Amalgamated System Expenses" "Nonpayment Charge" , . , .. . "Original Contracting Entities" "Party" or "Parties" ...... "Pass Through Flow" . .............................. . "Point of Discharge" ...... "Prime Rate" ........... "Proportionate Share" ..... "Reclaimed Water" ......... "Revenue Program" "Standard Methods" "Strength" ...... , ... "Surface Water Runoff" "Suspended Solids" or "SS" "System Buy -in Approach" . , .. „ , ... 6 "System Buy -out Approach" ........ . . ........ . . . ..... . . ..... . .. . . .. . .. 6 "Universal Terms" . . ............................... 6 "Unpaid Amount" ................... ............................... 6 "Value Engineering" ....... . .......... . ...... . . . ...... 6 CHARGE SYSTEM Amalgamated System Sewerage System Charge . Allocation of Expenses & Revenues . Amalgamated System Expenses Amalgamated System Revenues ........ Reclaimed Water ................. Amalgamated System Sewerage Facilities Charges ............. . ... . Requirements for Amalgamated System Sewerage Facilities Charges . Net Increase in Anticipated Discharge ......... Amalgamated System Sewerage Facilities Charge Rate Calculation ........... General Fund Reimbursement Charge . Nonpayment Charges Surface Water Runoff Privilege to Discharge Limitation of Discharge Amalgamated System Sewerage System Charges Amalgamated System Sewerage Facilities Charge 6 6 6 „ 7 .. 7 .10 ...............11 . 12 . 12 . 12 . 13 . 14 16 17 17 . 17 17 18 18 ADMINISTRATION Amalgamated System Sewerage System Charge Rate Development Expense and Revenue Allocation Amalgamated System Loadings Rate Adoption Ordinance ... Modification of Adopted Rates Billing .. , .. Payment Amalgamated System Sewerage Facilities Charge Payment Late Payment Discharge Flow and Strength . MGD - miles .. . DISCHARGE MEASUREMENT Responsibility for Monitoring, Estimating, Evaluating, and Reporting ......... Criteria for Measurement ...... ............................... Flow and Strength Reporting ......... . .... . .... Flow and Strength Measurement ....... Frequency..,..,..,... Physical Requirements Weather 19 19 19 20 .21 21 . 21 . 23 23 24 25 . 27 . 29 . 29 . 30 . 30 . 31 ..31 .31 .31 Flow Monitoring ..... Verification of Procedures ... . Missing Flow Data .......... . Missing Strength Data ......... Conditions for Waiver of Penalties Implementation ............... . MEETINGS .......................... Contracting Entity /Los Angeles Meetings . . Value Engineering . Financial Auditing . .31 . 32 33 34 . 34 ..35 35 35 . 36 36 OPERATION, LIABILITY, AND COMPLIANCE . 37 Ownership and Operation 37 Liability ........................... .............................37 Regulatory Liability . 37 General Liability .. ............................... . ........... 38 Liability Related to Non - Amalgamated System Facilities .. . . . ... . . .... . ..... 38 Gross Negligence ......... , . . 38 Notification of Claims ................... 38 Compliance with State and Federal Regulatory Requirements . 38 TERM OF AGREEMENT .... , , , ... . Reasons to Initiate Renegotiations ..... . Initial Time Prohibitions on Negotiations Negotiation Completion Requirements . . Negotiations at Expiration of the Term Conditions for Modification Proposals .... . Requirement for Good Faith Renegotiations Non - binding Mediation ......................... . . . . . . Termination Restriction ............... . ..... . ....... Month to Month Relationship ......... Termination of the Month to Month Relationship ... . Penalties for Violation of the Month to Month Relationship Conditions Contracting Entity Capital Investment Buyout CONFLICTS ... Default . , , .. , ...... Events Constituting a Default by Contracting Entity Events Constituting a Default by Los Angeles Remedies . . ........... Specific Performance ....... Cumulative Rights and Remedies Attorneys' Fees .,.,.,..... Dispute Resolution Scope of Dispute Resolution Exclusions . . 39 39 . 40 . 40 . 40 . 40 .41 41 ,41 ,.41 „ 42 . 42 . 42 . 44 44 44 44 44 . 44 . 45 45 45 . 45 . 45 Table of Contents Procedures for Disputes Regarding Invoices . . 46 Other Disputes ........ GENERAL PROVISIONS Supersedence .. , , .... • Applicability To Others ........................ Future Wastewater Service Contracts or Agreements Copies of New Agreements Revenue Program . Admissions by Parties ... . Construction of Agreement . Each Party Bears Own Costs . Waiver of Breach ............ Awareness of Contents /Legal Effect Agreement Binding on All . . Counterparts Severability ...... Captions .... Choice of Law Authority to Enter into This Agreement . Amendments and /or Changes to Agreement . . EFFECTIVE DATE . . 47 47 . 47 47 . 47 . 48 48 . 49 49 . 49 . 49 49 49 .,49 50 . 50 . 50 50 50 51 ..51 AGREEMENT This AGREEMENT ( "Agreement ") is made and entered into this 3rod day of March, 1999, by and between the CITY OF LOS ANGELES ( "Los Angeles ") and the CITY OF EL SEGUNDO ( "Contracting Entity") (collectively referred to herein as the "Parties" or individually as "Party"). RECITALS WHEREAS, Contracting Entity currently contracts with Los Angeles for the conveyance, treatment, and disposal of wastewater; and WHEREAS, disputes have arisen between Los Angeles and Contracting Entity in regard to a number of matters pertaining to the conveyance, treatment, and disposal of wastewater as well as charges regarding the same. Some of these disputes have resulted in a lawsuit, which has been consolidated with lawsuits between Los Angeles and other entities receiving wastewater service into a single case, LASC Case No. BC 034185 ( "Consolidated Action "), and a related case, LASC Case No. BC 128412 (collectively "Pending Actions "); and WHEREAS, Los Angeles and Contracting Entity desire to resolve these issues and enter into a new contract for conveyance, treatment, and disposal of wastewater; and WHEREAS, under the existing contract, Contracting Entity is authorized to discharge wastewater up to a specified flow. Under the existing contract, the charges imposed on Contracting Entity for operation and maintenance are based on actual volume of discharge and for capital are based on allowable volume of discharge; and WHEREAS, Los Angeles acknowledges that the wastewater system currently has unused system capacity; and WHEREAS, Los Angeles and Contracting Entity desire to eliminate discharge entitlements and make all unused capacity in the wastewater system available to either of the Parties as that Party's discharge increases, subject to the requirements and limitations set forth in this Agreement; and WHEREAS, Los Angeles and Contracting Entity desire to eliminate discharge entitlements in return for proportionally sharing future Sewerage Facility Charges, as hereinafter defined below, and for proportionally sharing in the capital costs for both the upgrade of existing facilities and the construction of new facilities; and WHEREAS, Los Angeles acknowledges that it is operating a regional wastewater system and is obligated to assess charges on a fair and equitable basis because Los Angeles has received state and federal grant funding; and WHEREAS, Los Angeles and Contracting Entity desire to base all treatment and disposal charges on actual discharge and to comply with federal and state requirements by measuring discharge in terms of flow and strength; and WHEREAS, Los Angeles and Contracting Entity desire to base all conveyance charges on actual flow and distance; and WHEREAS, Los Angeles and Contracting Entity desire to have all wastewater dischargers of the Amalgamated System, as more fully described herein below, pay equivalent rates for all fees and charges related to the Amalgamated System; NOW, THEREFORE, in consideration of the mutual promises specified herein and for other good and valuable consideration, Los Angeles and the Contracting Entity agree as follows: I. DEFINITIONS "Agency" or "Agencies" means any Entity(ies), other than Los Angeles, that is(are) signatory to an agreement or contract for wastewater services that complies with the Universal Terms. "Amalgamated System" (See "Los Angeles' Wastewater Treatment and Collection System ") " Amalgamated System Expenses" means those expenses used to determine the Amalgamated System Sewerage System Charge pursuant to Section II.B.2. "Amalgamated System Revenues" means those revenues used to determine the Amalgamated System Sewerage System Charge pursuant to Section II.B.3 of this Agreement. "Amalgamated System Sewerage Facilities Charge" means the charge, as determined in Section II.C.3, levied on new or expanding dischargers to recover the full cost of constructing Amalgamated System capacity to accommodate the anticipated increase in wastewater discharge. "Amalgamated System Sewerage System Charge" means the charge levied on an Entity to recover that Entity's Proportionate Share of the Net Amalgamated System Expenses. "Available Treatment Plant Effluent" means all treatment plant effluent that meets all applicable discharge standards and is not committed for the maintenance or preservation of a biological habitat as mandated by a county, state, or federal agency. "Biochemical Oxygen Demand" or "BOD" means the measure of the biochemically decomposable material in wastewater as represented by the oxygen uptake as determined by the procedures specified in Standard Methods. "Boundary Line Connection" means any wastewater discharge that is generated within the territorial boundaries of one Entity but is directly discharged to the sewer system of another Entity, and ultimately is treated by the Amalgamated System. "By- product" means any product, excluding Reclaimed Water, produced incidental to the process of treating wastewater. By- products may include, but are not limited to, electricity, digester gas, and biosolids products. "Capital Improvement Program" means Los Angeles' planned expenditures for capital projects in the Los Angeles Wastewater Treatment and Collection System. "Commercial Discharger" means any commercial user as defined in Appendix G, Revenue Program Guidelines of the Policy for Implementing the State Revolving Fund for the Construction of Wastewater Treatment Facilities published by the California State Water Resources Control Board, dated February 21, 1996 or as it may be revised from time to time. "Contracting Entity" means the City of El Segundo. 2 "Date of Execution" or "Execution" means the date the last Original Contracting Entity executes an agreement complying with the Universal Terms or the date Los Angeles executes an agreement complying with the Universal Terms with the last of the Original Contracting Entities, whichever occurs last. "Default" means those actions as specified in Section VIII.A. "Entity" or "Entities" means Los Angeles or any local governmental organization(s), whether a city or a sanitation district, any state or federal jurisdiction, or any other jurisdiction or organization, public or private, which is located outside Los Angeles' jurisdictional boundaries and receives wastewater conveyance, treatment, and disposal services from the Los Angeles Wastewater Treatment and Collection System pursuant to a contract with Los Angeles, except as provided in Section IX.B.1.b. "Fiscal Year (FY)" means the 12 -month period beginning on July 1 of one calendar year and ending on June 30 of the following calendar year or any other 12 month period mutually agreed to by the Parties. The designation for the Fiscal Year shall be based on the two partial calendar years included in the Fiscal Year (e.g. 1998 -99). "Flow Year" means the fourth quarter of one Fiscal Year and the first three quarters of the next Fiscal Year. The designation of the Flow Year (e.g. 1998 -99) shall be the same as that of the Fiscal Year from which the three quarters are utilized. "General Fund Reimbursement Charge" means the charge levied pursuant to Section II.D for reimbursement of the costs of emergency response services that are provided to the Amalgamated System but are paid for by Los Angeles' General Fund, separate and apart from costs that are reimbursed pursuant to Section II.B.2.a.(3). "Incremental Cost Approach" means the method of calculating the Amalgamated System Sewerage Facilities Charge in which the rate is based on the sum of (a) the value of that capacity of the Amalgamated System facilities that is unused and therefore available to provide service to new customers and (b) the present value of projected future costs within any Los Angeles' Capital Improvement Plan that are related to expanding the Amalgamated System capacity, all divided by the sum of the unused capacity plus the future capacity of the projects identified in any Los Angeles' Capital Improvement Plan. "Industrial Discharger" means any industrial user as defined in Appendix G, Revenue Program Guidelines of the Policy for Implementing the State Revolving Fund for the Construction of Wastewater Treatment Facilities published by the California State Water Resources Control Board, dated February 21, 1996 or as it may be revised from time to time. "Local System" (See "Los Angeles' Wastewater Treatment and Collection System "). "Los Angeles" means the City of Los Angeles, a municipal corporation and the individual organizational components thereof. "Los Angeles' Wastewater Treatment and Collection System" or "System" means all present and future facilities, including but not limited to plants, pipelines, pump stations, structures, tanks, valves, support facilities such as laboratories and maintenance yards, and other appurtenances owned by Los 3 Angeles to manage, operate, maintain, collect, convey, treat, store, distribute, and dispose of wastewater, treatment plant effluent, and By- products. "Amalgamated System" means that portion of the Los Angeles' Wastewater Treatment and Collection System exclusive of the Local System. "Local System" means the following facilities: a, One half of the Los Angeles - Glendale Water Reclamation Plant, the costs of which are paid by the City of Glendale. b. Pumping stations, pipelines, and other facilities needed to distribute Reclaimed Water to the extent that the facilities are not also needed to discharge treatment plant effluent to the ocean, Los Angeles River, or other receiving water in the event that the treatment plant effluent is not reused. c. Sewers less than 30 inches in diameter. d. Pumping plants and associated force mains, siphon structures and piping, diversion structures and junction structures with single influent sewers less than 30 inches in diameter, or, in the case of multiple influent sewers, where the equivalent single influent sewer is less than 30 inches in diameter as set forth in Section II.B.2.d. e. The Los Angeles Zoo treatment plant. f. The Japanese Garden at the Donald C. Tillman Water Reclamation Plant. "MGD- miles" means the product of the quantity of flow of an area of Los Angeles as set forth in Section BI.G.7, Contracting Entity, or other Entity discharging wastewater to the Amalgamated System and the distance between the Point of Discharge, as hereinafter defined, of that area of Los Angeles, Contracting Entity, or other Entity into the Amalgamated System and the point(s) of treatment as more fully described in Section III.G. "Net Amalgamated System Expenses" means the difference between the Amalgamated System Expenses and the Amalgamated System Revenues. "Nonpayment Charge" means the charge levied on an Agency to collect its share, as determined pursuant to Section ILE, of any Unpaid Amounts. "Original Contracting Entities" means collectively all of the following Entities which execute a contract for wastewater service complying with the Universal Terms, as herein defined, with Los Angeles by April 1, 1999: the City of Beverly Hills, the City of Culver City, County Sanitation Districts Nos. 4, 5, 9, 16, and 27 of Los Angeles County, the City of El Segundo, the City of San Fernando, and the City of Santa Monica. "Party" or "Parties" means Contracting Entity and /or Los Angeles. 4 "Pass Through Flow" means any wastewater discharge other than Boundary Line Connections, either measured or estimated, that is generated within one Entity's jurisdiction and is subsequently included in another Entity's measured discharge. "Point of Discharge" means either (a) the closest point on the boundary of Contracting Entity where flow is discharged by Contracting Entity into the Amalgamated System or (b) the population centroid of a drainage area within Los Angeles, of an Agency other than Contracting Entity, or of an Entity not signatory to an agreement complying with the Universal Terms. "Prime Rate" means the base rate on corporate loans posted by at least 75 % of the nation's 30 largest banks, as published in the Wall Street Journal or its successor publication. "Proportionate Share" means (a) for treatment/disposal, the quantity of wastewater discharged directly or indirectly by an Entity into the Amalgamated System measured in terms of flow and Strength, as calculated pursuant to Section III.F, divided by the total quantity of wastewater discharged into the Amalgamated System comprised of the same parameters, calculated pursuant to Section III.A.2, and (b) for conveyance, the quantity of wastewater discharged directly or indirectly by an Entity into the Amalgamated System measured in terms of MGD- miles, calculated pursuant to Section III.G, divided by the total MGD -miles from all Entities discharging wastewater to the Amalgamated System. Proportionate Share for the City of Glendale shall include the flow, Strength and MGD -miles for its share of sludge from the Los Angeles /Glendale Water Reclamation Plant. "Reclaimed Water" means Available Treatment Plant Effluent that is put to beneficial reuse in accordance with applicable laws and regulations. "Revenue Program" means the rate schedule and analysis that demonstrates that each class of wastewater discharger is paying its fair and equitable share of the cost of operating and maintaining the Amalgamated System, complying with the Revenue Program Guidelines of the Policy for Implementing the State Revolving Fund for the Construction of Wastewater Treatment Facilities published by the California State Water Resources Control Board, dated February 21, 1996 or as it may be revised from time to time. "Standard Methods" means the most recent edition of "Standard Methods for the Examination of Water and Wastewater," published by the American Public Health Association, the American Water Works Association, and the Water Environment Federation or their successors, or the successor publication which establishes the standards in the wastewater disposal industry. "Strength" means, upon Execution of this Agreement, the parameters of Biochemical Oxygen Demand and Suspended Solids, and, subsequently, as these parameters are modified or augmented pursuant to Section II.B.1.d. "Surface Water Runoff" means water contained in publicly -owned streambeds, channels or other catchments located on the ground surface or in publicly -owned storm sewers. Surface Water Runoff does not include groundwater, except for groundwater that has seeped into publicly -owned streambeds, channels or other catchments located on the ground surface or into publicly -owned storm sewers. "Suspended Solids" or "SS" means the insoluble solid matter in wastewater that is separable by laboratory filtration as determined by the procedures specified in Standard Methods. 5 "System Buy -in Approach" means the method of calculating the Amalgamated System Sewerage Facilities Charge in which the rates are based on the value of the Amalgamated System capital facilities, whether in service or still to be placed into service, calculated pursuant to Section II.C.4.a, divided by the total Amalgamated System flow and Strength capacity. "System Buy -out Approach" means the method of calculating the payment to an Agency for completely removing its wastewater from the Amalgamated System in which the rates are based on the value of the Amalgamated System facilities constructed subsequent to June 30, 1984,whether in service or still to be placed into service, calculated pursuant to Section II.C.4.a, divided by the total Amalgamated System flow and Strength. "Universal Terms" means those terms and conditions of this Agreement that were negotiated between Los Angeles and the Original Contracting Entities or, in the case of federal entities, provides the same cost recovery of Net Amalgamated System Expenses. These terms and conditions are set forth in detail in the Sections I through IX of this Agreement and as those terms and conditions may be amended pursuant to Sections VII and IX.P. "Unpaid Amount" means the difference between what Los Angeles has billed an Entity for Net Amalgamated System Expenses under its wastewater services contract or agreement, including any month -to -month charges levied pursuant to Section VII.I, and what the Entity actually has paid. "Value Engineering" means the process by which an independent engineer or group of engineers reviews and evaluates plans, specifications, and supporting engineering documents for a capital project, including the project's cost effectiveness. II. CHARGE SYSTEM A. General Los Angeles agrees to implement and Contracting Entity agrees to abide by a new charge system. The new charge system will: 1, allow Los Angeles to equitably recover, from each Agency, that Agency's Proportionate Share of the Net Amalgamated System Expenses by implementation of an Amalgamated System Sewerage System Charge, 2.. provide for the collection and crediting of Amalgamated System Sewerage Facilities Charges, 3. provide for the collection of General Fund Reimbursement Charges, and 4. provide for the collection of Nonpayment Charges. B. Amalgamated System Sewerage System Charge The Amalgamated System Sewerage System Charge shall be based on the operation and maintenance (O &M) costs and capital costs of the Amalgamated System for the Fiscal Year in 6 which service is provided. The charge shall include credits for all Amalgamated System Revenues as discussed in Section II.B.3. 1. Allocation of Expenses & Revenues The Net Amalgamated System Expenses shall be allocated to either conveyance or treatment /disposal as more fully defined in Section III.A.1. The allocated expenses shall then be divided by the appropriate Amalgamated System loading(s) to determine unit rates. a. The unit rate for conveyance shall be equal to the net conveyance expense divided by the Amalgamated System MGD -miles as calculated pursuant to Section III.A.2.c. b. The treatment /disposal expenses shall be further allocated among the parameters of flow and Strength in accordance with the procedures set forth in Section III.A.1. The unit rate for each parameter shall be equal to the portion of the Net Amalgamated System Expenses allocated to that parameter divided by the total Amalgamated System loading for that parameter. c. The total Amalgamated System quantities and loadings for MGD - miles, flow and Strength shall be determined in accordance with the procedures set forth in Section III.A.2. d. The Strength parameters shall be modified or augmented by Los Angeles as necessary to conform with state and federal requirements or, upon mutual consent of the Parties, to account for a constituent that causes the Amalgamated System to incur a significant cost that would otherwise not be incurred. 2. Amalgamated System Expenses a. The Amalgamated System Expenses, projected for the forthcoming Fiscal Year, used to determine the Amalgamated System Sewerage System Charge shall include the following: (1) The direct O &M costs of the Amalgamated System, including direct salary costs incurred by Los Angeles General Fund on behalf of the Amalgamated System and later charged to the Amalgamated System. (2) The direct capital costs of the Amalgamated System, whether for the purpose of upgrading existing facilities or for providing new and expanded facilities, including direct salary costs incurred by the General Fund on behalf of the Amalgamated System and later charged to the Amalgamated System. (3) Costs of administrative, management and support activities at the program, bureau, department and city -wide levels which are directly charged or allocated as overhead to the Amalgamated System, including the costs of administering any agreement for wastewater services that complies with the Universal Terms. 7 (4) The costs associated with support facilities such as laboratories and maintenance yards to the extent that those facilities are used to support the Amalgamated System. (5) The costs of portable equipment, such as vehicles and computers, to the extent that the equipment is used to support the Amalgamated System. (6) Compensated time off, retirement and fringe benefits added to the labor component of O &M and capital costs, to the extent that they are not already included in either the direct O &M or capital costs or in the overhead allocated to the Amalgamated System. (7) (8) (9) Costs associated with the operation, maintenance and construction of capital facilities relating to the processing, distribution or sale of By- products, which costs are incurred by Los Angeles and are related to the Amalgamated System, including the associated administrative and overhead costs. Principal and interest payments on and the costs of obtaining any loan that is attributable to the Amalgamated System, the proceeds of which are Amalgamated System Revenues pursuant to Section II.B.3.a.(4). Costs resulting from compliance with any program mandated by another governmental agency, or a court decree, settlement agreement or consent decree with a regulatory agency that are related to the Amalgamated System provided that Los Angeles shall make good faith efforts to make any such program available to Contracting Entity. However, the costs shall not be included if that program is mandated to be separately implemented and locally funded by any of the Agencies. (10) Liability as provided in Sections VLB and C. (11) Costs of preparing Los Angeles' Wastewater Revenue Program, developing charging and billing procedures and ordinances, calculating the charges and preparing the invoices pursuant to the provisions of this Agreement, and investigating adjustments and providing customer service related to service charges. Those activities which are related to Los Angeles' internal customers that were being performed by the Los Angeles Department of Water and Power as of the Date of Execution of this Agreement shall not be included regardless of who shall perform those activities in the future. (12) The capital and O &M costs of the Moss Avenue Pumping Station and portions of the Coastal Interceptor Sewer owned, managed, operated, maintained, and controlled by the City of Santa Monica at its sole and exclusive discretion, as set forth in Exhibit A. (13) Any fee or charge that is legally levied by an Agency on Amalgamated System sewers or pumping plants that are located within that Agency. (14) The compensation paid to an Agency removing its wastewater discharge from the Amalgamated System pursuant to Section VII.L, including any interest paid by Los Angeles for late payment pursuant to Section VII.L. b. The expenses used to determine the Amalgamated System Sewerage System Charge shall not include the following: (1) Costs related to the Local System. (2) Costs of issuance, interest and retirement of principal related to the Los Angeles capital financing program, except as identified in Section II.B.2.a.(8). (3) Costs related to the inspection, monitoring and enforcement programs for the Industrial Dischargers either located in Los Angeles or monitored by Los Angeles on behalf of another Entity, including associated administrative and laboratory services. (4) Costs of billing, collection, and enforcement activities which are related to Los Angeles' internal customers that were being performed by the Los Angeles Department of Water and Power as of the Date of Execution of this Agreement regardless of who shall perform those activities in the future. c. The conveyance portion of the capital and O &M costs included as Amalgamated System Expenses shall be equal to the sum of the total cost of all facilities 30 inches in diameter and greater and the total cost of all facilities 36 inches in diameter and greater, divided by two. d. For purposes of determining the conveyance costs included in the Amalgamated System Expenses pursuant to Section II.B.2. c and for inclusion as an Amalgamated System facility, the diameter of a pump station and associated force main, siphon structure and piping, diversion structure, junction structure, or sewage storage facility shall be considered to be equal to the diameter of the influent sewer to the pump station, siphon, diversion structure, junction structure, or sewage storage facility. The diameter of a vent station, manhole, or other appurtenance to a sewer shall be equal to the diameter of the sewer to which the appurtenance is connected. A pump station and force main, diversion structure, junction structure, or siphon structure and piping with multiple influent sewers shall be considered to have an equivalent single influent sewer of 30 inches or greater if: d.8 3 >_ 8,689 r =i and shall be considered to have an equivalent single influent sewer of 36 inches or greater if: n d.8 /3 > 14,130 !' q Where d; is the diameter of the influent sewer, in inches, and i= 1,2,...,n influent sewers. e. The treatment portion of the capital and O &M costs included in the allowable expenses set forth in Sections II.B.2.a shall include only one -half of the costs related to the Los Angeles- Glendale Water Reclamation Plant. 3. Amalgamated System Revenues a. The revenues to be credited against expenses in determining the Amalgamated System Sewerage System Charge shall include the following: (1) Amalgamated System Sewerage Facilities Charges - The Amalgamated System Sewerage Facilities Charges received from all Agencies and determined for Los Angeles pursuant to Section III.D.2 as new or anticipated burdens are placed on the Amalgamated System. (2) Any of the following penalties or interest: (3) (a) Reimbursement for any liability for non - compliance with state or federal regulatory requirements included as an Amalgamated System Expense for which a Party is solely responsible pursuant to Section VI.C. (b) Penalties paid by an Agency for violating the conditions of the month -to- month relationship pursuant to Section VII.K. (c) Interest paid by an Agency for late payment of amounts owed to Los Angeles in excess of compensation for the Agency's past capital payments pursuant to Section VII.L. (d) Proceeds of any penalty not otherwise allocated pursuant to this Agreement. Any grant receipts, FEMA funds, or other state or federal appropriations that offset Amalgamated System Expenses. (4) Any receipts of loans from the federal and /or state governments (e.g. from the State Revolving Fund) that are used to offset Amalgamated System Expenses, provided that Contracting Entity does not separately receive loans to offset its share of Amalgamated System Expenses. (5) Revenue from the sale of By- products. b. The revenues used to determine the Amalgamated System Sewerage System Charge shall exclude the following: (1) Proceeds from the Los Angeles capital financing program, including any bonds, certificates, commercial paper or other securities, except as included pursuant to Section II.B.3.a.(4). 10 (2) Interest and penalties for late payments pursuant to Section III.E. (3) Interest from a joint account established because an Agency disputes a portion of a bill pursuant to Section VIII.0 .3. Amalgamated System Sewerage System Charges related to monitoring penalty amounts, imposed pursuant to Sections IV.A.2, IV.F, and IV.G, shall not be considered as Amalgamated System Revenues because the penalty amounts are used to adjust the Proportionate Shares attributable to each Agency and Los Angeles. 4. Reclaimed Water Los Angeles and Contracting Entity shall share in the Available Treatment Plant Effluent produced by the Amalgamated System, as expressly set forth herein. a. Los Angeles shall have a proportionate right to all Available Treatment Plant Effluent produced by the Amalgamated System. The quantity of Available Treatment Plant Effluent to which Los Angeles has a right shall be equal to the total Available Treatment Plant Effluent produced by the Amalgamated System multiplied by the proportion its quantity of flow discharged into the Amalgamated System for the latest completed Flow Year, calculated pursuant to Section III.F.1.b, bears to the total Amalgamated System flow for the latest completed Flow Year calculated pursuant to Section IILA.2. For purposes of determining Los Angeles' proportionate right to Available Treatment Plant Effluent produced by the Amalgamated System, the quantity of flow discharged by Los Angeles shall include any flow discharged by an organization not having an agreement or contract that complies with the Universal Terms pursuant to Section IX.B.1.b. b. Contracting Entity shall have a proportionate right to Available Treatment Plant Effluent produced by the Amalgamated System. The quantity of Available Treatment Plant Effluent to which Contracting Entity has a right shall be equal to the total Available Treatment Plant Effluent produced by the Amalgamated System multiplied by the proportion its quantity of flow discharged into the Amalgamated System for the latest completed Flow Year, calculated pursuant to Section III.F.1.a, bears to the total Amalgamated System Flow for the latest completed Flow Year, calculated pursuant to Section III.A.2. c. The maximum amount of Available Treatment Plant Effluent which a Party may obtain from any individual Amalgamated System facility shall be limited to its proportionate right to Available Treatment Plant Effluent produced by the entire Amalgamated System, determined pursuant to Section II.B.4.a or b, multiplied by the total Available Treatment Plant Effluent produced at that Amalgamated System facility and divided by the total Available Treatment Plant Effluent produced by the entire Amalgamated System, except as allowed by Section II.B.4.e. d. In no event shall a Party have a right to more Available Treatment Plant Effluent from a combination of all treatment facilities in the Amalgamated System than its proportionate right to Available Treatment Plant Effluent produced by the entire Amalgamated System, determined pursuant to Section II.B.4.a or b. This limitation 11 on a Party's right shall not restrict a Party's ability to acquire Available Treatment Plant Effluent from any other Entity that has a right to Available Treatment Plant Effluent. e. Any Available Treatment Plant Effluent to which a Party has a right, but is not being utilized by that Party, may be utilized by the other Party at no cost until such time as the first Party utilizes the Available Treatment Plant Effluent or, if the first Party sells its share, until such time as the buyer of the first Party's share utilizes the Available Treatment Plant Effluent. g. Los Angeles shall provide Contracting Entity access to the Available Treatment Plant Effluent supply, as set forth above, at no cost to Los Angeles. Contracting Entity shall be responsible for acquiring any easements, rights -of -way, and permits as necessary and for constructing any facilities necessary for the Contracting Entity to receive Available Treatment Plant Effluent from any Amalgamated System facility. Los Angeles shall not unreasonably withhold the approval of nor unreasonably charge for any easements, rights -of -way, or permits requested by Contracting Entity. Los Angeles may impose reasonable conditions on granting access to the Available Treatment Plant Effluent supply as are necessary to ensure that such access does not interfere with its treatment operations. C. Amalgamated System Sewerage Facilities Charges 1. Requirements for Amalgamated System Sewerage Facilities Charges a. Each Party shall be responsible, pursuant to Section III.D, for Amalgamated System Sewerage Facilities Charges for any net increase in anticipated wastewater discharge, as determined pursuant to Section II.C.2, arising from new development, changes in land use, or increases in discharges from Industrial Dischargers within its jurisdiction or within jurisdictions for which it has assumed full responsibility. Although a Party is responsible for Amalgamated System Sewerage Facilities Charges, it is not obligated to levy the same or any charge upon individual dischargers within its jurisdiction. c. Surface Water Runoff discharged directly or indirectly to the Amalgamated System may be exempted from the Amalgamated System Sewerage Facilities Charge requirement pursuant to Section II.F.4. 2. Net Increase in Anticipated Discharge For purposes of determining whether an Amalgamated System Sewerage Facilities Charge will be required of a Party, the net increase in anticipated wastewater discharge shall be determined on a parcel by parcel basis, except where more than one parcel has been consolidated into a single development. In this case, the net increase will be based on the entire development. The net increase in anticipated wastewater discharge for any parcel or development shall be equal to the difference between the anticipated discharge and the baseline discharge for the parcel or development. 12 a. Anticipated Discharge For Industrial Dischargers, the anticipated discharge shall be based on the new permitted flow and the anticipated discharges of Strength. If the Industrial Discharger's discharge permit does not contain more accurate information, the anticipated discharges of Strength shall be equal to the discharges contained in the Los Angeles Sewage Generation Factor Table, established in accordance with Section III.F.4.a, proportioned by the amount of flow. For residential parcels and for Commercial Dischargers, the anticipated discharge shall be equal to the theoretical quantities of discharge for each of the parameters of flow and Strength based on the total square footage or other unit of measure, as adopted pursuant to Section III.F.4.a, and the intended use of the proposed project. b. Baseline Discharge The baseline discharge shall be the greater of: (1) For an Industrial Discharger, the highest annual flow, BOD, and SS measured during the five Flow Years preceding the Date of Execution of this Agreement. For residential parcels and for Commercial Dischargers, the theoretical quantity of discharge, established in accordance with Section III.F.4.a, for each of the parameters of flow, BOD, and SS at the time this Agreement is executed, or (2) the theoretical or permitted discharge that has been acquired through the payment of Amalgamated System Sewerage Facilities Charges pursuant to this Agreement. c. Future Strength Parameters Any future Strength parameter will be established for baseline discharge at the time the parameter is adopted pursuant to Section II.B.1.d. 3. Amalgamated System Sewerage Facilities Charge The Amalgamated System Sewerage Facilities Charges shall be calculated as follows: ASFC = [TSFCRQ + (CSFCRQ)(D,,,,11e8)](IDQ) + E(TSFCR e )(ID e Where: ASFC TSFCRQ, = The Amalgamated System Sewerage Facilities Charge; = The Amalgamated System Sewerage Facilities 13 pu: TSFCR &ems,,, Charge rates for flow related to treatment, calculated in terms of dollars per million gallons per day pursuant to Section II.C.4; The Amalgamated System Sewerage Facilities Charge rates for each Strength parameter related to treatment, calculated in terms of dollars per 1000 pounds per day pursuant to Section II.C.4; CSFCRQ. = The Amalgamated System Sewerage Facilities Charge rate related to conveyance, calculated in terms of dollars per MGD -mile pursuant to Section II.C.4; IDQ and IDength Party's net increase in anticipated annual average flow, and annual average Strength loading for each parameter, in terms of million gallons per day and 1000 pounds per day, respectively; and DMilee = Party's total MGD -miles for the latest completed Flow Year, calculated pursuant to Section III.G, divided by the Party's flow for the latest completed Flow Year, calculated pursuant to Section III.F.1. 4. Rate Calculation The Amalgamated System Sewerage Facilities Charge rates levied upon a Party shall be based on the System Buy -in Approach as described below. Pursuant to the provisions of Section VILA, following the initial ten year non - renegotiation period, either Party may initiate renegotiations to change the basis of the Amalgamated System Sewerage Facilities Charge to the Incremental Cost Approach provided that the conditions of Section VILE are met. a. Value of Facilities (1) The value of any Amalgamated System facility in service shall be equal to the full cost of that facility inflated to reflect present costs and then depreciated. (2) The value of any Amalgamated System facility under construction or not yet in service, also known as "Construction Work In Progress" shall be equal to the full cost of that facility inflated to reflect present costs but not depreciated. (3) The remaining principal on any loan from the federal and /or state governments that was used to offset the cost of an Amalgamated System facility, pursuant to Section II.B.3.a.(4) shall be subtracted from the value of that facility. (4) The full cost shall be equal to the original acquisition cost, including all direct and indirect costs and all design and construction management costs, of those Amalgamated System facilities contained in Los Angeles' wastewater fixed asset register and Los Angeles' wastewater Construction Work in Progress. 14 (5) Inflation to present worth shall be calculated using the Engineering News Record Construction Cost Index or its equivalent. (6) Depreciation shall be calculated using the straight -line depreciation method with the same asset lives used by Los Angeles in its accounting reports. Design Capacity of Amalgamated System Facilities (1) Treatment - related Facilities The design capacities for flow and Strength used to calculate the Amalgamated System Sewerage Facilities Charge rate shall be equal to: (a) the sum of the average influent flow and Strength capacities, respectively, of the Donald C. Tillman Water Reclamation Plant, the Terminal Island Treatment Plant, the Hyperion Treatment Plant, and any other reclamation or treatment plant that is incorporated into the Amalgamated System, plus (b) one -half of the average influent flow and Strength capacities, respectively of the entire Los Angeles- Glendale Water Reclamation Plant, less (c) the sum of the design flow and Strength, respectively, of the sludge returned to the Amalgamated System conveyance system from the Donald C. Tillman Water Reclamation Plant and any other reclamation plant that is incorporated into the Amalgamated System, less (d) one -half of the design flow and Strength, respectively, of the sludge returned to the Amalgamated System conveyance system from the entire Los Angeles- Glendale Water Reclamation Plant. The average influent flow and Strength capacities for the treatment and reclamation plants shall be the design values as adopted by Los Angeles' Board of Public Works or any revised values adopted by Los Angeles' Board of Public Works where the revised values reflect changes in regulation by a county, state, or federal agency or where the revised values more accurately reflect the true capacities of the plants as demonstrated by Los Angeles. The standard flow and Strength loadings in the sludge returned to the Amalgamated System conveyance facilities from the reclamation plants shall be the values used in the planning and /or design of the Amalgamated System facilities as adopted by Los Angeles' Board of Public Works or any revised values adopted by Los Angeles' Board of Public Works where the revised values more accurately reflect the average flow and Strength loadings of the sludge produced by the reclamation plants when they are operated at their influent capacities, as demonstrated by Los Angeles. 15 (2) Conveyance - related Facilities The capacity of conveyance - related facilities, measured in terms of MGD- miles, shall be equal to the Amalgamated System flow capacity, calculated pursuant to Section II.C.4.b.(1), multiplied by the average distance of the Amalgamated System. The average distance of the Amalgamated System shall be equal to the sum of the MGD -miles of Los Angeles, Contracting Entity, and all other Entities discharging wastewater to the Amalgamated System, calculated pursuant to Section III.G, divided by the total flow in the Amalgamated System, calculated pursuant to Section III.A.2. The MGD- miles and total flow in the Amalgamated System shall be determined using data for the latest Flow Year completed prior to the adoption of the Amalgamated System Sewerage Facilities Charge rates pursuant to Section III.A.3. c. Rates (1) The value of each facility that is part of the Amalgamated System, either by its inclusion in the fixed asset register or the Construction Work In Progress, shall be allocated to conveyance and to treatment flow and Strength by cost centers and using the same allocation factors adopted by Los Angeles pursuant to Section III.A.1.b. (2) The Amalgamated System Sewerage Facilities Charge rates shall be calculated by dividing the allocated costs of all capital facilities that are part of the Amalgamated System by the Amalgamated System design conveyance and treatment flow and Strength capacities as determined pursuant to Section II.C.4.b. D. General Fund Reimbursement Charge 1, Contracting Entity shall pay a General Fund Reimbursement Charge to compensate the Los Angeles general fund for the Contracting Entity's share of providing emergency response services to the Amalgamated System. The General Fund Reimbursement Charge shall be calculated based on the formula ( "Formula ") set forth in Exhibit B, which is attached hereto and is incorporated herein by this reference as if it were set forth fully herein. In no case shall the General Fund Reimbursement Charge exceed an amount equal to the O &M portion of the Amalgamated System Sewerage System Charge levied upon Contracting Entity times the lesser of: (1) 5 %, or (2) the percentage of operating revenues levied upon the Los Angeles' wastewater enterprise fund as general fund reimbursement, pursuant to Los Angeles Municipal Code Section 64.60 and as that Section may be amended from time to time. Los Angeles shall not initiate any action to revise or invalidate the Formula. The Formula may only be amended or revised under the following circumstances: (a) the State Water Resources Control Board or the Environmental Protection Agency, on its own initiative, requires or mandates the change; or (b) a court of competent jurisdiction rules in final, binding judgment that the Formula is invalid or illegal. Prior to any change in the Formula, and before implementation of any revised Formula, Los Angeles must obtain the written 16 approval of the State Water Resources Control Board or the Environmental Protection Agency, or their successor agencies, stating that the proposed change and the revised Formula comply with the Revenue Program Guideline requirements. 2. Provided that Contracting Entity interpleads or otherwise names Los Angeles in any court challenge, Contracting Entity shall not be responsible for any General Fund Reimbursement Charge that is held to be invalid or illegal, or any amount that is held to be excessive for Los Angeles or any Agency by a court of competent jurisdiction. 3. If, in finding that the General Fund Reimbursement Charge is invalid, illegal, or excessive, a court of competent jurisdiction rules that monies collected for this purpose must be returned, Los Angeles shall within 90 days return or credit all General Fund Reimbursement Charges paid by Contracting Entity that are ordered to be returned by the court. E. Nonpayment Charges As of October 1 following the end of each Fiscal Year, Los Angeles shall determine all of the Unpaid Amounts which have became more than 120 days delinquent since the previous October 1. Contracting Entity shall pay a Nonpayment Charge equal to the Unpaid Amounts multiplied by Contracting Entity's Proportionate Share of the Net Amalgamated System Expenses for the Fiscal Year and divided by the total Proportionate Shares of the Net Amalgamated System Expenses for the Fiscal Year for Los Angeles and all Agencies without any Unpaid Amounts. F. Surface Water Runoff 1. Privilege to Discharge a. Either Party may discharge Surface Water Runoff, directly or indirectly, to the Amalgamated System, subject to the conditions set forth in Section II.F. b. Discharge of Surface Water Runoff during the period of November 1 through March 31 shall be prohibited. c. Discharge of Surface Water Runoff shall be prohibited unless Los Angeles has obtained a waiver from the U.S. Environmental Protection Agency or has otherwise demonstrated that the discharge of Surface Water Runoff complies with the state and federal revenue program guidelines. 2. Limitation of Discharge a. The total Surface Water Runoff discharge to all treatment and reclamation plants in the Amalgamated System from all dischargers shall not exceed 5% of the Amalgamated System flow capacity, as defined in Section II.C.4.b. b. The Surface Water Runoff discharge to any treatment or reclamation plant other than the Hyperion Treatment Plant shall be limited to an aggregate amount from all dischargers that does not exceed 5% of the flow capacity of that treatment or reclamation plant, as defined in Section II.C.4.b. 17 c. The Surface Water Runoff discharge to any treatment or reclamation plant shall not exceed the difference between the flow capacity at that treatment or reclamation plant, as defined in Section II.C.4.b, and the influent flow, exclusive of Surface Water Runoff, at that treatment or reclamation plant. 3. Amalgamated System Sewerage System Charges Any Party who discharges Surface Water Runoff to the Amalgamated System shall be responsible for the full Amalgamated System Sewerage System Charge for the total amount of Surface Water Runoff discharged by the Party to the Amalgamated System. 4. Amalgamated System Sewerage Facilities Charge a. Treatment Facilities (1) If the aggregate amount of Surface Water Runoff discharged by all Agencies and Los Angeles does not cause any of the limitations as set forth in Section II.F.2 to be violated, no payment of Amalgamated flow System Sewerage Facilities Charges shall be required. (2) If the aggregate amount of Surface Water Runoff discharged by all Agencies and Los Angeles causes any of the limitations as set forth in Section II.F.2 to be violated, the discharges shall be divided into categories and prioritized as follows: (3) Category 1 Mandated by a responsible agency of the County of Los Angeles, the State of California, or the United States Category 2 - Voluntary discharge Beginning with all of the dischargers in Category 2 and then moving to Category 1, the full Amalgamated System Sewerage Facilities Charge must be paid or the flow removed from the Amalgamated System until the remaining Surface Water Runoff no longer causes the limitations as set forth in Section II.F.2 to be violated. The portions of their discharges for which the dischargers shall be required to pay the Amalgamated System Sewerage Facility Charge or remove flow from the Amalgamated System shall correspond to the proportions of the total Surface Water Runoff in their respective categories that they discharge. For purposes of this calculation, any Surface Water Runoff for which an Amalgamated System Sewerage Facilities Charge has been paid shall not be included. Once any discharger within a given category has been required to pay the Amalgamated System Sewerage Facilities Charge, all subsequent dischargers in that category shall also be required to pay the Amalgamated System Sewerage Facilities Charge. For purposes of this Section, the flow capacities of the treatment or reclamation plants and of the Amalgamated System shall be as determined pursuant to Section II.C.4.b, the plant influent flow shall be the average plant influent flow for the most recently completed Flow Year, and the amount of 18 Surface Water Runoff shall be the average discharge. The average discharge shall be defined as the total discharge during a Flow Year divided by the number of days of actual discharge during that same Flow Year. b. Conveyance Facilities (1) Each Fiscal Year before discharging Surface Water Runoff into a conveyance system owned by the other Party, a Party wishing to discharge Surface Water Runoff shall first obtain permission from the other Party. (2) If the individual Surface Water Runoff discharge from any given point of diversion of a Party causes the total peak dry weather flow in the receiving conveyance system to exceed the capacity of any part of the system, the Party owning the receiving conveyance system with insufficient capacity may deny the other Party the right to discharge that portion of the Surface Water Runoff which causes the exceedence. For purposes of this paragraph, the capacity of any sewer within the receiving conveyance system shall be that peak dry weather flow which causes the sewer to flow at three- quarters (3/4) of its full depth. The capacity of any pumping station within the receiving conveyance system shall be ninety (90) percent of the rated capacity of the plant. III. ADMINISTRATION A. Amalgamated System Sewerage System Charge Rate Development 1. Expense and Revenue Allocation a. The allocation of O &M costs to flow and Strength shall be determined by using updated cost accounting information for individual cost centers, typically unit processes, and distribution of the O &M expenditures utilizing process- specific O &M distribution factors adopted by the Los Angeles Board of Public Works for each cost center. The cost accounting information shall be updated for the first full Fiscal Year following completion of secondary treatment facilities under construction at the Hyperion Treatment Plant as of the Date of Execution of this Agreement. Thereafter, this information shall be updated not less than once every two years using the average O &M expenditures from the two most recently completed Fiscal Years. Plant -wide allocation percentages shall be calculated by dividing the distributed O &M costs by the total costs and shall be used to allocate anticipated O &M costs in Los Angeles' Revenue Program. b. The allocation of capital costs to flow and Strength shall be determined by assigning anticipated capital expenditures for the forthcoming Fiscal Year to individual cost centers, typically unit processes, and distribution of these anticipated expenditures utilizing process- specific distribution factors adopted by the Los Angeles Board of Public Works for each cost center and shall be incorporated into Los Angeles' Revenue Program. 19 2. Amalgamated System Loadings a. The Amalgamated System flow and Strength loadings, respectively, shall be equal to: (1) the sum of the influent flow and Strength loadings, respectively, at the Donald C. Tillman Water Reclamation Plant, the Terminal Island Treatment Plant, the Hyperion Treatment Plant, the entire Los Angeles- Glendale Water Reclamation Plant and any other reclamation or treatment plant that is incorporated into the Amalgamated System, less (2) the sum of the flow and Strength loadings, respectively, in the sludge returned to the Amalgamated System conveyance system from the Donald C. Tillman Water Reclamation Plant, the entire Los Angeles- Glendale Water Reclamation Plant and any other reclamation plant that is incorporated into the Amalgamated System, less (3) the City of Glendale's share of the influent flow and Strength loadings, respectively, at the Los Angeles- Glendale Water Reclamation Plant, plus (4) the flow and Strength loadings, respectively, in Glendale's share of the sludge that is returned to the Amalgamated System conveyance system from the Los Angeles- Glendale Water Reclamation Plant. Glendale's share of the influent flow at the Los Angeles- Glendale Water Reclamation Plant shall be equal to one -half (l) of the total influent flow at the plant. Glendale's share of the influent Strength loadings, measured in pounds per day, shall be equal to Glendale's share of the influent flow, measured in million gallons per day, multiplied by the average concentrations of Strength discharged from Glendale, measured in milligrams per liter, and multiplied by 8.34, a conversion factor. Glendale's share of the sludge flow from the Los Angeles- Glendale Water Reclamation Plant shall be equal to one -half (l) of the total sludge flow from the Los Angeles -Glendale Water Reclamation Plant for the latest completed Flow Year. Glendale's share of the Strength loadings in the sludge from the Los Angeles - Glendale Water Reclamation Plant shall be equal to the Strength loadings in Glendale's share of the influent to the plant multiplied by the Strength loadings in the sludge of the plant, and divided by the total Strength loadings in the plant influent. b. For purposes of calculating the Amalgamated System Sewerage System Charge rates and for determining the flow and Strength loadings from Los Angeles pursuant to Section III.F.1.b, the Amalgamated System flow and Strength loadings shall be equal to the quantities determined in Section III.A.2.a plus the sums of any penalty amounts determined pursuant to Sections IV.A.2, IV.F.2.a, IV.F.3.b, IV.G.2.a, and IV.G.3.b. c. The Amalgamated System MGD -miles shall be equal to the sum of the MGD -miles for all areas as set forth in Section III.G. 20 3. Rate Adoption Ordinance Los Angeles shall annually adopt, by ordinance, in conformance with the requirements and provisions of this Agreement, the rates to determine the Amalgamated System Sewerage System Charges and Amalgamated System Sewerage Facilities Charges for the use of the Amalgamated System. This rate setting process will begin with the first full Fiscal Year following Execution of the Agreement and continue every Fiscal Year thereafter. The rates for the first partial year, if any, after Execution of the Agreement shall be those that were mutually agreed to by the Parties prior to Execution of this Agreement. a. Rate Adoption Time Frame - Los Angeles shall adopt rates for service to be provided in the next Fiscal Year prior to the start of that Fiscal Year. To allow sufficient time for the Contracting Entity to adopt corresponding rates for its own jurisdiction, Los Angeles shall provide the adopted rates no later than four (4) months prior to the start of the Fiscal Year for which they are to become effective. If there are less than four (4) months between the Execution of this Agreement and the start of the next Fiscal Year, Los Angeles shall provide preliminary rates within one (1) month of Execution of this Agreement and shall adopt rates within four (4) months of the Execution of this Agreement. b, Breakdown of Charges to O &M and Capital - The rate adoption ordinance shall provide a breakdown of the Amalgamated System Sewerage System Charge rates into the categories of O &M and capital. c. At the same time that Los Angeles submits information on the forthcoming annual rates, Los Angeles shall provide an estimate of Amalgamated System Sewerage Service Charges for the following five year period. This estimate shall not be binding and shall only be used by the Agencies for planning purposes. 4. Modification of Adopted Rates If during a given Fiscal Year it becomes apparent that the actual expenditures in that Fiscal Year will exceed the anticipated expenditures used to establish the rates for the Amalgamated System Sewerage Service Charge in that Fiscal Year, Los Angeles may adopt a new rate ordinance to reflect the increased costs and subsequent payments will be based on the newly adopted rates. If Los Angeles adopts new rates pursuant to this Section, Los Angeles shall also prepare new invoices pursuant to Sections III.B.1, 2 and 3 for any remaining periods within the Fiscal Year for which the new rates will apply. B. Billing 1. Los Angeles shall prepare an annual estimated bill containing bimonthly installments for the Amalgamated System Sewerage System Charge and the General Fund Reimbursement Charge to the Contracting Entity. The bill shall be postmarked to Contracting Entity no later than 30 days prior to the start of the Fiscal Year for which the bill applies. 2. The Amalgamated System Sewerage System Charge portion of the bimonthly installments shall be calculated as follows: 21 Bimonthly Amount = [(RQ x DQ) + E(Rsrength x D &rength) + (Rc X Dc)] x F / 6 where: RQ -- The Amalgamated System Sewerage System Charge rate for the Fiscal Rstrengw Year which is attributable to flow in terms of dollars per million gallons; The Amalgamated System Sewerage System Charge rate for the Fiscal Year which is attributable to each Strength parameter in terms of dollars per 1000 pounds; Rc - The Amalgamated System Sewerage System Charge rate for the Fiscal Year which is attributable to MGD -miles in terms of dollars per MGD - mile; DQ D e - The wastewater flow, including any treatment sludge, discharged by Contracting Entity during the latest completed Flow Year; The quantity of each Strength parameter, including any treatment sludge, discharged by Contracting Entity during the latest completed Flow Year; Dc = The MGD -miles attributable to Contracting Entity for the latest completed Flow Year, calculated pursuant to Section III.G; F Payment factor equal to the ratio of actual expenditures to budgeted expenditures, averaged over the three most recently completed Fiscal Years, multiplied by 0.9. 3, The General Fund Reimbursement Charge portion of the bimonthly installments shall be calculated pursuant to Section II.D. 4, Within six months following the conclusion of a Fiscal Year, Los Angeles shall submit to Contracting Entity a reconciliation invoice for the Amalgamated System Sewerage System Charge and the General Fund Reimbursement Charge for services provided during that Fiscal Year. For purposes of calculating the reconciliation invoice, the Proportionate Share shall be determined using quantities for the Flow Year with the designation corresponding to the same Fiscal Year for which service is provided and for which the reconciliation invoice applies. The reconciliation invoice shall include the following : a. the Contracting Entity's reconciled Amalgamated System Sewerage System Charge which shall be calculated as its Proportionate Share of the actual Net Amalgamated System Expenses for that Fiscal Year, including credit for all Amalgamated System Sewerage Facilities Charges paid by the Agencies and determined for Los Angeles, although not paid by Los Angeles, pursuant to Section III.D.2, less any payments already made pursuant to Section III.C.1. This part of the bill will also break the total actual Net Amalgamated Expenses for the Fiscal Year into expenses attributable 22 to O &M and expenses attributable to capital in accordance with Los Angeles' adopted policy on capitalization. b, the Contracting Entity's reconciled General Fund Reimbursement Charge for that Fiscal Year which shall be calculated pursuant to Section II.D.1, less any General Fund Reimbursement Charge payments already made by Contracting Entity during the Fiscal Year pursuant to Section III.C. c. any Nonpayment Charge for the past Fiscal Year pursuant to Section II.E. d. a statement of the flow and Strength, including any penalty amounts, of each Entity discharging into the Amalgamated System. e. a statement of the final Amalgamated System rates. C. Payment 1. Contracting Entity shall make the payments for the bimonthly installments of the Amalgamated System Sewerage System Charge and the General Fund Reimbursement Charge, prepared pursuant to Section III.B.1, for each Fiscal Year in a timely manner so that they are postmarked by the last business day of July, September, November, January, March, and May, respectively, or within 30 days of receipt of the annual bill by Contracting Entity, which ever comes later. 2. Contracting Entity shall pay the reconciliation invoice within 30 days of its receipt. D. Amalgamated System Sewerage Facilities Charge Payment 1. Beginning on the Date of Execution of this Agreement, Contracting Entity and Los Angeles shall be responsible for Amalgamated System Sewerage Facilities Charges in accordance with Section II.C.1. 2. All of Contracting Entity's Amalgamated System Sewerage Facilities Charges for its increased flow and strength during each bimonthly billing period shall be calculated by Contracting Entity and submitted along with the next bimonthly payment made pursuant to Section III.C.1. The Amalgamated System Sewerage Facilities Charges for which Los Angeles is responsible shall be calculated by Los Angeles after the end of each Fiscal Year. Los Angeles' and Contracting Entity's Amalgamated System Sewerage Facilities Charge shall be calculated pursuant to Section II.0 using rates adopted pursuant to Section III.A.3. These amounts are Amalgamated System Revenues and shall be subtracted from the Net Amalgamated System Expenses when determining the reconciliation invoices pursuant to Section III .B.4.a. 3, Within 60 days following the end of each Fiscal Year, Contracting Entity shall submit a report to Los Angeles listing all new development, changes in land use, or increases in discharges from Industrial Dischargers which could result in a net increase in wastewater discharge during the Fiscal Year or partial Fiscal Year following the Date of Execution. The report shall total the increased flow, Strength loadings and MGD -miles resulting from the development, changes in land use and increases in discharges from Industrial 23 Dischargers listed in the report. Within 60 days following the end of each Fiscal Year, Los Angeles shall submit to Contracting Entity a report listing all of the new development, changes in land use and increases in discharges from Industrial Dischargers in the areas for which Los Angeles has responsibility and which could result in a net increase in wastewater discharge during the Fiscal Year or partial Fiscal Year following the Date of Execution. The report shall total the increased flow, Strength loadings and MGD -miles resulting from the development, changes in land use and increases in Industrial discharges listed in the report for Los Angeles. Either Party may, at its own cost, audit the other Party's records to assess compliance with the foregoing requirement. 4. Los Angeles shall notify Contracting Entity in writing if Contracting Entity's wastewater discharges are increasing at a rate that exceeds the growth rate upon which Los Angeles' long -range capacity plans for the System are based. If Los Angeles' wastewater discharges are increasing at a rate greater than the growth rate upon which the long -range capacity plans are based, Los Angeles shall notify Contracting Entity in writing. 5, By February 1 of each year, Contracting Entity shall provide Los Angeles with an estimate of the long -term increased flow and Strength loadings arising from new development, changes in land use and increases in discharges from Industrial Dischargers within its jurisdiction during the forthcoming Fiscal Year. This information shall be used for planning purposes only; there is no implied warranty as to its accuracy. E. Late Payment 1. Any payments of Amalgamated System Sewerage System Charges, General Fund Reimbursement Charges, Nonpayment Charges or Amalgamated System Sewerage Facilities Charges that are late shall be subject to interest on the original amounts due at the Prime Rate in effect when the payment first became due plus one (1) percent for payments that are 1 to 30 days late, the Prime Rate in effect when the payment first became due plus five (5) percent for payments 31 to 60 days late, and the Prime Rate in effect when the payment first became due plus ten (10) percent for payments more than 60 days late, not to exceed the maximum rate allowed by law. As long as payment, including applicable interest and penalties, is made within 120 days, Contracting Entity shall not be deemed to be in Default. 2, Los Angeles shall credit Contracting Entity for any Unpaid Amount that is subsequently paid by an Agency other than Contracting Entity, provided that Contracting Entity has paid a Nonpayment Charge corresponding to its share of the original Unpaid Amount. Los Angeles shall notify Contracting Entity of the credit within ten (10) business days of receiving the payment of the Unpaid Amount. Contracting Entity shall deduct the amount of the credit from its next bimonthly payment of Amalgamated System Sewerage System Charges, provided the payment of the Unpaid Amount was received no less than ten (10) days before the due date of the next bimonthly payment. If the payment of the Unpaid Amount is received less than ten (10) days before the due date of the next bimonthly payment, Contracting Entity shall deduct the credit from its second bimonthly payment of the Amalgamated System Sewerage System Charges following the payment of the Unpaid Amount. Noticing shall be pursuant to the requirements of Section IX.O. The credit shall be equal to: 24 a. The amount of the previous Nonpayment Charge, plus b. Any related interest and penalties paid by the delinquent Agency over the period of time from when Contracting Entity is billed the Nonpayment Charge to when the Unpaid Amount is recovered, multiplied by Contracting Entity's Proportionate Share of the Net Amalgamated System Expenses for the Fiscal Year divided by the total Proportionate Shares of the Net Amalgamated System Expenses for the Fiscal Year for Los Angeles and all Agencies without any late or delinquent payments. 3. If Los Angeles does not notify Contracting Entity within ten (10) days of receipt of the payment of an Unpaid Amount by an Agency, Los Angeles shall credit Contracting Entity with interest at a rate equal to the Prime Rate in effect when the credit first became due plus ten (10) percent over the period of time from when the Unpaid Amount was paid to the date that Los Angeles notifies Contracting Entity of the credit. F. Discharge Flow and Strength 1. Discharge Quantities The quantity of wastewater flow and Strength discharged by each Party, including any wastewater treatment sludge and Surface Water Runoff, shall be calculated at the end of each Flow Year as follows: a. The total quantity of flow and Strength discharged from Contracting Entity shall be equal to: (1) the sum of all quantities measured, pursuant to Sections III.F.2 and IV.B, at gauging stations located on sewers discharging from Contracting Entity either directly or indirectly to the Amalgamated System, less (2) any quantities from Surface Water Runoff, Pass Through Flows, and Boundary Line Connections which originate from any Entity besides Contracting Entity that pass through a gauging station located on sewers discharging from Contracting Entity, less (3) any wastewater or Surface Water Runoff that is generated within the territorial boundaries of jurisdictions or organizations for which Los Angeles has assumed responsibility pursuant to Section IX.B.1.b that passes through a gauging station located on sewers discharging from Contracting Entity, plus (4) the quantities, pursuant to Section III.F.3, that are generated in Contracting Entity's ungauged areas and discharged either directly or indirectly to the Amalgamated System, including Boundary Line Connections. b. The total quantity of flow and Strength discharged by Los Angeles shall be equal to: (1) the total Amalgamated System flow and Strength loadings, calculated as set forth in Section III.A.2, less 25 (2) the sum of all quantities discharged by the Agencies and other Entities to the Amalgamated System. 2. Measurement Methodology a. The measurement of the quantity of flow or Strength of any discharge pursuant to Section IV.B shall be performed in accordance with the requirements of Section IV.D. Strength shall be measured following the sampling and analysis protocols recommended in Standard Methods. All analyses of Strength samples shall be performed by a laboratory certified to conduct such analyses by the California State Department of Health Services pursuant to the Environmental Laboratory Act of 1988, and as that Act may be amended from time to time. b. The total mass emission of Strength at any given monitoring station shall be equal to the daily average pounds per day of Strength measured at the monitoring station multiplied by the number of days in the Flow Year. The daily average pounds per day shall be equal to the straight average of the samples taken, as follows: (1) For the first three years following Execution of this Agreement, it shall be based on all samples taken from the Date of Execution through the end of the Flow Year. (2) After the first three years following Execution of this Agreement, it shall be based on samples taken only during the three most recently completed Flow Years. 3. Estimation Methodology The quantity of flow or Strength of any discharge that is not measured pursuant to Section IV.B, including the discharge from Boundary Line Connections and Pass Through Flows, shall be equal to the sum of the estimated discharges from each of the individual dischargers within the ungauged area, except that Los Angeles need not estimate the quantities of Pass Through Flows or Boundary Line Connections if they are tributary to unmeasured areas for which the discharges are estimated. However, if requested by Contracting Entity for purposes of its facilities planning, Los Angeles shall make this information available to Contracting Entity. a. The flow and Strength discharges for residential customers shall be estimated using the theoretical factors adopted pursuant to Section III.F.4.b. b. Where a Party bases its service charges to Commercial /Industrial Dischargers on their metered water usage, the flows for those dischargers shall be estimated based on their metered water usage and the percentage of water usage that is discharged to the sewer, which percentage is as adopted by Los Angeles for use in charging the dischargers within its corporate limits and included in its Wastewater Revenue Program. Where a Party monitors Industrial Dischargers' flows directly, those dischargers' estimated flows shall be based on the monitored flows. Where a Party does not base its service charges to Commercial /Industrial Dischargers on metered 26 water usage or monitored flows, the flows for those dischargers shall be estimated using the theoretical factors adopted pursuant to Section III.F.4.b. c. The Strength discharged by Commercial /Industrial Dischargers shall be estimated using the theoretical factors adopted pursuant to Section III.F.4.b, except where Strength concentrations are monitored. Where a Party monitors Industrial Dischargers' Strength concentrations, those customers' estimated Strength shall be based on the monitored concentrations. 4. Estimation Factors a, For purposes of determining estimated discharges for the calculation of Amalgamated System Sewerage Facilities Charges, Los Angeles' Board of Public Works shall adopt a list of user categories and assumed loadings per unit of usage for each category. This list of user categories and assumed loadings shall be known as the Los Angeles Sewage Generation Factor Table. b. For purposes of determining estimated discharges for ungauged areas and Boundary Line Connections, Los Angeles' Board of Public Works shall adopt another list of user categories and an assumed flow and Strength per unit of usage for each category. This list of user categories and assumed loadings shall be based on the Los Angeles Sewage Generation Factor Table, however, the number of user categories shall be condensed to conform with the classifications set forth in the Los Angeles County Assessor's tax roll or as may otherwise be mutually agreed to by the Parties. This list shall be known as the Amalgamated System Sewage Generation Factor Table. G. MGD - miles Until Contracting Entity and Los Angeles can develop a more accurate method of allocating the costs of the conveyance portion of the Amalgamated System, the MGD -miles shall be based on a straight -line centroidal approach. Los Angeles shall use the following formulas and procedures to determine the centroidal MGD -miles for Contracting Entity, Los Angeles, other Agencies and any other Entities discharging wastewater to the Amalgamated System: 1, For an area whose flow is tributary to the Donald C. Tillman Water Reclamation Plant but not tributary to any future treatment or water reclamation plant that may be operated by Los Angeles, that area's MGD -miles shall be equal to the sum of: a. the portion of that area's flow that is treated at the Donald C. Tillman Water Reclamation Plant, including the area's share of sludge returned to the sewer from any upstream treatment or water reclamation plant that may be operated by Los Angeles, multiplied by the straight -line distance from the area's Point of Discharge to the Donald C. Tillman Tillman Water Reclamation Plant, plus b. the portion of that area's flow that is treated at the Los Angeles- Glendale Water Reclamation Plant, including the area's share of sludge returned to the sewer from any upstream treatment or water reclamation plant that is operated by Los Angeles, 27 multiplied by the straight -line distance from the area's Point of Discharge to the Los Angeles- Glendale Water Reclamation Plant, plus c, the portion of that area's flow that is treated at the Hyperion Treatment Plant, including the area's share of sludge returned to the sewer from any upstream treatment or water reclamation plant that is operated by Los Angeles, multiplied by the sum of the straight -line distance from the area's Point of Discharge to the Valley Spring Forman Diversion Structure and the straight -line distance from the Valley Spring Forman Diversion Structure to the Hyperion Treatment Plant. 2. For an area whose flow is tributary to the Valley Spring Forman Diversion Structure but not tributary to the Donald C. Tillman Water Reclamation Plant or any future treatment or water reclamation plant that may be operated by Los Angeles, that area's MGD -miles shall be equal to the sum of: a. the portion of that area's flow that is treated at the Los Angeles- Glendale Water Reclamation Plant, including the area's share of sludge returned to the sewer from any upstream treatment or water reclamation plant that may be operated by Los Angeles, multiplied by the straight -line distance from the area's Point of Discharge to the Los Angeles- Glendale Water Reclamation Plant, plus b, the portion of that area's flow that is treated at the Hyperion Treatment Plant, including the area's share of sludge returned to the sewer from any upstream treatment or water reclamation plant that is operated by Los Angeles, multiplied by the sum of the straight -line distance from the area's Point of Discharge to the Valley Spring Forman Diversion Structure and the straight -line distance from the Valley Spring Forman Diversion Structure to the Hyperion Treatment Plant. 3, For an area whose flow is tributary to the Los Angeles- Glendale Water Reclamation Plant, but not tributary to the Donald C Tillman Water Reclamation Plant, the Valley Spring Foreman Diversion Structure or any future treatment or water reclamation plant that may be operated by Los Angeles, that area's MGD -miles shall be equal to the sum of: a. that portion of that area's flow that is treated at the Los Angeles - Glendale Water Reclamation Plant, including the area's share of sludge returned to the sewer from any upstream treatment or water reclamation plant that may be operated by Los Angeles, multiplied by the straight -line distance from that area's Point of Discharge to the Los Angeles- Glendale Water Reclamation Plant, plus b. the portion of that area's flow that is treated at the Hyperion Treatment Plant, including the area's share of sludge returned to the sewer from any upstream treatment or water reclamation plant that is operated by Los Angeles, multiplied by the straight -line distance from the area's Point of Discharge to the Hyperion Treatment Plant. For the City of Glendale, the area's flow shall include its share of sludge from the Los Angeles- Glendale Water Reclamation Plant, calculated pursuant to Section III.A.2.a. 28 4. For an area whose flow is tributary to the Hyperion Treatment Plant, but not tributary to the Donald C. Tillman Water Reclamation Plant, the Valley Spring Forman Diversion Structure, the Los Angeles- Glendale Water Reclamation Plant or any future treatment or water reclamation plant that may be operated by Los Angeles, that area's MGD -miles shall be equal to that area's flow multiplied by the straight -line distance from that area's Point of Discharge to the Hyperion Treatment Plant. 5, For an area whose flow is tributary to the Terminal Island Treatment Plant but not tributary to any future treatment or water reclamation plant that may be operated by Los Angeles, that area's MGD -miles shall be equal to that area's flow multiplied by the straight -line distance from that area's Point of Discharge to the Terminal Island Treatment Plant. For an area whose flow is tributary to any future treatment or water reclamation plant that may be operated by Los Angeles, that area's MGD -miles shall be equal to the MGD -miles calculated in Sections III.G.1 through 5, as applicable, plus the amount of that area's flow that is treated at the future treatment or reclamation plant multiplied by the straight -line distance from that area's Point of Discharge to the future treatment or reclamation plant. 7, In order to determine the MGD -miles attributable to Los Angeles, Los Angeles shall first be divided into sub -areas tributary to the Donald C. Tillman Water Reclamation Plant, the Valley Spring Forman Diversion Structure, the Los Angeles- Glendale Water Reclamation Plant, the Hyperion Treatment Plant, the Terminal Island Treatment Plant and any future treatment or water reclamation plant that may be operated by Los Angeles, respectively. The sub -area tributary to the Terminal Island Treatment Plant shall be further subdivided into the Harbor, Terminal Island and Wilmington areas. The MGD -miles for each sub -area shall be determined using the same procedures in Sections III.G.1 through 6, as applicable. The total MGD -miles attributable to Los Angeles shall be equal to the sum of the MGD - miles attributable to each of the sub - areas. 8. In calculating MGD -miles pursuant to Section III.G.1 through 7, each area's flow shall consist of the total wastewater generated within the area, including infiltration and inflow and the sludge from any treatment facility operated by the Entity that is not included in the Amalgamated System, which sludge is discharged by the Entity into the Amalgamated System. IV. DISCHARGE MEASUREMENT A. Responsibility for Monitoring, Estimating, Evaluating, and Reporting 1. The discharging Party, i.e. the Party discharging wastewater to the other Party, shall be responsible for all monitoring, evaluating, and reporting of wastewater discharge measurements at the locations required by Section IV.B. The discharging Party shall also be responsible for estimating, evaluating and reporting flow and Strength where estimation is allowed pursuant to Section IV.B. 2. The receiving Party, i.e. the Party receiving the wastewater discharge from the other Party, shall have the option of monitoring, evaluating, and reporting of discharge measurements when the discharging Party fails to execute its responsibility pursuant to Sections IV.A.1 29 and N.E. In this case, the cost of monitoring, estimating, evaluating, and reporting shall still be the sole responsibility of the discharging Party and not attributable to the Amalgamated System. If the receiving Party exercises its option due to the discharging Party's failure, the data shall not be considered missing, but penalty amounts equal to 5% of the quantities measured by the receiving Party shall be added to the measured quantities. 3. If the receiving Party exercises its option for monitoring, evaluating, and reporting, the discharging Party may resume its responsibility after it demonstrates compliance with the monitoring, evaluating, and reporting requirements for a period of 30 days. During the demonstration period, the receiving Party shall still have the right to monitor the discharge at the expense of the discharging Party, but no penalty amounts shall apply. B. Criteria for Measurement 1. The flow and Strength shall be measured for any discharge that meets one of the following criteria: a. The discharge is Surface Water Runoff. b. The wastewater discharged through a single sewer, excluding Pass Through Flow, Surface Water Runoff, and Boundary Line Connections from another Entity, exceeds 0.5 cfs for the prior three consecutive flow years. 2. All flow and Strength not measured pursuant to Section IV.B.1 shall be estimated pursuant to Section III.F.3, except as follows: a. The receiving Party, at its discretion, may measure flow and Strength from a discharging Party with a discharge less than 0.5 cfs, provided that the cost of such measurement will be the sole responsibility of the receiving Party and not be attributable to the Amalgamated System. The discharging Party may elect to measure the flow and Strength of any discharge in lieu of estimating the flow and Strength. The discharging Party shall inform the receiving Party of its election before the Flow Year in which it will begin such measurement or within two months after the Date of Execution, whichever comes later. The discharging Party may also elect to begin estimating the flow and Strength of any discharge it has previously elected to measure, but is not required to measure, in which case it shall inform the receiving Party of this election before the Flow Year in which it will begin such estimation. Whether it elects to estimate or measure the discharge, the discharging Party shall use the elected method to determine the flow and strength it reports to the receiving Party pursuant to Section IV.0 for the entire Flow Year. C. Flow and Strength Reporting 1, Quarterly reports of all measured flow and Strength data collected during a quarter shall be submitted within 30 days of the end of the quarter. 30 2. Annual reports of the estimated flow and Strength, including all Boundary Line Connections, and the last quarterly report of measured flow and Strength data shall be submitted within 30 days of the end of the Flow Year. 3. Submission of quantity measurements and estimates shall constitute the discharging Party's verification that such data is an accurate representation of the Party's wastewater flow and Strength and acknowledgment that such data will be used to calculate a Party's total quantity of wastewater pursuant to Section III.F.1. D. Flow and Strength Measurement 1. Frequency a. Flow shall be monitored continuously. b. Strength shall be sampled monthly for the first two years after Execution of this Agreement and then quarterly thereafter. Strength samples shall be collected for 24 uninterrupted hours each month or quarter such that each day of the week is represented over a seven sample period and no day of the week is represented in more than four out of twelve consecutive 24 -hour samples. Each 24 -hour composite sample shall consist of 24 individual samples which are combined such that each sample represents the volume of wastewater discharged during the time between samples. 2. Physical Requirements a. A permanent and continuous flow metering station shall be installed at each location where flow and Strength is measured pursuant to Section IV.B and at each location where Surface Water Runoff is discharged to the sanitary sewer system. b. A temporary flow metering device may be used to measure flow while the permanent station is being repaired or replaced. If a temporary flow metering device is used, the Party shall make reasonable efforts to ensure the timely repair or replacement of the permanent flow metering device. c. All Strength samples shall be taken at the same location as the flow measurement station using an automatic sampling device. 3. Weather No Strength samples shall be collected within 72 hours of a rainfall event which records more than 1/2 inch of rain within a 24 hour period. 4. Flow Monitoring a. Flow metering equipment installed at each station shall be of a type that will accurately measure the range of flows passing the gauging station. 31 b, Flow metering equipment shall include redundant measuring techniques over the entire range of flows for which the station is intended to measure. c. Procedures for the measurement, data collection, and flow calculation shall be documented for each gauging station. d. If multiple methods of measurement can be utilized, the most accurate method for the particular device being used and the quantity of flow being measured shall be consistently utilized and reported. In the event of a measurement sensor failure, an alternate method of measurement and flow calculation may be utilized until such time as the sensor failure is corrected. E. Verification of Procedures 1„ The discharging Party shall provide the receiving Party with its flow database via computer disk or other electronic means. The database shall include all of the discharging Party's unprocessed data for each measuring technique employed in measuring its flows pursuant to Section IV.D .4.b. The discharging Party shall provide the data collected each month within fifteen (15) working days after the end of the month. If the discharging Party fails to provide the data within the fifteen day period, the receiving Party shall have the option of monitoring the flow itself at the expense of the discharging Party pursuant to Section IV. A. Any data not submitted within thirty (30) days following the end of each quarter shall be considered missing pursuant to Sections IV.F an G. Provision of the database to the receiving Party does not release the discharging Party of its obligation to evaluate the data pursuant to Section IV.A. 2. If the receiving Party desires to conduct an audit of the discharging Party's quantity measurements and /or estimations, it shall notify the discharging Party of its intent to audit within 30 days of receiving the measured or estimated quantities. The receiving Party's costs of performing the audit shall be borne by the receiving Party. The discharging Party shall provide the receiving Party access to all monitoring data and records within 15 days of the notice of intent to audit. The receiving Party shall notify the discharging Party of the results of the audit within 45 days of the notice of intent to audit. If the receiving Party's audit of the data and records reveals discrepancies in the discharging Party's data and records, the Parties shall meet for the purpose of resolving, to the mutual satisfaction of both Parties, the discrepancy in the data and records. If the Parties cannot arrive at a satisfactory resolution, the Parties shall resolve the issue via the dispute resolution process set forth in Section VIII.C. Routine questions regarding quantity measurement and estimation shall not be considered to be audits for purposes of this Section and shall be considered to be an expense of the Amalgamated System. 3. A representative of the receiving Party, at its own cost, shall be authorized to accompany the discharging Party and observe the discharging Party's practice in setting the Strength sampling device, in retrieving the device and in compositing the samples, for one sampling each year and at all locations discharging Party is required to sample. Discharging Party shall notify receiving Party of the date, time and location(s) of the next sampling after being notified of receiving Party's desire to observe the sampling. 32 4. The discharging Party shall split each composite sample and shall make available a preserved half to the receiving Party within six hours of retrieval of the sampling device if so requested by the receiving Party at no cost to the discharging Party. 5. If the Parties cannot arrive at a satisfactory solution to any disputes over sampling and measurement, the Parties shall resolve the issue via the dispute resolution process set forth in Section VIII.C. Routine questions shall not be considered audits for purposes of this Section and shall be considered expenses of the Amalgamated System. F. Missing Flow Data 1. If no more than 30 days are missed during any Flow Year and no more than 14 days are missed during any 30 day period at any individual monitoring station, then: a. No penalty shall apply, b. The data for the missing days shall be assumed to be equal to the average of all measured days. c. A letter shall be submitted explaining the cause for any missed data that exceeds 7 consecutive days. 2. If the number of missed days is between 30 and 90 days during any Flow Year, is no more than 30 days during any 45 day period, or is no more than 20 consecutive days at any individual monitoring station, then: a. The data for the missing days shall be assumed to be equal to the average of all measured days. To this amount shall be added a penalty equal to 10% of the assumed amount. b. A letter shall be submitted explaining the cause for any missed data that exceeds 7 consecutive days. 3. If the number of missed days exceeds 90 days during any Flow Year, is more than 30 days during any 45 day period, or is more than 20 consecutive days at any individual monitoring station, then: a. The Party will be deemed to be in Default upon compliance with the noticing requirements of Section VIII.A.1.c or Section VIII.A.2.b. b. The missing data shall be assumed to be equal to either (1) the average of all measured days, if at least 200 days were measured or (2) the average of the preceding Flow Year, if less than 200 days were measured. To this amount shall be added a penalty equal to 25 % of the assumed amount. c. The receiving Party shall have the right to measure the flow at the expense of the discharging Party. The receiving Party shall have the right to continue to meter the flow at the expense of the discharging Party until the discharging Party has shown, 33 to the reasonable satisfaction of the receiving Party, that it can and will comply with all of the flow metering requirements. G. Missing Strength Data 1. If no more than 2 non - consecutive months of sampling are missed during the first two Fiscal Years and no quarterly samples thereafter at any individual monitoring station, then: a. No penalty shall apply. b. The data for the missing months or quarters shall be assumed to be equal to the average of all measured months or quarters. c. A letter shall be submitted explaining the cause for any missed data. 2. If the number of missed samples is between 2 and 4 months and no more than 2 consecutive months during the first two Fiscal Years and no more than one quarterly sample thereafter at any individual monitoring station, then: a. The data for the missing months or quarters shall be assumed to be equal to the average of all measured months or quarters. To this amount shall be added a penalty equal to 10% of the assumed amount. b. A letter shall be submitted explaining the cause for any missed data. 3. If the number of samples missed is more than four months or more than two consecutive months during the first two Fiscal Years or more than one quarterly sample thereafter at any individual monitoring station, then: a. The Party will be deemed to be in Default upon compliance with the noticing requirements of Section VIII.A.1.c or Section VIII.A.2.b. b, The missing data shall be assumed to be equal to either (1) the average of all measured months or quarters or (2) the average of the preceding year, whichever is higher. To this amount shall be added a penalty equal to 25 % of the assumed amount. c. The receiving Party shall have the right to measure Strength at the expense of the discharging Party. The receiving Party shall have the right to continue to measure the strength at the expense of the discharging Party until the discharging Party has shown, to the reasonable satisfaction of the receiving Party, that it can and will comply with all of the Strength measuring requirements. H. Conditions for Waiver of Penalties If conditions beyond the reasonable control of a discharging Party prevents that Party from meeting any of the measurement requirements, the discharging Party may petition the receiving Party for a waiver of the penalty provisions. The discharging Party shall provide documentation 34 of the reasons that caused the problems and the steps being taken to correct the problems. The receiving Party shall not unreasonably deny the petition for waiver. I. Implementation 1. Each discharging Party shall have 12 months from the Execution of this Agreement to install and operate the flow monitoring stations required under the terms of this Agreement. Each discharging Party shall report the completion of the flow monitoring stations. Upon notification of completion, the flow monitoring requirements shall become effective. 2. For locations that meet the requirements for measuring flow pursuant to Section IV.B.1 or where the discharging Party elects to measure the flow and Strength of its discharge pursuant to Section IV.B.2.b subsequent to the Date of Execution, the discharging Party shall have one year from the date that the location meets the requirements or from the date that the discharging Party notifies the receiving Party of its election to install the appropriate flow metering equipment. Each discharging Party shall report the completion of the flow monitoring stations. Upon notification of completion, the flow monitoring requirements shall become effective. 3. The provisions for the collection of flow data in the agreements in effect prior to the Date of Execution of this Agreement shall continue in effect until the new flow measurement stations are operable. V. MEETINGS A. Contracting Entity /Los Angeles Meetings 1. Within 30 days of a written request of Contracting Entity, but in no case less than semi- annually, Los Angeles shall meet with a representative or representatives of Contracting Entity to discuss issues of mutual interest relative to this Agreement, including but not limited to: a. The operation and maintenance costs pertaining to the Amalgamated System; b. The capital program pertaining to the Amalgamated System; c. Written policies pertaining to the administration of the charge system; d. Disputes between Los Angeles and the Agencies, pursuant to Section VIII of this Agreement; e. The risk management practices pertaining to the Amalgamated System; f. Regulatory updates. At any such meeting, two representatives from Los Angeles shall be present. One Los Angeles representative shall be an employee from Los Angeles with knowledge of the Amalgamated System and the second Los Angeles representative shall be appointed by the 35 4'" President of the City Council. The representative from Contracting Entity must be an Assistant Manager, Division Head, City Manager, Department Head or their duly authorized representative. In no case shall the representative(s) from either Party be legal counsel. The foregoing requirements, however, shall not prevent either Party from designating other representatives to be present at any such meeting, including additional staff, consultants and attorneys. Los Angeles' costs of preparing for and attending any such meeting shall be considered a contract administration cost and shall be included as Amalgamated System Expenses pursuant to Section II.B.2.a.(3). 2, In submitting the Revenue Program and annual Capital Improvement Program to the Council and the Mayor for approval, Los Angeles Staff shall identify and summarize any issues where the Contract Entity disagrees with the proposed Revenue Program or Capital Improvement Program and shall expressly state the reasons for those disagreements. If matters are deemed to be of general interest to all Agencies who have wastewater conveyed and treated by Los Angeles, Los Angeles shall have the right to meet with the representatives of the Agencies collectively to discuss the issues of common interest. If Los Angeles meets with the Agencies collectively, this shall not preclude either Contracting Entity or Los Angeles from requesting a meeting to discuss an issue or issues limited in scope to the interest of Contracting Entity and Los Angeles. 4. If requested by two or more Agencies, those Agencies shall have the right to meet collectively with Los Angeles. If Los Angeles meets collectively with the Agencies, this shall not preclude either Contracting Entity or Los Angeles from requesting a meeting to discuss an issue or issues limited in scope to the interest of the Contracting Entity and Los Angeles. B. Value Engineering 1. The Agencies have the right, collectively, to meet at least once with any Value Engineering team hired by Los Angeles to review a proposed capital project for the Amalgamated System. For each project, Los Angeles' cost of the first of any such meeting shall be considered to be an Amalgamated System Expense. Contracting Entity shall pay the cost incurred by the Value Engineering team as a result of any subsequent meetings in proportion to its flow discharged to the Amalgamated System divided by the total flow discharged to the Amalgamated System by those Agencies requesting the subsequent meetings. The first meeting shall take place, if at all, within 30 days of the date of the letter requesting such meeting and at a mutually convenient time and place. 2. Los Angeles shall provide the Agency representatives with a copy of any Value Engineering study for an Amalgamated System project within 30 days of the completion of the study. C. Financial Auditing 1, The Agencies have the right, collectively, to meet at least once each auditing cycle with the auditor of the System's financial statement. The meeting shall take place, if at all, within 30 days of the date of the letter requesting such meeting and at a mutually convenient time and place. The cost of a single meeting shall be considered to be an Amalgamated System Expense. Contracting Entity may have further meetings with the auditors of the 36 Amalgamated System's financial statement, provided that Contracting Entity reimburses Los Angeles for any additional auditor's cost incurred as a result of the additional meetings, in proportion to its flow discharged to the Amalgamated System divided by the total flow discharged to the Amalgamated System by those Agencies requesting the subsequent meetings. Los Angeles may require that the auditors bill the Agencies directly for the additional costs. 2. Contracting Entity shall have the right to audit those System financial records that are made available to the auditor of the System's financial statements for audit purposes and to review the audit work papers at its own expense. VI. OPERATION, LIABILITY, AND COMPLIANCE A. Ownership and Operation 1. Los Angeles is recognized as the sole owner and sole operating authority of the Amalgamated System. As such, Los Angeles shall exercise reasonable care and skill and shall act as a prudent manager of the Amalgamated System to ensure compliance with all federal, state, and local laws, regulations, and rules pertaining to the discharge of wastewater, including without limitations all applicable pretreatment standards and effluent limits, if any. 2. With regard to the inspection, maintenance, and operation of the Local System or of facilities owned by either Los Angeles or Contracting Entity and all discharges within each Party's respective jurisdiction or territorial boundaries, each Party shall exercise reasonable care and skill and shall act as a prudent manager to ensure compliance with all federal, state, and local laws, regulations, and rules pertaining to the discharge of wastewater, including without limitation, all applicable pretreatment standards and effluent limitations, if any. 3, Contracting Entity hereby waives any present and future claims to any equity interest in the Amalgamated System. Los Angeles agrees that any future agreement or contract with any other Entity shall not give that Entity any equity interest in the Amalgamated System. B. Liability 1. Regulatory Liability Liability, federal or state, whether related to water or air, including fines, penalties, increased costs due to more stringent regulations as a result of the regulatory liability, and /or the cost of any alternative project in lieu of, or in addition to, any fine or penalty shall be treated as an expense of the Amalgamated System if said liability results from the construction or operation of the Amalgamated System. This would include, but not be limited to: operator error, negligence, sewage spills or other discharges resulting from clogs, breaks in pipes, lack of capacity, or electrical outages, equipment failure or breakdown, discharges into the air in violation of any SCAQMD rule or regulation, or any other action or inaction by Los Angeles in constructing or operating the Amalgamated System which results in liability assigned to any portion of the Amalgamated System. 37 2. General Liability Unless otherwise stated in this Agreement, third party liability, including compensatory damages, shall be treated as an expense of the Amalgamated System if said liability results from the operation of the Amalgamated System. 3. Liability Related to Non - Amalgamated System Facilities Contracting Entity will not be responsible for liability which results solely from construction and operation of the Local System. Similarly, Los Angeles will not be responsible for liability which results solely from construction and operation of Contracting Entity's wastewater collection system. If liability results from a combination of activities involving the Amalgamated System and other wastewater facilities, the Net Amalgamated System Expenses shall include the costs related to that portion of the liability attributable to the activities involving the Amalgamated System which is the basis for the liability. 4. Gross Negligence Liability which results from gross negligence and /or the willful and /or intentional acts of an individual or individuals charged with the operation of a facility which is part of the Amalgamated System shall not be chargeable as an expense of the Amalgamated System but shall be borne by Los Angeles or the successor jurisdiction responsible for the operation of the Amalgamated System. 5. Notification of Claims Los Angeles shall provide written notification to all Agencies of any and all claims and Notices of Dispute submitted to Los Angeles which refer, relate, or pertain to the Amalgamated System within thirty (30) days of receipt of such claim, provided that such claims are for amounts exceeding $500,000, excluding construction claims. Notification of construction claims shall only be required if so requested by Contracting Entity. C. Compliance with State and Federal Regulatory Requirements 1, The Parties shall satisfy all state or federal requirements for preparing and updating their Revenue Programs. 2. In any circumstance where (i) Los Angeles as owner of the System is mandated by a state or federal requirement to establish a program, prepare a study, or undertake some other action and (ii) such action would require Los Angeles to enter Contracting Entity's jurisdiction, Contracting Entity shall be responsible for complying with such requirement and shall report to Los Angeles all actions undertaken to comply. a. Los Angeles shall provide written notification to Contracting Entity of any state or federal requirements that are applicable to Contracting Entity in the foregoing circumstances. b. If Contracting Entity fails to take the necessary action after having been duly notified of its obligations by Los Angeles and if Contracting Entity's failure to take the 38 necessary action would result in any liability payable from the Amalgamated System, then Los Angeles shall have the authority to enter Contracting Entity's jurisdiction to perform the required actions on behalf of Contracting Entity and to directly charge Contracting Entity for any costs necessarily incurred to achieve compliance. c. If Contracting Entity's failure to take the actions necessary to comply with the state or federal requirements results in any liability payable from the Amalgamated System, Contracting Entity shall bear full financial responsibility for any fines or penalties that are levied as a result of Contracting Entity's failure to comply. d. If Los Angeles and Contracting Entity are both required to take actions to comply with state and federal requirements and Los Angeles fails to take the necessary actions to comply with the state and federal requirements and if Los Angeles' failure to take the necessary actions results in any liability payable from the Amalgamated System, Los Angeles shall bear full financial responsibility for any fines or penalties that are levied as a result of Los Angeles' failure to comply. VII. TERM OF AGREEMENT The term of this Agreement is thirty (30) years unless it is modified in writing by mutual consent of the Parties and shall commence upon full Execution. A. Reasons to Initiate Renegotiations During the unexpired term of this Agreement, either Party may request that the other Party negotiate, in good faith, modifications of the Agreement which the requesting Party believes are necessary because of any of the following changed circumstances: 1. There is a material change in the regulatory framework for wastewater that renders one or more of the terms or conditions of the Agreement to no longer be fair and equitable; 2. There is a proposed change in the physical configuration of the Amalgamated System that the existing terms or conditions of the Agreement do not adequately address; 3. There is a material change in the financial framework of Los Angeles' wastewater conveyance and /or treatment system which either renders any of the terms or conditions of the Agreement to no longer be fair and equitable or creates a condition that the existing terms or conditions cannot accommodate; There is any change in the regulatory, operating or financial framework of Los Angeles' wastewater conveyance and /or treatment system, which in the view of either Party, will or has caused the charge system described in Section II of this Agreement to no longer be fair and equitable. 5. If, after ten (10) years from the Date of Execution of this Agreement, Los Angeles requests the Contracting Entity to contribute money towards capital facilities or improvements for the Amalgamated System which are valued at $100 million or more, including direct and 39 indirect costs, in any one fiscal year and whose useful life is greater than the length remaining on the term of the then existing Agreement. B. Initial Time Prohibitions on Negotiations Notwithstanding the provisions of Section VII.A above, and excepting the provisions within this Agreement concerning Reclaimed Water and Surface Water Runoff, the Parties hereby knowingly and expressly waive the right to renegotiate any provision of this Agreement for a period of ten (10) years from the Date of Execution, irrespective of the cause, rationale or circumstances. The Parties further acknowledge and agree that the existing charge system will be used to recover the Amalgamated System Expenses during the initial ten (10) years of this Agreement even if either Party believes that the charge system may not be fair and equitable. The Parties acknowledge and agree that they have reached this Agreement following a period of lengthy and complicated negotiations and they are unwilling and further find it imprudent to revisit the subject - matter herein for a period of ten (10) years. With respect to the renegotiation of the Reclaimed Water and Surface Water Runoff provisions, the Parties knowingly and expressly waive the right to renegotiate these provisions for a period of five (5) years from the Date of Execution of this Agreement. Thereafter, either Party may seek to renegotiate Reclaimed Water and Surface Water Runoff provisions at any time. However, if after two years of good faith negotiations, the Parties fail to agree on new Reclaimed Water and Surface Water Runoff provisions, this Agreement shall not terminate within the initial ten (10) years of this Agreement. C. Negotiation Completion Requirements If after two years of good faith negotiations concerning any of the above proposed changes to a then existing Agreement, pursuant to Sections VILA and B, the Parties have been unable to reach a mutual agreement on any proposed changes to a then existing Agreement, the then existing Agreement shall, unless otherwise stated, terminate and the relationship of the Parties shall be governed by Section VII.I below. D. Negotiations at Expiration of the Term At least two calendar years prior to the expiration date of a then existing Agreement, the Parties shall begin good faith negotiations to extend the relationship of the Contracting Entity with Los Angeles for the conveyance and treatment of the Contracting Entity's wastewater. If, at the time set for expiration of the then existing Agreement, the Parties have not been able to reach a new agreement or have not agreed to extend the then existing Agreement, the Agreement shall, unless otherwise stated in Sections VILA or B, terminate and the relationship of the Parties shall be governed by Sections VII.I and L below. E. Conditions for Modification Proposals In the renegotiation of any provision in this Agreement pursuant to Section VILA or in the negotiation of any extension to this Agreement or any new agreement pursuant to Section VILD, all Los Angeles proposals to the Contracting Entity shall include a restatement of this Section VILE in its entirety and shall comply with the following: 1. The charge system must be fair and equitable to Los Angeles and Contracting Entity; 40 2. The charge system for the Contracting Entity within the Amalgamated System must be substantially similar to and consistent with the charge system for the internal users of Los Angeles' wastewater conveyance and /or treatment system within the Amalgamated System; 3. There shall be a fair and equitable cost recovery methodology to fully reimburse Los Angeles and the Contracting Entity for capital payments for the Amalgamated System capacity needed to serve new dischargers; and 4. There shall be a fair and equitable term (period of years) as measured by the capital needs and revenue requirements of the Contracting Entity. F. Requirement for Good Faith Renegotiations Los Angeles' obligation to, in good faith, negotiate an extension of its relationship with the Contracting Entity pursuant to Section VII.D or renegotiate any matter under this Agreement pursuant to Section VILA shall not be discharged unless and until it has presented in good faith a proposal which complies with the requirements set forth in Section VILE above. G. Non - binding Mediation It shall be the right of either Party to request, in writing, a formal, non - binding mediation concerning the renegotiation of any provision of this Agreement or negotiation of any extensions hereto up to and including the one hundred eightieth (180th) calendar day prior to termination of this Agreement pursuant to Sections VILC and D above. The non - requesting Party must accept a timely written request for non - binding mediation. The good faith negotiations shall not be deemed complete until the formal, non - binding mediation process has concluded by written statement of the mediator or the term of this Agreement has terminated pursuant to Sections VII.0 and D above. H. Termination Restriction In the event Los Angeles fails to propose provisions or an extension pursuant to Sections VII.0 and D above that satisfy the requirements of Section VILE or fails to participate in a formal, non- binding mediation process upon timely request by the Contracting Entity, the then existing Agreement shall not terminate and it shall continue in full force and effect until Los Angeles presents, in good faith, a proposal to the Contracting Entity that satisfies the requirements of Section VILE. I. Month to Month Relationship The Parties recognize that withdrawal from the Amalgamated System is a serious and complex undertaking and as such agree to follow the procedure for such withdrawal as set forth herein. If the Parties are unable to reach a mutual agreement on changes to the then existing Agreement proposed pursuant to Section VII.0 above and the then existing Agreement is terminated as provided, or if the term of the then existing Agreement expires as described in Section VILD above, or if a Party remains in Default for more than ninety (90) days, the result in any of these instances shall be a month to month relationship between the Parties wherein Los Angeles agrees to transport and treat the wastewater of the Contracting Entity provided that the Contracting Entity: 41 1, pays its fair and equitable share of the wastewater conveyance and treatment costs, including O &M and capital, in an amount and according to a charge system as determined by Los Angeles consistent with the requirements of Section VILE above; 2. complies with all then existing regulatory requirements, rules, regulations, laws and directives of the federal and state government concerning wastewater, including all Industrial Waste pretreatment requirements, rules, regulations and laws; and 3. actively and in good faith works towards extricating its wastewater discharge from the Amalgamated System. J. Termination of the Month to Month Relationship The month to month relationship shall terminate if: 1. the Parties agree to a written agreement which supersedes the month to month relationship; 2. the Contracting Entity removes its wastewater discharge from the Amalgamated System; 3. the Contracting Entity violates one of the provisions of the month to month relationship set forth above; or 4. five years expires from the date that the month to month relationship commences. However, this five year cap on the month to month relationship may be extended by mutual written agreement of the Parties. K. Penalties for Violation of the Month to Month Relationship Conditions If the Contracting Entity violates the terms and conditions of the month to month relationship, the Contracting Entity shall move, with all due deliberate speed, to remove its wastewater discharge from the Amalgamated System and shall be liable to pay the Amalgamated System a 10% penalty on all wastewater conveyance and treatment provided by the Amalgamated System from the time the Contracting Entity violates the terms of the month to month relationship to the time that the Contracting Entity no longer discharges wastewater to the Amalgamated System. If the Contracting Entity takes longer than one year from the date that it violates the month to month relationship to remove its wastewater from the Amalgamated System, then the penalty for conveyance and treatment of the Contracting Entity's wastewater shall increase to 15 % and shall increase 5% each year until the Contracting Entity's wastewater is removed from the Amalgamated System. L. Contracting Entity Capital Investment Buyout If the Contracting Entity removes its wastewater discharge from the Amalgamated System pursuant to any of the scenarios set forth above, then the Amalgamated System will reimburse the Contracting Entity for the remaining value of it's past capital payments for the Amalgamated System. The compensation for the past capital payments shall be based on the System Buy -out Approach as described below : 42 Vii' Mu The values of Amalgamated System facilities in service or included in Construction Work in Progress from Fiscal Year 1984 -85 forward shall be determined using the procedure contained in Section II.C.4.a. 2, The value of each facility determined pursuant to Section VII.L. 1 shall be allocated to conveyance and to treatment flow and Strength by cost centers and using the same allocation factors adopted by Los Angeles pursuant to Section III.A.1.b. 3. The compensation rates shall be calculated by dividing the totals of the values allocated pursuant to Section VII.L.2 by the Amalgamated System MGD -miles and flow and Strength loadings determined pursuant to Section III.A.2 for the latest completed Flow Year. Los Angeles shall calculate the compensation rates and include the rates in its Revenue Program whenever it prepares and adopts a Revenue Program. 4. The amount of compensation shall be calculated by multiplying Contracting Entity's MGD- miles and flow and Strength discharges for the latest completed Flow Year by the compensation rates and summing the results. 5. Los Angeles shall subtract the following from Contracting Entity's compensation for its past capital payments calculated pursuant to Section VII.L.1 through 4: a. Any Amalgamated System Sewerage System Charges, General Fund Reimbursement Charges, and Amalgamated System Sewerage Facilities Charges owed by Contracting Entity pursuant to Sections III.0 and D. b. Any interest owed for late payments pursuant to Section III.E. c. Any surcharges owed for wastewater service provided to Contracting Entity after it is required to remove its wastewater from the Amalgamated System pursuant to Section VII.K. d. Any amounts owed by Contracting Entity for meetings with any Value Engineering team or the System's financial auditor beyond the first such meeting, pursuant to Sections V.B.1 and V.C.1. 6. Contracting Entity shall pay to Los Angeles any negative net amount calculated above within 90 days of removing its flow. Los Angeles shall pay to Contracting Entity any positive amount calculated above within 90 days of Contracting Entity removing its flow. If payment is made after 90 days but before 120 days, interest shall be added at the Prime Rate in effect at the time Contracting Entity removes its flow plus one (1) percent. If payment is made after 120 days but before 150 days, interest shall be added at the Prime Rate in effect at the time Contracting Entity removes its flow plus five (5) percent. If payment is made after more than 150 days, interest shall be added at the Prime Rate in effect at the time Contracting Entity removes its flow plus ten (10) percent. In no case shall interest exceed the maximum rate allowed by law. 43 VIII. CONFLICTS A. Default 1. Events Constituting a Default by Contracting Entity Each of the following constitutes a "Default" by Contracting Entity under this Agreement. a,. Contracting Entity fails to pay any amount of an undisputed invoice, including any applicable interest and penalties, within 120 days of the due date. b. Contracting Entity fails to pay at least eighty-five (85) percent of the total amount due on any disputed invoice by the due date and to place the withheld amount into a joint account within ten (10) business days from the due date, as required pursuant to Section VIII.C.3.a. c. Contracting Entity fails to perform or observe any term, covenant, or undertaking in this Agreement that it is to perform or observe and such failure continues for ninety (90) days from a Notice of Default being sent in the manner prescribed in Section IX.O. 2. Events Constituting a Default by Los Angeles Each of the following constitutes a "Default" by Los Angeles under this Agreement. a. Los Angeles fails to accept and treat the wastewater discharged into the Amalgamated System by Contracting Entity. Los Angeles fails to perform or observe any term, covenant, or undertaking in this Agreement that it is to perform or observe and such failure continues for ninety (90) days from a Notice of Default being sent in the manner prescribed in Section IX.O. B. Remedies In the event of a Default, the Parties shall have the following rights and remedies: 1. Specific Performance Contracting Entity and Los Angeles agree and recognize that the rights and obligations set forth in this Agreement are unique and of such a nature as to be inherently difficult or impossible to value monetarily. If one Party does not perform in accordance with the specific wording of any of the provisions in this Agreement applicable to that Party, Defaults, or otherwise breaches this Agreement, an action at law for damages or other remedies at law would be wholly inadequate to protect the unique rights and interests of the other Party to the Agreement. Accordingly, in any court controversy concerning this Agreement, the Agreement's provisions will be enforceable in a court of equity by specific performance, including a month to month relationship and termination thereof as provided 44 Diu 1 °gym in Sections VII.I and J. This specific performance remedy is not exclusive and is in addition to any other remedy available to the Parties. 2. Cumulative Rights and Remedies The Parties do not intend that any right or remedy given to a Party on the breach of any provision under this Agreement be exclusive; each such right or remedy is cumulative and in addition to any other remedy provided in this Agreement or otherwise available at law or in equity. If the non - breaching Party fails to exercise or delays in exercising any right or remedy, the non - breaching Party does not thereby waive that right or remedy. Furthermore, no single or partial exercise of any right, power, or privilege precludes any further exercise of a right, power, or privilege granted by this Agreement or otherwise. 3. Attorneys' Fees In any adversarial proceedings between the Parties other than the dispute resolution procedure set forth below, the prevailing Party shall be entitled to recover their costs, including reasonable attorneys' fees. If there is no clear prevailing party, the Court or arbitrator shall determine the prevailing party and provide for the award of costs and reasonable attorneys' fees. In considering the reasonableness of either Party's request for attorneys' fees as a prevailing party, the Court or arbitrator shall consider the quality, efficiency, and value of the legal services and similar /prevailing rate for comparable legal services in the local community. If Los Angeles is awarded its legal fees /costs, then any proceeds therefrom shall first be applied so as to reduce legal fees /costs, if any, incurred by the Amalgamated System and then, to the extent there is any remaining balance, to the legal fees /costs incurred by Los Angeles. C. Dispute Resolution 1. Scope of Dispute Resolution Disputes ( "Disputes ") between the Parties other than those constituting a "Default ", or "Exclusion" (defined below), shall be resolved pursuant to the provisions of this Section. 2. Exclusions a. Emergency An emergency event which, if not promptly resolved, may result in imminent danger to the public health, safety or welfare shall not be subject to dispute resolution. b. Complete Discretion Those matters reserved to the complete discretion of Los Angeles or Contracting Entity under this Agreement shall not be subject to dispute resolution. 45 3. Procedures for Disputes Regarding Invoices a. Contracting Entity may dispute any portion of a bill for service provided by Los Angeles only because it disagrees with the methodology or calculation of such charges. When disputing a bill, Contracting Entity shall tender the undisputed amount, but in no case less than 85% of the total amount billed, to Los Angeles when the payment is due, along with a written notice stating the amount of the bill which is being disputed, explaining the reason for the disputed amount and identifying the proposed banking institution for the joint account. Contracting Entity shall deposit the withheld amount in an interest bearing joint account within 10 business days of the date of the Contracting Entity's written notice. The joint account shall be at a banking institution selected by both Parties and shall be in the joint names of Contracting Entity and Los Angeles. Disbursements from the joint account shall be made only at the written direction of an authorized representative of each Party. The withheld funds shall remain in the joint account until such time as the dispute is resolved. Failure to pay at least 85 % of the total amount billed by the due date and to place the withheld amount into a joint account shall invalidate the dispute and shall be considered a failure to make payment. b. Within 30 calendar days of receipt of a written notice of the amount being disputed and the explanation for the dispute, Los Angeles shall notify Contracting Entity in writing that it: (1) agrees that Contracting Entity is correct in its assertion concerning the disputed amount; (2) disagrees with Contracting Entity's assertion concerning the disputed amount and shall provide an explanation for its disagreement; or (3) needs an additional 15 calendar days to investigate the assertion by Contracting Entity. If requesting an additional 15 days, Los Angeles must provide an explanation as to why the additional time is required to complete its investigation. Failure to respond in writing within 30 calendar days, or within 45 days if an extension is requested, of receipt of Contracting Entity's written notice will result in Los Angeles being deemed to have agreed with the assertion of Contracting Entity. c. If Los Angeles notifies Contracting Entity that it disagrees with Contracting Entity's position on the disputed amount, Los Angeles shall simultaneously provide written notification to Contracting Entity of a date and time for a meet and confer. The dispute resolution process described in this Section and in Section VIII.C.4 may only be initiated if Contracting Entity has paid at least 85 % of the invoice and deposited any remaining disputed amounts into an interest bearing joint account. Any costs or attorney's fees associated with pursuit of a billing dispute will be borne by the Party incurring said costs or attorney's fees. d. Contracting Entity and Los Angeles shall receive interest from the joint account in proportion to the amount of principal of the joint account that they receive upon resolution of the dispute. The Parties agree to provide written authorization for release of the funds within 30 days following the resolution of the amount in dispute in accordance with the agreement. If the disputed amount was greater than the 15 % withheld pursuant to Section VIII.C.3.a above, Los Angeles shall return any amounts due to Contracting Entity within 30 days following the resolution of the dispute together with interest at the same rate that the joint account was earning. 46 4. Other Disputes a. Each Party to this Agreement may submit any Dispute related to or arising under this Agreement to non - binding mediation by delivering a Notice of Dispute to the other Party. b. The written Notice of Dispute prepared by the Party shall be delivered to the other Party in accordance with Section IX.O. The Notice of Dispute shall clearly describe the basis of the Dispute and the Sections of the Agreement under which the Dispute arises. c. The non - binding mediation shall be conducted by Judicial Arbitration Mediation Services (JAMS) or an equivalent mediation service agreed to by the Parties. d, Unless otherwise agreed, a mediator shall be appointed within forty -five (45) days of the date the Notice of Dispute is delivered to hear the Dispute and provide a written determination. The mediator shall be chosen jointly by the Parties. If the Parties cannot agree, the Los Angeles County Superior Court shall appoint the mediator. Employees or agents of Los Angeles or Contracting Entity are ineligible to serve as the mediator. e. The mediation shall be held within ninety (90) days of the date the Notice of Dispute is delivered. f. Any statute of limitations applicable to any claims, rights, causes of action, suits, or liabilities of whatever kind or nature, in law, equity or otherwise, whether known or unknown, shall be tolled during the mediation process. For purposes of this Section, the mediation process shall commence upon the service of a Notice of Dispute to the other Party pursuant to Section VIII.C.4.a above. For purposes of this Section, the mediation process shall be deemed complete ten (10) days after service of the mediator's written notice of the conclusion of the mediation. IX. GENERAL PROVISIONS A. Supersedence Upon execution of this Agreement, any and all existing agreements or contracts between Los Angeles and Contracting Entity concerning the use of the Amalgamated System are hereby rescinded, except for a settlement agreement relating to the Pending Actions and for those provisions relating to flow monitoring pursuant to Section IV.I.3. B. Applicability To Others 1. Future Wastewater Service Contracts or Agreements a. After the Date of Execution, Los Angeles agrees that any other agreement or contract relating to wastewater service entered into by and between Los Angeles and any Entity shall comply with the Universal Terms, the Federal Clean Water Act, the Clean Water Grant Revenue Program, and the State Revolving Fund Loan Program 47 requirements, and as they may be amended from time to time, or any other such statutes or regulations as mutually agreed by the Parties, except as otherwise provided in Section IX.B.1.b. b. Los Angeles may enter into wastewater service agreements or contracts with jurisdictions or organizations that do not comply with the Universal Terms provided that: (1) all flow originating from any jurisdiction or entity signing such an agreement shall be considered to have originated from Los Angeles, (2) any jurisdiction or entity signing such an agreement shall be billed an equivalent General Fund Reimbursement Charge unless otherwise prohibited by law, and (3) there will be no additional costs to the Contracting Entity. c. Los Angeles shall not authorize or permit any Entity which is not signatory to a wastewater service agreement or contract that complies with the Universal Terms to acquire or use any capacity in excess of the amount said Entity is expressly authorized to use by virtue of its wastewater service agreement or contract with Los Angeles in effect on the Date of Execution of this Agreement. If an Entity which is not signatory to a wastewater service agreement or contract complying with the Universal Terms discharges in excess of the amount of flow or Strength to which it is entitled by the wastewater service agreement or contract in effect on the Date of Execution of this Agreement, Los Angeles will undertake legal proceedings to invalidate the existing agreement or contract and /or force the Entity to return their flow to within the contract limits and /or remove their wastewater discharge from the Amalgamated System. 2. Copies of New Agreements If Los Angeles, after the Date of Execution, proposes to enter into any new wastewater service agreement or contract or to supplement, revise, or add an addendum to any existing wastewater service agreement or contract, then Los Angeles shall provide Contracting Entity with a copy of the same, in its final form, at least thirty (30) days prior to either the date the matter is presented to the governing body of Los Angeles or the date of execution by Los Angeles, whichever is earlier. C. Revenue Program Each Party shall prepare a Revenue Program as required by state and federal requirements. Following the initial approval of the Party's Revenue Program by the State Water Resources Control Board, or the successor agency, subsequent revisions or modifications shall only be required to maintain compliance with state and /or federal requirements. 48 D. Admissions by Parties Nothing in this Agreement constitutes an admission of liability by either Party. This Agreement and any documents prepared in connection herewith may not be used as evidence in any litigation, except as necessary to interpret or enforce the terms of this Agreement. E. Construction of Agreement Each Party, with the assistance of competent legal counsel, has participated in the drafting of this Agreement and any ambiguity should not be construed for or against any Party on account of such drafting. F. Each Party Bears Own Costs Each Party is to bear its own costs, expenses, and attorneys' fees arising out of or in connection with the subject matter of this Agreement and the negotiation, drafting, and execution of this Agreement. Each of the Parties understands that this Agreement includes all claims for loss, expense and attorneys' fees, taxable or otherwise, incurred by it or arising out of the Pending Actions. G. Waiver of Breach No waiver or indulgence of any breach or series of breaches of this Agreement shall be deemed or construed as a waiver of any other breach of the same or any other provision hereof or affect the enforceability of any part or all of this Agreement. No waiver shall be valid unless executed in writing by the waiving Party. H. Awareness of Contents /Legal Effect The Parties expressly declare and represent that they have read the Agreement and that they have consulted with their respective counsel regarding the meaning of the terms and conditions contained herein. The Parties further expressly declare and represent that they fully understand the content and effect of this Agreement and they approve and accept the terms and conditions contained herein, and that this Agreement is executed freely and voluntarily. I. Agreement Binding on All This Agreement shall be binding upon and shall inure to the benefit of each of the Parties, and each of their respective agents, employees, directors, officers, attorneys, representatives, principals, shareholders, sureties, parents, subsidiaries, affiliates, successors, predecessors, assigns, trustees or receivers appointed to administer their assets, and attorneys of any and all such individuals and entities. All the covenants contained in this Agreement are for the express benefit of each and all such persons described in this Section. This Agreement is not intended to benefit any third parties. J. Counterparts This Agreement may be executed in counterparts. This Agreement shall become operative as soon as one counterpart hereof has been executed by each Party. The counterparts so executed 49 shall constitute one Agreement notwithstanding that the signatures of all Parties do not appear on the same page. K. Severability Should any non - material provision of this Agreement be held invalid or illegal, such invalidity or illegality shall not invalidate the whole of this Agreement, but, rather, the Agreement shall be construed as if it did not contain the invalid or illegal part, and the rights and obligations of the Parties shall be construed and enforced accordingly. L. Captions The captions contained herein are included solely for convenience and shall not be construed as part of this Agreement or as full or accurate descriptions of the terms hereof. M. Choice of Law This Agreement shall be construed and enforced pursuant to the laws of the State of California. N. Authority to Enter into This Agreement Each Party represents and warrants that its respective obligations herein are legal and binding obligations of such Party, that each Party is fully authorized to enter into this Agreement, and that the person signing this Agreement hereinafter for each Party has been duly authorized to sign this Agreement on behalf of said Party. O. Notice 1 Any notice required under this Agreement shall be written and shall be served either by personal delivery, mail or fax. 2. In the case of service by personal delivery or fax, no additional time, in days, shall be added to the time in which a right may be exercised or an act may be done. 3. In the case of service by mail, notice must be deposited in a post office, mailbox, subpost office, substation, or mail chute, or other like facility regularly maintained by the United States Postal Service, in a sealed envelope, with postage paid, addressed to the representative(s) of the Party on whom it is to be served, at the office set forth in Section IX.O.4 below. The service is complete at the time of deposit. Any period of notice and any right or duty to do any act or make any response within any period or on a date certain after service of notice by mail shall be extended five days. Any period of notice and any right or duty to do any act or make any response within any period or on a date certain after service of notice by Express mail or other method of delivery providing for overnight delivery shall be extended by two court days. 50 4. Any notice required by this Agreement shall be served on the following representative(s) of the Parties: City of Los Angeles: City of Los Angeles Bureau of Sanitation 433 S. Spring Street, Fourth Floor Los Angeles, CA 90014 Attention: Financial Management Contracting Entity: City of El Segundo 350 Main Street El Segundo, CA 90245 Attention: City Clerk The Parties may, upon written notice, add or substitute representatives or addresses. P. Amendments and /or Changes to Agreement Any amendments and /or changes to this Agreement must be in writing, signed by a duly authorized representative of the Parties hereto, and must expressly state the mutual intent of the Parties to amend this Agreement as set forth herein. The Parties to this Agreement recognize that the terms and conditions of this Agreement which are set forth herein in the Sections preceding this Section have been arrived at through the collective negotiations of the following entities: The City of Los Angeles and the City of Beverly Hills, the City of Culver City, County Sanitation Districts Nos. 4, 5, 9, 16 and 27 of Los Angeles County, the City of El Segundo, the City of San Fernando and the City of Santa Monica. The Parties hereby agree that no amendments and /or changes may be made to the Universal Terms of this Agreement as set forth in the Sections which appear in this Agreement preceding this Section without the negotiated, collective agreement of Los Angeles and either seventy five percent (75 %) of the Agencies or Agencies representing seventy five percent (75 %) of all the flow discharged by the Agencies. The Parties also hereby recognize that each Agreement between Los Angeles and an Agency named herein shall contain this requirement as part of said Agreement. The Parties further recognize that the Agreements between Los Angeles and each of the Agencies named herein may contain terms and conditions set forth in Sections which appear after this Section which are necessitated by the relationship between Los Angeles and the individual Contracting Entity. However, any such additional Sections shall not alter, modify or change the terms and conditions of the Agreement as set forth in the Sections preceding this Section. X. EFFECTIVE DATE A. To become effective, both this Agreement and a settlement agreement relating to the Pending Actions must be executed by Contracting Entity and Los Angeles. The effective date shall be the 51 latter of the Date of Execution of this Agreement or the date of execution of the settlement agreement. B. For purposes of billing and payment, the provisions of Sections I through X of this Agreement shall not become effective until July 1, 1999. The charges for Fiscal Year 1998 -99 shall be calculated in the same manner that the charges for Fiscal Year 1997 -98 were determined. 1, By May 1, 1999 Los Angeles shall prepare an estimated invoice for Fiscal Year 1998 -99 in an amount equal to 90% of the total invoice for Fiscal Year 1997 -98. By July 1, 1999 Contracting Entity shall pay the estimated invoice for Fiscal 1998 -99. By December 1, 1999 Los Angeles shall prepare a reconciliation invoice for Fiscal Year 1998 -99 in an amount equal to the total charges for Fiscal Year 1998 -99 less the estimated payment previously made. Contracting Entity shall pay the reconciliation invoice within 30 days of its receipt. ATTEST: a .ey s Angeles "City Clerk Approved as to Form: James K. Hahn Los Angeles City Attorney Christopher l . Westhoff Assistant City Attorney ATTEST: C lmdy Morten El Segundo City C,'le`k CITY OFLOS ANGELES Date: Richard R,iord��;r', 'M' yore 1999 CITY OF EL SEGUNDO By: Mary Stc` ; ian, City Manager Date: 52 2676 • i e •J Approved as to Form: Burke, Williams & Sorenson John J. Welsh Attorneys for the City of El Segundo 53 2676 orry,11,,rn, row:, Yrrrr-r.r, 4;frZ16,1:gt7t7.? Irt.'!'"fr”Lfrt.".4772:' 0 1141,4=ita Ix* V 1I8I HX3 :74A7:70-17._ IN NEILSON AVE. FROM PICO BLVD. TO S'LY CITY LIMITS 3NI1 J31131 ,:t0 H11M S3NI1 ,ll1AVa9 110a3 °IS NIV 1 0 00 r- 00 H CA 30103 IN013 3AV NV300 °3AV NV300 01 NOLLVIS NOLLVIS 0NId11f1d °3AV SSOW 3Nf1 ,I.LIAV10 „09 3!120}11 EVITS r- c— CO 3> —I — I 7C) 0 I — 3> 0 - 0 c --1 c-, . 0 2 N0LLV1S 9NIdI fld °3AV SS011 3NI1 1,11AV10 .09 VNOZIIV JO 'S 01 OHVOI 1014 HOd OD 77 7"- S 0 OHVOI 01 J,IGN9 d10 A1, NOI1dIN0S30 EXHIBIT B General Fund Reimbursement Charge = (VERs - Vp,) x (VAs - VGA) x (VpT - VD,) x PCEI Where: VERs = Value of emergency response services based on the operating budget as set annually by the Los Angeles City Council; Vp, VAS VCI.A VpT VDI PCE = Value of Los Angeles pre-designated income for emergency response services operation expenses, including income from county, state or federal grants, allowances, revenue sharing, etc. which are designated or restricted to funding emergency response services operating expenses; fees and charges specifically charged by Los Angeles for emergency response services; income from any assessment or tax specifically designated for emergency responses services; and any other income which may only be used for the benefit of emergency response services operation expenses; Value of the Amalgamated System, calculated by inflating the original costs of acquiring the assets by two percent (2 %) per year and then depreciating the costs using the same asset lives used by Los Angeles in its accounting reports. The value of the Amalgamated System shall exclude the value of land, easements, underground sewers and interceptors, facilities replaced by newer facilities, and unused or abandoned facilities; Total assessed value of all real and personal property, excluding the assessed value of land, in Los Angeles. This value includes the value of all county assessed real and personal property minus the assessed value of the included land; the value of all state assessed real and personal property minus the value of the included land; and the value of all Los Angeles real and personal property minus the value of the included land. The value of Los Angeles property, excluding land, should be the total for the assets in the Los Angeles fixed asset register, excluding underground pipes and land. The asset values shall be calculated by inflating the original costs of acquiring the assets by two percent (2 %) and then depreciating the costs using the same asset lives used by Los Angeles in its accounting reports; = Value of property tax revenue available for general fund expenditures. This amount excludes property taxes collected for debt service as well as property tax assessments approved by a popular vote that are collected for a specific purpose, or property tax assessments collected for another agency; = Value of all discretionary income received by Los Angeles from property taxes, sales taxes, business taxes, license fees, grants, allotments, income sharing, investment income, etc. This value excludes income collected for debt service and income collected for a specific service (such as water, sewer, electric service charges, etc.); and = Contracting Entity's Proportionate Share