For Water Subcommittee Meeting, March 26, 2026
TO: Water Subcommittee Members
APPROVAL: Sachin Chawla, Director of Utilities
FROM: Toyasha Sebbag, Assistant to the City Manager
Title
Staff Request Water Subcommittee Provide Feedback on the Proposed 2024 - 2027 Labor Component Reset and Associated Staffing Adjustments under the Rialto Water Services Operations and Maintenance Subcontract. (ACTION)
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RECOMMENDATION
Staff recommends that the Water Subcommittee provide feedback on the proposed 2024 - 2027 Labor Component Reset and associated staffing adjustments under the Rialto Water Services Operations and Maintenance Subcontract.
BACKGROUND
On March 27, 2012, the City Council and the Rialto Utility Authority (RUA) approved a Concession Agreement (CA) with Rialto Water Services, LP (RWS), operated by Veolia North America (Veolia). Articles VIII and XIV of the Concession Agreement establish the compensation framework for wastewater and water services, including the Labor Component. Sections 8.11 and 14.11 of the Agreement require that the Labor Component be recalculated every fourth (4th) Contract Year using the methodology defined in the Operations and Maintenance Subcontract.
Under the CA and Operations and Maintenance Subcontract (OMS), the Periodic Reset recalculates the Labor Component using a formula-based methodology that includes:
1. The average annual Labor Expense for the immediately preceding four (4) Contract Years, adjusted as provided in the CA;
2. An Additional Labor Adjustment reflecting reasonably anticipated changes in Labor Expense during the succeeding four (4) Contract Years due to operational needs, regulatory requirements, or system changes;
3. Application of the Contractor Charge to the adjusted Labor Expense to determine the updated Labor Component; and
4. Execution of a Contract Administrative Memorandum (CAM) showing all the scope and staffing changes and calculations to capture retroactive adjustments and labor compensation going forward.
The previous reset covered the period 2020-2023 and required RUA to review Veolia’s labor expenses and evaluate any requested staffing adjustments necessary to support contractual obligations and operational requirements.
No additional positions were approved during the 2020-2023 reset period. As a result, several staffing requests accumulated and were included in the current 2024-2027 Labor Reset submission.
As part of the current submission, Veolia requested the addition of four (4) new positions to support operational, regulatory and capital improvement requirements across the wastewater collections system and laboratory functions.
ANALYSIS/DISCUSSION
Staff conducted a comprehensive review of Veolia’s Labor Reset submission, including:
• Historical labor expense data for 2020-2023
• Historical labor adjustments since the beginning of the concession and effectiveness of positions added and deleted
• Operational workload metrics
• Regulatory compliance requirements
• Position justification memoranda submitted by Veolia
• System growth and infrastructure changes
• Industry operational practices and safety standards
During the review process, staff also evaluated current wastewater system operations, including preventive maintenance activities, lift station inspections, CCTV inspections, emergency response activities, and regulatory laboratory compliance.
Overall system operations remain stable and compliant; however, staff confirmed that several operational areas are experiencing increasing workload demands, particularly due to system expansion, additional lift stations, and increased regulatory compliance requirements.
As part of the 2024 Labor Reset, Veolia requested approval of the following four (4) positions:
1. Two (2) Collection System Technicians
2. One (1) Laboratory Technician
3. One (1) Capital Projects Coordinator
Collection System Technicians
Veolia requested two additional Collection System Technicians citing:
• Increased system workload
• Additional lift stations added since 2020
• Expanded CCTV inspection requirements
• Increased DigAlert responses
• Sewer system growth due to development
• Safety requirements for two-person CCTV and jetting operations
Attachment 1 summarizes the workload and operational capacity of the current four-person sewer collections team based on standard industry productivity assumptions. Each technician provides approximately 150 productive hours per month (1,800 hours annually), resulting in a total monthly capacity of approximately 600 labor hours.
Current operational activities including lift station inspections, sewer cleaning, CCTV inspections, DigAlert responses, emergency callouts, and asset inspections require approximately 800 labor hours per month, creating an estimated 200-hour monthly workload deficit under current staffing levels.
Adding two additional Collections Technicians would increase operational capacity to approximately 900 labor hours per month, allowing the City to expand preventive maintenance activities, improve DigAlert response times, and support additional workload associated with system growth and new lift stations. The additional staffing would significantly reduce the operational workload gap while improving system reliability and response readiness.
Laboratory Technician
Veolia requested the addition of one (1) Laboratory Technician due to new regulatory requirements associated with the 2016 TNI Standard adopted by California ELAP, which took place in 2024 and increases documentation, auditing, and quality control responsibilities for certified laboratories. These requirements include:
• Additional internal laboratory audits
• Secondary data validation requirements
• Expanded training and certification obligations
• Technical Manager coverage requirements
Staff determined that these regulatory requirements represent a credible Change in Law justification under the Concession Agreement and that the additional laboratory position is necessary to maintain laboratory certification and ensure continued compliance with state regulatory standards. The additional position will also allow the laboratory to perform more process-control testing in-house, providing operators with faster analytical results to support day-to-day wastewater treatment operations.
Capital Projects Coordinator
Veolia also requested approval of a Capital Projects Coordinator to assist with project planning, permitting coordination, and capital program management activities. The request was based on the increasing volume of capital improvement and development-related projects requiring coordination, regulatory review, and engineering documentation.
While staff acknowledges the increasing complexity of capital project coordination, the Periodic Reset provisions of the Concession Agreement (Sections 8.11 and 14.11) are intended to address labor expenses associated with the operation and maintenance of the Utility Facilities, rather than capital program management functions.
Activities such as capital project planning, engineering coordination, and permitting support are typically associated with capital improvement program delivery rather than routine operations and maintenance responsibilities under the OMS. Accordingly, staff determined that the requested position does not fall within the scope of the Labor Component reset methodology.
Staff therefore recommends that the request for a Capital Projects Coordinator be evaluated separately through the appropriate contractual or administrative process, including potential consideration as part of capital program management support rather than the operations-based Labor Reset.
Staff Recommendation
After completing the review of Veolia’s Labor Reset submission, staff recommends approval of:
• Two (2) Collection System Technicians
• One (1) Laboratory Technician
Staff recommends rejecting the Capital Projects Coordinator position under the labor reset adjustment and having RWS/Veolia fund that position through the capital projects approval process as and when needed. Also, staff is in the process of checking the calculations for the labor reset and waiting for additional information from RWS/Veolia to complete the analysis. Once that is complete staff will bring the CAM back to the WSC for feedback or take it to the council for approval.
This determination is based on the findings documented in Attachment 2 Veolia’s Labor Reset Memorandum.
ENVIRONMENTAL IMPACT
The proposed action is not a “Project” as defined by the California Environmental Quality Act (CEQA). Pursuant to Section 15378(a), a “Project” means the whole of an action, which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. According to Section 15378(b), a Project does not include: (5) Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment.
GENERAL PLAN CONSISTENCY
Approval of the proposed action also complies with the following City of Rialto Guiding Principles, General Plan Goals and Policies: “Our City government will lead by example, and will operate in an open, transparent, and responsive manner that meets the needs of the citizens and is a good place to do business.”
LEGAL REVIEW
The City Attorney's Office has reviewed the staff report.
FINANCIAL IMPACTS
Operating Budget Impact
The proposed 2024 Labor Component Reset adjusts the contractor labor baseline in accordance with the methodology established in the CA and OMS.
Consistent with staff’s recommendation, approval of the three (3) positions (two Collection System Technicians and one Laboratory Technician) will result in an estimated ongoing annual increase of approximately $286,000, allocated to the wastewater utility. On average, each position represents a fully burdened cost of approximately $90,000 to $100,000 annually.
This increase represents a modest adjustment to the overall labor component (approximately 3-4% systemwide) and a targeted increase to wastewater operations of approximately 7%, reflecting that all positions are dedicated to wastewater services. The increase is primarily associated with regulatory compliance requirements and operational workload related to system growth and infrastructure expansion.
Detailed financial impacts, including retroactive adjustments and future year allocations, will be documented through a CAM following completion of the labor reset review.
Capital Improvement Budget Impact
There is no impact on the Capital Improvement Budget.
Licensing
This action does not require a business license.
ATTACHMENTS
1. Key Performance Indicator (KPI) Collection System Technicians
2. Veolia’s Labor Reset Memorandum
3. Veolia’s Collection System Technicians Justification
4. Veolia’s Laboratory Technician Justification
5. Capital Projects Coordinator Justification