Bajagua Signs Contract with USIBWC            

Landmark Agreement Sets in Motion Plans for Construction of Plant
To Treat Tijuana Sewage Flows

SAN DIEGO, CA – Efforts to treat Tijuana’s unchecked sewage made a monumental leap
forward today when the Acting Commissioner of the United States International Boundary and
Water Commission (US IBWC), Carlos Marin, signed a contract with Bajagua, LLC under the
terms of Public Laws 106-457 and 108-425.

The announcement follows the approval of Minute 311 in 2004 establishing the framework
within the treaty governing the use of waters along the US Mexican border. The contract will
facilitate negotiations between the United States and Mexico to move forward the Bajagua
project, as envisioned when Congress unanimously passed laws authorizing a public private
partnership to develop a secondary sewage treatment plant in Mexico. The Tijuana sewage
problem has plagued the south-bay area for more than 70 years and has repeatedly caused beach
closures and other negative public health consequences.

“This is a landmark day for the people of San Diego,” said Jim Simmons, managing partner for
Bajagua, LLC. “Our contract with the US IBWC will allow us to move forward with the project,
further negotiations between the US IBWC and Mexico, initiate the competitive bid process and
ultimately get contracts signed to proceed with the construction of this important project.”
The terms of the contract were for a 20 year fee-for-services contract with the Bajagua, LLC as
the “Owner of the Mexican Facility” to treat roughly 59 million gallons per day (mgd) of sewage
generated in Tijuana. The cost of design and construction of the proposed facility will be
amortized over the life of the 20 year contract. That cost, along with the operations and
maintenance costs will be paid back annually by Congressional appropriation. The design,
construction and operation of the project, estimated at 90% of the total project cost, will be
competitively bid, pursuant to the terms of U.S. Public Law 106-457.

“The contract is a fair deal for both parties, and protects the taxpayers at the front end and
through the life of the contract, by us providing up-front funding for the design and construction
of the project,” said Simmons. “We also must remain equity partners, to the tune of 20% of total
project cost, for the life of the contract. The bottom line is, we don’t get paid if we don’t
perform on-budget and to the standards of the US, California and Mexican environmental laws.”

The Bajagua project, a proposed comprehensive sewage treatment project, was authorized five
years ago under Public Law 106-457. This authorization was authored by Congressman Bob
Filner and former Congressman Brian Bilbray and was subsequently reauthorized in 2004 by the
entire San Diego congressional delegation under Public Law 108-425. The law provided for 50+
mgd of sewage treatment, with options for greater capacity, depending on the outcome of the
EPA master plan analysis, which was completed last year. That analysis named the Bajagua
project as the most feasible alternative to address the sewage crisis impacting San Diego
County’s shoreline.

The plant, now proposed to treat 59 mgd of sewage could also provide for the reclamation of a
portion of that water for resale purposes, subject to approval by the Government of Mexico. If
approved, a percentage of the resale proceeds would be rebated back to the U.S. Government to
offset the annual costs of the plant, in accordance with the provisions of PL 106-457.