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HomeMy WebLinkAboutBOARD MINUTES 11-30-06 MINUTES OF THE SPECIAL MEETING OF THE DISTRICT BOARD OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT HELD ON NOVEMBER 30, 2006 The District Board of the Central Contra Costa Sanitary District convened in a special meeting at its regular place of meeting, 5019 Imhoff Place, Martinez, County of Contra Costa, State of California, at 2:00 p.m. on Thursday, November 30, 2006. President ProTem Nejedly called the meeting to order and requested that the Acting Secretary call roll. 1. ROLL CALL PRESENT: Members: Boneysteele, Hockett, Lucey, Nejedly ABSENT: Members: Menesini a. PLEDGE OF ALLEGIANCE TO THE FLAG Board and staff joined in the Pledge of Allegiance to the Flag. 2. PUBLIC COMMENTS There were no public comments. 3. CAPITAL IMPROVEMENT BUDGET PLANNING WORKSHOP a. RECEIVE PRESENTATION AND DISCUSS DEVELOPMENT OF DRAFT 2007- 2008 CAPITAL IMPROVEMENT BUDGET (CIB) AND 2007 CAPITAL IMPROVEMENT PLAN (CIP). Director of Engineering Ann Farrell stated that the purpose of the Workshop is to review the historical perspective of the capital program, review the projected revenue and expense for the current fiscal year, review the proposed 10-Year Plan and expenditures for next fiscal year, 2007-2008, and set direction for the January Board Financial Planning and Policy Workshop, and the ten-year Capital Improvement Plan (CIP). She stated that the Board has a continued approval role in the capital spending process even after approval of the Capital Budget and Plan. The Board must approve consultant agreements over $50,000, award of construction contracts over $15,000, project overruns in excess of 15 percent of the total project established at the time of award of the construction contract, and construction change orders over $50,000. The backbone of the Capital Program is renewal and replacement. The baseline budget for renewal and replacement was first established at $21 million in January 2000. This baseline was established by taking the estimated $2.1 billion value of all District assets at that time and budgeting one percent for renewal and replacement. This represents replacement of all District assets approximately once every hundred years. The baseline is now $26 million with inflationary growth of 3 percent per year since January 2000. She noted that the baseline does not address capacity increases or changing regulations. Ms. Farrell reviewed capital program activity since 1999, comparing budgeted expenditures vs. actual expenditures and budgeted revenues vs. actual revenues. She stated that, from 2001-04, the District had the uncertainty of losing the ad valorem tax, and purposely under spent. In prior and subsequent years there was an effort to spend more than anticipated revenue, in order to reduce the balance in the Sewer Construction Fund. The net results of these variations in expenditures and revenue are that, since 1999, the Sewer Construction Fund has been reduced slightly, from $57.1 million to $55.8 million on June 30, 2006. Book 55 - Page 54 Board Minutes of November 30, 2006 For the current fiscal year, 2006-07, expenditures were budgeted at approximately $35 million and revenues at approximately $39 million. This is an anomaly because additional sewer service charge was shifted into the Capital Program in order to spend down the O&M Reserves. Consequently, there is quite a bit more Sewer Service Charge revenue going into the Capital Program this current fiscal year. Expenditures have gone up because of the bidding climate where projects have come in higher than budgeted and because of added scope items to several projects. In addition, the District has agreed to finance the main line sewers in Alhambra Valley. The capital revenue budget for 2006-07 was based on approximately 2,200 connections. However, the number of connections year to date is down significantly, and the estimate has now been reduced to approximately 1,400 connections. Based on these adjustments, current projections are for $40.9 million in expenditures together with $1.5 million in loans to Alhambra Valley residents, offset by revenues of approximately $36.1 million. This will result in drawing down the Sewer Construction Fund balance by $6.3 million to approximately $49.5 million. The total increase in projected expenditures is about 17 percent. As discussed earlier, a large portion of this is due to price escalation in the construction industry. Ms. Farrell quoted the "Price Escalation in Public Construction August 2006 Survey of 166 Public Owners" stating that 91 percent have experienced price increases and 45 percent have experienced decrease in number of bidders. The average price increase in fiscal year 2005-06 was 16 percent. The surveyed owners predicted an average price increase for the current fiscal year of 11 percent. Thus, the Districts experience of escalating construction costs is not uncommon. Ms. Farrell then moved the discussion from the review of the existing 2006-07 Capital Program to the proposed 2007-08 Capital Improvement Budget and Plan. Ms. Farrell stated that the goals of the 2007 Capital Improvement Plan are to fund the $26 million baseline renewal and replacement program fund with baseline revenues and to fund needed capacity and regulatory projects using both the balance from the Sewer Construction Fund and the one-time Dougherty Valley revenue. Anticipated capacity and regulatory driven projects have been budgeted, with the exception of two very large potential projects that may need to be bond funded. Ms. Farrell presented a comparison of bond financing vs. rate increases to fund large projects. The analysis shows that for large capital projects bond financing minimizes rate impacts and allocates project costs to the future ratepayers who will benefit by spreading the costs over 20 years. Rate financing is the lowest overall cost but has significant rate impacts for the several years of the project. By making the decision to spend down the reserve we are eliminating the "sinking fund approach" which is a third approach where funds are accumulated in reserves so that they are there when needed for a large project. In fiscal year 2007-08 expenditures are projected at approximately $41.3 million plus $1 million for Alhambra Valley mainline financing. The revenue is projected at approximately $39 million, including $7.7 million in revenue from an estimated 1,500 new connections. Using these projections, the Sewer Construction Fund balance will be spent down by about $3.3 million. Spending for Treatment Plant Projects is projected at $12.3 million. Projects include Wet Weather Protection, Wet Weather Bypass, UV Wet Weather Capacity, Plant Controls, Service Air, Solids Handling, and Standby Power. Ms. Farrell stated that the Wet Weather Protection Project was started after the December 31, 2005 event, which was a 30 plus year storm, resulting in water levels in Walnut Creek and Grayson Creek very close to the tops of the levees. Staff became concerned that these levees were not adequate to protect the treatment plant facility in events up to 1 OO-year storm, for which they were supposed to be designed. The major projects planned in the Collection System Program for 2007-08 include the renovation program and the A-Line Phase 2A Project. The Sewer TV Inspection Program drives the renovation program. Approximately one third of the District's sewer lines have been TV'd or approximately 2.6 million of the 7.9 million feet of total District Book 55 - Page 55 Board Minutes of November 30, 2006 sewer footage. The renovation projects have been created from the findings of the TV program and from findings of CSO field crews. Approximately 185,000 feet of District sewers have been renovated to date. The cost per foot on the renovations has averaged about $300 per foot for the last three years. Mr. Bill Brennan, Collection System Operations Department Manager, reported on the regulatory environment is becoming increasingly stringent noting that by May 2, 2007, the State Water Discharge Requirements will replace the Regional Water Quality Control Board for reporting of overflows. This requires that all information on overflows will be publicly accessible on a statewide database. This also requires that a Sewer System Management Plan be adopted by the Board and submitted to the State by May 2, 2009. The first Board activity on this issue will occur in May 2007, which will be approving and adopting the goals and organization structure for that plan. The District is currently at 70 overflows per 100 miles of pipe for a running 12-month period. This is below the benchmark of six overflows per 100 miles. This is possible because of the additional staff and equipment that has been provided by the Board, the District's focus on quality cleaning, the Engineering Department's Capital Program, and the weather. Quality cleaning is attained by more efficient cleaning tools, the quality assurance program in the field, closed circuit inspection used with cleaning as a training tool, continuing cleaning studies and creating training tapes, focus on root-control program, and spot repairs. The next steps that the Collection System Operations Department will be taking are to continue with the quality cleaning, further evaluate root-control program in easements, and analyze the new data. It is anticipated that greater effort will be required for additional gains and there is a need for continued investment in renovation and capacity projects through the Capital Program. Ms. Farrell summarized the presentation on the 2007-08 Capital Program reviewing the Treatment Plant Projects including the Standby Power and Wet Weather Projects, the Collection System Projects including the Renovation Program and the A-Line Project with Concord. Ms. Farrell reported on the General Improvements Program that includes vehicles and equipment, information technology, and CSO Facility Improvements Project. It is anticipated that there will not be a large expenditure for the CSO Facilities Improvements Project until the 2008-09 fiscal year, as 2007-08 will be spent designing the facility and obtaining Board and City of Walnut Creek approvals. The Recycled Water Program will see a larger than usual expenditure in 2007-08 associated with the A-Line Phase 2A extension. In summary Ms. Farrell stated that the Capacity Fee revenue from the Dougherty Valley has slowed, but continues to augment baseline revenues. The Sewer Construction Fund balance continues at a level higher than needed to meet cash flow needs. By spending down the Sewer Construction Fund balance and the Dougherty Valley capacity fee revenue, renewal and replacement of existing facilities can continue while also addressing most known regulatory and capacity needs. Large capacity and regulatory projects, if needed, may require bond funding to minimize rate impacts to current ratepayers. In response to a question from Member Lucey regarding the Alhambra Valley Sewer Project, Senior Engineer Alex Rozul stated that the Park Service has requested that the District extend the schedule by a week or so because of Park Service staffing issues. The initial draft environmental assessment will be completed this week. The project should go to bid in March 2007 with completion expected in July/August 2007. The project should be finished on time to meet the needs of the potential connectors. Member Nejedly requested staff to report back at a future Board meeting on Grayson Creek and Walnut Creek and the Treatment Plant's wet weather protection. Mr. Nejedly requested that staff investigate and contact the responsible parties regarding the levees and the need for dredging to maintain appropriate flooding protection. Book 55 - Page 56 Board Minutes of November 30, 2006 4. REPORTS/ANNOUNCEMENTS None. 5. ADJOURNMENT There being no further business to come before the Board, President Menesini adjourned the meeting at 2:57 p.m. ~ ' . 1..I.A.Uu C- 'H., Pre . . ent of the Board ~tors, Central Contra Costa Sanitary District, County of Contra Costa, State of California COUNTERSIGNED: CQ~ Secretary of the Central Contra Costa Sanitary District, County of Contra Costa, State of California --- Book 55 - Page 57