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HomeMy WebLinkAboutCAPITAL PROJECTS AGENDA 08-04-09Central Contra Sanitary District RO:IRD OF DIRECTORS CAPITAL PROJECTS COMMITTEE Chair McGill Member Lucey Tuesday, August 4, 2009 3:00 p.m. Third Floor Executive Conference Room Central Contra Costa Sanitary District 5019 Imhoff Place, Martinez, CA INFORMATION FOR THE PUBLIC ADDRESSING THE COMMITTEE ON AN ITEM ON THE AGENDA JAA1/iSA. ,V/Jfill/.Y Pre.idcnr AIfCHAGI. It h1c(,'lLL President l'm lim HANHAILI D. H(X'KH'l7' MAR!O M. ,ifG,Y&SINI PHONE: (925) 228-9500 FAX: (925J 676-72 / l www.cenfralsan.org Anyone wishing to address the Committee on an item listed on [he agenda will be heard when the Committee Chair calls for comments from the audience. The Chair may specify the number of minutes each person will be permitted to speak based on the number of persons wishing to speak and the time available. After the public has commented, the item is closed to further public comment and brought to the Committee for discussion. There is no further comment permitted from the audience unless invited by the Committee. ADDRESSING THE COMMITTEE ON AN ITEM NOT ON THE AGENDA In accordance with state law, the Committee is prohibited from discussing items not calendared on the agenda. You may address the Committee on any items not listed on the agenda, and which are within their jurisdiction, under PUBLIC COMMENTS. Matters brought up which are not on the agenda may be referred to staff for action or calendaredon a future agenda. AGENDA REPORTS Supporting materials on Committee agenda items are available for public review at the Reception, 5019 Imhoff Place, Martinez. Reports or information relating to agenda items distributed within 72 hours of the meeting [o a majority of the Committee are also available for public inspection at the Reception. During the meeting, information and supporting materials are available in the Conference Room. AMERICANS WITH DISABILITIES ACT In accordance with the Americans With Disabilities Act and California Law, it is the policy of the Central Contra Costa Sanitary District to offer its public meetings in a manner that is readily accessible to everyone, including those with disabilities. If you are disabled and require special accommodations to participate, please contact the Secretary of the District at least d8 hours in advance of the meeting at (925) 229-7303. ® Rec/deA Paper Capital Projects Committee August 4, 2009 Page 2 Call Meeting To Order Public Comments '3. Fiscal Year 2009-10 Capital Improvement Budget and Ten Year Plan Revisions - Farrell, Pilecki '4. Capital Improvement Program Expenditure and Revenue Scenario for Fiscal Year 2009-10 and Bevond -Farrell, Pilecki '5. Update on the Status of the Collection Svstem Operations Department (CSODI Administration, Crew, And Warehouse Facility DP 8208 -Farrell, Pilecki 6. Adjournment Attachment 3. Central Contra Costa Sanitary District July 30, 2009 TO: BOARD OF DIRECTORS VIA: JAMES M. KELLY, GENERAL MANAGER y/ ~~~/ FROM: ANNE. FARRELL, DIRECTOR OF ENGINEERING 1r ~*`~ TAD J. PILECKI, CAPITAL PROJECTS DIVISION MANAGER GAIL CHESLER, ASSOCIATE ENGINEER GG SUBJECT: FISCAL YEAR 2009-10 CAPITAL IMPROVEMENT BUDGET AND TEN-YEAR PLAN -REVISIONS BACKGROUND The FY 2009-10 Capital Improvement Budget (CIB) and Ten-Year Plan (CIP) was adopted at the June 4, 2009 Board Meeting. At that time the Board was informed that revisions would be necessary and would be brought to the Board at the August 6, 2009 Board meeting. These revisions included: Change the amount to be authorized by the Board, based on the actual 2008-09 fiscal year end financials/allocations carryover. Change the cash flow analysis for both the CIB and the CIP to subtract the $10 suggested rated increase that was not adopted. These revisions are discussed in further detail in the following paragraphs. BOARD AUTHORIZATION In past years, the Board has updated the funds authorized in the current CIB to reflect actual year end financial results. This year, although staff has developed the year end financials, in light of declining revenue, staff has elected to defer the updating of the funds authorized until the Board has had the opportunity to discuss/evaluate several new revenue/expenditure scenarios developed by staff. These new revenue/ expenditure scenarios are presented under a separate memo that is part of the August 4 Capital Projects Committee Agenda. Once the Board has given staff direction on how to proceed, a position paper may be prepared for Board consideration to adjust the funds authorized in the 2009-10 CIB. Fiscal Year 2009-2010 Revisions Page 2 July 30, 2009 CAPITAL IMPROVEMENT BUDGET (CIB) CASH FLOW The one-year cash flow for the CIB is documented in Table 2 of the CIB document. Revised Table 2 is attached for insertion in your CIB/CIP binder. This table shows the budgeted revenue and expenditures. This year we included an adjusted expenditure column to demonstrate the expected savings from the competitive bid climate. The revenues shown in the original document have been revised to subtract the suggested $10 sewer service charge (SSC) increase which was not adopted by the Board, resulting in a $1.7 million drawdown in the projected Sewer Construction Funds (SCF) Available. CAPITAL IMPROVEMENT PLAN (CIP) CASH FLOW The Ten-Year cash flow and the assumptions used to generate it are contained in Tables A-4 and A-5 of the CIP document. Revised Tables A-4 and A-5 are attached for insertion into your CIB/CIP binder. The cash flow as presented in the original document adopted by the Board would have required bonds, short term borrowing, or higher SSC rate increases to meet District cash flow needs. By subtracting the $10 SSC increase planned for FY 2009-10, the Sewer Construction Fund balance is further reduced in outlying years, falling to a low of $22.5 million in 2011-12 before being replenished over the next several years: The 2009-10 CIP will require either short or long term borrowing or deferral of projects to meet District cash flow needs through the period (FY 2010-11 through FY 2013-14) when the SCF balance falls below approximately $30 million. Staff is developing a detailed analysis of capital expenditure and revenue scenarios for the 2009-10 CIB/CIP, which is provided to the Board in a separate memo as part of this Capital Projects Committee Agenda. Given the favorable bid climate, it is appropriate for the District to weigh the deferral/elimination of projects against the need for short or long term borrowing (bond financing) to build projects now at a substantial savings. This analysis and decision process will be discussed at the Board Capital Projects Committee Meeting on August 4, 2009. /jf Table 2: SEWER CONSTRUCTION FUND REVENUES AND EXPENDITURES REVISED FOR NO SSC RATE INCREASE IN 2009-70 A summary of projected FY 2009-2010 Capital Improvement Program revenue and expenditures is presented below: Revenues Facilities Capacity Fees Pumped Zone Fees Interest Ad Valorem Taxes Sewer Service Charges' Reimbursements from Others: City of Concord Recycled Water Sales ~ Alhambra Valley Developer Fees, Charges, Other Total Revenues2: Per CIB Budaet $ 5,298,000 825,000 556,000 8,200,000 3,188,000 Adjusted for Anticipated Bid Savings in Current Economy $ 5,298,000 825,000 556,000 8,200,000 Expenditures Treatment Plant Program Collection System Program General Improvements Program Recycled Water Program Total Expenditures 3,188,000 4,528,000 4,528,000 175,000 175,000 359,000 359,000 427,000 427,000 $ 23,556,000 $ 23,556,000 $ 13,769,000 15,161,000 10,637,000 550,000 $ 13,069,000 13,544,000 9,037,000 550,000 $ 40,117,000 $ 36,200,000 A summary of Sewer Construction Funds Available is Presented Below: Projected Beginning Balance (7/1/09) Projected Revenues Projected Expenditures Projected S/C Funds Available (6/30/10) $ 47,641,000 23,556,000 (40,117,000) $ 47,641,000 23,556,000 (36,200,000) $ 31,080,000 $ 34,997,000 More specific information regarding the revenue and expenditure categories is included in the Capital Improvement Plan. Adjusted for no $10 rate increase in FY 2009-2010. z Revenue is first recorded in the O&M budget until O&M costs are offset. Any additional revenue will be recorded in the Sewer Construction Fund. Note: Original adopted budget based on March 5, 2009 Board Meeting recommending $10 SSC increase in 2009-10. Revised budget reflects reduced SSC revenue due to Board action on June 4, 2009 to not raise SSC for 2009-10. O M Of O N t! m N N N M M tr N Qf r m m N 'Q N m m m r r N M m N N N Q tD (+ tD 1~ M m N t0 1~ M1 N m r ~' N Q N N V N O r M r N V m r N m m m m N T M M m O1 M M R i0 N r M ?. 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Central Contra Costa Sanitary District July 31, 2009 TO: BOARD CAPITAL PROJECTS COMMITTEE VIA: JAMES M. KELLY, GENERAL MANAGER nj F~ FROM: ANN E. FARRELL, DIRECTOR OF ENGINEERING ~~~ TAD PILECKI, CAPITAL PROJECTS DIVISION MANAGER ~!~ SUBJECT: CAPITAL IMPROVEMENT PROGRAM EXPENDITURE AND REVENUE SCENARIOS FY 2009-10 AND BEYOND BACKGROUND The primary focus of the District's Capital Improvement Budget and Plan is to maintain regulatory compliance and provide excellent customer service. The Fiscal Year (FY) 2009-10 Capital Improvement Budget and Ten-Year Capital Improvement Plan were prepared with this focus in mind and adopted by the Board on June 4, 2009. Recommended modifications to these documents to reflect no $10 SSC rate increase in FY 2009-10 are being provided to the Board in a separate memo. Since the preparation of the CIB/CIP in January/February 2009, expenditures are in line with projections, but revenues have come in under budget by almost $4 million (approximately 10 percent of the budgeted Sewer Construction Fund revenue for FY 2008-09), thus reducing the Sewer Construction Fund starting balance for 2009-10 by a like amount. The major shortfalls in revenues are: Connection Fees Interest Income Alhambra Valley Assessments Total -$ 2.36 million -$ 0.99 million -$ 0.62 million -$ 3.97 million In addition to the $4 million shortfall in revenue, the State has borrowed approximately $1 million in Ad Valorem taxes for FY 2009-10 from the District, bringing the total revenue shortfall in the Sewer Construction Fund to approximately $5 million. The purpose of this memo is to look at approaches to address this revenue shortfall. For FY 2009-10, either the Capital Program needs to be reduced to match revenues or revenues need to be increased. In future years, higher SSC rates will be required to sustain the Capital Programs' focus on improving regulatory compliance and customer N:\PESUP\PILECKI\2009\CIB-CIP 2009-10 scenarios.doc CIP Expenditure 2009 and Beyond Page 2 of 8 July 31, 2009 service. In previous discussions this year with the Board, bond financing was discussed from the perspective of smoothing increases in the SSC rates, but given the significant loss in revenues, bond financing is needed to supplement the sewer construction fund. Revenues are now expected to continue rurining under the 2009-10 CIB/CIP estimates for the next two to three years. The District has pursued Federal Stimulus monies and has applied for State Revolving Funds. The District did not receive any stimulus monies and any funds from the SRF would not be available this calendar year. Based on reduced revenues, staff proposed providing the Capital Project Committee a fresh look at the CIB/CIP expenditures (including bid savings) and revenues at the August 4 committee meeting. The full Board will be briefed at the August 6 Board meeting. Staff recommends that the Board revisit capital expenditures and revenues much earlier in the fiscal year than is typical (November Board Capital Workshop) to carefully consider mid-course corrections. The following memorandum lays out some different expenditure and revenue scenarios for the Board's consideration. REVENUE ASSUMPTIONS The revenue assumptions contained in the adopted FY 2009-10 CIB/CIP included a number of, what were thought at the time it was developed to be, conservative assumptions. Since that time, further revenue reductions have occurred or are expected, thus it is prudent to evaluate some new capital planning scenarios with reduced revenues. Revised Table A-5 shows the adopted (adjusted for no $10 SSC charge increase in FY 2009-10) revenue assumptions and Table A-5A shows the proposed new revenue reduction assumptions (tables attached). The proposed changes in revenue assumptions reflected in Table A-5A are as described below: Interest: No change, stays as listed in Revised Table A-5. Inflation: No change, stays as listed in Revised Table A-5. Number of New Connections: Assumes same 1,000-per-year number of connections as before, but assumes 500 of the 2009-10 connectors or 50 percent, elect to defer their connection fees in accordance with the Board approved pilot program. This amounts to approximately $3 million. It is further assumed that half the deferral, or $1.5 million, is paid in 2010-11 and the other half, $1.5 million, in 2011-12. (Note: The FY 2009-10 revenue is now expected to be approximately $4 million, based on full payment from one large residential complex.) Ad Valorem Tax Escalation: Revised Table A-5 assumed no increase in property tax in 2009-10 but returned to 4 percent annual increases in the following nine years of the ten-year plan. The revised revenue assumption reflected in Table A-5A is that the housing downturn will continue for a longer period, and that property taxes will not begin to increase at 4 percent annually until FY year 2013-14. While East Contra Costa County has actually seen a significant decrease in property tax revenue due to N:\PESUP\PILECKI\2009\CIB-CIP 2009-10 scenarios.doc CIP Expenditure 2009 and Beyond Page 3 of 8 July 31, 2009 reassessments of existing housing stock, we have assumed that Central County will not see a similar reduction in tax revenue. The recent $1 million borrowing of Ad Valorem Tax by the State is not covered in the revenue assumptions, since it is assumed to be repaid in three years and can be addressed by short-term borrowing, if needed. Sewer Service Charge Capital Component: Revised Table A-5 and Table A-5A have removed the $10 rate increase for FY 2009-10 from the capital revenue stream. Financing: No change, both tables do not include any short- or long-term borrowing in the first four years of the program. However, in order to meet District cash-flow needs, some short- orlong-term borrowing would be necessary in these early years; several of the scenarios discussed later in this memo propose a $30 million bond in FY 2009-10. Both tables do include a $32 million bond in 2016-17 to fund a primary expansion or some other potential regulatory-driven projects. REVENUE SCENARIOS The major revenue assumptions for the Sewer Construction Fund in FY 2009-10 are: Connection Fees Interest Ad Valorem Tax ~'~ Sewer Service Charge Concord Reimbursement Reimbursements from Others $6.123 million or 26.0 percent $0.556 million or 2.4 percent $8.200 million or 34.8 percent $3.188 million or 13.5 percent $4.528 million or 19.2 percent $0.961 million or 4.0 percent Total Capital Income $23.556 million or 100 percent ~'~ Approximately $12 million is collected each year in Ad Valorem Tax, of which $4 million goes to debt service. Based on the above tabulation, interest income and reimbursements from others represent 6.4 percent of the total income. Any changes in these categories would not significantly impact the revenue scenarios presented below. However, if interest rates/income continue to be low in years 3 - 10, this could reduce future revenue by a million dollars a year for eight years. Connection fees represent 26 percent of the total capital income. The connection fee is calculated to comply with state law, and the District has no control over the actual number of connections. The District's only discretionary action is to update the connection fee each year to reflect the changes that occurred. The District has traditionally done this. Over or underestimating the number of connections by a significant amount can impact the total revenue collected by $2 million this year. Additionally, the pilot program for collecting connection fees from builders will have a significant impact on total income in the first year ($2 million). Ad Valorem Tax, approximately 35 percent of total income, has grown steadily over the years, and no significant declines are expected in the Central County tax base; N:\PESUP\PILECKI\2009\CIB-CIP 2009-10 scenarios.doc CIP Expenditure 2009 and Beyond Page 4 of 8 July 31, 2009 however, the District has no control over the amount collected. As said many times before, a major impact to the amount of Ad Valorem Tax collected would occur if the State takes away or borrows the money. The amount the District collects from Concord is set by our contract with them. The only revenues that can be controlled by the District are the capital component of the sewer service charge and the amount/timing of borrowing (short term or bond sales). The need for bond financing as part of the cash flow solution was discussed with the Board on several occasions during the 2009 budget process. The approach used by District staff in developing scenarios for this analysis has been to develop a number of expenditure scenarios and examining how much sewer service charge increases and/or borrowing would be necessary to support these expenditure scenarios. All other revenue source assumptions are assumed to be constant regardless of scenario. These assumptions can change rapidly, as evidenced by the earlier-than-expected payment by the Bart Avalon Development of $2.2 million in connection fees in July 2009, and our capital revenue coming in $4.0 million under budget this year. EXPENDITURE ASSUMPTIONS AND SCENARIOS For this scenario-planning exercise staff has developed five expenditure scenarios. Each scenario is described below: Scenario 1: This scenario is the reduced spending scenario from the adopted budget where it is assumed that bids for budgeted projects will come in 20 percent lower than budgeted in 2009-10 and 10 percent lower than budgeted in 2010-11. Scenario 2: This scenario takes Scenario 1 and reduces capital expenditures by approximately $18 million over the first three years by deferring or eliminating projects. The projects deferred were moved out in time and had a ripple effect in moving future projects further out in time to obtain the same expenditures for all scenarios in FY 2012- 13and thereafter. Projects deferred include the San Ramon Schedule C Interceptor and the wet scrubber replacement on the incinerators. Also, the $6 million budgeted for seismic improvements was removed from the budget, as no recommendations for projects have been developed at this time. Finally, expenditures were reduced for the renovation programs in both the collection system and the treatment plant for the first three years of the plan. Scenario 3: This scenario is similar to Scenario 2 except that $3 million per year in O&M savings in FY 2010-11 and 2011-12 are credited to the Capital Program. Scenario 4: This scenario is similar to Scenario 3, except for $30 million of bond financing is added in FY 2009-10. N:\PESUP\PILECKI\2009\CIB-CIP 2009-10 scenarios.doc CIP Expenditure 2009 and Beyond Page 5 of 8 July 31, 2009 Scenario 5: This scenario is similar to Scenario 2, except that the CSOD Administration, Crew and Warehouse Facility was deleted from the expenditures. The following table provides asummary/comparison of the five scenarios. EXPENDITURE SCENARIO FY 09-10 FY 10-11 FY 11-12 FY 12-13 Ado ted CIB/CIP With No Bid Savin s $40.1 M $38.6 M $35.2 M $26.0 M Scenario 1 -Ado ted CIB w/ bid Savin s $36.2 M $35.0 M $35.2 M $26.0 M Scenario 2 -Adopted CIB w/bid savings $34.7 M $28.6 M $26.2 M $26.0 M and ro'ect deferrals Scenario 3 -Adopted CIB w/bid savings, $34.7 M $28.6 M $26.2 M $26.0 M ro'ect deferrals, and O&M savin s Scenario 4 -Adopted CIB w/bid savings, $34.7 M $28.6 M $26.2 M $26.0 M project deferrals, 0&M savings and $30 million bond Scenario 5 -Adopted CIB w/bid savings $28.6 M $19.9 M $26.2 M $26.0 M and no CSOD Facilit Im rovements. CASH FLOW SCENARIOS The following table provides a summary of the SSC rate increases associated with the expenditure scenarios discussed above. SSC Rate Increase 10-11 11-12 12-13 13-14 Total 5 Yr SSC Increase Total 10 Yr SSC Increase . Scenariol $95 $0 $0 $0 $95 $117 Scenario 2 $30 $30 $12 $12 $84 $133 Scenario 3 $26 $26 $12 $12 $76 $134 Scenario 4 $15 $15 $15 $15 $60 $135 Scenario 5 $16 $16 $16 $16 $64 $138 Scenario 1, adopted CIB with bid savings, was analyzed with the reduced revenue assumptions and resulted in the need fora $95 sewer service charge (SSC) rate increase in 2010-11 if no bond financing is obtained. Based on this result, staff took another look at proposed projects and made some significant deferrals/cuts, as described above, in order to try and bring the required SSC rate increase down to a more reasonable level. Scenario 2, the deferred project expenditure scenario coupled with reduced revenues, results in the SSC rate increase being reduced to $30 in 2010- 11 and $30 in 2011-12 to fund the program. In the following years more modest increases, in the $10-12 range, are possible. Scenario 3 assumes $3 million is saved in the O&M budget (this represents a 5 percent saving in O&M) in years 2010-11 and 2011-12, and these funds are transferred to capital; the resulting SSC rate increases in the first two years can be reduced from $30 per year to $26 per year. Scenario 4 uses N:\PESUP\PILECKI\2009\CIB-CIP 2009-10 scenarios.doc CIP Expenditure 2009 and Beyond Page 6 of 8 July 31, 2009 the same expenditure and revenue assumptions, but assumes a $30 million bond is sold; annual expenses are spread over the ten-year plan period and the SSC rate increase can be kept to a moderate $16 per year, each year, for the ten-year period. Scenario 5 makes the same assumption as Scenario 2 and deletes the new CSOD Facilities. The resulting SSC rate increases are between $13 and $16 per year. Scenario 1, which has the highest expenditures, actually results in the lowest total ten-year SSC rate increase. By having a significant SSC rate increase in the first year, the program benefits from the accumulated revenue over the ensuing years, resulting in less need for rate increases in the outlying years. Scenarios 2 and 3 have higher SSC rate increases in the first two years but lower increases in outlying years, due to the same phenomena. Scenarios 4 and 5 spread the expenditures more evenly over the ten-year period, the fourth by bond financing and the fifth by eliminating one large project, the CSO Improvements. In both cases, the total SSC rate increase over the ten-year period is slightly more than Scenarios 2 and 3. ENR "BIDS FALL TO THE BOTTOM" The extremely competitive bid climate that the District and our neighboring agencies have experienced is also being seen around the country. Staff reported earlier to the Board that an informal survey of neighboring agencies indicated an average savings of 20 percent on projects bid this construction season. The District's experience has been similar. The June 29, 2009, Engineering News-Record, the construction magazine that tracks construction costs, featured an article entitled "Bids Fall to the Bottom - Desperate Contractors Drive Prices Below Costs." The article cites bids coming in 20 to 25 percent lower than engineer's estimates, similar to the District's experience. It also discusses the price of building materials, such as steel, lumber, plywood, and wallboard, which continue to fall due to reduced demand. In summary, the article reinforces that now is an excellent time to be bidding projects. Staff conducted an informal survey of other Districts to determine what their reaction has been to declining revenues and the competitive bid climate. Districts that responded to the survey included: Delta Diablo, Union Sanitary, South Bayside System Authority, East Bay Dischargers Authority, Fairfield Suisun, Central Marin, City of Hayward, West County, Sacramento Regional, and City of San Jose. All responders said they were continuing their capital program and felt they were getting excellent value in this bid climate. Some were also accelerating projects to take advantage of the competitive bid climate. Most are using either bond funding or State Revolving Fund loans to fund some projects in order to spread capital program costs over time and reduce impacts on rates. N:\PESUP\PILECKI\2009\CIB-CIP 2009-10 scenarios.doc CIP Expenditure 2009 and Beyond Page 7 of 8 July 31, 2009 IMPACT OF CSOD IMPROVEMENTS PROJECT ON SSC RATES AND DISTRICT FINANCES The Collection System Operations Improvements Project represents an expenditure of approximately $15 million over the first two years of the current ten-year capital plan. This project is included in Scenarios 1 through 4 in the above table and subtracted from Scenario 5. As shown in the above tables, bond financing and/or a significant increase in the SSC rate is needed to pursue the construction of the CSOD Improvements. Use of bond financing smoothes out the rate of SSC increases. If the CSO Improvements are not constructed, SSC rate increases are still necessary and bond financing may be necessary to proceed with the Capital Improvement Program. The existing CSO facility is inadequate for current and future needs and will need a major renovation or expansion. Major renovation of the existing facility would require bringing the entire building into code compliance, including electrical and seismic deficiencies. Preparation of plans and specifications for a renovation or addition will take six to eight months and will require the District to start over with the City of Walnut Creek (Conditional Use Permit, Design Review Committee, Site Development and Building Permits, etc.), which could add another year to the schedule. Hence, not adding any cost for,CSO to Scenario 5 understates the needed CIP expenditures. Also, the extremely competitive bid climate that the District is experiencing should make the cost of the new facility as low as it ever will be. DISCUSSION AND RECOMMENDATIONS The primary focus of the District's Capital Improvement Program is to maintain regulatory compliance and provide excellent customer service. The Capital Budget and Plan are prepared with this focus in mind and need to be funded at adequate levels to achieve these goals. FY 2008-09 ended with revenues significantly under budget with capital expenditures in line with estimates. In light of the poor economy and the hardships many households are experiencing, the Board elected not to pursue a $10 SSC rate increase in FY 2009- 10. The resulting decrease in revenue of $8.7 million ($4 million in revenue loss in FY 2008-09, $1.7 million in SSC increase in 2009-10 that did not occur, and the loss of $1 million in Ad Valorem Tax) cannot be fully offset by the favorable bid climate and savings in O&M. Deferring the collection of connection fees has also increased the likelihood for short-term financing. The District must now look to the future to anticipate the difficult decisions that lie ahead as its revenues continue to fall. If the District is going to maintain its capital program with only the projects discussed in Scenario 2 in this memo, then SSC rate increases will be needed for each of the next several years. These SSC rate increases can be smoothed by selling bonds to partially fund the capital program. SSC rate increases N:\PESUP\PILECKI\2009\CIB-CIP 2009-10 scenarios.doc CIP Expenditure 2009 and Beyond Page 8 of 8 July 31, 2009 and possible bond financing will be needed regardless of whether the District pursues the CSO Improvements project. Given the significant financial impacts associated with the decline in revenues and the cost of constructing a new CSO Facility, staff recommends the following course of action: 1) Proceed with bidding of the CSO Facility and, if favorable bids are received, award the contract and authorize staff to begin the process of selling bonds to fund the project/Capital Program. The informal survey supports staff's belief that the District should press fdrward with the construction of the CSO Improvements, in order to maximize the return on our rate-payer dollars. 2) Revise the CIB/CIP in November to reflect the decline in revenues, the proposed project deferrals/eliminations and the course of action selected with respect to the CSO Facility improvements. Staff is currently evaluating the month-to-month cash needs for FY 2009-10 to determine whether any short-term financing is necessary to bridge cash flow needs. As always, staff is available to investigate other scenarios as requested by the Board to further examine District cash flow and its impact on funding of the capital program in anticipation of needing to raise rates significantly, sell bonds, or make cuts to the capital program for FY 2010-11. /jf cc: Board of Directors N:\PESUP\PILECKI\2009\CIB-CIP 2009-10 scenarios.doc Z w Q Q O r T O 0 N Z W Q W U z W Q U N N O z LL W W 01 0 o O o l0 C r O O O O (p ° ~ 00 ri v a r (O ~ N fA C w OO o o O o In ~' r O 0 0 O N ~ ' O O '~ an- O M r ~ O O N (p O) C \° \° O \° O M O r O O ` ~ O ~ O ~ ~ r (O N to a~ ° o ~ o o o v °' ° o in ri ° v r (O ` N O EA r 1!1 0 o O o to L r O O O O ~ N v n ° ri - v s ~ o 3 N EA O N r \° \° \° ~ O O O ~ G) r> n ri ° v E r ~ N N o_ EA o. ° N \ r O O O O l0 N N O ~ M ~f ~ r In r ~ N fA a N N o o O o r N C r o 0 0 o co - ° i ° r _ v 3 r ~ r N EA N C r c o 0 o rn n r O O O O V O ~ ~ M ~ O r r U N to N a \° \° \° N ~ ~ O O O ~ U ' N O O O r r C (n N fA W N \ \ N O } N C O ' C R O :, N O v a U m m m y e E d c c LL _ W O U V U Z K ~ ~ N d z E ~ a ~ U 3 O d O U ~ N , ~ a l0 .a m U fA a w X Q O 4 O ~_ O C N ~ C N N c ~ m ~' U y •c w~ a~i cn a o c ~ w N O a~ a~ ~ U ~ Z o ~~ ~~ ~ N U7 ~ ~ ~ W Z W W U W 0' W J m H Q J LL a U W g U J (.~ O W N Z ~_ a y Q a Q W J m H O r O 0 N z W Q W U Z 4W {.L U N N O Z 0 LL W W Oi o o O o 10 C r oo 0 ° 0 ri 0 ° 0 v r (p o r (O _ . ~ N to C w ~ \° \° \° ~' O O O O N 7 ' O M O ~ '~ r (O r O N Ey rn C ~ 0 M 3 ~ 0 0 0 fD ~ M ~ ~ O r (O a r ~ E m ° ~ ~ o o o ri o o o v v m o r (O _ - N tf> ~ N o o O o lf) L r In O O O ~ N v n ni o v L o `" 3 N fA 'p N \° r In O O O M N ~i n ri °_ v E r ~ r N N EA _ O" a N ~ N 0 ~ 0 M 0 ~ 0 O 0 ~ r O r O N EA ~ \° C r O O l!7 O (O = ~ o ri ~`! o 3 r N N fA N r o o O o O d r o o ~n o v p '~ M N O O r r U N fA ~ n O o o O o ~ V r In O O O r O ~ O O r (n N ~ W ~ ~ } N C O y o « ~ C c N v i0 m a m ~ a E m c 5 o O V iI w U " Z v 3 x ~ _ ~ d m m z E ~ `, .~ d v 3 ~ ~ y v ~ fA Q (0 .n V •^w X ~0 d d O n o m m O C O ~ N E G N N c ~ m d U m w~ a~°i ~ ~ o c ~ w y U N N ~ U ~ Z o ~~ ~~ ~N N ~ 5. Central Contra Costa Sanitary District July 31, 2009 TO: BOARD OF DIRECTORS VIA: JAMES M. KELLY, GENERAL MANAGER ~~~'~' FROM: TAD PILECKI, CAPITAL PROJECTS DIVISION MANAGER SUBJECT: STATUS UPDATE ON THE CSOD ADMINISTRATION, CREW AND WAREHOUSE FACILITY, DP 8208 Following is a brief update on the status of the subject CSOD Facility: The City of Walnut Creek finished their reviews of the Building and Site Development Plans and provided their comments to the District on July 17 and 21 respectively. District Staff plans to address the City's Comments and resubmit the package for a second review by the week of August 24. • EBMUD, PG&E and Consolidated Fire have been concurrently reviewing the plans and specifications. • The District has received from its consultant an updated Engineer's Construction Cost Estimate for the Improvements at $13 Million. • At the August 6 Board Meeting, staff will seek the Board's concurrence to advertise the project. Pending favorable bids, staff will ask the Board to consider award of the project and to initiate sale of the bonds in October or November. • Attached for the Board's information are the results of a recent bid opening for a Police/Fire Facility in Winters, California. This facility is similar in nature to the District's project. The plans, specifications and Engineer's Estimate were prepared by the same team that is working on the District's Project. The Engineer's Estimate for the facility was $10.45 Million. Seventeen bids were received with the low bid at $6,366,000, thirty-nine percent below the engineer's estimate. 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