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Home My WebLink About1/26/2006 AGENDA BACKUPCentral Contra Costa Sar..�ary District ' BOARD OF DIRECTORS POSITION PAPER Board Meeting Date: January 26, 2006 No.: 4.a. OPERATIONS Type of Action: ACCEPTANCE OF REPORT subject: BOARD ACCEPTANCE OF THE 2005 NATIONAL POLLUTANT DISCHARGE ELIMINATION SYSTEM REPORT Submitted By: Bhupinder S. Dhaliwal, Laboratory Superintendent Initiating Dept./Div.: Operations /Plant Operations REVIEWED AND RECOMMENDED FOR BOARD ACTION: J PS ?V(2- �_ FOP, B. Dhaliwal 15. Craig . Kelly a 2 ISSUE: The Central Contra Costa Sanitary District's (District) 2005 National Pollutant Discharge Elimination System ( NPDES) Report has been prepared for submission to the California Regional Water Quality Control Board (RWQCB), San Francisco Bay Section. This annual report is presented for the District Board of Directors' information and acceptance. The Sewer System Overflow and Recycled Water Annual Reports will be submitted separately at later dates. RECOMMENDATION: Accept the 2005 NPDES Report. FINANCIAL IMPACTS: None ALTERNATIVES /CONSIDERATIONS: None BACKGROUND: During 2005 the treatment plant received a total of 17,520 million gallons of wastewater, which equated to an average flow of 48.0 million gallons per day. This average flow is about 7 percent higher than in 2004. The treatment plant produced an effluent with annual average carbonaceous biochemical oxygen demand (C -BOD) and total- suspended solids (TSS) concentrations of 6 and 8 mg /L, respectively. These concentrations are markedly lower than our NPDES permit standards of 25 and 30 mg /L, respectively. C -BOD and TSS removal efficiency for the treatment plant averaged 96 percent each. Solids disposal during the year involved the incineration of dewatered sludge in the District's multiple -hearth furnaces. Approximately 4,708 tons of furnace ash was produced. The ash met regulatory requirements for final disposal throughout the year. More than 15,000 NPDES permit- required tests were completed to comply with the NPDES permit requirements. The treatment plant effluent met all (100 percent) of the N: \POSUP \Correspondence\Position Papers\2006\2005NPDES Rpt.doc POSITION PAPER Board Meeting Date: January 26, 2006 subject. BOARD ACCEPTANCE OF THE 2005 NATIONAL POLLUTANT DISCHARGE ELIMINATION SYSTEM REPORT NPDES permit requirements throughout the year, which makes this the eighth consecutive year of full compliance. The District's NPDES permit requires an annual update of the District's operation and maintenance procedures. A description of the updates is also included in the annual report. Upon acceptance of this annual report by the District Board of Directors, it will be submitted to the RWQCB. The NPDES permit requires the annual report be submitted to the RWQCB by February 1, 2006. RECOMMENDED BOARD ACTION: Accept the 2005 National Pollutant Discharge Elimination System Report. N: \POSUP \Correspondence \Position Papers\2006\2005NPDES Rpt.doc 4a 2005 N PDES ANNUAL REPORT Douglas I Craig Board Meeting January 26, 2006 2005 NPDES ANNUAL REPORT ✓ Total Flow Treated = 17.5 Billion Gallons ✓ Average Daily Flow = 48.0 Million Gallons ✓ Peak Hourly Flow = 238 Million Gallons ✓ Ash Disposal 4,708 Tons (wet weight) (for soil amendment) 1 2005 NPDES ANNUAL REPORT TREATMENT PLANT ✓ Completed 15,000 Analytical Tests ✓ Approximately 11,000 Hours of Laboratory Work ✓ 100 Percent Compliance With NPDES Permit Requirements EVENTS NEAR PERMIT LIMITS ✓ COPPER LIMIT ✓ NICKEL LIMIT ✓ ENTEROCOCCUS LIMITS ✓ CHRONIC TOXICITY 2 NPDES RENEWAL ✓ MET WITH ROBERT SCHLIPF, SENIOR ENGINEER, RWQCB, ON JANUARY 18, 2006 ✓ MR. SCHLIPF HAD REVIEWED CCCSD'S NPDES APPLICATION EPA HAS STRONGLY EXPRESSED ITS DISSATISFACTION WITH THE RWQCB REGARDING DELAYS IN PERMIT ISSUANCE ✓ THE ISSUES WITH THE NEW PERMIT APPEAR TO BE DEFINED ✓ NEXT STEP - FOLLOW -UP DISCUSSIONS AND DRAFT TENTATIVE ORDER NPDES ISSUES ✓ INTERIM LIMITS FOR MERCURY AND CYANIDE - "INFEASIBILITY TO COMPLY" REPORTS ✓ NICKEL AND BIS- THALATE - NO REASONABLE POTENTIAL TO EXCEED WATER QUALITY OBJECTIVE ✓ CCCSD REQUESTING HIGHER PEAK BACTERIAL (ENTEROCOCCUS) COUNT CONSISTENT WITH BASIN PLAN 9 2005 NPDES ANNUAL REPORT ACKNOWLEDGEMENTS 2005 NPDES ANNUAL REPORT RECOMMENDATION Accept the 2005 Regional Water Quality Control Board Annual Report �,. a Central Contra Costa Sanitary District Board Workshop Budget and Sewer Service Charge Review For the Fiscal Year 2006 -2007 Budget Process January 26, 2006 Central Contra Costa Sanitary District Board Workshop `Keeping the Waters Calm' - Making decisions today for a better tomorrow - 1 Purpose of Today's Workshop • State of the District • Discuss rate setting philosophy • Discuss future budgets and rate impacts • Receive Board direction: — 2006 -07 SSC rate Increase • Operating Expenses • Capital Improvement Program — including new large capital projects for capacity • Other rates, fees, and charges • Consider future actions on unfunded liabilities Current Status • District's current condition — Serving the public; achieving our mission • Compliance, customer service, rates, organization — Successful workforce transition — Resources - $68 million in reserves — Low debt level • Future impacts for District (not unique) — Unfunded liabilities — Pending regulations — Economic downturn K Rate Setting Philosophy Learning From The Past The History • 2000 Workshop — Simplifying Assumptions • Introduced "funds required /funds available" concept • Why — First loss of Ad Valorem Tax — No rate increases since 1994 — Cost reductions, deferred capital projects — Staffing consolidations - Spending down reserves - Economic downturn - Expanding regulatory role District Response • Developed `cost- saving' strategy • Deferred capital projects • Board made tough rate decisions - Raised Sewer Service Charge — Raised Connection Fees — Raised rates and charges • Projected future loss of tax revenue — Limited to two years 3 2000 Upcoming Cash Flow Crisis BASELINE: No changes in SSC amount or allocation; Projected 0 &M Revenue and Expenses; Current CIP Fund Balances as of June 30 50.000 40, 000 30.000 20.000 O 10.000 0 1999 2000 2001 2002 2003 2004 OS (10, 000) Fiscal Year tTotal Funds Available 'Funds Requiretl Rate Setting Philosophy • Need for rate increases — Cash flow issues — Increasing costs — No short -term debt financing — Capital program requirements • `Soft landing' methodology — Long term approach — Modest annual rate increases — Reserves needed in future years — Control over growth of reserves 4 Rate - Setting Philosophy • Reserves should always be adequate to cover upcoming cash flow needs • A ten -year planning horizon is adequate for most financial planning purposes • Debt service should be reserved for major financial issues, e.g. major capital projects, plant expansion, pension bonds, etc. • Fees & Charges should reflect full cost of service • Rate and Fee increases may not always be required • Modest annual SSC increases may be preferred over large periodic rate increases 2006 -2006 PROJECTED TOTAL DISTRICT REVENUE ($81.4 MILLION) District Revenue M.r..tlDm.r 8% D.M S.Ma. Ray. k*.a "lion a Wop" tax for d.5t..ne.. r.n•ind.r of $0.5 nilk- b S.w.r C— V..don) Tax R.v. (afbr d.ct covered) 7 % Concord Capdm Crtngn .% Capital Capacity F... 18% 8— Sane. Chug.. 64% C.ndad S—e. Cnng.. 10% Note: Return of full tax revenue in 2006 -07 5 District Expenses 10 Year Budget Spending COMPARISON BY TYPE AND YEAR CCCSD O&M and Capital Expenses $60,000,000 :25,000,000 $50,000,000 $20.000.000 - $15,000,000 $30,000,000 - — $5.0 million contribution for Post - Retirement Costs $40,000,000 $10.000.000 $10,000,000 $0 $5.000.000 e",ye kft koo 111�0, 02Po, °ate 0%, 01"t ofts oftj —,—am --nae — Capital & D! Expense $- y ap' CIO $° CF, � 01 b .ps � jtJ Np O �p3 Pb O 2003 -2004 Acpul ■ 2004-2005 AcWpl O 2005 -2006 Prpjac4tl O 200fi -20W Rq�ctetl 10 Year Budget Spending CCCSD O&M and Capital Expenses $60,000,000 $50,000,000 $40,000,000 - $30,000,000 h IN $40,000,000 $10,000,000 $0 e",ye kft koo 111�0, 02Po, °ate 0%, 01"t ofts oftj —,—am --nae — Capital & D! Expense Six years of Board workshops • Board has made four major rate increases • Currently adopted modest multi -year rates • District's financial position allows options • District has the reserves to finance future near -term budget requirements • District should also consider funding identified `unfunded liabilities' • District preserves the ability to debt finance large capital projects After the `Perfect Storm' Building of District Reserves Growth of Reserves - San Ramon projects bond - $15 million - Dougherty Valley Fees - $ 23 million - Near -term savings, O &M - $ 7 million Capital projects - $20 million - Delayed & limited Ad Valorem Tax Take Away Impact of Future Spending - Return to budgeted spending - Connection Fees for capacity capital projects - Reserves will decline over time - Future rate increases will be needed 7 After the `Perfect Storm' Need for Reserves • Outstanding Liabilities - Pension Fund unfunded liability -- $34 million - GASB 45 unfunded liability -$90 million - Outstanding debt -$ 4 million • Future Costs - Capital Improvement Plan • 10 years Capital Program plan -$293 million - Regulatory compliance • Programs or projects Unknown Compound Interest How the Numbers Get Large (GASB 45) • Basic Investment (Growth and Contributions) • A "basic investment" is one where you start with an initial principal, invest it at an annually compounded rate of return, and add equal contributions every year. • Starting Principal: $5 million • $ Annual Contributions: $zoo $ 5 million • Growth Rate: 5 % • Years: 30 • Value at Maturity: $1o0 $254 million 0 20 P Cost of Deferred Rate Increase Last Year's Proposed Rate Increase ($8) • Basic Investment (Growth and Contributions) • A "basic investment" is one where you start with an initial principal, invest it at an annually compounded rate of return, and add equal contributions every year. • Starting Principal: $1.3 million • $ Annual Contributions: goo $ 1.3 million + new connections • Growth Rate: 4% • Years: 10 • Value at Maturity: $15.4 million ftoo 0 TO Unfunded Liabilities Concern for the future • Future economic liabilities — Pension fund — Retiree benefits, mainly health —Other —example: Paulsen • Not pure compound interest calculations — Will pay for future budget expenses — Protect against future rate inflation — Highlights "unfunded" issues in audits 9 Fact • Unfunded liabilities are inherent in every public agency • There is a growing concern: — Must be stated in audited financial reports — Can be funded over time — Can affect ability to debt finance — Can be a political liability 10 One View of the World $140,000,000 ' $120,000,000 $100,000,000 . , r $80,000,000"' $60,000,000 . $40,000,000 ' $20,000,000 I ® Long -Term Liabilties ■ Liquid Funds Available 10 GASB 45 Addressing the issue • Review actuarial valuation • Investigate issues around trust funds • Make future Board presentation with staff recommendation for 2006 -07 Budget If approved by Board: • Establish `vehicle' for funding • Fund from budgeted revenue • Future budgets to reflect both trust funding and OPEBs • Advise the Board of future measures to control costs Financial Summary District is in a strong financial position. District has stable revenue sources. District expenses and revenue are predictable. District expenses increase greater than the CIP. District reserves have grown due to connection fees, deferred projects. Capital Budget spending will increase and reduce reserves. Property tax revenue will return, and could be used to fund a OPEB trust. 11 Reality Therapy • The District has a dedicated workforce. • The District has adequate reserves. • The District's expenses are predictable. • The District has reasonable rates. • The District has labor peace. • The District has an excellent compliance record. • The District has an excellent capital program. • The District has the resources to meet future obligations. Why raise the Sewer Service Charge? • Board Policy Issue —What is an appropriate `reserve' balance? • Current `soft landing' spends down reserves — Modest annual vs. larger periodic rate increases? • Deferred rate increases have a cost — Should future large projects be bond funded? • Pay -as- you -go is less expensive for ratepayers — What are the impacts politically? • Is the District below the radar screen? 12 No Rate Increase Funds Required/Funds Available maae Recommended Scenario Funds R,q,i,,WFunds Available MAW uk0ce 20042005 ]001' 006 ?Ipe.pp) 303) -1000 1004200e 2000.2010 30161011 1011 -SOR 1012-2013 101 >rota M-1 Y., naaa --------- - ------ Actual Projected 2004-2005 20052006 2006.2007 2007-2000 2008 -2009 2009-201 0 2010.2011 2011-2012 Assumptions: Ar.u.1 S.s., Service Ch.,g./RUE 158,250 160,905 163,630 165.855 167.605 169.355 170,655 171,853 -Debt S... -O&M 204 234 213 263 271 282 294 306 .C4psaj Upgradeffieplawment 76 46 76 36 41 44 47 53 Total 280 280 289 299 312 326 341 359 4nd.ay. -Mi- Year- 8 9 10 , 13 14 15 Is No Rate Increase Funds Required/Funds Available maae mtao MAW uk0ce 20042005 ]001' 006 ?Ipe.pp) 303) -1000 1004200e 2000.2010 30161011 1011 -SOR 1012-2013 101 >rota M-1 Y., naaa --------- - ------ MGrWI '.) — --------- --------- -------- 2004.= 20052006 20062007 2007-2006 20062009 2009-2010 2010-2011 Dt service —11— 2011-2012 M 204 234 213 263 271 282 294 306 .1 UpgradeiReplawment 76 46 67 — 33 41 46 _ 50 -- 55 Total 280 280 280 296 312 328 344 361 vase this year 8 16 16 16 16 17 13 Rate Decision Impact • Financial impact mainly in long -term rates (over 5 years) • Difficult to predict long -term expenses and future revenue • Impact on short -term (3 years) —$10/year vs. $16 /year • Value of short -term rate deferment would be approximately $1 million per year Board Policy Issue • Pay now — Raise rates by CPI — Continued reserves —Cheapest long -term alternative — Allows expanded capital program — Ability to fund unexpected needs — Political cost —Ratepayers, bear burden 14 Board Policy Issue • Pay later- defer rate increase —Future cost not always known —Higher long -term costs —May be organizational impact • Defer capital projects, other expenses — Ability to borrow —Deferred political cost —Future ratepayers bear burden Sewer Service Charge and Connection Fee Comparison Agency SSC Connection Fee Benicia 472 7,500 Livermore 465 9,250 Crockett- Valona Sanitary District 453 2,425 Rodeo Sanitary District 443 - Berkeley (EBMUD for treatment) 402 - Pleasanton 378 10,400 Vallejo 375 1,875 EBMUD 347 - Oakland (EBMUD for treatment) 330 - Pittsburg (DDSD) 337 4,975 Dublin San Ramon Sanitary District 327 11,050 Mountain View Sanitary District 326 7,588 Novato 302 4,950 Antioch (DDSD) 283 4,225 CCCSD 280 4,150 Napa Sanitary District 274 5,660 Bay Point (DDSD) 272 3,375 Concord ( CCCSD for treatment) 258 3,792 Fairfield- Suisun 250 5,943 Union Sanitary District 216 3,137 West County Wastewater District 170 1,988 Oro Loma Sanitary District 153 6,057 15 Future Actions by Staff • Provide budget information for City of Concord — Coordinate with their budgeting process • Complete District Budget — Finalize 2006 -07 O &M & Cl Budgets • Proceed with District Rate Setting Process — Set Sewer Service Charge — Establish new Rates and Charges —Adjust Capacity Fee Recommendation of Staff • Plan to Implement the $9 Sewer Service Charge Increase • Adopt annual increase to Fees, Rates & Charges • Proceed with District Rate Setting Process — No Prop. 218 notice required — Announce in Spring Pipeline — Provide Notice of Pubic Hearings • Approve District Budget for 2006 -07 — Adopt Budget and rates in June • Consider a Trust Fund for OPEB — Separate presentation for Board consideration 16 Central Contra Costa Sanitary District Board Workshop Comments and Questions 17