HomeMy WebLinkAbout11/30/2006 AGENDA BACKUPCentral Contra Costa Sanitary District
November 20, 2006
TO: BOARD OF DIRECTORS
VIA: JAMES M. KELLY, GENERAL MANAGER „"
FROM: ANN E. FARRELL, DIRECTOR OF ENGINEERING
SUBJECT: FY 2007 -08 INITIAL CAPITAL PLANNING WORKSHOP
INTRODUCTION
In preparation for the Board Capital Planning Workshop on November 30, 2006, 1 have
summarized the material we will be covering in this memo. If you have questions, this
information, with additional detail, will be reviewed in the workshop. We routinely hold a
Capital Planning Workshop in the fall to set an estimated dollar amount for our capital
program for the following ten years. We have found this approach to be very helpful in
narrowing the scenarios and considerations for the January Financial Planning
Workshop in which the Board this year will be asked to review different rate setting
scenarios and give direction to staff. By fixing the level of capital expenditures,
approximately 40 percent of District overall spending, the possible budgeting scenarios
become more limited and understandable. If the scenarios in January lead to some
concerns about capital revenue and expenditures, adjustments can be made at that
time and incorporated into the draft Capital Improvement Budget and Plan, which is
brought to the Board in a second FY 2007 -08 Capital Planning Workshop in April.
BASELINE RENEWAL AND REPLACEMENT PROGRAM
In January 2000, staff developed and recommended a baseline for investment in our
capital facilities which assumed replacement of all assets every one hundred years.
This equates to a reinvestment of 1 % of the estimated replacement value. At that time
the total replacement value of our facilities was estimated at $2.1 billion and therefore
the annual investment was set at $21 million. This amount has been increased for
inflation at 3% per year. This is a modest increase as building costs have increased
significantly more than 3% per year since January 2000. This 3% annual increase
brings the recommended reinvestment for renewal and replacement of existing assets
to $26 million for the next fiscal year, year 2007 -08. Expenditures for significant
projects to increase capacity are in addition to this baseline renewal and replacement
program, as are projects to address changing regulations.
HISTORICAL PERSPECTIVE
Since fiscal year 1999 -00, District capital spending has ranged from a low of $19.8
million in 2002 -03 to a projected high of $40.9 million for the current fiscal year, 2006-
07. This wide variation has been due in large part to the conscious effort to defer
needed projects in fiscal years 2001 -02 through 2003 -04, when the permanent loss of
ad valorem tax was feared. During this same time period District capital revenue has
also varied significantly, as shown in the following figures. This variation is due to
changes in three revenue sources, ad valorem tax, Dougherty Valley capacity fees and
the capital component of the sewer service charge (SSC).
The capital component of the sewer service charge is the one revenue source that is
controlled by the District. In some years adjustments have been made to reduce the
capital component of the SSC and allocate more SSC to operating and maintenance
costs in an effort to avoid increasing rates. In other years the capital component has
been raised to fund needed projects.
On average, capital revenues have closely matched capital expenditures. Over the
seven years shown on the figures, the average annual revenue was $23,400,000 and
the average annual expenditures were $23,800,000, a less than 2% difference.
Average budgeted revenue was $21,500,000 compared to average actual revenues of
$23,400,000. In fiscal years 2003 -04 and 2004 -05 there was a sharp increase in capital
revenue due to the unanticipated rapid build out of the Dougherty Valley. In addition, ad
valorem taxes were not lost to the extent feared. Thus, the Sewer Construction Fund
Balance increased for the three period from fiscal years 2002 -03 to 2004 -05.
PROJECTED FISCAL YEAR 2006 -07 EXPENDITURES /REVENUES
Last year at this time we presented data to show that revenues from the Dougherty
Valley connections were coming in to District coffers faster than expected, resulting in a
significant increase in the Sewer Construction Fund balance. As discussed above, over
several prior years, there had been a conscious effort to defer needed projects due to
the uncertainty associated with the ad valorem tax revenue. In fact, much of the ad
valorem tax was retained, contributing to the increased Sewer Construction Fund
balance. Therefore, last year staff recommended increasing capital program
expenditures to levels greater than revenues for several years and funding the needed
projects partially from the Sewer Construction Fund balance. These needed capacity
and regulatory driven projects included the expansion of the ultra violet disinfection
facilities, a wet weather discharge point to increase the wet weather discharge capacity,
a study and implementation of improvements to increase furnace capacity and reduce
mercury in the effluent, the extension of the A -line from Buchanan Fields Golf Course to
the intersection of Meridian Park Boulevard and Galaxy Way, and the expansion of the
Primary Sedimentation Tanks.
Since that time, the pace of building has slowed and the Dougherty Valley connections
are expected to take place over a longer period of time. Therefore, the projected
revenue from capacity fees in 2006 -07 has been adjusted downward. The revised
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estimate of the timing of the Dougherty Valley capacity fees is shown on the following
figure. As you can see, the Dougherty Valley revenues are still expected within the ten
year planning window. On the expenditure side, a number of project bids have come in
higher than expected. In addition, some needed projects have been increased in
scope. On balance, the fiscal year 2006 -07 projections now call for drawing down the
Sewer Construction Fund, instead of increasing it as previously budgeted. This is
consistent with the last year's recommendation to use accumulated funds in the Sewer
Construction Fund to run the capital program in deficit mode and fund needed projects.
A comparison of budgeted vs. projected capital program activity for fiscal year 2006 -07
is contained in the following table.
2006 -07 Capital Program
Budgeted Activity
Projected Activity
Total expenditures
$34.8 million
$40.9 million
Alhambra Valley mainlines
$0 million
$1.5 million
Total revenue
$38.8 million
$36.1 million
Variance
+$4 million
-$6.3 million
SCF balance 6/30/07
$59.8 million
$49.5 million
As discussed in previous years, the Sewer Construction Fund balance acts as the bank
to fund all District operations. This is necessary because SSC revenue and property tax
revenue are collected by the County on the tax roles twice per year. For the intervening
six months, the District self funds its operation and maintenance functions as well as the
capital program. The cash flow needs dictate that the Sewer Construction Fund
balance be maintained in the neighborhood of $30 million. Therefore, even with the
significant shift of more than $10 million from budget to projections, there is still an
adequate balance to allow the capital program to run in a deficit mode for several more
years.
RECOMMENDED 2007 CAPITAL IMPROVEMENT PLAN
FY 2007 -08 TO FY 2016 -17
Staff has developed a ten -year capital expenditure plan which budgets for a baseline of
$26 million per year to fund renovation, renewal and replacement projects for a ten -year
total of $260 million in June 2007 dollars. Staff has supplemented this baseline with
approximately $34 million in needed capacity and regulatory expenditures between
fiscal years 2007 -08 and 2011 -12, as shown in the following figure. This approximates
the time over which the remainder of the $55 million in Dougherty Valley revenues are
expected to come in to District coffers. The Dougherty Valley revenues will offset a
large portion of the supplementary $34 million in needed projects. In addition, there
may be a need for two large projects, a capacity driven primary sedimentation tank
expansion project in fiscal year 2010 -11 ($20 million) and additional incinerator
improvements to meet mercury discharge regulations, in fiscal year 2013 -14 ($30
million).
The District ten year plan is developed each year to match needed expenditures with
revenues over the ten year planning window. This works well for smaller projects, but
for larger projects such as the two potential projects mentioned above, annual revenues
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are not adequate to fund both the baseline program and the large projects. This leaves
two funding options for large projects, either a significant rate increase during those
years when these large projects are implemented, or bond funding. In order to evaluate
these two alternatives, two tables showing expenditures and revenues were prepared
and the appropriate capital component of the SSC was calculated. These tables are
attached to the memo as an appendix. A graph comparing the SSC capital components
for each alternative was developed and is shown in the following figure. As shown,
using the bond funding approach, these two large potential projects can be
implemented with an average capital component increase of less than $1 per RUE per
year over the next nine years, from $49 to $53. If these projects are funded out of rates,
the capital component of the SSC must be increased by over $50 in a three year period,
from $37 to $89. As shown by this analysis, for large capital projects, bond financing is
the preferred approach. It minimizes rate impacts and allocates project costs to the
future rate payers who will benefit, instead of requiring current rate payers to bear the
entire cost. Thus, should large projects such as those described here be required in
future years, staff will recommend that bond financing be considered.
This year, unlike last year, projects to meet new regulatory requirements are budgeted
to the best of our ability. Our understanding of our potential new permit limits has
improved over the last several months in numerous discussions with the Regional
Water Quality Control Board (RWQCB). It is very likely that a project to remove
mercury from the incinerator air scrubber water will be required to allow compliance with
our new effluent limits for mercury. Staff is continuing to evaluate possible treatment
options and has included a preliminary budget of $5 million in the treatment plant
program expenditures for fiscal year 2008 -09. If treatment of the scrubber water is not
adequate to meet the mercury requirements, a much more expensive option would be
the installation of state of the art dry scrubber technology on our existing multiple hearth
incinerators, or the construction of a new fluidized bed incinerator with this same
technology. The dry scrubber technology removes mercury from the incinerator
emissions using dry powdered activated carbon and thus eliminates the high mercury
content in the scrubber water. The cost of these mercury reduction alternatives ranges
from $15 million to $50 million. Staff has included $30 million in fiscal year 2013 -14 for
such a project and recommends that, if needed, bond funding be considered.
In conclusion, the District is in a very sound financial position with respect to its ten year
capital plan, and should be able to fund needed baseline renewal and replacement as
well as needed capacity and regulatory projects to minimize rate impacts, even if bond
financing would need to be considered for major projects.
RECOMMENDED FISCAL YEAR 2007 -08 CAPITAL IMPROVEMENT BUDGET
The recommended fiscal year 2007 -08 Capital Improvement Budget includes $26
million for baseline renewal and replacement projects and an additional $15.3 million for
needed capacity and regulatory projects for a total recommended expenditure of $41.3
million. The allocation of the recommended $41.3 million among the four programs is
as follows:
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Program
Baseline
Capacity/Regulatory
Total
Treatment Plant
$7,000,000
$3,600,000
$12,300,000
Collection System
$16,500,000
$9,000,000`
$25,500,000*
General Improvements
$2,200,000
$200,000
$2,400,000
Recycled Water
$300,000
$800,000
$1,100,000
Total
$26,000,000
$15,300,000
$41,300,000*
*Does not include an additional $1 million which will be loaned to Alhambra Valley residents to
install main line extensions.
Staff will be working to develop the detailed budget document using the above
preliminary figures as modified by the November 2006 and January 2007 Board
Workshops. Many of the projects have already been defined. Others will evolve and
emerge as we prepare the budget document over the next six months in anticipation of
the second Board Capital Workshop in April 2007, when the detailed draft Capital
Improvement Budget is reviewed with the Board.
A review of the preliminary 2007 -08 Capital Improvement Budget for major projects and
areas of emphasis follows.
Treatment Plant Program
The major projects planned for the treatment plant program in 2007 -08 can be placed in
two major categories, wet weather issues and reliability improvements. Projects and
preliminary estimates of expenditures are as follows.
Category
Project
Annual Expense
% Treatment Plant
Program
Wet Weather
$3,920,000
30%
WW Protection
$1,000,000
WW Bypass
$1,220,000
UV WW Capacity
$1,700,000
Reliability
$6,000,000
50%
Plant Controls
$800,000
Service Air
$1,225,000
Solids Handling
$1,500,000
Standby Power
$2,475,000
All Other
$2,380,000
20%
Total
$12,300,000
100%
All of the above projects have been discussed with the Board in the past and were
included in last years CIB /CIP document, with the exception of the wet weather
protection project. This is a new project staff began after the wet weather events of last
winter. The storm of December 31, 2005, which was no more than a 50 -year storm,
resulted 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 a 100 -year storm, for which they were supposed
to have been designed. Therefore staff began an investigation to look at how best to
protect the plant from major storm events in the 50 to 100 -year range where
overtopping of the levees was possible. Staff will discuss some preliminary findings at
the November 30, 2006 workshop.
Collection System Program
The major 2007 -08 projects planned for the collection system can be grouped into four
categories, renovations to existing sewers, developer related services, the A -line phase
2A capacity project and the Alhambra Valley trunk sewer phase 2. Estimated
expenditures are shown as follows.
Category
Annual expense
% Collection System
Program
Renovation program
$7,800,000
30%
Developer services
$1,050,000
5%
A -line Phase 2A
$11,800,000
45%
Alhambra Valley Trunk
$1,200,000
5%
All others
$3,650,000
15%
Total
$25,500,000
100%
As you can see, the major drivers of the Collection System Program for 2007 -08 will be
the renovation program and the A -line Phase 2A. The A -line project is a joint project
with the City of Concord. Approximately $4 million of the project is for an intertie to the
Concord pumping station, which will allow the abandonment of the station. This portion
of the project will be funded 100% by the City of Concord. Of the remainder of the
project, after the Concord flows enter the A -line, approximately 30% of the flows will be
from Concord and therefore they will fund 30% of the remaining capital cost, for a
reimbursement of $2,215,000. So, of the total $11,800,000 A -line Phase 2A cost to be
expended in fiscal year 2007 -08, $6,215,000 or 53% will be reimbursed by Concord.
The ongoing renovation program will take us to North Orinda, Walnut Creek, Danville
and Martinez in 2007 -08. The renovation projects continue to be challenging, with
many backyard easements and difficult field conditions. Impacts to the community are
sometimes difficult to mitigate. Staff is doing an excellent job implementing these
difficult projects. We are beginning to see some positive impacts. Sewer system
overflows are trending downward. Staff believes this is due both to improved cleaning
and to the renewal of problem sewers through the renovation program. An update on
sewer system overflow trends will be provided at the November 30, 2006 workshop.
General Improvements Program
General improvements in fiscal year 2007 -08 will be modest and will include the
traditional equipment budget, information technology budget and items associated with
miscellaneous District facilities. The large budget Headquarters Office Building HVAC
project should be complete before the start of the fiscal year. The construction of the
new Collection Systems Operations Building is not expected until fiscal year 2008 -09.
The design of the facilities and navigation of the City of Walnut Creek review process is
expected to take most of the 2007 -08 fiscal year.
Recycled Water Program
The recycled water program will see a larger than usual expenditure in 2007 -08
associated with the A -line Phase 2A extension. As part of this project, a recycled water
distribution line will be extended to serve 18 new customers in the Diamond Boulevard
and Meridian Park Boulevard area of Concord. The estimated expenditures for this
extension are $900,000, of which Concord will reimburse the District approximately 30%
or $235,000.
SUMMARY
The proposed 2007 Ten Year Capital Improvement Plan includes baseline renewal and
replacement projects of $260 million ($26 million per year) as well as $34 million in
capacity and regulatory projects funded directly by rates and a potential $50 million in
bond funded large projects. The analysis presented in this memo indicates with the use
of bond funding for large projects, the spending of the accumulated balance in the
Sewer Construction Fund to a minimum balance of $30 million, and an average
increase in the capital component of the sewer service charge of less than $1 per
residential unit equivalent connection over each of the next nine years, the proposed
Ten Year Capital Plan can be funded. Therefore, staff recommends incorporating the
recommended preliminary budgetary figures for the 2007 -08 fiscal year Capital
Improvement Budget and 2007 Capital Improvement Plan in the ten year planning
document that will be considered at the January 2007 Financial Planning Workshop.
APPENDIX
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Capital Planning Workshop
November 30, 2006
CIB /CIP Workshop Outline
November 30, 2006
■ Introduction
• Historical Perspective
• Projected FY 2006 -07 Revenue /Expense
• Proposed 2007 10 -Year Capital Improvement
Plan
■ Proposed FY 2007 -08 Revenue /Expense
■ Summary & Conclusions
1
Why are we here?
• Review purpose and need for Capital Program
• Assess current level of revenue, expense and Sewer
Construction Fund (SCF) balance
• Develop direction for 2007 10 -year Capital
Improvement Plan (CIP) and FY 2007 -08 Capital
Improvement Budget (CIB)
• Propose CIB and CIP funding levels for January
Board Financial Planning and Policy Workshop
Opportunities for Board Input
• November — CIB /CIP Workshop Develops Capital
Expenditure Levels for FY 2007 -08 CIB & 2007 CIP
• January — Financial Planning Workshop Evaluates
Sewer Service Charge Scenarios using CIB /CIP $'s
• April — CIB /CIP Workshop Finalizes Capital
Improvement Budget (CIB) for Fiscal Year 2007 -08
• June — Authorize FY 2007 -08 CIB & 2007 CIP
• Board has continued approval role:
— For consultant agreements over $50,000
— For award of construction contracts over $15,000
— For project overruns in excess of 15% of project
budget at time of construction contract award
— For construction change orders over $50,000
2
Current Commitments
• Renewal & Replacement Capital Program — First
established at $21 million in January 2000
• Renewal and Replacement baseline is now $26
million with inflation @ 3% per year
• R &R baseline does not address capacity increases or
changing regulations
• Agreed in FY 2006 -07 CIB and 2007 CIP to fund
needed capacity and regulatory projects from SCF
balance and Dougherty Valley capacity fee revenue
• Noted that several potential large regulatory projects
were unbudgeted in 2007 CIP
Review of Recent Capital Program Activity
3
1999100
2000 -01
2001 -02
2002 -03
2003-04
2004 -05
2005.06
Total
26.7 M
$24.4 M
$25.1 M
$28.2 M
$25.9 M
$26.6 M
$27.7 M
budgeted
expenditures
Total actual
$21.3 M
$28 M
$20.5 M
$22.4 M
$19.8 M
$26.5 M
$27.7 M
expenditures
Total actual
$21.6 M
$18.9 M
$17 M
$23.5 M
$28.2 M
$30.0 M
$24.8 M
revenue
Variance
+$.3 M
-$9M
$2.5 M
+$.9 M
+$8.4 M
+$3.5 M
- $2.9 M
SCF Balance
$58.7 M
$55.8 M
— June 30
3
Capital Revenue Discussion
-Capital Revenue from a number of sources
CCCSD Actual Capital Revenue vs. Budgeted Capital Revenue
-Recently sources are highly variable
■Only discretionary source: Sewer service charge
CATEGORY 2001.02 2002 -03 2003.04 200405 Actual Budget
Projected
2005-06 2006 -07
2006 -07
SSC Capital Component $20 $41 $54 $76 $46 $76
$76
Sewer Service Charge $3,100,000 $5,300,000 $8,400,000 $12,100,000 $7,400,000 $12,400,000
$12,400,000
Ad Valorem Tax
Capacity Fees
Total Actual Capital
Revenue
$8,400,000 $7,700,000 $7,900,000 $200,000 $1,100,000 $7,200,000 $7,200,000
$4,400,000 $6,100,000 $7,600,000 $12,700,000 $10,400,000 $11,800,000 $7,200,000
$17,000,000 $23,500,000 $28,200,000 $30,000,000 $24,800,000 $38,800,000 $36.100,000 II
$35,000,000
CCCSD Actual Capital Revenue vs. Budgeted Capital Revenue
$30,000,000
$25,000,000
$20,000,000
-
$16,000,060
Average Actual Revenue $23.4 million
$10,000,000
Average Budgeted Revenue $21.5 million
Difference = $12 million more revenue than
budgeted over 7 year period.
$5,000,000
$o
1999 -2000 2000 -01 2001 -02 2002 -03 2003 -04 2004 -05 2005 -06
—*—Total Actual Capital Revenue -11-Total Budgeted Capital Revenue
H
CIB /CIP Workshop Outline
November 30, 2006
■ Introduction
■ Historical Perspective
■ Projected FY 2006 -07 Revenue /Expense
■ Proposed 2007 10 Year Capital Improvement
Plan
• Proposed FY 2007 -08 Revenue /Expense
• Summary & Conclusions
5
CCCSD Actual Capital Revenue vs. Actual Capital Expenditures
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
Average Actual Revenue $23.4 million
$10,000,000
Average Actual Expenditures $23.8 million
No net drawdown of Sewer Construction Fund Balance
$5,000,000
$o
1999 -2000 2000 -01 2001 -02 2002.03 2003.04 2000.05 2005 -05
—Total Actual Capital Revenue -t Total Actual Capital Expenditures
CIB /CIP Workshop Outline
November 30, 2006
■ Introduction
■ Historical Perspective
■ Projected FY 2006 -07 Revenue /Expense
■ Proposed 2007 10 Year Capital Improvement
Plan
• Proposed FY 2007 -08 Revenue /Expense
• Summary & Conclusions
5
Projected FY 2006 -07
Capital Program Activity
*SCF Balance beginning FY 2006 -07 (7/1/06) approximately $55.8 M
FY 2006 -07 Capital Budget by Program
Program
Budgeted 2006 -07
Projected 2006.07
Total expenditures
+Alhambra Valley
Mainline Financing
$34.8 M
$40.9 M
$1.5M
Total revenue
$38.8 M
$36.1 M
Variance
+ $4 M
- $6.3 M
SCF balance *
$59.8 M
$49.5 M
*SCF Balance beginning FY 2006 -07 (7/1/06) approximately $55.8 M
FY 2006 -07 Capital Budget by Program
Program
Baseline
2006 -07
expenditures
Budgeted Total
2006 -07
expenditures
Projected Actual
2006 -07
expenditures
Treatment
$ 6,200,000
$ 9,700,000
$10,500,000
Plant
Collection
$ 16,300,000
$ 19,700,000
$23,700,000
System
General
$ 2,200,000
$ 5,000,000
$6,300,000
Improvements
Recycled
$ 300,000
$ 400,000
$400,000
Water
Total
$ 25,000,000
$ 34,800,000
$40,900,000
% Increase
17%
2
Price Escalation in Public Construction
August 2006 Survey of 166 Public Owners*
■ 91 % experienced price increase
■ 45% experienced decrease in # of bidders
■ Average price increase fy 2005 -06 16%
■ Average price increase fy 2004 -05 13%
■ Inflationary pressures
— 46% cited oil & gas
27% cited steel
■ 93% expect price escalation fy 2006 -07
■ Predict average price increase fy 2006 -07 11 %
'Conducted by Market Measurement, Inc.
2006 -07 Major Projects
Treatment Plant
Budgeted
Projected actual
Comments
UV Disinfection Expansion
$2,492,000
$2,000,000
Behind schedule, will be on
line for 2007 wet weather
Plant Control System
$1,000,000
$1,000,000
-
Improvements
Chemical Feed Building
$900,000
$1,530,000
Scope and construction cost
Renovation
increase
POD HVAC Improvements
$900,000
$1,690,000
Scope and construction cost
increase
Service Air Improvements
$800,000
$1,590,000
Standby Power Facilities
$600,000
$280,000
Solids Handling
$208,000
$540,000
Improvements
Other Projects
$2,791,000
$1,870,000
Total
$9,691,000
$10,500,000
7
2006 -07 Major Projects
Budgeted
Collection System
Budgeted
Projected
Comments
$2,590,000 Scope and construction
Actual
cost increase
Concrete Corrosion M3, Minert/Arkell,St.
$4,906,000
$5,220,000
CSOD Caltrans Site
Mary's (CIPP)
$980,000 -
Improvements
North Orinda Renovation — Phase 2
$2,300,000
$2,900,000
Added sites, construction cost
Information Technology
$450,000
$420,000 -
increase
Alhambra Valley Trunk Sewer
$1,500,000
$2,200,000
Construction cost increase
M4A Force Main Replacement
$1,415,000
$3,300,000
Difficult site, construction cost
$400,000 -
increase
Walnut Creek Renovations - Phase 4
$1,379,000
$2,300,000
Added sites, construction cost
increase
Danville Renovation — Phase 1
$1,200,000
$1,140,000
Developer Sewers
$1,180,000
$1,050,000
TV Inspection Program
$900,000
$720,000
A -Line — Phase 2A
$620,000
$800,000
Other Projects
$3,298,000
$4,070,000
Total
$19,652,000
$23,700,000
2006 -07 Major Projects - General Improvements
8
Budgeted
Projected Comment
actual
HOB HVAC Improvements
$1,003,000
$2,590,000 Scope and construction
cost increase
Vehicles and Equipment
$1,000,000
$760,000 -
CSOD Caltrans Site
$800,000
$980,000 -
Improvements
CSOD Facility Improvements
$800,000
$480,000 -
Information Technology
$450,000
$420,000 -
Other Projects
$966,000
$1,070,000 -
Total
$5,019,000
$6,300,000
2006 -07 Major Projects - Recycled Water
All projects
$390,000
$400,000 -
8
CIB /CIP Workshop Outline
November 30, 2006
■ Introduction
• Historical Perspective
• Projected FY 2006 -07 Revenue /Expense
• Proposed 2007 10 Year Capital Improvement
Plan
• Proposed FY 2007 -08 Revenue /Expense
• Summary & Conclusions
Goals of 2007 Capital Improvement Plan
• Fund $26 million baseline renewal and replacement
program
• Fund needed capacity and regulatory projects
— Accumulated SCF balance ($50 -$30 million = $20
million)
— One -time Dougherty Valley revenue ($55 million)
• Evaluate funding options for future, large projects
— Capacity (primary sedimentation tanks $20M)
— Regulatory (furnace scrubber upgrade or furnace
replacement $15 -50M)
CIB /CIP Workshop Outline
November 30, 2006
• Introduction
• Historical Perspective
• Projected FY 2006 -07 Revenue /Expense
• Proposed 2007 10 Year Capital Improvement
Plan
• Proposed FY 2007 -08 Revenue /Expense
• Summary & Conclusions
Proposed FY 2007 -08
Capital Program Activity
Total Expenditures
+Alhambra Valley Mainline Financing
$41.3 M
$1.OM
Total Revenue
$39.0 M
Variance
- $3.3 M
SCF balance *
$46.2 M
*SCF Balance beginning FY 2007 -08 (7/1/07) projected @ $49.5 M
12
Proposed FY 2007 -08 Capital Revenue Budget
Category
SCC Capital Component
$49 /RUE
Sewer Service Charge
$8,015,000
Ad Valorem Tax
$7,620,000
Capital Fees
$7,795,000
City of Concord
$10,845,000
Interest on SCF
$2,495,000
Developer Fees & Charges & Misc.
$1,520,000
Alhambra Valley Reimbursement
$750,000
Total Budgeted Capital Revenue
$39,040,000
Proposed FY 2007 -08 Capital Expenditures by Program
Program
Baseline
2007 -08
expenditures
Recommended Total
2007 -08
expenditures
Treatment Plant
$ 7,000,000
$ 12,300,000
Collection System
$ 16,500,000
$ 25,500,000
General Improvements
$ 2,200,000
$ 2,400,000
Recycled Water
$ 300,000
$ 1,100.000
Total
$ 26,000,000
$ 41,300,000
13
2007 -08 Major Projects
Treatment Plant
Standby Power Facilities
$2,475,000
UV Disinfection Expansion
$1,700,000
Solids Handling Improvements
$1,500,000
Service Air Improvements
$1,225,000
Wet Weather Bypass
$1,220,000
Plant Wet Weather Protection
$1,000,000
Plant Control System Improvements
$800,000
Other Projects
$2,300,000
Total $12,300,000
2007 -08 Major Projects by Category
Treatment Plant
Category
Project
Annual Expense
%Treatment
Plant Program
Wet Weather
$3,920,000
30%
WW Protection
$1,000,000
WW Bypass
$1,220,000
UV WW Capacity
$1,700,000
Renewal &
Replacement
$6,000,000
50%
Plant Controls
$800,000
Service Air
$1,225,000
Solids Handling
$1,500,000
Standby Power
$2,475,000
All Other
$2,380,000
20%
Total
$12,300,000
100%
14
Plant Wet - Weather Protection
December 31, 2005 Flood Event
Imhoff Dr. bridge looking south along
Grayson Creek.
Along east side of Walnut Creek looking
north towards Imhoff Dr.
Plant Wet - Weather Protection
■ December 2005 heavy rains was estimated to be a 39 -year
storm event.
■ The plant currently relies solely on Flood Control's service road
for flood protection.
■ Flood Control data predicts water levels:
- As much as 1.5 ft. above the service roads for 50 yr. storm
- As much as 2.5 ft above the service roads for 100 yr. storm
■ One solution is to construct a 2 to 3 foot barrier along the plant's
perimeter adjacent to Grayson and Walnut Creek and reinforce
the entrances to the tunnel.
15
Plant Wet - Weather Protection
Projected water levels for 50 and 100 year storm events
Water levels based on information received from Contra Costa Flood Control and Water Conservation District
Plant Wet - Weather Protection
Potentially Vulnerable Tunnel Entrances
Tunnel entrance by to the West Gallery south of the Chemfeed
Building
16
Plant Wet - Weather Protection
Tunnel Equipment
Pumps located in the West Gallery
A -Line — Phase 2A
Piping, etc. in the tunnel system
(T -2 South)
2007 -08 Major Projects
Collection System
$11,785,000-
North Orinda Renovation — Phase 3
$1,800,000
Walnut Creek Renovations — Phase 5
$1,615,000
North Orinda Renovation — Phase 2.1
$1,550,000
Danville Renovation — Phase 2
$1,200,000
Alhambra Valley Trunk Sewer
$1,200,000
Developer Sewers
$1,050,000
TV Inspection Program
$900,000
Martinez Renovation — Phase 1
$750,000
Other Projects
$3,650,000
Total $25,500,000
"Includes $4 million for City of Concord intertie to A -line and $2.2 million for A -line.
17
2007 -08 Major Projects by Category
Collection System
Category
Annual Expense
% Collection System
Program
Renovation Program
$7,800,000
30%
Developer Services
$1,050,000
5%
A -line Phase 2A
$11,800,000"
45%
Alhambra Valley Trunk
$1,200,000
5%
All Others
$3,650,000
15%
Total
$25,500,000
100%
Includes total reimbursement of $4 million for intertie and $2.2 million for A -line
18
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CSO Plans and Progress
• Regulatory environment
• How do we compare to others?
• Overflow status
■ Cleaning initiatives
— Increase cleaning
— "Quality Cleaning"
■ The next steps
22
Regulatory Environment
■ Increasingly stringent
■ State Water Discharge Requirements will
replace RWQCB reporting of overflows by
May 2, 2007
■ All information on overflows publicly
accessible on statewide database
Regulatory Environment
• A Sewer System Management Plan (SSMP)
must be adopted by the Board and submitted
to the State by May 2, 2009
• Legal environment
• All of the above in the regulatory environment
will cause all agencies to reduce overflows
23
How We Measure Up
■ The "benchmark" is six overflows per 100 miles
of pipe (or 90 for a system the size of CCCSD)
■ We are currently below this at 70 for a running
12 -month period or 4.66 per 100 miles
.• ■ ■ ■ ■ ■ ■ ■ ■■■ ■■
ME
AWE ■ ■■ ■■■ ■■
24
Running 12 -Month Overflow Totals
160
110
-107
100
6 `9
4\87-
-83
— 83
�79�
-81
��8
570
60
0
Nov Dee Jan Feb Mar April May June July Aug Sep Oct
2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006
12 -Month Total at Month -End
How We Measure Up
■ Why this trend?
— Additional staff and equipment provided by
Board
— Our focus on Quality Cleaning
— Engineering's capital program
— Weather
25
"Quality Cleaning"
• More efficient cleaning tools
• Quality assurance program in the field
• CCTV inspection used with cleaning as a
training tool
"Quality Cleaning"
■ Continue cleaning studies and creating
training tapes
■ Focus on root - control program
■ Spot repairs
26
w
INO
Next Steps at CSO
• Stay the course — Continue quality cleaning
• Further evaluate root - control program in
easements — modify if needed
• Analyze the new data — what do we need to
do now?
■ Anticipate that greater effort will be required
for additional gains
■ Continue investment in renovation and
capacity projects through the Capital Program
28
Proposed FY 2007 -08 Capital Expenditures by Program
Program
Baseline
2007 -08
expenditures
Recommended Total
2007 -08
expenditures
Treatment Plant
$ 7,000,000
$ 12,300,000
Collection System
$ 16,500,000
$ 25,500,000
General Improvements
$ 2,200,000
$ 2,400,000
Recycled Water
$ 300,000
$ 1,100,000
Total
$ 26,000,000
$ 41,300,000
2007 -08 Major Projects - General Improvements
Vehicles and Equipment
$1,000,000
CSOD Facility Improvements
$580,000
Information Technology
$500,000
Other Projects
$320,000
Total
$2,400,000
2007 -08 Major Projects - Recycled Water
Pleasant Hill/ A -Line Recycled Water
$900,000
Other Projects
$100,000
Total
$1,000,000
W
CIB /CIP Workshop Outline
November 30, 2006
■ Introduction
• Historical Perspective
• Projected FY 2006 -07 Revenue /Expense
• Proposed 2007 10 Year Capital Improvement
Plan
■ Proposed FY 2007 -08 Revenue /Expense
■ Summary & Conclusions
Summary /Conclusions
• Capacity fee revenue from the Dougherty Valley has
slowed, but continues to augment baseline revenues
• Sewer Construction Fund balance continues at a
level higher than needed to meet cash flow needs
• By spending down the SCF balance and the DV
capacity fee revenue, renewal & 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
on current rate payers
30