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Home My WebLink About01/25/2007 AGENDA BACKUPCentral Contra Costa Sanitary District ' BOARD OF DIRECTORS POSITION PAPER Board Meeting Date: January 25, 2007 No.: 3.a. CONSENT CALENDAR Type of Action: AWARD CONTRACT /AUTHORIZE EXECUTION OF CONTRACT DOCUMENTS subject: AWARD A CONSTRUCTION CONTRACT TO CONTRA COSTA ELECTRIC, INC., AND AUTHORIZE THE GENERAL MANAGER TO EXECUTE CONTRACT DOCUMENTS FOR THE INSTALLATION OF THE NETWORK FIBER OPTIC CABLE AND WIRE RUNS FOR THE PLANT CONTROL SYSTEM IMPROVEMENTS PROJECT, DISTRICT PROJECT NO. 7204 Submitted By: Initiating Dept✓Div.: Jim Warrington, Manager Administration /Purchasing and Materials REVIEWED AND RECOMMENDED FOR BOARD ACTION: /!.J'19 AC . J. arrington Thart R raves A. F rrell James M. Kelly General Manager ISSUE: On December 20, 2006, a sealed quotation was received and opened for the installation of the network fiber optic cable and wire runs supporting the Plant Control System Improvements Project, District Project No. 7204. The Board of Directors must authorize award of the contract or reject quotations within 50 days of the quotation opening. RECOMMENDATION: Staff recommends award of a construction contract and authorizing the General Manager to execute the contract documents. FINANCIAL IMPACTS: The total cost to purchase and install these network fiber cables and wires is estimated at $40,000. ALTERNATIVES /CONSIDERATIONS: Reject the quotation, and readvertise an invitation for bids. Staff is not recommending this course of action as the additional amount over the Engineer's estimate is reasonable and does not warrant rejection. Rejection would also compromise the competitive pricing process and further delay this work from being completed. BACKGROUND: The Plant Control System Improvements Project is currently in the implementation phase. The Board has authorized a contract to Transdyn Controls, Inc. to implement a software replacement for the existing control system. The Board had also authorized the purchase of the replacement hardware and peripheral for the plant control system. The implementation phase includes software development and hardware configuration. Page 1 of 2 POSITION PAPER Board Meeting Date: January 25, 2007 Subject. subject: AWARD A CONSTRUCTION CONTRACT TO CONTRA COSTA ELECTRIC, INC., AND AUTHORIZE THE GENERAL MANAGER TO EXECUTE CONTRACT DOCUMENTS FOR THE INSTALLATION OF THE NETWORK FIBER OPTIC CABLE AND WIRE RUNS FOR THE PLANT CONTROL SYSTEM IMPROVEMENTS PROJECT, DISTRICT PROJECT NO. 7204 The scope of this contract is to install the network fiber optic cable and wire runs to remote locations so the data could be centrally acquired and equipment can be remotely controlled. District staff prepared the plans and specifications for the project. The Engineer's estimate for installation of fiber optic cable and wire runs supporting the Plant Control System was $30,000. In accordance with the California Public Contract Code, the project was formally advertised on November 17 and 24, 2006. A job walk was conducted on November 30, 2006, and was attended by three contractors. One (1) sealed quotation for $39,839 was received and publicly opened on December 20, 2006. A technical and commercial review of the quotation indicates that Contra Costa Electric, Inc. is responsive and responsible, with a quoted amount of $39,839. The funding for this work has been previously authorized by the Board on September 15, 2005. Staff has concluded that this project is exempt from the California Environmental Quality Act (CEQA) under CCCSD CEQA Guidelines Section 15302 since it involves reconstruction of an existing facility at substantially the same location and with the same purpose and level of activity as the facility being replaced. Approval of this project will establish the Board of Directors' independent finding that this project is exempt from CEQA. RECOMMENDED BOARD ACTION: Award of a construction contract to Contra Costa Electric in the amount of $39,839 for the installation of fiber optic cable and wire runs supporting the Plant Control System Improvements Project, District Project No.7204, and authorize the General Manager to execute the contract documents. Page 2 of 2 Central Contra Costa Sanitary District ' BOARD OF DIRECTORS POSITION PAPER Board Meeting Date: January 25, 2007 No.: 3.b. CONSENT CALENDAR Type of Action: HUMAN RESOURCES subject: ADOPT RESOLUTION APPOINTING MICHAEL C. SCAHILL TO THE POSITION OF COMMUNICATION SERVICES MANAGER, M -35 ($7433 - $9035) EFFECTIVE FEBRUARY 20, 2007 Submitted By: Cathryn R. Freitas, Initiating Dept /Div.: Administration /H. R. Human Resources Manager REVIEWED AND RECOMMENDED FOR BOARD ACTION: L��_ - ' le" C. Freitas 1K. sgraves James tJ. We y, General Manager ISSUE: Board authorization is required to formalize the appointment of the Communication Services Manager. A resolution for appointment is attached. RECOMMENDATION: Appoint Michael C. Scahill to the position of Communication Services Manager, M -35. FINANCIAL IMPACTS: None. It is a budgeted position. ALTERNATIVES /CONSIDERATIONS: Direct staff to continue with the recruitment and selection process. BACKGROUND: Communication Services Manager Harriette Heibel retired from her position at the end of October 2006. Accordingly, staff conducted a recruitment to fill the vacancy. An outside panel of oral board raters interviewed a number of qualified applicants and ranked the candidates. Additionally, Management and Communication Services staff met with the top candidates. With both internal and external input, Director of Administration Randall Musgraves selected Michael C. Scahill as the most qualified candidate for the position. Mr. Scahill has a Bachelor's degree in English from Rutgers University and a Master's degree in Fine Arts (Theater). He has direct experience in the wastewater industry: for the past six and one -half years he has served as the Supervising Public Information Officer for the Metropolitan Wastewater Department of the City of San Diego. Previously he was the manager of public relations for several hospitals. Mr. Scahill comes highly recommended to the District and is looking forward to beginning his employment with the District in February. RECOMMENDED BOARD ACTION: Adopt the attached resolution appointing Michael C. Scahill to the position of Communication Services Manager. Document2 RESOLUTION NO. 2007- A RESOLUTION APPOINTING MICHAEL C. SCAHILL TO THE POSITION OF COMMUNICATION SERVICES MANAGER BE IT RESOLVED by the Board of Directors of the Central Contra Costa Sanitary District as follows: THAT, effective February 20, 2007, Michael C. Scahill be appointed to the position of COMMUNICATION SERVICES MANAGER, Pay Range M-35,$7,433-$9,035, and be entitled to benefits normally accorded to the Management Group. PASSED AND ADOPTED this 25th day of January, 2007, by the following vote: AYES: Members: NOES: Members: ABSENT: Members: James A. Nejedly President of the District Board of the Central Contra Costa Sanitary District, County of Contra Costa, State of California COUNTERSIGNED: Elaine R. Boehme Secretary of the Central Contra Costa Sanitary District, County of Contra Costa, State of California Approved as to Form: Kenton L. Alm District Counsel Central Contra Costa Sanitary District ' BOARD OF DIRECTORS POSITION PAPER Board Meeting Date: January 25, 2007 No.: 5.a. OPERATIONS Type of Action: ACCEPTANCE OF REPORT Subject: BOARD ACCEPTANCE OF THE 2006 NATIONAL POLLUTANT DISCHARGE ELIMINATION SYSTEM ANNUAL REPORT Submitted By: Bhupinder S. Dhaliwal, Laboratory Superintendent Initiating Dept /Div.: Plant Operations /Laboratory REVIEWED AND RECOMMENDED FOR BOARD ACTION. .forL e_ B. Dhaliwal . Craig JarneVf Kelly Gene I Manager ISSUE: The Central Contra Costa Sanitary District's (District) 2006 National Pollutant Discharge Elimination System (NPDES) Annual 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 2006 NPDES Annual Report. FINANCIAL IMPACTS: None ALTERNATIVES /CONSIDERATIONS: None BACKGROUND: During 2006 the treatment plant received a total of 18,749 million gallons of wastewater, which equated to an average flow of 51.4 million gallons per day. This average flow is about 7 percent higher than in 2005. The treatment plant produced an effluent with annual average carbonaceous biochemical oxygen demand (C -BOD) and total- suspended solids (TSS) concentrations of 6 and 7 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 97 percent and 96 percent, respectively. Solids disposal during the year involved the incineration of dewatered sludge in the District's multiple -hearth furnaces. Approximately 4,928 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 \Laboratory\AnnualRpt- 2006 \NPDES Rpt PP.doc POSITION PAPER Board Meeting Date: January 25, 2007 subject. BOARD ACCEPTANCE OF THE 2006 NATIONAL POLLUTANT DISCHARGE ELIMINATION SYSTEM ANNUAL REPORT NPDES permit requirements throughout the year, which makes this the ninth consecutive year of full compliance. The District's NPDES permit requires an annual update of the District's operations 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, 2007. RECOMMENDED BOARD ACTION: Accept the 2006 National Pollutant Discharge Elimination System Annual Report. N: \POSUP \Laboratory\Annua]Rpt- 2006 \NPDES Rpt PP.doc 2006 NPDES ANNUAL REPORT Douglas I Craig Board Meeting January 2S, 2007 2006 NPDES ANNUAL REPORT ✓ Total Flow Treated = 18.7 Billion Gallons ✓ Average Daily Flow = 51.4 Million Gallons ✓ Peak Hourly Flow ✓ Ash Disposal = 154 Million Gallons = 4,928 Tons (wet weight) (for soil amendment) Item No. 5.a. 1 2006 NPDES ANNUAL REPORT TREATMENT PLANT ✓ Completed 15,200 Analytical Tests ✓ Approximately 11,000 Hours of Laboratory Work ✓ 100 Percent Compliance With NPDES Permit Requirements EVENTS NEAR PERMIT LIMITS ✓ COPPER LIMIT ✓ ENTEROCOCCUS LIMIT 2 2006 NPDES ANNUAL REPORT ACKNOWLEDGEMENTS 2006 NPDES ANNUAL REPORT RECOMMENDATION Accept the 2006 Regional Water Quality Control Board Annual Report Agenda Item 6a. Central Contra Costa Sanitary District Board Workshop Budget and Sewer Service Charge Review For the Fiscal Year 2007 -2008 Budget Process January 25, 2007 Purpose of Today's Workshop • State of the District • Discuss rate setting philosophy • Items that impact rates • Proposed rates & alternatives • Receive Board direction: — 2007 -08 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 1 STATE OF THE DISTRICT 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 CPI. District reserves have been maintained due to connection fees, deferred projects, return of property tax. Capital Budget spending will increase and reduce reserves. District has some unfunded liabilities 2 District Overview • 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. Current Status • District's current condition - Serving the public; achieving our mission • Compliance, customer service, rates, organization - Successful workforce transition - Resources - $69.7 million in reserves - Low debt level • Impacts for District (not unique) - Unfunded liabilities - Regulations - Economic downturn • In summary, good condition, but it will take resources for unfunded liabilities & regulations 3 RATE SETTING PHILOSOPHY Rate Setting Philosophy Learning From The Past The History • 2000 Workshop - Cash Flow Model Introduced "funds required/funds available" concept • Why - No rate increases since 1994 - Cost reductions, deferred capital projects - Staffing consolidations - Spending down reserves - Economic downturn - Expanding regulatory demands • In summary, the District needed a rate increase 4 2000 Upcoming Cash Flow Crisis USL iw , No charips In SSC amount or allocation; Projected O&M Revenue and Expenses; Current CIP Fund Balances as of June 30 50,000 40.000 90,000 20,000 0 10,000 0 1999 2000 2001 2002 2003 2004 (10,000) FWA Yew i4�Total Funds Avaiwle --P4 •Funds Required ' I 5 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. • SSC, Fees & Charges should reflect full cost of service • Rate and Fee increases may not always be required (review annually) • Modest annual SSC increases may be preferred over large periodic rate increases • District's Reserves will be drawn down to funds required in 9 years (smooth landing) 5 Seven Years of Board Workshops • Board has made four major rate increases • Just completed three modest rate increases • District's financial position allows options • District has the reserves and cash flow for most near -term budget requirements • District should consider alternative funding methods for `unfunded liabilities' • District preserves the ability to debt finance large capital projects (two Bonds are assumed in this year's Plan) Temporary Investment Balance /Funds Available R0,000,000 70.000,000 1801 R_ 60,000,000 50.000.000 40.000.000 30 00011m ?O IIOog110 � ■ ■ ■ � ■ � ■ � � Fund.Rqu d 10 002000 ri x; a' ``'' t° �t �'' }J `� �� tF tl 74 7✓ •,:' �� t� sC 7� y' ' � ' tf �� YI Y' ;:' � � t� T` � y'.:' c,� t� !r y� y' n' L— �- Temporaryh�estment Ba�rxe -Funds A�ail�bk E. ITEMS THAT IMPACT RATES Items that Impact Rates • Revenue — SSC /Concord — Tax & Capacity Fees • Expenses — Capital /O &M • Liabilities • Regulations • Are we on budget? District Revenue 2009 -2007 PROJECTED TOTAL DISTRICT REVENUE (999.9 M ILLION) Plus $ 12.5 trillion draw from reserves totals 999 trillion to cover total expense k arest,40" ax (ToYRom Reserves 112. 5MRLICNFMM Ia96N® 13% 10.3 mNNw OaM;10.2 mason CWM Debt Sensce Revenue (tee evenue) ax (13.7 mmlon In property to for debt ew S er Sancti Charges sarvos, remainder or 17.3 mason to 46% ewer Construction) Tax Revenue (alter den covered) B•: Corx:ord CaWW Charges 5., Cabal Capecey 8 PS Fees r: .—ord 06M Service Charges Note: Return of full tax revenue in 2006 -07 r� Revenue & Reserves Doss Nod Indude SaS4rimer a Fund INverm ].WI,`Ni '. O,JJU,IIU! O, 1YI,yU1 I,YLI,UW Resrves 61.133.2791:.. 13.47i.7661.. _ 143.0001 12.490.000 4.31&000 Revenue & Reserves xro,OW.Wo ACOUGI AC41001 AMAI FroNeled Pralecied Serer Samice Charges S 42,339284 S 40.376.860 S 45.210.000 S 46,843000 $ 4&861,000 arlm OW Service Charges 6.809.602 6.803.000 7,383,000 8.605.000 &915.000 ap1Yl apetlty A PS Fees 7,596.232 12.602,131 10.359.000 7.180,000 7,79&000 Concord Cap6al Charges 1,784,360 2,622,731 2.681,000 4.596.000 11.079000 Tax Revenue(Mer debt emrad) 5,56&861 197,450, 1,082,000. 7,481,000 7,910.000 Debt Service Revenue (tax revenue) 3.352.666 3901.492 3.889,000 3.882.000 3,870.000 ].WI,`Ni '. O,JJU,IIU! O, 1YI,yU1 I,YLI,UW Resrves 61.133.2791:.. 13.47i.7661.. _ 143.0001 12.490.000 4.31&000 Revenue & Reserves xro,OW.Wo sso10001000 -'------------------------------------- 640.0mlow - - - - - - - - - ------------------- sx.0oo.ro0 ---------------------------------- sm.000.000 ---------------------------------- :10.000.000 - - - - -- - - - -- - - - - - - - - - - - - - - - - - a. Nil x10.000.0001 #------ - - - -�- x2o.oW.oW1 s ■ 2W3 2W4 ACW1 \ 2001 -2005 MWW 0 20062006 ACWI O 2W6-2W7 ROIeCIB4 ■1007 -1008 RCIrt1r4 History of Central San Sewer Service Charge Rates HISTORY OF CENTRAL SAN SEWER SERVICE CHARGE RATES 300 .._......._ ....................._......... ...... ....... ..._................__........._._....-.....- --- ._........-_..........._........_.........._....._._-...__................__......_........._...._.....__... ........_.._.......__.......... .._._...._..........._.....1 District loss of Ad Valorem Tex AverepeRsholnerewee. r 250 nkfrirr l— n/ Ad VAlnran 200 I 150 100 50 0 90/91 91/92 92/93 93194 94195 9596 96/97 97/98 98/99 99100 00/01 01/02 02103 03104 04/05 05/06 06/07 �O MQS ■ CepeeVDeW E Property Tax and Capacity Fee Trends Property Tax and Capacity Fee Trends 16,000,000 10 Year Budget Spending 14,000,000 CCC9D O&M and Capital ft"nses 12,000,000 Accelerated 10,000,000 18,000,000 ;8,000,000 14,000,000 $40.000,000 2,000,000 S- 530.000.000 520.000.000 % % �Q�P, ry �P� P1- fiP43 ycP% Q.& Q�6, Q� �� i� Q�o� Q�d` Q.a Q. ° moo` ,O Q.it` °A�,.p,�5.� ;.�1� 'C 'y --*-- Properly Tax —s— Correction Fees 10 10 Year Budget Spending CCC9D O&M and Capital ft"nses $60,000.000 $50,000.000 $40.000,000 530.000.000 520.000.000 - 510.000.000 so 9j09 % 94th 0007 0l'0? "'ti tY 0111% % 040) O11, —08M Expense - Capital & Debt Expense , 10 History of Capital Expenditures Itistsry of Capital Expenditures ,000 Omitted '0.000 30.000 m.00o m.00o m.00o \)6�77� �N� Io.000 0 9091 9192 92.91 9991 9495 9595 9697 9795 9199 9400 0001 0102 0201 0}01 0405 01-00 Pry. 0601 H reel Ye Cr �In.4lual Dnllus SRI Iadlp 79/ y— District O &M Expenses 11 COMPARISON BY TYPE AND YEAR 5a5,000,000 520,000.000 ,,,/!13.0 million set aside br future Other Frost- Empioyment nenesb iopm Costs in 2005 -07 and 07-05 $15,000.000 $10.000,000 55,000000 L an Ile • 20M 11105 Abel 2005 -i006 ACW 02006.2007 Ro0CW 0 2007 -200e ROIeCbO 11 COMPARISON OF DEFLATED OPERATING EXPENSES BY CATEGORY COMPAHSON OF OWLATBJ OPERATING SHN110111 BY CATB30NY (piM Bond It Lan Interest Included In Other t3penses) ue .. o.. �. i% N V Need for Reserves • Outstanding Liabilities - Pension Fund unfunded liability - $40 million - GASB 45 unfunded liability $65 million - Outstanding debt $40 million - Terminal Pay $ 5 million • Future Costs - Capital Improvement Plan • 10 years Capital Program plan -$293 million - Regulatory compliance • Programs or projects Unknown 12 ■ 97 -98 Actual ■ 9&99 Actual 099.00 Actual p 00-01 Actual t 01-02 Actual p 02.03 Actual ■03-04 Actual 004.05 Actual t 2005-06 Projected ■20062007 Budget 0 fuvnte�il t?,er .R�lserne:n &pw;se- Pa.iUen Deflated by Compounded Annual Cat of Living Salary Increase Need for Reserves • Outstanding Liabilities - Pension Fund unfunded liability - $40 million - GASB 45 unfunded liability $65 million - Outstanding debt $40 million - Terminal Pay $ 5 million • Future Costs - Capital Improvement Plan • 10 years Capital Program plan -$293 million - Regulatory compliance • Programs or projects Unknown 12 Significant Liabilities DJASILRY STATUS AMOUNT DISCUSSION OASO 4511 Unfunded $65.0 million Per actuarial calculation of June 20, 2005 Post Employment assuming 5% rate of return. Amount re- Sensflts) calculated every two years. District pays retiree health care premiums each year, and budgeted to set aside an additional $3.0 million In fiscal year 2006 -07 for future costs. CCCERA Unfunded $40.5 million Per actuarial calculation of December 31, RN renv nt— 2005. This liability is funded by a portion of Unfunded Actuwhd our rate paid on salary (approx. 40% of the Acemed UnWiity rate, or 14% of salary). (UAAQ Debt Service Unfunded $30.5 million As of June 30, 2006 audited financial statements. Per Bond covenants, property tax is dedicated to pay for bond debt service. Terminal Pay Unfunded $5.2 million As of June 30, 2006 audited financial (Pay -as -you- statements. Vacation and sick leave amounts go) paid to employees when they leave service with the District. Projected rate of annual increase for next 10 years is 2.9 %. TOTAL $141.2 million I J GASB 45 OPEB Allocation $8.000.000 $5.000,000 34.000.000 53,000.000 52,000.000 $1.000.000 so 200&2007 2007 -2006 2008- 20D9-2010 20 201 2012 -2013 12013 -2014 2014 -2015 20152016 j !! Ftx� Future Liabily 3.050.700 2,843,060 2.631267 2,418,854 2,209.760 1 1.963.4 8 1,738,7 1,473,045 1,165.778 874,719 j in Premum Faynres $1.949,300 2,156,940 2,368.733 2.581,146 2.790240 ! 3,016,592 3261,663 3.526,955 � 3.814,222 4,125,281 $29,600,000 Fund for OPEB in 2016 13 GASB 45 Addressing the issue • Review actuarial valuation Fall 2007 • Investigate issues around trust funds • Make future Board presentation with staff recommendation for Fall/Winter For Board consideration: • Establish `vehicle' for funding • Fund from budgeted revenue • Future measures to control costs Retirement Graph: see Board Financial Planning Workshop Binder 14 Central Contra Costa Sanitary District Retirement Trend Analysis Retirement as a Percent of Salary Table E 25,000,000 20,000,000 15,000.000 10,000,000 5,000,000 J J J 1995 -1997 1997 -1999 1988-1999 1999 -2000 2000 - 2001 2001 -2002 2002 -2003 20032004 2004 -2005 2005 -2006 2006 -2007 <a> Projected ■ District Paid Retirement Costs ■ Total Salaries (Excluding OT) <a> Includes additional $1.6 million Pauson payment Note: Actual CCCERA rates differ slightly. All salary above is not subject to retirement. Average 2006-07 rate is 39 %, 2005 -06 was 36 %, 2004-05 was 31%, 2003 -04 was 32% UAAL: Approximately 40% of the total rate goes to pay for the UAAL in 2005 -06 and 2006-07. Overtime was combined in salary accounts in 1996 -97 and 97 -98 - made an assumption. Source: Salary d Benefits Report By District (Running Expense and Capital) and OTIS Benefit Page - CCCERA Rate History Chart Retirement - Salaries - Compounded Compounded Annual Growth Annual Growth District Paid Total Salaries Compared to Compared to Fiscal Year Retirement Costs (Excluding OT) Percent of Salary 96-97 96-97 1996 -1997 2,825,081 14,831,521 19% 0.00% 0.00% 1997 -1998 3,063,001 15,478,846 20% 8.42% 4.36% 1998 -1999 2,979,312 15,511,505 19% 2.69% 2.27% 1999 -2000 3,026,358 15,777,547 19% 2.32% 2.08% 2000 -2001 3,291,004 16,805,515 20% 3.89% 3.17% 2001 -2002 3,503,530 17,214,617 20% 4.40% 3.02% 2002 -2003 4,634,339 18,127,856 26% 8.60% 3.40% 2003 -2004 <a> 7,404,546 19,349,855 38% 14.76% 3.87% 2004 -2005 5,908,383 20,197,266 29% 9.66% 3.94% 2005 -2006 7,201,913 20,806,918 35% 10.96% 3.83% 2006 -2007 Projected 8,127,161 22,032,090 37% 11.15% 4.04% 25,000,000 20,000,000 15,000.000 10,000,000 5,000,000 J J J 1995 -1997 1997 -1999 1988-1999 1999 -2000 2000 - 2001 2001 -2002 2002 -2003 20032004 2004 -2005 2005 -2006 2006 -2007 <a> Projected ■ District Paid Retirement Costs ■ Total Salaries (Excluding OT) <a> Includes additional $1.6 million Pauson payment Note: Actual CCCERA rates differ slightly. All salary above is not subject to retirement. Average 2006-07 rate is 39 %, 2005 -06 was 36 %, 2004-05 was 31%, 2003 -04 was 32% UAAL: Approximately 40% of the total rate goes to pay for the UAAL in 2005 -06 and 2006-07. Overtime was combined in salary accounts in 1996 -97 and 97 -98 - made an assumption. Source: Salary d Benefits Report By District (Running Expense and Capital) and OTIS Benefit Page - CCCERA Rate History Chart Retirement Trend Analysis Retirement as a Percent of Salary Table F 25,000,000 , i 20,000,000 15,000,000 i 10,000,000 5,000,000 J J J J I J 1998-1997 1997 -1998 1998 -1999 1999 -2000 2000.2001 2001 -2002 2002 -2003 2003 -2004 20042005 2005 -2006 2006 -2007 <a> Projected ■ District & Employee Paid Retirement Costs ■Total Salaries (Excluding OT) <a> Includes additional $1.6 million Paulson payment Employee COLA: 03-04 = $667,904; 04-05 = $705,021; 05-06 $809,817 Source: Salary B Benefits Report By District (Running Expense and Capital) and OTIS Benefit Page - CCCERA Rate History Chart Retirement - Salaries - Compounded Compounded District & Annual Growth Annual Growth Employee Paid Total Salaries Compared to Compared to Fiscal Year Retirement Costs (Excluding OT) Percent of Salary 96-97 96-97 1996 -1997 2,825,081 14,831,521 19% 0.00% 0.00% 1997 -1998 3,063,001 15,478,846 20% 8.42% 4.36% 1998 -1999 2,979,312 15,511,505 19% 2.69% 2.27% 1999 -2000 3,026,358 15,777,547 19% 2.32% 2.08% 2000 -2001 3,291,004 16,805,515 20% 3.89% 3.17% 2001 -2002 3,503,530 17,214,617 20% 4.40% 3.02% 2002 -2003 4,634,339 18,127,856 26% 8.60% 3.40% 2003 -2004 <a> 7,404,546 19,349,855 38% 14.76% 3.87% 2004 -2005 6,576,287 20,197,266 33°x6 11.14% 3.94% 2005 -2006 7,906,935 20,806,918 38% 12.12% 3.83% 2006 -2007 Projected 8,936,978 22,032,090 41% 12.21% 4.04% 25,000,000 , i 20,000,000 15,000,000 i 10,000,000 5,000,000 J J J J I J 1998-1997 1997 -1998 1998 -1999 1999 -2000 2000.2001 2001 -2002 2002 -2003 2003 -2004 20042005 2005 -2006 2006 -2007 <a> Projected ■ District & Employee Paid Retirement Costs ■Total Salaries (Excluding OT) <a> Includes additional $1.6 million Paulson payment Employee COLA: 03-04 = $667,904; 04-05 = $705,021; 05-06 $809,817 Source: Salary B Benefits Report By District (Running Expense and Capital) and OTIS Benefit Page - CCCERA Rate History Chart 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 One View of the World 15 Regulations • Money has been well spent, but more will be needed: — Mercury Control — Sanitary Sewer Overflows • EBMUD • WCSD • LACSD — EPA —Greenhouse Gas Reduction Are we on budget? See Page 21 of the Report W Budget Compared to Actual Expenditure Trends Running Expense and Sewer Construction Expenditures Fiscal Years 1993 - 2006 Running Expense (O & M) Sewer Construction (Capital) Fiscal Year Budget Actual Variance Budget Actual Variance 93/94 $27,454,661 25,497,097 1,957,564 43,488,000 40,008,758 3,479,242 94195 27,718,169 26,344,393 1,373,776 41,846,000 31,970,568 9,875,432 95196 27,669,020 27,278,455 390,565 47,587,000 27,991,530 19,595,470 96197 28,339,406 27,150,243 1,189,163 28,848,000 18,152,123 10,695,877 97198 29,280,235 29,807,632 (527,397) 31,588,000 27,778,508 3,809,492 98/99 32,827,029 32,646,274 180,755 29,680,000 25,919,572 3,760,428 99100 33,853,178 33,579,171 274,007 27,884,000 21,300,000 6,584,000 00/01 35,861,186 38,268,841 (2,407,655) 35,586,000 29,136,000 6,450,000 01102 40,209,305 37,593,583 2,615,722 25,119,000 21,742,000 3,377,000 02/03 41,421,566 38,693,882 2,727,684 20,976,000 24,094,148 (3,118,148) 03104 44,033,397 42,426,805 1,606,592 25,873,000 19,781,446 6,091,554 04105 43,890,914 42,294,981 1,595,933 28,096,000 26,493,159 1,602,841 05/06 47,188,613 45,530,145 1,658,468 27,705,500 27,672,000 33,500 The table above shows budget versus actual trends. Historically, the District has come in modestly under the O &M budget. Regarding the Capital Budget, the budget versus actual was not considered until 1.999 as a part of the ratemaking process. Since 1999 the Capital Budget has been closer to the actual expenditures, although FY 2003 -04 was intentionally under spent because the District lost part of its property tax that year. Significant Liabilities The District has four unfunded liabilities: Other Post Employment Benefits (OPEB), Unfunded Actuarial Accrued Liability (UAAL) for Retirement pensions, Debt Service, and Terminal Compensation (called Accrued Compensated Absence and is made up of vacation and sick leave accrual payments to employees who separate employment). These are shown on Table D. Of these, debt service and accrued compensated absences trends and costs are well known, and the current approach to funding them is considered to be appropriate. The retirement UAAL cost paid by the District has increased significantly for both the District and District employees over the years. The rates charged to employers to fund the UAAL in past years apparently have not been enough, based on the rate of increase of the liability. Staff will analyze other alternatives for funding the UAAL and will report to the Board in Fall 2007. (See Tables E and F) Regarding OPEB, the District completed its first analysis of the liability in late 2005, and will conduct the next study this year, as required by GASB 45. While it is anticipated the recommended annual set aside of $5.0 million per year for current and future OPEB liability will not fully address the liability, it does position the District to fund the liability in a fiscally responsible manner. 21 PROPOSED RATES & ALTERNATIVES Staff Recommendation • Public Notice two -year rate increase of $11 /year • Authorize $11 increase for 2007 -8 ($289 /year to $300 /year) • Evaluate need for $11 increase for 2008 -09 next January • Adopt annual increase to fees, rates, and charges Staff Recommendation • Continue approach established in 2004 of having multi -year modest rate increases • Forecasts show needed projects can be funded and current level of service maintained with future moderate increases 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? 18 Recommended Scenario 8000 TQ000 P. bP�...M.N .. 64000 �k. 1. PX4000 1 ,�.. .... .............. ..� ..................... 24000 14006 2006]056 20061001 =07 -2506 20061006 200610/0 201010// ID 1 -1013 ]0 =11 25112014 "14 625161016' �I1si ••. TWI Ntd /W 636M5 . . Tgbl11Ob 11gIb Y YN31 I1NN336 .r.r .rr. .r 2Wi BEAU aYiBl ilk rr r rr. .rr w �r mL'11 aLLif ■1i�6 NU636rD S6Y3l Obr 10 M)N 10 1M Ii3! IA IJO lit IJ! IN b arfrs •OW 7y A! 1'SS A] w m w 10 133 7o D! 131 300 AI m 7y !N 161 Dt 30 Rate and Budget Scenarios Summarized Summary of Rates for Various Scenarios 20 SSC Increase 07-04 sac Increase FutuScenario Future O&M Spending Spending e Long -term Consequences Last Years (Last Year or 3-Year Rate Ordinance $10 08 -09 $13 09-10 $14 10 -11 $15 11-12 $18 total $70 Exbanam meted Par current information. $5.0 mom set aside for retiree and post- empbynnenl eenetib par year over the 10 -year period Spandap Per November 2005 Board Capital Works!" District evenees increase and reserves decline: ratepayers see moderate rate increases; allows for a pradwl reduction of reserves. Tow MC Rib In 2015-+6 •1411 SperOW Per Nov 2006 First YOM of two -year Staff Recommended 0 &09 a 11 E pBrsea adpreted per current information. $5.0 Board caaitrwwasf op. Potential Wp capacity approach of modest rate increases; District expenses increase and 09.10 E 12 � 2/year In $CrIZ" �� year $11 million est aside for retires and post, arnpbyrnem bw*f b per and re0ubtory pmWb in future years (350 million in current reserves decline praduatiy; nbpayen sea moderate role increases; allows 11-12 $1.2 of 3-yes< rate year over the 10-year period. dollars) - W"" reflects bond fundsw b future Boards to set moderate •,creases. 5-year Increase) total $58 cover these Wile Tow BBC Rass In 2015-16 Projects. • $= 08 -09 $14 No increase now "ream` tamper increase° later on (all 09-10 $14 No Rate Increase in 2007 -08 $0 Same es Recommended (above) Serb es Recommended (above) other 1* 05- beano equal). The Impact of one year with no rob increase, over ten years is $22.5 million assumin0 a 5% invesbnent �d row sec Rob In 2015-16 -11 1 11-12 S15 5_year tO1al $58 • 1410 Summary of Rates for Various Scenarios 20 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 (5 years) — $11- 12/year vs. $14 -15 /year • Value of short-term rate deferment would be approximately $1 million per year • Bonds vs. Pay -as- you -go Funding Liabilities Board Policy Issue • Modest Increase Now — Continued reserves — Cheapest long -term alternative — Allows expanded capital program — Ability to fund unexpected needs — Political cost — Ratepayers bear burden — Could reduce debt finances & unfunded liability 21 Board Policy Issue • Pay later- defer rate increase — Future cost not always known — Higher long -term costs — May be organizational impact • Defer /Debt Fund more capital projects, other expenses — Ability to borrow — Deferred political cost — Future ratepayers bear burden Sewer Service Charge and Connection Fee Comparison AVR per SSC plus Rank from '06/07 ' Rank from connection, AVR, If lowest Berkeley (EBMUD for treatment) $507 22 N/A $507 21 Benicia $498 21 WA $498 20 Dublin San Ramon SD $498 20 N/A $498 19 Crockett Sanitary District $473 19 $243 $718 23 Livermore $485 18 N/A $485 18 Oakland (EBMUD for treatment) $425 17 N/A $425 17 Richmond $402 18 N/A $402 18 Vallejo $393 15 N/A $393 15 Mountain View Sanitary District $382 14 N/A $382 14 Pleasanton $378 13 WA $378 12 Stage SD (EBMUD for treatment) $345 12 $11 $358 9 Novato $342 11 WA $342 8 Pittsburg (DDSD) $337 10 $32 $389 10 Napa Sanitation District $315 9 N/A $315 8 C =0 saw ! "t ' $380 is Antioch (DDSD) $283 7 $48 $331 7 Bay Point (DDSD) $272 8 $105 $377 11 Fairfield $271 5 N/A $271 5 Concord (CCCSD for treatment) $258 4 WA $258 4 Union Sanitary District $228 3 WA $228 3 Oro Lomo Sanitary District $193 2 WA $193 1 West County Wastewater District $170 1 $32 $202 2 22 Future Actions by Staff • Provide budget information for City of Concord - Coordinate with their budgeting process • Complete District Budget - Finalize 200 -08 O &M & Cl Budgets • Proceed with District Rate Setting Process? - Send out Prop 218 Notice - Set Sewer Service Charge - Establish new Rates and Charges - Adjust Capacity Fee Recommendation of Staff • Plan to Implement the $11 Sewer Service Charge Increase • Prepare and Adopt annual increase to Fees, Rates & Charges • Proceed with District Rate Setting Process — Prop. 218 notice required — Announce in Spring Pipeline — Provide Notice of Public Hearings • Approve District Budget for 2007 -08 — Adopt Budget and rates in June • Consider Funding OPEB /CCCERA — Separate presentation for Board consideration in Fall/Winter 2007 23 Central Contra Costa Sanitary District Board Workshop Comments and Questions 24