HomeMy WebLinkAbout11/29/2007 AGENDA BACKUPCentral Contra Costa Sanitary District
November 20, 2007
TO: BOARD OF DIRECTORS
VIA: JAMES M. KELLY, GENERAL MANAGER
FROM: ANN E. FARRELL, DIRECTOR OF ENGINEERING
SUBJECT: FY 2008 -09 INITIAL CAPITAL PLANNING WORKSHOP
Attached is the memo reviewed with the Capital Projects Committee on
November 14, 2007. After detailed discussion, the Committee made no changes
to the memo. Since preparation of the memo, additional discussions have
occurred with the Contra Costa Water District (CCWD) regarding the recycled
water line extension to the Diamond /Meridian Park Boulevard area of Concord as
part of the A -line Phase 2A project. CCWD has expressed no interest in
contributing to this project to make it more financially feasible, and therefore staff
has recommended and the Board has concurred, that this recycled line extension
be deferred. In lieu of the recycle water project, Staff recommends that several
needed projects that would have been done in future years be constructed in
2008 -09 to utilize the $2 million previously earmarked for the recycled water line
extension. This would also help keep expenditures more in line with projections
and revenues. These projects include the demolition of the abandoned primaries
and additional pipeline renovation work. This change will change the relative
expenditure amounts for the individual wastewater treatment, collection system
and recycled water programs, but will not change the overall recommended
expenditures for fiscal year 2008 -09, as presented in the attached memo.
Central Contra Costa Sanitary District
November 9, 2007
TO: BOARD CAPITAL PROJECTS COMMITTEE /BOARD OF DIRECTORS
VIA: JAMES M. KELLY, GENERAL MANAGER n • l
FROM: ANN E. FARRELL, DIRECTOR OF ENGINEERING fi�
SUBJECT: FY 2008 -09 INITIAL CAPITAL PLANNING WORKSHOP
INTRODUCTION
In preparation for the Board Capital Projects Committee meeting on November 14, 2007 and
the Capital Planning Workshop on November 29, 2007, 1 have summarized the material we
will be covering in this memo. This information, with additional detail, will be reviewed in the
committee meeting and 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 either
confirm or modify the rate that was set last year for fiscal year 2008 -09. By fixing the level of
capital expenditures, approximately 40 -45 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 2008 -09 Capital Planning Workshop in April.
BASELINE RENEWAL AND REPLACEMENT PROGRAM
As our District assets age, renovation and replacement is necessary to keep them
functioning properly. For budgeting purposes, the amount of annual investment in renovation
and replacement must be estimated. In January 2000, without a formal condition
assessment and asset management plan, 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. For example, the Engineering
News Record construction cost index, a commonly used index for construction cost
estimating, has increased approximately 3.8% per year over this same time period. This 3%
annual increase brings the recommended reinvestment for renewal and replacement of
existing assets to $27 million for the next fiscal year, year 2008 -09. While this approach
continues to provide a reasonable benchmark for planned expenditures, a more detailed and
systematic approach is needed.
Staff has made significant progress in developing a detailed Asset Management Inventory
and Plan for the Collection System. The value of the collection system is estimated to be
approximately 65% of the total District asset value. Our District -wide collection system
closed circuit TV inspection program has been underway for 5 years and 60 % of the
District's sewers have been televised and the condition assessed. We estimate that it will
take another 2 to 3 years to complete this work. As the work has progressed, the lines with
the highest defect scores have been grouped into renovation projects which we construct
each year. Staff is currently developing a reference document with maps to delineate the
progress of the TV program and the renovation projects that are being developed as a result.
This document will serve as our Collection System Asset Management Plan and will be
updated as projects are completed and additional line segments are televised and the
condition assessed.
Our next initiative is to develop a more formalized approach to condition assessment and
asset management in the treatment plant and at the pumping stations. We have begun an
inventory of the treatment plant to document ages and conditions of major assets and
renovation and replacement work done to date. We will then be developing an approach to
condition assessment and asset management for our treatment plant assets looking to the
future. We are currently developing scopes of work to hire technical assistance with
systematic condition assessments of remaining work needed on treatment plant concrete
structures, piping, coating and electrical systems. Significant renovation work has been done
on our pumping stations over the last ten years and this is being documented in a pumping
station inventory which will serve as the basis for determining what additional condition
assessment work is needed on the pumping stations to develop an overall asset
management plan.
Finally, expenditures for significant projects to increase capacity or address changing
regulations are in addition to the budget for renovation and replacement. For the last several
years, budgeted expenditures for needed capacity and regulatory projects have been
increased to take advantage of increased revenues from a number of sources, principle
among them being capacity fees for new connections. Thus, expenditures have in some
years significantly exceeded those estimated for baseline renewal and replacement.
HISTORICAL PERSPECTIVE
A series of two tables and two figures detailing expenditures and revenues for the last eight
years are attached in the appendix and summarized as follows. Since fiscal year 1999 -00,
District capital spending has ranged from a low of $19.8 million in 2002 -03 to a high of $39.7
million for 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. Subsequently, when there were large revenue
increases due to the pace of new home construction in the Dougherty Valley and related
capacity fees, expenditures were increased.
On average, capital revenues have closely matched capital expenditures. Over the eight
years shown on the figures, the average annual revenue was $25,100,000 and the average
annual expenditures were $25,700,000, a 2% difference. Average budgeted revenue over
the eight -year period was $23,700,000 compared to average actual revenue of $25,100;000.
Actual revenue exceeded budgeted revenue for a number of years due to the unanticipated
rapid build out of the Dougherty Valley and because ad valorem taxes were not lost to the
extent budgeted. Thus, the Sewer Construction Fund Balance increased for the three year
period from fiscal years 2002 -03 to 2004 -05. This increase has been offset in recent years
by increased spending, leading to a net draw down of the Sewer Construction Fund Balance
of approximately $5 million over the eight year period.
The one capital revenue source controlled by the District is the capital component of the
sewer service charge. This charge is adjusted each year as needed to match planned
expenditures or to draw down the Sewer Construction Fund Balance or place additional
revenue in the fund, depending on the goals and strategies of the Capital Budget and Plan in
any given year.
PROJECTED FISCAL YEAR 2007 -08 EXPENDITURES /REVENUES
As noted under the historical data discussion, for several years revenues from Dougherty
Valley connections were coming in to District coffers faster than expected, resulting in a
significant increase in the Sewer Construction Fund balance. 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. This also contributed to the increase in the fund balance.
Therefore, two years ago staff recommended increasing capital program expenditures to
levels greater than revenues for several years and funding needed deferred projects as well
as some needed regulatory and capacity driven projects partially from the Sewer
Construction Fund balance. These needed capacity and regulatory driven projects included
the expansion of the ultraviolet 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. Revenue projections have been
adjusted downward, but there is still a significant balance in the Sewer Construction Fund
that will support running a deficit in the capital program in order to stay on course with the
completion of needed projects. For the current fiscal year 2007 -08, both expenditures and
revenues are now projected to be about 4% less than budgeted, resulting in no net change to
the Sewer Construction Fund balance as budgeted at the end of the current fiscal year.
2007 -08 Capital Program
Budgeted Activity
Projected Activity
Total expenditures
$43.1 million
$41.6 million
Total revenue
$40.5 million
$39.0 million
Variance
-$2.6 million
-$2.6 million
SCF balance 7/1/08
$50.2 million
$50.2 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 rolls twice per year. For the intervening six
months, the District draws on these reserves to fund its operation and maintenance functions
as well as the capital program. The cash flow needs for this self funding dictate that the
Sewer Construction Fund balance be maintained in the neighborhood of $30 million.
RECOMMENDED 2008 CAPITAL IMPROVEMENT PLAN
FY 2008 -09 TO FY 2017 -18
Staff has developed a ten -year capital expenditure plan which budgets for a baseline of $27
million per year to fund renovation, renewal and replacement projects for a ten -year total of
$270 million in June 2008 dollars. Staff has supplemented this baseline with approximately
$45 million in needed capacity and regulatory expenditures between fiscal years 2008 -09
and 2010 -11 and an additional expenditure of approximately $22 million in the outlying years
to fund the primary expansion. While the timing of the remainder of the Dougherty Valley
capacity fee revenues is difficult to predict given the existing housing climate, it is expected
these revenues will come in within the early part of the ten year plan and will offset a large
portion of the supplementary $45 million in needed projects recommended for the near term.
If the housing slump is prolonged, some adjustments in expenditures or funds from another
source may be necessary to fund the supplementary projects. It is likely that large
expenditures in outlying years, such as the $22 million primary expansion, may need to be
bond financed unless another large development, such as the Concord Naval Weapons
Station, is approved and begins generating significant capacity fee revenue.
This year projects to meet known near term 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 appears less likely that a project to remove mercury from the incinerator air
scrubber water will be required to allow compliance with effluent limits for mercury. However,
staff is continuing to evaluate possible treatment options and has included a budget of $1
million in the treatment plant program expenditures for fiscal year 2008 -09 to complete pilot
testing and preliminary planning and design. An additional $15 million has been budgeted
over the subsequent three years to fund possible needed improvements to remove mercury.
Should these expenditures for mercury control in outlying years not be needed, these funds
can be allocated to other needed projects in a future capital plan.
Projects for possible long -term regulatory requirements, such as nutrient removal, are not
budgeted. There is more and more discussion at the Federal level about implementing
nutrient standards for all dischargers. Currently the District does not remove nutrients and it
would require an expensive retrofit to do so. Staff will be including a planning project in the
2008 -09 budget to examine possible long -term regulatory requirements, such as nutrient
removal, and develop alternative compliance strategies and budgets. It is anticipated that
some pilot work will be desirable to evaluate different technologies and compliance
strategies.
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
known needed capacity and regulatory projects minimum rate impacts. District staff will be
working on two important planning initiatives in 2008 -09: one, to better document our
condition assessment and asset management strategies for the collection system, treatment
plant and pumping stations, and two, to examine long term regulatory trends and identify
studies that should be done to develop compliance alternatives and budgets.
RECOMMENDED FISCAL YEAR 2008 -09 CAPITAL IMPROVEMENT BUDGET
The recommended fiscal year 2008 -09 Capital Improvement Budget includes $27 million for
baseline renewal and replacement projects and an additional $11.2 million for needed
capacity and regulatory projects for a total recommended expenditure of $38.2 million. The
allocation of the recommended $38.2 million among the four programs is as follows:
FY 2008 -09 Capital
Improvement Budget
Baseline
Capacity /Regulatory
Total
Treatment Plant
$7,500,000
$4,000,000
$11,500,000
Collection System
$17,000,000
$4,300,000
$21,300,000
General Improvements
$2,200,000
$800,000
$3,000,000
Recycled Water
$300,000
$2,100,000
$2,400,000
Total
$27,000,000
$11,200,000
$38,200,000
Staff will be working to develop the detailed budget document using the above preliminary
figures as modified by the November 2007 and January 2008 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 2008, when the detailed draft Capital Improvement Budget is reviewed
with the Board.
A review of the preliminary 2008 -09 Capital Improvement Budget for major projects and
areas of emphasis follows.
Treatment Plant Program
Preliminary estimates of expenditures for the fiscal year 2008 -09 Treatment Plant Program
can be grouped into three major categories: renovation, reliability and regulatory. The major
projects are as follows:
Category
Project
Annual Ex ense
Renovation
Piping Renovation
$1,000,000
Plant Site Improvements
$1,500,000
Aeration Air Renovation
$1,000,000
Reliability
Sludge Loading Facility
$1,500,000
Standby Power Im rovements
$1,200,000
Wet Weather Bypass
$1,200,000
Regulatory
Scrubber Water Mercury Pilot
Testing/Prelim i na Design
$1,000,000
All Other
$3,100,000
Total
$11,500,000
The projects listed under renovation have been identified and developed with input from plant
operations staff. They address urgent needs. For example, the piping renovation project will
begin the process of replacing ash piping which has been eroded down to paper thin walls
due to the abrasive nature of the ash. The site improvements will replace failing paving and
will incorporate the improvements needed to meet ADA requirements in the various parking
areas. Going forward, staff will be developing a more formal asset management approach to
developing renovation projects for the treatment plant, in addition to addressing urgent needs
identified by plant operations staff.
The aeration air renovation project is one that was discussed with the Board several years
ago. The aeration tanks, due to the way they were originally designed and constructed, have
developed leakage that has gotten progressively worse over the years. A similar facility in
Australia solved this problem by filling in the air plenums at the bottom of the aeration tanks
with concrete and adding a complete new diffused air system. The District could do the
same thing for an estimated cost of $8 to $10 million. Staff has been investigating other
options for several years in the hopes of avoiding this large expenditure. In the summer,
when flows are lower and tanks can be taken out of service, pilot studies have been
conducted on different methods for sealing the leaks in place and retaining the existing air
plenum and diffuser design. Staff has identified at least two and possibly three systems that
can effectively seal the leaks. These systems can be bid against each other and it is
estimated that a complete fix will cost in the neighborhood of $1 - $2 million. This is a
fraction of the cost of filling in the leaking plenums and adding a new aeration system. Staff
will present some photos and details of this study at the workshop on November 29, 2007.
The other large category of projects budgeted for 2008 -09 is reliability. There are three
critical projects budgeted. The first has to do with the sludge handling system. Currently, if
the operating incinerator or ash handling system goes down for any reason, the District has
no reliable means of sludge disposal until the other incinerator can be brought on line or the
ash handling problem corrected. Bringing the second incinerator on line takes weeks, and
there is not enough storage for this period of time. There is an old and very rudimentary
system available for dewatered sludge hauling, but it has no storage or odor control and is
considered to be unreliable. The Sludge Loading project will construct a reliable sludge
loading facility that can load trucks with dewatered sludge and hold enough sludge to get
through a long weekend so that sludge can be taken to landfill if the incinerators cannot
process sludge for any reason.
Second, the standby power improvements will replace the two existing engine - generator
sets, which have had significant reliability problems, with two new engine - generator sets.
And third, the wet weather bypass project will provide a more effective means of overflowing
to Walnut Creek if the capacity of the plant and the wet weather storage ponds are exceeded
than the current limited capacity flow over the adjacent Conco property. All three of these
projects have been discussed with the Board at previous workshops and meetings. Finally,
the major regulatory project addresses controlling mercury in the plant effluent and potentially
in the air emissions from the incinerator as well. District staff is conducting two different pilot
studies and working with an expert in incineration to develop an innovative approach to
control mercury in both the plant effluent and the incinerator emissions.
Collection System Program
The major 2008 -09 projects planned for the proposed $21,300,000 collection system
program can be grouped into four categories, renovations to existing sewers, developer
related services, the A -line phase 2A capacity project and the Alhambra Valley main line
extensions, which are being funded by the District through an assessment district process.
Estimated expenditures are shown as follows.
Category
Annual expense
% Collection System
Program
Renovation program
$7,500,000
35%
Developer services
$1,200,000
6%
A -line Phase 2A
$8,100,000
38%
Alhambra Valley Main Lines
$1,000,000
5%
All others
$3,500,000
16%
Total
$21,300,000
100%
As you can see, the major drivers of the Collection System Program for 2008 -09 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 30% of the approximate $22 million project cost 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 70% of the project cost. Of
the total $8,100,000 A -line Phase 2A cost to be expended in fiscal year 2008 -09, $7,000,000
is estimated to be reimbursed by Concord during fiscal year 2008 -09 because it is assumed
that the majority of the work being constructed next fiscal year will be the Concord intertie.
The Concord intertie costs will be reimbursed monthly due to the large impact on our cash
flow. The typical Concord capital reimbursements occur once per year, at the close of the
fiscal year.
The ongoing renovation program will take us to South Orinda, Walnut Creek, Lafayette and
Martinez in 2008 -09. 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.
One concern we are just beginning to track and document is the increasing time and cost
required to obtain and perfect easements and rights of entry needed for renovation projects
on private property. These costs are now being tracked separately and listed as a line item
when renovation construction projects are awarded. Initial data suggests that the cost can
range from 2 to 4 percent of total project cost for perfection of property rights to as much as
17 percent for sites that require new easements. For the recent North Orinda Phase 2.1
project, which consisted of 3700 feet of pipe almost entirely in back yard easements, the right
of way costs totaled approximately $432,000 or 17.3 percent of the $2.5 million total project
cost. Staff will continue to monitor and control these costs as much as practical, but they
must be recognized as the cost of doing business on private property.
General Improvements Program
General improvements in fiscal year 2008 -09 are proposed at a modest $3,000,000 and will
include the traditional equipment budget, information technology budget and items
associated with miscellaneous District facilities. In addition, expenditures will continue on the
permitting, environmental review and design of the proposed new Collection System
Operations Building. Due to the lengthy plan review process, construction of the new
Collection Systems Operations Building is not budgeted until fiscal years 2009 -10 and
2010 -2011.
Recycled Water Program
The recycled water program may see a larger than usual expenditure in 2008 -09 associated
with the A -line Phase 2A extension. As part of this project, a recycled water distribution line
may 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 $2,000,000, of
which Concord will reimburse the District approximately 30% or $600,000. District staff is
engaged in ongoing discussions with the Contra Costa Water District staff in an effort to
make this project a reality. If the project is not constructed, the budgeted $2,000,000 will not
be spent and will be available for other projects or will remain in the Sewer Construction
Fund. Also in 2008 -09, staff will be updating previous master planning efforts for recycled
water to identify any new opportunities and ensure that we are focusing our energy on the
projects that recycle the greatest amount of water. Chief among these are industrial
recycling projects, such as taking recycled waters to nearby existing refineries or to proposed
new power plants. The potential for Concord Naval Weapons Station development to use
recycled water also needs to be integrated into our recycled water master planning effort.
SUMMARY
The proposed 2008 Ten Year Capital Improvement Plan includes baseline renewal and
replacement projects of $270 million ($27 million per year) as well as $45 million in capacity
and regulatory projects funded directly by rates and a potential $22 million bond funded
project in outlying years. A preliminary financial analysis indicates, with the spending of the
accumulated balance in the Sewer Construction Fund to a minimum balance of $30 million
and the use of bond funding for large projects in outlying years, the proposed Ten Year
Capital Plan can be funded with a minimal impact on rates. Therefore, staff recommends
incorporating the recommended preliminary budgetary figures for the 2008 -09 fiscal year
Capital Improvement Budget and 2008 Capital Improvement Plan contained in this memo
into the ten year planning document that will be considered at the January 2008 Financial
Planning Workshop.
APPENDIX
Historical Perspective
Capital Revenue Discussion
CATEGORY
1999100
2000101
2001102
2002103
2003104
2004105
2005106
2006107
Total
$54
$76
$46
$76
SEWER SERVICE
CHARGE
$3,100,000
$6,300,000
$8,400,000
budgeted
$26.7 M
$24.4 M
$25.1 M
$28.2 M
$25.9 M
$26.6 M
$27.7 M
$34.7 M
expenditures
CAPACITY FEES
$4,400,000
$6,100,000
$7,600,000
$12,700,000
$10,400,000
$8,784,000
ALL OTHER
Total actual
expenditures
$21.3 M
$28 M
$20.5 M
$22.4 M
$19.8 M
$26.5 M
$27.7 M
$39.7 M
Total actual
revenue
$21.6 M
$18.9 M
$17 M
$23.5 M
$28.2 M
$30.0 M
$24.8 M
$36.6 M
Variance
+ $.3 M
- $9.1 M
- $3.5 M
+ $1.1 M
+ $8.4 M
+ $3.5 M
- $2.9 M
- $3.1 M
SCF Balance
- June 30
$55.9 M
$52.8 M
Capital Revenue Discussion
CATEGORY
2001102
2002103
2003104
2004105
2005106
2006107
SSC CAPITAL
COMPONENT
$20
$41
$54
$76
$46
$76
SEWER SERVICE
CHARGE
$3,100,000
$6,300,000
$8,400,000
$12,100,000
$7,400,000
$12,510,00
AD VALOREM TAX
$6,400,000
$7,700,000
$7,900,000
$200,000
$1,100,000
$8,111,000
CAPACITY FEES
$4,400,000
$6,100,000
$7,600,000
$12,700,000
$10,400,000
$8,784,000
ALL OTHER
$3,100,000
$3,400,000
$4,300,000
$5,000,000
$5,900,000
$6,895,000
TOTAL ACTUAL
CAPITAL REVENUE
$17,000,000
$23,500,000
$28,200,000
$30,000,000
$24,800,000
$36,300,000
10
CCCSD Actual Capital Revenue vs. Actual Capital Expenditures
$40,000,000 39.7
$35,000,000 __ - -- -- -
36.3
$30,000,000 -- - -- - Actual
Expense
$25,000,000 -- - - --
Actual
$20,000,000
Revenue
$15,000,000 - - --
$10,000,000 Average Actual Revenue $25.1 million
Average Actual Expenditures $25.7 million
$5,000,000 Difference= $5 million more expended than revenue over 8
year period. Sewer Construction Fund Balance drawn down
1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07
1-4W- Total Actual Capital Revenue t Total Actual Capital Expenditures
CCCSD Actual capital Revenue vs. Budgeted Capital Revenue
$40,000,000
38.8
$35,000,000
-- -- __ 16.3
$30,000,000
- -
$25,000,000
- --
Revenue
$20,000,000
- -- --
Actual
$15,000,000
-
$10,000,000
-
- --
Average Actual Revenue $25.1 million
- - --
Average Budgeted Revenue $23.7 million
$5,000,000
Difference: $11 million more revenue than budgeted
-- -
over 8 year period.
1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07
Total Actual Capital Revenue -* -Total Budgeted Capital Revenue
11
2008/09 Capital Improvements Program
Board Workshop
November 29, 2007
2008 -09 Capital Improvements Program Workshop
Agenda
• Strategic Areas of Emphasis Drive Projects
— Establish recommended expenditure levels for 2008 -09
— Review renovation/ reliability/ capacity/ regulatory areas of
emphasis
— Review programs and selected 2008 -09 projects
• Collection System Program
• Treatment Plant Program
• Recycled Water Program
• General Improvements Program
• CIB /10 Yr CIP Must Respond to Changes in Need and Revenue
— Review recommended expenditure levels for 2008 -09
— Establish projected revenue levels for 2008 -09 and cash flow
— Evaluate recommended 10 -year expenditures and revenue
projections and ability to fund needed projects
1
FY 2008 -09 Expenditure
Recnmmpnclatinnc
FY 2008 -09 Capital
Renovation/ Reliability
Capacity/
Total
Improvement Budget
Baseline
Regulatory
Treatment Plant
$7.5 M
$5.1 M
$12.6 M
Collection System
$17 M
$5.3 M
$22.3 M
General
Improvements
$2.2 M
$0.8 M
$3 M
Recycled Water
$0.3 M
$0.0 M
$.3 M
TOTAL
EXPENDITURES
$27 M
$11.2 M
$38.2 M
2
FY 2008 -09 Treatment Plant Program Highlights
Category
Project
Annual
Expense
%
Program
Renovation
Piping Renovation
$1.8 M
14%
Plant Site Improvements
$1.5 M
12%
Aeration Air Renovation *
$1 M
8%
Reliability
Sludge Truck Loading Facility *
$1.5 M
12%
Standby Power Improvements
$1.2 M
10%
Capacity
Abandoned Primary Structures &
Lime Storage Silos Demolition
$1.1 M
9%
Regulatory
Scrubber Water Mercury Pilot
Testing/ Preliminary Design
$1 M
8%
All Other
Protective Coatings, DAF Polymer
Improvements, Primary Expansion
Design, Plant Equipment, Wet
Weather Bypass
$3.5 M
27%
Total
$12.6 M
100%
Aeration Air Renovation
Overview of A/N Tanks
y}Y} T
�yd
�M� q
YAK
3
Aeration Air Renovation
24" Air Supply and
Air Plenum Boxes
Aeration Air Renovation
Air is Leaking from Cracks in Plenum
Aeration Air Header
Dilluters c�'_� �
Comer
Air Plenum Box — F-
D.
i . in Concrete
Aeration Air Renovation
Air Leakage from Plenums is Causing
Serious Problems
• Increasing aeration air loss is taxing capacity
of steam turbines and electric blower
• Air Leakage into subgrade and migrating to
surface around structures is blowing out soil
fines.
• Loss of soil fines is resulting in settlement
and potential loss of stability of structures.
5
Aeration Air Renovation
Summer 2007 Repair
Demonstration Projects
• Three contractors tested innovative repair
techniques
• One used an expanding grout injection
technique to seal cracks
• Two applied coatings under positive air
pressure to counteract under slab air
pressure
Aeration Air Renovation
Air Plenum Box Floor Slab
Aeration Air Renovation
Air Plenum Box Floor Slab
Repaired by Grout Injection
Show Video Clip
Aeration Air Renovation
Potential Repair Methods
• Repair Air Plenum Cracks Using one of
Three Approved Technologies.
(Estimated 10 Year Life)
— Approx. Cost $1 M - $2 M
• Pour New Floor and Install New Fine Bubble
Diffuser System
(Estimated 50 Year Life)
— Approx. Cost $8 M - $10 M
Sludge Truck Loading Facility
Incinerator down time could be weeks...
where will the sludge go ? ? ??
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Existing Sludge Loading Facility
Sludge Truck Loading Facility
Landfill Availability Drives Need for
Sludge Storage
• Avg Production: 20 truck loads /day
• Peak Production: 30 truck loads /day
• Land Fill Availability: 8 - 11 hrs /day /No Sundays and
Holidays
SOLUTION
• Storage Hopper: 400 cy to hold cake generated
overnight
• Additional Liquid Storage to hold Sludge on Sundays
or Holidays
Sludge Truck Loading Facility
Needed Project Components
• Cake Hopper for Overnight Storage
• Retrofit of Existing Tank for Liquid Sludge
Storage
• Enclosed Structure with Odor Control
Facilities for Loading
• Operator Observation Platform /Control
Station
• Wash Down Facilities
10
Location of New Sludge Truck
Loading Facility
n �J:
000 �
Sludge Truck Loading Facility
Estimated Costs are Significant but
Necessary for Reliable Sludge Disposal
- Construction - $4,000,000
- Design /CM - $1,000,000
- Total Project - $5,000,000
11
Demolition of
Abandoned Primary Structures
makes room for future Primaries
12
Treatment Plant Program
Innovations
• Developed innovative approach to sealing leaks in
aeration basins
• Pilot testing processes for mercury removal from
incinerator air emissions and scrubber water
• Completing state of the art upgrade to plant control
system and seem -less switchover
• Conducting Green House Gas inventory and
developing plan for reducing carbon footprint
• Beginning project to investigate innovative ways to
comply with future regulations e.g.) nutrient removal
• Five papers accepted for 2008 technical conferences
13
FY 2008 -09 Collection System Program
Highlights
Category
Projects
Annual
Expense
%
Program
Renovation & TV Program*
Walnut Creek VI,
Lafayette V, South
Orinda III, Martinez II =
25,900 ft.
$8.5 M
38%
Pumping Stations & Force
Mains Renovation/ Reliability
Flush Kleen FM &
small stations
$1.1 M
5%
Capacity
Developer Services
$1.2 M
5%
A -Line Phase 2A
$8.1 M
36%
Camino Pablo Trunk*
$1.3 M
6%
Alhambra Valley Mains
$1 M
5%
All others
$1.1 M
5%
Total
$22.3 M
100%
Camino Pablo Trunk Sewer Improvement 50% in
Frontage Road from Flush Kleen Pumping Station
to short of Miner Road
14
Camino Pablo Trunk Sewer Improvement in
Camino Pablo from Miner Road to Orinda Way
Note: Miner Road Trunk Sewer Improvements
have been deferred for one fiscal year.
Sewer Renovation
T.V. Program
• 1447 miles of public gravity lines
• 1275 miles of 6, 8 & 10 inch lines for potential
renovation
• Program to televise all lines started in 2002
• TV'd 900 miles to date (- 60 %)
• Complete initial TV program in 2 to 3 years
15
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16
Sample Defect Scores
Score
Description
75
break- inrunnecri -with grease, NCI
110
debris grease light NC2
110
encrastelion light #C2
110
scale/mineral deposits light OC2
115
gasket exposed
120
Infiltration Dripping at joint AC1
130
sceldminerel deposits at joint #C2 light
130
Corrosion light
130
encrustation at joint, NC2 light
I30
roots light
150
separatedjoint slight
150
mortar missing light PC2
150
Infiltration Reaming NC
150
offsetjoint, slight
160
too en- ection with roots light, #Cl
160
serviee wnnection with grease, WCI
160
break- inconnection with roots light, WCI
160
wn- U- defective, kCI
a • , a
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Hism
17
Sewer Renovation
T.V. Proqram Results to Date
Extrapolation of T.V. Results
(Miles of 6, 8 & 10 inch Pipe Scoring
7,000 or Greater)
1275 miles X (4.6% > 7000 score) = 59 miles
1275 miles X (2% obstructed) X (50% needing
renovation) = 13 miles
Total 6, 8 and 10 inch pipe
needing renovation = 72 miles
18
SCORE
(High score is poor condition)
PIPE
SIZE
1 -5,000
5,000-
7,000
7,000-
10,1000
>10,000
6"
136 miles
14 miles
12 miles
12 miles
8"
418 miles
5 miles
2.5 miles
2.0 miles
10"
25 miles
1 miles
0.2 miles
0.1 miles
TOTAL
MILES
TV ID
578 miles
20 miles
14.7
miles
14.1
miles
%
92.2%
3.2%
2.4%
2.2%
Extrapolation of T.V. Results
(Miles of 6, 8 & 10 inch Pipe Scoring
7,000 or Greater)
1275 miles X (4.6% > 7000 score) = 59 miles
1275 miles X (2% obstructed) X (50% needing
renovation) = 13 miles
Total 6, 8 and 10 inch pipe
needing renovation = 72 miles
18
10 Year Proposed Sewer Renovation Program
FISCAL YEAR
FOOTAGE RENOVATED
IN MILES
TOTAL PROJECT COST
(MILLIONS)"
2007/08
3.8
$6.6
2008/09
4.9
$7.4
2009/10
4.9
$8.4
2010/11
3.9
$6.7
2011/12
3.3
$5.7
2012/13
4.8
$8.3
2013/14
5.1
$8.8
2014/15
4.7
$8.1
2015/16
3.8
$6.5
2016/17
4.9
$8.5
TOTAL
44.1
$75.0
* Estimated at $325 per foot
Comparison of Current 10 -Year
Sewer Renovation Program vs.
Extrapolated Needs
19
RENOVATION
PROJECTED
PROGRAM
TOTAL COST
Current 10 -Year
44.1 miles
$75 Million
Program
Extrapolated
72.0 miles
$123.5 Million
Needs
Difference
27.9 miles
$48.5 Million
19
Comparison of Current 10 -Year
Sewer Renovation Program vs.
Projected Needs
• At current production rates it would take 16.5
years to renovate all pipes with a rating
greater than 7,000
• At current production rates it would take an
additional 9.5 years to renovate all pipes with
a rating of 5,000 to 7,000
• Total of 26 years to renovate all 6, 8 and 10
inch pipes with rating greater than 5,000 at
current production rates
How to maximize dollars for
sewer renovation ??
• Finish TV Program /Assessment to validate
extrapolation figures
• Complete Collection System Master Plan to
identify remaining capacity issues and adjust
Capital Plan
• Look at right of way /design /construction
process improvements to reduce project
costs
• Next budget cycle, adjust funding, if possible,
to maximize dollars for Renovation Program
20
Collection System Program
Innovations
• Leaders in use of trenchless technology
— Guided Horizontal Drilling
— Directional Drilling
— Microtunneling
— Pipe bursting, CIPP, Slip lining, Rib Lok, Reaming
• Developed state of the art geographical data
integration platform for collection system
• Developed TV program linked with
renovation program and integrated with CSO
• Using in -house right of way, survey, design
and construction management to minimize
cost of renovation project delivery
• Three papers accepted 2008 technical
FY 2008 -09 & Future
General Improvements Program
Highlights
• Maintain basic programs
— Equipment Budget
— Information Technology Plan
— HOB /HHW /POD Miscellaneous Building
Improvements
• Fund future building needs
— Collection System Operations Building and
Improvements
— Others as needed but none currently
budgeted
21
FY 2008 -09 & Future
Recycled Water Program Highlights
• Maintain basic landscape program and
publicize success
— Continue to add cost - effective connections to
existing backbone
— Continue to make needed capital improvements to
existing system
• Develop strategic approach to maximize year
round recycling for industrial /other purposes
— Consider water transfers
— Consider legislation re: duplication of services
— Hire expertise to facilitate thinking "out of the box"
FY 2008 -09 Expenditure
Rpcnmmpnrlatinnc
FY 2008 -09 Capital
Renovation/
Reliability
Capacity/
Total
Improvement Budget
Baseline
Regulatory
Treatment Plant
$7.5 M
$5.1 M
$12.6 M
Collection System
$17 M
$5.3 M
$22.3 M
General
Improvements
$2.2 M
$0.8 M
$3 M
Recycled Water
$0.3 M
$0.0 M
$.3 M
TOTAL
EXPENDITURES
$27 M
$11.2 M 1
$38.2 M
22
FY 2008 -09 Preliminary Estimate
Budqeted Revenue
Revenue Source
Budgeted
Amount
Facility Capacity Fees
$6.2 M
Pumped Zone Fees
$1.1 M
Interest
$2.5 M
Ad Valorem Taxes
$8.4 M
City of Concord
$11.2 M
Sewer Service Charges
(Preliminary $52 /RUE)
$8.7 M
Other Fees & Charges
$1.7 M
Total Revenue
1 $39.8 M
FY 2008 -09 Preliminary Capital
Cash Flow Estimate
Capital Program Cash
2008/09
Flow
Total Budgeted Revenue
$39.8 M
Total Budgeted
$38.2 M
Expenditures
Variance *
+ $1.6 M
Projected SCF Balance
$51.8 M
June 30, 2009
" Positive due to revenue from Concord reimbursement
23
SCF Balance Baseline Determined from
Projected 2007 -08 Capital Program Activity
2007 -08 Capital Program
Budgeted
Activity
Projected
Activity
Treatment Plant
$12.3 M
$10.9 M
Collection System
$26.5 M
$26.7 M
General Improvements
$3.2 M
$E6M
Recycled Water
$1.1 M
$
Total Expenditures
$43.1 M
$41.6 M
Total Revenue
$40.5 M
$39.0 M
Variance
-$2.6 M
-$2.6 M
SCF Balance
Beginning FY 2008 -09
$50.2 M
$50.2 M
Preliminary Ten Year Projected Revenue /Expense
and Impact on Sewer Construction Fund Balance
Fiscal Year
08 -09
09 -10
10 -11
11 -12
12 -13
13 -14
14-15
15.16
16 -17
17 -18
SSC ($):
0 &M (Prelim)
259
269
288
300
312
324
338
350
370
388
Capital (Prelim)
52
54
47
47
48
49
48
49
42
37
Total SSC (Prelim)
311
323
335
347
360
373
386
399
412
425
SCC Inc. (Prelim)
11
12
12
12
13
13
13
13
13
13
Capital ($M):
Total Revenue
39.8
34.5
36.4
31.9
32.5
33.6
35.3
35.8
31.9
39.2
Debt for Primaries
25.0
Total Expenditures
38.2
41.9
49.7
30.0
29.6
30.0
31.1
32.7
45.0
52.9
Mercury Rem $15M
x
x
x
CSO Bldg $13M
x
x
x
Variance ($M)
1.6
-7.4
-13.3
1.9
2.9
3.5
4.2
3.0
11.9
-13.7
Projected SCF
Balance ($M)*
51.8
44.3
31.0
32.9
35.7
39.2
43.4
46.5
58.4
44.7
*($50.2 M July 1, 2008)
24
Projected Sewer Construction Fund Balance
Fiscal Year
08.09
09.10
10.11
11.12
12.13
1 13.14
14.15
15.16
16.17
17.18
Expenditures ($M):
Treatment Plant
12.6
13.9
23.7
8.6
7.5
7.6
7.9
8.6
20.9
28.1
Mercury Removal $15 M
x
x
x
Primary Sedmntn $25 M
x
x
x
Coll. System
22.3
17.9
18.3
18.9
19.5
20.1
20.7
21.3
21.9
22.6
Gen'Ilmprvmts
3.0
9.7
7.3
2.1
2.3
1.9
2.1
2.3
1.6
1.7
CSOD Impmnts $13M
x
x
x
Recycled Water
0.4 1
0.4
0.4
0.4
0.4
0.4
0.4
0.5
0.5
0.5
Capital ($M):
Total Capital Revenues
39.8
34.5
36.4
31.9
32.5
33.6
35.3
35.8
31.9*
39.2
Debt Issuance
25.0
Total Capital Expenditures
38.2
41.9
49.7
30.0
29.6
30.0
31.1
32.7
45.0
52.9
Variance ($M)
1.6
(7.4)
(13.3)
1.9
2.9
3.5
4.2
3.0
11.9
(13.7)
Projected SCF Balance ($M)
51.8
44.3
31.0
32.9
35.7
39.2
43.4
46.5
58.4
44.7
($50.2 M July 1, 2008)
o ss
5O
ao
35
30
-
CF Balance
Board Role in Capital Program is
Ongoing
• Set Initial Capital Funding Levels in November
• Authorize Program Budgets in April - June
• Authorize Supplemental Program Funds if needed
• Award Construction Projects > $15,000
• Authorize Construction Change Orders >$50,000
• Authorize Consultant Contracts > $50,000
• Authorize Revisions to Consultant Contracts > 15%
25
What do we need from the Board today?
• Concurrence that proposed preliminary expenditure
figures for FY 2008 -09 and the subsequent 9 years
are acceptable for inclusion in financial planning
documents to be reviewed by Board in January 2008
• Concurrence that relative emphasis and allocation of
expenditures between the four programs is
acceptable for financial planning and development of
the detailed FY 2008 -09 Capital Improvement
Budget and Ten -Year Capital Plan
Board Input / Questions?
Staff is available to stay after meeting for any detailed
technical questions.
26