HomeMy WebLinkAbout11/13/2008 AGENDA BACKUPCentral Contra Costa Sanitary District
November 7, 2008
TO: BOARD OF DIRECTORS
VIA: JAMES M. KELLY, GENERAL MANAGER
FROM: ANN E. FARRELL, DIRECTOR OF ENGIN ERING
TAD J. PILECKI, CAPITAL PROJECTS DIVISION MANAGER
SUBJECT: FY 2009 -10 INITIAL CAPITAL PLANNING WORKSHOP
INTRODUCTION
In preparation for the Capital Planning Workshop on November 13, 2008, staff has
summarized the material we will be covering in this memo. Much of this information, with
additional detail, was reviewed in the Board Capital Projects Committee meeting on
October 28, 2008. 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 will be asked to consider rate -
setting scenarios for future years. 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
2009 -10 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 target amount has been
increased for inflation at 3% per year and has reached approximately $28 million for fiscal
year 2009 -10. Since January 2000, staff has invested significant resources in developing
N: \ENVRSEC\Admin \Farrell \CIPBoard Workshop- Ann \For Nov2008 \Board CIB Workshop Memo Nov 7 2008 Revised.doc Page 1
more sophisticated asset management programs for the collection system and treatment
plant to provide the data for a more rigorous assessment of the appropriate baseline
budgetary figure for asset renovation and replacement.
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 6 years and 70 % 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 has developed a preliminary 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.
Significant renovation work has been done on our pumping stations over the last ten years
and this has been documented in a pumping station inventory which serves as the basis for
determining what additional condition assessment work is needed on the pumping stations to
develop an overall asset management plan. The degree of complexity in the pumping
stations is more similar to the treatment plant than the collection system and thus the
pumping stations will ultimately be included in the treatment plant asset management plan
described below.
This past year we began a more formalized approach to condition assessment and asset
management for the treatment plant. 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. Concurrently, staff is developing a treatment plant GDI
model, similar to the collection system GDI model, which will help organize the data and
facilitate retrieval.
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
N: \ENVRSEC\Admin\Farrell \CIPBoard Workshop- Ann \For Nov2008 \Board CIB Workshop Memo Nov 7 2008 Revised.doc Page 2
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 intentionally significantly increased.
On average, capital revenues have closely matched capital expenditures. Over the nine
years shown on the figures, the average annual revenues were $26,500,000 and the
average annual expenditures were $26,800,000, a 1 % difference. Average budgeted
revenue over the nine -year period was $25,600,000 compared to average actual revenue of
$26,500,000, a 3% difference. Over the nine -year period of record, there has been a net
draw down of the Sewer Construction Fund Balance of approximately $3 million.
The one capital revenue source completely controlled by the District is the capital component
of the sewer service charge. This charge is adjusted each year, as needed, to either match
planned expenditures, 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 2008 -09 EXPENDITURES /REVENUES
For several years revenues were coming in to District coffers faster than expected, resulting
in an increase in the Sewer Construction Fund balance. Therefore, three 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, the standby power project and the
sludge hauling improvements project. The ultraviolet disinfection expansion is complete, and
many of the other needed projects are well underway.
For the current fiscal year 2008 -09, both expenditures and revenues are projected to be
about 10% more than budgeted, resulting in no net change to the Sewer Construction Fund
balance as budgeted at the end of the current fiscal year. This is due primarily to the
completion of the Concord inter -tie portion of the A -line project moving from fiscal year 2007-
08 to 2008 -09. Because this project is completely funded by Concord, the expense has
moved into fiscal year 2008 -09, as has an offsetting amount of revenue from Concord.
2008 -09 Capital Program
Budgeted Activity
Projected Activity
Total expenditures
$38.9 million
$42.8 million
Total revenue
$38.2 million
$42.0 million
Variance
-$.7 million
-$0.8 million
SCF balance 6/30/09
$54.0 million
$53.9 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
N: \ENVRSEC\Admin\Farrell \CIPBoard Workshop- Ann\For_Nov2008 \Board CIB Workshop Memo Nov 7 2008 Revised.doc Page 3
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 2009 CAPITAL IMPROVEMENT PLAN
FY 2009 -10 TO FY 2018 -19
For the seven years prior to 2006 -07, spending had been maintained at a level sufficient to
replace needed facilities on a 100 -year life cycle, or approximately 1 % of the estimated
replacement value of all District facilities each year. Beginning in fiscal year 2006 -07 the
District embarked upon an aggressive capital program to complete needed one time
reliability and capacity projects and make use of a significant accumulated reserve, which
resulted from a robust economy and the associated revenue from new connections and
increased property tax revenues.
The ten year 2008 Capital Improvement Plan (CIP) included continued significant spending
through the year 2010 -2011 to complete these needed projects, then tapering down to the
1 % of replacement value baseline level of spending (estimated at $27 million per year in
2007) to cover renovation and replacement over a 100 year period. Using this approach, the
2008 -09 CIP maintained modest rate increases, in the range of $11 to $14 per year, for the
next ten years.
While the projects included in the higher level of spending were essential projects, the
current housing crisis and other unfavorable economic factors are expected to reduce
revenues. Thus, staff developed a memorandum dated October 24, 2008, which was
discussed with the Capital Projects Committee on October 28, 2008. This memo estimated
reductions in capital revenue and delineated three potential spending scenarios for the fiscal
year 2009 -10 CIB; Aggressive, Moderate and Reduced spending.
The capital revenue figure adjustments included a reduction in the rate of increase of
property tax revenues, the number of new connections per year, and the interest rate
assumption on the Sewer Construction Fund balance. Over the eleven -year period starting
this current fiscal year and extending through the ten -year planning period, revenues were
projected to be reduced by approximately $7 million from the revenues assumed when last
years Capital Plan was prepared, primarily due to a reduction in the rate of increase of
property taxes.
For the last several years we have conservatively assumed a property tax increase of 4% per
year due to homes being reassessed upon sale and addition of new homes. For the last ten
years this annual increase has actually been significantly higher, ranging from a low of 5.8%
in 2001 -02 to a high of 10.3% in 2006 -07, and adding to our Sewer Construction Fund
Balance. However, our anticipation is that the current housing crisis will drive assessed
values down. Therefore, we have assumed 0% growth in property tax revenue for the
current fiscal year and next fiscal year (2009 -10). This change results in a reduction in tax
revenue over the planning period of approximately $6.7 million, when compared with last
year's capital planning documents. There is an additional reduction of $.3 million from
reduced interest and connection fees adding to the total $7 million capital revenue reduction.
N : \ENVRSECWdmin\Farrell \CIPBoard Workshop- Ann\For_Nov2008 \Board CIB Workshop Memo Nov 7 2008 Revised.doc Page 4
If expenditures are to be maintained at levels at or above those planned in the 2008 -09 CIP,
then sewer service charge revenue would have to be increased by at least $7 million to make
up this difference. Alternatively, reductions in expenditures could be considered. Staff
developed three spending scenarios in the October 24, 2008 memo and recommended that
the compromise scenario, the Moderate spending scenario, be adopted for presentation at
the November 13, Capital Planning Workshop and inclusion in the January 2009 Financial
Plan. The Moderate expenditure scenario continues most essential projects but shifts some
to future years. It reduces expenditures for treatment plant equipment replacement by $1
million and collection system renovation by $7 million. Finally, it eliminates two projects,
cogeneration replacement and electric blower replacement, while we consider to study the
impacts of AB 32, the California law limiting green house gas emissions, which may affect
the desirability of proceeding with these two projects. By making these reductions, staff was
able to develop a scenario, which can be funded by moderate $13 annual rate increases over
the ten -year planning period.
There are a number of possible projects that are not currently funded. For the last year, the
Board and staff have been working on developing some large -scale recycled water projects.
The construction of such projects is not currently included in the ten -year plan. Also, projects
to meet possible long -term regulatory requirements, such as nutrient removal, are only
partially funded in outlying years. 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 continuing
the planning project budgeted in 2008 -09 to examine possible long -term regulatory
requirements, such as nutrient removal, and develop alternative compliance strategies and
budgets. Staff has also not budgeted for any project, which could be needed to comply with
AB 32. Staff is currently engaged in a consultant procurement process to hire expertise to
assist us in developing a green house gas reduction plan. By this time next year, we should
have better information to assist us with capital budgeting to address reduction of our green
house gas emissions.
RECOMMENDED FISCAL YEAR 2009 -10 CAPITAL IMPROVEMENT BUDGET
The recommended fiscal year 2009 -10 Capital Improvement Budget includes $27 million for
baseline renewal and replacement projects and an additional $15.4 million for needed
capacity and regulatory projects for a total recommended expenditure of $42.5 million. The
allocation of the recommended $42.5 million among the four programs is as follows:
FY 2008 -09 Capital
Improvement Budget
Baseline
Capacity /Regulatory
Total
Treatment Plant
$7,350,000
$7,016,000
$14,366,000
Collection System
$16,849,000*
0
$16,849,000
General Improvements
$2,300,000
$8,435,000
$10,735,000
Recycled Water
$550,000
0
$550,000
Total
$27,049,000
$15,451,000
$42,500,000
*The baseline expenditure for the collection system program was reduced by approximately
$950,000 in FY 2009 -10 to accommodate large expenditures in the Treatment Plant and
General Improvement programs.
N:\ENVRSEC\Admin \Farrell \CIPBoard Workshop- Ann \For Nov2008 \Board CIB Workshop Memo Nov 7 2008 Revised.doc Page 5
Staff will be working to develop the detailed budget document using the above preliminary
figures as modified by the November 2008 and January 2009 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 2009, when the detailed draft Capital Improvement Budget is reviewed
with the Board.
A review of the preliminary 2009 -10 Capital Improvement Budget for major projects and
areas of emphasis follows.
Treatment Plant Program
Preliminary estimates of expenditures for the fiscal year 2009 -10 Treatment Plant Program
can be grouped into two major categories: renovation and reliability. The major projects are
as follows:
-Category
Project
Annual Ex ense
Renovation
Piping Renovation
$1,400,000
Aeration Air Renovation
$2,700,000
Reliability
Sludge Loading Facili ty
$3,600,000
Standby Power Improvements
$3,700,000
All Other
$2,966,000
Total
$14,366,000
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. Going forward, staff is 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 extensively this
past year. The aeration tanks, due to the way they were originally designed and constructed,
have developed air leakage that has gotten progressively worse over the years. This
leakage has potentially compromised the structural stability of the aeration basins and the air
loss has reached a point where replacement/upgrade of the electric blower may be
necessary sooner than planned. This past summer, the structural stability and air leakage in
Tank 1 of the aeration system was successfully addressed by a grout injection process. The
same process is proposed for Tank 2 during FY 2009 -10.
The other large category of projects budgeted for 2009 -10 is reliability. There are two 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
N: \ENVRSEC\Admin \Farrell \CIPBoard Workshop- Ann \For Nov2008 \Board CIB Workshop Memo Nov 7 2008 Revised.doc Page 6
through a long weekend so that sludge I 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. Both of these projects have been discussed with the Board at
previous workshops and meetings.
In last year's CIB, staff identified the potential for a major regulatory project addressing
controlling mercury in the plant effluent and potentially in the air emissions from the
incinerators as well. The amalgam separator program, in conjunction with other activities,
has resulted in significantly lower mercury levels in our influent and effluent. Also, indications
are that the regulators are not going to focus on mercury emissions from the incinerators in
the near term. Staff had budgeted $18.2 million in the 2008 -09 capital plan for the mercury
scrubber water /metals removal project. Staff proposes to use $9 million of the $18.2 million
to upgrade critical facilities associated with our sludge handling process. Specifically,
replace the existing antiquated wet scrubber with a new one ($4 million), replace the
centrifuges and cake pumps, which are', nearing the end of their useful lives ($3 million), and
upgrade the burners and gas piping on the furnace to address safety and efficiency issues.
These projects have been added to the 2009-10 CIP.
Collection System Program
The major 2009 -10 projects planned for the proposed $16,849,000 collection system
program can be grouped into three categories, renovations to existing sewers, developer
related services, and the Miner Road Trunk Sewer Improvements.
Estimated expenditures are shown as follows.
Category
Annual expense
% Collection System
Program
Renovation program
$11,200,000
66%
Developer services
$ 1,200,000
7%
Miner Road Trunk Sewer
Improvements
$ 2,400,000
14%
All others
$
2,049,000
13%
Total
$16,849,000
100%
As you can see, the major driver of the'Collection System Program for 2009 -10 will be the
renovation program. The ongoing renovation program will take us to South Orinda, Walnut
Creek, Lafayette, Danville, Diablo, and (Pleasant Hill in 2009 -10. 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.
N: \ENVRSEC\Admin\Farrell \CIPBoard Workshop- Ann\For�.Nov2008 \Board CIB Workshop Memo Nov 7 2008 Revised.doc Page 7
General Improvements Program
General improvements in fiscal year 20109 -10 are proposed at $10,735,000 and will include
the traditional equipment budget, information technology budget and items associated with
miscellaneous District facilities. The C$O Administration Crew and Warehouse Building is
budgeted at $7.5 million for 2009 -10 and $9,218,000 for 2010 -11. Also budgeted for seismic
retrofit of District buildings, is $1 million in 2009 -10 and $2.5 million in 2010 -11. ADA
improvements, which include carpet and painting, have been delayed until 2010 -11 ($700K).
Recycled Water Program
Staff recommends limiting Recycled Water Program spending to that needed for planning
only and some limited edition of Pleasant Hill Zone 1 connections, as an appropriate
approach for this year's financial planning cycle (estimated at $550,000 per year). This
planning will include funds for legal and lobbying efforts to pursue a large -scale recycled
water project. Should these efforts be successful, changes can be made in the Recycled
Water Program budget during the next ,year's financial planning cycle to include construction
costs for a large -scale recycled water project.
SUMMARY
The proposed 2009 Ten Year Capital Improvement Plan includes baseline renewal and
replacement projects of $280 million (approximately $28 million per year) as well as
$17,500,00 in capacity and regulatory {iI rojects funded directly by rates and a potential $27.5
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
2009 -10 fiscal year Capital Improvement Budget and 2009 Capital Improvement Plan
contained in this memo into the ten year planning document that will be considered at the
January 2009 Financial Planning Workshop.
N: \ENVRSEC\Admin\Farrell \CIPBoard Workshop- Ann\For_Nov2008 \Board CIB Workshop Memo Nov 7 2008 Revised.doc Page 8
APPENDIX
N: \ENVRSEC\Admin\Farrell \CIPBoard Workshop- Ann \For Nov2008 \Board CIB Workshop Memo Nov 7 2008 Revised.doc Page 9
Historical Perspective
Capital Revenue Discussion
CATEGORY
1999100
2000101
2001102
2002103
2003104
2004105
2005106
2006107
2007108
Total budgeted
expenditures
$26.7 M
$24.4 M
$25.1 M
$28.2 M
$25.9 M
$26.6 M
$27.7 M
$34.7 M
$43.1 M
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
$36.0 M
Total actual
$21.6 M
$18.9 M
$17 M
$23.5 M
$28.2 M
$30.0 M
$24.8 M
$36.6 M
$37.9 M
revenue
$3.1 M
$3.4 M
$4.3 M
$5.0 M
$5.9 M
$6.9 M
$10.6 M'
Total actual capital
revenue
$17 M
Variance
+$0.3 M
-$9.1 M
-$3.5 M
+$1.1 M
+$8.4 M
+$3.5 M
-$2.9 M
-$3.1 M
+$1.9 M
SCF Balance --
June 30
$55.9 M
$52.8 M
$54.7 M
Capital Revenue Discussion
CATEGORY
2001102
2002103
2003104
2004105
2005106
2006107
2007108
SSC capital
component
$20
$41
$54
$76
$46
$76
$58
Sewer service charge
$3.1 M
$6.3 M
$8.4 M
$12.1 M
$7.4 M
$12.5 M
$9.6 M
Ad valorem tax
$6.4 M
$7.7 M
$7.9 M
$0.2 M
$1.1 M
$8.1 M
$8.5 M
Capacity fees
$4.4 M
$6.1 M
$7.6 M
$12.7 M
$10.4 M
$8.8 M
$9.1 M
All other
$3.1 M
$3.4 M
$4.3 M
$5.0 M
$5.9 M
$6.9 M
$10.6 M'
Total actual capital
revenue
$17 M
$23.5 M
$28.2 M
$30.0 M
$24.8 M
$36.3 M
$37.9 M
* Includes $7.9 M Concord revenue, unusually high due to A -Line project.
Page 10
3A
Fiscal Year 2009/10
Capital Improvements Program
Board Workshop
November 13, 2008
2009 -10 Capital Improvements Program Workshop
Agenda
Strategic Areas of Emphasis Drive Projects
— Establish recommended expenditure levels for 2009 -10
— Review renovation/ reliability/ capacity/ regulatory areas of emphasis
— Review programs and selected 2009 -10 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 2009 -10 and beyond
— Establish projected revenue levels for 2009 -10 and beyond
— Evaluate recommended 10 -year expenditures and revenue
projections and ability to fund needed projects
$45
$40
$35
$30
$25
$20
$15
$10
$5
$0
$45
$40
$35
$30
$25
$20
$15
$10
$5
$0
CCCSD Actual Capital Revenue vs. Actual Capital Expenditures
$37.9
$36.0 1
Actual Expense
al Revenue \*_,�
Average Actual Revenue $26.5M (238.5M)
Average Actual Expenditures $26.8M (241.6M)
Difference = $3 million more expended than revenue over 9
year period. Sewer Constriction Fund Balance drawn down
1199/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/
—* —Total actual expenditures }Total actual revenue
CCCSD Actual Capital Revenue vs. Budgeted Capital Revenue
$40.5M
$37.9M
Budgeted Revenue
d�
Actual Revenue
Average Actual Revenue $26.5 million (238.5)
Average Budgeted Revenue $25.6 million (230.4)
Difference: $8 million more revenue than budgeted over 9 year period.
999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/C
---*—Actual Capdal Revenue 0 -Budge Capital Revenue
Page 11
Fiscal Year 2009/10
Capital Improvements Program
Board Workshop
November 13, 2008
2009 -10 Capital Improvements Program Workshop
Agenda
Strategic Areas of Emphasis Drive Projects
— Establish recommended expenditure levels for 2009 -10
— Review renovation/ reliability / capacity/ regulatory areas of emphasis
— Review programs and selected 2009 -10 projects
• Collection System Program
• Treatment Plant Program
• Recycled Water Program
• General Improvements Program
• CI13/10 Yr CIP Must Respond to Changes in Need and Revenue
— Review recommended expenditure levels for 2009 -10 and beyond
— Establish projected revenue levels for 2009 -10 and beyond
— Evaluate recommended 10 -year expenditures and revenue
projections and ability to fund needed projects
1
FY 2009 -10 Expenditure Recommendations
Moderate Scenario
FY 2009 -10 Capital
Renovation
Reliability/
Improvement Budget
Baseline
Regulatory
Total
Treatment Plant
$7.4 M
$7.0 M
$14.4 M
Collection System
$16.8 M
$0 M
$16.8 M
General
Improvements
$2.3 M
$8.4 M
$10.7 M
Recycled Water
$0.6 M
$0.0 M
$0.6 M
TOTAL
EXPENDITURES
$27.1 M
$15.5 M
$42.5 M
Moderate FY 2009 -10 Expenditure Scenario
• $325 M in expenditures over 10 years
• $17 M less than Aggressive Scenario
• Reductions from Aggressive Scenario
- Delete Cogeneration Replacement ($5 M)
- Reduce WWTP Equipment Replacement ($5 M)
- Reduce CS Renovation Program ($7 M)
• Maintains SSC annual increase @ - $13 /year
(based on preliminary O &M Budget Data)
2
FY 2009 -10 Treatment Plant Program Highlights
Category
Project
Annual
Expense
%
Program
Renovation
Asset Management *
$0.8M
5%
Piping Renovation
$1.4 M
10%
Aeration Air Renovation
$2.7 M
19%
Reliability
Sludge Truck Loading Facility *
$3.6 M
25%
Standby Power Improvements
$3.7 M
26%
All Other
Plant Equipment,
Electrical and Instrumentation
Replacement
$2.2 M
15%
Total
$14.4 M
100%
Objective of Treatment Plant
Asset Management
Capital Project Forecasting
• Anticipate retirement of assets
• Plan for pro- active replacement
• Eliminate reactive /urgent work
• Develop 10 -year Capital Funding Plan
First Step is Comprehensive
Asset Inventory
• Mainsaver (Maintenance Management Software)
— Contains most mechanical assets and civil structures
— Generic asset numbers for some piping systems, paving,
fencing, but no quantities
• Missing Inventory:
— Piping (ft, size, material, etc.), accessories, manholes,
catch basins
— Electrical cables, wires, conduits, vaults/ manholes,
transformers
— Control systems, PLCs, MMIs, workstations, etc.
4
Preliminary Data
• Current Estimate of Treatment Plant replacement value is $870M
(this does not include an accurate inventory of piping, electrical,
etc.)
Civil
$
336,700,000
Mechanical
$
110,400,000
Electrical
$
104,500,000
Instrumentation
$
6,900,000
Preservation
$
1,100, 000
Piping
$
308,000,000
TOTAL
$
867,600,000
• Assuming 1 % replacement (1 per 100 years), the budget would
be $8.7M per year...
— Is this a reasonable assumption?
Breakdown of Assets by
Initial Service Life Expectancy
0-20 yrs,
Example: 79% of District assets $39,814,555, 20-35 yrs,
5% $105,564,847 ,
have an initial service life greater 14%
than 50 years. Only 5% have a
service life less than 20 years.
35-50 yrs,
-$31,162,168,
4%
i
50+ yrs,
$691,094,267,
79%
5
Treatment Plant Asset Management Project
End Products
• Active Forecasting Model
— Updates from mainsaver data
— Produces reports to show which assets to replace
in a given year
• TP Asset Management Report
— Explains assumptions
— Generates cashflow chart for treatment plant
rehabilitation and replacement
($ for next 50 years)
0
Sludge Truck Loading Facility
Incinerator down time could be weeks...
where will the sludge go ? ? ??
.�n.ur
.rrwr
4�: , .w..
•E
saw HMO scNUUrc ."' a' w"`
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
8
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
Location of New Sludge Truck
Loading Facility
9
Front View of New Sludge Truck
Loading Facility
---- -------
New Sludge Truck Loading Facility
10
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
Treatment Plant Program Innovations
• Conducting green house gas inventory and
developing Green House Gas Management Plan
• Began project to investigate innovative ways to
comply with future regulations - nitrification and
nutrient removal requirements
• Pilot testing processes for mercury removal from
incinerator air emissions and scrubber water
• Developed innovative approach to sealing leaks in
aeration basins
• Completed state of the art upgrade to plant control
system and seem -less switchover (CASA Award)
11
)rojectodAdgaill Wa
(as
.it
on California, 2
30-60% loss in Sion snowpack
i
r 6-14 inches of sea level rise
>. 2 -2.5 times as many heat wave days
AB 32 (2006 Global Warming Solutions Act)
• Governor's Executive Order
— Reduce GHG emissions to 1990 levels by 2020
— Reduce GHG emissions another 80% by 2050
• California Air Resources Board (CARB)
— Delegated authority for AB 32 rule development
— Mandatory GHG reporting by January 1, 2009
— GHG emission - reduction requirements by 2012
12
California's GHG
Reduction Goal
ARB Emissions Inventory
700
600
-173 MMT CO2E Reduction
1990 Emission
Baseline
SOD
400
,3
427 MMTCO2e
$11% Reduction
-U1 MMTCOE
86 MMTCO2e
2000
`
20" x" 2050
Year
AB 32 Timeline
2007 2008 2009 2010 1 2011 2012 2020
d," I H', I and
h,
13
The Climate Registry Membership
I I
"a-
�_a
A Comprehensive Green House Gas
Management Plan is Under Development
• Fiscal year 2009/10 CIB /CIP includes budget for
study only — $250,000
• Study will develop Green House Gas Management
Plan
• Suggested projects, such as alternative energy, will
be budgeted in fiscal year 2010 -2011 CIB /CIP
14
FY 2009 -10 Collection System Program
Highlights
Category
Projects
Annual
Expense
%
Program
Walnut Creek 7,
Pleasant Hill 1,
Renovation & TV Program*
Lafayette 6, South
$11.2 M
67%
Orinda 4, Danville 2,
Diablo 1
Pumping Stations
Small stations
COLLECTION
SYSTEM'(
Capacity
Developer Services
$1.2 M
7%
Capacity /Renovation
Miner Road Trunk *
$2.4 M
14%
PROGRAM
$0.8 M
5%
Total
FY
2009 -10
100%
ML
Ra'
st
FY 2009 -10 Collection System Program
Highlights
Category
Projects
Annual
Expense
%
Program
Walnut Creek 7,
Pleasant Hill 1,
Renovation & TV Program*
Lafayette 6, South
$11.2 M
67%
Orinda 4, Danville 2,
Diablo 1
Pumping Stations
Small stations
$1.2 M
7%
Capacity
Developer Services
$1.2 M
7%
Capacity /Renovation
Miner Road Trunk *
$2.4 M
14%
All others
$0.8 M
5%
Total
$16.8 M
100%
15
Sewer Renovation Program
• 1,473 miles of public gravity lines
• 1,286 miles of 6, 8 & 10 inch lines for potential
renovation
• Program to televise all lines started in 2002
• TV'd 1017 miles to date (- 70 %)
• Complete initial TV program in 2 to 3 years
16
Sewer Renovation
T.V. Program Results
(as of Sept 2008)
* Total of lines with a score of 5000 or greater is 6.4%
17
Extrapolation of T.V. Results
Lines scoring 7000 or greater:
1,286 miles X (3.8% > 7000 score) + 49 miles
1,286 miles X (2% obstructed) X (50% needing renovation)
+ 13 miles
Total 6, 8 and 10 inch pipe scoring
7,000 or greater needing renovation = 62 miles
Lines scoring 5,000 to 7,000: = 33 miles
Total miles of 6, 8 and 10 inch pipe
needing renovation = 95 miles
Progress to Date
(miles per year)
The following table reflects the miles of pipe (6, 8 &10 Inch)
identified by the TV program renovated to date.
FISCAL YEAR
PIPE RENOVATED
2005/06
3.7 Miles
2006/07
4.4 Miles
2007/08
5.6 Miles
2008/09
6.3 Miles
TOTAL
20.0 Miles
18
10 year Renovation Scenarios
(2009/10 — 2018/19)
Total miles of pipe to be renovated per TV Program - 95 miles
Miles of pipe renovated to date - 20 miles
Remaininq miles of DIDe to renovate - 75 miles
Scenario
10 Yr Cost
Miles of
Percent
Add. Years
$9.5
(millions)
Pipe
Renov. in
to Complete
6.0
$8.9
Renov.
10 Yrs
$4.6
2013/14
6.0
in 10
2014/15
5.1
$7.5
2015/16
Yrs
$7.0
2016/17
Aggressive
$94.9
65
87%
-1.5
2018/19
(Adds $5 to 2009/10
$10.9
TOTAL
60.3 (44.1)'`*
$87.9 ($75) **
Moderate SSC)
Moderate
$87.9
60.3
80%
-2.5
/Reduced
Cost To
$109.6
75
100%
-
Complete
(Adds $15 to 2009/10
In 10 years
Moderate SSC)
HDuve iaDle esumatea at UOU /Ti Tor 2665/1 U
10 Year Proposed Sewer Renovation
Program Moderate Spending Scenario
FISCAL YEAR
FOOTAGE RENOVATED
IN MILES
TOTAL PROJECT COST
(MILLIONS)*
2009/10
7.2
$9.5
2010/11
7.0
$10.3
2011/12
6.0
$8.9
2012/13
3.1
$4.6
2013/14
6.0
$8.8
2014/15
5.1
$7.5
2015/16
4.7
$7.0
2016/17
6.1
$9.0
2017/18
7.7
$11.4
2018/19
7.4
$10.9
TOTAL
60.3 (44.1)'`*
$87.9 ($75) **
-tsumatea at UOU /rt Tor zuug /iu - $zw /tt for subsequent years
*`2008/09 CIB /CIP Renovation Program
19
Sewer Renovation Program
Are We Spending Enough?
• Hired RMC to conduct a bench mark study
• Agencies:
- Antioch - Clark County
- Fullerton - Sacramento
- Los Angeles - Stege Sanitary
- Santa Rosa - Union Sanitary
• Only Los Angeles has a regulatory driver
20
21
Percentage of Total System Planned (CCCSD Moderate
Spending Scenario) for Renewal in Next 10 Years
30
70
25
■ Renewal Rate
60
• System Age
50
20
40
15
30
10
20
5
10
0
0
Clark Union SanSacramento CCCSD City of City of City of City of Los Stage San
County District Area SD Antioch Santa Rosa Fullerton Angeles District
W RD
21
How Do We Continue
to Reduce Overflows?
CSO:
- Increase maintenance frequency of Vitrified Clay
Pipes
- 24 month schedule lines to 12 months
- 12 month schedule lines to 6 months
- Continue to emphasize quality cleaning
Engineering:
- Increase rating criteria on lines with past
overflows
- 53% of overflow lines had previous overflows
- Accelerate Renovation Program from 75 million
to $88 million over next ten years
(Moderate Scenario)
22
Collection System Program Innovations
• Successfully executed tunnel grade correction on
A -line project
• Developed TV program linked with renovation
program and integrated with CSO
• 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
FY 2009 -10 & Future
General Improvements Program
Highlights
• Maintain basic programs (- $2 M /yr)
- Equipment Budget
- Information Technology Plan
- HOB /HHW /POD Miscellaneous Building
Improvements
• Fund future building needs
- Collection System Operations Building and
Improvements ($17 M)
• Fund Seismic Retrofit Program ($3.5 M)
23
Seismic Retrofit Program
• Non - Treatment Buildings
— Warehouse at 4737 Imhoff Place
• To be discussed with Real Estate Committee on
November 18
— Headquarters Office Building and Plant Operations Building
• Under evaluation
— Retrofit budgeted $3.5 M
• Treatment Buildings and Pumping Stations
— Solids Conditioning, Pump and Blower, Material Warehouse,
etc...
— Request for Proposal for building evaluation will be sent out to
consultants
— Retrofit unbudgeted
FY 2009 -10 & 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
• Fund ten -year program at $550,000 per year
and revisit in 2009
24
FY 2009 -10 Expenditure Recommendations
Moderate Scenario
FY 2009 -10 Capital
Renovation/ Reliability
Capacity/
Total
Improvement Budget
Baseline
Regulatory
$2.0 M
Treatment Plant
$7.4 M
$7.0 M
$14.4 M
Collection System
$16.8 M
$0 M
$16.8 M
General
Improvements
$2.3 M
$8.4 M
$10.7 M
Recycled Water
$0.6 M
$0.0 M
$.6 M
TOTAL
EXPENDITURES
$27.1 M
$15.4 M
$42.5 M
FY 2009 -10 Preliminary Estimate
Budgeted Revenue
Revenue Source
Budgeted
Amount 2009/10
Facility Capacity Fees
$6.3 M
Pumped Zone Fees
$1.2 M
Interest
$2.0 M
Ad Valorem Taxes
$8.6 M
City of Concord
$5.2 M
Sewer Service Charges
$6.1 M
Other Fees & Charges
$1.2 M
Total Revenue
$30.6 M
* Reduced from projected $8.9 M 2008 -09
25
FY 2009 -10 Preliminary Capital
Cash Flow Estimate
Capital Program Cash Flow
2009/10
Total Budgeted Revenue
$30.6 M
Total Budgeted
$42.5 M
Expenditures
$22.4 M
Variance
- $11.9 M
Projected SCF Balance
$? M
June 30, 2010
$0.4 M
SCF Balance Baseline Determined from
Projected 2008 -09 Capital Program Activity
2008 -09 Capital Program
Budgeted
Activity
Projected
Activity
Treatment Plant
$12.7 M
$10.4 M
Collection System
$22.4 M
$27.8 M
General Improvements
$3.4 M
$4.2 M
Recycled Water
$0.4 M
$0.4 M
Total Expenditures
$38.9 M
$42.8 M
Total Revenue
$38.3 M
$42.0 M
Variance
-$0.6 M
-$0.8 M
SCF Balance
June 30, 2009
$47.2 M
$53.9 M
* Larger balance due to underspending in FY 2007/08
W
FY 2009 -10 Preliminary Capital
Program Cash Flow Estimate
Estimated Cash Flow
2009/10
Total Budgeted Revenue
$30.6 M
Total Budgeted
$42.5 M
Expenditures
11 -12
Variance
- $11.9 M
Projected SCF Balance
$42 M
June 30, 2010
17 -18
Preliminary Ten Year Projected Revenue /Expense
and Impact on Sewer Construction Fund Balance *
Fiscal Year
09 -10
10 -11
11 -12
12 -13
13 -14
14 -15
15 -16
16 -17
17 -18
18 -19
Capital ($M):
Total Revenue
$30.6
$30.8
$30.9
$31.1
$32.4
$34.2
$34.2
$60.4
$41.8
$37.3
Debt for Primaries
-
-
-
-
-
-
$32.0
Total Expenditures
$42.5
$43.9
$32.1
$29.3
$30.6
$32.5
$33.3
$45.9
$54.3
$36.9
SSC Increase ($) "
$13
$13
$13
$13
$13
$13
$13
$17
$17
$17
Projected SCF
$42
$29
$28
$29
$31
$32
$32
$47
$34
$35
Balance ($M)
* Includes no funding for:
-Large recycled water project implementation
-Green house gas reduction projects
-Seismic retrofit greater than $3.5 M
-Nitrification and /or nutrient removal
"* Based on very preliminary O &M Budget figures
27
Board Role in Capital Program is Ongoing
• Set Initial Capital Funding Levels in November
• Confirm Capital Funding Levels in January
• Authorize CIB /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%
What do we need from the Board today?
• Concurrence that proposed preliminary expenditure
figures for FY 2009 -10 and the subsequent 9 years
are acceptable for inclusion in financial planning
documents to be reviewed by Board in January 2009
• Concurrence that relative emphasis and allocation of
expenditures between the four programs is
acceptable for financial planning and development of
the detailed FY 2009 -10 Capital Improvement
Budget and Ten -Year Capital Plan
28
Board Input/ Questions?
Staff is available to stay after meeting for any detailed
technical questions.
29
Central Contra Costa Sanitary District
November 10, 2008
TO: BOARD OF DIRECTORS
VIA: JAMES M. KELLY, GENERAL MANAGER
ANN E. FARRELL, DIRECTOR OF ENGINEERING
TAD J. PILECKI, CAPITAL PROJECTS DIVISION MANAGER T(F,,
FROM: MICHAEL J. PENNY, ASSOCIATE ENGINEER 8Tffj,--
SUBJECT: MOSSWOOD DRIVE CREEK CROSSING EMERGENCY REPAIR
in July 2008, as art of the current construction work for the Lafayette Sewer Renovation,
Phase 5, project, the District's contractor, KJ Woods, was requested to provide a cost
estimate to replace a damaged creek crossing near Mosswood Drive in Lafayette (see
attached map). The District received a favorable cost estimate and directed KJ Woods
to proceed with the creek crossing work. Delays in the fabrication and delivery of the
pipe pushed construction of the creek crossing past October 15, the deadline in our
California Department of Fish and Game (F &G) permit application.
While investigating the Mosswood Creek crossing site on November 3 in order to initiate
the work, a District Inspector noticed sewage flowing into the creek from under the
creek crossing pipe. CSO was notified and immediately set up temporary bypass
pumping to prevent further sewage release into the creek (see photos). TV inspection
shows that the sewer is damaged downstream of the connection of the creek crossing
to the sewer main in an area separate from that included in the original quote and the
F &G permit application. The creek crossing pipe and the damaged sewer need to be
replaced as soon as possible to prevent another overflow. KJ Woods has started
preparatory work outside the creek bank for replacing the creek crossing and repairing
the sewer. Due to the emergency nature, this work has been authorized by staff, but
may exceed the General Manager's $50,000 authority.
A permit application had been submitted to the F &G in early July 2008 to replace the
damaged creek crossing pipe. No response was received from F &G until
November 5, 2008. Susan Gilmore of F &G informed the District that if no response had
been received by the District to the permit application within 90 days that we could
proceed with the work under Operational Law. The 90 day limit expired on October 8,
2008. However the only work that can be done is what was in the permit application,
which did not include the repair of the leaking sewer discovered downstream of the
creek crossing.
F &G Code Section 1610 exempts certain types of emergency work from notification
requirements in Section 1602. Specifically, notification is not required before beginning
"emergency work necessary to protect life or property." The District's Board of Directors
needs to declare an emergency so that the KJ Woods can proceed with the creek
crossing and sewer replacement for both the original intended scope of work and the
added repair. The District is required to inform F &G within 14 days of starting
emergency work. This emergency declaration will also allow the General Manager to
authorize work in an amount greater than $50,000, if needed.
Creek Crossing Location
Creek Crossing Looking South
Close Up of Spill Area
a -
L.1'
• �„* x ; � S t' fit/ \� � ~ � ' ... ! n�''�. �. *..�+ '�;.
i V.i. k a ♦ ! z �
o�.
All
.. � • � � `° w° ..,.,,yam � ' ; ` `{Yip y � pt .�+ I ' /
.1 'AI - � i
VI
5.a
Mosswood Drive Creek Crossing
Emergency Repair
Board Presentation
11/13/2008
Site Map
PJW
� >,.�„•x '° sac
E• .�'; pJgv
K N.• o ��. V3�
g a
Greek Crossin
-fin= ..
__.
Jr i 7 Y bY.
Time Line
• Creek Crossing Pipe Leak and CSO
Temporary Repair - End of April
• Investigation and Design - May /June
• Fish & Game Permit Application - July
• Request For Contractor Quote - July
Creek Crossing with CSO Temporary Repair
Proposed Permit Repair - Replace Creek Crossing Pipe
2
Leak Discovered
• Inspector Found Leak on November 3
— CSO set up bypass pumping
— Left Message with Fish and Game
• Fish and Game Responded November 5
— Operational Law — October 8
— Only what is in Permit Application
• Creek Crossing Pipe
• October 15 Completion Date
Bypass Pumping and Leak Location
Next Steps
• Creek Crossing Pipe about two weeks
out
• Contractor instructed to proceed with
locating and repairing leak
- Tree Removal
- Hand Excavation
- Repair
• Need to Declare Emergency to Comply
with Fish and Game Regulations
►.1
m e y e r s I n a v e riback silver & wilson
professional law corporation
MEMORANDUM
DATE: November 13, 2008
TO: Board of Directors
Central Contra Costa Sanitary District
FROM: Kent Alm, District General Counsel
BY: Richard D. Pio Roda, Esq.
Richard D. Pio Roda
Attorney at Law
415.421.3711
RE: Summary of California Public Contract Code § 22050 Emergency Procedures
This memo is a summary of the legal procedures that the Board must take to authorize the General
Manager to make emergency repairs on the creek crossing near Mosswood Drive in Lafayette.
Under California Public Contract Code (PCC) § 22050(b)(1), in an emergency the Board may by a four -fifths
vote of its members declare an emergency and authorize the General Manager to take immediate action,
procure the necessary equipment, services and supplies without giving notice for bids to let contracts to
make emergency repairs. PCC § 22050(b)(3) requires the General Manager to report back to the Board at
its next regular meeting the reasons justifying why the emergency did not permit a delay associated with
soliciting competitive bids and why the action was necessary to respond to the emergency. This General
Manager's report could occur at the Board's November 20th meeting.
Related to the General Manager's report back to the Board per PCC § 22050(b)(3), under PCC §
22050(c)(2), the Board must initially review the action not later than seven days after the action (this could
also occur at the Board's November 20th meeting) and at least at every regularly scheduled Board meeting
until the action is terminated, to determine, by a four -fifths vote, that there is a need to continue the actions,
unless the General Manager terminates the actions prior to the Board's review of the emergency action.
When the Board reviews the emergency action, it must terminate the action at the earliest possible date that
conditions warrant so that the remainder of the emergency actions may be completed by competitive bid
procedures.
Please contact me if you have any questions.
c: Jim Kelly, District General Manager
RDP
802.001
1169709.1
575 Market Street, Suite 2600 1 San Francisco, California 94105 1 tel 415.421.3711 1 fax 415.421.3767 ( www.meyersnave.com
LOS ANGELES - OAKLAND e SACRAMENTO - SAN FRANCISCO SANTA ROSA