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Central Contra Costa Sanitary District
FY 2011 -12 Capital Improvement Program
Executive Summary
Central Contra Costa Sanitary District funds an extensive Capital Improvement Program
designed to preserve, maintain, and enhance the District's assets, accommodate the
community's needs, and protect the environment. Capital improvements are construction,
acquisition or renovation activities which add value to the District's fixed assets (buildings,
pipelines, facilities, equipment) or significantly increase their useful life.
The District's FY 2011 -12 Capital Improvement Budget (CIB) details expenditures of
approximately $25.9 million for the planning, design and construction of treatment plant,
collection system, general improvements, and recycled water projects. By adopting the
CIB, the Board of Directors authorizes staff to pursue this work.
In addition to the CIB for the upcoming year, the Board approves aTen -Year Capital
Improvement Plan (CIP) that forecasts needed expenditures. The CIP focuses on facility
renovation, expansion and future regulatory compliance projects. It estimates
expenditures for the next ten years at $345 million (in 2011 dollars). The CIB and CIP
also include projected revenues and cash flow discussions to demonstrate how planned
expenditures could be funded.
Each planned project addresses one or
more District goals:
• Protect public health and the
environment
• Maintain existing assets
• Respond to regulatory and
community concerns
• Accommodate planned growth
This year we continue to be faced with some challenges and opportunities. Our revenue
stream for the next several years is projected to be significantly reduced due to the
downturn in the U.S. economy. This downturn has also created an opportunity by
substantially reducing the number of projects under construction in the marketplace,
resulting in a very competitive bid climate.
The recommended budget projects that expenditures will exceed revenue, but will
maintain an appropriate Sewer Construction Fund balance. This summary describes the
major projects for FY 2011 -12, the major projects included in the Ten -Year Capital
Improvement Plan, and the revenue streams that will support the planned expenditures.
FY 2011 -12
Capital Improvement Budget
The FY 2011 -12 CIB includes expenditures of approximately $25.9 M for planning, design
and construction of capital projects in four programs:
• Treatment Plant
• Collection System
• General Improvements
• Recycled Water
Each of the programs is divided into subprograms to track different types of work.
Most of the money will be spent on renovation or preservation of capital assets, as shown
in the following table:
Capital Pro
Subprogram
Treatment Plant Program
Planned Expenditure
.
$7.1 million (27 %)
Regulatory Compliance /Planning
$0.7 million
One -Time Renovation
$4.1 million
Recurring Renovation
$2.2 million
Expansion /Capacity Improvements /Miscellaneous
$5,000
Collection System Program
$12.8 million (50 %)
Renovation
$7.8 million
Regulatory Compliance /Planning
$0.4 million
Expansion /Capacity Improvements
$3.4 million
Pumping Stations /Force Mains
$1.3 million
General Improvements Program
$5.4 million (21%)
Vehicles and Equipment
$0.9 million
Management Information Systems
$0.9 million
CSO Facility Improvements
$2.1 million
All Other
$1.6 million
Recycled Water Program
Total
$0.6 million
$25.9
Major Project Emphasis
Although the CIB is made up of funding estimates for many individual projects, each year
there are several major projects which together account for a majority of total estimated
capital expenditures. In FY 2011 -12, the emphasis will be on 15 large projects, which
together account for $16,777,000, or 65 percent of the total estimated expenditures.
Estimated FY 2011 -12 expenditures for each of these projects are noted below.
Collection Systems Operations Department Facility Improvements
FY 2011 -12: $2,025,000
Estimated total project cost: $13,654,000
This project consists of design and construction of a new Collection Systems Operations
administration, crew, and warehouse building at 1250 Springbrook Road in Walnut Creek.
The project also includes site improvements such as new paving and landscaping.
Completion is scheduled for summer 2011.
The Collection System Operations Department Facility building is scheduled for completion in
summer 2011.
Lafayette - Pleasant Hill Road Trunk Sewer
FY 2011 -12: $1,900,000
Estimated total project cost: $2,411,000
This project will construct a 15 -inch relief sewer along Pleasant Hill Road from Springhill
Road to Stanley Boulevard in Lafayette. Deficient sewers in nearby neighborhoods will be
upsized within their current alignments.
South Orinda Sewer Renovations — Phase 5
FY 2011 -12: $1,800,000
Estimated total project cost: $2,167,800
This project will replace /rehabilitate approximately 12,000 feet of 6 -inch through 8 -inch
sewer pipe at several sites in Orinda.
�t
Construction in a narrow easement between two properties, not unusual for many of the District's
renovation projects.
Walnut Creek Sewer Renovations — Phase 8
FY 2011 -12: $1,800,000
Estimated total project cost: $2,149,700
This project will replace /rehabilitate approximately 10,000 feet of 6 -inch through 8 -inch
sewer pipe at several sites throughout the City of Walnut Creek and neighboring
unincorporated areas.
Open -cut construction in the street can be less disruptive than construction in easements.
Lafayette Sewer Renovations — Phase 7
FY 2011 -12: $1,790,000
Estimated total project cost: $2,113,600
The project will replace /rehabilitate approximately 13,000 feet of 6 -inch and 8 -inch sewer
pipe at several sites throughout the City of Lafayette and neighboring unincorporated
areas.
Treatment Plant Piping Renovations — Phase 6
FY 2011 -12: $1,000,000
Estimated Total project cost: $1,145,000
This is the continuation of a project to replace or renovate aging piping systems in the
treatment plant.
Pump & Blower Building Seismic Upgrade
FY 2011 -12: $1,000,000
Estimated total project cost: $2,155,000
In 2009, a seismic evaluation of treatment plant facilities was completed. Included in the
evaluation are recommendations to retrofit the Pump and Blower Building to comply with
current seismic design standards.
Vehicles & Equipment Acquisition
FY 2011 -12: $891,000
Estimated total project cost: $891,000
Purchases of vehicles and major equipment are made under this capital project.
Auxiliary Boiler Burner Upgrade
FY 2011 -12: $750,000
Estimated total project cost: $855,000
This project will replace the burners in the two auxiliary boilers and modify related ancillary
systems to meet upcoming air emissions regulations that require significant reductions in
NO emissions.
Primary Treatment Renovation
FY 2011 -12: $750,000
Estimated total project cost: $6,540,000
This project will renovate or replace the water and air supply pipelines at the primary
sedimentation tanks. This project also includes improvements to the scum and grit
systems and a new baffle system to improve solids settling.
The new Sludge Handling
Facility is almost complete.
Treatment Plant Protective Coatings — Phase 4
FY 2011 -12: $725,000
Estimated total project cost: $835,000
This project will clean and coat critical areas in the headworks, SCB basement, Pump and
Blower Building basement, clear well, sludge blending area, and the fuel oil storage tanks.
Application of coatings extends the useful life and minimizes corrosion of treatment plant
equipment, piping, and surfaces.
Outfall Improvements — Phase 6
FY 2011 -12: $685,000
Estimated total project cost: $1,085,000
This project will inspect both the land and submarine portions of the treatment plant
outfall, and will make repairs as needed.
Information Technology Development
FY 2011 -12: $602,000
Estimated total project cost: N/A
This project provides funding for the
replacement and continued development
of the District's computer and
telecommunications technology.
San Ramon Pump Station Upgrades
FY 2011 -12: $549,000
Estimated total project cost: $579,000
This project will replace existing dry weather pumps to provide the capacity needed to
handle increased flow from the San Ramon area.
Seismic Improvements for HOB
FY 2011 -12: $510,000
Estimated total project cost: $2,523,000
Structural steel frames constructed before the most recent Northridge earthquake may
weaken during an earthquake and be unable to resist the forces generated during a
seismic event. These steel framing problems in combination with the building's flexibility
are the primary reasons for the HOB's seismic vulnerability. This project will retrofit the
HOB to ensure a life- safety level of structural performance.
Ten -Year Capital Improvement Plan
The District updates its Ten -Year Capital Improvement Plan each year to guide long -range
policy and to:
• Identify, prioritize, and schedule capital projects for the ten -year period.
• Provide financial resources for completing those capital projects.
The plan covers FY 2011 -12 through FY 2020 -21 and projects total expenditures of
approximately $345 million (in 2011 dollars), or an average of $34.5 million per year, as
described in the following table:
Capital Pro Expenditure Cate
Renovation (one -time and recurring)
Dollars
$ 208 million
Percent
60%
Expansion (capacity increases for new customers)
$ 37 million
11%
Regulation- Driven
$ 84 million
24%
Miscellaneous
$ 16 million
5%
Total 10 -Year Capital Program Expenditures
$345 million
100%
The plan is divided into the same four programs as the budget. While a large portion of
the plan is devoted to ongoing renovation, several projects address capacity and
regulatory issues. The following table lists projected ten -year expenditures by program
and subprogram. A brief description of the major projects /programs not described in the
FY 2011 -12 Capital Improvement Budget section follows the table.
Capital Pro
Treatment Plant Program
Planned 10 Year Expenditure
$146.5 million (42 %)
Regulatory Compliance /Planning
$81.3 million
One -Time Renovation
$33.9 million
Recurring Renovation
$28.8 million
Expansion /Capacity Improvements /Miscellaneous
$2.4 million
Collection System Program
$171.6 million (50 %)
Renovation
$120.1 million
Regulatory Compliance /Planning
$2.5 million
Expansion /Capacity Improvements
$34.6 million
Pumping Stations /Force Mains
$14.3 million
General Improvements Program
$21.5 million (6 %)
Vehicles and Equipment
$5.4 million
Management Information Systems
$5.6 million
All Other
$10.5 million
Recycled Water Program
Capital Improvement Plan Total
$5.5 million (2 %)
$345.1 million (100%)
District Seismic Improvements: Substantial changes have been made to seismic
design standards. Recent evaluation of District buildings identified a number of necessary
improvements to address the new standards. These improvements will provide increased
safety for personnel and protection of plant processes.
Buildin
Solids Conditioning Building
Construction in Year
2013 -14
$5,055,000
Plant Operations Building
2015 -16
$1,240,000
Pump & Blower Building
2011 -12
$2,155,000
Warehouse
2016 -17
$895,000
Laboratory
2015 -16
$192
Headquarters Office Building (in GIP)
2011 -12
$2,523,000
Rental Properties (in GIP)
2011 -12
$640,000
Total Seismic Improvements
$12,740,000
The Bay Area is seismically active.
District facilities have been evaluated
and $12.7 million is currently budgeted
for retrofitting various buildings over the
next several years.
Sewer Renovation Program: In 2002, the District initiated a long -term program to
televise all 1,447 miles of its gravity sewers. To date, the program has televised
approximately 1,100 miles of sewers. Taking into account sewer mains renovated since
the start of the TV program, approximately 53 miles of sewer mains (6 -, 8 -, and 10 -inch
pipe) remain to be renovated. The ten -year plan targets renovating 77 miles of sewer
mains, which will allow for adding line segments to the renovation program as they are
identified by the ongoing TV program. (Ten -year plan: $120,120,000 estimated total
project cost — includes TV programs, large- diameter pipe renovation, and cathodic
protection.)
TV inspection of the collection
system helps to guide sewer
renovation plans.
Nitrification: The next ten years hold the potential for significant regulatory changes.
These include potential requirements for nitrification (convert ammonia to NOA increasing
pollutant removal from incinerator air emissions, and reducing greenhouse gas emissions.
Recent regulatory trends in the Delta have focused on ammonia as a potential stressor
that is contributing to the Delta's decline. For this reason, funding for nitrification has been
included in the ten -year plan to represent this potential need. (Ten -year Plan:
$71
Sewer Capacity Program: The Collection System Master Plan was updated in 2010 to
reflect recently approved land use and new flow- monitoring data. The Capital Plan has
been updated to reflect the new results. Sewer capacity projects will include trunk sewers
on Pleasant Hill Road in Lafayette, Lancaster Road in Walnut Creek, Moraga Way in
Orinda, and the San Ramon Schedule C Interceptor. (Ten -year plan: $34,631,000
estimated total project cost)
Treatment Plant Piping Renovation and Replacement Program: The replacement
value of treatment plant facilities is conservatively estimated at $600 million. Piping
systems are an important and critical component of the treatment plant infrastructure.
These systems will continue to be evaluated and prioritized for repair or replacement.
(Ten -year Plan: $12,410,000)
Potential Future Projects
Not Included in 2011 Capital Plan
The projects listed in this CIP are those that are reasonably certain to be undertaken.
However, when evaluating project priority and cash flow impacts, consideration must be
given to potential projects that are uncertain and not currently included in the plan. If
some or all of these potential projects listed below are required to be undertaken, there
could be a significant impact on the financial forecasts contained in the plan.
POTENTIAL PROJECTS NOT IN 2011 CAPITAL IMPROVEMENT PLAN
Description
Time frame
Estimated
total project
Estimated
probability
cost
Treatment Plant
Greenhouse Gas Reduction - Regulations are under development that
will require significant reductions in greenhouse gas emissions. The
appropriate reduction plan may include diversifying our energy portfolio by
2 -5 yrs
$15-$30
Medium
adding a renewable energy source, such as solar or wind. Alternatively,
million
the requirements may be satisfied by buying carbon dioxide allowances on
the open market or modifying the operation of our cogeneration facility.
Nutrient Removal — Construct facilities for nitrogen and phosphorus
10 -20 yrs
$70 million
Low
removal to address more stringent receiving water standards.
Recycled Water Projects
Martinez Refinery Recycled Water Project - Construct new treatment
and distribution facilities to supply up to 20 mgd to the Shell and Tesoro
3 -10 yrs
$100
Medium
refineries for cooling tower makeup and boiler feed water. Money for
million
planning activities only is budgeted.
Concord Landscape Recycled Water Project - Construct recycled
water distribution facilities to supply the Diamond Boulevard commercial
2 -5 yrs
$5 million
Medium
area of Concord. Money for planning activities only is budgeted.
Contra Costa Country Club Golf
Course is the District's largest
recycled water customer, using
almost 100 million gallons each year
for golf course irrigation.
Capital Revenue /Cash Flow/
Sewer Construction Fund Balance
The Capital Program is funded by a number of different fees and charges as described below.
Capacity Fees: A capacity fee is paid by each new connector to the District's collection system.
This fee is recalculated each year and represents the cost of buying into the existing assets of the
District. The revenue from these fees is dependent on the housing market and rate of new
connections.
Pumped Zone Fees: For connections in an area where pumping is necessary, an additional
capacity fee is charged to buy into the existing pumping station assets of the District. The revenue
from the pumped zone fees is highly dependent on the housing market and the rate of new
connections in the pumped zones.
Property Taxes: Historically, the District has received significant revenues from property taxes.
In 1978, when Proposition 13 reduced the taxation rate on property, the State Legislature urged
enterprise special districts to shift to user fee financing. In FY 1992 -93, the State of California
began diverting portions of the property tax revenue. The District still receives a significant
amount of property taxes which are allocated entirely to debt service and the Capital Program. If
those taxes were to be permanently diverted, a significant increase in other forms of revenue,
particularly the Sewer Service Charge, would be necessary.
Sewer Service Charges: The Sewer Service Charge is an annual charge placed on the property
tax rolls which funds operation and maintenance costs as well as a portion of the Capital Program.
Each year the capital revenue from all other sources is estimated, and the additional revenue
needed to fund the planned expenditures, after consideration of any increase or decrease to the
Sewer Construction Fund Balance, is generated by adjusting the capital component of the Sewer
Service Charge.
Reimbursements from Others: The District receives reimbursements from others for capital
expenditures which benefit others. For example, the City of Concord is served by a contract
which requires them to pay aflow- proportional share of capital projects which benefit Concord
(such as projects to improve wastewater treatment facilities and large interceptors.) Also, the
District has formed Assessment Districts to promote the installation of sewers in unsewered areas
and loaned money from the Sewer Construction Fund for construction of the sewers. This money
is then repaid with interest to the Fund.
Interest: Interest is earned on the balance of the Sewer Construction Fund, the money held in
reserve to fund future capital projects. The interest earned is returned to the fund.
Bond Proceeds: While the District generally follows a pay -as- you -go philosophy, Sewer Service
Charge rate increases can be mitigated by utilizing bond funding to spread the payments over
time, particularly for large, one -time projects that will benefit future ratepayers..
The total budgeted revenue for FY2011 -12 is $22,246,000, assuming a $30 Sewer Service
Charge rate increase.
FY 2011 -12 Capital Budget Revenue
($000)
Interest Sewer Service
$265 Charge ($30
Taxe.c
$6
Conc
increase)
$6
III Other
$1
$2,549 Capacity &
Pumped Zone Fees
$4,934
Sewer Service Charge Increase: One of the District's goals is to maintain responsible rates
while investing in the capital programs needed to protect public health and the environment,
maintain existing assets, respond to regulatory and community concerns, and accommodate
planned growth. The District has always prided itself on providing a high level of service at
reasonable rates. When the severity of the economic downturn became apparent, the District
Board of Directors, after thoughtful debate, elected not to raise rates for two years in order to
provide some financial relief to customers. Staff responded to the Board's actions by
implementing cost - saving measures which resulted in a savings in operating and maintenance
costs of over $2 million in 2009 -10 and $2.5 million in 2010 -11. Because the economic downturn
resulted in significant bid savings on capital projects, staff recommended, and the Board agreed,
that the Capital Program should continue and needed projects should be built. In order to fund
these projects without raising rates for two years, $30 million in bonds were sold. This increased
the District's bonded indebtedness to over $50 million and the annual debt service obligation to
$5.6 million.
FY 2010 -11 has been challenging for the District. Increased expenditures for regulatory mandates
and reduced revenues due to the economic downturn result in the need for a significant Sewer
Service Charge rate increase if the District is to continue providing the same level of service and
investing in infrastructure. Staff is recommending a two -year Sewer Service Charge increase of
$30 per year.
The following chart compares the District's rates to 26 other Bay Area sanitary agencies. If the
increase is adopted, the District's rates will still be well below the mean rate for these agencies.
Sewer Service Charge Rates for Bay Area Agencies
Revised April 6, 2011
10111 Residential Sewer Service Charge
Sewer Service +Property Tax
Agency Charge0> Revenue (2)
Petaluma
$889
$889
Santa Rosa
$855
$855
Rodeo Sanitary District
$666
$723
Crockett Sanitary District
$632
$859
Oakland (EBMUD for treatment)
$581
$539
Ironhouse Sanitary District
$574
$585
Richmond
$547
$547
Berkeley (EBMUD for treatment)
$496
$496
Benicia
$496
$496
Mountain View Sanitary District
$491
$518
Brentwood
$489
$489
Livermore
$489
$489
Vallejo
$465
$465
Novato
$462
$462
2010 -11 Mean Rate
$458
- --
Napa Sanitation District
$429
$429
Pittsburg (DDSD)
$407
$434
Stege SD (EBMUD for treatment)
$395
$416
CCCSD 2012 -13 Staff Recommended Rate
$371
$444
Pleasanton
$368
$368
Fairfield (FSSD)
$343
$343
CCCSD 2011 -12 Staff Recommended Rate
$341
$414
Antioch (DDSD)
$336
$363
Bay Point (DDSD)
$333
$413
Dublin San Ramon Services District
$314
$326
CCCSD Current 2010 -11 Rate
$311
$384
Concord (CCCSD for treatment)
$306
$306
Union Sanitary District
$290
$290
West County Wastewater District
$256
$276
Oro Loma Sanitary District
$178
$178
Rates in effect on July 1, 2010.
MAnnual Sewer Service Charge per Residential Unit Equivalent, or RUE.
(2) Some agencies receive property tax revenue ranging from $11 to $227 per RUE.
RUE from property taxes.
CCCSD receives $73 per
UASH FLOW/SEWER CONSTRUCTION BALANCE
As part of the Ten -Year Capital Improvement Plan, estimates of expenditures and revenues are
made and a cash flow projection is developed to show the relationship of revenues to the Sewer
Construction Fund (SCF) balance.
Each year, the Board of Directors sets the amount of the capital component of the Sewer Service
Charge as needed to fund the planned capital program. The capital component must be adequate
to maintain the SCF balance needed to meet the District's cash flow needs. This balance is in the
range of $30 to $35 million, depending on the timing of payments needed for District financial
obligations. The balance above that needed for cash flow is available to fund current or future
capital projects.
For a number of years, the Capital Program has operated with a significant deficit, which was
offset in FY 2009 -10 by selling $30 million in bonds. This year, staff has recommended increasing
the capital component of the Sewer Service Charge to bring revenue more in line with expenses.
Even with such an increase, a deficit of approximately $3.7 million is budgeted and will be drawn
from the Sewer Construction Fund.
Sewer Construction Fund Revenues and Expenditures
A summary of projected FY 2011 -12 Capital Improvement Program revenue and expenditures is
presented below:
With $30 Sewer Service
Revenues
Charge Increase *
Facilities Capacity Fees
$4
Pumped Zone Fees
562
Interest
265
Property Taxes
6
Sewer Service Charges
6
Reimbursements from Others:
City of Concord
2
Recycled Water Sales **
110
Alhambra Valley
481
Developer Fees, Charges, Other
491
Total Revenues **
$22
Expenditures
Treatment Plant Program
$7
Collection System Program
12, 840, 000
General Improvements Program
5
Recycled Water Program
550
Total Expenditures $25
A summary of Sewer Construction Funds Available impact is presented below:
Projected Expenditures
Projected Revenues
Draw from Funds Available
• 111
-$2212461000
$316681000
More specific information regarding expenditure categories is included in the Capital Improvement
Plan.
* Has not been recommended by Capital Projects Committee or approved by District Board.
** Revenue is first recorded in the O &M budget until O &M costs are offset. Any additional revenue will be
recorded in the Sewer Construction Fund.
Historical Capital Improvement Program
To place this year's proposed CIB and CIP in perspective, it is helpful to review historical
expenditures and revenues. Annual capital expenditures in inflation- adjusted dollars have
varied from year to year, depending on the need for large, one -time projects. On average,
spending has averaged around $30 million per year. This rate of spending represents a
replacement of all assets about once every hundred years, based on an estimated
replacement value of approximately $3 billion for the treatment plant, collection system,
and pumping station facilities.
Historically, the District has attempted to keep expenditures close to revenues so as to
avoid reducing the Sewer Construction Fund balance below $30 - $35 million. This allows
the Fund to act as the bank to meet the District's cash flow needs between its biannual
receipt of Sewer Service Charge and property tax revenue collected by Contra Costa
County. Capital revenues can be highly variable.
The District has two discretionary sources of capital revenue, the Sewer Service Charge
capital component and bond sales. In 2009 -10, the District chose to augment the Sewer
Construction Fund balance with $30 million in bond proceeds in order to ease the
pressure on Sewer Service Charge rates and allow the capital program to move forward
with needed projects. This decision was deemed prudent because the competitive
construction bidding climate occasioned by the poor economy has resulted in construction
costs being reduced by 20 -30 %, providing significant savings for the program. The
District will continue to balance capital expenditures and revenues to ensure that
appropriate investments are made in capital facilities while maintaining an adequate
Sewer Construction Fund balance to meet cash flow needs.
Property Tax and Capacity Fee Trends
$18,000,000
$16,000,000
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
State borrowing and Repayment
Accelerated Housing Market
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The Ten -Year Capital Improvement Plan includes over $145 million to renovate and improve the
wastewater treatment facility located in Martinez.
Questions?
For additional information about the District's Capital Improvement Budget and Ten -Year Plan,
please contact Director of Engineering Ann Farrell at (925) 229 -7302 or
Capital Projects Division Manager Tad Pilecki at (925) 229 -7273.