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Home My WebLink About08.b. (Handout #1)r Agenda Item 8.b. Financial Planning and Sewer Service Charge Review For the Fiscal Year 2012 -13 Budget Process February 16, 2012 Board Meeting Presented By Deputy General Manager/ Director of Engineering Ann Farrell Central Contra Costa Sanitary District Selected 2011 District Accomplishments • NACWA Platinum 13 Award; Platinum 14 in 2012 • 37 SSOs — less than three per 100 miles of sewer • 11th Certificate of Achievement for Excellence in Financial Reporting • New CSO Facility Ribbon Cutting • 9th Semester of Operator Training Program • More than 15 tons of pharmaceuticals collected in 3 years • SPROW Easements Clean Up • Annexation Backlog LAFCO Award 1 M State of the District Overview • Board Strategic Plan Continued Focus: - Funding Pensions - Recycled Water - Reasonable Rates - Meeting Current and Future Regulations - Efficiency through Technology • Meeting Mission and Goals: - Excellent Compliance Record - Excellent Customer Service - Responsible Rates - High Performance Organization Background - Financial • Two -year $30 per year SSC increase adopted June 2011 • 2011 -12 O &M Expense Projected to be $1.8 million under budget with draw down of O &M reserve of $2.5 million • 2011 -12 Capital Program Projected to draw down SCF $5.5 million • Total O &M and Capital Funds Available 7 -1 -12 projected to be $54 million • Unfunded liabilities increased significantly since June 2011 • Projected needed 10 -Year Plan SSC increases higher than presented in June 2011 E IN 2011 -12 Capital Program Mid -Year Projection 2011 -12 Capital Program Budgeted Projected Total Expenditures $25.9 million $27.7 million Total Revenue $22.2 million $22.2 million Variance -$3.7 million -$5.5 million SCF Balance 6/30/12 (Beginning balance 6/30/11 $52.1 million) $48.4 million $46.6 million Total 2011 -12 Capital Budget by Program Mid -Year Status Report Program Budgeted Expenditures Projected Actual Expenditures Treatment Plant $ 7,082,000 $ 8,472,000 Collection System $12,840,000 $11,553,000 General Improvements $ 5,442,000 $ 6,496,000 Recycled Water $ 550,000 $ 1,128,000 Total $2539149000 $2756499000 2011 -12 Mid -Year Report $1.8 M Major Expenditure Variance Capital Program Project Amount Treatment Plant Primary Demolition Added + $1.2 M Collection Systems Renovation Projects Deferred - $1.3 M General Improvements CSO Building Delayed + $1.3 M Recycled Water Concord REW Added +$ .6M Total I NA + $1.8 M :1 Review of Current and Future Projected SSC Rates and Drivers 10 -Year Financial Projections HISTORY OF CENTRAL SAN SEWER SERVICE CHARGE RATES Q ICn _ Shown with Property Tax Component In Addltlon to the Rate Current Sewer Service Charge Rankings for Bay Area Agencies _....... ___. _.... ___... ........._.___...__.__.... ..... _... ..._. ... AVR'Par Rank lrom aonnectlon, It SSC Plua en 88Cn1 lowpt known AVR rlr I 1 $ hta Roes .. , ..,.� ,� U718, .i 11' 1 N/A t 1709 23 , 53 1 1 1 $953 22 I� 5698 11 11 $57 _$_742 20 11111 $832 20 59 i 21 lmnhouse Sarittag Diatrtct 3592 1 1 _ $11 X11 111 1 79 Oaklantl EBM UD for treatmerrt�_ $572 fjlll!1�1�1�1�1�1� 1111 1111 $572 _ _18 Rlohmond $547 17 N/A $547 17 Brentwood $547 1_7 N/A $547 17 Barkele EBM UD for treatment $496 16 N/A 96 14 Senlcla _ $496 16 N/A $495 14 -- Mountain View Sariftary District $4$1 15 $516 16 Ltvermom $4a9 14 N/A $469 12 2011 -12 Mean Rate of Agerickis Su—eyed $494 Valle $495 13 N/A 13 Novato Current Sewer Service Charge Rankings for Bay Area Agencies _....... ___. _.... ___... ........._.___...__.__.... ..... _... ..._. ... AVR'Par Rank lrom aonnectlon, It SSC Plua en 88Cn1 lowpt known AVR Rank iron rowoat (wtth AVR $ hta Roes $1,099 23 N/A t 1709 23 Petaluma 53 22 N/A $953 22 Rotlao Sanitary Dtstrfct 5698 2l $57 _$_742 20 Crockett Sancta Dtstrlct $832 20 59 i 21 lmnhouse Sarittag Diatrtct 3592 ; 19 _ $11 $603 79 Oaklantl EBM UD for treatmerrt�_ $572 18 N/A $572 _ _18 Rlohmond $547 17 N/A $547 17 Brentwood $547 1_7 N/A $547 17 Barkele EBM UD for treatment $496 16 N/A 96 14 Senlcla _ $496 16 N/A $495 14 -- Mountain View Sariftary District $4$1 15 $516 16 Ltvermom $4a9 14 N/A $469 12 2011 -12 Mean Rate of Agerickis Su—eyed $494 Valle $495 13 N/A 13 Novato 12 _ 344 _$495 $508 15 Na Ssnttatlon Dtstrlot 3435 11 _ N/A $435 _ a ,;M DDSD Pleasanton $431 3412 10 9 _. _ 527 N/A — $458 - -$412 10 5 Scapa SD (EBMUD for traatment Be Point DDSD _ __$395 $389 a 7 - $21 $80 $416 $469 7 _ 11 CCC80 2012 -13 ROW - eRacg a 7/1/12 $971 a S73 $444 e Antioch DDSD 5383 5 327 $380 5 Dublin San Ramon Services District 3345 4 $12 $357__ 4 Falriblo ___ $343 3 _ N/A $343 3 CCCSD 2011 -12 Rete - eflacttve 7/l/11 1 73 14 Concord CCCSD for treatment _ ^_ $324 2 ^I 1 N/A $324 2 Union Sanitary Dlstriot $304 1 _ N/A $304 !I 1 West County Wastewater Distnct 1 $20 $324 2 Ora Lome Sanka�Dletnct,______ $188 -___ lowest_ N/A _ $198 ___lowest Unfunded Liabilities Continue to Grow Total Unfunded Liabilities vs. Cash Investments $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 2005 -08 2008-07 2007 -08 2008 -08 200 9-10 2010 -11 2011 -12 2012 -13 2013.14 L Total UM nded Uahlfltfes —Cash 8 Irneshnents lJ 2010 -11 2013 -14 GASB -45/ OPEB $ 81 million $ 73 million CCCERA UAAL $ 40 million $122.5 million Outstanding Debt $ 51.8 million $ 40.6 million Terminal Pay $ 5.1 million $ 4.0 million Total Unfunded Liability $177.9 million $ 240.1 million Total Unfunded Liabilities vs. Cash Investments $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 2005 -08 2008-07 2007 -08 2008 -08 200 9-10 2010 -11 2011 -12 2012 -13 2013.14 L Total UM nded Uahlfltfes —Cash 8 Irneshnents lJ a r 10 -Year Expenditure Increase Since 2011 Plan Driven by Employee Benefits • Employee benefit cost increased $31.4 million over ten year period - CCCERA cost increase $24.7 million - GASB -45 cost increase $25.7 million - Savings in other accounts partially offset the CCCERA and GASB -45 increases • Total 10 —Year O &M Expense increased by $31.9 million • 10 —Year Capital costs reduced by $13.7 million $358 Million 10 -Year Capital Plan Is a Responsible One That Funds.... • Treatment Plant — Incinerator /Solids Handling Impvmts $12.2 M — Primary Sedimentation Renovation $9.7 M — Cogeneration Replacement/Alternative Energy $71VI — Nitrification $70 M — Contaminated Soils Remediation $20 M • Collection System — Identified Renovation Needs Plus $125 M — Identified Capacity Needs $20 M — Pumping Station Renovation $10 M — CAD's and Developer Sewers $13 M • General Improvements and Treatment Plant — Seismic Improvements $10.2 M 7 Regulations Drive our Business.... Clean Air Act Title V Permit AB 32 Ammonia /Nutrients Removal Toxicity SSO Reduction New SSS WDR *NPDES Permit` 91 A J What is the view of the future for CCCSD? 'J 7R� N � ` 1 4 A i Where do we want to be on the innovation curve? 0 � MajoAty �i Early �+ FEOpLn m Q 40t Innovrloe MaJotq L Ferry LaW Time of Adoption ---------------------------- - - - - -- SSO Downward Trend Has Been Significant Since Start of Renovation Program 10 -Year Plan Provides for Alternatives to Fund Robust Capital Program and Significant Pay Down of Unfunded Liabilities • Two revenue scenarios examined - Housing recovery 2013 -14 vs. 2015 -16 • Two CCCERA payment scenarios examined - Pay down $75 million vs. $122.5 million • Two SSC increase scenarios examined Rate smoothing over 10 -year period vs. higher initial rates 10 .a Financial Report Summary of Scenarios m D..artpl0 danm.et. U Z Rat. Rat. Rat. •� 9� Prior -Year March 2011 �� Prat -Year Mar 2011 1 Remnmended Smnflra -2ynar WA 3 30 f 30 S 31 f 31 3 31 3 31 3 31 f 31 S 6 3 5$ $97 m 0rr9 _auPro"Per yoar 2012 Prellminary Draft Presented 20 12 PTllmfnflry DM" PTnnntad UnemOnd to W6" T W LO twgaq 2 at 1130/12 Board Finance 2 t 1/3('12 B00N RnenCe empeyee end Tnree IuWT t.ulillmT S 30 $ 34 3 3. $ 34 S 3. S 34 3 3A $ 34 S 34 $ 34 t 977 mtttee end p0na10n. hm utt+ae.ed 3 Baseline Scenario- Uniform $ 30 $ 38 $ 38 $ 38 .ututarivarty It 36 $ 36 $ 36 $ 36 S 36 S 701 Rate Int:rosees saar. 1a 2.—Pt r.waro Baseline Scenario - Two Ba.. W Sa.rma . Untf r m.ra m pOnnwtan nw PraP.M tin 4 $5ftear 88C rate Increases and $ 30 $ 50 S 50 S 27 $ 27 a R.l. Inw..... ...1mlPtana h°alrq 3r111 twl Vb ,th2014101. 1-13. 1 • ad • >• • ae • ae • >s • ae • 3n I. u • ae • x • 701 Butlp.t • Firunw COmmtd.. Irtpat years. Ba.e4ro Sm tarb - Tyro $50 per seine v SC-ftM 3 e P for ITnt- Baseline Scenario plus pay off 4 69C rat. Invennen eM bade] relm met a60w erWlnO rem W $ 30 S ao • 60 $ ?7 s 27 $ 27 $ Z7 t 27 s Z7 f ?7 s e60 $ 22 n.n� TO en needed In NWT W Tin Mt Stenarlo 3. year period. C CCEPA aWtbnal my me a. .Td at 6A CCCERA UAAL by end of 10- $13-0 ffa*W ro 2013-14 and NCreete $ 120 $ 22 $ 22 $ 22 $ 22 $ 22 $ 22 $ 22 $ 22 $ 667 year period; $120 front - loaded Beeellm Smn Pw pay of, to f21.6 ml0orl M 2021-22. Rind. SSC rate Increase In 2013 -14 6 AAL by end a to- Avnllnae tn0 Wt- Fonda 11r 11WTd ro $ 30 • •o • eo • ao 3 22 3 22 3 22 3 22 3 22 f 22 • 693 fc= 1 }1 A aW 2016 -16 � may need Ylon nn IMldnanp. Frmlioadtn0 NTe Sso rme vlcrmme m m f Naha, CC UI rower ro W. a hgner CCCERA cmtw CCCERA a'tionai mymeTa.tarl at Benenro SCenndO Poe Pay OO $130 Tt W tr12(113.14 end lnfiBeM CCGEf1A UAAL by eM a 10• m 021.0 rnWOn M 2021.22 DO not 6A a! period: 5120IrOn1ipe0e0 need erron- Trm ltrTndrq, FrOnl- f 30 f lm f 22 t 22 $ 22 f 22 f 22 f 22 f 22 f 22 t 8IS] S9G Tte tri�mpe In 2113.14 CM $121 Tin eiCTn6e N 211 }14 yglg rata W be.110htly bwar en 6.YnedO 6A Scenario ID Description rt.tn Rat. Rate F.I. Rat. Rai. Rat. Rat. Rat. Rat. aer Bndine Prior -Year March 2011 1 Recommended Scenario - 2 year $ 30 $ 30 S 31 $ 31 $ 31 $ 31 $ 31 $ 31 $ 5 $ 5 $ 597 rate ordinance of up to $30/year 2012 Prellminary Draft Presented 2 at 1130/12 Board Finance $ 30 $ 34 $ 34 $ 34 $ 34 $ 34 $ 34 $ 34 $ 34 $ 34 $ 677 Committee 3 Baseline Scenario- Uniform $ 30 $ 38 $ 38 $ 38 S 36 It 36 $ 36 $ 36 $ 36 S 36 S 701 Rate Int:rosees Baseline Scenario - Two 4 $5ftear 88C rate Increases and $ 30 $ 50 S 50 S 27 $ 27 $ 27 $ 27 $ 27 $ 27 It 27 $ 660 then rates as needed In future years. Baseline Scenario plus pay off 5 CCCERA UAAL by and of 10- $ 30 All 80 $ 80 S 60 $ 22 $ 22 $ 22 S 22 $ 22 $ 22 $ 653 year period. Baseline Scenario plus pay off 6A CCCERA UAAL by end of 10- $ 30 $ 120 $ 22 $ 22 $ 22 $ 22 $ 22 $ 22 $ 22 $ 22 $ 667 year period; $120 front - loaded SSC rate Increase In 2013 -14 11 Conclusions • No rate decision needed this budget cycle. • Increases in unfunded liabilities continue to drive rate increases. • 10 -Year Plan examines a range of possible approaches to funding District operation & maintenance, unfunded liabilities, and capital requirements. • More detailed evaluation of alternatives to pay down CCCERA UAAL to follow in March. 12