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BUDGET AND FINANCE AGENDA 03-12-12
SPECIAL MEETING OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT BUDGET AND FINANCE COMMITTEE Chair McGill Member Nejedly Monday, March 12, 2012 3:00 p.m. Executive Conference Room 5019 Imhoff Place Martinez, California INFORMATION FOR THE PUBLIC ADDRESSING THE COMMITTEE ON AN ITEM ON THE AGENDA BOARD OF DIRECTORS: JAMES A. NEJEDLY President DAVID R. ULLIAMS President Pro Tem BARBARA D. HOCKETT MICHAEL R. MCGILL MARIO M. MENESINI PHONE: (925) 228 -9500 FAX: (925) 676 -7211 www.centralsan.org Anyone wishing to address the Committee on an item listed on the agenda will be heard when the Committee Chair calls for comments from the audience. The Chair may specify the number of minutes each person will be permitted to speak based on the number of persons wishing to speak and the time available. After the public has commented, the item is closed to further public comment and brought to the Committee for discussion. There is no further comment permitted from the audience unless invited by the Committee. ADDRESSING THE COMMITTEE ON AN ITEM NOT ON THE AGENDA In accordance with state law, the Committee is prohibited from discussing items not calendared on the agenda. You may address the Committee on any items not listed on the agenda, and which are within their jurisdiction, under PUBLIC COMMENTS. Matters brought up which are not on the agenda may be referred to staff for action or calendared on a future agenda. AGENDA REPORTS Supporting materials on Committee agenda items are available for public review at the Reception Desk, 5019 Imhoff Place, Martinez. Reports or information relating to agenda items distributed within 72 hours of the meeting to a majority of the Committee are also available for public inspection at the Reception Desk. During the meeting, information and supporting materials are available in the Conference Room. AMERICANS WITH DISABILITIES ACT In accordance with the Americans With Disabilities Act and state law, it is the policy of the Central Contra Costa Sanitary District to offer its public meetings in a manner that is readily accessible to everyone, including those with disabilities. If you are disabled and require special accommodations to participate, please contact the Secretary of the District at least 48 hours in advance of the meeting at (925) 229 -7303. Budget and Finance Committee March 12, 2012 Page 2 Call Meeting to Order 2. Public Comments 3. Old Business *a. Review additional information from Andrew Brown requested by the Committee on last year's 4t" Quarter GASB 45 Trust performance *b. Review response to question regarding voided and reissued check to Sheri Cabral. Staff Recommendation: Review the information and provide direction if needed. 4. Risk Management *a. Review Loss Control Report and discuss outstanding claims Staff Recommendation: Review the report, discuss outstanding claims and provide direction if needed. *5. Review Position Paper setting a public hearing on April 19, 2012 at 2:00 p.m. to consider adoption of a proposed uncodified ordinance to amend the Schedule of Environmental and Development - Related Rates and Charges (Item 4.c. on Board agenda) Staff Recommendation: Review and recommend the Board set the public hearing. *6. Review Position Paper setting a public hearing on April 19, 2012 at 2:00 p.m. to consider adoption of a proposed uncodified ordinance to amend the Schedule of Capacity Fees (Item 4.d. on Board agenda) Staff Recommendation: Review and recommend the Board set the public hearing. *7. Final draft report on Bartle Wells Associates' audit of the District's permit counter and connection fee collection practices (Item 6.a.2) on Board agenda) Staff Recommendation: Receive the report. Budget and Finance Committee March 12, 2012 Page 3 8. Review the 2011 Annual Report of the Deferred Compensation Plan Advisory Committee and corresponding letter from Trucker Huss regarding Board fiduciary responsibility (Item 9.a. in Board Binder) Staff Recommendation: Review the report. 9. Review the updated administrative procedures for emergency withdrawals from the District's 457 Deferred Compensation Plan, giving authority to the Deferred Compensation Advisory Committee to approve or deny emergency withdrawal requests, in accordance with IRS regulations (Item 9.b. in Board Binder) Staff Recommendation: Review and recommend Board approval. 10. Expenditures a. Review Expenditures (Item 4.b. in Board Binder) Staff Recommendation: Review and recommend Board approval. *b. Review Legal Expenditure Summary Staff Recommendation: Review Legal Expenditure Summary. *c. Review P -Card expenditures Staff Recommendation: Review P -Card expenditures. 11. Financial analysis regarding possible funding alternatives for Contra Costa Employees' Retirement Association (CCCERA) Unfunded Actuarial Accrued Liability (UAAL) (Item 6.a.1) in Board Binder) Staff Recommendation: Review and provide input if needed. 12. Reports and Announcements 13. Suggestions for future agenda items 14. Adjournment * Attachment 3,a. HIGHMARK9 CAPITAL MANAGEMENT March 2, 2012 Debbie Ratcliff Central Contra Costa Sanitary District 5019 Imhoff Place Martinez, CA 94553 -4392 Dear Debbie, For 2011, the Plan returned 0.13 %. Plan performance was supported by our small cap stocks which outperformed the benchmark in 2011 by a considerable margin (0.85% vs. - 4.17 %). Our large cap domestic funds and our international equity funds were the largest detractor to performance in 2011. While our fixed income funds posted a positive 4.6% return in 2011, they underperformed the primary benchmark by over 3 %. In 2011, active managers in general struggled to outperform their benchmarks. In a recent report published by J.P. Morgan, it was revealed that 48% of active managers missed their benchmark by 250 basis points in 2011. This is the worst showing since 1998, when 55% of the managers missed by the same amount. Further, 31 % of the managers missed their benchmark by 500 basis points this year. Much of the underperformance from investment managers took place around the month of August. Many managers were positioned aggressively in the late summer months, only to have the market sell -off in response to the downgrading of the U.S. credit rating, as well as the circus surrounding the debt ceiling debate. As the market moved lower in response to these events, as well as the events taking place in Europe, many managers began to reduce their beta (volatility exposure) to the market. However, the market managed to stage an impressive fourth quarter rally, with most of the upward movement taking place in October. Thus, managers were positioned most aggressively when the market sold off the hardest (in August), and they were positioned most defensively, at the time when the market rallied the strongest (in October). The underperformance within active management was felt most strongly in the large cap growth universe where 70% of active managers missed their benchmark (Russell 1000 Growth) by 250 basis points during 2011. Within the District's Plan, for 2011 the Harbor Capital Appreciation Fund returned 0.61 %, which ranked in the 24th percentile of the Morningstar Large Cap Growth Managers Universe, and this corresponded to roughly a 2% underperformance vs. the Russell 1000 Growth Index. The T. Rowe Price Large Cap Growth Fund, while ranking in the 39th percentile on a calendar basis in the same large growth universe, underperformed by over 3.5% compared with the same benchmark. The disappointing performance of our funds in the large cap domestic equity portion of the Plan caused us to make some changes. We replaced the Davis New York Venture Fund with the Columbia Contrarian Core Fund in June of last year. In January of 2012, we removed the HighMark Large Cap Value Fund from the Plan, and we placed the proceeds of this trade into the T. Rowe Price Equity Income Fund. We have reviewed all of the managers that we are currently invested with, and while we are disappointed with the results from 2011, we feel we have solid managers that will post attractive returns in the future. The other notable area in the Plan that lagged in 2011 was our investments in international equities. We invest in funds that focus on both developed international markets, as well as funds that concentrate on emerging international markets. The developed funds would concentrate their investments in larger, more mature markets such as England, France, Japan, and Australia. Emerging Market funds focus their investing in international markets that are either smaller, or have stronger growth rates. Examples of some emerging market nations include: South Africa, China, Brazil, and India. Both emerging and developed international markets provided investors difficult challenges in 2011. For developed markets, the events in Europe provided significant head winds for investors. Over the course of 2011, many feared that Europe would provide another "Lehman moment ", causing our financial system to potentially revisit the events of 2008 -09. Emerging markets were also facing their own set of challenges with many of the emerging market nations facing inflationary headwinds. On numerous occasions throughout the year, emerging market central banks raised their interest rates in response to inflationary pressures. These increases in interest rates, coupled with a modest decrease in growth rates, led emerging markets to sell off in 2011. The MSCI - Emerging Market Index was down -18.4% for the calendar year 2011. This decline in emerging markets not only hurt our emerging market funds (RS Emerging Market Fund - 20.8 %, Lazard Emerging Market Fund -17.7% - 2011 return), but also impacted our other "developed" international equity funds. Our three developed international equity funds have roughly between 10 -20% invested in emerging market nations. The Dodge and Cox International Stock Fund - 15.97 %, HighMark International Opportunities Fund - 15.98 %, and the MFS International Growth Fund - 10.62% all negatively impacted returns for the Plan in 2011. Fixed Income For 2011, the Barclays Aggregate Index gained 7.8 %, Treasuries returned 9.8% and investment grade corporate bonds advanced 8.2 %, underperforming duration - adjusted Treasuries by -338 basis points. The Treasury sector return for the year was the largest annual gain since 2008 as ten -year and thirty -year yields declined by more than 140 basis points, resulting in spectacular returns of 17% and 36 %, respectively. High Yield returned 4.98 %, trailing equal duration Treasuries by -188 basis points. Both the HighMark Bond Fund (+6.61%) and the Pimco Total Return Bond Fund (4.16 %) underperformed the Barclays Aggregate Index benchmark during the year. The common denominator for both funds was their underweight to U.S. Treasuries throughout 2011. As mentioned, Treasuries offered very strong gains for the year, but with the low yields that treasuries offered, not many bond funds were drawn to the allure of a 10 -year treasury yielding 2.5% (today it yields 1.98% 3- 2 -12). In reviewing the strategies of both of our intermediate -term bond funds, while the performance was disappointing, we understand the rationale behind their strategic decisions, and we are comfortable maintaining our investments in both of the funds. In addition to the intermediate -term bond funds, we also maintain a position in the Vanguard short-term Investment Grade Bond Fund. This fund, lagged the benchmark as well, mainly due to the concentration in corporate bonds. As well, the short- duration positioning of the fund also negatively impacted returns. In summary, while 2011 was a disappointing year within several of the asset classes that we invest in, we are encouraged by the performance that we have seen thus far in 2012. We have reviewed our managers, and where we felt we needed to make a change, we have. Best regards, Andrew Brown 3,b, Central Contra Costa Sanitary District March 9, 2012 TO: BOARD BUDGET AND FINANCE COMMITTEE FROM: RANDALL MUSGRAVES, DIRECTOR OF ADMINISTRATION DEBBIE RATCLIFF, CONTROLLER SUBJECT: February 27, 2012 COMMITTEE MEETING There was one outstanding question from the last Board Budget and Finance Committee meeting which required additional staff research. The question and answer is provided below: 1. 188817 Sheri Cabral — Why did this check appear on the expenditure list twice with a third check being voided? The entire batch of checks dated 2 -9 -12 was accidently posted to the wrong accounting period. All were reversed without a check being produced. However, on vendors that are "one time" vendors, a check must be produced and then voided. This is a system constraint. N c LO ca c a0 N H m O O O O O O Z O O 0 O Z U) (Nn OD v W 0 D ca � g IL o o C�c Z O N Q N O N n CL m cc N O O m ¢ W �m��m�. 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(D O d cal O O CI\Ul H i O Z a) > (Nn OD =CU W 0 D m Q U o J2 Z :J Q T O T O N N N N O O O O aaaa —!Ica V; ca O C J O +44 6 N N T fa Co g Co Co 0 u� to 0 m d ca a7 J N c ca a7 2 ISO C d d Y ' Q cp f.- ! (D O d cal O O CI\Ul H i m d ca a7 J N c ca a7 2 ISO C d d Y O cCII N EQ ago Z. UC7 =CU D m Q o J2 :J Q T O T r N N N N O O O O aaaa as a N O r N O O N O N Co N pT N Co N Cl N N U w r N c7 d' v v -0 c 0 0 00� U U c U U O S 16, Central Contra Costa Sanitary District March 9, 2012 TO: BUDGET AND FINANCE COMMITTEE VIA: JAMES M. KELLY, GENERAL MANAGER NW— ANN FARRELL, DEPUTY GENE MAMA` ER AND DIRECTOR OF ENGINEERING 3 FROM: JARRED MIYAMOTO- MILLS, PROVISIONAL ENVIRONMENTAL Y-00120 1� ` SERVICES DIVISION MANAGER SUBJECT: PROPOSAL FOR REVISED CAPACITY FEES AND ENVIRONMENTAL AND DEVELOPMENT - RELATED RATES AND CHARGES At its March 15th regular meeting, the full Board will consider setting April 19, 2012 as the date for a public hearing to receive comments and to consider adopting proposed Capacity Fees and Environmental and Development - Related Rates and Charges. It should be noted that the proposed increases for Development Related Rates and Charges are higher than might be expected. One principal reason for this is that the District's administrative overhead rate was increased from 173% for 2011 -12 to 194% for 2012 -13 (a twelve percent change). If the Board sets the hearing date, staff will conduct a program to engage affected customers in a discussion of the proposals and to notify them of the public hearing. Notices of the public hearing will be posted on the bulletin board in the Headquarters Office Building Lobby and the District's website, and published in the Contra Costa Times and San Ramon Valley Times. In addition, about 300 letters with detailed information will be mailed to those companies and individuals who have specifically requested notice of fee increases, permitted industries, the Home Builder's Association, the Engineering and Underground Contractors' Association, the Associated Building Contractors Golden Gate Chapter, and contractors, architects, engineers and developers who regularly work in the District. An informal meeting on the proposals will be held about one week before the public hearing. In the past, few customers have attended these meetings since our fee setting methodology is generally accepted and proposed changes in fees, rates and charges have been relatively modest. Copies of a draft letter and two reports comprising the proposed outreach mailing are attached for your information, review and comment. We will mail out these letters after the Board sets the hearing date and we have incorporated any review comments. If you have any questions or would like to make comments on the outreach materials, please bring them up at the committee meeting, at the March 15th Board Meeting, or call Jarred Miyamoto -Mills at (925) 229 -7335. JM2: Attachments cc: Board of Directors March 19, 2012 Dear Interested Customer: 1 PHONE: (925) 228 -9500 FAX: (925) 228 -4624 www.centralsan.org JAMES At. KELLY General Manager KENTON L. ALM Counsel for the District (5/0)808 -2000 ELAINE R, BOEHAIE Secretary of the Distri, t PROPOSED REVISIONS FOR CAPACITY FEES, AND ENVIRONMENTAL AND DEVELOPMENT - RELATED RATES AND CHARGES Central Contra Costa Sanitary District (CCCSD) staff has recommended to its Board of Directors that capacity fees, and development - related rates and charges be revised to recover the current cost of providing facilities and services. These fees were last revised on July 5, 2011. Reports discussing each of the two proposals are enclosed for your information. If approved, the new capacity fees, and development - related rates and charges will be effective on July 2, 2012. Capacity Fees: The fees have been calculated so that new customers "buy in" to the current value of all CCCSD assets. This approach was first adopted in 2001, and has been used each year up to and including 2011, when the fees were last increased. Using this approach, each new customer's share in the current value of CCCSD facilities, equipment, land and fund balances is "equalized" with existing CCCSD customers at the time of connection. This is done by dividing the current value of all CCCSD assets by the current number of "Residential Unit Equivalents" (RUE) and charging this amount for new connections. The current and proposed capacity fees for each new residential unit and RUE are: Fee Gravity Service Pumped Service Current {before JulL2, 2012] $5,465 per RUE $7,071 per RUE Proposed (effective July 2, 2012) Change $5,797 per RUE 6.1% $7,422 per RUE 5.0% Capacity fees for nonresidential (commercial, industrial and institutional) projects are also based on "Residential Unit Equivalents," so they will also increase by the same percentages, if the proposal is adopted. Capacity Fees, and Environmental and Development - Related Rates and Charges Page 2 March 19, 2012 Environmental and Development-Related Rates and Charges: Chapter 6.30 of the CCCSD Code establishes environmental rates and charges to recover the costs for permitting of industrial users and regulating septage /grease hauling and disposal. In addition, the schedule includes development - related rates and charges to recover costs to provide the following services: • Permit Issuance • Plan and easement review for main sewer extension projects • Inspection of main sewer extensions and side sewers • Processing of quitclaims and real property agreements • Administration of the reimbursement and capacity use charge programs • Surveying and review of geotechnical engineering reports • Preparing development - related record drawings and adding new development information to CCCSD's maps After a review of the rates and charges in effect since July 5, 2011, CCCSD staff recommended to the Board of Directors that most environmental and development - related fees (57 fee categories) be increased between 1.5 and 7.7 percent, that seven fees affecting a small number of customers be increased between 5.9 and 12.9 percent. In addition, for the first time in many years, CCCSD staff recommended that fees for industrial user permits and septage /grease disposal be increased between 3.4 to 7.7 percent. Outreach Program: CCCSD staff will hold an informal meeting to discuss the proposed change in capacity fees, and development - related rates and charges with interested customers. The meeting will be held in CCCSD's Board of Directors Meeting Room at 5019 Imhoff Place, Martinez, California, and is scheduled for Tuesday, April 10, 2012 at 2:00 p.m. A public hearing to receive comments on the capacity fee, and rates and charges proposals is scheduled for Thursday, April 19, 2012 at 2:00 p.m. in CCCSD's Board of Directors Meeting Room. The draft ordinances to be considered by the Board, and the data and documents on which the fee proposal is based will be available for review ten (10) days prior to the public hearing, as required. If you have questions or would like any additional information, please contact me at (925) 229 -7335, or via e-mail to im2Qcentralsan.org, or call Engineering Assistant Earlene Millier at (925) 229 -7359. Sincerely, Jarred Miyamoto -Mills Environmental Services Division Manager JM2: Enclosures CENTRAL CONTRA COSTA SANITARY DISTRICT Report Regarding the Capacity Fee Proposal March 2012 INTRODUCTION In September 1998, the state enacted SB1760 that requires sewer connection fees to be solely based on one of two methods: 1) a buy -in to existing assets, or 2) the cost of future facilities expansion. This bill was enthusiastically endorsed and supported by home builders' associations statewide since prior to that time sewering agencies used many different approaches to calculate capacity fees In 2001, Central Contra Costa Sanitary District's (CCCSD) method for determination of Capacity Fees was changed from a "hybrid" of the two methods to a "buy -in -to -all assets" approach. This was done to provide a rational, practical, equitable and defensible method to calculate the financial burden of new connections. The buy -in -to -all- assets approach is preferred primarily due to the "facilities- mature" status of CCCSD. In this context, facilities- mature means that the value of existing assets (about $1.68 billion) is many times the value of future facilities expansion needed to accommodate future customers. Stated differently, most of the facilities needed to serve new customers have already been built and paid for by current customers. As a consequence, most of the work envisioned in CCCSD's Capital Improvement Plan is for renovation, replacement or upgrading of facilities to maintain capacity for both current and prospective customers. Charging a Capacity Fee based on the customer buying -in -to -all- assets at the time of connection to the public sewer system equalizes the unit investment of each customer as they move from being a "future" to "current" customer. The following sections discuss CCCSD's Capacity Fee approach and staff - proposed fee adjustments for 2012 -13. CCCSD'S APPROACH TO CALCULATING CAPACITY FEES CCCSD's current method of calculation for Capacity Fees is based on a buy- in- to -all- assets approach. The calculation estimates the "current value" of real property (land), facilities, equipment and the balances in the Sewer Construction, Running Expense, Debt Service and Self Insurance Funds. In the calculation, the current value of each asset category is determined as follows: • Land: The "current value" of investments in real property is estimated based on the opportunity value of like cash investments deposited in CCCSD's temporary investments at the time of each purchase and held at interest to the present, rather than by attempting to determine actual market value. Capacity Fee Proposal March 2012 Page 2 of 3 • Facilities: The current value of investments in physical facilities is estimated by both, 1) escalating each year's facilities expenditures based on the change in the Engineering News Record Construction Cost Index for the San Francisco Bay Area (ENR- CCI -SF), and 2) applying straight -line depreciation using the following life cycles with no salvage value. Please note that a category for "Mains (Renovation Program)" has been included again this year in the current value of facilities for determination of Capacity Fees. This category accounts for CCCSD's significant investment since 1988 in life -cycle replacement and renovation of sewers 10- inches in diameter and smaller. This work renews capacity in these smaller sewers for the benefit of both existing and new connectors and reduces future maintenance costs. Average Useful Life: Gravity Sewers Interceptors 150 years Trunks 100 years Mains (Renovated by District) 75 years Treatment Plant & Pumping Station Facilities Tanks /Foundations 100 years Buildings 75 years Mechanical, Electrical & Control Equipment 30 years Recycled Water Facilities Pipelines 50 years Mechanical, Electrical & Control Equipment 30 years General Improvements Buildings 50 years Mechanical /Electrical Equipment and Furnishings 25 years Vehicles and other Equipment 10 years Major Repairs /Replacements 10 years Capacity Fee Proposal March 2012 Page 3 of 3 • Fund Balances: Prior fiscal year -end balances for the Sewer Construction, Running Expense, Debt Service and Self Insurance Funds are used. The Sewer Construction Fund Balance is reduced by the principal value of CCCSD's outstanding debt. After estimating the "current value" for an asset category, the component of the Capacity Fee attributable to that category is calculated by dividing current value by the current number of customers (number of Residential Unit Equivalents: "RUE "): Value of Assets Buy -in Fee = - - - -- Number of Customers (RUE) RECOMMENDED CAPACITY FEE INCREASES Staff recommends that the Board consider adopting Capacity Fees for the 2012 -13 fiscal year by applying the valuation approach and facilities life cycles described above. The proposed fees are: Fee Category Current Proposed % Change Gravity Service $5,465 per RUE $5,797 per RUE 6.1% Pumping Service $7,071 per RUE $7,422 per RUE 5.0% The calculation of the proposed fees is shown in Table 1. If the recommended Capacity Fees are adopted by the Board of Directors, staff estimates that approximately $270,000 in additional annual revenue will be generated in fiscal year 2012 -13, based on its projection of 450 Residential Unit Equivalents [RUE] to be connected in the gravity zone and 350 RUE in the pumped zone. The recommended fee calculation approach is a rational, practical, equitable and defensible method to determine the financial burden of new connections. A comparison of the proposed Capacity Fees to the fees charged by neighboring agencies is presented in Table 2. EM:JM2 N Of O M C) r O N O M M o r t N r � N w LL 4) t 7 C � Ow � d vV U� to H da LL r 20 Lu m •Q. T HU°? 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N Cci D E ttl o m V v V` O N Cd O cL ° C •V � 4) J LL fn d v i m C 3 LL d d CO d d m LL d � N LL X = Lu Cc J tm 3 = N J W N �F LO It o tD P 4A 4A 0 0 r O to LO m LO M M 4A 4A m N 1, N A m t7D tp M r O C> tD LO I co LO m O 4A r � v d U) U) .� E L � C9 a d d LL LL r Q CL U U W D LUc d R C L r+ C d y W to D Q' G' co LO L r t0 N M n t0 � r H tU N w d •' �C1 C1 LL LL O C Z' 'c > E � a m Table 2 COMPARISON OF CAPACITY FEES Agency Dublin San Ramon Services District Mountain View Sanitary District Antioch (Delta Diablo Sanitation District for Treatment) Proposed CCCSD Pumped Zone Current CCCSD Pumped Zone Proposed CCCSD Gravity Zone Current CCCSD Gravity Zone Concord Pittsburg (Delta Diablo Sanitation District for Treatment) Bay Point (Delta Diablo Sanitation District for Treatment) West County Wastewater District Capacity Fee $15,913 $8,745 $7,901 $7,422 $7,071 $5,797 $5,465 $4,910 $4,358 $3,940 $2,613 CENTRAL CONTRA COSTA SANITARY DISTRICT Report Regarding Environmental and Development - Related Rates and Charges Proposal March 2012 OVERVIEW The Central Contra Costa Sanitary District (CCCSD) Board of Directors will soon consider adopting an ordinance to revise Chapter 6.30, Schedule of Rates and Charges, for various environmental and development - related services. If the proposed rates and charges are adopted by the Board of Directors, CCCSD staff estimates that approximately $50,000 in additional revenue will be generated in fiscal year 2012 -13. BACKGROUND Chapter 6.30 of the CCCSD Code includes a schedule of rates and charges for environmental and development - related services provided to property owners, contractors, developers, septic and grease waste haulers, and permitted industrial users. These services include permitting, plan review, inspection of construction for side sewers and main line extensions, addition of new sewers, parcels, and permit information to CCCSD maps, source control permits and inspections, and septic and grease hauler sampling and treatment. These rates and charges are intended to recover CCCSD's direct and indirect labor costs, other operating expenses, and administrative overhead incurred in providing each service. These rates and charges were last revised in 2011. CCCSD staff annually reviews the rates and charges to assess whether changes are appropriate. This year, as in the past, CCCSD has re- evaluated the rates and charges for the categories of Development Plan Review, Construction Inspection, Collection System, Right -of -Way, and Miscellaneous services. In addition, for the first time in many years, CCCSD staff also reviewed rates and charges for industrial user permits and septage /grease disposal and has proposed that these fees be increased gradually over the next few years. The recommended rates and charges are explained in the following pages. PROPOSED RATES AND CHARGES The State of California mandates that revenues from fees, rates and charges not exceed the cost of providing services. Following its review, CCCSD staff recommended that rates and charges be revised to include: 1) adjustment for changes in salaries, benefits and overhead; and 2) adjustment of the mileage rate for those charges that include a mileage factor. Table 1 presents a comparison of the current and proposed rates and charges. Proposal to Revise Development - Related Rates and Charges Page 2 March 2012 For 2012 -13, staff is recommending changes to the Schedule of Rates and Charges based on a 2.0% cost of living adjustment to staff salaries, an administrative overhead percentage of 194% of direct salary cost (twelve percent higher than the 173% overhead rate applicable in 2011), and a vehicle mileage rate of $0.325 per mile (non - depreciation costs only.) PROPOSED CHANGES Fees, rates and charges calculated based on the criteria cited above results in recommended increases between 1.5% and 7.7% for most fees (57 fee categories). Approval of the third increments of a three -year phase in of larger increases for two fees and the first increments of a proposed three -year phase -in for three other fees that affect only a few customers is also recommended, as discussed below: Application Fee for new parcel — new sewer service: This is the third year of a three - year increase of $13 per year (5.9 %) approved in 2010. The recommended increase will bring the fee in line with the actual cost of administrative work associated with setting up new parcels in the land, mapping and the Sewer Service Charge file systems. Application Fee — Capacity Use Program and Capacity Fee Installment Program /Promissory Note Program: This is the first year of a proposed three -year increase of $36 per year (12.9 %). The Capacity Use Charge program mitigates high capacity fees for customers with high- strength sewage (such as restaurants and bakeries). Setting up new customer accounts in the program requires significant staff time. This fee typically is applied to three or four customers each year. Reimbursement Account Set -Up Fee: This is the first year of a proposed three -year increase of $76 per year (8.0 %). This fee is only charged to the few installers of mainline extension projects who elect to participate in the Reimbursement Program. Commercial Business Plan Review (Change in RUE Value): Deleting this fee is recommended since "Source Control Review" fees are now charged for this service (see following item). Source Control Review: This is the third year of a three -year increase of $30 per year (12.0 %) approved in 2010. This increase will result in a fee that recovers the actual labor cost incurred to conduct a typical Source Control review for new business. Site Collector Plan Check: This is the first year of a proposed increase of $22 per year (7.8 %). A Site Collector Plan Check is required when a private sewer will serve several buildings on a single property. Industrial Permit Fees: These fees are intended to recover the costs incurred by CCCSD's Source Control staff administering and monitoring compliance of Significant Industrial Users and those with Special Discharge Permits. The fees have not been Proposal to Revise Development - Related Rates and Charges Page 3 March 2012 revised for more than ten years. During this time, increases in Permit Program costs have been recovered through the Pollution Prevention Surcharge applied to all non- residential sewer service charges. CCCSD staff has proposed that beginning this year, permit fees be increased gradually over time to eventually cover program costs rather than relying on non - residential customers to pay for permit activities through the Pollution Prevention Surcharge. Septage and Grease Disposal: These fees are intended to recover the costs for treatment of these wastes and program administration. The fees have not been revised for more than ten years. CCCSD staff has proposed that beginning this year, the fees be increased gradually over time to eventually recover a greater portion of the cost of service directly through the fee program. SUMMARY If the staff - proposed revisions to the Environmental and Development - Related Rates and Charges are adopted by the CCCSD Board of Directors, 64 fees would increase, no fees would decrease, 15 fees would remain unchanged and one fee would be deleted. If the recommended rates and charges are adopted by the Board of Directors, staff estimates that approximately $50,000 in additional revenue will be generated in fiscal year 2012 -13. JM2:EM Attachments ATTACHMENT 1 CENTRAL CONTRA COSTA SANITARY DISTRICT COMPARISON OF CURRENT & PROPOSED RATES & CHARGES FOR 2012 -13 Fee Category Current Fee I Proposed Fee %o Change (A) DEVELOPMENT AND PLAN REVIEW Review of new sewer plans and related documents; review of plans for and processing of residential and commercial permit applications; installer reimbursement of sewer construction costs from subsequent connectors; identification of right -of -way conflicts. (A -1) Development Review: Mainline Plan Review (actual cost): Base Fee (minimum charge) $2,222 $2,350 5.8% Each additional hour in excess of base fee $134 $142 6.0% Special Cut Sheet Review $212 $225 6.1% Manhole only design & plan review $904 $956 5.8% Right of Way Document Review - IOD / Sub Map (each): $606 $641 5.8% Right of Way Document Review - No Changes Required $398 $421 5.8% Right of Way document review - Appurtenance (initial): $542 $573 5.7% Appurtenance (each additional) $210 $222 5.7% (A -2) Application Fees Overflow Protection Device Installation (OPD only) no charge no charge no change Side Sewer Cleanout installation (to facilitate installation of OPD only; permit not upgradable) $25 $25 no change Basic Application (side sewer work, easement staking, permit renewal) $97 $103 6.2% Existing parcel - new sewer service $132 $140 6.1% New parcel - new sewer service $13 increase each year for 3 years - 3rtl ear $222 $235 5.9% Commercial Application $200 $211 5.5% Capacity Use Program (1st year of three proposed annual increases of $36) $280 $316 12.9% Capacity Fee Installment Program and Promissory Note Program (1st year of three proposed annual increases of $36 $280 $316 12.9% (A -3) Reimbursement Accounts: Set -up fee (1st year of three proposed annual increases of $76) $946 $1,022 8.0% Transaction fee $149 $158 1 6.0% (A-4) Commercial Business Plan Review (change in RUE value) (These reviews are now performed by Source Control and charged for as Source Control Review.) $131 Delete Special Studies Base fee (4 hours plus misc. costs) $533 $563 5.6% Each additional hour $115 $122 6.1% Source Control Review $30 increase each year for three years - 3ro ear $250 $280 12.0% Grease Variance Review (includes site visit) $301 $319 6.0% Site Collector Plan Check - formerly "Commercial Development Plan Check" (1st year of three proposed annual increases of $22) $283 $305 7.8% (A -5) Private pumping system plan check $380 $402 5.8% Additional Review $149 $158 6.0% Pre - approved Pump Systems $149 $158 6.0% Annexation Fee $400 $424 6.0% (A -7) ISpecial Approvals 1 $220 1 $233 1 5.9% Revised: 319!2012 Copy of DRAFT Attach 1 - Proposed Fee Comparison - 2012 -with jm2 rev and EM rev.xlsx Page 1 ATTACHMENT 1 CENTRAL CONTRA COSTA SANITARY DISTRICT ! COMPARISON OF CURRENT & PROPOSED RATES & CHARGES FOR 2012 -13 Fee Category Current Fee I Proposed Fee % Change (B) CONSTRUCTION INSPECTION Inspection of new sewer main construction and new connections and other sewer work on private property (includes TV inspection when appropriate). (B -1) Mainline Inspection (contributed assets): Base Fee $637 $669 5.0% Per Foot Charge (in street) $10.18 $10.70 5.1% Per Foot Charge (in undeveloped land) $7.00 $7.35 5.0% New Manhole, Rodding Inlet $633 $673 6.3% (B -2) Inspections by type: Overflow Protection Device installation (OPD only) no charge no charge no change Side Sewer Cleanout installation (to facilitate installation of OPD only) $50 $50 no change Side Sewer Installation / Repair per 100 feet: $152 $162 6.6% Single Inspection Charge (e.g. sewer connection; encroachment verification; side sewer cap on property; tap and lateral (new or replacement); air test; reinspection; homeowner preconstruction inspection) $152 $162 6.6% Manhole tap; lateral abandonment at main; pipe bursting; trash enclosure w/o trap; side sewer CIPP repair; outdoor grease trap only $304 $324 6.6% Manhole Alteration; trash enclosure with trap; grease interceptor abandonment $456 $486 6.6% Outside pump installation $456 $486 6.6% New Manhole or Rodding Inlet (private) $608 $648____F 6.6% Grease / Sand / Oil Interceptor $912 $972 6.6% (B -3) Overtime inspection: First Hour (if responding from off -site) $93 $95 2.2% Every hour thereafter $62 $64 3.2% Weekend /Holiday (New Year's Day, Martin Luther King, President's Day, Memorial Day, July 4th, Labor Day, Veteran's Day, Thanksgiving, Christmas) - 4 hr. minimum $279 $287 2.9% (B-4) I Inspection of non - permitted work (+ avoided charge) $304 $324 6.6% Revised: 3/9/2012 Copy of DRAFT Attach 1 - Proposed Fee Comparison - 2012 -with jm2 rev and EM rev.xlsx Page 2 ATTACHMENT 1 CENTRAL CONTRA COSTA SANITARY DISTRICT COMPARISON OF CURRENT & PROPOSED RATES & CHARGES FOR 2012 -13 Fee Category Current Fee I Proposed Fee % Change (C) COLLECTION SYSTEM SERVICES TV inspection of sewers conducted separate from a construction inspection activity; verification of sewer location and sewer service connection. (C -1) TV Inspection: Weekday, hourly rate $200 $212 6.0% Minimum Charge (2 hr min) $400 $424 6.0% Overtime - First Hour $137 $139 1.5% Overtime - Each Additional Hour $110 $113 2.7% Overtime - Weekend / Holiday (4 hr min) $467 $478 2.4% (C -2) Dye test $257 $267 3.9% (C -3) Collection system repair Actual Expense Actual Expense no change (C-4) Cancelled TV Inspection without prior notice $352 $374 6.3% (C -5) ISewer locating and marking $227 $240 5.7% (D) RIGHT -OF -WAY Establishing right -of -way agreements and resolving conflicts. (D -1) Process Quitclaim Deeds $947 $1,018 7.5% Process Quitclaim Deed - plat and legal by others $572 $616 7.7% (D -2) Process Real Property Agreement, License, or Easement Base Fee (minimum charge) $778 $836 7.5% Each Additional Hour (after 2 hours) $122 $131 7.4% (D -3) Right -of -way Research / Encroachment Resolution Fee Actual Expense Actual Expense no change (D-4) Right of Entry / Encroachment Permit Fee $169 $188 11.2% (E) MISCELLANEOUS District services provided for private sewer projects; interest rates for CCCSD programs; copying fees. (E -1) Engineering - private sewer projects Actual Expense Actual Expense no change (E -2) Soil evaluation - private sewer projects Actual Expense Actual Expense no change (E -3) Surveying Actual Expense Actual Expense no change (E-4) Minimum annual interest rate for CADs and Capacity Use Program 6.00% 6.00% no change (E -5) Document / Plan Copying Fees 8 1/2" x 11 "; 8 1/2" x 14 "; 11" x 17" (per sheet) $0.15 $0.15 no change 24" x 36" Plan (per sheet) $3.00 $3.00 no change CCCSD Standard Specifications $20.00 $20.00 no change (E -6) Multiplier to be applied to Alhambra Valley Assessment District (AVAD) 2010 -11 Parcel Assessment Amount listed in Ordinance 262 - Exhibit B to determine AVAD Reimbursement Fee amounts applicable to connections in 2012 -13. 1.01651 1.02146 0.5% (E -7) Connection Fee Deferral Program (Resolutions 2009 -34, 2010 -33 & 2011 -23) Processing fee for each separate "Memorandum of Agreement" (program and fees expire on June 30, 2013 unless program is extended) Ordinances 260 & 267 $460 $460 no change (E -8) Connection Fee Deferral Program (Resolutions 2009 -34, 2010 -33 & 2011 -23) In addition to Fee E -7 above, participation fee for each separate property (program and fees expire on June 30, 2013 unless program is extended) Ordinances 260 & 267 $115 $115 no change Revised: 3/9/2012 Copy of DRAFT Attach 1 - Proposed Fee Comparison - 2012 -with jm2 rev and EM rev.xlsx Page 3 ATTACHMENT 1 CENTRAL CONTRA COSTA SANITARY DISTRICT COMPARISON OF CURRENT & PROPOSED RATES & CHARGES FOR 2012 -13 Fee Category Current Fee I Proposed Fee I % Change (F) INDUSTRIAL PERMIT FEES Permitting and inspection of industries and other commercial dischargers to ensure availability and use of pretreatment processes. Base permit fee of Base permit fee of (F -1) Class I Fees $3,256 + cost of $3,450 + cost of 6.0% District's lab District's lab analysis analysis Base permit fee of Base permit fee of (F -2) Class II Fees $3,256 + cost of $3,450 + cost of 6.0% District's lab District's lab analysis analysis (F -3) Class III Fees 0 no change (F-4) Industrial user permit application fee 0 no change (F -5) Special discharge permit application fee ( *) No on -site inspection $65 each $70 each 7.7% On -site inspection Base fee of $345 Base fee of $365 5.8% (G) SEPTAGE DISPOSAL ( * *) Sampling and disposal of septic waste and grease. (G -1) Annual permit fee $1,650 $1,750 6.1% (G -2) Residential septic/toilet waste < 2,000 gallons $18 + $0.14/gal $20 + $0.15/gal 5.5%/7.1% > 2,000 gallons $58 + $0.14/gal $60 + $0.15/gal 3.4%/7.1% (G -3) Restaurant grease waste < 2,000 gallons $18 + $0.02 /gal $20 + $0.02 /gal 3.4%/0.0% > 2,000 gallons $58 + $0.02/ al $60 + $0.02/ al ( *) Additional charges to be billed separately if staff time incurred is above that included in the base fee. ( * *) Other approved waste will be charged at the residential septic and portable toilet waste rate unless actual strength characteristics are provided. Revised: 3/9/2012 Copy of DRAFT Attach 1 - Proposed Fee Comparison - 2012 -with jm2 rev and EM rev.xlsx Page 4 6+46 Central Contra Costa Sanitary District March 9, 2012 TO: BUDGET AND FINANCE COMMITTEE VIA: JAMES M. KELLY, GENERAL MANAGER ANN FARRELL, DEPUTY GENE L A ' ER AND DIRECTOR OF ENGINEERING v's FROM: JARRED MIYAMOTO- MILLS, PROVISIONAL ENVIRONMENTAL E�p`il��v SERVICES DIVISION MANAGER SUBJECT: BARTLE WELLS ASSOCIATES FINAL DRAFT REPORT ON THE AUDIT OF PERMIT COUNTER AND CONNECTION FEE COLLECTION PRACTICES During the General Manager's Report at the March 15th regular Board Meeting, Mr. Doug Dove of Bartle Wells Associates (BWA) will present BWA's findings and recommendations from the audit of Permit Counter and connection fee collection practices. I have attached a copy of BWA's Final Report for your review. Key audit findings and recommendations are presented beginning on page 2 of the report. Staff will be available at the Budget and Finance Committee Meeting on Monday, March 12, 2012 to brief the committee and answer questions. JM2: Attachments cc: Board of Directors CENTRAL CONTRA COSTA SANITARY DISTRICT AUDIT OF PERMIT COUNTER AND CONNECTION FEE COLLECTION PRACTICES March 9, 2012 FINAL DRAFT BARTLE WELLS ASSOCIATES Independent Public Finance Advisors 1889 Alcatraz Avenue Berkeley, CA 94703 -2714 Tel. 510.653.3399 Fax 510.653.3769 www.bartlewells.com TABLE OF CONTENTS EXECUTIVESUMMARY ................................................................ ..............................1 INTRODUCTION........................................................................... ............................... 8 Purposeof the Capacity Fee ...................................................................... ............................... 9 Definition.................................................................................................. ............................... 10 CURRENT OPERATING PROCEDURE .......................................... .............................11 GeneralOperating Procedure ................................................................ ............................... 11 InformationAvailability .......................................................................... ............................... 11 PaymentResearch ...................................................................................... .............................11 FeeCollection ............................................................................................. .............................12 CURRENT ISSUES WITH OPERATING PROCEDURE .................... .............................12 In- District Permit Issuing Agencies ......................................................... .............................12 HistoricalPayment Research .................................................................. ............................... 12 SpecialStudies ............................................................................................ .............................13 Expired& Abandoned Permits .............................................................. ............................... 13 FeeCollection ............................................................................................. .............................13 Residential2 "d Living Units ...................................................................... .............................14 Restaurants& Delicatessens ..................................................................... .............................14 SwimmingPools ......................................................................................... .............................14 INDUSTRY PRACTICES AND PROCEDURES ................................. .............................15 PermitsIssuing Agencies: ....................................................................................................... 15 HistoricalPayment Research: ............................................................................................... 15 SpecialStudies ............................................................................................ .............................16 Trackingof Fees: ..................................................................................................................... 16 Expirationof Permits: ............................................................................................................ 16 Follow -Up on Permits: ............................................................................................................ 16 FeeCollection: ......................................................................................................................... 17 Residential2 "d Living Units ...................................................................... .............................17 Restaurants& Delicatessens ..................................................................... .............................17 SwimmingPools ......................................................................................... .............................17 ShoppingCenters ....................................................................................... .............................17 CONCLUSION.............................................................................. .............................19 EXECUTIVE SUMMARY The Central Contra Costa Sanitary District ( "CCCSD" or "District ") is a special district, established in 1946, that collects and treats an average of 45 million gallons of wastewater per day for approximately 462,000 residents and businesses in central Contra Costa County (the "County "). The District provides service through 1,500 miles of sewer lines and 18 pumping stations. The District's 146 square mile service area is diverse and includes the cities of Concord, Walnut Creek, Danville, Lafayette, Moraga, and Orinda and County unincorporated areas. The District maintains and operates its own centralized treatment facility in Martinez, which also produces about 90% of the plant's daily power needs. The District's mission is to protect public health and the environment by collecting and treating wastewater, recycling high quality water and promoting pollution prevention. The District operates a permit counter, and is responsible for issuing sewer permits, determining and collecting sewer connection fees for construction within its service area, and for inspecting the sewer connection work performed by contractors. Fees are collected for building projects that will either require a new connection to the collection system, or increase sewer usage from an existing connection. The District uses the SunGardTM building permit software to process thousands of initial quotes, inquiries and permit issuances each year. The software was implemented in 1994 and the District is still using an old "green screen" version which is difficult to use. At least 13 permit staff employees have worked with the software over the last decade and training with the software has been primarily on-the-job rather than formal instruction provided by SunGardTM Working the permit counter is a high stress job since staff must be ready to respond to the public at the counter or on the phone at a moment's notice. The combination of a high volume of requests, limited SunGardTM training and antiquated software has led to inconsistent practices. In November 2011, the District's software vendor ran a report with the SunGardTM management software which showed the existence of a significant number of entered, but uncollected permit - related fees in the system. A District employee made a presentation to the Board of Directors recommending a special audit be performed to investigate the SunGardTM findings, follow -up procedures for outstanding permits, rate exemptions for swim clubs and several other issues. The District engaged Bartle Wells Associates (BWA) to conduct an audit of its permit counter practices. The purpose of this audit is to evaluate the District's current permit counter operating and connection fee collection procedures. This report summarizes the findings and recommendations of the audit, and includes an evaluation of the District's current operating practices as well as a survey of practices of other, similar, local wastewater agencies for comparison. Bartle Wells Associates 1 Central Contra Costa Sanitary District March 9, 2012 Permit and Connection Fee Audit BWA interviewed staff at eight local agencies similar to the District regarding policies and practices of collecting capacity fees associated with the issuances of construction permits. These agencies were chosen for the survey based upon their proximity to the District and that each provides similar wastewater services. The survey focused on the issues addressed in the audit to learn policy and management approaches used by these agencies that may be helpful to the District. The following table summarizes the results of the survey. Industry Practices Survey Summary Collects Follows Swimming Swimming Years Researches Charge Up on Separates Pool Pool Permit Charge Manages Before Expired Restaurants Connection Sewer Is History DatahaSa Permit Parmitc R nalic Paz (hnm=e ** An +i"c * FSSD contracts with cities for the research, collection and management of connection fees ** Sewer charges for swimming pools are based upon metered water use Key Audit Findings and Recommendations Identify and Resolve the Accumulated Entered but Uncollected Permit- Related Fees which show -up on the SunGardTM Software System In November 2011, the District's software vendor ran a report with the SunGardTM management software which showed that there were potentially a large number of entered, but uncollected permit- related fees in the system. Such fees include capacity fees, application fees, inspection fees, plan review fees, annexation charges, and reimbursement fees. With the assistance of the software vendor, District staff reran this report and determined that the SunGardTM system showed a total of $20.5 million in accumulated entered, but uncollected fees dating back to 1993, when the software was first implemented. Further analysis by the staff is currently in process with preliminary results showing the majority of the $20.5 million is a result Bartle Wells Associates 2 Central Contra Costa Sanitary District March 9, 2012 Permit and Connection Fee Audit O8 * FSSD contracts with cities for the research, collection and management of connection fees ** Sewer charges for swimming pools are based upon metered water use Key Audit Findings and Recommendations Identify and Resolve the Accumulated Entered but Uncollected Permit- Related Fees which show -up on the SunGardTM Software System In November 2011, the District's software vendor ran a report with the SunGardTM management software which showed that there were potentially a large number of entered, but uncollected permit- related fees in the system. Such fees include capacity fees, application fees, inspection fees, plan review fees, annexation charges, and reimbursement fees. With the assistance of the software vendor, District staff reran this report and determined that the SunGardTM system showed a total of $20.5 million in accumulated entered, but uncollected fees dating back to 1993, when the software was first implemented. Further analysis by the staff is currently in process with preliminary results showing the majority of the $20.5 million is a result Bartle Wells Associates 2 Central Contra Costa Sanitary District March 9, 2012 Permit and Connection Fee Audit of items that were canceled, closed quotes, permit applications or clerical errors which should not be included in a report of outstanding fees. To date, the analysis by staff has reviewed all 166 items in the system with a value of over $10,000 and identified 1,522 items with a value of under $10,000 that still need to be analyzed. As of the writing of this report, the amount of the permit- related fees that still need to be resolved is $6,558,665. All of these items need to be reviewed as soon as possible to determine if they are collectable and if so, efforts should be made to collect them. The District should establish criteria for determining which transactions should be pursued and how to provide an appropriate audit trail for the investigation. District Counsel should be asked to advise regarding applicable statutes of limitation for collection of fees and other related matters. Recommendation — Identify and resolve all outstanding permit- related fee issues in the SunGardTM system. Consider retaining an outside specialist familiar with the SunGardTM system to assist staff in completing this task in an expeditious manner. Form a team of District and temporary employees to go through the report line -by -line using Geographical Information system (GIS), hard copy records, and field inspections to do verifications. Work with District Counsel to review and update District policies and procedures for collecting outstanding fees. Regular Follow up on Outstanding CCCSD Permits is Needed Going forward, procedures for routine follow up for "aged" permit applications and periodic follow up on outstanding fees should be implemented by the District. It has been staff's experience that it is far easier to resolve items sooner, when they are "fresh ", rather than later. A report summarizing the status of outstanding applications, permits, and fees should be prepared and presented to the Finance Committee and/or Board of Directors on a regular (at least annual) basis. Recommendation — Implement procedures for routine follow up on aged permits and periodic follow up on new permit applications. Submit regular (at least annual) status reports on outstanding applications, permits, and fees to the Finance Committee and/or Board of Directors. Timing of f Capacity Fee Payment CCCSD currently collects its capacity fees on new connections after building permit "Roof and Rough Plumbing" inspections have been completed (called for when the roof is on the new building and the plumbing is done). The District originally adopted this approach to be customer friendly by deferring collection of fees to the time of actual physical connection. However, due to various circumstances, some builders never return to the District for their "Roof and Rough Plumbing" inspections and so capacity fees are not collected. In the case of tenant improvements permits, the District collects its capacity fees at the time of plan review. Based on BWA's survey of eight surrounding wastewater agencies, most collect the fees at the time of plan review and report that they encounter few payment problems. The District should consider collecting all capacity fees (for new and tenant improvement projects) at the time of plan review. Bartle Wells Associates 3 Central Contra Costa Sanitary District March 9, 2012 Permit and Connection Fee Audit Recommendation — Consider collecting all capacity fees at the time of plan review instead of after "Roof and Rough Plumbing" inspection. Agreements are needed with the County and Cities within CCCSD to Require CCCSD Si n -off Before Issuance of Certificates of Occupancy/Final Permits for New Construction As described above, some wastewater permit applications never get finalized, final inspections are not called for, and capacity fees are not collected. A key reason is that there are no agreements with the individual agencies within the District that specify that permit counters must require CCCSD sign -off before a final building permit inspection or issuance of a certificate of occupancy (CO). All of the wastewater agencies surveyed have sign -off agreements with the cities in their service areas before either the building permit or the CO is issued to ensure fee collection. However, District staff report that the County and city building departments have been resistant to this type of agreement when approached in the past. Recommendation — Secure agreements with the County's and cities' building departments within the District to require District inspectors to sign -off before final building permit inspection and issuance of a CO. Review and Standardization of Permit Counter /Capacity Fee Procedures is Needed A recurring theme during the audit was the need for a comprehensive set of standard operating procedures and definitions for use by permit counter staff. This will help ensure consistency in permit quotes from one staff member to another and allow new staff members to get up to speed more quickly. Special Studies: The standard procedures should clarify when a "special study" is needed and how it should be conducted. Currently, there is no standard procedure for special studies and this yields inconsistencies between the capacity fees quoted at the permit counter and the fees determined through the study. A special study can be requested by any applicant for any capacity fee. Permit counter staff reports that some builders always ask for a "special study" because the District will allow them to be issued on any project and usually results in lower fees. To ensure fairness, the District needs to be diligent in doing the required one to five year review of measured consumption from recipients of special studies. Historical Parcel Capacity Fee Research: When a parcel is redeveloped, the District, like most wastewater agencies, credits owners for prior capacity fees paid on the parcel. When an applicant believes that there was a prior use on their parcel, the District does research to determine if and what type of development was there and what Capacity Fee credit goes with the parcel. Standard procedures should be developed to guide and expedite historical research by permit counter staff. Existing historical resources should be digitized and cataloged for easy Bartle Wells Associates 4 Central Contra Costa Sanitary District March 9, 2012 Permit and Connection Fee Audit reference. If information on a parcel is not found in the digitized records, the burden to research and prove prior use would be on the applicant. Mixed Use Parcels (e.g., shopping centers): These present some of the most difficult and time consuming fee calculations the permit counter handles. Current procedures used in calculating fees for mixed -use parcels should be reviewed and new standard procedures developed as part of a comprehensive fee study. Restaurants vs. Delicatessens: Capacity fees and sewer service charges for delicatessens are significantly lower than fees for restaurants. Many of the requests for special studies involve food service establishments. The District's metric for differentiating between a delicatessen and a restaurant should be reviewed as part of a comprehensive fee study. The concept of "leasing" capacity (that is, creating an option of paying an ongoing charge for use of system capacity instead of an upfront capacity fee) should also be explored as this may be helpful in reducing the upfront impacts of capacity fees on new food service establishments trying to open their doors for the first time. Second Living Units: Some applicants may omit fixtures or appliances from submitted plans, or install fixtures and appliances after "Roof and Rough Plumbing" inspections to avoid paying capacity fees and sewer service charges for a second living unit. This was a universal problem reported by all eight of the wastewater agencies that we surveyed. Perhaps a follow up review of suspect parcels about a year after the permit is pulled would reveal evidence of a second unit (e.g., a second mailing address on the parcel or multiple electric meters). Cap and Reconnect Permits: When a connected building is to be demolished and replaced, the District requires that the property be temporarily disconnected to prevent demolition debris from entering the public sewer system. Payment of a fee and issuance of a District "cap & reconnect (C &R)" permit is required prior to any demolition work. After the replacement building passes its "Roof and Rough Plumbing" inspections, reconnection of the property is permitted. Building departments often do not require a District "cap & reconnect (C &R)" permit before issuing a demo permit so the District's C &R Permit fee is not collected. The District should include provisions in the agreements with demolition permit issuing agencies requiring that all applicants complete the "cap" portion of the District C &R permit prior to commencing demolition work. Capacity Use Charge Program: The District's capacity use charge program provides a capacity fee installment payment option to users whose capacity fee rates are higher than the Delicatessen rate. Under the program the customer pays an initial fee equal to the delicatessen rate, and then makes annual payments based on metered water consumption (See CCCSD Code Section 6.12.050 H). Bartle Wells Associates 5 Central Contra Costa Sanitary District March 9, 2012 Permit and Connection Fee Audit Fee Deferral & Installment Payment Plans: In response to building industry requests, the District currently offers subdivision developers the option to defer payment of capacity fees and annexation charges until close -of- escrow, or first occupancy. The developers sign a promissory note and recorded memorandum of agreement and pay setup and participation charges to cover direct and administrative cost for each property enrolled in the program. To encourage properties on septic tank systems to convert to public sewer service, the District offers property owners the option of installment payment of capacity fees over 10 years at the interest rate listed in the schedule of rates and charges. Property owners sign a promissory note and a recorded memorandum of agreement and pay a setup charge to cover administrative cost for each property enrolled in the program. These programs are currently administered by only one staff member, so training of others would provide needed backup. Recommendation — Develop a comprehensive standard manual of procedures and definitions for the permit counter staff to use. Staff Needs Additional Training on SunGardTM Software As highlighted by the lack of awareness of permit counter staff of the capabilities of SunGardTM to generate the report on outstanding permits, staff needs to be trained on how to use this tool more effectively. In its December 23, 2011 report to the District, SunGardTM found that the District is not utilizing the software to its full potential and could be saving time and improving customer service levels with additional training. The District is still using an old "green screen" version of the software and should consider updating to a more user - friendly, Windows -like version. Inspectors, who currently do not use the system at all, could be trained to use the system in the field on portable devices, thereby saving time and potentially improving data accuracy. Recommendation — Provide staff with additional training on the SunGardTM System as appropriate. Request a proposal from SunGardTM to provide training to staff to allow further utilization of the software. Consider upgrading to a more user - friendly version of the software if the cost is reasonable and funds are available. Eliminate Current Exemption for Swim Clubs Longstanding District practice (ref. 1977 Board Resolution Number 77 -1) has been to exempt swimming pools from paying wastewater charges. The logic, as stated in the 1977 resolution, was that the costs "shall be considered as included in the residential environmental quality (now Sewer Service) charge rates and no separate charge will be made therefore." In general, it's difficult to determine actual wastewater flows from swimming pools as they draw significant Bartle Wells Associates b Central Contra Costa Sanitary District March 9, 2012 Permit and Connection Fee Audit amounts of water from the municipal water system but most of the water is lost to evaporation. Typically, the pools themselves are not physically connected to the sewer system. A number of District swim clubs do have facilities that contribute to the sewer flows, including food prep areas, toilets and shower facilities that are not paying sewer service charges for their use. Under Prop 218, (passed by the voters in 1996) rates for all wastewater customers must be proportional to their usage of the system. Since many swim clubs do in fact discharge to the District's sewer system, they should be charged accordingly. Staff has compiled a partial list of over 70 swim clubs /community pools, country clubs, swim schools and pools at exercise /athletic clubs within the District. Of these, 46 are not currently paying sewer service charges. Recommendation — eliminate current exemption for swimming pools /clubs that are connected to the sewer system and develop an appropriate methodology for calculating sewer service charges for these users. A Comprehensive Fee Study is Needed The last time the District did a comprehensive fee study was in 1997. This audit has brought to light many issues with the current rate structure including: • Residential rates — should multi - family, planned retirement and second residential units pay less than single - family? • Rates for restaurants vs. delicatessens — are restaurant and delicatessen rates too high or too low? • Should food service establishments (e.g., restaurants, delicatessens and bakeries) be offered the option of "leasing" capacity? • Rates for mixed use parcels should be reviewed • Rates for swim clubs need to be developed • Are there too many rate categories in the existing rate structure? • Application fees could be simplified. Consider having only two application fees; one for residential and one for commercial. • Inspection fees for private lateral repairs - should they be reduced to encourage customers to do retrofits? (application and inspection fees for "clean-out" only permits are already deeply discounted) Recommendation — Commission a comprehensive fee study. Other Issues: • Determining which reimbursement fees apply to a particular parcel is sometimes difficult and only a few staff members are fully trained to deal with special cases. Can a reference by parcel be added to the SunGard database for instant access by Permit Counter staff? Bartle Wells Associates 7 Central Contra Costa Sanitary District March 9, 2012 Permit and Connection Fee Audit • District rates and fees should be available online in a clear and accessible format. Consider an online rate calculator like EBMUD's. INTRODUCTION The Central Contra Costa Sanitary District (the "District" or "CCCSD ") is a special district that collects and treats an average of 45 million gallons of wastewater per day for the residents and businesses in central Contra Costa County (the "County "). The District was established in 1946 and provides service to approximately 146 square miles through 1,500 miles of sewer lines and 18 pumping stations. The District maintains and operates its own treatment facility, which also produces about 90% of the plant's daily power needs. The District's mission is to protect public health and the environment by collecting and treating wastewater, recycling high quality water and promoting pollution prevention. In November 2011, the District's software vendor ran a report with the SunGardTM management software. This report showed there were potentially a large number of entered, but uncollected fees in the system. In January 2012, the staff ran this report again showing a total of $20.5 million in accumulated entered, but uncollected, fees dating back to 1993, when the software was first implemented. To date, the analysis by staff has reviewed all 166 items in the system with a value of over $1,000 and identified 1,522 items with a value of under $1,000 that still need to be analyzed. The amount of the permit- related fees that still need to be resolved, including potentially collectable items is currently $6,558,665. All of these items need to be reviewed as soon as possible to determine if they are collectable and if so, efforts should be made to collect them. The District engaged Bartle Wells Associates (BWA) to conduct an audit of their permit counter practices. The purpose of this audit is to evaluate the District's current permit counter operating and connection fee collection procedures. As such, this audit evaluates the District's current practices to identify procedural weak points, compare with industry standards and make appropriate recommendations based on the findings. The District defines a connection fee as the sum of applicable capacity fees, application fee, inspection fee, plan review fee, annexation charge, reimbursement fees and the first year's sewer service charge. The current connection fee is approximately $6,500 for a basic residential Bartle Wells Associates 8 Central Contra Costa Sanitary District March 9, 2012 Permit and Connection Fee Audit connection in the gravity service zone with the majority of the cost attributable to the capacity charge, which starts at $5,465. The following table presents the connection fee for a single family residential unit in the gravity service area. CCCSD Residential Connection Fee Components (FY 2011 -12) Charge Capacity Charge $5,465 Application Fee $132 Annexation Charge $400 Inspection Fee $152 Reimbursement Fee" - Plan Review Fee" - Sewer Service Charge 341 Total $6,490 " Reimbursement fees are dependent upon the location of the parcel and do not apply to all parcels "" Plan review fees are primarily for properties with pumping systems or non - residential applications Commercial fees may have additional charges Purpose of the Capacity Fee The purpose of the capacity fee is for new customers to buy -in to the assets of the District so as to equalize the investment in District assets between current and new customers. New wastewater connection fees are collected from new construction and from tenant improvements on parcels with existing connections. The District's 2010 Collection System Master Plan indicates there is sufficient conveyance capacity to connect new customers'. Notwithstanding the available capacity for new customers and connections, future wastewater system capital improvement projects will be needed to serve the current and new connections. The capacity fee is directly related to the recovery of costs of existing facilities and new facilities to serve future new customers. ' 2010 Collection System Mater Plan Update, p 4 -3. Bartle Wells Associates 9 Central Contra Costa Sanitary District March 9, 2012 Permit and Connection Fee Audit Definition The capacity fee is a one -time fee charged to an applicant requesting a new or expanded service connection. The charge is established pursuant to the Mitigation Fee Act (California Government Code 66000 et al). Section 66013(a) specifically addresses water and sewer connections as follows: Notwithstanding any other provision of law, when a local agency imposes fees for water connections or sewer connections, or imposes capacity charges, those fees or charges shall not exceed the estimated reasonable cost of providing the services for which the fee or charge is imposed, unless a question regarding the amount of the fee or charge imposed in excess of the estimated reasonable cost of providing the services or materials is submitted to, and approved by, a popular vote of two - thirds of those electors voting on the issue. The capacity fee is not considered a tax or special assessment. It is not subject to Proposition 218, which added Articles XIIIC and XIIID to the California Constitution. The fee is for facilities that benefit the person or property being charged and making the service connection. Capacity and connection fees are used interchangeably, but there is a subtle distinction as identified in Government Code Section 66013. "A capacity charge means a charge for facilities in existence at the time a charge is imposed or charges for new facilities to be constructed in the future that are of benefit to the person or property being charged." [Govt. Code Sec. 66013(b)(3)] "A [connection] fee means a fee for the physical facilities necessary to make a water or sewer connection, including, but not limited to, meters, meter boxes, and pipelines from the structure or project to a water distribution line or sewer main, and that does not exceed the estimated reasonable cost of labor and materials for installation of those facilities." [Govt. Code Sec. 66013(b)(5)] BWA uses the District's definition of "capacity charge" to include the sum of the above defined capacity charge and connection fee and all other associated administrative fees. Bartle Wells Associates 10 Central Contra Costa Sanitary District March 9, 2012 Permit and Connection Fee Audit CURRENT OPERATING PROCEDURE The District is responsible for collecting sewer connection fees for building and tenant improvement permits issued by the County and Cities in its service area. The District is also responsible for inspecting the sewer connection work performed by contractors. Fees are collected for any permit issued that will either create a new connection to the collection system, or increase sewer usage from an existing connection. Such examples of increased usage are the addition of an extra living unit on a residential property, or a retail store being converted to a restaurant on a commercial property. Fees are not collected (or refunded) if a parcel decreases sewer usage or disconnects from the collection system. General Operating Procedure The District operates a permit counter, which collects and accounts for connection fees for issued permits. When a developer, contractor or other such responsible party applies for a construction permit in the District's service area, the permit issuing agency is responsible for informing the applicant of the requirement of contacting the District for approval for any new or modified sewer services which may come as a result of any development on their property. The applicant must then submit improvement plans to the District for review. The District then informs the applicant that the District will inspect the connection and of any connection fees to be paid by the applicant prior to any sewer work being performed on the property. When the applicant brings their plans to the District permit counter, the District takes an application for service from the applicant and affixes a stamp or sticker to the plans as evidence to the issuing agency showing compliance with District ordinances and regulations. At which time, the issuing agency may complete its plan review and issue a building permit for the improvement. For new construction, CCCSD inspections are done once the roof is on and rough plumbing is installed and prior to any work on the side sewer. Unfortunately, applicants sometimes misinterpret the preliminary stamps that CCCSD applies to the plans as CCCSD's final approval and do not return to pay connection fees and obtain a sewer permit. Information Availability Connection fee information is available at the District offices and online, at the District website. To find information online, the applicant can go to the District website and select the "Permits" link on the left column of the District's homepage.. This takes the applicant to the "Permit Counter" webpage where there are several links to help guide the user to the right permits, info sheets and downloadable applications. Payment Research The District maintains an electronic database that tracks the history of all payments made on any parcel that has been issued a permit since 1994. For parcels that were connected prior to that Bartle Wells Associates 11 Central Contra Costa Sanitary District March 9, 2012 Permit and Connection Fee Audit date, the permit counter staff uses various other records and sources to establish if any connection fees are due. The District has electronic -image records for many parcels dating back to its inception in 1946, but will also use other historical records, such as paper receipts, aerial photos, old phone books, insurance maps and historical society documents to establish a traceable history of usage. Once a traceable history for a parcel is established, a connection fee is determined and applied to the new permit. Fee Collection Fees for new construction are collected after building permit "Roof and Rough Plumbing" inspections have been completed, and are expected to be collected prior to "final" building permit inspection and issuance of a CO. Fees for tenant improvements are collected at the time of the District's plan review. CURRENT ISSUES WITH OPERATING PROCEDURE The previous section outlines the overall approach the District follows to account for connection fees; however there are many fee collection and tracking issues that arise throughout this process that are problematic. This section addresses each of these issues. The issues discussed were derived from interviews with permit staff, informational interviews with neighboring districts and policy review of operating procedures. In- District Permit Issuing Agencies When an applicant applies for a building permit with an issuing agency (city or County) within the CCCSD service area, there is no guarantee the issuing agency will inform the applicant of any District requirements. Individual permit issuing agencies may not require District inspection and sign -off before final building permit inspection or granting of a CO. An applicant may go through the entire permit and construction process with the issuing agency and not realize there are any District sewer requirements until the time of applying for a CO, if ever. There are currently no statutory requirements, agreements or mandated procedures, for building permit agencies within CCCSD's service area which would ensure the District's permit and inspection requirements are met and any fees are collected. Historical Payment Research When researching prior connection fee payments made on a particular parcel, the District's electronic database only retains information for payments made after the system was installed in 1994. According to staff, the SungardTM software could be configured to retain manually entered pre -1994 parcel information. Bartle Wells Associates 1 ? Central Contra Costa Sanitary District March 9, 2012 Permit and Connection Fee Audit Currently, any payment made prior to 1994 requires independent research for each parcel. While the District maintains records for most parcels dating back to 1946, some parcels require more research to obtain a traceable occupancy history. For these parcels, the District staff will use paper receipts, aerial photographs, old phone books, newspapers, insurance maps and historical society documents in an effort to document occupancy history. When a traceable history is established through this method, the District assumes previous connection fees were paid and the parcel is credited for this payment. Special Studies The District allows applicants to request a special study to calculate the capacity charges due for a particular parcel and use. The special study often yields lower capacity fees than standard rates. This creates an inconsistency in determining charges. Permit counter staff reports that those who request a special study usually end up with a lower capacity fee. A special study can be requested by any applicant for any capacity fee. Some staff also believes that once a contractor or developer is aware that special studies can lead to reduced charges, they request special studies for all of their projects. It should be noted that permit counter staff may be unaware of cases where preliminary work on a special study indicates a higher fee, in which case the applicant opts for a standard rate. Also, completed special studies are to be tracked for five years to determine whether additional fees should be collected or a refund made. Expired & Abandoned Permits The District allows each applicant six months to complete a new connection or finish with tenant improvements before the permit expires. Once a permit expires, the applicant can apply to extend the permit at no extra cost for an additional six months. This can be done twice for each permit, for a total of 18 months to allow for project completion and inspection. Should an applicant not renew the permit, and it expires prior to District inspection, the permit is considered to be void and it is assumed there is no further development activity at the construction site; however this may not be the case. Construction can continue at a site with an expired permit and application made for occupancy with the issuing agency without contacting the District for inspection or follow -up. The District currently doesn't have adequate follow -up procedures or inspection processes for expired permits. Because there is limited follow -up, the development may still connect, or change sewer use, without the District's knowledge. Fee Collection Any fees for new connections are collected after building department "Roof and Rough Plumbing" inspections have been completed. There is no safe -guard in place to ensure the applicant returns to the District to pay fees due and obtain a District permit. The in- District Bartle Wells Associates 13 Central Contra Costa Sanitary District March 9, 2012 Permit and Connection Fee Audit building permit issuing agencies do not require District approval before conducting their final building permit inspection or issuing a CO. For tenant improvements on property already connected to the District's sewer system, connection fees are collected at the time of District plan review. Residential 2 "d Living Units The addition of a second living unit on a residential property requires the applicant to apply for a building permit. The applicant may go through the process and notify the District of their intention to construct a second living unit on their property. In some cases, the applicant will inform the District of all fixtures and appliances to be installed, resulting in collection of second living unit fees; in other cases this information may be omitted, or additional fixtures or appliances may be added after final building department inspection to avoid paying additional District charges. Restaurants & Delicatessens The District makes a distinction between food service establishments. They are either classified as a restaurant or as a delicatessen based upon whether the establishment will have a type 1 vent hood over their cooking range /oven. The connection fee and sewer service charge rates for the two classifications are significantly different. This is an area of particular contention with new construction and should be reviewed as part of a comprehensive fee study. The concept of "leasing" capacity (that is, creating an option of paying an ongoing charge for use of system capacity instead of an upfront capacity fee) should be explored as this may be helpful in reducing the upfront impacts of capacity fees on new businesses trying to open their doors. Swimming Pools The District does not currently charge sewer service charges for swimming pools. However, a number of District swim clubs do have facilities that contribute to the sewer flows, including food prep areas, toilets and shower facilities that are not being charged for their use. Under Prop 218, (passed by the voters in 1996) rates for all wastewater customers must be proportional to their usage of the system. Since many swim clubs do in fact discharge to the District's sewer system, they should be charged accordingly. Staff has compiled a list of over 70 swim clubs /community pools, country clubs, swim schools and pools at exercise /athletic clubs within the District. Of these, 46 are not currently paying sewer service charges. Bartle Wells Associates 14 Central Contra Costa Sanitary District March 9, 2012 Permit and Connection Fee Audit INDUSTRY PRACTICES AND PROCEDURES BWA interviewed staff at eight local agencies similar to the District regarding policies and practices of collecting capacity fees associated with the issuances of construction permits. The agencies surveyed are shown in the table below. Local Wastewater Agencies Surveyed District Name Acronym Primary Cities Served Delta Diablo Sanitation District DDSD Pittsburg /Antioch /Bay Point Dublin San Ramon Services District DSRSD Dublin /San Ramon East Bay Municipal Utilities District EBMUD Oakland /Berkeley /Alameda Fairfield Suisun Sewer District FSSD Fairfield /Suisun Mt. View Sanitary District MVSD Martinez Napa Sanitation District NSD Napa Union Sanitary District USD Fremont/Union City /Newark Vallejo Sanitation & Flood Control District VSFCD Vallejo These agencies were chosen for the survey based upon their proximity to the District and that each provides similar wastewater services. The survey focused on the issues addressed in the previous section to learn policy and management approaches that may be better than the District's current practices. Permits Issuing Agencies: All of the agencies interviewed except CCCSD have cooperative arrangements with the city permit issuing agencies within their service areas to ensure sewer capacity fee collection. As such, the cities will not issue a CO unless the applicants have complied with each district's requirements. Sewer agencies including CCCSD, MVSD, and DSRSD that serve areas in unincorporated Contra Costa County do not have any guarantees from the County that their sewer fees will be verified before the County permitting department gives final permit approval or issues a CO. The County expects applicants to complete all necessary filings with each agency listed above, but does not enforce compliance through the permitting process. Historical Payment Research: All of the agencies interviewed have a system to research the history of capacity fees levied on parcels in their service area. Each agency has a limit as to how far back they will research. While most agencies perform research as far back as records will allow and use a variety of Bartle Wells Associates 15 Central Contra Costa Sanitary District March 9, 2012 Permit and Connection Fee Audit sources, some set limits. For those agencies that set research limits, should an applicant contest the findings the burden of proof will then shift to the applicant to provide a record of historical occupancy to justify their claim. All agencies will accept applicant provided records regardless of onus. Special Studies All of the agencies interviewed have procedures to conduct a special study, if needed. However, all have indicated that these studies are only conducted if the applicant's proposed land usage is not already represented as a defined customer class, or if the applicant can provide sufficient reason to contest the agencies' strength factor and flow metrics. This process is usually reserved for specialized industries, multi -use parcels and franchises that have verifiable data. CCCSD will conduct a special study for any applicant who asks. All agencies charge administrative and cost -of -study fees for each special study. Tracking of Fees: All of the agencies interviewed employ a tracking system of all capacity and connection fees charged for each parcel. Each agency uses different types of records, and most use a combination of electronic database, ledgers, microfiche and other records. A few have moved to completely computerized systems, but will still store hard files as back up. Expiration of Permits: A few agencies do not set a time limit for their permits to expire. These agencies allow their permits to be active indefinitely until either a connection is made and inspected, or a new permit is issued to a new applicant for that particular parcel. Unlike the District, these agencies do not inspect any work related to the collection system. Most agencies have either a six -month or one- year limit on their permits with an option to extend the permit twice. Follow -Up on Permits: For the agencies that allow permits to expire, many follow up on expired permits. DSRSD updates permit statuses monthly and will issue a notification to the applicant 90 days prior to permit expiration. USD updates permit statuses quarterly and will contact any delinquent applicants. Smaller districts will occasionally monitor the parcel site for any construction activity. All other agencies wait until the next project applies for a permit and then applies any credit, if applicable. However VSFCD will contact applicants after one year if they have not yet attained a CO. VSFCD does this because they adjust their connection and capacity charges annually to a construction cost index, and those with open permits must pay the difference in cost from the adjustment. Bartle Wells Associates 16 Central Contra Costa Sanitary District March 9, 2012 Permit and Connection Fee Audit Fee Collection: Most agencies interviewed collect all charges before the issuance of a building permit by the County or City, usually at the plan review level. By doing this, these agencies have eliminated any problems with collecting from incomplete projects. All other agencies interviewed collect connection charges prior to the issuing of the CO for new connections. It should be noted that these agencies also have sign -off agreements with the cities that issue the CO, whereas CCCSD does not. Only EBMUD gives developers either one year to pay or bills the customer directly on monthly service bill over one year in equal increments for tenant improvements. Residential 2nd Living Units All of the agencies interviewed consider a 2 "d residential living unit to contain the minimum amount of fixtures required to sustain a single family as a stand -alone unit, such as a bathroom and a kitchen. All agencies have an issue with applicants occasionally not disclosing the complete details of fixture installations, but only the very small districts seem to effectively perform a follow -up procedure to verify. Because intent to defraud can be difficult to prove, most agencies will accept the applicant at their word based on submitted plans. All agencies will follow -up and investigate if any unreported usage is discovered through unrelated inspections. Some agencies receive postal address lists that can be used to identify any illegal 2 "d living units, but none actively employ a formal program to discover violators. Restaurants & Delicatessens Most of the agencies interviewed do not discern between a restaurant and a deli. These agencies treat all food service businesses as having equivalent impact upon the system. The few that do make a distinction use a variety of metrics such as square footage, whether customer dishes are washed on site or quantity of food prepared. These are typically smaller agencies that conduct personal interviews with each food service business to determine their impact. Swimming Pools None of the agencies interviewed collect connection fees for swimming pools. In all districts residential pools are not permitted to connect to the collection system and all pools are required to apply for a drainage permit, should they require draining. Most agencies do not charge sewer service charges for swimming pools specifically, but will charge for any showers, toilets and sinks on the parcel premises. For those agencies that do charge sewer service charges for swimming pools, charges are based upon water usage. Shopping Centers Among the agencies interviewed, approaches to shopping centers varied widely. For new shopping center connections some agencies will collect retail connection fees for each store front while some will wait until a business moves into an available unit. Of those who use a flat rate, Bartle Wells Associates 17 Central Contra Costa Sanitary District March 9, 2012 Permit and Connection Fee Audit usually adjustments will be made if a non - retail business occupies an available unit. For tenant improvements to existing connections, all agencies will base the connection fee upon the type of occupying business. The following table summarizes the results from the above discussion. Industry Practices Survey Summary Collects Follows Swimming Swimming Years Researches Charge Up on Separates Pool Pool Permit Charge Manages Before Expired Restaurants Connection Sewer Is History Database Permit Permits & Delis Fee Charges`* Active FSSD contracts with cities for the research, collection and management of connection fees ** Sewer charges for swimming pools are based upon metered water use Bartle Wells Associates 18 Central Contra Costa Sanitary District March 9, 2012 Permit and Connection Fee Audit ff 9TOMM -. o00 moo© FSSD contracts with cities for the research, collection and management of connection fees ** Sewer charges for swimming pools are based upon metered water use Bartle Wells Associates 18 Central Contra Costa Sanitary District March 9, 2012 Permit and Connection Fee Audit CONCLUSION Based upon interviews with permit counter staff, some current procedures with the permit application and issuance process are problematic with the calculating, tracking and collection of fees. The largest concern is addressing and resolving the accumulated, but uncollected, permit - related fees in the SunGardTM system. Another primary concern is establishing and maintaining a standard operating procedure for permit counter related duties. This includes standardized training in software use, applications of special studies, permit follow -up, research on charge history and other issues the staff confronts regularly. Other issues include the need for a comprehensive review of the District's fees and charges, and getting the in- District permit issuing agencies to require the District's sign off before they issue their final permits or COs to builders. Based upon the industry practices survey, there are policies and procedures the District could employ to increase efficiency in the permit issuance process. 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