HomeMy WebLinkAboutCAPITAL PROJECTS AGENDA 12-11-12central
Sanitary
SPECIAL MEETING OF THE
CENTRAL CONTRA COSTA
SANITARY DISTRICT
CAPITAL PROJECTS COMMITTEE
Chair McGill
Member Causey (Alternate)
Tuesday, December 11, 2012
3:00 p.m.
Second Floor 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 WILLIAMS
President Pro Tem
PAUL H. CAUSEY
MICHAEL R AICGILL
TAD J PILECKI
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.
Capital Projects Committee
December 11, 2012
Page 2
1. Call Meeting to Order
2. Public Comments
*3. Review of Draft Fiscal Year 2013 -14 Capital Improvement Budget (CIB) and
2013 10 -Year Capital Improvement Plan (CIP)
Staff Recommendation: Receive the report.
4. Update on Nutrient Studies required by NPDES Permit
Staff Recommendation: Receive the report.
5. Update on Relocation Plans for employees from Headquarters Office Building
(HOB) during the HOB Seismic Retrofit Project
Staff Recommendation: Receive the report.
6. Reports and Announcements
7. Suggestions for future agenda items
8. Adjournment
* Attachment
S.
Central Contra Costa Sanitary District
December 6, 2012
TO: BOARD OF DIRECTORS
VIA: ANN E. FARRELL, GENEIRLAL MANAGER
FROM: ANDREW ANTKOWI APITAL PROJECTS DIVISION MANAGER
SUBJECT: REVIEW PRELIMINARY 2013 TEN -YEAR CAPITAL PLAN
AND FISCAL YEAR 2013 -14 CAPITAL BUDGET
RECOMMENDATION
Staff recommends that the Board support the preliminary expenditures for the Capital Budget
and Plan as proposed in this memo. Setting a conceptual budget for capital expenditures
resolves one variable and simplifies the financial planning process. These figures are then
used as District staff more fully develop and refine financial planning scenarios based on
current information on operations and maintenance costs. The content of the Capital Budget
and Plan will be discussed at the Capital Planning Workshop on December 20, 2012. Due to
the substantial capital funding deficit we are currently experiencing, the calculated rate
increases for the next several years are on the order of 8% per year to allow for a capital
component of the sewer service charge that will bring capital revenue back in line with
planned capital expenditures.
Rates will be examined in more detail as part of the Financial Planning Workshop on January
24 which will incorporate all District expenses and revenues and make ten -year rate setting
projections for Board consideration. The goal of this two phase financial planning process is
to inform the Board of the District financial situation and reach Board consensus on the
language for a Proposition 218 notice regarding a rate increase, ideally by the first meeting in
March (March 7, 2013) in order to meet the noticing deadlines.
BACKGROUND
In preparation for the first fiscal year (FY) 2013 -14 Capital Planning Workshop on December
20, 2012, staff has summarized the material we will be covering in this memo. Much of this
information, with additional detail, will be reviewed with the Board Capital Projects Committee
on December 11, 2012. We routinely hold a Capital Planning Workshop in the fall to set an
estimated dollar amount for our capital program for the following ten years. We have found
this approach to be very helpful in narrowing the scenarios and considerations for the winter
Financial Planning Workshop (to be held January 24, 2013). By fixing the level of capital
expenditures, which comprise approximately 30 - 35 percent of District overall spending,
depending on the size of the Capital Budget that year, the possible budgeting scenarios
become more refined and understandable. If the scenarios in January lead to some
concerns about capital revenue and expenditures, adjustments can be made at that time and
can be incorporated into the draft Capital Improvement Budget and Plan, which is brought to
the Board in a second FY 2013 -14 Capital Planning Workshop in April.
Page 1
HISTORICAL PERSPECTIVE
As our District assets age, renovation and replacement is necessary to keep them
functioning properly. For budgeting purposes, the amount of annual investment in renovation
and replacement must be estimated. In January 2000, staff developed and recommended a
baseline for investment in our capital facilities which assumed replacement of all assets
every one hundred years. This equates to a reinvestment rate of 1 % of the estimated
replacement value. At that time, the total replacement value of our facilities was estimated at
$2.1 billion and therefore the annual investment was set at $21 million. This target amount
has been increased for inflation at 3% per year and has reached approximately $31 million in
2013 dollars for FY 2013 -14.
Since January 2000, staff has invested significant resources in developing more
sophisticated asset management programs for the collection system and treatment plant to
provide the data for a more rigorous assessment of the appropriate baseline budgetary figure
for asset renovation and replacement. These investigations support an annual investment of
approximately 1 % of replacement value as a reasonable amount for the collection system. In
fact, due to the relatively good condition of our system and limited number of line segments
needing capacity upgrades, we have been able to include the known renovation and capacity
needs for the collection system in the 1 % target budget amount as well as selected collection
system capacity improvements.
The annual investment rate for mechanical equipment/pressure piping systems /electrical
equipment at the treatment plan and pumping stations is more difficult to estimate. Staff
continues to better define this reinvestment rate. Work to date suggests a renovation budget
rate of 1 % of replacement value for the treatment plant and pumping stations is an
appropriate minimum funding levels for the Ten -Year Capital Improvement Plan.
The historical District philosophy for funding ongoing renewal and replacement has been to
do so out of ongoing capital revenues sources rather than bond financing. Bond financing
has been limited and has been reserved for large one -time projects which benefit all rate
payers, existing and future, and can logically be funded by spreading the payments over
current and future rate payers. Using this philosophy, the ongoing renewal and replacement
targeted expenditures of $31 million per year in 2013 dollars should be funded from annual
revenue receipts and this should be the minimum level of funding for the capital program.
As introduced above, expenditures for significant projects to increase capacity or address
changing regulations or construct recycled water projects should be viewed as in addition to
the budget for renovation, renewal and replacement. For several years in the recent past,
budgeted expenditures for needed capacity and regulatory projects were increased to take
advantage of increased revenues from a number of sources, principal among them being
capacity fees for new connections. However, more recently, revenues have significantly
decreased and the size of the capital program has been reduced. A number of the projects
that had been initiated when revenues were higher were ready for construction. These
projects targeted needed reliability, capacity and building improvements that had been
contemplated for many years. They included the Solids Handling Improvements to allow
hauling of sludge in the event of incinerators being out of service, and Dry/Wet Weather
Improvements to allow bypass to Walnut Creek when the outfall is being inspected and when
outfall capacity is exceeded and the wet storage ponds are full.
Page 2
Also included were Standby Power Improvements to replace the old engine generators that
were unreliable and finally a new Collection System Operations Department Administration,
Crew and Warehouse facility. In early 2009, staff recommended and the Board concurred
that bonds netting $30 million should be sold to enable completion of these needed projects.
Staff is happy to report that these needed projects have been essentially completed at this
time and very cost effectively, given the extremely competitive bid climate over the last
several years.
The following Figure 1 shows historical District capital expenditures since 1990 -91. Annual
capital spending has ranged from a low of $17 million in FY 1996 -97 to a high of $40 million
in FY 2006 -07 (in actual dollars). This wide variation has been due to the conscious effort to
defer needed projects in the late 1990's during a period of no rate increases and in FYs
2001 -02 through 2003 -04, when the permanent loss of ad valorem tax was feared, and then
escalate projects when the revenue picture improved with rapid build -out of the Dougherty
Valley and associated capacity fees. In 2002, bonds were issued for approximately $16.5
million to supplement capital revenue and fund construction of some capacity improvements
needed to serve the Dougherty Valley area of San Ramon in advance of receiving the
capacity fees generated upon connection of the completed homes and businesses. Those
fees peaked in FY 2004 -05 when there were almost 2000 new connections in the Dougherty
Valley alone. The Ten -Year Capital Plan was developed based partially on anticipated
revenues from the Dougherty Valley. The following property tax and capacity fee trend,
Figure 2, shows the extreme variability of these two sources of capital revenue over the
years. As development slowed and the economy deteriorated, anticipated revenues did not
materialize.
Capital revenues are collected and held in the Sewer Construction Fund (SCF). The SCF
balance is an important tool in funding daily District operations. In addition to funding the
capital program, the SCF balance is used to meet the cash flow needs of the District. The
District receives its sewer service charge and property tax revenue from the County two
times per year. In between the two revenue receipts, the District must pay its bills from the
funds on hand. Based on the current District operating and maintenance and capital
budgets, a SCF balance of approximately $30 to $35 million is necessary to pay the bills
between revenue receipts. The SCF balance was projected to fall below the needed level in
early 2009 if we continued the capital program at its budgeted level. Therefore, as noted
above, a net $30 million in bonds were sold to allow continuing with construction of needed
projects in the very favorable bidding climate.
The only capital revenue source completely within the control of the District is the capital
component of the sewer service charge. The capital component of the sewer service charge
had been sharply reduced in recent years to reduce increases in the overall sewer service
charge amount and still fund needed operation and maintenance activities. Last year the
Board approved a two -year rate increase of $30 each year, a portion of which was
designated to renew the funding of the capital program. Unfortunately, the majority of the
two -year $30 per year rate increase was allocated to operations and maintenance costs to
avoid deficit spending in that budget and the capital program continued to be significantly
underfunded. A table showing the sewer service charge components for the last thirteen
years follows.
Page 3
H
V
�N
C
CC
T
co
�= Z C.4
QW CD
QW CL
r
cn
cc E
U ~ Q c
as >. CD
Davv_i
V Z LL
J Z
LL
r
Z
W
V
it
LL
.-d- co O uh
N N cw
O C cc �
7 CO 1l-
1- --d- O
of m ai
t7 �
N m cc cn Qf 7
O
O$f O T ��pp
o cw
C O N Ct)
Q n r cJ N
C O N
n CO N
C N N a CO
�4OQ O N
to n
c, O �
C n c N
119
Q N_
$ r o o a
c' c�
u, �2 r
t7 m boCpo pNp to
NR LL7 C7 N
amcj cp
n n �
P-t. c"
r
m
M 9 N
1� m
n
N C) n tD
tC') tD r
< n O tD
of O � CD
c cr - a
cri -q
�j N CD N
CCU -
rz
O
a N t0
mon', ci
N O)
� tT
N COO c j
a P! a c 0 O
O
CO c�
y
C
d
E �
O N
d V) t,
c E
W.2
6 N C V
F-VC7¢
N
p�
N
O
m
(O
c�]
m
LO']
Qq
N
V
N
Z;
co
r-
N
clo
N
N
n
tq
i
N
Qf
m,
Ci
0
m
N
LL9
n
m LO
C%j LO
m
cli
tD gj
OnJ t0
Pn9
N�
N m
N O
cm
tD �
N
COO l7
N
E
l9
S
m
7
Q
C
d
a
7
Q
AV/
W
L
C
W
a
x
w
cc
7
c
41
Id
a
N
L
LL
a
c�
V
13
C
K
A
L
O
a
NIL
LL
2J--
0
as
co
U)
-0
ffl
0 0 0 0 0
00 00 00 0 0
0
0 0 0 0 0
0 0 0 0 0
0 0
r ° � � �
6a d9
EL-L LOZ
L L -0 LOZ
01 -6002
n
s
60-8002
80-LOOZ
_ cn
a LO-900Z
U
0 N
u o 90-9002
- 0
V,
m
rn
m
CL
50-t7OOZ
ai
U-
C
O
tl0-£OOZ
5
CD
s
c
o
-
£0-ZOOZ
�?
C
Tl
ZO- LOOZ
X
m
LO-000Z
r
as
CL
0
L
00-6661
66-8661
TT
86-L661
L6 -9661
96-9661
96-V661
V6-£661
£6 -Z661
26-1661
0
0
o
�
0
0
0
N
Efi
V,
m
rn
m
CL
ANNUAL SERVICE CHARGE PER RUE
Fiscal Year
Operations
Component
Capital
Component
Total Sewer Service Charge
per RUE
2000 -01
$185
$15
$200
2001 -02
$204
$20
$224
2002 -03
$207
$41
$248
2003 -04
$218
$54
$272
2004 -05
$204
$76
$280
2005 -06
$234
$46
$280
2006 -07
$213
$76
$289
2007 -08
$242
$58
$300
2008 -09
$260
$51
$311
2009 -10
$292
$19
$311
2010 -11
$300
$11
$311
2011 -12
$302
$39
$341
2012 -13
$344
$27
$371
PROJECTED FISCAL YEAR 2012 -13 EXPENDITURES /REVENUES /SCF BALANCE
For the current FY 2012 -13, expenditures were budgeted to significantly exceed revenue.
This was a conscious decision to deficit spend and utilize the $30 million in bond funds that
had been deposited in the Sewer Construction Fund to complete specific projects, such as
Standby Power Improvements, Sludge Hauling Improvements, Dry/Wet Weather Bypass
Improvements and the Collection System Operations Department Facility, when the bid
climate was favorable. The following tables show the budgeted expenditures and revenues
for FY 2012 -13 and the resultant cash flow and sewer construction fund balance.
2012 -13 CAPITAL PROGRAM
EXPENDITURES
BUDGETED
Treatment Plant Program
$7.4 million
Collection System Program
$13.7 million
General Improvements Program
$7.3 million
Recycled Water Program
$3.9 million
Total Expenditures
$32.3 million
2012 -13 CAPITAL PROGRAM
REVENUE
BUDGETED
Facilities Capacity Fees
$4.5 million
Pumped Zone Fees
$.6 million
Interest
$.4 million
Sewer Service Charges
$4.4 million
Property Taxes
$7.5 million
Reimbursements from Concord
$3.8 million
Reimbursements from others
$.6 million
Total Revenues
$21.8 million
Page 6
2012 -13 CAPITAL PROGRAM
CASH FLOW
BUDGETED
Total expenditures
$32.3 million
Total revenue
$21.8 million
Variance
-$10.5 million
SCF Balance 6/30/13
$35.8 million
As part of past debt financing, the District has pledged revenues to first pay debt obligations.
Second, revenue is assigned to operations and maintenance costs, including the self
insurance fund. Lastly, revenues are available for the Capital Improvement Program. As
discussed above, the District draws on the SCF balance to fund its operation and
maintenance functions as well as the capital program. The cash flow needs for this self -
funding dictate that the Sewer Construction Fund balance be maintained between $30 -$35
million. FY 2013 -14 will start with an estimated balance of $35.8 million, only slightly greater
than the minimum funds required to meet District cash flow needs. Thus, a significant sewer
service charge increase will be needed to continue to fund the capital program at the
historical and recommended level of 1 % of asset value or approximately $31 million per year.
DISCUSSION OF PROJECTED SEWER SERVICE CHARGE INCREASES NEEDED TO
FUND RECOMMENDED 2013 CAPITAL IMPROVEMENT PLAN
The sewer service charge was increased significantly over the last year two years.
Unfortunately, increases in the unfunded liability for pensions have resulted in higher
operating costs and the majority of the two year increase went to fund operating expenses.
Thus, limited funds were available to allocate to the capital component of the sewer service
charge and the capital funding deficit remains. The following two figures demonstrate 1) the
deficit spending that has occurred in the capital program and the resultant spending down of
the sewer construction fund - Figure 3, and 2) the increasing operations and maintenance
component of the sewer service charge while the capital component has remained flat -
Figure 4.
Page 7
1
N
LL
V
c0 4<
im LO
c0
ffl
a,
Ln
0 0
m o
a+ N
A Z v
cnC 0
VI■ Lo 0
V
A�
AA
MW
W
2
CD
0
a
.Q
V
O
O
I,-
GH
MIL
LL
N
Lo
Lo
to
m
ZP;
6s
N
LO
LO
Lo
C?
n
6a
m
co co
N
M
f�
Co /
ui
co
co
m N
CO
c
f�
0
LO
v
v3
v
C
41
CL
x
W
m
3
C
C
Q
N
co
cli
val
C
d
cr
3
C
C
Q
O O
� �
CO
ai
u2
C�
U
LO
N
U�
LO
fA
d
a;
c0
m
(d
T -p
O
N
e4
N
eo:
m
613
•i
C
R
T
7
>
to
LL
O
CO cO
N
C
m
O
Q
N
N
f{3
N
ca
Cl)
f.s
i+
},
C
cT
u
u
CA
N
rn
m
C\j
aD
LO
j
o
CO
U
C.)
6a
�
N
m
C
0
m
fA
co
r
r�
ao
m
N
u°
Co
U
N
L
OD
d
3
T
64
CD
O
T
d
Cam.
Ld
CD
N
co
H
lf)
ElN4
1iLO4
�
O
o
c0
p
T
O
LO
6a
CO
'i
rn
Cn
O
d
O
ff�
C4
O
O
E
rn
o
v,
0
7
0o
co
to
6s
O
�
v
C
41
CL
x
W
m
3
C
C
Q
N
co
cli
val
C
d
cr
3
C
C
Q
O O
� �
00
N
DI
N
CL
ai
u2
U
LO
N
U�
C
d
a;
c0
m
(d
T -p
O
N
e4
N
eo:
m
613
•i
C\j a)
CIS
T
>
r O
O
CO cO
N
(IS
m
Q
N
N
f{3
N
ca
Cl)
f.s
i+
},
C
cT
CA
N
rn
m
C\j
aD
LO
j
o
CO
U
N m
6a
�
�
C
N
co
r
r�
ao
m
N
Co
U
N
�
co
T
CD
O
T
Cam.
Ld
CD
N
co
N
lf)
ElN4
1iLO4
�
o
p
T
O
r
CO
'i
rn
Cn
LO
to
d
N
ff�
C4
.a
O
E
rn
o
v,
0
7
0o
co
to
ui
O
N
6a
64
�
N
L
Y
co
o
m
v
Y
n
°o
L6
m
m
`n
O
N
E!3
fA
Ef3
d
o
[?
Co.
Co
t6
to
cn
2:1
CD
o
f3
ea
Y
U
•2
co
�
Y
cn
O
CD
Il�
N
Y
Lb O
N
N
LO
C
N
EH
6a
6s
LO
C(IS
C
O
O
lA
C J
Nr
O
N
M
f.3
N
03.
if
03
C
CIS
07
o
C
N
CD
CO
mo
co
m
m
C
N
�'(A
EA
O
U
CO
U
Q
uo
v,
v,
N
m
un
i0
YO
cm
6a
cm
�
-nr
V).
O
N
L
N
Y
U
Q
o
v
m
N
�
L
N
U
O
O)
N
CO
O
O
c6
N
PZ
a)
N
O
0
O
CO
c0
m
0)
O
N
N
co
�+
O
fJ3
Ei)
f»
y
T
U
.0
Y
O
O
c
c
Y
¢
w
m
ck
m
O
_
>>
ca
m
N
LL
U
C
CCIS
CIS
U
LL
U)
00
N
DI
N
CL
d'I
d
L
LL
T
d
CD
EL
ch
�
L
rn
r
Lo aN
cO
r =_
v E
.
K}
64
N
d
E't
m
It
cu
E
co
N
`V
d
Cl)
O O
L
co
64
M
C N
N
N
-C�
1I li
a
=J
•C:
a o
0 °�
0 co
N
li Q
D
/9r
E!} 6a
�
C
G
N
co
U
li
0
0
r
E
CO
CL
N
O
CY,
61)
v
N
�
N
Ur
LO
cc
co
C
W
r
f�
�
O
N
> Z
Q +r
a
O
n
64
o
N
^VJ 7C)
W
M
n
0
�
N
W w�
{d��i
O
O
O
O
co
O
O'er
N
U
LO
0
(Z +'^''
N
o
.(n
E!}
N
U O
C,
a
0
U_ U
�
o
N
.�
o
CZ
N
No
N
O
CM
O
N
o
N
W
O
No
N
O O O
O ®
OM
O
O
O O O
LO
r
O
613.
LO q* It
V). 6c? 613
M
(a (a
N
64
N
64
K} K}
T
d
CD
EL
Based on expenditures of approximately $31 million per year for renovation, renewal,
replacement and known capacity projects; approximately 166,000 residential unit equivalents
paying sewer service charge; and revenue from other sources of approximately $17 million;
the capital component would need to be $84 to fully fund the capital program as compared to
the current capital component of $27. Thus, an increase of approximately $57 is needed in
sewer service charges just to bring the capital program out of the deficit spending mode.
Assuming a two year increase, this is approximately $29 per year.
Preliminary calculations using the Districts rate - setting model inclusive of operating and
maintenance costs and with capital expenditures less than $31 million in the first two years of
the plan, indicate rate increases of approximately $31 per year for the next several years will
be needed. Based on this very preliminary information, rates would need to increase from
the current $371 per year to $402 per year in FY 2013 -14 and $433 in FY 2014 -15. The
District would remain substantially below the FY 2012 -13 median of agencies surveyed of
$492 even with these increases. A Proposition 218 notice for two consecutive rate increases
of approximately $31 each year would need to be sent out by mid April to notice such a
proposed increase. In order to prepare the mailer in time, a Board decision on a two year
rate increase will be needed at the March 7, 2013 Board meeting if possible or the March 21,
2013 Board meeting at the latest.
ANNUAL SERVICE CHARGE PER RUE
Fiscal Year
Operations
Component
Capital
Component
Total Sewer Service Charge
per RUE
2006 -07
$213
$76
$289
2007 -08
$242
$58
$300
2008 -09
$260
$51
$311
2009 -10
$292
$19
$311
2010 -11
$300
$11
$311
2011 -12
$302
$39
$341
2012 -13
$344
$27
$371
Prelim 2013 -14
$353
$49
$402 $31 increase
Prelim 2014 -15
$354
$79
$433 $31 increase
These sewer service charge increase figures are preliminary and will be refined for the
January 24, 2013 Financial Planning Workshop. The FY 2013 Capital Plan and FY 2013 -14
Capital Budget are described in the following pages and are based on the recommended
continued level of funding and assume a rate increase of the magnitude discussed above.
Page 10
RECOMMENDED 2013 CAPITAL IMPROVEMENT PLAN
FY 2013 -14 TO FY 2022 -23
The proposed 2013 Ten -Year Capital Improvement Plan is summarized in the following,
Table 5. It contains a moderate baseline plan of $253 million in improvements over the next
ten years. The baseline program addresses needed reliability, capacity and building
improvement projects, including renovating 100% of the high priority defective sewers
identified to date, and provides $11.8 million to address needed seismic improvements and
$12.5 million for improvements to the sludge dewatering equipment and multiple hearth
incinerators. Recent studies of our solids handling technology have concluded that it is a
good investment to improve our current facilities and extend their life by 10 to 20 years
before deciding upon a new solids handling technology. However, no money has been
budgeted for seismic retrofit of the existing solids conditioning building. Because it is likely
that we will convert to another solids handling technology, such as fluidized bed incinerators,
in 10 to 20 years, a significant investment in seismic retrofit of the existing incinerator
building is not recommended.
In addition to the $253 million baseline, the total $365 million Ten -Year Capital Plan includes
$20 million to remediate contaminated soils in the area where new nitrification facilities would
be located and $70 million to construct nitrification facilities. It also includes $7 million for
removal of screenings from the wastewater stream to reduce downstream operational issues
and a $6 million allowance for alternative energy to either replace our existing cogeneration
system or convert to solar energy. Finally, in the tenth year of the plan, $4 million is
budgeted to begin permitting /pre- design of a new fluidized bed incinerator and $5 million to
begin planning /pre- design to replace our ultraviolet disinfection system with ozone, to better
treat for contaminants of emerging concern.
Funding for the $365 million Ten -Year Capital Plan is from traditional sources of capital
revenue, including property taxes, capacity fees and contributions from the City of Concord.
Any funding deficit must be made up by increasing the sewer service charge capital
component or by selling bonds. As noted previously in the memo, significant rate increases
are needed over the next several years to restore the capital component of the sewer service
charge to a sustainable level. Projections of the needed increases in the sewer service
charge capital component to fund the recommended Ten -Year Capital Plan will be further
discussed with the Capital Projects Committee on December 11 and with the full Board at the
December 20, 2012 Capital Budget Workshop.
Page 11
C
C
N
E
O
Q.
E
Q
V
N
L
C
N
y
O
Q
O
CL
lfj
CO
F
N
m
as
CL
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
p
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
1-
O
N
O
Co
N
O
CO
O
T
LO
O
LO
Cl
m
O
M
N
O
N
Cli
c'1
f-
N
V-
O
N
co
to
CO
t.f)
N
O
Lo
O
O
Ln
CO
m
O
0)
t0
00
O
O
W
0
m
N
-tr
h
CO
O
T
O
N
r
r
L6
Lf)
L[)
pl
rl:
O)
r
C6
Ln
O
N
1�
r
t0
T
T
t0
T
T
M
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
M
O
O
O
O
O
O
O
O
O
O
O
0
0
N
C)
C)
C)
Cl
O
O
00
LO
-T
O
O
LO
Ln
h
O
ti
CO
N
M
CO
O
";t
T
LO
1-
M
1-
O
O
Ln
W)
N
O
N
t0
NO
O)
N
O
co
O
I*-
r
N
M
1 -
LO
LO
co
M
a0
O�
1I
CO
N
N
CD
Ch
r
N
-W
0)
T
T
M
O
O
O
O
O
O
O
O
O
O
O
0
0
0
0
0
0
O
O
O
O
O
O
O
O
N
O
O
O
O
O
O
O
O
O
O
O
O
O
O
N
LO
p
p
O
Lo
O
C7
r
L2
CD
CD
CD
CD
O
O
O
r
T
.0
U,
O
ti
00
1-
t17
T
O
O
00
co
LO
Ln
N
NO
r
00
r
T
O
r
1-
Cn
M
Ln
Ln
�
�
LO
Lo
T
N
N
N
cl
N
r
T
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
N
O
O
O
O
O
O
O
O
O
O
0
0
O
O
O
1-
C7
00
O
Ln
pp
O
t1')
O
Lf)
LO
Ie
O
C7
CD
00
®p
O
Ln
O
Ln
1`
NO
co
00
M
r
1-
r
CO
co
CO
O
t0
O
LO
O
LO
V-
oO
-T
Ln
Lo
M
m
N
N
N
N
c+S
c7
YZ
C6
0
0
0
0
0
O
O
O
O
O
0
0
0
0
O
O
O
O
O
0
0
0
O
0
0
O
N
O
O
O
O
O
O
O
O
O
O
0)
LO
CO
p
00
p
LO
Ln
'm
M
O
P
11')
LIj
co
1�
Co
C)
O
C7
O
O
co
O
co
O
LO
O
Ul)
N
T
T
r
O)
T
O
N
N
CO
r
LO
LO
V-
--:r
LO
Ln
-W
O
N
co
N
r
T
M
LO
0
0
0
0
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
§
O
CA
0
0
0
O
O
O
O
O
O
O
O
T
L.C)
O
O
Lty
O
O
O
r-
O
O
O
O
O
O
N
ao
CO
Ln
.1
in
t-
CO
r
M
O
O
w
co
Ln
Ln
ti
Cn
O
m
�
N
O
CO
M
Ln
Ln
�
mr
LO
Ln
M
C
N
O
N
t'9
co
co
M
T
T
M
O
O
O
O
O
O
O
O
O
O
O
O
O
C7
O
C7
O
O
O
O
O
O
O
O
O
O
to
O
O
O
O
O
O
C7
O
O
O
O
O_
T
LCi
O
O
_
Ln
*
O
CO
Ln
Ln
O
LCi
_
CD
O
_
O
CD
ti
CO
N
Ln
M
1-
CO
CO
M
O
O
LO
Lo
Ln
In
m
I�
LP)
I �
r
N
Ln
CD
Ln
LO
Ln
co
Co
LO
LO
t0
O
N
N
CO
N
T
N
Ch
r
ti
T
T
T
T
M
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
pp
O
O
O
O
O
O
O
O
O_
O
O
O
O
O
O
T
O
L,C)
CT
U.,
r
O
L.C)
1�
7
O
w
tCpp
O
O
C6
CD
N
�
r-
M
O
P-
O
LO
N
O
O
co
00
LO
In
m
CO
r
m
LO
N
�
N
-T
LO
LO
�
mt
LP)
Lo
M
N
N
N
.::'
N
C" i
CD
T
M
T
T
M
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
0
O
0
O
O_
O
O
O_
O
O_
O
O_
O
O
O
N
O
M
O
LO
O
r
Lo
I�
O
N
m
O
1-
Ln
co
Ul)
O
O
1-
r-
Lc)
to
�
O
LO
r
LO
r
CO
N
r
r
T
LO
LO
qza--T
Ln
Lo
M
N
wi
N
C6
O
*
LLJ
T
Lfj
T
N
0
0
0
0
0
0
0
O
O
O
O
O
O
O
O
O
O
0
O
0
O
O
O
O
O_
O
O
O_
O
O_
O
O_
O
O
O
C)
O
CD
C D
O
0)
"
ui
1-
O
�
t0
O
LO
O
T
LO
In
t0
T
co
OO
a
r
N
1-
�
Ln
LC)
LO
v
Ln
Ln
Ln
t0
0
N
00
O
CD
N
M
r
Lo
T
T
N
O
O
O
O
O
O
O
O
O
O
0
O
0
O
0
op
0
O
O
O
0
O
0
O
O
O
-W
O
O
O
O_
O
O
O
0000
O_
O
O
O
Ln
1--
N
-
O
N
CO
m
O
c
r
CO
CD
t7
M
O
N
co
T
O
N
M
O
T
O
O
O
m
LC)
to
Co
CO
CO
V'
ti
O
LO
1-
O
C7)
LO
r
�
Co
00
Co
Ln
O
N
0
C=5'
N
r.::F
r
N
T
Qf
T
N
R
lC
W
A
W
C
.0
~
3
'r0�+
7
7
O
O
N
fn
C
N
to
fn
fn
`
N
E
t
y
C
N
E
._
w
V
O
++
V
O=
w
CL
cc
M
N
N
y
w
i=.
O
cr
0
.�
CL
CC
�
O
cc
"�
W
O
/a
C
E
tV
E
C
N
E
'¢
O
g
C
o
O
'.O-..
•lOC
y
y
aV)
R
lC
L)
~
•7
N
O
N
R N
O
N
cc
C
C
N
y
t�
cc
-
O
C
O
d) O
E
O
V
L
O
4)
V
y
O
i
y
C
N
!C
O
N
N
K
7
N
C)
Ca
y
C
1-
a
0
CC,
W
C>��a
Wd
CJ
>2�a
��
N
m
as
CL
RECOMMENDED FISCAL YEAR 2013 -14 CAPITAL IMPROVEMENT BUDGET
The recommended FY 2013 -14 Capital Improvement Budget totals $29.6 million of which
$28.1 million is for renewal and replacement and routine capacity improvements. This
amount is close to the $31.0 million annual investment recommended to accomplish a once -
per -100 year replacement of all District assets. In addition, an expenditure of $1.5 million
($4.4 million total project cost) is budgeted for the Concord Recycled Water Landscape
Irrigation Project. Approximately $1 million of this will be reimbursed through a State
Proposition 84 grant. The following table breaks down the expenditures by program.
FY 2013 -14 CAPITAL IMPROVEMENT
BUDGET
TOTAL
Treatment Plant Baseline
$ 8.7 million
Collection System Baseline
$14.9 million
General Improvements Baseline*
$ 4.1 million
Recycled Water Baseline
$ 0.4 million
Concord Landscape Irrigation
$1.5 million
Total Baseline
$28.1 million
Total Baseline + Concord Recycled Water
$29.6 million
*Includes $1.8 million for one time seismic retrofit projects which are considered renovation
and so have been considered baseline but will not be recurring.
Staff will be working to develop the detailed budget document using the above preliminary
figures as modified by the December 2012 Capital and January 2013 Financial Board
Workshops. Many of the projects have already been defined. Others will evolve and emerge
as we prepare the budget document over the next few months in anticipation of the second
Board Capital Workshop in April 2013, when the detailed draft Capital Improvement Budget
is reviewed with the Board.
A review of the preliminary 2013 -14 Capital Improvement Budget for major projects and
areas of emphasis follows.
TREATMENT PLANT PROGRAM
Preliminary estimates of baseline expenditures for the FY 2013 -14 Treatment Plant Program
can be grouped into two major categories: one time renovation and recurring renovation.
Each of the major projects is described briefly after the table.
FY 2013 -14 TREATMENT PLANT PROGRAM
CATEGORY
PROJECT
ANNUAL EXPENSE
One Time
Renovation
Primary Treatment Renovation
$ 5,000,000
Pump & Blower Building Seismic Imp.
$ 850,000
Co eneration Renovation
$ 400,000
Recurring
Renovation
Piping Renovation Phase 8
$ 100,000
All Other
$ 2,364,000
Total Baseline
$ 8,714,000
Page 13
Primary Treatment Renovations: Most of the piping and equipment in the Primary
Treatment area was installed in the early to mid 1970's and is more than 30 years old. Much
of the piping has shown signs of corrosion and some of the process equipment is reaching
the end of its service life. This project will replace water and air supply piping, grit handling
equipment, scum and grease removal and thickening systems, the electrical system and the
sludge collectors /piping /pumping.
Pump and Blower Seismic Improvements: The recently completed seismic analysis of
treatment plant structures indicated that the Pump and Blower Building (PBB) would sustain
significant damage /potential collapse during a major quake on the Concord fault. The PBB
houses critical equipment such as the primary and final effluent pumps, aeration air blowers
and service air compressors. Treatment plant operations would cease with the loss of any of
this equipment. This project will develop a final design /cost to upgrade the building to
withstand a major seismic event. Board approval will be sought prior to award of a
construction contract for the proposed improvements.
Piping Renovations Phase 8: A significant portion of the piping systems on the plant site
are over 30 years old and some have already begun to fail. The Piping Renovations
Program is systematically evaluating the piping systems and addressing problem areas
before pipe failures adversely affect the treatment processes. The Piping Phase 8 project
will evaluate and design the next round of piping replacement throughout the treatment plant.
COLLECTION SYSTEM PROGRAM
The major 2013 -14 projects planned for the proposed $14,919,000 collection system
program can be grouped into five categories: renovations to existing sewers, pumping
stations, developer services, capacity /renovation driven projects, and Contractual
Assessment Districts (CAD's). A description of the major programs /projects follows the table
of estimated expenditures.
FY 2013 -14 COLLECTION SYSTEM PROGRAM
CATEGORY
PROJECT
ANNUAL EXPENSE
Renovation program
North Orinda Ph 5, Lafayette Ph 8,
$ 10,601,000
Diablo Renovation Ph 2, Walnut
Creek Ph 10, Concrete and
Corrugated Pipe Renovation, TV
inspection and others
Capacity /Renovations
Grayson Creek Trunk in Pleasant
$ 1,600,000
Hill
Pumping Stations
Moraga Pumping Station Grinder,
$ 600,000
Buchanan South Pumping Station
Removal
Developer services
Developer Services
$ 681,000
Contractual
Current CADs — Harper Lane,
Assessment Districts
Willow Drive
$ 500,000
All others
$ 2,137,000
Total
$14,919,000
Page 14
Renovation Program: The renovation program continues the District's efforts to
renovate /replace sewers identified by the TV Program as being in poor condition. This year's
renovation program focuses on North Orinda, Diablo, Walnut Creek, and Lafayette where
approximately 35,000 feet of sewer mains will be renovated /replaced. In addition, design
and right -of -way acquisition efforts for next year's program will commence. The Concrete
and Corrugated Metal (CM) Pipe Renovation Project (2013 CIPP Lining project) will install
approximately 6,300 feet of cured in place pipe in concrete and CM pipe ranging in size from
18 to 42 inches. The majority of the concrete pipe to be renovated is downstream of force
mains that comprise the Martinez Pump system. The CM pipe was installed in the 1950's in
Walnut Creek and recent CCTV work has shown extensive corrosion.
Capacity /Renovations: In May 2010, the update of the Collection System Master Plan was
completed and a list of priority capacity replacement projects was developed. The first of the
identified projects, the new trunk sewer in Pleasant Hill Road near Acalanes High School in
Lafayette, was completed in fiscal year 2011 -12. The design of the Pleasant Hill Grayson
Creek Trunk project started in fiscal year 2012 -13 and will continue in the 2013 -14 with
construction in fiscal year 2014 -15. The Pleasant Hill Grayson Creek Trunk project will install
approximately 5600 feet of 18 to 24 inch line in Pleasant Hill between the intersection of
Pleasant Hill Road and Mercury Way to the Pleasant Hill Relief Interceptor in Ardith Drive.
Pumping Stations: The focus of this program for FY 2013 -14 is implementing minor
improvements at District's pumping stations. The Moraga Pumping Station has consistent
problems with ragging. To improve the maintenance and operation of this station a project to
add grinders and /or other equipment needed to alleviate the ragging problem will be
designed and constructed during this fiscal year. The decommissioning of the Buchanan
South pumping station is also planned. With some rerouting of sewers, this small pumping
station can be eliminated.
Developer Services: This project provides for appropriate capitalization of District force
account labor and other expenses for planning, design, and construction of developer
installed and contributed main sewer facilities in FY 2013 -14.
Contractual Assessment Districts (CAD): The CAD program provides a financing
mechanism for property owners to extend public sewers into areas which are currently
served by septic systems. The program requires participating property owners to fund the
cost for the non - participating property owners. The participating property owners can elect to
have the District finance their costs and pay them back over a ten -year period with interest.
The District has funded 24 CAD's using this approach over the years and has already been
paid back the majority of the funds, with interest. Based on staff's knowledge of potential
CAD's in the service area, a budget of $500,000 per year or $5 million over the ten -year plan
has been suggested.
Page 15
GENERAL IMPROVEMENTS PROGRAM
General Improvements in FY 2013 -14 are proposed at $ 4,091,000 and will include the
traditional equipment budget, information technology budget and items associated with
miscellaneous District facilities. The largest proposed expenditure is the $1.8 million
budgeted for construction of seismic retrofit of the District Headquarters Office Building
(HOB). In order to facilitate construction staff will be relocated to other buildings at the
treatment plant site in Martinez, and a leased office building in Concord. Staff will use the
opportunity of an empty building to construct general improvements. These general
improvements include new carpet, painting, installing recycled water to the restrooms and
other minor upgrades.
The General Improvements Program also recommends significant investment in Information
Technology (IT) next year. $500,000 has been budgeted for general IT development. Staff
will be seeking Board input on the types of improvements they would like to see as we
assess the state of the industry and where the District needs to go to be a leader in the use
of technology. Staff is also planning to upgrade and modernize the existing geographic data
integration (GDI) system which is used to display our collection system maps and link them
to a variety of databases within the District. As part of this project, staff is researching a
replacement for our collection system maintenance scheduling software. The goal is to have
a real -time scheduling system which will support wireless field applications and real -time
workflow routing for collection system operations crews. A budget of $600,000 is
recommended for the GDI /maintenance scheduling modernization project.
RECYCLED WATER PROGRAM
Recycled Water Program spending includes the baseline budget needed for recycled water
planning and continued implementation of cost - effective Pleasant Hill Zone 1 connections.
This planning includes funds for staff time and consultant and lobbying efforts to continue to
pursue Title 16 funding for the Concord Landscape Irrigation project construction as well as
pursue partners and support for a large -scale recycled water project to serve the Martinez
refineries. The baseline also includes $100,000 for the District share of the Feasibility Study
for the Martinez Refinery Project, for which we recently received Title 16 funding.
In addition to the baseline, $1.5 million ($4.4 million total project cost) is budgeted for
construction of the Concord Landscape Irrigation project. The District will receive a
reimbursement of approximately $1 million from State Proposition 84 funds to construct this
project.
Page 16
RECOMMENDATION
Staff recommends that the Board support the preliminary expenditures for the Capital Budget
and Plan as proposed in this memo. Setting a conceptual budget for capital expenditures
resolves one variable of the financial planning process. These figures are then used as
District staff more fully develops and refines financial planning scenarios as they gather
current information on operations and benefits costs. Finally, a comprehensive rate planning
document is prepared for distribution to the Board in mid January and will be discussed at a
workshop on January 24, 2013. This year's financial planning process is particularly
important as there is no Proposition 218 notice in place and the Board will need to make a
decision regarding future rate increases by early to mid March to allow for proper Proposition
218 noticing to occur. The December Capital Budget Workshop discussion is the first step in
this process. Following the January Financial Planning Board Workshop and after a
determination on funding levels and future rate increases is made, the Capital Budget and
Plan expenditure figures can be finalized and the comprehensive Capital Budget and Plan
developed for Capital Projects Committee and full Board consideration in April.
Page 17