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Cost Model Scenarios (PowerPoint)CENTRAL CONTRA COSTA SANITARY DISTRICT Comprehensive Wastewater Cost of Service Study BOARD WORKSHOP - WASTEWATER FINANCIAL PLAN/ JANUARY 20, 2015 S • Key Assumptions • Financial Plan Scenarios • Scenarios Comparison • Preliminary Cost of Service Findings • Recycled Water Policy Issue • Wrap -Up 2 Updated CCCERA five year contribution rate projections AB 197 impacts included Discontinuation of additional UAAL contributions MOU Provisions &Benefit Rates included Proposed Staffing Plan Changes Fiscal Impact included ($427K) FY 16 -25 10 -year CIP Total - $416M (unescalated) Pay -As- You -Go Capital Funding 3 Current reserves targets 32% (^-,4 months) of next year's O &M expenses 100% of next year's debt service 30% of next year's capital expenses 0 • Board Preliminary Reserve Targets (by FY 2020) 5 months (42 %) of O &M expenses 100% of next year's debt service 50% of next year's capital expenses $6.5M in Self- Insurance and Emergency Reserves • Staff Recommended Long Term Reserves Targets (by FY 2025) 6 months (50 %) of O &M expenses 100% of next year's debt service 100% of next year's capital expenses $6.5M in Self- Insurance and Emergency Reserves 5 Lr I Updated budget FY 15 -24 CIP Projections $75M UAAL (Previous direction) Current Reserves Targets NNW BASELINE Updated budget Staffing Plan Retirement (CCCERA data) Medical FY 16 -25 CIP ($416M) $75M UAAL (Previous direction) Current Reserves Targets • Updated budget Staffing Plan Retirement (CCCERA data) Medical • FY 16 -25 CIP ($416M) • $10M UAAL (No additional) Current Reserves Targets Updated budget Staffing Plan Retirement (CCCERA data) Medical FY 16 -25 CIP ($416M) $10M UAAL (No additional) Board Preliminary Reserve Targets (by FY 2020) Updated budget Staffing Plan Retirement (CCCERA data) Medical FY 16 -25 CIP ($416M) $10M UAAL (No additional) Staff Recommended Long Term Reserves Targets (by FY 2025) P $120 0 $100 $80 $60 $40 $20 $0 Inflated Capital Improvement Plan Spending (in millions) $34 $40 i � yytt. d FY 2016 FY 2017 ® Treatment Plant $43 1 FY 2018 $40 $36 FY 2019 FY 2020 Collection System Inflation factor is 3% per year starting in FY 2017 $41 $39 FY 2021 FY 2022 General Improvements $68 $47 FY 2023 FY 2024 Recycled water $97 FY 2025 9 Scenario 2015 -16 2016 -17 2017 -18 2018 -19 2019 -20 2020 -21 2021 -22 2022 -23 2023 -24 2024 -25 10 -Year Excess ID Description Rate Rate Rate Rate Rate Rate Rate Rate Rate Rate Ending Funds Increase Increase Increase Increase Increase Increase Increase Increase Increase Increase Total Available 2024 -25 Prior Year 2014 -15 Scenario used $34 $33 $32 $6 $0 $0 $0 $0 $0 N/A $544 $4,760,000 Prior Year for Rate Setting (June 2014) Percentage Increase 7.7% 7.0% 1 6.3% 1.1% 0.0% 0.0% 0.0% 1 0.0% 0.0% N/A 18.2% Updated Data Including Capital Expenses, Retirement & Medical $64 $63 $17 $17 $18 $19 $19 $20 $20 $21 $717 $57,440,000 Baseline Rates, $75M in UAAL Payments Percentage Increase 14.6% 12.5% 3.0% 2.9% 3.0% 3.1% 3.0% 3.0% 3.0% 3.0% 38.8% Updated Data Including Capital Expenses, $10M in UAAL $33 $32 $20 $20 $20 $20 $20 $20 $20 $19 $663 $270,000 1 Payments Percentage Increase 7.5% 6.8% 4.0% 3.8% 3.7% 3.5% 3.4% 3.3% 3.2% 3.0% 33.8% Scenario 1, plus Reserves are Increased to 5 Mo. O &M And 6 $35 $33 $25 $24 $24 $24 $24 $23 $23 $23 $697 $70,000 2 Mo. Capital by Year 5 Percentage Increase 8.0% 7.0% 4.9% 4.5% 4.3% 4.1% 4.0% 3.7% 3.5% 3.4% 37.0% Scenario 2, plus Reserves are Increased to 6 Mo. O &M And 12 $35 $33 $33 $33 $33 $33 $33 $33 $32 $32 $769 $150,000 3 Mo. Capital by Year 10 Percentage Increase 8.0% 7.0% 6.5% 6.1% 5.8% 5.4% 5.2% 4.9% 4.5% 4.3% 42.9% Orange shading indicates 3% COL increase Engineering's CIP figures are inflated 3% yearly starting in Year 2 (FY 2017) 10 % increase 16% 14% 12% 10% 8% 6% 4% 2% 0% Scenarios Comparison - % Revenue Adjustments FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Prior Year Baseline Scenario 1 Scenario 2 Scenario 3 11 $ /RUE Scenarios Comparison - $ /RUE $800 $750 " $700 $650 $600 $550 $500 $450 $400 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Prior Year Baseline Scenario 1 Scenario 2 Scenario 3 12 COST OF SERVICE ANALYSIS 13 Non - Residential 3% MFR 2% Accounts Total Accounts 114,745 Sewer Service Charge Revenue Total FY 14 Revenue $72.3M 14 Non - residential customers are billed based on 100% of water consumption Methodology does not assume any incidental water use Should have a return factor less than 100% Typical return factor is 90% to 95% 15 Should the District have a separate Recycled Water Fund? cons • Can account separately and economics would be transparent • Would be able to see clearly the funds needed to support recycled water Introduces additional accounting tasks to identify and record recycled water costs Expectation that RW would be self- sufficient Requires interfund transfers for internal RW use 16 Most agencies do not have a separate Recycled Water Enterprise Fund District is already tracking costs separately We do not recommend setting up a separate Recycled Water Fund 17 • Board direction on revenue adjustment scenarios Recommend Scenario 3 Use 90% return factor for non - residential classes Next step —March 5t" Workshop Completing cost of service analysis to recover proposed revenue adjustments am o4r, 19