HomeMy WebLinkAbout04. Set Public Hearing to amend the Schedule of Capacity FeesCentral Contra Costa Sanitary District
BOARD OF DIRECTORS
POSITION PAPER
Board Meeting Date: May 5 2016
Subject: ESTABLISH JUNE 2, 2016 AT 2:00 PM AS THE DATE AND TIME FOR A
PUBLIC HEARING REGARDING A PROPOSED ORDINANCE TO AMEND THE
SCHEDULE OF CAPACITY FEES
Submitted By: Initiating Dept./Div.:
Thomas Brightbill, Senior Engineer Eng./Planning and Development Services
REVIEWED AND RECOMMENDED FOR BOARD ACTION:
D. Gemmell — Planning and Dev. Svcs Div'n. Manager
JM. Petit — Director of Engineering and Tech Services
K. Alm R. Bailey
Counsel for the District General Manager
ISSUE: State Law and District Code require that a public hearing be held prior to the
Board of Directors' consideration of amendments to the Schedule of Capacity Fees.
RECOMMENDATION: Establish June 2, 2016 at 2:00 pm as the date and time for a
public hearing to receive comments on and consider adoption of a proposed ordinance
to amend the Schedule of Capacity Fees.
FINANCIAL IMPACTS: None by this action. If the staff recommendation to revise
Capacity Fees is adopted by the Board of Directors following the public hearing and the
level of new development remains constant with the last fiscal year, then the Fiscal
Year 2016-17 capacity fee revenue would be approximately 1.1% lower.
ALTERNATIVES/CONSIDERATIONS: The Board of Directors may decline to establish
the recommended public hearing date or may elect to choose a different date, however,
a public hearing must be held if Capacity Fees are to be revised. If the hearing is held
on June 2, 2016, the increased fees could take effect on July 1, 2016.
BACKGROUND: Staff has completed its annual review of the District's Capacity Fee
Program and has concluded that it would be appropriate to revise the fees to account
for changes in the valuation of District assets and the number of current customers. The
effect of implementing the staff recommendation would be to change Capacity Fees as
follows:
Fee Category Current Proposed
Gravity Zone Fee $6,005 per RUE $5,948 per RUE
Pumping Zone Fee $7,655 per RUE $7,556 per RUE
% Change
- 0.9 %
- 1.2 %
Staff also proposes to conduct a public hearing on a related recommendation to revise
the Schedule of Environmental and Development -Related Fees and Charges at the
same June 2, 2016 Board meeting.
Page 1 of 2
POSITION PAPER
Board Meeting Date: May 5, 2016
Subject: ESTABLISH JUNE 2, 2016 AT 2:OOPM AS THE DATE AND TIME FOR A
PUBLIC HEARING REGARDING A PROPOSED ORDINANCE TO AMEND THE
SCHEDULE OF CAPACITY FEES
A coordinated outreach program to inform and solicit input from interested customers
(including the Building Industry Association of the Bay Area) regarding both the
proposed Capacity Fees and the proposed Environmental and Development -Related
Fees and Charges will be conducted by staff before the public hearing date.
COMMITTEE RECOMMENDATION: The Finance Committee discussed staffs
proposals for revising these fees and charges at its April 22, 2016 meeting.
RECOMMENDED BOARD ACTION: Establish June 2, 2016 at 2:00 pm as the date
and time for a public hearing to receive comments on and consider adoption of a
proposed ordinance to amend the Schedule of Capacity Fees.
Attached Supporting Document:
1. Proposed Ordinance, including Exhibit A: Schedule of Capacity Fees, Rates, and Charges
(Uncodified)
2. Report regarding the Capacity Fee Update
Page2 of 2
ATTACHMENT 1 I
The proposed uncodified Ordinance, including Exhibit A to the Ordinance, will be
prepared once the Finance Committee has reviewed the draft position paper and
associated report regarding Capacity Fees.
CENTRAL CONTRA COSTA SANITARY DISTRICT
Report Regarding the Capacity Fee Update
April 15, 2016
INTRODUCTION
ATTACHMENT 2
Central Contra Costa Sanitary District (CCCSD) charges a Capacity Fee when
properties are first connected to our public sewer or when there is an expansion or
change of use for non-residential properties. Each year this fee is updated based on
changes to the value of our assets and the number of customers in the district. This
memo summarizes the basis for the Capacity Fee and presents the calculations for the
updated fee.
BACKGROUND
The total value of CCCSD's existing assets (approximately $1.7 billion) is much greater
than the value of any future facilities expansion needed to accommodate future
customers. While CCCSD's FY 2015-16 Capital Improvement Plan lists over $400
million in projects over the next ten years, most of these projects are for renovation,
regulatory compliance, replacement or upgrading of facilities to maintain capacity for
both current and prospective customers. CCCSD believes that our facilities generally
have adequate capacity to serve both existing and future customers.
The Water Environment Federation's (WEF) Manual of Practice 27, Financing and
Charges for Wastewater Systems defines several methods for calculating System
Development Charges such as CCCSD's Capacity Fee. CCCSD uses the Equity
Buy -in method and has used this methodology since 2001. Under this approach, new
customers are charged at the same equity position as existing customers which is
appropriate based on the level of assets, expansion, and capacity described above.
California Senate Bill 1760, enacted in September 1998, defines Capacity Charges for
water and sewer agencies in Section 66013 of the California Government Code. The
equity buy -in method defined by WEF and used by CCCSD conforms to the
requirements contained in Section 66013.
CALCULATION APPROACH
The Capacity Fee is adjusted each year to reflect the changes in the value of CCCCD's
assets. It is calculated using the equity buy -in approach which divides the value of
CCCSD's assets by the current number of RUEs to determine the fee. The calculated
value of CCCSD assets are 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 Update Report
Page 2
April 15, 2016
• Facilities: The current value of investments in physical facilities is estimated by
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 then applying straight-line depreciation using the life
cycles in Table 3 with no salvage value.
Note that a category for "Mains (Renovation Program)" is included 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.
• Fund Balances: Prior fiscal year ending 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.
Contributed assets are generally not included in the calculation in order to avoid double
recovery of costs, as described in the WEF manual.
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 as shown below. The number of customers is determines by
calculating the number of Residential Unit Equivalents (RUES).
Equity Buy -in Fee =
Value of Assets
Number of Customers (RUES)
RECOMMENDED CAPACITY FEE
Staff recommends that the Board adopt Capacity Fees for the 2016-17 fiscal year by
applying the valuation approach and facilities life cycles described above. The updated
fees are:
Fee Cateaory Current Proposed % Change
Gravity Service $6,005 per RUE $5,948 per RUE -0.9%
Pumping Service $7,655 per RUE $7,556 per RUE -1.2%
The recommended fee calculation approach is a rational, practical, equitable and
Capacity Fee Update Report
Page 3
April 15, 2016
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.
CENTRAL CONTRA COSTA SANITARY DISTRICT
Report Regarding Capacity Fee Update
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CENTRAL CONTRA COSTA SANITARY DISTRICT
Report Regarding the Capacity Fee Update
Table 2 — Comparison of Capacity Fees
AGENCY CAPACITY FEE
Dublin San Ramon Services District $16,927
Mountain View Sanitary District $9,443
Current CCCSD Pumped Zone $7,665
Proposed CCCSD Pumped Zone $7,556
Antioch (Delta Diablo Sanitation District for Treatment) $7,314
Pittsburg (Delta Diablo Sanitation District for Treatment) $6,767
Current CCCSD Gravity Zone $6,005
Proposed CCCSD Gravity Zone $5,948
Concord $5,043
Bay Point (Delta Diablo Sanitation District for Treatment) $3,940
West County Wastewater District $2,993
CENTRAL CONTRA COSTA SANITARY DISTRICT
Report Regarding the Capacity Fee Update
Table 3 - Average Useful Service Life
Gravity Sewers
Interceptors 150 years
Trunks 100 years
Mains (Renovated by District) 100 years
Treatment Plant & Pumping Station Facilities
Tanks/Foundations 100 years
Buildings 75 years
Mechanical, Electrical & Control Equipment 30 years
Recycled Water Facilities
Pipelines
Mechanical, Electrical & Control Equipment
General Improvements
50 years
30 years
Buildings 50 years
Mechanical/Electrical Equipment and Furnishings 25 years
Vehicles and other Equipment 10 years
Major Repairs/Replacements 10 years