HomeMy WebLinkAbout06. (Handout) Legislative Matters - Little Hoover CommissionCentral Contra Costa Sanitary District
September 1, 2016
TO: THE HONORABLE BOARD OF DIRECTORS
VIA: ROGER S. BAILEY, GENERAL MANAGER e45 ----
FROM: EMILY BARNETT, COMMUNICATION SERVICES AND
INTERGOVERNMENTAL RELATIONS MANAGER
Item 6.
(Handout)
SUBJECT: LITTLE HOOVER COMMISSION AUGUST 25, 2016 HEARING ON
SPECIAL DISTRICTS — DISTRICT'S WRITTEN RESPONSE TO THE
COMMISSION
On behalf of the District, I attended and provided testimony at the August 25, 2016 Little
Hoover Commission Hearing on Special Districts in Sacramento. The attached letter is
the District's written response to testimony provided at the hearing.
As a courtesy, a copy of this letter has been sent to the California Association of
Sanitation Agencies (CASA) and the California Special Districts Association (CSDA).
Representatives from both associations also provided testimony at the hearing.
The Board will have an opportunity to discuss this matter at the Board meeting under
the Legislative Matters agenda item.
Attached Supportina Documents:
1. August 26, 2016 Letter to Little Hoover Commission on Special Districts Hearing
Central Contra Costa Sanitary District \qA6
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August 26, 2016
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The Honorable Pedro Nava, Chair
Little Hoover Commission
925 L Street, Suite 805
Sacramento, CA 95814
Sent Via Email to littlehoover anlhc.ca.gov
1 1 . •1 II i
2016
PHONE: (925) 228-9500
FAX• (925) 676-7211
www. centralsan org
ROGER S. BAILEY
General Manager
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SUBJECT: LITTLE HOOVER COMMISSION HEARING ON SPECIAL DISTRICTS —
RESPONSE TO TESTIMONY
Dear Chairman Nava:
Central Contra Costa Sanitary District (CCCSD) appreciates the Little Hoover Commission's
(Commission) efforts to host a public hearing reviewing special districts. While the CCCSD
provided oral comments at the August 25, 2016 hearing, this letter serves to provide more detailed
written comments. The CCCSD looks forward to working with the Commission's staff as they
prepare their final report, but does request that the Commission review source material to verify its
accuracy when testimony is provided specifically related to the CCCSD. This would increase the
overall accuracy of information for the final report and help to ensure greater understanding, as all
parties would be utilizing the same information.
About the CCCSD
The CCCSD, established in 1946, provides wastewater collection and treatment services to nearly
500,000 residents and more than 3,000 businesses in the East San Francisco Bay Area. Within its
144 square mile service area, the CCCSD operates a 54 -million gallon -per -day capacity treatment
plant, 19 pumping stations, and over 1,500 miles of sewer lines.
Response to Testimony from the Howard Jarvis Taxpayers Association (HJTA): Property Taxes
The HJTA has made comments related to the CCCSD's financials that are inaccurate. It appears
that the HJTA's comments were based on comparison reporting from 1997 through 2014, an 18 -
year timeframe. In testimony from Jon Coupal of the HJTA, it was stated that, "for the Central
Contra Costa Sanitation District property tax revenues more than doubled to $13 million annually"
(p. 6).
The CCCSD's ad valorem tax revenue is based on the assessed value of property in the area,
which has, over the 18 -years reported, continued to increase in the East San Francisco Bay Area,
thus accounting for the increase. The CCCSD uses 100% of its ad valorem tax revenue to pay
debt service and fund needed infrastructure investments in the treatment plant, pumping stations,
facilities, and collections system.
Recycled Paper
Little Hoover Commission
Hearing on Special Districts
Response to August 25, 2016 Testimony
Page 2
Response to Testimony from the HJTA: Fund Eauitv
In testimony from Jon Coupal of the HJTA, it was stated that, "its [CCCSD's] fund equity figure
jumped more than 300% from $214 million to $644 million" (p. 6). From the HJTA's comments
about the CCCSD's Fund Equity balance, it appears the information includes only half of the actual
fund equity from the CCCSD's 1997 Annual Financial Statements Fund Equity/Retained Earnings.
The actual information reported by the CCCSD in the 1997 Annual Financial Statement is $430
million, not $214 million as stated by the HJTA. This is a clear error in the information presented by
the HJTA. The actual difference in the CCCSD's Fund Equity went from $430 million in 1997 to
$644 million in 2014, which is a 50% difference, not a 300% difference as reported by the HJTA.
The true 50% increase in the 18 -year timeframe is mainly due to the CCCSD's continued
investment in its infrastructure.
In addition, the CCCSD adheres to the strict Governmental Accounting Standards Board (GASB)
rules which have changed the reporting details set forth in the Fund Equity section of the financial
statements over the 18 -year period. An example that intersects this information is the change from
"Fund Equity," "net assets" to "net position". The CCCSD's current net position is broken down by:
1. Net investment in capital assets — the cost of what the CCCSD paid in infrastructure Tess
depreciation.
2. Restricted for debt service — estimated one-year reserve restricted to pay debt service
such as revenue bonds or loan service.
3. Unrestricted — cash or other assets that are not needed to pay liabilities and are not
earmarked for a specific purpose.
The comments from the HJTA may be construed to suggest that in 2014, the CCCSD had
$644 million in cash or other forms of liquid assets. Such a suggestion would be grossly in error. Of
the $644 million in net position, $568 million was net investment in capital assets (total investment
in infrastructure as of 2014). The actual cash balances as of the date of this letter are
approximately $44 million (excluding debt service obligations), which the CCCSD uses to fund
annual operations, capital improvements, and for use in emergency situations. Depending on the
time of year, that figure can drop as low as $22 million as operational, capital, and self-insurance
expenses are paid.
The CCCSD appreciates the opportunity to comment on matters of such importance. If further
clarification is needed, the CCCSD welcomes the opportunity to provide the Commission with
additional information.
Sincerely,
Ann K. Sasaki, P.E.
Deputy General Manager