HomeMy WebLinkAbout07.B.1) Parking Lot Items from 11-10-16 Board Workshop TBA )
Central Contra Costa Sanitary District
January 26, 2017
TO: HONORABLE BOARD OF DIRECTORS
VIA: ROGER S. BAILEY, GENERAL MANAGER
FROM: JEAN-MARC PETIT, DIRECTOR OF ENGINEERING & TECHNICAL
SERVICES
PHILIP LEIBER, DIRECTOR OF FINANCE & ADMINISTRATION
THEA VASSALLO, FINANCE MANAGER
SUBJECT: ADDITIONAL PARKING LOT ITEMS
This memorandum addresses the following parking lot items from the November 10,
2016 Board Workshop:
1. Separate benefits, unfunded actuarial accrued liabilities (UAAL) and other items
in the Operations and Maintenance (O&M) budget.
The UAAL cost has been separated from other benefits and presented as its own
line-item starting with the current year's budget document. Please refer to pages
14 and 15 of the FY 2016-17 budget book for this information (see Attachment 1).
2. Could Central San pledge real property as assets to be used to secure a bond to
increase bond agency rating scores?
The Public Financial Management Group (PFM), Central San's financial advisor,
has discussed this question with Jones Hall, the bond counsel firm that worked
on Central San's 2009 bonds, as well as with Central San's District
Counsel. Both conveyed that public agencies are generally prohibited from
mortgaging their property, unless their enabling legislation specifically affords
them that power. Kent Alm is confirming that Central San's statute does not
include this power. Central San would have a potential concern about pledging
its real property assets to secure bonds in any case, given that the revenues of
the enterprise are pledged as security for the 2009 bonds, and to the extent such
real property is used (or could be argued to be used) in generating such revenue,
the security of the existing 2009 bondholders might be impaired.
3. What is the percent of funding of the UAAL that would bring the Contra Costa
County Employees' Retirement Association (CCCERA) to a superfunding level?
When is Central San proiected to reach that level? Could those funds be
accessible in the future if funding levels reach or exceed superfundinq?
Superfunding occurs when the assets of the pension plan exceed the liabilities
that have been accrued. In the past, many pension plans took pension holidays
when their plans were in this superfunded status. They reduced or eliminated
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January 26, 2017
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contributions towards the normal costs of the plan until such time as the assets
were reduced to match the liabilities. This practice of pension holidays was
mostly eliminated with the passage of the Public Employee's Pension Reform Act
of 2013 (PEPRA).
Using the spreadsheet CCCERA provided last year and updating it with the
December 31, 2015 valuation information, Central San would become
superfunded in 2025 (provided the actual experience in future years matches all
actuarial assumptions). Again, Central San would still be required to make full
contributions toward the normal cost once the UAAL is eliminated and those
excess funds would not be accessible. However, since the Board directed staff
to establish a separate IRS Section 115 pension trust, funds from that trust could
be used to make the payment to CCCERA in a given year rather than budgeting
for those payments.
4. What should be done with future $2.5 million payments toward unfunded
liabilities?
The view of both PFM and Central San staff is that Central San will want to
assess this every year, but that it would make sense to make progress towards
putting aside one year's worth of CCCERA payments (approximately $18 million)
in the Pension Trust and then generally increasing the funded status of the Other
Post-Employment Benefits (OPEB) Trust. The exact allocation to each Trust will
be dependent on updates to actuarial analyses and any changes to CCCERA
calculations/contribution amounts.
5. Consider solar for alternative energy under a P3 agreement model.
Central San staff are currently pursuing this initiative, in conjunction with the
commitments of the Strategic Plan to reduce reliance on non-renewable energy,
by exploring opportunities for self-generation, conservation and efficiency.
Recent steps included a meeting with Contra Costa Electric on December 29,
2016 to explore solar possibilities.
6. Add ad valorem taxes to the sewer service charge comparison chart as well as
additional revenues when comparing rates between agencies.
Central San staff have prepared a revised comparison chart (see Attachment 2)
that includes these additional components.
7. Discuss status and availability of WIFIA funding from the U.S. Environmental
Protection Agency (EPA).
The WIFIA is a program through the Federal EPA that provides credit assistance in
the form of loans for large water infrastructure projects. On December 10, 2016,
the President signed legislation providing budget authority for the WIFIA program.
The EPA estimates that current budget authority may provide more than $1 billion
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January 26, 2017
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in credit assistance. WIFIA can fund up to 49% of a project, with a minimum
project size of $20 million. The EPA intends to collect Letters of Interest (LOI) in
two selection rounds in 2017. The first submittal period began January 10, 2017,
and will end on April 10, 2017. If all available funding is not allocated in the first
round, a second LOI submittal period will begin on August 1, 2017 and end on
September 29, 2017. More information about the application process can be found
at: https://www.epa.gov/wifia/how-apply-wifia-assistance#notice.
Additional details are available in the handbook:
https:Hwww.epa.gov/sites/production/files/2017-
01/documents/program handbook 1-9-17 final.pdf
Loans will be available at the applicable treasury rate, and are available for
projects in the following categories, each have the same "priority" for fund
availability:
a. Adaption to extreme weather and climate change including enhanced
infrastructure resiliency, water recycling and reuse, and managed aquifer
recovery;
b. Enhanced energy efficiency of treatment works, public water systems, and
conveyance systems, including innovative, energy efficient nutrient
treatment;
C. Green infrastructure; and
d. Repair, rehabilitation and replacement of infrastructure and conveyance
systems.
Central San staff will begin reviewing appropriate application guidelines with the
intent of compiling a competitive application.
8. How would Central San's bond ceiling be affected by every $100 rate increase?
Based upon an estimated $16 million of annual revenue generated by a $100
rate increase, PFM has determined that, Central San could realize approximately
$115 million to $140 million of project funds, depending on financing term (20 or
30 years). In preparing this estimate, PFM has assumed Central San's current
ratings, 2x coverage, and current market interest rates plus 25 basis points.
9. What are the true costs of issuing a Proposition 218 Notice including staff time?
Direct expenditures related to compliance with Proposition 218 notice
requirements include the following:
$ 35,000 Postage (which would increase given any changes in postal rates)
13,000 Printing
1,500 Legal review
10,000 Internal labor (this is an estimate and would include development,
design, editing, review, updates, and executive level review)
59 0 Total
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January 26, 2017
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Indirect costs include the additional costs to ensure Central San is complying
with the cost of service aspects of Proposition 218, in the form of a periodic cost
of service study. Other potential consequential costs include addressing a major
protest if such were to occur.
The Proposition 218 direct costs, among others, are factors for consideration in
determining the length of the rate action.
Attached Supporting Documents:
1. Excerpt from FY2016-17 Budget showing UAAL
2. Revised sewer service charge comparison chart including ad valorem taxes
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January 26, 2017
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Attachment #1: UAAL Breakout in FY2O16-17 Budget Book
Table 3-FY 2015-17 Budgeted operations and Maintenance Revenues and Expenditures
audgetto
FY 2015-16 FY 2015-16 FY 2016-17 Budget
w "ected Budget Variance
Revenue:
Sewer Service Charge $70,390,000 $71,753,500 $71,100,000 5710,0{)0 1.0%
Concord SSC $13,700,000 $14,260,000 $14,790,000 $1,090,000 8.046
Permlt&Inspection Fees $1,047,000 $1,576,300 $1,430,000 $381000 36.6%
Lease Rental Income $619,300 $613,500 $616,200 ($3,100) -05%
HHW Reimbursement $879,000 5878,000 $888,000 59,000 1.0%
Stormwater/Pollution Prevention $268,000 $300,000 $310,000 $42,000 15.7%
Interest income $103,000 $164,000 $233,000 $130,000 126.2%
Recycled Water $75,000 $92,000 $100,000 $25,000 333%
other $411,000 5423,000 $350,000 (561,1:MD0) -14.80b
Total Revenue $87,492,300 $90,060,300 $89,817,200 $2,324,900 2.7%
Expenditures:
Salaries&Wages $30,943,085 $30,749,781 $33,158,707 $2,215,622 7.2%
Benefits&Cap OlFl Credit $13,565,121 $15,009,882 $14,163,311 $598,190 4,4%
Salary&Benefits(Active Employees) $44,508,206 $45,759,663 $47,322,016 $2,813,812 6.3%
Benefits Retirees 5 25&400 $4.914,249 S5.362,300 $103,900 2.0%
Retirement UAAL $11,900,700 $11,900,700 511,741,700 ($159,000) -1.3%
Additional UAAL $2,500,000 $2,500,000 $2,500,000 $0 0.00,6
Total UAAL 514,400,700 $14,400,700 514,241,700 (5159,000) -1.1%
Chemicals $1,655,000 $1,552,000 $1,920,000 $265,000 161.096
Utilities $4,780,250 $4,252,350 $4,315,790 ($464,450) -9.7%
Repair&Maintenance $5,369,900 $4,897,432 $5,222,852 ($147,048) -2,756
Hauling&Disposal $998,550 $904,250 $941;050 ($57,500) •5x99
Professional&Legal Fees $640,300 $552,250 $630,750 ($9,550) -1.5%
outside Services $3,883,115 53,755,009 $3,960,175 $97,060 2-5%
.Self Insurance Expense $1,500,000 $1.500,000 5920.000 ($5800()0) -38,1%
Materials&Supplies $2,210,045 $.2,.307,111 $2,100,025 ($110,020) •5.0%.
Ocher Expenses $2,260,398 $2,116,134 52.854,258 $593.860 26.3916
"Total O&M $23,297,558 $21,836,536 $22,884,900 ($412,658) -1.8%
TotalExpenditure5 $87,464,864 $86,911,148 $89,810,918 $2,346,054 2.7%
'•Includes cast for the production and distribution of recycled water,
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January 26, 2017
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Figure 3-FY 2016-17[Operations and Maintenance Budget by Expense Category
AM ottw r—Repairs&FAmi ten oce
6-014 t' 5Z%
chemkaks&U191hes 1 "sigk Scrvkes
6. — M f 4.4*
t
Other Benefits a YKWM;ies d CAP OH INaroriais!Swppli+rs
Unfunded L6ablIdY Contribution
tix4ireeweatt-ice
RetirtmtntA"'.
13 1
Madicsi 1d9
IFY 2016-17 Budget�a Operations and Maintenance Expenses(in thousands)
Salaries $33,159 36.996
$11,762 13.1%
fielirernent-11AAl 11,741 1
rnent-NC $5,926 6.6%
Unfunded Liability Contribution
Other Benefits l Vacancies 1 Cap OH $1,838 2•Q
Chemicals&Utilities $6,236 6.906
All Other $5,346 6.0°/6
Repairs&Maintenance 53,223 5'13%
Outside Services $3,980 4.4%
Materials&Supplies $7,100 2.3%
Total $89,811 100.696
15
Comparison of Annnual Sewer Service Charges
ATTACHMENT 2
Including Other Sources of Income
Additional Information from CAFRs and Budgets
From Central San Comparison Chart (FY 2015-16 unless otherwise noted)
All Other
TOTAL SSC AV Revenue Other Sources
Operating+ as%of as%of as%of of Other Revenue
2016-17 AVR per SSC plus Total SSC Total AV All Other Non-operating Total Total Total Called Out As
SSC Rank Connection AVR Revenue Revenue Revenue Revenue Revenue Revenue Revenue Separate Line Items Comments
Santa Rosa $1,239 27 $1,239
Petaluma $1,119 26 $1,119
Rodeo Sanitary District $962 25 $66 $1,028 $3,199,004 $279,036 $82,476 $3,560,516 90% 8% 2%
Berkeley(EBMUD for treatment) $820 24 $820
Crockett Community Services District $743 23 $212 $955
No breakdowns for Sanitary
Department included in budget
Richmond $722 22 $722
Oakland (EBMUD for treatment) $717 21 $717
Benicia $678 20 $678
Brentwood $663 19 $663
Ironhouse Sanitary District $658 18 $13 $671 $9,387,874 $239,552 $3,951,020 $13,578,446 69% 2% 29% Cattle, Hay sales, Mineral rights FY 2014-15 CAFR
(11%)
2016-17 Mean Rate of Survey $608 $608
AB 939 Solid Waste, Franchise
Novato Sanitary District $573 17 $64 $637 $16,222,876 $2,155,479 $764,659 $19,143,014 85% 11% 4% Fees, Rental(3%)
Napa Sanitation District $555 16 $555 $19,887,172 $0 $4,777,170 $24,664,342 81% 0% 19% Lease income(3%)
Mountain View Sanitary District $544 15 $27 $571 $5,530,286 $328,732 $1,157,490 $7,016,508 79% 5% 16% Rents and leases(2%) FY 2014-15 CAFR
Livermore $540 14 $540
Pittsburg(DDSD for treatment) $530 13 $22 $552
Stege SD(EBMUD for treatment) $521 12 $24 $545 $4,483,151 $383,281 $313,423 $5,179,855 87% 7% 6% Property tax not listed in CAFR;
figure from County report
Vallejo $520 11 $520
Centra!San $503 10 $73 $576 $72,233,903 $14,835,167 $19,242,451 $106,311,521 68% 14% 18% Service charges-City of
Concord (13%)
Concord (CCCSD for treatment) $502 9 $502
Pleasanton $464 8 $464
Antioch (DDSD for treatment) $482 7 $28 $510
Bay Point(DDSD for treatment) $473 6 $67 $540
West County Wastewater District $468 5 $24 $492 $17,329,830 $977,876 $5,531,483 $23,839,189 73% 0% 27% Rental income(1%)
Fairfield Suisun Sanitary District $436 4 $436 $23,351,121 $0 $1,764,349 $25,115,470 93% 0% 7% Drainage fees(6%)
Sewer portion of CAFR
Revenue/Expense statement.
Ad valorem revenue not listed
Dublin San Ramon Services District $382 3 $18 $400 $22,092,217 $500,000 $24,175,040 $46,767,257 47% 0% 53% in CAFR;estimated from other
sources. Other income
includes$20 million in sewer
capacity fees
Union Sanitary District $380 2 $380 $50,112,564 $0 $2,097,299 $52,209,863 96% 0% 4%
Oro Loma Sanitary District $221 lowest $221 $11,949,883 $0 $7,839,101 $19,788,984 60% 0% 40% Agency Treatment,recycling,landfill, rents&leases(27%)
Shaded rows are special districts