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Home My WebLink About01. Attachment 2 - (Final) Second Presentation PROPOSED FY 2019 =20 AND FY 2020 =21 r RATE SCENARIOS 2 Board Workshop # January 15, 2019 r .IA CSO Meeting Room _ . 12pm to 4pm ITEM A INTRODUCTION By Roger S. Bailey, General Manager WORKSHOP PRESENTATION OUTLINE A. Introduction B. Cost of Service Update • Cost of Service Methodology • New High Strength Food Service Category • New Low Strength Food Service Category • Non-Residential Mixed-Use Rates/Customers C. Update on Operations and Maintenance (O&M) Assumptions D. Proposed fiscal year (FY) 2019-20 and FY 2020-21 Capital Improvement Budgets (CIB) and corresponding Capital Improvement Plan (CIP) E. Rate Impact Scenarios and Implementation Schedules • Revenue Assumptions • Sewer Service Rate Impact Scenarios • Recycled Water Rate Impact Scenarios • Rate Implementation Schedule • Outreach Plan F. Recap of Recommendations and Closing ` 3 CENTRALSAN ITEM B COST OF SERVICE UPDATE By Danea Gemmell, Planning and Development Services Division Manager Thomas Brightbill, Senior Engineer — Financial Planning BP 030 REQUIRES REGULAR COST OF SERVICE REVIEW Central Contra Casta Number:BP 030 Sanitary District Related Admin.Procedure AP 030 Authority: Board of Directors Effective: July 6,2017 Revised: A new or updated cost of service study may be appropriate more frequently in certain circumstances, to be assessed by staff each time rate changes are proposed. Staff shall report to the Board at the time of the proposed rate change on whether, in staff's opinion, the Cost of Service study remains a valid basis for the rates. An administrative procedure addressing this assessment is maintained by the General Manager. I. A cost of service study addressing rates subject to Propositicn 218 shall be conducted riot less than once every ten years. This policy is consistent with state law specifying that any public utility serving a public school must perform a cast of service study not less than once every ten years. II. A new or updated cost of service study may be appropriate more frequently in certain circumstances,to be assessed by staff each time rate changes are proposed. Staff shall report to the Board at the time of the proposed rate change on whether,in staffs opinion,the Cast of Service study remains a valid basis forthe rates. An administrative procedure addressing this assessment is maintained by the General Manager. fCrg .l RRfx—d by the Secretary&She Distdj L5 CENTRAL WHEN COST OF SERVICE NEEDS TO BE DONE* o No documentation for existing Cost of Service ✓ More than five years has elapsed since last Cost of Service ✓ Changes have occurred in revenue requirements or customers since last review ✓ Rate restructuring needed to reflect new objectives , classes , services, supply conditions *From Best, Best& Krieger CSDA Proposition 218 Presentation CSDA Workshop, March 2017 6 ■ COST OF SERVICE METHODOLOGY Distribute Develop and Determine Review Allocate Costs Costs to Design Revenue Customer to Causative Schedule of Requirements Classes Components Customer Rates and Classes ` Charges L7 CENTRALSAN DReevenuee INCREASED CAPITAL IMPROVEMENT PROGRAM Requirements IS DRIVING RATE INCREASES FY 1 2019-20 Variance from Budget61 • • 2018-19 Variance LMMIL- _dL_ (Financial Model) Budget Abi, Ad Operations and Maintenance $89,720,456 $87,542,314 ($2,178,142) (2.4%) Sewer 45,318,835 66,176,000 20,857,165 46.0% Construction Debt Service 3,583,530 2,981,663 (601,867) (16.8%) Self-Insurance 924,500 970,725 46,225 5.0% Total Budget • CENT� . ` a • . ReviewCURRENT RATE AND CHARGE CATEGORIES Customer Classes Current Rate Class Structure $ 5.61 Standard Commercial $ 6.00 XA 10% 0% 90% $ 6.50 XB 20% 0% 80% $ 7.02 XC 30% 0% 70% $ 7.52 XD 40% 0% 60% $ 8.03 XE 50% 0% 50% $ 8.52 XF 60% 0% 40% $ 9.03 XG 70% 0% 30% $ 9.53 XH 80% 0% 20% $ 10.04 XI 90% 0% 10% $ 12.05 XJ 0% 70% 30% $ 11.63 XK 0% 80% 20% $ 12.31 XL 0% 85% 15% $ 12.69 XM 0% 90% 10% $ 13.01 XN 0% 95% 5% $ 13.18 XO 15% 85% 0% $ 10.53 Restaurant 100% $ 6.46 Automotive, Aviation, Marine service $ 9.74 Hotels and motels with food service $ 10.53 Supermarkets $ 14.90 Bakeries $ 12.93 Mortuaries $ 5.61 Schools— Daycare, Preschool, University $ 6.98 Schools— Elementary *per student $ 13.71 Schools— Intermediate/High School *perstudent Industrial Permit *colc'd by actual strength and flow ` 9 CENTRALSAN Review CUSTOMER PROFILE Customer Classes Residential Single Family (SFR) 97,056 Dwelling Units Multifamily (MFR) 411451 Dwelling Units Subtotal 138,507 Non-Residential 4,427 Meters Total 142,934 Notes: 1. Residential parcels billed a flat per-unit fee 2. Multiple businesses may be served by single meter 'A r_ 9` 10 CENTRALSAN Review 80% OF REVENUE Customer Gasses FROM RESIDENTIAL CUSTOMERS FY 2018-19 . _ venue Residential Single Family (SFR) $55,030,800 Multifamily (MFR) $22,756,600 Subtotal $77,787,400 80.3% Non-Residential $19,062,600 19.7% Total $96,850,000 100.0% CENT ` 11 ■ . Allocate Costs FLOW AND STRENGTH SOURCES BALANCED to Causative Components AGAINST PLANT FLOW AND STRENGTH : COSTS ALLOCATED TO FLOW AND STRENGTH Tota cost Biochemical oxygen demand (BOD) Total suspended solids (TSS) ` 12 Allocaust°es COST OF SERVICE ANALYSIS FINDING #1 Components Treatment Plant Flows are generally flat while customer connections increase with population growth • Treatment Plant Influent Flow: • Concord/Clayton Flows increased slightly from 32% to 34%: • 12,963 million gallons annually • 4,234 million gallons annually • 35 million gallons per day (MGD) • 12 MGD Treatment Plant Inflow 2010 - 2018 70 60 — 50 � 40 0 30 LL 20 — 10 0 2010-Q1 2011-Q1 2012-Q1 2013-Q1 2014-Q1 2015-Q1 2016-Q1 2017-Q1 2018-Q1 ` 13 RALSAN Allocate Costs COST OF SERVICE ANALYSIS FINDING #2 to Causative Components 2014- 17 Water Consumption Data Shows Residential Customers' Water Use has decreased more than Non-Residential Customers' Water Use Residential Non-Residential Unit Water Unit Water Consumption • • • CENT■ . Allocate Costs COST OF SERVICE ANALYSIS FINDING #3 to Causative Components Flow Unit Costs Increased due to Lower Water Consumption Flat Treatment Plant Costs i i Higher Costs for Lower Unit Flows by Customer Each Unit of Flow Current Cost . Industrial Service Unit Cost Rates Unit Rates Difference Wastewater Flow ($/hcf) $4.14 $4.81 16% BOD ($/Ib) $1.37 $1.274 -7% TSS ($/I b) $0.64 $0.665 4% Hundred cubic feet (hcf) Pound (Ib) ` 15 r- 9 RACENTLSAN Distribute SPECIFIC AREAS OF REVIEW Costs to Customer Classes • New High Strength Food Service Class • New Food Service Class • Delis • Bars • Ice Cream Parlors • Yogurt Shops • Coffee Shop • Review ( 15) Mixed Use Classifications ` 16 CENTRALSAN Distribute AB 1826 REQUIRES REDUCTION OF ORGANIC WASTE Costs to Customer 50% REDUCTION BY 2020 Classes 75% REDUCTION BY 2025 • New waste stream • Onsite concentrator for food waste used by restaurants to comply • Connected to sewer drain , hot/cold water lines & electrical • Generates high strength waste discharged to sewer • Discharge has a combined • Approximately 100 gallons strength over 10 times of effluent are produced by greater than single family every 1 ,200 pounds of residential strength food processed CENT ` 17 ■ . Distribut Costs to e NEW HIGH STRENGTH CATEGORY: Customer Classes / RESTAURANTS WITH ADDITIONAL EQUIPMENT Restaurants with Concentrators Restaurants with Grinders • Cheesecake Factory* • Seafood City • Hilton Hotel/Plate & Vine * Currently billed based on flow � N at restaurant rate i L18 CENTRALSAN Distribute Costs to OTHER CUSTOMER CLASSES PROPOSED FOR Customer Classes INCLUSION IN HIGH -STRENGTH CATEGORY Restaurants with Breweries Breweries • Danville Brewing • Five Suns Brewing • Canyon Club (Moraga) • Del Cielo Brewing (under construction) • Epidemic Ales (not currently discharging but anticipate connecting in the near future) • Source Control developing a BMP (Best Management Practice) permit for breweries All currently under Industrial Permit with strength tested 2-3 times per year for billing ` 19 ■ Distribute NEW MEDIUM -LOW STRENGTH Costs to Customer FOOD CATEGORY Classes • 82 businesses currently billed at Standard Commercial Rate ($5.61 per hcf) • Delis • Bars • Ice Cream Parlors • Yogurt Shops • Coffee Shops • Wastewater strength for these business is greater than Standard Commercial Remove from Standard Commercial class and move into new Medium-Low class ` 20 Distribute Costs to Customer Classes MIXED-USE RATES AND CUSTOMERS �... ` 21 CENTRALSAN t s4- Y _I V-lA a & _ i y Ito, . ':'�. 's IO1 fp Ij max CENTRAL SAN �4 .F r�ayf Y� CENTRAL SAN CC t THr E PARCELS .F e SD�24i CENTRAL SAN - � L 1 .F f' � 41% CENTRAL SAN FIFTEEN BUSINESSES Big 5 Sporting Goods Armed Forces a � w Taco Bell Career Center _ . Fresenius SAFE Credit Pho Lee Hoa Healing Hands Medical Care Union Pha'ti Restaurant Spa & Massage Jenny Craig Mi Karaoke Cosmo Prof Q-Nails Domo Sushi Express Hair Korean BBQ Pollo Pollo Salon ` 26 CENTRALSAN SIX CUSTOMER CLASSES Medical Offices Entertainment - Big 5 Restaurants Sporting Goods Barbers, Beauty Salons Pet Grooming Armed Forces Taco Bell Career Center F� ow— 1 Business Offices Fresenius SAFE Credit Pho Lee Hoa Healing Hands Medical Care Union Pha'ti Restaurant Spa & Massage Mi Kara (vJenny Craig r� Cosmo Prof Q-Nails FDomo Sushi � Express Hair Korean BBQ .04Pollo Pollo Salon ` 27 EIGHT WATER METERS -Nwalm :,- --Medical OfficesfflL_ Entertainment Big 5 Restaurants Sporting Goods Barbers, Beauty Salons, Pet Grooming Armed Forces Taco Bell Career Center Business Offices Fresenius ;.. SAFE Credit Pho Lee Hoa Healing Hands Medical Care Union Pha'ti Restaurant Spa & Massage Mi Karaoke a / (v WSWJenny Craig O Cosmo Prof '%PAP Q Q-Nails Domo Sushi Express Hair Korean BBQ Pollo Pollo Salon ` 28 CENTRALSAN FIVE MIXED USE (SHARED) WATER METERS 74 Medical Offices - Entertainment - Big 5 Restaurants ' Sporting Goods Barbers, Beauty Salons Pet Grooming Armed Forces Taco Bell Career Center Business Offices Fresenius ;.. SAFE Credit Pho Lee Hoa Healing Hands Medical Care Union Pha'ti Restaurant Spa & Massage Mi Karaoke r� \ Jenny Craig Cosmo Prof C.-I Q-Nails FDomo Sushi Express Hair Korean BBQ polio Polio Salon AL Ig L29 CENTRALSAN ReviewCURRENT RATE AND CHARGE CATEGORIES Customer Classes ■ ■ Current Rate Class Structure $ 5.61 Standard Commercial $ 6.00 XA 10% 0% 90% $ 6.50 XB 20% 0% 80% $ 7.02 XC 30% 0% 70% $ 7.52 XD 40% 0% 60% $ 8.03 XE 50% 0% 50% $ 8.52 XF 60% 0% 40% $ 9.03 XG 70% 0% 30% $ 9.53 XH 80% 0% 20% $ 10.04 XI 90% 0% 10% $ 12.05 XJ 0% 70% 30% $ 11.63 XK 0% 80% 20% $ 12.31 XL 0% 85% 15% $ 12.69 XM 0% 90% 10% $ 13.01 XN 0% 95% 5% $ 13.18 XO 15% 85% 0% $ 10.53 Restaurant 100% $ 6.46 Automotive, Aviation, Marine service $ 9.74 Hotels and motels with food service $ 10.53 Supermarkets $ 14.90 Bakeries $ 12.93 Mortuaries $ 5.61 Schools— Daycare, Preschool, University $ 6.98 Schools— Elementary *per student $ 13.71 Schools— Intermediate/High School *perstudent Industrial Permit *colc'd by actual strength and flow CENT ` 30 ■ . Develop and Design SURVEY OF BILLING TYPES BY AGENCY Schedule of Rates and Charges • of Agencies Billing By Business Agencies Billing By • of Business • - Types Strength Category • M&L-- —.MMMML- San Jose 55 Berkeley (EBMUD for treatment) 5 Richmond 36 Brentwood 5 Napa Sanitation District 31 Union Sanitary District 5 Castro Valley 28 Santa Rosa 4 Novato 23 Petaluma 3 Hayward 19 Benicia 3 Pittsburg(Delta Diablo for treatment) 12 Sunnyvale 3 Rodeo Sanitary District 11 Vallejo 3 Concord (CCCSD for treatment) 10 Dublin San Ramon Services District 3 Antioch (Delta Diablo for treatment) 9 West County Wastewater District 2 Pleasanton (DSRSD for treatment) 8 Fairfield (FSSD) 2 Oakland (EBMUD for treatment) 7 SFPUC 1 San Leandro 7 Crockett Sanitary Department 1 Livermore 6 Stege SD (EBMUD for treatment) 1 Bay Point (Delta Diablo for treatment) 6 Oro Loma Sanitary District 1 Mt View Sanitary District 5 k113 1 CENTRALSAN Develop and Design PROPOSED RATE STRUCTURE Schedule of Rates Changess BASED ON COMBINED STRENGTH (BOD+TSS) Charges Medium Medium Low Medium High Low High Up to 350 mg/L 351 to 700 mg/L 701-1000 mg/L 1001-1300 mg/L Over 1300 mg/L Std. Commercial MixeG I Food` Supermarkets (No Food Service) Delis Restaurants Churches Restaurants . . Yogurt ShopGrinders* Mixed Use 0'. Schools: Daycare, Ice Cream Shop Breweries, Preschool, Hotels with Food Restaurants with University - UniversityBreweries Bars Automotive, Mixed-Use with Aviation, Marine Coffee Shop Bakeries Mortuaries *Restaurant with equipment will move Mixed Use Meters up to the next highest strength category ** 50% by flow Milligrams per liter (mg/L) 32 CENTRALSAN ITEM C UPDATE ON OPERATIONS AND MAINTENANCE (O&M ) ASSUMPTIONS 33 FINANCIAL RATE MODEL ASSUMPTIONS • Basis of Model: Updated Cost of Service Study by Raftelis in January 2019 • Updated O&M Budget. • Based on new employee contracts per MOUs • Number of employees per latest Staffing Plan • Retirement (CCCERA data) • CalPERS Medical per current employee contract • Additional annual payment of $2.5M for unfunded liability in the next 10 years or other Board-directed use • Capital Budget: • 3% escalation • Current 10-Year CIP: $861 M for baseline • Updated 10-Year CIP: $867M based on revised cash flow • Use Reserves Targets per Board Policy Debt Service Coverage • Assumes Public Offerings through two separate bond issues • Bonds assume 30-year term • Interest Rate: 4.5% first five years, 5% thereafter j&. M` 34 CENTRALSAN Recent Updates toFinancial , Adjustments Additional Revenue, Other) Debt Plar— A Current Debt Plan $185 million 2009 Bond Refunding Savings $8.2 million 2017-18 Variance $11.7 million Increase forecast assumptions for Ad Valorem growth rate $0.8 million Concord Capital Project Reimbursement* $7.0 million Debt Service Payment due to deferral of bonds by one year $3.3 million Subtotal $31 million Updated Debt Plan $154 million * Concord's proportionate share of capital that will now be financed through pay-go funding rather than debt proceeds. (*Original slide presented on November 1, 2018) ` 35 ■ 1 Financial Plan Summary Data in Thousands ($ 000's) Proposed Year Fiscal Year FY • 0 iL Rate SSC CIP Increase 0 18-19 45,319 7% $567 1 19-20 81,227 50;900 7% $607 2 20-21 103,778 77,000 7% $649 3 21-22 113,421 1 2�0 6% $688 4 22-23 106,093 77,000 6% $730 5 23-24 76,072 6% $773 6 24-25 72,907 5% $812 7 25-26 77,288 5% $853 8 26-27 81,560 3% $878 9 27-28 72,381 3% $904 10 28129 76,178 3% $932 Total $860,905 $154,000 (*Original slide presented on November 1, 2018) 36 ■ . REVENUE REQUIREMENTS BudgetFY 2018-19 FY 2019-20 Variance from % Projections FY 21 • Variance L=a Ah (Financial Model) a Budget -a Operations and Maintenance $89,720,456 $87,542,314 ($2,178,142) (2.4%) Sewer 451,318,835 66,176,000 20,8571,165 46.0% Construction Debt Service 3,583,530 21,981,663 (601,867) (16.8%) Self-Insurance 9241500 9701725 461225 5.0% Total . • ` 37 CENTRALSAN ITEM D PROPOSED FY 2019 -20 AND FY 2020 -21 CAPITAL IMPROVEMENT BUDGETS (CIB) AND CAPITAL IMPROVEMENT PLAN (CIP) 1�3a W�y Updated 10 Ye FY2019-20: $867M ❖ 3. New total extended to FY 2028-29 (rolling 10-year period and inflated 3%) with updated cash flow "I c 2419 Doi Iars) Ten Year CIP 1 2 3 4 5 5 7 8 9 10 FY19/20 FY20/21 FY21/22 FY22/23 FY23/24 FY24125 FY25/25 FY26/27 FY27/28 FY28/29 Treatment Plant $28.8 $44.3 $49.;-2 $53.0 $45.7 $42.4 $45.4 $38.8 $45.8 $24.8 Cciiecticn S-stem $27.1 $36.8 $37.7 $44.4 $35.5 $32.3 $37.2 $27.8 $34.0 $44.6 Recycled Water $4.1 $11.1 $14.1 58.4 $5.4 $4.4 $4.4 $0.4 $0.4 $0.4 Genera. improvements 54.1 $2.6 1 $2.6 $2.5 $1.7 51.7 $1.7 $1.7 $1.7 $1.9 ^ont ngenry $2.0 $2.0 $2.0 $2.0 $2.0 $2.5 $2.5 $2.5 $2.5 $2.5 TOTAL Updated Total CIP $55.1 $95.8 $105.3 $1.05.4 $90.3 $83.3 592.2 $71.2 WA $74.2 $867.2 Revised Total CIP(*) $81.3 $103.8 $113.4 $105.1 $75JO $72.8 577.3 $81.6 MA 575.2 SMU.9 (*Presented 11/1/18) Sita❑ 5ioao Sea.a ------ Sam Lz PWIEV29 ._:z_- -ac.;� Fewm Fr22f23 =-23.� Frt.4,'c5 Ff25rAS F 2af27 FY27}28 FY28{� ❑QonuF"Mmy ■Oeneral■opmwe. FLU ❑RerydedlNater ❑0AeAion5ysfiem ■Treat entPIart CENT ` 39 ■ . Capital ProjectsFlow Summary: Changes FY 2020-23 FY 2019-20 FY 2020-2112022-23 Total Total • • . Updated FY 2019-20 CIP $66.1 M $96.8M $106.3M $106.4M Reviser FY2019-20 CIP for $81.3 M $103.8M $113.4M $106.1M Cashflow (with 3% escalation) Change from Revised CIP* -18.7% -6.7% -6.3% 0.3% * 31.7% reduction in cash flow over the first three years of the CIP program ` 40 CENTRALSAN MAJOR PROJECTS RECOMMENDED FOR NEXT TWO FISCAL YEARS TREATMENT PLANT COLLECTION SYSTEM RECYCLED WATER • Solids Handling Sewer Renovation Filter Plant Upgrade Improvements - Ph. 1 projects: • Steam, Aeration and 0 Walnut Creek — Ph. 13 Blower System 0 Lafayette — Ph. 13 Renovations 0 S. Orinda — Ph. 7 • Mechanical and Danville — Ph. 3 GENERAL Concrete Renovations Large Diameter IMPROVEMENTS • POB Seismic Upgrades Inspection • HYPOWERS Bioenergy ERP Replacement • Piping Renovation — Pump Stations: Server Room Relocation Ph. 10 0 Ph. 1 Moraga/Cross Information Technology • UV Electrical Roads Buildings Improvements Improvements 0 Ph. 2 Martinez/ Vehicles Replacement • Annual Infrastructure Fairview/Maltby Equipment Replacement Replacement ` 41 CENTRALSAN ITEM E UPDATE ON RATE IMPACT SCENARIOS AND RATE IMPLEMENTATION SCHEDULES By: Danea Gemmell, Planning and Development Services Division Manager l7� 42 SUMMARY OF SCENARIOS • Baseline Sewer Service Charge 567 607 649 688 729 773 812 852 878 904 931 Rate Increase 7.0% 7.0% 6.0% 6.0% 6.0% 5.0% 5.0% 3.0% 3.0% 3.0% 64.3% $861 M Debt Issuance CIP (millions) 77 77 154 SCENARIO 1: Updated Sewer Service Charge 567 597 628 658 689 717 745 775 798 822 847 Cashflow Rate Increase 5.25% 5.25% 4.75% 4.75% 4.0% 4.0% 4.0% 3.0% 3.0% 3.0% 49.4% $867 M Debt Issuance CIP (millions) 77 77 154 SCENARIO 2: Updated Sewer Service Charge 567 607 649 688 729 751 774 797 821 846 871 Cashflow Reduce Rate Increase 7.0% 7.0% 6.0% 6.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 53.6% Bonds $867 M Debt Issuance CIP (millions) 89 89 SCENARIO 3: Updated Sewer Service Charge 567 635 711 789 876 885 894 903 912 921 930 Cashflow No Bonds Rate Increase 12.0% 12.0% 11.0% 11.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 64.1% $867 M Debt Issuance CIP (millions) 43 CENTRALSAN SEWER SERVICE CHARGE RATES BAY AREA AGENCIES SCC Property 2018-19 Agency 2018-19 Rank Tax SSC plus SSC(1) from Revenue( Property lowest Z) Tax San Francisco PUC $1,422 31 $1,422 Berkeley (EBMUD for treatment) $1,379 30 $1,379 Santa Rosa $1,298 29 $1,298 Rodeo Sanitary District $987 28 $86 $1,072 Petaluma $953 27 $953 Benicia $892 26 $892 Richmond $824 25 $824 Crockett Sanitary Department $789 24 $147 $936 Oakland (EBMUD for treatment) $767 23 $767 San Leandro (EBMUD for treatme $733 22 $733 Napa Sanitation District $676 21 $676 Average of Agencies Surveyed $675 $694 Brentwood $653 20 $653 Livermore $632 19 $632 Novato Sanitary District $615 18 $42 $657 Sunnyvale $592 17 $592 Concord (CCCSD for treatment) $592 16 $592 Mt View Sanitary District $591 15 $34 $625 Vallejo Sanitation and Flood Contr $584 14 $20 $604 West County Wastewater District $576 13 $24 $600 Central San $567 12 $104 $671 Pittsburg (Delta Diablo for treatme $562 11 $38 $600 Stege SD (EBMUD for treatment) $549 10 $47 $596 Antioch (Delta Diablo for treatment $533 8 $36 $570 Bay Point (Delta Diablo for treatm $522 9 $34 $556 Pleasanton (DSRSD for treatment) $480 7 $480 Fairfield-Suisun Sewer District $468 6 $0 $468 San Jose $467 5 $467 Dublin San Ramon Services Distric $423 4 $423 Castro Valley Sanitary District $419 3 $419 Union Sanitary District $407 2 $407 Hayward $394 1 $394 Oro Loma Sanitary District $256 lowest $256 (1) Annual Sewer Service Charge per Single Family Residence (SFR) (2) Estimated from agencies' Certified Annual Financial Reports (CAFRs) 44 CENTRALSAN RATE IMPACTS SCENARIO I Updated Sewer Service Charge 567 597 628 658 689 717 745 775 798 822 847 Cashflow Rate Increase 5.25% 5.25% 4.75% 4.75% 4.0% 4.0% 4.0% 3.0% 3.0% 3.0% 49.4% $867 M Debt Issuance CIP (millions) 77 77 154 140 Capital Financial Plan $120 5100 s8o 560 $40 $20 $o F'Y 2 019 FY 2 021 FY 2 023 FY 2025 FY 2027 M&-Property lax �Bonds Proceeds SRF Loans pother SSC �Reserees -Total CIP Aelo 1146 CENTRALSAN RATES SCENARIO 1 FY , . . Proposed Proposed Rate FY • 2020-21 % Increase Rate Residential Single Family (SFR) $567 $598 5.5% $629 5.2% Multifamily (MFR) $549 $566 3.1% $596 5.3% Non-residential Low -- $6.23 up to 11% $6.56 5.3% Medium Low -- $7.65 up to 36% $8.05 5.2% Medium -- $9.59 up to 13% $10.09 5.2% Medium High -- $10.70 up to 10% $11.26 5.2% High -- $14.18 up to 10% $14.92 5.2% Schools - Elementary o 0 (per student) $6.98 $7.43 6.5/0 $7.82 5. /03 Schools - Intermediate/High o 0 (per student) $13.71 $14.68 7.1/0 $15.45 5. /03 FY 2019-20 percentage increases vary due to Cost of Service calculations and rounding FY 2020-21 percentage increases vary due to rounding of rates k47 SCENARIO 1 : NON -RESIDENTIAL RATE IMPACTS . . . Mete Rate Rate Class Rate Increase . . . . 71, 3,346 Standard Commercial $ 5.61 Low $ 6.23 11% Deli/Yogurt/Ice Cream/ 82 Bars/Coffee Shops $ 5.61 Medium Low $ 7.65 36% 7 XA $ 6.00 Medium Low $ 7.65 28% 5 XB $ 6.50 Medium Low $ 7.65 18% 16 XC $ 7.02 Medium Low $ 7.65 9% 16 XD $ 7.52 Medium Low $ 7.65 2% 21 XE 8.03 Medium Low S 7.65 -5% 36 XF $ 8.52 Medium $ 9.59 13% 28 XG $ 9.03 Medium $ 9.59 6% 29 XH $ 9.53 Medium $ 9.59 1% 35 XI 10.04 Medium 9.59 -4% 5 XJ $ 11.63 Medium High $ 10.70 -8% 2 XK $ 12.05 Medium High $ 10.70 -11% 0 XL $ 12.31 Medium High $ 10.70 -13% 0 XM $ 12.69 Medium High $ 10.70 -16% 0 XN $ 13.01 Medium High $ 10.70 -18% 0 XO $ 13.18 Medium High $ 10.70 -19% :119 Rprtmimnt in ;i Mpffiiim High 1 n_7 0 5 Bakeries 14.90 High 14.18 76 Automotive,Aviation, Marine service $ 6.46 Low $ 6.23 -4% 35 Hotels and motels with food service $ 9.74 Medium High $ 10.70 10% 33 Supermarkets $ 10.53 Medium High $ 10.70 2% 8 Mortuaries $ 12.93 High $ 14.18 10% 137 Churches $ 5.61 Low $ 6.23 11% 82 Schools(Daycare, Preschool, University) $ 5.61 Low $ 6.23 11% 52 Schools(Elementary) *per student $ 6.98 School-Elementary $ 7.43 7% 14 Schools(Intermediate) *per student $ 13.71 Schools-Intermediate/High $ 14.68 7% 18 Schools(High School) * per student $ 13.71 Schools-Intermediate/High $ 14.68 7% 20 Industrial *calculated by Formula 4,427 Total 48 CENT■ . PROPOSED HIGH -IMPACT RATE TRANSITION PLAN • Rate increases greater than 25% will be spread over two years and averaged with second year rate • Interim rate will be published for these affected customers • Affects approximately 89 meters • Two current rate classes: • Delis/Yogurt/Ice Cream/Bars/Coffee Shops (36% increase) • Mixed Use XA (28% increase) • Financial Impact is approximately $41 ,000 49 CENTRALSAN DELI/YOGURT/ICE CREAM/BAR/COFFEE SHOP IMPACTS • 82 Meters • Current Rate $5.61 • Proposed Rate $7.65 • Rate Increase 36% • Transitional Rate $6. 72 FY 2019-20 Proposed 6 Charges FY 2019-20 Increase y 6 M. Charges Average Bill $1,571 $2,094 33.3% $1,859 18.3% Lowest Bill $566 $596 5.3% $596 5.3% Highest Bill $6,665 $9,088 36.4% $7,983 19.8% CENT■ . DISTRIBUTION OF ANNUAL SEWER SERVICE CHARGES FOR DELIS, BARS, COFFEE SHOPS, ICE CREAM & YOGURT SHOPS 25 20 O 15 O L E 10 Z 5 1 , 1 0 - $575 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000 $5,500 $6,000 $6,500 $7,000 $7,500 Amount of Annual Charge FY 2018-19 charges for businesses not on shared water meters ` 51 CENTRALSAN SCENARIO Updated Sewer Service Charge 567 607 649 688 729 751 774 797 821 846 871 Cashflow Reduce Rate Increase 7.0% 7.0% 6.0% 6.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 53.6% Bonds $867 M "bt Issuance CIP (millions) 89 89 $140 Capital Financial Plan $120 $100 $80 $60 Seo ....... ....... ....... $20 so FY2019 FY 2021 FY 2 023 FY2M FY 2027 �P roperty Tax �Bonds Proceeds �SRF Loans Other —SSC Reserves —Total C1 P FI-52 CENTRALSAN RATES SCENARIO 2 FY , . . Proposed Proposed Rate FY • 2020-21 % Increase Rate Residential Single Family (SFR) $567 $608 7.2% $651 7.1% Multifamily (MFR) $549 $576 4.9% $616 6.9% Non-residential Low -- $6.33 up to 13% $6.77 7.0% Medium Low -- $7.78 up to 39% $8.32 6.9% Medium -- $9.75 up to 14% $10.43 7.0% Medium High -- $10.88 up to 3% $11.64 7.0% High -- $14.41 up to 11% $15.42 7.0% Schools - Elementary o $6.98 $7.55 8.2/0 $8.08 7.0% (per student) Schools - Intermediate/High o $13.71 $14.93 8.9/0 $15.98 7.0% (per student) FY 2019-20 percentage increases vary due to Cost of Service calculations and rounding FY 2020-21 percentage increases vary due to rounding of rates 53 CENTRALSAN SCENARIO 2 : NON -RESIDENTIAL RATE IMPACTS . . . Meters I W Turrent Rate Class"�Rate . . . . 3,346 Standard Commercial $ 5.61 Low $ 6.33 13% Deli/Yogurt/Ice Cream/ 82 Bars/Coffee Shops $ 5.61 Medium Low $ 7.78 39% 7 XA $ 6.00 Medium Low $ 7.78 30% 5 XB $ 6.50 Medium Low $ 7.78 20% 16 XC $ 7.02 Medium Low $ 7.78 11% 16 XD $ 7.52 Medium Low $ 7.78 3% 21 XE 8.03 Medium Low 7.78 -3% 36 XF $ 8.52 Medium $ 9.75 14% 28 XG $ 9.03 Medium $ 9.75 8% 29 XH $ 9.53 Medium $ 9.75 2% 35 XI 10.04 Medium 9.75 -3% 5 XJ $ 11.63 Medium High $ 10.88 -6% 2 XK $ 12.05 Medium High $ 10.88 -10% 0 XL $ 12.31 Medium High $ 10.88 -12% 0 XM $ 12.69 Medium High $ 10.88 -14% 0 XN $ 13.01 Medium High $ 10.88 -16% 0 XO $ 13.18 Medium High $ 10.88 -17% :119 Rprtmimnt in ;i Mpffiiim High inR 0 5 Bakeries 14.90 High 14.41 76 Automotive,Aviation, Marine service $ 6.46 Low $ 6.33 -2% 35 Hotels and motels with food service $ 9.74 Medium High $ 10.88 12% 33 Supermarkets $ 10.53 Medium High $ 10.88 3% 8 Mortuaries $ 12.93 High $ 14.41 11% 137 Churches $ 5.61 Low $ 6.33 13% 82 Schools(Daycare, Preschool, University) $ 5.61 Low $ 6.33 13% 52 Schools(Elementary) *per student $ 6.98 School-Elementary $ 7.55 8% 14 Schools(Intermediate) *per student $ 13.71 Schools-Intermediate/High $ 14.93 9% 18 Schools(High School) * per student $ 13.71 Schools-Intermediate/High $ 14.93 7% 20 Industrial *calculated by Formula 4,427 Total 54 CENT■ . DECISION TREE Years 3,4,5,and 6 Resulting Bond Standard Years 1 and 2 Commercial Impact Rate Increase Rate Increases or SRF Funding (*any years not shown assume 3%increase) Required (1st year/2nd year) $154M Bonds pm 2 years at or $30M Bond+ minimum $89M SRF 11%/5.25% 0 W 4 years at 5% or LOW L $89M SRF Rate Increase 1 year at 4% * $89M SRF J 2 years at up to 7% r 1 year $92M Bonds 13%/7% at 7% 2 years at 7% * $72M Bonds No Debt 18%/12% ` 55 CENTRALSAN UPDATED RECYCLED WATER RATE IMPACT SCENARIOS RECYCLED WATER PROPOSED RATES CumulativeDescription FY 18/1910 2FO121 FY21/2I-MMEEFY21FY286,217 F27,28 10FY28/29 Total Zone 1— Former Potable $3.69 $3.80 $3.91 $4.03 $4.15 $4.27 $4.40 $4.53 $4.67 $4.81 $4.95 ($/1,000 gallons) Rate Increase 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 34/° Zone 1 — Former Canal/Well ($/1,000 gallons) $1.76 $1.81 $1.86 $1.92 $1.98 $2.04 $2.10 $2.16 $2.22 $2.29 $2.36 Rate Increase 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 34/° A7N—M RACENTLSAN PROPOSITION 218 IMPLEMENTATION 2019 RATE PUBLIC HEARING SCHEDULE o Board of Directors — Financial Workshop-Debt Nov. 1 , 2018 o Board of Directors — Rates Workshop Jan. 15, 2019 o Board of Directors — Follow Up Rate Discussion Jan. 31 , 2019 o Set Public Hearing for Rates o Approve Prop 218 Notice 01 Proposition 218 Notice Mailed March 4, 2019 o Board of Directors — Public Hearing April 18, 2019 • Sewer Service and Recycled Water o Board of Directors — Public Hearing June 6, 2019 • Adopt O&M and Capital Budgets • Adopt Updated Capacity Fees, Development Fees & Charges o FY 2019-20 Sewer Rates Effective July 1 , 2019 o Board of Directors — Sewer Service on Property Tax July 23, 2019 o Sewer Charges Submitted to County Tax Collector Aug. 9, 2019 CENT ` 59 ■ . OUTREACH PLAN • Prepare Proposition 218 Notice using the 2017 format as approved by Board on November 15, 2018 • Send custom letters to 89 customers who will experience high rate impacts with : • Meter-specific information for current and proposed rates • Outline Two-Year Transition Plan to Cost of Service Rate • Obtain customer feedback through surveys Ijd. A0 CENTRALSAN RECOMMEND BOARD ACTION ON THE FOLLOWING : • Consider Recommended Sewer Service Charge Non-Residential Rate Structure Based on Cost of Service Update • Consider Two-Year Rate Schedule • Choose Preferred Sewer Service Rate Scenario • Choose Recycled Water Rate Scenario • Provide alternative direction if needed • Consider Rate Hearing Schedule on April 18 , 2019 ' 611 ITEM F RECAP OF RECOMMENDATIONS AND CLOSING By Roger S. Bailey, General Manager l7�1= �: tCENTRALSAN SUMMARY OF SCENARIOS OW" IM Annual Rate Increases Scenari 0 110 2 3 4 5 111qVP 8 9 10 Cumulative ID 19113escription L FY 18/19 FY19/20 FY20/21 FY21/22 FY22/23 FY23/24 FY24/25 FY2.5/26 FY26/27 FY27/28 FY28/29 Total Baseline Sewer Service Charge 567 607 649 688 729 773 812 852 878 904 931 Rate Increase 7.0% 7.0% 6.0% 6.0% 6.0% 5.0% 5.0% 3.0% 3.0% 3.0% 64.3% $861 M Debt Issuance CIP (millions) 77 77 154 SCENARIO 1: Updated Sewer Service Charge 567 597 628 658 689 717 745 775 798 822 847 Cashflow Rate Increase 5.25% 5.25% 4.75% 4.75% 4.0% 4.0% 4.0% 3.0% 3.0% 3.0% 49.4% $867 M Debt Issuance CIP (millions) 77 77 154 SCENARIO 2: Updated Sewer Service Charge 567 607 649 688 729 751 774 797 821 846 871 Cashflow Reduce Rate Increase 7.0% 7.0% 6.0% 6.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 53.6% Bonds $867 M Debt Issuance CIP (millions) 89 89 SCENARIO 3: Updated Sewer Service Charge 567 635 711 789 876 885 894 903 912 921 930 Cashflow No Bonds Rate Increase 12.0% 12.0% 11.0% 11.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 64.1% $867 M Debt Issuance CIP (millions) 3 CENTRALSAN