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Home My WebLink About04. (Handout) Updated Presentation Item 4. (Handout) (Updated Presentation) • Attachment 3 FY 2019-20 - FY 2022-23 w + SEWER SERVICE CHARGE RATE HEARING Board Meeting April 18, 2019 �. w� INTRODUCTION Roger S. Bailey General Manager � z 1 OUTLINE 1 . Overview 2. Customer Survey 3. Cost of Service 4. Recycled Water 3 OUR COMMITMENT ❖ Successful Execution of Our Mission ❖ Highest Customer Service ❖ Continuous Improvement ❖ Fiscal Responsibility (cost does matter) ❖ Innovative ❖ Responsive ❖ Disciplined and Focused %will) 2 INFRASTRUCTURE INVESTMENTS IN OUR COLLECTION SYSTEM AND TREATMENT PLANT Collection System Treatment Plant Miles Investment/ Number of Investment/ Period Replaced Expenditure $ Projects Expenditure $ Last FY 6 $19.5M 5 $18.3M Last 5 Yrs. 25 $86.3M 26 $63.8M Last 10 Yrs. 51 $140.7M 60 $108.5M I INFRASTRUCTURE INVESTMENTS $306,200,000 SPENT OVER TEN YEARS CIP Actual Expenditures $50.M E $95.M E E $90.M $35.M E E E $30.M o E E E �` E ■PW $15.M o .GI po m •CS = •TP $S M MID 1111 11-12 12-13 1319 1415 1516 16-17 11-18 1L19PIojeMd Flom y— RW—Recycled Water/GI—General Improvements/CS—Collection System/TP—Treatment Plant 6 3 OPERATIONAL ACCOMPLISHMENTS ❖ Reduced sanitary sewer overflows from a high of 162 in 2002 to an all-time low of 28 in 2018 ❖ Achieved 100% compliance with wastewater discharge permit from National Pollutant Discharge Elimination System (NPDES) ❖ Received NACWA Platinum Peak Performance Award for the 21St consecutive year ❖ Implemented a comprehensive Asset Management Program to track assets and optimize maintenance through their lifecycle NUMBER OF OVERFLOW5 180 62 160 14574 140 \35 X123 120 11,107100 - - \71 81 86 80 r\63 l 60 - �-_-_ � �/ �49 49 489'3 60 20 - 0 1939 10[0]001 10]2 NAS 1001 A]3 16:6 NV]IDN X09 1010 X11 X12 1013 NIO 20151O1fi XI]}018 7 FINANCIAL ACCOMPLISHMENTS ❖ Refinanced debt to save $8.2M in interest costs ❖ Maintained a relatively flat O&M budget for six consecutive fiscal years ❖ Switched to CalPERS Health, saving $5.8M annually effective July 2019 ❖ Established best practices: •Completed Cost of Service Study •Adopted formal Reserve Policy and Debt Policy • Formalized Optimizations Program • Initiated Benchmarking Study CIENTRALSAN 4 PENSION AND OPEB LIABILITIES STEADILY REDUCED Pension OPEB $160 100% $90 100% $140 90% $80 — 90% $120 80% $70 80% 70% $fi0 70% c$100 60% c 50 60% $ $80 50% ° 50% 2 $60 40% $40 40% 30% $30 30% $40 20% $20 20 $20 10% $10 10% $0 0% $0 0% OHO O�9 ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti iiiiiiiiiiiiiUAAL —Funded% iiiiiiiiiiiiiUAAL —Funded% Notes: Pension:2018 valuation is released summer of 2019. OPEB-Valuations projected liabilities less assets as of June 30 of that year. Pension-funded percentage excludes Section 115 Trust Assets(established in FY 2017-18). (OPEB—Other Post-Employment Benefits) APIA- llk g ALLOCATION OF PROPOSED RATE ADJUSTMENTS LARGER CONTRIBUTION TOWARDS CAPITAL Over Past Five-Year Period Over Next Two-Year Period Over Next Four-Year Period (FY2014-15 to FY2018-19) (FY2019-20 to FY2020-21) (FY2019-20 to FY2022-23) O&M O&M,1.7% O&M 0.0 19.0 N hill.- P Capital 81% 1L Capital Capital,98.3 100 100%to Capital 1.7%to O&M and over next two years. 98.3%to Capital over next four years. 10 5 CONTINUED ADVANCES IN FINANCIAL REPORTING & CONTROLS Builder®t ATRIMBLECOMPANY \ DPettyCash 11 Construction Program Management Software Program Management GFOA CAFR Award Internal Audit Information System 2017 2018 2P l/' LVLT Implementation of ERP Software Monthly Report Enhancements Replacement and Responsiveness to Board Requests GFOA Budget Award GFOA=Government Finance Officers Association/CAFR=Comprehensive Annual Financial Report/ ERP=Enterprise Resource Planning DISTRICT OUTREACH Emily Barnett Communication Services & Intergovernmental Relations Manager �z 6 PROPOSITION 218 PROCESS • November 1,2018-Board Workshop to review debt options • January 15,2019-Board Workshop to review rate scenarios FWR•YERR IL�TE INCgFASE CIISTOXER HOTIFICATIWI • January 31,2019-Board Meeting to review and approve Proposition 218 Notice and set Public Hearing w ��• - • March 4,2019- Proposition 218 --..,•-. Notices mailed to wastewater and • recycled water ratepayers • April 4,2019- Pipeline Newsletter article on rate increase notice • April 4 and 11,2019-Legal Notices published in Contra Costa Times and San Ramon Valley Times -�- • April 18, 2019-Public Hearing 13 EL CENTRAL SAN CUSTOMER ATTITUDES TOWARD POTENTIAL RATE INCREASES • Central San contracted to conduct a customer survey on March 12-17, 2019 • Margin of sampling error of +/-4.9% at the 95% confidence interval (industry standard) •400 telephone interviews with registered voters in the Central San service area • Interviews on landlines and cell phones in English and Spanish • Some percentages may not sum to 100% due to rounding 7 MOST CUSTOMERS ARE UNCERTAIN WHAT THEY PAY PER YEAR FOR THEIR SERVICE $0 0 15% $200 or less 6% Mean $225.30 Over$200 11% Don't know/ 6800 Refused FOUR IN FIVE SAY WHAT THEY CURRENTLY PAY FOR CENTRAL SAN'S SERVICES IS FAIR Very fair 49% Total Fair Somewhat fair 33% 82/ Somewhat unfair ■6% Total 2017 Responses Unfair Very unfair 4% 9/ Total Fair: 77% Total Unfair: 11% Don't know/NA -9% Don't know: 12% 'i 8 CUSTOMERS TEND TO VIEW THE INCREASE STATED IN DOLLARS AS MORE FAIR THAN STATED IN PERCENTAGES Very Fair ■Smwt.Fair ■Smwt.Unfair ■VeryUnfair ■DK/NA Total Tota Fair Unfair $31 per Year 36% 69% 25% 5%per Year 37% 16% 50% 41% - 17 r� CENTRAL SAN THE DOLLAR INCREASE RECEIVES STRONGER AND MORF CONSISTENT SUPPORT ACROSS PARTY AND INCOME PF Demographic Group $31 per Year 5%per Year Total Fair Total Unfair Total Fair Total Unfair '6emocrats 73% 21% 63% 22% Independents 64% 26% 42% 50% Republicans 68% 30% 37% CMME= $100,000 �W5% 33% 41% JM%= $100,000-$250,000 69% 26% 53% 36% W3% 13% 52% ■� 9 REASONS GIVEN BY CUSTOMERS WHO SAY IT IS FAIR It's an Important Service/ 31% Worth the Money Inflation 28% It's not that Expensive/It's Reasonable 21% They do a Great Job/ ■7% Keep the Environment Clean More People Leads to More Waste . 5% To Prevent and Repair/Infrastructure ,4% 19 w , 1111154TUFF72,191-1 M2 VERBATIM COMMENTS IN FAVOR OF THE INCREASE They are very necessary General inflation of services.These are fair prices and it is important the economy. to the environment. Its been awhile since they increased rates Thirty one dollars isn't that Because that and they also much money, no other j increase will have more reason. improve restrictions now. infrastructure. I want these services to continue. I wouldn't want to pay much more than that.The cost of living wage increase always seems so little compared to the actualincrease. -- CENTRAL SAN 10 CUSTOMERS WHO THINK IT IS UNFAIR SAY THE AMOUNT IS TOO GREAT 5%is unfair/too high 33% Can't afford it/too expensive/ 31% already pay enough Charged for services not received/ 10% not efficient They have enough money =9% Too many taxes M 6% Waste of money/could go to qi better things 4% Don't know where the money goes d 4% 4 Bad water quality 1% 21 21 CENTRAL SAN VERBATIM COMMENTS IN OPPOSITION TO THE INCREASE Everything is going up and some people like us who are on a fixed ersonally,I can afford it but to other people income are not being able ix that is unfair.That is a 20 percent jump in 4 afford to pay for things. years and that is quite a bit of a burden. 0 We pay enough taxes on everything else,everything is going They get enou up,but I'm sure they will do it anyways. money out of us I think they already charge I was not even aware of how much we pay enough. and I am not up for upping the prices. I'1 CIENTRALSAN 22 11 CUSTOMERS' HIGHEST PRIORITIES ■Total Highest Priority ■Total Lowest Priority Difference Maintaining,enhancing or replacing aging equipment,pipelines,facilities,and buildings +73% Maintaining sewer service reliability +68% Increasing the use of recycled water +65% Meeting increased state and federal health, safety,and environmental regulations +56% Improving sewer service reliability +56% Reducing District energy consumption +43% Preparing for the future of communities in central Contra Costa County +42% Reducing greenhouse gas emissions +36% Preparing for changes related to climate change +32% 23 AFTER HEARING A SERIES OF MESSAGES, SUPPORT FOR THE $31 PER YEAR PROPOSAL INCREASES, WHILE PERCEPTIONS OF THE 5% INCREASE REMAIN THE SAM[ ■Very Fair ■Smwt.Fair ■Smwt.Unfair Very Unfair ■DK/NA Total Fair Uni Initial Support 69% 25; $31 per Year After Messages 42% 77% 16`. Initial Support =7% ® N .50% 5%per Year After Messages 29% ' 51% so 24 CENTRALSAN 12 MESSAGES IN FAVOR OF INCREASING RATES (Ranked by%Very Convincing) (ENVIRONMENT) These rate increases will enable Central San to continue protecting our environment by expanding household hazardous waste collection and keeping over 2 million pounds per year of hazardous products out of our waterways, recycling water to save local drinking water and support regional water resiliency, and collecting and safely disposing of tens of thousands of pounds of unwanted medications each year.38% (INFRASTRUCTURE)These rate increases will be used to complete nine major projects that will repair and replace aging facilities at the sewage treatment plant and replace over 28 miles of sewer pipe in Contra Costa County.35% (MASTER PLAN) These rate increases will help Central San prepare for the future. In 2017, Central San began implementing a 20-year detailed master plan that is focused on four major factors: replacing aging infrastructure — including aging sewer pipes and flood levees, meeting new regulatory requirements,and ensuring sustainability.33% (OPERATING BUDGET)Over the last five years,Central San's operating budget has not grown. The District is committed to reducing it by$2 million next year.These rate increases will be utilized to repair,replace,and re-invest in services that directly benefit customers.24% ` 25 CENTRALSAN MESSAGES FOCUSED ON THE ENVIRONMENT, INFRASTRUCTURE NEEDS, AND THE MASTER PLAN ALL RESONATE ■Very Convincing ■Somewhat Convincing Environment 37% 75% Infrastructure 43% .78% Master Plan 48% ■81% Operating Budget 44% 68% �l CENTRALSAN �r 13 RATE ASSUMPTIONS Danea Gemmell Planning & Development Services Division Manager 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 payment of$1.25M for FY 2019-20(option to increase with favorable variance) and annual payment of$2.5M for unfunded liability remaining 9 years or other Board- directed use • Two percent vacancy factor • Capital Budget: • 3%escalation • Updated 10-Year CIP:$867M based on revised cash flow • Use Reserve Targets per Board Policy including 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 ` CENTRAL SAN 14 CURRENT REVENUE REQUIREMENTS FY 2019-20 FY 2018-19 Proposed Variance fro Budget Budget* FY 2018-19 Md (Final Pass) I Budget 1 9 Operations and $89,720,456 $87,584,775 ($2,135,681) (2.4%) Maintenance Sewer Construction 45,319,000 66,176,000 20,857,000 46.0% Debt Service 3,611,038 2,982,415 (628,624) (17.4%x) Self-Insurance 924,500 1,073,700 149,200 16.1% *January 2019 Workshop forecast a FY 2019-20 total budget of$157,670,702 29 CENTRAL SAN PROPOSED O&M BUDGET Adopted • ... FY 2018-19 FY 2019-20 Budget Variance Budget Budget Variance Administration $27,737,657 $23,482,428 ($4,255,229) (15%) Engineering $17,033,406 $16,863,942 ($169,464) (1%) Collection System $13,960,060 $14,750,139 $790,079 6% Operations Plant Maintenance $14,366,463 $14,610,349 $243,886 2% Plant Operations $14,222,651 $15,520,408 $1,297,757 9% District Safety $847,425 $749,161 ($98,264) (12%) Recycled Water $1,552,794 $1,608,348 $55,554 4% I. 15 PROPOSED CAPITAL IMPROVEMENTS BUDGET FOR FY 2019-20 AND FY 2020-21 Adopted IFY 2018-19 Budget Collection System $19,347,000 $27,130,000 $36,762,000 Treatment Plant $16,865,000 $28,330,000 $44,240,000 General Improvements $4,750,000 $4,264,000 $2,724,000 Recycled Water $2,857,000 $4,452,000 $11,153,000 CIB Contingency $1,500,000 $2,000,000 $2,000,000 • rrr .. . rrr •. : • rrr 140 ................ Capital Financial Plan $120 $100 $80 $60 540 $20 $0 MON M. FY2.1 FY2025 M.1 -Property --'-P 31 EL CENTRAL SAN PROPOSED WASTEWATER RATES Residential(rate per residential unit) Single Family Homes $567.00 $598.00 $629.00 $660.00 $690.00 Apartments,Condominiums,Second Living $549.00 $566.00 $596.00 $625.00 $654.00 Units,Mobile Homes Schools Daycare,Preschool,University(per HCF) $5.61 $6.23 $6.56 $6.87 $7.20 Elementary(per student) $6.98 $7.43 $7.82 $8.19 $8.58 Intermediate,High Schools(per student) $13.71 $14.68 $15.45 $16.18 $16.95 Industrial Formula(including food processing) Wastewater Flow(per HCF) $4.14 $4.82 $5.08 $5.32 $5.57 Biochemical Oxygen Demand $1,370.72 $1,275.00 $1,342.00 $1,406.00 $1,473.00 (per 1,000 pounds) Suspended Solids(per 1,000 pounds) $639.14 $666.00 $701.00 $734.00 $769.00 Fixed charge $98.33 $93.69 $98.61 $103.29 $108.20 Special Discharge Contractual Agreements: '1 16 PROPOSED WASTEWATER RATES - CONTINUED ��Mwwww Non-residential Low(Standard Commercial) $5.61 $6.23 $6.56 $6.87 $7.20 Low(Automotive) $6.46 $6.23 $6.56 $6.87 $7.20 Medium-Low(Delicatessens,Yogurt Shops, Ice Cream Shops,Coffee Shops,Bars,and $5.61 $6.72 $8.05 $8.43 $8.83 Mixed-Use Rate XA) Medium-Low varies $7.65 $8.05 $8.43 $8.83 Medium varies $9.59 $10.09 $10.57 $11.07 Medium-High(Hotels and Motels) 'I $9.74 i-$11.26 $11.79 ' $12.35 Medium-High(Restaurants,Supermarkets) $10.53 .$11.26 $11.79 ' $12.35 Medium-High(shared meter with bakeries or high-strength food service)High Bakeries) varies $11.26 $11.79 $12.35 High�Mortuaries) High(Restaurants with Grinders or Emulsifiers,Brewing with BMP permit) ®®®®® Minimum Annual Charge $566.00 $566.00 $596.00 $625.00 $654.00 Rates shown are per Hundred Cubic Feet(HCF)of water consumption unless other otherwise noted 33 CENTRAL SAN Tr RATE INCREASE ALLOCATIONS TO CAPITAL AND O&M FOR NEXT FOUR YEARS $598 $629 $660 $690 *SSC Rate increase in% 5.5% 5.2% 4.9% 4.5% Additional SSC revenue $5,393,823 $10,890,788 $16,219,361 $21,550,151 raised per year Amount allocated to•= $0 $0 $0 $915,283 Amount allocated to Capital $5,393,823 $10,890,788 $16,219,361 $20,634,868 • •= 0% 0% 0% 4.2% 100% 100% 100% 95.8% :S,n:gl.Fa-ily Rate '1 17 SUMMARY 35 raTMETTIRMIZE SINGLE FAMILY SEWER SERVICE CHARGE FY 2019-20 (*)San Francisco PUC (')Berkeley(EBMUD for treatment) (*)Santa Rosa (')Rodeo Sanitary District 1*)Benicia (')Petaluma (*)Richmond (')Crockett Sanitary Department (*)Oakland(EBMUD for treatment) San Leandro(EBMUD for treatment) (*)Napa Sanitation District Average of Agencies Surveyed (*)Livermore millillill (')Brentwood (*)West County Wastewater District (')Novato Sanitary District Central San(Proposed FY 2019-20) Pittsburg(Delta Diablo for treatment) Sunnyvale (')Concord(CCCSD for treatment) (*)Mt View Sanitary District (')Vallejo Sanitation and Flood Control Central San(FY 2018-19) $562 Antioch(Delta Diablo for treatment) Bay Paint(Delta Diablo for treatment) (*)Stege SO(EBMUD for treatment) (*)Pleasanton(DSRSD for treatment) (*)Fairfield-Suisun Sewer District San lose (•)Dublin San Ramon Services District 1*)Union sanitary District (*)=FY 2019-20 rate Castro Valley Sanitary District Hayward (*)Oro Loma Sanitary District $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 - I 18 PROPOSED RATE INCREASE SUMMARY Single Family $567 $598 $629 $660 $690 $718 $747 $777 $800 $824 $849 Residential - $31 $31 $31 $30 $28 $29 $30 $23 $24 $25 $262 *Rate Increase 5.5% 5.2% 4.9% 4.5% 4.0% 4.0% 4.0% 3.0% 3.0% 3.0% 41.0% Ten-Year CIP $66.1 $96.8 $106.3 $106.4 $90.3 $83.3 $92.2 $71.2 $80.4 $74.2 $867.2 Debt Issuance (millions) $77 $77 $?sa *Single Family Rate 37 CENTRAL SAN VALID RATE CHANGE PROTESTS RECEIVED Customer Type Number of ValidProtests Single Family 16 Multi-Family 2 Other 0 MW Number of parcels billed: 117,125 Percent valid protests: 0.015% CENTRALSAN 19 VALID RATE CHANGE PROTESTS RECEIVED (HISTORICAL) 140 120 100 80 60 40 20 Rate Change Number of 78 124 67 55 19 18* Valid Protests *As of 12pm on 4/18/19(meeting date:4/18/19) A�Q tCENTRAL SAN9 VALID PROTESTS RECEIVED As of 12pm on 4/18/19(meeting date:4/18/19) 8 44 10 56 ■General Opposition ■Fixed Income/Hardship/Senior Citizen w— CENTRALSAN I1 20 CONTRA COSTA WATER DISTRICT PROPOSITION 218 PROTESTS Proposition 218 Notices • Mailed to all customers on November 13 • 7 written protests received through December 28 • 6 against rate increases • 1 against rate structure impacts • 2 written comments received to date • 1 questioning methodology for peak demand change • 1 concern with format of the notice 41 CENTRAL SAN RECOMMENDED BOARD ACTION FOR SSC. • Conduct a public hearing to receive comments and consider adopting a proposed uncodified ordinance adopting Alternative 1, increasing the annual SSC for residential and non-residential customers consistent with the chart below, averaging 5.25%, 5.25%, 4.75%, and 4.75% for the next four fiscal years: Annual Annual Annual Annual A Increase ssc Increase SSC Increase SSC Increase SSC Single Family $31 $598 $31 $629 $31 $660 $30 $690 Residences Multi-Family $17 $566 $30 $596 $29 $625 $29 $654 Residences Non Residential Varies as shown in the Proposition 218 Notice mailed to property owners and Attachment 1 (Residential Rates shown in dollars per residential unit) • Upon conclusion of the public hearing, adopt the proposed uncodified ordinance, which includes the following findings: • The proposed charges are exempt from the California Environmental Quality Act(CEQA) b` There was not a majority protest Edir— CENTRAL SAN 21 QUESTIONS 43 Ir CENTRAL SAN 22