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Home My WebLink About08. Receive report on COVID-19 impacts to costs, revenues and services Page 1 of 23 Item 8. CENTRALSAN Jdf A- hom CENTRAL CONTRA COSTA SANITARY DISTRICT December 17, 2020 TO: HONORABLE BOARD OF DIRECTORS FROM: DANEA GEMMELL, PLANNING AND DEVELOPMENT DIVISION MANAGER PHILIP LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION REVIEWED BY: ROGER S. BAILEY, GENERAL MANAGER SUBJECT: RECEIVE REPORT ON COVID-19 IMPACTS TO CENTRAL SAN'S COSTS, REVENUES AND SERVICES Attached is a presentation on the impact of COVI D-19 on the District's costs, revenues and financial plan. On March 25, 2021, a financial workshop will be held to consider the District's current financial outlook and whether to proceed with implementation of the rate adjustments specified for year three (FY 2021-22) of the four-year rate plan that commenced in FY 2019-20. Issues investigated in today's COVI D-19 presentation will have a bearing on decisions to be made in that upcoming workshop. Strategic Plan Tie-In GOAL ONE: Customer and Community Strategy 1—Deliver high-quality customer service GOAL THREE: Fiscal Responsibility Strategy 1—Maintain financial stability and sustainability GOAL SEVEN:Agility andAdaptability Strategy 1—Maintain a safe working environment for employees and the public during the COVID-19 pandemic ATTACHMENTS: 1. Presentation December 17, 2020 Regular Board Meeting Agenda Packet- Page 137 of 173 Page 2 of 23 COVID-19 FINANCIAL WORKSHOP IMPACTS TO COSTS, REVENUES, AND SERVICES W Board Meeting December 17, 2020 -on-d6 AL "T xr2 V2 Topics I. Background II. COVID-19 Update a) Statistics b) Impacts to Central San and Selected Central San Customers III. Budgeted and Actual Revenue Overview a) Revenue Forecasts b) Teeter Plan Update IV. Mid-Year Update: Spending/Cost Impacts V. State Revolving Fund Loan Status Update VI. Financial Plan Preview � z 1 December 17, 2020 Regular Board Meeting Agenda Packet- Page 138 of 173 Page 3 of 23 INTRODUCTION 7ars ago, in accordance with Proposition 218, Board adopted a 4-year schedule of rate adjustments with annual check-ins to determine if course corrections needed. • Today's information is in preparation of a March 2021 check- in on rates/Financial Workshop. • COVID-19 has had financial impacts affecting Fiscal Year (FY) 2019-20, FY 2020-21 (current year), and which will affect FY 2021-22. • These impacts are manageable; several adjustments (subject to Board approval) can keep the financial plan generally on- track. • No policy decisions are needed at this time; this information is presented in preparation for a March 2021 workshop on rates. - ` 3 APPROVED SEWER SERVICE CHARGE (SSC) RATES • Central San is entering Year 3 of the 4-Year Rate Schedule. • In Year 2, the Board waived collection of the 5.25% SSC rate increase; Single-Family Residential remained at$598 instead of the $629 adopted. $1,000 10.0% 1 2 3 4 $848 $746 $776 $799 $823 $S98 $690 $717 fm $500 _ ___ __ ___ __ __ – 5.0% $0 0.0% 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 2028-29 Single Family Rate —Rate Increase 4 CENTRALSAN 2 December 17, 2020 Regular Board Meeting Agenda Packet- Page 139 of 173 Page 4 of 23 7 ANNUAL SSC PROCESS Year 2020 Year 2021 June- Jan-Dec Dec March April May June Jul Aug 2020 2020 2021 2021 2021 2021 2021 2021 Data Preliminary Financial Public Operations& Board Process SSC Submit SSC Collection Financial Workshop Hearing iS Maintenance Approves with Water to County by4 Water Workshop to Review Confirm SSC (O&M)/Capital O&M/CIP Data Based for Purveyors Approved Rates by Improvement Budget on Collection SSC Rates Board plan(CIP) ApRpproved on Property Budget ates Tax Roll Presented ` I s CENTRALSAN FY 2020-21 REVENUES FOR O&M AND CAPITAL BUDGETS eA Total Revenue* $163.5M *Excludes$15.9 million(M)use of reserve funds,and$3M debt proceeds L 16 CENTRALSAN 3 December 17, 2020 Regular Board Meeting Agenda Packet- Page 140 of 173 Page 5 of 23 $$C MAKES UP 62% of $163.5M REVENUE ❖ Residential accounts(roughly 80%)are charged a flat per-unit rate ❖ Most commercial accounts are charged based on water consumption All Other Revenue $101.2M 62% Sewer Service Charge(SSC) A - I � CENTRAL SAN FY 2020-21 REVENUES (BUDGETED) $163.5M TOTAL_ Capacity Fees All� Other Revenue$6.4M(4%) $6.3M(4%) Ad Valorem Tax_ _ $18.5M 11% $31.1 M ' $83.1 M Residential SSC City of Concords 19% 51% (SSC) 18.1M Non-Residential SSC s CENTRAL SAN 4 December 17, 2020 Regular Board Meeting Agenda Packet- Page 141 of 173 Page 6 of 23 7 SOME REVENUES VULNERABLE TO COVID-19 IMPACTS Revenue Type/Sub-Type Primary Basis of Assessment REM= Residential $83.1 M Board-approved user class rate multiplied Low Sewer (50.8%) by unit of measure(residential unit Service equivalents,water consumption, $18.1 M Charge Non-Residential (11.1%) days)water strength,per student/school City of Concord Revenue $31.1M Flow-proportionate share of eligible O&M Low (19.0%) and capital expenses $18.5M Central San's share of the 1%countywide Ad Valorem Taxes (11.3%) tax assessed on properties in the service Low area Board-approved rate multiplied by (3.9% Capacity Fees (3 9�) calculated added burden for new development or change in existing use Varies depending on type:Household $6.4M Hazardous Waste(HHW)reimbursement, Other Revenues (3.9%) source control fees/fines,permit and Moderate developer fees,recycled water,lease rental income,interest income CENTRALSAN CALIFORNIA DEVELOPED A FOUR-TIER SYSTEM TO DESIGNATE THE RISK STATUS OF EACH COUNTY County risk level Adjusted case rate* Positivity rate** 7-day average of daily COVIDN 7-day average of all COVID-19 tests performed that are positive 19 cases per 1 OOK Entire county Healthy equity quartile •- . More than 7.0 More than 8,0% tDaily new cases(per Positive tests business operations are rr closed M SUBSTANTIAL i i 5.0-8.0% 0 , Some non-essential Dail new cases(per Positive tests Positive tests indoor business rr operations are closed p�.0-3.9 2.0-4.9% 2.2-5.2% Some indoor business Daily new cases(per Positive tests Positive tests operations are open with 100k) modifications MINIMAL Less than 1.0 Less than 2.0% Less than 2.2% Most indoor business Daily new cases(per Positive tests Positive tests operations are open with 100K) modifications Source:California State Government COVID-19 information,available at https://covidl9.ca.gov/safer-economy/ As counties move between tiers, local response measures (including which businesses can operate and at what levels) are adjusted. 10 CENTRALSAN 5 December 17, 2020 Regular Board Meeting Agenda Packet- Page 142 of 173 Page 7 of 23 7 CHANGES IN COVID-19 STATUS: VOLATILITY = CHALLENGING TO FORECAST Aug 29 Oct 6 Nov 4 Dec 1 Minimal Cases per Day 9.1 7.1 7.7 30.2 (per 100k) Positivity Rate 5.3% 3.2% 3.3% 6.4% CENTRAL SAN CONTRA COSTA COUNTY COVID-19 RESPONSE • March 16, 2020: First Contra Costa County stay-at-home order issued defining "essential activities" and limitations for residents and various business sectors. • Post-March 16: Multiple subsequent orders either easing or broadening these restrictions based on local COVID-19 cases and positivity trends. • Many businesses have been forced to close or modify their operations in order to comply. • December 3, 2020: Regional Stay Home issued order for counties with ICU capacities less than 15%; will last at least until January 4, 2021. • On December 4, Health Officers in most Bay Area counties(including Contra Costa)decided to implement these restrictions effective December 6 regardless of ICU capacity levels. CENTRAL SAN 6 December 17, 2020 Regular Board Meeting Agenda Packet- Page 143 of 173 Page 8 of 23 IMPACTS TO CENTRAL SAN SERVICE LEVELS Initial Current Future (March 2020) (December 2020) (Dates TBD) Suspend HHW Facility HHW:Re-use room still pending reopening Reduced Field&Operations staffing Laboratory:Rotational schedule Permit Counter:Cortactless; onsite physical reopening pending Physical close of Permit Counter (plan drop-off implemented) Environmental Compliance: Rotational fieldwork with two tearns Teleworking of most office staff -- - rl CENTRALSAN LIMITED ONSITE INSTRUCTION AT SCHOOLS • In MMay 2020, Board approved a credit worth $180,000, reflecting changes in student days onsite versus assumptions in billed amount. • Central San School SSC in FY 2020-21 was approximately$800,000 before the$180,000 offset provided as a credit in FY 2020-21. Current • Re-Opening Instruction? (As of Late November; ME" SUBJECT TO Acalanes Union High(Lafayette) No After January 2021 Lafayette Some "When appropriate' Martinez Unified No Indeterminate Moraga No Indeterminate Mt.Diablo Unified(Concord&Clayton) No Hybrid opening January 2021 Crinda Union No Indeterminate San Ramon Valley Unified(Danville) Some Hybrid opening January 2021 Walnut Creek No Hybrid opening January 2021 is CENTRALSAN 7 December 17, 2020 Regular Board Meeting Agenda Packet- Page 144 of 173 Page 9 of 23 727020NN-RESIDENTIAL CONSUMPTION is LOWER THAN PREVIOUS YEARS YTD Metered Consumption 2,500,000 2,000,000 1,500,000 1,000,000 500,000 Jan Feb Mar Apr May Jun Jul Aug Sep OR Nov Dec 2017 2018 -2019 -2020 Source:Contra Costa Water District 2020 Non-Residential Water Data Year-to-date(YTD) CENTRALSAN REVENUE FORECAST 1 . Budgeted and Actual Revenue Overview Through October 2. Non-Residential SSC a) Water Consumption b) Forecast of Revenue by Customer Class 3. Concord Wholesale Revenue 4. Capacity Fees 5. Ad Valorem Taxes a) Forecast b) Teeter Plan Update 6. Other Revenues 16 CENTRALSAN 8 December 17, 2020 Regular Board Meeting Agenda Packet- Page 145 of 173 Page 10 of 23 O&M REVENUES • Revenues by Major Type through October: FY 2020-21 YTD Annual YTD YTD YTD Revenue Annual Revenue Revenue Source Budget Actual Variance M Budget M Sewer Service Charge Revenue $ 544,132 $ 848,034 $ 303,902 55.9% $ 44,527,762 1.9% Sewage Treatment Cost Sharing - (46,215) (46,215) 15,760,000 -0.3% Miscellaneous Service Charge 377,192 197,929 (179,263) -47.5% 2,177,000 9.1% Permit and Inspection Fees 674,133 640,480 (33,653) -5.0% 2,022,400 31.7% Other Non Operating Income 251,667 215,045 (36,622) -14.6% 755,000 28.5% Investment Income 63,333 70,731 7,397 11.7% 190,000 37.2% Total Revenue $1,910,457 $1,926,003 $ 15,546 0.8% $65,432,162 2.9% LSSC:Forecast to be$1M over budget in both O&M and Capital for YTD. Payments are received in 2 installments (December and April)" O&M revenues overall:About at budget thus far;potentially slightly below for the full fiscal year due to weakness in BEEN& ermit and In Fees. ` 17 ' SEWER CONSTRUCTION REVENUES • Through October 2020, negative YTD revenue variance of $0.4M (-13.4%); due mainly to capacity fees (timing of which has been historically volatile, but which could fall short by up to $3.5M if trend continues). Total YTD Budget FY 2020-21 YTD YTD YTD Variance Annual Realized Revenue by Source Budget Actual Variance($) (%) Budget (%) Sewer Service Charges $ 692,532 $1,078,404 $ 385,872 55.7% $56,673,402 1.9% Capacity Fees 2,121,333 969,273 (1,152,060) -54.3% 6,364,000 15.2% Other Government Revenue - - - 15,300,000 0.0% Tax Revenue - 362,578 362,578 15,940,000 2.3% Permit and Inspection Fees 127,000 71,873 (55,127) -43.4% 381,000 18.9% L n Operating Income** 333 57,713 57,380 17213.9% 1,000 5771.3% nt Income 97,833 93,360 (4,473) -4.6% 293,500 31.8% $ 3,039,032 $2,633,201 $ (405,831) -13.4% $94,952,902 2.8% ncludes Contractual Assessment District(CAD)revenue 18 9 December 17, 2020 Regular Board Meeting Agenda Packet- Page 146 of 173 Page 11 of 23 7 MAP OF CONTRA COSTA COUNTY WATER PROVIDERS ® City of Martinez Water Department ® Contra Costa Water District(CCWD) ® Dublin San Ramon Services District(DSRSD) ® East Bay Municipal Utilities District(EBMUD) h %of FY 20-21 Non-Residential Revenue Other (DSRSD�,� Martinez) 9% 4 e Z2&19 CENTRAL SAN CY 2020 NON-RESIDENTIAL WATER CONSUMPTION FORECAST INDICATES 20% DECREASE FROM 2019 CCWD Water Consumption(HCF) sw,nm 718,525 737,066 686,561 7m,om sw,om _ _ 590,595 5m,6m _ Sss,aeo 4m,0o0 195.050 p 157,047 3w,Ow I 187,994 188,989 100,006 8 135,556 1 W,000 0 2017 2019 2019 2010 ■g1AR 11 Wg2AR 11 •Q3A twl q<Prgxted YQ4A,1u 1 EBMUD Water Data through July 2020 also shows a similar trend ` Calendar Year(CY) Hundred Cubic Feet(HCF) Quarter(Q) CENTRAL SAN 10 December 17, 2020 Regular Board Meeting Agenda Packet- Page 147 of 173 Page 12 of 23 11 ILA FORECAST OF CY 2020 NON-RESIDENTIAL CONSUMPTION Original Projected Non-Residential SSC Revenue: $18.1 M x 1.104=$20.OM %OF SSC CCY 2020 PROJECTED PROJECTED NON- FY 2020-21 ONSUMPTION IMPACT RES REVENUE NON-RES (Fy 2021-22) REVENUE LOW HIGH *j (Based on High Office 18.1% -7.6% -9.4% $3.3M Food Service 15.0% -33.8% -38.3% $1.8M Mixed Use 14.7% -22.4% -23.6% $2.2M All Others 11.5% -5.0% -10.9% $2.OM Hotel/Motel 7.3% -31.3% -32.6% i $1.010 Businesses 7.1% -23.5% -31.9% $1.0M Market/Supermarket 5.4% +8.5% +9,2% $1.2M Recreation/Entertainment 4.7% -39.3% -43.8% i $0.510 Industrial/Permitted 44% -0.4% -3.5% $0.9M (includes Hospitals) Schools 4.4% -16.9% -19.6% i $0.7M Automotive/Car Wash 4.1% -14.5% -19.9% i $0.610 Government 3.3% -24.1% -25.8% $0.5M TOTAL 100.00% -18.1% -21.7% i $15.7M CENTRALSANI 7FORECAST OF FY 2021-22 SEWER SERVICE NON-RESIDENTIAL REVENUE BY CUSTOMER CLASS Projected Revenue Shortfall=($4.3M) $4,000,000 $3 sM $3,500,000 --- $3.eM $2.9M $3,000,000 $2,500,000 $z.3M $2,000,000 $1.SM $1,500.000 $M $I.IM $1,000.000 $O.J $500,000 $0 doe �oe JSe rays oaY zye`' �e e� ;Yea ooYz a5 ecY p oaroe 0 eCa�,Fe c°o\ aos o'F 4ea Yo POY Pe ■FY 2021-22(Original Projection) ■FY 2021-22(Impacted Projection) 22 CENTRALSAN 11 December 17, 2020 Regular Board Meeting Agenda Packet- Page 148 of 173 Page 13 of 23 7CONCORD WHOLESALE REVENUE • Wholesale agreement started in 1974 and is billed on a flow- proportionate share of operating and capital expenses related to treating the wastewater collected from Concord-owned and Clayton-owned sewers. • Concord Flow Factor= Concord Flow Total Central San Plant Net Influent • Concord Revenue = Concord Flow Factor x Eligible Expenses Note that total revenue could vary if either the year-end actual flow factor or actual eligible expenses are below budgeted levels. • Concord and Clayton each conducts Proposition 218 SSC Rate Hearings and includes Central San treatment costs in their cost of service for customers. 23 CENTRALSAN 7CITY OF CONCORD REVENUE FY 2020-21 budget assumes a flow factor of 33.6% Projected Annual Flow Concord 1,656 35.7% 4,639 Net Plant 5,026 37.4% 13,439 FY 2020-21 Projected Annual Flow Factor: 'Based on 4-year weighted average Concord Flow Factor(Historical) 35% 34.1% 34.1% 34% --- 33.59/ 33% ------ ----- 32.2% 32% 31% 30% FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20 FY 2020-21 24 CENTRAL SAN 12 December 17, 2020 Regular Board Meeting Agenda Packet- Page 149 of 173 Page 14 of 23 CAPACITY FEES M • Currently tracking behind budget; but in past years, there has been significant volatility by month. ®®®® July $530,333 $248,070 ($282,263) ($282,263) August $530,333 $237,126 ($293,208) ($575,471) September $530,333 $235,074 ($295,260) ($870,731) October $530,333 $249,004 ($281,329) ($1,152,060) November $530,333 $222,466 ($307,867) ($1,459,927) ® '1 •, Ill ®®® If trend continues, could be under budget by �$3.5M for FY 2020-21. ` 25 PERMIT COUNTER ACTIVITY Indicator for Capacity Fees and Construction Activity Residential Unit Equivalents(RUE) Permits Issued Added(Includes Commercial and Residential) t t>t6 ' tScO tt tau , $ E , rc a ++ � o , 8 E E � z' z .w X2020.21 �2a,9-20 o20B19 �202a202t X201&2020 0201&2019 ---2020.21 —•201920 201819 ____202x2021 —201&2020 201&2018 26 CENTRALSAN 13 December 17, 2020 Regular Board Meeting Agenda Packet- Page 150 of 173 Page 15 of 23 AD VALOREM TAXES • Contra Costa County assesses a Countywide Tax on taxable properties within the county (1% of assessed value). • A property's assessed value is determined by: -Historical value,allowing for escalation(approximately 2%per year). -Market value, if resold within the assessment year(sale price becomes new assessed value). • Central San receives a Ad Valorem Property Tax (Actual and Budgeted) share of the Countywide 19.5001W0 Tax for those properties 19,0w, 0 within its service area 18,000,000 (aka ad valorem taxes). 12.500,000 The share varies 16,SW,000 depending on the property's Tax Rate Area, 16,500000 ranging between 0.4% 15,000,000 201617 2017.19 201S 19 2019.20 ., and 2.8% of the 1% tax. �l HOME SALES ARE VERY STRONG: NO NEGATIVE IMPACT ON AD VALOREM TAXES FORECASTED • Drivers include low interest rates, relocation to suburbs. • Strong market is moving assessed values upwards. Sales of Existing Single-Family Homes in Contra Costa County $850,000 (Jan 2018—Oct 2020) 35 $800,000 _____________________ __________________________________ ___ 30 3 a $750,000 ____________________ _ ___________________ ________ -------- 25`° u a a $700,000 ________ _________ ___ _____ ____ ____ __ __ __ _________ 20 0 g � m $650,000 __ _______ _____ _______ __ __ __ ______________ IS o� a 3 v $600,000 _ _ ________________ _________________________ _ --- 10' $550,000 -------------------------------------------------------------- 5 .. $500,000 0 t Median Sold Price of Existing Single-Family Homes Median Days on Market Source:Data from California Association of Realtors 28 CENTRAL SAN 14 December 17, 2020 Regular Board Meeting Agenda Packet- Page 151 of 173 Page 16 of 23 "TEETER PLAN" SUMMARY 7Relevant to Central San's collection of most SSC and all ad valorem • Named after Desmond Teeter, Contra Costa County Auditor in the 1940s. distributionPrior After A county's o local A county'sdistributions t. . . agencies d only occur agencies is based o after taxes . . .. collected • Provides stable cash flow and elimination of collection risk for local agencies. • County manages funding pool, bears risk of delinquencies, and retains any interest and penalties collected. • Added to State Revenue and Taxation Code in 1949. Constitutional legality upheld in Corrie v County of Contra Costa, 110 Cal.App. 2d 210 (1952). • Contra Costa was first county on January 3, 1950; currently most counties are"Teeter counties." CENTRALSAN 7- Most CONTRA COSTA COUNTY PROPERTY TAX LEVIES & COLLECTIONS operty tax is collected within year of levy - But significant drop-off around great recession of 2008 100.00% 95.00% - - - --- 90.00% • But within 5 years, more than 99.5% is collected Property Tax Collection as Percent of Levy(Aging) 99.80% 99.55% HE] 99.83% 99.87% 99.89% 99.87% 99.93% 99.87% 99.81% 99.]0% 99.19% 100.00% r— 99.00% NOW 99.24% 98.00% ■Levy Year M 9].00% •Levy Year+3 97.18% 96.00% 95.00% n •Levy Year+2 94.00% •Levy Year+1 — — — — 93.00% `A ■Levy Year — — — — — 92.00% �- 91.00% 90.00% FY2007-08 H2008-09 f 2009-10 FY 2010-11 FY2011-12 FY2012-13 FY2013-14 FY2014-15 FY2015-16 FY2016-17 H2017-18 f 2018-19 Levy Year Source:Contra Costa County,Comprehensive Annual Financial Reports(CAFRs)from multiple years - F 3� CENTRAL SAN 15 December 17, 2020 Regular Board Meeting Agenda Packet- Page 152 of 173 Page 17 of 23 FUNDING FOR TEETER PLAN OBLIGATIONS IS SECURE • Discussion between Central San Director of Finance&Administrative and County Auditor&Treasurer on November 17, 2020: • Spring property tax collections were strong; no notable COVID-19 impact. • Outlook for December. Still"wait and see"until then, but not overly concerned at this time: • Governor's Executive Order allows counties to waive penalties for payments through May 6, 2021. It is possible some taxpayers will ask for this waiver. • Area of concern may be that small businesses that do not have property tax impound accounts like many residential properties have (with mortgages). • A County reserve fund of$75-$85M allows for Teeter fund payments in the levy year, even if it takes time to collect from taxpayer. • Funding for Teeter Plan obligations is secure: County has done various assessments. Strong reserve and liquidity position. "Prepared to fund payments,even if with defaults up to 10%." See prior bar chart for"worst case"scenario of 2008 recession when collections in first year were at 94.9%. ` r 31 CENTRAL SAN • Overall Vulnerability:Moderate OTHER REVENUES Permit&Inspection Fees "Other Revenues" (total $6,000,000 - - -Application Fees $6.4M or 3.9% of annual -Inspection Fees revenues) includes multiple $5,000,000 _ -Plan Review - IndustrialPermitFees sources each with their differing vulnerability to $4,000,000 - Miscellaneous(Mist.) Service Charges(Moderate) COVID-19 related impacts -HHW Facility -Recycled Water $3,000,000 $2.2M -Stormwater/Pollution Prevention Program Example: Drop in interest yields $2,000,000 - Other Non-Operating ,..na,mm,rw r,.q,.w•rm+r m.p.pa Income= "" :A -Lease/Rental Income l+M1 $1,000,000 - -Fines&MISC.Income ' b' k Investment Income $0 -Interest Income - Pooled Money Investment Account(PMIA) S&P Global Ratings(S&P) Government Investment Pools(GIP) Federal(Fed) 32 CENTRALSAN 16 December 17, 2020 Regular Board Meeting Agenda Packet- Page 153 of 173 Page 18 of 23 7 CURRENT YEAR SPENDING FORECAST • Costs: • O&M expenditures likely to be below budget by a few million, despite some additional spending on COVID-19. • Capital Expenditures are forecast to be below budget; assume underspend carries forward to following year. • Bottom Line: • Favorable O&M spending variance this year can offset a portion of potentially lower capacity fee revenue this year, and a portion of the lower water volume variance that will affect revenues next year. • This offset happens through O&M and Sewer Construction Reserves, or through the Rate Stabilization Account. CENTRALSAN • r OW EXPENSES • The O&M Fund expenditures are $4.9M (16.0°/x) under budget YTD.A significant portion of that likely to be available as year-end savings. - Spending YTD as percent of budget by year: 40% 33.2% 31.9% 30.9% 31.3% 30.2% 30% -- -- -- -----28.3%_*# 20% 2016 2017 2018 2019 2020 2021 -Those years ended with savings of$3-5M. FY 2020-21 YTD Total YTD YTD YTD Variance Annual Budget Expense Type Budget Actual Variance($) (%) Budget Used[%) Salaries&Wages $13,181,064 $11,814,918 $1,366,145 10.4% $39,543,191 29.9% Employee Benefits 3,848,391 3,183,378 665,013 17.3% 11,545,173 27.6% Unfunded Liability Costs 5,275,672 4,568,400 707,272 13.4% 15,827,016 28.9% Purchased Property 2,111,526 1,695,599 415,927 19.7% 6,334,577 26.8% Services Purchased Professional, 2,101,826 1,075,977 1,025,849 48.8% 6,305,477 17.1% Technical&Other Services Supplies&Materials 3,155,433 2,401,279 754,154 23.9% 9,466,300 25.4% Other Expenses 848,201 884,843 (36,641) -4.3% 1,644,604 53.8% Total $30,522,113 $25,624,394 $4,897,719 16.0% $90,666,338 28.3% **Transition to new enterprise resource planning(ERP)also created temporary payments backlog,slowing recorded expenses(this was caught up in November). 34 17 December 17, 2020 Regular Board Meeting Agenda Packet- Page 154 of 173 Page 19 of 23 SEWER CONSTRUCTION SPENDING 7- The Sewer Construction Fund has spent$19.3M through October 2020; below expectations by$10.2M. • Appears there is a reasonable chance spending will fall below the 90% target this year. Propose recognizing less than full funding for capital spending in financial plan for future years. YTD FY 2020-21 YTD YTD YTD Fav/(Unfav) Fav/(Unfav) Total Budgeted Actual Variance Variance(%) FY Budget Expenses by Program: Collection System $ 18,876,332 $ 11,003,343 $ (7,872,989) -41.7% $ 49,686,784 Treatment Plant 6,435,046 5,525,762 (909,284) -14.1% 39,194,584 General Improvements 1,696,789 2,422,273 725,484 42.8% 6,108,365 Recycled Water 2,444,477 334,991 (2,109,486) -86.3% 11,506,037 Contingency - _ _ = 2.100.000 Total Expenses: S 29.452.644 S 19.286.369 S 110.166.2751 -34.5% 5 108.595.770 CENTRALSAN COVID-19 COST IMPACTS • Central San has incurred a total of—$1.2M in known/tracked costs related to COVID-19 between O&M ($1.15M) and capital ($47K) over FY 2019-20 ($838K) and FY 2020-21 ($359K): Staff Related Efforts—Sanitizing,communication,process re-engineering, $812K Small share for etc.In some circumstances temporary services have also be acquired to (through Overtime address new daily needs such as Headquarters Office Building 11/17) (HOB)sanitizing. Contracted Services—Including services such as:sanitizing/disinfecting, $174K Partially scheduling software,remote signature software,etc. Supplies&Materials— Purchase of items such as:protect personal $164K Yes equimpment,santizing supplies,workplace modifications,etc. Capital Costs—Planning,design,and implementation/construction of long- $47K Partially(sneeze term safety plan and accompanying workspace improvements(cubicle/ guards reimbursable). office configurations,etc.)to mitigate the risk of the pandemic now and Some other capital In the future. equipment may qualify as emergency protective measures. •These impacts have already been reflected in the spending shown in previous slides (and prior year budget), so there is not an overall problem; spending is still under budget. ederal Emergency Management Agency(FEMA) 36 18 December 17, 2020 Regular Board Meeting Agenda Packet- Page 155 of 173 Page 20 of 23 77OFFSETTING FACTORS some savings as a result of current situation and state of economy Decreased FY 2020�Tt Costs Actu.1 to October ®®® Salaries/Benefits $14.998M $17.029M $2.048M Vacancies/slower (Vacancies) hiring(7.7% vacancy as of 10/2020) Training& $0.172M $0.029M $0.142M Fewer offsite Meetings conferences,etc. due to COVID-19 Project bid costs Not quantified;insufficient information to project at this time Borrowing costs Not in FY 2020-21 budget;but will benefit future years Budgeted at 3%, likely interest costs of 0.6% r 37 CENTRAL SAN SOLIDS HANDLING FACILITY IMPROVEMENTS (SOLIDS PROJECT t-IIIIIIR'!" I I 11 i • Major elements include solids blending tanks, dewatering, cake pumps, furnace modifications, new wet scrubbers, building seismic, ash handling, new electrical, etc. • Advertise Project for Bidding in January 2021. • Board consideration for Award in April 2021. 38 CENTRAL SAN 19 December 17, 2020 Regular Board Meeting Agenda Packet- Page 156 of 173 Page 21 of 23 STATE REVOLVING FUND (SRF) LOAN UPDATES FOR THE SOLIDS PROJECT • December 2018: SRF Application submitted • June 2019: Intended Use Plan recommended full funding request • June 2020: Updated Project Cost Estimate increased by$45M • August 2020: Requested to upsize project funding from $89.6M to $173.1M • October 22, 2020: Kick-off Meeting with SRF Finance Team: • Initial Agreement draft sent to Central San by November 1 • SRF Interest rate lower than previous assumptions; likely 0.65% (20-year term)to 0.9% (30-year term) • Notice of full $173.11M funding approval • December 2020: Finalizing Preliminary Loan Agreement • April 2021: Project Bid Opening • June/July 2021: Notice to Proceed • Mid 2021: First draw anticipated after Final Loan Agreement executed No COVID-19 impacts related to funding amount or timing. 39 CENTRALSAN SSC ANNUAL REVIEW REQUIREMENT "Prior to imposing the rate set forth under this Ordinance for Fiscal Year 2021-22, the Board of Directors shall consider, at a noticed public hearing:" ❖ the District's proposed budget, ❖ its financial condition; ❖ projected capital and operations and maintenance costs; ❖ as well as other factors which bear on the revenue requirements of the District. r ao CENTRAL SAN 20 December 17, 2020 Regular Board Meeting Agenda Packet- Page 157 of 173 Page 22 of 23 TEN-YEAR FINANCIAL MODEL HAS OFFSETTING ASSUMPTIONS • Non-Residential Water Savings from SRF Interest Revenues Rate • Length of COVID-19 Impacts Model Assumptions to match on Water Consumption actual CIP Cashflow • Increased Solids Project Rate Stabilization Fund has Costs $4.76M • Other Potentially Lower Inflation Assumptions In light of these offsetting factors, there are several options to keep "on track"with respect to the financial and rate plan to present at the March 2021 Workshop. CENTRALSAN QUESTIONS, COMMENTS, AND DISCUSSION 1 42 21 December 17, 2020 Regular Board Meeting Agenda Packet- Page 158 of 173 Page 23 of 23 7 CENTRAL SAN NON-RESIDENTIAL CUSTOMER CLASSES DEFINED General Business Types 0 Mixed Use Different business types on shared meters with blended rates Office Business offices,dental,medical,veterinary Hotel/Motel Hotels and motels Food Service Restaurants,delis,bakeries,bars,yogurt/ice cream shops Government Fire stations,government services,government offices Schools Public and private educational institutions Businesses Barbers/salons,dry cleaners,pet grooming,maintenance/contractors,meeting halls,Laundromats,nurseries,consumer retail,transportation,crematories Recreation/Entertainment Cinemas/theaters,bowling alleys,health clubs,swimming pools,tennis clubs Automotive/Car Wash Automotive sales and repair,gas stations,car washes Market/Supermarket Markets and supermarkets Industrial/Permitted Hospitals,breweries,water process users All Others Churches,residential care nursing,light industrial,warehouse,research l l' CENTRALSAN 22 December 17, 2020 Regular Board Meeting Agenda Packet- Page 159 of 173