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HomeMy WebLinkAbout02. Conduct Financial Planning Workshop Page 1 of 25 Item 2. CENTRALSAN SANITARYjdf A- hom CENTRAL CONTRA COSTA , . March 25, 2021 TO: HONORABLE BOARD OF DIRECTORS FROM: DANEA GEMMELL, PLANNING AND DEVELOPMENT SERVICES DIVISION MANAGER PHILIP LEI BER, DIRECTOR OF FINANCEAND ADMINISTRATI ON REVIEWED BY: JEAN-MARC PETIT, DIRECTOR OF ENGINEERING AND TECHNICAL SERVICES ROGER S. BAILEY GENERAL MANAGER SUBJECT: CONDUCT THE FINANCIAL PLANNING WORKSHOP, DURING WHICH THE FOLLOWING WILL BE PRESENTED AND DISCUSSED: • CURRENT FINANCIAL CONDITION REVIEW • PENSION OVERVIEW AND FUNDING FINANCIAL STRATEGIES • FINANCIAL PLAN UPDATE • RATES Staff will present the attached presentation at the Workshop. Strategic Plan Tie-In GOAL THREE: Fiscal Responsibility Strategy 1—Maintain financial stability and sustainability, Strategy 2—Ensure integrity and transparency in financial management ATTACHMENTS: 1. Presentation March 25, 2021 Special Board Meeting Agenda Packet- Page 4 of 30 Page 2 of 25 ANNUAL FINANCIAL WORKSHOP Board Workshop March 25, 2021 wig= INTRODUCTION Roger S. Bailey, General Manager CENTRALSAN 1 March 25, 2021 Special Board Meeting Agenda Packet- Page 5 of 30 Page 3 of 25 TODAY'S OBJECTIVES FOR BOARD DISCUSSION 1. Confirm adopted Sewer Service Charge (SSC) rates for Fiscal Year (FY) 2021-22 and proposed recycled water rates 2. Confirm Financing Alternatives of Capital Improvement Program (CIP) 3. Consider strategy for interest savings for Pension Unfunded Actuarially Accrued Liability (UAAL) Costs CENTRALSAN ` 3 PRESENTATION OUTLINE I. Current Financial Condition Review II. Pension Overview and Funding Financial Strategies III. Financial Plan Update IV. Rates V. General Manager Concluding Remarks � 4 2 March 25, 2021 Special Board Meeting Agenda Packet- Page 6 of 30 Page 4 of 25 RECENT FINANCIAL ACCOMPLISHMENTS • Overall Budgetary Control and Cost Reductions • Six years of flat Operations and Maintenance(O&M)budgets(through FY 2019-20) • California Public Employees'Retirement System(CalPERS)Healthcare Plan switch;$5.5 million savings annually effective FY 2019-20 • 2018 Bond Refinancing:$8 million interest savings through 2030 • State Revolving Fund(SRF)Financing for Solids Handling Project:$40+million interest savings over 20 years • Spending Control after Budget Adoption • FY 2019-20$5.88 million O&M savings • FY 2020-21 anticipated$5-6 million O&M savings • Customer Rate Relief • Deferral of FY 2020-21 adjustment:maintained$598 SSC,postponing$629 SSC • Credit for distance learning for school students in FY 2019-20 • Building Reserves to Weather Turbulent Times • Fully funded O&M and Sewer Construction Reserves • Rate stabilization account:$4.76 million • Pension Prefunding Trust:$11.9 million(with Contra Costa County Employees'Retirement Association(CCCERA)assets, Pension now 85.8%funded) • Greatly improved funded ratios,and high funding levels for Other Post- `` Employment Benefits(OPEB)(87%) 15 CENTRALSAN I. CURRENT FINANCIAL CONDITION REVIEW Phil Leiber, Director of Finance and Administration 3 March 25, 2021 Special Board Meeting Agenda Packet- Page 7 of 30 Page 5 of 25 Mon FY 2020-21 CENTRAL SAN FUNDING SOURCES (BUDGETED) $182.4 MILLION (M) TOTAL $15.9M(8.7%) $3M(1.6%) SRF Loan Proceeds Use of Reserves $6.4M(3.5%) All Other Revenue Capacity Fees $6.3M(3.5%T $18.5M Residential SSC Ad Valorem Tax_- 10.1% `f45.6% 3.1M $31.1M City of Concord 17% $18.11M i` 9.9% Non-Residential SSC Revenue provides$163.5M of the$182.4M revenue requirement 7 CENTRALSAN 7 FY 2021 -22 CENTRAL SAN FUNDING SOURCES (FORECAST) $197.5M TOTAL SRF Loan Proceeds $34.11V!($17.3 Reserves $1.3M(0.7%) 1w All Other Revenue $8.2M(4%) Ahm, Capacity Fees--- _ $85.6M� Residential SSC $7.9M(4%) $19.01M 43.1% Ad Valorem Tax 9.6% F $25.1M $16.31M ,*2'..7% 8 City of Concord —Non-Residential SSC Total Revenue Requirements of$197.5M includes revenue of $162.1 M, other sources of$35.4M 8 CENTRAL SAN 4 March 25, 2021 Special Board Meeting Agenda Packet- Page 8 of 30 Page 6 of 25 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:" A. District's proposed budget, B. Projected capital and operations and maintenance costs; C. Its financial condition; D. Other factors which bear on the revenue requirements of the District. r 9 CENTRAL SAN 7 A. PROPOSED FY 2021 -22 BUDGET • Pending finalization (to be presented to Board in early May) • O&M • Per Financial Plan*: $93.9 million 4 $94.9 million • Draft Budget: Anticipated to be in this range • Net Variance: Not Anticipated • Capital Budget • Per Financial Plan*: $110.4 million 4$106.9 million • Draft Budget: $106.9 million • Net Variance: $3.5 million decrease from original plan Financial Plan:original 4-year rate plan,and as updated. io CENTRAL SAN 5 March 25, 2021 Special Board Meeting Agenda Packet- Page 9 of 30 Page 7 of 25 B. PROJECTED O&M COSTS Running Expense(O&M)Budget 5240.000.000 5120.00.000 519.00.000 SW,000,000 550.000.000 I 20.000.000 ■ I s CENTRALSAN 1.1 - "'7 ` 11 . B. PROJECTED CAPITAL COSTS Capital Budget ("Estimated Expenditures"pre FY17/18) 140,000,000 - 120,000,000 - 100,000,000 80,000,000 60,000,000 - 40,000,000 20,000,000 p zz Takeaway: Going forward rate increases driven by capital investment will be mitigated by planned use of debt CENTRALSAN 6 March 25, 2021 Special Board Meeting Agenda Packet- Page 10 of 30 Page 8 of 25 C. FINANCIAL CONDITION • Financial Condition is Good • Required Fiscal Reserves are fully funded • $4.76 million in Rate Stabilization Account has been established • Favorable variances are anticipated from FY 2020-21: Results through January 2021 • O&M • Total revenues of$25.9 million • Total spending of$45.6 million • Net Variance: $5-$6 million favorable(adjusted for timing) • Capital • Total revenues of$42.3 million • Total capital project spending of$31.7 million • Net Variance: $1 million favorable (revenue only) 13 CENTRAL SAN C. F7INANCIAL CONDITION: RESERVES BOARD POLICY (BP) 017 FISCAL RESERVES Defines and governs use of. • O&M Reserve • Sewer Construction Reserve • Self-Insurance Reserve • Rate Stabilization Account • OPEB Trust and Pension Prefunding Trusts &4 CENTRAL SAN7 March 25, 2021 Special Board Meeting Agenda Packet- Page 11 of 30 Page 9 of 25 C. FINANCIAL CONDITION: RESERVES Reserve Status O&M SC-CIB Rate ($ millions) Reserve Reserve Stabilization (5/12) (50%CIB) Self Insurance Reserve Acct Reserves-Start of Year(6/30/20)(1) $66.0 $73.8 $6.4 $2.61 Policy Required Level at 6/30/20 37.8 44.0 6.5 Difference 28.2 29.8 (0.1) Reconciliation: FY 2019-20 CIB Carryforward(3) 21.0 PY Additions available for Future Use (3) 5.6 All Other(2) 20.9 (0.1) 2019-20 O&M&SC Y/E Variances 7.29 3.2 Board Approved Reallocations (2.25) 0.1 2.15 Balances After Reallocations 6 Z $73 8 $6.5 $4.76 Anticipated Increases SU S1 0 Projected Ending Balances(4) 6$ $Z_4.8 $6.5 $4.76 (1) Amounts per Balance sheet. (2) For O&M,this is the remaining balance of the O&M reserve in excess of the policy required level that will be drawn down during FY 2020-21. (3) $21M remains in SC for the FY 2019-20 carryforward,which increased from the$8.5M carryforward at 6/30/19. (4) Projected O&M and SC Reserve balances are rough estimates only,pending close of financial results for year. Prior Year(PY) Sewer Construction(SC) Capital Improvement Budget(CIS) Year End(Y/E) 15 D. OTHER FACTORS THAT BEAR ON REVENUE REQUIREMENTS OF DISTRICT • Revenue Outlook in FY 2021-22: • $4.3 million decline in SSC for commercial customers(lower 2020 water use). • School's credit provided in FY 2019-20. Pending issue for FY 2020-21. • Estimated higher costs for Solids Handling Project. • Progress on UAAL paydown: Updated pension cost projections. • Economic uncertainty due to COVID-19 continues: • 2020 lower water consumption affects FY 2021-22 commercial SSC revenue. • Lower 2021 water consumption affects FY 2022-23 revenues. • A gradual recovery in commercial water usage over 4 years is assumed. CENTRALSAN 8 March 25, 2021 Special Board Meeting Agenda Packet- Page 12 of 30 Page 10 of 25 II. PENSION OVERVIEW AND FUNDING FINANCIAL STRATEGIES Phil Leiber, Director of Finance and Administration CENTRALSAN 7 PENSION COSTS HAVE BEEN A SIGNIFICANT FACTOR AFFECTING OUR O&M BUDGET IN PAST DECADE • Labor related costs are about 75% of the O&M Budget • Pension UAAL costs most volatile component Budgeted Salaries and BenefitspX 100 tin mAbons 80 60 40 0 2604 2010 29n 2012 20E 2C14 2615 2016 20P 2= . __ : _._: 202T �N=h— �F*� wu C==Cm0 Az —v— ;sine L��c,Wx 18 9 March 25, 2021 Special Board Meeting Agenda Packet- Page 13 of 30 Page 11 of 25 PENSION AND OPEB FUNDING STATUS ($MILLIONS) Pension 4,e„ea OPER $160 1ww $9a lams 5120 eox 5�0 ems swr $5o tms $IOU �” 550 sms $a0 az S� ams $6o ao% $30 ims $4U — $2n 1ms a $20 $10 so $0 ox �UP.AL —Wnded% —UAAL —Funded% Pension Assets in OPEB Prefunding CCCERA Trust(1) Trust(1) Trust(2) Reserves-Start of Year(6/30/20)(1) $69.8 $10.3 $338.3 Anticipated Increases $26 $L6 $22-1 Projected Ending Balances $79.4 $11.9 saiu (1) OPEB and Pension Prefunding Trust balances as of 6/30/20 and 12/31/20. (2) initialactuarial value of assets per December 31,2018 CCCERA valuation and ending balance is per 2019CCCERA Valuation. 19 UAAL UPDATE • UAAL Progress: • Pension UAAL has been reduced by 50%since 2012(Pension funded status up from 56%to 85.8%). • Each year, layers are added to the UAAL,which are then amortized over 18 years. • We are on track to pay off UAAL this decade. • Board's commitment to directing additional funding has helped make this happen faster. Anticipated UAAL with Scheduled Amortization(Blue) and with Additional UAAL Payments to Pension Prefu riding Trust to Date and at$1.25 million through 2025(Red) s4o Net As ct 520 ® —� 50 (5Sn V (5401 15601 (5�1 2019 1070 5021 2022 2023 5024 2x25 2026 1-21 2074 •UAAL(21119 VaLaion) ($]e26) [$65) ($531 ($441 (59s) ($31) 1$231 ($14) ($4) $2 O Nex UAft R019 Ye4a[im] 1621 1511 141] [3a] (221 113] 13] 1 19 26 will Person pr�ur,din6 Trus rirs2 • Years above are CCCERA"valuation date".Lag of 2 years for Central San for ' FY Impact. CENTRALSAN 10 March 25, 2021 Special Board Meeting Agenda Packet- Page 14 of 30 Page 12 of 25 HISTORY OF ADDITIONAL UAAL PAYMENTS ($MILLIONS) Pension Date of CCCERA Prefunding OPEB FY Payment Trust Trust Trust Total Source of Funds 2013-14 Dec 2013 $5.0 Budgeted 2014-15 Dec 2014 $5.0 Budgeted 2015-16 Dec 2015 $2.5 Budgeted 2016-17 Feb 2017 $2.5 Budgeted-Board Decision 2017-18 Aug 2017 $3.4 Funded by FY 2015-16 variances 2017-18 Various $2.5 Budgeted-Board Decision 2017-18 Various $2.0 Funded by FY 2016-17 variances 2018-19 Various $2.5 Budgeted-Board Decision 2019-20 Various $1.25 $1.25 Budgeted$1.25M to OPEB Trust,and$1.25M variance from FY 2018-19 to Pension Prefunding Trust jk Subtotal $12.5 $9.15 $6.25 $27.9 2020-21 $1.25 $1.25 Budgeted$1.25M to Pension Prefunding Trust Totals $12.5 $10.4 $6.25 $29.15 21 AML UAAL REDUCTION STRATEGIES • Central San has taken many proactive steps to manage y^'� pension costs including adopting a pension funding strategy with the goal of a fully funded pension. • Borrowing for CIP,freeing up funds for UAAL paydown and reducing interest cost is a strategy for consideration. Measure Status Pension Relorrn • Change to benefit levels 10 Pensionable Comnensaeon Law5uns.PEPRA • Establish new tiers for new employees Q 2013 PEPRA(Public Employees'Pension Reform act) Can use Section 115 Pension Trust for this purpose it Establish Pension- Pension Payment Stabilization Reserve Fund Board elects.rvso ha.e Rate Slablulaaon account Designated Reserves Section 115 Trust Established in 2017 • Prepayment of annual contribution to Retirement Have been dung this full years Prepayment of UAL System for discount(year-to-year strategy) Partial prepayment of total Retirement UAA L Addfl payments annually to CCCERA and (longer-tens strategy) to Pension Trust posor • Reallocating capita[reserves and issuing tax-exempt � CProonsideedrarflon Now infrastructure financing in-lieu of Taxable POB Issuance of Oebt Targeted refundings for budget relief 2ota�erunding saved interest costs pia not defer principal • Pension Obligation Bonds(POB) ERpiored.FY2012-13 22 11 March 25, 2021 Special Board Meeting Agenda Packet- Page 15 of 30 Page 13 of 25 UAAL REDUCTION STRATEGY: INTEREST EXPENSE REDUCTION • Strategy: • Debt financing for CIP and free up SSC revenue that have would gone towards Capital Spending, then use it to pay down pension UAAL • Goal: • Replace 7% interest cost for Pension "debt'with -1% interest on debt for CIP • Term of debt would be same as schedule for payoff of UAAL • Net Savings of-$9.4 million: Interest Costs on Pension Debt vs.CIP Debt a,000,000 3,500,000 3.000.000 2500,000 2,000,000 1.500,000 1 000,000 L FY 21-22 FY 22-23 tl'23-29 FY 2425 iY 2526 FY 2629 FY n-28 FV 28-29 In<e rs Co4 4s is I---Coo To Be 23 CENTRAL SAN UAAL STRATEGY: INTEREST EXPENSE REDUCTION • Risks: • Actual savings could vary depending on pension asset earnings. • Interest rates for CIP Borrowing may change until issuance. • What about"Superfunding" (where Pension assets reach or exceed 100%of Pension liability)? 24 CENTRAL SAN 12 March 25, 2021 Special Board Meeting Agenda Packet- Page 16 of 30 Page 14 of 25 7 PENSION "SU PERFUNDING" • Board has expressed past concern about "superfunding." • What is it? • Continue paying"normal"pension costs even as pension is fully funded. • No more"pension payment holidays." • Why is it not a problem? • "Normal cost"payments continue, so that promised benefits can be paid. Working employees continue to accrue additional benefits that would need to be paid when they retire. • Those normal cost payments are not going to be such that the funded ratio would continue climbing higher and higher. When funded ratio reaches 100%,if all actuarial assumptions are met,the funded ratio should continue to hover around 100%. 25 CENTRALSAN 7 PENSION "SU PERFUNDING" • In contrast, UAAL payments would stop when no longer needed. • Layers(gains or losses)are added annually to the UAAL, amortized over 18 years. • Continues regardless of our funded ratio. • If actuarial assumptions are met, each new layer would be zero.As we get close to 100%, UAAL payments should be small or non-existent. • In practice,even as we approach 100%funding,would still have some normal random fluctuations. • Other reasons why "superfunding" isn't a major issue: • Central San pension policy(BP 041): Payments to Trust OR CCCERA,as appropriate. • Funds in Trust available for multiple purposes, including paying"normal"pension costs(if directed by the Board). 26 CENTRAL SAN 13 March 25, 2021 Special Board Meeting Agenda Packet- Page 17 of 30 Page 15 of 25 7 DEBT FINANCING��� • Key financial planning tool • With low interest rates, prudent to borrow more • Governed by Debt Management Policy • Types: SRF or Revenue Bonds • Revenue requirement includes debt service and/or pay-as- you-go funding for CIP • Financial Plan Scenarios explore options 27 CENTRALSAN III. FINANCIAL PLAN UPDATE Danea Gemmell, Planning and Development Services Division Manager CENTRAL SAN 14 March 25, 2021 Special Board Meeting Agenda Packet- Page 18 of 30 Page 16 of 25 CURRENT UPDATE IS MORE FAVORABLE • Higher Solids Project Increased SRF Loan $173.1 M Cost: change of$52 million Unfunded liabilities revisited/ • Potentially longer period for reduced impact on O&M COVID-19 Impacts on Water New CIP Cashflow Factors Consumption into Calendar included in Financial Model Year(CY)2023 Lower Ten-Year CIP from Baseline These and previously known factors have been incorporated in ALL new financial model scenarios 29 CENTRAL SAN 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$173.1 M • 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$173.1 M funding approval • December 2020-February 2021: SRF Due Diligence • March 2021: Expected Central San Loan Finalization. New State of CA General Obligation (GO) Bond Issuance sets new SRF interest rates • April-May 2021: Project Bid Opening • June/July2021: Project Award • Mid 2021: First draw anticipated after Final Loan Agreement executed '0194ao CENTRAL SAN 15 March 25, 2021 Special Board Meeting Agenda Packet- Page 19 of 30 Page 17 of 25 CURRENT YEAR CIP: FY 2020-21 To FY 2021-22 $907.5 MILLION OF IMPROVEMENTS/PROJECTS FY2020-21 BUDGET (mmnlim2020Mh-) Ten Year CIP 1 2 3 4 5 6 7 8 9 10 11 FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 reatment Plant $32.3 $52.8 $57.3 $62.7 $55.3 $45.5 $37.6 $43.0 $36.7 $36.9 ollectlon System $40.2 $40.8 $36.0 $39.2 $35.3 $29.6 $34.8 $27.3 $27.1 $25.1 neral lm rove $3.9 $2.5 $2.1 $2.1 $2.0 $1.9 $1.8 $1.8 $1.8 $2.5 Recycled Water $9.1 $11.7 $11.5 $0.3 $5.3 $11.3 $13.3 $1.3 $0.3 $0.3 antingency $2.5 $2.5 $2.5 $2.5 $2.5 $2.5 $2.5 $2.5 $2.5 $2.5 TOTAL FY 2020-21 CIP $88.0 $110.4 $109.5 $106.8 $100.4 $90.8 $90.1 $75.9 $68.4 $67.3 $907.5 Sra50 Su99 51059 5AD 5>S.P Sw,P SCSD SAD W9 ..,oma w,r., �9ew.+ v�n... owvvap�m«m ■n.m--n:M `31 CENTRALSAN 7 PROPOSED 10-YEAR CIP FY 2021-22: $939.3 MILLION (In.111;Pn 2021 O 11.,, Ten Year CIP 1 2 3 4 56 7 8 9 10 FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 <3 $45.2 $63.2 $68.6 $76.5 $60.8 $53.4 $40.5 $23.7 $26.0 $38.3 ®Re,ded $39.8 $37.4 $42.0 $39.1 $31.8 $35.3 $27.6 $29.9 $25.3 $26.8 $2.9 $2.1 $2.1 $2.0 $2.0 $2.0 $2.0 $2.0 $2.0 $1.9 $16.5 $8.2 $2.0 $5.5 $11.6 $13.7 $1.3 $0.3 $0.3 $0.3 $2.5 $2.5 $2.5 $2.5 $2.5 $3.0 $3.0 $3.0 $3.0 $3.0 TOTAL $106.9 $113.4 $117.2 $125.5 $108.7 $107.4 $74.4 $58.9 $56.7 $70.3 $939.3 IP 5i15P 5i]PP 5105.0 $91.0 PO erma 11 "111� .m.n"a o�PL�^m1eMrr21 21..rery,-rc ^, rrnn 11 11 r CENTRALSAN 16 March 25, 2021 Special Board Meeting Agenda Packet- Page 20 of 30 Page 18 of 25 NEW FINANCIAL RATE MODEL ASSUMPTIONS COVID-19 IMPACTS • $4.3M reduction in non-residential SSC revenue for FY 2021-22 • Gradual 4-Year recovery to Pre-COVID water consumption and revenue assumptions (FY 2024-25) • Adjustments to Schools will be offset with Rate Stabilization Fund 33 CENTRAL SAN NEW FINANCIAL RATE MODEL ASSUMPTIONS: CIP SPENDING RATE • Context: Strategic Plan includes goal of spending 90%of budgeted capital expenditures including carry forward. • Past Practice: Financial Plan has historically assumed 100%of CIP spending. • Proposed Approach: Use 90%funding ratio,with make-up in later years. Proposed CIP $106.9 $113.4 $117.2 $125.5 $108.7 $107.4 $74.4 $58.9 $56.7 $70.3 Allocation CIP Cashflow 90.0% 90.0% 90.0% 95.0% 95.0% 95.0% 100.0% 113.9% 133.6% 108.9% Factor Forecasted $96.2 $102.1 $105.5 $119.2 $103.3 $102.0 $74.4 $67.1 $75.7 $76.5 Cashflow CENTRAL SAN 17 March 25, 2021 Special Board Meeting Agenda Packet- Page 21 of 30 Page 19 of 25 OTHER RATE MODEL ASSUMPTIONS • Basis of Model: Updated Cost of Service Study by Raftelis in January 2019 • Updated O&M Budget: • Based on current memorandums of understanding (MOUs); 1.75%/2% in FY 2021-22,and 3%Consumer Price Index(CPI)for following years • Number of employees per latest Staffing Plan • Retirement(CCCERA data) • CalPERS Medical per current employee contract • Updated more favorable Unfunded Pension Liability Assumptions • Additional annual payment of$1.25M for unfunded liability until 2025 • Capital Budget: • 3%escalation • Updated 10-Year CIP:$939M based on revised cash flow • Future SRF issuances at 2.25%interest • Bond Interest at 2.5%to 3.0%over next 10 years • Solids Project:Assumes$173.1 M SRF Loan based on 20-year term; at Interest Rate 1% • Reserves: Targets per Board Policy Debt Service Coverage delmas CENTRAL SAN IV. RATES Thomas Brightbill, Senior Engineer Financial Planning 18 March 25, 2021 Special Board Meeting Agenda Packet- Page 22 of 30 Page 20 of 25 SUMMARY OF ADOPTED SSC RATES • Board of Directors approved a 4-year schedule of Sewer Service Charge rates in April 2019. • Rate ordinance requirements include annual reviews to determine if adjustments are needed followed by an annual public hearing. 37 CENTRAL SAN APPROVED 4-YEAR SSC RATES 7000 (FY 2019-20 TO FY 2022-23) $1, $31 not collected $900 $813 $848 approved $799 (+3 $629 $776 3% (+3%) $777 $746 (+4%) +4%) — I effective $690 $700 $598 5660 $598 I.0%1 I I I I I I I I I I I I $600 I I I I I I I I I I I I I I I I $soo I I I I I I I I 1 I I I I I I I I I I I I I $401) I I I I I I I I I I I I I I I I I $30o I I I I 1 I I I I I I I I i I I I I j $zoo I I ! I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I $0 I_ L I_ 2019-20 2020.21 2021-22 2022-23 202324 202425 202526 202627 2027-28 2418-29 t ■Approved Single-Family Rate ©Not Colleaed G Planned 38 CENTRAL SAN 19 March 25, 2021 Special Board Meeting Agenda Packet- Page 23 of 30 Page 21 of 25 OUR RATES CONTINUE TO BE BELOW THE AVERAGE 'F u"um keley IEEMDD for Ire almen0 Sana Rasa Petaluma gedc Rode.—lee,Maic Richmond Cal,l"d(Flimun for treatment) Crak¢R"fli-y t)epad,a.[ Sart Leandro[EEMUO for treatment) Avenge d Agencies seryeyed Average of Agencies Surveyed Napa Sariioid nG.r,. Vallejo Sanitation and Flood Control l rneore M[View SanhatV 0ierin Nwa[o 5,i—q Dern" Wentwoed C."..tc—f."...end SVnnyvale We51 County Wastewater N.rin central San larey.approved) Central San FY 2020-21 approved Stege 50[EEMUD far ireatmenU Pinab,m Ikklta Diablo br veatmend ce.ttal5an central San FY 2020-21 efective Antioch tDelta Diablo br veatment7 Bay Pdnt)delta GablV lo r Deatment) Fa'r.rd IF55UI San lose Pleaaaroon(D5160 for treatment) Dublin San Ramon Services 0ivriu Cart.Valley Sanitary Di.h!it Union Saa,District Hayward o..Lnma sanaary orstri[t $0 $200 $400 $600 $1100 $1,000 $1,200 $1,400 $1,600 $1,1100 FY 2020-21 Annual Charge per Single-ramily Home Alm `39 CENTRALSAN geraeley(ERM11 RATE COMPARISON INCLUDING PROPERTY TAX uPur ❑for Veatmen[! Santa ansa Pe[aluna Rodeo Sanhary GSPI[t gencLt Oocken San Wry DeW rVnent Richmond OaMaM(E9Mu D fertreaE�+entl Sa n lea nd.IEEMII D}or neaamen[) Aaeage m gsandea snryeyea Average of Agencies surveyed Neoata sanitary omdn aaoa sanuanon conn Ydekp SdgildVOn dntl HCOA COmr0 Central San{Pree,avp.aed] Central San FY 2020-21 approved Mt Kew Sanitary Gvia eetniral Sart Central San FY 2020.21 a lve West Lwnry Was[ewaler RIIrict renw,aad Stege a01ERM11 D tw 4ea[men[) PMskwe Idella Gallo'or Heatmenq Can[ON(CCCSO for tnahnentl Sennvrale Antioch(Gena Oiahlo br Vestment) Bay Pam)Dasa Gahm br—in) Fairfield IBRD) CartrV Valley Sanitary Gs[ri�t Pleasanton 1051Lw for treatment) 0,Po1in San RamonSxrvires Gs[rat Dnien SaeitaN pa[d[t ■iY ZI)]0-]S SemrSerrice Cham l]estimated property to Hay W POLOma SanitaryNstrict $0 $200 $400 $600 $970) $1,000 $1,200 $1,400 $1,600 $1 FY 2020-21 Annual Charges per Single-Family Home CENTRAL SAN 20 March 25, 2021 Special Board Meeting Agenda Packet- Page 24 of 30 Page 22 of 25 STAFF RECOMMENDATION: RECOMMEND ADOPTION OF PREVIOUSLY APPROVED SEWER SERVICE CHARGE RATES Proceed with published rate of$660 per Single-Family residence for FY 2021-22. `41 CENTRALSAN RECYCLED WATER RATES Danea Gemmell, Planning and Development Services Division Manager CENTRALSAN 21 March 25, 2021 Special Board Meeting Agenda Packet- Page 25 of 30 Page 23 of 25 3% RECYCLED WATER RATE INCREASE IS SCHEDULED ON JULY 1, 2021 • On April 18, 2019, the Board adopted 4-year recycled water(ReW) rates with 3% escalation annually • Zone 1 ReW customers are billed based on measured use $4.50 $4.00 $3.50 $4.03 $4.15 $3.00 $3.38 $3.48 $3.58 $3.69 $3.80 $3.91 $2.50 $2.00 $1.61 $1.66 $1.71 $1.76- $1.81 $1.86 $19d $1.98 $1.50 At $1.00 $0.50 $0.00 FY 2015- FY 2016- FY 2017- FY 2018- FY 2019- FY 2020- FY 2021- FY 2022- 2016 2017 2018 2019 2020 2021 2022 2023 (Class I(Former Treated) —*--Class II(Former Untreated) `43 CENTRALSAN SUMMARY OF RECOMMENDATIONS AND CLOSING Roger S. Bailey, General Manager CENTRALSAN22 March 25, 2021 Special Board Meeting Agenda Packet- Page 26 of 30 Page 24 of 25 SUMMARY OF KEY POINTS BY GENERAL MANAGER 1. Confirm adopted Sewer Service Charge rates for Fiscal Year (FY) 2021-22 and proposed recycled water rates 2. Confirm Financing Alternatives of Capital Improvement Program (CIP) 3. Consider strategy for interest savings for Pension Unfunded Actuarially Accrued Liability (UAAL) Costs 45 CENTRALSAN SSC RATE RECOMMENDATION • Continue with previously adopted SSC rate for FY 2021- 22; representing a 4.75% increase from the approved but deferred $629. • Conduct public hearing on April 15, 2021 accordingly (required per 2019 rate ordinance) 5600a Baa nn <pI1Me9 5900 $H]3 $$IB SA00 1.5.35%I $71] J.4 3 f+d^y f'B9U —I I !.9911 53oo sS95 5Fw I —• I I I I I I' I I I swe 1•o%I I I I I I I I I I I I I CENTRALSAN I I I I I I I I I I I I I I I I I I I I I I I I Saco I I I I I I I I I I I I I I I I I I I $]09 I I I I I I I I I I I I I I I I I I I I I I I I sIW I j I I I I I I I I I j 301910 1030.39 303133 303LE3 301339 303635 ]03536 iO3b31 SOII�IB 301619 •gpprpVetl SinBleFamllV Pate pPot Collpeied GPlanned I� 23 March 25, 2021 Special Board Meeting Agenda Packet- Page 27 of 30 Page 25 of 25 UPCOMING EVENTS Set Public Hearing for 4/15/21 3/25/21 Confirm Rates at Public Hearing for Fiscal 4/15/21 Year 2021-22 Draft Budget Released 5/6/21 Engineering&Operations Committee Review of Budgets 5/11/21 Finance Committee Review of Budgets 5/17/21 Budget Presentation 5/20/21 Budget Hearing and Adoption 6/3/21 `47 CENTRALSAN QUESTIONS, COMMENTS, AND DISCUSSION E 48 CENTRALSAN 6' 24 March 25, 2021 Special Board Meeting Agenda Packet- Page 28 of 30