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Home My WebLink About04.a. Review draft Position Paper to conduct a public hearing and consider adopting an uncodified Ordinance to amend the Schedule of Capacity Fees Page 1 of 17 Item 4.a. All" BOARD OF DIRECTORS i POSITION PAPER MEETING DATE: MAY 9, 2022 SUBJECT: REVIEW DRAFT POSITION PAPER TO CONDUCTA PUBLIC HEARING TO RECEIVE PUBLIC COMMENTAND CONSIDER ADOPTING UNCODIFIED ORDINANCE NO. AMENDING THE SCHEDULE OF CAPACITY FEES, RATES AND CHARGES, REPLACING ORDINANCE NO. 309 IN ACCORDANCE WITH DISTRICT CODE CHAPTER 6.12 DATA ISAVAILABLE, AS REQUIRED BYGOVERNMENT CODE TITLE 7, DIVISION 1, CHAPTER 8, SECTION 66016. IF YOU HAVE QUESTIONS, PLEASE CONTACT SENIOR ENGINEER THOMAS BRIGHTBILL BYE-MAIL AT TBRIGHTBILL@ CENTRAL SAN.ORG SUBMITTED BY: INITIATING DEPARTMENT: BRYAN MCGLOIN, MANAGEMENT ANALYST ENGINEERING AND TECHNICAL SERVICES- THOMAS BRIGHTBILL, SENIOR ENGINEER, PDS-RATES AND FEES FINANCIAL PLANNING REVIEWED BY: DANEA GEMMELL, PLANNING AND DEVELOPMENT SERVICES DIVISION MANAGER JEAN-MARC PETIT, DIRECTOR OF ENGINEERING AND TECHNICAL SERVICES ISSUE State Law and District Code require that a public hearing be held to receive public comment on ordinances which revise Capacity Fees. BACKGROUND Central San charges a Capacity Fee when properties first connect to the public sewer or when there is an expansion or change of use for non-residential properties. Each year, this fee is updated based on changes to the value of Central San's assets and the number of Central San customers. California Senate Bill 1769, enacted in September 1993, defines Capacity Charges for water and sewer agencies in Section 66013 of the California Government Code. The equity buy-in method used by Central San conforms to the requirements contained in Section 66013. A recommended ordinance to establish the following proposed Capacity Fees is attached: May 9, 2022 Special FINANCE Committee Meeting Agenda Packet- Page 3 of 37 Page 2 of 17 Fee Category Current Proposed % Change Gravity Service $6,803 per RUE $7,200 per RUE 5.8% Pumping Service $8,388 per RUE $9,211 per RUE 9.8% RUE = Residential Unit Equivalent ALTERNATIVES/CONSIDERATIONS The Board may decline to adjust the Schedule of Capacity Fees. I n this event, the fees that went into effect on July 1, 2020 would continue. This is not recommended as Capacity Fees would not accurately reflect the value of each parcel's share of Central San's assets. FINANCIAL IMPACTS If the recommended Capacity Fees are adopted, staff estimates that approximately$318,000 in additional Capacity Fee revenue would be generated by the change in Fiscal Year 2022-23, assuming a projected additional development of 800 RUEs. COMMUNITY OUTREACH Staff will conduct a coordinated outreach program to inform and solicit input from stakeholders and interested customers regarding the proposed Capacity Fees. Notices of the public hearing will be posted and published in the Contra Costa Times and San Ramon Valley Times. I n addition, approximately 400 letter reports, including the proposed schedule of rates and charges, will be distributed to developers, engineers, architects, contractors, waste haulers, representatives of the Building Industry Association of the Bay Area, and others who have requested notice of fee increase proposals. (To be updated for the Board meeting scheduled for June 16, 2022) "As of May 13, 2022, no stakeholders nor members of the public had contacted Central San with comments.Any comments received after May 13, 2022 will be presented to the Board of Directors at the public hearing." COMMITTEE RECOMMENDATION The Finance Committee reviewed this item at its May 9, 2022 meeting and recommended consideration and approval of the proposed uncodified Ordinance. RECOMMENDED BOARD ACTION Hold the public hearing. Once the public hearing has concluded: Adopt the attached proposed uncodified ordinance, revising the "Schedule of Capacity Fees, Rates and Charges" effective July 1, 2022, which includes the following findings: • Central San has made a substantial investment in assets that will benefit new users. • The purpose of the Capacity Fee Program is to equalize the investment in Central San's assets among current and new users, thus ensuring that new users pay their fair share for facilities and other assets. o There is a strong and reasonable relationship between the actual added burden imposed by new users and the proposed Capacity Fee. o The current Sewer Construction Fund balance and future Capacity Fee revenue will be allocated to: May 9, 2022 Special FINANCE Committee Meeting Agenda Packet- Page 4 of 37 Page 3 of 17 ■ Life-cycle replacement, renovation, upgrading, and improvements to maintain existing capacity in Central San's facilities; ■ Addition to, and expansion of, facilities when needed or required to meet legal and regulatory requirements; ■ Equitable adjustment of contributions among current, new, and contractual users; and ■ New users' buy-in to all of Central San's assets including facilities and the balance in the Sewer Construction Fund. o For Central San to continue an adequate level of service to all users, maintenance of existing facilities' capacity and construction of additional facilities' capacity in the future is required. o The proposed fees, rates and charges are exempt from the California Environmental Quality Act (CEQA) per section 6.12.020 of the District Code. (Four affirmative votes are required for adoption.) 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. Proposed Ordinance 2. Proposed Ordinance - Exhibit 3. Report Regarding Capacity Fee Update 4. Table 1 - Capacity Fee Calculation FY 2022-23 5. Table 2 - Comparison of Capacity Fees 6. Table 3 -Average Useful Service Life May 9, 2022 Special FINANCE Committee Meeting Agenda Packet- Page 5 of 37 ATTACFNE1411f T ORDINANCE NO. AN ORDINANCE OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT ADOPTING AN UNCODIFIED SCHEDULE OF CAPACITY FEES, RATES AND CHARGES IN ACCORDANCE WITH DISTRICT CODE CHAPTER 6.12 WHEREAS, the Board of Directors (Board) of the Central Contra Costa Sanitary District (Central San) finds that substantial study has been conducted regarding the impacts of planned future development within Central San's service area on existing Central San services and facilities, along with an analysis of new, improved, or expanded Central San facilities and services required or appropriate to serve new users and current users who change the use of their connected buildings and facilities, and said studies have set forth the relationship between the added burden imposed by such users, and the need for an estimated cost of Central San services and facilities occasioned by this added burden; and WHEREAS, these studies were undertaken by Central San staff and culminated in documents that are part of the public record, to wit: the Capital Improvement Budget and Ten-year Capital Improvement Plan contained in the document titled, "Central Contra Costa Sanitary District FY 2021-22 Budget," and the Staff Report Regarding the Capacity Fee Update dated April 18, 2022; and WHEREAS, these studies also included the Wastewater Capacity Fee Review Study dated May 28, 2018 by Black & Veatch which reviewed Central San's methodology and calculations; and WHEREAS, it is reasonable and necessary that all users of Central San's wastewater and household hazardous waste collection, treatment, recycling, reuse and disposal services and facilities, including those temporary users served under Special Discharge Permits, contribute their appropriate portion of the funding for such Central San services and facilities; and WHEREAS, a properly noticed public hearing regarding the proposed Capacity Fee Program revisions was held on June 16, 2022, and proper notice was also given of the availability of the documents noted above for public inspection and review prior to said public hearing; and WHEREAS, Chapter 6.12 of the District Code provides the enabling authority for Central San to implement the proposed uncodified Schedule of Capacity Fees, Rates and Charges; and WHEREAS, the Board finds as follows: 1. Central San has made a substantial investment in assets that will benefit new users. 2. For Central San to continue an adequate level of service to all users, maintenance of existing facilities capacity and construction of additional facilities capacity in the future is required. May 9, 2022 Special FINANCE Committee Meeting Agenda Packet- Page 6 of 37 Page 5 of 17 Ordinance No. Page 2 of 3 Central Contra Costa Sanitary District 3. The purpose of the Capacity Fee Program is to equalize the investment in Central San's assets among current and new users, thus ensuring that new users pay their fair share for facilities capacity and services. 4. The current Sewer Construction Fund balance and future Capacity Fee revenue will be allocated to: • Life-cycle replacement, renovation, upgrading and improvements to maintain existing capacity in Central San's facilities; • Addition to and expansion of facilities where needed or required to meet legal and regulatory requirements; • Equitable adjustment of contributions among current, new and contractual users; • New users' buy-in-to-all-assets of Central San including facilities and the balance in the Sewer Construction Fund. 5. There is a strong and reasonable relationship between the actual added burden imposed by new users and the proposed capacity fees, rates and charges. 6. The proposed fees, rates and charges are exempt from the California Environmental Quality Act (CEQA) per section 6.12.020 of the District Code. NOW, THEREFORE, the Board of Directors of the Central Contra Costa Sanitary District does ordain as follows: Section 1 (To be Uncodified) The "Schedule of Capacity Fees, Rates and Charges" as set forth in full in Exhibit "A" to this Ordinance, which exhibit is incorporated in full herein by this reference, is hereby adopted in uncodified form pursuant to the provisions of District Code Section 6.12.020. As of the effective date of this Ordinance, Capacity Fees shall be charged at such rates and for such categories of users as set forth in said Schedule, and shall remain in effect until amended or replaced by ordinance. Section 2 All ordinances and parts of ordinances in conflict with the provisions of this Ordinance are repealed. The provisions of this Ordinance, insofar as they are substantially the same as existing provisions relating to the same subject matter shall be construed as restatements and continuations thereof and not as new enactments. To the extent this Ordinance or any portion or section of this Ordinance is determined invalid or unconstitutional, such portions of Ordinance No. 309 shall remain in effect and such rates and charges due thereunder for any categories of users shall remain due and payable as if those portions of Ordinance No. 309 had not been repealed. With respect, however, to violations, rights accrued, liabilities accrued, or appeals taken, prior to the effective date of this Ordinance, under any chapter, ordinance, or part of an ordinance, such chapter, ordinance or part of an ordinance shall be deemed to remain in full force for the purpose of sustaining any proper suit, action, or other proceedings, with respect to any such violation, right, liability or appeal. May 9, 2022 Special FINANCE Committee Meeting Agenda Packet- Page 7 of 37 Page 6 of 17 Ordinance No. Page 3 of 3 Central Contra Costa Sanitary District Section 3 This Ordinance shall be a general regulation of Central San and shall be published once in the Contra Costa Times and San Ramon Valley Times, newspapers of general circulation within Central San, and shall be effective on July 1, 2022. PASSED AND ADOPTED this 16th day of June 2022, by the Board of Directors of the Central Contra Costa Sanitary District by the following vote: AYES: Members: NOES: Members: ABSENT: Members: David R. Williams President of the Board of Directors Central Contra Costa Sanitary District County of Contra Costa, State of California COUNTERSIGNED: Katie Young Secretary of the District Central Contra Costa Sanitary District County of Contra Costa, State of California Approved as to form: Kenton L. Alm, Esq. Counsel for the District May 9, 2022 Special FINANCE Committee Meeting Agenda Packet- Page 8 of 37 ATTACHMENT 2of 17 EXHIBIT "A" SCHEDULE OF CAPACITY FEES, RATES AND CHARGES (Uncodified) The Capacity Fees, Rates and Charges listed below were established by Central Contra Costa Sanitary District Ordinance No. adopted June 16, 2022. These fees, rates and charges shall be applied to all new connections or added burdens for which fees become due and payable on or after July 1, 2022 in accordance with the provisions of District Code Chapter 6.12. Gravity Capacity Fee $7,200 / RUE* Pumping Capacity Fee $2,011 / RUE *A residential unit equivalent (RUE) is a measure of sewage volume and strength equivalent to a typical residential household. Gravity Zone Fee Zone 1 = Gravity Capacity Fee Pumped Zone Fee (Zone 2) = Gravity Capacity Fee + Pumping Capacity Fee Residential Unit Equivalence (RUE) Factors0) Number of RUE = Unit of Measure Count Multiplied by the RUE Factor Use Unit Gravity Pumping Code User Group Measure 2) Capacity Fee Capacity Fee RUE Factor RUE Factor LU Single-family residences Dwelling Unit 1.000 1.000 LA Multiple-family residences, apartments Dwelling Unit 0.847 0.847 LD Duplex Dwelling Unit 0.847 0.847 LM Mobile homes Dwelling Unit 0.847 0.847 LT Condominium Dwelling Unit 0.847 0.847 LS Accessory structure connected Dwelling Unit 0.847 0.847 to sewer on same parcel with Single-family residence (not meeting Accessory Dwelling Unit(3) criteria LE Accessory Dwelling Unit(3)— Dwelling Unit 0 0 within existing space LN Accessory Dwelling Unit(3)— 1,000 square 0.425 0.425 new structure feet sq. ft. LC Common areas 1,000 sq. ft. 0.200 0.200 Page 1 of 5 May 9, 2022 Special FINANCE Committee Meeting Agenda Packet- Page 9 of 37 Page 8 of 17 Residential Unit Equivalence (RUE) Factors') Number of RUE = Unit of Measure Count Multiplied by the RUE Factor Use Unit of Gravity Pumping Code User Group Measure(2) Capacity Fee Capacity Fee RUE Factor RUE Factor AB Auto body/ painting 1,000 sq. ft. 0.484 0.467 AD Auto dealerships 1,000 sq. ft. 0.484 0.467 AL Aircraft services 1,000 sq. ft. 0.484 0.467 AR Auto repair/ maintenance 1,000 sq. ft. 0.484 0.467 AS Service stations 1,000 sq. ft. 0.484 0.467 BT Transportation services 1,000 sq. ft. 0.432 0.467 AC Car washes 1,000 sq. ft. 21.127 22.829 AW Car washes with recycling 1,000 sq. ft. 3.522 3.805 Barbers / beauty salons / pet BB grooming 1,000 sq. ft. 0.725 0.783 BC Dry cleaners, no laundry 1,000 sq. ft. 0.259 0.279 BR Retail sales 1,000 sq. ft. 0.259 0.279 Equipment repair/ repair services BE 1,000 sq. ft. 0.228 0.247 Contractors / business services BK 1,000 sq. ft. 0.228 0.247 BN Nurseries / lumberyards 1,000 sq. ft. 0.228 0.247 IL Light industrial 1,000 sq. ft. 0.228 0.247 BH Meeting halls/studios 1,000 sq. ft. 0.290 0.313 EA Auditoriums/theaters 1,000 sq. ft. 0.290 0.313 EC Cinemas 1,000 sq. ft. 0.290 0.313 EM Entertainment 1,000 sq. ft. 0.290 0.313 EB Bowling alleys 1,000 sq. ft. 0.311 0.336 BZ Miscellaneous commercial 1,000 sq. ft. 0.510 0.551 EG Golf courses/country clubs 1,000 sq. ft. 1.166 1.391 EH Health clubs/spas 1,000 sq. ft. 1.166 1.391 ET Tennis clubs 1,000 sq. ft. 1.166 1.391 IW Warehouses 1,000 sq. ft. 0.136 0.147 BM Markets 1,000 sq. ft. 0.556 0.601 BS Supermarkets 1,000 sq. ft. 0.880 0.601 BX Shopping centers 1,000 sq. ft. 1.057 1.142 OB Business offices 1,000 sq. ft. 0.295 0.319 OF Financial institutions / banks 1,000 sq. ft. 0.295 0.319 OG Government offices 1,000 sq. ft. 0.295 0.319 OS Fraternal /service offices 1,000 sq. ft. 0.295 0.319 OM Medical offices 1,000 sq. ft. 0.637 0.688 OV Veterinary clinics 1,000 sq. ft. 0.637 0.688 RD Delicatessens (or other food 1,000 sq. ft. 1.562 1.294 service without Type 1 hood RN Bars 1,000 sq. ft. 1.562 1.294 RI Ice cream parlors 1,000 sq. ft. 1.562 1.294 RY Yogurt shops 1,000 sq. ft. 1.562 1.294 Page 2 of 5 May 9, 2022 Special FINANCE Committee Meeting Agenda Packet- Page 10 of 37 Page 9 of 17 Residential Unit Equivalence (RUE) Factors0) Number of RUE = Unit of Measure Count Multiplied by the RUE Factor Use Gravity Pumping Code User Group Unit of Capacity Fee Capacity Fee Measure(2) RUE Factor RUE Factor RS Restaurants or other food 1,000 sq. ft. 4.010 2.738 service w/T pe 1 hood dine-in RT Restaurants or other food 1,000 sq. ft. 4.010 2.738 w/Type 1 hood take-out Patio seating in excess of 300 RC square feet(4), banquet facilities 1,000 sq. ft. 1.166 0.825 RB Bakeries retail 1,000 sq. ft. 4.061 2.178 BL Laundromats 1,000 sq. ft. 13.506 14.594 SF Skilled nursing facilities 1,000 sq. ft. 2.216 2.347 Residential care facilities for the FE elderly 1,000 sq. ft. 0.932 0.987 HP Hospitals 1,000 sq. ft. 2.891 3.124 LH Hotels/ motels 1,000 sq. ft. 1.926 1.272 CH Churches 1,000 sq. ft. 0.242 0.261 Schools with cafeteria and gym / showers Classroom 0.860 1.000 Schools with gym / showers and no cafeteria Classroom 0.774 0.900 Schools with cafeteria and no m / showers Classroom 0.516 0.600 Schools without cafeteria or gym / showers Classroom 0.430 0.500 (1) Fees for multi-use buildings shall be determined by considering each use separately. (2) "Unit-of-measure" shall mean the basic unit that quantifies the degree of use of a particular parcel (e.g. dwelling unit, square footage). Square footage of an improvement shall be based upon the gross exterior dimensions of the structure. (3)Accessory Dwelling Units are 1,200 sq. ft. maximum and meet criteria of Gov't Code Sect 65852.2. (4) Patio seating capacity fees charged for patios at Dine-in Restaurants (RS)and Bars (RN). Page 3 of 5 May 9, 2022 Special FINANCE Committee Meeting Agenda Packet- Page 11 of 37 Page 10 of 17 SCHEDULE OF CAPACITY FEES, RATES AND CHARGES — CONTINUED Special Studies The fees for Special Studies shall be as established in the Schedule of Environmental and Development-Related Fees, Rates and Charges pursuant to the provisions of Chapter 6.30 of the District Code. The following user groups require a special study to determine the appropriate capacity fees. Administrative fees to conduct special studies for these user groups shall be waived. Use Code User Group BP Parking lots CM Cemeteries MO Mortuaries with embalming or cremation facilities EP Parks / playgrounds ES Swimming pools EF Large fitness / athletic clubs LR Residence hotels IE Electronic industries IH Heavy industries IP Permitted industries IR Laboratories / research facilities -- Improvements with garbage disposals -- Public facilities -- S ecial billings -- Utilities Values for use in the RUE formula in Section 6.12.050(D)(2) shall be: FLORU = 200 gallons per da pd BODRU = 200 milligrams per liter (m /I TSSRU = 215 m /I A = 0.69 B = 0.14 C = 0.17 Page 4 of 5 May 9, 2022 Special FINANCE Committee Meeting Agenda Packet- Page 12 of 37 Page 11 of 17 SCHEDULE OF CAPACITY FEES, RATES AND CHARGES — CONTINUED Non-Residential Capacity Fee Installment Payment Program Interest Rate — The annual interest rate for calculation of payments under this program shall be the rate as established in the Schedule of Environmental and Development- Related Fees and Charges pursuant to the Provisions of Chapter 6.30 of the District Code. Number of Payments — Up to fifteen equal annual payments (one per fiscal year), at the option of the applicant. The first annual payment shall be due at the time the permit is issued with each of the remaining payments charged on the annual property tax bill. Capacity Use Charge Program For existing Capacity Use Charge Agreements only: Capacity Use Charge Rates Use Code User Group Annual ($/HCF (Hundred Cubic Feet)) RS Restaurants (dine-in) $7.34 RT Restaurants (paper service / no dishwashers) $7.34 The annual payment for each agreement signed prior to March 19, 2021 will be reviewed. If the annual payment would be higher under the Non-Residential Capacity Fee Installment Payment Program, the difference will be waived for the customer. If the annual payment would be lower under the new program, the lower payment will be charged for that year. Page 5 of 5 May 9, 2022 Special FINANCE Committee Meeting Agenda Packet- Page 13 of 37 ATTAemMENT 3 CENTRAL CONTRA COSTA SANITARY DISTRICT Report Regarding the Capacity Fee Update April 18, 2022 INTRODUCTION The Central Contra Costa Sanitary District (Central San) charges a Capacity Fee when properties are first connected to the public sewer or when an increase, expansion, or change of use occurs on a non-residential parcel which creates an added burden on the wastewater collection and treatment system. Each year this fee is updated based on changes to the value of Central San's assets and the number of Central San's customers. This memo summarizes the basis for the Capacity Fee and describes the calculation used for the fee update. BACKGROUND The total value of Central San's existing assets (approximately $2.1 billion) is much greater than the value of future facilities expansion needed to accommodate future customers. While Central San's FY 2021-22 Budget lists nearly $940 million in capital projects over the next 10 years, most of these projects are driven by renovation, regulatory compliance, replacement or upgrading of facilities to maintain capacity for both current and prospective customers. Central San believes that its facilities generally have adequate capacity to serve both existing and future customers. The Water Environment Federation's (WEF) Manual of Practice 27, Financing and Charges for Wastewater Systems defines several methods for calculating System Development Charges such as Central San's Capacity Fee. Central San uses the Equity Buy-in method and has used this methodology since 2001. Under this approach, new customers are charged at the same equity position as existing customers, which is appropriate based on the level of assets, expansion, and capacity described above. Section 66013 of the California Government Code defines Capacity Charges for water and sewer agencies as a charge for public facilities in existence at the time a charge is imposed that are of proportional benefit to the person or property being charged. The equity buy-in method defined by WEF and used by Central San conforms to the requirements contained in Section 66013. Central San's Capacity Fee methodology and calculations were reviewed by consultants Black & Veatch in the fall of 2017. Their March 2, 2018 report titled Wastewater Capacity Fee Review Study made the following findings: • The equity-buy-in methodology used by Central San is appropriate. • Central San's use of Replacement Cost Less Depreciation (RCLD) is appropriate. • The exclusion of contributed assets from the calculation is appropriate in order to avoid double recovery of asset values. • The use of different service zones for gravity and pumped zones is appropriate. May 9, 2022 Special FINANCE Committee Meeting Agenda Packet- Page 14 of 37 Page 13 of 17 Capacity Fee Update Report Page 2 April 18, 2022 CALCULATION APPROACH The Capacity Fee is typically adjusted each year to reflect annual changes in the value of Central San's assets. It is calculated using the equity buy-in approach which divides the value of Central San's assets by the current number of Residential Unit Equivalents (RUEs) to determine the fee. The calculated value of Central San's assets is determined as follows: • Land: Rather than attempting to determine actual market value, the current value of investments in real property is estimated based on the opportunity value of like cash investments deposited in Central San's temporary investments at the time of each property purchase and held at interest to the present. • Facilities: The current value of investments in physical facilities is estimated by escalating each year's facilities expenditures based on the change in the Engineering News Record Construction Cost Index for the San Francisco Bay Area (ENR CCI-SF) and then applying straight-line depreciation using the life cycles in Table 3. The depreciation schedule assumes no salvage value remaining at the end of the asset's useful life. Note that a category for "Mains (Renovation Program)" is included in the current value of facilities for determination of Capacity Fees. This category accounts for Central San's significant investment since 1988 in life-cycle replacement and renovation of sewers 10-inches in diameter and smaller. This work renews capacity in these smaller sewers for the benefit of both existing and new connectors and reduces future maintenance costs. • Fund Balance: Prior fiscal year ending balance for the Sewer Construction Fund, less the principal value of Central San's outstanding debt, is used. The inclusion of the Running Expense and Self Insurance Funds was reviewed by staff and District Counsel who determined that it was no longer appropriate to include those two items in the fee calculation. Contributed assets are generally not included in the calculation in order to avoid double recovery of costs, as described in WEF's Manual of Practice 27. After estimating the current value for an asset category, the component of the Capacity Fee attributable to that category is calculated by dividing current value by the current number of customers as shown below. The number of customers is determined by calculating the number of RUEs. May 9, 2022 Special FINANCE Committee Meeting Agenda Packet- Page 15 of 37 Page 14 of 17 Capacity Fee Update Report Page 3 April 18, 2022 Value of Assets Equity Buy-in Fee = ---------------------------------------- Number of Customers (RUEs) RECOMMENDED CAPACITY FEE Staff recommends that the Board adopt Capacity Fees for Fiscal Year (FY) 2022-23 by applying the valuation approach and facilities life cycles described above, resulting in updated fees as follows: Fee Category Current Proposed % Change Gravity Service $6,803 per RUE $7,200 per RUE 5.8% Pumping Service $8,388 per RUE $9,211 per RUE 9.8% The recommended fee calculation approach is a rational, practical, equitable and defensible method to determine the financial burden of new connections. A breakdown of the proposed Capacity Fees by asset category is presented in Table 1. Based on the review of information in Table 1, the increases are a result of Central San's continued capital improvement investment in its facilities. There is a greater than 10% change in the per-RUE asset values over the previous year for District-renovated Mains, and Recycled Water Facilities which generally reflects the higher levels of Central San's capital spending. In addition, per-RUE value of the Sewer Construction Fund Balance is 59.3% higher than the previous year. Table 2 shows a comparison of the proposed Capacity Fees to those fees charged by neighboring agencies. The useful service life assumptions for each asset category are included in Table 3. May 9, 2022 Special FINANCE Committee Meeting Agenda Packet- Page 16 of 37 ATTACHMENT 4 CENTRAL CONTRA COSTA SANITARY DISTRICT Report Regarding Capacity Fee Update Table 1-Capacity Fee Calculation FY 2022-23 (Equity buy-in. Asset values through 6/30/21) Total Asset less Net Asset Net Asset FY 2020-21 Change Change Asset Cateogry1 Contributed 1 Value per Value Assetsl'Z Value RUE Value per RUE Treatment Plant/Outfall 508,867,806 (140,864,632) 368,003,174 2,147 2,188 (41) -1.9% Collection System Trunks and Interceptors 361,831,555 0 361,831,555 2,111 1,959 152 7.8% Contributed Mains 658,442,000 (658,442,000) 0 0 0 0 District-renovated Mains 294,209,094 0 294,209,094 1,717 1,429 288 20.1% Pump Stations,Force Mains 102,554,954 0 102,554,954 2,011 ° 1,585 426 26.9% Recycled Water 43,256,510 (12,976,953) 30,279,557 177 120 57 47.2% General Improvements 78,162,971 (23,440,503) 54,722,468 319 380 (61) -16.0% Major Repairs 12,504,819 (3,751,446) 8,753,373 51 73 (22) -30.0% Land 56,951,156 (3,013,457) 53,937,699 315 313 2 0.6% Sewer Construction Fund Balance 93,090,794 0 93,090,794 543 341 202 59.3% less Outstanding Debt (principle only) (30,947,751) 0 (30,947,751) (181) 0 (181) TOTAL VALUES 2,178,923,908 (842,488,991) 1,336,434,917 Capacity Fee-Gravity Service 7,200 Capacity Fee-Pumped Service 9,211 s 171,374 Total Residential Unit Equivalents(RUES) 51,001 Pumped Zone RUES Notes: 1.Original cost escalated to current dollars less depreciation except land which is original cost escalated by opportunity cost 2.Contributed Assets include grant-funded,developer dedications,and capital contributions from City of Concord 3.Net asset value divided by total RUEs unless otherwise noted 4.Pumped component equals asset value divided by pumped zone RUEs 5.Gravity Service Capacity Fee plus pumped component May 9, 2022 Special FINANCE Committee Meeting Agenda Packet- Page 17 of 37 ATTACE'Af e CENTRAL CONTRA COSTA SANITARY DISTRICT Report Regarding Capacity Fee Update Table 2 — Comparison of Capacity Fees AGENCY CAPACITY FEE Dublin San Ramon Services District $16,169 West County Wastewater District $10,244 Mt View Sanitary District $10,184 Proposed CCCSD Pumped Zone $9,211 Current CCCSD Pumped Zone $8,388 Proposed CCCSD Gravity Zone $7,200 Current CCCSD Gravity Zone $6,803 Concord $5,043 Antioch (Delta Diablo Sanitation District for Treatment) $5,033 Pittsburg (Delta Diablo Sanitation District for Treatment) $4,358 Bay Point (Delta Diablo Sanitation District for Treatment) $3,940 Based on publicly available data as of April 18, 2022 May 9, 2022 Special FINANCE Committee Meeting Agenda Packet- Page 18 of 37 ATTACHAff4f6f 17 CENTRAL CONTRA COSTA SANITARY DISTRICT Report Regarding the Capacity Fee Update Table 3 - Average Useful Service Life Gravity Sewers Interceptors 150 years Trunks 100 years Mains (Renovated by District) 100 years Treatment Plant & Pumping Station Facilities Tanks/Foundations 100 years Buildings 75 years Mechanical, Electrical & Control Equipment 30 years Recycled Water Facilities Pipelines 50 years Mechanical, Electrical & Control Equipment 30 years General Improvements Buildings 50 years Mechanical/Electrical Equipment and Furnishings 25 years Vehicles and other Equipment 10 years Major Repairs/Replacements 10 years May 9, 2022 Special FINANCE Committee Meeting Agenda Packet- Page 19 of 37