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Home My WebLink About04. Conduct a public hearing in accordance with Ordinance No. 330 to consider the financial condition of Central San with respect to the current need for the previously adopted Fiscal Year (FY) 2024-25 Sewer Service Charge (SSC) rate of $725 for a single Page 1 of 6 Item 4. CENTRAL SAN BOARD OF DIRECTORS POSITION PAPER MEETING DATE: APRIL 25, 2024 SUBJECT: CONDUCTA PUBLIC HEARING INACCORDANCE WITH ORDINANCE NO. 330 TO CONSIDER THE FINANCIAL CONDITION OF CENTRAL SAN WITH RESPECT TO THE CURRENT NEED FOR THE PREVIOUSLYADOPTED FISCAL YEAR (FY) 2024-25 SEWER SERVICE CHARGE (SSC) RATE OF $725 FOR A SINGLE-FAMILY RESIDENCE AND FY 2024-25 RATES FOR ALL OTHER USER GROUPS WHICH REPRESENTS A4 PERCENT INCREASE OVER THE CURRENT SSC RATES SUBMITTED BY: INITIATING DEPARTMENT: THOMAS BRIGHTBILL, SENIOR ENGINEER ENGINEERING AND TECHNICAL SERVICES- PDS-RATES AND FEES REVIEWED BY: DANEA GEMMELL, PLANNING AND DEVELOPMENT SERVICES DIVISION MANAGER GREG NORBY, DEPUTY GENERAL MANAGER - OPERATIONS Roger S. Bailey Leah Castella General Manager District Counsel ISSUE Ordinance No. 330 requires that the Board of Directors hold a public hearing to consider Central San's current financial condition prior to imposing the previously approved SSC rate increases for FY 2024-25. BACKGROUND On June 21, 2023, the Board of Directors adopted Ordinance No. 330 which approved rate increases to the annual SSC effective July 1, 2023 and July 1, 2024. The approved SSC rate increase for July1, 2024 increases the SSC rates by 4.0%. The rate for single-family homes is increased by$28 to $725 per year (residential SSC rates are rounded to the nearest whole dollar.) April 25, 2024 Special Board Meeting Agenda Packet- Page 17 of 110 Page 2 of 6 Ordinance No. 330 requires that prior to imposing the rate increase: "Prior to imposing the rates set forth under this ordinance for FY 2024-25, the Board shall consider at a noticed public hearing prior to June 30, 2024, Central San's proposed budget, its financial condition, projected capital and operations and maintenance costs, as well as other factors which bear on Central San's revenue requirements, to determine whether the increased amounts set forth herein for FY 2024-25 are still necessary. If the Board concludes by a majority vote that sewer service charges for less than the amount set forth in this ordinance for FY 2024- 25 will produce adequate revenues for those years, the Board may, by resolution, fix the sewer service charges for FY 2024-25 to be imposed at appropriate amounts up to the maximum of the rates set forth herein without an amendment of this ordinance. In such case, the resolution shall clearly set forth such lesser charges that are to be imposed and those charges shall remain in place until further action of the Board. If the Board determines the rates set forth in the table for FY 2024-25 are appropriate for imposition, no further action of the Board shall be required." On April 4, 2024, a Financial Planning Workshop was held with staff and the Board of Directors which reviewed Central San's current financial position, the updated 10-year Capital Improvement Plan, as well as options and strategies for debt financing. The financial numbers presented at the workshop included the previously approved 4% SSC rate increase for FY 2024-25. ALTERNATIVES/CONSIDERATIONS After reviewing Central San's current financial condition and receiving any public input, the Board of Directors could: • take no action, thereby imposing the previously approved rate increase to the annual SSC; or • impose an SSC rate increase in an amount less than 4%. FINANCIAL IMPACTS Unless other action is taken by the Board of Directors, the previously approved rate increase will provide an estimated $121.3 million in SSC revenue for FY 2024-25. This would allow for increasing the investment in infrastructure replacement, compliance with financial reserve policy requirements, moderate and stable rate increases in future years, and recognition of continuing inflationary impacts to overall costs. COMMITTEE RECOMMENDATION This matter was not reviewed by a Board Committee. The entire Board of Directors provided comments at the April 4, 2024 Financial Planning Workshop. RECOMMENDED BOARD ACTION Hold the public hearing. Receive any public input. Take no additional action and thereby impose the previously approved SSC rate increase to $725 per year per single-family residence and FY 2024-25 rates for all other user groups which represents a 4 percent increase over the current SSC rates. Strategic Plan Tie-In GOAL ONE: Customer and Community Strategy 2- Promote initiatives to advance affordable and equitable access to services April 25, 2024 Special Board Meeting Agenda Packet- Page 18 of 110 Page 3 of 6 ATTACHMENTS: 1. Presentation April 25, 2024 Special Board Meeting Agenda Packet- Page 19 of 110 Page 4 of 6 Attachment 1 April 25,2024 Public Hearing to Review FY 2024-25 SSC Increase = ,tea Al 1 FY 2024-25 SSC Review Requirement The ordinance for this year indicated "Prior to imposing the rates set forth under this ordinance for Fiscal Year 2024-25, the Board of Directors shall consider, at a noticed public hearing prior to June 30,2024:" A. District's proposed budget; B. Its financial condition; r C. Projected capital and operations and maintenance costs;. , D. Other factors which bear on the � p, revenue requirements of the District. 2 April 25, 2024 Special Board Meeting Agenda Packet- Page 20 of 110 Page 5 of 6 Staff Recommends Implementation of the Previously Approved FY 2024-25 SSC Rate Sewer Service Charge Rates $1,200 $T0 49 $995 Current 2-Year $944 (5.4%) $1,000 Rate Schedule $a1s $ a49 (s4% (ss%> ) I I 4 $754 4.0 (4.0%) (.2%) I I I I I Debt I I I I $800 $697 $725 (4.0%) I I I I IAssumptions I I I I 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 Current I I I I I I I I I I I I I I I I SRF Loan $173.1 M $173.1 M s400 � �� 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 Future $200 Bonds or $190.0 M $130.0 M SRF Loans $o 2023-24 2024-25 2025-26 2026-27 2027-28 2028-29 2029-30 2030-31 2031-32 2032-33 1 MApproved Single-Family Rate L jPrevious Plan Proposed Plan 3 3 Our Rates Continue to be Below the Average San Francis-(SFPUC) Santa Rasa Petalurre Bent Rodeo Sanitary Di And Richmond Berkeley(EBMUDfor treatment( Pleasanton(DSRSD for treatment) Galloon(EBMJDfar treatment) Crockett Sanitary Department M[Uew Sanitary District Vallefe Sanitation and Flood Control Average Average of Agencies Surveyed Live Siege SO(EDMUDfor treatment) Brentwood Concord(CCCSDfortreatmenl) Medan I Median of Agencies Surveyed West County Wastewater District Sunnyvale Napa Sanitation District Central San PROPOSED FY 24-25 Central San FY 2024-26(proposed) Central San Central San FY 2D23-24 Novato Sanitary Distria Hayward Pitishurg(Delta Diahlofor treatment) Antiod(Delta Diahlo for treatment) Bay Point(Delta Diablo far treatment) San Leandro Union Sanitary District Fairhel, suis�n sewer Dinda San Jose I Castro Valley Sanitary Distrid Dulth San Ramon Services Dislrid Oro Loire SanitaryDislrid $0 $200 5400 5600 5800 51,000 $1,200 $1,400 $1,600 $1,800 $2,000 FY 2023-24 Annual Sewer Service Charge per Single-Family Home 4 4 April 25, 2024 Special Board Meeting Agenda Packet- Page 21 of 110 Page 6 of 6 Central San's Rates are Below Average Even When Property Tax is Included San Fror—I IFPUC Santa Rosa r. Petaluma rL Bent Rodeo Sanitary District Richmond Berkeley(FBMU D for treatment( Crockett Sanitary Department Rea,onto,(DSRSD for o-eatmenq Cie.d(EBMUD far treatment( Vl View Sanitary District i r� Vallejo Sanitation and Flood Convol Average Average of Agencies Surveyed Siege SD(®MUDfor treatment( Central San PROPOSED FY 24-25 Central San FY 2024-26(proposed) Livermore I Central San Central San FY 2023-24 Medan o Median of Agencies Surveyed west County wastewater District Brentwood N—to Sanitary Distrid Concord(CCCSDfor treatment) Sunny ale Napa Sanitation Diennot Pittsburg(Delta Dishlo for treatme nt) I .FY 23-24 Sewer Service Charge Antioch(Delta Diablo for treatment) Hayward p es"..t.Pi 1. Bay Point(Delta Diablo for treatment) San Leandro ion Un Sanitary District Fairfield-Suisun Sewer District Castro Valley Sanitary Betrict San Jose Dublin San Ramon Services District Oro Loire Sanitary District $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 FY 2023-24 Annual Sewer Service Charge per Single-Family Home 5 5 Questions, Comments, and Discussion I 4 rl+.wt. _`rs"tom' �•—�,�: _-+�_.� .r M- 1 ff_ _ 6 April 25, 2024 Special Board Meeting Agenda Packet- Page 22 of 110