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HomeMy WebLinkAbout04.b. CONDUCT A PUBLIC HEARING ON THE FY 2010-11 CAPITAL IMPROVEMENT BUDGET, 2010 TEN-YEAR CAPITAL IMPROVEMENT PLAN, APPROVE THE 2010 CIP, AND APPROVE AND ADOPT THE CIB FOR INCLUSION IN THE FISCAL YEAR 2010-11 DISTRICT BUDGETCentral Contra Costa Sanitary District ' BOARD OF DIRECTORS POSITION PAPER Board Meeting Date: June 3, 2010 No.: 4.b. Public Hearings Type of Action: CONDUCT A PUBLIC HEARING; APPROVE CIP; APPROVE AND ADOPT CIB subject: CONDUCT A PUBLIC HEARING ON THE FISCAL YEAR 2010-11 CAPITAL IMPROVEMENT BUDGET, AND THE 2010 TEN-YEAR CAPITAL IMPROVEMENT PLAN, APPROVE THE 2010 CIP, AND APPROVE AND ADOPT THE CIB FOR INCLUSION IN THE FISCAL YEAR 2010-11 DISTRICT BUDGET Submitted By: ' Earlene Millier, Engineering Assistant III REVIEWED AND RECOMMENDED FOR BOARD ACTION: N° I E. Millier C G. Chester Initiating DeptJDiv.: Engineering/Environmental Services C. Swanson A. Farrell ames elly General Hager ISSUE: The Board of Directors has established June 3, 2010 as the date for a public hearing on the 2010-11 Capital Improvement Budget (CIB) and the 2010 Ten-Year Capital Improvement Plan (CIP). Board approval of the CIP and approval and adoption of the CIB for inclusion in the Fiscal Year (FY) 2010-11 District Budget is requested. RECOMMENDATION: Conduct a public hearing to receive comments on the CIB/CIP. Approve the 2010 CIP. Approve and adopt the CIB for inclusion in the FY 2010-11 District Budget. Approval and adoption of the budget and plan will establish the Board of Directors' independent finding that these documents are exempt from the California Environmental Quality Act (CEQA) and that CCCSD either has or will produce appropriate CEQA compliance documentation prior to undertaking any project identified in these documents. FINANCIAL IMPACTS: Approval of the FY 2010-11 CIB and 2010 CIP is a necessary step to implement the capital program. Approval will include an estimated carryover from 2009-10 of $19,098,000 and an additional authorization of $18,368,000 from the Sewer Construction Fund; resulting in a total FY 2010-11 Board authorized funding level of $37,466,000. This will allow expenditures to continue on the District's Capital Improvement Program. ALTERNATIVES/CONSIDERATIONS: The Board could direct staff to modify the CIB and/or CIP to reduce or increase the planned capital expenditures. The Board could also defer approval to a later date. These alternatives are not recommended. BACKGROUND: The CIP provides the basis for project prioritizing and scheduling, and long-range financial planning. The CIP also provides the framework for analyzing different capital program funding scenarios. The 2010 CIP covers the ten-year period N:\ENVRSEC\Position Papers\Millier\2010\PP Conduct Public Hearing FY 10-11 CIB FINAL 6-3-10.DOC POSITION PAPER Board Meeting Date: June 3, 2010 subject: CONDUCT A PUBLIC HEARING ON THE FISCAL YEAR 2010-11 CAPITAL IMPROVEMENT BUDGET,-AND THE 2010 TEN-YEAR CAPITAL IMPROVEMENT PLAN, APPROVE THE 2010 CIP, AND APPROVE AND ADOPT THE CIB FOR INCLUSION IN THE FISCAL YEAR 2010-11 DISTRICT BUDGET from FY 2010-11 through FY 2019-20. The plan includes expenditures totaling $305.8 million (2010 dollars) over ten years. This is down from an estimated $331 million ten- year planned expenditures in the FY 2009-10 CIP. The CIB provides a detailed presentation of the schedules and cost estimates for projects proposed for the first year of the ten-year planning period. These estimates are the basis of the request for the Board's authorization of funds for FY 2010-11 from the Sewer Construction Fund to the Treatment Plant, Collection System, General Improvements, and Recycled Water Programs. ~ A draft C1B/CIP was submitted to the Board of Directors on March 12, 2010. A special meeting of the Board to discuss the draft was held on April 8, 2010. It is appropriate for the Board to receive comments from the public prior to considering approval of the CIB/CIP. The Board established June 3, 2010 as the date for a public hearing to receive these comments and appropriate notices have been posted and published. Capital Budget Authorization Adoption of the CIB with the FY 2010-11 District Budget will authorize funds from the Sewer Construction Fund for planning, design, and construction of capital improvement projects. The new funding authorization will include an estimated carryover of $19,098,000 from Board authorizations in previous years, and an estimated additional authorization of $18,368,000 from the Sewer Construction Fund resulting in a total Fiscal Year 2010-11 authorized funding level of $37,466,000. These figures will be reviewed in August and a revised Table 1 will be issued if needed when actual FY 2009-10 expenditures are known and actual carryover can be determined. The CIB document spells out Board and staff authority limits. The Board's role in the capital program is ongoing throughout the year. Specific Board approval is required for consultant agreements over $50,000, for award of construction contracts over $15,000, for construction change orders over $50,000, and for project overruns in excess of 15 percent (15%) of the final project budget established at the time of construction contract award. The distribution of the recommended Board funding authorization to the four capital improvement programs is shown on Attachment 1. The estimated expenditures for the capital program in FY 2010-11 are also shown in Attachment 1 and total $28,464,000. POSITION PAPER Board Meeting Date: June 3, 2010 subject: CONDUCT A PUBLIC HEARING ON THE FISCAL YEAR 2010-11 CAPITAL IMPROVEMENT BUDGET, AND THE 2010 TEN-YEAR CAPITAL IMPROVEMENT PLAN, APPROVE THE 2010 CIP, AND APPROVE AND ADOPT THE CIB FOR INCLUSION IN THE FISCAL YEAR 2010-11 DISTRICT BUDGET Equipment Budget Included in the CIB is a separate section for the 2010-11 Equipment Budget, which totals $446,700, including a contingency amount of $60,000. This budget includes equipment requests of $5,000 or more and itemizes those greater than $15,000. The Equipment Budget was reviewed by the Board Capital Projects Committee on March 25, 2010, and the full Board on April 8, 2010. Information Technology Budget Also included in the CIB is the Information Technology Development Plan (IT Plan) for 2010-11. The IT Plan totals $660,000.. The plan is developed to provide funding for needed hardvvare and software upgrades, network security, disaster recovery telecommunications and other needed applications. The IT plan was reviewed by the Board Capital Projects Committee on March 25, 2010 and recommended to the full Board. Ten-Year Capital Plan The draft 2010 CIP includes $112.3 million (2010 dollars) for Treatment Plant projects (36.7% of total expenditures), $162.4 million for Collection System projects (53% of total expenditures), $25.6 million for General Improvements projects (8.4% of total expenditures), and $5.5 million for Recycled Water projects (1.8% of total expenditures) over the next ten years. Staff has evaluated the CIB and CIP and concluded that they are exempt from CEQA under CCCSD CEQA Guidelines Section 15262 since they are planning studies for possible future actions, which CCCSD has not approved, adopted or funded, and the outcome of these tasks will not have a legally binding effect on later activities. Approval of the budget and plan will establish the Board of Directors' independent finding that these documents are exempt from CEQA. The Board further finds that CCCSD either has or will produce appropriate CEQA compliance documentation prior to undertaking any "project" identified in these documents. RECOMMENDED BOARD ACTION: Conduct a public hearing to receive comments on the CIB and CIP. Approve the 2010 CIP. Approve and adopt the FY 2010-11 CIB for inclusion in the FY 2010-11 District Budget. Approval and adoption of the budget and plan will establish the Board of Directors' independent finding that these documents are exempt from CEQA and that CCCSD either has or will produce appropriate.CEQA compliance documentation prior to undertaking any project identified in these documents. ATTACHMENTI CAPITAL IMPROVEMENT BUDGET SUMMARY FISCAL YEAR 2010-11 Estimated Carryover Additional Total Estimated Program Authorization Proposed FY 2009-10 FY 2009-10' RequestedZ Authorization Expenditures Treatment Plant $7,388,000 $3,374,000 $10,762,000 $7,437,000 Collection System $4,558,000 $9,920,000 $14,478,000 $10,508,000 General Improvements $7,071,000 $4,319,000 $11,390,000 $9,969,000 Recycled Water $81,000 $755,000 $836,000 $550,000 Total $19,098,000 $18,368,000 $37,466,000 $28,464,000 ' This number is an estimate of funds that have been `authorized by the Board, allocated to projects by the General Manager, but not spent during FY 2009-10. 21f this estimate changes significantly after final year=end accounting, it may be necessary to come back to the Board for a change in the Total Proposed Authorization. N:\ENVRSEC\Position Papers\Millier\2010Wttachment 1 to 2010-11 CIP CIB 6-03-10.doc K~~~ FY 2010-17 ~ Capital Improvement Budget and Ten-Year Plan ~1 Executive Summary Central Contra Costa Sanitary District FY 2010-11 Capital Improvement Program Executive Summary Central Contra Costa Sanitary District funds an extensive Capital Improvement Program designed to preserve, maintain and enhance the District's assets, accommodate the community's needs, and protect the environment. Capital improvements are major construction, acquisition or renovation activities which add value to the District's fixed assets (buildings, pipelines. facilities, equipment) or significantly increase their useful life. The District's FY 2010-11 Capital Improvement Budget (CIB) details expenditures of approximately $28.5 million for the planning, design and construction of capital projects. By adopting the CIB, the Board of Directors authorizes staff to pursue this work. In addition to the CIB for the upcoming year, the Board approves aTen-Year Capital Improvement Plan that forecasts needed expenditures for ten years into the future. This plan focuses on renovation, expansion and regulatory requirements. Its estimated expenditures for the next ten years are $306 million (in 2010 dollars), an average of $30.6 million per year. The CIB and Ten-Year Capital Improvement Plan also include projected revenues and cash-flow discussions to demonstrate how planned expenditures could be funded. Each planned project addresses one or more of these District goals: • Protect public health and the environment • Maintain existing assets • Respond to regulatory and community concerns • Accommodate planned growth This year we are faced with some challenges and opportunities. Our revenue stream for the next several years is projected to be significantly reduced due to the downturn in the U.S. econom~~. This downturn has also created an opportunity by substantially reducing the number of projects under construction in the marketplace, resulting in a very competitive bid climate. The low bid on some recently bid District projects has been as much as 30% less than the engineer's estimate. Staff has reduced overall capital improvement expenditures. The recommended budget contains expenditures that exceed revenues, but which maintain an appropriate Sewer Construction Fund balance. Several large projects are being constructed utilizing a portion of the proceeds from bonds sold in 2009 for the express purpose of constructing these projects. This summary describes the major projects for FY 2010-11, the major projects included in the Ten-Year Capital Improvement Plan, and the revenue streams that will support the planned expenditures. FY 2010-11 Capital Improvement Budget he FYZO10-11 CIB budgets for expenditures of approximately $28 million ($28,464,1)(10) for the planning, Tdesign and construction of capital projects catego-•ized into four programs: • Treatment Plant • Collection System • General Improvements • Recvcled lA'ater Each of those programs is subdivided into subprograms. Most of the money will be spent on renovation or preservation of capital assets, as shown in the following table: ~~ ~~ ~~ Treatment Plant Program Regulatory Compliance/Planning ~ $7.4 million (26%) $ 0.4 million One-Time Renovation $ 4.9 million Recurring Renovation Expansion/Capacity Improvements/Miscellaneous Collection System Program $ 2.1 million $ 0.01 million $10.5 million (37'%) Renovation $ 7.U million Regulatory Compliance/Planning $ 0.3 million Expansion/Capacity Improvements $ 2.2 million Pumping Stations/Force Mains $ 1.0 million General Improvements Program $10.0 million (35%) Vehicles and Equipment $ 0.7 million Management Information Systems $ 1.0 million CSO Facility Improvements $ 6.1 million All Other $ 2.2 million Recycled Water Program 0.6 million (2%) Major Project Emphasis Although the CIB is made up of funding estimates for many individual projects, each year there are several major projects which account for a majority of total estimated capital expenditures. In FY 2010-11, the emphasis will be on 9 large projects, which together account for $17,925,000, or 63% percent of the total estimated expenditures. Estimated FY 201(1-11 expenditures for each of these projects are noted below. Collection Systems Operations Department Facility Improvements FY 2010-11: $6,080,000 Estimated total project cost: $13,415,000 The project consists of design and construction of a new Collection Systems Operations administration, crew, and warehouse building at 1250 Springbrook Road in Walnut Creek. The project also includes site improvements such as new paving and landscaping. The project is expected to be completed in spring 2011. CSO staff has been temporarily relocated to Martinez to provide the contractor with full access to the site while minimizing impacts on operations. asphalt and concrete from demolition are recycled as part of the neu~ CSUD facility project. --."~- Dry/Wet Weather Bypass Improvements -Treatment Plant Program FY 2010-11: $2,200,000 Estimated total project cost: $3,199,000 This project will design and construct necessary improvements to the wet weather discharge system, to allow discharge directly to Walnut Creek during extreme wet weather events when all wet weather holding basins are full It includes a gravity overflow structure to be located near the northeastern side of Basin B, as well as other hydraulic improvements. The structure will also allow the District to bypass flows to bti'alnut Creek during inspection and maintenance of the outfall. Diablo Renovations, Phase 1 -Collection System Program FY 2010-11: $2,000,000 Estimated total project cost: $2,370,000 The Diablo Sewer Renovations, Phase 1 project will replace or relocate approximately 12,000+ feet of 6 and 8-inch sewer pipe in the public right of way and easements. Sites are located in Diablo and Dam~ille. Piping Renovations, Phase 5 -Treatment Plant Program FY 2010-11: $1,690,000 Estimated total project cost: $1,957,000 The Treatment Plant Piping Renovations Program replaces corroded Return.4ctivated Sludge /R.-1S) piping. This project will provide reliability in the many piping systems, both above and below ground in the treatment plant, by renovation and replacement where required. Focus areas are the air supply headers and downcomers at the aeration tanks, 3 water high pressure pipes in the West gallery and aeration condenser drain lines. Martinez Sewer Renovations, Phase 3 -Collection System Program FY 2010-11: $1,400,000 Estimated total project cost: $1,612,000 The Martinez Sewer Renovation, Phase 3 project will replace or rehabilitate approximately 5,000 feet of 6-inch and 8-inch sewer pipe located in the public right of way and easements. Cured in place pipe installation inMiner Road allows extending seiner life with minimal disruption to traffic. Standby Power Facility Improvements -Treatment Plant Program FY 2010-11: $1,350,000 Estimated total project cost: $5,432,000 This project will replace two standby power diesel engine generators that will not meet the new Air Board regulations. The existing generators have become unreliable and are reaching the end of their useful lives. The facility building will be modified to accept the new engine generators and will also be brought up to current seismic standards. Hall Drive Sewer Renovations, Phase 2B -Collection System Program FY 2010-11: $1,200,000 Estimated Total project cost: $1,404,000 This project will replace approximately 3,30(1 feet of Fi-inch sewer that is currently in backyard easements. Horizontal directional drilling will be used to install the replacement gravity sewer lines in the front yards of properties and within the public right of way. Seismic Improvements for Headquarters Office Building (HOB) -General Improvements Program FY 2010-11: $1,005,000 Estimated total project cost: $2,009,000 A preliminary evaluation has been completed on the HOB and significant seismic deficiencies (per current codes) were found. This project will make seismic improvements to meet life safety standards. 2010-11 Development Sewerage -Collection System Program FY 2009-10: $1,000,000 Estimated total project cost: $1,000,000 This project provides for appropriate capitalization of District labor and other expenses for permitting and inspection of developer installed and contributed main sewer facilities. Historical Capital Improvement Program To place this year's proposed Capital Budget and Plan in perspective, it is helpful to review historical expenditures and revenues. As shown in the expenditure graphs, annual capital expenditures in inflation adjusted dollars have decreased over the years to approximately $30 million per year from a high of $60 million in 1993-94. This rate of spending represents a replacement of all assets about once every hundred years, based on an estimated replacement value of approximately $3 billion for the treatment plant, collection system and pumping station facilities. :~o.ooo ~.ooo :~.ooo s4o.aoo sao.ooo s2aaoo 5'aaao 5- The use oftechnoloyies such as Pilot Tube Guided Auger Boring allow the District to install seerer lines in tight spaces with less disruption. ,,........~ ......:...~ ~....,...a:...M~ G 90-9' S"-92 52~5J 4J-40 54-95 55~9ti 90-51 57 JB bb lb 5'!-0;; COL' b'-0. ..~-55 03.04 04-05 05-06 U6-07 7/-0B 0B-O6 05-'0 - In Actual Ddlars - Atljusted by 3%Near Historically, the District has attempted to keep expenditures close to revenues with the goal of not reducing the Sewer Construction Fund balance below a $30-35 million benchmark. This allows the Fund to act as the bank to meet the District's cash flow needs between biannual receipt of revenue from Contra Costa County. As noted in the below figure on property tax and capacity fee revenue trends, capital revenues can be highly variable. The District has two discretionary sources of capital revenue, sewer service charge capital component and the selling of bonds. In 2009-10 the District chose to augment the Sewer Construction Fund balance with $30 million in bond proceeds in order to ease the pressure on sewer service charge rate increases and allow the Capital program to move forward with needed projects. This decision was deemed prudent because the current competitive construction bidding climate has resulted in construction costs being reduced by 20-30%, resulting in significant savings for the program. The District will continue to balance capital expenditures and revenues to ensure that appropriate investments are made in capital facilities while maintaining an adequate Sewer Construction Fund balance to meet cash Flow needs. Property Tax and Capacity Fee Trends 318000 000 i6,00D,000 14,000,000 12,000,000 - 10 000 000 , , 38,000,000 ,~, - - -°~ 56,000,000 4 .000,000 3 _ - F _ _ $2,000.000 ,~~~ ~.~°'~,~,,a ~~°'y,A°~ ~.°~°'~ ~.°~°'~ ~.°~°'~ ~°o ~°~;i?°~ ~°~~°p ~~~ ~~~ ~°1 ~°0 ~°~ e`°, Q`°` Q`~ QP~ QP,Q~p1 e`°~ Q`°~ Q`p1 Q`°~ Q`°, ~A~' ~~% ~~~ ~~~, ^~ s~~, ~~~~. ~~ ~°~~' ~~ ~p'` ~C~' ~CQ ~CP` ~CiP ~C~ ~01 ~(~ ~~ `~ ^p~`1 ~,~'~~' ^,~;^~ 1„~~~ p~h ~y1~~~~1 ~71~ ~0~~ ~~,`~ t Property Tax Connection Fees Ten-Year Capital Improvement Plan The District develops aTen-Year Capital Improvement Plan each year which provides the information needed to formulate long-range policy regarding: • Identifying, prioritizing, and scheduling capital projects for the ten-year period. • Providing financial resources for completing those capital projects. The plan covers FY 2010-11 through FY 2019-20 and includes total expenditures of approximately $306 million (in 2010 dollars), or an average of $30.6 million per year, as described in the following table: Treatment Plant Program $112.3 million (37"'/c~) Regulatory Compliance $ 42.1 million One-Time Renovation $ 31.2 million Recurring Renovation $ 36.6 million Expansion/Miscellaneous Projects Collection System Program $ 2.3 million $162.4 million (53%) Renovation Regulatory Compliance/Planning $105.3 million 2.6 million Expansion/Capacity Improvements $ 42.2 million Pumping Stations/Force Mains $ ] 2.2 million General Improvements Program $ 25.6 million (S%) Vehicles and Equipment $ 5.2 million Management Information Systems $ 5.9 million All Other $ 14.5 million Recycled Water Program $ 5.5 million (2c%) The plan is divided into the same four programs as the budget. While a large portion of the plan is devoted to ongoing renovation, several projects address capacity and regulatory issues. The following table lists total ten-year expenditures by program and subprogram. A brief description of the major projects/programs not described under the FY 2010-11 Capital Improvement Budget section follows the table. MAJOR TEN-YEAR TREATMENT PLANT PROJECTSIPROGRAMS District Seismic Imarovements: Substantial changes have been made to seismic design standards. Many District buildings have been evaluated and significant deficiencies have been found. Improvements ~~~ill be made to buildings to provide safety for personnel and protect plant processes. (Ten-year plan; $9,467.000 total project cost) Solids Conditioning Bldg. 2012-13 Plant Operations Building 2013-14 Pump S Blower Bldg. 2015-16 Warehouse 2015-16 Laboratory 2015-16 T Sacramento 5unta Rusa NORTH AI,VIERICAN CONCORD- I~LATE GREEN VALLEY Farallon Islands GPS site O~. PACIFIC PLATE Major faults MT $5,305,000 $850,000 $2,225,000 $895,000 $192.000 Columbia GPS site ~ ~ ~. y9< c9 ~ ' ~ -~` ~~ The Bay Area is ~eismirally ~ `c~ - ,'' FI active. Uistrlct facilities are 9~0 y! ~, being evaluated and many ~,_ ~ ~~ ~ will need to he retrofitted `~, 9C~ over the next several years. ~,~ San `~+ ~. Jose 9y 1 ~. ~ ^'~,. ~,, N 9 ~ Z Santa ~` i. Crui ~lutiti Beach 0 30 MILES 0 30 KILOMETERS Future Regulatory Projects: The next ten years hold the potential for significant regulatory changes. These include potential requirements to nitrify (remove ammonia), increase removal of certain pollutants from incinerator air emissions, and reduce greenhouse gas emissions. An unidentified regulatory expenditure of $32 million has been included in the ten-year plan to represent this potential funding need. Nitrification would require an expansion of the aeration tanks to accommodate the additional treatment. Effects of greenhouse gas reduction requirements are still being studied and could require significant investment. Changes to solid waste regulations may affect the furnaces and impacts range from additional emissions equipment to total replacement of the furnaces. (Construction FY 16-17; $32,0(10,000 estimated total project cost) Piuin~ Renovation and Replacement Program: The replacement value of treatment plant facilities is conservatively estimated at $600 million. Piping systems are an important and critical component of the treatment plant infrastructure. These systems will continue to be evaluated and prioritized for repair or replacement. (Ten-year Plan; $11,488,000) The new Sludge Handling Facility is designed to allou~ solids hauling in emergency situations. 10 MAJOR TEN-YEAR COLLECTION SYSTEM PROJECTSIPROGRAMS Sewer Renovation Program: In 2002, the District initiated along-term program to televise all 1,!47 miles of its gravity sewers. To date, the program has televised approximately 1,100 miles of sewers. Taking into account sewer mains renovated since the start of the TV program, approximately 57 miles of sewer mains (6-, 8-, and 10-inch pipe) need to be renovated at a cost of X86 million. The current ten-year plan targets renovating all 57 miles of sewer mains. (Ten-year plan; $105,300,000 estimated total project cost -includes TV programs. large-diameter pipe renovation, and cathodic protection) Ongoing TV inspection of the collection system helps to guide seiner renor.~ation plans. Sewer Capacity Program: The Collection System Master Plan was updated in 2010 to reflect recently approved land use and new flow-monitoring data. The Capital Plan has been updated to reflect the new results. Sewer capacity projects will include trunk sewers on Pleasant Hill Road in Lafayette, Lancaster Road in Walnut Creek, Moraga l~'ay in Orinda, and the San Ramon Schedule C Interceptor. (Ten-year plan; $42,200,000 estimated total project cost) 11 Potential Future Projects Not Included in 2010 Capital Plan The projects listed in this CIP are those that are reasonably certain to be undertaken by the District. However, when evaluating project priority and cash flow impacts, consideration must be given to potential projects that are uncertain and not currently included in the plan. If some or all of these potential projects listed below are required to be undertaken, there could be a significant impact on the financial forecasts contained in the plan. TABLE A-2: POTENTIAL PROJECTS NOT IN 2010 CAPITAL LNPRO~~MENT PLAN i rea~meni runt: rtyarauuci rrocess ~apaciry Nitrification -Construct facilities for nitrification (ammonia 5-10 yrs $65 million Medium to nitrate) to address more stringent receiving water standards for ammonia. Nutrient Removal -Construct facilities for nutrient removal to 10-20 yrs $65 million Low address more stringent receiving water standards for nitrogen and phosphorus. Treatment Plant: Solids Handling Upyrade or Replace Existing Sludge /ncineration System - 2-5 yrs up to $60 million Medium tISEPA is developing new air emission limits for Incinerators. Depending on the final emission limits, CCCSD may need to upgrade air emissions controls or replace the sludge incineration system. Treatment Plant: Other Projects Greenhouse Gas Reduction - Ret?ulations are under 2-5 yrs $15 - $30 million High development that will require significant reductions in greenhouse gas emissions. The appropriate reduction plan may include diversifying our energy portfolio by adding a renewahle ernrgv source, such as solar or wind. Recycled Water Projects Martinez Refinery Recycled Water Project- Construct new 3-10 yrs $100 million Medium treatment and distribution facilities to supply up to 20 mgd to the Shell and Tesoro refineries for cooling tower makeup and boiler feed water. Concord Landscape Recycled Water Project- Construct 2-5 yrs $5 million High recycled water distribution facilities to supply the Diamond Boulevard commercial area of Concord. Collection System Projects Contractual Assessment Districts -Provide financing 1-10 yrs $4 million High for construction of main line extensions to serve neighborhoods who wish to organize contractual assessment districts. 12 Capital RevenuelCash Flow/ Sewer Construction Fund Balance CAPITAL RE«NUE The Capital Program is funded by a number of different fees and charges as described below. Facility Capacity Fees: A facility capacity fee is paid by each new connector to the District's collection system. This fee is recalculated each year and represents the cost of buying into the existing assets of the District. The revenue from these fees is dependent on the housing market and rate of ne~~~ connections. Pumped Zone Fees: For connections in an area where pumping is necessary, an additional facility capacity fee is charged to buy into the existing pumping station assets of the District. The revenue from the pumped zone fees is highly dependent on the housing market and the rate of new connections in the pumped zones. Property Taxes: Historically, the District has received significant revenues from property taxes. In 1978, when Proposition 13 reduced the taxation rate on property, the State Legislature urged enterprise special districts to shift to user fee financing. In FY 199?-93, the State of California began diverting portions of the property tax revenue. The District still receives a significant amount of property taxes which are allocated entirely to debt service and the Capital Program. If those taxes were to be permanently diverted, a significant increase in other forms of revenue, particularly the Sewer Service Charge, would be necessary. Sewer Service Charges: The Sewer Service Charge is an annual charge placed on the property tax rolls which funds operation and maintenance costs as well as a portion of the Capital Program. Each year the capital revenue from all other sources is estimated, and the additional revenue needed to fund the planned expenditures, after consideration of any increase or decrease to the Sewer Construction Fund Balance, is generated by adjusting the capital component of the Sewer Service Charge. Reimbursements from Others: The District receives reimbursements from others for capital expenditures which benefit others. For example, the City of Concord is served by a contract which requires them to pay aflow-proportional share of capital projects which benefit Concord (such as projects to improve wastewater treatment facilities and large interceptors). Also, the District has formed Assessment Districts to promote the installation of sewers in unsewered areas and loaned money from the Sewer Construction Fund for construction of the sewers. This money is then repaid with interest to the Fund. Interest: Interest is earned on the balance of the Sewer Construction Fund, the money held in reserve to fund future capital projects. The interest earned is returned to the fund. Bond Proceeds: While the District generally follows apay-as-you-go philosophy, Sewer Service Charge rate increases can be mitigated by utilizing bond funding to spread the payments over time. 13 The total budgeted revenue for FY 2010-11 ranges from $19,669.000 to $22,369,000, depending on whether there is a sewer service charge rate increase. FY 10-11 Capital Budget Revenue ($1,000) Sewer Service Charge $1,856 to $4,556 (depending on SSC rate inc~ Interest $850 Facilities Capacity & Pumped Zone Fees $6,584 All Other $1,067 Taxes Concord $6,873 $2,429 CASH FLOWISEW~R CONSTRUCTION FLND BAI.A:tiCE As part of the Ten-Year Capital Improvement Plan, estimates of expenditures and revenues are made and a cash-flow projection developed to show the interrelationship of revenues and the Sewer Construction Fund (SCF) balance. Each year a policy decision is made by the Board of Directors, based on staff analysis and recommendations, on the amount of the capital component of the Sewer Service Charge to fund the planned Capital Program while maintaining an adequate SCF balance. The SCF balance is needed for future capital projects. It also acts as the bank to meet the District's cash flow needs. To provide sufficient funds for cash flow needs, a balance of approximately $30 million is recommended for the SCF. This year a drawdown of the SCF of $6 to $9 million is budgeted. This can be supported because the drawdown will fund construction of specific projects for which $30 million in bonds were issued in ?009 and placed in the SCF. 14 Sewer Construction Fund Revenues and Expenditures A summary of projected FY 2010-11 Capital Improvement Program revenue and expenditures is presented below: Revenues Facilities Capacity Fees Pumped Zone Fees Interest Ad Valore m Taxes Sewer Service Charges Reimbursements from Others: City of Concord Recycled Water Sales Alhambra Valley Developer Fees, Charges, Other Total Revenues $16 Rate Increase No Rate Increase $ 5,731,000 $ 5,731,000 853,000 853,000 85 0,000 8 50,0 00 6,873,000 6,873,000 4,556,000 1,8 56,0 00 2,429,000 2,429,000 175,000 1 75,000 457,000 457,000 445,000 445,000 $ 22,369,000 $ 19.669 000 Expenditures Treatment Plant Program Collection System Program General Improvements Program Recycled Water Program Total Expenditures $ 7,437,000 $ 7,437,000 10,508,000 10,508,000 9,969,000 9.969.000 550,000 550,000 $ 28,464,OD0 $ 28,464,000 A summary of Sewer Construction Funds Available Impact is Presented Below: Projected Revenues 22,369,000 19,669,000 Projected Expenditures (28,464,000) (28,464,000) Draw From Funds Available (6,095,000) (8,795,000) More specific information regarding expenditure categories is included in the Capital Improvement Plan. "Revenue is first recorded in the 0&M budget until 0&M costs are offset. Any additional revenue will be recorded in the Sewer Construction Fund. 15 Questions? For additional information about the District's Capital Improvement Budget and Ten-Year Plan, please contact Director of Engineering Ann Farrell at (925) 229-7302 or Capital Projects Division Manager Tad Pilecki at (9251 229-7273. The Ten-YE:ar CupitUl Improvement Plan includes over $110 million to renovate and improve the u~asteu~ater treatment facility located in a9artinez.