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HomeMy WebLinkAbout1989-06-01 COUNTY SANITATION DISTRICTS OF ORANGE COUNTY, CALIFORNIA P.O.BOX 8127.FOUNTAIN VALLEY,CALIFORNIA 92728-8127 _ 10844 ELLIs,FOUNTAIN VALLEY.CAUFORNIA 9270E-7018 (714)962-2411 FAX(714)882-0WIi May 2S , 1989 NOTICE OF ADJOURNED REGULAR MEETING DISTRICT NO. 1 THURSDAY, JUNE 1, 1989 - 5:30 P.M. 10844 Ellis Avenue Fountain Valley, California Pursuant to adjournment by the Secretary of the adjourned regular meeting of May 17, 1989, the Board of Directors of county sanitation District No. 1 will meet in an adjourned meeting at the above hour and date to consider modifications to the District's supplemental user fee program. Secretary 4° BOARDS OF DIRECTORS County Sanitation Districts P.O. Box 8127.10844 Ellis Avenue of Orange County,California Fountain Valley,CA 92728-8127 Telephone:(714)962-2411 DISTRICT NO. 1 AGENDA ADJOURNED REGULAR MEETING THURSDAY, JUNE 1, 1989 - 5:30 P.M. (1 ) Roll call (2) Public comments: All persons wishing to address the Board on spec is agenda items or matters of general interest should do so at this time. As determined by the Chairman, speakers may be deferred until the specific item is taken for discussion and remarks may be limited to five minutes. (3) Consideration of items re long-range financial program: \„J (a) Staff report on long-range financial plan (b) Discussion (4) Consideration of the following actions on items relative to proposed Ordinance No. 112, An Ordinance of the Board of Directors of County Sanitation District No. 1 of Orange County, California, Amending Ordinance No. 109 Establishing Sanitary Sewer Service Charges and Repealing Ordinance No. 111 : See page "A" (a) Report of the General Counsel re proposed Ordinance No. 112 (b) Consideration of motion to read said Ordinance No. 112 by title only, and waive reading of entire ordinance (must be adopted by unanimous vote of Directors present) (c) Consideration of motion to introduce said ordinance No. 112 and pass to second reading on June 14, 1989 (5) other business and communications, if any (6 ) Consideration of motion to adjourn Y , �..d ORDINANCE NO. 112 AN ORDINANCE OF THE BOARD OF DIRECTORS OF COUNTY SANITATION DISTRICT NO. 1 OF ORANGE COUNTY, CALIFORNIA AMENDING ORDINANCE NO. 109 ESTABLISHING SANITARY SEWER SERVICE CHARGES, AND REPEALING ORDINANCE NO. 111 The Board of Directors of County Sanitation District No. 1 of Orange County, California, does hereby FIND: A. That a financial and engineering report has been prepared setting forth the financial projections for providing sewer service to properties within the District; and, B. That the financial and engineering reports have been made available to the public in accordance with the provisions of Government Code Section 54992; and, C. That the new sewer use fees established by this Ordinance do not exceed the estimated amount required to provide the sewer service for which the fee is levied, as provided in Government Code Sections 54991 and 54992. The Board of Directors of County Sanitation District No. 1 of Orange County, California, does hereby ORDAIN: Section 1: Table A, as adopted by Section 2 of Ordinance No. 109, is hereby amended to read as set forth in Table A of this Ordinance. Section 2: This Ordinance shall become effective July 1, 1989. Section 3: The Secretary of the Board shall certify to the adoption of this Ordinance and shall cause the same to be published in a newspaper of general circulation in the District as required by law. "A-1" AGENDA ITEM NO. 4 "A-1" s PASSED AND ADOPTED by the Board of Directors of County Sanitation District No. 1 of Orange County, California, at a regular meeting held Chairman of the Board of Directors County Sanitation District No. 1 of Orange County, California ATTEST: Secretary of the Board of Directors County Sanitation District No. 1 of Orange County, California J -2- "A-2" AGENDA ITEM NO. 4 "A-2" TABLE A ORDINANCE NO. 112 Basis of Minimum Annual Charge Annual Rate Charge Per Unit Single-Family Charge per $45.00 $45.00 Dwellings dwelling unit Multi-Family Charge per 27.00 27.00 Dwellings/Mobile dwelling unit Homes Commercial/ Charge per 1,000 32.00 32.00 Industrial/Other square feet of (government building .J buildings, utilities, non-profit organizations, etc.) "A-Y AGENDA ITEM NO. 4 "A-3" II MANAGER'S AGENDA REPORT County Sanitation Districts P.O. Box 8127• 10844 Ellis Avenue of Orange County, California Fountain Valley, CA 92728-8127 Telephone:(714) 962-2411 DISTRICT NO. 1 MANAGER'S REPORT TO DISTRICT NO. 1 DIRECTORS MEETING DATE: June 1, 1989 - 5:30 p.m. Item No. 3(a): Update on long-range financial program and consideration of amendments to existing sanitary sewer service charges. BACKGROUND In 1984 District No. 1 modified its long-range financial plan. This plan established one-time sewer connection fees for new development to finance facilities expansion, and a supplemental user fee to make up a shortfall in ad valorem tax revenues and provide the additional financing necessary for both operations and maintenance as well as major facilities rehabilitation. The financial plan was adopted after considerable study to avoid projected short and long-range funding shortfalls in revenues required to finance the District's operating and capital expenses, which are escalating due to the rising cost of meeting environmental and public health standards established by state and federal regulatory agencies. The plan has since been modified and the current fee schedule is as follows: Single-Family Multi-Family Commercial/Ind/ Fee Type Residential Residential Governmental/Other One-time Connection $1,500 per $1,500 per $300 per 1,000 sq. Fee dwelling unit dwelling unit ft. of building Annual User Fee $34.32 per $20.60 per $24.57 per 1,000 dwelling unit dwelling unit sq. ft. of building In 1986, the Board also elected to issue $24,700,000 in Certificates of Participation (COP' s) in concert with Districts Nos. 2 and 3 to partially finance District 1's share of joint treatment works construction and to purchase additional equity in the joint treatment works to reflect the new flow-based joint works equity formula. FUTURE FINANCIAL PROJECTIONS Based upon the Facilities Master Plan and the Financial Plan recommendations contained in the 30-year Action Plan now under consideration by the Board, District No. 1 will exhaust its capital funds as soon as 1990-91. The Action Plan recommends that the District's share of the treatment plant construction and the trunk sewer construction be financed by a combination of borrowing -1- June 1, 1989 (ie COP's) and increased connection fees. Debt retirement and escalating operating and maintenance costs would be paid by increasing the annual supplemental use fees. Staff has prepared a Statement of Projected Cash Flow based on the following assumptions: 1. Scenario 2 of the Action Plan Which Recommends Continuation of Current Treatment Levels 301 h Waiver This scenario is used in the cash flows as the staff' s preliminary preferred alternative recommendation. It represents the minimum probable level of construction and operations and maintenance costs. For the first five years of the planning period the differences between Scenarios 2 and 3 (full secondary treatment) are not significant. Additional flow and sewer connection assumptions are also consistent with the Master Plan. 2. Connection Fees The Master Plan Financial Plan recommends a change in the method of determining connection fees. The recommended change, which is incorporated in the cash flow, is to include the cost of future facilities on a per unit basis. The reason to include these costs is that we currently operate at capacity and any new flow will require new, additional capacity. The first change is anticipated to be effective October 1, 1989 when the residential connection fee is projected to be $2260 under Scenario 2. Beginning July 1, 1990, and annually thereafter, connection fees are �.. projected to increase to reflect changes in the Engineering News Record - LA construction cost index, assumed to be 5% per year. 3. Debt Over the next 10 years COP-type debt totaling $80 million is projected to be issued to meet Joint Works Treatment and District sewer capital requirements in 1990-91, 1993-94 and 1995-99. A more detailed needs analysis will be performed and returned to the Directors before any debt is issued. The cash flow projections are for several small issues on the theory of borrowing as little as possible and only when absolutely necessary. All issues are treated as fixed rate at 8% for 20 years. The Health and Safety Code permits the use of user fees to repay debt, and as the only controllable source of revenue for the District, they are projected for use to repay the necessary new debt. Existing debt continues to be repaid from capital funds. RECOMMENDATIONS It is clear that the user fee rates will have to continue to escalate - and at an accelerated pace - to maintain the District' s financial integrity. However, there are several unknowns that will have a major impact on. the District' s cash flow requirements. -2- June 1, 1989 A considerable portion of the District's major funding shortfalls are for capital financing. The projections herein assume that all construction projects proceed on schedule. Thus, the estimates can be considered "worst case" scenarios. However, we continue to experience delays in major projects because of SCAQMD requirements. Further delays in these projects would also delay, or at least spread out, the need for capital funds. Conversely, as the Directors are aware, if the secondary treatment waiver is not renewed in 1990, the Districts' capital needs will increase substantially. All the projections assume the renewal of the Districts' 301(h) permit. Ordinance No. 112 (attached to the agenda) incorporates the following proposed fee schedule and is presented for consideration by the Directors. Single-Family Multi-Family Commercial/Indust. Fee Type Residential Residential Governmental/Other Annual User Fee $45.00 $27.00 $32.00/1,000 sq. ft. No change in the connection fee schedule is recommended at this time. After a final decision is made by the Boards regarding the NPDES Permit renewal , staff will return with a connection fee recommendation. Staff will review the attached cash flow projections, the proposed supplemental user fee increase and the proposed Ordinance with the Directors in greater detail ,.i at the meeting. -3- COUNTY SANITATION DISTRICT N0.1 5/25189 STATEMENT OF PROJECTED CASH FLOW Page 1 FISCAL YEARS 1989-90 THROUGH 1998-99 LINE 1989-90 1990-71 1"I_" 1992-95 1993-94 $-Year Total 1994-99 10-Year Total LINE -___ ------- ------- ------ ___ ------- i -_--------- ----------- ------------- ---- OPERATING FUND 1 Reserves 6 Carry-Over From Last Year 5,213,000 4,522,000 4,776,000 4.024,000 5,104,000 3,213,000 6.437,000 3,213,000 l ___________ ___________ ......._.. ___________ ( ----------- ----------- _____-_____ REVENUE 2 Share of lW In AllecatioA 1.924.000 2,059,ODO 2,205.000 2,362,000 2,532,000 11,082,000 16.639,000 27,720,000 2 3 Fees: Industrial Waste 508,000 559,000 615,RON 677.TOO 745,000 3,104.000 5,005,000 8.109,000 3 4 Supplemental User 3,M,000 4,167,000 5,512.000 7.M.000 9,609,000 29,812,000 66,591,000 96,403,000 4 5 Interest 6 Miscellaneous Intake 276,000 332,000 312,M 324,000 409,000 1,653,000 2,785,000 4,438.000 5 6 Other Revenue 0 0 6 ___________ ___________ ___________ ----------- ----------- ----------- ----------- I TOTAL REVENUE 5.910,000 7,117,M 8,644.000 10,69$.M 13,295.000 ; 45.651,000 91,019.000 136,670.she 7 ___________ _--------- ___-__----- 8 TOTAL AVAILABLE FUNDING 9.123,000 11,699,000 13,420,000 14,709,000 18,399,400 i 48,B64,ANN 97,456.000 139,M,000 8 -- --------__ __------_ ----------- ----------- , ----------- ___________ EXPENDITURES 9 Share of Joint Works M 4 0 4,092,000 4,691.000 5.378,000 5.547,000 6,360,000 26,D60,000 48,867,000 74,935,000 9 10 Collection System N 6 0 and Other Doer. 449,000 482,000 SIB,000 558,000 602.000 2,609.000 3,835,000 6,444,000 l0 It Other toenditures 1,750,400 3,500,000 3,500.000 5,000,000 i 13.750,000 33,250.00R 47,OM,000 11 ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ 12 TOTAL EXPENDITURES 4,541,M 6.923,000 9,396,000 9,605.000 11,962,000 42,427,000 95,952,000 120,379,000 12 ___________ ___________ ___________ ___________ ___________ __________ _--------- ----------- 13 Reserves 6 Carry-Over to Next Year 4.582,M 4,776,000 4.024,000 5,104,000 6.437.000 6,437,000 11,504,000 11,504.000 13 14 Next Year's Dry Period Funding Reovirements 2,271.000 3.462,000 4,698,000 4.803,000 5,981,000 5,"1,000 10.382.000 10,382.000 14 ___________ ___________ __....... ----------- ----------- ----------- ----------- -__ ...... 15 Fund Balance or (Deficit) 2.311,ROD 1.314,000 (674,000) 301,000 456,000 ; 456,000 1.122,000 1,122,NOR 15 Single family Resident User Fee $45 251 176 $Eto 1130 BM Number of E9uivalsnt Daellin9 Units 71,148 71.819 12,5M 13,221 73.912 77.367 COUNTY SANITATION DISTRICT NO.L S/25189 STATEMENT OF PROJECTED CASH FLOW Page 2 FISCAL YEARS 1909-90 THROUGH 199E-99 LINE 1989-90 1990-91 1991-92 1912-93 1993-94 5-Year Total 1994.99 10-Tur TOUT LINE ____ _______ _______ _______ ------- ------- { ------------ -------___ _—____„___ ---- CAPITAL FUMDISI --------------- 16 Reserves 6 Carry-over Free Last Year 13,991,000 3,942,000 19,481,000 6,934,000 225,000 13.991,400 21.434,000 13'"1'000 16 REVENUE 17 Construction Grants 2a7,000 287,000 287,000 17 IB Fees: Connection 11561,000 1,635.000 1,714,DOD 1,793,000 1,887,000 0,590,000 10,966.000 19,5S6,000 IB 19 Industrial Waste 143,000 157,000 173,000 190.000 209,000 872,000 1,404,000 2,276.000 19 20 Supplemental User 0 0 20 21 Sale of Capacity Rights 489,000 240,000 44,000 1,696,000 47S,000 2,944,000 560.000 3,SO4,000 21 22 Interest 6 Miscellaneous Income 636.000 830,000 936.000 2S4,000 768,000 3,424,000 5,585,000 9,009,000 22 23 Other Income 35,000,000 30.000,000 ; 65,000,000 1S,000,000 80,000,000 23 1 ___________ ___________ ___________ ___________ ___________ __-------- ----------- ___________ 24 TOTAL REVENUE 3.116.000 37,862,OOD 2.867.000 3,933.000 34,539.000 81.117.DRT 33,515,000 114,632.000 24 ___________ ___________ ___________ ___________ ___________ { ___________ ----------- _________,_ 25 TOTAL AVAILABLE FUNDING 17.107.060 41,804,000 22,348,000 10,867,000 33.564.000 95,108,000 54.949,000 128,623,000 25 ___________ ___________ _--------- ----------- ___________ ----------- ----------- _____._____ EXPENDITURES 26 Share of Joint Works Treatment Plant 10,724.000 14.901,000 13,015,000 8,099,000 5,768,000 52,507,000 26,107,000 78,614,000 26 21 District Collection System 140,000 100.000 100.000 260,000 100.000 660,000 1,040.000 1,700,00. 27 2B COP Payaents 2,341,000 2,522,000 2,299,000 2,283,000 2.262,000 11.507,000 10,993,000 22,500,000 28 i 29 ' Other Expenditures 5,000.000 4,000,000' 7 9,000,000 2,250,000 11,250,000 29 __________ ___________ ___________ ___________ ___________ l ----------- ----------- _______-___ i 30 TOTAL EXPENDITURES 13.165.W 22,323,000 15.414,000 10,642,000 12.130,000 73,674,000 40,390,000 114,064,000 30 __________ ___________ _--------- ........... ----------- { ----------- ----------- ----------- 31 Reserves 6 Carry-over to Next Year 3.942.u0 19,481.000 6.934.000 225,000 21,131,000 ; 21,434,000 14,559.000 14,559,000 31 { Single family Resident Connection Fee 12,260 R2,370 R2,/10 12,610 02,110 }],500 i { Number of New Equivalent Dwelling Units 691 691 691 691 691 691 _ COUNTY SANITATION DISTRICT NO.1 5/25189 STATEMENT OF PROJECTED CASH PION Page 3 FISCAL YEARS 1909-90 THROUGH 1993-99 LINE 1989-90 1990-91 1991-92 1992-93 199kw ) 5-Twr Total 1994-99 10-Year Total LINE ....... ....... ....... ....... ....... ( ...._._.__.. ----------- ------------- ---- BOND FUND(S) ------------ 32 Reserves 6 Carry-Over From Last Year 52,000 0 0 0 0 ( 52,000 0 $2,000 32 ........... ........... ........... ........... ........... ( .__.._._. ----------- -_________- REVENUE 33 Tax Levy 19.000 ( 1/,4N 19.000 33 34 Interest 1 Miscellaneous Income 0 0 0 0 0 0 0 0 36 35 Other Income 0 0 35 36 TOTAL REVENUE 19,000 0 0 0 0 ( 19,000 0 19,000 36 ........... ........... ........... ........... ........... . ........... ........... ........... 37 TOTAL AVAILABLE FUNDING 71,000 0 0 0 0 7I,000 0 71,000 37 ........... ........... ........... ........... _._----- i ----------- ----------- ----------- EXPENDITURES ) 38 Bond Principal 6 Interest 71.000 71,000 71,000 38 39 Other EXPOMILUIDS 39 ........... ........... ........... ........... ...__.... --___.-._ _ ----------- ----------- 40 TOTAL EXPENDITURES 71,000 0 1 1 0 ( IT.M 0 71.000 60 ........... ........... ---------- ........... ........... ) ----------- ----------- -•-•---•-_- al Reserves a Carry-Over to Next Year 0 0 1 0 0 0 0 0 el 42 Next Year's Dry Period Funding Requirements 0 0 0 0 0 0 0 0 12 ........... ........... ........... ........... ........... i ----------- ----------- ----------- 43 Fund Balance or (Deficit) 0 0 6 0 0 ( 0 0 0 63 GUARANTY le Reserves 6 Carry-Over Free Last Year 17,256.000 8,524.M 24,257.000 10,151,000 3,329,CAT ( 11,2S6,000 27,871,000 17,2$6.000 se 45 TOTAL REVENUE 9,645.000 46,979,000 11,511,000 14,618,000 46.634,000 126,187.000 124,534.000 251.321,000 65 ........... ........... ........... ........... ........... 1 ._.-------- ----------- .. ........ 46 TOTAL AVAILABLE FUNDING 26,301.000 53,503,000 35,768,000 25,576,000 51,963,000 ( 144,043,000 152,405,000 268,577,000 06 47 TOTAL EXPENDITURES 17,777,000 29,246,000 24,810,000 20.247,000 24.092,000 116.172,000 126,342,000 242.514,000 17 _____ ___________ ___________ ___________ __________• i ----------- ----------- __.-_-____. 48 Reserves A Carry-Over to Next Year 8,524,000 24.257,000 10,950,000 5,329.000 27,871,000 27.871,000 26.063,000 26,063,000 48 49 Next Year's Dry Period Funding Requirements 2,271.M 3,462.000 4,698,000 4,803,000 5,981.000 5.981.000 10,382,000 10,382,000 49 ........... ........... ........... ........... ........... ----------- ----------- ------._.__ 50 FUND BALANCE 09 (DEFICIT) 6.253,000 20.795,000 6,260.000 S26,000 21,890,000 21,890,000 15,681,000 15,681,000 50 COUMTY SANITATION DISTRICT NO.1 5/25189 SCHEDULE OF DISTRICT COLLECTION SYSTEM PROJECTS PROJECT TOTAL C.I.P. 1989-90 1990-91 1991-92 1992-93 1993.94 5-Year Total 1994-99 10-Year Total ----------- .......... i ----------- ----------- ----------- ----------- ----------- ---------- ------------ ----------- ------------- Dyer Road Manhole Rehabilitation 160,000 ; 160.000 160,000 160,000 M2iA-Dyer Manhole Rehabilitation 160,000 ; 0 160.000 160,000 Graenville-Sullivan Manhole Rehabilitation 170,000 0 170,000 170,000 Raitt Street Manhole Rehabilitation 210,000 0 210,000 210.000 Miscellaneous (1) 1,000,000 100,000 100,000 100.000 100,000 100.000 ; 500,000 500,000 1,000.000 ---------- ----------- ---------- ----------- ----------- ----------- ---------- i ........... ----------- -----.-.--- TOTAL 1,700,000 0 100,000 100.000 100,000 260,000 100,000 660.000 1,040,000 1,700.000 .......... ........... .......... ........... ........... ........... .......... . ........... ........... ........... .......... ........... ......... ........... ........... ........... .......... . ........... ........... ........... MEETING DATE June 1, 1989 TIME 5:30 p.m.Dismicri 1 DISTRICT 1 JOINT 80ARDS (CRANK)........HANSON......_�_ (VERELLEN).........ALLEN....... _ (YOUNG)........GRISET......JG_ (ERSKINE)..........BANK ISTER..._ `✓ (KENNEDY)......HOESTEREY...JC_ _ (WEDAA)............BIGONGER...._ (ROTH).........STANTON...... (NORGY)............CA%IN......_ (HART).............COX........._ _ DISTRICT 2 (PERRY)............CULVER...... KENNEDY ..........GRIFFI......_ (GRAHAM).......MATLIN HONEY....._ _ <CHESSE............GRIFFI......_ (GRAHAM).......MANONEY....._ _ _ (CRAYOUNK)............GRISET (YOUNG)........BIGONG......_ _ _ (CRANK)............HANSON......_ ((YOUNG)........GRISE......._ _ _ (KENNEDY)..........HOESTEREYISLES....... NEWTON).......ISLES........_ _ _ (NELSON)...........ISLES......._ (SHONE)........NEAT........_ ( )............KANEL (DOWNER).......NEWTON...... _ _ (GRAHA )...........MAHONEY....._ (HUNTER).......PERRY......._ (GRAHAM)...........MAYS........ (HUNTER).......PICKLE...... _ _ (SCOTT)........ ....MAYS........ (BARBERA)......SILZEL MITH....... (SCOET)............NEAT........ (BATHER.)......SMITH......._ (WEDIN)............NELSON...... (ROTH).........STANTON..... (DOWNER)...........NEWTON...... (HUNTER)...........PERRY....... DISTRICT 3 (HUNTER)...........PER..... (HART) .. T).............PLUMMLUMMET....._ _ (DUKE).........POLIS ...... )DUKE).............POLIS (WEDIN)........NELSON......— — — (ST.NTON)..........ROTH........ (ERSKINE)......BANNISTERALLEN ..._ (WILES)............SHERID......_ (ERSKIN........CATLIN TER..._ _ _ (WINE))............5IEFEN...... (PERRY)........CULVER......_ _ _ (FASBENDE..........SILZ£N......_ (PE.RY)........CULVER......_ (ROTH).............SMITH....... (YOUNG)........GRIFFI......_ (ROTH)...... .......STANTON RAUSS..... _ (YOUNG)........GRISE....... _ _ (HART/COX..........SERA........_ ( ))........MANEL HONEY....._ _ _ (MILLER)...........SWAN........ _ SYLVIA (GRAHAM) NEAL........_ _ _ (GREEN)............KANNER......_ (HUNTER).......NEAT........_ _ _ (GREEN)............MANNER...... (HUNTER).......PICKLE......_ _ _ (ISLES)............WEDAA....... (WILE))........SIEFEN TANTON....._ _ _ (ISLES)............WEDIN....... (WAHLST........SYLVIA......_ _ _ (RUNT).............NILSON...... (HUNT).........WILSON.... .._ _ (BANNISTER)........WINCHELL...._ (HUNT).........WILSON......_ DISTRICT 5 STAFF: -- SYL VESi£R...�C (HART).........COX......... BROWN........ ,� (HART).........STRAUSS..... ANDERSON—._ (STANTON)......ROTH....... . CLARKE...... CLAWSON....._ DISTRICT 6 OAWE;.......JC ---- FILECCIA.... (GREEN)........WANNER... ..._ _ _ HODGES...... (HART).........PLUMMER....._ _ _ KYLE........ (STANTON)......ROTH........_ _ _ LINDER...... OOTEN... .... DISTRICT 7 STREED........ -- VON LANGEN (BARRERA)......SMITH......._ _ _ WINSOR.... .. (KENNEDY)......EDGAR......._ _ (YOUNG)........GRISET......_ _ (STANTON)......ROTH........_ (AGRAN)........SHERIDAN...._ _ (COX)..........STRAUSS....._ (GREEN)........WANNER......_ OTHERS: WOODRUFF... .1,1� DISTRICT 11 TOE.... ....._ ANWAR....... (SILVA)........MAYS........_ _ _ DEMIR....... (BANNISTER)....:IINCHELL....� FLEMING..... (ROTH).........STANTON..... HOHENER..... HOUGH....... DISTRICT 13 HOWARD...... -- HUNT........ (BIGONGE R).....WEDAA......._ _ _ KNOPF....... (HUNTER).......PICKLER....._ _ _ LINDSTROM..._ (STANTON)......ROTH........ LYNCH....... (SARRERAI......SMITH....... STONE....... (ISLES)........'IEDIN......._ _ _ WASON....... DISTRICT IA YOUNG....... (MILLER).......SWAN........_ (EDGAR)........KENNEDY....._ (STANTON)......ROTH........_ _ _ (AGRAN)........SHERIDAN...._ _ (BARBERA)......SMITH....... 05/11/89 COUNTY SANITATION DISTRICT NO. 1 OF ORANGE COUNTY, CALIF RNIA MINUTES OF ADJOURNED REGULAR MEETING June 1, 1989 - 5:30 p.m. 10844 Ellis Avenue Fountain Valley, California Pursuant to adjournment by the Secretary of the adjourned regular meeting of May 17, 1989, the Board of Directors of County Sanitation District No. 1 of Orange County, California, met in an adjourned regular meeting at the above hour and date. The Chairman called the meeting to order at 5:49 p.m. The roll was called and the Secretary reported a quorum present. DIRECTORS PRESENT: Robert Hanson, Chairman, Dan Griset and Ronald B. Hoesterey DIRECTORS ABSENT: Roger R. Stanton STAFF MEMBERS PRESENT: J. Wayne Sylvester, General Manager, Rita J. Brown, Secretary, Thomas M. Dawes and Gary G. Streed OTHERS PRESENT: Thomas L. Woodruff, General Counsel �.: Update on long-range financial The General Manager reported that in program and consideration of 1984 District 1 modified its long-range amendments to existing sanitary financial plan. This plan established sewer service charges one-time sewer connection fees for new development to finance facilities expansion, and a supplemental user fee to make up a shortfall in ad valorem tax revenues and provide the additional financing necessary for both operations and maintenance as well as major facilities rehabilitation. The financial plan was adopted after considerable study to avoid projected short and long-range funding shortfalls in revenues required to finance the Dlstrict's operating and capital expenses, which are escalating due to the rising cost of meeting environmental and public health standards established by state and federal regulatory agencies. Mr. Sylvester then reviewed the current fee schedules of the District, as follows: Single-Family Multi-Family Commercia/Industrial/ Fee Type Residential Residential Governmental/Other One-time Connection $1,500 per $1,500 per $300 per 1,000 sq. Fee dwelling unit dwelling unit ft. of building Annual User Fee $34.32 per $20.60 per $24.57 per 1,000 sq. dwelling unit dwelling unit ft. of building -1- 6/01/89 DISTRICT 1 He further reported that the Districts all have a separate industrial user fee billed annually by the Districts for users that place a higher demand on the Districts' sewerage system. In 1986 the Board also elected to issue $24,700,000 in Certificates of Participation (COP's) in concert with Districts Nos. 2 and 3 to partially finance District 1's share of joint treatment works construction and to purchase additional equity in the joint treatment works to reflect the new flow-based joint works equity formula. The Acting Director of Finance then reviewed the District's financial projections for the next ten years. Based upon the Facilities' Master Plan and the Financial Plan recommendations contained in the 30-year "Action Plan" now under consideration by the Joint Boards, District No. 1 will exhaust its capital funds as soon as 1990-91. The 'Action Plan" recommends that the District' s share of the treatment plant construction and trunk sewer construction be financed by combination of borrowing (i .e. , COP' s) and increased connection fees. Debt retirement and escalating operating and maintenance costs would be paid by annually Increasing the supplemental user fees. He noted that in 1988-89 the District had increased the user fees by 30% to finance District activities. Staff's recommendation for 1989-90 is for another 30% increase. However, in the next few years the user fees may have to escalate at an accelerated pace to maintain the District' s financial integrity. However, there are several unknowns that may have a major impact on the District' s cash flow requirements. Staff reported that a considerable portion of the District's major funding shortfalls are for capital financing. Staff' s projections assume that all construction projects proceed on schedule. Thus, the estimates can be considered "worst case" scenarios. However, the Districts continue to experience delays in major projects because of SCAQMD requirements. Further delays in these projects would also delay, or at least spread out, the need for capital funds. It was also pointed out that, conversely, as the Directors were aware, if the secondary treatment waiver is not renewed in 1990, the Districts' capital needs will increase substantially. All projections currently being submitted to the Directors assume the renewal of the Districts' 301(h) waiver permit. Mr. Streed explained the District's cash flow projections were based on several assumptions. Scenario 2 of the "Action Plan", which recommends continuation of the current treatment levels under the 301(h) waiver, is the staff' s preliminary preferred alternative recommendation. It represents the minimum probable level of construction, operation and maintenance costs. For the first five years of the planning period, the differences between Scenarios 2 and 3 (full secondary treatment) would not be significant. Additional flow and sewer connection assumptions are also consistent with the Master Plan. With regard to connection fees, the Master Plan Financial Plan recommends a change in the method of determining connection fees. The recommended change, which Mr. Streed indicated was incorporated in the cash flow projections, is to Include the cost of future facilities on a per-unit basis. The reason for including these costs is that the Districts currently operate near capacity and any new flow will require new facilities. He noted that a determination would be made by the Board after a decision is made on the permit renewal application and any revised connection fees would probably be effective October 1, 1989, when the residential connection fee is projected to be $2,260 under Scenario 2. -2- 6/01/89 DISTRICT 1 He further reported that over the next 10 years COP-type borrowing totaling $80 million is projected to be needed to meet joint works treatment and District �..: sewer capital requirements. He indicated that a more detailed analysis would be performed and presented to the Directors before any debt is issued. The cash flow projections are for several small issues on the theory of borrowing as little as possible and only when absolutely necessary. All issues are assumed to be at a fixed rate of 8%.for 20 years. It was pointed out that the Health and Safety Code permits user fees to repay debt; and as the only controllable source of revenue for the District, they are projected for use to repay the necessary new debt. Existing debt continues to be repaid from capital funds. The Board then entered into a general discussion of the District's financial situation and the alternatives for funding the District's needs. Directors questioned whether any of the other Sanitation Districts were in a position to loan money to District 1 rather than issue debt certificates. Staff reported that based on recommendations included in the Financial Plan of the new Master Plan, all of the Districts will have to go into the debt market. A desire to minimize. borrowing and to build District reserves by other means was also expressed. The General Manager then reviewed the draft ordinance included with the agenda material which increases the supplemental user fees, as follows: Single-Family Multi-Family Comnercia/Industrial/ Fee Type Residential Residential Governmental/Other Annual User Fee $45.00 per $27.00 per $32.00 per 1,000 sq. �...� dwelling unit dwelling unit ft. of building Staff reported that no change in the connection fee schedule was recommended at this time. After a final decision is made by the Boards regarding the NPOES Permit renewal , staff will present their recommendations to the Board relative to increasing the connection fees. The Directors commented that they would prefer to increase the connection fees gradually and build a reserve for their future facilities' requirements. Mr. Sylvester reiterated that the recommended change in the policy for computing connection fees would increase the fee from $1,500 to $2,260. Thereafter, the connection fee would probably increase 5% annually based an the construction cost index. He added that those projections are based on the assumption of Scenario 2, continuing with the current level of treatment. If the Boards choose to go to Scenario 3, full secondary treatment, the current fee would increase to $2,500. Staff assured Directors that the connection fees would be escalated annually to keep pace with Inflation. Actions re proposed Ordinance No. 112 First readin of Proposed Moved, seconded and duly tarried: Ord No. 11 That proposed Ordinance No. 112, An Ordinance of the Board of Directors of County Sanitation District No. 1 of Orange County, California, Amending Ordinance No. 109 Establishing Sanitary Sewer Service Charges and Repealing Ordinance No. 111, be read by title only; and, FURTHER MOVED: That reading of said ordinance in its entirety be, and is hereby, waived. Following the reading of Ordinance No. 112 by title only, it was moved, seconded and duly carried: -3- 6/01/89 DISTRICT 1 That Ordinance No. 112, An Ordinance of the Board of Directors of County Sanitation District No. 1 of Orange County, California, Amending Ordinance No. 109 Establishing Sanitary Sewer Service Charges and Repealing Ordinance No. 111, be introduced and passed to second reading on June 14, 1989, at 7:30 p.m., at the Districts' administrative office. Makin findin that adoption of Following a verbal report by the rdinance No. 112 1s cote oricall General Counsel , it was moved, elines exempt per CEQA Gui seconded and duly carried: That the Board of Directors hereby finds that adoption of Ordinance No. 112 is categorically exempt per California Environmental Quality Act (CEQA) Guidelines Section 15273, in that the Ordinance establishes fees for operation and maintenance expenses of the District. Adjournment Moved, seconded and duly carried: That this meeting of the Board of Directors of County Sanitation District No. 1 be adjourned. The Chairman then declared the meeting so adjourned at 6:14 p.m. , June 1, 1989. Secretary, Bp rd of Directors County Sanitation District No. 1 of Orange County, California -4- STATE OF CALIFORNIA) ) SS. COUNTY OF ORANGE ) Pursuant to California Government Code Section 54954.2, I hereby certify that the Agenda for the Adjourned Regular Board Meeting of District No. % held on k , 19 P'J was duly posted for public inspection at the main lobby of the District's offices on Q.CD , 1911. IN WITNESS WHEREOF, I have hereunto set my hand this au0� day of 19 Rita J. Brown, Secretary of the Board of Directors of County Sanitation District No. I of Orange County, California