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HomeMy WebLinkAboutMinutes 1988-03-17 COUNTY SANITATION DISTRICT NO. 6 OF ORANGE COUNTY, CALIFORNIA MINUTES OF ADJOURNED REGULAR MEETING March 17, 1988 - 2:30 p.m. 10844 Ellis Avenue Fountain Valley, California Pursuant to adjournment of the regular meeting of March 9, 1988, the Board of Directors of County Sanitation District No. 6 of Orange County, California, met in an adjourned regular meeting at the above hour and date. The Chairman called the meeting to order at 2:30 p.m. The roll was called and the Secretary reported a quorum present. DIRECTORS PRESENT: James Wahner, Chairman, Philip Maurer, Don R. Roth DIRECTORS ABSENT: None STAFF MEMBERS PRESENT: J. Wayne Sylvester, General Manager, Rita J. Brown, Secretary, Thomas M. Dawes, Gary G. Streed, W. N. Clarke OTHERS PRESENT: Clark Ide, Conrad Hohener, Phil Stone * * * * * * * * * * * * * * * * * * Review of Master Plan of Trunk The Director of Engineering reviewed the Sewer System status of the District' s sewer rehabilitation program and its Master Plan of trunk sewers. He reported that the joint Districts currently have approximately $120 million worth of new facilities in the construction phase at the two treatment plants. An additional $186 million worth of projects are under design. County Sanitation District No. 6, which includes most of the City of Costa Mesa, portions of the City of Newport Beach and unincorporated territory, owns 5% capacity in the joint works facilities and shares in the cost of said facilities in proportion to that capacity. The northerly half of District No. 6 drains to existing sewers which roughly parallel the San Diego Freeway and are tributary to the Fountain Valley Reclamation Plant. The southerly portion of the District drains to facilities in Pacific Coast Highway jointly owned with District No. 5 and are tributary to the Huntington Beach Treatment Plant. Districts 5 and 6 have had a systematic program of rehabilitating the Coast Highway Trunk Sewer system for several years which will be completed in 1989. The backbone of the sewer system which serves the northerly portion of the District was acquired from the Federal Government in 1955. These trunks, called the "Air Base" trunks, were built by the U.S. Army, circa 1943, to serve the old Santa Ana Army Air Base and were dedicated at no cost to the Sanitation District. These sewers are in poor condition and staff estimates that they have a maximum expected remaining life of 10 years. 03/17/88 District 6 I , In 1960 District No. 6 participated in the construction of the Gisler-Redhill O jj Trunk Sewer system with County Sanitation District No. 7 and has an ownership of 5% of the capacity in that- system. The District owns a total capacity of about d 7.5 mgd to serve the northerly portion of the District while future requirements H are estimated to be 15 mgd. Conrad Hohener, representing Boyle Engineering Corporation, District' s engineers, then reviewed the results of Boyle's preliminary Master Plan studies relative to facilities required to serve the needs of northerly District 6. He also reviewed the previously-approved proposal to prepare a joint study combining the needs off District No. 6 with those of Districts Nos. 7 and 14° Mr. Hohener indicated that k ! by sharing in the Project Report and the construction of joint sewage conveyance facilities with Districts 7 and 14, District 6 would realize approximately a 50% savings in the cost of their needed facilities. A new sewer between the Fountain p Valley Plant and Baker Street at Fairview Road was previously estimated to cost the District $7 million. However, a much more economical alternative for replacement of the old Air Base lines would be for District No. 6 to participate ' Iui with Districts 7 and 14 in the new Baker-Gisler Interceptor Sewer. Districts Nos. 7 and 14 must construct the new conveyance facilities from their recently-built Main Street Pump Station to the Joint Treatment Works at Plant No. 1. Routing the sewers through the northerly portion of Sanitation District No. 6 would allow them to participate in that project. Sharing capacity ownership of the joint facilities with Districts 7 and 14 would reduce the l estimated cost from $7 million to approximately $1.4 million for District No. 6. Sharing construction costs of a larger conveyance facility is a much more economical way of obtaining the necessary capacity. In addition to the joint project, District 6 must parallel lines also built in O 1942 and 1943 by the Army in Fairview Road from Baker Street to Wilson Street, ati ' an estimated cost of about $2.3 million. Mr. Hohener reported that the City of Costa Mesa and the Costa Mesa Sanitary District had participated in the selection process relative to the recommended Hi' route of the new line. They studied 17 different proposed route combinations. It was pointed out that the proposed facilities will meet all Master Plan criteria of the City and Sanitary District. HA The General Manager advised that an adjourned meeting date would be set in the next four to six weeks for Districts 6, 7 and 14 to meet to consider the joint r! conveyance facilities. 4i Update on long-range financial The General Manager reported that in program and consideration of 1983 the Board modified their long-range amendments to existing sanitary financial program and implemented a sewer service charges supplemental user fee to make up the ', ! shortfall of ad valorem tax revenues and N provide the additional financing necessary for both operations and maintenance 34I costs as well as major facilities' rehabilitation. User fees are charged to all 'ka properties connected to the sewer. Funds for facilities' expansion are currently '0 provided from connection fees on new development paid by the developer. J, -2- '„G !r _03/17/88 District 6 During the public workshops and the hearing held in 1983 to present the District's proposed user fee program to its constituents, the public was advised that the initial user fee schedule was expected to increase substantially (77%) in the second year (1984) of the program to cover rising costs, and then remain at the increased level for several years. However, the District was able to delay any increase in both the connection fee and supplemental user fee until 1986 due to a significant decline in inflation rates and receipt of favorable bids on various District and Joint Works construction and rehabilitation projects, all of which reduced District expenditures below anticipated levels. In 1986 changes in land use restrictions and the taxable status of major properties in the District resulted in lower ad valorem revenues (to pre-1984-85 levels) and necessitated increases in the District' s fee structure to maintain the financial integrity of the capital and operating funds. Based on further projected shortfalls, the Board previously directed staff to plan an increase of 10% per year in the supplemental user fee (beginning in 1986-87) to help meet the District' s funding needs. The Board has also systematically increased the one-time connection fee to help fund capital expansion requirements. The General Manager then reviewed the current fee schedules of the District, as follows: Single-Family Multi-Family Commercial /Industrial / Fee Type Residential Residential Governmental /Other One-time Connection $1,500 $1,500 $300 per 1,000 sq. Fee ft. of building Annual User Fee $31.68 per $18.02 per $22.68 per 1,000 dwelling unit dwelling unit sq. ft. of building Mr. Sylvester further advised that staff' s financial projections continue to reflect financial shortfalls, particulary in the capital accounts. Projections indicate that District No. 6 will exhaust its capital funds as soon as 1989-90, and the Board will have to determine to how to best finance the District' s share of the treatment plant construction and the trunk sewer construction. The Acting Director of Finance then reviewed three alternative proposals for the Board' s consideration which could provide funding to finance the District' s needs. Each financial scenario was based on different assumptions. The first reflected the annual 10% increase in supplemental user fees over the next ten years, as previously directed by the Board, and the current connection fee schedule. Although connection fee rates will continue to rise as the cost of constructing sewage facilities escalates, connection fee revenues will be inadequate for financing all of the District' s capital needs. This scenario reflects a funding deficit in 1989-90 of $2,040,000.00. He further reported that one financing alternative would be the issuance of $9 million of Certificates of Participation. The certificates would provide sufficient funding to cover the District' s sewer replacements required in the northerly portion of the District as well as the joint works projects for rehabilitation/reconstruction and increased levels of treatment. Retirement of the certificates would be made by further increasing the supplemental user fee to $52.28 in 1989-90 and 20% annually thereafter to pay the annual debt service of $880,000. It was pointed out that at the end of a ten-year period, the District would have a capital fund balance of $4.1 million but their outstanding debt would be almost $15 million. -3- 03/17/88 District 6 Another alternative would be to not issue debt certificates but to raise the annual user fee by an amount basically equivalent to what the debt service would be and to use those fees directly for capital needs. Mr. Streed indicated that the advantage of this alternative is that at the end of the ten-year period, the € capital fund balance is relatively close to what it would be if Certificates of Participation were issued, but the District would not be faced with an ! I outstanding debt of $14,960,000. The disadvantage is that the cash is not received "up front" in the early years when it is projected to be needed for ''I'rj = capital projects. The Directors then entered into a discussion of the various alternatives available to them to provide the necessary funding to meet the District's future Ilf" needs. Staff pointed out that all of the projections assume that all construction projects proceed on schedule. However, the Districts continue to experience delays in major projects, such as the Central Power Generating System, because of South Coast Air Quality Management District (SCAQMD) requirements. Further delays in this $53 million project, of which District 6' s share is $2.7 million, would also delay when capital funds need to be raised. The +" Districts hope to receive the necessary SCAQMD permit for the Central Power ' I Generating project by July. In addition, the consulting engineers will have provided preliminary information by then on the updated Master Plan for the Joint Works that will be incorporated into the new budgets. Because of the major ! N impact of the Joint Works capital projects on Distict 6' s cash flow and overall funding needs, staff recommended that consideration of any major changes to the F! I District's long-term financial plan be held in abeyance until some of the unknowns were better focused. No change in the connection fee schedule was I ! r mme as current fee the b cost reco nded the nt pays basic of sewerage system capacity for new development. I il, The General Manager reviewed the draft ordinance included with the agenda material increasing the supplemental user fees by 10% in 1988-89, as previously directed by the Board, as follows: Iry , . Single-Family Multi-Family Commercial/Industrial Fee Type Residential Residential Governmental /Other ';r, Annual User Fee $34.85 per $20.92 per $24.95 per 1 ,000 sq. ft. I'i!I'I ' dwelling unit dwelling unit of building Mr. Sylvester observed that the projections clearly indicate that the Districtf ' - would soon have to accelerate the user fee increases and with that in mind, 145 ! ' � reported that staff had drafted a user fee structure providing for a 20% increase f ' in supplemental user fees to better offset future projected shortfalls and P ,' I provided it to the Board for their consideration, as follows: Vie ! Single-Family Multi-Family Commercial /Industrial � i 1 Fee Type Residential Residential Governmental /Other f ' Annual User Fee $38.02 per $22.82 per $29.94 per 1,000 sq. ft. dwelling unit dwelling unit of building ,,I° � I a { -4- r, 9 ,Fry 5Ib ' 03/17/88 -District 6 Following further discussion it was the concensus of the Directors that it was in the District's best interests to adopt the 20% increase to help maintain the District's fiscal integrity. The Directors also discussed possible revisions to Schedule A of proposed Ordinance No. 612 in order to be consistent with Districts 1, 5 and 11 ordinances relative to adjustment of any inequities in connection with condominiums and commercial/industrial property. The Directors expressed their desire to eliminate these sections from the proposed new ordinance. First reading of proposed It was moved, seconded and duly Ordinance No. 612 carried: That Ordinance No. 612, An Ordinance of the Board of Directors of County Sanitation District No. 6 of Orange County, California, Amending Ordinance No. 609 Pertaining to Sanitary Sewer Service Charges, be read by title only; and, FURTHER MOVED: That reading of said entire ordinance be, and is hereby, waived. Following the reading of Ordinance No. 612 by title only, it was then moved, seconded and duly carried: That Ordinance No. 612, An Ordinance of the Board of Directors of County Sanitation District No. 6 of Orange County, California, Amending Ordinance No. 609 Pertaining to Sanitary Sewer Service Charges, be introduced, as amended by the Board, and passed to the second reading on April 13, 1988, at 7:30 p.m. , at the District' s administrative office. Adjournment Moved, seconded and duly carried: That this meeting of the Board of Directors of County Sanitation District No. 6 be adjourned. The Chairman then declared the meeting so adjourned at 3:08 p.m. , March 17, 1988. Secretary, Board of Directors County Sanitation District No. 6 of Orange County, California -5- a- o • • • I certify that the minutes of the adjourned regular meeting of County Sanitation District No. 6 of Orange County, California, on March 17, 1988, reporting the actions of said District, are a true and correct report of said minutes. (Jairman rd of Directors of County itation District No. 6 of Orange County, California Secretary, Board of Directors of County Sanitation District No. 6 of Orange County, California 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 1 , 19 8$ was duly posted for public inspection at the main lobby of the District' s offices on l0 19 00 IN WITNESS WHEREOF, I have hereunto set my hand this day of 19 0;r. Rita J. Brown, Secretary of the Board of Directors of County Sanitation District No. 1.0 _ of Orange County, California