HomeMy WebLinkAboutMinutes 1988-03-30COUNTY SANITATION DISTRICT NO.1
OF ORANGE COUNTY,CALIFORNIA
MINUTES OF ADJOURNED REGULAR MEETING
March 30,1988 -4:30 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.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 5:10 p.m.The roll was called and the
Secretary reported a quorum present.
DIRECTORS PRESENT:Ronald B.Hoesterey,Chairman,Dan Griset,
Robert Hanson and Roger R.Stanton
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:Thomas L.Woodruff,General Counsel
and Don E.Smith
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sewer service charges
Update on long—range financial The General Manager reported that in
program and consideration of 1984 District No.1 adopted its
amendments to existing sanitary long—range financial plan.This plan
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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.
Mr.Sylvester advised that the plan has since been modified and he reviewed the
current fee schedule,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 $26.40 per $15.85 per $18.90 per 1,000
dwelling unit dwelling unit sq.ft.of building
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District 1
He further reported that 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 finance District l’s share of joint treatment works construction
for the next three years and to purchase additional equity in the joint
treatment works to reflect the new flow—based joint works equity formula.
Although the annual debt service for the COP’s is approximately $2.3
million,last year the Board decided against an increase in the basic user
fee rate but did direct staff to budget annual increases of 20%for
subsequent years.
Mr.Sylvester further advised that the staff’s financial projections
continue to reflect funding shortfalls,particularly in the capital
accounts.Estimates indicate that District No.1 will exhaust its capital
funds as soon as 1990-91,and the Board will have to make a decision on 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 20%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 sewerage facilities escalates,
connection fee revenues will be inadequate for financing all of the
District’s capital needs.The annual user fee increase will basically cover
only the escalating operating and maintenance costs.This scenario reflects
a capital funding deficit in 1990-91 of $5,091,000 and a projected deficit
in 1996—97 of $29,658,000.
Mr.Streed reported that one source of additional capital funds would be the
issuance of $10 million of additional Certificates of Participation.This
would be sufficient to fund any contemplated District 1 sewer
rehabilitations,as well as the joint works projects for
rehabilitation/reconstruction for the next five years,and would be almost
sufficient for the 10—year planning period.Retirement of the certificates
could be made by further increasing the supplemental user fee by 20%next
year,50%in 1989—90 and 1990-91,and 20%thereafter to pay the additional
annual debt service of $977,000.The projected capital fund balance in 1997
under this alternative would be a negative $3,939,000.Mr.Streed also
reviewed a schedule which provided for an annual 30%increase in the user
fee beginning in 1988—89.The 1997 capital fund balance under this
alternative would be a positive $2,726,000.It was pointed out that under
each of these alternatives,at the end of the 10—year planning period,the
outstanding debt service for the new COP issue would be $17,586,000.When
added to the outstanding debt service for the 1986 issue,the total
outstanding debt in 1997 would be $50,094,000.
A third alternative would be to not issue any additional 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.
Staff pointed out that the advantage of this alternative is that at the end
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District 1
of the 10—year planning period the capital fund balance is relatively close
to the second alternative,but the District is not faced with an additional
outstanding debt of $17,586,000 in 1997.The main disadvantage is that the
cash is not received “up—front”in the early years when the need is
projected for capital funds.
The Directors then entered into a discussion of the various alternatives
available to them to provide the necessary funding to meet the anticipated
needs of the District.Staff pointed out 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.The
General Manager added that the District’s major funding shortfalls are for
capital financing.The projections reviewed by staff 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 such as the Central Power Generating
System because of SCAQMD requirements.Further delays in this $53 million
project,of which District l’s share is $5.5 million,would also delay,or
at least spread out,the need for capital funds.The same is true for other
capital projects.The Districts hope to have a decision on the Central
Power Generating Project from SCAQMD by July.In addition,by July the
consulting engineers will have provided preliminary information on the
updated Master Plan for Joint Works that will be incorporated into the new
budgets.Because of the major impact of the Joint Works capital projects on
the District’s cash flow and overall funding needs,staff recommended that
consideration of any major changes to the District’s long—term financial
plan be held in abeyance until some of these unknowns are better focused.
No change in the connection fee schedule was recommended as the current fee
pays the basic cost of sewage system capacity for new development.
Mr.Sylvester then reviewed the draft ordinance included with the agenda
material which provides for an increase in the supplemental user fees of 20%
in 1988—89,as previously directed by the Board,as follows:
Single—Family Multi—Family Commercial /Ind/
Fee Type Residential Residential Governmental/Other
Annual User Fee $31.68 per $19.02 per $22.68 per 1,000
dwelling unit dwelling unit sq.ft.of building
The General Manager observed that the projections clearly indicate that the
District would soon have to accelerate the user fee increases and with that
in mind,reported that staff had drafted a user fee structure providing for
a 30%increase in supplemental user fees for the Board’s consideration as
the accelerated schedule would better offset future projects and funding
shortfalls.If this schedule were adopted,it would increase the fees
beginning in 1988—89 as follows:
Single—Family Multi—Family Commercial/Indust.
Fee Type Residential Residential Governmental/Other
Annual User Fee $34.32 $20.60 $24.57
Following further discussion it was the concensus of the Directors that it
was in the District’s best interest to adopt the 30%increase to help
maintain the District’s fiscal integrity.
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03/30/88
District 1
First reading of proposed It was moved,seconded and duly
Ordinance No.111 carried:
That Ordinance No.111,An Ordinance of the Board of Directors of County
Sanitation District No.1 of Orange County,California,Amending Ordinance
No.109 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.111 by title only,it was then moved,
seconded and duly carried:
That Ordinance No.111,An Ordinance of the Board of Directors of County
Sanitation District No.1 of Orange County,California,Amending Ordinance
No.109 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.
Adiournment 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
5:42 p.m.,March 30,1988.
0
Secretary,Boar of Directors
County Sanitation District No.1 of
Orange County,California
0
I certify that the minutes of the adjourned regular meeting of County
Sanitation District No.1 of Orange County,California,on March 30,1988,
reporting the actions of said District,are a true and correct report of said
minutes.
*
Chairman ~—
Board of Directors of County
Sanitation District No.1
of Orange County,California
Secretary,Board of Directors of
County Sanitation District No.1
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 ~3c~
,was
duly posted for public inspection at the main lobby of the
District’s offices on ‘,19~~
IN WITNESS WHEREOF,I have hereunto set my hand this
_____
day of ~&)~-c4~.
,19~.
cz~z~
Rita 3.Brown,secretary of the
Board of Directors of County
Sanitation District No.
____
of Orange County,California