HomeMy WebLinkAboutMinutes 1989-06-01COUNTY SANITATION DISTRICT NO.1
OF ORANGE COUNTY,CALIFORNIA
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
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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 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 then reviewed the current fee schedules of the District,as
follows:
Single—Family Multi—Family Comercia/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
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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 system0
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 l’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 a
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 requl rements.
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 Districtst 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.
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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 reconi~endations 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 Cormiercia/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 recomended at
this time.After a final decision is made by the Boards regarding the NPDES
Permit renewal,staff will present their reconinendations to the Board relative to
increasing the connection fees.The Directors comented that they would prefer
to increase the connection fees gradually and build a reserve for their future
facilities’requirements.Mr.Sylvester reiterated that the recomended 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
on 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 reading of Proposed Moved,seconded and duly carried:
Ordinance No.112
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:
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That Ordinance No.1129 An Ordinance of the
Sanitation District No.1 of Orange County.
No.109 Establishing Sanitary Sewer Service
No.1119 be introduced and passed to second
7:30 p.m.,at the Districts’administrative
Making finding that adoption of
Ordinance No.112 is categorically
exempt per CEQA Guidelines
Board of Directors of County
California,Amending Ordinance
Charges and Repealing Ordinance
reading on June 14,1989,at
off I ce,
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.
~r~fDirector~~Secreta
County Sanitation District No.1 of
Orange County,California
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Following a verbal report by the
General Counsel,it was moved,
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,
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I certify that the minutes of the adjourned regular meeting of County
Sanitation District No.1 of Orange County,California,on June 1,1989,
reporting the actions of said District,are a true and correct report of said
minutes.
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CWai rman
Board of Directors of County
Sanitation District No.1
of Orange County,California
Secretary,Boar 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 ~\,19~was
duly posted for public inspection at the main lobby of the
District’s offices on ~~,19~j.
IN WITNESS WHEREOF,I have hereunto set my hand this
_____
day of _________________,19i~.
Rita J.Brown,Secretary of the
Board of Directors of County
Sanitation District No.I
of Orange County,California