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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 ************************** 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 —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 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. -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 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: —3— 6/01/89 DISTRICT 1 ~.- ..~‘ 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 0 0 0 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, -4- 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. ~,I,~ 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