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HomeMy WebLinkAbout98.12-13-2017 Administration Committee Meeting ONLINE Agenda Item 8 Attachment - OCSD Rate Study Report Final.pdf G��NjV SANIT,gro� � � O = 9 c ¢ n o \ � A h 9oTFCT�NG Nv\PO���2 THE E Orange County Sanitation District Cost of Service Rate Study and Financial Analysis Final Report and Recommendations on Wastewater Rates, Fees, and Charges December 2017 COST OF SERVICE STOOYI REPORT I ORANGE COUNTY SAN RATION DISTRICT Contents 1 Introduction 1-1 1.1 Purpose 1-1 1.2 Scope of Work and Deliverables 1-1 1.3 Project Findings and Recommendations 1-2 1.4 Background 1-2 1.5 Project Drivers 1-2 1.6 Organization of this Report 1-3 2 Baseline Data and Assumptions 2-1 2.1 System Profile and Planning Assumptions 2-1 2.2 Cost Allocation Data 2-4 3 Revenue Requirement and Financial Forecast 3-1 3.1 Revenue Requirement Analysis 3-1 3.2 Cash Flow and Debt Coverage Tests 3-2 3.3 Reserve Fund Test 3-3 3.4 Recommended Revenue Requirements 3-5 4 Cost of Service Analysis and Rate Design 4-1 4.1 Revenue Needs Forecast 4-1 4.2 Functional Cost Allocation 4-2 4.3 Unit Cost Calculation 4-5 5 Peer Rate Survey 5-1 5.1 Results of Peer Agency Survey 5-1 5.2 Public School Rate Alternatives 5-4 6 Capital Facilities Capacity Charge 6-1 6.1 Approach 6-1 6.2 Methodology 6-2 6.3 Capital Facilities Capacity Charge Calculation 6-3 6.4 Supplemental Capital Facilities Capacity Charge 6-4 7 Miscellaneous Fees 7-1 7.1 Wastehauler Fees 7-2 8 Rebate Procedures Review 8-1 4wcarolw- DECEMBER20171 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT 8.1 Background 8-1 8.2 Preliminary Findings 8-1 8.3 Recommended Rebate Calculation Changes 8-1 8.4 Recommended Administrative Changes to the Rebate Program 8-3 9 Findings and Recommendations 9-1 Appendices Appendix A Use Codes and Rate Sheet Tables and Figures Figure 1 OCSD Service Area and Cities 1-2 Table 1 OCSD FYE 2017 and FYE 2018 Sewer Service Charges and Industrial Rates 2-1 Table 2 Projected Residential and Commercial EDUs 2-2 Figure Historical and Forecasted Tributary Flows(MGD) 2-3 Table 3 Projected Influent Flow 2-4 Table 4 Projected BOD Loads 2-4 Table 5 Projected TSS Loads 2-4 Table Functional Cost Allocation Categories and Percentages—O&M 2-5 Table 7 Functional Cost Allocation Categories and Percentages-Capital 2-6 Table 8 Projected Revenues and Expenses with Revenue Increases 3-3 Table 9 Reserve Balance Objectives 3-4 Table 10 Reserve Balance Forecast 3-5 Figure 3 Step-by-Step Approach to Cost of Service and Rate Design Process 4-1 Table 11 FYE 2019 Revenue Needs Forecast 4-2 Table 12 Cost Allocation Percentage Bases 4-3 Table 13 Cost Allocation Results 4-4 Table 14 Unit Cost Calculation of FYE 2019 Rates 4-5 Table 15 Five-Year Rate Recommendation 4-5 Table 16 Summary of Public School Survey of Agencies Error!Bookmark not defined. Equation 1 Overview of Capacity Charge Calculation 6-2 Table 17 Capital Facilities Capacity Charge Cost Summary 6-2 Table 18 Capital Facilities Capacity Charge Calculations 6-3 Table 19 Proposed Capital Facilities Capacity Charge Smoothing Schedule 6-3 �Carol1l0" DECEMBER 20171 ii COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT Table 20 Supplemental Capital Facilities Capacity Charge Calculation 6-4 Table 21 Supplemental Capital Facilities Capacity Charge Calculation 6-5 Figure User Fee Calculation Methodology 7-1 Table22 Wastehauler Treatment Charge Calculation 7-2 Table 23 Cost to Administer and Process Manifests Submitted by Wastehaulers 7-3 Table 24 Administration and Processing Charge per Unit Flow from Wastehaulers 7-3 Table 25 Outside Wastehauler Capital Fee 7-4 Table 26 Total Wastehauler Fee 7-4 Table 27 Wastehauler Fee Phase-In 7-4 Figure 5 Historical Per Person Flow,BOD,and TSS 8-1 Table 28 Flow Rebate Recommended Alternatives 8-2 Figure Non-Residential Rebates Submitted from FYE 2012 to 2017 8-3 4wcarolw, DECEMBER 20171 iii COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT Abbreviations AF Acre foot/Acre feet,IAF=435.6 CCF,326,000 gallons AFY Acre foot per year AWWA American Water Works Association Brine Line Inland Empire Brine Line,administered by SAWPA(previously referred to as the Santa Ana Regional Interceptor,or SARI,line) BOD Biochemical oxygen demand Carollo Carollo Engineers,Inc. CFCC Capital Facilities Capacity Charge CIP Capital Improvement Plan COP Certificate of Participation Cy Calendar Year District Orange County Sanitation District EDU Equivalent dwelling unit.Aunit of measure for comparing a parcel's wastewater demand relative to a typical single-family dwelling unit. Flow Influent or effluent flow of wastewater from the District's treatment facilities Fiscal Year Ending.The District's fiscal year runs from July 1 to June 30. FYE is the FYE calendar year in which the fiscal year ends(i.e.FYE 2017 covers the fiscal year ending June 30,2017). GPCD Gallons per capita/person per day GPD Gallons per day I&I Inflow and infiltration IRWD Irvine Ranch Water District Ml Manual "Principles of Water Rates,Fees,and Charges: Manual of Water Supply Practices Ml,"published by AWWA MFR Multifamily Residential MG Million gallons MGD Million gallons per day mg/L Milligrams per liter _ O&M Operations and Maintenance OCSD Orange County Sanitation District PAYGO Pay-As-You-Go Capital Funding SAWPA Santa Ana Watershed Project Authority _ SFR Single Family Residential Customer Sq.Ft. Square feet TSS Total suspended solids WEF Water Environment Federation 4w carolw, DECEMBER 20171 1-1 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT 1 Introduction 1.1 Purpose Orange County Sanitation District(District or OCSD)retained Carollo Engineers, Inc., (Carollo)to conduct a five- year financial review and cost of service rate study(Study)for the District's rates,fees,and charges,covering fiscal years ending(FYE)2019 through 2023.The Study evaluated the District's wastewater utility revenue needs, and developed sewer service rates and wastewater capital facilities capacity charges to equitably distribute costs among utility customers.This report outlines the baseline assumptions,methodologies used,and recommendations and results of Carollo's analysis. 1.2 Scope of Work and Deliverables The District outlined a scope of work for Carollo's analysis that covered several important topics and key deliverables. 1.2.1 Project Tasks Allocation of Unit Cost Expenditures recalculation of its fees for connecting to the District's system.These fees are calculated based on OCSD has historically allocated costs to itsthree the projected funding needs forthe next several chief treatment criteria—Flow, Biochemical Oxygen decades,and the corresponding customer growth Demand(BOD),and Total Suspended Solids(TSS). projections,and help fund past and future capital Each of the District's costs can be allocated in part projects. or in whole to these three categories,and the subsequent cost allocationsform the basis of Rebate Process Review individual rates fordistinct parcel types. The District maintains a rebate process for Carollo's analysis has reviewed the District's commercial customers able to provide evidence that operations and maintenance budget(O&M),capital their actual demand(typically based on water improvement plan(CIP),current plant-in-service, consumption)deviates from the District's adopted and debt service to allocatethe District's cost rate ordinance use code assumptions.Each use type drivers to these three treatment constituents. has an estimated flow and loading associated with it. If a customer is able to show that their system Five-Year Financial Projection usage is belowthese estimates,the District provides Carollo reviewed the District's proposed FYE 2018 a rebate for that portion of the flow. operating budget and ClP,and tested the Over the last several years,the historic statewide reasonableness of the District's rates to cover these drought has resulted in substantially reduced flows funding needs.Where needed,revenue adjustments across OCSD's service area.Subsequently, are recommended. numerous commercial customers have applied for Capital Facility Capacity Charges Calculation and received rebates by showing their reduced potable water bills—typically on the order of 20 The District is concluding a Facilities Master Plan percent or greater belowthe District's estimates. that outlines needed capital projects throughoutthe This trend has had a substantial financial impact on collection system and the two treatment plants. the District,spurring the need for a review of this With this new data for needed facilities upgrades, process. repairs,and rehabilitation,the District is initiating a 4w carolw, DECEMBER 20171 1-1 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT Public School Fee Review reassess estimates for flow and loadings by parcel The District requested that Carollo review the use type.This report includes data analysis results current rate structure for public schools.The District and recommendations for updated use type currently charges public schools by school district, estimates. based on average daily attendance(ADA).Private Miscellaneous Fee Calculation schools,colleges,and some other educational The District requested that Carollo review and institutions are billed based on 1,000 square feet, validate various miscellaneous fees for service. like all of OCSD's other commercial customers. Many of these fees cover permitting applications, Carollo has reviewed the efficacy of this rate such as waste hauler and fats,oils,and grease structure and has collected data on methods used (FOG). by peer agencies. Use Code and Loading Factor Review Rate Survey To provide additional context and comparison, Related to the District's request to review the rebate Carollo has developed a rate survey of peer process, Carollo is also reviewing the District's agencies.While every agency has different assumptions for flow and loadings for each parcel operational,capital,and funding circumstances that use type.This has been an ongoing process,and is should be considered,a rate survey is useful for concurrent with other efforts at the state level to identifying effective rate structure alternatives. 1.3 Project Findings and Recommendations Based on the analyses performed for this rate study,Carollo recommends the following: • Increase the regional user rate 1.2 percent,from$331.00 to$335.00 per equivalent dwelling unit(EDU)in FY 2019. • Following the FY 2019 adjustment,it is recommended that OCSD implement additional annual adjustments of 1.2 percent for the subsequent four years(through FY 2023). • Over the proposed five-year recommendation,update the industrial rates based on unit costs developed though this analysis. • In line with staff recommendations,during the forecasted period,the District is projected to draw upon available reserves, reducing reserves to its policy target levels.This approach is recommended to avoid larger annual rate increases.As the District anticipates reducing reserve levels to fund continued capital investment,all recommendations should be reviewed and updated periodically to confirm continued compliance with the District's Reserve Policy. • Wastewater customers may request a rate adjustment by providing water consumption records that demonstrate lower sewer discharge levels than defined without the District's ordinance(Ordinance No. OCSD-41).The District should consider implementing a loadings criteria(sampling)for rate adjustments, ratherthan merely basing the adjustment on water meter information.This would require the customer to perform and pay for discharge sampling and provide the District with results prior to a rate charge adjustment.The current District ordinance allows sampling information to be required under Article 11— Section 2.03B. • Over five-year period,it is recommended the District increase the residential Capital Facilities Capacity Charge(CFCC)from$3,855 to$5,719 per EDU,and increase the commercial-industrial CFCC from$2,000 to$3,639 per 1,000 square feet by FY 2023. • Over a five-year period,gradually increase the Supplemental Capital Facilities Capacity Charge to $0.001996 per gallon,$0.481 per lbs.of BOD,and$0.271 per lbs.of TSS by FY 2023. CAS••^ DECEMBER 201711-2 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT • Adjust the fee rebate program to require that flow and loadings data be provided by applicants in order to receive a rebate on the full fee.Otherwise,applicants that only provide flow data should only be rebated on the flow portion of their fee. • Additional recommended changes to the rebate program include implementing a flow reduction threshold in order to process an application,and setting a lower flow assumption for parcels with significant square footage. 1.4 Background 1.4.1 About Orange County Sanitation District Formed in 1948, OCSD provides wastewater collection,treatment,and -- disposal for approximately 2.6 million residents and businesses in central and northwest Orange County.OCSD is a special district that is governed by a Board of Directors consisting of 25 board members .® appointed from 20 cities,two sanitary districts,two water districts,and one representative from the Orange County Board of Supervisors.The _ \ District's service area spans 479 square miles,and includes nearly 400 miles of pipes and 15 pump stations to convey wastewater to its two ®� wastewater treatment/reclamation plants,which collectively treated approximately 188 million gallons per day(IAGD)in HE 2017.The A District also treats flow and loadings from Irvine Ranch Water District and the Santa Ana Watershed Project Authority. Since the last rate study review, in 2016,OCSD transferred 176 miles of local sewers serving parts of Tustin and the unincorporated area of Figure 1 OCSD Service Area and Cities Orange County to East Orange County Water District. 1.5 Project Drivers Financial Feasibility First,the rate study can be useful to affirm revenue requirements,and test if current rates will meet funding needs(both operational and capital).This analysis uses a multi-step approach to test the resiliency and feasibility of the rate structure,looking at cash flow,reserve balances,and bond coverage. Legal Compliance Second,cost drivers change over time and it is necessary to regularly revisit the allocation of costs to specific rate elements.The District periodically initiates cost of service analyses,typically every three to five years,in order to review the alignment of costs with rates and charges.In the State of California,water and wastewater agencies must establish rates in accordance with the substantive requirements defined by California Constitution Article XIII D,Section 6,commonly referred to as Proposition 218.Therefore,when cost drivers change,OCSD must test the reasonableness of the current rates for each customer. In light of the requirements of Proposition 218,the goal of this report and the underlying analysis is therefore twofold: 1. Outline the nexus of costs with the corresponding rates and fees that fund those costs 2. Discuss the strategic goals and initiatives supported by the District's rates and fees 4wcarolw, DECEMBER 20171 1-2 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT While this document does not establish any legal opinions on behalf of either Carollo or OCSD,the analysis in the study has been conducted based on the review and interpretation of these stated legal guidelines,as well as relevant case law. 1.6 Organization of this Report This report is organized into seven chapters in orderto address each of the District's scope items forthis project. • Baseline Data and Assumptions • Revenue Requirements and Financial Forecast • Cost of Service Analysis and Rate Design • Peer Rate Survey • Capital Facilities Capacity Charge • Miscellaneous Fees • Rebate Procedures Review Each chapter builds on analyses and inputs from prior chapters,but is intended to address each scope item in a standalone section. 4w carolly, DECEMBER 20171 1-3 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT 2 Baseline Data and Assumptions 2.1 System Profile and Planning Assumptions 2.1.1 Current Rate Approach The District's equivalent dwelling unit(EDU)approach provides a straightforward basis for assessing charges for wastewater service.Users are billed a flat wastewater service charge based on the property-use classification maintained by the County Assessor.The District maintains a listing of average flow and wastewater strength discharges for each property type,which is used to develop the user rates.The single-family residential(SFR)user rate is based on typical flow and loadings for an average 3-bedroom home and serves asthe base rate to calculate rates for other users.Multi-family residential users are charged 70 percent per unit of the SFR rate.Commercial and the majority of industrial users are charged a percentage of the SFR rate as specified in the Fees and Charges Ordinance,Ordinance No.OCSD-41.These use factors are based on the average flow and strength characteristics for the type of property,charged on a 1,000-square-foot basis.Users with unusually high flows and/or strength of wastewater, known as"Permit Users;'pay individually calculated charges, based on measured wastewater flows and strengths.The District currently has 114 different residential and commercial use code rates,which are outlined in the appendix of this report. 2.1.1.1 Current Rates The full rate schedule is outlined in the appendix of this report,with the annual rate per EDU for each use code summarized.The baseline SFR rate that is adjusted based on the appropriate EDU factor is$331 annually for FYE 2018,up from$327 and$322 in FYE 2017 and FYE 2016. Permitted dischargers that have flows and loadings inconsistent with any standard use code—typically industrial dischargers with a unique effluent profile—are billed on a unit constituent basis. For FYE 2018,flow is billed at $1,377.56 per million gallons,while BOD and TSS are billed at$654.79 and$696.47 per thousand pounds, respectively. Table 1 OCSD FYE 2017 and FYE 2018 Sewer Service Charges and Industrial Rates Rate FYE 2017 FYE 2018 Residential Annual Service Charges SFR(1 EDU)m $327.00 $331.00 MFR(0.7 EDU) 228.90 231.70 Class I and 11 Permittee and Special Purpose Discharge Permittee Rates Flow(per MG) 1,361.09 1,377.56 BOD(perthousand lbs.) 646.96 654.79 TSS(perthousand lbs.) 688.15 696.47 Notes: (1) Commercial rates are scaled based on the EDU factor for a given use type,and the building square footage.The use codes and corresponding El are found in the appendix. 4Wcarolw, DECEMBER20171 2-1 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT 2.1.2 Equivalent Dwelling Units An EDU is an industry standard method of developing rates and fees for wastewater service.An EDU measures the relative demand of a parcel of a given use type compared with a single-family residential parcel,taking into account the flow,BOD,and TSS demands of a typical parcel of that use type.EDUs for commercial customers are expressed in 1,000 square feet. In FYE 2018,OCSD began the year with approximately 925,000 residential and commercial EDUS,with approximately 2,700 additional EDUs projected by the end of the year. Modest growth of 0.3 percent annually is projected through the study planning horizon.In addition,the District has approximately 45,000 industrial EDUs. No growth is projected.The five-year forecast of EDUs is outlined in Table 2. Table 2 Projected Residential and Commercial EDUs Residential 527,867 529,451 531,039 532,632 534,230 535,833 Added EDUs 1,584 1,588 1,593 1,598 1,603 1,607 Commercial EDUs 394,316 395,499 396,686 397,876 399,069 400,266 Added EDUs 1,183 1,186 1,190 1,194 1,197 1,201 Subtotal 924,950 927,725 930,508 933,300 936,099 938,908 Industrial EDUs 44,981 44,981 44,981 44,981 44,981 44,981 Added EDUs - - - - - - Total 969,931 972,706 975,489 978,281 981,080 983,889 2.1.3 Flow and Loadings Projections 2.1.3.1 District Service Area California has experienced significant drought over the past five years.While winter 2017 brought higher than average precipitation throughout the state,residents and businesses have been slow to reverse the substantial conservation efforts that were undertaken.In many areas of California,water demand fell by more than 30 percent.While most of that conservation occurred outdoors,wastewater flows were similarly affected. In 2005, the District's two plants treated a combined 244 MGD on average from the OCSD service area';by 2014,influent flow had fallen by nearly 20 percent to 198 MGD,followed by an additional 5 percent the next yearto 188 MGD. This decrease was in spite of service area population growth of approximately 87,000 people(4 percent)over those ten years.Based on these factors,household gallons per person per day(GPCD)fell from 100 GPCD in 2005,to 75 GPCD in 2015. Going forward,the OCSD service area population is expected to grow modestly,at 0.5 percent annually through 2020,and then slower at 0.3 percent beyond that.Additional conservation is expected,decreasing influent flows by 0.5 percent annually, and bringing GPCD down to 70 GPCD by 2022. 'Excludes any flows from IRW D or SAWPA 4wcarolw, DECEMBER 20171 2-2 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT 250 200 EMMESM a5o f 3 3 aoo So 000 h 00 1 001 H 00 h 00 h 00 006 h 0, H 00�H Pe h 010 0H1 0M1M1 h 01 P->-H 01 H 0"� h 01^ 0"�h 0"0'h oh0 h oh 1 oHH 1 0H h off H0h h h H M1 h h ■Historica l Tributary Area Flow ■Forecasted Tributary Area Flow Figure 2 Historical and Forecasted Tributary Flows(MGD) Despite the ongoing drop inflow,total pounds of BOD and TSS have remained relatively consistent and have not shown a discernible trend either up or down.Therefore,the current pound per day observation remains unchanged and reflects an overall increase in concentrations. 2.1.3.2 IRWD and SAWPA Flows from IRW D have declined sharply in recent years,due to additional recycled water treatment capacity at IRW D facilities. In 2008, IRW D conveyed over 10 MGD of raw sewage flows to OCSD facilities,but conveyed only 4 MGD the following year.In 2015, IRWD raw sewage flows had fallen to 2 MGD.In addition to the raw sewage flows, IRW D conveys sludge to OCSD facilities.However,due to additional solids handling facilities projected to be completed in late 2017, IRW D will soon no longer send sludge to OCSD. No change to BOD or TSS is expected from the raw sewage flow. SAW PA sends wastewater flows from the Inland Empire region to OCSD facilities for treatment in order to protect Orange County's groundwater resources.SAWPA's brine line primarily delivers concentrated byproducts from groundwater desalter facilities, but also carries wastewater discharge from several Inland Empire wastewater agencies.SAW PA has contracted 17 MGD of treatment capacity at OCSD facilities,and may discharge up to 30 MGD into the brine line. Influent flows have held relatively consistent,at an average of 11 MGD over the last decade,and are projected to grow modestly in the years ahead. 2.1.3.3 Urban Runoff OCSD also takes and treats drainage diversion flows from 19 local diversion systems within the OCSD service area.For 2015,average flow was 1.5 MGD.BOD and TSS loads from this flow are minimal and assumed to be negligible for any projections. 4w carolw, DECEMBER 2017 12-3 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT Table3 Projected Influent Flow OCSD 168.4 167.6 166.7 165.8 164.6 163.5 IRWD 5.5 5.7 5.9 6.1 6.3 6.5 SAWPA 13.0 13.5 14.0 14.5 15.0 15.9 Urban Runoff 2.4 2.8 3.3 3.7 4.1 4.5 Total 189.4 189.6 189.8 190.1 190.0 190.3 Table4 Projected BOD Loads •�E . 1 �� F F �� OCSD 435,267 437,309 439,3 1 441,391 442,650 443,902 IRWD-Raw Sewage 11,468 11,857 12,261 12,677 13,633 14,096 IRWD-Sludge 37,000 18,000 SAWPA 5,244 5,484 5,723 5,963 6,186 6,408 Total 488,978 472,650 457,334 460,031 462,468 464,406 Table 5 Projected TSS Loads OCSD 487,714 490,002 492,290 494576 495,987 497,390 IRWD-Raw Sewa a 13,761 14,229 14,713 15,213 16,254 16,807 IRWD-Sludge 71,000 36,000 - - - - SAWPA 12,585 13,161 13,736 14,311 14,845 15,379 Total 585,060 553,392 520,739 524,100 527,087 529,576 2.2 Cost Allocation Data The purpose of a cost of service analysis is to provide a rational basis for distributing the full costs of the District's utility service to each class or customer in proportion to the demands they place on the system.Detailed cost allocations help determine the degree of equity that can be achieved in the design of the resulting unit rates.This analysis yields an appropriate method for allocating costs,which could be sustained unless substantial changes in cost drivers or customer discharge patterns occur. The Functional Cost Allocation apportions the annual revenue requirement for a select test year by major function of the utility. For the District,the primary functions are related to flow,BOD,and TSS.These function cost pools include the system's existing operations and maintenance(O&M)expenditures,debt service,and rate- funded capital costs. It is necessary to allocate costs to billable constituents that can be both measured at the treatment facilities and estimated or measured for each user.O&M expenditures and the capital cost for each project were assigned to 4wcarolw, DECEMBER 20171 2-4 COST OF SERVICE STOOYI REPORT I ORANGE COUNTY SAN RATION DISTRICT each associated billable constituents:flow and strength(BOD and T55).The District applies separate allocations for O&M and capital costs in order to more accurately reflect appropriate cost relationships.This process allows the District to recover a proportionate share of capital and O&M costs from each user through the annual user rate based on flow and loading discharges. Although,the wastewater system has undergone significant change,the unit process allocations presented in the 199E Determination of Financial Rates and Charges Report are still applicable and provide a strong foundation for establishing cost-of-service based rates.Atthe time of this study,the District conducted an extensive review of the District's costs and respective relationship to flow,BOD, and T55.Foreach cost category(e.g.,collection and diversion),a defined percentage share of those costs are allocated to flow, BOD,and TS5.Overtime,the expenditures associated with each cost category change, butthe percentage allocationsto billable constituents should remain consistent.The allocation percentages for O&M are presented in Table 6 and the allocations for capital costs by unit process are presented in Table 7.The percentages vary slightly between O&M and capital to reflect the differences in design,sizing,and operational criteria. In particular,the allocations for the primary and secondary sedimentation categories differ between O&M and capital allocations because operating costs are driven by different functions than the capital costs. Table6 Functional Cost Allocation Categories and Percentages—O&M Collection jr.,90% 5% 5% Interplant 90% 5% 5% Headworks 75% 5% 20% Primary Sedimentation 15% 25% 60% Activated Sludge Process 100% Oxygen Activated Sludge Process 100% Blower Equipment and Structures 100% Aeration Equipment and Structures 100% Trickling Filters 100% Secondary Sedimentation 100% Sludge Thickening 25% 75% Digestion 25% 75% Solids Handling 25% 75% Solids Disposal 45% 55% Effluent Disposal 100% 4wcarolw, DECEMBER20171 2-5 COST OF SERVICE STUDYI REPORT I ORANGE COUNTY SAN RATION DISTRICT Table7 Functional Cost Allocation Categories and Percentages-Capital Collection 90% 10% Interplant 90% 10% Headworks 75% 5% 20% Primary Sedimentation 30% 70% Activated Sludge Process 100% Oxygen Activated Sludge Process 100% Blower Equipment and Structures 10D% Aeration Equipment and Structures 100% Trickling Filters 100% Secondary Sedimentation 70% 30% Sludge Thickening 25% 75% Digestion 25% 75% Solids Handling 25% 75% Solids Disposal 45% 55% Effluent Disposal 100% 4wCarallo, DECEMBER 20171 2-6 COST OF SERVICE STOOYI REPORT I ORANGE COUNTY SAN RATION DISTRICT 3 Revenue Requirement and Financial Forecast 3.1 Revenue Requirement Analysis The revenue requirement analysis determines the amount of rate revenue needed in a given year to meet a utility's expected financial obligations.Three separate tests must be met in order for rates to be sufficient: 1. Cash Flow Test:Annual utility revenues must be adequate to meet general cash needs(operating expenses) 2. Bond Coverage Test:AnnuaIrate revenues must satisfy debt coverage obligations on Certificates of Participation(COPS) 3. Reserve Test: End of year reserve balances must meet minimum balance requirements Revenues must be sufficient to satisfy all three tests. If revenues are found to be deficient through one or a combination of tests,then the greater deficiency(shortfall)drivesthe rate increase.With the exception of the bond coverage test,the District could electto limitthe revenue adjustments,however,the bond coverage is a legal obligation. 3.1.1 Operational Funding Sources and Needs 3.1.1.1 Revenue Sources User Rates User rate revenue is the District's largest source of revenue,totaling approximately$291.2 million budgeted in HE 2018.By FYE 2023,user rate revenue is projected to be$294.9 million,assuming no adjustments to the current rates. Capital Facilities Capacity Charges Capital Facilities Capacity Charges(CFCCs)are a one-time charge imposed on new development or expansion of existing users that increase demand on the system.They provide for equitable cost recovery of growth related costs.Based on the projected growth, CFCC revenue is expected to increase from$9.9 million in FYE 2018 to $11.2 million in FY 2022(with assumed annual inflationary adjustments). Tax Revenues The District received approximately 21 percent of its total budgeted revenue for FYE 2017,or$93.7 million, in property tax revenue from Orange County.This source of revenue has grown beyond projection in recent years as the economy and housing market has recovered.The previous rate analysis assumed that property tax revenue would not surpass$90 million until HE 2021,chiefly due to the severe impact that the economic recession had on Orange County and surrounding regions.Based on input from staff,the forecast assumes continued 5 percent annual growth in its property tax revenue. Debt Financing Based on the on-going update to the District's Master Plan,the forecasted CIP is focused on rehabilitation and replacement(R&R)projects primarily,which the District intends to fund mostly through a mixture of direct rate funding and use of reserves.Consequently,the District does not anticipate issuing additional debt during the forecast period of this analysis. 4wcarolly, DECEMBER 20171 3-1 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT The District has contractual covenants within the existing COP indenture agreements,which require minimum coverage ratios of 1.25 times.The coverage ratio is calculated as the ratio of net annual revenues available for debt service payments to total annual debt service requirements.The District is projected to maintain a minimum bond coverage ratio of 2.3 over the forecast period. 3.2 Cash Flow and Debt Coverage Tests The cash flowtest identifies projected cash requirements in each given year.Cash requirements include O&M expenses,debt service payments, policy-driven additions to working capital,miscellaneous capital outlays, replacement funding,and rate-funded capital expenditures.These expenses are compared to total annual projected revenues.Shortfalls are then used to estimate needed rate increases. The bond coverage test measures the ability of a utility to meet legal and policy-driven revenue obligations. Given the District's existing debt obligations, it is required to collect sufficient funds through rates to meet all ongoing O&M expenses,as well as 1.25 times the total debt-service requirements due in a year.The coverage factor is set by policy in orderto maintain the District's current bond rating.As the District continues its pay-as- you-go capital-replacement cycle,the bond coverage test will not be a driver of rate increases. ccaroOv- DECEMBER 20171 3-2 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT Table 8 Projected Revenues and Expenses with Revenue Increases r r r r r r Operating Revenues General User Fees $306.2 $307.0 $307.8 $308.7 $309.6 $310.6 Permitted User Fees 12.9 12.9 12.9 12.9 12.9 12.9 IRWD O&M and Solids 10.4 10.8 11.1 11.5 11.8 12.2 Assessments SAWPA Assessments 3.3 3.4 3.5 3.6 3.7 3.8 Interest Revenues 8.3 8.6 8.9 9.2 9.5 9.8 Subtotal $341.1 $342.7 $344.2 $345.9 $347.6 $349.3 Non-Operating Revenues Property Taxes $93.7 $98.3 $103.3 $108.4 $113.9 $119.5 Capital Facilities Capacity 9.9 10.2 10.5 10.9 11.2 11.6 Charges Other Non-Operating 8.1 10.5 15.7 16.1 24.8 24.5 Revenues al IRWD Capital Assessment 5.4 5.5 5.7 5.9 6.1 6.3 Total Revenues $458.2 $467.3 $479.5 $487.2 $503.6 $511.3 O&M $166.9 $161.9 $167.1 $172.5 $178.0 $183.7 CIP 154.9 179.9 183.6 261.7 317.0 333.0 Debt Service 82.0 80.5 80.0 76.0 72.5 72.5 Other Funding Requirements(2) 3.6 2.4 2.4 2.4 2.4 2.4 Total Revenue Requirements $407.4 $424.7 $433.0 $512.6 $569.8 $591.5 Cash Flow $50.7 $42.6 $46.4 $(25.4) $(66.3) $(80.2) Debt Service Coverage(3) 3.4x 3.7x 3.8x 4.0x 4.3x 4.4x Notes: (1) All figures are in million dollars.No revenue increases are included in these figures. (2) Includes equity purchases from RA-7 and/or RA-14,and share of SFl requirements. (3) Calculated as revenues,less CFCC revenue and O&M,divided by debt service. 3.3 Reserve Fund Test The reserve test is met through the cash flow test in many instances if reserve funding is included as a policy- driven expense.Nonetheless,it is helpful to consider this test separately,given the complex funding needs an individual agency maintains,including capital,operating,and rate stabilization reserves as examples.The District 4wcarollo, DECEMBER 20171 3-3 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT maintains several reserve funds to support its capital programs,enable consistent funding of operations and maintenance,and respond to unexpected funding needs,such as emergency repairs. Table 9 outlines the reserve fund targets with each individual policy objective delineated,and ccaroOv- DECEMBER 20171 3-4 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT Table 10 forecasts the District's end of year reserve balances. For FYE 2018,the District must maintain a minimum reserve balance of$530.5 million at the end of the fiscal year. Based on the results of the cash flow analysis,and accounting for capital project funding and revenue from the CFCC,the District is projected to exceed its reserve balance objective by$53.0 million.The District is projected to fall short of its reserve targets without any revenue increases. Table9 Reserve Balance Objectives 111010HAM Cash Flow Reserve 50%Operating Expenditures $83.5 $81.0 $83.6 $86.2 $89.0 $91.8 100%Next Year AUG COP Svc. 82.0 80.5 80.0 76.0 72.5 72.5 Operating Contingency - - - - - - 10%Operating Expenditures 16.7 16.2 16.7 17.2 17.8 18.4 Capital Improvement Reserve - - - - - - 50%Annual Average CIP 117.8 122.8 128.5 134.0 141.0 143.0 Self-Insurance 57.0 57.0 57.0 57.0 57.0 57.0 Debt Service Reserve - - - - - - 10%of Outstanding COPS 100.5 96.6 92.5 88.7 85.1 81.4 less: Reserve for Debt - - - - - - Retirement Repl& Refurb @ 2%/yr 66.0 67.3 68.6 70.0 71.4 72.8 Total Reserve Funds Target $523.4 $521.3 $526.9 $529.2 $533.8 $536.9 Notes: (1) All figures are in million dollars. 4w carolly, DECEMBER 20171 3-5 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT Table 10Reserve Balance Forecast Beginning Reserve Balance $535.3 $586.0 $628.6 $675.0 $649.6 $583.4 CFCC Revenue 9.9 10.2 10.5 10.9 11.2 11.6 Capital Funding (154.9) (179.9) (183.6) (261.7) (317.0) (333.0) Cash Flow from O&M 195.7 212.3 219.5 225.5 239.5 241.1 End of Year Balance $586.0 $628.6 $675.0 $649.6 $583.4 $503.1 Over/(Under)Target $62.6 $107.3 $148.1 $120.4 $49.6 ($33.8) Notes: (1) All figures are in million dollars. 3.4 Recommended Revenue Requirements Based on the review of the three financial tests,the District is projected to collect sufficient revenue to fund operations and capital in the near-term.With modest inflationary increases of 1.2 percent annually,the District will be above the aggregate reserve targeted amount through FYE 2022,and is projected to fall slightly under by $33.8 million,or 6.3 percent,in FYE 2023.This will be the starting point in future cash flow and sewer rate analyses. 4wcarolw, DECEMBER20171 3-6 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT 4 Cost of Service Analysis and Rate Design The rate design analysis takes a four step approach,building off of the financial forecast and baseline data •Define the annual revenue that must be recovered from user inputs discussed above.The first F rates and permit users. step—Revenue Needs Forecast— has largely been completed,and forms the basis of the Functional •Determine the percentage allocation of O&M and capital costs Cost Allocation and Unit Cost to the billable constituents(flow, BOD,and TSS),based upon Calculation processes. the existing allocation methodology. 4.1 Revenue Needs Forecast Section3ofthis report outlined -Develop unit costs for each billable constituent by dividing the total cost allocated to that constituent by the total wastewater much of the data that will be used in flow or loadings of that constituent. this step.The revenue needs are the amount of revenues that must be - - �- recoveredthroughuserratesand .Develop rates for each customer category by applying unit costs permit user charges in orderto to estimated flows and related loadings for each category. cover annual expenditures, less any offsetting revenues. Figure Step-by-Step Approach to Cost of Service and Rate Design Process Offsetting revenues can include interest earnings,IRW D and SAWPA payments,and other non-operating revenues.Expenditures and offsetting revenues forthe forecast period are presented in Table 11.The 1.2 percent revenue increase recommended in the prior section is included in the Policy Driven Rate Increases/(Decreases)line item. 4wcarollo, DECEMBER20171 4-1 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT Table 11 FYE 2019 Revenue Needs Forecast Expense Item F On oin O eratin Ex enses Operating Expenses $172.3 Other Operating Expenses Self-Insurance 2.8 Debt Service 80.5 Bond Coverage(above Cash Flow Needs) - Policy Driven Rate Increases/(Decreases) 192.7 Less Off-Setting Revenues Revenuesfrom other Districts and Urban Runoff (10.8) Other Operating Revenues (10.7) Non-Operating Revenues (96.7) Intra-District Revenues - Local Sewer Operating Revenue (0.01) Self-Insurance (2.8) Total Revenue Needs $327.3 For FYE 2019,the District must raise$327.3 million in rate revenue to meet the revenue needs forecast.This target will be allocated to each of the unit constituents of the rate and form the basis of the rate calculation. 4.2 Functional Cost Allocation Table 12 outlines the District's four primary cost allocation categories.The percentage allocation of treatment expenditures was based upon an analysis of the District's unit process expenditures and the allocation of each line item expense to one of the unit processes presented in Table 6.For instance,expenses related to preliminary treatment at Plant#1 were allocated to the Headworks category,with 75,5,and 20 percent of those costs allocated to flow, BOD,and TSS, respectively.The final treatment expenditures percentages in Table 12 are the average of these expense allocations,weighted based on the magnitude of the cost. Plant-in-service is also a weighted allocation, based on the District's land,systems, and other assets. For instance, the collection and treatment systems,the effluent and solids disposal assets,and other system assets are included in this allocation. The CIP category is based on an allocation of the District's capital projects among flow,BOD, and TSS, based on the factors outlined Table 7.Like the treatment expenditures,each project was matched with the appropriate unit process of the OCSD system and allocated accordingly,weighted by total cost. A fourth allocation category is included in the cost allocation factors. "As All Others"is used for expenses and projects that do not benefit a single or majority unit process and affect multiple processes,or they are used for administrative or other departments such as IT that cannot be easily allocated across the three primary factors. At the end of the cost allocation process,these costs are reallocated based on the results of all other cost drivers. carollo, DECEMBER 20171 4-2 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT Table 12 Cost Allocation Percentage Bases Allocation Item Novi BOD TS5 Treatment Expenditures 26.7% 29.7% 43.6% Plant-in-Service 34.0% 29.9% 36.1% 20 year CIP 34.9% 29.3% 35.7% All Others 31.9% 31.9% 36.2% Compared with the results of the previous rate study completed in 2013,the treatment expenditures are mostly unchanged(25,31,and 44 percentto flow,BOD,and TSS, respectively,in 2013),while the CIP and plant-in- service have shifted from BOD to more TSS-driven projects and costs.More projects in the latest capital plan are dedicated tothe sludge thickening,digestion,and solids handling and disposal processes,which have a larger allocation to TSS. 4wcarolw, DECEMBER 20171 4-3 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT Table 13 Cost Allocation Results �LYS2S��aLW'1'� :a r Ongoing Operating Expenses Operating Expenses 172.3 27% 30% 44% As Treatment Expenditures Other Operating Expenses 0% 0% 0% Self-Insurance 2.8 34% 30% 36% As Plant-in-Service New Debt Service - 35% 29% 36% Total CIP Existing Debt Service 80.5 38% 41% 21% 2013 Debt Service Weighting Miscellaneous Capital 35% 29% 36% As CIP Replacement Funding - 34% 30% 36% As Plant-in-Service Rate Funded Capital Improvements - 35% 29% 36% Total CIP Bond Coverage(above Cash Flow Needs) 35% 29% 36% Total CIP Policy Driven Rate Increases(Decreases) 192.7 34% 30% 36% As Plant-in-Service Less Off-Setting Revenues Revenuesfrom other Districts and Urban (10.8) 0% 0% 0% As all others Runoff Other Operating Revenues (10.7) 0% 0% 0% As all others Non-Operating Revenues (96.7) 0% 0% 0% As all others Intra-District Revenues 0% 0% 0% As all others Local Sewer Operating Revenue (0.01) 0% 0% 0% As all others Self-Insurance (2.8) 0% 0% 0% As all others Total(with"As All Others"reallocated) 327.3 104.4 104.3 218.6 Percentage Total 31.9% 31.9% 36.2% - Notes: (1) All dollarfgures are In millions. The District's O&M operating costs are largely driven by TSS(44 percent),and then BOD(30 percent),while flow related costs take a much larger portion of allocated capital and plant-in-service line items.The overall resulting allocation of 32,32,and 36 percent to flow, BOD,and T55,respectively, represents a noticeable shift compared with the previous cost of service study(36,33,and 31 percent, respectively to flow, BOD,and T55). As discussed above,this largely due to a shift in capital spending needs into the future,with more capital projects planned supporting functions directly related to T55 removal,such as secondary sedimentation,solids handling and disposal,and digestion,rather than more BOD or flow oriented processes,such as primary sedimentation, headworks,or activated sludge processes. �carolw, DECEMBER 2017 1 4-4 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT 4.3 Unit Cost Calculation Taking the allocated costs to flow, BOD,and TSS from Table 13,the unit cost calculation assigns a unit cost to each of those three categories based on the projected demand for the year.The results of this calculation are found in Table 14. Table 14 Unit Cost Calculation of FYE 2019 Rates • a Cost Allocation(millions) $104.4 $104.3 $118.6 Annual Demand 66,000 MG 162,0001bs. 155,900 lbs. Unit Cost $1.58 per 1,000 gallons $0.64 per lb. $0.76 per lb. Unit Demand per EDU 185 GPD 288 mg/L 290 mg/L Annual Demand per EDU 67,500 gallons 162.5 lbs. 163.3 lbs. Annual Charge per EDU $106.69 $103.99 $124.09 Total Annual Charge per EDU $335.00 Permittee Rate $1,580 $640 $760 per MG perthousandlbs. perthousandlbs. The projected rates forthe next five years are outlined in Table 15.The per EDU rate increases by 1.2 percent, while the flow, BOD,and TSS permittee rates change by 15, -2,and 9 percent,respectively.While new rates have been calculated for permittees,the District may elect to phase-in the rate change in order to prevent rate shock as it has done in previous years.The rates in Table 15 outline the forecasted ratesthrough FYE 2023. Table 15 Five-Year Rate Recommendation r r rt t r t SFR/1 EDU $331.00 $335.00 $339.00 $343.10 $347.20 $351.40 Flow($/MG) 1,377.56 1,580.00 1,599.30 1,618.61 1,637.91 1,657.22 BOD($/1,0001bs.) 654.79 640.00 647.82 555.64 663.46 671.28 TSS($/1,000 Its.) 696.47 760.00 769.29 778.57 787.86 797.14 Notes: (1) All figures are in million dollars. 4wcarollo, DECEMBER 20171 4-5 COST OF SERVICE STUDYI REPORT I ORANGE COUNTY SAN RATION DISTRICT 5 Peer Rate Survey Rate surveys area helpful tool for agencies to stay aware of the latest industry rate trends,and to see how other utilities manage cost recovery.These surveys do have limited usefulness though,and should not betaken as a rate target.Surveyed agencies should be reviewed in the context of unique characteristics such as their service area size,geography and location,age,and system functions.As such,making comparisons against others agencies is challenging and may not reflect OCSD's system characteristics.Regardless,a comparison survey is an important tool to gauge how rates lineup with others. Carollo surveyed seven"peer"agencies in order to provide a reasonable gauge against OCSD's rates.Below is a brief summary of each agency's rate structure and key highlights of system. 5.1 Results of Peer Agency Survey 5.1.1 East Bay Municipal Utilities District EBMUD's wastewater treatment plant provides service for 685,000 people along the eastern shore of San Francisco Bay.Similarto OCSD, EBMUD provides secondary treatment for a maximum flow of 168 million gallons per day(MGD).Primary treatment is provided for up to 320 MGD.Storage basins provide plant capacity for a short-term hydraulic peak of 415 MGD.On average,about 63 million gallons of wastewater is treated daily. EBMUD's wastewater customers are charged monthly.Residential rates are comprised of a fixed service charge, a fixed strength charge,and a variable flow component(per hundred cubic feet or ccf with a max of 9 units).Also, included in the bi-monthly charge are unit treatment rates for chemical oxygen demand filtered(CODf)and total suspended solids(TSS). Currently,for a single family residential(SFR)customer with one equivalent(EDU),an annual service charge is $69.96 and strength charge is$166.20 minimum.Additionally, monthly unit treatment rates are$1.139 perccf (flow),$0.337 per pound of discharge for CODf,and$0.492 per pound for TSS. Non-residential customers are assessed a fixed service charge and a variable rate(per ccf)that varies among 36 different business classifications(similar to OCSD's use codes). EBMUD is able to assess wastewater charges based on water usage as they provide water service in parallel to wastewater service. 5.1.2 San Francisco Public Utilities District SFPUC maintains a 900 mile long combined sewersystem and 17 pump stations that collect sewage and storm water,transfer the wastewater to the three treatment plants for treatment and discharge it to the San Francisco Bay and the Pacific Ocean.While average flow is over 80 MGD,San Francisco is the only coastal city in California with a combined sewersystem that collects and treats both wastewater and stormwater in the same network of pipes—thus it can treat up to 500 MGD during storm events. Similar to EBMUD's rate structure,SFPUC charges water and wastewater fees on a monthly basis.Residential customers'wastewater charges are 100 percent flow based.SFPUC recently transitioned from a two-tiered volumetric structure to a uniform rate.Non-residential customers are grouped,based on a Standard Industrial Classification(SIC)code, into one of twelve SIC groups.Wastewater service charges are calculated by multiplying water consumption by an assigned flow factor.The flow factor is the percentage of metered water use returned to the sewer system as wastewater. 4wcarollo, DECEMBER 20171 5-1 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT For the purpose of determining applicable charges,the percentage of water use returned to the sewers(flow factor)is assumed to be 90 percent for SFR users and non-residential users and 95 percent for multifamily residential(MFR)users. For SFR customers,wastewater rates are based on typical strengths for domestic wastes with all SFR customers designated one dwelling unit per account.Currently,Tier 1 SFR customers have a maximum of four discharge units where a discharge unit equals one ccf.The annual Tier 1 charge per discharge unit is$148.80 per dwelling unit with a typical customer using 3 ccf per month. 5.1.3 Eastern Municipal Water District EMWD provides wastewater services to approximately 239,000 customers within its service area and currently treats approximately 43 million gallons per day of wastewater at its four active regional water reclamation facilities,through 1,813 miles of sewer pipelines. EMWD is a water and wastewater provider and thus bills on a monthly basis in coordination with water usage. EMWD's rates are comprised of two charges,a rate fixed monthly charge for capital projects and a fixed daily service charge per EDU. EMWD has several service areas each with a different daily service rate.Annual service rates per EDU plus fixed sewer charge per EDU are as follows for SFR customers that are served and billed by EMWD:Area 1 is$321.56,Area 2 is$329.59,Area 3 is$331.78,Area 4 is$376.31,and Area 5 is$428.50. Residential customers are billed in "sewer blocks" based on the number of people in a household and pay a proportionate rate of a standard EDU.The default rate is based on a 3-4 person household. 1-2 person households are charged 70 percent of the full residential rate for the appropriate geographic area,while 5-6 and 7+person household are charged 125 and 170 percent, respectively. 5.1.4 Sacramento Regional County Sanitation District Regional San owns and operates the regional wastewater conveyance system and the Sacramento Regional Wastewater Treatment Plant located near Elk Grove,California.Regional San's contributing agencies include the Sacramento Area Sewer District and the cities of Folsom,Sacramento and West Sacramento.These agencies collect and channel wastewaterto Regional San's interceptor pipelines.Region San serves population of about 1.4 million residents in the region.Approximately 130 million gallons of wastewater are treated each day and discharged to the Sacramento River. SFR customers are charged a flat monthly rate per EDU,and MFR customers are charged per dwelling unit.The Regional San monthly basic rate currently encompasses costs forthe existing treatment and conveyance process as well asthe costs for permit-mandated upgrades.Each SFR is charged an annual flat rate of$432 per EDU. Commercial customers are charged per adjusted EDU factors stemming from 43 categories and are based on Region San-specific loading factors.The commercial categories are charged on a square footage basis, station/stall basis,and other similar measures based on the type of business. 5.1.5 City of Sacramento The City of Sacramento provides wastewater service to more than 75,000 customers in the portion of the city that is not served by the Sacramento Area Sewer District.The wastewater system consists of combined sewer pipes which convey wastewater and storm drain runoff in a single pipe,as well as separated sewer pipes forwastewater only. The combined sewer system serves many of the older parts of Sacramento,while the separated sewer system serves the newer sections of the city.The sewage collected in the wastewater system pipes is pumped to a treatment plant in Elk Grove where it is treated and released backto local rivers.The treatment process is 4wcarollo- DECEMBER20171 5-2 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT performed by the Sacramento Regional County Sanitation District and the City of Sacramento collects the charges forth is service on the District's behalf. The City of Sacramento customers are billed monthly and the charge is comprised of the minimum unit charge and service rate.The minimum unit charge is based on water meter size and monthly metered water use per ccf, while the service rate follows an inclining six-block rate structure.For SFR,service rate blocks are based on the number of rooms and,for MFR,each dwelling unit is charged the same as an SFR.Currently,an SFR customer within Bock 3 is charged a$319.68 annual service rate in addition to the minimum monthly metered water use charge of at least$156.96. Commercial rates are a fixed/variable hybrid.The City has a commodity rate per CCF($1.09 for FYE 2018).It also has a minimum monthly charge set for each meter size($22.89 for a 1"meter in FYE 2018),if the customer does not use enough water to meet the minimum monthly charge. 5.1.6 Napa Sanitation District The Napa Sanitation District is located in the Napa Valley and provides wastewater collection,treatment and disposal services to over 80,000 customers in the City of Napa and surrounding unincorporated areas of Napa County.Napa San is an independent special district created by a local community to meet the specific need of wastewater treatment and disposal. It treats an average of 10 MGD of wastewater,and produces recycled water and biosolids for reuse. Napa San charges a fee for connection to the sewer system,and then charges an annual rate for sewer service. These rates and fees vary depending on the type of sewer service connections for customers classified as residential,commercial,or industrial. The sewer service charge is billed annually or monthly for collection and treatment of waste.The charge is based on the typical volume and strength of the wastewater generated by a single family home or EDU,where one EDU is equivalent to 210 gallons of wastewater per day or 76,650 gallons per year,with a strength factor of 1.0. Currently,a single family dwelling with one EDU is assessed$638.10 for an annual sewer service charge. For commercial businesses,the sewer service charge is billed annually based on the gallons of potable water used in the previous year divided by the product of the strength factor,the current rate per EDU,and 76,650 gallons per year.Strength factors are based on the State Water Resources Control Board Revenue Program. For industrial businesses,a permit is required to discharge process waste to the sewers.Industrial users are charged monthly for a minimum of one service unit plus a sewer use fee based on a multiplier for high-strength flows. Biochemical Oxygen Demand(BOD)in mg/L and TSS in mg/L are determined based on a Napa san-specific flow factor,strength factor,and current rate per EDU. 5.1.7 Central Contra Costa Sanitation District Central Contra Costa Sanitary District is a special district responsible for the collection and treatment Of wastewater in a 146 square mile area of central Contra Costa County.Central San collects and cleans an average of 32 MGD of water for over 484,000 residents and 3,000 business. Sewer service charges are billed annually and rates are based on the customer type.The customer groups are residential,commercial/non-industrial,industrial, institutional,and mixed use(parcels with shared water meters). Residential customers are only charged a rate per residential unit,while other customers are assessed an additional minimum annual charge.Currently,the annual SFR sewer service charge is$530.00 per residential unit. Commercial/non-industrial and institutional customers are charged rates per ccf plus their respective minimum annual charge.Industrial customers are charged rates that are fixed,per ccf,or per 1,000 pounds.Mixed use customers are charged rates per ccf plus a minimum annual charge. 4wcarollo- DECEMBER 20171 5-3 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT A prorated portion of the first year's Sewer Service Charge is paid within the connection fee based on the month that the fee is paid(the sewer service year runs from July through June).Subsequent sewer service charges are paid on the county property tax bill. 5.2 Public School Rate Alternatives As part of this survey,Carollo reviewed each agencies approach for billing public schools.As OCSD cannot obtain square footage for the schools from the county assessor,as they do for all other non-residential customers), public schools are assessed based on average daily attendance(ADA).This information is garnered at the school district level and validated by the State.This methodology is only applied to public schools as private schools are assessed a methodology consistent with all other commercial uses.According to the results of the survey,the annual cost per student varies across agencies. However,the ADA methodology for assessing wastewater fees for schools is a very common practice utilized by multiple peer agencies. 4wcarofw- DECEMBER 20171 5-4 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT 6 Capital Facilities Capacity Charge A Capital Facilities Capacity Charge(CFCC)is a one-time fee paid at the time property is developed and connected to the wastewater system.The fees are levied to pay a portion of the District's capacity costs and for access to capacity in the system.Currently,the District has a CFCC of$3,855 per residential unit(three-bedroom) and$2,000 per 1,000 square feet for commercial and industrial users. Under the current industrial use ordinance, additional CFCCs,referred to as Supplemental Capacity Facilities Capacity Charges(SCFCC),can be imposed on industrial users who place larger than average demands on the system.The CFCC is updated periodically to reflect the changes in the value of the wastewater system to which anew customer is connecting. Capacity charges are designed to recover a proportionate share of system capacity costs from future users.The District's system currently has unused capacity that is available to serve future Users. In addition,the District will also continue to maintain, improve,and expand the system with future capital improvements.The CFCC methodology implemented by the District in 2006 only accounted for the benefit that future users will receive from future improvements.Now that many of those projects are completed,Carollo is reevaluating available methodologies. In order to provide the wastewater system capacity and resources to serve these customers,OCSD has constructed some excess capacity within the existing wastewater system and will be further expanding those systems.Consistent with California Government Code§66013, public facilities inexistence at the time a charge is imposed or charges for new public facilities to be acquired or constructed in the future that are of proportional benefit to the person or property being charged.The CFCC,as presented within this report,does not exceed the estimated reasonable cost of providing the service for which the CFCC and SCFCC are being imposed and product provided directly to the payor that is not provided to those not charged. Absent such charges,existing customer would be required to bear the burden of all capital costs,including capacity related costs,through rates.Consequently, new customer would receive the benefit of sewer availability,without themselves paying for that capacity. 6.1 Approach Similar to the District's sewer service charges,the base CFCC is equal to the capital costs required to support the wastewater flow and loadings estimated for an average 3-bedroom single-family residence or per EDU.Other residential rates are calculated relative to this base charge,based upon the assumed flows and loadings. Commercial and industrial CFCCs are calculated in units of CFCC per 1,000 square feet. Permit Users are subject to a supplemental charge based on the expected flows and loadings in excess of the maximum allowed under based commercial/industrial CFCCs.The supplemental charge is equal to the unit costs of flow, BOD,and SS capacity. Permit Users are also subject to increases in CFCCs should flows and/or loadings significantly exceed the amount of capacity previously allocated and paid for,at the same rate as the supplemental charges described above. Pursuantto an agreement with IRWD,IRWD is not required to pay CFCCs.In exchange, IRWD provides funding to the District for the construction costs of certain wastewater collection,transmission,treatment,and disposal facilities to be use by IRWD and is obligated to make certain payment to the District for certain service arising from the wastewater system(including any standby or availability charges). 4w carollo, DECEMBER 20171 6-1 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT 6.2 Methodology Two general types of Capacity Charges are used to recover system costs from new users.There is the system Buy-in(or existing cost basis)approach and the Incremental(or future cost basis)approach.Additionally,utilities can elect to use a hybrid approach that combines these two approaches.The existing CFCC, last evaluated in 2006,was calculated using the future costs basis approach. While all methods are valid,the best approach is dictated by each system's specific characteristics.As the District has both existing capacity and identified capital needs to support future growth,Carollo recommends that the District implement a hybrid approach. For the purposes of this study,the term"buy-in component"shall refer to the value of existing system assets(i.e. facilities already in service)that may be recovered through the capacity charge.The term"future component" shall referto future facilities(i.e.,facilities in the CIP)that may be recovered through the CFCC. The buy-in component of the capacity charge is to be based on replacement cost new less depreciation(RCNLD). Outstanding debt principal and monetary reserves are also accounted for in this cost basis as described below. The future component incorporates the present value(in 2017 dollars)of the District's CIP.Costs are fairly and reasonably spread over both existing and future users by dividing the total system value by the total number of EDUs that are projected to receive service through 2036.The methodology for calculating both the System and Treatment Capacity Charges is illustrated in Figure 2.1 below: Adjusted RCNLD of Existing System+Present Value of Future CIP CFCC = Existing+Future Customers Equation 1 Overview of Capacity Charge Calculation 6.2.1 Buy-In Cost Basis Utilities often construct excess infrastructure capacityto meet projected future demands.The purpose of the buy-in component of the proposed CFCC isto recover costs that have already been incurred by OCSD.Existing customers have paid for this system overtime through their user rates(through direct capital financing or retired debt).The buy-in component of a capacity charge provides a mechanism to reimburse existing system users for the carrying costs of constructing system capacity that is available to be used by future users. There are further considerations when calculating the buy-in component of the capacity charge.Given that the existing system was constructed overtime,the original cost of constructing the system does not accurately reflect its current value northe cost to construct the facilities today.Consequently,Carollo used the replacement cost of the existing system defined in the 2017 Comprehensive Annual Financial Report(CAFR) Replacement costs alone might not be the best estimate of system value,as system assets have a finite lifespan and must be replaced and/or rehabilitated in time. By accounting for accumulated depreciation in the buy-in cost basis,OCSD may recover a proportionate value of capital improvements that will replace depreciated assets or will be undertaken to extend the useful lives of these assets through the future cost component of the CFCC. The existing cost basis should not include costs of assets that were grant-funded or donated and should only include those costs incurred by the District's ratepayers for the development of the existing system.For this reason,contributed assets are removed from the existing cost basis. 41rcaroflo- DECEMBER 2017 1 6-2 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT Finally,the buy-in component is reduced by outstanding debt principal on existing assets net of available reserves.While there is no statutory requirement to do so,Caro Ilo recognizes that customers connecting to the system will pay forth ese assets through the debt service component of their utility rates and therefore deducts outstanding debt principal from the existing cost basis.However,as the District maintains reserves that are essentially assets in the form of cash that could also be used to retire outstanding debt service,reserves are accounted for as a credit against the outstanding debt principal. 6.2.2 Future Cost Basis In addition to the value of the existing system, it is appropriate for the District to recover a proportionate share of future capital improvements that will benefit future customers.Projects included in the District's CI P have two primary purposes—maintain reliability of existing infrastructure and increase system capacity.Existing and future users will benefit generally in the same manner and to the same extent from these projects.As noted above, accumulated depreciation is deducted from the buy-in component of the CFCC.This allows for the inclusion of future rehabilitative and upgrade projects, in order to equitably recover system value from future users and prevent a double counting of assets through the buy-in and future components of the capacity charges. The future cost basis accounts for capital improvements that will be constructed through 2028.The costs of these projects are estimated based on mid-point of construction and stated in future dollars.Costs are brought back to present value terms(2017 dollars)using a 3.5 percent capital discount rate. 6.2.3 Existing and Future Customer Base The CFCC methodology spreads the buy-in and future cost bases over the projected number of EDUs(existing and future)through 2036.Using the same annual growth assumptions as with the 5-year rate forecast,OCSD is expected to add an additional 54,000 EDUs for a total of nearly 1,021,200 EDUS. 6.3 Capital Facilities Capacity Charge Calculation The CFCC is applicable to any new development requiring service or additional treatment capacity within the OCSD's service area.The charge is designed to recover a proportionate share of the capital costs associated with providing wastewater service. 6.3.1 Existing System Cost Basis The cost to buy into the existing system is determined based on the total value of existing assets,net of liabilities (the buy-in cost basis).The following items are included as part of the buy-in cost basis. 6.3.1.1 Value of Infrastructure in Service The infrastructure portions of existing capital assets are valued based on the replacement cost of existing infrastructure, less accumulated depreciation.The District's capital assets were pulled from the latest CAR for the following asset types: • Sewage Collection Facilities • Effluent Disposal Facilities • Sewage Treatment Facilities • General and Administrative Facilities • Excess Purchase Price over Book Value Based On the current infrastructure replacement value and accounting for depreciation,the identified a value of the system is$3.7 billion 6.3.1.2 Adjustments to Value of Water Infrastructure in Service The value of system infrastructure in service is adjusted to account for land value and construction work in progress. 4cca%rlo- DECEMBER20171 6-3 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT • The value of land owned by the District is added to the value of the existing system. • Construction in Progress is separately tracked and added to the value of the existing system to avoid double counting with the CIP. • Contributed Capital,assets that were not funded by existing users, if applicable,is deducted from existing assets to provide equal footing with existing users. The total value of these adjustments is$515 million. 6.3.1.3 Liability and Asset Related Adjustments The District's outstanding debt principal is deducted from the asset base,as it represents an outstanding liability that will be paid by both existing and future ratepayers through the District's annual rates and charges.As an offset to these deductions,and as applicable,the District's existing cash assets were added back.This approach assumes that the District could retire or defease the outstanding debt with their reserves/cash on hand. Existing cash assets include the following funds: • Debt Service Reserve Fund • Cash Flow Contingency Reserve • Self-Insurance Reserve As of June 30,2016,there are$571 million in total liability and asset related adjustments. 6.3.2 Future System Cost Basis The future system cost basis of the CFCC is based on the preliminary CIP being developed as part of the updated Master Plan and extends through 2038(20-year plan).These CIP projects include a mix of new facilities that will add capacity to existing conveyance and treatment facilities,as well as repair and replace aging infrastructure. Based on the existing information,future CIP accounts for nearly$2.2 billion in costs. 6.3.3 CFCCCalculation The table below summarizes the various inclusions and adjustments related to the development of the updated CFCC.The total value of the system is allocated to billable constituents—flow,BOD,and TSS.This process mirrors the cost allocation previously discussed in section 2.2 . Table 16 Capital Facilities Capacity Charge Cost Summary A RCNLD of Water Infrastructure in Service $3,736 $1,411 $1,549 $775 B Sub-Total of Adjustments $515 $180 $151 $184 C Total Value of Capital Assets(A+B) $4,251 $1,591 $1,700 $959 D Total Liability and Asset-Related Adjustments $(571) $(236) $(300) $(35) E Total Value of Existing Assets Net of Liabilities(C+D) $3,680 $1,355 $1,400 $925 F Infrastructure Related Future CIP Costs $2,210 $772 $648 $789 G Total Value of Existing and Future Assets $5,889 $2,127 $2,048 $1,714 (E+F) Notes: (1) All dollarfigures are In millions. 4wcaroflo- DECEMBER 2017 1 6-2 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT In order to create a more clear and understandable basis, Commercial-industrial CFCCs are recovered on a 1,000 square foot basis rather than an EDU basis.Had this different rate basis not been defined each EDU would equate to roughly 1,571 commercial square feet.The unit costs for each CFCC were developed by dividing the costs for each functional cost category by the number of projected units. Table 17 Capital Facilities Capacity Charge Calculations A Residential Cost Allocation($ Iff $3,214 $1,161 $1,118 $935 B Percent Share ofSystem Value 54.6% 54.6% 54.6% C Total Residential EDUs 562,140 562,140 562,140 D CFCC per EDU $5718 $2,065 $1,989 $1664 E Commercial-Industrial Cost Allocation($M) $2,675 $966 $930 $778 F Percent Share of System Value 45.4% 45.4% 45.4% G Total Commercial-Industrial Square Footage 735,246 735,246 735,246 (1,000 sq.ft.) H CFCC per 1,000 sq.ft. $3,638 $1,314 $1,265 $1,059 The CFCC methodology presented within this report reflects a hybrid approach consisting of both a buy-in and future basis component.The future basis reflects the projected 20-year CIP being developed as part of the updated Master Plan.The presented fees reflect the legal maximum that the District can charge new or expanded connections to the system. Based on the change of methodology and the resulting increases, it is recommended that the CFCC be increased gradually over the five-year rate program.The proposed increases are reflected in the table below. Table 18 Proposed Capital Facilities Capacity Charge Smoothing Schedule SFREDU $3,855 $4,228 $4,601 $4,973 $5,346 $5,719 Commercial EDU $2,000 $2,328 $2,656 $2,983 $3,311 $3,639 Notes: (1) FYE2023CFCCtargetwasmunded up from the calculated values in Table 17. 4wcarolw, DECEMBER20171 6-3 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT 6.4 Supplemental Capital Facilities Capacity Charge As discussed above, permit users that exceed designated flow and loading discharges are subject to a supplemental CFCC.The SCFCC is intended to recoverthe costs of providing capacity tothese customer, not recovered through the initial CFCC that is imposed upon the industrial users at the time it is connected to the wastewater system.The initial CFCC is collected at the time of building permit application,by the local cities and sanitary districts that are tributary to the OCSD system. It is based on the square footage of the new improvements on the site.Given the various agencies and districts and service area,this is the most expeditious wat for both the industry to pay and OCSD to collect the CFCC.However,as the costs that the CFCC is meant to pay for are incurred and accounted based on the flow and strength of the wastewater treated,there has to be an adjustment to reconcile the differences between the levied square footage charge and the actual costs incurred that are related to the flow and strength of the treated wastewater.In addition,industrial users typically have a higher flow and strength wastewater than the initial square footage charge is meant to compensate for.The SCFCC reconcilesthese differences.It is commensurate with a rental rate,in which the user is required to pay an equitable rental charge for capacity used within the system beyond the initial purchased capacity. The alternative would be for each industry to apply directly to OCSD for an up-front CFCC charge based on the anticipated flow and strength of the wastewater that they will discharge into the system.For an industry that has a high flow and/or strength discharge into the system,an up-front fee would not accurately capture the actual impact on the system.Thus,most of the time industry would be either over paying or under paying. The SCFCC allows the industry to only payforthe capacitythey require and to do it on a yearly basis.This makes the charge more accurate and reduces the large up-front cash outlay that would be necessary for a one-time CFCC. The SCFCC is calculated on the same methodology as the CFCC.The District's total value(existing and future)are divided by the total number of EDUs serviced.These costs are then amortized over a thirty-year period at a 5- percent interest rate. Finally,amortized costs are divided by the base flow and loading contributed per EDU.The SCFCC calculation is shown below. Like the CFCC,there is a significant increase overthe current SCFCC and reflects the proposed utilized of hybrid approach. Table 19 Supplemental Capital Facilities Capacity Charge Calculation A Total Value of Existing and Future Assets($M) $5,889 $2,127 $2,048 $1,714 B Total Future EDUs 1,027,038 1,027,038 1,027,038 C SCFCC per EDU $2,071 $1,995 $1,669 (A-B) D 30-Year Amortized SCFCC $135 $130 $109 C amortized at 5%for 30- ears E EDU Basis 185 0.4452 0.4473 -A Ibs/day Ibs/day F SCFCC $0.001996 $0.798521 $0.664784 (D . E . 365) per gallon per lb. per lb. ccaroOo- DECEMBER 20171 6-4 COST OF SERVICE STUOYI REPORT I ORANGE COUNTY SAN RATION DISTRICT As such and given the SCFCC is recovered on a lease basis,rather than purchased capacity basis,Carollo is proposing to further smooth the annual adjustments.This measure is appropriate and reasonable as costs and functions will continue to changeover time.The proposed SCFCC charges through 2023 are presented below. Table 20 Supplemental Capital Facilities Capacity Charge Calculation 1 I 1 1 I 1 1 Flow(Per Gallon) 0.001936 0.001948 0.00196 0.001972 0.001984 0.001996 BOD(Per Pound) 0.4151 0.42828 0.44146 0.45464 0.46782 0.481 TSS(Per Pound) 0.22261 0.232288 0.241966 0.251644 0.261322 0.271 OCSD will continue to review the SCFCC on a regular basis to review potential capital cost shifts and to maintain SCFCC rate payer equity. 4w carolly, DECEMBER 20171 6-5 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT 7 Miscellaneous Fees Similar to the periodical review of rates and charges,it is necessary to revisit the calculation of the District's administrative fees and charges related to permitees. Earlier this year,OCSD staff performed an internal fee review for services provided by its Resource Protection Division.The District administers a permit program through the Resource Protection Division to provide a means for protecting the public and environment through the regulation of industrial wastewater discharges.The permit program limits the discharge of specific pollutants from industrial facilities by establishing numeric discharge standards,discharge requirements,self-monitoring requirements,and report requirements.The permits are divided into four categories: • Industrial Wastewater Discharge Permit: Limits the discharge of specific pollutants from industrial facilities by establishing numeric discharge standards,discharge requirements,self-monitoring requirements,and report requirements. • Special Purpose Discharge Permit:Issued by OCSD for water and wastewater discharges to the sewerage system when no alternative discharge points exist other than the sewer system and/or alternate discharge methods pose an environmental impact or threat. • Wastehauler Permit:OCSD operates a wastehauler station at Plant No.l for the disposal of septage, chemical toilet,and grease trap wastes only. Liquid waste pumpers must register with the Orange County Health Care Agency and obtain a Wastehauler Permit from OCSD. • Fats,Oil,&Grease(FOG)Wastewater Discharge Permit:OCSD established a program to eliminate the discharge of FOG-containing wastewater from food service establishments and commercial kitchens. Restaurants are now required to store fats,oils,and grease in containers that are picked up by permitted recycling and rendering facilities. These fees are in place to recoup the costs of providing these services.Based on this notion,staff utilized an industry-standard cost build-up approach to define the full cost of service.Each permit or service was divided into various tasks and corresponding staff and/or material costs were identified.The result of this process identifies the maximum fee amount that can be charged. r - Figure 4 User Fee Calculation Methodology While this sets a legal maximum(cost ceiling),the district is not required to implement at these levels.As there are permit related fees,the District wants to set rates at levels that encourage full and maximum participation. This is common for fees or service related to public health and safety.As such,for some permit fees,the District outlined various options of cost recovery—ranging from"fully burdened costs"to subsidized options.While fully burdened costs reflects multi-year office staff and field staff operations(not previously considered),the increase �carollo, DECEMBER 20171 7-1 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT would represent a significant increase over the existing charges.Alternatively,excluding internal costs(under the subsidized option)would represent a drop inmost cases and is not recommend. Based on the review of the District's 2017 internal fee review,Carol lofinds that the District's methodology and calculation of fees to be fair and reasonable,and in-line with industry standards.Carollo recommends that the fees at a minimum recover a portion of the District's internal costs and 100 percent of external costs. 7.1 Wastehauler Fees There are three cost components to the calculation of the waste hauler fees. 1. Cost of treatment for trucked septage 2. Cost to administer and process manifests submitted by the wastehaulers 3. Portion of capital costs for facilities The capital cost portion varies between wastehaulers inside and outside of Orange County.The different rate covers the portion of capital funding that in-county wastehaulers cover through annexation and connection fees. In order forthe District to adequately recover capital costs,it is recommended that a portion of annexation and connection fee costs be allocated to out-of-county wastehaulers to cover their portion of capital buy-in. 7.1.1 Wastehauler Treatment Charge The treatment cost portion of the fee is based on the rate paid by industrial users per unit constituent(flow, BOD, and TSS).This is allocated based on an estimated volume of flow and assumed concentration of loadings per unit of wastewater brought to OCSD facilities by each wastehauler.This calculation is demonstrated below in Table 21. Table 21 Wastehauler Treatment Charge Calculation W�a�mmoiriiiiiiiiiiiiiiiiiilililli1ii:All Flown) 14.2 MGY $1,580/MG $22,436 BOD(Assumed) 5,000 mg/L $640/1,000 Its $379,197(2) T55(Assumed) 5,000 mg/L $760/1,000 Its $450,296 Total Revenue Requirement $851,929 Treatment Charge O) $0.06 Notes: (1) Taken from OCSD Annual Report FY 2015116,p.7.2. (2) Boo and T55 revenue requirements calculated based on assumed annual flow,multiplied by assumed loadings concentrations and conversion factor to calculate annual loadings in pounds,and then multiplied by the industrial rate per 1,0001be. (3) Total revenue requirement divided by the estimated annual flow received. 7.1.2 Wastehauler Administration and Processing Charge OCSD must recoup its administrative costs to manage and administer the wastehauler program.The associated costs and the calculation of the fee is outlined in.This fee is developed by first calculating the staff time associated with administering each manifest,or delivery, by wastehaulers.The associated staff cost to the 4cCa/=116, DECEMBER 20171 7-2 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT District is estimated from this,and then converted to a per unit of flow rate based on estimated flow per manifest,and the total number of manifests estimated each year. Table 22 Cost to Administer and Process Manifests Submitted by Waste haulers Division OH (2) Cost per Manifest Source Control Environmental 0.5 Receive manifest at $32.99 $10.89 $21.94 Technician station,review manifest,record/log in.Verbal verification with hauler.Test PH. Source Control Program 0.5 Input field data 29.17 9.63 19.40 Assistant (volume,in-county or out-of-county,decal, etc.).File. Source Control Source Control 0.1 Review,instruct staff 55.98 18.47 7.45 Supervisor for further action. Total Cost per Manifest $48.78 Notes: (1) Based on midpoint salary. (2) Assumed at 33 percent of hourly rate Table 23 Administration and Processing Charge per Unit Flow from Wastehaulers Calculation Step Calculation Input Average numberof waste hauled deliveries per month o) 662 Total number of waste hauled deliveries per year 7,945 Average manifests per delivery 1 Cost to administer manifest(�) $48.78 Cost per delivery/truck(@a 1 manifest per truck) $48.78 Total cost per year(3) $387,571 Manifest program cost per gallon(4) $0.03 per gallon Notes: (1) Taken from 005D Annual Report FY 2015/16,F.T2. (2) From Table 22. (3) Cost per delivery multiplied by 7,945 annual deliveries. (4) Total cost per year divided by 14.2 MGY(from Table 21). 4wcarollo, DECEMBER 20171 7-3 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT 7.1.3 Wastehauler Capital Charge The final portion of the wastehauler fee is the capital charge to cover buy-in of OCSD facilities.Only wastehaulers from outside the District's service area pay this portion of the fee because local wastehaulers will have already paid an annexation and/or connection fee to buy-in to District facilities.Outside users on the other hand have not contributed to the capital cost of District facilities,and therefore must pay a portion of these costs with each unit flow of sewage delivered. Table 24 Outside Wastehauler Capital Fee Calculation Step Total Capital Charge for SFR to Connect(�1 $8,718.18 Annual Recovery(2) $405.83 Assumed Septic Tank Volume 2,000 gallons Annual Capital Charge(3) $0.17 per gallon Notes: (1) Annexation fee plus Capital Facilities Correction Charge from Table 18.The annexation fee excludes any capital buy-in portion from the Districts current fee because this is incorporated into the CFCC portion of the calculation. (2) Amortization of total capital charge,assuming 4 percent interest and 50 year repaymem. (3) Annual recovery divided by assumed septic tank volume,with the collection system percentage offacilkies deducted.This deduction is based on the percentage of plant-in-service dedicated to the col lection system(17 percent). 7.1.4 Total Wastehauler Fee Combining the three fee components,the final wastehauler fee is outlined in Table 25. Table 25Total Wastehauler Fee Treatment Charge $0.06 per gallon $0.06 per gallon Manifest Admin 0.03 0.03 Capital Charge - 0.20 Total $0.09 per gallon $0.29 per gallon The District is planning to phase the rate increase for these users gradually overtime, like the other capital fees. The District has not updated this fee since 2007,and as a result,will implement the increase over five years. Table 26Wastehauler Fee Phase-In Local $0.05 $0.06 $0.07 $0.08 $0.09 $0.09 Outside Service Area $0.12 $0.14 $0.16 $0.18 $0.20 $0.22 4 rcarollo, DECEMBER 20171 7-4 COST OF SERVICE STUDYI REPORT I ORANGE COUNTY SAN RATION DISTRICT 8 Rebate Procedures Review 8.1 Background OCSD administers a rebate program for its customers that can provide evidence that their actual system usage and demand is lower than the assumed billing formula for that customers use type. In recent years,the District has seen a considerably uptick in the number of rebates that have been issued,particularly to commercial customers.These customers have reduced their water usage in response to calls for conservation from the state and their local water utility.Because OCSD has not updated its assumed flow for each use type in a number of years, it takes only a nominal amount of conservation in some cases to fall below the assumed flow from the billing formula. 8.2 Preliminary Findings Camillo and the District began researching this increase in 2015. From that analysis,a number of preliminary recommendations were developed,which are summarized and expanded upon here.During that review,the basic methodology of the program was reviewed,and several years of rebate data was analyzed. Currently,the District calculates the rebate issued by adjusting the annual fee by the percentage flow decrease. For instance,if the annual fee is$331,and the customer shows a 25 percent reduction in flow,the rebate is $82.75-25 percent of$331.This program is causing significant revenue loss for the District.In FYE 2014,the District issued nearly 4,000 rebates,totaling$14.6 million.With the proposed recommendations made in 2015, those rebates would have fallen to$5.9 million after recalculating the fee rebates issued. 8.3 Recommended Rebate Calculation Changes 8.3.1 Separate Flow and Loadings Rebates While flows have been decreasing 0.25 120 across California in recent years, `o c there is inconclusive evidence to In 0.20 200 i suggest that OCSD's influent 0 2 loadings have decreased 800.25 significantly on a per capita basis. 60 As shown in Figure 5,flows have ? decreased steadily from 2000 to 40 3 2015, by nearly 30 percent. 0 However, Boo and TSS have not o 0.05 20 2 shown the same decline. > Therefore,it is reasonable for the o 0 �, .r �., r, o, 0 n, v 0 0 0 02 0 H H o 0 0 0 0 0 0 o 0 0 0 n o 0 0 District to only issue rebates on n n n n n n n ry the portion of the fee that is iiiiiiiiiiiiiFlow —Boo —TSS shown to have decreased.While a reduction inflow can correspond with similar reductions in loadings Figure 5 Historical Per Person Flow,BOD,and TSS 4wcarollo, DECEMBER 20171 B-1 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT for a specific parcel,the influent wastewater at OCSD's plants does not show this trend on an aggregate level. A recommended alternative approach for the District's rebate program is illustrated in Table 27.In this example,a customer of 1 EDU applies for a rebate after demonstrating a 25 percent reduction inflow.Rather than issuing a 25 percent rebate of the annual fee,the alternative approach would calculate 25 percent of the flow portion only (for FYE 2019,$104.22),and issue a rebate on that.This approach would be in keeping with the District's ordinance,which allows the District to require sampling information for rate adjustments(Article II—Section 2.03B). Table 27 Flow Rebate Recommended Alternatives Calculation Step Annual Charge per EDU $104.22 $109.52 $121.67 Baseline Annual Charge per EDU $335.50 Current Rebate Approach—Adjusted Annual Fee $251.63 Recommended Rebate Approach—Adjusted Fee Portions $80.08 $106.48 $122.23 Recommended Rebate Approach—Adjusted Annual Fee $308.79 Net Difference to OCSD $57.16 8.3.2 Tiered Rebate Structure In addition to only issuing the rebate on the flow portion of the fee,the District could follow an approach used by Los Angeles County Sanitation Districts(LACSD)and implement a tiered rebate structure.This tiered structure does not issue the rebate in proportion to the conservation demonstrated.Instead, rebates are calculated based on a conservation tier corresponding to the exact usage reduction.This approach achieves multiple goals. It simplifies the rebate process for both the customer and the District. Furthermore, it acknowledges the variability 1n flow from year to year,and accounts for the uncertainty inherent in estimating wastewater flows. The tier structure used by LACSD has five tiers.Customers must demonstrate a ten percent usage reduction at minimum to qualify for a rebate. Actual Average Daily Flow Baseline Assun I I I 904E or greater 0 70%to 89% 20% 50 to 69% 40% 30 to 49% 60% 29%or less 80% There are downsides to this approach.A customer with a 30 percent reduction in usage would fall within the same tier as someone with only a 12 percent usage reduction.Both of these customers would receive a 20 percent fee reduction,despite having nearly a 20 percentage point difference in their conservation rates.As a result,this approach does lack some of the precision of using the actual conservation rate. 4wcarofw, DECEMBER 20171 8-2 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT Ultimately,the District would be best served using the actual conservation rate initially.Using only the flow portion of the fee will provide a sufficient modification to the rebate program,and implementing a tiered approach may unnecessarily complicate matters with other changes taking place. 8.4 Recommended Administrative Changes to the Rebate Program 8.4.1 Minimum Flow Reduction Thresholds Currently the District accepts rebate applications from all users, regardless of how large of a flow deviation is claimed. It is recommended that the District implement a flow(or loadings,when data is provided by the customer)threshold in order to process the rebate application.This recommendation is based on several reasons. First,the District does not meter wastewater flows itself,and does not maintain any of this data.Furthermore, the flow reduction data provided by each customer comes from potable water agencies,which will always show a higher level of usage than true wastewater flows.While the District's use code assumptions for flow and loads are a reasonable approximation of typical demands of a parcel of that type,they are an average and intended to fit a broad array of parcels of a given characteristic.It is inevitable that certain parcels will fall outside of the normal distribution of parcels of a similar classification.For these parcels that truly fall outside of the typical usage profile,a rate adjustment is a logical course of action.Conversely,parcels that demonstrate a nominal amount of conservation likely do not significantly deviate from the mean for similar parcels,and it would not make sense to provide these parcels a rate adjustment. The second reason for a flow reduction threshold is administrative. Requiring flow and loadings data for a full rebate,as discussed above,would substantially reduce the revenue loss that the District is currently experiencing. Aside from the financial impact however,the District also experiences administrative burdens due to the rebate program.With the increase in rebate activity,the District needed to devote additional resources to handling all of the applications and addressing questions,placing additional staff time requirements that were not always adequately planned. In order to address these issues, a reduction threshold is recommended.This would require that rebated parcels demonstrate a flow that is significantly different from a typical parcel of that class.This threshold could be determined on a class by class basis by reviewing the standard deviation and distribution of each class,or it could be applied for all classes uniformly. 8.4.2 Adjusted Usage Lock-In Other agencies offering a wastewaterflow N 2s% rebate also offer a"lock-in"period to `w 20% applicants.This allows the customerto 0 30% 26% 26% automatically have their fee adjusted for a set 25 % 13% 12% 24% amount ohree to following s.the By oprocessed this ate, w 26% I I I I I 3% typically three[o five years.By offering this c 6% type of adjustment,the District could ' 3 `a substantially cut down on its administrative a o% burden,given that a significant number of 2 2 3 4 6 6 7 8 rebates are submitted by repeat applicants. Number of Rebates Submitted per Customer(can Based on an analysis of rebate applications include years before 2012) from FYE 2012 to 2017,over 80 percent of all rebates were from customers with rebate applications in multiple years. Figure 6 Non-Residential Rebates Submitted from FYE 2012 to 2017 4wcarolw, DECEMBER 2017 1 8-3 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT 8.4.2.1 Customer Opt-In for Lock-In It is also recommended that the lock-in program be optional for the customer.The customer maybe in the process of make property upgrades that could further reduce their water usage.Therefore,the District should not mandate that the customer cannot apply again in order to receive the rebate. However,the customer will likely be best served by opting into to the lock-in to save time and paperwork each year. Data Requirements and Review Process It is important that the District verify the accuracy of the water usage data associated with any rebate, particularly if that data has the potential to impact the fee for three or more years.Therefore,the District should collect a minimum of three years of historic usage data for any lock-in request,and the usage data should have a limited variance.No single year of data should be more than 25 percent above or below the three-year mean usage on the rebate application.This is in line with the procedures used by LACSD,which also uses 25 percent. Additionally,the District's rebate data supportsthis benchmark.Based on the rebate data from EYE 2012to 2017, a typical customerwith multiple rebate applications had a variability in reported usage of approximately 25 percent' Going one step further,the District should base the rebate lock-in on the highest of the three years of data provided.Single year rebates would be based on the single year of data provided.If the customer decides that the max of the three years of data provided does not reflect the actual usage patterns,they can apply again the following year. -Based on the available data from the customer,the variability was defined as:the absolute value of the difference between the mean and the minimum and maximum of usage for a customer,then divided by the mean. 4wcarolw, DECEMBER 20171 8-4 COST OF SERVICE STUDYI REPORT I ORANGE COUNTY SAN RATION DISTRICT 9 Findings and Recommendations Based on the analyses performed forth is rate study,Carollo recommends the following: • Increase the regional user rate 1.2 percent,from$331.00 to$335.00 per equivalent dwelling unit(EDU)in FY 2019. • Following the FY 2019 adjustment,it is recommended that OCSD implement additional annual adjustments of 1.2 percent for the subsequent four years(through FY 2023). • Update the industrial rates based on unit costs developed though this analysis. • In line with staff recommendations,during the forecasted period,the District is projected to draw upon available reserves, reducing reserving to its policy target levels.This approach is recommended to avoid larger annual rate increases. • As the District anticipates reducing reserve levels to fund continued capital investment, all recommendations should be reviewed and updated periodically to confirm continued compliance with the District's Reserve Policy. • Wastewater customers may request a rate adjustment by providing water consumption records that demonstrate lower sewer discharge levels than defined without the District's ordinance(Ordinance No. OCSD-41).The District should consider implementing a loadings criteria(sampling)for rate adjustments, ratherthan merely basing the adjustment on water meter information.This would require the customer to perform and pay for discharge sampling and provide the District with results prior to a rate charge adjustment.The current District ordinance allows sampling information to be required under Article 11— Section 2.03B. • It is recommended the District update the existing CFCC methodologyto a hybrid approach to recover costs associated with the existing system and no longer simply future components. Given the change in methodology,it is recommended that the District adjust the increases over the proposed five-year rate program. • Adjust the Capital Facilities Capacity Charge(CFCC)from$3,855to$5,718 per EDU and commercial- industrial Capacity Facilities Capacity Charge from$2,000 to$3,638 per 1,000 square feet by FY 2023.In subsequent years,it is recommended that the District continue to annually adjust the CFCC by inflation. • Increase the Supplemental Capital Facilities Capacity Charge to$0.001996 per gallon, $0.481 per lbs.of BOD,and$0.271 per Its.of TSS by FY 2023. • Adjust the fee rebate program to require that flow and loadings data be provided by applicants in order to receive a rebate on the full fee.Otherwise,applicants that only provide flow data should only be rebated on the flow portion of their fee. • Additional recommended changes to the rebate program include implementing a flow reduction threshold in order to process an application,and setting a lower flow assumption for parcels with significant square footage. 4w carollo, DECEMBER 20171 9-1 COST OF SERVICE STUDYI REPORT I ORANGE COUNTY SAN RATION DISTRICT Appendix 1 Use Codes and Rate Schedule 000 Conversion-Rural 100% $331.00 $335.00 $339.00 1 Vacant Land 0% 0.00 0.00 0.00 2 One Residence 100% 206 219 253 331.00 335.00 339.00 3 Two or More SFR 70% 206 219 177 231.70 234.50 237.30 4 Misc.Improvement 100% 206 219 177 331.00 335.00 339.00 5 Common Area Parcel 0% - - - 0.00 0.00 0.00 6 "Hold'Parcel 0% 0.00 0.00 0.00 7 Mobile Home 50% 206 219 127 165.50 167.50 169.50 8 Equiv.To Vacant 0% 0.00 0.00 0.00 10 Duplex Only 70% 206 219 177 231.70 234.50 237.30 11 Triplex Only 70% 206 219 177 231.70 234.50 237.30 12 04-Units Only 70% 206 219 177 231.70 234.50 237.30 13 5 To 16 Units 70% 206 219 177 231.70 234.50 237.30 14 17 To 25 Units 70% 206 219 177 231.70 234.50 237.30 15 26-40 Units Only 70% 206 219 177 231.70 234.50 237.30 16 41-99 Units Only 70% 206 219 177 231.70 234.50 237.30 17 100 or More Units 70% 206 219 177 231.70 234.50 237.30 18 AMix Of Forms 70% 206 219 177 231.70 234.50 237.30 19 SFR With 1 or 2 Rentals 85% 206 219 177 281.35 284.75 288.15 20 Amusement Parks 144% 214 240 347 476.64 482.40 488.16 21 Automobile Dealership 41% 215 245 99 135.71 137.35 138.99 22 Auto Repair Shop 41% 215 245 99 135.71 137.35 138.99 23 Automotive Service 41% 215 245 99 135.71 137.35 138.99 24 Used Car Lot 41% 215 245 99 135.71 137.35 138.99 26 Airport and Related 53% 230 210 140 175.43 177.55 179.67 28 Bowling Alleys 112% 586 390 149 370.72 375.20 379.68 4w Carallb, DECEMBER 20171 9-1 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT 29 Conventional Car Wash 796% 17 133 3,930 2,634.76 2,666.60 2,698.44 30 Coin Operated Car Wash 151% 17 133 694 499.81 505.85 511.89 32 Cemetery&Related 101% 664 712 99 334.31 338.35 342.39 33 Church Buildings 20% 210 234 50 66.20 67.00 67.80 34 Dormitory 97% 220 220 250 321.07 324.95 328.83 35 Entertainment Center 144% 214 240 347 476.64 482.40 488.16 36 Financial Buildings 27% 215 245 99 89.37 90.45 91.53 37 Fraternal Buildings 51% 216 234 124 168.81 170.85 172.89 38 Funeral Home 101% 664 712 99 334.31 338.35 342.39 39 Golf Course 41% 215 245 99 135.71 137.35 138.99 40 Health Club 29% 151 183 85 95.99 97.15 98.31 42 Hospital 97% 206 219 253 321.07 324.95 328.83 43 Hotel 97% 151 183 283 321.07 324.95 328.83 44 Lumber/Constr. Mat'I. 17% 206 219 45 56.27 56.95 57.63 Yard 45 Marinas 53% 230 210 140 175.43 177.55 179.67 47 Supermarket 151% 666 708 149 499.81 505.85 511.89 48 Convenience Market 151% 215 245 99 499.81 505.85 511.89 50 Single Medical Bldgs.To 124% 215 241 297 410.44 415.40 420.36 3 Stories 51 Small Medical Center 124% 215 241 297 410.44 415.40 420.36 52 Medical Center Complex 124% 215 241 297 410.44 415.40 420.36 53 High Rise Medical 124% 215 241 297 410.44 415.40 420.36 54 Converted Residence To 124% 215 241 297 410.44 415.40 420.36 Medical 55 Mobile Home Park 50% 220 220 130 165.50 167.50 169.50 56 Motels and Motor Hotels 70% 151 183 283 231.70 234.50 237.30 57 Motorcycle/Small Vehicle 41% 215 245 99 135.71 137.35 138.99 Bldg. 58 Nurseries(Plants) 10% 222 261 23 33.10 33.50 33.90 60 Nursing Home 102% 216 238 260 337.62 341.70 345.78 61 Convalescent Hospitals 102% 216 238 248 337.62 341.70 345.78 62 Converted Res Used As 102% 216 238 260 337.62 341.70 345.78 Nursing 4wcaro/k* DECEMBER 20171 9-2 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT . :�1 1 1 1 63 Low Rise Retirement 700/b 151 183 283 231.70 234.S0 237.30 Building 64 High Rise Retirement 70% 151 183 283 231.70 234.50 237.30 Building 65 Single Office Bldgs.To 3 41% 21S 239 100 135.71 137.35 138.99 Stories 66 Small Office Center 41% 215 239 100 135.71 137.35 138.99 67 Office Complex 41% 215 239 100 135.71 137.35 138.99 68 High Rise Office 30% 215 239 100 99.30 100.50 101.70 69 Converted Residence To 41% 215 239 100 135.71 137.35 138.99 Office 71 Parking Garage 17% 220 220 45 56.27 56.95 57.63 72 Paved Parking Lot 17% 220 220 45 56.27 56.95 57.63 73 Recreation 144% 214 240 347 476.64 482.40 488.16 74 Recreation Vehicle Park 270A 309 270 55 89.37 90.45 91.53 76 Restaurant-Take Out 300% 480 269 480 993.00 1,005.00 1,017.00 77 Restaurant-Coffee Shop 600% 480 269 960 1,986.00 2,010.00 2,034.00 78 Restaurant-Dinner 600% 480 269 960 1,986.00 2,010.00 2,034.00 House 79 Restaurant-Conversion 600% 480 269 960 1,986.00 2,010.00 2,034.00 From SFR 81 Pre-Schools, Nursery or 82% 220 220 200 271.42 274.70 277.98 Care 82 Private Schools 82% 220 220 200 271.42 274.70 277.98 83 Automotive Service 41% 215 245 99 135.71 137.35 138.99 Station 84 Marine Service Station 41% 215 245 99 135.71 137.35 138.99 85 Combined Service 100% 215 245 99 331.00 335.00 339.00 Station/Restaurant 86 Combined Service 41% 215 24S 99 135.71 137.35 138.99 Stn./Convenience Mkt. 88 Convenience Shopping 53% 500 354 79 175.43 177.55 179.67 Center 89 Neighborhood Shopping 139% 500 354 200 460.09 465.65 471.21 Center 90 Community Shopping 226% Soo 354 325 748.06 757.10 766.14 Center 4ccarollo, DECEMBER 20171 9-3 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT 92 Skating Rinks 112% 586 390 149 370.72 375.20 379.68 94 Department Store 23% 215 245 55 76.13 77.05 77.97 95 Discount Store 23% 215 245 55 76.13 77.05 77.97 96 Unattached Single Store 23% 215 245 55 76.13 77.05 77.97 97 Strip Store 23% 215 245 55 76.13 77.05 77.97 98 Store With Offices or Liv. 82% 220 220 200 271.42 274.70 277.98 Qtr. 99 Store w/Office Upstairs 82% 220 220 200 271.42 274.70 277.98 100 Drive-In Theater 10% 222 261 23 33.10 33.50 33.90 101 Unattached Theater 51% 216 234 124 168.81 170.85 172.89 103 Chemical Tank and Bulk 100% 206 219 253 331.00 335.00 339.00 Storage 104 Food Processing Plant 100% 206 219 253 331.00 335.00 339.00 105 Cold Storage Plant 100% 206 219 253 331.00 335.00 339.00 106 Factory 100% 206 219 253 331.00 335.00 339.00 107 Light Industrial-Single 50% 206 219 75 165.50 167.50 169.50 Tenant 108 Light Industrial-Multi 50% 206 219 75 165.50 167.50 169.50 Tenant 109 Research and 50% 206 219 75 165.50 167.50 169.50 Development 110 Warehouse-Single 17% 460 383 25 56.27 56.95 57.63 Tenant 111 Warehouse-Multi 17% 460 383 25 56.27 56.95 57.63 Tenant 112 Steel Building 7% 460 383 10 23.17 23.45 23.73 113 Mini-Warehouse 7% 460 383 10 23.17 23.45 23.73 114 Industrial Park 50% 206 219 75 165.50 167.50 169.50 115 Recreational Vehicle 17% 460 383 25 56.27 56.95 57.63 Storage 116 Truck Terminal 17% 460 383 25 56.27 56.95 57.63 118 Governmental Use 82% 215 239 198 271.42 274.70 277.98 119 Public Utility 100% 206 219 253 331.00 335.00 339.00 120 Water Mutual or 100% 206 219 253 331.00 335.00 339.00 Company DECEMBER 20171 9-4 COST OF SERVICE STUDY REPORT I ORANGE COUNTY SAN RATION DISTRICT 1 :.1 1 1 1 1 121 Parcel Of Minimal or No 0% - - - 0.00 0.00 0.00 Value 122 Subsurface Parcels 0% - - - 0.00 0.00 0.00 124 Oil/Mineral Rights 0% - 0.00 0.00 0.00 125 Mineral Rights 0% - - - 0.00 0.00 0.00 Equipment 126 Vacant Common Area- 0% - - - 0.00 0.00 0.00 Imp.Alloc. 201 Home Owners 0% - - - 0.00 0.00 0.00 Exemption Add'n. 222 Office Condos W/Out 0% 0.00 0.00 0.00 Individual Bathrooms 223 Laundromat 1800% 260 270 5,958.00 6,030.00 6,102.00 3,825 224 Nightclub 200% 288 274 350 662.00 670.00 678.00 444 La Mirada Tract(Includes 0% 0.00 0.00 0.00 Local Fee) 666 Unassigned Vacant 0% - - - 0.00 0.00 0.00 777 Septic Tank Property 0% 0.00 0.00 0.00 888 Conversion-Composite 100% 206 219 253 331.00 335.00 339.00 Prop NEW Laundromat In Mixed 422% 1,396.82 1,413.70 1,430.58 Use Notes: (4) Flow is measured in gallons per day per EDU or 1,000 square feet.Boo and T55 are measured in milligrams per liter of Flow. 4w carolly, DECEMBER 20171 9-5 COST OF SERVICE STUDY I REPORT I ORANGE COUNTY SAN RATION DISTRICT 4ccarolw- DECEMBER 20171 9-6