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Tuesday, April 13, 2021Board of Directors Study Session
Time: 9:30 A.M. IMPORTANT NOTICE REGARDING APRIL 13, 2021 STUDY SESSION MEETING This meeting is being conducted utilizing teleconferencing and electronic means consistent withState of California Executive Order N-29-20 dated March 17, 2020, regarding the COVID-19pandemic. *** The livestream of the meeting can be viewed by clicking the "Video" icon on this page (which will bemade available at the start of the meeting) or by visiting www.youtube.com/CostaMesaSanitary. Inaccordance with Executive Order N-29-20, the public may only view the meeting online and not inthe District's Board Room. *** To participate in the meeting by computer: 1. Copy and past the following into your browser - https://us02web.zoom.us/join 2. Enter the Meeting ID number - 899 0194 1368 3. Click "Join." *** To join the meeting with a mobile device: 1. Download the Zoom app at the Google Play Store (for Android devices) or the App Store (forApple devices) 2. Open the Zoom app. Select "Join a Meeting." 3. Enter Zoom Meeting ID. Select "Join Meeting." *** To join the meeting by phone: 1. Call 1-669-900-6833. 2. You will be asked to enter the Meeting ID number. Dial 899 0194 1368# 3. Lastly, you will be asked to enter your Participant ID. Press the # symbol again to bypass thisstep. *** Public Comments: Members of the public can submit any comments in writing for the Board ofDirectors' consideration by sending them to the District Clerk, Noelani Middenway, atnmiddenway@cmsdca.gov. Those comments will be made part of the official public record of themeeting. *** Obtaining Agenda Materials: The public is entitled to copies of all documents that are made part ofthe agenda packet. If any document or other writing pertaining to an agenda item is distributed toall or a majority of the Board after the packet is prepared, a copy of that writing may be obtainedfrom the District Clerk's Office. *** In Compliance with ADA: Contact District Clerk, Noelani Middenway, at (949) 645-8400, 48 hoursprior to meeting if assistance is needed (28 CFR 35.102.35.104 ADA Title II).
A. OPENING ITEMS
1. Roll Call - (If absences occur, consider whether to deem those absences excused based on facts presented for the
absence – such determination shall be the permission required by law.)
B. PUBLIC COMMENTS - This time has been set aside for persons in the audience to make comments on items
within the subject matter jurisdiction of the Costa Mesa Sanitary District that are not listed on this agenda.
Members of the public will have the opportunity to address the Board of Directors about all other items onthis agenda at the time those items are considered. Under the provisions of the Brown Act, the Board of
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Directors is prohibited from taking action on oral requests but may refer the matter to staff or to asubsequent meeting. The Board of Directors will respond after public comment has been received. Pleasestate your name. Each speaker will be limited to four (4) continuous minutes.
1. Public Comments
C. ITEMS OF STUDY
1. March 2021 Code Enforcement Officer Report
2. Discuss Re-joining The California Association of Sanitation Agencies (CASA)
3. Preliminary Biennial Budget Review for Fiscal Year 2021-22 and Fiscal Year 2022-23
D. CLOSING ITEMS
1. Oral Communications and Director Comments
2. Adjournment
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Tuesday, April 13, 2021Board of Directors Study Session
Time: 9:30 A.M. IMPORTANT NOTICE REGARDING APRIL 13, 2021 STUDY SESSION MEETING This meeting is being conducted utilizing teleconferencing and electronic means consistent withState of California Executive Order N-29-20 dated March 17, 2020, regarding the COVID-19pandemic. *** The livestream of the meeting can be viewed by clicking the "Video" icon on this page (which will bemade available at the start of the meeting) or by visiting www.youtube.com/CostaMesaSanitary. Inaccordance with Executive Order N-29-20, the public may only view the meeting online and not inthe District's Board Room. *** To participate in the meeting by computer: 1. Copy and past the following into your browser - https://us02web.zoom.us/join 2. Enter the Meeting ID number - 899 0194 1368 3. Click "Join." *** To join the meeting with a mobile device: 1. Download the Zoom app at the Google Play Store (for Android devices) or the App Store (forApple devices) 2. Open the Zoom app. Select "Join a Meeting." 3. Enter Zoom Meeting ID. Select "Join Meeting." *** To join the meeting by phone: 1. Call 1-669-900-6833. 2. You will be asked to enter the Meeting ID number. Dial 899 0194 1368# 3. Lastly, you will be asked to enter your Participant ID. Press the # symbol again to bypass thisstep. *** Public Comments: Members of the public can submit any comments in writing for the Board ofDirectors' consideration by sending them to the District Clerk, Noelani Middenway, atnmiddenway@cmsdca.gov. Those comments will be made part of the official public record of themeeting. *** Obtaining Agenda Materials: The public is entitled to copies of all documents that are made part ofthe agenda packet. If any document or other writing pertaining to an agenda item is distributed toall or a majority of the Board after the packet is prepared, a copy of that writing may be obtainedfrom the District Clerk's Office. *** In Compliance with ADA: Contact District Clerk, Noelani Middenway, at (949) 645-8400, 48 hoursprior to meeting if assistance is needed (28 CFR 35.102.35.104 ADA Title II).
A. OPENING ITEMS
Subject 1. Roll Call - (If absences occur, consider whether to deem those absences excusedbased on facts presented for the absence – such determination shall be the
permission required by law.)
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Robert Ooten, President
Michael Scheafer, Vice PresidentArlene Schafer, Secretary
Arthur Perry, Director
Brett Eckles, Director
Meeting Apr 13, 2021 - Board of Directors Study Session
Access Public
Type Procedural
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B. PUBLIC COMMENTS - This time has been set aside for persons in the audienceto make comments on items within the subject matter jurisdiction of the CostaMesa Sanitary District that are not listed on this agenda. Members of the publicwill have the opportunity to address the Board of Directors about all other items
on this agenda at the time those items are considered. Under the provisions ofthe Brown Act, the Board of Directors is prohibited from taking action on oralrequests but may refer the matter to staff or to a subsequent meeting. The Boardof Directors will respond after public comment has been received. Please state
your name. Each speaker will be limited to four (4) continuous minutes.
Subject 1. Public Comments
Meeting Apr 13, 2021 - Board of Directors Study Session
Access Public
Type Procedural
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C. ITEMS OF STUDY
To: Board of Directors
From: Ed Roberts, Code Enforcement Officer
Date: April 13, 2021
Subject: March 2021 Code Enforcement Officer Report
Summary
Attached is the monthly report from Officer Roberts describing his enforcement activities for the month of March regarding scavenging of
recyclable materials, trash carts stored in public view and graffiti on trash carts.
Recommendation
That the Board of Directors receives and files this report.
Analysis
In the month of March, Officer Roberts approached four (04) individuals observed scavenging from CMSD trash carts. In the same month
he issued 90 warning notices to residents storing their trash carts in public view. Officer Roberts found no graffiti on trash carts in the
month of March.
Officer Roberts' enforcement activities are described in more detail in the attached report.
Legal Review
Not applicable.
Environmental Review
Code enforcement activities and reporting are not a disturbance of the environment similar to grading or construction and do not
constitute a project under CEQA or the District’s CEQA Guidelines.
Financial Review
Officer Roberts' activities are funded in the adopted budget.
Public Notice Process
Copies of this report are on file and will be included with the complete agenda packet for the April 13, 2021 Board of Directors Study
Session meeting at District Headquarters and posted on the District’s website.
Alternative Actions
1. Direct staff to report back with more information.
File Attachments
March 2021 CEO report.doc (1,026 KB)
Subject 1. March 2021 Code Enforcement Officer Report
Meeting Apr 13, 2021 - Board of Directors Study Session
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Type
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C. ITEMS OF STUDY
To: Board of Directors
From: Scott Carroll, General Manager
Via: Angela Colunga, Office Specialist
Date: April 13, 2021
Subject: California Association of Sanitation Agencies (CASA)
Summary
Per direction from the Board of Directors, District staff has researched membership information with the California Association of
Sanitation Agencies (CASA).
Recommendation
That the Board of Directors provide direction to staff.
Analysis
The California Association of Sanitation Agencies (CASA) is committed to advancing wastewater interests, including the recycling of
wastewater into usable water, generation of renewable energy, biosolids and other valuable resources. Currently, CASA represents 128
public agencies that collect, treat, recycle, or dispose of wastewater including the Orange County Sanitation District, Irvine Ranch Water
District, El Toro Water District, and South Coast Water District. Additionally, CASA consists of over 70 private-sector organizations, such
as, engineering consultants, service and technology providers, accountants, attorneys, and financial institutions.
In a typical year, CASA promotes 3 annual conferences (2 in California and 1 in Washington, D.C.), publishes 26 newsletters, issues
frequent LISTSERV communications on a variety of topics, has regularly scheduled workgroups and committee meetings, and provides
state and federal advocacy on proposed measures. Additionally, CASA partners with other sanitation and wastewater agencies, such as
the Association of California Water Agencies (ACWA) and the California Water Environment Association (CWEA), to host webinars and
special presentations. For example, next month on Wednesday, May 5 , 2021, CASA and CWEA are hosting a full-day, virtual workshop
focused on enhancing innovation in California to meet the State’s key water and carbon management objectives.
According to their website (www.casaweb.org), CASA has one tentative in-person event scheduled for 2021, which is their 66 Annual
Conference. This conference is scheduled to take place in San Diego on August 11, 2021 – August 13, 2021. CASA will be confirming the
status of this event in early June 2021.
A CASA membership fee is based on an organization’s Wastewater Operations and Maintenance (O&M) budget including salaries and
benefits. For Fiscal Year 2020-21, the District’s Wastewater O&M budget plus salaries and benefits is $4,196,800. According to CASA’s
membership fee structure, the District’s membership fee would cost $8,000 per year. Membership is based on a calendar year basis and
can be prorated depending on the month of registration.
Benefits of a CASA Membership include:
Legislative advocacy at the local, state, and national levels
Advocacy and information on regulatory issues and legal matters
Access to highly knowledgeable and experienced staff and Board consisting of engineers, scientists, attorneys, lobbyists,
consultants and other professionals
Opportunities to network with your peers and keep current through conferences and seminars
Subject 2. Discuss Re-joining The California Association of Sanitation Agencies (CASA)
Meeting Apr 13, 2021 - Board of Directors Study Session
Access Public
Type Action
Fiscal Impact Yes
Recommended Action That the Board of Directors provide direction to staff.
Goals 1.0 Sewer Infrastructure
6.6 Administrative Management - Stay informed of Federal and State legislation
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Opportunities to be presented the CASA Award of Excellence
Opportunities to meet experienced and skilled consultants that can help with specific issues or general tasks
Opportunities to meet decision-makers at the organizations you work with
Opportunities to connect directly with your legislators to help influence decisions affecting your district, the state, and the country
Access to CASA Connects newsletter, which offers an insider’s look at the happenings within the wastewater community
Access to communication tools and other resources to help you manage your organization
Participate in an annual salary survey
CASA Workgroups:
1. Collection Systems Workgroup: discusses regulatory proposals and permits relating to sewer collection systems, serves as a
clearinghouse for collection system performance metrics and other data, and coordinates with other associations working on
collection system issues.
2. Air Quality, Climate Change, and Energy Workgroup: discusses regulatory, legislative and policy proposals related to energy and
climate change and serves as a forum to discuss regulatory and policy initiatives, new technologies, funding opportunities and
capital projects.
3. Regulatory Workgroup: determines CASA’s position on state and federal regulatory proposals that affect wastewater agencies,
assists in drafting comment letters and regulatory language, and provides a forum for members to learn about the latest regulatory
developments on biosolids, water quality and recycled water. The workgroup is divided into two subgroups with a biosolids focus
and a water focus.
CASA Committees:
1. Associates Committee: provides a forum for associate (private sector) members to network, learn about new technologies and
capital projects, discuss issues of interest and assist CASA with special projects.
2. Attorneys Committee: provides a forum for discussion of legal issues and an opportunity for continuing education for members of
the local wastewater agency bar. The committee approves CASA's participation as a friend of the court in litigation and provides
recommendations to the Board of Directors regarding participation in litigation as a party. The committee provides input to the
state and federal legislative committees on measures that require legal expertise.
3. Communications Committee: assists CASA in its mission to provide excellent service to its members in the areas of education,
outreach and public information. The committee draws on its expertise in communications and public relations to directly and
indirectly support CASA members through preparation of toolkits and materials, hosting workshops, presentations at conferences,
coaching on best practices and development of strategies and information campaigns.
4. Federal Legislative Committee: establishes CASA's position on proposed federal legislation and executive branch policies. The
committee also assists in planning the program for the annual Washington, D.C. policy forum and collaborates with other
associations on the development of federal policy proposals.
5. Program Planning Committee: assists in planning the program themes, focus and content for CASA's two major conferences held
in January and August.
6. State Legislative Committee: establishes the association's position on proposed state legislation and ballot measures and assists
in planning the program for the annual Sacramento public policy forum.
The last time the District was a member of CASA was in FY 2011-2012 and the membership fee was $8,000. The last time Board
members attended a CASA conference was in August 2014 as nonmembers. CASA conferences cost an additional amount to attend and
pertain to an organization’s status – member or nonmember. For a Board member to attend CASA’s upcoming 66 Annual Conference
as a CASA member, it would cost $595 per attendee. For nonmembers to attend the conference, it would cost $1,100 per attendee.
If the Board wishes to proceed with joining CASA, then staff recommends budgeting for it in the Fiscal Year 2021-22 / 2022-23 Budgets.
Legal Review
Not Applicable.
Environmental Review
The consideration of membership in a professional organization is an administrative matter and is not a disturbance of the environment
similar to grading or construction and is not a project under CEQA or the District’s CEQA Guidelines.
Financial Review
The annual cost for a CASA membership is $8,000. CASA conference rates are not included in the annual membership fee. For CASA’s
upcoming 66 Annual Conference, the membership rate is $595 per attendee. The non-membership rate is $1,100 per attendee. To
attend the conference, additional expenses such as travel, meal and lodging will need to be included in the budget. These costs were not
budgeted items in the Fiscal Year 2020-21.
Public Notice Process
Copies of this report are on file and will be included in the complete agenda packet for the April 13, 2021 Board of Directors Study
Session meeting at District Headquarters and posted on the District’s website.
Alternative Actions
Refer item back to staff with further instructions.
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File AttachmentsAbout-CASA-Brochure copy.pdf (1,544 KB)
LISTSERVS.pdf (144 KB)
2021 CASA Member Dues Flier.pdf (249 KB)
Statement of Budget Revenues and Expenses FY 2020-21.jpg.pdf (525 KB)
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C. ITEMS OF STUDY
To: Board of Directors
Via: Scott Carroll, General Manager From: Kaitlin Tran, Finance Manager
Date: April 13, 2021 Subject: Preliminary Biennial Budget Review for Fiscal Year 2021-22 and Fiscal Year 2022-23
Summary
The following represents Staff’s proposed preliminary Biennial Budget for the Fiscal Year (FY) 2021-22 and FY 2022-23. Staff is
requesting direction from the Board on the attached preliminary budget. The two-year budget will be brought back with the Board's
recommendations incorporated to the May 11, 2021 Study Session. Staff will be requesting adoption of the two-year budget on June 28,2021.
Recommendation
That the Board of Directors provide feedback to staff regarding the proposed preliminary Biennial Budget for the Fiscal Years 2021-22and 2022-23.
Analysis
The following are highlights of the proposed preliminary Biennial Budget for the Fiscal Years 2021-22 and 2022-23: General Fund Revenue:
Beginning of FY 2019-20 budget, the District created a General Fund to account for the unrestricted financial resources of the general
government. These unrestricted resources consist primarily of general property taxes and investment earnings. Staff is assuming a 2%increase in property tax revenue each year. The proposed preliminary property tax revenues are $333,000 and $340,000 for FY 2021-22
and FY 2022-23, respectively. Property tax revenues are unrestricted revenues previously recorded in the Solid Waste Fund for rate
stabilization. Staff is proposing the Board to continue to transfer this revenue to the Solid Waste Fund through this budgetary process. If
more revenue is received than the budgeted amount at fiscal year-end, staff recommends the Board of Directors transfer the revenue, asper the District goal, to either the Solid Waste or the Wastewater Fund.
Preliminary Budget FY 2021-22:
The total preliminary budget for FY 2021-22 is $13,240,400 the Solid Waste Fund preliminary budget of $6,648,400 assumes thatexpenses will exceed revenues by $401,800 creating a deficit requiring the use of reserves to balance the budget. Deficit spending has
been past practice of the District for the last seven years because the Board approved lowering the trash rate in 2013 and 2014 to reduce
the solid waste reserve balance. Using funds from the reserve balance helped stabilized the trash rate after implementing the Organics
Recycling Program in 2015.
The Board adopted the five-year rate structure on June 27, 2019, which went into effect FY 2019-20, and is as follows:
Fiscal Year 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24
% Increased 0.0%4.1%7%7%6%6%
Annual Rate 216.00 224.88 240.60 257.40 272.88 289.20
Month Rate 18.00 18.74 20.05 21.45 22.74 24.10
According to the Solid Waste Rate Study, dated February 2019 by the consulting firm, NBS, revenues would exceed expenditures by thefifth year (FY 2023-24) of the five-year rate adjustment. The study projected the District would have deficit spending of $200,500 in FY
2021-22; however, staff is estimating the deficit will double the study’s projection in FY 2021-22 due to the Coronavirus 2019 (Covid-19)
pandemic, reduced investment earnings, and the 5.8% consumer price index (CPI) increase CR&R received. Staff believes the Stay-at-
Subject 3. Preliminary Biennial Budget Review for Fiscal Year 2021-22 and Fiscal Year2022-23
Meeting Apr 13, 2021 - Board of Directors Study Session
Access Public
Type Discussion
Goals 8.0 Finance
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Home order put in place resulted in an increase in refuse accumulation. NBS projection for the costs FY 2019-20 Trash Hauler, RecyclingDisposal and Organics Disposal was $291,037 less than the actual costs and FY 2020-21, NBS's projection is $311,465 less than staff's
projection.
FY 2019-20 FY 2020-21
NBS Projection NBS Projection
Trash Hauler $2,768,902 $2,796,591
Recycling/Disposal $1,760,389 $1,813,201
Organics Disposal $708,803 $744,243
Total $5,238,094 $5,354,035
Actual $5,529,131
Staff Projection $5,665,500
The District had a 22,982 occupancy count as of July 2020.The occupancy count has since increased to 23,004, or 0.10%, as of
February 2021. The current occupancy count has been increasing at a slower rate when compared to previous fiscal years. Based on the
current trends, staff estimates the FY 2021-22 occupancy count will increase by 0.20%, resulting in an estimated 23,028 accounts. Of thisamount, 22,652 accounts are placed on the County’s assessments and the revenue is being recorded under the Annual Charge account.
The FY 2021-22 preliminary Annual Charge Revenue budget is $5,830,600; this is a 7% increase from the $5,438,041 FY 2020-21 final
amount placed on the County Assessments.
Staff processes invoices directly to the remaining 376 accounts at the beginning of the fiscal year and records the revenue to the Charges
for Services revenue account. The FY 2021-22 preliminary Charges for Services budget is $111,000. This account also includes residents
of newly developed properties that pay a prorated fee for services during the year until they can be placed on the County assessment.
Effective FY 2019-20, CR&R received a 5.8% CPI rate increase for the hauler fee, recycling disposal processing fee and conversion
technology organics fee.
Per section 3.4 of the 2018 CR&R contract, hauler rates may be considered for a CPI adjustment every two years during the term of theagreement. The hauler may request a two-year CPI adjustment using prior years' data to be applied for the two future years. Per the
contract, CPI increases are not automatic and need Board of Directors approval.
CR&R submitted a 5.6% CPI rate increase request on March 29, 2021. The District is in the process of auditing the hauler's revenues toverify CR&R’s profit margin prior to having the Board of Directors approve or reject the request. Please note that this preliminary budget
does not reflect the 5.6% CPI request from CR&R.
Approved
5.8% Proposed
5.6%
Fiscal Year 2018-19 2019-20 2020-21 2021-22 2022-23
Hauler (Occupancy, per unit)9.7954 10.3634 10.3634 10.9438 10.9438
Recycling Disposal (per ton)51.97 54.98 54.98 58.06 58.06
Organics (per ton)71.50 75.65 75.65 79.89 79.89
The Wastewater Fund preliminary budget of $6,259,000 assumes that expenses will exceed revenues by $295,200 creating a deficit
which will require the use of reserves to balance the budget. The FY 2017-2018 was the final last year of the five-year 2% rate increase
from the 2012 Sewer Rate Study adopted by the Board. The District is planning to conduct a wastewater rate study in FY 2021-22. The
wastewater rates are as follow:
Wastewater Rates FY 2020-21 FY 2021-22 FY 2022-23
Per Month Per Year Per Month Per Year Per Month Per Year
Residential (Per Dwelling Unit)
Single Family $ 7.70 $ 92.38 $ 7.70 $ 92.38 $ 7.70 $ 92.38
Multi Family $ 4.52 $ 54.21 $ 4.52 $ 54.21 $ 4.52 $ 54.21
Non-Residential (Per 1,000 sq. ft.)
Commercial – Ave Strength $ 3.42 $ 41.09 $ 3.42 $ 41.09 $ 3.42 $ 41.09
Commercial – High Strength $ 3.73 $ 44.81 $ 3.73 $ 44.81 $ 3.73 $ 44.81
Industrial $ 8.79 $ 105.48 $ 8.79 $ 105.48 $ 8.79 $ 105.48
FY 2020-21 Wastewater assessment placed on the County Assessment was $5,667,569. Since rates are not increasing from FY 2020-
21, staff is projecting the annual charge growth in new accounts to be 0.50%. The preliminary Wastewater Annual Charge revenue is
$5,695,800.
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There are some unincorporated areas and a few addresses from the City of Newport Beach that are not placed on the tax roll duringassessments. At the beginning of the fiscal year, staff invoices the City of Newport Beach and property owners to collect these fees and
record this revenue in the Charges for Services account. The FY2021-22 preliminary Charges for Services is $22,000. The Charges for
Services account also includes residents of newly developed properties that pay a prorated fee for services during the year until they can
be placed on the County assessment.
This preliminary personnel budget included the Cost-of-Living Adjustment (COLA) to salaries equal to the February to February
Consumer Price Index (CPI) for the Los Angeles-Long Beach-Anaheim area of 1%, General Manager’s 3.5% salary adjustment, staff
annual merit 5% salary adjustment. The General Manager declined a salary adjustment in FY 2019-20. In addition, there will be potentialpromotions of one wastewater staff and one administrative staff. This is the first biennial budget to include the in-house District Engineer
salary and benefits. Other significant increases in benefits include overtime, tuition, compensated absences, and workers compensation.
Solid Waste Programs budget decreases 61% in the FY 2021-22 preliminary budget. Funds and resources need to be allocated towardsplanning for SB 1383 compliance. Instead of funding school recycling presentations, staff is proposing hiring a solid waste consultant to
assist the District in implementing SB 1383 mandates and conducting quarterly waste characterization studies. As an alternative, staff is
looking into assigning the CR&R Senior Sustainability Coordinator to develop a solid waste presentation that can be used for various
grades in school. These presentations will focus on Costa Mesa Sanitary District’s (CMSD) level of service to educate residents. TheDistrict will continue its important partnership with Newport Mesa Unified by offering the Alkaline Battery Recycling Program to schools in
our District area. Included in the 2018 agreement with CR&R, the hauler will collect household hazardous waste (HHW) materials from
residents on a call-in basis, resulting in the cost reduction of HHW materials collection at Orange Coast College Recycling Center. The
preliminary budget for the HHW program is reduced from $50,000 in FY 2020-21 to $25,000 in FY 2021-22. Beginning FY 2021-22 theSharps Program cost will be distributed among the Solid Waste and Wastewater Fund due to the finding of needles flushed down the
drain while cleaning the sewer line. The pharmaceutical drop-off program will be discontinued because many pharmacies are installing
drop-off boxes on their own and the Costa Mesa Police Department will occasionally sponsor a “Prescription Drug Take Back” day at their
headquarters. Discontinuing the pharmaceutical drop-off program will save $15,000 annually.
Staff is proposing a budget of $342,400 for the Administration Capital Outlay account to continue the replacement and upgrades to
District's servers and software, replacement of one rooftop air condition unit, installation of a drought tolerant landscape and a
photovoltaic system battery storage at headquarters. Of that amount, staff is proposing to transfer out $235,000 from the FacilityRevolving Fund and transfer into the Wastewater Fund to cover for the installation costs of the drought tolerant landscape and a
photovoltaic system battery storage.
Preliminary Budget FY 2022-23:The total preliminary budget for FY 2022-23 is $13,421,300. The Solid Waste Fund preliminary budget of $6,805,900 assumes that
expenses will exceed revenues by $162,300 thus creating a deficit requiring the use of reserves to balance the budget. According to the
Solid Waste Rate Study, dated February 2019 by the consulting firm, NBS, revenues would exceed expenditures by the fifth year (FY
2023-24) of the five-year rate adjustment. The study projected the District would have a deficit spending of $10,400 in FY 2022-23;however, staff is estimating the deficit will be much higher due to the COVID-19 pandemic, reduced investment earnings, and the 5.8%
CPI increase CR&R received.
The Solid Waste annual rate for FY 2022-23 is $272.88. Staff estimates the FY 2022-23 occupancy count will increase by 0.50%,resulting in 23,143 accounts. Of this amount, 22,767 accounts will be placed on the County’s assessments and the revenue will be
recorded under the Annual Charge account. The FY 2022-23 preliminary Annual Charge Revenue budget is $6,212,600.
Staff processes invoices directly to the remaining 376 accounts at the beginning of the fiscal year and records to the Charges for Servicesrevenue account. The FY 2021-22 preliminary Charges for Services is $118,000. This includes residents of newly developed properties
that pay a prorated fee for services during the year until they can be placed on the County assessment.
The preliminary Wastewater Fund budget of $6,275,400 assumes that expenses will exceed revenues by $203,400 thus creating adeficit which will require the use of reserves to balance the budget. As mentioned previously, a wastewater rate study will be conducted in
FY 2021-22 to determine an appropriate rate adjustment starting FY 2022-23 that could make up the deficit. The preliminary budget does
not include two additional wastewater maintenance workers and new equipment as presented to the Board on March 9, 2021. Staff will
be brining back for discussion the hiring of two additional wastewater maintenance workers and acquiring new equipment on April 26,2021.
Staff did not include Cost-of-Living Adjustment (COLA) to salaries for the FY 2022-23. The preliminary Personnel budget included the 5%
annual merit increase and 20% rate increase in workers compensation. The Wastewater Fund personnel preliminary budget does notinclude any new positions or changes in personnel.
The preliminary Administration Capital Outlay budget is $38,300 which includes the second portion funds to replace and upgrade the
District's servers and software as described above, and replacement of one rooftop air conditioning unit. Capital Improvement Projects:
Staff is requesting $1,802,000 and $1,767,000 for Capital Improvement Projects (CIP) for fiscal years 2021-22 and 2022-23, respectively.
Incomplete projects in FY 2020-21 will be requested to be carry forward into FY 2021-22.
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Fund Balance:
As a planned reduction in Solid Waste Reserves the Board adopted a deficit budget for the past several years. The Board lowered the
Solid Waste Rate from $239.41 in FY 2013-2014 to $216. In addition, the Board of Directors voted to implement the Organics Program
effective July 1, 2015 without increasing rates. In FY 2018-2019, the Board conducted the Solid Waste Rate Study and adopted a five-year rate plan structure designed to meet anticipated maintenance and operation costs while providing sufficient funding for solid waste
disposal.
Staff projects by FY 2023-24 the District will have a surplus of $9,500, resulting in $108,500 less than NBS’ projection. In order to meetthe Operating Reserves requirement of 30% of its operating budget in FY 2024-25, the District will need to conduct a Solid Waste Rate
Study in FY 2023-24 and the new rate adjustment would go into effect on July 1, 2024 (assuming Board approval). This projection does
not include the 5.6% CPI rate increase requested by CR&R on March 29, 2021. If the Board approved CR&R’s request to increase 5.6%
CPI, operating expenses will increase and revenue will not be able to support the additional costs.
As mentioned previously, the last time the Wastewater Fund rate increased was in FY 2017-18; the operation expenditures have
increased through the years. Revenue from wastewater service charges is not sufficient to meet projected expenses which will require
the use of reserves to balance the budget in FY 2021-22 and FY 2022-23. However, if a wastewater rate adjustment is approved by theBoard, money will be reallocated into the wastewater reserve balance in FY 2022-23.
Legal Review
Not applicable. Environmental Review
Subject activity is exempt from the requirements of the California Environmental Quality Act (CEQA) (Public Resources Code Section
21000 et. seq.). Section 15300.4 of CEQA allows an agency while establishing its own procedures “to list those specific activities whichfall within each of the exempt classes”, and the District has adopted “CEQA Guidelines and Implementing Procedures” that state on page
6 “”Projects” does not include …. C. Continuing administrative or maintenance activities.”
Financial ReviewThe report attachments include details for the following:
Preliminary Budget FY 2021-22
Preliminary Budget FY 2022-23
Solid Waste & General Fund Balance Projections FY 2020-21 to FY 2024-25Wastewater Fund Balance Projections FY 2020-21 to FY 2024-25
Public Notice Process
Copies of this report are on file and will be included with the entire agenda packet for the April 13, 2021 Board of Directors study sessionmeeting at District Headquarters and on District website at www.cmsdca.gov.
Alternative Actions
1. Refer the matter back to staff for additional information.
File AttachmentsAttachment A - Preliminary Budget FY 2021-22.pdf (1,468 KB)
Attachment B - Preliminary Budget FY 2022-23.pdf (1,398 KB)
Attachment C - Solid Waste & General Fund Balance Projections FY 2020-21 to FY 2024-25.pdf (695 KB)
Attachment D - Wastewater Fund Balance Projections FY 2020-21 to FY 2024-25.pdf (688 KB)
4/9/2021 BoardDocs® Pro
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D. CLOSING ITEMS
Subject 1. Oral Communications and Director Comments
Meeting Apr 13, 2021 - Board of Directors Study Session
Access Public
Type
4/9/2021 BoardDocs® Pro
https://go.boarddocs.com/ca/cmsdca/Board.nsf/Private?open&login#13/13
D. CLOSING ITEMS
THE NEXT STUDY SESSION OF THE COSTA MESA SANITARY DISTRICT BOARD OF DIRECTORS WILL BE HELD ON
TUESDAY, MAY 11, 2021, VIA TELECONFERENCE.
Subject 2. Adjournment
Meeting Apr 13, 2021 - Board of Directors Study Session
Access Public
Type Procedural