12 - Liquid Waste Annual Charge Costa Mesa Sanitary District …an Independent Special District Protecting our community’s health and the environment by providing solid waste and sewer collection services. www.cmsdca.gov Memorandum To: Board of Directors From: Scott Carroll, General Manager Date: April 18, 2013 Subject: Liquid Waste Annual Charge Summary Recently, the District conducted a comprehensive analysis of the District’s liquid waste charges. The analysis concluded that an adjustment to each user class is recommended to ensure fairness and equity among all the users and to ensure there are adequate revenues to fund operating and capital components of the District’s wastewater collection system to meet California General Waste Discharge Requirements. The analysis looked at charges for the next five years (FY 2013-14 through 2017-18) and because some classes are recommended to have their charges increase, the District followed Proposition 218 procedures by notifying all property owners located within the District’s service area. Property owner have until 6:00 p.m. on April 18, 2013 to notify the District of their protest to the proposed charge adjustments. If the District receives a majority protest of 13 ,039 protests, then the proposed adjustment will not go into effect. Staff Recommendation That the Board of Directors approves continuing the public hearing to June 27, 2013. Analysis To determine the proposed charges will generate enough revenue for the District’s wastewater collection system staff performed the following calculations. ITEM NO. 12
Board of Directors April 18 , 2013 Page 2 of 5 FY 2013 -14 Revenues: Annual charges 5,110,130 (from sewer rate study) Permit & Inspection Fees 80,000 Connection Fees 75,000 Investment Earnings 60,000 Other 25,000 TOTAL: $5,345,130 Expenditures: Salaries & Benefits 1,377,292 (from proposed spending plan on 3 -28 -13) M&O 2,467,475 (from proposed spending plan on 3 -28 -13) Sub -Total: $3,844,767 $5,345,130 - $3,844,767 = $1,500,363 The balance of $1,500,363 is transferred into the Asset Management Fund, which funds the District’s Capital Improvement Projects (CIP). Asset Management: Balance 5,140,000 Transfer In 1,500,363 TOTAL: $6,640,363 Funds are then transfer red out of the fund balance to budget for CIP Balance 5,140,000 Transfer In 1,500,363 TOTAL: $6,640,363 Transfer Out 1,960,000 (from proposed spending plan on 3 -28 -13) Net Balance $4,680,363 Below are the proposed total expenditures Sala ries & Benefits 1,377,292 M&O 2,467,475 CIP 1,960,000 TOTAL: $5,804,767
Board of Directors April 18 , 2013 Page 3 of 5 FY 2014 -15 Revenues: Annual charges 5,212,332 (from sewer rate study) Permit & Inspection Fees 80,000 Connection Fees 75,000 Investment Earnings 60,000 Other 25,000 TOTAL: $5,447,332 Expenditures: Salaries & Benefits 1,484,800 (from proposed spending plan on 3 -28 -13) M&O 2,330,390 (from proposed spending plan on 3 -28 -13) Sub -Total: $3,815,190 $5,447,332 - $3,815,190 = $1,632,142 The balance of $1,632,142 is transferred into the Asset Management Fund, which funds the District’s Capital Improvement Projects (CIP). Asset Management: Balance 4,727,167 * Transfer In 1,632,142 TOTAL: $6,359,309 *Assuming balance fr om FY 2013 -14 earned 1% interest Funds are then transferred out of the fund balance to budget for CIP. Asset Management: Balance 4,727,167* Transfer In 1,632,142 TOTAL: $6,359,309 Transfer Out 1,957 ,000 (from proposed spending plan on 3 -28 -13) Net Balance $4,402,309 Below are the proposed total expenditures. Salaries & Benefits 1,484,800 M&O 2,330,390
Board of Directors April 18 , 2013 Page 4 of 5 CIP 1,957,000 TOTAL: $5,772,190 Attachment A is a ten year analysis of the Liquid Waste charge and the Asset Management Fund . The Board set a goal to maintain a minimum balance of $5 million in the Asset Ma nagement Fund and as shown in the attachment, the analysis demonstrates that the District cannot achieve this goal with the proposed spending plan. Attachment B is pr oposed spending cuts for Fiscal Year 2013 -14 & Fiscal Year 2014 -15. When these cuts are applied to the ten year analysis, the District is able to achieve the minimum Asset Management Fund balance on a long term basis, as demonstrated in Attachment C. Str ategic Plan Element & Goal This item adheres to the objective and strategy of Strategic Element 7 .0, Finance , which states: “Objective: To ensure the short and long -term fiscal health of the District Strategy: The District will forecast and plan revenue and expenditures and maintain appropriate reserves and investments to provide financial resources to fund current and planned operations and projects .” Legal Review District Counsel has reviewed and approved this report. Financial Review Attachment A a nd C are long term forecast of revenues and expenditures for the Liquid Waste Fund. Adopting a resolution will establish the following charges for the next five consecutive years. The Sewer Rate Study, dated December 7, 2012 describes the projected reven ues the charges below will generate. Proposed Annual Wastewater Rates Current Proposed Proposed Proposed Proposed Proposed Customer Class Rate * 7/1/2013 7/1/2014 7/1/2015 7/1/2016 7 /1/2017 Residential (Per Dwelling Unit) Single Family 69.00 85.34 87.05 88.79 90.57 92.38 Multi Family 53.77 50.09 51.09 52.11 53.15 54.21
Board of Directors April 18 , 2013 Page 5 of 5 Non -Residential (Per 1,000 sq. ft.) Commercial - Ave Strength 38.69 37.96 38.72 39.49 40 .28 41.09 Commercial - High Strength 43.66 41.40 42.23 43.07 43.93 44.81 Industrial 113.72 97.44 99.39 101.38 103.41 105.48 Committee Recommendation On April 16, 2013 the Operations Committee discussed this item; however, this report was prepared befor e the meeting occurred. Staff will share with the Board the Committee’s recommendation at tonight’s meeting. Public Notice Process Copies of this report are on file and will be included with the entire agenda packet for the April 1 8 , 2013 Board of Direct ors regular meeting at District Headquarters and on District’s website. Alternative Actions 1. R efer the matter back to staff. Reviewed by: Marc Davis District Treasurer/Interim Accounting Manager Attach ments A: Long Term Revenues and Expendit ures For ecast B: Proposed spending cuts C: Long Term Revenues and Expenditures Forecast after proposed spending cuts are applied.
Attachment A 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 LW Annual Charges 5,110,130 5,212,332 5,316,579 5,422,910 5,531,369 5,531,369 5,531,369 5,531,369 5,697,310 5,868,229 Permit & Insp Fees 80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000 Connection Fees 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 Investment 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 Other 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 Total Revenue:5,345,130 5,447,332 5,551,579 5,657,910 5,766,369 5,766,369 5,766,369 5,766,369 5,932,310 6,103,229 Salaries & Benefits 1,377,292 1,484,800 1,518,208 1,552,368 1,587,296 1,623,010 1,659,528 1,696,867 1,735,047 1,774,085 M&O 2,467,475 2,330,390 2,382,824 2,436,437 2,491,257 2,547,310 2,604,625 2,663,229 2,723,152 2,784,423 Balance 1,500,363 1,632,142 1,650,547 1,669,105 1,687,816 1,596,048 1,502,216 1,406,273 1,474,112 1,544,722 CIP 1,960,000 1,957,000 1,666,958 1,035,079 1,870,800 1,700,000 1,700,000 1,700,000 1,800,000 1,800,000 Total Expenses (Salaries, M&O & CIP)5,804,767 5,772,190 5,567,990 5,023,884 5,949,353 5,870,321 5,964,153 6,060,096 6,258,198 6,358,508 Asset Mananagement 5,140,000 4,727,167 4,446,332 4,474,220 5,159,329 5,026,108 4,971,378 4,821,330 4,572,879 4,289,461 Transfer In 1,500,363 1,632,142 1,650,547 1,669,105 1,687,816 1,596,048 1,502,216 1,406,273 1,474,112 1,544,722 Total 6,640,363 6,359,309 6,096,879 6,143,325 6,847,145 6,622,156 6,473,594 6,227,603 6,046,991 5,834,182 Transfer Out for CIP 1,960,000 1,957,000 1,666,958 1,035,079 1,870,800 1,700,000 1,700,000 1,700,000 1,800,000 1,800,000 AM Balance 4,680,363 4,402,309 4,429,921 5,108,246 4,976,345 4,922,156 4,773,594 4,527,603 4,246,991 4,034,182 Assumptions:AM Blance earning 1% interest CIP in 2018-19 -2020-21 is average expense for first five years No rate increase 2018-19 through 2020-21 Salaries & benefits and M&O 2.25% CPI Annual charge for the first five years is from the sewer rate study CIP for 2015-16 through 2017-18 from the sewer study Annual Charge in 2021-22 & 2022-23 assumes 3% inflation
Attachment B Proposed Spending Cuts FY 2013 -14 Personnel 42,000 Full time Maintenance Assistance . This position will remain part time. M&O 30,000 – TRC computer consulting/maint contract – Building 5 00 – Office supplies (Admin) 1,345 – Building Maintenance (Admin) Capital Outlay 10,000 – Smartcovers 27,000 – Toughbook laptops and licenses 45,000 – HQ parking lot 13,500 – HQ exterior maintenance CIP 150,000 – Force main upgrades Total Cuts: $319,345 FY 2014 -15 Personnel 42,000 – Full Time Maintenance Assistance 30,400 – PT Account Clerk M&O 5,000 – Vehicle maintenance 5,990 – Equipment Maintenance (Admin) 2,000 – Pump Station maintenance Capital Outlay 9,900 – Furniture for Account Clerk 10,000 – Smartcovers CIP 150,000 – HS 44 Bristol & Randolph 20 ,000 – Manhole Rehabilitation Total Cuts: $275,290
Attachment C 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 LW Annual Charges 5,110,130 5,212,332 5,316,579 5,422,910 5,531,369 5,531,369 5,531,369 5,531,369 5,697,310 5,868,229 Permit & Insp Fees 80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000 Connection Fees 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 Investment 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 Other 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 Total Revenue:5,345,130 5,447,332 5,551,579 5,657,910 5,766,369 5,766,369 5,766,369 5,766,369 5,932,310 6,103,229 Salaries & Benefits 1,304,892 1,412,400 1,444,179 1,476,673 1,509,898 1,543,871 1,578,608 1,614,127 1,650,445 1,687,580 M&O 2,370,475 2,297,500 2,349,194 2,402,051 2,456,097 2,511,359 2,567,865 2,625,641 2,684,718 2,745,125 Balance 1,669,763 1,737,432 1,758,206 1,779,186 1,800,374 1,711,139 1,619,897 1,526,601 1,597,147 1,670,525 CIP 1,810,000 1,787,000 1,666,958 1,035,079 1,870,800 1,700,000 1,700,000 1,700,000 1,800,000 1,800,000 Total Expenses (Salaries, M&O & CIP)5,485,367 5,496,900 5,460,331 4,913,803 5,836,795 5,755,230 5,846,472 5,939,768 6,135,163 6,232,704 Asset Mananagement 5,140,000 5,049,761 5,050,195 5,192,857 5,996,334 5,985,167 6,056,270 6,035,928 5,921,154 5,775,484 Transfer In 1,669,763 1,737,432 1,758,206 1,779,186 1,800,374 1,711,139 1,619,897 1,526,601 1,597,147 1,670,525 Total 6,809,763 6,787,193 6,808,401 6,972,044 7,796,708 7,696,307 7,676,166 7,562,529 7,518,301 7,446,010 Transfer Out for CIP 1,810,000 1,787,000 1,666,958 1,035,079 1,870,800 1,700,000 1,700,000 1,700,000 1,800,000 1,800,000 AM Balance 4,999,763 5,000,193 5,141,443 5,936,965 5,925,908 5,996,307 5,976,166 5,862,529 5,718,301 5,646,010 Assumptions:AM Blance earning 1% interest CIP in 2018-19 -2020-21 is average expense for first five years No rate increase 2018-19 through 2020-21 Salaries & benefits and M&O 2.25% CPI Annual charge for the first five years is from the sewer rate study CIP for 2015-16 through 2017-18 from the sewer study Annual Charge in 2021-22 & 2022-23 assumes 3% inflation