12 - A - Liquid Waste Annual Charge Costa Mesa Sanitary District …an Inde pendent Special District Protecting our community’s health and the environment by providing solid waste and sewer collection services. www.cmsdca.gov Memorandum To: Operations Committee From : Scott Carroll, General Manager Date: April 16 , 2013 Subject: Liquid Waste Annual Charge Summary Recently, the District conducted a comprehensive analysis of the District’s liquid waste charges. The analysi s 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 Cal ifornia 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 b y 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 1 3 ,039 protests, then the proposed adjustment will not go into effect. Staff Recommendation That the Operations Committee recommends the Board of Directo rs adopt a resolution confirming and adopting the report and directing Clerk to file with County Audito r . Analysis To determine the proposed charges will generate enough revenue for the District’s wastewater collection system staff performed the following calculations.
Operations Committee April 16 , 2013 Page 2 of 5 FY 2013 -14 Revenues: Annual charges 5,110,130 (from sewer rate study) Permit & In spection 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 propos ed 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 transferred 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 Salaries & Benefits 1,377,292 M&O 2,467,475 CIP 1,960,000 TOTAL: $5,804,767
Operations Committee April 16 , 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 prop osed 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 from 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.
Operations Committee April 16 , 2013 Page 4 of 5 Salaries & Benefits 1,484,800 M&O 2,330,390 CIP 1,957,000 TOTAL: $5,772,190 Attac hment 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 Distr ict cannot achieve this goal with the proposed spending plan. Attachment B is proposed 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. Strategic 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 fi scal 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 Distr ict Counsel has reviewed and approved this report. Financial Review Attachment A and 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 revenues the charges below will generate.
Operations Committee April 16 , 2013 Page 5 of 5 Proposed Annual Wastewater Rates Current Proposed Proposed Pr oposed 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 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 Public Notice Process Copies of this report are on file and will be included with the entire agenda packet for the April 16 , 2013 Operations Committee regular meeting at District Headquarters and on District’s website. Alternative Actions 1. Do not recommend the Board of Directors adopt the proposed charges. Reviewed by: Marc Davis District Treasurer/Interim Accounting Manager Attach ments A: Long Term Revenues and Expendit ures Forecast B: Proposed spending cuts C: Long Term Revenues and Expenditures Forecast after proposed spending cuts are a pplied.