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Tuesday, June 8, 2021
Board of Directors Study Session
Time: 9:30 A.M.
IMPORTANT NOTICE REGARDING JUNE 8, 2021 STUDY SESSION MEETING
This meeting is being conducted utilizing teleconferencing and electronic means consistent with
State of California Executive Order N-29-20 dated March 17, 2020, regarding the COVID-19
pandemic.
***
The livestream of the meeting can be viewed by clicking the "Video" icon on this page (which will be
made available at the start of the meeting) or by visiting www.youtube.com/CostaMesaSanitary. In
accordance with Executive Order N-29-20, the public may only view the meeting online and not in
the District's Board Room.
***
To participate in the meeting by computer:
1. Copy and paste 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 (for
Apple 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 this
step.
***
Public Comments: Members of the public can submit any comments in writing for the Board of
Directors' consideration by sending them to the District Clerk, Noelani Middenway, at
nmiddenway@cmsdca.gov. Those comments will be made part of the official public record of the
meeting.
***
Obtaining Agenda Materials: The public is entitled to copies of all documents that are made part of
the agenda packet. If any document or other writing pertaining to an agenda item is distributed to
all or a majority of the Board after the packet is prepared, a copy of that writing may be obtained
from the District Clerk's Office.
***
In Compliance with ADA: Contact District Clerk, Noelani Middenway, at (949) 645-8400, 48 hours
prior 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 on
this 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 a
subsequent meeting. The Board of Directors will respond after public comment has been received. Please
state your name. Each speaker will be limited to four (4) continuous minutes.
1. Public Comments
C. ITEMS OF STUDY
1. CR&R Environmental Services Request for an Annual Rate Adjustment for FY 2021-2023
2. Preliminary Biennial Budget Review for Fiscal Year 2021-22 and Fiscal Year 2022-23.
3. Receive and File Quarterly Legislative Report - Quarter 2
D. CLOSING ITEMS
1. Oral Communications and Director Comments
2. Adjournment
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Tuesday, June 8, 2021
Board of Directors Study Session
Time: 9:30 A.M.
IMPORTANT NOTICE REGARDING JUNE 8, 2021 STUDY SESSION MEETING
This meeting is being conducted utilizing teleconferencing and electronic means consistent with
State of California Executive Order N-29-20 dated March 17, 2020, regarding the COVID-19
pandemic.
***
The livestream of the meeting can be viewed by clicking the "Video" icon on this page (which will be
made available at the start of the meeting) or by visiting www.youtube.com/CostaMesaSanitary. In
accordance with Executive Order N-29-20, the public may only view the meeting online and not in
the District's Board Room.
***
To participate in the meeting by computer:
1. Copy and paste 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 (for
Apple 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 this
step.
***
Public Comments: Members of the public can submit any comments in writing for the Board of
Directors' consideration by sending them to the District Clerk, Noelani Middenway, at
nmiddenway@cmsdca.gov. Those comments will be made part of the official public record of the
meeting.
***
Obtaining Agenda Materials: The public is entitled to copies of all documents that are made part of
the agenda packet. If any document or other writing pertaining to an agenda item is distributed to
all or a majority of the Board after the packet is prepared, a copy of that writing may be obtained
from the District Clerk's Office.
***
In Compliance with ADA: Contact District Clerk, Noelani Middenway, at (949) 645-8400, 48 hours
prior 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 excused
based 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 President
Arlene Schafer, Secretary
Arthur Perry, Director
Brett Eckles, Director
Meeting Jun 8, 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 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
on this agenda at the time those items are considered. Under the provisions of
the Brown Act, the Board of Directors is prohibited from taking action on oral
requests but may refer the matter to staff or to a subsequent meeting. The Board
of 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 Jun 8, 2021 - Board of Directors Study Session
Access Public
Type Procedural
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C. ITEMS OF STUDY
To: Board of Directors
From: Scott Carroll, General Manager
Date: June 8, 2021
Subject: CR&R Environmental Services Request for an Annual Rate Adjustment for FY 2021-2023
Summary
Per section 3.4 of the 2018 CR&R contract, hauler rates may be considered for a Consumer Price Index (CPI) adjustment every two
years during the term of the agreement. 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. Contract language also
stipulates the District has the right to audit the hauler's revenue to check hauler's profit margin before the Board of Directors makes a
decision.
On May 11, 2021, the Board of Directors delayed discussing this item to allow staff and CR&R officials discuss past performance issues.
The Board directed staff to bring this item back to today's meeting for discussion and possible action.
Recommendation
That the Board of Directors consider denying CR&R's request for an annual rate adjustment for FY 2021-2023.
Analysis
Per section 3.4 of the 2018 CR&R contract, hauler rates may be considered for a Consumer Price Index (CPI) adjustment every two
years during the term of the agreement. 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 their
second CPI increase request on Friday March 30, 2021, via email, their request is attached to this report for your review (See Exhibit 1).
In 2019, the Board of Directors approved CR&R's first CPI increase request of 5.8%, which increased solid waste expenditures by
over $535,000 for the two-year period from FY 2019-20 to FY 2020-21. The latest CPI increase request is 5.6%. If approved by the
Board, staff estimate solid waste expenditures will increase $647,700 during the next two fiscal years (FY 2021-22 & FY 2022-23).
Contract language also stipulates that the District has the right to audit the hauler's revenue to check hauler's profit margin before the
Board of Directors makes a decision. Mr. Marc Davis, District Treasurer, has obtained documents from CR&R and interviewed officials
regarding their profit margin and will give the Board an oral report of his findings at today's meeting.
CR&R is requesting a CPI increase to the following rates:
Subject 1. CR&R Environmental Services Request for an Annual Rate Adjustment for FY
2021-2023
Meeting Jun 8, 2021 - Board of Directors Study Session
Access Public
Type Action
Fiscal Impact Yes
Dollar Amount $647,700.00
Budgeted No
Budget Source Solid Waste Fund
Recommended Action That the Board of Directors consider denying CR&R's request for an annual rate adjustment
for FY 2021-2023.
Goals 2.0 Solid Waste
8.0 Finance
8.7 Finance - Ensure rates are not among the highest in the County
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1. Hauler (Occupancy) Fee — This fee includes all costs that CR&R has for collection of mixed waste/organics and all equipment used
including vehicles and issuing carts to customers. The current rate is $10.3635 per unit/per month and the proposed adjustment
is $10.9439 per unit/per month.
2. Processing Fee Recycling/Disposal — Cost per ton to process mixed solid waste. The current rate is $54.98 per ton. This is a net rate
to the District and includes any recyclable revenue retained by CR&R. The proposed adjustment is $58.06 per ton.
3. Conversion Technology Fee (Organics) — Current rate is $75.65 per ton, cost for delivery and processing of organic tonnage at the AD
Facility. The proposed adjustment is $79.89. A stipulation in the Agreement with CR&R states that CMSD is guaranteed the lowest
conversion technology fee and if CR&R negotiates a lower fee with another agency than CR&R must honor the lower fee to CMSD.
CR&R did provide in the attachment a list of Orange County cities that have implemented curbside organics recycling and noted their
conversion technology fee is higher than CMSD (See Exhibit 2). However, CR&R did not provide the conversion technology fee from
other clients such as the Cities of Temecula, Hemet and Los Angeles.
FY 2021-22 will be the third year of a five-year rate adjustment for solid waste. Residential rates will increase 7% from $240.60 to
$257.40 a year or $21.45 a month. When the solid waste rate study was being performed in FY 2018-19, the study took into
consideration inflation, including future CPI requests from CR&R. The study took into account an inflation average of 3.4% for two fiscal
years. When the Board approved CR&R request for a 5.8% CPI increase in 2019, expenditures exceeded revenues projected from the
solid waste study that resulted in a variance of over $308,000. CR&R's proposed CPI request of 5.6% is again higher than the solid
waste rate study inflation projection and if approved, the District will be below the $2 million fund balance by nearly $300,000 in FY 2022-
23 and below the minimum fund balance by over $818,000 in FY 2023-24 (See Exhibit 3). The District needs to have a minimum fund
balance of $2 million to continue paying bills during the months when assessment fee revenues are not allocated from the County of
Orange.
Can the District approve a lower CPI to CR&R? The short answer is yes, but staff has determined a lower CPI will still leave the District
below the $2 million fund balance by over $200,000 in FY 2023-24. Exhibit 4 are Fund Balance projections if the Board approved a 2.5%
CPI to CR&R. Approving a 2.5% or a 5.6% CPI would require the District to conduct a Proposition 218 hearing for another rate
adjustment on top of the 7% in 2021-22 and 6% in 2022-23 that was approved by the Board on May 23, 2019. The District would also
have to budget an additional $12,000 to pay for printing and mailing Prop 218 notices.
Exhibit 5 are Fund Balance projections without a CPI increase to CR&R. You will notice FY 2022-23 is balanced without using Fund
Balance money. This is a result of significant cuts made by staff that include programs, staff development, forgoing cost of living
adjustment for staff, professional services, etc.
Exhibit 6 is a letter from CR&R opposing staff's recommendation to deny CR&R's request for a 5.6% CPI rate adjustment
Performance
On March 9, 2021, staff presented a review of CR&R's performance this past year (See Exhibit 7). While CR&R's performance was
considered satisfactory, their performance did raise concerns from staff that we believe the Board should take into consideration when
deciding to grant or deny CR&R's request for a rate adjustment. Specifically, staff has the following concerns:
1. Staff received 348 complaints about trash carts not being emptied during their regular scheduled day, an increase of 55% from past
year, and vehicle breakdowns were 50% higher. During the week of March 29 through April 2 the Eastside neighborhood experienced
long delays getting their trash carts emptied by CR&R.
2. There were long delays for Christmas tree collections causing staff to receive many complaints from the public.
3. For several months CR&R was not in compliance with signage requirements of the agreement. On April 26, 2021, the Board did
approve a new sign design for CR&R trucks servicing the District.
4. CMSD is one of the very few agencies that provide billing services through assessments on the property tax role. This protects CR&R
from bad debt and saves CR&R money by not incurring typical expenditures for billing services (e.g. creating invoices, postage, hiring
debt collectors, etc). Staff believes the District providing its own billing service should be taken into consideration when deciding on rate
adjustments.
5. CR&R is non-compliant with the requirement of providing the District with a complete and accurate vehicle list. CR&R provided
consultant Mike Balliet a list of 12 vehicles, but only 10 vehicles on the list provided service to the District with an unlisted vehicle (57357)
employed as a spare.
6. CR&R's fleet average age is 8.5 years. Staff believes an ideal average age for a fleet of this type to be 7 years, with trucks phased out
of service after 12 years. Staff is concerned that the probability of mechanical issues leading to on-route breakdowns are increasing due
to the age of CR&R's fleet.
7. Many mixed waste routes are experiencing heavy loads (exceeding 12 tons), especially the Monday route. While these collection
vehicles can carry 12 to 14 tons, when loads are above 12 tons stopping efficiency and maneuverability are impacted. In addition, it can
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be argued that operation under these heavier load conditions can lead to excessive wear and tear on compaction units, brakes, and other
operation and safety systems. Staff believes rerouting and/or adding additional units to the routes will alleviate the heavy loads.
On May 13, 2021, staff met with CR&R to discuss the performance issues identified above. Staff commends CR&R for recognizing our
concerns, and we welcome the suggested improvements outlined in the attached letter from CR&R (See Exhibit 8); however, staff
believes the District should take a position of "wait and see" if the proposed plan comes to fruition before approving a rate adjustment.
After our meeting on May 13, the District did experience organic carts not being emptied in the College Park area. Staff and CR&R met
again to discuss communication improvement methods.
After the meeting, CR&R did demonstrate communication improvements. For instance, the day after Memorial Day, CR&R informed staff
that two drivers called out on sick leave and one mixed waste collection unit was down and needed repair work. By Wednesday, CR&R
was back to full strength and was able to empty the trash carts missed from last Tuesday. The information provided by CR&R allowed
staff to give the public updates about their trash collection. This is a good start from CR&R, but staff believes a "wait and see" approach
is warranted to determined if CR&R's improved communication plan is consistent throughout the year.
Legal Review
Legal review is not required.
Environmental Review
Consideration of a consumer price index increase to hauler rates is an administrative matter and not a disturbance of the environment
similar to grading or construction and not a project under CEQA or the District’s CEQA Guidelines.
Financial Review
Approving CR&R's request for 5.6% rate adjustment will increase solid waste expenditures by $647,700 during the next two fiscal years
(FY 2021-22 & FY 2022-23). The additional expense is not included in the preliminary FY 2021-22 & FY 2022-23 Budgets. An additional
$12,000 will need to be budgeted in FY 2021-22 for printing and mailing Proposition 218 hearing notices to the public.
Approving CR&R's request for 2.5% rate adjustment will increase solid waste expenditures by $289,200 during the next two fiscal years
(FY 2021-22 & FY 2022-23). The additional expense is not included in the preliminary FY 2021-22 & FY 2022-23 Budgets. An additional
$12,000 will need to be budgeted in FY 2021-22 for printing and mailing Proposition 218 hearing notices to the public.
Public Notice Process
Copies of this report are on file and will be included in the complete agenda packet for the June 8, 2021 Board of Directors Study
Session meeting at District Headquarters and posted on the District’s website.
Alternative Actions
1. Approve CR&R's request for an Annual Rate Adjustment for FY 2021-2023
2. Approve a CPI adjustment of 2.5% to CR&R for FY 2021-2023
2. Direct staff to report back with more information.
File Attachments
Exhibit 1 - CR&R Rate Adjustment letter 2021.pdf (83 KB)
Exhibit 1a - U.S Bureau of Labor Statistics (1).pdf (289 KB)
Exhbit 2 - CR&R Rate Adjustment 2021.xlsx (54 KB)
Exhibit 3- Fund Balance Projections - Solid Waste Fund - CR&R CPI 5.6 Percent.pdf (755 KB)
Exhibit 4- Fund Balance Projections - Solid Waste Fund - CR&R CPI 2.5 Percent.pdf (754 KB)
Exhibit 5- Fund Balance Projections - Solid Waste Fund - CR&R CPI 0 Percent.pdf (708 KB)
Exhibit 6 - CR&R Letter - Opposition to Staff's Recommendation.pdf (339 KB)
Exhibit 7 - CR&R Annual Review 2019-2020 Report - MBC.pdf (1,370 KB)
Exhibit 8 - CR&R Letter - Performance Review.pdf (646 KB)
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C. ITEMS OF STUDY
To: Board of Directors
Via: Scott Carroll, General Manager
From: Kaitlin Tran, Finance Manager
Date: June 8, 2021
Subject: Preliminary Biennial Budget Review for Fiscal Year 2021-22 and Fiscal Year 2022-23.
Summary
On April 13, 2021, and May 6, 2021, staff presented to the Board the Preliminary Biennial Budget Review for Fiscal Year 2021-22 and
Fiscal Year 2022-23. In the Analysis section of this report, you will find staff’s responses to the comments and questions from the Board
at the Study Session Meeting and Special Meeting. In addition, attachments A-F have been updated with information from the Special
meeting. Please note attachments A & B include increased budget amounts in green font and decreased budget amounts in blue font.
General Fund Revenue:
Beginning of the 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 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, as per the District goal, to either the Solid Waste or the Wastewater Fund.
Preliminary Budget FY 2021-22 (Attachment A):
The total preliminary budget for FY 2021-22 is $13,203,600. The Solid Waste Fund preliminary budget of $6,489,500, assumes
that expenses will exceed revenues by $242,900 creating a deficit requiring the use of reserves to balance the budget. The Solid
Waste Preliminary Budget presented at the May 6, 2021, Special Meeting has a deficit of $$357,800. Staff made some budget
cuts and reduced the deficit by $114,900.
According to the Solid Waste Rate Study conducted in February 2019 by the NBS, a consulting firm, it projected the District would
have deficit spending of $200,491 in FY 2021-22. The rate study’s deficit projection is $42,409 less than the proposed preliminary
budget. Deficit spending has been a practice of the District for the last seven years. The Board approved lowering the trash rate in
2013 and 2014 to reduce the solid waste reserves balance. Using funds from the reserves balance helped stabilize the trash rate
after implementing the Organics Recycling Program in 2015.
CR&R submitted a 5.6% Consumer Price Index (CPI) rate increase request on March 29, 2021. The District audited the hauler's
revenue to verify the profit margin prior to the Board’s decision. The District Treasurer will be giving an oral report of his
Subject 2. Preliminary Biennial Budget Review for Fiscal Year 2021-22 and Fiscal Year
2022-23.
Meeting Jun 8, 2021 - Board of Directors Study Session
Access Public
Type Action, Discussion
Fiscal Impact Yes
Budgeted No
Budget Source Solid Waste and Wastewater Funds
Recommended Action That the Board of Directors provide feedback to staff regarding the proposed preliminary
Biennial Budget for the Fiscal Years 2021-22 and 2022-23 and direct staff to report back
on June 28, 2021 to adopt the final Biennial Budget.
Goals 8.2 Finance - Adopt a balanced budget
8.0 Finance
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audit findings at today's meeting. The preliminary budget does not reflect the 5.6% CPI request from CR&R.
The Wastewater Fund preliminary budget of $6,381,100 assumes that expenses will exceed revenues by $417,300, creating a
deficit requiring the use of reserves to balance the budget. The Wastewater Preliminary Budget presented at the May 6, 2021,
Special Meeting has a deficit of $313,200. There were some changes since the Special Meeting; Staff had to make some
adjustments resulting in a deficit increase by $104,100 due primarily to the Engineering Technician/Construction Inspector
resigning and the District will resort to hiring a contractor to provide construction inspection services. The FY 2017-18 was the
final 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.
Preliminary Budget FY 2022-23 (Attachment B):
The total preliminary budget for FY 2022-23 is $13,312,800. The preliminary Solid Waste Fund budget of $6,618,600 assumes
that revenues will exceed expenses resulting in a surplus of $25,000. After the Special Budget Meeting on May 6, 2021, Staff
further reduced expenditures to have a surplus budget. According to the 2019 Solid Waste Rate Study, NBS projected the District
would have deficit spending of $10,362 in FY 2022-23.
The preliminary Wastewater Fund budget of $6,354,200 assumes that expenses will exceed revenues by $282,200, creating a
deficit which will require the use of reserves to balance the budget. The Wastewater Preliminary Budget presented at the May 6,
202, Special Meeting has a deficit of $203,400. Some adjustments were requested, resulting in a deficit increase of $78,800. 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 will 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.
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 carried forward into FY 2021-22.
Recommendation
That the Board of Directors provide feedback to staff regarding the proposed preliminary Biennial Budget for the Fiscal Years 2021-22
and 2022-23 and direct staff to report back on June 28, 2021 to adopt the final Biennial Budget.
Analysis
The following information is in response to the Board of Directors’ inquiries and comments from the May 6, 2021, Special Meeting and
updates staff made after the meeting.
The Salaries and Benefits accounts for FY 2021-22 (Attachment A) are reduced by $10,000 and $41,000 in the Solid Waste and
Wastewater Funds, respectively. A total reduction of $51,000 due to:
a) Assuming the new hire of the part-time Code Enforcement Office starting salary at the beginning salary range resulting in
$9,000 savings.
b) Beginning FY 2021-22, the District will recruit to fill the Engineering Technician position resulting in $11,000 savings. The
District will contract out the Construction Inspector position with an estimated cost of $92,400. This is budgeted under the Plan
Check/Inspection- Outside account.
c) While waiting to fill the Wastewater Maintenance Worker II (WMWII) position, the District anticipates to contract with a staffing
agency for a temporary worker for at least four months. The estimated cost for the four-month contract is $40,000. The salaries
and benefits savings for the four-month period for the WMWII is $24,000. Staff reduced $24,000 from the Wastewater
Maintenance Salaries and Benefits and increased $40,000 to the Contract Services Wastewater account.
d) Staff have been taking vacation hours resulting in a $7,000 reduction in Compensated Absences.
The Salaries and Benefits accounts for FY 2022-23 (Attachment B) are reduced by $10,500 and $24,200 in the Solid Waste and
Wastewater Funds, respectively. A total reduction of $34,7000.
The Professional Services, Staff reduced the Public Relations budget from $60,000 to $48,000 in FY 2021-22. The Solid Waste
Consulting Services estimated budget of $30,000 will not be sufficient to cover for the service. Staff estimated the costs will be
$45,000 for FY 2021-22 and FY 2022-23. The updated total preliminary budgets for Professional Services account are $321,800 and
$215,800 for FY 2021-22 and FY 2023, respectively.
As mentioned previously under the Salaries and Benefits budget, the contracted Construction Inspector estimated cost is $92,400.
Staff budgeted this cost under the Plan Check/Inspection-Outside account for both fiscal years.
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Solid Waste/Recycling tonnage- The proposed Preliminary Budget for FY 2021-22 and FY 2022-23 Staff assumes CR&R rates
remain the same.
Trash Hauler- Staff assumes a 0.2% increase in the occupancy account from FY2020-21 to FY 2021-22, resulting in 23,028
accounts. Also, a 0.5% increase in the occupancy account in FY 2022-23, will result in 23,143 accounts. The current Trash Hauler
rate is $10.3635. Therefore, the preliminary budgets for the Trash Hauler account are $2,863,800 and $2,878,100 for FY 2021-22
and FY 2022-23, respectively (Exhibit 1.1 & 1.2).
If the Board approves a 5.6% CPI rate increase for the next two fiscal years, the new hauler rate will be $10.9439 per occupancy
account (Exhibit 1.1) and the FY 2021-22 and FY 2022-23 estimated costs will be $3,024,200 and $3,039,300, respectively (Exhibit
1.2).
The Board could consider approving a lower CPI rate. If the Board approves a 2.5% CPI rate increase for the next two fiscal years,
the new hauler rate will be $10.6226 per occupancy account (Exhibit 1.1) and the FY 2021-22 and FY 2022-23 estimated costs will
be $2,935,400 and $2,950,100, respectively (Exhibit 1.2).
Recycling/Disposal – Staff assumes recycling tonnage will increase 3% in the next two fiscal years at the current rate of $54.98.
Therefore, the preliminary budgets for the Recycling Tonnage account are $1,995,800 and $2,056,300 for FY 2021-22 and FY
2022-23, respectively. This is 1% less than the preliminary budgets presented at the Special Meeting.
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If the Board approves a 5.6% CPI rate increase for the next two fiscal years, the new Recycling Disposal rate will be $58.06 per ton
and the FY 2021-22 and FY 2022-23 estimated costs will be $2,107,600 and $2,171,400, respectively.
The Board could consider approving a lower CPI rate. If the Board approves a 2.5% CPI rate increase for the next two fiscal years,
the new Recycling Disposal rate will be $56.35 per ton and the FY 2021-22 and FY 2022-23 estimated costs will be $2,045,700 and
$2,107,700, respectively.
Organics Disposal- Staff assumes organics tonnage will increase 5% in the next two fiscal years at the current rate of $75.65. Staff
anticipates the implementation of SB1383 will continue to increase the organics disposal tonnage. Therefore, the preliminary
budgets for the Organics Disposal are $862,400 and $907,800 for FY 2021-22 and FY 2022-23, respectively. This is 3% less than
the preliminary budgets presented at the Special Meeting.
If the Board approves a 5.6% CPI rate increase for the next two fiscal years, the new Organics Disposal rate will be $79.89 per ton
and the FY 2021-22 and FY 2022-23 estimated costs are $910,700 and $958,700, respectively.
The Board could consider approving a lower CPI rate. If the Board approves a 2.5% CPI rate increase for the next two fiscal years,
the new Organics Disposal rate will be $77.54 per ton and the FY 2021-22 and FY 2022-23 estimated costs will be $884,000 and
$930,500, respectively.
If the 5.6% CPI rate increase is approved, the estimated total costs for the Trash Hauler, Recycling Disposal and the Organics
Disposal will increase $320,500 and $327,200 in FY 2021-22 and FY 2022-23, respectively. A total increase of $647,700 for the
next two fiscal years.
If the Board considers approving a lower CPI rate of 2.5%, the estimated total costs for the Trash Hauler, Recycling Disposal and
the Organics Disposal will increase $143,100 and $146,100 in FY 2021-22 and FY 2022-23, respectively. A total increase of
$289,200 for the next two fiscal years.
Since the Facilities Maintenance Worker will be performing the Code Enforcement Officer duties he may need assistance in
janitorial duties, so staff increased $15,100 in the Building Maintenance (HQ) account to support the contracted janitorial services.
The updated total preliminary budgets for Building Maintenance (HQ) account are $49,500 and $45,100 for FY 2021-22 and FY
2022-23, respectively.
Staff reduced the Solid Waste Association of North America (SWANA) membership dues from five (5) Board members to one (1)
Board member. As a result, the Membership Dues account has a budget cut of $1,200 in the in both fiscal years.
The Staff Development accounts for both Solid Waste and Wastewater Funds (HQ and DY Staff) have budget cuts of $11,600
and $5,100 in FY 2021-22 and FY 2022-23, respectively. The following training and conferences have been cut from the Staff
Development account:
FY 2021-22
Strategic Government Resources Conference
Staff Annual Anniversary Gift
Liebert, Cassidy, Whitmore Conference
California Special District Association Conference
Coating Inspection Training
OSHA Construction 10-Hour Training
Trench/Excavation Safety Competent Person Training
California Resource Recovery Association Conference
Municipal Management Assoc of Southern California Conference
American Water Works Association Conference
FY 2022-23
Strategic Government Resources Conference
Coating Prep Training
OSHA Construction 30-Hour Training
Southern California Waste Management Forum Annual Conference
Southern California Waste Management Forum Spring/Summer Conference
Southern California SWANA Chapter Meetings
American Water Works Association
The total liability insurance budget presented at the Special Meeting were $196,000 and $235,200 for FY 2021-22 and FY 2022-23,
respectively. The District recently received a revised estimated liability insurance contributions of $233,100 and $256,200 for FY
2021-22 and FY 2022-23 respectively. Resulting in an increase of $37,100 in FY 2021-22 and $21,000 in FY 2022-23.
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As mentioned previously in the Salaries and Benefits section, the estimated cost to hire a temporary Wastewater Maintenance staff
for four months is $40,000. Staff increased the Wastewater Maintenance Contract Services account by $40,000 in FY 2021-22.
Staff anticipates the new Engineering Technician incumbent will need training and support in the online permitting and inspection
software (Cityworks PLL); therefore, Staff increased the GIS Support account by $3,000 in FY 2021-22.
The District recently received proposals for the Fats, Oils and Grease Program and is able to reduce the cost by $17,500 beginning
FY 2021-22. The revised preliminary budget for the Fats, Oils and Grease Program is $114,000 in both fiscal years.
The Household Hazardous Waste Program preliminary budget of $25,000 has been reallocated to fund the Solid Waste Consulting
Services expense in both fiscal years. Staff eliminated the HHW program at OCC Recycling Center because CR&R offers the door-
to-door HHW collection program to residents. In addition, there were concerns that non-residents or commercial businesses were
dropping off HHW at OCC Recycling Center.
Solid Waste Fund Balance Projections:
Attachment C- Staff assumed no CPI rate adjustments for CR&R in FY 2021-22 and FY 2022-23. The proposed preliminary budget
has a deficit of $242,900 in FY 2021-22 and a surplus of $25,000 in FY 2022-23. Based on the contract, CR&R may request a CPI
rate increase every two years; therefore, Staff assumed CR&R will receive a CPI rate increase of 5.5% in FY 2023-24 and FY 2024-
25. By FY 2023-24 and FY 2024-25 the District will have deficit budgets of $25,600 and $159,300, respectively. By FY 2024-25 the
District is estimated to have $75,410 in reserves.
Attachment D- Staff assumed a 5.6% CPI rate adjustment for CR&R in FY 2021-22 and FY 2022-23, resulting in $563,400 and
$302,200 budget deficits for FY 2021-22 and FY 2022-23, respectively. The District will not be able to meet the operating reserves'
requirement by $280,290 in FY 2022-23. In addition, Staff assumed CR&R will receive a CPI rate increase of 5.5% in FY 2023-24
and FY 2024-25. In this case, the District will not be able to meet the operating reserves' requirement by $818,490 in FY 2023-24.
Attachment E- The Board could consider approving a lower CPI rate to CR&R. Staff assumed a 2.5% CPI rate adjustment for
CR&R in FY 2021-22 and FY 2022-23,resulting in $385,800 and $120,900 budget deficits for FY 2021-22 and FY 2022-23,
respectively. Staff estimated the District will have $133,010 in reserves by FY 2022-23. In addition, Staff assumed CR&R will receive
a CPI rate increase of 5.5% in FY 2023-24 and FY 2024-25. In this case, by FY 2023-24, the District will not be able to meet the
operating reserves' requirement by $205,390.
Wastewater Fund Balance Projections:
Attachment F- 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 the wastewater service charge 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 rate adjustment
is approved by the Board, money will be reallocated into the wastewater reserves balance. If a rate adjustment is not approved for
FY 2022-23, the District will continue to operate using the reserves to balance the budget.
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 which
fall 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 Review
The report attachments include details for the following:
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1. Attachment A -FY 2021-22 Preliminary Budget
2. Attachment B -FY 2022-23 Preliminary Budget
3. Attachment C -Solid Waste Fund Balance Projections -CR&R 0%
4. Attachment D -Solid Waste Fund Balance Projections -CR&R 5.6%
5. Attachment E -Solid Waste Fund Balance Projections -CR&R 2.5%
6. Attachment F -Wastewater Fund Balance Projections
Public Notice Process
Copies of this report are on file and will be included with the entire agenda packet for the June 8, 2021, at the Study Session Meeting
District Headquarters and on District website at www.cmsdca.gov.
Alternative Actions
1. Refer the matter back to staff for additional information.
File Attachments
Attachment A- FY 2021-22 Prelim Budget 06082021.pdf (1,699 KB)
Attachment B- FY 2022-23 Prelim Budget 06082021.pdf (927 KB)
Attachment C - Solid Waste Fund Balance Projections - CR&R CPI 0 Percent.pdf (696 KB)
Attachment D - Solid Waste Fund Balance Projections -CR&R CPI 5.6 Percent.pdf (742 KB)
Attachment E - Solid Waste Fund Balance Projections -CR&R CPI 2.5 Percent.pdf (742 KB)
Attachment F - Wastewater Fund Balance Projections.pdf (657 KB)
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C. ITEMS OF STUDY
To: Board of Directors
Via: Scott Carroll, General Manager
From: Gina Terraneo, Management Analyst II
Date: June 8, 2021
Subject: Quarterly Legislative Update - Quarter 2
Summary
The Quarterly Legislative Report provides the Board of Directors with analyses of measures pending at the state and congressional
levels that are of interest to the District. On July 22, 2010, the Board of Directors gave authority to the President to write support and/or
opposition letters on behalf of the Board if that position has been taken by an agency the District is a member of. For all other bills, staff
recommendations for formal District positions on legislation will be agendized and presented for Board action at their regular Board of
Directors meetings. When the Board takes formal action on a piece of legislation, the President will advocate the support or opposition of
individual bills as approved by the Board.
Recommendation
That the Board of Directors receives and files the Quarterly Legislative Report.
Analysis
As of May 26, 2021, the following Congressional and State bills are of interest to the District and are summarized in the attached
Quarterly Legislative Report for Quarter 2:
CONGRESS
SUPPORT:
HR 535 – Special Districts Provide Essential Services Act
S 91 – Special Districts Provide Essential Services Act
WATCH:
HR 616 – Emergency Water is a Human Right Act
HR 895 – Emergency Assistance for Rural Water Systems Act of 2021
HR 1015 – Water Recycling Investment and Improvement Act
HR 1352 – Water Affordability, Transparency, Equity, and Reliability Act of 2021
HR 1512 – CLEAN Future Act
HR 1915 – Water Quality Protection and Job Creation Act of 2021
S 209 – Emergency Assistance for Rural Water Systems Act of 2021
S 914 – Drinking Water and Wastewater Infrastructure Act of 2021
S 916 – Water Affordability, Transparency, Equity, and Reliability Act of 2021
CA STATE LEGISLATURE
SUPPORT:
AB 361 – Open meetings: local agencies: teleconferences
AB 818 – Solid waste: premoistened nonwoven disposable wipes
ACR 17 – Special Districts Week
OPPOSE:
AB 59 – Mitigation Fee Act: fees: notice and timelines
Subject 3. Receive and File Quarterly Legislative Report - Quarter 2
Meeting Jun 8, 2021 - Board of Directors Study Session
Access Public
Type Discussion, Receive and File
Goals 6.6 Administrative Management - Stay informed of Federal and State legislation
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WATCH:
AB 20 – Political Reform Act of 1974: campaign contributions: The Clean Money Act of 2021
AB 230 – Employment: flexible work schedules
AB 418 – Emergency services: grant program
AB 474 – California Public Records Act: conforming revisions
AB 602 – Development fees: impact fee nexus study
AB 703 – Open meetings: local agencies: teleconferences
AB 881 – Plastic waste: diversion: recycling: export
AB 1027 – Solid and organic waste
AB 1041 – Employment: leave
AB 1086 – Organic waste: implementation strategy
AB 1217 – Personal protective equipment: stockpile
AB 1403 – Emergency services
AB 1500 – Safe Drinking Water, Wildfire Prevention, Drought Preparation, Flood Protection, Extreme Heat Mitigation, and
Workforce Development Bond Act of 2022
ACA 1 - Local government financing: affordable housing and public infrastructure: voter approval
SB 45 – Wildfire Prevention, Safe Drinking Water, Drought Preparation, and Flood Protection Bond Act of 2022
SB 219 – Property taxation: delinquent penalties and costs: cancellation: public health orders
SB 244 – Lithium-ion batteries: illegal disposal: fire prevention
SB 274 – Local government meetings: agenda and documents
SB 323 – Local government: water or sewer service: legal actions
SB 594 – Elections: local redistricting
SB 695 – Mitigation Fee Act: housing developments
SB 741 – Trash receptacles and storage containers: reflective markings
Research for the quarterly legislative report is sourced from legislative analyses compiled by various individuals, organizations, and
agencies, including the National Special District Coalition, California Special Districts Association, California Association of Sanitation
Agencies, CalRecycle, Californians Against Waste, Orange County Sanitation District, and the websites of the District's state
representatives.
Important Upcoming Dates on the Legislative Calendar:
May 21 – Last day for fiscal committees to hear and report bills introduced in their house
June 4 – Last day for each house to pass bills introduced in that house
June 15 – State Budget deadline
July 14 – Last day for policy committees to meet and reports bills
July 16 – Summer Recess begins upon adjournment
August 16 – Legislature reconvenes from Summer Recess
August 27 – Last day for fiscal committees to meet and report bills to the floor (2 house)
September 10 – Last day for any bill to be passed; Legislature adjourns for the year
State Level COVID-19 Impacts on Special Districts (provided by California Special Districts Association)
$1.92 billion experienced fiscal impact statewide
$2.43 billion projected unmet fiscal impact by December 2021
33% of special districts have had staff cutbacks
42% have had to significantly reduce services to their communities
Legal Review
Not applicable
Environmental Review
Consideration of pending legislation is an administrative matter and 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 which fall 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 Review
Not applicable.
Public Notice Process
Copies of this report are on file and will be included with the complete agenda packet for the June 8, 2021 Board of Directors Study
Session meeting held via teleconference and posted on the District’s website.
nd
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Alternative Actions
1. Direct staff to report back with more information.
File Attachments
Legislative Analysis Quarterly Report - 2.pdf (449 KB)
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D. CLOSING ITEMS
Subject 1. Oral Communications and Director Comments
Meeting Jun 8, 2021 - Board of Directors Study Session
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Type
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D. CLOSING ITEMS
THE NEXT STUDY SESSION OF THE COSTA MESA SANITARY DISTRICT BOARD OF DIRECTORS WILL BE HELD ON
TUESDAY, JULY 13, 2021 AT 9:30 A.M. IN THE DISTRICTS BOARD ROOM, 290 PAULARINO AVENUE, COSTA MESA.
Subject 2. Adjournment
Meeting Jun 8, 2021 - Board of Directors Study Session
Access Public
Type Procedural