HomeMy WebLinkAbout06-12-2012 b1 2012 sewer fund reviewcounc1 l
ac En 6a 12epoi t
CITY O F S A N L U I S O B I S P O
FROM :
Carrie Mattingly, Utilities Directo r
Prepared By :Dave Hix, Utilities Deputy Director, Wastewate r
Greg Head, Interim Senior Administrative Analys t
SUBJECT : FY 2012-13 SEWER FUND REVIE W
RECOMMENDATION S
1.Review and accept the FY 2012-13 annual Sewer Fund financial review ;
2.Conceptually approve the 2012-13 Sewer Fund budget, with final action on June 19 2012 wit h
the adoption of the 2011-13 Financial Plan Supplement ;
Authorize the addition of a Utilities Business Manager position ;
4.Approve the amended Capital Improvement Plan ; and
5.Adopt the Water Reclamation Facility (WRF) Energy Efficiency Project resolutio n
communicating the Council's preliminary support for initial loan and grant applicatio n
processing .
DISCUSSION
This report presents the annual review of the Sewer Fund . It highlights major adjustments made t o
the Sewer Fund analysis since the preparation of the 2011-13 Financial Plan .
As outlined in the FY 2012-13 Sewer Fund Analysis, which forecasts the financial position of th e
Sewer Fund through FY 2019-20, the City is able to :
1.Maintain an ongoing level of capital improvement projects to maintain the community's
wastewater infrastructure assets ;
2.Maintain a positive fiscal position in the Sewer Fund ;
3.Maintain a healthy working capital balance and revenue plan forecast to position the Sewe r
Fund to secure favorable financing terms for Wastewater Master Plan Improvements in th e
wastewater capital program forecast ; and,
4; Continue to deliver safe and reliable wastewater services to the community withi n
previously adopted sewer service rates .
FY 2012-13 Sewer Fund Analysis Repor t
The FY 2012-13 Sewer Fund Analysis report, including the details of the process and assumption s
used to complete the analysis, changes in financial position, and an update on major activities and
programs, is attached .The analysis incorporates the following key financial impacts .
1
Meeting Dat e
June 12, 201 2
Item Number
B1
B1-1
FY 2012-13 Sewer Fund Review Page 2
1.New agreement between the City and Cal Poly with updated sewer rates commencing o n
July 1, 2012 .
2.2012-13 salary and benefit updates .
3.Assumed salary and benefit concessions of 6 .8% from San Luis Obispo City Employee s
Association (SLOCEA).
4.Increasing City PERS contributions commencing on July 1, 2013 .
5.Four Significant Operating Program Changes .
6.Amended Capital Improvement Plan .
2011-13 Financial Plan Supplement : FY 2012-13 Budget
Revenue Updat e
Overall, revenue projections for FY 2011-12 and FY 2012-13 are in alignment with the 2011-1 3
Financial Plan .
The City Council adopted sewer service rates in support of the City's 2011-13 Financial Plan durin g
a public hearing on June 14, 2011 in accordance with Proposition 218 requirements . The adopte d
FY 2012-13 sewer rates reflect a 6% increase, effective July 1, 2012 .
Cal Poly Agreement .Discussions between the City and Cal Poly have culminated in a tentative F Y
2012-13 Rate Agreement for Sewer and Water Services that will be presented to Council, in detail, fo r
its consideration on June 12, 2012 . Building on the existing five-year agreement, which expires o n
June 30, 2012, the proposed agreement establishes a mutually-approved methodology fo r
calculating the University's appropriate sewer rate, based on the University previously makin g
capital contributions to the Water Reclamation Facility upgrade projects . The Agreement provide s
for annual renewal of sewer rates . Rates were previously updated every five years .
The proposed methodology and new rates are scheduled to commence July 1, 2012, with a minima l
increase in projected revenues to the sewer fund from Cal Poly for FY 2012-13 .
Operating Program Updat e
The Sewer Fund's operating program budgets were updated to reflect the following changes .
1.Salary and benefit updates provided by Finance, 6 .8% salary and benefits concessions fro m
SLOCEA, and increased City PERS contributions .
2.Due to a change in workload distribution, the allocation of administrative managemen t
salaries and benefits to the Sewer Fund was increased from 40% to 50 %
3.As described in the table below, four Significant Operating Program Changes (SOPCs).
SOPC Name
Budget
Impact Comment s
tional Structure $12,500(1)Joint water (50%) and sewer (50%). One-time . Use of consultantOrganizaO
Review services to augment staff work to-date .
Development Impact Fee Study $7,500(1)Joint water (50%) and sewer (50%). One-time . Update facility costs,
demographic data and growth assumptions,water supply
B1-2
FY 2012-13 Sewer Fund Review Page 3
SOPC Name
Budget
Impact Comments
component, secondary dwelling units/guest houses .
Water Quality Studies for San
Luis Obispo Creek
$275,000 Sewer. One-time . Enhanced studies and continuing stakeholde r
facilitation to better quantify water quality and the related beneficia l
uses of San Luis Obispo Creek .
Utilities Business Manager $0 Joint water (45%) and sewer (55%). Ongoing . 1 .0 FTE addition o f
new job classification coordinated with HR . Estimated annual cos t
of $125,383 included in 2011–13 Financial Plan for 2012-13 a s
ongoing operating program expenditure . Therefore, there is no
increase in the 2012-13 budget or projected years budgets . The
comprehensive analytic and fiscal needs of the Utilities Departmen t
have been undergoing assessment since July 2010 . This work ,
which is completed,complements the broader organizationa l
structure analysis that commenced in July 2011 . The broader
organizational review is entering phase two for which there is a n
SOPC request for consultant services . In an effort to accelerate th e
process of hiring the Utilities Business Manager position, staf f
intends to begin the recruitment following Council's authorizatio n
of the added position .
(I)Sewer Fund's share of cost
Capital Improvement Plan Amendments
Recommended amendments to the previously approved 2011-13 Capital Improvement Plan (CIP )
are summarized in the table below .
C1P Name 2012- 13
Projected
Years Comments
Energy Co-
generation
($400,000)In anticipation of the WRF Energy Efficiency Project, the
Energy Co-generation Project was eliminated .
WRF Upgrade Start Date
Moved 2014 - 15
Commencement of WRF Upgrade project moved out tw o
years (2012–13 to 2014–15) based on Central Coast Water
Board staff feedback .
Calle Joaquin Lift
Station
Start Date
Moved 2013 – 1 4
2,600,000
1 .Calle Joaquin Lift Station replacement project move d
out one year (2012–13 to 2013-14)
2 .Added $2 .6 million for construction .
3 .Total project cost of $4 .1 million in 2013-14 .
Debt Service Updat e
Debt service payments related to the 1992 WRF upgrade and energy conservation projects ar e
complete in August 2012 . Debt service carried by the fund will be reduced by 72%.Revenues
currently used to pay this debt will contribute to preparing the fund for the heavier debt burde n
payments necessitated by the upcoming Water Reclamation Facility Upgrade Project .
WRF Energy Efficiency Project Resolutio n
The WRF Energy Efficiency Project Investment Grade Audit (IGA), which Council approved i n
January 2012, is scheduled for completion in November 2012 . The IGA includes the business case
(estimated costs and benefits) for Council to make a fully informed decision about proceeding wit h
the project . Since the IGA is in process and the results will not be presented to Council fo r
consideration until December 2012, it is premature to include the financial impacts of the project i n
FY 2012-13 Sewer Fund Review Page 4
the FY 2012-13 Fund Review and Fund Analysis . However, an expression of Council's intent to
fully consider the project when IGA results are available communicates to prospective lenders and
grantors the requisite conditional support necessary for preliminary loan and grant applicatio n
processing required for timely project funding . WRF Energy Efficiency Project Resolutio n
(Attachment 2) expresses Council's preliminary support for the project pending the completion o f
the IGA, and subsequent presentation and recommendation to Council .
ATTACHMENT S
1.FY 2012-13 Sewer Fund Analysi s
2.WRF Energy Efficiency Project Resolution
ATTACHMENT 1
FY 2 .012-13 Sewer Fund .Analysi s
June 12, 201 2
Prepared by th e
Utilities Departmen t
city of san lu g s oBIspo
Attachment 1
city of san Luis of isp o
FY 2012-13 Sewer Fun d
TABLE OF CONTENT S
I .OVERVIE W
II .
2011-13 FINANCIAL PLAN SUPPLEMENT :FY 2012-13 BUDGET
A.Revenue Summary
B.Operating Program Summar y
C.Capital Improvement Plan Summar y
D.Debt Service Summar y
III .
MAJOR ACTIVITIES AND PROGRAM S
A.FY 2011-12 Updat e
B.FY 2012-13 and Forecas t
EXHIBIT A — FINANCIAL SCHEDULE S
A .1 Changes in Financial Positio n
A .2 Projection Assumption s
A .3 Capital Improvement Pla n
EXHIBIT B — SEWER RATE STRUCTURE HISTORY
Attachment 1
city o f
san lws oB1sp o
FY 2012-13 Sewer Fund Analysi s
I.OVERVIEW
This report presents the financial condition of the Sewer Fund, based on the 2011-13 Financia l
Plan Supplement : FY 2012-13 Budget operating and capital programs . It takes into consideration
the identified needs in the Wastewater Master Plan, regulatory requirements, infrastructur e
maintenance, and adopted City financial policies .
II.2011-13 FINANCIAL PLAN SUPPLEMENT : 2012-13 BUDGE T
A.Revenue Summary
The Sewer fund's projected revenues are summarized in Table A .
Table A . Revenue Summary
130,30 0
14,202,30 0
79500 0
104,800
117,60 0
65 70 0
6,90 0
3,60 0
15,426,20 0
Original
Budget
Budget Variance
Budget
Investment &Property Revenue
Sewer Service Charge s
Sales to Cal Pol y
Development Impact Fees
Account Set-up Fee s
Industrial User Charge s
Connection Charges & Meter Sales
2011-1 2
Original
Revised
233 700
213 000 (20,700 )
13,152,400
13,152,400
0
750,000 {
725,000 (25,00 0.
102,900
128,600
25,700
115,500 1
115 .500
0
64,5001
65,200
700
6,800
9,100
2,30 0
.3,500 !.
45,700 .42,200
14,429,300 14,454,500 25,200 .
2012-13
Revise d
Budget Varianc e
127,500 (2,800)
14,266,000 63, 700
799 200 4,200
103,700 (1,100)
116,400 (1,200)
65 .700 0
9,200 2,300
3,600
0
15,491,300 65,100
Overall, revenue projections for FY 2011-12 and FY 2012-13 are in alignment with the 2011-1 3
Financial Plan . FY 2011-12 revenue projections are based upon actuals through March 31, 2012 .
FY 2012-13 Sewer Service Charges are projected using the HDR (HDR is the department's rat e
consultant) revenue model which is based upon the following :
1.FY 2012-13 monthly sewer rates, adopted as part of the 2011-13 Financial Plan ,
2.Winter water use data collected for a three-month period, route-dependent ranging betwee n
mid-November 2011 and mid-March 2012, that establishes the Average Winter Water Us e
(AWWU) sewer cap for billing, an d
3 Sewer rate analysis that includes a review of all sewer accounts using the most recent 12 -
month period.
The HDR revenue model projects FY 2012-13 Sewer Service Charges of $14,266,045 ; a smal l
increase from the original budget . Beyond FY 2012-13, Sewer Service Charges are estimate d
using projected sewer service rate changes applied to the most recent volume/use data . FY 2012 -
13 monthly sewer rates, which reflect a 6% increase effective July 1, are summarized below .
B1-7
Attachment 1
FY 2012-13 Monthly Sewer Charge s
TYPE OF ACCOUNT Monthly Rates
Base Fee Volume Fee
Residential — minimum base charge +volume charge
Single family dwelling, including single meter condominiums and townhouses ,
per dwelling unit . Total monthly fee capped based on Average Winter Water Us e
(AWWU )
Multi-family dwelling in anyduplex, apartment house or rooming house, pe r
account. Accounts without separate irrigation meter : Total monthly fee capped
$7 .4 3
$7,4 3
$7.43
$8 .1 9
$8 .1 9
$8 .1 9
based on Average Winter Water Use (AWWU). Account with separate irrigatio n
meter : No cap .
Mobile home or trailer park, per account . Accounts without separate irrigatio n
meter : Total monthly fee capped based on Average Winter Water Use (AWWU).
Account with separate irrigation meter : No cap .
Non-Residential -minimum base charge +volume charge
All non-residential accounts, per account $7 .43 $8 .1 9
Schools
Public or private school, based on per average daily attendance (ADA) at th e
school
N/A $6 .64/ADA
Each Vehicle Discharging into the City Sewer System
Minimum base fee includes 1,500 gallons discharge . Volume fee per 100 gallon s
in excess of initial 1,500 gallons discharged
$193 .30 $11 .64
per 100 gallon s
I Unit = 748 Gallon s
The following table compares the FY 2011-12 and FY 2012-13 monthly bill for the averag e
Single Family Residential (SFR) customer using the calculated AWWU "Sewer Cap" an d
approved monthly sewer rates .
Comparison Average Single Family Residential Sewer Customer Monthly Bil l
2011-12 2012-1 3
AWWU SFR "Sewer Cap":6-Units 6-Unit s
Rates Average Bill Rates Average Bil l
Base Charge :$7.01 $7 .01 $7 .43 $7 .4 3
Volume Charge (Sewer Cap x Rate):$7.73/unit $46 .38 $8 .19/ unit $49 .1 4
Total $53 .39 $56.57
Sales to Cal Poly are projected to slightly increase due to an increase in the ratio (from 82% to
86%) applied to the City's sewer rate that is incorporated in the proposed new Cal Poly rat e
agreement .
Considering the current economic volatility and development climate, projected FY 2012-1 3
Development Impact Fees were maintained as originally estimated in the 2011-13 Financia l
Plan . A trending analysis will be performed in conjunction with the 2013-15 Financial Plan t o
determine if adjustments to the forecast methodology are substantiated .
B .Operating Program Summary
B1-8
Attachment 1
Wastewater Division operating programs are summarized in Table B . The summary of operating
programs reflects the operating program base budget amounts for FY 2012-13, which include s
four Significant Operating Program Changes (SOPCs). All of the SOPCs are in the Wastewate r
Administration I Engineering program . Forecasted operating and maintenance costs are adjuste d
for inflation using inflation rates coordinated with Finance .
C .Capital Improvement Plan Summar y
Capital improvement project expenses are forecast based on infrastructure maintenance an d
repair history, individual project budget estimates, and regulatory requirements . Maintaining th e
wastewater system infrastructure, including major equipment upgrades, ongoing treatmen t
processes, technology, and long-term infrastructure upgrade and replacement planning is critica l
to providing safe and reliable wastewater services for the community . Wastewater Divisio n
Capital Improvement Plans are summarized in Table C . The table reflects all recommended
amendments, and reports FY 2012-13 and two projected years .
Table B . Summary of Operating Programs
2012-1 3
BUDGET
Wastewater Collection (I)1,086,60 0
Pretreatment 234,300
Water Reclamation Facility 3,302,00 0
Water Quality Laboratory 474,30 0
Wastewater Administration/Engineering (2)923,100
Wastewater Franchise Fees 522,800
TOTAL WASTEWATER SERVICES OPERATING PROGRAMS 6,543,100
(1)Customer Service costs are allocated 50/50 between the Sewer and Water Fund s
(2)Includes all FY 2012-13 SOPCs
B1-9
Attachment 1
Table C . Capital Improvement Plan
2012-13
2013-14
2014-1 5..
BUDGEFPROPOSED PROPOSE D
Wastewater Collectio n .
Co Action Sys tern Improvements
.....
500,000
1,575,000 800 000...
CoAcoSs\//fr//\+eReplacement Sae g
Cane Joaquin Lift Station
100,000
Construction Management.....
'Madonna Lift Statio n
Design ..
Constructio n_,Maltam Lift Statio n.. ,.
Dn
100,00 0........
.
.
...
Fleet Repiemit /2 Ton Picku p
Fleet RWa\mnt :H/m-ear __.
Equipment Replacement : Generator (50% share)
Fleet Replacement : CCTV Van
Fleet Replacement : 1 1/2 Ton Service Trucks
Water Reclamation Facility
Map' Maintenanc e
W R g ad e
Desig n
Total Wastewater Services CIP Request s
SaesInformation Technology
NtNetwork Firewalls.
Virtual Private «d»ok (VPN) Appliances..~_~~ ~ ~
Web Filter, Security Upgrades, Network Securit y...
_._
Network Equipment Replacemen t
Total Shar of Information Tec n Qg C M
TOTAL SEWER FUND CAPITAL PLA N
D .Debt Service Summary
The Sewer fund's debt service obligations are summarized in Table D .
1,500 000
970,000
6,625,000 3,275,000
97,000)6,645500 3,308,5 0
Table D . Debt Service Summary
Comments
~.._~.
Current
~ y
<
.
State Revolving
g ~5900 Last payment August m z
Energy Conservatio Projects
.
/ \ S283,800 Last payment August 2012 .
2009 Public Safety Radio System Upgrade
$4¢50 0
2009 Public S :f Communications Center
$32,70 0... ,
Private Placement m£Tank Farm Lift Station
$187,90 0..:..._
Total
°
.
»$2,995,000
BI-l O
Attachment 1
If the investment grade analysis is favorable and Council approves the WRF Energy Efficiency
Project, an estimated $4 .1 million in debt financing will be required with debt service payment s
commencing in FY 2013-14 . The Water Reclamation Facility Upgrade, reprogrammed t o
commence in FY 2014-15, will require approximately $54 .8 million in debt financing with deb t
service payments commencing in FY 2017-18 .
V. MAJOR ACTIVITIES AND PROGRAM S
A .
FY 2011-12 Updat e
1.Laguna Lift Station and Calle Joaquin Lift Station Siphon and Forcemai n
Laguna Lift Station design has been completed and staff will be coming to Council with a
request for bids for construction in June of 2012 . This project was originally proposed to
be constructed with the Calle Joaquin Lift Station, Siphon and Forcemain replacemen t
project, but has moved forward separately as the Calle Joaquin project has been deferre d
one year because of land acquisition, permitting and additional time to study money
saving and collaborative alternatives .
2.Regulatory Update
The City, Central Coast Water Board staff (CCWB), and stakeholders from th e
community interested in San Luis Obispo Creek, met in January and discussed solution s
and alternatives to protect the creek and its uses . This process, led by the City's
facilitator, has resulted in a path forward to answering questions and providing additiona l
information on the impacts of nutrients on aquatic habitat and disinfection by-product s
referred to as Trihalomethanes (THMs). The studies will require additional funding, bu t
have resulted in the reissuance of the WRF's National Pollutant Discharge Eliminatio n
System (NPDES) permit being deferred two years . This process not only defers the cos t
of the WRF Upgrade for two years, but will allow the City to participate in th e
development of a reasonable and protective nutrient discharge limit .
B .
FY 2012-13 and Forecas t
Water Reclamation Facility Energ-y Efficiency Projec t
In January of this year Council approved a study, referred to as an Investment Grade
Analysis (IGA), partnering with Pacific Gas and Electric (PG&E), to analyze an d
specifically identify equipment to improve energy efficiency, decrease electrical demand ,
and reduce operations and maintenance costs . This phase of the project, approved b y
Council in January of 2012, will provide a provide a 50% o design of the project along wit h
a more thorough financial breakdown of costs, savings, and pay back of the project . The
scope of this project also coordinates with the goals and recommendations of the WR F
Master Plan and will reduce the cost of the future WRF upgrade by approximately $1 .5
million with the possibility of greater reductions as the project's study and design near s
completion . The IGA is expected to propose 13 environmentally and fiscally sustainabl e
energy efficiency measures identified in PG&E's Preliminary Energy Assessment (PEA )
with an estimated project payback in the range of 15 to 17 years .
The IGA is scheduled to be completed in November of 2012 and will detail how the Cit y
can move forward with a design/build project if the resultant savings, efficiency, an d
financing are favorable . When completed, the IGA will provide an accurate cost estimate ,
scope, and partial design of the project that will enable Council to make a sound decisio nB1-11
Attachment 1
as to whether or not to move forward with the project . A Resolution and proforma sewe r
fund analysis showing projected costs and funding assumptions has been included wit h
the staff report. This information will provide state lending agencies and public/privat e
lenders sufficient information to examine and pre-approve the City for debt financing .
The Resolution and proforma sewer fund analysis demonstrates adequate revenues an d
agency support and will facilitate moving forward with the preliminary financin g
inquiries for this project in a timely manner should Council choose to approve th e
project. Lining up potential project financing will allow the City to take the earlies t
possible advantage of energy efficiencies, reduced maintenance benefits, and the curren t
favorable bidding and construction environment .
2 Water Quality Studie s
Recent regulatory discussions have resulted in a two-year deferral of the issuance of th e
WRF's revised NPDES permit . The deferment has been granted because new statewid e
nutrient requirements are currently being developed that look at the nutrient discharge s
and their effects on aquatic habitat . This regulatory relief allows the City the capability t o
work collaboratively with stakeholders and collect additional critical data to develop a
reasonable and protective discharge limits for the creek . A SOPC request identifyin g
$275,000 for water quality studies and a facilitator for the stakeholder process in include d
as part of the financial plan supplement .
3 Water Reclamation Facility Upgrad e
Because of recent regulatory relief, the WRF upgrade has been deferred for two years t o
allow time to develop the most appropriate discharge limits for San Luis Obispo Creek .
Design for the upgrade is assumed for 2014 . This timing will ensure construction i s
completed and processes are in compliance with discharge requirements within 5 year s
after the WRF's revised NPDES permit is issued . Total project costs are estimated a t
$64 .3 million including $3 .5 million for design and $60 .8 million for construction and
related services .
Attachment 1
EXHIBIT A
2012 SEWER FUN D
FINANCIAL SCHEDULES
B1-13
Attachment 1
Exhibit A.1
CHANGES IN FINANCIAL POSITION - SEWER FUN D
00-I I 2011-12 2'012'-I 1 301 1 is t
.~taal F ~I 1010 ,.t I'w 12!ition lnin oi„ctiou i'n;icctir>n oi irCUa1 Ptn7~oi,n
Revenues
Investment and Property Revenues 206,500 213 ;000 128,000 200,200 192,300 278,900 379,100 290,300 308,300 358,700
Service Charges
Customer Sales
Sewer Service Charges 12,493,800 13,152,400 14,266,000 14,836,600 15,281,700 15,740,200 16,212,400 16,536,600 16,867,300 17,204,600
Sales to Cal Poly 471,000 725,000 799,200 831,200 856,100 881,800 908,300 926,500 945,000 963,900
Development Impact Fees 169,800 128,600 103,700 106,000 109,000 112,300 115,700 119,500 123,500 128,20 0
Account Set-Up Fees 113,800 115,500 116,400 118,000 120,400 123,800 126,900 130,500 134,200 138,200
Industrial User Charges 63,500 65,200 65,700 66,600 67,900 69,800 71,500 73,500 75,600 77,900
Connection Charges and Meter Sales 6,700 9,I00 9,200 9,300 9,500 9,800 I0,000 10,300 10,600 10,900
Other Revenue 1,800 45,700 3,600 3,700 3,800 3,900 4;000 4,100 4,200 4,300
Total Revenue 13,526,900 14,454,500 15,491,800 16,171,600 16,640,700 17,220,500 17,827,900 18,091,300 18,468,700 18,886,700
Expenditures
Operating Program s
Public Utilities 5,652,300 6,373,700 6,543,100 6,529,400 6,766,100 7,038;300 7,217,300 7,424,800 7,632,100 7,854,700
General Government 1,467,200 1,354,300 1,394,100 1,413,600 1,441,900 1,477;900 1,524,800 1,560,200 1,607,000 1,655,200
Total Operating Programs 7,119,500 7,728,000 7,937,200 7,943,000 8,208,000 8,516,200 8,732,100 8,985,000 9,239,100 9,509,900
Capital Improvement Plan 2,216,400 7,486,400 970,000 6,645,500 3,308,500 4,695,000 63,463,000 2,500,000 3,550,000 2,500,000
Debt Service 3,191,500 3,245,000 2,995,000 824,600 823,400 821,800 4,942,200 4,940,500 4,938,200 4,894,700
Total Expenditures 12,527,400 18,459,400 11,902,200 15,413,100 12,339,900 14,033,000 77,137,300 16,425,500 17,727,300 16,904,60 0
Other Sources (Uses)
Operating Expenditure Adjustments (64,600)(157,300)(62,900)(64,200)(65,800)(67,400)(69,100)(71,200)(73,300)(75,500)
Projected MOA Adjustments 82,000 110,100 96,900 80,900 68,400 55,500 41,800 27,400
Capital Reserve (1,200,000)(300,000)(725,000)(930,000)(1,050,000)
Proceeds from Debt Financing 54,800,000
Other Sources (Uses)
Total Other Sources (Uses)(64,600)(157,300)19,100 (1,154,100)31,100 (286,500)54,074,300 (945,700)(31,500)(1,098,100)
Revenues and Other Sources Over (Under )
Expenditures and Other Uses 934,900 (4,162,200)3,608,700 (395,600)4,331,900 2,901,000 (5,235,100)720,100 709,900 884,000
Working Capital, Beginning of Year 9,628,500 10,563,400 6,401,200 10,009,900 9,614,300 13,946,200 16,847,200 11,612,100 12,332,200 13,042,100
Working Capital, End of Year 10,563,400 6,401,200 10,009,900 9,614,300 13,946,200 16,847,200 11,612,100 12,332,200 13,042,100 13,926,100
Attachment 1
Exhibit A.2
PROJECTION ASSUMPTIONS - SEWER FUN D
CAFE;GOR)ES 2012-13 21113-14 2014-15 2015-16 21116-17 2017-18 2018-19 2019-2 0
Utilities Service Fees CPI Projections 0 .8%1 .4%2 .0%2 .8%2.5%2 .8%2 .8%3 .0%
Debt Service - State Revolving Fund Loan $1,885,900 $0 $0 $0 $0 $0 $0 $0
Debt Service - Energy Conservation Projects $283,800 $0 $0 $0 $0 $0 $0 $0
Debt Service -2009 Public Safety Radio System Upgrade $42,800 $42,600 $42,600 $42,100 $41,800 $41,800 $41,300 $0
Debt Service - 2009 Public Safety Communications Center $32,700 $32,800 $32,500 $32,500 $32,500 $32,400 $32,400 $32,300
Debt Service - I-Bank Loan for Tank Farm Lift Station $561,900 $561,100 $560,300 $559,400 $558,500 $557,500 $556 ;600 $555,600
Debt Service - Private Placement for Tank Farm Lift Station $187,900 $188,100 $188,000 $187,800 $187,300 $186,700 $185,800 $184,700
Debt Service- Water Reclamation Facility Upgrade $0 $0 $0 $0 $4,122;100 $4,122,100 $4,122,100 $4,122,10 0
Debt Service - WRF Energy Efficiency Project $0 $0 $0 $0 $0 $0 $0 $0
Development Impact Fee Growth Rate 0.00%0.25%0 .50%0 .50%0 .50%0 .50%0.50%0 .75%
Attachment 1
Exhibit A.3
C_UPITAI_ I\IPRO\ E\IENT PLAN - SEWER FIN D
CO1)IT_11[ ,\'o )i•I10 ;iloor ,1u_l 'runI l
WASTEWATER SERVICES
2111-5
llt rx ;1 F PPoo c ~<ro r usrn PhUi'I'I+1 )Pn q~>17 01)0 St:f
WastewaterCoRecfiotr
Collection System Improvements
500,000
1,575 ;000
800,000
1,470,000
1,500,000
1,575,000
600,000
1,590,000
Collection System Infrastructure Replacement Strategy
100,00 0
Laguna Lift Station
Design
Construction
Construction Managemen t
Colic Joaquin Lift Station
Design
Construction
3,800,000
Construction Management
300000
Madonna Lift Station
Design
100,000
Construction
Margarita Lift Station
Design
500,000
100,000
Construction 500,000
Foothill Lift Station
Design 100,00 0
Construction 500,000
Buckley Lift Station
Design 500,000
Construction 2,000,000
Construction Management 500,000
Fleet Particulate Matter Trap Retrofi t
Fleet Replacement 112 Ton Pickup 20,000
Fleet Replacement: Hydro-Cleaner 255,000 270,000
Equipment Replacement :Generator (50% share)55,00 0
Fleet Replacement :CCTV Van 120,000
Fleet Replacement 1 112 Ton Service Trucks 180,00 0
Water Reclamation Facility
Major Maintenance 370,000 575,000 320,000 505,000 400,000 425,000 450,000 640,000
WRF Energy Efficiency Projec t
WRF Upgrade
Design 1,500,000 2,000,000
Construction
Infrastructure 16,840,000
Nutrient Removal 39,460,000
Construction Management 4,500,000
Fleet Replacement :Mid-Size Pickup 15,000
Fleet Replacement : 3/4 Ton Service Bed Truck 25,000
Total Wastewater Services CJP Requests 970,000 6,625,000 3,275,000 4,695,000 63,420,000 2,500,000 3,550,000 2,500,000
Shared Information Technology
Office Application Software Replacement (4% share )
City Website Upgrade (4% share)
Network Firewalls 8,50 0
Virtual Private Network (VPN) Appliances 6,50 0
Web Filter,Security Upgrades,Network Security 5,50 0
Network Equipment Replacement 33,500
Radio Handholds and Mobile Replacements 43,000
Total Share ofInformation Technology CUP 0 20,500 33,500 0 43,000 0 0 0
TOTAL SEWER FUND CAPITAL PLAN 970,000 6,645,500 3,308,500 4,695,000 63,463,000 2,500,000 3,550,000 2,500,000
B1-1 6
Attachment 1
EXHIBIT B
SEWER RATE STRUCTURE HISTORY
Current policies to guide rate structure setting :
■Comply with legal requirement s
■Encourage conservatio n
■Ensure revenue adequacy to fully meet system operating and capital need s
■Provide equity and fairness between customer s
■Be easy to understand and administe r
■ Facilitate ongoing review to maintain rate stabilit y
The City Council approved the residential volume-based sewer rate structure effective July 1 ,
2007 delivering a sewer rate structure with a base fee and volume charge to reflect the individua l
customer's usage and associated sewer charges . The volume based sewer rate structur e
encourages water conservation and achieves fairness and equity among residential custome r
classes — customers with low use pay less and customers with higher usage pay more . Prior t o
2007, the single family residential sewer rate structure was a fixed charge which did not reflec t
the individual customer's water use and associated demand placed on the wastewater system .
With the residential volume-based sewer rate structure, the individual customer's metered wate r
use during the winter months, when outdoor irrigation should be turned down or off and wate r
use should be most reflective of the demand placed on the wastewater system for sewer charges ,
is used to establish a "sewer cap". The water use during the winter months is averaged t o
establish the sewer cap . Residential sewer caps are implemented with the first full sewer servic e
period after July 1st . Sewer charges are based on actual water usage up to the customer's sewe r
cap, which is most reflective of that customer's demand on the wastewater system .
When a new customer account is activated, single family residential accounts start with an 8-uni t
sewer cap and multi-family residential accounts start with a 6-unit sewer cap until the custome r
establishes their individual sewer cap based on their average winter water use, as established in
the winter months . Eight units was selected as it is representative of winter water use for ne w
customers . After an individual cap has been established, a customer will not be charged mor e
than the cap . Conversely a customer may be charged less if their monthly water usage is belo w
the cap .
The City's sewer rate structure includes a minimum base charge plus a volume fee based on th e
volume of water used .
WHEREAS,the City has entered into an agreement with Pacific Gas and Electric t o
develop an Investment Grade Assessment (IGA) to complete a study, provide a thoroug h
financial breakdown, and partial design of the most efficient cost saving measures at the WRF ;
and
WHEREAS,the full costs and benefits of the WRF Energy Project are not yet know n
and it is premature to include the financial impacts of the project in the FY 2012-13 Sewer Fun d
Review and Fund Analysis ; and
Attachment 2
RESOLUTION NO .
(2012 Series )
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO I N
SUPPORT OF PRELIMINARY DEBT FINANCING APPLICATIONS FOR TH E
WATER RECLAMATION ENERGY EFFICIENCY PROJEC T
WHEREAS,the City of San Luis Obispo supports and promotes climate protection ,
greenhouse gas reduction, and investment in infrastructure which will save energy and funds ; an d
WHEREAS,the City Council positively received a preliminary report related to th e
installation of certain Energy Efficiency and Renewable Energy Upgrades at the Wate r
Reclamation Facility (WRF); and
WHEREAS,it is expected project costs will require the City to apply for and assum e
some debt financing ; and
WHEREAS,in the interest of timely project funding and in order to take the earlies t
possible advantage of energy efficiencies, reduced maintenance benefits, and the curren t
favorable bidding and construction environment, should the IGA result in a favorable project, the
City expresses its intent to fully consider the project when the IGA results are available ; and
WHEREAS,the City desires to communicate to lenders and grantors in the interim th e
requisite conditional support necessary for preliminary loan and grant application processing .
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Lui s
Obispo as follows ;
SECTION 1 .Support the submission of preliminary loan and grant applications for th e
WRF Energy Project ;
SECTION 2 . Approve Exhibit A ; a Proforma of Financial Schedules for the City of Sa n
Luis Obispo's Sewer Fund, exclusively in support of preliminary financing applications and t o
demonstrate the sewer fund's financial position for possible WRF Energy Project debt financing .
Upon motion of , seconded by
and on the following vote :
AYES :
NOES :
R
B1-18
Attachment 2
Resolution No . (2012 Series)
Page,2
ABSENT :
The foregoing resolution was adopted this day of 200x .
Mayor Jan Marx
ATTEST :
Sheryl] Schroeder
Interim City Cler k
APPROVED AS TO FORM :
J. Christine Dietrick
City Attorney
EXHIBIT A
Proforma of Financial Schedules for the City of San Luis Obispo's Sewer Fund, (consisting of 3
pages)
B1-19
Attachment 2 (Proforma)
Exhibit A.1
CHANGES IN FINANCIAL POSITION - SEWER FUND PROFORM A
to-1 I x011-1 _
Revenues
Investment and Property Revenues 206,500 213,000
Service Charges
Customer Sale s
Sewer Service Charges 12,493,800 13,152,400
Sales to Cal Poly 471,000 725,000
Development Impact Fees 169,800 128,600
Account Set-Up Fees 113,800 115,50 0
Industrial User Charges 63,500 65,20 0
Connection Charges and Meter Sales 6,700 9,10 0
Other Revenue 1,800 45,70 0
Total Revenue 13,526,900 14,454,500
Expenditures Capital Expenditure
Operating Programs
Public Utilities 5,652,300 6,373,700
General Government 1,467,200 I,354,300
Total Operating Programs 7,119,500 7,728,000
Capital Improvement Plan 2,216,400 7,486,400
Debt Service 3,191,500 3,245,000
Total Expenditures 12,527,400 18,459,400
Other Sources (Uses)
Operating Expenditure Adjustments (64,600)(157,300)
Projected MOA Adjustments
Capital Reserv e
Proceeds from Debt Financing 1 Debt Financin g
Other Sources (Uses )
Total Other Sources (Uses)(64,600)(157,300)
Revenues and Other Sources Over (Under)
Expenditures and Other Uses 934,900 (4,162,200)
Working Capital, Beginning of Year 9,628,500 10,563,400
Working Capital,End of Year 10,563,400 6,401,200
t
128,000 162,200
149,200
230,800
3I9,500
I4,266,000
14,836,600
15,281,700
15,740,200
16,212,400
799,200 831,200
856,100
881,800 908,300
103,700
106,000
109,000
112,300
115,700
116,400 118,000 120,400 123,800 126,900
65,700
66,600
67,900
69,800
71,500
9,200
9,300
9,500
9;800
10,000
3,600 3,700 3,800 3,900 4,000
15,491,800
16,133,600 16,597,600 17,172,400
17,768,300
Start Operational Savings
(64,200)
(65,800)
(67,400)(69,100 )
I10,100 96,900 80,900
68,400
(1,200,000)
(300,000)
(725,000 )
54,800,000
4,119,100
(1,154,100)
31,100
(286,500)
54,074,300
1,708,700
(651,900)
4,082,100
2,660,400
142,200
6,401,200 8,109,900 7,458,000 11,540,100 14,200,500
8,109,900 7,458,000
11,540,100 14,200,500
14,342,700
(IO(I 1
11101 1
358,60 0
16,536,600
926,500
119,500
130,500
73,500
10,300
4,100
373,900
16,867,30 0
945,00 0
123,500
134,200
75,60 0
10,60 0
4,200
427,900
17,204,600
963,900
128 ;200
138,200
77,900
10,900
4,300
18,159,600 18,534,300 18,955,900
WRFUpgrade Saving s
7,121,000 7,319,700 7,533,000
1,560,200 1,607000 1,655,200
8,681,200 8,926,700 9,188,200
2,500,000 3,550,000 2,500,000
5,421,200 5,418,900 5,375,400
16,602,400 17,895,600 17,063,600
(71,200)(73,300)(75,500)
55,500 41,800 27,400
(930,000)(1,050,000 )
(945,700)(31,500)(1,098,100 )
611,500 607,200 794,200
14,342,700 14,954,200 15,561,400
14,954,200 15,561,400 16,355,600
le i
6,970,000
2,995,000
17,902,200
Start Debt Service
6,750,10 0
1,477,900
8,228,00 0
4,695,00 0
1,302,500
14,225,500
6,267,000
6,492,100
1,413,600 1,441,900
7,680,600
7,934,000
6 •~
t0
3,308,500
1,304,100
12,546,60015,631,400
6,921,800
1,514,800
8 4 . 600
71,700,400
(62,900)
82,000
I^~4,100,000
Attachment 2 (Proforma )
Exhibit A .2
PROJECTION ASSUMPTIONS - SEWER FUND PROFORM A
DATE GOR1 r
Utilities Service Fees CPI Projections
11,12-1 3
0.8%
2_013-1 4
1 .4%
2014-1 5
2.0%
2015-1 6
2.8%
_,201~i-1 7
2.5%
201?-I $
2 .8%
Z01)3-I ?
2.8%
?019-2 0
3 .0%
Debt Service - State Revolving Fund Loan $1,885,900 $0 $0 $0 $0 $0 $0 $0
Debt Service - Energy Conservation Projects $283,800 $0 $0 $0 $0 $0 $0 $0
Debt Service - 2009 Public Safety Radio System Upgrade $42,800 $42;600 $42,600 $42,100 $41,800 $41,800 $41,300 $0
Debt Service - 2009 Public Safety Comnarnications Center $32,700 $32,800 $32,500 $32,500 $32,500 $32,400 $32,400 $32,30 0
Debt Service - I-Bank Loan for Tank Farm Lift Station $561,900 $561,100 $560,300 $559,400 $558,500 $557,500 $556,600 $555,600
Debt Service - Private Placement for Tank Farm Lift Station $187,900 $188;10 $188,00 $187,800 $187,300 $186,70 $185,800 $184,700
Debt Service -Water Reclamation Facility Upgrade $0 $0 .$0 $0 $0 $4,122,10 $4,122,100 $4,122,100
Debt Service - WRF Energy Efficiency Project $0 $480,70 $480,70 $480,700 $480,70 $480,700 $480,700 $480,70
Development Impact Fee Growth Rate 0.00%0 .25%0 .50%0.50%0.50%0.50%0 .50%0175%
Attachment 2 (Profomta )
Exhibit A.3
CAPITAL IMPROVE \IE\T PLAN - SEWER FUND PROFORM AL
1'I :,o it Ii t
Ij I1[s
WASTEWATER SERVICES
2012-I 3
II )I,1T
_-~-?
PFIOT,XTU P!i .Pti,,pt .f )11u t ;ttt,-.D OP),0 POQr[J51:1)
Wastewater Collectio n
Collection System Improvement s
Collection System Infrastructure Replacement Strategy
500,00 0
100,000
1,575,000 800,000 1,470,000 1,500,000 1,575,000 600,000 1,590,000
Laguna Lift Statio n
Design
Construction
Construction Management
Cale Joaquin Lift Station
Design
Construction
Construction Management
Madonna Lift Station
Desig n
Construction
Margarita Lift Statio n
Design
Construction
Foothill Lift Station
Design
Construction
Buckley Lift Station
Design
Construction
Construction Management
Fleet Particulate Matter Trap Retrofit
3,800,000
300000
100,000
500,000
100,000
500,000
100,000
500,000
500,000
2,000,00 0
500,00 0
Fleet Replacement : 112 Ton Pickup 20,000
Fleet Replacement : Hydro-Cleaner 255,000 270,000
Equipment Replacement : Generator (50% share)55,00 0
Fleet Replacement : CCTV Van 120,000
Fleet Replacement : 1 1/2 Ton Service Trucks 180,000
Water Reclamation Faciliiy
Major Maintenance 370,000 575,000 320,000 505,000 400,000 425,000 450,000 640,000
WRF Energy Efficiency Project 6,000,000
WRF Upgrade
Design 1,500,000 2,000,000
Construction
Infrastructure 15,340,000
Nutrient Removal 39,460,000
Construction Management 4,500,000
Fleet Replacement : Mid-Size Pickup 15,000
Fleet Replacement : 314 Ton Service Bed Truck 25,000
Total Wastewater Services ClPRequests 6,970,000 6,625,000 3,275,000 4,695,000 61,920,000 2,500,000 3,550,000 2,500,000
Shared Information Technology
Office Application Software Replacement (4% share )
City Website Upgrade (4% share)
Network Firewalls 8,500
Virtual Private Network (VPN) Appliances 6,500
Web Filter, Security Upgrades, Network Security 5,500
Network Equipment Replacement 33,500
Radio Handholds and Mobile Replacements 43,000
Total Share of Information Technology CIP 0 20,500 33,500 0 43,000 0 0 0
TOTAL SEWER FUND CAPITAL PLAN 4970,000 6,645,500 3,308,500 4,695,000 61,963,000 2,500,000 3,550,000 2,500,000
B1-2 2