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HomeMy WebLinkAbout06/04/1996, 4 - ANNUAL REVIEW OF ENTERPRISE FUNDS council M j aGEnaa aEpom 6 Nem N®6v CITY OF SAN LUIS OBISPO � S FROM: Bill Statler, Director of Finance Prepared By: Linda Asprion, Revenue Manager SUBJECT: ANNUAL REVIEW OF ENTERPRISE FUNDS CAO RECONEMENDATION Review and discuss 1996-97 rate setting, capital improvement project requests, and financial condition for the City's five Enterprise Funds: A. Transit Fund B. Parking Fund C. Golf Course Fund D. Water Fund E. Sewer Fund DISCUSSION Annually the five Enterprise Funds are reviewed by the Council to adjust fees and rate structures as required to ensure that they remain appropriate and equitable. The Council sets fees and rates at levels which fully cover the total direct and indirect costs- including operations, capital outlay, and debt service - for the water, sewer, parking, and golf funds; while striving to cover at least thirty percent of transit operating costs with fare revenues as set forth in the Short-Range Transit Plan. Accordingly, attached are individual reports for each of the five Enterprise Funds. Each Fund's report includes a "Change in Fund Balance" showing two years of historical/actual revenues and expenditures with ending fund balance and a five year projected fund balance (fiscal years 1995- 96 through 1998-99) along with the assumptions used in these projections. Unless specifically requested as part of the 1996-97 Budget, no changes in projects or programs from those previously approved by the Council are reflected in these assumptions. Additionally, each report addresses rate setting/changes (if any) for Fiscal Year 1996-97. Also included with each report for Council consideration are new funding requests for Capital Improvement Projects for 1996-97. The Enterprise Funds have included these requests (if any) in their fund balance projections. It should be noted that the analysis of each Enterprise Fund is only through the 1998-99 timeframe. The purpose of these analyses'is not to comprehensively review long-term rate needs, but to confirm assumptions in the 1995-97 Financial Plan. Council Agenda Report - Title of Report Page 2 FISCAL IMPACT The Golf Course Fund is requesting an equity transfer from the General Fund of$54,500 and the Sewer Fund is requesting a rate increase of 3%. These requests are discussed in detail in the appropriate fund report ATTACHMENTS A. Transit Fund Annual Review B. Parking Fund Review C. Golf Course Fund Review D. Water Fund Review E. Sewer Fund Review Attachment.,L council g j agcnaa izEpoRt C I T Y OF SAN LU IS O B I S P O FROM: Michael D. McCluskey, Public Works Director4 Prepared by: David Elliott, Administrative Anal Harry Watson, Transit Manager SUBJECT: Transit Fund Rate Review CAO RECONEMUNDATIONS 1) Review and discuss the transit fund rate review 2) Reduce appropriations on three capital projects to match actual revenues and costs DLSCUSSION Transit Fund Rate Review The attached worksheet, "Changes in Fund Balance - Transit Fund", projects revenues and expenses for the transit fund over the next four years. Worksheet projections are based on the following assumptions: C SLO Transit will continue to be able to use more than half of its annual Federal Transit Administration (FTA) apportionment for operations. G Operations appropriations will be at levels proposed for the 1996-97 budget and will increase by three percent each year from 1997-98 to 1998-99. G A $2,040,000 capital improvement appropriation to build a transit transfer center will be covered by grant revenues. 0 An estimated additional $120,000 appropriation needed for the bus maintenance building addition/exterior bus washer will be appropriated from fund balance, which is in effect excess Transportation Development Act (TDA) revenue received. 0 Annual FTA and TDA apportionments will not increase. C Transit patronage will not increase. G Transit fares will not increase. C Annual in-lieu fare contributions from Cal Poly will fall to $160,000 in 1996-97 and remain at that level. A planned $900,000 capital improvement appropriation to purchase three new buses is not shown on the worksheet. It will be covered by a $720,000 FTA grant (pending approval) and $180,000 from TDA revenues. Public Works will request the appropriation after the grant application is approved and the grant agreement is ready to be executed. Council Agenda Report- Transit Fund Rate Review Page 2 From the worksheet Public Works has concluded that current transit fares plus anticipated FTA and TDA apportionments will cover all planned operating expenses and capital outlays from 1996-97 through 1998-99. Capital Project Appropriation Reductions Appropriations on the following three grant-financed capital projects should be reduced to match actual revenues available based on grant approvals and contract prices: Existing Actual Required Appropriation Cost Reduction Bus Stop Improvements $75,000 $50,000 -$24,000 New Bus Acquisition $818,200 $577,000 -$241,200 Wheelchair Lift Replacement $40,000 $38,300 -$1,700 On the Bus Stop Improvements, the City has received grants for only $50,000 worth of work rather than the $75,000 originally anticipated. On the New Bus Acquisition, grants were approved for only two buses instead of the three originally planned. (This is a different project than the three-bus acquisition mentioned above.) On the Wheelchair Lift Replacement, actual installation cost was $1,700 less than budgeted. Attachment Changes in Fund Balance - Transit Fund hAtramitVatemv1.agn 0 0000000 0000 000 0 00 00 co o IT o co o co v v_ a N (00 coOtNf1 W 0) W a) w 't to to N a) C7 CO) r r ° T r T ri O 0000000 O Op S O O o O O p `a ' O O O 000 O OOO O. CO O otoo N NON R R N � m co LO V)40 LO m C07 CSO C r: O Cr) O N N l7 C7 1� r r O 0000000 000 OOO O O O O O 000 O 000 O O O Co C'7 0 0 o O 00 O r to R Nrl IT w 0 Or LOO N O O CD a Lf) O n N N Cf) CO n r N r N W r N C7 0 o o 0 o o o 0 000 000 0 0 0 s, ;<m 0 0000000 000 0t0 nl00 00 s's LO Ot000 r0 V- t r C9 r l0 O r t0 ap O O O n O C7 CO Q) r 001 CN7 N co C O N O N a: CV r N O 0000000 000 000 o O 0 O O 00000 OOO O O 0 01 CO r CO 0 W W N N a N It 0 N C43 CV)C`V) N COO W N n W C� Co)0 Q .. .. R C% CO r r r T T T t LL O 0000000 0 o 0 000 O O O O O O O o O 000 O O O ;..' r` to o to n N v_ o co m m W a r e CA O to CO CA ^ t0 N 0 Cl)O Z.l l0 0 Q N r M CO T C'9 O7 C9 1: OCOA Q `o MX. a W. Q ° a mxm O m +� `m v. CC y !Z U U a Z. . . 7 O 7 m W m LL x . 0 m W a7 ^CO 7 NZ C .. L Q i d m C m O r .. C O Z G t d 'O m m y y , 7 a C c C p ..' tD m C .y., G O C C .. '0 d C N 4ti}A m y m Z m c > adm fl m to � t O cm m W Q Wa `.° ... com ad � LiCc cWv01010 a "1 0 3 U v a (D.2 � Ur U m O d L c c G G `m Z j m j 0 0 t H U " 0 = E : p O R C3 0 Q •.. „” G m � F- H0LL Lf' c C. m~ N C. C~ G c m m m x r m x 7 7 a :Q W 0 Q W LL LL t Attachment council j, agenda Repout C I T Y OF SAN LU IS OB ISP O FROM: Michael D. McCluskey, Public Works Director Prepared by: David Elliott, Administrative Anal t' Keith Opalewski, Parking Mariar SUB,IECr: Parking Fund Rate Review CAO RECOMMENDATION 1) Review and discuss the parking fund rate review 2) Approve new CIP project requests for 1996-97 DISCUSSION Parking Fund Rate Review The attached worksheet, "Changes in Fund Balance - Parking Fund", projects revenues and expenses for the parking fund over the next four years. Worksheet projections are based on the following assumptions: C Operations appropriations will be at levels proposed for the 1996-97 budget and will increase by four percent each year from 1997-98 to 1998-99. G Capital improvement appropriations from fund balance will include: $136,000 in 1996-97 for the Palm/Nipomo Parking Lot $41,000 in 1996-97 for the 860 Pacific Parking Lot $50,000 in 1996-97 for an archeological study of artifacts found on the site of the Palm Street Parking Garage $1.5 million in 1997-98 for acquisition of land for a third parking garage and $10,900 over the next three years for information system improvements. C Although parking patronage and revenue increased substantially in 1995-96 after completion of the Downtown Centre, they will level off and not increase significantly more until the new garage expansion is built. (Revenue projections for 1996-97 through 1998-99 reflect the jump in patronage seen in 1995-96.) O Parking meter rates will increase by 10 cents per hour in January 1998 as called for in Municipal Code Section 10.52.010. C Parking ticket fines will increase by two dollars in January 1998. c A reserve approximately equal to annual debt service will be maintained as required by contractual obligations. From this worksheet Public Works has drawn the following conclusions: C Current parking rates plus planned future increases will cover all planned operating expenses, capital outlays, and debt service obligations from 1996-97 through 1998-99, including additional debt service for the Marsh Street.Parking Garage Expansion. C After building the Marsh Street Garage Expansion and enacting planned increases in parking meter rates and parking ticket fines, starting in 1998-99 the parking fund will have about $500,000 available each year for additional debt service -- enough to finance about $5 million worth of future construction. G After allowing for all reserve requirements, in 1998-99 there will be about $2.6 million available from the unappropriated parking fund balance for future capital appropriations. New CIP Projects Requests for 1996-97 The Palm/Nipomo Parking Lot, the 860 Pacific Parking Lot, and the Palm Street Parking Garage Archmological Study are new projects. Attached are the project requests, which have been approved by the CIP Review Committee. It is important to emphasize that the City's Archaeological Resources Preservation Guidelines require private development to assume responsibility for artifacts all the way through cataloguing and curating. Since these artifacts were excavated as a part of the Palm Street Parking Garage project, like private projects, it is appropriate that the Parking Program complete the necessary remaining work. CONCURRENCES The BIA Parking Committee members have received a copy of this agenda report. The Parking Committee will discuss the report at its meeting on June 14, 1996. Attachments Changes in Fund Balance - Parking Fund CIP Project Requests: Palm/Nipomo Parking Lot 860 Pacific Parking Lot Palm Street Parking Garage Archaeological Study hApar15ng\ratemv 1.agn 00 000000000 0000 000000 00 00 0 00 000000o 0 0000 00 00 0 00 O O T A O M O r (D CD N IT A CD to Co A OfD tp CDNtnNmO I(! (DNmA ACD RCO A CDClOQ CNr NON O C7 'gr co TCA r 0 LO Q Of CO to co CO N CO N r N M N 00 000000000 OOOO 000000 0 0 O O 00 0000000 O 0009 O O co A00 O O T A OM O CO N CO (O a r CA M N Cp OCD(D ONtONmO N ega NCD 0 c m 00 ACOCONNON A O a WN CF) leqr rLO CO CDC\j N 0tOto0 wr MCD A N r of C7 N r 00000000000 0000 000000 00 00 00 00o00o0 000 $ o0 0o MD g 00 0rn0M0 a mt- 0 rn0 ato M O O O (6ci L6 CV CD 0 Q Cq O IT co co N CD CA CA co co C17 CA to NNNO N N CAD N CD Q ^ rCQpcm T co co) {D N T r T N r N C•J N ' cc 000000000 OOOO 000000 OO 06 O i 00 0 0 0 0 0 0 0 0 0 0000 O O co O 00000000000 CO CO V to CD CO OCA r g crc C7 CV 6 CO O Cq O CO K CO f: vrm V7 C6 NT O CO W LOr OO CA Nrr OCO CO CA OD MCD co f N R W O NTT r (Ar CD CO LC7 ACO O N r N CO N N 0o 000000000 0000 000000 00 00 0 00 000000000 0000 0000 00 0o 0 LO wNAN CD N wV' CD v M CA Ca T CO Cc O_ CO COCA A. OT NCO PCD CO CO PrM co C'7 ('� M TIT CO fDr Q CA CO CO CO T A CA M C9 T A CO v O r CA CO C7 r CO m N Q CO CO N r Q CO) I v CO CCOO M CO CO N N M N Z ' 00 000000000 OOOO 0 0 0 0 0 0 60 O O O {L 00 O o O o O o o O 0000 O O O Cl co O C7 CO N N O M M O N Q CD CO T N CO CO) r A CO N Q CO tD tp t7r N CD W CD (O C6 C6 ON RC O (O Pf 7 O W CA A A co O o CO CO O N N CO t(• Z .,:' T Q CO CO T r r Ca CO r CA O m to CA A .. N N r IL W ` m V c Z � � N v OD • m m C O 03 rr ? to m m w Q {`• ¢ O v m m Q U p W �' i cc 0a) cc L m Z y' cc O 0 m �N Co [L m m = V O ; c m m > >.. am o U c m m ¢ o Ew0 C � m > m m o � U a) m � U a m c a z m 0 v o m o m0 c `o m CL c m m m m 7 m m 7 co Q O os o W U y w z m a m m Z O m m CL c J U m G c ] O m CL cm c .+ y m c rn c t too m m > LL t �? O m c mCD m m m p U X m m n ¢ f' •_• O m m m m W m U C m m C~ �D to > ¢ m c r Z W C7 7 7 C m 01 O G ® V C7 0 a U, O V Y J Y m tm ¢ " m m 0 0 0 % a dLL m O Z of ao m m O m t0 L .. a .. .. m ; o ACL LL _.l JaO « ~ m C-.o m ~ N OO aN O.~ G cm m m _ � SLLco O %O00 � co2wo0 o x C > o c g V,> rte¢ W O ¢ WLL LL LL 8/ 1995-97 Financial Plan Request CAPITAL IMPROVEMENT PROJECT OPERATION: Parking PROJECT TITLE: Palm/Nipomo Parking Lot Description ■ Remove buildings on two City-owned parcels at the corner of Palm and Nipomo Streets ■ Construct a new parking lot with 35 spaces adjacent to the existing lot 14 ■ Install parking meters, extensive landscaping along the perimeter, and lighting One-time cost $136,000 Objectives ■ Provide additional parking at the south end of the downtown ■ Increase revenue for the parking find ■ Improve the appearance of the recently purchased property at the corner of Palm and Nipomo Background In 1995 the City purchased two parcels at the corner of Palm and Nipomo Streets for possible long-term development of a parking garage_ Building a parking lot on these parcels would provide a good interim use and help satisfy current parking demand at the south end of downtown. Policy Links ■ Adopted parking program goals: adequate, safe, and attractive parking for visitors, customers, and employees in the downtown ■ A Conceptual Physical Plan for the City's Center Costs To Date 1995/96 1996/97 1997/98 1998/99 Totals Study (archaeology) 5,000 5,000 Site Preparation 35,000 35,000 Construction 1 1 86,000 1 1 1 86,000 Equipment Acquisition 10,000 10,000 TOTALS 136,000 136,000 Revenue Sources Parking Fund 136,000 136,000 Public Art Public art will be incorporated into this project with a minimum outlay of$1,070 —one percent of the project budget. Effect on the Operating Budget Landscape maintenance by contract for this lot will cost about$600 per year. c�-9 1995-97 Financial Plan Request CAPITAL IMPROVEMENT PROJECT OPERATION: Parking PROJECT TITLE: 860 Pacific Parking Lot Description IN Remove the existing building at 860 Pacific Street ■ Construct a new temporary parking lot with 27 spaces ■ Install panting meters One-time cost: $41,000 Objectives IN Provide additional temporary parking adjacent to the Marsh Street Parking Garage ■ Increase revenue for the parking fund Background Planned expansion of the Marsh Street Parking Garage will extend across the City-owned property at 860 Pacific Street, the former location of the Parks and Recreation Department offices. If approved, construction on the garage expansion would probably not start until 1998. Until then a temporary parking lot could alleviate some of the tremendous parking demand which has prompted the proposed expansion. From May 6, 1996 to September 15, 1996, Information Systems will occupy the existing building on the site, a residence converted for office use, while configuring new computers and reconfiguring existing computers for the planned conversion to Windows 95 and a new workstation software suite. Public Works will offer the building for sale and removal after Information Systems vacates it. If no one buys the building, Public Works will offer it for salvage and thea demolish it. Policy Lbiks ■ Adopted parking program goals: adequate, safe, and attractive parking for visitors, customers, and employees in the downtown ■ A Conceptual Physical Plan for the City's Center Costs To Date 1995/96 1996/97 1997/98 1998/99 Totals Site Preparation 20,000 20,000 Construction 18,000 18,000 Equipment Acquisition 3,000 3,000 TOTALS 41,000 j 41,000 Construction cost estimates assume that the temporary nature of the parking lot will not require extensive landscaping or other typical appearance improvements. 860 Pacific Parking Lot(continued) Revenue Sources Parking Fund 41,000 41,000 Public Art Public art will not be incorporated into this project because of its temporary status. 1995-97 Financial Plan CAPITAL IMPROVEMENT PROJECT PROGRAM: Parking REQUEST TITLE: Completion of Archaeological Study on Palm Street Parking Structure Artifacts Request Summary In May, 1987,the City contracted with Archaeological Resource Service to provide archaeological testing,excavation and analysis of artifacts, as well as monitoring of earthwork on the site of the Palm Street parking structure prior to its construction. The project was broken into three phases: prc-archival study and testing - $22,000; lab processing and construction monitoring- $37;000; and analysis and report writing -$16,000. Total cost for the contract was $75,000. As the project commenced there were significant overrides in the cost of Phase I and Phase 11 and disagreements between the contractor and the City's project manager as to the reason for these additional costs. Before becoming fully involved with Phase III, the contractor requested additional funding from the City. This funding was refused by the City. The artifacts remained with the contractor for several years with no further developments occurring. In June, 1990, the City agreed to extend the time of the contract, and to pay the remainder of the contracted funds, pending receipt of a report on the portion of the artifacts which had been catalogued by the contractor. At the same time,the City retrieved the collection and placed it in storage at the Corporation Yard. The report was never completed, and the final payment of$8,431 was never made. The City continued to attempt to obtain a final archaeological report from the contractors, with no success. The possibility of legal action was considered but, for a number of different reasons, a decision was made not to pursue this course. About half of the collection had been catalogued and boxed, with approximately fifty 33-gallon garbage cans worth of material std remaining in burlap bags. The boxes and burlap bags have remained in storage since that time. With the help of volunteers from the San Luis Obispo County Archaeological Society (SLOCAS) and a Cal Poly archaeological class, the catalogued materials have recently been removed from their deteriorated and water damaged boxes and repackaged and stored in an appropriate interim manner. However,at least half of the collection remains to be catalogued, a final report must be prepared and the artifacts must be properly curated or archived. Therefore, staff is requesting an appropriation of$50,000 in the Parking Fund to hire a new archaeologist to complete the project to the standards contained in the City's Archaeological Resource Preservation Guidelines. These Guidelines require private development to assume responsibility for artifacts all the way through cataloguing and curating. Since these artifacts were excavated as part of the Palm Street Parking Garage project, like private projects,it is appropriate that the Parking Program complete the necessary remaining work. Key Objectives • Complete a project involving a major archaeological find that was initiated nine years with the construction of the Palm Street parking structure and has been languishing since. • Bring the project in line with the City's Archaeological Resource Preservation Guidelines adopted by Council in October, 1995. • Make available to the public a significant piece of the City's history. • Make available to professionals major findings from the prehistorical and Mission periods and what is considered by many to be one of the largest and finest collections of Chinese artifacts in the State. Factors Driving the Request for Change • Part of the collection is not yet catalogued and none of the collection is properly archived which places the City in non-conformance with its own archaeological policy. Completion of Archaeological Stuay of Palm Street Parking Structure Artifacts (cont.) • The collection has been damaged by remaining in the storage container exposed to heat,water and the vibrations from passing City trucks. Even though staff is attempting to store the materials in a manner which will keep out water, they will still be impacted by heat and dust and vibrations. • The archeological community knows that this collection exists and that it is significant,and is strongly requesting that it be made available to the public and professionals. • The City has an ethical responsibility to handle an important archaeological collection appropriately,the Parking Program has a policy driven responsibility to fund and complete the work.. Alternatives • Leave the collection in the storage container at the Corporation Yard If this alternative is chosen, the collection risks further deterioration and never becomes available for viewing or research which would be a tremendous loss. In addition to ignoring what could be considered an ethical duty, the City would also be in non-compliance with its own adopted archaeological policy. • Postpone the remainder of the archeological study to some later date As well as the concerns expressed above about deterioration of the collection,the cost of performing the rest of the archeological study will only become more expensive at a later date. Furthermore,because there is now much interest in the study generated by the recent reboxing activities, there have been indications that several local archaeologists may be willing to donate some of their time, resulting in potential significant cost savings. If the project is postponed, this interest and momentum will be lost. • Phase the proiect over two or more years. While this alternative has the advantage of spreading the cost over several fiscal years,it has all the disadvantages of postponing the project in terms of possible loss of momentum and potential increases in costs. If the project were divided between the actual cataloguing and the writing of the final report, for example, there is a possibility of second phase funding being eliminated or reduced or the contracted archaeologists having other commitments,resulting in more delays or the sidetracking of the project once again. • Seek isant money for the nroiect. There is a minimal amount of appropriate grant money available from the Certified Local Government Program administered through the State Historical Preservation Office. For the 1996-97 there is approximately$100,000 available statewide and 38 Certified Local Governments(CLG) eligible to apply for funding. The City will further explore the requirements of becoming a CLG,but it has been decided in the past that the amount of funding available is not significant enough to warrant the cost of qualifying for and malting the application. Cost Summary It is difficult to estimate what the actual cost of finishing the project will be, since the material still needing cataloguing is intermingled with dirt and has not yet even been sifted. However,indications from the original archaeologists are that about half the collection was catalogued. The original contract price more than nine years ago for analysis and report writing was $16,000. The project bogged down because the contractors grossly underestimated the size of the find and the cost of analysing iL Given this information, and after discussions with SLOCAS (see attached letter),it is estimated that completing the project could require an additional$50,000. This appropriation would be added to the approximately $6,000 left over from the original contract after the recent expenditure of part of the remaining funds on materials to rebox the collection. SLOCAS believes that is may be quite possible that volunteered time, both by professionals and interested amateurs, will reduce this cost, but it is difficult to anticipate by how much. BUDGETED COST CHANGE TOTAL Cost 1996-97 1996-97 1996-97 Archaeological Study - 0- $50,000 $50,000 Completion of Archaeological Study of Palm Street Parking Structure Artifacts (cont.) Implementation • Determine whether there is a site within the City where the cataloguing process can be finished or whether the artifacts must once again be removed from San Luis Obispo. • Determine what level of professional and amateur volunteer help may be available. • Develop an RFP for archaeological services to finish cataloguing the collection and writing a final report which includes the integration of volunteer help, if appropriate. • Hire an archaeologist or archaeological firm to complete the project as defined in the RFP and arrange for volunteers, if available. • Determine an appropriate site for curating the collection. Attachment: Letter from SLOCAS IAARTIFACr.BUD 41-4"q Attachment C council / j apenaa Repopm CITY OF SAN LUIS OBISPO FROM: Paul LeSage, Director of Parks and Recreation SUBJECT: STATUS OF THE GOLF COURSE FUND CAO RECOMMENDATION: BY MOTION: ■ Receive the status report on the Golf Course Fund ■ Determine that the rates adopted in the 1995-97 Financial Plan will not be adjusted ■ Continue to subsidize the Enterprise Fund through Fiscal Year 1996-97 in the amount of $54,500 ■ Make a determination on the future of the Golf Course operation as an Enterprise Fund as a part of the 1997-99 Financial Plan Process DISCUSSION Background: Since the change in status from General Fund-supported program to an enterprise operation, the Golf Course has not generated enough revenue to operate as a true enterprise fund. A general downturn in the golf industry has resulted in as much as a 20% drop in rounds played. While revenue at Laguna Lake Golf Course (LLGC) has not dropped to this extent, they have not increased either. In addition to the decreasing play, Laguna Lake Golf Course also lacks amenities present at other area golf courses that produce additional revenue in excess of green fees. The lack of a complete driving range is significant. A course similar to LLGC in rounds played located in Simi Valley generates over $200,000 in additional driving range revenue. The area located at LLGC is not, and never was, large enough to accommodate a full-size driving range. As the surrounding area developed with homes, an attempt was made to retain the driving range amenity and protect the adjacent residential development. This was done by creating a "driving cage" which necessitates the golfers hitting into a series of nets. This eliminates the euphoric feeling of success for the golfers as they cannot watch the ball traveling its normal trajectory after the drive is accomplished. Consequently, the "driving cage" is very under used and the resulting revenue is lacking. While the course does not generate enough revenue to operate as a true enterprise fund, recovering operational expenses, capital project funding, administrative overhead, and the required 20% reserve, LLGC is recovering direct operating expenses. In the 1994-95 fiscal year, revenue exceeded operating expenses by $2,300. The 1995-96 projections estimate a $12,000 recovery of direct operating expenses. After reviewing many scenarios, staff believes the only way to increase course revenue is to increase the number of paid rounds played. The incremental green fee increases adopted as a part of the 1995-97 Financial Plan development has slightly increased revenue, but has not correspondingly resulted in sufficient increased rounds played necessary to achieve the revenue target. Staff has put considerable effort in improving the visibility of the course from an advertising aspect. A targeted effort is being made to develop and implement a more comprehensive advertising program than has ever been done. The program includes: • revising the golf course brochure • increased distribution, including local motels/hotels and restaurants • ad in the Chamber Visitors' Guide, and City Map (Attachments 2 & 3) • Developing a page for publication on the World Wide Web, via SLONET (Attachment 4) • Distribution of information through SLO Flyers • increased promotion and lessons to youth and teens Additionally, a local public relations firm has been contacted for advice. Several recommendations have arisen through this consultation which includes a radio ad program. A slight increase in rounds played has been noted at LLGC. FISCAL IMPACT Based on current projections found in the Mid-Year Budget Review process the LLGC will require a general fund subsidy of $54,500 for the 1996-97 fiscal year. Currently, rates adopted for 1996-97, to be placed into effect July 1, 1996, are as follows: SENIORS/YOUTH WEEKDAYS $5.00/round GENERAL WEEKDAYS $7.00/round WEEKENDS $7.75/round Current green fees are: SENIORS/YOUTH WEEKDAYS $4.50/round GENERAL WEEKDAYS $6.50/round WEEKENDS $7.25/round A"4 ALTERNATIVES 1. Return the program to operation under the General Fund. There is some justification to this alternative in that the Laguna Lake Golf Course serves primarily seniors and youth players. Well over 50% of LLGC participants are among these age divisions. City policy, as adopted with the Parks and Recreation Element, states that seniors and youth programs are not expected to operate and recover costs at a high rate of recovery. If the course was in the General Fund, it would be recovering 85% of its full expenses. That would be the highest rate of any program under the Parks and Recreation Department umbrella. However, staff believes that every attempt should be made to make this a true enterprise fund operation. It is in the best interest of the financial situation of the City to accomplish Enterprise operation. 2. Contract the operation. The lack of amenities such as the driving range, motorized golf carts, restaurant, and the ability to sell alcohol contribute to making the course unattractive to potential contractors. In addition, many of the LLGC patrons remember the deteriorated condition of the course when it was previously contracted and would be significantly opposed to this alternative. 3. Sell the LLGC. This is contrary to the adopted Parks and Recreation Element that states: "Lease or sale of City-owned parkland will be discouraged unless such action meets a demonstrated need which cannot otherwise be met." As has been noted, the sale of the course will not significantly affect the operating budget of the City in the General Fund. It will also meet with significant opposition from course users. ATTACHMENTS: 1. Change of Fund Balance 2. Map 3. Chamber of Commerce brochure page 4. WWW page g:caolprs/golfcrsc.wp 4-/ 7 „3 g CO o 0 00 00 0 00 0 0 0 oil � o 0 N O O O O O O O O C O O n . N M �: v,�,;e:i?:•:tin C r O S O O gin in S S O cc M N] Ci i<ZY.: p00 0 pp po 0 o p CIO 0 o C O I O Xl ter.. OC O O O C CD g g o o , o o g o g o o� a e� � n l Z .i,..'.F^:i?Z: N c c' c � a �' h oo v •• vi v- o vi 'kYi.o•}:.. N }f:x Lt `'*t2E:} .-. N try t.; Lu cc 15 m y ca 2. FY go a pa, v m Ed O � m A •N cr CV7 .A Q m @i m ai c y �3 v r0.e .7� = m rn W cl) cc a,`°i .�n oQ., O ma a rV ” ;d d o7 rmjcaO r .m. O O i �i C C O L C7 O s n n F o 'y a a o d d x a a s m m 0'< rs}' u m O a 0 U O z O . W x w a _ ' Xtir> > 'PauoS [% iD 'evQYio= in..Real• _ .,` ,3^..., 7n=mO, �np y c _j CD c � eyd ss�i pb i C O �• /_ (�:,t i'_ O e �N�Zi'9 L Peoa uoaro� , .01 m °: 0: f.. r d'••A� Z w •" ;J:'e:-::r,. r�'' TZ P: �'� • c . Creston m •• _ frr'� B7 4 •X�:�,s .app Zt�pN� E W WV 4� I; [JI .0I l •- ••o �i • i a leay oulwe•J13 �vOJ! .. a3 �•••` Qo .w::, i _a ..I , • J c 4a WLU a •o vemi O 46 .00 Q J •4 Way V l 2' I V, ae.� J • ; ,� � dm N cc zi H— �-J ° •'� a O¢ ®< I pe CP, �@ V O Fa'--_ ~ O. L-d ell'QF -::tr..r- J Ncc ui to J. Ae0 a�< �c d .. •• -m a NC n W CD 'U i ,.0.. .�' I o' b d ,uu.t �. ¢ baw9+S0 d` .. : ' n �J•7ee0�'..�: ca cm •pp .p Q2mp.. ' %.Q \ i �V °:, r�pO •"••• Z2, oO <Y ° O.\i.:.•, < 'i- • .'..B IROC(< _,,�ir:':I <v~i C® V a yLa j({{tltl6))sjjt3ji�•�3 ® J•I uof �"+' • .���Q','' :�...� .,1 < E8la .� E3i 4 ZZ Wf d ZW •. Gl zO no V Z ` m • OA00) 04 Ln ® �. 02 m v- Ln z (1, - ° - „ x i0 0 s is ♦ 1 /h �J � „Oj Ir ♦ Q O 0 CIO 4 11 y I/, In a o• � .i•-l�.fr-.l 1 g -,p a 12 0 ATTACHMENT 2 I ' I I ( ('I1t� ?(!%fit ��i�.i.�✓�KJ�i:, J � � �4 p(I aments We1>`omel — ��,,w,�„� �� - � v tom., I• /i��.,,`� — _ _' ole tournament is ideal for r���jll�/�1��'� — specraEoccaszorrs, fund raisers and parHes., 1?AF V �\� • 9rHoTe Executive Comse •Open-daffy iam to dusk sm Ilf+ \\\ • Drnting.Range'- •Crab&;Hand.CartRentals �#6�; • BBQ FacHities f essons Available "r!� �,�\��I�\\\, Advance fee times ac¢ilable Cdl1 for reservations. ' 11170 Los Osos Valley Road San L_uis Obisp-o CA'93405 6239: SII I II \ / nl i • � tl ' • l r ��_.^'���.cf -. ��c - _ C .,y. 7r-•,v � • 111 1- /. l l • l l 1 l �x 1 - i f •. 1 3 f � `� '11 1• I' -fib c •• 41t 4VNMJ.SLO-ONLINECOM IAW NA r F SAN I f WIS `M �s'C L F (805)781-7309 Laguna Lake Municipal Golf Course lies in the heart of San Luis Obispo, only one mile off Highway 101. Our beautiful 9 hole executive length golf course has a well earned reputation for outstanding putting greens, overall quality of course maintenance, and a friendly helpful staff. Additional services include a driving range, golf lessons, club and hard cart rentals, club assembly and repair and a pro shop which sells equipment and apparel. Ask about our special services. [ Tournaments I Rates/Hours I Lessons ] ATTACHMENT 4 Attachment. L jcouncil ° June 4 1996 aGEnaa uEpont °®N�., C I T Y O F S AN LU I S 0 B 1 S P 0 FROM: John Moss, Utilities Director Bill Statler, Finance Director Prepared By: Linda Asprion,Revenue Manager Sue Baasch,Administrative Analyst ] SUBJECT: 1996 WATER FUND RATE REVIEW CAO RECOMMENDATION 1. Adopt a resolution establishing water system access charges, effective July 1, 1996, of$22.40 per month,to be adjusted according to future percentage changes in water service rates; and 2. Review and discuss the 1996 annual water fund report and 1996-97 capital request for water facilities planning. DISCUSSION This report presents the annual review of the water fund and confirms the adequacy of the previously adopted rates. On May 23, 1995, Council approved a 3%, not to exceed the consumer price index, water rate increase for July 1996. Staff is not recommending any change to this previously approved rate increase. This report also requests Council set water system access fees for City properties using private wells to meet water needs but are connected to the City's water system for fire protection; and, finally, it asks for Council approval of funding necessary to complete a water facilities master plan, estimated at $100,000. Overview Financial Plan policies require the City to perform an annual review of the water fund and adjust fees and rate structures to ensure they remain appropriate and equitable. In May of 1995, Council reviewed a water fund analysis and adopted rates for water service charges for July 1996, to be equal to 3.0% or the cost of living change. The cost of living change through April 1996, using the U.S. Cities Average"Consumer Price Index—All Urban Workers", was 2.9%. This analysis confirms the appropriateness of the level of the rate increase approved last year for implementation in July as well as the actual water service rates. The rate schedule approved for July 1, 1996 remains the same, due to rounding, whether increased by 2.9% or 3.0%. This review of the Water Fund is based on actual revenues and expenses for two years(1993-94 to 1994-95) and projected for four years (1995-96 to 1998-99); the previously approved capital improvement plan with the identified changes; and standard assumptions for future City growth, inflation and water demand patterns. Council Agenda Report- 1996 Water Fund Rate Review Page 2 The primary focus of the fund analysis is to review the adequacy of the 1996-97 revenues. Accordingly, it confirms the fund's ability to support all the approved and recommended 1996-97 operating and capital expenditures. The snapshot picture of the next two fiscal years confirms the fund's ability to pay for the water reuse project. Next year, as part of the 1997-99 Financial Plan and annual water fund analysis, staff intends to show a longer range projection to ensure prudent financial planning for the major water supply options identified in the adopted Urban Water Management Plan. The 4.5% projected rate increases in 1997-98 and 1998-99, comparable to the level of inflation, demonstrates the effectiveness of past projections in maintaining rate stability for the Water Fund. The generally stable revenue requirements reflect quality planning for water capital improvement projects and operating programs, and are consistent with rate objectives identified below. Financial schedules providing detail for the water fund analysis are provided in Exhibits A.1 through A3. The 1996-97 capital request for funding a water facilities master plan is provided in Exhibit B. The method used to calculate the initial water system access charges is provided in Exhibit C. Background Financial Plan policies require the City to annually review the financial needs of the water fund and to adjust fees and rate structures as necessary. Fees and rates are to be set at levels to recover the total cost of providing water services, including operations and maintenance, capital outlay, and debt service. The rate review is to be conducted within the framework of the following 1988 Council approved objectives: ■ Comply with legal requirements ■ Ensure revenue adequacy to fully meet system operating and capital needs ■ Encourage conservation ■ Provide equity and fairness between classes of customers ■ Result in rate structures that are easy to understand by our customers and easy to administer ■ Provide for ongoing review in order to facilitate rate stability Rate Setting Methodology In determining water revenue requirements and setting recommended rates, the following general methodology is used: Step 1: Determine Water Fund revenue requirements for: 0 Operations and maintenance 0 Capital improvements and replacements to Debt service obligations (existing and projected) Step 2: Subtract from this amount "non-rate revenues" such as: Q Interest earnings Connection fees and meter sales 4—OZ3 Council Agenda Report- 1996 Water Fund Rate Review Page 3 Q Revenues from other agencies(Cal Poly/Cuesta) 0 Other service charges(service start-up fees, late charges, etc.) Step 3: Identify water rate requirements: 0 Revenue needed to be generated from water rates is the difference between water revenue requirements(Step 1)and "non-rate" revenues(Step 2). Step 4. Determine new rates: to Model the rate base(consumption and customer account assumptions) against the existing rate structure and rate requirements identified in Step 3. Because this analysis is performed over a multi-year period, other factors are considered, such as fund balance available to support capital projects, debt service requirements, and minimum fund balance policy_ Water System Access Charges On March 12, 1996, staff presented for Council consideration a number of policy issues relative to the Urban Water Management Plan. Along with these policy issues, staff identified a potential equity and liability concern relative to those commercial customers within the City who use a private well for domestic supply and the City's system to supply their on-site fire protection. In these cases, the customer receives the benefit of the City's water system for pressure and flow, while the City assumes some liability should the City's system fail to deliver water in the event of a fire. The customer pays nothing towards the opeation and maintenance of the City's system since there is no actual consumption of water unless there is a fire emergency. Council directed staff to return with an analysis and recommendation on how best to equitably charge the customer for the benefit they receive. Staff determined that these customers were benefiting from that part of the water system that is directly related to distribution, and should not be charged for any source of supply or treatment costs. Next, staff prepared an analysis (Exhibit C) of the 1996-97 costs for providing the distribution facilities and then divided these costs by the total number of water meters throughout the City. This methodology resulted in a recommended 1996-97 monthly charge of$22.40 per property. Should Council approve this proposal, staff can implement the charge by requesting that the County include the charge in the property taxes for those specific properties that do not have a water meter but are attached to the City system for fire protection. Future increases would be linked to any percentage change in the water service rates. Our research shows that less than five City properties presently would be affected by this charge. However, an increasing number of properties will fall into this category. Recently annexed areas, as well as areas under consideration for annexation, have a number of such properties. zl �4 Council Agenda Report- 1996 Water Fund Rate Review Page 4 Capital Improvement Plan Updates to the previously approved four year capital plan are reflected in Exhibit B-3. This includes the elimination of$300,000 previously approved for Salinas studies and reflects the Council-approved action to combine study phases relative to the Salinas Project. Under the Water Treatment Plant major equipment maintenance, two major projects are exchanged, based on the completion of other projects and what is considered now to be the most appropriate timing: the clear well recoating is moved to 1997-98 from 1996-97 ($350,000); and Reservoir 1 floating cover and liner is moved to 1996-97($300,000). Ongoing telemetry requirements, estimated at $20,000, will be funded within the previously approved budget for water system improvements. The net effect of these changes is to reduce the previously approved 1996-97 capital improvement plan by$350,000. Changes to the 1995-96 capital improvement plan includes a recommendation to eliminate the pump station transformer project($25,000), as it cannot go forward due to the deregulation of Pacific Oras and Electric. Remaining budget from a two year trench repair program ($69,800) is also recommended to be returned to fund balance. Funding is available in the 1996-97 capital plan for next year's trench repair project. 1996-97 Capital Request for Water Facilities Master Planning The detailed capital request to fund a$100,000 water infrastructure master plan is included as Exhibit B. This plan would evaluate existing water storage and distribution systems for adequacy to serve General Plan build-out and expansion areas; provide preliminary design to ensure system adequacy for build-out as incremental development occurs; and provide preliminary cost estimates so that appropriate cost distribution and cost recovery models can be established. Appropriate facilities master planning is necessary to ensure that as annexation/development occurs, the infrastructure needed to serve the ultimate development of a given area is installed and appropriate costs are allocated to that annexation/development. Summary of Key Assumptions Based upon the assumptions in Exhibit A.2 and the factors discussed above, the financial position projections indicate that water rates require an increase of 2.9% in 1996-97(previously approved by Council) and project a 4.5% in 1997-98 and 1998-99. The following is a summary of key assumptions for expenditures and revenues: ■ Per capita water use in 1996-97 is estimated at 120 gallons per person per day. ■ Operations and maintenance costs are based on the 1996-97 budget with an inflation rate of 4%thereafter. ■ Debt-financing and repayment costs reflect issuing bonds in 1997-98 for phase one of the Water Reuse project and design ofthe Salinas project($7,600,000); and in 1998-99 for phase Council Agenda Report- 1996 Water Fund Rate Review Page 5 two of Water Reuse and construction of the Salinas project ($10,470,000). Debt service for the 1997-98 debt financing($845,000)begins in 1998-99. ■ Sales to other agencies is reduced in 1996-97 from 1995-96 because Cuesta College is projected to receive its water from the State Water Project beginning 1997 and will no longer be purchasing water from the City. Due to its equity contribution in January, Cal Poly's rates are fixed at a proportion of the commercial rate, and will increase proportionately as other customers. ■ Water customer growth rate is projected at less than 1%. ■ Capital Improvement charges(development impact fees)as adopted by Council on November 1994 are adjusted annually based on inflation and customer growth at the one percent growth rate. For revenue purposes, these projections are then refined based on actual growth (a percentage of one percent) and are also reduced by the amount of the retrofit credit. ■ Connection and meter charges, and account set-up fees are projected to increase according to the rate of inflation. ■ Additional funding for the Nacimiento water supply project is not one of the assumptions included in this analysis. If the project continues on the anticipated schedule, water deliveries will begin in the year 2000, at which time the City will pay to purchase the water as an operating program expense. The purchase price will include recovery of all debt service costs from the financing of the final design and construction, as well as operating costs. At the current subscription request of 3,380 acre-feet per year, and an estimated cost of$1,000 per acre-foot, the estimated annual cost in the year 2000 is $3,380,000 per year. This cost is outside of the timeframe covered in this rate review, and will be recovered through a combination rates and impact fees. As indicated earlier, staff intends to include all water supply options and costs in next year's longer time frame water fund analysis. ■ Fund balance exceeds the 20% of operating expense requirement. This is due to the receipt of Cal Poly's equity contribution and planning to meet future costs. Using this fund balance to reduce projected rite increases would be premature at this time until more is known about the timing and implementation of the next major water supply project. As has been historically demonstrated,the water fund is vulnerable to large capital expenditures to pay for approved future water supplies as well as to fluctuations in revenue due to demand variability based on weather and water supply. The City has soundly followed a policy in the last few years of regularly reviewing and adjusting rates to ensure fund health and to minimize the risk of unanticipated, large increases. The additional policy that serves to supplement the fund balance requirement is ensuring that revenues and expenses match each year, and using fund balance discreetly to pay for one-time capital projects. It would not be fiscally prudent to use fund balance to pay for annual operating expenses, debt service or approved ongoing water system maintenance. As has been stated previously, a longer range projection next year will address fund balance issues in even more detail. Council Agenda Report- 1996 Water Fund Rate Review Page 6 FISCAL IMPACT Approval ofthe recommended actions will add $100,000 to the previously approved 1996-97 water capital plan for funding a water facilities master plan. As identified in the capital improvement plan section of this report, the previously adopted 1996-97 water capital improvement plan budget has been reduced by $350,000 due to changes in scope and timing of certain major water projects. In total,therefore,the recommended water fund capital budget is$250,000 less than previously adopted. Adoption of the recommended water access charges will generate an estimated revenue of$1,300 which has not been included in the revenue projections. The annual revenue assumes five affected properties. ATTACHMENT Resolution adopting Water Access Charges E7HEBITS A. Water Fund Rate Review 1. Changes in fund balance 2. Assumptions for fund projections 3. Capital improvement plan B. 1996-97 Capital Request- Water Facilities Planning C. Water Access Charge fee derivation ATTACHMENT RESOLUTION NO. (1996 SERIES) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO IMPLEMENTING WATER SYSTEM ACCESS CHARGES WHEREAS, the City Council of the City of San Luis Obispo has determined that water access charges are necessary to pay for the costs associated with providing water system access and should be applied to any property owner within the City who does not have a water meter but is attached to the City's water system for emergency purposes, such as fire protection; and WHEREAS, after an analysis of the costs associated with providing distribution facilities necessary to serve City customers, divided by the number of the total number of water meters, it has been determined that the monthly access charge will be $22.40; WHEREAS, this fee will be modified annually according to any percentage change in future water service rate adjustments; and NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of San Luis Obispo hereby establishes a monthly water system access charge payable by the property owners in the amount of$22.40, to become effective July 1, 1996. On motion of , seconded by and on the following roll call vote: AYES: NOES: ABSENT: The foregoing Resolution was adopted on this day of 1996. ATTEST: Mayor Allen Settle Acting City Clerk, Kim Condon APPROVED AS TO FORM: City Attorney Jeffrey Jorgensen O O O O G S O S p O O O S S S O p p N � O O .r O H p � .•+ V O O c0 O V O G1 ^ t` O V, O DD f': O OV C\ N O C1 G1 V: N 00 C\ L1 r O r p O 00 0o C N V; C% v00 ` iCki:kyi° 06 0 8 c o 0 0 0 O CD op 8 8 H p H p o p O V', N O p t:� V••• V: 'y N C% V•. O r O r O N oC 0% eq O r cam: H O 00 V N NV4 r- N 7 'o � Cl. N N cq f': 00 geek: t� 00 7 G1 to r rl t+: N cn: S O H cc N H S O S S Slo 10 c S 8 S pI en o v; `5{ Nj> SF O 0 00 O cc O � 00 00 c^. C1 N c', r, O• „y; vi O O P N a0 Ci N v; f' O 00 -ItN 0 ka..f6i;i fes; 00 �: .r V: N ? N V: r N O 00 l� N v N en a5k CD i o O o H S o e o 0 0 o H H H p H l 0 0 8 H 8 j p p p p O � O f•: O 8 ^ O O N V; 7 N r+ C^ C% r- 0 V'• M 0D y L o 0 o V•; o c, r v . m O v`, O mcl; N 0o L, VO N N O cn c7 v isik;•. 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O N � r O ^L 0 CO �- N N CL r r �I 0 0 000 0 0 0000 I O O o 000 0 0 0000 O N� OD O_ O 000 0 0 0 0 1 0 f- a' O O 000 00 O � rU) 0 ' � � O O 0LOL- NN 0cr) C� It f- 0 0 to O r C9 r N CL 0 00 000 O O O a) 0) 0 00 000 0 0 0 zCD co CD O O N O CD Z m (O rl- O f- C9 to O N O Cn 0 Ch C9 N r r N LL0 r N a- 00000000000000000000 t�9 1� 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 o O Q co 00000000000000000000 O O rNr W OrNOONONOOCOWOO v r - 00N COf- COL000Lf) U) It CC) CDLO (OC9N r O W LA (DNNN 0NcoN00Lf) Cr) LD0N0 [f CD (O 0 N N Q 0 r 4!9 O J LL J % c � p) CL Y 0 C CL E m =) Z m m _ � m m C) i m c m co WW o o CD a) __ .. L c_ (co o c � rn E 3 wD oCL ' E - m a -� m c (L c� E m > Q cu cL Z Q a c �? c E ° � ¢ t CF) Q N QcoE �� oYm co cc � Q0 � o m ° � o CC wd � CLmcE 'CIS c (h `L° > cc m CL i s i m H > m m C N w� CO) = C [A O o mc .. mQ m o m L mct �O E EO co m m ca E m 0 L 0 C2 V E = C ,C (mJ c a H c c >. J cmn c ; m cu E c _am - c co w a) Q c co Q Q � m Cn 0 -a? C. O � O 1 0 � a m F- Q'~ C S � CL en 7 N HCH C U) (A CAc � wHQ a) a: m C1N Lo c NUJ L r m m m = j m w C y m `p +�. m CC m (n L y +' a) Q (a co Co m O Ca ca m c LO m O N m m 0 R '� co > dtECLusMi3: EXHIBIT B 1996-97 Financial Plan CAPITAL IMPROVEMENT PLAN PROGRAM: Water Administration REQUEST TITLE: Water Facilities Planning Project Description Prepare mature master plan for City water systems to serve projected General Plan build-out of the City. Evaluate existing water storage and distribution systems for adequacy to serve expansion areas, make recommendations for improvements to existing systems, provide preliminary design and cost estimates for new/expanded infrastructure in City expansion areas. Project Objectives ■ Identify needed water system improvements to serve future growth within the General Plan build-out ■ Provide preliminary design to ensure system adequacy for build-out as incremental development occurs. IN Provide preliminary cost estimates for infrastructure construction for development of appropriate cost distribution/recovery model, e.g. impact fees, assessment district, etc. Fidsting Situation The City has grown to the limits of the current water delivery system. Issues of water quality and capacity at the Water Treatment Plant have been addressed with the latest plant upgrade. Utilities staff is woriang to develop additional water supplies to serve projected General Plan build-out and impact fees have been developed to recover the cost of developing new supplies attributable to new development. There currently are no developed infrastructure plans for serving the expansion/annexation area including the Airport area, Margarita, Froom and Dalidio expansion areas. As a result,growth and annexation of these areas is resulting in piecemeal infrastructure development which may not be capable of serving the future needs of the City and/or the expansion areas. Additionally,current impact fees do not address cost recovery for the required infrastructure and no other mechanism currently exists for cost recovery. Without adequate infrastructure planning, water system development will continue to be piecemeal and cost recovery opportunities for the infrastructure development will be lost. Without adequate planning, the City could be placed in a situation of having to replace inadequate systems at City expense. Goal and Policy Links ■ To provide unieterniipted waw flow at adequate pressures, to meet all fire and domestic flow requirements, ... ■ City policy that new development pay its fair share of the cost of building facilities necessary to serve it. ■ City General Plan It should be noted that a substantial portion of the proposed work-scope pertains to the airport annexation area. Of the $100,000 estimated for this work, about 70% ($70,000)is applicable to the infrastructure planning needs of the Margarita and airport annexation areas. This is consistent with the amount included in the tentative budget for preparing the specific plan budget for this area. As such, if preparation of the specific plan proceeds, this$70,000 share would be appropriately counted towards the City's contribution to this planning effort. On the other hand, even if specific plan preparation does not go forward in the near future, we believe that it is essential for proper infrastructure planning in meeting operational needs and General Plan goals that we prepare a comprehensive water distribution facilities plan at this time. While this effort can go forward independently of the specific plan, it would be desirable to coordinate these efforts. Accordingly, we will not begin this work effort until issues surrounding the possible preparation of a specific plan for this area are substantively resolved. Project Work Completed As stated earlier, the treatment component of the city's water facilities has been recently upgraded to meet the water quality requirements of the State of California. As an indirect result of that upgrade, capacity improvements were also realized which,with the addition of a second clarifier, should facilitate development as identified in the current General Plan. Staff is pursuing development of additional water supplies needed for build-out through the development of several water supply 4,/-3A- projects including Water Reuse, Salinas Reservoir Expansion, and the Nacimiento Pipeline project. The remaining component necessary to fulfill the needs of the General Plan is the planning and eventual development of the water storage and distribution facilities. Environmental Review Completion of the requested facilities planning is necessary to adequately complete the environmental review of future annexations/developments. Environmental review of specific CIP projects resulting from this work will be completed for those projects. Project Phasing, Costs and Funding Sources Project Costs 1996-97 JTotalStudy 100,000 TOTAL 100,000 Funding Sources 1996-97 JTotalWater Fund 100,000 TOTAL 100,000 Implementation ■ Prepare RFP for consulting services for required infrastructure master planning. 10/96 ■ Present RFP to Council for approval. 11/96 ■ Award Contract. 2/97 ■ Complete consultant work (planning, preliminary design and financial cost estimates). 6/97 ■ Present to City Council for approval/direction. 8197 ■ Incorporate capital improvements and fees/assessments into financial planning process. 3/98 It should be noted that the tasks and schedules provided here may be affected by the decision to proceed or not to proceed with the specific plan process for the Airport annexation area. Should the City decide to proceed with the specific plan process, the services identified in this request would become a part of that specific plan RFP. Public Art Policy The proposed project is the study phase only,of future underground utilities projects and as such is exempt from the Public Art requirements. Alternatives ■ Defer the project. As stated earlier, deferral of the project may allow additional development and annexations to occur without adequate facilities planning to ensure that infrastructure provided is adequate and that fees collected are adequate to recover the costs associated with that development,consistent with our policies. Given the past slow development of our expansion areas, a short term deferral would seem possible with only minor impacts overall. However, given Council's recent direction relative to the Airport Area and direction to revise water allocation policies which may result in the availability of water for annexation development, staff is concerned that the pace of development may increase and the resultant impacts to the infrastructure and financing programs would be greater than anticipated. Project Effect on the Operating Budget • Staff will incur some time impacts relative to administration of the consultant contract and coordination with other departments. No other impacts to the operating budget are anticipated as a result of this project. x-33 Exhibit C WATER SYSTEM ACCESS CHARGES Method of determining monthly cost of providing access to City water Step 1. Determine 'DistfibLifidns"share of water fund expenses: Summary of Water Cost Components — 1996-97 Source of . .......... upply:: .........Total. Operations and Maintenance $2,141,365 $1,218,131 $1,139,104 $4,498,600 Capital Outlay $10,472 $335,957 $1,911,571 $2,258,000 Debt Service $202,900 $754,000 $477,000 $1,433,900 TOTAL' $2.354:737 ;$2,308088 $3.52T675. Step 2 Determine number of meters Meter Size Number 5/8 inch — 7,229 3/4 inch — 3,589 1 inch It — 1,682 1.5 inch 290 2 inch — 280 3 inch 16 4 inch 34 6 inch 13 1996-97 8 inch 5 Distribution Costs Total 13,138 = $3,527,675] Step 3. Determine monthly charge Per Unit/Per Month Rounded to nearest$.05 $22.:4:0] L 7 '� Attachment council °'June 4, 1996 j ac En ba Pepoat CITY OF SAN LUIS O B 1 5 P 0 FROM: John Moss, Utilities Directo 0� Finance Bill Statler, Direct r Prepared By: Sue Baasch, Administrative Analyst-16 SUBJECT: 1996 SEWER FUND RATE REVIEW CAO RECOMMENDATION Adopt a resolution increasing sewer service charges by three percent (3%), effective July 1, 1996. DISCUSSION This report presents the annual review of the sewer fund and requests adoption of a three percent increase to the sewer service charges, effective July 1, 1996. Additionally, this report requests Council approval of two 1996-97 capital improvement projects: development of a sewer facilities master plan, estimated at$100,000, and the balance of funding to complete the Casa Street sewer main project, estimated at $100,000. Overview As Council recalls, staff has targeted 1996-97 for several years as the year when sewer fund stability could be achieved. From one perspective, it has happened. Fund balance exceeds 20% of operating expenditures. For nearly ten years, the sewer fund has been extremely hard hit, paying for almost$35 million in capital improvements required to meet the very stringent effluent discharge standards set by the State to protect our San Luis Obispo Creek. In combination with prudent rate increases, the equity contribution of$3 million from Cal Poly in January has restored the sewer fund balance. On the other hand, to be truly healthy, revenues should meet ongoing expenditures. It does not happen in 1996-97, is closer in 1997-98, and finally there in 1998-99. For this reason, staff recommends continued small increases so that fund balance is not used to pay ongoing expenses. The other significant unknown when dealing with the sewer fund balance is the amount of future costs in meeting the capacity demands in the Edna-Islay, Tank Farm area and potential annexation areas. Staff is recommending 1996-97 funding for a master plan to provide more accurate information about future system needs. Therefore, while fund balance currently exceeds 20% of operating expenses, staff recommends the higher balance be preserved to partially offset the need to debt finance one-time capital expenses. More discussion of fund balance follows in the background and assumption sections. Atl4s� Council Agenda Report - 1996 Sewer Fund Rate Review Page 2 Cal Poly's equity contribution does moderate the amount of rate increase necessary in July 1996, which was previously projected at 6.0%. This review of the sewer fund is based on actual revenues and expenses for two years (1993-94 to 1994-95) and projected for four years (1995-96 to 1998-99); the previously approved capital improvement plan with the identified changes; and standard assumptions for future City growth and inflation. However, the primary focus of the fund analysis is to review the adequacy of the 1996-97 revenues. The proposed 1996-97 sewer service charges are provided in Exhibit A. Financial schedules providing detail for the sewer fund analysis are provided in Exhibits B.1 through B.3. The two 1996-97 capital requests are provided in Exhibit C-1 and C-2. Background Using Fund Balance to reduce Debt Service During the 1995 sewer fund review, Council requested staff analysis of the best use of Cal Poly's equity contribution. Accordingly, in January 1996, staff spent considerable time in evaluating the advantages and disadvantages of a new State program offering zero-interest State Revolving Loans to municipalities who elected to pay 16 2/3%—the "State match"—to the federally funded SRF loans. Since the City has three State Revolving Fund loans, presently totalling $27.7 million, staff hoped this program might present a significant financial strategy for the sewer fund. Participation in the state program would have required the City to pay a one-time cost of$5,022,000. To achieve this amount, staff considered full use of the equity contribution supplemented by bond proceeds. However, in further discussions with the State, it was revealed that this program offered no advantage to the City. The State determined that such payments would be "prepayment" of interest, and the loan principal amount would not be reduced. No credit would be given for interest paid in the three annual debt service payments already made by the City. A more detailed discussion of this program was provided to Council by memo in February. To continue the analysis, staff discussed whether a $1 million buy-down of the SRF principal amount would be financially desirable. Since the total outstanding indebtedness is currently $27.7 million, the reduction to annual debt service would be about$30,000 in the first year (based on the 3% loan interest rate), an amount that is less than anticipated interest earnings. In summary, staff recommends retaining fund balance to pay for one-time capital expenditures, reducing the need for debt-financing future large capital expenditures. Rate Review Objectives The rate review is to be conducted within the framework of the following 1988 Council approved objectives: �,3(o Council Agenda Report - 1996 Sewer Fund Rate Review Page 3 ■ Comply with legal requirements ■ Ensure revenue adequacy to fully meet system operating and capital needs ■ Encourage conservation ■ Provide equity and fairness between classes of customers ■ Result in rate structures that are easy to understand by our customers and easy to administer ■ Provide for ongoing review in order to facilitate rate stability Rate Setting Methodology In determining sewer revenue requirements and setting recommended rates, the following general methodology is used: Step 1: Determine Sewer Fund revenue requirements for: ■ Operations and maintenance • Capital improvements and replacements ■ Debt service obligations (existing and projected) Step 2: Subtract from this amount "non-rate revenues" such as: ■ Interest earnings ■ Connection fees and meter sales ■ Other service charges (lateral installations and abandonments, etc.) Step 3: Identify sewer rate requirements: ■ Revenue needed to be generated from sewer rates is the difference between water revenue requirements (Step 1) and "non-rate" revenues (Step 2). Step 4. Determine new rates: ■ Model the rate base (consumption and customer account assumptions) against the existing rate structure and rate requirements identified in Step 3. Capital Improvement Plan 1995-96 Capital Improvement Plan Changes Updates to the previously approved 1995-96 capital plan are reflected in Exhibit B-2. Recommendations for budget modifications to two Water Reclamation Facility major equipment maintenance projects were brought to Council on May 21, 1996. An additional $130,000 was approved for the Belt Filter Press. Approval was also given to fund the additional costs to complete the Digester No. 1 project through the deferral of the cogeneration project ($20,000) and using $10,000 from the Digester No. 2 1996-97 budget. y.57 Council Agenda Report - 1996 Sewer land Rate Review Page 4 1996-97 Capital Requests for Sewer Facilities Master Planning and Casa Street Sewer Main Attached to this report as Exhibit C-1 and C-2 are two 1996-97 capital requests: $100,000 to fund the development of a sewer master plan; and $100,000 to pay for the increased costs associated with the replacement of the Casa Street sewer main. As identified in the Casa Street sewer main CIP request, staff is recommending that all other wastewater system improvements be deferred for one year to offset the major portion of the increased cost of completing the Casa sewer main project. The proposed sewer master plan would evaluate existing wastewater collection and treatment systems for adequacy to serve General Plan build-out and expansion areas; provide preliminary design to ensure system adequacy for build-out as incremental development occurs; and provide preliminary cost estimates so that appropriate cost distribution and cost recovery models can be established. Appropriate facilities master planning is necessary to ensure that as annexation/development occurs, the infrastructure needed to serve the ultimate development of a given area is installed and appropriate costs are allocated to that annexation/development. Summary of Key Assumptions Based upon the assumptions in Exhibit B.2 and the factors discussed above, the financial position projections indicate that sewer rates require an increase of 3.0% in 1996-97 and 4% in 1997-98 and 3% in 1998-99. The following is a summary of key assumptions for expenditures and revenues: ■ Fund balance exceeds the 20% of operating expenses requirement. This is due to the receipt of the Cal Poly's equity contribution. Using this fund balance to reduce projected rate increases would be premature at this time until more is known from the sewer master plan. The City has soundly followed a policy in the last few years of regularly reviewing and adjusting rates to ensure fund health and to minimize the risk of unanticipated, large increases. ■ Operations and maintenance costs are based on the preliminary 1996-97 budget with an inflation rate of 4% thereafter. ■ Exercising its equity contribution option fixes Cal Poly's rates at 70% of the commercial rate, to increase proportionately with other commercial customers. ■ Sewer customer growth rate is projected at less than 1% until 1998-99. ■ Capital improvement charges (development impact fees) are estimated based on inflationary and customer growth adjustments to the base year (1992-93) projection of $583,200, which assumed annual growth of 1% in the City. These impact fees are projected at $98,100 in 1996-97 and $204,700 in 1997-98. y-3� Council Agenda Report - 1996 Sewer Fund Rate Review Page 5 ■ Reimbursement from FEMA and OES to offset disaster-related expenses is projected at $47,700 in 1995-96. ■ Annual debt service payments of$2,135,900 are to repay the State Revolving Loan Funds received by the City for the construction of the Unit 3 and 4 improvements to the Water Reclamation Facility and collection system improvement ("Relief Sewer Main"). FISCAL E14PACT The proposed 3.0% rate increase will (rounded to the nearest five cents) establish monthly sewer rates of$20.95 for single family dwellings in July 1996. This is an increase of 60 cents over the 1995 single family monthly charge. The following summarizes current and proposed rates for all customers: Proposed : .. ::;:...........:::.:::::::.::: Current 7/1/96 010 _.. .. ................:.::...:.,:....:...:::::,,..::..:...::..:.:.,:.:,;::..<.::.::.,:. 520.35 520.95 LF , :::, 16.20 16.50 12.25 12.45 eha�isatleranraa..:':::.:..............::. 2.30 2.35 iWo €Al! 20.35 20.95 > l1SeiEDpiif8c:!use?:;:::>:>:i: €:>'€<:>':>»i: s:`:>a«; 2.4 .___.. .........:.....:: 2.45 ;>:3%".......:..; kidi►r;mtii :':>3: =s€:«s>;::::>»»::>:<:ii:::>::<»>:>:<s:>:::>" 67.95 69.00 i';`r,%i,:!.••::;:..G:;i.::;E';::::;;v.:'::v:.:.n:::...:.<.:i:F::::<.;;::•;:;ii:'i.+%::r:::i;::i:i%;:b.:;: 4.10 4.15 ATTACEMIENT - Resolution adopting sewer service rates EXMI TS A. Schedule of proposed Monthly Sewer Service Charges, effective 7/1/96 B. Sewer Fund Rate Review 1. Changes in fund balance - sewer fund 2. Assumptions for sewer fund projections 3. Capital improvement plan for the sewer fund C. 1996-97 Capital Improvement Project Requests 1. Wastewater Facilities Planning 2. System Improvements - Casa Street Sewer Main Y'3 / ATTACHMENT RESOLUTION NO. (1996 SERIES) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO ESTABLISHING SEWER SERVICE RATES WHEREAS, it is the policy of the City of San Luis Obispo to review enterprise fund fees and rates on an ongoing basis and to adjust them as required to ensure that they remain equitable and adequate to fully cover the cost of providing services; and WHEREAS, a comprehensive analysis of sewer fund operating, capital and debt service needs has been performed for fiscal years 1996-97 through 1998-99; and WHEREAS, the City Council has reviewed the sewer service rates necessary to meet operating and system improvement requirements. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of San Luis Obispo hereby declares: SECTION 1. Resolution No. 8421 (1995 series) is hereby rescinded on the effective date of this resolution. SECTION 2. The rates set forth in Exhibit A shall be effective July 1, 1996. On motion of , seconded by and on the following roll call vote: AYES: NOES: ABSENT: The foregoing Resolution was adopted on this day of 1996. ATTEST: Mayor Allen Settle Acting City Cleric, Kim Condon APPROVED AS TO FORM: City Attorney Jeffrey Jorgensen y_�!o E7EI[BIT A MONTHLY SEWER SERVICE CHARGES Effective Date Type of Account 7/1/96 Single family dwelling, including single meter condominiums and townhouses $20.95 Multi-family dwelling in any duplex, apartment house or roominghouse, per each dwelling unit 16.70 Mobile home or trailer park, per each dwelling unit 12.60 Public, private, or parochial school, average daily attendance at the school 2.35 All other accounts Minimum charge 20.95 Additional charge for every 100 cubic feet in excess of 500 cubic feet of metered water consumption 2.45 Each vehicle discharging sewer into City system Minimum charge 70.00 Additional charge per 100 gallons in excess of 1500 gallons discharged 4.20 EXHIBIT B.1. o g O a h g q g O o $ $ $ o p $ $ c 00 O' p 01i r y O OD N 0 N V; y 00 m ccO, y Go v N m ~ - O 00 O N N 00 N y r ~ O N V1 R n V'1 N O y 0 00 m N r- N 00 NO N N el' C Q� O v ri CV O N } O $ 0 0 CMD 8 p O O $ O Cv O a g \C8 0 a � o a O CA O (c•'. N ...i 00 .moi 00 m oo V; 00 N N � .� 00 N M 00 P: �O r N: 00 .� h � b N 1I': N H: N v N el N O O� 00 VOR hCV NO0 qO ' o c n0O OO' CIF 00 m j� N� N (1 QoC N N °i p .ti Ob .. O Oon. OO r o kOn O Op Nt IN 0 OOcn ~ � 0 M OO 00P Op CV O .r N ti N O Ocl: b .••� 00 Ch N N .N.. N m W Vj Z ^+ 8 IrPO O C p Ob � . p y r OO_ p O O O O 00 N m. r- C4 N00 +: O p� h V' m 000 a 0N0 a Cn Cl W y N N N N r r ''LU W :z U ' ^ Y m d ayi c E > > m O m y m Z v y w i� Z w' m y c a 0 y 0 y W W V00 'y0 C IVn r� O W LL -r- .= 1 p •ia d ; .. 'O 0. m 4N V1 �. "' p O 0 0 N d d m � � O G. � � °� oa a. e d � � •OD 9 o m h o d = V p o a 7 c d m o o as a e c U = d d y m 4 O �! � � m � K v •� y� F .. 0 o m Ci W E Z W y c O W !VR K ,cfi°sn E C 6. d O V7 C/1 y w LYi Ci .. .+ Yi .. �0 �. O O Z : v y > 'W s d F 8 n. C7 _° v' o c G% E0. 'L e 8 w m > > w U '- U S U O r r c n W aLi F y d c E o o Q <:; a c d c a s 0 0 m 0 U D u O go d go V 2 s > a a 4. w p X22 a.£ m §) 2 8 8 • # LO L $ a a @ Q # 2 2 § - 2 ° ° - # q % ® ® - ° # E k f \ A 0 — § / 88 0CD 8 o a § CO � t \ \ OX Go Lo t / \ j B Cl)C � � CD _ D — c # [ - £ o s ) ) § E & \ / o) a 8 8 § \ / # 8cm $ f / f ƒ g 2 / § a 2 a - 2 ° # E CD Va� 2 Cd0 � / 0 LU k � / 0 k CL � 7 UCL ca \ � 2 2 $ ; m a = U. } / / ) § Cl)uj a ¢ � k ooEj 300 _ ƒ -i U- e , c a) 49 CD ocm @ o — k § E ) % CD c 2 ® # ) f e � 3 # f e c e © J $ _ at j k £ © . 3 i § & LL © ° M ƒ / E § a 7 ca 6 n § 2 D ) 2 / k to k k $ � co ca \ O � ` © k 2 E k § g k 2 J CD t — § § & 2 J § e = _ ' E > ) © _ a CL ca a = ° [ ) CL } 2 , » Z b ] CD f \ CD I $ cc f I E a § / § ) % & a ° ] ■ § 0 © — C _ _ ■ a a » e u 8 3 ; 2 2 2 0 0 § I 3 I k $ I E E ��� EXHIBIT Ba. / ] 8 8 ° 0 0 8 8 8 8 8 ° ° 8 8 ° @ 8 co b m 0 o 0 0 0 8 o a o 2 k ® # © # 0 7 "t a 0 # � © # 0 0 # 0 G 2 - - - ® ® & i � _ _ _ 2 _ a ( ® CIS / k § 2 § § § 0 § / 8 a , o # 6 0 0 CO 0 � @_ = R - § o c 0 0 0 0 0 ƒ 2 § 8 8 8 « 8 8 / / 0 / $ $ # # # 0 g 2 E N � co 6s ID 0 a L ; 2 _ § § § 0 § © j co \ § / 0 � � Ci 2 8 8 8 8 8 8 0 8 8 ° 8 8 8 8 ^ _ 0 � cr) co m a to LD cm 0 0 0 OD _ J I CL f ■ $ e # Cl- � k % # 2 0. O CD � 2 = CD ) z ° u C \ C e § / 09- k w 0 7 ® 0 — 2 , & k k E k k$ \ j LU k \ 0 2 0 f@ � R J � ) a f - m t = & § I 0 « 0 ° £ w f f k B E \ — jM 0 0 E [ to E ® } § / 0 a 0 E 2 0 § ° § / / } j ) \ A k ° § ) ) f R _$ « ` ® # k ) § k ) & § \ k I cm L f k ) $ $ � 'a w / ) _) " # ( c o $ § [ o m I a 9 f $ e o a ) & E 5 s § 2 m k 0 c \ k ) k £ ƒ I / $ ) \ > f f } ƒ » & k ��� 1996-97 Financial Plan TT C.1. CAPITAL IMPROVEMENT PLAN PROGRAM: Wastewater Administration REQUEST TITLE: Wastewater Facilities Planning Project Description Prepare infrastructure master plan for City wastewater systems to serve projected General Plan build-out of the City. Evaluate existing wastewater collection and treatment systems for adequacy, make recommendations for improvements to existing systems, provide preliminary design and cost estimates for new/expanded infrastructure in City expansion areas. Project Objectives ■ Identify needed wastewater system improvements to serve future growth within the General Plan build-out. ■ Provide preliminary design to ensure system adequacy for build-out as incremental development occurs. ■ Provide preliminary cost estimates for infrastructure development and treatment capacity improvements for development of appropriate cost distribution/recovery model, e.g. impact fees, assessment district, etc. Existing Situation The City has grown to the limits of the current wastewater system design. Average daily flows at the Water Reclamation Facility have exceeded 80% of the design capacity and as such the City should now begin planning for eventual capacity improvements to the facility. Of the remaining population growth identified in the General Plan, which relates directly to treatment facility capacity, approximately 30% is infill related growth and 70% is annexation related growth. Treatment issues related to water quality at the Water Reclamation Facility(WRF)have been addressed with the latest plant upgrade. Impact fees have been developed to recover the cost of only that portion of the last plant upgrade which could be attributable to new development. The wastewater collection system serving the Edna-Islay area of the City is currently exceeding design capacity and is inadequate to serve any additional development. The current system requires significant wastewater pumping(through two pump stations)and transmission of the wastewater from the Edna-Islay area north to South street, west on South to Higuera, and then back south on Higuera to the WRF. This entire system is at or near capacity and will be unable to accommodate any additional development in the City's major expansion area. There are no developed infrastructure plans for serving this and other remaining expansion/annexation areas including,the Airport Area, Margarita,Froom and Dalidio expansion areas. As a result, growth and annexation of these areas will result in infrastructure development which may not be capable of serving the longer term needs of the City and which is currently adding flow to an already overtaxed system. Current impact fees do not address cost recovery for the needed infrastructure and the lift station fees being charged in some of the expansion areas are providing a very inadequate level of cost recovery. Without appropriate infrastructure planning, development will continue to overload existing systems and cost recovery opportunities for infrastructure development and improvements will be lost The City's failure to provide adequate wastewater collection and treatment systems may result m regulatory action by the California Regional Water Quality Control Board. Goal and Policy Links ■ To provide uninterrupted wastewater flow without health hanrrd, leakage or water infiltration and inflow. ■ To provide a treated wastewater that continuously meets all state and federal requirements. ■ City policy that new development pay its fair share of the cost of building facilities necessary to serve it. ■ City General Plan It should be noted that a substantial portion of the proposed work-scope pertains to the Airport annexation area. Of the $100,000 estimated for this work, about 70% ($70,000)is applicable to the infrastructure planning needs of the Margarita and Airport annexation areas. This is consistent with the amount included in the tentative budget for preparing the specific plan budget for this area. As such, if preparation of the specific plan proceeds, this$70,000 share would be appropriately counted towards the City's contribution to this planning effort. On the other hand, even if specific plan preparation does not go forward in the near future, we believe that it is essential for proper infrastructure planning in meeting operational needs and General Plan goals that we prepare a comprehensive wastewater collection and treatment facilities plan at this time. y..lJ 5 While this effort can go forward independently of the specific plan, it would be desirable to coordinate these efforts. Accordingly,we will not begin this work effort until issues surrounding the possible preparation of a specific plan for this area are substantively resolved. Project Work Completed As stated earlier, the treatment quality component of the City's Water Reclamation Facility has been recently upgraded to meet the requirements of the State of California. Some preliminary analysis of options for serving the city's expansion areas was provided in Wastewater Management Plan prepared by Brown and Caldwell in 1986. Additionally,treatment facility capacity upgrades have been identified and the current facilities were designed and constructed to allow for this future expansion. This information,however, needs to be reviewed in the context of the facilities and General Plan as they exist today, and additional detail provided to allow for accurate cost estimation and design. Environmental Review Completion of the requested facilities planning is necessary to adequately complete the environmental review of future annexations/developments. Environmental review of specific CIP projects resulting from this work will be completed for those projects. Project Phasing, Costs and Funding Sources Project Costs 1996-97 Total Study 100,000 100,000 TOTAL 100,000 100,000 Funding Sources 1996-97 Total Sewer Fund 100,000 100,000 TOTAL 100,000 100,000 Implementation ■ Prepare RFP for consulting services for required infrastructure master planning. 10/96 ■ Present RFP to Council for approval. 11/96 ■ Award Contract. 2197 ■ Complete consultant work (planning, preliminary design and financial cost estimates). 6/97 ■ Present to City Council for approval/direction. 8/97 ■ Incorporate capital improvements and fees/assessments into financial planning process. 3/98 It should be noted that the tasks and schedules provided here may be affected by the decision to proceed or not to proceed with the specific plan process for the Airport annexation area. Should the City decide to proceed with the specific plan process, the services identified in this request would become a part of that specific plan RFP. Public Art Policy The proposed project is the study phase only, of future underground utilities projects and as such is exempt from the Public Art requirements. Alternatives ■ Defer the project. Since there are currently problems associated with system capacity in the Edna-Islay area which need to be addressed immediately, and the WRF is exceeding 80% of its design capacity, deferral would not yield any significant long term savings and could result in the development of a more critical situation. Early planning will allow the City to complete the necessary capital improvements in a planned manner with minimal impacts to sewer rates. Additionally,planning now will ensure that development fees collected will be adequate to recover the costs associated with that development, consistent with our policies. y-414 Project Effect on the Operating Budget ■ Staff will incur some time impacts relative to administration of the consultant contract and coordination with other departments. No other impacts to the operating budget are anticipated as a result of this project. Llo-47 EXHIBIT C.2. 1996-97 Budget Request CAPITAL IMPROVEMENT PLAN PROGRAM: Wastewater Collection REQUEST TITLE: System Improvements Project Description This request is for an additional$100,000 to replace the Casa Street sewer line in 1996-97. Originally,this project was identified as one of eight to be replaced in the approved 1996-97 wastewater systems Capital lmprovement Plan at a total cost of$434,000. It was listed as the highest priority project. The estimated cost has been revised from$186,000 to$534,000. Staff recommends that the other seven projects be deferred to 1997-98,and that the additional$100,000 be approved from Sewer Fund balance to allow the Casa Street project to go forward. Project Objectives ■ Uninterrupted sewage flow without health or effluent leakage. ■ Reduction of infiltration and inflow. ■ Ongoing program of rehabilitation of deteriorated collection system. ■ Ongoing program of upgrading significant system deficiencies and maintenance problems. EAsting Situation Cost estimates for the Casa Street sewer line replacement project are higher than originally projected due to a number of complicating factors,inchndmg excavating in rock,abandoning multiple sewer lines and easements, redirecting lateral connections and moving the Cal Poly flow meter. These unseen factors were not considered when the original estimate was determined for the 1995-97 budget This project has been coordinated with the street reconstruction and resurfacing schedule to minimize future disn"on. Staff has determined that all other wastewater collection system improvements for 1996-97 may be deferred for one year to accommodate this project, with acceptable risk. Goal and Policy Limps ■ Wastewater Management Plan ■ Approved 1995-97 Financial Plan,Appendix B,page 56-57 ■ Uninterrupted sewage flow without health hazard is a primary goal of the Wastewater Collection Program. Project Worst Completed Staff has finished field work and is in the process of completing design and specifications. Environmenal Review This project is exert from environmental review as it replaces existing infrastructure and does not impact any nearby drainages or creeks. Project Phasing,Costs and Funding Sources Wastewater collection system improvements has$434,000 approved for 1996-97. Adequate funding for the additional$100,000 is available in the sewer fund. Project Carts To-Dare 1995-96 199697 ]TjoralConstruction-Casa Street 0 0 534,000TOTAL 0 0 534000 J�X Casa Sewer Main Project Phasing, Costs and Funding Sources FundinSources To-Date 1995-96 199697 Total xx ..::::.......:::...:::. � V.6YY.Q1': ��i:_i"::��:i�:::::<:i':i':i�'':':i:i'.:i::::':��i':ii�:ii �:i'."::::i:::iso:�:::i�::::ii�::::Ij::::i:5i:'i`::�'�::�::::::�:::Je::,'.'J.i'::::'F,'.��>: j:iF:i::j':::i::`i'i::':<':::•::':i^ 520.9087.512.553-Prev.Approved 0 0 434,000 434,000 I2 0 0 100,000 100,000 TOTAL 0 0L 534,000 S534- Implementation 534 Implementation Construction should begin in September and take approximately ten weeks. Alternatives • Deferral of this project will result in the continued high maintenance, surcharging,and deterioration of the sewer line, leading to possible collapse, interruption of service and spills. Deferral of this project may also require delay of a badly needed street resurfacing project on Casa, or, later excavation of the street after resurfacing. Project Effect on the Operating Budget Failure to complete this project may continue or escalate the operating budget requirements for emergency repairs and ongoing maintenance, Location Map/Schematic Design A site plan is attached. F:—Nbodgal—M �l-�9 Q MW IR 06 �--, DD PROJECT illl LOCATIONS � loco to= FIS4' 1\\VVVe55 a���•\�� � r r ��•• D� r D�- row oo.,ra .o d�� E U:r 4-rt5 iyj ••' S I i5� '\a\ 111Y i • r i1111li���,IIIIIIIIIII��IIII�(IIIIII C1ty of CASA SEWERMAIN SdY1 1L11S OBlSPO IMPROVEMENT 570 955 Morro Street. San Luis Obispo,CA 93401 y� cn�cny y � r � -F�-+ C/) T 0) cz o CL — CY) C) d7 O CZ U U +-� 4-0 a� o a� .® a� a� a� cz — +� O .� N 0) cz (D CL — CZCL CZ cz cz czCD U :3 >, cn cn 0 ._ cncn O CD '- U : > 0 U 43 O (Z — cz � ( � � � � CLE .� � .0 N0 >% > CZ •� cn U o� Q oC • • 0 --------------- .......... ..... ............. 4[ ...... }� m LL � o > N C� , � O _ r N ^C a� a� C � d U as O U � U bD U O Oi O U � Cd 0 U >, z cd O 4 Cd b ' cn to �j. 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