HomeMy WebLinkAbout06/01/2004, PH 1 C - 2004 SEWER FUND REVIEW council. June 1 2004
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C I TY O F SAN LU I S O B I S P O
FROM: John Moss,Utilities Directo
Prepared By: Sue Baasch,Administrativ yst
SUBJECT: 2004 SEWER FUND REVIEW
CAO RECOMMENDATION
1. Review and accept the 2004 annual sewer fund financial review; and
2. Adopt a resolution rescinding Resolution #9463 (2003 Series) increasing sewer rates by five
percent (5.0%), effective July 1, 2004, and adopting revised rate increases of six and one-half
percent (6.5%)effective July 1, 2004.
3. Direct staff to return with a public hearing on June 15, 2004 with a Resolution amending
Water and Wastewater Development Impact Fees effective September 1, 2004.
4. Approve the amended CIP Program request for the Tank Farm Lift Station increasing funding
from$6.5 million to $7.795 million including design.
REPORT IN BRIEF
The Sewer Fund and the wastewater services provided through that fund continue to be
challenged by ever increasing regulatory requirements and the demands of an aging wastewater
infrastructure. The 2004 Sewer Fund analysis includes revised projections for continuing to
provide the quality services under the fund, meet future regulatory requirements, and complete
Wastewater Master Plan improvements needed to serve the City to build-out of the General Plan.
The 2004 Sewer Fund Analysis indicates that in order to meet our Wastewater service goals and
continue to meet current and future regulatory requirements, an adjustment of the currently
adopted sewer rate increase for 2004 from 5% to 6.5% will be required. This increase is
necessary to fund the increased cost associated with the Tank Farm Lift Station project and
increased operating expenses for electric energy due to delays in the implementation of our
energy generation project at the Water Reclamation Facility (WRF). A rate increase of 8.0% in
2005 followed by rate increases of 5% are projected to be required through 2009-10 but are not
being recommended for adoption at this time.
Staff has made a number of modifications to our projected Capital Improvement Plan in order to
minimize costs and achieve additional efficiencies. Staff has moved projected Master Plan
improvement design and construction out an additional year, delayed or combined a number of
major equipment maintenance projects into the master plan improvements, deferred telemetry
system improvements, and returned $317,000 to the Sewer fund working capital. Even with
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Council Agenda Report- 2004 Sewer Fund Review
Page 2
these adjustments the identified increases in rates are required to meet our current and future
obligations.
Based on the projected increased cost, including financing costs, of the Tank Farm Lift Station, a
project identified in the adopted Wastewater Facilities Master Plan and approved in the 2003-05
Capital Improvement Plan and amended with the proposed 2004-05 CIP Request, staff has
completed an analysis and is recommending revised Wastewater Development Impact Add-on
fees for those areas to be served by the Tank Farm Lift Station. The recommended fee increases .
range from $743.00 to $986.00 per single family dwelling unit equivalent depending on the
expansion area, and are necessary to ensure that new development pays its proportionate share of
the increased cost of that facility. Staff is recommending that Council direct staff to return with a
resolution adopting the revised Water and Wastewater Development Impact fees on June 15,
2004 with the recommended fee increases to become effective September 1, 2004. More details
regarding this proposed add-on fee will be included in the June 15`h report, including the
relationship of the fee to the current wastewater development impact fee level. Property owners
will be notified and given an opportunity to discuss the proposed fee with staff prior to the 15'`as
well.
DISCUSSION
The 2004 Sewer Fund Analysis shows that even with previously adopted rate increases our costs
required to continue to provide quality wastewater services for the community, maintain our
aging infrastructure and provide facilities to meet future demand for.services and increasingly
stringent water quality requirements, require adjustment to the previously adopted rate increase
for 2004 from 5.0% to 6.5%. Future increases of 8% in 2005 and 5% per year beginning in 2006
are also projected to be required to meet the ongoing demands for operations, maintenance,
capital improvements and facility upgrade debt service costs,in the future.
A variety of factors are influencing this requested rate increase and future projected rate increases
including increased costs associated with the Tank Farm Gravity Sewer and Lift Station Project,
energy costs, and overlapping debt service for major improvements. The adopted Wastewater
Facilities Master Plan has identified facilities and improvements required to meet the future
demands for wastewater services to build-out of the current General Plan. This is significant in
that the planned improvements to our Water Reclamation Facility in 2007-08 will likely be the
last capacity related improvement to that facility under the current General Plan. That said, a
significant component of the proposed improvement is also intended to meet additional treatment
requirements being imposed by the Regional Water Quality Control Board (RWQCB) for
discharge to San Luis Obispo Creek.
It is currently projected that the City will be required to provide facilities to reduce nitrate in its
discharge to less than 10 parts per million. Additionally, other constituents have been proposed
for regulation by the RWQCB that are currently being studied by the City's consultants in an
effort to validate, or invalidate as the case may be, the real and practical need for these
limitations given that San Luis Obispo Creek is an effluent dependent water body and its
practical beneficial uses are limited by that fact. Nonetheless, the projected improvements to the
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Council Agenda Report-2004 Sewer Fund Review
Page 3
WRF at a cost of$1.6 million in 2005-06 and $17.65 million in 2007-08 are a.significant driver
to the identified rate increases.
The Tank Farm Gravity Sewer and Lift Station is another significant capital improvement driving
the required increases in both rates and development impact fees. This facility, currently under
design, is critical to meeting the wastewater service needs of our major residential and
commercial expansion areas, Orcutt, Margarita and the Airport expansion areas. Additionally,
installation of this gravity sewer, lift station and force main will eliminate the need for three
existing and aging lift stations and provide a significant service enhancement and long term
efficiency for those receiving service in the south-east portion of the City. The existing lift
stations are reaching the end of their practical/useful life, are at or exceeding capacity and are
poorly configured from an efficiency standpoint. The proposed $7.2 million lift station and
sewer project approved for construction in 2004-05 will resolve current and future service issues.
Increases to the "add-on" Development Impact fees for the areas served by this lift station are
included in this analysis and are recommended to address the increased cost of the sewer and lift
station project. A full discussion of the proposed development impact fee changes will be
provided to Council at a public hearing on June 15, 2004.
Debt service for these projects will overlap with the debt service requirements of our 1994 WRF
Improvements. We have typically seen improvements to our treatment facilities required on a 10
to 15 year basis. Historically, those improvements have received significant grant funding from
the state and federal governments. Since the early 1980s grant funds have no longer been
available and we have had to rely on funding the required improvements on our own. We have
been able to soften the impact through the use of state and federal low interest loan financing.
However, the responsibility for full facility improvement costs still falls on the community and
must be covered by rates and fees. This problem and that of increasing regulation is being felt
nationwide and many communities in California are currently projecting sewer rates approaching
$100 per month for a single family residence. We are fortunate in that we made the difficult
decision to fund improvements to our facility in 1994 that many agencies are just considering
now, along with new requirements similar to those that we are facing today. While the City's
rates may seem high, we have seen and will continue to see over time our rates becoming
moderate as compared to many other agencies in California with inland discharges.
We have seen through experience that proper planning and timely maintenance.and upgrade of
our facilities significantly moderates impacts to rates and the community's ability to maintain
compliance with regulatory requirements. Planned annual increases in rates and careful analysis
of fund requirements avoids rate instability. Planning for needed system capacity improvements
avoids forced building moratoriums or fines associated with capacity exceedance. In short, our
overall approach to fund and facilities maintenance has been sound and continued planning and
management will be our best course of action over the long run.
In summary, while this year's fund analysis indicates that regular rate increases will be required
over the next several years, the analysis of the Sewer Fund also reflects the continued
accomplishment of significant goals for the City and the careful and conscientious approach to
managing our resources. At this time, staff is recommending only amending this year's adopted
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Council Agenda Report- 2004 Sewer Fund Review
Page 4
rate increase. We will, consistent with our two year financial planning process, return to Council
with next year's fund analysis recommending rate setting for two years based on the improved
information contained in the 2005-07 Financial Plan.
Development Impact Fees
An analysis has been prepared using the previously adopted methodology prepared by David
Taussig and Associates titled Water and Wastewater AB 1600 Fee Study Update, February 25,
2002, for allocation of the increased costs for the Tank Farm Lift Station between new
development and existing customers in the Airport/Margarita and Orcutt expansion areas. A full
discussion of modifications to our development impact fees for both Water and Wastewater will
be presented to Council, following our standard public notification of fee increases to interested
parties, at a public hearing on June 15, 2004. While projected fee increases are consistent with
Council policy that new development pay its share of the facilities and resources needed to serve
it, fees of any kind should be considered with great sensitivity. In this case, however, it should
be noted that the proposed"one-time" add-on fee is relatively modest, especially if financed over
a 30 year period of time. As such, revised Development Impact Fees have been assumed in the
2004 Sewer Fund analysis. Staff is recommending that Council direct staff to return with a
resolution adopting revised Water and Wastewater Development Impact fees on June 15, 2004
with the recommended fee increases to become effective September 1, 2004.
Issues on the Horizon
Sewer Rate Structure Analysis—The City's sewer rate structure has been in place for more than a
decade and should be reviewed to ensure that the policies of the Council relative to sewer rate
structure are defined and represented by the sewer rate structure. Staff is concerned that as rates
have escalated over time with annual percentage increases, that any inherent subsidies,
intentional or otherwise, may have disproportionately increased to a point of inequity.
Additionally, staff has received a number of requests from the community to consider a volume
based residential rate structure based on metered water use. There are advantages and
disadvantages of both flat and volume based rates that staff would like to study and provide an
analysis and recommendation for Council's consideration. We did review this issue a number of
years ago and at that time decided to continue with our flat rate for residential. With increasing
rates for sewer, considering a volume based sewer rate for our residential customers may be an
important strategy in maintaining an appropriate equity among our customers.
Utility Billing Services -With increasing water and sewer rates and customer growth, the need to
complete a thorough review of our customer service/utility billing programs is becoming an
increasing priority. With Council concurrence staff would propose completing the review in
2004 with implementation of the recommendations to be included for consideration in the 2005-
07 Financial Plan. Staff would propose that we return to Council in the fall of 2004 with a
complete review of our customer service programs, current issues with those programs and
program goals and recommended enhancements. Customer service programs/issues currently
identified for review include; service area expansion impacts to meter reading and billing,
automated/remote meter read options, distribution/customer/finance staffing analysis, billing
frequency, water use information for conservation program development and customer service,
and accommodating metering and billing for water reuse customers.
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Council Agenda Report:2004 Sewer Fund Review
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Working Capital —The City's current policy for minimum working capital balance is 20% of the
operating program requirements. This funding is intended to cover unforeseen one-time
emergencies or may be used to provide some increased level of rate stability with Council
approval. Given the high costs associated with infrastructure emergencies and the potential for
significant capital improvements causing rate instability, staff would like to return to Council
with a discussion and possible consideration for amending (increasing) our minimum working
capital requirements.
Radio System Upgrade — The Finance and Information Technology Department is currently
working with a consultant on an analysis and recommendation for implementation of a radio
system upgrade. The current system is aging and the technology behind the system no longer
complies with FCC policy. The system serves Police, Fire, Public Works, Parks and Recreation
and Utilities. Utilities relies heavily on the radio system for dispatch of field crews and
communication between crews on routine and emergency operations. The Enterprise funds will
be expected to participate financially in the Radio System Upgrade once the project isdefined
and costs are known. The Finance and Information Technology Department will be bringing a
recommendation for the Radio system Upgrade to Council later' this year.
2004-05 Sewer Fund Operating Budget
Sewer Fund Operating program budgets for the 2004-05 fiscal year are as shown in the table
below.
Operating Programse
Administration 632,200
Industrial Pretreatment 705,200
Wastewater Collections 261,100
Water Reclamation 2,709,400
Total 4,307,900
Requests for Significant Operating Program Changes
There are no requested Significant Operating Program Changes at the present time for the Sewer
Fund.
2004-05 Capital Improvement Plan Request
Included as Attachment 4 to this report is the Capital Improvement Plan Request seeking
approval of an amended budget for completion of the Tank Farm Gravity Sewer and Lift Station.
A CIP request was submitted and approved in the 2003-05 Financial Plan for the Tank Farm
Gravity Sewer and Lift Station. The 2003-05 Financial Plan CIP request was based on the City's
Wastewater Facilities Master Plan.
The City's Wastewater Facilities Master Plan was completed in October 2000 and identified
improvements necessary to meet the full build-out of the City as identified in the General Plan.
The Master Plan described and identified the most desirable alignment and design for a new
Council Agenda Report- 2004 Sewer Fund Review
Page 6
gravity line, lift station and force main to replace the City's aging; problematic and over capacity
Tank Farm, Rockview and Airport Lift Stations. Much of the information for the Master Plan,
including costs for this recommended project, had been developed a year earlier and was based
on a reconnaissance level analysis. During development of the preliminary design letter for this
project many costs have changed, a much more detailed scope of work has been developed and
the project received a more detailed cost estimation. This assessment has resulted in the revised,
and more accurate, cost estimate for construction of the project. The revised estimate will
require the project budget to be increased by $1.295 million fora total project budget of$7.795
million. This project is anticipated to be debt financed using the California Infrastructure and
Economic Development Bank revolving fund loan program at a very favorable interest rate.
Rate Review Exhibits
Financial schedules providing detail for the sewer fund analysis are provided in Attachments 2.A
through 2.C. These include an analysis showing changes in working capital from 2002-03 to
2008-09; summary of key assumptions by year; and the projected capital improvement plan.
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:
a. Operations and maintenance
a. Capital improvements and replacements
b. Debt service obligations (existing and projected)
Step 2: Subtract from this amount"non-rate revenues" such as:
a. Interest earnings
b. Connection fees and meter sales
c. Revenues from other agencies (Cal Poly)
d. Other service charges (service start-up fees, late charges,etc.)
Step 3: Identify sewer rate requirements:
a. Revenue needed to be generated from sewer rates is the difference between sewer
revenue requirements (Step 1) and"non-rate" revenues (Step 2).
Step 4: Determine new rates:
a. 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
working capital available to support capital projects, debt service requirements, and minimum
working capital policy.
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Council Agenda Report- 2004 Sewer Fund Review
Page 7
Summary of Key Assumptions
The following is a summary of key assumptions for expenditures and revenues:
a. Operations and maintenance costs are based on the 2004-05 Budget with an inflation rate of
3% thereafter.
b. Sewer customer growth rate is projected at I%.
c. Sales to Cal Poly are based on historic use and the 2003 Agreement between the City and the
University. This agreement set the proportion (74%) of the non-residential rate the
University pays to account for the University's difference from other customers (capacity
interest percentage in the collection system and at the Water Reclamation Facility).
d. Capital improvement charges (development impact fees) are estimated based on inflation and
customer growth assumptions. This analysis assumes a varying percentage collection of these
fees (see Exhibit 2-A). Development occurring under maps vested prior to impact fee
establishment pays only those fees in place at the time of approval. Development in the
Airport, Margarita, Edna-Islay and Orcutt areas will pay the increased "add-on" fees
identified in this report.
e. Annual debt service payments of $2,135,500 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").
f. Annual debt service payments of $276,700 for the energy conservation projects began in
2003-04. Electrical savings at the Water Reclamation Facility are projected to equal debt
service payments by 2005-06.
g. Annual debt service is increased by $432,500 in 2005-06 to pay for the $7.2 million Tank
Farm Lift Station project. It is anticipated that this project will receive a California
Infrastructure and Economic Development Bank revolving fund loan with a very favorable
interest rate (currently 2.5%).
h. Annual debt service is increased by $96,000 in 2006-07 to pay for the design phase of the
Master Plan improvements and increased by $1,235,700 in 2008-09 to pay for the
construction phase of Master Plan improvements at the Water Reclamation Facility. It is
anticipated that this project will receive a State Revolving Fund low interest loan to reduce
financing costs for the project.
By 2008-09, the sewer fund is projected to have more than $4.17 million dollars in annual debt
service payments. This high debt service amount will last for only four years, as the State
Revolving Loan Funds for the improvements in the early 90's will be paid in full by the fall of
2012, retiring the annual debt service of$2.135 million.
Council Agenda Report-2004 Sewer Fund Review
Page 8
Sewer Rate History
The table below shows a ten-year history of sewer rates from 1995 to 2004. It also shows the
recommended and projected rates into the future as it is anticipated that the master plan
improvements will be underway, and the sewer fund must be positioned to fund the debt service
for$17.7 million in improvements.
ChargeYear Monthly Single Family
Sewer Service
A Historical Perspective of
Projected Sewer Rates
200940 37.23 —
2008-09 35.46 In the ten-year period from 1995-96
2007-08 33.77 to 2005-06, projected sewer rates.
2006.07 32.16 will have increased 50% while the
2005-06 30.63 cost of living will have increased a
projected 54%. The single-family
- ~- sewer rate will have increased from
Proposed $20.35 to a projected $30.63 per
2004-05 28.36 month.. When considered in context
with the increases associated with
Adopted inflation and the significant
2004-05 27.96 improvements made to our services,
2003-04 26.63 facilities and infrastructure, the
2002-03 25.24 increase represents considerable
value versus expense.
2001-02 24.50
2000-01 23.79 -
1999-00 22.88
1998.99 21.79
1997-98 21.47
1996-97 20.95
1995=96 20.35
Summary
The City Council's commitment to adopting modest, regular sewer rate increases and setting
appropriate development impact fees has been a wise strategy for the long term health of the
sewer fund. In a time when economic factors and increasingly stringent discharge requirements
are large factors in the sewer fund's planning and budgeting, it is possible to maintain services,
comply with current and future regulatory requirements., and protect the City's investment in its
sewer infrastructure and services with modest annual rate increases.
Council Agenda Report- 2004 Sewer Fund Review
Page 9
FISCAL IMPACT
In July 2004, the recommended sewer rate increase .of six and one-half percent establishes
monthly sewer service rates of $28.36 for single-family dwellings, an increase of $0.40 per
month over the previously adopted 2004 single-family rate.
ATTACHMENTS
1. Proposed Schedule of Monthly Sewer Service Rates
2. Sewer Fund Review
Exhibit 2. A—Changes in financial position
Exhibit 2. B—Assumptions for fund projections
Exhibit 2. C—Capital improvement plan
3. Resolution rescinding Resolution # 9463 (2003 Series), and increasing sewer rates by
6.5% effective July 1, 2004.
4. CIP Request—Tank Farm Gravity Sewer and Lift Station
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Attachment 1
PROPOSED SCHEDULE OF MONTHLY SEWER SERVICE RATES
Type of Account July 1 00
Single family dwelling, including
single meter condominiums and $28.36
townhouses
Multi-family dwelling in any duplex,
apartment house or rooming 22.33
house, per each dwelling unit
Mobile home or trailer park, per 16.86
each dwelling unit
Public, private,or parochial school,
average daily attendance at the 3.20
school
All other accounts
Minimum charge 28.36
Additional charge for every 100 3.42
cubic feet in excess of 500
cubic of metered water
consumption
Each vehicle discharging sewer
into City system
Minimum charge 93.43
Additional charge per 100 5.62
gallons in excess of 1500
gallons discharged
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ATTACHMENT 3
RESOLUTION NO. (2004 Series)
A RESOLUTION OF THE 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 2003-04 through 2007-08; and
WHEREAS, this comprehensive analysis has been revised based on updated revenue and
expenditure information; and
WHEREAS,the Council has reviewed the sewer service rates necessary to meet system operating,
capital and debt service requirements.
NOW,THEREFORE,BE IT RESOLVED by the Council of the City of San Luis Obispo as follows:
SECTION 1. Resolution No. 9463 (2003 Series) is hereby rescinded,effective July 1,2004.
SECTION 2. The rates set forth in Exhibit"A"are hereby adopted,establishing rates effective
July 1,2004.
Upon motion of seconded by and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this day of ' 2004.
ATTEST: Mayor Dave Romero
Diane Reynolds, Acting City Clerk
APPROVED AS TO FORM:
-74
JbDathI6 Lowell, City Attorney
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EXHIBIT A to Resolution No. (Series 2004)
MONTHLY SEWER SERVICE RATES
Type of Account July 1, 004
Single family dwelling, including
single meter condominiums and $28.36
townhouses
Multi-family dwelling in any duplex,
apartment house or rooming 22.33
house, per each dwelling unit
Mobile home or trailer park, per 16.86
each dwelling unit
Public, private, or parochial school,
average daily attendance at the 3.20
school
All other accounts
Minimum charge 28.36
Additional charge for every 100 3.42
cubic feet in excess of 500
cubic of metered water
consumption
Each vehicle discharging sewer
into City system
Minimum charge 93.43
Additional charge per 100 5.62
gallons in excess of 1500
gallons discharged
Attachment 4
'PUBLIC UTILITIES
TANK FARM GRAVITY SEWER AND LIFT STATION
CIP Project Summary
Implementing the Collections component of the Wastewater Master Plan, in order to correct existing deficiencies
and provide adequate infrastructure for areas of town having development potential, will cost approximately
$7,200,000 in 2004-05 for construction of the Tank Farm Lift Station Project. This is an increase of$1,295,000
to the prior project design and construct estimate of $6,500,000. Total project costs, including design, are now
estimated at$7,795,000.
Background. The Tank Farm Road gravity sewer and regional lift station have been envisioned for more than 25
years. The new facilities are essential to providing wastewater collection service to the Margarita and Airport
Annexation Areas. The new sewer and regional lift station will allow the retirement of the existing Airport Lift
Station,Tank Farm Lift Station, and the Rockview Lift Station. The Tank Farm and Rockview lift stations are at
capacity and have reached the end of their serviceable life. After completion of the project, the wastewater will
not be pumped as far, increasing the overall energy efficiency of the project. The new facilities will also have
adequate capacity to support build-out of the Margarita and Airport Specific Plan areas.. However, it is estimated
that 32.5% of the project relates to the need to increase efficiency and replace aging infrastructure for existing
customers in the Tank Farm/Broad Street area of the City.
Project Objectives
1. Replace aging and deteriorated infrastructure.
2. Address existing deficiencies in the wastewater collection system.
3. Provide infrastructure needed to serve new development planned within the Urban Reserve Line.
Revised CIP Request
The City's Wastewater Master Plan was completed in October 2000 and identified improvements necessary to
meet the full build-out of the City as identified in the General Plan. The Master Plan described and identified the
most desirable alignment and design for a new gravity line, lift station and force main to replace the City's aging,
problematic and over capacity Tank Farm, Rockview and Airport Lift Stations. Much of the information for the
Master Plan, including of costs for this recommended project, had been developed a year earlier and was not an
in-depth analysis. During development of the preliminary design letter for this project many costs had changed, a
much more detailed scope of work was developed and the project received a thorough cost estimation analysis.
This assessment has resulted in the revised, and more accurate, cost estimate for construction of the project. This
project is anticipated to be debt financed.
Existing Situation
Currently, public wastewater collection facilities do not exist to serve the Airport and Margarita areas. Since
small annexations have been occurring at the edge of the City,trunk facilities have not yet been provided to serve
the overall area. Certain existing facilities are at capacity, aging, and inefficient. These facilities are currently in
need of either upgrade or replacement. The draft Wastewater Master Plan includes recommendations for
improvements to these deficiencies. The plan also makes recommendations for improvements to areas within the
existing City limits. The 2003-05 Financial Pian allocated funding for the design and construction of this project.
.Council approved the design contract with Brown and Caldwell Engineers for$595,000 in September of 2003 and
the project is expected to begin construction in the 2004-05 fiscal year. The increase in construction costs is due
to the preliminary cots estimate in 1999 for the Wastewater Master Plan. The revised costs of 7,795,000 provides
a costs that better reflects the scope of the project.
ATTACHMENT 4
TANK FARM GRAVITY SEWER AND LIFT STATION
Goal and Policy Links
1. Approved 2001-03 Financial Plan, Appendix B—Capital Improvement Plan,Page 136
2. Wastewater Element of the General Plan, Section 12
3. Airport Area Specific Plan, Section 8.4
4. Wastewater Master Plan,Chapter 6
Project Work Completed
1. Wastewater Master Plan
2. Design agreement with Brown and Caldwell Engineers was approved in September 2003.
3. Design Letter Report with construction cost estimate completed in March 2004.
4. Some preliminary pipeline design.
5. Agreement with right of way agent to secure property and easements was approved in March 2004 and
negotiations with property owners are proceeding.
6. Some environmental work performed with review of Margarita/Airport Area Specific Plan.
Environmental Review
Thorough environmental analysis will be necessary along the gravity sewer alignment and for the lift station.
Archaeological assessment and investigation of possible soil contamination may also be needed.
Other Special Review Considerations
1. Construction of this project must occur in such a way as to prevent interference with the City's ability to
provide wastewater collection service to its customers.
2. Caltrans plans to repave Highway 227 (Broad Street)between Fuller Road and South Street sometime around
2004-05. The Tank Farm Lift Station and Sewer Improvements project should be constructed prior to the
repaving project and should be coordinated with Caltrans throughout the design process.
3. The project will also require coordination with SLO County,who has plans to repave Tank Farm Road.
Project Phasing and Funding Sources
The total project costs are now estimated at$7,795,000,an increase of$1,295,000 from the 2003-05 Financial
Plan that identified$500,000 for the design and$6,000,000 for construction,(total of$6,500,000). An addition of
$95,000 was transferred from construction to fund the design contract was approved earlier this year,reducing the
available construction budget to$5,905,000. The table below shows the revised design contract amount of
$595,000 and an increase of$1,295,000 to the construction costs to reflect the design agreement with Brown and
Caldwell and their cost estimate in the preliminary design letter.
PUBLIC UTILMIES
TANK FARM GRAVITY SEWER AND LIFT STATION
Pro'ect Costs by Type
Project Costs
To-Date 2004-6 2005-06 2006-07 Total
Original Budget 500,000 1 6,000,0001 1 6,500,000
Approved Change
Revised Design(transfer from Construction) 595,000 5,905,000 6,500,000
Requested Change
Increase to Construction 1,295,000 1,295,000
Revised Project Budget
Tank Farm Lift Station 595,000 7,200,000 1 7,795,000
The Wastewater Facilities Master Plan indicates that 67.5%of the cost of this project is attributable to new development.
Project Funding Source: Debt Financing, Sewer Fund
Department Coordinator and Project Review/Support
Department Coordinator: Dave I-Tix,Wastewater Division Manager
Project Review and Support. The Community Development Department will review the environmental
documentation for compliance with CEQA. Public Works Engineering will provide review of the project
plans and specifications, bidding, and contract management. More involvement may be necessary if Public
Works provides engineering design services on the gravity sewer or any other portion of the project. Barbara
Lynch has reviewed this request on behalf of Public Works and Ron Whisenand has reviewed this request on
behalf of Community Development.
Alternatives
1. Deny the Project. Without successful completion of this project, there will not be adequate infrastructure to
support annexation of the Margarita and Airport Annexation Areas. In addition, two of the three lift stations
that would otherwise be retired by this project would need substantial improvement to increase capacity and
replace aging equipment.
2. Defer or Re phase the Request. Deferral or rephrasing of the project is not recommended, as it could affect
the timing of the Margarita,Orcutt, and Airport Annexations. Also, deferral of the project would result in the
need to keep the existing Tank Farm and Rockview Lift Stations in service,.though they are operating at
capacity and have reached the end of their serviceable life.
Operating Program: Wastewater Collection
Project Effect on the Operating Budget
1. Utilities staff will work with the consultant to ensure facilities are properly designed. Public Works staff will
bid the project and provide construction and contract management services.
Requesting Department. Wastewater Division Manager and Utilities Engineer, 40 hours for project
approvals,design assistance,and plan review.
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ATTACHM 4
,PUBLIC UTILITI.ES
TANK FARM GRAVITY SEWER AND LIFT STATION
Project Support. Public Works Engineering, 20 hours for plan review and bidding; Public Works
Engineering, 1200 hours for inspection; Public Works Engineering, 20 hours for contract administration;
Community Development, 52 hours for environmental and architectural review.
2. It is expected that the effort to operate and maintain the new lift station will be less than the current effort to
maintain the Airport,Tank Farm, and Rockview Lift Stations, which will be retired with this project.
3. Minor cost savings resulting from more efficient pumping will be offset by increased flows from development
in the Margarita and Airport.Annexation Areas.
Location Map
ti
1
Gravity 1 _ 3 Furze Maio
SewerTank Farm
Replacement , Lift Station +„
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Gravity Scwcr
# Improvements �
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