BPC Agenda 2-11-11 - Monterey One Watermontereyonewater.org/dwnloads/agendas_minutes/archives... · 2012-05-29 · boxes, and pipelines from the structure or project to a water distribution

Joint Powers Authority Member Entities: Boronda County Sanitation District, Castroville Community Services Water District, County of Monterey, Del Rey Oaks, Fort Ord, Marina Coast Water District,

Monterey, Moss Landing County Sanitation District, Pacific Grove, Salinas, Sand City, and Seaside.

M E E T I N G N O T I C E and A G E N D A

BUDGET/PERSONNEL COMMITTEE Gloria De La Rosa, Chair

Lou Calcagno, Carmelita Garcia, Chris Orman and Dave Pendergrass [Alternate – Ramiro Cortez]

DATE: Friday, February 11, 2011

TIME: 1:30 p.m.

LOCATION: Admin Conference Room 5 Harris Court, Building D

PUBLIC COMMENTS Anyone wishing to address the Committee on matters not appearing on the Agenda may do so now. Comments on any other matter listed on the Agenda are welcome at the time the matter is being considered by the Committee.

1. REVIEW OF CAPACITY FEE STUDY (see attachment)

2. REVIEW ADVANCE PAYMENT POLICY FOR USER FEES (see attachment)

3. UPDATE ON ASSET MANAGEMENT PLAN AND CAPITAL IMPROVEMENT PROGRAM

(see attachment)

4. REVIEW MID-YEAR BUDGET STATUS AND INVESTMENT PORTFOLIO

(see attachment) 5. RECEIVE STATUS OF CLASSIFICATION AND COMPENSATION

STUDY (see attachment)

Z:\BOARD COMMITTEES\BUDGET-PERSONNEL COMMITTEE\2011\February\BPC Agenda 2-11-11.doc

BUDGET/PERSONNEL COMMITTEE February 11, 2011 Page 2 of 2

* * * * * * * * *

This Committee Meeting Notice and Agenda was hereby posted at the MRWPCA Administrative offices, 5 Harris Court, Building D, Monterey, California 93940.

POSTED: Tuesday, February 8, 2011 BY: /s/ Betty Nebb

Executive Assistant



MEMORANDUM TO: BUDGET/PERSONNEL COMMITTEE FROM: JOHN TIERNAN, DIR OF ADMIN SERVICES/DEPUTY GM (via Keith Israel, General Manager)

DATE: FEBRUARY 4, 2011

SUBJECT: REVIEW OF CAPACITY FEE STUDY ─────────────────────────────────────────────────────────── Municipal Financial Services (MFS) has completed their analysis of our capacity fee for new connection to MRWPCA’s system. We had not reviewed the nexus for this fee in over ten years. Our current capacity fee is $2,923. MFS recommends the fee be adjusted to $3,100, which represents a 6% increase. This fee analysis is based on the method to determine: 1) the replacement value of fixed assets, 2) use of total capacity in the system (29.6 mgd), and 3) revenue from capacity fees was included. Staff has attached the entire nexus report for your review. Tom Pavletic and Marv Winer from MFS will explain the details of how they determined the new value. Carollo Engineers determined the fixed asset evaluation and their report is also included. Should the Committee concur with the new fee, staff recommends that it become effective July 1, 2011 so as to coincide with the rest of our proposed budget. RECOMMENDATION: Recommend that the full Board adopt an updated fee of $3,100, effective July 1, 2011, for connection to the MRWPCA system Z:\BOARD COMMITTEES\BUDGET-PERSONNEL COMMITTEE\2011\February\Capacity Fees 2-4-11.doc

D R A F T R E P O R T

Wastewater Capacity

Charges

February 2011

Prepared by:

Municipal Financial Services

i

TABLE OF CONTENTS

EXECUTIVE SUMMARY

CHAPTERS

CHAPTER 1. INTRODUCTION CHAPTER 2. SYSTEM VALULATION AND CAPACITY CHAPTER 3. CAPACITY CHARGES APPENDICES

APPENDIX A. GOVERNMENT CODE §66012, §66013 & §66014 APPENDIX B. FACILITY VALUATION MEMORANDUM DATED 2/4/2011 APPENDIX C. 20-YEAR PROJECTION OF MAJOR CAPITAL PROJECT BUDGETS (>$25K)

TABLES AND FIGURES

ii

LIST OF TABLES

LIST OF FIGURES

CHAPTERS

Table 1 Principal and Interest for the SWRCB Loan and Debt Issues

Table 2 Contribution of Capacity Charge Revenue

Table 3 Capital Improvement Plan, x$1000

Table 4 Allocation to Components

Table 5 Average System Load and Design Capacity

Table 6 Capacity Charge Components

Table 7 Average Discharge for a few Selected Customer Classes

Table 8 Recommended Single Family Capacity Charges

Table 9 Current and Recommended Capacity Charges

Table 10 Comparison of Current and Recommended Single Family Capacity Charges

FIGURES

Figure 1 Development of Capacity Charges

ACKNOWLEDGEMENTS

iii

ACKNOWLEDGEMENTS

The consulting team acknowledges the assistance of the following Agency staff:

Staff Tom Buell Brad Hagemann Keith Israel John Tiernan Susan Sulanga

The consulting team comprised the following participants:

Tom Pavletic Marv Winer

ABBREVIATIONS AND TERMS

iv

ABBREVIATIONS AND TERMS

BOD Biochemical Oxygen Demand CIP Capital Improvement Program ENR Engineering News Record FY Fiscal year (July 1 to June 30) FY 10-11 July 1, 2010 through June 30, 2011 GPM Gallons per minute MRWPCA Monterey Regional Water Pollution Control Agency NPDES National Pollutant Discharge Elimination System SFCCI San Francisco Construction Cost Index SFR Single family residential TSS Total Suspended Solids

PLEASE TAKE NOTE

This report is intended to provide general discussion of the subject matter covered. To the extent it addresses laws, regulations or court decisions of any jurisdiction, it is not intended as a precise, detailed or thorough summary of the pertinent legal authorities. The reader should note that this report was not prepared or reviewed by an attorney, and it is not intended, and should not be relied upon, as legal advice. Its purpose is to assist in the recognition and analysis of public policy issues. Questions concerning the interpretation or applicability of the legal authorities referenced herein should be referred to an attorney qualified in the specific subject matter.

ES-1

EXECUTIVE SUMMARY

The recommended wastewater system capacity charges have been developed to meet the regulatory requirements found in the State of California’s Government Code Section 66000 et sequentia. A capacity charge is described in the Government Code as a charge to pay for a public agency’s facilities in existence at the time the charge is imposed or to pay for new facilities that will be constructed in the future that are of benefit to the person or property being charged (new development or changes in discharge by existing customers). In accordance with the MRWPCA Ordinance No. 79-2, Article 5, the capacity charge for any new connection is developed by multiplying the wastewater capacity for each new connection by the unit costs for flow, BOD and TSS. The current capacity charge for single family connections of $2,923 was adopted in Ordinance No. 2009-03 and is the sum of the following components: component cost = unit cost x single family capacity Flow - $ 2,000 = $ 10.58/gpd x 189 gpd BOD - $ 479 = $ 1,141.26/lb-d x 0.42 lb-d TSS - $ 444 = $ 1,057.62/lb-d x 0.42 lb-d The current unit costs listed above have been escalated annually since initially adopted in 2000 by a factor that represents the increase in construction costs. The single family capacity was changed in 2007 from 210 gpd to 189 gpd for flow, 0.41 lb-d to 0.42 lb-d for BOD and 0.29 lb-d to 0.42 lb-d for TSS. The initial unit costs were based on the escalated acquisition value of the wastewater system adjusted for the amount of debt issued and projected capital improvements. The adjusted wastewater system value was allocated to flow, BOD and TSS in the ratio of 71:20:9 to reflect the relative function of system assets in terms of the treatment process. The allocated, adjusted wastewater system values were then divided by the respective annual discharge into the wastewater system for each component. Municipal Financial Services recommends unit costs based on a different development methodology than the current methodology. The recommended capacity charge for single family connections is $3,100 and is the sum (rounded to the nearest $10) of the following components: component cost = unit cost x single family capacity Flow - $ 2,192 = $ 11.60/gpd x 189 gpd BOD - $ 601 = $ 1,430/lb-d x 0.42 lb-d TSS - $ 311 = $ 740/lb-d x 0.42 lb-d The recommended unit costs are based on the reproduction cost of the wastewater system adjusted for the amount of debt issued, projected capital improvements and revenue from capacity charges (revenue from capacity charges was not included in 2000 methodology). The adjusted wastewater system value was allocated to flow, BOD and TSS in the ratio of 71:20:9 to reflect the relative function of system assets in terms of the treatment process (the same as in the 2000 methodology). The allocated, adjusted wastewater system values were then divided by the respective capacity in the system (not annual discharge into the wastewater system) for each component.

1-1

CHAPTER 1

INTRODUCTION Conceptual Approach

In developing wastewater system capacity charges, we have endeavored to satisfy the rational nexus criteria generally applied to these types of charges.1 A rational nexus-based capacity charge must:

• Be rationally based on public policy that demonstrates a nexus between new development and the need to replace, expand or build facilities to accommodate it.

• Not exceed the new development’s proportional share of the cost of facilities needed to serve that development, after crediting it for other contributions that it has already made or will make toward that cost.

• Not be arbitrary or discriminatory in its application to individuals or customer classes. Capacity Charge Regulatory Requirements

The wastewater system capacity costs that have been developed meet the regulatory requirements found in the State of California’s Government Code Section 66000 et sequentia regarding the establishment of capacity charges.2 A capacity charge is described in the Government Code as a charge to pay for a public agency’s facilities in existence at the time the charge is imposed or to pay for new facilities that will be constructed in the future that are of benefit to the person or property being charged (new development or changes in discharge by existing customers). The term “capacity charge” is not synonymous with the term “connection” fee or charge. Section 66013 of the Government Code defines a connection fee as a fee for the physical facilities necessary to make a water or a sewer connection, including, but not limited to, meters, meter boxes, and pipelines from the structure or project to a water distribution line or sewer main, and that does not exceed the estimated reasonable cost of labor and materials for installation of those facilities. Capacity charges are not for the physical connection to a collection system and do not include costs for operations and maintenance. Alternative Capacity Charge Calculation Methodologies

There is no single, established method for the determination of capacity charges that is either appropriate for all utilities or eminently fair to all new applicants for service. There are, however two general methods currently employed by utilities to develop capacity charges. These methods can be categorized as follows: Average Cost (Buy-In) Method. Capacity charges are designed to derive the average investment per connection. This method is employed using either the historical (acquisition) value or reproduction cost of the existing utility system. If historical value is used, this method suffers from the fact that it is based on the original cost of the utility assets and is thus not a measure of the

1 To the extent that this study addresses laws, regulations or court decisions of any jurisdiction, it is not intended as a precise, detailed or thorough summary of the pertinent legal authorities and is not to be considered a legal opinion. 2 Section 66012 through 66014 of the State of California’s Government Code are included in Appendix A.

CHAPTER 1. INTRODUCTION

1-2

current cost (original cost adjusted for inflation) associated with serving a new connection. However, if the reproduction cost of the existing facility is used and it includes near-term capital improvements to the utility system, then this average cost method is appropriate because it recovers the current average cost of the capacity in the utility system (including near-term capital improvements) necessary to serve a new customer. This method is most appropriate for those utilities (for example, MRWPCA) with available capacity in the existing system. Incremental (Marginal) Cost Method. Capacity charges are designed to derive the incremental cost of system expansion. This method is based on the sound economic principle that new applicants for service should be responsible for only those incremental capital improvement costs which they cause to be incurred. Under this method, the capacity charges are designed so that the utility rates would not have to be increased over the planning period to pay for growth-related capital improvements as long as the projected growth occurs. However, this method suffers from the fact that the incremental costs associated with meeting the demand of future customers may vary significantly from planning period to planning period because of the variance in both the costs of expansion and the number of new applicants. In addition, it does not recover the value of capacity in existing facilities available to meet new demand. Methodology Selected for the Development of Capacity Charges

The capacity charges developed in this study is based on the average cost method. The system buy-in portion of the capacity charge recovers the reproduction cost of capacity in those portions of the existing system in which there is capacity available (for example, the treatment plant, outfall and pump stations). The reproduction cost is depreciated based on the relative condition of the assets compared to new. The net value of the system is updated annually by both escalating the net reproduction cost of existing assets for inflation and the addition of the first 10 years of new facilities listed in the 20 Year Projection of Major Capital Project Budgets.

CHAPTER 1. INTRODUCTION

1-3

The methodology selected for development of capacity charges is shown schematically in Figure 1.

Figure 1. Development of Capacity Charges

STEP 1 System Valuation

less$ Debt and Loan

Principal Outstandingplus

$ Budgeted 10-Year

Capital Expenditures$ Flow Component

$ Reproduction Cost New

Less Depreciationless

$ Past Revenue from

Capacity Chargesplus

$ Debt and Loan

Prior Interest

$ Adjusted

Reproduction Cost

New

$ BOD Component

$ TSS Component

go to Step 2

STEP 2 System Capacity and Calculation of Capacity Charge Components

$ Flow Component ÷ Flow Capacity, mgd =Flow Capacity Charge

Component, $/mgd

$ BOD Component ÷ BOD Capacity, lbs/day =BOD Capacity Charge

Component, $/lb-d

$ TSS Component ÷ TSS Capacity, lbs/day =TSS Capacity Charge

Component, $/lb-d

from Step 1 go to Step 3

STEP 3 Capacity Charge Calculation for New Connection

Flow Capacity Charge

Component, $/mgdx Flow Discharge, mgd =

$ Flow Capacity Charge

Component

BOD Capacity Charge

Component, $/lb-dx BOD Discharge, lbs/day =

$ BOD Capacity Charge

Component$ Capacity Charge

TSS Capacity Charge

Component, $/lb-dx TSS Discharge, lbs/day =

$ TSS Capacity Charge

Component

from Step 2

2-1

CHAPTER 2

SYSTEM VALUATION AND CAPACITY Capacity charges are developed by calculating the unit cost of capacity for flow, BOD and TSS. The unit costs are based on the system valuation, the allocation of the valuation to flow, BOD and TSS and the design capacity of the system in terms of flow, BOD and TSS. System Valuation

Valuation of the wastewater system is based on the reproduction cost of system assets with adjustments for assets that were purchased with the use of financing (loans or debt), contributed assets, assets that were purchased with the use of revenue from capacity charges, and projected expenditures for new facilities that will be constructed during the next ten years. Reproduction Cost New Less Depreciation

Reproduction costs are the costs to purchase and install wastewater system assets in today’s dollars (December 2010). Depreciation was determined by relative condition of the assets compared to new where assessed by Agency staff or Carollo Engineers. Where unknown, depreciation estimated by straight-line method using number of years in service and industry standard useful life. Reproduction costs and depreciation were developed by Carollo Engineers as described in their February 4, 2011 memorandum which is included in Appendix B. Loan and Debt Principal and Interest Data

Detailed principal and interest data for two debt issues and one SWRCB low interest loan are shown in Table 1. The net reproduction cost of the system is adjusted to account for the outstanding principal remaining to be paid on the debt issues and loan. Revenue from Capacity Charges

The reproduction cost of the system is adjusted to account for revenue from capacity charges. The amount of revenue from capacity charges from 1983-2020 is shown in Table 2. The amount of revenue from capacity charges from 1983-1997 was based on the estimated number of connections per year and the capacity charge in effect each year. Actual capacity charge revenue was provided for 1998-2010. The amount of revenue from capacity charges from 2011-2020 was based on the estimated number of connections per year and the projected capacity charge in effect each year. Planned Capital Projects

The net reproduction cost of the system is adjusted to account for projected expenditures for new facilities that will be constructed during the next 10 years. Annual budgeted capital projects expenditures for the next 20 years were provided as shown in the 20 Year Projection of Major Capital Project Budgets provided by MRWPCA. The budget document is included as Appendix C. Annual expenditures for the next 10 years are summarized in Table 3.

CHAPTER 2. SYSTEM VALUATION AND CAPACITY

2-2

The system value as of 2010 is calculated by adjusting the reproduction cost for the following:

• Subtract the value of debt issue and loan outstanding principal payments

• Subtract the value of past revenue from capacity charges

• Add the value of capital projected planned for the next 10 years The system value for 2010-2020 is summarized in Table 6. The 2010 values for reproduction costs are increased by 3 percent per year for 2011 onward. Allocation to Flow, BOD and TSS

The value of the system is allocated to flow, BOD and TSS in proportion to the functional design characteristics of the system. The wastewater system was designed to enable the collection, treatment and disposal of wastewater and solids generated from wastewater treatment. The system was designed based on levels of wastewater flow and wastewater strength in terms of BOD and TSS. The value of the system is allocated to these three components based on the relative function of each design parameter. The percentage allocation to flow, BOD and TSS is shown in Table 4. The percentage allocations are the same as used in the 2000 study that is the basis for current capacity charges. Average System Load and Design Capacity

The average system load and the system design capacity are summarized in Table 5. The average system load is the average annual wastewater volume (in million gallons per day, mgd) and pounds of BOD and TSS discharged into the wastewater system. The system design capacity is the maximum amount of flow, BOD and TSS permitted for the wastewater system as expressed in the NPDES permit.1 Average system load values were used as a basis for the development of current capacity charges. Design capacity values are used as a basis for the development of recommended capacity charges.

1 NPDES is the National Pollutant Discharge Elimination System.

Table 1

Principal and Interest for the SWRCB Loan and Debt Issues

2003 Bonds 2006 Bonds SWRCB Loan

Issue Amt = $11,430,000 Principal Issue Amt = $9,780,000 Principal Loan Amt = $2,373,748 Principal

Principal Interest Total Remaining Principal Interest Total Remaining Principal Interest Total Remaining

FY 1/2 151,046 73,586 224,632 2,222,702

FY 2/3 155,729 68,904 224,632 2,066,973

FY 3/4 50,000 520,742 570,742 11,380,000 160,556 64,076 224,632 1,906,417

FY 4/5 70,000 445,350 515,350 11,310,000 165,533 59,099 224,632 1,740,884

FY 5/6 75,000 443,950 518,950 11,235,000 170,665 53,967 224,632 1,570,219

FY 6/7 1,270,000 442,450 1,712,450 9,965,000 401,094 401,094 9,780,000 175,956 48,677 224,632 1,394,263

FY 7/8 1,300,000 410,700 1,710,700 8,665,000 481,313 481,313 9,780,000 181,410 43,222 224,632 1,212,853

FY 8/9 1,140,000 371,700 1,511,700 7,525,000 481,313 481,313 9,780,000 187,034 37,598 224,632 1,025,819

FY 9/10 1,150,000 337,500 1,487,500 6,375,000 481,313 481,313 9,780,000 192,832 31,800 224,632 832,988

FY 10/11 1,075,000 280,000 1,355,000 5,300,000 481,313 481,313 9,780,000 198,810 25,823 224,632 634,178

FY 11/12 1,030,000 226,250 1,256,250 4,270,000 481,313 481,313 9,780,000 204,973 19,660 224,632 429,205

FY 12/13 1,050,000 174,750 1,224,750 3,220,000 481,313 481,313 9,780,000 211,327 13,305 224,632 217,878

FY 13/14 530,000 130,125 660,125 2,690,000 450,000 481,313 931,313 9,330,000 217,878 6,754 224,632 0

FY 14/15 885,000 107,600 992,600 1,805,000 250,000 462,188 712,188 9,080,000

FY 15/16 845,000 72,200 917,200 960,000 250,000 451,563 701,563 8,830,000

FY 16/17 960,000 38,400 998,400 0 75,000 440,938 515,938 8,755,000

FY 17/18 975,000 437,750 1,412,750 7,780,000

FY 18/19 910,000 389,000 1,299,000 6,870,000

FY 19/20 860,000 343,500 1,203,500 6,010,000

FY 20/21 910,000 300,500 1,210,500 5,100,000

FY 21/22 975,000 255,000 1,230,000 4,125,000

FY 22/23 1,025,000 206,250 1,231,250 3,100,000

FY 23/24 1,025,000 155,000 1,180,000 2,075,000

FY 24/25 1,025,000 103,750 1,128,750 1,050,000

FY 25/26 1,050,000 52,500 1,102,500 0

Totals 11,430,000 4,001,717 15,431,717 9,780,000 7,368,219 17,148,219 2,373,748 546,472 2,920,220

CapChgs v12.xlsx

Table 2

Contribution of Capacity Charge Revenue

% Change ENR CCI Capacity Charge Revenue 1, 2

Fiscal Beginning ENR Adjusted Equivalent Capacity Charge Ending

Year End Balance 20-City CCI Balance Connections Charge Revenue Balance

1983 $0 200 $1,431 $286,208 $286,208

1984 $286,208 1.97% $291,839 200 $1,474 $294,794 $586,634

1985 $586,634 1.18% $593,567 200 $1,518 $303,638 $897,205

1986 $897,205 2.38% $918,593 200 $1,564 $312,747 $1,231,340

1987 $1,231,340 2.58% $1,263,163 200 $1,611 $322,130 $1,585,293

1988 $1,585,293 2.56% $1,625,951 200 $1,659 $331,794 $1,957,745

1989 $1,957,745 2.12% $1,999,334 200 $1,709 $341,748 $2,341,082

1990 $2,341,082 $2,341,082 200 $1,760 $352,000 $2,693,082

1991 $2,693,082 2.18% $2,751,701 200 $1,760 $352,000 $3,103,701

1992 $3,103,701 3.10% $3,199,990 200 $1,760 $352,000 $3,551,990

1993 $3,551,990 4.51% $3,712,310 200 $1,760 $352,000 $4,064,310

1994 $4,064,310 3.80% $4,218,770 200 $1,760 $352,000 $4,570,770

1995 $4,570,770 1.16% $4,624,016 200 $1,760 $352,000 $4,976,016

1996 $4,976,016 2.72% $5,111,536 200 $1,760 $352,000 $5,463,536

1997 $5,463,536 3.65% $5,662,828 200 $1,760 $352,000 $6,014,828

1998 $6,014,828 1.63% $6,112,924 1,108 $1,760 $1,949,825 $8,062,749

1999 $8,062,749 2.36% $8,253,422 970 $1,760 $1,706,792 $9,960,214

2000 $9,960,214 2.66% $10,224,834 1,615 $1,990 $3,212,994 $13,437,828

2001 $13,437,828 1.95% $13,699,197 1,031 $1,990 $2,051,970 $15,751,167

2002 $15,751,167 3.09% $16,237,958 602 $1,990 $1,198,477 $17,436,435

2003 $17,436,435 2.39% $17,852,477 893 $1,990 $1,777,504 $19,629,981

2004 $19,629,981 6.29% $20,864,797 673 $2,275 $1,530,700 $22,395,497

2005 $22,395,497 4.65% $23,437,355 556 $2,404 $1,337,191 $24,774,547

2006 $24,774,547 4.10% $25,789,925 394 $2,541 $1,002,032 $26,791,957

2007 $26,791,957 2.78% $27,537,358 478 $2,732 $1,306,694 $28,844,052

2008 $28,844,052 4.31% $30,086,142 494 $2,732 $1,348,261 $31,434,403

2009 $31,434,403 3.13% $32,418,416 157 $2,923 $458,616 $32,877,032

2010 $32,877,032 2.75% $33,782,305 201 $2,923 $588,530 $34,370,835

2011 $34,370,835 3.00% $35,401,960 200 $3,100 $620,000 $36,021,960

2012 $36,021,960 3.00% $37,102,619 200 $3,193 $638,600 $37,741,219

2013 $37,741,219 3.00% $38,873,456 200 $3,289 $657,758 $39,531,214

2014 $39,531,214 3.00% $40,717,150 200 $3,387 $677,491 $41,394,641

2015 $41,394,641 3.00% $42,636,480 200 $3,489 $697,815 $43,334,295

2016 $43,334,295 3.00% $44,634,324 200 $3,594 $718,750 $45,353,074

2017 $45,353,074 3.00% $46,713,666 200 $3,702 $740,312 $47,453,979

2018 $47,453,979 3.00% $48,877,598 200 $3,813 $762,522 $49,640,120

2019 $49,640,120 3.00% $51,129,324 200 $3,927 $785,397 $51,914,721

2020 $51,914,721 3.00% $53,472,163 200 $4,045 $808,959 $54,281,122

Notes:

1 Revenue from charges for FY 1983-2007 and 2012-2020 are estimated.

2 Revenue from charges for 2009-2011 were are based on Agency budgets.

CapChgs v12.xlsx

Table 3

Capital Improvement Plan, x$1000

Item FY 10/11 FY 11/12 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18 FY 18/19 FY 19/20 Total

Annual 4,282 4,500 4,498 4,480 4,885 8,875 7,205 5,215 6,915 990 51,845

Average 5,185

Source: 20 Year Projection of Major Capital Project Budgets provided by MRWPCA.

CapChgs v12.xlsx

Table 4

Allocation to Components

System

Component Acquisition Cost 1

Percent 1

Flow $155,513,765 71%

BOD $42,513,191 19%

TSS $20,402,030 9%

$218,428,986 100%

Notes:

1 The acquisition cost and percentage allocations are the same as

used in the 2000 study that is the basis for current capacity charges.

CapChgs v12.xlsx

Table 5

Average System Load and Design Capacity

Average System Load System Design Capacity

Component 2010 Rate Model 2000 Capacity Charges NPDES Permit

Flow and Load

Flow 21.3 mgd 21.1 mgd 29.6 mgd

BOD 49,600 lbs/day 62,200 lbs/day 66,000 lbs/day

TSS 45,800 lbs/day 37,700 lbs/day 61,000 lbs/day

Strength

BOD 280 mg/l 353 mg/l 266 mg/l

TSS 258 mg/l 214 mg/l 246 mg/l

CapChgs v12.xlsx

3-1

CHAPTER 3

CAPACITY CHARGES Capacity charges are developed by calculating the unit cost of capacity for flow, BOD and TSS based on the system valuation and design capacity presented in the previous chapter. Capacity Charge Components

Capacity charges consist of three components – one each for flow, BOD and TSS. Each component is calculated by dividing its allocated system value by its design capacity. The annual calculation of each capacity charge component is shown in Table 6. The capacity charge components are in units of $ per gpd (gallons per day) for flow and $ per pound per day for BOD and TSS. Each new connection to the wastewater system pays a capacity charge for the average amount of flow, BOD and TSS estimated to be discharged into the system through the connection. The capacity charge is the sum of the products of the capacity charge component times the average discharge for each component. Average Discharge for Selected Customer Classes

For comparison purposes, the average discharge characteristics (gallons of flow and pounds of BOD and TSS) for a few selected customer classes are summarized in Table 7. The average discharge characteristics for nonresidential customer classes remain the same as was reported in the 2000 study. The average discharge characteristics for single family customers are different from those reported in the 2000 study. The average flow discharge for single family customers decreased from 210 gpd to 189 gpd (a 10% reduction). The average BOD discharge for single family customers increased from 0.41 pounds per day to 0.42 pounds per day (a 2% increase). The average TSS discharge for single family customers increased from 0.29 pounds per day to 0.42 pounds per day (a 45% increase). Note that because approximately 71% of the capacity charge is derived from the flow component, total capacity charges are most dependant on the flow discharge characteristic. Capacity Charges

Capacity charges recommended for single family connections are shown in Table 8. The capacity charges recommended for single family connections are the sum of the products of the average discharge for each component times each unit cost capacity charge component. Current and recommended capacity charges for selected customer classes are summarized in Table 9. The summary includes the values for average discharge and for each capacity charge component. Current and recommended capacity charges for single family connections are evaluated in Table 10. The evaluation consists of a comparison of the differences between each unit cost component (flow, BOD and TSS) for changes in system valuation and system capacity. In addition to changes in unit costs based on these changes, the single family capacity charge also changes as a result of the changes in single family discharges of flow, BOD and TSS described above.

CHAPTER 3. CAPACITY CHARGES

3-2

Payment of Capacity Charges

Ordinance No. 2000-02 established the basis for the payment and collection of capacity charges and provided for annual increases in the charge by the same percent as the annual change in the Engineering News Record Construction Cost Index for San Francisco (ENR SFCCI). That ordinance was amended by Ordinance No. 2009-03 to increase capacity charges by an amount greater than the annual change in the ENR SFCCI. The capacity charges recommended in this study would be effective July 1, 2011. Capacity charges would be subject to an annual increase on each subsequent July 1 as established in Ordinance No. 2000-02.

Table 6

Capacity Charge Components

Notes

FY 10/11

FY 11/12

FY 12/13

FY 13/14

FY 14/15

FY 15/16

FY 16/17

FY 17/18

FY 18/19

FY 19/20

System Value

Reproduction Cost New

1527,448,000

543,271,000

559,569,000

576,356,000

593,647,000

611,456,000

629,800,000

648,694,000

668,155,000

688,200,000

less

Principal Outstanding

22003 Bonds

5,300,000

4,270,000

3,220,000

2,690,000

1,805,000

960,000

00

00

2006 Bonds

9,780,000

9,780,000

9,780,000

9,330,000

9,080,000

8,830,000

8,755,000

7,780,000

6,870,000

6,010,000

SWRCB Loan

224,632

224,632

224,632

224,632

00

00

00

Subtotal

15,305,000

14,275,000

13,225,000

12,245,000

10,885,000

9,790,000

8,755,000

7,780,000

6,870,000

6,010,000

Contributions

336,021,960

37,741,219

39,531,214

41,394,641

43,334,295

45,353,074

47,453,979

49,640,120

51,914,721

54,281,122

Net Reproduction Cost New

476,121,040

491,254,781

506,812,786

522,716,359

539,427,705

556,312,926

573,591,021

591,273,880

609,370,279

627,908,878

plus

Capital Projects

45,184,500

5,184,500

5,184,500

5,184,500

5,184,500

5,184,500

5,184,500

5,184,500

5,184,500

5,184,500

System Value

481,305,540

496,439,281

511,997,286

527,900,859

544,612,205

561,497,426

578,775,521

596,458,380

614,554,779

633,093,378

plus

PV of Interest Payments

5

System Cost

481,305,540

496,439,281

511,997,286

527,900,859

544,612,205

561,497,426

578,775,521

596,458,380

614,554,779

633,093,378

Allocation to Components

Flow

71%

6342,673,000

353,447,000

364,524,000

375,847,000

387,745,000

399,766,000

412,068,000

424,657,000

437,541,000

450,740,000

BOD

19%

93,677,000

96,623,000

99,651,000

102,746,000

105,999,000

109,285,000

112,648,000

116,090,000

119,612,000

123,220,000

TSS

9%

44,956,000

46,369,000

47,822,000

49,308,000

50,869,000

52,446,000

54,060,000

55,711,000

57,402,000

59,133,000

System Capacity

Flow

29.600 mgd

29.600 mgd

29.600 mgd

29.600 mgd

29.600 mgd

29.600 mgd

29.600 mgd

29.600 mgd

29.600 mgd

29.600 mgd

BOD

66,000 lbs/d

66,000 lbs/d

66,000 lbs/d

66,000 lbs/d

66,000 lbs/d

66,000 lbs/d

66,000 lbs/d

66,000 lbs/d

66,000 lbs/d

66,000 lbs/d

CapChgs v13.xlsx

BOD

66,000 lbs/d

66,000 lbs/d

66,000 lbs/d

66,000 lbs/d

66,000 lbs/d

66,000 lbs/d

66,000 lbs/d

66,000 lbs/d

66,000 lbs/d

66,000 lbs/d

TSS

61,000 lbs/d

61,000 lbs/d

61,000 lbs/d

61,000 lbs/d

61,000 lbs/d

61,000 lbs/d

61,000 lbs/d

61,000 lbs/d

61,000 lbs/d

61,000 lbs/d


Flow

$11.60/gpd

$11.90/gpd

$12.30/gpd

$12.70/gpd

$13.10/gpd

$13.50/gpd

$13.90/gpd

$14.30/gpd

$14.80/gpd

$15.20/gpd

BOD

$1,420/lb-d

$1,460/lb-d

$1,510/lb-d

$1,560/lb-d

$1,610/lb-d

$1,660/lb-d

$1,710/lb-d

$1,760/lb-d

$1,810/lb-d

$1,870/lb-d

TSS

$740/lb-d

$760/lb-d

$780/lb-d

$810/lb-d

$830/lb-d

$860/lb-d

$890/lb-d

$910/lb-d

$940/lb-d

$970/lb-d

Notes:

1 The Reproduction Cost New value for FY 10/11 is from a January 13, 2011 memorandum prepared by Carollo Engineers. Values for subsequent years are escalated by 3%.

2 Principal outstanding for debt is from Table 1.

3 Contribution values are from Table 2.

4 Capital projects are from Table 3.

5 The present value of past interest payments is from Table 2.

6 The basis for allocation to components is from Table 4.

CapChgs v13.xlsx

Table 7

Average Discharge for a few Selected Customer Classes

2010 Rate Model 2000 Capacity Charge Study

Flow / Strength Flow / Load Flow / Strength Flow / Load

Single Family

Flow 189 gpd 189 gpd 210 gpd 210 gpd

BOD 265 mg/l 0.42 lbs/day 233 mg/l 0.41 lbs/day

TSS 265 mg/l 0.42 lbs/day 165 mg/l 0.29 lbs/day

Commercial Business




Motel / Hotel

Flow 5,000 gpd 5,000 gpd 5,000 gpd 5,000 gpd



Restaurant - 2 meals / day


BOD 1,000 mg/l 8.34 lbs/day 1,000 mg/l 8.34 lbs/day


Restaurant - with bar


BOD 1,000 mg/l 33.36 lbs/day 1,000 mg/l 33.36 lbs/day


Takeout Food - small




Takeout Food - large




CapChgs v12.xlsx

Table 8

Recommended Single Family Capacity Charges

Notes

FY 10/11

FY 11/12

FY 12/13

FY 13/14

FY 14/15

FY 15/16

FY 16/17

FY 17/18

FY 18/19

FY 19/20


1

Flo

w$11.6

0/g

pd

$11.9

0/g

pd

$12.3

0/g

pd

$12.7

0/g

pd

$13.1

0/g

pd

$13.5

0/g

pd

$13.9

0/g

pd

$14.3

0/g

pd

$14.8

0/g

pd

$15.2

0/g

pd

BO

D$1,4

20/lb-d

$1,4

60/lb-d

$1,5

10/lb-d

$1,5

60/lb-d

$1,6

10/lb-d

$1,6

60/lb-d

$1,7

10/lb-d

$1,7

60/lb-d

$1,8

10/lb-d

$1,8

70/lb-d

TS

S$740/lb-d

$760/lb-d

$780/lb-d

$810/lb-d

$830/lb-d

$860/lb-d

$890/lb-d

$910/lb-d

$940/lb-d

$970/lb-d

Average Single Family Load

2

Flo

w189 g

pd

189 g

pd

189 g

pd

189 g

pd

189 g

pd

189 g

pd

189 g

pd

189 g

pd

189 g

pd

189 g

pd

BO

D0.4

2 lbs/d

0.4

2 lbs/d

0.4

2 lbs/d

0.4

2 lbs/d

0.4

2 lbs/d

0.4

2 lbs/d

0.4

2 lbs/d

0.4

2 lbs/d

0.4

2 lbs/d

0.4

2 lbs/d

TS

S0.4

2 lbs/d

0.4

2 lbs/d

0.4

2 lbs/d

0.4

2 lbs/d

0.4

2 lbs/d

0.4

2 lbs/d

0.4

2 lbs/d

0.4

2 lbs/d

0.4

2 lbs/d

0.4

2 lbs/d

Single Family Capacity Charge

3

Flo

w$2,1

92

$2,2

49

$2,3

25

$2,4

00

$2,4

76

$2,5

52

$2,6

27

$2,7

03

$2,7

97

$2,8

73

BO

D$596

$613

$634

$655

$676

$697

$718

$739

$760

$785

TS

S$311

$319

$328

$340

$349

$361

$374

$382

$395

$407

Tota

l$3,1

00

$3,1

80

$3,2

90

$3,4

00

$3,5

00

$3,6

10

$3,7

20

$3,8

20

$3,9

50

$4,0

70

Notes:

1 C

apacity c

harg

e c

om

ponents

are

fro

m T

able

6.

2 T

he a

vera

ge s

ingle

fam

ily load is b

ased o

n v

alu

es fro

m the 2

010 R

ate

Model show

n in T

able

7.

3 T

ota

ls a

re r

ounded to the n

eare

st $10.

CapC

hgs v

12.x

lsx

Table 9

Current and Recommended Capacity Charges

Recommended Current

Component Total Component Total Difference

Load Charges Charge Load Charges Charge Dollars Percent

Single Family

Flow 189 gpd $11.60/gpd $2,192 189 gpd $10.58/gpd $2,000 $193 10%

BOD 0.42 lbs/d $1,420/lb-d $596 0.42 lbs/d $1,141/lb-d $479 $117 24%

TSS 0.42 lbs/d $740/lb-d $311 0.42 lbs/d $1,058/lb-d $444 -$133 -30%

$3,100 $2,923 $177 6%

Commercial Business


BOD 0.18 lbs/d $1,420/lb-d $256 0.18 lbs/d $1,141/lb-d $205 $50 24%

TSS 0.18 lbs/d $740/lb-d $133 0.18 lbs/d $1,058/lb-d $190 -$57 -30%

$2,080 $1,940 $140 7%

Motel / Hotel

Flow 5,000 gpd $11.60/gpd $58,000 5,000 gpd $10.58/gpd $52,900 $5,100 10%

BOD 12.93 lbs/d $1,420/lb-d $18,361 12.93 lbs/d $1,141/lb-d $14,756 $3,604 24%

TSS 5.00 lbs/d $740/lb-d $3,700 5.00 lbs/d $1,058/lb-d $5,288 -$1,588 -30%

$80,060 $72,945 $7,115 10%

Restaurant - 2 meals / day




$27,140 $25,386 $1,754 7%

Restaurant - with bar




$108,590 $101,566 $7,024 7%

Takeout Food - small


BOD 1.67 lbs/d $1,420/lb-d $2,371 1.67 lbs/d $1,141/lb-d $1,906 $465 24%

TSS 1.00 lbs/d $740/lb-d $740 1.00 lbs/d $1,058/lb-d $1,058 -$318 -30%

$7,750 $7,196 $554 8%

Takeout Food - large




$30,990 $28,771 $2,219 8%

CapChgs v12.xlsx

Table 10

Comparison of Current and Recommended Single Family Capacity Charges

2000 Annual Esc. Value Ordinance 1

Recommended

Study Escalation Current Current FY 10/11

System Valuation

Flow 71% $155,513,765 4.34% $237,835,763 $223,238,000 $342,672,636

BOD 19% $42,513,191 4.34% $65,017,764 $69,887,270 $93,677,285

TSS 9% $20,402,030 4.34% $31,201,948 $39,827,008 $44,955,619

$218,428,986 $334,055,475 $332,952,278 $481,305,540

System Capacity

Flow 21.1 mgd 21.1 mgd 21.1 mgd 29.6 mgd

BOD 61,237 lbs/d 61,237 lbs/d 61,237 lbs/d 66,000 lbs/d

TSS 37,657 lbs/d 37,657 lbs/d 37,657 lbs/d 61,000 lbs/d


Flow $7.37/gpd $11.27/gpd $10.58/gpd $11.60/gpd

BOD $694.24/lb-d $1,062/lb-d $1,141.26/lb-d $1,420/lb-d

TSS $541.78/lb-d $829/lb-d $1,057.62/lb-d $740/lb-d

Average Single Family Discharge


BOD 0.410 lbs/d 0.420 lbs/d 0.420 lbs/d 0.420 lbs/d

TSS 0.290 lbs/d 0.420 lbs/d 0.420 lbs/d 0.420 lbs/d

Single Family Capacity Charge

Flow $1,548 $2,130.03 $1,999.62 $2,192

BOD $285 $445.91 $479.33 $596

TSS $157 $348.01 $444.20 $311

Total $1,990 $2,923.96 $2,923.15 $3,100

Notes:

1 Values in italics listed in this column are not in the Ordinance but are calculated for comparison.

CapChgs v12.xlsx

APPENDIX A

Government Code §66012, §66013 & §66014

Government Code Sections 66012 - 66014

66012. (a) Notwithstanding any other provision of law which prescribes an amount or otherwise limits the amount of a fee or charge which may be levied by a city, county, or ci ty and county, a city, county, or city and county shall have the aut hority to levy any fee or charge in connection with the operation of a n aerial tramway within its jurisdiction. (b) If any person disputes whether a fee or cha rge levied pursuant to subdivision (a) is reasonable, the audi tor, or if there is no auditor, the fiscal officer, of the city, cou nty, or city and county shall, upon request of the legislative body of the city, county, or city and county, conduct a study and det ermine whether the fee or charge is reasonable. 66013. (a) Notwithstanding any other provision of law, when a local agency imposes fees for water connections or sewer connections, or imposes capacity charges, those fees or charges sha ll not exceed the estimated reasonable cost of providing the service for which the fee or charge is imposed, unless a question regarding t he amount of the fee or charge imposed in excess of the estimated re asonable cost of providing the services or materials is submitted to , and approved by, a popular vote of two-thirds of those electors voti ng on the issue. (b) As used in this section: (1) "Sewer connection" means the connection of a structure or project to a public sewer system. (2) "Water connection" means the connection of a structure or project to a public water system, as defined in sub division (f) of Section 116275 of the Health and Safety Code. (3) "Capacity charge" means a charge for public facilities in existence at the time a charge is imposed or charge s for new public facilities to be acquired or constructed in the fut ure that are of proportional benefit to the person or property bein g charged, including supply or capacity contracts for rights o r entitlements, real property interests, and entitlements and other rights of the local agency involving capital expense relating to its use of existing or new public facilities. A "capacity cha rge" does not include a commodity charge. (4) "Local agency" means a local agency as defin ed in Section 66000. (5) "Fee" means a fee for the physical facilitie s necessary to make a water connection or sewer connection, includ ing, but not limited to, meters, meter boxes, and pipelines from the structure or project to a water distribution line or sewer main, and that does not exceed the estimated reasonable cost of labor and m aterials for installation of those facilities. (6) "Public facilities" means public facilities as defined in Section 66000. (c) A local agency receiving payment of a charge as specified in paragraph (3) of subdivision (b) shall deposit it i n a separate capital facilities fund with other charges received , and account for the charges in a manner to avoid any commingling wi th other moneys of the local agency, except for investments, and shall expend those charges solely for the purposes for which the charg es were collected. Any interest income earned from the investment of m oneys in the capital facilities fund shall be deposited in that fund.


(d) For a fund established pursuant to subdivisi on (c), a local agency shall make available to the public, within 1 80 days after the last day of each fiscal year, the following informa tion for that fiscal year: (1) A description of the charges deposited in th e fund. (2) The beginning and ending balance of the fund and the interest earned from investment of moneys in the fund. (3) The amount of charges collected in that fisc al year. (4) An identification of all of the following: (A) Each public improvement on which charges wer e expended and the amount of the expenditure for each improvement, inc luding the percentage of the total cost of the public improvem ent that was funded with those charges if more than one source o f funding was used. (B) Each public improvement on which charges wer e expended that was completed during that fiscal year. (C) Each public improvement that is anticipated to be undertaken in the following fiscal year. (5) A description of each interfund transfer or loan made from the capital facilities fund. The information provided, in the case of an interfund transfer, shall identify the public impro vements on which the transferred moneys are, or will be, expended. T he information, in the case of an interfund loan, shall include the da te on which the loan will be repaid, and the rate of interest that the fund will receive on the loan. (e) The information required pursuant to subdivi sion (d) may be included in the local agency's annual financial rep ort. (f) The provisions of subdivisions (c) and (d) s hall not apply to any of the following: (1) Moneys received to construct public faciliti es pursuant to a contract between a local agency and a person or ent ity, including, but not limited to, a reimbursement agreement pursu ant to Section 66003. (2) Charges that are used to pay existing debt s ervice or which are subject to a contract with a trustee for bondho lders that requires a different accounting of the charges, or charges that are used to reimburse the local agency or to reimburse a person or entity who advanced funds under a reimbursement agreement or contract for facilities in existence at the time the charges are collected. (3) Charges collected on or before December 31, 1998. (g) Any judicial action or proceeding to attack, review, set aside, void, or annul the ordinance, resolution, or motion imposing a fee or capacity charge subject to this section shal l be brought pursuant to Section 66022. (h) Fees and charges subject to this section are not subject to the provisions of Chapter 5 (commencing with Sectio n 66000), but are subject to the provisions of Sections 66016, 66022, and 66023. (i) The provisions of subdivisions (c) and (d) s hall only apply to capacity charges levied pursuant to this section.


66014. (a) Notwithstanding any other provision of law, when a local agency charges fees for zoning variances; zoning ch anges; use permits; building inspections; building permits; fi ling and processing applications and petitions filed with th e local agency formation commission or conducting preliminary proc eedings or proceedings under the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000, Division 3 (commencing with Section 56000) of Title 5; the processing of maps under the provisions of the Subdivision Map Act, Division 2 (commencing with Se ction 66410) of Title 7; or planning services under the authority o f Chapter 3 (commencing with Section 65100) of Division 1 of Ti tle 7 or under any other authority; those fees may not exceed the esti mated reasonable cost of providing the service for which the fee is charged, unless a question regarding the amount of the fee charged in excess of the estimated reasonable cost of providing the services or materials is submitted to, and approved by, a popular vote of tw o-thirds of those electors voting on the issue. (b) The fees charged pursuant to subdivision (a) may include the costs reasonably necessary to prepare and revise th e plans and policies that a local agency is required to adopt b efore it can make any necessary findings and determinations. (c) Any judicial action or proceeding to attack , review, set aside, void, or annul the ordinance, resolution, or motion authorizing the charge of a fee subject to this sec tion shall be brought pursuant to Section 66022.

APPENDIX B

Facility Valuation Memorandum Dated 2/4/2011

1 pw://Carollo/Documents/Client/CA/MRWPCA/6965L00/Deliverables/ValuationSummary (C)

DRAFT PROJECT MEMORANDUM Project Name: Facility Valuation Task Date: February 4, 2011

Client: Monterey Regional Water Pollution Control Agency

Project Number: 6965L00

Prepared For: Jennifer Gonzales and John Tiernan – MRWPCA

Prepared By: Rebecca Overacre – Carollo Engineers

Reviewed By: Rick Chan and Scott Vanier – Carollo Engineers

Subject: Facility Valuation

PURPOSE The purpose of this memorandum is to summarize the methodology and findings of a planning-level facility valuation of the Monterey Regional Pollution Control Agency’s (MRWPCA) Regional Treatment Plant (RTP), outer lying pump stations, force mains, and other facilities. The valuation of these facilities will be used to inform MRWPCA’s capacity fee study.

BACKGROUND In 2009, Carollo Engineers (Carollo) provided services to identify rehabilitation and replacement needs for six of the MRWPCA’s outer lying sewage pump stations. The project included development of replacement cost estimates for all assets at the selected pump stations. In 2010, the MRWPCA contracted Carollo to conduct similar efforts at the RTP, which included development of replacement cost estimates for many assets. The asset inventory, condition assessments, and cost estimates resulting from these projects were applied toward the valuation presented here, in addition to estimates obtained using methods described below.

METHODOLOGY

Of the standard valuation methods available for assessing capacity fees, this study used the Cost Approach, or “Asset Approach,” which relies on a Reproduction Cost New (RCN) estimate. The RCN determined within this engineering analysis reflects a summation of the project costs to purchase and install similar assets in today’s dollars. The following are key assumptions used for the RCN estimates:

Reproduction Cost New

• The opinion of probable cost was prepared in accordance with the guidelines of the AACE International (the Association for the Advancement of Cost Engineering) for a Class 5 estimate, or Predesign Cost Estimate. According to the definitions of AACE International, the accuracy of the “Class 5 Estimate” can be expected to range from +50% to -30% of the actual cost of the project.


• The RCNs are presented in current dollars based on an Engineering News Record Construction Cost Index (ENR CCI) value of 8952 (20 Cities Average, December 2010).

• The RCNs are comprised of both direct and indirect costs to estimate total project costs. Direct costs are those directly attributed to the physical make-up of the assets (e.g., site development, materials, site dewatering, facilities, equipment, piping, electrical/instrumentation/controls, installation and labor, etc.). Direct costs also include items such as ancillary support/facilities, construction contingency factors, general conditions, and contractor overhead and profit. Indirect costs consist of sales tax, engineering/legal/administration, construction management, and change order contingency factors.

Above-Ground Asset Groups Where feasible, direct costs were estimated for individual asset replacements. The references used for these estimates include the cost from a 100 percent design estimate or similar values pertaining to the actual asset (i.e., if developed as part of a recent project) brought into current dollars. Other cost sources included Carollo reference projects, the R.S. Means price catalog, Carollo’s Unit Price Catalog (used more commonly for pricing raw materials), and vendor quotes for identical or similar equipment. Direct costs were escalated to project costs via additional indirect cost multipliers, as noted above.

To address the limited detail in the asset inventory and the range of uncertainty in the itemized replacement cost estimates, cost curves were used to conduct a “reasonableness check” of the asset summations on a unit process level. Cost curves were also utilized to estimate the value of distributed plant support systems, such as process piping and electrical, instrumentation, and control systems. These curves are based on bid tabulations from Carollo design projects, Carollo engineer’s estimates for 100% final design, and engineer’s estimates prepared by joint venture partners. These references provide construction costs based on key size parameters that vary by unit process. Costs were normalized for time and location, and indirect factors were applied to adjust the construction costs to total project costs.

Below-Ground Asset Groups

Below-ground assets included in the RTP system consist of the land and ocean outfalls and force mains transferring sewage from the pump stations to the RTP. Below-ground costs were developed slightly different than above-ground costs based on the difference in asset types and construction requirements. Direct (or construction) costs were estimated based on pipe material unit costs and the following cost components:

• Materials, labor, equipment

• Pavement replacement

• General conditions

• Contractor overhead and profit

• Construction contingency


The unit construction costs for the below-ground assets also included trenching and bedding, pavement replacement, and the associated fittings, valves, and related structures. Indirect cost factors were then applied to estimate total project costs.

Reproduction Cost New Less Depreciation (RCNLD) represents the estimated cost of the asset in the current year based on the condition or remaining service life of the asset. The condition assessment findings of the Pump Station and RTP Asset Management Projects were used to estimate depreciation. This approach accounts for maintenance and rehabilitation that has extended the useful life of many of the MRWPCA’s assets.

Reproduction Costs New Less Depreciation

The relationship between condition scores used in the asset management projects and depreciation is shown in Table 1. This is an approach to condition grading provided by the International Infrastructure Management Manual, a publication of the Association of Local Government Engineering New Zealand, Inc. The scale provides a measurable condition ranking system consistent with the modified reporting approach allowed by the General Accounting Services Board (GASB) Statement 34.

Condition rankings were averaged for each asset category at the pump stations and RTP. Rankings were assigned to the below-ground assets based on the monitoring of these assets by MRWPCA staff. Most of the below-ground assets were assigned a condition ranking of 2 due to good condition findings and ongoing protection with cathodic protection systems that are routinely tested. Divers inspect and maintain the ocean outfall every three years, and camera inspections of the land outfall have revealed minimal defects. The land outfall and most of the force mains are in sandy soils with low corrosivity, and pipe condition has tested well in potholed locations. An exception is the Castroville Force Main, which stretches through clay soils and a high water table. This force main was assigned a condition ranking of 4 due to known corrosion.

Where condition was not assessed by MRWPCA staff or Carollo, the number of years in service was used to estimate depreciation. This applied to the Harris Court Administration Building. Land was not depreciated.

Table 1 Asset Condition Ranking Scale(1) Facility Valuation Monterey Regional Water Pollution Control Agency

Ranking Description Percentage of Asset Requiring

Rehabilitation(2) 1 Very Good Condition 0% 2 Minor Defects Only 0-10% 3 Significant Maintenance Required 11-20% 4 Requires Renewal 21-50% 5 Asset Unserviceable >50%

Notes: (1) Adapted from the International Infrastructure Management Manual, Version 3.0, 2006. (2) “Percentage of asset requiring rehabilitation” is that percentage of the value of the asset

needed to return the asset to like-new condition.


Findings Planning-level facility costs developed using these methods were summed for each of the system components. Table 2 shows the resulting estimates of RCN and RCNLD for the treatment plant, pump stations, force mains, and other facilities. Table 2 Reproduction Costs New Less Depreciation

Facility Valuation Monterey Regional Water Pollution Control Agency

System Element

Description RCN(1) Remaining Value Less

Depreciation(2)

RCNLD(3)

RTP All RTP assets except those associated with the Salinas Valley Reclamation Plant $279,800,000 86% $241,009,000

Pump Stations

Ten sewer pump stations $81,300,000 93% $75,589,000

Force Mains

Force Mains between pump stations and to RTP from each pump station $163,500,000 92% $150,050,000

Other Outfall, Harris Court Administration Building and Land $65,100,000 93% $60,800,000

Total: $589,700,000 $527,448,000 Note: (1) Reproduction Cost New. Class 5 estimate in current dollars, ENR CCI value of 8952 (20

Cities Average, December 2010). (2) Relative condition of the assets compared to new, where assessed by MRWPCA staff or

Carollo. Where condition unknown, depreciation estimated by straight-line method using number of years in service and industry standard useful life.

(3) Reproduction Cost New Less Depreciation. Class 5 estimate in current dollars, ENR CCI value of 8952 (20 Cities Average, December 2010).

APPENDIX C

20-Year Projection of Major Capital Project

Budgets (>$25k)

Monterey Regional Water Pollution Control Agency TWENTY YEAR PROJECTION OF MAJOR CAPITAL PROJECT BUDGETS (>$25k)

FY10/11 to FY19/20 and 10+CIP NO PROJECT NAME ACTIVITY REMARKS

FY10/11 FY11/12 FY12/13 FY13/14 FY14/15 FY15/16 FY16/17 FY17/18 FY18/19 FY19/20 10+ Yrs Prj Cost

5 Year Capital ProjectsRegional Treatment Plant

203 Digester Mixing System Replacement Design complete R & R Mixing System 2 Digesters

Construction 1750 $1,750 Include rehab of remaining pump system

163 Digester Gas Blending and Storage Rehab Design $30 $500 Gas Blending. Cogen upgrades.

Construction $500 *** $1,030 $10M in 5-10 yr Time Frame for Cogen Upgr

213 RTP SCADA Upgrades Design/Implement 225 $275 $500 Implement 2009 SCADA Study

218 Class A/B Water System Construction $280 $280 Implement 2010 Study

220 Biofloc Aeration System upgrade Design $150 Install new blowers and diffusers

Construction $1,500 $1,650

223 Barscreen Replacement Study complete $550k spent 09/10 on construction.

Design complete Include Grit Sluice Gate Replacement

Construction $730 $730

230 Headworks Odor Scrubber Construction 75 55 $130 Biofilter System- install #2

XXX Admin Office Roof Construction 100 $100 Roof leaks above Customer Service

231 RTP Phone System Replacement Design $5 Obsolete system with no expansion capacity


232 Lab HVAC Upgrade Design $25 Safety upgrades needed


233 Lab Sample Prep Room & BacT Room Remodel Construction $40 $40 Safety upgrades needed

XXX Biosolids Dewatering Drives Replacement (5) Construction $250 $250 Obsolete equipment

XXX Chemical Building (FLEWR) Roof Replacement Construction $60 $60 Minor leaks

XXX Remove obsolete and unused equipment Construction $25 $25 Various locations at RTP

XXX Conduit replacement Construction $50 $50 Various locations at RTP

234 Digester Bldg. Pump Base Replacement Construction $40 $40 Rebuild pump bases to match new pumps

235 DAFT/Gravity Thickener Concrete Coating Construction $100 $100 Concrete is failing due to H2S corrosion

XXX Drying Bed Biocell Wall Construction $10 $10 Replace dirt berm in drying bed 32

236 Grit Removal Area Rehab Construction $100 $100

Rehab air sparger system, coat blower motors, coat sluice gate actuators, replace grit piping, repair concrete at east influent gate

XXX Headworks Area Rehab Construction $350 $350Influent sluice gates, handrails, Parshall Flume, conduit, lighting, piping

241 Headworks Grating- Ph 3 Construction $70

XXX Maintenance Building Roof Construction $50 $50 Roof leaks

237 Plant Air System Rehab Design $50 $50

Replace plant air with individual small systems for LW Bubbler, SRT, Digester Bldg, Cogen, Tire Filling Station, Biosolids Dewatering

Construction $100

238 Primary Clarifiers Area Rehab Construction $175 $175 Coating of primary effluent boxes & pumps

239 Scum Dewatering Rehab Construction $140 $140 Replace existing scum dewatering system

240 Recycle Sump Rehab Construction $65 $65 RS#1 & 2- pump pad replacement, valves

XXX Underground Fuel Storage Tanks Remove & Repla Construction $400 $400

Remove USTs for Diesel & Gas. Replace with ASTs. Purchase new cabinets & card reader.

CIP NO PROJECT NAME ACTIVITY REMARKSFY10/11 FY11/12 FY12/13 FY13/14 FY14/15 FY15/16 FY16/17 FY17/18 FY18/19 FY19/20 10+ Yrs Prj Cost

Pump Stations205 Salinas PS Capacity Enhancement Design $150 FY10/11- $100k in Major O&M Budget

Construction $3,000 $3,000 $6,150

219 Sluice Gate Replacement/Concrete Repairs Design $50


229 Reeside Odor Scrubber Design $25


242 Monterey PS- Stair Supports Construction $75 $75

243 Reeside PS- Electrical Construction $317 $317

XXX Pump Station Seismic Evaluation- All PS Design $250 $250

XXX Pump Station SCADA Backup Construction $88 $88 Reeside, SEPS, FOPS, CAPS

XXX Pump Station Level Meters & Flow Meters Repl. Construction $175 $175

244 Salinas Inlet Rehab Design $50


245 Sta 13- Fountain Generator Replacement Design $10


XXX Sta 13- Fountain Grinder Replacement Design $5


XXX Sta 13- Fountain Pump #2 Replacement Construction $45 $45

246 Sta 15- Coral Electrical/Generator Redesign Design 100


XXX Sta 15- Coral Structural Rehab Design $15


XXX Sta 15- Coral Grinder Replacement Design $5


XXX Marina PS- Grinder Replacement Design $5


XXX Marina PS- Generator Replacement Design $5


XXX Fort Ord PS Rehab- Drives, Motors, Generators Design $225


XXX Fort Ord PS Inlet Rehab Design $50


XXX Fort Ord PS- Paving Construction $50 $50

XXX Seaside PS Structural Corrosion Rehab Construction $200 $200

XXX New Grinders (Reeside, MOPS, SEPS, CAPS) Construction $530 $530

XXX Structural Repairs in Fan Room (SEPS, FOPS, SA Construction $225 $225

TOTAL 5 YEAR CIP $4,282 $4,500 $4,498 $4,480 $4,885 $22,645


5 - 10 Year Capital ProjectsRegional Treatment Plant

163 Cogeneration Facility Construction $5,000 $5,000 Joint Facility w/landfill

XXX Admin Building HVAC Replacement Design $100


XXX Class A Water System Treatment Upgrades Construction $125 $125

XXX Grit Pump Replacement Construction $300 $300

XXX Lagoon Road Repairs Construction $50 $50

XXX Liquid Waste Pump Replacement Construction $65 $65

XXX Primary Clarifier Distribution Structure Roof Construction $225 $225

XXX Recycle Sumps Pump & CP Replacements Construction $50 $50

XXX Secondary Clarifiers (Valve Replacement & Seals) Construction $300 $300

XXX Headworks Stop Log Replacement Construction $500

XXX Aluminum Dome Replacement Construction 150 $150 $150 $150 $150

XXX Biosolids Disposal Study $75 Biosolids Disposal Options

Design $900 If Landfilling No Longer Viable

Construction $5,000 $5,000 $10,975

Pump StationsXXX PS SCADA Upgrades Design 75 Replace DC motors and drives

Construction 525 $600 Install new AC motors and drives

XXX Pump Station Corrosion Coating (All PS) Construction $1,000 $1,000

XXX Sta 13- Fountain Pump Replacement Construction $125 $125

XXX Sta 15- Coral Dry Side Pump Replacement Design $5


XXX Marina PS- New Drives Design $5


XXX Moss Landing PS- new expanded PS & pipeline Design $100


XXX Salinas PS- Roofing Construction $35 $35

XXX Castroville PS- Roofing Construction $35 $35

XXX Castroville PS- Ventilation, Wet Well Coat, Grease Design $75


XXX Seaside PS- Inlet Rehab Design $50


XXX Seaside PS- Pump Replacement Construction $575 $575

XXX Fort Ord PS- Pump Replacement Construction $840 $840

XXX Fort Ord PS- Roofing Construction $40 $40

TOTAL 10 YEAR CIP $8,875 $7,205 $5,215 $6,915 $990 $29,200


10+ Year Capital ProjectsRegional Treatment Plant

XXX Biosolids Facility Expansion Design $100 Add 3rd press and conveying

Construction $1,500 Construct expansion

Equipment $2,000 $2,000 Screw Press

XXX Class C Water Pump Station Pump Replacement Construction $75 $75

XXX Primary Clarifier/Thickener Dome Replacement Construction $600 $600

XXX Headworks/Grit Chamber Coating Construction $250 $250

XXX Trickling Filter Motors Construction $280 $280

XXX Trickling Filter Rotary Distributor Rebuild Construction $600 $600

XXX Primary Clarifier No.6 Design $200 Req'd for future flows (CPAR)


XXX Primary Effluent Equalization Study $75 Req'd for future flows (CPAR)

Design $400

$5,000 $5,475

XXX Aluminum Dome Replacement Construction $300 $300

Pump StationsXXX Sta 13- Fountain Water System Construction $15 $15

XXX Castroville PS Modifications Design $750 line to handle future flow


XXX Seaside PS Relocation/Monterey PS Mods Study $1,000 Eventual beach erosion

Design $4,000


XXX Reeside PS- Pumps Construction $125 $125

XXX Monterey PS- Odor Control Fans Construction $85 $85

XXX Seaside PS- Carbon Scrubbers Construction $125 $125

XXX Seaside PS- Odor Control Fans Construction $85 $85

XXX Castroville PS- Odor Control Fans Construction $85 $85

XXX Castroville PS- Pumps Construction $325 $325

XXX Salinas PS- Capacity Enhancement Project Construction $30,000 $30,000

XXX VFD Replacement (MOPS, SEPS, CAPS) Construction $1,600 $1,600

TOTAL 10+ YEAR CIP $114,575 $114,575

TOTAL CIP Costs $4,282 $4,500 $4,498 $4,480 $4,885 $8,875 $7,205 $5,215 $6,915 $990 $114,575 $166,420



MEMORANDUM TO: BUDGET/PERSONNEL COMMITTEE FROM: JOHN TIERNAN, DIR OF ADMIN SERVICES/DEPUTY GM (via Keith Israel, General Manager) DATE: FEBRUARY 3, 2011 SUBJECT: REVIEW ADVANCE PAYMENT POLICY FOR USER FEES ─────────────────────────────────────────────────────────── Since the mid 1990’s, the Agency and member entities for whom we bill have been allowing a 5% discount for ratepayers who pay their annual billing in advance. Approximately 20%, or 20,000 customers, currently take advantage of the discount. Originally we offered this because the advance payments could be invested and would return more than the 5% reduction in payments. This was the case until recent economic conditions have produced less than 1% return on our investments. The total amount of payments (revenue) lost by allowing the discount under today’s investment environment is approximately $150,000 per year. To recover this amount would require a 1% user rate increase for all of our ratepayers. Proposition 218 and the recently adopted Proposition 26 require that the amount of the fee or charge levied on any customer shall not exceed the proportional cost of service attributable to each parcel, and that no ratepayer should pay a higher fee to benefit another ratepayer who pays less. The advance payment policy would appear to be contrary to the principle underlying Propositions 218 and 26, both of which were not in effect when MRWPCA first offered this discount.

MEMORANDUM

Budget/Personnel Committee February 3, 2011 Page 2 of 2 In addition, the discount alternative causes complaints from customers when we raise user rates. Customers believe they have paid for an entire year and do not want to pay for the months in their discount period that include a rate increase. In discussions with member entities that are affected by the discount, the consensus is that they would understand the elimination of the advance payment discount. As an example, the City of Monterey is potentially losing $80,000 of user fees because of these discounts. City officials are struggling with balancing budgets and any loss of such an amount can have an adverse effect. Based on the above discussion, we should consider eliminating this discount until higher interest rates are available. RECOMMENDATION: Authorize staff to notify ratepayers and member entities that the advance payment discount will be discontinued. Z:\BOARD COMMITTEES\BUDGET-PERSONNEL COMMITTEE\2011\February\Advance Paymt Discounts.doc



MEMORANDUM TO: BUDGET/PERSONNEL COMMITTEE FROM: BRAD HAGEMANN, ASSISTANT GENERAL MANAGER (via Keith Israel, General Manager) DATE: FEBRUARY 8, 2011 SUBJECT: UPDATE ON ASSET MANAGEMENT PLAN AND CAPITAL

IMPROVEMENT PROGRAM ────────────────────────────────────────────────── BACKGROUND As you recall, during last year’s budget and rate deliberations, staff had developed data that indicated a Capital Improvement Program (CIP) of $4.5 million per year over the next ten years was needed to ensure that the MRWPCA collection system and treatment plant infrastructure continued to provide unprecedented safe, environmentally responsible and cost-effective treatment and disposal or recycling of the member entity’s sewage. However, staff recommended that the Board hold off on formally considering a multiple-year rate structure that supported the CIP until staff could validate the data and build a solid, defensible short- and immediate-term capital improvement program. Since that time, staff has worked with Carollo Engineering to validate the data and prepare a comprehensive CIP report. We are happy to report that our initial estimates of a CIP of approximately $4 million per year for the next 15 years will maintain the collection system and treatment plant in good working order for future generations and allow us to fully meet the expectations of our member entities and our regulatory requirements. Also recall that we looked at several options for adjusting the sewage rate that would be needed to support the recommended CIP. Those options included a

MEMORANDUM Budget/Personnel Committee February 8, 2011 Page 2 of 2 combination of debt financing and “pay as you go” or strictly “pay as you go.” As we did last year, staff will develop several funding alternatives to consider as part of the overall budget consideration and adoption process that will begin in March. We will provide an overview on funding options at the Committee meeting. DISCUSSION As discussed at the January 2011 Budget/Personnel Committee meeting and Board meeting, staff has been working with Carollo Engineers to finalize the Asset Management Project Technical Memorandum to include both Regional Treatment Plant (RTP) and Pump Station assets and projects. Carollo has completed their final draft report based on staff’s input budget, “smoothing” to provide for a manageable project list CIP budget. The reports indicate that a total of approximately $23 million will be needed over the next 5 years with a total of approximately $58 million over the next 15 years. The proposed CIP averages to about $4.6 million per year for the next 5 years. The attached table delineates the short-term (five year) and intermediate-term (6 – 15 year) project summary by year, Project Location (either RTP or Pump Station), general types of projects, and estimated costs. Staff will provide a detailed list of all of the proposed capital improvement projects for consideration by the Committee and the Board as part of the budget and rate consideration process that will be initiated at the March BP Committee and Board meetings. As indicated at the January meeting, Agency staff is available to make presentations to member entity Councils and Boards at your request. Staff is currently scheduled to make a presentation at the March 2, 2011 City of Pacific Grove Council Meeting at the request of Mayor Garcia.

� Information only – no action needed. Attachment: Short- and Intermediate-Term CIP Summary Table Z:\BOARD COMMITTEES\BUDGET-PERSONNEL COMMITTEE\2011\February\Asset Management and CIP Update.doc

Short-Term CIP - 5

YearsLocation Types of Projects

Estimated R&R

Costs(1)

FY 11/12

Digester Upgrade mixing system

Bioflocculation Replace blowers and control system

Headworks Upgrade odor control system

Drying Beds Replace dirt berm with biocell wall

Various Upgrades to roofs, air system, conduits

Seismic evaluations

RTP costs $4,195,000

Salinas Capacity Enhancement - Enviromental

Fountain Ave Replace Pump

Coral Structural Rehabilitation

Castroville Upgrade manhole & re-coat sluice gate

PS costs $495,000

FY 11/12 Subtotal $ 4,690,000

FY 12/13

Fuel Tanks Upgrade structure

Cogen Upgrade equipment

Liquid Waste Replace mixer & clean pipes

Clarifiers Upgrade structures and replace pumps

DAFT Replace pumps & compressors

Class C Replace pumps

Various Upgrades to SCADA & flow meters


Salinas Capacity Enhancement

Upgrade SCADA

PS costs 3,091,000

FY 12/13 Subtotal $4,940,000

Pump Stations

Reeside, Seaside,

Ft. Ord & Castroville

Monterey Regional Water Pollution Control Agency

Pump Stations and Regional Treatment Plant Asset Management Project

Regional Treatment Plant

Pump Stations


Short-Term CIP - 5


Estimated R&R

Costs(1)



FY 13/14

Fuel Tanks Remove USTs & install ASTs

Cogen Upgrade system

Various Upgrades to SCADA - Phase II

RTP costs $907,000

Salinas Capacity Enhancement

Coral Replace generator & grinder

Seaside Upgrade structural

Marina Replace generator

PS costs 4,012,000

FY 13/14 Subtotal $4,919,000

FY 14/15

Digester Upgrade gas blending and storage

Screw Presses Replace drives

Sludge Lagoons Repave roadways

Cogen Joint project with Waste Management

Various Upgrade roofs and heat pump


Fountain Ave Replace grinder

Marina Replace grinder

Ft Ord Rehab inlet and paving

Others grinders, structual, seismic, meters

PS costs 2,793,000

FY 14/15 Subtotal $4,758,000


Pump Stations


Pump Stations

Short-Term CIP - 5


Estimated R&R

Costs(1)



FY 15/16

Admin Bldg HVAC replacement

Biosolids Disposal options - study



Castroville Upgrade structural & roofing

Salinas Roofing

Coral Pump replacement

Moss Landing Expand pump station & pipeline

Others SCADA upgrades

PS costs 2,095,000

FY 15/16 Subtotal $3,520,000

22,827,000$ Short-Term CIP 5 Year Total


Pump Stations

Intermediate-Term

CIP - 6-15 YearsLocation Types of Projects

Estimated R&R

Costs(1)

FY 16/17

Grit Removal Replace pumps, gates & actuators

Liquid Waste Replace pumps

Clarifiers Dome rehab & replace pumps, gates & actuators

Trickling Filters Replace gates

MLSS Replace gates & valves

Rapid Mix Replace gates & meters

DAFT Dome rehab

Digester Ferric chloride storage tank


Class C Replace pump and strainer


Marina Replace drives

Seaside Inlet Rehab

PS costs $648,000

FY 16/17 Subtotal $ 4,358,000

FY 17/18

Storm Water Pond Upgrade ramp & replace level & gate

Cogen SCADA upgrades & replace air dryer

RTP costs $109,000

PS costs -

FY 17/18 Subtotal $109,000

FY 18/19

Headworks Replace MCCs

Trickling Filters Replace rotary distributors


Seaside Replace pump

PS costs 584,000

FY 18/19 Subtotal $4,827,000


Pump Stations


Pump Stations




Pump Stations

Intermediate-Term


Estimated R&R

Costs(1)



FY 19/20

Bioflocculation Replace MCCs

Cogen Replace gas meter

Recycle Sumps Replace flow meters

RTP costs $630,000

Ft Ord Roofing & rehab drives, motors, generators

Seaside Rehab drives, motors, generators

PS costs 3,277,000

FY 19/20 Subtotal $3,907,000

FY 20/21

Clarifiers Rehab scum walls

Class C Sodium hypochlorite tank

Cogen Replace heat exchanger

RTP costs $206,000

Reeside Pumps

Monterey Fans

Seaside Rehab drives, motors, generators & odor control

PS costs 3,419,000

FY 20/21 Subtotal $3,625,000

FY 21/22

Grit Removal Replace equipment

Clarifiers Dome rehab & replace equipment

Trickling Filters Replace flowmeters

DAFT & Thickners Dome rehab

Digester Replace flowmeters

Biosolids Replace flowmeters


Castroville Pumps and fans

PS costs $407,000

FY 21/22 Subtotal $ 3,811,000

FY 22/23

Trickling Filters Replace pumps

Bioflocculation Repalce equipment

Admin Bldg Roofing

RTP costs $916,000

Salinas Pumps

PS costs 622,000

FY 22/23 Subtotal $1,538,000


Pump Stations


Pump Stations


Pump Stations


Pump Stations

Intermediate-Term


Estimated R&R

Costs(1)



FY 23/24

Liquid Waste Replace pumps & roof

Recycle Sumps Replace pumps

Biosolids Replace pumps

Cogen Upgrade Electrical and equipment


Fire Pump Replace storage tanks

Various Roofing & equipment


Salinas Chemical feed system

Mty, Seaside & CV Replace VFDs

PS costs 1,946,000

FY 23/24 Subtotal $3,581,000

FY 24/25

Recycle Sumps Replace pumps

Bioflocculation Replace blowers

Digester Replace pumps

Class C & Fire Replace pump

RTP costs $707,000

Salinas Replace VFDs

PS costs 3,248,000

FY 24/25 Subtotal $3,955,000

FY 25/26

Headworks Replace fan

Grit Removal Replace crane

Sludge Pump St. Replace pumps

Thickener Replace pumps


Maint. Bldg Replace heat pump


PS costs -

FY 25/26 Subtotal $1,908,000

31,619,000$

TOTAL 15 YEARS 54,446,000$


Pump Stations

Intermediate-Term CIP 6-15 Years Total

Pump Stations


Pump Stations




MEMORANDUM TO: BUDGET/PERSONNEL COMMITTEE FROM: JOHN TIERNAN, DIR OF ADMIN SERVICES/DEPUTY GM

(Via General Manager) DATE: FEBRUARY 4, 2011

SUBJECT: REVIEW MID-YEAR BUDGET STATUS AND INVESTMENT

PORTFOLIO

Typically, in February, we give the Committee and the Board an update on six months of budget revenues and expenditures. I will give a full report at the Board meeting.

FY10-11 SIX-MONTH BUDGET STATUS:

For the period July 1 through December 31, 2010, we are on target with both expenditures and revenues when compared to our adopted budget. With a target of 50%, our expenditures are at 47% (Chart 1) and revenues are at 50% of budget (Chart 2). All expense categories are under or at budget six months into the FY (Chart 3). Staff’s ongoing focus on expenditures helps us stay within budget. We are reporting revenues at 49.6% of budget (Chart 4). Our largest category, User Fees, is at 49.57% or $8 million. Lift Station Maintenance Fees for quarter ended 12/31/09 are not included in the report as they are calculated in mid February. Staff expects revenues to be at or above budget for this category by year end. Lien penalty fees are high due to continued foreclosures.

MEMORANDUM

Budget/Personnel Committee February 4, 2011 Page 2 of 2 SVRP is under budget and CSIP is over. We had to make repairs on the pipeline and valves for CSIP. Salinas River Diversion Facilities Project is operating much lower than budgeted due to first-year of operations. We are reimbursed for whatever expenses we incur for the projects. We will fine tune our six-month projections and make a full presentation at the Board meeting this month. INVESTMENT PORTFOLIO:

Every quarter we look internally at our investments to determine best yields and maturities. The following describes current investment strategies (Chart 5): As of December 31, 2010, the Investment Portfolio contained an amortized cost basis of $6,503,410 spread among three separate investments. The portfolio’s weighted average amortized cost yield is .615%. The weighted average maturity of the portfolio was .072 years due to the fact that over 64% of our investments were liquid. Yields continue to be less expected primarily due to our country’s economy. In comparison, in 2008, the interest rates were about 2.2% and last year at this time, market interest rates were about .69%. The Investment Portfolio is in compliance with all provisions of the adopted Investment Policy and with applicable provisions of state statutes. The sources of market values and prices were Bloomberg LLP, FT Interactive (a national pricing service), Union Bank of California, and several securities dealers.

RECOMMENDATION:

Accept this report along with any committee recommendations for the Board presentation. Z:\BOARD COMMITTEES\BUDGET-PERSONNEL COMMITTEE\2011\February\Mid-Year Budget Status Report 2-11-2011.doc

47

.13

%

38

.37

%

56

.19

%

31

.09

%

0%

25%

50%

75%

100

%

MR

WP

CA

SV

RP

CS

IPS

RD

F

BU

DG

ET

FY

10/1

1 V

S E

XP

EN

DIT

UR

ES

Th

rou

gh

Decem

ber

31,

2010

Ta

rge

t =

50

%

CHART 1

49.6

4%

38.3

7%

56.1

9%

31.0

9%

0%

25%

50%

75%

100

%

MR

WP

CA

SV

RP

CS

IPS

RD

F

BU

DG

ET

FY

10/1

1 V

S R

EV

EN

UE

ST

hro

ug

h D

ecem

ber

31,

2010

Targ

et

= 5

0%

CHART 2

Target = 50%

2010/11 2010/11 % of Actuals Variance Variance

Approved Budget Actuals to Budget from Target $ from Target %

$9,331,142 $4,423,565 47.41% ($242,006) -2.59%

136,225 32,370 23.76% (35,743) -26.24%

274,975 111,236 40.45% (26,252) -9.55%

252,090 120,420 47.77% (5,625) -2.23%

620,000 327,410 52.81% 17,410 2.81%

374,673 165,873 44.27% (21,464) -5.73%

476,380 244,392 51.30% 6,202 1.30%

1,125,800 574,437 51.02% 11,537 1.02%

2,394,072 1,144,209 47.79% (52,827) -2.21%

1,158,530 468,664 40.45% (110,601) -9.55%

19,000 4,738 24.94% (4,762) -25.06%

$16,162,887 $7,617,314 47.13% ($464,130) -2.87%

1,545,707 631,111 40.83% (141,743) -9.17%

676,486 0 0.00% (338,243) -50.00%

$18,385,080 $8,248,425 44.86% ($944,115) -5.14%

1,955,724 750,352 38.37% (227,510) -11.63%

1,036,374 582,378 56.19% 64,191 6.19%

SRDF Facility 895,999 278,543 31.09% (169,457) -18.91%

$22,273,177 $9,859,698 44.27% ($1,276,891) -5.73%

Expenditures2010/11 Budget to Actuals as of December 31, 2010

Office Expenses

Information Systems

Professional Services

Operating Supplies

Description

Wages & Benefits

Training & Administration

Chemicals

Contract Services

Utilities

Maintenance & Repairs

Reclamation - Plant

Reclamation - Distrib.

Total General Fund

Billable Services

Total O&M

Debt Service

Total MRWPCA

Transfer to Reserves

CHART 3

Target = 50%

$16,217,940 $8,039,195 49.57% ($69,775) -0.43%0 0 0.00% $0 0.00%

Other Operating Revenue

Brine Receiving 400,000 203,838 50.96% $3,838 0.96%

Liquid Waste Fees 350,000 212,586 60.74% $37,586 10.74%

Grease Fees 130,000 68,257 52.51% $3,257 2.51%

Diluted Oily Waste 100,000 75,985 75.99% $25,985 25.99%

User Penalty Fees 250,000 152,988 61.20% $27,988 11.20%

Lien Penalty Fees 25,000 0 0.00% ($12,500) -50.00%

Lien Transfer Fees 70,000 74,670 106.67% $39,670 56.67%

NSD Services Fees 69,500 37,915 54.55% $3,165 4.55%

MOCO Wastewater Billings 14,400 8,077 56.09% $877 6.09%

Fees - Outside Entities 175,000 72,235 41.28% ($15,265) -8.72%

Reclamation - Reimbursements 255,642 94,484 36.96% ($33,337) -13.04%

SRDF - Reimbursement 51,810 18,327 35.37% ($7,578) -14.63%

Lift Station Maintenance 80,000 0 0.00% ($40,000) -50.00%

PG&E Auxiliary Power 20,000 3,554 17.77% ($6,446) -32.23%

Misc. Operating Income 47,200 2,920 6.19% ($20,680) -43.81%

Non-Operating Revenue

Investment Gains/Interest 29,935 15,237 50.90% $270 0.90%

Other Revenues 126,200 59,954 47.51% ($3,146) -2.49%

$18,412,627 $9,140,222 49.64% ($66,092) -0.36%

1,955,724 750,352 38.37% ($227,510) -11.63%

1,036,374 582,378 56.19% $64,191 6.19%

SRDF Facility 895,999 278,543 31.09% ($169,457) -18.91%

$22,300,724 $10,751,495 48.21% ($398,867) -1.79%

Reclamation - Plant

Reclamation - Distribution

General Fund Revenues

User FeesTransfer Reserves

Revenues w/o Reclamation

Revenues

2010/11 Budget to Actuals as of December 31, 2010

Operating Revenues2010/11 Approved

Budget2010/11 Actuals

% of Actuals

to Budget

Variance

from Target

Variance

from Target

%

CHART 4

OV

ER

NIG

HT

LIQ

UID

ITY

64.0

4%

2 D

AY

S T

O 6

MO

NT

HS

0.0

1%

6 M

ON

TH

S T

O 1

YE

AR

11.8

5%

MR

WP

CA

AS

SE

T C

LA

SS

ES

A

S O

F D

EC

EM

BE

R 3

1, 2

01

0

CHART 5



MEMORANDUM TO: BUDGET/PERSONNEL COMMITTEE FROM: BRAD HAGEMANN, ASSISTANT (via Keith Israel, General Manager) DATE: FEBRUARY 7, 2011 SUBJECT: STATUS REPORT OF THE CLASSIFICATION AND

COMPENSATION STUDY ────────────────────────────────────────────────────────── The Agency last updated our position classifications to be consistent with new laws and regulations approximately ten years ago. This year’s Memorandum of Understandings MOU’s) with the three employee associations includes a provision to update our Position Classifications/Job Descriptions and perform a salary survey by an experienced consulting firm. Working with the associations, we developed a scope of work and issued a Request for Qualifications. Eight firms responded to the RFQ. Staff evaluated the proposals and chose to interview the top four firms that best met the needs of the Agency. At the conclusion of the interview process staff selected Koff and Associates, Inc. to conduct the study at a cost of approximately $30,000. Koff was chosen based on their proven track record for accomplishing these types of studies and their experience in working with wastewater and water agencies. The President of the firm, Ms. Katie Kanecko is our Project Director. Koff’s study approach and methodology includes a two-phase process. Phase I - Classification Study will include development of a project team, an orientation meeting with all staff, employee completion of a Position Description Questionnaire (PDQ); staff interviews; and preparation of a draft classification plan including suggested changes to our existing position descriptions. Phase II – Compensation Study includes: determination of comparator agencies;

MEMORANDUM

Budget/Personnel Committee February 7, 2011 Page 2 of 2 determination of benchmark classifications; acquiring salary and benefits data; data analysis and review; and, preparation of a draft report. The project schedule is a total of approximately 90 days from the contract award date. Koff was given a Notice to Proceed on the project in early December 2010. To date, Koff has completed a majority of the Phase I work. We anticipate a draft Classification Description Report by February 25. The Draft report will provide comments/recommendations regarding updates to our existing Position Descriptions, suggested position title changes to be more consistent with our industry and any suggested position re-classifications. We anticipate the Phase II Compensation Study to be completed in the mid-March time frame. Draft reports as related to employee negotiations will be presented to the Budget/Personnel Committee in Closed Session prior to general public circulation.

� Information only – no action needed.

Z:\BOARD COMMITTEES\BUDGET-PERSONNEL COMMITTEE\2011\February\Koff Classification-Comp Study.doc