COUNTY SANITATION DISTRICTS OF LOS ANGELES COUNTY

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1 COUNTY SANITATION DISTRICTS OF LOS ANGELES COUNTY 1955 Workman Mill Road, Whittier, CA Mailing Address: P.O. Box 4998, Whittier, CA Telephone: (562) , FAX: (562) GRAC E ROBINSON HYDE Chief Engineer and General Manager June 6, 217 Board of Directors County Sanitation District No. 14 of Los Angeles County Dear Directors: Wastewater Budget Matters for Fiscal Year The agenda for the Board meeting on June 13, 217, contains an item relating to wastewater budget matters for fiscal year (FY) These matters include establishing an appropriations limit on the proceeds of taxes, adopting the sewerage system final budget, requesting the tax levy, and authorization appropriations per the sewerage system budget. Appropriations Limit The Constitution of the State of California places a limit on the authorization to expend the proceeds of taxes levied by state and local governments in California. In addition, the Government Code requires the governing body for each local jurisdiction to establish, by resolution, an appropriations limit for each fiscal year. The appropriations limit for FY has been determined by adjusting the previous limit for FY based upon population change factors for Los Angeles County and the change in the California Personal Per Capita Income. The appropriations limit has also been adjusted to include the increased operation and maintenance costs of secondary treatment needed to comply with federal requirements. All of this is in accordance with the procedures outlined in Article XIIIB of the Constitution and Section 791 of the Government Code. The proposed appropriations limit and anticipated tax revenue are shown in Exhibit No. I. This information has been available to the public at the Districts' Joint Administration Office in conformance with the requirement that the documentation used in the determination of the appropriations limit be available fifteen days prior to its establishment by the Board of Directors. Final Budget for Fiscal Year Enclosed for your review is the proposed final budget for FY , a list of proposed capital projects, and information on the funds set aside in reserves. The reserves, which are shown as being in the rate stabilization fund, are used for a number of purposes: (I) smoothing out the service charge rates from year to year and avoiding spikes in any given year as expenditures fluctuate, (2) accumulating funds to pay for large capital projects that could have a major impact on rates, and (3) meeting unforeseen DOC ft Recycled Paper ~.1

2 Board of Directors -2- June 6, 217 emergencies that might arise during the year. As previously discussed with the Board, the District's targeted goal for reserves is six months of Operations & Maintenance (O&M) costs and one year of debt service. In addition, each District has cash on hand that is used for meeting expenditures from the start of the fiscal year until property taxes and service charges are received in late December. The final budget provides a comparison with the current budget and a breakdown of the items included in the budget. In preparing the final budget, it is projected that the general revenue sources available to the District for meeting expenses during the coming fiscal year include capital improvement fund monies, a pro rata share of the ad valorem (property) taxes, grants, state low-interest loans, interest income, and contract revenue. The supplemental revenue required to meet expenses will be collected through a combination of service charges and industrial wastewater surcharges. The final budget reflects the service charge rate as adopted by the Board on June 18, 215, a rate of $39.67 per month ($476 per year) for a single-family home. The final budget has been prepared in accordance with the Joint Administration Agreement. This agreement allocates Joint Administration costs to each signatory District according to the ratio of the number of sewage units in a District to the total number of sewage units in all the Districts signatory to the agreement. A sewage unit represents the average daily sewage flow and strength (measured in terms of chemical oxygen demand and suspended solids from a single-family home. This method of allocating costs considers flow as well as the strength of sewage from all types of users and is the most equitable way to distribute Joint Administration costs. Current Key Issues O&M expenses at the Lancaster WRP increased significantly in 212 when the new treatment facilities became operational, most notably due to the higher energy demands associated with full tertiary treatment. Since that time, O&M costs have tracked with inflation and are projected to do so in the future. A number of capital projects are anticipated to begin design or be under construction during : Trunk F Sewer Rehabilitation - This project, which is already underway, address hydrogen sulfide corrosion. The total estimated cost is $2.8 million, with half of the total to be spent in Inlet Works Electrical Upgrades- This project involves the replacement of electrical equipment that is nearing the end of its useful life, and will improve the overall operation and efficiency of the plant. These upgrades will be completed during the upcoming fiscal year, with $5, budgeted for Biotrickling Scrubbers - These scrubbers will remove hydrogen sulfide from biosolids digester gas to meet air emission requirements. In addition, they will greatly reduce reliance on chemical addition and reduce operating costs. The scrubbers are budgeted at $5, in fiscal year Water Diversion Diaphragms- These diaphragms, to be installed in the recycled water storage reservoirs, will provide leak detection and prevent soil erosion in the event a minor leak should develop. This work will be performed in fiscal year at a cost of$47,. Low Water Rebate Program Because the cost of metering wastewater discharges from individual parcels is impractical and cost prohibitive, discharges are estimated using standard loading factors based on the size and types of DOC

3 Board of Directors -3- June 6, 217 facilities located on the parcel. With the on-going efforts by the local community to conserve water and install low-flow plumbing fixtures, many parcels may be discharging at lower rates than is currently estimated. This program allows parcel owners to apply for a reduction in their service charge rate based on their actual water usage. Staff has conducted a concerted public outreach program, including information on the program in our Proposition 218 notices, newspaper advertisements and the Districts' website, to ensure that parcel owners are aware of the program. Summary of Required Actions At the June 13, 217 Board meeting, it will be recommended that the Board of Directors adopt a resolution establishing the appropriations limit on the proceeds of taxes, adopt the budget for FY , adopt a resolution requesting the tax levy, and authorize appropriations in the sewerage system budget, all as shown on the agenda. GRH:gc Very truly yours,.flv~(r, {. ~k_ Grace Robinson Hyde Enclosures DOC

I SUMMARY OF 217-18 APPROPRIATIONS LIMIT FOR EACH SANITATION DISTRICT ~ DISiiRICT _,,_ lltimi!er 1 1$ 2 3 4 5 8 9 14 15 16 17 18 19 2o 21 22 23 27 28 29 SBC ocv ~ NR 1:428 1.42J 1.42J 1.42J 1:428 1.

4 I SUMMARY OF APPROPRIATIONS LIMIT FOR EACH SANITATION DISTRICT ~ DISiiRICT _,,_ lltimi!er 1 1$ o SBC ocv ~ NR 1: J 1.42J 1.42J 1: : T.42i ,731,518 2,664,222 m 8,115,829 1,42,997 48,163,24 17,115,48 1 1,671,645 38,973,94 49,27,645 11,437,222 5,765,176 87,462 98,891 81,437 22,73,386 2,129, ,77,97 96,98 13,578,797 1,985,661,16, ,783 1,283,126 1' 1,323, ,364 45,51 58,241 31,851,33 22,597,56 2,664,222 46,111,869 61,742,1 19,11,141 14,187,793 5c417, ,791,78 87,462 1,26, ,678 23,192,956 N/A** N/A** 4,297, 513, 92, 872, 1 735, 3,67, 621, 92, SBC OCV 34 NR * This col umn represents the net chcnge resulting from the percent ch::r'lge in JX)pul ati on end the percent d1a1ge i n Per Ccpi ta Income of 3. 69%, end for ill ustrati ve purjx>se!s is rounded to the fourth Sgnifie<r11: digit. ** ThisDistrid is not subje:::t to ;;n ~priationslimit as it does not receive roy proc:eedsof taxes. Exhibit No. 1 DOC

5 COUNTY SANITATION DISTRICT NO. 14 OF LOS ANGELES COUNTY SEWERAGE SYSTEM FINAL BUDGET FOR REQUIREMENTS FOR FISCAL YEAR JULY 1 THROUGH JUNE 3: APPROPRIATION: O&M - Joint Administration $ 1,2, $ 1,222, O&M - Technical Services 1,494, 1,693, O&M - Lancaster Water Reclamation Plant 9,677, 1,9, O&M - Local District Sewers 527, 485, Capital - Joint Administration 61, 134, Capital - Local Capital 9,251, 3,41, Bond Repayment 1,453, 1,455, Loan Repayment 6,856, 6,856, Contingency for Emergency 2, 2, $ 39,719, $ 34,95, Transfer to Rate Stabilization Fund 2,32, 5,283, CASH FLOW REQUIREMENT (for period JULY 1 THROUGH DECEMBER 31) 17,832, 16,737, TOTAL BUDGET: $ 59,871, $ 56,115, ESTIMATED CASH AND REVENUE: Cash on Hand July 1 $ 19,59, $ 16,97, Transfer from Capital Improvement Fund 4,447, 3,397, Taxes 77, 872, Recycled Water / Agricultural Reuse 661, 738, Service Charge 31,976, 31,728, Industrial Waste 2,5, 2,112, Interest and Contracts 377, 361, TOTAL RESOURCES: $ 59,871, $ 56,115, SERVICE CHARGE CALCULATION Number of Sewage Units 67,176 66,655 Charge Per Sewage Unit $ 476. $ 476.

6 COUNTY SANITATION DISTRICT NO. 14 OF LOS ANGELES COUNTY JULY 1, 217 THROUGH JUNE 3, 218 PROPOSED CAPITAL PROJECTS JOINT ADMINISTRATION: $ 134, LOCAL: 1. Trunk F Sewer Rehabilitation $ 1,397, 2. Lancaster WRP - Hydrogen Sulfide Treatment Facilities 5, 3. Lancaster WRP - Inlet Works Electrical Upgrades 5, 4. Lancaster WRP - Filter Upgrades at Reservoirs 47, 5. Lancaster WRP - Miscellaneous 174, $ 3,41, TOTAL PROPOSED CAPITAL PROJECTS: $ 3,175,

7 COUNTY SANITATION DISTRICT NO. 14 OF LOS ANGELES COUNTY JULY 1, 217 THROUGH JUNE 3, 218 Fiscal Year Rate Stabilization Fund Beginning Balance $ 3,528, Interest 223, Revenue 5,283, Ending Balance $ 36,34,

COUNT Y SANITATION D ISTRICTS OF LOS ANGELES COUNTY

COUNT Y SANITATION D ISTRICTS OF LOS ANGELES COUNTY 1955 Workman Mi ll Rood, Whittier, CA 90601-1400 Moiling Address: P.O. Box 4998, Whittier, CA 90607-4998 Tele phone: (562) 699-7 411, FAX: (562) 699-54