Western Municipal Water District

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1 Western Municipal Water District Western Municipal Water District Funding Future Development Infrastructure February 2016

2 Workshop Overview 1) Background on purpose of connection fees 2) Connection fee process 3) Review calculations for various service areas 4) Summary 5) Next steps 6) Questions Water Wastewater Riverside Retail La Sierra to WRCRWA MARB Riverside Retail to WWRF Murrieta Murrieta to SRRRA

3 Background on Connection Fees New facilities and additional capacity are required to meet new demands. Demands are based on MARB, city and county general plans. Projections indicate Western is about halfway to ultimate build-out. Advisory group has been working for last six months.

4 Connection Fee Goal Expansion is paid for by those that benefit. Connection fees pay for expanded system capacity.

5 Connection Fee Goal Fees reflect cost to new users without undue burden to existing users. Nexus must exist between fee and public improvements that benefit new users. Fee proceeds segregated from general fund.

6 Need for Fee Increase Existing fees are outdated. Riverside Retail Water revised in 1996 and 1992 for the North and South areas, respectively. Murrieta Division was set when acquired in March Air Reserve Base does not have a fee. Western prepared to propose fee increases in but held off due to the recession. Development is coming. Connection fees pay for growth.

Engineering and Finance Committee and updates

7 Connection Fee Process Master Plans prepared A. A. Webb Consultants calculated fees Raftelis Carollo Engineering and Finance Committee and updates Advisory Group process and input Board Workshop February, 3, 2016

8 Water Connection Fee Calculations (as of July 1, 2014)

9 Facility Needs for Riverside Retail North

10 Facility Needs for Riverside Retail South

11 Calculated Infrastructure Cost Riverside Retail Water Service Area Pipelines $ 61,727,000 Storage $ 18,184,000 Pumps & PRVs $ 27,116,000 Total Cost Facilities $107,027,000 + Outstanding Debt $ 15,508,000 Total Requirement $122,535,000 EDUs 17,678 Fee $6,931 per EDU

12 Calculated Infrastructure Cost Murrieta Water Service Area Total Cost Facilities $24,017,000 + Outstanding Debt $ 1,929,000 Total Requirement $25,946,000 EDUs 4,078 Fee $6,362 per EDU

13 Water Supply Sustainability Fee Concept

14 Water Supply Sustainability Fee Connection Fees fund infrastructure to store and deliver water. Water Supply Sustainability Fee funds the creation of water supply to meet future demands for portion of water not provided by MWD in certain conditions. MWD commits to providing water to meet 80% of demand for most scenarios. Planning for local resources to provide the remaining 20%. Water Reliability Rate funding from existing customers will provide the 20% buffer in the near-term. Water Supply Sustainability fee is necessary to create the water supply to meet ultimate demands for the portion of the 20% buffer that increases due to new development.

15 Water Supply (Current Condition) Western s Riverside Retail Area MWD 20% Cutback - 4,200 AFY Recycled Water 1,100 AFY CDA/ADS via La Sierra 3,500 AFY 4,600 AFY Western Supply Reliability Projects

16 Water Supply (Ultimate Condition) Western s Riverside Retail Area MWD 20% Cutback - 9,800 AFY Recycled Water Local Supplies CDA/ADS via La Sierra 3,400 AFY 4,200 AFY 3,500 AFY 11,100 AFY Western Supply Reliability Projects

17 Who Pays For Growth 45,000 40,000 35,000 30,000 Future Growth 3,000 1,000 4,000 Water Supply Sustainability Fee Concept (Paid by Development) Funded by Reliability Charge (Future Customers) 25,000 20,000 15,000 4,000 32,000 Funded by Reliability Charge (ExisHng Customers) 10,000 16,000 MWD 80% of Demand 5,000 0 Current Demand Ul;mate Demand

Water Supply Sustainability Fee Water Supply Sustainability Fee would potentially fund the following water supply projects: Half of tertiary

18 Water Supply Sustainability Fee Water Supply Sustainability Fee would potentially fund the following water supply projects: Half of tertiary component of WWRF Recycled water conversion projects Local water supply development Water rights acquisition Additional interconnection capacity

19 Water Supply Sustainability Fee Potential Impacts of not Implementing a Water Supply Sustainability Fee: There will be insufficient water supply to meet ultimate demands. Funding by existing rate structure is inadequate to fund all needed water supply projects. Development may have to be curtailed at some point in the future.

20 Sewer Connection Fee Calculations

21 Riverside Retail Sewer System

22 Riverside Retail Sewer To WWRF (new facilities) Facilities to be Built $3,414,147 Reimbursement from CFD - $2,000,000 $1,414,147 Future EDUs 4,571 Incremental Fee $309 per EDU

23 Riverside Retail Sewer To WWRF (buy-in to existing facilities) Facilities already built $8,054,044 Reserves - $ 314,713 Debt $ 156,023 Total asset value $7,583,308 Current EDUs 1,859 Equity Buy-in Fee $4,079 per EDU

24 Riverside Retail Sewer Treatment Recycling Plant Expansion Cost (Primary & Secondary) Phase I Expansion Cost $11,517,578 WWRF Phase II Expansion Cost AFC Debt Obliga;on Principal $51,265,015 Interest $48,172,253 Outstanding Debt $99,437,268 Total Obliga;on (Asset Cost) $110,954,846

25 Riverside Retail Sewer Treatment Recycling Plant Expansion Cost (Ter;ary) WWRF Phase II Expansion Cost AFC Debt Obliga;on Principal $7,056,142 Interest $6,630,452 Outstanding Debt $13,686,594 Water Reliability Contribu;on -$7,186,352 Total Obliga;on to Fund $6,500,242

26 Riverside Retail Sewer Treatment WWRF Primary & Secondary $110,954,846 Tertiary $ 13,686,594 Reliability Contribution - $ 7,186,352 WSSF Contribution - $ 6,500,242 Total Obligation $117,455,088 Capacity of Plant 15,000 EDUs Treatment Buy-in Fee $7,830 per EDU

27 Riverside Retail Sewer Fees To WWRF Conveyance Increment $309 per EDU Conveyance Buy-in $4,079 per EDU Treatment Buy-in Fee $7,830 per EDU Total Wastewater Fee $12,218 per EDU

28 Remaining Systems WRCRWA Sewer Conveyance (La Sierra)

29 La Sierra Sewer Value of Capacity Right $12,242,455 Existing Collection Facilities $15,340,449 Reserves $ 4,196,978 Debt $ 0 Total asset value $31,779,882 4,621 EDUs $6,877 per EDU

30 Summary of Fee Calculations

31 Current and Updated Fees Connec;on Fees ($/Equivalent Dwelling Unit - EDU) Current Water Riverside North AFC $3,048 Riverside South AFC $8,571 Murrieta Retail $5,882 Wastewater WWRF Treatment WWRF Collec;on Benefit Area 2 Benefit Area 3 $3,030 $3,194 $1,260 La Sierra Wastewater $4,505

32 Current and Updated Fees Connec;on Fees ($/Equivalent Dwelling Unit - EDU) Water Current Riverside North AFC $3,048 Riverside South AFC $8,571 InflaHon Adjustment (2015) $9,949 Murrieta Retail $5,882 $10,073 Wastewater WWRF Treatment WWRF Collec;on Benefit Area 2 Benefit Area 3 $3,030 $3,194 $1,260 $9,003 La Sierra Wastewater $4,505 $7,707 Systems consolidated Systems consolidated

33 Current and Updated Fees Water Connec;on Fees ($/Equivalent Dwelling Unit - EDU) Current Riverside North AFC $3,048 Riverside South AFC $8,571 InflaHon Adjustment (2015) Calculated (July 1, 2016 $) $9,949 $7,297 Murrieta Retail $5,882 $10,073 $6,697 Wastewater WWRF Treatment WWRF Collec;on Benefit Area 2 Benefit Area 3 $3,030 $3,194 $1,260 $9,003 $12,862 La Sierra Wastewater $4,505 $7,707 $7,240

34 Potential Phased Implementation Current (Average) Proposed (July ) Proposed (50%) (July ) Proposed (50%) (July ) Proposed (1/3) (July ) Proposed (1/3) (July ) Proposed (1/3) (July ) Water Riverside $5,810 $7,297 $6,648 $7,486 $6,433 $7,057 $7,681 Murrieta $5,882 $6,697 $6,377 $6,871 $6,271 $6,661 $7,050 Wastewater La Sierra WW $4,500 $7,240 $7,214 $7,428 $5,540 $6,581 $7,621 WWRF $5,257 $12,862 $8,962 $13,196 $7,665 $10,602 $13,539 Fee increases are distributed across two or three years. Fees are adjusted for inflation.

Connection Fees Survey (3/4" meter) $25,000 / EDU $20,000 / EDU $15,000 / EDU $10,000 / EDU $5,000 / EDU $0 / EDU WMWD (Calculated) EMWD (2016) City of Riverside * (W-8/20/2011 S-5/13/2014) EVMWD

35 Connection Fees Survey (3/4" meter) $25,000 / EDU $20,000 / EDU $15,000 / EDU $10,000 / EDU $5,000 / EDU $0 / EDU WMWD (Calculated) EMWD (2016) City of Riverside * (W-8/20/2011 S-5/13/2014) EVMWD (8/1/2015) RCWD ** (7/1/2015) City of Corona (3/21/2012) JCSD (Proposed) JCSD *** (1/1/2015) Last Updated Wastewater $12,218 / EDU $7,858 / EDU $12,341 / EDU $13,428 / EDU $8,203 / EDU $4,644 / EDU $8,995 / EDU $5,910 / EDU Water $6,931 / EDU $6,618 / EDU $6,170 / EDU $8,714 / EDU $2,458 / EDU $10,048 / EDU $12,470 / EDU $7,260 / EDU Total $19,150 / EDU $14,476 / EDU $18,511 / EDU $22,142 / EDU $10,661 / EDU $14,692 / EDU $21,465 / EDU $13,170 / EDU NOTES * City of Riverside: collects frontage fees (included) ** RCWD: collects property tax assessments and Fees for benefit areas (not included) *** JCSD: in addition, collects fees for benefit areas (not included)

36 Working Group Comments Additional information requested on replacement costs. Information requested on water use efficiency programs and the impact on fees. Justify new commercial accounts paying full connection fees when existing customers have already funded the infrastructure. Consider developers having the opportunity to pay for fees in advance of building. Request of all reports, rate and growth models, maps and studies. Provide information and presentations to the working group in advance of special board workshop on connection fees. Postpone consideration of the proposed water supply sustainability fee. Request to phase in connection fees over a two to three year period or more.

37 Summary Must collect appropriate funds to meet ultimate demands. New connections must pay for additional demand on the system. Water supply sustainability fee is necessary to meet escalating cost of new water supply for buffer above MWD 80%.

38 Next Steps Riverside Chamber endorsed an increase in connection fees in a phased in approach and no water sustainability fee. Continue to work with BIA and other stakeholders. Schedule second workshop with Board. Schedule public hearing to consider fees.

39 QUESTIONS? Western Municipal Water District Administration Operations wmwd.com

Temescal Valley Water District

Temescal Valley Water District Comprehensive Water, Recycled Water, and Wastewater Cost of Service Study Draft Report / December 7, 2016 24640 Jefferson Avenue Suite 207 Murrieta, CA 92562 Phone 951.698.0145