4.2 Wastewater Services

Transcription

1 4.2 This section of the MSR evaluates the provision of wastewater, or sewer, services within Area 3 of Placer County. This section focuses on the ability of the respective sewer districts to meet present and future service needs in a cost effective manner SERVICE PROVIDERS AND SERVICE AREAS Placer County, Area 3, is comprised of three areas Highway 89 Corridor, Martis Valley, and North Lake Tahoe. Each area and the respective special district providing sewer service is described briefly below and illustrated on the following page as Figure Highway 89 Corridor. The Highway 89 Corridor includes lands on both sides of Highway 89, running from the Placer County line on the north to Tahoe City on the south. This corridor is the site of several residential areas serving the greater Tahoe basin. The two special districts providing wastewater collection services to this area are: C C Alpine Springs County Water District Squaw Valley Public Service District. North Lake Tahoe. The North Lake Tahoe area includes all land adjacent to Lake Tahoe within Placer County. This includes portions of the northern and western shores of the Lake, stretching from the Nevada state line on the east to the El Dorado County line on the south. Special districts providing wastewater collection services are noted below. C C Tahoe City Public Utility District North Tahoe Public Utility District Martis Valley. The Martis Valley encompasses the northeast corner of Placer County, from Highway 89 east to the Nevada state line. The Placer County portion of the Valley (which also includes portions of Nevada County to the north) includes approximately 39 square miles. Special districts providing wastewater collection service are noted below. The Tahoe-Truckee Sanitation Agency provides sewage treatment and disposal for the Truckee Sanitary District, which contracts with the Northstar Community Services District. C C C Northstar Community Services District Truckee Sanitary District Tahoe-Truckee Sanitation Agency MUNICIPAL SERVICE REVIEW PLACER LAFCO

2 89 I80 I80 NEVADA Soda Springs DONNER LAKE Truckee 267 WASHOE 89 Kings Beach PLACER Tahoe City CARSON CITY FRENCH MEADOWS RESERVOIR LAKE TAHOE HELL HOLE RESERVOIR DOUGLAS Meeks Bay Legend Truckee Sanitary District Sierra Lakes CWD Squaw Valley CWD North Tahoe PUD Northstar CSD Donner Summit PUD EL DORADO 89 Tahoe City PUD Alpine Springs CWD Source: Placer County GIS Miles NOTES: Only Placer County portion of districts are shown. Sphere of influence is coterminous with district boundaries. Figure Districts PLACER LAFCO MUNICIPAL SERVICE REVIEW

3 4.2.2 REVIEW AND ANALYSIS OF SERVICE PROVISION Alpine Springs County Water District The Alpine Springs County Water District (ASCWD) encompasses approximately five square miles and serves a permanent population of approximately 500 residents. Primary water users include four commercial centers, a 30-unit apartment complex, 462 single-family homes, and 130 condominiums. Alpine Springs sewer infrastructure was built incrementally along with specific development patterns in the community. Unlike other districts, however, no information is available on the length of mains, appurtenances, or other important infrastructure components. 1. Infrastructure Needs and Deficiencies This section evaluates ASCWD s ability to provide sewer services for their service area. Since the District does not have a current sewer systems master plan, this analysis is derived primarily from the District Manager, Eastern Nevada County Wastewater MSR, and secondary sources. Issue #1: Wastewater Flow Capacity Wastewater flows from the District are derived from a recently completed municipal service review for the Tahoe-Truckee Sanitation District (T-TSA). Shown in Table 4.2-1, Alpine Springs is credited with a maximum 7-day flow of mgd, and peak hour flows of 0.28 mgd during the summer and 0.29 mgd during winter with projected increases to 0.40 mgd. According to the ASCWD District Manager, these estimates are reasonable and sewer infrastructure has adequate capacity to handle present flows, although no formal modeling has been done. TABLE ALPINE SPRINGS CWD CURRENT AND FUTURE WASTEWATER FLOWS Timeframe Service Population Peak-Hour Flow Summer Winter Summer Winter Current , Projected ,130 6, Source: Nevada County LAFCo Eastern County Wastewater MSR, Sewage flow and infiltration/inflow (I/I) is critical to the design of sewer collection and transport systems. Although the District s sewage collection and transport system has an excess of capacity, the Truckee River Interceptor which carries discharge from five sewer districts to TTSA has at times operated at or above design capacity due to high I/I flows during wet years. Excessive I/I flows results in higher sewer treatment fees from TTSA and maintenance and operations. Average I/I flows are estimated to be 30 percent of flows. The District has just begun to conduct sewer line televising and testing as a means to address I/I flows. MUNICIPAL SERVICE REVIEW PLACER LAFCO

4 Issue #2: Capital Improvements Capital and recapitalization is perhaps the most critical issue facing special districts today. Infrastructure deteriorates over time and, without proper plans, will present a significant liability in the future. In 2003, ASCWD prepared its first capital replacement plan for its water and sewer infrastructure. Although preliminary only, the replacement costs for District assets totaled $21 million, of which $1.23 million should be set aside for capital replacement on an annual basis assuming that assets will require replacement at the end of their expected useful life. With regular preventive maintenance and repair, sewer infrastructure lasts longer than expected useful life and thus many districts do not set aside 100 percent of the annual depreciation each year for recapitalization. In 2003, the Board established Policy 2.70 to set aside 2.5 percent of revenues totaling $18,000 annually for infrastructure replacement. The District s annual set aside covers only 1.5 percent of the annual depreciation, an amount well below necessary levels given the District s lack of an adequate preventive maintenance program (Table 4.2-2). Assets TABLE ALPINE SPRINGS CWD CAPITAL REPLACEMENT NEEDS, 2003 General Expected Useful Life Estimated Replacement Cost as of 2003 Annual Contribution required for remaining years Buildings 30 to 50 yrs $2,131,771 $57,976 Vehicles 15 to 25 yrs $564,413 $82,134 Equipment 7 to 15 yrs $244,397 $59,366 Water Infrastructure 50 yrs $9,645,335 $487,695 Sewer Infrastructure 50 yrs $8,465,547 $550,293 $21,051,463 $1,237,464 Source: John Shaw, General Manager of ASCWD, 2003 Estimated annual contribution based on inflating original purchase cost by 3% inflation rate annually and dividing by the average expected useful life of each asset. Includes all assets for fire, water and sewer services. 2. Management Efficiencies/Cost Avoidance/Facilities Sharing Alpine Springs CWD was formed in 1963 to provide safe, reliable and potable water to the community of Alpine Meadows. The District was originally formed under Section of the California Water Code. ASCWD s mission is to serve Alpine Meadows with: 1) clean, safe and dependable drinking water, 2) safe, efficient and non-hazardous collection of wastewater, 3) protection of live and property, and 4) protection, preservation and enhancement of the urban forest with consideration for the property owner s continued use and enjoyment. PLACER LAFCO MUNICIPAL SERVICE REVIEW

5 Shown in Figure 4.2-1, a five-member Board of Directors oversees the General Manager. The General Manager oversees four departments: Administration (one employee), Recreation (seasonal only), Operations and Maintenance (water and sewer), and the Fire Department (staffed by volunteers with a contract for management and first response with North Lake Tahoe PUD). Total employees number six, not including volunteers. FIGURE ALPINE SPRINGS CWD ORGANIZATION CHART Board of Directors (5) General Manager Administration Recreation Services Operations/Maintenance Fire Services The District s overall operations are quite lean, with only a few employees, minimal facilities and equipment, a small operations office and maintenance yard, and limited other physical assets. Therefore, options for cost avoidance and facility sharing include the use of joint powers authority, technological improvements, and contracting out of services as described below. Joint Agency Practices. ASCWD is a member of two Joint Powers Authorities for the operation of a common risk management and insurance program. The programs cover workers compensation, property, general and auuto liability, and auto physical damage insurance. The District also contracts with North Tahoe Fire Protection District for the management of the Alpine Meadows Fire Department. Discussions are underway regarding the feasibility of NTPUD annexing and providing fire service operations to Alpine Meadows. Contract Services. ASCWD is essentially a contract district and takes full advantage of cost savings offered through contract services. As noted above, ASCWD contracts our fire protection services to NTPUD. Internally, District management is contracted to an Engineer, and payroll functions and accounting are outsourced to a certified public accountant. Garbage service is contracted to Tahoe Truckee Sierra Disposal Company. The District outsources slurry sealing of roadways and major rehabilitation projects. Sewer line televising is also contracted out. Water Quality Violations. District personnel indicate that ASCWD is not under an order by the Lahontan Regional Water Quality Control Board for violations of wastewater discharge. Technology/Management. The District utilizes a SCADA system to electronically monitor critical water infrastructure and could extend it to read water meters, provided the District s meters are replaced. The District could also implement a main line inspection to reduce water lost from the system and control the amount of inflow/infiltration, presently estimated at 30 MUNICIPAL SERVICE REVIEW PLACER LAFCO

6 percent. Finally, the District needs to focus on a preventive maintenance program. ASCWD also needs comprehensive maps showing the location of elements of its water and sewer system. Facility Sharing Arrangements. Although the District does not anticipate sharing water and sewer facilities, opportunities exist for other facility sharing arrangements that could augment District revenues. The District s assets include a recreational center (park), firehouse, greenbelt land, and District land that could be leased to private individuals or organizations. The District parcel located next to the commercial center at the entrance to the Valley is a potential commercial revenue source, provided it does not conflict with the character of the Valley. As summarized in the water section, the critical issue facing ASCWD is to raise revenue to augment operations, address deficiencies in service levels, fund deferred maintenance and recapitalization needs, and provide emergency services. To raise revenue, ASCWD could sell its surplus snow well water to Squaw Valley and then use the revenues to address district needs. The ASCWD Board has expressed no interest in this option even though SVPSD is willing to spend millions to augment their water supply (ASCWD Newsletter, September 2003). Without adequate funding, ASCWD will eventually be unable to maintain its infrastructure and the eventual cost avoidance option will be consolidation with a financially stronger district. 3. Financing and Rate Restructuring This section evaluates the financing of operations and improvements for Alpine Springs CWD. Information on District financing is derived from audited financial statements from fiscal year June 30, These statements are a consolidated series of financial statements that follow the Government Accounting Standards Board (GASB) method of Accrual accounting. Revenues and Expenses. The District s operating revenues and expenses for year 2002 are summarized in Table District operating revenues totaled $68,000 and include sewer revenues from fees and connection charges. Non-operating revenues of $53,000 consist of property taxes and interest. Operating expenses were $114,000 for 2002, and include direct operating, administration and general, and depreciation. Net income for the year recorded a $6,000 gain. Property taxes subsidize operation of the sewer functions for the District. TABLE ALPINE SPRINGS CWD WASTEWATER ENTERPRISE FUND Revenue Profile Amount Sewer Revenue $68,000 Non Operating Revenue $53,000 Expense Profile - Direct Operating $52,000 - Admin. and General $40,000 - Depreciation $22,000 Net Income $6,000 Source: District Audited Financial Statement, 2002 Financial Constraints and Opportunities. Several factors will affect District operations and finances in upcoming years. The proposed CMOM regulations will require special districts operating wastewater collection systems to develop procedures to improve system capacity, perform long-term planning for investments in infrastructure, develop an overflow emergency PLACER LAFCO MUNICIPAL SERVICE REVIEW

7 response plan, develop better documentation and asset management procedures, and share this information with stakeholders more effectively. No cost estimate is available at this time. District Assets and Liabilities. Current assets for 2002 totaled $36,000. With respect to property plant and equipment, the District s held $1.2 million in fixed assets. With accumulated depreciation of $1.0 million (87 percent of fixed assets), the District owned $168,000 in net property, plant and equipment of which land comprises only a fraction. ASCWD has the highest depreciation percent of Placer County water/wastewater districts, reflecting a historical practice of underfunding both capital and recapitalization needs. Long Term Debt and Investments. Shown in Table 4.2-4, long-term debt and investment information is for all District activities such as water, wastewater, parks and recreation. Long term debt (e.g., bonds, certificates of participation, etc.) are key methods used by the District to finance capital improvements. According to the District audited financial statements, long-term debt totaled $169,000 as of 2002 due to a Certificate of participation loan with fixed interest rates of 6.9 percent due in June of Debt service payments total about $35,000 annually. Asset Replacement and Maintenance. On August 8, 2003, the ASCWD Board established Policy 2.7.0, requiring the District to address the need to accumulate reserves for recapitalization and capital outlay. Specifically, the District must reserve a minimum of 2.5 percent of annual cash reserves and place it into the recapitalization fund to be used exclusively to pay for recapitalization of facilities. TABLE ALPINE SPRINGS CWD CASH REQUIREMENTS FOR DEBT Due June 30, Total Debt Service in 2003 $38,051 in 2004 $35,395 in 2005 $35,645 in 2006 $35,728 Later Years $35,640 Total Debt Payments $169,000 Source: District Audited Financial Statement, 2002 ASCWD currently sets aside $18,000 annually for the replacement of plant facilities and equipment. Based upon annual recapitalization needs, approximately $1.2 million should be set aside. Opportunities for Rate Restructuring. ASCWD receives funds through a combination of and valorem property taxes and water rates. Property taxes account for 63 percent of total revenues received and subsidize sewer operations. The District charges an annual sewer fee of $23 per unit. New users pay a one-time fee of $1,050 plus a $350 inflow and infiltration surcharge. A review of other Districts indicates that Alpine Springs charges some of the lowest rates countywide. Part of the reason may be that the District is heavily funded by property taxes. However, Alpine Springs has not completed a thorough rate analysis to ensure that rates cover the full operation and maintenance costs of the sewer distribution system. Given the District s level of deferring maintenance and needed system improvements, the fees charged for sewer services are likely well below the level needed to sustain the District over the long-term. MUNICIPAL SERVICE REVIEW PLACER LAFCO

8 4. Government Structure Government structure analysis includes consideration of the suitability of current physical boundaries of the District, including potential changes to the location, extent, and political appropriateness of District boundaries. This includes an analysis of the logic of the existing and planned District boundaries, and thus opportunities to provide service in a more efficient or costeffective manner. This section evaluates potential consolidation opportunities for ASCWD. ASCWD is the sole wastewater provider for its service area; potential options for acquisition of other private companies do not exist. During the course of this review, this MSR evaluated ASCWD s operations, funding levels, and infrastructure condition. Whereas cost avoidance opportunities are always present, in contrast to other districts, the critical issue facing ASCWD is raising revenue to augment operations, address deficiencies in service levels, fund deferred maintenance and recapitalization needs, and provide emergency services. Without adequate funding, ASCWD will eventually be unable to maintain its sewer infrastructure and the eventual cost avoidance option will be consolidation with a financially stronger district. Inasmuch as State guidelines require the MSR to evaluate consolidation options, this analysis briefly outlines the benefits of consolidation with Squaw Valley PSD (SVPSD) due to its proximity to ASCWD, although other districts could be evaluated as well. Should consolidation be an option, a formal feasibility analysis should be undertaken. District consolidation offers several benefits in improved service levels. SVPSD has the fiscal and organizational resources to assume responsibility of providing the full range of services for Alpine Springs. In some cases, such as Fire Services, Squaw Valley could provide the most responsive service to Alpine Springs due to its close proximity (only 3 miles away). More importantly, Squaw Valley is well-financed, with significant reserves and financing mechanisms in place that are necessary to address long-term recapitalization needs. Perhaps the most attractive reason for the consolidation of ASCWD and SVPSD is water. As discussed later, Squaw Valley does not have additional water for new development. The District is currently evaluating options to spend in excess of $12 million to acquire water from new wells, utilize the springs east of the Truckee River, and acquire surface water rights from the Truckee River. ASCWD could supply most SVPSD s needs for less than $1 million. ASCWD could raise revenue to address its infrastructure deficiencies with water sales. District consolidation would not be without cost to Alpine Springs and Squaw Valley. Sewer rates in Squaw Valley are higher on an annual basis. Additional revenue would also need to be raised to address deferred maintenance and recapitalization needs of Alpine Springs. Nonetheless, Alpine Springs infrastructure needs must eventually be addressed, either by Alpine Springs residents alone or by both districts. The total cost remains the same. Table summarizes some of the benefits that could be achieved through consolidation. PLACER LAFCO MUNICIPAL SERVICE REVIEW

9 Consolidation Issue Infrastructure Needs Water Supply Fire Services Shared Facilities Sewer Services Economies of Scale TABLE ALPINE SPRINGS CWD BENEFITS FROM CONSOLIDATION WITH SVPSD Alpine Springs ASCWD has significant deferred maintenance and recapitalization need with limited revenues. ASCWD has excess water supply if funds were available to treat manganese in the snow well water. Volunteer fire service. NTPUD provides management and first response. NTPUD is six miles away. ASCWD currently has only one combined administrative office, with a maintenance yard and fire station. District needs sewer system master plan, funding for infrastructure recapitalization, and staffing. ASCWD does not benefit from economies of scale and thus contracts out most services to private firms Squaw Valley SVPSD in comparison is quite well funded and currently sets aside 60 percent of annual recapitalization needs for its water system. SVPSD is considering spending $6.8 million to augment its supply, though ASCWD could provide the same for $775,000. SVPSD already provides full fire services at a reasonable cost to its residents and is located the closest to ASCWD (3 miles away). SVPSD is moving its main office and yard to within 3 miles of Alpine Meadows Road, providing the opportunity to share facilities. SVPSD has highly trained staff and the financial resources to manage its sewer system and could extend service to ASCWD. SVPSD performs much of its operations inhouse and annexation of ASCWD may provide greater economies of scale 5. Local Accountability and Governance The District operates under the leadership of an elected five-member Board of Directors, with a General Manager providing daily oversight and management of staff and resources. The District holds regularly scheduled meetings on the second Friday of each month, at 8:30 A.M. District staff indicates that all meetings are held in compliance with the Brown Act and all laws governing public meetings. Meetings are not typically covered by local media sources. Public comments are allowed at scheduled meetings, and also can be provided by letters to the District. Operating procedures and practices, including budgets, personnel policies, fees and rates, capital improvements plans, and other documents are available for public review at the District s offices. District operating hours are 9:00 A.M. to 3:00 P.M. Monday through Friday. The District and its activities undergo public review procedures, including financial review by independent auditors. There are sufficient mechanisms in place to ensure that actions and operating procedures of the District are open and accessible to the public. The District maintains a website at where Board policies, approved minutes, District news, water and sewer rates, and other helpful information can be obtained. MUNICIPAL SERVICE REVIEW PLACER LAFCO

10 Squaw Valley Public Services District As of 2003, the SVPSD serves a resident population of 900 permanent residents with 18,000 people on weekends. The District serves 975 single-family units and 500 commercial equivalent dwelling units on a 10- inch tie-in connection to the T-TSA interceptor - significantly larger than the water connections served. SVPSD provides sewer services to water customers served by Squaw Valley Mutual Water. Shown in Table 4.2-6, District infrastructure includes 18 miles of gravity sewer mains and 350 manholes. TABLE SQUAW VALLEY PSD SEWER SYSTEM CHARACTERISTICS System Facilities Number of Connections 1,275 EDU Length of Gravity Mains 18 miles Length of Force Mains None Manholes 350 Main Pumping Stations None Satellite Pumping Stations None Asset Value N/A Source: SVPSD Sewer Master Plan, Infrastructure Needs and Deficiencies The following highlights issues facing the District in continuing to provide wastewater collection services. Information for this analysis is gathered through the District s Sewer Master Plan (1994), audited financial records and rates, and discussions with the District Manager. Issue #1: Wastewater Flow Capacity Wastewater flows from the District are derived from a recently completed municipal service review for the Tahoe-Truckee Sanitation District (T-TSA). Shown in Table 4.2-7, Squaw Valley is credited with a maximum 7-day flow of mgd, and peak hour flows of 0.65 mgd during the summer and 0.78 mgd during winter. According to the District Manager, SVPSD s sewer infrastructure was originally built for the 1964 Winter Olympics and was designed for a population exceeding the buildout projections of Squaw Valley. Therefore, the District has adequate capacity to accommodate future flows. TABLE SQUAW VALLEY PSD CURRENT AND FUTURE WASTEWATER FLOWS Timeframe Service Population Peak-Hour Flow Summer Winter Summer Winter Current ,070 18, Projected ,020 26, Source: Nevada County LAFCo Eastern County Wastewater MSR, PLACER LAFCO MUNICIPAL SERVICE REVIEW

11 Sewage flow and infiltration/inflow (I/I) is critical to the design of sewer collection and transport systems. Although the District s sewage collection and transport system has excess of capacity, the Truckee River Interceptor which carries discharge from five sewer districts to TTSA has at times operated at or above design capacity due to high I/I flows during wet years. Excessive I/I flows results in higher sewer treatment fees from TTSA and maintenance and operations. During FY 2003, the District will complete sewer line televising to identify needed I/I repairs. Issue #2: Capital Improvements Capital and recapitalization funding is one of the most critical issues facing sewer districts today. Except for a bank restoration project, the District s efforts have focused on televising and diagnosing infiltration and inflow problems in the sewer system. No major capital projects are scheduled at this time through According to the District Manager, all the capital improvements anticipated from the 1994 Sewer Master Plan have been completed. The District s I/I monitoring and data collection effort should assist in identifying capital improvement needs for the upcoming update of the sewer master plan. Issue #3: Water Quality and Runoff The Regional Water Quality Control Plan for the Lahontan Region (1996) prohibits the discharge of any waste or deleterious material that would adversely affect or threaten the beneficial uses of the waters of the basin or cause a violation of water quality objectives. The Basin Plan also prohibits the discharge of treated or untreated wastewater directly to surface waters. The Squaw Valley PSD is not in violation of existing water quality laws. 2. Management Efficiencies/Cost Avoidance/Facilities Sharing The District is an independent special district and was formed in 1964 under the State of California s Water Code Sections and to provide public water service to the community. Squaw Valley s mission statement is to assume leadership in providing high-quality public services need by the community. This is to be done by taking leadership in providing, maintaining, and advocating for needed, high-quality, and financially sound community services, including, but not limited to, water, emergency services, sewer and garbage. Further, the District will conduct its operations consistent with protecting the natural resources and environment of the community. The District s five-person Board of Directors oversees district affairs. The General Manager oversees operations in three areas emergency services, water services, sewer services, and administration. The District has 21 full-time employees and several part-time employees. Of this total, 10 full-time employees and 5 part-time employees work in fire services, 5 full-time MUNICIPAL SERVICE REVIEW PLACER LAFCO

12 employees work in utilities, and 5 full-time employees work in administration. No management audits of District operations have been performed in the past few years. FIGURE SQUAW VALLEY PSD ORGANIZATION CHART Board of Directors General Manager Assistant General Manager Fire Services Operations Administration With respect to planning tools, the District has audited financial statements, a master water plan, a master sewer plan, master recreation plan, and capital/recapitalization improvements plan. These plans are periodically updated to ensure that Districts operations are run in an efficient manner and that present and future service needs are adequately met. Moreover, SVPSD also maintains mutual aid agreements and contingency plans with other nearby districts. Joint Agency Practices. SVPSD is a member of two JPAs for the operation of a common risk management and insurance program. The programs cover retirement, workers compensation, property, general and automobile liability, and automobile physical damage insurance. The District also participates in mutual aid agreements with surrounding districts. The District also has two bargaining units with the local labor organizations. Water Quality Violations. District personnel indicate that SVPSD is not under an order by the Lahontan Regional Water Quality Control Board for violations of wastewater discharge. Contract Services. The District performs the majority of services utilizing in-house personnel. Larger or occasional projects are outsourced. This includes 1) major water and sewer line replacements, major roadwork or slurry seal. Tahoe-Truckee Sierra Disposal provides waste management services. Building maintenance and even sewer line televising services are all performed by in-house operations staff. Technology/Management. The District has focused on a few technological improvements to optimize efficiency. The SCADA system was just updated to monitor tanks, wells, and even entrance into facilities. The District is continuing its conversion to radio read (as opposed to manual read) meters. SVPSD is developing its GIS system and integrating with its Hanson Maintenance System so that personnel can readily locate manholes and other appurtenances. The District s most significant improvement over the past few years has been the development of computerized model of the District s water system, aquifer, and groundwater supply. With respect to sewer, the District will complete televising lines for I/I problems this year. Lastly, the PLACER LAFCO MUNICIPAL SERVICE REVIEW

13 District has purchased standardizes accounting software used by other special districts in the area, offering economies of scale and lower overall maintenance costs. Joint Facility Sharing. The District s operations include water, sewer, and fire services. Each District operation shares the same facility and is highly integrated with one another. The District recently purchased land for a new 30,000 square foot facility (in two buildings) near the Valley s entrance that will house all water, sewer, and fire service functions under the same roof. The old administrative building will be leased out as surplus property and the old fire station will remain in use as an equipment yard and fire station. Consolidation Opportunities. In past years, the District has been approached by Mutual Water, the other main water provider in the Valley for 300 customers. The District tendered an offer to purchase the water company. Although the Mutual Water Company charges nearly two times the water rates as Squaw Valley PSD, the offer was not accepted. Consolidation would not affect the District s wastewater operations, only indirectly through enhanced personnel. 3. Financing and Rate Restructuring This section evaluates the financing of operations and infrastructure improvements for Squaw Valley PSD. District financing is derived from audited financial statements for fiscal year ending June 30, Statements are a consolidated series of financial statements that follow the Government Accounting Standards Board method of Accrual accounting. Revenues and Expenses. The District s operating revenues and expenses for year 2002 are summarized in Table District operating revenues totaled $1.1 million and include service fees. Non-operating revenues total $1.6 million and consist of property taxes and interest earned. Property taxes are generally used to fund sewer operations, while service fees primarily fund water operations. All other revenue totaled $15,900. Operating expenses were $1.2 and include salaries and benefits, field operations, and administration and general. Depreciation was $0.45 million. Net income recorded a $218,000 loss. TABLE SQUAW VALLEY PSD WATER AND WASTEWATER FUNDS Revenue Profile Amount Service fees $1,158,094 Non Operating Revenue $1,697,885 All Other Revenue $15,928 Expense Profile - Salaries and benefits $792,870 - Field operations $259,453 - General and admin. $147,207 - Depreciation $453,783 Net Income ($218,682) Source: District Audited Financial Statements, 2002 Financing Constraints. EPA requirements will require special districts operating wastewater systems to develop procedures (CMOM) to improve system capacity, perform longterm planning for investments in infrastructure, develop an overflow emergency response plan, develop better documentation and asset management procedures. No cost estimate for compliance is available at this time. MUNICIPAL SERVICE REVIEW PLACER LAFCO

14 District Assets and Liabilities. In 2002, current assets for 2002 totaled $114,000. Investments total $328,000. The District held $12.3 million in fixed assets plus $1.1 million in assets under construction. With $5.8 million in accumulated depreciation (43 percent of fixed assets and new construction), the District owned $6.5 million in net property, plant and equipment. Shown in Table 4.2-9, the District has total assets of $6.9 million as of Long Term Debt & Investments. The District uses long term debt to finance capital improvements. This debt is associated with the acquisition of a parcel for the relocation of District s water, sewer, and fire services, the purchase of several fire engines, and other debt. According to the District audited financial statements, long-term debt totaled $3.5 million in 2002 with instruments at variable interest rates of 5.1 percent to 6.5 percent, due in Debt service payments are $390,000 annually as shown in Table Asset Replacement and Maintenance. In addition to a Sewer Operating fund, the District has established funds for fixed asset replacement and capital projects. The Master Plan recommends a reserve of $1.3 million for replacement of sewer assets and the District sets aside 60 percent of the recommended amount. A total of $1.85 million was held for sewer projects, of which sewer capital and fixed asset reserves total $1.2 million (see Table ). TABLE SQUAW VALLEY PSD SEWER FUND SUMMARY Fund Purpose Main Revenue Source Total Sewer Fixed Asset Replace fixed assets Transfer from operating fund $757,000 Replacement plus year end unexpended funds Sewer Capital Project Capital Projects to 40% of sewer connection fees $494,000 serve new customers Sewer Inflow/Infiltration Correct I/I problems 60% of sewer connection fees $592,000 Source: District Financing Plan, 2000 TABLE SQUAW VALLEY PSD WATER/WASTEWATER BALANCE SHEET Current & Restricted Assets Cash and cash equivalent $2,277 Investments $328,547 Accounts receivable $101,385 Property, Plant, Equipment Fixed Assets $12,348,942 Construction in Progress $1,162,811 Accumulated Depreciation ($5,848,108) Net Property, Plant & Equip. $6,500,834 Total Assets $6,946,926 Source: District Audited Financial Statements, 2002 TABLE SQUAW VALLEY PSD CASH REQUIREMENTS FOR DEBT Due June 30, Total Debt Service in 2003 $335,477 in 2004 $339,214 in 2005 $339,558 in 2006 $339,658 Thereafter $2,192,665 Total Debt Payments $3,546,572 Source: District Audited Financial Statements, 2002 PLACER LAFCO MUNICIPAL SERVICE REVIEW

15 Rate Restructuring. As of 2003, the District assesses wastewater charges of $229 for a singlefamily residence and $300 for a commercial use. If usage is over 95,000 gallons the rate is $3.16/1,000 gallons. Additionally, connection fees are a one time charge of $1,211. Discussions with the District Manager indicate that these rates will be significantly restructured in Government Structure Government structure analysis includes consideration of the suitability of current physical boundaries of the District, including potential changes to the location, extent, and political appropriateness of District boundaries. This includes an analysis of the logic of the existing and planned District boundaries, and thus opportunities to provide service in a more efficient or costeffective manner. The primary consolidation option is for SVPSD to acquire ASCWD The Water Services chapter analyzed the advantages and disadvantages of acquiring ASCWD. Briefly, Squaw Valley is well positioned, both organizationally and financially, to provide the full range of services to Alpine Springs. Alpine Springs can also supply SVPSD s water needs According to the GDUFS (2003); ASCWD could supply SVPSD s needs for under $1 million significantly less than the $12 million in options being considered. Finally, acquiring ASCWD would also allow the District to potentially benefit from economies of scales in operations. 5. Local Accountability and Governance The District operates under an elected five-member Board of Directors, with a General Manager providing daily oversight and management of staff and resources. The District holds regularly scheduled meetings on the last Tuesday of each month, at 8:30 A.M. All meetings are held in compliance with the Brown Act and laws governing public meetings. Meetings are typically covered by local media sources. Public comments are allowed at scheduled meetings, and also can be provided by letters to the District. Operating procedures and practices, including budgets, personnel policies, fees and rates, capital improvements plans, and other documents are available for public review at the District s offices. The District s operating hours are 8:00 A.M. to 5:00 P.M. Monday through Friday. The District s activities undergo significant public review, including financial review by independent auditors. Sufficient mechanisms are in place to ensure that actions and operating procedures are open and accessible to the public. The District maintains a website at where Board policies, District news, rates, and other helpful information can be obtained. MUNICIPAL SERVICE REVIEW PLACER LAFCO

16 North Tahoe Public Utility District As of 2003, the NTPUD service area covers approximately 4,158 acres, and serves a resident population of 8,000 and seasonal population exceeding 20,000. The District currently serves 4,850 sewer connections significantly larger than the 3,600 water connections currently served. NTPUD provides sewer services to water customers served by Agate Bay and Fulton. District infrastructure includes 80 miles of sewer mains, 4 main and 14 satellite pumping stations. Table summarizes these facilities. TABLE NORTH TAHOE PUD SEWER SYSTEM CHARACTERISTICS System Facilities Number of Connections 4,850 Length of Gravity Mains 74.5 miles. Length of Force Mains 6.25 miles Manholes 1,682 Main Pumping Stations 4 stations Satellite Pumping Stations 14 stations Asset Value $98 million Source: NTPUD Sewer Master Plan, Infrastructure Needs and Deficiencies This discussion highlights issues facing the District in continuing to provide wastewater collection services. Information for this analysis is gathered through the District s Sewer Master Plan (2003), audited financial records and rates, and discussions with the District Manager. Issue #1: Wastewater Flow Capacity Shown in Table , T-TSA credits North Tahoe and Tahoe City with a maximum 7-day flow of 2.48 mgd Peak hour flows total 5.8 mgd during summer and 4.9 mgd during winter. NTPUD s records indicate an average daily flow of 1.05 mgd and peak daily flow of 3.8 mgd. In contrast to T-TSA projections, NTPUD projects a lower growth rate of 34 units annually, increasing the average wastewater flow to 1.1 mgd and peak flow to 1.9 mgd by Average I/I flows are estimated to be 0.66 mgd for infiltration and 0.29 mgd for inflow. Since the District s infrastructure was originally designed for a population of 100,000 and daily flow of 11 mgd, no shortage in wastewater transmission capacity exists. TABLE NORTH TAHOE/TAHOE CITY PUD CURRENT AND FUTURE WASTEWATER FLOWS Timeframe Service Population Peak-Hour Flow Summer Winter Summer Winter Current ,000 40, Projected ,000 46, Source: Nevada County LAFCo Eastern County Wastewater MSR, PLACER LAFCO MUNICIPAL SERVICE REVIEW

17 Issue #2: Capital Improvements Capital and recapitalization funding is one of the most critical issues facing sewer districts today. In 2003 dollars, the replacement value of District assets totals $98 million. The Master Plan recommends District policies for scheduled replacement and/or accumulation of reserves available for facility replacement before each facility reaches the end of its useful life. As an example, if the facility annual replacement rate equals the yearly straight line depreciation rate, the facility s effective age (average of facility elements) will be one half the facility s chronological age at the end of the facility s estimated useful life. To maintain the District s hypothetical average system age of 69 years requires annual replacement funding of $1,414,000. The Plan recommends that the District set forth a replacement budget of $1.965 million annually in order to maintain the system s effective age of 50 years (chronological age of 100 years). TABLE NORTH TAHOE PUD ANNUAL CAPITAL REQUIPMENTS FOR SEWER ASSETS Facility Value in 2003 Dollars Service Life Annual Capital Replacement Export Force Main $10,000, $200,000 Collection System $78,672, $787,000 Pump Stations and Base Facility $7,700, $257,000 Equipment and Vehicles $1,877, $171,000 Total $98,249,000 $1,414,000 Source: 2003 NTPUD Sewer Master Plan Issue #3: Major Projects The 2003 Sewer Master Plan also identified specific projects that required rehabilitation or eventual replacement. These projects are described briefly below and shown in Table The following list is not intended to be a comprehensive list of all needed improvements, but rather to provide some of the more critical projects facing the District. In 1998, Congress directed the U.S. Army Corp of Engineers to evaluate options for remedying the deteriorating water quality of Lake Tahoe due to exfiltration from local sewer systems. TRPA adopted a 10-year plan to restore the lake's water quality at an estimated cost of $900 million. Funding sources included the State of California ($275 million), Nevada ($82 million), the federal government ($297 million), and local government and private sources. NTPUD costs totaled $17.6 million of which $4.0 million was the highest priority needs (Table ). The federal government set aside these requirements as too costly to implement at this time. MUNICIPAL SERVICE REVIEW PLACER LAFCO

18 TABLE NORTH TAHOE PUD RECOMMENDED SEWER SYSTEM IMPROVEMENTS, Facility Improvement Reason for Need Estimated Costs Replacement of Administrative Inadequate sizing and poor $3,030,000 Building for personnel. configuration of existing building Replacement and expansion of Inadequate sizing, poor configuration, $1,600,000 Operations and Community Center and need to remove soil contamination Sewer Main Replacement Ongoing replacement needs of aging $4,860,000 lines exceeding useful life Force Main Replacement Project from Aging infrastructure in need of $13,200,000 Secline Satellite stations to Dollar Hill replacement Secline Main Pump Station Relocation Structurally failing system near beach $3,500,000 Project presents environmental hazard. Miscellaneous Sewer System Replacement of aging components $3,045,000 Improvements which require excessive repairs/costs Total $29,235,000 Source: 2003 NTPUD Sewer Master Plan TABLE NORTH TAHOE PUD PRIORITY IMPROVEMENTS FROM FRAMEWORK STUDY Facility Description Potential Action Plan First Cost National Force Main Replace and relocate 600 feet of force main $485,000 Carnelian Force Main Install valve and turnout appurtenances for $400,000 temporary piping connections Dollar Point Pump Station Install permanent on-site backup generator $555,000 Gravity Sewer to Secline Rehabilitate/slip line gravity sewers $978,000 Pump Station Secline Force Main Replace and relocate 2,100 feet of force main 1,580,000 Total $2,998,000 Source: Lake Tahoe Basin Framework Study Wastewater Collection System Overflow/Release Reduction Evaluation, U.S. Corp of Engineers and Tahoe Regional Planning Agency, Management Efficiencies/Cost Avoidance/Facilities Sharing The North Tahoe PUD was formed under Sections of the Public Utilities Code. The District was originally formed in 1948 for the purpose of providing safe, reliable and sewer services to the Kings Beach, Brockway, and Tahoe Vista communities located along the north shore of Lake Tahoe. The District s mission is as follows: PLACER LAFCO MUNICIPAL SERVICE REVIEW

19 to provide water service, consistent with standards set for public health, safety, and the environment in an efficient and accountable manner to provide recreation and parks programs and facilities for the use and enjoyment of residents and visitors alike and to do this while continuing an awareness of the economic role of the District within the North Tahoe area. The District is managed by a five-member Board of Directors, which oversees the Chief Executive Officer and administrative staff. The CEO oversees the operations of three departments -- Public Works, Recreation, and Accounting consisting of 50 full-time employees and 20 part-time employees. The District utilizes contractors on demand for certain projects. Public Works has 23 fulltime staff, of which 11 work in wastewater operations. FIGURE NORTH TAHOE PUD ORGANIZATION CHART Board of Directors Chief Executive Officer Chief Financial Officer Assistant Manager Public Works Department Recreation Departments Accounting/Admin Staffing levels for the District s wastewater operations appear optimal. The American Clean Water Association Guide to Effective Sewer Maintenance recommends a staffing complement of 13 to 15 (which includes supervision, construction inspection, and equipment maintenance) to maintain and operate a wastewater collection system and pump stations serving a population of 10,000. The District allocates 10 to 12 full-time employees plus additional seasonal labor to the wastewater operations, and thus appears to maintain the optimal staffing complement. With respect to planning tools, the District has audited financial statements, a master water plan, a master sewer plan, master recreation plan, and capital/recapitalization improvements plan. These plans are periodically updated to ensure that District operations are run in an efficient manner and that present and future service needs are adequately met. Moreover, NTPUD also maintains mutual aid agreements and contingency plans with other nearby districts. To optimize efficiency, the District has implemented the following programs. Joint Agency Practices. NTPUD is a member of two JPAs for the operation of a common risk management and insurance program. The programs cover workers compensation, property, general and auuto liability, and auto physical damage insurance. The District operates its own retirement program. Although mutual aid agreements are in place, the District does not share additional facilities, in part due to geography and accessibility issues along the lakefront. Finally, NTPUD maintains a joint use-maintenance agreement with the Truckee-Tahoe USD. MUNICIPAL SERVICE REVIEW PLACER LAFCO

20 Contract Services. NTPUD contracts out street repair and rehabilitation services and snow removal services to Placer County, as well as sewer main televising and leak detection. NTPUD operates the beaches and many park and recreational facilities for Placer County, the Tahoe Conservancy, and the State of California. Since the District operates and maintains a 100-acre regional park, NTPUD affords these agencies significant cost savings because the District already has the equipment, maintenance yards, and trained manpower available. Technology/Management. NTPUD has committed to installing a new Supervisory Control and Data Acquisition (SCADA) system during 2003 which will help monitor and regulate critical facilities. Key to this change will be the conversion to a radio-based telemetry system, rather than telephone line system. The SCADA will link to the District s Local Area Network (LAN). Taken together, the SCADA system will enhance operational capabilities and security. The District has also undergone efforts to reexamine their 1996 energy audit by Dewante and Stowell to see whether it is cost-effective to replace oversized pumps to conserve on energy costs. Information management has become a key component of optimizing wastewater operations. The District s Hanson Workload Management System keeps track of the collection system assets; tracks work orders, and customer complaints, but can also monitor time-on-task, manage preventive maintenance, and link up with a GIS system. District operations utilize the GasBoy dispensing and computer software for fuel management. The District s SCADA system will be linked with the LAN. Accounting is automated by the Springbook Accounting Software. 3. Financing and Rate Restructuring This section describes the factors affecting the financing of sewer operations within NTPUD s boundaries. Information on District financing is derived from audited financial statements from fiscal year June 30, These statements are a consolidated series of financial statements that follow the Government Accounting Standards Board (GASB) method of Accrual accounting. Revenues and Expenses. The District s operating revenues and expenses for year 2002 are summarized in Table District operating revenues totaled $793,000 and include service charges, connection fees and other revenues. Non-operating revenues total $2.6 million and consist of property taxes. Operating expenses of $2.0 million for 2002 include direct operating, administration and general expenses. Depreciation totaled $691,000. Altogether, net income recorded a $713,000 gain. TABLE NORTH TAHOE PUD REVENUE AND EXPENSE INDICATORS Revenue Profile Amount Service Charges $662,000 Connection Fees $66,000 Non Operating Revenue $2,615,000 All Other Revenue $119,3000 Expense Profile - Direct Operating $975,000 - Admin. and General $1,040,000 - Depreciation $691,000 - Non Operating Expense $43,000 Net Income $713,000 Source: District Audited Financial Statements, 2002 PLACER LAFCO MUNICIPAL SERVICE REVIEW

21 District Assets and Liabilities. Table summarizes district assets and liabilities. Current assets for 2002 totaled $1.6 million and $1.4 million from investments. Accounts receivable total $242,000 and restricted assets total $1.7 million. With respect to net property plant and equipment, the District held $28 million in fixed assets plus those under construction. With accumulated depreciation of $13.8 million (49 percent of fixed assets), the District owned $14.3 million in net property, plant and equipment of which land comprises only a fraction of the value. Financing Constraints. EPA requirements for a Capacity, Management, Operations, and Maintenance program (CMOM) will require TABLE NORTH TAHOE PUD BALANCE SHEET INDICATORS Current and Restricted Assets Cash and cash equivalent $1,634,000 Investments $1,414,000 Accounts receivable $242,000 Restricted Assets $1,721,000 Property, Plant, Equipment Fixed Assets $27,962,000 Construction in Progress $57,000 Accumulated Depreciation -$13,756,000 Net Property, Plant, Equipment $14,264,000 Total Assets $19,433,000 Source: District Audited Financial Statements, 2002 special districts operating wastewater collection systems to develop procedures to improve system capacity, perform long-term planning for investments in infrastructure, develop an overflow emergency response plan, and develop better documentation and asset management procedures. No cost estimate is available at this time. Long Term Debt and Investments. Shown in Table , the District s present debt consists of $5.7 million in 2002 for a Water Systems Refunding and Improvement Project loan with variable interest rates of 3 to 5.35 percent, due in February of The District has twice restructured its debt service, lowering annual payment to $700,000. No debt is outstanding for wastewater operations. The District s policy for its investments establishes safety, liquidity and yield as three goals. The District maintains a bond rating of AAA according to Standard and Poor s. TABLE NORTH TAHOE PUD CASH REQUIREMENTS FOR DEBT Due June 30, Total Debt Service in 2003 $702,000 in 2004 $699,000 in 2005 $699,000 in 2006 $699,000 Later Years $4,900,000 Total Debt Payments $8,403,000 Source: District Audited Financial Statements, 2002 Asset Replacement and Maintenance. Capital and recapitalization funding is one of the most critical issues facing sewer districts today. Infrastructure deteriorates over time and, without proper plans, will present a significant liability in the future. In 2003 dollars, District assets have a replacement value of $98 million, including the value of the export force main and collection system. The 2003 Master Plan recommends $30,000 to $60,000 annually for emergency capital, $1,965,000 for capital improvements, and adequate cash reserve to avoid unnecessary assessments suddenly impacting system users. MUNICIPAL SERVICE REVIEW PLACER LAFCO

22 As discussed earlier, the Master Plan recommends District policies for scheduled replacement and/or accumulation of reserves available for facility replacement before each facility reaches the end of its useful life. To maintain the District s hypothetical effective (average) system age of 69 years would require annual replacement funding of $1,414,000. The Plan recommends that the District should set forth an annual replacement budget of $1.965 million annually in order to maintain the system s effective age of 50 years (chronological age of 100 years). NTPUD has established a policy of maintaining reserves between $500,000 and $1,000,000. The Board currently has reserves set aside for these efforts. According to the District s audited financial statements, the District has $397,000 set aside for capital outlays, $330,371 designated for board reserves (which have been allocated for major capital improvements), and $163,222 unreserved for operations. The District maintains a Sewer Reserve Sinking Fund of $1.38 million, $1,716,000 reserved for capital outlay, and $1,754,000 unreserved for operations. Opportunities for Rate Restructuring. The District has traditionally relied on property taxes to fund its wastewater system. In 1994, the State of California informed the District that they would transfer 40 percent of the District s tax revenues to the State. However, due to the adverse impact upon wastewater operations, the District was allowed to retain the funds provided they were spent on the sewer system. This meant that property tax previously earmarked for parks and recreation functions were no longer available. Thus, the citizen voted in a special assessment to pay for parks and recreational services. The District then subsequently reduced sewer charges. Today, at least two-thirds of the wastewater operational budget is funded through property taxes. Because of the District s historical reliance on property taxes and the financing agreement with the State of California, the District s wastewater rates are among the lowest within Placer County. As of 2003, a single-family residence is charged only $99 per year for sewer services. Commercial use is defined by 20 different usage codes and each has a separate yearly rate ranging from $1.44 for a church to $403 for an animal shelter. Without this property tax subsidy, however, the District s sewer fees would likely be much higher. The District charges connection fees to recoup the costs of connecting users to the system and apportioning a portion of the fixed asset investment to that user. District connection fees total $2,000 per living unit, $1,400 per studio, and $1,670 plus charges for the number of fixtures connected per business. Given the absence of a recent fee study, the Master Plan calculated that sewer connection fees for a single-family residence could be approximately $5,000 based on the average capital investment per gallon based on the $28 million invested in the operating sewer system, 1 mgd capacity, and average daily flow of 180 gallons per single-family residence. Taken together, the sewer rates and connection fees appear to be lower than otherwise required. The sewer fee is heavily subsidized by property taxes and thus would not cover the full costs of services provided except for the property tax transfer. The sewer connection fee also does not appear to recoup costs based on the absence of a recent fee study. In concert with finalization of the Sewer Master Plan and identification of needed improvements and timetable, these fees could be reexamined along with other financing mechanisms to fund the sewer system. PLACER LAFCO MUNICIPAL SERVICE REVIEW

23 4. Government Structure Government structure analysis includes consideration of the suitability of current physical boundaries of the District, including potential changes to the location, extent, and political appropriateness of District boundaries. This includes an analysis of the logic of the existing and planned District boundaries, and thus opportunities to provide service in a more efficient or costeffective manner. The primary consolidation option is NTPUD and TCPUD. NTPUD is located adjacent to Tahoe City Public Utility District (TCPUD). The proximity of both districts and successful consolidation of the North Shore s two fire districts have raised the question of further consolidation. In 1994, a consolidation feasibility study examined pros and cons of consolidating NTPUD and TCPUD s water, sewer, and parks operations. In 1994, the Boards for both districts appointed a Citizens Advisory Committee to review findings. In short, the Committee recommended consolidation of NTPUD and TCPUD based on nine principal findings. The Committee found that consolidation of the Districts parks and recreation functions was the easiest to implement, particularly given inter-district cooperation. Consolidation of the Districts water operations faced the greatest barriers, although not deemed prohibitive. With respect to sewer services, the Committee found that the two Districts have similar and compatible infrastructure in terms of the age, overall condition, and methodology of maintenance of their systems.both districts collect sewer effluent. through a common piping system which meets on Dollar Hill and then in piped through a common system to T-TSA. In doing so, both Districts comply with essentially the same engineering standards, regulations, discharge requirements, and have equally commendable records of performance.accordingly, the Committee finds that in the area of sewer service, the consolidation will not be problematic and in fact is likely further to enhance the existing levels of service.(page 20). After initial reorganization costs, the Committee estimated a conservative savings of approximately $500,000 annually as a result of consolidating upper management positions, a 13 percent workforce reduction, and implementing other cost-cutting strategies. Assuming a 7,000 customer base, each customer would save $70 annually on water, sewer, and parks services. Although the Committee cited potential savings, it is clear that agreement on the magnitude of savings and potential benefits of consolidation were heavily disputed by parties in both districts. Eventually, the NTPUD and TCPUD consolidation proposal was defeated at the ballot box. Should a feasibility study be conducted again, the feasibility study should also assess whether workforce reductions, cost avoidance opportunities, and service improvements could be achieved independent of consolidation. Retaining an experienced management consultant could assist in examining the feasibility of district consolidation through a more rigorous cost-benefit analysis. MUNICIPAL SERVICE REVIEW PLACER LAFCO

24 5. Local Accountability and Governance The District operates under an elected five-member Board of Directors, with a General Manager providing daily oversight and management of staff and resources. The District holds regularly scheduled meetings on the first Monday of each month, at 7:30 P.M. District staff indicates that all meetings are in compliance with the Brown Act and State laws governing public meetings. Meetings are covered by local media, but not televised. Public comments are allowed at scheduled meetings, and also can be provided by letters to the District. Operating procedures and practices, including budgets, personnel policies, fees and rates, capital improvements plans, and other documents are available for public review at the District s offices. The District s operating hours are 8:00 A.M. to 5:00 P.M. Monday through Friday. The District and its activities undergo significant public review procedures, including financial review by independent auditors. There are sufficient mechanisms in place to ensure that actions and operating procedures of the District are open and accessible to the public. The District maintains a website at where Board policies, District news, water and sewer rates, and other helpful information can be obtained. PLACER LAFCO MUNICIPAL SERVICE REVIEW

25 Tahoe City Public Utility District TCPUD covers 22 square miles and serves 15,000 permanent residents and up to 30,000 people during the peak summer season. The District has 7,210 connections nearly double the 3,725 water connections due to the many privately-owned water systems within the District s boundaries. The District s 25 flow sheds are served by a total of 20 pumping stations which deliver wastewater flow, via the trunk sewer system, to the regional treatment plant operated by Tahoe-Truckee Sanitation Agency (T-TSA). Table summarizes these facilities. TABLE TAHOE CITY PUD SEWER SYSTEM CHARACTERISTICS System Facilities Number of Connections 7,210 Length of Gravity Mains 130 miles. Length of Force Mains 5.7 miles Manholes 2,350 Main Pumping Stations 9 stations Satellite Pumping Stations 11 stations Asset Value $47 million Source: Sewer Master Plan, Infrastructure Needs and Deficiencies The following discussion highlights issues facing the District in continuing to provide wastewater collection services for residential and commercial customers. Information for this analysis is gathered through the District s Sewer Master Plan (2002), audited financial records and rates, and discussions with the District Manager. Issue #1: Wastewater Flow Capacity The Tahoe-Truckee Sanitation District MSR is the source of information about TCPUD s wastewater flows. Based on its MSR, North Tahoe and Tahoe City are credited with a maximum 7-day flow of 2.48 mgd, and peak hour flows of 5.8 mgd during the summer and 4.9 mgd during winter. Summer and winter wastewater flows average 1.2 mgd and 0.8 mgd, respectively based on information provided TTSA. The TCPUD 2002 Sewer Master Plan did not indicate areas where the lines had insufficient capacity or pressure to handle wastewater flows. The District has 1,649 parcels that could be developed, notwithstanding restrictions on parcel development by outside factors (e.g., the Tahoe Regional Planning Agency) and property owners (e.g., California Tahoe Conservancy and the USFS). Therefore, the District projects 7,605 customers and an average daily flow of 1.96 mgd during July/August. Given that the District can handle present wastewater flows, TCPUD indicates that adequate capacity will be available to accommodate average and peak-day flows at buildout. Sewage flow and infiltration/inflow (I/I) is critical to the design of sewer collection and transport systems. In 2001, the District s average I/I flow was estimated to be up to 40 mgd per month. The District has a preventive maintenance and repair plan in place to address I/I flow issues that has resulted in a 33 percent reduction in I/I. MUNICIPAL SERVICE REVIEW PLACER LAFCO

26 Issue #2: Capital Improvements Capital and recapitalization funding is one of the most critical issues facing sewer districts today. Infrastructure deteriorates over time and, without proper plans, will present a significant liability in the future. In 2003 dollars, the replacement value of District assets totals $46 million. The Sewer Master Plan recommends that TCPUD undertake a range of studies resulting in physical improvements totaling $3.8 million from 2003 through This total excludes long-term asset renewal funding recommended under the financial master plan, funding for major improvements to reduce risks associated with low-lying laterals or environmentally sensitive areas, and projects to be funded through the operating budget. Finally, the totals include $800,000 for the Grove Street Pump station replacement that will be funded by a State loan. Issue #3: Lake Tahoe Improvements In 1998, Congress directed the U.S. Army Corp of Engineers to evaluate options for remedying the deteriorating water quality of Lake Tahoe due to exfiltration from local sewer systems. A 10- year plan to restore the lake's water quality was adopted by the TRPA at an estimated cost of $900 million. Funding sources included the State of California ($275 million), Nevada ($82 million), federal government ($297 million), and local government and private sources. TCPUD projects cost $26.1 million of which $8.0 million was the highest priority needs (Table ). The federal government set aside these requirements as too costly to implement at this time. TABLE TAHOE CITY PUD TOP PRIORITY IMPROVEMENTS Facility Description Potential Action Plan First Cost Lateral A Gravity Line Conversion to low-pressure grinder pump $4,309,000 system for 40 parcels Laterals H and V Rehabilitate with CIPP 4,210 LF of gravity sewers or replace with relocation $913,000 Grove Street Pump Station Sunnyside, Rubicon, and Coast Guard Pump Stations Replace with new replacement pump Replace pumping equipment and controls and make other improvements $1,539,900 $748,300 Lake Terrace Gravity Line Rehabilitate w/cipp 1,980 LF of gravity sewer $528,300 Total $8,038,500 Source: Lake Tahoe Basin Framework Study Wastewater Collection System Overflow/Release Reduction Evaluation, PLACER LAFCO MUNICIPAL SERVICE REVIEW

27 2. Management Efficiencies/Cost Avoidance/Facilities Sharing TCPUD is an independent special district, and is the oldest local government in the Tahoe Basin. It was formed in 1938 under the State of California s Public Utility District Act to provide public water service to the community. The Tahoe City Public Utility District provides safe, reliable, and potable water to a diverse geographical area located along the north and west shores of Lake Tahoe and portions of the Truckee River Corridor. The District s mission statement is as follows: to serve people and their environment. We are a creation and extension of the people of the community. Within the scope of our enabling legislation, we seek to accomplish what cannot be done effectively on an individual basis. It is our responsibility to provide water and sewer service for reasons of health and safety, and to provide parks and recreation for enhancement of quality of life. We are obligated to serve the public interest throughout our functions. We strive for public satisfaction with the services we offer. We are compelled to provide quality public services utilizing prudent fiscal practices. We are committed to the efficient and effective operations for all District functions. The District consists of a five-person Board of Directors, which directs the General Manager. The General Manager oversees 38 full-time employees and 20 seasonal employees working in four departments: General and Administrative, Public Works (includes Parks) and Recreation. The District utilizes contractors on demand for certain projects. No management audits in water and sewer operations have been conducted in recent years, although staffing appears appropriate. FIGURE TAHOE CITY PUD ORGANIZATION CHART Board of Directors (5) General Manager District Engineer Assistant GM Parks and Recreation Public Works Construction Manager Accounting With respect to planning tools, the District also has audited financial statements, a Capital Improvement Plan, a Master Water Plan, a Master Sewer Plan, Urban Water Management Plan, and Disaster Plan. These plans are periodically updated to ensure that Districts operations are run in an efficient manner and that present and future service needs are adequately met. Moreover, TCPUD also maintains mutual aid agreements and contingency plans with other nearby districts, providing an additional layer of security for its customers. MUNICIPAL SERVICE REVIEW PLACER LAFCO

28 TCPUD performs water and sewer services for its service area. To optimize operational efficiency and maintain the lowest possible service costs, the District has implemented various cost avoidance and facility sharing projects, some of which are described below. Joint Agency Practices. TCPUD is a member of the ACWA Joint Powers Insurance Authority which is a common risk management program covering general liability, property, workers compensation and disaster insurance. The District also belongs to the Public Employees Retirement System for health insurance and retirement. Mutual aid agreements with neighboring districts are in place. Tahoe Conservancy continues to give grants to TCPUD for projects that increase access to public facilities and lakefront as well as improve park facilities. Finally, the District works through the State Department of General Services for vehicle procurement. Contract Services. TCPUD will contract out large projects and snow removal services in remote areas of the District. TCPUD contracts out sewer line televising and leak detection for water mains. TCPUD operates the beaches and many park and recreational facilities for Placer County and the State of California, and bike trails for Cal-Trans. The District contract outs janitorial services for administrative buildings and uses community service workers through the Sheriff office for supplemental maintenance labor. Utility billing statements are also contracted out along with other administrative functions. Technology/Management. TCPUD has recently upgraded to Wonderware SCADA software and is in the process of transitioning to the use of Moscad-L telemetry equipment to ensure reliability and standardization. The District also takes advantage of the latest advances in GIS and Auto CAD software to enhance operations. District is utilizing Sussex workload management system. TCPUD is currently investigating installing meters on residential services for radio read. The District utilizes seasonal employees to maintain certain park facilities in the summer, TCPUD purchased Springbrook software along with SVPSD and NTPUD. The District is investigating the use of water metering to reduce unaccounted for loss of water. Facility Sharing. The District currently provides water via intertie to supply the Dollar Cove area in NTPUD. TCPUD also has arranged with TTUSD for the joint use of fields, gymnasiums, and meetings rooms. A joint-use fuel tank is shared with NTFPD. TCPUD currently has land and facilities at their offices that may be consolidated and better utilized in conjunction with other agencies. The District has had preliminary discussions with both Placer County Facilities Department and North Tahoe Fire Protection District. Water Quality Violations. District personnel indicate that TCPUD is not under an order by the Lahontan Regional Water Quality Control Board for violations of wastewater discharge. PLACER LAFCO MUNICIPAL SERVICE REVIEW

29 3. Financing and Rate Restructuring This section evaluates the financing of operations and improvements for Tahoe City PUD. Information on District financing is derived from audited financial statements from fiscal year December 31, The revenue and expenses statement are derived from actual budgets of the District, whereas the assets and liabilities statement is a consolidated financial statement that follows the Government Accounting Standards Board (GASB) method of Accrual accounting. Revenues and Expenses. The District s operating revenues and expenses for year 2002 are summarized in Table District operating revenues totaled $1.5 million and include water service charges and connection fees. Nonoperating revenues total $30,000 and consist of interest earned on investments and property taxes. Operating expenses were $1.5 million for 2002, and include direct operating and administration and general. Depreciation was $714,000. Net income for the year recorded at a $654,000 loss. Financing Constraints. Two upcoming mandates may impact District finances. The TABLE TAHOE CITY PUD WASTEWATER ENTERPRISE Revenue Profile Amount Service Charges $1,527,802 Non Operating Revenue $30,000 All Other Revenue $37,500 Expense Profile - Direct Operating $875,130 - Admin. and General $659,979 - Depreciation $714,774 Net Income ($654,581) Source: District Operating Budget, 2002 Framework Study identified $26.1 million in improvements to improve water quality of Lake Tahoe. New EPA requirements for a Capacity, Management, Operations, and Maintenance Program (CMOM) will require special districts operating wastewater collection systems to develop procedures to improve system capacity, perform long-term planning for investments in infrastructure, develop an overflow emergency response plan, develop better documentation and asset management procedures. No cost estimate is available at this time. District Assets and Liabilities. Current assets totaled $2.4 million of that $3.3 million are from investments (see Table ). Restricted assets total $150,000. With respect to property plant and equipment, the District s held $46.6 million in fixed assets plus $0.5 million in assets under construction. With accumulated depreciation of $27.7 million (59 percent of fixed assets), the District owned $19.4 million in net property, plant and equipment of which land comprises only a fraction of the value. Debt service and reserves are held in separate accounts not included within this fund. TABLE TAHOE CITY PUD SEWER/WATER ASSETS AND LIABILITIES Current and Restricted Assets Receivables ($1,088,871) Investments $3,348,724 Restricted Assets $150,499 Property, Plant, Equipment Fixed Assets $46,554,911 Construction in Progress $552,573 Accumulated Depreciation $27,701,524 Net Property, Plant, Equip. ($19,405,960) Total Assets $21,817,412 Source: District Audited Financial Statements, 2002 MUNICIPAL SERVICE REVIEW PLACER LAFCO

30 Long Term Debt and Investments. Long term debt (e.g., bonds, certificates of participation, etc.) are key methods used by the District to finance capital improvements. According to the District audited financial statements, long-term debt totaled $5.2 million as of 2002 due to various state loans and Certificates of participation with variable interest rates of 3.5 to 6.3 percent, due from Debt service payments total about $1.5 million annually (Table ). The District has established a policy for its investments, establishing safety, liquidity and yield as three key goals. TABLE TAHOE CITY PUD CASH REQUIREMENTS FOR DEBT Due June 30, Total Debt Service in 2003 $1,506,772 in 2004 $1,519,482 in 2005 $410,489 in 2006 $408,052 Later Years $2,771,845 Total Debt Payments $6,616,640 Source: District Audited Financial Statements, 2002 Asset Replacement and Maintenance. The District s physical assets are substantial: sewer assets are valued at approximately $46 million and water assets are valued at approximately $35.8 million as of Given the magnitude of these assets, and historical low amount of financial reserves, the District is committed to increasing reserves to fund capital/recapitalization needs. The District has currently adopted a midway approach designed to pay-as-you-go (as reflected in sewer rates or reserves) coupled with debt financing. TCPUD currently sets aside retained earnings for such recapitalization or Board designated purposes. Funding for these reserves is drawn from the revenue stream, primarily from property taxes. The enterprise capital reserve consists of $3.0 million as detailed below are designated by the Board for long-term capital projects (e.g., acquisition and/or construction of infrastructure) to increase capacity for service. The District has five reserves for the water and sewer fund. Longterm capital replacement funds total $800,000. Designated funds for cash flow requirements total $250,000. Reserves for emergencies fund total $500,000. The reserve for COP debt service totals $85,000, other reserves for debt service totals $617,000. Finally, the District maintains an unappropriated fund of $796,000. Opportunities for Rate Restructuring. The District s Financial Master Plan indicates that new revenues will be needed to fund capital replacements in the near future. The District is currently pursuing a middle-ground financing strategy which implements new sewer charges (pay-as-yougo philosophy) plus the issuance of bonds at strategic points to pay for larger capital projects. Currently, residential units have a $1,000 connection charge and a $ annual charge. Temporary discharges are $0.81 per 1,000 gallons. 4. Government Structure The Tahoe City Public Utility District (TCPUD) is located adjacent to NTPUD. The proximity of both Districts and the successful consolidation of the North Shore s two Fire Districts have raised the question of the desirability of district consolidation and reorganization. In 1994, a Consolidation Feasibility Study examined pros and cons of consolidating TCPUD s and PLACER LAFCO MUNICIPAL SERVICE REVIEW

31 NTPUD s water, sewer, and parks operations. In 1994, the Boards for both districts appointed a Citizens Advisory Committee to review findings. In short, the Committee recommended consolidation of TCPUD and NTPUD based on nine principal findings. The Committee found that consolidation of the Districts parks and recreation functions was the easiest to implement, particularly given interdistrict cooperation. Consolidation of the Districts water operations faced the greatest barriers, although not deemed prohibitive. With respect to sewer services, the Committee found that the two Districts have similar and compatible infrastructure in terms of the age, overall condition, and methodology of maintenance of their systems.both districts collect sewer effluent. through a common piping system which meets on Dollar Hill and then in piped through a common system to the T-TSA. In doing so, both Districts comply with essentially the same engineering standards, regulations, discharge requirements, and have equally commendable records of performance.accordingly, the Committee finds that in the area of sewer service, the consolidation will not be problematic and in fact is likely further to enhance the existing levels of service.(page 20). After initial reorganization costs, the Committee estimated a conservative savings of approximately $500,000 annually as a result of consolidating upper management positions, a 13 percent workforce reduction, and implementing other cost-cutting strategies. Assuming a 7,000 customer base, each customer would save $70 annually on water, sewer, and parks services. Although the Committee cited potential savings, it is clear that agreement on the magnitude of savings and potential benefits of consolidation were heavily disputed by parties in both districts. Eventually, the NTPUD and TCPUD consolidation proposal was defeated at the ballot box. Should another feasibility study be conducted, the feasibility study should also assess whether workforce reductions, cost avoidance opportunities, and service improvements could be achieved independent of consolidation. Retaining an experienced management consultant could assist in examining the feasibility of district consolidation through a more rigorous cost-benefit analysis. 5. Local Accountability and Governance The District operates under the leadership of an elected five-member Board of Directors, with a General Manager providing daily oversight and management of staff and resources. The District holds regularly scheduled meetings on the third Friday of each month, at 8:30 p.m. District staff indicates that all meetings are held in compliance with the Brown Act and all laws governing public meetings. Meetings are typically covered by local media sources, although no televised broadcasts are made. Also, press releases are occasionally made. Public comments are allowed at scheduled meetings, and also can be provided by letters to the District. Operating procedures and practices, including budgets, personnel policies, fees and rates, capital improvements plans, and other documents are available for public review at the MUNICIPAL SERVICE REVIEW PLACER LAFCO

32 District s offices. The District s operating hours are 8:00 A.M. to 4:30 P.M. Monday through Friday. The District also maintains a website. The District and its activities undergo public review procedures, including financial review by independent auditors. There are sufficient mechanisms in place to ensure that actions and operating procedures of the District are open and accessible to the public. The District also maintains a website at which is under development. PLACER LAFCO MUNICIPAL SERVICE REVIEW

33 Northstar Community Services District The Northstar community covers approximately 1,000 acres and currently serves 1,300 residences (approximately 650 single-family residences and 650 condominiums), a commercial area, golf course and ski slopes. Today, NCSD serves approximately 3,000 residents and a seasonal population of 9,000. District assets are summarized in Table The District s sewer distribution system is comprised of approximately 27 miles of gravity mains, 6.5 miles of force mains, 420 manholes, and 13 total pump stations. Total replacement value of the sewer system as of 2003 is estimated at $19 million. TABLE NORTHSTAR CSD SEWER SYSTEM CHARACTERISTICS System Facilities Number of Connections 1350 Length of Gravity Mains 27 miles Length of Force Mains 6.5 miles Manholes 420 Main Pumping Stations 11 stations Satellite Pumping Stations 1 stations Asset Value $19 million Source: Northstar Utilities Staff, Infrastructure Needs and Deficiencies The following discussion highlights issues facing NCSD in continuing to provide wastewater collection services. Information for the following analysis is gathered from audited financial records and rate schedules, and the District Manager. Issue #1: Wastewater Flow Capacity Wastewater flows from the District are derived from a recently completed municipal service review for the Tahoe-Truckee Sanitation District (T-TSA). Shown in Table , Northstar and TSD combine for a maximum 7-day flow of 2.37 mgd, peak hour flows of 3.5 mgd during summer, and peak hour flow of 4.0 mgd during winter, increasing nearly 50 percent by NCSD anticipates a planned capacity of 1.3 to 1.7 mgd. NCSD s sewer system can carry 1.0 to 3.7 mgd; however, restrictions in the size of downstream pipes prohibit flows much in excess of 2.1 mgd. Still, the District s sewer infrastructure was originally designed with a flow capacity of 2.0 mgd (well in excess of current usage), thus no shortage in capacity is projected. TABLE NORTHSTAR CSD AND TRUCKEE SANITARY DISTRICT CURRENT AND FUTURE WASTEWATER FLOWS Timeframe Service Population Peak-Hour Flow Summer Winter Summer Winter Current ,500 39, Projected ,500 54, Source: Nevada County LAFCo Eastern County Wastewater MSR, MUNICIPAL SERVICE REVIEW PLACER LAFCO

34 Although the District s sewage collection and transport system has excess capacity, the Truckee River Interceptor which carries discharge from five sewer districts to T-TSA, has at times operated at or above design capacity due to high inflow and infiltration flows during wet years. The District has a preventive maintenance plan in place to address I/I flow issues. NCSD s ability to accommodate sewer flows at buildout is regulated by the Trimont Agreement. The Trimont Agreement calls for TSD to collect and transport wastewater generated from Trimont land and Northstar CSD to the T-TSA regional facility, provided T-TSA has available capacity. Such services to be provided by TSD to NCSD are on a first-come-first-serve basis for applicants for service within NCSD or TSD boundaries. However, disputes remain between TSD and NCSD regarding the geographic area in which future wastewater collection service is provided, expansion of NCSD s Sphere of Influence, and inclusion of NCSD territory in TTSA. Issue #2: Capital Improvements Capital and recapitalization funding is one of the most critical issues facing water districts today. The District s audited financial statements show that the sewer plant and equipment has been depreciated 65 percent of its original value. Recognizing the need to maintain its infrastructure, NCSD manages a capital program to replace aging components of its sewer system, vehicles and equipment. Replacement costs for District water and sewer assets total $18.9 million if all assets are replaced today and $30.5 million if replaced when their economic useful life expires. To provide adequate funding to maintain water and sewer infrastructure, the District has established capital and replacement funds individually for its water system and sewer system. As of 2003, the District has set aside $1.45 million, including $861,000 for water improvements and $592,000 for sewer improvements. In concert with the District s 15-year capital improvement plan and annual water and sewer rates, the District s reserves are adjusted every year to ensure that sufficient revenues are available to meet expected expenditures Northstar CSD does not have a sewer system master plan nor has a long-range plan for how to accommodate future wastewater needs. New development is expected to fully provide for needed infrastructure as part of a development agreement or payment of impact fees. Although State law clearly allows the District to charge new developers for sewer improvements, the District should have in place a sewer system master plan to estimate the future impact, address existing service issues and capital needs, as well as comply with upcoming CMOM regulations. 2. Management Efficiencies/Cost Avoidance/Facilities Sharing Northstar CSD is an independent special district formed in 1965 under the State of California s Public Utility Act (Government Code 66000) to provide service to the Northstar community. The Northstar CSD s purpose is to: provide water service, consistent with standards set for public health, safety, and the environment in an efficient and accountable manner. This is to be done by PLACER LAFCO MUNICIPAL SERVICE REVIEW

35 taking leadership in providing, maintaining, and advocating high-quality, and financially sound community services. The District consists of a five-member Board of Directors who oversee the functions of the General Manager. District operations are organized into three divisions operations/utilities (which includes water, sewer, snow removal, road maintenance, and trails), the fire department, and administration. The District maintains a total of 19 full-time employees of which seven work in the utilities division, three in administration, and the remainder in the fire department. FIGURE NORTHSTAR CSD ORGANIZATION CHART Board of Directors General Manager Assistant General Manager Operations/Utilities Fire Department Administration With respect to planning tools, the District has audited financial statements, a master water plan, and a capital/recapitalization plan. These plans are periodically updated to ensure that District operations are run in an efficient manner and that present and future service needs are adequately met. Moreover, the Northstar CSD also maintains mutual aid agreements and contingency plans with other nearby districts. However, the District does not have an emergency operations plan. The District is updating its 1998 Strategic Plan to guide future priorities through buildout. As operations change over time, periodic management audits can serve as an invaluable tool for ensuring that adequate staffing is available to meet present needs. Since a management study has not been conducted in recent years, the adequacy of staffing levels cannot be determined. Northstar CSD has a relatively lean operations and maintenance department which is responsible for performing water and sewer services, snow removal, road work, and trail management. To optimize efficiency and maintain the lowest possible service costs, the District has implemented the following programs. Joint Agency Practices. Northstar is a member of two joint-power authorities for the operation of a common risk management and insurance program. The programs cover workers compensation, property, general and automobile liability, and automobile physical damage insurance. The District is a member of the public employee retirement system. Because of recent increases in general liability insurance rates for lower coverage, the District executed a new contract with the Special Districts Risk Management Authority to help control liability costs. MUNICIPAL SERVICE REVIEW PLACER LAFCO

36 Contract Services. Placer County currently contracts out street repair and rehabilitation services and snow removal services to NCSD. Road maintenance and sewer operations are complementary in that sewer main repairs often require trenching and roadway reconstruction. The District benefits from using the same heavy equipment, more fully utilizing its maintenance yard, reduced travel costs, and more fully utilizing employees. On the other hand, the District also contracts out slurry sealing, payroll, and accounting functions at an affordable price. Technology/Management. Northstar CSD utilizes a SCADA system to monitor and regulate its water infrastructure (e.g., storage, pumps, and metering stations) and sewer system. The District s employees are highly skilled and cross trained in a variety of disciplines, allowing for more reliable service. The District adheres to specific purchasing policies and practices to ensure products are provided in the most cost-effective manner. The District is implementing new GIS applications for its water and sewer services. Duplicate Service Boundaries. Presently, Northstar does not have duplicate service boundaries with other wastewater collection TABLE NORTHSTAR CSD WASTEWATER ENTERPRISE FUND Revenue and Expenses Amount Revenue Profile Sewer Charges $1,013,573 Connection Fees $8,953 Non Operating Revenue $14,237 Expense Profile - Direct Operating - Administration and General - Depreciation $97,613 Net Income ($57,527) Source: District Audited Financial Statements, providers. However, Northstar CSD and Truckee Sanitary District have applied to annex the same territory east of Northstar. In addition, both Districts have existing disagreements about the Trimont Litigation and its impact upon providing wastewater services in Northstar and the disputed SOI. Although these issues do not necessary represent duplication in current service boundaries, resolution presents a cost avoidance option. Water Quality Violations. District personnel indicate that Northstar is not under an order by the Lahontan Regional Water Quality Control Board for violations of wastewater discharge. 3. Financing and Rate Restructuring This section evaluates the factors affecting the operations and infrastructure improvements for Northstar. Information on District financing is derived from audited financial statements for the fiscal year June 30, These statements are a consolidated series of financial statements that follow the Government Accounting Standards Board (GASB) method of Accrual accounting. Revenues and Expenses. The District s operating revenues and expenses for year 2002 are shown in Table District operating revenues totaled $1,022,830 and include sewer services and other revenues. Sewer revenue consists of sewer rates and connection fees. Property taxes are not used to fund operations. Non-operating revenues consist of interest PLACER LAFCO MUNICIPAL SERVICE REVIEW

37 income. Operating expenses were $991,631 and include direct operating, administration and general. Depreciation totaled $97,613. Net income for 2002 recorded a $57,000 loss. Financing Constraints. Several factors will affect District operations and finances in upcoming years. New EPA requirements for a Capacity, Management, Operations, and Maintenance program (CMOM) will require special districts operating wastewater collection systems to develop procedures to improve system capacity, perform long-term planning for investments in infrastructure, develop an overflow emergency response plan, develop better documentation and asset management procedures, and share this information with stakeholders more effectively. No cost estimate is available. District Assets and Liabilities. District balance sheet information provides a summary of assets and liabilities of the NCSD s wastewater activities (see Table ). Current assets for 2002 totaled approximately $532,000, which is comprised primarily of cash. Designated assets totaled $558,000. With respect to property plant and equipment, the District held $2.6 million in fixed assets. With accumulated depreciation of $1.5 million (59 percent of fixed assets), the District owned $1.1 million in property, plant, and equipment. Long Term Debt and Investments. The District does not hold long-term debt, such as bonds or certificates of participation. All capital improvements are financed according to a pay-as-yougo philosophy. As a result, the District does not have a bond rating. The only long-term debt that the District holds is for compensated absences. This amount was $16,000 for June 30, No debt schedule is utilized for the District, since compensated absences may be called upon at any time. However, this year the District only retired $3,600 in absences district wide. Asset Maintenance and Replacement. NCSD has set aside cash or designated assets for future major repairs and replacements. These funds are not legally restricted but, rather, are a result of management s desire to defray the costs of replacing certain assets as they wear out or become obsolete. The District has also segregated cash and pooled cash investment into two categories: designated and undesignated. Designated cash represents funds reserved for future major repairs and replacements of the District s equipment and facilities and for District improvements. NCSD sets aside funds for asset maintenance and replacement on an annual basis. For 2003, the District has set aside a total of $385,000 for water capital and $476,000 for water systems on an annual basis for replacement of critical water facilities. The District also set aside $204,000 for capital needs and $388,000 for sewer replacement needs in These funds are TABLE NORTHSTAR CSD WASTEWATER BALANCE SHEET Balance Sheet Items Amount Current and Restricted Assets Cash and Cash equivalent $427,000 Accounts Receivable $104,000 Designated Assets $558,000 Property, Plant, Equipment Fixed Assets $2,612,000 Accumulated Depreciation ($1,535,000) Net Property, Plant, Equipment $1,077,000 Total Assets $2,167,000 Source: District Audited Financial Statements, MUNICIPAL SERVICE REVIEW PLACER LAFCO

38 fluid and are adjusted each year, in tandem with rate adjustments, to ensure that the District can adequately address asset maintenance and replacement needs. Opportunities for Rate Restructuring. The District s current rates reflect a two-tier structure. Approximately $217 annually is charged by Northstar to transport sewage to the regional treatment facility. An additional $290 is charged by TTSA for wastewater treatment. It is important to note that Northstar s fees appear higher than other districts; however, other District; with lower charges are heavily subsidized by property taxes which results in substantially lower rates, but not lower costs of service. The District charges a one-time water connection fee based on meter size for each new customer as a means to equitably distribute the asset value of the water system to new users. As of 2003, the District charges $896 per residence to hookup to the sewer system. However, a comprehensive rate analysis has not been recently done. As a result, it is unclear whether water rates or connection fees are recovering the full costs of providing services to customers. 4. Government Structure In Section of the Cortese-Knox-Hertzberg Act, the Legislature finds and declares that a single multi-purpose governmental agency is accountable for community service needs and financial resources and therefore may be the best mechanism for establishing community service priorities, especially in rural communities. In addition, responsibility for services should be given to the agency or agencies most capable of providing government services, regardless of whether the agency is a single-purpose, multi-purpose, or several agencies. Northstar CSD is a highly integrated operation consisting of water and sewer operations. The operation is generally well funded and operated. Northstar has capacity to expand operations should they assume control over their Sphere of Influence as well as the areas immediately east of the District. No financial or organizational constraints limit the District s expansion ability. Northstar could be acquired by TSD, but that would create duplicate service boundaries, create a distance administrating agency, and would most likely be less responsive to local needs. Within the planning area, the Truckee Sanitary District provides wastewater collection services to a portion of the subdivision lots south of the Town of Truckee. Northstar CSD provides wastewater collection services to Northstar-at-Tahoe Resort. NCSD currently accesses the T- TSA facility through a contract with TSD, a contract which has long been disputed. However, Northstar successfully petitioned the T-TSA Board for direct annexation of its area to T-TSA. Under this annexation, NCSD would still operate and maintain its wastewater collection system. However, NCSD owns a pipeline extending across the Martis Valley from the current Schaffer Mill Road. This pipeline connects with a pipeline, in which NCSD owns all capacity right except for 350,000 gpd, which extends from Schaffer Mill Road to the main interceptor line of T-TSA along the Truckee River. These lines are more than adequate to serve the planned build out of PLACER LAFCO MUNICIPAL SERVICE REVIEW

39 Northstar-at-Tahoe and, with reasonable improvements, should accommodate planned sewage needs from the eastern portion of Martis Valley to the T-TSA facility. As noted later, if TSD could merge with the Town of Truckee or become a subsidiary district, the Placer County portion of TSD would need to become a separate entity or annexed to Northstar, or Truckee would need to secure LAFCO approval to serve areas outside corporate limits. The Town would need to acquire TSD s wastewater collection system and a decision would have to be made regarding ownership and operation of the collection system in the unincorporated areas. Northstar CSD would likely assume service areas in Placer County. 5. Local Accountability and Governance The District operates under the leadership of an elected five-member Board of Directors, with a General Manager providing daily oversight and management of staff and resources. The District holds regularly scheduled meetings on the first Tuesday of each month, at 7:30 p.m. District staff indicates that all meetings are held in compliance with the Brown Act and all laws governing public meetings. Meetings are covered by local media sources. Public comments are allowed at scheduled meetings, and can be provided by letters. Operating procedures and practices, including budgets, personnel policies, fees and rates, capital improvements plans, and other documents are available for public review at the District s offices. The District s operating hours are 8:00 A.M. to 5:00 P.M. Monday through Friday. The District and its activities undergo public review procedures, including financial review by independent auditors. Sufficient mechanisms ensure that actions and operating procedures of the District are open and accessible to the public. The District maintains a website at MUNICIPAL SERVICE REVIEW PLACER LAFCO

40 Truckee Sanitary District The Truckee Sanitary District (TSD) encompasses approximately 39 square miles in Nevada and Placer counties, of which 11 miles are in Placer County. TSD serves a peak day population of 30,500. TSD operates and maintains an expansive wastewater collection system serving 8,800 equivalent dwelling units and 770 commercial accounts. TSD s collection system consists of 300 miles of gravity pipelines, 3,287 manholes, 36 lift stations, and other assets valued at $49 million. TSD also transports wastewater flow from Northstar to T-TSA. Table summarizes TSD s wastewater system. TABLE TRUCKEE SANITARY DISTRICT SEWER SYSTEM CHARACTERISTICS System Facilities Number of Connections 8,792 residential Length of Gravity Mains 300 miles Length of Force Mains 9 miles Manholes 3,720 Main Lift Stations 10 stations Small Lift Stations 26 stations Asset Value $49 million Source: Nevada County LAFCo Eastern County Wastewater MSR, Infrastructure Needs and Deficiencies The following discussion highlights issues facing TSD in continuing to provide wastewater collection services. Information for the following analysis is gathered from audited financial statements, TSD s Wastewater Master Plan, Nevada County MSR, and other sources. Issue #1: Wastewater Flow Capacity Wastewater flows from the District are derived from a recently completed municipal service review for the Tahoe-Truckee Sanitation District (T-TSA). Shown in Table , TSD and Northstar combine for a maximum 7-day flow of 2.37 mgd, peak hour flows of 3.5 mgd during summer, and peak hour flow of 4.0 mgd during winter, increasing nearly 50 percent by According to TSD s Placer County Sphere of Influence Study (2002) and District Wastewater Master Plan (2000), TSD has adequate capacity to accommodate wastewater flows through Although the Nevada County MSR (2003) indicates that TSD can accommodate future wastewater flows, the MSR also recognizes the difficulty of assessing population growth trends. Nevada County, Placer County, and Truckee each have general plans that project different population growth scenarios. The Martis Valley, which straddles the Placer County and Nevada County lines, is also undergoing significant development pressures. Due to the multiple agencies involved, obtaining consistency in population projections and service demands is problematic. PLACER LAFCO MUNICIPAL SERVICE REVIEW

41 TABLE TRUCKEE SANITARY DISTRICT AND NORTHSTAR CSD CURRENT AND FUTURE WASTEWATER FLOWS Timeframe Service Population Peak-Hour Flow Summer Winter Summer Winter Current ,500 39, Projected ,500 54, Source: Nevada County LAFCo Eastern County Wastewater MSR, Considerable controversy exists over the disposition of sanitary district boundaries which affect wastewater flow projections and planning efforts for Truckee Sanitary District and Northstar. Northstar s wastewater flows are currently counted under TSD projections. However, should Northstar be annexed by T-TSA, Northstar could ultimately bypass TSD s wastewater lines. Furthermore, Northstar and TSD are claiming duplicate Sphere of Influence areas. The final disposition of the Sphere of Influence will also impact the wastewater flows for TSD. Issue #2: Capital Improvements Capital and recapitalization funding is one of the most critical issues facing water districts today. In 2002, TSD adopted Resolution No reconsidering and modifying the Wastewater Collection Master Plan. TSD anticipates expenditures of $2.5 million for capital improvements for increased capacity and new connections, $2.5 million for repairs/replacements/improvements, and $352,000 for miscellaneous projects. Major projects are shown in Table TABLE TRUCKEE SANITARY DISTRICT AND NORTHSTAR CSD CAPITAL IMPROVEMENTS AND COSTS Sewage Collection Facility Description Amount Olympic Heights Design and install wastewater collection system $1,440,000 Lift Station 1-B Relocate Donner Creek outfall $1,440,000 Prosser Creek Annexation Annexation of School and State inspection station $400,000 Vehicle and Equipment Various replacements $451,300 Highway 267 Bypass Bridge Install main pipeline on bridge $240,000 Source: TSD Projected Capital Facility Projects, Management Efficiencies/Cost Avoidance/Facilities Sharing Truckee Sanitary District (TSD) is one of the oldest sanitary districts, formed in 1906 under the State of California statutes relative to the formation of a sanitary district. TSD was subsequently MUNICIPAL SERVICE REVIEW PLACER LAFCO

42 reorganized under the 1923 Sanitary Act. TSD still operates under this act and is governed by the rules and regulations in the Health and Safety Code of California. The District consists of a five-member Board of Directors elected at large from within the District s boundaries. The Board oversees the functions of the General Manager. District operations are organized into three divisions Civil and Mechanical Engineering, Operations and Maintenance, and Administration. The District maintains a full-time staff of 35 employees. Figure provides an abbreviated organizational structure. FIGURE TRUCKEE SANITARY DISTRICT ORGANIZATION CHART Board of Directors General Manager Operations/Maintenance Engineering Administration The District has audited financial statements, a master sewer plan, a preventive maintenance plan, and capital/recapitalization plan. These plans are periodically updated to ensure that District operations are run in an efficient manner and that present and future service needs are adequately met. Moreover, TSD has an emergency operations plan and maintains mutual aid agreements and contingency plans with other nearby districts. Personnel Training. TSD personnel are highly qualified and receive adequate training. District personnel receive training consistent with the California Water Environment Association guidelines for wastewater collection system workers. All TSD maintenance personnel hold a California Water pollution Control Association Collection System Maintenance Grade II certification of higher. Many staff are cross-trained to perform most duties in their respective departments, allowing for consistency in service and flexibility. Infrastructure Maintenance and Repair. Deferred maintenance is one of the greatest unfunded liabilities facing wastewater districts today, eventually contributing to premature and costly infrastructure repair and replacement expenditures. TSD has an extensive preventive maintenance program. TSD conducts regularly scheduled mainline testing, inspection, cleaning, and repairs. As a result, the District s wastewater collection system remains in good operating condition and is expected to function properly through the full service life of 50 to 100 years. Infiltration and Inflow. Sewage flow and infiltration/inflow (I/I) is critical to the design of sewer collection and transport systems. Although the District s sewage collection and transport system has excess of capacity, the Truckee River Interceptor which carries discharge to T-TSA has at times operated at or above design capacity due to high I/I flows during wet years. PLACER LAFCO MUNICIPAL SERVICE REVIEW

43 Excessive flows will result in higher maintenance/operations costs as well as higher T-TSA fees. TSD has a maintenance and repair program in place to address I/I flow issues. Management/Technology. The District has 25 computer work stations or servers and software applications. A Computer Aided Drawing and Drafting system (CADD) has been acquired and is in use. A Mapping and Geographical Information System (GIS) is being developed to aid in upgrading and/or replacing current TSD maps. The CADD system will also aid in designing capital improvement projects. In conjunction with CADD and GIS, TSD has purchased computerized and digitized base maps of the Truckee area. The District is nearing completion of a 1½-year project implementing a SCADA system at 56 lift station and metering sites that monitor and control wastewater flow via phone and radio to a central PC SCADA master. Professional Recognition. In 1997 and again in 2002, TSD won the California Water Environment Association Best of the Best Collection System of the Year Award for medium sized districts (250 to 500 miles of pipeline) at the CWEA Statewide Annual Awards Program. Judging includes regulatory compliance, accomplishments, preventive maintenance, safety, training programs, presentation, emergency procedures, and administrative procedures. The CWEA has more than 500 agencies and businesses involved in wastewater collection and water reclamation throughout California. Facility Sharing Opportunities. During the 1990s, the District constructed several facilities. TSD completed a new 8,600 square foot Administration Building in 1992, a 9,600 square foot Vehicle Maintenance Facility in 1993, and a 9,800-square foot Vehicle Storage Facility in TSD recently completed a 9,100 square foot, hydronically heated Field Operations Building. Although these facilities are not shared, TSD is currently leasing its property to the Truckee Donner Parks and Recreation Department for soccer and baseball fields. 3. Financing and Rate Restructuring This section evaluates the financing of operations and infrastructure improvements for Truckee Sanitary District. District financing is derived from audited financial statements from fiscal year June 30, These statements are a consolidated series of financial statements that follow the Government Accounting Standards Board method of Accrual accounting. Revenues and Expenses. District operating revenues and expenses for 2002 are shown in Table District services charges and fees comprise the major revenue source, accounting for $2.2 million. Property taxes comprise the second largest revenue source at $2.1 million. TABLE TRUCKEE SANITARY DISTRICT WASTEWATER ENTERPRISE FUND Revenue Profile Amount Service Charges and Fees $2,311,741 Property Taxes $2,066,972 Contributed Capital $654,384 All Other $447,734 Expense Profile Operations and Maintenance $1,834,097 Administration and General $1,529,472 Depreciation $1,168,299 Non-Operating Expenses $126,547 Net Income $822,416 Source: District Audited Financial Statements, MUNICIPAL SERVICE REVIEW PLACER LAFCO

44 Operating expenses totaled $3.3 million for 2002, and included direct operating and administration and general. Depreciation recorded $1.1 million in Nonetheless, TSD recorded a net positive income for the year of 2002 totaling $822,000. Financing Constraints. New EPA requirements for a Capacity, Management, Operations, and Maintenance program (CMOM) will require special districts operating wastewater collection systems to develop procedures to improve system capacity, perform long-term planning for investments in infrastructure, develop an overflow emergency response plan, and develop better documentation and asset management procedures. No cost estimate is available at this time. Assets and Liabilities. As summarized in Table , current assets for 2002 totaled $794,000. The District also holds $9.1 million in restricted assets. With respect to property plant and equipment, the District s held $49.3 million in fixed assets which includes collection and treatment facilities, administrative facilities, construction in progress, and land. With accumulated depreciation of $16.7 million (38 percent of total assets), the District owned $32.6 million in net property, plant and equipment. Total assets were $43 million in TABLE TRUCKEE SANITARY DISTRICT WASTEWATER BALANCE SHEET Current & Restricted Assets Current Assets $793,558 Other Sierra Meadows $562,634 Restricted Assets $9,176,960 Property, Plant, Equipment Fixed Assets $49,303,867 Accumulated Depreciation ($16,725,133) Net Property, Plant & Equip. $32,578,734 Total Assets $43,111,886 Source: District Audited Financial Statements, Long Term Debt and Investments. Although the District has $741,000 recorded for long-term liabilities, this amount held in long-term debt has an associated account in restricted assets to pay for this debt. The account is a trust fund for the Districts 1-5 Maintenance Funds. No annual payments or interest are being paid on this account. Since the District does not have debt, no bond rating has been issued by Standard and Poor s. The District is amassing a large reserve fund which will likely protect the District from issuing future debt instruments. Asset Replacement and Maintenance. The TSD Board of Directors has set a goal to acquire a Reserve Fund equal to ten percent of TSD s replacement value of all buildings, property, pipelines, lift stations, equipment, and vehicles (total replacement cost). These monies would be used as an emergency fund in the event of unforeseen or catastrophic failure/loss of TSD facilities, including major system damage resulting from seismic events. Currently, the reserve funds consist of $18.9 million allocated as follows: $177,000 for the Martis Valley Interceptor maintenance, $8.0 million for major improvements, $175,000 for capital reserve, $737,000 for Sewer Assessment Districts 1 thru 5, and $10 million unreserved. Opportunities for Rate Restructuring. As of 2002, the District charges a single-family residence $174 annually for basic wastewater services plus either a monthly user fee charge of $14.50 per unit for residences which contribute a property tax assessment and $19.00 for residences that do not have a special assessment. For new construction, a single-family PLACER LAFCO MUNICIPAL SERVICE REVIEW

45 residence is also assessed a one time connection fee of $750. Fees have not been updated in many years and thus the District could benefit from a service cost analyses to determine whether rates are recovering the costs of providing service. Commercial rates vary significantly. 4. Government Structure TSD is a well-functioning sanitary district that has received statewide recognition for excellence. State law requires this section to consider the suitability of current physical boundaries of the District, including potential changes to the location, extent, and political appropriateness of District boundaries. This includes an analysis of the logic of existing and planned boundaries, and thus opportunities to provide service in a more efficient or cost-effective manner. The following describes potential government structure changes to TSD s service area. TSD is the major wastewater collection agency for the Town of Truckee. The District serves areas in Nevada County as well as a portion of the Martis Valley in Placer County. TSD s Sphere of Influence is larger than its present service boundaries in both Nevada and Placer counties. The three primary consolidation options include, but are not limited to, the following: 1) merging with the Town of Truckee or becoming a subsidiary of Truckee; 2) consolidating with T-TSA; or 3) acquiring all or a portion of Northstar CSD and/or its proposed Sphere of Influence. As noted by the Nevada County Eastern County Wastewater MSR, TSD could merge with the Town of Truckee or become a subsidiary district. For this option to occur, the Placer County portion of TSD would need to become a separate entity or annexed to Northstar, or the Town of Truckee would need to secure LAFCO approval to serve areas outside corporate limits. The Town would need to acquire TSD s wastewater collection system and a decision would have to be made regarding ownership and operation of the collection system in the unincorporated areas. Under this option, Northstar CSD would likely assume service areas in Placer County. Since T-TSA s enabling legislation allows the District to provide wastewater collection services, the second option would be for TSD and other member agencies to consolidate with T-TSA. T- TSA would be able to enforce uniform performance requirements for wastewater collection. Although member agencies do not have a uniform approach to addressing infiltration and inflow, T-TSA s acquisition of TSD could expedite the process of establishing more uniform controls. Acquisition of TSD could also provide some economies of scale for T-TSA, provided that the combination of single-purpose districts can be done in an efficient manner. The final option would be for TSD to acquire wastewater collection services in Placer County. TSD has a proposed SOI amendment before Nevada County LAFCO to include all drainage areas on the south side of Donner Lake and a second area called the Martis Valley Sphere of Influence east of TSD s and Northstar CSD s boundaries. Northstar CSD is also seeking to annex the approximately same 11-square mile territory to their east. For this option to provide feasible, considerable efforts would be needed to address conflicting SOI proposals. MUNICIPAL SERVICE REVIEW PLACER LAFCO

46 5. Local Accountability and Governance The District operates under the leadership of an elected five-member Board of Directors, with a General Manager providing daily oversight and management of staff and resources. The District holds regularly scheduled meetings on the third Thursday of each month, at 7:00 p.m. at the District main office. District staff indicates that all meetings are held in compliance with the Brown Act and all laws governing public meetings. Meetings are typically covered by local media sources. Public comments are allowed at scheduled meetings, and also can be provided by letters to the District. Operating procedures and practices, including budgets, personnel policies, fees and rates, capital improvements plans, and other documents are available for public review at the District s offices. TSD s operating hours are 7:00 A.M. to 4:00 P.M. Monday through Friday. The District and its activities undergo public review procedures, including financial review by independent auditors. Sufficient mechanisms are in place to ensure that actions and operating procedures of the District are open and accessible to the public. The District does not have an operational website, but is currently developing one at PLACER LAFCO MUNICIPAL SERVICE REVIEW

47 Tahoe-Truckee Sanitation Agency The Tahoe-Truckee Sanitation District (T-TSA) is the sole operator of wastewater treatment facilities for Eastern Placer County and Eastern Nevada County. T-TSA accepts wastewater from Truckee Sanitary District, North Tahoe PUD, Squaw Valley PSD, Alpine Springs CWD, Tahoe City PUD, and Northstar CSD through TSD. T-TSA collects and conveys wastewater to a Water Reclamation Plant east of Truckee. 1. Infrastructure Needs and Deficiencies The following discussion highlights issues facing T-TSA in continuing to provide wastewater treatment and disposal services. Information for the following analysis is gathered primarily from Nevada LAFCO s Eastern County Wastewater MSR and other secondary sources. Issue #1: Wastewater Flow Capacity According to the 2003 Eastern Nevada County MSR, T-TSA s summer peak-day population (e.g., permanent residents, peak seasonal residents, motel/hotel and day visitors) totaled 85,000. Peak winter population was similar to that found in summer, at 85,000. Total peak day winter population in the T-TSA area is projected to increase to 132,000 and an additional 16,000 if unsewered lands adjacent to TSD service area were connected. Taken together, the total peak day population would be 143,000 during the summer and 148,000 during winter months by T-TSA s wastewater treatment facility has undergone several expansions to accommodate growth among member agencies. In 2002, the Lahontan Regional Water Quality Control Board issued an order permitting TTSA to increase its maximum 7-day average summer flow from 7.4 mgd to 9.6 mgd and instantaneous flow rate to 15.4 mgd. Treatment capacity cannot be reserved or purchased by member agencies but is rather provided to development within member agencies on a first-come-first served basis. Such increase is designed to handle projected population of 143,000 by Sewage flow and infiltration/inflow (I/I) is also critical to the design of sewer collection and transport systems. Although the District s sewage collection and transport system has excess capacity, the Truckee River Interceptor which carries discharge from five sewer districts to T- TSA, has at times operated at or above design capacity due to high I/I flows during wet years. Excessive I/I flows results in higher sewer treatment costs to T-TSA and increased maintenance and operations. However, each member agency addresses I/I flow in a different manner. Although the Nevada County MSR (2003) indicates that T-TSA can accommodate future wastewater flows, the MSR also recognizes the difficulty of assessing population growth trends. Nevada County, Placer County, and Truckee each have general plans that project different population growth scenarios. The Martis Valley, which straddles the Placer County and Nevada County lines, is also undergoing significant development pressures. Due to the multiple agencies involved, obtaining consistency in population projections and service demands is problematic. MUNICIPAL SERVICE REVIEW PLACER LAFCO