COUNT Y SANITATION D ISTRICTS OF LOS ANGELES COUNTY

Transcription

1 COUNT Y SANITATION D ISTRICTS OF LOS ANGELES COUNTY 1955 Workman Mi ll Rood, Whittier, CA Moiling Address: P.O. Box 4998, Whittier, CA Tele phone: (562) , FAX: (562) GRACE ROBINSON HYDE Ch ief Engineer and Genera/ Manager June 14, 2017 Board of Directors South Bay Cities Sanitation District of Los Angeles County Dear Directors: Wastewater Budget Matters for Fiscal Year The agenda for the Board meeting on June 21, 2017, contains an item relating to wastewater budget matters for fiscal year (FY) These matters include establishing an appropriations limit on the proceeds of taxes, adopting the sewerage system final budget, requesting the tax levy, and authorization appropriations per the sewerage system budget. Appropriations Limit The Constitution of the State of California places a limit on the authorization to expend the proceeds of taxes levied by state and local governments in California. In addition, the Government Code requires the governing body for each local jurisdiction to establish, by resolution, an appropriations limit for each fiscal year. The appropriations limit for FY has been detennined by adjusting the previous limit for FY based upon population change factors for Los Angeles County and the change in the California Personal Per Capita Income. The appropriations limit has also been adjusted to include the increased operation and maintenance costs of secondary treatment needed to comply with federal requirements. All of this is in accordance with the procedures outlined in Article XIIIB of the Constitution and Section 7910 of the Government Code. The proposed appropriations limit and anticipated tax revenue are shown in Exhibit No. I. This information has been available to the public at the Districts' Joint Administration Office in conformance with the requirement that the documentation used in the determination of the appropriations limit be available fifteen days prior to its establishment by the Board of Directors. Final Budget for Fiscal Year Enclosed for your review is the proposed final budget for FY , a list of proposed capital projects, and information on the funds set aside in reserves. The reserves, which are shown as being in the rate stabilization fund, are used for a number of purposes: (I) smoothing out the service charge rates from ye~r to year and avoiding spikes in any given year as expenditures fluctuate, (2) accumulating funds to pay for large capital projects that could have a major impact on rates, and (3) meeting unforeseen DOC ft Recycled Paper \4'

2 Board of Directors -2- June 14,2017 emergencies that might arise during the year. As previously discussed with the Board, the District's targeted goal for reserves is six months of Operations & Maintenance (O&M) costs and one year of debt service. In addition, each District has cash on hand that is used for meeting expenditures from the start of the fiscal year until property taxes and service charges are received in late December. The final budget provides a comparison with the current budget and a breakdown of the items included in the budget. In preparing the final budget, it is projected that the general revenue sources available to the District for meeting expenses during the coming fiscal year include capital improvement fund monies, a pro rata share of the ad valorem (property) taxes, grants, state low-interest loans, interest income, contract revenue, and reserves. The supplemental revenue required to meet expenses will be collected through a combination of service charges and industrial wastewater surcharges. The final budget reflects the service charge rate as adopted by the Board on May 17, 2017, a rate of per month (130 per year) for a single-family home. In addition to the expenses directly incurred by each District for the facilities it owns, the final budget also includes each District's proportionate share of the costs associated with facilities and services jointly shared with other Districts. In accordance with the Joint Administration and Joint Outfall Agreements, Joint Administration and Joint Outfall costs are allocated to each signatory District according to the ratio of the number of sewage units in a District to the total number of sewage units in all the Districts signatory to each agreement. A sewage unit represents the average daily sewage flow and strength (measured in terms of chemical oxygen demand and suspended solids) from a single-family home. In the Joint Outfall System (JOS), there are approximately 1.9 million sewage units. This method of allocating costs considers flow as well as the strength of sewage from all types of users and is the most equitable way to distribute Joint Administration and Joint Outfall costs. Current Key Issues The issues outlined below relate to the JOS. This is the system of trunk sewers and treatment plants jointly owned by the seventeen Districts' signatory to the Joint Outfall Agreement. Each District in the JOS is required to pay its proportionate share of these costs. In addition, a District may have costs related to sewers and pumping plants specifically owned by that District. Those costs are solely borne by that specific District. Sewer System Maintenance and Repair - One of the naturally occurring processes in sewer systems is the formation of hydrogen sulfide gas. Through a series of complex biological and chemical reactions this gas is transformed into sulfuric acid, which can lead to extensive corrosion of the sewers. In an effort to slow down the corrosion rate and to control odors, iron salts and sodium hydroxide are routinely added to the sewer system and the crowns of the sewer pipes are sprayed with acid-neutralizing magnesium hydroxide. Although the chemical addition has reduced the rate of corrosion, it has not eliminated the problem. Where feasible, the Districts' sewer rehabilitation program utilizes technological advancements for the in-place repair of sewer lines by inserting corrosion-resistant liners into the sewers. These liners restore the structural integrity of damaged lines and represent a permanent solution as they prevent further corrosion from occurring. In some instances, corroded sewers are being replaced with pipelines containing corrosion-resistant material. Diversifying Biosolids Management for Reliability- In addition to treating all of the incoming flows, the Districts are also responsible for managing the resulting biosolids (the residual materials removed from the wastewater). In recent years, they have primarily been hauled to remote sites throughout California and Arizona. Unfortunately, those sites are owned and operated by third parties, DOC

3 Board of Directors -3- June 14, 2017 leaving the Districts subject to the uncertainty of the business climate and changing public sentiment. In order to limit this uncertainty and provide greater stability, the Districts have been developing biosolids management facilities that will be owned and controlled by the Districts. In line with this strategy was the development of Tulare Lake Compost, a state-of-the-art facility located in Kings County. The facility began operation in January 2016, and currently manages approximately 30,000 tons per year of biosolids. The resulting compost is then applied to adjacent farm land, also owned by the Districts, for land reclamation and soil enrichment. Clearwater - Effluent from the Joint Water Pollution Control Plant (JWPCP) in Carson is conveyed to the ocean through two tunnels, one completed in 1937 and the other in Both tunnels have had continual flow in them and cannot be taken out of service under any condition. As has been discussed extensively with the Boards, construction of a third tunnel (the Clearwater Project) has been proposed. In December 2016, District No. 2, acting in its capacity as the administrative agent for the Joint Outfall System, approved a prequalification package for potential contractors on the Clearwater Project and authorized staff to begin negotiations with the Los Angeles/Orange Counties Building and Construction Trades Council on a Project Labor Agreement. The Clearwater project will be funded with a combination of monies accumulated in the Capital Improvement Fund (fees paid by new users of the system and dedicated to capital projects) and debt financing. The Districts previously sold bonds in 1993 (which have subsequently been refinanced), with debt service that expires between 2021 and It is proposed to use the Capital Improvement monies first and wait until the existing debt is retired before issuing the new debt. Because the two debts are fairly similar in size, it will appear relatively seamless to the rate payers and will minimize impacts on the rates. Flow Equalization at the San Jose Creek Water Reclamation Plant (WRP)- Influent flows at the treatment plants are not static; they vary over the course of the day with peaks and valleys occurring at different times. Unfortunately, flows are highest during the day when the demand for recycled water is lowest, meaning that water may be discharged to the San Gabriel River and go unused. Conversely, flows are lowest at night when the demand for recycled water is highest, meaning that some of the need may go unmet. An 8 million gallon storage tank is being proposed at the San Jose Creek WRP that will store the peak flows during the day and then feed them back into the plant during the low-flow periods. This will make more recycled water available and also improve the operational efficiency of the WRP. Summary of Required Actions At the June 21, 2017 Board meeting, it will be recommended that the Board of Directors adopt a resolution establishing the appropriations limit on the proceeds of taxes, adopt the budget for FY , adopt a resolution requesting the tax levy, and authorize appropriations in the sewerage system budget, all as shown on the agenda. Very truly yours, GRH:gc Grace Robinson Hyde Enclosures DOC

4 [ SUMMARY OF APPROPRIATIONS LIMIT FOR EACH SANITATION DISTRICT I APPRO. LMT. POPULATION APPRO. LMT." APPRO. LMT APPRO. LMT. DISTRICT EXCLUDING CHANGE CHANGE EXCLUDING MANDATED INCLUDING NUMBER MANDATED COSTS FACTOR FACTOR MANDATED COSTS COSTS MANDATED COSTS , ,129,961 1,645,314 18,775, ,243, ,452,224 2,398,809 31,851, ,880, ,731,518 1,885,538 22,597, ,554, ,664, ,664, ,562, ,341,772 2,770,097 46,111, ,782, ,115, ,980 9,076, ,000, ,042, ,042, ,185, ,163,204 13,578,797 61,742, ,412, ,115,480 1,985,661 19,101, ,401, ,955,786 1,106,583 13,062, ,603, ,671, ,783 1,815, ,374, ,904,667 1,283,126 14,187, ,844, ,051, ,828 5,417, ,373, ,973,094 14,930,018 53,903, ,187, ,207,645 1,583,433 50,791, ,967, ,437,222 1,323,167 12,760, ,528, ,765, ,364 5,943, , , , , ,891 45,501 1,026, , ,437 58, ,678 SBC 21,771, ,703, ,590 23,192,956 s:;v 18,976, ,129,695 4,160,000 24,289, N/A** NR N/A** ESTIMATED AD VALOREM TAX REVENUES -- DISTRICT NUMBER 2,901, ,866, ,297, , ,696, ,818, , , ,853, ,583, , ,322, ,155, , ,670, ,389, , , , , ,052,000 SBC 6,848,000 s:;v 34 NR * This col umn represents the net chgnge resji ti ng from the perc:a1t cha1ge in popu!ati on end the perce'lt cha'lge i n Per ~ ta I ncome of 3. 69%. end for i II us:rati ve purposas is rounded to the fourth Sgnifica-rt digit ** This District is not subject to an appropriations limit as it does not receive my proceeds of taxes. Exhibit No. 1 DOC

5 SOUTH BAY CITIES SANITATION DISTRICT OF LOS ANGELES COUNTY SEWERAGE SYSTEM FINAL BUDGET FOR REQUIREMENTS FOR FISCAL YEAR JULY 1 THROUGH JUNE 30: APPROPRIATION: O&M - Joint Administration 888,000 O&M- Technical Services 862,000 O&M - Local District Sewers 1,172,000 O&M -Joint Facilities 4,739,000 Capital - Joint Administration 45,000 Capital - Local Capital 30,000 Capital- Joint Facilities 3,396,000 Bond Repayment 934,000 Loan Repayment 568,000 Contingency for Emergency 263, , ,000 1,380,000 4,976, , ,000 4,174, , , ,000 12,897,000 14,393,000 TRANSFER TO RATE STABILIZATION FUND 307,000 63,000 CASH FLOW REQUIREMENT (for period JULY 1 THROUGH DECEMBER 31) 6,936,000 7,511,000 TOTAL BUDGET: 20,140,000 21,967,000 ESTIMATED CASH AND REVENUE: Cash on Hand July 1 6,455,000 Transfer from Capital Improvement Fund 353,000 Taxes 4,699,000 Grants 21,000 Service Charge 6,456,000 Loans 1,488,000 Industrial Waste 255,000 Interest and Contracts 413,000 Transfer from Rate Stabilization Fund 7,869,000 1,261,000 5,052, ,000 6,589, , , ,000 TOTAL RESOURCES: 20,140,000 21,967,000 SERVICE CHARGE CALCULATION Number of Sewage Units Charge Per Sewage Unit 50, ,

6 SOUTH BAY CITIES SANITATION DISTRICT OF LOS ANGELES COUNTY JULY 1, 2017 THROUGH JUNE 30,2018 PROPOSED CAPITAL PROJECTS JOINT ADMINISTRATION: 100,000 JOINT FACILITIES: 1. Trunk Sewer Rehabilitation 2. Pumping Plant Improvements 3. Clearwater Tunnel 4. Treatment Plant Projects 1,213,000 43,000 1,235,000 1,468, San Jose Creek Flow Equalization Facilities 215,000 4,174,000 LOCAL: 1. Herondo St. PP- Replacement of Force Mains 2. Malaga Cove Pumping Plant No. 2 Site Improvements 3. Malaga Cove Pumping Plant No. 1 Site Improvements 100,000 30,000 10, ,000 TOTAL PROPOSED CAPITAL PROJECTS: 4,414,000

7 SOUTH BAY CITIES SANITATION DISTRICT OF LOS ANGELES COUNTY JULY 1, 2017 THROUGH JUNE 30, 2018 Rate Stabilization Fund Beginning Balance Interest Revenue Ending Balance Fiscal Year ,316, ,000 63,000 23,543,000