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Home My WebLink About2015-08-31 - Board of Directors Meeting Agenda Packet AGENDA YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS REGULAR MEETING Monday, August 31, 2015, 8:30 AM 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL Ric Collett, President Michael J. Beverage, Vice President Phil Hawkins Robert R. Kiley Gary T. Melton 4. ADDITIONS/DELETIONS TO THE AGENDA 5. PUBLIC COMMENTS Any individual wishing to address the Board is requested to identify themselves and state the matter on which they wish to comment. If the matter is on the agenda, the Board will recognize the individual for their comment when the item is considered. No action will be taken on matters not listed on the agenda. Comments are limited to matters of public interest and matters within the jurisdiction of the Water District. Comments are limited to three minutes. 6. COMMITTEE REPORTS 6.1. Citizens Advisory Committee (Collett) · Minutes of the meeting held August 24, 2015 at 8:30 a.m. (To be provided at the next regular Board meeting.) · Next meeting is scheduled to be held September 28, 2015 at 8:30 a.m. 7. CONSENT CALENDAR All items listed on the consent calendar are considered to be routine matters, status reports, or documents covering previous Board instructions. The items listed on the consent calendar may be enacted by one motion. There will be no discussion on the items unless a member of the Board, staff, or public requests further consideration. 7.1. Minutes of the Board of Directors Regular Meeting held July 23, 2015 Recommendation: That the Board of Directors approve the minutes as presented. 7.2. Payments of Bills, Refunds, and Wire Transfers Recommendation: That the Board of Directors ratify and authorize disbursements in the amount of $1,491,935.46. 7.3. Quitclaim Easement Deed to Western Pacific Housing, Inc., Tract 17617 Recommendation: That the Board of Directors authorize the General Manager to execute the Quitclaim Easement Deed to Western Pacific Housing, Inc., abandoning the two sets of recorded easements of the Official Records of Orange County, California. 7.4. Terms and Conditions for Water and Sewer Service with City Ventures, Tract 17459 Recommendation: That the Board of Directors approve the Terms and Conditions for Water and Sewer Service with City Ventures, Tract 17459, Job No. 2015-06. 7.5. Terms and Conditions for Water and Sewer Service with Robert Nicorici, 17691 Imperial Hwy, Yorba Linda Recommendation: That the Board of Directors approve the Terms and Conditions for Sewer Service with Mr. Robert Nicorici, 17691 Imperial Hwy, Yorba Linda, Job No. 2015-07S. 7.6. Terms and Conditions for Water Service with Rezai & Son, LLC, 4240 E La Palma Ave Recommendation: That the Board of Directors approve the Terms and Conditions for Water Service with Rezai & Son, LLC for the property located at 4240 E La Palma Ave, Job No. 2015-08. 8. ACTION CALENDAR This portion of the agenda is for items where staff presentations and Board discussions are needed prior to formal Board action. 8.1. 2015 Water and Sewer Rate Study Report Recommendation: That the Board of Directors receive and file the 2015 Water and Sewer Rate Study Report. 8.2. Board Position on Potential State Public Goods/Water Tax Recommendation: That the Board of Directors (1) consider adopting Resolution No. 15-21 taking an Oppose position on the State’s action to legislate a public goods charge for water; and (2) submit a letter to local legislators indicating the District's opposition. 9. REPORTS, INFORMATION ITEMS, AND COMMENTS 9.1. President's Report 9.2. Directors' Reports · CASA Annual Conference - August 19-21, 2015 · UWI Annual Conference - August 26-28, 2015 9.3. General Manager's Report 9.4. General Counsel's Report 9.5. Future Agenda Items and Staff Tasks 10. COMMITTEE REPORTS CONTINUED 10.1. Interagency Committee with MWDOC and OCWD (Collett / Melton) · Next meeting is scheduled to be held September 22, 2015 at 4:00 p.m. 10.2. Interagency Meeting with City of Placentia and Golden State Water (Melton / Kiley) · Minutes of the meeting held July 27, 2015 at 2:00 p.m. (To be provided at the next regular Board meeting.) · Next meeting is scheduled to be held September 29, 2015 at 2:00 p.m. at YLWD. 10.3. Joint Agency Committee with City of Yorba Linda (Collett / Beverage) · Minutes of the meeting held July 22, 2015 at 10:00 a.m. · Minutes of the meeting held August 26, 2015 at 10:00 a.m. (To be provided at the next regular Board meeting). · Next meeting is scheduled to be held September 23, 2015 at 10:00 a.m. at YL City Hall. 11. INTERGOVERNMENTAL MEETINGS 11.1. YL LMCAC - August 13, 2015 (Beverage - As Needed) 11.2. YL City Council - August 18, 2015 (Collett) 11.3. MWDOC Board - August 19, 2015 (_____) 11.4. OCWD Board - August 19, 2015 (Collett) 11.5. OCSD - August 26, 2015 (Kiley/Beverage) 11.6. YL LMCAC - August 27, 2015 (Beverage - As Needed) 12. BOARD OF DIRECTORS ACTIVITY CALENDAR 12.1. Meetings from September 1, 2015 - October 31, 2015 13. ADJOURNMENT 13.1. The next Regular Board of Directors Meeting will be held Thursday, September 10, 2015 at 8:30 a.m. Items Distributed to the Board Less Than 72 Hours Prior to the Meeting Pursuant to Government Code section 54957.5, non-exempt public records that relate to open session agenda items and are distributed to a majority of the Board less than seventy-two (72) hours prior to the meeting will be available for public inspection in the lobby of the District’s business office located at 1717 E. Miraloma Avenue, Placentia, CA 92870, during regular business hours. When practical, these public records will also be made available on the District’s internet website accessible at http://www.ylwd.com/. Accommodations for the Disabled Any person may make a request for a disability-related modification or accommodation needed for that person to be able to participate in the public meeting by telephoning the Executive Secretary at 714-701-3020, or writing to Yorba Linda Water District, P.O. Box 309, Yorba Linda, CA 92885-0309. Requests must specify the nature of the disability and the type of accommodation requested. A telephone number or other contact information should be included so the District staff may discuss appropriate arrangements. Persons requesting a disability-related accommodation should make the request with adequate time before the meeting for the District to provide the requested accommodation. ITEM NO. 7.1 AGENDA REPORT Meeting Date: August 31, 2015 Subject:Minutes of the Board of Directors Regular Meeting held July 23, 2015 STAFF RECOMMENDATION: That the Board of Directors approve the minutes as presented. ATTACHMENTS: Name:Description:Type: 2015-07-23_-_BOD_-_Minutes.doc Minutes Minutes Approved by the Board of Directors of the Yorba Linda Water District 8/31/2015 PH/RK 4-0-0-1 RC was absent. 1 MINUTES OF THE YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS REGULAR MEETING Thursday, July 23, 2015, 8:30 a.m. 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER The July 23, 2015 Regular Meeting of the Yorba Linda Water District Board of Directors was called to order by President Collett at 8:30 a.m. The meeting was held in the Board Room at the District’s Administration Building located at 1717 East Miraloma Avenue in Placentia, California 92870. 2. PLEDGE OF ALLEGIANCE President Collett led the pledge. 3. ROLL CALL DIRECTORS PRESENT STAFF PRESENT Ric Collett, President Marc Marcantonio, General Manager Michael J. Beverage, Vice President Steve Conklin, Engineering Manager Phil Hawkins Javier Martinez, Water Production Superintendent Robert R. Kiley Amelia Cloonan, Human Resources Analyst Gary T. Melton Delia Lugo, Finance Manager Damon Micalizzi, Public Information Manager Robyn Shaw, Programmer Analyst Annie Alexander, Executive Secretary Bryan Melton, Human Resources Analyst Cindy Botts, Water Conservation Supervisor ALSO PRESENT Art Kidman, Partner, Kidman Law LLP Brett Barbre, Director, MWDSC and MWDOC Tom Lindsey, Mayor Pro Tem, City of Yorba Linda Chris Townsend, President, Townsend Public Affairs Cori Williams, Senior Associate, Townsend Public Affairs Mark Feldstein, Representative of the Pool Industry Eddy Jackson, Resident Denisse Salazar, Reporter, Orange County Register 4. ADDITIONS/DELETIONS TO THE AGENDA Mr. Marcantonio requested that in addition to considering the resolution associated with Item No. 7.4., that the Board consider authorizing the General Manager to execute an agreement with the County of Orange for the collection of special taxes, fees, charges, and assessments. A copy of the agreement was provided in the agenda packet, located directly behind the resolution. Mr. Marcantonio also noted that the resolutions associated with Item Nos. 7.5. and 7.6. had been slightly revised in order to clarify the proposed amendments. 2 Copies of the revised resolutions were provided to the Board and made available to the public prior to the meeting. President Collett stated that a request had been made to move the Closed Session (Item No. 13.1) immediately following Public Comments (Item No. 5) in order to accommodate the attendance of legal counsel. 5. PUBLIC COMMENTS President Collett stated that some misinformation had been published in a local newspaper and on several blogs indicating that the Board would be considering the approval of water and sewer rates at this meeting which is incorrect. The action being considered by the Board is to authorize staff to mail a notice of the proposed changes to the water and sewer rates and schedule an associated public hearing in September. No other comments were provided at this time. The following item was taken out of order. 13. CLOSED SESSION The meeting was adjourned to Closed Session at 8:33 a.m. All Directors were present. Also present were Mr. Marcantonio, Mr. Kidman and Ms. Cloonan. 13.1. Conference with Legal Counsel - Anticipated Litigation Significant Exposure to Litigation Pursuant to Paragraph (2) of Subdivision (d) of Section 54956.9 of the California Government Code Related to potential claim submitted on behalf of Stephen Wight. Number of Potential Cases: One The Board reconvened in Open Session at 8:41 a.m. Mr. Kidman reported that the Board had voted unanimously to reject the potential claim submitted on behalf of Stephen Wright and refer the matter to the District’s insurance carrier (ACWA/JPIA). 6. CONSENT CALENDAR Director Hawkins made a motion, seconded by Director Kiley, to approve the Consent Calendar. Motion carried 5-0. 6.1. Payments of Bills, Refunds, and Wire Transfers Recommendation: That the Board of Directors ratify and authorize disbursements in the amount of $1,382,307.13. 3 7. ACTION CALENDAR 7.1. Annual Lump Sum Prepayment to CalPERS for the Unfunded Accrued Liability (UAL) Director Barbre addressed the Board and stated that he was in favor of prepaying this liability. Mrs. Lugo explained that the District is a Pooled Participant in the California Public Employee’s Retirement System (CalPERS). For FY 2015/16, CalPERS is requiring that participating pooled business partners pay the UAL on a monthly “pay-as-you-go” basis or as an annual lump sum prepayment. Submitting a lump sum prepayment will result in an annual cost savings of $7,605 for the District. Director Beverage made a motion, seconded by Director Kiley, to authorize staff to pay the annual lump sum prepayment to California Public Employee’s Retirement System as budgeted for the Retirement Benefit Unfunded Accrued Liability (UAL) in the amount of $206,619. Motion carried 5-0. 7.2. OPEB Deposit with CERBT Mrs. Lugo explained that the District budgeted Annual Required Contribution (ARC) for Other Post-Employment Benefits (OPEB) for FY 2015/16 is $197,742. The actuarially projected OPEB “pay-as-you-go” expenses for FY 2015/16 are $149,358. Staff is proposing that the District pre-fund the California Employees Retirement Benefit (CERBT) with the entire ARC amount. By doing so, the District can submit for reimbursement of actual retiree costs at the end of the fiscal year and take advantage of CERBT’s investment rate of return of 7.61%. Director Kiley made a motion, seconded by Director Beverage, to authorize staff to deposit $197,742 (the District’s Annual Required Contribution) to the California Employee’s Retirement Benefit Trust (CERBT) for FY 2015/16. Director Barbre addressed the Board and commented on the benefits of reducing OPEB liabilities. Motion carried 5-0. 7.3. Notice of Proposed Water and Sewer Rate Increase and Schedule a Public Hearing Mr. Marcantonio explained that during the budget process, staff recognized that the State’s Emergency Drought Declaration and the associated water conservation mandates would require a change in the District’s current business model in order to meet annual operational costs. Historically, the District has relied on revenue generated from volumetric water usage to meet a larger portion of its operating expenses. With the current conservation requirements, a shift of revenue reliance on 4 the Basic Monthly Service charge (or base fee) is needed. As such, staff has proposed a water and sewer rate increase for the next 5 fiscal years. In order to proceed, a notice regarding the proposed rate increase and the associated public hearing will need to be mailed. Mr. Eddy Jackson, resident, addressed the Board and displayed a spreadsheet he had compiled comparing local agency costs for water service. He commented on the impact of the State’s conservation mandate on the District’s financial condition and stated that the proposed rate increase was a progressive tax that would disproportionately affect the community’s middle class families and seniors. He also suggested that the Board consider returning to semi-monthly billing and implementing a tiered rate structure. He then asked if the District would accept an online petition as a written protest against the proposed rate increase. Mr. Kidman stated that legal counsel would look into Mr. Jackson’s inquiry regarding the validity of an online petition and get back to him. Staff then responded to questions from the Board regarding recent revisions to the notice, associated FAQ’s, and timeline for mailing. Director Hawkins requested that staff prepare a rate comparison graph listing all surrounding cities for the public hearing. Directors Collett and Beverage then commented on the complexities involved with comparing special district and city agency rates for water/sewer service. Director Beverage made a motion, seconded by Director Melton, to authorize staff to mail a Notice of Proposed Water and Sewer Rate Increase to the District’s customers notifying them of proposed changes to their water and sewer rate for the upcoming five fiscal years and schedule a Public Hearing on September 17, 2015 at 6:30 p.m. Motion carried 5-0. 7.4. Sewer Charges Collected on the Tax Roll for Fiscal Year 2015/16 Mr. Marcantonio explained that at the beginning of each fiscal year, the Board considers collecting sewer maintenance charges on the County property tax roll for customers connected to the District’s sewer system that don’t also receive water service or a water bill from the District. Residents of the Locke Ranch area do not receive water service from the District, so their sewer charges are collected on the tax roll. Furthermore, due to the disparity in sewer maintenance charges between the City of Yorba Linda and the District, it has been determined that classifications with rate differences need to be placed on the tax roll for collection until a Proposition 218 process can be completed. To move forward with this process, the Board will need to adopt a resolution directing the County to add these charges to the tax roll and authorize the General Manager to execute an agreement with the County for their collection. 5 Director Barbre addressed the Board and noted that the resolution being presented for consideration listed the Orange County Auditor/Controller as the office being authorized to collect these charges. He stated that collection of these charges was actually performed by the Orange County Treasurer-Tax Collector. Staff then responded to questions from the Board regarding the difference between the sewer maintenance charges being collected and the charges proposed as part of the Proposition 218 process. President Collett requested that the resolution be revised to reflect the correct office performing the collection services. Director Beverage made a motion, seconded by Director Melton, to adopt Resolution No. 15-17 as revised, Electing to Have Certain Sewer Maintenance Charges Collected on the FY 2015/16 Tax Roll and Superseding Resolution No. 14-10 and authorize the General Manager to execute an agreement with the County of Orange for the collection of special taxes, fees, charges, and assessments. Motion carried 5-0 on a Roll Call vote. 7.5. Clarify the Salaries, Benefits and Special Conditions Agreed upon between the District and Employees of the Yorba Linda Water District Employees Association for the Remainder of Fiscal Years 2015-2018 Mr. Bryan Melton explained that the Board had previously adopted the Memorandum of Understanding (MOU) between the District and the YLWD Employees Association for FYs 2015/18. The Board then subsequently adopted the Budgeted Positions for FY 2015/16 which included the newly created position of Public Affairs Representative. The nature of this position does not qualify it to be placed in the Supervisory and Confidential or Management Employees’ Groups and should therefore be represented by the YLWD Employees Association. As such, the MOU requires modification to reflect that change. Modification is also required in Section 13.1 (Safety Boot Allowance) of the MOU to allow employees to purchase more than one pair of safety footwear, provided that it does not exceed the annual $200 allowance. Additionally, the holiday schedule for FYs 2015/18 requires modification to reflect the actual dates observed for Memorial Day in 2016 and 2017. Mr. Bryan Melton then responded to questions from the Board regarding the proposed revisions. Director Beverage made a motion, seconded by Director Hawkins, to approve Resolution No. 15-18 as revised, Amending Resolution No. 15-06 to Modify and Further Clarify the Salaries, Benefits and Special Conditions Agreed upon between the District and Employees of the Yorba Linda Water District Employees Association for the Remainder of Fiscal Years 2015-2018. Motion carried 5-0 on a Roll Call vote. 6 7.6. Clarify the Salaries, Benefits and Special Conditions Offered by the District to Supervisory and Confidential Employees for the Remainder of Fiscal Years 2015-2018 Mr. Bryan Melton explained that the Board had previously adopted the Supervisory and Confidential Employees Compensation Letter for FYs 2015/18. The Board then subsequently adopted the Budgeted Positions for FY 2015/16 which included the newly created position of Records Management Administrator and Water Conservation Supervisor. As such, the Compensation Letter for this employee group requires modification to reflect these changes. Modification is also required to clarify the certificate reimbursement benefits offered and correct the holiday schedule. Additionally, staff is requesting that the name of this group be identified as “Professional and Confidential Employees” from this point forward in order to more accurately reflect the positions contained within. Mr. Marcantonio then responded to questions from the Board regarding the proposed revisions and the use of drought penalties to fund the salary of the Water Conservation Supervisor position. Director Kiley made a motion, seconded by Director Hawkins, to approve Resolution No. 15-19 as revised, Amending Resolution No. 15-07 to Modify and Further Clarify the Salaries, Benefits and Special Conditions by the District to Professional and Confidential Employees (formerly Supervisory and Confidential Employees) for the Remainder of Fiscal Years 2015-2018. Motion carried 5-0 on a Roll Call vote. 7.7. Clarify the Salaries, Benefits and Special Conditions Offered by the District to Management Employees for the Remainder of Fiscal Years 2015-2018 Mr. Bryan Melton explained that the Board had previously adopted the Management Employees Compensation Letter for FYs 2015/18 in which the Public Information Manager position was identified at a Range 33. In order to reflect the additional responsibilities of water conservation, communications, and legislation, the range for this position is being placed at 37. As such, the Compensation Letter for this employee group requires modification to reflect this change. Modification is also required to correct the holiday schedule. Mr. Bryan Melton then responded to questions from the Board regarding the monetary difference in the salary ranges, the last time a change to the range for this position had been made, and the duties assigned. Director Beverage commented on the importance of this position to the District and a previous proposal to change the range for this position which was discussed during the budget process. Director Kiley commented on the issues currently facing the District and the importance of this position. 7 Mr. Marcantonio then responded to questions from the Board regarding staff’s recommendation and management of the approved budget for employee salaries and benefits. Director Kiley made a motion, seconded by Director Hawkins, to approve Resolution No. 15-20 Amending Resolution No. 15-08 to Modify and Further Clarify the Salaries, Benefits and Special Conditions Offered by the District to Management Employees for the Remainder of Fiscal Years 2015-2018. Motion carried 3-2 on a Roll Call vote with Directors Beverage and Melton voting No. Mr. Bryan Melton left the meeting at this time. 8. DISCUSSION ITEMS 8.1. Potential Amendments to Ordinance No. 09-01 Instituting Water Conservation Measures, Prohibition Against Water Waste and Water Shortage Supply Contingencies President Collett explained that this item had been placed on the agenda so that the Board could provide comments to staff regarding potential revisions to the Ordinance. Director Hawkins suggested that the District compare its ordinance to those of other nearby agencies for the purposes of consistency. Mr. Marcantonio asked Mrs. Botts to provide the Board with an overview of the State’s efforts to develop a model water efficient landscape ordinance. Director Hawkins then suggested that the Board consider waiting until October to address revising the Ordinance. Following further discussion, the Board agreed. Proposed amendments will be provided to staff in advance. Mr. Kidman commented on the need for the District to remain flexible and fair in its application of the water conservation and drought penalty ordinances. Mayor Pro Tem Lindsey addressed the Board and commented on the potential degeneration of property values in the community due to the State’s water conservation mandate. Mr. Mark Feldstein addressed the Board and commented on water savings associated with maintaining a pool versus turf. He also commented on the effects of the drought on the pool industry throughout the state. Mr. Kidman left the meeting at this time. 8 8.2. Potential Amendments to Ordinance No. 15-01 Instituting Drought Penalties to Comply with State of California Mandate Discussion of this matter was deferred until October. 8.3. "Communication with Those Charged with Governance" Letter Mrs. Lugo explained that the District had engaged W hite Nelson Diehl Evans LLP to audit the financial statements for the year ended June 30, 2015. At their request, staff is providing a copy of the “Communication with Those Charged with Governance” to the Board for review and future reference. This letter is issued during the planning phase of the audit as it provides pertinent information related to the responsibilities of the auditing firm during the audit process. 8.4. Status of Legislative Affairs Mr. Chris Townsend introduced Ms. Cori Williams who then provided an overview of various legislative activities. Mr. Townsend then responded to questions from the Board regarding potential grant funding opportunities. 9. REPORTS, INFORMATION ITEMS, AND COMMENTS 9.1. President's Report None. 9.2. Directors' Reports · Weymouth Water Treatment Plant Inspection Trip - July 17, 2015 Directors Collett and Hawkins reported on their attendance at the above listed event. 9.3. General Manager's Report Mr. Marcantonio asked each manager (or their designee) in attendance to provide a report regarding activities within their respective departments. He then provided the Board with an overview of his activities and meeting attendance. Director Kiley left the meeting at this time. Mr. Micalizzi introduced Ms. Denisse Salazar, reporter for the Orange County Register. 9.4. General Counsel's Report None. 9.5. Future Agenda Items and Staff Tasks None. 9 10. COMMITTEE REPORTS 10.1. Interagency Committee with MWDOC and OCWD (Collett / Melton) Next meeting is scheduled to be held July 28, 2015 at 4:00 p.m. 10.2. Joint Agency Committee with City of Placentia (Melton / Kiley) Minutes of the meeting held June 22, 2015 at 2:00 p.m. will be provided at the next regular Board meeting. Next meeting is scheduled to be held July 27, 2015 at 2:00 p.m. at Golden State Water in Placentia. 10.3. Joint Agency Committee with City of Yorba Linda (Collett / Beverage) Minutes of the meeting held June 23, 2015 at 10:00 a.m. were provided in the agenda packet. Minutes of the meeting held July 22, 2015 at 10:00 a.m. will be provided at the next regular Board meeting. Next meeting is yet to be scheduled. 10.4. Citizens Advisory Committee (Collett) Next meeting is scheduled to be held July 27, 2015 at 8:30 a.m. 11. INTERGOVERNMENTAL MEETINGS Each of the Directors reported on their attendance at the following meetings. 11.1. YL LMCAC - July 9, 2015 (Beverage - As Needed) 11.2. WACO - July 10, 2015 (Hawkins/Kiley) 11.3. MWDOC Board - July 15, 2015 (Melton) 11.4. OCWD Board - July 15, 2015 (Kiley) 11.5. YL Planning Commission - July 15, 2015 (Melton) 11.6. YL City Council - July 21, 2015 (Beverage) 11.7. YL Planning Commission - July 22, 2015 (Hawkins) 10 11.8. OCSD - July 22, 2015 (Kiley/Beverage) 12. BOARD OF DIRECTORS ACTIVITY CALENDAR 12.1. Meetings from July 24, 2015 – August 31, 2015 President Collett asked if the Board would like to consider rescheduling the regular meeting on Thursday, August 27, 2015 due to a schedule conflict. Following discussion, the Board determined to reschedule this meeting to Monday, August 31, 2015 at 8:30 a.m. The Board reviewed the activity calendar and made no additional changes. 14. ADJOURNMENT 14.1. The meeting was adjourned at 10:54 a.m. The next Regular Board of Directors Meeting will be held Thursday, August 13, 2015 at 8:30 a.m. Annie Alexander Assistant Board Secretary ITEM NO. 7.2 AGENDA REPORT Meeting Date: August 31, 2015 To:Board of Directors Cost Estimate:$1,491,935.46 From:Marc Marcantonio, General Manager Presented By:Damon Micalizzi, Public Information Manager Prepared By:Damon Micalizzi, Public Information Manager Subject:Payments of Bills, Refunds, and Wire Transfers SUMMARY: Section 31302 of the California Water Code says the District shall pay demands made against it when they have been approved by the Board of Directors. Pursuant to law, staff is hereby submitting the list of disbursements for Board of Directors’ approval. STAFF RECOMMENDATION: That the Board of Directors ratify and authorize disbursements in the amount of $1,491,935.46. DISCUSSION: The major items on this disbursement list are as follows: A check of $100,651.50 to ACWA/JPIA for September 2015 medical and dental premium; a check of $391,603.68 to Haaker Equipment Co. for a 2015 Kenworth T440 with Vactor 210; a wire of $459,668.27 to MWDOC for June 2015 water purchases; a wire of $38,561.97 to Southern California Gas Company for July 2015 gas charges for multiple locations; a wire of $19,460.54 to Southern California Gas Company for July 2015 Richfield’s gas charges; and a wire of $31,317.52 to So. California Edison for July 2015 electricity charges for multiple locations. The balance of $189,846.12 is routine invoices. The Accounts Payable check register total is $1,231,109.60; Payroll No. 17 total is $260,825.86; and the disbursements of this agenda report are $1,491,935.46. A summary of the checks is attached. STRATEGIC PLAN: SR 1-C: Engage with Regional Agencies on Water Supply Issues PRIOR RELEVANT BOARD ACTION(S): The Board of Directors approves bills, refunds and wire transfers semi-monthly. ATTACHMENTS: Name:Description:Type: 15-CS_0831.pdf CAP SHEET Backup Material CkReg083115.pdf CHECK REGISTER Backup Material 15_CC_0831.pdf CREDIT CARD SUMMARY Backup Material Approved by the Board of Directors of the Yorba Linda Water District 8/31/2015 PH/RK 4-0-0-1 RC was absent. . August 25, 2015 CHECK NUMBERS & WIRES: Computer Checks 66147—66242 $ 682,101.30 ___________ $ 682,101.30 WIRES: W081415 MWDOC $ 459,668.27 W081715 So. California Gas Co. $ 38,561.97 W082015 So. California Gas Co. $ 19,460.54 W082015A So. California Edison $ 31,317.52 ____________ $ 549,008.30 TOTAL OF CHECKS & WIRES $1,231,109.60 PAYROLL NO. 17: Direct Deposits $ 167,592.05 Third Party Checks 6209—6217 $ 47,205.14 Payroll Taxes $ 46,028.67 $ 260,825.86 TOTAL OF PAYROLL $260,825.86 ---------------------------------------------------------------------------------------------------------------------- DISBURSEMENT TOTAL: $1,491,935.46 ================================================================== APPROVED BY THE BOARD OF DIRECTORS MINUTE ORDER AT BOARD MEETING OF August 31, 2015 ==================================================================. Check No.Date Vendor Name Amount Description 66168 08/31/2015 ACWA/JPIA 100,651.50 MEDICAL & DENTAL- SEPTEMBER 66151 08/31/2015 AL BERMUDEZ 14.90 CUSTOMER REFUND 66169 08/31/2015 Apollo Technologies Inc.430.00 WTR TREATMENT SVC-CLOSED LOOP 66164 08/31/2015 APRIL ALVAREZ 41.62 CUSTOMER REFUND 66170 08/31/2015 Aramark 763.26 UNIFORM SERVICE 66161 08/31/2015 ASPEN RODEO 653.34 CUSTOMER REFUND 66158 08/31/2015 AUDREY STITH 191.44 CUSTOMER REFUND 66171 08/31/2015 Autoscribe Corporation 596.25 PAYMENT VISION GATEWAY 66172 08/31/2015 AWWA - Dues 104.00 AWWA MEMBERSHIP RENEWAL 15/16 66173 08/31/2015 Barker and Sons Plumbing Inc.9,567.50 SEWER SERVICE LINE AT (3) LOCATIONS 66174 08/31/2015 Battery Systems Inc 649.56 T-105 BATTERY - UNIT E167 66175 08/31/2015 Bryan Arnado 90.90 MI. REIMBURSEMENT - ARNADO,B 66163 08/31/2015 C.C. ROYAL SERVICE INC 333.88 CUSTOMER REFUND 66176 08/31/2015 CalCard US Bank 31,474.76 CREDIT CARD TRANSACTIONS FOR JULY & AUGUST '15 66177 08/31/2015 Chambers Group Inc.935.00 PROF. SERVICES - JULY 2015 66167 08/31/2015 CHARLES HISE 734.40 CUSTOMER REFUND 66154 08/31/2015 CHRISTINE M CLINE 87.04 CUSTOMER REFUND 66178 08/31/2015 City Of Anaheim 21,826.41 RICHFIELD & LAKEVIEW - AUGUST 2015 66179 08/31/2015 City Of Placentia 25.00 ALARM PERMIT RENEWAL CHARGE 66180 08/31/2015 Coastline Equipment 664.43 HARDWARE SUPPLIES 66181 08/31/2015 Cogsdale Services Corporation 5,760.00 WTR CONSERVATION'15 (QUO-4264) 66182 08/31/2015 Com Ser Co Inc.45.40 ANTENNA ENDS & FREIGHT 66183 08/31/2015 Community Lock & Safe Service, Inc.22.65 REPLACEMENT KEYS 66184 08/31/2015 Costco 110.00 COSTCO BUSINESS MEMBERSHIP 66185 08/31/2015 Culligan of Santa Ana 2,020.46 EQUIPMENT - PE SOFTENER 66186 08/31/2015 Cynthia Botts 286.46 EDUCATION TUITION FY 15/16 66187 08/31/2015 David W. Barmer 170.00 CERT REIMBURSEMENT - BARMER 66188 08/31/2015 Dell Marketing L.P.6,537.57 IT COMPUTER AND EQUIPMENT 66189 08/31/2015 Dion & Sons, Inc.4,690.39 MYSELLA S3 OIL 66190 08/31/2015 Doane and Hartwig Water Systems, Inc.570.11 W2T11685 MOTOR & W2T9688 PM KIT TCI 66148 08/31/2015 DOUGLAS MACCOLL 11.13 CUSTOMER REFUND 66191 08/31/2015 Eisel Enterprises, Inc.591.84 438 METER BOX, LID & COVER 66192 08/31/2015 Employee Relations, Inc.115.65 DOT PHYSICALS 66194 08/31/2015 EyeMed 1,348.02 EYEMED - AUGUST 2015 66193 08/31/2015 Federal Express 49.53 FEDEX SHIPMENTS 66195 08/31/2015 Haaker Equipment Co.391,603.68 2015 KENWOTH T440 WITH VACTOR 210 66196 08/31/2015 Hach Company 676.30 CHLORINE & REFILL VIALS 66197 08/31/2015 Hydrex Pest Control 175.00 PEST CONTROL - AUGUST 66198 08/31/2015 Infosend Inc.5,227.03 DATA, POSTAGE AND PRINT FEE 66199 08/31/2015 Innovyze 20,400.00 SCADA WATCH SRVR - 7/15-7/16 66160 08/31/2015 IVANKA HOROZOVA 139.17 CUSTOMER REFUND 66202 08/31/2015 J & S Construction 3,420.00 R&R 4532 SCHOOL ST & 5390 SILVER CANYON 66200 08/31/2015 Jackson's Auto Supply - Napa 179.78 AUTOMOBILE MAINTENANCE PARTS 66157 08/31/2015 JASSMIN HALWANI 101.22 CUSTOMER REFUND 66149 08/31/2015 JEAN MARIE LEBEAU 158.05 CUSTOMER REFUND 66201 08/31/2015 John Bogosian 1,054.08 HARDWARE SUPPLIES 66156 08/31/2015 JOHN OJEDA 142.50 CUSTOMER REFUND 66159 08/31/2015 JONATHAN S DOCTOR 45.72 CUSTOMER REFUND 66203 08/31/2015 Kidman Law 6,903.00 LEGAL SERVICES 66204 08/31/2015 Kimball Midwest 321.46 HARDWARE SUPPLIES 66205 08/31/2015 Konica Minolta Business 567.01 BIZHUB C552 & 181 - LEASE 66207 08/31/2015 Managed Health Network 164.25 EAP - AUGUST 2015 66152 08/31/2015 MARIA DELFONZO 76.97 CUSTOMER REFUND 66208 08/31/2015 Marina Landscape, Inc 4,114.68 JULY MONTHLY MAINTENANCE 66150 08/31/2015 MARK POWELL 225.00 CUSTOMER REFUND 66153 08/31/2015 MARYJO ORONOZ 107.26 CUSTOMER REFUND 66209 08/31/2015 Mc Fadden-Dale Hardware 162.57 HARDWARE SUPPLIES 66210 08/31/2015 Mc Master-Carr Supply Co.241.14 HARDWARE SUPPLIES 66211 08/31/2015 Minuteman Press 162.00 BUSINESS CARDS - TEM & BOTTS 66212 08/31/2015 MR2 Solutions Inc 9,280.00 CONSULTING IT SERVICES - JUNE 2015 66242 08/31/2015 Municipal Water District 225.00 RESIDENTIAL SMART TIMERS (3) W081415 08/14/2015 Municipal Water District 459,668.27 WATER DELIVERIES - JUNE 2015 66214 08/31/2015 Murcal, Inc.120.34 PC BOARD 66215 08/31/2015 Muzak LLC 80.18 MUZAK LLC SERVICES - AUG 2015 Yorba Linda Water District Check Register For Checks Dated: 08/14/2015 thru 8/31/2015 66216 08/31/2015 Neopost Inc 190.48 IM SERIES INK CARTRIDGE 66162 08/31/2015 NEWTON ENGINEERING 674.73 CUSTOMER REFUND 66217 08/31/2015 Nicholas A. Hollon 145.79 SAFETY BOOT ALLOWANCE - HOLLON 66218 08/31/2015 Nickey Kard Lock Inc 6,514.01 FUEL 66219 08/31/2015 Office Solutions 1,199.62 OFFICE SUPPLIES 66220 08/31/2015 Orange County - HCA 344.00 FA0067288 & FA0050175 - HAZMAT DISCLOSURE 66221 08/31/2015 Pacific Truck Equipment Inc.419.26 VMAC SERVICE KITS 66222 08/31/2015 Parts Source Anaheim 77.63 MERCON 10LV TRANS FLUID 66223 08/31/2015 Powerstride Battery 279.72 BATTERIES - 59 & 78 66224 08/31/2015 Praxair Distribution 154.70 CYLINDER RENTAL 66225 08/31/2015 Progistics Distribution, Inc.21.64 MCMASTER SAME DAY SHIPPING 66226 08/31/2015 Quinn Power Systems Associates 4,171.17 WELL 7 - MAINTENANCE PARTS 66234 08/31/2015 Rachel Padilla/Petty Cash 297.93 PETTY CASH - O081715 & Y081015 66227 08/31/2015 Raftelis Financial Consultants, Inc.9,568.03 YL 2015 WATER & SEWER RATE STUDY 66228 08/31/2015 Red Wing Shoes - Sta Ana 92.44 SAFETY BOOT PURCH - HUIZAR, G 66147 08/31/2015 ROBERT F DOLL 213.86 CUSTOMER REFUND 66165 08/31/2015 SAEED YAZDIANPOUR 79.15 CUSTOMER REFUND 66229 08/31/2015 Safety-Kleen Systems Inc 482.61 HAZMAT REMOVAL 66230 08/31/2015 SC Prime Source Inc.4,800.00 JANITORIAL SVCS - AUGUST 2015 66166 08/31/2015 SEAN P REES 89.27 CUSTOMER REFUND 66231 08/31/2015 Severn Trent De Nora Texas, LLC 225.82 TUBE ASSY - ACRYLIC 66155 08/31/2015 SHI SHENG LI 20.10 CUSTOMER REFUND 66232 08/31/2015 Shred-It USA Inc 105.84 ON-SITE SHRED SERVICE 66233 08/31/2015 South Coast AQMD 1,403.94 PERMITS AND FEES FOR AQMD W082015 08/20/2015 Southern Calif Edison Co.31,317.52 7573 - JULY 2015 W081715 08/17/2015 Southern Calif Gas Co.38,561.97 HIGHLAND AVE - JULY 2015 W082015A 08/20/2015 Southern Calif Gas Co.19,460.54 RICHFIELD - JULY 2015 66235 08/31/2015 St.Jude Hospital Yorba Linda 47.00 DMV PHYSICAL EXAM & AUDIOGRAM 66236 08/31/2015 Terryberry Company 304.89 EMPLOYEE RECOGNITION - RUBEN 66206 08/31/2015 The Lighthouse Inc.157.08 CONTROLLER #193 66237 08/31/2015 Time Warner Cable 1,428.15 BASIC CABLE AND FIBER OPTIC INSTALL 66238 08/31/2015 Townsend Public Affairs, Inc.5,000.00 CONSULTING SVCS - AUGUST 66239 08/31/2015 U S Postal Service(Hasler)2,500.00 REPLENISH FUNDS FOR POSTAL MTR 66240 08/31/2015 U S Postmaster 40.00 REPLENISH PO BOX DEP #PD95021 66213 08/31/2015 Wonderware West 2,785.00 TRAINING FOR SYSTEM PLATFORM - ARNADO,B 66241 08/31/2015 Yorba Linda Hardware 29.65 HARDWARE SUPPLIES 1,231,109.60 Date Vendor Name Amount Description 7/28/2015 National Notary 92.00 Notary insurance & membership - Alexander A 7/28/2015 Jon's Flags 519.48 New Flags (USA & CA State) for Water District 7/30/2015 Orchard Supply Hardware 9.48 (2) bags of salt pellets for car wash RO system 8/3/2015 Home Depot 29.64 (4) 2-Gal liquid chlorine - Hidden Hill Reservoir 8/4/2015 McMaster Carr 17.36 O-rings for Hydrants 8/5/2015 B&M Lawn & Garden 65.19 Hardware supplies 8/5/2015 Cellular Outfitter 92.15 IT equipment & hardware 8/5/2015 Arvato Digital Services 99.99 Windows anytime upgrade 8/5/2015 Amazon.com 160.99 Streamlight - Litebox 8/5/2015 Power Equipment Direct 93.61 (2) pressure spray guns 8/6/2015 KB Design 3,139.56 YLWD uniforms 8/6/2015 Amazon.com 186.07 (10) copies of Death of a Water District 8/6/2015 Inland Group 5,682.00 Prop 218 - Newsletter postage 8/6/2015 Placentia Disposal 576.46 (2) front loads - Richfield 8/6/2015 Solarwinds Inc.8,866.00 Licence 1 YR maintenance & Netflow analyser 8/6/2015 Online Information Services 607.20 Utility exchange report 8/7/2015 FTP Today 59.95 ylwd.ftptoday.com - August 8/7/2015 CalPERS 798.00 CalPERS Education Forum 2015 - Lugo & McCann 8/10/2015 Kohler 345.07 Waterless urinal - maintenance balls 8/10/2015 Grainger 20.73 Hardware supplies 8/10/2015 Harbor Freight Tools 77.75 Hardware supplies 8/11/2015 Harrington Industrial 226.27 Repair parts for Well 18 8/11/2015 US Post Office 313.11 Postage due 8/11/2015 Verizon Wireless 8,610.80 Verizon Wireless for June & July 2015 8/12/2015 Facility Solution Group 59.73 Photocells for highland booster station 8/13/2015 Home Depot 28.32 Rental of equipment for sewer repair 8/13/2015 Home Depot 236.89 (22) rapid set concrete bags 8/13/2015 Village Nursery 92.07 SOD for landscape repair 8/13/2015 Praxair 46.48 Welding supplies - refill oxygen tank 8/13/2015 Fry's Electronic 255.88 IT equipment & hardware 8/13/2015 Westrux International 66.53 Hardware supplies 31,474.76 Cal Card Credit Card U S Bank 7/28/15-8/13/15 ITEM NO. 7.3 AGENDA REPORT Meeting Date: August 31, 2015 Budgeted:N/A To:Board of Directors Funding Source:N/A From:Marc Marcantonio, General Manager Job No:201409 Presented By:Steve Conklin, Engineering Manager Dept:Engineering Reviewed by Legal:N/A Prepared By:Ariel Bacani, Engineering Technician II CEQA Compliance:N/A Subject:Quitclaim Easement Deed to Western Pacific Housing, Inc., Tract 17617 SUMMARY: Western Pacific Housing, Inc. requested the District to abandon its existing water easements within their proposed housing Tract 17617, located at the northeast corner of Yorba Linda Blvd. and Prospect Ave., Yorba Linda. The two sets of easements were originally recorded on September 14, 1978 and March 20, 1984, of the Official Records of Orange County, California for the former development on this site. STAFF RECOMMENDATION: That the Board of Directors authorize the General Manager to execute the Quitclaim Easement Deed to Western Pacific Housing, Inc., abandoning the two sets of recorded easements of the Official Records of Orange County, California. DISCUSSION: Subsequent to the Board's approval of Terms and Conditions for this project, the District was granted easements from Western Pacific Housing, Inc. on May 1, 2015, to cover the proposed water and sewer pipelines within the housing tract's private streets. With the new easements in place, the owner requested that the District quitclaim the existing easements covering the abandoned water facilities, as shown on the attached exhibit. Staff reviewed this request and has determined that the prior easements are no longer required and that the abandonment of these easements will not hinder the District's ability to operate, maintain, and replace the new water and sewer main pipelines. The cover page for the attached Quitclaim Easement Deed was prepared in accordance with the requirements of District legal counsel. ATTACHMENTS: Name:Description:Type: 201409_Quitclaim_Easement_Deed.pdf Quitclaim Easement Deed with Western Pacific Housing, Inc., Tract 17617 Agreement Approved by the Board of Directors of the Yorba Linda Water District 8/31/2015 PH/RK 4-0-0-1 RC was absent. RECORDING REQUESTED BY: Yorba Linda Water District WHEN RECORDED, MAIL TO: D.R. Horton 100 E. San Marcos Blvd. San Marcos, CA 92069 THIS SPACE FOR RECORDER'S USE ONLY FREE GOVERNMENT RECORDING PURSUANT TO GOVERNMENT CODE SEC. 6103 AND 27383 QUITCLAIM DEED J-201409 For good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Yorba Linda Water District (“Transferor”) does remise, release, and forever quitclaim to WESTERN PACIFIC HOUSING, INC., a Delaware Corporation (“Transferee”), all right, title, and interest Transferor has in the real property and appurtenances described and depicted in Exhibits A and B, respectively, attached hereto and incorporated herein by reference. Executed as of , 2015 YORBA LINDA WATER DISTRICT By: __________________________________ Name: Marc Marcantonio Title: General Manager [MUST BE NOTARIZED] EXHIBIT "A" QUITCLAIM EASEMENT LEGAL DESCRIPTION PARCEL A ALL THAT PORTION OF YORBA LINDA WATER DISTRICT PIPELINE EASEMENT AS DESCRIBED IN BOOK 12841, PAGE 842 RECORDED IN THE OFFICIAL RECORDS OF ORANGE COUNTY CALIFORNIA ON SEPTEMBER 14, 1978, WITHIN PARCEL 1 OF A PARCEL MAP, RECORDED DECEMBER 21, 1976 IN BOOK 89, PAGE 45 OF PARCEL MAPS, RECORDS OF ORANGE COUNTY,STATE OF CALIFORNIA: SAID PORTION OF LAND CONTAINS+/- 1873.58 SQUARE FEET. PARCEL B ALL THAT PORTION OF YORBA LINDA WATER DISTRICT PIPELINE EASEMENT AS DESCRIBED IN DEED 84-114916 RECORDED IN THE OFFICIAL RECORDS OF ORANGE COUNTY CALIFORNIA ON MARCH 20, 1984, WITHIN PARCEL 1 OF A PARCEL MAP RECORDED DECEMBER 21, 1976 IN BOOK 89,PAGE 45 OF PARCEL MAPS,RECORDS OF ORANGE COUNTY, STATE OF CALIFORNIA: SAID PORTION OF LAND CONTAINS+/-529.35 SQUARE FEET. PARCEL C ALL THAT PORTION OF YORBA LINDA WATER DISTRICT PIPELINE EASEMENT AS DESCRIBED IN DEED 84-114917 RECORDED IN THE OFFICIAL RECORDS OF ORANGE COUNTY CALIFORNIA ON MARCH 20, 1984, WITHIN PARCEL 2 OF A PARCEL MAP RECORDED DECEMBER 21, 1976 IN BOOK 89,PAGE 45 OF PARCEL MAPS,RECORDS OF ORANGE COUNTY, STATE OF CALIFORNIA: SAID PORTIONS OF LAND CONTAINS+/-684.99 SQUARE FEET, AS SHOWN ON EXHIBIT"S"ATTACHED HERETO AND MADE A PART HEREOF. PREPARED UNDER THE SUPERVISION OF: u�Na Michael 0. Levin No. 6896 9 � l CHAEL D.LEVIN,P.L.S. 6896 DATE EXHIBIT B' SHEET 1 OF 4 EASEMENT QUITCLAIM IN THE CITY OF MRBA LINDA, COUNTY OF ORANGE, STATE OF CALIFORNIA I30' 30' I _ 89°50'42"#' 329.98' I _LINE TARE _ I I _BEARINC --- LENGTH_ L 1 N8950'13141 6500' r L2 N022344E 500' L3 N8950'13'WY 15.00' PARCEL A > 1 Z4 N0223'44E 20.00' L 7 Q L5 N8950'13"9/ 80.00' L6 L6 N0223'44E 1500' L6 REGULU$ o ] L7 N8950'I3"W 40.00' L7 i DRIVE �, II PARCEL A zi � L2 L4 z/ PARCEL B Z6- L23.50� 0, N89 50'42141 329 98' 9 .63 LOT 1 0� U PARCEL C 0'078 GROSS ACRES ICl- ON � \ � , .. ...:.,..•.`.L -..• 2 FOLEY ° DRIVE 30 30 - SCAM. 1`80' }' = N43°48 25'?Y 38.90' I I 66-1 h o N89 050'42"# 301.88' �p h 197. 13' _ 162.83' 491.92' N89°50'42"K' 851.88' h YORBA LINDA BLVD. h EXHIBIT B' SHEET 2 OF 4 EASEMENT QUITCLAIM IN THE CITY OF MRBA LINDA, COUNTY OF ORANGE, STATE OF CALIFORNIA 30' I 89°50'42"ff' 329.98' I I 1 PARCEL A Q LINE TABLE _ o iUO. BE.4351-KU LENGTH_ L REGULUS L1 N8950'12"W 72.50' DRIVE L2 N282853'741 35.30' p �I I PARCEL A , PARCEL B 131 ' — L2 15 N89 50'42"W 32998 L�w 90.63' LOT > oN h � PARCEL C 4f 078 GROSS ACRES � O \\� PARCEL.. �2 FOLEY ° DRIVE 30' 30 SCALE. 1"--80' N43 '49251Y 38.90' o N89°50'42"{f' 301.99' h 197. 13' 162.83' 491.92�� N89°50'42"K' 851.88' h YORBA LINDA BLVD. h EXHIBIT B' SHEET 3 OF 4 EASEMENT QUITCLAIM IN THE CITY OF MRBA LINDA, COUNTY OF ORANGE, STATE OF CALIFORNIA 1 30' 30 I �89°50'42"{f' 9,5, I I Li 1 PARCEL A Q � _ ____LI_N_E_T_ABLE_ _ o N0BEARING LENGTH L REGULUS L 1 N282922141 25 70' DRIVE L2 N89 50'13W 20.00' p �I I PARCEL A .. ' I n, � –_ – s � PARCEL B . . .,..• _._ �o 90.63' 15'N89 W 9 50'42" 32 .98' — 25.50' 7Z, h PARCEL C LOT > o� L2 ¢078 iNOSS ACRES Cl- 0 FFOLY E .10' 30' sc&x. 1"=80' 48 25'?Y 38 90' - o N89°50'42"{f 301.88' �p h 197. 13' 162.83' 491.92 } N89°50'42"{f 851.88' h YORBA LINDA BLVD. h EXHIBIT B' SHEET 4 OF 4 EASEMENT WITCLA/M IN THE CITY OF YORSA LINDA, COUNTY OF ORANGE, STATE OF CAL IFORN IA LEGEND EASEMENT TO BE OU/TCLA/MED L IST OF EASEMENTS O1 SOUTHERN CAL IFORNIA ED/SON COMPANY EASEMENT FOR PURL/C UTILITIES, INGRESS, EGRESS PER /NST. NO 9049, RECORDED MAY 5, 1978 AS BOOK 12663, PAGE 1507, OFF/C/AL RECORD. (TO BE OU/TCLA/MED BY SEPARATE DOCUMENT 2O SOUTHERN CAL IFORNIA ED/SON COMPANY EASEMENT FOR PURL/C UTILITIES, INGRESS, EGRESS PER DOCUMENT RECORDED N0l/EWER 8, 1983 AS INSTRUMENT NO 83-515823, OFF/C/AL RECORD. (TO BE QUITCLAIMED BY SEPARATE DOCUMENT O3 Cl Tr OF YORBA LINDA EASEMENT FOR R/GHT—OF—IVAY FOR TRAFF/C SIGNAL CONTROL PER DOCUMENT RECORDED SEPTEMBER 11, 1985 AS INSTRUMENT N0. 85-343853, OFF/CIAL RECORD. (TO BE OU/TCLA/MED BY SEPARATE DOCUMENT PREPARED UNDER THE SUPERS/S/ON OF �0 -AND S��F Michael D. Levin 11/24/14 No. 6896 /CHAEL D. LEIi/N, P.L.S. 6896 DA TE P.L.S. 6996 LICENSE EXP/RAT/ON DATE.• 6/30/15 9TF pF CA`�F�`� ITEM NO. 7.4 AGENDA REPORT Meeting Date: August 31, 2015 Budgeted:N/A To:Board of Directors Funding Source:Developer Funded From:Marc Marcantonio, General Manager Account No:1/2-2600 Job No:201506 Presented By:Steve Conklin, Engineering Manager Dept:Engineering Prepared By:Ariel Bacani, Engineering Technician II CEQA Compliance:N/A Subject:Terms and Conditions for Water and Sewer Service with City Ventures, Tract 17459 SUMMARY: City Ventures is proposing to redevelop a former nursery into housing Tract 17459, consisting of 48 detached condominium units on 5.61 acres. The project is located at 3811 Prospect Ave., north of Imperial Hwy., within the City of Yorba Linda, as shown in the attached exhibit. STAFF RECOMMENDATION: That the Board of Directors approve the Terms and Conditions for Water and Sewer Service with City Ventures, Tract 17459, Job No. 2015-06. DISCUSSION: The District has an existing Zone 2 water pipeline in Prospect Avenue that is adequate in size and of sufficient pressure to serve the project. Staff requires the applicant to loop the proposed onsite water system into Prospect Avenue at two points for water circulation and redundancy. The project is located within Drainage Area "2" of the District's Sewer Service Area. The District has an existing 8-inch sewer main in Imperial Highway that is adequate in size to serve the housing tract. The applicant will extend the sewer main along Prospect Avenue and into the proposed development. City Ventures' engineer provided sewer flow calculations, confirming that additional peak sewer flows generated from this development will not adversely impact the District's existing sewer facilities. The Terms and Conditions for Water and Sewer Service with City Ventures for Tract 17459 are attached for your consideration. ATTACHMENTS: Name:Description:Type: 201506_T_C.doc Terms & Conditions for Water & Sewer Service with City Ventures for Tract 17459 Agreement 201506_Exhibit.pdf Exhibit of Proposed Water & Sewer Improvements for City Ventures, Tract 17459 Exhibit Approved by the Board of Directors of the Yorba Linda Water District 8/31/2015 PH/RK 4-0-0-1 RC was absent. Date: AUGUST 31, 2015 YORBA LINDA WATER DISTRICT TERMS AND CONDITIONS FOR WATER AND SEWER SERVICE NAME OF APPLICANT: CITY VENTURES LOCATION OF PROJECT: 3811 PROSPECT AVE., YORBA LINDA TRACT NUMBER: 17459 JOB NUMBER: 201506 UNIT(S): 48 The applicant will be required to complete to the satisfaction of the District the following items that have an “X” following the number. 1) X The applicant shall provide the District with a copy of the Grant Deed or Title Report of the property to be served. 2) X The applicant shall include information deemed necessary by the District in the event the applicant is required to file a Department of Real Estate Tax Disclosure statement. 3) The applicant shall provide to all purchasers of the homes a statement that the home is located within Improvement District No. 1 and that the home is subject to a property tax over and above the normal 1% Basic Tax Levy to pay for Production, Storage, and Transmission water facilities serving Improvement District No. l. 4) The applicant shall provide to all purchasers of the homes a statement that the home is located within Improvement District No. 2 and that the home is subject to a property tax over and above the normal 1% Basic Tax Levy to pay for Production, Storage, and Transmission water facilities serving Improvement District No. 2. 5) X The applicant shall submit two (2) sets of the improvement plans to the District for plan check processing. a) Improvement Plans b) Grading Plans c) Tract, Parcel or Vesting Map d) Landscaping Plans 6) X Improvement Plans submitted for plan check shall comply with the submittal requirements established by the YLWD Engineering Department. 7) X The applicant shall dedicate or obtain all easements deemed necessary by the District in accordance with the Rules and Regulations of the District. All easement documents shall be prepared under the supervision of and stamped by a Professional Land Surveyor or a Registered Civil Engineer Page 2 of 5 NAME OF APPLICANT: CITY VENTURES LOCATION OF PROJECT: TRACT 17459 – 3811 PROSPECT AVE., YORBA LINDA (licensed prior to January 1, 1982) licensed to practice in the State of California. 8) X The applicant shall provide the District with a copy of the Recorded Tract/Parcel Map(s) or Easement Documents illustrating all District easements required by Term and Condition No. 7, prior to requesting occupancy releases. 9) X The applicant shall prepare and process all easements to be quitclaimed by the District in accordance with the Rules and Regulations of the District. 10) X The applicant shall furnish the District with a 24-hour emergency telephone number prior to the District’s approval of the construction plans. 11) X The applicant shall notify the District 48 hours prior to initiating any work related to required or proposed improvements. 12) X The applicant shall complete a Temporary Construction Meter Permit application for all water to be used in construction work and all water used under such permit shall be taken from the approved construction meter. 13) X The applicant shall provide per the District specifications one complete set of "As Built" mylars and electronic copy of ACAD drawings (version 2008 or later) for the Water facilities. 14) X The applicant shall complete an Application to and Agreement for Water Service. 15) X The applicant shall pay all of the water fees as required by the Rules and Regulations of the District. 16) X The applicant shall pay meter fees associated with the installation of radio read meters for this project. 17) X The applicant shall comply with the Rules and Regulations of the Yorba Linda Water District with regard to the Rendition of Water Service. 18) X The applicant shall provide the District with a set of plans stamped and approved by the Orange County Fire Authority, or fire agency having jurisdiction, that identifies approved fire hydrant locations. Such approved plan must be submitted to the District before staff will initiate a District plan check for water improvements. 19) X The applicant shall have all water facilities designed in accordance with the District's Water Facilities Plan and the District’s Standard Specifications. All design plans shall be prepared under the supervision of and stamped by a Registered Civil Engineer licensed to practice in the State of California. 20) X The applicant’s water facilities (on-site) shall be District owned and maintained. Page 3 of 5 NAME OF APPLICANT: CITY VENTURES LOCATION OF PROJECT: TRACT 17459 – 3811 PROSPECT AVE., YORBA LINDA 21) X The applicant shall be required to conduct flow tests at their cost in the event the Orange County Fire Authority requires a flow test. A District representative shall be present to witness the flow test. 22) X The applicant shall comply with all additional District requirements, relative to the fire protection system, fire hydrant construction and fire hydrant locations. 23) X The applicant shall install one (1) water Sampling Station(s) in conformance with the District’s Standard Plans. 24) X The applicant shall provide a completed Surety Bond for the water facilities prior to the District signing the Water Improvement Plans. The applicant shall also provide to the District an estimate of the construction costs of the proposed water facilities. 25) X The applicant shall install the curb and gutters a minimum of one week prior to the installation of the water main and services. 26) X All existing water services that are not useable in the new plan shall be cut and plugged at the main line. 27) X The applicant shall coordinate through the District all connections of new water facilities to the existing District facilities. 28) X The applicant shall provide a written copy of the Bacteriological Report prior to occupancy releases certifying that the water meets the Health Department's requirements. 29) X The applicant shall adjust and raise to grade all valve covers within the limits of this project. 30) X The applicant shall install a pressure regulator in all dwellings that have over 80 p.s.i. static water pressure in accordance with the appropriate building codes. 31) X The applicant shall complete a Temporary Water Permit for all water that will be used through the new water services to serve the new dwellings. 32) X The applicant shall install a District approved backflow device in connection with any private fire suppression sprinkler facilities that may be required by the Orange County Fire Authority or fire agency having jurisdiction. 33) X The applicant shall install a reduced pressure principle backflow prevention device on all commercial buildings and landscape services. 34) X The applicant shall install and provide a written test report to the District for each backflow device certifying that the backflow devices are operating properly prior to the water meters being turned on for service. Page 4 of 5 NAME OF APPLICANT: CITY VENTURES LOCATION OF PROJECT: TRACT 17459 – 3811 PROSPECT AVE., YORBA LINDA 35) X The applicant shall install and provide a written test report to the District certifying that the double check detector assembly is operating properly prior to the double check detector assembly being turned on for service. 36) X The applicant shall provide an annual written test report to the District certifying that the backflow devices and fire detector assemblies are operating properly pursuant to the District’s Backflow Prevention Program and the State of California Administrative Code, Title 17, Public Health Rules and Regulations Relating to Cross-Connections. 37) The applicant shall complete a Sewer Connection Application and Permit for Sewer Service. 38) X The applicant shall complete an Application to and Agreement for Sewer Service. 39) X The applicant shall comply with the Rules and Regulations of the Yorba Linda Water District with regard to the Rendition of Sanitary Sewer Service. 40) X The applicant shall pay all of the sewer fees as required by the Rules and Regulations of the District. 41) X The applicant shall have all sewer facilities designed in accordance with the District's Sewer Master Plan and Standard Specifications. All design plans shall be prepared under the supervision of and stamped by a Registered Civil Engineer licensed to practice in the State of California. 42) X The applicant shall provide a completed Surety Bond for the sewer facilities prior to the District signing the Sewer Improvement Plans. The applicant shall also provide to the District an estimate of the construction costs of the proposed sewer facilities. 43) X The applicant’s sewer facilities (on-site) shall be District owned and maintained. 44) X The applicant shall construct a sewer main and appurtenances in conformance with the approved plans and the District’s Plans and Specifications. 45) X The applicant shall adjust and raise to grade all sewer manhole covers within the limits of this project. 46) X The applicant shall install a sewer backflow prevention valve on all sewer service connections in which the pad elevations of the property being served is lower than the rim elevation of the upstream manhole. Installation of the backflow device shall comply with all requirements of the Building and Plumbing Codes of the appropriate agency having jurisdiction. 47) X The applicant shall submit a video inspection report of their sewer project in DVD format. The video of the sewer facilities shall be conducted in the Page 5 of 5 NAME OF APPLICANT: CITY VENTURES LOCATION OF PROJECT: TRACT 17459 – 3811 PROSPECT AVE., YORBA LINDA presence of the District inspector, which will include stationing locations of manholes, cleanouts, wyes, laterals, backflow devices and appurtenances. (END OF STANDARD TERMS AND CONDITIONS) PROJECT SPECIFIC TERMS AND CONDITIONS 48) X The applicant shall loop the proposed onsite public water system into the existing water main pipeline at Prospect Ave., per approved plans and District Specifications. 49) X The applicant shall extend the public sewer system from Imperial Hwy., along Prospect Ave., and into the proposed development, per approved plans and District Specifications. I hereby certify that the foregoing Terms and Conditions were approved at the August 31, 2015 Regular Meeting of the Board of Directors of the Yorba Linda Water District. The approved Terms and Conditions shall become void six (6) months from the approval date if a formal Application To and Agreement with the Yorba Linda Water District for Water and Sewer Service is not executed for the project under consideration. Marc Marcantonio, General Manager I I VV- 1171 i L_-� L 6 Q 14 IB - 16 43 2] N 4 2 _ 11 15 19 � 23 y N �1 3 8 18 4 I Q IS N 1 V1 2i 1] 25 lq I • I U 30 •jr 32 33 •J4 35 CIE 37 38 39• •40 41 •42 I �\ I 1. PROPOSED PROPOSED ��.__ .- SEWER MAIN WATER MAIN I j LA FITNESS I I I I EXISTING 10" I WATER MAIN I I PROPOSED 8" I. \� SEWER MAIN 1BROOKILEXTENSION : YN AVENUE .9z EXISTING 8" SEWER MAIN I • I `Fy �F PREPARED BY: SCALE: EXHIBIT N.T.S. YORBA LINDA WATER DISTRICT PROPOSED WATER AND SEWER DATE: 1717 E. MIRALOMA AVENUE IMPROVEMENTS FOR TRACT 17459 8/31/2015 PLACENTIA, CALIFORNIA 92870 CITY VENTURES FILENAME: (714) 701-3000 J-201506 ITEM NO. 7.5 AGENDA REPORT Meeting Date: August 31, 2015 Budgeted: N/A To: Board of Directors Funding Source: Developer Funded From: Marc Marcantonio, General Account No: 2-0010-2600-00 Manager Job No: 2015-07S Presented By: Steve Conklin, Engineering Dept: Engineering Manager Reviewed by Legal: N/A Prepared By: Ricardo Hipolito Jr., Engineering CEQA Compliance: N/A Tech II Subject: Terms and Conditions for Water and Sewer Service with Robert Nicorici, 17691 Imperial Hwy, Yorba Linda SUMMARY: Mr. Nicorici is proposing to redevelop an existing 2-lot residential development at 17691 Imperial Hwy and requested sewer service along with an additional single water service. The property is approximately 0.49 acres and is located in the District's Western Service Area. Staff advised Mr. Nicorici that he would have to build a new sewer main in Imperial Hwy, westerly from Casa Loma Avenue, to provide sewer service to his development. An exhibit depicting the project location is attached for your reference. STAFF RECOMMENDATION: That the Board of Directors approve the Terms and Conditions for Sewer Service with Mr. Robert Nicorici, 17691 Imperial Hwy, Yorba Linda, Job No. 2015-07S. DISCUSSION: This property is located within Drainage Area 2 of the District Sewer Service Area and includes construction of approximately 270 linear feet of 8-inch sewer main, two manholes and two sewer laterals, as shown on the attached exhibit. This development is consistent with the District's Sewer Master Plan. For water service, the District has water facilities in Imperial Hwy that are adequately sized to serve this development. The District is currently providing water service to an existing home, within this development, that's proposed to be demolished and replaced with a new home. The applicant requested additional water service for the second parcel to the north. The applicant is required to complete a standard single water application and install a 1-inch water service. Per District policy, a standard single water application does not require Board approved Terms and Conditions. The applicant paid the sewer service administrative fee of $1,673.00 and will be required to pay the remaining water and sewer fees in accordance with the District's Rules and Regulations. The Terms and Conditions for Sewer Service with Mr. Robert Nicorici, for the construction of a new sewer main in Imperial Hwy are attached for your consideration. STRATEGIC PLAN: SR 2-B: Evaluate Feasibility of Providing Additional Wastewater Services within the Region ATTACHMENTS: Name:Description:Type: 2015-07S_T_C.pdf Terms & Conditions for Sewer Service with Robert Nicorici Agreement 201507S_Exhibit.pdf Exhibit of Proposed Sewer Extension for 17691 Imperial Hwy Exhibit Approved by the Board of Directors of the Yorba Linda Water District 8/31/2015 PH/RK 4-0-0-1 RC was absent. Date: AUGUST 31, 2015 YORBA LINDA WATER DISTRICT TERMS AND CONDITIONS FOR SEWER SERVICE NAME OF APPLICANT: ROBERT NICORICI LOCATION OF PROJECT: 17691 IMPERIAL HIGHWAY, YORBA LINDA TRACT NUMBER: N/A JOB NUMBER: 2015-07S LOT(S): 2 The applicant will be required to complete to the satisfaction of the District the following items that have an “X” following the number. 1) X The applicant shall provide the District with a copy of the Grant Deed or Title Report of the property to be served. 2) X The applicant shall include information deemed necessary by the District in the event the applicant is required to file a Department of Real Estate Tax Disclosure statement. 3) The applicant shall provide to all purchasers of the homes a statement that the home is located within Improvement District No. 1 and that the home is subject to a property tax over and above the normal 1% Basic Tax Levy to pay for Production, Storage, and Transmission water facilities serving Improvement District No. l. 4) The applicant shall provide to all purchasers of the homes a statement that the home is located within Improvement District No. 2 and that the home is subject to a property tax over and above the normal 1% Basic Tax Levy to pay for Production, Storage, and Transmission water facilities serving Improvement District No. 2. 5) X The applicant shall submit two (2) sets of the improvement plans to the District for plan check processing. a) Improvement Plans b) Grading Plans c) Tract, Parcel or Vesting Map d) Landscaping Plans 6) X Improvement Plans submitted for plan check shall comply with the submittal requirements established by the YLWD Engineering Department. Page 2 of 5 NAME OF APPLICANT: ROBERT NICORICI LOCATION OF PROJECT: 17691 IMPERIAL HIGHWAY, YORBA LINDA 7) X The applicant shall dedicate or obtain all easements deemed necessary by the District in accordance with the Rules and Regulations of the District. All easement documents shall be prepared under the supervision of and stamped by a Professional Land Surveyor or a Registered Civil Engineer (licensed prior to January 1, 1982) licensed to practice in the State of California. 8) X The applicant shall provide the District with a copy of the Recorded Tract/Parcel Map(s) or Easement Documents illustrating all District easements required by Term and Condition No. 7, prior to requesting occupancy releases. 9) The applicant shall prepare and process all easements to be quitclaimed by the District in accordance with the Rules and Regulations of the District. 10) X The applicant shall furnish the District with a 24-hour emergency telephone number prior to the District’s approval of the construction plans. 11) X The applicant shall notify the District 48 hours prior to initiating any work related to required or proposed improvements. 12) X The applicant shall complete a Temporary Construction Meter Permit application for all water to be used in construction work and all water used under such permit shall be taken from the approved construction meter. 13) X The applicant shall provide per the District specifications one complete set of "As Built" mylars and electronic copy of ACAD drawings (version 2010 or later) for the Water facilities. 14) The applicant shall complete an Application to and Agreement for Water Service. 15) The applicant shall pay all of the water fees as required by the Rules and Regulations of the District. 16) The applicant shall pay meter fees associated with the installation of radio read meters for this project. 17) The applicant shall comply with the Rules and Regulations of the Yorba Linda Water District with regard to the Rendition of Water Service. 18) The applicant shall provide the District with a set of plans stamped and approved by the Orange County Fire Authority, or fire agency having jurisdiction, that identifies approved fire hydrant locations. Such approved plan must be submitted to the District before staff will initiate a District plan check for water improvements. Page 3 of 5 NAME OF APPLICANT: ROBERT NICORICI LOCATION OF PROJECT: 17691 IMPERIAL HIGHWAY, YORBA LINDA 19) The applicant shall have all water facilities designed in accordance with the District's Water Facilities Plan and the District’s Standard Specifications. All design plans shall be prepared under the supervision of and stamped by a Registered Civil Engineer licensed to practice in the State of California. 20) The applicant’s water facilities (on-site) shall be District owned and maintained. 21) The applicant shall be required to conduct flow tests at their cost in the event the Orange County Fire Authority requires a flow test. A District representative shall be present to witness the flow test. 22) The applicant shall comply with all additional District requirements, relative to the fire protection system, fire hydrant construction and fire hydrant locations. 23) The applicant shall install one (1) water Sampling Station(s) in conformance with the District’s Standard Plans. 24) The applicant shall provide a completed Surety Bond for the water facilities prior to the District signing the Water Improvement Plans. The applicant shall also provide to the District an estimate of the construction costs of the proposed water facilities. 25) The applicant shall install the curb and gutters a minimum of one week prior to the installation of the water main and services. 26) All existing water services that are not useable in the new plan shall be cut and plugged at the main line. 27) The applicant shall coordinate through the District all connections of new water facilities to the existing District facilities. 28) The applicant shall provide a written copy of the Bacteriological Report prior to occupancy releases certifying that the water meets the Health Department's requirements. 29) The applicant shall adjust and raise to grade all valve covers within the limits of this project. 30) The applicant shall install a pressure regulator in all dwellings that have over 80 p.s.i. static water pressure in accordance with the appropriate building codes. 31) The applicant shall complete a Temporary Water Permit for all water that will be used through the new water services to serve the new dwellings. 32) The applicant shall install a District approved backflow device in connection with any private fire suppression sprinkler facilities that may be required by the Orange County Fire Authority or fire agency having jurisdiction. Page 4 of 5 NAME OF APPLICANT: ROBERT NICORICI LOCATION OF PROJECT: 17691 IMPERIAL HIGHWAY, YORBA LINDA 33) The applicant shall install a reduced pressure principle backflow prevention device on all commercial buildings and landscape services. 34) The applicant shall install and provide a written test report to the District for each backflow device certifying that the backflow devices are operating properly prior to the water meters being turned on for service. 35) The applicant shall install and provide a written test report to the District certifying that the double check detector assembly is operating properly prior to the double check detector assembly being turned on for service. 36) The applicant shall provide an annual written test report to the District certifying that the backflow devices and fire detector assemblies are operating properly pursuant to the District’s Backflow Prevention Program and the State of California Administrative Code, Title 17, Public Health Rules and Regulations Relating to Cross-Connections. 37) The applicant shall complete a Sewer Connection Application and Permit for Sewer Service. 38) X The applicant shall complete an Application to and Agreement for Sewer Service. 39) X The applicant shall comply with the Rules and Regulations of the Yorba Linda Water District with regard to the Rendition of Sanitary Sewer Service. 40) X The applicant shall pay all of the sewer fees as required by the Rules and Regulations of the District. 41) X The applicant shall have all sewer facilities designed in accordance with the District's Sewer Master Plan and Standard Specifications. All design plans shall be prepared under the supervision of and stamped by a Registered Civil Engineer licensed to practice in the State of California. 42) X The applicant shall provide a completed Surety Bond for the sewer facilities prior to the District signing the Sewer Improvement Plans. The applicant shall also provide to the District an estimate of the construction costs of the proposed sewer facilities. 43) X The applicant’s sewer facilities (on-site) shall be Privately owned and maintained. 44) X The applicant shall construct a sewer main and appurtenances in conformance with the approved plans and the District’s Plans and Specifications. 45) X The applicant shall adjust and raise to grade all sewer manhole covers within the limits of this project. Page 5 of 5 NAME OF APPLICANT: ROBERT NICORICI LOCATION OF PROJECT: 17691 IMPERIAL HIGHWAY, YORBA LINDA 46) X The applicant shall install a sewer backflow prevention valve on all sewer service connections in which the pad elevations of the property being served is lower than the rim elevation of the upstream manhole. Installation of the backflow device shall comply with all requirements of the Building and Plumbing Codes of the appropriate agency having jurisdiction. 47) X The applicant shall submit a video inspection report of their sewer project in DVD format. The video of the sewer facilities shall be conducted in the presence of the District inspector, which will include stationing locations of manholes, cleanouts, wyes, laterals, backflow devices and appurtenances. (END OF STANDARD TERMS AND CONDITIONS) PROJECT SPECIFIC TERMS AND CONDITIONS 48) X The applicant shall construct approximately 270 feet of new 8-inch sewer main with two manholes and two new sewer laterals, per approved plans and District Specifications. I hereby certify that the foregoing Terms and Conditions were approved at the August 31, 2015 Regular Meeting of the Board of Directors of the Yorba Linda Water District. The approved Terms and Conditions shall become void six (6) months from the approval date if a formal Application To and Agreement with the Yorba Linda Water District for Water and Sewer Service is not executed for the project under consideration. Marc Marcantonio, General Manager I I PROPOSED -------------- I 3 1-STORY I RESIDENCE c O O <a Entrada Dr l d aEntrada Dr t a Entr 0 17691 IMPERIAL n HWY. 0.49 ACRES D Vinjon's Kennel I + I Weatherly Dr i PROPOSED I 2-STORY 1 I `j 77691 Imperial Hwy RESIDENCE I Nay �––—–– W Q --------- � F/don cn a on Tr j1 PROP. 1"WATER a w * I W I f resvnw�� r/ SERVICE O > d , �a l Yorba Linda � 0 Community Center d � ur c II OT�Pr z. v i Z Q i VICINITY MAP \ ct EX. 1"WATER "' J SERVICE w Q EX. 8"WATER MAIN I� y vI \w PROPOSED 8" SEWER ` co \ MAIN (APPROX. 270 L.F.) I w PROP. SEWER � I MANHOLE ��lo PROP. TWO 4"SEWER �5►`y w LATERALS Y w LOCATION MAP PROP. SEWER MANHOLE PREPARED BY: EXHIBIT SCALE: N.T.S. YORBA LINDA WATER DISTRICT SEWER MAIN EXTENSION DATE: 1717 E. MIRALOMA AVENUE FOR 8/31/2015 PLACENTIA, CALIFORNIA 92870 17691 IMPERIAL HWY., YORBA LINDA FILENAME: (714) 701-3100 J2015-07S ITEM NO. 7.6 AGENDA REPORT Meeting Date: August 31, 2015 Budgeted:N/A To:Board of Directors Funding Source:Developer Funded From:Marc Marcantonio, General Manager Account No:1-2600 Job No:2015-08 Presented By:Steve Conklin, Engineering Manager Dept:Engineering Reviewed by Legal:No Prepared By:Ricardo Hipolito Jr., Engineering Tech II CEQA Compliance:N/A Subject:Terms and Conditions for Water Service with Rezai & Son, LLC, 4240 E La Palma Ave SUMMARY: The applicant is planning to construct an office/warehouse building on the rear portion of the existing lot located at 4240 E. La Palma Avenue. The property consists of approximately 1.33 acres and is located within the Western Service Area in the City of Anaheim. An exhibit depicting the location of the project is attached. STAFF RECOMMENDATION: That the Board of Directors approve the Terms and Conditions for Water Service with Rezai & Son, LLC for the property located at 4240 E La Palma Ave, Job No. 2015-08. DISCUSSION: The District has an existing water pipeline in Fee Ana Street, that is adequate in size and of sufficient pressure to serve this project. The Anaheim Fire Department requires the building to be equipped with a private fire sprinkler system and on-site fire hydrant. Staff reviewed these conditions and requires the applicant to install a fire double-check detector assembly and an isolation valve to separate the private system from the public system. The onsite water facilities will be privately owned and maintained. Additionally, the applicant will install two separate domestic and irrigation water services. Sewer service for this property is provided by the City of Anaheim. The Terms and Conditions with Rezai & Son, LLC for water service are attached for your consideration. ATTACHMENTS: Name:Description:Type: 201508_T_C.pdf Terms & Conditions for Water Service with Rezai & Son, LLc Agreement 201508_Exhibit.pdf Exhibit of Proposed Water Service for Rezai & Son, LLC Exhibit Approved by the Board of Directors of the Yorba Linda Water District 8/31/2015 PH/RK 4-0-0-1 RC was absent. Date: AUGUST 31, 2015 YORBA LINDA WATER DISTRICT TERMS AND CONDITIONS FOR WATER AND SEWER SERVICE NAME OF APPLICANT: REZAI & SON, LLC LOCATION OF PROJECT: 4240 E. LA PALMA, ANAHEIM, CA TRACT NUMBER: 17608 JOB NUMBER: 201508 UNIT(S): 1 The applicant will be required to complete to the satisfaction of the District the following items that have an “X” following the number. 1) X The applicant shall provide the District with a copy of the Grant Deed or Title Report of the property to be served. 2) X The applicant shall include information deemed necessary by the District in the event the applicant is required to file a Department of Real Estate Tax Disclosure statement. 3) The applicant shall provide to all purchasers of the homes a statement that the home is located within Improvement District No. 1 and that the home is subject to a property tax over and above the normal 1% Basic Tax Levy to pay for Production, Storage, and Transmission water facilities serving Improvement District No. l. 4) The applicant shall provide to all purchasers of the homes a statement that the home is located within Improvement District No. 2 and that the home is subject to a property tax over and above the normal 1% Basic Tax Levy to pay for Production, Storage, and Transmission water facilities serving Improvement District No. 2. 5) X The applicant shall submit two (2) sets of the improvement plans to the District for plan check processing. a) Improvement Plans b) Grading Plans c) Tract, Parcel or Vesting Map d) Landscaping Plans 6) X Improvement Plans submitted for plan check shall comply with the submittal requirements established by the YLWD Engineering Department. 7) X The applicant shall dedicate or obtain all easements deemed necessary by the District in accordance with the Rules and Regulations of the District. All easement documents shall be prepared under the supervision of and stamped by a Professional Land Surveyor or a Registered Civil Engineer Page 2 of 5 NAME OF APPLICANT: REZAI & SON, LLC LOCATION OF PROJECT: 4240 E. LA PALMA AVENUE, ANAHEIM, CA (licensed prior to January 1, 1982) licensed to practice in the State of California. 8) X The applicant shall provide the District with a copy of the Recorded Tract/Parcel Map(s) or Easement Documents illustrating all District easements required by Term and Condition No. 7, prior to requesting occupancy releases. 9) X The applicant shall prepare and process all easements to be quitclaimed by the District in accordance with the Rules and Regulations of the District. 10) X The applicant shall furnish the District with a 24-hour emergency telephone number prior to the District’s approval of the construction plans. 11) X The applicant shall notify the District 48 hours prior to initiating any work related to required or proposed improvements. 12) X The applicant shall complete a Temporary Construction Meter Permit application for all water to be used in construction work and all water used under such permit shall be taken from the approved construction meter. 13) X The applicant shall provide per the District specifications one complete set of "As Built" mylars and electronic copy of ACAD drawings (version 2008 or later) for the Water facilities. 14) X The applicant shall complete an Application to and Agreement for Water Service. 15) X The applicant shall pay all of the water fees as required by the Rules and Regulations of the District. 16) X The applicant shall pay meter fees associated with the installation of radio read meters for this project. 17) X The applicant shall comply with the Rules and Regulations of the Yorba Linda Water District with regard to the Rendition of Water Service. 18) X The applicant shall provide the District with a set of plans stamped and approved by the Orange County Fire Authority, or fire agency having jurisdiction, that identifies approved fire hydrant locations. Such approved plan must be submitted to the District before staff will initiate a District plan check for water improvements. 19) X The applicant shall have all water facilities designed in accordance with the District's Water Facilities Plan and the District’s Standard Specifications. All design plans shall be prepared under the supervision of and stamped by a Registered Civil Engineer licensed to practice in the State of California. Page 3 of 5 NAME OF APPLICANT: REZAI & SON, LLC LOCATION OF PROJECT: 4240 E. LA PALMA AVENUE, ANAHEIM, CA 20) The applicant’s water facilities (on-site) shall be District owned and maintained. 21) X The applicant shall be required to conduct flow tests at their cost in the event the Anaheim Fire Authority requires a flow test. A District representative shall be present to witness the flow test. 22) X The applicant shall comply with all additional District requirements, relative to the fire protection system, fire hydrant construction and fire hydrant locations. 23) The applicant shall install one (1) water Sampling Station(s) in conformance with the District’s Standard Plans. 24) X The applicant shall provide a completed Surety Bond for the water facilities prior to the District signing the Water Improvement Plans. The applicant shall also provide to the District an estimate of the construction costs of the proposed water facilities. 25) X The applicant shall install the curb and gutters a minimum of one week prior to the installation of the water main and services. 26) X All existing water services that are not useable in the new plan shall be cut and plugged at the main line. 27) X The applicant shall coordinate through the District all connections of new water facilities to the existing District facilities. 28) X The applicant shall provide a written copy of the Bacteriological Report prior to occupancy releases certifying that the water meets the Health Department's requirements. 29) X The applicant shall adjust and raise to grade all valve covers within the limits of this project. 30) X The applicant shall install a pressure regulator in all dwellings that have over 80 p.s.i. static water pressure in accordance with the appropriate building codes. 31) X The applicant shall complete a Temporary Water Permit for all water that will be used through the new water services to serve the new dwellings. 32) X The applicant shall install a District approved backflow device in connection with any private fire suppression sprinkler facilities that may be required by the Orange County Fire Authority or fire agency having jurisdiction. 33) X The applicant shall install a reduced pressure principle backflow prevention device on all commercial buildings and landscape services. Page 4 of 5 NAME OF APPLICANT: REZAI & SON, LLC LOCATION OF PROJECT: 4240 E. LA PALMA AVENUE, ANAHEIM, CA 34) X The applicant shall install and provide a written test report to the District for each backflow device certifying that the backflow devices are operating properly prior to the water meters being turned on for service. 35) X The applicant shall install and provide a written test report to the District certifying that the double check detector assembly is operating properly prior to the double check detector assembly being turned on for service. 36) X The applicant shall provide an annual written test report to the District certifying that the backflow devices and fire detector assemblies are operating properly pursuant to the District’s Backflow Prevention Program and the State of California Administrative Code, Title 17, Public Health Rules and Regulations Relating to Cross-Connections. 37) The applicant shall complete a Sewer Connection Application and Permit for Sewer Service. 38) The applicant shall complete an Application to and Agreement for Sewer Service. 39) The applicant shall comply with the Rules and Regulations of the Yorba Linda Water District with regard to the Rendition of Sanitary Sewer Service. 40) The applicant shall pay all of the sewer fees as required by the Rules and Regulations of the District. 41) The applicant shall have all sewer facilities designed in accordance with the District's Sewer Master Plan and Standard Specifications. All design plans shall be prepared under the supervision of and stamped by a Registered Civil Engineer licensed to practice in the State of California. 42) The applicant shall provide a completed Surety Bond for the sewer facilities prior to the District signing the Sewer Improvement Plans. The applicant shall also provide to the District an estimate of the construction costs of the proposed sewer facilities. 43) The applicant’s sewer facilities (on-site) shall be District owned and maintained. 44) The applicant shall construct a sewer main and appurtenances in conformance with the approved plans and the District’s Plans and Specifications. 45) The applicant shall adjust and raise to grade all sewer manhole covers within the limits of this project. 46) The applicant shall install a sewer backflow prevention valve on all sewer service connections in which the pad elevations of the property being served is lower than the rim elevation of the upstream manhole. Installation Page 5 of 5 NAME OF APPLICANT: REZAI & SON, LLC LOCATION OF PROJECT: 4240 E. LA PALMA AVENUE, ANAHEIM, CA of the backflow device shall comply with all requirements of the Building and Plumbing Codes of the appropriate agency having jurisdiction. 47) The applicant shall submit a video inspection report of their sewer project in DVD format. The video of the sewer facilities shall be conducted in the presence of the District inspector, which will include stationing locations of manholes, cleanouts, wyes, laterals, backflow devices and appurtenances. (END OF STANDARD TERMS AND CONDITIONS) PROJECT SPECIFIC TERMS AND CONDITIONS 48) X The applicant shall install one new fire protection line and two separate domestic and irrigation water services, per approved plans and District Specification. I hereby certify that the foregoing Terms and Conditions were approved at the August 31, 2015 Regular Meeting of the Board of Directors of the Yorba Linda Water District. The approved Terms and Conditions shall become void six (6) months from the approval date if a formal Application To and Agreement with the Yorba Linda Water District for Water and Sewer Service is not executed for the project under consideration. Marc Marcantonio, General Manager W ^: I O co r. _ I d 0 W EXISTING BUILDING I a Q Or 9eu,prpe4e = a < I Infosend I ZQ n "i, a e Oran gpih`Peave� 4240 E.La Palma Avenue I _ v eat.A a AM;,as ATWOOD EO,a„g,t I Anaheim,CA I >>� (A I U } Estelk Ln Seascape Kids Fun-o W W aSS'wer s Jungle Z z Ve EMV&ate y IPlacenlia h J 4 — J E Mhekme Ave L — — — — — — — — — — — — � — l W z QyI�W rt II eo s E La Palma Ave Q Q O PPROJECT ° EXIST.LOADING OCK } I W r SITE n — 0 � sama Ana I L — I i0 O X � 3 - Banyan W p W �O s..: r____________ _______ c I a U) VICINITY MAP PROP.ON-SITE F.H. O N W N V PROP.ON-SITE WATER Y LINE(PRIVATE) owv. ' ;a; 1% O ~ d V I r Q d 19 W p I I I O s L VJ I ? I 0 Y I 0 h o I I PROPOSED BUILDING DWY. y w Ij o I I OFFICE AND WAREHOUSE ' a o y 0 I0 LLI W to I o •: L l o I LOCATION MAP PREPARED BY: EXHIBIT SCALE: N.T.S. YORBA LINDA WATER DISTRICT WATER SERVICE DATE: FOR 8/31/2015 1717 E. MIRALOMA AVENUE INFOSEND INDUSTRIAL DEVELOPMENT PLACENTIA, CALIFORNIA 92870 4240 E. LA PALMA AVENUE, ANAHEIM FILENAME: (714) 701-3100 J201508 ITEM NO. 8.1 AGENDA REPORT Meeting Date: August 31, 2015 To:Board of Directors From:Marc Marcantonio, General Manager Presented By:Delia Lugo, Finance Manager Dept:Finance Prepared By:Delia Lugo, Finance Manager Subject:2015 Water and Sewer Rate Study Report SUMMARY: Attached for the Board's review and discussion is the 2015 Water and Sewer Rate Study Report. This report, prepared by Raftelis Financial Consultants, Inc., provides the justification and rationale behind the proposed rates scheduled to be considered by the Board on September 17, 2015. The proposed rates have been included in the notice mailed to property owners of record within the District's service area pursuant to Proposition 218. STAFF RECOMMENDATION: That the Board of Directors receive and file the 2015 Water and Sewer Rate Study Report. DISCUSSION: On March 31, 2015, the District entered into a Professional Services Agreement with Raftelis Financial Consultants, Inc. to perform a Water and Sewer Rate Study. Upon providing the requested pertinent financial and statistical data, Raftelis was able to meet the major objectives of the study which include the following: Develop financial plans for the water and sewer enterprises to ensure financial sufficiency that includes the establishment of adequate reserve balances, meets the operation and maintenance costs, and ensures sufficient funding for capital refurbishment and replacement needs. Conduct a cost-of-service analysis for the water and sewer services. Develop a fair and equitable 5-year water and sewer rates to enhance revenue stability for recovering fixed costs while in compliance with Proposition 218. The presented 2015 Water and Sewer Rate Study Report summarizes the key findings and recommendations related to the development of the financial plans for Water and Sewer utilities and the development of associated water and sewer rates that are equitable and in compliance with Proposition 218. PRIOR RELEVANT BOARD ACTION(S): At the Special Board meeting held on July 16, 2015, the Board received and filed the 2015 Water and Sewer Rate Study, prepared by Raftelis Financial Consultants, Inc., that provided the statistical and financial data in support of the proposed water and sewer rate increases. ATTACHMENTS: Name:Description:Type: YLWD_2015_Rate_Study_Report_FINAL_AUG_25_2015.pdf 2015 Water and Sewer Rate Study Report Backup Material Approved by the Board of Directors of the Yorba Linda Water District 8/31/2015 PH/RK 4-0-0-1 RC was absent. Water and Wastewater Financial Plan Study Report City of Thousand Oaks YORBA LINDA WATER DISTRICT 2015 Water and Sewer Rate Study Report FINAL August 25, 2015 445 S. Figueroa Street Suite #227 Los Angeles, CA 90071 Phone 626.583.1894 Fax 626.583.1411 www.raftelis.com August 25, 2015 Delia Lugo Finance Manager Yorba Linda Water District 1717 E. Miraloma Avenue Placentia, CA 92870 Subject: 2015 Water and Sewer Rate Study Report Dear Ms. Lugo, Raftelis Financial Consultants, Inc. (RFC) is pleased to provide this 2015 Water and Sewer Rate Study Report (Report) for the Yorba Linda Water District (District) to develop water and sewer rates that are equitable and in compliance with Proposition 218. The major objectives of the study include the following: 1. Develop financial plans for the water and sewer enterprises to ensure financial sufficiency, meet operation and maintenance (O&M) costs, ensure sufficient funding for capital refurbishment and replacement (R&R) needs; In addition, the analysis contained in this Report makes assumptions regarding customer water usage during the current drought conditions and ensures that the District is financially prepared for a period of reduced sales. 2. Conduct a cost‐of‐service analysis for the water and sewer services; and 3. Develop fair and equitable 5‐year water and sewer rates to enhance revenue stability for recovering fixed costs while in compliance with Proposition 218 requirements. The Report summarizes the key findings and recommendations related to the development of the financial plans for Water and Sewer utilities and the development of the associated water and sewer rates. It has been a pleasure working with you, and we thank you and the District staff for the support provided during the course of this study. Sincerely, RAFTELIS FINANCIAL CONSULTANTS, INC. Sanjay Gaur Khanh Phan Vice President Senior Consultant YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 TABLE OF CONTENTS 1 INTRODUCTION 1 1.1 BACKGROUND OF THE STUDY 1 1.2 OBJECTIVES OF THE STUDY 1 1.3 LEGAL REQUIREMENTS AND RATE SETTING METHODOLOGY 2 1.3.1 LEGAL REQUIREMENTS 2 1.3.2 RATE SETTING PROCESS 3 2 GENERAL ASSUMPTIONS 5 2.1 INFLATION 5 2.2 PROJECTED DEMAND AND GROWTH 5 2.3 RESERVE POLICY 6 2.4 KEY FINANCIAL INFORMATION 9 3 WATER FUND – FINANCIAL PLAN AND RATES 10 3.1 WATER REVENUE REQUIREMENTS 10 3.1.1 REVENUES FROM CURRENT WATER RATES 10 3.1.2 MISCELLANEOUS WATER REVENUES 12 3.1.3 WATER O&M EXPENSES 13 3.1.4 PROJECTED CAPITAL IMPROVEMENT PROJECTS 15 3.1.5 CURRENT DEBT SERVICE 16 3.2 WATER FINANCIAL PLAN 17 3.2.1 STATUS QUO WATER FINANCIAL PLAN 17 3.2.2 PROPOSED WATER FINANCIAL PLAN 19 3.3 COST OF SERVICE ANALYSIS AND WATER RATE DESIGN 22 3.3.1 WATER COST OF SERVICE ANALYSIS 22 3.3.2 MONTHLY BASE FEES 26 3.3.3 WATER USAGE CHARGE COMPONENTS 28 4 SEWER FUND – FINANCIAL PLAN AND RATES 30 4.1 SEWER REVENUE REQUIREMENTS 30 4.1.1 REVENUES FROM CURRENT SEWER RATES 30 4.1.2 MISCELLANEOUS SEWER REVENUES 32 4.1.3 SEWER EXPENSES 33 YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 4.1.4 SEWER CAPITAL IMPROVEMENT PROJECTS (CIP) 33 4.2 SEWER FINANCIAL PLAN 34 4.2.1 STATUS QUO SEWER FINANCIAL PLAN 34 4.2.2 PROPOSED SEWER FINANCIAL PLAN 35 4.3 COST OF SERVICE ANALYSIS AND SEWER RATE DEVELOPMENT 39 4.3.1 RECOMMENDATIONS 39 4.3.2 COST OF SERVICE ANALYSIS & SEWER RATES DEVELOPMENT 40 5 CUSTOMER CONNECTION IMPACT ANALYSIS 45 6 APPENDICES 46 6.1 APPENDIX 1: CURRENT RESERVE POLICY (ADOPTED JUNE 11, 2015) 46 6.2 APPENDIX 2: CAPITAL IMPROVEMENT PLAN 50 6.3 APPENDIX 3: ASSET LIST & ALLOCATION FACTORS 52 6.4 APPENDIX 4: WATER COST ALLOCATION FACTORS 53 6.5 APPENDIX 5: SEWER COST ALLOCATION FACTORS 55 YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 LIST OF TABLES & FIGURES Figure 3‐1: Projected Water CIP and Funding Sources ________________________________________________ 16 Figure 3‐2: Water Operating Financial Plan ________________________________________________________ 21 Figure 3‐3: Projected Water Fund Ending Balances __________________________________________________ 21 Figure 4‐1: Projected 5‐Year Sewer CIP ____________________________________________________________ 34 Figure 4‐2: Sewer Operating Financial Plan ________________________________________________________ 38 Figure 4‐3: Projected Sewer Fund Ending Balances ___________________________________________________ 38 Figure 5‐1: Sample Single Family Water Bills at Different Usage Levels ___________________________________ 45 Figure 5‐2: Sample Single Family Water and Sewer Bills at Different Usage Levels __________________________ 45 Table 2‐1: Inflation Factor Assumptions ____________________________________________________________ 5 Table 2‐2: Projected Account Growth Rate and Water Usage Sales _______________________________________ 6 Table 2‐3: Current Financial Policy ________________________________________________________________ 7 Table 2‐4: Revised and Proposed Financial Policy _____________________________________________________ 8 Table 2‐5: Beginning Fund Balances _______________________________________________________________ 9 Table 3‐1: Current Water Rates __________________________________________________________________ 10 Table 3‐2: Projected Water Accounts and Usage ____________________________________________________ 11 Table 3‐3: Projected Revenues from Current Water Rates _____________________________________________ 12 Table 3‐4: Projected Miscellaneous Water Revenues _________________________________________________ 12 Table 3‐5: Projected Purchased Water Supply Costs __________________________________________________ 14 Table 3‐6: Budgeted and Projected Water O&M Expenses _____________________________________________ 15 Table 3‐7: Current Debt Service __________________________________________________________________ 16 Table 3‐8: Status Quo Water Financial Plan (No Revenue Adjustment) ___________________________________ 18 Table 3‐9: Proposed Water Revenue Adjustments ___________________________________________________ 19 Table 3‐10: Proposed Water Financial Plan _________________________________________________________ 20 Table 3‐11: Annualized Water Revenue Requirement for FY 2016 _______________________________________ 22 Table 3‐12: Water System Peaking Factors _________________________________________________________ 24 Table 3‐13: Allocated Water System Cost __________________________________________________________ 24 Table 3‐14: Revenue Requirements Allocated to Rate Components ______________________________________ 26 Table 3‐15: Equivalent Meter Units (EMUs) ________________________________________________________ 26 Table 3‐16: Components for Monthly Base Fees for FY 2016 ___________________________________________ 27 Table 3‐17: Monthly Base Fee for FY 2016 _________________________________________________________ 27 Table 3‐18: 5‐year Monthly Base Fees _____________________________________________________________ 28 Table 3‐19: Descriptions of Proposed Water Usage Charge Components _________________________________ 29 Table 3‐20: Components for Water Usage Charges in FY 2016 _________________________________________ 29 Table 3‐21: Estimated Cumulative Pass‐through Water Supply Rates ____________________________________ 29 Table 4‐1: Current Sewer Rates __________________________________________________________________ 30 Table 4‐2: Projected Sewer Account Summary ______________________________________________________ 31 Table 4‐3: Projected Commercial Sewer Billed Flows (ccf) under Current Rate Structure _____________________ 31 Table 4‐4: Projected Sewer Revenues from Current Rates _____________________________________________ 32 Table 4‐5: Projected Miscellaneous Sewer Revenues _________________________________________________ 33 Table 4‐6: Projected Sewer Expenses ______________________________________________________________ 33 YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Table 4‐7: Status Quo Sewer Financial Plan (No Revenue Adjustment) ___________________________________ 35 Table 4‐8: Proposed Sewer Revenue Adjustments ___________________________________________________ 36 Table 4‐9: Proposed Sewer Financial Plan __________________________________________________________ 37 Table 4‐10: Annualized Sewer Revenue Requirement for FY 2016 _______________________________________ 40 Table 4‐11: Units of Sewer Service for FY 2016 ______________________________________________________ 41 Table 4‐12: Sewer Unit Cost of Service Development (FY 2016) _________________________________________ 42 Table 4‐13: Sewer COS Allocation to Customer Classes _______________________________________________ 43 Table 4‐14: Proposed Sewer Rates for FY 2016 ______________________________________________________ 43 Table 4‐15: 5‐year Proposed Sewer Rates __________________________________________________________ 44 Table 6‐1: Water CIP (Uninflated) ________________________________________________________________ 50 Table 6‐2: Water CIP (Inflated) __________________________________________________________________ 51 Table 6‐3: Sewer CIP (Inflated) ___________________________________________________________________ 52 Table 6‐4: Asset Allocations to Water Function Costs _________________________________________________ 52 Table 6‐5: Asset Allocations to Sewer Function Costs _________________________________________________ 52 Table 6‐6: Water O&M Cost Allocation Factors _____________________________________________________ 53 Table 6‐7: Revenue Requirement to Water Functional Cost Components _________________________________ 54 Table 6‐8: Sewer O&M Cost Allocation Factors ______________________________________________________ 55 Table 6‐9: Revenue Requirement Allocations to Sewer Functional Cost Components ________________________ 56 YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 GLOSSARY Commonly Used Terms Terms Descriptions AF Acre foot / Acre feet, 1 AF = 435.6 CCF AWWA American Water Works Association BPP Basin Pumping Percentage (percentage of water demand to be met by Groundwater) CII‐Regular Existing Commercial, Irrigation, Industrial customers CII‐YLC Commercial, Irrigation, Industrial customers annexed from the City of Yorba Linda CIP Capital Improvement Projects COS Cost of Service COP Certificate of Participation CPI Consumer Price Index/Indices CUP Conjunctive Use Program EBL Employee Benefit Liability EMU Equivalent Meter Unit ENR CCI Engineering News Records Construction Cost Indices FY Fiscal Year (July 1 – June 30) GPCD Gallons per capita per day HCF Hundred cubic feet or 100 cubic feet, 1 HCF = 748 gallons LOC Line of Credit M1 Manual “Principles of Water Rates, Fees, and Charges: Manual of Water Supply Practices M1" published by AWWA MFR Multi‐Family Residential MGD Million gallons per day MWD Metropolitan Water District of Southern California MWDOC Municipal Water District of Orange County O&M Operations and Maintenance OCWD Orange County Water District PAYGO Pay‐As‐You‐Go R&R Refurbishment and Replacement RFC Raftelis Financial Consultants, Inc. SFR Single Family Residential SWRCB State Water Resources Control Board YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 This page intentionally left blank to facilitate two‐sided printing. YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 1 of 56 1 INTRODUCTION 1.1 BACKGROUND OF THE STUDY Yorba Linda Water District (District) currently provides water service to over 24,000 residential and commercial accounts located in the City of Yorba Linda, portions of Brea, Anaheim and Placentia. The District’s current water rate structure consists of a monthly base fee, which increases with meter size, and a uniform water usage charge based on the units of water usage within a billing period. The District currently utilizes two sources of water supply: groundwater from Orange County Water District (OCWD) and imported water from Municipal Water District of Orange County (MWDOC). In response to the statewide drought declaration by Governor Brown, the District has declared a Stage 3 Water Supply Shortage and has been mandated to reduce 36% of water use District‐wide by the State Water Resources Control Board (SWRCB). Like many water agencies, the District relies on water usage sales to help recover a portion of its fixed costs. This practice reduces the monthly base fee and promotes affordability for low volume water users. However, this practice can also create financial volatility when water demand fluctuates due to economic or weather conditions, such as the current drought. The proposed rates in this Report reflect the cost of service and provide an enhancement of revenue stability for covering fixed costs. The District is proposing an increase in the revenue it receives from its customer connections over the next 5 years. The District provides sewer collection service to over 25,000 accounts, including some annexed accounts formerly serviced by the City of Yorba Linda. The District currently has two sets of monthly base fees and volumetric rates for its Commercial customer connections. To determine the District’s financial needs for the upcoming 5‐year period, RFC completed financial plans and cost of service (COS) studies for the District’s water and sewer enterprises. This Report includes the assumptions used in the study, findings and proposed staff recommendations, as well as the resulting rates. 1.2 OBJECTIVES OF THE STUDY This report was prepared using the principles established by the American Water Works Association. The American Water Works Association “Principles of Water Rates, Fees, and Charges: Manual of Water Supply Practices M1” (the “M1 Manual”) establishes commonly accepted professional standards for cost of service studies. The M1 Manual general principles of rate structure design and the objectives of the Study are described below. According to the M1 Manual, the first step in the ratemaking analysis is to determine the adequate and appropriate funding of a utility. This is referred to as the “revenue requirements” analysis. This analysis considers the short‐term and long‐term service objectives of the utility over a given planning horizon, including capital facilities and system operations and maintenance, to determine the adequacy of a YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 2 of 56 utility’s existing rates to recover its costs. A number of factors may affect these projections, including the number of customer connections served, water‐use trends, nonrecurring sales, weather, conservation, use restrictions, inflation, interest rates, wholesale contracts, capital finance needs, changes in tax laws, and other changes in operating and economic conditions. After determining a utility’s revenue requirements, the next step is to determine the cost of service. Utilizing a public agency’s approved budget, financial reports, operating data, and capital improvement plans, a rate study generally categorizes (functionalizes) the costs (such as treatment, storage, and pumping), expenses, and assets of the water system among major operating functions to determine the cost of service. After the assets and the costs of operating those assets are properly categorized by function, the rate study allocates those “functionalized costs” to the various customer connection classes (e.g., single‐ family residential, multi‐family residential and commercial) by determining the characteristics of those classes and the contribution of each to incurred costs such as peaking factors or different delivery costs, service characteristics and demand patterns. Rate design is the final part of the M1 Manual’s rate‐ making procedure and generally uses the revenue requirement and cost of service analysis to determine appropriate rates for each customer connection class. The major objectives of the study include the following: 1. Develop financial plans for the water and sewer enterprises to ensure financial sufficiency, meet operation and maintenance (O&M) costs, ensure sufficient funding for capital refurbishment and replacement (R&R) needs. In addition, the analysis contained in this Report makes assumptions regarding customer connection water usage during the current drought conditions and ensures that the District is financially prepared for a period of reduced sales. 2. Conduct a cost‐of‐service analysis for the water and sewer services; and 3. Develop fair and equitable 5‐year water and sewer rates to enhance revenue stability for recovering fixed costs while in compliance with Proposition 218 requirements. This Report provides an overview of the study and includes findings and recommendations for water and sewer financial plan and rates. 1.3 LEGAL REQUIREMENTS AND RATE SETTING METHODOLOGY 1.3.1 Legal Requirements There are two Constitutional provisions that govern and impact water rates — Article X, Section 2 (“Article X) and Article XIII D, Section 6 (“Article XIII D”). Article X was added to the California Constitution in 1928 as former Article XIV, Section 3, and amended in 1976. Article X provides that: “It is hereby declared that because of the conditions prevailing in this State the general welfare requires that the water resources of the State be put to beneficial use to the fullest extent of which they are capable, and that the waste or unreasonable use or unreasonable method of use of water be prevented, and that the conservation of such YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 3 of 56 waters is to be exercised with a view to the reasonable and beneficial use thereof in the interest of the people and for the public welfare. “ In November 1996, California voters approved Proposition 218, which amended the California Constitution by adding Article XIII C and Article XIII D. Article XIII D placed substantive limitations on the use of the revenue collected from property‐related fees and on the amount of the fee that may be imposed on each parcel. Additionally, it established procedural requirements for imposing new, or increasing existing, property‐related fees. Water and wastewater service fees are property‐related fees. In accordance with these provisions, a property‐related fee must meet all of the following requirements: (1) revenues derived from the fee must not exceed the funds required to provide the property‐related service; (2) revenues from the fee must not be used for any purpose other than that for which the fee is imposed; (3) the amount of a fee imposed upon any parcel or person as an incident of property ownership must not exceed the proportional cost of the service attributable to the parcel; (4) the fee may not be imposed for a service, unless the service is actually used by, or immediately available to, the owner of the property subject to the fee. A fee based on potential or future use of a service is not permitted, and stand‐by charges must be classified as assessments subject to the ballot protest and proportionality requirements for assessments; (5) no fee may be imposed for general governmental services, such as police, fire, ambulance, or libraries, where the service is available to the public in substantially the same manner as it is to property owners. The five substantive requirements in Article XIII D are structured to place limitations on (1) the use of the revenue collected from property‐related fees and (2) the allocation of costs recovered by such fees to ensure that they are proportionate to the cost of providing the service attributable to each parcel. 1.3.2 Rate Setting Process Revenue Requirements. The Study used the revenue requirements method for allocating costs. This methodology is consistent with industry standards established by the American Water Works Association, Principles of Water Rates, Fees and Charges: Manual of Water Supply Practices M1 (the “M1 Manual”). The revenue requirements analysis “compares the revenues of the utility to its operating and capital costs to determine the adequacy of the existing rates to recover the utility’s costs.” American Water Works Association, Principles of Water Rates, Fees and Charges: Manual of Water Supply Practices M1 (6th ed. 2012). The revenue requirements are analyzed through the development of a long‐term financial plan. Based on the best information currently available, the financial plan incorporates projected operations and maintenance costs, capital expenditures, debt service, growth, and conservation assumptions to estimate annual required revenues. Cost of Service. After determining a utility’s revenue requirements, the next step in the analysis is determining the cost of service. The Study arranged the costs, expenses, and assets of the water system by major operating functions to determine the cost of service. After the assets and the costs of operating those assets were properly categorized by function, the Study classified them and allocated the revenue requirements to the various customer connection classes (e.g., single‐family residential, irrigation, and commercial) by determining the characteristics of those classes and the customer connection class contribution to the incurred costs such as peaking factors or different delivery costs, YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 4 of 56 service characteristics and demand patterns. This analysis included a review of such matters as system operations and water usage data—e.g., capacity (peak demand)1, commodity (average demand)2, number of customer connections, customer service and accounting, equivalent meter size, and public fire protection services.3 The impact that these matters have on system operations determined how the costs were allocated among the various customer connection classes. Rate Design. The final part of the analysis was the rate design. The rate design involved developing a rate structure that proportionately recovers costs from customer connections. The final rate structure and rate recommendations were designed to fund the utility’s long‐term projected costs of providing service; proportionally allocate costs to all customer connections; provide a reasonable and prudent balance of revenue stability while encouraging conservation; and comply with the substantive requirements of Article XIII D. 1 System capacity is the system’s ability to supply water to all delivery points at the time when demanded. It is measured by each customer connection’s water demand at the time of greatest system demand. The time of greatest demand is known as peak demand. Peak demand costs recover the costs of facilities needed to meet the peak use, or demands, placed on the system by each customer connection class. Both the operating costs and the capital assets related costs incurred to accommodate the peak flows are allocated to each customer connection class based upon the class contribution to the peak day event. 2 Commodity refers to the amount of metered water usage over a specific time period, typically a twelve‐month period. 3 This refers to the need to increase the size of mainlines to provide public fire protection requirements. YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 5 of 56 2 GENERAL ASSUMPTIONS 2.1 INFLATION The Study period is from Fiscal Year (FY) 2016 to 2020. Various types of assumptions and inputs were incorporated into the Study based on discussions with District staff. These include the projected number of accounts and annual growth rates in consumption for different customer connection classes, and inflation factors and other assumptions. The inflation factor assumptions are presented in Table 2‐1, below. Table 2‐1: Inflation Factor Assumptions KEY FACTORS FY 2017 FY 2018 FY 2019 FY 2020 General (CPI) 4% 4% 3% 3% Personnel 8% 8% 8% 8% Energy 9% 9% 9% 9% Water Cost 9% 9% 9% 9% ENR CCI4 4% 4% 3% 3% The general inflation rate of 3 to 4% is based on District’s staff estimates on minimum wage increases and economy. A personnel inflation rate of 8% is based on District staff estimates for salary and benefits costs increases. Energy inflation rate and water cost increases of 9% are based on District staff estimates. A construction rate of 3 to 4% (applied to capital projects) is based on District staff estimates and based on the estimated Engineering News Records Construction Cost Indices (ENR CCI) 10‐year average. 2.2 PROJECTED DEMAND AND GROWTH To estimate future water usage, two primary factors are used – account growth and the water demanded per account. Given that the District is mostly built‐out, it is estimated that the total number of accounts will increase by approximately 100 accounts per year during the Study period. In consideration of the current drought conditions and the District’s assigned mandatory water usage cutback of 36% from the SWRCB, total water demand is projected to decrease by 36% for FY 2016. For FY 2017 through FY 2020 usage is expected to rebound by 5% per year, but will remain at 15% below 2013 sales due to permanent changes made by the District’s customers such as lawn removal and fixture replacement. 4 ENR CCI: Engineering News Record Construction Cost Indices YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 6 of 56 Table 2‐2: Projected Account Growth Rate and Water Usage Sales FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Account Growth 100 accts 100 accts 100 accts 100 accts Projected Water Sales 18,752 AF 13,298 AF 14,581 AF 15,623 AF 16,664 AF 17,706 AF % Reduction from 2013 Sales (20,831 AF) 10% 36% 30%25%20% 15% 2.3 RESERVE POLICY A reserve policy is a written document that provides a basis for the Agency to cope with unanticipated reductions in revenues, offset fluctuations in costs of providing services, fiscal emergencies such as revenue shortfalls, asset failure, natural disaster, etc. It also provides guidelines for sound financial management with an overall long‐range perspective to maintain financial solvency and mitigate financial risks associated with revenue instability, volatile capital costs and emergencies. It also sets funds aside for replacement of capital assets as they age as well as for new innovative capital projects. Additionally, adopting and adhering to a sustainable reserve policy enhances financial management transparency and helps achieve or maintain a certain credit rating for future debt issues. The appropriate amount of reserve and reserve types are determined by a variety of factors, such as the size of the operating budget, the amount of debt, the type of rate structure, frequency of customer billing, and risk of natural disaster. With this being said, most reserves tend to fall into the following categories: operations & maintenance (O&M) cash flow, rate stabilization, capital refurbishment and replacement (R&R), and emergency. O&M Cash Flow – The purpose of an O&M reserve is to provide working capital to support the operation, maintenance and administration of the utility. From a risk management perspective, the O&M reserve supports the District’s cash flow needs during normal operations and ensures that operations can continue should there be significant events that impact cash flows. As it is unlikely for a utility to predict perfectly the revenues and revenue requirements for each billing period, a reserve set aside to hedge the risk of monthly negative cash positions is prudent in financial planning. Another factor to consider when creating a cash flow reserve is the frequency of billing. A utility that bills once a month would require less minimum reserves than a utility that bills semi‐annually. Rate Stabilization and Operating Emergency – While it is not typical for utilities to have substantial rate increases in a short period of time, factors such as declining water sales and rapidly increasing water supply costs may result in large unforeseen rate increases. In order to minimize rate shocks, a rate stabilization reserve could be set up in order to smooth rate increases through gradual increases in the rates as opposed to abrupt and large rate increases. A rate stabilization reserve acts as a buffer to protect customer connections from experiencing large shifts in their bills. YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 7 of 56 Capital Emergency – The purpose of an emergency fund is to allow the utility to provide uninterrupted service in light of a fiscal emergency, natural disaster or facility failure. An emergency reserve decreases risk by recognizing the high capital cost of the utilities and setting aside adequate funds to restart the system after an event or replace an essential facility. Critical asset analysis completed by staff provides the basis for the target level of emergency reserve. Capital R&R – Capital R&R reserves are used to fund future obligations that are necessary for maintaining a reliable infrastructure. Because water and sewer utilities are highly capital‐intensive enterprises, it is important to accurately estimate long‐term R&R costs and develop a reserve to fund the eventual replacement of the system and new capital projects. The District currently has an adopted reserve policy for its Water and Sewer Enterprises (shown in Table 2‐3). Both the Water and Sewer Enterprise have an Operations Reserve of 12% of annual O&M costs and an Emergency Reserve of $1M. The Water Enterprise has a Debt Service Reserve of $4.87M and a required minimum debt coverage ratio of 110%. The Sewer Enterprise has no issued debt and does not have a financial policy in place for Debt Service Reserves or a required minimum debt coverage ratio. The Capital R&R Reserve is approximately $2M for the Water Enterprise and $345K for the Sewer Enterprise. Both Enterprises have reserves for the Employee Benefit Liability (EBL) – $182K for Water and $15K for Sewer. See Appendix 1 for further detail of the current reserve policy. Table 2‐3: Current Financial Policy Reserves Water Sewer Operations 12% of O&M 12% of O&M Emergency $1M $1M Capital Replacement $2.02M ($1.82M Capital + $200K for Maintenance)$345K COP/ Debt Service $4.87M ($2.15M for 2008 COP Reserve + $2.72M for Debt Service)$0 Employee Benefit Liability (EBL) $182K $15K Debt Coverage 1.10x By Official Statement N/A After evaluation of its current financial policies, the District is proposing to make the following changes:  Increase its Operations Reserve from 12% to 25% of annual O&M. The District is billing monthly for its water and sewer services and expenses are paid monthly. However, there is a 30 day gap between when revenues are received and expenses paid. Like many water agencies, the District is partially reliant on water usage sales to pay for fixed infrastructure costs. Considering that water sales are seasonal (high during summer and lower during winter months) and most of the utilities system costs are relatively fixed throughout the year, having a higher Operations Reserve is warranted. A reserve target of 25% of O&M budget, or 90 days of the operating budget, is considered standard within the industry. YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 8 of 56  Due to the potential volatility of water costs caused by the recent drought, RFC recommends establishing a Rate Stabilization Reserve for the water enterprise. To avoid rate spikes caused by the potential volatility of water sales, 15% of water commodity revenues (aka water usage charges) can be set as Rate Stabilization Reserve.  Based on District Staff assessment of major repair of critical assets, the District proposes to establish $10M for Water Emergency reserve and $3M for Sewer Emergency Reserve.  Capital Replacement Reserve targets for both enterprises are proposed to be set at 2% of asset values (inflated to current dollars for replacement costs using ENR CCI from original costs) to adequately build the working capital necessary for annual capital projects.  Debt service reserves and EBL reserves are restricted reserves based on current policy and are not proposed to change for either enterprise.  Based on Standards and Poors (S&P) rating criteria, a debt coverage ratio5 of 1.25x or higher is required to be considered in good standing. Better ratings will result in lower interest rates should the District have the need for issuing debt in the future. Also, it gives some buffer for the District during periods of volatile water sales to avoid technical default; technical default is when debt coverage falls below the requirement of the Official Debt Statement at 1.10. RFC recommends that the District set its Debt coverage requirement for current and any future debt at 1.25. A summary of the proposed financial policies is provided in Table 2‐4 below. Table 2‐4: Revised and Proposed Financial Policy Water Sewer Reserve Policy Operations 25% of O&M 25% of O&M Rate Stabilization 15% of Commodity Revenues N/A Emergency $10M for major repair of critical assets $3M for major repair of critical assets Capital Replacement 2% of asset value by replacement costs 2% of asset value by replacement costs COP/ Debt Service 100% of annual total debt service + $2.147M 2008 COP Restricted 100% of annual total debt service Employee Benefit Liability (EBL) Based on District’s projections Based on District’s projections Debt Coverage 1.25x for Good standing per S&P rating criteria 1.25x for Good standing per S&P rating criteria 5 Debt Coverage = Net Revenues / Debt Service Net Revenues = Total Revenue – Total O&M Debt Service = Principal and Interest for the long‐term annual debt payment YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 9 of 56 2.4 KEY FINANCIAL INFORMATION The Study utilized the following key financial documents and figures: 1. FY 2016 Budget provided by District staff in May 2015 2. 5‐year Projected CIP Budget provided by District Staff in May 2015 3. Water supply cost projections provided by District staff for FY 2016 in May 2015 4. Projected beginning fund balances as of July 1, 2015 provided by District staff in May 2015 Table 2‐5: Beginning Fund Balances Reserve Balances as of July 1,___ Water (FY 2015) Water (FY 2016) Sewer (FY 2015) Sewer (FY 2016) 2014 2015 2014 2015 Operation Reserve $3,136,962 $4,395,782 $160,489 $434,611 Rate Stabilization Reserve $0 $0 Emergency Reserve $1,010,940 $1,026,207 $1,010,396 $1,018,596 Capital Replacement and Maintenance Reserve $16,876,503 $17,593,484 $2,127,063 $2,236,904 Debt Service and COP Reserve $4,882,348 $5,652,792 EBL Reserve $186,070 $186,306 $14,006 $14,018 Total $26,092,823 $28,854,571 $3,311,954 $3,704,129 YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 10 of 56 3 WATER FUND – FINANCIAL PLAN AND RATES 3.1 WATER REVENUE REQUIREMENTS A review of a utility’s revenue requirements is a key first step in the rate study process. The review involves an analysis of annual operating revenues under the status quo, operation and maintenance (O&M) expenses, transfers between funds, and reserve requirements. This section of the report provides a discussion of the projected revenues, O&M expenses, other reserve funding and revenue adjustments estimated as required to ensure the fiscal sustainability and solvency of the Water Fund. 3.1.1 Revenues from Current Water Rates The current rates, last updated on July 1, 2014, were originally developed in the 2012 Rate Study. The District’s water service charges have two components – a fixed component (monthly base fee) and a volumetric component (water usage sales). The monthly base fee increases along with meter size because it is assumed that customer connections with larger meter sizes consume more water and the costs to provide service to these customer connections is also higher. A typical single family home with a 1” meter has a monthly base fee of $16.77. The volumetric component of the water service charge is the number of units consumed (measured in hundred cubic feet) multiplied by the uniform rate of $2.70 per unit. The rates for both the monthly base fee and monthly water usage charge are summarized in Table 3‐1 below. Table 3‐1: Current Water Rates Water Base Fee by Meter Size FY 2014 FY 2015 Effective Date July 1, 2013 July 1, 2014 5/8 $8.80 $10.06 3/4 $8.80 $10.06 1 $14.67 $16.77 1 1/2 $29.34 $33.54 2 $46.94 $53.66 3 $102.67 $117.37 4 $187.80 $211.26 6 $410.67 $469.47 8 $704.00 $804.80 10 $1,114.67 $1,274.27 Water Usage Charge Uniform Rate ($ / hcf6) $2.64 $2.70 6 1 hcf = 100 cubic feet = 748 gallon YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 11 of 56 In April 2015, the State Water Resources Control Board of California issued a mandatory statewide water usage cutback of 25% in response to the extended drought conditions. In order to achieve the statewide cutback, each water agency was assigned a water usage reduction factor based on its calendar year 2013 usage; the District was assigned a mandatory cutback factor of 36%. In light of the drought conditions, many of the District’s customers have taken steps to reduce their consumption. Even after the drought has ended, it is projected that water usage will be 15% lower than 2013 sales because of the permanent changes customers have made to reduce water usage such as turf removal and fixture replacement. In addition to the water usage reduction, the District is anticipating approximately 100 new accounts per year during the Study period, since the service area is near build‐out (see Table 2‐2). Table 3‐2 summarizes the projected number of accounts by meter size for the Study period, as well as the volume of water sold by the District. The number of total accounts starts at 24,638 in FY 2016 and climbs gradually each year by 100 accounts. The entirety of the projected account growth is assigned to the 1” meter size category, which is the District’s most common meter size. Table 3‐2: Projected Water Accounts and Usage Account Summary FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Account Growth 100 accts 100 accts 100 accts 100 accts 5/8 28 28 28 28 28 28 3/4 5,587 5,617 5,617 5,617 5,617 5,617 1 17,205 17,271 17,371 17,471 17,571 17,671 1 1/2 573 573 573 573 573 573 2 1,138 1,138 1,138 1,138 1,138 1,138 3 5 6 6 6 6 6 4 4 4 4 4 4 4 6 1 1 1 1 1 1 8 0 0 0 0 0 0 10 0 0 0 0 0 0 Total 24,541 24,638 24,738 24,838 24,938 25,038 Total Water Sales Acre Feet (AF)7 18,752 13,298 14,581 15,623 16,664 17,706 hcf 8,168,198 5,792,702 6,351,647 6,805,336 7,259,025 7,712,714 7 Acre Foot (Feet) is equivalent to approximately 325,000 gallons or 435.6 HCF. The number of AF sold is multiplied by 435.6 to determine the hcf sold in the following row. YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 12 of 56 The projected Monthly Base Fee revenues can be determined by multiplying the number of accounts in each meter size by its corresponding monthly charge. Similarly, the projected Water Usage Charge revenues can be determined by multiplying the projected water sales by the water usage rate of $2.70. Together, the total revenue from current rates can be obtained as shown in Table 3‐3. The calculated revenues for FY 2015 of $27,180,529 are within less than a percent of the budgeted total of $27,042,873. Table 3‐3: Projected Revenues from Current Water Rates Calculated Revenues from Current Rates FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Service Charges $5,126,395 $5,144,707 $5,164,831 $5,184,955 $5,205,079 $5,225,203 Water Revenues $22,054,134 $15,640,295 $17,149,446 $18,374,407 $19,599,367 $20,824,327 Total $27,180,529 $20,785,002 $22,314,277 $23,559,362 $24,804,446 $26,049,531 Forecast From Budget for FY 2015 Service Charges 4,988,739 Water Revenues 22,054,134 Total $27,042,873 3.1.2 Miscellaneous Water Revenues In addition to revenue from rates, the Water Operating Fund also receives miscellaneous revenues from different sources such as interest earnings, property taxes, and other operating/non‐operating sources. The property tax revenue received by the District is a portion of the 1% ad valorem tax levied on property. While, property tax revenue, interest earnings, and non‐operating revenue are fairly stable, other operating revenues can fluctuate. Total miscellaneous revenues for the Study period are shown in Table 3‐4. Table 3‐4: Projected Miscellaneous Water Revenues FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Other Operating Revenues $1,237,953 $645,110 $756,678 $768,028 $779,548 $791,242 Interest $119,005 $85,000 $82,269 $83,442 $94,581 $123,598 Property Taxes $1,454,342 $1,395,000 $1,408,950 $1,423,040 $1,437,270 $1,451,643 Non‐Operating Revenue $702,159 $565,200 $573,678 $582,283 $591,017 $599,883 Total $3,513,458 $2,690,310 $2,821,575 $2,856,793 $2,902,417 $2,966,365 YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 13 of 56 3.1.3 Water O&M Expenses 3.1.3.1 Water Supply Costs The District has two sources of water supply – (1) local groundwater, (2) treated import water. The groundwater supply is managed by Orange County Water District (OCWD), while the import supplies are managed by Municipal Water District of Orange County (MWDOC). These are the two agencies in which the District purchases their water supply from. The District currently has the infrastructure in place to supply 70% of its water needs with groundwater and the remaining 30% with treated import water. Additionally, in 2013 OCWD, MWDOC and the District entered into an agreement that allows Metropolitan Water District of Southern California (MET) to store untreated import water in the groundwater basin. This water can be pumped out of the groundwater basin in times of need and purchased through MWDOC at treated import water rates less energy and maintenance costs. This is known as the Conjunctive Use Program (CUP). As managers of the groundwater basis, OCWD sets the limits for the amount of water that can be pumped out of the local groundwater basis. This is referred to as the Basin Pumping Percentage (BPP). As a member agency of OCWD, the District has access to this water supply at the limits set by OCWD. The current BPP for the District is set at 70%. However, for FY 2015 and FY 2016, the District is anticipating pumping a portion of the CUP water out of the groundwater basin. Due to current infrastructure capacities the District will have to reduce its purchases of groundwater in order to meet the obligation of pumping CUP water. For example, for the District to fulfill a CUP obligation of 1,600 acre feet with estimated total water demands of 16,000 acre feet 10% of the total water purchases will be purchased at CUP water rates, therefore reducing ground water purchases to 60% of total supply. Both of the District’s wholesale water suppliers have a base fee and volumetric component to their rate structures. For FY 2016, the District incurs a base fee from OCWD of $300,000 and has a variable unit charge of $322 per AF. The District is reliant on imported water from MWDOC to meet the remaining 30% of demand. The District incurs three separate base fees (readiness to serve, capacity charge, and retail charge) from MWDOC, which total approximately $1.26M for FY 2016. Since MWDOC adjusts its rates on a calendar year basis, the volumetric rate changes midway through the fiscal year. From July through December of 2015, the cost per AF is $924. From January to June of 2016, the cost of per AF will rise to $942. Based on projections and inputs from District staff, the respective sources of water, per unit price, and expected purchase quantities are shown in Table 3‐5 below. The total water supply costs at the bottom of the table are determined by multiplying the per unit costs for each source of water by the corresponding quantity purchased from that source, and adding in the base fee associated with each source. Actual sales figures were used for FY 2015 and projected sales were used for FY 2016 and beyond. As part of the water financial plan model, RFC calculates the District’s water supply costs for future years. YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 14 of 56 Table 3‐5: Projected Purchased Water Supply Costs FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Water Sales 18,752 AF 13,298 AF 14,581 AF 15,623 AF 16,664 AF 17,706 AF Water Demand (with 5% water loss) 19,739 AF 13,998 AF 15,349 AF 16,445 AF 17,542 AF 18,638 AF BPP 70% 70%70%70% 70%70% Water Demand to be met by OCWD 11,821 AF 8,203 AF 10,744 AF 11,512 AF 12,279 AF 13,046 AF CUP 1,996 AF 1,596 AF 0 AF 0 AF 0 AF 0 AF MWDOC 5,922 AF 4,199 AF 4,605 AF 4,934 AF 5,262 AF 5,591 AF Water Supply Cost Components OCWD Fixed $300,000 $300,000 $327,000 $356,430 $388,509 $423,474 Variable Unit Cost $294 / AF $322 / AF $351 / AF $383 / AF $417 / AF $455 / AF CUP Unit Cost $781 / AF $826 / AF $832 / AF $917 / AF $1,009 / AF $1,110 / AF MWDOC MWD RTS $717,714 $736,896 $803,217 $875,506 $954,302 $1,040,189 MWD Capacity Charge $229,757 $270,692 $295,054 $321,609 $350,554 $382,104 MWDOC Retail Charge $250,257 $257,954 $281,169 $306,475 $334,057 $364,122 MWDOC Unit Cost $905 / AF $932 / AF $980 / AF $1,068 / AF $1,165 / AF $1,269 / AF July – Dec (55% of FY demand) $891 / AF $924 / AF $942 / AF $1,027 / AF $1,119 / AF $1,220 / AF Jan – Jun (45% of FY demand) $924 / AF $942 / AF $1,027 / AF $1,119 / AF $1,220 / AF $1,330 / AF Water Supply Costs without Future Increases8 OCWD $3,775,365 $2,941,296 $3,759,623 $4,006,739 $4,253,855 $4,500,971 CUP $1,557,878 $1,317,415 $0 $0 $0 $0 MWDOC $6,558,928 $5,178,727 $5,556,315 $5,862,799 $6,169,283 $6,475,767 Total $11,892,171 $9,437,439 $9,315,938 $9,869,538 $10,423,138 $10,976,738 Projected Water Supply Costs OCWD Fixed $300,000 $300,000 $327,000 $356,430 $388,509 $423,474 Variable $3,475,365 $2,641,296 $3,770,989 $4,403,976 $5,120,357 $5,930,013 CUP $1,557,878 $1,317,415 $0 $0 $0 $0 MWDOC Fixed $1,197,728 $1,265,541 $1,379,440 $1,503,590 $1,638,913 $1,786,415 Variable $5,361,200 $3,913,186 $4,513,481 $5,271,101 $6,128,534 $7,097,608 Total $11,892,171 $9,437,439 $9,990,910 $11,535,097 $13,276,312 $15,237,510 Projected Pass‐ through WS Costs9 $0 $0 $674,972 $1,665,559 $2,853,174 $4,260,773 8 FY 2016 Fixed Costs + FY 2016 Unit Cost * Projected Sales 9 Pass‐through = Total Projected Water Supply Costs – Total Water Supply Costs without future increases YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 15 of 56 3.1.3.2 Water O&M Expenses Using the District’s FY 2016 budget values, inflation factors were assigned to each line item to determine future O&M costs for the Water Fund. RFC worked closely with District staff to identify any non‐ recurring costs and other anticipated expenses for the Study period. In addition, the District will continue to pass through the increases in water supply costs from its wholesalers onto retail customer connections as allowed by Assembly Bill (AB) 3030. Table 3‐6 summarizes budgeted and projected O&M expenses for the Water Fund during the Study period. Table 3‐6: Budgeted and Projected Water O&M Expenses FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Power $1,142,849 $1,403,404 $1,677,314 $1,958,863 $2,277,505 $2,637,636 Water Supply Costs $12,708,101 $10,677,006 $9,990,910 $11,535,097 $13,276,312 $15,237,510 Salary Related Expenses $6,853,668 $7,906,784 $8,539,327 $9,222,473 $9,960,271 $10,757,093 Supplies & Services $3,374,504 $3,891,663 $4,198,778 $4,378,635 $4,526,067 $4,679,208 Total $24,079,123 $23,878,858 $24,406,330 $27,095,069 $30,040,155 $33,311,446 3.1.4 Projected Capital Improvement Projects The District has programmed approximately $22M in capital expenditures during the Study period for the water enterprise, as shown in Figure 3‐1. (A full list of projects and costs can be found in the Section 6.2). The CIP costs for future years are determined by using the programmed/budgeted costs and inflating the value by the capital cost inflation factor shown in Table 2‐1. While most of the District’s CIP expenditures are paid for by current rate revenues (pay‐as‐you‐go basis, PAYGO funded), there is some use of debt. The District currently has an open line of credit (LOC) with maximum borrowing limit of $7M. As of March 2015, the outstanding principal balance of the LOC is $5.621M, with a remaining borrow limit of $1.379M. The District is planning to continue to use its LOC to finance capital projects for FY 2015 ($179K) and FY 2016 ($1.2M), as indicated by the purple portion of the bar in Figure 3‐1. YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 16 of 56 Figure 3‐1: Projected Water CIP and Funding Sources 3.1.5 Current Debt Service The District currently has two outstanding long‐term debts: Certificate of Participation (COP) 2008 and Refunding Bond 2012A. The debt service payments for these two loans are summarized in Table 3‐7. In addition, the District pays an annual interest rate of approximately 1% on its $7M LOC until the end of the term in FY 2018. In FY 2018, the District will be required to make a balloon payment for the full principal payment of the $7M LOC. The balloon payment was originally scheduled for FY 2017, but the District is planning to extend to term of the balloon payment until FY 2018. For the purposes of the Financial Plan, it is assumed that the balloon payment of $7M will occur in FY 2018. Table 3‐7 summarizes the total debt service across the District’s three sources of debt for the water enterprise. Table 3‐7: Current Debt Service FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 COP 2008 $2,129,596 $2,129,596 $2,128,396 $2,125,996 $2,127,296 $2,127,196 Refunding Bond 2012A $593,913 $591,963 $588,488 $588,313 $591,213 $583,713 LOC Principal Payment $0 $0 $0 $7,000,000 $0 $0 Total $2,723,509 $2,721,559 $2,716,884 $9,714,309 $2,718,509 $2,710,909 YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 17 of 56 3.2 WATER FINANCIAL PLAN 3.2.1 Status Quo Water Financial Plan Table 3‐8 displays the pro forma of the District’s Water Fund under current rates over the Study period. All projections shown in the table are based upon the District’s current rate structure and do not include any rate adjustments or pass‐through increases on wholesale water costs. The pro‐forma incorporates the data shown in Table 3‐3 through Table 3‐7 and Figure 3‐1. Under the “status‐quo” scenario, revenues generated from rates and other miscellaneous revenues are inadequate to sufficiently recover operating expenses of the utility beginning in FY 2016 and the debt coverage ratio falls below the target level of 125%. Since current revenues cannot even meet operating expenses, the sizable CIP expenditures and debt service during the Study period would have to be funded from reserves. While the ending reserve balance is already below target levels, it becomes negative in FY 2018 under this scenario. In short, the District is unable to maintain fiscal sustainability and solvency under the current rates. YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 18 of 56 Table 3‐8: Status Quo Water Financial Plan (No Revenue Adjustment) FY 2015FY 2016FY 2017FY 2018FY 2019FY 2020 DescriptionsEstimatedBudgetedProjectedProjectedProjectedProjected Projected Water Sales18,752 AF13,298 AF14,581 AF15,623 AF16,664 AF17,706 AF REVENUES Existing Revenues from Rates $27,180,529$20,785,002$22,314,277$23,559,362$24,804,446$26,049,531 Service Charges$5,126,395$5,144,707$5,164,831$5,184,955$5,205,079$5,225,203 Commodity$22,054,134$15,640,295$17,149,446$18,374,407$19,599,367$20,824,327 Proposed Rev Adjustments$0$0$0$0$0$0 Proposed Rev Adjustments (%)0.0%0.0%0.0%0.0%0.0%0.0% Passthrough Water Supply Cost Rev$0$0$0$0$0$0 Property Tax$1,454,342$1,395,000$1,408,950$1,423,040$1,437,270$1,451,643 Other Revenues$2,059,116$1,295,310$1,380,403$1,365,896$1,351,220$1,342,807 TOTAL REVENUES$30,693,987$23,475,312$25,103,630$26,348,297$27,592,936$28,843,980 EXPENSES O&M Expenses$24,079,123$23,878,858$24,406,330$27,095,069$30,040,155$33,311,446 Power Costs$1,142,849$1,403,404$1,677,314$1,958,863$2,277,505$2,637,636 Water Supply Costs$12,708,101$10,677,006$9,990,910$11,535,097$13,276,312$15,237,510 Salary Related Expenses$6,853,668$7,906,784$8,539,327$9,222,473$9,960,271$10,757,093 Supplies & Services$3,374,504$3,891,663$4,198,778$4,378,635$4,526,067$4,679,208 Other Non‐Operating Expenses$9,250$22,000$22,880$23,795$24,509$25,244 LOC Interest Expenses$58,000$70,000$70,000$70,000$0$0 OPEB Payment$100,000$100,000$100,000$100,000$100,000$100,000 TOTAL EXPENSES$24,246,373$24,070,858$24,599,210$27,288,864$30,164,664$33,436,691 NET REVENUES$6,447,614 ‐$595,546$504,420 ‐$940,567 ‐$2,571,728 ‐$4,592,711 New LT Debt Issues$0$0$0$0$0$0 New ST Debt Issues$0$0$0$0$0$0 New LOC Borrow$179,217$1,200,000$0$0$0$0 TOTAL PROPOSED DEBT$179,217$1,200,000$0$0$0$0 Available for CIP$179,217$1,200,000$0$0$0$0 Transfers to COP Reserves$0$0$0$0$0$0 DEBT SERVICE LOC Principal Payment$0$0$0$7,000,000$0$0 Current Debt Service$2,723,509$2,721,559$2,716,884$2,714,309$2,718,509$2,710,909 Proposed LT Debt Service$0$0$0$0$0$0 Proposed ST Debt Service$0$0$0$0$0$0 TOTAL DEBT SERVICE$2,723,509$2,721,559$2,716,884$9,714,309$2,718,509$2,710,909 CIP Debt Funded$179,217$1,200,000$0$0$0$0 PayGo$1,207,085$4,593,233$6,411,345$3,696,151$3,645,604$3,075,218 TOTAL CIP$1,386,302$5,793,233$6,411,345$3,696,151$3,645,604$3,075,218 NET CASH BALANCES$2,517,020 ‐$7,910,337 ‐$8,623,809 ‐$14,351,026 ‐$8,935,840 ‐$10,378,838 Beginning Reserve Balances$26,092,823$28,854,571$20,944,234$12,320,425 ‐$2,030,601 ‐$10,966,442 Ending Reserve Balances $28,609,843$20,944,234$12,320,425 ‐$2,030,601 ‐$10,966,442 ‐$21,345,279 Target Reserve Balances$31,534,004$30,613,912$31,340,398$32,577,948$33,804,357$35,124,879 Debt Coverage Ratio237%‐22%19%‐35%‐95%‐169% Required Debt Coverage Ratio125%125%125%125%125%125% YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 19 of 56 3.2.2 Proposed Water Financial Plan The District previously adopted a resolution authorizing automatic adjustments to its rates to pass through for a five‐year period projected increases in the rates for wholesale water. RFC recommends that the District continue its use of pass‐through increases for wholesale water costs. Actual water supply pass‐through costs will be determined annually to align with actual water cost increases imposed on the District. In addition to the pass‐through water supply costs, the Water Fund needs additional revenue adjustments as shown in Table 3‐9 to meet the target reserve requirement and maintain financial sufficiency for its expenses and other funding obligations. Table 3‐9: Proposed Water Revenue Adjustments Fiscal Year Effective Date Proposed Water Revenue Adjustments 2016 October 1, 2015 36% 2017 July 1, 2016 5% 2018 July 1, 2017 5% 2019 July 1, 2018 5% 2020 July 1, 2020 5% Table 3‐10 shows the pro‐forma for the Water Fund with revenues from the automatic pass‐through increases for wholesale water and the proposed revenue adjustments shown above. Cumulatively, these factors result in the following:  Positive net water income and positive net water cash balances beginning in FY 2017. As shown in Figure 3‐2, the proposed revenue (shown by green line) begins to meet all operating and debt obligations (shown by stacked bars) in FY 2016 and subsequently contributes to reserves in future years.  The District stays above the debt coverage ratio threshold of 125% throughout the Study period.  Water Fund ending balances improve during the Study period. As shown in Figure 3‐3, the ending balance (shown by green bar) gradually moves closer to the target reserve level (shown by red line), effectively meeting it starting FY 2019. YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 20 of 56 Table 3‐10: Proposed Water Financial Plan FY 2015FY 2016FY 2017FY 2018FY 2019FY 2020 DescriptionsEstimatedBudgetedProjectedProjectedProjectedProjected Projected Water Sales18,752 AF13,298 AF14,581 AF15,623 AF16,664 AF17,706 AF REVENUES Existing Revenues from Rates $27,180,529$20,785,002$22,314,277$23,559,362$24,804,446$26,049,531 Service Charges$5,126,395$5,144,707$5,164,831$5,184,955$5,205,079$5,225,203 Commodity$22,054,134$15,640,295$17,149,446$18,374,407$19,599,367$20,824,327 Proposed Rev Adjustments$0$5,611,951$9,550,511$11,765,545$14,246,930$17,012,649 Proposed Rev Adjustments (%)0.0%36.0%5.0%5.0%5.0%5.0% Passthrough Water Supply Cost Rev$0$0$674,972$1,665,559$2,853,174$4,260,773 Property Tax$1,454,342$1,395,000$1,408,950$1,423,040$1,437,270$1,451,643 Other Revenues$2,059,116$1,295,310$1,412,625$1,433,753$1,465,147$1,514,723 TOTAL REVENUES$30,693,987$29,087,262$35,361,335$39,847,259$44,806,967$50,289,318 EXPENSES O&M Expenses$24,079,123$23,878,858$24,406,330$27,095,069$30,040,155$33,311,446 Power Costs$1,142,849$1,403,404$1,677,314$1,958,863$2,277,505$2,637,636 Water Supply Costs$12,708,101$10,677,006$9,990,910$11,535,097$13,276,312$15,237,510 Salary Related Expenses$6,853,668$7,906,784$8,539,327$9,222,473$9,960,271$10,757,093 Supplies & Services$3,374,504$3,891,663$4,198,778$4,378,635$4,526,067$4,679,208 Other Non‐Operating Expenses$9,250$22,000$22,880$23,795$24,509$25,244 LOC Interest Expenses$58,000$70,000$70,000$70,000$0$0 OPEB Payment$100,000$100,000$100,000$100,000$100,000$100,000 TOTAL EXPENSES$24,246,373$24,070,858$24,599,210$27,288,864$30,164,664$33,436,691 NET REVENUES$6,447,614$5,016,405$10,762,125$12,558,395$14,642,303$16,852,627 New LT Debt Issues$0$0$0$0$0$0 New ST Debt Issues$0$0$0$0$0$0 New LOC Borrow$179,217$1,200,000$0$0$0$0 TOTAL PROPOSED DEBT$179,217$1,200,000$0$0$0$0 Available for CIP$179,217$1,200,000$0$0$0$0 Transfers to COP Reserves$0$0$0$0$0$0 DEBT SERVICE LOC Principal Payment$0$0$0$7,000,000$0$0 Current Debt Service$2,723,509$2,721,559$2,716,884$2,714,309$2,718,509$2,710,909 Proposed LT Debt Service$0$0$0$0$0$0 Proposed ST Debt Service$0$0$0$0$0$0 TOTAL DEBT SERVICE$2,723,509$2,721,559$2,716,884$9,714,309$2,718,509$2,710,909 CIP Debt Funded$179,217$1,200,000$0$0$0$0 PayGo$1,207,085$4,593,233$6,411,345$3,696,151$3,645,604$3,075,218 TOTAL CIP$1,386,302$5,793,233$6,411,345$3,696,151$3,645,604$3,075,218 NET CASH BALANCES$2,517,020 ‐$2,298,387$1,633,897 ‐$852,064$8,278,190$11,066,500 Beginning Reserve Balances$26,092,823$28,854,571$26,556,184$28,190,081$27,338,016$35,616,206 Ending Reserve Balances $28,609,843$26,556,184$28,190,081$27,338,016 $35,616,206$46,682,707 Target Reserve Balances$31,534,004$31,247,344$32,441,392$33,954,375$35,492,951$37,164,898 Debt Coverage Ratio237%184%396%463%539%622% Required Debt Coverage Ratio125%125%125%125%125%125% YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 21 of 56 Figure 3‐2: Water Operating Financial Plan Figure 3‐3: Projected Water Fund Ending Balances YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 22 of 56 3.3 COST OF SERVICE ANALYSIS AND WATER RATE DESIGN 3.3.1 Water Cost of Service Analysis Proposition 218 requires a nexus between the rates charged and the costs of providing service. Based on the proposed financial plan, the cost of service analysis translates this financial requirement into actual rates. The first step in the cost of service analysis is to determine how much revenue is required to be collected from rates. The methodology used is based upon the premise that the utility must generate annual revenues adequate to meet its projected annual expenses. Revenues from sources other than water rates and charges (e.g. revenues from miscellaneous services) are deducted. The financial plan shows the required revenue adjustment for FY 2016 effective October 1, 2015, or 9 months of revenues under new rates, however, the calculated revenue requirement shown in Table 3‐11 is annualized for FY 2016. Table 3‐11: Annualized Water Revenue Requirement for FY 2016 REVENUE REQUIREMENTS FY 2016 Notes O&M Expenses $23,878,858 Table 3‐6 Other Non‐Operating Expenses $22,000 Table 3‐8 LOC Interest Expenses $70,000 Table 3‐8 OPEB Payment $100,000 Table 3‐8 Debt Service $2,721,559 Table 3‐8 Rate Funded CIP $5,793,233 Table 3‐8 Reserve Funding ‐$7,910,337 Table 3‐8 SUBTOTAL REVENUE REQUIREMENTS $24,675,312 LESS: OTHER REVENUES Property Tax ‐$1,395,000 Table 3‐8 Other Revenues ‐$1,295,310 Table 3‐8 New LOC Borrow / New Debt Proceeds for CIP ‐$1,200,000 Table 3‐8 SUBTOTAL OTHER REVENUES ‐$3,890,310 NET REVENUE REQUIREMENT FROM CURRENT RATES $20,785,002 Proposed Revenue Adjustment for FY 2016 36% Table 3‐9 Annualized Proposed Revenue Adjustment10 $7,482,601 TOTAL REVENUE REQUIREMENTS FROM PROPOSED RATES $28,267,603 10 Revenue Adjustments effective for FY 2016 (9 months) shown in the pro‐forma in Table 3‐10 = $20.785M * 36% * 9 months / 12 months = $5.612M YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 23 of 56 According AWWA M1 Manual (Principles of Water Rates, Fees and Charges), the costs incurred in a water utility are based upon the specific service requirements or cost drivers imposed on the system by its customer connections. Each of the various water utility facilities are designed and sized to meet one or more of these cost drivers. The capital costs incurred in the construction/installation of these facilities, as well as the O&M expenses incurred in running the system, are linked to these service requirements. The principal service requirements that drive costs include the annual volume of water consumed, the peak water demands incurred, the number of customer connections in the system, and the number of fire services required to maintain adequate fire protection. Accordingly, these service requirements are the basis for the selection of the cost components used in the second step in the cost‐ of‐service allocation process. The AWWA recommends two methods for classifying costs among various customer connections: (1) the Base‐Extra Capacity method in which costs are allocated to the different customer connection categories proportionate to their use of the water system; and (2) the Commodity‐Demand method in which costs are proportionately allocated to each customer connection category based on their peak demand. Although the two methods vary in the way in which costs are allocated, both result in rates designed to recover the reasonable cost of service during periods of both average and peak demands. This Study uses the Base‐Extra Capacity method, which is widely used in the water industry to serve retail customer connections. The second step in the cost of service analysis is to functionalize the revenue requirements into cost components. This analysis employs the “Base‐Extra Capacity” method, under which water utility costs of service are assigned to basic functional cost components including: water supply costs; base costs (fixed costs incurred to meet average demand); extra capacity or peaking costs (fixed water system costs to meet maximum day and maximum hour, or peaking, demand); and conservation, meter service and customer‐service related costs as described in the M1 Manual. Base costs include operations and maintenance and capital costs under average (base) demand conditions, a portion of operations and maintenance costs associated with storage, treatment, pumping and distributions facilities, and certain water capital cost investments. Extra capacity costs are costs associated with meeting water demands that exceed average (base) levels of use by system customer connections. These costs are incurred because of water use variations and peak demands of customer connections. Both base and peaking costs are considered fixed costs along with billing and customer service costs, fire protection and meter service costs. Customer costs are costs associated with serving customer connections, such as meter reading, billing, customer service, etc. Direct fire protection costs are related to the costs that apply solely to the fire protection function of the water system, both public and private, such as fire hydrants and related branch mains and valves, and the additional capacity required in the system to accommodate fire flow in case of an emergency. Table 3‐12 summarizes the peaking characteristics of the District’s water system determined by the District’s Water Master Plan 200511. The Average Daily Flow is the volume of water delivered to the system over the course of a year divided by 365 days. The Peak Day Demand is the largest volume of water delivered to the system in a single day. Similarly, the 11 Water Master Plan Chapter 7 Section 7.6 YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 24 of 56 Peak Hour Demand is the maximum volume of water delivered to the system in a single hour. The Max Day peaking factor, which is the ratio of Peak Day Demand over Average Daily Flow, is 1.5 and the Max Hour peaking factor, or Peak Hour Demand over Average Daily Flow, is 2.55. These ratios are used to determine the appropriate percentage allocation of total O&M and capital costs towards peaking, as shown in Section 6.3 and Section 6.4 of the Appendix. Table 3‐12: Water System Peaking Factors Peaking Factors Base 1.00 Max Day 1.50 Max Hour 2.55 The revenue to be recovered from rates of $28,267,603 is allocated according to the categories listed below in Table 3‐13. Note that the annualized revenue adjustment of $7,482,601 (shown in Table 3‐11) applies only to water system costs (Base Fixed, Peaking, B&CS and Meter). The water supply and power costs reflect the anticipated water and power costs for FY 2016. For further detail please see Section 6.4 of the Appendix, which shows the step‐by‐step allocations. Table 3‐13: Allocated Water System Cost Revenue Requirements FY 2016 at Current Rates Revenue Adjustment FY 2016 with Rev Adjustments Water Supply $10,677,006 $10,677,006 Power $1,403,404 $1,403,404 Base Fixed $3,365,270 $2,892,838 $6,258,108 Peaking $4,418,941 $3,798,589 $8,217,530 B&CS $534,411 $459,388 $993,798 Meter $385,971 $331,786 $717,757 Total $20,785,002 $7,482,601 $28,267,603 According to the M1 Manual, the cost‐of‐service approach to setting water rates results in the proportionate distribution of costs to each customer connection or customer connection class based on the costs that each incurs. A dual set of fees—ﬁxed and variable—is an extension of this cost causation theory. For example, a utility incurs some costs associated with serving customer connections irrespective of the amount or rate of water they use, such as billing and customer service costs. These types of costs are referred to as customer‐related costs and typically are costs that would be recovered through a ﬁxed charge. These costs are usually recovered on a per‐customer connection basis or some other non‐consumptive basis. Regardless of the level of a customer connection’s consumption, a customer connection will be charged this minimum amount in each bill. YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 25 of 56 Utilities invest in and continue to maintain facilities to provide capacity to meet all levels of desired consumption including the peak12 demand plus fire protection, and these costs must be recovered regardless of the amount of water used during a given period. Thus, peaking costs along with base costs and fixed water system costs to meet average demand are generally considered as fixed water system costs. It is ideal that agencies recover 100% of the fixed costs through monthly base fees, however, it forgoes the affordability for essential use and heavily impacts efficient users. To balance between affordability and revenue stability, it is a common practice that a portion of the base costs and peaking costs are recovered in the monthly base fee along with the customer‐related costs and meter‐related costs. The most common method for levying base fees is by meter size. Meter size is a proxy for the estimated demand that each customer connection places on the water system. The District’s base meter is most commonly a 1‐inch meter. The ratio at which the meter charge increases is a function of the meter’s safe operating capacity. For example, based on the AWWA meter capacity ratios, a customer that has a 2‐inch meter has the capacity equivalency of 5.33 ¾‐inch meters. (A 2‐inch meter has a safe operating capacity of 160 gallons per minute (gpm) compared to a ¾‐inch meter which has a safe operating capacity of 30 gpm as listed in Table B‐1 in the M1 Manual). Billing and customer service costs related to meter reading, billing and collections are distributed among customer connections based on the total number of bills rendered in a test year, which is FY 2016 for this Study. Meter service costs, costs related to maintenance and costs related to customer meters and services, are distributed to customer connections in proportion to estimated costs for meters and services installed. Capacity costs, costs related to capital and costs related to customer meters and services, are distributed in proportion to meter demand capacity as provided by the M1 Manual. According to the M1 Manual, distribution of meter service costs and capacity costs by equivalent meter and service ratios recognizes that meter and service costs vary, depending on considerations such as the size of service pipe, materials used, locations of meters and other local characteristics for various size meters as compared to 1‐inch meters and services. The components of water system costs are recovered through either monthly base fee revenues, water usage charge revenues, or a combination of both. As shown in Table 3‐14 below, the entirety of the water supply and power costs are recovered from water usage charges. On the other hand, meter costs and billing & customer service costs are entirely recovered from fixed base fees. Base and peaking costs are recovered from both monthly base fees and water usage charges. 12 Peaking costs are the costs related to providing water during high‐demand periods. YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 26 of 56 Table 3‐14: Revenue Requirements Allocated to Rate Components Cost Categories FY 2016 Monthly Base Fees Water Usage Charges Billing & CS Capacity Water Supply Power Delivery Water Supply $10,677,006 $10,677,006 Power $1,403,404 $1,403,404 Base Fixed $6,258,108 $4,755,527 $1,502,581 Peaking $8,217,530 $6,244,489 $1,973,041 Billing & CS13 $993,798 $993,798 Meter $717,757 $717,757 Total $28,267,603 $993,798 $11,717,774 $10,677,006 $1,403,404 $3,475,622 3.3.2 Monthly Base Fees In order to create parity across the various meter sizes, each meter size is assigned a factor relative to a ¾” meter, which has a value of 1. According to the AWWA M1 Manual, a particular meter size’s ratio of meter and capacity servicing costs relative to that of a ¾” meter is its “Equivalent Meter Units” (EMU). As described in Section 3.3.1, a 2‐inch meter has 5.33 times the throughput capacity of a ¾” meter and therefore has a multiplication factor of 5.33 to determine its EMU to ¾” meter. The Meter & Capacity factor escalates as meter size increases because the District’s cost to service a meter increases with its size. Table 3‐15 summarizes the EMUs for each fixed cost component. Table 3‐15: Equivalent Meter Units (EMUs) Meter Sizes Number of Accts Meter & Capacity Factor # of Bills per Yr Capacity EMUs per Yr14 5/8 28 1.00 336 336 3/4 5,617 1.00 67,404 67,404 1 17,271 1.67 207,252 345,420 1 1/2 573 3.33 6,876 22,920 2 1,138 5.33 13,656 72,832 3 6 11.67 72 840 4 4 21.00 48 1,008 6 1 53.33 12 640 8 0 93.33 0 0 10 0 140.00 0 0 Total 24,638 accounts 295,656 bills 511,400 EMUs 13 Billing & Customer Service 14 Example: 17,271 1‐inch meters in 12 billing periods potential draw on the system is equivalent to 345,420 ¾‐inch meters (17,271*12 bills/year * 1.67) YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 27 of 56 Monthly base fee components include: customer service – uniform for all accounts; meter service – maintenance and capital costs related to meters and inclusive of delivery‐related fixed costs, proportionate to meter cost ratios; and capacity – peaking and fire protection related costs increased by meter capacity ratios. The unit rate for each component for FY 2016, is shown in Table 3‐16. Table 3‐16: Components for Monthly Base Fees for FY 2016 Revenue Requirement (From Table 3‐14) Units of Service (From Table 3‐15) Unit Cost of Service Billing & CS $993,798 295,656 bills / yr $3.37 / bill Capacity $11,717,774 511,400 EMUs / yr $22.92 / EMU Total $12,711,572 % of Total Rev 45% The monthly fixed charges proposed for FY 2016 in Table 3‐17 are built from adding up the monthly service charge components – billing/customer service, and capacity. As noted above the customer service costs is the same for each account regardless of meter size. The capacity component of the monthly base fee is determined by multiplying the unit cost of $22.92 (found in Table 3‐16 and Table 3‐17) by the appropriate meter factor found in Table 3‐15. Adding these two components together yields the total proposed monthly base fee for each meter size for FY 2016, as shown in Table 3‐17 below. Table 3‐17: Monthly Base Fee for FY 2016 Meter Size Number of Accounts Billing & CS Capacity Proposed Monthly Base Fee 5/8 28 $3.37 $22.92 $26.29 / month 3/4 5,617 $3.37 $22.92 $26.29 / month 1 17,271 $3.37 $38.20 $41.57 / month 1 1/2 573 $3.37 $76.40 $79.77 / month 2 1,138 $3.37 $122.24 $125.61 / month 3 6 $3.37 $267.40 $270.77 / month 4 4 $3.37 $481.32 $484.69 / month 6 1 $3.37 $1,222.40 $1,225.77 / month 8 0 $3.37 $2,139.20 $2,142.57 / month 10 0 $3.37 $3,208.80 $3,212.17 / month In order to better align fixed revenues with fixed costs and reduce revenue volatility, the District proposes to collect all necessary revenue increases from the monthly base fees, and leave the water usage charge unchanged. Although the District is not proposing any adjustment to the water usage charge, the rate may increase in future years because of increases in the pass‐through water supply costs, which the District will calculate every year based on more realistic water supply cost increases. YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 28 of 56 While the overall increase in revenue for the water enterprise as a whole is 5% (as found in Table 3‐9), the monthly base fee increases by 11‐12% each year since the entirety of the revenue adjustment is being placed on the monthly base fee. Table 3‐18 summarizes the base monthly fee for each meter size for each year of the Study period. It should be noted that the proposed rates are based on currently available financial information. Based upon updated financial information, District Staff will annually evaluate the financial health of the District to determine the required revenue adjustment prior to implementing new rates. Table 3‐18: 5‐year Monthly Base Fees Meter Size (inch) Current FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 7/1/2014 10/1/2015 7/1/2016 7/1/2017 7/1/2018 7/1/2019 5/8 $10.06 $26.29 $29.37 $32.73 $36.39 $40.36 3/4 $10.06 $26.29 $29.37 $32.73 $36.39 $40.36 1 $16.77 $41.57 $46.44 $51.76 $57.54 $63.81 1 1/2 $33.54 $79.77 $89.12 $99.32 $110.41 $122.44 2 $53.66 $125.61 $140.33 $156.39 $173.85 $192.78 3 $117.37 $270.77 $302.49 $337.09 $374.72 $415.53 4 $211.26 $484.69 $541.46 $603.39 $670.74 $743.78 6 $469.47 $1,225.77 $1,369.34 $1,525.96 $1,696.28 $1,880.98 8 $804.80 $2,142.57 $2,393.52 $2,667.28 $2,964.98 $3,287.83 10 $1,274.27 $3,212.17 $3,588.39 $3,998.81 $4,445.12 $4,929.13 3.3.3 Water Usage Charge Components 3.3.3.1 Water Usage Charge In meeting Proposition 218 requirements, RFC conducted a cost of service analysis and identified three different rate components for the water usage charge, including Water Supply, Power and Delivery. Each of the rate components is described in Table 3‐19. YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 29 of 56 Table 3‐19: Descriptions of Proposed Water Usage Charge Components Rate Components Description Water Supply To recover water supply costs assessed by OCWD and MWDOC as described in Section 3.1.3.1 1. OCWD o Fixed Costs o Variable Costs 2. MWDOC o Fixed Costs o Variable Costs Power To recover the District’s power costs incurred to deliver the water to end users Delivery To recover remaining base costs (costs to meet average daily flow) and remaining peaking costs (costs to meet peak demand) Table 3‐20 shows the FY 2016 revenue requirement for each of the three water usage rate components. Dividing each cost component by the total projected sales produces the unit cost of service for each of the rate components. Table 3‐20: Components for Water Usage Charges in FY 2016 Water Supply Power Delivery Proposed FY 2016 Revenue Requirements (From Table 3‐14) $10,677,006 $1,403,404 $3,475,621 $15,556,031 Units of Service (From Table 3‐2) 5,792,702 hcf 5,792,702 hcf 5,792,702 hcf 5,792,702 hcf Unit Cost of Service $1.85 / hcf $0.25 / hcf $0.60 / hcf $2.70 / hcf 3.3.3.2 Pass‐through Water Supply Rates As described in Section 3.3.3.2, the District will use the pass‐through provision to make adjustments to its rates to address increases in the cost of wholesale water. While Table 3‐21 shows the projected pass‐through rates, actual water supply pass‐through costs will be determined by the District Staff annually to align with actual water cost increases imposed on the District. Table 3‐21: Estimated Cumulative Pass‐through Water Supply Rates FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Estimated Pass‐through (from Tables 3‐5 or 3‐10) $0 $674,972 $1,665,559 $2,853,174 $4,260,773 Projected Sales (hcf) (From Table 3‐2) 5,792,702 6,351,647 6,805,336 7,259,025 7,712,714 Est. Cumulative Pass‐through Water Supply Rate $0.00 / hcf $0.11 / hcf $0.25 / hcf $0.40 / hcf $0.56 / hcf YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 30 of 56 4 SEWER FUND – FINANCIAL PLAN AND RATES 4.1 SEWER REVENUE REQUIREMENTS A review of a utility’s revenue requirements is a key first step in the rate study process. The review involves an analysis of annual operating revenues under the status quo, operation and maintenance (O&M) expenses, transfers between funds and reserve requirements. This section of the report provides a discussion of the projected revenues, O&M expenses, other reserve funding and revenue adjustments estimated as required to ensure the fiscal sustainability and solvency of the Sewer Fund. 4.1.1 Revenues from Current Sewer Rates The District provides sewer collection services within its service area for both residential and commercial use. Treatment of the District’s flow is performed by the Orange County Sanitation District. In addition to its existing customer connections, the District annexed a portion of the City of Yorba Linda’s service area. These annexed customer connections are denoted with “YLC” in Table 4‐1 below. All residential customer connections pay a flat rate for sewer collection service, depending on their dwelling type (single family residential or multi‐family residential). Existing Commercial customer connections (CII‐ Regular) pay a monthly base fee of $5.50 per month plus a volumetric fee of $0.46 for all water usage beyond 22 hcf. The annexed Commercial customer connections (CII‐YLC) pay an annual base rate based on their water meter size (also shown in monthly costs in Table 4‐1) as well as a volumetric rate of $0.176 per hcf, based on 90% of the prior year’s water usage. Table 4‐1: Current Sewer Rates Sewer Maintenance Charges Current Rate SFR‐District Individual Metered $5.50 per month MFR‐District Master Metered $3.85 per unit per month SFR‐YLC SFR, formerly by City $5.50 per month MFR‐YLC MFR, formerly by City, on Tax Roll $5.50 per unit per month CII‐Regular Commercial District customer connections $5.50 per month CII‐YLC Prior City Commercial Customer Connections Meter Size Annual Rate on Tax Roll 5/8" Meter $14.41 $1.20 per month 3/4" Meter $21.02 $1.75 per month 1" Meter $27.54 $2.30 per month 1 1/2" Meter $67.01 $5.58 per month 2" Meter $106.49 $8.87 per month 3" Meter $211.69 $17.64 per month 4" Meter $330.11 $27.51 per month 6" Meter $658.94 $54.91 per month Sewer Flow / Commodity Rates CII‐Regular all usage above 22 hcf $0.460 per hcf CII‐YLC 90% of prior year usage $0.176 per hcf YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 31 of 56 District staff provided RFC with the estimated actual number of accounts for FY 2015 and projected for FY 2016 and estimated that approximately 100 single family sewer accounts will be added per year during the Study period (as previously mentioned in Section 2.2). Table 4‐2 provides a summary of the projected number of sewer accounts by customer connection type. Table 4‐2: Projected Sewer Account Summary FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 SFR‐District 15,527 15,627 15,727 15,827 15,927 16,027 MFR‐District 1,414 1,414 1,414 1,414 1,414 1,414 SFR‐YLC 5,582 5,582 5,582 5,582 5,582 5,582 MFR‐YLC 2,192 2,192 2,192 2,192 2,192 2,192 CII‐Regular 377 377 377 377 377 377 CII‐YLC 201 201 201 201 201 201 CII‐YLC by Meter Size 5/8" Meter 3/4" Meter 4 4 4 4 4 4 1" Meter 58 58 58 58 58 58 1 1/2" Meter 22 22 22 22 22 22 2" Meter 116 116 116 116 116 116 3" Meter 4" Meter 1 1 1 1 1 1 6" Meter Total 25,293 25,393 25,493 25,593 25,693 25,793 As stated above, commercial customer connections have a volumetric component to their sewer bill. Each CII‐Regular customer connection is charged $0.46 beyond 22 units of water. Each unit of water beyond 22 units is referred to as an “overage unit”. As shown in Table 4‐3 below, the District anticipates 234,316 overage units in FY 2016, which translates into approximately $108K in volumetric revenue (as shown in Table 4‐4). For the CII‐YLC customer connections, 90% of the prior year’s water usage is multiplied by a rate of $0.176 per unit. The anticipated volume of 264,709 units multiplied by the return factor of 90% and the per unit rate of $0.176 yields $33K in volumetric revenue from CII‐YLC customer connections, as shown in Table 4‐4. The volumetric quantities are displayed in Table 4‐3 below. Table 4‐3: Projected Commercial Sewer Billed Flows (ccf) under Current Rate Structure FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 CII Regular Total Usage 302,516 302,516 302,516 302,516 302,516 302,516 CII Overages 234,316 234,316 234,316 234,316 234,316 234,316 CII‐YLC Volume 209,328 264,709 264,709 264,709 264,709 264,709 90% of CII‐YLC Volume 188,395 238,238 238,238 238,238 238,238 238,238 YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 32 of 56 By summing the projected revenue values from volumetric charges and monthly fixed charges, the total revenue from current rates can be obtained as shown in Table 4‐4 below. The calculated revenue for FY 2015 ($1,784,856) is validated by the District’s budgeted revenue for FY 2015 ($1,783,575), less than a 1/10th of a percent difference. Table 4‐4: Projected Sewer Revenues from Current Rates FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Sewer Maintenance Charges Sewer Charge Revenue $1,483,403 $1,490,003 $1,496,603 $1,503,203 $1,509,803 $1,516,403 Sewer Parcel Assessments $160,511 $160,511 $160,511 $160,511 $160,511 $160,511 Sewer Flow / Commodity Rates Sewer Charge Revenue $107,785 $107,785 $107,785 $107,785 $107,785 $107,785 Sewer Parcel Assessments $33,158 $41,930 $41,930 $41,930 $41,930 $41,930 Total $1,784,856 $1,800,229 $1,806,829 $1,813,429 $1,820,029 $1,826,629 Sewer Charge Revenue $1,591,188 $1,597,788 $1,604,388 $1,610,988 $1,617,588 $1,624,188 Sewer Parcel Assessments $193,668 $202,440 $202,440 $202,440 $202,440 $202,440 Actual / Budget $1,783,575 $1,785,848 Sewer Charge Revenue $1,588,680 $1,584,348 Sewer Parcel Assessments $194,895 $201,500 4.1.2 Miscellaneous Sewer Revenues In addition to revenue from rates, Sewer Fund also receives miscellaneous revenues from different sources such as other operating revenue, interest, and non‐operating revenue, to offset the operating costs. Interest revenues are calculated by multiplying the average ending fund balance by the reserve interest rate. Exclusive of interest revenues, total miscellaneous revenues are projected to increase at 1% per year during the Study period as shown in Table 4‐5. YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 33 of 56 Table 4‐5: Projected Miscellaneous Sewer Revenues FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Other Operating Revenue $60,440 $36,291 $36,835 $37,388 $37,949 $38,518 Interest $14,679 $8,000 $10,289 $12,156 $14,285 $16,711 Non‐Operating Revenue $6,425 $11,925 $12,104 $12,285 $12,470 $12,657 Total Miscellaneous Revenues $81,544 $56,216 $59,228 $61,830 $64,703 $67,886 4.1.3 Sewer Expenses The District’s FY 2016 budget values and the assumed inflation factors for the study period (as detailed in Section 2.1) were used as the basis for projecting O&M costs. Table 4‐6 summarizes budgeted and projected O&M expenses for Sewer Fund. Table 4‐6: Projected Sewer Expenses FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Salary Related Expenses $979,273 $845,865 $913,535 $986,617 $1,065,547 $1,150,791 Supplies & Services $452,717 $988,704 $454,855 $473,439 $488,152 $503,352 Total O&M Expenses $1,431,990 $1,834,569 $1,368,390 $1,460,056 $1,553,698 $1,654,142 Non‐Operating Expenses $0 $0 $0 $0 $0 $0 OPEB Obligations $0 $7,500 $7,500 $7,500 $7,500 $7,500 TOTAL EXPENSES $1,431,990 $1,842,069 $1,375,890 $1,467,556 $1,561,198 $1,661,642 % Change 29% ‐25%7% 6% 6% 4.1.4 Sewer Capital Improvement Projects (CIP) The District has programmed approximately $1.6M in capital expenditures during the Study period for the sewer enterprise, as shown in Figure 4‐1 (See Section 6.2 in the Appendix). Sewer CIP includes the replacement for vehicle and capital equipment for the Sewer Fund. The values provided by District staff for the 5‐year Sewer CIP are in 2016 dollars. The CIP costs for future years are determined by using the programmed/budgeted costs and inflating the value by the capital cost inflation factor shown in Table 2‐1. YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 34 of 56 Figure 4‐1: Projected 5‐Year Sewer CIP 4.2 SEWER FINANCIAL PLAN 4.2.1 Status Quo Sewer Financial Plan Table 4‐7 displays the pro‐forma of the District’s Sewer Fund under current rates over the Study period. All projections shown in the table are based upon the current rate structure and do not include any rate adjustments. The pro‐forma incorporates the data shown in Table 4‐4 through Table 4‐6 and Figure 4‐1. Under the “status‐quo” scenario, revenues generated from rates and other miscellaneous revenues are inadequate to sufficiently recover operating expenses of the utility beginning in FY 2016. Much like the water enterprise, the current revenues barely meet operating expenses, which would require CIP expenditures to be funded from reserves. While the ending reserve balance is already below target levels, it dives further below target levels under the status quo scenario. In short, the District is unable to maintain fiscal sustainability and solvency under the current sewer rates. YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 35 of 56 Table 4‐7: Status Quo Sewer Financial Plan (No Revenue Adjustment) 4.2.2 Proposed Sewer Financial Plan As shown in the pro‐forma above in Table 4‐7, the sewer enterprise will experience ending fund balances that do not meet target levels under the current sewer rates. To meet the target reserve requirements set forth in Section 2.3 and maintain financial sufficiency for its expenses and other funding obligations, the sewer enterprise will require additional revenues. Table 4‐8 below outlines the proposed revenue adjustments through FY 2020 which will allow the sewer enterprise to meet its obligations. It includes an 8% revenue adjustment for each year of the study period. Note that the first revenue adjustment is proposed to occur in October of 2015, while the remaining revenue adjustment will occur at the beginning of each fiscal year. FY 2015FY 2016FY 2017FY 2018FY 2019FY 2020 Proposed Revenue Adjustments (%)0.0%0.0%0.0%0.0%0.0%0.0% REVENUES Existing Revenues From Rates$1,783,575$1,800,229$1,806,829$1,813,429$1,820,029$1,826,629 Proposed Revenue Adjustments$0$0$0$0$0$0 Other Operating Revenue$60,440$36,291$36,835$37,388$37,949$38,518 Interest Income$14,679$8,000$9,512$10,219$10,648$10,790 Other Non‐Operating Revenue$6,425$11,925$12,104$12,285$12,470$12,657 TOTAL REVENUES$1,865,119$1,856,445$1,865,280$1,873,321$1,881,095$1,888,594 EXPENSES Salary Related Expenses$979,273$845,865$913,535$986,617$1,065,547$1,150,791 Supplies & Services$452,717$988,704$454,855$473,439$488,152$503,352 Total Non‐Operating Expenses$0$0$0$0$0$0 OPEB Obligations$0$7,500$7,500$7,500$7,500$7,500 TOTAL EXPENSES$1,431,990$1,842,069$1,375,890$1,467,556$1,561,198$1,661,642 NET REVENUES$433,130$14,375$489,391$405,764$319,897$226,951 Total CIP$0$688,421$208,000$216,320$222,810$229,494 Debt/Loan Funded$0$0$0$0$0$0 PAYGO$0$688,421$208,000$216,320$222,810$229,494 PROPOSED DEBT ISSUES$0$0$0$0$0$0 Proceeds to Debt Reserve Fund$0$0$0$0$0$0 Debt Proceeds to Capital R&R Fund$0$0$0$0$0$0 DEBT SERVICE Existing Debt Service$0$0$0$0$0$0 Proposed Debt Service$0$0$0$0$0$0 TOTAL DEBT SERVICE$0$0$0$0$0$0 NET CASH BALANCES$433,130 ‐$674,046$281,391$189,444$97,087 ‐$2,543 BEGINNING SEWER FUND BALANCES$3,311,954$3,704,129$3,030,083$3,311,474$3,500,918$3,598,006 ENDING SEWER FUND BALANCES $3,745,084$3,030,083$3,311,474$3,500,918$3,598,006$3,595,463 TARGET FUND BALANCES $5,287,296$5,387,941$5,348,008$5,450,601$5,536,159$5,625,282 Sewer Operating25%of O&M Budget$357,997$458,642$342,097$365,014$388,425$413,536 Sewer Capital R&R2%of Asset Values$1,915,298$1,915,298$1,991,910$2,071,587$2,133,734$2,197,746 Sewer Emergency$3,000,000$3,000,000$3,000,000$3,000,000$3,000,000$3,000,000$3,000,000 Sewer EBL Reserves$14,000$14,000$14,000$14,000$14,000$14,000$14,000 DEBT COVERAGE RATIO#N/A#N/A#N/A#N/A#N/A#N/A TARGET DEBT COVERAGE 125%125%125%125%125%125% YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 36 of 56 Table 4‐8: Proposed Sewer Revenue Adjustments Fiscal Year Effective Date Proposed Sewer Revenue Adjustments 2016 October 1, 2015 8% 2017 July 1, 2016 8% 2018 July 1, 2017 8% 2019 July 1, 2018 8% 2020 July 1, 2019 8% Table 4‐9 shows the pro‐forma for the sewer enterprise under proposed revenue adjustments. Cumulatively, these factors result in the following:  Positive net income and positive net cash balances for each year of the Study period, with the exception of FY 2016 due to programmed CIP expenditures.  Proposed revenues (shown by green line in Figure 4‐2) are sufficient to meet obligations (shown by stack bars), including a surplus to replenish reserves in subsequent years.  Although the sewer ending balances (shown by red bars in Figure 4‐3) are well below reserve target levels (shown by green line in Figure 4‐3) for most of the Study period, they approach target levels in FY 2019, and surpass targets in FY 2020. YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 37 of 56 Table 4‐9: Proposed Sewer Financial Plan FY 2015FY 2016FY 2017FY 2018FY 2019FY 2020 Proposed Revenue Adjustments (%)0.0%8.0%8.0%8.0%8.0%8.0% REVENUES Existing Revenues From Rates$1,783,575$1,800,229$1,806,829$1,813,429$1,820,029$1,826,629 Proposed Revenue Adjustments$0$108,014$300,656$470,969$656,100$857,288 Other Operating Revenue$60,440$36,291$36,835$37,388$37,949$38,518 Interest Income$14,679$8,000$10,289$12,156$14,285$16,711 Other Non‐Operating Revenue$6,425$11,925$12,104$12,285$12,470$12,657 TOTAL REVENUES$1,865,119$1,964,458$2,166,713$2,346,227$2,540,832$2,751,803 EXPENSES Salary Related Expenses$979,273$845,865$913,535$986,617$1,065,547$1,150,791 Supplies & Services$452,717$988,704$454,855$473,439$488,152$503,352 Total Non‐Operating Expenses$0$0$0$0$0$0 OPEB Obligations$0$7,500$7,500$7,500$7,500$7,500 TOTAL EXPENSES$1,431,990$1,842,069$1,375,890$1,467,556$1,561,198$1,661,642 NET REVENUES$433,130$122,389$790,823$878,671$979,634$1,090,160 Total CIP$0$688,421$208,000$216,320$222,810$229,494 Debt/Loan Funded$0$0$0$0$0$0 PAYGO$0$688,421$208,000$216,320$222,810$229,494 PROPOSED DEBT ISSUES$0$0$0$0$0$0 Proceeds to Debt Reserve Fund$0$0$0$0$0$0 Debt Proceeds to Capital R&R Fund$0$0$0$0$0$0 DEBT SERVICE Existing Debt Service$0$0$0$0$0$0 Proposed Debt Service$0$0$0$0$0$0 TOTAL DEBT SERVICE$0$0$0$0$0$0 NET CASH BALANCES$433,130 ‐$566,032$582,823$662,351$756,824$860,667 BEGINNING SEWER FUND BALANCES$3,311,954$3,704,129$3,138,097$3,720,920$4,383,272$5,140,096 ENDING SEWER FUND BALANCES $3,745,084$3,138,097$3,720,920$4,383,272$5,140,096 $6,000,762 TARGET FUND BALANCES $5,287,296$5,387,941$5,348,008$5,450,601$5,536,159$5,625,282 Sewer Operating25%of O&M Budget$357,997$458,642$342,097$365,014$388,425$413,536 Sewer Capital R&R2%of Asset Values$1,915,298$1,915,298$1,991,910$2,071,587$2,133,734$2,197,746 Sewer Emergency$3,000,000$3,000,000$3,000,000$3,000,000$3,000,000$3,000,000$3,000,000 Sewer EBL Reserves$14,000$14,000$14,000$14,000$14,000$14,000$14,000 DEBT COVERAGE RATIO#N/A#N/A#N/A#N/A#N/A#N/A TARGET DEBT COVERAGE 125%125%125%125%125%125% YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 38 of 56 Figure 4‐2: Sewer Operating Financial Plan Figure 4‐3: Projected Sewer Fund Ending Balances YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 39 of 56 4.3 COST OF SERVICE ANALYSIS AND SEWER RATE DEVELOPMENT Government Code Section 54999 requires agencies to perform a cost of service analysis at least once every ten years. A cost of service analysis ensures that rates properly reflect the cost of providing service to the customer connection, and are thus fair to customers. For the analysis, a “test” year was established in which revenue requirements for that year were evaluated and the resulting rates for that year were calculated. The following analysis uses FY 2016 as the test year. 4.3.1 Recommendations In reviewing the District’s existing sewer rate structure, there were two primary concerns. First, the current rate structure was developed more than 10 years ago and there is no administrative record supporting the development of current rates. Secondly, there are inconsistencies in the rate structures for the two types of Commercial customer connections served by the District – the existing Commercial customer connections within the District (CII‐Regular) and those annexed from the City of Yorba Linda (CII‐YLC). The rates charged differ in terms of the monthly base fee and the volumetric flow charge assessed, as summarized below: 1. Monthly sewer base fee: a. CII‐Regular: $5.50 per month with 22 hcf included before incurring overages b. CII‐YLC: by meter size ($1.20 ‐ $54.91 per month) with no hcf included 2. Volumetric commodity rate: a. CII‐Regular: $0.46 per hcf above 22 hcf b. CII‐YLC: $0.176 per hcf for 90% of prior year usage To address the rate structure inconsistency, RFC recommends that the District harmonize the rates for the two subsets of Commercial customer connections. The base fee would be identical for both groups and include a base flow allotment, equivalent to a single family residential home. Any flow beyond the base allotment would be charged at the volumetric rate. The volumetric rate would also be identical for both groups of Commercial customer connections. The flow for Commercial customer connections would be estimated by using 83% of the prior year’s water usage, because it is assumed that 83% of a Commercial customer connections’ potable water usage is returned in the sewer system (as estimated by District staff). For residential accounts, the residential sewer flow is recommended to be set to 55 GPCD. A GPCD of 55 is the new indoor efficient water usage for residential accounts per SB x7‐7. In addition, the density per single family home would be set to 3.04 persons15 and 2.5 persons for multi‐family residential homes (as estimated by District staff). 15 Household density for Single Family as reported by E‐5 by California Department of Finance on May 2015, “E‐5 Population and Housing Estimates for Cities, Counties, and the State, January 1, 2011‐2015, with 2010 Benchmark” YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 40 of 56 4.3.2 Cost of Service Analysis & Sewer Rates Development Proposition 218 requires a nexus between the rates charged and the costs of providing service. Based on the proposed financial plan, the cost of service analysis translates this financial requirement into actual rates. The first step in the cost of service analysis is to determine how much revenue is required to be collected from rates. The methodology used is based upon the premise that the utility must generate annual revenues adequate to meet its estimated annual expenses. Revenues from sources other than rates and charges (e.g. revenues from miscellaneous services) are deducted as shown in Table 4‐10. The financial plan shows the required revenue adjustment for FY 2016 effective in October 1 2015, or 9 months of revenues under new rates, however, the calculated revenue requirement shown in Table 4‐10 is annualized for FY 2016. Table 4‐10: Annualized Sewer Revenue Requirement for FY 2016 REVENUE REQUIREMENTS FY 2016 Notes O&M Expenses $1,834,569 Table 4‐6 OPEB Payment $7,500 Table 4‐7 Debt Service $0 Table 4‐7 Rate Funded CIP $688,421 Table 4‐7 Reserve Funding ‐$674,046 Table 4‐7 SUBTOTAL REVENUE REQUIREMENTS $1,856,445 Table 4‐7 LESS: OTHER REVENUES Other Operating Revenue ‐$36,291 Table 4‐7 Interest Income ‐$8,000 Table 4‐7 Other Non‐Operating Revenue ‐$11,925 Table 4‐7 SUBTOTAL OTHER REVENUES ‐$56,216 NET REVENUE REQUIREMENT FROM CURRENT RATES $1,800,229 Proposed Revenue Adjustment 8% Table 4‐8 Annualized Proposed Revenue Adjustment $144,018 NET REVENUE REQUIREMENT FROM PROPOSED RATES $1,944,247 Based on the recommendations listed in Section 4.3.1, the revised units of service including revised flows are re‐calculated for FY 2016 for each customer connection class and summarized in Table 4‐11 below. The recommendations included reducing the estimated GPCD to 55 for indoor usage and using a wastewater return factor of 83%. To estimate the base use for SFR customer connections, the GPCD of 55 for indoor usage is multiplied by the average number of persons per dwelling (3.04), multiplied by 30 to determine monthly usage, and finally divided by 748 to convert the flow from gallons to hcf, yielding YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 41 of 56 a total of 7 hcf. A similar methodology is followed to determine the base use for MFR customer connections, but the persons per dwelling is reduced to 2.5. To determine the overage billed sewer flows for Commercial customer connections, the total water usage for the customer connection class is multiplied by the return factor of 83%. The 7 units of flow per month that is included in the Commercial customer connections’ monthly base fee is then deducted from the total. The remaining flow beyond 7 units is charged at the proposed volumetric rate. Table 4‐11: Units of Sewer Service for FY 2016 Sewer Flows Estimates Revised Bill Flows (hcf) # of Accounts Base Use per Acct16 Overage Billed Sewer Flows17 SFR‐District 1,312,668 15,627 7 hcf18 MFR‐District 101,808 1,414 6 hcf19 SFR‐YLC 468,888 5,582 7 hcf MFR‐YLC 157,824 2,192 6 hcf CII‐Regular 251,088 377 7 hcf 219,420 CII‐YLC 219,708 201 7 hcf 202,824 Total 2,511,985 25,393 422,245 RFC worked closely with District staff to allocate individual line items of the O&M expenses, Sewer asset list, and each revenue requirement line item for FY 2016 to functional cost components: Flow and Administration (see Section 6.5 in the Appendix for steps by steps allocations). Table 4‐12 shows the unit costs for each of the cost components for sewer. 16 Included in Sewer Maintenance Charges 17 Overage billed flows = 83% * Total Annual Water Usage – 7 hcf / account * # of accounts*12 months 18 7 hcf = 55 gpcd * 3.04 people per household * 30 days / 748 gallons per hcf 19 6 hcf = 55 gpcd * 2.50 people per household * 30 days / 748 gallons per hcf YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 42 of 56 Table 4‐12: Sewer Unit Cost of Service Development (FY 2016) Flow General FY 2016 (From Table 4‐10) REVENUE REQUIREMENTS O&M Expenses $505,057 $1,329,513 $1,834,569 Other Non‐Operating Expenses $0 $0 OPEB Payment $7,500 $7,500 Rate Funded CIP $642,933 $45,488 $688,421 Reserve Funding ‐$305,789 ‐$368,256 ‐$674,046 SUBTOTAL REVENUE REQUIREMENTS $842,200 $1,014,245 $1,856,445 LESS: OTHER REVENUES Other Operating Revenue ‐$36,291 ‐$36,291 Interest Income ‐$8,000 ‐$8,000 Other Non‐Operating Revenue ‐$11,925 ‐$11,925 SUBTOTAL OTHER REVENUES $0 ‐$56,216 ‐$56,216 NET REVENUE REQUIREMENT FROM CURRENT RATES $842,200 $958,029 $1,800,229 8% Proposed Revenue Adjustments $67,376 $76,642 $144,018 NET REVENUE REQUIREMENT FROM PROPOSED RATES $909,576 $1,034,671 $1,944,247 Units of Service 2,511,985 25,393 (from Table 4‐11) hcf # of Accounts Unit Cost of Service $0.36 $40.75 per hcf per acct per yr These various cost components for sewer service are then allocated to each customer connection class based on its projected sewer flows and number of accounts. Table 4‐13 shows the same costs components from Table 4‐12 above with the allocations to each customer connection class. The revenues for each customer connection class are shown under the current and proposed rates. While the change in revenues from $1.8M to $1.94M represents an 8% increase, it is not evenly distributed across all customer connection classes. For example, the revenues from CII‐Regular customer connections are proposed to decrease by 20% and the revenues from CII‐YLC customer connections are proposed to increase by 52%. These changes are the result of the recommendations from the COS analysis and the proposed revenue adjustments. The proposed adjustments better aligns the rate charged to each customer connection class with the cost of providing service to that same customer connection class. The current rates were established several years ago and the District has not conducted a COS analysis for approximately 10 years, as required by Government Code 54999. YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 43 of 56 Table 4‐13: Sewer COS Allocation to Customer Connection Classes Flow Costs20 ($0.36 / hcf) General Costs ($40.75/acct) (Proposed) Total Current % Change SFR‐District $475,310 $636,743 $1,112,052 $1,031,382 8% MFR‐District $36,864 $57,615 $94,479 $65,327 45% SFR‐YLC $169,782 $227,446 $397,228 $368,412 8% MFR‐YLC $57,147 $89,316 $146,463 $144,672 1% CII‐Regular $90,918 $15,361 $106,279 $132,667 ‐20% CII‐YLC $79,555 $8,190 $87,745 $57,768 52% Total $909,576 $1,034,671 $1,944,247 $1,800,229 8% Combining the data from Table 4‐12 and Table 4‐13 above, the fixed and variable components for each account in each customer connection class can be determined. The fixed and variable components are described below:  Fixed – General costs of service are assessed uniformly to each sewer account to recover the fixed costs and overhead costs of operating sewer systems. These costs do not vary with sewer system use. Flows costs are best captured on the volumetric (variable charge). To that end, the fixed monthly charge is the same for each customer connection class. Dividing the general costs by the number of accounts for each customer connection class provides the fixed charge amount.  Variable ‐ Flow costs of service for each customer connection class is divided by the projected sewage flows generated by each customer connection class. The variable rate is comprised of the costs to collect the sewer flows, divided by the total flow. Table 4‐14 below shows the proposed Sewer Rates for FY 2016. Both fixed and variable charges are detailed in Table 4‐14 below. Table 4‐14: Proposed Sewer Rates for FY 2016 Rate Structure Flow General Proposed Current Notes Sewer Maintenance Charges SFR‐District Flat $2.54 $3.40 $5.94 $5.50 7 unit allowance MFR‐District Flat $2.18 $3.40 $5.58 $3.85 6 unit allowance SFR‐YLC Flat $2.54 $3.40 $5.94 $5.50 7 unit allowance MFR‐YLC Flat $2.18 $3.40 $5.58 $5.50 6 unit allowance CII‐Regular Flat + Vol $2.54 $3.40 $5.94 $5.50 7 unit allowance CII‐YLC Flat + Vol $2.54 $3.40 $5.94 Varies 7 unit allowance Commodity Rates CII $0.36 / hcf Estimated return factor is 83% 20 Flows Costs to Customer Connection Class = $0.36 / hcf * Revised Bill Flows (hcf) ($0.36/hcf from Table 4‐12) Example: SFR‐District = $0.36/hcf * 1,312,668 hcf (from Table 4‐11) YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 44 of 56 Table 4‐15 shows the 5‐year Sewer Rates using the proposed 8% revenue adjustment listed in Table 4‐8 of the proposed Sewer Financial Plan in Section 4.2.2. Note that the proposed rates also include a uniform volumetric rate for both the CII‐Regular and CII‐YLC customer connection classes. Table 4‐15: 5‐year Proposed Sewer Rates Est. Sewer Flows Return Factors Current FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 8% 8% 8% 8% Sewer Maintenance Charges SFR‐District 7 hcf $5.50 $5.94 $6.42 $6.94 $7.50 $8.10 MFR‐District 6 hcf $3.85 $5.58 $6.03 $6.52 $7.05 $7.62 SFR‐YLC 7 hcf $5.50 $5.94 $6.42 $6.94 $7.50 $8.10 MFR‐YLC 6 hcf $5.50 $5.58 $6.03 $6.52 $7.05 $7.62 CII‐Regular 7 hcf $5.50 $5.94 $6.42 $6.94 $7.50 $8.10 CII‐YLC 7 hcf Varies $5.94 $6.42 $6.94 $7.50 $8.10 Commodity Rates ($ / hcf) CII Regular above 7 hcf 83% $0.46 $0.36 $0.40 $0.44 $0.48 $0.52 CII ‐ YLC above 7 hcf 83% $0.18 $0.36 $0.40 $0.44 $0.48 $0.52 YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 45 of 56 5 CUSTOMER CONNECTION IMPACT ANALYSIS Figure 5‐1 shows the customer impact of the proposed revenue adjustments versus the current rates for a single family residential home with a 1” water meter – the most common size of residential meter in the District’s service area. Since the entirety of the revenue adjustment was placed on the monthly base fee, the dollar impact of the proposed rate does not change with usage. The total water bill for various levels of usage is presented in Figure 5‐1 below. For all usage levels, each account will experience an increase of $24.80. Figure 5‐1: Sample Single Family Water Bills at Different Usage Levels For the same single family residence with a 1” water meter, the monthly charge for sewer service is proposed to increase by $0.44. Figure 5‐2 summarizes the total bill for water and sewer at various usage levels, which includes the proposed bill total from Figure 5‐1 plus the monthly sewer service charge of $5.94. Figure 5‐2: Sample Single Family Water and Sewer Bills at Different Usage Levels YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 46 of 56 6 APPENDICES 6.1 APPENDIX 1: CURRENT RESERVE POLICY (ADOPTED JUNE 11, 2014) RESERVE POLICY A. GENERAL POLICY: Maintaining adequate reserves is an essential part of sound financial management. The Yorba Linda Water District Board of Directors realizes the importance of reserves in providing reliable service to its customers, financing of long‐term capital projects and funding availability for emergencies should the need arise. Interest derived from reserve balances shall be credited to the reserve account from which it was earned. B. CATEGORIES: YLWD shall accumulate, maintain and segregate its reserve funds into the following categories: Restricted and Designated Reserves 1. Board Designated Reserves; and 2. Contractually Restricted Reserves. C. SCOPE: This policy will assist the Board of Directors in establishing: 1. Target levels for reserve funds; 2. Requirements for the use of reserve funds; and 3. Periodic review requirements for each reserve. D. PERIODIC REVIEW: Staff and the YLWD Board shall review the reserve balances and targets annually as a part of the annual budget process. The Finance Staff will continue to review all reserve and investment balances on a monthly basis, with a quarterly report going to the full Board to receive and file. E. RESTRICTED AND DESIGNATED RESERVES: 1. Board Designated Reserves: YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 47 of 56 These are reserve funds earmarked for the purpose of funding such items as new capital facilities, repair or replacement of existing facilities and general operating reserves designated for a specific purpose and use by the Board of Directors. 1.0 Operating Reserve A. Definition and Purpose – Established to cover temporary cash flow deficiencies that occur as a result of timing differences between the receipt of operating revenue and expenditure requirements and unexpected expenditures occurring as a result of doing business. B. Target Level – The Government Finance Officers Association (GFOA) recommends that funding should be no less than one to two months (or 8% ‐ 17%) of the District’s annual operating budget. The District’s current target will be a minimum of 8% and a maximum of 17% of the annual operating budget for both the water and sewer funds. C. Events or Conditions Prompting the Use of the Operating Reserve – This reserve may be utilized as needed to pay outstanding operating expenditures prior to the receipt of anticipated operating revenues. 1.1 Emergency Reserve A. Definition and Purpose – Established to provide protection recovery to the District and its customers for losses arising from an unplanned event or circumstance. The reserve level combined with YLWD’s existing insurance policies should adequately protect YLWD and its customers in the event of a loss. B. Target Level – Established at a minimum level equal to $1,000,000 for the water fund and shall accumulate interest and annual contributions as determined by the District’s annual operation to a maximum level of $4,000,000. The target for sewer will be a minimum of $250,000 and a maximum of $1,000,000. C. Events or Conditions Prompting the Use of the Emergency Reserve – This reserve shall be utilized to cover unexpected losses experienced by the District as a result of a disaster or other unexpected loss. Any reimbursement received by the District from insurance companies as a result of a submitted claim shall be deposited back into the reserve as replenishment for the loss. 1.2 Capital Replacement Reserve A. Definition and Purpose – Established to provide capital repair and replacement funding as the District’s infrastructure deteriorates over its expected useful life. B. Target Level – The Board‐approved 2010 Asset Management Plan recommended that the annual contribution to this reserve be at a minimum level of $1,820,000 for the water fund and $345,000 for the sewer fund, less money set aside for the Maintenance Reserve. Funding with available funds based on the District’s operations shall be allocated quarterly. C. Events or Conditions Prompting the Use of the Capital Replacement Reserve – Through the annual budget process, staff shall recommend anticipated asset replacement projects. The YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 48 of 56 Board of Directors shall take action to approve recommended project appropriations from the capital replacement reserve. Should unplanned replacement be necessary during any fiscal year, the Board of Directors may take action to amend the budget and appropriate needed funds as required. 1.3 Maintenance Reserve A. Definition and Purpose – Established to provide funding for non‐scheduled capital asset repair and replacement. B. Target Level – $200,000 subject to an annual review. C. Events or Conditions Prompting the Use of the Maintenance Replacement Reserve – Unplanned failure of assets including but not limited to pumps, motors and major facility repairs. 1.4 Debt Service Reserve A. Definition and Purpose – Established to provide funding for semi‐annually scheduled debt service payments. B. Target Level – The District’s highest annual debt service payment – currently $2,723,509. C. Events or Conditions Prompting the Use of the Debt Service Reserve – Semi‐annual debt service payments will be made out of this fund, with funding on the water rate replenishing the fund annually. 1.5 Employee Liabilities Reserve A. Definition and Purpose – The purpose is to cover employees’ accrued vacation and other compensatory time and to ensure the complete funding associated with the liability incurred for employees whom have met the requirements necessary for district paid health benefits at retirement. B. Target Level – The annual contribution will be $100,000 ($93,000 for water and $7,000 for sewer) to be evaluated and/or adjusted annually thereafter based on an analysis of current employees’ vacation and sick time accrued and actuarial determinations of future retiree costs. As of July 1, 2013, an actuary determined that the District’s Other Post Employment Benefit (OPEB) liability was $1,896,791. When combined with a liability on the District’s books for vacation, compensatory and sick time of $1,047,342 at June 30, 2014, the target is projected to be approximately $2,944,133 for the combined water and sewer enterprises. C. Events or Conditions Prompting the Use of the Employee Liabilities Reserve – This reserve may be used in the event that operating funds are not adequate to meet vacation, compensatory and sick time paid out or retiree medical cost obligations within the current year. YLWD 2015 Water and Sewer Rate Study Report ‐ FINAL August 25, 2015 Page 49 of 56 2. Contractually Restricted Reserves: These are funds held to satisfy limitations set by external requirements established by creditors, grant agencies or law. Examples include stipulated bond covenants and reserves held with a fiscal agent. 2.0 US Bank 2008 COP Reserve A. Definition and Purpose – Established to cover reserve requirements held with a designated fiscal agent (US Bank) for the 2008 Certificates of Participation. B. Target Level – Funding shall be held in an amount equal to $2,147,096. C. Events or Conditions Prompting the Use of the Contractually Restricted Reserve – This reserve may be utilized as needed by the fiscal agent to pay any outstanding debt service payments not covered by the District within the specified billing and due dates. End of Policy Document YLWD 2015 Water and Sewer Rate Study Report- FINAL August 25, 2015 6.2 APPENDIX 2: CAPITAL IMPROVEMENT PLAN Table 6-1:Water CIP (Uninflated) 2014 Description FY 020 Capital Improvement Plan(Uninflated) S&W Well Project(Well No.21) Water $1,194,603 $0 $0 $0 $0 S&W Well Project(Well No.22) Water $211,320 $950,000 $1,040,000 $257,360 $0 Fairmont BPS Upgrade Water $1,000,000 $4,000,000 $602,299 $0 $0 Richfield Road Pipeline Water $1,340,000 $31,627 $0 $0 $0 Fairmont BPS Phase 2 Water $0 $0 $0 $0 $0 Lakeview Grade Separation Water $260,000 Water Water Rehabilitation&Restoration Future Pipeline Project Water $760,000 $458,128 $0 $0 Timber Ridge BPS Rehabilitation Water $240,000 $10,000 $0 $0 Lakeview Booster Piping Water $94,000 $0 $0 $0 FRS Rehabilitation Phase 2 Water $153,310 $528,000 $90,000 $627,000 Annual Routine Capital R&R Water $0 $0 $1,520,000 $2,211,034 $2,500,000 Water Water Water Others Vehicle&Capital Equipment Replacement Water $399,000 $540,000 $187,000 $165,000 $177,000 $180,000 Other Projects Completed in FY 14/15 Water $987,302 Water Water Water Water Total CIP $0 $1,386,302 $5,793,233 $6,164,755 $3,417,299 $3,272,394 $2,680,000 ® Yorba 'Linda Page 50 of 56 Water District Irk YLWD 2015 Water and Sewer Rate Study Report - FINAL August 25, 2015 Table 6-2:Water CIP (Inflated) FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 020 Budgeted Description Estimated Capital Improvement Plan S&W Well Project(Well No.21) Water $1,194,603 $0 $0 $0 $0 S&W Well Project(Well No.22) Water $211,320 $988,000 $1,124,864 $286,711 $0 Fairmont BPS Upgrade Water $1,000,000 $4,160,000 $651,447 $0 $0 Richfield Road Pipeline Water $1,340,000 $32,892 $0 $0 $0 Fairmont BPS Phase 2 Water $0 $0 $0 $0 $0 Lakeview Grade Separation Water $260,000 Water Water Rehabilitation&Restoration Future Pipeline Project Water $760,000 $476,453 $0 $0 Timber Ridge BPS Rehabilitation Water $240,000 $10,400 $0 $0 Lakeview Booster Piping Water $94,000 $0 $0 $0 PRS Rehabilitation Phase 2 Water $153,310 $549,120 $97,344 $698,508 Annual Routine Capital R&R Water $0 $0 $1,644,032 $2,463,198 $2,868,674 Water Water Water Others Vehicle&Capital Equipment Replacem Water $399,000 $540,000 $194,480 $178,464 $197,186 $206,544 Other Projects Completed in FY 14/15 Water $987,302 Water Water Water Water Total CIP $1,386,302 $5,793,233 $6,411,345 $3,696,151 $3,645,604 $3,075,218 ® Yoirba Linda Page 51 of 56 Water District r-ft. YLWD 2015 Water and Sewer Rate Study Report- FINAL August 25, 2015 Table 6-3: Sewer CIP (Inflated) FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 020 Project Number Description Vehicle&Capital Equipment Repla $0 $72,000 $688,421 $200,000 $200,000 $200,000 $200,000 Total CIP $0 $72,000 $688,421 $200,000 $200,000 $200,000 $200,000 rotal CIP(Inflated) $0 $0 $688,421 $208,000 $216,320 $222,810 $229,494 6.3 APPENDIX 3: ASSET LIST &ALLOCATION FACTORS Table 6-4:Asset Allocations to Water Function Costs WaterAssets Replacement Costs WaterSupply Power Base Fixed Max Day Max Hour B&CS Meter General Total Source of Supply $10,459,451 67% 33% 0% 0% 100• Pumping Plant $32,420,946 67% 33% 0% 0% 1009/0 Water Treatment Plant $4,039,595 67% 33% 0% 0% 1005/ Transmission&Distribution $281,797,179 39% 20% 41% 0% 100% General Plant $23,682,761 100% 100% Total $352,399,932 $0 $0 $141,788,692 $70,894,346 $116,034,133 $0 $0 $23,682,761 $352,399,932 Capital Allocation 0% 0% 40% 20% 33% 0°% 0% 7% Table 6-5:Asset Allocations to Sewer Function Costs Capital Expenses Flow General Total Assets Value by RC Pumping and Lift 100% 0% 100% $671,491 Sewer Mains 100% 0% 100% $87,251,507 Sewer Services 0% 100% 100% $6,068,490 GIS 0% 100% 100% $259,292 Vactor 100% 0% 100% $1,514,140 O&M Expenses $89,437,138 $6,327,782 $95,764,920 $95,764,920 Capital Allocation 93% 7% 100% ® Yorba 'Linda Page 52 of 56 Water District YLWD 2015 Water and Sewer Rate Study Report - FINAL August 25, 2015 6.4 APPENDIX 4: WATER COST ALLOCATION FACTORS Table 6-6: Water O&M Cost Allocation Factors FY 2016 WaterSupply Power Base Fixed Max Day Max Hour B&CS Meter General Variable Water Costs Power $1,403,404 100% 051. OCWD(Pumping) $3,541,410 100% 09/0 MWDOC $7,135,596 100% 0.0 Salary Related Expenses $7,906,784 100% Supplies&Services Communications $280,232 100% 09/o Contractual Services $545,124 100% Data Processing $217,461 100% 0% Dues&Memberships $106,773 100% Fees&Permits $18,822 100% Board Election $0 100% Insurance $275,596 100% Materials $690,479 100% District Activities and Events $27,072 100% Maintenance $415,101 100% 0% Non-Capital Equipment $138,338 100% Office Expense $39,851 100% 09/. Professional Services $544,350 100% Travel&Conferences $67,718 100% Training $103,518 100% Uncollectible Accounts $37,200 100% 09/o Utilities $83,700 53% 26% 21% 091. Vehicle Expenses $300,328 0•� 0% 40% 20% 33% 0% 01/. 7% Subtotal Supplies&Services $3,891,663 Total $23,878,858 $10,677,006 $1,403,404 $165,149 $82,575 $116,121 $574,744 $415,101 $10,444,759 Yorba Linda Page 53 of 56 Water District YLWD 2015 Water and Sewer Rate Study Report - FINAL August 25, 2015 Table 6-7: Revenue Requirement to Water Functional Cost Components Current Revenue Requirements from Rates FY 2016 WaterSupply Power Base Fixed Max Day - Max Hour S&CS Meter General- Total 7 REVENUE REQUIREMENTS O&M Expenses $23,878,858 $10,677,006 $1,403,404 $165,149 $82,575 $116,121 $574,744 $415,101 $10,444,759 $23,878,858 Other Non-Operating Expenses $22,000 $22,000 $22,000 LOC Interest Expenses $70,000 $0 $0 $28,165 $14,082 $23,049 $0 $0� $4,704 $70,000 OPEB Payment $100,000 $100,000 $100,000 Debt Service $2,721,559 $0 $0 $1,095,024 $547,512 $896,123 $0 $0 $182,900 $2,721,559 Rate Funded CIP $5,793,233 $0 $0 $2,330,917 $1,165,458 $1,907,528 $0 $0 $389,330 $5,793,233 Reserve Funding -$7,910,337 $0 $0 -$1,396,205 -$698,103 -$1,135,256 -$221,720 -$160,134 -$4,298,919 -$7,910,337 SUBTOTAL REVENUE REQUIREMENTS $24,675,312 $10,677,006 $1,403,404 $2,223,049 $1,111,524 $1,807,564 $353,024 $254,967 $6,844,773 $24,675,312 LESS:OTHER REVENUES Property Tax -$1,395,000 -$1,395,000 -$1,395,000 Other Revenues -$1,295,310 -$1,295,310 -$1,295,310 Debt Proceeds for CIP -$1,200,000 $0 $0 -$211,805 -$105,902 -$172,219 -$33,635 -$24,292 -$652,147 -$1,200,000 SUBTOTAL OTHER REVENUES -$3,890,310 $0 $0 -$211,805 -$105,902 -$172,219 -$33,635 -$24,292 -$3,342,457 -$3,890,310 NET REVENUE REQUIREMENT FROM CURRENT RATES $20,785,002 $10,677,006 $1,403,404 $2,011,244 $1,005,622 $1,635,346 $319,389 $230,674 $3,502,317 $20,785,002 Reallocation of General Costs 39% 19% 31% 6% 4% -100% Reallocated General Costs $1,354,026 $677,013 $1,100,960 $215,022 $155,296 -$3,502,317 REVISED NET REVENUE REQUIREMENTS FROM CURRENT RATES $20,785,002 $10,677,006 $1,403,404 $3,365,270 $1,682,635 $2,736,306 $534,411 $385,971 $0 $20,785,002 Revenue Requirements FY 2016 Rev Ad Rev Req after Rev Adjustments Water Supply $10,677,006 $10,677,006 Power $1,403,404 $1,403,404 Base Fixed $3,365,270 $2,892,838 $6,258,108 Peaking $4,418,941 $3,798,589 $8,217,530 B&CS $534,411 $459,388 $993,798 Meter $385,971 $331,786 $717,757 Total $20,785,002 $7,482,601 $28,267,603 Revenue Adjustments 36% $7,482,601 ® Yolrba Linda Page 54 of 56 Water District YLWD 2015 Water and Sewer Rate Study Report - FINAL August 25, 2015 6.5 APPENDIX 5: SEWER COST ALLOCATION FACTORS Table 6-8: Sewer 0&M Cost Allocation Factors Flow General Total FY 2016 O&M Expenses Salary Related Expenses 100% 100% $845,865 Communications 0% 100% 100% $21,293 Contractual Services 0% 100% 100% $41,031 Data Processing 0% 100% 100% $16,368 Dues&Memberships 0% 100% 100% $8,337 Fees&Permits 0% 100% 100% $207,843 Board Election 0% 100% 100% $0 Insurance 0% 100% 100% $20,744 Materials 100% 0% 100% $105,472 District Activities, Emp Reco 0% 100% 100% $2,038 Maintenance 100% 0% 100% $332,244 Non-Capital Equipment 0% 100% 100% $29,413 Office Expense 0% 100% 100% $3,000 Professional Services 0% 100% 100% $100,360 Training 0% 100% 100% $7,297 Travel &Conferences 0% 100% 100% $11,212 Uncollectible Accounts 0% 100% 100% $2,800 Utilities 0% 100% 100% $7,150 Vehicle Expenses 93% 7% 100% $72,105 O&M Expenses $505,057 $1,329,513 $1,834,569 $1,834,569 28% 72% 100% ® Yorba Linda Page 55 of 56 Water District Irk YLWD 2015 Water and Sewer Rate Study Report - FINAL August 25, 2015 Table 6-9: Revenue Requirement Allocations to Sewer Functional Cost Components Current Rev Req from Rates Flow General Total FY 2016 REVENUE REQUIREMENTS O&M Expenses $505,057 $1,329,513 $1,834,569 $1,834,569 Other Non-Operating Expenses $0 $0 $0 OPEB Payment $7,500 $7,500 $7,500 Debt Service $0 $0 $0 Rate Funded CIP $642,933 $45,488 $688,421 $688,421 Reserve Funding -$305,789 -$368,256 -$674,046 -$674,046 SUBTOTAL REVENUE REQUIREMENTS $842,200 $1,014,245 $1,856,445 $1,856,445 LESS:OTHER REVENUES Othe r Ope rati ng Reve n ue -$36,291 -$36,291 -$36,291 Interest Income -$8,000 -$8,000 -$8,000 Other Non-Operating Revenue -$11,925 -$11,925 -$11,925 Debt Proceeds for CIP $0 $0 $0 $0 SUBTOTAL OTHER REVENUES $0 -$56,216 -$56,216 -$56,216 NET REVENUE REQUIREMENT FROM CURRENT RATES $842,200 $958,029 $1,800,229 $1,800,229 47% 53% 100% 8 Revenue Adjustments $67,376 $76,642 $144,018 $144,018 NET REVENUE REQUIREMENT FROM PROPOSED RATES $909,576 $1,034,671 $1,944,247 $1,944,247 Units of Service 2,511,985 25,393 hcf #of Accounts Unit Cost of Service $0.36 $40.75 per hcf per account peryr ® Yorba Linda Page 56 of 56 Water District r-ft. ITEM NO. 8.2 AGENDA REPORT Meeting Date: August 31, 2015 To:Board of Directors From:Marc Marcantonio, General Manager Presented By:Damon Micalizzi, Public Information Manager Prepared By:Damon Micalizzi, Public Information Manager Subject:Board Position on Potential State Public Goods/Water Tax SUMMARY: On August 19, 2015, the Association of California Water Agencies (ACWA) delivered an mass email to California water agencies to alert of an impending action by the State Legislature to propose a “Public Goods Charge” (PGC) or other tax on water bills. The charge or tax could be framed as a “drought response” measure that would generate funds to assist disadvantaged communities. ACWA ’s position is to oppose the public goods charge and ACWA is urging California water agencies to express their opposition to a bill that may be rushed through in the last weeks of the legislative session. The ACWA fact sheet is attached for further understanding of the bill and reasons to consider opposing the bill. ACWA has also asked that water agencies adopt a resolution in opposition to a public goods charge on water. In some opinions the use of a PGC can be a positive alternative funding mechanism to the use of GO bonds, providing a less expensive funding mechanism for local projects. The PGC would need to be justified in light of Prop 218, which has been recognized as a problem for agencies funding non-cost of service projects, such as funding water projects in disadvantaged communities somewhere in the State. The real issue at this time is the potential for a bill to be passed without full public vetting of the bill. There are many questions on the implementation of the PGC such as: who pays, how much, where does the funding go? A funding program that is likely to impact all water customers and water agencies in the State should be fully vetted and supported by those who implement and those who pay. This type of action should not be hidden as a trailer bill that lacks full disclosure and transparency . STAFF RECOMMENDATION: That the Board of Directors (1) consider adopting Resolution No. 15-21 taking an Oppose position on the State’s action to legislate a public goods charge for water; and (2) submit a letter to local legislators indicating the District's opposition. STRATEGIC PLAN: SR 1-C: Engage with Regional Agencies on Water Supply Issues ATTACHMENTS: Name:Description:Type: ACWA_fact-sheet-pgc-opposition.docx ACWA FACT SHEET Backup Material Resolution_No._15-21_- _Opposition_to_Public_Goods_Charge.docx RESOLUTION Backup Material Oppose_Letter_PGC_Huff.docx OPPOSE LETTER SEN HUFF Backup Material Oppose_Letter_PGC_Chang.docx OPPOSE LETTER ASSEM CHANG Backup Material Approved by the Board of Directors of the Yorba Linda Water District 8/31/2015 RK/PH 4-0-0-1 Roll Call RC was absent. Association of California Water Agencies www.acwa.com A New Statewide Tax on Water Bills is Not the Solution August 2015 As the Legislature returns from recess for the final weeks of the session, there are signs that a proposed public goods charge or other tax on water bills could emerge in a policy bill or in budget trailer bill form. Such a proposal could be billed as a “drought response” measure that would generate funding to assist disadvantaged communities that lack safe drinking water and / or have been severely impacted by the ongoing drought. While there is a clear need to fund sensible, long-term solutions and assist disadvantaged communities that do not have safe drinking water, a statewide tax on water bills paid by a subset of Californians is not an appropriate response. Here are some key reasons why a new statewide tax on water bills in not the solution. Major Policy Changes Should Not be Imposed through Last-Minute Bills • A permanent statewide tax on water bills would be a major policy change that should not be imposed through a last-minute bill rushed through in the final weeks of the legislative session. • A more thoughtful, transparent process is needed to identify long-term funding solutions that can assist disadvantaged communities that do not have safe drinking water. Water Agencies Already Make Significant Investments and Are Prepared for Drought • Establishing a permanent statewide tax on water bills under the heading of emergency drought relief is illogical and misleading. Water agencies have made, and continue to make, significant local investments in water management programs and infrastructure. • According to a recent report by the Public Policy Institute of California, local water and wastewater agencies are spending more than $25 billion a year on local water-related programs and projects. State and federal spending on water is just a fraction of that in California each year. Association of California Water Agencies www.acwa.com • Local investments prepared local water managers to respond successfully to the current drought and have shielded the state’s economy from the drought’s most severe impacts over the past four years. A Tax on Water Bills is Contrary to Local Control and Accountability • A tax on water bills would make it more difficult and costly for local water agencies to fund critical local water efficiency and supply projects. • Local water managers are best suited to identify ways to spend locally-generated revenues at their respective agencies. A Tax on Water Bills is an Inappropriate and Inefficient Method of Funding Solutions • A tax on water bills is not the appropriate mechanism to fund water solutions or address the water quality and water supply problems faced by some disadvantaged communities • While there is a clear need to fund sensible long-term funding solutions and assist disadvantaged communities that do not have safe drinking water, a tax on water bills paid by a subset of Californians is not the solution. • Layering an additional tax on water bills in order to send money to Sacramento, where a portion will be carved out to fund another layer of administration, is not efficient and is not an appropriate solution or sound policy. • More appropriate funding sources – such as the state’s general fund – should be pursued to address a problem that is in the general public’s interest to solve. With income tax making up a good part of the state’s general fund, Californians with higher incomes would be contributing more and Californians with lower incomes would contribute less. Resolution No. 15-21 Opposing Public Goods Charge on Water 1 RESOLUTION NO. 15-21 RESOLUTION OF THE BOARD OF DIRECTORS OF THE YORBA LINDA WATER DISTRICT IN OPPOSITION TO A PUBLIC GOODS CHARGE ON WATER WHEREAS, proposals to impose a public goods charge or similar permanent statewide tax on water could emerge in the near future; and WHEREAS, a public goods charge or other permanent tax on water bills is not the appropriate mechanism to fund water solutions or address water quality and water supply problems faced by some disadvantaged communities; and WHEREAS, assessing a public goods charge would unfairly penalize local water agencies that have already made, and continue to make, investments in water management programs and infrastructure and would make it more difficult and costly for local water agencies to fund critical local water efficiency and supply projects; and WHEREAS, according to a recent report by the Public Policy Institute of California, local water agencies are spending more than $25 billion a year on local water-related programs, projects and infrastructure, and those investments have prepared them to respond to the current drought and have shielded the state’s economy from the drought’s most severe impacts over the past four years; and WHEREAS, while there is a clear need to fund sensible long-term solutions and assist disadvantaged communities that do not have safe drinking water, a tax on water bills paid by a subset of Californians is not the solution; and WHEREAS, local water managers are best suited to identify ways to spend locally- generated revenues at their respective agencies; an additional tax on water bills paid in order to send money to Sacramento, where a portion will be carved out to fund another layer of administration, is not efficient and is not an appropriate solution or sound policy; and NOW, THEREFORE, BE IT RESOLVED that Yorba Linda Water District opposes any effort by the state Legislature to impose a statewide public goods charge or other tax on water bills; and Resolution No. 15-21 Opposing Public Goods Charge on Water 2 BE IT FURTHER RESOLVED that the Yorba Linda Water District opposes the use of the budget trailer bill process or other last-minute attempt to circumvent the appropriate legislative policy committee process to advance policy issues without full disclosure and transparency; and BE IT FURTHER RESOLVED that a copy of this resolution shall be sent to our state legislative representatives and key members of the Administration. PASSED AND ADOPTED this 31st day of August 2015, by the following called vote: AYES: NOES: ABSTAIN: ABSENT: Michael J. Beverage, Vice President Yorba Linda Water District ATTEST: Marc Marcantonio, Board Secretary Yorba Linda Water District Reviewed as to form by General Counsel: Arthur G. Kidman, Esq. Kidman Law LLP August 31, 2015 The Honorable Bob Huff California Senate State Capitol Sacramento, CA 95814 RE: Proposed Statewide Tax on Water Bills / Public Goods Charge on Water POSITION: OPPOSE Dear Senator Huff, On behalf of Yorba Linda Water District, I am writing to express our opposition to efforts to establish a public goods charge or other permanent statewide tax on water to fund statewide water solutions or provide funding to disadvantaged communities without safe drinking water or those affected by the ongoing drought. Furthermore, we also strongly oppose the use of the budget trailer bill process or other last-minute attempts to circumvent the appropriate legislative policy committee process to advance policy issues without full disclosure and transparency. Establishing a permanent statewide tax on water under the heading of emergency drought relief is illogical and misleading. Yorba Linda Water District has made, and continues to make, significant local investments in conservation programs and infrastructure such as the Ground Water Replenishment System that have allowed our district to respond to the current drought. Such investments made by agencies throughout California have shielded our communities and the state’s economy from the drought’s most severe impacts over the past four years. While there is a clear need to fund sensible long-term solutions and assist disadvantaged communities that do not have safe drinking water, a tax on water bills paid by a subset of Californians is not the solution. Layering an additional tax on water bills in order to send money to Sacramento, where a portion will be carved out to fund another layer of administration, is not efficient and is not an appropriate solution or sound policy. More appropriate funding sources – such as the state’s general fund – should be pursued to address a problem that is in the general public’s interest to solve. With income tax making up a good part of the state’s general fund, Californians with higher incomes would be contributing more and Californians with lower incomes would contribute less. Hon. BHuff August 31, 2015 Page 2 For the aforementioned reasons, Yorba Linda Water District opposes a public goods charge or other permanent statewide tax on water bills and respectfully requests your “NO” vote if such a bill is heard on the Senate floor. Sincerely, Michael J. Beverage Board Vice President, Yorba Linda Water District CC: Wendy Ridderbusch, Director of State Relations, ACWA August 31, 2015 The Honorable Ling Ling Chang California Assembly State Capitol Sacramento, CA 95814 RE: Proposed Statewide Tax on Water Bills / Public Goods Charge on Water POSITION: OPPOSE Dear Assemblywoman Chang, On behalf of Yorba Linda Water District, I am writing to express our opposition to efforts to establish a public goods charge or other permanent statewide tax on water to fund statewide water solutions or provide funding to disadvantaged communities without safe drinking water or those affected by the ongoing drought. Furthermore, we also strongly oppose the use of the budget trailer bill process or other last-minute attempts to circumvent the appropriate legislative policy committee process to advance policy issues without full disclosure and transparency. Establishing a permanent statewide tax on water under the heading of emergency drought relief is illogical and misleading. Yorba Linda Water District has made, and continues to make, significant local investments in conservation programs and infrastructure such as the Ground Water Replenishment System that have allowed our district to respond to the current drought. Such investments made by agencies throughout California have shielded our communities and the state’s economy from the drought’s most severe impacts over the past four years. While there is a clear need to fund sensible long-term solutions and assist disadvantaged communities that do not have safe drinking water, a tax on water bills paid by a subset of Californians is not the solution. Layering an additional tax on water bills in order to send money to Sacramento, where a portion will be carved out to fund another layer of administration, is not efficient and is not an appropriate solution or sound policy. More appropriate funding sources – such as the state’s general fund – should be pursued to address a problem that is in the general public’s interest to solve. With income tax making up a good part of the state’s general fund, Californians with higher incomes would be contributing more and Californians with lower incomes would contribute less. Hon. LChang August 31, 2015 Page 2 For the aforementioned reasons, Yorba Linda Water District opposes a public goods charge or other permanent statewide tax on water bills and respectfully requests your “NO” vote if such a bill is heard on the Assembly floor. Sincerely, Michael J. Beverage Board Vice President, Yorba Linda Water District CC: Wendy Ridderbusch, Director of State Relations, ACWA ITEM NO. 10.3 AGENDA REPORT Meeting Date: August 31, 2015 Subject:Joint Agency Committee with City of Yorba Linda (Collett / Beverage) · Minutes of the meeting held July 22, 2015 at 10:00 a.m. · Minutes of the meeting held August 26, 2015 at 10:00 a.m. (To be provided at the next regular Board meeting). · Next meeting is scheduled to be held September 23, 2015 at 10:00 a.m. at YL City Hall. ATTACHMENTS: Name:Description:Type: Minutes_7.22.15.docx Minutes Minutes YLWD/CC Minutes July 22, 2015 Page 1 of 2 CITY OF YORBA LINDA Land of Gracious Living YORBA LINDA WATER DISTRICT/ CITY COUNCIL JOINT ADVISORY COMMITTEE MEETING MINUTES July 22, 2015 10:00 a.m. CALL TO ORDER The Yorba Linda Water District/City Council Joint Advisory Committee meeting convened at 10:00 a.m. in the Council Chambers at 4845 Casa Loma Avenue, Yorba Linda. PLEDGE OF ALLEGIANCE City Manager Mark Pulone ROLL CALL Committee Members City Council: Gene Hernandez, Tom Lindsey Water District: Ric Collett, Mike Beverage Staff Members: Marc Marcantonio, Mark Pulone PUBLIC COMMENTS Rosemarie Sauer, resident, said that she was upset about the proposed increase in rates and suggested lowering the tiers and increasing rates only for those who waste water. Eddy Jackson, resident, spoke regarding the proposed rate increase said that it would target people like Mrs. Sauer and recommended that the Water District re-evaluate everything. YLWD/CC Committee Minutes July 22, 2015 Page 2 of 3 Kay Dotson, resident, said that the proposed rate increase was unfair and that some people, including herself, would be paying a disproportionate amount. A lengthy discussion ensued among Committee members and staff regarding increased water rates and the Proposition 218 voting process. ACTION CALENDAR 1. Minutes of the YLWD/City Council Joint Advisory Committee meeting held on June 23, 2015. The YLWD/City Council Joint Advisory Committee approved the minutes of the June 23, 2015 Joint Advisory meeting. DISCUSSION ITEMS 2. Drought Response, Water Conservation/Drought Penalty Ordinances, and Community Outreach Efforts General Manager Marc Marcantonio announced a 38% reduction in water use for the month of June and expressed his appreciation for all of the community’s efforts and responsiveness in helping achieve that goal. Mr. Marcantonio said that the Water District has a brand new website which is continuously updated and includes a great deal of important information to keep the public up to date. Eddy Jackson, resident, asked if the Yorba Linda Water District would be implementing smart meters with the Proposition 218 vote to help control costs. General Manager Marc Marcantonio said that the Yorba Linda District previously had a Capital Improvement Project to develop AMI’s or smart meters, which are extremely costly. He said that due to the drought and the need to reduce costs the project had to be deferred to a future date. Mr. Marcantonio also confirmed that new build outs are required to install a smart meter system. Katy Dotson, resident, spoke about penalties and said that they should be billed to each zone instead of spreading them out to all of the LMAD. She also said that several residents in the City were interested in designing various areas within the City to be drought tolerant and sought direction from the Committee. Mayor Gene Hernandez referred Ms. Dotson to the Public Works Department or Yorba Linda Water District. Rosemarie Sauer, resident, spoke about drought tolerant plants and said that residents should become educated before using drought landscaping at home. YLWD/CC Committee Minutes July 22, 2015 Page 2 of 3 3. Joint Agency Water Conservation Demonstration Project Public Works Director/City Engineer Michael Wolfe said that there were no updates on the Water Conservation Demonstration project. 4. Potential Future Agenda Items City Manager Pulone stated that the “Drought Response, Water Conservation/Drought Penalty Ordinances, and Community Outreach Efforts” item should remain on the next meeting agenda. Mayor Hernandez suggested an update at the next meeting regarding the Landscape Maintenance Assessment District and irrigation systems. ADJOURNMENT City Manager Pulone adjourned the meeting at 11:07a.m. to the next Yorba Linda Water District/City Council Joint Advisory Committee meeting at 10:00 a.m. on Wednesday, August 26, 2015. ITEM NO. 12.1 AGENDA REPORT Meeting Date: August 31, 2015 Subject:Meetings from September 1, 2015 - October 31, 2015 ATTACHMENTS: Name:Description:Type: BOD_-_Activities_Calendar.pdf Backup Material Backup Material Event Date Attendance by: September 2015 Yorba Linda City CouncilTue, Sep 1Beverage MWDOCWed, Sep 2Melton OCSD Operations CommitteeWed, Sep 2Kiley/Beverage OCWD Wed, Sep 2Collett WACO Fri, Sep 4Hawkins/Kiley District Offices ClosedMon, Sep 7 LAFCOWed, Sep 9Beverage (As Needed) Yorba Linda Planning CommissionWed, Sep 9Melton Board of Directors Regular MeetingThu, Sep 10 Yorba Linda LMCACThu, Sep 10Beverage (As Needed) Yorba Linda City CouncilTue, Sep 15Collett MWDOCWed, Sep 16Melton OCWDWed, Sep 16Kiley Board of Directors Special MeetingThu, Sep 17 Interagency Committee Meeting with MWDOC and OCWDTue, Sep 22Collett/Melton Joint Agency Committee Meeting with City of Yorba LindaWed, Sep 23Collett/Beverage OCSDWed, Sep 23Kiley/Beverage Yorba Linda Planning CommissionWed, Sep 23Hawkins Board of Directors Regular MeetingThu, Sep 24 Yorba Linda LMCACThu, Sep 24Beverage (As Needed) Citizens Advisory Committee MeetingMon, Sep 28Collett Interagency Committee Meeting with City of Placentia and GSWTue, Sep 29Melton/Kiley October 2015 WACO Fri, Oct 2Hawkins/Kiley Yorba Linda City CouncilTue, Oct 6Beverage MWDOCWed, Oct 7Melton OCSD Operations CommitteeWed, Oct 7Kiley/Beverage OCWD Wed, Oct 7Collett Board of Directors Regular MeetingThu, Oct 8 Yorba Linda LMCACThu, Oct 8Beverage (As Needed) LAFCOWed, Oct 14Beverage (As Needed) Yorba Linda Planning CommissionWed, Oct 14Melton Yorba Linda City CouncilTue, Oct 20Collett MWDOCWed, Oct 21Melton OCWDWed, Oct 21Kiley Board of Directors Regular MeetingThu, Oct 22 Yorba Linda LMCACThu, Oct 22Beverage (As Needed) Citizens Advisory Committee MeetingMon, Oct 26Collett OCSDWed, Oct 28Kiley/Beverage ISDOC Thu, Oct 29Hawkins/Kiley11:30AM 10:00AM 8:30AM 5:30PM 8:30AM 6:30PM 8:30AM 6:30PM 5:30PM 8:30AM 6:30PM 8:00AM 6:30PM 6:30PM 7:30AM 6:30PM 8:30AM 5:00PM 6:30PM 8:30AM 6:30PM 8:30AM 2:00PM 6:30PM 4:00PM 6:30PM 6:30PM 8:30AM 6:30PM 6:30PM 8:30AM 5:30PM 8:30AM 5:00PM 5:30PM 7:30AM 7:00AM 8:00AM Board of Directors Activity Calendar Time 6:30PM 8/27/2015 2:24:28 PM