Title
Acting on behalf of County Service Area 75 - Chualar:
a. Receive follow-up report as directed during Budget Hearings on June 10, 2014 regarding remaining FY 2014-15 funding requirements for County Service Area - 75 Chualar to meet existing operational costs, short term rate adjustment studies, and long term sewer master plan work; and
b. Consider potential funding options and provide direction to staff.
Report
RECOMMENDATION:
It is recommended that the Board of Supervisors, acting on behalf of County Service Area 75 - Chualar:
a. Receive follow-up report as directed during Budget Hearings on June 10, 2014 regarding remaining FY 2014-15 funding requirements for County Service Area - 75 Chualar to meet existing operational costs, short term rate adjustment studies, and long term sewer master plan work; and
b. Consider potential funding options and provide direction to staff.
SUMMARY:
During the FY 2014-15 Budget Hearings on June 10, 2014, RMA - Public Works requested $325,000 to fund; (1) operation & maintenance activities, (2) a short term rate study, and (3) a long term system master plan with an associated rate study for the sewer system that serves the Community of Chualar. This sewer system is managed by the County through County Service Area 75 - Chualar (CSA 75). The Board directed staff to report back with short-term and long-term recommendations and FY 2014-15 expenditure requirements, as well as receive a status report on potential interests for acquisition of the system by an outside party.
DISCUSSION:
For FY 2014-15, $325,000 is needed to fund short and long term activities as follows:
Short Term Needs $225,000
Annual operating allocation ($80,000)
Collection System Cleaning ($10,000)
Collection System Repairs ($60,000)
Sanitation Vehicle ($50,000)
Short Term Rate Study ($25,000)
Long Term Needs $100,000
System Master Plan & Rate Study
Total $325,000
Annual Operating Allocation - The annual revenues from CSA 75 are about $70,000 while the annual operation & maintenance costs are $150,000. The requested allocation of $80,000 would provide sufficient funding to cover standard operations & maintenance costs in FY 2014-15. It should be noted that this operations & maintenance allocation will not be sufficient to fund emergency repair activities which have occurred several times over the past few years. If emergency repairs are needed in FY 2014-15, staff will need to return to the Board of Supervisors to obtain more funding. In addition, it should be anticipated that this annual operations & maintenance allocation may be needed for several years until rates are adjusted to fully fund this activity.
Collection System Cleaning - The Chualar sewer system contains approximately 10,000 lineal feet of gravity sewer pipe. This portion of the system has not been cleaned on a regular basis which raises the risk of blockages and sanitary sewer overflows. The system should be cleaned on an annual basis at a cost of $1 per lineal foot or $10,000.
Collection System Repairs - There are six locations in the gravity sewer system that need point repairs (e.g. offset joints, damaged pipe, etc.). At these locations, an excavation is needed to expose the pipe and make the needed repair. It is estimated that this will cost $60,000.
Sanitation Vehicle - The maintenance vehicle that had been used for a number of years to effect repairs for the Chualar sewer system was well past its useful life, was no longer dependable, and had to be removed from service. The noted cost of $50,000 would replace this vehicle and provide staff the necessary equipment to perform operations and maintenance duties.
Short Term Rate Study - Because the existing rate structure does not provide $150,000 needed to cover the annual operations & maintenance activities, a rate study should be conducted to determine the appropriate rate structure to cover these costs. The existing rate is less than $14/month for a single family home. Based on the results of the rate study, a schedule could be developed to raise rates over a number of years to insure that the Chualar community has the ability to absorb this additional expense.
System Master Plan & Rate Study - The sanitary system for Chualar was built in the early 1960s and is over 50 years old. There is a gravity sewer system that collects sewage from developed properties on the east side of Highway 101. This sewage drains to a pump station which is also located on the east side of Highway 101. The sewage is then pumped two miles west to treatment ponds located within the 100 year floodplain of the Salinas River. Because of the age of the system, there have been increasing maintenance problems resulting in emergency repairs. To date, the General Fund has provided almost $1 million to cover operations expenses and to complete repairs.
The system needs to be upgraded to improve efficiency, account for future growth, reduce maintenance costs, remove the treatment ponds from the floodplain, and to consider more advanced methods of sewage treatment. To do this, a sewer master plan must be developed along with a rate structure that would fund the needed improvements along with the operations and maintenance costs of the upgraded system. If grants could be found to fund a portion or all of the capital project expenses, the needed rate structure could be lowered. In addition, the master plan would need to determine the viability of piping the sewage to another treatment facility in the Salinas Valley.
To be viable, the master plan and supporting rate structure must be developed with the assistance of the Chualar community. Development of the master plan and rate structure would take approximately a year from the time a consultant is under contract.
Staff is requesting the Board consider potential funding options for the above short-term and long-term funding needs for the Chualar sanitation system. These funding options consist of:
· Consider funding one or all of the currently unfunded needs from general fund contingencies. The FY 2014-15 Adopted Budget includes General Fund Contingencies of $3,856,465.
· Consider funding one or all of the currently unfunded requirements from Capital Projects Funds 401 & 402. In Fund 401, there is $257,546 allocated for Equipment and Storm Water Management at the Public Works Laurel Corporation Yard. This project can be delayed. In addition, Fund 402 includes $227,159 for the Old Jail Adaptive Reuse Study. Sufficient progress has been made on this Study to allow $67,454 to be transferred to CSA 75.
· Defer funding any of the currently unfunded needs until it is determined if there is an interested outside party for acquiring the system and direct staff to closely track operating costs as the fiscal year progresses, and return to the Board through the Budget Committee for additional funding consideration if necessary.
OTHER AGENCY INVOLVEMENT:
RMA-Public Works manages the Chualar sewer system through CSA 75. Upgrading the sewer system will be in-line with a recent Grand Jury recommendation.
FINANCING:
There may be an impact on the General Fund pending Board approval of the options provided. There were no funds identified in the FY 2014-15 Adopted Budget for the RMA to cover additional operating costs, rate studies, and development of a master plan for CSA 75. The estimate of $325,000 provides $200,000 for operating costs that exceed projected revenue receipts, $25,000 to fund a short term rate study, and $100,000 to fund a system master plan and rate study.
Prepared by: Robert K. Murdoch, Director of Public Works (831) 755-4830
Approved by:
________________________________________
Benny J. Young, RMA Director
Dated: July 1, 2014