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The Community Services District board heard reasons why the new $12 million water treatment plant isn’t expected to be online until October at last week's meeting. In other business, the board authorized notifying ratepayers about a “worst case” rate increase of 3.76 percent for its 2015-16 budget, approved a three-year labor agreement between the CSD and Operating Engineers Union Local 3, and approved the Rancho Murieta Association’s application for an irrigation water meter at the North Gate.

Rate increase of no more than 3.76% proposed

Directors Betty Ferraro, Jerry Pasek and Paul Gumbinger voted to authorize staff to send ratepayers a notice of “worst case” rate increases proposed for water, sewer, security, drainage and trash collection services the draft 2015-16 budget. Directors Mike Martel and Mark Pecotich were not present.

The sample bill for the draft budget projects a 3.76 percent increase in the monthly bill, taking the average residential bill from $161.41 to $167.48. Rates in the actual budget could be lower, but they can’t be higher than the ones that will appear in the rate-change notice being mailed to the district’s customers, General Manager Darlene Gillum said.

Gillum began the budget discussion by saying one of this year’s budget questions is how to fund Security reserves “to repay the internal borrowing we’ve done for the North Gate project.”

The CSD has approved spending over $200,000 for equipment and other expenses for security  operations at the new facility, with about $150,000 borrowed from other funds, Gillum said.

To fund security reserves, the draft budget allocates $65,040 of the estimated $528,480 in property tax revenue the district expects to receive for 2015-16, and this impacts rates for the other funds, Gillum said.  In the past, all of the property tax revenue has been allocated to the administration/general fund.

The Security budget also includes $6,000 for body cameras and other equipment for patrol officers and a 5 percent salary range adjustment for represented employees.

Security is funded by a special tax with a 2 percent ceiling on annual increases. In the draft budget, security and drainage, both special taxes, increase 2 percent.

Revenue projections for the 2015-16 budget include an expected increase of $8,520, about 1.6 percent, in the Sacramento County property tax allotment; 16 new residential connections, commercial growth and the opening of the hotel planned for Murieta Gardens in April 2016.
The draft budget and sample bills are available starting on Page 220 of the meeting packet.

Water treatment plant delay

General Manager Darlene Gillum presented timelines that explain how the May completion date for  a new water treatment plant morphed into the current mid-October date after Paul Siebensohn, director of field operations, reported that the water treatment plant project was continuing at full speed.  “At this point, we haven’t made up time, but we haven’t lost time either,” Siebensohn told the board.

The delay in completing the plant was discussed at last month’s board meeting, when the board approved spending up to $300,000 for a temporary filtration system to provide treated water through the summer months. The temporary system will supplement the output of Plant #2, which has supplied the community’s treated water since Plant #1 was shut down last September so a larger capacity membrane-filter plant could be built in its footprint.

The first timeline, with a completion date of May 2015, was included in the bid documents. The original timetable called for a start date of mid-February, shutdown and demolition of the existing plant in July, and a 48-day commissioning process.

These are the timeline changes Gillum identified as reasons the project completion date is now Oct. 16, 2015:

  • Financing agreements with developers were not in place when the project was bid. Securing the agreements and financing for the project caused a three-month delay and changed the start date for the project from February to May 2014.
  • Funding issues delayed the release of trade contracts for the project from Feb. 27 to June 5, 2014.
  • Shutdown and demolition of Plant #1 occurred in September 2014 instead of July.
  • The allowance for the commissioning period was increased from 48 days to 69 to 80 days.
  • Implementation of custom stainless steel piping for the project originally scheduled for January 2015 is now scheduled for April 22, overlapping with the commission, testing and performance period.

The timeline chart presentation can be downloaded here (550 kb PDF file).

Labor agreement approved

The board approved a memorandum of agreement between the CSD and Operating Engineers Union Local 3 that runs through 2017. Represented employees — Security, plant and clerical workers — ratified the agreement earlier this month, General Manager Darlene Gillum said.

The agreement calls for wage adjustments each year, starting with 5 percent this year, then 3 percent for each of the following years. “There would be no additional COLAs added to salary ranges,” Gillum said.

Since the district’s contribution to the California Public Employees’ Retirement System on behalf of employees is being reduced, the wage increases are effectively 3 percent for the first year, then 2 percent in years two and three of the contract.  By the end of the agreement, “the district would be only paying to PERS the employer’s contribution,” Gillum said. She added that salary ranges were found to be “under market” and said the wage adjustments will bring them into line.

The agreement replaces eight-step salary ranges for represented field operations and administration personnel with six steps, allowing those employees to reach the top a little faster, Gillum said. Security personnel already have a five-step salary range.

Employees advance a step in the salary range by meeting standards that require having a minimum of 100 points on their annual evaluation, Gillum said. There are also certification requirements for some job levels and pay incentives for acquiring additional certificates, she said.
Other provisions of the agreement cover medical vesting for retirees, medical coverage opt-out, vacation leave and stand-by pay.

The agreement starts on Page 197 of the meeting packet.

Conservation and water availability

Water treatment plant production was up more than 4 percent for February compared to the five-year average and up 9 percent compared to same month last year, reported Paul Siebensohn, director of field operations. Noting that “we’re heading into the fourth year of a drought,” Siebensohn said the district is complying with conservation measures for the state “based on our current irrigation schedule and district code. ... We’re doing well.”

“So we’ll continue then with the two-day-a-week (watering schedule) and going after people who are obvious wasters,” President Jerry Pasek said.

While drought indicators “are looking very bad for the entire state,” Siebensohn said, “...as to where we are with water storage, we’re doing very well. ... As of today we’re at 107 percent capacity in our reservoirs. ...”  Based on historical averages, that’s enough water for about two years, but that estimate depends on variables that include usage levels, evaporation, temperatures and rainfall, he told the board.

Watering days remain Monday and Friday for Murieta North and Tuesdays and Saturdays for Murieta South, Murieta Village and the commercial areas. Watering times are limited to the hours between midnight and 10 a.m.

Information about watering times and restrictions is available here. Information about rebates the CSD offers for water-efficient appliances, toilets and drip systems is available here.

Irrigation meter approved for North Gate

The board voted to approve a request from the Rancho Murieta Association for an irrigation water meter installation at the new North Gate after General Manager Darlene Gillum said RMA had submitted a water permit application and paid fees totaling $10,377.99.  Gillum said the charge covers the meter and installation costs, as well as water supply augmentation and capital improvement fees based on a water use factor of 21,732 feet, about half an acre.

Gillum explained that the landscape plan calls for a drip system that uses potable water instead of  raw water from Laguna Joaquin. “Because it’s not currently a planned use (of potable water), the board needs to approve that installation and use of water,” she told the directors. “My understanding is it’s an entirely drip system and the raw water from Laguna Joaquin would have a high potential of plugging all of the drip system.”

Developer representative John Sullivan responded to a question from President Jerry Pasek about the landscaping plan by saying, “There’s 8,000 total plants going in between the first monumentation where the signage is and where the ultimate gate is.” He estimated half the plants had been installed.

Study looks at CSD reserves

The district’s first full reserve study separated the CSD into five areas, evaluated the life cycles and replacement costs for components in each, and made funding recommendations.

Derek Eckert of Association Reserves presented the executive summary for one area, the sewer department, to demonstrate how the study evaluates reserve needs.  Sewer components in the study include pipelines, pumping stations, lift stations, vehicles, fencing and the wastewater treatment facility.

The CSD has about $2.8 million in sewer reserves and the study puts the fully funded reserve balance at $8.1 million. The ratio between current reserve amount and the fully funded number is 32.3 percent, which Eckert described as a “mid-range funding position.”

Eckert said the current reserve contribution is about $15,000 a month. The study recommends a sewer reserve contribution of $47,450 per month.

The reserve study notes, “Deferred maintenance and the need for a transfer of funds to reserves are common when the percent funded is below 30 percent.”

“I think it’s all well done,” said Director Paul Gumbinger of the reserve study. “I think it’s time we have something like this.”

Reserve studies are “really built to be living, breathing documents” and can be updated to reflect changes like the new water treatment plant and the North Gate, Eckert said.

The CSD is using water fund reserves and borrowing from other reserve funds for $4.3 million of the water treatment plant cost. Reserves are also being used for the CSD share of North Gate costs, about $250,000.

The reserve study begins on Page 60 of the meeting packet.


Craig Sheumaker's picture
Joined: 06/22/2011
Posts: 277
Post rating: 115

How Many?

Allow me to be the first to ask HOW MANY plants are being installed at the new north gate? In the 4th year of a drought, when residents are being restricted in their watering days and are being asked not to put in new, high-demand plants, when CSD has vowed to go after water-wasters, RMA is putting 4,000 - 8,000 plants between the highway and the new gate!? I'm glad a meter is being installed and I hope the cost of the water is coming out of the pockets of the board members who approved this. 

 Craig Sheumaker

Beth Buderus's picture
Joined: 08/03/2007
Posts: 926
Post rating: 706

I wondered why too

I wondered why they were putting in so much landscaping too with the drought, granted if we had plenty of water it would be expected and make sense to have a beautiful landscaped area at the entrance.

Maybe it's the "Do as I say but not as I do" story.

 

John Merchant's picture
Joined: 08/30/2007
Posts: 122
Post rating: 225

Budgets vs Actual

On June 9, 2004, the CSD Board sent a letter to every resident that analyzed "flat growth" and the impact of funding the CSD with the existing number of ratepayers. The CSD budget at that time was $2,927,000. In 2004, the board projected the 2014/2015 CSD budget to be $4,417,000 if there was no significant increase in revenues (which logically, could only come from new development). At the time, we felt that 2014/2015 projection was a pretty scary number.

The proposed budget in last month's CSD packet is $6,030,000. The cost of operating the CSD has essentially doubled in ten years. 

Public budgeting generally omits long range forecasting and analysis of historical data. We merely take last years numbers and play them against this years projection and tell everyone about the increase. We should spend more time looking at trends. I say this because if you were to accept the last ten year period as a benchmark, the 2026 CSD budget would be $12,000,000.

That would mean your average, residential bill would be in the neighborhood of $330 per month. Impossible you say? Thats not what the actual numbers say. 

 

Bunky Svendsen's picture
Joined: 08/07/2007
Posts: 165
Post rating: 210

Please explain

John,

If your numbers are correct, that would mean the CSD budget has expanded by 100% over the last ten years, or 10% per year. But our dues have not increased anywhere near that amount per year. Where is the money coming from? Compounding on a reasonable rate increase would account for a large amount of that(60% maybe?)...but 100%?

Bobbi Belton's picture
Joined: 07/30/2007
Posts: 275
Post rating: 442

CSD budget

In addition to rates and fees charged by the District to ratepayers, income from property taxes is sent over from the county. However, John is correct and when I last calculated it, our water rates were going up an average of 10% per year. Security and drainage charges are a tax and limited to a two percent per annum increase. If anyone its really curious as to how the budget and therefore your bill is calculated, I'd suggest making an appointment to review the process with GM Darlene Gillum.

Bobbi Belton

John Merchant's picture
Joined: 08/30/2007
Posts: 122
Post rating: 225

Part of our bill IS

Part of our bill IS subsidized by property taxes. Ten years ago, we received a $245,000 allocation which has grown now to about $550,000. In reality, you pay that part of the CSD bill.  You pay property taxes and the money gets sent back to the CSD.  You also pay for the security ballot measure we passed in the 90's. Our security budget has grown at a much more controlled level because the bond measure "caps" the amount of increase each year (I think its 2 percent). This may explain why we are "borrowing" CSD reserve funds from other areas to cover the costs of the new gate security installation. BTW, I  admit that my $330 per month estimate may be "radical" but there are other issues that make that number a possibility.

1. Water charges to each resident fall wonderfully to the bottom line. The more you pump through the existing fixed costs of the CSD water infrastructure, the more money you make. Simply put, it costs a minimal amount in raw material to make the product that the CSD sells. Pump it, clean it up and sell it.  Except, now we use LESS water.  Sales just went down. How much revenue will decrease due to drought, conservation and mandatory rationing remains to be seen.  We have huge fixed costs. The shortfall in revenue can go only to the monthly bills.  There is no other place for it to go. Very conservatively, 60 percent our water revenue comes from landscaping. THAT, is going to change.

2. If we continue to demand what we presently demand from security, there will need to be another measure "J".  If we want more, it is going to go on the monthly bill.

We need a well developed long range forecast. CSD can then plug in an INTELLIGENT growth plan (development) and see if that fixes the problem.  Perhaps a community presentation (which I have already asked for) could include a discussion of this analysis.

PS: please use MBA compliant housing numbers when you do this analysis.

 

Marklin Brown's picture
Joined: 08/12/2007
Posts: 196
Post rating: 104

Conflicting messages

On the one  hand there is a major water crisis in California on the other hand we are at 107% capacity here with the installation of considerable landscaping at the North Gate and $10,000 water meter installation to monitor it.

Also, strict enforcement of water violations will ensue while the water demands increase at an unknown rate due to new development.

Let's say we are now three plus years in the future, all the development is in and the hotel is at full occupancy. If the water issue hasn't improved or we are back into another drought, what is the water situation look like then? I suppose all available water would be needed. Does the Golf Course get sacrificed for landscaping elsewhere? A fancy gate won't sell homes where there is a water shortage. Given the nature and extent of the California drought, real estate may take a hit in general. I see financial ruin for developers but due diligence in maintaining the status quo.

 

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