[News brief published May 22] At its meeting Wednesday, the Community Services District board of directors approved an agreement with developer interests that provides funding for the water treatment plant expansion and allows the $12.8 million project to move forward. The board also addressed its effort to bring security cameras to Rancho Murieta and received an annual report on trash collection in the community.
Under the terms of the agreement, Cosumnes River Land LLC, Rancho Murieta Properties LLC and other entities represented by Murietan John Sullivan are required to post a $4 million letter of credit within 10 days of signing the agreement. The board authorized the general manager to enter into contracts to construct the plant after the agreement is finalized and signed and the letter of credit is received. The board approved financing the CSD’s $4.3 million share of the cost by borrowing from reserves.
The other source of funding is a $4.1 million letter of credit from the South developer. This funding dates to the early '90s, when Community Facilities District No. 1 was formed to generate about $13 million for infrastructure projects, including a water treatment plant to serve Murieta South, and South developers made up a shortfall of $6.6 million with letters of credit. The present project includes the required water treatment capacity and uses the remaining developer funding to pay for it.
While the South developer commitment for the plant has a 20-year history, Cosumnes River Land and Rancho Murieta Properties arrived on the development scene recently and jump-started efforts to build a new water treatment plant.
Sullivan, a long-time resident who has served as a director on the CSD and Rancho Murieta Association boards, pressed the CSD to provide water for a hotel project he proposed after acquiring the 53-acre Murieta Gardens property in 2012. Sullivan also represents Rancho Murieta Properties and other development entities formed when a group of investors purchased the Pension Trust Fund's Rancho Murieta holdings last year.
The CSD board approved a term sheet for the financing and services agreement last December. One of the deal points was the Cosumnes River Land hotel project would receive provisional water service in exchange for $180,000 upon signing the term sheet.
The water treatment plant was put out for bids before the final agreement and funding were in place. When bid costs came in higher than expected, some CSD directors expressed doubts the developers would enter into the financing and services agreement. Bid deadlines were extended 30 to 60 days to keep the project alive.
The county approval process for the Murieta Gardens hotel project added pressure to negotiations for the agreement by disallowing provisional water service for the hotel. Instead, county planners reinstated a requirement for additional water treatment capacity to be in place before occupancy permits could be issued. At last month's planning commission hearing for the hotel, CSD General Manager Ed Crouse told the commissioners that construction contracts for the water treatment plant wouldn't be awarded until developers came to the table with their share of the funding.
The financing and services agreement that went to the board for approval last week increased the CSD share of the cost from $3 million to $4.3 million.
At the Finance Committee meeting earlier this month, Assistant General Manager Darlene Gillum explained that the $3 million cap on the CSD cost for the plant was based on replacing the capacity of the older of the two existing water treatment plants. After it was determined "that we could in effect be able to decommission Plant 2 earlier than first thought," Gillum said. "… (the cost) went up to the $4.1 million to allow for decommissioning of Plant 2 in addition to replacing of the Water Treatment Plant 1 capacity."
A decade ago, in a different development climate and under a different CSD philosophy toward development, the CSD believed its financial contribution for a new plant should be zero.
In the early 2000s, the district decided to pursue membrane water treatment technology, and instead of building two new phases of the water treatment plant, proposed to combine the capacity within the footprint of the two existing phases of the plant, Crouse explained last year in an overview of water treatment facilities planning. In 2003, when developers were eager to build, plans were made for a large water treatment plant expansion to accomplish this at developer expense. The effort failed and the bids were never opened.
By the time the first projects in the development plan -- the Retreats and the Residences of Murieta Hills -- were approved by the Sacramento County Board of Supervisors in late 2007, the recession had set in and building came to a standstill. Faced with a water treatment plant that was nearing the end of its life, the CSD considered whether to start reserving to replace the plant at an estimated cost of $6.5 million or rehab it for $1.5 million.
"We’re hopeful that eventually development will turn, and there may be an opportunity to partner with the developer. … If we commit to spending $6.5 million, then that money is probably off the table as far as our discussions with the developers," Crouse said in 2010. The board decided to reserve $1.5 million for rehabilitation starting in the 2010-11 budget, and the debt prepayment cost was added to ratepayers' monthly bills.
The $1.5 million commitment became the CSD's "fair share" in negotiations for a financing and services agreement with the 670 Group, landowners of the projects that already have county approval -- Murieta Gardens; Lakeview and Riverview, the remaining unbuilt subdivisions on the South; the Residences East and West and the Retreat projects on the North. The commitment was expanded to $3 million in the draft version of the agreement released in mid-2013.
When the CSD board approved the financing and services agreement last December, Murieta Gardens was no longer part of the 670 Group, and the board approved the term sheet for a separate agreement with Cosumnes River Land and Rancho Murieta Properties at the same meeting.
At Wednesday's meeting, board members applauded Gillum for her work negotiating the agreement. "She's worked literally night and day on this," said Director Paul Gumbinger. "We, the board, owe her a vote of thanks."
Director Bobbi Belton cast the sole vote against approval of the financing and services agreement, and also opposed authorizing the general manager to award bids and enter into contracts for the plant and borrowing from reserves to pay CSD's share of the plant cost. Belton said she has consistently voted no "to building in front of development," and Gillum responded, "We're only paying for our replacement (capacity) cost."
The CSD's $4.3 million share of the plant cost will come from funds the CSD initially collected for the $1.5 million rehab and from water replacement reserves, and $2 million will be borrowed from other reserves and repaid with interest. A memorandum Gillum prepared tracks the reserve accounts, projecting expenditures and contributions to determine the effect of the internal borrowing. "I have not projected a rate increase for reserve collection," Gillum said. "I think that we have adequate reserves."
Residents will pay a flat fee of $6 a month. They are currently paying about $4.75 a month for water treatment plant financing, based on the commitment to fund a $1.5 million rehabilitation of the plant that became part of of the CSD share of the cost for a new plant.
The plant will have a treatment capacity of 4.0 million gallons a day, with a core structure that can be expanded to 6.0 million gallons a day, according to a memorandum prepared by Gillum.
The 4.0 phase costs $12.3 million and replaces an existing CSD plant with a treatment capacity of 1.5 million gallons, adds the Community Facilities District #1 capacity of 1.5 million gallons, and provides Cosumnes River Land and Rancho Murieta Properties with capacity of half a million gallons. Another half a million gallons per day of treated water is allocated for other uses.
The plant will be expanded to provide additional treatment capacity at the request of Cosumnes River Land and Rancho Murieta Properties "when they are in need of increasing their purchased water capacity to a total of 1.5 mgd," the memo reads, bringing "total plant treated water capacity production to 5.0 mgd." The additional capacity would accommodate development plans for land formerly owned by the Pension Trust Fund for Operating Engineers.
The $12.8 million total cost for the two phases of the plant is to be shared as follows, according to Gillum's memo:
The Community Facilities District #1 share is limited to the $4.1 million available from South developer Reynen & Bardis' existing letters of credit.
The CSD share to replace the existing Water Treatment Plant #1 capacity of 1.5 mgd is $4.3 million.
The Cosumnes River Land and Rancho Murieta Properties share to purchase 1.5 mgd of treated water capacity is $4.3 million. A $4 million letter of credit is required within 10 days of signing the financing and services agreement as well as payment of $178,245. The CSD received payment of $180,000 in January for provisional water service for the hotel project.
The low bids for construction of the water treatment plant are as follow:
GE Water & Process Technologies, equipment and services: $2,173,800
River City Painting Inc.: $291,000
JD Pasquetti, site work: $555,659
Roebbelen Contracting Inc., fencing: $53,640
KG Walters Construction, mechanical: $4,893,000
Bockmon & Woody Electric: $2,370,226
Marquee Fire Protection: $42,500
Information presented at the board meeting about the water treatment plant project and the financing and services agreement are available in the May 21 meeting packet at this location on the CSD web site.
Purpose of ad hoc security committee
Director Mike Martel, who initiated the CSD Security Ad Hoc Committee, commented on public reaction to the number of camera locations on "wish lists" the committee received, saying entities in the community were encouraged to submit ideas for camera locations and they are "a work in progress." Committee members estimated over 100 locations were suggested. The lists weren't made available to media at the committee meeting but have since been provided by the CSD and can be seen here.
Martel said his goal in forming the committee was "to come up with a strategy and a plan" to use the one-time, per-lot security impact fee charged to developers "to enhance our security." He estimated the fees would total close to $2 million "if all the houses are built."
Martel said cameras allow security patrol options that increase efficiency. He said the committee will come up with a variety of proposals and recommendations and the CSD board will "either adopt some of them, none of them or all of them, or amend them .… The whole thing is to help the community at buildout keep the quality of life.… "
Martel invited people to attend the committee meetings and provide input. No date was set for the next committee meeting.
2013 diversion report
Jack Fiori, vice president of California Waste Recovery Systems, presented the annual report on collection operations in Rancho Murieta. The CSD has contracted with the company for solid waste collection since taking over the service from Sacramento County in late 2005.
The annual report covers recycling efforts as well as the amount of trash residents put curbside every week.
For the record, in 2013 that worked out to 31 pounds of trash, 10 pounds of recyclables, and 17 pounds of green waste per household per week.
The biggest change is a jump in the number of bulk waste pick-ups, Fiori noted. Residents can call the company and schedule a curbside pick-up four times a year, and the number of collections per service day has increased from 3.6 in 2007 to 5.1 in 2013. And they're really taking off this year, with bulky waste collection three times what it was a year ago at this time, Fiori said. Murietans can schedule bulk waste pickups by calling 354-4154.
Residents are reminded to keep trash out of the recycling bins where it accounts for about 20 percent of the contents, according to Fiori. What belongs in the recyclables cart? Try these: magazines and catalogs, corrugated cardboard and chipboard, shoeboxes, junk mail and envelopes, paper bags, computer paper and other paper products; newspapers, glass jars and bottles; tin and steel cans and containers; plastic bottles, jugs and jars; aluminum cans, foil and trays; and telephone books.
The acceptable materials list, collection calendar and route map can be found on the company's website.
The board approved contracting with Associations Reserves for a reserve study at a cost not to exceed $14,835.
The board adopted the groundwater well environmental environmental initial study and proposed mitigated negative declaration.
A workshop will be held from 9 a.m. to noon Saturday, June 7, at the CSD Building to review the 2014-15 budget. The "worst case" budget projected an overall rate increase of 8.35 percent -- $13.59 -- in the average monthly residential bill for water, security, drainage, sewer, and trash collection services. A brief presentation at the board meeting introduced factors that will reduce the increase.