October 15, 2012

 

RUNNING SPRINGS WATER DISTRICT

M E M O R A N D U M

 

DATE: October 15, 2012

TO: CSA 79 Advisory Committee

FROM: Ken Ayers, Board President

Ryan Gross, General Manager

SUBJECT: RUNNING SPRINGS WATER DISTRICT INFORMATION FOR

CSA 79 REGULAR ADVISORY COMMITTEE MEETING

The following information has been compiled and considered by the Running Springs Water District (District or RSWD) Board of Directors and staff regarding the potential annexation of the Green Valley Lake (GVL) CSA 79 sewer service area and San Bernardino County Green Valley Lake fire service area into the RSWD service area and consolidation of those services. This information is being provided to the CSA 79 Advisory Committee for their information.

CSA 79 SANITATION SYSTEM FACTS AND STATISTICS

1. 35 miles of sewer pipeline (40 year old truss pipe)

2. 4 sewer lift stations

3. 491 sewer manholes

4. 134 sewer clean outs

5. Current monthly sanitation user fee is $63.24 per equivalent dwelling unit (EDU)

6. Current EDUs = 1,252

7. FY 2012/2013 CSA 79 revenue projected to be $952K

8. Currently $1.38 million in CSA 79 operating, CIP, replacement and expansion reserves

9. Current projects include: $60,000 slip lining (1/2 mile), 50 manholes to be lined, Awanee Lift Station Improvements and pump replacement

10. CSA 79 staff provided RSWD with an Operational Activity Report for July 2012 at its August 29, 2012 Advisory Committee meeting.

11. Special District representatives have stated that there have been no fines assessed against CSA 79 in the last 10 years and that there have been very few sanitary sewer overflows (SSOs).

CURRENT STATUS OF RSWD STAFF REVIEW OF CSA 79 SEWER SYSTEM

As of August 2012 approximately 2 miles or 6% of the CSA 79 sewer pipeline inspection video had been reviewed in 8 of the 14 systems by RSWD staff. Of the 8 systems reviewed, 60 sections of pipe ranging from 6 to 10 inches in diameter were reviewed from video taken between 2009 thru late 2011. Only 2 of the 60 sections reviewed appeared to not be in need of repairs or replacement to reduce infiltration and inflow (I&I).

Based on this preliminary review it is the District staff’s opinion that the system may require significant repair and/or replacement to get closer to RSWD standards and reduce I&I to an acceptable level. However, without a current comprehensive video inspection and cleaning it would be difficult to accurately estimate the cost of the necessary improvements to bring the system closer to RSWD standards but based on the information available it would likely be more than 5 years and greater than $10 million. This would likely require the formation of an assessment district and issuance of improvement bonds to the residents of the Green Valley Lake and Snow Valley service areas.

RSWD staff has prepared a flow comparison from April and October of 2010 to illustrate the wet weather flows received from CSA 79 indicating excessive I&I.

Video inspection records that District staff has reviewed identify 114 potential problem areas in only 6% of the system that may or may not have been addressed since the video inspection was done. To date no maintenance or repair records have been acquired in order to determine if any of these areas have been addressed.

RSWD STAFF AND COMMITTEE MEMBER COMMENTS, CONCERNS AND OUTSTANDING ISSUES

Original Expectations:

. Consolidation of the three districts would reduce duplication of operational costs

such as audit reports, legal, mandated studies, management, etc.

. The GVL sewer system was in need of repair and upgrades but those could be accomplished with the existing sewer rate in GVL due to the cost savings.

. The County Supervisor would support whatever the communities wanted.

. The costs associated with developing the new consolidated district would be reimbursed by the GVL service fees.

. Since RSWD provides first responder fire and paramedic service to the entire area, consolidation would incorporate the fees and taxes for the area currently served.

. Consolidation would rectify RSWD being a "donor service" for Arrowbear,

Green Valley Lake and Snow Valley.

Currently:

. Arrowbear decided to withdraw from the consolidation process.

. In GVL, the portion of the pipes that the staff have been able to evaluate appear to

be in much worse condition than was anticipated.

. The possible cost of upgrading the GVL system could reach $15 million.

. The current County Supervisor has not been willing to either support or oppose the consolidation and continues to request additional information.

. The costs to prepare budgets, evaluate the GVL system and attend meetings is being borne by the RSWD.

. Since the initial evaluation of the GVL system revealed that it is probably in need of extensive and expensive repairs, it no longer seems reasonable to continue the consolidation effort unless a thorough video of the system is completed along with an engineer’s report of the necessary upgrades the system would need, including cost estimates.

. There is no funding source for any additional studies.

Other Major Issues of Concern

1. Cost incurred by RSWD for the last 2 years to study the consolidation project is approximately $15,000 as of August 2012. Additional cost if this process moves forward would be approximately $7,000 to $10,000 for LAFCO application process plus an additional $10,000 to $15,000 for additional studies such as a formal Plan for Service and Feasibility Study.

2. County Fire Chief believes LAFCO study does not address consolidating fire services therefore he will apparently oppose expanding RSFD service area to include the Green Valley Lake area.

3. Estimated cost to provide repairs to significantly reduce I&I into the collection system could exceed $10 million and require 5 years plus (refer to current status above).

4. Current monthly sanitation user fee is $63.24 per dwelling unit. To adequately address I&I these costs will likely escalate possibly beyond affordable but to adequately address this issue a more comprehensive and current video inspection would need to be performed.

5. See CSA 79 Sanitation System Facts and Statistics above.

6. RSWD financial consultant projection of net revenues for the first year of consolidation is $11,000 for sanitation and $130,000 for fire for a total of $141,000.

7. CSA 79 provides service to 1,252 EDUs. Delinquent accounts and vacant property would need to be considered.

8. According to audit report, CSA 79 does not pursue uncollectable fees and instead uses the property tax roll as the method to collect fees for services. The percent of customer accounts that are delinquent would need to be determined.

9. Current RSWD contract with CSA 79 will expire on May 9, 2017. The terms of this contract will need to be re-negotiated to address current conditions and regulatory environment.

10. What costs would CSA 79 customers support for their sanitation system improvements? Would RSWD be the target of constant anger associated with system upgrades and maintenance?

11. CSA 79 has not provided any significant repair records so their systems integrity will always be the subject of major concern.

12. If consolidation does not occur with the added CSA 79 fire tax RSFD will be at risk in the future since County Fire already provides service to the mountain area. The question is the consolidation with CSA 79 collection system worth the funds the consolidation of the fire services would receive? $680,000 for equipment replacement would require 5 years using the projected revenues of $130,000 from the fire tax fund.

13. The five year plan formulated to address consolidation and the estimated monthly service charge of $63.24 and reduce to RSWD current monthly service fee was figured prior to documentation of the collection system provided by County Special Districts and evaluated by RSWD staff.

14. County Supervisor has been reluctant to take a position on the consolidation and continues to ask for additional meetings and studies which are driving up the cost to RSWD.

15. CSA 79 system would require a complete video inspection to identify all maintenance issues which is estimated to cost $400,000.

16. If CSA 79 system is in fact discovered to be in need of significant repair/replacement it would require a large sum to finance the work whose responsibility would it be to sell the bonds and the responsibility associated with the bonds throughout their life? (i.e. failure to pay/default).

17. Regulatory reporting documentation such as the CSA 79 Sewer System

Management Plan (SSMP), maintenance records or any spill reporting have not been able to be reviewed by RSWD staff. There is a concern with staff that this may be an extra burden that is unable to be defined at this time.

18. There have been improvements/benefits since the consolidation talks have begun that directly affect the GVL residents which are:

a. CSA 79 Advisory Committee has been revived and the appointment of Lewis Murray as the commission secretary will give the community a direct contact with their supervisor’s office, hopefully addressing the communities concerns in a timelier manner.

b. The County Fire Chief has promised to improve the services they provide to the GVL community.

c. The problems identified with the sewer collection system have come to the surface and the community is now becoming aware of the issues.

Conclusion:

Expansion of the RSFD fire service area to include Green Valley Lake is the most beneficial to both districts and appears feasible at this time. Annexation of CSA 79 Sanitation service area into RSWD service area could be considered in the future if and when the system is improved to the point of financial viability for both districts.

 

 

 

 

The Original Proposal is below:



PROPOSED CONSOLIDATION OF CSA 79

& RUNNING SPRINGS WATER DISTRICT

 

5 YEAR PLAN

Proposed consolidation of CSA 79 (Green Valley Lake) and Running Springs Water District for Sewer and Fire Services to be phased in over a tentative five year period.

Board Representation: The Consolidated District Board of Directors will be a seven Member Board with the current Running Springs Water District Board filling five seats and Green Valley Lake residents filling two additional seats. After the initial five year period has elapsed, the Board will revert back to a five member Board elected at large.

Consolidated District Name: The new consolidated District name will be determined at the time application is submitted to the Local Agency Formation Commission (LAFCO).

Rates & Fees:     Existing CSA 79 Sewer Fee $61.40/month
                              Existing CSA 79 Sewer Availability $30.30/year (Unimproved) 
                              Existing RSWD Sewer Fee $27.45/month plus 15% of water usage plus $3,00/month loan repayment (average fell-time   
                                         RSWD sewer bill is $35-42)  
                            Existing RSWD Fire Availability $65.00/year (Improved)
                             Existing RSWD Sewer Availability $10.00/year (Unimproved)

After the initial five year period has elapsed, or when the Board has determined that Green Valley Lake's Sewer infrastructure and equipment are adequate, we anticipate sewer fees will change to the rate charged to Running Springs residents at that time

Revenue Accountability: Revenue from Green Valley Lake will be accounted for independently of Running Spring's revenues during the initial five year period or when the Board has determined that Green Valley Lake's Sewer and Fire infrastructure and equipment are within District specifications.  Revenues over expenses will be appropriated by the Board of Directors into designated CSA 79 improvement District Accounts for future Green Valley Lake capital improvement projects and equipment purchases. These accounts will remain in effect after the initial five year period has elapsed.   After the initial five year period, all revenue received from Green Valley Lake rates, fees, availability charges and property taxes will no longer be accounted for separately.

Outstanding CSA 79 Fees:    All outstanding fees and charges, including loan amounts, owed to Running Springs Water District by CSA 79 at the time of consolidation, will be paid in fell at the end of the initial five year period.

 Employee Staffing:        CSA 79 currently has two outstanding loans with the Running Springs Water District. The first loan has a balance of $333,202 with an annual payment of $68,013 and is scheduled to be paid off in March, 2017. The newest loan has a balance of $119,947 with an annual payment of $26,183 and is scheduled to be paid off in January, 2016, The two loans total $94,196 per year and should continue to be collected from Green Valley Lake revenues during the initial five year period.  Two additional Sewer Collection Division employees will be hired to replace the CSA 79 employees and handle the additional workload of servicing Green Valley Lake,  The four existing Green Valley Lake firefighters will be given the opportunity to continue as paid/call firefighters with the new consolidated District.

O&M Expenses:  Preliminary estimates of the first year sewer related O&M expenses will include activities such as pipeline cleaning and videoing, pipeline point repairs, manhole sealing, etc,  The Fire Department related O&M expenses will include additional staffing and training of paid-call staff,

 Capital Expenses:   There may be an immediate need to purchase two vehicles for the new sewer collection employees if vehicles are not included in the transfer of services from CSA 79 to the new district. One small 4x4 pick-up track and one larger 4x4 pick-up track outfitted with a snow plow will be needed. These vehicles may be purchased new or used and may be financed.

The CSA 79 lift station telemetry system will need to be integrated into the Running Springs telemetry system, Additional items to outfit the collection system would include lockers, two-way radios, computer equipment, miscellaneous safety equipment and tools.

Items needed to outfit the fire station; vehicles and firefighters that may be needed immediately after consolidation by the Fire Department would include pagers, radios (BKs/800 MHz), computer equipment, turnouts, B.A's, fire apparatus, fire equipment & tools.

RSWD & CSA 79   SEWER RATE INCREASES  FOR LAST 10 YEARS

Fiscal Year Running Springs

CSA 79

2002-2003

2.0%

15.0%

2003-2004

2.0%

15.0%

2004-2005

0.0%

5.0%

2005-2006

2.0%

5.0%

2006-2007

4.5%

7.0%

2007-2008

3.3%

7,0%

2008-2009

4.6%

3.0%

2009-2010

            0.0%

3.0%

2010-2011

0.0%

3.0%

2011-2012

1.6%

3.0%

Total 10 Year Increase

20.0%

66.0%

Average Annual Increase

2.0%

6.6%

2011/12 Sewer Rates:      $27.45/mo. + $3.00 loan + 15%of H2O usage (ave. bill $35.42/mo.)

CSA 79 Rate:    $61.40/mo.