A copy of the CCSD’s “Notice of Public Hearing on Proposed Increases to Water and Sewer Rates” (the so-called “Prop. 218 Notice”) arrived in my mail today. If you are a CCSD ratepayer or own property in Cambria, you, too, most likely will have received your Prop. 218 Notice by the time you read this. This article is the second in a series intended to supplement, amplify, and/or clarify the explanations provided with the Prop. 218 Notice.
I hope that these articles will help you to understand the rationale behind the proposed rate increases. If you have questions or topics you would like me to address in future articles, as always, you can email me at firstname.lastname@example.org. Today we focus on the wastewater (sewer) rates. Water rates will be discussed in next week’s article. For more detailed information about the 2022 Wastewater Rate Study and the proposed rate increases, please visit the district website at: CambriaCSD.org/proposition-218.
Cambria is a wonderfully unique community with many positive attributes. Unfortunately, some of those unique qualities also create challenges related to utility services. The incredible canyons support abundant wildlife and the hills rising from the sea provide beautiful vistas, but that topography also creates a very complex and challenging environment for our utilities. Except for some straight runs on Moonstone Beach and Main Street, the major part of Cambria could be likened to a roller coaster. As such, we have many complex points for both Water distribution and Wastewater retrieval.
When you consider the complexity of our system, the advanced age of our utilities and the underlying miles of piping and gravity lift stations you can begin to understand the challenges CCSD faces in keeping things operating successfully and seamlessly, while also handling emergency circumstances as they arise. For the good of the community, it is essential that your CCSD have the appropriate systems, equipment, and assets to accomplish these responsibilities.
Where are We Now? The Wastewater utility rate increases recommended in the recent 2022 Bartle Wells Study are 7.5% for three years, with a pass-through inflation rate adjustment for years four and five pegged to the Consumer Price Index for California. By law, the CCSD’s utilities must be financially self-supporting enterprises. Service charges are the main source of revenues for each utility. The Wastewater rate increases recommended by Bartle Wells were developed based on a targeted $12 million of critical repair, replacement, and enhancement projects for Cambria’s Wastewater Treatment Plant. These projects were determined by your CCSD based on a focused assessment of our critical utility needs in the last few years. The assessment concluded that, if these Wastewater Treatment Plant requirements are not addressed, the plant is and will remain in a vulnerable condition and will be at risk of operational failure.
Of course, it is totally impractical that any rate level increase could produce $12 million in a short time to address these immediate project needs. The purpose of the rate increase is to generate revenue which will support yearly debt service to undertake these critical projects for our aging facility. The $12 million would be obtained through a loan mechanism with repayment over a 30-year period. To make ourselves eligible for these monies, CCSD will have to demonstrate to the lender that we can support that level of obligation financially. Implementing these rates is the way that is accomplished. Without this rate increase, the District cannot obtain lending to do these critical repairs, replacements, and upgrades. The inability to address these essential project needs would put the Wastewater Treatment Plant operations at risk, with probable impact to the health and wellbeing of the community.
What about the Proposed Pass-through Inflation Adjustment? Even with these steps being taken, there are additional high priority Wastewater projects that need to be addressed. As these three yearly rate increases help to build revenues, the District will be in a better position to take small steps in addressing some of those needs, as well. We also will need to assess the criticality of remaining work over time. Cost elements that will never go away are routine expenses and costs for emergency maintenance and repair. What it costs to accomplish those activities will not be the same four years from now that they are today.
That is why your CCSD Board supported the Bartle Wells recommendation for a pass-through inflation rate adjustment for years four and five. This type of inflation adjustment addresses property-related services and is defined by California Government Code 53756. The Code states, “An agency providing water, wastewater, sewer, or refuse collection service may adopt a schedule of fees or charges authorizing automatic adjustments that pass-through increases in wholesale charges for water, sewage treatment, or wastewater treatment or adjustments for inflation.”
How to Get More Information about our Wastewater Utility Requirements. The CCSD Board Meeting Agenda Package for March 17 (Agenda Item 8.B, pages 137-139) provides a full explanation of what constitutes the $12 million project content including an excellent recounting of how the Wastewater utility assessment evolved. The agenda packet can be accessed online (cambriacsd.org/2022-03-17-board-meeting). Just below the board meeting recording, click on the bullet identified as “Agenda”.
How were the 2018 Rate Study Increases Applied and Expended? To address questions from the community on how the prior rate increase was applied, here is some specific information. The three-year 2018 wastewater rate study recommendations (Scenario B) were 20 percent (November 2018), 18 percent (July 2019), and 16 percent (July 2020). The actual rates implemented by CCSD Board direction were 20 percent (November 2018), 16 percent (July 2019), and 16 percent (July 2020).
What Funds were Actually Expended for the Wastewater Utility? Capital Improvement Projects received $607,197 while Maintenance and Repair (M&R), Services, and Supplies received $1,996,454 (excluding salary and benefits for SEIU Wastewater utility employees). M&R costs are often not obvious or visible to the public because identification, action, maintenance, or replacement occurred before a major problem developed. There was a long list of important, but smaller dollar value, maintenance activities that repaired/upgraded the plant infrastructure or halted further deterioration.
The M&R work and expenses covered a broad range of circumstances related to equipment/facility components: failures, repairs/replacements, upgrades, improvements, implementing technical tools and assets. A sampling of accomplishments during the period includes major lift station maintenance such as pump repairs/replacement, generator repairs, repurposed effluent surge tank and installed new effluent pumps, influent screen installation and construction of support platforms, manhole raising, handrail repair and replacement, implemented collection system maintenance, implementation of a GIS program to track /document collection system cleaning and repairs, SCADA upgrades and computer replacements, vactor truck to jet flush/clean collection system lines, and a sewer inspection video camera system.
The prior 2018 Wastewater rate increases detailed above were designed to address infrastructure needs and provide adequate operating and maintenance funding, establishing the utilities on a more stable financial footing. Revenue obtained over this period has significantly improved and stabilized the District’s Wastewater Treatment Plant operation and maintenance needs. The District now needs to address funding the most critical capital improvements of its aging infrastructure in order to address existing deficiencies and support safe and reliable service.
Note. CCSD Directors Cindy Steidel and Karen Dean worked together to produce today’s article.