COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Department of Public Works

DATE:

November 3, 2005

BOARD MEETING DATE:

November 15, 2005

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

4/5ths vote required on Appropriation Transfer

TO:

Honorable Board of Supervisors

FROM:

Neil R. Cullen, Director of Public Works

SUBJECT:

Loan to the Crystal Springs County Sanitation District and Associated Appropriation Transfer Request

Recommendation

1.

Adopt a resolution as the governing board of both the Crystal Springs County Sanitation District (District) and the County of San Mateo (County), authorizing the President of the Board to execute an agreement between the District and the County which will provide a $1,000,000 loan to the District that will be used to reimburse the Town of Hillsborough (Town) for District costs associated with the Town’s Sewer Capital Improvement Project that improved the Town’s sewer transmission lines that are used to transport District wastewater through the Town.

2.

Approve an Associated Appropriation Transfer Request (ATR) to recognize the loan to the District from the County and to transfer $177,575 from the District’s “contingencies” to “contribution to other agencies” in order that these funds can also be used to reimburse the Town. (4/5ths vote required).

Vision Alignment

Commitment: Responsive, effective and collaborative government.

Goal 22: County and local governments effectively communicate, collaborate and develop strategic approaches to issues affecting the entire County.

The proposed agreement and ATR will allow the District to reimburse the Town this year for costs incurred by the Town for the benefit of the District.

Background

Previous Board Action

Acting as the governing Board of both the District and the County, entered into a four party agreement dated July 18, 1989, between the Town, the City of San Mateo (City), the District, and the County that designated relationships with respect to the use and ownership of sewage conveyance and treatment facilities jointly used by the four agencies.

History

The Town’s sewer that is located in Crystal Springs Road and El Cerrito Avenue (Trunk Sewer) carries sewage that is collected from the District, the County’s Tower Road Facilities, portions of the Town and the area within the City near De Anza Boulevard (Map Attached.). The 1989 four party agreement specifies how costs are to be distributed for usage and system upgrades.

The Town’s Trunk Sewer was experiencing overflows into San Mateo Creek due to both the lack of capacity as well as the deteriorating condition of the Trunk Sewer. The Town, under the threat of sanctions by the Regional Water Quality Control Board, replaced undersized and deteriorated portions of the Trunk Line and has now determined the cost of the work for each entity pursuant to the four party agreement.

Discussion

The Town reported that the cost of the Town’s project was $2,518,873 and the cost distribution based on the four party agreement is:

County (Tower Road Facilities)

$99,243.60

District

$1,177,573.13

City of San Mateo

$304,783.63

Town of Hillsborough

937,272.64

The District is responsible for the largest percentage based on the flow from the District and the number of connections. The current sanitary sewer service charge rate levied by the District is $496 per single-family dwelling. Sewer service charges are the primary revenue source for the District and are used to finance the maintenance of the District's sewer collection system, a proportionate share of the down stream systems (the Town’s and the City’s transmission systems) and the cost of treating the waste water that is collected in the District. The Town’s sanitary sewer service charge rate is currently are $1,315 per parcel and the City’s is on average $352.00 per parcel. The differences can be attributed to the number of connections and the size of the respective collection systems.

The District does not have sufficient funds to reimburse the Town from its existing reserves and we are therefore recommending the General Fund loan as a means of the District meeting its current financial obligation.

Resolutions and an agreement have been approved as to form by County Counsel.

Fiscal Impact

The proposed loan is for five (5) years at an interest rate equal to the interest rate paid on pooled reserves in the County Treasury. Payment will be made from the revenues that the District receives, primarily sewer service charges, and the loan provides that the District can accelerate payments if other revenues or funds become available to the District.

The District is evaluating the current rate structure to determine the increases that are necessary to support on-going maintenance, District capital improvement projects, and the District’s share of expenses for the jointly used facilities. Proposed changes in the current rate structure will be the subject of a separate report.

There is no impact to the General Fund as the General Fund will be receiving the same interest rate as it does on its other pooled reserves. However, there may be future impacts to the General Fund associated with the County’s use of the wastewater facilities used to transport and treat sewage from the County’s facilities at Tower Road.

Future Actions

The District, County, Town and City will be developing a long range forecast of anticipated costs for on-going maintenance and capital improvement projects for the jointly used facilities. The City has plans to continue to upgrade their wastewater treatment facilities and portions of the jointly used conveyance systems. The Town plans to replace and upsize their conveyance system downstream of their last project. Currently these projects are estimated to cost $60,500,000 within the next nine (9) years. The Town, City, and District plan to explore options for financing the proposed work including applying for State Revolving Fund money. We will also evaluate the current agreement and propose changes in order to simplify the allocation of costs and “normalize costs over a longer period of time”.