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HomeMy WebLinkAbout1979-12-04; City Council; 5541-3; Accepting report of Ralph Anderson & Assoc.CITY OF CARLSBAD AGENDA BILL NO. 5541 - Supplement No. 3 DATE: December 4, 1979 DEPARTMENT:Public Works Subject: ACCEPTING THE REPORT OF RALPH ANDERSEN & ASSOCIATES RE: FORMATION OF A SUBSIDIARY DISTRICT OF THE CMWD Statement of the Matter Council approved an agreement with Ralph Andersen & Associates at their regular meeting of November 21, 1978 for an analysis of the feasibility of forming a subsidiary district of the CMWD by the City of Carlsbad; to make an economic analysis of cost impacts and to recommend an organizational structure for a combined water service operation. The final report was submitted in early September and has been reviewed by staff. Staff is of the opinion that this report fulfills the original agreement with Ralph Andersen & Associates relating to the formation of a subsidiary district of the CMWD. It is forwarded to Council for acceptance. EXHIBITS: A. Memo from Director of Utilities & Maintenance to City. Manager of November 19, 1979. B. Ralph Andersen Report entitled "Water Service in the Carlsbad Area". On file in the City Clerk's Office. RECOMMENDATIONS: 1. Accept the Andersen Report and direct staff to close out the agreement with Ralph Andersen & Associates. 2. Direct staff to prepare documents for further action in accordance with policy objectives. Council Action: 12-4-79 Council approved the above listed staff recommendation. 79-209 November 19, 1979 MEMORANDUM TO: City Manager FROM: Director of Utilities & Maintenance SUBJECT: Review of Andersen Report Re: Forming a Subsidiary District of the Costa Real Municipal Water District (CMWD), formerly the Carlsbad Municipal Water District. Council approved the retention of Ralph Andersen & Associates at their regular meeting of November 21, 1978 to perform an analysis of the establishment of the Carlsbad Municipal Water District as a subsidiary district of the City of Carlsbad. The study, originally projected as a four-month effort, was delayed by the diffi- culty in developing all of the economic data necessary to provide a comprehensive analysis. The final report was submitted in September 1979 and is considered current as of that date. The study concludes that a combined water operation of the City and CMWD operations, established under provisions of the District Reorganization Act, is legally feasible and can result in an overall direct cost savings of the combined operations at about $104,000 annually. It further concludes that other cost savings are also probable by eliminating the need for purchase of new billing equipment by CMWD and by the use of city-owned heavy equipment as opposed to contracting to outside contractors for this service. Additional cost savings may also be realized by utilization of the City's purchasing system for vehicles, petroleum and repair parts and from mainten- ance of vehicles by the City's maintenance shops. The study also addresses personnel considerations of the reassignment of CMWD personnel to City employment. It is considered that all personnel reductions occasioned by the consolidation could be achieved through attrition and suggests Council should make such a policy commitment. Details regarding the reassignment of permanent CMWD employees to the City can be accomplished by staff and submitted to Council for approval prior to the date set for consolidation. It is recommended that Council take the following action: 1. Accept the report and direct staff to close out the contracts with Ralph Andersen & Associates. 2. Direct staff to prepare an application to LAFCO for the formation of a sub- sidiary district of the CMWD for approval at the regularly scheduled Council meeting of December 20, 1979. ROGER/W. Director of Utilities & Maintenance RWG:pab WATER SERVICE In The CARLSBAD AREA Final Report Prep ared by: Ralph Andersen and Associates 1446 Ethan Way Suite 101 Sacramento, California 95825 September, 1979 (916) 929-5575 TABLE OF CONTENTS Page Numb er Chapter I THE STUDY IN PERSPECTIVE 1 Chapter II LEGAL FRAMEWORK GOVERNING CHANGES IN DISTRICT ORGANIZATION, .... 5 Chapter III THE CARLSBAD MUNICIPAL WATER DISTRICT - A PROFILE 11 Chapter IV THE CITY OF CARLSBAD - A PROFILE ....... 42 Chapter V ORGANIZATION PLAN FOR A COMBINED WATER OPERATION 69 Appendix 101 Chapter I THE STUDY IN PERSPECTIVE WATER SERVICE IN THE CARLSBAD AREA The provision of water service to the City of Carlsbad and the unincorporated, area north, south and east of the City is provided primarily by the City and the Carlsbad Municipal Water District, and to a lesser extent by the Oliven- heim, San Marcos, Buena Colorado, and Vista Water Districts. . The City Of Carlsbad Assumed Responsibility For The Deli- very Of Water To The "Old Carlsbad Area" In 1958 Between about 1915 and 1958,. retail water service was pro- vided to a 7,000 acre service area known as the "Old Carls- bad Area" by the Carlsbad Mutual Water Company and the Terramar Water Company. In 1958, the City purchased the two water companies with the proceeds from the sale of a $767,000 revenue bond issue and established a City water utility. Since the City's purchase of the water companies, the stor- age and distribution systems have been improved substan- tially and the number of retail customers now exceeds 5,600 with an annual water consumption of approximately 5,000 acre feet. . The Carlsbad Municipal Water District (CMWD) Was Formed In 1954 To Supply Imported Water To The Carlsbad Area The CMWD was formed in 1954 to supply imported water to the City of Carlsbad and the surrounding unincorporated area comprising a service area of about 20,000 acres. More specifically, the District was formed to: - Annex to the San Diego County Water Authority so as to receive Colorado River water. - Construct the pipelines and reservoirs necessary to bring water from the Water Authority's aqueducts. - Establish an organization to operate and maintain the new facilities. The District currently provides the City with all of its wholesale water and in addition serves about 2,875 retail customers with an annual consumption of approximately 5,000 acre feet. Of the 2,875 retail customers, approximately 200 are located in the unincorporated area north, south and east of the City and the balance are in the incorporated area of the City. . The San Marcos, Olivenheim, Buena Colorado and Vista Water Districts Also Provide Retail Water Service To City Residents In addition to CMWD, the San Marcos and Olivenheim Water Districts also provide retail water service to City residents. They currently provide service to a combined total of approximately 3,000 retail customers. Water service is also provided to a limited number of City residents on the northern boundary of the City by the Buena Colorado Municipal Water District and the Vista Irrigation District. BOTH CMV.'D AND CITY OFFICIALS HAVE EXPRESSED AN INTEREST IN COMBINING THE OPERATION AND MAINTENANCE OF THE DISTRICT AND CITY WATER SYSTEMS Over the past eight years, both CMWD and City officials have expressed an interest in combining the operation and maintenance of the District and City water systems. As early as 1971, the District proposed that it conduct all water operations under a contractual agreement with the City. Agreement on this proposal was not reached. The issue of a consolidated water operation has since been raised by CMWD in 1973, and by the City in 1974 and 1976. None of these proposals has resulted in the establishment of a combined water ser- vice. The most recent proposal for a consolidated water operation was made by the City in late 1978 when the City Council agreed to: . Consider the establishment of CMWD as a subsidiary district of the City. . Retain a consultant to develop a comprehensive plan for the integration of the City and District water operations. THIS STUDY IS DESIGNED TO DEVELOP A MODEL ORGANIZATION FOR THE CREATION OF A COMBINED WATER OPERATION Based on the above, the City Council has sponsored this study. The principal study goal is the development of organization plan for the creation of a com- bined water operation through the establishment of the Carlsbad Municipal Water District as a subsidiary district of the City. More specifically, the study is designed to accomplish the following: . The District Reorganization Act provides that a district may be established as a subsidiary district of a city if 70% or more of the taxable or assessable land area is with- in the boundaries of the city; and if 70% or more of the registered voters of the district reside within the city. In light of the above requirements, an important part of the study is a determination as to whether or not CMWD meets these requirements. . Development of an organization plan for the combined water operation, including a complete and factual analysis of the costs and benefits. . A careful analysis and recommendations regarding the salar- ies and fringe benefits of District and City employees arid the practical personnel problems that may occur when merg- ing District and City employees. Chapter II LEGAL FRAMEWORK GOVERNING CHANGES IN DISTRICT ORGANIZATION THE CARLSBAD MUNICIPAL WATER DISTRICT IS SUBJECT TO THE PROVISIONS OF THE DIS- TRICT REORGANIZATION ACT In 1965, the State Legislature adopted the District Reorganization Act. This Act sets forth uniform procedures for accomplishing a change in the organiza- tion of a special district. Unless specifically excluded, the Act clearly applies to all special districts. The Act does not specifically exclude a municipal water district, and consequently.the Carlsbad Municipal Water Dis- trict is subject to its provisions. The broad scope and mandatory nature of the District Reorganization Act inso- far as its applicability to a change in the organization of a special district may be seen in the following provisions: "District means an agency of the state, formed pursuant to general law or special act, for the local performance of governmental or proprietary functions within limited bound- aries. This division shall provide the sole and exclusive authority and procedure for the initiation, conduct and completion of changes of organization or reorganization. On and after the effective date of this division, all changes of organization and reorganizations shall be initiated, conducted and com- pleted in accordance with and ^s provided in this division." THE DISTRICT REORGANIZATION ACT PROVIDES THREE ALTERNATIVES FOR CHANGING THE ORGANIZATION OF A DISTRICT Provisions of the District Reorganization Act are intentionally broad so as to provide a community with maximum flexibility insofar as organizing to deliver specific services locally. In terms of accomplishing a basic change in organv zation, however, the Act sets forth three principal alternatives: . Subsidiary District Under this alternative, the District would continue in existence as a separate governmental entity. All of the provisions of the Municipal Hater District Law of 1911 would continue to apply, except that the City Council would also serve as the District Board of Directors. This would be similar to the present responsibility of the City Coun- . cil to also serve as the Board of Directors for the Rede- velopment Agency. . Merger This alternative provides for the elimination of the Dis- trict through its merger with the City. The City would, in effect, assume all of the assets, obligations and responsi- bilities of the District. . Dissolution - This alternative provides for the outright elimination of the District. If dissolved, responsibility for providing water service to the area now served by the District, as well as other terms and conditions of the dissolution, would be. determined by the Local Agency Formation Commis- «, sion. THE DISTRICT REORGANIZATION ACT PROVISIONS INDICATE THAT THE CARLSBAD MUNI- CIPAL WATER DISTRICT MAY NOT BE MERGED WITH THE CITY OF CARLSBAD Section 56402 of the Government Code provides that a merger may only occur when the boundaries of the district are totally within the boundaries of the city. A review of the District's boundaries indicates that a portion of its territory is outside the boundaries of the City and, therefore, the provisions regarding merger do not apply. THE DISTRICT HAY BE MADE SUBSIDIARY TO THE CITY IF AT LEAST 70% OF THE DIS- TRICT'S TAXABLE OR ASSESSABLE LAND AREA AND 70% OF ITS REGISTERED VOTERS ARE LOCATED WITHIN THE CITY'S BOUNDARIES Section 56403 of the Government Code provides that a special district may be established as a subsidiary district of a city if 70% or more of the dis- trict's taxable or assessable land area and 70% of its registered voters are located within" the city's boundaries. Therefore, if the conditions outlined above are met, the District may be established as a subsidiary district of the City of Carlsbad. / THE DISTRICT MAY BE DISSOLVED PURSUANT TO DISTRICT REORGANIZATION ACT PROCE- DURES The District Reorganization Act conta.ns specific provisions relating to the dissolution of a special district. As indicated previously, the Carlsbad Municipal Water District could be dissolved pursuant to these provisions, and the responsibility for providing water service would subsequently be deter- mined by LAP CO. SPECIFIC PROCEDURES MUST BE FOLLOWED TO ACCOMPLISH A CHANGE OF ORGANIZATION UNDER THE DISTRICT REORGANIZATION ACT The District Reorganization Act 'provides specific procedures for creation of a subsidiary district, merger, or dissolution. The principal steps involved in accomplishing a change in organization under any of these alternatives are similar, and are summarized below: . Preliminary Proceedings May Be Initiated By Petition Or By Application Of Any Affected City, District, Or County Consideration of a change in organization can be initiated by a petition signed by five percent of the resident voters of the district; or five percent of the registered voters residing within the territory of the city outside the boundaries of the district. A change of organization can also be initiated by any affected county, city, or dis- trict. An affected city, county, o;- district is defined by the Act as one which contains or would contain territory for which an organization change is proposed. Based on the above, a change of organization regarding the Carlsbad Municipal Water District could be initiated by the County of San Diego, the City of Carlsbad, the Carlsbad Municipal Water District and any other affected special district. . LAFCO Must_Review And Approve, Conditionally Approve, Or Disapprove All Proposed Changes Of Organization Initiated Under The District Reorganization Act Once the petition 'or application is filed, LAFCO must give notice, hold a hearing, and make a determination. In 8 summary, LAFCO may either approve, conditionally approve, or disapprove the proposal. If LAFCO disapproves the pro- posed change in organization^ the proposal may not be con- sidered again for a period of one year. If LAFOO approves, the proposed change is referred to the Board of Supervisors for appropriate action. The County Board Of Supervisors Must Also Review And Approve Or Disapprove Proposed Changes In Organization The Board of Supervisors, like LAFCO, must give notice, hold a hearing, and make a determination. If the Board of Supervisors disapproves the proposed change, the proceed- ings are terminated. V An Election Hill Be Required If Either The City Or District Does Nnt Approve The Proposed Change In Organization If the Board of Supervisors approves the proposed change of organization, the proposal is subject to a vote of the electorate. A vote is not required, however, if both the City Council and District Board of Directors agree to the proposed change. If an election is required, the Board of Supervisors may direct that it be held only within the District, or both within the District and within the territory of the City outside the boundaries of the District. It should be noted, however, that Section 56418 of the Government Code requires that an election be held only within the District if a valid petition containing no less than 10% of the sig- natures of the resident voters of the District request a district-only election; . The Final Decision Is Implemented By The Board Of Super- visors Depending upon the outcome of the election, the Board of Supervisors adopts a resolution that either: - Confirms the defeat of the proposed change of organization by the elec- torate. - Confirms its approval and orders imple- mentation of the change of organization with the terms and conditions set by LAP CO. in Chapter III THE CARLSBAD MUNICIPAL WATER DISTRICT - A PROFILE THE RESPONSIBILITIES OF THE DISTRICT INCLUDE THE DELIVERY OF WHOLESALE WATER TO THE CITY OF CARLSBAD'S WATER UTILITY AND THE PROVISION OF RETAIL WATER SER- VICE TO RESIDENTIAL, COMMERCIAL/INDUSTRIAL, AND AGRICULTURAL CUSTOMERS CMWD was created in 1954 under the Municipal Water District Law of 1911 to provide imported water to a 20,000 acre service area comprising the City of Carlsbad and the surrounding unincorporated area to the north, south and east of the City. . CMWD Provides The City Water Utility With All Of The Whole- sale Water Supply 'CMWD now provides the City of Carlsbad's water utility with all of its wholesale water supply. During calendar year 1978, CMWD imported approximately 10,000 acre feet of water of which the City received 5,000 acre feet or about half the District's supply. . CMWD Provides Retail Water Service To Approximately 2,875 Residential, Commercial/Industrial, And Agricultural Cus- tomers ' . In "addition to delivering wholesale water to the City of Carlsbad's water utility, CMWD provides retail water ser- vice to approximately 2,875 residential, commercial/indus- trial, and agricultural customers with an annual consump- tion in fiscal year 1977-78 of 4,664.2 acre feet. The num- ber of customers and consumption by category of customer is as follows: 11 Type Number % Total Consumption % Total Residential 2,606 90.7% 974.8 A/F 20.9% Comm./Indus. 130 4.5% 1,019.8 A/F 21.9% Agricultural 139 4.8% 2,669.6 A/F 57.2% * TOTAL 2,875. 4,664.2 THE DISTRICT WATER SYSTEM CONSISTS OF TRANSMISSION, STORAGE, PURIFICATION AND DISTRIBUTION FACILITIES The District water system consists of a variety of facilities as follows: . Approximately 75 miles of transmission and distribution pipelines ranging in diameter from 6 inches to 27 inches. . Joint ownership of the Tri-Agencies Pipeline and the South Aqueduct Connections valued at $1.5-miHi on and $1.25 mil- lion respectively. . Squires Dam with a reservoir capacity of 600 acre feet. . Two chlorination stations, one located at Santa Fe Reser- voir and the other at Squires Dam. . One pumping station. . Eight distribution reservoirs with a total capacity of 7.35 M.G. as follows: - Santa Fe - 2.5 M.G. - B - 1.0 M.G. 12 - C - 1.0 M.G. - La Costa - 1.5 M.G. - E - 1.5 M.G. - D (2) - 1.25 M.G. each - Pump Station - 0.1 M.G. . Five wholesale metering stations. . 17 pressure regulating stations and one control station. THE COST OF WATER TO CMWD IS DETERMINED BY THE SAN DIEGO COUNTY WATER AUTHORITY The sole source of water to CMWD is the San Diego County Water Authority. The cost, of the water to CMWD is determined by the Authority and includes a charge for the water delivered to the District less agricultural credits, plus a capacity charge. For example, the total cost, of water to CMWD in January, 1979 was $47,637.97 and can be broken down a. follows: Acre Feet Rate Amount Total Water Delivered 488.9 $ 97.10 $47,472.19 Agricultural Credits -488.4 34.00 - 16,605.60 Capacity Charge^) 752.08 16,771.38 TOTAL 47,637.97 In addition to the monthly charges described above, the Authority charges the District its share of other Authority expenses related to the treatment, stor- age and delivery of water. For example, the Authority imposes charges for evaporation, pumping, and spillage. * 1/12 of annual charge based on peak flow of 22.3 c.f.s. X 1.9835 X $4,550. 13 THE COST OF HATER TO THE DISTRICT'S RETAIL CUSTOMERS CONSISTS OF WATER CHARGES, IMPROVEMENT DISTRICT PROPERTY TAX LEVIES, AND A PROPORTIONATE SHARE OF THE COUNTY'S GENERAL PROPERTY TAX LEVY The cost of water to CMWD retail customers consists of both property tax levies and water charges. Currently, the District finances capital improve- ments with property taxes and the maintenance and operation of the system with water charges. It should be noted, however, that during the 25 year history of the District, both water charges and property taxes have been utilized to finance capital improvements. . Water Charges Consist Of A Ready-To-Serve Fee And A Unit Charge For Water The District water charges consist of a ready-to-serve fee and a direct charge for water as follows: • . ' - Ready-To-Serve Fee The ready-to-serve fees are based on the size of the customer's meter and are as follows: Meter Size Monthly Charge 5/8" $ 4.40 3/4" 4.40 1 5.50 ' 1-1/2" 7.70 2 " 12.65 3 " 19.25 4 " 37.95 6 " 55.00 8 " 82.50 14 - Unit Water Charge The unit water charge is the cost of water per 100 cubic feet or 748 gallons . and varies according to type of cus- tomer. Type -Unit Charge Residential 40$ Commercial/Industrial 40$ Agricultural 32$ • The District Receives A Share Of The San Diego County General Property Tax Levy Prior to the passage of Proposition 13, the District levied a general tax rate of 0.14$ per $100 of assessed valuation for the purpose of financing capital improvements. In general terms, the adoption of Proposition 13 permits only the County to levy a general tax rate and specifically pre- cludes any other unit of local government, including the District, from doing so. The ony exceptions to this re- quirement are tax rates levied for the purpose of meeting debt service requirements of general obligation bonds approved by the voters prior to the passage of Proposition 13. Proposition 13 was very vague, however, as to how the property tax revenues generated by the County's general tax rate were to be distributed among the various local govern- ment entities such as cities, school districts, and special 15 districts. As a consequence, the State Legislature has adopted implementing legislation that provides, in general terms, that each taxing- agency receive a share of the total property tax revenue collected in proportion to the percen- tage their tax rate represented of the total tax rates le- vied by all local taxing agencies. Based on this legisla- tion, the District's share of the County general tax rate was 0.1048506% and generated $116,301 which was about 45% of the previous year's total. The practical impact on a District property owner is that he or she now pays property taxes to the District equal to about 45% of the amount he or she paid the previous year. . The District Levies A Series Of Improvement District Tax Rates The District has chosen to finance .=» major portion of its capital improvements through the use of voter approved general obligation bonds on four improvement districts. Improvement Districts 1 and 4 encompass CMWD's entire ser- vice area and were established to finance the construction of the transmission and storage facilities necessary to bring imported water to the Carlsbad area. As a result, all District property owners pay tax rates to support the general obligation bonds sold to finance these facilities. Improvement Districts 2 and 3 were established to finance the construction of .the. storage reservoirs and distribution mains to serve the. District's retail service areas east and south of the "Old Carlsbad" area of the City. Tax rates 16 to support the general obligation bonds sold to finance these facilities are paid by the retail customers served by these improvements. The net effect of the above is that a District property owner who is also a retail customer of the District pays a tax rate for Improvement Districts 1 and 4 plus a tax rate for either Improvement District 2 or 3. The current tax rates for the improvement districts are as follows: \ Rate Per $100 A.V. Improvement District 1 0.04$ Improvement District 2 0.10<J: Improvement District 3 . 0.26$ «•• . Improvement District 4 0.02<J: The Average Monthly Cost Of Water To A District Customer Includes Water Charges And Tax Levies And Varies According To The Type Of Customer And The Improvement Districts With- in Which The Customer Is Included The average monthly cost of water to a District customer varies according to a variety of factors including the type of customer (residential, conmercia!/industrial, or agri- cultural), and whether or not the customer is located in Improvement District 2 or 3. Based on a set of uniform assumptions regarding market value, assessed value, type of customer, water consumption, and meter size, the following conclusions can be reached regarding the average monthly cost of water to similar residential customers located in 17 Improvement District 2 or 3. Because the District's tax revenues are used solely for capital improvements and debt service, and the water charges are used solely to finance the maintenance and operation of the water system, they have been shown separately in the examples below. (The assumptions and detailed calculations supporting these examples are included in the Appendix.) Imp. District 2 Imp. District 3 Maintenance & Operation Ready-To-Serve Fee $ 4.40 $ 4.40 Unit Water Charge . 6.00 6.00 Subtotal 10.40 10.40 Capital Improvements Improvement District 1 .83 ' .83 Improvement District 2 2.08 Improvement District 3 - 5.42 Improvement District 4 .42 .42 General Tax Levy 1.31 1.31 Subtotal 4.64 7.98 TOTAL $14.54 . $18.38 18 DISTRICT POLICY IS ESTABLISHED BY A BOARD OF DIRECTORS The legislative and policy making responsibilities of the District are assumed by a five member Board of Directors that is elected by division for overlapp- ing four year terms. The policy development and implementation activities of the Board are supported through the creation of committees composed of two or three Board members and supported by District staff. These committees are charged with the responsibility for developing specific recommendations for consideration by the full Board of Directors. For example, the Finance Com- mittee, with the assistance of District staff, is responsible for the develop- ment of the preliminary annual budget which ultimately is revised, modified and approved by the full Board. DAILY MANAGEMENT OF DISTRICT OPERATIONS IS THE PRINCIPAL RESPONSIBILITY OF THE GENERAL MANAGER The District established the General Manager position on a full-time basis-in 1972. This position was filled until the retirement of the incumbent in Jan- uary of 1977. Upon the retirement of the incumbent, the position was filled on an interim basis by the Assistant General Manager for approximately one year, at which time he left the position for health reasons. As an interim measure, the District is contracting with an outside engineering consultant, who also serves as District Engineer, to assume the responsibilities of Acting General Manager. The General Manager supervises the daily activities of the District through two division supervisors, and typical duties include the following: . Implement District legal responsibilities and policies as established by the Board of Directors. . Supervise overall District operations, including the provi- sion of technical assistance and support to District staff. . Prepare operating and capital improvement budgets, and related financial information, for Board consideration. . Prepare reports and recommendations concerning District policies and operations for Board consideration. . Confer with representatives of the public and private sector, and undertake negotiations.as necessary to coordi- • nate and implement District programs and policies. . Develop, implement and administer District personnel poli- cies and programs. THE DISTRICT HAS 10 AUTHORIZED FULL-TIME POSITIONS AND ALLOCATES STAFF RESPON- SIBILITIES BETWEEN TWO DIVISIONS As indicated on Exhibit 1, on page 22, the District has 10 authorized full- time positions. With the exception of the General Manager who coordinates all District activities, District staff is allocated between the Administrative and Field Operations Divisions. In addition, the Board has retained outside assistance to perform engineering, legal, and some financial services. 20 THE ADMINISTRATIVE DIVISION IS RESPONSIBLE FOR ALL ACCOUNTING, CUSTOMER BILL- ING, AND GENERAL ADMINISTRATIVE SUPPORT ACTIVITIES The Administrative Division has responsibility for all accounting, customer billing, and general administrative activities, including administrative and clerical support to the Board of Directors. These responsibilities are car- ried out by four office employees as follows: . Office Manager/Assistant General Manager This position reports directly to the General Manager and has responsibility for the day-to-day management of all Administrative Division activities including: - Supervision, training, and evaluation of all office staff. - Responsibility for all customer service and billing activities. - Responsibility for a variety of finan- cial management activities including: .. Provision of assistance to the General Manager in the prepara- tion and administration of the annual budget. .. Cash management. .. General accounting including accounts payable, payroll, accounts receivable, and fixed .assets. 21 Exhibit 1 CARLSBAD MUNICIPAL WATER DISTRICT Organization Chart roro Field Operations Systems Superintendent (1) Leadman . (1) Meter Reader (1) Water Operator I, II (2) Board of Directors General Manager Consultants Engineering Legal Financial Public Relations Administration Office Manager/ Assistant General Manager (1) Executive Secretary (1) Billing Clerk (1) Receptionist (l) .. Preparation of financial reports. .. Coordinating the conduct of the annual audit with the outside auditor. .. Supervision and coordination of bond payments and maintenance of appropriate records. .. Coordination of District finan- cial service needs with banks. - Supervise and coordinate customer ser- vice and billing activities. - Supervise and coordinate general cleri- cal support to the Board of Directors, General Manager and District staff. Of the tasks described above, the vast majority of the Office Manager/Assistant General Manager's time is dedicated to financial management activities. The balance of her time is spent in general office management and the supervision and training of office personnel. . Executive Secretary This position devotes nearly full-time to general clerical j support to the General Manager and Board of Directors. Duties include the preparation of agendas, minutes, resolu- tions, general correspondence, typing, filing, and respon- sibility for records management and retention. In addi- 23 tion, this position also provides back-up assistance on the telephone and counter and prepares the daily bank deposit and types warrants. Receptionist Approximately 50% of the time associated with this position is devoted to customer service and billing activities, in- cluding responding to customer inquiries on the telephone and over the counter, stuffing and mailing utility bills, and opening and sorting utility bill payments by meter book. The balance of the position's time is dedicated to pricing work orders, posting inventory records, verifying and filing bond accounts, and general office, duties includ- ing typing and filing. Billing Clerk This position is allocated on a full-time basis to customer service and billing activities. The tasks assigned to this position include the following: - Check meter book calculations for accuracy and compute water bills. - Prepare water bills including typing the address on the bill, entering billing information into the billing machine, balancing the meter books, preparing a recapitulation report and stuffing and mailing the bills. 24 - Prepare work orders for new meter in- stallations and field repairs. **»„,„•- Prepare service requests for turn-ons and turn-offs. - Process customer deposits. - Prepare delinquent lists and follow-up on collections. THE FIELD OPERATIONS DIVISION IS RESPONSIBLE FOR THE OPERATION, MAINTENANCE, AND REPAIR OF THE DISTRICT'S WATER SYSTEM The Field Operations Division is responsible for the operation, maintenance, and repair of all water system facilities including transmission and distribu- tion lines, distribution reservoirs, Squires Dam, chlorinators, hydrants, and meters. In general, the District's method of operation has been to perform - the routine operation, maintenance, and repair work with District employees and to supplement District employees with oucside contractors and the rental of heavy equipment on major repairs such as main line leaks. The District contracts for all new construction and a variety of other field services such as water meter testing and repair, some water quality testing, and major vehi- cle repairs. More specifically, the Division's day-to-day responsibilities include the following: . Determine the amount of v/ater to be purchased from the San Diego Water Authority and insure that it is delivered. . Operate and perform routine maintenance on the treatment and storage facilities including chlorinators, pressure reducing valves, storage and distribution reservoirs, and 25 pumping station. Maintenance and repair work is performed by District staff and is augmented by outside contract as required. . Conduct water quality tests including the collection of samples and the performance of tests for color, turbidity, and chlorine residuals. Bacterial tests are conducted by an outside con- tractor. . Conduct the annual backflow prevention testing program. The District is just in the process of initiating this program. One employee is certified to conduct the tests and a second will be certified shortly. Currently there are 10 backflow devices in service with 50 additional devices in the process of installation. . Install all water meters and perform limited meter testing and repair work. More specifically, District employees repair and test all 5/8" meters and the less severely damaged meters up to 4" in size. The testing and repair of the more severely dam- aged and larger meters are performed by an outside contractor. . Perform a variety of customer service related tasks that include: . - Reading all water meters. This requires about eight man days per month. - Responding to customer complaints regarding water leaks, high meter readings and the like. - Turning water services on and off. 26 . Maintain and repair the transmission and distribution lines with assistance from outside contractors as required. As a general rule, water line repairs are performed by District staff with -assistance from outside contractors and the ren- tal of heavy equipment. For example, on breaks to steel pipe, the District contracts for the necessary heavy equip- ment, operator, and v/elder, and performs the repair work with District staff. The responsibilities outlined above are performed by a staff of five field maintenance employees as follows: .. Systems Superintendent This position reports directly to the General Manager and is responsible for the routine operation, maintenance and repair of all water system facilities. The Systems Super- intendent is required to have a Grade II certification as a water system operator pursuant to State regulations, and his duties include the following: - Implements District management poli- cies, procedures and priorities. - Assigns, supervises, trains, and evalu- ates subordinate field personnel. - Assumes responsibility for personally performing water quality tests and lo- cating District water lines. 27 - Insures that District equipment is pro- perly maintained by District personnel and coordinates major repair work with outside garages. - Assists in budget preparation and administration. Leadman This position is expected to perform the full-range water system operation and maintenance and to serve as the Acting Systems Foreman as required. Specific duties include: - Routine maintenance and repair of pres- sure regulating valves. - Raise and paint valve cans. - Install and repair water services. - Maintain and clean vault? and reser- voirs. - Conduct daily checks of reservoirs when the Water Operators are reading meters. - Assist in supervision of field mainten- ance operations. Meter Reader This position is dedicated on a full-time basis to meter related activities and is required to be certified to per^ form backflow prevention tests. Specific duties include: 28 - Meter reading. - Testing and repair of all 5/8" meters and the less -severely damaged larger meters up through 4" in size. - Maintenance and cleaning of meter boxes. - Conducting backflow prevention tests. - Assisting in all other maintenance and repair tasks. - Responds to customer complaints and collecting delinquent accounts. Water Operator The two Water Operator positions are expected to perform the full-range of water system operation, maintenance, and repair tasks. Specific assigned duties include the follow- ing: - Inspect reservoirs on a daily basis including the reading of the elevation levels in the tanks and adjusting the valves to regulate the amount of water in the reservoir. This task requires approximately four man hours per day. - The balance of their time is dedicated to the routine maintenance and opera- tion of the water system, facilities, and meter .reading. When time permits, these employees also flush water lines and turn valves. 29 ADMINISTRATIVE SUPPORT ACTIVITIES ARE PROVIDED THROUGH A COMBINATION OF DIS- TRICT STAFF AND OUTSIDE CONTRACTORS Administrative support services are performed through the combined use of Dis- trict staff and a variety of contracts with outside consultants and contract- tors. The District's approach to the provision of administrative support ser- vices is similar to that taken with water system construction and maintenance, in that the more routine tasks are performed by District staff, while the more complex work and major one-time projects are performed by contract. PERSONNEL SERVICES ARE THE RESPONSIBILITY OF THE GENERAL MANAGER The General Manager has direct responsibility within Board policy for all per- sonnel matters including selection, disciplinary actions, compensation and training. . .FINANCIAL SERVICES ARE PROVIDED BY THE ADMIN1STRATIVE DIVISION The District's financial services are provided by the District's administra- tive staff and include: . Revenue administration . Cash management . General accounting . Preparation of financial reports 30 The use of outside financial assistance is limited to the conduct of the an- nual audit and one-time special projects such as the preparation of rate stu- dies and the services required for the long-term financing of capital improve- ments. THE MAJORITY OF DISTRICT CUSTOMERS ARE BILLED BI-MONTHLY The District bills all of its 2,900 plus water customers on a bi-monthly basis, except about 600 major commercial and agricultural users who are billed monthly. As a result, the District bills about 1,800 customers per month. The billing process is designed so that meters are read and customers are billed in a batch system. The billing is performed manually and involves the following: ' , The Meter Reader with the assistance of other field main- tenance personnel read the meters, enter the amount of water consumed in the meter book, and compute the consump- tion. . The Billing Clerk - Verifies the Meter Reader's computa- tions and rates the meter books. - Calculates each costumer's bill includ- ing the addition of penalties and arrears. - Prepares the bill through the use of an NCR billing machine. - Prepares water consumption report. 31 . The Receptionist - Prepares the bills for mailing. - Receives and processes payments both over the counter and through the mail. . The Billing Clerk - Posts payments and balances the accounts by meter book. - Prepares a delinquent list and follows up on delinquent accounts. THE RESPONSIBILITY FOR PURCHASING HAS BEEN ASSIGNED TO THE GENERAL MANAGER The purchase of District supplies, materials and equipment is the principal responsibility of the General Manager. In broad terms, purchase orders are initiated by either the General Manager, Offi.ce Manager, or Systems Superin- tendent. The General Manager has the authority to approve purchase orders, under $500, while all those over $500 must be approved by the Board of Direc- tors. " EQUIPMENT MAINTENANCE ACTIVITIES ARE PERFORMED BY DISTRICT EMPLOYEES WITH THE ASSISTANCE OF OUTSIDE GARAGES The District's field maintenance personnel perform all routine maintenance to District equipment including lubes, oil changes, and tune-ups. Major repair work is performed by outside garages. 32 PROFESSIONAL ENGINEERING SERVICES ARE PROVIDED BY A CONSULTING ENGINEER The District Board has contracted with a consulting engineer to provide var- ious engineering services at a total cost of $54,000 as follows: . Routine engineering services such as attendance at Board meetings and general engineering assistance are provided on a retainer basis. These costs totaled approximately $14,000 in fiscal year 1977-78. . The engineering tasks associated with private developments such as plan checks, plan approvals, and construction in- spection are provided on an hourly fee basis plus reim- bursement for out-of-pock*et expenses and are paid by the developer through trust accounts established by the Dis- trict. These costs totaled approximately $30,000 in fiscal year 1977-78. . The engineering tasks associated with District sponsored construction and maintenance projects such as design, con- struction inspection, and construction management are pro- vided on an hourly fee basis or fixed price basis depending on the size of the project; These costs totaled approxi- mately $10,000 in fiscal year 1977-78. LEGAL SERVICES ARE PROVIDED BY A PRIVATE LAW FIRM As with engineering services, the Board has retained the services of a private law firm to perform a variety of legal services including the attendance at 33 Board meetings, providing legal consultation to the Board and staff, represent- ing the District in various legal matters, and preparation of required legal documents. Routine services are provided on a retainer basis at a cost of $11,400 per year, plus reimbursement for expenses. Non-routine legal services such as representing the District in an unanticipated law suit are paid on an hourly fee basis plus reimbursement for out-of-pocket expenses. A VARIETY OF INCIDENTAL SERVICES ARE PROVIDED BY OUTSIDE CONTRACTORS In addition to engineering, legal, and vehicle maintenance, a variety of inci- dental services are provided to the District by outside contractors. The type of service and cost to the District are as follows: Service «- Annual Cost Answering Service $ 630 Radio Maintenance 575 Gardening and Custodial Services 1,680 TOTAL ' $2,885 THE DISTRICT DOES NOT CURRENTLY UTILIZE DATA PROCESSING EQUIPMENT The District currently does not use data processing applications in the con- duct of its business. The District is, however, exploring the feasibility of utilizing data processing equipment and has budgeted an initial $10,000 for the acquisition of the necessary software and equipment. 34 THE DISTRICT OPERATES ITS OWN COMMUNICATIONS EQUIPMENT / The District operates its own radio equipment from its administrative office facilities. The equipment is used to contact District employees who are in the field. Outside normal business hours, emergency calls are received by an answering service that contacts District staff as appropriate. Field em- ployees carry pagers so that they can be contacted to respond to emergency calls on a 24-hour basis. DISTRICT FINANCE IN PERSPECTIVE Currently, the District finances the operation and maintenance of the water system with water charges and its capital improvement program with property tax revenues. The passage of Proposition 13 has severely restricted the Dis- trict's property tax revenues and will require the District to develop an alternative method for financing capital improvements. In broad terms, the adoption of Proposition 13 permits only the County to levy a general tax rate and specifically precludes any other unit of local govern- ment, including the CMWD, from doing so. The only exception to this require- ment are tax rates levied for the purpose of meeting debt service requirements of general obligation bonds approved by the voters prior to the passage of Proposition 13. Proposition 13 was very vague, however, as to how the pro- perty tax revenues generated by the County's general tax rate were to be dis- tributed among the various local government entities including CMWD. As a consequence, the State Legislature has adopted special implementing legisla- tion that provides, in general terms, that each taxing agency receive a share of the total property tax revenue collected in proportion to the percentage .35 their tax rate represented of the total tax rates levied by all taxing agen- cies. Based on this legislation, the District's share of the County general tax revenue in 1978-79 was $116,301, which is about 45% of the previous year's The practical impacts of Proposition 13 on the District would seem to be the following: . The District may continue to levy the tax rates against each of the four improvement districts to finance the debt service requirements of the voter approved general obliga- tion bonds passed prior to the adoption of Proposition 13. . The District may not, however, finance future capital pro- jects from tax supported general obligation bonds. With the above in mind, the following will place the District's overall finan- cial position in perspective. THE DISTRICT HAS DEBT OBLIGATIONS OF $3.2 MILLION The District has a total debt obligation of $3,198,000. Of the total, $2,098,000 is long-term general obligation bonded debt against the District's four improvement districts with the final payment due in 1991. Debt service for 1978-79 will amount to $215,728 for principal and interest. The bonds are being financed by a special voter approved property tax levy against each of the four improvement districts as follows: .36 Rate Per $100 A.V. Improvement District 1 0.04$ Improvement District 2 • 0.10$ Improvement District 3 0.26$ Improvement District 4 0.02$ The remaining $1.1 million represents the District's contribution to the con- struction of the Tri-Agency Pipeline and South Aqueduct Connection. The Dis- trict had originally planned to finance the obligation out of the revenues from its 0.14$ general tax levy. With the passage of Proposition 13, however, the District is no longer permitted to levy a general tax rate and is now exploring alternative financing methods such as the imposition of development fees and the sale of water revenue bonds. In the meantime, the District has sold a $600,000 and $500,000 five-year notes and plans to finance the debt service on this obligation with the District's share of the County's general property tax levy and other water revenues. THE DISTRICT'S PRINCIPAL SOURCE OF REVENUE IS DERIVED FROM WATER SALES . A major portion of the District's revenue can be attributed to water sales. The other significant source of revenue has historically been the property tax. However, now that the District may no longer levy a general property tax rate, the only property tax revenue the District can rely on over the long term is that generated by the Countywide 1% and that generated by the tax rates levied against each of the four improvement districts. Exhibit II on the following page summarizes District revenues as reported in the annual . audit and .budget documents. .37 An analysis of the District's revenue history suggests the following conclu- sions: . The District's revenues from water sales have increased steadily between 1973-74 and 1977-78, and are expected to increase again in 1978-79. It should be noted, however, that the magnitude of these increases are, in reality, a reflection of increased consumption and the cost of water to the District. . Water sales revenues have represented about 63% of the Dis- trict's revenue over the past five years. The relative importance of water sales are likely to increase in the ^ -• • • wake of Proposition 13. --:•- • . The decline in property tax reveues in the current fiscal year represents a significant revenue shortfall to the ~ . ; ;; ~ District. '.''.'.'•.'. '...'•' DISTRICT OPERATING EXPENDITURES HAVE INCREASED SIGNIFICANTLY Between fiscal years 1973-74 and 1977-78, District expenditures have increased significantly. Exhibit III on the following page summarizes District operat- ing expenditures.as reported in the annual audit and budget document. 38 CO I cn CMooo CM LOOOr-. «\ CO oCO 10CO r-TcnCM roCOCM Lf) ro O A LOCO r-.t—i •V10 cn LOovo COLOoo ooocn r-.iUD CMvoCM enen LOO CM ooCO LO CM O LOr^LO LO CMcr> LO ooCT> ro o10 ID LO LO OO cn COLO i LO en LOen LO 8 COenLO •Ncn LOi-Hcn cn COoo rcnCMcn oo OID cn CM10 o r-l CO CMOO COCM CM LO CM LO o LO o az. 3: OJ•M :?••- _j cJD cC <D •f- (X >JT I— i O>x o o;LU l— i Q•a:COoo LO cn ioo en cn CM ooo CO LOoo cn LOr-lin o LO *± CMcn CM CM CO IDOO LO COOO oo CMLO CM oo r-- 00«\ r-lCO oo oo OO F--f~» LO CO•a- cn LO LOo ooo cnOc\ CM COoo CDooIDf\ LOCM CM O LOr-. oo cr.c •r~ •*->res 5-O>O.o I/)O) OO CD IOC o •ocro COO)01feJCo cu oo $_ r- 3 CU ro co •<-> C 5rO CU ro 3 Q- —I cuor cutocCD CU •I— (O co •r— C COcu cOJ cuat cnc: (O cun.o rO COcursccu CU C£ i-O) COcuXrO CUQ. O d. CUa rO UJ COcu cu 4-> CCUEcu COi- JD CUct: LUo 0)ex g M-O CUCO CU CO QJ CUCJo Q. "O oCO COcursc:cu cuo: fcj= o ro O 00UJ LU UJa: n;LU Q2: oo o UJo_o 39 An analysis of the District's expenditure history reveals that the cost of water consistently represents over 75% of the District's maintenance and operation costs, and that the cost of water to the District has increased approximately 86% since fiscal year 1973-74. All other operating costs have increased at a moderate rate. .40 Exhibit III CARLSBAD MUNICIPAL WATER DISTRICT Expenditures . 1973-74 1974-75 1975-76 1976-77 1977-78 Operating Expenses Cost of Water Sold Pumping Water Treatment Transmission and Distribution Customer Acctg. Administrative and General ' TOTAL OPERATING EXPENSES $441,268 1,992 10,178 71,224 2,197 123,350 $650,209 $461,375 1,667 19,154 86,788 10,471 140,758 $720,213 $534,969 2,248 17,245 67,639 26,606 138,222 $786,928 $645,636 3,086 19,786 86,421 25,654 173,656 $953,639 $ 820,873 3,046 12,246 67,607 29,031 173,828 $1,106,631 41 Chapter IV THE CITY OF CARLSBAD WATER DEPARTMENT -.A PROFILE THE RESPONSIBILITY OF THE CITY WATER DEPARTMENT IS THE PROVISION OF RETAIL WATER SERVICE TO APPROXIMATELY 5,700 RESIDENTIAL, COMMERCIAL, AND AGRICULTURAL WATER CUSTOMERS Between about 1915 and 1958, retail water service was provided to a 7,000 acre service area known as the "Old Carlsbad Area" by the Carlsbad Mutual Water Company and the Terramar Water Company. In 1958, the City purchased the two water companies with the proceeds from the sale of a $767,000 revenue bond issue and established a City water utility. The City currently provides retail water service to approximately 5,700 resi- * dential, commercial/industrial, and agricultural customers with an annual consumption in calendar year 1978 of 4,828.2 acre feet. The number of cus- tomers and consi'nption by category is as follows: Type Number % of Total Consumption % of Total Residential 5,156 90.5% 3,724.3 A/F 77.1% Commercial/Industrial 468 8.2% 766.4 A/F 15.9% Agricultural 75_ ' 1.3% 337.5 A/F 7.1 TOTAL 5,699 4,828.2 I/O 42 THE CITY'S WATER SYSTEM CONSISTS OF A VARIETY OF DISTRIBUTION FACILITIES The City's operating water system consists of a variety of distribution facilities as follows: • . Three distribution reservoirs with a combined capacity of 8.0 M.G. . Approximately 93 miles of transmission and distribution pipelines. . Approximately 650 fire hydrants. -. Three pumping stations as follows: - Buena Vista - Ellery (This station will no longer be used when the Tri-Agency pipeline is completed, but will continue to be maintained for emergencies.) - Number 5. This station is currently in a standby status . Nine pressure reducing stations. . Approximately 1,620 gate valves. In addition to the facilities, listed above, there are a number of facilities in a custodial status including: 43 . Wells in San Luis Ray Valley - Aqua Hedianda Creek and related pumping and transmission facilities. . Lake Calevara storage facility. . Water rights to 3,400 A/F per year in San Luis Rey Valley. The water qualify is such that it is not usable at this time. THE TOTAL COST OF WATER TO THE CITY IS DETERMINED BY CMWD The sole source of water to the City is CMWD. The cost of water to the City is determined by CMWD and includes a unit water charge established by the San Diego Water Authority (SDWA), plus, an override charge and chlorination charge established by CMWD. For example, the current cost per acre foot of water to the City in January, 1979 was $146.40 and can be broken down as follows: SDWA Unit Water Charge* $131.40 Override 14.00 Chlorination 1.00 Total Cost/AF $146.40 The purpose of the overri'de charge is to defray the cost of operating and maintaining that portion of CMWD storage and transmission system attributable to the volume of water transported by CMWD to the City. The chlorination charge is established by CMWD to defray purification costs of the water deli- vered to the City. *The unit water charge established by SDWA varies from month to month based on the cost of delivering the water to CMWD. 44 . In addition to the above, CMWD also charges the City for the costs associated with operation and maintenance of the transmission pipelines located in CMWD's Improvement District 3 that benefit City water customers. It should be noted, however, that these .costs are not billed by the City to the customers that benefit directly from the facilities. Rather these charges become part of the City's total cost of water and are distributed proportionately among all City water customers. THE COST OF VJATER TO THE CITY'S RETAIL CUSTOMERS CONSISTS OF WATER CHARGES. CMWD IMPROVEMENT DISTRICT PROPERTY TAX LEVIES. AND A PROPORTIONATE SHARE OF THE COUNTY'S GENERAL PROPERTY TAX LEVY SUBVENTED TO CMWD The cost of water to City retail customers consists of water charges levied by the City and property taxes imposed by CMWD. ... . Mater Charges Consist Of A Ready-To-Serve Fee And A Unit Charge For Water The City's water charges consist of a ready-to-serve fee and a unit charge for water as follows:* - Ready-To-Serve Fee The ready-to-serve fees are based on the size of the customer's meter and are as follows: * The City is currently in the process of revising its water charges. 45 Meter Size Monthly Charge 5/8" $ 3.85 3/4" 4.70 • 1 " 6.35 1-1/2" 8.00 2 " 13.00 - Unit Water Charge The unit water charge is the cost of water per 100 cubic feet or 748 gallons and is currently 43$ per unit for the first 200 units and 28$ per unit there- after. City Water Users Also Pay Property Taxes To CMWD The City of Carlsbad service area is included in the general taxing area of CMWD as well as Improvement Districts 1 and 4. As indicated in Chapter III, CMWD may no longer levy a general tax rate since the passage of Proposition 13, but does receive a proportionate share of the County's general property tax revenue which will amount to about 45% of CMWD's previous year's total in 1978-79. The practical impact on a City property owner is that he or she now pays general property taxes to CMWD equal to about 4555 of the amount he or she paid the previous year to CMWD. In addition, City residents also pay tax rates for CMWD Improvement Districts 1 and 4 which are currently v*"'' 0.04$ and 0.02$ per $100 assessed value respectively. 46 The Average Monthly Cost Of Water To A City Customer Includes Water Charges And Property Tax Payments The average monthly cost of water to a City customer con- sists of City water charges and property tax payments to CMWD. Based on a set of uniform assumptions regarding market value, assessed value, type of customer, water consumption, and meter size, the following conclusion can be reached regarding the cost of water to a residential customer. Because the City uses approximately 8<t of its 43<£ unit water charge to defray debt service on its water revenue bonds, that amount has been shown separately along with the tax payments to CMWD which are also used for debt service and capital improvements. (The assumptions and detailed calculations supporting this example are included in; the..Appendix.) Maintenance and Operation . Ready-To-Serve Fee -. $ 3.85 Unit Water Charge (M&O) 5.25 " Subtotal 9.10 Capital Improvements. Improvement District 1 .83 Improvement District 4 .42 General Tax Levy . 1.31 Unit Water Charge (Debt Service) 1.20 Subtotal ' 3.76 TOTAL ' $12.86 47 CITY POLICY IS ESTABLISHED BY THE CITY COUNCIL The legislative and policy making responsibilities of the City are assumed by a five member City Council. The City Council makes policy decisions for a wide range of municipal services including water regarding service levels, capital improvements, finances and the like. The City Council implements its policies and programs through an appointed City Manager who is responsible for the administration and management of the City organization. THE UTILITIES AND MAINTENANCE DEPARTMENT IS RESPONSIBLE FOR A WIDE RANGE OF MUNICIPAL SERVICES INCLUDING WATER SERVICE The Utilities and Maintenance Department is responsible for a wide range of municipal services including: *'•'.• . Maintenance and operation of the City water system within the City's service area. . Maintenance and operation of the sewage collection system and storm drains within the City's service area. . Maintenance of streets, curbs, and sidewalks on a City-wide . basis. . Maintenance of the City buildings and equipment on a City- wide basis. These activities are performed by a staff of 53 positions allocated among four division: Building Maintenance, Utilities, Streets, and Mechanical Mainte- nance. The department is under the direct supervision of the Director of 48 Utilities and Maintenance who currently reports through the Public Works Administrator to the City Manager. It should be noted, however, that the City Council has recently approved a reorganization plan that will require the Director of Utilities and Maintenance to report directly to the City Manager and will result in the elimnation of the Public Works Administrator position and the reassignment of his responsibilities to the City Manager and Director of Utilities and Maintenance. This reorganization is scheduled to take place by January 1980. DAILY MANAGEMENT OF THE WATER SYSTEM IS THE RESPONSIBILITY OF THE DIRECTOR OF UTILITIES AND MAINTENANCE The Director of Utilities and Maintenance is principally responsible for managing and coordinating the operations and related business affairs of the City's water utility. Approximately one-third of the Director's time is dedi- cated to water related operations and maintenance activities and typical duties include the following: . Implement City's legal responsibilities and policies as they relate to water service. . Supervise overall water operations, including the provision of technical assistance and support to City's staff. . Coordinate water related engineering needs with the City Engineer and Public Works Administrator. 49 . Prepare operating and capital improvement budgets, and related financial information, for consideration by the Public Works Administrator, City Manager, and City Council. . Prepare reports and recommendations concerning water policies and operations. . Implement and administer City personnel policies and programs as they relate to water operations personnel. , Coordinate water related activities with other City depart- ments and divisions, and with outside agencies. The Director's immediate staff consist of a Secretary who dedicates approxi- mately one-third of her time to water-related administrative and clerical duties. The principal water related duties assigned to this position include responding to customer inquiries, pricing work orders, posting invoices to work orders, and general office tasks such as typing, filing, and preparing routine correspondence. THE CITY HAS ALLOCATED 16.5 POSITIONS TO WATER OPERATIONS As indicated on Exhibit IV, the City has 16.5 authorized positions allocated to water operations, in addition to the partial allocation of the Director of Utilities and Maintenance and his secretary. These positions are all assigned to the Utilities Division and are supplemented by other City departments such as Legal, Finance, and Engineering which provide a wide range of water related support services. 50 Exhibit IV CITY OF CARLSBAD UTILITIES DIVISION Organization Chart City Council City Manager Public Works Administrator Director of Utilities and Maintenance (1/3) Secretary (1/3) Utilities Superintendent (1/2) Sr. Eng. Aide (1) Sr. Stenographer Clerk (1) Water Pumping Water Maintenance Meter Water Pump Foreman (1) Water Pump Operator (2) Water Mechanic Maintenance (1) Water Maintenance Foreman (1) Heavy Equipment Operator (1) Sr. Water Serviceman (2) Water Serviceman (2) Meter Shop Foreman (1) Sr. Water Serviceman (1) Water Serviceman (2) THE UTILITIES DIVISION IS RESPONSIBLE FOR THE OPERATION, MAINTENANCE, AND REPAIR OF THE CITY'S WATER SYSTEM The Utilities Division is responsible for the operation, maintenance, and repair of all water system facilities including transmission and distribution lines, pumps and regulators, distribution reservoirs, hydrants, and meters. All these activities are performed by a group of 16.5 employees as follows: . The Utilities Superintendent Is Responsible For All Field Operations Activities The Utilities Superintendent is directly responsible to the Director of Utilities and Maintenance for field operations associated with the water system. This responsibility is carried out through three Foremen who directly supervise the activities of the field crews. In addition, the Utilities Superintendent's immediate staff includes a Senior Engineering Aide and Senior Clerk Stenographer. The responsibilities of the Utilities Superintendent and his immediate staff are as follows: - Utilities Superintendent The Utilities Superintendent's duties involve operational responsibility for both the water system and sewage col- lection system. Approximately one half of the Superintendent's time is allo- cated to the water system and primary duties include: .. Identification of water system maintenance and construction needs. 52 .. Planning, assigning, and directing the three field foremen. • .. Assisting in budget preparation and administration. .. Assisting the City's engineering office in the review of water system plans and the inspection of new facilities. .. Supervision of limited office engineering activities. .. Coordination of water field operations with other City departments and divisions, and with outside agencies. Senior Engineering Aide This position is dedicated on a full- time basis to water related office engineering activities and duties including the following: .. Minor design and drafting of water line improvements. .. Maintain water system as built drawings. .. Assist the City's engineering staff in the review of water system related plans. .. Maintain water system records and maps. 53 ..Prepare water related reports to a variety of regulatory agencies, .. Subject to the review of the City's engineering staff, pre- pare legal descriptions for easements. - Senior Clerk Stenographer This position is responsible for a variety of clerical duties related to water operations and works in coopera- tion with the Secretary to the Director of Utilities and Maintenance. Prin- cipal duties include responding to . customer inquiries, pricing work orders, and general office duties such as typing, filing, and preparing work orders. Responsibility For The Regulation And Control Of The Water Distribution System Has Been Assigned To The Pump Section The Water Pump Foreman and his crew are responsible for the regulation and control of the water distribution system. The Water Pump Foreman's crew consists of two Water Purnp Operators and one Water Mechanical Maintenanceman.* For '* It should be noted that this crew works a 4-day, 10-hour work week and their responsibilities are assumed by water or sewer employees on a standby basis during the weekend. If a water related emergency occurs, employees assigned to water operations are always available on a standby basis 24 hours per day, 365 days per year. • • 54 • practical purposes, the crew works as a team and performs the following duties: - Insures the proper functioning of water pressure and relief valves throughout the system. - Cleans and maintains reservoirs and vaults. - Oversees and maintains telemetering equipment. Major maintenance and repair work is performed by outside contractors. - Collects water samples and performs tests for Ph, chlorides, chlorine residuals, odort turbidity, and color. The complex bacteriological tests are performed by an outside laboratory. - Performs or supervises hydrostatic tests on new water lines. - Performs duties associated with the City's valve maintenance program including valve turning, cleaning, and identification of serious maintenance problems. . Responsibility For The Construction, Maintenance, And Repair Of The Hater Distribution System Is Assigned To The Maintenance Section "**""* The Water Maintenance Foreman is responsible to the Utili- ties Superintendent for the day-to-day activities involved 55 in the construction, maintenance, and repair of the water distribution system. More specifically, the principal responsibilities of this section include: - Installation of water services. . - Connection of new water lines installed by contractors to existing City trans- mission lines. - Perform all repair work to water lines and services with 'the exception of specialized welding which is performed by an outside contractor. - Install water lines that do not exceed $5,000 in value on a project by project basis. All lines that exceed $5,000 in value are installed by outside contractors. The above tasks are accomplished by two small crews; a light crew and heavy crew. In general, the light crew installs new services and performs minor repair work and consists of one Senior Water Serviceman and one Water Serviceman. The heavy crew is normally composed of the Water Maintenance Foreman, one Heavy Equipment Operator, one Senior Water Serviceman, and one Water Serviceman, and is responsible for installing fire hydrants and repairing leaks. When there is a major line break or a construction project, all employees function as one crew under the supervision of the Water Maintenance Foreman. The section's total staff includes six positions as follows: 56 Position Title Number of Positions Water Maintenance Foreman . 1 .^ Heavy Equipment Operator 1 Senior Water Serviceman 2 Water Serviceman 2 . The Meter Section Is Responsible For Meter Reading, Repair And Replacement, Testing Backflow Prevention Devices, And Responding Jo Customer Complaints The Meter Section has responsibility for meter reading, re-reads, customer complaints, meter repairs, and replace- ments and installations, connections and disconnections of water service, and the testing of backflow prevention devices. The activities ef this section are closely related to those of customer billing staff in the Finance '*«»».„•• Department. The section is staffed by a Meter Shop Fore- man, one Senior Water Serviceman, and two Water Service- men. Specific duties assigned to this section include the following: - Read approximately 5,700 meters each month and record readings in meter books. This requires approximately 18, 10-hour man days per month. It should . be noted that the City intends to change over to bi-monthly billing prior to January, 1980, with the exception of about 600 high consumption accounts that will continue to be billed on a monthly basis. 57 Maintain water consumption and meter records. Conduct all tests of backflow preven- tion devices. According to City staff, there are approximately 110 backflow prevention devices to be inspected on an annual basis. Responsibility for conducting the tests has been assigned specifically to the Meter Shop Foreman and Senior Water Serviceman, both of whom are certified inspectors. In cooperation with the Finance Depart- ment, respond to a variety of customer inquiries including: .. High water bill complaints. .. Water pressure complaints. .. Turn-on and turn-off of water services. Install all new water meters and exchange existing meters. Test, repair, and maintain all water meters up to 2". Meters that are 2" and larger are tested and repaired by an outside contractor. 58 THE ADMINISTRATIVE SUPPORT SERVICES REQUIRED BY THE WATER SYSTEM ARE PROVIDED BY THE VARIOUS CITY DEPARTMENTS The administrative support services required by the water system are provided by the various City departments as appropriate. PERSONNEL SERVICES ARE PROVIDED BY THE PERSONNEL OFFICE All personnel management services are provided by the Personnel Office including labor relations, selection, .classification, compensation, training, safety, fair employment, and the administration of manpower programs and the self-insurance program for workers' compensation. The City's Personnel Office staff utilizes limited outside consulting assistance for major one-time pro- jects, test development, special training programs, and the administration of the self-insurance program for workers' compensation. In broad terms, the above services are provided to all City departments and the related impact of the 16.5 positions assigned to the water utility on ihe work load of the Personnel Office is minimal. ALL' FINANCIAL SERVICES AS WELL AS CUSTOMER BILLING AND DATA PROCESSING SERVICES ARE PROVIDED BY THE FINANCE DEPARTMENT All financial services as well as customer billing and. data processing are provided by-the Finance Department for all City departments. Specific services provided to the water utility include: . Provision of financial advice. . Cash management and investments. 59 . Budget preparation. . General accounting services including accounts payable, payroll and. fixed asset accounting. . Financial reporting. . Revenue forecasting and administration. . Customer service and billing. . Expenditure control. It is estimated that the performance of the above services requires the equi- valent of three full-time account clerks positions with occasional assistance from the Finance Director and Assistance Finance Director. CITY WATER CUSTOMERS ARE BILLED MONTHLY Customer billing services have been computerized and are performed by two account clerks assigned to the Finance Department. The City bills 5,700 water customers per month on a cycle system. (As indicated previously, the City intends to change over to bi-monthly billing by January, 1980.) Broadly, the steps involved in the billing and collection process include the following: . Field maintenance personnel assigned to the Meter Section of the Utilities Division read the meters and enter the readings into the .meter books. 60 . The consumption data is then entered into the automated billing system which automatically computes the consump- tion, prepares the bills, and posts the accounts. . Payments received by mail are batched and processed by the computer and are automatically posted to the customer accounts. . Payments made in person are received by the cashier and are posted by the computer to the appropriate customer account. In addition to the billing responsibilities described above, the Finance Department staff also performs routine customer service activities such as processing turn-ons, turn-offs, delinquent accounts, and customer complaints. PURCHASING IS CONTROLLED BY THE PURCHASING DEPARTMENT The Purchasing Department is responsible for the procurement of all services, supplies, and equipment for the City operations including water. This respon- sibility is coordinated with appropriate staff at the departmental level. LEGAL ASSISTANCE IS PROVIDED BY THE GITY ATTORNEY'S OFFICE The City Attorney and his staff of one Assistant City Attorney and one Legal Secretary provide all basic legal services required by the City including those of the water utility. The City Attorney's staff is augmented by outside legal counsel as required. 61 ENGINEERING SERVICES ARE PROVIDED BY CITY STAFF All engineering services, including those required by the water utility., are the responsibility of the Engineering Division. This division is under the direct supervision of the City Engineer who reports to the Public Works Administrator. It should be noted, however, that as a result of a recently approved reorganization, the City Engineer will report to a newly created position of Development Services Director, who will be responsible for plann- ing and building, as well as engineering. Services provided by the Engineer- ing Division to the water utility include: . Review of water system engineering plans prepared by developers. . . . Inspection of v/ater system improvements installed by developers. . Contract administration for City financed projects. . Directing the work of outside engineering consultants. As indicated on Exhibit V, the City has 19 authorized positions allocated to the Engineering Division. In addition to the general advice and assistance provided to the water utility by the City Engineer, it is estimated that approximately 1 full-time equivalent engineering position is allocated to water related engineering work as follows: . Approximately h of an Associate Civil Engineer's time is dedicated to water related capital projects. 62 Exhibit V CITY OF CARLSBAD ENGINEERING DIVISION Organization Chart Current Development Prin. Civil Engineer (1) Asst. Civil Engineer (2) Const. Inspector (3) Sr. Eng. Aide (1) Public Works Administrator City Engineer (1) Capital Program Prin. Civil Engineer (1) Admin. Asst. (1) Secretary (1) Sr. Steno Clerk (1) Transportation Prin. Civil Engineer (1) Sr. Eng. Aide (1) Design Assoc. Civil Eng. (1) Assist. Civil Eng. (1) Sr. Eng. Aide (2) Contract Administration Const. Sup. (1) Sr. Const. Insp. (1) Sr. Eng. Aide (1) . Approximately % of an Assistant Civil Engineer's time is dedicated to review of water related aspects of private '**,„..,development applications. . Approximately h of a Construction Inspector's time is dedicated to the inspection of water related capital projects. The above services are augmented by the office and field engineering work per- formed by the Senior Engineering Aide assigned to the Utilities Division. Special one-time-engineering projects such as the preparation of water master plans are performed by outside engineering consultants. BUILDING AND EQUIPMENT MAINTENANCE"ARE THE RESPONSIBILITY OF THE UTILITIES AND MAINTENANCE DEPARTMENT The Utilities and Maintenance Department is responsible for the maintenance and repair of City equipment and buildings, including those that belong to the City water utility. These responsibilities are performed by the Mechanical Maintenance Division and Building Maintenance Division as follows: . Mechanical Maintenance This division is"responsible for performing the vehicle maintenance and limited repair tasks below. Major repair work such as rebuilding engines and transmissions and body work is done by outside garages, - Preventive maintenance including oil changes, lube jobs, tune-ups, and replacement of parts. 64 - Replacement of engines. - Distribute and maintain City's gasoline supply. The tasks described above are performed by a staff of five including a Mechanical Maintenance Foreman, three Equipment Mechanics, and one Garage Attendant. Each City service, including water, is charged a propor- tionate share of the total costs of operating the City garage including salaries, maintenance and operations costs, parts, and outside labor. . Building Maintenance "' • This division is responsible for the maintenance of all.. City buildings. The tasks performed include general main- tenance and repair, remodeling, and routine janitorial services. These services are performed by a staff of four including a Building Maintenance Foreman, one Public Works Leadman, and two Custodians. COMMUNICATIONS SERVICES ARE PROVIDED BY CLERICAL STAFF ASSIGNED TO THE UTILITIES AND MAINTENANCE DEPARTMENT The clerical staff assigned to the Utilities and Maintenance Department operate the radio equipment located at the City corporation yard. The equip- ment is used to contact department employees, including those assigned to water, who are in the field. Outside normal business hours, the City Police Department receives all emergency calls and dispatches water personnel as appropriate. The radio is maintained by an outside-contractor. 65 THE CITY HAS A WATER RELATED DEBT OBLIGATION OF $2.2 MILLION The City has a total water related debt obligation of $2,202,000 in revenue bonds with authority to issue an additional $575,000. Debt service for 1978- 79 will amount to $178,884 for principal and interest. The final payment will be due on the existing debt in 1990. THE CITY'S PRINCIPAL SOURCE OF WATER REVENUE IS FROM WATER SALES Almost all of the City's water revenue can be attributed to water sales. The only other significant revenue source has been investment earnings. Exhibit VI on the following page summarizes City water revenues as reported in the annual audits from 1973-74 through 1977-78. A review of this revenue history indi- cates that water sales consistently represent 90% or more of total revenues and that water sales revenues have increased approximately 32% since fisal year 1973-74. CITY OPERATING EXPENDITURES HAVE INCREASED SIGNIFICANTLY Since fiscal year 1973-74, City water related operating costs have increased significantly. Exhibit VII on page 68 summarizes City water related operating expenditures as reported in the annual audits from 1973-74 through 1977-78. An analysis of the City's expenditure history reveals that the cost of water consistently represents over 55% of the City's maintenance and operation costs, and that the cost of water to the City has increased approximately 55% since fiscal year 1973-74. 66 Exhibit VI CITY OF CARLSBAD Water Revenue 1973-74 1974-75 1975-76 1976-77 1977-78 Water Sales $ 994,650 $1,026,883 $1,160,260 $1,169,248 $1,238,171 Other Revenue 14,087 18,925 37,669 33,607 43,527 Interest 42,722 67,161 59.405 68,498 106.497 TOTAL $1,051.459 $1.112,969 $1,257,334 $1,271.353 $1,388,195 67 Exhibit VII CITY OF CARLSBAD Hater Expenses 1973-74 1974-75 1975-76 1976-77 1977-78 Operating Expenses Production and Purification^) Transmission and Distribution General and Administrative $373,231 $401,070 $443,433 $511,574 $ 589,258 127,342 186,540 188,762 206,931 234,366 140,118 159,652 194,735 178,735 206,093 TOTAL OPERATING EXPENSES ' $642,£91 $747,262 $826,794 $897,240 $1,073,717 1. Approximately 90% of these costs are attributable to the purchase of water from CMWD. 68 Chapter V ORGANIZATION PLAN FOR A COMBINED WATER OPERATION It is the purpose of this portion of the report to develop an orgnaization plan for the creation of a combined water operation through the establishment of the Carlsbad Municipal Water District as a subsidiary district of the City. THE DISTRICT MAY BE ESTABLISHED AS A SUBSIDIARY OF THE CITY The District Reorganization Act provides that a district may be established as a subsidiary district of a city if 70% or more of the taxable or assessable land area is within the boundaries of the city; and if-70% or more of.the registered voters of the district reside within "the city. A careful review of the records of the County Assessor and and County Registrar of Voters indicate that the Carlsbad Municipal Water District meets both of these requirements. More specifically: . 99.54% of the registered voters of the District reside within the City of Carlsbad. . Approximately 71% of the District's taxable or assessable land area is within the boundaries of the City. The steps involved in making the above determinations inlcuded a review of the methodology with the appropriate staff of LAFCO, the County Assessor's Office, and the County Registrar of Voters. More specifically, the steps required to make the necessary determinations included the following: . The determination as to whether or not 70% or more of the registered voters of the District reside within the City merely involved a certification by the County Registrar of Voters to that fact based on a review of the official voter registration records. . The determination as to whether or not 70% or more of the taxable or assessable land area of the District is within the City required a detailed analysis of the County Assessor's records and included the following steps: - Determined the total number of parcels within the District. - Of the total, determined which parcels were within and which were outside the boundaries of the City. - For each parcel inside and outside the City, determined the area in acres and whether it was taxable or non-taxable. THE DEVELOPMENT OF AN ORGANIZATION PLAN FOR A COMBINED WATER OPERATION REQUIRES THAT CERTAIN ASSUMPTIONS BE MADE In developing an organization plan for the creation of a combined water opera- tion through the establishment of the District as a subsidiary district of the City, it is necessary to set forth certain basic assumptions. These assump- tions include the following: 70 . The District's service area will remain the same. Thus, it is assumed that LAFCO would require the City to serve those portions of the District service area presently outside the City. • . Service levels will remain at a level equal to or superior to current service levels. In other words, the City would provide the same or better quality of service to both City and District customers if it were to assume responsibility for a combined water operation. . Obligations of the District to its. creditors will not be impaired in any way if the City were to assume responsibi- lity for District operations. . The City has all of the legal powers necessary to provide a combined water operation. . District employees who become City employees will receive ^salaries comparable to or higher than those received from the District at the time they are integrated with the City, and they will receive the same fringe benefits received by City employees. 71 FOR PURPOSES OF ANALYSIS, IT IS NECESSARY TO IDENTIFY THOSE WITHIN THE CITY OF CARLSBAD WHO WOULD BE AFFECTED ORGANIZATIONALLY UNDER A COMBINED WATER OPERA- TION If the City assumes responsibility for providing a combined water operation, the following areas of City service would be directly affected: . City Council The City Council would serve as the governing body for the District, rather than a separate Board of Directors. In this capacity, the City Council would have the responsibi- lity for making various policy decsions regarding the water service responsibilities of the District. The relationship and/or responsibility would be no different than that pre- sently experienced by the City Council when it sits as the governing body of the Redevelopment Agency or Housing Authority. ' . City Manager As with other City services including the City's existing water utility, the City Manager would have the responsibi- lity for coordinating the delivery of the water service currently provided by the District on a daily, basis through various department heads. In addition, he would have the responsibility for developing policy recommendations, through the operating and capital outlay budgeting process and otherwise,.that would result in efficient and economic delivery of this and related services in the future. 72 . City Clerk As is presently done for the City Council, the City Clerk would serve as secretary to the governing body when it con- sidered District related water service matters. In addi- tion, the City Clerk would assist with agenda preparation, the publication and filing of various legal documents, and the handling of public inquiries. . City Attorney The City Attorney would sit with the City Council when it considers matters pertaining to District water service. In addition, his staff would provide routine legal service on a continuing basis, including the review and preparation of contracts, resolutions and other legal documents. . Department of Finance The Department of Finance would assume overall responsibi- lity for the administration of all financial matters per- taining to District water service. This responsibility includes accounting for payroll, accounts payable, and accounts receivable, utility billing, and other finance related services. . Department of Purchasing The Department of Purchasing would assume overall responsi- bility for the procurement of all services, supplies, and equipment for District water operations. 73 . Personnel Office In assuming responsibility for a District water service, the City would add some or all of the 10 District employees to its staff. The initial responsibility for merging employees would fall, to a great extent, on the Personnel Office. This office would be responsible for establishing personnel records, assigning positions to classifications, assuring that appropriate salary and fringe benefit . arrangements are made, and undertaking similar tasks neces- sary to integrate District employees during this one-time transition period. s On a continuing basis, this office would be responsible for *•*recruitment and selection, benefit administration, and other personnel related items such as safety, training, and workers compensation. . Engineering Division This Division would assume responsibility for providing all engineering services pertaining to District water opera- tions. The City Engineer would serve as the District En- gineer when the City considers matters related to District water service. In addition, his staff would provide routine engineering services on a continuing basis, including the review of private developments, design and construction of capital projects, and supervision of outside engineering consul- tants. 74 . . . Department of Utilities and Maintenance This Department would assume the responsibility for ongoing operation and maintenance of District related water facili- ties. In broad terms, this responsibility will be integra- ted into the City's current water operations to assure maximum efficiency. A SPECIFIC PLAN FOR INTEGRATING THE DISTRICT'S WATER SERVICES INTO THE OVERALL CITY SERVICE PROGRAM MUST BE DEVELOPED AS A BASIS FOR DETERMINING WHETHER COST SAVINGS WILL RESULT Chapter III describes the present organization and staffing of the District, and indicates that District personnel and outside consultants are involved in administrative/clerical, engineering, or field related operations and mainten- *"* ance activities. When considering how District activities might be integrated into the overall City organization, it is necessary to review each principal area of activity and, where appropriate, to consider District workload. On this basis, practical judgments can be made regarding additional organization and staffing required for the District service program. Similarly, cost implications associated with transferring District responsibilities to the City can be identified. . The City Council Would Assume Policy Making Responsibility For All District Activities As indicated previously, a separate Board of Directors is presently responsible for governing the activities of the Carlsbad Municipal Water District. If responsibility for District operations was transferred to the City, policy 75 making responsibility would be assumed by the City Council, rather than the'separate Board of Directors. This would result in a cost savings inasmuch as the salary of District Board members would be eliminated along with travel ex- penses related to meetings and conventions and the payment of dues to water related organizations. The elimination of these expenses would total $14,500 as follows: Directors Expense . $ 8,000 Meeting, Conventions 4,000 Dues 2,500 $14,500 Routine Legal Responsibilities Would Be Assigned To The City Attorney There may be a need for specialized legal assistance from time to time in conjunction with bond issues or unusual litigation. It is assumed that the present practice of the District to retain special counsel for these matters would be followed by the City. However, routine matters would be assigned to the City Attorney and his staff, including review and preparation of legal documents, provision of advice to City staff, atten- dance at City Council meetings when District related mat- ters are discussed. This routine workload is presently handled for the District by a private law firm at a cost of $1,000 per month, plus an hourly fee for legal assistance 76 other than the performance of routine legal services. This routine workload can be absorbed by the City Attorney with his present staff. Even if the assumption of District water service by the City resulted in an additional day or two per month, this increase in workload would in not justify the addition of another employee in the City Attor- ney's Office. Rather, the added workload would be incor- porated with other assignments and would be subject to the overall priority setting process. Thus, a cost savings would result inasmuch as there would no longer be a need to retain a private law firm for this purpose. This cost sav- ings will approximate $12,000 annually. Routine Personnel Responsibilities Would Be Assumed By The Personnel Office The City's Personnel Office would assume responsibility for all personnel related tasks, including record-keeping, recruitment and selection, benefits administration, safety, and training. The District has not had a high turnover rate, and the overall increase in workload should not be substantial. For example, even if 50% of the total Dis- trict work force turned over annually, this would only amount to five positions. Some of these positions would be recruited from existing City lists which would minimize any additional workload to a further extent. 'The Personnel Office also assists in the administration of workers compensation insurance. In this regard, the Dis- trict spent $2,546 in fiscal year 1978-79 for this insurance. 77 . Because of its size, the City is able to self-insure for workers compensation insurance, and the added cost to the City under this system would be $1,383 if District em- ployees were added. This figure is related to the actual loss experience of the District, and the average cost per clerical and field maintenance employees in the City. Thus, an annual savings of $1,163 would result. Operation And Maintenance Of The District's Water Facili- ties Would Be Assigned To The Department Of Utilities And Maintenance Those within the Carlsbad Municipal Water District who are responsible for the operation and maintenance of the Dis- T'trict water facilities include the following: Title . Number General Manager 1 Systems Superintendent 1 Leadman 1 Meter Reader 1 Water Operator I, JI 2 While the City currently operates and maintains its own water distribution system, they must have additional per- sonnel if they are to assume responsibility for operating and maintaining the District's water facilities. Of the six District positions referenced above, it is assumed that all but the General Manager's position are required regard- less of whether the District or the City operates and main- tains the District's water facilities. 78 With respect to the five positions referenced above, their placement and area of responsibility within the Department of Utilities and Maintenance depends upon how the Depart- ment is organized, or reorganized, for purposes of operat- ing and maintaining the District's water facilities. In this regard, there are at least two principal alternatives. The first alternative would integrate and consolidate the District's operations into the appropriate water related sections of the Utilities Division. The second alterna- tive, as outlined in Exhibit VIII, would establish the Dis- trict's water operations as a separate section in the Uti- lities Division and would be directed by the Systems Super- intendent. This second alternative is believed to be pre- <•*• ferable, at least initially, until City officials obtain experience in administering this new program area. Once this experience has been gained, the City can carefully integrate the various aspects of the District's water operations into the appropriate sections that currently operate the City's water system. More specifically, it is assumed that over the long-term, that District operations would be consolidated into City water operations as follows: - The Water Pumping Section would assume responsibility for the operation and maintenance of the Districts wholesale and retail water distribution facili- ties, including storage facilities, pumps, valves, and related appurtances. 79 cucco $2 COD. CUoc COc: c•r— CO £ i. CU o o $-o co CO COCD O -g §-•— ' toco CO cuCX.o_ o •r" Q t— 1 ECUXIc.cu+Jc•r—W i_ E CUOJ CX4-* ^3 (/) (/) 3? r-* «»--^ S-*— ^ 0 r— 1 "O *•*—•* rtJcuc a:COE S- "O QJ CO i * O) CU r-l H-4 A t— « i-o4J CO g CD CU CX+•» o CO J_cu-4->- Q) t-l c rOE £ou_ D. O CO S-cy a»s. t-i cCOEcuo •r— > &— d) C/) S-cu-p CO ll CO ^ *w_^^ c CO cuo •r*>S-OJ CO ^.QJ COs Q)OCCO C CU S- QJ 10 CUo C *""**CU T-l1 % ^^. c•r- CCO CO21 6cuS- S- QJ O4-> U.ca S 4-> CU rH£Z ^ x Q. •r- S- 3 0 CT-MUJ COi. >> CU> Q-CO OCU ^ ' CM S CUo•r- S-cuoo £^ QJ CO •S- CO CM C CUU•r— >S- QJoo i- O)-t-> CO -31 CO C Q. D— S- 0) 80 r-H ' C COEQJS-bu. cxE13a. i. OJ4-> CO3: CM t.o^_> COi- QJa. 0 a. Erjtx s_QJ 4-> COS ^^t— 1 HwX o •r- CU C UCO C.c: coo c QJ QJs: 4->cJ- -r- CU CO•«-> s:CO31 This section would also assume respon- sibility for water testing.'. - The Water Maintenance Section would assume responsibility for the installa- tion of services and the repair and maintenance of the distribution lines. - The Meter Section would assume respon- sibility for meter reading, testing and repair of water meters, conducting backflow prevention tests, and respond- ing to customer complaints. The suggested organization and staffing plan, as outlined above and on Exhibit VIII, would result in a direct cost savings in as much as the General Manager position would no longer be needed and would be eliminated. As discussed previously, this position is currently filled on an interim basis by an outside consulting engineer, who also serves as the District Engineer. The elimination of this contract would result in an approximate annual cost savings of $16,000. Future savings would approximate $26,000 per year plus the cost of fringe benefits if the District employs a General Manager on a full-time basis. Finance Related Responsibilities Would Be Assumed By The ' Department Of Finance • Those assigned above to the Department of Utilities and Maintenance are presently located within the Field Opera- tions Division of the District with the exception of the 81 General Manger. The remaining District positions are con- cerned principally with finance and administrative tasks, and are located within the District's Administration Divi- si on as follows: Title Number Office Manager/Assistant General Manager 1 Executive Secretary 1 Billing Clerk 1 Receptionist ' 1 The duties and responsibilities of the above positions, as well as the amount of time spent on broad tasks, was sum- marized in Chapter III. Based on a careful review of this and related data, an organization framework has been pre- pared, and it indicates the following with respect to the above five positions: - Although it is an important and essen- tial position within the District organization, the Office Manager/ Assistant General Manager position would be deleted if the City assumed responsibility for District water service. As indicated in Chapter III, the Office Manager/Assistant General Manager performs a wide variety of administrative and supervisory tasks, but these tasks would be dispersed throughout the City organization and assumed by others if the two agencies were consolidated. For example: 82 .. The Finance Department would as- sume responsibility for financial accounting, auditing, and cus- tomer service and utility billing .. General recordkeeping, and general office functions would be jointly assumed by the City Manager, City Clerk, City Attorney, Department of Finance, Personnel Office, Engineering Division, and the Department of Utilities and Main- tenance The Executive Secretary position would be deleted. This position is devoted nearly full-time to general clerical support the the General Manager, and Board of Direc- tors. These tasks, like those of Office Manager/Assistant General Manager, would be dispersed throughout the City organi- zation and assumed by others if the two agencies were consolidated. For example: .. The City Clerk's Office would as- sume responsibility for the pre- paration of agendas, minutes, and resolutions. .. Records management and retention, •as v/ell as general filing and typ- ing would be assumed by the City 83 Manager, City Clerk, City Attor- ney, Engineering Division, and the Department of Utilities and Main- tenance - The Receptionist position would be deleted. Approximately 50% of the time associated with this position is de- voted to customer service and billing activities, including responding to customer inquiries on the telephone and over the counter, stuffing and mailing utility bills, and opening and sorting utility bill payments. The balance of v< the position's time is dedicated to miscellaneous general accounting and office duties, including typing and filing. If the two agencies consoli- dated, the customer service billing and accounting responsibilities would be assumed by Finance Department staff who are performing similar duties. The general office duties will be dispersed throughout the organization principally to the Department of Utilities and Maintenance, City Attorney, City Clerk, and City Manager. - The Billing Clerk position would be assigned to the Finance Department. As indicated in Chapter III, this position is dedicated on a full-time basis to 84 ' customer service and billing activities including the manual preparation of utility bills. The manual preparation of bills presently associated with this position would be absorbed by the City's automated utility billing sys- tem. The automation of the utility billing will permit this position to adequately handle the other customer service responsibilities associated with this position, plus the provision of general accounting assistance in payroll and accounts payable and accounts receivable. The organizational framework described above has several direct cost implications, as follows: - Deletion of the Office Manager/ Assis- tant General Manager, Executive Secre- tary, and Receptionist would result in an annual savings of $51,800, including retirement and other benefits. - At the present time, the District con- tracts with a private accounting firm for a year-end audit as required by the State Controller. The City has a simi- lar audit of all its operations, and the addition of the District water ser- vice would not normally increase pre- 85 sent costs by more than $1,000. The District presently pays $3,900 for these services and, thus, an annual . cost savings of approximately $2,900 would result. Engineering Related Responsibilities Would Be Assumed By The Engineering Division The City's Engineering Division would assume responsibility for all the District's engineering related services. As indicated in Chapter III, these services are currently pro- vided by an outside engineering consultant and include the following: - Routine engineering services such as attendance at City Council meetings and responding to general engineering ques- tions. - Engineering tasks associated with pri- vate developments such as plan checks, plan approvals, and construction inspection. .- Engineering tasks associated with Dis- trict sponsored construction and main- tenance projects such as design, cons- truction inspection, and construction management. 86 As indicated in Chapter IV, the City's Engineering Division currently provides the City's water utility with all of its "***"" engineering services. These services are supplemented by the office "and field engineering work performed by the Senior Engineering Aide assigned to the Utilities Division of the Department of Utilities and Maintenance. Special one-time engineering projects such as the preparation of water master plans and the design of major capital pro- « jects, are performed by outside engineering consultants. When the City and District water operations are consoli- dated, the City's existing engineering staff will perform the District related engineering services described above with the exception of special one-time engineering pro- jects. Both the City and the District currently contract with outside engineering consultants to perform this work and it is assumed that this practice will continue. More specifically, the District's engineering related work load would be dispersed among the City's engineering staff as follows: - The City Engineer would assume overall responsibility for District related engineering services and would assume the responsibilities of District ^ngineer including attendance at City Council meetings. 87 - The Current Development Section would assume responsibility for the engineer- ing tasks associated with private developments such as plan checks, plan approvals, and construction inspec- tion. This section is currently res- ponsible for reviewing all new develop- ments within the City's boundaries, including those within the District's retail water service area, thus the assumption of the additional develop- ment related engineering services for the District should have a minimal work load impact and will not require the addition of engineering staff. In addition, it will have the added advan- tage of improving the overall effi- ciency of the development review pro- cess for developments which are within the City limits and the District's retail service area. - The Capital Programs Section would . assume responsibility for the engineer- ing tasks associated with District . sponsored construction and maintenance projects. As indicated above, major one-time engineering projects would continue to be performed by outside engineering consultants. The remaining work consists of minor design, cons- truction management, and construction inspection work and can be absorbed by existing City staff. The organizational framework above has several direct cost implications; as follows: - The District's contract with an outside engineering consultant for routine engineering services can be eliminated for a cost savings of approximately $14,000. - The engineering tasks associated with District sponsored construction and maintenance projects are performed by an outside engineering consultant. The cost of these services in fiscal year 1977-78 was approximately $10,000. While precise numbers are not avail- able, a portion of the $10,000 was for engineering design services and the balance was for construction management and inspection. If it were assumed that the City would continue to con- tract for the design work and that this work accounted for $5,000 in consultant fees, there would be a savings of approximately $5,000. 89 • . Potential Cost Savings Approximating $117,000 Would Result If The City Were To Assume Responsibility For District Water Service As indicated above, there is a realistic potential for achieving cost savings on an annual basis of $117,363 if the City were to assume responsibility for providing District water service. This potential cost savings is summarized; as follows: $ 14,500 - Elimination of separate Board of Director 12,000 - Elimination of contract with private law firm 1,163 - Savings in workers compensation insurance 16,000 - Deletion of contract with outside consultant for General Manager's services 51,800 - Deletion of positions of Office Manager/Account- »•* ing Officer, Executive Secretary, and Receptionist . 2,900 - Savings in audit preparation costs 19,000 - Savings in consulting engineering costs $117,363 The potential cost savings summarized above reflects only direct costs that can be identified with certainty. However, it is probable that other cost savings will be achieved if the City'were to assume responsibility for provid- ing District water service. For example: 90 . The District spent $7,869 in fiscal year 1978-79 for over- time. Because of the broader City work force which can be trained to operate and maintain the District water sys- tem, there will be greater flexibility insofar as handling problems that occur on an emergency or unscheduled basis. The added flexibility should permit current District over- time to be minimized. .. As indicated previously, the District's Billing Clerk will be absorbed in the City's Finance Department, while the other three clerical positions would be eliminated. This one remaining position would be relocated to City Hall. The District's Administrative Offices would be vacant and would be functional insofar as another public or private use. With respect to maintenance crews and equipment, it is assumed that this will be integrated with other City faci- lities from a standpoint of location. The City is working toward the development of new corporation yard facilities, and this expansion will occur whether or not District activities are assigned to the City. It may be that District field personnel and equipment would remain at their present facilities for an interim period, but the eventual goal would be to merge them with City water crews for purposes of coordination, greater flexibility, and economy. . . 91 . As indicated previously, the District is currently investi- gating the acquisition of its own computer equipment and w has budgeted an initial $10,000 for this purpose. If the District, operations are merged with the City, the District's data processing needs can be met by the City's data pro- cessing equipment, thus eliminating the District's need for purchasing .new computer equipment. . The District currently augments District staff by contract- ing for the necessary heavy equipment and operators. The City, oo the other hand, owns the necessary heavy equipment and employs two full-time Heavy Equipment Operators in its Utilities Division and is capable of providing the neces- sary heavy equipment support required by the District water system. If it is assumed that the City would provide the "w- necessary heavy equipment and operators required by the District water system, a cost savings would result. . A complete analysis of economic implications must contrast the potential for cost savings with any potential cost increase. There will obviously be some one-time costs associated with the assumption of the District water service responsibility by the City, but these should be relatively minor and pertain principally to transition of personnel and accounting records. On a continuing basis, however, there will be a cost increase of approximately $13,500 due to differences in salaries between the District and the City. As indicated on Exhibit IX, on page 95, these salary differences exist betweenfft",, ' • "***- the District and City field maintenance classifications. 92 When the cost differences are applied to the six District positions that would be integrated with the City, an annual cost increase of approximately $13,500 results. When applied against the potential cost savings, a net annual sav- ings of $103,863 results as follows: $117,363 - Potential Cost Savings 13,500 •-' .Additional Salary Costs $103,863 - Net Potential Cost Savings If The Responsibility Is Transferred To The City, A Variety Of Personnel Considerations Must Be Addressed If the responsibility for providing District water service is transferred to the City, a variety of personnel-related considerations must be addressed in order to assure a smooth transition of District employees to the City. Several of the principal considerations are discussed below. . Staff Members Of The District Would Become City Employees As indicated in the report, it would be necessary to trans- fer 6 of the 10 District positions to the City in the event that the District was made subsidiary to the City. The City could make the policy decision to hire all District employees and subsequently achieve the economies of conso- lidation through attrition. 93 . Transferring District Employees To The City Will Require Resolution Of Certain Salary And Benefit Issues While it is beyond the scope of this study to develop f~* ^"^ detailed recommendations regarding classifications or ; salaries and benefits, it is appropriate to highlight prac- tical problems that will arise in merging employees of two separate agencies. . A Review Of Position Classifications By The City Will Be Necessary Prior To Transferring District Employees To assure internal equity and to provide a basis for sett- ing salaries, the classifications of both the City and Dis- trict employees should be reviewed and, where appropriate, modified. " . Salaries Of Existing District Employees Will Have To BeV,,.,, ——_———__—_ .! 1 L! . Determined As indicated by Exhibit IX on page 95, the salaries of existing District employees are generally lower than those of the City with the exception of the Billing Clerk. In that regard, it is reconmended that the Billing Clerk's salary be frozen until the City salary for the comparable classification catches up. 'In addition, two other issues should be resolved in terms of salary administration: - Placing District employees at the pro- per step in the City's pay plan. - Confirmation of a policy by the City that no District employee will be paid a lower base salary than was earned with the District. 94 Exhibit IX District and City Salary Comparison CARLSBAD MUNITIPAL WAfER DISTRICT (JO01 Existing Title Billing Clerk .Systems Superintendent Leadman Water Meter Reader Water System Operator Top Step Rate $1,168 1,407 1,058 1,058 804 Number of Positions 1 CITY OF CARLSBAD Top Step Rate $1,122 1,600 1,226 1,173 1,124 Recommended City Title Int. Account Clerk Water Supervisor Utility Maintenance Worker II Meter Reader/ Repairer Maintenance Worker I RETIREMENT OASDI MEDICAL DENTAL LONG-TERM DISABILITY. LIFE INSURANCE OTHER INSURANCES UNIFORM Field Office SICK LEAVE Payoff ANNUAL LEAVE HOLIDAYS ' OVERTIME STANDBY Exhft /X District and City Benefit Comparison f CMWD PERS Yes Blue Cross None None $6,000 Agency/ Employee '• • 14.179X/7.00X 6.-13X/6. 133! of first $22,900 salary Emp. Emp. + 1 Family 40.42 40.42/48.82 40.42/63.66 $2.52 - 5. 82/mo. -varies by age City of Carlsbad PERS 57 Survivor Yes Crown Yes Yes $5,000 Agency/Employee 9.406V7.00X 6.13V6.13X of first $22,900 salary Emp. $37.19 Emp. + Family $65.00/$48.11 None Supplied, safety shoes - ~! pairs Allowance 12 days, unlimited accumulation On retirement, may ex- tend separation date up to 180 days 10 days after 1 year 11 days after 6 years 12 days after 7 years 13 days after 8 years 14 days after 9 years 15 days after 10 years 11 T*s - regular working days and Saturday 2-T - Sundays or legal holidays $5.00 per day and sex $265/yr. $70/yr. $250/yr. Yes - Optical Supplied Safety shoes - 2'pairsNone 12 days, unlimited Part of medical .89$ per $100 of salary $2.495/month Part of medical $187.00 $130.00 May carry a maximum 1 yr accumulation 1 day vacation for 3 days unused sick leave - ann. ' at employee option Credit sick bal. for ret.10 days.after 1 year 15 days after 6 years 20 days after 15 years 12 Th Th $10.00 per day Up to 29 days . Fringe Benefit Questions Will Have To Be Resolved A comparison of fringe benefits received by City and Dis- trict employees is summarized on Exhibit X on page 96. As indicated thereon, the nature of most benefit items is similar. It is assumed that transferred District employees will receive the same fringe benefits received by City employees, subject to the following: - Arrangements Will Be Necessary To Assure No Interruption In Health Plan Coverage For District Employees The City will have to assure that all District employees receive health coverage inmediately upon transfer to the City without a waiting period. - An Agreement Concerning Liability For Accrued Vacation And Sick Leave Of District Employees Will Have To Be Negotiated Between The District And The City The following issues must be resolved in terms of vacaton and sick leave policies: .. Will District employees being transferred to the City be treated as terminated employees by the District? .. Upon termination, will accrued vacation and sick leave balances be paid if transferred to the City? 97 One approach to these questions is for the City to accept the liability for the current sick leave and vacation accruals for each employee at the time of transfer and, using the vacation and sick leave accruals as a base, apply City personnel policies for future accruals. The principal advantages of this approach are simplicity of admin- istration and equitable treatment of employees. Guidelines For Determining Prior Credit For District Employees Will Have To Be Determined * When District employees are transferred to the City, a decision will have to be made with respect to the prior service of employees with the District. This is particularly important in determin- ing vacation accrual rates. There are essentially two alternatives: .. The first alternative would pro- vide that, -for purposes other than retirement, transferred Dis- trict employees would be treated as new City employees and would not receive credit for their Dis- trict service. 98 .. The second alternative would pro- vide that transferred District ' employees would receive credit for their District service. . Retirement Plans Will Have To Be Integrated As City employees, the District contract with PERS would be merged with the City's contract and District staff would be covered pursuant thereto. The District employees would receive credit for their prior service, and there would be no cost to the City for prior service inasmuch as this has already been paid for by the District. District employees would also continue to be covered under OASDI which is presently available to City employees. •. ' ' A REVISED WATER RATE STRUCTURE WILL NEED TO BE DEVELOPED As indicated in Chapters III and IV, the City and District both finance water operations primarily from revenues generated by water charges. While the actual charges vary, the current water rate structures for both organizations include a ready-to-serve charge and a unit water charge. The primary distinc- tion between the City and the District has been their respective approaches to the financing of capital improvements. The District has financed capital im- provements with property tax supported general obligation bonds while the City has relied on revenue bonds supported by revenues from water charges. As indicated before, however, the passage of Proposition 13 has eliminated the use of general obligation bonds so it is likely that the District will have to rely on revenue bonds for future long-term financing. 99 If the responsibility for providing District water service is transferred to the City, a uniform rate structure would need to be developed for City and/*"•"•• >w District water customers. The principal considerations in developing such a rate structure are discussed below. . A Uniform Rate Structure Would Be Developed To Offset Operation And Maintenance Costs If the District and City water operations are combined, a uniform rate structure would be established to offset the cost of operating and maintaining the combined systems. It is assumed that water charges would continue to consist of a ready-to-serve charge and a unit water charge. • There Would Be No Change In The Financing Of Either The City's Or The District's Existing Long-Term Debt Obligations There would be no change in the financing of either the City's or the District's existing long-term debt obligations. As indicated above, the District's current debt is financed by general obligation bonds. These bonds are supported by improvement District property tax rates and it is assumed that these tax payments will continue to be paid by the District property owners as required by the bond covenants. Similarity, the City long-term debt is financed by water revenue bonds and would continue to be supported by water charges paid by City water customers. It is assumed that the water charges required to meet the City's debt service obligations would be added to City customer's total water bill. 100 APPENDIX 101 V,,,, AVERAGE MONTHLY COST OF WATER N TO AN AVERAGE RESIDENTIAL CUSTOMER SERVED BY CMWD Assumptions 1. Market Value: $100,000 2. Assessed Value: 25,000 3. Meter Size: 5/8" 4. Consumption: 15 Improvement Improvement District 2 District 3 Maintenance and Operation • Ready-to-serve fee - $4.00 = $ 4.40 $ 4.40 Unit water charge - $0.40 X 15 = 6.00 6.00 Subtotal . 10.40 10.40 Capital Improvements Improvement District 1 - $250.00 X $0.04 * 12 = .83 .83 Improvement District 2 - $250.00 X $0.10 * 12 = 2.08 Improvement District 3 - $250.00 X $0.26 -t 12 = - 5.42 Improvement District 4 - $250.00 X $0.02 * 12 = .42 .42 General Levy - $250.00 X $0,14 * 12 X 45% = ' 1.31 1.31 Subtotal 4.14 7.98 TOTAL $14.54 $18.38 102 AVERAGE MONTHLY COST OF WATER TO AN AVERAGE RESIDENTIAL CUSTOMER SERVED BY THE CITY OF CARLSBAD Assumptions 1. Market Value: $100,000 2. Assessed Value: 25,000 3. Meter Size: 5/8" 4. Consumption: 15 units 5. Unit Water Charge: 35$ M.O. + 8$ debt service = 43$ Maintenance and Operation Ready-to-serve fee - $3.85 „ = $ 3.85 Unit water charge - 35$ X 15 = 5.25 Subtotal 9.10 Capital Improvements Improvement District 1 - $250.00 X $0.04 * 12 = .83 Improvement District 4 - $250.00 X $0.02 * 12 = .42 General Levy - $250.00 X $0.14 * 12 X 45% = 1.31 Unit Water Charge - 8$ X 15 = 1.20 Subtotal =3.76 TOTAL . ' = $12.86 103