HomeMy WebLinkAbout; ; 1985 CAPITAL IMPROVEMENT PLAN; 1985-12-23CAPITAL IMPROVEMENT PLAN
FINAL DRAFT
Costa Real
Municipal Water District
5950 El Carnino Real, Carlsbad, CA 92008
Telephone: (619) 438-2722
Costa Real Municipal Water District
CAPITAL IMPROVEMENT PLAN
Final Draft
December 23, 1985
Prepared by
William C Meadows, General Manager
Geoffrey A. Poole, Administrative Analyst
TABLE OF CONTENTS
Page
I. Summary 1
II. Introduction 3
III. Growth Forecast and Land Use 6
IV. Water Demands 11
V. Project Phasing and Estimated Costs 15
VI. Funding 18
VII. Financing 23
VIII. Conclusions 31
IX. Partial List of Sources Consulted 32
IX. Appendixes 35
LIST OF FIGURES
Figure t Page Title
1.
2.
3.
4.
5.
6.
5
7
10
14
CRMWD Serice Area
SANDAG and City of Carlsbad
Population Projections
SANDAG regional forecast for
CRMWD
CRMWD Land Use Comparison for
the Years 1980 and 2000
San Diego County Water Authority
population projections for its
member agencies
CRMWD water sales projections
LIST OF TABLES
Table #
1.
2.
3.
4.
5.
6.
Paae
6
11
12
12
13
16
Title
Land Use Projections
Average Day Water Demand
Minimum Fire Flow Requirements
Required Fire Flow Durations
Total Water Demand
Master List of Proposed Projects,
7.
8.
17
21
24
Cost Estimates and Allocations
Master List of Proposed Projects
and Cost Estimates per Phase
City of Carlsbad Contributions
for Enhancement Projects
Security Pledged to COP Financing
LIST OF APENDIXES
Appendix Title
A. Computerized Spreadsheet Represent-
ing Financial Projections Through
Phase I Using the Fee at Time of
Previous Draft ($880 per EDU)
B. Graphic Representation of Appendix
A.
C. Computerized Spreadsheet Represent-
ing Financial Projections Through
Phase I Using the Adopted Fee
Effective Jan.'86 ($1590 per EDU)
D. Graphic Representation of Appendix
C.
E. Capital Improvement Plan Map
SUMMARY
Costa Real Municipal Water District must provide
facilities to accommodate rapid urbanization in
Carlsbad. The Capital Improvement Plan identifies
projects that will satisfy the future demands on the
water system. The projects identified in this report
fall into two main categories:
1. Construction of new facilities and enlargement
of existing ones to accommodate the increase in demand
from new development. Costs of new or enlarged reser-
voirs, increased pipeline capacities and other projects
necessary for their operation can be attributed to new
development.
2. Replacement and rehabilitation of facilities
that have depreciatied by operation of the system. The
cost of improving facilities currently in use is the
responsibility of the consumers.
In addition to the projects shown in this plan,
developers must contribute facilities which are built
privately, according to District specifications, and
which serve new development. These facilities have a
special benefit to those developments. This report
identifies the major facilities to be undertaken by the
District. Together, the developer-contributed
facilities and the District-built facilities will
constitute the complete water system.
In order to allocate the cost of District projects
equitably between developers and water users, the
benefits to be provided by the proposed projects have
been analyzed. This report identifies total improve-
ments costing $41,750,000 (current value) to buildout.
The respective allocation between new development and
water users is:
New Development $24,510,000
Water Users $17,240,000
The major facilities charge (MFC), a connection
fee paid by new development, has been set at $1,590 per
equivalent dwelling unit as of January 1986. The
amount of this fee was determined by analysis of
revenue required to finance the proportionate cost of
projects the District must undertake to accommodate new
development in the immediate future. Additional
adjustments in the MFC might be recommended as the
exact project costs of construction and financing are
determined through implementation of this plan.
A water rate surcharge of $0.10 per 100 cubic feet
($43.56 per acre foot) would complement the increased
major facilities charge in accordance with the propor-
tionate share of benefit to water users, and allow the
District to undertake the immediate projects. However,
the Water Service Agreement between the District and
the City of Carlsbad provides for the transfer of
substantial funds for water system improvement, and
this report recommends settling pending issues with the
City before considering a specific water rate
surcharge. The use of City reserves could significantly
reduce the amount of a water rate surcharge. It is also
recommended that no work on the village area
rehabilitation program, adopted by the City prior to
the Water Service Agreement, be undertaken until the
matter of fund transfers is addressed.
The District has the resources to implement its
capital improvement program in a timely manner. Doing
so will assure existing and future citizens that the
water system is in place to serve their needs.
INTRODUCTION
Purpose
The purpose of the Capital Improvement Plan (CIP)
is to identify the major water facilities that must be
provided by the District to serve anticipated demands
at buildout; to consider appropriate financial methods;
and to describe policies which would carry out the
plan. The CIP recognizes the need to build new facili-
ties and replace existing ones to ensure an adequate
future water supply for CRMWD's area. The portion of
Carlsbad served by CRMWD is shown on Figure 1.
In addition to the practical need, the CIP is
required by the Water Service Agreement between CRMWD
and the City of Carlsbad, entered into in 1983. Re-
garding capital improvements, the agreement provides:
Per Agreement
1. The District will be responsible for the plan-
ning, financing and construction of all major capital
facilities to provide potable water service within the
District.
2. The District will coordinate the capital im-
provement program with the City.
3. The District, with input from the City, will
adopt a master plan of facilities.
4. The City will contribute the proceeds from the
sale or lease of Lake Calavera, together with any
undesignated reserves in the City's water utility fund,
to the District's capital development fund.
Policies
This report is based on the following policies:
1. New development will pay for facilities not
needed to serve existing water users. Payment will be
by:
A. Contributing facilities providing specific
benefits to new developments, such as in-
tract pipelines
B. Paying major facilities charges to fund
projects of District-wide benefit, the need for
which is required by new development
2. Existing water users will pay for the replace-
ment or improvement of facilities they have used, the
need for which has not been created by new development.
Methodology
The CIP is based on information from a variety of
sources. The draft report entitled "Master Plan of
Public Water System Facilities" prepared for CRMWD by
Woodside/Kubota and Associates updates information on
the capital requirements of the District. Other subarea
master plans adopted by the District in the past have
the same function, and have been used as a guide for
the preparation of the CIP. Additional engineering
analysis was provided by the District's staff. The
consultants' report itself is based on input from the
City of Carlsbad and other sources.
Population and land use data were initially
gathered from the report prepared by the San Diego
County Association of Governments (SANDAG). The City of
Carlsbad subsequently released its revised Public
Facilities Management System Monitoring Report which
includes population projections. Both the SANDAG and
City projections are presented in this report.
Financial analysis by CRMWD's staff was based on
the consideration of various financial methods and
current policies of the District. Long-term revenue
and expense projections were developed with the aid
of computerized spreadsheets that represent CRMWD's
existing and potential revenue sources, and based on
growth and water sales projections which are explained
in the appropriate sections that follow.
Figure 1
COMMON BOUNDARY AREA
(COSTA REAL MWO &
CITY OF CARLSBAD)
BUENO COLORADO MWO
OLIVENHAIN MWO
BOUNDARY-CITY OF
CARLSBAD OUTSIO;
DISTRICT SERVICE
AREA
BOUNDARY-COSTA REAL
MUNICIPAL WATER
DISTRICT
GROWTH FORECAST AND LAND USE
CRMWD is San Diego County's fastest growing water
agency in terms of assessed valuation, and is on the
forefront of an urban expansion that will nearly double
its population in the next ten years. Population within
the District may reach nearly 47,000 by the year 1990,
an increase of 17,000 in that ten year span. Develop-
ment occuring within the District is projected to
increase the developed land by 151% over the next 15
years. Figures 2-5 are graphic representations of these
projections, made by SANDAG and the San Diego County
Water Authority, that were considered in the
engineering of the CIP projects.
Growth Forecasts
There is a potential for significant descrepencies
between 20 year growth forecasts and actual growth
rates. Therefore, implementation of the CIP requires
a more detailed analysis into the projects that are of
an immediate concern. These projects will supply the
current users as well as new developments that are
currently planned or expected to occur in the near
future. The remaining projects are components of the
water system that will supply a buildout population.
The actual growth trends will determine the date, pre-
cise location and actual sizing of those projects.
Land Use
Land use analysis aids in the determination of
gross water demand on the transmission system. The
figures in Table 1 were used in the Woodside/Kubota
report to determine anticipated sizing and location of
the facilities. In addition to actual growth trends,
actual development in accordance with the City land use
plan will determine precise sizing and location of
future facilities.
Table 1-Costa Real Municipal Water District
Land Use Projections
Residential 14,000 acres
Agricultural 1,500 acres
Industrial 2,500 acres
Commercial 1,000 acres
Recreational 1,000 acres
Total 20,000 ac±es
-r!..
Costa. Real Population 1975-2000
Roundsd to Nearest 1000
9 0
80 -
70
30.000G
/ 7.000 tl
/ 375
87.0000
74,00 OB
59.0000
-#7,000
,96* J / 990 1 99.3
'Actions by
City of Carbihad
2000
(D
NJ
SAN DIEGO REGIONAL FORECAST
POPULATION. . . HOUSING. . . EMPLOYMENT. . . LAND USE
CC19TA REAL M. W. D.
VEM
1980
1990
1995
2000
TOTAL
30190
39315
73788
86777
P O P U L
HOUSE
HQLP
29073
57900
72213
85053
A T
(X)
(96.
(97.
(97.
(98.
I
3)
6)
9)
0)
0 N
GROUP
QTBi
1117
1413
1573
1722
(X)
( 3. 7)
( 2. 4)
( 2. 1)
( 2. 0)
YEA.fr
1980
1990
1993
2000
0 C C U P
TQTAl
11782
23489
32913
39668
I E D H
SINGLE
pAflJLY
6428
13438
16730
22269
0 U 8 I
(X)
(34.6)
(32.7)
(30. 9)
(36. 1)
NO UN
MULTI-
FAtflLY.
3334
12031
16163
17399
I T
(X)
(43.
(47.
(49.
(43.
8
4)
3)
1)
9)
YEAR
1980
1990
1993
2000
TOTAL
13613
23202
29355
33359
(mis.
1677
1433
1328
1241
(X)
(12. 3)
( 3. 7)
( 4. 3)
( 3. 7>
C
HEft
3317
600O
7403
8603
I V I L
(X)
(24. 4)
(23.8)
(23. 1)
(23. 6)
IAN
gqvT
1043
1617
1876
2082
E H P L
(X)
( 7. 7)
( 6. 4)
( 6. 3)
( 6. 2)
0 Y M E N T
BEIAIL (X)
2033 (14. 9)
4783 (19.0)
6009 (20. 3)
6984 (20.8)
SEBVJCE <X)
3031 (22. 4)
3818 (23. 1)
6988 (23. 6)
7966 (23. 7)
qTHER
2488
' 3331
3949
6683
(X)
(18.3)
(22.0)
(20. 1)
(19. 9)
TOTAL UNIFORMED MILITARY:1980. . .1990. . .1993. .2000. .
YEAR
I960
1990
1993
i 2OOO
1
LAND USE A C R f
DEVELOPED
RES I- NON-
TQTAU, C/.) PENTIAL (X) ElSIfi <X> FREEHftY <X>
5018 (23.1) 3152 (62.8) 1620 (32.3) 246 ( 4.9)
8818 (44.2) 6097 (69.1) 2473 (28.1) 246 ( 2.8)
10709 (53.7) 7681 (71.7) 2781 (26.0) 246 ( 2.3)
12575 (63 0) 9266 (73 7) 3063 (24.4) 246 ( 2. O)
I't\ G E 8
UNDEVELOPED
DEVEL- NOT
IQIA.L (X) QEABLE <*> USABLE <x>
14939 (74.9) 11372 (76.1) 3367 (23.9)
11139 (33.8) 7371 (68.0) 3367 (32.0)
9248 (46.3) 3681 (61.4) 3367 (38.6)
73B2 (37.0) 3813 (31.7) 3367 j (4B. 3)
oo
Note: All information presented is based on gridcells uihlch
approximate city or district boundaries as of January. 1983.
n n it f i n h t
(1980)LAND USE ACREAGES
37%
DEVELOPABLE
Figure 4
16%
RESIDENTIAL
^ 8%"NONRESIDENTIAL
DEVELOPED
Residential (3,l52ac.)- 16%
Nonresidential (l,620ac.J- 8%
Freeway ( 246ac.}- I %
Total (5,01 Sac.)-25%
1%
FREEWAY
UNDEVELOPED
Developable UI,372ac.)-57%
Not Useable ( 3,567ac.)-18 %
Total (!4,939ac.)-75%
TOTAL ACREAGE (I9,957ac.)
(2000)
/ NONRESIDENTIAL
DEVELOPED
Residential ( 9,266ac.)-47%
Nonresidential ( 3,063ac.)-15 %
Freeway ( 246ac.)- 1%
Total (12,575 ac.)- 63%
1%
FREEWAY
UNDEVELOPED
Developable ( 3,8l5ac-)-l9%
Not Useable ( 3,567ac.)-l8%
Total ( 7,382ac.)-37%
TOTAL ACREAGE (I9,957ac.)
10
Growth Rate in Percent from 1980-2000 Figure 5
San Diego County Water Authority Agencies
MWU*.WC»~JOV>oHMW£WJg£°
Eueno Colorado M.W.D.
Costa Real M.W.D.
Del Mar, City of
De Luz Heights M.W.D.
Escondido, City of
Fallbrook P.U.D.
Eelix W.D.
National City, City of
Oceanside, City of
Olivenhain M.W.D.
Otay M.W.D.
Padre Dam M.W.D.
Pendleton Mil. Res.
Poway, City of
Rainbow M.W.D.
Ramona M.W.D.
Rincon del Diablo M.W.D.
San Diego, City of
San Dieguito W.D.
San Marcos C.W.D.
Santa Fe I.D.
South Bay I.D.
Valley Center M.W.D.
Yuima M.W.D.
San Diego Regional Avg.
61.8 |1
^\ \\\\\\\\\\!
13.7 |
1
11.11
1
35.2 |
1
39.9 |
1
8.91
1
12.0 |
1
69.0 |
1
49.6 |
1
81.5 |
~" 1
71.4 I
1
1-5.5
1
49.6 |
1
139.8 |
I
"4.5 |
1
211.8
31.6 |
1
42.7 |
1
170.0 I
1
82.7 |
1
23.0 |
1
130.8 |
1
50.2 |
1
45. 4 |
1
11
WATER DEMANDS
Average Day Demand
Approximately 530 water meter records from the
City of Carlsbad and CRMWD were reviewed for the period
July, 1979, through June, 1982. The residential meter
records were converted to gallons per day per dwelling
unit and compared with the number of dwelling units per
gross acre (including streets). The result was an
indication of average day demands based on the number
of dwelling units per gross acre at buildout. Usage is
shown in gallons per day per acre (gpdpa). The water
flow calculations for all catagories of use were deter-
mined as follows:
Table 2-Costa Real Municipal Water District
Average Day Water Demand
Water Demand
Land Use Gal. Per Day Per Acre
Agricultural 2,500 gpdpa
Industrial 3,000 gpdpa
Commercial
Auto Retail 980 gpdpa
Regional Retail 840 gpdpa
Restaurants 2,910 gpdpa
Motels 3,360 gpdpa
Schools
Elementary 1,840 gpdpa
Junior High 2,215 gpdpa
High School 2,190 gpdpa
Freeway Landscape 2,900 gpd/1000'
Peak Demand (Fire Flow)
The City of Carlsbad Fire Department's recommenda-
tions for minimum fire flow requirements were used to
determine peak demands. Minimum flow and required
duration were used to determine overall fire flow
demands. The required flows are shown on the following
page.
12
Table 3-Costa Real Municipal Water District
Minimum Fire Flow Requirements
Land Use Gallons per Minute
R.L.— Low Density 1500-1750
R.L.M.— Low Medium Density 1750
R.M.— Medium Density 2500
R.M.H.— Medium High Density 3500
R.H.— High Density 3500
N.— Neighborhood Commercial 3000-4000
C.— Community Commercial 3000-4000
PI — Industrial 3000-4000
E,J,H,HC,P — Schools 3000
RRI — Intensive Regional Retail 6000
Required Fire Flow Duration
Sizing and location of future facilities have been
determined per fire flow volume requirements for the
following durations:
Table 4-Costa Real Municipal Water District
Reqiured Fire Flow Durations
Required Fire Flow (GPM)
10,000 and greater
9,500
9,000
8,500
8,000
7,500
7,000
6,500
. 6,000
5,500
5,000
4,500
4,000
3,500
3,000
2,500 and less
Duration (Hrs)
10
9
9
8
8
7
7
6
6
5
5
4
4
3
3
2
13
Total Water Demand
The projects that are proposed in the CIP are
designed to satisfy the requirements of the District at
buildout population of an estimated 109,000. The total
water demands of buildout population have been
calculated and used as design parameters for future
projects. The District's current pipeline capacity from
the aqueduct system of the San Diego County Water
Authority (SDCWA) is 58 cubic feet per second (cfs).
Projected annual total water demand within the
District, shown in Figure 6, is based on the
assumptions that (1) anticipated population increases
will occur as projected by SANDAG, and (2) the per
capita demand of both existing and future populations
for urban water will remain at .221 acre feet (197
gallons per capita per day). These calculations have
been made for CRMWD by the San Diego County Water
Authority. Total water demand on the CRMWD system at
buildout will produce a total capacity requirement of
93 cfs from the SDCWA aqueduct system into the
District's distribution system. Therefore, pipeline and
reservoir capacities of the CIP projects are designed
to meet these future needs. The data in Figure 6 are
summarized as follows:
Table 5-Costa Real Municipal Water District
Total Water Demand
Projected Water Use (Acre Feet)
Estimated
Year
1990
1995
2000
Population
59,000
74,000
87,000
Urban
13,100
16,300
19,200
Agric.
3,600
3,600
3,600
Total
16,700
19.900
22,800
30,000
25,000 _
U|
ujoco
20,000 _
, 15,000 _
Ui
ro,ooo_
5,000 _
PROJECTED WATER USE TO YEAR 2000
-— PAST
AGRICULTURE DEMAND
7970 1980 1990 2000
H-
l-i(D
cn
FISCAL YEAR
15
PROJECT PHASING AND ESTIMATED COSTS
Improvements have been planned to adequately serve
the Disrict at buildout. Multi-year increments are
used, from which the overall plan may be divided into
yearly segments, or annual budgets. This process
allows the District to plan for the long term while
preserving the flexibility to adapt to actual
circumstances on a short term basis. The three plan-
ning phases are: 1985-1990, 1991-2000, 2001-buildout.
No year for buildout has been established by the City
of Carlsbad, although it is assumed to occur after
the year 2005 for water system planning purposes.
Although the consulting engineers list the La
Costa Hi, Tri-Agencies Terminal and Santa Fe II reser-
voirs within Phase I of their report, this report has
deleted them since they are already financed and under
construction. The nature and total cost estimate of
the Squires Reservoir project has been changed.
Originally planned as two projects, it is now concei-ved
as a 20 million gallon reservoir which would double as
additional storage (a benefit to future development)
and replacement storage (a benefit to existing resi-
dents). Adjusting the engineer's report to show future
financial requirements only, by changing the nature of
the Squires Reservoir project ($800,000 less) and by
deleting participation in Olivenhain Municipal Water
District's Mount Israel Reservoir ($1,000,000) gives a
grand total of $41,750,000 for the CIP.
Projects listed in the CIP are those that are to
be financed, designed, and constructed by CRMWD. In-
tract projects, those that benefit specific
developments, are the responsibility of the developers
to finance and construct. Hence, they are not described
in the CIP. The project list on page 16 (Table 6)
identifies all CIP projects, cost estimates and
allocation of the costs between new development (MFC)
and water users. A further breakdown of the projects
into their respective phases follows on page 17
(Table 7).
16
Table 6-Costa Real Municipal Water District
Master List of Proposed Projects,
Cost Estimates and Allocations
1986-2005
Pro ject ( Phase )
Squires Reservoir (1)
Evans Point Reservoir (1)
TAP Chloramination Sta. (1)
Telemetry/Control (1)
Village Rehabilitation (1)
"D" Reservoir Expansion (1)
Santa Fe III (2)
Village Rehabilitation (2)
San Luis Rey Well Field (2)
Replace/Enlarge PAR (2)
Point "D" Cogeneration (2)
Squires I Cogeneration (2)
Telemetry/Control (2)
"D" Reservoir Expansion (3)
Replace/Enlarge ECR Line (3
Replace/Enlarge PAR Line (3
Replce/Enlrg Squires Line (
Agua Hedionda Basin (3)
La Costa II Reservoir (3)
Village Rehabilitation (3)
Telemetry/Control ( 3 )
Grand Total All Phases
MFC-Qualifying-
(New Development)
5,600,000
700,000
112,000
98,000
3,000,000
4,500,000
640,000
462,000
4,000,000
) 2,189,000
) 1,450,000
3) 879,000
600,000
280,000
24,510,000
Enhancement-
( Water Users)
4,400,000
. 500,000
88,000
77,000
1,350,000
2,000,000
1,500,000
452,000
600,000
600,000
363,000
1,411,000
1,558,000
621,000
1,000,000
500,000
220,000
17,240,000
Total 1985$
10,000,000
1,200,000
200,000
175,000
1,350,000
3,000,000
4,500,000
2,000,000
1,500,000
1,092,000
600,000
600,000
825,000
4,000,000
3,600,000
3,008,000
1,500,000
1,000,000
600,000
500,000
500,000
41,750,000
Totals per Phase
Phase
MPC-Qualifying-
(New Development)
Enhancement-
(Water Users)Total 1985$1-
2-
3-
(1986-1990
(1991-2000
(after 2000
projects )
projects )
projects )
9,510,000
5,602,000
9,398,000
6,415,000
5,515,000
5,310,000
15,959,000
11,117,000
14,708,000
All Phases 24,510,000 17,240,000 41,750,000
17
Table 7-Costa Real Municipal Water District
Proposed Projects and Cost Estimates
by Phase
PHASE I (1985-1990)
Project Year 1985 Cost
Squires Reservoir
Evans Point Reservoir
TAP Chloramination Station
Telemetry-Control System
Village Area Rehabilitation
"D" Reservoir Expansion (8 MG)
1986
1986
1986
1987
1987
1989
10,000,000
1,200,000
200,000
175,000
1,350,000
3,000,000
Subtotal $15,925,000
PHASE II (1991-2000)
Project 1985 Cost
Santa Fe III (9 MG) 4,500,000
Village Area Rehabilitation 2,000,000
San Luis Rey Well Field Rehab. 1,500,000
Replace/Enlarge PAR Line (1st Stage) 1,092,000
Point "D" Cogeneration Sta. 600,000
Squires I Cogeneration Sta. 600,000
Telemetry-Control System 825,000
Subtotal:$11,117,000
PHASE III (after 2000)
Project
Subtotal
GRAND TOTAL ALL PHASES
1985 Cost
"D" Reservoir Expansion- 2nd Stage 4,000,000
Replace/Enlarge ECR Line (36") 3,600,000
Replace/Enlarge PAR line (39") ' 3,008,000
Replace Squires Dam Line 1,500,000
Agua Hedionda Basin Rehab. 1,000,000
La Costa II Reservoir (1.5 MG) 600,000
Village Area Rehabilitation 500,000
Telemetry-Control System 500,000
$14,708,000
$41,750,000
18
FUNDING
In 1984, the District financed three reservoirs
with certificates of participation. The "full faith
and credit" of the District was pledged as security,
meaning revenues from major facilities charges, water
sales, property taxes, interest earnings and other
available sources be used for funding as necessary.
There are many options that might be cost effective at
the time of financing the Phase I projects. The key
question to answer when the projects are undertaken is
"who pays?". The certificate of participation program
was designed to spread costs among the project
beneficiaries. This policy is addressed by this report,
which has allocated costs proportionately, subject to
modification as the District proceeds with the actual
work leading to construction.
The various projects in the CIP will benefit both
existing and future water users. Table 6, page 16,
shows the complete list of projects and the allocation
of responsibilities between developers and water users.
The cost allocation represented in Table 6 results from
the analysis of individual projects to determined the
respective benefits for new development and water
users. A 56% to 44% benefit ratio between new
development and water users was determined by analysis
of the relationships between replacement cost, due to
existing demands, and enlargement cost, due to future
demands, of pipeline and reservoir improvements. Phase
I projects where this cost-benefit ratio applies are
Squires Reservoir, TAP chloramination station, and
telemetry/control system improvements. In other cases,
projects will benefit new development exclusively (e.g.
"D" Reservoir Expansion) or water users exclusively
(e.g. Village Area Rehabilitation) and are cost-
allocated accordingly.
The revenue generated by the Major Facilities
Charge which is paid by new development will finance
the portion of Phase I projects that benefit new
development (Table 6). Adequate revenue must also be
generated to finance the enhancement project list
(Table 6). These revenues will either be generated
through funds from the City that are to be transferred
to the District for this purpose or through a capital
surcharge, an increase on the water rate. Descriptions
of these revenue alternatives follow.
19
Major Facilities Charge
A discussion of specific funding sources can begin
with the major facilities charge, which is a connection
charge levied against new development. The MFC was
established as part of the 1984 certificate of
participation program which financed three reservoirs
currently under construction. This charge is assessed
against equivalent dwelling units at the time the City
issues building permits. Based on information which
indicated the need to proceed with projects of an
immediate concern, the MFC has been set at $1,590 per
EDU as of January 1986. This will enable the District
to proceed with the immediate projects while the long
term capital plan is being finalized.
To calculate the amount of the charge, growth
estimates for CRMWD service area were analyzed to
determine the potential revenue from the MFC. In 1984
approximately 2,000 EDUs were added to the CRMWD
system. The City's latest population projections show
a rate of approximately 1,100 EDUs per year for
CRMWD's area. Therefore, 1,000 EDUs was judged to be a
realistic number which should generate an adequate
revenue stream to meet fixed debt service for projects
that benefit new development.
During the review of an earlier draft of this
report, a question was raised regarding determination
of a charge to support ultimate MFC requirements. An
average annual debt service for the entire project list
was calculated, and it yielded a MFC of over $5,000 per
EDU for MFC qualifying projects. There are several
problems with this approach.
This method would make changes in the project list
and estimated costs extremly difficult, if not
virtually impossible to justify. One must question the
accuracy of population projections that go for some
twenty years into the future. Variations in the actual
population growth or more detailed studies into the
Phase II and III projects could possibly eliminate or
substantially alter some projects. Therefore, such a
charge could be exhorbitant and overly speculative. The
shorter the planning period relied upon to set rates,
the more accurate the forecasting will be. Required
financing for Phase I MFC-qualifying projects was
thereby used in considering the major facilities
charge.
20
Capital Surcharge
During design of the certificate of participation
program, the District considered a capital surcharge on
the water rate. This wasn't done, although pledging
the "full faith and credit" of the District acknow-
ledged the availability of a surcharge if needed for
payments.
A capital surcharge on the water rate of $0.10
per 100 cubic feet ($43.56 per acre foot) would fund
the Phase I enhancement project list. However, no
surcharge is recommended at this time because the
District is due (pursuant to the Water Service
Agreement of 1983) to receive undesignated reserves
from the City's water enterprise fund plus the proceeds
from the sale or lease of Lake Calavera, to be used for
capital improvements of the water system. If City funds
received by the District are insufficient to meet the
total construction costs of the list of enhacement
projects, an increase on the water rate will have to be
considered at that time.
The discussion has so far addressed Phase I MFC-
qualifying projects, the need for which is created
mostly by new development. The remaining projects
shown in Table 6, totalling $17,240,000, are needed
mainly because of wear on the system which has created
the need to replace or enhance facilities.
As previously mentioned, City reserves for water
system improvements and proceeds from the sale or lease
of Lake Calavera are to be transferred to the District
as stated in the Water Service Agreement. The estimated
$3,000,000 million dollar in City reserves coupled with
the estimated $15,000,000 that could be generated by
the sale of Lake Calavera approximately $18,000,000 in
assets. This would result in a surplus of funds of
$760,000 if applied to the construction of the
enhancements projects in Table 6. As shown on the
following page Table 8, the transfer of City funds from
the sources just described could avoid the cost of
financing, thereby saving a substantial amount in
interest costs, while not having to increase water
rates.
21
Table 8-Costa Real Municipal Water District
City of Carlsbad Contributions for
Enhancement Projects
City Reserves $3,000,000 . -f\jj.t^U
Sale of Other Property $1,500,000-£«P«^ 4*-********* <
Sale of Lake Calavera $15,000,000
Total $19,500,000
Enhancement Projects (Table 7) $17,240,000
Surplus of Funds $1,529,000
While it is recommended that no surcharge be le-
vied at this time, work on the enhancement projects
should not be undertaken until the issues of City
contributions are resolved. One exception to the
recommendation is the Squires Reservoir project. The
rehabilitation of Squires Reservoir should be
addressed for water quality reasons as soon as
possible. For this reason the District may have to move
ahead with this work by arranging short- term or
interim financing.
Lake Calavera
The sale of Lake Calavera has been recommended in
two City reports. A 1984 publication entitled "A
Report on the Evaluation of Lake Calavera and Mission
Basis Well Field as Water Resources," by Glenn M.
Reiter, & Associates concluded "the cost involved in
putting the limited quantities of water available to
beneficial use for domestic purposes are obviously
prohibitive," and that "sale of the property
surrounding the lake with retention of the 'flooded'
area for its limited flood control value (and residen-
tial development enhancement) would appear to be in the
best interest of the City." A 1969 "Water System
Engineering Study" by Jack Y. Kubota and Wayne P. Li 11
recommended that "Water Department properties not
needed for water supply purposes in the expanded future
system should be liquidated as advantagous1y as
possible with the object of facilitating the
financing of needed new works." This report
recommends that action be taken as soon as possible to
resolve this matter.
22
The ultimate use of Lake Calavera may be a
politically sensitive matter, as recent opposition to
the idea of draining the lake indicated. Yet the
conversion of this non-functional asset to cash as a
way to pay for water system improvements should be
feasible by taking steps to preserve the enviornmental
amenities of the lake and surrounding 200-plus acres.
23
FINANCING
In undertaking a program involving the
construction of public facilities, a factor of major
importance is the ability to obtain sufficient
financing. The District's certificate of participation
program has been discussed relative to its affect on
existing debt service requirements and CRMWD policies
regarding funding this debt. Other financial methods
are available to the District and will next be
discussed. Debt security, which has been mentioned in
the section on funding, will first be covered since it
is fundamental to arranging financing.
Debt Security
Consideration of the security CRMWD can offer for
its anticipated debt is important when evaluating
financial alternatives. One financial method might be
chosen over another because of market conditions which
would be expected to favor one method (i.e. attract a
lower interest rate). The national credit rating agen-
cies, Standard & Poor's Corporation and Moody's
Investors Service, analyze several factors in order to
rate a prospective debt issuer's credit worthiness.
According to Standard & Poor's "Credit Overview" report
on municipal ratings, there are four broad areas of
concern covering established sectors of credit:
economic, debt, administrative and fiscal.
Economic factors include the area's economy which
ultimately generate's the most important criteria: the
agency's ability to repay debt. The analysts believe it
is important for an area to offer economic diversity in
its revenue base along with diversity and growth in
employment opportunities. The creation of jobs and
adequate income levels are considered.
Debt factors include the type of security being
pledged to repay the debt, overall debt burden, debt
history and trend. Standard & Poor's says the debt
burden must be measured against the income and the
agency's total budget resources. Debt history and
projected debt needs must also be considered, and a
community, as represdented by its public agency,
"should also be able to demonstrate a regular planning
program for capital improvements."
Administrative factors include an examination of
the type of government involved and an assessment of
its ability to accomplish the job it's supposed to be
doing. Limitations on the agency's ability to generate
revenues, debt limitations, and current unused margin
24
(income in excess of current expenses) are also consi-
dered, with revenue resources having to at least equal
expense requirements. The analysts also evaluate such
management factors as personnel turnover, labor-manage-
ment relations history, and legal and political
constraints that are present in the structure and
environment of the entity.
Fiscal factors include an examination of fiscal
performance. The balance sheet for the general operat-
ing account of the district would be looked at to see
if current assets of cash and investments exceed
current liabilities. Financial statements are examined
to see if an agency has its finances under control.
As stated in a 1983 report prepared for the County
of San Diego, "The underlying security of an issue of
a public debt obligation is the prime determinant of
annual borrowing cost." The rating agencies evaluate
security to determine the credit worthiness, which in
turn attracts investors.
Various financing options, both traditional and
irinovative, are available to CRMWD, and will next be
discussed, starting with the program begun by the
District in 1984.
Certificates of Participation
CRMWD issued tax-exempt certificates of participa-
tion (COPs), under terms of an Installment Sale Agree-
ment. This agreement was between Imperial Securities
Corporation, the seller of the COPs, and CRMWD, the
agent for the seller and owner of the facilities to be
financed. Security for the COP's was called the full
faith and credit of the District, meaning all revenue
sources available to CRMWD would be used if needed to
pay off the debt. The actual mix of revenues designed
to service the debt is detailed in Table 9.
Table 9-Costa Real Municipal Water District
Security Pledged to COP Financing
Source Est. Percent
Connection Charges (new development) 36%
Interest Earnings (on all dist. funds) 33%
Property Taxes (Dist. share of 1% levy 17%
allowed by Prop. 13 and allocated by
the County)
Water Sales (capital surcharge) 14%
Total 100%
25
As previously stated, a capital surcharge has not
been used to service the COP debt although it is
available in case of revenue shortfalls in the other
areas.
The ratings from Moody's Investors Service and
Standard & Poor's Corporation, the national credit
rating agencies, were considered adequate by the
District's financial advisors in light of market condi-
tions and the innovative nature of the COPs. The
ratings were "Baa" from Moody's "BBB+" from Standard &
Poor's. Essentially the same rating by both rating
agencies, CRMWD's issue was considered neither highly
protected nor poorly secured, with interest payments
and principal security appearing adequate for the
present but with certain protective elements possibly
lacking or unreliable over any great length of time.
Such "bonds", or certificates in this case, are said to
lack outstanding investment characteristics and to have
speculative characteristics.
The COP issue attracted three bidding syndicates
at the competitive sale, with the winning group offer-
ing an average interest rate of 10.04 percent over the
20-year life of the certificates. The COP program has
been judged by the CRMWD staff and advisors to be
sucessful. Revenues have been adequate to meet debt
service. Although it formed the basis of the
District's capital financing program, the COP program
is but one of several methods the District may
ultimately consider as it proceeds to implement the
capital improvement program. Other financing techniques
relevant to the CIP will next be discussed.
General Obligation Bonds
Proposition 13 (Article XIIA of the Constitution
of the State of California) has limited taxation to one
percent of full market value of real property. This
has eliminated the use of general obligation bonds
unless voter authorization was obtained prior to July
1978. CRMWD has $300,000 of voter approved, unissued
G.O. bonds which could hypothetically be issued; how-
ever, issuance costs and the marketability of this
relatively small amount would reduce the net value of
the bonds. A legal opinion from bond counsel would
also be required. For these reasons G.O. bond financ-
ing is not a meaningful option for the District.
Pay As You Go
A major benefit of using cash on hand to pay for
improve-ments is the substancial savings in interest
26
expense. The ability of the District to pay for cer-
tain capital improvements from current funds is a func-
tion of cash on hand, future cash flow conditions and
the equitability of using funds generated by current
residents to pay for facilities which might benefit
future water users. An evaluation of benefits received
by different classes of water users has been done and
is reflected in Table 6.
As described heretofore, CRMWD has established a
major facilities charge for new development. The
future replacement and rehabilitation of existing faci-
lities could be financed on a pay-as-you-go basis by
creating a sinking fund from a water rate surcharge;
however, this report recommends the issues of
transferring City reserves and disposition of Lake
Calavera be resolved prior to levying a surcharge. The
liquidation of real property assets presently
controlled by the City and the transfer of earmarked
City reserves for water system improvements would allow
the District to employ pay-as-you-go financing for the
rehabilitation (water user) category of projects.
A recent article in the Journal of the American
Water Works Association (September 1983) provided a
general rule: cash-finance items of a recurring
nature, like routine improvements or replacement of
mains and hydrants, but debt-finance major nonrecurring
projects, like treatment plants and reservoirs. Use of
major facility' charge revenues to fund the MFC-qualify-
ing improvements and cash financing of enhancement/re-
placement projects as proposed would follow this
general rule.
Revenue Bonds
The Revenue Bond Law of 1941 may be used to
finance water system improvements. The primary securi-
ty for this debt is the revenue produced by the project
to be financed. For CRMWD primarily this means water
sales, and since the 1984 COP program established a
blend of debt service revenue sources, including a
small percentage from water sales, the use of revenue
bonds could conflict with established policy. The
issuance of revenue bonds requires authorization by a
majority vote in a public election. Revenue bonds were
considered by CRMWD in 1983 and ultimately rejected in
favor of certificates of participation. Revenue
bonds may be attractive depending on CRMWD's future
requirements.
27
Special Assessments
Special assessment financing is applicable when
the benefit of the improvement can be assigned to a
specific property. The CIP projects are of a District-
wide benefit, with certain exceptions, like the Village
Area Rehabilitation. Special assessments may be used by
the District to provide other facilities, though, and
should be briefly described.
Assessments pursuant to various statutory provi-
sions may be levied against the benefitting properties
according to the share of benefit. The assessments may
be calculated according to acreage, front footage along
a pipeline, number of dwelling units or similar basis.
Such financing is often initiated by property owners
needing facilities to serve new development, or to
upgrade existing facilities. Special assessment
districts could be formed by the CRMWD to finance
facilities serving subareas of the District. However,
the use of special assessment District financing would
not conform to the District-wide nature of the capital
improvement plan, and for this reason is not
recommended for CIP financing at this time.
CRMWD has traditionally required developers to
install water facilities to serve new developments.
The existing District policy is to accept such facili-
ties as contributions to the public water system once
they are completed according to District specification.
The District often requires developers to oversize a
pipeline or other facility so that additional proper-
ties can be served. In such cases, the developer is
required to pay for his share only. The District
adopts an area of benefit map and a reimbursement
agreement which establish charges to be collected when
new parcels develop. These proceeds cover the remain-
ing costs of the facilities.
Lease Financing
Public agencies have used lease financing to cope
with restrictions on the use of other methods (e.g.
G.O. bonds), or when market conditions favor it.
Lease financing establishes the public agency as the
lessee of a facility financed by another party and
ultimately owned by the agency. In many ways a lease
revenue program would be structured similar to CRMWD's
certificate of participation program. Lease revenue
bonds would be authorized by the lessee, typically a
non-profit corporation or joint powers authority
created for the purpose. The bonds would be authorized
without an election, but subject to the referendary
28
provisions available to the public which could
terminate the proceedings.
Security for the bonds would be the ability of the
lessee (CRMWD) to meet its financial obligations.
Pledged sources of security could include the general
fund of the District, major facility charges, user
fees, a reserve fund and insurance. In other words,
the District's funding policies established by the 1984
certificate of participation program could be main-
tained. Once the lease was paid in full, the District
would own the facility or facilities.
Not only does CRMWD's COP program seem compatible,
but the similarity goes beyond appearance. Some
transactions using "certificates of participation" have
actually been forms of lease financing which, although
labeled the same as CRMWD's program, have been
structured differently. Such a "COP" program would
involve a lease with a purchase option or conditional
sales agreement.
The similar structure and same label created
problems when CRMWD's COP program was put together.
The New York rating agencies viewed it as lease financ-
ing, for which different credit evaluation criteria are
used. CRMWD representatives emphasized the differences
to help overcome the confusion. Additionally, the tax-
exempt status of CRMWD's certificates was questioned
when the IRS ruled a COP issue by another agency to be
non tax-exempt. Bond counsel to CRMWD dealt with the
IRS and rating agencies to solve this problem.
Although CRMWD's program was not a lease financing
arrangement, the lines of distinction were blurred.
For this reason the role of bond counsel in reviewing
the structure of the program and certifying its tax-
exempt status was particularly important, and the
District's program was successfully marketed.
Government; Grants and Loans
The potable water industry does not benefit from
the same level of governmental assistance as the waste-
water industry, where Federal and State grants are
often used to finance major projects. The California
Safe Water Bond Law of 1984 provided low interest loans
up to ?5,000,000 and grants up to $400,000 for eligible
projects, defined as improvements needed to bring water
systems to minimum drinking water standards.
In 1985 CRMWD applied for a loan to rehabilitate
Squires Dam and Reservoir, for which the California
Department of Heath Services has urged covering and
29
lining to meet current standards. Ranking of each
application was based on the seriousness of each
system's deficiencies related to public health. CRMWD
was ranked far down on the priority list and notified
that funding was not available because of its ranking.
It is possible future loans will be -available but the
likelihood of CRMWD qualification is not considered
good at this time because of the lack of identified
water quality problems affecting public health.
Mello-Roos Community Facilities Act
The Mello-Roos Community Facilities Act became law
in January 1983. It is available to local agencies as
an alternate method for financing a wide range of
public services and capital improvements, including
water system facilities. Whereas special assessment
financing is limited to local improvements where it can
be clearly demonstrated that specific properties re-
ceive a direct benefit, Mello-Roos provides for special
taxes to be levied without such precise restrictions.
They can be used for any governmental facilities which
the legislative body is authorized by law to construct,
own or operate, as necessary to meet increased demands
placed upon the agency by development or the need for
rehabilitation. The act also sets forth procedures for
changing the originally intended uses of the tax pro-
ceeds, a major difference between Mello-Roos and
special assessment financing.
Under Mello-Roos a community facility district is
formed by the public agency, subject to abandonment of
the proceedings if 50 percent of the qualified voters
or landowners protest, with approval required by a two-
thirds majority vote of the qualified electors. The
vote is by registered voters except where less than 12
registered voters live within the proposed community
facilities district, in which case each landowner has
one vote per acre or portion thereof. The voting
provisions facilitate public approval in situations
where less than 12 registered voters reside and where
the landowners want development of their property. For
this reason Mello-Roos has been used more often in
these circumstances.
Advantages of Mello-Roos
1. Considerable flexibility is available in the
establishment of any special tax formula.
2. The taxed property is not subject to a specific
lien as it would be with assessment proceedings.
30
3. Special taxes can be structured so payment
accrues only upon development (i.e. upon occupancy of
dwelling units), in which cases if development doesn't
occur, there would not be any reason for the public
facilities, and no need for taxes.
4. The special tax levy can be used to pay as you
go as well as to pay principal and interest on long-
term bonded indebtedness. This offers greater
. flexibility than assessment bonds, meaning
opportunities for lower financing costs.
5. The structuring of the tax is not limited to
benefits to land, but can be more closely related to
users of the service, allowing for payment based on the
benefits received by those other than landowners.
Disadvantages of Mello-Roos
1. There is no express procedure to notify a buyer
or new homeowner his property is subject to a special
tax.
2. A requirement for reserve fund replenishment could
create an inequity where a few property owners would
pay for the delinquency of others, with no procedure
for solving this problem.
3. The structure of the special tax might produce
confusion as new people move into the territory.
4. The procedure for adopting the community
facility district allows for the financing to be
arranged so quickly that potential problems cannot be
adedquately dealt with.
Confusion and the specter of inequity, when raised
prior to an election, would make Mello-Roos financing
difficult to sell to two-thirds of the voters. How-
ever, if a water shortage were imminent, pending re-
habilitation of existing facilities or construction of
new ones, and if it were evident such improvements
would benefit all classes of users, voters might
provide the necessary approval. In this case the
District would be able to take advantage of the
positive aspects of the Mello-Roos Community Facilities
Act.
31
CONCLUSIONS
1. The District has identified the major facilities
needed to meet the ultimate demands on the water
system.
2. The costs of the required facilities have been
identified in current dollars, and apportioned to
the respective project beneficiaries. Exact
project costs will become known as the projects
are developed.
3. The District has the funding mechanisms in place,
through its Major Facilities Charge, water sales
and other revenue sources to support a major
construction program.
4. There are several financial vehicles available as
the District proceeds with its capital improvement
program.
5. By adoption of this report, the District is in a
position to proceed with its capital improvement
program.
32
PARTIAL LIST OF
SOURCES CONSULTED
Andersen, Ralph, & Associates; Jones Hall Hill &
White; Rauscher Pierce Refsns, Inc. "County
of San Diego: A Review of Financing Methods
for Capital Facilities and Equiptment, Final
Report" March 1983.
Bartle Wells Associates. "Costa Real Municipal
Water District : Major Facilities Financing
Plan and Rate Study." June 1983.
Bartle Wells Associates. "Official Statement,
Costa real Municipal Water District,
$12,600,000 1984 Certificates of
Participation." February 1984.
Blakesley, William E., P.E. Engineer, Costa Real
Municipal Water District.
Brammell, Thomas L., C.P.A. Controller, Costa Real
Municipal Water District.
Brown, F. MacKenzie, Attorney at Law. Unpublished
(typewritten, undated) analysis of Mello-Roos
Community Facilities Act of 1982.
Burzell, Linden R., P.E. District Engineer, Costa
Real Municipal Water District
California Legislature, Senate Committee on Local
Government, Senator Milton Marks, Chairman.
"Closing the Gap: Infrastructure Needs And
Our Ability To Pay For Them: Summary of the
testimony received at the interim hearing of
the Subcommittee on Infrastructure and Public
Works, November 27, 1984.
California Legislature, Senate Committee on Local
Government, Senator Milton Marks, Chairman.
"Public Infrastructure Financing Methods:
Helping Communities Get What They Are Willing
To Pay For: Summary Report." Summary of the
testimony received at the interim hearing of
the Subcommittee on Infrastructure and Public
Works, November 2, 1983.
California Office of Planning and Reasearch. Paying
ill6. ZiE^-EJL Ne_w Wa^.s _t£ ZiLY. f.P.J. £ub^ijc
Infrastructure in California. Sacramento:
1983.
33
City of Carlsbad. Numerous documents and meetings
with several staff members and department
heads.
Cole, Lisa A.; Duven, Dawn R.; Owen, Samuel H.;
and Vogt, John A. Guide to Municipal Leasing.
Foreward by John E. Petersen. Chicago:
Municipal Finance Officers Association, 1983.
Costa Real Municipal Water District. Financial
and general records.
Costa Real Municipal Water Distrtict. Urban Water
Management Plan. December 1985.
Government Finance Research Center, Municipal
Finance Officers Association. Bu^_ldijn2
Prosperity; Financing Public Infrastructure
for Economic Development. Washington, D.C.:
Government Finance Research Center, 1983.
Chap.2.
Horler, Virginia L. "Guide ro Public Debt
Financing in California." Los Angeles:
Rauscher Pierce Refsnes, Inc., 1982.
Kubota, Jack Y. and Lill, Wayne P. "Water System
Engineering Study: City of Carlsbad." January
1966.
Lemieux, Wayne K., Attorney at Law. Handbook for
li°9.§L:L A.5e_Hc.Y P_f. f.i .2 i <*.!.§.• Sacramento:Association of California Water Agencies,
1984.
McKinley, J. Rowe. "Financing Water Utility
Improvements." Ame_r_^c_a_ri Wa__te_r_ Wor_ks^
Association Journal. September 1983.
Miller, James W. "Old Water-New Water: Setting
Equitable Water Rates for Surburban
Customers." American Water Works Association
Journal. September 1984.
Moser, Gregory V., Attorney at Law. Legal Counsel,
Costa Real Municipal Water District.
Reiter, Glenn M. & Associates. "A Report on the
Evaluation of the Lake Calavera and Mission
Basin Well Field as Water Resources." City of
Carlsbad, April 14, 1984.
34
Reiter, Glenn M. & Associates. "Diagnostic
Analysis of the City of Carlsbad and Costa
Real Municipal Water District Areas." City of
Carlsbad, September 22, 1981.
San Diego Association of Governments. San Diego
County Water Authority Member Agencies."
Report issued January 1985.
Standard and Poor's Corp. £££<li;t Over v:Lewj_
Municipal Ratings. New York: Standard and
Poor's Corp., 1983. Part Two.
Water Service Agreement. City of Carlsbad and
Costa Real Municipal Water District. May 25,
1983.
Wells, Edwin A., Principal Consultant. Bartle
Wells Associates. Municipal Financing
Consultants.
Woodside/Kubota & Associates, Inc. "Draft Master
Plan for Public Water System." Costa Real
Municipal Water District, February 1985.
COSTR 8[f!L HOMICIPflL UfHER DISTRICT Append! X A
ZO YERR CRPITRL IHPROUEflEHT PROJECUGHS
STORY 1986-2005
1586 36-90
Hunker of EDO's
Major Facility Charge
MFC I Inflation Factor
MFC $ Inflation Factor
Property Taxes
Property Tax I Inflation
ftanual Hater Sales (R.F.)
Hater Sales I Increase
Capital Surcharge
Capital Surch I Inflator
Capital Surch $ Inflator
Capital Fund Interest
Ongoing Capital Projects
Master Plan Projects at'.
No Construction Inflation
Projects constructed at nid-phase year
10", Financing for 20 years
1st paynent in year following construction
1000
$880
O.OOX
$0
$250,000
5.00X
12,000
1.QOZ
$0.10
o.oo;;
$0
$300,000
$250,000
50GO
$880
1,00
$0
$1 ,381 ,108
1,05
61,996
1.Q4.
$0,10
1.00
$0
$1,500,000
$1 ,250,000
5000
$880
1.00
$0
$1,763,065
1.05
79,077
1.01
$0.10
1.00
$0
$1,500,000
$1,250,000
5003
$880
1,00
$0
$2,250,168
1.05
96,210
1,31
$0.10
1.08
$0
$1,500,000
$1,250,000
5000
$880
1.00
$8
$2,371,818
1. 85
117,351
1.01
$8.10
1.00
$3
$1,500,000
$1,250,083
2GGOO
$880
1.00
$0
$8,266,189
1.05
357,337
1.01
$0,10
1.00
$0
$6,000,030
$5,830,000
5 VERR 5YERR 5 YERR 5 VERR 20 YESR
PROJECTIONS TOTflL IOIRL TQTBL TOTRl TOTftl
86-90 91-95 96-00 01-05 86-05
Revenues
Major Facility Charges $1,100,000 $1,100,000 $4,100,000 $1,^0,030 $17,600,1100
Property faxes $1,381,108 $1,763,365 $2,250,168 $2,871,818 $8,26b,1B<i
Capital Surcharge $2,331,220 $3,111,612 $1,190,897 $5,098,868 $15,565,597
1981 COP Reserve Interest $725,000 $725,000 $725,000 $725,000 $2,900,000
Capital Fund Interest $1,500,000 $1,500,000 $1,500,000 $1,500,000 $6,000,000
Lake Calawra Proceeds $0 $0 $0 $0 $0
City Utility Funds $0 $0 $0 $0 $0
Total Revenues $10,837,628 $11,832,673 $13,066,065 $11,595,715 '550,332,036
Expenditures
1981 CBP Financing $7,325,253 $7,633,653 $7,617,225 7 W 3"0 ;29 'cc C2C
Other Instalment Debt $81,300 $0 '£0 :n $i' lr
Operating Capital Itens 51 ^fl/Cl) *l A 5 V rt C " r n i L j A
1937 Phase I Financing <8b-9G projects $11,3n5,CEO} U 3r,
'991 Phase II Financing (91-00 projects)
2001 Phase III financing '^aftcr 2000 project?)
?otai Expenditures $15,176,236 $17,G37,bss $17,Gib..3:3 {l5r:'H,t.GS $61,l.:fl5..;j5
Met Sain or (Loss) ($1,338,608) ($5,231,980) vS3;)80,768) '$618,S93) •511,173,213)
Capital Fund Balance $3,000,000 '$1,338,838) ($6,513,583) ($10,521,356) ($11,173,219) ($11,173,219)
1986-20O5 FINANCIAL PROJECTIONS
ro -
>< .1 -
,o -
1 O
19S6—1990
Cash Flows ihru Phase i
K'L VtNl.lt;
-199^ 1996 —20OO 2OO1--2O05 1936 —2GOf.i
QOO E.D.U,'s/"YR, <8? $8SO/tI,.p. U,
;PtMD!TURt,S r^' 1 CAP. FUND BAL,
T3TDfD3
CL.u.
X
DO
COSTS FOL NUNiciPflL URTER Gismcj
20 YEiK CRPITflL IHPRQUEHENT PROJECTIONS
mw;< 1986-2005
Appendix C
Nunber of EGLI's
Major Facility Charge
HFC X Inflation Factor
MFC $ Inflation Factor
Property Taxes
Property Tax X Inflation
flnnual Uater Sales (B.F.)
Uater Sales ,'.Increase
Capital Surcharge
Capital Surch Hnflator
Capital Surch $ Inflator
Capital Fund Interest
Ongoing Capital Projects
•tester Plan Projects at:
Ho Construction Inflation
Projects constructed at nid-phase year
10" Financing for 20 years
1st paynent in year following construction
PROJECTIONS
Revenues
Major Facility Charges
Property Taxes
Capital Surcharge
1981 COP Reserve Interest
Capital Fund Interest
Lake Calauera Proceeds
City Utility Funds
Total Revenues
Expenditures
1981 COP Financing
Other Installment Debt
Operating Capital I tens
1987 Phase I Financing (86-90 oro.eets $11,075,333;
1991 Phase a financing '91-30 projects)
lOOi Phase ill financing softer 2303 orojects)
Total Expenditures
Net Sain or (Lass)
Capital Fund Balance S3,000,0
1000
$1,590
fl.OOX
$0
$250,000
s.oor.
12,000
UQX
$0.10
O.ttOX
$0
$300,000
$250,000
5000
$1 ,590
1.00
$0
$1 ,331 ,108
1.05
61,996
1.01
$0.10
1,00
$0
$1,500,000
$1 ,250,000
5 YERR
TOTfiL
86-90
$7,950,000
11,381,108
$2,831,220
$725,000
$1,500,000
$0
$0
5000
$1,590
1,00
$0
$1,763,065
1.05
79,077
1.01
$0.10
1,00
$0
$1 ,500,000
$1 ,250,000
5 YERR
TOTRL
91-95
$7,958,000
$1,763,065
$3,111,612
$725,000
$1 ,500,000
$0
$0
5000
$1 ,590
1.00
$0
$2,250,168
1.05
96,210
1.31
$3.10
1.00
$0
$1 ,500,000
$1,250,000
5 YERR
IfllfiL
96-30
*n ,Trn rinn•»l ,:jU,iJUU
$2,250,168
$1,190, 897
$725,000
$1,500,300
$0
$0
5000
$1 ,590
1.00
$0
$2,871,818
1,05
117,051
1,01
$0,10
1.00
$0
$1,550,000
$1,250,000
5 YERR
TOTRL
01-05
»7,9;.0,000
$2,871,318
$5,098,368
$725,030
$1,500,300
$0
$0
20000
$1 ,590
1.00
$0
$8,266,189
1.05
357,337
1.01
$0.10
1.00
$3
46,030,800
$5,000,800
20 YERR
TOTRL
fir r*rdrub
531 ,808,003
$8,266,189
$15,565,59?
$2,900,000
$6,000,000
SG
$0
$11,387,628 $15,382,678 $16,616,865 $18,115,715 $61,532,036
$7,325,250 $7,638,050 $7,617,225 $5,815,388 $28,155,525
Sol ,300 $0 ifi iO 4fi!.308
$1,258,800 $1,250,000 51 250 COG - r< '.H iL r3 W
$6,519,686 $6,119,608 ^ 1J" M i i
$3 :c £:; iG
i:] £3
515,176,236 -417,337,658 $!7;;iifci3- $15,211,b08 »64,£G5,i3;;
($788,608) ($1,651,980) ($130,768) $2,301,18? $2b,7S1
$2,211,392 $556,111 '$125,611 $3,026,751 $3,326,751
COSTA REAL FINANCIAL PROJECTIONS
$1,59O/EDU & $,10 CAP, SUR,
»&£•;-19SO 1991 - 1995 1996-2OOO
RLV'tlHUt
FISCAL YEARS ENDING
[L_1:J EXPENDITURES ^
!O01 -2005
CAP, FUND BAL-
TST3fD
Q.
—jtX
o
'*-«7wE*
JANUARY 16, 1986
JOINT COMMITTEE MEETING
COSTA REAL MUNICIPAL WATER DISTRICT
CITY OF CARLSBAD
Capital Improvement Plan
Executive Summary
SUMMARY
Costa Real Municipal Water District must provide
facilities to accommodate rapid urbanization in
Carlsbad. The Capital Improvement Plan identifies
projects that will satisfy the future demands on the
water system. The projects identified in this report
fall into two main categories:
1. Construction of new facilities and enlargement
of existing ones to accommodate the increase in demand
from new development. Costs of new or enlarged reser-
voirs, increased pipeline capacities and other projects
necessary for their operation can be attributed to new
development.
2. Replacement and rehabilitation of facilities
that have depreciatied by operation of the system. The
cost of improving facilities currently in use is the
responsibility of the consumers..
In addition to the projects shown in this plan,
developers must contribute facilities which are built
privately, according to District specifications, and
which serve new development. These facilities have a
special benefit to those developments. This report
identifies the major facilities to be undertaken by the
District. Together, the developer-contributed
facilities and the District-built facilities will
constitute the complete water system.
In order to allocate the cost of District projects
equitably between developers and water users, the
benefits to be provided by the proposed projects have
been analyzed. This report identifies total improve-
ments costing $41,750,000 (current value) to buildout.
The respective allocation between new development and
water users is:
New Development $24,510,000
Water Users $17,240,000
The major facilities charge (MFC), a connection
fee paid by new development, has been set at $1,590 per
equivalent dwelling unit to be phased in during 1986.
The amount of this fee was determined by analysis of
revenue required to finance the proportionate cost of
projects the District must undertake to accommodate new
development in the immediate future. Additional
adjustments in the MFC might be recommended as the
exact project costs of construction and financing are
determined through implementation of this plan.
A water rate surcharge of $0.10 per 100 cubic feet
($43.56 per acre foot) would complement the increased
major facilities charge in accordance with the propor-
tionate share of benefit to water users, and allow the
District to undertake the immediate projects. However,
the Water Service Agreement between the District and
the City of Carlsbad provides for the transfer of
substantial funds for water system improvement, and
this report recommends settling pending issues with the
City before considering a specific water rate
surcharge. The use of City reserves could signifcantly
reduce the amount of a water rate surcharge. It is also
recommended that no work on the village area
rehabilitation program, adopted by the City prior to
the Water Service Agreement, be undertaken until the
matter of fund transfers is addressed.
The District has the resources to implement its
capital improvement program in a timely manner. Doing
so will assure existing and future citizens that the
water system is in place to serve their needs.
INTRODUCTION
Purpose
The purpose of the Capital Improvement Plan (CIP)
is to identify the major water facilities that must be
provided by the District to serve anticipated demands
at buildout; to consider appropriate financial methods;
and to describe policies which would carry out the
plan. The CIP recognizes the need to build new facili-
ties and replace existing ones to ensure an adequate
future water supply for CRMWD ' s area.
In addition to the practical need, the CIP is
required by the Water Service Agreement between CRMWD
and the City of Carlsbad, entered into in 1983. Re-
garding capital improvements, the agreement provides:
Per Agreement
1. The District will be responsible for the plan-
ning, financing and construction of all major capital
facilities to provide potable water service within the
District.
2. The District will coordinate the capital im-
provement program with the City.
3. The District, with input from the City, will
adopt a master plan of facilities.
4. The City will contribute the proceeds from the
sale or lease of Lake Calavera, together with any
undesignated reserves in the City's water utility fund,
to the District's capital development fund.
Policies
This report is based on the following policies:
1. New development will pay for facilities not
needed to serve existing water users. Payment will be
by:
A. Contributing facilities providing specific
benefits to new developments, such as in-
tract pipelines
B. Paying major facilities charges to fund
projects of District-wide benefit, the need for
which is required by new development
2. Existing water users will pay for the replace- ™ .^
ment or improvement of facilities they have used, the T^
need for which has not been created by new development.
PROJECT PHASING AND ESTIMATED COSTS
Improvements have been planned to adequately serve
the Disrict at buildout. Multi-year increments are
used, from which the overall plan may be divided into
yearly segments, or annual budgets. This process
allows the District to plan for the long term while
preserving the flexibility to adapt to actual
circumstances on a short term basis. The three plan-
ning phases are: 1985-1990, 1991-2000, 2001-buildout.
No year for buildout has been established by the City
of Carlsbad, although it is assumed to occur after
the year 2005 for water system planning purposes.
Although the consulting engineers list the La
Costa Hi, Tri-Agencies Terminal and Santa Fe II reser-
voirs within Phase I of their report, this report has
deleted them since they are already financed and under
construction. The nature and total cost estimate of
the Squires Reservoir project has been changed.
Originally planned as two projects, it is now conceived
as a 20 million gallon reservoir which would double as
additional storage (a benefit to future development)
and replacement storage (a benefit to existing resi-
dents). Adjusting the engineer's report to show future
financial requirements only, by changing the nature of
the Squires Reservoir project ($800,000 less) and by
deleting participation in Olivenhain Municipal Water
District's Mount Israel Reservoir ($1,000,000) gives a
grand total of $41,750,000 for the CIP.
Projects listed in the CIP are those that are to
be financed, designed, and constructed by CRMWD. In-
tract projects, those that benefit specific
developments, are the responsibility of the developers
to finance and construct. Hence, they are not described
in the CIP. The project list on page 16 (Table 6)
of the report identifies all CIP projects, cost
estimates and allocation of the costs between new
development (MFC) and water users. A further breakdown
of the projects into their respective phases follows on
page 17 (Table 7) of the report. Tables 6 and 7 have
been included in the Executive Summary and are
displayed on the following pages.
costa Keal Municipal water District
Master List of Proposed Projects,
Cost Estimates and Allocations
1986-2005
MFC-Qualifying- Enhancement-
Project (Phase) (New Development) (Water Users)
Squires Reservoir (1)
Evans Point Reservoir (1)
TAP Chloramination Sta. (1)
Telemetry/Control (1)
Village Rehabilitation (1)
"D" Reservoir Expansion (1)
Santa Fe III (2)
Village Rehabilitation (2)
San Luis Rey Well Field (2)
Replace/Enlarge PAR (2)
Point "D" Cogeneration (2)
Squires I Cogeneration (2)
Telemetry/Control (2)
"D" Reservoir Expansion (3)
Replace/Enlarge ECR Line (3)
Replace/Enlarge PAR Line (3)
Replce/Enlrg Squires Line (3
Agua Hedionda Basin (3)
La Costa II Reservoir (3)
Village Rehabilitation (3)
Telemetry/Control (3)
5,600,000
700,000
112,000
98,000
3,000,000
4,500,000
640,000 ..
462,000
4,000,000
2,189,000
1,450,000
) 879,000
600,000
280,000
4,400,000
500,000
88,000
77,000
1,350,000
2,000,000
1,500,000
452,000
600,000
600,000
363,000
1,411,000
1,558,000
621,000
1,000,000
500,000
220,000
Total 1985$
10,000,000
1,200,000
200,000
175,000
1,350,000
3,000,000
4,500,000
2,000,000
1,500,000
1,092,000
600,000
600,000
825,000
4,000,000
3,600,000
3,008,000
1,500,000
1,000,000
600,000
500,000
500,000
Grand Total All Phases 24,510,000 17,240,000 41,750,000
Totals per Phase
Phase
MFC-Qualifying-
(New Development)
Enhancement-
(Water Users)Total 1985$
1-
2-
3-
(1986-1990
(1991-2000
(after 2000
projects)
projects )
projects )
9
5
9
,510
,602
,398
,000
,000
,000
6
5
5
,415,
,515,
,310,
000
000
000
15
11
14
,959
,117
,708
,000
,000
,000
All Phases 24,510,000 17,240,000 41,750,000
-Costa Real Municipal water District
Proposed Projects and Cost Estimates
by Phase
PHASE I (1985-1990)
Project Year 1985 Cost
Squires Reservoir
Evans Point Reservoir
TAP Chloramination Station
Telemetry-Control System
Village Area Rehabilitation
"D" Reservoir Expansion (8 MG)
1986
1986
1986
1987
1987
1989
10,000,000
1,200,000
200,000
175,000
1,350,000
3,000,000
Subtotal $15,925,000
PHASE II (1991-2000)
Project 1985 Cost
Santa Fe III (9 MG) 4,500,000
Village Area Rehabilitation 2,000,000
San Luis Rey Well Field Rehab. 1,500,000
Replace/Enlarge PAR Line (1st Stage) 1,092,000
Point "D" Cogeneration Sta. 600,000
Squires I Cogeneration Sta. 600,000
Telemetry-Control System 825,000
Subtotal:$11,117,000
PHASE III (after 2000)
Project
Subtotal
GRAND TOTAL ALL PHASES
1985 Cost
"D" Reservoir Expansion- 2nd Stage 4,000,000
Replace/Enlarge ECR Line (36") 3,600,000
Replace/Enlarge PAR line (39") 3,008,000
Replace Squires Dam Line 1,500,000
Agua Hedionda Basin Rehab. 1,000,000
La Costa II Reservoir (1.5 MG) 600,000
Village Area Rehabilitation 500,000
Telemetry-Control System 500,000
$14,708,000
$41,750,000
CtTf TO
CONCLUSIONS
1. The District has identified the major facilities
needed to meet the ultimate demands on the water
system.
2. The costs of the required facilities have been
identified in current dollars, and apportioned to
the respective project beneficiaries. Exact
project costs will become known as the projects
are developed.
3. The District has the funding mechanisms in place,
through its Major Facilities Charge, water sales
and other revenue sources to support a major
construction program.
4. There are several financial vehicles available as
the District proceeds with its capital improvement
program.
5. By adoption of the report, the District is in a
position to proceed with its capital improvementprogram.