The boards of the Rancho Murieta Association and the Community Services District set goals in January. But unlike the RMA’s goals to move forward with remodeling the North Gate and improve the cable system, the CSD’s goals won’t be achieved this year. Instead, the CSD is looking at developing a five-year financial plan that takes into account aging infrastructure, a state mandate to reduce water usage, and regulatory requirements that increase the district’s reporting and compliance responsibilities for sewer maintenance and storm drainage.
“What I see us struggling with this year and even the next five years is the economy and its impact,” said General Manager Ed Crouse at the Jan. 22 board workshop.
According to Crouse, there are two things that will affect CSD rates. One is aging infrastructure and its effect on the district’s annual maintenance costs and reserve contributions. The other is the 20 percent reduction in water use the state has mandated by 2020. “There’s going to be increased costs to comply (with the mandate),” Crouse said. “You’re probably going to need a conservation coordinator , you’re going to have to have incentives, you going to have to have public education outreach. But, at the same time, as you conserve more water, you’re going to lose revenue. So it’s a double whammy.”
A third issue is, “There’s going to be no new development, as far as we can tell, at least until five years,” Crouse said. He added that every CSD department is concerned about budget impacts, “short-term and long-term.”
The CSD provides sewer, water, drainage, security and garbage collection services for the community at an average monthly cost of $137 for residential users.
“What I’d like to see, and I know you proposed earlier, Ed, that we need to get to the point where we’re doing a 2 to 3 percent rate increase consistently rather than what we had to do two years after we had zero, zero, zero (rate increases), and bump it 18 percent,” said President Bobbi Belton.
The 2008-2009 budget increased the average monthly cost for a residential rate payer 18.8 percent. At the time, the board reduced an anticipated 20.5 percent "worst case" increase by deciding to reimburse $600,000 in reserves over a 10-year period instead of five years. The CSD used the reserve funds to meet the requirements of a cease and desist order a regulatory agency issued in 2006. The 2008-2009 budget also restored the full contribution for water and sewer replacement reserves, which had been cut to 50 percent during the two years the state diverted 80 percent of the district's share of property taxes. The 2009-2010 budget increased rates less than 1 percent despite a drop in the district’s property tax revenue.
The workshop started with a look back at what the district accomplished in 2009. Paul Siebensohn, director of field operations, reported on numerous repairs and improvements that were made on the wastewater and water treatment side of operations.
Crouse pointed out Siebensohn’s department completed about 36 major projects in the past year, many of which were done in-house by staff at a considerable cost savings.
Siebensohn characterized the work as falling into two categories -- general maintenance and “abnormal maintenance” due to aging infrastructure. He said an effort was made to absorb the infrastructure repairs in the operating budget.
The district also took steps to improve oversight of its systems through continuous, online monitoring and computerization at a cost of about $10,000, he said.
The projects and goals Siebensohn outlined for 2010 include electrical replacements and upgrades at the water and wastewater treatment plants, which he cited as examples of aging infrastructure.
Siebensohn said he is looking at the need for an additional utility operator so the department can meet increased state compliance and reporting requirements for a newly implemented sewer management plan and municipal storm system permit, and still continue to perform maintenance and repair projects in-house.
Siebensohn referred to increases in annual permitting costs charged by regulatory agencies as another budget concern. The cost of annual dam inspections performed by the Department of Safety of Dams was about $32,000 in 2009, he said, and it’s expected to go up 8 percent this year. Referring to steep increases in inspection and permit fees in recent years, Director Dick Taylor remarked, “I can remember when it was $3,200.”
“We’re going to face a lot of pressure on the revenue side and the expense side,” Crouse said. “So we’re going to try over the next year or two to develop long-term forecasts so that we can address it.”