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HomeMy WebLinkAbout7.3 DSRSD Services Study CITY OF DUBLIN o- �� AGENDA STATEMENT CITY COUNCIL MEETING DATE: July 14, 1986 SUBJECT Dublin . San Ramon Services District Services Study EXHIBITS ATTACHED 1 ) Report of the Dublin and San Ramon Liaison Committee regarding the services of the Dublin San Ramon Services District dated July 1, 1986 2 ) Analysis of Solid Waste Collection Options Open to " Dublin and San Ramon, September 20, 1985, prepared by Hughes, Heiss & Associates 3 ) Analysis of the Impact of Transferring Parks, Recreation and Aquatic Services from DSRSD to the Cities of Dublin and San Ramon, December 15, 1985, prepared by Hughes, Heiss & Associates ✓4 ) Alternatives Analysis - Dublin San Ramon Fire Services Study, January, 1986 , prepared by Angus McDonald &Associates 5 ) Analysis of Water & Sewer Operations of DSRSD, February 15, 1986 , prepared by Hughes , Heiss & Associates � 6 ) Analysis of the Cost and Revenue Impact of Parks and Recreation Services Transfer from DSRSD to Dublin and San Ramon, February 15, 1986, prepared by Hughes , Heiss & Associates & Angus McDonald & Associates RECOMMENDATION Consider recommendations of the Dublin and San Ramon Liaison Committee as outlined in its report of July 1 , 1986, and give Dublin representatives appropriate direction . FINANCIAL STATEMENT: See attached reports DESCRIPTION For over a year, the Cities of Dublin and San Ramon ' have been working together on two major studies being performed by Angus McDonald & Associates and Hughes , Heiss & Associates regarding the potential transfer of services from the Dublin San Ramon Services District to the Cities of Dublin and San Ramon. Attached to this agenda " statement are several detailed reports on the service and revenue implications of assuming services currently performed by Dublin San Ramon Services District . As you may recall, in the later part of 1985, the Cities of Dublin and San Ramon acted on the report involving Solid Waste Collection options to the Cities of Dublin and San Ramon. The City assumed the franchise responsibility for the provision of . garbage service to the citizens of Dublin. As a result of the City' s action, the garbage rates for both residential and commercial customers in the City of Dublin were reduced with no reduction in the level of garbage service . The Committee representatives from Dublin and San Ramon have discussed the other services identified in the attached reports in some length. As a result of those discussions, the Committee prepared a report dated July 1, 1986 , which summarizes the conclusions of the Committee and poses recommendations for the future of the Dublin San Ramon Services District, on which the Committee was in unanimous agreement . On June 30,1986 , the Committee met with representatives from the Dublin San Ramon Services District to discuss the recommendations of the Committee. It was agreed at that meeting that both Cities would have their City Council ' s review the contents of the reports and the Commit-tee ' s recommendations and that the Dublin and San Ramon Liaison Committee would meet once again with the representatives from the Dublin San Ramon Services District on July 21 , 1986 to discuss the content in the reports in more detail . It is recommended that the City Council consider the recommendations of the Dublin and San Ramon Liaison Committee and give the Dublin representatives appropriate direction. COPIES TO: Jim Robinson Paul Ryan ITEM NO. e John Heiss Angus McDonald j` ,rfa7i Item 7.3 Exhibit Number 1 Missing Report of the Dublin and San Ramon Liaison Committee regarding the services of the Dublin San Ramon Services District dated July 1 , 1986 ANALYSIS OF SOLID WASTE COLLECTION OPTIONS OPEN TO DUBLIN AND SAN RAMON CITY OF DUBLIN CITY OF SAN RAMON September 20 , 1985 Hughes, Heiss & Associates , Inc . San Mateo, California ANALYSIS OF SOLID WASTE COLLECTION OPTIOiV� OPEN TU WbLIN AND SciN RAhiOi•.i The paper which follows explores opt-ions and issues open to Dublin and San Ramon related to the delivery of solid waste collection services. The paper evaluates alternative approaches for assuming service franchisor authority and responsibility. The key focus or the analysis includes the following : identification of issues related to assumption of the franchisor responsibility ty Dublin and San Karron fro+r; the Dublin-San Damon Services District (USKSu) . Evaluation of the advantages and disadvantages of alternative courses of action open to each of the cities. Key decision points faced by each of the cities. The paper opens with a brief review of the existing service systen in botrr Dublin and Jan Ramon. 1. CURkEk-TLY , SEPh.r,lE rRAigCHISc AokEE,iEJS NK0V10E THE drSIS Fun inE Ur=�1�/'tKY OF JULlu y�Slt CuLLtC� Iurti JEVI�EJ IU UUr;Liir r,ItiU JE1i+ Hh1l.JP1. Under the current service systPTii, two collection companies and taro distinct franchises are related to the delivery or solid ;taste collection services to the Dublin and San Kamion areas. Key character- istics of the existing syste» include the following : OS�SD provides solid waste collection services to the City of Dublin and the southern one third of the City of Sari Ramon under a franchise agreement with the Oakland Scavenger Company. This ten year agreement expires April 1, igSo. The northern portion of the City of San kamcn receives solid waste collection services under a franchise agreement bet,geen the Central Sanitary District of Contra Costa County and Valley Disposal Service. The franchise agreement between the Central Sanitary District and /alley Disposal expires November 1, 1986. Negotiations related to contract reneti,.al are currently underway. -1- Given the existence of two different francnise agreements and two r different service deliverers, service levels and costs vary across the _ Dublin and San Kamon service areas. because of involvement of two - different service delivery companies in the City of San Kamon, differ- ent rate structures and different service levels are provided within the city boundaries depending upon the service delivery company involved . Exhiuit 1 , whicn follows this page, summarizes basic charac- teristics of both costs and service levels related to tic two service deliverers and current franchise agree=ments. Analysis of the inform- ation presented in Exhibit I indicates that residential service cost differentials whicn appear to be apparent when vie;:ed on a per can basis tend to blur when service levels are considered. While the per can cost of service provided by the Oakland Scavenager Company is significantly below the comparable per can test charged oy Valley Disposal service, these cost differentials blur when certain services are consiaered : Under the Vallee Disposal Service contract , customers are provided pick-up of two cans of lawn or garden clippings with each can of solid waste. in the Jakland Scavenger service area, these additional cans of lawn and garden clippings ..ould result in an additional per can cost of S3. 50 each . lnus, for, a suburban customer who uses both the solid wastF and lawn and garden clipping service, the valley L,isoosal Service could actually be less expensive. in addition, under the existing Valley Disposal Service contract with the Central Sanitary District , three free clean-ups are provided each year. in t;,e DSKSD service area covered by Oa:land Scavenger, there are two free annual clean-ups included in the basic service rate. The uSKSD funds two additional free clean-ups uy applwing a portion of revenue received tnrough the District ' s share of the �3.UO per ton importation fee levied on Jan Francisco. As noted in the Exhibit, these additional services are not funded by the basic rate structure. -2- EXH IB IT I Cities of Dublin and San Ramon COMPARATIVE SOLID WASTE COLLECTION -_ COSTS AND SERVICE LEVELS Oakland Scavenger Valley Disposal Residential Monthly cost of $5.05 per Monthly cost of $8.95 per can (32 gallon) -- 1 can. can (32 gallon) -- 1 can. Backyard pick-up . Backyard pick-up. Each additional can at Each additional can at $3.50. $4.00 No comparable arrangement. With one can of garbage ser- Blurs per can cost differ- vice, get 2, 32 gallon cans entials between the two of clippings per week. In- service providers. cluded in the service price. 2 free annual clean ups in- 3 free clean-ups each year. cluded in basic service rate. Additional clean-ups in ser- vice area reflect DSRSD use of revenue received through $3/ton surcharge on SF waste transported to A-ltamont land fill . These additional services not funded by basic rate structure. - Commercial . Monthly cost per 32 gallon Monthly cost per 32 gallon can (one can) of $5.05 . can (one can) of 49 .40. . Each additional can at. Each additional can at $5 .05 . $3.70 . Loose material @ $4.75/ Loose material @ 56 .30/ yard. yard. -3- By most measures, cotmmercial pick-up costs in the uakland Scavenger Service area are significantly lower than they are in the Valley Disposal Service area. _ Cost differentials between the two service areas also need to be considered in conjunction with revenue generation related to solid waste collection franchise agreements. The USRSD--Jakland Scavenger agree-renL includes a 7.0;0 franchise fee which generates from S10u,u0U to J1I5,U)u a year revenue for USrSD. It should oe noted that tnis franchise fee has been reduced over the course of the contract by decision of the board of Directors of L)SkSu. Franchise fee reductions were agreed upon to moderate cost increases during the high inflation periods of several years ago. Conversely, the Central Sanitary District--Valley Disposal Service agreement provides negligible franchise fee revenue for the Central Sanitary District . Essentially, the Ventral Sanitary District views administration of the franchise agreement as a service for residents and agencies covered by the District ' s jurisdiction and has levied a franchise fee sufficient to cover contract administration and management costs. For the entire Central Sanitary District Service area, this franchise fee is currently approximately S15,ui J per year . It also needs to be understood that observed price differentials between the two service deliverers could possibly reflect the results of two distinctly different negotiation processes. In Ala,;teda Count',, agencies contracting with the uakland Scavenger Company have formed a Joint r oriers r,gre&rient hefuse Kate r<evietvr Connittee which jointly supports pro- fessional evaluation of the Oakland Scavenger Company' s operating cost structure to provide participating agencies with inforhiation useful in individual ne-loLiaion of rates with the service cuitpany. -in addition, the refuse Rate Review Committee attempts to develop consensus policies regarding reasonable rates of return for the Uakland Scavenger Company related to service delivery and a uniform posture related to proportional rate increases that participatine, agencies should negotiate on an individual basis with the uakland Scavenger Company. It is clear that the joint action of multiple agencies possible through the refuse rate Review Committee increases the leverage of individual agencies in negotiating with the solid waste collection company. -u- in the Central unitary District service area, the District r negotiates with Valley Disposal service. The Central Sanitary District also employes a professional accounting firm to evaluate service company operating costs and iirargins, but because of the centrally delivered service, jurisdictions in areas covered by the Central unitary District--Valley Disposal Service contract have no input in detennining either rate structures, franchise fee levels, or other cost related items related to service oelivery. These factors further Dlur service cost and service level co.npar- i sons between the tyro service del ivery companies under both existing arrangements and potential future arrangerinents assu,ning that the two cities assume direct franchisor responsioility. 'L. PAS<I ICIPAT ION 1N TFE ALA-.EbA COUNTY SuLIG 'W ;3TE JYJT E;`I uE t"ErlhTt�) hJUII WIVAL KtVtNUt f Ji< DJf<JiJ haUVt A?rAHl Fi<Ul�l Fr'hrJCniSc rE_ k LP,I Cu ntVCPvUt Currently, the City ana County of pan Francisco, imports solid waste into Alameda County for disposal at the i'Itam ont landfill owned and operated by the Oakland JcavenGer Co.ripany. Tnis importation Uy the City and County of Jan I ranci sco- includes a 53.00 per ton fee -- levied to mitigate or offset the impact of importing solid waste into and through the various jurisdictions in r,lameda County. nevenue related co this fee or surcharge is currently distributed: among the various jurisdictions in Alameda County through individual contracts between those jurisdictions and the Oakland scavenger Company. UJr<JC currently receives approximately �)%5,000 per year as its portion of this [litigation fee or surcharge related revenue. This is covered uy a separate contract between bSkSb and the Oakland Scavenger Co,-opany--a contract which expires on October 3i, i986. This contract is distinct from the franchise agreement contract beta,2en USkSD and uakiand -5- Scavenger which expires in spring of 1966- Analysis indicates that neitner Dublin nor San Ramon would have access to this revenue unless _ the DShSD board of Directors chose to assign the contract to the two cities or estab lished a separate agreement between the District and the t,.„o cities for allocation of the revenue. It needs to be clearly understood that this contract and the revenue related to it are completely distinct from the franchise agreement. �eolacement of 'jSnSii by the cities as service franchisers for solid waste collection services would have no impact on the separate agreement between DSkSD and Uakland Scavenger nor would it provide the cities with immediate access to that revenue stream. 3. a.h1Lt LUii'otn km-ig6E T�LivUS lk Kt USE COLLECT1Ur RATES Aht U! FICULT U Pr uJtl,i , SEVct t L Kr-Y SACT-Jr-') kEEJ 1 U bt Uiiut�<S T UJU by cU T n uU�sLli nivu J�,iy Kr�i`ili +. A major issue related to the assumption of francnisor resronsi- Di 1 ity by the V.:o cities and subsequent-contracting with solid waste collection companies involves the dual issues of imoderating costs for service area customers as well as potentially generating franchise fee revenue for the cities. As noted earlier,. service level differentials make "apples to apples” comparisons of residential services and costs relatively difficult between the two service companies. Conversely, it appears relatively clear that there is a fairly significant cciimer- vial cost differential uetvjeen the two companies given existing franchise agreements and rate structures. In considering the longer range, the following needs to be noted : Specific rate structures could change no mater which service aelivery company is selected by either Dublin or pan Ramon. Individual cite success in negotiating a rate structure and franchise fee with competing service aeliverers are all imponderables at this time. "breaking apart" the current USKSlJ service area could result in different rate structures for the two cities given resulting shifts in commercial--residential customer wiix in the two individual areas compared to the total DSRSU service area covered by the current rate structure. The northern portion of Sari Ramon, as noted earlier, is covered by an "umbrella" agreement between the Central Sanitary District and Walley Disposal Service. under this agree,-nent, rates are esentially comparable for the entire service area. If San rcamon is severed from this service arrangement and contracts with a Contra Costa County oased service deliverer which &-,iploys a Contra Costa Countv based landfill , tnere is some potential for San k&-non to experience a nigher rate structure than is currently the case. Given its location in the southernmost portion of Contra Costa County, transportation costs related to service delivery to San Ramon by a company employing a Contr-a Costa County based landfill could be expected to be higher than costs related to serving jurisdictions in the central and northern portions of the County. To the extent that San Ramon negotiated an individual contract with a Contra Costa County based service deliverer, the loss of the "averaging effect" of being a part of the larger Central Sanitary District contract could exert upward pressures on rates ano costs for San Ramon operating alone. Conversely, as discussed i'n greater length in a subsequent _ portion of this pa?er, costs could oe moderated by opening tine service to competitive bid in the two areas. In addition, available data related to expected future cost trends differs sharpl wren the t';+o service celivery companies involved in the Dublin and San Ramon areas are considered : The most recent analysis conducted b� the accounting fire Of Price, Waterhouse for the Refuse hate Review Ca,cnittee indicated that profits and return on equity have exceeded targets due to revenue exceeding projections with the costs increasing at a lower rate proportionally for uaklano Scavenger Company operations in filaieda County. Current projections indicate that, given targeted recommiended reductions in return on equity, rate increases should not be necessary until approximately the lgog-i�Si) time frame for those jurisdictions dealing with the Oakland Scavenqer Company. In addition, tree refuse Hate Review Committee has taken the policy- position that residential rates be held constant and any cost redUl. ions be applied tp tr}e CCem{ ierCl a -7- rate area to ultimately eliminate the "commercial subsidy" of residential rates by commercial customers. For the current year, this was translated into an 11% reduction in commercial rates and constant residential rates. Conversely, the Central sanitary District--valley Uisposal Service contract and franchise agreement is currently under neqotiation. Until these negotiations are completed, it is virtually impossible to accurately predict future trends in rate structures in the Central sanitary uistrict service area. However, it should be noted the 'valley Uisposal Service rates were increased as of July I, i535 as a result of the periodic readjustment of rates negotiated between the valley Disposal service and the Central sanitary District. in addition, there is significant uncertaint_ related to lonqer range landfill issues in Contra Costa County. until these issues are resolved, future cost projections related to refuse collection services are probably i;npossiole. 4 . ANALYSIS ANU LEGAL urI410;lS DuTr JuDLIN r.Iiul S.ti;: igAi'10114 CHIN riJJu•it 1'AV;LriiJr- K1bc�IJ wRE;Ii LAISI Ii'ii l.Uvlrl-il Ii ) LA ir(C. Analysis of statutes and resultine case law indicate the following reyarding exercise of franchisor rights related to solid waste collection services : As general law cities, both LAblin and San Rair;on Can elect to offer the franchise rights for solid Y+aste Collection services within their jurisdictions. They have no rights to existina contracts until those contracts expire or are assigned or renegotiated a�, ;.xisting parties. Transition or transfer of the franchisor authority or responsibility between existing special service districts and the two cities does not require Local Agency Formation Commission action or approval . Given the above, should Dublin and pan Ramon aecide to assure authority over the granting of solid waste collection francnises, the follo':iing steps should be taken: The City of Dublin, through city council resolution, should decide through majority vote to pursue absorbtion of respon- sibility for granting a franchise for solid waste collection -b- services. The Board of uirectors of the Dublin-San hamon = Services District should be notified of this intent once the =- resolution is passed . To facilitate negotiations with _ potential service deliverers and to. provide an orderely transition of franchise responsibility and agreement, this notice should be given as soon as possible given the expir- ation of the existing DSRSU franchise agreement with Oakland Scavenger in April , 198b and the 19IJ eav rene;,val provision associated with that agreement. San Damon, through comparable action, will need to notice both the Dublin-San Ramon Services jistrict and the Central Sanitary District of the City' s intent to assume franchisor responsbility. Again, these notices should be given as soon as possible considering the following : - The expiration and renewal notice deadlines associated with the USRSD--Oakland Scavenger Company agree.-nent. - The existence of ongoing negotiations related to contract reneti4al between the Central Sanitary District and Valley Disposal Service. Analysis indicates that the issues related to assuming franchisor responsibility and service delivery options are sienificantly different when Dublin is compared to San Ra;;ron. As a result, the options open to each city and the advantages and disadvantages or each are explored separately in the paragrapns r:hicn follo-w. bUbLIN 'S I..PPkOACH TO ASSUMING THE FRAiIiCHISu� RULE 1S iZEL,tiTIVELY Practically, the City of Dublin faces two options in regard to the delivery of solid waste collection services: Maintain the status quo which would involve USiSD re- contracting with the uakland Scavenger Company for the aelivery of solid waste collection services to the Uublin area. The City of Dublin assuming the franchisor role and selecting a service deliverer once the DSKSD--vakland Scavenger Company contract expires. -9- The paragraphs which follow explore each option. (1) Maintenance of the Status Quo Offers Few 'Advantages to DubbIin . As noted above, the franchise agrec-nent between USRSD and the Oakland Scavenger Company is expiring and, in the aosence of Dublin assuming the francnisor' s role would need to be negotiated by USRSD prior to its expiration date of April 1, 1966. As a result, there is no certainty that such a re-negotiated contract would provide the same rate structure or comparable fee levels as are currently in place under the expiring ten year agreement. While analysis conducted through the refuse Rate Review Committee has indicated that there should not be significant change in residential or commercial rates over the period through the end of the 11080 ' s, the actual rate struc- ture, potential franchise fee, and other service delivery provisions are dependent on the type of contract whicn would be agreed upon between DSRSD and the Uakland Scavenger Company. As a result , from the prospective of potential cnanges in rates and franchise fees, Dublin ' s assumption of franchisor respons- ibility and subsequent negotiatioii with a service aeliverer appears to offer no greater risk than renegotiation of service between DSRSD and the Oakland Scavenger Company. Given this conclusion, there appears to be little advantage to Dublin to maintain the status cuo. (Z) ri Variety of Steps Heed to be Undertaken for Dublin to Assume the rranciii sor Kole. The key elements in the process related to Dublin ' s assump- tion of franchisor responsibility involve those key dates related to • -10- the expiration of the existing contract between DSRSD and Oakland Scavenger. As noted earlier in this paper, the ten year franchise _ agreement expires April 1, 1986 and also includes a aJ day renewal notice by either party which makes the practical decision date January 1 , 1586. It should be noted that the Oakland Scavenger Company has already notified OSRSD of their interest in renewing the contract . Given these key dates, the City of Dublin needs to undertake the following steps: As noted auove, notify the Di ) SD board of birectors of the City' s intent and interest in assuring solid waste collection system franchisor responsibilities. That notice should be made as soon as possible. The City needs to determine how it wishes to proceed in terms of the selection of a collection company. This could involve preparation of a request for proposal ano solicitation of competitive bias for negotiation .gith a specified service provider. Assuming that the City selects to open the process to cc,npetitive Did , prepar- ation of a requesil for proposal anc solicitation of bids should occur concurrent -witIn the notice to the uSPSD. If it appears likely that the City will select the Oakland Scavenger Company as the service deliverer, it is clearly in the City' s interest to request membersnip in the Refuse kate Review Committee through inclusion in the Committee' s Joint Powers agreement . Key advantages related to Committee membership include: - Increased leverage in the rate negotiation process. - Lower costs involved in contract administration to include the sharing o` costs or professional audits of Scavanger Company financial performance wnich is Key to the rate negotiation process. - Steps should be taken to gain committee memcership as soon as and if it clear that the Oakland Scavenger Company is likely to be selected . -11- The final step in the process involves selection of a = service company, negotiation of rates, and establisiiment of a franchise agreement . :Major advantages and disadvantages associated with Dublin ' s assuming the franchisor role include the following : Advantages: - Enables the city to control t'ne franchise fee determination. - Provides the opportunity for the City to receive franchise fee revenue. - Through direct participation in the negotiation process, allows the City to exercise local control over rate structures, franchise fees, ano service levels. Disaovantages: - Given the composition of Dublin (resic'ential . versus coanmercial mtix) and the existence of no significant difference in rise between the City negotiating a ne,.- contract and u-SP�)b negotiating a new contract , there appear to be no signiricant disadvantages associated witn the City's assu�,,ing the franchisor role. p. SAij 1A:Muiv FACES r~ �r:,Ni�1ETY OF •!OKE l.U-IPL=i; 15SUEEJ 1N ri!iY HuJUJ!il` I IU 1:-E CUKKtNI JUL1U 'vJrijlt CULLtCI iUiv jYJlt'i. Given the existence of two different services delivery contracts covering the City area and different expiration dates associates with each of those contracts and conditions, Jan {-,non faces a more complex situation involving alternatives to the delivery Of solid waste collection services. basic options open to the Clty include the followinq : I"aintain the status quo which would involve allowing the Central 'Sanitary District to renew the franchise for the fan Ramon area and maintenance of two distinct service deliverers within t-e Cite boundaries. -12- (love to assume the franchisor responsibility under a variety = of scenarios including : - Attempting to contract with one service delivery company for the entire City area. -- - i1aintaining two distinct service delivery agencies within City boundaries but establish local control over service contracts and conditions. Each of these options are explored in the sub-paragraphs which follow. (1) viaintainance of the Status Quo woulo oe Unli�ely to Fulfill San i anion City Uouncil Objectives. The first option open to the City of San Ra,non is maintainance of the status quo involving split delivery of solid waste collection services . This could be accomplished whether or not the City of Dublin assures franchiser responsibility from the bublin-San Ramon Services District for its area. There are two alternative courses of action for maintaining the status quo: Under the first alternative, the City of San Ramon could notify GS,�SD of the City' s intent to withdraw from the District ' s service delivery franchise once tree existing contract with Uakland Scavenger Company expires. This would probably occur concurrent with notice by the City of Dublin of the same intent . Under this scenario, San kamon could t,ien sign a contract or joint powers agreement with Dublin fcr the franchise of solid waste collection services in the southern portion of San Kamon which is currently covered oy the Dublin- Sari Ramon Services bistrict. Tne contract or .joint powers agreenent could provide the following : - Could stipulate distribution of franchise revenue related to the southern portion or Jan ramon. - Could include a proportional contrioution to Dublin ' s costs related to meaibership in the Refuse Kate Keview Committee should Dublin select Oaklano Scavenger Company as a service deliverer. -13- Under this scenario, no change would be made regarding service delivery in the northern area of Sang Ramon and it is assumed under tine status quo option that the City-would simply allow the -_ Central sanitary District to renegotiate a franchise for the northern area and split service delivery would continue. Tile other option is for the City of pan kamon to assu,rie franchisor riqhts for both northern and southern areas but negotiate agreements with separate service delivery companies. ivotice requirements to ooth DSRSD and the Central sanitary District would oe the same as the previous option, but pan Ramon v,ould need to go through the process of selecting service deliverers for the tv:o areas. Under this scenario, pan Rai ion a:ou ld need to: - Issue a request for proposal . - 'Select a service delivery ca-i;;any or companies. - petition for membership in tiie refuse gate Kevie-.ti Ca,l;aittee to reduce costs and potentially increase levrage for negotiating refuse collection rates in the southern portion of t7e City if. ua�land 'Scavenger ioimpanv is the Ca,pang se lected to provide service. - Negotiate franchise fees for the service situations in each area of thE_ C ity. _ 1--a-:!or considerations related to the maintenance of ti e status quo in regard to multiple service deliverers wtithin the city boundaries of San Raimon include the following : Neither of these options ;vould �eet the City' s oJ.jectives of providing a uniform service delivery syste:i and cost structure vji tiii n the city ooun-d ari eS. wn i l e rate structures are dependent on the results of negotiations with service deliverers, it is highly likely that a rate differential would exist Because of differing travel requirements for northern and southern portion service deliverers. Additionall}, it is unlikely that the franchise fee revenue generated from the southern portion of the Cite could oe expected to be sufficient to offset the cost aifferential between the two areas if the City Council selected to apply that franchise fee to egi-jalize rates. -14- Even if San Ramon elects to withdraw from the Dublin-San Ramon Services District for solid waste collection -_ service purposes, the City is unlikely to loose access to the option of selecting a collection company with access to closer, Alameda. -County landfill sites. Principal reasons include the following : - Solid waste qenerated in the southern portion of the Citv is already included in the Ala:7eda County Solid taste Plaii. A shift of service deliverers has no impact on the waste stream whicn the Plan has been developed to deal ;pith. - There are no specific approvals or plan a��end:r,ents required to effect a change in service deliverers or placement of franchisor autnoritti, regardless of whether San kamon elects a contract or joint powers agreement tnrough the City of Duclin or contracts directly for service for the soutnern portion of the City. ,ioininc, with bublin through a contract or a joint powers agreerient for the franchise for southern portions of San Raicion could have a positive impact on rate levels. oy providinq a larger area covered ov the franchise, preferential rates mig.lit DE able to be negotiated . it should be noted that these variations on. the stat•_!c duo have been presented because of the potential for San Raison to be unsuccessful in gaining access to the Alameda County waste Disposal syste!n for r,aste generated in the northern portion cf the City. ;:--.s such, the t%:c scenarios presented under tili s orticn represent ;:orst case" alternatives . (�) Consolidation ofi all of San ianion Under a SinGiE Solio Juste Lollection rrancnise represents a !yore Lo:iL) le1 fie, of uecisions and Processes . the other major option open to the City of pan amion is to reeve to consolidate the solid waste collection franchise under a single service deliverer covering the entire city area. Inis involves transitioning franchisor authority from two separate agencies--bS<Ju -15- an6 the Central Sanitary District--as well as selecting and negotiating with a single solid waste collection company. Nevertheless, this _ option is more consistent with the City Council ' s objectives in terms of the following : Establishing a uniform collection system across the entire city area. Potentially gaining access to the Alameda County disposal system with attendant reduced travel costs and potentially lower rate structure. The potential to generate a higher level of franchise fees than are available under the split service deliver\ option discussed in the preceeding section. 1'o pursue the consolidated service option, San Kanon would need to accomplish the activities outlined in the suo-par.grapris w1hicn follow: (2.1) Formal iiotice of the Intent to i-%ssume .Franchisor - Hutnority ',•;ouIG geed to be uiven to born uSxSu and the ;,entrai unitary uistrict. To effect any change in the existing service delivery system, Jan Kamon would need to give formal notice to both US�SU and the Central Sanitary District of the City's interest and intent in assuming solid waste collection franchisor authority for all areas witnir the city boundaries. While there are differing expiration dates related to both the uSPSO and the Central unitary District contracts, it ',would be In Jan Ram on ' s interest to make the decision aria give notice as quickly as possible. hey dates include tree following : As noted above, the DSKSD--Oakland Scavanger Co;npany contract expires April 1., 1986 and includes a �O aay notice requirement related to franchise contract renewal uy one or both parties. Ns a result, the practical date related to contract renewal is January 1, 1566. wnen one considers Lice elapsed timne necessary to select a replacement service company, negotiate agreerient, and the like, It iS ir! the City' s interest to snake notice as soon as possiole. -16- while the contract between the Central unitary District and the Valley Disposal service expires ivove-ilber 1, 136, interviews indicate that both _ parties are currently under negotiation related to contract renewal . As a -re-sult, it is again in fan -_ Ramon ' s interest to make notice of the intent to assume franchisor autnority for the northern portion of the City as soon as possible so that the City's intent can be taken into account by ooth parties negotiating renewal of the contract for the remainder of central Contra Costa County. In addition to notifying the Central unitary District of the City ' s intent to assume franchisor resconsibility, pan Kamon should also explore one additional issue with the Central unitary bistrict before proceeding with the selection of a service delivery company. This would involve the potential to include the City's sphere of influence--areas included within the spnere of influence but external to existing city ooundaries--under the provisions of a new solid 'caste collection franc%rise. This could involve either estaolisil- ing a contract or a joint powers agreement oet`Iieen Jan ya;rion and Vie Central unitary histrict which would al-low the City of pan ka,non to deliver solid waste collection services and provide the franchise for the exercise of those services to areas falling external to the city boundary, but -Y%hicii fall within the sphere of influence. while approval of such a proposal is at the discretion of the Central ,�anitary District, the following factors need to be consideree : If such an aareenent .is not ne;otiated , it woula be extremely d i f f i c u l t to include newl y annexeci areas as part of the City' s solid waste collection system until the franchise agreement between the Central unitary District and Vallee Disposal service or other selected service deliverers expired . b+iiile the length of the franchise agreerrlent which is being currently being renegotiated is untnown at this til;ie, it could oe expected to be a winiral:rn. of five to seven years. -17- In the absence of such agream ent, as annexation occurred, the City Council 's goal of providing a uniform delivery system throughout the city- boundaries _ would be frustrated. . Over the lonoer range, the absence of peripheral areas could impact the rate structure achieved by San Rarnon. To the extent teat the unincorporated periphery which falls within the sphere of influ- ence includes significant commercial aevelopment, inclusion of those areas in the solid wash collection service area could have positive i;rncact on overall rate structures for both residential and conrrercial customers in fan Rainon. (�.2) H Service beliverer will i,leed to be elected o� the City o. pan <aron. Achievement and i,nplerientation of a consolidated solid waste collection s%,stem within the city boundaries of San woula necessitate selection of a service deliverer. To the extent that the City pursues competitive- bids from interested sclia waste collection cc-fipanies, the process of request for proposal , selection of a "Didder, negotiation of a contract, and the lice v,ould need to oe f ,ilo:red . "'s such, it is basically the sa=ne process a-s outlined for bublin earlier in this paper. It would appear to .be in the City' s interest to pursue competitive_ biGs in the interest of minimizing rate levels and maximizing Potential francnise fee revenue . The selection of a single service deliverer is complicated by the staggered contract expiration dates relazec to current service deliverers and agreements. As a result, it would be necessary for the Citv to select a service deliverer but provide for actual irhp;iementation of services on a staggered basis as follows: to provide service under a Jan Ramnoh granted franchise to the southern portion of pan kamon effective r.pril 1, 1 98b. -10- Implement service to the northern portion of pan Ramon upon expiration of the Central sanitary uistrict- -Valley Disposal service contract on November 1, 1986. - The issue is further. compiicated if the . service deliverer -= selected involves use of an Alameda County based landfill for disposal purposes. if this is the case, the issue of importation of incremental solid -taste involves the waste generated in the northern portion of San namon . Any contract covering t-he collection and disposal of waste generated in that area could not be finalized until required approvals were obtained from the Alameda County solid 'waste M1ianagement :Authority. As a result, fan namon and the selected services deliverer could finalize that portion of the service contract related to the southern portion of the City which is already included in the Alameda County solid waste system. Achievement of full consolidation would be dependent on the approval process wnicn is descriced in the section which follows. (�.3) To the Extent the selected Franchise 'could Involve Use of Landfill sites in Alarrieda County and Impact Currently Projected Waste streams, normal r,Puroval of importation t;i I I be - equlrec. vi'hile there are a variety of options open to pan Ra.,,on in the selection of a service delivery cc:r,pany to achieve consolidated service, snould that service aelivery company include, as part of its service, disposal of pan Ramon generated waste at an Alameda County landfill site, a third party approval will oe necessary before the system could actually be implecirented . The approval mechanise}, related to waste generated in the northern portion of sari Ramon and imported -1 S'_ for disposal to Alameda County, would involve the following basic - steps: San kamon would select a disposal company to provide consolidated solid waste collection services. The company selected would make application for importation of incremental solid waste (generated by the northern portion of San Paaion) to the Alameda County Solid Waste Authority. The request would be for an amendment to tine Alameda County Solid Waste Plan to incorporate the incremental increase in the waste stream resulting from the importation of solid waste generated by the northern portion of San kamon. The Alameda County solid !Taste Authority woule then analyze and act upon the request for a plan amend,--rent. Assuming approval by the Alameda County Solid waste Authority, final approval of tiie plan arrend,,ant would also need to be granted by State level solid waste management agencies. _ Mile analysis indicates that the process for gaining importation approval is relatively straightfor,,Yard in terms of process mechanics, there are a variety of other factors w;iicri car, be expected to influence the time frame required to reach a decision on any importation request as yell as the type of decision ultimately rendered . These include the following : The City and County of Sari Francisco, as noted earlier in this paper, currently is a major importer of solid waste to Alameaa County. under the ter; is of the existing importation agreement , the City and County of San Francisco pays a mitigation fee or surcharge of S3.00 per ton to offset the impact of solid •,•laste importation on affected Alameda agencies. That agree- ment expires in 1558 and includes a series of contracts between Oakland Scavenger and AlamEda County agencies covering disposition of the X3.00 per ton mitigation fee. The City and County of pan Francisco and the Oakland Stavanger Company are currently negotiating with the Alameda County Solid waste Authority to both extend and expand the existing importation agreement which runs through 1988. Ultimate resolution of this request will - set a number of precedents which can have significant _. influence on any San Ramon related request for solid waste importation. Key issues include the following : - fart of the current analysis and negotiation process involves determination of a revised mitigation fee related to solid waste import- ation. This includes refining how such a fee is calculated based on the actual iirioact of incremental solid waste importation on ooth individual jurisdictions and the overall Alameda County solid waste system. - until this issue is resolved and appropriate precedents established , it is iii9hIv unIikely that the Alameda County Solid ';taste iiianagercent Authority would or could act on an additional request for importation. - interviews indicate that this issue should be decided by the end of this calendar year or early in i986. - As a result, little action could be expected on a Jan namon related redu:.st for importation until early in iubo. intervie,.s indicate that the cmgUnt or ti-c, reQuir cd to process the request for a plan arm�endment and reach decision would be about six imonths. hs Sun, inq cosmpleticn Of the San Francisco case-by the end of the year and a six month decision makina time frame, San Ramon could expect a decision on a request for i,-mportation of solid waste related to the northern portion of the City little earlier than June, 1988. while this date falls well before the expiration of the current franchise agreement related to the northern portion of the laity, it is significantly later than the expiration of the uSRSD--Oakland Scavenger contract for the southern portion of the City and underlines the need for a two step contract approach of if a consolidated service delivery agency employing nlameda County landfill sites is selected. Overall , the major disadvantages associated with pursuing a consolidated solid waste collection system to include a single service delivery company include the following : There is some uncertainty in .regard to how a request for importation of solid waste would be resolved at the -21- Alameda County solid waste Management Authority level . Current conflicts involving the City of berkeley and Contra Costa County related to solid waste importation and related fees could have some potential to stimulate political resistance to importation by San Ramon. -= the extent to which this is a real possibility is unknown at this time. Similarly, there could be some potential resistance by Contra Costa agencies depending on the impact on Jan *�amon' s AithdrawI frail the solid waste collection system, Disputes could arise if San kamon' s witndrawl would impact the overall cost structure of solid waste selection services for re:-ilaining Contra Costa County agencies. however, since pan Radon falls in the southern end of the County and has relatively extended travel distances related to the disposal of waste at existing and li<ely future landfills, it is not clear that withdrawl of pan kamon Traii the Contra Costa County systsri would nave adverse cost impact on remaining agencies. Nevertheless, there is an unknown potential for Contra Costa County based resistance to witndrawl of fan Ramon from the Contra Costa County sv`stem--aotential resistance which could complicate state level approval of an amendment to the Alameda County solid waste N.anaaeciient Plan which involves a San - Ramon related importation request . There is virtually no wa,v to auantifv this risk at the current time. ;additionally, it is highly likely that importation of solid Ovate generated in the northern portion of Jan — ramon will result in some level of mitigation I�Z: consistent with the ultimate resolution of tie San Francisco request to expand importation and extend the importation agreement related to Alameda -County. As a result, basic rates related to northern and southern Jan Damon could dlfier because of the exi stance of such a mitigation fee. An alternative to equalize costs could involve the City Council Deciding to employ any franchise fee to offset the impact cf a mitigation fee on northern section rates, or zo equalize rates across the entire City by brining southern section rates up to those charged for the northern area including the mitigation fee. 'hich course of action open to the City is dependent can the level and type of franchise fee negotiated with the service delivery company. The final , "worst case" scenario associated with att 4npting -co install a single service delivery agency would involve implementation of fan Ramon franchise service for the southern portion of the City in -22- the early spring of 1986 and tnen, subsequently, disapproval of an importation request by the Alameda County solid Waste Authority in the summer of 1960. Even if this "worst case° scenario occurred, San -= Kamon would still have approximately three months to identify and implement alternative service delivery approacnes for continuing solid waste collection services in the northern portion of the iity. If an importation request Y•as denied , tiie City woulo need to select either an alternative service deliverer or the selected service delivery company would need to identify an alternative landfill site located in Contra Costa County. ,;s noted above, the City mould have three months to resolve this issue before the current Valley Disposal Service- -Central sanitary District franchise contract covering pan iamon expires. iiesolution of such an issue would probably involve reverting to one of the two options presented in earlier portions of this section w,iich involved maintenance of a split service delivery system. (3) under any scenario, There Appear to be Fey: significant u1 sadyan-cages to Jan Kamon s hssuci inq bile i rancn i sor role for the Entire Area ivitnin its Jurisdiction. Vlajor disadvantages and advantages associated with pan karon ' s assuminq tiie franchisor role for all solid taste collection services provided within its boundaries are summarized below: DisadvantageS: The major disadvantages associated with sari Ka;ion ' s assumption of franchisor Quthorit\, for solid waste collection services within its oound- aries involves the potential uncertainty involveo in any request for importation of solid waste to Alameda Count;. As noted above, to the extent that such a request was denied, it could complicate the selection of service aelivery companies and subsequent negotiations of contracts. -23- San R-amon would have to assume responsibility for - contract negotiations with service delivery companies under each option. If the City were _ required to operate under a system with two sery-ice delivery companies, negotiation could pose an incremental expense and administrative load as follows : . . From the perspective of improving leverage aril -moderating costs of negotiated rate structures, it would be in the City' s interest to obtain access to the Refuse Rate Revie,,,; Committee in Alameda County for the purposes of obtaining professional auditing information on service delivery agency costs. This is, of course, predicated on the selection of uakland Scavaeaer Company as a service deliverer in the southern portion of the City. if Sari Ramon has unsuccessful in obtaining ad„iission to the Refuse Rate Review Lomnroittee, its negotiating posture could be complicated . While it -would probably have access to the results of the periodic audit of oaklana Stavanger Company operations, it might lose some negotiating lev rage if it were not part of the Co;amittee. if -c he ity is r e a ii red to nec^tiate service delivery for the northern, portion of San Ramon on an individual oasis, it could lose some of the "leverage” wnicn is currently provided through the Central Sanitary District negotiation for an area wide service franchise. However, it should be noted that this potential loss of leverage could oe offset ay increased local control over negozia-tions and related rates and franchise fps negotiated . if an importation request :.ere denied, there is the potential that the 'City could find itself in a situation where it would be recuired to negotiate service delivery contracts with two different companies and attendant continuation of a aivided service syste^i and non-uniform rate structure across the City. Advantages : by assuming the franchisor authority for the entire City, San kamon would be able to establish local control with potentially greater impact on -24- r both refuse rate collection costs for residents, a - uniform rate schedule across the City, and poten- tial franchise fees. Depending on how successful the City is in nego- tiating agreements with competitive bidders, costs could be reduced for all or a portion of San Ramon residents. Given the above, there appear to be no co:-,lpelling reasons for San �a,non to maintain the status quo. 7. fib MATTER �rili7 CUU,<SC OF ACTION IS SELECIED BY TAE T'WO CITIES, r+CicJS iu FEE kEVti+JIE �tLATEU ZD THE SAi,; OF JU lu wrJ� t 1J li�t'ruJJ1JLt JiInUJI Irit IU +IUkti�it Ut I,+t UJ�JU Z)'J As noted earlier in this paper, USKSU currently receives a portion of the importation fee levied on the City and County of San rrancisco through the ua';land Stavanger Company. Tnat revenue is _. received as a result of an agree,ient between the Oakland Stavanger Company and the DSNSu. The expiration of that contract is uctober 31, i Even if the cities elect to exercise authority over the grant- ing of solid waste collection francnises within their respective jurisdiction, that aecision has no impact on gaining access to the acrproximately �75,000 per year revenue related to the mitigation fee. City access to that revenue could be gained only through negotiations with the 3oard of Directors of US{SU. -L 5- J Analysis of the Impact of Transferring Park, Recreation and Aquatic Services from the Dublin-San Ramon Services District to the Cities of Dublin and San Ramon THE CITIES OF DUBLIN-AND SAN RAMON December 15, 1985 Hughes, Heiss and Associates San Mateo, California ANALYSIS OF THE IMPACT OF TRANSFERRING PARK, RECREATION AND -AQUATIC SERVICES FROM THE DUBLIN-SAN RAMON SERVICES DISTRICT TO THE CITIES OF DUBLIN AND SAN RAMON The paper which follows analyzes the facility, service, cost, and revenue impact of transferring responsibility for parks, recreation and aquatic services from the Dublin San-Ramon Services District to the two cities. It considers the impact of transitioning park and recreation services from the perspective of the following: Estimated value of existing park facilities and the equity of dividing these facilities based on their geographic location between the two cities. Alternative approaches for determining the amount of revenue which could be transferred from the District to the two cities considering both program related revenues and general property tax revenues currently received by the District. The impact of the service transfer in terms of program cost and revenue loss on both the District and the cities. The paper opens with an overview of the current facility network. 1 . PARK FACILITIES AVAILABLE TO THE TWO CITIES ARE GENERALLY CONSISTENT WITH HISTORICAL- SUPPORT APIA _j PR E- MENTS AND OPERATIONS. A key issue in the transition in responsibility for park services involves how the cities would divide currently available park resources maintained by DSRSD. The key issue involved in the transfer of park facilities involves the extent to which a simple geographic division of facilities based on location within each of the cities is equitable from the perspective of the city given differences in the size and scope of facilities available. -1- Exhibit I , which follows this page, provides an overview of key charac- teristics of the park facilities currently maintained by the Dublin San-Ramon Services District. Principal conclusions which can be drawn from the facility characteristic data presented in the exhibit include the following: From the perspective of general facility size, Dublin and San Ramon based facilities are almost identical -- with 37 park acres located in Dublin and .37 .5 park acres located in San Ramon. Despite some general comparability in overall facility size, further analysis indicates there are some relatively significant differences between the facilities available to Dublin and San Ramon. These include the following: Dublin has access to the Shannon Community Center -- with no comparable facility located in San Ramon. The Dublin Sports grounds are lit while the comparable Athan Downs Park in San Ramon does not have lights. Analysis of District records indicates that the lighting at the Dublin Sports Grounds contributes to significantly different facility rental revenue generation between the two facilities. As of December 1 , 1985, the Dublin Sports Ground had generated $13,810 in rental revenue while the Athan Downs rental revenue totalled $4,685. - While total acreage is the same, Dublin has the larger number of developed park acres. The White House property, located in San Ramon, is generally undeveloped with the exception of grounds immediately surrounding the White House facility. From the perspective of developed park acres, Dublin has 37 as compared to 33.5 for San Ramon. From the qualitative perspective, pool facilities available to the two communities are generally accepted to differ rather substantially in terms of utility and consistency in regard to providing aquatics programming. District program staff indicate that the San Ramon Olympic Pool is better con- figured to support program activities than the Valley Community Swim Center. -2- EXHIBIT I Dublin and San Ramon PHYSICAL CHARACTERISTICS OF PARKS AND PARK FACILITIES ' DUBLIN Improvements Conces- Rest- slon Baseball Soccer Tennis Par Swings/ Other Facility Size rooms Bldq• Fields Fields Courts Course Slides Facilities Ownership Dublin 22 Acres x x 6 5 - - - Small Storage Building Quit claim deed from U.S. Sports for materials/equipment Government. In perpetuity Grounds employed In facility as long as land used for maintenance. park/recreation purposes. Shannon Park 9.5 Acres - - - - - - x Comm.Ctr. Bldg. with configuration suitable District for multiple use--mtgs., social functions, etc. Picnic tables. Mape 2.5 Acres - - - - - - x Redwood deck; picnic tables. District 8 lane pool with 2 diving Valley boards;wading pool; dress- School District owns pro- Community Ing rm, fac. w/restrooms, party. DSRSD owns Swim Center 3.0 Acres x - - - - - - showers, lobby, improvements. TOTAL 37.0 Acres x x 6 5 - - x 1 - 1 i SAN RAMON Improvements j Conces- Rest- slon Baseball Soccer Tennis Par Swings/ Other Facility Size rooms Bldcl• Fields Fields Courts Course Slides Facilities Ownership I Athan Downs 20 Acres x x 4 4 4 - - Small Storage Building District ;I for materials/equipment employed In facility d maintenance. Boon Acres 5.5 Acres - - - - - x x Horseshoe pits; picnic District i� tables. Inverness 6.0 Acres - - - - - x - - District -- 3.0 additional acres to be transitloned from developer to District maintenance responsibility In 2 years. Red Barn/ 4.0 Acres - - - - - - - House with barn;leased for District White House use as senior ctr. Most land undeveloped. 16 long lane/8short lane Dressing rooms constructed pool w/wading pool. Dress- within school bldg. Facll- San Ramon Ing room facility w/rest- ity ownership transferred Olympic Pool 2.0 Acres x - - - - __ - rooms, showers, office. to School District In 2004. TOTAL 37.5 Acres x x 4 4 4 x x i - Based on current operations, the San Ramon Olympic Pool operates a greater portion of the year, and as a result, generates significantly more revenue than the valley _ Community Swim Center -- $89,000 versus $34,000 for the last "program" year. However, the revenue differential is in part offset by higher operating costs at SROP -- • reflecting the more extended operating period associated with that facility. Appendix A to this report outlines - costs and revenues associated with the two facilities. As can be seen from review of the information presented in the exhibit, "net" cost of the two facilities when both revenues and costs for the two facilities are considered is approximately $69,000 for SROP and $61 ,000 for UCSC. There is also some difference in terms of actual ownership of park land. The land supporting the Dublin Sports Ground was received from the federal government under a quit claim deed. As long as the facility is used for park purposes, it is available to the Dublin San-Ramon Services District or its successor agency in perpetuity. Nevertheless, the land is not completely owned and could not be sold to realize its significant commercial value and generate funds to aquire park facilities of a comparable scope elsewhere in the Dublin area. Nevertheless, its use as a park facility for Dublin is relatively certain given the characteristics of the quit claim deed and as a result, should be viewed as having some value in its availability for that purpose. -3A- While there are clearly qualitative and quantitative differences in the mix of facilities available to the two cities, the actual funds invested in those facilities are virtually the same. Exhibit II , which follows this page, shows investment for aquisition and improvements in the various facilities located in Dublin and San Ramon. It should be noted that the dollar amounts shown in Exhibit II represent the cost at the time an investment was made and no attempt has been made to equalize the investments from the perspective of present or future value, based on the time the investment was made. It was felt that the absolute value of funds invested was a relatively valid measure to apply to compare the two sets of facilities. The principal conclusions which could be drawn from the information presented in Exhibit II include the following: Total funds invested in Dublin and San Ramon based facilities are almost identical . The investment total shown in Exhibit II accords no value to _ the land which supports the Dublin Sports Ground. As noted above, the District received the land through a quit claim deed from the federal government and was not required to -acquire the property. Since the long-term use of the land for park purposes is virtually assured, it can be assumed that the land has value for park purposes. To the extent that a value was assumed, this could increase the total value of investment in Dublin based park facilities to a level above comparable investments in San Ramon. Exhibit II also shows projected capital improvements required for the various park facilities located among the two cities. Projected capital improvement needs were determined through interview with park management staff from DSRSD. They reflect two categories for capital needs: Those projected for the current fiscal year if funds are available through DSRSD. Longer range capital improvement needs to correct maintenance problems. -4- EXHIBIT II Dublin and San Ramon SUMMARY CHARACTERISTICS OF PARK FACILITIES DUBLIN Invested Required Capital Improvements Planned for Other Facility Acquisition Improvements Total 1985/86 Projected Total Dublin Sports Ground N/A 578,000 578,000 90,000 -- 90,000 Shannon Park 8 Community Center 122,000 828,000 950,000 -- 97,000 97,000 Mape Park 31 ,650 20,000 51 ,650 -- -- -- Valley Comm- unity Swim Center -- 555,000 555,000 9,100 133,000 142,100 TOTAL $153,650 $1 ,981 ,000 $2,134,650 . $99,100 $230,000 $329,100 SAN RAMON -- Invested Required Capital Improvements Planned for Other Facility Acquisition Improvements Total 1985/86 Projected Total Athan Downs $336,500 $463,000 $799,500 $90,000 $228,000 $318,000 Boone Acres 160,000 282,000 442,000 -- -- -- Inverness -- 62,000 62,000 -- -- -- Red Barn/ White House 135,000 2,000 137,000 -- -- --{ San Ramon Olympic Pool -- 656,000 656,000 30,000 -- 307000 TOTAL $631 ,500 $1 ,465,000 $2,096,500 $120,000 $228,000 $348,000 { $86,000 in park dedication fees currently reserved for possible construction of cultural arts facility at White House/Red Barn sites. -5- Projected capital improvement needs do not include such expendi- tures as totally rebuilding or modifying the White House facility to provide San Ramon A community center facility comparable to the Shannon Center located in Dublin. Projected capital improvement needs also do not reflect an annual reserve for pool equipment depreciation which the District has recently established. This will be dealt with in a subsequent section of this report. In total , the information presented in Exhibit II indicated that capital improvement expenditures required to correct major maintenance and condition problems are generally equivalent between the two cities. Park maintenance operations currently make use of the DSRSD corporation yard facility located at the District Headquarters site. Because this facility is an integral part of the site and because it is also used to support other components of the operation, it has not been considered as an asset directly related to the parks operation and subject to division by the two cities if they assume responsibility for parks operations. The facility will need to be considered in conjunction with alternatives related to total dissolution of the DSRSD. It should also be noted that interviews with District staff and analysis of District records indicates that the property was purchased with funds generated by Assessment District 60-1 which is limited to the Dublin area. Because of these factors, it was determined that disposition of the yard and headquarters site was not relevant to the parks issue. While funds invested in the facilities are generally equal between the — two cities, data indicate that a higher proportion of those funds were generated through property taxes levied on the Dublin area. Exhibits III and IV, which follow this page, provide several perspectives on proportional contribution to investments in park facilities' aquisition and improvement. Exhibit III shows the proportional contribution required to service and retire park improvement bonds employed by DSRSD to generate funds to aquire and improve the basic set of park facilities available to the two communities. It can be assumed that the dedicated property taxes associated with the service and retirement of these bonds reflects the proportional contribu- tion of the two areas to overall facilities' aquisition and improvement. As can be seen from review of the information -6- EXHIBIT III Dublin and San Ramon PARKS RELATED DEBT SERVICE REQUIREMENTS Series Characteristics Outstandina Balance A $1 ,500,000 issued in 1970. Retired None -- issue retired as of 7/1/85. as of 7/1/85 . B $800,000 issued in 1972. $460,000 To be retired by July, 1992. Annual debt service/principal retirement ranges from $72,812 to $77,500 annually through July, 1992. Funded by dedicated tax rate levied annually by District Board. Because of balance in Improvement District #1 Fund, no levy in 1985-86. Proportional Payoff of Park Improvement Bonds Contra Costa County- Alameda County-Dublin San Ramon Percent Percent Amount of Total Amount of Total m 1971-72 $98,439 57p $74,143 43P 1972-73 149,803 60 99,869 40 1973-74 138,652 64 77,184 36 1974-75 158,370 64 87,863 36 1975-76 150,051 62 92,210 38 1976-77 145,981 57 109,866 43 1977-78 172,677 57 129,565 43 1978-79 147,931 53 133,166 47 1979-80 96,026 51 92,385 49 1980-81 84,562 49 86,449 51 1981 -82 109,062 49 113,154 51 1982-83 113,443 51 108,443 49 1983-84 121 ,844 52 114,068 48 1984-85 1211390 50 121 ,352 50 TOTAL $1 ,808,231 56p $1 ,439,717 44p I o EXHIBIT IV Dublin and San Ramon PROPORTIONAL PROPERTY.TAX CONTRIBUTIONS TO DSRSD GENERAL FUND Alameda County--Dublin Contra Costa County--San Ramon Percent Percent Fiscal Year Amount of Total Amount of Total 1971-1972 $292,698 58p $214,718 42p 1972-1973 379,100 59 263,442 41 1973-1974 460,176 61 289,739 39 1974-1975 545,834 66 277,648 34 1 975-1 976 786,427 62 481 ,172 38 1976-1977 761 ,911 54 641 ,237 46 1977-1978 949,575 58 659,635 42 1978-1979 343,081 . 55 280,572 45 1979-1980 642,424 52 586,747 48 1980-1981 767,593 51 736,730 49 1981 -1982 889,866 50 872,652 50 1982-1983 980,067 52 913,882 48 1983-1984 1 ,190,001 53 1 ,034,354 47 1984-1985 1 ,212,656 52 1 ,103 ,959 48 TOTAL $10,201 ,409 55° $8,353,487 45% -8- ° presented in Exhibit III, the Alameda County/Dublin area has contributed approximately 56% of the total property taxes devoted to the service and retirement of the park improvement bonds. However, over time, as the area has -grown, the propor- tional contribution of the Contra Costa County/San Ramon Area has increased moderately. If this trend continues through the retirement of the Series B issue, overall contribution to retirement of the bonds will be as follows: Dublin - 54%, San Ramon - 46%. As a general fund service, park operations and some facility improvements have been supported by the general property tax available to the DSRSD general fund. As a result, proportional contribution of property taxes provides another perspective on comparative contribution to .facilities aquisition and improvement. Exhibit IV, which follows this page, traces proportional property tax contributions to the District general fund since 1971 . As can be seen from review of information presented in the exhibit, Dublin has contributed approximately 550 of property taxes over that period while San Ramon' s contribution totals 45%. -8A- 0 In total , major comparability or facility equity issues are as follows:. Actual dollars invested between the two communities are relatively equal . From the qualitative and quantitative perspective, Dublin-based facilities could be assumed to have a higher "value" than those located in San Ramon. the following factors lead to this conclusion: Dublin based facilities have a larger proportion of developed park acres. The Shannon Community Center is located in Dublin and no comparable facility is available within the San Ramon area. There are some qualitative differences between the park facilities available to the two communities to include the presence of lights at the Dublin Sports Grounds and the absence of comparable capabilities at the Athan Downs- San Ramon based facility with attendant differences in revenue generation potential . While the Dublin Sports Grounds are not "owned" from the perspective of having been aquired by DSRSD, the avail- ability of these facilities to support a perpetual park use indicates that they should be viewed as having some value. If some value is assumed for these facilities, then one could view the total investment in the Dublin area as exceeding that applied for aquisition and improvement in San Ramon. This is generally balanced by a proportionately higher investment in terms of property taxes paid to the general fund and for debt service and retirement related to park improvement bonds by Dublin residents over the last 15 years. The factors noted above shift moderately if a "value" is accorded to the Dublin Sports Ground property when investment versus proportional contributions are considered. -9- While Dublin area residents have contributed "more" from the debt - service and general property tax perspective, the Dublin area can be viewed as having a slightly more expansive mix of facilities -- especially if access to the Dublin Sports Grounds is accorded an acquisiton "value" . While the facility is not owned in the traditional sense, it is essentially available in perpetuity to support programming. As such, it can be viewed as having an acquisiton "value" generally proportional to the cost of acquiring Athan Downs in San Ramon. If treated as such for analytical purposes, the total "investments" in each city area generally is equivalent to revenues contributed as shown in Table 1 which follows: Table 1 Comparative Investment and Contributions -- DSRSD Park Facilities Dublin / y San Ramon Total b q o ,YOo Mor $ Total $ Total $ Total Based on Actual Acquisition Costs invested for Aquisi- tion and Improvement $2 ,134,650 50.5 $2,096,500 49 .5 $4,231 ,150 100.0 Property Taxes and — Debt Service $12 ,009,640 55 .1 $9,793,204 44.9 $21 ,802,844 100 .0 With Acquisition Value Accorded to Dublin Sports Grounds Invested for Acquisi- tion and improvement $2,471 ,150 5 4. .1 $2 ,096,500 45.9 $4,567 ,650 100.0 As can be seen from the information presented in the table, if an acquisition "value" is accorded to the Dublin Sports Grounds facility, total dollars invested in Dublin represent approxi- mately 54% of the total facility investment "pie" . This is generally equivalent to the area' s contribution in terms of total property taxes including debt service. -10- 2 . ASSUMPTION OF MAINTENANCE AND OPERATING RESPONSIBILITIES. FOR PARKS AND AQUATIC PROGRAMS WOULD GENERATE ANNUAL COSTS IN EXCESS OF $400,000 A YEAR FOR EACH CITY. The Key issues in the service analysis from the perspective of both cities is the cost and revenue impact of assuming lead responsibility for the delivery of parks and recreation services from DSRSD. Any cost analysis needs to incorporate assumptions about how each city would approach the provision of park maintenance services. The section which follows explores maintenance cost issues and opens with an analysis of current costs related to the delivery of park maintenance services by DSRSD. (1) For Fiscal Year 1985-1986 , DSRSD has allocated 5967 ,000 to Support Recreation, Parks, and Aquatics Services. To estimate individual city costs of assuming park maintenance responsibilities, the project team accomplished the following: Reviewed actual labor hour distribution- by..park facility for DSRSD maintenance staff during fiscal year 1984-1985 . Through interviews with District-staff, identified planned modifi- cations in facility maintenance services during fiscal year 1985-1986 given staffing increases approved by the DSRSD Board. For purposes of analysis, facility operating costs were divided between direct costs related to on-site maintenance of each facility to include labor hours and materials and supplies expenditures and general "overhead" costs involving supervision and equipment maintenance. -11- Exhibit V, which follows this page, summarizes projected fiscal year 1985-1986 costs for parks and aquatic services for DSRSD. As noted above, these budget estimates have been converted to estimated per facility cost based on the actual experience during fiscal year. 1984-1985 and expected modifications planned by park management for the current fiscal year. In total , the expected operating budget for parks and aquatic services totals $931 ,300 plus an accrual contribution for pool replacement. It should be noted that DSRSD has established a program providing for an annual contribution to cover depreciation of pool equipment for both pool facilities. As the estimates displayed in Exhibit V are interpreted, the following factors should be noted: An estimated average hourly loaded labor cost was employed to convert permanent staff hours to maintenance costs per facility. This involved calculating an average hourly cost including direct salary and fringe benefits for all full-time staff involved in direct maintenance activities. The cost was calculated assuming 1 ,800 hours per staff person per year available for actual on-site work when time lost for vacation, sick leave, and holidays was considered. The project team allocated expected use of temporary and Kelly staff by facility characteristics. This reflected the actual 1984-1985 experience adjusted ey a change in mix of temporary, permanent, and Kelly staff labor hours planned for the current fiscal year. Basic material and supplies costs were allocated based on actual 1984-1985 experience, adjusted by any planned major improvement projects or changes in maintenance levels as stipulated by park maintenance staff at DSRSD. The data displayed in Exhibit V provide a basic estimate of the labor hours required for park maintenance purposes on a facility-by- facility basis. The only expenditure of time not shown in the exhibit involves small project engineering and construction inspection services provided by DSRSD staff during 1984-1985 . These were estimated to total 683 staff hours for the past fiscal year. -12- EXHIBIT V Dublin and San Ramon PROJECTED 1985-1986 OPERATING COST BY FACILITY AND FUNCTION D I R E C T L A 8 0 R H 0 U R S Permanent Staff Temporary Staff Kelly Staff Materials Aquatics Cost Per Cost Cost Per Cost Cost Per Cost and Capital Program General Overhead Hours flour Total Hours Hour Total Hours Hour Total Supplies Outlay Staff Total Management And Supervision Park Superintendent 1,800 $28.28 E 50,912 - - - - - - - - - S 50,912 Park Supervisor 1,800 20.59 37,069 - - - - - - - - - 37,069 Clerical 900 12.65 11,382 - - - - - - - - - 11,382 Equipment Malnt. 1,800 17.09 30,762 149 $ 5.00 $ 745 - - - - $ 42,600 - 74,107 Sub-Total 6,300 $130,125 149 $ 745 - - - - $ 42,600 $173,470 Dublin Facilities Dublin Sports Ground 2,033 $18.84 S 38,302 225 $ 5.00 $1,125 1,033 b 6.75 $ 6,973 S 74,006 - - $120,405 Mape Park 607 18.84 11,436 52 5.00 260 283 6.75 1,910 4,329 - - 17,935 Shannon Park and Community Center 1,945 18.84 36,644 160 5.00, 800 679 6.75 4,583 58,404 - - 100,431 W Valley Community 1 Swim Center 1,556 18.84 29,315 147 5.00 735 440 6.75 2,970 59,311 13,000µ $ 38,297 $143,628 Sub-Total 6,141 $115,697 584 $2,920 2,435 $16,436 $196,050 $ 13,000 $ 38,297 $382,400 San Ramon Facllitles Athan Downs 2,016 $18.84 $ 37,981 244 $ 5.00 $1,220 1,303 6.75 $ 8,795 $ 68,194 - - 5116,190 Boone Acres 762 18.84 14,356 96 5.00 480 319 6,75 2,153 12,164 - - 29,153 Inverness Park 732 18.84 13,791 102 5.00 510 521 6.75 3,517 12,830 - - 30,648 San Ramon Olympic Pool 1,880 18.84 35,419 142 5.00 710 455 6.75 3,071 57,123 16,000* 70,603 182,926 White House 66 18.84 1,243 5 5.00 25 2 6.75 13 25,109 - - 26,390 Sub-Total 5,456 $102,790 589 $2,945 2,600 $17,549 $175,420 $ 16,000 S 70,603 $385,307 District Facllltlos and Programs 1102. $ 19,292 78 $ 390 965 $ 6,514 - - - $ 26,196 TOTAL 18,921 $367,904 1,400 $,000 6,000 $40,500 $371,470 S 71,600 $108,900 $967,373 µ Reflects annual contribution to fund future equipment replacement (2) Conservative Analysis Indicates Direct Facility Maintenance and Operating Costs Would be Generally Comparable to Those Projected By DSRSD For. Fiscal Year 1985-1986 . . Completion of the analysis shown in Exhibit V provided the base line of expected labor hours required to maintain and operate the facilities located in each of the communities. These were then converted to expected operating costs for each facility assuming both Dublin and San Ramon assumed responsibility for park maintenance and aquatics programming. Exhibit VI ; which follows this page, shows basic assumptions employed to develop cost estimates as well as estimated costs for each of the communities. In reviewing the information presented in the exhibit, the following factors should be noted: Likely maintenance approaches to be taken by the two communites are moderately different. Based on interviews with city staff, the following differences were noted: - ,Dublin is likely to contract for maintenance services with a private contractor following the same basic approach currently employed to provide public works maintenance services. San Ramon is likely to employ a combination of in-house staff, and contract services. San Ramon' s approach would include: . . Providing a basic in-house crew to accomplish pool maintenance and basic safety maintenance in park facilities. . . Contract for field supervision plus general maintenance. These differences in planned approaches are reflected in the cost estimates shown in Exhibit VI . Estimates reflect the following key assumptions: -14- EXHIBIT VI Dublin and San Ramon PROJECTED COSTS OF ASSUMING PARKS, RECREATION, AND AQUATICS SERVICES DUBLIN Assume all initial work accomplished through maintenance contract. Initial supervision of field maintenance activities would be provided by contract superintendent who would be increased from a one-half time to a full-time committment. Field maintenance hours would be as projected in the facility cost analysis. Basic contractor costs employed to estimate service costs related to the various type personnel employed by Dublin and San Ramon are as follows: Rate Per Hour DSRDS Staff Private Contract* Position Cost** Position Cost Park Superintendent $28.28 Superintendent 546.80 Maintenance and Landscape Construction worker 17 .32 Labor 1 15.36 Groundsman/Gardener 17 .65=- Labor Foreman 19.20 - Park Maintenance Landscape Worker 15.14 Laborer 1 15.36 Mechanic 17 .09 Mechanic 24.00 Temporary Laborer/ Park Aid 5 .00 *** Kelly Employee 6.75 *** Analysis assumes same work hours required. Could actually be more or less depending on service level and productivity adjustments. Includes overhead and profit. ** Calculated based on 1800 net working hours. ** No comparable employee -- assumes city could select to hire summer staff apart from contract at comparable rates. -15- EXHIBIT VI (2) Cost Calculations _ Cost Hours Per Hour Total Facility/Function Superintendent 900 $46.80 $42,120 Dublin Sports Ground Contractor Staff 2,033 $16.44* $33,829 Temporary Staff 225 5.00 1 ,125 Kelly Staff 1 ,033 6.75 6,973 Sub-total 541 ,927 Mape Park Contractor STaff 607 $16 .44 $100100 Temporary Staff 52 5 .00 260 Kelly Staff 283 6.75 1 ,910 Sub-total 512,270 Shannon Park Contractor Staff 1 ,945 $16.64 $32,365 Temporary Staff 160 5.00 800 Kelly Staff 800 6.75 4,583 Sub-total $37 ,748 Valley Community Swim Center Contractor Staff 1 ,556 $16.64 325,892 Temporary Staff 147 5 .00 735 Kelly Staff 735 6.75 4,961 Sub-total 531 ,588 Equipment Maintenance 900 20.00 518,000 Labor Total 5183 .653 Materials and Supplies 5196,050 Reserve for Pool Equipment Replacement 13 ,000 Park and Pool Maintenance Total 3392,703 Aquatics Program Staff 38,297 TOTAL -- DUBLIN 3431 ,000 *Average Rate for Above -16- - EXHIBIT VI (3) SAN RAMON Assumes San Ramon would accomplish through combination of in-house and private contract staff. Assumptions as follows: Park and Recreation Director (City Staff) would provide overall management in regards to service levels, facility modifications, and program operations (e.g. aquatics services) . Contract superintendent would provide day to day .field supervision. Current half-time superintendent would increase from half to full-time based on assumption of park maintenance activities. Pool maintenance would be accomplished through use of in-house staff. - Safety maintenance of playground facilities and ball field maintenance would be accomplished by in-house staff. Analysis indicates that: . . Pool maintenance would require about 40% of 2 person crew. . . Remaining 60p could be allocated to other functions noted above. - . . In-house crew would be limited to two employees dedicated to park/pool maintenance purposes. Cost calculations reflect cost of in-house crew at same level as current DSRSD staff. -- Remaining maintenance services accomplished by private contractor and temporary/Kelly staff through patterns comparable to those currently employed by DSRSD. -17- EXHIBIT VI (4) Cost Calculations - Cost Hours Per Hour Total Facility/Function Superintendent 900 $46.80 $42,120 Athan Downs City Crew 1 ,710 $18.84 $32,216 Contractor Staff 306 16.64 5,092 Temporary Staff 244 5 .00 17220 Kelly Staff 1 ,303 6.75 8,795 Sub-total $47,323 Boone Acres City Crew 570 $18.84 $10,739 Contractor Staff 192 16.64 3,195 Temporary Staff 96 5 .00 480 Kelly Staff 319 6.75 2 ,153 Sub-total $16,567 Inverness Park City Crew -- $18.84 '- Contractor Staff 732 16 .64 $12,180 Temporary Staff 102 s 5.00 510 Kelly Staff 521 6.75 3,517 Sub-total $16,207 San Ramon Olympic Pool City Crew 1 ,320 18.84 $24,869 Contractor Staff 560 16.64 9,318 Temporary Staff 142 5 .00 710 Kelly Staff 455 6 .75 3 ,071 Sub-total $37,968 White House Contractor Staff 66 16.64 $1 ,098 Temporary Staff 5 5 .00 25 Kelly Staff 2 6.75 13 Sub-total 51 ,136 Equipment Mechanic 900 20.00 18,000 Labor Total 3179,321 -18- f EXHIBIT VI (5) Cost Calculations (co.ntinued) Cost - Hours Per Hour Total Materials and Supplies _ _ $175,420 Reserve for Pool Equipment Replacement _ _ 16.000 Park and Maintenance Total $370,741 Aquatics Program Staff 70,603 TOTAL SAN RAMON $441 ,344 -19- Costs are estimated based on current hourly costs plus an allowance for overhead and profit employed by the contract firm currently working with Dublin and San Ramon. The project team has attempted to match the number and type of labor hours currently expended by all DSRSD staff with the various employee categories currently utilized by the private contractor. These comparisons are shown in Exhibit VI . To the extent that higher or lower cost contract employees were employed to provide services could have relatively significant impact on increasing or decreasing total maintenance costs. - It should be noted that the cost estimates displayed in the exhibit reflect no commitment by the contract firm. They are provided for illustrative purposes only and actual costs would be dependent on specific contract agreements negotiated by the two cities as well as service levels determined by each individual city. The cost estimate assumes the same basic expenditures for materials and supplies as those budgeted for and planned by DSRSD. The analysis assumes continued use -of relatively low cost temporary and Kelly Service workers by both cities. It should be noted that hourly rates for these employees are well below the lowest contract laborer employee. A "loaded" cost of S11 .52 -per hour for the lowest level contract employee is well above the $5.00 to $6 .75 per hour associated with the temporary or Kelly Services employees currently utilized by the District. Again, how the temporary or part-time labor issue was resolved could have significant impact on comparative costs. The data displayed in Exhibit VI include no allocation for equipment cost -- either through rental from a private contractor or through purchase by each of the individual cities. The -equipment cost issue is dealt with in a subsequent section of this report. In evaluating projected maintenance and aquatic program costs, the project team attempted to be conservative and to provide a "worst" case estimate of likely future maintenance costs from the perspective of each of the cities . In evaluating these estimates, the following factors should be taken into account: -20- The actual number of work hours required to- provide maintenance services could increase or decrease based on the following: Comparative productivity through use of the private contract approach. Short of an actual estimate of a contract service cost and subsequent evaluation of staff productivity and work quality, it is virtually impossible to quantify potential productivity increases and their impact on costs at this time. Any change in maintenance service levels in terms of frequency could have significant impact on the number of work hours required as well as resulting service costs. - The analysis assumes continuation of a part-time Aquatics Program Coordinator and staff. The analysis assumes a part-time Coordinator employed by both cities. This could be accompished through hiring one person to coordinate aquatics programs for both cities. If separate approaches were taken to staffing the aquatics program at the two pool facilities, costs could be increased through the reduced flexibility of shifting staff between the two pools as demand varies. This could increase individual city costs for aquatics programming. As noted above, the analysis assumes continued use of relatively low cost temporary or Kelly Service staff to meet fluctuating seasonal maintenance needs. If these labor hours were replaced by higher cost contract labor employees, costs could be increased. Conversely, this might be offset by higher productivity through use of contract staff. If the total number of projected hours for temporary and Kelly staff were completely replaced by a contract labor employee at the lowest classification in salary level , costs would be increased for the two cities as follows: Dublin: $15,400; San Ramon: $16 ,243. As noted above, engineering support costs have not been included in the estimates. Services for minor design and construction inspection could cost an additional $15,000 for each city if they were not accomplished by in-house staff. The analysis displayed in Exhibit VI also assumes that general management and supervisory costs are reduced if the services were provided by the two cities. This assumes that overall field supervision could be provided by expanding the current part-time public works supervisors in each city. This compares to DSRSD' s current plans to establish multiple levels of super- vision in fiscal year 1985-1986 . -21- Given the above, the following conclusions can be drawn related to expected maintenance costs for each of the cities: Maintenance costs could be expected to fall in the range of $430,000 to $440,000 annually for each city if lead responsi- bility were assumed for both park maintenance and aquatics programming. These costs are generally comparable to costs currently experi- enced by DSRSD. When overall costs for management, supervision, and equipment maintenance are added to the estimated direct costs of maintaining facilities, the current budget year costs displayed in Exhibit V for DSRSD maintenance services would be as follows: - Dublin facilities -- $447 ,463. San Ramon facilities -- $450,370. As can be seen from the above, expected individual city opera- ting costs are almost identical to those currently experienced by DSRSD. Given the current maintenance approaches proposed by each of the individual cities, it is unlikely that service transfer from DSRSD would include absorption of a significant number of existing maintenance staff by either of the cities. Given the proposed contracting approach, full-time city positions resulting from the service transfer would be minimal . While there could be opportunities for absorption of all or some of the maintenance staff by the private contractor, it should be noted that such absorption is clearly at the discretion of the individual contractor. 3. REVENUES AVAILABLE TO OFFSET OPERATING AND CAPITAL COSTS COULD VARY WIDELY DEPENDING ON THE RESULTS OF NEGOTIATIONS BETWEEN THE CITIES AND DSRSD. Under current state law, there is no established procedure for determining the specific share of property tax revenues which would be available to the cities if service delivery responsibility were shifted from DSRSD to each individual city. Essentially, any transfer would need to be negotiated no matter which approach were taken for service transfer. The key issue involves lack of specificity in current law regarding how property tax -22- revenues would be divided in the post Proposition 13 era considering the absence of a dedicated tax rate for parks and recreation services within the overall general fund property tax revenue received by DSRSD. To identify issues related to the property tax transfer question, it is necessary to understand the financial structure of DSRSD' s general fund operations as well as historical trends in the use of general fund resources to support general fund services including parks, recreation and aquatic services as well as the fire service and District administration both before and after passage and implementation of Proposition 13. (1) Review of DSRSD Revenues and Expenditure Trends Indicates a Significant Shift in General Fund Revenue Sources in the Post- roposition 13 Era. Exhibit VII , which follows this page, shows the composition of DSRSD revenues and expenditures for selected periods both before and after the passage of Proposition 13 . The information in the exhibit is intended to provide a data base for subsequent evaluation of alternative scenarios for — calculating revenue transfer related to transition in parks and aquatic services. Review of the information presented in Exhibit VII leads to the following basic conclusion: There has been a significant shift in District revenue sources employed to support general fund services pre- and post-Proposi- tion 13. Prior to Proposition 13, property taxes accoun.ted for nearly 80% of general fund revenues. In the years following Proposition 13, property taxes have fallen to 60% of total general fund revenues. Prior to Proposition 13, a portion of the District' s property tax revenue was clearly associated with the delivery of parks and . recreation services. -23- EXHIBIT VII Dublin and San Ramon TRENDS IN DUBLIN-SAN RAMON SERVICES DISTRICT REVENUES AND EXPENDITURES 1 . GENERAL FUND EXPENDITURES 1974-1975 1977-1978 1978-1979 1982-1983 1985-1986 % of % of % of % of % of % 5 District Program $ Total 8 Total E Total E Total b Total Change Legislative S $72,249 7.1 b 84,030 4.7 S 115,487 8.4 S 42,110 1 .8 b 75,100 1 .9 3.9 Executive/Finance/P.W. 154,678 15.2 169,348 9.5 102,193 7.4 277,003 12.0 597,400 14.7 286.2 Fire 515,121 50.7 782,303 43.8 849,994 61 .6 1,459,949 63.0 2,455,400 60.5 376.7 Parks/Recreation 274,224 27.0 751 ,576 42.0 312,231 22.6 538,145 23.2 931,300 22.9 239.6 TOTAL $1,016,272 100.0 $1,787,257 100.0 $1,379,905 100.0 $2,317,207 100.0 $4,059,200 100.0 299.4 ' 2. GENERAL FUND REVENUES 1974-1975 1977-1978 1978-1979 1982-1983 1985-1986 r % of % of % of % of % of % N District Program $ Total S Total $ Total S Total 5 -Total Change --7- - r , Property Tax/State Bailout $ 823,342 80.8 $1,635,487 78.8 $1,072,410 60.7 $1,926,255 64.5 $2,517,800 62.8 205.8 ! Interfund Transfers Sewer Fund 85,440 8.4 102,382 4.9 344,666 19.5 322,644 10.8 741,0002 18.5 767.3 Water Fund 38,009 3.7 9,594 .5 66,622 3.8 79,862 2.7 119,200 3.0 . 213.6 '! Fire CIP - - - - - - 10,739 .4 68,200 1 .7 - Park Dedication - - - - - 2.478 - - - - Iniergovernment - - 162,979 7.8 78,873 4.5 33,385 1 .1 22,000 .5 - Franchise Fees 22,1651 2.2 27,500 1 .3 39,116 2.2 129,525 4.3 115,000 2.9 418.8 Recreation Fees 30,323 3.0 44,278 2.2 71,791 4.1 36,414 1 .2 25,000 .6 (17.6) Aquatics - - 59,559 2.8 - - 52,446 1 .8 88,000 2.2 - `i General Government 1,743 .3 10,000 .5 - - - - 55,000 1 .4 - Insurance Refunds - - - - - - 117,576 3.9 - - - I! Miscellaneous 1,129 .1 - - 41,469 2.3 50,527 1 .7 7,000 .2 520.0 Interest 16,763 1 .6 241000 1 .2 50,865 2.9 224,760 7.6 250 000 6.2 391 .4 TOTAL 51 018,914 100.0 $2,076,229 100.6 .$1,765,812 100.0 $2,986,611 100.0 54,008,200 100.0 293.4 I Includes Community Center Rental 2 Includes $291,000 from sewer enterprise funds and $450,000 from sewer expansion fund (sewer connection fees?) Prior to 1975, 25% of the District' s $1 .00 tax rate was associated with parks and recreation services. In 1975, District voters approved an override of up to .$.39 additional property tax to support an increase in the level of park and recreation services. This led to a potential District tax rate of $1 .39 of which S .64 was dedicated to parks and recreation services and S .75 for other general fund services. As assessed valuation grew at a rapid rate in the years immediately preceeding the passage of Proportion 13, the override was never fully used. In the year prior to • passage of Proposition 13 , the total District property tax rate stood at $1 .28 which included $ .59 allocated to parks and recreation and $ .69 allocated to other general fund services. With the passage of Proposition 13 , there has been a significant shift in the composition of overall general fund revenue. As noted above, property tax dropped as a proportion of overall general fund revenue. The years following Proposition 13 have seen an increasing use of non-property tax revenue sources to support general fund operations. These include: . . Transfers from the sewer and water enterprise and expansion funds. . . Increasing fees related to parks and recreation services. . . Significant growth in interest on the general fund balance. With the passage of Proposition 13 , there has been a loss in identity of dedicated tax rates associated with specific general fund services. Key issues include the following: . . Because of provisions of Proposition 13, the property tax override previously associated with increasing parks and recreation service levels was eliminated with the passage of the proposition. It had been approved by voters within the three-year "envelope" which preceeded passage of the Proposition. 0 -25- . . With the loss of the override, the DSRSD shares of property tax revenues in both Alameda and Contra . Costa Counties were calculated on a lower base. Exhibit VIII , which follows this page, provides a more detailed portrait of revenue and expenditure trends in the post-Proposition 13 era. Data displayed in the exhibit need to be reviewed in the following context relevant to the park and recreation revenue transfer issue. Key factors include the following: With the passage of Proposition 13, the DSRSD Board adopted the policy that the first priority for use of general fund resources with emphasis on property tax revenues was the maintenance of fire service levels. This associates available property tax revenues with maintenance of fire service levels. In the years since Proposition 13 passed, a variety of things have happened which have tended to blur the previously stated relationship between property tax revenue and support of the fire service within the overall context of general fund expendi- tures and revenue trends. These include the following: Fire service expenditures have increased at a rate — substantially faster than property tax revenues received by DSRSD. Analysis of fire service expenditures indicate that, over time, the Board has not only maintained but increased fire service levels as measured by services provided and department staffing. DSRSD has operated with a significant general fund expenditure/revenue positive balance for every year since passage of Propositon 13 . As expenditures have tradition- ally trailed revenues by a substantial amount, the District has built a rapidly increasing general fund balance. To a great extent the general fund balance has been achieved through increased revenue transfers from enter- prise and expansion funds related to sewer and water operations. These transfers incorporate the following policies stated by the DSRSD Board: -26- EXHIBIT VIII Dublin and San Ramon POST PROPOSITION 13 TRENDS IN SELECTED REVENUE AND EXPENDITURE PATTERNS FISCAL YEAR EXPENDITURE BY PROGRA14 CATEGORY % 1978-1979 1979-1980 1980-1981 1981-1982 1982-1983 1983-1984 1984-1985 1985-1986 Change Legislative/Administrative $ 217,680 S 219,029 $ 261,704 $ 296,458 $ 319,113 $ 399,082 $ 556,771 $ 672,500 208.9 Fire 849,994 1,011,248 1 ,154,715 1,271,829 1,459,949 1,802,852 2,406,659 2,455,400 188.9 Recreation/Parks/Aquatics 312,231 221,170 433,686 '611 ,091 538,145 717,581 1 ,016,788 931 ,300 193.3 Total $1,379,905 $1,451,447 $1,850,105 $2,179,378 $2,317,207 $2,919,515 $3,980,218 $4,059,200 194.2 REVE14UE BY MAJOR SOURCE Property Tax/Subventions $1,072,410 $1,229,171 $1,530,910 $1,840,403 $1,926,255 $2,249,938 $2,455,176 $2,517,800 134.8 Interfund Transfers ry Sewer Enterprlse 139,824 201,656 262,235 162,403 169,805 182,942 211 ,550 292,000 115.0 Sewer Expansion 47,842 304,319 189,524 48,460 152,839 694,342 587,587 450',000 Water Enterprise 65,204 90,900 48,557 85,684 65,235 85,669 103,753 119,200 78.9 Water Expansion 1,418 10,598 15,503 6,890 14,627 2,690 70,080 Fire CIP - - 36,087 13,820 10,739 26,498 107,503 68,200 Park Dedication - - 69,050 3,070 2,478 - - - Interest 50,865 78,407 122,028 276,508 224,760 201 ,302 281 ,926 250,000 Franchise Fees 39,116 63,778 135,565 139,177 129,525 171,464 129,308 115,000 Recreation Fees 71 ,791 28,124 52,789 36,668 36.414 27,090 24,778 25,000 Aquatics - - - 6,124 52,446 104,156 112,790 88,000 141scellaneous 277,342 57,278 96,777 78,183 201,488 94,751 126,720 84,000 TOTAL $1,765,812 $2.0641231 $2,599,025 $2,697,390 $2,986,611 $3,840,842 $4,211,171 $4,008,200 127.0 Ending General Fund Balance $ 563,196 $1,187,300 $1,930,769 $2,354,554 $2,512,662 $3,339,092 * n/a Note: FY 1978-79 through 1983-84 based on annual audit. 1984-1985 based on unaudited DSRSD Financial report. 1985-1986 based on DSRSD Budget. To be provided upon completion of audit. . . Up to 15% of expansion fund revenues in a given year can be transferred to the general fund to offset the cost of administrative operations related to general fund service support-of enterprise activities. The actual amount transferred within the 150 maximum is -at the discretion of the Board. . . The District employs a mathematical technique which relates enterprise fund operations to overall District line operations to calculate a share of enterprise fund revenues which should be transferred to the general fund to offset overall administrative support. . . Review of revenue transfers over the years since Proposition 13 has passed indicates that when expansion and enterprise revenues are combined, their totals have either equaled or exceeded both legislative and administrative costs in the District. To the extent that this excess occurs, these enterprise and expansion fund revenue transfers are supporting general fund services beyond District overhead and administration. - Review of revenue trends subseqeunt to the passage of Proposi- tion 13 indicates that direct park and recreation revenues are always significantly less than the cost of those services. To maintain parks and recreation services, the District has been required to rely on other general fund revenue sources — to support and increase park services. Because of the changing mix of revenue sources in the general fund since Proposition 13 passed, there is no direct relationship observable between the support of parks and recreation services and any single general fund revenue source. As indicated above, the analysis of revenue and expenditures indicates that the District has built and maintains a substantial continuing general fund balance or reserve. Exhibit IX, which follows this page, shows the composition of that reserve over time.- Data displayed in the exhibit reflect the results of annual financial audits of the District' s general fund. Principal conclusions drawn from the information presented in Exhibit IX include the following: Prudent expenditure controls have resulted in the development of a substantial general fund reserve or unexpended balance over time. The composition of that general fund reserve has changed over time. -28- EXHIBIT IX Dublin and San Ramon GENERAL FUND BALANCE ALLOCATIONS -- RESERVES FISCAL YEAR 1978-1979 1979-1980 1 980-1 981 1981-1 982 . 1 982-1 983 1983-1984 1984-1985* Reserves for Self Insurance $ 227,000 $ 227,000 $ 227,000 $ 227,000 - - Fund Balance Reserved for Vandalism - - 50,000 50,000 50,000 - Reserved for Workers' Comp. - - 63,000 91 ,225 206,214 253,605 Reserved for Operating Reserve - - 820,000 1 ,027,000 1 ,003,430 1 ,000,000 Reserved for ' Capital Replacement - - 32,000 58,535 95,597 493,697 Unreserved- Undesignated 336, 196 903,215 599,671 760,747 Reserved for Encumbrances - 57,085 139,098 140,247 - - Reserved for End of Year Appropriations - - - - 1 ,157,421 1 ,403,609 Reserved for Landfill - - - - - 52,181 Reserved for Aquatics CIP - - - - - 136,000 TOTAL $ 563,196 $1 ,187,300 $1 ,930,769 $2,354,554 $2,512,662 $3,339,092 To Be Provided Upon Completion of audit. The District has built and maintained a reserve for operations which approximates $1 million. - At the end of each year,'"-the District has maintained a varying amount classified as reserved for year end appropri- ations. To the extent that this reserve has existed in past years, it has been employed to fund major capital improvement projects related to general fund operations. This has included an upgrading of both fire service and parks facilities. The only funds currently contained in the general fund reserve which can clearly be associated with parks and recreation involve the capital replacement reserve for the pools. Presumably, this reserve would be available for transfer, depending on the results of negotiations, should the.cities choose to transition responsibility for parks and recreation services from the District. (2) Reserves Dedicated to Parks, Recreation and Aquatic Services are Relatively imited. As noted above, review of District budgets and end of year .audits indicates a relatively limited amount of funds available for transfer which can be directly tied to parks and recreation services. These consist of: Park dedication funds. The general fund reserve specifically identified for replacement for pool facilities and equipment. While the only fund balances officially tied to park and recreation services involve park dedication fees, the cities could probably negotiate a reasonable case that funds set aside for pool replacement ought to be transferred if responsibility for operating the pools is assumed by the cities. Table 2, which follows on the next page, shows the estimated reserves and funds clearly tied to parks and recreation services which would probably be available to the cities if responsibility were transferred. -30- 1 - Tabl e 2- Park and Recreation-Related Funds -- Balance as of July 31 , 1985 Dublin San Ramon Park Dedication Fee* $200,607 $106 ,434 Pool Replacement 59,200 76 ,800 Total 2$-9 ,TOE TUT3,234 *Including interest accrued. - estimated allocation: less committed funds . It should be noted that the pool capital replacement fund is based on a schedule of depreciation and resulting annual set-asides to fund future replacement. These annual set-asides, which would become the financial responsibilities of the cities if they assume responsibility for pool operations , are as follows: For Dublin, a transfer of $12,700 is projected for the current budget year. This grows to approximately $43,000 a year at the end of a 20-year period. _ -- For San Ramon, the current contribution is $15 ,900, growing to $54,000 at the end of a 20-year planning period. Beyond these two categories of funds, there is no clear tie between other unallocated or unapprorpriated DSRSD general fund reserves and the transfer of parks and aquatic services to Dublin and San Ramon. (3) Non-Property Tax Revenues Related to Parks and Recreation and T75-7—able e o Dublin and San Ramon Fall Weil Sort or Projected Program Costs . The only revenues which can be accurately predicted for transfer without negotiation with DSRSD involve program related fees and revenues. These are summarized in Exhibit X, which follows this page, -31- EXHIBIT X Dublin and San Ramon PROJECTED REVENUES ASSOCIATED WITH ASSUMPTION OF PARKS, RECREATION AND AQUATICS, 1985/86* Item Dublin San Ramon Recreation Fees $13,400- $11 ,600 Aquatics Contract -- $15,000 - $20,000 Aquatics Club -- 15,000 Aquatics Revenues $26,500 $26,500 TOTAL $39,900 $68,100 - $73,100 Based on 1985/86 DSRSD operating budget -32- and reflect budgeted amounts for the current year apportioned between Dublin and San Ramon based on historical operating experience. Two types of revenues are displayed in Exhibit X: Direct recreation and aquatics program revenues. It should be noted that aquatics program revenues projected in the exhibit reflect budgeted amounts but fall well below actual experience during fiscal year 1984-1985. These fee revenues were estimated by District staff as follows: Dublin -- approximately $34,000. San Ramon -- approximately $54,000. Because the project team has elected to take a conservative approach in projecting both costs and revenues associated with service transfer, the lower budgeted amounts were employed to calculate direct fee revenues available to the two cities. As can be seen from review of the information presented in the exhibit, direct revenues fall well short of projected program costs whether or not solid waste collection franchise fees are considered. Table 3, which follows on the next page, summarizes the comparison between projected program costs for each city and conservatively estimated direct revenues. -33- Table 3 - Direct Cost and Revenue Comparison -- Parks and Recreation Services Dublin San Ramon Projected Cost $431 ,000 $441 ,344 Direct Program .. Revenue 39 ,900 73 ,100 Net Cost $391 ,100 $368 ,244 As can be seen from review of the information presented in the table, the key financial issue related to service transfer involves individual city access to general fund revenue sources beyond those direct revenues associated with parks and recreation services. This essentially involves the proportion of property tax revenue which could be negotiated for transfer from the DSRSD in the event the cities elect to assume responsibility for the delivery of parks, recreation, and aquatic services. The section which follows explores the property tax transfer issue. (4) Any Transfer of Property Taxes Related to Parks and Recreation Services 717—R-e—e-d To Be Negotiated Between the DSRSD and Each of the Cities. Any transfer of parks and recreation services will require formal transition of responsibility from the District to each of the cities. This can be accomplished in a variety of ways: -34- Through total dissolution of the District -- an issue which goes well beyond the transfer of park and recreation services. - Through limited reorganization -- in other words, a detachment of city territory from the District and an annexation to each of the individual cities for the purpose of delivering park and recreation services. Through District initiation to eliminate the service. Under any alternative short of total District dissolution, it is probable that the transition of service would need to involve consideration by LAFCO. Because of the multi-County nature of DSRSD, it is not clear whether the process would involve: One LAFCO. Legislation related to District reorganization in'�a multi-county setting indicates that the LAFCO in the county in which the greater proportion of the entire District assessed valuation lies would have the authority to act on any reorganization proposal . The statute speaks to equalized ad valorem assessed rules. This is clearly not the case- in the post-Proposition 13 environment. Because of the lack of certainty in the existing statute, it is unclear as to how the principal county would be determined and whether it would involve Alameda or Contra Costa Counties. - Two LAFCO' s. Given the uncertainty noted above, the principal county issue would probably have to be resolved before any proposal for District reorganization was dealt with. It would be impractical to have the decision analyzed and rendered by two separate LAFCO' s . In any case, the issue of non-fee revenue transfer associated with service transition is an important one. Under existing statute, there is no formula to calculate property tax transfer in the event of a service transition. It is clearly a negotiated item as part of the overall LAFCO review process. To evaluate the financial impact on each of the cities of assuming service reponsibility, it has been necessary for the project team to structure and evaluate potential scenarios related to property tax transfer. This has been accompished to provide a "best" case and "worst" case analysis to determine bottom line costs to each city of assuming the service. -35- A key issue in the property tax transfer question is the position previously taken by the Board of DSRSD that post-Proposition 13 property taxes have been and will continue to be used to maintain fire services, and only a small portion of those property taxes are available for and used to support parks and recreation and other general fund services. This position potentially sharply restricts the revenue available for parks and recreation if the Board' s philo- sophy provided the basis for negotiated property tax transfer. For example, for fiscal year 1985-1986, the net cost for the fire service (exclusive of transfers from the fire capital improvement fund) is almost equivalent to total projected property tax revenue to be received by the District. Exhibit XI , which follows this page, describes and evaluates alternative scenarios for -calculating property tax transfer if the cities assume responsibility for parks--and recreation services from — DSRSD. They range from a representation of the DSRSD Board' s posi- tion that property taxes are dedicated to the support of fire service through a variety of scenarios which treat property taxes related to parks and recreation services based on historical general fund expenditure trends, pre- and post-Proposition 13 taxing and expendi- ture patterns, and the like. Essentially, the data contained in the exhibit are self-explanatory. The basic conclusions which can be drawn about the various scenarios are highlighted in the sub-para- graphs which follow: -36- EXHIBIT XI Dublin and San Ramon ALTERNATIVE PROPERTY TAX TRANSFER SCENARIOS SCENARIO ONE Assumptions All General Fund functions supported by proportional share of property tax dollar after dedicated/directly related revenues considered. Calculations 1 . Take average percent for the last five fiscal years for which audited financial statements available. Covers FY 80/81 through 84/85. 2. For each major program component, deduct from program cost revenues directly related to the delivery of the service. Fire: Transfers from Fire Capital Improvement Fund. Legis.Admin: Transfers from enterprise funds to support overhead related to administration of enterprise fund operations. Parks, Recreation, Aquatics: Fee, contract, and park dedication fees. r_ Five Year 1980-1981 1981-1982 1982-1983 1983-1984 1984-1985 Total Fire Total Cost $1 ,154,715 $1 ,271 ,829 $1 ,459,949 $1 ,802,852 $2,406,659 ( Less Rev) 36,087 13 ,820 10,739 26,498 107,503 Net Cost $1 ,118,628 $1 ,258,009 $1 ,449,210 31 ,776,354 32,299,156 37,901 ,357 Admin./Leg. Total Cost $261 ,704 $296,458 $319,113 $399,082 3556,771 ( Less Rev) 350,792 248,087 235,040 268,611 315 .303 Net Cost -- 48,371 84,073 130,471 241 ,458 $504,383 Rec/Parks/ Aquatics Total Cost $433,686 $611 ,091 $538,145 $717,581 51 ,016,788 (Less Rev) 121 ,839 45,862 91 ,338 131 ,246 268,814 Net Cost $311 ,847 $565,229 $446,807 $586,335 747,974 $2,658,192 -37- EXHIBIT XI (2) 3. Use 5 year totals to calculate proportional share- of costs supported by General fund less dedicated revenues. - Percent 5 Year Total Share Fire $7,901 ,357 71 .415 Admin./Leg. 504,383 4.559 Park/Rec./Aquatics 2,658,192 24.026 Total $11 ,063,992 4. Then apply % to calculate share of property tax. 1985 - 1986 Property Tax Budgeted: $604,927 Advantages Disadvantages Reflects philosophy that general Fails to take into account specific fund resources support all general policy decisions taken by Board of fund activities and that such Directors to enhance general fund factors as interest earnings and throuah allocation of expansion other miscellaneous revenue funds. To extent such resources sources support fire services as allocated to parks/recreation/aqua- well as overhead, parks, aquatics, tic programs, approach overstates and the like. allocation of property tax share to Parks/Recreation. Recognizes that District has run -Not consistent with previous substantial general fund balance apparent District Board policy virtually every year since Propo- decision that maintenance of Fire sition 13 passed. service top general fund priority and property taxes dedicated to that purpose. Fails to adjust for loss of solid waste collection revenue tradition- ally associated with support of Parks/Rec. by District staff. SCENARIO TWO Assumptions Review of revenue and expenditure trends since passage of Proposition 13 indicates that Fire service costs have risen faster than property tax revenues. Indicates that Board of Directors have made policy decision to increase rather than maintain service levels in place at the time Proposition 13 sharply reduced property tax revenue. -38- EXHIBIT XI (3) Leads to assumption that property tax share attributable to Parks and - Recreation could be calculated based upon allocation post-Proposition first year. Calculations 1 . Use FY 1978-1979 as base. Deduct fire service costs from property tax revenue. 2. Deduct sewer enterprise fund and water enterprise fund transfers from legislative/administrative costs. Reflects use of these revenues to support of overhead operations related to management and support of these enterprise fund activities. 3 . Deduct revenues related to parks/recreation/aquatics from gross program cost. 4. Total net cost of legislative/administrative and parks/recreation/aquatics program and calculate percent of each. 5 . Multiply 1978 - 1979 property tax remainder after fire service costs deducted by percentages calculated in step 4. 6. Divide result by total property taxes to calculate share attributable to parks/recreation. 7 . Use resulting percentage to estimate property tax share attributable to parks/recreation/aquatics in FY 1985 - 1986. 1978 - 1979 Property Tax: $1 ,072,410 ( 1978 - 1979 Fire Service Cost: 849,994) Net Property Tax $222,416 -39- EXHIBIT XI (4) 1978 - 1979 Administrative/Legislative $217,680 1978 - 1979 Enterprise Fund Transfers ( 205,028) Net Administrative/Legislative Cost $12,652 1978 - 1979 Park/Rec./Aquatics Cost - - $312,231 1978 - 1979 Park/Rec./Aquatics Revenue 71 ,791 Net Park/Rec. Cost $240,440 Dollar Percent Amount of Total Net Admin./Legis. $ 12,652 5% Net Parks/Rec/Aquatics 240,440 9500' TOTAL $253,092 100 Net Property Tax $222,416 Parks/Rec. Percent .95 Share Attributable to Parks/Rec $211 ,295 Total 1978 - 1979 Property Tax $1 ,072,410 Share Attributable to Parks/Rec 211 ,295 % Share Attributable to Parks/Rec. 19.7% 1985 - 1986 Projected Property Tax $2,517,800 % Share Attributable to Parks/Rec. $496,007 Advantaqes Disadvantages Reflects board policy decision in May understate portion of. general post-Proposition 13 environment. fund- property tax dollar attributable to Park/Rec. First year following . Not influenced by subsequent deci- Proposition 13 showed substantial sions to expand Park/Recreation increase in enterprise fund amounts program through application of dis- employed to support administrative/ cretionary funds to Park/Rec. legislative overhead operations. programs. . Assumes faster than property tax increase in fire service costs financed by use of discretionary funds available through the general fund. -40- EXHIBIT XI (5) SCENARIO THREE Assumptions Proposition 13 simply reduced total property tax "pie". Amounts attributable to various General Fund Services could be apportioned based on pre-Proposition 13 tax rate shares of total property tax dollar. Interviews and review of documents indicates that the historical relationship between the tax rate components was as follows: On tax rate of one dollar prior to 1975, $.25 attributed to Parks and Recreation purposes. In 1975, District voters approved tax override of up to $.39 additional to support upgraded levels of Park and Recreation services. Led to tax rate of about $1 .39 which, with the override, led to $.64 for Parks and Recreation purposes with $.75 remaining for other general fund supported services and activities. With passage of Proposition 13 in 1978, Parks and Recreation related override was eliminated because it fell within the 3 year retroactive provision covered by the Proposition. As a result, subsequent District shares of the reduced property tax dollar were calculated based on the previous tax rate(s) exclusive of the override. From perspective of arguing property tax split, one could reason as -- follows: Tax rate in year prior to Proposition 13 was $1 .28 -- S.59 Parks and Recreation and $.69 related to other general fund functions. With elimination of the voter approved override, this rate could be assumed to be reduced to $.89 -- S.69 for other general fund functions and $.20 for Parks and Recreation. This $.20 represents about 22.5% of the properly tax dollar. Under this approach, this transition percentage could be employed to apportion/split the current property tax by service. -41- EXHIBIT XI (6) Calculations - 1985 - 1986 Projected Property tax: $2,517,800 "Historical" Parks/Recreation Percentage: 22.51 1985 - 1986 Property Tax Share to be Apportioned: $566,505 Advantages Disadvantages Historical relationship with past Runs counter to policy statements service patterns. of District Board. Assumes that general fund services supported by mix of property tax and general fund revenues. . Follows same rationale as that applied to apportion reduced pro- perty tax dollar to cities, counties, and special districts following Proposition 13 . Associates faster than property . tax growth cost increases related to general fund services with other non-property tax discre- tionary revenues. r_ SCENARIO FOUR Assumptions Reflects Board stated position that, with passage of Proposition 13, Property Tax dedicated first to maintenance of Fire service levels. Under this scenario, two alternative approaches could be employed: Using 1978 - 1979 as the base year; recalculate portion of the total "property tax pie" allocated to the fire service and other general fund services. Use resulting proportions to apportion Property Tax revenue in subsequent years. This is the approach taken in Scenario Three. -42- EXHIBIT XI (7) = The other alternative under this scenario is to-assume that, under District policy since Proposition 13; the .District's property tax _ revenue has been dedicated first to the support of . fire service with any unused remainder employed to maintain other district general fund services and activities. This alternative virtually automatically assumes that non-fire services are largely supported by other general fund revenue sources including discretionary funds available to the district board. Calculations If calculated based on the 1985 - 1986 budget, this would leave virtually no property tax revenue available for transfer: 1985 - 1986 Projected Property Tax Revenue $2,517,800 1985 - 1986 Net Fire Budget $2,449,600 Net Property Tax $68,200 Advantaaes Disadvantages . . From District Board perspective, Fails to reflect that fire service largely consistent with previous costs have grown at sharply faster public statements about allocation rate than property tax revenue of available property tax revenue. since 1978 - 1979. . Represented 79% of property tax revenue in first year following Proposition 13. __Estimated to be 95% in FY 1985-1986. Indicates Board has increased rather than simply maintained fire service levels. Not historically consistent given sharply increasing proportion of property taxes "dedicated" to fire services since 1978 - 1979 as shown below: -43- •.., .. Jr' ..... �e. ..y ..y. .rte.,o.rY- <. _•- ., .. . .. ..., . .. .__ .., EXHIBIT XI (8) Fire S-ervice - Property As a Percent Fiscal Year Fire Cost' Tax of Property Tax 1978 - 1979 $ 849,444 $1 ,072,410 79.2% 1979 - 1980 1 ,011 ,248 1 ,229,171 82.3 1980 - 1981 1 ,118,628 1 ,530,910 73.1 1981 - 1982 1 ,258,009 1 ,840,403 68.4 1982 - 1983 1 ,449,210 1 ,926,255 75.2 1983 - 1984 1 ,776,354 2,249,938 79.0 1984 - 1985 2,299,156 2,455,176 93.6 Av.erage 78.7 * Exclusive of transfer revenue from Fire Capital Improvement Fund. SCENARIO FIVE Assumptions Combines scenarios Two and Four to reflect district position that fire services receive priority in allocation of Property tax revenue, but employs rt. historical trends since Proposition 13 to develop allocation percentages to relate general funded services and activities to property tax share. Calculation 1 . For each year, develop net cost of each of the general fund supported services by deducting dedicated revenues: Fire: Fire CIP Administrative/Legal : Overhead supporting transfers from sewer/water enterprise funds. Recreation/Parks/Aquatics: Recreation fees, aquatics revenue 2. As shown above under Scenario Four, calculate net fire costs as a portion of property tax revenues. _ Calculate average percentage for the eight years beginning with the passage of Proposition 13 (FY 1978 1979) . 3 . For eight year period, for non-fire programs, calculate resulting percents. -44- EXHIBIT XI (9) 4. Apply percentage for fire service to 1985 - 1986 property tax. Deduct result from property tax total . 5 . Apply percents related to non-fire programs to net property tax balance after fire service costs deducted. Calculate property tax share based on application of percentages. Application Fire service net costs shown in Scenario Four above. Other general fund services dealt with below. Administrative/Legal Recreation/Parks/Aquatics Fiscal Dedicated Dedicated Year Total Cost Revenue Net Cost Total Cost Revenue Net Cost 1978-1979 $ 217,680 $ 205,028 $ 12,652 $ 312,231 $ 71 ,791 $ 240,440 1979-1980 219,029 292,556 (73,527) 221 ,170 28,124 193,046 1980-1981 261 ,704 350,792 (89,088) 433,686 121 ,839 311 ,847 1981 -1982 296,458 248,087 48,371 611 ,091 45,862 565,229 1982-1983 319,113 235,040 84,073 538,145 91 ,338 446,807 1983-1984 399,082 268,611 130,471 717,581 131 ,246_ 586,335 1984-1985 556,771 315,303 241 ,468 1 ,016,778 137,568 879,220_ Total $2;269,837 $1 ,915,417 $354,420 $3,850,692. $627,.768- .. $3,222,924 Net $ a Admin./Legal $354,420 9.9 Rec/Parks/Aquatics 3,222,924 90.1 Total $3,577,344 100.0 Fire Services absorbed 78.7% of property tax revenue during eight fiscal years since passage of Proposition 13 (see calculations under Scenario Four, above) $2,517,800 Projected 1985 - 1986 Property Taxes .787 Average Fire Service % $1 ,981 ,509 Property Tax Revenue Attributable to Fire Service $536,291 Net Property Tax available to support other general fund services .901 Parks/Recreation/Aquatic Share $483,198 Net Property Tax attributable to Parks, Recreation/ Aquatics -45- EXHIBIT XI (10) SCENARIO SIX - Assumptions Employs property tax revenue al.location decision made by DSRSD in the year immediately following passage of Proposition 13 to determine potential allocation of current property tax revenue to Recreation and Parks services. Incorporates the following basic components related to DSRSD Board decision- making related to use of property taxes for the support of general fund services: All locally generated property taxes (exclusive of state bail out) were directly allocated to maintain fire service. The District received state "bail out" assistance in 2 increments: An initial payment which was made by the State based on the recognition that the District delivered fire. services. A subsequent payment by the State reflecting recognition that the District also provided Parks and Recreation services. Calculation 1 . Determine composition of total FY 1978-1979 property tax revenue and calculate percentages related to each property. tax component as follows: Use/ Percent Property Tax Type Allocation Amount Share County Tax Allocating including Fire Service $ 623,324 58.10 prior year collection, HOPTR, Support BITR, etc. Initial State Bail out Payout Fire Service 311 ,810 29.1 Support Subsequent State Bail out Payout Recreation 137,276 12.8 and Parks Total $1 ,072,410 100.0% -45A- EXHIBIT XI (11 ) 2. Apply resulting percentages to 1985-1986 projected property tax to estimate proportion of current-property 'tax'attributable to Recreation and Park Services. Projected 1985-1986 Property $2,517,800 Tax Revenue Park and Recreation Percent Share 12.8% Amount Subject to Transfer with the Service $ 322,278 Advantages Disadvantages Reflects previous stated Not completely consistent with actual historical expenditure . patterns. For example, in FY 1978-1979, under this approach property tax allocation to fire. service at $935,134 while total Fire Service expenditure only $849,444. Reflects no allocation of property tax for DSRSD overhead/ administrative services. -4513- Depending on how negotiations proceeded, revenue available to the cities could vary broadly. This could have a significant impact on the ulitmate costs of assuming parks and recreation services. From the third-party perspective, it appears that scenarios two, three and five are the most philosophically sound. Each generally employs a variation on the theme of the proportional property tax allocation approach rationale employed by counties to allocate post-Proposition 13 property tax dollars following passage of the Proposition. Each tends to incorporate the DSRSD Board' s decision to protect fire in the years immediately following passage of the proposition, but reflects decisions related to service level increases which have occurred in subsequent years. 5 . DEPENDING ON HOW THE PROPERTY TAX TRANSFER ISSUE IS RESOLVED, THE NET ADDITIONAL CITY—ASSUMING P RECREATION SERVICES- COULD RANGE FROM $75 ,000 TO $350,000 ANNUALLY. Exhibit XII, which follows this page, combines previous cost analyses with each of the revenue transfer scenarios presented in the previous section. Under each scenario, each city' s share of transferred property tax has been calculated based on projected proportional property taxes from each area for fiscal year 1985-1986. These data were obtained from the auditors of Contra Costa and Alameda Counties. Net costs considering gross program costs and potential revenues are displayed in two ways in Exhibit XII : Net cost to each city given property tax transfer under each scenario considering the potential property tax share plus direct revenues related to parks and recreation ( fees, contract revenue, etc. ) . The exhibit also displays the impact of potential solid waste franchise fee revenue on'off-setting net costs of park and recreation services if they are transferred to the individual cities. As noted earlier, while this franchise fee revenue is not directly related to parks and recreation, it is displayed because it reflects the previous decision of both cities to assume the services from the District. Estimated revenues are illustrative only and, as noted previously, are dependent on the types of franchise arrangements negotiated by each individual city. -46- if E .j . EXHIBIT XII Dublin and San Ramon COSTS AND REVENUES OF ALTERNATIVE SCENARIOS INVOLVING TRANSFER OF ; 1 PARKS, RECREATION AND AQUATICS SERVICES i REVENUE TRANSFER SCENARIO f Scenario One Scenario Two Scenario Three Scenario Four Scenario Five Scenario Six j ' COST DUBLIN SAN RAMON DUBLIN SAN RAMON DUBLIN SAN RAMON DUBLIN SAN RAMON DUBLIN SAN RAMON DUBLIN SAN RAMON Park and Pool <. Maintenance Cost $ 392,703 S 370,741 S 392,703 S 370,741 $ 392,703 S 370,741 S 392,703 $ 370,741 $ 392,703 $ 370,741 $ 392,703 S 370,741 Aquatics Program Cost 38,297 70,603 38,297 70,603 38,297 70,603 38,297 70,603 38,297 70,603 381297 70,603 COST TOTAL $ 431,000 S 441,344 S 431,000 $ 441,344 S 431,000 $ 441 ,344 $ 431,000 S 441 ,344 S 431,000 $ 441 ,344 S 431,000 S 441 ,344 REVENUES v PROGRAM RELATED Property Tax S 314,560 $ 290,367 S 257,924 S ?38,083 $ 294,583 $ 271,922 S 35,464 S 32,736 S 251,263 S 231,935 5 167,585 $ 154,693 ` i Recreation Fees 13,400 11,600 13,400 '11,600 13,400 11,600 13,400 11,600 13,400 11,600 13,400 11 ,600 Aquatics Program 26,500 59,000 26,500 59,000 26,500 59,000 26,500 59,000 26,500 59,000 26,500 59,000 REVENUE TOTAL $ 354,460 S 360,967 $ 297,824 S 308,683 S 334,483 S 352,522 $ 75,364 $ 103,336 $ 291,163 S 302,535 $ 207,485 $ 225,293 Net Additional Contribution Required To Fund $ 76,540 $ 80,377 S 133,176 S 132,661 S 96,517 S 98,822 $ 355,636 S 338,008 $ 139,837 $ 138,809 S 223,515 S 216,051 tj • .il 6. THE IMPACT OF SERVICE TRANSFER ON DSRSD VARIES WIDEtY DEPENDING ON THE - PROPERTY TAX TRANSFER SCENARIO EMPLOYED.- To this point, the analysis has focused on the impact on Dublin and San Ramon of transitioning responsibility for park and recreation services. An additional perspective needs to be considered. The cost reduction and revenue loss impact on remaining DSRSD services is a key component of the service responsibility transfer equation. Analysis needs to include potential impact under the various property tax scenarios presented in the preceding section. It should also include the cumulative impact of the loss of solid waste collection franchise fee revenue based on a previous decision of the two cities. Exhibits XIII and XIV, which follow this page, provide several perspectives on this issue: Exhibit XIII shows the cost and revenue impact of service transition based on projected 1985-1986 cost and revenue data. It shows impact in terms of each of the property tax.,.transfer scenarios presented and evaluated in the preceding sections. Specific components of Exhibit XIII include the following: Basic parks, recreation and aquatic operating costs are deducted from the DSRSD general fund budget. Revenues are deducted based on the specific property tax transfer scenarios employed. These include those direct ' service related revenues involving parks, recreation, and aquatics fees and contract revenues as well as alternative property tax transfers formulated under the various scenarios. In addition, the exhibit displays estimated costs which DSRSD would incur related to .service transfer. These involve: . . Buy-out of accrued vacation and sick leave for parks and recreation employees. -48- i EXHIBIT XIII ! Dublin and San Ramon IMPACT ON DSRSD OF ALTERNATIVE COST AND REVENUE TRANSFER SCENARIOS -- I 1985/86 OPERATING BUDGET REVENUE TRANSFER SCENARIO S Scenario One Scenario Two Scenario Three Scenario Four Scenario Five Scenario Six � . Revenue 1985-1986 Revenue Budget Less b 4,008,200 5 4,008,200 E 4,008,200 S 4,008,200 b 4,008,200 S 4,008,200 Revenue Reductions Resulting I From Service Transfer Property Tax b 604,927 E 496,007 5 566,505 $ 68,200 E 483,198 E 322,278 Recreation Fees 25,000 25,000 25,000 25,000 25,000 25,000 i . Aquatics Fees 88,000 88,000 88,000 88,000 88,000 88,000 Franchise Fees 115,000 115,000 115,000 115,000 115,000 115,000 Net Revenue 5 3,175,273 $ 3,284,193 S 3,213,695 E 3,712,000 $ 3,297,002 E 3,457,922 i E, xpense 1985-1986 Expense Budget S 4,059,200 $ 4,059,200 b 4,059,200 E 4,059,200 E 4,059,200 E 4,059,200 Less Expense Reductions 4 Resulting From Transfer Of Parks/Aquatics Program Park/Recreatlon/Aquatics Operating Budget ( 931,300) ( 931,000)(' 931,000) ( 931,300) ( 931,300) ( 931,300) Plus Costs Related To Service Transfer Vacatlon/Sick Leave Buyout 1 for Terminated Employees 18,438 18,438 18,438 18,438 18,438 18,438 Contract Maintenance Cost For District Facilities 8,800 8,800 8,800 8,800 8,800 8,800 NET OPERATING BUDGET $ 3,155,138 E 3,155,138 $ 3,155,138 S 3,155,138 S 3,155,138 E 3,155,138 Revenue Surplus/Deficit +E 20,135 +$ 129,055 +S 58,557 +E 557,000 +b 141,864 +E 302,784 1 Based on 7-1-85 Balances a EXHIBIT XIV Dublin-and San Ramon REVENUE SOURCES FOR FUNDING REMAINING GENERAL FUND SERVICES UNDER ALTERNATIVE REVENUE TRANSFER SCENARIOS -- DSRSD -- 1985/86 BUDGET 4 ! REVENUE TRANSFER SCENARIO Scenario One Scenario Two Scenario Three Scenario Four Scenario Five Scenarlo Six General Fund Services . Costs 1985/86 Legislative S 75,100 $ 75,.100 $ 75,100 E 75,100 E 75,100 S 75,100 Executive/Administrative 597,400 597,400 597,400 597,400 597,400 597,400 Fire Service 2,455,400 2,455,400 2,455,400 2,455,400 2,455,400 2,455,400 TOTAL S 3,127,900 S 3,127,900 b 3,127,900 E 3,127,900 S 3,127,900 E 3,127,900 Revenue Budget After Revenue Transfers Continuous Revenue Sources cn Property Taxes - Net After, Transfer E 1,192,873 E 2,021,793 S 1,951,295 b 2,449,600 b 2,034,602 S 2,195,522 Sewer Enterprise Fund 292,000 292,000 292,000 292,000 292,000 292,000 Water Enterprise Fund 119,200 11,f§,200 119,200 119,200 119,200 119,200 Fire CIP 68,200 68,200 68,200 68,200 68,200 68,200 TOTAL $ 2,392,273 $ 2,501 ,193 E 2,430,695 E 2,929,000 b 2,514,002 b 2,674,922 3 Balance of General Fund Service a Costs To Be Funded By Variable/ lion-Certain Revenue Sources E 735,627 E 626,707 b 697,205 S 198,900 E 613,898 E 452,97 . Variable Revenue sources Interest E 250,000 S 250,000 E 250,000 E 250,000 $ 250,000 $ 250,000 E. Transfer From Sewer Expansion Fund/ Transfer From Water Expansion Fund 450,000 450,000 450,000 450,000 450,000 450,000 Miscellaneous* 84 000 84 000 84,000 84,000 84 000 84,00 0 TOTAL 784,000 784,000 784,000 784,000 784,000 784,000 Balance-Revenue Compared to Expenditures +S 48,373 +$ 157,293 +S 86,795 +S 585,100 +E 170,102 +S 331,022 * Includes surcharge fees related to Altamont Landfill by San Francisco i . . Estimated cost of contracting for maintenance at District facilities which are currently handled by parks and recreation and which would not be trans- ferred to the two cities including the treatment plant and the District headquarters. Data displayed in the exhibit indicate that, under any of the scenarios, revenue is reduced to a lesser degree than costs incurred by the District. Each of the scenarios result in an operating surplus for the District which ranges from modest to significant, depending on the nature and scope of the property tax transfer scenario employed. To fully evaluate the cost and revenue transfer impact on the DSRSD, the type of revenue and the mix of those revenues remaining to the District needs to be considered. Exhibit XIV provides this perspective. Revenues are classified into two basic categories -- continuing revenues and variable revenues. . . Continuing revenues represent those which are gener- ally dependable and can be expected to provide a continuing revenue stream. Revenues in this classi- fication include property taxes and transfers from the enterprise funds. . . Variable revenue sources consist of those revenues -- which could vary on an annual basis and do not represent totally dependable long-term revenue sources. These include expansion fund transfers which are based on connection fees which could vary depending on building volume in the Dublin-San Ramon area and which, over the longer range, can be expected to diminish as build-out occurs and system capacities are reached. Other variable revenue sources include interest income which is dependent on fund balances as well as varying market interest rates and miscellaneous revenue which largely consists of the solid waste importa- tion surcharge which will expire in approximately four years. -51- As demonstrated in Exhibit XIV, under any of the property tax transfer scenarios, DSRSD' s reliance-on variable revenue sources to fund remaining general fund services including the fire service increases. The extent of that reliance varies with the property tax transfer scenarios employed. It should be noted that this varies from the current situation only to the extent that any transfer of property tax reduces "continuing revenue sources" below the level necessary to fund overhead plus fire services. That situation is summarized in Table 4 which follows: Table 4 Revenue-Cost Comparison 1985-1986 DSRSD Budget Budget Costs Legislative __ $ 75 ,100 Administrative 597 ,400 Fire $2,455 ,400 COST TOTAL S3,1 Continuing Revenue Sources Property Tax $2,517 ,800 Enterprise Fund Transfers 411 ,200 CONTINUING REVENUE TOTAL SL�79-M(5 Balance Requiring Support From Variable Revenue Sources $ 198,900 As can be seen from review of the information presented in the table, under the current budget, approximately $200,000 of variable revenue is required to balance general fund expenditures with revenues. To the -52- extent that this "gap" is increased, remaining general fund services could be impacted if variable revenue sources decreased under any of the property tax transfer scenarios described in this report. This impact of service and revenue transfer on remaining DSRSD general fund services is important because it represents a factor which is likely to be considered in negotiation of any property tax transfer. However, these impacts should also be considered in the context of the significant unexpended general fund balances pre- viously discussed. 7 . ANY TRANSFER OF RESPONSIBILITY FOR DELIVERY OF RECREATION AND PARK SERVICES WOULD ALSO NEED TO DEAL WITH CAPITAL ASSETS RELATED TO PARK MAINTENANCE. To this point, analysis has focused on transfer and division of basic park facilities as well as operating costs and revenue issues. An additional factor which would need to be considered by- DSRSD and each of the cities would involve disposition of the basic park and pool maintenance equipment inventory. Analysis of the existing equipment inventory is shown in Exhibit XV, which follows this page. Data displayed in the exhibit include the following: Isolates the basic required inventory for each city to accomplish its own park maintenance. Identifies additional equipment currently owned by DSRSD for park maintenance purposes which exceeds this basic required inventory. Identifies other equipment ( alarm equipment at the pools) which is generally fixed at those facilities and should be considered a part of the basic park maintenance facility inventory. -53- EXHIBIT XV Dublin and San Ramon PARK AND POOL MAINTENANCE EQUIPMENT INVENTORY Item Basic Required Inventory Acquisition Cost By Year of Purchase ($) For Each City 1985 1984 1983 1982 1981 1980 Pre-1980 Turf Tractor 15,900 Tractor/Loader $13,000 Utility Vehlcle-Cushman 4,300 72" Mower 10,000 13" Mower 20,000 24' Trailer N/A Hydraulic Trailer 2,100 Chipper 5,400 Turf Vacuum N/A Fertilizer/Soll Spreader 2,000 ' Traci-or Auger 1 ,360 Aerlfier N/A Rotor l l l er N/A Verticutter-Seeder 4 ,500 Flail Mower N/A Airless Sprayer 2,000 Commo. Equip. 4,200 Valve/Cable Locator 2,500 -- Rototlller 1 ,900 Rototlller 500 Sod Cutter 2,100 Sprayer 4,000 Generator 550 Weed Mower 800 21" Rotor Mower 450 Utility Body Plck-up 14,000 EXHIBIT XV (2) Item Basic Required Inventory Acquisition Cost By Year of Purchase ($) For Each City 1985 1984 1983 1982 1981 1980 Pre-1980 :y 241 Electric Lift 4,600 2 Ton Dumb Truck 16,100 Misc. Tools/Equipment 8,510* SUB-TOTAL BASIC $71300 $35,350 $20,000 $48,400 -- -- $29,660 $140,710 INVENTORY FOR EACH CITY 1± "Extra" Capital Items x Beyond Basic Requirement :.v Utility Vehicle-Cushman $ 5,500 Utility Vehicle-Jacobson $4,000 72" Mower $14,000 Flat Bed Trailer 3,000 Fertilizer Spreader $ 2,000 n 1/2 Ton Pick-Up N/A ' 1/2 Ton Pick-Up 8,500 Misc. Tools/Equipment 2,750* SUB-TOTAL "EXTRA" $41000 $14,000 - $17 ,000 -- -- $ 4,750 $ 39,750 CAPITAL ITEMS Communications and Alarm Equipment Portable Commo. Equip. $ 3,200 $ 1 ,100 Alarm Equipment-Central $1 ,100 Alarm Equipment-Dublin $2,400 ' Alarm Equip.-San Ramon 2,400 Sub-Total $1 ,100 $ 3,200 $ 1 ,100 -- -- $4,800 -- $ 10,200* OTHER ITEMS IN DSRSD INVENTORY - - - - - - - 6,945* �� Various acquisition dates Review of the information presented in Exhibit XV indicates that the District maintains an equipment inventory which has sufficient items to equip one city to provide park maintenance, but does not include sufficient items to equip both. As a result, any transfer of responsibiliy for park maintenance would need to include some provision involving disposition of equipment assets between the two cities. Exhibit XVI, which follows this page, provides several perspectives on the replacement cost and values of the existing mix of park maintenance apparatus and equipment. Principal conclusions which can be drawn from the information presented in the exhibit include the following: Estimated replacement cost for a basic set of apparatus and equipment required to provide park maintenance services would probably fall in the $160,000 to $200,000 range. Because of the varying dates of aquisition of the various items included in the DSRSD equipment and apparatus inventory, current value differs rather significantly from initial purchase value or replacement costs. The -second section of Exhibit XVI provides one approach for estimating the depreciated value of assets in the park and pool maintenance inventory. If services were transitioned, these assets would need to be disposed of. Alternative courses of action are as follows: The assets could be sold and the resulting sale proceeds dealt with as part of the overall asset transfer involved in transition of park and recreation responsibility from DSRSD to the cities. To the extent that asset values were transferred, the results of the sale could be distributed to the cities based on initial contributions of property taxes to the general fund previously discussed in the report. Most of the assets were acquired in the period 1980 to the present. Property tax contributions for -56- _yTw EXHIBIT XVI Dublin and San Ramon ALTERNATIVE EVALUATION OF MAINTENANCE EQUIPMENT REPLACEMENT VALUES AND COSTS 1 . ESTIMATED REPLACEMENT COST OF BASIC INVENTORY OF MAINTENANCE EQUIPMENT Assumptions - . Price calculations based on year of acquisition adjusted by changes in consumer price index of the period. Cost, acquisition year, and composition of basic inventory as shown in Exhibit XV. Calculations Estimated Year of Acquisition CPI Replacement Acquisition Cost Inflator Cost 1980 $29,660 43.4a $42,532 . 1981 -- 26.3 -- 1982 48,400 14.6 55,466 1983 20,000 8.2 21 ,640 1984 35,350 T 4.0 36,764 -- 1985 7,300 -- 7 ,300 $163,702 2. DEPRECIATED VALUE OF ASSETS IN PARK AND POOL MAINTENANCE INVENTORY Assumptions For illustrative purposes, assume following depreciation schedule to estimate "value" of park/pool maintenance assets for transfer purposes. Purchase Year Value 1985 100a 1984 80% 1983 60% 1982 40% 1981 20p 1980 1oa Pre-1980 10,40 -57- EXHIBIT XVI (2) While assets acquired prior to 1981 are probably fully depreciated by most accounting methods, they have been accorded nominal value of 10% to underline the continued utility._of most assets in that category. Calculations Basic Required Inventory Purchase Purchase Depreciated Year Cost Value 1985 $7,300 $7,300 1984 35,350 28,280 1983 20,000 12,000 1982 48,400 19,360 Pre-1980 29,660. 2,966 $140,710 $69,906 "Extra" Capital Items Beyond Basic Requirement 1985. $4,000 $4,000 1984 14,000 ' 11 ,200 1983 17,000 10,200 Pre-1980 -4,750 475 $11 ,850 $25 ,875 Communications and r_ _ Alarm Equipment 1985 $1 ,100 51 ,100 1984 3,200 2,560 1983 1 ,100 660 1980 4,800 480 $10,200 $4,800 Other Miscellaneous Items Average 1983 $6,945 $4,167 TOTAL $169,705 $104,748 II -58- these years could provide the basis for calculating division of assets or the proceeds of the sale of those assets. During this period, the Dublin area contributed approximately 52% for overall property taxes contributed to the general fund and San Ramon 48%. These percentages could be employed to divide the results of any sales of assets if such a transition were negotiated as part of the overall service transfer. It should be noted, however, that the likelihood that significant amounts would be generated through sale of assets is probably highly unlikely. It would probably not equal the depreciated value of many of the assets and would probably generate revenues which fell significantly below the amount required for each city to provide a basic inventory of apparatus and equipment necessary to support its own park maintenance operations. The other alternative would be for one of the cities to take possession of the basic set of equipment required to provide park maintenance services and establish a procedure of cash transfers to equalize matters between the two cities. Remaining assets could be distributed to the other city or sold with the proceeds divided as noted above. To the extent that one of the cities took possession of the basic mix of apparatus and equipment required to provide basic park maintenance services, the value of that inventory could be determined based on depreciated value and the other city reimbursed for a proportional share of that estimated value based on property tax contributions to the general fund calculated from 1980 to the present. For example, if the depreciated value of the basic inventory is estimated to be $69,900 and Dublin took possession of that inventory to provide park maintenance services, it would reimburse San Ramon for 48% of that amount. As noted earlier in this report, costs related to basic park maintenance equipment were not calculated into operating cost estimates previously displayed. To the extent that equipment was rented through a private con- tractor, annual operting costs could be expected to increase, with the amount unknown at this time. Additionally, to the extent that one of the cities took over the existing equipment inventory, start-up cost could be reduced. The other city would be required either to rent equipment or make a relatively significant incremental capital expentiture to provide a basic equipment inventory. Any transfer of cash between the two cities to offset estimated asset value would fall well below the actual cost of acquiring new equipment and apparatus. -59- _._. .. -7 8. THERE COULD BE ADDITIONAL EMPLOYEE RELATED COSTS INVOLVED WITH THE SERVICE TRANSFER WHICH ARE -DIFFICULT TO QUANTIFY AT THIS TIME There are two additional employee related cost issues which could impact service transfer costs involving DSRSD and the two cities. They involve: Retirement benefits for parks employees. Liability for unemployment compensation for parks employees who are terminated and not transferred to or assumed by Dublin or San Ramon. Previous discussions with representatives of Dublin and 'San Ramon, as noted earlier in this report, indicated that the cities quite probably would provide most park maintenance services through contract and would not establish significant numbers of in-house staff positions for maintenance purposes. As a result, it appears likely that the cities would not absorb significant numbers of the park maintenance staff currently employed by DSRSD. Cost implications related to service transfer and employee cost issues are as follows: PERS Contribution Costs and Rates: Section 20567 .5 of the California Pu is Employees Retirement Law provides for the transfer of a service and related employees from one PERS contracting agency to another. Exhibit XVII, which follows this page, quotes regulations related to this issue. Review of this section and other sections of the Retirement Law related to termination of an agency indicated that: -60- EXHIBIT XVII Dublin and San Ramon PROVISIONS COVERING PERS LIABILITY AND INTER-AGENCY SERVICE TRANSFER California Public Employee's Retirement Law -- Page 8 20567.5. When one or more or all of the functions and the respective employees oT a contracting agency are or have been transferred to, or assumed by, another public agency which is not required by law to assume the contract of such agency, the agencies may, if the succeeding agency is or becomes a contracting agency, agree to a merger of the contract, or the portion of the contract relating to employees so trans- ferred, into the contract of such succeeding agency. Upon such merger the contract, .or the portion of the contract relating to employees so transferred, shall cease to exist and the contract of the succeeding agency shall be considered a continuation and, to the extent of any differences, an amend- ment to the agency' s contract with respect to its former employees. Accumulated contributions held for, or as having been made by, the agency and such employees, and assets derived from such contributions, shall be merged with analogous contributions under the contract of the succeeding agency, and credit for prior and current service or such employees who were members under the agency' s contract shall not be changed by the transaction. The liability to the system with respect to service credited the succeeding agency. T e agencies may agree to payments between them with respect to such liability but any such agreement shall not affect the liability of the succeeding agency with respect to such service. (Added by Stats. 1959, Ch. 1899; amended by Stats. 1979, Ch. 1110, effective 9/27/79; operative 1/1/80.) -61- Transfer of parks and recreation services could have cost impact on Dublin and San Ramon related to assump- tion of liability for unfunded prior service only if the specific employees are absorbed. A valuat o� would need to be done by PERS to assess the actual cost of a transfer if employees were absorbed. If the service is terminated by DSRSD and the involved employees are laid off and not retained in other District employment, the District would retain responsibility for any unfunded retirement liability related to those employees' service with DSRSD as long as those employees .maintain their accounts with PERS and do not withdraw the vested portions of their accounts. If the employees withdraw their funds, all DSRSD liability related to the employees would be eliminated. Any responsibility for unfunded liability related to terminated parks and recreation employees would be included in a recalculation of the DSRSD contribution rate for non-public safety employees. - The actual amount of any unfunded liability is impossible to estimate at this time without an actuarial valuation by PERS staff, as well as actual employee action related to withdrawing retirement funds. To put potential annual cost in some context, employer contributions to PER for the involved employees total $37 ,000 for the current fiscal year. It can be expected that any residual , incremental contribution related to unfunded liability - would be significantly less than this amount on an annual basis. An issue which would need to be taken into account in any service transfer and property tax transfer negotiation would involve placement of financial responsibility for this amount. It can be assumed that the DSRSD would argue that transfer of parks and recreation related revenue should be accompanied by assumption of respon- sibility by the cities for this amount. From the cities' perspective, resolution of the issue would appear to be closely related to the level of property tax transfer negotiated. Depending on the results of a PERS valuation of unfunded liability, it is likely that the annual cost to each city would be $18,000 or less if full responsibility were transferred, a contract between each city and DSRSD would be the vehicle to employ for alloca- tion of responsibility. -62- - Liability For Unemployment Compensation: Effective January 1 1986, public agency responsibility for unemployment insurance contribution will change as a result of amendment of the California Unemployment Insurance Code by the State Legislature. The Legislature has abolished the Local Public Entity Employees Fund and as of January 1 , 1-986, public entities will be required to select either the: (1) Contribution rate - method; or (2) The cost reimbursement method. It appears DSRSD may select the cost or direct reimbursement method. Under this option, the District will not pay an unem- ployment our unemployment insurance related payroll tax, but will be liable for any unemployment compensation related to District employees who are discharged and meet unemployment compensation guidelines. While actual costs related to termination are dependent on whether or not employees have had multiple employers during the "base period" employed to calculate unemployment benefits, total liability could reach $12,948 per employee if an employee: Has a base employment period in which the DSRSD has been the only employer. Remains unemployed for the full two years following termination. Considering employment dates of existing staff with DSRSD liability could reach $90,000 if ail parks- employees were terminated and remained unemployed for the maximum period following termination upon service transfer. Again, it is possible that the District would take the position — that, with revenue transfer, the cities should assume liability for unemployment costs related to terminated parks employees. This an additional factor which would need to be dealt with during the property tax transfer negotiation process. Each of the factors noted above needs to be considered in regard to the short-term cost-impact revenue on the DSRSD involving cost savings related to service transfer and revenue loss impact related to revenue transfer. As previously shown in Exhibit XIV, Virtually all revenue transfer scenarios have a positive impact on DSRSD He: costs reduced to a greater degree than revenues transferred) . Depending on the scenario ultimately negotiated and the scope of positive revenue - expenditure impact on DSRSD, it is not at all clear that the -63- Cities should be expected to bear full responsibility for the employee related costs outlined in this section. During discussions with District staff, the issue was also raised regarding placement of liability for claims against the District for injuries suffered on park property prior to the service transfer. It appears that it is not unusual for people to make claims some time after an incident has occurred, and the issue raised by District staff involves how such incidents would be handled post - service and revenue transfer. Unless clearly stipu- lated at the time of service transfer and agreed to by the cities, it would appear logical for the District to retain liability for those events which occurred during its operation of facilities. There seems to be little clear relationship between transfer of revenue to support current and future operations and financial responsibility for past incidents which would clearly fall outside each City' s liability insurance coverage. 9. TRANSFER COULD INITIALLY INVOLVE PART1 AL ASSUMPTION OF SELECTED SERVICES BY ONE OR BOTH MiES During the review of the draft report materials, representatives of San Ramon raised the possibility of partial service transfer rather than initial full assumption of parks and aquatics program services.- Represen- tatives of the city of Dublin did not indicate similar interest. Analysis of the practical realities of service financing and actual service delivery patterns indicates it would be extremely difficult to transfer part of a service (e.g. part of park maintenance -- city accomp- lishes safety related maintenance and District staff accomplishes turf maintenance, tree trimming, custodial related services and the like) . -64- What does appear feasible is a staged transition of programs. For example, initially the city could assume responsibility for aquatics programming, _ then in subsequent years, the full program. Because of staff committments and utilization levels, it does not appear-feasible to separate pool and park maintenance. Issues related to such a sequenced service transfer would include the following: Dublin would presumably assume all programs and negotiate a property tax and asset transfer accordingly -- either in conjunc- tion with or apart from San Ramon. With the facility maintenance responsibility transfer, DSRSD maintenance staff would be reduced to levels necessary to maintain service at San Ramon based facilities. Based on the data shown in Exhibit V, earlier in the report, remaining district staff would total approximately six maintenance staff plus part-time staff including Kelly and temporary staff. The District' s park maintenance budget would be reduced to about $450,000. Costs related to all Dublin based facilities and_ programs would be eliminated as well as costs related to aquatics' programming and field reservation related to San Ramon based . activities. Revenue transfers related to Dublin' s assumption of park' s and aquatics' programs. would be- dependant on the results of negotiations and could be expected to fall in the range of the six scenarios presented and described in previous sections of this report. Cost and revenue transfers related to San Ramon are more com- plicated. Issues to be resolved include: What portion of property tax revenues would be accorded to aquatics programming? How would school District contract revenues be divided? This involves issues related to assumption of responsi- bility for pool maintenance; reserve for pool equipment replacement; and operating costs related to utilities and materials and supplies. -65- For the purposes of illustrative analysis, the following impacts have been assumed: San Ramon would assume full responsibility for field reservations and aquatics operations related to SROP. Costs to San Ramon would be as displayed in Appendix A to this report -- approximately $158,000 annually. All pool related revenues would accrue to San Ramon. This would include assignment of the school district contract from DSRSD to San Ramon. San Ramon could contract with DSRSD for pool and landscape maintenance. Given available data, the cost -- revenue gap to be "covered" by San Ramon would be approximately $69,000 prior to any property tax transfer negotiated related to the assumption of aquatics programming and operations by San Ramon. Any property tax transfer related to partial service assumption would need to be negotiated and would be associated with all the vagaries previously described. Additional complicating factors include the following: Identifying some relationship between net aquatics. program cost and DSRSD property taxes devoted to parks and aquatica programming. While any relationship between-program costs and property tax revenue would be subject to negotiation, an illustrative sequence can be constructed to estimate potential impact: Document net parks and aquatics program costs related to San Ramon once actual revenues have been deducted. - Calculate aquatics as a percent of total property tax revenue associated with parks and aquatics operations with that total dependant on the property tax transfer scenario employed. Apportion San Ramon' s share based on proportional property tax generation from the Dublin and San Ramon Areas. Based on this analytical sequence, an estimated 32% of total property taxes associated with parks and aquatics services could be considered as candidate revenue for transfer to San Ramon upon assumption of partial service responsibility. This amount could range from $11 ,000 to $90,000 depending on the type of revenue transfer scenario ultimately negotiated. i -66- APPENDIX A COMPARATIVE OPERATIONS -- SWIMMING POOLS APPENDIX A Dublin and San Ramon COMPARATIVE OPERATIONS -- SWIMMING POOLS - Valley San Ramon Community Olympic Costs Swim Center Pool Aquatics Staff $32,099 $59,101 Other Aquatics Program Costs 6,230 112470 Utilities 14,050 35,790 Landscape Maintenance 29,315 352419 Reserve for Equipment Replacement 13,000 16,000 Cost Total $94,694 $157 ,780 Revenues User Fees $30,000 $50,000 Family Passes 43100 –_ 4,100 — School Contract -- 35,000 Revenue Total $34,100 $89,100 Net Direct Cost $60,694 $68,680 ALTERNATIVES ANALYSIS DUBLIN/SAN RAMON FIRE SERVICES STUDY Alternatives Analysis 1 - DubffiVSm Tenon Fre S eirvIlcez Study I; Prepared for rrr 7. the Cities of Dublin and San Ramon /I - By Angus McDonald & Associates in association with L._ The FPE Group Berkeley, California I` - ,j January, 1986. i TABLE OF CONTENTS Pace I . INTRODUCTION AND SUMMARY . . . . . . . . . . . . . . . 1 A. Introduction. . . . . . . . . . . . . . . . . . . . 1 O B. Summary . . . . . . . . . . . . . . . . . . . . . 1 II . ALTERNA'T'IVES ANALYSIS . . . . . . . . . . . . . . . . . . 2 - A. The Five Alternatives . . . . . . . . . . . . . . . 2 I" B. Establishment of Fire Service Specifications . 2 I C. Results of the Cost Requests . . . . . . . . . . . . 2 I D. Technical Analysis of Alternatives . . . 4 I 1 . Individual City Departments . . . . . . . . . 2 . Status Quo. . . . . . . . . . . . . . . . . 5 ` ~ 3 . Functional. Consolidation. . . . . . . 6 �. 4 . Twin Cities Fire Department . . . . . . . . . 8 a. Budget Estimates . . . . . . . . . . 9 b. Revenue Estimates . 9 C . Fund Balances . . . . . . . . . . . . 1n 5 . Private Contractors . . . . . . . . . . . . . 18 L. . 6 . Additional Materials Available . . . . . . . . 21 I I�_ f . .,_ LIST OF TABLES f � Pane Table II-1 : THE FIVE ALTERNATIVES . ,. . . . . . . . . . . . . 3 Table II-2: PERFORMANCE COMPARISON OF SERVICE PROVIDERS . . . 7 Table II-3 : CURRENT TAXABLE VALUE BY JURISDICTION. . . . . 10 Table II-4 : PROPERTY TAX TRANSFER ASSUMPTIONS . . . . . . . 11 Table II-5 : ADDITIONAL TAXABLE VALUE FORECASTS . . . . 13 Table II-b : INCREMENTAL PROPERTY TAX REVENUE AVAILABLE: FOR FIRE SERVICES . . . . . . . . . . . . . . . 15 Table II-7 : FUND BALANCES FOR TWIN CITIES FIRE DEPARTMENT . . . . . . . . . . . . . . . 17 Table II-3 : PRIVATE CONTRACTOR FIRE SERVICE COST ESTIMATES . . . . . . . . . . . . . . . . 1 ? i. I Table II-9 : FUND BALANCES BASED ON PRIVATE CONTRACTOR COST ESTIMATES . . . . . . . . . . . . . . . . 20 i' i i �..., ATTACHMENTS I .^. Page Attachment 1 : Fire Service Evaluation Specifications . . . . 22 Attachment 2 : Cost Request Letter and Materials . . . . . . 23 I I;. Attachment 3 : Response from Consolidated . . . . . . . . . . 31 I � I ' Attachment 4: Joint Response from DSRSD and SRVFPD ..32 i Attachment 5 : Rural/Metro Corporation Cost Estimate . . . . . 34 L Attachment 6 : American Emergency Services Corporation Cost Estimate . . . . . . . . . . . . . . . . .45 Attachment 7 : Follow-Up Letter to DSRSD and SRVFPD .... . . . . 50 i i Attachment 8: Budget Estimate -- Twin Cities Fire Department Witizout San Ramon' s Sphere of Influence . . . . 53 Attachment 9 : Budget Estimate -- Twin Cities Fire Department Witiz San Racoon ' s Sphere of Inluence . . . . . 60 I . i l__ I . INTRODUCTION AND SUMMARY A. Introduction 'C This report provides both an analysis of fire service alterna- tives and an update on the status of .current efforts . The discussion below is supplemented by a number of attachments which provide background information and technical assumptions . t . IB. Summary I . Although the existing service providers did not provide the , - information required for comprehensive analysis of all fire ser- vice delivery alternatives , a number of other conclusions are provided in the present analysis . Described in detail below, these conclusions include : n The status quo is characterized by satisfactory fire service delivery, but there is a lack of consistency in some areas of fire service provision in Dublin and San Ramon; i O Individual city departments are not economically feasible nor operationally desirable; 1 Fire service cost estimates prepared by private contractors iare well below all other service delivery cost estimates ; 9 Functional consolidation may- be a possibility; a A twin cities fire department is economically feasible under certain assumptions . Such a department would not be feasi- ble at this time, but would be feasible upon buildout of the cities ' existing corporate limits or annexation of all or i most of Bishop Ranch; Present conditions , circumstances , and the consultant ' s an- alyses point to functional consolidation and a twin cities ! fire department as the most realistic alternatives for tae i _ delivery of fire services . These t_wo alternatives should be the focus of the draft and final protect reports . - - L - � 1 II . ALTERNATIVES ANALYSIS =. A. The Five Alternatives Table II-1 shows the five alternatives selected for analysis as part of the Dublin/San Ramon Fire Services Study. The organiza- tional structure for each alternative is also provided on Table II-1 . B . Establishment of Fire Service Specifications Prior to the comparison of the alternatives shown on Table II-1 , the consultants , in conjunction with the San Ramon Public Safety Committee and Dublin ' s City Manager, developed a detailed set of fire service specifications . These specifications (Attachment 1 ) have two purposes : 6 First, to establish the level of service that is desired within the two communities ; and ® Second, to provide a common set of assumptions that would be utilized by potential service providers in preparing service cost estimates . C. Results of the Cost Requests After a number of meetings , the specifications were finalized . A -- formal cost request was then prepared (Attachment 2) , and a meet- _ ing was held to request cost responses from potential service providers . Service cost estimates were requested from: �+ Dublin-San Ramon Services District ( DSRSD) The City of Pleasanton 0 Contra Costa Consolidated Fire Protection District 4; San Ramon Valley Fire Protection District (SRVFPD) e Rural/Metro Corporation, and 0 American Emergency Services Corporation. The City of Pleasanton did not respond to the cost request . - Contra Costa Consolidated did respond, but did not provide any cost estimates (Attachment 3 ) . Dublin-San Ramon Services Dis- trict and San Ramon Valley F. P .D. did not prepare cost estimates , but did send a jointly-prepared and signed letter (Attachment 4 ) . Rural/Metro Corporation and American Emergency Services Corpora- tion, both private contractors , each prepared cost estimates . 2 Table II-1 THE FIVE ALTERNATIVES Dublin/San Ramon Fire Services Study Emergency Taxing Fire Fire Medical ALTERNATIVE Authoritv Prevention Suppression Services ----------------------------------------------------------------- STATUS QUO Districts Districts Districts Districts CITY DEPTS . cities Cities Cities Cities CONTRACT A: Cities District or District or District or Contractor Contractor Contractor CONTRACT B: Cities Cities District or District or Contractor , Contractor FUNCTIONAL CONSOLIDATION Districts Districts Districts Districts Jointly— Jointly Jointly ------------------------------------------------ Source : The FPE Group and McDonald & Associates 3 The absence of cost estimates from the districts prevents a _ cost/revenue analysis of any alternative that assumes existing providers . Cost estimates from the existing service providers would have allowed for the complete analysis of all original service alternatives , including extension of DSRSD' s existing boundary or extension of SRVFPD'-s existing boundary. The consultant team could have prepared cost estimates to substi- tute for data not provided by the existing service providers . However, the usefulness of any consultant estimates would be severely hampered because they would not have been prepared by the agency that would ultimately provide the service . The lack of participation by exi.sting service providers does not eliminate from further consideration the following alternatives : 0 The extension of SRVFPD ' s service area boundary southward, encompassing all of the City of San Ramon and crossing the County line to include all of the City of Dublin; 0 The extension of DSRSD' s fire service area. boundary north- ward, encompassing all of the City of San Ramon . These alternatives can be considered in subsequent discussions and proceedings, but the analysis originally planned for them cannot be completed . D. Technical Analysis of Alternatives Without data from existing providers, the following alternatives can be analyzed : 0 Individual Citv departments ; -_ 0 The status quo; 19 Functional consolidation of the existing providers ; a► A twin cities fire department ; a::d 41 Service provision scenarios that involve private contractors . 1 . Individual City Departments The feasibility of establishing individual city departments was examined utilizing the specifications developed for the cost requests ( ;kttachment 1 ) . The consultants conclude the it would - be neither cost-effective nor operationalLy efficient to create individual departments . Individual departments would necessitate creating individual cormnand and administration structures , fire 4 prevention offices and emergency communication arrangements, all of which would result in a significant duplication of existing _ }^ public investment. Although individual city departments would I result in the termination of DSRSD-' s fire department, SRVFPD would continue to serve the balance of its service area. Two new r= fire service entities ( the Dublin and San Ramon fire departments ) would therefore result in one (net) additional fire service provider in the Dublin/San Ramon area. I operationally, individual city departments would not be as effec- tive as a single , unified organization due to economies of scale . In addition, the costs of individual departments would far exceed available fire services revenues . Initial cost estimates pre- pared for a prototype City of San Ramon fire department indicated that available revenues could not support a .fire department providing the current level of service. Establishment of indi- vidual departments would therefore require reallocation of exist- ` ing revenues from other programs, an option which cannot be justified . For these reasons , detailed analysis of separate city departments was terminated . 2 . Status Quo a. Current DSRSD/SRVFPD Cooperative Efforts Under the automatic response- program recently implemented by DSRSD and SRVFPD, . a generally effective fire suppression service is possible . The key to successful performance is for the opera- tional staff' of the respective departments to act as a cohesive emergency unit . This focuses upon whether response plans, com- mand structures and operational procedures have been fully devel- oped, tested for effectiveness , and implemented. only when the public perceives that the two districts are functioning as a single integrated unit, without concern for district boundaries , - - will a satisfactory level of service be provided . This necessi- tates an on-going effort to monitor performance, such that prob- lem areas can be auickly resolved and corrective actions imple- mented . Due to the recent date of the new response program, no professional judgement on its performance can be made . b . Service Delivery Differences There has been no integration or development of a unified fire prevention effort between the two districts . Currently, there is a material disparity in regulatory requirements and fire insn_ ec-- tion/code enforcement efforts between the two districts . As a rapidly developing area, it is critical that the corrstnunities maintain a comprehensive fire prevention program to control their fire exposure . At this time, there is a lack of consistency between the districts in a number of areas , including : Q Sprinkler, fire alarm and rated roof covering ordinances t� Construction plan and development review processes 5 Fire inspection Public fire safety education-.- -_ - Table II-2 compares status quo levels of service with the levels of service specified in the cost request letter (Attachment 2) . The table is provided to demonstrate that the service levels _ specified in the cost request letter met, in major respects, the service/performance levels of existing providers . Service level data for DSRSD and SRVFPD is based upon data collected and analyzed in Attachment 1 , as well as the Districts ' annual reports . 3 . Functional Consolidation a. Current Efforts In the absence of cost estimates from existing fire service providers ( DSRSD and SRVFPD) , a follow-up letter has been pre- pared, reviewed by City staff, and sent to the Boards of Dirac- tors of DSRSD and SRVFPD. A copy of this letter is included as -- Attachment 7 . The Districts ' response or responses to this let- ter will provide further input on the viability and time schedule of functional consolidation. On January 15 , the City of San Ramon ' s Public Safety Committee will be holding a joint meeting with_ the SRVFPD and DSRSD Boards of Directors . The agenda for this meeting includes a modifica- tion to the request included as Attachment 7 . The modification. specifies that at this time, "he_Committee is reauestina a til-ie schedule for the achievement, by the districts , of benchmarks numbered "1 . " through "9 . " These benchmarks are associated with Z consolidation, while the benchmarks numbered "10 . " through "17 . " are evidence of actual or literal consolidation . b. Implementing Functional Consolidation - Example The time schedule for functional (or actual ) consolidation could be tied to taxable value increases within the two cities . ('she discussion of the twin cities department (below) points out that required expenditures would exceed currently available revenues for a twin cities department . However , buildout of both cities ' corporate limits or annexation of Bishop Ranch would provide revenues sufficient to finance a twin cities department) . For example, tale two cities could develop a t-me schedule that callea for functional consolidation no later than the year that current corporate boundaries are built-out . If functional consolidation ` had not been acheived by that time, the two cities would have potential access to the revenues required to finance a twin? ? . cities department . ,I . 6 i f - Table--'II-2 PERFORMANCE COMPARISON .OF SERVICE PROVIDERS _ Dublin/San Ramon Fire Services Study Service Cost Request Letter Element SRVFPD DSRSD Specification ---------------------------------------------------------------------- (- -Total Population 52, 800 33 , 600 41, 100 (Cities of i; Served By Agency Dublin and SR) -Fire Station None in either 1-Dublin All witizin Cities Locations Dublin or SR 1-San Ramon - of Dublin and SR -Total Fully-Manned Units Available 6 .00 4 .00 6 .00 -Manned Units Per 10, 000 Population 1 . 14 1 . 19 1 .46 l -Appar. Response 3-bldg. fire 3-bldg. fire 3-bldg . fire by Incid . --Eng . or 1-non-bldg . 1-non-bldg . 1-non-bldg . �-' Eng ./Aerial Equip. fire fire fire -Running Time for - 3 to 8 min . Max . 4. 5 min. Max 4 .0 min . -- 1st On-Scene Unit w/90% confid . -Min. . Manpower 6 firefighters 6 firefighters• 6 firefighters Response for 3 company off. 3 company off . 3 company off . I House Fire 1 Batt . Chief 1 Chief ( call ) 1 Chief (call ) -Min. Manpower 12 firefighters 12 firefiQLliters 12 firefighters I for Commercial 6 company off. 3 company off . 3 company of= . ' Building Fire 1 Batt. Chief 1 Chief (call ) 1 Chief ( call ) L_ 1 Asst . Chief 1 Chief (call ) 1 Chief i (On-Call ) -S':ill Level of Most FF Cart Most FF Cart All FF Cart Personnel All FF EFT All FF EFT All FF EFT Most Comp. Off . Most Como. Off . All Come . Off . Certified Certified Certified ---All Chief Officers Experienced---------- .. -Dispatch Own Dispatch Contracted Contracted � - Arrangement Center Dispatch Serv. Dispatch Sere . I ., -Participate in Mutual/Auto . Aid Yes Yes Yes -Full-Time Fire Prev . Officer Yes Yes Yes f -Full-Time Insp. Yes Yes Yes -Public Educ . Yes Yes Yes ---------------------- Source : The FPE Groin J 7 C . Advantages of Functional Consolidation When compared to the status quo, functional consolidation offers - a number of advantages to the cities of Dublin and San Ranson. Advantages include : o Uniformity of on-scene conuaand and control. Presently, the two districts have differing policies with regard to the rank of the officer reporting to various incidences . Func- tional consolidation would resolve those differences . # Combination/standardization of training resources. Econo- mies of scale could be achieved if the two departments combined their training functions . 0 Increased opportunities for specialization. Functional con- solidation would enable the sharing of costs for specialized prevention and suppression functions , including hazardous waste specialists and inspection personnel . 0 Increased equipment maintenance. Separately, neither dis- trict can afford to hire a full-time mechanic . Combined , _- the two districts could afford to do so, achieving a `nigher level of maintenance service . 0 Uniform level of code enforcement and inspection. .- -Func-tional consolidation could eliminate existing aisparities between the districts ' fire codes and inspection/enforcement procedures . This would result in fire code uniformity throughout the City of San Ramon. b opportunities for group purchasing. The two districts could achieve increased purchasing power for some items as a result of their combined size . e Utilize one dispatching facility. Within San Ramon, emer- gency calls are handled differently, depending upon where the incident is located . Functional consolidation could - allow for the establishment of a single dispatching facility for both districts , with some potential for cost reductions . 0 Provide for reduction of reserve fleet. If the districts shared access to each other ' s reserve fleet, some reduction in the existing ( separate) fleet size may be possible . 4 . Twin Cities Fire Department Although originally excluded from the fire services study, a til n cities fire department has recently beer_ activated as an alterna- tive . 8 a. Budget Estimates r7. Attachment 8 provides a detailed budget estimate for a twin - � ;'; cities fire department serving the_ cities of. .San Ramon and Dublin, both now and until the existing corporate limits build out . Attachment 9 provides a similar level of analysis for a twin cities fire department that would serve both cities and San Ramon ' s sphere of influence . I( b. Revenue Estimates f : In order to test the economic feasibility of a twin cities fire department, estimates of existing and potential "fire service" revenues were completed . In Dublin and San Ramon, the only revenue source available to finance ongoing fire services is .the property tax. ( DSRSD collects fees that are use-6 for capital improvements , and this revenue source would be available for that j purpose only. In addition, DSRSD is apparently financing fire department expenditures with monies transferred from the :later and Sewer Funds to the General Fund . A twin cities fire depart- ment, however, would not have access to these monies) . Revenue ' to finance a twin cities department, regardless of who provided the service ( i .e. city employees or private contractors) , would come in two ways : first , as the result of the transfer of property tax revenue from existing providers to the cities ; and second , from the incremental revenue that would have accrued to the existing providers but would now accrue to the cities . If the cities of San Ramon and Dublin assumed fire prgtection responsibilities, a negotiated amount of property tax revenue would be transferred from DSRSD and SRVFPD to the cities . This transfer amount would be based upon taxable value, service area population, and other. measures deemed appropriate by the parties to a negotiated property tax transfer . (These parties would include Contra Costa County, SRVFPD, and DSRSD staff and offi- cials ) . The overall intent would be to quantify the current amount of property tax revenue expended by the districts for fire services in Dublin and San Ramon, and transfer that amount to the - cities . Table II-3 shows current taxable value data for each of the jurisdictions involved in potential property tax transfers . Pro- perty tax transfers would represent a portion of the property tax, revenue that is generated by those taxable values . Table II-3 also indicates that the majority of DSRSD' s 1985/86 taxable value is within the City of Dublin. This means that Alameda County would be tho "principal county" for any LAFCO proceedings in- volving DSRSD . Table II-4 summarizes property tax transfer assumptions . The i $793 , 300 transfer from SRVFPD to the twin cities fire department 1 is based upon San Ramon ' s snare of total SRVFPD taxable val;-e anu service area population . San Ramon represents 14 percent of SRVFPD population and 13 . 5 percent of SRVFPD taxable value , and 9 - Table 11-3 CURRENT TAXABLE VALUE BY JURISDICTION Dublin/San Ramon Fire Services Study 1985/86 .._ Agency Taxable Value Percent City of Dublin $709,767,541 City of San Ramon $1,324,227,661 San Ramon Valley FPD $4,173,070,274 DSRSD (City of Dublin) $709,767,541 DSRSD (Other Alameda Co.) $3,728,724 DSRSD (Alameda Co. Total) $713,496,265 52.501/10 DSRSD (City of San Ramon) $645,524,150 DSRSD (Other C. C. Co.) so DSRSD (C.C. Co. Total) $645,524,150 47.5001 DSRSD (Both Counties) $1,359,020,415 100.00% Source: Contra Costa County Auditor-Controller, Alameda County Auditor-Controller, and McDonald & Asscc'ates - 10 Table II-4 - PROPERTY TAX TRANSFER ASSUMPTIONS - Dublin/San Ramon Fire Services Study _ - Transfer from SRVFPD to the Twin Cities Fire Department i Pr Current Property Tax Revenue, Including Augmentation Fund: $4,881,928 Assumed Transfer Percentage (Based on tax. val. and service area pop.): 16.3% Resulting Transfer to Twin Cities Fire Department: S793.300 Transfer from DSRSD to the Twin Cities Fire Department Scenario A: Current Property Tax Revenue: $2,517,800 Fire Expenditures as Percent of Property Tax Revenue: 88.7% Resultino Transfer to Twin Cities Fire Deoartment: 52.233,300 Total Transfer to Twin Cities Fire Department Current DSRSD Transfer to Balance to Amount Trans- Total of Property Tax Parks & Rec. Fire Service ferred from Transfers to Scenario (1) Revenue Providers Provider SRVFPD Twin Cities Scenario A $2,517,800 $284,500 $2,233,300 S793,300 $3,026,600 I Cne 2,517,800 $604,927 $ $1,912,873 $793,300 $2,706,200 Teo $2,517,800 $496,007 $2,021,793 $793,300 $2,815,100 Three $2,517,800 $566,505 $1,951,295 5793,300 $2,744,600 Four 17,800 $68,200 $2,.. $2,449,600 $793,300 5.., 42,900 Five $2,517,800 $483,198 $2,034,602 5793,300 $2,827,900 Six $2.517,800 $322.278 $2.195,522 S793,300 52.988.800 Note: 1 Scenarios One, Two, Three, Four, and Five are described in "Analysis of the Impact� ) Y � pact cf Transferring Park, Recreation and Aquatic Services from the Dublin-San Ramon Services District to the Cities of Dublin and San Ramon," prepared by Hughes, Heiss and Associates, November 15, i 1985. Scenario Six will be described in a future Hughes, Heiss and Asscciates report. Scenario A is described above. Source: McDonald & Associates and Huahes. Heiss and Asscciates. I_ 11 the average of the two ( 16 .3 percent) was utilized to calculate the transfer amount. Table II-4 also provides a number, potential property tax transfers from DSRSD to the twin cities fire department. These transfers (which range from $1 , 912 ,873 to $2, 449 , 600) are based on multiple assumptions . Scenario A, which results in a transfer of $2, 233 , 300 from DSRSD to the twin cities department, is based upon a comparison of existing fire service expenditures and current property tax revenues . The logic behind Scenario A is that property tax revenue is the only source of revenue available to fund DSRSD fire department staff, operating, and maintenance costs. Fire department costs presently represent 88. 7 percent of total property tax revenue . Under Scenario A, DSRSD would trans- fer 88 . 7 percent of total property tax revenue to the twin cities fire department, which would be assuminc fire services . Scenarios One through Six are based upon work completed by Hughes , Heiss and Associates as part of the DSRSD services study. Each scenario is expained in detail in "Analysis of the Impact of Transferring Park, Recreation and Aquatic Services from the Dub- ' lin-San Ramon Services District to the Cities of Dublin and San Ramon . " Table II-4 shows the potential transfers to narks and recreation service providers (calculated by Hughes, Heiss & As- _ sociates ) . The balance of DSRSD property tax is assumed to be available for transfer to the twin cities fire department . The sum of the transfer from SRVFPD and the transfer from DSRSD would provide the initial revenue base for the twin cities department . As indicated on Table II-4, total transfers ranee from $2 , 706 , 200 to $3 , 242 , 900 . It must be emphasized that be- cause negotiation (rather than a--formula) would be utilized to — calculate the transfer amount, any estimate is preliminary in nature . Negotiations may result in a transfer that does not match any of the dollar figures shown on Table II-4, but it is likely that the final transfer would be within the range defined by Scenario A and Scenarios One through Six . In addition to transferred property tax revenues , a twin cities fire department would also have access to the incremental proper- ty tax revenue ( i . e . , the property tax revenue from additional development in the cities and from annexation of San Ramon ' s sphere of influence ) that would otherwise accrue to the dis- tricts if they continued to provide fire services . Table II-5 sur2marizes the forecasts of additional taxable value used to estimate incremental property tax revenue. Additional development within the Citv of San Ramon (which provides for the additional taxable value on Table II-5) is based upon projections prepared by Blayney-Dyett as _part of the General Plan effort . Additional development within the City of Dublin was prepared by Blayney-Dyett (during Dublin ' s General Plan process) and City of } Dublin staff . 12 i Table 11-b ADDITIONAL TAXABLE VALUE FORECASTS Dublin/San Ramon Fire-Services Study A d d i t i o n a l T a x a b l e V a l u e Dwellinq Units Non-Residentiall Total, New Development' City of San Ramon Planning Area Twin Creeks City Limits $18,000,000 $18,300,000 $36,300,000 Sphere $0 $0 $0 Bollinger Canyon City Limits $0 $0 $0 Sphere $8,000,000 $0 $8,000,000 Crow Canyon City Limits $110,088,000 $470,232,000 $580,320,000 Sphere $0 $0 $0 Westside City Limits $40,504,000 $35,000,000 $75,504,000 Sphere $103,972,000 $0 $103,972,000 South San Ramon City Limits $332,712,000 $18,250,000. . _ $350,962,000 Sphere $0 $0 $0 Bishop Ranch City Limits $0 $0 $0 Sphere $108,220,000 $2,000,000,000 $2,108,220,000 Dougherty Hills City Limits $0 $0 $0 Sphere $676,108,000 $55,225,000 $731,333,000 TOTALS City Limits $501,304,000 $541,782,000 $1,043,036,000 Sphere $896,300,000 $2,055,225,000 $2,951,525,000 City Limits + Sphere $1,397,604,000 $2,597,007,000 $3,994,011,000 City of Dublin City Limits $485,450,000 $179,500,000 I $664,950,000 Source: Blayney-Dyett, City of San Ramon Planning Department, City of Dublin Planning Depart- ment, and McDonald & Associates 13 As indicated on Table II-5, almost 75 percent of the total -- additional taxable value within the City of San Ramon ( including its sphere of influence) will occur in the sphere, with the - remaining 25 percent resulting from additional development within the existing corporate limits . Bishop Ranch accounts- for nearly 50 percent of the total additional taxable value within San Ramon and its sphere of influence . With a projected taxable value of approximately $2 billion, the buildout taxable value of Bishop Ranch is roughly equivalent to the combined existing taxable values of Dublin and San Ramon. The City of Dublin will also experience considerable growth in taxable value within its existing corporate limits . Table II-5 indicates that at buildout, the total taxable value within Dublin will be almost twice the existing total taxable value. Table II-6 summarizes the estimates of incremental property tax revenue from additional development. Totals shown represent in- cremental revenue upon buildout of either existing corporate limits or San Ramon ' s sphere of influence. The present analysis does not specify the dates when buildout in San Ramon and Dublin will occur. A timetable associated with the revenue projections will be discussed in subsequent project reports . As was the case with transfers , the actual amount of incremental revenue would be the result of negotiation. The present analysis breaks additional property tax revenue into four components . These components are shown on Table II-6 and described below. Incremental revenue within the City of Dublin. The City of Dublin, which obtains fire services solely from DSRSD, would be — entitled to an increased share of the basic one percent property tax revenue divided among all taxing agencies within the City of Dublin. The present analysis assumes that 88 . 7 percent of DSRSD' s current property tax revenue is utilized for fire ser- vices ( as explained above) , and therefore 88 . 7 percent of DSRSD' s apportionment factor represents fire expenditures . DSRSD cur- rently receives an apportionment equivalent to 21 . 232169 percent of the basic one percent property tax increment collected within Dublin . If 88 . 7 percent cf this apportionment factor was trans- ferred to the twin cities fire department, the resulting appor- tionment factor would be 18 .83 percent . Multiplying 18 .83 pe--- cent by the additional property tax revenue generated within t:e City of Dublin ( $6 , 649 , 500) results in incremental property tax revenue for fire services of S1 , 252 , 300 . Incremental revenue within the DSRSD portion of San Ramon. Table II-5 indicated that $1 , 043 , 086 , 000 in additional taxable value would result from new development within existing City cf San Ramon corporate limits . The present analysis assumes that 50 percent of this growth will take place within the "DSRSD" portion cf San Ramon, and 50 percent will take place within the "SRVFPD" portion of San Ramon . DSRSD receives incremental property tax 14 Tabla 11-6 INCREMENTAL PROPERTY TAX REVENUE AVAILABLE FOR FIRE SERVICES Dublin/San Ramon Fire Services Study Underlying Assumptions Percentage of DSRSD's Apportionment Factor 'Allocated" to Fire Services Provider: 88.7% Percentage of SRVFPD's Apportionment Factor 'Allocated' to Fire Services Provider: 100.0% Estimates of Incremental Revenue by Jurisdictional Area Incremental Rev- Incremental Revenue from the City of Incremental Revenue from F, enue from the San Ramon's Existing Corporate Limits the City,of San Ramon's L" City of Dublin DSRSD Portion SRVFPD Porlion Sphere of Influence Total Additional Taxable Value: $664,950,000 $521,543,000 $521,543,000 $2,951,525,000 Portion of City Limits Taxable Value from DSRSD Area: Not Applicable 50.0% Not Applicable Not Applicable Portion of City Limits Taxable Value from SRVFPD Area: Not Applicable Not Applicable 50.0% Not Applicable !' Total Incremental Property Tax Revenue: $6,649,500 $5,215,430 $5,215,430 $29,515,250 Assumed Increment Allocation Factor: 18.830/. 17.47% 14.83% 15.00% Incremental Tax Revenue for Fire Services: $1,252,300 $911,100 $773,300 $4,427,300 ' Recapltulallon of Incremental Revenue f Incremental Revenue Generated Within Existing City Limits City of Dublin: $1,252,300 DSRSD Portion of ilia City of San Ramon: $911,100 SRVFPD Portion of the City of San Ramon: $773,300 Sublotal Incremental Revenue: $2,936,700 Revenue Generated Within San namon's• SOL $4,427,300 TOTAL INCREMENTAL REVENUE FOR TWIN CITIES FIRE ENTITY: $7,364,000 Source: McDonald & Associates revenue in Contra Costa County based upon an apportionment factor of 19 . 6955775 percent ( slightly lower than its Alameda County apportionment factor) . If 88 . 7 percent of this apportionment - factor was transferred to- the twin cities fire department; the _ apportionment factor would be 17 .47 percent. Multiplying 17 .47 - percent by the incremental property tax revenue generated within the DSRSD portion of the City of San Ramon results in incremental property tax revenue for fire services of $911 , 100 . Incremental revenue within the SRVFPD portion of San Ramon. As was noted above, it is assumed that 50 percent of additional San Ramon taxable value- will occur within the SRVFPD portion of the City of San Ramon. SRVFPD receives incremental property tax revenue based upon an apportionment factor of 14.8274 percent, which is used exclusively for fire services . Therefore, we will assume that SRVFPD' s entire apportionment factor would be trans- ferred to a successor fire services provider . Multiplying 14 .83 percent by the additional property tax revenue generated within the SRVFPD portion of the City of San Ramon results in incremen- tal property tax revenue for fire services of $773, 300 . Incremental revenue within the City of San Ramon' s sphere of influence. The final (and largest) source of additional revenue for the twin cities fire department is incremental property tax ' revenue from San Ramon' s sphere of influence. Because the sphere is partially built-out, some of this revenue would represent a transfer of then-existing base property tax revenue (annexation agreement transfers ) , and the balance would result from incremen- tal property tax revenue accruing via an apportionment factor to the twin cities fire department ( annexation agreement apportion- ment factors) . For purposes of this analysis, we have assumed that 15 percent of incremental property tax revenue within the sphere would be available to the twin cities fire department . This is clearly a key assumption, because the sphere of influence will generate nearly $30 million in property tax revenue, to be divided among all taxing entities . The 15 percent figure, which results in $4, 427,.300 in incremental revenue for the twin cities fire department, is roughly equivalent to SRVFPD' s existing ap- portionment factor . C . Fund Balances The budget estimates from Attachments 8 and 9 are compared to the revenue estimates (described above) on Table II-7 . Seven separ- ate scenarios are presented for three different time periods . Under all scenarios , a twin cities fire department could not be financed by currently available property tax revenues . Assuming a 1985/86 twin cities scenario, an additional San Ramon station would be required immediately, because current levels of service are acheived with support from the Alcosta Boulevard station. This station is located in unincorporated Contra Costa County, and therefore would be outside the twin cities service area. An additional station would be required to fill the gap created by the absence of this station ' s availability. 16 ,i `u Table II-7 FUND BALANCES FOR TWIN CITIES FIRE DEPARTMENT Dublin/San Ramon Fire Services Study f ' 5 Scenario A Scenario One Scenario Two Scenario Three Scenario Four Scenario Five Scenario Six Twin Cities Fire Department, Serving Existing Development in 1985/86 'i Revenues: $3,026,600 $2,706,200 $2,815,100 $2,744,600 $3,242,900 $2,827,900 $2,988,800 w Budget Requirements: $4,227,500 $4,227,500 $4,227,500 $4,227,500 $4,227,500 $4,227,500 $4,227,500 Fund Balance (Deficit): ($1,200,900) ($1,521,300) ($1,412,400) ($1,482,900) ($984,600) ($1,399,600) ($1,238,700) ,9 �i u .t Twin Cities Fire Department, Serving Both Cities at Buildout of Existing Corporate Limits Revenues: $5,963,300 $5,642,900 $5,751,800 $5,681,300 $6,179,600 $5,764,600 $5,925,500 Budget Requirements: $4,227,500 $4,227,50''0 $4,227,500 $4,227,500 $4,227,500 $4,227,500 $4,227,500 s' Fund Balance (Deficit): $1,735,800 $1,415,400 $1,524,300 $1,453,800 $1,952,100 $1,537,100 $1,698,000 's Twin Cities Fire Department, Serving Both Cities at Buildout of Existing Corporate Limits and �u Annexation/Buildout of San Ramon's Sphere of Influence Revenues: $10,390,600 $10,070,200 $10,179,100 $10,108,600 $10,606,900 $10,191,900 $10,352,800 Budget Requirements: $5,050,400 $5,050,400 $5,050,400 .$5,050,400 $5,050,400 $5,050,400 $5,050,400 Fund Balance (Deficit): $5,340,200 $5,019,800 $5,128,700 $5,058,200 $5,556,500 $5,141,500 $5,302,400 Source: McDonald & Associates l i Buildout of the existing cities ' corporate limits or annexation of Bishop Ranch, however, would provide sufficient revenue under _ all scenarios to finance an additional station, as shown on Table _ II-7 . After buildout of existing- corporate limits, available = ongoing revenue would range from $5 , 642 ,900 (Scenario One) to $6, 179, 600 (Scenario Four) -. Budget requirements, however, would remain at $4, 227, 500 as no additional expenditures would be required in excess of expenditures required to serve existing development. Substantial fund balances would result from these revenue and expenditure amounts . Prior to buildout of the existing cities ' corporate limits , annexation of Bishop Ranch to the City of San Ramon would also result in additional revenues in excess of budget requirements . Although specific revenue and expenditure amounts are not shown on Table II-7 , the substantial ( $2 billion) taxable value of Bishop Ranch would provide for revenues greater than incremental expenditures . Table II-7 also indicates that annexation of San Ramon' s sphere of influence ( including Bishop Ranch) would provide additional revenues for fire services far in excess of additional staffing requirements. The large fund balances shown on Table II-7 ( at buildout and annexation of San Ramon' s sphere) are the result of conservative assumptions, so that actual tax transfers would 'nave to be significantly lower than those projected for the twin cities department to be financially infeasible. 5 . Private Contractors Attachments 5 and 6 are the cost-responses provided by private contractors . Their cost estimates are summarized .in Table II-8 . The contract cost estimates were solicited from two of the nine known private fire suppression service providers within the Unit- ed States . American Emergency Services Corporation and Rural/Metro Corpora- tion have reportedly provided satisfactory service to their cli- ents for a number of years . The absence of private contractor activity in California prevents direct observation or evaluation of their performance . Table II-9 compares Scenario A revenue estimates (described a- bove) with the cost estimates provided by the private con- tractors . In all cases , revenues would exceed required expendi- tures for contract services . (This conclusion is not affected by substitution of Scenarios One through Six) . The cost estimates , however, must be regarded as preliminary. They were based upon the information provided in Attachment 2 , but a site visit was not conducted. If private contractors are selected for further evaluation, a site visit and firm cost estimate would be re- quired. Marketing representatives of both firms have offered to undertake such an effort . 18 Table II-8 PRIVATE CONTRACTOR FIRE SERVICE COST ESTIMATES Dublin/San Ramon Fire Services Study Contract Cost Estimates ---------------------------------- Geographic Area AESC ( 1 ) R/MC ( 2 ) ----------------------------------------------------------------- Existing City of Dublin $ 927,000 $ 1 , 312,000 ( 3 ) $ 821 , 000 (4) Existing City of San Ramon $ 964,000 $ 1 , 353 ,000 ( 3 ) S 1 , 067 , 000 (4) City of San Ramon and Its Sphere of Influence $ 964, 000 Not Provided Cities of Dublin and San Ramon Without San Ramon ' s Sphere of Influence Not Provided $ 1, 560, 000 (4) Cities of Dublin, San Ramon, and San Ramon ' s Sphere of Influence $ 1 , 222 , 000 $ 2, 1137 , 000 ( 3 ) $ 1 , 823 , 000 (4) Notes : ( 1 ) American Emergency Services Corporation ( 2 ) Rural/Metro Corporation ( 3 ) Estimate Per Specification (See attachment 5 ) (4) Alternative Estimate (See Attachment 5 ) -------------------------------------------------------------- Source: American Emergency Services Corporation, Rural/Metro Corporation, and McDonald & Associates 19 Table II-9 FUND BALANCES BASED ON PRIVATE CONTRACTOR COST ESTIMATES Scenario A Dublin/San Ramon Fire Services Study ----------------------------------------------------------------- -Private Contract Fire Services, Serving Existing Development Within Both Cities , 1985/86 : Rural/Metro A.E.S .C . ------------ ------------ Available Revenues : $ 3 ,026, 600 $ 3 , 026, 600 Budget Requirements : $ 2, 187 , 000 $ 1, 222 , 000 Fund Balance (Deficit) : $ 839, 600 S 1 , 804, 600 ----------------------------------------------------------------- Private Contract Fire Services, Serving Both Cities at Buildout of Existing Corporate Limits : Rural/Metro A.E.S .C. , ------------ ------------ Available Revenues : $ 5 , 963 , 300 $ 5, 963 , 300 Budget Requirements : $ 2, 187 , 000 $ 1 , 222 , 000 Fund Balance (Deficit) : $ 3 , 776-,-300 $ 4, 741 , 300 ----------------------------------------------------------------- Private Contract Fire Services, Serving Both Cities at Buildout of Existing Corporate Limits and San Ramon' s Sphere of Influence : Rural/Metro A.E .S .C. ------------ ------------ Available Revenues : $ 10, 390, 600 S 10, 390, 600 Budget Requirements : $ 2 , 187 , 000 $ 1 , 222 , 000 Fund Balance (Deficit) : $ 8, 203 , 600 $ 9, 168, 600 ----------------------------------------------------------------- Notes : ( 1 ) Rural/Metro cost estimates are based on estimates per specifications , shown on Attachment 5 . ( 2 ) American Emergency Services Corporation estimates are based on Attachment 6 . ------------------------------------------------------------- Source : Rural/Metro Corporation, American Emergency Services Corporation, and McDonald & Associates 20 6 . Additional Materials Available In addition to the materials attached, the consultants have also obtained legal documents whose utilization will depend on the nature of the recommendation. Included among these materials are legal opinions on reorganization from both city attorneys, exam- ples of agreements between private contractors and municipal- ities, and joint powers agreements (JPA' s) for fire services . Examples of JPA' s have been obtained for: w Western Contra Costa County Joint Powers Authority, which is comprised of the City of Richmond Fire Department, West County Fire Protection District, Kensington Fire Protection District, and the El Cerrito Fire Department; 9 Ross Valley Fire Service, which is comprised of the Town of Fairfax, the Town of San Anselmo, and the Sleepy Hollow Fire Protection District; and a South County Fire Protection Authority, which is comprised of the City of San Carlos and the Belmont Fire Protection District . 21 Fire Service Evaluation Specifications NOTE: This 45-page, 8. 5" by 14" document is available at City of San Ramon and City of Dublin offices . 22 1 Cities of Dublin and San Ramon A=chm=t 2 - August 6, 1985 -_ San Ramon Valley Fire Protection District 800 San Ramon Valley Boulevard Danville, California 94526 Attention: Michael W. Blodgett, Chief Subject: Transmittal of Request for Cost Estimates Dear Chief Blodgett: The Cities of Dublin and San Ramon are currently considering fire service delivery alternatives . One alternative would involve service delivery by San Ramon Valley Fire Protection District. Attached is a request for your estimate of fire service delivery costs within four specified geographic areas . We are asking for your estimate of costs, because you, as potential providers of fire services , are in the best position to accurately estimate your agency' s service costs . We are not, however, requesting an actual bid from your agency. The estimates that you provide are for purposes of this study only, and are not a commitment to provide services at the estimated cost. Your cost estimates will be included in a comparison of fire service delivery alternatives . Existing and/or potential service providers include: Consolidated Fire District, the City of Pleasanton, Dublin-San Ramon Services District, San Ramon Valley _.. Fire Protection District, private contractors , and individual City departments . A briefing session for potential public agency service providers will be held Wednesday, August 14, 1985 at 3 : 30 P.M. in Community Room 11 of the John Muir Emergicenter, 205 Porter Drive, San Ramon. A similar session for potential private contract pro- viders will be held at 1 : 30 P.M. on-the same day at the same location. These sessions will provide an opportunity for poten- tial service providers to ask any questions with regard to this cost request. We appreciate your cooperation and assistance . Your input will contribute greatly to ensuring that the analysis is an accurate . estimate of fire service delivery costs . Yours very truly, City of Dublin City of San Ramon enclosure 23 Angus McDonald & Associates -_ 1950 Addison Street Berkeley.California 94704-1102 Telephone(415)548-5831 REQUEST FOR COST _ESTIMATES Dublin/San Ramon Fire Services Study As part of our responsibilities during the Dublin/San Ramon Fire Services Study, McDonald & Associates and the FPE Group are preparing an analysis of fire service alternatives for the Cities of Dublin and San Ramon. One portion of this analysis involves a cost comparison of alternative fire service provision scenarios . Fire service cost estimates should be based on the levels of service outlined on Attachment 1. Also attached is a map and summary of existing and potential development within the geographic areas noted above (Figure 1) . We are requesting your judgment regarding the cost of providing fire services to the following geographic areas : o The existing City of San Ramon; 9 The existing City of-Dublin; 0 The City of San Ramon plus its Sphere of Influence; and V The Cities of Dublin, San Ramon, and San Ramon ' s S_ohere. of Influence. Please provide four separate cost estimates (one for each geographic area) . (The City of Pleasanton' s cost response need only address the City of Dublin) . If your agency currently provides fire services within one or more of these areas, please prepare an estimate of contract service costs . Each cost estimate should summarize assumptions .within the following cost _ categories : .io Personnel costs (salaries , benefits, workers compensation, overtime) ; _ Capital improvement acquisition and maintenance; 1* Purchase and maintenance of apparatus ; and a Communications costs . Potential service providers should call Brian Welch or Angus McDonald at 548-5831 if there are any questions about this request. Specific questions about levels of service should be directed to Tim Callahan at 932-4490 . The scheduled completion of our project is such that it would be very helpful to us if we could receive your cost response by August 31 , 1985 . Thank you 24- in advance for making this contribution to the effort. We hope that it will insure a comparison of fire service delivery _ alternatives that reflects the actual level, cost and manner of _ private contractor service provision.- 25 Figure 1 QUANTi TY AND LOCATION OF NEW DEVELOPMENT Dublin/San Ramon Fire Services Study = Additional Development, �'allinaer Canyon Planning Area: few(dling Units: 60 Cite of San kamon Non-rosidential: None (Existing uses: Additional Development, / Population: 25,500 City of San Ramon Dwelling Units: 9,500 �j� Office: 1.7 millions . ft. (including Sphere of Influence): q Industrial: 1.0 million sq. fl. Dwelling Units: 7,663 Office: 8.14 million sq. ft. c Retail: 1.0 million sq. ft.) Industrial: 530.000 so. ft. Shaded Area Designates G _ Retail. 140.000 sq. ft. Sphere of Influence 1 r; �f � P I Additional Develooment. D h � it ". / � / oua e v Hills Plznnino Area: Ada;Banal Development. Crow Canyon Planning Area: �. ( Dwelling Units: 4,098 Dwelling � Units: 850 �.�j/ ' ' � Additional Development, Dce: 60,000 Office: 730,000 sq. ft. ' �/ Bishoo Ranch Planning Area: Industrial: 40,000 Industrial: None t '� ` j ,,�j� Dwelling Units: None Retail: 10,000 Petaii: 3-40,000 sq. It. `� J j Office: 6.0 million sq. ft. /�%• / / Industrial: 440,000 sq. ft. Addit_ional Development. .c`� / lj Retail: 80.000 sq. fL. Twin Creeks Planninq Area: " Additional Development, Dweliing Units: 170 o is — ( Y� ` South San Raon Plannino Area: Non-residential: None l�/� 1 Dwelling Units: 2,085 / 1 office: 80,000 sq. ft. Additional Development. p Industrial: 50.000 sq. ft. Westside Planning Area: -----� �4 Retail: 10,000 sq. ft. Dwelling Units: 1,420 Office: None _. Industrial: Ncne C>L)gu,�VS4'�4 / `� City of Dub,In Retail: 40,000 "-AD UK4CA2y //i (Existing uses: a Population: 15.600 0 Dwelling Units: 6,200 Additional Development,' City of Dublin: Existing non-residential Dwelling Units: 3,500 � -' � dwelooment estimates Office: 190,000 sq. ft. _ not available) Industrial: 315,000 sq, ft. Retail: 550.000 sq. ft. s � 1-580 City of PleE�santon Source: McDonald&Associates 26 i r"- Fire Protection Service Specifications _ Cities of Dublin & San Ramon �4 The Cities of Dublin and San Ramon hereby solicite non-binding cost estimates for the provision of fire protection services for a 12 month period. Such estimates shall provide for a comparable level of fire protection to that which presently exists , and which is outlined in the following performance standards . Service area for requested cost estimates include the present incorporated limits of the respective cities and the sphere of influence of the City of San Ramon. Cost for services shall be itemized, based upon areas to. be served and using the categories of personnel wages, fringes , apparatus , facilities , equipment and other. An overall staffing organization chart, by job category, for the personnel who will be engaged for these services should be provided. Purpose of soliciting 'cost estimates is to facilitate the respective City ' s determination of the appropriate, cost-effective level and means to provide fire protection services. This solicitation should not be considered an offer to contract, nor a request for proposals to contract, but advisory, non-binding statements by respondent of their costs to provide fire protection services in conformance with these specifications . Service Statement The service to be provided includes all personnel , apparatus , equipment, materials , and property (real and personal) necessary to provide the stated fire protection services. The respective cities neither own, nor will make available, any fire protection facilities , apparatus or equipment. Costs for provision of such facilities and equipment should be included in your estimate. The service to be provided can be classified in accordance with the following functional parameters : a) Fire Suppression, Emergency Medical and Community Services b) Fire Prevention and Public Education Services Each functional parameter should be refered to for detailed performance requirements . Fire Suppression, Emergency Medical and Community Services - The Fire Suppression element consists of the alerting, response, control and extinguishment of uncontrolled fire or emergency conditions . In addition, it includes the provision of "First Responder" , non-transport emergency medical services , and community services . The provider shall provide the response capability as outlined below, perform the emergency/community services as stated and exercise reasonable professional judgement in the rendition of 27 fire suppression and emergency services. It is intended that provider respond to all unauthorized and uncontrolled fire conditions , and other community emergencies to which services of the fire department are customary (ie. fuel spills , floods , emergency lock-outs etc. ) . The fire suppression- services provided shall . include, as a minimum, the following elements in conformance with the proscribed performance .levels : 1) Unit response by type of occupancy: a) Residential , Commercial , Industrial , Assembly, Educational and institutional Occupancies - 2 engine companies & 1 combination pumper-aerial device (55 to 85 foot) b) Exterior Fire (Vehicle/Dumpster etc) - 1 engine company c) Wildland - 1 engine company and 1 patrol unit d) Special Hazard Incident - 1 engine company and a hazardous materials equipment vehicle e) Community Service Call - 1 engine company and other equipment, as appropriate. (For item la above, a chief officer shall be available to respond , as deemed necessary under the circumstances . Said officer need not be on full-time duty, but shall be readily_-available via on-call or other availability system. ) 2) Running Time, ie. emergency travel time from fire station to emergency scene, for first on-scene unit to be maximum 4 minutes . A 90% significance factor is assigned to this parameter. Exception: Running time for wildland incidents to-be maximum 10 minutes . 3) Manpower Complement by Responding Unit: a) Engine Company - 1 company officer and 2 firefighters b) Combination Unit - 1 company officer and 2 firefighters c) Patrol - 2 firefighters d) Haz . Mat. Unit - 2 firefighters - ( It is understood that on-duty manpower would be available to support the various emergency equipment available (ie. cross- manning) 4) Skill Level of Personnel : a) Firefighters - California.. Certified Fire-fighter 1 and EMT 1 All firefighters shall have, or receive within 3 months of engagement, basic hazardous materials training equivalent to California Highway Patrol Module II . b) Company Officer - California certified firefighter 1 and EMT 1 trained with minimum 5 years experience . Officer must have 2 years supervisory experience . Hazardous materials training equivalent to CA Fire Command Module 1B. Optimum is certified officer. c) Chief Officers - California Certified firefiahter. Company officer and supervisory experience totaling 28 minimum 10 years . Optimum is certified officer. i5) Initial Response Arrangement - Provider shall provide personnel and equipment to -achieve stated performance levels ,. 24 hours/day: In addition, provider, through its own -resources or reliable, �- automatic/mutual assistance arrangement from outside resources , provide the capability to respond to a concurrent emergency by at least one, fully manned engine company. 6) Emergency Dispatch - Provision shall be made for emergency unit dispatch, either through provider resources or through outside agency contract. If contract services are employed, cost estimate should specifically indicate costs projected for such services . Contract services are currently utilized by one provider. 7) Apparatus & Equipment - Apparatus provided to meet stated performance levels shall be fully serviceable fire equipment meeting current provisions of National Fire Protection Association Standard 1901 , Automotive Fire Apparatus , and California State requirements . Engines shall be minimum 1 ,000 GPM and combination unit minimum 1 ,000 GPM with 55 ' aerial capability. Patrol units shall be California standard, 4 wheel drive, 250 - 400 gallon tank, brush units . Provider shall assure, through own resources or outside contract/arrangement, that adequate equipment, first-line and reserve, is available to assure achievement of stated performance levels at all times . 8) Mutual/Automatic Aid: Provider shall maintain and continue performance under existing automatic/mutual aid agreements equivalent to that undertaken by current fire protection providers . Fire Prevention Services The Fire Prevention element consists of the promulgation, recordation, regulation and enforcement of the fire prevention and control measures within the respective communities . It is the intent that provider continue the existing level of fire prevention - services , and execute a uniform level of performance throughout the respective cities . Existing fire prevention functions including fire prevention regulation, inspection, fire investigation, plan review and public education. The fire prevention services provided shall comply with all applicable requirements of law and include , as a minimum, the following elements in conformance with the proscribed performance levels : 1) Fire Prevention Office: Provider shall maintain a full-time fire prevention office, staffed by a core of fir` prevention personnel , capable of performing or regulating performance of the fire prevention function. As a minimum, one full-time fire prevention professional shall be available for consultation and inspection services every business day. One fire prevention professional , within the respective communities , shall be designated fire marshal . Where possible, he may perform those duties concurrent with 29 performance with other fire protection- responsibilities. (S) he -- shall be capable of being certified a public safety officer and to exercise appropriate police powers . _ 2) Staff Qualifications : .Fire Inspectors - Full-time inspection personnel shall demonstrate capabilities for performance of the fire inspection responsibility, equivalent to that for Fire Inspector I , NFPA 1031 , Fire Inspector, Fire Investigator and Fire Prevention Education Officer Professional Qualifications . Fire Marshal - The individual designated Fire Marshal shall demonstrate capabilities for performance of the fire inspection responsibility, equivalent to that for Fire Inspector II , NFPA 1031 , Fire Inspector, Fire Investigator and Fire Prevention Education Officer Professional Qualifications . Note : One Fire Prevention Professional shall have specialized training in hazardous materials beyond that required for fire fighters or company officers . 3) Fire Inspection Program: Provider shall institute a fire prevention inspection and code enforcement effort for all assembly, education, commercial , multi-unit residential , industrial and institutional occupancies . Performance shall provide for at least the annual inspection of all such occupancies with appropriate follow-up inspection and enforcement efforts . In addition, voluntary residential inspections shall be publicly offered, encouraged during performance of other in-service functions , and provided to provided to requested residences . Programs may be executed by a combination of in-service company inspections and/or full-time inspector performance, as considered most cost-effective and prudent considering the occupancies involved. 4) Construction Plan Review Program: Provider shall institute a construction plan review program to assure all community construction efforts are in compliance with applicable regulatory requirements . Facilities at the municipal planning department may be made available for the performance of a one-stop plan review effort with building officials . 5) Public Education: Provider shall institute a year-round public fire safety education program equivalent to that currently provided. Elements include Learn Not to Burn programs , Fire Prevention Weeks , Fairs & Displays , Media Relations etc. . It is intended that a material , public fire safety education effort be a part of the fire prevention function. 6) Fire Investigation: Primary fire investigation is to be performed by fire suppression personnel . However, fire prevention personnel shall be available to support fire investigation efforts , provide technical support and assist prosecution efforts of local law enforcement authorities . End of Performance Specifications 30 7 RA cosy' US, CONTRA COSTA COUNTY - CONSOLIDATED FIRE DISTRICT ot, FIRE CHIEF BOARD OF FIRE COMMISSIONERS William F. Maxfield A=C-11ment 3 Albert J. Gray 2 Edward B. Haynes 010 Geary Road Richard F. Holmes Pleasant Hill, California 94523-4694 Donald J. Maclntosh TELEPHONE(415) 930-5500 September 5 , 1985 Harold E. Wildes 0, Mr. Brian Welch "P. Angus McDonald & Associates 1950 Addison Street Berkeley, CA 94704-1102 r,,1cD(DNA!_U ;& A33(130CIATF'' Dear Mr. Welch: The Consolidated Fire District chooses not to respond to your request for cost estimates for providing fire services for the City of Dublin/San Ramon. While of benefit to your study, we can see no benefits for this District to commit staff time to prepare the in-depth analyses necessary for a reasonably precise cost estimate . Given the following and the lack of incentives , we do not interests of the District or its feel it would be in the best citizens to provide contract fire protection as specified in Attachment I at this time . 1 . Both the existing level of service and the proposed service level differ from the norm provided by this District . 2 . There is no long term commitment for service . 3 . The contract area is physically separated with 2 other fire agencies between Consolidated Fire and Dublin/San Ramon. 4 . The uncertainty over the use otf stations fror., the existing District, equipment and personnel by this District . Sincerely, William F . Maxfield Fire Chief WFM:p s 31 Serving the communities of Clayton, Concord, Lafayette, Martinez, Pleasant Nil, Walnut Creek,and some unincorporated County areas Anac'hmenQ 4 DUBLIN SAN RAMON SERVICES DISTRICT SAN RAMON VALLEY FIRE PROTECT ION -DISTRICTY August 30, 1985 L i L � U L (1 Mr . Angus McDonald �� Y �} 3 1485 Angus McDonald & Associates 1950 Addison Street , Suite 107 Berkeley , CA 94704 MCDONALD & ASSOCIATES Dear Mr. McDonald: After a careful joint review of the Fire Protection Service Specifications for the City of San Ramon , both current fire service providers , Dublin San Ramon Services District and the San Ramon Valley Fire Protection District , believe that your request amounts to a decrease in the level of service now provided to the citizens of San Ramon. Under present 12w, those who would substitute present levels of service with inadequate levels of service , resulting in property or life loss , may be not only collectively liable , but individually and personally liable as well . Both Districts now cooperate dn: — Emergency medical ambulance transportation Mutual and automatic aid for fire suppression and medical emergency services Joint training Joint dispatch Joint hiring Compatability of communication equipment The above cooperative services are a result of our commitment to the provision of the highest level of ser- vices in the most cost-effective manner . in this regard , we believe that the City of San Ramon is currently receiv- ing a higher level of service than anywhere else in the two (2 ) Counties , due to our ability to draw upon the resources of both Districts automatically . 32 i Mr. Angus McDonald Angus McDonald & Associates _- August 30, 1985 We are dedicated , by-. virtue of-our vast experience and _ expertise , to maximizing fire protection and medical emer- gency service delivery within the City of San Ramon by the joint Departments . Accordingly , after much consideration , we propose to continue to provide and improve the high level and integrity of existing services to the commun- ity . Consequently , we decline to respond to your request and instead use our valuable resources and time to con- . tinue our efforts to make fire protection and medical emergency service delivery non-jurisdictional within our community . We are prepared to work with the City Council and staff to respond to any concerns you may have . In this regard , we are available to discuss the mechanics of such cooperation and communication to effect your suggestions . Sincerely , The San Ramon Valley Fire Protection District and Dublin San Ramon Services District Boards of Directors i A . William Blendow Patricia I . Boom Joseph Covello Wally Duncan Richard H. Fahey i H. Alan H u o v i n e n Dennis Jeffery On vacation Donald M . Schinnerer Thomas W . Seabu ry `f iG��t<<. �/� Louis A. Sylvia 33 -2- 0 11 M�Ta ecurity o RURAL/ � The Emergency People METRO Ambulance � � Fire =� CORPORATION �mergency Medical Atzc;m=1 5 September 11 , 1985 Y Angus McDonald & Associates tAcG-NALD— 2950 Addison Street Berkeley , California 94704 Dear Mr . McDonald : Enclosed are two pages to replace incorrect pages of the cost estimates for the Cities of Dublin and San Ramon that were sent to you yesterday . We apologize for any inconvenience this has caused you . Very truly yours , / Eleanor Heckendorn Administrative Assistant Encl cc : Paul Rankin lames Robinson �d P.G. Drawer F • Scottscide, AZ 85252 • Phone (602) 9-9-4-3888 I - I - _ ORGANIZATIONAL CHART ( Estimate per Bid Specifications) Fire Administration 1 Chief 1 Clerk Operations Communications 3 Stations Supervisor On Duty 1 to Z Dispatchers 7 Officers 14 Firefighters 1 Clerk Fire Prevention Training Note : All — fire prevention Fire Marshal Training Officer and training Asst . Fire Marshal Assistant Training positions would Officer be filled by cross-trained on-duty operations - personnel . 35 CONTRACT FIRE SERVICE PROVISIONS =- Estimate per Bid Specifications Rural /Metro would hire and properly orient a complement of fulltime firefighting personnel and a reserve ( on-call , parttime) force of firefighters . A minimum of twenty-one ( 21 ) firefighters and officers would be assigned to duty each twenty-four hours at the combined fire stations ; the off- duty personnel and the reserves would be subject to call - in and/or fill -in duty in the absence of one of the scheduled personnel or in the event of a fire or other emergency call requiring their assistance . All fulltime personnel - and as many reserves as possible - will be emergency medical tech- nician qualified as well as firefighter trained . All regular and call -in time , including training and sick leave and vacation relief duty , would be the responsibility of Rural /Metro ; additionally , Rural /Metro would pay for all payroll related taxes and personnel benefits in conjunction with the regular and reserve activities . A capable and qualified fire officer and operations manager would be hired by Rural /Metro Corporation as Fire Chief . The Fire Chief would be responsible for fire protection and emergency medical service programs within the Cities , sub- ject to contractual obligations and Rural /Metro ' s opera- tional policies and guidelines . The Fire Chief would 30 I , e�PP�;M�T90 RURAL/ Secunty The Emergency People METRO Ambulance " h - Fire °Rc' CORPORATION Emergency Medical _ September 10 , 1985 Angus McDonald & Associates 2950 Addison Street Berkeley, California 94704 Dear Mr . McDonald : This letter is in response to your request for cost estimates to provide fire .-protection services to the Cities of Dublin and San Ramon , California . Our estimate to provide quality fire and emergency medical ser- vices to both cities is from $1 , 560 ,000 to $2 , 187 , 000 . Enclosed is a cost estimate itemization as requested . As you know , these cost estimates are not an actual bid . They are provided to assist you in your study, and they are not a commit- ment to provide services at this estimated cost . These cost estimates are based on the very limited written infor- mation we received from .you and without first hand knowledge of the area . If a final proposal is requested- and prepared , the cost of providing the service might be reduced significantly with the benefit of on- site knowledge . We are very interested in providing contracted fire services to the Cities of Dublin and . San Ramon , and are happy to provide addi - tional information upon your request . Contracted services offer many long term benefits to communities such as the elimination of the unfunded liability of employee twenty year retirement programs . Most importantly , contracting provides total control of quality , quantity and cost of service provision . In preparing this information , we have provided cost estimates in two ways . Our first estimate of costs is based upon the bid spe- cifications we received in the information packet plus the addi - tional information provided by Angus McDonald and Associates , dated August 16 , 1985 . These cost estimates are for a very high level of service , --" an ideal level of service"-- to each com- munity . Our second proposal or alternate cost estimate represents a more conservative level of service , using a reduced number of on-duty personnel but incorporating the ability to -provide an equal or greater number of trained personnel to an emergency scene using P.0. Drawer F . Scottsdale, Az 8522 . Phone (602) 9943886 37 an on-call system . The second proposal is a very appropriate level of service which , based upon the information provided , exceeds the level of service of many comparable communities based upon the information provided , and it represents a cost savings of over $600 , 000 per year . We included in our estimates a communications center and the cost of providing communications - to include dispatching are combined into the payroll and equipment portions . Due to our lack of familiarity with the area, our estimates leave open the option to rent , purchase , or build suitable station facilities ; however , adequate funds are included . We at Rural /Metro request a close review and serious consideration of the Rural /Metro fire department service cost estimates . ' We believe we can satisfactorily serve the Cities of Dublin and San Ramon , California , with quality fire department and emergency medical services and look forward to the opportunity to do so . Sincerely, DanieT E . Giblin Senior Vice President - Marketing DEG : eh cc : Paul Rankin James Robinson 38 COST ESTIMATES -. FOR FIRE DEPARTMENT SERVICES Rent and Utilities , Equipment , Personnel Station Apparatus , Costs Facilities Maintenance TOTAL Estimate Per Bid Specifications Existing City of $1 , 048 ,000 S 74 , 000 $ 231 ,000 -San Ramon $1 , 353 , 000 Existing City of 1 ,035 ,000 50 ,000 227 ,000 Dublin 1 , 312 ,000 Both Existing Cities 1 , 554 , 000 97 , 000 329 ,000 With or Without San Ramon ' s Sphere of Influence Combined 2 , 187 , 000 Alternate Estimate Existing City of 756 , 000 74 , 000 237 , 000 San Ramon 1 , 067 , 000 Existing City of 589 , 000 50 ,000 182 , 000 Dublin 821 , 000 Both Existing Cities 1 , 152 , 000 74 ,000 334 , 000 Combined 1 , 560 , 000 Both Existing Cities 1 , 344 ;000 97 , 000 393 , 000 Plus San Ramon ' s Sphere of Influence Combined 1 , 823 , 000 39 ORGANIZATIONAL CHART ( Estimate per Bid Specifications) Fire Administration 1 Chief 1 Clerk Operations Communications 3 Stations on Supervisor Duty 1 to 2 Dispatchers 7 Officers 28 Firefighters 1 Clerk Fire Prevention Training Note : All fire prevention Fire Marshal Training Officer and training Asst . Fire Marshal Assistant Training positions would Officer be filled by cross-trained on-duty operations personnel . 40 i I _ i CONTRACT FIRE SERVICE PROVISIONS Estimate per Bid Specifications Rural /Metro would hire and properly orient a complement of fulltime firefighting personnel and a reserve (on-call , parttime) force of firefighters . A minimum of eighteen ( 18 ) firefighters and officers would be assigned to duty each twenty-four hours at the combined fire stations ; the off- duty personnel' and the reserves would be subject to call -in and/or fill -in duty in the absence of one of the scheduled personnel or in the event of a fire or other emergency call requiring their assistance . All fulltime personnel - and as many reserves as possible - will be emergency medical tech nician qualified as well as firefighter trained . All regular and call -in time , including training and sick leave and vacation relief duty, would be the responsibility of Rural /Metro ; additionally, Rural /Metro would pay for all payroll related taxes and personnel benefits in conjunction with the regular and reserve activities . A capable and qualified Tire officer_ and operations manager would be hired by Rural /Metro Corporation as Fire Chief . The Fire Chief would be responsible for fire protection and emergency medical service programs -within the Cities , sub- ject to contractual obligations and Rural /Metro ' s opera- tional policies and guidelines . The Fire Chief would 41 organize and coordinate all staffing and equipment situations within the fire department , as well as assume command of any emergency situation within the department ' s realm of activity. Rural /Metro would provide seven pieces of firefighting apparatus outfitted with all appropriate equipment including fire hose , nozzles , ladders , breathing apparatus , ven- tilation equipment , brass goods and hand firefighting tools . The upkeep and/.or replacement of all Rural /Metro owned vehicles and equipment would be the responsibility of Rural /Metro . Rural /Metro would maintain in service , except during required and necessary maintenance and repair periods , the fire apparatus noted above and would provide fuels , lubri - cants parts , and supplies for its vehicles . Each of the Rural /Metro vehicles would be equipped with two- way mobile radios , and each of Rural /Metro ' s employees would be assigned a tone- alert pager for emergency call notifica- tion . An emergency alarm receipt and dispatch program would be established and operated by Rural /Metro Corporation . Three fire stations are contemplated in the fire department system plan . Rural /Metro would be responsible for all interior house- keeping and exterior grounds cleaning of the fire stations ; all other maintenance would be the responsibility of the 42 S Cities , though , wherever possible , Rural/Metro personnel would assist with general upkeep . The cost of utilities - would be the responsibility ' of Rural /Metro . Rural /Metro would respond to all calls for fire and/or emergency medical assistance within the area and would record all such activity and would report to the appropriate City, at least monthly, the number and types of such inci - dents . Also reported regularly would be an accounting of fire protection and public safety programs conducted within the Cities by Rural /Metro personnel . Rural /Metro would assist the Cities in adopting supporting fire codes and ordinances to fire department operations . ( See attached ) . Rural /Metro would ask the Cities to appoint a Rural /Metro officer as their respective Fire Marshals so that they could properly develop a positive fire prevention and investigation program within the Cities in conjunction with fire department operations . By contract Rural /Metro would stand behind all of its opera- tional planning and implementation and would properly insure itself , its personnel , and its vehicles and property against liability , accident and/or loss . Rural /Metro would agree to indemnify both cities against any claim which might arise out of Rural /Metro ' s performance under a fire protection service agreement , and would name the Cities as additional insureds on its policies . 43 The foregoing represents the general scope of the Rural / Metro Corporation plan for implementing fire department ser- vices under contract . Specific information about the pro- posed operation is not contained in this material ; however it would be discussed if a final proposal is requested . Alternate Estimate Our alternate cost estimate is designed to provide a high level of service replacing the high cost of a department structured towards full time manning utilizing a part paid and part on-call staffing system. This system can provide an equal or often greater number of trained personnel to an emergency scene at a considerable ( $600 , 00) savings to the communities . Should contracting become a serious con- sideration , we will be happy to outl i ne a program fnr yniir review . 44 AMERICAN EMERGENCY SERVICES CORPORATION P.O. Box 215 ® Wheaton, Illinois 60189 0 (312) 3644020 A=hm=t 6 September 12, 1985 Mr. Tim Callahan Angus McDonald & Associates 1950 Addison St. Berkeley, CA 94704-1102 Dear Tim: Enclosed are cost estimates for fire service delivery for the Cities of Dublin and San Ramon. While it is difficult to make precise estimates without detailed specifications and personal knowledge of the area, I feel these estimates should be sufficiently accurate for the purposes of your study. Please feel free to call me if you have any questions . Sincerely, Gar S�JJens2n y President _ Enc s. 3. 45 COST ESTIMATES =. Existing City of Dublin Personnel 551 ,000 Benefits 193,000 Operations 97,000 Sub-Total 841 ,000 Contingencies 42 ,000 Sub-Total 883,000 Capital Fund 44,000 927,000 46 ' I COST ESTIMATES Existing City of San Ramon Personnel 565,000 Benefits 198,000 Operations 113,000 Sub-Total 876,000 Contingencies 44,000 Sub-Total 920,000 Capital Fund 44,000 Total 964,000 Estimates for the City of San Ramon plus its sphere of influence would be the same. 47 COST ESTIMATES = Cities of Dublin, San Ramon and San Ramon 's Sphere of Influence. Personnel 740,000 Benefits 257,000 Operations 128,000 Sub-Total 1 ,112,000 Contingencies 56,000 Sub-Total 1 ,168 ,000 Capital Fund 54,000 1 ,222.,000 48 Angus McDonald & Associates _ 1950 Addison Street Berke!ev.California 94704-1102 Telephone(415)548-5831 _ A=hmeni 7 October 3, 1985 Board of Directors Dublin San Ramon Services District 7051 Dublin Boulevard Dublin, California 94568 Subject: Request for Technical Assistance Dublin/San Ramon Fire Services Study; 1200 Ladies and Gentlemen: I would like to acknowledge your letter dated August 30, 1985 and applaud your commitment to providing the highest level of service in the most efficient manner . I am particularly impressed by District cooperation in mutual and automatic aid, ;c4.nt ,.raJ -; -g , .joint dispatch , joint hiring , and communications , as well as your most recent example of inter-District cooperation. I am encouraged by your "efforts to make--fire protection and medical emergency service delivery non-jurisdictional within our community. " In your letter, you indicate a willingness to work with the City Council and staff to respond to any concerns they might have, and note that you are available to .discuss the ;mechanisms of such cooperation and communication. I would like to rec_uest assistance from you in that light . You have pointed out a number of areas in which the two Districts cooperate, and I would like you to extend that discussion . Your letter indicates that a functional consolidation_ of many services is underway. I would like to now raise the c_uestion o-L whether additional functional consolidation, or even a literal consolidation, is a possibility. A number of steps would be involved. A list of these steps is attached , beginning with the status quo, and leading to literal consolidation of fire protection and suppression in the Cities of Dublin and San Ramon . If the two i__...... .... .�_ :... 4 9 Angus McDonald & Associates 1950 Addison Street Berkeley_ .California 947 04-1102 Telephone(415)548-5831 _ October 3 , 1985 Board of Directors San Ramon Valley Fire Protection District 800 San Ramon Valley Boulevard San Ramon, California 94526 Subject: Request for Technical Assistance Dublin/San Ramon Fire Services Study; 1200 Ladies and Gentlemen: I would like to acknowledge your letter dated August 30, 1985 and applaud your commitment to providing the highest level of service _ in the most efficient manner . I am particularly impressed by District cooperation in mutual and automatic aid, joint training , ` joint dispatch, joint hiring , and cornmunication_s , as well as your most recent example of inter-District cooperation. I am encouraged by your "efforts to make fire protection and medical emergency service delivery non-jurizdictional within. our — community. " In your letter , you indicate a willingness to work with the CZty Council and staff to respond to any concerns they micht have, and note that you are available to discuss the mechanisms of such cooperation and communication. I would like to reques-t assistance from you in that light. You have pointed out a number of areas in which the two Districts cooperate , and I would like you to extend that discussion . Your letter indicates that a functional consolidation of many services is underway. I would like to now raise the question of whether additional functional consolidation, or ever_ a literal consolidation_, is a possibility. A number of steps would be involved . A list of these steps is attached, beginning with the status cuo, and leading to literal consolidation of fire protection and suppression in the Cities of Dublin and San Ramon. If the two so San Ramon Valley Fire Protection District October 3, 1985 Page two Districts are willing to endorse the concept of additional consolidation, I request your assistance in providing the dates when you could accomplish these benchmarks . f Thank you for your assistance. Yours very truly, fT ANGUS McDONALD & ASSOCIATES Angus N. McDonald i l_ f L__. 51 BENCHMARKS LEADING TO LITERAL CONSOLIDATION OF FIRE SERVICES _ Dublin/San Ramon Fire Services Study 1 . Development of uniform fire suppression operational procedures, and on-scene tactical/strategic operations . 2 . Consolidate training -- including recruit, on-the-job skills development/retention, and promotional/advancement training . 3 . Develop integrated command structure within all functional areas -- fire suppression, fire prevention, etc. 4 . Consolidate maintenance operations -- including preventative and general maintenance for facilities , apparatus and equipment . 5 . Develop/implement/enforce uniform fire protection codes within the community. 6 . Establish uniform equipment acquisition procedures , including the specifications thereof . 7 . Consolidate fire prevention functions, including plan review, in-service and dedicated inspector services, code enforcement and public education. . 8 . Consolidate dispatching -- alarm receipt, unit notification, status , and command and control . 9 . Standardize apparatus and equipment throughout . _ 10 . Consolidate personnel management operations , including recruitment, promotions and establishment of uniform - pay/benefits and perquisites for personnel . 11 . Consolidate budget, financial management and control functions . 12 . Combine headquarters functions into one facility. 13 . Attiring of all personnel , including uniforms (dress , station, etc . ) emblems , badges and other markings in a uniform manner . 14. Develop uniform marking/identification of apparatus and equipment such that the public_ perceives that one department serves the entire community. 15 . Establish unitary commmand structure . 16 . Establish unitary policy structure . 17 . Establish a single governing body. 52 jl .. . '�.. BUDGET ESTIMATE JOINT POWERS DUBLIN & SAN RAMON FIRE DEPARTMENT jj... Fire Department Within Current City Limits of Dublin & San Ramon - Based upon retaining the current level of services , as outlined in the fire service evaluation specifications , attachment 1, the following is a budget estimate for a Joint Powers , Dublin & San Ramon fire department with service area consisting of their combined incorporated limits . The department would be capable of providing I two complete , initial responses for a structural fire which is at least equivalent to that available from the respective, current providers . In addition, fire prevention and public education services , at least comparable to those currently provided, are included. Apparatus type, manning and response arrangement (response time and ! travel distance) would be within the ranges of current providers . Full-time fire prevention and public education services are at least equivalent. Emergency communications and dispatch would be provided j via contract with another fire department or a county agency, an arrangement currently being utilized by one provider. t The department would consist of three fire stations , with two fully manned, 24 hours per day, fire units in each facility. The scenario entails acquisition of the two existing DSRSD stations and the construction of a new San Ramon station, west of I 7680 , sited somewhere in the area encompassing Crow Canyon Road, Bollinger Canyon Road and San Ramon Valley Boulevard.- .' - Initial Budget for the Six Unit Department Salaries $3 ,527 ,308 (83 . 4% of Budget) Facilities $ 36 ,000 ( . 8% of Budget) Communications $ 152 , 000 ( 3 . 5% of Budget) Operations $ 143 , 000 ( 3 .3% of Budget) Capital Improv $ 369 , 202 ( 9 . 0% of Budget) Total : $4 , 227 , 510 Personnel Structure for Six Unit Department Round the clock staffing, per unit, is based upon the following calculation and includes allowances for vacation , sick leave (duty & non-duty related) and administrative leave which are comparable to those of the existing providers . i_ 168 hours/week x 3 man minimum manning/unit = 1-0 . 85 positions 46 . 5 hrs Effective Work Week i 53 Note: Effective Work Week is calculated based upon Fair Labor Standards Act directed maximum, regular pay, firefighter workweek of 53 hours (28 day work period) minus 6 . 5 hours per week averaged - allocation for vacation, sick and administrative leave time. Department' s Cost by Position Positions Number Cost Fire Chief 1 $ 84 ,558 Assistant Chief 1 $ 75 ,081 Fire Marshal 1 $ 61 ,523 Fire Inspector 2 $ 104 , 968 Pub Ed Officer 1 FTE $ 29 , 748 Fire Captains 17 $ 935 ,884 Fire Fighters 48 $2 , 178 , 288 Clerical 2 $ 57 , 258 Total : 73 $3 ,527 ,308 Salary Structure and Department ' s Costs for Various Positions The salary schedule outlined below is based upon comparison with structure of current providers. Though a department ' s costs for personnel cannot be measured without conclusion of appropriate labor-management agreement, the following appear appropriate in comparison with current providers and other agencies . Fire Chief Salary - $58 , 000 Benefits - 35% of base Workers Comp - 8 . 79% of base T- — Misc Exp - 2% of base Total Department Cost = $84 , 558 Assistant Chief Salary - $51,500 Benefits - 35% of base Workers Comp - 8 . 79% of base Misc Exp - 2% of base Total Department Cost = $75 ,081 Fire Marshal Salary - $42 , 200 Benefits - 35% of base Workers Comp - 8 . 79% of base Misc Exp - 2% of base Total Department Cost = $61 ,523 54 Fire Inspector i Salary - $36 ,000 Benefits - 35% of base _ Y; Workers Comp - 8 . 79% of base ' Misc Exp - 2% of base Total Department Cost = $52,484 Public Education Officer Salary - $22 , 000 Benefit's - 30% of base Workers Comp - 3 . 22% of base Misc Exp - 2% of base Total Department Cost = $29 , 748 Fire Captain Salary - $37 ,000 Benefits - 35% of base Workers Comp - 8 . 79% of base T" Misc Exp - 5% of base Total Department Cost = $55 ,052 = Fire Fighter Salary - $30 ,500 ( Benefits - 35% of base Workers Comp - 8 . 79% of base Misc Exp - 5% of base Total Department Cost = $45 ,381 Clerical Salary - $21, 600 Benefits - 30% of base Workers Comp - .54% of base Misc Exp - 2% of base Total Department Cost - $28 , 629 t �:. 53 L. Facilities Operation & Maintenance This analysis assumes the cost-free transfer of the two DSRSD - stations and the construction of a station in northern San Ramon --_ (West of I-680) . Cost for the additional station is included under . the Capital Improvement Budget. Annual Operation & Maintenance for Facilities : $ 36 ,000 (Utilities , Maintenance & Repair etc. ) -- Total : $ 36 ,000 Apparatus This analysis includes the cost-free transfer of all. firefighting apparatus and equipment of DSRSD. This would thus provide the equipment necessary to support four of the six units within the twin cities department. However, acquisition of any firefighting equipment from SRVFPD cannot be assumed, therefore acquisition of new -- equipment, with appropriate reserves , would be required. The additional apparatus and equipment required is included under the Capital Improvement Budget. Operations This following represents the -best estimates for annual operating costs for the fire department. The element consists of the costs to sustain administrative, fire suppression, fire prevention and public education services . Firefighting Supplies & Equipment: $ 30 , 000 (Annual Requirements for Firefighting & Training) Insurance: $ 451000 (Estimate for Property Insurance, Liability etc . ) Office Operations : $ 13 , 000 (Annual Requirements for Admin and Fire Prevention) Apparatus & Equipment Maint. $ 55 , 000 (Annual Requirements for Vehicle Operations & Maint) Total : $ 143 , 000 Communications The following represents estimated costs for operation of the emergency alarm notification, dispatch- and command & control element of the fire department. It assumes that 911 alarm receipt would continue with the existing county agencies (Alameda and Contra Costa Emergency Services) with alarm transmission and command & control performed by a contract agency. This arrangement is currently being utilized by one provider (DSRSD) and other agencies in Alameda and Contra Costa Counties (ex. Orinda & Moraga Fire Protection f 56 Districts) . 7 In addition to annual communication costs, an initial capital acquisition of communications-- equipment; compatable with the contract - dispatch agency, would be required. An estimated amount for this capital acquisition is contained under the Capital Improvement Budget. The following are the estimated annual costs for obtaining the j� contract dispatcher and the maintenance/operation of other required communication systems . ii Contract Emergency Communications : $ 110,000 Telephone : $ 18 , 000 Radio/Comm Equip Maint/Replacement $ 24 , 000 Total : $ 152 , 000 I I` 57 Capital Improvement Budget Facilities : New Station Annual -Financing Cost: $109 , 684 The following represents the estimated costs for a new fire station to support the northern areas of San Ramon. Costs include those for land acquisition and building construction including site improvements . Stated building cost estimates were compared with those for SRVFPD' s new station 5 , contracted for late 1985 , to assure validity. The estimate for the station is based upon the following parameters : a) 4 , 800 sq. ft. operating station on approx 1 acre of land b) $312 , 000 building cost + $500 , 000 land cost financed over 20 years c) Construction cost based upon $65/square foot for combined building and site improvements . d) $812 ,000 Real Cost + 15% Soft Cost = $933 , 800 financed amount e) Financing @ 10% over 20 years . Apparatus The following represents the vehicle acquisitions required to support the new fire department and to equip the new San Ramon station. This estimate assumes acquisition of current vehicle complement of DSRSD by the Twin Cities department. In addition, it includes acquisition of a new hazardous materials vehicle and fire prevention-van deemed appropriate to support enhanced hazardous materials response capabilities and community fire prevention efforts . Engines (2) - New Purchase ($175 , 000 per; Fin. 10 years) Annual cost for 10 year financed items = $65 , 498 Patrols (1) - New Purchase ($ 40 , 000 per; Fin. 5 years) Haz Mat/Rescue (1) - New Purchase ($ 75 , 000 per; Fin. 5 years) Annual cost for 5 year financed items = $34 , 887 Utility (1) - New Purchase ($ 10 , 000 per; Fin. 3 years) Autos (3) - New Purchase ($ 12 , 000 per; Fin. 3 years) Fire Prev Van (1) - New Purchase ($ 17 , 000 per; Fin. 3 years) Annual cost for 3 year financed items = $29 , 133 Total Annual Cost: $129 , 518 The following represents required single occurance, capital acquisitions to support fire department operations . It would consist principally of reserve ea_uipment, example spare hose, nozzles etc. necessary for restocking fire apparatus after its use . The item 58 I entitled communications equipment is for equipment that wi 11 rov'd - p i e _. communications compatability with the contract dispatch agency. See discussion above under heading Communications . Reserve Firefighting Equipment Acquisition: $ 30 , 000 I7_, Communication Equipment: $100 ,000 ` = Total Capitalized Acquisition: $369 ,202 l_ I I ; - 1 f 59 A=-ch+ enQ 9 BUDGET ESTIMATE _ JOINT POWERS DUBLIN & SAN RAMON FIRE DEPARTMENT _ Service Area Including Dublin, San Ramon and their Spheres -- Based upon retaining the current level of services , as outlined in the fire service evaluation specifications , attachment 1, the following is a budget estimate for a Joint Powers, Dublin & San Ramon fire department with service area consisting of Dublin, San Ramon and their built out spheres. The estimate reflects the projected maximum size of any fire department, by personnel and equipment except for emergency communications , necessary to perform projected services . The date of achievement of stated maximum would depend upon the rate of development, the rate of increase in emergency medical services , the effectiveness of fire prevention efforts and the actual , realized demand for fire suppression services . The department would be capable of providing two complete, initial responses for a structural fire, a single manned reserve unit and a duty battalion chief, 24 hours per day. Full-time fire prevention and public education services would continue at an enhanced level . Emergency communication and dispatch would be provided via contract with another fire department or a county agency. The department would consist of four fire stations , with two manned fire units per station in three of those. The last station to have only one fully manned unit. The scenario entails acquisition of the two existing DSRSD stations , SRVFPD ' s Alcosta station and the construction of a new station, West of I-680 , sited in the area encompassing Crow Canyon Road, Bollinger Canyon Road and San Ramon Valley Boulevard. Under this scenario, the department would continue to contract for dispatch and emergency communications services . An enhancement would be to provide the dispatch function internally or in conjunction with another public service agency (fire or police) . As response rates for fire and emergency medical services increase , this option should be considered, but cost estimation for such, at this time, is considered premature. Operational Budget for the required Seven Unit Department Salaries $4 ,291 , 603 (84 . 9% of Budget) Facilities $ 48 , 000 .( 0 . 9% of Budget) Communications $ 167 , 000 ( 3 .3% of Budget) Operations $ 170 , 000 ( 3 . 3% of Budget) Capital Improv $ 373 , 826 ( 7 . 6% of Budget) Total : $5 ,050 , 429 Personnel Structure for Seven Unit Department Round the clock staffing, per unit, is based upon the following calculation and includes the stated allowance for vacation, sick 60 i leave (duty & non-duty related) and administrative leave which are comparable to those of the existing providers . 168 hours/week x 3 man minimum manning/unit = 10 .85 positions 46 .5 hrs Effective Work Week Note: Effective work week is calculated based upon Fair Labor - Standards Act directed maximum firefighter workweek of 53 hours (28 day work period) minus 6 .5 hours per week averaged allocation for r. vacation, sick and administrative leave. r Department' s Cost by Position I Positions Number Cost Fire Chief 1 $ 87 ,474 Assistant Chief 1 $ 77 ,998 s L.... Fire Marshal 1 $ 62 , 981 Battalion Chief 3 $ 176 , 316 !" Fire Inspector 3 $ 157 ,452 ' Pub Ed Officer 1 FTE $ 29 , 748 Fire Captains 20 $1 ,101 , 040 -= Fire Fighters 56 $2 ,541,336 ' Clerical 2 $ 57 , 258 Total : 88 $4 ,291 , 603 ( _ Salary Structure and Department' s Costs for Various Positions Fire Chief Salary - $60 , 000 I.. Benefits - 35% of base Workers Comp - 8 . 79% of base Misc Exp - 2% of base Total Department Cost = $87,474 Assistant Chief Salary - $53 ,500 Benefits - 35% of base Workers Comp - 8 . 79% of base Misc Exp - 2% of base '. Total Department Cost = $77 , 998 i 61 Fire Marshal =_ _ Salary - $43 ,200 Benefits - 35% of base Workers Comp - 8 . 79% of base Misc Exp - 2% of base Total' Department Cost = $62 ,981 Battalion Chief Salary - $39 ,500 Benefits - 35% of base Workers Comp - 8 . 79% of base Misc Exp - 5% of base Total Department Cost = $58 ,772 Fire Inspector Salary - $36 ,000 Benefits - 35% of base Workers Comp - 8 . 79% of base Misc Exp - 2% of base Total Department Cost = $52 , 484 Public Education Officer Salary - $22 , 000 Benefits - 30% of base Workers Comp - 3 . 22% of base Misc Exp - 2% of base Total Department Cost = $29 , 748 Fire Captain Salary - $37,000 Benefits - 35% of base Workers Comp - 8 .79% of base Misc Exp - 5% of base Total Department Cost = $55 ,052 Fire Fighter Salary - $30 ,500 Benefits - 35% of base Workers Comp - 8 . 79% of base Misc Exp - 5% of base Total Department Cost = $45 ,381 Clerical Salary - $21, 600 Benefits - 30% of base Workers Comp - .54% of base Misc Exp - 2% of base Total Department Cost - $28 , 629 62 Facilities Operation & Maintenance =. This analysis assumes the cost-free transfer of the two DSRSD stations , the SRVFPD Alcosta Road station and the erection of an additional station in San Ramon (West of 680) . Cost for the . additional station is included under the Capital Improvement Budget. i Annual Operation & Maintenance for Facilities : $ 48 , 000 (Utilities , Maintenance & Repair etc. ) Total : $ 48 ,000 I. . Apparatus I - This analysis includes the cost-free transfer of all firefighting apparatus and equipment of DSRSD. In addition, it would include the �. cost-free transfer of a majority of the equipment within SRVFPD ' s ' Alcosta station. However, acquisition of additional firefighting equipment, including reserves , would be required to completely equipment the seven unit department. The additional apparatus and equipment required is included under the Capital Improvement Budget. i . Operations The following represents the estimated annual operating costs for . the fire department. The element consists of the costs to sustain j ' administrative, fire suppression, fire prevention and public i education operations . _ Firefighting Supplies & Equipment: $ 35 , 000 (Annual Requirements for Firefighting & Training) Insurance : $ 50 , 000 (Estimate for Property Insurance, Liability etc. ) Office Operations : $ 15 , 000 (Annual Requirements for Admin and Fire Prevention) . Apparatus & Equipment Maint. $ 70 , 000 i (Annual Requirements for Vehicle Operations & Maint) j Total : $ 170 , 000 L_ I . i '� 63 i Communications The following represents estimated costs for operation of the emergency alarm notification, dispatch -and command & control element of the fire department. It assumes that 911 alarm receipt would - continue with the existing county agencies . Alarm transmission and command & control to be provided by contract agency. As indicated earlier, with increasing alarm rates , consideration should be given to provision of in-house dispatch services or in conjunction with another agency. Cost for such an undertaking could not be reasonably estimated with any degree of confidence. In addition to the annual communication costs , an initial capital acquisition of communications equipment would be required that is compatable with the contract dispatch agency. An estimate is included in the Capital Improvement Budget. The following are the estimated annual costs for obtaining the contract dispatch service and the maintenance/operation of other required communication systems . Contract Emergency Communications : $ 125 , 000 Telephone: $ 18 ,000 -Radio/Comm Equip Maint/Replacement $ 24 ,000 Total : $ 167 ,000 64 r v Capital Improvement Budget Facilities : New Station Annual Financing Cost: $109 , 684 The following represents the estimated_ costs for a new fire station to support the northern areas of San Ramon. Costs include those for _ land acquisition and building construction including site i improvements . Stated building cost estimates were compared with those of SRVFPD' s new station 5 , contracted for late 1985 , to assure validity. The estimate for the station is based upon the following parameters : a) 4 , 800 sq. ft. Operating Station on approx 1 acre b) $312 , 000 Building Cost + $500 ,000 Land Cost Financed Over 20 Years c) Building Cost based upon $65/square foot for I� building and site improvements � _. d) $812 , 000 Real Cost + 15% Soft Cost = $933 , 800 amount financed e) Financing @ 10% over 20 years . a Apparatus : The following represents the vehicle acquisitions required to support ithe new fire department and to equip the new San Ramon station. This estimate assumes acquisition of the entire vehicle complement of the DSRSD fire department. In addition, it includes acquisition of a majority of the equipment in SRVFPD' s Alcosta station. In addition, it includes acquisition of vehicles for-battalion chief ' s operations , hazardous materials response, and enhanced fire prevention. Engines (2) - New Purchase ($175 ,000 per; Fin. 10 years) Annual cost for 10 year financed items = $'05 , 498 Patrols (1) - New Purchase ($ 40 , 000 per; Fin. 5 years) Haz Mat/Rescue (1) - New Purchase ($ 75 , 000 per; Fin. 5 years) Annual cost for 5 year financed items - $?� � 887 Utility (2) - New Purchase ($ 10 , 000 per; Fin. 3 years) Autos (3) - New Purchase ($ 12 , 000 per; Fin. 3 years) Fire Prev Van (1) - New Purchase ($ 17 , 000 per; Fin. 3 years) Annual cost for 3 year financed items = $33 , 757 - Total Annual Cost: $134 , 142 I 65 The following represents required single occurance, capital - acquisition of reserve equipment to support fire department - operations. The communications eq_uipment _acquisition is to provide equipment compatable with contract dispatch agency. Reserve Firefighting Equipment Acquisition (One Time) : $15 ,000 Communication Equipment Acquisition (One Time) : $115 ,000 (Equipment Required for Compatability with Contracted Communication Center) Total Capitalized Acquisition: $373 , 826 I 66 ANALYSIS OF _ WATER AND SEWER OPERATIONS OF THE DUBLIN SAN RAMON SERVICES DISTRICT CITY OF DUBLIN CITY OF SAN. RAMON February 15 , 1986 Hughes , Heiss and Associates 675 Mariners Island Boulevard Suite 108 San Mateo, Ch 94404 ANALYSIS OF WATER AND SEXIER OPERATIONS OF THE DUBLIN-SAN RAMON SERVICES DISTRICT The purpose of the report which follows is to present an overview of the structure and content of current water and sewer operations of DSRSD. Information presented in this report is intended to provide each of the cities a basis for evaluating future courses of action related to the .structure and .service delivery capabilities of DSRSD. The paper opens with an overview of the basic structure of sewer service operations; introduces the organization and staffing for both water and sewer service delivery activities; then explores the details of sewer service operations; provides a comparable description of water service operations; and concludes with an analysis of options related to service transition involving both sewer and water services. 1 . BASIC STRUCTURE OF DSRSD SEWER SERVICE OPERATIONS. The basic budget structure of DSRSD sewer operations reflects both legal and operational segmentation of treatment and collection services. The basic components of the sewer service operation are as follows: -� Regional Sewer Operations.. -- This budget component covers the operation of the treatment plant and Involves DSRSD service to member constituencies and areas plus contracts for services with Pleasanton and the U. S. Army -- Camp Parks Facility. Local Sewer Operations -- Covers the operation and maintenance of the collection system. Unlike the plant, which as a result of contracts with agencies external to the DSRSD, and essentially a regional service operation, local sewer or collection system operations are largely confined to the Dublin and San Ramon areas. They include: Al I of the City of Dubl in. The southern portion of the City of San Ramon. The northern portion of the City is served by the Central Sanitary District of Contra Costa County with service boundaries generally following watershed configuration. -1- Industrial Treatment -- This service component, by practice and federal permitting requirements, is inextricably linked to treatment plant operations. This -component provides staff and a =_ technical capability to monitor major dischargers to insure _ materials are not discharged into the system which cannot be adequately handled by the treatment plant. In addition to the basic components noted above, DSRSD is a partici- pant in LAVWMA (the Livermore-Amador Valley Water Management Agency) . This joint-powers agency functions to export wastewater from the Livermore Valley. The District's involvement is two-fold: As a member agency through the joint-powers agreement, the District provides basic financial support to LAVWMA operations and capital expansion planning and construction. In addition, the District staff handles maintenance and opera- tions of LAVWMA facilities. In return, the District is reim- bursed for staff and other expenses related to LAVWMA maintenance and operations. The following sections explore the operation of the sewer system in more detail . 2. ORGANIZATION AND STAFFING OF 'CATER AND SEWER CPERATIONS. Exhibit i , which follows this page, shows the overall organization and staffing of District water and sewer operation. Exhibit 11, which follows Exhibit I , provides a basic breakdown of staff assignments by service and program. Principal conclusions which can be drawn from the information presented in. the exhibits include the following: Within the basic water and sewer service operation, the District employs 31 full-time staff plus three contract maintenance and utility worker employees acquired from Kelly Services. Some support and supervisorial staff are involved in the delivery of both sewer and water services from both the budgeting and actual operating perspectives. These Include: The Assistant Superintendent who has responsibility for first- line supervision of both sewer and water operations. -2- EXHIBIT I Cities of Dublin and San Ramon ORGANIZATION AND STAFFING District General Manager Contract Super- Dl strict ' Intendent (1) Engineer (I) J Public Works Part-Time j (1) Clerk Assistant Contract Inspec- Assistant Super- (1) Office (1) tlon (2) ICIVII 1 (1) Intendent Engineer Staff Engineer 1 Contract Full-time (1) w t Full-Time Part-time (1) i reatment Treatment Industrial Sewerage [enlo r Chemist lant (1) lant Main Waste Ilectlon ater (1) peratlons Penance Sr (1) Inspector (1) System (1) ystem (t) u ervisor Mechanic Techn. orator Lab In Ilection Water ntract Analyst (1) reatment Elec- Mochnnic System Malnten- System Mtnce. 'lant (5) trlclan (1) (1) (1) Worker (1) ante (2) Repair (2) Worker (2) perator Worker Worker/ III 0 orator Su vr. Mainten- ance (2) Worker FaclIIty Mfnce. Malnten- Treatment Grounds Mtnce. ante (1) lant (6) Worker perator IPI EXHIBIT 11 Cities of Dubiln and San Ramon ALLOCATION OF STAFF DSRSD WATER A14D SEWER OPERATIONS No. of No. of No. of Positions 2 Posltlons2 Posltlons2 Local Sewer Staff Position Assigned Water Operations Assigned Regional Sewer - Plant Assigned Collection System Superintendent - - 1 .0 Management of all operations - Assistant Line Management--treatment Line Management--plant opera- - - Superintendent .25 and Field maintenance staff .75 Lions/malntenance staff Tests effluent to determine com- Ch ern ist - - 1 .0 pliance with discharge stds. - internal chemical monitor- Lab Analyst .10 Quallty testing of treated water. .90 Ing of treatment process— - Operations Line supervision of - - Supervlsor 1 .00 treatment plant operations Lead operator--shift supervl- 0 erator III - - 5.00 sor treatment plant operations - Line operators -- treatment Operator 1 d it - - 6.0 plant operations - Mechanical maintenance of Mechanics - - 3.0 treatment plant Infra-structure - Electro-mechanical maintenance/ Electrician - - 1 .0 treatment plant Infrastructure - - _ collect/ truck employed/ Collection System - - 1 .0 collection line malnt. Technician Maintenance Maintenance Assistance Assists/works with .p Workers - - 1 .0 to Mechanics - 2.0 collectlon.technlclan. 1 Contract Mtnce. Misc. maintenance -- facilities Miscellaneous maintenance - Worker 1 .0 and grounds. 2.0 facilities and grounds Senior Operator 1 .0 Working supervisor. Plant/Dis- trlbutlon System - - - - Water Operator/ Operations and Maintenance Water Repair Worker 2.0 Water System operations/malnt. - - - Industrial Waste Back-flow prevention program-- At source discharge monitor- Ifspector 5 device Inspection and maintenance 5 Ing -- user contact. - _ Public Works Superv./ Inspection of new connections Insp. of new Conn. and Inspector .5 and rolafod Infrastructure. - - .5 related Infrastructure. Account Clork .5 Wator billings. - - .5 Sewer billings Colloctlon Local line cleaning/ System Worker - - - 1 .0 maintenance. Inspector 2 Part-tlmo pos. to work off now Part-time pos. to work Installation related backlog. - - .2 oft new Installation re- Public Works Clerical support--plant and main- Cler. support--treatment plant lated inspection backlog Clerk .25 tonance operations. 75 other staff In sower/water. - Asst. Civil Staff Englneer--misc.col. Engineer .30 Staff englneer mist water pro► 05 Staff engr -misc sower prod 25 system exp./maint. pro]. Industrial Waste Technician 1 .00- Collects discharge samples. . - Office Engineer/ Engineering adminlstratlon/mist. Engineering administratlon/mist. Contract .33 project enciinoering--water system ,33 pro_l. on Ineerin --sewer system._ - - G)ntract Englneer Design/oversoo design related to Design oversee design other engr. - DPW Dir. .2 water system projects 2 services related to sewer oiler. - I Funded under sower-Industrial waste budget. 2 Full-time equivalents. An Industrial Waste Inspector who is charged to both sewer and water budgets. An Account Clerk who is shared between sewer and crater _ services with assigned responsibility for processing sewer and water billings. The Secretary/Receptionist at the treatment plant who Is charged to both water and sewer services. A Public Works Inspector who has responsibility for inspecting new sewer and water connections. A Laboratory Analyst who is shared between the water and sewer programs. Interviews actual time allocation (90% sewer - 10% water) differ from the budgeted "split" (50% sewer - 50% water) . Most line operating and maintenance personnel are clearly differentiated between sewer and water services, both from the budget and actual operating perspective. Staff assigned to the sewage treatment plant are involved in both regional treatment plant operations and maintenance plus support of LAVWMA. As noted above, DSRSD is reimbursed by LAVWMA for staff services related to operations and maintenance of LAVWMA facilities. In addition to the staff noted above, there are selected pro- fessional and technical staff assigned to the District office to provide support to and are involved in water and sewer operations. These include: The staff Assistant Civil Engineer assigned to the District Office public works operations provides general engineering support to both water and sewer operations as well as other District activities. This position is charged to the District general fund but is involved in permit processing, capacity allocation calculations, and other factors related to both water and sewer programs. Recently, the District replaced a full-time Director of Public Works with an engineering contract with a professional engineering firm. The contract provides for a District Engineer .on a part-time basis and a full-time office or administrative engineer. These positions are charged to both the general fund and water and sewer budgets with time allocations as shown in Exhibit II . Other contract services such as the District's Attorney, and Financial Consultant are charged to both general fund and sewer and water budgets. -5- The District General Manager, accounting, and general support staff are charged to the general fund but expend significant portions of their time related to the water and sewer programs. In addition to the in-house and contract staff noted above, the Districts also contract for specialized services related to water and sewer operations. These include: A contract with Honeywell for instrumentation maintenance. A service contract with a computer service agency for water and sewer b 1 I I i ngs. 3. TREATMENT PLANT OPERATIONS ARE REGIONAL IN NATURE AND iNYOLYE SERVICE CONTRACTS WITH JURISDICTIONS EXTERNAL TO DUBLIN AND SAN RAMON. Critical to any understanding of treatment plant and sewer system operation is a review of the regional nature of the services provided by DSRSD. The treatment plant is essentially a regional service facil ity and one which would not lend itself to physical division between Dublin and San Ramon and individual city operation of , treatment and/or collection facilities in the event of dissolution of the District or service transfer to the two cities. Due to the regional , multi-city nature of the treatment plant operation, should reorganization or dissolution of DSRSD be pursued, the cities would need to effect some form of Joint Powers Agreement to manage plant operations. In addition, provisions would need to be made to maintain service contracts as outlined in the paragraphs which follow: The plant Is owned and operated by DSRSD. While the City of Pleasanton has purchased the right to specific portions of overall plant capacity, analysis indicates that Pleasanton has no actual equity interest in existing plant or equipment. The long-term service contract for the City of Pleasanton includes specific agreements related to the D i v i s i o n of plant ca pac i-ty between Pleasanton and DSRSD. Table 1 , which follows, shows the allocation of both existing plant capacity and the capacity expansion currently under construction. -6- Tab 1 e 1 Allocation of DSRSD Treatment Plant Opacity Capacity (Million Gallons/Day) DSRSD Pleasanton Amount �_ Amount _% Basic Plant 4.05 60.8 2.61 39.2 Stage 3 Expansion - - 2.34 100.0 Sub-Total 4.05 45.0 4.95 55.0 Stage 3B Expansion 1 .25 50.0 1 .25 50.0 TOTAL 5.30 46.1 6.20 53.9 The basic agreement between DSRSD and the City of Pleasanton was established May 30, 1978 and runs for a period of thirty years. The agreement established the basic division of plant capacity at the time the agreement was negotiated and provided for additional sharing of plant capacity based on financial contribution to plant expansion. Under the terms of the agreement and the existing working relationship, the City of Pleasanton pays DSRSD for plant operations through sewer service fees collected by the City of Pleasanton and rebated to the District. Comparably, expansion requirements related to the City of Pleasanton are funded by connection fees collected by the City and rebated to the District. Amounts rebated to the District are comparable to fee schedules developed and approved by the District Board of Directors. Pleasanton has responsibility for collecting all fees related to customers in the City of Pleasanton. Collection issues related to bad debts or slow payers are covered by the Cl ty of Pleasanton with the amounts rebated to the District reflecting the number of customers, usage, and established fee schedules. In addition to the agreement with Pleasanton, DSRSD has an agreement -to provide 300,000 gallon per day treatment capacity for the U. S. Army, Camp Parks Facility. Under the terms of the agreement: y The Department of the Army pays about 5250,000 per year for treatment services based on a combination of actual usage fees and a bi-monthly user charge stipulated in the contract. The U. S. Army/Camp Parks treatment requirements are deduced frcm the DSRSD share of overall plant capacity. -7- 4. CURRENT SEDER OPERATIONS ARE SELF SUPPORTING AND PROVIDE ANNUAL CONTRIBUTIONS TO SUPPORT V Two basic funds support sewer service operations at DSRSD. These include the sewer enterprise and the sewer expansion funds. The section which follows explores the financial structure of sewer operations. (1) The Sewer Enterprise Fund Supports Day-to-Day Operations Involving Both the Plant and Collection System Within The Service Area. The sewer enterprise fund is comprised of three distinct components as fol I ows: Regional -- provides the basic budget to support plant operations. Local -- supports maintenance and operation of the collection system. Industrial waste -- supports monitoring and evaluation of information related to major dischargers. Each of these components combine to comprise the overall sewer operating fund which is operated on a full enterprise basis. Virtually all financial resources available to the fund are generated by sewer service user fees which coDsist of two major components: The demand component -- which is designed to recover basic fixed costs (staff, non-variable operating expenses, etc. ) and to reflect peak monthly use by consumers. The loading component -- which is designed to recover variable costs (chemicals, energy costs, etc. ) and is designed to reflect differences in proportional average use among various user types. As noted above, user fees are designed to recover the costs of collection, treatment, waste water disposal , and billing and admin- i strat i on related to day-to-day sewer service operations. They are periodically recalculated and upgraded based on the actual costs of -8- operations. Table 2, which follows, shows the composition of rates and how rates are divided to support both collection system and plant operations for selected customer types. Table 2 Composition of Sewer System Charges — Selected Customer Classes Composition of Bi-Monthly Charges Customer Collection Plant Type Unit System Operations Total Single Fam. Res. DU $9.70 $12.80 $22.50 Condominium DU 7 .24 9.56 16.80 Multiple Family DU 5.81 8.53 14.34 Restaurant Ccf .32 1 .15 1 .47 School Ccf .18 .27 .44 At current levels, DSRSD rates are above the median and average of 20 Bay Area communities based on a survey recently completed by the District. Based on a comparison of bi-monthly user fees for a typical single family residence, the DSRSD rate of $22.50 compares to the 20 community survey average of 318.70 and a survey median of 518.09. It shou=l-d also be noted that DSRSD rates have remained relatively constant over recent years. The industrial waste component of the sewer enterprise fund Is supported by direct b! I I i ngs for the cost of services to speci f is customers who are major or potential problem dischargers. Charges are based on the actual costs of tests and monitoring required for each customer. Exhibit III , which follows this page, provides several perspectives on sewer enterprise fund operations as budgeted for the current fiscal year. Principal conclusions which can be drawn from the information presented in the exhibit include the following: -9- EXHIBIT III Cities of Dubiin and San Ramon SEWER ENTERPRISE FUND -- BUDGETED 1985=1986 Sewer Enterprise Fund Component Collection Industrial Plant System Waste Fund Total Revenue Service Charges $2,414,000 $699,000 $145,200 $3,258,200 .Interest Income 30,000 8,000 - 38,000 Revenue Total $2,444,000 $707,000 $145,200 $3,296,200 Expense Personnel Services $ 861 ,100 $108,300 $ 72,200 $1 ,041 ,600 Materials and Supplies 918,700 46,000 7,700 972,400 .Contractual Services 171 ,400 396,700* 26,800 594,900 Other Expense 22,000 2,000 1 ,900 25,900 Capital Outlay 14,100 - - 14,100 Expense Total $1 ,987,300 $553,000 $108,600 $2,648,900 Gross Margin $ 456,700 $154,000 $ 36',600 S 647 ,300 Transfer To General Fund $ 218,300 $ 60,800 $ 11 ,900 $ 291 ,000 Net Surplus Before Deprecia- tion Allowance $ 238,400 $ 93 ,200 S 24,700 S 356,300 * Includes Payment of $365,100 to LAVWMA -10- Operations are budgeted to provide a modest surplus for each program area. Costs levied against the sewer enterprise fund include a formula employed to determine an allocation of enterprise fund revenues to support District overhead -- legislative and administrative operations. This formula, adopted by policy of the DSRSD Board, calculates enterprise fund contributions to the general fund by comparing the total cost of District overhead ( legislative and administrative budget components) to the total cost of all line operations in the District including both general fund and sewer and water enterprise fund operations. The resulting percentage is then multiplied times each of the enterprise funds and enter- prise fund components to calculate the amount of revenues which will be transferred to the general fund to offset the cost of overhead operations which are required to maintain both water and sewer services but are not charged or budgeted directly to those funds. For the current fiscal year, the general fund contribution for both sewer and water enterprise components is estimated to fall in the 10% to 11% range. Viewed another way, approximately $.10 of each sewer use fee dollar is employed to provide support of .overall District overhead external to imme- diate sewer plant or collection system operations. In addition to . the fund transfers to the general fund and related overhead support, there are several other types of transactions related to the District's involvement in LAVWMA. . These include: The annual payment to support LAVWMA operations -- budgeted as $365,000 for fiscal year 1985-1986 and budgeted within the local portion of the sewer enterprise fund. The District also maintains a separate LAVWMA maintenance and operating budget which estimates the cost of maintenance and operation services provided to the joint powers agency. This is budgeted at approximately $241 ,000 for fiscal year 1985-1986. As noted above, LAVWMA is billed by the District on a monthly basis for the actual cost of staff time and materials related to support LAVWMA operations. Overall , the sewer enterprise fund shows a net deficit when viewed from the fund balance perspective. This deficit results directly from how accumulated depreciation 1s treated. -1 1- The sewer enterprise fund balance is estimated to be approximately $2.5 million in terms of non-obligated cash and reserves on hand. When accumulated depreciation is considered, the sewer enterprise fund shows an accumulated deficit of approximately $1 .5 to $1 .5 mil I ion. Exhibit IV, which follows this page, shows ten-year trends in sewer enterprise fund performance and illustrates the impact of depreciation and contributions to general fund overhead on bottom line fund performance. (2) Sewer Connection Fees Support System Expansion Sewerage treatment plant capacity and related expansion require- ments are funded completely by connection fees. The District has no debt related to either past or current plant expansion projects. Connection fees are calculated based on a marginal cost analysis which estimates the dollar cost of adding each incremental gallon of plant processing capacity. Relevant facts include the following: Connection fees are calculated based on the treatment capacity required to handle each incremental single family residence -- -- estimated at 280 gallons per day. All connection fees are calculated on this basis and couched in terms of single family dwel I ing unit equivalents. The incremental cost of each additional gallon of capacity based on current connection fee 'cost levels is estimated to be about $8.90. It is the current and continuing practice of the District to fund all expansion from expansion fund reserves plus Federal grants. As noted above, there is no debt associated with DSRSD plant expansion. Anticipated expansion for the treatment plant is as follows: -12- EXHIBIT IV Cities of Dubin and San Ramon SEWER ENTERPRISE FUND COST AND REVENUE TRENDS -- FISCAL YEAR 1977/78 THROUGH 1985/86 Fiscal Year - 1977- 1978- 1979- 1980- 1981- 1982- 1983- 1984-* 1985-* 1978 1979 1980 1981 1982 1983 1984 1985 1986 -------------------------------------(000)-------------------------------------- Revenue $ 985 $1 ,278 $1 ,535 $1 ,757 $2,372 $2,497 $2,895 $2,964 $3,296 Expense 832 938 1 ,013 1 ,463 1 ,944 2,201 2,260 2,786 2,649 !, Gross Margin $ 153 $ 340 $ 522 $ 294 $ 428 $ 296 $ 635 $ 178 $ 647 i Less Transfer To W General Fund $ 95 $ 137 $ 202 $ 262 $ 162 $ 170 $ 183 $ 249 $ 291 Net Margin $ 58 $ 203 $ 320 $ 32 $ 266 $ 126 $ 452 ($ 71 ) $ 356 Less Allowance for Depreciation $ 182 $ 184 $ 195 $ 406 $ 416 $ 422 $ 428 $ 434 $ 440 Surplus (Deficit) ($ 124) $ 19 $ 125 ($ 374) ($ 150) ($ 296) $ 24 ($ 505) ($ 84) Accumulated Deficit ($1 ,242) ($1 ,373) ($1 ,220) ($1 ,562) ($1 ,616) ($1 ,670) ($1 ,478) N/A N/A Budgeted Performance a � The current 3B expansion program will bring the plant to a total of 11 .5 million gallon per day capacity -- adding 2.5 million gallon per day capacity. Over the long range, the ultimate maximum size of the treatment plant is estimated to be 22 million gallons per day capacity. This would result In the addition of 10.5 million gallons per day capacity compared to planned capacity when the 3B expansion program is completed. The ultimate division of future capacity between DSRSD and Pleasanton will reflect individual contributions to the expansion fund, and if expansion fund revenues are insufficient to support the capacities required by either party, under the terms of the agreement between DSRSD and Pleasanton, an individual party can pay for additional capacity beyond that funded by expansion fund revenue. Exhibit V, which follows this page, shows trends In expansion fund operations since 1977-1978. Several factors should be noted. Under existing DSRSD Board .policy, portion of expansion fund revenues are annually transferred to the general fund to offset overhead costs. Under the existing District policy, up to 15% of annual expansion fund revenues can be transferred to the general fund by Board action. Unlike the enterprise fund transfers to the general fund, there is no specific formula employed to calculate the amount of 'expansion fund revenues which are affected on an annual basis. As can be seen from review of the information presented in the exhibit, annual transfers from the expansion fund to the general fund vary substantially both in absolute dollar volume and as a percentage of total expansion fund revenue. With the exception of these annual transfers to the general fund within the basic percent maximum stipulated by board policy and ordinance, expansion funds are dedicated to system expansion -- planning and construction -- and are not employed to support maintenance or day-to-day operations. Based on unaudited financial data contained In the end of year financial reports issued by DSRSD, approximately $225 of each $2,500 connection fee equivalent during 1984-1985 were associated with transfers to general fund operations from the expansion fund. -14- EXHIBIT V Cities of Dublin and San Ramon SEWER EXPANSION FUND TRENDS -- FISCAL YEAR 1977/78 THROUGH 1984/85 Fiscal Year 1977- 1978- 1979- 1980- 1981 - 1982- 1983- 1984. 1 97 8 1979 1980 1981 1982 1983 1984 1985- --------------------------------( 000)-------------------------------- Revenues $ 418 $2,006 $7,060 $2,623 $1 ,681 $2,133 $5,043 $6,487 Capital r Expenditures 671 1 ,579 3,979 983 1 ,157 3,050 5,261 3,598 :t Sub-Total Surplus (Deficit) ($ 253) $ 427 $3,081 $1 ,640 $ 524 $ 917 ($ 218) $2,889 Transfer To `i General Fund $ 5 $ 48 $ 304 $ 190 $ 48 $ 153 $ 694 $ 588 u Net Performance ($ 288) $ 379 $2,777 $1 ,450 $ 476 $ 764 ($ 912) $2,301 i End of Year Fund Balance $1 ,609 $1 ,988 $4,764 $6,215 $6,691 $5,372 $4,459 $6,759 i General Fund Transfers f As a % of Expanslon Fund Revenue 1 .2% 2.4% 4.3% 7 .2% 2.9% 7 .2% 13.7% 9.1% 1 j s Virtually no expansion fund resources are allocated to or employed for expansion of the collection system. In general , any adjustments. to the col lection system result from- the construction of new development. Developers are required to install collection systems to District specifications and the collection systems are then turned over for maintenance to the District once completed. Inter- views with District representatives and analysis of current plans and operating documents Indicate that there are no significant future ex- penditures of expansion fund dollars related to the collection system. (3) When Considered Together, Combined Transfers of Enterprise and Expansion Fund Revenues Related to mater and Sewer Operations Frequently Exceed The Actual Costs of the Overhead They Are Designed to Partially Offset Within the DSRSD General Fund. Exhibit VI, which follows this page, provides a consolidated perspective on enterprise and expansion fund transfers to the general fund since fiscal year 1978-1979. As noted above, the major rationale underlying transfers from both enterprise and expansion funds is to offset basic District overhead costs related to the delivery of those services but not budgeted directly within either enterprise or expansion funds related to sewer and water operations. Additionally, while a formula Is now employed to calculate enterprise fund transfers to support District overhead, expansion fund transfers are accom- plished within a polio maximum based on an annual budgeting and actual allocation decision made by the Board of Directors without the benefit of a detailed formula. As can be seen from review of the informal-ion presented in Exhibit Vl, enterprise fund transfers tend to offset the bulk of overhead and administrative costs related to DSRSD. When expan- sion fund transfers are also considered, total contributions to the -16- EXHIBIT VI Cities'of Dublin and San Ramon USE OF SEWER AND WATER FUNDS TO OFFSET DSRSD OVERHEAD COSTS Total Over- Enterprise Expansion head Budget -- Funds Transferred Net Over-- Funds Transferred Net Over- Fiscal Legislative and To The General Fund head Costs To The General Fund head Costs Year Administration Sewer Water Total Remalnlnq Sewer Water Total Remaining 11978-1979 $ 217 ,660 $139,824 $ 65,204 $205,028 $ 12,652 $ 47,842 $ 1 ,418 $ 49,260 ($ 36,608) 11979-1980 219,029 201 ,656 90,900 y 292,556 (73,527) 304,319 10,598 314,917 ( 388,444) 1980-1981 261 ,704 262,235 88,537 350,772 (89,088) 189,524 15,503 205,027 ( 294,115) 1981-1982 296,458 162,403 85,684 248,087 48,371 48,460 6,890 55,350 ( 6,979) 1982-1983 319,113 169,805 65,235 235,040 84,073 152,839 14,627 168,466 ( 83,393) 1983-1984 399,082 182,942 85,669 268,611 130,471 694,342 2,690 697,032 ( 566,561 ) 1984-1985** 556 ,771 211 ,550 103,753 315,303 241 ,468 587,587 70,080 657,667 ( 416,199) 1985--1986-9- 672,500 292,000 119,200 411 ,200 261 ,300 450,000* ( 188,700) Budgei-ed X'k Unaudited general fund from sewer and water expansion and enterprise funds have exceeded the total cost of legislative and administrative overhead for each fiscal year since 1978-1979. in considering the amount of expansion fund and enterprise fund transfers budgeted for the current fiscal year, the extent to which expansion fund and enterprise fund transfers exceed the actual cost of legislative and administrative totals nearly $2 million over the period since fiscal year 1978- 1979. As a result, one of the following two conclusions can be drawn: During the same period, the unappropriated/unallocated general fund balance of the DSRSD has grown substantially. While end of year audit data for fiscal 1984-1985 are currently not avail- able to the project team, it is IikeIy that the unallocated or operating reserve components of the District general fund (re- served for operating reserve and reserved for end of year appro- priations) are likely to total approximately $2.5. This represents an increase of approximately $2.2 million since fiscal year 1978-1979. Analysis indicates that expansion and enterprise fund transfers to the general fund have contributed to the bulk of this unallocated or operating reserve within the general fund. For the current fiscal year, the District is budgeting a modest deficit in overall general fund operations while still making a rather substantial contributior-r- of $450,000 a year from the -- water and sewer expansion funds. Again, for the current fiscal year, projected transfers of both water and sewer enterprise and expansion funds exceed the cost of legislative and administra- tive overhead. Thus, to the extent that actual expenditure patterns follow budget plans, the excess of water and sewer enterprise and expansion fund transfers over actual legislative and administrative costs will be employed to fund other general fund services (recreation and parks and fire) rather than contribute to continued build-up of an unexpended general fund reserve. -18- 5. TOTAL 1NVESTiENT IN SEWER SYSTEMS INFRASTRUCTURE EXCEEDS $98 MILLION. Table 3, which follows displays the estimated value, as measured by estimated. replacement cost as of 1985, for both the treatment plant and the collection system. Table 3 Value/Replacement Cost of Sever System Facilities and Equipment Estimated Replacement Cost Component As of 3/85 Treatment Plant and Equipment Structures $ 32,810,654 Equipment 6,909,345 Sub-Total $ 39,719,999 Collection System Sewer Lines $ 58,556,066 Vehicles/Equipment 177 ,600 ' Sub-Total $ 58,733,666 TOTAL $ 98,453,665 As can be seen from review .of the Information presented In the tab.l e, total investment in the treatment plant is estimated at $40 million as measured by current replacement cost exclus-1`ve of the 38 expansion which is .currently in progress. The collection system replacement cost is estimated at nearly $59 million. Existing DSRSD financial analysis has calculated annual depreciation necessary to fund future replacement for both the plant and the collection system. Estimated annual depreciation allowance requirements are as follows: Approximately $280,500 annually to cover the depreciation of plant and associated equipment. Approximately $17 ,400 annually to cover depreciation associated with vehicles and equipment necessary to maintain and inspect the local collection system. -19- Approximately $836,000 annually to fund depreciation related to the entire collection system. Analysis of past expenditure patterns indicates the District is currently allocating approximately $400,000 to $500,000 annually for a depreciation allowance for total sewer enterprise fund operations. Based on estimated depreciation requirements associated with each component of the system, this annual allocation allowance includes: Fu I I allowance for the replacement of the plant and associated equipment. ' Only partial reserve related to ultimate replacement of the collection system. It should be noted, however, that the calculations employed to estimate the replacement date for the collection system assume a 70 year life span and average replacement date of 2040. The composition of the infrastructure related to the sewer system raises a variety of complex issues which would need to be considered in the event of the dissolution of DSRSD and potential d i v i s i o n of assets between the cities of Dublin and San Ramon. Critical and complex issues include the following: Development of a quantitative relationship between the current value of the treatment plant and its associated equipment and financial contributions historically made by residents of the two communities would probably have to be measured by relative contributions to the expansion fund. To develop such a relationship, it would be necessary to: Analyze the source and uses of all funds paid into and out of the expansion fund since the District was established and the plant built. - Develop cumulative totals by area. Determine how to deal with the City of Pleasanton's contribution to plant expansion. Based on the above, develop a proportional breakdown of financial contribution by the two areas. -20- - Calculate the results in terms of individual area contribution to existing plant and equipment. Recognize that, while the City of Pleasanton apparently has no equity interest in the plant through the agreement between the City and DSRSD, the City has clear rights to contractually stipulated portions of plant capacity both now and over the course of the 30 year agreement initially established in 1978. While the agreement theoretically expires in 2008, analysis suggests that Pleasanton probably has the rights to the stipulated portions of plant capacity in perpetuity. As will subsequently be discussed, calculation of individual city "ownership" based on proportional contribution would represent a monumental analytical task, and given the regional and "undividable" nature of the plant, largely a theoretical exercise. As a result, an even or 50/50 division of plant assets would probably be a more practical course of action in the event of dissolution of service transfer. Collection systems could be divided based on geographic locations in each of the cities. However, since collection system maintenance and renewal costs are and probably would continue to be funded from revenues and fees derived from total system operations, such d i v i s i o n of cw nersh 1 p wou I d also probably be relatively theoretical . These issues are explored in more detail in subsequent sections of this report which explore alternatives for service transfer. 5. UNDER CURRENT APPROACHES, DSRSD FOLEOW S THE PATTERN OF MOST COMPARABLE DISTRICTS AND ALLOCATES CAPACITY ON A FIRST COFE, FIRST SERVED BASiS. Overall , operations require the District to plan expansion of the plant when the plant reaches 75% of capacity. Plant expansion requirements are based on growth plans in the service area as measured in the terms of single family dwelling unit equivalents and their impact on flow and plant treatment requirements. While this planning takes into account the individual development and growth plans of the cities within the DSRSD service area (Dublin, San Ramon, and Pleasanton), the only formal allocation of capacity of both existing plant and any additional capacity expansion reflects the contractual and f i nano i al arrangements between DSRSD and the City -21- of Pleasanton. Access of Dubl in and San Ramon to the capacity of the plant is based on an actual allocation of permits to developers and projects on a first come, first served basis. In this practice, DSRSD follows procedures and approaches generally employed by other large sanitation districts throughout California. In collecting information during the course of this study, the project team contacted five large multi-jurisdictional sanitation districts to explore how these districts dealt with the issue of capacity allocation among multiple incorporated cities within their service areas. The results of these contacts were as fol I cws: With the exception of situations where there are specific contracts between an individual city and the sanitation district which stipulates city shares of plant capacity and associated financial contributions to purchase that capacity, permits and their impact on capacity are always dealt with on a first come, first served basis within the entire district service area. The only exception to this rule was found In the Sacramento Sanitation District which covers two cities and unincorporated area. In this district, capacity allocation is based on existing usage of plant capacity as measured ten years ago and X ormalized in a written agreement between the- district and governmental agencies falling within its service boundaries. This district is planning to_ expand capacity in the near future -- and current plans call for the allocation of this additional capacity based on the same percentage basis stipulated in the written agreement between the district and those governmental entities falling within its service area which were based on capacity utilization ten years ago. The issue of capacity allocation is considered in more detail later in this report. 7. DSRSD'S 1NVOLYEWNT IN LAVWMA REPRESENTS A LONG-TERM FINANCIAL AND OPERATING COMMITWNT WHICH WOULD NEED TO BE DEALT WITH IN THE EYENT OF DISTRICT REORGANIZATION. As noted earl ier in this report, DSRSD is a participant in LAVWMA. Under the terms of the joint powers agreement which provides the basis for LAVWMA, parties to the agreement may withdraw only under clearly stipulated conditions which include: -22- No agency may w ithdraw from the agreement unti I al I debt is sat sf ied. The JPA provides for a five year withdrawal period. . That period is subsequent to- retirement of outstanding debt. To support the formation of LAVWMA, $4.2 million In revenue bonds were sold in 1978. DSRSD responsibility for this revenue bond issue totals 21 .67%. These bonds are scheduled to be retired in the year 2000 and DSRSD's share of responsibility for unpaid principal totals $812,600 as of June 30, 1985. As a result, both practically and legally, any major adjustment in the organization and sery ices of DSRSD related to sewer operations would need to include transition and responsibility related to LAVWMA consistent with the Joint powers agreement which initially established the agency. This issue is considered in more detail in a subsequent section of this report. 8. WATER SERVICE OPERATIONS ARE LARGELY FINANCIALLY AND OPERATIONALLY_ DISTINCT FROM OTHER DISTRICT OPERATIONS AND SERVICES. Like sewer services operations, the water service provided through DSRSD 1 s' essenti al I sel f funded. Uni Ike sewer operations, seater services are more clearly delineated in terms of a local service area which is — I imited to the city boundaries of Dubl in. The section which fol lows outlines the nature and scope of the existing district water service program.. (1) Water Is Acquired Under Contract With Zone 7 of the Alameda County Flood Control and Water Conservation District. The DSRSD essential ly serves as a middle man in the del ivery of water to Dubl in customers. Principal characteristics of the existing system i ncl ude the fol l av i ng: DSRSD has a 30 year contract with Zone 7 to purchase treated, potable water for delivery to customers. Principal characteristics of the contract include the following: Established in September, 1963, the contract expires in September, 1993. -23- The contract provides for renewal upon the mutual consent of both parties. If the contract is not renewed, water would still be del ivered by Zone 7 to DSRSD at a quota equivalent to the last calendar year of the contract. After two years, if a new contract is not estab I i shed, Zone 7 is st f i I required to deliver water but is allowed to change the quota available to DSRSD customers. As noted above, DSRSD purchases treated water from Zone 7. DSRSD adds fluoride and chlorine and channels the water into the distribution system for Dublin customers. Section H of the contract provides for the assignment of the contract. Review of contract provisions indicates no signifi- cant barriers to transfer of water service operating responsi- bility to Dublin from DSRSD. The only stipulation of note is that the contract requires the consent of Zone 7 before assignment. (2) The dater Enterprise Fund Supports Day-to-Day Operations Based on Charges for Water Use. As noted above, water distribution operations are totally self supporting -- based on revenues derived primarily from the sale of water to district customers. Exhibit VII, which follows this page, shows trends In water enterprise fund operations over_ the last five years. Review of the information -presented in the exhibit leads to the following conclusions: The water enterprise fund has operated with a positive balance with the exception of performance budgeted for the current year. It appears that the potential deficit projected for the budget year 1985-1986 involves conservative projection of expected water sales. Review of past budgets indicates that actual water sales have significantly exceeded budgeted levels in virtually all years. Budgeting and accounting for water enterprise fund operations includes an allowance for depreciation plus an enterprise fund transfer to the DSRSD general fund. As noted earlier in this report, the transfer to the general fund is based on a formula which compares enterprise fund operations to the total structure of district general fund and operations. For the current fiscal year, a water enterprise fund transfer of approximately 9.1 cents on each dollar of revenue is projected for transfer to the DSRSD general fund to cover overhead. -24- EXHIBIT VII Cities of Dublin and San Ramon WATER ENTERPRISE FUND PERFORMANCE -- LAST FIVE YEARS Fiscal Year Revenues 1981-82 1982-83 1983-84 1984-85* 1985-86** Water Sales . $1 ,014,415 $ 961 ,698 $1 ,266,427 $1 ,402,597 $1 ,086,300 Penalties 18,832 21 ,829 24,329 34,011 - Meter Sales 22,580 17,120 2,355 128,580 - Interest 50,471 51 ,792 56,446 77,355 32,600 Other 12,189 42,340 16,073 65,529 26,700 TOTAL REVENUES $1 ,118,487 $1 ,094,779 $1 ,365,630 $1 ,708,072 $1 ,145,600 Expenses Personnel $ 149,279 $ 170,470 $ 205,294 $ 212,496 $ 220,000 Materials/Supplies 620,007 673,317 793,822 849,356 741 ,900 Miscellaneous 30,750 32,206 29,389 78,292 121 ,900 TOTAL EXPENSE $ 800,036 $ 875,993 $1 ,028,505 $1 ,140,144 $1 ,083,800 Gross Margin $ 318,451 $ 218,786 $ 337 ,125 $ 567,928 $ 61 ,800 Transfer To General Fund $ 81 ,469 $ 65,235 $ 85,669 $ 103,753 S 119,200 Net Margin $ 236,982 $ 153 ,55 L_ $ 251 ,456 $ 464,175 ($ 57 ,400) Allowance for Depreciation $ 43,526 $ 44,248 $ 48,132 .$ 52,000*** $ 56,000*-`f Net Contribution To Retained Earnings $ 193,456 $ 109,303 $ 203,324 $ 412,175 ($ 113,400) and of Year Retained Earnings $ 177 ,016 $ 286 ,319 $ 489,643 $ 901 ,818 $ 788,418 * Unaudited ** Budgeted *** Estimated -25- The water enterprise fund has a positive balance even when accumulated depreciation is considered. it should be noted, however, this positive balance involves comparison of fund -. retained earnings with accumulated depreciation related to basic _ p I ant and equipment and not the distribution or f ire hydrant system. The actual cash balance at the end of fiscal year 1984-1985 is estimated to be approximately $1 .1 million of which about $900,000 are retained earnings. Exhibit VIII, which follows this page, provides more detail on the budgeted cost of water operations for fiscal year 1985-1986. The exhibit includes the detailed cost of budgeted operations within the water enterprise fund and includes some charges not formerly reflected in the water enterprise budget. These include charges related to engineering support provided by district administrative staff and the like. The data displayed in Exhibit VIII probably reflect a relatively comprehensive portrait of the total cost of water enterprise operations at DSRSD. The data displayed in the exhibit reflect: Both direct and indirect staff involved in the delivery of water services. The cost of water purchased from Zone 7 is budgeted for the current fiscal year. As can be seen from review of the information presented in -ttie exhibit, this reflects approximately 50% of the total operating cost of the water enterprise fund. Cost of maintaining the distribution system to include meter replacement, line breaks, and hydrant repairs. User charges provide the bulk of water enterprise fund revenues. They are currently established based on two distinct components which include the following: Service Charae: Designed to recover the cost of customer services (accounting, meter maintenance, etc.) . Quantity Charge: Designed to reflect varying levels of usage by varying types of customers. The quantity charge has two basic components: -26- EXHIBIT VIII Cities of Dublin and San Ramon _. WATER ENTERPRISE FUND. OPERATING BUDGET--- 1985-1986 Component Amount Staffing FTE Salaries and Fringe Benefits Assistant Supt. (25%) ' . $ 12,734 Lab. Analyst (10%) 3,143 Public Works Clerk (25%) 6,789 Ind. Waste• Inspec. (50%) 21 ,010 Pub. Wks. Inspec. (50%) 18,207 Account Clerk (50%) 12,069 Sr. Operator ( 1 ) 36,092 Water Rep. Wkr. ( 1 ) 34,549 Water Oper. 1 ( 1 ) 33,404 Utility Wrk. ( 1 ) 15,000 District Eng.** (33-1/3%) 33,280 Office Eng. ** (40%) 34,944 Asst. Civ. Eng.* (30%) 12,657 Part-Time Inspector (360 hrs.) 5,760 Sub-Total Staff $279,638 Overtime/Holiday Pay/Stand-by 25,000 STAFF TOTAL $304,638 Expen Purchase of Water $525,600 Sub-Surface Line Maintenance 122,000 Hydrant Repair (10 @ $2,000) $20,000 Main Service Breaks (20 @ $3,000) 60,000 Materials/Parts 25,000 Commercial Meter Replace- ment (20 @ $600) 12,000 Water Leak Testing 5,000 * Charged to General Fund {* Contract Employees -- includes amount allocated to water expansion fund -27- EXHIBIT V I I I (2) Component Amount Building and Grounds Maintenance $ 13,000 Automotive Expense 10,000 Equipment Maintenance 37,100 Chemicals 16,700 Office Supplies 5,500 Utilities -- Pumps 12,000 Legal Expense 7,000 Accounting/Audits 6,800 Insurance 14,000 Paging/Telephone System 6,000 Computer Costs 7,000 Miscellaneous 1 ,100 Tests/Reports 1 ,000 Travel 1 ,200 Safety Clothing 1 ,200 Expense Total $787 ,200 Capital Outlay 30,000 TOTAL $1 ,121 ,838 v A basic usage related cost component designed to recover 100% of the cost related to the source of supply, 60% of costs related to pumping operations, and 60% of costs related to transmission and distribution system operations and maintenance. An extra capacity cost component which is designed to cover 100% of the cost of reservoirs, 40% of the cost of pumping operations, and 40% of the transmission and distribution system operating and maintenance costs. The composition of this rate structure is based on allocation of actual operating costs among the various components of the water system: Table 4 which follows shows the percent allocation of the various cost components based on budgeted data for 1985-1986. Table 4 Allocation of Water Service Costs Among Cost Components Component Percent of Total Customer Accounting 4.0% Meter Maintenance 2.0 Source of Supply 55.0 Pumping 5.0 Transmission/Distribution 33.0 Reservoirs 1 .0 TOTAL 100.0% The DSRSD district board sets rates given the components noted above. Key issues related to the current rate structure include the following: For the past four years, the same basic service charge level has been maintained. Quantity charges are reviewed annually and are established based on the actual costs of system operations. -28- (3) Expansion Funds Are Employed To Support Both Increase in System Capacity and to Preserve System Infrastructure. The second major component of the water program involves the water service expansion fund. The primary revenue source for the expansion fund involves water connection fees related to new construction within the service area. Exhibit IX, which follows this page, shows key features related to expansion fund operations over the last five years. Principal conclusions which can be drawn from the information presented in the exhibit include the following: Over the last 5 years, the expansion fund balance remained relatively constant at approximately $670,000. The bulk of. the sharp growth in a total expansion fund revenue over the 5 year period has been committed to increases in system capacity -- reservoirs, pumps, etc. With the exception of fiscal year 1983-1984, the transfer of revenues from the water expansion fund to the general fund has been close to or at the 15% maximum stipulated in DSRSD policy and ordinances. These expansion fund transfers to the general fund should be taken ' in the context of the total comparison of general fund overhead costs, enterprise fund transfers, and sewer and water expansion fund transfers discussed in an earlier section of this report. s __ Currently, connection fees are structured to provide resources for system expansion plus renewal of the infrastructure currently in place. Given the existing connection fee of 51 ,200, for a typical single family dwelling unit, connection fees are allocated as follows: $1 ,080 -- allocated to expansion/contribution to the marginal cost of adding a new customer to the system as measured by future needs to expand the system. $120 -- representing system "buy- in" and generally employed -nor replacement and renewal of existing infrastructure. -29- EXHIBIT IX Cities of Dublin and San Ramon - WATER EXPANSION FUND TRENDS -- 1981/82 THROUGH 1984/85 Fiscal Year Revenues 1981-82 1982-83 1983-84 1984-85* Connection Fees $ 45,933 $ 97 ,510 $368,196 $700,800 Interest 86,258 75,715 63,807 40,656 Other - 3 ,213 450 3,505 Revenue Total $132,191 $176,438 $432,453 $744,961 Exoenditures Capital Outlay $ 35,726 $ 76,147 $462,021 $651 ,664 Transfer to General Fund 6,890 14,627 2,690 103,753 Miscellaneous - - 13,011 2,389 Expenditure Total $ 42,616 $ 907774 $477 ,722 $757,806 Contribution to (Deduction frcm) Fund Balance $ 89.575 $ 85 ,664 ($ 45,269) ($ 12,845) . Fund Balance At End of Year $645,318 $730,982 $685,713 $672,868 General Fund Transfer As A °a of Connection Fee Revenue 150 15p .7p 14.8% * Unaudited -30- As of the summer of 1985, connection fees were below the average of East Bay agencies in the water service business. The average was _ calculated at about $1 ,375 for the typical single family dwelling unit. In the immediate Livermore-Amador Valley area, a connection fee of $1 ,200 charged by DSRSD compares to $1 ,165 in Pleasanton, $1 ,401 in Livermore and $3,500 in San Ramon which is served by EBMUD. Of the total connection fee of $1 ,200,. an estimated $180 represents a contribution to DSRSD overhead and general fund operations based on actual estimated' performance during fiscal year 1984-1985. Like the sewer expansion fund, there is no debt related to water expansion fund operations. All system enhancements are paid from existing cash reserves and expansion fund revenues based on connection fees collected. (4) Available Information Indicates There Are No Significant Problems Related To Syst--n Infrastructure. A key issue related to the potential assumption of water service operations by Dublin involves likely future capital needs related to both the existing system and system expansion. Basic conclusions developed during the course of the study are as follows: Interviews with system operators and engineering personnel Indicate no significant problems with the condition of the existing distribution system. These contentions are supported by the following additional facts: The ISO rating of the water system for fire protection services indicates no significant problems related to system pressure and flow. Review of actual expenditures over recent years for sub-surface repair of distribution lines Indicates expenditure levels are relatively modest and significant breaks relatively infrequent. -31- Future capital improvement needs are relatively modest when the expansion fund balance and expected future expansion needs are considered given growth projected for the Dublin area. Exhibit X, which follows this page, outlines major expansion projects _ contained in the DSRSD water system master plan. in addition to the specific projects outlined in the master plan, depreciation schedules associated with existing infrastructure need to be considered and Include the following: No significant work is projected for the distribution system until the year 2020. Industrial meters are projected for replacement in 1988 according to existing depreciation schedules. The total cost associated with this projected date is a relatively modest $60,700. The existing depreciation schedules indicates the need to replace fire hydrants in 1990 at an estimated cost of $900,000. Analysis of actual operations indicate that it i s not at al l cl ear that a project of th is scope w i l l be required. Hydrant Iife is significantly longer than the 20 year depreciation period employed for cost-accounting purposes. Table 5 which follows outlines the current estimated replacement costs of the total investment in plant, equipment, and distribution system related to water service operations. Table 6 Investment in Water System - DSRSD* Pumps, Reservoir s, . Equipment $ 1 ,178,200 Distribution Lines 14,380,800 Meters 248,800 Fire Hydrants 900,000 TOTAL $16,707,800 * Based on estimated replacement cost in 1984 -32- EXH IB IT X Cities of Dublin and San Ramon - WATER SYSTEM MASTER PLAN PROJECT STATUS Improvement Type Upgrade Existing Project Description Cost Expansion System Status Emergency Connection to EBMUD $ 27,115 X Under study 4.2 mg. steel reservoir 585,106 X X Planned for 2020 2,000 gpm booster pump station 63,830 X Not Accomplished Pipeline Upper/Third Zone 3,615 X Not Accomplished 500 gpm pump station - Shannon 184,381 X Under construction Kremco Pipeline 361 ,532 X Under study Reservoir No. 3 478,723 X Underway - developer financed Third Zone Reservoir 319,149 X Underway - developer financed 8" water line *- Nielson 106,383 X Not Accomplished Rehabilitate Dougherty -_ Flouride Station • 40,000 X Underway -33- In addition to the investment outlined in the table, DSRSD also maintains a parts inventory associated with water system operations with an estimated value of. approximately $25,000. To this point, information presented in this report has focused on the description of both water and sewer service operations. It was intended to provide a background for subsequent analysis of practical alternatives for reorganization of the water and sewer service delivery system. The sections which follow address service transfer and reorganization questions. 9. TRANSFER OF RESPONSIBILITY FOR SEWER OPERATIONS TO THE TWO CITIES IS POTENTIALLY CHARACTERIZED BY A NUMBER OF COWLEX PROBLEMS. Obviously, a prime focus of the current study reflects the potential for Dublin and San Ramon to assume control of those services currently provided by the DSRSD in the water and sewer service area. Given the "regional " nature of sewerage treatment plant operations, the potential transfer of control of sewer service operations to the two cities is characterized by a set of relatively complex issues. These are explored in the sections which follow. ( l) Any Potential Transfer of Service Would Need To Involve Tn3 Entire Seweraae Treatment and Seger Collection Operation. Theoretically, service transfer related to sewer operations could involve a variety of alternative approaches: The cities could remove the entire sewer operation from DSRSD through de-annexation or district reorganization; employ a joint-powers agency ( JPA) of the two cities to replace the district board; but maintain both treatment plant and collection system operations as a joint regional service. A second alternative would be to establish the plant and the industrial treatment program as a JPA activity, but assume individual responsibility for operation and maintenance of the collection systems in the two individual communities. -34- Leave responsibility for operation of the plant with DSRSD with each city assuming individual responsibility for collection system operations and maintenance. Given the practical characteristics of the sewerage treatment and sewer collection system described earlier in this report, it is clear to the project team that it would be impractical and not cost- effective to divide the operation into its constituent components. Compelling factors include the following: The plant and industrial treatment program components are inextricably linked -- both in the . context of practical operations as well as based on Federal permitting requirements. The plant operation cannot be divided into separate operating components. It is a regional operation; it has a fixed installation that cannot be divided; and, in addition, the City of Pleasanton's service involvement needs to be considered. There are few practical advantages to assuming responsibility for the collection system on an individual city basis: Analysis_.of workloads indicates that it is insufficient to justify separate crews for each city. To the extent that each city assumes individual responsibility for collection system maintenance, duplication of effort would be likely. If individual responsibility were assumed, expensive equipment would need to°be duplicated or shared. Operation of the collection system provides Iittle signi- ficant revenue generation potential . As previous analysis has shown, the portion of sewer user fees related to col- lection system operations are generally sufficient to just off-set operating and maintenance costs. Based on this, there is no significant financial advantage to assuming responsibility of maintenance for the collection system. The one practical advantage of direct city control of collection system maintenance would involve the potential to improve coordination between underground maintenance of collection lines and city plans for street resurfacing and improvements programs. This would entail avoiding collection system maintenance related street "breaks" after streets are newly resurfaced or repaired. As a result, the only practical approach to dealing with issues of sewer operations in the event of dissolution or reorganization would be to: -35- Maintain the basic organizational and operating continuity of the plant, industrial treatment program, and the basic collec- tion systems. Establish the basis for Jolnt control of the combined operation If it was transferred from DSRSD. , The sections which foi low explore how such a Joint approach might be implemented. (2) Service Transfer Would Need To Replace DSRSD With A Joint Powers Agency Controlled By The Two Cities. Given the assumptions noted above, the only practical alterna- tive for organizing sewer operations, if removed from the organizational and policy control of DSRSD, would be through a JPA of Dublin and San Ramon. This JPA would consist of the following basic components: Maintenance of basic treatment plant operations as currently organized and staffed. As noted earlier in this report: There is virtually no way to divide the treatment plant. Is it impractical to sever plant operations from collection system maintenance. There is no indication that city assumption of responsibil ity for plant or collection systems operations would have any appreciable impact on plant and collection system maintenance and-operating staffing needs internal to the sewer enterprise fund operation. Analysis of DSRSD plant operations and collection system maintenance staffing levels provides no indications that these activities are overstaffed. As a result, City assumption of responsibility for operations appears to provide no likely economies in terms of staffing reductions. Any transfer of control of overall plant and collection system operations would need to be effected in such a manner to ensure retention of key staff. To be able to continue to operate the plant in the existing Federal and State regulatory environment, it is critical to ensure that certified personnel are available to, maintain key required functions. As a result, it is prac- tical to assume that any JPA of Dubl in and San Ramon would need to provide salary and fringe benefit levels for plant and system operating personnel generally comparable to those currently provided through DSRSD. Any reduction in these salary and benefit levels could Jeopardize retention of key qualified staff and could make transition in service responsibility impractical , -36- If the plant and collection system were operated under the control of a JPA, analysis indicates that there would be some need to provide additional staff resources beyond those involved in direct plant and collection system operations. In part, these additional staff would involve the following: To provide services and capabilities currently provided through DSRSD overhead. To provide a bare minimum operating and administrative capability for a regional sewage treatment and collection system operation. This assumes that the existing city staffs in Dublin and San Ramon could not assume immediate management and engineering support responsibility for a JPA controlled sewer plant and collection system operation without incremental staff. Exhibit XI , which follows this page, outlines the types of manage- ment, administrative, and engineering support which would be required in addition to the basic staff involved in day.-to-day plant operations and collection system maintenance and currently supported by the sewer enterprise fund. Costs are estimated based on current salary and fringe benefit levels in DSRSD. As can be noted through comparison with infor- mation presented earl ler in this report, the cost of this overhead staff, is generally equivalent to the amount of sewer enterprise fund transfer to the general fund to support overhead in the DSRSD 1985-1986 budget, It should be noted that the cost estimates outlined in Exhibit XI do not Include a variety of other costs which could be associated with transfer of plant and collection system management to JPA. These include: Basic administrative space. It should be noted that there Is insufficient space at the sewage treatment plant to accommodate staff of the scope and content presented in Exhibit XI . In addition, given existing current rental facilities, adequate space is unavailable in either of the cities. If DSRSD were not dissolved, and the sewer operation was treated as an individual service, district administrative facilities would be unavailable to house the staff and functions noted In the exhibit. -37- EXHIBIT XI Cities of Dublin and San Ramon PROJECTED STRUCTURE AND COST OF A JOINT POWERS AGENCY FOR SEWER OPERATIONS Cost Fringe Position Function Salary Benefits Total Administrative Overall administration; $ 50,000 $ 18,427 $ 68,427 Manager coordinate planning activities; liaison with cities. Engineer Capacity planning; contract $ 45,000 $ 16,927 $ 61 ,927 administration; plan checking Secretary Clerical support to Manager $ 17,500 $ 8,677 $ 26,177 and Engineer Accountant Grants Administration; $ 35,000 $ 13,927 $ 48,927 billing system administration; system general ledger and account maintenance; etc. Account Clerk Customer bills; payroll ; $ 16,000 $ 8,227 $ 24,227 accounts payable; etc. Miscellaneous Support/back-up -- financial $ 16,000 $ 8,227 $ 24,227 Clerk and general administration $179,500 $. 74,412 $253,912 MATERIALS/SUPPLIES $ 32,500 TOTAL 3286 ,412 -3 8- Approximately 2,000 to 2,500 square feet would be required to accommodate staff. If rented, this space could require an additional $4,000 a year in rental costs related to sewer enterprise fund operations. . if built at the plant, additional space could cost approximately $100,000 to $125,000 in the form of a one time capital expenditure. It should be noted that the administrative staff outlined in the exhibit do not include some functions and capabilities currently available within the organization and operations of DSRSD. These include: Contract outside engineering for day-to-day contract administration and engineering activities related to sewer system operations. The analysis assumes that a full-time engineering position could accomplish these activities. Provision for a financial consultant to conduct periodic analyses of sewer rates and connection fees. The analysis assumes that an administrative manager and accountant could accomplish these studies. At the levels estimated in the exhibit, overhead costs could be charged to the enterprise fund and would require little subsidy by the cities at this expenditure level . Similarly, overhead costs would not require the expansicn funds currently allocated by DSRSD to support i overhead and other general fund activities. As a result, expansion funds currently transferred to the DSRSD general fund could be employed to reduce connection fees on a short-term basis or could be retained to support future capital replacement and expansion needs of the overall sewer system. (3) Any JPA Wou I d Have To Assume Respons I b i 1 I ty For Most DSRSD Contras;s If service were transferred to a JPA established by Dublin and San Ramon, provisions would need to be made to effect transfer or existing DSRSD contracts related to plant and discharge operations:. They include: -39- The existing contract between DSRSD and the City of Pleasanton related to providing Pleasanton a long-term share of existing and planned plant capacity. The treatment agreement with the U.S. Army for the Camp Parks faci I ity. DSRSD participation in LAVWMA. It should be noted that continuation of the arrangement with LAVWMA under which plant and collection system maintenance staff provide operations and maintenance support for LAVWMA is a critical component in control I ing the costs of staffing and other components of both plant and collection system operations. Current contracts between DSRSD and the various construction and engineering firms involved in the 3B expansion. Other contracts related to the sewer system in which DSRSD is currently involved probably would not be transferred or assumed by the cities in the event a JPA is established. These include: _ The district contract with the financial consultant. Engineering contracts to provide district engineer and administrative engineer services for the DSRSD. While the process of assignment of contracts would be a complex one and could involve relatively significant legal expenditures, there is no indication that transfer could not be effected and would pose a major barrier to transition In the organization of the delivery of both sewage treatment and collection system services. (4) Establishment Of A JPA Would Probably Require Either.Dissolution Of DSRSD Or A Substantial District Reorganization. Because of the financial importance of sewer service operations in the total context of DSRSD operations, any modification in the current sewer service system would have major impact on any future operations of DSRSD. It is extremely difficult to consider removal of sewer operations as an independent entity without profound effect on the district: -40- If only the sewer service were removed, the remaining revenues available to support water, fire, and parks/recreation services would require either: Elimination of most district support staff to allow maintenance of service levels in these services. - Would require some cutback of services to maintain a min- imai overhead or management and administrative capability. If both sewer and water .services were removed, it would require profound reorganization of the district to maintain fire and parks and recreation services. Removal of both sewer and water services would .virtually eliminate district overhead involving management and administrative staff. Maintenance of any administrative staff under this option would require drawing on general fund revenues currently employed to support both fire and parks/recreation services with attendant impact on reducing service levels in both those areas. Over the longer range, however, analysis of potential increases in general fund revenues related to property tax growth. suggests that this problem would be largely resolved. To the extent that both sewer and water services were eliminated, DSRSD would be required to draw on the general fund reserve over the short-term to maintain an administrative capability, but over the longer range, would experience property tax increases sufficient to replace sewer and water enterprise and expansion fund revenues. If sewer, water, and parks and recreation services were transitioned to the two cities, and only fire service remained as a district responsibility, the need for most district overhead staff would be eliminated. Essentially, the district could function with a chief and one or two clerical and financial support positions to provide administrative and overhead services. These staff could probably be accommodated in the existing fire administrative facility and would result in the district headquarter facility being surplus. Considering projected property tax growth, reorganization of this extent could not be expected to have significant, negative long-range impact on fire service delivery. The final option would involve total district dissolution. Further exploration of this option requires resolution of how fire services would be delivered. This issue is clearly beyond the scope of this paper and will be' addressed in a subsequent joint paper incorporating the results of the fire study and the analysis of each of the other DSRSD services. No matter which option the cities elect to pursue, there are essentially two courses of action open: -41- Pursue the dissolution process or service transfer including negotiated property tax transfer through the Alameda County _ LAFCO process. The dissolution of DSRSD would go through the Alameda County LAFCO as a "change of organization_: or, possibly, a "reorganization" if a single service transfer were pursued. In either case, (1 ) agreement between the Board of Supervisors of Alameda County and Contra Costa County and the Cities of Dublin and San Ramon must be reached on the exchange of property tax revenues and (2) the unanimous consent of DSRSD Board of Directors must be obtained or an election conducted in the DSRSD service area receiving a majority vote for dissolution. An alternative to the dissolution process identified above would be to seek an amendment to the government code to permit a district dissolution. This amendment could include any of the provisions identified in the dissolution process above, including but not limited to an election. There are many examples of such special legislation in the state statutes. The city or cities would have to draft proposed language which would have to offer an alternative to unanimous consent, such as a majority vote of the district board or a majority vote in the district' s service area. Scme common threads run through either of these two options and involve issues related to: Division of assets related to sewer system operations. Transition of staff. Assumption of contracts. The implication of each of these three issue areas are pursued in more detail in the paragraphs which follow: (5) Transfer Of Sewer Operati ons To JPA foul d Requ i re Carefu I PI ann 1 nc1 And Detailed Analysis To Effect Asset Transfer and Ensure Staff Continuity The section which follows assumes individual transfer of sewer operations to each of the cities exclusive of any consideration of the ultimate disposition of water, parks/recreation, and fire services. The key issues addressed in this section include: -42- The importance of maintaining continuity in plant and collection system operations and the relationship of that continuity to retention of a cadre of qualified and certified operators and maintenance personnel . To ensure that smooth transfer, the following steps would need to be accomplished in any service transition: - The JPA would need to establish basic personnel systems and policies to ensure retention of a core of key staff currently employed by DSRSD and certified for plant operations. - This would require: . . Establishing basic personnel policies and procedures. . . Establishing a salary and compensation plan. . . Transferrina PERS plans and benefits related to existing staff. This would also include assumption of unfunded I iabi I ity for transferred employees. Based on an analysis of a 1983 valuation of DSRSD PERS benefits for non-safety employees, this un- funded liability could total approximately 5210,000 for treatment plant and collection - _rystem staff. Any transfer of service responsibility to a JPA would require division of assets related to the service rendered. Ownership of assets would need to be transferred f rcm DSRSD to each of the cities and not to the JPA established by those cities. Since there is no formula currently existing which can be employed to provide the basis for division of assets created by an enterprise fund operations, a specific approach would need to be negotiated between Dublin and San Ramon in regard to the division of plant and collection system assets. Since there is virtually no link between property tax paid by the various areas and other commonly available measures which can be -43- empI oyed to div ide pub icl y owned assets, the foi I ow ing factors wouI d need to be considered and resolved: The basic infrastructure involving the treatment plant was created by resources drawn from a variety of different sources including federal grants, user fees, connection fees, and pay- ments by the City of Pleasanton. These resources have been generated in varying amounts and proportions in the year since the district was established. It is logical to assume that any division of assets would be calculated on the following basis: The collection system and related equipment could be logically divided based on geographic placement. The plant and related infrastructure represents a fixed asset which cannot be physically divided between each of the cities. As a result, any division of ownership between the two cities which reflected historical contributions by the residents of the two areas would need to be based on a formula combining two factors: . . The geographic and political jurisdiction location of the customer base for the system over the 20 plus years which DSRSD has been in operation. This would need to include proportional consideration of sewer fees paid by customers from each of the two poli- tical jurisdiction areas over the years since the district has been in operation. . . A comparable anaTysis of the location from which connection fees have been generated. . . Analysis would need to factor out contract related revenues including contributions paid by both Pleasanton and the U. S. Army - Camp Parks facility. It is not at all clear that data are available to support such a formula. To effectively develop such information, the following would be required: Customer location by city area for each of the years since the DSRSD has been in the sewer business. Fees paid by each customer by year by jurisdictional location of customers. -44- The same information for connection fees paid over the entire period of the district's operations. Given the years the district has been in operation, the collection and evaluation of such customer data would be a major and perhaps impossible task. In reality, any division of ownership between the two cities would be largely a formal, legal transaction. Because of the regional nature of plant operations, the cities would need to combine in some fashion to operate the plant and as previous analysis has indicated, the collection systems as well . As noted above, the most probable approach for maintaining joint operation of the system would be the establ ishment of a joint powers agency. This would raise the issue of proportional representation of each of the cities on the JPA board and proportional control of system operations in regard to fee levels, expansion plans, relationships and arrangements with other jurisdictions involved in the service delivery system, and the like. There are a variety of approaches which could be undertaken to determine proportional representation on a JPA board. These include: T Based On Proportional Ownership Of The Plant: In addition to the difficulty of defining proportional ownership noted above, such an allocation of proportional control reflects historical contributions made in the past which would change over time as each area reflects differing rates of growth and contributions to the sewerage treatment system as measured by both user and connection fees. Considering the differing rates of growth projected for the Dublin and San Ramon areas, such an approach could quickly I ead to an outdated composition of the board in regard to control of system operations. Population Base Of Each Respective Service Area: While such an approach is easily measurable, it really has no direct relation- ship with actual use of the sewer system by constituents of each of the two cities. Essentially, the financial contribution to plant operations should be the major measure to determine pro- portional control . Considering the importance of commercial and industrial users and the financial fabric of the sewer system, population represents a relatively poor choice to determine proportional control . -45- i I No matter which approach were taken, any JPA would result in one of the cities having a majority on the board with proportionally greater influence on decision making and policy formulation. The only way to avoid weighting the influence on the board from one city to the other would be to provide equal representation with or without an outside third party represented as the tie breaker. For example, this could include the City of Pleasanton which is a key partner in both current and future plant operations. . While this is a theoretical alternative, it is not at all clear that such an approach would be politically practical . Given the information presented above, the project team has concluded it would. be virtually impossible to determine the historical proportional financial contribution of the Dublin and San Ramon areas to plant and other infrastructure construction and renewal . As a result, the only real practical approach to division of treatment plant and. related system infrastructure assets should the cities pursue recreenization of DSRSD would be on a 50/50 basis. While collection system assets could be divided on a geographical basis, analysis suggests it would be most cost-effective to maintain them jointly. These factors combine to suggest that: Plant assets probably would be divided eq ua l l y in the event of DSRSD dissolution. The plant would be operated by a JPA of Dub I in and San Ramon. While a variety of approaches could be employed to determine representation on a JPA, the most practical approach would be to f o f low the 50/50 d i v i s i o n of assets ou I i ned above and provide each city equal representation. (5) Reorganization Of Sevier System Operations Would Have A Varie-�­/ Of Implications Related to Dublin and San Ramon. Transfer of responsibility for control of the sewer service frc..n -46- DSRSD to the two cities provides several opportunities and potential problems for the cities. They can be summarized as follows: It is not at all clear that assumption of responsibility would have significant positive financial impact on the general fund operations of each city. It appears that the practical overhead required to operate the plant and collection system under a JPA would involve expenditures generally comparable to the level of fund transfers currently effected by DSRSD from the sewer enterprise fund to the district general fund. Given the existence of Proposition 4 and other legislation impacting local financial operations, it is not clear that the cities could use expansion funds to subsidize general fund operations to any significant degree. To the extent that the cities transferred responsibility for system control from DSRSD to a JPA, they would increase their control over the setting of both user and connection fees. While such a step could theoretically provide the cities the opportunities to reduce constituent costs related to sewer operations, analysis of both current and future .operations under a JPA indicate that significant reductions in fee levels are not likely. Consider the following: User Fees: The sewer enterprise fund is largely operated on a break even basis. Since The project team identified no significant opportunities for cost reduction in regard to staff operations within the plant and the collection system context, and That the practical administrative structure for a JPA would require about the same commitment as enterprise funds currently transferred to the DSRSD general fund, these do not appear to be major opportunities to reduce user fees without increasing deficits in enterprise fund operations. - Connection Fees: Because of significant levels in expansion fund transfers between the sewer expansion fund and the DSRSD general fund over recent years, one could make the short-term assumption that elimination of DSRSD from the sewer system would free those expansion funds for either reduction in connection fees or increase in reserves available to support future system expansion. Analysis indicates that, because of the fluctuation in connection fees on a year to year basis, it would probably not be prudent to translate those connection fee revenues transferred to the DSRSD general fund to a reduction in connection fees if the sewer system were maintained by a JPA. Prudent management would probably require simply retaining this incremental amount within the expansion fund to support future system expansion. -47- The other potential major impact of service responsibility transition would involve providing the cities direct control over both capacity planning and capacity allocation. . The major advantage of direct city involvement In sewer system operations would involve capacity planning and allocation: The current master plan and district planning policy calls for planning the next stage expansion when the system reaches 75% of capacity. While future expansion plans are driven by the development plans and projections of each of the communities served by the District, planning for capacity still involves a "third party" outside of direct c i ty control -- an arrangement which could lead to some disagreement about whether or not city development plans and system capacity plans are consistent. Over recent months, some issues in this context have arisen regarding capacity planning for eastern lands in the Dublin sphere of Influence. D 1 rect c i ty control of both capacity and community expansion planning could be expected to eliminate the potential for such inconsistencies. As noted earlier in this report, capacity is currently allocated on a first_ come, first served basis, resulting in the cities having no certainty that they will have a specified share of available capacity to support current and short range planning and development decisions. As noted earlier, if DSRSD agreed, the cities and the district could negotiate and contractually agree on capacity allocations. With a JPA, the cities could negotiate proportional allocation of bot=h existing and future capacity as a condition of participation in that JPA -- without the necessity of negotiating with or obtaining the agreement of an independent third party. 10. WATER SERYiCE OPERATIONS COULD BE RELATIVELY CLEANLY SEVERED FROM DSRSD. Post of the complexities related to transition of sewer service operations to the two cities do not characterize potential transfer of water service operations to Dublin. Principal contributing factors include: The fact that the water service area Is limited to one jurisdiction -- Dublin. The resulting absence of the need to address the division of assets question involving an enterprise fund operation. -48- Like the sewer service system analysis presented in the previous section, any transfer of water services can be viewed in a variety of -_ contexts including: The total dissolution of DSRSD. In conjunction with the transfer of sewer service. As a single service transfer. The section which follows considers the transfer of water operations In the context of a single service transfer. (1) Severance of 'Plater Operations From DSRSD Would Probably Have Little Impact On Total Costs Of Water Service Operations Funded By The Mater Enterprise Fund. Previous sections of this report have portrayed staff involved in the water service operation in the DSRSD context. As previous analysis indicated, there are essentially two categories of staff involved in the delivery of water services: Those dedicated to water service operation and funded from water service operations on a 100% basis. Those staff shared between and among water and sewer operations. The latter fall into two categories. Contract staff. In-house staff employed by DSRSD. Any assumption of water service by Dublin could theoretically take two forms: Assumption of total control to include relocation of staff, direct management of enterprise funds, formulation of water service policy and fees by the Dublin city council , and the like. Assumption of control and policy responsibility but contracting with DSRSD for day-today maintenance and operations. -49- While the latter approach would probably be most cost effective in terms of being able to continue sharing staff among water and sewer services, interviews indicate that this would probably not be politically feasible. Representatives of DSRSD maintain that if Dublin assumes responsibility and control of water operations, then there should be a clean severance in terms of staff and day-to-day operating responsibility. As a result, the staffing and cost impact of service transfer requires the following assumptions to be developed: That staff would be transferred to employment by the City of Dublin. Like the sewer service operation, some continuity in regard to core staff needs to be maintained to ensure consistency in system operation. That the basic staffing impact of system transfer described in the following paragraphs would need to incorporate the following: That Dublin would require one individual in a management capacity for overall water service system operations. The project team feels it would be impractical to assume that the water service business could be run as an additional duty by existing staff available to the City. The basic work responsibilities related to water service operations would need to be transitioned to and accomplished by staff employed by the City of Dubl in. That the basic operating budget apart from staff expenses would be essentially the same under Dub l i n as it i s under DSRSD. That some addition to existing costs would be required involving provision of dedicated engineering staff time to replace hours currently devoted by the staff engineer assigned to the DSRSD administrative staff and funded through the general fund budget. In addition, some allowance would be needed to provide overall accounting supervision of water service operations. While day-to-day workload responsibilities would be insufficient to justify a professional accounting position on a full-time basis, analysis indicates that it would not be unreasonable to assume that approximately a -50- quarter time accountant would be required to oversee the financial aspects of customer billing and general ledger maintenance. Some allowance would need to be made to provide financial consulting assistance related to water fees and other cost-accounting questions. Such funds are currently not allocated in the DSRSD water enterprise operating budget and are provided through the district's general contract with an outside financial consultant. Illustrative analysis assumes an allowance of approximately $15,000 per year would be required for this service. - A contract would need to be provided for periodic testing of water samples currently accomplished by the lab analyst within the DSRSD operation. Such an approach is followed by many water agencies, and for the purposes of analysis is estimated at $5,000 per year. Given the assumptions noted above, Exhibit XII, which follows this page, shows the estimated staffing cost related to day-to-day operations of water sery ices i f control I ed by the Ci ty of Dubl in. Table 6 which follows compares a projected water enterprise fund oper- ating budget if Dublin controlled the service compared to the current budget for fiscal year 1985-1986 with the service provided by DSRSD. Table 6 Comparative Cost Impact Of Transferring hater Service To Dublin DSRSD If Controlled Component 85-86 Budget By Dublin Staff $ 220,000 $ 273,668 Materials/Supplies 741 ,900 741 ,900 Contract Services 88,600 88,600 Other 33,300 33,300 TOTAL $1 ,083,800 $1,137,468 As can be seen from review of the information presented in the table, there is no significant cost differential or cost savings differential if service were transferred from DSRSD to Dub[ in. -51- EXH IB IT XI I Cities of Dublin and San Ramon PROJECTED STAFFING REQUIREMENTS FOR WATER SYSTEM OPERATED BY THE CITY OF DUBLIN Cost Fringe Position Function Salary Benefits Total Water Direct day-to-day operations; $ 38,000 $ 14,827 -$ 52,827 Superintendent schedule crew activities; handle system administration; assist existing city departments with such items as required engineering, customer billing coordination, etc. Senior Operator Lead operations person/field $ 26,736 $ 11 ,448 $ 38,184 crew leader. Water Operator/ System operation/field ser- $ 50,808 $ 22,096 $ 72,904 Water Repair vice activities/computerized Worker (2) meter reading. Backflcw/new Combined responsibility for $ 31 ,476 $ 12,870 $ 44,346 connection back-flow inspection program inspector and new connection inspection. Clerk System billing input/general $ 16,908 $ 8,499 $ 25,407 clerical support for water reports/correspondence. -- Contract Main- Utility maintenance person. $15,000 $ - $ 15,000 tenance Worker TOTAL $178,928 $ 69,740 $248,668 -52- Data displayed in the table also illustrate the cost impact of ese've iinr g,, water from sewer operations. In addition to the operating cost data displayed above, other potential one time costs need to be considered and include: The assumption of unfunded pension liabilities for employees transferred from DSRSD to Dublin. At an estimate of approximately $7,000 per non-safety employee, this could contribute an additional cost of approximately $25,000 to f $30,000 to Dublin. Instrumentation related to water service operations would need to be moved from the DSRSD plant to Dublin. Th i s represents a one time cost of $30,000. In addition, a facility would need to be provided to accommodate instrumentation. While a relatively small space (approximately 10' x 10' with an air conditioned environment) would be required, it is not clear where such a facility would be provided within the Dublin complex given the existence of rented space. Additionally, some corporation yard space would be required to store the parts Inventory currently maintained for water system operations and to park vehicles. Until a facilities plan is developed far Dublin, it is difficult to determine how these requirements could be incorporated into the city's space planning. (2) Assumption Of Control Of Water Operations Would Enable Dublin To Exercise Tota l Control Over Water Service Fees and Connection Fees. The basic advantage of transfer of responsibi I ity to Dublin, from Dublin' s perspective, would involve assumption of total control over both connection fees and water rates. Since previous analysis has indicated that operating costs would be the same if Dubl i n operated the service, the only major potential to reduce water service rates would be based on some reduction in the water enterprise fund operating margin. With the exception of the loss budgeted for the current year, water enterprise fund operations over the last five years have -53- generally resulted in the generation of a positive balance even when a reserve for depreciation is considered. Since expansion funds are employed to support growth in the system, in future years, determination of the appropriate level of fund balances . in .the enterprise fund involve the amount of funds necessary to replace existing infrastructure in future years. Previous analysis has indicated that: Current depreciation is being calculated and accumulated to essentially replace infrastructure Involving pumps, Instrumentation, and vehicles. The current fund balance Is generally equivalent with replacement needs covering these items considering the depreciation schedule employed by DSRSD. - Other major system items including distribution lines and hydrants are not fully covered by the existing deprecia- tion reserve. If 1984-1985 were employed as an illustrative base, and the margin generated in the water enterprise fund for that year were cut in half to attempt to reduce water service rates, rates could have been reduced by 14% and some increase in water enterprise fund balance still achieved. Whether or not such a decrease could be maintained in future years is problemmatical and depends on total system sales and operating costs. This probably represents the maximum fee reduction which could be achieved if Dublin had control of the water service operation. The water expansion fund represents the other potential impact that Dubl in control could have on fee levels. W i th the exception of one year, over the last five years, approximately 15% of expansion fees have been transferred from the expansion — fund to the DSRSD general fund. Since cost analysis indicates that, if Dubl in assumed control of the system, such a transfer would not be necessary to off-set the cost of water service delivery, the potential would exist to either allow these Incremental portions of the expansion fund to contribute to an increase in the expansion fund reserve, or employ them to reduce expansion fees on either a one-time or continuing basis. When the expansion fund balance is compared to the total projected capital improvement requirements of the system contained in the existing water service master plan, it would appear that the most prudent short-term approach would be to retain these incremental expansion funds to accelerate the build-up of expansion fund balance available to support future capital improvement requirements. Thus, while any ultimate decision in fee levels would represent a polio decision of the Dublin city council , practical analysis indicates that: -54- It is uni ikely that Dubl in's assumption of water system operations would result in appreciable decreases in water service fees. There might be some potential to reduce expansion fees by 15% if development continues at the pace projected in Dublin. (3) Transfer of Responsibility and Control Of The Dater Service System Can Be Effected By Either Negotiation Or Formal District Recrganization Through Election. Again, like the services previously discussed I n both this report and other reports submitted by the project team, transfer of responsibility and control over water service operation from DSRSD to Dubl in could be effected under two alternative approaches as discused earlier in this report related to sewer operations. -55- I\ 9 ANALYSIS OF COST AND REVENUE IMPACT OF PARKS AND RECREATION SERVICE TRANSFER FROM DSRSD TO DUBLIN AND SAN RAMON Submitted by : February 15, 1986 Hughes , Heiss & Associates McDonald & Associates ANALYSIS OF THE COST AND REVENUE IWACT OF PARKS AND RECREATION SERVICE TRANSFER FROM DSRSD TO DUBLIN AND SAN RAMON � The purpose of the paper which follows is to present a summary analysis of the long-range impact of service and revenue transfer involved in the delivery of Parks and Recreation Services from the DSRSD to the Cities of Dublin and San Ramon. The analysis is designed to test the following assumptions and to explore the following issues: The contention of representatives of the DSRSD that other than minimal property tax transfer jeopardize both the short and long-range delivery of fire services if the responsibility for fire service delivery remains with DSRSD. Consistent with the contention noted above, the significant amounts of property tax lost by DSRSD would increase the reli- ance on both the general fund reserve and enterprise and expansion fund revenues to maintain fire service levels both now and in future years. A key issue involves the perceived uncer- tainty of maintaining high levels of expansion fund transfers to the general fund as build-out occurs and sewer and water connection fees diminish. To test these contentions and assumptions, the following analysis was accomplished: Projections of a Iikely future assessed valuation and associated property tax revenues were developed given growth projected for both Dublin and San Ramon within the service boundaries of DSRSD. Assessed valuation was projected conservatively based on the following: - All projections were couched in terms of current dollar value. - The 2-1/2% assessed valuation inflator allowed under Proposition 13 was not incorporated into the analysis. - The analysis assumed no property turnover and attendant increases in total assessed valuation as a result of reassessment at the time of sale. - Growth in assessed valuation assumed incremental increases resulting from new development in both the Dublin and San Ramon areas falling within the boundaries of DSRSD and no annexation was incorporated into projections. -1 - Once total assessed valuation was projected, net property tax revenue to the District was calculated based on the assumption that the District would receive an average of 19% of each property tax dollar generated in both the Dublin and San Ramon areas falling within the District's service boundaries. Then, the impact on each of the involved jurisdictions of various property tax transfer scenarios were calculated both now and in future years. High, medium, and low-range scenarios pre-'. sented in Hughes, Heiss and Associates' report covering the transfer of park and recreation services were employed to calculate the illustrative impact of service and revenue transfer. The paragraphs which follow summarize the results of this analysis: 1 . PLANNED DEVELOPMENT WILL SIGNIFICANTLY EXPAND ASSESSED YALUATION IN THE DSRSD SERVICE AREA OVER THE NEXT TEN YEARS. Exhibit I, which follows this page, shows projected growth in assessed valuation by jurisdiction within the DSRSD service boundaries over the next ten years. The analysis incorporates the assumptions previously presented and assumes build-out In the 1995-1996 period. As shown In the exhibit, total assessed valuation and resulting property taxes available to the DSRSD general fund can be expected to increase by acre than 751 expressed in terms of current dollars. 2. GIVEN EXISTING INFRASTRUCTURE, THE COSTS OF DSRSD GENERAL FUND SUPPORTED SERVICES CANNOT BE EXPECTED TO INCREASE AT COMPARABLE RATES. To estimate the cost and revenue impact of the various scenarios described above, it was necessary to estimate future DSRSD general fund costs before any consideration of service transfer is made. In analyzing the current mix of general funds supported • services within the District, the following assumptions were made: -2- EXHIBIT I Cities of Dublin and San Ramon PROJECTEE; ASSESSED VALUATION AND PROPERTY TAX REVENUE -- DUBLIN AND SAN RAMON SERVICES DISTRICT Fiscal Year Projected Assessed 1985- 1986- 1987- 1988- 1989- 1990- 1991- 1992- 1993- 1994- 1995- Valuation 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 Based on areas falling within DSRSD boundaries 1 with no annexation by - - - - - - - - - - - - - - - - - Projected Assessed Valuation - - - - - - - - - - - - - - - - - - - - - - - - - - - w either city or district Expressed in (000). i over planning period. Dublin 5706,690* $773,185 5839,680 $906,175 $972,670 $1,039,165 $1,105,660 $1,172,175 $1,238,670 $1,305,165 51,371,660 San Ramon 652,330* 680,521 708,712 736,903 765,094 817,785 844,967 872,191 899,454 926,756 954,094 DSRSD TOTAL $1,359,020 $1,453,706 $1,548,392 $1,643,078 51,737,764 $1,856,950 $1,950,627 52,044,366 52,138,124 $2,231,921 12,325,754 Total Property $13,590 $14,537 515,484 $16,431 517,378 $18,570 $19,506 $20,444 $21,381 $22,319 523,257 Tax i DSRSD Property Tax 2,518** S2,762 $2,942 $3,122 $3,302 $3,528 53,706 $3,884 $4,062 $4,241 54,419 Revenue at Increment of 19% of Property Tax Dollar ' *Estimated **As projected In DSRSD fiscal year 1985-1986 budget. A Even with growth, significant expansion in general fund supported services does not appear to be highly likely. Essentially, the basic fire service infrastructure needed to serve the area is currently In place i n terms of both stations and on-duty engine companies and other support and service units. Analysis indicates that no increase in basic fire suppression staffing will be required to accommodate growth in future years. Some increase in support staff should be expected and is dealt with below. - For analytical purposes, it is assumed that park/recrea- tion/aquatic's expenses will be in constant in terms of current dollars over the course of the planning period. Significant increases in the size and scope of District. administrative/legislative expenses should not be expec- ted. Basic administrative, support, and engineering staff will not be required to be expanded in any significant fashion over the planning period. Given the above, to project expected future costs for all DSRSD general fund supported services, the following assumptions were developed and employed: That the District would add a full-time Finance Officer position when the Fire Chief retires. For illustrative purposes, it was assumed that this Increase in adminis- trative staffing would occur during fiscal year 1987-1988. It was assumed that basic fire department fire suppression staffing would remain constant over the planning period, but that there would be modest increases to both administrative and fire prevention staff. It was assumed that two positions would be added over the planning period, Including a Fire Marshall/Assistant Chief and a Fire Inspector. Given these assumptions, Exhibit 11, which follows this page, shows projected general fund service costs over the planning period. Costs are projected by major program, assumptions related to cost increases are noted, and total general fund service costs expressed in current dollars are listed for each year over the planning period through fiscal year 1995-1996 . -4- EXHIBIT II Cities of Dublin and San Ramon PROJECTED GENERAL FUND COSTS -- DSRSD Program Legislative/Administratlon _ Fire Service Parks/Recreation/Aquatics COST Fiscal Year Cost Assumptions Cost Assumption Cost Assumptions TOTAL Budget 1985-1986 $672,500 - $2,455,400 - $931,300 - S4,059,200 1986-1987 672,500 - 2,455,400 - 967,400 Illustrative Increase to 4,095,300 reflect need to reserve/ expend funds to deal with estimated renewal require- ments of facilities -- parks/aquatics 1987-1988 722,500 Assumes retirement of 2,507,900 Addition of Fire 967,400 4,197,800 . 1 Joint Fire Chief/ Inspector position �n Finance Officer and 1 addition of Finance Officer fully charged to General Fund 1988-1989 722,500 - 2,507,900 967,400 4,197,800 1989-1990 722,500 - 2,507,900 Addition of Fire 967,400 4,197,800 Marshall/Assistant Chief Level position 1990-1991 722,500 - 2,567,200 967,400 4,257,100 i 1991-1992 722,500 - 2,567,200 967,400 4,257,100 1992-1993 722,500 - 2,567,200 967,400 4,257,100 1993-1994 722,500 - 2,567,200 967,400 4,257,100 1994-1995 722,500 - 2,567,200 967,400 4,257,100 1995-1996 722,500 - 2,567,200 967,400 4,257,100 1 3. CONSERVATIYE ASSUMPTIONS WERE ALSO EMPLOYED TO PROJECT FUTURE DSRSD GENERAL FUND REVENUES OVER THE PLANNING PERIOD. Exhibit III, which follows this page, contains basic projections of DSRSD general fund revenues over the planning period through fiscal year 1995-1996. it should be clearly understood that conservative assumptions were employed to project future general fund revenues by basic revenue source. These major assumptions include the following: All revenues are expressed in terms of current dollars with no consideration of inflation. As a result, they are projected on the same basis as costs described in the preceding section. Basic property tax revenue before any revenue transfer associated with parks and recreation services are drawn from the previous analysis presented in Exhibit I . It is assumed that interest earnings on general fund balances and general fund cash deposits will decline moderately over the planning period -- reflecting the potential further decrease in interest rates as well as some potential decrease in total general fund reserves if deficit spending Is required for several years. Aquatics and recreation user fees are projected at a constant level over the planning period. Since these revenues will be removed frcm total District general fund revenue sources consistent with the transfer of parks and recreation service responsibility, they are largely irrelevant to the long-range analysis of the impact of service transfer and property tax transfer on the remaining District general fund revenue sources and costs. The analysis assumes a steady decline in expansion fund trans- fers . to the general fund as build-out occurs and water and sewer connection fees decline. The only increase in enterprise fund transfers to the general fund is associated with an increase in total general fund administrative costs related to the establishment of the full-time Finance Officer position in District administration. It is assumed that only a portion of the increase in cost related to the Finance Officer position would be offset by enterprise fund transfers given the current District approach of employing a formula to calculate annual enterprise fund transfers necessary to support overall administrative and legislative activities. -6- EXHIBIT III Clues of Dublin and San Ramon PROJECTED GENERAL FUND REVENUES -- DSRSD Revenue by Source Solid Waste Solid Waste Enterprise Expansion Property Interest Aquatics and Franchise Importation Fund Fund Revenue Fiscal Year Tax Earnings Rec. User Fees Fee Surcharge Transfers Transfers Total Assumptions 1985-1986 12,517,800 $250,000 $113,000 $115,000 $84,000 $411,200 $450,000 $3,941,000 - 1986-1987 2,762,000 200,000 113,000 - 84,000 411 ,200 450,000 4,020,200 Franchise fee lost as cities assume franchisor role. J 1987-1988 2,942,000 190,000 113,000 - 84,000 450,000 405,000 4,184,000 Enterprise transfers Increase to 1 reflect Increase in DSRSD admin. costs 1988-1989 3,122,000 180,000 113,000 - 42,500 450,000 360,000 4,267,500 San Francisco importation fee expires -- revenue lost. 1989-1990 3,302,000 180,000 113,000 - - 450,000 315,000 4,360,000 Annual decrease In expansion fund revenue to reflect build-out Impact. 1990-1991 3,528,000 185,000 113,000 - - 450,000 270,000 4,546,000 - 1991-1992 3,706,000 190,000 113,000 - - 450,000 225,000 4,684,000 1992-1993 3,884,000 200,000 113,000 - - 450,000 180,000 4,827,000 - 1993-1994 4,062,000 200,000 113,000 - - 450,000 135,000 4,960,000 - 1994-1995 4,241,000 200,000 113,000 - - 450,000 90,000 5,094,000 - 1995-1996 4,419,000 200,000 113,000 - - 450,000 45,000 5,227,000 - s 4. COST AND REVENUE PROJECTIONS WERE THEN COMBINED INTO A TEN-YEAR FORECAST OF THE STRUCTURE AND CONTENT OF DSRSD GENERAL FUND OPERATIONS. Exhibit IV, which follows this page, combines the previously developed general fund cost and revenue projections into a summary projection of general fund operations prior to any transfer of service or property tax revenue for DSRSD. It should be noted that this represents an extremely conservative projection of DSRSD general fund operations. Using budgeted costs and revenues for fiscal year 1985-1986 as a base results in the projection of a general fund operating deficit for the first three years of the planning period. While this reflects budgeted performance for the current fiscal year, review of historical trends in DSRSD operations suggests that projection of a continued operating deficit reflects an extremely conservative posture and is not consistent with past operations. In most fiscal years since the passage of Propo- sition 13, actual District expenditures have significantly lagged those projected in the budget and end of year results have included increase in the general fund unexpended reserve virtually every year since the passage of Proposition 13 . Nevertheless, even with these very conservative bases for projections, comparison of projected costs and revenues indicates that, over the ten- year period, early deficits will be eliminated and total general fund revenues -- largely based on growth in property tax revenues -- will significantly exceed general fund operating cost requirements : over the majority of the ten-year planning period. Assuming no transfer of either services or property tax revenue, revenues can be expected to exceed costs by nearly $1 million at the end of the ten-year planning year with a cumulative contri- bution to either the general fund reserve or allocation for capital improve- ments totaling $3.8 million over the projected ten-year planning period. -s- EXHIBIT IV Cities of Dublin and San Rem on I rtc v clvuc JU COS rllw�n( FOR USRSD E EFCFt SERVICE OR PRCPERTY TAX TRANSFER Cumulative Projected Projected Surplus us Impact on Fiscal Year Revenue Cost P General (Def icit) Fund Reserve 1985-1986 $3,941 ,000 $4,059,200 ($118,200) ($118,200) 1986-1987 4,020,000 4,095,300 (75,300) (193,500) 1987-1988 4,184,000 4,197,800 (131800) (207 I' ,300) ° 1988-1989 4,267,500 4, 197,800 69,700 ( 137,600)' 1989-1990 4,360,000 4,197,800 162,200 24,600 1990-1991 4,546,000 4,257,100 288,9D0 313,500 1991-1992 4,684,000 4,257,1CO 426,900 740,400 1992-1993 4,827,000 4,257, 100 570,800 1 ,311 ,200 1993-1994 4,960,000 4,257,100 702,900 2,014,100 1994-1995 5,094,000 4,257,100 836,900 2,851 , 100 1995-1996 5,227,000 4,257,100 969,900 3,820,900 -9- 5. UNDER ANY OF THE PROPERTY TAX TRANSFER SCENARIOS ASSOCIATED WITH TRANSITION OF PARKS/RECREATION/AQUATIC SERVICES TO THE TWO CITIES, GROWTH IN ASSESSED VALUATION AND REMAINING PROPERTY TAXES WILL MORE THAN OFFSET SHORT-ffERM REVENUE LOSSES AND PROTECT THE DELIVERY OF FIRE SERVICES WITHIN THE DSRSD SERVICE AREA. Exhibit V, which follows this page, shows the impact of property tax transfers related to the transition of parks/recreation/aquatic services to the Cities of Dublin and San Ramon from the DSRSD employing three property tax transfer scenarios. The first scenario is based on the maximum property tax transfer from DSRSD to the two cities highlighted in Hughes, Heiss and Associates, report on the transfer of parks and recreation services. It is predicated on a 24,10 transfer of total property tax from DSRSD to the two cities. The second scenario involves the mid-range of the six scenarios presented by Hughes, Heiss and Associates. It is predicated on a 19.7$ property tax transfer. The third scenario represents a low-range property tax transfer and approximates the perceived policy position of the DSRSD Board regarding relating parks and recreation services to general fund property tax revenues. It reflects a 12.8% property tax transfer. Review of the information presented in Exhibit V indicates that, under any of the scenarios, even with the loss of property tax revenue to the two cities, growth in remaining property taxes more than offsets the impact of any property tax transfer and provides a significant general fund surplus early in the ten- year planning period. Under any of the three scenarios, DSRSD reliance on non- property tax resources for supporting fire services diminishes sharply early in the ten-year planning period. Additionally, under any of the scenarios, the cumulative and positive balance when general fund costs and revenues are compared Is substantial . This indicates that even the high property tax transfer scenario results in a relatively minimal impact on the DSRSD' s ability to support re- maining general fund services without substantial reliance on "uncertain" general fund revenue sources at any point in the ten-year planning period. -10- EXHIBIT V Cities of Dublin and San Ramon COST REVENUE IMPACT OF TRANSFERRING PARKS/RECREATION AND AQUATICS SERVICES ON DSRSD BASED ON HIGH, MEDIUM, AND LOW PROPERTY TAX TRANSFER SCENARIOS I . HIGH PROPERTY TAX TRANSFER SCENARIO Assumption: (1) Parks/Recreatlon/Aquatics services transferred to Dublin-San Ramon as of January 1, 1987. (2) As a result, DSRSD has .=arks/Recreation for one-half of, flscai year 1986-1987 and absorbs costs and revenues related to parks/ recreation/aquatics operations for the full fiscal year. (3) After January 1 , 1987, all parks/recreation/aquatics related costs removed from DSRSD budgets. Represents cost reduction of $483,700 In fiscal year 1986-1987 and 5967,400 In each year thereafter. (4) Post January 1 , 1987, all parks/recreatlon/aquatics related fee and contract revenue transferred to the cities along with the service. This represents a revenue reduction of $56,500 In user fees In fiscal year 1986-1987 and $113,000 each year thereafter. I (5) Under this first Illustration, the "high" property tax transfer scenarios developed as Scenario One (pages 37-38) In the Hughes, I Helss and Associates December 15, 1985 report analyzing transfer of recreatlon/parks/aquatics services Is employed. This scenario was based on transfer of 24,026% of total property tax to the cities along with responsibility for delivery of parks/ recreatlon/aquatics services. Cost/Revenue Impact: DSRSD Cost Revenue Per Year 1985-1986 1986-1987 1987-1988 1988-1989 1989-1990 1990-1991 1991-1992 1992-1993 1993-1994 1994-1995 1995-1996 Projected Costs $4,059,200 $4,095,300 $4,197,800 $4,197,800 $4,197,800 $4,257,100 $4,257,100 $4,257,100 $4,257,100 $4,257,100 $4,257,100 Less Parks/Aquatics - 4831700 967,400_ 967,400 967,400 967,400 967,400 967,400 967,400 967,400 967,400 Net Costs $4,059,200 $3,611 ,600 13,230,400 $3,23(11400 $3,230,400 $3,289,700 $3,289,700 $3,289,700 $3,289,700 $3,289,700 $3,289,700 Revenues Projected Revenues $3,941,000 $4,020,000 $4,184,000 $4,267,500 $4,360,000 $4,546,000 $4,684,000 $4,827,000 $4,960,000 $5,094,000 $5,227,000 Less Property Taxes Transferred - (339,726) (723,732) (768,012) (812,292) (867,888) (912,000) (955,464) (999,252) (1,043,286) (1,087,074) Less Recreation/ Aquatics Fees - (56,5001 (113,000) (113,000) (113,000) (113,000) (113,000) (113,000) (113,000) (113,000) Net Revenues $3,941 ,000 $3,623,774— 13,347,268- $3,3861488 $3,434,708 $3,565,112 $3,659,000 $3,758,536 $3,847,748 $3,937,714 $4,026,926 Surplus/Deficit ($118,200) $12,174 $116,868 $156,088 1204,308 $275,412 $369,300 $468,836 $558,048 $648,014 $737,226 Cumulative Impact on General Fund Reserve ($118,200) ($106,026) $10,842 $166,930 $371,238 $646,650 $1,015,950 $1,484,786 $2,042,834 $2,690,848 53,428,074 Net General Fund Reserve EXHIBIT y (2) 2. MEDIUM PROPERTY TAX TRANSFER SCENARIO Assumptions: (1) Same as Assumptions 1-4 as described In the first section. (2) Under this second Illustration, the mid-range property tax transfer described In the Hughes, Helss and Associates report (pages 38-40) Is employed. This scenario Is based on a transfer of 19.7% of total property tax. Cost/Revenue Impact: DSRSD Cost-Revenue Per Year 1985-1986 1986-1987 1987-1988 1988-1989 1989-1990 1990-1991 1991-1992 1992-1993 1993-1994 1994-1995 1995-1996 Net Costs (See Sec- tion 1 for details) 14,059,200 13,611 ,600 13,230,400 13,230,400 53,230,400 13,289,700 13,289,700 13,289,700 13,289,700 13,289,700 13,289,700 Revenues Projected Revenues 13,941,000 14,020,000 14,184,000 $4,267,500 14,360,000 14,546,000 14,684,000 14,827,000 14,960,000 15,094,000 15,227,000 Less Property Taxes Transferred - (5272,057) (1579,579) (1615,034) (1650,494) (1695,016) (1730,082) (1765,148) (1800,214) ($835,477) (870,543) Less Recreatlon/ Aquatics Fees - (156,500) (1113,000) (11131000) (5113,000) (1113,000) (1113,000) (1113,000) (1113,000) ($113,000) (1113,000) Net Reserves 13,941 ,000 S3_,691 44 f3,491,426 53,559,466 13,596,506 13,737,984 13,840,918 £3,948,852 14,046,786 14,145,523 14,243,457 Surplus (Deficit) (1118,200) 179,843 1261,026 $309,066 1366,106 1448,284 1551,218 1659,152 1757,086 $855,823 1953,757 I N Cumulative Impact on General Fund Reserve (1118,200) (538,357) $222,669 1531,735 1897,841 11,346,125 $1,897,343 12,556,495 13,313,581 14,169,404 15,123,161 3, LOW PROPERTY TAX TRANSFER SCENARIO Assumptions; (1) Same as Assumptions 1-4 as described In first section: (2) Under this third Illustration, the low-range property tax transfer described In the Hughes, Heiss and Associates report (pages 45A-45B) Is employed (12.8%). Cost/Revenue Impact: 6 OSRSD Cost Revenue Per Year 1985-1986 1986-1987 1987-1988 1988-1989 1989-1990 1990-1991 1991-1992 1992-1993 1993-1994 1994-1995 1995-1996 Net Costs See Sec- tion I for details) $4,059,200 13,611,600 $3,230,400 5_3x230,400 13,230,400 13,289,700 13,289,700 $3,289,700 13,289,700 53,289,700 13,289,700 Revenues Projected Revenues 13,941 ,000 £4,020,000 14,184,000 $4,267,500 14,360,000 $4,546,000 $4,684,000 $4,827,000 14,960,000 15,094,000 15,227,000 Less Property Taxes Transferred - (176,768) (376,576) (399,616) (422,656) (451 ,584) (474,368) (497,152) (519,936) (542,848) (565,632: Less Recreation/ Aquatics Fees - (52,500) (113,000) (113,000) (113,000) (113,000) (113,000) (113,000) (113,000) (113,000) (113,000' Net Revenues 13,941,000 53,790,732 53,694,424_ 13,7541884 £3,824,344 £3,981 ,416 14,096,632 14,216,848 $4,327,064 £4,438,152 S4,548,3bo Surplus (Deficit) (1118,200) 1179,132 1464,024 1524,484 £593,944 $691,716 $806,932 $927,148. S1,037,364 $1,148,452 11,258,66E Cumulative Impact L A on General Fund (1118,200) 160,932 1524,956 11,049,440 11,643,384 12,335,100 13,142,032 14,069,180 15,106,544 16,254,996 17,513,664 Reserve Exhibit VI, which follows this page, shows the impact of property tax transfers under the various scenarios on both Dublin and San Ramon. Principal elements displayed in the Exhibit include the following: The cost impact of absorbing parks and recreation services on each of the two cities -- again, employing current dollars and projecting no basic increase in costs over the planning period. Showing those parks and recreation related fee revenues which would accrue to each of the two cities upon service transfer -- based on information presented in the Hughes, Helss and Associates parks and recreation report. Potential property taxes transferred to each of the titles under the various property tax transfer scenarios presented in Exhibit V. Property tax revenues are, again, expressed In terms of current dollars, and reflect differential rates of growth for the two communities based on projected increases in assessed valuation developed based on expected growth rates for each community. Review of the information presented in Exhibit Yl indicates that only the high property tax transfer scenario results in both cities avoiding the need to subsidize parks and recreation services with other general fund revenue sources beyond those received through property tax transfer. Udder the first scenario, the positive impact on Dublin is significantly greater than San Ramon due to a higher property tax base within the DSRSD service boundaries and a slightly higher rate of growth in total assessed valuation. Under the medium and low property tax transfer scenarios, the City of San Ramon would be required to subsidize parks/ recreation/aquatic services from other general fund revenue sources over the entire ten-year planning period. Under the medium property tax transfer scenario, Dublin would "break even" approximately mid-way through the planning period and at the end of the ten-year period, would be in a positive situation when total costs and .property tax revenues and other parks and recreation related fee revenues are considered. Under the low-range transfer favored by DSRSD, both cities would be in a negative cumulative and annual position for the ten-year planning period. -13- EXHIBIT VI Cities of Dublin and San Ramon IMPACT OF ALTERNATIVE PROPERTY TAX TRANSFER SCENARIOS SCENARIOS ON PARKS/RECREATION/AQUATICS COST REVENUE POSITIONS OF THE TWO CITIES 1 . HIGH PROPERTY TAX TRANSFER Cost/Revenue Impact: DSRSD Cost Revenue Per Year 1986-1987 1987-1988 1988-1989 1989-1990 1990-1991 1991-1992 1992-1993 1993-1994 1994-1995 1995-1996 Dublin Park/Recreation/ Aquatics Costs £215,500 £431,000 $'31 000 £431 000 $431 ,000 £431 ,000 £431 ,000 £431 ,000 £431,000 £431 ,000 Property Tax Revenue 5176,477 $383,309 1413,910 $444,OT8 $474,372 5504,727 $535,091 5565,445 $595,800 £626,155 Fees 20,500 41 ,000 41 ,000 41,000 41 ,000 41 ,000 41,000 41 ,000 41 ,000 41 ,000 Revenue Total £196,947 $424,309 $454,910 $485,018 $515,372 $545,727 $576,091 $606,445 5636,800 £667,155 Surplus (Deficit) ($18,523) ($6,691) $23,910 $54,018 $84,372 $114,727 $145,091 5175,445 $205,800 $236,155 Cumulative Surplus (Deficit) ($18,523) (£25,214) ($1,304) $52,714 £137,086 $251 ,813 $396,904 $572,349 $778,149 $1,014,304 San Ramon Park/Recreation/ Aquatics Costs $220,500 £441 ,000 _5441 ,000 _£441 ,00_0_ 5441 ,000 $441 ,000 $441 ,000 £441 ,000 $441 ,000 £441 ,000 Property Tax Revenue $155,322 $323,536 5336,182 $349,321 $373,265 £385,676 $398,079 $410,491 $423,143 £435,554 Fees $36,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 P Revenue Total $191 ,322 $3951536 $408,182 $421 ,321 $445,265 £457,676 £470,079 £482,491 $495,143 $507,554 i Surplus (Deficit) (529,178) (£45,464) (532,818) (519,679) $4,265 $16,676 $29,079 $41 ,491 £54,143 $66,554 Cumulative Surplus (Deficit) ($29,178) ($74,642) ($107,460) ($127,139) ($122,874) ($106,198) ($77,119) ($35,628) ($18,515) (£85,069) 2. MEDIUM PROPERTY TAX TRANSFER Cost/Revenue Impact: 1986-1987 1987-1988 1988-1989 1989-1990 1990-1991 1991-1992 1992-1993 1993-1994 1994-1995 1995-1996 Dublin c Park/Recreation/ Aquatics Costs 5215,500 £431 ,000 $431 ,000 $4311000 $431 ,000 $431 ,000 1431,000 $431 ,000 $431 ,000 1431 ,000 Property Tax Revenue 5144,702 5314,292 $339,383 £364,070 £388,959 $413,848 5438,745 5463,634 $488,523 $513,412 Fees $20,500 £41 ,000 £41 ,000 $41 ,000 £41 ,000 $41 ,000 $41 ,000 $41 ,000 541 ,000 $41 ,000 Revenue Total £165,202 $355,292 $380,383 £405!070 $429,959 $454,848 £479,745 5504,634 $529,523 5554,412 Surplus Deficit) ($50,298) ($75,708) ($50,617) ($25,930) ($1,041) $23,848 $48,745 £73,634 $98,523 $123,412 Cumulattive Surplus (Deficit) (£50,298) ($126,006) ($176,623) ($202,553)(5203,594) (£179,746) ($131,001) (£57,367) $41 ,156 $164,568 San Ramon Park/Recreation/ Aquatics Costs $220,500 £441,000 £441,000 $441 ,000 £441,000 £441 ,000 $441 ,000 $441 ,000 £441 ,000 £441 ,000 Property Tax Revenue $127,355 $265,282 $275,651 £286,424 £306,057 £316,233 5326,403 $336,580 5346,954 $357,131 Fees $36,000 $72,000 $72,000 £721000 £72,000 $72,000 $72,000 $72,000 $72,000 $72,000 Revenue Total $163,355 £337,282 £347 651 £358_,42.1 £378,057 $388,233 $398,403 £408,580 $418,954 5429,131 Surplus (De flclt) ($57,145) (£103,718) (£93,349) (£82,576) ($62,943) ($52,767) (£42,597) ($32,420) (£22,046) (511,869) Cumulative Surplus (Deflclt) (£57,145) ($160,863) (;254,212) (£336,788)(5399,731) ($452,498) ($495,095) ($527,515) (£549,561) ($561,430) EXHIBIT VI (2) 3. ' LOW PROPERTY TAX TRAIISFER Cost/Revenue Impact: DSRSD Cost - Revenue Per Year 1986-1987 1987-1988 1988-1989 1989-1990 1990-1991 1991-1992 1992-1993 1993-1994 1994-1995 1995-1996 Dublin Parks/Recreatlon/ Aquatics Costs $215,500 £431 ,000 £431,000 £431,000 £4311000 £431 ,000 5431 ,000 5431,000 $431,000 £431 ,000 Property Tax Revenue 194,019 $204,210 $220,513 5236,553 $252,725 5268,897 $285,073 5301,245 5317,416 $333,588 Fees 520,500 £41 ,000 $41 ,000 141 ,000 _5"00 £41 ,000 $41,000 541,000 541 ,000 $41 ,000 Revenue Total 11141519 12451210 1261 ,513 £277,553 9293,725 1309,897 5326,073 $342,245 $358,416 $374,588 Surplus (Deficit) (5100,981) (1185,790) ($169,487) (S153,447) (5137,275) ($121,103) (5104,927) (188,755) ($72,5fi4) ($52,412) Cumulative Surplus (Deficit) ($100,981) (5286,771) ($456,258) (1609,705) (1746,980) ($868,083) (1973,010) ($1,061,765) ($1,134,349) ($1,190,851) 1 San Ramon Parks/Recreation/ Aquatics Costs $220,500 5441 ,000 $4411000 £4411000 5x41 ,000 $441 ,000 1441,000 £4_411000 5441 ,000 $441 ,000 Property Tax Revenue 182,749 $172,366 $179,103 5186,103 $198,859 1205,471 $212,079 5218,691 $225,432 $232,044 Fees 136,000 572,000 $72,000 572,000 $72,000 £72,000 172,000 $72,000 $72,000 $72,000 Revenue Total $118,749 £2441366 $251,103 £258,103 62701859 $277,471 $2841079 $290,691 5297,432 5304,044 Surplus (Deficit) (5101 ,751) (5196,634) (5189,897) (£182,897) ($170,141) (1163,529) (5156,921) ($150,309) (1143,568) ($136,956) Cumulative Surplus (Deficit) (5101,751) (1298,385) ($488,282) (1671,179) ($841,320) (51,004,849) (51,161,770) ($1,312,079) ($1,455,647) (51,592,603) Again, it should be noted that, under any of the property tax transfer scenarios, DSRSD will be in a significantly positive situation when costs and I property tax revenues are considered over the ten-year period. This results in the identification of two key issues related to the negotiation of property tax transfers involving the transfer of parks and recreation services to the two cities: That available evidence, based on extremely conservative planning assumptions, Justifies pursuit of a property tax transfer scenario which minimizes the need for each of the cities to subsidize parks and recreation services with incremental revenues drawn from other general fund revenue sources at the time of service transfer. Also raises the issue of disposition of the general fund reserve currently maintained by DSRSD. Over the years since the passage of Proposition 13, the unallocated or unappropriated general fund reserve has grown substantially. While end-of-year audits are still unavailable for fiscal year 1984-1985, It is likely that the amount of the unallocated general fund reserve is in the vicinity of $2.5 million exclusive of reserves for capital replacement, insurance funds, and the like. One can assume that these reserves have been built by moderating previous expenditures on parks and recreation services provided by the DSRSD as well as the installation of capitai irnprovcirients or upgrading for existing park facilities. Since previous analysis has indicated that there is a significant amount of required capital improvements to renew and maintain existing facilities, one could clearly make the argument that any transfer of service responsibility frcm the District to the two cities should include both transfer of existing property taxes sufficient to support the services without significant subsidy by the two cities, as well as transfer of a portion of the District's general fund reserve to enable the cities to install capital improvements currently planned by the District. -16-