FINAL DRAFT PLAN FOR SERVICES & FEASIBILITY ......2016/10/22 · Final Draft, October 22, 2016 1 1. INTRODUCTION AND SUMMARY This Study evaluates the financial feasibility and governance

r ichard@berksonassociates .com| 510.612.6906| www.berksonassociates .com

FINALDRAFT

PLAN FOR SERVICES & FEASIBILITY STUDY

LOS OLIVOS WATER RECLAMATION

PreparedfortheLosOlivosWaterReclamationSteeringCommittee

PreparedbyBerksonAssociates

October22,2016

FinalDraft,October22,2016


TABLE OF CONTENTS

CHAPTER1.INTRODUCTIONANDSUMMARY.................................................................................1 SummaryofFindings

CHAPTER2.OVERVIEWOFTHECOMMUNITY................................................................................9DemographicsandLandUseAssessedValueandExistingTaxes

CHAPTER3.GOVERNANCEOPTIONS............................................................................................14StatusQuo................................................................................................................................14

FormaCommunityServicesDistrict(CSD)...............................................................................14FormaCounty–dependentSpecialDistrict..............................................................................19

AnnextoSantaYnezCSD(SYCSD)............................................................................................24 SantaYnezWaterConservationDistrictID-1...........................................................................29

CHAPTER4.WASTEWATERSYSTEM..............................................................................................30PreliminarySystemCapitalCostsOperatingCosts

CHAPTER5.DISTRICTBUDGET......................................................................................................35 OperatingExpenditures OperatingRevenuesandRates

CHAPTER6.CAPITALEXPENDITURESANDFUNDING....................................................................38 CapitalFinancing



TABLE OF CONTENTS (CONT’D)

FIGURESANDTABLES

Figure1LosOlivosSpecialProblemsArea.....................................................................................3

Figure2ComponentsofaMembraneBioreactorSystem...........................................................30

TableS-1EstimatedOverheadandAdministrativeCosts-NewLosOlivosCSD...........................5

TableS-2EstimatedAnnualAssessmentsforSystemConstruction(FullBuildout)......................6

TableS-3TotalAnnualCostsbyOrganizationalOption(w/NewDevelopment)............................7

Table1SummaryofAssessedValueinLosOlivos......................................................................12

Table2ExistingBasic1%PropertyTaxandAdditionalBonds....................................................13

Table3EstimatedOverheadandAdministrativeCosts-LosOlivosCSD....................................17

Table4EstimatedOverheadandAdministrativeCosts-CSA/County-dependentSpecial

District.............................................................................................................................23

Table5EstimatedOverheadandAdministrativeCosts–SYCSDAnnexation.............................27

Table6EstimatedCapitalCostsandAllocationsforaCommunityWastewaterSystem............32

Table7EstimatedAnnualSystemOperatingCostsandAllocations...........................................34

Table8EstimatedOverheadandAdministrativeCosts–LosOlivosCSD...................................35

Table9EstimatedTotalAnnualAdmin.andOperatingCostsandRates–LosOlivosCSD.........37

Table10EstimatedCapitalCostAllocations–LosOlivosCSD......................................................39

Table11EstimatedAnnualAssessments–LosOlivosCSD...........................................................41

APPENDICES

A.SummaryofSewerRatesintheRegion


www.berksonassociates.com 1

1. INTRODUCTION AND SUMMARY ThisStudyevaluatesthefinancialfeasibilityandgovernanceoptionsofonepotentialcommunitywastewatersystemsolutionforLosOlivos.TheStudycomparesthecostsandbenefitsofthreedifferentgovernanceoptions:formationofaLosOlivosCommunityServicesDistrict(CSD);annexationtotheSantaYnezCommunityServicesDistrict(SYCSD);andthecreationofaCounty-dependentspecialdistrictgovernedbytheBoardofSupervisors.

ThewastewatertreatmentsystemcostsusedinthisStudyarefromtheSeptember2016studyupdatetoa2013Countysponsoredfeasibilitystudy.1The2016studyanalyzedaMembraneBioreactorsystem(MBR)thatwouldservetheentirecommunityandaccommodatesomeexpansionofexistingusesanddevelopmentofvacantlotsinthecommercialcore,or“downtown”.The2016studyalsodescribedcostsforindividualonsiteadvancedtreatmentsystems.Unlikethe2013study,the2016studydidnotevaluatea“Phase1”systemthatwouldbelimitedtothecommercialcoreandsmalllotresidences,andwhichcouldcostsignificantlyless.Asnotedinthisfinancialfeasibilitystudy,a“downtown”MBRsystemshouldbeanalyzedasonemethodtoprovideamorefinanciallyfeasiblesystem,inadditiontootherpotentialcostreductions;thisapproachassumesthatresidentialpropertiesoutsidethecorecouldbeservedbyonsiteadvancedtreatmentsystemsuntilexpansionofthecoresystembecomesviable.

CostestimatesforgovernanceoptionsweredevelopedbyBerksonAssociates(BA)basedonreviewofbudgetsforsimilardistricts;discussionswithSYCSD,CountyPublicWorks,andotherdistricts;andBAexperiencewithsimilaranalyses.Itisanticipatedthatthesecostestimateswillberefinedastheprocessmovesforward.

In1974,SantaBarbaraCountydesignatedaLosOlivosSpecialProblemsArea(SPA),withboundariesasshowninFigure1,duetopotentialadverseimpactsofwastewatertreatmentanddisposalinthearea.AdditionalCountyreviewisrequiredfordevelopmentprojectswithintheSPAtomitigateanypotentialimpactstopublichealth.PropertyuseisfurtherlimitedbywastewaterflowrestrictionsthatmaybeimposedbytheCentralCoastRegionalWaterQualityControlBoard(RWQCB).

In2010,theCountyadoptedaWastewaterManagementPlan(WWMP)toaddressonsitewastewaterissuesintheSPA.Theseissuesincludeaseasonallyhighgroundwatertablethat

1RevisionstoLosOlivosWastewaterSystemPreliminaryEngineeringReport,September13,2016,AECOM



allowsdischargeofsomesepticeffluentdirectlyintothewatertable;manysmalllotsofinsufficientsizetoproperlyaccommodateanonsitesepticsystem;manyexistingsepticsystemsthatdonotmeetcurrentcoderequirements,andduetoageorfailurenolongertreateffluentproperly.WellandgroundwatertestingdocumentedintheWWMPconfirmshighgroundwaternitratelevelsinareasoftheSantaYnezValley.

InJanuaryof2016theSantaBarbaraCountyOnsiteWastewaterTreatmentSystemLocalAreaManagementPlan(LAMP)2wentintoeffect,andincludespermit,inspectionandreportingelements.ApermitissuedbyEHSisrequiredfortheconstructionofanewOnsiteWastewaterTreatmentSystem(OWTS)aswellastherepair,modificationorabandonmentofexistingsystems.InspectionandapprovalofallworkbyEHSisrequiredpriortobackfillinganycomponentsorputtingthesystemintoservice.3

TheCountyWWMPidentifiedacommunitywastewatertreatmentsystemasonepossiblemethodtotreatwastewaterandprovideanoptionforreplacingfailingsystems,particularlyonsmalllotsthatcannolongersupportanonsitesystemthatmeetscurrentcodes.Acommunitysystemwouldalsoenableredevelopmentandmodestexpansionofcurrentuses,aswellasnewdevelopmentonvacantlotswithintheconstraintsimposedbythearea’scommunityplan.Currently,thereisinsufficientrestroomaccessinthetown’scommercialcoretoaccommodatevisitorsontheweekendyear-round;portablerestroomsareprovidedtoservevisitorsrestrictedfromuseofbusinessrestrooms.

In2013,theCountysponsoredaPreliminaryFeasibilityStudy(PFS)ofwastewatertreatmentanddisposaloptions4inresponsetothe2013enactmentofStateWaterResourcesControlBoard’sWaterQualityControlPolicyregulatingonsitesystems.5ThisStatepolicyaffectsbothcommercialandresidentialsystems.AFocusedFeasibilityStudy(“FFS”)datedSeptember2016providesamoredetailedanalysisofonetreatmentsystemreviewedinthe2013study,6althoughdidnotevaluatealowercostsystemlimitedtothedowntownasafirstphase.

2cosb.countyofsb.org/uploadedFiles/phd/EHS/CH%20EHS%20LAMP%20Plan%20Document.pdf3cosb.countyofsb.org/phd/default_all.aspx?id=19274&menu2id=174&pghead=18958&footer=189604LosOlivosWastewaterSystemPreliminaryEngineeringReport(PreliminaryFeasibilityStudy,or”PFS”),AECOM,January8,2013

5AdoptedpursuanttoAssemblyBill885.6RevisionstoLosOlivosWastewaterSystemPreliminaryEngineeringReport(“FFS”),AECOM,September13,2016





SUMMARY OF FINDINGS

1.UNDERTHESTATUSQUO,THEABILITYOFSMALLLOTHOMEOWNERSTOUPGRADETHEIRSYSTEMTOMEETTODAY’SMORERESTRICTIVESTANDARDSMAYBECONSTRAINED.Withoutanewcommunitywastewatersystem,propertyownerswillberesponsible,attheirowncost,fortheinstallation,upgrade,maintenanceandrepair/replacementofindividualadvancedonsitetreatmentsystemstomeetCountyandStatewaterqualitystandardsiftheirsystemsfailortheyproposearemodelornewdevelopment.Thecommunitywouldalsobeexposedtoadditionalregulatoryactionifgroundwaterqualityconcernspersist.Stategrantsorlowinterestloansmaybeavailabletofundonsitesystems,however,alocalgovernanceentityisneededtoadministertheprogramandmanagepotentialclusteredsystems.

The2016FFSdescribesmodificationstoexistinghouseholdsepticsystemstoprovideincreasedtreatmentofwasteusingapeatfilter.Thesystemrequirestheadditionofapumpvault,peatfilteranddrainfieldatanestimatedcostof$17,640perhouseholdandannualmaintenancecostof$895.7However,the2016FFSstatesthat“..manyhousesmaynothavetherequiredspacetoinstallthepeatfilterwhichwouldresultintheneedforamorecompactandhighercostsystem”.Costscouldvarydependingondesign,providerandpotentialclustering.

2.ADMINISTRATIVECOSTSVARYMODESTLYBETWEENTHEGOVERNANCEOPTIONS.Theoveralladministrativecostsofthethreegovernanceoptionsstudiedvaryby$75,000annuallywhenatreatmentsystemisinplace.AnnexationtotheSYCSDorcreationofaCounty-dependentspecialdistrict(e.g.,aCountyServiceAreaorsanitationdistrict),arelikelytohaveloweradministrativecoststhananewCommunityServicesDistrict(CSD),rangingfromanestimated$114,000to$124,000annuallybecauseofeconomiesofscale.TheSYCSDandCounty-dependentspecialdistrictoptionscouldprovideaccesstotechnicalandfinancialresourcesnototherwisereadilyavailabletoaCSD.

ALosOlivosCSDisestimatedtocostfrom$110,000annuallypriortosystemoperation,to$189,000annuallywhenasystemisinplaceasshowninTableS-1.TheCSDwillhaveitsown

72016FFS,AECOM,Section3.2.1.Otherestimatesofonsitesystemsindicatecostscouldbecloserto$25,000.



board,elections,officespaceandequipmentandwillberequiredtoprepareannualfinancialauditsandreports,andmaintainitsownwebsite;theseexpensescontributetothegreatercostsestimatedforthisoption.ItmaybepossibleforaCSDtocontractorsharestaffwithotheragenciestoachievesavings.Chapter5describesCSDcostassumptionsinmoredetail.

TableS-1EstimatedOverheadandAdministrativeCosts-NewLosOlivosCSD

3.CONSTRUCTIONANDOPERATINGCOSTSFORAWASTEWATERSYSTEMCOULDBEPROHIBITIVEFORANYGOVERNANCEOPTIONUNLESSCOSTSAVINGSCANBEACHIEVED,ADDITIONALREVENUESOBTAINED,ORTHESYSTEMISPHASED.CoststoplanandconstructthecommunitywastewatersystemservingallofLosOlivoswouldtotalnearly$21million,orabout$40,500to$45,700persingle-familyunit(orcommercialequivalent)dependingontheamountofexistingandnewdevelopmentthatconnectstothesystem.8Thissystemwouldservetheentirecommunityincludingnewdevelopment;the2013AECOMstudyanalyzedamorelimitedsystemservingonlythecommercialcoreandadjacentsmallerparcelhomes,withtheabilitytoexpandtoserveotherareas,atlessthanhalfthetotal

8RevisionstoLosOlivosWastewaterSystemPreliminaryEngineeringReport,September13,2016,AECOM

Item FirstYear

AdministrationBoard 6,000

Legal 20,000

Accounting/Finance 15,000

OfficeSpace,Utilities 0

Equip/Supplies/Internet 2,500

Memberships 3,000

OtherOverhead/Admin. 10,000

Subtotal(exc.Staff) 56,500

Admin.StaffSalaries/Benefits $54,000

TOTALExpenditures $110,500perResidentialUnitEquivalent(RUE) $283

perRUEpermonth $24

AnnualAmountBuildout

6,000

20,000

15,000

15,000

5,000

3,000

17,000

81,000

$108,000

$189,000$376

$31

AnnualAmount



cost.9The2016studyonlyanalyzedacommunity-widebuildoutscenario;aphasedapproachwhichprovidesalowertotalcostsystemforthedowntownshouldbeanalyzedasonemeans,inconjunctionwithadditionalgrantorotherfunding,andsystemcostrefinements,toimprovefinancialfeasibility.

Constructioncostreductionsof25percentormorearepossiblewithcarefulplanning,resultingincostsof$33,500to$37,800.10TableS-2summarizesannualassessmentsforconstructionandfinanceofacommunitywastewatersystem,whichareassumedtobethesameforallgovernanceoptions.Theannualassessmentassumesalow-interest,40-yearUSDAloanthatiscommonforsimilarsmallsystems.Thetotalcostsarespreadtoallexistingandnewdevelopment.Atargetcostreductionscenariodescribedinthe2013AECOMstudyassumes$1.5millioningrantsandareductionin“Engineering,Admin.&Legal”costfactorfrom35%to20%.

TableS-2EstimatedAnnualAssessmentsforSystemConstruction(FullBuildout)

Costreductionswillbeparticularlyimportanttoreduceadministrationandsystemoperationscoststoapointwhereratesarecomparabletoothertertiarytreatmentsystemsintheregion.Includingpossiblesavingssuggestedinthe2013PFS,upto50%operatingcostreductionsmaybepossibledependingonfinalsystemdesignandwhetheroperationscanbecontractedtoa

9Largerresidentiallotsoutsidethecommercialcorepotentiallycouldbeservedbyonsitesystems.10Basedontargetcapitalcostreductionscenariosandpotentialoperatingcostreductionsindicatedinthe2013AECOMfeasibilitystudy.

Item CSD CSASYCSD

Annexation

SYSTEMCONSTRUCTION

TOTALImprovementCosts $21,019,000 $21,019,000 $21,019,000

AnnualAssessmentforConstructionperRUE $1,809 $1,809 $1,809AnnualAssessmentper1,000Com'lSq.Ft. $2,601 $2,601 $2,601

AnnualAssessmentforConstructionw/savingsAnnualAssessmentforConstructionperRUE $1,461 $1,461 $1,461AnnualAssessmentper1,000Com'lSq.Ft. $2,100 $2,100 $2,100



larger,lowercostagency.Asnotedpreviously,aphasedapproachthatservesonlythedowntowncouldresultinalower-costsystem.

Ifoperatingcostreductionscanbeachieved,annualratesforadministrationandsystemoperationscouldrangebetween$910to$1,060orabout$76to$88permonth,dependingonnewdevelopmentconnectingtothesystem,governanceoption,andmannerofcontractingforservices,asshowninTableS-3.Theseoperatingchargesaregenerallyconsistentwithotherwastewaterratesintheregionfortertiarytreatment.11TableS-3alsoshowstotalannualcostsincludingadministration,operations,andassessmentsforsystemconstruction.

TableS-3TotalAnnualCostsbyOrganizationalOption(w/NewDevelopment)

Theactualrateswilldependonthefinalsystemdesignandwhetheritservesthedowntownonlyortheentirecommunityatbuildout,furtherengineeringanalysis,anddecisionstobemadebyafuturegoverningboard.Theestimatedcostallocationsinthisanalysisassumeagreatereffluent“strength”fromcommercialwastewaterandthereforecostallocationstocommercialusesareproportionatelygreater.Forexample,theSYCSDchargesrestaurantsahigherrate(6timesaresidentialrate)for“dirtier”wastewater,inadditiontogreaterflows.Certain

11SeeAppendixA.

Item CSD CSASYCSD

Annexation

OPERATIONS(inc.Administration)AnnualO&MperResidentialUnitEquivalent(RUE) $1,741 $1,611 $1,592AnnualO&Mper1,000Com'lSq.ft. $830 $768 $759

AnnualO&Mw/savingsAnnualO&MperRUE $1,058 $929 $909AnnualO&Mper1,000Com'lSq.ft. $504 $443 $433

TOTALANNUALCOSTSFOROPERATIONS+CONSTRUCTIONASSESSMENTSTotalperResidentialUnitEquivalent $3,550 $3,420 $3,401Annualper1,000Com'lSq.Ft. $3,431 $3,369 $3,360

TotalCostsw/savingsTotalperResidentialUnitEquivalent $2,519 $2,390 $2,370Annualper1,000Com'lSq.Ft. $2,605 $2,543 $2,534



equipmentneededtohandlepeaktouristflowscanalsobeallocatedtocommercialuses,whichwouldreducethecapitalandoperatingcostsbornebyresidentialuses.

4.ACSDOFFERSTHEGREATESTDEGREEOFLOCALCONTROLOVERTYPE,LEVEL,ANDCOSTOFWASTEWATERTREATMENTSERVICES.AnindependentCommunityServicesDistrict(CSD)wouldbegovernedbyaboardofdirectorselectedbytheresidentsofLosOlivostomanagetheplanning,constructionandoperationofacommunitywastewatersystem.TheCSDwouldalsoprovidealocalgovernanceentitythatcouldrepresentthecommunityinnegotiationswithotherserviceproviders,forexample,tocontractforadministrativeand/oroperationalserviceswithanotherentitysuchastheCountyorSYCSD.Ifconnectiontoaregionalwastewatersystemprovestobeamoreviableoptionthanacommunitysystem,theCSDcouldrepresentthecommunity’sinterestsinregionalplanningandimplementationefforts.

Whiletheonlyserviceconsideredatthistimeistheprovisionofwastewater-relatedservices,theCSDcouldexpanditsservices,withSantaBarbaraLocalAgencyFormationCommission(“LAFCO”)12approvalandsubjecttoprotestproceedingsoflocalvoters.AlltaxesandassessmentswouldbesubjecttoapprovalbyvotersorpropertyownerswithintheCSD.

Unlikeothergovernanceoptions,aLosOlivosCSDwouldcontroldecisionsaboutthesystem,itscostandcapacitytoallownewdevelopment.Incontrast,theothergovernanceoptionswouldresultinaboardrepresentingabroaderconstituencycontrollingservicesandrates.Forexample,inthecaseofannexationtotheSYCSD,theSYCSDboardwouldvoteondecisionsaffectingLosOlivos,andLosOlivoswouldconstituteaminorityofvoterswithintheexpandeddistrict.

12Statelawcreatesalocalagencyformationcommissionineverycountytoconsiderannexations,cityincorporations,andspecialdistrictformations.TheSantaBarbaraLAFCOismadeupoftwomembersoftheBoardofSupervisors,twomembersfromthecounty’sspecialdistricts,twomembersfromthecounty’scities,andapublicmemberchosenbytheremainderoftheboard.



2. OVERVIEW OF THE COMMUNITY

DEMOGRAPHICS AND LAND USE ThecensuspopulationoftheLosOlivosCensusDesignatedPlace(CDP)is1,132residents.13TheCDPencompassesaslightlylargerareacomparedtotheSpecialProblemsArea(SPA)andtheTownship.The2016FFSbaseditssystemdesignonthehigherpopulation,andassumedminimalgrowthovertime;thisapproachhelpstoassurethatadequatecapacitywillexistforpotentialdemandoverthenexttwentyyears.

AccordingtotheSantaYnezValleyCommunityPlanEIR,thereare228,990squarefeetofdevelopedcommercialfloorareainLosOlivos.14Thecommercialspaceconsistsofamixofhotel,retail,restaurantsandofficespace.Thereareapproximately25smalllotresidentialpropertiesinthecommercialcore.

POTENTIALNEWDEVELOPMENTAsaresultofrestrictivestandardsadoptedbytheRegionalWaterQualityControlBoardin1991,commercialprojectsinLosOlivosarelimitedtoverylowwaterusesandmanyproposedprojectsareeventuallywithdrawn.15AcommunitywastewatersysteminLosOlivos,inadditiontoaddressingexistingthreatstosurfaceandgroundwaterresources,willalsoenablesomelevelofcommercialexpansionintheLosOlivoscore.

The2016FFSassumesapproximately120,500squarefeetofnewcommercialdevelopmentinthecommunity.Thisassumptionprovidesforsomeexpansionofexistingusestoincluderestroomfacilities,andconversionofofficeusestomorewater-intensiveusessuchasrestaurants,aswellasdevelopmentofvacantparcelsinthecommercialcore.Additionaldevelopmentwouldreducecapitalandoperatingcoststoexistingpropertyowners.

TheMBRwastewatersystemanalyzedbythe2016FFScanadjustitscapacityifneededtoaccommodateadditionalnewdevelopmentbeyondthe120,500squarefeet.ThegoverningbodyoftheLosOlivoswastewatersystemwoulddeterminetheamountandtimingofwastewatercapacityexpansion.132010census.14Table4.9-24,EIR,pg.4.9-26.15SantaYnezCommunityPlan,October9,2009,pg.115.



Mattei'sTavernInnDevelopmentPlanThedevelopmentandexpansionofMattei’sTavernInncouldparticipateinthenewcommunitywastewatersystem;however,thecurrenttimelineforfinalapprovalanddevelopmentofMattei’sisuncertainatthistime,anditisnotknownwhetherthestartofitsconstructionwillcorrespondwiththetimingofacommunitywastewatersystem.

Theproject,approvedbytheCountyPlanningCommissiononJanuary30,2013,consistsofa64-guestroomcottagehotel,agym,spa,swimmingpoolandameeting/banquetroomlocatedadjacenttotheexistingMattei'sTavernInn.TheProject’sapprovalsrequireittoconnecttoacommunitywastewatersystem,ifoneisavailableatthetimeofconstruction;otherwise,theProjectwillneedtoconstructitsownonsitesystemwithnofurtherobligationtoconnecttoafuturecommunitysystem.16TheProjectisanticipatedtogenerateabout10,000gpdofwastewaterthatwouldreceivetertiary-leveltreatmentandbeusedforonsiteirrigation.17

Afterreceivingitsapprovals,thepropertysubsequentlywassold,andthenewownerisintheprocessofrevisingthePlanandgoingthroughareviewprocess.Changesincludeaddingtwomoreroomsandreconfiguringthesiteplan,andreducingchangestointeriorsofexistinghistoricstructures.TheCountyhasnotyetdeemedtheapplicationcomplete;oneoftheoutstandingissuesisthestatusoftheProject’swastewatersystem,whichneedsconceptualapprovalbytheRegionalWaterQualityControlBoard(RWQCB).Someoftheconcernsregardingthewastewatersystem,whichdiffersfromtheoriginalapprovedPlan,arewhetherlandscapeirrigationisanappropriateuseforthetreatedeffluent,whetheralldisposalcouldoccuronsite,andifnot,whatoptionsexistforoffsitedisposal.DependingontheoutcomeofRWQCBreview,additionalenvironmentaldocumentationmayberequiredaswellasaPlanningCommissionhearing.IftheProjectisdeemedtohavenoadditionalenvironmentalimpacts,itisanticipatedthatitcouldbeapprovedatastafflevelwithnofurtherpublichearingsrequired.Thepossibilityexiststhatthepropertyownercouldreverttotheoriginalapproveddevelopment.18

16CountyofSantaBarbaraPlanningandDevelopment,http://sbcountyplanning.org/projects/09DVP-00019/index.cfm

17CountyofSantaBarbaraPlanningandDevelopment,http://sbcountyplanning.org/projects/09DVP-00019/index.cfm

18R.BerksondiscussionwithJoyceGerber,Planner,CountyofSantaBarbaraPlanningandDevelopmentDepartment



SantaYnezValleyCommunityPlanTheSantaYnezValleyCommunityPlanEIRanalysisofwastewatergenerationindicatesthepotentialforatotalof1millionsquarefeetofcommercialusessplitbetweenretailandnon-retailuses.19However,thislevelofdevelopmentwouldrequiresignificantincreasesindensitythatmayrequire20yearsormorebeforeeconomicconditionsjustifyincreasedmulti-storydensity.

TheCommunityPlandiscussesanumberofapproachestoaddresswastewaterissuesinthearea,includingacommunitywastewaterfacilitysuchasthesystemevaluatedbyAECOM,andapublicsewerextensiontoLosOlivossuchasasewerextensionandconnectionfromtheCityofSolvangortheChumashtreatmentfacilitytoserveBallardandLosOlivos.

TheCommunityPlannotedthatasewerextensionfromtheCityofSolvangortheChumashtreatmentfacilityraisessignificantpolicyconcernsandpotentialenvironmentalimpactsassociatedwithextendingurbanservicesthroughagriculturallands.20ComprehensivePlanpoliciesintheLandUseandAgriculturalElements,aswellasLocalAgencyFormationCommission(LAFCO)policiesdiscourageextendingsewerservicetoruralareasbecausesuchextensionscanencouragedevelopmentintensificationthatisincompatiblewithinagriculturalareas.TheCommunityPlanalsonotesthat“sewerextensionalongtheAlamoPintadocorridorwouldalsobeinconsistentwithSantaYnezValleyCommunityPlanpolicies,whichrecognizeandsupporttheSantaYnezValleyCommunityPlanpolicieswhichrecognizeandsupportpreservationofdistinct,andseparateurbantownships,andthepreservationandenhancementofagricultureasavitalcomponentoftheValley’seconomyandruralcharacter.”

19Table4.9-20,EIR,pg.4.9-24.20SantaYnezValleyCommunityPlan,October6,2009,pg.118.



ASSESSED VALUE AND EXISTING TAXES Table1indicatestheassessedvalueintheLosOlivosarea.Thistotalvalueprovidesameasureoffeasibilitywhencomparedtothedebtissuancerequiredforawastewatersystem,andtotheannualassessmentpayments.ThesecomparisonsarediscussedinChapter6.

Table1SummaryofAssessedValueinLosOlivos

LandUse Parcels AssessedValue

ResidentialRuralResidential 49 naSingleFamilyResidence 282 $133,328,000ResidentialIncome2-4Units 5 $4,277,000

Total 336 $137,605,000

Commercial 57 $63,390,000

Vacant 23 $4,184,000

Other(non-taxable) 6 $0

TOTAL 422 $205,179,000

Source:SantaBarbaraCountyAssessorsOffice,OnlineParcelDetails,2016.

ParcellistprovidedbyLosOlivosReclamationCommittee.

BoundariescorrespondtoSpecialProblemsArea.Ruralresidentialexcluded.



EXISTINGTAXESANDASSESSMENTSInLosOlivos,propertyownerspayforseveralschoolbondsinadditiontotheirbasic1%ofassessedvalue.ThepaymentsareshowninTable2.Thebondsincreasethebasicpropertytaxbillbyabout7.5%,foracombinedrateof1.075%ofassessedvalue.

Table2ExistingBasic1%PropertyTaxandAdditionalBonds

Theserelativelylowexistingtaxoverridesprovideadditionalfinancialcapacityforwastewatersystemassessments.Industrystandardsgenerallimitcombinedadvaloremandtaxoverridestoamaximumof1.8to2.0%oftotalassessedvalue.

Fund Rate

0000Basic1%(Prop13/AB8)Taxes 1.00000%

7251-LosOlivosElemBond1996 0.01974%

7255LosOlivosElemBond2006 0.03000%

9421AllanHancockCCBond2006 0.02500%

Total 1.07474%

Source:CountyofSantaBarbara,Auditor-Controller'sOffice



3. GOVERNANCE OPTIONS

Construction,managementandoperationofanewwastewatersysteminLosOlivosrequireagovernmentagency.Thecharacteristics,advantagesanddisadvantagesofseveralprimaryoptionsunderconsiderationaredescribedbelow.

STATUS QUO Withoutanewwastewatersystem,propertyownerswillberesponsible,attheirowncost,fortheinstallation,upgrade,maintenanceandrepair/replacementofindividualsystemstomeetCountyandStatewaterqualitystandardsiftheirsystemsfailortheyproposenewdevelopment.Thecommunitywouldalsobeexposedtoadditionalregulatoryactionifgroundwaterqualityconcernspersist.Stategrantsorlowinterestloansmaybeavailabletofundadvancedonsitetreatmentsystems,however,alocalgovernanceentityisneededtoadministertheprogramandmanagepotentialclusteredsystems.

The2016FFSdescribesmodificationstoexistinghouseholdsepticsystemstoprovideincreasedtreatmentofwasteusingapeatfilter.Thesystemrequirestheadditionofapumpvault,peatfilteranddrainfieldatanestimatedcostof$17,640perhouseholdandannualmaintenancecostof$895.21However,the2016FFSstatesthat“..manyhousesmaynothavetherequiredspacetoinstallthepeatfilterwhichwouldresultintheneedforamorecompactandhighercostsystem”.Costscouldvarydependingondesign,providerandpotentialclustering.

FORM A COMMUNITY SERVICES DISTRICT (CSD) ACommunityServicesDistrict(CSD)isaspecialdistrictformedunderCalifornialaw.22SincetheenactmentoftheCommunityServicesDistrictLawinthe1950s,morethan300communitieshaveformedcommunityservicesdistrictstoachievelocalgovernance,provideneededpublicfacilities,andsupplypublicservices.23ThecurrentstudyassumesthataCSDwouldbelimitedtowastewaterandrecycledwater-relatedservices,butitcouldprovideagovernanceframeworkforotherservicesinthefuture.AnynewserviceswouldrequireSantaBarbaraLAFCOapproval

212016FFS,AECOM,Section3.2.1.22Gov.CodeSec.61000-61250.23Gov.CodeSec.61001(a)(4).



andpotentiallyvoterapprovalofanytaxorassessmentrequiredtofundtheservices,andwouldbesubjecttoaprotestvote(greaterthan50%protestwouldstoptheproceedings).

FORMATIONANDGOVERNANCECSDformationmaybeinitiatedbyresolutionoftheCountyBoardofSupervisors,24orbyapetitionsignedbynolessthan25percentofregisteredvoterslivingwithintheproposeddistrictboundaries.25LAFCOapprovalisrequired.Eithermajorityvoterapprovalorvoterorpropertyownerapprovalof,respectively,aspecialtaxorassessmentmaybenecessarytogeneratesufficientrevenuetocarryoutitspurposes.26

TheCSD’selectedBoardofDirectorswouldestablishpoliciesfortheoperationofthedistrict.An“independent”CSDelectsitsfiveboardmembersfromresidentsofthedistrict.

SERVICESThisStudyassumesthataCSDwouldprovideservicesthatincludethecollection,treatmentanddisposalofwastewaterandrecycledwater.CSDsalsomayprovideabroadrangeofotherfacilitiesandservices,forexample,parksandrecreation,landscapemaintenanceandlighting.27Otherservicesthatmaybeactivatedatafuturetime(“latent”services)wouldbesubjecttoapprovalbyLAFCO28andaprotestvote(greaterthan50%protestwouldstoptheproceedings).WiththeexceptionoffundinganAreaPlanningCommission,aCSDhasnoauthorityoverlandusedecisions;thispowerremainswiththeCounty.

ZONESWhenevertheboarddeterminesthatitisinthepublicinteresttoprovidedifferentservices,providedifferentlevelsofservice,providedifferentfacilities,orraiseadditionalrevenueswithinspecificareasofthedistrict,itmayformoneormorezones.Azonemaybeapplicabletothe

24Gov.CodeSec.61013(a).Itcouldalsobeinitiatedbyotherspecialdistricts,suchasSantaYnezRiverWaterConservationImprovementDistrictNo.1,buttheCountyisconsideredthemostlogicalagencytoinitiateaproposal.

25Gov.CodeSec.61011.26Gov.CodeSec.61014(e)(2).27SeeGov.CodeSec.61100,whichliststheservicesthatCSDsareauthorizedtoprovide.28Gov.CodeSec.61106.



extentthatadditionalservicesareconsideredfortheLosOlivoscommercialcore,whichwouldpayforthoseserviceswithouttaxingotherareas.

REVENUESANDEXPENDITURESACSDhasbroadauthority.Itcanestablishratesandchargesforservices29andreceivegrantandotherrevenuesfromotherpublicagencies.30Thedistrictmaylevyspecialtaxesorbenefitassessments.31Adistrictmaycharge“standbycharges”forsewerthatallowsforthecollectionofaservicechargeorassessmentbasedonthebenefitderivedfromtheavailabilityofsewer,whetherornottheserviceisutilized.32AdistrictmayissueGeneralObligationbonds(nottoexceed15percentofthedistrict’sassessedvalue),33revenuebonds,andMello-RoosCommunityFacilitiesDistrictbonds.34Allchargesandfeesarerequiredtoequalthecostoftheserviceorfacility;utilityservicechargesmaybeadoptedandincreasedthroughtheProposition218majorityprotestprocess.Alltaxesrequirevoterapprovalorallowforaprotestprocess.

OperatingCostsEstimatedsystemoperatingcostsarebasedonAECOMestimatesfortheproposedsystemdescribedinChapter4.Theoperatingcostsincludestaff,suppliesandequipment,andreservesforreplacement.ItisassumedthatallgovernanceoptionswouldincursimilarcostsforoperationofthesystemandwouldallocateandbillthosecoststotheLosOlivosratepayers.Thebilledcostsalsowouldincludeadministrativeandoverheadchargesasdescribedbelow.

AdministrationandOverheadCSDcostestimatesassumeapart-timegeneralmanagerandsecretary/treasurer;thesepositionsmaybecontracted.TheCSDwouldalsorequirecontractservicesforlegalandfinancialreporting.Asmall500squarefootofficespaceisassumed,plusutilitiesandofficeequipment/supplies.CSDhearingswouldbeheldinalocalschoolorsimilarfacility.

29Gov.CodeSec.61115.30Gov.CodeSec.61016.31Gov.Code61121-2232Gov.Code61124,pursuanttotheUniformStandbyChargeProceduresAct,Chapter12.4(commencingwithSection54984)ofPart1ofDivision2ofTitle5.

33Gov.CodeSec.61126,pursuanttoArticle11(commencingwithSection5790)ofChapter4ofDivision5ofthePublicResourcesCode.

34Gov.CodeSec.61126-27.



Theinitialyearspriortowastewatersystemoperationswillprimarilyrevolvearoundplanning,communityworkshopsandconsensusgathering,seekinggrantsandotherfunding,andspecialstudies.Itisanticipatedthattherewillbenoneedforofficespace,andthatstaffrequirementswillbeless.Table3illustratesapotentialbudget.Theinitialcostscouldbefundedthroughsomecombinationofcommunitycontributionsandassessments.Actualcostswilldependonthefinalsystemdesignanddecisionstobemadebyafutureboard.

Table3EstimatedOverheadandAdministrativeCosts-LosOlivosCSD

Item FirstYear Buildout

AdministrationBoard 6,000 6,000 (3)Legal 20,000 20,000Accounting/Finance 15,000 15,000OfficeSpace,Utilities 0 (5) 15,000 (1)Equip/Supplies/Internet 2,500 (6) 5,000Memberships 3,000 3,000OtherOverhead/Admin. 10,000 17,000 (2)

Subtotal(exc.Staff) 56,500 81,000Admin.StaffSalaries/Benefits $54,000 (5) $108,000 (4)

TOTALExpenditures $110,500 (5) $189,000perResidentialUnitEquivalent(RUE) $283 (7) $376 (7)perRUEpermonth $24 $31

(1)Assumes500sq.ft.at$2.50permonth.(2)Other/Contingencyat10%ofotheradmincostsinc.staff.(3)Assumestipendof$100/month,5boardmembers.(4)50%GM/Operatorat$100k,50%Sec'yTreasurer$60k,+35%taxes,benefits.(5)Assumesfirstyear(ormore)primarilyplanningwithnooperationalstafforcontractstoadminister;50%staffassumed,andnoofficespacerequired.(6)Equipment/Supplies/Internetreducedfirstyearduetonoofficespace.(7)ResidentialUnitEquivalentsare"LoadAdjusted"forcommercialstrengthfactor.

AnnualAmount



FINANCIALCONTROLSANDACCOUNTABILITYTheCSDBoardmustadoptanannualbudget,andmayestablishseparatereservefundsfromcontingenciesandcapital.AnnualindependentfinancialauditsandreportstotheStatearerequired.

ADVANTAGESANDDISADVANTAGESOFFORMINGACSDGovernance

• Pro:ALosOlivos-electedBoardofDirectorsprovidesgreaterlocalcontrol.Bycontrast,annexationtoalargerdistrict,suchastheSYCSD,orformationofaCounty-dependentspecialdistrictgovernedbytheBoardofSupervisorswouldresultindecisionsbeingmadebygoverningboardsinwhichLosOlivosisasmallconstituency.

• Pro:ACSDcouldrepresentthecommunityintheplanningandimplementationprocessifaregionalwastewatersystemprovestobeamoreviableoptionthanalocalcommunitysystem.

• Con:Relativelysmalldistrictscanhavedifficultyattractingqualifiedboardmembers.However,LosOlivoscurrentlyappearstobenefitfromstrongcommunityparticipationbyresidentswitharangeofprofessionalskillsandexperience.

• Con:Theboardofasmalldistrict,whichislimitedtoresident,couldbemoreeasilydominatedbyspecialinterestswhoseneedsdivergefromothercommunityinterest;forexampleinLosOlivos,thecommercialcorehasauniquesetofneedsthatdifferfromsurroundingresidentialareas.Thispotentialissuemaybemitigatedbythecreationofzonestohelpassurethatresidentialareasdonotpayforservicesneededincommercialareas,andviceversa.

Services

• Pro:ALosOlivosCSDcouldtailorservicestotheneedsofthelocalcommunity.ItwouldnotbesubjecttodecisionsmadetothebenefitofalargercommunityofinterestthatmaydivergefromtheneedsofLosOlivos.Asnotedabove,thelatterissuemaybemitigatedbythecreationofaLosOlivos“zone”ifannexedtoSYCSD,althoughzonelimitationsmayalsolimittheabilitytoexpandtherangeandtypeofservicesprovidedinLosOlivos.

• Pro:ACSDcouldseeopportunitiestoreduceoperatingcostsbycontractingwithalargerentity,forexample,theSYCSDortheCountyPublicWorksDepartment.

• Pro:ACSDcouldserveasthelocalgoverningentitynecessarytoobtainStategrantsandloansforupgradeofonsitesystems,whichmaybeanoptionforlargerresidentialpropertiesincombinationwithacommunitysystemservingthecommercialcore.



RevenuesandExpenditures

• Con:ALosOlivosCSDprovidesasmallerrevenuebaseatgreaterfinancialriskofadverse,unanticipatedfinancialeventsrelativetoothergovernanceoptions.

• Con:Arelativelysmalldistrictwillbenefitlessfrompotential“scaleeconomies”comparedtoalargerentitythatmaycontractatlowercosts.ThiscanbeaddressedtosomedegreebytheCSDcontractingwithalargerentitysuchastheSYCSDortheCounty.

• Con:ACSDwillincurcostsforannualauditsandfinancialreports.

FinancialControlsandAccountability

• Pro:AlocallyelectedboardconsistingofLosOlivosresidentswillbefinanciallymotivatedtominimizecosts,maximizethevalueofdistrictservicesandcontractoversightsincetheywillalsoberatepayersofthedistrict.

• Con:Annualaudits,financialreports,publicnoticinganddisclosurecanrepresentagreatercostandefforttoasmalldistrictcomparedtolargerentities,andcreateadministrativecoststhatrequirehigherfeesandrates.

• Con:Publicinformationandoutreach(e.g.,website)representrequiremoreeffortandcostbyasmalldistrictrelativetoitsstaffandfinancialresources,creatingrisksofreducedtransparencyandaccountability.

FORM A COUNTY-DEPENDENT SPECIAL DISTRICT AcommonformofCounty-dependentspecialdistrictisaCountyServicesArea(CSA),whichisaspecialdistrictformedunderCalifornialaw.35CountyServiceAreas(CSAs)mayprovideanyservicethatacountycanprovide,andarethemostcommonformofspecialdistrictinCalifornia.36AnotherexampleofaCounty-dependentdistrictisacountysanitationdistrict;unlikeaCSA,whichpotentiallycanprovidearangeofservices,asanitationdistrictislimitedtosanitation.ThisreportgenerallyreferstoaCSAduetoitspotentialforadditionalservices,however,similarissuesapplytosanitationdistricts.

TheLagunaCountySanitationDistrictinSantaBarbaraCounty,withannualrevenuesinexcessof$13million,isanexampleofaCountydependentdistrict.SantaBarbaraCountyalsomanages

35Gov.CodeSec.25210-25217.436What’sSoSpecialAboutSpecialDistricts?(FourthEdition),SenateLocalGovernmentCommittee,October2010



otherCSAsforsanitationpurposes,forexampleCSA12,butthesearegenerallymuchsmallerserviceareaslargelylimitedtorevenuecollection,andhavenofull-timestaff.

County-dependentspecialdistrictsaregovernedbytheCountyBoardofSupervisors,butmayappointanadvisorybodytoprovideinput.

FORMATIONANDGOVERNANCEACounty-dependentspecialdistrictmaybeformedbyresolutionoftheCountyBoardofSupervisors,37orbyapetitionsignedbynolessthan25percentofregisteredvoterslivingwithintheproposedboundaries.38LAFCOapprovalisrequired.39Eithermajorityvoterapprovalorvoterorpropertyownerapprovalof,respectively,aspecialtaxorassessmentmaybenecessarytogeneratesufficientrevenuetocarryoutitspurposes.40

TheCSAisgovernedbythecountyboardofsupervisors.LosOlivos’1,000residentsrepresentaverysmallpercentageofthepopulationofthecountythatelectsthesupervisors.TheboardofsupervisorsmayappointoneormoreadvisorycommitteestogiveadvicetotheboardofsupervisorsregardingaCounty-dependentspecialdistrict’sservicesandfacilities.41

SERVICESACounty-dependentspecialdistrictcanprovidearangeofservicessimilartothosethataCSDcanprovide.42CSAservicesmayincludethecollection,treatment,ordisposalofsewage,wastewater,recycledwater,andstormwater.43Iftheboarddesirestoexercisealatentpower,theboardshallfirstreceivetheapprovalofthelocalagencyformationcommission.44

ZONES37Gov.CodeSec.25211.3.38Gov.CodeSec.25211.1.39Gov.CodeSect.25211.4.40Gov.CodeSec.25211.4(f)(2).41Gov.CodeSec.25212.4.42Gov.CodeSec.25213.43Gov.CodeSec.25213(g).44Gov.CodeSec.25213.5(a),pursuanttoArticle1(commencingwithSection56824.10)ofChapter5ofPart3ofDivision3.



Whenevertheboarddeterminesthatitisinthepublicinteresttoprovidedifferentservices,providedifferentlevelsofservice,providedifferentfacilities,orraiseadditionalrevenueswithinspecificareasofthedistrict,itmayformoneormorezones.45AzonemaybeapplicabletotheextentthatadditionalservicesareconsideredfortheLosOlivoscommercialcore,whichwouldpayforthoseserviceswithouttaxingotherareas.

REVENUESANDEXPENDITURESACSAhasbroadpowers.Itcanestablishratesandchargesforservices46andreceivegrantandotherrevenuesfromotherpublicagencies.47ACSAmaylevyspecialtaxesorbenefitassessmentsforcapitalimprovementsandoperations.48Adistrictmaycharge“standbycharges”forsewerthatallowsforthecollectionofaservicechargeorassessmentbasedonthebenefitderivedfromtheavailabilityofsewer,whetherornottheserviceisutilized.49AdistrictmayissueGeneralObligationbonds(nottoexceed5percentofthedistrict’sassessedvalue)50andrevenuebonds.51Allchargesandfeesarerequiredtoequalthecostoftheserviceorfacility;utilityservicechargesmaybeadoptedandincreasedthroughtheProposition218majorityprotestprocess.Alltaxesrequirevoterapprovalorallowforaprotestprocess.

Althoughnotassumedinthecurrentanalysis,theboardmayloanCountyfundstotheCSA,contingentuponrepaymentwithinthesameyearunlesstheboardextendstherepaymentperiodby4/5thsvote.52Theboardofsupervisorsmayalsoestablisharevolvingloanfundupto$10millionforloanstoCSAs,andrepaymenttooccurwithin10years.53

OperatingCosts

45Gov.CodeSec.25217-25217.446Gov.CodeSecs.25215.4–25215.5.47Gov.CodeSec.25214.2(a).48Gov.Code25215.2–25215.3,25216.3.49Gov.Code61124,pursuanttotheUniformStandbyChargeProceduresAct,Chapter12.4(commencingwithSection54984)ofPart1ofDivision2ofTitle5.

50Gov.CodeSec.25216.1.51Gov.CodeSec.25216.1.52Gov.CodeSec.25214.4(b).53Gov.CodeSec.25214.5(a).



EstimatedoperatingcostsarebasedonAECOMestimatesfortheproposedsystem.Theoperatingcostsincludestaff,suppliesandequipment,andrepair/replacement.ItisassumedthatallgovernanceoptionswouldincursimilarcostsforoperationofthesystemandwouldallocateandbillthosecoststotheLosOlivosratepayers.Costsavingsmaybepossible,dependingonfinalsystemdesignanddecisionstobemadebyafutureboardregardingstaffing,i.e.,contractingwithprivatefirmsorsharingstaffwithotherpublicentities.

Allocatedcostswouldincludeadministrativeandoverheadchargesasdescribedbelow.

AdministrationandOverheadCSAcostestimatesassumethatexistingCountyPublicWorksDepartmentstaffwouldprovidemanagementandadministrativeservicesneededbytheCountyServiceArea(CSA)ordependentcountysanitationdistrict,andtheCountywouldapplyacostallocationtobillforservicesfromotherCountydepartments,forexample,legal,accounting,buildings,etc.

TheestimatesshowninTable4willberefinedbytheCountyifthisoptionmovesforward,andmayvarydependingonthefinalconfigurationofthewastewatersystem.

• ManagementandAdministration–Theinitialestimateassumesthat0.25FTE(approximately10hours/week)willberequiredformanagementoversightanddirection,includingcontractreview,reportingandinteractionwithratepayersandapotentiallocaladvisorycommittee,managementofanylegalissuesthatmayarise,andothermanagementtasks.Astaffcostforthemanager,includingsalary,taxesandbenefits,assumes$220,000basedonareviewofCountymanagementpositions.Administrativesupportwouldberequired;theinitialcostestimatesassumesapproximately0.20FTE,or8hours/week,atatotalcostof$120,000includingsalary,taxesandbenefits.

Actualcostsmayvarydependingonthespecificstaffrequiredandtheirsalaries;forexample,theadministrativesupportmayincludeservicesofacontracttech,andaccounting/paymentservicesfromfinancialstaff.

• IndirectCostAllocations–Thepreliminarybudgetestimateassumesa$20,000annualindirectcostallocation.TheamountwilldependontheextenttowhichtheCSAordependentcountysanitationdistrictrequiresservicesfromotherCountydepartments.Bycomparison,indirectCountychargestotheLagunaCountySanitationDistrict,whichhasrevenuesofabout$13.5million,ischargedapproximately$100,000annuallyforindirectCountyservices.

• Other–Anadditional$25,000annuallyisincludedformiscellaneousexpenses,forexample,periodicsystemmanagementreportsandotherplansandstudies,expensesrelatedtopublicinformationmaterials,andanyextraordinarylegalortechnicalservices.



Asnotedabove,wastewatersystemoperatingcostswillbesimilartotheothergovernanceoptions,dependingonspecificstaff,contractingandotherdecisionstobemadebyfutureboards,andwillbefundedbyservicechargesthatincludetheoverhead/administrationcharges.

Table4EstimatedAdministrationCosts–CSA/County-dependentSpecialDistrict

FINANCIALCONTROLSANDACCOUNTABILITYTheboardisrequiredtoadoptanannualbudget,andprovideforregularauditsofCSAaccounts.54

ADVANTAGESANDDISADVANTAGESOFFORMINGACSAGovernance

• Pro:ACSAorotherCounty-dependentspecialdistrictisconsistentwithLAFCOpolicies,secondonlytocityannexationinpriority,whichgenerallyencourageconsolidationoffunctionswithexistingagencies,anddiscouragecreationofnew,potentiallyredundantpublicentities.

• Pro:Noneedforcostsforongoinglocalelections,asrequiredforaCSD.

• Con:BoardofSupervisorsservesasCSAboard,andthereforethecommunitydoesnothavedirectcontroloftheCSA.Thiscanbepartiallyaddressedbycreationofanadvisory

54Gov.CodeSec.25214.

ItemAnnualAmount

AdministrationStaffSalaries/Benefits $79,000OtherAdmin/Overhead 45,000

TOTALExpenditures $124,000

(1)Assumes0.25FTEExec.at$220,000w/taxes,benefitsand8hrs/wkContractTech/Financeat$120,000.(2)Includes$20,000Countycostallocationforlegal,finance,etc.,and$25,000miscandcontingency.Note:CountycostallocationtoLagunaapprox.$100k.(Lagunaservicerevenuesareabout$13.5million).



bodytooverseeCSAaffairsandtoprovidedirectiontotheBoardonCSApolicyandimplementation.

• Con:ThisoptionrequiresconcurrenceandsupportbytheCountyBoardofSupervisors.

Services

• Pro:TheCounty’sPublicWorksDepartmenthastheexperienceandexpertisetomanageaLosOlivoswastewatersystem,andtoseekgrantfundingopportunities.


• Pro:ACounty-dependentspecialdistrictislikelytoprovideadministrativeandmanagementeconomiesofscaleandcostsavingscomparedtoformationofanewCSD.

• Pro:WhiletheCounty-dependentspecialdistrictisintendedtobefinanciallyself-supportingfromrevenuesgeneratedwithinitsboundaries,theCountycouldprovideshort-termloansandotherfinancingassistanceifnecessary,atthediscretionoftheBoardofSupervisors.

• Con:County-dependentspecialdistrictcostswouldincludeallocationofCountyoverheadcoststhatcouldoffset,tosomedegree,thesavingsnotedabove.


• Pro:Asnotedabove,annualfinancialauditingandfinancialreportingisprovidedaspartofoverallCountyprocess,reducingassociatedcostsandhelpingtoassuredisclosureandtransparency.Anadvisorycommitteewouldfurtherimprovefinancialreviewanddisclosure.

ANNEX TO SANTA YNEZ CSD (SYCSD) TheSantaYnezCommunityServicesDistrict(SYCSD)wasformedNovember15,1971andoperatespursuanttotheCommunityServicesDistrictAct(GovernmentCodeSection61000etseq.).55ItislocatedinnorthernSantaBarbaraCounty,primarilynorthofStateHighway246,threemileseastoftheCityofSolvangandaboutamileandahalfwestofStateHighway154,and4.5milesfromLosOlivos.

TheSYCSDisgovernedbyafive-memberboardofdirectors,electedat-large.AGeneralManagerisresponsibleforadministrativefunctions.

55SantaYnezCommunityServicesDistrictMunicipalServiceReviewandSOIUpdate,SantaBarbaraLAFCO,April2012



TheDistrictcollectsandtransportswastewater.EffluentfromtheDistrictistreatedanddisposedofbytheCityofSolvang'swastewatertreatmentplant.TheDistrict,bycontract,maintainsthecollectionlines,pumpstationandwastewatertreatmentplantfortheChumashTribeIndianReservation.TheDistrictprovidesstreetlightinginthecommunity.

ANNEXATIONANDGOVERNANCETheSYCSDcouldapplytoLAFCOfortheannexationofLosOlivos,contingentonLAFCOapprovaloftheDistrict’spendingapplicationtofirstamenditsSphereofInfluencetoincludeLosOlivos.Ifitapprovestheannexation,LAFCOwouldconductprotestproceedings,includingmailingnoticetovoters.LAFCOwouldrequireanelectionontheannexationproposalifatleast25percent,butlessthan50percent,ofvotersprotesttheannexation;aprotestof50percentormorewouldterminatetheproceedings.Iffewerthan25percentprotestisreceivedattheprotesthearing,theannexationcanproceed.56

TheSYCSDboardwouldprovidepolicydirectionandoversightofDistrictoperations,includingservicestoLosOlivos.ResidentsofLosOlivoswouldparticipateinelectionsforthefivedirectorselected“atlarge”fromtheentireterritoryoftheSYCSDincludingannexedareasofLosOlivos.LosOlivos’1,000residentswouldrepresentapproximately20percentofthecombined5,000SYCSDresidentsfollowingannexation.ParticipationontheSYCSDboardwilldependontimingofopenpositionsontheSYCSDboard.

SERVICESTheSYCSDwouldmanageandoperatetheLosOlivoswastewatersystem.ExistingSYCSDstaffwouldmanageservicesandadministrativefunctions,andexistingtechnicalstaffwouldhandleongoingmaintenancefunctions,augmentedbycontractservicesasneeded.

ZONESAsnotedfortheformationofanewCSD,iftheSYCSDboardofdirectorsdeterminesthatitisinthepublicinteresttoprovidedifferentservices,providedifferentlevelsofservice,providedifferentfacilities,orraiseadditionalrevenueswithinspecificareasofthedistrict,itmayformoneormorezones.57

56GovernmentCodeSec.57075etseq.57Gov.CodeSec.61140(a).



LAFCOTermsandConditionscouldrequirethattheSYCSDcreateaseparatezonefortheannexedterritory.AssumingLAFCOimposedsuchaterm,thiszonewouldprovidefortheestablishmentofratesspecifictoservicestoLosOlivos,andcouldalsoestablishthatservicesinLosOlivoscouldbelimitedsolelytowastewater-relatedservices.

REVENUESANDEXPENDITURESTheSYCSDwouldchargeuserfeestoLosOlivosresidentswhoareconnectedtothewastewatersystemtofundoperations,includinganallocationofSYCSDoverheadandadministrativecosts.

Inadditiontotestingandmaintenanceresponsibilities,theSYCSDwouldmanageandprovideoversightforthesystem’sconstructionandimplementation,futureconnections,andrepairandreplacement.TheDistrictwouldalsofacilitatethefundingofinitialconstructionandexpansion,includingseekinggrants,andoverseeinganyassessmentanddebtissuanceprocess.Revenuestofundmaintenanceandcapita,includingashareofSYCSDadministrationandoverhead,wouldcomeexclusivelyfromrevenuesgeneratedfromwithintheLosOlivosarea.

OperatingCostsEstimatedoperatingcostsarebasedonAECOMestimatesfortheproposedsystem.Theoperatingcostsincludestaff,suppliesandequipment,andreservesforreplacement.ItisassumedthatallgovernanceoptionswouldincursimilarcostsforoperationofthesystemandwouldallocateandbillthosecoststotheLosOlivosratepayers.Thebilledcostswouldincludeadministrativeandoverheadchargesasdescribedbelow.

AdministrationandOverheadTable5estimatestheallocationofSYCSDadministrativeandoverheadcoststoLosOlivospropertyownersproportionatetothenumberofconnections.58InadditiontooperatingandcapitalcostsfortheLosOlivoswastewatersystem,whichareaddressedseparatelyinthisreport,itisassumedthatSYCSDwouldallocateashareofthefollowingcosts:

• GeneralManagerandSecretary/Treasurer–CurrentlytheSYCSDallocatesapercentageofthecostofitsGeneralManagerandSecretary/Treasurertodifferentfunctions,includingadministration;operations;andtheTribecollectionsystemandtreatmentplant.Allocatingthesecosts(otherthantheTribe’scosts)overabroaderratebasethatincludesLosOlivoscouldimproveeconomiesofscaleandreducecoststoexistingSYCSDratepayers.TheestimatedLosOlivosallocationisbasedontheapproximatenumberofLosOlivosconnectionsrelativetototalSYCSDconnections.

58CorrespondencewithSYCSD,August31,2016.



TheLosOlivosoperatingcostswouldaccountfornearly50%ofSYCSDcosts,post-annexation,butonly33%ofconnections.This33%factorisappliedtotheGeneralManagerandSecretary/Treasurercosts(includingtaxes,benefitsandworkerscomp)currentlyallocatedtoSYCSDoperationstotaling$141,500,foranallocationof$47,200.

• OverheadContributionandAdministrativeFee–InadditiontoashareoftheGeneralManagerandSecretary/Treasurercostsallocatedtooperations,itisassumedthatLosOlivosrateswouldincludeashareofSYCSD’scurrentoverheadandadministrativecoststotalingapproximately$200,000(afterdeductingTribecontributions).A33%sharewouldallocate$66,900toLosOlivos.

Theestimatedannualcostsof$114,100allocatedtoLosOlivoswouldberefinedifthisoptionmovesforward.ActualchargeswillnotbedetermineduntiltheLosOlivossystemhasbeendesignedandtheareaincludedwithintheSYCSDSphereofInfluence.ThestaffallocationsassumethatnoadditionaladministrativeoroverheadstaffwillneedtobehiredfollowingannexationandoperationoftheLosOlivossystem,andthattheadministrativestaffcanhandletheadditionalresponsibilitieswithoutadverselyaffectingservicestoexistingSYCSDratepayers.

Table5EstimatedOverheadandAdministrativeCostAllocations-SYCSDAnnexation

Item Amount Comments

OperatingCostsLosOlivosOperatingCosts(1) 685,934 49% Estimatefrom2013PFS(underrevision)SYCSDOperatingCosts(2) 711,650 51% Excludingadministration&Tribecollection/plantTotal $1,397,584 100% SYCSDOperationsafterLosOlivosAnnexation

ConnectionsLosOlivos 400 33%SYCSD 800 67%Total 1,200 100%

ManagementAllocations:CurrentSYCSDOperations(3)GeneralManager42% 78,000 42%ofsalaryw/ 35% taxes,benefits,workerscompSecretary/Treasurer60% 63,526 60%ofsalaryw/ 35% taxes,benefits,workerscompTotal $141,526 Managementcostsallocatedtoexpandedoperations

TotalAllocationtoLosOlivosOperations(4)Management 47,175 33%LOshareoftotalconnectionstimestotalop'smanagementAdmin/Overhead 66,900 33%LOshareoftotalconnectionstimestotalOH/adminTotal $114,075 note:TribecontributionsdeductedfromtotalOH/admin

(1)Estimatefrom2013PFS(underrevision);includesoperationsstaff,equipmentandsupplies,reservesforrepair/replacement.Updatescostswilladdinsurance.(2)FY16-17budget,OperationsexcludingTribecollection/plant.(3)FY16-17budget,shareofGMandSecretary/Treasurersalariesallocatedtooperations(excludesTribe).(4)Admin/Overheadallocationbasedonadmin.andbldg.budgetof$245,700lessTribecontributionof$45,000.AllocationproportionatetoLosOlivosconnectionsas%oftotal.



FINANCIALCONTROLSANDACCOUNTABILITYTheSYCSDbudgetandfinancialreportswoulddocumentandaccountforservicestoandrevenuesfromtheLosOlivosarea.Costs,revenues,assetsandliabilitiesspecifictoLosOlivosshouldbeseparatelytracked;thecreationofaLosOlivoszonewouldhelptosegregatethefinancialreportingforthearea.

TheSYCSDwouldberesponsibleforpublicoutreachanddisseminationoffinancialandotherinformation.TheDistricthasprovidedinformationanddocumentsrequestedforthecurrentStudyinatimelymanner,buttheDistrict’swebsitehasnotbeenoperationalsincelate2015,limitingitsabilitytoprovideinformationtothecommunity.

ADVANTAGESANDDISADVANTAGESOFANNEXATIONTOSYCSDGovernance

• Pro:AnnexationtoSYCSDisconsistentwithLAFCOpolicies,thirdinprioritybehindcityannexationandCountyCSAformation,whichgenerallyencourageconsolidationoffunctionswithexistingagencies,anddiscouragecreationofnew,potentiallyredundantpublicentities.

• Pro:CostsofelectionswouldbesharedwiththerestofSYCSD.

• Con:TheSYCSDboardwillmanageservicesprovidedtoLosOlivos,ratherthanalocallyelectedboardofLosOlivosresidents,aswouldbethecasewithanewCSD.ThiscanbeaddressedtosomedegreebycreationofanadvisoryboardtoprovideinputtotheSYCSD.

• Con:TheSYCSDboard,ratherthanalocallyelectedboard,wouldcontroldecisionsregardingwastewatercapacityandexpansion,aswellascosts,indirectlyaffectingnewgrowthanddevelopmentinLosOlivosandtheSantaYnezValley,particularlyifaregionalwastewaterplantisSYCSD’soptionforLosOlivos.

Services

• Pro:TheSYCSDhastheexperienceandexpertisetomanageaLosOlivoswastewatersystem.

• Con:TheSYCSDcouldexpandservicestoSYCSDand/oradoptchargesforservicesnotdesiredbyLosOlivosresidents,whowouldrepresentaminorityoftheSYCSDelectorate.ThiscanbeaddressedbycreationofaseparateLosOlivoszoneasaLAFCOconditionthatwouldlimitservicesinLosOlivostowastewater.

• Con:theSYCSDboardwoulddeterminetheexpansionofservicesinLosOlivos.ExpansionofserviceswouldalsobesubjecttoanyLAFCOconditionsrestrictingservicesinLosOlivosorSYCSD,andsubjecttoLosOlivosvoterapprovalofnewLosOlivostaxes.



NewtaxesandchargesapplicabletotheentireSYCSDwouldbesubjecttovoterapprovaltheentireSYCSDelectorate,ofwhichLosOlivosrepresentsaminority.


• Pro:AnnexationtoSYCSD,similartotheformationofaCounty-dependentspecialdistrict,islikelytoprovideadministrativeandmanagementeconomiesofscaleandcostsavingscomparedtoformationofanewCSD.

• Pro:WhileservicestotheLosOlivosarea,orzone,wouldbeintendedtobefinanciallyself-supportingfromrevenuesgeneratedwithinitsboundaries,theSYCSDcouldprovideshort-termloansandotherfundingifnecessary,asdeterminedbytheSYCSDboard.TheavailabilityofSYCSDresourcesislikelytobelessrelativetoaCounty-dependentspecialdistrictoption.

• Pro:AnnualfinancialauditingandfinancialreportingisprovidedaspartofcurrentSYCSDoperations,reducingassociatedcoststoLosOlivos.

• Con:TheSYCSDcostsandchargestoLosOlivoswouldincludeanallocationofSYCSDoverheadcoststhatcouldoffset,tosomedegree,thesavingsnotedabove.


• Pro:Asnotedabove,annualfinancialauditingandreportingisprovidedaspartofcurrentSYCSDoperations,reducingassociatedcostsandhelpingtoassuredisclosureandtransparency.ALosOlivosadvisorycommitteewouldfurtherimprovefinancialreviewanddisclosure.

• Con:TheSYCSD’swebsitehasbeennon-operationalsinceNovember2015,raisingconcernsaboutSYCSD’sabilitytocommunicatewithitscustomersinanefficientandtransparentmanner.

SANTA YNEZ WATER CONSERVATION DISTRICT ID-1 TheSantaYnezRiverWaterConservationDistrict,ImprovementDistrictNo.1(SYRWCDID-1)isnotauthorizedbyStatelawtoprovidewastewaterservices,althoughithaslatentpowerstoenterintocontractstoaccept,treatanddisposeoftreatedwastewaterfromotheragencies.SYRWCDID-1soughtlegislationin2008thatwouldhaveexpandeditsservicestoincludewastewater,buttheGovernorvetoedthebill.59Therefore,SYRWCDID-1isnotconsideredaviableentityatthistimetomanageaLosOlivoswastewatersystemintheabsenceofaseparatepublicentityinLosOlivos.AnewlyformedLosOlivosCSDorCounty-dependentdistrictcouldconsidercontractingwithID-1ifcostefficienciescouldbeachieved.

59CURRENTSANDUNDERCURRENTSINTHESANTAYNEZVALLEY,SantaBarbaraGrandJury,5/6/2010.



4. WASTEWATER SYSTEM

ArecentreporttoSantaBarbaraCounty’sEnvironmentalHealthServicesDepartment60refinedtheanalysispreparedin2013ofLosOlivoswastewatersystemoptions.61The2016FocusedFeasibilityStudy(“FFS”)furtheranalyzedtheMembraneBioreactor(“MBR”)option.Thisoptionwasoneoffourtreatmentsystemsstudiedin2013;MBRwasanalyzedfurtherinthe2016reportbecauseofitsreducedfootprintrelativetootheroptions,anditshigherqualityeffluentcomparedtoothermethods.62The2016FFSdidnotevaluateconnectiontoaregionalsystem.The2016studydidnotevaluateaphasedsystemservingthecommercial-core,whichcouldsignificantlyreducetotalcosts,whileotherlargerresidentialpropertiesupgradeonsitesystems.

PRELIMINARY SYSTEM ThefollowinggraphicillustratesthebasiccomponentsofMBR.AsdescribedintheFFS,theMBRprocessconsistsofactivatedsludgereactors(oraerationbasins)thatusemembranefiltrationforsolidsseparation.Thesludgemustberemovedandseparatelydisposed.Thesystemincludesa300,000-gallonequalizationtankorbasininstalledtosmooththespikesinflowduringpeaktourismdays.

Figure2ComponentsofaMembraneBioreactorSystem

Source:AECOM,2016

60RevisionstoLosOlivosWastewaterSystemPreliminaryEngineeringReport(“FFS”),AECOM,September13,2016

61LosOlivosWastewaterSystemPreliminaryEngineeringReport(PreliminaryFeasibilityStudy,or”PFS”),AECOM,January8,2013



Thetreatedeffluentissuitableforcertaintypesofnon-potablereuse(“NPR”),includingagriculturalirrigation.However,theFFSconcludedthatanNPRsystemwouldbeoflimitedbenefitduetominimaldemandforirrigationduringthewinterseasonandcoststoconstructwinterstoragefacilities,andlackofindustrialuserswithlargewaterdemands.IfasuitablenumberofNPRuserscouldbeidentified,somecostsavingscouldbeachievedinconstructingtheNPRdistributionlinesincommonwiththecollectionsystem.63

ThealternativetoNPRistheuseofinfiltrationponds,whicharereservoirswherewaterisstoredandallowedtoeitherinfiltrateintothegroundorevaporate.

The2016FFSrecommendsagravitycollectionsincetheLosOlivosterraingenerallyslopestothesouth.Aliftstationwouldberequiredsincethedisposalsiteisassumedtobetothenorthduetomorefavorablesoilconditionsthatmaximizegroundwaterrechargebenefits.

CAPITAL COSTS Table6summarizesthe2016FFScapitalcostestimates.Thelandcostassumesacquisitionof0.50acresrequiredfortherecommendedsystem,including0.20acresfora300,000-gallonequalizationtankorbasin.Thecostoftheequalizationtank,whichisrequiredtoservepeakflowsgeneratedbysummertourism,hasbeenallocatedinthecurrentreporttocommercialuses.Costsincludea20%contingency.TheEngineering,AdministrationandLegalcostsarecalculatedas35%ofconstructioncosts(excludingland).

Anadjustmenttothecommercial“LoadFactor”hasbeenaddedinthisreporttoreflectthegreaterstrengtheffluentofcertaintypesofcommercialuses.Forexample,restaurantwastewaterflowsarenotonlygreaterthanresidentialuses,buttypicallyhavea“strengthfactor”asmuchassixtimesthatofaresidentialuse.Theactualstrengthfactorswillbedeterminedbyengineeringanalysis,butaconservativefactoraveraging“2.0”(forallcommercialuses,includingrestaurants,hotels,retailandoffice)isincludedtoillustratetherelativedistributionofcostsbetweenresidentialandcommercialuses.

63FFS,Section4.2.1.



Table6EstimatedCapitalCostsandAllocationsforaCommunityWastewaterSystem

ItemExistingTOTAL New Buildout

TotalImprovementCosts(1)EqualizationTank(comm'l)Other(allocatedperRUE)

Costsw/PotentialSavings

ResidentialUnitEquivalents(RUE's)(2)ResidentialUnitsCommercialRUE's(3)

TotalCommercialSq.ft.

$20,869,000 $20,869,000$516,000 $516,000

$20,353,000 $20,353,000

$16,827,000 $16,827,000

ResidentialUnitEquivalents(RUE's)(2)336 0 33655 29 83391 29 419

228,990 120,539 349,529

RUE'sLoadAdjustedResidential 1.00Commercial 2.00

Total

336 0 336109 57 167445 57 503

CapitalCostAllocationsResidential(RUEalloc.)Commercial

Commercial(RUEalloc.)Commercial(Tank)

SubtotalCommercial

Total

Allocation/RUEAllocation/Com'lSq.ft.

Allocationsw/SavingsResidentialCommercial

Total


(1)AECOMSept.13,2016.(2)ResidentialbasedonparcelcountinSPA;numberislessthanAECOManalysis.(3)CommercialRUE'snotshowninAECOMFFS;estimateshownbasedoncommercialflows/daydividedby221gpdavg/residentialconnection.

$15,362,700 74% $13,606,500 65%

4,990,300 6,746,500516,000 516,000

$5,506,300 26% $7,262,500 35%

$20,869,000 100% $20,869,000 100%

$45,700 $40,500$24.05 $20.78

$12,387,200 74% $10,971,100 65%4,439,800 26% 5,855,900 35%

$16,827,000 100% $16,827,000 100%

$37,800 $33,480$19.39 $16.75

(2)ResidentialbasedonparcelcountinSPA;numberislessthanAECOManalysis.(3)CommercialRUE'snotshowninAECOMFFS;estimateshownbasedoncommercialflows/daydividedby221gpdavg/residentialconnection.



Asindicatedinthe2013PFS,“…carefulprojectplanningandmanagementcouldresultinadministrationfeesaslowas20%oftheconstructioncosts”,comparedtothe35%assumption.ThePFSfurthernotesthata“design-build”typeprojectcouldreduceadministrativecosts.ThePFScalculatedpotentialcostsavingsthatintherangeof$1,500,000ingrantsorcostreduction,andEngineering,AdministrationandLegalcostsof20%ofthetotalconstructioncosts.64

Applyingthepotentialcostreductionsdescribedabovecouldresultinsavingsofapproximately$4million,andatotalcostof$16.8million.

OPERATING COSTS The2016FFSestimatedannualoperatingcostsof$685,900assummarizedinTable7.Costsincludecollectionsystempowercosts,linecleaning,inspectionandreplacement;laborassumesoneoperatorwouldberequiredattheplantforhalfoftheday,5daysperweek.Foroneofthesedays,anadditionaloperatorwouldlikelyberequiredtoassistwithmaintenance.65

Asnotedinthe2013PFS,“O&Mcostsareapproximateandactualcostscouldbehalfofthevaluespresenteddependingonthefinalproject.”ThePFSrecommendedthatcostsavingstrategiessuchassharingpersonnelandequipmentwithsurroundingdistrictstoperformO&Mdutiesshouldbefullyexploredtolowerannualcosts.66

642013PFS,Section10.2.2.652016FFS,Section5.1.5.662013PFS,Section10.2.4.



Table7EstimatedAnnualSystemOperatingCostsandAllocations

Item

OperatingCosts(1)CollectionSystemTreatment/Disposal

TOTALExisting

$127,400558,500

Buildout

$127,400558,500

Total $685,900 $685,900

Units,Sq.ft.andRUE'sResidentialUnits(RUE's)CommercialRUE


33655391

228,990

33683419

349,529


Total

336109445

336167503

OperatingCostAllocationsResidentialCommercial

TotalAllocation/RUEAllocation/Com'lSq.ft.

OperatingCostsw/Savings(2) 50%Allocation/RUEAllocation/Com'lSq.ft.

(1)AECOMFFS,Sept.13,2016.(2)O&Mcostsavingsassumes50%reductioninoperations&maintenancecosts.

$517,725$168,175$685,900$1,541$0.73

$770$0.37

(2)O&Mcostsavingsassumes50%reductioninoperations&maintenancecosts.

$458,543$227,357$685,900$1,365$0.65

$682$0.33

(2)O&Mcostsavingsassumes50%reductioninoperations&maintenancecosts.



5. DISTRICT BUDGET ThissectiondescribesapreliminarybudgetforaLosOlivosspecialdistrict.EstimatedcostsareshownforaCSD;dependingonthetypeofdistrictorannexation,administrativecostscouldbelessasdescribedinChapter3.Iftheproposalmovesforward,thebudgetwillberefinedadoptedbythedistrictboard.

ADMINISTRATION & OPERATING EXPENDITURES AsshowninTable8,ongoingmanagementandadministrativecostsareestimatedatjustunder$200,000annually.Thefirstyears,inadvanceofwastewatersystemoperations,areassumedtorequireasmallerbudgetofslightlyover$100,000duetolessstafftime,nooffice,andreducedequipmentexpenses.Theloweroperatingcostsmayextendfromonetothreeyears,dependingonthetimerequiredtoplanandconstructawastewatersystem.Theinitialcostscouldbefundedbyacombinationofcommunitycontributionsandassessments.

Table8EstimatedOverheadandAdministrativeCosts-LosOlivosCSD

Item FirstYear Buildout

AdministrationBoard 6,000 6,000 (3)Legal 20,000 20,000Accounting/Finance 15,000 15,000OfficeSpace,Utilities 0 (5) 15,000 (1)Equip/Supplies/Internet 2,500 (6) 5,000Memberships 3,000 3,000OtherOverhead/Admin. 10,000 17,000 (2)

Subtotal(exc.Staff) 56,500 81,000Admin.StaffSalaries/Benefits $54,000 (5) $108,000 (4)

TOTALExpenditures $110,500 (5) $189,000perResidentialUnitEquivalent(RUE) $283 (7) $376 (7)perRUEpermonth $24 $31

(1)Assumes500sq.ft.at$2.50permonth.(2)Other/Contingencyat10%ofotheradmincostsinc.staff.(3)Assumestipendof$100/month,5boardmembers.(4)50%GM/Operatorat$100k,50%Sec'yTreasurer$60k,+35%taxes,benefits.(5)Assumesfirstyear(ormore)primarilyplanningwithnooperationalstafforcontractstoadminister;50%staffassumed,andnoofficespacerequired.(6)Equipment/Supplies/Internetreducedfirstyearduetonoofficespace.(7)ResidentialUnitEquivalentsare"LoadAdjusted"forcommercialstrengthfactor.

AnnualAmount



Thebudgetassumesapart-timeGeneralManagerandpart-timesecretary/treasurer.ThestaffmaybeemployeesoftheDistrict,ormaybecontractedservicesfromaprivatefirmoranotherpublicagency.Similarly,theDistrictmaycontractforotherservicessuchasaccounting,fromaprivatefirmorpublicagency.Acontingencyof10percentofnon-staffcostsisincluded.Theactualmannerofobtainingservices,levelsofservices,andassociatedbenefitspaid(ifemployees)willbedeterminedbyafutureCSDBoard.

WASTEWATEROPERATIONSAsdescribedinChapter3,the2016FFSestimatesannualoperatingcostsat$686,000.Theprior2013studynotedthatthesecostscouldbeupto50%lowerdependingonthefinaldesign,anddependingonpossiblesavingsbycontractingwithsurroundingdistricts.

OPERATING REVENUES AND RATES Table9illustratespotentiallyratesrequiredtocovertheprojectedadministrativeandsystemoperatingcosts,withandwithoutpotentialoperatingcostsavings.Withtheassumedsavings,ratesapproachthoseofothertertiarytreatmentsystemsintheregion(seeAppendixA).



Table9EstimatedTotalAnnualAdmin.andOperatingCostsandRates-LosOlivosCSD

Actualrateswilldependonthespecificfinalsystemdesign,districtmanagementandadministrativecosts,andcontractingandratedecisionstobemadebytheBoardofDirectors.

Item FirstYear Ongoing Buildout

AdminandOperatingCostsAdmin/Overhead $110,500 $189,000 $189,000WastewaterSystemOperations 685,900 685,900

Total $110,500 $874,900 $874,900

Units,Sq.ft.andRUEs(LoadAdjusted)ResidentialUnits(RUEs) 336 336 336CommercialRUEs 109 109 167

Total 445 445 503CommercialSq.ft. 228,990 228,990 349,529

TotalAdminandOperatingCostAllocationsResidential $83,400 $660,400 $584,900Commercial 27,100 214,500 290,000

Total $110,500 $874,900 $874,900

Allocation/RUE $248 $1,965 $1,741Allocation/Com'lSq.ft. $0.12 $0.94 $0.83

Allocationsw/Savings(1)Residential $83,400 $401,500 $355,600Commercial 27,100 $130,400 $176,300

Total $110,500 $531,900 $531,900

Allocation/RUE $248 $1,195 $1,058Allocation/Com'lSq.ft. $0.12 $0.57 $0.50

(1)Assumesupto50%potentialsystemoperationssavings.

AnnualAmount



6. CAPITAL EXPENDITURES AND FUNDING

AsdescribedinChapter3,costsfortheproposedsystemtotal$20.9million,or$16.8millionifpotentialcostsavingscanbeachieved.Totalcostscouldbesignificantlylowerifthesystemisphasedtofirstserveonlythecommercialcore,withotherlargerresidentialpropertiesupgradingtoimprovedonsitesystems.Thesecostsareassumedtobethesameforallgovernanceoptions.Additionalgrantfundingmaybepossibleforplanning,designandconstructiontofurtherreducecosts.Remainingcostsarelikelytobefundedthroughdebtissuancesecuredbybenefitassessmentspaidbypropertyowners,asdescribedbelow.

CAPITAL FINANCING Arangeoffundingsourcesmaybetappedtohelppayforthesystem’splanningandconstructioncosts.Loansmayalsobeutilizedwherepossibletoreducefinancecosts.Examplesoffundingsourcesinclude:

• CountyofSantaBarbara

• StateWaterResourceControlBoard’sCleanWaterStateRevolvingFundandWaterRecyclingFundingProgram

• UnitedStatesDepartmentofAgriculture’sWaterandWasteDisposalLoanandGrantProgram

Thegovernanceentitywillneedtoinvestigateandapplyforthesesources,andexploreotheropportunitiesforrelatedfunds,forexample,tohelpfundsustainableenergysourcessuchassolarpanelstohelpreduceoperatingcosts.

Table10illustratesthepotentialallocationofcapitalcostsbeforeandafterpossiblecostreductionsdiscussedinChapter3.ThetotalcostsareallocatedtoResidentialUnitEquivalents(“RUE’s).Thetablealsoshowsanaverageloadadjustmentof“2”toreflecttheincreasedcostsattributabletowastewaterfromcommercialuses,whichvariesdependingonthetypeofuse;forexample,restaurantsnotonlygeneratesignificantlygreaterflowsthanofficeortypicalretail,butthewaste“strength”alsorequiresadditionalcoststoprocess.Forexample,theSYCSDratesincludeastrengthfactorof“6”forrestaurants.Theactualadjustmentfactorswillbedeterminedaftermoredetailedengineeringanalysis,anddecisionstobemadebyafuturegoverningboard.

Theallocationsofcostshavebeenadjustedforequipmentrequiredbycommercialuses.Forexample,thesystemdesignincludesan“equalizationtank”tohandlepeakflowsduringthesummerfromtourists;thesecostsareallocatedtocommercialuses.



Table10EstimatedCapitalCostAllocations

ItemExistingTOTAL New Buildout

TotalImprovementCosts(1)EqualizationTank(comm'l)Other(allocatedperRUE)

Costsw/PotentialSavings

ResidentialUnitEquivalents(RUE's)(2)ResidentialUnitsCommercialRUE's(3)


$20,869,000 $20,869,000$516,000 $516,000

$20,353,000 $20,353,000

$16,827,000 $16,827,000

ResidentialUnitEquivalents(RUE's)(2)336 0 33655 29 83391 29 419

228,990 120,539 349,529


Total

336 0 336109 57 167445 57 503

CapitalCostAllocationsResidential(RUEalloc.)Commercial

Commercial(RUEalloc.)Commercial(Tank)

SubtotalCommercial

Total


Allocationsw/SavingsResidentialCommercial

Total


(1)AECOMSept.13,2016.(2)ResidentialbasedonparcelcountinSPA;numberislessthanAECOManalysis.(3)CommercialRUE'snotshowninAECOMFFS;estimateshownbasedoncommercialflows/daydividedby221gpdavg/residentialconnection.

$15,362,700 74% $13,606,500 65%

4,990,300 6,746,500516,000 516,000

$5,506,300 26% $7,262,500 35%

$20,869,000 100% $20,869,000 100%

$45,700 $40,500$24.05 $20.78

$12,387,200 74% $10,971,100 65%4,439,800 26% 5,855,900 35%

$16,827,000 100% $16,827,000 100%

$36,870 $32,650$19.39 $16.75

(2)ResidentialbasedonparcelcountinSPA;numberislessthanAECOManalysis.(3)CommercialRUE'snotshowninAECOMFFS;estimateshownbasedoncommercialflows/daydividedby221gpdavg/residentialconnection.



AlikelysourceoffinancingistheUSDept.ofAgriculture(USDA),whichoffersloansthroughitsRuralUtilitiesServiceWaterandEnvironmentalPrograms(WEP)fortheconstructionofwastefacilitiesinruralcommunities.Theprogramistargetedtocommunitieswithpopulationslessthan10,000.Theseloansarecommonlyusedforcapitalfundingbypublicagenciesandofferlowinterestratesandlongamortizationterms.Currentlyinterestratesarebetween1.625%and2.75%for40-yearloans.

Table11showstheannualdebtserviceforaloantofundthesystem’scosts.Thedebtamountincludes$150,000forcompletingtheUSDAapplication,preparinganengineer’sReportforassessments,forminganassessmentdistrictandconductingavotetoapprovetheassessmentdistrict.Theassumedinterestrateisassumedat3%;actualrateswilldependonfinancingconditionsatthetimethedebtisissued.Debtissuanceisapproximately10%ofthearea’sassessedvalue.

GRANTSInadditiontoitsloanprogram,theUSDAalsooffersWasteDisposalPredevelopmentPlanningGrants,andotherformsofgrantsforconstruction.Itisanticipatedthatafuturegoverningboardandstaffwillpursuegrantstohelpfundthesystemandreducecoststoratepayers.

ASSESSMENTSTable11calculatesannualassessmentbasedonthesystem’scostanddebtfinancingasdescribedabove.Theallocationstocommercialusesincludea“loadfactor”toaccountfortheadditionalwasteprocessingrequiredforcommercialwaste.Anassessmentengineerwilldeterminetheactualassessments,andthegoverningboardofthedistrictwilladoptassessments.Assessmentsarelikelytovarybyspecificcommercialandresidentialuse.

Althoughabenefitassessmentisafixedamountperparcel,thetableillustratestherelativeincreaseintaxburdenwhentheassessmentsareaddedtoexistingpropertytaxratesof1.07%ofassessedvalue.Theresultingequivalentratesrangefrom1.44%to1.53%comparedtototalassessedvalueinthearea.Theequivalenttaxrateswillvarybyspecificpropertiesdependingontheirvalue.Theseaverageratesarelessthangenerallyacceptedmaximumcapsof1.8-2.0.Totaldebtisapproximately10%oftotalareavalue.



Table11EstimatedAnnualAssessments

ItemExistingTOTAL Buildout


Total

DebtIssuanceImprovementCostsIssuanceCosts(1)

336 336109 167445 503

$20,869,000 $20,869,000$150,000 $150,000

TotalDebtw/PotentialSavings

$21,019,000 $21,019,000$16,977,000 $16,977,000

AnnualDebtService(2) 3.0% $909,000 $909,000

AnnualDebtServiceAllocations-LoadAdjustedResidentialCommercial

TotalAllocation/RUEAllocation/Com'lSq.ft.

AnnualDebtServiceAllocations-LoadAdjusted$685,400 $608,200$222,700 $301,500$908,100 $909,700$2,040 $1,810$3.97 $2.60

AnnualDebtServicew/SavingsAllocation/RUEAllocation/Com'lSq.ft.

$734,000 $734,000$1,650 $1,460$3.21 $2.10

AssessedValueResidentialCommercial

TotalA.V.(3)DebtService/TotalA.V.Totalw/currentTaxOverridesTotalw/savings

(1)Estimatedissuancecostsincludeloanprocess/application,assessmentengineer'sreport,assessmentdistrictformation/vote.(2)Rates(8/2016)arebetween1.625%and2.75%;40yearUSDAloan.(3)Includesunsecureda.v.Excludes23vacantparcelsand42ranchoestates.

Burden Burden$137,600,000 0.50% $137,600,000 0.44%$63,400,000 0.35% $88,018,899 0.34%

$201,000,000 $225,618,8990.45% 0.40%1.53% 1.48%1.44% 1.40%

(1)Estimatedissuancecostsincludeloanprocess/application,assessmentengineer'sreport,assessmentdistrictformation/vote.(2)Rates(8/2016)arebetween1.625%and2.75%;40yearUSDAloan.(3)Includesunsecureda.v.Excludes23vacantparcelsand42ranchoestates.



APPENDIX A

SUMMARYOFSEWERRATESINTHEREGIONSource:LagunaSanitationDistrictpresentationre:FY16-17rates



Treatment Level Agency Monthly Rate Inc. Tertiary $113.45* 3.0%

10.5% 6.0%

$ 84.00 $ 80.31 $ 75.67

Secondary $102.40* $ 82.17* 3.7% $ 69.87 3.7% $ 66.00 $ 63.40* $ 61.26* $ 47.87 5.5% $ 40.78* 9.6% $ 36.57* $ 36.05 3.1% $ 34.65 1.6% $ 19.20 5.0%

Primary $ 39.53

Summerland Lompoc Laguna Vandenberg Village

Montecito Santa Ynez Mission Canyon Cuyama Los Alamos Carpinteria Santa Barbara Goleta West Sanitary Goleta Sanitary Guadalupe Solvang Santa Maria

Mission Hills Buellton $ 25.00

Average $ 59.91

* These rates include estimated property tax contributions.

Documents

FINAL DRAFT PLAN FOR SERVICES & FEASIBILITY ......2016/10/22 · Final Draft, October 22, 2016 1 1. INTRODUCTION AND SUMMARY This Study evaluates the financial feasibility and governance