HomeMy WebLinkAboutUkiah Valley Sanitation District 2021-07-01 COU No. 2021-224
BUDGET APPROVAL AGREEMENT
This Agreement is entered on July 1, 2021, in Ukiah, California, between the City of
Ukiah ("City"), a general law municipal corporation, and the Ukiah Valley Sanitation District
("District"), a county sanitation district.
1. The City and the District agree to approve as shared costs of the Combined
CITY/DISTRICT Sewer System ("Combined System") for fiscal year 2021-22 the City budget for
direct expenditures of personnel, operations, and capital outlay, and the indirect expenditures
of internal service use of the Wastewater Enterprise, as set forth in the attached Exhibit A.
Total direct operating budgeted costs, defined as costs of Personnel and Operations in Exhibit A
of$4,524,050 as well as an Operating Indirect Rate ("OIR") on such costs of 14.20% ($642,415)
for a total budgeted estimate of$5,166,465 will be shared 49.48% District and 50.52% City.
This share is for 2021-2022 fiscal year and will be effective July 1, 2021.
Total direct costs of$2,730,000 for Capital Outlay in Exhibit A will be funded by both the
City and District at 49.48% District and 50.52% City, as well as an Indirect Rate on such costs
incurred not to exceed 9%, which is the five-year average of Indirect Costs incurred and
budgeted by the Combined System related to Purchasing and Insurance. This rate will be
referred to as the Capital Indirect Rate ("CIR") and will be negotiated for projects over$200,000
based on an estimate of required Indirect Costs to complete the capital project The City and
District will use the CIR on all Capital Outlay with costs less than $200,000 unless either party
desires to negotiate the rate for any individual project. The City Engineer or City's Water
Resources Director will communicate verbally or in writing to the District Manager when such
expenditures are expected to begin. The District will pay to the City the District's share of the
cost for an approved capital expense within fifteen (15) days of the date of an invoice given to
the District for that expense. On and after the effective date of this Agreement, any portion of
capital projects paid by the District will be capitalized on its books as intangible assets and
depreciated.
The shared costs presented in Exhibit A exclude District and City administrative and
other overhead costs allocated directly to the wastewater activities of the City and District. The
City and District shall incur 100% of each agency's own administrative and other costs not
shown on Exhibit A.
2. For any costs incurred for District-only activities or projects (e.g. a main line
replacement of a District asset), that the City is required to perform or contracted to perform
on the District's behalf, the City may include in total project costs an amount to cover the City's
indirect administrative and overhead costs. Before the City is required to perform the work, the
parties shall negotiate and agree on the amount thereof to include in the project costs to be
paid by the District. In the event of an emergency or urgent need to commence work before
the parties can negotiate and agree on the total project costs, including indirect administrative
and overhead costs, the City and the District shall negotiate and agree on those costs before a
final cost settlement is made.
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3. The District shall pay to the City by the 1st of every month starting July 1, 2021,
1/12th of the District's share of the agreed operating budget(Personnel, Operations, and
Indirect Rate)shown in Exhibit A (i.e.,$430,538 x 0.4948=$213,030.20). City is not required to
generate an invoice for these payments which are regularly scheduled fixed monthly payments
to the City by the District. As provided in Section II.D.4.a of the Operating Agreement,the City
and District will review every quarter the actual costs incurred. This City and District will
reconcile differences between actual costs incurred, budget costs, and over/under payments
made by either agency no later than 90 days after the end of the fiscal year,June 30.
Per the Refinancing Agreement between the City and District,the share of debt service
overall between the City and District has changed, resulting in a payment of the City to the
District of$20,131.00(see Exhibit B). The parties agree the City will remit this payment to the
District after the third quarter reconciliation, no later than April 15, 2022.
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4. Payments under above shall be subject to interest as provided in
Section II.D.4.b of the Operating Agreement.
5. Both parties have multiple outstanding issues related to this budget and budget years
2018-19 and 2019-20 but will forgo asserting them for this budget year(2021-22)with the
understanding that neither party is waiving its right to raise any or all of these same issues for
future budgets. Neither this Agreement nor the approved expenditures and budget shall be
treated by either party as an admission or concession that any such objection or concern lacks
merit or has the effect of waiving any such objection or preventing it from being asserted in the
future.
The parties have entered this agreement on the date first written above.
UKIAH VALLEY SANITATION DISTRICT CITY OF UKIAH
By: f
Ernie Wipf, Chy� erson Sage Sangiacomo, City Manager
ATTEST: , 6�� ATTEST:
Y: f
Kristine Lawler, City Clerk
ea-'Tedjue-, a rcti!
APPROVED AS TO FORM APPROVED AS TO FORM
Joanna, General Counsel David J. Rapport,City Attorney
Go
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3. The District shall pay to the City by the 1st of every month starting July 1, 2021,
1/12t" of the District's share of the agreed operating budget (Personnel, Operations, and
Indirect Rate) shown in Exhibit A (i.e., $430,538 x 0.4948 = $213,030.20). City is not required to
generate an invoice for these payments which are regularly scheduled fixed monthly payments
to the City by the District. As provided in Section II.D.4.a of the Operating Agreement, the City
and District will review every quarter the actual costs incurred. This City and District will
reconcile differences between actual costs incurred, budget costs, and over/under payments
made by either agency no later than 90 days after the end of the fiscal year, June 30.
Per the Refinancing Agreement between the City and District, the share of debt service
overall between the City and District has changed, resulting in a payment of the City to the
District of$20,131.00 (see Exhibit B). The parties agree the City will remit this payment to the
District after the third quarter reconciliation, no later than April 15, 2022.
4. Payments under subsections b and c above shall be subject to interest as provided in
Section II.D.4.b of the Operating Agreement.
5. Both parties have multiple outstanding issues related to this budget and budget years
2018-19 and 2019-20 but will forgo asserting them for this budget year (2021-22) with the
understanding that neither party is waiving its right to raise any or all of these same issues for
future budgets. Neither this Agreement nor the approved expenditures and budget shall be
treated by either party as an admission or concession that any such objection or concern lacks
merit or has the effect of waiving any such objection or preventing it from being asserted in the
future.
The parties have entered this agreement on the date first written above.
UKIAH VALLEY SANITATION DISTRICT CITY OF UKIAH
By:
Ernie Wipf, Chairperson Sage Sangiacomo, City Manager
ATTEST: ATTEST:
enkl"Ig LGImt gl-
By: Kristine Lawler(Mar4,202216:15 PST)
Kristine Lawler, City Clerk
APPROVED AS TO FORM APPROVED AS TO FORM
�; � \"-#—
Joanna Jin, General Counsel David J. Rapport, City Attorney
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Exhibit A
Shared Costs Between City and District for the Combined City/District Sewer System
Fiscal Year 2021-22
Budget by Activity(Collection and Treatment)
ACCOUNTS FOR:
COMBINED WASTEWATER SYSTEM 2020 2021 2021 2022
BY ACTIVITY ACTUAL ORIG BUD REVISED BUD BUDGET
WASTEWATER SYSTEM MANAGEMENT 435,915.21 .00 .00 .00
WASTEWATER COLLECTION 709,968.42 918,959.88 917,624.88 1,476,319,00
WASTEWATER TREATMENT 3,102,003.24 3,402,972.89 3,324,524.89 5,777,731.00
TOTAL DIRECT BUDGET 4,247,886.97 4,321,932.77 4,242,149,77 7,254,050.00
INDIRECT RATE (14.20% OF PERSONNEL AND OPERATING) 642,415.00
GRAND TOTAL BUDGET 7,896,465,00
Budget by Character(Major Cost Category)
PROJECTION: 20221 2021-22 Budget
ACCOUNTS FOR: BUDGET BY CHARACTER 2020 2021 2021 2022
ACTUAL ORIG BUD REVISED BUD BUDGET
PERSONNEL 2,133,973.33 2,137,213.59 2,137,213.58 2,315,225.00
OPERATIONS 1,659,370.76 1,929,719.19 1,849,936.19 2,208,825,00
CAPITAL OUTLAY 454,542.78 255,000.00 255,000.00 2,730,000.CO
TOTAL DIRECT BUDGET 4,247,886.87 4,321,932.77 4,242,149.77 7,254,050.CO
INDIRECT RATE (14.20% OF PERSONNEL AND OPERATING) 642,415.00
GRAND TOTAL BUDGET 7,896,465.00
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Exhibit A(cont)
Shared Costs Between City and District for the Combined City/District Sewer System
Fiscal Year 2021-22
Budget by Object
2020 2021 2021 2022
ACCOUNTS FOR: BUDGET BY OBJECT ACTUAL ORIG BUD REVISED BUD BUDGET
51 PERSONNEL
51110 REGULAR SALARIES 1,260,118.87 1,256,321.00 1,256,321.00 1,365,829.00
51120 NON-REGULAR SALARIES .00 .00 .00 .00
51130 OVERTIME SALARIES 60,959.46 51,332.58 51,332.58 50,000.00
51140 STAND-BY SALARIES 33,671.13 32,000.00 32,00C.00 32,000.00
51150 COMPENSATED ABSENCE .00 .00 .00 .00
51210 RETIREMENT (PERS) 153,094.60 156,548.00 156,548.00 166,065.00
51211 PERS UNFUNDED LIABLTY 248,440.00 265,476.00 265,476.00 303,456.00
51220 INSURANCE 244,493.49 245,508.00 245,508.00 272,082.CC
51230 WORKERS COMP 90,724.24 90,894.00 90,894.00 96,785.00
51240 MEDICARE 21,570.19 20,220.00 20,220.00 19,378.00
51250 UNEMPLOYMENT 14,928.30 14,016.00 14,016.00 .00
51260 FICA .00 .00 .00 .00
51280 OVERTIME/CALLOUT .00 .00 .00 .00
51290 CELL PHONE STIPE 5,973.05 4,898.00 4,898.00 4,658.00
51 PERSONNEL 2,133,973.33 2,137,213.58 2,137,213.58 2,315,225.00
52 OPERATIONS
52100 CONTRACTUAL SERV 365,648,00 377,000.00 297,624.00 386,000.00
52113 PLANNING STUDIES .00 100,000.00 82,000.00 15,000.00
52114 COMPLIANCE STUDI 1,837,86 .00 .00 25,000.00
52120 LABOR CHARGES FR .00 .00 .00 .00
52150 LEGAL SERVICES/E 00 10,000.00 10,000.00 10,000.00
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ACCOUNTS FOR: BUDGET BY OBJECT 2020 2021 2021 2022
ACTUAL ORIG BUD REVISED BUD BUDGET
52100 SECURITY SERVICE 892.00 1,100.00 1,100.00 1,500.00
52601 DATA STORAGE .00 .00 .00 .00
53000 LAWSUIT SETTLEMENT 30,000.00 .00 .00 .00
54100 SUPPLIES 97,116.93 132,750.00 l26,750.00 135,000.00
54101 POSTAGE 753.32 700,00 1,700.00 700.00
54102 SMALL TOOLS 23,903.35 34,500.00 27,401.19 30,000.00
54103 LAB SUPPLIES 20,551.23 20,000,00 25,000.00 30,000.00
54161 BACKGROUND & PHY 2,293.60 2,500.00 2,500.00 2,500.00
54320 SOFTWARE 10,057.47 29,350,00 29,250.00 33,000.00
54330 COMPUTER AND TEC 9,126.36 12,000.00 12,000.00 12,000.00
54700 FINES & PENALTIE .00 50,000.00 50,000.00 50,000.00
55100 TELEPHONE 4,927.49 4,105.00 7,105.00 11,000.00
55200 PG&E 34,771.07 33,000.00 33,000.00 35,000.00
55210 UTILITIES 287,136.21 292,500.00 292,500.00 317,625.00
55220 WASTEWATER DISPO .00 .00 .00 .00
56110 CITY GARAGE - PA .00 .00 .00 .00
56120 EQUIPMENT MAINTE 317,764.34 343,344,88 334,844.08 510,000.00
56125 LAB EQUIP-REPAIR 11,599.51 10,000.00 16,600.00 20,000.00
56130 EXTERNAL SERVICE 45,659.66 38,119,31 53,718.12 40,000.00
56210 FUEL & FLUIDS 39,231.36 48,000.00 49,000.00 55,000.00
56300 BUILDING MAINT. 2,314.72 18,000.00 33,000.00 55,000.00
56410 EQUIPMENT RENTAL 996.67 2,000,00 2,000.00 4,000.00
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ACCOUNTS FOR: BUDGET 8Y OBJECT 2020 2021 2021 2022
ACTUAL ORIG BUD REVISED BUD BUDGET
56504 FACILITY MAINTEN 9,875.42 20,000.00 20,000.00 20,000.00
57100 LEARNING AND DEV 27,936.94 36,000.00 29,743.00 42,000.00
57300 MEMBERSHIPS & SUBSCRPTN 3,801.61 6,850.00 6,850.OD 9,000.00
58201 WATER PURCHASES .00 .00 .OD .00
58202 CHEMICALS 266,433.40 250,000.00 243,400.00 280,C00.00
5841C GARAGE LUBRICANT .00 8,000.00 8,000.00 8,000.00
58510 REIMBURSABLE JOB .00 5,000.00 5,000.OD 15,000.00
59100 PROPERTY TAXES 13,749.38 13,900.00 13,900.00 14,000.00
59101 FEES 30,994.40 31,000.00 36,850.00 42,500.00
59400 OTHER EXPENSES 00 .00 .00 .00
9470C FINES & PENALTIES .00 .00 .OD .00
52 OPERATIONS 1,659,370.76 1,929,719.19 1,849,936.19 2,208,825.00
80 CAPITAL OUTLAY
80100 MACHINERY & EQUI 80,790.68 200,000.00 200,000.00 2,475,000.00
80220 BUILDING IMPROVE .00 .00 .00 15,000.00
80230 INFRASTRUCTURE 373,752.10 55,000.00 55,000.00 240,000.00
TOTAL 80 CAPITAL OUTLAY 454,542.78 255,000.00 255,000.00 2,730,000.00
TOTAL DIRECT BUDGET 4,247,886.87 4,321,932.77 4,242,149.77 7,254,C50.00
INDIRECT RATE (14.20% OF PERSONNEL AND OPERATING) 642,415.00
GRAND TOTAL BUDGET 7,996,465.00
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Exhibit B
HILDEBRAND
CONSULTING
Date: September 16,2021
To: Dan Buffalo, City of Ukiah
Mark DeMeulenaere, Ukiah Valley Sanitation District
Wing-See Fox, Ukiah Valley Sanitation District
From: Mark Hildebrand, Hildebrand Consulting, LLC
Subject: Fiscal Year 2021-22 Annual ESSSU Reconciliation Memo
Hildebrand Consulting, LLC has been retained by both the City of Ukiah ("City") and Ukiah Valley
Sanitation District ("District") to provide consulting services with respect to the shared costs
between the City and the District. The City and District entered into an Operating Agreement' in
2018 which specifies how sewer collection and treatment services will be provided within the
respective service areas and how costs will be shared and distributed. The Operating Agreement
specifies a portion of shared costs is to be allocated based on each utility's proportionate share of
winter water usage and relative strength of sewage discharge to the wastewater treatment plant
(i.e., based on the relative number of Equivalent Sewer Service Strength Units("ESSSU")). Given the
ever-changing water usage and number of customers, the relative number of ESSSUs will likely
change every year. The following describes the current number of ESSSUs for each entity in fiscal
year 2020-21 but applied to Fiscal Year 2021-22, in accordance with the Operating Agreement and
Refinancing Agreement'.
The ESSSU values were calculated based on updated utility billing data from both parties (monthly
average of January through March 2021 water usage). ESSSU values are assigned based on dwelling
units for residential customers (1 dwelling unit = 1 ESSSU) and based on water usage for non-
residential customers. Non-residential ESSSUs are calculated by dividing average monthly winter
water usage for each account by 5.68 HCF,then multiplying by the appropriate strength factor'.
1 Operating Agreement signed in 2018 for the Combined Sewer System Serving the Ukiah Valley Sanitation District and
the City of Ukiah.
' Refinancing Agreement signed in 2020 as part of the refunding of the 2006 Wastewater Revenue Bonds for the
Combined Sewer System Serving the Ukiah Valley Sanitation District and the City of Ukiah.
3 For details,see Section 4.5 of the 2020 Joint Sewer Rate Study, Hildebrand Consulting.
Exhibit B
Table 1 below provides a summary comparison of the data used to calculate the previous and updated ESSSU values.The updated
percent of ESSSUs for the District is 49.483%and the City is 50.517%.
Table 1 - Previous and Updated ESSSU Values
2020 Rate Study ESSSU Values 2021 Updated ESSSU Values
Dwelling ESSSUs Dwelling ESSSUs
Accounts Units Count Percent Accounts Units Count Percent
Residential 2,454 3,581 3,581 27.5% Residential 2,495 4,321 4,321 34.3%
----------------------------------------------------------------------- ----------- ------------------------------------------------------------------------ ---------
Mobile Home 11 620 620 4.8% Mobile Home (na)*
Commercial Low Strength 267 (na) 1,411 10.8% Commercial Low Strength 249 (na) 1,116 8.9%
Commercial Moderate Strength 18 (na) 452 3.5% Commercial Moderate Strength 19 (na) 290 2.3%
Commercial Medium Strength 5 (na) 81 0.6% Commercial Medium Strength 7 (na) 231 1.8%
Commercial High Strength 21 (na) 388 3.0% Commercial High Strength 23 (na) 281 2.2%
Total: 2,776 4,201 6,532 50.16 o Total: 2,793 4,321 6,240 49.483%
*District classifies Mobile Homes as residential now
Residential 2,971 4,179 4,179 32.1% Residential 3,063 4,318 4,318 34.2%
-------------------------------------------------------------------------------------- -----------------------------------------------------------------------------------------
Mobile Home 7 248 248 1.9% Mobile Home 7 251 251 2.0%
-------------------------------------------------------------------------------------- -----------------------------------------------------------------------------------------
Commercial Low Strength 545 (na) 1,464 11.2% Commercial Low Strength 542 (na) 1,203 9.5%
-------------------------------------------------------------------------------------- ------------------------------------------------------------
-----------------------------
Commercial Moderate Strength 14 (na) 108 0.8% Commercial Moderate Strength 16 (na) 142 1.1%
Commercial Medium Strength 9 (na) 79 0.6% Commercial Medium Strength 9 (na) 92 0.7%
--------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------
Commercial High Strength 36 (na) 412 3.2% Commercial High Strength 38 (na) 363 2.9%
Total: 3,582 4,427 6,490 49.84% Total: 3,675 4,569 6,370 50.517%
The ESSSU percentages are then used to update the debt allocation as defined by the Operating Agreement. The Operating
Agreement specifies that 25.8414% of the existing debt (the "Capacity" portion) is allocated 65% to the District and 35% to the
City. The remaining 74.1586% (the "Upgrade/Rehabilitation" portion) is to be allocated based on the ESSSU split. With the
updated ESSSU ratio (see Table 1), the resultant debt service allocation is 53.493%for the District and 49.711%for the City. This
results in debt true-up amount is$20,131 (due from the City to the District) in FY 2021/22.