AGENDA

SANTA MARGARITA WATER DISTRICT

FINANCE AND ADMINISTRATION

COMMITTEE MEETING

JUNE 26, 2019

CALL TO ORDER: 8:30 AM, Conference Room

26111 Antonio Parkway, Rancho Santa Margarita, CA 92688

COMMITTEE CHAIR: Charles T. Gibson

COMMITTEE MEMBER: Saundra F. Jacobs

1. PUBLIC FORUM

Persons wishing to address the Committee are requested to submit a "Request To Be Heard"

form to the Recording Secretary. Comments are limited to three minutes, unless further time

is granted by the Presiding Officer.

2. PRESENTATIONS

2.1 Fiscal Year 2019 Required Audit Communications Page 3

3. TREASURER

3.1 Consideration and Action on the District's Investment Report Portfolio for the Period

Ending May 31, 2019 Page 6

Recommendation: Receive and file the District’s investment report portfolio.

3.2 Consideration and Action on the District's May 2019 Business Expense

Reimbursement Report and Board of Directors' Compensation Page 11

Recommendation: Approve the Business Expense Reimbursement Report and

Board of Directors’ Compensation.

4. ACTION ITEMS

4.1 Consideration and Action on Improvement District No. 4 Draft Benefit Analysis

Study and Engineer's Report on Ad Valorem Taxes for Fiscal Year 2019-2020

Prepared by DLM Engineering Page 14

Recommendation: Review draft Fiscal Year 2019-20 Benefit Analysis Study

and Engineer’s Report and provide direction on application of funds on hand.

5. INFORMATION ITEMS

5.1 The District's Proposition 218 Rate Structure Page 53

5.2 Assistant General Manager - Finance Report Page 57

5.3 Finance and Administration Committee Notes – May 29, 2019 Page 58

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ITEMS DISTRIBUTED TO THE COMMITTEE LESS THAN 72 HOURS PRIOR TO

MEETING

Pursuant to Government Code section 54957.5, non-exempt public records that relate to open

session agenda items and are distributed to a majority of the Members less than seventy-two

(72) hours prior to the meeting will be available for public inspection in the lobby of the

District’s business office located at 26111 Antonio Parkway, Rancho Santa Margarita,

California 92688, during regular business hours. When practical, these public records will

also be made available on the District’s Internet Web Site, accessible at

http://www.smwd.com.

Upon request, this agenda will be made available in appropriate alternative formats to

persons with disabilities, as required by Section 202 of the Americans with Disabilities Act of

1990. Any person with a disability who requires a modification or accommodation in order to

participate in a meeting should direct such request to Kelly Radvansky, Secretary to the

Board of Directors, at (949) 459-6642 at least 48 hours before the meeting if possible.

MEMORANDUM

TO: Finance and Administration Committee DATE: June 26, 2019

FROM: Christine McIlrevey and Robert Grantham

SUBJECT: Fiscal Year 2019 Required Audit Communications

SUMMARY:

Vavrinek, Trine, Day & Co., LLP was selected in 2017 through a competitive bidding process to

perform the audits for the District and the Santa Margarita/Dana Point Authority. The Fiscal

Year 2019 Audit is the last year of this three-year audit engagement period.

Vavrinek, Trine, Day & Co., LLP (VTDC) will make a presentation to the Finance and

Administration Committee. A letter summarizing their role and responsibilities in conjunction

with the Fiscal Year 2019 audit is attached.

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25231 Paseo De Alicia, Suite 100, Laguna Hills, CA 92653 P 949.768.0833 F 949.768.8408 W vtdcpa.com

1

June 17, 2019

To the Board of Directors Santa Margarita Water District

We are engaged to audit the financial statements of the Santa Margarita Water District (District) for the year ended June 30, 2019. Professional standards require that we provide you with the following information related to our audit. We would also appreciate the opportunity to meet with you to discuss this information further since a two-way dialogue can provide valuable information for the audit process.

Our Responsibilities under U.S. Generally Accepted Auditing Standards, and Government Auditing Standards

As stated in our engagement letter dated March 29, 2019, our responsibility, as described by professional standards, is to express an opinion about whether the financial statements prepared by management with your oversight are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles. Our audit of the financial statements does not relieve you or management of your responsibilities.

As part of our audit, we will consider the internal control of the District. Such considerations are solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control.

As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we will also perform tests of the District's compliance with certain provisions of laws, regulations, contracts, and grants. However, providing an opinion on compliance with those provisions is not an objective of our audit.

Generally accepted accounting principles provide for certain required supplementary information (RSI) to supplement the basic financial statements. Our responsibility with respect to management’s discussion and analysis, schedule of changes in the District’s net pension liability and related ratios and schedule contributions, which supplement the basic financial statements, is to apply certain limited procedures in accordance with generally accepted auditing standards. However, the RSI will not be audited and, because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance, we will not express an opinion or provide any assurance on the RSI.

We have not been engaged to report on introductory section and statistical section, which accompany the financial statements but are not RSI. Our responsibility with respect to this other information in documents containing the audited financial statements and auditor’s report does not extend beyond the financial information identified in the report. We have no responsibility for determining whether this other information is properly stated. This other information will not be audited and we will not express an opinion or provide any assurance on it.

We will also audit the financial statements for the Santa Margarita/Dana Point Authority (Authority). We understand that the Authority’s MD&A will be omitted. Accordingly, our report will identify that such information is omitted and that our opinion on the financial statements is not affected by this missing information.

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Planned Scope, Timing of the Audit, and Other

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgment about the number of transactions to be examined and the areas to be tested.

Our audit will include obtaining an understanding of the entity and its environment, including internal control, sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing, and extent of further audit procedures. Material misstatements may result from (1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or governmental regulations that are attributable to the entity or to acts by management or employees acting on behalf of the entity. We will generally communicate our significant findings at the conclusion of the audit. However, some matters could be communicated sooner, particularly if significant difficulties are encountered during the audit where assistance is needed to overcome the difficulties or if the difficulties may lead to a modified opinion. We will also communicate any internal control related matters that are required to be communicated under professional standards. If a member of the Board is aware of matters that have a material bearing on the financial statements take as a whole (such as those described in items 1-4), please contact Jessica Andersen at (949) 768-0833 or by email at jandersen@vtdcpa.com by August 30, 2019.

We began our audit on June 17, 2019 and expect to issue our report by November 2019. Jessica Andersen and Roger Alfaro are the engagement partners and are responsible for supervising the engagement and signing the report or authorizing another individual to sign it.

This information is intended solely for the use of the Finance and Administration Committee, Board of Directors, and management of the District and is not intended to be, and should not be, used by anyone other than these specified parties.

Very truly yours,

Jessica Andersen, Partner Of Vavrinek, Trine, Day & Co., LLP

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MEMORANDUM

TO: Finance and Administration Committee DATE: June 26, 2019

FROM: Robert Grantham

SUBJECT: Consideration and Action on the District's Investment Report Portfolio for the

Period Ending May 31, 2019

SUMMARY:

Recommendation: Receive and file the District’s investment report portfolio.

Issue: The District is presenting the investment transactions report as of May 31, 2019.

Fiscal Impact: Investment returns help to offset the District’s expenditures.

Previously Related Action: The District’s investment report for the period ending April 30,

2019, was received and filed by the Finance and Administration Committee on May 29, 2019.

Adherence to Policy: The investment transactions report adheres to the District Investment

Policy.

Anticipated Board Action: The District’s investment report is presented quarterly to the Board

of Directors.

DISCUSSION:

Under the adopted Policy, the District will present a monthly list of transactions to the Finance

and Administration Committee. On a quarterly basis, the District will provide a quarterly

investment report update to the Finance and Administration Committee and to the Board of

Directors.

Investments

All investments continue to meet the District’s credit requirements, resulting in no need to trade

securities due to credit concerns through May 2019.

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For the month of May 2019, the District’s investment interest income is $202,134. In total, the

year-to-date interest income is $2,239,953, which is shown in the following table.

May 2019 May 2018

Union Bank 1,474,516$ 1,242,806$

Wells Fargo 136,564 58,123

BNY 378,548 86,788

CAMP 250,325 -

Total Interest Income 2,239,953$ 1,387,717$

Interest Income Year to Date

The District’s historical reserve balances are presented below in accordance with the adopted

Reserve Policy.

$79

$76

$71

$78 $79

$78

$60

$75

$90

May'18 Jun'18 Sep'18 Dec'18 Mar'19 May'19

SANTA MARGARITA WATER DISTRICTUnrestricted Cash Balance

(in millions)MAY 31, 2019

Unrestricted Cash Balance

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$6

$11

$8

$10

$8 $8 $8 $8 $8 $8 $8 $8

$34 $35

$13

$24

$34 $34

$0

$5

$10

$15

$20

$25

$30

$35

$40

May'18 Jun'18 Sep'18 Dec'18 Mar'19 May'19

SANTA MARGARITA WATER DISTRICTRestricted Cash Balances

(in millions)

MAY 31, 2019

Restricted for Construction Restricted Bond Reserves Restricted Debt Service

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Account Trade Date Settlement Date Transaction Type CUSIP Security Description Maturity Date Par Value Yield Principal Value

SMWD POOL (120-00-00)MaturityXXXX0000 5/15/19 5/15/19 Paydown 02007LAC6 ALLY ABS 2016-3 A3 8/15/20 11,545.97 (11,545.97) XXXX0000 5/15/19 5/15/19 Paydown 44930UAD8 HYUNDAI ABS 2016-A A3 9/15/20 8,482.36 (8,482.36) XXXX0000 5/15/19 5/15/19 Paydown 44931PAD8 HYUNDAI ABS 2017-A A3 8/15/21 13,080.67 (13,080.67) XXXX0000 5/15/19 5/15/19 Paydown 34531EAD8 FORD ABS 2017-A A3 6/15/21 21,859.20 (21,859.20) XXXX0000 5/15/19 5/15/19 Paydown 44891EAC3 HYUNDAI ABS 2016-B A3 4/15/21 24,124.38 (24,124.38) XXXX0000 5/15/19 5/15/19 Paydown 47788NAC2 JOHN DEERE ABS 2016-B A3 6/15/20 9,776.78 (9,776.78) XXXX0000 5/15/19 5/15/19 Paydown 89238MAD0 TOYOTA ABS 2017-A A3 2/15/21 14,505.09 (14,505.09) XXXX0000 5/1/19 5/1/19 Paydown 3136AQDQ0 FANNIE MAE SERIES 2015-M13 ASQ2 9/1/19 2,270.24 (2,270.24) XXXX0000 5/1/19 5/1/19 Paydown 3136B1XP4 FNA 2018-M5 A2 9/25/21 4,059.54 (4,059.54) XXXX0000 5/1/19 5/1/19 Paydown 3137FKK39 FHMS KP05 A 7/1/23 406.62 (406.62) XXXX0000 5/3/19 5/3/19 Paydown 86563YVN0 SUMITOMO MITSUI BANK NY CD 5/3/19 930,000.00 (930,000.00)

Total (1,040,110.85) DispositionsXXXX0000 various various Sell Money Fund Money Market Fund 1,845,842.22 (1,845,842.22) XXXX0000 5/22/19 5/23/19 Sell 912828D72 US TREASURY NOTES 8/31/21 595,000.00 2.20% (592,350.39) XXXX0000 5/28/19 5/30/19 Sell 912828D72 US TREASURY NOTES 8/31/21 305,000.00 2.10% (304,308.99) XXXX0000 5/28/19 5/30/19 Sell 912828D72 US TREASURY NOTES 8/31/21 30,000.00 2.10% (29,932.03)

Total (2,772,433.63) AcquisitionsXXXX0000 various various Buy Money Fund Money Market Fund 2,078,022.02 2,078,022.02 XXXX0000 5/21/19 5/23/19 Buy 023135AW6 AMAZON.COM INC BONDS 2/22/23 595,000.00 2.69% 588,919.10 XXXX0000 5/1/19 5/3/19 Buy 912828X70 US TREASURY N/B NOTES 4/30/24 930,000.00 2.27% 918,229.69 XXXX0000 5/21/19 5/30/19 Buy 14042WAC4 COPAR 2019-1 A3 11/15/23 335,000.00 2.52% 334,932.13

Total 3,920,102.94 SMWD BC-63 (120-63-00)AcquisitionsXXXX0010 various various Buy Money Fund Money Market Fund 1,035.40 1,035.40

SMWD Dana Point Dist 2A (221) BC 74 (120-74-00)AcquisitionsXXXX0020 various various Buy Money Fund Money Market Fund 25.22 25.22

SMWD TALEGA 2003 BC65 (120-65-00)AcquisitionsXXXX0030 various various Buy Money Fund Money Market Fund 9,409.50 9,409.50

SMWD Dana Point Dist 4B (429) BC 74 (120-74-00)AcquisitionsXXXX0040 various various Buy Money Fund Money Market Fund 4,235.09 4,235.09

SMWD TALEGA BOND RES 07 BC66 (120-66-00)AcquisitionsXXXX0050 various various Buy Money Fund Money Market Fund 879.75 879.75

SMWD 2013-1 SENDERO RES BC66 (120-66-00)AcquisitionsXXXX0056 various various Buy Money Fund Money Market Fund 8,185.25 8,185.25

Transaction Summary - May 2019

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Account Trade Date Settlement Date Transaction Type CUSIP Security Description Maturity Date Par Value Yield Principal Value

Transaction Summary - May 2019

SMWD 2013-1 SENDERO CONS BC68 (120-68-00)AcquisitionsXXXX0057 various various Buy Money Fund Money Market Fund 4,894.85 4,894.85

SMWD 2013-1 SENDERO FIRE BC68 (120-68-00)XXXX0058 No Transactions

SMWD 2013-1 SENDERO ACQ BC68 (120-68-00)XXXX0059 No Transactions

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MEMORANDUM

TO: Finance and Administration Committee DATE: June 26, 2019

FROM: Robert Grantham

SUBJECT: Consideration and Action on the District's May 2019 Business Expense

Reimbursement Report and Board of Directors' Compensation

SUMMARY:

Recommendation: Approve the Business Expense Reimbursement Report and Board of

Directors’ Compensation.

Issue: The Business Expense Reimbursement Report and Board of Directors’ Compensation for

the period ending May 31, 2019, are being submitted for information and approval.

Fiscal Impact: The District annually adopts the budget, which includes these expenses.

Previously Related Action: The Business Expense Reimbursement Report and Board of

Directors’ Compensation for the period ending April 30, 2019, was approved at the May 29th

Finance and Administration Committee and will be presented to the Board of Directors on June

21st.

Adherence to Policy: The Business Expense Reimbursement Report and Board of Directors’

Compensation comply with the District’s Purchasing Policy, Travel and Expense

Reimbursement Policy, and Training, Education, and Conference Policy.

Anticipated Board Action: It is anticipated that this item will be presented to the Board of

Directors for approval at the July 19th Board of Directors’ meeting as a Consent Calendar item.

DISCUSSION:

The District’s Business Expense Reimbursement Report (Attachment “A”), and Board of

Directors’ Compensation (Attachment “B”) are attached.

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Attachment "A"

SANTA MARGARITA WATER DISTRICTBUSINESS EXPENSE REIMBURSEMENT REPORT

May 31, 2019

FERONS, DAN -$ BUNTS, DON -$ BUTLER, TRICIA -$ CASTILLO, ERICA -$ GRANTHAM, ROBERT -$ LEACH, JIM LEACH-05202019 05/20/19 REIMBURSEMENT : 01/04/19-04/26/19 121.93 770.61 892.54$

BOARD MEMBERS

GIBSON, CHARLES GIBSON-05202019 05/20/19 REIMBURSEMENT : 04/05/19-05/09/19 87.65 87.65$ JACOBS, SAUNDRA -$ McCUSKER, JUSTIN -$ OLSON, BETTY -$ WILSON, CHARLEY WILSON-05202019 05/20/19 REIMBURSEMENT : 05/07/19-05/09/19 571.46 48.79 398.23 1,018.48$

*Detail of attendees will be provided upon request.

INVOICE NUMBER LODGING MEALS AUTO TOTAL

NAME DESCRIPTION MEMBERSHIP DUES CONFERENCE AIRFARE

NAME DESCRIPTION MEMBERSHIP DUES CONFERENCE AIRFARE

ADDTL EXP

ADDTL EXP SUBMITTAL DATE

INVOICE NUMBER

GENERAL MANAGER & DEPARTMENT HEADS

LODGING MEALS AUTO TOTALSUBMITTAL DATE

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Santa Margarita Water District

Board of Directors' Compensation

Director Pay Date Amount Meeting Date Function

Gibson, Charles 5/10/19 210$ 4/3/19 SMWD Board Meeting

210 4/5/19 WACO Meeting

210 4/15/19 SMWD Strategic Planning Meeting

210 4/16/19 SMWD WQI Committee Meeting

210 4/19/19 SMWD Board Meeting

210 4/22/19 ACWA Region 10 Planning Event

210 4/23/19 South OC Economic Coalition

210 4/25/19 FVWA Board Meeting

210 4/29/19 SMWD Budget review w/GM & Asst. GM-Finance

210 4/30/19 SMWD FAC Meeting

0 * 4/11/19 State of South County Reception

0 * 4/18/19 OCBC Chairman's Leadership Breakfast

2,100$

Jacobs, Saundra 5/10/19 210$ 4/3/19 SMWD Board Meeting

210 4/15/19 SMWD Strategic Planning Meeting

210 4/19/19 SMWD Board Meeting

210 4/30/19 SMWD FAC Meeting

840$

McCusker, Justin 5/10/19 210$ 4/3/19 SMWD Board Meeting

210 4/4/19 MWDOC Elected Officials Meeting

210 4/5/19 WACO Meeting

210 4/11/19 State of South OC Reception

210 4/12/19 SMWD EOC Meeting

210 4/15/19 SMWD Strategic Planning Meeting

210 4/17/19 RMV Meeting - PA3 Update

210 4/19/19 SMWD Board Meeting

210 4/23/19 South OC Economic Report Luncheon

210 4/26/19 Meeting w/ SMWD GM & President Jacobs

2,100$

Olson, Betty 5/10/19 210$ 4/3/19

210 4/9/19

210 4/11/19

210 4/12/19

210 4/15/19

210 4/16/19

210 4/18/19

210 4/19/19

210 4/25/19

210 4/30/19

SMWD Board Meeting

SJBA Board Meeting

State of South County Reception

SMWD EOC Meeting

SMWD Strategic Planning Meeting

WQI Committee Meeting

OCBC Chairman's Leadership Breakfast

SMWD Board Meeting

FVWA Board Meeting

Budget Meeting w/GM and Asst. GM

2,100$

Wilson, Charley 5/10/19 210$ 4/1/19 ACWA Energy Committee Prep

210 4/3/19 SMWD Board Meeting

210 4/5/19 WACO Meeting

210 4/11/19 Sustain OC

210 4/12/19 OC Council of Governments

210 4/15/19 SMWD Strategic Planning

210 4/16/19 Meeting w/ Dick Ackerman

210 4/17/19 ACC-OC Meeting

210 4/19/19 SMWD Board Meeting

210 4/23/19 Meeting w/ Dr. Bernstein

0 *4/29/19 ACWA Energy Committee Prep

2,100$

Total Directors' Compensation 9,240$

* Exceeds ten paid meetings allowance per month and/or more than one paid meeting on the same day.

Attachment "B" 3.2.b

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MEMORANDUM

TO: Finance and Administration Committee DATE: June 26, 2019

FROM: Robert Grantham

SUBJECT: Consideration and Action on Improvement District No. 4 Draft Benefit Analysis

Study and Engineer's Report on Ad Valorem Taxes for Fiscal Year 2019-2020

Prepared by DLM Engineering

SUMMARY:

Recommendation: Review draft Fiscal Year 2019-20 Benefit Analysis Study and Engineer’s

Report and provide direction on application of funds on hand.

Issue: Annually, the District commissions the preparation of the Improvement District No. 4 (ID

No. 4) Benefit Analysis Study on Ad Valorem Taxes (Study). The Study develops an allocation

of the annual debt service (principal and interest due) on the District’s outstanding General

Obligation Bonds to the District’s relevant Improvement Districts and sub-districts. The

allocation is used to determine the ad valorem (value-based) tax rates provided to the County of

Orange for the upcoming year’s property tax bills.

Fiscal Impact: The Study establishes the assessment tax rates for Tax Fiscal Year 2019-2020

(FY 2020) for each Improvement District for the payment of General Obligation Bond debt

service.

Previously Related Action: On August 17, 2018, the Board approved the adoption of

resolutions establishing assessment tax rates for FY 2019 for each Improvement District for the

payment of General Obligation Bond debt service. On December 21, 2018, the Board also

approved the use of interest earned on the Debt Service Stabilization Fund to help offset the

District’s annual contributions towards the debt service payments on behalf of Improvement

Districts No. 5 and 6. The District will be subsequently repaid through future connection fee

revenues.

Adherence to Policy: The District has covenanted to set assessment tax rates to pay the annual

debt service obligations on its General Obligation Bonds.

Anticipated Board Action: It is anticipated that the Final Benefit Analysis Study and FY 2020

Ad Valorem tax rate assessment resolutions will be presented to the Board of Directors for

approval on August 23, 2019.

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DISCUSSION:

DLM Engineering has prepared a preliminary DRAFT FY 2020 Benefit Analysis Study. The

Study is prepared annually and develops tax rates for Improvement Districts Nos. 2, 3, and 4 that

are necessary to pay the annual debt service on the District’s outstanding General Obligation

Bonds (Bonds). The Study also allocates portions of Bond debt service among the sub-districts

of Improvement District No. 4, based upon the benefit received from the facilities the Bonds

financed. For the purposes of presenting the analysis to the Finance and Administration

Committee (FAC), the District has used the FY 2018 assessment rates, with an estimated growth

factor. Consequently, the resulting tax rates presented in this DRAFT Study are estimates only

and subject to change based on actual assessed land values to be released by the County of

Orange in July.

Historically, the Benefit Analysis Study is presented to the Board annually in August along with

the property tax resolutions. The District receives the assessed valuations from the County in the

later part of July, which limits the review period with the Board in advance of the adoption. As

part of the process for the FY 2020 analysis, a DRAFT of the Improvement District No. 4 (ID

No. 4) Benefit Analysis Study on Ad Valorem Taxes is being presented to the Finance and

Administration Committee in order to facilitate guidance on the use of the existing Debt Service

Stabilization Fund (DSSF).

The Study’s preliminary estimated tax rates (per $100 of assessed land value) are provided in the

table below. To provide context to tax rates in the table below, a tax rate of $0.10 for a property

with a $500,000 assessed land value equates to $500 in an annual assessment.

Table 1 – Tax Rates

GO Bond Debt Service Tax Rate (per $100 of assessed valuation)

Improvement District

FY 2017-18

FY 2018-19

Preliminary

FY 2019-20

Preliminary

Percent

Change (1)

2 $0.0110 $0.0110 $0.0149 35.2%(2)

3 0.2811 0.2224 0.2206 -0.8%

4A (RSM) 0.2979 0.2411 0.2384 -1.1%

4B (Las Flores) 0.3496 0.2110 0.2088 -1.0%

4C (Village of Esencia) 0.13036 0.0938 0.0955 1.8%

4D (Ladera) 0.1316 0.0929 0.0911 -1.9%

4E (Village of Sendero) 0.1937 0.1157 0.1126 -2.7%

(1) Percentage change from FY 2018-19 to FY 2019-20.

(2) Preliminary rates do not include any use of funds on hand to offset amount. Improvement

District No. 2 was allocated $104,620 of funds to offset the prior year tax levy.

As seen in the table above, the tax rates for all of the improvement districts and sub-districts will

be lower in the coming year, with the exception of ID 2, which has very little debt remaining. In

FY 2019, the District used a portion of the Debt Service Stabilization Fund to keep the

assessment rate from increasing from the prior year. However, with the assessment rate being

relatively small, the District is not proposing to provide a comparable offset in FY 2020. For

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example, a property with an assessed land value of $500,000 would pay an annual assessment of

$75 this year, versus $55 last year.

A DRAFT of the Improvement District No. 4 (ID No. 4) Benefit Analysis Study on Ad Valorem

Taxes is included as an appendix to this memorandum. The Study will be finalized and brought

back to the FAC in July, if the County has provided the new assessment information in a time to

meet the meeting schedule.

Future Debt Service Outlook by Improvement District

A significant portion of the District’s Bonds reach final maturity on August 1, 2020. Total Bond

debt service will decrease from $14.6 million to $3.0 million in FY 2021, as shown in the table

below. The projected percentage changes shown apply to both debt service and tax rates.

Table 2 – Debt Service Payments

Debt Service Comparison – Projected Changes for FY 2020-21

Improvement District

Preliminary

FY 2019-20

Projected(1)

FY 2020-21

Projected

Percentage

Change

Final GO Bond

Payment

2 $370,650 $369,450 0% 8/1/2038

3 2,026,450 249,000 -88% 8/1/2038

4A (RSM) 6,338,023 748,372 -88% 8/1/2038

4B (Las Flores) 1,136,732 117,980 -90% 8/1/2038

4C (Village of Esencia) 816,722 183,637 -78% 8/1/2038

4D (Ladera) 2,520,722 1,138,830 -55% 8/1/2038

4E (Village of Sendero) 492,820 200,307 -59% 8/1/2038

5/6 (District Advance)(2) 870,256 - -100% 8/1/2020

(1) Projected amounts based on current allocations. Improvement District No. 4 will remain

subject to changes in allocation for portions of debt service through final Bond maturity.

(2) District has been advancing debt service costs attributable to Improvement Districts No. 5

and 6 from operating revenues; these advances will cease after the FY 2020 tax year.

Use of Debt Service Stabilization Funds

Each year, the County of Orange collects property taxes assessments on behalf of the District.

The amount collected typically exceeds the total annual debt service payments due to penalty

charges, repaid delinquencies, and supplemental taxes which are paid when a property is sold

and reassessed. The District holds these excess funds in a Debt Service Stabilization Fund

(DSSF). Currently, there is approximately $11 million available in the DSSF.

In prior years, the District has applied portions of the DSSF to offset tax rate requirements and to

maintain consistent tax rates from year to year. Based on the discussion with the Board during

last year’s Benefit Analysis process, the District is considering applying a portion of the DSSF to

fund capital projects rather than applying these funds to offset this year’s tax rates.

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The District is seeking input and direction from the FAC regarding the application of existing

DSSF. There are two options regarding the application of the DSSF:

• Use available money in the DSSF to offset Improvement District Bond tax rates, similar to

the District’s historic practice; or

• Utilize the DSSF to fund those capital projects that directly benefit the specific improvement

districts and sub-districts from which the taxes were collected.

Option 1 – Offset Improvement District Bond Debt Service Payments

The District could continue its practice of utilizing the DSSF to offset annual tax rates.

Historically, the District has applied between 1/7th and 1/3rd of each ID’s fund balance to reduce

the annual debt service payments. However, with the last large debt service payments coming

due August 2020, an agency would typically exhaust the remaining funds to pay the final year of

debt service. As a result, the District would apply approximately 80 percent of the DSSF to

reduce the FY 2020 tax rates. (As noted above, annual debt service payments drop from roughly

$14.6 million to $3 million in FY 2021 with a decrease to $2.2 million from 2034 through 2038.)

In subsequent years, the remaining DSSF would continue to be applied to offset tax rates.

Option 2 – Utilize DSSF for Capital Projects

As an alternative to applying the DSSF to our annual debt service payments, the District could

utilize a portion of the $11 million of the DSSF to pay for current capital projects that benefit

each of the respective improvement districts. The District’s financial forecast that was presented

in the recently adopted Budget incorporates $101 million in capital projects over the next five

years. The District anticipates funding these projects through a combination of rate-revenue

increases, cash reserves on hand, and debt financing. Utilizing the DSSF would provide the

District with another funding source. All else being equal, DSSF availability would reduce the

amount of capital the District funds through debt, saving debt interest expense over 30 years.

Overall, this option would utilize much of the DSSF for District capital needs over the next two

years.

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SANTA MARGARITA WATER DISTRICT 26111 Antonio Parkway

Rancho Santa Margarita, California 92688

DRAFT ID NO. 4 BENEFIT ANALYSIS STUDY ON AD VALOREM TAXES

FOR FISCAL YEAR 2019-20

June 17, 2019

Prepared by:

DLM Engineering 14220 Sandhill Road

Poway, CA 92064

In Association with

EFS Engineering, Inc. Gillingham Water, Inc.

6-30-20

Donald L MacFarlane

No. C 33285

CIVIL

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Santa Margarita Water District Map of Improvement Districts

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EXECUTIVE SUMMARY Purpose This report is the Improvement District No. 4 (ID 4) Benefit Analysis Study on ad valorem taxes for the Santa Margarita Water District (District), for Fiscal Year 2019-20 (July 1, 2019 through June 30, 2020). The purpose of this report is to calculate and document the appropriate allocation of the District’s General Obligation Bond (Bond) debt service and to recommend resulting ad valorem tax rates for consideration of adoption by the District’s Board of Directors. California law requires that public agencies conduct and document such analysis as the objective basis for taxes. For purposes of cost accounting and cost allocations, the District is divided into eight geographical units known as Improvement Districts (IDs) and referred to as IDs 1 through 8. ID 4, is further subdivided into five sub-districts: IDs 4A through 4E. Unit boundaries are depicted in the accompanying map. As illustrated in the map, there is some overlap between the five sub-districts in ID 4. More specifically, IDs 4D and 4E are contained within ID 4B. The five sub-districts in ID 4 are as follows:

• 4A – Rancho Santa Margarita • 4B – Las Flores • 4C – Village of Esencia • 4D – Ladera Ranch • 4E – Village of Sendero

The District has not yet reached buildout. Two other Improvement Districts, IDs 5 and 6, are in the planning and pre-development stages. The landowner of these two IDs is the Rancho Mission Viejo Company (RMV). Under the terms of a development agreement between RMV and the District, developments within IDs 5 and 6 pay a regional capacity charge to the District to buy into existing regional facilities. This report estimates and documents cost allocations and ad valorem tax rates for each of the IDs in the District’s service area, which are currently responsible for paying Bond debt service. This consists of IDs 2, 3, and the five sub-districts of ID 4. Additionally, IDs 5 and 6 are allocated benefit and related Bond debt service requirements for certain facilities. Background – Debt Financing and Benefit Allocations Historically, the District has sold Bonds to fund the construction of water, wastewater, and recycled water facilities serving the various IDs. Table ES-1 on the following page lists the District’s current Bonds and the IDs that benefit from each Bond. IDs 5 and 6 are planning to develop and will eventually benefit from some of the regional facilities. Bond funds were not used to construct facilities in ID 7, which encompasses the Talega Community within the City of San Clemente. The 2017 Series A (Refunding) bond issuance was used to refund the 2009 Series A (Water Reliability) bonds issue and all the proceeds have been spent.

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Table ES-1, Bond Issues and Benefitting IDs

Bond Issue Benefitting IDs 2014A Series 2, 3, 4, 4A, 4B 2017A Series (Refunding) (Water Reliability)

2,3,4

Bond proceeds have been used to fund localized projects that benefit specific IDs, as well as other projects serve a broader area within the District at-large. The tax rates assessed on each ID and sub-district are proportional to the share of bond proceeds spent within that geographic unit. For facilities that provide benefit to only a single Improvement District, the allocation of project costs, and the resulting tax rates for the repayment of the project’s allocated share of the Bonds, is straightforward. However, other funded facilities are more regional in scope and provide benefit to multiple IDs. For these regional facilities, the allocation of project costs needs to account for the share of the project’s capacity utilized by each ID. This report documents the allocations and calculations used to assign benefit and Bond debt service. The allocation process accounts for the constructed facilities and, where available, approved facility master plans for projected development. For IDs 2, 3, and a portion of 4A, the debt service is defined directly by the Bond issues themselves as there was no overlapping benefit to other IDs. For the remainder of ID 4 and its various sub-districts, general facility plans, and capacity allocations were originally defined in the Preliminary Master Plan of Water Supply and Wastewater Disposal Facilities, ID 4 and proposed IDs 4A, 4B, and 4C, prepared by RBF Consulting (December 1983). An ID 4A Revised Plan of Works was prepared by RBF in August 1991. Subsequently, subarea master plans were prepared that provided revisions and more details for the facilities and capacities. Accordingly, this report updates the projected development inventories, water demands, and wastewater loadings, and resulting cost allocations, for the ID 4 sub-districts. The updated projections are based on information furnished to the District by RMV, the primary owner of the undeveloped property located in ID 4. Cost Adjustments In addition to the allocation of Bond debt service, the annual tax rate for each ID is affected by three other cost and revenue components as follows: 1) To the extent the allocated tax rate exceeds a certain threshold in ID 4C, special funds would be

contributed subject to the Tri-Party Agreement between the District and RMV, dated March 3, 2015 and amended on March 22, 2016. Such funds are not expected to apply in 2019-20 or thereafter since the tax rate is now below the threshold.

2) The District maintains balances of debt service stabilization funds (DSSF) attributable to each ID. The DSSF have been generated over multiple years from receipts of supplemental tax revenues from the County of Orange in excess of required Bond debt service, as well as from late-payment penalties and collection of past due assessments. Historically, the District has applied portions of the DSSF to maintain consistent tax rates from year-to-year. Funds have been used to reduce tax rates as needed due to decreases in assessed value or changes in allocation of debt service between Improvement Districts.

3) The District has historically contributed operating revenues to fund a portion of the annual debt service. Through Fiscal Year 2018-19, the District paid the debt service associated with upsizing regional facilities to serve future customers in IDs 5 and 6.

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These three revenue sources can potentially fund a portion of the overall debt service, thereby reducing the ad valorem tax rates. In Fiscal Year 2019, no DSSF were applied to pay annual debt payments, with the exception of ID 2. For ID 2, a $100,000 had been applied last year in order to prevent a moderate increase in the year-over-year tax rate.

Recommended Ad Valorem Tax Rates The recommended debt service allocations, revenue sources, and resulting ad valorem tax rates are presented in Tables ES-2 and ES-3 below and discussed in more detail later in the report. The recommended tax rates are calculated by dividing the debt service allocated to each ID, adjusted as described above, by the ID’s total assessed property valuation provided by the County of Orange Assessor’s Office. For this DRAFT report, the tax rates and projected revenues are based on the Fiscal Year 2018-19 total assessed value of land and improvements as provided by the County of Orange Assessor’s Office and increased by three percent for all IDs except 4C (Esencia) which was assumed at four percent because of ongoing development. Changes to the tax rates over last year are summarized below:

• The tax rates will decrease for all IDs and sub-districts with the exception of ID 2 and ID 4C.

o ID 2 will experience a slight increase in the tax rate as there will be no DSSF used to offset the tax rate. In FY 2018-19, $100,000 was used to prevent an increase in the annual tax rate. Per the direction of the Board, and due to the minimal level of the tax rate, this offset is not being applied in FY 2019-20.

o ID 4C (Esencia) will experience a slight increase as bond proceeds have been spent this past year within this sub-district, which is still under development. [With the completion of the Study and final assessed land values from the County of Orange, the tax rate might not rise dependent upon the magnitude of the increases to assessed values.]

o For all other IDs, the tax rates will decrease due to the annual increase in assessed land values.

• The District, County of Orange, and Rancho Mission Viejo PA 2 Development, LLC entered into a Tri-Party Agreement on March 15, 2015, and amended it on March 22, 2016, whereby RMV would pay down the annual debt service so that the resulting tax rate would be 0.13036 per $100 of assessed value. This year’s proposed tax rate for ID 4C is below 0.13036 and so no contribution from RMV is required.

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Tables ES-2 and ES-3 are Preliminary and Subject to Change based on any DSSF utilization and final Assessed Value Information

Table ES-2, Debt Service Revenue Sources

Description

Debt Service Revenue Sources ($Millions)

FY 2018-19

Proposed FY 2019-20

Percent Change

Ad Valorem Taxes $13.6 $14.0 2.9% Less Allowance for Delinquencies ($0.3) ($0.3) 0.0% Net Tax Revenue $13.3 $13.7 3.0% Tri-Party Agreement $0.0 $0.0 0.0% Debt Stabilization Fund $0.1 $0.0 -100% Contribution for ID 5 and 6 (Operating Revenues) $0.9 $0.9 0.0%

Total $14.3 $14.6 2.1%

Table ES-3, Historical & Proposed Tax Rates

Tax Rate (per $100 of assessed valuation)

Improvement District

2017-18

2018-19

Proposed 2019-20

Percent Change vs.

Previous Year 2 0.0110 0.0110 0.0149 35.5% 3 0.2811 0.2224 0.2206 -0.8%

4A 0.2979 0.2411 0.2384 -1.1% 4B 0.3496 0.2110 0.2088 -1.0% 4C 0.13036 0.0938 0.0955 1.8% 4D 0.1225 0.0929 0.0911 -1.9% 4E 0.1605 0.1157 0.1126 -2.7%

Report Changes for FY 2019-20 As noted above, changes to debt service, the DSSF contribution, and assessed valuations affect the tax rates. Additionally, as shown in the Appendix Table 3, the Allocation of Water Supply Reliability Enhancement Program (WSREP) was modified to reflect updated land use information for Planning Area (PA) 3 in ID 5 and PA 4 in ID 6, which changed water demands, and storage planning. The update to PA 3 and PA 4 had a minor effect on the percentages in Table 3. The water demands, wastewater flows, and WSREP storage allocation for ID 4C were revised to reflect updated land use information provided by RMV. This caused the ID 4C tax rate to increase.

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Report Organization The remainder of this report provides a more detailed description of the benefit analysis and debt service allocation including:

1. Methodology 2. Capacity Allocations

a. District Administration Building b. Regional Water Supply Facilities c. Wastewater Treatment Facilities d. Water Supply Reliability Enhancement Program

3. Benefit Analysis Summary 4. Analysis of Debt Service Funding Requirements for FY 2019-20 5. Debt Service Stabilization Fund 6. Estimated Ad Valorem Tax Rates 7. Appendix, Summary of Tables and Tables I through III and 1 through 11.

DETAIL

1. Methodology This section of the report outlines the debt service cost allocation methodology for the various bond issues and facilities. Results and supporting calculations are contained in a series of tables in the Appendix. Results Tables I, II, and III present key results and Tables 1 through 11 document various supporting data and calculations. The IDs 4, 4A and 4B bond issues provide funding for various projects, which benefit the overlapping sub-districts within ID 4. As a result, it is necessary to allocate the proportional benefit of each bond issue, and the appropriate amount of debt service, to each of the overlapping IDs. In addition, the District may utilize certain funding sources for Bond debt service, which impact all of the IDs with outstanding Bonds. There have been several revisions over the years to the methodology for allocating the debt service on the District’s Bonds due to changes in land use plans, facilities, capacity requirements, and funding sources. The principles listed below are currently utilized as the basis for reallocating capacity and costs:

• The existing South County Pipeline (SCP) has adequate capacity to serve the entire District, including future development.

• The Chiquita Water Reclamation Plant (CWRP) and the Chiquita Land Outfall have adequate capacity to serve the entire District, excluding ID 1.

• Capacity is reallocated based on the projected ultimate capacity needs of the District.

• IDs 4C and 4E have been participants and paid debt service for the District’s existing bond issues

for the various backbone facilities. Therefore, they are entitled to service, and it was recommended that capacity should be reallocated based on the approved development plans for each of these IDs going forward.

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• IDs 5 and 6 will need to acquire capacity in the District’s backbone water supply system, water supply reliability projects, and wastewater treatment facilities since they have not participated in and do not own capacity in any of the District’s facilities. However, portions of the capacity in the SCP and CWRP, which are required to serve IDs 5 and 6, have been funded from operating revenues. The District will be reimbursed through capacity charge payments as defined by the development agreement with RMV.

• The funding formula for the debt service on the District’s Administration Building allocates its

debt service to benefitting IDs. This updated benefit analysis is based on the capacity requirements for each of the various sub-districts within ID 4, as determined by their existing and planned land use. Table 4 summarizes the current existing and approved development for ID 4. The projected ultimate capacity requirements are based on the proposed land uses in the approved General Plan Amendments or actual development for developed areas. The projected ultimate water demands and wastewater flows for each of the sub-districts within ID 4 are also shown in Tables 4 and 5, respectively. Table 4 was reviewed and accepted by RMV in 2017. Updates to land uses in this year’s report are described in Section 7 of this report.

2. Capacity Allocations The allocation of specific facilities is described in the paragraphs below.

2a. District Administration Building ID 4 financed a portion of the Administration Building from a combination of IDs 4 and 4A bond issues. The proposed allocation of costs to the various sub-districts within ID 4 is shown in Table 11 and is based on the number of equivalent dwelling units within each planned community since the primary use of this facility is administration, engineering, customer service and operations, which are mainly a function of the number of customers and/or service connections.

2b. Regional Water Supply Facilities

Regional water supply facilities include the SCP, the Irvine Lake Pipeline, and costs for various historical engineering investigations for domestic water storage facilities projects. The allocation methodology is different for each of these facilities, as described below:

• The SCP was a joint project between the District and the Metropolitan Water District of Southern

California (MWD) to provide water supplies to all of ID 4, as well as other IDs within the District’s service area. Capacity in the SCP was reallocated in 2006 (as shown in Tables 7 and 8) based on the projected ultimate demands of the IDs served by the SCP, including the future needs of IDs 4C, 4E, 5 and 6 (based on the proposed Ranch Plan development). This allocation is based on the premise that IDs 5 and 6 will need to purchase capacity in the SCP to serve the proposed developments. This will ultimately result in phasing out all surplus capacity and eliminate the need for the District to carry a portion of the oversized capacity from operating revenues. However, during the interim period, before capacity is acquired by IDs 5 and 6, the District plans to continue to fund this portion of capacity from operating revenues or the DSSF. The costs for the SCP project facility have also been adjusted to reflect the purchase of pro-rata capacity by MWD in this facility.

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Agreement No. 2178 between the District and MWD defines the District’s capacity as 48.59 cubic feet per second (cfs) when the pipeline is operated as a joint facility. The proposed capacity allocations in some reaches of the SCP exceed the District’s ownership under Agreement No. 2178. However, MWD is obligated to provide any additional required capacity under the agreements for the Allen McColloch Pipeline (AMP) and SCP.

• The Irvine Lake Pipeline and domestic water storage facilities are different projects which were

undertaken by the District in order to provide for the future water supply needs of the District. Debt service for both of these facilities was reallocated in 2006 and is currently funded from ad valorem taxes within ID 4. It is recommended that IDs 5 and 6 be required to purchase a pro-rata share of these facilities based on their pro-rata needs prior to obtaining any service commitments. However, IDs 5 and 6 are not currently assigned any benefit / debt service costs for these facilities within this benefit analysis.

2c. Wastewater Treatment Facilities

This primary category of facilities includes the CWRP Common Facilities, Treatment Capacity, Land Outfall and Effluent Disposal facilities. The CWRP common facilities were master planned based on higher flow rates and have adequate capacity to serve the ultimate needs of the various participating ID’s, including IDs 5 and 6. The allocation methodology was revised in 2006 to allocate all capacity based on the ultimate needs of the IDs being served from these facilities. This will ultimately result in phasing out all surplus capacity and eliminate the need for the District to carry a portion of the oversized capacity from operating revenues or the DSSF. However, during the interim period, prior to when capacity is acquired by IDs 5 and 6, the District funded this portion of capacity from operating revenues. This District contribution will cease with the final debt service payment of the 2014A Bonds in August 2020. Treatment capacity at the CWRP has been built in phases, depending on the needs of each specific ID. Each ID is responsible for funding and building needed capacity and IDs 5 and 6 do not currently own treatment capacity. Therefore, it will also be necessary for these IDs to fund and construct additional treatment capacity to meet their needs. In 2010, the District prepared a master plan for expanding the capacity of the CWRP from 9 million gallons per day (mgd) to an estimated maximum average of 10.5 mgd, which will be required to serve the future needs of the District. This study was funded from the ID 4 bond issue, and the costs for this study have been allocated to IDs 4C and 4E. The current allocation of treatment capacity for ID 4 is shown in Table R-1.

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Table R-1: Current Allocation of CWRP Treatment Capacity to ID 4

ID No. / Development Area

Total Existing Treatment Capacity

(mgd) 4A – Rancho Santa Margarita 2.53 4B – Los Flores 0.33 4C – Village of Esencia 0.53 4D – Ladera Ranch 1.43 4E – Village of Sendero 0.32 Total ID 4 Capacity 5.14

Note: ID 4 Capacity Only

2d. Water Supply Reliability Enhancement Program The District sold a bond issue (Santa Margarita / Dana Point Authority Series 2009A Revenue Bonds) in February 2009 to finance the District’s Water Reliability Enhancement Program, which included funding for the District’s share of the costs of three emergency water supply reliability projects. The three projects include the Baker Water Treatment Plant, an Intertie with Irvine Ranch Water District (IRWD), and the Upper Chiquita Reservoir (UCR). The purpose of these projects is to provide emergency water supplies for the participating IDs for up to a ten-day period when one or more of the District’s primary imported water supplies might be interrupted due to an emergency situation or planned shutdown. The participating IDs currently allocated benefit and debt service costs under this benefit analysis include IDs 2, 3, and 4. Table 3 summarizes the allocation of capacity to each of the participating IDs, and includes IDs 5 and 6, who will participate in the future, based on the updated projected water demands for each of these IDs. Supporting data and calculations for Table 3 are presented in Tables 3A through 3D. The debt service for each of the participating IDs is included in Table 1, and the debt service allocation to IDs 4A, 4B, 4C, 4D and 4E is detailed in Results Table I, based on the benefit allocation as determined in Table 3. The 2009A issue was refinanced in 2017 and is now reflected as the 2017A Santa Margarita / Dana Point Authority Series 2017A Refunding Revenue Bonds (2017A issue).

3. Benefit Analysis Summary The recommended debt service allocations for FY 2019-20 are summarized in Table R-2 below and in Results Table I in the Appendix. The allocations are based on the benefit analysis and the District’s FY 2019-20 Debt Service Schedule, which is shown in Table 1 of the Appendix.

Table R-2: Debt Service Allocation Summary ID 2 ID 3 ID 4A ID 4B ID 4C ID 4D ID 4E Total DS $370,650 $2,026,450 $6,323,588 $1,137,069 $848,414 $2,514,556 $481,393

4. Analysis of Debt Service Funding Requirements for FY 2019-20 Several funding sources may be utilized to fund the annual debt service on the Bonds. The funding sources include:

• Ad valorem taxes on land and improvements only within the various IDs;

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• Debt Service Stabilization Funds (DSSF), which include reserves resulting from the receipt of supplemental tax payments, delinquent tax payments, etc.; and

• District operating revenues for specific facilities as discussed previously.

Ad valorem tax revenues are dependent on both the tax rates, which are set by the District, and total assessed values, which are established by the County of Orange Assessor’s Office. Table R-3 shows a comparison of the total assessed values for the last six years. The large increase in the assessed valuation of land and improvements in ID 4C and ID 4E is due to the conversion of raw land into housing and associated development. For this DRAFT report, the District has assumed that the assessed valuations from Fiscal Year 2018-19 would increase by three percent in all IDs, except for ID 4C, which was assumed to increase by four percent because of the rapid development. [to be updated in final report]

Table R-3: History of Total Assessed Valuations for Fiscal Years [Update]

Total Assessed Value for Fiscal Year ($1,000) 2019/20

ID

2014/15

2015/16

2016/17

2017/18

2018/19

2019/20*

Percent Change

2 1,974,367 2,106,834 2,236,076 2,353,363 2,468,385 2,542,437 3% 3 690,726 760,888 799,169 855,449 909,999 937,299 3%

4A 1,978,850 2,131,184 2,278,789 2,461,320 2,627,291 2,706,109 3% 4B 428,287 457,209 481,336 507,361 539,486 555,670 3% 4C 83,039 321,486 606,399 785,306 871,604 906,468 4% 4D 2,089,347 2,297,357 2,427,572 2,574,216 2,733,193 2,815,188 3% 4E 205,352 317,527 348,663 411,061 423,486 436,191 3%

*2019/20 is an estimate subject to change.

5. Debt Service Stabilization Fund The projected year-end balance in the District’s DSSF is approximately $11 million as shown in Table 2 in the Appendix. Per the Direction of the Board, the District will…[to be determined based on guidance from the FAC and Board] [Table 2 to be included in this section of the report in the final version]

6. Estimated Ad Valorem Tax Rates Results Tables II and III in the appendix list the proposed ad valorem tax rates and the estimated revenues for each of the various IDs. For this DRAFT report, the tax rates and projected revenues are based on the Fiscal Year 2018/19 total assessed value of land and improvements as provided by the County of Orange Assessor’s Office and increased by three percent for all IDs except 4C which was assumed at 4 percent. The estimated tax rates include a contingency for an assumed two (2) percent delinquency rate. Results Table III in the Appendix shows a comparison between the proposed tax rates for FY 2019-20 and the actual tax rates for each of the IDs for the prior two years. A comparison of the projected revenue sources for FY 2019-20, as compared to FY 2018-19, is shown in Table ES-2.

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7. Updated Land Uses

The Study team coordinated with the District’s Engineering Department to collect updated land use information that was developed in the past year or had not been incorporated in previous ID 4 benefit analysis studies. The documents provided by the District for Planning Area (PA) 3, ID 5 and PA 4, ID 6 are listed below. The ID 4 Benefit Analysis Study does not calculate tax rates for IDs 5 and 6. However, the land use in IDs 5 and 6, and resulting water demands for these IDs, does affect the allocation of the Water Supply Reliability Enhancement Project costs to ID 4.

1. Planning Area 3 Master Plan of Works, Improvement District No. 5, David Evans and Associates, April 2019. Includes PA 4 of ID 6.

2. A spreadsheet of dwelling unit projections for the Ranch Plan provided by Rancho Mission Viejo (RMV) entitled 2018 CIP-Exhibit A_2018-2-22_SMWD_RMV-2018 DU projection.

The Study team reviewed this information and compared it with what was used for the Fiscal Year 2018-19 ID 4 Benefit Analysis Study. The PA-3 Master Plan of Works was used to update the land use for PA-3 and PA-4. This update had very little effect on the percentages in Table 3 or the tax rates. The spreadsheet information was compared with the land use in the Fiscal Year 2018-19 Benefit Analysis Study and differences were noted. The differences were discussed with SMWD staff and representatives of RMV. Representatives of RMV and the District provided updated land uses for PA-2, ID 4C that incorporates an Area Plan Amendment, that is expected to be approved by the County of Orange. The updates increased the water demands, wastewater flows, and storage percentages for ID 4C, and increased the tax rate for ID 4C.

8. Appendix The Appendix contains three results tables, Results Tables I, II, and III, eleven calculation tables, Tables 1 through 11, and four supporting calculation tables, Tables 3A-3D for Table 3. An explanation of the tables, their function, and a reference for the information contained in each table is provided at the end of this report.

• Table 1 presents the bond debt service schedule and Table 2 presents the DSSF balances attributable to each ID. Table 10 presents the facilities benefitting ID 4 funded by Bond proceeds at their capital costs. Input data for Tables 1, 2 and 10 are provided by the District.

• Table 4 estimates the water demand and Table 5 the wastewater flows for each ID. IDs 4A, 4B,

and 4D have been built out for some time and their land uses, water demands, and wastewater flows do not change on a year-to-year basis. ID 4E is nearly built out while ID 4C is developing. Changes were made to Tables 4 and 5 this year as discussed in the previous section. Tables 4 and 5 provide input to several other tables.

• Tables 3, 6, 7, 8, and 9 originated in the most recent Plan of Works (POW). Table 3 is updated

annually if there are revised water demands from Table 4 or IDs 5 and 6. Changes were made to Table 3 this year based on updated land use for IDs 4C, 5 and 6. Table 6 allocates wastewater capacity. Table 7 allocates supply sources, and Tables 8 and 9 allocate capacity in the SCP and its turnouts. Slight adjustments are made to Table 7 if warranted by a change in the demands for IDs 4C and 4E. Tables 8 and 9 are generally not updated until the POW is updated. The allocated capacity in some facilities may exceed the water demands or wastewater flows for individual IDs

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ID NO. 4 Benefit Analysis Study On Ad Valorem Taxes for FY 2019-20

DLM Engineering Page 12

because the facilities were sized when unit water demands, and wastewater flows were higher than they currently are.

• The detailed benefit analysis for the ID 4 Bond Facilities is shown in Table 10. The facility costs

utilized were updated by the District’s Finance Department and include costs for construction in progress as of May 31, 2019.

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ID NO. 4 Benefit Analysis Study On Ad Valorem Taxes for FY 2019-20

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APPENDIX – TAX RATE CALCULATION TABLES No. Title Function/Use Reference

Results Tables

I Summary of Proposed Debt Service Allocations

Provides the proposed debt service allocations for each bond issue and ID. Applies several adjustments including the DSSF to calculate the adjusted debt service.

Based on Tables 1, 2, 3, and 10 and District Finance Department

II Analysis of Required Ad Valorem Tax Rates

Takes the debt service from each ID, increases it to cover delinquencies, and then divides by the assessed valuation to calculate tax rates.

Table I and the assessed valuations from County of Orange

III Summary of Proposed Ad Valorem Tax Rates

Provides the proposed tax rates for each ID and those from the previous two years.

Table II

Calculation Tables

1 FY 2019-20 Bond Debt Service Schedule

Provides the debt service principal and interest for each bond issue and ID.

District Finance Department

2 Debt Service Stabilization Fund

Shows the available DSSF balances by ID and sub-district.

District

3 Allocation of Water Supply Reliability Enhancement Program

Shows the capacity in three projects, and the overall percentage that is assigned to each ID. The percentages are used to spread the debt service for this bond issue, line 5, Table I.

2008 Study with Updated demands and storage. Separate Spreadsheet

4 ID 4 Estimated Ultimate Development and Domestic Water Demands

Calculates the maximum day demand for IDs 4A through 4E and then a percentage of the total demand for ID 4. The percentages are used to allocate asset value in Table 10.

2017-18 Study Values Confirmed with RMV. Minor updates.

5 Estimated Ultimate Wastewater Flows

Calculates the average wastewater flow for IDs 4A through 4E and then a percentage of the total flow for ID 4. The percentages are used to allocate asset value in Table 10.

2017-18 Study Values Confirmed with RMV. Minor updates.

6 Wastewater Treatment Facilities, ID 4 Capacity Allocations

Takes the wastewater flows from Table 5, allocates capacity, and calculates percentages in the Chiquita facilities. The percentages are used to allocate asset value in Table 10.

2013 POW with Capacity Allocated to IDs 4C and ID 4E

7 Estimated Water Demands and Supply Sources

Provides the capacity in three transmission pipelines assigned to each ID. Used in Tables 8 & 10 to calculate percent allocations for each ID.

2017-18 Study

8 South County Pipeline (SCP) Capacity Allocations

Calculates the percent of ID capacity for IDs 4A through 4E. The percentages are used to allocate asset value in Table 10.

2017-18 Study

9 Allocation for SCP Turnouts

Calculates percentages for IDs 4A through 4E to allocate asset value in Table 10.

2013 Plan of Works

10 Facility Cost Analysis: ID 4 Bond Facilities

Spreads asset values for ID facilities amongst IDs 4A through 4E. Used in Table I to spread debt service.

District Finance Department. Tables 4, 6, 7, 8, 9, and 11

11 Allocation of Administration Building Debt Service Costs

Uses dwelling units in Table 4 to spread debt service and calculate percentages used in Table 10 to allocate asset value.

Table 4

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No. Title Function/Use Reference

Supporting Calculations for Table 3

3A ID 5 and ID 6 Estimated Ultimate Development and Domestic Water Demands

Calculates total equivalent dwelling units (EDUs) and demands for ID's 5 and 6, in support of table 3B

For PAs 3, 4, and 5: 2019 PA3 MPOW DEA, 2017/18 WSV Psomas; For PA8: RMV Unit Counts 7-7-16

3B Emergency Water Supply Analysis for IDs 1, 2, 3, 4, 7 & 8

Calculates percentage share of EDUs for the entire District, in support of table 3D

For IDs 1-3, 7, and 8: ID 5 & 6 Cap. Allocation Study, T.2 Other IDs: this spreadsheet Tables 4 and 3A

3C Available Emergency Water Supplies for 10 Day Theoretical Outage

Calculates available 10-day emergency supply by source, inputs to Tables 3 and 3D

2013 Plan of Works Table VIII-13, and District staff communications

3D Allocation of Domestic Water Reliability Projects for 10-day Outage

Calculates percentage share of water reliability project costs by ID, inputs to Table 3

District data and policies

Notes:

• 2008 Study = Report on Proposed Allocation of Capacity in Domestic Water Supply Reliability Projects, Henry Miedema & Associates, April 14, 2008.

• 2019 PA3 MPOW = Planning Area 3 Master Plan of Works, Improvement District No. 5, David Evans and Associates, April 2019. Includes PA 4 of ID 6.

• 2017-18 Study = ID 4 Benefit Analysis Study on Ad Valorem Taxes for Fiscal Year 2017-18.

• 2013 Plan of Works = Santa Margarita Water District, revised Plan of Works, Improvement District Nos. 4C / 4E / 5 & 6, April 2013.

• DEA Study = Santa Margarita Water District, PA1 Plan of Works, Addendum #1, David Evans & Associates, April 2016.

• The Ranch Plan, Planning Areas Nos. 3 and 4, Water Supply Verification (WSV), Psomas, October 2017.

• The Ranch Plan, Planning Areas Nos. 5 and 8, WSV, Psomas, May 2018.

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RESULTS TABLE I Santa Margarita Water District - Benefit Assessment StudySUMMARY OF PROPOSED DEBT SERVICE ALLOCATIONS

FY 2019-20

ID 2 ID 3 ID 4A ID 4B ID 4C ID 4D ID 4E Other Total(RSM) (Las Flores) (Esencia) (Ladera) (Sendero) Sources

IDs 2, 3 & 4A Debt Service 1 370,650 2,026,450 3,005,750 5,402,850

ID 4 2014A Debt Service Allocation 2 2,579,746 1,015,186 642,569 1,363,342 285,300 870,256 6,756,400

ID 4B 2014A Debt Service Allocation 3 114,479 579,983 89,864 784,326

ID 4 2017A Debt Service Allocation 738,092 7,403 205,845 571,231 106,229 1,628,800

Total Debt Service 370,650 2,026,450 6,323,588 1,137,069 848,414 2,514,556 481,393 870,256 14,572,376

Adjustments

a) Tri-Party Agreement March 3, 2015 4 - - -

b) Debt Service Stabilization Fund 5 - - - - - - - - - Total Adjusted Debt Service 370,650 2,026,450 6,323,588 1,137,069 848,414 2,514,556 481,393 870,256 14,572,376

Notes:1. Refer to Table 1 2. Per Table 10. Totals are exclusive of ID 4B 2014 Bonds and 2017A Bonds.3. Total per Table 1. Allocation based on assessed value of ID divided by the total assessed value of ID 4B, 4D, and 4E.4. Per this agreement, RMV deposits funds sufficient to adjust the ID 4C tax rate downward to 0.13036 per $100 of assessed value.5. Refer to Table 2

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RESULTS TABLE II Santa Margarita Water District - Benefit Assessment Study

ANALYSIS OF REQUIRED AD VALOREM TAX RATES TO FUND G. O. BOND DEBT SERVICEFY 2019-20

Estimated Tax Rates (/$100 AV)

ID 1-3 & 8 ID 4 1 ID 4A ID4B ID 4C ID 4D ID 4E(RSM) (Las Flores) (Esencia) (Ladera) (Sendero)

ID 2 370,650 2.0% 378,214 2,542,437 0.0149 0.0149

ID 3 2,026,450 2.0% 2,067,806 937,299 0.2206 0.2206

ID 4A (RSM) 6,323,588 2.0% 6,452,641 2,706,109 0.0705 0.1679 0.2384

ID 4B (Las Flores) 1,137,069 2.0% 1,160,274 555,670 0.0705 0.1383 0.2088

ID 4C (Esencia) 848,414 2.0% 865,728 906,468 0.0705 0.0250 0.0955

ID 4D (Ladera) 2,514,556 2.0% 2,565,874 2,815,188 0.0705 0.0206 0.0911

ID 4E (Sendero) 481,393 2.0% 491,217 436,191 0.0705 0.0421 0.1126Totals 13,702,120 13,981,755 10,899,363

Notes:

1. The tax rates for ID 4A, 4B, 4C, 4D, and 4E have two components.The first component is the ID 4 rate which must be equal for ID 4A through ID 4E, shown in the seventh column.This component is set at the minimum tax rate of any of ID 4B, ID 4D, or ID 4E, so that it does not exceed the total rate of any of ID 4A through ID 4E.The minimum tax rate is the ID 4D because it has the highest assessed valuation (denominator) divided into the ID 4B Bond debt service.Columns 8 through 12 are the remaining tax rate for each of ID 4A through ID 4E and are added to the ID 4 rate to get the total.2. Assumed +3% over FY 2018-19 Assessed Valuation except 4C assumed +4%

Total

Assessed Valuation as of Jan. 1 of FY 2

($1000's)

Total Adjusted Debt Service

for FY ($)

Improvement District

Estimated Delinquency

Rate (%)

Required Tax

Revenue ($)

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RESULTS TABLE III Santa Margarita Water District - Benefit Assessment Study

SUMMARY OF PROPOSED AD VALOREM TAX RATES ($/100 AV)FY 2019-20

ID 2 0.0110 0.0110 0.0149

ID 3 0.2811 0.2224 0.2206

ID 4A (RSM) 0.2979 0.2411 0.2384

ID 4B (Las Flores) 0.3496 0.2110 0.2088

ID 4C (Esencia) 0.13036 0.0938 0.0955

ID 4D (Ladera) 0.1225 0.0929 0.0911

ID 4E (Sendero) 0.1605 0.1157 0.1126

Two Year's PriorTax Rates

Improvement District

Previous Year Tax Rates

FY Proposed Tax Rates

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TABLE 1 Santa Margarita Water District - Benefit Assessment Study

BOND DEBT SERVICE SCHEDULE 1

FY 2019-20

Improvement Description Principal Interest Total($) ($) ($)

ID 2 2017 Series A (Refunding) 155,000 215,650Total Debt Service 155,000 215,650 370,650

ID 3 2014 Refunding Revenue Bonds 1,695,000 83,2502017 Series A (Refunding) 105,000 143,200Total Debt Service 1,800,000 226,450 2,026,450

ID 4 2014 Refunding Revenue Bonds 6,440,000 316,400 6,756,4002017 Series A (Refunding) 685,000 943,800 1,628,800Total ID 4 Debt Service 7,125,000 1,260,200 8,385,200

ID 4A 2014 Refunding Revenue Bonds 2,865,000 140,750Total Debt Service 2,865,000 140,750 3,005,750

ID 4B 2014 Refunding Revenue Bonds 440,000 344,326 784,32612,385,000 2,187,376 14,572,376

Notes:

1. From Bond Issues, per SMWD Finance Department. Includes debt service payments due on 2/1/2020 and 8/1/2020.

District

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TABLE 2Santa Margarita Water District - Benefit Assessment Study

DEBT SERVICE STABILIZATION FUNDFY 2019-20

Beginning Balance 1

($)

Allocated for Debt Service for FY

2020 ($) 2

Remaining Balance

($)

2 TBD 0 0

2A (3) TBD 0 0

3 TBD 0 0

4A (RSM) TBD 0 0

4B (Las Flores) TBD 0 0

4C (Esencia) TBD 0 0

4D (Ladera) TBD 0 0

4E (Sendero) TBD 0 00 0 0

Notes:1. Balances will be updated and provided for final report.2. Proposed debt service allocations will be updated for final report.3. Bonds paid off.

Improvement District

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TABLE 3Santa Margarita Water District - Benefit Assessment Study

ALLOCATION OF WATER SUPPLY RELIABILITY ENHANCEMENT PROGRAMFY 2019-20

WSREP Project Element

Improvement DistrictAllocation

by ID 1ID 4

Sub-Allocation 2Baker

Treatment Plant IRWD IntertieUpper Chiquita

Reservoir(%) (%) (cfs) (cfs) (AF)

2 Coto de Caza 12.791% 1.66 0.96 37.73

3 6.116% 0.80 0.46 18.04

4A (RSM) 22.159% 45.315% 2.88 1.66 65.37

4B (Las Flores) 0.222% 0.455% 0.03 0.02 0.66

4C (Esencia) 6.180% 12.638% 0.80 0.46 18.23

4D (Ladera) 17.150% 35.071% 2.23 1.29 50.59

4E (Sendero) 3.189% 6.522% 0.41 0.24 9.41

Subtotal ID 4 2 48.900% 100.00% 6.36 3.67 144.265 16.928% 2.20 1.27 49.94

6 8.387% 1.09 0.63 24.74

7 6.878% 0.89 0.52 20.29Totals 3 100.000% 13.00 7.50 295.00

Notes:1. WSREP percental allocations per Report on Proposed Allocations of Capacity in Domestic Water Supply

Reliability Projects, (SMWD, 2008, updated 2016, 2019 with PA3 MPOW (ID 5 and portion of ID 6)).2. ID 4 subtotals support calculations in Results Table I.3. WSREP Element Capacities per SMWD (see Table 3C).

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TABLE 4Santa Margarita Water District - Benefit Assessment Study

ID 4 ESTIMATED ULTIMATE DEVELOPMENT AND DOMESTIC WATER DEMANDSFY 2019-20

(AF/ Year) (cfs)

ID 4A (Rancho Santa Margarita)SFR 450 3,889 DU 450 1.00 3,889 1,960 6.50MFR 6,523 DU 175 1.00 6,523 1,279 4.24Commercial / Ind. (Gross) 479 Ac 2,925 6.50 3,114 1,569 5.20Subtotal ID 4A 13,526 45.49% 4,808 15.94 43.80%

ID 4B (Las Flores)SFR 450 1,144 DU 450 1.00 1,144 577 1.91MFR 836 DU 175 1.00 836 164 0.54Commercial / Ind. (Gross) 14 Ac 2,925 6.50 91 46 0.15Subtotal ID 4B 2,071 6.97% 786 2.61 7.16%

ID 4C (Esencia)SFR 350 1,471 DU 350 1.00 1,471 577 1.91SFR 450 1,043 DU 450 1.00 1,043 526 1.74Single Family Attached 94 DU 175 1.00 94 18 0.06MFR 150 DU 175 1.00 150 29 0.10Affordable Housing 175 107 DU 175 1.00 107 21 0.07Commercial / Ind. (Net) 495 kSF 225 0.50 248 125 0.41Community Facilities (Net) 30 kSF 225 0.50 15 8 0.03Schools 10 1,200 Stu 10 0.02 27 13 0.04Unaccounted Water 0 % 0 0.00Subtotal ID 4C 3,154 10.61% 1,317 4.366 12.00%

ID 4D (Ladera)SFR 450 5,026 DU 450 1.00 5,026 2,533 8.40MFR 3,138 DU 175 1.00 3,138 615 2.04Commercial / Ind. (Gross) 86 Ac 2,925 6.50 559 282 0.93Subtotal ID 4D 8,723 29.34% 3,430 11.37 31.25%

ID 4E (Sendero)SFR 175 107 DU 175 1.00 107 21 0.07SFR 300 297 DU 300 1.00 297 100 0.33SFR 450 63 DU 450 1.00 63 32 0.11Single Family Attached 285 DU 175 1.00 285 56 0.19MFR 202 DU 175 1.00 202 40 0.13Apartments 286 DU 175 1.00 286 56 0.19Senior Living Apartments 107 DU 175 1.00 107 21 0.07Senior Living Fac. (SLF) 477 DU 175 1.00 477 94 0.31SLF Penthouse 8 DU 300 1.00 8 3 0.01Custom Lots 0 DU 450 1.00 0 0 0.00Commercial / Ind. (Net) 84.000 kSF 225 0.50 42 21 0.07RMV Headquarters 25.000 kSF 225 0.50 13 6 0.02Community Facilities (Gross) 5.5 Ac 2,500 5.56 31 15 0.05Community Park 300 12.3 Ac 300 0.67 8 4 0.01Domestic Irrigation 5 2 Sites 25 gpm 80.00 160 81 0.27Open Space 64.1 Ac 100 0.22 14 7 0.02Medical Office 26.000 kSF 325 0.72 19 9 0.03Skilled Nursing / Assist. Living 155 Beds 35 0.08 12 6 0.02Healthcare Non-Residential 100.000 kSF 325 0.72 72 36 0.12Retail 98.000 kSF 250 0.56 54 27 0.09Unaccounted Water 0 % 0 0.00Subtotal ID 4E 2,257 7.59% 635 2.106 5.79%

EDU Factor 3

% of Total EDUs

Unit Use 2

(gpd)EDU Count

Avg. Water Demands

Max. Day Demands 4

% of Ultimate

DemandsImprovement District

Actual / Proposed Land Uses 1

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Max. Day Demands 4

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TotalsSFR 175 107 DU 175 1.00 107 21 0.07SFR 300 297 DU 300 1.00 297 100 0.33SFR 350 1,471 DU 350 1.00 1,471 577 1.91SFR 450 11,165 DU 450 1.00 11,165 5,628 18.66Single Family Attached 379 DU 175 1.00 379 74 0.25MFR 10,849 DU 175 1.00 10,849 2,127 7.05Apartments 286 DU 175 1.00 286 56 0.19Senior Living Apartments 107 DU 175 1.00 107 21 0.07Senior Living Fac. (SLF) 477 DU 175 1.00 477 94 0.31SLF Penthouse 8 DU 300 1.00 8 3 0.01Affordable Housing 175 107 DU 175 1.00 107 21 0.07Affordable Housing 300 0 DU 300 1.00 0 0 0.00Custom Lots 0 DU 450 1.00 0 0 0.00Commercial / Ind. (Gross) 579 Ac 2,925 6.50 3,764 1,897 6.29Commercial / Ind. (Net) 579.000 kSF 225 0.50 290 146 0.48Community Facilities (Net) 30.000 kSF 225 0.50 15 8 0.03Community Facilities (Gross) 5.5 Ac 2,500 5.56 31 15 0.05Community Park 200 0.0 Ac 200 0.44 0 0 0.00Community Park 300 12.3 Ac 300 0.67 8 4 0.01RMV Headquarters 25.000 kSF 225 0.50 13 6 0.02Domestic Irrigation 5 2 Sites 25 gpm 80.00 160 81 0.27Open Space 64.1 Ac 100 0.22 14 7 0.02Medical Office 26.000 kSF 325 0.72 19 9 0.03Skilled Nursing / Assist. Living 155.0 Beds 35 0.08 12 6 0.02Healthcare Non-Residential 100.000 kSF 325 0.72 72 36 0.12Retail 98.000 kSF 250 0.56 54 27 0.09Schools 10 1,200 Stu 10 0.02 27 13 0.04Unaccounted Water 0 0.00

Total 29,731 100.00% 10,978 36.39 100.00%

Notes:1. Land Use quantities per SMWD records and Subarea

Master Plans (See detail following note 5)2. Unit Use factors per input table at right Land Use Units

3. EDU Factors per table at right. 1 Affordable Housing 175 DU 175 1.0 175 Non-res EDUs per 1 EDU = 450 gpd 2 Affordable Housing 300 DU 300 1.0 1754. Based on MD peaking factor = 2.4 3 Apartments DU 175 1.0 1505. Domestic irrigation estimated on a per site basis, 4 Commercial / Ind. (Gross) Ac 2,925 6.5000 2,925

per PA-1 POW, Addendum 1 (April 2016). 5 Commercial / Ind. (Net) kSF 225 0.5000 225

Two sites totaling 15.5 acres. 6 Community Facilities (Gross) Ac 2,500 5.5556 2,5007 Community Facilities (Net) kSF 225 0.5000 2258 Community Park 200 Ac 200 0.4444 09 Community Park 300 Ac 300 0.6667 300

10 Custom Lots DU 450 1.0 80011 Domestic Irrigation 5 Sites 25 gpm/site 80 / site 012 Healthcare Non-Residential kSF 325 0.7222 32513 Medical Office kSF 325 0.7222 32514 MFR DU 175 1.0 17515 Open Space Ac 100 0.2222 016 Reg. Sports Park / Event Cntr. Ac 400 0.8889 40017 Retail kSF 250 0.5556 25018 RMV Cow Camp Ac 700 1.5556 70019 RMV Headquarters kSF 225 0.5000 custom20 Schools 10 Stu 10 0.0222 10

ID 4 C Designation Units 21 Schools 12.5 Stu 12.5 0.0278 10SFR 350 1,471 22 Senior Living Apartments DU 175 1.0 150SFR 40 1,043 23 Senior Living Fac. (SLF) DU 175 1.0 175Single Family Attached 94 24 SFR 175 DU 175 1.0 175MFR 150 25 SFR 300 DU 300 1.0 225Affordable Housing 175 107 26 SFR 350 DU 350 1.0 200

27 SFR 450 DU 450 1.0 225Total Units 2,865 28 Single Family Attached DU 175 1.0 175

29 Skilled Nursing / Assist. Living Beds 35 0.0778 35Commercial/ Ind 495,000 30 SLF Penthouse DU 300 1.0 225Community Facilities 30000 31 Unaccounted Water %

Water Unit Use

(gpd)

Sewer Unit Use

(gpd)

WaterEDU Factor

Land Use Source Detail:• ID 4A, 4B, 4D land use from November 30, 2011

Updated Capacity Acquisition Study for Improvement District Nos. 5 & 6 (Henry Miedema & Associates)

• IDC 4C land use from Table below provided by DEA and SMWD 061419.

• ID 4E land use from Plan of Works, Planning Area 1, Addendum 1, April 20, 2016 by Hall & Foreman Adjusted based on RMV Unit Counts 7-7-16

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TABLE 5Santa Margarita Water District - Benefit Assessment Study

ID 4 ESTIMATED ULTIMATE WASTEWATER FLOWSFY 2019-20

ID 4A (Rancho Santa Margarita)SFR 450 3,889 DU 225 0.875MFR 6,523 DU 175 1.142Commercial / Ind. (Gross) 479 Ac 2,925 1.401Subtotal ID 4A 3.418 49.15%

ID 4B (Las Flores)SFR 450 1,144 DU 225 0.257MFR 836 DU 175 0.146Commercial / Ind. (Gross) 14 Ac 2,925 0.041Subtotal ID 4B 0.445 6.39%

ID 4C (Esencia)SFR 350 1,471 DU 200 0.294SFR 450 1,043 DU 225 0.235Single Family Attached 94 DU 175 0.016MFR 150 DU 175 0.026Affordable Housing 175 107 DU 175 0.019Commercial / Ind. (Net) 495 kSF 225 0.111Community Facilities (Net) 30 kSF 225 0.007Schools 10 1,200 Stu 10 0.012Unaccounted Water 0 % 0 0.000Subtotal ID 4C 0.720 10.36%

ID 4D (Ladera)SFR 450 5,026 DU 225 1.131MFR 3,138 DU 175 0.549Commercial / Ind. (Gross) 86 Ac 2,925 0.252Subtotal ID 4D 1.932 27.78%

ID 4E (Sendero)SFR 175 107 DU 175 0.019SFR 300 297 DU 225 0.067SFR 450 63 DU 225 0.014Single Family Attached 285 DU 175 0.050MFR 202 DU 175 0.035Apartments 286 DU 150 0.043Senior Living Apartments 107 DU 150 0.016Senior Living Fac. (SLF) 477 DU 175 0.083SLF Penthouse 8 DU 225 0.002Custom Lots 0 DU 800 0.000Commercial / Ind. (Net) 84 kSF 225 0.019RMV Headquarters 1 Ac 2,500 0.003Community Facilities (Gross) 5.5 Ac 2,500 0.014Community Park 300 12.3 Ac 300 0.004Domestic Irrigation 5 2 Sites 0 0.000Open Space 64.1 Ac 0 0.000Medical Office 26.0 kSF 325 0.008Skilled Nursing / Assist. Living 155 Beds 35 0.005Healthcare Non-Residential 100 kSF 325 0.033Retail 98 kSF 250 0.025Unaccounted Water 0 % 0 0.000Subtotal ID 4E 0.439 6.31%

Totals 6.953 100.00%

Improvement District Actual / Proposed Land Uses 1

Unit Flow Rate 2

(gpd)

Avg. Wastewater

Flow (mgd)

% of Total Wastewater

Flows

Notes:1. Land Use quantities per Table 4, per SMWD records and Subarea Master Plans2. Unit Use factors per input table at right below Table 4

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TABLE 6Santa Margarita Water District - Benefit Assessment Study

ID 4 CAPACITY ALLOCATIONS FOR WASTEWATER TREATMENT FACILITIESFY 2019-20

Serra Ocean Outfall

Improvement District

Current Allocation 1

(mgd)% Total

Capacity% ID 4

Capacity

Current Allocation

(mgd)

4C, 4E % of Subtotal 4

(%)

Current Allocation

(mgd)

Est AA Flows (mgd)

Percent of Total

(%)

Alloc. Capacity 3

(mgd)4A (RSM) 2.69 27.20% 41.64% 2.69 2.69 3.42 49.15% 2.534B (Las Flores) 0.37 3.74% 5.73% 0.37 0.37 0.44 6.39% 0.334C (Esencia) 0.98 9.91% 15.17% 0.98 74.24% 0.98 0.72 10.36% 0.534D (Ladera) 2.08 21.03% 32.20% 2.08 2.08 1.93 27.78% 1.434E (Sendero) 0.34 3.44% 5.26% 0.34 25.76% 0.34 0.44 6.31% 0.32Subtotal 4C+4E 4 1.32 13.35% 20.43% 1.32 100.00% 1.32 1.16 16.67% 0.86Subtotal ID 4 5 6.46 65.32% 100.00% 6.46 6.46 6.95 100.00% 5.14IDs 5 & 6 3.43 34.68% 3.43 3.43 0.00 0.00% 0.00Totals 9.89 100.00% 100.00% 9.89 9.89 6.95 100.00% 5.14

Chiquita Treatment 2Chiquita Common Chiquita Land Outfall

Notes:1. Chiquita Common Current Allocations per 2013 POW (SMWD).2. Chiquita Treatment Current Allocations per 2013 POW (SMWD), adjusted for current loadings.3. Allocation Capacity total per per 2013 POW (SMWD).4. 4C+4E subtotals utilized in Table 10, per 2013 Plan of Works.

5. ID 4 subtotals utilized in Table 6 percentage calculations, then used in Table 10.DRAFT

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TABLE 7Santa Margarita Water District - Benefit Assessment Study

ESTIMATED ULTIMATE WATER DEMANDS AND SUPPLY SOURCES (cfs, except as noted)FY 2019-20

ID 1 ID 2 ID 3 ID 4A ID 4B ID 4C ID 4D ID 4E ID 5 ID 6 ID 7 ID 8 Total(RSM) (Las Flores) (Esencia) (Ladera) (Sendero)

Total MD Domestic Water Demands 1 31.41 8.46 4.89 15.94 2.61 4.37 11.37 2.11 8.31 3.10 5.20 0.32 98.08

Supply Sources 2

Aufdenkamp Connection Trans. Main 14.00 - - - - - 14.00 Alicia Trans Main 24.20 10.30 3.50 15.00 - - - - - - - - 53.00 South County Pipeline-- SCP 1996 Capacity Allocations - 2.00 3.72 15.12 4.45 8.06 15.35 0.56 - - 10.71 0.35 60.32 -- Additional 2006 Capacity Allocations 3 - - - - - (3.72) - 1.24 12.57 5.26 - - 15.35 -- Shift in Capacity from ID 4C to ID 4E 4 (0.20) 0.20 - Subtotal South County Pipeline - 2.00 3.72 15.12 4.45 4.14 15.35 2.00 12.57 5.26 10.71 0.35 75.67

Supply Totals 38.20 12.30 7.22 30.12 4.45 4.14 15.35 2.00 12.57 5.26 10.71 0.35 142.67

Notes:1. Total Domestic Water Demands per 2013 POW, SMWD, Table V-2, ID 4 from Table 4, ID 5 & 6 from Draft 2014 Capacity Acquisition Study.2. Supply Sources per 2013 POW.3. Applicable only for Improvement Districts with new GPA included under Ranch Plan.4. The capacity shift equalizes the supply to demand ratio between 4E and 4C.

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TABLE 8Santa Margarita Water District - Benefit Assessment Study

SOUTH COUNTY PIPELINE CAPACITY ALLOCATIONSFY 2019-20

SCP Capacity Allocations (cfs)Ph. II, Rch 3 Ph. II, Rch 4

Capacity Allocation 3

% ID 4 Capacity 4

Capacity Allocation

% ID 4 Capacity 4

Capacity Allocation

% ID 4 Capacity 4

Capacity Allocation

% ID 4 Capacity 4

Capacity Allocation

Capacity Allocation

1 0.00 0.00 0.00 0.00 0.00 0.002 Coto de Caza 2.00 4.64% 2.00 4.84% 2.00 7.70% 0.00 0.00% 0.00 0.003 3.72 0.00 0.00 0.00 0.00 0.004A (RSM) 15.12 35.11% 0.00 0.00% 0.00 0.00% 0.00 0.00% 0.00 0.004B (Las Flores) 4.45 10.33% 0.00 0.00% 0.00 0.00% 0.00 0.00% 0.00 0.004C (Esencia) 4.14 9.61% 4.14 10.02% 4.14 15.94% 4.14 17.27% 0.00 0.004D (Ladera) 15.35 35.65% 15.35 37.15% 0.00 0.00% 0.00 0.00% 0.00 0.004E (Sendero) 2.00 4.64% 2.00 4.84% 2.00 7.70% 2.00 8.34% 0.00 0.007 10.71 10.71 10.71 10.71 10.71 10.718 0.35 0.00 0.00 0.00Future Capacity Needs IDs 5&6 17.83 17.83 43.15% 17.83 68.66% 17.83 74.38% 8.93 0.00

Subtotal ID 4 Funded Capacity 4 43.06 100.00% 41.32 100.00% 25.97 100.00% 23.97 100.00% 0.00 0.00

Totals 75.67 52.03 36.68 34.68 19.64 10.71

Notes:

1. Total SMWD Capacity in Ph.1, Rch 1-4 = 75.67 cfs per 2012 POW.2. Total SMWD funded capacity through Phase II, Reach 2 (Ortega Hwy.) = 48.59 cfs based on Agreement No. 2178 with MWD.

3. ID 4 capacity allocations per Table 7, SCP totals.4. ID 4 Funded Capacity includes ID2 (Coto de Caza) capacity. ID 2 does not have SCP turnouts and takes its capacity through ID 4.

Benefit Analysis Study and Engineer's Report on Ad-Valorem and Other Assessments for 2013-14 Fiscal Year, August 21, 2013 (Henry Miedema & Associates).

General: Reference 2013 POW Table V-1, SMWD, Updated with Demands in Table 4.

Ph. II, Rch 2 2Improvement District Ph.I, Rch 1-4 1 Ph. I, Rch 5 Ph. II, Rch 1

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TABLE 9Santa Margarita Water District - Benefit Assessment Study

SOUTH COUNTY PIPELINE -- CURRENT ALLOCATION FOR SCP TURNOUTSFY 2019-20

Turnout ID 4A (RSM) ID 4B (Las Flores) ID 4C (Esencia) ID 4D (Ladera) ID 4E (Sendero) Total Capacity

(cfs) (%) (cfs) (%) (cfs) (%) (cfs) (%) (cfs) (%) (cfs)SC-1 1 15.12 77.26% 4.45 22.74% - 0.00% - 0.00% - 0.00% 19.57

SC-2 1 - 0.00% - 0.00% - 0.00% 15.35 89.50% 1.80 10.50% 17.15

SC-3 1 2.00 31.55% - 0.00% 4.34 68.45% - 0.00% - 0.00% 6.34

SC-6 2, 3, 4 - 0.00% - 0.00% 4.40 62.86% - 0.00% 2.60 37.14% 7.00SC-7 5 - 0.00% - 0.00% 4.40 62.86% - 0.00% 2.60 37.14% 7.00

Notes:1. SC-1, SC-2, SC-3 Capacities per Benefit Analysis Study and Engineer's Report on Ad-Valorem and Other Assessments for 2013-14 Fiscal Year (Henry Miedema & Associates).

2. SC-6 and SC-7 Capacities shown in Table VI-9, Revised Plan of Works, Improvement District Nos. 4C/ 4E/ 5 &6, April 2013.

3. SC-6 construction in-progress, no costs included in Table 10.4. SC-6 Funded by GO Bond Funds and CFD FundsFunding by GO Bonds Inlcuded in the Costs for Reach of SCP in Table 10 Under Transmission Pipelines.5. SMWD considering building SC-7, see 2019 PA-3 MPOW.

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TABLE 10 Santa Margarita Water District - Benefit Assessment Study

FACILITY COST ANALYSIS: ID 4 BOND FACILITIESFY 2019-20

CAPACITY ALLOCATIONTotal ID 4A ID 4B ID 4C ID 4D ID 4E Others Previous FY Current FY ID 4A ID 4B ID4C ID 4D ID 4E Others

Description RSM Las Flores Esencia Ladera Sendero Totals Totals RSM Las Flores Esencia Ladera Sendero

Effluent DisposalEFFL Disposal Sys Capacity Purchase 1.0000 0.4164 0.0573 0.1517 0.3220 0.0526 - 9,092,642$ 9,092,642$ 3,786,255$ 520,786$ 1,379,379$ 2,927,662$ 478,560$ -$

Force Mains (Sewer)Plano Force Main 1.0000 1.0000 - - - - - 284,919$ 284,919$ 284,919$ -$ -$ -$ -$ -$ 8" Force Main Antonio Bridge SJC 1.0000 - - - - 1.0000 - 58,452$ 58,452$ -$ -$ -$ -$ 58,452$ -$ 10" Force Main/Oso Parkway 1.0000 - 1.0000 - - - - 170,361$ 170,361$ -$ 170,361$ -$ -$ -$ -$

LandMesa Pump Station (Land) 1.0000 1.0000 - - - - - 38,413$ 38,413$ 38,413$ -$ -$ -$ -$ -$ Eng Water Import/Storage (Land) 1.0000 0.4380 0.0716 0.1200 0.3125 0.0579 - 1,897$ 1,897$ 831$ 136$ 228$ 593$ 110$ -$ Plano Sewage Lift Station Ph I (Land) 1.0000 1.0000 - - - - - 1,077$ 1,077$ 1,077$ -$ -$ -$ -$ -$ Chiquita WRP PH1 (Land) 1.0000 0.2720 0.0374 0.0991 0.2103 0.0344 0.3468 489,958$ 489,958$ 133,265$ 18,330$ 48,550$ 103,045$ 16,844$ 169,925$ District Administration Building (Land) 1.0000 0.4549 0.0697 0.1061 0.2934 0.0759 - 860,225$ 860,225$ 391,346$ 59,922$ 91,262$ 252,391$ 65,304$ -$ South County Pipeline (SCP) Ph II 1.0000 - - 0.1727 - 0.0834 0.7438 181,155$ 181,155$ -$ -$ 31,288$ -$ 15,115$ 134,752$

Land/Ocean OutfallChiquita Land Outfall RCH I 1.0000 0.2720 0.0374 0.0991 0.2103 0.0344 0.3468 2,356,298$ 2,356,298$ 640,894$ 88,153$ 233,486$ 495,561$ 81,005$ 817,199$ Chiquita Land Outfall RCH II 1.0000 0.2720 0.0374 0.0991 0.2103 0.0344 0.3468 5,119,943$ 5,119,943$ 1,392,583$ 191,545$ 507,335$ 1,076,793$ 176,014$ 1,775,673$ Chiquita Land Outfall Serra 1.0000 0.2720 0.0374 0.0991 0.2103 0.0344 0.3468 1,815$ 1,815$ 494$ 68$ 180$ 382$ 62$ 629$

Non-Domestic Pump Stations Zone D NDW Pump Station I 1.0000 - 1.0000 - - - - 8,421$ 8,421$ -$ 8,421$ -$ -$ -$ -$

Non-Domestic Water Main16" NDWTM Antonio Bridge SJC 1.0000 - - - - 1.0000 - 122,289$ 122,289$ -$ -$ -$ -$ 122,289$ -$ 8" & 16" NDWTM Meandering Trail 1.0000 - - - 1.0000 - - 69,664$ 69,664$ -$ -$ -$ 69,664$ -$ -$

Administration BuildingDistrict Administration Building 1.0000 0.4549 0.0697 0.1061 0.2934 0.0759 - 2,238,186$ 2,238,186$ 1,018,228$ 155,909$ 237,452$ 656,685$ 169,912$ -$

Office Furniture1

Office Furniture - District Admin. Bldg 1.0000 0.4549 0.0697 0.1061 0.2934 0.0759 - 54,308$ 54,308$ 24,707$ 3,783$ 5,762$ 15,934$ 4,123$ -$

Pressure Reducing StationZone 2 Pressure Reducing Station 1.0000 - 1.0000 - - - - 28,222$ 28,222$ -$ 28,222$ -$ -$ -$ -$

Pump Stations (Water)Mesa Pump Station 1.0000 1.0000 - - - - - 778,211$ 778,211$ 778,211$ -$ -$ -$ -$ -$ AMP Pump Station 1.0000 1.0000 - - - - - 1,321,168$ 1,321,168$ 1,321,168$ -$ -$ -$ -$ -$ Lakeside Pump Station PH I 1.0000 1.0000 - - - - - 870,393$ 870,393$ 870,393$ -$ -$ -$ -$ -$ Lakeside Pump Station PH II 1.0000 1.0000 - - - - - 162,324$ 162,324$ 162,324$ -$ -$ -$ -$ -$ Lakeside Pump Station PH III 1.0000 1.0000 - - - - - 268,054$ 268,054$ 268,054$ -$ -$ -$ -$ -$ Antonio PS Zone III 1.0000 1.0000 - - - - - 33,912$ 33,912$ 33,912$ -$ -$ -$ -$ -$ Foothill PS Zone IV 1.0000 1.0000 - - - - - 33,912$ 33,912$ 33,912$ -$ -$ -$ -$ -$ Zone 3 Pump Station 1.0000 - 1.0000 - - - - 785,957$ 785,957$ -$ 785,957$ -$ -$ -$ -$ Island PS Ph. 1 1.0000 1.0000 - - - - - 34,469$ 34,469$ 34,469$ -$ -$ -$ -$ -$ Interim Pump Station 1.0000 1.0000 - - - - - 436,202$ 436,202$ 436,202$ -$ -$ -$ -$ -$

Sewage Lift StationsPlano Sewage Lift Station PH I 1.0000 1.0000 - - - - - 1,120,582$ 1,120,582$ 1,120,582$ -$ -$ -$ -$ -$ Chiquita Influent Lift Station Expansion 1.0000 0.8959 0.1041 - - - - 708,231$ 708,231$ 634,504$ 73,727$ -$ -$ -$ -$ Plano Lift Sta. Phase 2 1.0000 1.0000 - - - - - 1,086,436$ 1,086,436$ 1,086,436$ -$ -$ -$ -$ -$ Las Flores Lift Station 1.0000 - 1.0000 - - - - 1,189,414$ 1,189,414$ -$ 1,189,414$ -$ -$ -$ -$

TanksZone 2 10 MG Reservoir 1.0000 - 1.0000 - - - - 2,988,906$ 2,988,906$ -$ 2,988,906$ -$ -$ -$ -$ SCP Regulating Reservoir 1.0000 0.3976 0.1033 0.0961 0.3565 0.0464 - 2,086,223$ 2,086,223$ 829,450$ 215,599$ 200,580$ 743,695$ 96,898$ -$ Eng Wtr Importation Storage 1.0000 0.4380 0.0716 0.1200 0.3125 0.0579 - 1,215,649$ 1,215,649$ 532,477$ 87,085$ 145,845$ 379,872$ 70,370$ -$ Las Flores Zone 2 Reservoir (10 MG) 1.0000 - 1.0000 - - - - 2,332,593$ 2,332,593$ -$ 2,332,593$ -$ -$ -$ -$

Treatment PlantsChiquita WRP Common 1.0000 0.2720 0.0374 0.0991 0.2103 0.0344 0.3468 14,000,781$ 14,000,781$ 3,808,099$ 523,791$ 1,387,337$ 2,944,553$ 481,321$ 4,855,680$ Chiquita WRP PH I 1.0000 0.4915 0.0639 0.1036 0.2778 0.0631 - 6,000,000$ 6,000,000$ 2,949,135$ 383,697$ 621,669$ 1,666,772$ 378,727$ -$ Chiquita Effluent Disposal 1.0000 0.2720 0.0374 0.0991 0.2103 0.0344 0.3468 48,838$ 48,838$ 13,284$ 1,827$ 4,839$ 10,271$ 1,679$ 16,938$ Chiquita WRP PH II 1.0000 0.4915 0.0639 0.1036 0.2778 0.0631 - 7,069,003$ 7,069,003$ 3,474,574$ 452,059$ 732,430$ 1,963,736$ 446,203$ -$ Chiquita WRP PH III 1.0000 0.4915 0.0639 0.1036 0.2778 0.0631 - 324,101$ 324,101$ 159,303$ 20,726$ 33,581$ 90,034$ 20,458$ -$ CWRP Odor Control Improvements 1.0000 0.8959 0.1041 - - - - 1,172,127$ 1,172,559$ 1,050,496$ 122,063$ -$ -$ -$ -$ Chiquita WRP 2009 Master Plan 1.0000 - - 0.7424 - 0.2576 - 239,302$ 239,302$ -$ -$ 177,664$ -$ 61,638$ -$

Trunk Sewers10" Antonio/Oso TS 1.0000 - 1.0000 - - - - 154,432$ 154,432$ -$ 154,432$ -$ -$ -$ -$ Street A 10" TS Antonio/Meadering Trail 1.0000 - 1.0000 - - - - 62,357$ 62,357$ -$ 62,357$ -$ -$ -$ -$ Trunk Sewer District Headquarters 1.0000 - 1.0000 - - - - 42,933$ 42,933$ -$ 42,933$ -$ -$ -$ -$ Bluff Top Trunk Sewer 1.0000 1.0000 - - - - - 815,979$ 815,979$ 815,979$ -$ -$ -$ -$ -$ Chiquita Trunk SWR 1.3 MGD 1.0000 0.6596 0.0766 0.2638 - - - 1,690,676$ 1,690,676$ 1,115,170$ 129,506$ 446,000$ -$ -$ -$ 8" Easterly Trunk Sewer 1.0000 - - - - - 1.0000 13,516$ 13,516$ -$ -$ -$ -$ -$ 13,516$ 10" Trunk Sewer Las Flores 1.0000 - 1.0000 - - - - 67,006$ 67,006$ -$ 67,006$ -$ -$ -$ -$ 12" Trunk Sewer Oso Parkway Las Flores 1.0000 - 1.0000 - - - - 59,672$ 59,672$ -$ 59,672$ -$ -$ -$ -$ Las Flores LS / Ladera FM Conv to gravity 1.0000 - 1.0000 - - - - 51,014$ 51,014$ -$ 51,014$ -$ -$ -$ -$ 12" TS Las Flores 1.0000 - 1.0000 - - - - 75,011$ 75,011$ -$ 75,011$ -$ -$ -$ -$

Water Transmission Mains30" Alicia Trans Main RCH 10 1.0000 1.0000 - - - - - 211$ 211$ 211$ -$ -$ -$ -$ -$ South County Pipeline PH I RCH I 1.0000 0.3976 0.1033 0.0961 0.3565 0.0464 - 4,860,773$ 4,860,773$ 1,932,569$ 502,333$ 467,339$ 1,732,765$ 225,767$ -$ South County Pipeline PH I RCH 2 1.0000 0.3976 0.1033 0.0961 0.3565 0.0464 - 5,785,593$ 5,785,593$ 2,300,264$ 597,907$ 556,255$ 2,062,444$ 268,722$ -$ Alicia TM RCH 4 1.0000 1.0000 - - - - - 120,891$ 120,891$ 120,891$ -$ -$ -$ -$ -$ South County Pipeline PH I RCH 3 1.0000 0.3976 0.1033 0.0961 0.3565 0.0464 - 5,346,096$ 5,346,096$ 2,125,526$ 552,488$ 514,000$ 1,905,773$ 248,309$ -$ South County Pipeline PH I RCH 4 1.0000 0.3976 0.1033 0.0961 0.3565 0.0464 - 1,786,950$ 1,786,950$ 710,464$ 184,671$ 171,806$ 637,011$ 82,998$ -$ 24" WTM in SM Pkwy 1.0000 1.0000 - - - - - 157,615$ 157,615$ 157,615$ -$ -$ -$ -$ -$ Las Flores/OSO Water Trans Main 1.0000 - 1.0000 - - - - 228,627$ 228,627$ -$ 228,627$ -$ -$ -$ -$ 24" Melinda Rd TM 1.0000 1.0000 - - - - - 297,424$ 297,424$ 297,424$ -$ -$ -$ -$ -$ Alicia Trans Main Rech 3b 1.0000 1.0000 - - - - - 85,340$ 85,340$ 85,340$ -$ -$ -$ -$ -$ Service Connection 1 1.0000 0.7726 0.2274 - - - - 992,628$ 992,628$ 766,915$ 225,713$ -$ -$ -$ -$ Service Connection 3 1.0000 0.3155 - 0.6845 - - - 1,244,286$ 1,244,286$ 392,519$ -$ 851,767$ -$ -$ -$ Service Connection 2B 1.0000 - - - 0.8950 0.1050 - 1,230,348$ 1,230,348$ -$ -$ -$ 1,101,215$ 129,133$ -$ Las Flores/OSO WTM 1.0000 - 1.0000 - - - - 134,904$ 134,904$ -$ 134,904$ -$ -$ -$ -$ Irvine Lake Pipeline 1.0000 0.4380 0.0716 0.1200 0.3125 0.0579 - 1,360,363$ 1,360,363$ 595,865$ 97,452$ 163,206$ 425,093$ 78,747$ -$ 30" Antonio S. OSO Dam 1.0000 - 0.1480 - 0.6848 0.1672 - 145,153$ 145,153$ -$ 21,483$ -$ 99,401$ 24,270$ -$ Alicia Transmission Main RCH 10 1.0000 1.0000 - - - - - 30,586$ 30,586$ 30,586$ -$ -$ -$ -$ -$ 12" Trans. Main 1.0000 1.0000 - - - - - 3,113$ 3,113$ 3,113$ -$ -$ -$ -$ -$ Alicia Trans Main RCH 5 1.0000 1.0000 - - - - - 77,775$ 77,775$ 77,775$ -$ -$ -$ -$ -$ Alicia Trans Main RCH 6 1.0000 1.0000 - - - - - 98,440$ 98,440$ 98,440$ -$ -$ -$ -$ -$ Alicia Trans Main RCH 7 1.0000 1.0000 - - - - - 61,344$ 61,344$ 61,344$ -$ -$ -$ -$ -$ Alicia Trans Main RCH 8A 1.0000 1.0000 - - - - - 493,645$ 493,645$ 493,645$ -$ -$ -$ -$ -$ Alicia Trans Main RCH 8B 1.0000 1.0000 - - - - - 460,034$ 460,034$ 460,034$ -$ -$ -$ -$ -$ Alicia Trans Main RCH 9 1.0000 1.0000 - - - - - 485,541$ 485,541$ 485,541$ -$ -$ -$ -$ -$ South County Pipeline PH II RCH 1 1.0000 0.0770 - 0.1594 - 0.0770 0.6866 965,289$ 965,289$ 74,339$ -$ 153,881$ -$ 74,339$ 662,730$ South County Pipeline PH II RCH 2 1.0000 - - 0.1727 - 0.0834 0.7438 7,063,756$ 7,063,756$ -$ -$ 1,220,023$ -$ 589,383$ 5,254,350$ South County Pipeline PH I RCH 5 1.0000 0.0484 - 0.1002 0.3715 0.0484 0.4315 1,493,196$ 1,493,196$ 72,275$ -$ 149,609$ 554,709$ 72,275$ 644,329$ 30" Zone II I/O PL 1.0000 - 0.5000 - 0.5000 - - 158,594$ 158,594$ -$ 79,297$ -$ 79,297$ -$ -$ 3,400'-16" Street "A" 1.0000 - 1.0000 - - - - 353,622$ 353,622$ -$ 353,622$ -$ -$ -$ -$ 1,000' Oso Pkwy TM Ph. I 1.0000 - 1.0000 - - - - 100,724$ 100,724$ -$ 100,724$ -$ -$ -$ -$ 20" WTM Antonio Parkway 1.0000 - 1.0000 - - - - 272,042$ 272,042$ -$ 272,042$ -$ -$ -$ -$ 30" Antonio N of OSO 1.0000 - 1.0000 - - - - 394,283$ 394,283$ -$ 394,283$ -$ -$ -$ -$ 16" WTM Zone 2 OSO Parkway 1.0000 1.0000 - - - - - 101,986$ 101,986$ 101,986$ -$ -$ -$ -$ -$

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CAPACITY ALLOCATIONTotal ID 4A ID 4B ID 4C ID 4D ID 4E Others Previous FY Current FY ID 4A ID 4B ID4C ID 4D ID 4E Others

Description RSM Las Flores Esencia Ladera Sendero Totals Totals RSM Las Flores Esencia Ladera Sendero3,200'-16" Antonio TM 1.0000 - 1.0000 - - - - 496,818$ 496,818$ -$ 496,818$ -$ -$ -$ -$ 16" WTM Morning S/O Oso 1.0000 - 1.0000 - - - - 113,433$ 113,433$ -$ 113,433$ -$ -$ -$ -$ 36" WTM Zone II Inlet/Outlet 1.0000 - 1.0000 - - - - 318,987$ 318,987$ -$ 318,987$ -$ -$ -$ -$ Antonio and Las Flores valve and main 1.0000 - 1.0000 - - - - 6,581$ 6,581$ -$ 6,581$ -$ -$ -$ -$ Antonio Pkwy Bridge WTM SJ Creek 1.0000 - - - - 1.0000 - 136,577$ 136,577$ -$ -$ -$ -$ 136,577$ -$ 16" WTM Oso w/ Pump Station STE 1.0000 - 1.0000 - - - - 636,939$ 636,939$ -$ 636,939$ -$ -$ -$ -$ 16" WTM Oso Zone 2 Altura 1.0000 1.0000 - - - - - 1,422,582$ 1,422,582$ 1,422,582$ -$ -$ -$ -$ -$ 16" WTM Morning S/O Oso 1.0000 - 1.0000 - - - - 143,472$ 143,472$ -$ 143,472$ -$ -$ -$ -$

Cathodic ProtectionIsland Pasture Reservoir - Anode Installation 1.0000 1.0000 - - - - - $3,789 $36,264 36,264$ -$ -$ -$ -$ -$ CP Anode Well @ Las Flores L.S. 1.0000 1.0000 43,610$ 43,610$ -$ 43,610$ -$ -$ -$ -$

SCADA (General)

SCADA Chiquita Expansion Ph 3 1.0000 - - - 1.0000 - - 294,314$ 294,314$ -$ -$ -$ 294,314$ -$ -$ SCADA Foothill TEP MP Ph IA 1.0000 0.5000 0.5000 - - - - 465,997$ 465,997$ 232,999$ 232,999$ -$ -$ -$ -$ SCADA TELEMETRY MP PH II 1.0000 0.4380 0.0716 0.1200 0.3125 0.0579 - 304,913$ 304,913$ 133,558$ 21,843$ 36,581$ 95,281$ 17,650$ -$ SCADA TELEMETRY MP PH III 1.0000 0.4380 0.0716 0.1200 0.3125 0.0579 - 237,934$ 237,934$ 104,220$ 17,045$ 28,546$ 74,351$ 13,773$ -$ SCADA System MP Ph. III 1.0000 0.4380 0.0716 0.1200 0.3125 0.0579 - 406,671$ 406,671$ 178,129$ 29,133$ 48,789$ 127,079$ 23,541$ SCADA Field Equipment -$ -$ -$ -$ -$ -$ SCADA Office Equipment -$ -$ -$ -$ -$ -$ Dell cache Xeon 800 MHZ Bus computers 1.0000 0.4380 0.0716 0.1200 0.3125 0.0579 - 2,368$ 2,368$ 1,037$ 170$ 284$ 740$ 137$ -$ 10" Tablet Computer w/docking station 1.0000 0.4380 0.0716 0.1200 0.3125 0.0579 - 6,771$ 6,771$ 2,966$ 485$ 812$ 2,116$ 392$ -$ Wonderware computer software package 1.0000 0.4380 0.0716 0.1200 0.3125 0.0579 - 37,287$ 37,287$ 16,332$ 2,671$ 4,473$ 11,652$ 2,158$ -$

Construction In-ProgressPW Zone 3 Relocation Oso Parkway/SR241 1.0000 0.2720 0.0374 0.0991 0.2103 0.0344 0.3468 18,387$ 381,085$ 103,652$ 14,257$ 37,762$ 80,147$ 13,101$ 132,166$ CRWP ILS Overflow Basin 1.0000 - - 0.7424 - 0.2576 - 25,826$ -$ -$ -$ -$ -$ -$ -$ SCP SC 6 P/L near CWRP +DWTM to CCr 1.0000 - - 0.6286 - 0.3714 - -$ -$ -$ -$ -$ -$ -$ -$ Ladera Lift Station Odor Control Fac 1.0000 - 0.1111 - 0.8889 - - 95$ -$ -$ -$ -$ -$ -$ -$ Homo LS 1-8 refurb / inlet sys redesign 1.0000 - 0.1111 - 0.8889 - - 1,285$ -$ -$ -$ -$ -$ -$ -$

Subtotal ID 4 Bond Fund Facilities 112,033,438$ 112,401,837$ 42,917,565$ 16,888,997$ 10,690,000$ 22,681,029$ 4,746,358$ 14,477,888$ City of San Juan Cap Purchase of G11/G21 434,559$ 434,559$ MWD Reimbursement for SCP 13,787,492$ 13,787,492$ Total ID4 Bond Funds 126,255,489$ 126,623,888$

ID4 2019-20 Basic ID 4 Debt Service 100.00% 38.182% 15.026% 9.511% 20.179% 4.223% 12.880% 6,595,400$ 6,756,400$ 2,579,746$ 1,015,186$ 642,569$ 1,363,342$ 285,300$ 870,256$

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TABLE 11Santa Margarita Water District - Benefit Assessment Study

FY 2019-20

EquivalentDwelling Units %

4A (RSM) 13,526 45.49%

4B (Las Flores) 2,071 6.97%

4C (Esencia) 3,154 10.61%

4D (Ladera) 8,723 29.34%

4E (Sendero) 2,257 7.59%Totals 29,731 100.00%

ID 4 ALLOCATION OF ADMINISTRATION BUILDING DEBT SERVICE COSTS

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TABLE 3ASanta Margarita Water District - Benefit Assessment Study

ID 5 AND ID 6 ESTIMATED ULTIMATE DEVELOPMENT AND DOMESTIC WATER DEMANDSFY 2019-20

(AF/ Year) (cfs)

ID 5PA-3SFR 450 2,100 DU 450 1.00 2,100 1,059 3.51SFR 300 2,765 DU 300 1.00 2,765 929 3.08MFR 2,135 DU 175 1.00 2,135 419 1.39Affordable Housing 175 510 DU 175 1.00 510 100 0.33Commercial / Ind. (Gross) 198.4 Ac 2,925 6.50 1,290 650 2.15Schools 12.5 2,800 Stu 12.5 0.03 78 39 0.13Community Park 200 82.7 Ac 200 0.44 37 19 0.06Reg. Sports Park / Events Ctr. 55.8 Ac 400 0.89 50 25 0.08Commercial / Ind. (Gross) 35.3 Ac 2,925 6.50 229 116 0.38RMV Cow Camp 69.6 Ac 700 1.56 108 55 0.18Subtotal PA-3 9,301 69.01% 3,409 11.301 62.61%

Subtotal ID 5 9,301 69.01% 3,409 11.301 62.61%ID 6

PA-4Affordable Housing 175 75 DU 175 1.00 75 15 0.05SFR 450 500 DU 450 1.00 500 252 0.84Commercial / Ind. (Gross) 66.0 Ac 2,925 6.50 429 216 0.72Subtotal PA-4 1,004 7.45% 483 1.601 8.87%

PA-5SFR 450 1,250 DU 450 1.00 1,250 630 2.09Affordable Housing 175 75 DU 175 1.00 75 15 0.05Community Park 200 0 Ac 200 0.44 0 0 0.00Commercial / Ind. (Net) 150 kSF 225 0.50 75 38 0.13Community Facilities (Net) 0 kSF 225 0.50 0 0 0.00Subtotal PA-5 1,400 10.39% 683 2.263 12.54%

PA-8SFR 450 1,250 DU 450 1.00 1,250 630 2.09Affordable Housing 175 75 DU 175 1.00 75 15 0.05Community Park 200 5 Ac 200 0.44 2 1 0.00Commercial / Ind. (Net) 150 kSF 225 0.50 75 38 0.13Community Facilities (Net) 740 kSF 225 0.50 370 187 0.62Unaccounted Water 0 % 0 0.00Subtotal PA-8 1,772 13.15% 870 2.885 15.98%

Subtotal ID 6 4,176 30.99% 2,036 6.748 37.39%Total 13,478 100.00% 5,445 18.05 100.00%

Notes:1. 2019 DEA PA3 MPOW PA3, PA4;

2018 Psomas WSV Report for PA5, PA82. Unit Use factors per input table at right Land Use Units

3. EDU Factors per table at right. 1 Affordable Housing 175 DU 175 1.0 175 Non-res EDUs per 1 EDU = 450 gpd 2 Affordable Housing 300 DU 300 1.0 1754. Based on MD peaking factor = 2.4 3 Apartments DU 175 1.0 150

5. Domestic irrigation estimated on a per site basis, 4 Commercial / Ind. (Gross) Ac 2,925 6.5000 2,925

per PA-1 POW, Addendum 1 (April 2016). 5 Commercial / Ind. (Net) kSF 225 0.5000 225 Two sites totaling 15.5 acres. 6 Community Facilities (Gross) Ac 2,500 5.5556 2,500 Two sites totaling 15.5 acres. 7 Community Facilities (Net) kSF 225 0.5000 225

8 Community Park 200 Ac 200 0.4444 09 Community Park 300 Ac 300 0.6667 300

10 Custom Lots DU 450 1.0 80011 Domestic Irrigation 5 Sites 25 gpm/site 80 / site 012 Healthcare Non-Residential kSF 325 0.7222 32513 Medical Office kSF 325 0.7222 32514 MFR DU 175 1.0 17515 Open Space Ac 100 0.2222 016 Reg. Sports Park / Events Ctr. Ac 400 0.8889 40017 Retail kSF 250 0.5556 25018 RMV Cow Camp Ac 700 1.5556 70019 RMV Headquarters kSF 225 0.5000 custom20 Schools 10 Stu 10 0.0222 1021 Schools 12.5 Stu 12.5 0.0278 1022 Senior Living Apartments DU 175 1.0 15023 Senior Living Fac. (SLF) DU 175 1.0 17524 SFR 175 DU 175 1.0 17525 SFR 300 DU 300 1.0 22526 SFR 350 DU 350 1.0 20027 SFR 450 DU 450 1.0 22528 Single Family Attached DU 175 1.0 17529 Skilled Nursing / Assist. Living Beds 35 0.0778 3530 SLF Penthouse DU 300 1.0 22531 Unaccounted Water %

Avg. Water Demands

Max. Day Demands 4

% of Ultimate

Demands

Water Unit Use

(gpd)

WaterEDU Factor

Sewer Unit Use

(gpd)

Improvement District Actual / Proposed Land Uses 1

Unit Use 2

(gpd)EDU

Factor 3EDU Count % of Total

EDUs

Land Use Source Detail:• ID 4A, 4B, 4D land use from November 30, 2011

Updated Capacity Acquisition Study for Improvement District Nos. 5 & 6 (Henry Miedema & Associates)

• IDC 4C land use from PA-2 Subarea Plan of Works, RBF, February 12, 2014 Adjusted based on RMV Unit Counts 7-7-16

• ID 4E land use from Plan of Works, Planning Area 1, Addendum 1, April 20, 2016 by Hall & Foreman Adjusted based on RMV Unit Counts 7-7-16

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TABLE 3BSanta Margarita Water District - Benefit Assessment Study

EMERGENCY WATER SUPPLY ANALYSIS FOR IMPROVEMENT DISTRICTS 1, 2, 3, 4, 7 & 8PROJECTED 2030 DOMESTIC WATER DEMANDS (NORMAL YEAR)

FY 2019-20

Commercial Water Services

Projected Residential

Water Service

Total Projected Domestic Water Connections 1

Percent of Total

(EDUs) (EDUs) (EDUs) (%) Acre-Feet cfs1 (Mission Viejo) 21,629 27.75% 9,476 13.092 (Coto de Caza) 5,402 6.93% 2,551 3.523 (Rancho Trabuco) 3,624 4.65% 1,476 2.044A (RSM) 13,526 17.35% 4,808 6.644B (Las Flores) 2,071 2.66% 786 1.094C (Esencia) 3,154 4.05% 1,317 1.824D (Ladera) 8,723 11.19% 3,430 4.744E (Sendero) 2,257 2.90% 635 0.885 9,301 11.93% 3,409 4.716 4,176 5.36% 2,036 2.817 (Talega Valley) 3,863 4.96% 1,569 2.178 (Hidden Ridge) 228 0.29% 97 0.13Totals 77,954 100.00% 31,593 43.64

Projected Annual Domestic Water Demand 1Improvement

District

Notes:1. EDU counts and demands in AF/yr are from:

-- For IDs 1-3, 7, and 8 January 2017 Draft ID 5 & 6 Capacity Allocation Study, Table 2-- For IDs 4A-4E: Table 4 (this spreadsheet)-- For IDs 5 and 6: Table 3A (this spreadsheet)

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TABLE 3CSanta Margarita Water District - Benefit Assessment Study

EMERGENCY WATER SUPPLY ANALYSIS FOR IMPROVEMENT DISTRICTS 1, 2, 3, 4, 7 & 8AVAILABLE EMERGENCY WATER SUPPLIES FOR 10 DAY THEORETICAL OUTAGE

FY 2019-20

FacilityCapacity Total Available Capacity

(10 day outage)(AF) (cfs) (AF/day) (AF)

I. Existing FacilitiesDistribution System Tanks 144 144

ETWD R-6 Reservoir 407 407

Subtotal 551 551

II. Proposed ProjectsUpper Chiquita Reservoir (UCR) 295 295

Baker Treatment Plant 13.0 25.8 258

IRWD Interconnection Projects 7.5 14.9 149

ID 4C & 4E Dist. Storage 21 21

Subtotal 316 723

868 20.5 40.7 1,274

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TABLE 3DSanta Margarita Water District - Benefit Assessment Study

EMERGENCY WATER SUPPLY ANALYSIS FOR IMPROVEMENT DISTRICTS 1, 2, 3, 4, 7 & 8PROPOSED ALLOCATION OF DOMESTIC WATER RELIABILITY PROJECTS FOR THEORETICAL 10 DAY OUTAGE

FY 2019-20

Existing Supply Sources Emergency Supply Availability from Water Reliability Projects 4

Existing / Proposed

Distribution Storage 2

Existing R-6 Reservoir 3

Proposed Upper Chiquita

Reservoir

Proposed IRWD Inter-connections

Baker Pipeline Treatment Plant Totals

(%) (AF) (AF) (AF) (AF) (AF) (AF) (AF) (AF) (AF) (%) (AF) (%)1 (Mission Viejo) 27.75% 9,476.3 389.83 27.60 407.00 (44.8) - - - - 0.000% 434.60 111%2 (Coto de Caza) 6.93% 2,551.3 104.95 10.00 95.0 37.73 19.03 32.98 89.74 12.791% 99.74 95%3 (Rancho Trabuco) 4.65% 1,475.7 60.71 15.30 45.4 18.04 9.10 15.77 42.91 6.116% 58.21 96%4A (RSM) 17.35% 4,808.4 197.80 33.30 164.5 65.37 32.96 57.14 155.47 22.159% 188.77 95%4B (Las Flores) 2.66% 786.4 32.35 30.70 1.7 0.66 0.33 0.57 1.56 0.222% 32.26 100%4C (Esencia) 4.05% 1,317.0 54.18 8.30 45.9 18.23 9.19 15.94 43.36 6.180% 51.66 95%4D (Ladera) 11.19% 3,430.3 141.11 13.80 127.3 50.59 25.51 44.22 120.33 17.150% 134.13 95%4E (Sendero) 2.90% 635.5 26.14 2.47 23.7 9.41 4.74 8.22 22.38 3.189% 24.84 95%5 11.93% 3,409.2 140.24 14.58 125.7 49.94 25.18 43.65 118.77 16.928% 133.35 95%6 5.36% 2,035.8 83.75 21.48 62.3 24.74 12.48 21.63 58.85 8.387% 80.33 96%7 (Talega Valley) 4.96% 1,569.3 64.56 13.50 51.1 20.29 10.23 17.73 48.25 6.878% 61.75 96%8 (Hidden Ridge) 0.29% 97.4 4.01 - - - - - - 0.000% - 0%Totals 100.00% 31,592.5 1,299.62 191.02 407.00 697.6 295.00 148.76 257.86 701.62 100.000% 1,299.64 100%

Notes:1) Recommended Emergency Water Supply is based on a 10-day outage with no imported water supplies available to District. Volume is calculated assuming day 1 demand at 100%, day 2 at 80%, day 3 at 75%, day 4 at 70%, and days 5-10 at 65% of normal demands, and for summertime conditions with a peaking factor of 2.1. This results in a volume equal to: 15.015 average days.2) Distribution Storage is calculated based on 50% of total storage. ID 6 Estimated Based on 2013 POW and April 2017 Study by David Evans Associates (DEA)ID 5 from PA-3 MPOW April 2019, DEA3) R-6 Reservoir was funded solely by Improvement District No. 14) Proposed Upper Chiquita Reservoir, IRWD Interconnection Projects and Baker Treatment Plant are proposed to be allocated to all IDs excluding ID 1, based on required additional capacity. 10-day supply availability from each source per Table 3C.

Total Allocated Emergency

Supply

% of Recommended

Supply

Recommended Emergency

Water Supply 1Improvement

District

Percentage of Domestic Water

Service Connections

Projected Average Annual Demand

Net Additional Required Capacity

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MEMORANDUM

TO: Finance and Administration Committee DATE: June 26, 2019

FROM: Robert Grantham

SUBJECT: The District's Proposition 218 Rate Structure

SUMMARY:

Following the completion of the Fiscal Year (FY) 2020 Budget, the District is developing a two-

year water, recycled water, and wastewater rate package. The proposed rates would be effective

on a calendar year basis, running from January 2020 through December 2021. Now, with the

development of the Wastewater Master Plan and updated Integrated Resources Plan, the District

is evaluating the potential funding sources and cost recovery structures for these programs. The

purpose of this memorandum is to recap the rate structure considerations that had previously

been discussed with the Board, as well as begin a discussion with the Finance and

Administration Committee as to possible capital funding approaches.

Discussion:

On March 25th, the Board adopted wastewater rate increases, as well as implemented the potable

water pass-through and the power surcharge for calendar year (CY) 2019. In June, as part of the

Budget adoption process, the Board approved maximum annual rate increases of 4.5 percent for

CY 2020 and CY 2021. This forecast assumed that the District would issue $40 million in debt in

FY 2020 to fund the District’s planned Capital Repair and Replacement Projects. However, this

financing level could change dependent upon the need to fund future water reliability projects

and/or the direction of the Board.

The following section outlines the rate structure issues and considerations, by service line, that

had been identified during the rate and budget processes:

Potable Water

Issue #1:

• Phasing out of the Tier 1 commodity charge offset will recover the true cost to serve

water to our customers and more accurately conveys the value of water, but will impact

customer bills, particularly for irrigation customers.

• Considerations: The District had proposed phasing out the commodity charge offset over

a three-year period. Based on the feedback the District received from the larger

homeowner associations (HOA), the timing of the increase was of greater concern than

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the increase itself. During the District’s outreach meetings, the HOAs requested that the

District provide them with a multi-year rate forecast, as it was available, so that they

could prepare their own budgets.

Issue #2:

• Fire Meters are charged the District’s standard monthly fixed charge.

• Considerations: The District is conducting a review of the storage and conveyance

capacity requirements to provide adequate fire flows in case of emergency. Based on this

review, the District might propose implementing a specific fixed fire meter charge as it is

determined to be appropriate based on costs.

Issue #3A:

• With the adoption of the District’s new rate structure in 2015, fixed charges have

increased at a higher pace than commodity charges. The District recovers annual fixed

costs through the monthly fixed charges based on meter size. This approach equitably

recovers costs from customers based on their potential demands on the system.

Additionally, this structure also created financial stability for the District. However, due

to the 2015 rate structure change, water bills for low-volume customers have been

increased at a disproportionally higher rate than high-volume customers.

Issue #3B:

• As part of its original 2019 water rate proposal, the District had proposed correcting the

meter hydraulic ratios. This change would result in higher increases for 1.5- and 2-inch

meter fixed charges relative to other size meters. Many of the District’s irrigation and fire

meters are 2-inches.

• Considerations: The District will evaluate the potential of implementing a peak demand

component to the monthly fixed charges, similar to what other agencies have

implemented, including South Coast Water District (SCWD). This approach can

introduce some revenue volatility but could be mitigated by making only a portion of the

fixed charges based on peak demands. Doing so, would also help to prevent large

changes in individual customer’s bills each year.

Issue #4:

• The District has yet to determine how it should recover Future Water Supply Projects

costs that the Board approves.

• Considerations: The District is in the process of developing a capital funding plan. Future

water resource project costs could be recovered from customers in a number of ways,

including but not limited to the following:

o Recover capital costs on the annual property tax roll.

o Recover capital costs in the fixed monthly charge.

o Recover capital costs through the monthly commodity rates.

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Recycled Water

• Issue: Potable and recycled water users are charged a “common” monthly fixed charge.

This is appropriate in the fact that there is a shared benefit in having access to the water

system, regardless of the source of supply. However, due to the number of meters in the

recycled water system relative to the number in the potable water system, potable water

users fund a higher portion of these fixed water costs.

• Considerations:

o The fixed cost recovery philosophy is reasonable and in keeping with the spirit of

the shared purpose of the potable and recycled water system. Both potable water

and recycled water systems have storage, distribution, and transmission.

o There is a collective benefit to all water users of having access to recycled water,

including having some protection against State mandated water reductions.

o Shifting a higher share of fixed charges to the recycled water commodity charge

would result in those charges exceeding the cost of potable water, particularly in

the lowest tier.

Wastewater

• Issue: The District currently charges a flat monthly fixed wastewater charge for all

customers regardless of customer class and size. This structure might not equitably

recover costs, as some customers discharge greater flows and loadings into the system.

• Considerations: The District could adjust commercial and multi-family monthly fixed

charges to better account for their wastewater discharge flows and strengths:

o Multi-Family Common Rates – Charge fee per equivalent dwelling unit.

▪ The District serves approximately 600 Multi-Family Common (MFC)

accounts. These are accounts with a single meter that serve multiple

dwelling units. These 600 MFC accounts serve 2,900 dwelling units, yet

pay the same fixed monthly charge as a single family home. The District

can address this disparity by charging a fee per dwelling unit.

o Commercial Rates –

▪ Similar to the MFC accounts, commercial accounts are charged the same

fixed monthly charges as all other wastewater customers. Charging a

monthly fixed charge that accounts for the size of the discharger and

strength of the wastewater discharged, will address this disparity.

Other Considerations

• Issue: The District believes it is important to have the appropriate level of input from the

Board and public stakeholders.

• Consideration #1: The District intends to hold two special workshops with the Board

prior to the Proposition 218 Rate Hearing. These workshops could be included as part of

the regular Board meetings or may be held as separate meetings, dependent upon the

desire of the Board.

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• Consideration #2: Public rate workshops were not overly well attended during the 2019

rate adoption process, but gave the District an opportunity to provide additional

background information to those who did attend. The District believes it is important to

have a public outreach process.

• Consideration #3: Customer Surveys might provide input for the Board and help the

District better understand if concerns are reserved to select customers or greater than

anticipated.

Rate Schedule

Below is the proposed timeline schedule of the rate implementation process.

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Agenda Item 2

Assistant General Manager - Finance Report

Oral Presentation

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COMMITTEE NOTES

SANTA MARGARITA WATER DISTRICT

FINANCE AND ADMINISTRATION

COMMITTEE MEETING

MAY 29, 2019

CALL TO ORDER: 8:30 AM, Conference Room

26111 Antonio Parkway, Rancho Santa Margarita, CA 92688

COMMITTEE CHAIR: Charles T. Gibson

COMMITTEE MEMBER: Saundra F. Jacobs

Call to Order @ 8:31 AM

ATTENDEES

Members Present: Director Gibson (Chair) and Director Jacobs (Member)

Staff Present: Daniel Ferons, Robert Grantham, Kathleen Springer,

Christine McIlrevey, and Jennifer Wilt

Others Present: Scott Smith with Best Best & Kreiger

Scott Sutherland with Sutherland Retirement Group of Wells

Fargo Advisors

Gavin Gruenberg and Chip Burciaga with Voya

1 PUBLIC FORUM

There were no public requests to speak.

2 ACTION ITEM

2.1 Consideration and Action on the District Changing Deferred Compensation Providers

ACTION: APPROVED

Status: The Committee received presentations from Sutherland Retirement Group

of Wells Fargo Advisors and Voya. Voya gave the Committee an overview of the

customer portal, the estimated timing of the transition process, and expected

benefits and features employees will receive. The Committee requested to "check-

in" on this topic biannually, if not annually. On a quarterly basis, Voya will

provide benchmark progress updates to management.

3 TREASURER

3.1 Consideration and Action on the District's Investment Report Portfolio for the Period

Ending April 30, 2019

ACTION: RECEIVED AND FILED

Status: The District is working with the State to expedite the Trampas loan

payment process, with the goal to obtain the $4.0 million-dollar payment before

the end of the fiscal year. Due to an accounting system upgrade, the State is

behind schedule in processing SRF loan reimbursement requests. The District's

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year end fund balance is an important metric of financial performance with the

District potentially issuing debt in FY 2020, it is important to report maximum

fund balance.

3.2 Consideration and Action on the District's April 2019 Business Expense

Reimbursement Report and Board of Directors' Compensation

ACTION: APPROVED

Status: There was no further discussion on this item. Item was approved to be

presented to the Board of Directors on June 21st as a Consent Calendar item.

4 INFORMATION ITEMS

4.1 Assistant General Manager - Finance Report

ACTION: INFORMATION ONLY

Status: Mr. Grantham updated the Committee on the following items:

• Fiscal Year 2020 Budget

o Fiscal Policies review including update “Days Cash.”

o Final Budget to be presented at the June 5th board meeting includes the

$1.0 Million Expense Reduction as requested by the Board.

o 3A Plant Costs in the FY 2020 Budget the District only reflects its

proportional share of capital costs now that MNWD is operating the plant.

• Fiscal Year 2019 Audit Process Timeline

o District to add a placeholder on the November 6th board package for any

items coming from the October FA Committee meeting.

• Suite 100 Tenant Update

o Suite 100 to be used as a transitional area for employees during the

District’s space update.

4.2 Finance and Administration - Committee Meeting - Apr 30, 2019 8:30 AM

ACTION: INFORMATION ONLY

Status: There was no further discussion on this item.

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5 CLOSED SESSION

Status: No reportable action taken.

5.1 PUBLIC EMPLOYEE PERFORMANCE EVALUATION

Pursuant to Government Code Section 54957

Title: General Manager

5.2 CONFERENCE WITH LABOR NEGOTIATORS

Pursuant to Government Code Section 54957.6

Agency Designated Representative: Board President

Unrepresented Employee: General Manager

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