Sanitary Sewer System Capacity Assurance Program (CAP)fayettealliance.com/.../06/CAP_TFM_Slides_8-7-2012.pdfAug 07, 2012 · August 7, 2012 CAP Task Force Meeting 5 A credit amount

August 7, 2012

CAP Task Force Meeting 1

Sanitary Sewer System

Capacity Assurance Program

(CAP)

CAP TASK FORCE Lexington-Fayette Urban County

GovernmentDivision of Water Quality

August 7, 2012

1

AGENDAAGENDA

� Recommendations for Task Force

� Adequate Capacity vs. Credits

� Credit Allocation Priority

� Overview of Land Development

Planning/Permitting Process

� Entry Point(s) for Capacity/Credit Requests

� Expiration Period for Credit Allocations

� Grandfathering

� Developer-Earned Credit Program (REVISED)

2

August 7th & 9th

August 7, 2012


Decision ItemDecision Item

Adequate Capacity vs.

Credits

Task Force Action Needed

3

Capacity vs. CreditsCapacity vs. Credits

� Credits do not equal capacity.

� Credits may be thought of as cash in your wallet or purse.

� Capacity may be thought of as the sum of your debts (i.e. credit card, mortage, etc.)

� You can have money in your wallet (credits), but still be deep in debt (no adequate capacity).

� Credits enable LFUCG to allow new connections to the system until adequate capacity is restored.

� Credits do not necessarily restore adequate capacity. (RMP projects will do that.)

Clarification

4

August 7, 2012



5

credit

bank #1

credit

bank #2

credit

bank #3

Is there

Adequate

Capacity?

If no adequate capacity, must use credits

earned from public sewer repair and

removal of private sources

in credit bank #1

force main

wastewater

treatment plantpump

station

new flow

SSO #1

SSO #2

gravity

sewer

Visualization


Credit Allocation Priority


6

August 7, 2012


� Where adequate capacity can not be certified, requests will be reviewed to determine if sufficient banked credits are available.

� When there are not enough (public) banked credits to offset a flow increase, the applicant could be placed on the Waiting List.

� As DWQ earns credits, they will be posted and available to the Waiting List and new requests.

� Credit Allocation Priority refers to the rule(s) that will govern how credits are allocated and the Waiting List is managed.

ConceptCredit Allocation PriorityCredit Allocation Priority

7

� A “first-in, first out” approach is a generally accepted method for allocating resources when demand is perceived to exceed supply.

� A “first-in, first-out” approach for allocating sewer credits could result in delays for small credit requests who are backed up behind a large flow increase that precedes them.

� Essential Service facilities (if exemption allowed) will be unaffected, since they are permitted to connect regardless of the amount of credits available.

ConsiderationsCredit Allocation PriorityCredit Allocation Priority

8

August 7, 2012


� A credit amount of 2,500 gallons per day (gpd) will be reserved in each bank for minor sewer connections.

� Minor sewer connections are defined in the Consent Decree as those less than 2,500 gpd. (single family home ~ 400 gpd)

� If the credit balance in a bank drops to 2,500 gpd or less, non-minor credit requests will be placed on the Waiting List until the credit balance exceeds 2,500 gpd.

� A “first-in, first-out” approach will be adopted for managing the Waiting List and for allocating credits when the credit balance exceeds the 2,500 gpd reserve.

� Earned credits will be posted to banks on an ongoing basis so that they are available for public use.

RecommendationCredit Allocation PriorityCredit Allocation Priority

9


10

� Example:

2,500 gpd

10,000 gpd

0 gpd

Current balance

Reserve level

BankSE4_100

Request #1:

• Application received 6/1/13

• 10,000 gpd

• Shady Estates

• Not Essential Facility

Action:

• 7,500 gpd is allocated to Shady Estates (transaction recorded).

• Request for 2,500 gpd put on Waiting List for Shady Estates.

• New credit bank balance becomes 2,500 gpd.

August 7, 2012



11

� Example:

2,500 gpd

0 gpd

Current balance

Reserve level

BankSE4_100

Request #2:


• 5,000 gpd

• Sunny Estates


Action:

• Request for 5,000 gpd put on Waiting List for Sunny Estates.

• No transaction recorded in credit bank.

• Credit bank balance remains at 2,500 gpd for minor connection requests.


12

� Example:

2,500 gpd

0 gpd

Current balance

Reserve level

BankSE4_100

Request #3:


• 400 gpd

• 221B Baker Street


Action:

• Approved for 400 gpd.

• Transaction recorded in credit bank for -400 gpd.

• New credit bank balance becomes 2,100 gpd.

August 7, 2012



13

� Example:

2,500 gpd

0 gpd

Current balance

Reserve level

BankSE4_100

Request #4:


• 3,000 gpd

• Urgent Treatment Center

• Deemed an Essential Facility

Action:

• Approved for 3,000 gpd

• Transaction recorded in credit bank for -3,000 gpd.

• New credit bank balance becomes -900 gpd.

2,100 gpd


14

� Example:

0 gpd

-900 gpdCurrent balance

BankSE4_100

Request #5:


• 4,000 gpd

• Sud’s Car Wash

• Not an Essential Facility

Action:

• Request for 4,000 gpd put on Waiting List for Sud’s Car Wash.

• Credit bank balance remains at -900 gpd.

• Sud’s Car Wash won’t get needed credits until…

2,500 gpd

Threshold credit amount when allocations to Waiting List can begin.

Reserve level

900 gpd ~ Return to zero2,500 gpd ~ Replenish Reserve2,500 gpd ~ Shady Estates5,000 gpd ~ Sunny Estates4,000 gpd ~ Sud’s Car Wash

14,900 gpd earned

August 7, 2012


� Task Force Action

� Disposition

� Council action required? Yes (part of implementing ordinance)

Credit Allocation PriorityCredit Allocation Priority Outcome

Recommendation No. 7: Credit Allocation Priority.

A credit amount of 2,500 gpd will be reserved in each bank for minor sewer connections. When credit balances exceed the reserve amount, credit allocations will made on a “first-in, first-out” basis. Essential Service facilities will be unaffected.

15

Detailed deliberations and Task Force Action to be postponed to next meeting.

Information ItemInformation Item

Overview of Land Development Process

No Task Force Action Needed

16

August 7, 2012


Land Development ProcessOverviewOverview

Preliminary Subdivision Plan

• Submitted to Planning Commission. Technical Committee performs review.

• Can not be approved until Zoning Map Amendment (if needed) and must own property.

• Planning Commission (PC) action (Approval, Conditional Approval, Postponement, or Denial).

• If approved by PC, then Preliminary Subdivision Plan (PSP) is certified by Planning Director.

• Land Disturbance Permit

• KDOW Sewer Extension Permit

• Others as required.

Final Subdivision Plan

Construction of public infrastructure

Infrastructure Development Agreement

Develop engineering plans

Building Inspection

• Occupancy Permit

• 3-way agreement with Developer, Engineer, and LFUCG Division of Engineering (DOE)

• DOE cannot enter into Agreement until PSP has been approved and on file.

• Notice to Proceed issued after administrative review of infrastructure plans.

• DOE notification of construction schedule/progress.

• Developer constructs public infrastructure & secures necessary permits.

• Requires substantial completion of public infrastructure & DOE certification.

• Developer provides CCTV, test results, bond, as-built drawings, etc.

• PC approval required; Recorded with Fayette Clerk after approval.

• Can submit portion of Final Subdivision Plan (phases).

Building Inspection

• Building Permit

• Can not issue Plumbing Permit if As-Builts not on file and sewer released.

• Rough-In Permit can be issued without sewer release but cannot connect to public sewer.

Tap Desk

• Rough-In Permit

• Plumbing Permit

• Tap Inspection

• Pay Item Agreement

• Replacement Permit

• Plug Permit

• Plug Inspection

17

Land Development ProcessOverviewOverview






Building Inspection

• Building Permit

Building Inspection


Tap Desk

• Rough-In Permit

• Plumbing Permit

• Tap Inspection



• Plug Permit

• Plug Inspection

Start here if construction of public infrastructure is necessary to service development. (Subdivisions, expansion areas, etc.)

Start here if existing public infrastructure is sufficient. (Infill development, replacement structures, etc.)

18

August 7, 2012



Entry Point(s) for Capacity/Credit Reservations


19

� New connections to the sanitary sewer system will require a capacity or credit allocation.

� The CAP Entry Point policy refers to when a developer may reserve sewer capacity/credits.

� To meet the requirements of the Consent Decree, a CAP Entry Point no later than tap permit issuance is sufficient.

ConceptCAP Entry PointCAP Entry Point

20

August 7, 2012


� Setting the CAP Entry Point at the time of tap permit issuance presents a financial risk to the development community, since there is no guarantee of sewer capacity until late in the development process.

� Allowing an entity to reserve capacity too early in the process may create the potential for unfair business practices (hoarding), unnecessary allocations to non-viable business plans, and overly conservative credit requests.

� Ultimately, the CAP Entry Point should be selected to avoid penalizing legitimate developments or creating undue financial risk such that it results in a self-inflicted moratorium.

ConsiderationsCAP Entry PointCAP Entry Point

21

� Other CAP communities (Knoxville, Cincinnati, etc.) include provisions to allow major developments (such as subdivisions) to reserve credits well in advance of tap permit issuance.

� The CAP Entry Point for infill developments and replacement structures is typically at tap permit issuance.

� Regardless of when the CAP Entry Point occurs, the credit reservation/allocation must be verified at tap permit issuance to prevent non-compliance with the Consent Decree (and identify unused credits).

ConsiderationsCAP Entry PointCAP Entry Point

22

August 7, 2012


Where new public infrastructure necessary.RecommendationRecommendation






Building Inspection

• Building Permit

Building Inspection


Tap Desk

• Rough-In Permit

• Plumbing Permit

• Tap Inspection



• Plug Permit

• Plug Inspection

Build houseConnect to

sewer Sell house

Permanent

Allocation

After PSP approval by PC and Planning Director certification.

Compliance

Check

Prior to signing IDA, LFUCG verifies CAP allocation (yes/no).

Allocation for full amount shown in PSP.

Compliance check to ensure allocation not exceeded and return unused credits. Reconciliation

Maximum threshold that can be used in any year.

23

Where existing infrastructure sufficient.RecommendationRecommendation






Building Inspection

• Building Permit

Building Inspection


Tap Desk

• Rough-In Permit

• Plumbing Permit

• Tap Inspection



• Plug Permit

• Plug Inspection


sewer Sell house

Permanent AllocationFirst opportunity for awareness of proposed development by LFUCG.

Allocation for full amount, no maximum annual threshold.

24

August 7, 2012



� Disposition


CAP Entry PointsCAP Entry Points Outcome

Recommendation No. 8: CAP Entry Point.

For developments requiring construction of public infrastructure, credits may be requested upon approval of the Preliminary Subdivision Plan. For developments not requiring construction of public infrastructure, credits are requested prior to issuance of tap permit. In either case, a tap permit shall not be issued without certification of adequate capacity or proof of credit allocation.

25



Expiration Period


26

August 7, 2012


� In some other community CAPs credits are reserved and, at some predefined point in the development process, are permanently allocated to the parcel.

� The Expiration Period refers to the period of time that a credit reservation is valid.

� The Expiration Period applies only to credit reservations. Credit allocations are permanent.

� Expiration Periods are not applicable where adequate capacity can be certified.

� The Expiration Period “clock” begins from the date on the approval letter for the credit reservation.

ConceptExpiration PeriodExpiration Period

27

� An Expiration Period for credit reservations provides a mechanism to return unused credits to the public pool, such as from:

� A reduction in flow from a change in the planned development

� Over-estimation in the original credit request

� Change in development priorities

� Cancellations

� The Expiration Period also provides a means to limit credit stockpiling and minimize the impact of non-viable requests.

ConsiderationsExpiration PeriodExpiration Period

28

August 7, 2012


� Too short of an Expiration Period may be impractical and limit the ability of the developer to secure needed financing from lending institutions.

� Too long of an Expiration Period may unnecessarily deplete credit balances in the short-term and promote stockpiling.

� For example, assume a 10-year Expiration Period were selected. Credits could be reserved several years in advance with little or no activity to move the development forward and still have ample time to complete the development before the credit reservation expired.

ConsiderationsExpiration PeriodExpiration Period

29

Where new public infrastructure necessary.RecommendationRecommendation






Building Inspection

• Building Permit

Building Inspection


Tap Desk

• Rough-In Permit

• Plumbing Permit

• Tap Inspection



• Plug Permit

• Plug Inspection


sewer Sell house

Permanent

Allocation

Check

Reconciliation

No expiration on permanent allocations.

Any unused credits returned to public pool upon full build-out.

30

August 7, 2012



� Disposition


Expiration PeriodExpiration Period Outcome

Recommendation No. 9: Expiration Period.

There will not be an expiration period for permanent credit allocations.

31



Grandfathering


32

August 7, 2012


� The Consent Decree requires LFUCG to maintain a list of Approved Connections.

� The Approved Connections List (ACL) represents those planned new connections to the sewer system that are currently in the land development process, but that have not yet physically connected to the sewer system.

� Developments that are on the ACL will be allowed to connect to the sewer system regardless if there are available credits (i.e. grandfathered).

� Grandfathering is not a “free pass”, but rather a commitment of sewer capacity by LFUCG that was made prior to the onset of the CAP.

ConceptGrandfatheringGrandfathering

33

� LFUCG’s Consent Decree (CD) does not identify if grandfathered developments will require subtraction from the credit bank (or if negative credit bank balances will be permitted).

� The CD for Chattanooga (TN) was issued in mid-July 2012 and has similar language to LFUCG’s CD.

� Chattanooga’s CD clearly identifies that a subtraction from the credit bank is required for flow increases from planned connections on the ACL.

� Consequently, it is anticipated that EPA may enforce a similar requirement on LFUCG.

ConsiderationsGrandfatheringGrandfathering

34

August 7, 2012


� All of the capital projects outlined in the Remedial Measures Plan (RMP) are scheduled to be completed within the next 11 – 13 years.

� The RMP projects will allow adequate capacity to be certified for the 2-year, 24-hour storm and eliminate the need for banked credits.

� Grandfathering developments not anticipated to physically connect to the sewer system within the RMP time period may unnecessarily deplete credit reserves in the short term.

ConsiderationsGrandfatheringGrandfathering

35

Where new public infrastructure necessary.

Permanent

Allocation

GrandfatheringGrandfathering






Building Inspection

• Building Permit

Building Inspection


Tap Desk

• Rough-In Permit

• Plumbing Permit

• Tap Inspection



• Plug Permit

• Plug Inspection


sewer Sell house

Reconciliation

Compliance

Check

Grandfather

Permanent allocation if there is an approved PSP.

Allocation for full amount shown in PSP.

No limits placed on number of connections per year unless PSP or IDA already contains limiting language.

Also Grandfathered if FSP approved but have not yet connected all lots to sewer.

36

August 7, 2012


Where existing infrastructure sufficient.RecommendationRecommendation






Building Inspection

• Building Permit

Building Inspection


Tap Desk

• Rough-In Permit

• Plumbing Permit

• Tap Inspection



• Plug Permit

• Plug Inspection


sewer Sell house

Permanent Allocation

Notes:• Infill development and

replacement structures will have Use of Record.

• Credits may be necessary if there will be a flow increase.

• No “check point” in Land Development Process prior to Building Permit/Tap Desk from which to regulate.

Notes:• Infill development and

replacement structures will have Use of Record.

• Credits may be necessary if there will be a flow increase.

• No “check point” in Land Development Process prior to Building Permit/Tap Desk from which to regulate.

No

Grandfather

37

� Grandfather all developments that have an approved Preliminary Subdivision Plan (PSP) or an approved Final Subdivision Plan (FSP).

� Approve credits for all proposed new connections identified in the approved PSP or FSP. No limits placed on how many connections allowed per year unless the PSP or IDA already contains limiting language.

� Grandfathered developments are granted permanent allocation that does not expire.

RecommendationGrandfatheringGrandfathering

38

August 7, 2012



� Disposition


GrandfatheringGrandfathering Outcome

Recommendation No. 10: Grandfathering.

Grandfather all developments with an approved PSP or FSP. Approval for all lots with no limit on connections per year unless limiting language included in PSP or IDA already. Permanent allocations and not subject to expiration.

39



Developer-EarnedCredit Program

(REVISED)


40

August 7, 2012


� When there are not enough banked credits to offset a flow increase, the applicant will be placed on the Waiting List until sufficient credits are earned.

� Credits are earned by reducing flow to LFUCG’s sanitary sewer system.

� Under a Developer-Earned Credit Program (DECP), an applicant may elect to use private funds to rehabilitate LFUCG’s sewer system to earn the needed credits.

� Credits earned under a DECP are immediately assigned to the participating developer for their use upon completion of the rehabilitation work.

ConceptDeveloper Earned Credit ProgramDeveloper Earned Credit Program

41

Is the proposed flow addition an essential

facility?

ESSENTIAL FACILITY CHECK

CAP OVERVIEWCAP OVERVIEW How does it work?

Is there adequate collection/transmission/ treatment capacity?

CAPACITY DETERMINATION

Calculate proposed flow addition and discharge

location.

REVIEW REQUEST

Customer submits request for capacity allocation.

START

NO

Notify applicant that request approved.

APPROVAL

Record transaction in credit bank ledger (via

Credit Tracking Information Management System).

RECORD TRANSACTION

Add flow request to the Waiting List.

WAITING LIST

Notify applicant that request denied.

DENIAL

YES

NO

YES

Are there sufficient credits available to offset flow

addition?

CREDIT AVAILABILITY

NO

YES

42

August 7, 2012


� Cincinnati MSD

� Developer performs the work (3-year expiration).

� 100% funded by developer (except MSD administration and oversight).

� MSD inspects work to ensure meets their standards.

� Knoxville Utilities Board (KUB) cost shares with developer.

� DWQ will need adequate management and field inspection resources to administer a DECP.

� A DECP is an implementation decision and would not be identified in the CAP Plan to EPA due January 3, 2013.

ConsiderationsDeveloper Earned Credit ProgramDeveloper Earned Credit Program

43

� A DECP provides a means for developers to move forward with proposed development if adequate sewer capacity and credits are currently unavailable.

� A DECP offers the advantage to LFUCG and their rate payers to expedite rehabilitation/improvement of the existing sewer system.

� DECP credits are earned by rehabilitation of the public sewer system (or from sump pump redirections) and may reduce credit potential in the banking area for other developments, unless bank is merged with the downstream bank when all credits have been “mined”.

ConsiderationsDeveloper Earned Credit ProgramDeveloper Earned Credit Program

44

August 7, 2012



45

credit

bank #1

credit

bank #2

credit

bank #3

What if...

All the potential credits are “mined” from a

banking area, but SSO #1 still persists?

force main

wastewater

treatment plantpump

station

new flow

SSO #1

SSO #2

gravity

sewer

Visualization


46

credit

bank #2

credit

bank #3

Then...

SSO#1 bank can be merged with

downstream bank.

force main

wastewater

treatment plantpump

station

new flow

SSO #1

SSO #2

gravity

sewer

Visualization

August 7, 2012


� Include provision in LFUCG’s CAP for a voluntary Developer Earned Credit Program (DECP).

� Under LFUCG’s DECP:

� Developer would enter into contract with LFUCG and credit amount would be tied to a “real” development (i.e. one with an approved PSP).

� Credits earned through DECP are not subject to expiration.

� Who performs the work to be negotiated.

� Option #1: Developer submits payment for the work necessary to earn the requested credits and LFUCG performs the work within a contractually specified period of time.

� Option #2: Developer performs the work, but signs contract that grants LFUCG the legal authority to shut down the work if, in LFUCG’s opinion, the work is not being performed in a responsible or efficient manner.

� LFUCG may purchase unused DECP credits upon agreement by both parties.

� DECP credits (in the same bank) must be used prior to allocation of credits from the public bank.

RecommendationDeveloper Earned Credit ProgramDeveloper Earned Credit Program

47


� Disposition


Developer Earned Credit ProgramDeveloper Earned Credit Program Outcome

Recommendation No. 6: Developer-Earned Credit Program.

Include provision in LFUCG’s CAP for a voluntary DECP. Developer and LFUCG enter into contract. Credits earned under DECP would not expire. Who performs the work on the public sewer system necessary to earn credits to be negotiated, but in no case shall LFUCG not have stop work authority.

48


August 7, 2012


� Location: Council Chambers

� Time: 9 am – 11 am

� Future Dates:

MEETING SCHEDULEMEETING SCHEDULE Next Meeting

� August 7th

� August 9th

� August 23rd

� August 28th *

� Sept. 6th

� Sept. 20th

49

* Tentative date for CAP Workshop.

Documents

Sanitary Sewer System Capacity Assurance Program (CAP)fayettealliance.com/.../06/CAP_TFM_Slides_8-7-2012.pdfAug 07, 2012 · August 7, 2012 CAP Task Force Meeting 5 A credit amount