FPUD approves 2020-2021 budget

The Fallbrook Public Utility District will adopt its calendar year 2021 rates in December, but the fiscal year 2020-2021 budget has been approved.

A 5-0 FPUD board vote, June 22, approved the 2020-2021 budget. The budget will be used as the base for the 2021 rates and charges when the board considers those during its final scheduled meeting of 2020.

“We managed to hold our operating costs fairly flat,” Jack Bebee, general manager of FPUD, said. “The increase in the wholesale cost of water is really the driver.”

FPUD projects fiscal year 2020-21 revenues of $38,102,229 including $31,789,398 from water sales with the rest being provided by fixed charges, property tax revenue, capacity fees for new development, interest and other investment earnings and sale of surplus assets. The revenue does not include $31,900,000 from the State Revolving Fund loan for the Santa Margarita River Conjunctive Use Project. The $27,470,440 budgeted operating expenses would create a net operating revenue of $10,631,790 although the total expenditures of $70,155,258 include $39,121,750 for capital expenditures along with $3,563,049 of debt service during 2020-2021.

Salaries and benefits account for most of FPUD’s operational expenses. Just over a week of fiscal year 2019-2020 remained when FPUD approved the 2020-2021 budget, so the projected operational expenses of $12,955,244 were used as the 2019-2020 base. The budget calls for $13,457,556 of 2020-2021 operational expenses, which is a 1.5 % increase over the previous year. The budget is based on 67 employees.

“The district’s overall costs are going up about 1 1/2%, our operating costs. The district’s worked really hard in holding down our costs fairly flat,” Bebee said.

FPUD projects 8,100 acre-feet of potable water sales for 2020-2021 with municipal and industrial demand accounting for 5,400 acre-feet and agricultural sales totaling 2,700 acre-feet. About 99% of FPUD’s water supply is imported from the San Diego County Water Authority and the other 1% is obtained from a local well. Not all sewage processed is from billable sources, and the district anticipates 478 million gallons of billable sewage flow during 2020-2021. FPUD delivers approximately 600,000 gallons of recycled water a day or approximately 675 acre-feet annually to the district’s 29 recycled water customers.

The district’s water distribution system consists of approximately 270 miles of pipeline, approximately 6,800 values, five pump stations, a treated water reservoir with a capacity of 300 million gallons, nine steel reservoirs including the Bucknell Reservoir in De Luz which has been taken out of service but is used to house wireless communications facilities and an ultraviolet disinfection water treatment plant. The Conjunctive Use Project will include a groundwater treatment plant, and FPUD’s future plans also include an upgrade of the advanced metering infrastructure system which will allow for real-time meter reading and also provide customers with real-time water use data. The wastewater system is comprised of 78 miles of buried sewer lines and force mains, a water reclamation plant with a capacity of 2.7 million gallons per day, a 1-megawatt solar energy facility and a 23-mile ocean outfall line. The recycled water infrastructure has 10.5 miles of buried pipe.

The projected 2020-2021 water sales consist of $24,414,828 of potable water purchases, $1,188,241 from recycled water customers and $6,186,550 of wastewater bill payments. FPUD, which has a service area of approximately 44 square miles – equating to about 28,000 acres – has approximately 9,300 potable water customers and 5,000 sewer customers.

FPUD was projected to end 2019-2020 with $12,778,727 of water purchases costs and expects the 2020-2021 amount to be $13,810,108. Pumping costs are expected to increase from $180,000 to $202,797. FPUD’s water costs are expected to increase by 9%.

“That includes the IAC cost,” Bebee said.

The San Diego County Water Authority has an infrastructure access charge which is used for SDCWA fixed expenditures incurred even when water use is reduced. The CWA rates and charges for calendar year 2021 include a 15.8% increase in the IAC. FPUD has 11,855 meter equivalents, so the total infrastructure access charge the district will pay to the CWA is $603,180.

In November 1996, the state’s voters passed Proposition 218, which requires a public vote on benefit assessments. Proposition 218 exempts water and sewer rate increases if a cost of service study shows a relationship between the rates and the agency’s cost to provide water or sewer service. A rate setting policy can be in effect for up to five years and must include a rate design and public review. In December 2017, the FPUD board held a Proposition 218 hearing which approved annual rate increases of up to 8.0% through calendar year 2022. That limit will force FPUD to absorb the IAC when the district sets its calendar year 2021 rates.

“Eventually that will catch back up,” Bebee said.

The Santa Margarita River Conjunctive Use Project will enhance groundwater recharge and recovery capability within the lower Santa Margarita River basin and develop a program to increase available water supplies for FPUD and U.S. Marine Corps Base Camp Pendleton. It is expected to be operational by fall 2021, which would be during fiscal year 2021-2022. The total estimated cost of the conjunctive use project is $62.9 million. It is currently under construction and approximately 35% complete.

“That continues to be our most substantial capital project,” Bebee said.

Major maintenance of existing infrastructure is also a part of the district’s capital improvement program.

“The largest part of it is valve and pipeline replacement projects,” Bebee said. “We continue to maintain that program. After Santa Margarita is complete, that’s going to be the bulk of our capital program.”

The major potable water pipeline capital projects for 2020-2021 are completion of the first phase of the Winter Haven Road pipeline replacement project which began in fiscal year 2019-2020 and will replace 12-inch pipe relined in 1968 with new pipe between Clearcrest Lane and Havencrest Lane, initiation of the second phase of that project which will involve approximately 2,650 feet of 12-inch water main from Havencrest Lane to Sunnycrest Lane, and replacement of approximately 1,000 feet of 20-inch pipe along the Gum Tree Pipeline which is old enough to have been relined in 1966. The 2020-2021 portion of those three projects has a budget of $1,298,000. FPUD is targeting the replacement of 100 valves during 2020-2021, and the valve replacement program has a budget of $500,000.

In 2012, FPUD developed a 10-year program to recoat all of the district’s steel reservoirs to protect the steel from corrosion. The 2020-2021 capital plans include recoating the 2.8 Million Gallon Tank in De Luz, which will complete FPUD’s reservoir recoating program. The 2020-2021 De Luz projects also include a new pressure reducing valve station at Ross Lake, replacement or elimination of the Lynda Lane pressure reducing valve, and upgrades or replacement of the Donnil Pump Station surge tank.

The district’s Toyon Pump Station which was built in 1982 and serves 63 accounts in the Toyon Service Area near Red Mountain Reservoir has exceeded its useful life, and a replacement will be constructed near the ultraviolet treatment plant to consolidate FPUD facilities at the Red Mountain site. FPUD’s capital projects will also include the fifth year of a six-year program to replace automatic meter reading meters with advanced metering infrastructure meters.

In December 2019, FPUD awarded a construction contract for upgrades to the Overland Trail Lift Station, which will rehabilitate that lift station and also increase capacity to handle the flows currently handled at the Anthony’s Corner Lift Station, and that work also includes the demolition of the Anthony’s Corner Lift Station. Work is scheduled to be completed in December 2020, so that is part of the 2020-2021 wastewater capital budget. Due to procurement delays the headworks cover replacement at the water reclamation plant will not be completed until 2020-2021, and the reclamation plant capital improvements are also scheduled to include repairs to the secondary and tertiary storage pond liners and supervisory control and data acquisition control improvements. Five aging below-grade – and thus confined space – air release and vacuum valves in the recycled water system will be replaced with new above-grade air valves, and remote pressuring monitoring capabilities will be added in strategic locations.

FPUD’s capital budget also includes $300,000 to replace a full-size crane.

Joe Naiman can be reached by email at [email protected].