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City of Santa Ana, CA SEWER RATE STUDY <br />address critical backlogged R &R projects, a rate revenue increase is needed As shown in Figure 5, should <br />the City elect to maintain the status quo (do nothing), the Sewer Enterprise runs into a cash deficit <br />position by FY15/16 and will not be able to address critical system needs. By the end of the Study <br />Period, the Sewer Enterprise will have a ($14.1 million) deficit. <br />Figure 5: Projected Revenues and Revenue Requirements — No Revenue Increases, Status Quo <br />Projected Revenue and Revenue Requirements - Status Quo <br />$ty <br />$io <br />$5 <br />- -$5 <br />-$10 <br />-$15 <br />-$20 <br />M <br />2015 2016 2017 2018 2019 <br />�O&M Expenses .__--. Routine Capital Outlay iiiiiiiiiiiiiiiiTransfers <br />—46P— Revenue — •Target Cash Balance Cash Balance <br />Delaying CIP activities does stretch out available cash; however, continued deferral of needed CIP <br />projects also increases the probability, consequence and cost of asset failure. As a rough approximation, <br />Black & Veatch estimated the cost of continuing to defer CIP projects using the methodology set forth in <br />the American Society of Civil Engineers' (ASCE's) 2012 Failure to Act Economic Report for Water (FAC <br />Report). The FAC Report notes that in addition to the actual repair /replacement costs, there are costs <br />associated with payment of claims to impacted households and businesses. Additionally, if projects are <br />deferred by several years, there is an economic loss due to loss of jobs, lost work days, business <br />closures, traffic delays, street repairs, contamination of receiving waters, etc. Table 13 below <br />summarizes the cost of not executing the proposed CIP using the FAC Report methodology. <br />Note that the values presented in Table 13 do not include the cost of replacing the asset nor does it <br />include fines that the State may impose for violating Waste Discharge Requirements (WDRs) should <br />sanitary sewer overflows (SS0s) occur. State enforcement actions for WDR violations include fines of <br />$10,000 per day plus $10 per gallon spilled (for spills over 1,000 gallons), and mandated CIP activities <br />through a consent decree. <br />BLACK & VEATCH I Sewer Rate Study <br />65B -196 <br />37 <br />