65B - PROPOSED WATER AND SEWER RATE ADJ

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City of Santa Ana, CAI WATER RATE STUDY Algorithm used by the CAMPS model: ■ If Condition Rating = 3, then compare (calculate Remaining Useful Life = Replacement Year - Current Year) with (calculate (50% x Useful Life) + Current Year) and use largest value for Replacement Year. To continue to refine and improve these class -based useful life estimates, which have a large impact on funding strategy analysis, Black & Veatch recommends initiating an infrastructure risk analysis and condition - monitoring program. Leading asset management practices within the infrastructure management industry are to monitor the condition of assets, using a prioritization approach. Such an approach may consist of beginning with those assets where assets are past or nearing the end of their expected useful. Another key element in risk management would be to conduct condition monitoring on those assets posing the greatest risk to the City, should the asset fail. Provided later in this report is further discussion of risk analysis and condition monitoring. Refurbishment programs, intervals and cost Most asset classes require various capital refurbishments on a cyclic basis in order to sustain or extend the asset's useful lives. Pump stations, for example, can be expected to undergo pump refurbishment, motor overhaul, replacement of electric components, and mechanical overhaul at intervals shorter than the cycle for the replacement of assets themselves. Appropriate refurbishment intervals and costs that are considered major (non - operational /annual) expenditures, were developed for specific asset classes. Replacement costs For each asset class and for specific assets where required, Black & Veatch estimated the base -year (FY2013) replacement cost. Black & Veatch's estimates are based on the experience of our engineers, construction cost estimates recently prepared for other clients, industry standards, and our experience with other agencies. Where possible, replacement costs, were defined in terms of unit costs to facilitate the class -based estimating approach (examples include dollars per foot of various types of pipe, dollars per gallon for storage facilities, and dollars per square foot for buildings of various classes). For Governmental Accounting Standards Board (GASB) 34 compliance, Black & Veatch has included factors to include ancillary costs such as planning, design, site development, and internal administrative costs where appropriate for the types of assets. The Asset Class Library, along with the asset inventory were the key input for projecting capital asset R &R needs. DEVELOPMENT OF REFURBISHMENT AND REPLACEMENT SCHEDULES AND COSTS Black & Veatch used its Comprehensive Asset Management Prioritization System (CAMPS) Model in conjunction with risk profile analysis to develop the R &R schedules presented in this report. The R &R schedules project the capitalized refurbishment, and replacement costs (in 2012 dollars) needed to sustain the water infrastructure managed by the City. Black & Veatch then escalated costs for each BLACK & VEATCH I Appendix A: Refurbishment & Replacement Program 65 65B -77