HomeMy WebLinkAboutItem 04 - Sanitation Users Charge Adjustment Public Works Agency
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Item # 4
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
December 5, 2023
TOPIC: Sanitation Services Users Charge (Sanitation Fee) Adjustment in Compliance
with Proposition 218 Requirements
AGENDA TITLE
Authorization to Prepare Documents for Proposed Sanitation Fee Adjustment in
Compliance with Proposition 218 Requirements (Non-General Fund)
RECOMMENDED ACTION
Authorize and direct staff to initiate the process for adjusting the Sanitation Fee, as per
the Proposition 218 requirements, including, but not limited to, all of the following:
a. Prepare and mail proposed rate adjustment notices to all Santa Ana property
owners in compliance with Proposition 218 requirements at a cost not to exceed
$100,000;
b. Schedule a public hearing at a future City Council meeting on or after February
6, 2024; and
c. Prepare all other documents to proceed with proposed sanitation fee adjustment.
GOVERNMENT CODE §84308 APPLIES: No
DISCUSSION
On August 1, 2023, the City Council authorized and awarded a contract to Stearns,
Conrad & Schmidt Consulting Engineers, Inc. (SCS) to conduct a comprehensive Cost
of Service Study for the sanitation enterprise (Exhibit 1). The study examined City
assets, capital needs, and financial conditions related to sanitation services, addressing
the requirements of Proposition 218.
Background
The Sanitation Fee, established on June 17, 1991, by Ordinance (NS-2129), has
remained fixed and without an increase since 1996. It was reduced in 2017 and 2019
when certain expenses were transferred to the General Fund. The current monthly rate
is $5.35 per dwelling unit.
The Sanitation Fee, constituting 1% of the total City budget, funds essential services,
including:
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•Illegal Dumping/Rubbish Removal: Removal of illegally dumped waste and
rubbish, ensuring that our community remains free of unsightly and hazardous
debris.
•Roadway Cleaning (streets, sidewalks, and alleys): Regular cleaning and
maintenance of our city's streets, sidewalks, and alleys, contributing to overall
cleanliness and safety.
•Street Sweeping: Street sweeping services, which help prevent the
accumulation of debris and pollutants on our roadways, contributing to improved
air and water quality.
•Sanitation and Right-of-Way Inspection and Enforcement: Inspection and
enforcement activities related to sanitation and right-of-way regulations, ensuring
that all properties adhere to municipal codes for the benefit of public health and
safety.
•Weed Abatement: Weed abatement efforts, reducing fire hazards and
maintaining the aesthetic quality of our city.
The study examined the existing service level and program sustainability. This
comprehensive analysis highlighted the necessity of a fee adjustment. This need is
driven by inflation, an escalation in service levels, and a substantial rise in the cost of
street sweeping services, primarily attributed to prevailing wage requirements, resulting
in a significant price increase. The proposed fee adjustment delineated below is
imperative to ensure the ongoing and necessary delivery of on-demand sanitation
services.
Proposed Changes
1. Increase the monthly Sanitation Fee from $5.35 to $11.72 per unit, effective July
1, 2024.
2. Establish a 90-day reserve, maintaining approximately 20% of operating and
maintenance expenses in alignment with the City reserve policy.
3. Implement an annual adjustment of 3.5% to keep pace with inflation and
operational costs.
Year 1
FY 2024-25
Year 2
FY 2025-26
Year 3
FY 2026-27
Year 4
FY 2027-28
Year 5
FY 2028-29
Implementation
Date
July 1, 2024 July 1, 2025 July 1, 2026 July 1, 2027 July 1, 2028
Monthly User
Charge per Unit
$11.72 $12.13 $12.56 $13.00 $13.45
Maintaining the high-quality sanitation services in our community is essential, and the
proposed fee adjustment is crucial for this purpose. The increasing costs associated
with street sweeping, specifically the prevailing wage requirements, make it necessary
and strategic to implement this fee adjustment. The primary objective is to ensure the
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ongoing provision of essential services, improve and expand services as noted below,
and maintain financial reserves to meet future operational demands.
The fee adjustment will allow for significant improvements in various service areas,
resulting in a cleaner and more vibrant community. The City plans to enhance its
services in the following ways:
•Increase Street Sweeping Frequency: Commercial streets will benefit from
heightened frequency, with sweeping scheduled twice weekly to ensure a
consistently cleaner environment. Industrial streets will also see an improvement,
with sweeping occurring twice monthly to address the unique needs of these
areas effectively.
•Combat Illegal Dumping: The City aims to significantly elevate its efforts in
addressing the pressing issue of illegal dumping. This involves augmenting the
removal process and intensifying roadway-cleaning services. Additional
contractual services and staffing will be introduced, bolstering the City's capacity
to respond to illegal dumping promptly and ensuring the swift restoration of
affected areas to their pristine state.
These planned enhancements highlight the City's commitment to maintaining and
elevating our neighborhood cleanliness and hygiene standards. By investing in these
improvements, we are fulfilling our immediate responsibilities and nurturing a more
sustainable and pleasant environment for all residents and businesses.
Next Steps
Upon receiving authorization from the City Council, the following steps will be taken:
1. Staff will work closely with legal counsel to draft the necessary documents for the
Sanitation Fee adjustment.
2. Public outreach and notification efforts will be initiated to inform residents and
stakeholders of the proposed adjustment.
3. A public hearing will be scheduled to allow community input and gather feedback
on the proposed fee adjustment.
4. Following the public hearing, the City Council will adopt a resolution adjusting the
City’s Sanitation Fee.
The proposed Sanitation Fee adjustment, as indicated by the Cost-of-Service Study, is
essential to ensure the continued provision of vital sanitation services and programs to
the residents of Santa Ana. We request the City Council's authorization to proceed with
the preparation of the required documents for this adjustment in compliance with
Proposition 218 requirements (Exhibit 2). Receiving the support of the Council for this
initiative will contribute to maintaining the high standards of cleanliness and
environmental care that our community values.
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FISCAL IMPACT
Funding is available in the FY 2023-24 budget in the following account:
Fiscal Year
Accounting
Unit -
Account #
Fund
Description Accounting Unit,
Account Description Amount
2023-24 06817641-
62300
Sanitation
Fund
Public Works-Roadway
Cleaning, Contract
Services-Professional
$100,000
Total:$100,000
EXHIBIT(S)
1. Sanitation Enterprise Cost of Service Study
2. Proposition 218 Compliant Notice of Proposed Rate Adoption
Submitted By: Nabil Saba, P.E., Executive Director – Public Works Agency
Approved By: Tom Hatch, Interim City Manager
EXHIBIT 1
Sanitation Services Users Charge
Cost of Service Study Report
City of Santa Ana
Management Services20 Civic Center Plaza
09223101.00 | November 14, 2023Santa Ana, CA 92701 SCS Engineers Management Services
5850 South Semoran Blvd
Orlando, FL 32822
386-546-7719
i
November 14, 2023
Ms. Elizabeth Rubio
Project Manager
City of Santa Ana – Public Works Agency
220 S. Daisy Avenue
Santa Ana, CA 92703
Subject:Sanitation Services Users Charge Cost of Service Study
Dear Ms. Rubio:
SCS Engineers Management Services has completed a Sanitation Services User Charge Cost of Service
Study for the City of Santa Ana. The goal of this study was to update the City’s user charge to reflect the
cost to serve your customers and ensure financial sustainability over the projection period of FY 2024 –
FY 2034.
The objectives of the Study presented herein were to:
•Review the sufficiency of revenues derived from the current charges for sanitation and ongoing
operations of the City to meet your financial requirements and fund your projected expenditures
throughout the projection period;
•
•
Allocate your costs to provide sanitation service to your various customer classes;
Update your sanitation user charge to reflect the cost to serve your customers;
The analysis described in this report was based on information and kind assistance provided by you and
your staff. If you have any questions or would like to discuss, please do not hesitate to call me at 386-
546-7719 or email me at vquinn@scsengineers.com.
Vita Quinn, MBA Kira Bieber
Director of Management Services
SCS Engineers
Financial Analyst
SCS Engineers
Table of Contents
Section Page
Executive Summary .....................................................................................................................................3
Background ........................................................................................................................................3
Objectives ...........................................................................................................................................3
Revenue Sufficiency Analysis (RSA)..................................................................................................4
Cost of Service Analysis (COSA) ........................................................................................................4
User Charge Structure Analysis.........................................................................................................5
Introduction ........................................................................................................................................6
Background...............................................................................................................................6
Scope & Objectives ..................................................................................................................7
Revenue Sufficiency Analysis (RSA)..................................................................................................7
Source Data ..............................................................................................................................7
Beginning Fund Balances ...........................................................................................7
Revenues .....................................................................................................................7
Operating Expenditures...............................................................................................7
Capital Spending .........................................................................................................8
Future Hiring ................................................................................................................8
Property & Billing Information.....................................................................................8
Assumptions .............................................................................................................................8
Revenue/Cost Escalation ...........................................................................................8
Interest Earnings on Invested Funds .........................................................................8
Customer & Billed Parcel Growth ...............................................................................8
Minimum Reserve Policies..........................................................................................9
Future Borrowing & Vehicle/Equipment Funding......................................................9
Analysis .....................................................................................................................................9
Description...................................................................................................................9
Results ...................................................................................................................... 10
Cost of Service Analysis.................................................................................................................. 11
Description............................................................................................................................. 11
Source Data ........................................................................................................................... 11
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Table of Contents
Section Page
Allocation of Costs................................................................................................................. 12
COSA Results ......................................................................................................................... 12
User Charge Calculation ................................................................................................................. 13
Parcel & Billing Data Reconciliation..................................................................................... 13
User Charge Development.................................................................................................... 14
Recommendations & Next Steps ................................................................................................... 14
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EXECUTIVE SUMMARY
This Executive Summary represents a summary of the results of the 2025 Sanitation Services Users
Charge Cost of Service Study (Study) that was conducted for the City of Santa Ana (City) by SCS
Engineers’ Management Services team (SCS).
BACKGROUND
Santa Ana, with a population of about 310,000, is a City in and the county seat of Orange County,
California. It is located in the Greater Los Angeles region, and is the second most populous city in
Orange County.
The Sanitation Services Users Charge is paid by approximately 92,800 customers on a bi-monthly
billing basis. Among the services provided are Roadway Cleaning and Environmental Sanitation
Programs and they include street sweeping, alley and sidewalk cleaning, abandoned item collection
and power washing, weed abatement and sanitation code compliance inspections. These programs
also coordinate with neighborhood associations to assist in beautifying their neighborhoods.
In fiscal year 2025, the City is projected to incur total expenses of $13.8 million. This budget
encompasses several critical allocations, including $775,000 earmarked for one-time capital
improvements, $1.1 million for contract maintenance staff to boost sanitation services, and
$831,000 for hiring four maintenance workers and three program support employees. Furthermore,
a significant ongoing expenditure of $3.0 million is earmarked for the introduction of a new street
sweeping contract. This contract is geared towards enhancing service frequency, especially in key
arterial and commercial corridors, thereby upholding elevated standards of cleanliness and
maintenance. These strategic allocations in FY 2025 are vital in addressing the evolving needs of the
City and its residents, fostering a cleaner and more efficient urban environment.
The City last updated its rates when it reduced the monthly charge of $6.47 to $5.35 in 2019. City
user charges generate approximately $6.0 million in revenues. Realizing that current revenue is
insufficient to fund ongoing costs, the City has chosen SCS to develop a financial management plan
and an updated user charge to generate the required revenue while minimizing the impact on City
residents.
OBJECTIVES
The objectives of this Study were as follows:
1. Revenue Sufficiency Analysis – Project the sufficiency of the City’s sanitation user charge
revenues to fund its annual sanitation expenditures over a 10-year projection period.
Develop a long-term financial management plan that will satisfy the City’s operating
expenses, capital program, and debt service payments, while maintaining adequate debt
service coverage and working capital reserve requirements
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2. Cost of Service Analysis – Using the results of the Revenue Sufficiency Analysis, allocate all
of the City’s projected sanitation costs between service types to determine the revenue
requirement for sanitation for the residential and commercial customers served by the City.
3. User Charge Structure Analysis – Examine the City’s current sanitation user charge and
develop modifications, as appropriate, to generate a new user charge that is fair, equitable,
easy to understand, conform to accepted industry practice, and reflects the cost to serve City
customers.
REVENUE SUFFICIENCY ANALYSIS (RSA)
This analysis evaluated the sufficiency of the City’s user charge revenues to meet all of its current
and projected financial requirements over a ten-year projection period, and determined the level of
any user charge revenue adjustments necessary in each year of the projection period to provide
sufficient revenues to fund the City’s cost requirements.
The analysis determined that the City’s current user charge revenues are no longer sufficient to meet
the current projected financial needs of the City to fund its ongoing operations, capital program, debt
service and coverage requirements, and working capital reserves. Therefore, a long-term financial
management plan and series of revenue adjustments was developed, as shown in the table below.
COST OF SERVICE ANALYSIS (COSA)
In order to calculate the cost to provide sanitation services for The City, the City’s operating and
capital budgets must be allocated accordingly. The City’s costs were allocated to 5 cost center pools:
•
•
•
Right-of-Way (ROW) Cleaning – Cleaning of sidewalks and alleys of debris, trash and weed
removal and abatement
Illegal Dumping – Clearing rubbish and bulky items from streets and sidewalks disposed of in
unauthorized locations
Sanitation Code Compliance – Enforcing compliance with all of the Sanitation related
municipal codes and regulations adopted by the Council
•
•
Street Sweeping – Roadway cleaning to remove trash and other debris from the streets
Emergency Services – Provide sanitation services in an emergency situation
The results of the COSA reflect the costs to provide each of these services. The results from this
analysis are used as the revenue requirement for calculating the updated user charge.
The table below reflects the relative expenses incurred in providing each service.
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Cost of Service Summary
Expenses by Service %
ROW Cleaning
Illegal Dumping
Sanitation Code Compliance
Street Sweeping
Emergency Services
$
$
$
$
$
1,944,197 14.7%
1,625,973 12.3%
1,443,705 10.9%
7,641,424 57.9%
540,224 4.1%
Total Service Expense $ 13,195,523 100.0%
USER CHARGE STRUCTURE ANALYSIS
SCS examined the City’s current user charge and calculated a new user charge that would fairly and
equitably recover the City’s current cost of service and revenue requirements from each unit. The
calculated user charge is shown below.
User Charge Calculation
Revenue Requirement
Less: Offsetting Revenues
$13,195,523
$74,984
Net Revenue Requirement $13,120,539
Projected FY 2025 Units 93,265
Annual Revenue Requirement/Unit $140.68
Monthly Users Charge
Annual Revenue Requirement/Unit
Monthly Users Charge
$140.68
$11.72
Bi-monthly Billed Amount $23.44
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INTRODUCTION
The background, scope, and objectives of the Study are described below.
BACKGROUND
The Sanitation Services Users Charge of $5.35 per month is paid by approximately 92,800
customers on a bi-monthly basis.
The City’s current sanitation user charge includes 2 major components:
The Roadway Cleaning and Environmental Sanitation Programs play a vital role in maintaining the
City's cleanliness and hygiene standards. These programs encompass a wide array of services,
including street sweeping, alley and sidewalk cleaning, abandoned item collection, and power
washing. Additionally, they ensure compliance with sanitation codes through right-of-way inspections
and enforcement activities, as well as the removal of weeds from streets and sidewalks.
In fiscal year 2025, the City is projected to incur total expenses of $13.8 million. This budget
encompasses several critical allocations, including $775,000 earmarked for one-time capital
improvements, $1.1 million for contract maintenance staff to boost sanitation services, and
$831,000 for hiring four maintenance workers and three program support employees. Furthermore,
a significant ongoing expenditure of $3.0 million is earmarked for the introduction of a new street
sweeping contract. This contract is geared towards enhancing service frequency, especially in key
arterial and commercial corridors, thereby upholding elevated standards of cleanliness and
maintenance. These strategic allocations in FY 2025 are vital in addressing the evolving needs of the
City and its residents, fostering a cleaner and more efficient urban environment.
Acknowledging the City's challenges is crucial; inflation, economic pressures, and supply chain
issues have escalated costs. Remarkably, user charges have remained stagnant since 1996, and in
2019, they were lowered, intensifying the strain on the City's finances.
However, despite these hurdles, the additional funds allocated for contractual services and
expanding the City's workforce represent investments to elevate current service standards.
Increasing the frequency of essential roadway cleaning services will result in quicker response times,
benefiting the entire community. In adapting to shifting economic landscapes, these strategic
allocations are pivotal, ensuring the City's ability to maintain and enhance its residents' overall
quality of life.
The City reduced its monthly user charge of $6.47 to $5.35 in 2019 and there have not been any fee
increases since 1996. City user charges generate approximately $6.0 million in revenues. Realizing
that current revenue is insufficient to fund ongoing costs, the City has chosen SCS to develop a
financial management plan and an updated user charge to generate the required revenue while
minimizing the impact on City residents.
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SCOPE & OBJECTIVES
The components and objectives of this Study were as follows:
1. Revenue Sufficiency Analysis (RSA) – Project the sufficiency of user charge revenues to fund
operating expenses, capital investment, and debt service while maintaining adequate debt
service coverage and working capital reserve requirements over a long-term projection
period.
2. Cost of Service Analysis (COSA) – Apportion sanitation costs from the RSA among service
types to determine the true cost of sanitation services provided by the City.
3. Assessment/User Charge Structure Analysis – Examine the City’s current sanitation user
charge and test modifications based off of the results from the COSA and revenue
requirement from the RSA.
The following sections describe the source data and assumptions used in the analyses, the work that
was performed, and the recommended Sanitation Services Users Charge.
REVENUE SUFFICIENCY ANALYSIS (RSA)
SOURCE DATA
The following presents the source data provided to SCS by City staff, which was relied upon to
conduct the Study:
BEGINNING FUND BALANCES
Unaudited trial balance schedules for the fiscal year ended 6/30/2023 provided by City staff were
used to establish fund balances for the Environmental Sanitation Program.
REVENUES
The revenues utilized in the RSA reflect an evaluation of multiple years of historical results and user
charge revenues collected, the FY 2024 Budget, and conversations with City staff. Beginning in FY
2025, user charge revenue is based upon the FY 2024 projection, adjusted annually to reflect
assumed revenue adjustments and change in billed units. Projections of all other revenues are
based upon the FY 2024 projection, excluding interest income (which was calculated annually based
upon projected average fund balances and assumed interest rates).
OPERATING EXPENDITURES
The City’s operating expenditures include all personal services, operations and maintenance (O&M)
expenses, transfers, debt service requirements, and minor capital outlay. The expenses reflected in
the RSA reflect an evaluation of multiple years of historical results, the FY 2024 Budget, and
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conversations with the City. In each year thereafter, expenses were based upon the FY 2024
projection and assumed cost escalation factors that were reviewed with City staff.
CAPITAL SPENDING
City staff provided project-level capital improvement projects and the most current vehicle and
equipment replacement program budgets. The total projected spending from FY 2024 – FY 2034 is
projected to be approximately $775,000 for capital improvement projects and $4.3 million for the
vehicle replacement program. The vehicle replacement program will cost the City approximately
$398,000 per year.
FUTURE HIRING
The City has outlined its future plans for contracting and staff recruitment. Specifically, the City aims
to enhance its services by bringing in contract maintenance staff to bolster sanitation services for
the community, allocating $1.1 million for this purpose. In addition, there is a plan to hire 7.0 full-
time equivalents (FTEs) in FY 2025, which includes the recruitment of four City maintenance workers
and three program administrative support and management employees, collectively representing an
investment of approximately $831,000. These strategic initiatives reflect the City's dedication to
elevating service quality and operational efficiency for the benefit of its residents.
PROPERTY & BILLING INFORMATION
Account and billing information for all residential and commercial units served by the City from 2019
through 2023 was provided by City Staff.
ASSUMPTIONS
The following assumptions and policies were agreed upon by City staff and are reflected in the RSA
and included in the schedules in the Appendix.
REVENUE/COST ESCALATION
The escalation factors used for various types of operating assessments, revenues and expenses
were based upon historical trends, our industry experience, and discussions with City staff.
INTEREST EARNINGS ON INVESTED FUNDS
The Study assumes interest rate earnings of 0.80% in each year of the projection period, based upon
staff input and recent actual earnings for the City’s funds.
CUSTOMER & BILLED PARCEL GROWTH
Projected growth in billed accounts of 0.25% in each year of the projection period was based upon
an analysis of billed units and City input.
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MINIMUM RESERVE POLICIES
Local government revenues are often cyclical in nature. Reserves are the portion of fund balances
for utility systems that are required to satisfy the utility’s projected cash flow needs during the
budget year, future capital outlays, debt payments, and debt service coverage requirements without
impacting continued operations of the utility. These funds are intended for foreseen financial needs
as well as to minimize risk associated with emergencies, economic downturns, and unforeseen
events that could create fiscal hardship.
Many utilities, rating agencies, and the Government Finance Officers Association (GFOA) best
practice recommendations emphasize the importance of having risk-based policies or strategies to
respond to significant, unplanned, unavoidable costs or revenue losses from unusual or adverse
periods, unanticipated system failures, or natural disasters. Reserves also support a strong bond
rating by signaling to investors that the utility has resources to repay debt, even with potential
disruptions.
The financial management plan reflected herein assumes that the minimum operating fund reserve
will equal 20% of annual O&M expenses for the City. This reserve level is according to City policy, and
is generally consistent with our industry experience and a healthy level of reserves for a municipal
utility system per the evaluation criteria published by the municipal bond ratings agencies.
Maintaining this level of reserves retains the City’s ability to access the municipal bond market for
future capital bond funding.
FUTURE BORROWING & VEHICLE/EQUIPMENT FUNDING
The City intends to cash fund all of its capital and vehicles throughout the projection period, so no
debt assumptions were used in this analysis. However, an assumption was made that the City will
establish a fleet/equipment program with an equal level of investment into a capital reserve or
funding program in each year of the projection period and all required vehicle/equipment
replacements will be funded from this reserve.
ANALYSIS
DESCRIPTION
In order to initialize the RSA, we obtained the City’s historical and budgeted financial information,
historical billed accounts, multi-year capital improvement program, and the City’s current financial
and debt policies. We also spoke with City staff regarding other assumptions and policies that would
affect the financial performance of the City, anticipated customer growth, reserve policies, capital
funding sources, earnings on invested funds, escalation rates for operating costs, impacts of
potential regulatory and legislative initiatives, etc.
SCS then input this information into our Revenue Sufficiency Model. The Revenue Sufficiency Model
creates a multi-year projection of the City’s current user charge revenues to determine whether the
level of existing revenues can meet the projected financial requirements during each year of the
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projection period from FY 2024 – FY 2034. The model then calculates the level of revenue
adjustments required for the fund to meet its revenue requirements. It replicates the cash flows in
each year of the projection period, based upon City policies and available fund balances. In each
year, the model utilizes unrestricted fund balances, revenues, and capital funds to pay for any
operating or capital expenditures in that year. To the extent necessary to fund all of the projects and
vehicle/equipment replacements in the capital program, the model can identify the level of
borrowing and the resulting debt service payments that would be required.
RESULTS
Based on the source data and input provided by City staff, and the assumptions and policies
described herein, the City’s current revenues are not sufficient to fund its ongoing operating, capital,
debt service and coverage requirements, and working capital reserve targets throughout the
projection period.
Additionally, a new street sweeping contract of $4.1 million will begin in FY 2025 and is a major
driver for the user charge increase required. This represents an increase of $3.0 million in ongoing
expenses that will be used to expand street sweeping services, including increasing annual sweeping
by 20,000 curb miles and commercial sweeping to twice per week, increase required staffing, and
provide better service to customers and $1.1 million for contract maintenance staff to boost
sanitation services. In order for the City to be sustainable, their fund balance must meet the
minimum reserve target in each year of the projection period. The graph below shows the City’s fund
balance (in yellow) without any increase in the users charge and the fund balance (in blue) with the
necessary increases. As can be seen, the fund balance without user charge increases falls
significantly below the reserve target beginning in FY 2025 and the fund is exhausted by FY 2026.
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The analysis concluded that a one-time larger increase of 120.50% in FY 2025 and inflationary-like
increases of 3.50% each year thereafter will be sufficient for the City to meet its financial
requirements throughout the projection period. The recommended 5-year plan of revenue
adjustments is shown in the table below:
This financial management plan will provide sufficient revenues for the City to maintain adequate
working capital in each year of the projection period, while retaining the ability to fund planned and
anticipated future capital spending with no borrowing.
COST OF SERVICE ANALYSIS
DESCRIPTION
In order to calculate the cost to provide various sanitation services, the City’s operating and capital
budgets must be allocated accordingly. The City’s costs were allocated to 5 cost center pools:
•
•
•
Right-of-Way (ROW) Clearing – Cleaning of sidewalks and alleys of debris, trash and weed
removal and abatement
Illegal Dumping – Clearing rubbish and bulky items from streets and sidewalks disposed of in
unauthorized locations
Sanitation Code Compliance – Enforcing compliance with all of the Sanitation rules and
regulations adopted by the Council
•
•
Street Sweeping – Roadway cleaning to remove trash and other debris from the streets
Emergency Services – Provide sanitation services in an emergency situation
SOURCE DATA
The following presents the key financial data relied upon in conducting the COSA:
FY 2025 Projected Operating Expenses
The COSA uses the FY 2025 projected expenses from the RSA as the basis for the costs to be
apportioned between the cost center pools. The operating expenditures include all O&M expenses
(including personal services, fixed and variable O&M costs, transfers, and minor capital outlay)
related to the provision of sanitation service to the City’s served residents and businesses.
Capital Improvement Program
The COSA includes the City’s cash funded capital costs from its capital improvement program (CIP)
for FY 2024 – FY 2034 as provided by City staff and used in the RSA. Notably, the CIP encompasses
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two primary projects: a Sanitation Case Management System, aimed at improving code compliance
through enhanced case management, and the deferral of facility improvements. These initiatives are
projected to cost approximately $775,000 in FY 2025.
ALLOCATION OF COSTS
Described below are the methods used to allocate expenses to cost center pools.
Direct Allocation
Where possible, costs were directly assigned to these cost center pools. For example, Contract
Services – Professional was allocated to “Street Sweeping Only.”
Indirect Allocation
In the case that items supported more than one cost pool, we attempted to identify proper allocation
criteria to apportion the line item cost to each cost pool. For example, personal services costs are
often allocated based upon the number of employees or based upon a workflow analysis of where
each employee spends their time.
Staff Estimate
If certain cost items supported more than one cost pool but a specific allocation criterion could not
be identified, we discussed with City staff the appropriate allocation percentages and used staff
estimates or data provided by City staff to apportion the costs.
Weighted Average
For cost items that supported more than one cost pool, a specific allocation criterion could not be
identified, and staff did not have an estimate as to the allocation percentage, the weighted average
of the allocation of all other costs was used to allocate those costs. This weighted allocation is
primarily used for administrative and overhead costs, as it is appropriate to allocate such costs
based upon the weighted average of the allocation of all other costs for which they are responsible.
The allocations to each cost center pool were then used to calculate the new sanitation user charge
for residential and commercial customers.
COSA RESULTS
In total, the City’s FY 2025 projected revenue requirement totals approximately $13.2 million. The
apportionment of expenses incurred by the City to each cost center pool are shown in the table
below:
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Cost of Service Summary
Expenses by Service %
ROW Cleaning
Illegal Dumping
Sanitation Code Compliance
Street Sweeping
Emergency Services
$
$
$
$
$
1,944,197 14.7%
1,625,973 12.3%
1,443,705 10.9%
7,641,424 57.9%
540,224 4.1%
Total Service Expense $ 13,195,523 100.0%
As discussed in Section 1.1, these costs are grouped into two main sanitation functions. The
amounts allocated to each of these functions are shown in the chart below.
The revenue requirement for the Environmental Sanitation portion of the user charge is
approximately $1.95 million. The revenue requirement for the Sanitation Roadway Cleaning portion
of the user charge is approximately $11.25 million.
These apportioned costs were used to calculate the updated user charge described herein and
presented in the next subsection.
USER CHARGE CALCULATION
The results of the COSA were then used to develop an updated sanitation user charge using the
overall revenue requirement.
PARCEL & BILLING DATA RECONCILIATION
In order to develop the new user charge, it is necessary to conduct a detailed billing analysis to
determine the number of bills/units and types of charges billed in the most recent fiscal year/s,
ensuring that each unit serviced is billed appropriately.
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Some units were not charged for the full twelve months. After reviewing historical data and
discussing with City staff, we were able to identify new occupancies that have not been there for a
full year yet. We recommend the City tracks new units added to the system to improve the accuracy
of its billing and revenue projections.
After we understood the way each account was currently being billed, we worked closely with City
staff to account for or adjust any discrepancies (e.g., units that were not billed for an entire year) and
provided these anomalies to the City for review and/or billing system updates. The adjusted billing
data could now be used to develop the new user charge.
USER CHARGE DEVELOPMENT
The results of the billing data analysis and the apportioned costs from the COSA represent the Net
Revenue Requirement (NRR) for the updated user charge.
Sanitation Services User Charge Calculation
The user charge was calculated by dividing the net revenue requirement (NRR) by the projected
number of City units in FY 2025. The calculation is shown below:
User Charge Calculation
Revenue Requirement
Less: Offsetting Revenues
$13,195,523
$74,984
Net Revenue Requirement $13,120,539
Projected FY 2025 Units 93,265
Annual Revenue Requirement/Unit $140.68
Monthly Users Charge
Annual Revenue Requirement/Unit
Monthly Users Charge
$140.68
$11.72
Bi-monthly Billed Amount $23.44
RECOMMENDATIONS & NEXT STEPS
Based upon the results of the study described herein, we recommend the following:
•The City’s current Sanitation Services Users Charge revenues are not sufficient to fund all of
its ongoing operations, capital, and reserve requirements throughout the projection period.
Therefore, a long-term financial management plan was developed for the City. The five-year
plan of recommended revenue adjustments is shown in the table below.
14
•We recommend that the City align its Sanitation Services Users Charge with the costs to
provide service to City residents, as shown in the table below.
•
•
The City should update the revenue sufficiency analysis portion of this Study every 1-2 years
to be sure that the recommended user charge plan continues to be sufficient to fund the
City’s operations while meeting all of its financial policies and goals.
The City should update the structure of its Sanitation Services Users Charge every 3-5 years,
or as services or functions provided change over time, expenses increase/decrease
significantly, and/or customer demographics change
15
Santa Ana, CA
Revenue Sufficiency Analysis
Results as of November 14, 2023
Appendix A
Schedule 1 - Model Results
Schedule 2 - Model Assumptions & Inputs
Schedule 3 - Trial Balances as of Jun 30, 2023
Schedule 4 - Cash In
Schedule 5 - Cash Out
Schedule 6 - Pro Forma
Schedule 7 - Capital Improvement Plan
Schedule 8 - Borrowing
Schedule 9 - Summary of Funds
Schedule 10 - Additional Employees
Schedule 11 - Vehicle Replacement Program
Management Services
Schedule 1 - Model Results
Schedule 2 - Model Assumptions & Inputs
FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034
Growth
Unit Growth 0.25%0.25%0.25%0.25%0.25%0.25%0.25%0.25%0.25%0.25%0.25%
Cost Escalation Factors
Salaries
O&M
Contract Services
CO
N/A
N/A
N/A
N/A
N/A
N/A
4.00%
3.00%
4.00%
3.00%
0.00%
0.00%
4.00%
3.00%
4.00%
3.00%
0.00%
0.00%
4.00%
3.00%
4.00%
3.00%
0.00%
0.00%
4.00%
3.00%
4.00%
3.00%
0.00%
0.00%
4.00%
3.00%
4.00%
3.00%
0.00%
0.00%
4.00%
3.00%
4.00%
3.00%
0.00%
0.00%
4.00%
3.00%
4.00%
3.00%
0.00%
0.00%
4.00%
3.00%
4.00%
3.00%
0.00%
0.00%
4.00%
3.00%
4.00%
3.00%
0.00%
0.00%
4.00%
3.00%
4.00%
3.00%
0.00%
0.00%
TO
No Escalation
Interest Assumptions
Interest Earnings on Fund Balances
Working Capital Reserve Target
Working Capital Reserve Target (% of O&M)
CIP
0.80%0.80%0.80%0.80%0.80%0.80%0.80%0.80%0.80%0.80%0.80%
20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00%
CIP Escalation 0.00%3.40%3.40%3.40%3.40%3.40%3.40%3.40%3.40%3.40%3.40%
Note: The unit count for FY 2023 of 92,800 and historical unit counts are used to project revenues.
Schedule 3 - Trial Balances as of Jun 30, 2023
Sanitation
Fund
Assets
Cash & Cash Equivalents
Accounts Receivable
$5,287,985
1,121,340
Total Assets
Liabilities
$6,409,324
Accounts Payable
Compensated Absences
Other Current Payables
$(334,513)
(87,230)
(116,224)
Total Liabilities $(537,967)
Net Assets $
$
5,871,357
5,871,357Total Available Fund Balance
Schedule 4 - Cash In
FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034
User Charge Revenue Assumptions
User Charge Increase
Unit Growth
0.00%
0.25%
120.50%
0.25%
3.50%
0.25%
3.50%
0.25%
3.50%
0.25%
3.50%
0.25%
3.50%
0.25%
3.50%
0.25%
3.50%
0.25%
3.50%
0.25%
3.50%
0.25%
User Charge Revenues
Sanitation
Sanitation Revenue $
$
5,935,520 13,120,540 13,613,708 14,125,414 14,656,353 15,207,248 15,778,851 16,371,938 16,987,319 17,625,829 18,288,340
Other Operating Revenues
Restitution Court
Abatement Control Charge
Miscellaneous Recoveries
4,820
2,433
8,179
4,820
2,433
8,179
4,820
2,433
8,179
4,820
2,433
8,179
4,820
2,433
8,179
4,820
2,433
8,179
4,820
2,433
8,179
4,820
2,433
8,179
4,820
2,433
8,179
4,820
2,433
8,179
4,820
2,433
8,179
Total Other Operating Revenues
Non-Operating Revenues
$15,432 15,432 15,432 15,432 15,432 15,432 15,432 15,432 15,432 15,432 15,432
Penalties & Service Charge
Expense Reimbursement
$30,000
17
30,000
17
30,000
17
30,000
17
30,000
17
30,000
17
30,000
17
30,000
17
30,000
17
30,000
17
30,000
17
Total Non-Operating Revenues $30,017 30,017 30,017 30,017 30,017 30,017 30,017 30,017 30,017 30,017 30,017
Interest Earnings
Interest Earnings - Sanitation Fund
Total Interest Earnings
$39,443 29,536 27,295 27,576 27,437 27,111 27,293 27,841 28,522 29,117 29,532
$39,443 29,536 27,295 27,576 27,437 27,111 27,293 27,841 28,522 29,117 29,532
Transfers In
Transfer From Fund 057 $200,000 ----------
Total Transfers In $200,000 ----------
Total Cash In $6,220,411 13,195,524 13,686,452 14,198,438 14,729,238 15,279,807 15,851,592 16,445,228 17,061,289 17,700,394 18,363,320
Schedule 5 - Cash Out
Personal Services
FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034
Account Code
Salaries Regular
Salaries Cash Out/Separation
Salaries Overtime
Retirement-Employer Normal Cost
Retirement - Employer Unfunded - Misc
Medicare Insurance
06817640 - 61000
06817640 - 61010
06817640 - 61040
06817640 - 61100
06817640 - 61102
06817640 - 61120
06817640 - 61130
06817640 - 61170
06817640 - 61180
06817641 - 61000
06817641 - 61010
06817641 - 61020
06817641 - 61040
06817641 - 61100
06817641 - 61102
06817641 - 61110
06817641 - 61120
06817641 - 61130
06817641 - 61170
06817641 - 61180
06817641 - 65105
4
$594,350 618,124 642,849 668,563 695,305 723,118 752,042 782,124 813,409 845,945 879,783
15,300
38,530
56,630
72,750
8,590
15,912
40,071
58,895
75,660
8,934
16,548
41,674
61,251
78,686
9,291
17,210
43,341
63,701
81,834
9,663
17,899
45,075
66,249
85,107
10,049
143,705
1,895
29,551
1,590,434
48,959
161,944
116,986
154,492
154,105
6,072
18,615
46,878
68,899
88,511
10,451
149,454
1,971
30,733
1,654,052
50,917
168,421
121,665
160,671
160,270
6,314
19,359
48,753
71,655
92,052
10,869
155,432
2,050
31,962
1,720,214
52,954
175,158
126,532
167,098
166,680
6,567
20,134
50,703
74,521
95,734
11,304
161,649
2,132
33,240
1,789,022
55,072
182,164
131,593
173,782
173,348
6,830
20,939
52,731
77,502
99,563
11,756
168,115
2,217
34,570
1,860,583
57,275
189,451
136,857
180,733
180,282
7,103
21,777
54,840
80,602
103,546
12,226
174,840
2,306
35,953
1,935,007
59,566
197,029
142,331
187,963
187,493
7,387
22,648
57,034
83,826
107,688
12,715
181,833
2,398
37,391
2,012,407
61,948
204,910
148,024
195,481
194,993
7,682
Health Insurance 122,840
1,620
127,754
1,685
132,864
1,752
138,178
1,822Retiree Health Benefits
Worker Compensation Insurance
Salaries Regular
Salaries Cash Out/Separation
Salaries Part-Time
25,260
1,359,510
41,850
138,430
100,000
132,060
131,730
5,190
21,690
327,120
1,630
45,920
8,280
26,270
1,413,890
43,524
143,967
104,000
137,342
136,999
5,398
22,558
340,205
1,695
47,757
8,528
27,321
1,470,446
45,265
149,726
108,160
142,836
142,479
5,614
23,460
353,813
1,763
49,667
8,784
28,414
1,529,264
47,076
155,715
112,486
148,550
148,178
5,838
24,398
367,966
1,834
51,654
9,048
Salaries Overtime
Retirement-Employer Normal Cost
Retirement - Employer Unfunded - Misc
Part-Time Retirement
Medicare Insurance
Health Insurance
Retiree Health Benefits
Worker Compensation Insurance
Benefits Overhead
25,374
382,684
1,907
53,720
9,319
26,389
397,991
1,983
55,869
9,599
27,445
413,911
2,062
58,103
9,887
28,543
430,468
2,145
60,428
10,183
1,051,459
29,684
447,686
2,231
62,845
10,489
1,093,517
30,872
465,594
2,320
65,358
10,804
1,137,258
32,106
484,218
2,413
67,973
11,128
1,182,749Additional Personal Services from Hiring -830,983 864,223 898,792 934,743 972,133 1,011,018
Subtotal Personal Services
Personal Services Execution
$
$
3,249,280 4,210,152 4,378,473 4,553,524 4,735,574 4,924,904 5,121,804 5,326,577 5,539,539 5,761,015 5,991,348
100%100%100%100%100%100%100%100%100%100%100%
Total Executed Personal Services 3,249,280 4,210,152 4,378,473 4,553,524 4,735,574 4,924,904 5,121,804 5,326,577 5,539,539 5,761,015 5,991,348
Fixed Operations & Maintenance
Communications
Training, Transportation, Meeting
Tuition Reimbursement
Membership, Subscription & Dues
Contract Services-Professional
Maintenance & Repair Machinery & Equipment
Miscellaneous Operating Expenses
Gas & Diesel
Rental City Equipment
Accident Repair & Replacement
IT Maintenance Charge
Insurance Charges
Benefits Overhead
Public Works Administrative Charges
Indirect Costs
Computer Software Subscriptions
Principal- Leases
Communications
Training, Transportation, Meeting
Tuition Reimbursement
Membership, Subscription & Dues
Contract Services-Professional
Miscellaneous Operating Expenses
Gas & Diesel
06817640 - 62010
06817640 - 62120
06817640 - 62130
06817640 - 62140
06817640 - 62300
06817640 - 62322
06817640 - 63001
06817640 - 63300
06817640 - 65010
06817640 - 65012
06817640 - 65040
06817640 - 65100
06817640 - 65105
06817640 - 65240
06817640 - 65400
06817640 - 66511
06817640 - 67200
06817641 - 62010
06817641 - 62120
06817641 - 62130
06817641 - 62140
06817641 - 62300
06817641 - 63001
06817641 - 63300
$7,520
5,500
4,000
2,300
605,700
500
211,000
49,300
175,010
1,600
35,550
72,730
4,550
173,300
195,390
3,150
550
15,940
4,500
1,000
2,100
1,521,500
166,650
20,000
7,746
5,665
4,120
2,369
629,928
515
67,330
50,779
180,260
1,648
36,617
74,912
4,687
178,499
203,206
3,245
567
16,418
4,635
1,030
2,163
4,521,500
171,650
20,600
7,978
5,835
4,244
2,440
655,125
530
69,350
52,302
185,668
1,697
37,715
77,159
4,827
183,854
211,334
3,342
583
16,911
4,774
1,061
2,228
4,702,360
176,799
21,218
8,217
6,010
4,371
2,513
681,330
546
71,430
53,871
191,238
1,748
38,846
79,474
4,972
189,370
219,787
3,442
601
17,418
4,917
1,093
2,295
4,890,454
182,103
21,855
8,464
6,190
4,502
2,589
708,583
563
73,573
55,488
196,975
1,801
40,012
81,858
5,121
195,051
228,579
3,545
619
17,941
5,065
1,126
2,364
5,086,073
187,566
22,510
8,718
6,376
4,637
2,666
736,927
580
75,781
57,152
202,885
1,855
41,212
84,314
5,275
200,902
237,722
3,652
638
18,479
5,217
1,159
2,434
5,289,515
193,193
23,185
8,979
6,567
4,776
2,746
766,404
597
78,054
58,867
208,971
1,910
42,449
86,843
5,433
206,929
247,231
3,761
657
19,033
5,373
1,194
2,508
5,501,096
198,989
23,881
9,249
6,764
4,919
2,829
797,060
615
80,396
60,633
215,240
1,968
43,722
89,449
5,596
213,137
257,120
3,874
676
19,604
5,534
1,230
2,583
5,721,140
204,958
24,597
9,526
6,967
5,067
2,914
828,942
633
82,807
62,452
221,697
2,027
45,034
92,132
5,764
219,531
267,405
3,990
697
20,192
5,700
1,267
2,660
5,949,986
211,107
25,335
9,812
7,176
5,219
3,001
862,100
652
85,292
64,325
228,348
2,088
46,385
94,896
5,937
226,117
278,101
4,110
718
20,798
5,871
1,305
2,740
6,187,985
217,440
26,095
10,106
7,392
5,376
3,091
896,584
672
87,850
66,255
235,199
2,150
47,776
97,743
6,115
232,901
289,225
4,233
739
21,422
6,048
1,344
2,822
6,435,504
223,964
26,878
Schedule 5 - Cash Out
FY 2024
41,110
820
129,670
77,360
132,220
205,330
506,710
FY 2025
42,343
FY 2026
43,614
FY 2027
44,922
FY 2028
46,270
FY 2029
47,658
FY 2030
49,087
FY 2031
50,560
FY 2032
52,077
FY 2033
53,639
FY 2034
55,248Rental City Equipment
Accident Repair & Replacement
City Yard Rental
Computer Services Charge
Insurance Charges
Public Works Administrative Charges
Indirect Costs
Computer Software Subscriptions
Principal-Capital Lease
Sanitation (Debris/Liter Removal Crews)
Street Sweeping Signage
Annual Training Cost
Annual Maint. Sanitation Case Mgmnt System
Other Expenses (Technology/Infrastructure)
06817641 - 65010
06817641 - 65012
06817641 - 65020
06817641 - 65040
06817641 - 65100
06817641 - 65240
06817641 - 65400
06817641 - 66511
06817641 - 67200
06817641 - 62300
06817641 - 62300
06817641 - 62120
06817640 - 62300
06817640 - 62300
820
133,560
79,681
136,187
211,490
521,911
773
1,627
900,000
50,000
50,000
-
820
137,567
82,071
140,272
217,835
537,569
796
820
141,694
84,533
144,480
224,370
553,696
820
820
145,945
87,069
148,815
231,101
570,307
844
820
150,323
89,681
153,279
238,034
587,416
869
820
154,833
92,372
157,878
245,175
605,038
896
820
159,478
95,143
162,614
252,530
623,189
922
820
164,262
97,997
167,492
260,106
641,885
950
820
169,190
100,937
172,517
267,909
661,142
979
820
174,266
103,965
177,693
275,946
680,976
1,008750
1,580 1,676 1,727 1,778 1,832 1,887 1,943 2,001 2,062 2,123
-
-
-
-
-
-
927,000
51,500
51,500
50,000
100,000
-
954,810
53,045
53,045
51,500
103,000
-
983,454
54,636
54,636
53,045
106,090
100,000
1,012,958
56,275
56,275
54,636
109,273
-
1,043,347
57,964
57,964
56,275
112,551
-
1,074,647
59,703
59,703
57,964
115,927
-
1,106,886
61,494
61,494
59,703
119,405
-
1,140,093
63,339
63,339
61,494
122,987
-
1,174,296
65,239
65,239
63,339
126,677
-
-
-Mail Out/Printing Cost for Protest Vote (fee increase) 06817640 - 62300
Subtotal Fixed Operations & Maintenance
Fixed Operations & Maintenance Execution
$
$
4,374,890 8,318,478 8,771,554 9,090,364 9,520,966 9,763,803 10,119,334 10,488,037 10,870,407 11,266,958 11,678,224
100%100%100%100%100%100%100%100%100%100%100%
Total Executed Fixed Operations & Maintenance
Capital Outlay
4,374,890 8,318,478 8,771,554 9,090,364 9,520,966 9,763,803 10,119,334 10,488,037 10,870,407 11,266,958 11,678,224
Vehicle Replacement Program $398,030 398,030 398,030 398,030 398,030 398,030 398,030 398,030 398,030 398,030 398,030
Subtotal Capital Outlay $398,030 398,030 398,030 398,030 398,030 398,030 398,030 398,030 398,030 398,030 398,030
Capital Outlay Execution 100%100%100%100%100%100%100%100%100%100%100%
Total Executed Capital Outlay $398,030 398,030 398,030 398,030 398,030 398,030 398,030 398,030 398,030 398,030 398,030
Debt Service
Senior Lien Debt
Existing Senior Lien Debt Service $80,254 88,032 103,925 120,767 145,077 204,322 155,613 152,210 163,438 215,741 250,541
Subtotal Senior Lien Debt $80,254 88,032 103,925 120,767 145,077 204,322 155,613 152,210 163,438 215,741 250,541
Total Debt Service $80,254 88,032 103,925 120,767 145,077 204,322 155,613 152,210 163,438 215,741 250,541
Cash Funded Capital
Cash Funded Capital
Total Cash Funded Capital
Total Cash Out
$
$
$
-
-
775,518
775,518
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,102,455 13,790,211 13,651,982 14,162,685 14,799,648 15,291,059 15,794,782 16,364,854 16,971,413 17,641,745 18,318,142
Schedule 7 - Capital Improvement Plan
FY 2024 FY 2025
500,000
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034
Capital Expense (Office/Shops i.e. HVAC system)
Sanitation Case Mgmnt System
$-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-250,000
Total Projects $-750,000 ---------
Execution %
Escalation %
100.00%
100.00%
100.00%
103.40%
100.00%
106.92%
100.00%
110.56%
100.00%
114.32%
100.00%
118.21%
100.00%
122.23%
100.00%
126.39%
100.00%
130.69%
100.00%
135.14%
100.00%
139.74%
Total Executed Projects $-775,518 ---------
Schedule 6 - Pro Forma
FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034
Sanitation
Sanitation User Charge Revenue
Revenue from Growth
$5,935,520
-
5,935,520
14,839
13,120,540
32,801
13,613,708
34,034
14,125,414
35,314
14,656,353
36,641
15,207,248
38,018
15,778,851
39,447
16,371,938
40,930
16,987,319
42,468
17,625,829
44,065
Revenue Before Charge Increase
User Charge Increase
Revenue from Charge Increase
$5,935,520 5,950,358
120.5%
7,170,182
13,153,341
3.5%
13,647,743
3.5%
14,160,727
3.5%
14,692,994
3.5%
15,245,266
3.5%
15,818,298
3.5%
16,412,868
3.5%
17,029,787
3.5%
17,669,894
3.5%0.0%
-460,367 477,671 495,625 514,255 533,584 553,640 574,450 596,043 618,446
Total Sanitation User Charge Revenue
Plus: Other Operating Revenues
Operating Income
$
$
$
5,935,520
15,432
13,120,540
15,432
13,613,708
15,432
14,125,414
15,432
14,656,353
15,432
15,207,248
15,432
15,778,851
15,432
16,371,938
15,432
16,987,319
15,432
17,625,829
15,432
18,288,340
15,432
5,950,951 13,135,973 13,629,140 14,140,845 14,671,784 15,222,680 15,794,282 16,387,370 17,002,750 17,641,261 18,303,772
Less: Operating Expenses
Personal Services
Fixed Operations & Maintenance
$ (3,249,280)
(4,374,890)
(4,210,152)
(8,318,478)
(4,378,473)
(8,771,554)
(4,553,524)
(9,090,364)
(4,735,574)
(9,520,966)
(4,924,904)(5,121,804)(5,326,577)(5,539,539)(5,761,015)(5,991,348)
(9,763,803) (10,119,334) (10,488,037) (10,870,407) (11,266,958) (11,678,224)
Total Operating Expenses
Net Operating Income
$ (7,624,170) (12,528,630) (13,150,027) (13,643,888) (14,256,540) (14,688,707) (15,241,138) (15,814,614) (16,409,945) (17,027,973) (17,669,571)
$ (1,673,219)607,343 479,113 496,957 415,244 533,973 553,144 572,756 592,805 613,288 634,201
Plus (Less): Non-Operating Income in Debt Service Coverage Test
Non-Operating Revenue
Interest Earnings
Capital Outlay
$30,017
39,443
(398,030)
30,017
29,536
(398,030)
30,017
27,295
(398,030)
30,017
27,576
(398,030)
30,017
27,437
(398,030)
30,017
27,111
(398,030)
30,017
27,293
(398,030)
30,017
27,841
(398,030)
30,017
28,522
(398,030)
30,017
29,117
(398,030)
30,017
29,532
(398,030)
Total Non-Operating $(128,571)(338,478)
268,865
(340,719)
138,395
(340,438)
156,520
(340,576)
74,667
(340,903)
193,070
(340,721)
212,423
(340,172)
232,584
(339,491)
253,314
(338,897)
274,391
(338,482)
295,719Net Income Before Debt Service $ (1,801,790)
Debt Service & Coverage
Existing Senior Lien Debt Service $80,254 88,032 103,925 120,767 145,077 204,322 155,613 152,210 163,438 215,741 250,541
Total Senior Lien Debt Service $80,254 88,032 103,925 120,767 145,077 204,322 155,613 152,210 163,438 215,741 250,541
Senior Lien Debt Service Coverage -22.45 3.05 1.33 1.30 0.51 0.94 1.37 1.53 1.55 1.27 1.18
Total Debt Service
Net Cash Flow
$80,254 88,032 103,925
34,470
120,767
35,753
145,077
(70,410)
204,322
(11,252)
155,613
56,810
152,210
80,374
163,438
89,876
215,741
58,650
250,541
45,178$ (1,882,044)180,833
Fund Balance
Balance at Beginning of Fiscal Year
Net Cash Flow
$
$
$
$
$
5,871,357
(1,882,044)
3,989,313
180,832
3,394,627
34,470
3,429,096
35,753
3,464,849
(70,410)
3,394,439
(11,252)
3,383,187
56,810
3,439,997
80,374
3,520,371
89,876
3,610,247
58,650
3,668,897
45,178
Total Funds Available
Less: Planned Cash Funded Capital
3,989,313 4,170,145
(775,518)
3,429,096 3,464,849 3,394,439 3,383,187 3,439,997 3,520,371 3,610,247 3,668,897 3,714,075
----------
Balance of Working Capital
Less: Working Capital Reserve Target
3,989,313
(1,524,834)
3,394,627
(2,505,726)
3,429,096
(2,630,005)
3,464,849
(2,728,778)
3,394,439
(2,851,308)
3,383,187
(2,937,741)
3,439,997
(3,048,228)
3,520,371
(3,162,923)
3,610,247
(3,281,989)
3,668,897
(3,405,595)
3,714,075
(3,533,914)
Surplus/Deficit of Working Capital
Add Back: Working Capital Reserve
2,464,479
1,524,834
888,901
2,505,726
799,091
2,630,005
736,071
2,728,778
543,131
2,851,308
445,445
2,937,741
391,769
3,048,228
357,448
3,162,923
328,258
3,281,989
263,302
3,405,595
180,161
3,533,914
Balance at End of Fiscal Year 3,989,313 3,394,627 3,429,096 3,464,849 3,394,439 3,383,187 3,439,997 3,520,371 3,610,247 3,668,897 3,714,075
Schedule 8 - Borrowing
Senior Lien Borrowing
FY 2024
FY 2024
FY 2024
FY 2025
FY 2025
FY 2025
FY 2026
FY 2026
FY 2026
FY 2027
FY 2027
FY 2027
FY 2028
FY 2028
FY 2028
FY 2029
FY 2029
FY 2029
FY 2030
FY 2030
FY 2030
FY 2031
FY 2031
FY 2031
FY 2032
FY 2032
FY 2032
FY 2033
FY 2033
FY 2033
FY 2034
FY 2034
FY 2034
Cumulative Annual Payment $
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Subordinate Borrowing
Cumulative Annual Payment
Short-Term Borrowing
Cumulative Annual Payment
Schedule 10 - Additional Employees
Position FY 2024 FY 2025
1.0
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034
Assistant Public Works Maintenance Manager (AM)
Maintenance Worker II
Management Aide (UC)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4.0
1.0
1.0Public Works Projects Manager
Annual Salary Totals
Assistant Public Works Maintenance Manager (AM)
Maintenance Worker II
Management Aide (UC)
$-
-
-
-
200,962
401,482
83,439
209,000
417,541
86,777
217,360
434,242
90,248
226,055
451,612
93,858
235,097
469,677
97,612
244,501
488,464
101,517
176,537
254,281
508,002
105,577
183,599
264,452
528,322
109,800
190,943
275,030
549,455
114,192
198,580
286,031
571,434
118,760
206,524Public Works Projects Manager 145,101 150,905 156,941 163,219 169,747
Total Salary $-830,983 864,223 898,792 934,743 972,133 1,011,018 1,051,459 1,093,517 1,137,258 1,182,749
Schedule 9 - Summary of Funds
Sanitation Fund FY 2024
$ 5,871,357
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034
Balance at Start of FY
Cash In
Interest
3,989,313 3,394,627 3,429,096 3,464,849 3,394,439 3,383,187 3,439,997 3,520,371 3,610,247 3,668,897
6,180,968 13,165,988 13,659,157 14,170,862 14,701,801 15,252,697 15,824,299 16,417,387 17,032,767 17,671,278 18,333,789
39,443 29,536 27,295 27,576 27,437 27,111 27,293 27,841 28,522 29,117 29,532
(8,102,455) (13,014,693) (13,651,982) (14,162,685) (14,799,648) (15,291,059) (15,794,782) (16,364,854) (16,971,413) (17,641,745) (18,318,142)Cash Out
Subtotal
Less: Working Capital Reserve
$ 3,989,313 3,394,627 3,429,096 3,464,849 3,394,439 3,383,187 3,439,997 3,520,371 3,610,247 3,668,897 3,714,075
(1,524,834) (2,505,726) (2,630,005) (2,728,778) (2,851,308) (2,937,741) (3,048,228) (3,162,923) (3,281,989) (3,405,595) (3,533,914)
Amount Available for Projects $ 2,464,479 888,901 799,091 736,071 543,131 445,445 391,769 357,448 328,258 263,302 180,161
Amount Available After Projects $ 2,464,479 888,901 799,091 736,071 543,131 445,445 391,769 357,448 328,258 263,302 180,161
Plus: Restricted Funds 1,524,834 2,505,726 2,630,005 2,728,778 2,851,308 2,937,741 3,048,228 3,162,923 3,281,989 3,405,595 3,533,914
Available at End of FY $ 3,989,313 3,394,627 3,429,096 3,464,849 3,394,439 3,383,187 3,439,997 3,520,371 3,610,247 3,668,897 3,714,075
Schedule 11 - Vehicle Replacement Program
Vehicle Type FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034
JEEP - WRANGLER
FREIGHTLINER - 114SD
FREIGHTLINER - 114SD
CHEVY - COLORADO
CHEVY - COLORADO
FORD - F-250
FORD - F-250
JOHN DEERE - 410L
FORD - F-250
FORD - F-250
FORD - F-250
FORD - F-250
FORD - F-550
FORD - F-550
FORD - F-550
CHEVY - 3500 UTILITY TRK
CHEVY - SILVERADO
FORD - F-550
FORD - F-550
FORD - F-250
CATERPILLAR - 926M
CHEVY - SILVERADO
FORD - F-550
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1.00
1.00
1.00
1.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1.00
1.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1.00
1.00
1.00
1.00
1.00
1.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1.00
0.00
0.00
0.00
1.00
0.00
0.00
0.00
0.00
0.00
1.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
0.00
0.00
0.00
0.00
1.00
1.00
0.00
1.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1.00
1.00
1.00
1.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1.00
1.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
FORD - F-250
FORD - F-550
FORD - F-250
FORD - F-550
FORD - F-550
CHEVY - TRAVERSE
Total Addl Vehicle Expense
JEEP - WRANGLER
FREIGHTLINER - 114SD
FREIGHTLINER - 114SD
CHEVY - COLORADO
CHEVY - COLORADO
FORD - F-250
$-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-88,385 -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
354,511
354,314
46,377
46,377
43,495
43,495
-
-
-
-
-
-FORD - F-250
Schedule 11 - Vehicle Replacement Program
Vehicle Type FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034
JOHN DEERE - 410L
FORD - F-250
FORD - F-250
FORD - F-250
FORD - F-250
FORD - F-550
FORD - F-550
FORD - F-550
CHEVY - 3500 UTILITY TRK
CHEVY - SILVERADO
FORD - F-550
FORD - F-550
FORD - F-250
CATERPILLAR - 926M
CHEVY - SILVERADO
FORD - F-550
FORD - F-250
FORD - F-550
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
--
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
279,569 -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
49,793
50,602
50,197
49,928
121,715
121,446
121,580
107,277
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
107,277
113,838
113,838
-
-
-
-
140,007
140,007
-
-
-
-
-
-
-
-
-
-
43,495 -
-
-
-
-
-
-
-
-
-
-
-
-
393,297
107,277
121,580
-
-
-
-
-
-
-
-
43,495 -
-
-
-
-
-
121,715
FORD - F-250
FORD - F-550
FORD - F-550
CHEVY - TRAVERSE
75,000
150,000
150,000
75,000
-
-
-
-
92,241
184,481
184,481
92,241
Total Vehicle Cost $450,000 --227,676 975,560 1,218,774 -553,443 279,569 393,297 280,013
Cash Funded Average Spending $398,030 398,030 398,030 398,030 398,030 398,030 398,030 398,030 398,030 398,030 398,030
NOTICE OF PUBLIC HEARING
Concerning proposed changes to the City of Santa Ana
Sanitation Services Users Charge
Pursuant to State law, the Santa Ana City Council will hold a public hearing at the time,
date, and location specified below to consider increasing the Sanitation Services User
Charges for the City’s sanitation services.
DATE: MMM DD, YYYY
TIME: 5:45 p.m.
LOCATION: City Council Chambers
22 Civic Center Plaza Santa Ana, CA 92701
If adopted, the increased user charges will become effective on July 1, 202 4 and subject
to annual user charge adjustments through July 1, 2028.
The public hearing will be conducted in accordance with California Constitution Article XIII
D, Section 6 (also known as “Proposition 218”). This notice is being sent to all property
owners and customers of record whose parcels receive sanitation services in the City of
Santa Ana, who would be subject to the proposed user charge adjustments.
All members of the public are invited to attend the public hearing. Additionally, under
Proposition 218, property owners and customers of record may submit a written protest to
the proposed user charge changes. Only one protest per parcel is permitted.
Please refer to the “How Can I Participate?” section of this document for instructions on
submitting a formal written protest against the proposed action. You may also appear at
the public hearing at the date and time specified above. More information is available online
at https://www.santa- ana.org/.
HOW CAN I PARTICIPATE?
The City of Santa Ana welcomes your participation and input throughout the process as
the City Council considers increasing the user charges and estimated future user charge
adjustments explained in this Notice. If you have questions or comments about the
increase and estimated future user charges, here is what you can do:
CALL OR VISIT: Information on the increase user charges and estimated future user
charge adjustments are available for review at the City’s Public Works Agency and on our
website: https://www.santa- ana.org or call 714-647-3380 with questions.
WRITE OR E-MAIL: Written protests may be mailed to The City of Santa Ana , Attention:
City Clerk, P.O. Box 1988, M30, Santa Ana, CA 92702; delivered in-person to City Hall, 20
Civic Center Plaza, Santa Ana; or e-mailed to ecomment@santa-ana.org. All protests shall
include the name, property address, and signature of the person submitting the protest.
Oral protests do not count as formal written protests. Only one written protest per parcel is
permitted.
EXHIBIT 2
ATTEND THE PUBLIC HEARING: Written protests may also be submitted at the Public
Hearing on MMM DD, YYYY, at 5:45 p.m., in the City Council Chambers at 22 Civic Center
Plaza, Santa Ana, CA 92701. All members of the public will have an opportunity to speak
and give testimony regarding the proposed sanitation user charges at the Public Hearing;
however, only written protests will count toward a majority protest. Written protests must
be received before the conclusion of the Public Hearing to be counted. The Public Hearing
is subject to being held electronically or by teleconference if required or permitted by
national, state and/or local orders as a result of a public health emergency crisis. In this
event, information will be provided on the City's website and posted in City Council
Chambers.
WHY HAVE I RECEIVED THIS NOTICE?
The City of Santa Ana is presenting the increased user charges for its roadway cleaning
and environmental sanitation program services. Property owners and customers of record
who would be impacted by these changes are receiving this notice. The City of Santa Ana
is dedicated to providing reliable and cost-effective sanitation services to its
residents/property owners, and businesses.
WHY ARE USER CHARGES INCREASING?
BACKGROUND: The City’s roadway cleaning and environmental sanitation programs
play a vital role in maintaining the City's cleanliness and hygiene stan dards. These
programs encompass a wide array of services, including street sweeping, abandoned item
collection, sidewalk cleaning, and power washing, addressing illegal dumping, and
cleaning alleys. Additionally, they ensure compliance with sanitation code s through right-
of-way inspections and enforcement activities, as well as the removal of weeds from
streets and sidewalks.
Beginning in fiscal year 2025, the City budget reflects several critical changes, including
costs for contract maintenance staff to boost sanitation services, and for additional
maintenance workers and program support employees. Furthermore, a significant ongoing
expenditure of $3.0 million is earmarked for the introduction of a new street sweeping
contract. This contract will enhance service frequency, especially in key arterial and
commercial corridors, resulting in quicker response times, benefiting the entire community.
It's imperative to acknowledge the challenges faced by the City. Inflation, economic
pressures, and supply chain disruptions have substantially increased costs. Notably, user
charge has remained stagnant since 1996, and in 2019, it was reduced, placing additional
strain on the City's finances. Despite these hurdles, the City remains dedicated to
maintaining high cleanliness standards through strategic investments and efficient
utilization of resources.
BASIS UPON WHICH THE CHARGES WERE CALCULATED: The City retained SCS
Engineers (SCS) to perform a Sanitation Services Users Charge Study. This study
included a five-year financial projection of anticipated growth, fund balances and reserve
targets, revenues, operations and maintenance expenses, vehicle/equipment replacement
expenses, and capital spending. The analysis determined that the City’s current user
charge revenues will no longer be sufficient to meet the projected financial needs of the
City to fund its sanitation services operations. Therefore, a five-year financial management
plan was calculated.
SCS determined that sanitation services user charge per unit should increase to a monthly
charge of $11.72 per month in July 2024, billed bi-monthly as $23.44 per unit per bill. An
inflationary-like increase of approximately 3.50% is anticipated to be necessary each July
from 2025 to 2028.
The public hearing will include consideration of adopting a resolution that will authorize
sanitation user charges and future user charge adjustments for a five -year period
commencing July 1, 2024, through June 30, 2029. If approved by the City Council, the
proposed user charges included in Exhibit A will go into effect on July 1, 2024, including
annual user charge adjustments in user charge years two through five, based on the
methodology contained in the tables below.
Any additional increase that exceeds this methodology and the additional user charge
increase percentages below, in any year, would be subject to another Proposition 218
noticed public hearing and approval by the City Council.
SANITATION SERVICES USER CHARGES
Current
FY 2023-24
Proposed
FY 2024-25
Year 2
FY 2025-26
Year 3
FY 2026-27
Year 4
FY 2027-28
Year 5
FY 2028-29
Implementation
Date
July 1, 2024 July 1, 2025 July 1, 2026 July 1, 2027 July 1, 2028
Monthly User
Charge per Unit
$5.35 $11.72 $12.13 $12.56 $13.00 $13.45
PUBLIC HEARING PROCESS
At the time of the Public Hearing, the City Council will hear and consider all protests and
objections to the proposed increases. Oral comments DO NOT qualify as a formal protest
unless accompanied by a written protest. Upon conclusion of the hearing, the City Council
will evaluate the written protests and consider the adoption of the proposed increases. If
written protests are not submitted by at least a majority of identified parcels subject to the
proposed adjustments (a “majority protest”), the City Council will be authorized to adopt
the proposed user charge. If adopted, the increased user charges will become effective on
July 1, 2024, and annual user charge adjustments effective July 1, 2025, through July 1,
2028.
FOR MORE INFORMATION
Please visit us at https://www.santa-ana.org/, to learn more about the proposed user
charge changes.