MSR G1 10 Alpaugh Jan06

CHAPTER 10 – ALPAUGH JOINT POWERS AUTHORITY EXECUTIVE SUMMARY This section provides an overview of the written determinations of the Alpaugh Joint Powers Authority (AJPA) Municipal Service Review (MSR). As part of its review of municipal services, the Tulare County Local Agency Formation Commission (LAFCO) is required to prepare a written statement of its determination with respect to each of the following: 1) Growth and population projections for the affected area; 2) Infrastructure needs and deficiencies; 3) Financing constraints and opportunities; 4) Cost avoidance opportunities; 5) Opportunities for rate restructuring; 6) Opportunities for shared facilities; 7) Government structure options; 8) Evaluation of management efficiencies; and 9) Local accountability and governance. These requirements are established by AB 2838, the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000. The AJPA MSR identifies the following written determinations: Written Determinations 1) Growth and Population 1. In March 2003, the TCWWD and the AID formed the Alpaugh Joint Powers Authority (AJPA), which is now a separate governing agency responsible for all operations and maintenance to the domestic water system in the rural community. 2. Census data indicates that Alpaugh had a 1990 population of 633, and a 2000 population of 761, corresponding to average annual growth rate of approximately 1.9% 3. It is likely that the Alpaugh community will continue to grow at an average annual rate between 1% and 2% depending upon land use zoning and other policies established by the Tulare County General Plan and other factors. Using these rates, the AJPA could expect a year 2025 service population between 975 and 1,250 assuming no development limitations. 4. In recent years, domestic water service providers for Alpaugh have been unable to support any new connections to their water system due to severe water quality problems (including arsenic contamination), inadequate system pressures, and deterioration of water pipelines resulting in breaks and leaks. Water system problems have halted any new development from occurring in the community. 2) Infrastructure Needs and Deficiencies 1. Alpaugh’s water problems have long been documented, however, since its formation, the AJPA has received over $4 million in grants and loans to improve the community’s water supply and distribution system. 2. Alpaugh’s water supply is currently derived from a single well (Well #10), and uses Well #9, owned and operated by the AID, as a backup in case Well #10 fails to function. The AJPA expects to have an additional well drilled in the future, at which time Well #10 would function as the Authority’s backup well. 3. While Alpaugh water District’s have struggled over recent years to supply customers with safe, affordable drinking water, the AJPA appears to be making steps in the right direction by Alpaugh Joint Powers Authority MSR Page 10-1 Tulare County LAFCO MSR G1_10 Alpaugh Jan06.DOC/55-7301-01 obtaining funding necessary for a complete overhaul of its water system. While the Authority is unable to support additional connections at this time, ongoing system improvements will improve the system capacity and level of service and allow for additional service connections in the future. 4. Assuming 290 equivalent dwelling units (EDUs) in order to meet Tulare County Improvement Standards, the AJPA water system would need to be capable of delivering a combined flow rate (from all source and storage facilities) of 1,030 GPM (500 GPM fire flow and 530 GPM domestic demand) for a period of two hours while maintaining a minimum pressure of 25 PSI to each lot served. The pumping efficiency of the AJPA water system is unknown, and therefore it can not be determined at this time if the water system meets the requirements of the Tulare County Improvement Standards. 3) Financing Constraints and Opportunities 1. Overall, the AJPA is in semi-stable financial condition. The AJPA adopted its first budget in fiscal year 2003-2004 which determined the spending plan for the Authority. The fiscal year 2003-04 budget is organized and clearly articulates the District’s future financial performance plans. 2. The AJPA’s water budget for fiscal year 2003-04 identifies a zero beginning cash balance and anticipated revenues of $177,596, generated solely from customer sales, and connection fees. Total budget expenditures of $164,330 cover salaries and employee benefits totaling $55,924 and services and supplies totaling $107,406. Net revenues in the amount of $13,266 would be used for capital system improvements and reserves. 3. A water system master plan and/or capital facilities plan could help the Authority identify opportunities to finance needed system improvements and set forth timelines for such improvements based upon available revenues. 4. Additional development in the community could help the Authority establish a more stable balance between the revenues being generated, and the required resources to maintain and improve the community water system. 5. The Authority should continue to pursue available State and Federal grant/loan assistance to continue to improve and repair its water system, including but not limited to, the installation of water meters. Although the Authority should continue to pursue funding through grant and loan assistance programs, the Authority should not rely solely on such funding, as it is often a long and tedious process, and are generally not approved solely for capacity improvements. 6. Without grant money, the Authority relies upon fees paid by developers for rights to water capacity to construct capacity improvements to the water system. 4) Cost Avoidance Opportunities 1. It appears the AJPA has completed significant budget planning to obtain an operational permit from the California Department of Health Services Drinking Water Field Operations Branch. The TMF Capacity Assessment has helped the AJPA avoid unnecessary costs by evaluating the current state of the water system, and determining future spending plans, thereby eliminating unexpected costs arising from unforeseen expenses. Alpaugh Joint Powers Authority MSR Page 10-2 Tulare County LAFCO MSR G1_10 Alpaugh Jan06.DOC/55-7301-01 2. The Authority avoids excessive overhead costs by operating with a part-time staff, which provides adequate levels of service to the small community. The Authority also avoids unnecessary costs by contracting out professional services including engineering, legal services, and other consulting services. 3. Since the current AJPA Boundary and SOI contain large areas of undeveloped land, it is unlikely that the Authority will need to expand its SOI in the foreseeable future. The Authority can avoid unnecessary costs associated with the construction of long stretches of water main by participating in the Tulare County General Plan Update process and indicating where development can most efficiently be served by supporting infrastructure. 5) Opportunities for Rate Restructuring 1. The AJPA currently charges a monthly flat rate for domestic water service; currently set at $55.00 per month. 2. While the District’s monthly rates are among the highest compared to other domestic water service providers throughout the County, the connection fees charged by the District are below average. 3. When the District’s water system ultimately becomes metered, rates would need to be restructured to bill customers based upon the amount of water used. 4. With a significant reduction in water usage, the District would save on power costs to operate the well pumps. The savings could potentially be passed on to customers, as it would become cheaper for the District to operate the system. A rate reduction resulting from the installation of meters could help the District provide water service to its customers on a more affordable level. 5. In the near future, it will be necessary for the AJPA to address capital system improvements, and identify funding sources for such improvements. 6. The District should consider revising its fee structure to segregate operation and maintenance costs and the costs of constructing new infrastructure. This would help the District determine whether current fees charged to the development community are adequate to expand its water capacity to serve future development. The District has historically relied upon grant/loan programs to implement major repairs or improvements to its water system. 6) Opportunities for Shared Facilities 1. The AJPA currently takes advantage of sharing equipment with the Alpaugh Irrigation District on an as needed basis through a Joint Exercise of Powers Agreement. 2. The AJPA also has mutual aid agreements with the Alpaugh Irrigation District for use of a backup well should the AJPA’s new well fail to operate. When the second well for the AJPA becomes operational, the Authority will no longer need to rely on the Alpaugh Irrigation District’s well for a backup. Alpaugh Joint Powers Authority MSR Page 10-3 Tulare County LAFCO MSR G1_10 Alpaugh Jan06.DOC/55-7301-01 3. Other opportunities to reduce expenditures by sharing resources include the following: splitting insurance premiums with nearby District’s requiring related insurance coverage; and/or the employment of a grant writer by two or more District’s. 7) Government Structure Options 1. There are no foreseeable conditions that would indicate that development within the Authority’s SOI would result in a change in government structure. 2. Since the formation of the AJPA, there are no potential boundary conflicts with any communities that could affect the governmental structure of the Authority. 8) Evaluation of Management Efficiencies 1. It appears that since the formation of the AJPA, the management of the water system has become more efficient. The AJPA has worked with State agencies to secure funding necessary to improve the community’s water system to acceptable standards. 2. Although the AJPA has managed to bring the community’s water system back to operational standards, the affordability of supplying domestic water to customers remains questionable. Implementing a metered billing system for water could increase the efficiency of the domestic water service provision by reducing the cost of water to low volume users. A reduction in water usage would likely reduce the costs of operating the system by reducing power costs associated with operating the well pumps. 3. The AJPA is governed by a five member Board of Directors elected at large from within its boundaries, which is responsible for setting policy and general administrative procedures. 4. The AJPA currently operates with a part-time staff, including a secretary, manager, and two distribution operators. The Authority contracts out for other services, including engineering, legal counsel, and other consulting services. 5. The AJPA’s answering message provides contact information in case of emergencies. Staff is available to respond to emergency situations during non-office hours. The AJPA also has an Emergency/Disaster Response Plan in place. 9) Local Accountability and Governance 1. Regularly scheduled meetings are held on the second Monday of each month at 6:00 p.m. at the AJPA office. 2. The AJPA adopts budgets and rate changes at hearings where the public is notified and invited. 3. The AJPA should work with the Tulare County Resource Management Agency (RMA) and/or Tulare County LAFCO to have information regarding District affairs posted on the Tulare County RMA and/or LAFCO website. The District could provide information such as meeting times and locations, budgets, rates, ordinances, agendas, completed/upcoming projects, and other District affairs to Tulare County for posting on the County’s (RMA and/or LAFCO) website. Alpaugh Joint Powers Authority MSR Page 10-4 Tulare County LAFCO MSR G1_10 Alpaugh Jan06.DOC/55-7301-01 10.0 ALPAUGH JOINT POWERS AUTHORTIY 10.0.1 Background The requirement for Local Agency Formation Commissions (LAFCO) to conduct reviews of local municipal services was established with the passage of AB 2838, the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000. The bill passed the legislature, and was signed into law by Governor Davis on September 26, 2000. Municipal Service Reviews (MSRs) provide LAFCOs with an additional tool to fulfill their statutory responsibilities of promoting orderly growth and development, preserving the States finite open space and agricultural land resources, and working to ensure that high quality public services are provided to all Californians in the most efficient and effective manner. MSRs are a requirement of State annexation law and are required to be completed before the consideration of a Sphere of Influence (SOI) amendment or once every five years when a SOI amendment is not being considered. In July 2003, the Tulare County Local Agency Formation Commission (LAFCO) Board adopted a Municipal Service Review (MSR) exemption policy, which identifies the agencies that would be subject to a review and the extent of that review. The agencies in Tulare County were divided into three (3) categories: agencies subject to a full comprehensive study; agencies subject to a questionnaire study; and agencies exempt from a MSR study. The policy further identifies that the services subject to review shall be: • Police protection • Fire protection • Water and wastewater • Solid waste collection and disposal • Streets and traffic circulation • Power generation and distribution • Health Care The Alpaugh Joint Powers Authority (AJPA) provides domestic water service to residents in the unincorporated community of Alpaugh. The Alpaugh Irrigation District (AID) and the Tulare County Water Works District #1 (TCWWD) were formerly the domestic water suppliers to residents of Alpaugh; however, neither agency currently provides domestic water service and are exempt from review. In March 2003 the two districts formed the AJPA, which is now a separate governing agency responsible for all operations and maintenance to the domestic water system in the rural community. The AJPA incorporates the Boundaries of both the TCWWD and the AID. Currently, the AJPA is the only domestic water service provider in the area and therefore is the only agency within the community subject to a full comprehensive study. Formerly, the TCWWD was the domestic water supplier within the town of Alpaugh, and has a District Boundary bounded by Avenue 56 to the north, Knox Road to the west, McNeely Road to the east, and the Atchison Topeka – Santa Fe railroad tracks to the south. The SOI for the TCWWD was coterminous with the District Boundary. The AID formerly provided domestic water service to residents in the surrounding rural areas outside of the Boundary of the TCWWD. The SOI for the AID includes areas north, east and south of the District Boundary. The AJPA operates within a Boundary that incorporates the Boundaries of the TCWWD and the AID, and has an SOI coterminous with the AID SOI. Alpaugh is located in southwestern Tulare County, west of State Route (SR) 43 along Avenue 56. Alpaugh is an agriculturally oriented service community surrounded on the all sides by lands in Alpaugh Joint Powers Authority MSR Page 10-5 Tulare County LAFCO MSR G1_10 Alpaugh Jan06.DOC/55-7301-01 agricultural production, scattered rural residential uses and vacant land. Communities surrounding Alpaugh include Allensworth and Earlimart to the east, Pixley to the northeast, Delano to the southeast, and Corcoran to the northwest. The Tulare County/Kings County Line is located approximately two miles west of Alpaugh, and the Tulare County/Kern County Line is located approximately seven miles south of Alpaugh. The current Boundary and the currently adopted SOI for the AJPA are illustrated on Figure 10-1. The following excerpt from the Tulare County LAFCO website (www.co.tulare.ca.us/lafco/info.asp) defines a SOI and the purpose it serves. A “Sphere of Influence” is the physical boundary and service area that a local governmental agency is expected to serve. Establishment of this boundary is necessary to determine which governmental agencies can provide services in the most efficient way to the people and property in any given area. The Sphere of Influence requirement also works to discourage urban sprawl by preventing overlapping of jurisdictions and duplication of services. The following discussions address the nine legislative factors required by the Cortese-Knox-Hertzberg Act; 1) Growth and population, 2) Infrastructure needs and deficiencies, 3) Financial constraints and opportunities, 4) Cost avoidance opportunities, 5) Opportunities for rate restructuring, 6) Opportunities for shared facilities, 7) Government structure options, 8) Evaluation of management efficiencies, and 9) Local accountability and governance. Alpaugh Joint Powers Authority MSR Page 10-6 Tulare County LAFCO MSR G1_10 Alpaugh Jan06.DOC/55-7301-01 FIGURE 10-1 – ALPAUGH JOINT POWERS AUTHORITY (AJPA) BOUNDARY AND SOI Source: Tulare County GIS Database (July 2004) Alpaugh Joint Powers Authority MSR Page 10-7 Tulare County LAFCO MSR G1_10 Alpaugh Jan06.DOC/55-7301-01 10.1 GROWTH AND POPULATION The purpose of this section is to present historical and projected growth patterns and population projections to establish a baseline for the evaluation of the service needs of Alpaugh. 10.1.1 Historical Data The Census Bureau, on a decennial basis, identifies and provides detailed information on all incorporated Cities along with several smaller unincorporated communities (termed Census Designated Places – CDPs). Each census, community profiles are developed and provide a wide range of information pertaining to population, demographics, housing information, household data, education and employment, income and poverty, and historical trends. Census 2000 data indicates that Alpaugh had a population of 761 as of January 2000. Census 1990 data indicates that Alpaugh had a population of 633 in 1990, corresponding to an annual growth rate, between 1990 and 2000, of approximately 1.9%. The unincorporated areas of Tulare County grew from a population of 133,222 in 1990 to a population of 141,150 in 2000, corresponding to an annual growth rate of approximately 0.6%. It is likely that the Alpaugh and the surrounding service area of the AJPA will continue to grow at an average annual rate between 1% and 2% depending upon land use zoning, and other policies established by the Tulare County General Plan and other factors. Using an average annual growth rate between 1% and 2% the AJPA could expect a year 2025 service population between 975 and 1,250. In recent years, the domestic water service providers for Alpaugh have been unable to support any new connections to their water system due to severe water quality problems (including arsenic contamination), inadequate system pressures, and deterioration of water pipelines resulting in breakages and leakages. Water system related problems have halted any new development from occurring within the community. The population projections do not assume any development limitations within the community. 10.1.2 Written Determinations 1. In March 2003, the TCWWD and the AID formed the Alpaugh Joint Powers Authority (AJPA), which is now a separate governing agency responsible for all operations and maintenance to the domestic water system in the rural community. 2. Census data indicates that Alpaugh had a 1990 population of 633, and a 2000 population of 761, corresponding to average annual growth rate of approximately 1.9% 3. It is likely that the Alpaugh community will continue to grow at an average annual rate between 1% and 2% depending upon land use zoning and other policies established by the Tulare County General Plan and other factors. Using these rates, the AJPA could expect a year 2025 service population between 975 and 1,250 assuming no development limitations. 4. In recent years, domestic water service providers for Alpaugh have been unable to support any new connections to their water system due to severe water quality problems (including arsenic contamination), inadequate system pressures, and deterioration of water pipelines resulting in breaks and leaks. Water system problems have halted any new development from occurring in the community. Alpaugh Joint Powers Authority MSR Page 10-8 Tulare County LAFCO MSR G1_10 Alpaugh Jan06.DOC/55-7301-01 10.2 INFRASTRUCTURE NEEDS AND DEFICIENCIES The purpose of this section is to evaluate the infrastructure needs and deficiencies of the AJPA in terms of availability of resources, capacity to deliver services, condition of facilities, service quality, and levels of service. 10.2.1 Domestic Water Alpaugh’s problems with water have long been documented. Residents were paying a flat rate of $55 per month for water that contained high levels of arsenic and was deemed unsafe for cooking and drinking. Until a temporary 5,000 gallon storage tank was installed in late 2003, residents were traveling to Delano or Corcoran to buy bottled water. Residents of Alpaugh were required to manually fill water bottles via four spigots available on site, as drinkable water still could not be delivered to customer’s taps. The AJPA has since addressed many of the health issues in regard to unsafe drinking water and the Department of Health Services rescinded a boil water order as of January 10, 2005. The current infrastructure for domestic water service is the result of two former systems, previously owned and operated by the AID and TCWWD. When the two Districts formed the AJPA, rights to the domestic water infrastructure were relinquished to the Authority, which is now a separate governing body. During the first year of operation, the AJPA purchased water through the AID from Well #9. This well was the source of water utilized by the AJPA distribution system. Recently, a new well, referred to as Well #10, was added to the AJPA system through funding obtained from a U.S. Department of Agriculture (USDA) grant and loan, and Well #9 is only to be used as a backup should the new well fail. The AJPA expects to have an additional well drilled in the near future, at which time Well #10 would function as the Authority’s backup well. Well #9 is the property of the AID, and is primarily used to supply water for irrigation purposes. Much of the AJPA water distribution system was constructed over 70 years ago. The pipeline system consists of steel, transite, and plastic pipe varying in size from 2 to 8 inches in diameter. Most of the AJPA water system is un-metered; only the Alpaugh School and Western Farms have water meters, although they are currently being charged flat rates. Metering the AJPA water system would help promote water conservation. Although the water system is currently un-metered, AJPA staff has indicated that system will be metered in the future. The AJPA water system currently supports 295 connections including one industrial connection, a school connection, and 293 residential connections. In 2002, the TCWWD applied for and received a Proposition 13 Urban Water Conservation Grant in the amount of $70,200, in order to install new water meters for all the served connections, in order to better manage the amount of water use in the community. It is unknown whether the funds were transferred to the AJPA upon relinquishment of the domestic water infrastructure. The District’s Engineer (Boyle Engineering) should be contacted regarding the status of the grant and related system improvements. The TCWWD conservatively estimated a 15% reduction in water use resulting from the installation of meters and charging customers a metered rate. Since its formation, the AJPA has received over $4 million in grants and loans from the USDA, and the Department of Water Resources (DWR), to improve the community’s water system. The funds are being used to construct several improvements to the community’s water system including drilling a new well, replacing several miles of water mains and constructing a new water tank. The new well on the edge of town, Well #10, produces water that is safe to drink by government standards as indicated by State health officials. The arsenic maximum standard became more stringent as of January 2006 (10 PPB, previously 50 PPB). Alpaugh Joint Powers Authority MSR Page 10-9 Tulare County LAFCO MSR G1_10 Alpaugh Jan06.DOC/55-7301-01 While the Alpaugh water District’s have struggled over recent years to supply customers with safe, affordable drinking water, the AJPA seems to be making steps in the right direction by applying for State and Federal Grants to restore its deteriorating water system. While the Authority is unable to support additional connections at this time, ongoing system improvements will improve the system capacity and allow for additional service connections in the future. Tulare County Improvement Standards require that the construction of water source facilities comply with the requirements of Bulletin No. 74, “Water Well Standards” prepared by the State of California Department of Water Resources. The Tulare County Improvement Standards also establish specific requirements for quantity and quality of water to be delivered to a system. Some of these requirements are summarized below. • The quantity of water delivered to the distribution system within a subdivision from all source and storage facilities for a period of two hours shall be the maximum domestic demand plus a fire flow quantity of not less than 500 GPM for single family residential, 1,500 GPM for multi-family residential, commercial, and light manufacturing, and 2,500 GPM for heavy manufacturing. • For systems up to 625 customer units (equivalent dwelling units) the domestic quantity shall not be less than Q = 100 + 25 * √N, and Q = 100 + N for more than 625 customer units at sufficient pressure to provide a minimum pressure of 25 PSI to each lot served; where Q equals the rate of flow in GPM delivered from the combined source facilities to the distribution system, and N equals the total number of customer units where each customer unit is equivalent to one for a single family dwelling on a normal subdivision lot. Other types of development shall be assigned appropriate customer unit values by the Engineer as experience with the distribution system or locality indicates. • The minimum source and domestic demand storage design requirements shall be in accordance with Plate No. WS-11 of Section IV of the Tulare County Improvement Standards. • The quality of water supplied for human consumption shall conform to Sections 3, 4 and 5 of the latest United States Public Health Service Drinking Water Standards. Samples will be taken and tests made by the County Department of Health Services for bacteriological determination of potability. • Chemical and physical tests for potability shall be performed by a commercial laboratory certified by the State Department of Health Services for performance of chemical and physical analysis and the costs thereof shall be borne by the sub-divider. Assuming 290 equivalent dwelling units (EDUs) in order to meet Tulare County Improvement Standards, the AJPA water system would need to be capable of delivering a combined flow rate (from all source and storage facilities) of 1,030 GPM (500 GPM fire flow and 530 GPM domestic demand) for a period of two hours while maintaining a minimum pressure of 25 PSI to each lot served. The pumping efficiency of the AJPA water system is unknown, and therefore it can not be determined at this time if the water system meets the requirements of the Tulare County Improvement Standards. Alpaugh Joint Powers Authority MSR Page 10-10 Tulare County LAFCO MSR G1_10 Alpaugh Jan06.DOC/55-7301-01 10.2.2 Written Determinations 1. Alpaugh’s water problems have long been documented, however, since its formation, the AJPA has received over $4 million in grants and loans to improve the community’s water supply and distribution system. 2. Alpaugh’s water supply is currently derived from a single well (Well #10), and uses Well #9, owned and operated by the AID, as a backup in case Well #10 fails to function. The AJPA expects to have an additional well drilled in the future, at which time Well #10 would function as the Authority’s backup well. 3. While Alpaugh water District’s have struggled over recent years to supply customers with safe, affordable drinking water, the AJPA appears to be making steps in the right direction by obtaining funding necessary for a complete overhaul of its water system. While the Authority is unable to support additional connections at this time, ongoing system improvements will improve the system capacity and level of service and allow for additional service connections in the future. 4. Assuming 290 equivalent dwelling units (EDUs) in order to meet Tulare County Improvement Standards, the AJPA water system would need to be capable of delivering a combined flow rate (from all source and storage facilities) of 1,030 GPM (500 GPM fire flow and 530 GPM domestic demand) for a period of two hours while maintaining a minimum pressure of 25 PSI to each lot served. The pumping efficiency of the AJPA water system is unknown, and therefore it can not be determined at this time if the water system meets the requirements of the Tulare County Improvement Standards. Alpaugh Joint Powers Authority MSR Page 10-11 Tulare County LAFCO MSR G1_10 Alpaugh Jan06.DOC/55-7301-01 10.3 FINANCING OPPORTUNITIES AND CONSTRAINTS The purpose of this section is to evaluate the capability of the AJPA to finance needed improvements and services. 10.3.1 Annual Budget LAFCO should consider the ability of the service provider (AJPA) to pay for improvements or services associated with annexed sites. This planning can begin at the SOI stage by identifying what opportunities there are to meet infrastructure and maintenance needs associated with future annexation and development, and identifying limitations on financing such improvements, as well as the opportunities that exist to construct and maintain those improvements. Overall, the AJPA is in semi-stable financial condition. The AJPA adopted its first budget in fiscal year 2003-2004 which determined the spending plan for the Authority. The budget provides a framework for the AJPA to address the following issues: reserves, revenues, expenditures, investments, and rates and fees. The AJPA combined past budget records from the TCWWD and the AID to estimate revenues and expenditures for its 1st fiscal year budget. The fiscal year 2003-04 budget is organized and clearly articulates the District’s future financial performance plans. The document provides information that is divided into the following categories: • Total Available Funds o Fund Balances o Revenues o Reserve Fund • Total Budget Expenditures o Expenses (cid:131) Salaries and Employee Benefits (cid:131) Services and Supplies o Fixed Assets o Contingencies The AJPA’s water budget for fiscal year 2003-04 identifies a zero beginning cash balance and anticipated revenues of $177,596, generated solely from customer sales, and connection fees. Total budget expenditures of $164,330 cover salaries and employee benefits totaling $55,924 and services and supplies totaling $107,406. Net revenues in the amount of $13,266 would be used for capital system improvements and reserves. 10.3.2 Financing Opportunities The AJPA could benefit from the preparation and implementation of a water system master plan and/or five year capital improvement plan, to assess the Authority’s current capacity and determine the most cost-effective means of meeting the needs of the AJPA and the residents it serves. A water system master plan and/or capital facilities plan could help the District identify opportunities to finance needed system improvements. The AJPA Boundary covers a large land area (refer to Figure 10-1), which is for the most part, with the exception of the township, undeveloped or developed with scattered rural residential uses, and agricultural uses. Additional development in the community could help the Authority establish a more stable balance between the revenues being generated, and the required resources to maintain and improve Alpaugh Joint Powers Authority MSR Page 10-12 Tulare County LAFCO MSR G1_10 Alpaugh Jan06.DOC/55-7301-01 the community water system. Volunteers from the community recently formed a town council to help promote growth. The AJPA and the town council should work together to identify opportunities for growth, and to understand how the community and the Authority could benefit from such growth. Based upon the Technical, Managerial, and Financial (TMF) Capacity Assessment Form for Change of Ownership of Community Public Water Systems (California Department of Health Services Drinking Water Field Operations Branch, November 2002), there seems to be little pressure for growth in Alpaugh. The Authority should continue to pursue available State and Federal grant/loan assistance to continue to improve and repair its water system, including but not limited to, the installation of water meters. Although the Authority should continue to pursue funding through grant and loan assistance programs, the Authority should not rely solely on such funding, as it is often a long and tedious process, and are generally not approved solely for capacity improvements. Without grant money, the Authority relies upon fees paid by developers for rights to water capacity to construct capacity improvements to the water system. 10.3.3 Written Determinations 1. Overall, the AJPA is in semi-stable financial condition. The AJPA adopted its first budget in fiscal year 2003-2004 which determined the spending plan for the Authority. The fiscal year 2003-04 budget is organized and clearly articulates the District’s future financial performance plans. 2. The AJPA’s water budget for fiscal year 2003-04 identifies a zero beginning cash balance and anticipated revenues of $177,596, generated solely from customer sales, and connection fees. Total budget expenditures of $164,330 cover salaries and employee benefits totaling $55,924 and services and supplies totaling $107,406. Net revenues in the amount of $13,266 would be used for capital system improvements and reserves. 3. A water system master plan and/or capital facilities plan could help the Authority identify opportunities to finance needed system improvements and set forth timelines for such improvements based upon available revenues. 4. Additional development in the community could help the Authority establish a more stable balance between the revenues being generated, and the required resources to maintain and improve the community water system. 5. The Authority should continue to pursue available State and Federal grant/loan assistance to continue to improve and repair its water system, including but not limited to, the installation of water meters. Although the Authority should continue to pursue funding through grant and loan assistance programs, the Authority should not rely solely on such funding, as it is often a long and tedious process, and are generally not approved solely for capacity improvements. 6. Without grant money, the Authority relies upon fees paid by developers for rights to water capacity to construct capacity improvements to the water system. Alpaugh Joint Powers Authority MSR Page 10-13 Tulare County LAFCO MSR G1_10 Alpaugh Jan06.DOC/55-7301-01 10.4 COST AVOIDANCE OPPORTUNITIES The purpose of this section is to identify practices or opportunities that may help to eliminate unnecessary costs. 10.4.1 Fiscal Structure As a result of the 1996 Federal Safe Drinking Water Act, the California legislature passed Senate Bill 1307 which added Section 116540 to the California Health and Safety Code (CHSC). Section 116540 requires that “No public water system that was not in existence on January 1, 1998, shall be granted a permit unless the system demonstrates to the department that the water supplier possesses adequate financial, managerial, and technical capacity to assure the delivery of pure, wholesome, and potable drinking water. This section shall also apply to any change of ownership of a public water system that occurs after January 1, 1998.” To meet the requirements of Section 116540, the AJPA was required to submit a five-year projection of anticipated revenues and expenditures for the system. The following elements of the budget projection are required: • Maintenance of an equipment replacement reserve • The projected expenses to be incurred as a result of implementing the water system’s CIP and its equipment replacement schedule • The water system’s consolidated financial statement from the previous two fiscal years (from prior owners) • A copy of the proposed rate structure and the estimated annual cost of water per customer, based on water usage over the last calendar year It appears the AJPA has completed significant budget planning to obtain an operational permit from the California Department of Health Services Drinking Water Field Operations Branch. The TMF Capacity Assessment has helped the AJPA avoid unnecessary costs by evaluating the current state of the water system, and determining future spending plans, thereby eliminating unexpected costs arising from unforeseen expenses. The AJPA has adequate staff resources and administrative capabilities to provide the needed level of services to the residents within its boundaries. The AJPA avoids excessive overhead costs by operating with three part-time staff members, which provide adequate levels of service to the community. The Authority also avoids unnecessary costs by contracting out professional services including engineering, legal services, and other consulting services. The formation of the AJPA has consolidated staff resources by reducing the amount of staff required to operate a single water system under two separate governing bodies. If the SOI were expanded in the future, the Authority would assume fiscal responsibilities to construct or maintain the water infrastructure associated with the SOI and any territories that were annexed. LAFCO should consider the relative burden of new annexations to the Authority when it comes to its ability to provide domestic water service, as well as capital maintenance and replacements required as a result of expanding the Authority’s boundary. Since the current AJPA Boundary and SOI contain large areas of undeveloped land, it is unlikely that the Authority will need to expand its SOI in the foreseeable future. Alpaugh Joint Powers Authority MSR Page 10-14 Tulare County LAFCO MSR G1_10 Alpaugh Jan06.DOC/55-7301-01 The Authority can avoid unnecessary costs associated with the construction of long stretches of water main by participating in the Tulare County General Plan Update process and indicating where development can most efficiently be served by supporting infrastructure. Opportunities exist at the time of annexation and development to introduce alternative methods of construction and maintenance of public or semi-public infrastructure to serve future SOI/annexation areas. 10.4.2 Written Determinations 1. It appears the AJPA has completed significant budget planning to obtain an operational permit from the California Department of Health Services Drinking Water Field Operations Branch. The TMF Capacity Assessment has helped the AJPA avoid unnecessary costs by evaluating the current state of the water system, and determining future spending plans, thereby eliminating unexpected costs arising from unforeseen expenses. 2. The Authority avoids excessive overhead costs by operating with a part-time staff, which provides adequate levels of service to the small community. The Authority also avoids unnecessary costs by contracting out professional services including engineering, legal services, and other consulting services. 3. Since the current AJPA Boundary and SOI contain large areas of undeveloped land, it is unlikely that the Authority will need to expand its SOI in the foreseeable future. The Authority can avoid unnecessary costs associated with the construction of long stretches of water main by participating in the Tulare County General Plan Update process and indicating where development can most efficiently be served by supporting infrastructure. Alpaugh Joint Powers Authority MSR Page 10-15 Tulare County LAFCO MSR G1_10 Alpaugh Jan06.DOC/55-7301-01 10.5 OPPORTUNITIES FOR RATE RESTRUCTURING The purpose of this section is to identify opportunities to positively impact rates without decreasing service levels. 10.5.1 Fee Structure The AJPA water system is currently un-metered, and all customers are charged a flat rate for water service. According to the Prop. 13 Urban Water Conservation Grant, the installation of water meters along with the reading of these meters would drastically cut down on the flat rate use fee that currently exists and would also promote water conservation. These meters will also provide a control measure to detect any leaks in the current system. The installation of these meters could reduce the amount of water used by 15%. The AJPA currently charges a monthly flat rate for domestic water service; currently set at $55.00 per month. Table 10-1 shows a comparison of water rates and connection fees, respectively, for surrounding service providers. The table also shows the relationship between monthly service charges and average household incomes for the respective communities. Since some of the service providers charge a metered rate for water, it is necessary to calculate an average monthly bill based upon a specific amount of usage taken as 1,200 cubic feet, or approximately 8,977 gallons, per month for this analysis. Alpaugh Joint Powers Authority MSR Page 10-16 Tulare County LAFCO MSR G1_10 Alpaugh Jan06.DOC/55-7301-01 TABLE 10-1 COMPARISON OF WATER RATES Average Service Provider Sample Monthly Bill Connection Fee Household Rate/Income Ratio Income Earlimart PUD $12.50 $1,500 $1,775/mo. 0.70% Ivanhoe PUD $9.50 $1,700 $2,171/mo. 0.44% Pixley PUD $20.00 $2,000 $1,942/mo. 1.03% Teviston CSD $30.00 $800 $2,014/mo. 1.49% Tipton CSD $24.00 $2,800 $2,198/mo. 1.09% Alpaugh JPA $55.00 $1,500 $1,974/mo. 2.79% Cutler PUD $18.00 $1,500 $2,028/mo. 0.89% Orosi PUD $19.08 $2,400 $2,533/mo. 0.75% Lemon Cove SD $10.01 $500 $2,361/mo. 0.42% London CSD $18.00 $1,400 $1,807/mo. 1.00% Lindsay-Strathmore ID $14.187 T&M $2,096/mo. 0.68% Poplar CSD $25.00 $1,750 $2,043/mo. 1.22% Richgrove CSD NA NA $1,907/mo. NA Springville PUD $23.42 $2,800 $2,023/mo. 1.16% Strathmore PUD $43.30 $1,150 $2,096/mo. 2.06% Terra Bella ID $12.438 $2,908 $2,109/mo. 0.59% Woodville PUD $27.28 $2,000 $2,123/mo. 1.28% Average $23.17 $1,780 $2,080/mo. 1.11% Notes: 1) Fee information obtained from service providers 2) Average household income based upon Census 2000 data 3) Rate/Income ratio calculated by dividing sample monthly bill by average household income 4) Sample monthly bill is calculated for a typical single family dwelling 5) NA=Not Available 6) T&M=Time and Material basis 7) Based on an average of four separate rates charged by the Lindsay-Strathmore Irrigation District 8) Based on potable water service provided by the Terra Bella Irrigation District 9)Richgrove CSD and Lindsay-Strathmore ID were omitted from the average calculations As indicated in Table 10-1, the AJPA charges the highest monthly rate for water service compared to other domestic water service providers throughout the County. The cost of domestic water service within Alpaugh equates to approximately 2.79% of the average household income within the community. The new connection fee charged by the AJPA is below average compared to other service providers in the County. When the District’s water system ultimately becomes metered, rates would need to be restructured to bill customers based upon the amount of water used. With a significant reduction in water usage, the District would save on power costs to operate the well pumps. The savings could potentially be passed on to customers, as it would become cheaper for the District to operate the system. A rate reduction resulting from the installation of meters could help the District provide water service to its customers on a more affordable level. As indicated in the TMF Capacity Assessment, there are not any plans or anticipated funds at this time for capital improvements or equipment replacement (above and beyond the improvements being constructed Alpaugh Joint Powers Authority MSR Page 10-17 Tulare County LAFCO MSR G1_10 Alpaugh Jan06.DOC/55-7301-01 from USDA and DWR grant/loans). In the near future, it will be necessary for the Alpaugh JPA to address capital system improvements, and identify funding sources for such improvements. The District should consider revising its fee structure to segregate operation and maintenance costs and the costs of constructing new infrastructure. This would help the District determine whether current fees charged to the development community are adequate to expand its water capacity to serve future development. The District has historically relied upon grant/loan programs to implement major repairs or improvements to its water system. 10.5.2 Written Determinations 1. The AJPA currently charges a monthly flat rate for domestic water service; currently set at $55.00 per month. 2. While the District’s monthly rates are among the highest compared to other domestic water service providers throughout the County, the connection fees charged by the District are below average. 3. When the District’s water system ultimately becomes metered, rates would need to be restructured to bill customers based upon the amount of water used. 4. With a significant reduction in water usage, the District would save on power costs to operate the well pumps. The savings could potentially be passed on to customers, as it would become cheaper for the District to operate the system. A rate reduction resulting from the installation of meters could help the District provide water service to its customers on a more affordable level. 5. In the near future, it will be necessary for the AJPA to address capital system improvements, and identify funding sources for such improvements. 6. The District should consider revising its fee structure to segregate operation and maintenance costs and the costs of constructing new infrastructure. This would help the District determine whether current fees charged to the development community are adequate to expand its water capacity to serve future development. The District has historically relied upon grant/loan programs to implement major repairs or improvements to its water system. Alpaugh Joint Powers Authority MSR Page 10-18 Tulare County LAFCO MSR G1_10 Alpaugh Jan06.DOC/55-7301-01 10.6 OPPORTUNITIES FOR SHARED FACILITIES The purpose of this section is to evaluate opportunities for a jurisdiction to share facilities and resources, thereby increasing efficiency. 10.6.1 Shared Facilities The AJPA currently takes advantage of sharing equipment with other service providers on an as needed basis. The following excerpt from Section 5.04 of the Joint Exercise of Powers Agreement outlines the agreement between the AJPA and the Alpaugh Irrigation District to share equipment. “(Alpaugh) Irrigation district shall contribute equipment, as necessary, to the Authority including but not limited to, one pick-up truck, water chlorination testing system, bacteria sample testing kits, miscellaneous tools like shovels, picks, rakes, etc., and other miscellaneous equipment. The backhoe shall remain the property of the Irrigation District, but shall be made available to the Authority on an as need basis, pursuant to the terms of the Agreement between the Authority and the Irrigation District.” The AJPA also has mutual aid agreements with the Alpaugh Irrigation District for use of a backup well should the AJPA’s new well fail to operate. When the second well for the AJPA becomes operational, the Authority will no longer need to rely on the Alpaugh Irrigation District’s well for a backup. Other opportunities for sharing resources also include splitting insurance premiums with nearby Districts requiring related insurance coverage. Also, the employment of a grant writer by two or more districts could potentially benefit the AJPA without incurring the sole cost of a full time employee. 10.6.2 Written Determinations 1. The AJPA currently takes advantage of sharing equipment with the Alpaugh Irrigation District on an as needed basis through a Joint Exercise of Powers Agreement. 2. The AJPA also has mutual aid agreements with the Alpaugh Irrigation District for use of a backup well should the AJPA’s new well fail to operate. When the second well for the AJPA becomes operational, the Authority will no longer need to rely on the Alpaugh Irrigation District’s well for a backup. 3. Other opportunities to reduce expenditures by sharing resources include the following: splitting insurance premiums with nearby District’s requiring related insurance coverage; and/or the employment of a grant writer by two or more District’s. Alpaugh Joint Powers Authority MSR Page 10-19 Tulare County LAFCO MSR G1_10 Alpaugh Jan06.DOC/55-7301-01 10.7 GOVERNMENT STRUCTURE OPTIONS The purpose of this section is to consider the advantages and disadvantages of various government structures to provide public services. 10.7.1 Development within SOI Areas One of the most critical elements of LAFCO’s responsibilities is in setting logical service Boundaries for communities based on their capability to provide services to affected lands. There are no foreseeable conditions that would indicate that development within the District’s SOI would result in a change in government structure. Since the formation of the AJPA, there are no potential boundary conflicts with any communities that could affect the governmental structure of the Authority. 10.7.2 Written Determinations 1. There are no foreseeable conditions that would indicate that development within the Authority’s SOI would result in a change in government structure. 2. Since the formation of the AJPA, there are no potential boundary conflicts with any communities that could affect the governmental structure of the Authority. Alpaugh Joint Powers Authority MSR Page 10-20 Tulare County LAFCO MSR G1_10 Alpaugh Jan06.DOC/55-7301-01 10.8 EVALUATION OF MANAGEMENT EFFICIENCIES The purpose of this section is to consider the management structure of the AJPA. 10.8.1 Organizational Structure Prior to the formation of the AJPA domestic water within the area was being managed by two separate governing bodies. The management efficiencies of the prior service providers were questionable, as neither District was able to provide affordable, clean, safe drinking water to the residents of Alpaugh. Individually, District revenues were not adequate to keep pace with maintenance and repairs to the water systems. It appears that since the formation of the AJPA, the management of the water system has become more efficient. The AJPA has worked with State and Federal agencies to secure funding necessary to improve the community’s water system to acceptable standards. Although the AJPA has managed to bring the community’s water system back to operational standards, the affordability of supplying domestic water to customers remains questionable. Implementing a metered billing system for water could increase the efficiency of the domestic water service provision by reducing the cost of water to low volume users. A reduction in water usage would likely reduce the costs of operating the system by reducing power costs associated with operating the well pumps. The AJPA has accounting and finance functions, current personnel regulations and resolutions. The Authority undergoes annual audits in compliance with auditing standards. The AJPA is governed by a five member Board of Directors that is elected at large from within the AJPA Boundary that is responsible for setting policy and general administrative procedures. The Board of Directors of the AJPA meet monthly on the second Monday of each month. The AJPA employs two licensed distribution operators. Both entities of the AJPA have longstanding relationships with engineering, legal, and other professional entities. For the time being, all of these professional services are provided by outside consultants as needed on a contract basis. The AJPA’s answering message provides the public with the operational hours of the Authority and with contact information in case of emergencies. Emergency contact information is also posted on the District’s office door. Staff is available to respond to emergency situations during non-office hours. The AJPA also has an Emergency/Disaster Response Plan in place that outlines who to contact in case of specific emergencies. The AJPA has began to set aside funding for contingencies, as identified in previous sections of this report. Contingency funds can be used for emergency improvements and/or unforeseen replacement or rehabilitation costs. 10.8.2 Written Determinations 1. It appears that since the formation of the AJPA, the management of the water system has become more efficient. The AJPA has worked with State agencies to secure funding necessary to improve the community’s water system to acceptable standards. 2. Although the AJPA has managed to bring the community’s water system back to operational standards, the affordability of supplying domestic water to customers remains questionable. Implementing a metered billing system for water could increase the efficiency of the domestic water service provision by reducing the cost of water to low volume users. A Alpaugh Joint Powers Authority MSR Page 10-21 Tulare County LAFCO MSR G1_10 Alpaugh Jan06.DOC/55-7301-01 reduction in water usage would likely reduce the costs of operating the system by reducing power costs associated with operating the well pumps. 3. The AJPA is governed by a five member Board of Directors elected at large from within its boundaries, which is responsible for setting policy and general administrative procedures. 4. The AJPA currently operates with a part-time staff, including a secretary, manager, and two distribution operators. The Authority contracts out for other services, including engineering, legal counsel, and other consulting services. 5. The AJPA’s answering message provides contact information in case of emergencies. Staff is available to respond to emergency situations during non-office hours. The AJPA also has an Emergency/Disaster Response Plan in place. Alpaugh Joint Powers Authority MSR Page 10-22 Tulare County LAFCO MSR G1_10 Alpaugh Jan06.DOC/55-7301-01 10.9 LOCAL ACCOUNTABILITY AND GOVERNANCE The purpose of this section is to evaluate the accessibility and levels of public participation associated with the agency’s decision-making processes. 10.9.1 Public Access and Information Methods LAFCO may consider the agency’s record of local accountability in its management of community affairs as a measure against the ability to provide adequate services to the SOI and annexation areas. The AJPA has a five member Board of Directors elected by voters residing within the Districts Boundary. Regularly scheduled Board meetings, which are open to the public, are held on the second Monday of each month at 6:00 p.m. at the District office located at 5446 Tule Road in Alpaugh. Special meetings may be called by giving 24-hour notice at the request of the District’s President with the concurrence of at least one other member of the board, or at the request of any three members of the board. The AJPA should work with the Tulare County Resource Management Agency (RMA) and/or Tulare County LAFCO to have information regarding AJPA affairs posted on the Tulare County RMA and/or LAFCO website. The AJPA could provide information such as meeting times and locations, budgets, rates, ordinances, agendas, completed/upcoming projects, and other affairs to Tulare County for posting on the County’s (RMA and/or LAFCO) website. It would make sense to post information regarding AJPA affairs on Tulare County websites, since Alpaugh is an unincorporated community within Tulare County, and there is a mutual interest in the community. The internet is a relatively low-cost yet powerful method of involving the general public/customers/ratepayers in governmental affairs. Greater dissemination of information can lead to greater interest in attending Board meetings and participating in elections. It also allows the public, some of whom are not physically able to attend Board meetings, to follow AJPA activities remotely from their home or business. Prior to the formation of the AJPA, the Alpaugh Irrigation District was sued over a proposed increase in water rates. The lawsuit was ultimately settled, and resulted in a smaller increase than was originally proposed. Since the formation of the AJPA, the Authority has not been subject to any litigation. Any proposed rate changes should be discussed at hearings where the public is notified and invited. 10.9.2 Written Determinations 1. Regularly scheduled meetings are held on the second Monday of each month at 6:00 p.m. at the AJPA office. 2. The AJPA adopts budgets and rate changes at hearings where the public is notified and invited. 3. The AJPA should work with the Tulare County Resource Management Agency (RMA) and/or Tulare County LAFCO to have information regarding District affairs posted on the Tulare County RMA and/or LAFCO website. The District could provide information such as meeting times and locations, budgets, rates, ordinances, agendas, completed/upcoming projects, and other District affairs to Tulare County for posting on the County’s (RMA and/or LAFCO) website. Alpaugh Joint Powers Authority MSR Page 10-23 Tulare County LAFCO MSR G1_10 Alpaugh Jan06.DOC/55-7301-01