AgdaPkt 2019-05-20 Joint SA PFA - Laserfiche WebLink

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8.A. - Page 37 of 73 Attachment D established by the City Council of the City. The current sewer facilities fee for a new residential connection is $960. New non-residential connections pay a fee equal to $960 per each 2,000 square feet of building area. In addition, pursuant to the Joint Powers Agreement, the City also collects the Authority's treatment capacity charges and periodically remits payment of these fees to the Authority. SVCW connection fee revenues are not Net Revenues of the City's wastewater system available to pay the City's allocable share of debt service on the 2019 Notes. See "THE AUTHORITY AND THE WASTEWATER SYSTEM — Capacity Fees for New Development" in the forepart of this Official Statement. Future Capital Needs The City budgets funds annually for capital improvements to its sewer collection system including repairs, replacements, upgrades, and expansions. The City budgeted $7.1 million for sewer system capital funding in fiscal year 2018-19 and projects to budget approximately $6 million to $7 million annually through fiscal year 2024-25. The City anticipates fully funding its sewer system capital improvements on a pay-as- you-go basis. The City's 2013 update to its Sanitary Sewer Master Plan identified approximately $45,300,000 of recommended capital improvements to the City's wastewater collection system. The City conducts closed- circuit television inspections of the wastewater collection system to identify sources of infiltration and inflow and in general assess the condition of the system. Recommended capital improvements are adjusted periodically in light of real estate development and the physical condition of the collection system. The City currently anticipates funding its collection system capital needs on a pay-as-you-go, cash basis, and has increased its sewer rates accordingly. However, the City might consider the future use of debt financing if such financing were either needed to fund high-priority projects or if it made economic sense to construct a number of improvements in a given year rather than spread the capital improvement expenditures over a longer timeframe. Any such debt, if issued, would likely be issued on a senior basis to the obligation of the City to pay its allocable share of the Series 2019 Notes. Additionally, the City could be liable for funding some additional expenditures related to the monitoring or clean-up of soil with perchloroethylene ("PCE") contamination located under Sequoia Station, a retail shopping center located next to a Caltrain station. Through mediation, the City has received approximately $650,000 from the prior owner of a dry-cleaning business that used to be located near the site and was the source of the PCE. These funds are designated towards remedying the situation. The San Francisco Bay Area Regional Water Quality Control Board ("RWQCB") has jurisdiction over determining what actions need to be taken to remedy or monitor the situation. The RWQCB has determined that the City was partially responsible for the PCE contamination due to overflow/leaks from the City's sewer pipelines. In October 2014, the City contracted with an outside consultant to create a work plan that would propose steps to monitor the groundwater pollutant plume and develop a remedial action plan. In November 2016, the RWQCB approved the remedial action plan and required the City to submit quarterly groundwater monitoring reports. The City completed a small-scale remediation study at the shopping center site in 2018. The full-scale remedial action plan contains 3 strategies and is anticipated to cost close to $2 million. The City anticipates financing most of its remaining allocable share of costs for the Authority's capital improvement plan, equal to approximately $268.6 million from Fiscal Year 2018-19 through Fiscal Year 2025-26. The City anticipates financing these costs through the Series 2019 Notes, the WIFIA Loan and other long-term debt issued by the Authority. A-9 551