10/10/2018 FOCUSED MUNICIPAL SERVICE REVIEW
City of San Juan Capistrano Water and Wastewater Utilities
ORANGE COUNTY LOCAL AGENCY FORMATION COMMISSION
TABLE OF CONTENTS I. INTRODUCTION ...... 1 MSR Background and Determinations ...... 2 Focused MSR Overview ...... 4 Governance Alternatives ...... 7 Affected Agencies’ Profiles ...... 8 II. FOCUSED MSR DETERMINATIONS ...... 17 III. PLAN FOR SERVICE……………………………………………………………………………………………………………………………..45 IV. MSR Assessments (See Appendices 1 and 2)
LIST OF EXHIBITS AND APPENDICES Exhibit 1: City of San Juan Capistrano Vicinity Map ...... 5 Exhibit 2: City of San Juan Capistrano Population ..……..…………………….………………………………………………..…..6 Exhibit 3: City of San Juan Capistrano Profile ...... 9 Exhibit 4: City of San Juan Capistrano Sphere of Influence Map ...... 10 Exhibit 5: Moulton Niguel Water District Profile ...... 11 Exhibit 6: Moulton Niguel Water District Sphere of Influence Map ...... 12 Exhibit 7: Santa Margarita Water District Profile ...... 13 Exhibit 8: Santa Margarita Water District Sphere of Influence Map ...... 14 Exhibit 9: South Coast Water District Profile ...... 15 Exhibit 10: South Coast Water District Sphere of Influence Map ...... 16
Appendix 1: Focused MSR Infrastructure Assessment Appendix 2: Focused MSR Fiscal Assessment
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I. INTRODUCTION
The City of San Juan Capistrano Focused Municipal Service Review (MSR) contains seven key sections: MSR Background and Determinations, Focused MSR Overview, Governance Alternatives, Affected Agencies’ Profiles, Focused MSR Determinations, Plan for Service, and the Focused MSR Assessments (Infrastructure and Fiscal). To provide an overview of the MSR’s content and organization for the reader, a general description of each section is summarized below:
• MSR Background and Determinations – provides the background on the history and legislative requirements for MSRs and brief discussion of each of the MSR determinations. This section also summarizes the MSR processes conducted by Orange County Local Agency Formation Commission (OC LAFCO) since the early 2000s.
• Focused MSR Overview – provides an overview of the following: 1) application submitted by the City of San Juan Capistrano to explore the potential transfer of its water and wastewater operations and facilities to a public successor agency; and, 2) discussion of the focus study area’s location, land use, and population and the history of the City’s utility systems.
• Governance Alternatives – provides a discussion of the existing provision of water and wastewater services within the MSR focus area and an overview of the potential governance alternatives that may improve service efficiency in accordance with Government Code Section 56430(b).
• Affected Agencies’ Profiles – provides operational profiles for the City of San Juan Capistrano (CSJC) and each of the alternative service providers included in the MSR: Moulton Niguel Water District (MNWD), Santa Margarita Water District (SMWD), and South Coast Water District (SCWD). The profiles provide a snapshot of each agency’s key services, service area map, and an overview of the governance structure. This section also includes data on each agency’s water and wastewater infrastructure system.
• Focused MSR Determinations – includes the written statement of determinations required for MSRs in accordance with Government Code Section 56430. This section of the report includes a discussion of the MSR determinations for the CSJC and each of the three alternative service providers reviewed in the focused MSR. 1 | P a g e
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• Plan for Service – includes the requirements of a plan for service in accordance with Government Code Section 56653 and other recommended areas to be addressed by the three alternative service providers relative to the potential annexation of the CSJC’s utility systems.
• Focused MSR Assessments – provides in-depth analyses of the CSJC and three alternative service providers in the following areas and are intended to inform OC LAFCO, CSJC and affected agencies as to options regarding transferring of CSJC’s systems and services:
1) Infrastructure Assessment (Appendix 1) – an assessment of the CSJC’s water and wastewater infrastructure systems that is also intended to inform the OC LAFCO and CSJC as to options regarding the transferring of these infrastructure and operations to a public successor agency. This assessment focuses on MSR Determination #3, “the present and planned capacity of public facilities and adequacy of public services, including infrastructure needs or deficiencies.”
2) Fiscal Assessment (Appendix 2) – an assessment of the present fiscal conditions of the CSJC’s systems and potential alternative service providers. This assessment focuses on MSR Determination #4, “the financial ability of an agency to provide services” and MSR Determination #6, accountable and efficient governance structure and operational efficiencies, as related to the potential transfer of the CSJC’s utility systems.
MSR BACKGROUND AND DETERMINATIONS In 1997, the State Legislature convened a special commission to study and make recommendations to address California’s rapidly accelerating growth. The Commission on Local Governance for the 21st Century focused their energies on ways to empower the already existing County LAFCOs, originally established in 1963. One of the major new responsibilities of LAFCOs that came out of the effort of this Commission was to begin conducting regional studies of municipal services (Municipal Service Reviews, or MSRs) every five years. MSRs are a way to assist agencies and residents by: (1) evaluating existing municipal services and relevant alternatives, and (2) identifying any future constraints or challenges that may impact service delivery in the future.
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The Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 requires that LAFCOs review municipal services before updating the spheres of influence and to prepare a written statement of determination with respect to each of the following:
1) Growth and population projections for the affected area. 2) The location and characteristics of any disadvantaged communities within or contiguous to the sphere of influence. 3) Present and planned capacity of public facilities, adequacy of public services, and infrastructure needs or deficiencies related to sewers, municipal and industrial water, and structural fire protection in any disadvantaged, unincorporated communities within or contiguous to the sphere of influence. 4) Financial ability of agencies to provide services. 5) Status of, and opportunities for, shared facilities. 6) Accountability for community service needs, including governmental structure and operational efficiencies. 7) Any other matter related to effective and efficient service delivery, as required by commission policy.
To meet these statutory requirements, OC LAFCO has conducted multiple MSRs involving Orange County cities, special districts, the County and other municipal service providers. MSRs for the City of San Juan Capistrano and the three potential alternative service providers (Moulton Niguel Water District, Santa Margarita Water District and South Coast Water District) were conducted as a part of these processes. Information from these past studies, where relevant, were considered in completing this service review.
The MSR process does not require OC LAFCO or an affected agency to initiate changes of organization based on service review findings; it only requires that OC LAFCO make determinations regarding the provision of public services per Government Code Section 56430. MSRs are not subject to the provisions of the California Environmental Quality Act (CEQA) because they are only feasibility or planning studies for possible future action that OC LAFCO has not approved (Cal. Pub. Res. Code § 21150). The ultimate outcome of conducting a service review, however, may result in OC LAFCO updating a single or multiple spheres of influence and may be used in subsequent consideration by the Commission of a proposal for a change of organization or reorganization.
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FOCUSED MSR OVERVIEW On August 22, 2016, the City of San Juan Capistrano submitted an application to OC LAFCO requesting an MSR focusing on the potential transfer of the City’s water and wastewater facilities and operations to one or more public agencies. In the application, the City acknowledged that this process may involve the potential sale, transfer or lease of the infrastructure and operations. This focused MSR assesses the City’s systems and the potential transfer of the systems to one or a combination of the three independent special districts with service boundaries adjacent to the City: Moulton Niguel Water District (MNWD), Santa Margarita Water District (SMWD), and South Coast Water District (SCWD). This report is considered a “focused” MSR, in that it concentrates on specific municipal services, the water and wastewater utilities of the City of San Juan Capistrano, while performing the review and analysis necessary to make the determinations defined by state law for MSRs under Government Code §56430.
The review and analysis for this focused MSR required two studies: (1) an infrastructure assessment of the City’s and the alternative service providers’ systems and facilities, and (2) a fiscal assessment of the City’s system and the alternative service providers. As specialized technical expertise was required for these analyses, OC LAFCO commissioned independent professional consultants to perform these assessments. On December 13, 2017, after conducting a competitive selection process, the Commission approved agreements with Policy Consulting Associates to perform the infrastructure assessment and Berkson Associates to conduct the fiscal assessment. Those assessments and the associated scopes of work are key components of this report and the assessments are provided as Appendices 1 and 2.
STUDY AREA LOCATION, LAND USE AND POPULATION The City of San Juan Capistrano, which was incorporated in 1961, encompasses 14.4 square miles. The City is the site of the oldest settlement in Orange County, the Mission San Juan Capistrano, and is proud of its strong roots in its Spanish, Mexican and early Californian heritage. The area attracts tourists and visitors to its ocean views, historic landmarks and the many cultural events and activities that are sponsored year-round.
The City is located in southern Orange County, approximately one-half mile inland from the Pacific Ocean. The City is bordered by the City of San Clemente to the southeast, the City of Dana Point to the southwest, the City of Laguna Niguel to the west, the City of Mission Viejo to the north, and unincorporated area including Ladera Ranch and Rancho Mission Viejo to the northeast. Exhibit 1 provides a vicinity map of the City.
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EXHIBIT 1: SAN JUAN CAPISTRANO VICINITY MAP
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The land use in the City is primarily residential development and open space with small areas dedicated to commercial, agricultural and public or institutional use. The City’s General Plan, which was adopted in 1999 and amended in 2002, defines the various land uses within the City.
According to the California Department of Finance projections, the current population of the City of San Juan Capistrano is 36,262. The following chart also provides the City’s projected populations from the Center for Demographic Research’s Modified 2014 Orange County Projections:
EXHIBIT 2: CITY OF SAN JUAN CAPISTRANO POPULATION - CURRENT AND PROJECTED
2017 2020 2025 2030 2035 City of San Juan Capistrano 36,262 39,435 39,470 39,562 39,572
HISTORY OF UTILITY SYSTEMS
The City’s utility has provided domestic and recycled water to the areas within the City’s boundaries and a small portion of the City of Dana Point since 2004. Prior to that, the service was provided by the Capistrano Valley Water District (CVWD), which operated as a subsidiary district of the City. The merger of the CVWD and the City was approved by OC LAFCO in 1998 and the dissolution of the CVWD was recorded in 2004. There are 14 connections within the City’s boundaries, on Camino Capistrano, Rancho Capistrano, and Peppertree Bend, where Moulton Niguel Water District provides water services.
The utility also currently provides wastewater services throughout the City’s incorporated territory. The system was originally constructed in the 1920’s with the bulk of the mains constructed between 1960 and 1980. There are areas within the City which are serviced by other agencies. Moulton Niguel Water District serves the areas known as Hidden Creek Estates and the Hamilton Oaks Winery and several connections along Camino Capistrano, Rancho Capistrano, and Peppertree Bend. Additionally, South Coast Water District serves 143 parcels within the city limits, as well as through a connection to the Chiquita Land Outfall for brine disposal. The Infrastructure Assessment in Appendix 1 provides maps and details of the operations and facilities of the City’s water and wastewater systems.
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GOVERNANCE ALTERNATIVES Government Code Section 56430(b) provides that the Commission may assess various alternatives for improving efficiency and affordability of infrastructure and service delivery within and contiguous to the sphere of influence, including the consolidation of governmental agencies. Over the past several months, OC LAFCO staff and the two independent consultants, Policy Consulting Associates and Berkson Associates, have worked with the representatives of the key stakeholders (City of San Juan Capistrano, Moulton Niguel Water District, Santa Margarita Water District, and South Coast Water District) to gather the data and information necessary to prepare the MSR. The following summarizes agency positions and interests related to the San Juan Capistrano’s Water and Wastewater Utilities:
• The City of San Juan Capistrano, the current service provider, is considered the “status quo” alternative. However, the City filed an application expressing an interest to divest itself of the responsibilities and liabilities of the water and wastewater utilities. In the application, the City specified that the potential transfer be to another public agency.
• MNWD was identified by the City in its application as a potential successor agency for these services. The agency staff participated in the analysis process by attending the initial group stakeholder meetings, responding to data questionnaires from the consultants, providing clarifying information to the consultants through phone conversations and e-mail correspondence, and attending meetings with OC LAFCO staff and the consultants to review the administrative draft report. The agency is reviewed in this report as an alternative service provider.
• SMWD was identified by the City in its application as a potential successor agency for these services. The agency staff participated in the analysis process by attending the initial group stakeholder meetings, responding to data questionnaires from the consultants, providing clarifying information to the consultants through phone conversations and e-mail correspondence, and attending meetings with OC LAFCO staff and the consultants to review the administrative draft report and the district’s comment letter. The agency is reviewed in this report as an alternative service provider.
• SCWD was identified by the City in its application as a potential successor agency for these services. The agency staff participated in the analysis process by attending the initial group stakeholder meetings, responding to data questionnaires from the consultants, providing clarifying information to the consultants through phone conversations and e-mail correspondence,
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and attending meetings with OC LAFCO staff and the consultants to review the administrative draft report and the district’s comment letter. The agency is reviewed in this report as an alternative service provider.
• Irvine Ranch Water District (IRWD) was identified by the City in its application as a potential alternative provider for these services. The IRWD staff participated in the initial group stakeholder meetings; however, in a letter dated December 19, 2016, IRWD informed OC LAFCO that it was not interested in being considered as a potential service provider for water or wastewater service to the City.
AFFECTED AGENCIES’ PROFILES The following governmental entities are the affected agencies reviewed in this focused MSR:
❖ The City of San Juan Capistrano ❖ Moulton Niguel Water District ❖ Santa Margarita Water District ❖ South Coast Water District
The agency profiles, together with the sphere of influence maps, are provided as Exhibits 3 through 10.
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CITY OF SAN JUAN CAPISTRANO (CSJC)
EXHIBIT 3: CITY OF SAN JUAN CAPISTRANO PROFILE
General Information Agency Type General Law City Address 32400 Paseo Adelanto, San Juan Capistrano, CA 92675 Date Incorporated 1961 Key Services Administration, Planning & Zoning, Building & Safety, Code Enforcement, Public Works, Water, Wastewater, Parks and Recreation, Fire (Orange County Fire Authority), Police (Orange County Sheriff), Animal Control (County of Orange), and Library (County of Orange). Service Area Location South Orange County, bordered by the City of San Clemente to the southeast, the City of Dana Point to the southwest, the City of Laguna Niguel to the west, the City of Mission Viejo to the north, and unincorporated area including Ladera Ranch and Rancho Mission Viejo to the northeast. Square Miles 14.4 Land Uses Primarily residential; also includes commercial, industrial, institutional and open space uses. Population Served 36,262 (State Department of Finance, 2017) Last MSR/SOI Review 2/3/2013 Water Utility Connections Domestic: 11,572 Recycled: 70 Water Distributed Domestic: 5.44 million gallons per day Recycled: 0.27 million gallons per day Wastewater Utility Connections 9,590 Miles of Lines 125 Average Flows 2.18 million gallons per day Governance Governing Body Five-member City Council; District voting was adopted in 2016 and after 2018 the City will be completely voting by district. Meetings First and Third Tuesdays of every month at 5:00 p.m. City Hall, 32400 Paseo Adelanto, San Juan Capistrano Website www.sanjuancapistrano.org Agency Contact Benjamin Siegel, City Manager
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EXHIBIT 4: CITY OF SAN JUAN CAPISTRANO SPHERE OF INFLUENCE MAP
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MOULTON NIGUEL WATER DISTRICT (MNWD)
EXHIBIT 5: MOULTON NIGUEL WATER DISTRICT PROFILE
General Information Agency Type Independent Special District Address 27500 La Paz Road, Laguna Niguel, CA 92677 Principal Act California Water District Law, Division 13 of the Water Code of the State of California, commencing with Section 34000. Date Formed 1960 Key Services Water and recycled water distribution and wastewater collection. Service Area Location Serving the cities Aliso Viejo, Laguna Niguel, and portions of Laguna Hills, Mission Viejo, Dana Point, and San Juan Capistrano. Square Miles 37 Land Uses Primarily residential; also includes commercial, industrial, institutional and open space uses. Population Served 173,280 (Annual Report to the Drinking Water Program 2016) Last MSR/SOI Review 2/13/2013 Water Service Connections Domestic: 54,075 Recycled: 1,307 Water Distributed Domestic: 21.36 million gallons per day Recycled: 5.75 million gallons per day Wastewater Service Connections 51,200 Miles of Lines 540 Average Flows 9.44 million gallons per day Governance Governing Body Seven-member Board of Directors elected at-large to serve four- year terms. Meetings Third Thursday of every month at 6:00 p.m. MNWD Main Office Board Room 27500 La Paz Rd, Laguna Niguel, CA 92677 Website www.mnwd.com Agency Contact Joone Lopez, General Manager
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EXHIBIT 6: MNWD SPHERE OF INFLUENCE MAP
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SANTA MARGARITA WATER DISTRICT (SMWD)
EXHIBIT 7: SANTA MARGARITA WATER DISTRICT PROFILE
General Information Agency Type Independent Special District Address 26111 Antonio Parkway, Rancho Santa Margarita, CA 92688 Principal Act California Water District Law, Division 13 of the Water Code of the State of California, commencing with Section 34000. Date Formed 1964 Key Services Water and recycled water distribution and wastewater collection; operates advanced treatment facilities. Service Area Location Serving portions of the cities of Mission Viejo and Rancho Santa Margarita, San Clemente/Talega, and the communities of Las Flores, Coto de Caza, Ladera Ranch, Rancho Mission Viejo Sendero/Esencia. Square Miles 97.9 Land Uses Primarily residential; also includes commercial, industrial, institutional and open space uses. Population Served 165,000 (SMWD website - https://www.smwd.com/316/About-Us) Last MSR/SOI Review 2/13/2013 Water Service Connections Domestic: 54,214 Recycled: 1,534 Water Distributed Domestic: 19.16 million gallons per day Recycled: 7.28 million gallons per day Wastewater Service Connections 51,269 Miles of Lines 630 Average Flows 10.59 million gallons per day Governance Governing Body Five-member Board of Directors elected at-large to serve four-year terms. Meetings First Wednesday of every month at 7:00 p.m. and Second Friday after first Wednesday at 7:30 p.m. SMWD District Office Board Room 26111 Antonio Parkway, Rancho Santa Margarita, CA 92688 Website www.smwd.com Agency Contact Dan Ferons, General Manager General Date Formed Residential;
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PEXHIBIT 8: SMWD SPHERE OF INFLUENCE MAP
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SOUTH COAST WATER DISTRICT (SCWD)
EXHIBIT 9: SOUTH COAST WATER DISTRICT PROFILE
General Information Agency Type Independent Special District Address 31592 West Street, Laguna Beach, CA 92651 Principal Act California Water District Law, Division 13 of the Water Code of the State of California, commencing with Section 34000. Date Formed 1932 (Consolidated in 1999) Key Services Water and recycled water distribution and wastewater collection; operates advanced treatment facilities. Service Area Location Serving Dana Point, South Laguna, portions of San Clemente and San Juan Capistrano. Square Miles 8.3 Land Uses Primarily residential; also includes commercial, industrial and institutional uses. Population Served 35,000 (SWRCB Sanitary Survey, 2016) Last MSR/SOI Review 2/13/2013 Water Service Connections Domestic: 12,360 Recycled: 192 Water Distributed Domestic: 4.55 million gallons per day Recycled: 0.74 million gallons per day Wastewater Service Connections 17,801 Miles of Lines 140 Average Flows 2.96 million gallons per day Governance Governing Body Five-member Board of Directors elected at-large to serve four-year terms. Meetings Second and Fourth Thursday of every month: Second Thursday Meeting at 6:30 p.m. City of Dana Point Council Chambers at 33282 Golden Lantern, Dana Point, CA 92629
Fourth Thursday Meeting at 6:00 p.m. District Administrative Office, 31592 West Street, Laguna Beach, CA 92651 Website www.scwd.org Agency Contact Rick Shintaku, Acting General Manager
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EXHIBIT 10: SOUTH COAST WATER DISTRICT SPHERE OF INFLUENCE MAP
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II. FOCUSED MSR DETERMINATIONS The potential transfer of the City of San Juan Capistrano’s water and wastewater utility systems to a public agency would require an agency sphere of influence review and update and annexation. In order to update an agency sphere of influence, the Commission, in accordance with Government Code Section 56430, is required to conduct a municipal service review and prepare a written statement of determinations for the MSR focus area. The statement of determinations for each of the agencies discussed in this focused MSR report is presented below.
DETERMINATION I
GROWTH AND POPULATION PROJECTIONS FOR THE AFFECTED AREA.
According to data provided by the California Department of Finance, the current population of the City of San Juan Capistrano is 36,262. The expected growth within the City will be modest over the next 15 years, increasing by 3,310 residents by 2035, according to the California State University, Fullerton, Center for Demographic Research. The MNWD and SCWD service territories are largely built out and SMWD is expected to serve approximately 35,000 more people by 2035.
The following chart includes both city and agency service populations for agencies discussed in this focused MSR report. OC LAFCO noted no issues related to population growth for the focused area.
MSR Focused Area Population Agency Current 2035 San Juan Capistrano 36,262 39,572 Moulton Niguel WD 173,280 176,539 Santa Margarita WD 165,000 200,000 South Coast WD 35,000 37,495 Focused Area Population J
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DETERMINATION II
THE LOCATION AND CHARACTERISTICS OF ANY DISADVANTAGED UNINCORPORATED COMMUNITIES WITHIN OR CONTIGUOUS TO THE SPHERE OF INFLUENCE
OC LAFCO confirmed that there are no disadvantaged unincorporated communities (DUCs)1 within or contiguous to the spheres of influence of any of the affected agencies discussed in this focused MSR. Therefore, no issues related to DUCs were noted. However, in its Housing Element, the City recognizes that, according to the 2005-2009 Comprehensive Housing Affordability Strategy prepared by the US Department of Housing and Urban Development, more than 11 percent of the City’s total households are classified as extremely low income (0-30% of average monthly income (AMI)), another 11 percent of the City’s total households are classified as very low income (31-50% of AMI), and 16 percent are classified as low income (51%- 80% of AMI).2 In its Housing Element, the City identifies programs to meet the housing needs of residents of all income levels.
DETERMINATION III
PRESENT AND PLANNED CAPACITY OF PUBLIC FACILITIES, ADEQUACY OF PUBLIC SERVICES, AND INFRASTRUCTURE NEEDS OR DEFICIENCIES INCLUDING NEEDS OR DEFICIENCIES RELATED TO SEWERS, MUNICIPAL AND INDUSTRIAL WATER, AND STRUCTURAL FIRE PROTECTION IN ANY DISADVANTAGED, UNINCORPORATED COMMUNITIES WITHIN OR CONTIGUOUS TO THE SPHERE OF INFLUENCE.
A central component of this focused MSR includes an infrastructure assessment prepared by Policy Consulting Associates. In general, the infrastructure assessment finds that each of the three potential successor agencies (MNWD, SMWD, and SCWD) efficiently provide water and wastewater services to their respective service populations. Any recommendation of an agency as the successor agency for the City’s water and wastewater systems is not a reflection of a deficiency on the part of the other districts. A summary of the assessment’s findings relative to this
1 The term “disadvantaged unincorporated community” (DUC) is defined as a fringe, island, or legacy community in an unincorporated territory in which the median household income is 80 percent or less than the statewide median household income. US Census data was used from the American Communities Survey, 2011-2015 Five-Year Estimates. 2 City of San Juan Capistrano, 2014-2021 Housing Element, adopted 1/21/14 and revised 9/19/17, page 19. 18 | P a g e
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determination for each of the agencies discussed in the focused MSR follows.
CITY OF SAN JUAN CAPISTRANO (CSJC) The assessment found the following for the City of San Juan Capistrano’s water and wastewater systems:
Water:
• While CSJC’s domestic water system has sufficient infrastructure capacity to adequately serve all existing connections, insufficient fire flow to meet fire code requirements at several locations is a capacity concern.
• While the recycled water system has sufficient system capacity within the system to provide services to existing connections, the CSJC is operating under recycled water supply constraints and must blend the recycled water with groundwater in order to serve all customers.
• As a result of the shift from relying on importing to pumping local groundwater, the CSJC now has more flexibility with its water sources to shift resources as needed. Therefore, it can be determined that the CSJC sources of domestic water supply are acceptable to serve current and future population projections, in addition to weathering a three-year drought.
• Expansion of the recycled water system will be necessary to meet future demands; however, any plans for expansion of the recycled water system will be dependent upon availability of funding, such as grant funds and availability of a reliable recycled water supply.
• Generally, the CSJC meets standards defined for adequately operated water systems with regard to distribution system integrity, drinking water quality, degree of water reserves for emergency purposes, and preventative maintenance practices. Improvements to the system should be made to ensure adequate fire flows throughout the system. Additionally, the CSJC should implement a tracking system of response times to customer reports of issues and the number and type of complaints related to water services.
• The CSJC has appropriately identified and planned for its water related capital improvement needs in the Recycled Water Master Plan, the HDR report, and the citywide Capital Improvement Plan; however, capital planning does not assure that adequate funding is allocated to fund all necessary projects.
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• There are indications of deferred maintenance in the City’s water system. The most significant infrastructure needs for the system are improvements to the joint regional water supply, pump station component replacements and line realignment, and relocation of two segments of pipeline. Additionally, approximately 14.5 percent of the domestic distribution system is beyond its useful life standard as defined by the CSJC, approximately 88 percent of the pump stations' mechanical and electrical equipment have exceeded their useful age, and nearly all of the reservoirs exceed useful life ranges. The CSJC has identified 30 miles of pipeline that is in need of replacement over the next 20 years.
Wastewater:
• The CSJC’s wastewater system has sufficient collection system capacity and treatment capacity to serve existing and anticipated projected demand.
• The CSJC’s wastewater services are considered to be adequate based on the low rate of sanitary sewer overflows, high regulatory compliance, and preventative maintenance practices. Improvements are necessary to mitigate the City’s high rate of infiltration and inflow.
• In the next 10 years, approximately 12 percent of all of CSJC’s pipes will require renewal and 11 percent of all manholes will require minor renewals.
• CSJC is also responsible for a share of capital improvements at the SOCWA Jay B. Latham Treatment Facility.
Full details of each area noted above are referenced in the infrastructure assessment report.
MOULTON NIGUEL WATER DISTRICT (MNWD) Moulton Niguel Water District encompasses approximately 37 square miles, serving 173,280 in population. With most of its service area nearly built out, the District operates over 700 miles of domestic water distribution pipelines and 30 pump stations. The District’s recycled water system consists of 150 miles of distribution pipelines and 13 pump stations. The District owns and maintains approximately 540 miles of wastewater pipelines and 19 lift stations. MNWD has planned for its water and wastewater infrastructure through: the Urban Water Management Plan,
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capital improvement programs, and other local policies.
The infrastructure assessment identifies MNWD as one of the potential agencies to assume the CSJC’s water and wastewater systems. Relative to this determination, the assessment cites the following key factors to support MNWD as a potential successor agency:
• As a larger agency, MNWD has the operational capacity to take on additional systems and population based on its system size, water reserves, and the management of the adequate and reliable condition of the District’s current system.
• MNWD is exploring options involving diversifying water supply which may result in a more reliable water supply and economies of scale for City residents.
• MNWD makes use of remote meter reading technology for efficiency, which could benefit city residents by lowering costs and increasing access to water use data.
• MNWD’s customer satisfaction rate demonstrates that it is a responsive agency.
• MNWD has detailed adopted policies for its governance and operations.
• MNWD currently provides water and wastewater services within a portion of the City of San Juan Capistrano, in addition to delivering imported and recycled water to the City.
The transfer of the City’s utility systems to MNWD would require an application and plan for service for a sphere of influence amendment and annexation to the District. In accordance with Government Code Section 56653, the plan for service shall generally include the level range and financing of services, an indication of upgrades to sewer and water facilities and when services can feasibly be extended. Specific and additional components of a plan for service for the transfer are included in a separate section (Plan for Service) of this review. Additionally, OC LAFCO may impose terms and conditions as part of any change of organization or reorganization.
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SANTA MARGARITA WATER DISTRICT (SMWD) Santa Margarita Water District encompasses approximately 62,674 acres, serving 165,000 in population. Expected to grow to 200,000 customers served by 2035, the District owns and operates 626 miles of potable water mains, 34 storage tanks, 21 pump stations, and other facilities. The District’s recycled water system includes 129 miles of main, eight storage tanks, two open reservoirs, and 14 pump stations.
The District owns and operates 630 miles of sewer lines, 21 lift stations, two wastewater treatment plants with advanced water treatment for recycling, and capacity in three reclamation plants. SMWD also operates two water reclamation plants on behalf of other agencies and four urban return flow water recovery facilities. SMWD has planned for its water and wastewater infrastructure through: the Urban Water Management Plan, capital improvement programs, and other local policies.
The infrastructure assessment identifies SMWD as one of the potential agencies to assume the CSJC’s utility systems. Relative to this determination, the assessment cites the following key factors to support SMWD as a potential successor agency:
• As a larger agency, SMWD has the operational capacity to take on additional systems and population based on its system size, water reserves, and the management of the adequate and reliable condition of the District’s current system.
• SMWD is exploring options involving diversifying water supply, which may result in a more reliable water supply and economies of scale for City residents.
• SMWD shares a common interest with the City regarding groundwater and the City’s Groundwater Recovery Plant (GWRP).
• SMWD’s groundwater recharge project could utilize and maximize the GWRP’s capacity to process added groundwater, which may lessen the City’s reliance on imported water.
• SMWD’s customer satisfaction rate demonstrates that it is a responsive agency.
• SMWD currently provides the following services to the City: delivery of imported and recycled water, meter reading, and emergency services.
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The transfer of the City’s utility systems to SMWD would require an application and plan for service for a sphere of influence amendment and annexation to the District. In accordance with Government Code Section 56653, the plan for service shall generally include the level range and financing of services, an indication of upgrades to sewer and water facilities and when services can feasibly be extended. Specific and additional components of a plan for service for the transfer are included in a separate section (Plan for Service) of this review. Additionally, OC LAFCO may impose terms and conditions as part of any change of organization or reorganization.
SOUTH COAST WATER DISTRICT (SCWD) South Coast Water District encompasses approximately 10 square miles, serving 35,000 in population. Largely built-out, the District’s water distribution system is comprised of 158 miles of pipe, 13 reservoirs, nine pump stations, and a groundwater recovery facility. The District’s recycled water system includes 20 miles of pipe, three pump stations, two reservoirs, and a wastewater treatment and reclamation facility. The District owns and maintains 140 miles of sewer lines, 13 lift stations, three miles of force mains, and a two-mile interceptor line. The District’s long-term capital budget is based on 100-year projections for future rehabilitation and replacement of the system and proposes a combination of capital reserves and bond financing to finance the long-term infrastructure needs of the system.
The infrastructure assessment identifies SCWD as one of the potential agencies to assume the CSJC’s utility systems. The infrastructure assessment notes the following key factors relative to this determination and SCWD’s assuming of the City’s utility systems:
• SCWD’s system is similar to the City’s utility system in the types of systems (water, recycled water, groundwater and wastewater), size of operations, and population served.
• SCWD is exploring options to diversify its water supply, which may result in a more reliable water supply and economies of scale for City residents.
• SCWD has experience in operating wells and groundwater treatment facilities.
• The close proximity of SCWD’s operational headquarters to the City 23 | P a g e
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may allow for faster response times to complaints and emergencies.
• SCWD’s customer satisfaction rate demonstrates that it is a responsive agency.
• SCWD currently operates the Joint Regional Water Supply System, which delivers MWDSC imported water over 30 miles to the City and MNWD.
• SCWD provides wastewater services within a portion of the City and receives the City’s wastewater into its collection system.
• SCWD sees the potential of mutual benefits for the District and the City, as the sole agency leading the proposed Doheny Ocean Desalination Project, which may lessen the region’s reliance on imported water.
However, the infrastructure assessment also notes that transferring of the City’s utility systems would immediately double the size of SCWD and may have an effect on the District’s resource capacity to accommodate the City’s water and wastewater system, which requires maintenance to improve its integrity. The assessment further notes that economies of scale and greater capability to integrate the City’s system may be better realized through an agency with a larger size of operations.
The transfer of the City’s utility systems to SCWD would require an application and plan for service for a sphere of influence amendment and annexation to the District. In accordance with Government Code Section 56653, the plan for service shall generally include the level range and financing of services, an indication of upgrades to sewer and water facilities and when services can feasibly be extended. Specific and additional components of a plan for service for the transfer are included in a separate section (Plan for Service) of this review. Additionally, OC LAFCO may impose terms and conditions as part of any change of organization or reorganization.
DETERMINATION IV
FINANCIAL ABILITY OF AGENCIES TO PROVIDE SERVICES.
A central component of this focused MSR includes a fiscal assessment prepared by Berkson Associates. The assessment notes that current issues such as: the drought, water supply, conservation efforts, governmental 24 | P a g e
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regulations, retirement liabilities and catastrophic events, may each present future uncertainties for the City’s water and wastewater utility systems. This determination highlights the findings of the fiscal assessment’s discussion of the conditions and resources of the CSJC and each of the alternative service providers relative to: 1) average household bills, 2) property tax revenues, 3) capital planning and expenditures, 4) outstanding debt, coverage and financial capacity, 5) pension obligations, 6) reserves, and 7) employees, salaries and benefits.
In general, the fiscal assessment finds all three of the alternative service providers noted in this MSR to be generally in a better position than CSJC to address water/wastewater financing needs, if the CSJC system is annexed. The two larger alternative service providers, MNWD and SMWD, due to their size, will typically realize economies of scale and service improvements to CSJC without significantly expanding existing planning, operations, and administrative staff. Resulting efficiencies could help to improve funding of reserves and capital improvements needed by the CSJC system. The magnitude of these savings was not analyzed as part of this work and may be studied further by the potential successor agency or agencies.
Below is a summary of the key findings for the City and the alternative providers relative to this determination:
1) Average Household Bills Lower rates and utility bills benefit residents and provide capacity to finance improvements. Low rates of alternative service providers improve the potential to annex CSJC without significant impacts on ratepayers of the alternative provider. Each agency's rates are highly dependent on a number of local conditions such as topography, age of the system, and offsetting of costs by property tax revenues. Average bills also depend on individual household demand and conservation.
CITY OF SAN JUAN CAPISTRANO (CSJC) CSJC average household water and wastewater charges are estimated at $146 monthly per household, partly influenced by the lack of significant property tax available to cover fixed costs, unlike the alternative service providers.
MOULTON NIGUEL WATER DISTRICT (MNWD) MNWD's average household water and wastewater charges are estimated to be $79, partly the result of its property tax revenues reducing the need for rate revenue. 25 | P a g e
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SANTA MARGARITA WATER DISTRICT (SMWD) SMWD's average household water and wastewater charges are estimated at $99 monthly.
SOUTH COAST WATER DISTRICT (SCWD) SCWD's average monthly bills are estimated at $134 monthly ($168 monthly after penalties).
2) Property Tax Revenue
A strong property tax revenue base (each agency’s share of the 1% general levy) reduces utility rates and improves a district's ability to address financial needs without significant ratepayer burdens. Property taxes reduce the need to generate revenue from rates and charges. Property tax revenue can be used for any purpose, unless allocated to specific purposes by the district. However, it is noted that if legislative efforts succeed to reduce property tax revenues to special districts, funding of districts’ operations and capital improvements may be adversely affected.
CITY OF SAN JUAN CAPISTRANO (CSJC) CSJC receives approximately $1.06 million of property tax annually, or about 4 percent of total water enterprise revenues. It is likely that any of the City’s property tax received on behalf of the former Capistrano Valley Water District and allocated to utility debt and lease obligations would be transferred to an annexing agency. However, further legal review is necessary to verify constraints, if any, on the allocation and use of this property tax.
MOULTON NIGUEL WATER DISTRICT (MNWD) MNWD receives approximately $27.6 million of property tax revenue, or 30 percent of total revenues.
SANTA MARGARITA WATER DISTRICT (SMWD) SMWD receives approximately $7.5 million of property tax revenue, or 9 percent of total revenues.
SOUTH COAST WATER DISTRICT (SCWD) SCWD receives approximately $4.4 million of property tax revenue, or 12 percent of total revenues.
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3) Capital Planning and Expenditures
Capital expenditures should keep pace with system depreciation. Low expenditures may reflect either a relatively new system, or inadequate system replacement. A high ratio may indicate “catch-up” to remedy deferred maintenance.
CITY OF SAN JUAN CAPISTRANO (CSJC) CSJC has appropriately identified needed improvements, including replacement of aging system components, in its current CIP; however, improvements are funded annually on a "pay as you go" basis with minimal reserves available for future needs. The CSJC budget notes that the water and sewer capital replacement programs will require additional funding from water and sewer ratepayers to meet the capital improvement needs of the City's water and sewer system. The City could require at least eight years of positive and growing cash flows in order to build its reserves to recommended levels while also funding capital improvements.
ALTERNATIVE PROVIDERS (MNWD, SMWD, AND SCWD) All of the alternative service providers have Capital Improvement Programs extending four years to ten years into the future. MNWD's average expenditures represent about ten percent of MNWD's net asset value of their assets; SMWD average expenditures represent about 2 percent of the District’s net asset value of its assets; and SCWD’s average expenditures represent about 7 percent of the net asset value of the District’s assets.
Additionally, all districts undertake long-term financial planning and forecasting which can be found in agenda reports and budget documents posted on district websites. MNWD prepares a separate financial forecast document that is easily accessible on their website.
4) Outstanding Debt, Coverage, and Financial Capacity
Debt capacity provides the ability to fund capital improvements and amortize the costs over time, minimizing impacts on rates.
CITY OF SAN JUAN CAPISTRANO (CSJC) CSJC's debt coverage ratio currently exceeds the minimum 1.0-1.25 required for its debt. In prior years its coverage was inadequate, and its credit rating was downgraded (e.g., to S&P 'A-'), reducing debt capacity 27 | P a g e
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by requiring greater revenues to pay higher interest rates. In 2017, Fitch affirmed its “A” rating. ALTERNATIVE PROVIDERS (MNWD, SMWD, AND SCWD) All of the alternative service providers' debt coverage ratios exceed minimum standards: MNWD (2.4), SMWD (13.5) and SCWD (3.3). Each of the potential providers should be able to provide adequate coverage for existing CSJC utility debt that may be assumed by an alternative service provider, assuming CSJC property tax and other revenues required for debt payment are transferred to the new provider along with the debt.
MNWD, SMWD, and SCWD have a strong financial rating (e.g., S&P 'AA+').
5) Pension Obligations
Pension obligations are likely to increase in future years, reducing revenues available for services and/or requiring rate increases. Unfunded liabilities increase the potential for future cost increases.
CITY OF SAN JUAN CAPISTRANO (CSJC) CSJC's pension liability is 69 percent funded for all City employees; additional analysis will be required to determine liabilities attributable to any employees transferred as a result of an annexation.
ALTERNATIVE PROVIDERS (MNWD, SMWD, AND SCWD) Pension liabilities vary among the alternative providers, including: MNWD ($17.6 million liability, 74.6% funded), SMWD ($27.2 million liability, 68.2% funded), and SCWD ($7.8 million liability, 84.3% funded).
6) Reserves
Adequate reserves are essential to rate stability and to meet debt obligations while minimizing interest rates. Reserves also are necessary to assure funding of needed major repairs and infrastructure replacement, and for dealing with contingencies.
CITY OF SAN JUAN CAPISTRANO (CSJC) CSJC reserves are currently inadequate and do not meet CSJC targets.
ALTERNATIVE PROVIDERS (MNWD, SMWD, AND SCWD) All three alternative providers maintain reserves adequate to absorb the
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CSJC system and maintain reserves for the larger system. All three agencies' unrestricted reserves exceed 100 percent of one year of operating expenditures: MNWD (111%), SMWD (107%), SCWD (177%). Any proposed use of reserves to fund transition or other costs associated with the transfer of the CSJC system should be described in the District’s Plan for Service.
7) Employees, Salaries and Benefits
CITY OF SAN JUAN CAPISTRANO (CSJC) AND ALTERNATIVE SERVICE PROVIDERS (MNWD, SMWD AND SCWD) CSJC utility employees total 26 positions (approximately 20 operational positions), although some of their time is shared with non-utility departments. This is the fewest number of employees compared to all of the alternative service providers.
The feasibility of retaining current CSJC utility staff following an annexation depends on the alternative service providers’ willingness, as well as collective bargaining agreements, and other agency rules and policies.
DETERMINATION V
STATUS OF, AND OPPORTUNITIES FOR, SHARED FACILITIES.
The following is a list of shared opportunities and facilities and agreements involving the City’s utility systems and MNWD, SMWD, and SCWD:
• South Orange County Wastewater Authority (SOCWA) – the CSJC, MNWD, SMWD, and SCWD are participating members and there are various SOCWA agreements. • San Juan Basin Authority (SJBA) – the CSJC, MNWD, SMWD, and SCWD are participating members and there are various SJBA agreements including agreements with SMWD to provide financial and accounting services for the SJBA and with SCWD to provide well maintenance, data logging and well reading services. • CSJC agreement with San Juan Hills Golf Club to provide irrigation water supplemented with domestic water. • Recycled Water Purchase Agreement between the CSJC and MNWD. • Licenses for wastewater system interconnections between CSJC and MNWD. • Agreement for water interconnections between CSJC and MNWD. 29 | P a g e
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• Agreement for sewer services by the City to approximately four parcels within MNWD’s service area. • Water purchase agreement from MNWD by the CSJC. • Emergency water interconnection agreements between CSJC and SCWD. • Emergency water interconnection agreement between CSJC and SMWD. • Emergency water interconnection between CSJC and City of San Clemente. • A joint exercise of powers agreement to operate and maintain the joint transmission facilities. • Capacity agreements for the Allen-McColloch Pipeline. • Agreements for service between MNWD and the CSJC for Hidden Creek Estates and the Hamilton Oaks Winery. • Contract for Meter Reading Services between CSJC and SMWD. • Agreement for Capacity in SMWD's Upper Chiquita Reservoir. • South County Pipeline Operation and Maintenance Agreement. • Service Connection No. 4 Agreement with SMWD. • Settlement agreement between CSJC, SJBA, and San Juan Hills Golf Club. • SMWD provides emergency response services to CSJC and MNWD has provided emergency response services to CSJC. • CSJC is currently in discussions with SMWD for formal agreement for the following services: cleaning, video, and inspection of its wastewater system. • SCWD provides wastewater services to 143 parcels within the CSJC. • SCWD provides maintenance services for the CSJC storm drain system. • Agreement for SCWD to operate the Joint Regional Water Supply System (JRWSS) providing water to CSJC and MNWD. • MNWD established a smart water meter network that may provide CSJC with the ability to easily convert from manual meters to smart meters.
The majority of the agreements involve the CSJC and the three districts addressed in this focused MSR and will need to be addressed as part of the process to transfer the CSJC utility systems.
Additional shared services opportunities, facilities and agreements identified by the districts include:
• MNWD led the creation of the California Data Collaborative, which focuses on compiling water industry data and developing standards for that data. This work enables better collaboration, helps public agencies make informed decisions and facilitates leading research and private sector volunteer work. • MNWD organized a working group, including five local cities, the County of Orange, and local non-governmental environmental organizations to disseminate lessons learned in urban runoff reduction and evaluate the
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impact of new strategies to reduce irrigation over-watering. • SMWD provides operational services by contract for the Rancho Mission Viejo Private Domestic Water System, including all regulatory reporting. • SMWD provides operational services by contract for the Nichols Institute water and wastewater systems, including all regulatory reporting. • SMWD provides management, financial and engineering services to the Fenner Valley Water Authority by agreement. • SMWD provides management and financial services to the Dana Point Authority by agreement. • SMWD provides joint trench safety training with the Orange County Fire Authority. • SCWD provides Operation & Maintenance of the Salt Creek Ozone Facility to the City of Dana Point by agreement since 2005. • SCWD provides sewer lift station inspection and cleaning services and sand trap cleaning services by agreement at Strands Beach for the City of Dana Point. • SCWD provides sewer maintenance services by agreement for the City of Dana Point Community Center. • SCWD provides Treatment Facility Operation Services for the Poche Clean Beach Project to the County of Orange by agreement since 2009. • SCWD provides bi-annual maintenance and inspection services by agreement (lift stations and sewer collection system) at Doheny State Beach for the California Department of Parks and Recreation. • SCWD provides quarterly sewer maintenance and cleaning services to private establishments and utilities on a time and materials basis.
DETERMINATION VI
ACCOUNTABILITY FOR COMMUNITY SERVICE NEEDS, INCLUDING GOVERNMENTAL STRUCTURE AND OPERATIONAL EFFICIENCIES.
CITY OF SAN JUAN CAPISTRANO (CSJC) The City was incorporated under the general laws of the State of California in 1961 and is governed by a five-member City Council. The City is currently transitioning to district elections, whereby each of five districts within the City will elect a council member. This process began with the election in 2016. Council members serve staggered, four-year terms. The Mayor and Mayor Pro Tem are selected by the City Council members and serve a one-year term. The City Manager is appointed by the City Council to carry out the policies and direction of the City Council, and to oversee the day-to-day operations of the City and appoint department 31 | P a g e
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heads. The City Council meets the 1st and 3rd Tuesday of every month at 5 p.m. The City maintains a comprehensive and resourceful website with access to City Council agendas, financial reports, and other City information.
MOULTON NIGUEL WATER DISTRICT (MNWD) MNWD is an independent special district established in 1960 as a California Water District under the provisions of the state of California Water Code. MNWD is governed by a seven-member publicly elected Board of Directors who are elected at-large for four-year terms. The Board meets on the third Thursday of each month at 6 p.m. at the District’s main offices in Aliso Viejo. The District maintains a comprehensive and resourceful website with access to District agendas, financial reports, and other District information.
SANTA MARGARITA WATER DISTRICT (SMWD) SMWD is an independent special district established in 1964 as a California Water District under the provisions of the state of California Water Code. SMWD is governed by a five-member publicly elected Board of Directors who are elected at-large for four-year terms. The Board meets on the first Wednesday of each month at 7 p.m. and the second Friday after the first Wednesday of each month at 7:30 a.m. at the District’s main offices in Rancho Santa Margarita. The District maintains a comprehensive and resourceful website with access to District agendas, financial reports, and other District information.
SOUTH COAST WATER DISTRICT (SCWD) SCWD is an independent special district established in 1999 as a California Water District under the provisions of the State Water Code. SCWD is governed by a five-member publicly elected Board of Directors who are elected at-large for four-year terms. The Board meets on the second and fourth Thursday of each month. The meeting on the second Thursday of the month is held at 6:30 p.m. in the City Council Chambers in Dana Point. The meeting of the fourth Thursday of the month is held at 6:00 p.m. at the District’s Administrative Office in Laguna Beach. The District maintains a comprehensive and resourceful website with access to District agendas, financial reports, and other District information.
CSJC residents would represent a minority following integration with two of the alternative service providers, or about 17-19 percent of total residents of a combined MNWD/CSJC or SMWD/CSJC. In the case of integration with SCWD, CSJC residents would comprise about 50 percent of the population of the combined areas. If MNWD, SMWD, or SCWD switch to a system of division elections, CSJC representation could be affected if annexed; potential changes are 32 | P a g e
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unknown at this time.
DETERMINATION VII
ANY OTHER MATTER RELATED TO EFFECTIVE OR EFFICIENT SERVICE DELIVERY, AS REQUIRED BY COMMISSION POLICY.
This determination includes a discussion of each of the potential alternative service providers’ participation in efforts and projects involving water reliability that may potentially impact and provide benefits to the CSJC’s residents currently or as part of a future change of organization or reorganization. These discussions include efforts involving the San Juan Basin Authority, the San Juan Watershed and other water reliability projects. It should be noted that the potential impacts and benefits of these efforts and projects were not analyzed as part of this MSR.
1) San Juan Basin Authority (SJBA) The mission of the SJBA is to develop and maintain a reliable, high quality, economical local water supply for the residents in the San Juan Basin by maximizing water use through management of the local ground and surface water of San Juan Creek and its tributaries, with due consideration for preservation, enhancement, and conservation of the environment, including, but not limited to, the natural resources, fish and wildlife, infrastructure improvements, and the cultural heritage of the area. The SJBA was created in 1971 as a joint powers authority and members are the City of San Juan Capistrano (CSJC), Moulton Niguel Water District (MNWD), Santa Margarita Water District (SMWD), and South Coast Water District (SCWD).3
MOULTON NIGUEL WATER DISTRICT (MNWD) The following includes a summary of MNWD’s involvement in the SJBA’s projects4:
a. Active Member of the SJBA
MNWD currently is an active contributing member of the San Juan Basin Authority and holds a seat on its Board of Directors. The San Juan Basin Authority provides the Salt Nutrient Monitoring Plan, which is a regulatory requirement for the MNWD’s recycled water program. MNWD has continued to follow and support the
3 http://www.sjbauthority.com/. 4 August 8 Response from MNWD. 33 | P a g e
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development of various efforts the San Juan Basin Authority is leading.
Efforts to study the basin and the current and future yield of the basin are critical given the City’s historic investments into the San Juan Groundwater Basin. As a proponent of data-driven policy decisions, MNWD is working with the County of Orange and local cities to develop tools for adaptive planning and customer engagement to reduce urban return flows and their impact on the watershed. These tools would be extremely beneficial to the San Juan Basin Authority and the City of San Juan Capistrano. They would facilitate future planning activities, reduce regulatory compliance costs, and improve the environmental health of the watershed.
b. Real-Time Watershed Smart Network MNWD is working collaboratively to deploy a real-time watershed smart network with 15-minute interval flow data in the Aliso Watershed, with sensors in creeks and storm drain channels. This network, which would serve as a scalable pilot program could better inform decisions relating to investments for the San Juan Watershed. Most of the flow monitoring in South Orange County for watershed planning was done many years ago. Better real-time data enables adaptive decision-making to right size infrastructure to meet changing demands. Currently, South Orange County watershed flows in both the Aliso and San Juan Watersheds are dominated by urban runoff caused by over-irrigation during most of the year, with very little intermittent precipitation. Streams in South Orange County would only naturally flow a month or two in an average year without urban runoff, but presently flow year-round.
With the State of California recently enacting legislation to “make conservation a California way of life” and requirements to reduce and eliminate unnatural flows into streams and the ocean, developing better data sets to understand the change in urban return flows into local creeks and streams will assist the San Juan Basin Authority and the City of San Juan Capistrano with their future capital investment decisions. MNWD takes its stewardship of ratepayer funds seriously and would hold the same commitment for the ratepayers of the City of San Juan Capistrano. The investments related to the deployment and use of real-time data come at a fraction of the cost of traditional capital infrastructure projects. This data- driven approach has saved District customers over $20 million. That financial commitment was previously earmarked for seasonal recycled water storage, but was found to be unnecessary based on 34 | P a g e
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data analysis that was conducted by scientists at Netflix. Netflix is one of the California Data Collaborative partners MNWD works with. With urban runoff trending downward and statewide regulatory agencies efforts to further reduce runoff, it is imperative that the San Juan Basin Authority continue to identify and develop tools that will provide adaptive planning and help the Authority make the best informed and cost-effective decisions.
SANTA MARGARITA WATER DISTRICT (SMWD) The following includes a summary of SMWD’s involvement in the SJBA’s projects5:
a. San Juan Bedrock Barrier Investigation This project was identified by District staff based on the information developed during the development of the San Juan Watershed project. The identification of the existence of a subsurface hydraulic barrier will create improved opportunities for both South Coast Water District and the City of San Juan Capistrano’s groundwater recovery projects. The barrier, if it exists, may allow SCWD the ability to pump the near ocean groundwater basin significantly harder without the concern that it may be inducing sea water intrusion on the inland groundwater basins. This barrier would also allow the CSJC the ability to pump their portion of the basin harder due to reduced or eliminated concern of negative impacts on SCWD’s ability to receive and pump groundwater.
Due to the significant beneficial impacts to the existing uses and the possible future increased groundwater harvesting associated with the San Juan Watershed Project that could occur if this barrier does exist, the District has contributed over $85,000 towards the construction of two new monitoring wells on either side of the assumed barrier location and is actively involved in developing the pump testing of the respective sides of the barrier and monitoring the results of this pumping.
b. South Orange County Wastewater Authority (SOCWA) – Triennial Review SOCWA is the permit holder for recycled water in the Region and the District works in conjunction with and in addition to SOCWA’s efforts. The District has been the lead member agency in forwarding the Regional Water Quality Control Basin’s Triennial Review process and the prioritization of efforts that further the use of recycled water in the San Juan Watershed. The effort expended to date is allocating District resources, including an outside consultant, to meet with Regional
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Board staff, present to the Regional Board at public meetings and develop a methodology which will ultimately lead to the Board acting to address various constraints on expanding the use of recycled water within the Watershed.
c. WEI 2017 San Juan Basin Monitoring Contract The District has been and continues to be a very active participant in advocating expanded monitoring in the San Juan Basin to establish a baseline to be used for the redefining of the amount of water in storage within the basin, the amount of water that may be introduced into the usable portion of the Basin from runoff within the Watershed, the quality of the surface and groundwater that currently exists and is predicted to occur following implementation of various land use plans and water facility projects.
d. South Orange County Watershed Management Area (SOCWMA) Membership The District is an active member of SOCWMA for providing input relating to the land area of the Watershed that is located within the District and what the impacts may be from the implementation of various land developments or facilities that may be constructed in the upstream portions of the Watershed. The District has been successful in developing a variety of projects that are beneficial to the Basin which is demonstrated by obtaining numerous grants through SOCWMA to assist in the implementation of the projects. All these projects have been in collaboration with other water districts and/or municipal entities located within the Watershed.
e. Salt and Nutrient Management Plan (SNP) Cooperative Agreement/Participation Through participation in SOCWA and the SJBA, the District has been the lead in continuing the completion of the requirements associated with the Salt and Nutrient Management Plan for the San Juan Basin. The initial SNMP was prepared through SOCWA with the on-going requirements identified in the SNMP being transitioned to the SJBA. The District has been spearheading these efforts and recently completed the Water Quality and Antidegradation Analysis for the Middle San Juan Hydrologic Sub-Area to fulfill one of the four requirements that were outline in the original SNMP.
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SOUTH COAST WATER DISTRICT (SCWD) The following includes a summary of SCWD’s involvement in the SJBA’s projects6:
a. Joint Groundwater Monitoring Program and Annual Report (based on the collection of surface water, groundwater, biotic and climate data gathered in the field with data from reliable sources) The groundwater-monitoring program is an ongoing project that primarily consists of labor hours for the remote gathering of data from level data logging probes and measuring groundwater levels with a manual sounder to verify the data. The other part of this project is to repair and/or replace equipment as necessary that is used for the level data logging.
b. Provide Technical Input as part of the Adaptive Pumping Management (APM) Plan The purpose of the APM Plan is to allow for groundwater pumping while protecting water quality and the environment. The APM Plan is updated as needed by the SJBA hydrogeologist. The hydrogeologist makes recommendations to the technical advisory group of the SJBA, which SCWD is a participant of, and the technical advisory group analyzes this information and makes recommendations to the SJBA Board of Directors. Water levels and key water quality constituents are routinely monitored (via monitoring wells) throughout the basin. This comprehensive data set is used to update the APM plan, as needed.
c. Monitor and Maintain Seven Groundwater Monitoring Wells Complete with Level Data Logging Probes SCWD drilled and outfitted seven monitoring wells in 2010. These monitoring wells were constructed to help monitor the groundwater levels in compliance with regulatory permits. The monitoring wells utilize level, temperature and conductivity logging probes that must be uploaded, calibrated and maintained according to manufacturer recommendations. In addition to the data logging probes, the wells are manually sounded whenever the probes are uploaded to verify data logger reads. The wells also require maintenance of the wells themselves that could include mechanical brushing, chemical cleaning and video logging. The wells normally require this type of maintenance every three to five years depending on the groundwater
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water quality.
SCWD pays its share of the above costs to the San Juan Basin Authority. SCWD’s FY 2018-19 share is budgeted at $76,369. The funding source is the SCWD operating budget, which is garnered from the consumers as part of their rate structure.
In addition to the above programs, SCWD also takes part in the day- to-day business of the SJBA. For example, the SJBA recently voted to become a voting member of the South Orange County Watershed Management Area (SOCWMA). This decision was rendered after the technical advisory group made a recommendation, the board members investigated, public comments were heard and finally a vote was taken. The board voted unanimously to pursue becoming a voting member of SOCWMA.
2) San Juan Watershed The San Juan Watershed Project is a multi-phase project that will enhance water reliability by capturing local storm water runoff as well as directing recycled water into temporary storage and using it to recharge the underground aquifer. When completed, the San Juan Watershed Project will be able to provide about 5.6 billion gallons of additional local, reliable water. That’s enough water for 50,000 families each year.7
MOULTON NIGUEL WATER DISTRICT (MNWD) The following includes a summary of MNWD’s involvement in the San Juan Watershed8:
a. Past and Future Involvement in the San Juan Watershed About a third of the District’s geographical territory is within the San Juan Watershed. Although MNWD is not currently a partner in the “San Juan Watershed Project,” many of the services and programs that MNWD offers do benefit residents, businesses, and the environment in the San Juan Watershed. If MNWD were to acquire the San Juan Capistrano water utilities, the District would expand its interest in that watershed and re-evaluate opportunities to become partners in the San Juan Watershed Project and other projects that the City of San Juan Capistrano might recommend.
7 http://sanjuanwatershed.com/about-the-project/ 8 August 8 Response from MNWD. 38 | P a g e
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MNWD also recognizes the importance of the Groundwater Reclamation Plant to the City of San Juan Capistrano. Given the City’s investments and assets, it deserves to receive the full benefit, both operationally and financially, of the Groundwater Reclamation Plant.
b. Innovative Partnerships and Applications Benefit Local Watersheds MNWD has developed applications and partnerships that have direct benefit to local watersheds. The District is looking to target its outreach and water efficiency programs to help encourage the adoption of efficient watering practices to reduce overwatering, which will result in less urban runoff and improved water reliability. Additionally, staff are organizing a working group across local cities, the County of Orange, and non-governmental environmental organizations to disseminate lessons learned and evaluate the impact of different strategies to reduce irrigation over-watering.
The watershed programs and collaborations MNWD supports have applicability and benefits for all watersheds in South Orange County, including San Juan Creek, Aliso Creek and Salt Creek.
SANTA MARGARITA WATER DISTRICT (SMWD) The following includes a summary of SMWD’s involvement in the San Juan Watershed9:
a. San Juan Watershed Project Phase 1 – Install three (3) rubber dams in San Juan Creek to increase percolation of urban runoff and storm water flows into the basin. Cost ~ $26.4 million. Amount of water generated ~ 700-acre feet per year (afy).
b. San Juan Watershed Project Phase 2 - Involves installing up to seven (7) additional rubber dams in San Juan Creek and installing recycled water pipelines and outlets to discharge recycled water behind these new dams and behind the three dams constructed for Phase 1. Cost ~ $86.4 million. Amount of water generated ~ 6,120 afy.
c. San Juan Watershed Project Phase 3 - Involves constructing recycled water pipelines and outlets to discharge recycled water along
9 August 9 Response from SMWD. Additional information concerning the San Juan Watershed Project proposed by Santa Margarita Water District in partnership with the City of San Juan Capistrano and South Coast Water District is available at: http://sanjuanwatershed.com/. 39 | P a g e
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San Juan Creek to serve as live stream recharge. Cost ~ $30 million. Amount of water generated ~ 3,550 afy.
d. Upper San Juan Basin Water Harvesting – Construct hydro- modification facilities necessary for development to increase recharge of San Juan Basin. Cost ~ $5 million. Amount of water generated ~ 540 afy.
e. Trampas Canyon Reservoir Augmentation – Involves using the Trampas Canyon Reservoir to blend local groundwater with recycled water and constructing water treatment facilities to meet Potable Reuse water for consumption. Cost ~ $30 million. Amount of water generated ~ 4,000 afy.
f. RMVMWC Potable Water Treatment – Construction of a well field collection pipeline and surface water treatment plant that will treat up to 2,500 afy of groundwater to drinking water standards. Cost ~ $10 million. Water generated ~ 2,250 afy.
g. Oso Barrier Treatment – Provide treatment for the water captured and recycled by the Oso Barrier. Cost ~ $5 million. Improves water quality within the basin for ~ 1,000 afy.
h. Water Quality and Antidegradation Analysis for the Middle San Juan Hydrologic Sub-Area – This project is being undertaken to study the existing conditions of this area and the underlying groundwater basin and project the impacts of increased recycled water use on the basin. The purpose is to identify those impacts of additional recycled water use and methods to reduce or eliminate those impacts that may be identified.
i. Lake Mission Viejo Pump Back Treatment – The installation of a pump and some minor piping from Lake Mission Viejo to the Lake Mission Viejo Advanced Water Treatment Facility will allow for lower quality lake water to be treated and return higher quality water back to the lake. Through Public/Private Partnership, cost is $0. Removes over 730 tons of salt from the San Juan Watershed per year.
SOUTH COAST WATER DISTRICT (SCWD) The following includes a summary of SCWD’s involvement in the San
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Juan Watershed10:
a. San Juan Watershed Project (SJWP) – Phase 1 - Storm Water Capture: o Phase 1 of the SJWP will enhance water reliability for South Orange County by capturing local storm water runoff, by constructing and implementing rubber dams to capture and filter storm water runoff. Please refer to SMWD staff for additional project details. o Santa Margarita Water District (SMWD) as a member of the San Juan Basin Authority (SJBA) is leading this project. To date, SCWD is the only agency partner. The SCWD Board approved a 20% cost share of Phase 1. o SCWD has $400,000 budgeted for the project in FY 18-19 and $3,000,000 planned for FY 19-20. The funding source is the SCWD operating budget, which is garnered from the consumers as part of their rate structure.
3) Other Water Reliability and New Water Supply Projects
MOULTON NIGUEL WATER DISTRICT (MNWD) The District has invested over $70 million in water system reliability projects since 2008, which has improved the ability of the District to provide service in times of emergency. Together, these projects have increased water supply availability during emergency periods from 1.5 days to 24 days. The District’s Board adopted a policy to reach 31 days of reliability and is also engaged in evaluating and implementing a variety of future local water supply initiatives that are cost-effective11:
a. Expansion of the District’s Recycled Water System The District recently completed a Recycled Water Masterplan identifying upwards of 1,300 AF of existing irrigation accounts that could be cost-effectively converted to reliable recycled water accounts. The final analysis with specified customer accounts, and their corresponding connections, that can be converted is scheduled to be released in Fall 2018. MNWD is a leader in recycled water development, with 50 years of proven experience. The City of San Juan Capistrano currently does not treat any of its wastewater to recycle for irrigation use. MNWD’s leadership in recycled water
10 August 8 Response from SCWD. 11 August 8 Response from MNWD. Additional information on projects available at www.mnwd.com/protect-san-juan- watershed. 41 | P a g e
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development would be a key asset to the City’s customers in further expanding recycled water use in the City of San Juan Capistrano.
b. Partnership with Orange County Water District MNWD has been actively working with the Orange County Water District to better understand available capacity in its groundwater basin and pilot a program for emergency supplies that could ultimately benefit a variety of Orange County agencies. The Orange County Water District is planning to update its Orange County Groundwater Basin Storage and Operational Strategy this year, as well as address water storage program requests being made by MNWD and other agencies.
c. Support of Ocean Water Desalination Projects As part of MNWD’s 2014 Long Range Water Reliability Plan, MNWD evaluated new desalination projects which were in various stages of planning at the time. A conceptual desalination project was evaluated and assumed to be developed at either the Huntington Beach and/or Dana Point facility, which would provide MNWD with up to 14,000 AFY. The supply would be delivered directly or in-lieu into MNWD’s service area, providing both water supply and system reliability benefits.
d. Use of Local Groundwater in the Aliso Creek Watershed The District is in the process of developing test wells to evaluate the groundwater yield in the Aliso Watershed and potential for use as a local water supply. The District is in the conceptual stage and is expecting preliminary results in mid-2019. MNWD is eager to collaborate with the City of San Juan Capistrano based on the City’s existing expertise in groundwater pumping and using groundwater as a non-potable water supply which would provide mutual benefits.
e. Urban Run-off and Stormwater Diversions to Treatment Plants Local cities and the County of Orange are faced with upwards of $1 billion in new regulatory MS4 compliance costs associated with keeping unnatural flows away from local creeks and the ocean in South Orange County. The District is currently studying the potential to divert urban and storm flows into the excess wastewater treatment capacity owned by the District. These diversions would reduce compliance costs as well as provide a local new water supply source. In the Aliso Watershed, the District is estimating that approximately 1,200 AF/Year in new water supplies can be produced.
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f. Exploring Direct Potable Reuse Water Supply The State of California recently released a framework to develop standards for direct potable reuse by 2023. The District has historically aggressively pursued the expansion of its recycled water system. However, after the remaining 1,300 AF of irrigation water demand is converted, the most cost-effective utilization of the District's remaining wastewater would be through direct potable reuse. MNWD is committed to working with the State and local agencies to explore the feasibility and cost-effectiveness of direct potable reuse and implement it when possible. Successful implementation would provide approximately 3,000 AF/Year of new, local potable water.
SANTA MARGARITA WATER DISTRICT (SMWD) The following includes a summary of SMWD’s involvement in other water reliability projects12:
a. Cadiz Valley Water Conservation, Recovery and Storage Project SMWD is the lead agency for the Cadiz Water Project which will provide a new Southern California water supply by actively managing a groundwater basin that is part of a 1,300-square-mile watershed in eastern San Bernardino County. Water that would otherwise evaporate will be collected and conserved for beneficial use. The project will then convey the conserved water to SMWD and to other Southern California water agencies to enhance their water supply reliability. A future phase of the project could include the ability to store water underground in the Cadiz aquifer so that it could be used during dry years. SMWD will purchase at least 5,000 acre-feet of water annually from the Cadiz Water Project. The 5,000 acre-feet of water represents approximately 20% of the District’s overall water supply.
b. Recycled Water Conversion Projects SMWD is expanding the recycled water production and distribution systems within the City of Rancho Santa Margarita. Cost ~ $13 million. Amount of potable water saved ~ 1,000 afy. The District is actively pursuing additional conversion projects in the City of Mission Viejo, Community of Las Flores and Coto de Caza. SMWD is also working with the City of San Clemente to intertie the recycled water systems for additional supply.
12 September 19 Response from SMWD. Additional Information is available at the SMWD website: https://www.smwd.com/311/Current-Future-Projects. 43 | P a g e
Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018
c. Potable Reuse Project The District is preparing preliminary designs for potable reuse of recycled water. The current planning is exploring the use of the Lake Mission Viejo Advanced Water Treatment Facility as a research facility to determine water quality treatment alternatives; exploration of reservoir augmentation projects utilizing the District’s recycled water storage reservoirs and groundwater recharge in the upper and lower San Juan Watershed.
d. Ocean Desalination SMWD has an existing non-binding letter of intent for participation in the Poseidon Huntington Beach Ocean Desalination Plant and included the SCWD Doheny Desalination Plant in the District’s Integrated Resources Plan. The District is actively reviewing both projects with their proponents to determine the level of participation in the future.
e. Groundwater Storage SMWD has groundwater stored in the Chino Basin and an existing agreement with Cucamonga Valley Water District for additional groundwater. The District is reviewing the project for delivery of the water through several alternatives including exchange agreements and water transfers.
SOUTH COAST WATER DISTRICT (SCWD) The following includes a summary of SCWD’s involvement in the other water reliability projects13:
Doheny Ocean Desalination Project14 o The Project objectives include: (1) development of a drought- proof, reliable potable water supply; (2) further diversification of the District’s water supply portfolio, adding to SCWD’s aggressive water conservation, recycling, and groundwater programs; and (3) providing emergency backup water supplies from a disruption of imported water supplies (e.g., earthquake, longer term MWD system shutdowns, etc.). o Phase 1 of the project would include an initial capacity of up to 5 million gallons per day (MGD), with potential for future
13 August 8 Response from SCWD. 14 Additional information on the Doheny Ocean Desalination Project is available at: http://scwd.org/depts/engineering/projects/water_supply_projects/oceandesal3/.
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expansions up to 15 MGD. o The desalination facility would be built on existing SCWD- owned property in close proximity to primary water transmission pipelines and an existing ocean outfall, minimizing construction costs and environmental impacts. o The Project would use slant wells buried beneath the ocean floor to ensure protection of marine life; an advancement preferred by environmentalists and state regulators. o The brine, which is the salty water left over from the desalination process, would be combined with treated wastewater in the existing San Juan Creek Ocean Outfall pipeline, and discharged to the ocean. This is also the preferred method by state and federal regulators and consistent with the State Board’s Ocean Plan Amendment. o The EIR was released for public review, with the comment period recently ending on August 6, 2018. o Funding Sources: ▪ SCWD has received a commitment for a $10 million Prop 1 desalination grant from the State of California for the project. ▪ SCWD is applying for a low interest State Revolving Fund loan (approx. 2% interest rate for 30 years) to fund the remaining capital cost ▪ SCWD is applying for a Local Resources Program (LRP) funding of $475 per AF for 15 years, to offset annual operating costs.
III. PLAN FOR SERVICE The transfer of the City’s utility systems to MNWD, SMWD or SCWD would require an application for a sphere of influence amendment and plan for service for the annexation to the District. In accordance with Government Code Section 56653, the plan for service shall generally include the level and range of services, an indication of any improvement or upgrading of structures, roads, sewer and water facilities, an indication of when services can feasibly be extended, and information on how the services will be financed. Additionally, OC LAFCO may impose terms and conditions as part of any change of organization or reorganization.
In addition to the requirements of Government Code Section 56653, the plan for service submitted by an alternative service provider should specifically
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Focused MSR for City of San Juan Capistrano Utility Systems October 10, 2018 address the following: a) Specific methods of financing improvements to the CSJC system. b) Transfer of existing CSJC’s assets and liabilities, including utility’s share of property tax, existing debt obligations, and reserves. c) Integration of all existing agreements for the utility systems to ensure that the rights of parties, including private entities, are protected and appropriately addressed. d) Consideration of formation of improvement district or zone to create nexus between CSJC rates and CSJC costs. e) Plans for the GWRP, including operations and staffing, sources of water, ability to assume repayment of GWRP debt and lease obligations. f) Plans for projects that may result in a more reliable water supply for CSJC ratepayers and identification of associated cost impacts to CSJC and district ratepayers. g) Potential transfer of staff from CSJC to the alternative provider and continuity of benefits (i.e., pension benefits) and disposition of unfunded pension and OPEB obligations. h) Identification of funding sources for costs associated with the transfer of the CSJC system. i) Identification of impacts on CSJC existing rates for services. j) Identification of impacts on District’s existing rates for services. k) The format for CSJC participation and input into the annexation and integration process.
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