CC SR 20171219 3 - Abalone Cove SewerRANCHO PALOS VERDES CITY COUNCIL MEETING DATE: 12/19/2017
AGENDA REPORT AGENDA HEADING: Regular Business
AGENDA DESCRIPTION:
Consideration and possible action to reduce the City's financial subsidy in the
maintenance and operation of the Abalone Cove Sewer System.
RECOMMENDED COUNCIL ACTION:
(1) Receive report and provide direction on possible future actions.
FISCAL IMPACT: None
Amount Budgeted: FY17-18 Budgeted Expenditures:
$223,100 (Acct. 225-400-0000-521M) Operations
$175,000 (Acct. 330- 400-8203-8001) Capital
FY17-18 Budgeted Revenues:
$55,100 (Acct. 225-300-0000-3102) Assessments
$500.00 (Acct. 225-300-0000-3601) Interest Income
$208,000 Transfer in from General Fund Tax Rev
Additional Appropriation: N/A
Account Number(s): See above
ORIGINATED BY: Ron Dragoo, PE, Principal Engineer ---
REVIEWED BY: Elias Sassoon, PE, Director of Public Works
APPROVED BY: Doug Willmore, City Manager f'
ATTACHED SUPPORTING DOCUMENTS:
A. Abalone Cove Sewer Maintenance Fee Study Update (page A-1)
BACKGROUND AND DISCUSSION:
At the June 20, 2017, City Council meeting, the City Council asked Staff to evaluate the
overall operation of the Abalone Cove Sewer System, and to return with options that
could potentially aid in reducing the City's on-going subsidy of the system to zero.
The Abalone Cove Sewer Maintenance Fee was first introduced at the July 17, 2001,
City Council meeting. Ordinance No. 368 amending the Rancho Palos Verdes
Municipal Code was adopted August 7, 2001, establishing sewer maintenance fees for
the Abalone Cove Sewer System. The maintenance fee was established in accordance
with the needs of the new system, which was just then becoming operational. Funding
for the eventual replacement of system components was not included in the initial
budget, and the August 7, 2001 report indicated that the initial maintenance fee was to
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be subsidized by $19,125 annually to help reduce the cost of maintaining the system to
residents. The report further indicates that "[the] City Subsidy will be reviewed each
year thereafter when the City's Budget is adopted, and may be discontinued, reduced,
or otherwise altered as the City Council deems appropriate". The subsidy has
continued every year following the initial establishment of the fee without ever being
increased by the Consumer Price Index (CPI) factor allowed.
Since the beginning of operation of the City-owned/maintained Abalone Cove Sewer
System in 2001 (Attachment A, Appendix, Item 1), the system has been maintained,
and repairs performed as needed. The system is aging, and repairs/upgrades are
needed to minimize the probability of sewer overflows in this system.
The cost of implementing these repairs/improvements to the system is increasing the
overall cost to operate the system. However, the fees collected through the property
owner charges are less than the annual costs of operating and maintaining the system,
as previously stated, and the City has subsidized sewer maintenance costs since the
maintenance fee was adopted. While the original fee was established to maintain and
operate a new system, funds to replace failing components were not included in the
original fee schedule. The original fee, upon establishment, was 50% subsidized by the
City.
The cost of maintenance continues to increase as the cost of maintenance services
rise, the system is getting older and system component replacements and upgrades are
needed. The State (through an EPA mandate) has put in place operator requirements
that were not in place when this system came on line and the fee was originally
established. The mandate requires all sewer system operators in California to develop
a Sewer System Management Plan (SSMP) detailing the City's maintenance plans to
limit the number of Sanitary Sewer Overflows (SSO) to zero. The City's SSMP has
been developed and we are currently in compliance in Abalone Cove. However, fines
can be imposed for violations of this requirement. To this end, a Sewer Needs
Assessment (Attachment A, p. 28), was conducted to determine likely costs to
repair/upgrade the system and meet the intent of the State -required SSMP.
The Abalone Cove Sewer Maintenance Fee Study Update (Attachment A) provides
details on how the subsidy can be reduced to zero while funding the needed
repairs/improvements. The fee can be adjusted through the Proposition 218 process,
which requires a public protest hearing to be held. A proposed new rate could be
approved if a majority of affected property owners did not personally attend the protest
hearing and/or submit their protests in writing to the City Council. If a majority of
property owners did not protest, a new rate could be put in place. A chart (Attachment
A, p. 4) illustrates different subsidy levels that would allow some of the
repairs/improvements to be implemented, which could demonstrate the City's good -faith
effort to meet the intent of the zero SSO requirement. This chart may be used by the
City Council to illustrate how the rates would change if the City continued to subsidize at
different levels.
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ALTERNATIVES:
Alternatively, the City Council can choose to simply keep the fee at its current rate and
forgo the needed repairs/improvements and gradually end the subsidy. However, this
would put the City at risk of system failures and violation of the zero SSO requirement,
possibly resulting in fines or other enforcement actions against the City.
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w
ABALONE COVE
SEWER MAINTENANCE FEE
STUDY UPDATE
CITY OF RANCHO PALOS VERDES
LOS ANGELES COUNTY, CALIFORNIA
December 5,2017
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Table of Contents
EXECUTIVE SUMMARY......................................................... 1
INTRODUCTION..............................................................5
ANNUAL REVENUE REQUIREMENTS .............................................. 6
Administrative Costs
Table 1. Estimate of Annual Administrative Costs
Operations, Maintenance and Capital Improvement Costs
Table 2. Estimated Annual Revenue Requirements
Annual Revenue Requirements by Subsystem
Table 3. Summary of the Annual Revenue Requirements by Subsystem
SEWER CHARGES AND REVENUE ANALYSIS ......................................... 9
Rate Zones
Existing Annual Rates
Table 4. Historical Maximum Sewer Charge Rates by Zone
Maximum Annual Revenue
Proiected Revenue Shortfall
Table 5. Estimated Projected Annual Revenue Shortfall
Projected Cash Flow Summary
Table 6. 10 -Year Projected Cash Flow Summary - No Subsidy
Subsidy Considerations
Subsidy Levels Chart
FEE ADOPTION PROCESS ................................................. ...... 14
Steps to Establishment
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APPENDIX .................................................................... 15
Table A. Estimate of Annual Operations, Maintenance and Capital Improvement Costs ......... 16
Table B. Projected Maximum Sewer Charge Rates by Zone ............................... 17
Table C. Equivalent Residential Units by Zone ......................................... 17
Table D. Maximum Projected Annual Sewer Charge Revenue by Zone ...................... 17
Item 1. Attorney Work Product ................................................... 18
Item 2. Abalone Cove Sewer Needs Assessment ...................................... 28
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EXECUTIVE SUMMARY
CITY OF RANCHO PALOS VERDES
UPDATE STUDY - ABALONE COVE SEWER MAINTENANCE FEE
December 5, 2017
The City of Rancho Palos Verdes requested that Penco Engineering develop an estimate of the sewer user
fees that would be needed to fully fund the annual operation and maintenance cost and needed capital
projects costs associated with the Abalone Cove Sewer System. The current sewer rates being levied
by the City on parcels with the Abalone Cove area do not cover the annual operating and maintenance
costs for the system. In addition, City staff have identified a number of capital projects that are needed to
provide residents with a reliable sewer system. This analysis identifies the annual sewer rates that would
be needed, by zone, to adequately fund the sewer system based upon the current rate methodology. The
highlights of the report are as follows:
• The City owns the Abalone Cove sewer system, see "Attorney Work Product" in the Appendix,
Item 1.
• The existing sewer system for Abalone Cove needs capital improvements, see "Abalone Cove Sewer
Needs Assessment" in the Appendix, Item 2.
• The original fee was established to maintain and operate a new system, funds to replace failing
components were not included in the original fee schedule (and City subsidized 50% of the original
fee).
• In addition, the State Water Board has adopted zero tolerance for sanitary sewer overflow (SSO).
The proposed Maintenance/Capital Improvements will help to meet the zero SSO mandate.
• The table below summarizes the estimated Annual Revenue requirements including administrative,
operation and Capital Improvement costs for the next five years.
Summary of the Annual Revenue Requirements by Subsystem
Annual Revenue Requirements
Fiscal Year
2018-19
2019-20
2020-21
2021-22
2022-23
Summary by Subsystem
Subsystem
Gravity Subsystem
Cost Estimate
$89,250
$91,928
$94,685
$97,526
$100,452
Force Main Subsystem
Cost Estimate
$135,565
$123,762
$85,760
$88,333
$90,983
Low Pressure Subsystem
Cost Estimate
$572,480
$267,569
$275,596
$283,864
$292,380
Totals
$797,295
$483,259
$456,042
$469,723
$483,815
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UPDATE STUDY - ABALONE COVE SEWER MAINTENANCE FEE
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• The sewer system has historically been divided into 4 zones, A, B, C, and D. Below are the historical
rates charged each zone for the last five years and the following table, shows the rates for the next
five years with just a CPI adjustment.
Historical Maximum Sewer Charge Rate by Zone
Historical Sewer Charge
Zone
Maximum Rates Per ERU
A
B
C
D
Year and Historical Rates Per ERU
Fiscal Year 2013-14
$163.92
$660.00
$222.51
$718.57
Fiscal Year 2014-15
$165.56
$660.60
$224.74
$725.76
Fiscal Year 2015-16
$165.73
$667.27
$224.96
$726.49
Fiscal Year 2016-17
$166.13
$668.87
$225.50
$728.23
Fiscal Year 2017-18
$170.62
$686.93
$231.59
$747.89
Source: 2017-18 Abalone Cove Sewer Service Charge Annual Report
* Equivalent Residential Unit
Projected Maximum Sewer Charge Rates by Zone
Projected Sewer Charge
Zone
A
B
C
D
Maximum Rates Per ERU
Year and Projected Rates
Fiscal Year 2018-19
$173.61
$698.95
$235.64
$760.98
Fiscal Year 2019-20
$176.64
$711.18
$239.77
$774.30
Fiscal Year 2020-21
$179.74
$723.63
$243.96
$787.85
Fiscal Year 2021-22
$182.88
$736.29
$248.23
$801.63
Fiscal Year 2022-23
$186.08
$749.18
$252.58
$815.66
Projected rates are equal to the previous years rate plus escalation for inflation at a projected rate of 1.75%
CM
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UPDATE STUDY - ABALONE COVE SEWER MAINTENANCE FEE
December 5, 2017
• The table below shows the estimated Revenue Shortfall if the current rates only are increased by
the CPI for the next five years.
Estimated Projected Annual Revenue Shortfall
The table below shows the required rates that need to be charged for the system to become
revenue neutral within a ten year period as compared to the current rates that are being charged.
The City would need to loan funds to the District in the early years. See Table 6 in the report for
details.
Zone
Fiscal Year
Projected Revenue Shortfall
No Subsidy Rate
$IERU
2018-19 2019-20 2020-21 2021-22 2022-23
30.00
Cost Estimate Shortfall
Maximum Projected Revenue
$59,130
$60,165
$61,218
$62,289
$63,379
Estimate Revenue Required
797,295
483,259
456,042
469,723
483,815
Cost Estimate - Annual Revenue
($738,165)
($423,094)
($394,824)
($407,434)
($420,436)
Shortfall
Cumulative Cost Estimate Shortfall
($738,165)
($1,161,259)
($1,556,083)
($1,963,517)
($2,383,953)
The table below shows the required rates that need to be charged for the system to become
revenue neutral within a ten year period as compared to the current rates that are being charged.
The City would need to loan funds to the District in the early years. See Table 6 in the report for
details.
Zone
ERU
Current Rate $/ERU
No Subsidy Rate
$IERU
Zone A
30.00
$ 170.62
$ 788.13
Zone B
35.00
$686.93
$ 2,436.41
Zone C
37.82
$231.59
$ 5,864.88
Zone D
27.00
$747.89
$ 7,513.15
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• The chart below illustrates how the rates would change if the City wanted to continue a subsidy
at different levels.
$/ERU Subsidy Chart
$8,000.00 -Zone -Zone -Zone -Zone
A B C D
$7,513.15
$7,000.00 (FY 17-18
�0 $747.89)
$6,000.00 $5,634.86
L $5,864.88
(FY 17-18
$5,000.00 ti $231.59)
$4,398.66
$4,000.00 $3,756.58
$3,000.00
$2,932.44
$2,000.00 $1,878.29 $2,436.41
$1,827.31 (FY 17-18
$1,466.22 $686.93)
$1,000.00 $1,218.20
ZONE A
$609.10 $788.13
$0.00 5591.10 (FY 17-18
197.03 $394.07
$
$0.00 $170.62)
100% 75% 50% 25% 0%
SUBSIDY PERCENTAGE
• At a 25% subsidy, the City would be contributing approximately $133,400/year
• At a 50% subsidy, the City would be contributing approximately $266,790/year
• At a 75% subsidy, the City would be contributing approximately $400,000/year
A-7
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INTRODUCTION
CITY OF RANCHO PALOS VERDES
UPDATE STUDY - ABALONE COVE SEWER MAINTENANCE FEE
December 5, 2017
The City of Rancho Palos Verdes (the "City") is responsible for the operation and maintenance of the sewer
system in the Abalone Cove area, which consist of grinder pumps on each sewer lateral and a series of lift
stations and low pressure force mains, see "Attorney Work Product" in the Appendix, Item 1. The Abalone
Cove Sewer System was constructed by the City in FY 2002-03 to get properties off of septic systems in
the landslide area. Because this system does not meet the standards of the Los Angeles County Sewer
Maintenance District, the SMD would not accept this portion of the City's sewer system for maintenance.
As such, the responsibility for the maintenance and operation of the Abalone Cove Sewer System rest with
the City.
Since the City is responsible for the maintenance of the Abalone Cove Sewer System, the City levies an
annual fee on property owners connected to the Abalone Cove sewer. However, the fees collected are
less than the annual costs of operating and maintaining the system, and the City has subsidized sewer
maintenance costs for property owners in an effort to bring uniformity to the annual service charges
collected by the SMD on other parcels within the City. The original fee was established to maintain
and operate a new system, funds to replace failing components were not included in the original fee
schedule (and City subsidized 50% of the original fee).
In 2012, it was determined that a rate increase of 140%-400% (depending on the zone) would be required
to balance expenditures with revenues. At that time, a decision was made not to seek a rate increases for
properties served by the Abalone Cove Sewer System. Since that time, annual operation and maintenance
costs have continued to increase, and as the system continues to age there is a need to upgrade/replace
portions of the system. In addition, the State Water Board has adopted zero tolerance for sanitary sewer
overflow (SSO). The proposed Maintenance/Capital Improvements will help to meet the zero SSO
mandate.
This report reviews the projected future expenses and revenues requirements for the operation and
maintenance of the Abalone Cove sewer collection system. Based upon those costs a preliminary Sewer
Maintenance Fee has been developed for the Abalone Cove system which would provide the revenue
levels needed to cover the on-going operations and capital improvement costs for the system from those
parcels that discharge wastewater into the Abalone Cove sewer collection system.
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ANNUAL REVENUE REQUIREMENTS
ADMINISTRATIVE COSTS
CITY OF RANCHO PALOS VERDES
UPDATE STUDY - ABALONE COVE SEWER MAINTENANCE FEE
December 5, 2017
Table 1 shows the estimated annual administrative costs for Fiscal Years 2018-19 through 2022-23. In
deriving the figures, the estimated administrative costs for 2017-18, as provided annual Abalone Cove
Sewer Service Charge Report, were escalated by 3% annually to account for inflation.
Table 1
Estimate of Annual Administrative Costs
Estimate of Annual
Year
---F-Fiscal
2018-19
2019-20
2020-21
2021-22
2022-23
Administrative Costs
Account Description
City Administration and Overhead
$10,609
$10,928
$11,255
$11,593
$11,941
Edison
3,708
3,819
3,934
4,052
4,173
Professional Services
5,253
5,411
5,573
5,740
5,912
County Collection Charge
515
530
546
563
580
Total Administrative Costs
$20,085
$20,688
$21,308
$21,948
$22,606
Source: 2017-18 Abalone Cove Sewer Service Charge Annual Report (plus 3% annual increase for inflation)
OPERATIONS, MAINTENANCE AND CAPITAL IMPROVEMENT COSTS
The Abalone Cove Sewer Charge was established to generate revenue in order to pay for administrative
costs as discussed above along with costs to operate and maintain the Abalone Cove Sewer System,
including costs associated with capital improvement and replacement. The Abalone Cove sewer system is
comprised of three types of components or subsystems:
• Gravity Subsystem
• Force Main Subsystem
• Low Pressure Subsystem
In estimating the Capital Improvement cost expenditures, the "Abalone Cove Sewer Needs Assessment"
document prepared by City staff was utilized, please see Appendix Item 2 for details.
Table B, located in the Appendix, shows the details of the cost estimate of the annual expenditures based
upon the recommended maintenance activities and capital expenditures for Fiscal Years 2018-19 through
2022-23 for the Abalone Cove Sewer System. It should be noted that all cost estimates utilize the upper
end of cost estimates for planning purposes.
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UPDATE STUDY - ABALONE COVE SEWER MAINTENANCE FEE
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Table 2 summarizes the annual administrative cost information from Table 1 and the estimated cost
information for capital improvements from Table A in the Appendix.
Table 2
Estimated Annual Revenue Requirements
Estimate
Fiscal Year
Annual Revenue Requirements
2018-19
2019-20
2020-21
2021-22
2022-23
Cost Estimate
Estimate
Estimate
Estimate
Estimate
Estimate
Gravity Subsystem
Administrative Costs *
$20,085
$20,688
$21,308
$21,947
$22,606
Operations and Maintenance
69,165
71,240
73,377
75,578
77,846
Capital Improvement Projects
0
0
0
0
0
Gravity Subsystem Annual Revenue Required
$89,250
$91,928
$94,685
$97,526
$100,452
Force Main Subsystem
Operations and Maintenance
36,565
48,662
50,122
51,625
53,174
Capital Improvement Projects
99,000
75,100
35,638
36,707
37,808
Force Main Subsystem Annual Revenue Required
$135,565
$123,762
$85,760
$88,333
$90,983
Low Pressure Subsystem
Operations and Maintenance
110,480
143,794
148,108
152,551
157,128
Capital Improvement Projects
462,000
123,775
127,488
131,313
135,252
Low Pressure Subsystem Annual Revenue Required
$572,480
$267,569
$275,596
$283,864
$292,380
Estimated Total Revenue Requirements
$797,295
$483,259
$456,041
$469,723
$483,815
Sewer charge administrative costs from Table 1 are included with gravity subsystem costs since the gravity subsystem costs are shared by all equivalent residential units.
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ANNUAL REVENUE REQUIREMENTS BY SUBSYSTEM
CITY OF RANCHO PALOS VERDES
UPDATE STUDY - ABALONE COVE SEWER MAINTENANCE FEE
December 5, 2017
Table 3 summarizes the estimated annual revenue requirements for each of the three subsystems of
Abalone Cove for Fiscal Years 2018-19 through 2022-23.
Table 3
Summary of the Annual Revenue Requirements by Subsystem
Annual Revenue Requirements
Fiscal Year
2018-19
2019-20
2020-21
2021-22
2022-23
Summary by Subsystem
Subsystem
Gravity Subsystem
Cost Estimate
$89,250
$91,928
$94,685
$97,526
$100,452
Force Main Subsystem
Cost Estimate
$135,565
$123,762
$85,760
$88,333
$90,983
Low Pressure Subsystem
Cost Estimate
$572,480
$267,569
$275,596
$283,864
$292,380
Totals
$797,295
$483,259
$456,042
$469,723
$483,815
A-11
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UPDATE STUDY - ABALONE COVE SEWER MAINTENANCE FEE
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SEWER CHARGE RATE AND REVENUE ANALYSIS
RATE ZONES
A system of zones was developed to identify the specific combination of subsystems used by each
contributing parcel. These zones are as follows:
• Zone A - Gravity Subsystem Only
• Zone B - Gravity Subsystem and Force Main Subsystem
• Zone C - Gravity Subsystem and Low Pressure Subsystem
• Zone D - Gravity Subsystem, Force Main Subsystem and Low Pressure Subsystem
EXISTING ANNUAL RATES
Each rate zone has a maximum annual rate. Those rates are the determining factor as to the maximum
revenue that can be generated annually from the current sewer service charges. The current rate that
can be collected per Equivalent Residential Unit (ERU), can be increased annually based upon the increase
in Consumer Price Index for all Urban Consumers (CPI) for the Los Angeles, Riverside and Orange County
Areas, not to exceed seven percent (7%). Table 4 provides the historical maximum rate for each of rate
zones covering the prior five year period.
Table 4
Historical Maximum Sewer Charge Rate by Zone
Historical Sewer Charge
Zone
A
B
C
D
Maximum Rate Per ERU
Year and Historical Rate Per ERU
Fiscal Year 2013-14
$163.92
$660.00
$222.51
$718.57
Fiscal Year 2014-15
$165.56
$660.60
$224.74
$725.76
Fiscal Year 2015-16
$165.73
$667.27
$224.96
$726.49
Fiscal Year 2016-17
$166.13
$668.87
$225.50
$728.23
Fiscal Year 2017-18
$170.62
$686.93
$231.59
$747.89
Source: 2017-18 Abalone Cove Sewer Service Charge Annual Report
In order to project future maximum annual rates, and thereby future maximum annual revenue to be
generated from the current sewer charges, an assumption was made with regard to the rate at which
the maximum rates will escalate each year. In reviewing historical CPI data for all Urban Consumers (CPI)
for the Los Angeles, Riverside and Orange County Areas, it was found that CPI increased on average by
1.64% per year over the previous five year period and by 1.82% per year over the previous ten year period.
Considering this, Table B was prepared and provides the maximum rates for each zone for the next five
years utilizing a projected annual CPI rate of 1.75% and is located in the Appendix.
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MAXIMUM ANNUAL REVENUE
CITY OF RANCHO PALOS VERDES
UPDATE STUDY - ABALONE COVE SEWER MAINTENANCE FEE
December 5, 2017
The maximum revenue that can be generated from sewer charges for each zone is a product of the
maximum annual rate times the number of ERU per zone. Table C provides the number of ERU in each of
the rate zones and is located in the Appendix.
Table D provides the maximum annual revenue that can be generated from sewer charges for each zone
based on the projected maximum annual rates from Table B times the number of ERU per zone from Table
D and is located in the Appendix.
PROJECTED REVENUE SHORTFALL
For the next five years and beyond, the projected maximum annual revenue that can be collected from
the sewer charge rate is significantly less than the annual revenue required. Table 5 provides a comparison
of the annual revenue required from table, versus the projected annual revenue based upon the current
rates.
Table 5
Estimated Projected Annual Revenue Shortfall
Projected Revenue Shortfall
Fiscal Year
2018-19 2019-20 2020-21 2021-22 2022-23
Cost Estimate Shortfall
Maximum Projected Revenue
$59,130
$60,165
$61,218
$62,289
$63,379
Estimate Revenue Required
797,295
483,259
456,042
469,723
483,815
Cost Estimate - Annual Revenue
($738,165)
($423,094)
($394,824)
($407,434)
($420,436)
Shortfall
Cumulative Cost Estimate Shortfall
($738,165)
($1,161,259)
($1,556,083)
($1,963,517)
($2,383,953)
PROJECTED CASH FLOW SUMMARY
Based upon the annual maintenance costs and capital expenditures, Table 6 summarizes rates which would
be required respectively for the recommended approach described below:
• Recommended Approach — The annual sewer rate would fully fund annual operating and
maintenance costs on a pay as you go basis, and be revenue neutral over a 10 year period. The City
would need to loan funds to the district in the early years for the completion of the planned capital
improvements which would be repaid over a 10 year period. Table 10 shows the annual revenues
and expenditures based upon a 10 year repayment schedule. After that period, annual revenues
would exceed expenditures beginning in Year 11 once the capital improvement cost have been
recovered. This would allow the City to begin building a reserve for future capital expenditures or an
emergency reserve fund for repairs to the system in the event of a natural disaster.
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Table 6
10 -Year Projected Cash Flow Summary - No Subsidy
10 Year Projected
Fiscal Year
2018-19
2019-20
2020-21
2021-22
1 2022-23 1
2023-24
1 2024-25
1 2025-26
1 2026-27
1 2027-28
Cash Flow Summary
Subsystem and Estimated Revenue Requirements '
Gravity Subsystem
Administrative Costs Z
$20,085
$20,688
$21,308
$21,947
$22,606
$23,284
$23,983
$24,702
$25,443
$26,206
Operations and Maintenance
69,165
71,240
73,377
75,578
77,846
80,181
82,587
85,064
87,616
90,245
Capital Improvement Projects
0
0
0
0
0
0
0
0
0
0
Gravity Subsystem Annual Revenue Required
$89,250
$91,928
$94,685
$97,526
$100,452
$103,465
$106,569
$109,766
$113,059
$116,451
Force Main Subsystem
Operations and Maintenance
36,565
48,662
50,122
51,625
53,174
54,769
56,413
58,105
59,848
61,644
Capital Improvement Projects
99,000
75,100
35,638
36,707
37,808
38,943
40,111
41,314
42,554
43,830
Force Main Subsystem Annual Revenue Required
$135,565
$123,762
$85,760
$88,333
$90,983
$93,712
$96,523
$99,419
$102,402
$105,474
Low Pressure Subsystem
Operations and Maintenance
110,480
143,794
148,108
152,551
157,128
161,842
166,697
171,698
176,849
182,154
Capital Improvement Projects
462,000
123,775
127,488
131,313
135,252
139,310
143,489
147,794
152,228
156,794
Low Pressure Subsystem Annual Revenue Required
$572,480
$267,569
$275,596
$283,864
$292,380
$301,152
$310,186
$319,492
$329,077
$338,949
Estimate Revenue Requirements
1 $797,195
1 $483,259
1 $456,042
1 $469,723
1 $483,815 1
$498,329
1 $513,279
1 $528,677
1 $544,538
1 $560,874
Zone and Estimated Revenues
Zone
ERUs
EDU
Zone A
30.00
$788.13
$23,644
$23,644
$23,644
$23,644
$23,644
$23,644
$23,644
$23,644
$23,644
$23,644
Zone B
35.00
$2,436.41
85,274
85,274
85,274
85,274
85,274
85,274
85,274
85,274
85,274
85,274
Zone C
37.82
$5,864.88
221,810
221,810
221,810
221,810
221,810
221,810
221,810
221,810
221,810
221,810
Zone D
27.00
$7,513.15
202,855
202,855
202,855
202,855
202,855
202,855
202,855
202,855
202,855
202,855
Total Estimated Revenue
$533,583
$533,583
$533,583
$533,583
$533,583
$533,583
$533,583
$533,583
$533,583
$533,583
Annual Surplus/(Deficit)
($263,712)
$50,324
$77,541
$63,860
$49,768
$35,254
$20,304
$4,906
($10,955)
($27,291)
Cumulative Surplus/(Deficit)
($263,712)
($213,388)
($135,847)
($71,987)
($22,218)
$13,036
$33,340
$38,245
$27,191
$0
' Estimated revenue requirements are equal to the average of the low cost estimate and the high cost estimate
2 Sewer charge administrative costs from Table 1 are included with gravity subsystem costs since the gravity subsystem costs are shared by all equivalent residential units.
A-1 Page 11
liiiQ PENCOENG
Client Success is Our Success
SUBSIDY CONSIDERATION
CITY OF RANCHO PALOS VERDES
UPDATE STUDY - ABALONE COVE SEWER MAINTENANCE FEE
December 5, 2017
A City subsidy of the annual expenditures could be considered for the following reasons:
1. The sewer system helps keep water out of the slide plane which helps minimize movement
2. The City has subsidized maintenance and improvements of the sewer septic system since its
inception
The 120" Altamira Storm Drain line transmits runoff from Altamira Canyon under Palos Verdes
Drive South. This critical piece of infrastructure does not require a great deal of maintenance due
to land movement being slowed by the sewer system.
4. Critical safety employees are able to quickly drive through the Abalone Cove because the roadway
is moving slowly and does not require frequent repairs - the drivable surface is smoother and
affords safer access for safety folks.
The chart on the following page shows options for subsidy levels
A-15
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liiiQ PENCOENG
Client Success is Our Success
CITY OF RANCHO PALOS VERDES
UPDATE STUDY - ABALONE COVE SEWER MAINTENANCE FEE
December 5, 2017
$/ERU
Subsidy Chart
$8,000.00
-Zone -Zone Zone -Zone
A B C D
$7,513.15
$7,000.00
(FY 17-18
$747.89)
$6,000.00
$5,634.86
$5,864.88
(FY 17-18
$5,000.00
1.=
$231.59)
$4,398.66
$4,000.00
$3,756.58
$3,000.00
$2,932.44
ONE6
$2,000.00
$1,878.29
$2,436.41
$1,827.31
(FY 17-18
$686.93)
$1,466.22
$1,000.00
$1,218.20
ZONE A
5788.13
$0.00
$609.10
$591.10
(FY 17-18
$0.00
$197.03 $394.07
$170.62)
100%
75% 50%
25%
0%
SUBSIDY PERCENTAGE
• At a 25% subsidy, the City would be contributing approximately $133,400/year
• At a 50% subsidy, the City would be contributing approximately $266,790/year
• At a 75% subsidy, the City would be contributing approximately $400,000/year
A-16
Page 13
PENCOENG
Client Success is Our Success
FEE ADOPTION PROCESS
STEPS TO ESTABLISHMENT
CITY OF RANCHO PALOS VERDES
UPDATE STUDY - ABALONE COVE SEWER MAINTENANCE FEE
December 5, 2017
The following are the steps for establishing Sewer User Fees:
1. Finalize the parcel database.
Fine-tune the Sewer Maintenance User Fee Rates needed to generate the required revenue for the
maintenance and operation of the sewer system and sewer capital improvement program.
3. Prepare a draft Rate Analysis Report for review by City staff.
4. After approval of the Rate Analysis Report by the City Council, mail notices to all affected property
owners a minimum of 45 -days prior to the public hearing.
Since any increase in the current sewer user fees must comply with the requirements of Article XIIID,
Section 6 of the California Constitution (Proposition 218), if a majority of the owners of property protest
the increase in the sewer rate on their property the City cannot impose the increased rates on the parcels
served by the Abalone Cove Sewer System.
Respectfully submitted:
Jeffry M. Cooper, PE
PE CO Engineering, Inc.
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liiiQ PENCOENG CITY OF RANCHO PALOS VERDES
ClientSuccess isOur Success UPDATE STUDY - ABALONE COVE SEWER MAINTENANCE FEE
December 5, 2017
APPENDIX
Table A. Estimate of Annual Operations, Maintenance and Capital Improvement Costs ....... 15
Table B. Projected Maximum Sewer Charge Rates by Zone ................................ 16
Table C. Equivalent Residential Units by Zone ........................................... 17
Table D. Maximum Projected Annual Sewer Charge Revenue by Zone ....................... 17
Item 1. Attorney Work Product....................................................... 17
Item 2. Abalone Cove Sewer Needs Assessment ........................................ 28
•
Page 15
NCOENG
K
lient Success is Our Success
Table A
CITY OF RANCHO PALOS VERDES
UPDATE STUDY - ABALONE COVE SEWER MAINTENANCE FEE
December 5, 2017
Estimate of Annual Operations, Maintenance and Capital Improvement Costs
Estimate of Annual
Fiscal Year
Maintenance, Operations and Capital Improvement Costs
2018-19
2019-20
2020-21
2021-22
2022-23
Gravity Subsystem
Estimate
Estimate
Estimate
Estimate
Estimate
Operations and Maintenance
Annual System Maintenance t
$5,665
$5,835
$6,010
$6,190
$6,376
Gravity Pipelines Video Inspection I'3
37,500
38,625
39,784
40,977
42,207
Differential Land Movement Monitoring 2
11,000
11,330
11,670
12,020
12,381
Manhole Inspection and Cleaning Z
15,000
15.450
15.914
16.391
16,883
Operations and Maintenance Subtotal
$69,165
$71,240
$73,377
$75,578
$77,846
Capital Improvement Projects
$0
$0
$0
$0
$0
Gravity Subsystem Subtotal
$69,165
$71,240
$73,377
$75,578
$77,846
Force Main Subsystem
Estimate
Estimate
Estimate
Estimate
Estimate
Operations and Maintenance
Annual System Maintenance t
$36,565
$37,662
$38,792
$39,956
$41,154
GPS Monitoring Z
0
11.000
11.330
11.670
12,020
Operations and Maintenance Subtotal
$36,565
$48,662
$50,122
$51,625
$53,174
Capital Improvement Proiects
GPS Mapping of Existing System z
$14,000
$0
$0
$0
$0
Design, Plans and Specifications, Cost Estimates Z
85,000
0
0
0
0
Construction Management and Inspection I'4
0
22,500
0
0
0
Above Ground Pipeline Replacement 2'4
0
34,600
35,638
36,707
37,808
Braided Stainless Steel Lines Z
0
18.000
0
0
0
Capital Improvement Projects Subtotal
$99,000
$75,100
$35,638
$36,707
$37,808
Force Main Subsystem Subtotal
$135,565
$123,762
$85,760
$88,333
$90,983
Low Pressure Subsystem
Estimate
Estimate
Estimate
Estimate
Estimate
Operations and Maintenance
Annual System Maintenance '
$16,480
$16,974
$17,484
$18,008
$18,548
Grinder Pump Maintenance z
94,000
96,820
99,725
102,716
105,798
Ongoing Preventative Maintenance Z
0
30,000
30,900
31.827
32,782
Operations and Maintenance Subtotal
$110,480
$143,794
$148,108
$151,551
$157,128
Capital Improvement Projects
Grinder Pump Laterals Z
$10,500
$10,815
$11,139
$11,474
$11,818
Grinder Pump Replacement 2'6
32,000
32,960
33,949
34,967
36,016
New Lift Station - Narcissa/Figtree 2'6
0
80,000
82,400
84,872
87,418
Additional Lift Station Storage - Thyme Z
22,000
0
0
0
0
Additional Lift Station Storage - Sweetbay East Z
55,000
0
0
0
0
Additional Lift Station Storage - Sweetbay/Altimura Z
77,000
0
0
0
0
Additional Lift Station Storage - Abalone Cove Z
98,500
0
0
0
0
Convert Thyme and Sweetbay East to 3 Phase Power Z
75,000
0
0
0
0
Preventative Maintenance - Install Epoxy Coating Lining z
30,000
0
0
0
0
Preventative Maintenance - Install SCADA Z''
62,000
0
0
0
0
Capital Improvement Projects Subtotal
$462,000
$123,775
$127,488
$131,313
$135,252
Low Pressure Subsystem Subtotal
$572,480
$267,569
$275,596
$283,864
$292,380
Cost Estimate Totals
$777,210
$462,571
$434,733
$447,775
$461,209
' Source: 2017-18 Abalone Cove Sewer Maintenance budgeted costs (including 3% escalation annually for inflation)
2 Source: 2017-18 Abalone Cove Sewer Needs Assessment (including 3% escalation annually for inflation)
' Video Inspection biannual cost is allocated over two-year periods (including 3% escalation annually for inflation)
4 Above Ground Pipeline Replacement cost is allocated over a ten-year period (including 3% escalation annually for inflation)
s Grinder Pump Replacement cost is allocated over a ten-year period (including 3% escalation annually for inflation)
6 Lift Station cost is allocated over a ten-year period (including 3% escalation annually for inflation)
SCADA is the acronymn for Supevisory Control and Data Acquisition
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liiiQ PENCOENG
Client Success is Our Success
CITY OF RANCHO PALOS VERDES
UPDATE STUDY - ABALONE COVE SEWER MAINTENANCE FEE
December 5, 2017
Table B
Projected Maximum Sewer Charge Rates by Zone
Projected Sewer Charge
Zone
A
B
C
D
Maximum Rates Per ERU
Year and Projected Rates
Fiscal Year 2018-19
$173.61
$698.95
$235.64
$760.98
Fiscal Year 2019-20
$176.64
$711.18
$239.77
$774.30
Fiscal Year 2020-21
$179.74
$723.63
$243.96
$787.85
Fiscal Year 2021-22
$182.88
$736.29
$248.23
$801.63
Fiscal Year 2022-23
$186.08
$749.18
$252.58
$815.66
Projected rates are equal to the previous years rate plus escalation for inflation at a projected rate of 1.75%
Table C
Equivalent Residential Units by Zone
Zone and Equivalent Residential Units
Zone A 30.00 Zone C 37.82
Zone B 35.00 Zone D 27.00
Source: 2017-18 Abalone Cove Sewer Service Charge Annual Report
Table D
Maximum Projected Annual Sewer Charge Revenue by Zone
Maximum Projected
Revenue by Zone
Zone
2018-19
2019-20
2020-21
2021-22
2022-23
Zone and Projected Revenue
Zone A Projection
Zone B Projection
Zone C Projection
Zone D Projection
$5,208
24,463
8,912
20,546
$5,299
24,891
9,068
20,906
$5,392
25,327
9,227
21,272
$5,486
25,770
9,388
21,644
$5,582
26,221
9,552
22,023
Maximum Projected Revenue
$59,130
$60,165
$61,218
$62,289
$63,379
UNNAt
Page 17
IPENCOENG CITY OF RANCHO PALOS VERDES
Client Success is our Success UPDATE STUDY - ABALONE COVE SEWER MAINTENANCE FEE
December 5, 2017
Item 1. Attorney Work Product
ALESHIRE & INTRA -OFFICE
j
V V i lei DERLLP MEMORANDUM
ATTORNEY"
ATTORNEY WORK PRODUCT
TO:
Ron Dragoo, Principal Engineer
FROM:
Anne N. Lanphar; Joshua M. Min
DATE:
October 9, 2017
RE:
Ownership of Abalone Cover Sewer System
I. INTRODUCTION
The City has asked our office to determine the ownership of the Abalone Cove
sewer system based on certain documents sent to our office by Ron Dragoo, the Principal
Engineer for the City. In addition to the documents provided, the Successor Agency's
Long Range Property Management Plan ("LRPMP"), as well as the subsequent staff
reports and agendas associated with the LRPMP, were also reviewed.
The land commonly referred to as Abalone Cove Shoreline Park ("Abalone Cove")
was acquired from the County of Los Angeles ("County") by the Rancho Palos Verdes
Redevelopment Agency ("RDA") through an October 13, 1987 Reimbursement and
Settlement Agreement concerning litigation over RDA's redevelopment plan ("Horan
Settlement") among the County, RDA, and the City of Rancho Palos Verdes ("City"). The
Horan Settlement also directed the County to issue $10 million in assessment bonds, a
portion of the proceeds of which were to be given to the RDA to pay for the construction
of landslide abatement improvements in the Abalone Cove area, which included
construction of a sanitary sewer system. However, due to delays in the County's issuance
01203.0006/415439.1
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IPENCOENG CITY OF RANCHO PALOS VERDES
Client Success is our Success UPDATE STUDY - ABALONE COVE SEWER MAINTENANCE FEE
December 5, 2017
Ownership of Abalone Cover Sewer ATTORNEY WORK PRODUCT
System
October 9, 2017
Page 2
of the bonds until July 1991, the City made several loans to the RDA, some of which went
towards the construction of the Abalone Cove sewer system.
Despite the fact that the RDA used funds loaned from the City to pay for some of
the construction of the sewer system, title to the Abalone Cove land was deeded from the
County to the RDA, and the RDA owned and was responsible for the construction of the
Abalone Cove sewer system, until the dissolution of the RDA and the transfer of RDA's
property to the City as Successor Agency by operation of law.
Subsequently, the Successor Agency submitted a LRPMP that included the
transfer of Abalone Cove from the Successor Agency to the City. This LRPMP was
approved by the Oversight Board of the Successor Agency, as well as the State
Department of Finance, and the Abalone Cove property was transferred from the
Successor Agency to the City by grant deed on or about February 10, 2015. City staff
later discovered over 150 easements granted to the former RDA by private property
owners specifically for the construction and maintenance of the Abalone Cove sewer
system, and determined these easements needed to be assigned to the City as well. In
or about September 2015, the Successor Agency's Oversight Board adopted a resolution
to amend the Long Range Property Management Plan for the assignment and
assumption of these easements to the City. However, the assignment and assumption
agreement may have been insufficient to transfer the benefit of these easements to the
City. Further review of these easements is ongoing to determine whether they were
appurtenant easements, or easements in gross, as appurtenant easements would have
01203.0006/415439.1
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giiQ PENCOENG
Client Success is Our Success
CITY OF RANCHO PALOS VERDES
UPDATE STUDY - ABALONE COVE SEWER MAINTENANCE FEE
December 5, 2017
Ownership of Abalone Cover Sewer ATTORNEY WORK PRODUCT
System
October 9, 2017
Page 3
transferred automatically to the City, whereas easements in gross will require the
recordation of a deed from the Successor Agency to the City.
II. ANALYSIS — TIMELINE OF EVENTS
An overview of the relevant documents provided shows that title to the Abalone
Cove land, and the sewer system, belonged to the RDA.
1987.10.13 Reimbursement and Settlement Aareement (Horan Settlement Aareeme
-Section 7 of the Agreement states the County would deliver a deed to the real
property, transferring to RDA all of its right, title, and interest to Abalone Cove,
together with all improvements, fixtures, easements, and rights appurtenant
thereto, in exchange for the consideration of $1.06 million. The City was to pay
$545,000 of the consideration, and the RDA was entitled to possession of and title
to the Abalone Cove property at the time of the City's $545,000 payment to County.
-Section 3 of the Agreement states the total obligation to perform the landslide
abatement improvement work was to be RDA's, and that neither the City nor the
County had any obligations for the work, except to assure formation of the
assessment districts and sale of the bonds. Section 3 also states the work was to
be done in accordance with the recommendation of the Abalone Cove Panel of
Experts
-Part of the landslide abatement improvement work included the construction of
the Abalone Cove sewer system. (See section 2.K ["Nothing herein shall be
construed as preventing the City from forming an improvement district for the
installation of sanitary sewers in all or any portion of the [Abalone Cove] area"];
01203.0006/415439.1
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IPENCOENG CITY OF RANCHO PALOS VERDES
Client Success is our Success UPDATE STUDY - ABALONE COVE SEWER MAINTENANCE FEE
December 5, 2017
Ownership of Abalone Cover Sewer ATTORNEY WORK PRODUCT
System
October 9, 2017
Page 4
section 21 ["Nothing herein shall prevent the Abalone Cove Panel of Experts from
exercising its independent judgment to order utilization of assessment proceeds
for installation of sewers, house connections, sewer district connection charges, or
any other sewer -related work to the extent permitted by law"].)'
-A copy of the actual quitclaim deed conveying the Abalone Cove property to the
RDA was not provided to our office.
1989.03.07 RDA Resolution 1989-006 Approving Loan from LA County
-The RDA approved the issuance of a promissory note to the County for a $1.45m
loan from the County to the RDA so the RDA could construct certain landslide
abatement improvements, including a sanitary sewer preliminary study. (See
section 2.5.)
1989.11.08 City Council Resolution 1989-106 Granting to County the Rights to Construct
Landslide Improvements
-The City Council granted the County the rights-of-way and acquisition, installation,
and construction of landslide abatement improvements, including storm drains,
water discharge facilities, individual drainage facilities, and sanitary sewers.
However, the Resolution specifically stated the RDA was to design, construct, and
install the landslide abatement improvements, and the County was to convey the
1 While section 2.J prevents the use of "Maintenance Funds" (a $1 m portion of the
bond proceeds to be given to a Joint Powers Maintenance Authority consisting of the City
and the RDA) from being used to maintain the sanitary sewers, the RDA could still use
the bond proceeds to actually construct the sewer system, pursuant to section 2.K and
2.L.
01203.0006/415439.1
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PENCOENG CITY OF RANCHO PALOS VERDES
Client Success is our Success UPDATE STUDY - ABALONE COVE SEWER MAINTENANCE FEE
December 5, 2017
Ownership of Abalone Cover Sewer ATTORNEY WORK PRODUCT
System
October 9, 2017
Page 5
landslide abatement improvements and all easements and rights-of-way acquired
in connection therewith to the RDA, or any successor entity thereto upon
completion of such improvements.
1990.09.04 RDA Resolution 1990-019 Establishina Assessment Districts and Riahts to
LA County for Improvements to Abalone Cove
-The resolution approved the Agreement for Implementation of Stabilization Report
between RDA and the County. Section 3 of the agreement stated the County shall
convey the County Improvement District improvements (in the Abalone Cove area)
and all easements and rights-of-way acquires in connection therewith to RDA or
any successor entity thereto upon completion of such improvements.
-A copy of the document actually conveying the improvements, easements, and
rights-of-way was not provided to our office.
1992.05.05 RDA Staff Report re Repayment of Advances to RDA from City
-Due to delays in the County's issuance of the $10 million in assessment bonds,
the City had loaned RDA funds to construct landslide abatement improvements.
After the County finally issued the bonds on July 25, 1991, these amounts could
finally be repaid.
1999.05.18 City Council Staff Report re Amendment to Project Agreement for Abalone
Cove
-In 1973, the County had purchased Abalone Cove using a grant from the federal
government, where the County entered into a "Project Agreement" with the State
Department of Parks and Recreation, which included such requirements as using
01203.0006/415439.1
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PENCOENG CITY OF RANCHO PALOS VERDES
Client Success is our Success UPDATE STUDY - ABALONE COVE SEWER MAINTENANCE FEE
December 5, 2017
Ownership of Abalone Cover Sewer ATTORNEY WORK PRODUCT
System
October 9, 2017
Page 6
competitive bidding, maintaining the property for public use, etc. In January 1997,
the County notified the City that when County transferred Abalone Cove to the
RDA in 1988, it was necessary to execute an "Amendment to the Project
Agreement" whereby RDA would assume the obligations of the Project Agreement,
but such a document was never executed.
-There is some confusion by this staff report's reference to the "City" instead of the
"RDA," as while the background section of the staff report acknowledges that the
County transferred the Abalone Cove property to the RDA, the Discussion sections
repeatedly refers to the "City" as being the recipient of the Abalone Cove property,
and how the "City" is to sign the Amendment to the Project Agreement assuming
the obligations. This confusion is compounded by the fact that the City's letter to
the Los Angeles County Department of Beaches and Harbors states that on May
18, 1999, the City Council authorized the Mayor to sign the Amendment. Further,
a letter from the State Department of Parks and Recreation addressed to the City's
Assistant City Manager states that the City of Rancho Palos Verdes will be the
"grant recipient of record for the Abalone Cove project." This letter, however, does
not mention ownership of the Abalone Cove property.
2003.07.01 City Council Staff Report re Loan Agreement Between City and RDA
-This staff report references a loan of $12,000 made from the City to the RDA
Abalone Cove Fund in Fiscal Year 2002-03 to complete sewer lateral installations
for three properties, prepare as -built plans for the sewer system, and perform
01203.0006/415439.1
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PENCOENG CITY OF RANCHO PALOS VERDES
Client Success is our Success UPDATE STUDY - ABALONE COVE SEWER MAINTENANCE FEE
December 5, 2017
Ownership of Abalone Cover Sewer ATTORNEY WORK PRODUCT
System
October 9, 2017
Page 7
miscellaneous site restoration activities. The report does not state any transfer of
ownership of the Abalone Cove property from the RDA to the City.
2003.12.02 City Council Staff Report re Fiscal Year 2003-04 and Consolidated Loan
reement Between Citv and RDA
-This staff report notes that the Abalone Cove sewer project was completed during
Fiscal Year 2002-03 and the system is operational. With the completion of the
sewer project, the RDA Abalone Cove Fund is completely depleted.
2013.09.18 Agenda for the Special Meeting of the Oversight Board of the Successor
Agency to the RDA
-The Long Range Property Management Plan ("LRPMP") for Abalone Cove notes
that the RDA was dissolved on January 31, 2012, and the City elected to become
the Successor Agency to the RDA. On February 1, 2012, the property of the former
RDA was transferred to the Successor Agency by operation of law. The Plan also
notes that title to all parcels comprising Abalone Cove was held by the RDA.
-The LRPMP also makes reference to an easement agreement entered into
between the City and the RDA on May 3, 2011 which purportedly shows the City
has been operating a park on these properties, and which granted to the City an
easement in perpetuity "on, in, over and across the Abalone Cove property for
operation of the City -operated park facilities and related structures; construction,
maintenance or repair of public facilities, including but not limited to ... sewers."
-While we do not have a copy of this May 3, 2011 easement agreement, we do
have an April 18, 1989 staff report regarding an operational agreement between
01203.0006/415439.1
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PENCOENG CITY OF RANCHO PALOS VERDES
Client Success is our Success UPDATE STUDY - ABALONE COVE SEWER MAINTENANCE FEE
December 5, 2017
Ownership of Abalone Cover Sewer ATTORNEY WORK PRODUCT
System
October 9, 2017
Page 8
the RDA and the City, which states that the City will operate the park and the
parking facilities, but that RDA would still own the property. Further, while this
LRPMP states the May 3, 2011 easement agreement references "City -operated
park facilities... including... sewers," it does not reference the ownership of such
sewers. Reviewing the May 3, 2011 easement agreement could give more insight.
2015.02.04 Aaenda Packet re Abalone Cove Sewer Svstem Easements
-The staff report, and the attached proposed resolution, notes that the Oversight
Board of the Successor Agency ("SA") approved the LRPMP on or about
September 18, 2013 by adopting Resolution No. 2013-08. Subsequently, the
California State Department of Finance approved it as well through a letter dated
April 25, 2014. The plan included the conveyance of Abalone Cove from the SA to
the City.
-Additionally, the Report notes that the staff had been investigating certain
easements across private properties that were conveyed to the RDA so the RDA
could construct the Abalone Cove sewer system
2015.09.01 Staff ReDort re Assianment and AssumDtion Aareement Between SA and C
-The staff report recommends the city council approve an assignment and
assumption agreement between the SA and the City, whereby the easements
granted to the former RDA for the construction of the Abalone Cove sewer system
are assigned to and assumed by the City. The report is accompanied by an
extensive spreadsheet listing all of these easements, specifically stating the
purpose was for access to or construction of a sewer system.
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Ownership of Abalone Cover Sewer ATTORNEY WORK PRODUCT
System
October 9, 2017
Page 9
2015.09.09 Agenda Packet re Conveyance of Abalone Cove to City
-The agenda packet shows the Oversight Board of the SA approved Resolution
No. OB 2015-01 authorizing conveyance of Governmental Use Property (which
includes Abalone Cove) to the City.
2016.01.26 Agenda Packet re Assignment and Assumption Agreement Between SA and
Citv
-The packet shows the Oversight Board of the SA adopted Resolution No. OB
2015-04 approving amendments to the LRPMP and the execution and delivery of
the assignment and assumption agreement between SA and the City regarding
the easements once held by the former RDA for the construction of the Abalone
Cove Sewer System.
III. CONCLUSION
Despite the confusion concerning the Amendment to the Project Agreement, all
other records provided to our office indicate that title to Abalone Cove, and ownership
and construction of the Abalone Cove sewer system, belonged to the RDA. Specifically,
The documents confirm that the sewer system would have been conveyed to the RDA by
the County after the County had finished constructing its improvements to the sewer
system. The LRPMP also confirms that title to the Abalone Cove property was held by
the RDA, and that all property of the RDA was transferred to the Successor Agency by
operation of law on February 1, 2012.
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December 5, 2017
Ownership of Abalone Cover Sewer ATTORNEY WORK PRODUCT
System
October 9, 2017
Page 10
The LRPMP's reference to a May 3, 2011 easement agreement that describes the
sewers as "City -operated," while not definitively stating the City owns the sewer system,
does create some ambivalence as to the former RDA's ownership of the sewer system.
Review of this May 3, 2011 easement agreement may provide more insight. However,
this confusion is mooted by the staff reports and agendas regarding the LRPMP's
treatment of the Abalone Cove property, including the sewer system, as they show that
the LRPMP's transfer of the entirety of Abalone Cove to the City was approved by the
SA's Oversight Board, and the State Department of Finance. Finally, while the City was
assigned numerous easements once belonging to the former RDA for the construction of
the Abalone Cove sewer system, further review of these easements is necessary and
ongoing to determine if the easements were automatically transferred to the City, or if the
SA must execute a deed transferring the easements to the City.
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Item 2. Abalone Cove Sewer Needs Assessment
SYSTEM SUMMARY
The Abalone Cove Sewer System was designed with consideration given to land movement associated with
a landslide. In general the system appears to be a relatively good designed system with operational issues
associated with any aging sewer system. The following assessment is to identify the issues that require
attention, however this assessment does not extend to land movement and erosion.
Most of the components of the Abalone Cove Sewer System pipes, manholes, pump stations electrical
components, grinder pumps, low-pressure lateral lines, etc. are located in easements on private property.
Grinder pumps and the lateral lines that convey waste to the shared waste lines are located on private
property within easements, when the system was installed. Property owner modifications to landscaping
or other improvements may have caused these lateral lines to be moved outside of their easements.
The remainder of the waste collected by the entire system is carried in pipes located in easements. The
primary conveyance pipe enters the public right of way, at the western edge of Wayfarers Chapel, and
continues across and along Palos Verdes Drive South to the Ab Cove pump station. From there waste is
pumped to the Sanitation Districts of Los Angeles.
The system was brought on-line (became operational) in 2001 which is when the City Council established
the annual maintenance fee for the system which is used to perform required maintenance on the system.
PIPELINES
Several different systems exist within the Abalone Cove Sewer System including lift stations that use pumps
connected to force mains which carry waste through pressurized cast iron pipes. Galvanized metal pipes
carry low pressure waste from grinder pumps to the gravity system. Stainless steel lines connect the
galvanized pipes to polyethylene plastic pipe to allow movement between the ridged galvanized pipes
in the landslide. Polyethylene plastic pipes are used to carry waste from the grinder pumps to the low
pressure galvanized pipe. The gravity pipes carry waste downhill and collect waste directly from some
homes, force mains, galvanized pipes and are accessible through manholes.
Approximately 2,505 feet of force mains are included in the system. Cast iron pipes (CIP - CL 52) are used
in varying in sizes from 3 inches to 6 inches in the force main system. The galvanized metal pipes vary
in size from 2 inches to 3 inches and account for approximately 12,815 feet of the low pressure system.
Approximately 35, 10 foot long braided stainless steel connectors are located between the galvanized pipes
to allow for landslide movement The approximate length of the remainder of the low pressure system
piping uses Polyethylene Plastic Pipes (PE) varying in size from 1.25 inches to 4 inches is approximately
6,800 feet. Approximately 19,000 feet of polyvinylchloride pipe (PVC) was installed to convey gravity flows.
The system operates in this hilly area of the city using lift stations to transmit the waste with high powered
lifting pumps to the gravity portion of the system. The low pressure grinder pumps transmit waste to the
galvanized system or to a manhole. The grinder pumps lift waste from homes through PE to a manhole or
to the galvanized metal pipes where the waste is routed (using braided stainless steel connecters to allow
movement in the ridged galvanized pipe system) to the gravity system.
Above Ground Pipelines: Some above ground pipes have required maintenance recently due to land
movement and age. Specifically some of the galvanized pressure lines, which run above ground, are
showing noticeable exterior corrosion and have been replaced. A visual inspection of these piAs.34
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revealed significant deposits on the interior of the pipes. These deposits reduce the available volume
within a pipe to transfer materials. Additionally, some of the pipes appear to be reacting with the native
soil in some areas where some pipe wall thicknesses are reduced. This pipe wall diameter reduction can
lead to reduced pipe strength and can result in pipes that are susceptible to failure. The existing above
ground galvanized pipe network should be mapped and the galvanized pipes within that network should
be replaced with a flexible material. Replacement costs for the above ground system will be dependent of
the materials chosen for the replacement which could include alternative materials like polyethylene pipe
(PE) which is both flexible and readily available. The current planning level construction cost estimate to
replace the entire 12,815 foot system including removal and disposal of the existing material would range
between $230,000 and $346,000.
Braided Stainless Steel Lines: The above ground pipeline system was designed to accommodate ground
movement through the use of braided stainless steel flexible lines. As the ground moves the above ground
pipes move with the land. In areas where the pipes need to move closer together or further apart due
to the land movement the pipes can move with the ground and the movement is accommodated by
the flexible lines. Many of these above ground pipes and the flexible lines have become stretched tight
with no or little room for additional movement. This condition needs to be addresses. The cost of the
stainless steel lines is extensive, accordingly less expense flexible lines could be identified and added to
the existing braided stainless steel lines to provide additional flexibility to the system to accommodate
ground movement. The existing stainless steel flexible line network should be mapped and the stainless
steel flexible lines with less than 1 foot of movement remaining should be replaced. Replacement costs
for the flexible lines will be dependent of the materials chosen for the replacement, which could include
alternative materials like hydraulic hose, which is both very flexible and readily available. Currently
14 sections of braided stainless steel flexible lines require replacement. The current planning level
construction cost estimate to replace the 14 sections which measure a total of approximately 140 feet
would range between $6,000 and $18,000.
Grinder pump laterals: Grinder pump laterals are routed both above ground and underground. These
pipelines use Polyethylene Plastic Pipe (PE) pipe to discharge effluent directly into the gravity lines, or into
manholes or connect to the above ground galvanized pipelines. These pipelines vary in size from 1.25" to
4". Ground movement has not been an issue with these pipelines to date. The pipelines are flexible, but
if ground movement requires additional length problems could result. Accordingly, a modification to the
existing system to accommodate ground movement is recommended. The modification could be as basic
as adding a switchback style length of PE to provide the additional length to the pipe that may be needed
to accommodate ground movement. The system includes forty-five residential grinder pumps that would
benefit from extending the PE. The planning level construction cost estimate to perform this work is
estimated to range from $8,700 to $10,500.
Gravity Pipelines: The gravity mainline pipes were constructed using polyvinyl chloride (PVC) SDR 35
pipe; the Wyes are 8 inch by 4 inch. Although life expectancy is very good, they are susceptible to land
movement and could crack at the bell or pull apart without anyone knowing. The system was installed
beginning in 2000 and the performance of the gravity mainline system has not been compromised due to
land movement or other impediments in the area. An ongoing maintenance program which includes video
inspecting the entire system on alternating years has been in place since 2013. The cost of the last video
inspection performed in early 2017 was $55,307.
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Recommendations:
Operations:
• Map all above ground pipelines and create a working GIS layer for this asset which can include
maintenance information vital to accommodate mandated reporting requirements. Visually
inspect all exposed pipelines for undue strain due to land -movement etc. Remove and replace
the existing above ground pipeline system. Develop plans and specifications for an above ground
pipeline replacement project possibly using ANSI/ASTM D2239, Polyethylene plastic pipe (PE) as the
replacement pipe, and develop a programming level cost estimate for the project. Extend the PE at
grinder pumps.
Establish a monitoring program to evaluate differential land movement which may affect
underground pipes within the system. The existing underground PVC pipes are currently water
tight, however land movement may affect this condition. An annual monitoring program could be
incorporated into the City's existing Landslide GPS monitoring program. Estimated range of costs -
$6000 - $11,000.
The system was installed 16 -years ago. Continuing the current video inspection program will provide
early warning signs of system distress. Corrective action can be undertaken if needed. The video
record will be a good indicator of how the PVC pipes will perform over the next 16 -years. Estimated
range of costs on an annual basis - $27,500 - $37,500.
Programming Level Cost Estimate for Pipelines:
It is important to note that cost estimates developed at this stage of system analysis are provided
as a guideline only. Programming level cost estimates are anticipated to evolve during the mapping
and development of construction documents stages of the work. The following is a summary of the
information presented above:
Above ground pipelines: Soft Costs- Estimated costs for the: GPS mapping of existing system $14,000,
design of the replacement construction documents for the above ground pipelines including preparation
of plans specifications and estimates $85,000, construction management and inspection services $22,500.
Estimated construction Costs to remove/dispose of existing galvanized pipe and installation of 12,815 LF of
PE pipe is estimated to be in the range of $230,000 to 346,000. The range of construction costs to extend
the grinder pump lateral lines and replace the braided stainless steel lines is estimated to be $20,000
to$38,500.
GPS Monitoring: a program would need to be develop with the City's surveyor who performs the GPS
monitoring; monitoring the additional points would add between $6,800 to 11,000 to the existing
monitoring costs.
Video inspection/cleaning: the estimated range of costs annually to perform video inspections and
cleaning of the gravity system every other year is $27,500 - $37,500.
MANHOLES
A manhole is the top opening to an underground utility vault which is used as an access point for making
connections, inspection, adjustments or performing maintenance on an underground sewer system. The
Abalone Cove Sewer System installed 71 manhole access points. The manholes were constructed g
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pre -fabricated steel reinforced concrete stacking rings, a collar and a customized base where the sewer
pipe is accessible and passes through the base of the manhole. This manhole design is typical and used
in most areas of the country, however local areas of roots from vegetation soon began to penetrate
the manholes and impact the transmission of waste water as intended. Ground water could also enter
the system at the manholes during rain events if significant rains were experienced. This condition was
recognized and a project to minimize root intrusion and possible ground water inflow was developed.
Manholes were cleaned of roots and debris, spalled concrete was repaired and each manhole in the system
was lined with a minimum 80mil coating of a spray -on epoxy coating. The epoxy prevents water from
entering or exiting the manhole, and creates a barrier between the gasses in the sewer system and the
concrete. This treatment will minimize root intrusion and concrete spalling caused through interaction
between the concrete and the gasses in the sewer system and prevent water from entering the system at
manholes.
Recommendation:
• Inspect manholes when the pipes in the system are cleaned and video inspected approximately
every two years and repair any failing epoxy areas as they are discovered.
Programming Level Cost Estimate for Manholes:
The cost of this activity is expected to be minimal, however for this planning level effort repairs to
the epoxy coating are anticipated to cost $5,000 annually. Manhole inspection and cleaning could
add between $10,000 and $15,000 annually to the pipeline video inspection/cleaning program.
GRINDER PUMP SYSTEMS
The topography of the Abalone Cove Sewer System required the inclusion of several small pumps to
provide service to approximately 45 single family residences. These grinder pumps are placed in series
(all pumps are connected to a single pipe line) configuration to transmit waste through above ground PE
pipes to a gravity area of the system. Some of the grinder pump systems connect to the gravity portion
of the system at manholes; other grinder pump systems are connected to the above ground galvanized
pressure line system. The lateral and transmission pipes associated with the grinder pumps are located in
easements on private property.
The grinder pump system is a very expensive part of the system to maintain. The grinder pumps used in
this system is an E -one sewer systems pump capable of delivering a 9GPM flow at total dynamic head of
138 feet. The model GP 2010 grinder pump was originally specified for use in the system. Replacement
pumps purchased from e -one have been modified by the company improving the reliability and operation
of the pumps. Staff has noticed that many of the grinder pumps which lift waste over 40 vertical feet seem
to have ongoing maintenance problems and some specific properties seem to experience operational
failures more regularly than others. The grinder pumps come with a 2 year manufacturer's warranty. The
warranty period is an industry standard and is to be expected for small sewage pumps with similar ratings.
It is typical for an a -one pump to have a service life of approximately seven to ten years. However, due to
service requirements, the pumps at some locations require replacement at 3 to 4 year intervals.
The Abalone Cove Sewer System includes a total of 47 grinder pump stations (two provide service to the
beach school at Abalone Cove), some of which experience considerably more stress through higher lifting
requirements than others. The following are some of the larger systems:
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CITY OF RANCHO PALOS VERDES
UPDATE STUDY - ABALONE COVE SEWER MAINTENANCE FEE
December 5, 2017
• Beach -House to PVDS (non-residential) - Duplex grinder Pumps are located at two stations for this
system: Total head of 124 feet (84 feet plus 40 feet) —This is a substantial vertical distance for these
pumps to lift the wastewater and could be problematic.
• Vanderlip Estates 10 -grinder pumps—This is a low pressure system with relatively low lift
requirements.
• Pomegranate to Sweetbay 3 -grinder pumps — Lift of about 30 -feet vertically.
• Narcissa 6 -grinder pumps — Lift of about 30 -feet vertically.
• Figtree and Narcissa 20 -grinder pumps — Lift of about 78 -feet vertically (Many pump failures are
associated with pumps that lift waste over 40 feet).
The current cost of a replacement a -one pump runs about $2,500, installation costs are approximately
$700. Staff time associated with diagnosis and replacement of grinder pumps average 8 hours per failed
grinder pump. The in -ground grinder pump -stations are constructed of HDPE and so are corrosion
resistant. Each grinder pump sump has a storage of approximately 47 gallons before the high water alarm
is activated with an assumed 10 gallons of additional storage before the sealed units are completely full.
Recommendations:
• Replace each pump at a specific time interval with a new unit. This program could begin with 10
units per year being replaced. Accordingly all pumps could be replaced within a five year period.
• Establish a maintenance program which, as a minimum, provides for annual inspections of the
electrical connections for all pumps, replaces all corroded components, and would require bearings
to be lubricated in an effort to extend the useful life of the grinder pumps.
• Develop an agreement with property owners that will facilitate the transfer of ownership of the
pumps, and the associated lateral lines that connect to the transmission pipes, to the property
owners. This would result in lowering the maintenance cost of the low pressure system which would
directly reduce costs to property owners that use a grinder pump to transmit waste through the
system. It is uncommon for a City to maintain sewage ejector (grinder) pumps.
• Consider installing a new lift station to relieve the stress on grinder pumps and improve the reliability
of the system to consistently lift waste at the Narcissa/Figtree grinder pump leg of the system.
Programming Level Cost Estimate for Grinder Pumps:
A grinder pump replacement program is estimated to cost $32,000 per year.
Servicing grinder pumps twice a year is estimated to cost between $70,500 and $94,000 per year.
The installation of a new lift station will require easements, environmental evaluation, design and
construction of a new system. The estimated range of costs to install a new lift station is $650,000 to
$800,000.
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LIFT STATIONS
CITY OF RANCHO PALOS VERDES
UPDATE STUDY - ABALONE COVE SEWER MAINTENANCE FEE
December 5, 2017
The Abalone Cove Sewer System includes four large lift stations. Of the existing lift stations, the two
larger lift stations (Sweetbay / Altimira and Ab Cove) have been converted to allow use of 3-phase
electrical power for the duplex 10hp pumps. The remaining two smaller lift stations (Thyme and
Sweetbay East) operate using the originally installed electrical system, which provides single-phase
power to the duplex 7%hp pumps.
The technical information associated with each pump station follows:
• Thyme: Storage capacity after alarm: 1,470 gal — Services 12 connections (Head of 60'), single phase
electrical 7%hp alternating duplex pumps.
• Sweetbay East: Storage capacity after alarm: 1,543 gal — Services 16 connections (Head of 29'), single
phase electrical 7%hp alternating duplex pumps.
• Sweetbay / Altimira: Storage capacity after alarm: 510 gal — this pump station has very limited spare
capacity! Services 30 connections: Head of 74' Consider adding additional storage capacity to this lift
station, 3-phase electrical 10hp alternating duplex pumps.
• Ab Cove: Storage capacity after alarm: 6,400 gal: Services the entire system including 110 single
family homes connections, 1 church, 1 School/nursery, 1 shower/toilets. (Head of 68), 3-phase
electrical 10hp alternating duplex pumps.
It is assumed that the system was designed to accommodate the 180 parcels that are included in the
district. Currently 113 are connected to the system, 67 are undeveloped. Los Angeles County Department
of Public Works Sewer Maintenance Division used 260 gallons of waste per house per day as a planning
number when estimating sewer flow needs. Accordingly if the developed properties connected to
the Abalone Cove System delivered a uniformed amount of waste 16 hours a day the waste flow is
approximately 17 gallons per hour. However, residential flow usually has peak flows associated with
morning and evening activities preparing for the day, showering etc., and returning home when the
evening meal is prepared, and laundry is washed. Residential flow connections produce an average of
17 gal/hour over the 16 hour period, however when considering peak flow rates this number could be
doubled resulting in higher peak flow rates. Storage at lift stations after the alarm is triggered as follows:
• Thyme can accommodate approximately 5.5 hours of peak hour flow before a spill;
• East Sweetbay can accommodate approximately 4.3 hours of peak hour flow before a spill;
• Sweetbay / Altamira can accommodate approximately 1.2 hour of peak hour flow before a spill;
• Abalone Cove Pump Station can accommodate less than 2.3 hours of peak hour flow before a spill.
Recommendations:
• Consider installing additional storage capacity to provide at least 6 -hours capacity to allow time for
responders to fix or replace pumps, or in the case of a power failure.
Establish a basic standard for the lift pump models and phase the standard pumps into service. A
basic requirement is that the pumps should be interchangeable. This would allow for a single spare
pump of each size to be stored to serve as a replacement for the 4 -pumps needed to operate each of
the same size lift stations.
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CITY OF RANCHO PALOS VERDES
UPDATE STUDY - ABALONE COVE SEWER MAINTENANCE FEE
December 5, 2017
• Consider lining the pump -wells with a CIPP liner or epoxy coating to ensure that they are waterproof.
• Install an SCADA (supervisory control and data acquisition) based alarm system at each of the four
lift stations that will enable real time notification of system problems and failures. A lift station
based SCADA system will minimize the probability of overflows at the lift stations.
• Post a clear notification system at each pump -station, detailing who to call when an audible or visual
alarm is activated
• Place electrical wiring schematics and instructions on how to replace the lift station pumps in a
folder inside each lift station.
• Convert the two smaller lift stations at Thyme and East Sweetbay to accommodate three phase
pumps.
• Establish a maintenance program to address the following at minimum:
o Lubricate and test lift station pumps and the overall operation of each lift station's system in
general, including air/vac valves, corp stops etc. on a scheduled roster.
o Replace each pump at a specific time interval with a serviced or new exchange unit. This must
be done in a cycle that allows each pump station to have the oldest and newest pump in the
same pump station at any time.
o Inspect the electrical connections for all of the pumps.
o Test the stand-by generator at Abalone Cove and check the quantity of the remaining fuel.
Programming Level Cost Estimate for Grinder Pumps:
Additional storage at the lift stations will provide a safeguard in preventing overflows. The estimated range
of costs to increase storage is:
Thyme — $16,500 to $22,000
Ease Sweetbay $37,000 to $55,000
Sweetbay/Altimura $65,000 to $77,000
Abalone Cove $86,000 to $98,500
The estimated cost to purchase new lift station pumps and 2 spare pumps is $31,500.
The estimated range of costs to install epoxy coating lining at all four lift stations is $18,000 to $30,000.
The estimated range of costs to install SCADA at four lift stations is $46,000 to 62,000.
The estimated range of costs of converting 2 lift stations to operate on 3 phase power is $50,000 to
$75,000.
The initial cost of establishing a preventative maintenance program that will include the items described
above is estimated to cost between $62,000 and $80,000. The ongoing cost of a PM program is estimated
to cost between $20,000 and 30,000 per year.
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