BOARD OF COUNTY COMMISSIONERS AGENDA ITEM SUMMARY

Transcription

1 8D1 BOARD OF COUNTY COMMISSIONERS AGENDA ITEM SUMMARY PLACEMENT: DEPARTMENTAL PRESET: 09:45 AM TITLE: SEPTIC TO SEWER AGENDA ITEM DATES: MEETING DATE: 3/29/2016 COMPLETED DATE: 3/17/2016 COUNTY ATTORNEY: 3/7/2016 ASSISTANT COUNTY ADMINISTRATOR: 3/14/2016 REQUESTED BY: DEPARTMENT: PREPARED BY: Name: John Polley, Director Utilities and Solid Waste John Polley, Director Name: Procedures: None Utilities and Solid Waste EXECUTIVE SUMMARY: Presented for review and discussion are a number of issues related to the septic to sewer conversion program. Issues to consider include scheduling, mandatory connection policy, financing alternatives and methods to reduce proposed assessments. APPROVAL: ENG ADM LEG ACA CA BACKGROUND/RELATED STRATEGIC GOAL: 80764ebf 1 of 24

2 Pollution from septic tanks poses a significant threat to our waterways. The County recently conducted extensive research to identify the sites of greatest concern regarding potential pollution from septic tanks. The study found five of the 14 sites sampled had detections of chemical and/or biological markers and elevated bacterial counts including the presence of a human fecal source marker. The County recently updated a report that prioritizes 24 areas in need of septic to sewer conversion. On November 11, 2015 the Board of County Commissioners directed staff to move forward with prioritized septic to sewer conversions in North River Shores (phase II), Golden Gate and Old Palm City. Septic to Sewer Program Mission To promote for the orderly extension of wastewater and water service to areas of environmental concern related to septic sewer systems and to promote the environment and consequently the overall health safety and welfare of the community in a fiscally prudent manner which minimizes financial effects to existing customers of the System. Septic to Sewer Objectives The program goals and objectives considered in the extension program included providing service to those areas that are most critical to meeting the Program Mission and include the following: 1. Improve water quality through reduced nutrient loadings as a result, in part, of the removal of on-site sewage treatment disposal systems (OSTDS) along the St. Lucie Estuary and Indian River Lagoon (surface waters) within the County for the benefit of the County residents; 2. Reduce the overall cost of service for all residents through economies of scale and operating efficiencies related to providing regionalized wastewater treatment and disposal service. The program should not have a material adverse impact on the existing customers currently being served by the County s regional water and wastewater system; 3. Provide for the long-term health, safety, and welfare of the County, especially recognizing a primary health concern due to potential contamination of the on-site water supply in areas that utilize on-site wells for drinking water in conjunction with a septic system; 4. Extend service with the highest priority that meets the Extension Program Mission. Priorities were established by the County s Consulting Engineers as previously discussed as part of the criteria rankings in Section 1 of this report. 5. The program should result, to the extent practical, in the most economical alternative to the affected customer that is connecting to the County s regional system through the extension program. ISSUES: Schedule 80764ebf 2 of 24

3 In order to complete the septic to sewer program in an orderly way it is important to develop a reasonable schedule that impacted property owners can rely on. The recommended schedule provides for construction of one major project per year. This will allow for the Utility to fund its contribution on a pay as you go basis. Another benefit is the ability to provide property owners significant notice of when payments will be due and when they will be required to connect. Accelerating the schedule will likely cause costs to increase as there are limited resources to design, construct and build the projects. Proposed tentative schedules for the first six projects are provided as follows: North River Shores Phase II Estimated Construction Cost $4,186,403 Plans Complete December 2016 Permits in Hand February 2017 Construction Bids April 2017 Initial Assessment Resolution May 2017 Final Assessment Resolution June 2017 Commence Construction August 2017 Complete Construction October 2018 Assessment on Tax Bill November 2018 Requirement to Connect October 2019 Golden Gate Estimated Construction Cost $9,589,163 Plans Complete December 2016 Permits in Hand February 2017 Construction Bids April 2018 Initial Assessment Resolution May 2018 Final Assessment Resolution June 2018 Commence Construction August ebf 3 of 24

4 Complete Construction October 2019 Assessment on Tax Bill November 2019 Requirement to Connect October 2020 Old Palm City Estimated Construction Cost $13,552,370 Plans Complete August 2018 Permits in Hand September 2018 Construction Bids April 2019 Initial Assessment Resolution May 2019 Final Assessment Resolution June 2019 Commence Construction July 2019 Assessment on Tax Bill November 2019 Complete Construction July 2020 Requirement to Connect July 2021 Beau Rivage Estimated Construction Cost $3,974,236 Plans Complete August 2019 Permits in Hand September 2019 Construction Bids April 2020 Initial Assessment Resolution May 2020 Final Assessment Resolution June 2020 Commence Construction August 2020 Complete Construction September ebf 4 of 24

5 Assessment on Tax Bill November 2021 Requirement to Connect September 2022 Gaines Avenue Estimated Construction Cost $4,445,731 Plans Complete August 2020 Permits in Hand September 2020 Construction Bids April 2021 Initial Assessment Resolution May 2021 Final Assessment Resolution June 2021 Commence Construction August 2021 Complete Construction September 2022 Assessment on Tax Bill November 2022 Requirement to Connect September 2023 Hibiscus Park Estimated Construction Cost $14,165,566 Plans Complete August 2021 Permits in Hand September 2021 Construction Bids April 2022 Initial Assessment Resolution May 2022 Final Assessment Resolution June 2022 Commence Construction August 2022 Complete Construction September 2023 Assessment on Tax Bill November ebf 5 of 24

6 Requirement to Connect September 2024 Mandatory Connection The capital costs to extend service to the first three projects are estimated to be approximately $27.4 million. Funding for the improvements are assumed from the issuance of additional indebtedness. The debt payments are in-turn offset by the revenues derived from non-ad valorem assessments and rate revenues for service from connecting customers. The unrestricted assessment revenues are designed to recover approximately 73% of the associated debt service payments issued to finance the capital costs. The discounted assessment to new customers recognizes the environmental and financial benefit accrued to the entire Utility System from the septic to sewer extension program. The balance of the debt service payments not funded from assessment revenues are projected to be funded by the incremental net revenues of the utility system derived from the new customer connections. Due to the fact that the financial forecast assumes a 100% connection rate, these projects will require adoption of a mandatory connection policy to ensure adequate revenues are available to fund the debt service. No environmental improvement will occur until septic tanks are eliminated. To implement the mandatory connection program it is necessary to develop policy and adopt an ordinance. A mandatory connection ordinance will include a detailed process for the notification to property owners prior to, during and upon completion of a wastewater project as well as provide for the adoption of mandatory connection administrative policies and procedures by resolution of the Board. The ordinance should also include enforcement provisions in order to achieve the proposed environmental and financial goals. Enforcement options include the County s code enforcement process, assessment of a monthly base facility charge, termination of any existing Martin County Utility service until compliance is achieved or any other civil or criminal penalty available by law. The draft policy attached to this item provides for the following: Martin County will make the project known through proactive communication in principally two forms: Through standard procedures and timelines for notifying property owners within a neighborhood project boundary and; Through organized public outreach meetings to inform the affected parties of the neighborhood project. Martin County will develop a process to address a limited number of special circumstances in which a temporary waiver of the mandatory connection requirement may be justified. Martin County may also make limited financial assistance available from time to time for those with justifiable hardships, subject to appropriation. Acceptable cause for deferral is the recent repair and or replacement of septic systems. The policy provides for assistance for the cost to connect to the County system on the basis of a qualified hardship. It is the intent of the policy that such assistance be need based while recognizing that facts and circumstances vary on a case by case basis, thus necessitating a sliding scale for assistance. Such provisions, if any, are subject to appropriation of funding for that specific purpose ebf 6 of 24

7 Financing Alternative As part of its ordinary due diligence in choosing a financing source, staff has considered several alternative financing scenarios in cooperation with its Consultant and Financial Advisor. For comparison purposes, the numbers below reflect current interest rates, as provided by the Financial Advisor and each scenario is based upon approximately the same amount of initial borrowing requirements. Each of the scenarios will be repaid using monies collected through the special assessment methodology. Scenarios considered include: Conventional water/wastewater revenue bonds 20 year amortization Total debt payments = $43.2 million Conventional water/wastewater revenue bonds 30 year wrap around amortization Total debt payments = $65.0 million Assessment revenue bonds 20 year amortization Total debt payments = $47.6 million Assessment revenue bonds, with General Fund pledge 20 year amortization Total debt payments = $43.6 million State Revolving Fund 20 year amortization Total debt payments = $39.9 million The State Revolving Fund (SRF) loan is recommended as the financing method for the initial three septic to sewer projects. The total debt payments incurred under the SRF scenario is projected to be $39.9 million, which is substantially less than the nearest alternative. Recommendations to Reduce the Proposed Assessments In an effort to provide some equity to the future customers, staff was directed to develop a uniform charge or assessment for the first three projects. The estimated prepaid assessment for North River Shores Phase II, Golden Gate and Martin Downs/Sunset Gardens provided on November 3, 2015 was $11,750 inclusive of construction costs and Capital Facility Charges. The annual assessment was estimated to be $850/year for a twenty year period. The annual assessment would be reduced to $814 for those who take advantage of the 4% discount for early payment of taxes. The County Administrator has directed staff to make efforts to reduce the proposed assessments. Staff has developed and recommends two alternatives. Cost Sharing and Project Coordination with Engineering When the septic to sewer construction is complete, the roads in each area will be resurfaced. This new surface will eliminate potholes, uneven surfaces and the patchwork look of existing roads. The resurfacing will increase the life expectancy of the streets to enhance the entire area. The septic to 80764ebf 7 of 24

8 sewer work will be coordinated with Engineering so stormwater system repairs can be completed prior to roadway resurfacing. The estimated cost of resurfacing the roads was included in the proposed assessments. If the estimated cost to repave the roads of $2,236,000 is funded by Engineering as part of the FPL franchise fee program the assessment could be reduced by approximately $1,100. This would reduce the estimated assessment to $10,650. Financing the Capital Facilities Charge in the Monthly Utility Bill The estimated assessments provided on November 3, 2015 included a wastewater Capital Facility Charge (CFC) of $2,100 which is charged to all new connections to the County s regional utility system. The Capital Facility Charge provides for the recovery of the capital cost of wastewater treatment, disposal, and wastewater transmission facilities that are necessary to provide service. Some Utility Systems finance the collection of CFC charges on the monthly bill (an installment payment as opposed to an up-front charge). If this were done as part of the Martin County septic to sewer program the $2,100 fee could be amortized at 0% interest over a ten year period for $17.50 per month. By removing the Capital Facility Charge from the assessment and allowing for this installment payment at no financing cost, the estimated assessment could be further reduced to $8,550. If the assessment was reduced to this amount the annual assessment on the tax bill is estimated to be $594 for those property owners who take advantage of the 4% discount for early payment of taxes. This estimate assumes a 2.8% interest rate on the cost of borrowed funds. The current SRF loan interest rate is approximately 1%. Applying this rate would further reduce the annual estimated payment to a level as low as $523; however, the interest rate will not be known until the loan is secured with the Florida Department of Environmental Protection (the loan administrator for the State). LEGAL SUFFICIENCY REVIEW: To the extent this item contains legal issues it has been reviewed for legal sufficiency and consistency with applicable law; however, this matter is primarily a matter of Board policy. RECOMMENDED ACTION: RECOMMENDATION a.) Move that the Board approve the proposed tentative Schedule. b.) Move that the Board authorize staff to begin to communicate the schedule with the affected residents. c.) Move that the Board approve the State Revolving Fund (SRF) Financing Alternative. d.) Move that the Board approve the Cost Sharing with Engineering. e.) Move that the Board approve the concept of Financing of Capital Facility Charges (CFC) on the monthly bill ebf 8 of 24

9 f.) Move that the Board direct staff to develop detailed policies and procedures to provide for financing the Capital Facilities Charge on the monthly bill. g.) Move that the Board direct staff to prepare a draft mandatory connection ordinance consistent with Board direction. h.) Move that the Board direct staff to bring the mandatory connection ordinance and policy back for final approval. ALTERNATIVE RECOMMENDATIONS Move that the Board approve staff recommendation with Board directed modifications. FISCAL IMPACT: RECOMMENDATION Approval of the recommendation will require implementation of rate index. ALTERNATIVE RECOMMENDATIONS Changes to the Schedule may impact the cost of the service. Failure to adopt the Mandatory Connection Policy will result in higher costs to the residents. DOCUMENT(S) REQUIRING ACTION: Budget Transfer / Amendment Chair Letter Contract / Agreement Grant / Application Notice Ordinance Resolution Other: ROUTING: X ADM _ BLD _ CDD _ COM X ENG _ FRD _ GMD _ GSD _ ITS _ LIB _ MCA _ MPO _ PRD _ USD X CA X ACA X LEG 80764ebf 9 of 24

10 BOARD OF COUNTY COMMISSIONERS MARTIN COUNTY, FLORIDA MANDATORY CONNECTION POLICY MANUAL Septic to Sewer Conversion Program Draft February 26, 2016 Program The Martin County Board of County Commissioners has established a program to make wastewater treatment service available to existing neighborhoods which currently depend upon septic tanks, commonly called the Septic to Sewer Program. The program is intended to enhance and protect the environment and consequently the overall health safety and welfare of the community in a financially feasible manner which minimizes financial impacts to existing customers of the system. To achieve this program in an orderly manner, Martin County has evaluated a number of existing residential neighborhoods which do not have service available and therefore are not connected to its system of regional wastewater treatment facilities. There are a number of reasons for the neighborhoods to connect to the system, including: i) preventing pollutants from entering the estuary; ii) providing long-term ability to meet increasing regulations regarding treatment and disposal; iii) increasing the supply of reclaimed water as an additional water resource, further enhancing the long-term benefit of the regional system. Each neighborhood within the Martin County Utility Service Area was evaluated in terms of cost to connect to the regional system and identified environmental criteria. From these evaluations, three neighborhood projects were named as current projects, with 21 other projects to follow in the future. Homeowners and residents may expect the neighborhood projects to proceed as follows: 1. Martin County will design and construct the pipelines and facilities to collect the sewage from individual properties and pump it to the regional treatment plants. These lines will be located in the public easement adjacent to the individual property. 2. When the lines are complete, the owner will be notified of the need to hire a qualified plumber to: a) make a plumbing connection from the existing home or commercial building to the regional collection lines, and b) abandon the existing septic system. Policy It is the policy of Martin County that connection to the wastewater treatment system is mandatory once it is declared to be available. The purpose of this mandatory connection policy is to obtain the desired environmental benefits and to assure the financial feasibility of the program. Martin County will implement the policy through its employees and agents. Page 1 of 5 10 of 24

11 Martin County will make the project known through proactive communication in principally two forms: Through standard procedures and timelines for notifying property owners within a neighborhood project boundary, and Through organized public outreach meetings to inform the affected parties of the neighborhood project. Martin County will recognize and provide for a limited number of special circumstances in which a temporary waiver may be justified. Martin County may also make limited financial assistance available from time to time for those with justifiable hardships, subject to appropriation. Definitions Available means the Utilities and Solid Waste Director, or designee, has made a determination based upon applicable standards that the County s regional wastewater system is capable of being connected to the plumbing of an establishment or residence, is not under moratorium, and has the adequate permitted capacity to accept the sewage. Base facility charge means the fixed charges per month, based on the connection size of the meter serving the customer account, which is charged for each month the account is inactive. The base facility charge is further defined in the Resolution Establishing Rates, Fees, and Charges for Potable Water, Wastewater and Reclaimed Water Services, as it may be amended from time to time. Municipal Service Benefit Unit (MSBU) means the legally binding levy of a non-ad valorem assessment against individual properties for the specific purpose of recovering the capital costs of the neighborhood project and the wastewater capital facilities charge applicable to the property. Often referred to as a special assessment, the MSBU sets the maximum amount an individual property owner may be charged for the project. The MSBU is adopted in according to procedures established in Florida law. Owner means the persons or entities who own a particular property within the neighborhood project. Resident means the persons who live in a particular property within the neighborhood project. The Resident may or may not be the Owner. Neighborhood project means a planned and organized undertaking to design, build and install the infrastructure necessary to connect individual properties within a defined geographic boundary to the regional wastewater system. Notification to Property Owners Once a neighborhood project is authorized to begin, the Utilities and Solid Waste Director, or designee, will notify each affected property Owner and/or Resident in writing as various milestones are anticipated or achieved. Each letter will be sent by first class mail, unless otherwise specified. Although the wording refers to required communication with the Owner, Page 2 of 5 11 of 24

12 the Director may choose to also communicate with the Residents separately to assure the maximum public awareness of the neighborhood project. 1. Planning Letter. This letter provides the initial contact with the Owner. It informs the Owner that a neighborhood project is planned and that the project includes their property. 2. Assessment Letter. This letter notifies the Owner about a public hearing to establish a Municipal Service Benefit Unit (MSBU) the property is about to occur. The MSBU has the effect of placing a legally binding financial requirement on the property and sets the maximum amount of the financial requirement. 3. Preconstruction Letter. This letter informs the Owner about the anticipated date when construction will begin and the anticipated timeline of the project. 4. Notice of Availability Letter. This letter notifies the Owner that construction is complete and that connection to the regional utility system is available, and that the connection must be made within 365 days of the date of the Availability Letter. 5. Reminder Letter. This letter is sent at the end of 300 days and reminds the Owner of the legal requirement to connect within 365 days. This letter is sent only to Owners who have not yet made connection. 6. Base Charge Letter. This letter is sent 30 days prior to the expiration of the 365 day connection period. It informs the Owner that the utility service monthly base charge will begin on the 366 th day, if connection has not been made. It once again reminds the Owner of the requirement to connect within 365 days. 7. Code Enforcement Letter. If connection has not been made at the end of 18 months following the date of Availability Letter, then this letter will be sent informing the Owner that the case has been turned over to code enforcement for compliance. Public Outreach Martin County will plan and conduct at least two public outreach meetings to inform the community of the neighborhood project, its benefits and costs. The exact timing of the meetings is flexible, but generally, one will be held between the time of the planning letter and the establishment of the special assessment and the second meeting will be held after construction is underway. These informational meetings are in addition to the public hearings needed to formally adopt budgets, special assessments, utility rates, etcetera. As informational meetings, they may include other matters, especially other coordinated neighborhood improvements. Special Circumstances Temporary Deferral of Connection The Board of County Commissioners has determined that certain circumstances may justify temporarily deferring connection to the regional wastewater system. The Utilities and Solid Waste Director, or designee, may approve a temporary deferral of connection under the following conditions: 1. The property owner must request the deferral. This may be done by submitting a letter to the Director. Alternatively, the Director may devise a form for use in requesting a deferral. Page 3 of 5 12 of 24

13 2. The property owner must state the reason for the request for deferral. Acceptable cause for deferral is the recent repair and or replacement of septic system components, defined as follows: a. Cost of completed repairs / replacements exceeds $4, b. Repairs / replacements occurred between prior to, but not more than 2 years prior to the date of the Availability Letter. c. Repairs / replacements have been properly permitted by the Martin County Health Department. d. Completed repairs / replacements have been performed by a qualified plumber licensed in Martin County. e. Copies of legible receipts and permits are provided to validate the above conditions. 3. The Director may exercise judgment in determining the length of the deferral, but in no cases may the deferral exceed three years from the date of the Availability Letter. Financial Assistance The Board of County Commissioners, in its sole discretion, may fund financial assistance resources to help qualified Owners and Residents meet their financial obligations resulting from the neighborhood project. Financial assistance may fall into four categories: 1. Assessment of line construction costs. Each property will be assessed a portion of the line construction costs. Any Owner may elect to have the assessment placed on the annual property tax bill. Interest rates may vary from project to project, and will normally be amortized over a 20-year period. 2. Up front connection payments. These are the fees to recover the cost of the wastewater treatment and disposal plant facilities, commonly called Capital Facility Charges [CFC]. Any Owner may request to make the CFC in monthly payments at no interest, amortized over 10 years. In such cases, the CFC monthly payments will be added to the monthly utility bill for the customer account. 3. Cost of plumbing to connect the property to the regional system. The Owner will bear the cost of hiring a qualified plumber to connect the property to the regional collection system and to abandon the existing septic tank. Martin County may provide funding assistance to offset this cost, subject to available funding. 4. Monthly fees and charges. Monthly utility bills will normally fall to the Resident. Martin County may provide funding assistance to offset this cost, subject to available funding. The first two financial assistance categories are available to any property Owner in the neighborhood project. The latter two categories are such that they must be paid for and carried out by the Owner and/or Resident. Page 4 of 5 13 of 24

14 It is the intent of this policy that assistance for the latter two categories will be on the basis of a qualified hardship. Recognizing that facts and circumstances vary from one household to the next, a sliding scale will be applied. The guidelines and procedures established for the State Housing Initiative Partnership [SHIP] Program, as amended from time to time, will be used as the basis for allocating resources to these two financial assistance categories. Such resources, if any, are subject to appropriation of funding for this specific purpose [from a source other than SHIP funding]. Exact determination of how the resources will be allocated and the amount of monies to be made available will be made on an annual basis in conjunction with the funding decision. Additional Enforcement Provisions Ultimately, the goal of the program is to have properties within the neighborhood projects connected to the regional sewer system. Absent such connection, the environmental goal is not achieved. General Provisions Payment of assessment or capital facility charges does not relieve an Owner from connecting to the System. If during the 365 day connection period, the septic system fails the Owner must connect to the System. If the property sells and the connection has not yet occurred, the Owner must connect to the System. Conclusion Martin County, within this policy, has identified various timelines, accommodations and financial aids to mitigate any burdens being placed upon Owners and Residents as a result of these improvements. If at the end of three years from the date of the Availability Letter, connection still has not been made to the regional collection system, the County Administrator, or designee, is authorized to use any and all means to enforce this policy, including but not limited to, withholding building permits, injunctive relief, and any other remedy provided by law. *** end *** Page 5 of 5 14 of 24

15 DAN HUDSON CONSULTING, LLC POST OFFICE BOX 2175 STUART, FLORIDA Memorandum February 22, 2016 To: Taryn Kryzda, County Administrator Roger Baltz, Assistant County Administrator Jennifer Manning, Grants Compliance/Budget Manager John Polley, Utilities and Solid Waste Director Phil Keathley, Project Manager CC: Mika Gorniewicz, Senior Financial Analyst From: Dan Hudson Reference: Financing Recommendation for Septic to Sewer Program Summary: It is recommended that Martin County proceed with securing State Revolving Fund [SRF] financing to support the financial requirements of the Septic to Sewer Program for the three current projects, North River Shores Phase 2, Old Palm City and Golden Gate. The purpose of this memorandum is to recommend that Martin County proceed with State Revolving Fund [SRF] financing for the three current neighborhood projects of the Septic to Sewer Program. As part of its ordinary due diligence in choosing a financing source, Martin County has considered several alternative financing scenarios in cooperation with its Financial Advisor. For comparison purposes, the numbers below reflect current interest rates, as provided by the Financial Advisor and each scenario is based upon approximately the same amount of initial borrowing requirements. Each of the scenarios will be repaid using monies collected through the special assessment methodology. Scenarios considered include: Conventional water/wastewater revenue bonds 20 year amortization o Total debt payments = $43.2M Conventional water/wastewater revenue bonds 30 year wrap around amortization o Total debt payments = $65.0M Assessment revenue bonds 20 year amortization o Total debt payments = $47.6M Assessment revenue bonds, with General Fund pledge 20 year amortization o Total debt payments = $43.6M State Revolving Fund 20 year amortization o Total debt payments = $39.9M Page 1 15 of 24

16 Recommendations 1. The State Revolving Fund [SRF] loan is recommended as the financing method for the initial three projects. The total debt payments incurred under the SRF scenario is $39.9M, which is substantially less than the nearest alternative. Further, the complex SRF formula used to determine the final interest rate will very likely be materially less. To illustrate this point, the reader should be aware that the current published base rate is 1.98%, however actual loans being issued are averaging 0.93%. The SRF is administered through the Florida Department of Environmental Protection and it originates from the Federal Clean Water program. Monies are currently available for projects of this type. 2. The second choice, if the SRF interest rate increases unexpectedly, would be the assessment revenue bonds, backed with a General Fund pledge as additional collateral. The total debt incurred under this scenario is $43.6M. This is a common financing mechanism, with very little risk to the General Fund. The assessment process provides the revenue to repay loan, but the County pledges to use General Fund monies in the unlikely event the assessments were not sufficient to repay the loan. This produces a better interest rate than using the assessment revenue alone. The assessment methodology used in Florida and Martin County makes it highly improbable that General Fund assistance would ever be needed. In addition to the attractive interest rate, this scenario also takes the bonds out of the water and wastewater user charges rate calculations, resulting in lower utility rates over time. 3. The wrap around debt scenario should not be considered further. It does offer some benefits by setting a level debt service for the next thirty years, however, the additional interest costs incurred, at $65.0M total, make it prohibitively expensive. These recommendations apply only to the current three projects. Since interest rates are market driven, the current set of facts should not be generalized to future choices. * * * Page 2 16 of 24

17 Martin County, FL Revised New Money Analysis * Aggregate 1C Aggregate 2C Aggregate 3C Aggregate 4 Water & Sewer Bonds Special Assessment Bonds Special Assessment Revenue Bonds State Revolving Fund (Non-Ad Valorem Backup 1.98% Pledge) Ratings AA/AA Baa2/BBB Aa3/AA- 1.98% Delivery 7/1/2016 7/1/2016 7/1/2016 7/1/2016 1/1/2019 1/1/2019 1/1/2019 7/1/2017 6/1/2019 Project Deposit 32,029,012 32,029,012 32,029,012 31,204,045 Scale Adjustment None None None - Term 20 Year 20 Year 20 Year 20 Year Solution Straight Line Straight Line Straight Line Straight Line Par 31,295,000 32,855,000 32,205,000 32,383,216 TIC 2.81% 3.85% 2.91% 1.98% All In TIC 2.91% 3.95% 3.01% 2.17% Total Debt Service 43,165,164 47,649,625 43,599,947 39,931,870 Max Annual DS 2,149,606 2,369,375 2,170,975 2,028,116 Average Annual DS 1,856,566 2,049,446 1,875,267 1,815,085 *Bond Rates as of 2/1/2016; SRF rates as of 2/10/2016 Page 3 17 of 24

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19 DAN HUDSON CONSULTING, LLC POST OFFICE BOX 2175 STUART, FLORIDA Memorandum January 14, 2016 To: Taryn Kryzda, County Administrator Roger Baltz, Assistant County Administrator John Polley, Utilities and Solid Waste Director Phil Keathley, Project Manager CC: Mika Gorniewicz, Senior Financial Analyst Kate Parmalee, Manager, Community and Strategic Partnerships Anita Cocoves, Health and Human Services Manager From: Dan Hudson Reference: Septic to Sewer Funding Partnership Update Summary: This memorandum provides a survey of funding partners which have the potential of bringing up to $7.75M into the funding stream to reduce the per household cost. While the maximum amount may be optimistic, a realistic estimate would be in excess of the $3.75M previously identified as necessary to bring the per unit cost to below $10,000. Additionally, Utilities suggests amortizing the Capital Facility Charge on the utility bill, which has great merit. It might be useful and encouraging to give a quick update on potential funding partnerships which have been identified for the Septic to Sewer Program. This summary describes the maximum amount of potential funding. Financing alternatives will be addressed in a separate memo. Partner: Community Development Block Grant [CDBG] Amount: $1,500,000 Golden Gate Probability: High; subject to competitive process Discussion: Septic to Sewer is an ideal CDBG project. Up to $1.5M is available annually. It is subject to competition from other applicants, but Martin County typically scores very high and with some modest changes, can increase its score in certain categories. Martin should submit for $1.5M and the amount will be all or nothing based upon the objective scoring and ranking criteria. Partner: Legislative Appropriations Request Amount: $2,000,000 Golden Gate $2,000,000 Old Palm City Probability: High; subject to legislative determination Discussion: Martin has already been awarded $1.5M for the North River Shores Phase 2 project. St. Lucie River water quality continues to be an important issue politically and Page 1 19 of 24

20 environmentally. It is very likely that Martin will receive some funding, but the amount could vary substantially. Partner: Other Grants Amount: $ 500,000 Golden Gate $ 500,000 Old Palm City Probability: Moderate; subject to competitive process Discussion: There are a number of grants which the septic to sewer program could qualify for. These include the Florida DEP TMDL grants, Indian River Lagoon National Estuary Program, St. Lucie River Issues Team, and possibly others. The amounts and basis of selection varies with each grant agency. The amounts could vary substantially. Also there are likely other county departments in competition for some of these grants. Partner: Community Redevelopment Area [CRA] Amount: $ 250,000 Golden Gate $1,000,000 Old Palm City Probability: High; subject to recommendation of advisory boards Discussion: CRA funding should be actively sought. Lack of sewer was identified as a basis for creation of the CRA s initially. Connection to regional sewer typically increases property values, thereby increasing the Tax Increment Funding available in the future. It has its own recurring revenue stream. Depending upon the total funding picture, it could be used to assist homeowners with out of pocket costs. Partner: State Housing Initiative Partnership [SHIP] Amount: $ 40,000 Varied; case by case basis Probability: Low Discussion: SHIP is assigned a low probability. It s applicability is limited to homeowner assistance for those individuals who meet eligibility requirements. Still it could be an important part of the total picture by addressing those with a genuine financial hardship. Other: Amortize Capital Facility Charge on Utility Bill Amount: $4,500,000 All three projects Probability: High Discussion: John Polley has suggested amortizing the CFC [$2,100] into the customer s monthly utility bill. This suggestion has great merit. It can be done under existing policy, with Board approval. It reduces the assessment amount to below $10,000 immediately. It appears to be compliant with applicable bond covenants. It is another way the Utilities and Solid Waste Department can participate in addition to the $6.999M it has already committed. Although it remains part of the total cost of the project, if amortized without interest for 10 years, it would be about $17.50 on the customer s monthly utility bill. *** Page 2 20 of 24

21 BCC MEETING DATE: March 29, 2016 AGENDA ITEM: 8D1 TO: VIA: FROM: REF: SUBJECT: MARTIN COUNTY, FLORIDA SUPPLEMENTAL MEMORANDUM Honorable Members of the Board DATE: March 23, 2016 of County Commissioners Taryn Kryzda County Administrator John Polley Utilities & Solid Waste Director 80764ebf SEPTIC TO SEWER Map of the septic to sewer study areas and a memo from Dan Hudson Consulting regarding the suggested formula for CRA contribution for septic to sewer. Page 1 of 1 usd2016m298 SUPPLEMENTAL_3.docx 21 of 24

22 SW HIGH MEADOW AVE SW MAPP RD GREEN RIVER PARKWAY SAVANNAH RD. PortSalernoR-2A Area: :43 PortSalernoR-2A Area: :46 PortSalernoR-2A :39Area: PortSalernoR-2A :2Area: PortSalernoR-2A :49Area: PortSalernoR-2A Area: :48 PortSalernoR-2A :35Area: PortSalernoR-2A :51Area: PortSalernoR-2A Area: :45 PortSalernoR-2A Area: :52 PortSalernoR-2A :28Area: PortSalernoR-2A Area: :24 PortSalernoR-2A Area: :30 PortSalernoR-2A :42Area: PortSalernoR-2A :27 Area: PortSalernoR-2A Area: :38 PortSalernoR-2A :30Area: PortSalernoR-2A Area: :34 PortSalernoR-2A Area: :32 PortSalernoR-2A Area: :34 PortSalernoR-2A Area:0.0 :19 PortSalernoR-2A :18Area: PortSalernoR-2A Area: :36 PortSalernoR-2A Area: :41 PortSalernoR-2A Area: :47 PortSalernoR-2A Area: :27 Area:3.92 PortSalernoR-2A Area:0.0 :31 :50 PortSalernoR-2A Area:5.01 :4 PortSalernoR-2A :3 Area: PortSalernoR-2A Area: :37 PortSalernoR-2A :32 Area: PortSalernoR-2A Area: :40 PortSalernoR-2A :21 Area: PortSalernoR-2A :23 Area: PortSalernoR-2A Area: :26 PortSalernoR-2A :29 Area: PortSalernoR-2A Area: :31 PortSalernoR-2A Area: :3 PortSalernoR-2A Area: :25 PortSalernoR-2A Area: :29 PortSalernoR-2A :28 Area: PortSalernoR-2A Area: :20 Legend NW GOLDENROD RD NW FEDERAL HWY NW GOLDENROD RD NE COUNTY LINE RD NE SAVANNAH RD NE INDIAN RIVER DR NE SKYLINE DR CAUSEWAY BLVD. NE CAUSEWAY BLV Septic Study Areas ± Septic Study Areas JENSEN BEACH BLVD. NE JENSEN BEACH BLV SW MARTIN HWY SW MARTIN HWY City of Stuart Service Area 3 BRITT RD. Martin County Utilities Service Area 9 SW MARTIN HWY SW MARTIN HWY I-95 SW SAND AVE 17 CR 714 SW CITRUS BLV SW CITRUS BLV SW CITRUS BLV SW SAND AVE SW SAND AVE FLORIDA TRP MARTIN HIGH 20 SW SAND TRL SW MARTIN HWY INTERSTATE 95 SW MURPHY RD SW MURPHY RD MEADOWS AVE 24 NORTH F ORK OF ST. DOWNS BLVD SW SUNSET TRL 23 NW BRITT RD SW BERRY AVE 18 NW PINE LAKE DR SW MAPP RD SW MATHESON AVE MATHESON AVE SW 34 TH ST SW MARTIN HWY LUCIE RIVER FEDERAL HWY US-1 NW BRITT RD SW MAPP RD NW SPRUCE RIDGE DR SW DYER POINT RD SW SUNSET TRL FLORIDA TRP FLORIDA TRP MAPP RD. SW ROBY'S WAY SW MAPP RD SW MAPP RD SW MAPP RD NW BAKER RD NW WRIGHT BLV SOUTH FORK OF 8 NW DIXIE HWY ST. LUCIE 1 SW FEDERAL HWY GAINE S NE DIXIE HWY SW FEDERAL HWY SW PALM CITY RD RIVE R BAKER RD. DIXIE HWY KANNER HWY. (SR 76) SALERNO RD. NE SAVANNAH RD ST. LUCIE ESTUARY SE DIXIE HWY SE WILLOUGHBY BLV SE POMEROY ST 5 16 SW LINDEN ST NE ALICE ST S KANNER HWY SW MARTIN HWY S KANNER HWY SE FEDERAL HWY SE PALM BEACH RD SE MONTEREY RD S KANNER HWY SE INDIAN ST SE MONTEREY RD SE FEDERAL HWY SE WILLOUGHBY BLV SE DIXIE HWY POME ROY S T. SE SALERNO RD SE AULT AVE SE MONTEREY RD SE FEDERAL HWY SE COMMERCE A VE FEDERAL HWY (US-1) INDIAN RIVER DR. NE PALMER ST SE ST LUCIE BLV SE MONROE ST E SE COVE RD SE ST LUCIE BLV SE DIXIE HWY SE GRAN PARK WAY SE COVE RD SE DIXIE HWY SE SUMMERFIELD W AY SE JACK AVE 2 SE ST LUCIE BLV SE JEFFERSON ST SE OCEAN BLV SE ST LUCIE BLV DIXIE HWY. INDIAN RIVER LAGOON OCEAN BLVD. ATLANTIC OCEAN OCEAN BLVD. ST. LUCIE INLET 15 7 POCKE T MANATE E SE DIXIE HWY NE OCEAN BLV NE OCEAN BLV 6 NE OCEAN BLV NE OCEAN BLV HOARSESHOE RD. COVE RD. 14 SE DIXIE HWY NE MACARTHUR BLV SE COVE RD SE MACARTHUR BLV SW CITRUS BLV 19 FLORIDA TURNPIK E 10 4 INTERSTATE 95 SW JACK JAMES DR SW SALERNO RD SW GAINES AVE SE CO PAR UR DI T SE SE PAR DI SE DR IVE COVE RD. SE COVE RD SE FEDERAL HWY SE SEABRANCH BLV SE DIXIE HWY SE HERITAGE BLV SE FEDERAL HWY SE DIXIE HWY SE GOMEZ AVE CITRUS AVE SW CITRUS BLV SW 96 TH ST SW 96 TH ST PRATT WHITNEY RD. SW TROPICAL AVE SW KANNER HWY SW PRATT-WHITNEY RD INTERSTATE 95 SE SEABRANCH BLV SE FEDERAL HWY SE DIXIE HWY SE DIXIE HWY SE BEACH RD RANK COMMUNITY 1. OLD PALM CITY AREA 2. GOLDEN GATE SUBDIVISION 3. BEAU RIVAGE SUBDIVISION 4. GAINES AVE AREA 5. HIBISCUS PARK AREA 6. PORT SALERNO / NEW MONROVIA AREA 7. SALERNO / MANATEE POCKET AREA 8. NORTH MAPP ROAD AREA 9. EVERGREEN G&CC (HIDEAWAY ISLES / MID RIVERS) 10. SOUTH MAPP ROAD 11. SOUTH FORK AREA 12. TOWN OF SEWALL'S POINT 13. RIO / ST. LUCIE (EAST) 14. ROSEWALK / GALLEON BAY SUBDIVISIONS 15. STUART YACHT & COUNTRY CLUB 16. FOUR RIVERS SUBDIVISION 17. CRANE CREEK COUNTRY CLUB 18. NORTH RIVER SHORES - PHASE TROPICAL FARMS AREA 20. RIVER'S END SUBDIVISION 21. VISTA SALERNO / US 1 AREA 22. RIO / ST. LUCIE (WEST) 23. CAPTAIN'S CREEK SUBDIVISION 24. LAKE GROVE SUBDIVISION Miles SW CITRUS BLV SW CITRUS BLV SW KANNER HWY SW PRATT-WHITNEY RD FLORIDA TRP SE BEACH RD SE BRIDGE RD Date: 2/3/2016 By: Barry Lucas MXD: G:/projects/usd/blucas/For_Phil/CRA_MCU_Septic_Study_ /CRA_MCU_SepticStudy.mxd PDF: G:/projects/usd/MAPS/SepticStudyAreas_ pdf 22 of 24

23 DAN HUDSON CONSULTING, LLC POST OFFICE BOX 2175 STUART, FLORIDA Memorandum March 11, 2016 To: Taryn Kryzda, County Administrator Roger Baltz, Assistant County Administrator John Polley, Utilities and Solid Waste Director Phil Keathley, Project Manager CC: Mika Gorniewicz, Senior Financial Analyst Jennifer Manning, Grants Compliance/Budget Manager Kate Parmalee, Manager, Community and Strategic Partnerships Anita Cocoves, Health and Human Services Manager From: Dan Hudson Reference: Exposure Draft Suggested Formula for CRA Contribution to S2S Summary: This is an exposure draft of a suggested formula for recommending the CRA contribution to the Septic to Sewer program. CRA funding would be earmarked to help offset homeowner out of pocket expenses needed to connect to the regional sewer system. Readers are encouraged to comment on this draft. During a recent discussion, there was a consensus among staff that a good use of Community Redevelopment Area [CRA] funding would be to help offset the homeowner out of pocket expenses. This leaves the question of How much funding is needed? Following preliminary review and analysis, the following formula is suggested as the basis for recommending a total level of CRA funding: Golden Gate Old Palm City # Units X Homeowner Out of Pocket Expense X Proportion Owner Occupied Homes X Probability of Need = Amount of Funding 775 X $2,500 X 0.25 X 0.40 = $193, X $2,500 X 0.75 X 0.15 = $227,391 Based upon construction timelines, Golden Gate would require about $50,000 per year for four years, and Old Palm City would require about $45,000 per year for five years. The formula is explained below: Page 1 23 of 24

24 Number of Units. Golden Gate has 775 parcels, all within the CRA. Old Palm City has 1,078 parcels however, all are not in the CRA. For the purpose of budgeting, we will estimate that approximately 75% of the parcels are within the CRA [809 units]. Homeowner Out of Pocket Expenses. This is the amount of money estimated for the homeowner to hire a plumber to complete the connection to the regional sewer system lines and properly abandon the existing septic tanks. This is estimated to be between $2,500 - $3,800. Because most of the CRA neighborhoods are one-fourth acre or less, the lower end of the estimate range is used. Proportion of Owner Occupied Homes. A small sample of homes was examined to determine how many residences are owner occupied, on the assumption that funding would not be made available to investment properties. The small sample is consistent with anecdotal evidence. Probability of Need. This is the most difficult item to estimate because detailed household income data is not available. However, it can be managed through policy. The mandatory connection policy as drafted suggests that homeowner assistance in this category would be on the basis of qualified hardship and that a sliding scale be applied based upon the criteria contained in the SHIP program. Therefore, amount of assistance will vary from one owner to the next. Golden Gate has a large number of low to moderate income households, but this may not hold true among owner occupied homes. Therefore, for the purpose of the funding formula, we will use the assumption of a 40% factor as the probability of need in Golden Gate. In other words, 40% of the owner occupied homes will qualify for need based financial assistance at some level. Old Palm City will have some number of homes that are both owner occupied and low to moderate income. However, it will be considerably less than in Golden Gate. Therefore we will use the assumption of a 10% factor as the probability of need in Old Palm City. Lastly, this probability is for the purpose of budgeting. A separate assistance formula must be devised which would match up the actual number applying for and qualifying for assistance with the amount of funding available. This will be addressed in a separate memo. * * * Page 2 24 of 24