TO: Members of the Governing Board
FROM: Christopher Silke, District Engineer
REPORT BY: Annamaria Martinez, Assistant Engineer
SUBJECT: Budget Amendment from USDA Water Loan CIP Reserves for Short-Lived Asset Replacement
RECOMMENDATION
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Approve a Budget Amendment to increase appropriations in the Napa Berryessa Resort Improvement District’s “USDA Res WTP,” Project 21072 budget by $40,000; offset by a reduction in the “USDA Bond-Water Depr Res,” Project 16023 budget for the replacement of an eligible short-lived asset at the water treatment plant. (Fiscal Impact: $40,000 Revenue and Expense; Napa Berryessa Resort Improvement District Fund; Not Budgeted; Discretionary)
[4/5 vote required]
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BACKGROUND
The Napa Berryessa Resort Improvement District ("NBRID") is a special district of the State of California organized under the Resort Improvement District Law (Public Resources Code Section 13000 et seq.) for the provision of water and sewer service in an unincorporated portion of the County of Napa.
NBRID residents voted to approve Assessment District 2012-01 on July 10, 2012 to repay sewer/wastewater and water loans from the United States Department of Agriculture (USDA) used to fund two major improvement projects - the Wastewater Storage Capacity Upgrades and Treatment Plant Replacement Project and the Water Treatment Plant Replacement Project. NBRID issued Series A Bonds (Wastewater System Improvements) in the principal amount of $7,959,872 for the wastewater facilities and Series B Bonds (Water System Improvements) in the principal amount of $2,923,728 for the water facilities. The combined total of the USDA loan principal amount is $10,883,600.
In accordance with the loan agreements for the two USDA loans, NBRID is required to deposit an annual sum of $58,966 and $53,067 into a designated sewer (Project 16022) and water (Project 16023) loan depreciation reserve fund annually for 10 years. NBRID can use the funds included in the depreciation funds for “timely replacement of short-lived assets” associated with the 2011 USDA project.
The facilities constructed as part of Assessment District 2012-01 have reached 10 years in age. Through Fiscal Year 2024-2025 NBRID staff identified four water projects installed during construction that satisfied the criteria for use of the USDA depreciation reserves. These projects were funded through Budget Amendment into Project 21072 (Water).
Between Fiscal Year 2020-21 and 2023-24, NBRID staff identified the following four projects, totaling $155,000, as meeting the requirements for use of the USDA water loan depreciation reserve fund (Project 21072). Status is noted below each project.
W1: Roberts Filter blower rehabilitation. Budget: $20,000
- Project complete. Total Expense: $5,000
W2: Installation of Variable Frequency Drives (VFDs) at the raw water intake pumps. Budget: $45,000
- Project Complete. Total Expense: $48,564
W3: Restoration/rehabilitation of both steel filter tanks used for water treatment. Budget: $30,000
- Project complete. Total Expense: $42,082
W4: Replacement of water plant process control and monitoring equipment. Budget: $60,000
- Ongoing. Revised Budget: $55,000. Expended: $34,000
To date approximately $130,000 has been expended on the above water projects. The funds remaining in project W1 after project completion ($15,000) were reallocated to project W2 and W3 during the previous Budget Amendment request. An additional $5,000 from project W4 was reallocated to complete project W3. The remaining balance of unspent reserve funds in Project 21072 is approximately $25,400, all of which is allocated to project W4 for ongoing replacement of water plant process control and monitoring equipment.
NBRID staff has now identified project W5 - the replacement of two pump motor starters - equipment used to temporarily reduce the electrical load during motor start-up - installed on the high-lift distribution pumps at the water plant. Both existing starters were installed during the 2011 USDA water treatment plant replacement project and are classified as short-lived assets and eligible for funding by the depreciation reserve budget. The starter units will be replaced with more efficient variable frequency drives (VFDs), a type of motor starter that allows greater control of motor speed throughout the operating cycle. Staff anticipate that the VFDs will also reduce the pressure surges observed in the distribution system during pump start-up and shutdown, which is expected to also reduce the number of water service line breaks requiring repair below County paved roadways. Total Budget Amendment requested for items is $40,000. Note: The contract for project W5 falls within the monetary limit granted to the District Engineer as Purchasing Agent for NBRID. The contract will be vetted through County Counsel and appropriate bonds and insurance limits will be required of the contractor procuring and installing the equipment prior to the start of construction.
Approximate reserve funds available as of June 30, 2025 in Project 16023 (Water) is $389,976. If the requested Budget Amendment is approved today, the estimated balance in this account, not including interest accrued will be $349,976 for future short lived asset replacement for the USDA funded water facility.
Requested Action:
1. Increase appropriations by $40,000 for Intrafund Transfers-Out within NBRID Fund (Subdivision 5240500, Project 16023 USDA Bond-Water Depr Rsv) with use of its available fund balance;
2. Increase revenue by $40,000 for Intrafund Transfers-In for NBRID Fund (Subdivision 5240500, Project 21072 USDA Res WTP) and;
2. Increase appropriations by $40,000 for Construction Services within NBRID Fund (Subdivision 5240500, Project 21072 USDA Res WTP) offset by an increase in revenue.
FISCAL IMPACT
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Is there a Fiscal Impact? |
Yes |
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Is it currently budgeted? |
No |
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Is it Mandatory or Discretionary? |
Discretionary |
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Discretionary Justification: |
USDA Loan Depreciation Reserves are set aside each year for the replacement of short-lived assets associated with USDA Water loan. Five projects have now been identified that meet the criteria for use of the USDA depreciation reserves. |
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Is the general fund affected? |
No |
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Future fiscal impact: |
The requested BA is proposed to fund a project that will extend the life of the high lift pumps sending water into distribution, potentially reduce the number of water service breaks in the distribution system, thereby reducing the frequency of pump replacement and repairs costs to the lateral service lines and roadways, and reduce energy costs associated with operation of the pumps. |
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Consequences if not approved: |
The existing equipment will remain and the District will continue to experience increased costs associated operation and maintenance of the high lift pumps and repairs to service lines in County roadways. |
ENVIRONMENTAL IMPACT
ENVIRONMENTAL DETERMINATION: The proposed action is not a project as defined by 14 California
Code of Regulations 15378 (State CEQA Guidelines) and therefore CEQA is not applicable.