Capital Improvement Plan – Sacramento River Funding Area Disadvantaged Community Involvement Area

CAPITAL IMPROVEMENT PLANNING FOR ECONOMICALLY DISADVANTAGED WATER AND WASTEWATER SYSTEMS IN THE SACRAMENTO RIVER FUNDING AREA

A capital improvement planning process for economically disadvantaged water and wastewater systems in the Sacramento River Funding Area (SRFA) was led by Burdick & Company. Capital improvement planning was identified as a need for economically disadvantaged water systems during the earlier Phase 2 Disadvantaged Community Involvement Program (DACIP) effort. The capital improvement planning process was initiated in February 2021, with technical assistance occurring through March 2023.

What is a Capital Improvement Plan?

A capital improvement plan (CIP) is a short-range plan, usually five to ten years, that identifies capital projects and infrastructure/equipment purchases needing repair or replacement, or completely new improvements. The CIP provides a planning schedule and budget, matching projected revenues and other funding sources with the major capital needs identified, and identifying potential funding options.

Why develop a Capital Improvement Plan?

According to a US EPA study, there is a 20-30% life cycle cost savings for U.S. utilities that use strong asset management practices.
A CIP saves money by identifying upcoming needs (predictive rather than reactive).
Planning ahead for long-term costs will promote financial and rate stability. (Rates should be based on the utility’s budget, and the budget should be based, in part, on the CIP.)
A CIP is a flexible planning tool; it doesn’t lock a district or city in to spending funds, but acts as a guide to spending.

Summary of Assistance Provided

The project team worked with three municipalities and three districts to develop 5-year or 10-year Capital Improvement Plans (or similar documents) to guide decision-making and financing strategies for system upgrades and improvements. Participating entities included the following:

Water/Wastewater System	County	IRWM Region
City of Alturas	Modoc County	Upper Pit River
City of Lakeport	Lake County	Westside
City of Tehama	Tehama County	North Sacramento Valley
Colusa County Waterworks District #1 (Grimes)	Colusa County	North Sacramento Valley
Olivehurst Public Utility District	Yuba County	Yuba
El Rio Villa Housing Complex (owned and managed by Yolo County Housing Authority)	Yolo County	Westside

The basic steps for developing a CIP include:

Step 1: Perform an inventory of existing infrastructure components (or assets); assess the condition of those assets, based on actual condition as well as projected life; and develop a repair/replacement schedule and cost estimate.
Step 2: Prioritize project needs.
Step 3: Identify possible sources of funding for the improvements (e.g., capital reserves, loans, grants, revised rates).
Step 4: Develop the short-term funding plan (CIP), including a funding analysis and recommended timeline for future CIP planning processes.

The project team generally followed these steps for the water systems assisted through the DACIP grant. Since each system was unique in terms of level and type of planning assistance required, the CIP planning process was adjusted to suit each system’s individual needs. Each entity also decided what type of final document would be most useful for their needs, whether it be a 5-year CIP, 10-year CIP, Tech Memo, or Funding Analysis. Below is a summary of the final products developed for each participating system:

City of Alturas – 5-year CIP for Water and Wastewater Collection System
City of Tehama – 10-year CIP for Water System
Olivehurst Public Utility District – 5-year CIP for Water and Wastewater Systems
Colusa County Waterworks District No. 1 (Grimes) – 5-Year Water System Funding Plan
City of Lakeport – Project Summary Report and Funding Analysis
El Rio Villa – Tech Memo for Water System and Sewer Collection System

Outcomes

The outcomes from the project team’s involvement with field staff and management were valuable to the various jurisdictions by providing a sustainable capital planning tool and allowing them to actually understand the cost of maintenance, repair, and replacement, and how it strengthens their ability to provide crucial services to their customers.

The final written CIPs were useful as a tool for explaining and legitimizing infrastructure needs and justifying costs/expenditures to boards, city councils, and the public. As noted above, the CIP documents themselves varied by jurisdiction and were intentionally formatted and organized to meet the specific needs of each entity.

This exercise encouraged and facilitated discussion among board members, management staff, and/or city councils, and provided valuable data that will be carried forward in future planning processes.