Rancho Palos Verdes City Council
   

JUNE 20, 2006 ABALONE COVE SEWER MAINTENANCE FEE JUNE 20, 2006 ABALONE COVE SEWER MAINTENANCE FEE

JUNE 20, 2006 ABALONE COVE SEWER MAINTENANCE FEE



TO: HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL

FROM: DIRECTOR OF PUBLIC WORKS

DATE: JUNE 20 2006

SUBJECT: ABALONE COVE SEWER MAINTENANCE FEE
Attachment: Engineer's report for the Abalone Cove Sewer Maintenance Fee - PDF

Staff Coordinator: Ron Dragoo, Sr. Engineer

RECOMMENDATIONS:

1. Conduct a public hearing on the proposed levy and continue the public hearing to the next regularly scheduled meeting.

INFORMATION:

1. Notification of the Public Hearing on the Abalone Cove Sewer Maintenance Fee was published in the Daily Breeze. However the time required between publications wan inadequate. To comply with the requirements of the Health and Safety Code, and to allow residents the opportunity to speak to the noticed Public Hearing, staff is recommending opening the public hearing, accepting speakers, then continuing the public hearing to the next regularly scheduled meeting of July 5, 2006.

EXECUTIVE SUMMARY:

1. The Abalone Cove Sewer District has been in existence since July 2001.

2. Revenues collected through the District help pay for maintenance of the system which is broken into four zones (subsystems) including 50 grinder pumps, four lift stations and thousands of feet of pressure and gravity flow pipes.

3. Residents within the district are assessed a fee in accordance with the specific subsystems used by each parcel. The City has subsidized maintenance of the system in an effort to reduce fees to the property owners. The subsidy during the first two years was $35,000.

4. Since inception of the District, the total District budget has remained relatively stable, varying from $52,200 to $56,600 per year.

5. In FY 2003/04 the subsidy was reduced to $17,500. In FY 2004/05 the subsidy was $10,540 and in FY 2005/06 the subsidy was $9,522.

6. In FY2006/07 the proposed rates paid by users of the system will increase by 2.60%. The code allows increases to residents fees annually, but limits the increase to the Consumer Price Index (CPI). This years’ CPI is 4.70%.

BACKGROUND:

To insure funding for the on-going operation and maintenance of the sewer facilities in the Abalone Cove area, the City Council established the Abalone Cove Sewer Service Charge on July 17, 2001. This Sewer Maintenance Fee ensures a fair and equitable levying of the necessary costs of operating and maintaining the facilities.
The City Council annually reviews the Fiscal Year’s current and projected costs for operating and maintaining the sewer facilities and sets rates for the ensuing fiscal year, which begins July 1 and ends June 30. In setting the annual rates, the City Council will consider any new or updated maintenance costs, and any fund balances or shortages, and adjust the rates accordingly.
The Abalone Cove Sewer Service Charge is levied under the authority of the California Health and Safety Code, Sections 5471 et seq. (the "Code"). Payment of the charge for each parcel will be made in the same manner and at the same time as payments are made for property taxes for each property.
To levy the sewer charge for fiscal year 2006-2007, the City must hold a public hearing. The attached Engineer’s report was prepared to analyze costs and determine the amounts. This report estimates the annual operating costs of the Abalone Cove sewer system and the corresponding fee required of each property.
ANALYSIS:

The estimated annual cost to maintain the Abalone Cove sewer system for FY 2005-2006 is $52,221. This amount is equal to FY 2004-2005 and 2003- 2004, and slightly less than the budgeted amount of $56,595 for FY’s 2001-2002 and 2002-2003:

 

FY 2001-02

FY 2002-03

FY 2003-04

FY 2004-05

FY 2005-06

FY 2006-07

 

Actual

Actual

Actual

Actual

Actual

Proposed

District Costs

$56,595

$56,595

$52,221

$52,221

$52,221

$52,221

-

     

City Subsidy

$35,000

$35,000

$17,500

$10,535

$10,000

$8,414

Total Fee

$21,595

$21,595

$34,721

$41,686

$42,699

$42,699

 

When the Abalone Cove Sewer Service Charge was established, the City Council agreed to have the City subsidize sewer maintenance in an effort to reduce fees to property owners and to bring uniformity to the annual service charges. The City annual subsidy for FY 2001-2002 and FY 2002-2003 was $35,000, for FY 2003-2004 it was $17,500,for 2004-2005 it was $10,540, for 2005-06 it was $10,000. The City subsidy is reviewed each year and may be reduced, altered, or otherwise discontinued, as the City Council deems appropriate. Through the most recent budget process, the City Council authorized a subsidy of no more than $10,700.

The FY 2006-07 Engineer’s Report groups parcels in the Abalone Cove sewer service area into various rate zones based on the specific combination of sewer subsystems used by each parcel. The proposed FY 2006-07 fees for a single-family parcel ranges from $140.97 to $613.11. The Fee for Zones A and C are at the maximum allowable rates, Zones B and D are less than the maximum charges authorized pursuant to Section 13.06.070 of the City’s Municipal Code. A description of the various zones and their historic and proposed fees are as follows:

Property Owner Fees:

FY 2001-2002

FY 2002-2003

FY 2003-2004

FY 2004-2005

FY 2005-06

% Increase

FY 2005-2006

Actual

Actual

Actual

Actual

Subsidy

 ($35,000)

 ($17,500)

($10,540)

($9,522)

($8,414)

Zone A

$ 119.07

$ 127.13

$ 129.46

$ 134.64

4.5 %

$ 140.97

Zone B

$ 209.15

$ 327.84

$ 454.20

$ 454.21

0.0 %

$ 454.21

Zone C

$ 129.71

$ 172.57

$ 175.73

$ 182.76

4.5 %

$ 191.35

Zone D

$ 219.79

$ 418.28

$ 567.50

$ 590.20

3.7 %

$ 613.11

 

The proposed fee varies by zone. The zones with the highest fees, Zones B and D, are the zones with the highest per parcel cost for maintenance. For the Abalone Cove Sewer System, the in-street pump stations have the highest per parcel costs to maintain, and thus those properties which use these in-street pump stations have the highest fees. A system of zones was developed to identify the specific combination of subsystems used by each contributing parcel.

The percent increase also varies by zone. The zones with the highest increase, Zones B and D, have historically received the highest per parcel subsidy. Therefore, when the subsidy is reduced, Zones B and D will be impacted the most.

The Ordinance which established the Abalone Cove Sewer Service District also established the maximum service charge that can be levied, which is increased each year based on the Consumer Price Index (CPI) If the service charge proposed is greater than the maximum service charge as established through City Ordinance, a new or revised Ordinance would be required in order to re-establish the new maximum service charge that can be levied. The maximum service charges for the FY 2005-06 are as follows:

FY 2005-06

Max. Rates

Zone A

$140.97/ERU

Zone B

$ 567.58/ERU

Zone C

$191.35/ERU

Zone D

$617.94/ERU

 

CONCLUSION:

The City Council is required to conduct a public hearing and adopt a resolution (confirming the annual sewer service charge) prior to collecting fees through the tax roll. By adopting staff’s recommendation, Council will be levying single-family parcels from $140.97 to $613.11.

ALTERNATIVE ACTIONS:

Revise the City subsidy which will revise the proposed fees.

FISCAL IMPACT:

By adopting the staff recommendation, Council will be approving a total sewer service charge of $43,807.58 and a City subsidy of $8,414 in general funds to maintain the FY 2006-2007 Abalone Cove sewer system. No additional funding is required since the general fund subsidy is allocated in the FY 200-2007 budget.

CONCLUSION:

Staff is recommending Opening the Public Hearing for the Abalone Cove Sewer Maintenance Fee, allow speakers to comment, and continue the public hearing to the next regularly scheduled meeting of July 5, 2006.

Respectfully Submitted,

Ray Holland
Interim Director of Public Works

Reviewed,

Les Evans
City Manager

Attachments: FY 2006-2007 Engineer’s Report