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HomeMy WebLinkAbout1989-05-31 District 6b COUNTY SANITATION DISTRICTS OF ORANGE COUNTY, CALIFORNIA P.O. BOX 8127, FOUNTAIN VALLEY, CALIFORNIA 92728-8127 10844 ELLIS, FOUNTAIN VALLEY, CALIFORNIA 92708-7018 (714) 962-2411 FAX (714) 962-0356 May 24, 1989 NOTICE OF ADJOURNED REGULAR MEETING DISTRICT NO. 6 WEDNESDAY, MAY 31, 1989 -4:00 P.M. 10844 Ellis Avenue Fountain Valley, California Pursuant to adjournment of the adjourned regular meeting of May 17, 1989, the Board of Directors of County Sanitation District No. 6 will meet in an adjourned meeting at the above hour and date to consider modifications to the District's supplemental user fee program. BOARDS OF DIRECTORS County Sanitation Districts of Orange County, California P.O. Box 8127 • 10844 Ellis Avenue Fountain Valley. CA 92728-8127 Telephone: (714) 962-2411 ( 1) ( 2) DISTRICT NO. 6 ADJOURNED REGULAR MEETING WEDNESDAYJ MAY 31J 1989 -4:00 P.M. Roll call AGENDA Public Comments: All persons wishing to address the Board on specific agenda items or matters of general interest should do so at this time. As determined by the Chairman, speakers may be deferred until the specific item is taken for discussion and remarks may be limited to five minutes. ~ (3) Verbal status report on the District's sewer rehabilitation program and Master Plan of facilities to serve the District (4) Consideration of items re long-range financial program: (a) Staff report on financial projections (b) Discussion (5) Consideration of the following actions relative to proposed Ordinance No. 613, An Ordinance of the Board of Directors of County Sanitation District No. 6 of Orange County, California, Amending Ordinance No. 609 Establishing Sanitary Sewer Service Charges, and Repealing Ordinance No. 612: se·e page "A" (a) Report of the General Counsel re proposed Ordinance No. 613 (b) Consideration of motion to read said Ordinance No. 613 by title only, and waive reading of entire ordinance (must be adopted by unanimous vote of Directors present) (c) Consideration of motion to introduce said Ordinance No. 613 and pass to second reading on June 14, 1989 (6) Consideration of the appeal of Norlyn Builders regarding connection fees charged pursuant to District Ordinance No. 612 for property located at 1455 Superior Avenue, Newport Beach: (a) Consideration of motion to receive and file said appeal filed by Rosenfeld, Lindsey & Wolff, dated May 4, 1989, on behalf of Norlyn Builders (Copy included with General Counsel's Memorandum enclosed with Directors' agenda material) (b) Verbal report of General Counsel (c) Consideration of motion to receive and file General Counsel's Memorandum dated May 24, 1989 regarding said appeal (Copy enclosed with Directors' agenda material) (d) Presentation by Norlyn Builders (e) Response by District General Counsel and staff (f) Discussion by Directors (g) Consideration of action on appeal of Norlyn Builders (7) Other business and communications, if any (8) Consideration of motion to adjourn -2- ORDINANCE NO. 613 AN ORDINANCE OF THE BOARD OF DIRECTORS OF COUNTY SANITATION DISTRICT NO. 6 OF ORANGE COUNTY, CALIFORNIA AMENDING ORDINANCE NO. 609 ESTABLISHING SANITARY SEWER SERVICE CHARGES, AND REPEALING ORDINANCE NO. 612 The Board of Directors of County Sanitation District No. 6 of Orange County, California, does hereby FIND: A. That a financial and engineering report has been prepared setting forth the financial projections for providing sewer service to properties within the District; and, B. That the financial and engineering reports have been made available to the public in accordance with the provisions of Government Code Section 54992; and, C. That the new sewer use fees established by this Ordinance do not exceed the estimated amount required to provide the sewer service for which the fee is levied, as provided in Government Code Sections 54991 and 54992. The Board of Directors of County Sanitation District No. 6 of Orange County, California, does hereby ORDAIN: Section 1: Table A, as adopted by Section 2 of Ordinance No. 609, is hereby amended to read as set forth in Table A of this Ordinance. Section 2: This Ordinance shall become effective July 1, 1989. Section 3: The Secretary of the Board shall certify to the adoption of this Ordinance and shall cause the same to be published in a newspaper of general circulation in the District as required by law. "A-1" AGENDA ITEM NO. 5 "A-1" \I ~. ~ PASSED AND ADOPTED by the Board of Directors of County Sanitation District ~ \.,,,,,' No. 6 of Orange County, California, at a regular meeting held ------- ATTEST: Secretary of the Board of Directors County Sanitation District No. 6 of Orange County, California Chairman of the Board of Directors County Sanitation District No. 6 of Orange County, California -2- "A-2" AGENDA ITEM NO. 5 "A-2" "A-3" Single-Family Dwellings Multi-Family Dwellings/Mobile Homes Commercial/ Industrial/Other (government buildings, utilities, non-profit organizations, etc.) TABLE A ORDINANCE NO. 613 Basis of Charge Charge per dwelling unit Charge per dwelling unit Charge per 1,000 square feet of building AGENDA ITEM NO. 5 Annual Rate $49.00 29.00 35.00 Minimum Annual Charge Per Unit $49.00 29.00 35.00 "A-3" l MANAGER'S AGENDA REPORT County Sanitation Districts of Orange County, California DISTRICT NO. P.O . Bo x 8 127 • 10844 Ellis Ave nue Fountain Valley, CA 92728-8 127 Telephone : (714) 962-2411 MANAGER'S REPORT TO DISTRICT NO. 6 DIRECTORS MEETING DATE: May 31, 1989 -4:00 p.m . Item No. 4(a): Update on long-range financial program and consideration of amendments to ex isting s a nitary sewer service charges. BACKGROUND In 1983 the Board modified the District's long-range financial program and implemented a supplemental user fee to make up the shortfall of ad valorem tax revenues and provide the additional financing necessary for both operations and maintenance as well as major facilities rehabilitation . User fees are charged to all properties connected to the sewer. Funds for facil i ties expansion are currently provided from connection fees on new development paid by the develope r. Following is the current fee schedule: Single-Family Multi-Family Commercial/Ind/ Fee T~pe Residential Residential Governmental/Oth e r One-time Connection $1,500 per $1,500 per $300 per 1,000 sq. Fee dwelling unit dwelling unit ft. of building Annual User Fee $34.85 per $20.92 per $24.95 per 1,000 dwelling unit dwelling unit sq. ft. of building In 1986, the Board considered and rejected the issuance of Certificates of Part i cipation (COP's) in concert with other Districts to pa r tially fin a nce District 6 1 s sh a re of joint treatment works construction. FUTURE FINANCIAL PROJECTIONS Based upon the Facilitie s Ma ster Plan and the Financial Plan recommendatio ns contained in the 30-year Action Plan now under consideration by the Board , District No. "will exha ust its capital funds as soon as 1990 -91. The Action Plan recommends that the District's share of the treatment plant construction and the trunk sewer construction be financed by a combination of borrowing (ie COP's) and increased connection fees. Debt retirement and escalating operating and ma intenance costs would be pa id by increasing the annual supplemental use fe e s . Staff has prepared a Statement of Projected Cash Flow based on the following assumptions: ' -1- May 31, 1989 1. Scenario 2 of the Action Plan Which Reco1TTTiends Continuation of Current Treatment Levels (301(h) Waiver) This scenario is used in the cash flows as the staff's preliminary preferred alternative recoITTTiendation. It represents the minimum probable level of construction and operations and maintenance costs. For the first five years of the planning period the differences between Scenarios 2 and 3 (full secondary treatment) are not significant. Additional flow and sewer connection assumptions are also consistent with the Master Plan. 2. Connection Fees The Master Plan Financial Plan recoITTTiends a change in the method of determining connection fees. The recoITTTiended change, which is incorporated in the cash flow, is to include the cost of future facilities on a per unit basis. The reason to include these costs is that we currently operate at capacity and any new flow will require new, additional capacity. The first change is anticipated to be effective October 1, 1989 when the residential connection fee is projected to be $2260 under Scenario 2. Beginning July 1, 1990, and annually thereafter, connection fees are projected to increase to reflect changes in the Engineering News Record - LA construction cost index, assumed to be 5% per year. 3. Debt Over the next 10 years COP-type debt totaling $29 million is projected to be issued to meet Joint Works Treatment and District sewer capital requirements in 1990-91. A more detailed needs analysis will be performed and returned to the Directors before any debt is issued. The cash flow projections are for several small issues on the theory of borrowing as little as possible and only when absolutely necessary. All issues are treated as fixed rate at 83 for 20 years. The Health and Safety Code permits the use of user as the only controllable source of revenue for the projected for use to repay the necessary new debt. to be repaid from capital funds. RECOMMENDATIONS fees to repay debt, and District, they are Existing debt continues It is clear that the user fee rates will have to continue to escalate -and at an accelerated pace -to maintain the District's financial integrity. However, there are several unknowns that will have a major impact on the District's cash flow requirements. A considerable portion of the District's major funding shortfalls are for capital financing. The projections herein assume that all construction projects proceed on schedule. Thus, the estimates can be considered , "worst case 11 scenarios. However, we continue to experience delays in major projects because of SCAQMD requirements. Further delays in these projects would also delay, or at least spread out, the need for capital funds. -2- May 31, 1989 Conversely, as the Directors are aware, if the secondary treatment waiver is not renewed in 1990, the Districts• capital needs will increase substantially. All the projections assume the renewal of the Districts• 301(h) permit. Ordinance No. 613 (attached to the agenda) incorporates the following proposed fee schedule and is presented for consideration by the Directors. Fee Type Annual User Fee Single-Family Residential $49.00 Multi-Family Residential $29.00 Corrrnercial/Indust. Governmental/Other $35.00/1,000 sq. ft. No change in the connection fee schedule is recorrrnended at this time. After a final decision is made by the Boards regarding the NPDES Permit renewal, staff will return with a connection fee recorrrnendation. Staff will review the attached cash flow projections, the proposed supplemental user fee increase and the proposed Ordinance with the Directors in greater detail at the meeting. -3- ' ( (_ COUNTY SANITATION DISTRICT NO. 6 S/25/89 STATEHEHT OF PROJECTED CASH FLOW Page 1 FISCAL YEARS 1989-90 THROUGH 1998-99 LINE 1989-90 199G-91 1991-92 1992-93 1993-94 5-Year Total 1994-99 10-Year Total LINE ------------------------------------ OPERATING FUND -------·------Reserves & Carry-Over Fro1 Last Year 1,969,000 2,718,000 3,125,000 3,541,000 4,723,000 1,969,000 5,874,000 1,969,000 ------------------------------------------------------------------·---------------------REVENUE 2 Share of 1' Tax Allocation 1,228,000 1,326,000 1,432,000 1,547,000 1,671,000 7,204,000 10,585,000 17,789,000 2 3 Fees: Industrial Haste 114,000 125,000 138,000 152,000 167,000 696,000 1,120,000 1,816,000 3 4 Supple1ental User 2,077,000 3,419,000 5,170,000 5,863,000 6,129,000 22,658,000 34,749,000 57,407,000 4 5 Interest & Hiscellaneous Income 166,000 207,000 236,000 293,000 376,000 1,278,000 2,105,000 3,383,000 5 6 Other Revenue 0 0 6 ----------------------------------------------------------------------------------------7 TOTAL REVENUE 3,585,000 5,077,000 6,976,000 7,855,000 8,343,000 31,836,000 48,559,000 80,395,000 7 ----------------------------------------------------------------------------------------8 TOTAL AVAILABLE FUNDING 5,554,000 7,795,000 10,101,000 11,396,000 13,066,000 33.805,000 54,433,000 82,364,000 8 ---------------------------------------------------------------------------------------- EXPENDITURES ------------9 Share of Joint Works H & o 2,587,000 2,959,000 3,385,000 3,483,000 3,985,000 16,399 ,000 30,413,000 46,812,000 9 10 Collection Syste1 H & O and Other Oper. 249.000 261,000 275,000 290,000 307,000 1,382,000 1,846,000 3,228,000 10 11 Other Expenditures 1,450,000 2,900,000 2,900,000 2,900,000 10,150,000 14,500,000 24,650,000 11 ----------------------------------------------------------------------------------------12 TOTAL EXPENDITURES 2,836,000 4,670,000 6,560,000 6,673,000 7 ,192,000 27, 931,000 46,759,000 74,690,000 12 ----------------------------------------------------------------------------------------13 Reserves & Carry-Over to Next Year 2, 718,000 3,125,000 3,541,000 4,723,000 5,874,000 5,874,000 7,674,000 7,674,000 13 14 Next Year's Ory Period funding Require1ents 1,418,000 2,335,000 3,280,000 3,337,000 3,596,000 3,596,000 S,572,000 5,572,000 14 ---------------------------------------------------------------------------------------- 15 fund Balance or (Deficit) 1,300,000 790,000 261,000 1,386,000 2,278,000 2,278,000 2,102,000 2, 102,000 15 ·------------------------------------------· -----------------------------------------------------------------------------·--········ -----------------·-------------------------- Single family Resident User fee $80 $120 $135 $140 S145 Hu1ber of Equivalent Dwelling Units 42.393 42,739 43,085 43,431 43, 777 45,507 ... (_ ( ( COUNTY SANITATION DISTRICT HO. 6 5/25/89 STATEHENT OF PROJECTED CASH FLOM Page 2 FISCAL YEARS 1989-90 THROUGH 1998-99 LINE 1989-90 1990-91 1991-92' 1992-93 1993-94 5-Year Total 1994-99 10-Year Total .LINE ------------------------------------CAPITAL FUND(S) --------------- 16 Reserves & Carry-over Fron Last Year 7,298,000 2,826,000 21,739,000 17, 733,000 16,865,000 7 ,298,000 15,537 ,000 7,298,000 16 -----------------------------------------------------------------------------------------REVENUE 17 Grants 133,000 133,000 133,000 17 18 Fees: Connection 782,000 820,000 860,000 901,000 947,000 4,310,000 5,500,000 9,810,000 18 19 Industrial Haste 50,000 55,000 61,000 67 ,000 74,000 307,000 495,000 802,000 19 20 Supplemental User 0 2,341,000 2,341,000 20 21 Sale of Capacity Rights 226,000 111,000 20,000 785,000 220,000 1,362,000 259,000 1,621,000 21 22 Interest & Hiscellaneous Income 359,000 871,000 1,399,000 1,226,000 1,149,000 5,004,000 3,885,000 8,889,000 22 23 Other Income 29,000,000 29,000.000 29,000,000 23 ----------------------------------------------------------------------------------------24 TOTAL REVENUE 1,550,000 30,857,000 2,340,000 2,979,000 2,390,000 40,116,000 12,480,000 52,596,000 24 ----------------------------------------------------------------------------------------25 TOTAL AVAILABLE FUNDING 8,848,000 33,683,000 24,079,000 20, 712,000 19,255,000 47 ,414,000 28,017 ,000 59,894,000 25 ---------------------------------------------------------------------------------------- EXPENDITURES ------------ 26 Share of Joint Marks Treatment Plant 4,962,000 6.894,000 6,021,000 3,747.000 2,668,000 24,292.000 12,078,000 36,370,000 26 27 District Collection Syste1 1,060,000 1,050,000 325,000 100,000 1,050,000 3,585,000 6,450,000 10,035,000 27 28 Other Expenditures 4,000,000 4,000,000 4,000,000 28 ---------------------------------------------------------------------------------------- 29 TOTAL EXPENDITURES 6,022,000 11,944,000 6,346,000 3,847,000 3,718,000 31,877,000 18,528,000 50,405,000 29 ----------------------------------------------------------------------------------------30 Reserves & Carry-over to Next Year 2,826,000 21.739,000 17,733,000 16,865,000 15,537,000 15,537 ,000 9,489,000 9,489,000 30 -----------------------------------------------------------------------------------·----------------------------------------------···----------------------------·-------------····------· Single Family Resident Connection Fee $2,260 $2,370 $2,490 $2,610 $2,740 $3,500 Number of New Equivalent Dwelling Units 346 346 346 346 346 346 .. ,,, ( ( ( COUNTY SANITATION DISTRICT HO. 6 5/25/89 STATEMENT OF PROJECTED CASH FLOM Page 3 FISCAL YEARS 1989-90 THROUGH 1998-99 LINE 1989-90 1990-91 1991-92 1992-93 1993-94 5-Year Total 1994-99 10-Year Total LINE ------------------------------------BOND FUND(S) ------------ 31 Reserves & Carry-Over Fron Last Year 0 0 0 0 0 0 0 0 31 ----------------------------------------------------------------------------------------REVENUE 32 Tax Levy 0 0 32 33 Interest & Hiscellaneous Incoae 0 0 0 0 0 0 0 0 33 34 Other Income 0 34 ---------------------------------------------------------------------------------------- 35 TOTAL REVENUE 0 0 0 0 0 0 0 0 35 ---------------------------------------------------------------------------------------- 36 TOTAL AVAILABLE FUNDING 0 0 0 0 0 0 0 0 36 ----------------------------------------------------------------------------------------EXPENDITURES ------------ 37 Bond Principal & Interest 0 0 37 38 Other Expenditures 38 ·--------------------------------------------------------------------------------------- 39 TOTAL EXPENDITURES 0 0 0 0 0 0 0 0 39 ---------------------------------------------------------------------------------------- 40 Reserves & Carry-Over to Next Year 0 0 0 0 0 0 0 0 40 41 Next Year's Ory Period Funding Requireaents 0 0 0 0 0 0 0 0 41 ---------------------------------------------------------------------------------------- 42 Fund Balance or (Deficit} 0 0 0 0 0 0 0 0 42 ---------------------------------·----------------------------------------·------· --------------·-----------------------------------------------------------------------------------------SUMMARY (Adjusted for Inter-fund Transfers) 43 Reserves & Carry-Over From Last Year 9,267,000 5,544,000 24,864,000 21,274,000 21,588,000 9,267,000 21,411,000 9,267 ,000 43 44 TOTAL REVENUE 5,135.000 35,934,000 9,316,000 10,B34,000 10,733,000 71,952,000 61,039,000 _ 132, 991,000 44 ----------------------------------------------------------------------------------------45 _TOTAL AVAILABLE FUNDING 14,402,000 41, 478 '000 34,180,000 32,108,000 32,321,000 81,219,000 82,450,000 142,258,000 45 46 TOTAL EXPENDITURES B,858,000 16,614,000 12,906,000 10,520,000 10,910.000 59,808,000 65,287 .ooo 125,095,000 46 --------------------------------------------------·------------------------------------- 47 Reserves & Carry-Over to Next Year 5,544,000 24,864,000 21,274,000 21,588,000 21,411,000 21,411,000 17,163,000 17, 163,000 47 48 Next Year's Dry Period Funding Requireaents 1,418,000 2,335,000 3,280,000 3,337 ,000 3,596,000 3,596,000 5,572,000 5,572,000 48 ----·----------------------------------------------------------------------------------- 49 FUND BALANCE OR (DEFICIT) 4,126,000 22,529,000 17, 994,000 18,251,000 17,815,000 17,815,000 11,591,000 11,591,000 49 -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- PROJECT Coast Trunk Force Hains Bitter Point Pump Station to Newport Blv d.,5-31 (3) ( )t Bitte r Point and Rocky Poin t Puap Station !1prove1ents, 5-32 (I) ( )* Rehabilitate Nest Coast HighNay Gravity Sewer ( ) Airbase Trunks Rehabilitation ( Hiscellaneous Projects ( ) Sub-total ACO Fund Baker-Gisler Interceptor** 14 -1-l(a) (3) ( Baker -Gisler Inter ceptor** 14-1-l(b) (3) ( Fairview Relief. Baker Street to Hilson Stree t (6 -1 2) (3) ( District Ho.6 Trunk Parallel ( Hiscellaneous Projects ( Sub-total FR fund GRAHD TOTAL TOTAL C. l.P. 60,000 50 ,000 200,000 1,050,000 2,025,000 250,000 3,585,000 50,000 1,300,000 50,000 800,000 50,000 2,750,000 1,500,000 250,000 6,600,000 100,000 10,185,000 150,000 COUNTY SAHITATIOH DISTRICT H0.6 SCHEDULE OF DISTRICT CO LLE CTION SYSTEH PROJECTS 1989-90 1990-91 1991-92 1992-93 10,000 200,000 50,000 25,000 25,000 25,000 25,000 25,0DO 235,000 25,000 50 ,000 75,000 250,000 750,000 250. 000 500,000 250,000 50,000 25,000 25,000 25. 000 25 '000 825,000 1,025,000 275,000 25,000 1,060,000 1,050,000 325,000 100,000 5/25/89 1993-94 5-Year Total 1998-99 JO-Year Tot al 10,000 10,000 200,000 200,000 600,000 650. 00 0 400,000 1,050,000 25,000 2,000,0 00 2 '025 '000 25,000 125,000 125,000 250,000 625,000 1,010,000 2' 525 '000 3. 535, 000 1,250.000 1,250,000 750,000 750,000 400,000 450,000 2' 300. 000 2. 750. 000 0 1,500,000 I, 500 , 000 25,000 125,000 125,000 25 0,000 425,00 0 2,575,000 3, 925,000 6,5 00,000 1,050,000 3,585 ,000 6, 450. 000 10. 035. 00 0 ----------· ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ~R E: AGE NDA ITE M NO . 6 LAW OFFI CE S OF Rour ke & Woodruff CRAI G G . FARRI NGTON CLARK F: IOE A IOROF'CSSIONAL CORPORATI ON SUITE 7 000 TEt.EPHON£ (7 14 ) 558·7000 ~ACSIMll. .. E : (714) 835·7787 LOIS E . .JEFFREY MAGOALENA LONA-WIANT SUSAN R. MEOWI EO THOMAS F. NIXON BRIAN K. OKAZAKI .J AMES G . RO U RKE K E N NARD R . SM A R T • .JR. DA NI E L K . SPRADLIN A L AN R. WATTS THOMAS L. WOODRUFF 7 01 SOUTH PARKER STREET ORANGE, CALI F ORN I A 92668 May 24, 1989 Honorable Chairman and Members of the Board of Directors County Sanitation District No. 6 10844 Ellis Avenue Fountain Valley, CA 92708-7018 Re: Appeal of Norlyn Builders Re: Sewer Connection Fee For Property Located at 1455 Superior Avenue, Newport Beach, CA As General Counsel representing the Sani ta ti on District No. 6, we are responding appeal dated May 4, 1989, from the law firm of & Wolff, representing Norlyn Builders. INTRODUCTION staff of County to the letter of Rosenfeld, Lindsey Norlyn Builders was assessed a $219 ,000 .00 connec tion fee for the 146 unit senior citizens residence i nn (cong re gate care facility) [see Exhibit "A"] that is to be located at 1455 Superior Avenue, Newport Beach, CA. It was assessed this amount based upon the connection charge of One Thousand Five Hundred Dollars ($1,500.00) each, for 146 "resi denc es", just as an apartmen t house is assessed for each individ ua l apartment. No rl yn contends that it should have been assessed as a commercial property, 1 i ke a hotel, rather t han as a residential us e, 1 ike an apartment. The District contends that No rl yn was correctly assessed as a residential use si milar t o an apartment house. Board of Directors -District No. 6 Page 2 May 24, 1989 ARGUMENT 1. The Units Are "Residences" Within The Definition In The District's Ordinance. The District has consistently assessed apartment houses as "residences". This is because people permanently live there, have their registered voter address there, receive their mail there, and spend the time that they are not working or are not involved in some recreational, or business pursuit, at their apartments. Similarly, the residents at the Norlyn facility will receive their mail and register as voters there, and will spend most of their time in their unit, that is not used for recreational or personal business purposes. In fact, they will typically spend much more time in their unit than most apartment dwellers who are younger and generally work during the day. Section 102(20) of the Ordinance defines a dwelling unit as "a single unit providing complete, independent living facilities for one or more persons, with permanent provisions for living, sleeping, eating, cooking and sanitation." The units provided by Nor lyn meet al 1 of those requirements. They are single uni ts providing for complete, independent living facilities for one or more persons, including permanent provisions for living, sleeping and sanitation within the individual units. While the developer apparently will provide the option to have the apartments furnished with basic furniture, they will contain all the personal and household furnishings and effects of the tenant. In addition, the residents have provisions for eating and cooking which will be done on a congregate basis through the central kitchen and the central dining room. Unlike hotels, almost all of the meals of the residents that live in the individual units will be taken in the common cooking and eating facilities and will be included as part of the monthly rent, compared to a commercial hotel restaurant which charges for each item served. Also unlike hotels, the residents will spend most of their day in their units or in the common facilities. A person who uses a hotel is normally a temporary visitor, does not live in the unit, and is away from the units for business or recreation much of the time. When compared to apartments, the units are quite comparable as far as sewage use is concerned. In fact, most residents of an Board of Directors -District No. 6 Page 3 May 24, 1989 apartment will probably use the apartment's sewage facilities less than residents of the Norlyn Builders units. More residents of apartments are employed and are away from the premises a large portion of the day. Most residents of apartments do not eat their lunch at the apartment nor do they use the toilet facilities during the daylight hours. The persons who will be at the Norlyn facility will probably eat all three mea ls at the facilities and will, most of the time, use the sewa ge facilities at the facility. Therefore, the residents at the Norlyn facilities will probably use the sewage facilities slightly more than residents in a n apartment. It is, therefore, on the facts alone, fair to assess Norlyn Builders at least as much for connection fees as a builder of apartment units. 2. The Units Are "Residences" Within The Common Meaning Of The Term Not only do the individual units fit the definition of a "residence" within the District's Ordinance, they also fit the normal definition of a "residence". Residence depends upon intention as well as fact and in its ordinary adaptation, it is the place where one remains when not called elsewhere o n business, pleasure or for other temper a r y purposes. (Bu rt L_ Scarborough, 56 Cal .2d 817, 820 (1961).) A room in a hotel does not normally fit that description because most people are only staying there temporarily. However, most persons who will stay at the Norlyn project will use their units as a perma nent residence until they choose another. They wil l undoubtedly g i ve that as their mailing address for both personal and business records and relationships, and will register as livin g at that address for purposes of voting. These are all indications of a permanent "residence" within any definition of the term. 3. BQLlYQ~~§£LlQ~§-1.!§__RLQi~£1 ~§~-~M Q1~l ~_FQ L £QQQ~£1l QQ_f~~_RQLEQ§~§~Q1~§~~B~§lQ ~Q£~~_f.QL RQLEQ§~§_Q!_hYQlQlQg_~h~_£l1Y _Q!_B~~EQL1 _]~E£h Occupancy Tax. Although a "hotel" in Newport Be ach, as a commercial establishment, would pay a lesser connection fee to the District than a residential facility, a hotel would also have to pay a 9 % occupancy tax imposed by the City of Newport Beach on the units because the rental period is, according to Nor l yn ' s appeal documents, for le ss than 30 days. If the average rental for the 146 Norlyn units is $1,500.00 per month, this would mean that treated as a hotel, the Norlyn facility would have to pay Board of Directors -District No. 6 Page 4 May 24, 1989 $23 6 ,5 2 O. O 0 per year bed tax. The builder appears to be less than forthright in its efforts, by seeking to claim the facilities as a hotel with lower connection charges for District purposes but to treat them as residences with the City to avoid paying any bed tax. 4. Norlyn Has Been Deceptive In That It Has Changed "Horne" To "Hotel" On The District's Plan. In its summary of the project filed with the City, Norlyn calls the project a "home". On the same summary filed with the District, Norlyn has changed the documents by calling the project a "hotel". Use of a name alone is not the determining factor but rather the actual use should be controlling. The Board should simply disregard the appellant's nomenclature. CONCLUSION There is absolutely no merit to Norlyn's contentions that it is a "hotel" facility rather than a "residential" facility for purposes of connection fees. The 146 units are going to be the permanent homes for the residents and simply calling it a hotel or the fact that the residents' meals are prepared and served in a common room does not change this to a commercial hotel enterprise. Its use of the sewage system is at least as intensive as that of an apartment house on which each unit pays a residential connection fee. CFI:cjs:Cl252 cc: Mr. J. W. Sylvester Mr. G. Streed Miss R. Brown Mr. T. M. Dawes Respectfully submitted, L ~RKE & WOODRUFF ~:s1.~~ General Counsel (" NEWPORT BAY RETIREMENT INN 152 ROOM CONGRE GATE LIVING DEVELOPMENT FOR SENIOR CITIZENS . ( , NEWPOR T BAY RE TIREMENT I NN 1 52 room Congregate Living Facility. Newport Beach, California. INTRODUCT I ON By the year 2030, one out of every five Americans wil l be over 65 yea r s of age , many over 85 yea r s of age. Expert s on aging are troubled by the prospect of a society in which the elderly will be looking after the elderly. Two t o four mil l ion , approximately 11%, of Ca l ifornia 's population are already over the age of 65 . T his prospect of a r apidly g r owi n g aged population foretells the n eed for increasedretirementac comodation of various t ypes. Many r etirees are finding jt difficult to locate and maintain suitable housing because of rising energy costs, property taxes , the expense of ever inc r easing house maintenanc e , the inconvenience of living with younger relatives with different lifestyl es, and concerns about physical safety. Newport Bay Retirement Inn is being designed to meet this increasing demand for such a lternative accomodation in the Newport Beach communi t y. ( :'"•" A PROJECT SUMMARY LOCATION Between Placentia and Medical Lane on Superior Ave. in Newport Beach, approximately~ mile from Hoag Hospital. Two blocks from Pacific Coast Highway and the ocean. There are a number of medical service facilities (including medical offices, convalescent hospitals, etc.) in the vicinity . The location is convenient to shopping, movies , churches and synagogues. TYPE OF PROPERTY Proposed 152-room Congregate Living Project containing approximatel y 74 ,283 Sq. Ft . living area. Total building area; approxima tely 96 ,711 Sq. Ft. LAND AREA 65,000 Sq. Ft. or l~ acres ZONING , The property is currently zoned Administrative/Professional. A Condi- tional Use permit will t he ref o re be required and should be obtained within four months. t:. LAW O F FICES ROSENFELD, LINDSEY & WO LFF MORTON M. ROS E NFELD ROCHEi-LE M, LINOSEY STEVEN G . WOLFF .JOAN MUSSOFF SI NG E R ALA'I D. ARONSON VIA FEDERAL EXPRESS Board of Directors A PROFESSIONAL CORPORATION 2D4 9 C EN T U RY ?ARK EAST S UITE 600 L OS ANGELES . CALIFORNIA 90067 May 4, 1989 orange County Sanitation Distric t No. 6 10 844 Ellis Fountain Va ll ey, California 92708 -7018 Re: sewer connection Fee 1455 superior Avenue, Newport Beach, California Ladies and Gentlemen: TELE?HONE (2 13 ) S5 6 -1221 FAX (213) S 5 6-0"'-0I This law firm represents Norlyn Builders ( "Norlyn ") , the owner of the above-referenced retirement h otel project (the "Hotel ") . This l etter shall constitute a formal appeal of the recent decision by officials of Orange County Sanitation District No . 6 (th e "District") not t o refund a portion of the sewer connection fee previous l y paid to the Di strict by Norlyn. The relevant facts giving rise to this appeal are as ~ol l ows: On November 30 , 1988, Norlyn paid, under protest, a sewer connection fee in the amount of $219 , 000 as a prerequisite to commencing development of the Hotel. Prior to paying such fee, Norlyn was informed by the City of Newport Beach Permit Office that the City was not clear as to whe th er the Hotel was being properly assessed for sewer connection fees, and recommended further i nquiry with the District; howev er, due to the pressing need to ob t a in a building permit in order to secure construction financi ng for the Hotel, Norlyn had no choice but to pay the fee and did so under protest. On December 6 , 1988, Norlyn wrote to Thomas Dawes reiterating its protest and requesting a r educti on in the sewer conne ction fee on the grounds that th e Hotel was a commerc i al project. On December 14, 1988, Norlyn again wrote to Mr . Dawes requesting a refund of $193 ,500 based upon the diff e rence between the sewer connect i on fee paid under protest ($21 9 ,000) and th e fee properly chargeable to an 85,0 00 square foot commercia l building ($25,500, based upon $300 per 1,000 square feet). 1 .• LAW O FF I CES R 0 ·s EN FELD, LI N D S E Y & W 0 L FF A P l=i O F E.SS I ONAL.. CO RPORATIO N Board of Directors Orange county Sanitation District No. 6 May 4, 1989 Page 2 On December 27, 1988, Norlyn received a letter from Gary Streed stating that the District needed further information in order to process Norlyn's request for a reduction in the connection fee and requesting a copy of Norlyn's building permit and documentation of the square footage of the Hotel. Norlyn provided Mr. Streed with these items on January 28, 1989. On February 14, 1989, a representative of Norlyn, Shelly Acquistapace, spoke with Mr. Streed and was informed by him that everything looked in order and that Norlyn should be receiving the requested refund of sewer connection fees. Having not received the refund check by March 6, 1989, Ms. Acquistapace again telephoned Mr. Streed. At that time, Mr. Streed informed Ms. Acquistapace that he had received a letter from Raimar Schuller of the City of Newport Beach Building Department stating that, notwithstanding the fact that both the City of Newport Beach and the Newport Mesa Unified School District had classified the Hotel as a commercial project, it was his opinion that the sewer fees had been properly assessed. On March 13, 1989, M. David Green, one of the principals of Norlyn, telephoned Mr. Schuller to discuss such letter. Mr. Schuller declined to respond to Mr. Green's telephone call, and instead faxed a copy of the letter to Mr. Green. On April 5, 1989, we wrote to Mr. Streed reiterating Norlyn's demand for a refund of sewer connection fees and setting forth certain additional reasons why we believed such a refund was justified. Mr. Streed referred our letter to Thomas Woodruff, general counsel for the Sanitation Districts. On April 26, 1989, we received a letter from Mr. Woodruff stating that the sewer connection fee imposed by the District was properly determined on the basis of the Hotel being a residential rather than a commercial project. Copies of the above-referenced correspondence are attached hereto for the Board's convenience. Based upon the foregoing, we believe that the General Manager of the District has made a final determination not to refund Norlyn's sewer connection fees, and, accordingly, that this matter is properly the subject of an appeal pursuant to Section 601.8 of Ordinance No. 606 of the Board of Directors of County Sanitation District No. 6 of Orange County, California (the "Ordinance"). Pursuant to Section 601. 8 (B), we have enclosed a check in the amount of $100 as payment of the applicable appeal fee. , .· L A W OFFICES .., R o 's E N FE L 0' LI N 0 s E y & w 0 L FF A PROFESSIONAL. CORPORA TION ~card of Directors Orange County Sanitation District No . 6 May 4, 1989 Page 3 For the reasons set forth below, Norlyn is entitled to a refund of sewer connection fees in the amount of $193,50 0 : The Hotel is an interim ass i sted-care facility designed to accommodate persons between the ages of 75 and 90 who do not yet require the full -time care provided by a conva l escent hospital. Because of the advanced age of the occupants, it is anticipated that most will stay at the Hotel for a short period of time . For this reason , the Hotel wi l l not enter into long-term leases with its occupants ; rather, units will be available for rental on daily, weekly and monthly terms. In fact, it is contemplated that many guests of the Hotel will be seasonal visitors from colder climates . statis tics from similar projects indicate that the average length of stay in the Hotel will be significantly shorter than the average length of stay in a traditional convalescent hospital. Section 702.l(c) of the Ordinance provides that the sewer connection fee for new construction "other than dwelling buildings" shall be $300 per 1 ,000 square feet of floor area contained within such construction. Section 102 (20) of the Ordinance defines a dwelling unit as "a single unit providing complete, independent living facilities for one or more persons, including permanent provisions for living, sleeping, eating, cooking and sanitation ." As described below, none of the units in the Hotel is an independent living facility in that the individual units do not contain permanent provisions for eating or cooking; thus, the Hotel units are not "dwelling units ", and the Hotel is not a "d welling building " for purposes of Section 702 of the Ordinance. The Hotel will be comprised of 146 small living units, 125 of which will be studio units consisting of only 375 to 425 square feet. It is anticipated that nearly all of the units wil l be occup i ed by only one person. Each unit will contain only one bathroom . Laundry facilities will be centrally located, and none of the units will contain a washer or dryer . None of the units will contain a kitchen and there are no permanent provisions for eating or cooking as contemplated by the Ordinance. Meals for Hotel occupants wi ll be prepared in a commercial kitchen and served in a central dining room. The kitchen is under the jurisdiction of the County Board of Health, and, like other commercial kitchens, contains special features including a grease trap designed specifical ly to minimize its impact on the sewer system. 1 .· ; LA W O FF I C ES ROSENFELD, LINDSEY & WOLFF A P ROFESS IO N A L CORPORAT IO N Board of Directors Orange County Sanitation District No. 6 May 4, 1989 Page 4 I t is unlikely that occupants will entertain guests in their units, due to the size and lack of amenities in the units as well as statistics showing that the recreational time of occupants of similar facilities is often spent with family and friends away from the Hotel. One of the important goals of the Hotel is to provide occupants with the opportu nity to pursue as active a lifestyle as they are able . To this end, the Hotel will provide numerous activities for its occupants, many of which will be held off the grounds of the Hotel. To encourage participation in these activities, the Hotel will provide transportation to and from out side activities. It is not anticipated or desired that occupants of the Hotel spend a great deal of time in their units, and both the units and the social schedule have be e n and will be designed to facilitate this goal. Mr. Schuller stated in his letter that occupants of the Hotel will "receive mail, be registered to vote and consider it their home." The s e criteria are irrelevant to the determination of sewer connection fees. Nowhere in the Ordinance are such criteria set forth, nor are such criteria useful in addressing the issue. The Ordinance states that the goal of sewer connection fees is to equitably allocate sewage treatment costs. As such, the focus should properly be on the level of use being made of the sewer system in each particular case. As the above facts clearly show, occupants of the Hotel will not be heavy users of the sewer system. The economies of scale provided by having central cooking and eating facilities, together with the fact that the occupants will not be spending large amounts of time in their units or entertain- ing guests in their units, will clearly result in a significantly smaller impact on the sewer system than is created by residential sewer use. It is our understanding that convalescent hospitals l o cated in the District have been treated as commercial projects for purposes of determining sewer connection fees. The Hotel will impose no greater burden on the sewer system than a conval e scent hospital. Both facilities are characterized by elderly p e rsons living in small units and eating meals prepared in a c e ntral commercial kitchen. In fact, a convalescent hospita l is likely to L AW O F F I C ES ROSENFELD , LINDSEY & WOLFF A PROFESS I ONAL. CO?PORAT I ON Board of Directors Orange Co u n t y Sanitation District No. 6 May 4, 1989 Page 5 impose a greater burden on the sewer system , both because its occupants are generally not able to leave t he facility during the day and because a much larger staff, including nurses and other medical professionals , are present in the hospital at all times . As noted above , both the City of Newport Beach and the Ne wport Mesa Unified School District have classified the Hotel as a commercial development. No evidence has been presented that these classifications are improper , and the District seems simply to have decided to ignore them . The District 's refusal to refund the sewer connection fees in ques t ion , and the similar treatment of similar facilities which others may wish to b u ild in the future , will have an adverse effect upon the elderly of Orange County. I f the sewer fees are not refunded, Nor l yn will be forced to pass them along to occupants of the Hotel in the form of higher occupancy charges. This will make the uni ts less affordable to elderly persons who do not feel comfortable living on their own but who do not need the full-time car e p r ovided by a convalescent hosp i tal, and will discourage future construction of similar projects. It seems incredible that a n 85 year old widow with one bathroom and no kit chen or laundry facilities should generate the same sewer fee as the owner of a four or five bedroom home with multip l e bathrooms, a large kitchen, laundry facilities and various other related amenities, but that is the result of the District 's position. The elderly of Orange County have spent decades paying taxes a n d contributing to the development and maintenance of County services ; at this s tage in their lives during which many are living on fixed incomes , it is surprising that the County is not more sympathe tic to their needs . For the foregoing reasons, Norlyn respectfully requests that the Board refund the amount of $193,500 in sewer connection fees previously paid under protest to the District. In the event this appeal is unsuccessful , noth ing contained in this letter is intended, nor shall it be construe d, to operate as an admission of any or all relevant facts or a waiver, relea se or relinquishment of our client's rights, claims and remedies against the District, the City of Newport Beach, or any other party having an interest in this matter, all of which rights, claims and remedies are hereby expressly reserved . L AW OFF I CES ROSENF E LD, LINDSEY & WOLFF A PROFESSIONAL CORPORATION Boar d of Directors Orange County Sanitation District No. 6 May 4 , 1989 Page 6 Should you have any questions concerning anything contained in t his letter, please do not hesitate to contact the undersigned . Thank you for your consideration. ADA:bg Enclosures cc: Thomas L. Woodruff, Esq . Mr. M. David Green Steven G. Wo l ff, Esq . Alan D. Aronson -. i" • NoRLYN BUILDERS 522 South Sepulveda Blvd., Suite 207, West Los Angeles, California 90049 Telephone (213) 471-455Q • FAX (213) 471-5071 December 6, 1988 Department of Building and Safety Newport Beach, CA Mr. Thomas M. Dawes Orange County Department of Sanitation Post Off ice Box 8127 Fountain Valley, CA 92728-8127 Re: Payment of Sewer/Sanitation Fee Under Protest 146 Unit Retirement for Elderly 1455 Superior Avenue Newport Beach, CA Plan Check 1020-80 Permit B-6359 Dear Mr. Dawes: The above referenced project has been classified by Newport Beach Building and Safety and Newport Unified School District as falling into the commercial category. · In consideration of these facts and the restrictive covenant limiting the occupancy to persons sixty-two (62) years of age or older, and licensing by the Department ·of Social Services as an R.F.E., we demand the fee be reduced to the applicable commercial rate and not the $1500.00 per unit, (totallin·g $219,000.00) now being paid. Please refund the difference immediately. MDG:sa File #4036 cc: Sincerely, Jerome Pastor, Esq. Barton Doyle, Esq. (BIA) (' December 14, 1988 Thomas Dawes Orange County of Sanitation P.O. Box 8127 Fountain Valley, CA 92728-8127 RE: SEWER FEE ON 1455 SUPERIOR, NEWPORT BEACH PROTEST LETTER OF 12-06-88 Dear Mr. Dawes: To follow up our conversation of 12-14-88 we shall expect to hear from your office soon regarding the above referenced matter. Per our established square footage of 85,000 verifiable by The Plan Check Department of Building & Safety for Newport Beach and school fees paid on this basis, we calculate oui.· fee to be $25, 500. 00 ( 85 x $300). Accordingly, a refund of $193, 500 is forthcoming. Obviously this amount has. seriously impaired our financial viability and I'm sure you can understand our motivation to pursue the issue. As further substantiation of our: commercial hotel type designation we wish to point out that th~re are not any kitchen~ designed into the units, and a central dining room and commercial kitchen under County Board of Health jurisdiction. Also we do not fall under Newport Beach's requirements for residetttia:l tarXil'.lg· Ve~ly yours, ~-------­ M. David Green Norlyn Builders General Partner : I .-,. \_.· ·- Ii 1 -. . ,~, .(:) COUNTY SANITATION DISTRICTS , Norlyn Builders ·OF ORANGE COUNTY, CALIFORNIA P.O. BOX 8127, FOUNTAIN VALLEY, CALIFORNIA 92728-8127 10844 ELLIS, FOUNTAIN VALLEY. CALIFORNIA 92708-7018 (714) 962-2411 December 27, 1988 522 South Sepulveda Blvd., Suite 207 West Los Angeles, California 90049 Attention: M. David Green Subject: Connection Fees; 1455 Superior Avenue Newport Beach, California RECEIVED DEC 2 9 1988 Ans'd •••• ___ _ In order to properly process your request for a reduction in subject connection fees we will need additional information. Please forward a copy of your building permit, B-6359, on which you paid these fees and some documentation of the square footage under the roof of these facilities. When we have all of the necessary information and documentation, we will be able to resolve your demands. GGS.35 GGS:pi _ ..... NuRLYN BurLDERS tJ ~'f\ . ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-----.:----:--~:--:- 522 South Sepulveda Blvd., Suite 207, West Los Angeles, California 90049 Telephone (213) 471-4550 ~ FAX (213) 471-5071 Mr. Gary G.· Streed Acting Director of Finance County Sanitation Districts of orange County, Californa Post Office Box 8127 January 28, 1989 Fountain Valley, CA 92728-8127 Re: Connection Fees; 1455 Superior Avenue Newport Beach, California Dear Mr. Streed: Per your request, I am enclosing a copy of our building permit, B- 6359 and I have also enclosed a copy of the school fees that were paid. The school fees receipt has documentation of' square footage which is 85,000. Please feel free to contact me if you require any further information. /sda Enclosures File #4036 Regards, NORLYN BUILDERS _.JI ultt!_/1pa;t fa/xi(b 1 ShellyJAcquistapace . ,,· / ..;:..·4 , :.:, , • :;c,·.r'"_.;-, t .:.,=.-v.~ -, V··· CITY OF NEWPORT BEACH P.O. BOX 1768, NEWPORT BEACH. CA92658-89I:5 February 10, 1989 Mr. Gary G. Streed, · Chief Administrative Assistant County Sanitation Districts of Orange County, Ca. 10844 Ellis Avenue P.O. Box 8127 Fountain Valley, Ca. 92728-8127 Subject: Sanitation District Fee for 1455 Superior Avenue {Bu11ding Permit #8-6359) Dear Mr. Streed: After due consideration including input from the City Attorney and the Planning Department, it is my bel tef that Sanitation District #6 permit fees have .. been charged properly for 1455 Superior Avenue and the assessment shou1d stand. While the School District and the Building Code considers this occupancy a ·commercial use, the sewer flow is an entirely different matter. It 1s my opinion that the 146 units will be used similar or even more intense than an apartment house. Seniors are using 1455 Superior as their principal residence, they will receive mail, be registered to vote and consider it their home. Being retired, they would most likely stay continuously at home, eat their meals there and not 1eave during weekdays for work. This obviously is only my opinion and the Sanitation Di.strict as the administrator and being most famHiar with sewer flows, should be ultimately deciding on the correct assessment. Very truly yours, BUILDING DEPARTMENT jk ... ~ -. LAW OFFICES ROSENFELD. LINDSEY & WOLFF MORTON M. ROSENFELD ROCHELLE: M. LIN OSEY STEVEN G. WOLFF ..JOAN MUSSOFF SINGER ALAN 0. ARONSON ·BY FEDERAL EXPRESS Mr. Gary G. Streed A PROF'ESSIONAL CORPORATION 2049 CENTURY PARK EAST SUITE GOO LOS ANGELES. CALIFORNIA 90067 April 5, 1989 Chief Administrative Assistant County Sanitation Districts of Orange county, California 10844 Ellis Fountain Valley, California 92708-7018 Re: Sewer Connection Fees 1455 Superior Avenue, Newport Beach, California Dear Mr. Streed: TE:LEPHON E: (2131 556-1221 FAX 12131 SSG-0401 As we discussed on Friday, March 31, 1989, this law firm represents Norlyn Builders ("Norlyn"), the owner of the above- referenced retirement hotel project (the "Hotel"). On November 30, 1988, Norlyn paid, under protest, a sewer connection fee in the amount of $219,000. On December 6, 1988, Norlyn wrote to your off ice demanding a reduction in the connection fee on the grounds that the Sanitation District had erroneously classified the Hotel as a "dwelling building." As of this date, Norlyn has received neither the refund demanded nor a · final determination by the Sanitation District regarding the proper classification of the Hotel. The purpose of this letter is to summarize the reasons why Norlyn is entitled to the claimed refund and to reiterate the demand that the excess connection fees be refunded to Norlyn. Section 702 of Ordinance No. 606 of the Board of Directors of County Sanitation District No. 6 of Orange County, California (the "Ordinance"), as amended, provides at subsection 1 (c) that the sewer connection fee for new c.onstruction "other than dwelling buildings" shall be $300 per 1, ooo square feet of floor area contained within such construction. Section 102 (20) of the Ordinance defines a dwelling unit as "a single unit providing complete, independent living facilities for one or more persons, including permanent provisions for living, sleeping, eating, cooking and sanitation." For the reasons set forth below, the units in the Hotel are not "dwelling units", and the Hotel is not . . •\. \ i ("\ (\ ~'"": v : .. ! { . . . :-· i . . -..,..; \.__I ~ 1. LAW OFFICES ROSENFELD, LINDSEY & WOLFF A PROFESSIONAi.. CORPORATION Mr. Gary G. Streed April 5, 1989 Page 2 , I a "dwelling building" for purposes of Section 702 of the Ordinance. As the enclosed floor plans clearly show, the residential ·suites in the Hotel do not contain eating areas or kitchens. Residents of the Hotel will be served by a central dining room and a commercial kitchen. There are no permanent provisions for eating or cooking in any unit. The Newport Beach Building Department has itself determined that none of the units contain legal kitchens. Since none of the suites in the Hotel contain permanent provisions for eating or cooking, the definition of "dwelling unit" set forth in Section 102 (20) of the Ordinance clearly excludes the Hotel suites, and the Hotel must be categorized as a non-dwelling building for purposes of determining the sewer connection fees. While Mr. Schuller of the Newport Beach Building Department is entitled to his opinion that the Hotel is a dwelling building, we respectfully submit that his opinion is based upon improper criteria. Mr. Schuller states in his letter to you of February 10, 1989 that the residents of, the Hotel will "receive mail, be registered to vote and consider it their home." These criteria are completely irrelevant to the determination of sewer connection fees. The sewer connection fee depends solely on a determination of whether the project in question is a dwelling building or a non- dwelling building. The definition of a dwelling unit is concerned only with the permanent physical facilities available in the unit, and not with whether a person occupying the unit receives mail, is registered to vote or considers it his home. In determining to build the Hotel, Norlyn has relied on the definitions set forth in the Ordinance •. It is not only improper, but also unfair, to now introduce additional criteria which have not been agreed upon by the Board of Directors of the Sanitation District. Norlyn has been put to great inconvenience and expense as a result of the four-month delay in receiving the refund of sewer connection fees to which it is lawfully entitled. If this refund is not received by April 21, 1989, Norlyn may have no choice but to institute formal proceedings against the Sanitation District and the City of Newport Beach in.order to enforce its right to the refund. Obviously, this is a course of action which Norlyn would like to avoid. Norlyn intends to be a landowner in the City of Newport Beach for many years to come, and truly desires to maintain good relations with the City and the County. Nevertheless, given the amount of money involved, Norlyn must take all appropriate steps to secure the refund. LAW OF"F"ICES ROSENFELD, LINDSEY & WOLFF A PROF"£SSl0NAL CORPORATION Mr. Gary G. Streed April 5, 1989 Page 3 Based upon the established square footage for the Hotel of ~. 85,000 square feet, the sewer connection fee which should properly ·~be charged to Norlyn is $25,500 (85 times $300). Accordingly, the refund should be in the amount of $193,500. We trust the foregoing will lead to the prompt resolution of this matter. However, in the event that this is not the case, please understand that nothing contained in this letter is intended, nor shall it be construed, to operate as an admission of any or all relevant facts or a waiver, release or relinquishment of our client's rights, claims and remedies against the Sanitation District, the City of Newport Beach, or any other party having an interest in this matter, all of which rights, claims and remedies are hereby expressly reserved. We very much appreciate your assistance in resolving this matter. In the event we can be of any assistance to you, please do not hesitate to contact the undersigned. ADA:bg Enclosure cc: ~. M. David Green vlSteven G. Wolff, Esq. Sincerely, QL,Q~~~ Alan D. Aronson .- LAW OFFICES OF Rourke & Woodruff CRAIG G. FARRINGTON CLARK F. IOE: A PROFESSIONAL.. CORPORATION SUITE 7000 LOIS E:. JEFFRE:Y MAGOALE:NA LONA-WIANT SUSAN R. MEOWIE:D THOMAS F: NIXON 701 SOUTH PARKER STREET ORANGE:, CALIFORNIA 92668 BRIAN K. OKAZAKI JAME:S G. ROURKE: KE:NNARO R, SMART. JR. OANIE:L K. SPRADLIN ALAN R. WATTS THOMAS L. WOODRUFF Alan D. Aronson, Esq. Rosenfeld, Lindsey & Wolff 2049 Century Park East Suite 600 Los Angeles, Ca. 90067 Apr i 1 2 5 , 1 9 8 9 Re: Norlyn Builders Project 1455 Superior Avenue Newport Beach, California Senior Citizens Congregate care Facility Dear Mr. Aronson: TEL..EPMONE 17141 sse-7000 F'ACSIMIL..E: 17141 835-7787 Your correspondence addressed to the County Sanitation Districts of Orange County {"Districts"} regarding the above- referenced project and the dispute concerning the amount of sewer connection fees payable to the Districts has been forwarded to this office, as General counsel to the Districts, for review and reply. I have now concluded that review in full detail, including examination of the Applications, Plans, Specifications, correspondence and Minutes of the City of Newport Beach Planning Commission dating back to early 1987. Based on this review, I have concluded that the amount of fees imposed by the Sanitation Districts and collected by the City of Newport Beach on their behalf, were in fact properly determined and that the rate of fees for Sanitation District No. 6 is properly calculated on the basis of the project being a number of residential dwelling units, as opposed to a commercial business-type project. Let me say in summary that the records and the actual proposed utilization of the project is unequivocal that it constitutes 152 permanent residential homes for senior citizens, and the attempt of you and your client to factually distinguish it and change it to a "hotel" by an interpretation of Section Page 2 April 25, 1989 102(20) of Section 702 of Ordinance No. 606, is simply unsupportable. The Ordinance def ini ti on does not require that there in fact be cooking facilities, but simply includes that as a description of what would normally constitute a residential- type project. I would commend to you also the d,efinition of a dwelling unit in the Newport Beach Municipal Code (Section 20.87.140). Their definition is nearly identical to that of the Districts, and throughout all of the proceedings, including the environmental studies and the Staff and Planning Commission activities, it was viewed as a 152-unit apartment complex for the senior citizens. As you well know, these units are leased to individual persons on a long-term basis, and not on a daily hotel/motel arrangement. The living accommodations which you provide are certainly different than a single-family home or even traditional apartments, in that central dining room facilities are available, and such amenities as maid service and social programs are also afforded. That does not detract from the fact that this is truly the residence of these 152 to 304 persons. The Restrictive Covenant executed by your clients certifies that it is a "home" for senior citizens. You have attempted to downplay the importance of such things as receiving mail and registering to vote, but in reality, you and your client must fully recognize that they truly are determinative factors as to whether a person considers it to be a home or simply a resting stop in the form of a hotel for one or several days' stay. Lastly, I would suggest to you that this issue for the Sanitation Districts is not at all related to any decision made by the City of Newport Beach or the Newport Mesa Unified School District. The reasoning by which those independent government agencies choose to establish their fees rests solely in their discretion. The School District, as several have, elected to provide for a lesser rate of developer school impact fees for senior citizens, on the basis that in their determination they would not provide a serious burden or impact on the District's facilities. Newport Mesa Unified School District chose to do that, even before the Legislature amended Government Code section 65995 in early 1988. The Sanitation Districts have not made the same determination. In point of fact, as Mr. Streed has pointed out, this type of use and occupancy probably provides a heavier than normal usage to the Districts' sewer system. I would also indicate to you that this very issue relating to congregate care facilities has been recently litigated in the Orange County Superior Court, both in proceedings for writ of mandate and complaints for injunctive relief and refund of fees, and in every instance, the Courts have ruled adversely to the developer, \....,/ \.__,I ~ Page 3 April 25, 1989 partly because by the time of trial the developers had stipulated that in fact such a facility was truly residential and not commercial. The Districts properly assessed the fees and will make no refund as per your request by letter of December 6, 1988. If you have any particular questions or comments, please feel free to call, and I will be most happy to review them with you. TLW:pj(B54) cc: Mr. J.W. Sylvester Mr. G.G. Streed Very truly yours, ROURKE & WOODRUFF ~a::rf :!~· /':~~ral Counsel :-· ... I' " ROSENFELD, LINDSEY & WOLFF , A PROFESSION.AL CORPORATION •' . 213-556-1221 ~ 2049 CENTURY PARK EAST, STE. BOO 21!!-558-1221 '--rn 15"3:1 S.1sn 16-332611222 · • LOS ANGELES. CA 90087 · ~ PAV [j ~::::: ~ . ~· . -,----... ----TO THE ·. d I $. ~ . 0~~~ ~~~ ~~ ~o-::~:~s \_ . ilEelesBank. . ~~~ FOR~ ANGELE&CAU<OM~7i~ ~ · • F"'1lSTAASATCONST1!UATIOH . ~ 11 1 0D•SJ•;r1:•222JJ2~J1: ~?••11 •2~ . ~ \.,_/ "--11 . _ . _ _ , JtM~MMM. _ _ .M _ t t - r-. ... ; ..... J ..... l ~ \ .. , ... MEETING DATE May 31, 1989 DISTRICT l TIME 4:00 PM DISTtHCTS 6 (CRANK) •••••••• HANSON •••••• (YOUNG) •••••••• GRISET •••••• == == == (KENNEDY) •••••• HOES TERE Y ••• (ROTH) ••••••••• STANTON ••••• ===: ==== == DISTRICT 2 (NORBY) •••••••• CATLIN •••••• (GRAHAM) ••••••• MAHONEY ••••• ------ (WED AA) •••••••• BIGONGER •••• ------ (YOUNG) •••••••• GRISET •••••• ------ (NELSON) ••••••• ISLES ••••••• ------ (SCOTT) •••••••• NEAL •••••••• ------ (DOWNEY) ••••••• NEWTON •••••• ------ (CULVER) ••••••• PERRY ••••••• ------ (HUNTER) ••••••• PICKLER ••••• ===:======== (FASBENDER) •••• SILZEL •••••• (BARRERA) •••••• SMITH ••••••• ===: ==== ==== (ROTH) ••••••••• STANTON ••••• _____ _ DISTRICT 3 (DUKE) ••••••••• POLIS _____ _ (WEDIN) •••••••• NELSON •••••• _____ _ ( VERELLEN) ••••• ALLEN ••••••• _____ _ (ERSKINE) •••••• BANNISTER ••• _____ _ (NORBY) •••••••• CATLIN •••••• _____ _ (PERRY) •••••••• CULVER •••••• _____ _ (CHESSEN) •••••• GRIFFIN ••••• _____ _ (YOUNG) •••••••• GRISET •••••• _____ _ { ) •••••••• KANEL ••••••• ____ -- {GRAHAM). •••••• MAHONEY ••••• _____ _ {SCOTT) •••••••• NEAL •••••••• _____ _ {HUNTEK) ••••••• PICKLER ••••• _____ _ (WILES) •••••••• SIEFEN •••••• _____ _ {ROTH) ••••••••• STANTON ••••• _____ _ {WAHLSTROM) •••• SYLVIA •••••• _____ _ (HUNT) ••••••••• WILSON •••••• _____ _ DISTRICT 5 (HART) ••••••••• cox •.••..••. __ ---- (HART> ••••••••• STRAUSS ••••• _____ _ (STANTON) •••••• ROTH •••••••• _____ _ DISTRICT 6 (GREEN) •••••••• WAHNER •••••• ..,.. (HART) ••••••••• PLUMMER ••••• ~====== (STANTON) •••••• ROTH •• ······~--__ DISTRICT 7 (BARRERA) •••••• SMITH ••••••• _____ _ (KENNEDY) •••••• EDGAR ••••••• _____ _ (YOUNG) •••••••• GRISET •••••• _____ _ (STANTON) •••••• ROTH •••••••• _____ _ (AGRAN) •••••••• SHERIDAN •••• _____ _ (COX) •••••••••• STRAUSS ••••• _____ _ (GREEN) •••••••• WAHNER •••••• _____ _ DISTRICT 11 (SILVA) •••••••• MAYS •••••••• _____ _ (BANNISTER) •••• WINCHEl_L •••• _____ _ (ROTH) ••••••••• STANTON ••••• _____ _ DISTRICT 13 (BIGONGER) ••••• WEDAA ••••••• _____ _ (HUNTER) ••••••• PICKLER ••••• _____ _ (STANTON) •••••• ROTH •••••••• _____ _ (BARRERA) •••••• SMITH ••••••• _____ _ (ISLES) •••••••• WEDIN ••••••• _____ _ DISTRICT 14 ------ (MILLER) ••••••• SWAN •••••••• _____ _ (EDGAR). ••••••• KENNEDY ••••• _____ _ (STANTON) •••••• ROTH •••••••• _____ _ (AGRAN) •••••••• SHERIDAN •••• _____ _ (BARRERA) •••••• SMITH ••••••• _____ _ 05/ 11/89 ~~~~~~~~~~~ JOINT BOARDS (VERELLEN) ••••••••• ALLEN ••••••• (ERSKINE) •••••••••• BANNISTER ••• ---- (WEDAA) •••••••••••• BIGONGER •••• ---- (NORBY) •••••••••••• CATLIN •••••• ---- (HART) ••••••••••••• COX ••••••••• ---- (PERRY) •••••••••••• CULVER •••••• ---- (KENNEDY) •••••••••• EDGAR ••••••• ---- (CHESSEN) •••••••••• GRIFFIN ••••• ---- (YOUNG) •••••••••••• GRISET •••••• ---- (CRANK) •••••••••••• HANSON •••••• ---- (KENNEDY) •••••••••• HOESTEREY ••• ---- (NELSON) ••••••••••• ISLES ••••••• ---- ( ) •••••••••••• KANEL ••••••• ---- (EDGAR) •••••••••••• KENNEDY ••••• ---- (GRAHAM) ••••••••••• MAHONEY ••••• ---- (SILVA) •••••••••••• MAYS •••••••• ---- (SCOTT) •••••••••••• NEAL •••••••• ---- (WEDIN) •••••••••••• NELSON •••••• ====:==== (OOWNEY) ••••••••••• NEWTON •••••• (CULVER) ••••••••••• PERRY ••••••• ---- (HUNTER) ••••••••••• PICKLER ••••• ===:==== (HART) ••••••••••••• PLUMMER ••••• (DUKE) ••••••••••••• POLIS •••••• ·==== ==== (STANTON) •••••••••• ROTH •••••••• ___ _ (AGRAN) •••••••••••• SHERIDAN •••• ___ _ (WILES) •••••••••••• S IEFEN •••••• ___ _ (FASBENOER) •••••••• SILZEL. ••••• ___ _ {BARRERA) •••••••••• SMITH •• -••••• ___ _ (ROTH) ••••••••••••• STANTON ••••• ___ _ (HART /cox) ..•..•••• STRAUSS •••• ·---- (MILLER) ••••••••••• SWAN •••••••• ___ _ (WAHLSTROM) •••••••• SYLVIA •••••• ___ _ {GREEN) •••••••••••• WAHNER •••••• ___ _ ( 8 IGONGER) ••••••••• WED AA ••••••• ___ _ (ISLES) •••••••••••• WEDIN ••••••• ___ _ (HUNT) ••••••••••••• WILSON •••••• ___ _ (BANNISTER) •••••••• WINCHELL •••• ___ _ STAFF: SYLVESTER ••• .,,,,,-- BROWN ••••••• ~ ANDERSON •••• CLARKE •••••• CLAWSON ••••• DAWES ••••••• ~ FILECCIA •••• -- HODGES •••••• KYLE •••••••• LINDER •••••• OOTEN ••••••• __ STREED •••••• ~ VON LANGEN WINSOR •••••• WOODRUFF •••• ~ IDE ••••••••• ANWAR ••••••• DEM IR ••••••• FLEMING ••••• HOHENER ••••• HOUGH ••••••• HOWARD •••••• HUNT •••••••• KNOPF ••••••• LINDSTROM ••• LYNCH ••• -•••• __ STONE ••••••• WASON ••••••• YOUNG ••••••• __ DISTRICT 6 ADJOURNED REGULAR MEETING NOTES MAY 31, 1989 -4:00 P.M. #6{b) -Report of General Counsel re Appeal of Norlyn Builders Tom Woodruff stated that their appeal consisted of their May 4, 1989 letter including attachments consisting of several letters between Norlyn and the Ci t y of Newport Beach and the Sanitation District, as well as his letter of response. Referred to his review of their appeal in his Memorandum dated May 24, 1989. These fees were paid to the City of Newport Beach at the time of securing the Building Permit but they objected to the payment of those fees because the owner considers this a commercial venture instead of a residential; and, therefore, feels that the commercial rate should apply. The matter had been reviewed on several instances with Gary Streed on the telephone. It was then referred to the General Counsel •s office for review. He again called the Board's attention to his evaluation of the facts and his opinion contained in his Memorandum. He noted that the procedure would be to include this written material into the record and then allow representatives from Norlyn Builders to make any presentation and staff would respond. District believes that they are residences. Developer interprets because they don't have kitchens, they are commercial. TLW noted that residents will be receiving their mail there and that is where they wi l l be living their life. Director Roth commented that utilization of these units will be somewhat different as they do not have full kitchens. They are unique but like most senior citizen housing , they have some type of dining facility. Asked if t hey still have a major amount of food three times a day in a major dining room? TLW replied that that was correct. #6{d) -Presentation by Norlyn Builders Mr. Steve Wolff, attorney for Norlyn Builders, addressed the Board. He stated that the facility is State licensed and State regulated. The Department of Social Services regulates the facility. When first developed, they made it clear to the City of Newport Beach that this was a commercial development. The area is zoned for commercial rather than residential. They have special parking requirements that do not apply to residences. Have much higher density per dwelling unit. Because of construction obligations, they paid the fees under protest. Said Mr. Streed felt they would probably get a refund. Mr. Schuller of Newport Beach suggested that the residential classification was proper. His opinion was that this was similar to an apartment. He noted that Mr. Schuller said that this was on l y his opinion and the Sanitation District as the administrator should ultimately decide on the correct assessment. With regard to the General Counsel •s Memorandum, said they are not an apartment or hotel. They are an interim assisted-care facility got 75-90 year olds. The y have to prov i de many of the same features as convalescent homes. Have to provide for and handle their needs like transportation to offs i te activ i ties including religious and cultural events. Would be happy to provide copy of regulations from the State. Re parking the City of Newport Beach requires 1 ~-2 spaces per dwelling unit. We have 1/4 space per unit; 100 units per acre. Are in a commercial zone rather than a resident i al zone. Re definitions in District's material, he quoted Section 102(20) from Ordinance No. 606 re "independent living facilities". Wording includes cooking and eating facilities. Districts• General Counsel says we don't need eating facilities to be classified as residential. The ordinance simply includes these items which are normally in a residential unit. The absence of these facilities would seem to make it clear that these units are not dwelling units as defined by the District's ordinance . Stated that their commercial kitchen will have grease traps which are better for the sewers. Added that Schuller•s letter and General Counsel •s Memo use criteria re occupant receiving mail as permanent residence. This is not a criteria. His client relied on this ordinance when originally planning to build. Unfair to add additional criteria to raise fee. Tom Woodruff conmented that they will probably be a higher user of the sewers than apartments. Wolff stated that over 90% will have one occupant, and never more than 2 people, 1 bath and 1 sink. No separate laundry facilities or kitchen. Don't believe we are putting a greater burden on the sewer system. Are required to provide transportation for offsite activities so will do less damage than convalescent homes. Usually stay 1-5 years in convalescent hospital. Thought their project should pay perhaps less than convalescent hospital. Re occupancy tax as a hotel, they aren't aware of that and don't think it is the District's job to impose that tax. If we are subject to this tax, we will pay it. If not, won't worry about it. If residential connection fee is imposed, client will attempt to pass the cost on to the residents. Many of them won't be able to afford it. Seems unfair to require an 85 year old widow to pay for this. They should not bear the same burden as an apartment or single family home. Mr. Goodman, one of the owners of Norlyn Builders, then added that they had with them material which they have highlighted that pertain to the regulations that the State has under the Social Services Dept. re licensing of this facility. Passed out regulations. It is quite clear that in no way are they considering this as an apartment-type unit. They have monitoring and transportation requirements and dispensation of medicines. Much closer to a residential immediate care facility but no on-site nurse or injections. He referred to definitions again--administrator, basic services, care and supervision. He stated that when they originally conceived this project, that land was zoned for administrative, professional and conmercial. The City stated that the project is not listed but is characteristic of a residential hotel. We didn't invent that name. The City has in their General Plan that they supported the senior citizen housing. People receive mail at convalescent hospitals too. #6(e) -Response by staff Tom Woodruff stated that what was bothersome to him is some rather gross inconsistencies. Re bed tax, this was brought up to point out to them that they hann•t planned on this fee either. If bed tax is due, they will pay annual fee of $236,000 but aren't prepared to pay one-time District charge of $219,000. Occupants will only rent on daily, monthly or quarterly basis which is the exact criteria for the City of Newport Beach bed tax of 9%. -2- TLW added that Norlyn said they used the word "hotel" as shorthand because it was convenient to do. He referred to a set of plans given to the District for the project and the original set given to the City of Newport Beach. He showed Directors where they had patched in one word 11 hotel" on the District's copy. Copy for the Building Dept. said "home••. The living units do have wet bars. They do not have full kitchens. In the last 3-5 years congregate care facilities are generally common. Have 146 rooms and one big sink. They say if you don't have a kitchen, don't have to pay the fees. Have addressed all of this in my letter to Mr. Aronson and Memorandum of May 24th. Doesn't matter if School Districts treat them differently. It isn't the way we treat them. Re 1/4 parking space per unit, hotels have greater parking requirement than residences. Density for 8/10 acre is a tremendous load on the sewer. Mr. Wolff replied that Memorandum is misleading. Re hotel tax, this isn't required if occupant stays 30 days or more. In June the Planning Commission defined it as a residential hotel. Director Roth noted that he had his father in a residential care unit for acti ve seniors. He stated that their arguments hadn't convinced him to make a change in the staff's decision. Goodman said they aren't trying to convince them they are something that they aren't. Director Plummer said she had some real problems with this. It is one of those situations that has fallen through the cracks. It is a commercial area and was processed as a commercial project. The fact that the Sanitation Districts has an ordinance that defines it as a residence is fine but are talking about a facility that is a new type of facility. We are going to see more of these. The City just approved another project in Corona del Mar for an 85-unit residential care unit in a commercial zone. Requirements are completely different than they are for residences. Have real problems in assessing residential fee on a commercial venture that is defined by the State and City as a commercial operation. Maybe the District will have to go back to the drawing board and come up with other users on the sewer line. Don't feel it has more use than hotel. The impact of a venture like this is less on Sanitation District's facilities than commercial hotel. She stated, I personally will not be able to support the District's request to not consider this appeal. Need to reconsider how you are going to define things like this. Roth replied, that isn't the issue. The issue today is, is this a residential unit? Do they have all these facilities? What is the impact on the sewer system? A commercial building does not have the same impact on the sewer system. Wahner agreed with Director Roth. Asked staff if they wanted to review additional material distributed re regulations? TLW replied he didn't think it had any direct bearing on this issue. They show that they have some governing regulations as to how they are going to operate the facility. We know that. Not licensed like a convalescent facility but do have some regulations because it is a congregate facility. Don't need to review regulations. Wolff added, I don't really see how you can treat this different than a convalescent hospital. -3- Roth said I appreciate your remarks but we are concerned about costs. This District is one of the poorest. We are under the gun called EPA. We have multi-millions invested in facilities and they are telling us it isn't good enough. Also have SCAQMD regulations on the other side enforcing their provisions on our activities. I am pro-development and pro-Senior Citizen and trying to keep the costs down. It is unfair to pass these dollars onto someone here. Wolff said it is unfortunate but you may consider whether your ordinance is adequate and someone else will get benefits from this. Roth moved to deny appeal and support staff recommendation. Wahner seconded motion. Plummer stated that she voted on this project as a commercial project. Would never have voted on it as residential. District is defining it as a residence. Have a real problem with this. Recognize impact on developer and recognize Sanitation District's rules and regulations. Would hope that the District loo ks into some type of another definition that this is a commercial venture. Has to be some type of middle ground. Plummer abstained on motion. Motion carried. -4- . \ COUNTY SANITATION DISTRICT NO. 6 OF ORANGE COUNTY, CALIFORNIA MINUTES OF ADJOURNED REGULAR MEETING May 31, 1989 -4:00 p.m. 10844 El 11 s Avenue· Fountain Valley, California Pursuant to adjournment of the adjourned regular meeting of May 17, 1989, the Board of Directors of County. Sanitation District No. 6 of Orange County, California, met in an adjourned regular meeting at the above hour and date. The Chairman called the meeting to order at 4:12 p.m. The roll was called and the Secretary reported a quorum present. DIRECTORS PRESENT: DIRECTORS ABSENT: STAFF MEMBERS PRESENT: OTHERS PRESENT: ·James A. Wahner, Chairman, Ruthelyn Plunmer, Don R. Roth None J. Wayne Sylvester, General Manager, Rita J. Brown, Secretary, Thomas M. Dawes and Gary G. Streed Thomas L. Woodruff, General Counsel, Steven Wolff, Alan D. Aronson and Michael Goodman· * * * * * * * * * * * * * * * * * * * * * * * * * * Actions re appeal of Norlyn connection fees charged for Receive and file appeal submitted by Rosenfeld, Lindsey & Wolff on behalf of Norlyn Builders Moved, seconded and duly carried: That the notice of appeal submitted by Rosenfeld, Lindsey & Wolff, dated May 4, 1989, on behalf of Norlyn Builders, regarding connection fees charged pursuant to Ordinance No. 612 for property located at 1455 Superior Avenue, Newport Beach, be, and is hereby, received and ordered filed. Report of General Counsel The District's General Counsel reported on the appeal of Norlyn Builders which included their letter dated May 4, 1989, and attachments consisting of several letters between Norlyn, the City of Newport Beach and the Sanitation District. He reported that Norlyn Builders was assessed a $219,000 connection fee for the 146-unit senior citizens residence inn, based on the connection charge of $1,500 per unit, in accordance with District's Ordinance No. 612. Mr. Woodruff stated that Norlyn Builders contend that they should have been assessed as a conrnercial property, like a hotel, rather than as a residential building. The District contends that Norlyn was correctly assessed as residential property similar to that of any other building with individual living quarters is assessed, for each individual unit. -1- 5/31/89 DISTRICT 6 The General Counsel briefly reviewed the arguments and conclusion contained in his Memorandum of May 24, 1989, making comparisons between the definitions and uses of a 11 hote 111 versus a 11 residence 11 • He stated that there is no merit U to Norlyn's contention that it is a 11 hotel 11 facility rather than a 11 residential 11 facility for the purposes of connection fees. The facility's use of the sewage system is at least as intensive as that of an apartment house which is required to· pay a residential connection fee for each unit. Receive and file General Counsel's Memorandum dated May 24, 1989 Moved, seconded and duly carried: That the General Counsel's Memorandum dated May 24, 1989, regarding said appeal, be, and is hereby, received and ordered filed. Presentation by Norlyn Builders The Chairman recognized Mr. Steven Wolff, of Rosenfeld, Lindsey & Wolff, attorneys representing Norlyn Builders. Mr. Wolff stated that the facility located at 1455 Superior Avenue, Newport Beach, is licensed and regulated by the State Department of Social Services. He advised that the development is in an area zoned for conmercial buildings. Mr. Wolff contended that the project has unique requirements that do not generally apply to typical residential units. Because of construction obligations, they paid the connection fees under protest in order to proceed with the project. Mr. Wolff further conmented on conversations with the District and correspondence included in their appeal submittal· between Norlyn, the District and the City regarding the connection fee assessment. Mr. Wolff stated that this facility is an interim, assisted-care facility for the aged, and the owners will be providing many of the same services as a convalescent home. He also conmented on the parking requirements for coJ1111ercial versus residential developments, indicating that their one-quarter space per unit more closely met the conmercial requirements rather than the residential requirements. Mr. Wolff also contended that the absence of a complete kitchen in each unit would preclude them from being classified as "dwelling units 11 as defined by the District's ordinance. He questioned the criteria used in the General Counsel's Memorandum relative· to the residents' permanent address which would be used for their mail, voter registration, etc. He reiterated that their facility more closely resembles a convalescent hospital which is classified as a conmercial establishment. Mr. Wolff also noted that if said facility was determined to be a hotel by the City of Newport Beach, they were prepared to pay whatever hotel tax was assessed them. Mr. Goodman, one of the owners of the facility, also addressed the Board. He reiterated that the State Department of Social Services regulates this type of facility and they do not consider it as an apartment~type unit. He also advised that when the project was originally conceived, the land was zoned for administrative, professional and comnercial. -2- u 5/31/89 DISTRICT 6 Response by General Counsel and The Distr1ct•s General Counsel staff responded to what he indicated were some rather gross inconsistencies in the statements and documents of Norlyn Builders. Norlyn stated that if the hotel bed tax was appropriate, they would be prepared to pay the annual tax of $236,520. However, they also stated to the Sanitation District that they had not planned on, nor were prepared to pay, the one-time D1str1ct connection charge of $219,000. He also pointed out that the original set of plans submitted to the City of Newport Beach contained the term retirement 11 home 11 while the set of plans given to the Sanitation District had been changed to read retirement 11 hotel 11 • Mr. Woodruff refuted Mr. Wolff's comnent regarding parking and stated that if this facility was classified as a hotel, the parking requirement would be greater than for residences, not less. · He added that the high density land use of the 146-unit complex on 8/10 of an acre places a tremendous load on the Sanitation District's facilities. Director Plumner expressed concern that perhaps this type of development did not fit into either category--conmercial or residential, but that a separate category should be established to address this type of user as there are several more establishments of this type planned for the future. It was pointed. out that the issue before the Board that evening was whether this is a residential unit or a conmercial building based on use of the building and the impact on the sewer system~ · Denying appeal of Norlyn Builders It was moved, seconded and duly carried: That the appeal of Norlyn Builders, dated May 4, 1989, regarding the connection fee charges pursuant to District Ordinance No. 612 for property located at 1455 Superior Avenue, Newport Beach, be, and is hereby, denied. Director Ruthelyn Plunmer requested that her abstention from voting on the motion be made a matter of record. Status Report on ·District's sewer rehabilitation program and Master Plan of facilities The Director of Engineering reviewed the status of the District's rehabilitation program and the master-planned facilities included in the new Collection, Treatment and Disposal Facilities Master Plan currently being considered by the Directors as part of the Joint Districts• 30-year 11 Action Plan 11 program. The District has embarked on a major rehabilitation and construction program relative to trunk sewers that will serve approximately two-thirds of the City of Costa Mesa. D1strict 6 will participate in a portion of the Baker-Gisler Interceptor, between Fairview Road and Treatment Plant No. 2, along with Distr1cts 7 and 14. District 6 will also have to build a parallel trunk sewer in Fairview Road to relieve the existing line. Districts Nos. 5 and 6 have completed rehabilitation of the Coast Highway Force Main. He added that District 6 also has a gravity sewer in Coast Highway that needs to be replaced but because of the District's financial condition, staff will try to postpone that work for as long as possible. -3- 5/31/86 DISTRICT 6 Mr. Dawes also advised that the trunk sewer in Newport Boulevard, which serves the development around Hoag Hospital, needs to be supplemented with a parallel line. -· The· sewer system improvements which will be needed over the next 10-year period total $10 million. Mr. Dawes noted that this was a little higher than previously anticipated because of projected higher density land uses. amendments to existing sanitary sewer service charges program and consideration of Update on long-range financial The General Manager reported that in 1983 the Board modified their long-range financial program and implemented a supplemental user fee to make up the shortfall of ad valorem tax revenues and provide the additional financing necessary for both operations and maintenance costs as well as major facilities' rehabilitation. User fees are charged to all properties connected to the sewer. Funds for facilities• expansion are currently provided from connection fees on new development paid by the developer. In 1986 the Board also considered the issuance of Certificates of Participation (COP's) to partially finance their share of the joint works construction at the treatment plants but the· District 6 Board decided against this proposal. The Acting Director of Finance then reviewed the District's financial projections for the next ten years. Based upon the Facilities' Master Plan and the Financial Plan reconmendations contained in the 30-year 11 Action Plan 11 now under consideration by the Joint Boards, District No. 6 will exhaust its capital funds as soon as 1990-91. The 11 Action Plan 11 reconmends that the District's share of the treatment plant construction and the trunk sewer construction be financed by a combination of borrowing (i.e., COP's) and increased connection fees. Debt U retirement and escalating operating and maintenance costs would be paid by annually increasing the supplemental user fees. He noted that the user fee 1s projected to escalate at an accelerated pace to maintain the District's financial integrity. However, there are several unknowns that may have a major impact on the District's funding requirements. Staff reported that a considerable portion of the District's major funding shortfalls are for capital financing. Staff's projections assume that all construction projects proceed on schedule. Thus, the estimates can be considered "worst case 11 scenarios. However, the Districts continue to experience delays in major projects because of SCAQMD requirements. Further delays in these projects would also delay, or at least spread out, the need for capital funds. It was also pointed out that, conversely, as the Directors were aware, if the secondary treatment waiver is not renewed in 1990, the Districts' capital needs will increase substantially. All projections currently being submitted to the Directors assume the renewal of the Districts• 301(h) waiver permit. Mr. Streed then reviewed the current fee schedules of the District, as follows: Single-Family Multi-Family Comnercia/Industrial/ Fee T~pe Residential Residential Governmental/Other One-time Connection $1,500 per $1,500 per $300 per 1,000 sq. Fee dwell 1 ng unit dwell 1 ng unit ft. of building Annual User Fee $34.85 per $20.92 per $24.95 per 1,000 sq. dwelling unit dwelling unit ft. of building -4- u 5/31/89 DISTRICT 6 The Acting Director of Finance explained the District's cash flow projections were based on several assumptions. Scenario 2 of the "Action Plan", which reconmends continuation of the current treatment levels under the 301(h) waiver, is the staff's preliminary preferred alternative reconmendation. It represents the minimum probable level of construction, operation and maintenance costs. For the first five years of the planning period, the differences between Scenarios 2 and 3 (full secondary treatment} would not be significant. Additional flow and sewer connection assumptions are also consistent with the Master Plan. With regard to connection fees, the Master Plan Financial Plan reconmends a change in the method of determining connection fees. The reconmended change, which Mr. Streed indicated was incorporated in the cash flow projections, is to include the cost of future facilities on a per-unit basis. The reason for including these costs is that the Districts currently operate near capacity and any new flow will require new additional facilities. He noted that once the Boards determine the appropriate wastewater management program under the 11 Action Plan°, a change would be reflected when the residential connection fee is projected' to be $2,260 under Scenario 2. Mr. Streed reported f~rther that over the next 10 years COP-type borrowing totaling $29 million is projected to be needed to meet joint works treatment and District sewer capital requirements, the first issue probably in 1990. He indicated that a more detailed analysis would be performed and presented to the Directors before any debt is issued. The cash flow projections are for several small issues on the theory of ·borrowing as little as possible and only when absolutely necessary. All issues are assumed to be at a fixed rate of 8% for 20 years. It was pointed out that the Health and Safety Code permits the oser fees to repay debt; and as the only controllable source of revenue for the District, they are projected for use to repay the necessary new debt. The Directors then entered into a discussion of the District's financial condition and alternative means of funding the needs, particularly the possible issuance of debt certificates. The General Manager reiterated that the decision as to whether or not to issue debt was not before the Directors at this time. He noted that the purpose of this meeting was just to consider adjusting the user fees for next year. Before a decision is required relative to incurring debt, staff will provide a more detailed analysis of the District's needs and the Board will make a decision at that time. If the Board should decide against borrowing, the near-term user fees would probably need to be double what they would otherwise be. The General Manager then reviewed the draft ordinance included with the agenda material which increases the supplemental user fees, as follows: Fee Type Annual User Fee Single-Family Residential $49.00 per dwelling unit Multi-Family Residential $29.00 per dwelling unit Conmercia/Industrial/ Governmental/Other $35.00 per 1,000 sq. ft. of building Staff added that no change in the connection fee schedule was recomnended at this time. After a final decision is made by the Boards regarding the NPDES Permit renewal, they would be presenting their recomnendations to the Board relative to increasing the connection fees. -5- t . • ... 5/31/89 DISTRICT 6 Actions re proposed Ordinance No. 613 F1rst reading of proposed Ordinance No. 613 Moved, seconded and duly carried: That proposed Ordinance No. 613, An Ordinance of the Board of Directors of County Sanitation District No. 6 of Orange County, California, Amending Ordinance· No. 609 Establishing Sanitary Sewer Service Charges, and Repealing Ordinance No. 612, be read by title only; and, FURTHER MOVED: That reading of said ordinance in its entirety be, and is hereby, waived. Following the reading of Ordinance No. 613 by title only, it was moved, seconded and duly carried: That Ordinance No. 613, An Ordinance of the Board of Directors of County Sanitation District No. 6 of Orange County, California, Amending Ordinance No. 609 Establishing Sanitary Sewer Service Charges, and Repealing Ordinance No. 612, be introduced and passed to second reading on June 14, 1989, at 7:30 p.m., at the Districts' administrative office. Making finding that adoption of Ordinance No. 613 is categorically exempt per CEQA Guidelines Following a verbal report by the General Counsel it was moved, seconded and duly carried: . . That the Board of Directors hereby finds that adoption of Ordinance No. 613 is categorically exempt per California Environmental Quality Act (CEQA) ~ Guidelines Section 15273, in that the Ordinance establishes fees for operation and maintenance expenses of the District. Adjournment Moved, seconded and duly carried: That this meeting of the Board of Directors of County Sanitation District No. 6 be adjourned. The Chairman then declared the meeting so adjourned at 5:34 p.m., May 31, 1989. -6- STATE OF CALIFORNIA) ) SS. COUNTY OF ORANGE ) Pursuant to California Government Code Section 54954.2, I hereby certify that the Agenda for the Adjourned Regular Board Meeting of District No. ~ held on '\l\i-e.tf i \ , 19jj was duly posted for public inspection at the main lobby of the District's off ices on ~ft • ~ Cil <.o ' 19.i.j. IN WITNESS WHEREOF, I have hereunto set my hand this ~ to-+L day of~ ,. 19 8'1. Rita J. Brown, Secretary of the Board of Directors of County Sanitation District No. ~ of Orange County, California /