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
/