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HomeMy WebLinkAboutMinutes 1973-05-23COUNTY SANITATION DISTRICT NO.2 MINUTES OF ADJOURNED REGULAR MEETING May 23,1973 —5:00 p.m 1O8~I1~Ellis Avenue Fountain Valley,California Pursuant to adjournment of the regular meeting held May 9, 1973,the Board of Directors of County Sanitation District No.2, of Orange County,California,met in an adjourned regular meeting at the above hour and date,in the District offices. The Chairman called the meeting to order at 5:15 p.m.The roll was called,and the Secretary reported a quorum present. DIRECTORS PRESENT:Robert Nevil (Chairman),Ralph Clark,Norman Culver,Dale Chaput, Robert Finnell,Donald Fox,Edward Just,Jerry Patterson,Robert Root, Don Smith,Mark Stephenson,and Donald Winn DIRECTORS ABSENT:None STAFF MEMBERS PRESENT:Fred A.Harper,General Manager, 3.Wayne Sylvester,Secretary, Ray Lewis,Robert Webber,Jim •Benzie,.and Rita Brown OTHERS PRESENT:Lawson Mead,Ernest Bodnar,Royce Cahn,Milo Keith,Jack Kenney, Donald Martinson,Jim Barisic, Walt Bressel,Fred Clodt,Gary Frye,Jack Gulso,E.V.Kadow, Kerry Lawler,Bob Main,Don Seitz, Ralph Shook,and D.E.Wilkins Report of Engineer~re Mr.Donald Martinson of Lowry & Santa Ana River Inter Associates,District’s consulting ceptor,Contract 2—1~4—2 engineer,reviewed the scheduling of the Santa Ana River Interceptor from Katella Avei~ue to La Palma Avenue,Cbntracl.No.2—l~4—2. The project is being reviewed by the State Water Resources Control Board and if approval is forthcoming,the following tentative schedule has been established: June 13,1973 Consideration of Plans and Specifications by the Board of Directors July 10,1973 Receive bids July 11,1973 Award contract September 10,1973 Commence construction October,1971~Complete project #2 5/23/73 0 Mr.Martinson stated that when the $5.2 million project is tied into Contract No.2—l~—l in October.of 197l~,the Santa Ana River Interceptor will then be complete and in service from Treatment Plant No.1 to La Palma Avenue. Recess The Chairman declared a five minute recess at 5:30 p.m. Reconvene The Board reconvened at 5:35 p.m. Public Hearing re proposed Open Public Hearing —The public Sewer Connection Ordinance hearing on proposed Sewer Connection No.203 Ordinance No.203,amending Uniform Connection and Use Ordinance No.202, was declared open by the Chairman. Discussipn re effective date of proposed Ordinance —Chairman Nevil reported to the Directors that August 1,1973,had been suggested as an effective date in the event proposed Ordinance No.203 is adopted and advised that the matter would be further discussed under the item for consideration of Ordinance No.203. Statement re notices of public hearing —The Secretary reported that the following notices had been mailed to all cities, sanitary districts,and permittees within the Distriàt,the County of Orange,those interested parties from whom communi cations had been received with regard to the proposed conne~tion charges,and District Directors and Alternates: February 23,1973 Notice of further consideration of Ordinance No.203 Apr11 17,1973 Notice of public hearing re Sewer Connection Ordinance No.203, with draft of proposed ordinance April 27,1973 Copies of the Summary and Conclusions of the report “Financing Major Sewerage Improvements —Orange County Sanitation District No.2” prepared by Stone &Youngberg May 8,1973 Second notice of public hearing re Sewer Connection Ordinance No.203, with copies of proposed ordinance May 17,1973 Public Notice of hearing was published in Santa Ana Register Report of financing consultant —Mr.Ernest Bodnar of Stone & Youngberg,Municipal Financing Consultants,Inc.,reviewed the report prepared by his firm on Financing Major Sewerage Improvements fr County Sanitation District No.2 and summar ized the findings and recommendations as follows: 0 —2— ~k~&S AILAk?~ #2 5/23/73 1.To meet its existing and anticipated future needs, District Mo.2 Initiated a five—year sewerage improve ment program which Is estimated to cost more than $19 million.In conjunction with six other Orange County sanitation districts,the District is in the process.of upgrading jointly—owned sewage treatment works to meet State water quality control standards. The estimated cost of upgrading jointly—owned primary treatment facilities Is approximately $21.2 million. The consulting engineers estimate the cost of activated sludge secondary treatment which eventually will be required by Federal and State standards at approximately $100.8 million. 2.On the basis of the consulting engineers’cost estimates and construction schedules,the Director of Finance has projected funding needs of District Mo.2 to implement its program;meet its share of estimated capital costs of the proposed joint treatment works improvement program;provide for the District’s share of projected operatIons and maintenance costs;and debt service costs on District bonds.Projected cash flow deficits range from approximately $1.73 million in 1973/7~4 to $7.62 million in 1975/76 dependent upon the level of secondary treatment required to meet Federal and State standards. 3.In the absence of new ~ubstantIal sources o~f revenue, general obligation bond financing is the most practical and feasible financing alternative available to District No.2.to implement its improvement program as scheduled. IL Recent development trends within the area served by the District have indicated the following: a.A trend toward increased higher density.residential types of development in the District. b.The potential property tax base provided by single family unit land uses tends to be significantly greater than the potential property tax base provided by a multiple family unit. c.Engineering data indicate average daily flows per dwelling unit in single family residential land uses average about 385 gallons.per unit. In high density residential land uses,flows averaged about 256 gallons per day per unit, or approximately two—thirds that of lower density single family land uses. d.Within cities served by District No.2 there are significant differences in present users of the District’s sewerage facilities.Median value of owner—occupied housing units ranges from $23,900 to $32,300.Population per owner— occupied housing units ranges from 3.5 to 14.0. —3— II #2 5/23/73 e.Land values within the District have increased signIficantly in recent years.Land suitable for low density residential development has increased from approximately $10,000 to $12,000 per acre in 1960 to current levels of $28,000 to $30,000’. Land suitable for high density residential develop ment is now valued at approximately $50,000.per acre.Land suitable for commercial development is now valued at approximately ~l0O,0O0 per acre. f.The District’s property tax baseof $l.085 billion consists of land having an assessed valuation of $1~21 million (.39 percent of total tax base)and improvements on land which is owned and occupied by present property owners having an assessed valuation of $6611 million (61 percent of total tax base). 5.Demands for sewerage services are created by two broad classifications:(1)present users,and (2)potential users,(owners of imp.roved or unimproved land not connected to the system but adjacent to it).A system of assessing and recovering the costs of these benefits must consider the following: a.Equity among present users. b.Equity among potential users. a.Equity between present and potential iXsers.. The distribution of costs in relation to complete equity. in all cases is highly unlikely.What must be attempted is the achievement of optimum equity in relation to the degree of benefits received by broad categories of present users and potential users within the constraints posed by statutory provisionsand practical administrative procedures. 6.On the basis of the analyses,evaluations,and consideration to optimize equity among users and potential users of the District’s sewerage system,it is recommended that the governing Board consider the use of a sewer connection fee as a new source of revenue.The purpose of the connection fee would be to recover costs of providing facilities in the near future which will have sufficient built—in capacity to serve future users.It is also recommended that the connection fee be made applicable to connections made to a District owned facility or to any local collector sewer which discharges into the District’s sew~erage system. 7.As the basis for formulating connection charges,unit costs of providing trunk sewer and sewage treatment—. disposal capacity are.suggested.The unit cost of providing such facilities is approximately $557,500 per million gallons. 8.As the basis for computing connection charge fees,it Is recommenc’.ed that the Board consider using average anticipated sewage flows from residential land uses which have served as the basis to design master plan trunk sewer facilities In District No.2. _L~_ 10.Commercial and industrial uses were considered in the same manner as residential uses.It Is anticipated these uses will provide an average flow of 3,555 gallons per day per acre.At a unit capital cost of $55.75 for providing 100 gallons of sewerage capacity,the charge would be approximately $2,000 per acre.On a square footage basis,the capital cost for sewerage facilities would be approximately $145 per 1,000 square feet of the facility.This rate is suggested as a general guide in recognition of the wide variation in types of industrial and commercial uses.It is suggested the charge for major types of industrial and commercial facilities be coordinated with the administration of the excess capacity connection fees of the Districts’Uniform Industrial Use Ordinance,on the basis of a close study of the capacity requirements,type of discharge,number of employees,and other related factors. 11.Annual revenue from connection charges under rates suggested in this study could provide as much as $1.3 million on the basis of near—term development patterns anticipated in the District. 12.Based on the estimated revenue which may be derived annually from the suggested connection fees,the District could nearly meet its minimum cash deficit of $1.73 million in 1973/714,assuming Federal and State standards will necessitate only 116 mgd of secondary treatment capacity,equivalent to activated sludge,forall Districts?flows. 13.Should full secondary treatment equivalent to activated sludge be required by Federal and State standards,antici pated connection fee revenue would only partly offset the estimated maximum cash flow deficit of $~.62 million anticipated in 1975/76. ill.In view of the uncertainty of treatment level requirements and revenue realized from connection fees,it is recommended that consideration of the possible use of general obligation bond financing be deferred until additional information is made available relative to treatment level requirements. 15.The.recommended level of connection charges for District No.2 is approximately 12 percent lower than the level of charges recently adopted by District No.3.:This differential appears to result from the differences in topography of the Districts,their respective needs for pumping stations and force mains,and miles of sewer mains contained In each District’s trunk sewer system. 16.District No.2 master plan facilities are designed to serve areas presently outside the District’s boundaries. If a connection fee policy is adopted by the Board,it is recommended that the rationale for computation of annexation fees be revised.A suggested rationale Is to maintain the existing charge at Its present level and escalate it annually.The suggested amount of annual es calation In the annexation fee would be equivalent to the estimated property taxes paid to the District by the owner .of an acre of raw land. 9.Based on the estimated capital sewerage facilities,projected land uses,and current land use the District,it Is recommended given to the establishment of a connection charge of $220. #2 5/2 3/7 3 cost of providing flows from residential developments within that consideration be residential unit —5-- #2 - 5/23/7 3 Written communications —The Secretary reported that no written communications in connection with proposed Ordinance No.203 had been received. Oral statements —The Chair recognized Mr.Donald Seitz representing Anaheim Hills,Inc.,Mr.Royce Cahn representing the Building Industry Association,Mr.Gary Frye representing the William.Lyon Company,and Mr.Robert Main and Mr.Walt Bressel representing the Garden Grove Sanitary District,each of whom addressed the Board in connection with the proposed ordinance and/or asked questions of the financing consultant concerning the District’s funding requirements. In response to a question regarding the District’s eligibility for federal revenue sharing funds,Director Finnell,Chairman of the Joint Administrative Organization,reported that when revenue sharing funds were first announced,the Joint Districts were advised by the Environmental Protection Agency that If they were receiving federal construction grant funds,revenue sharing funds could not be used to offset the local share of costs. Close public hearing —It was moved,seconded and duly carried that the public hearing on proposed Sewer Connection Ordinance No.203 be closed.The Chairman then declared the hearing closed at 6:19 p.m.,May 23,1973. Consideration of Proposed The Board entered Into a lengthy Sewer Connection discussion concerning proposed Ordinance No.203 Sewer Connection Ordinance No.203, during which the comments of Directors and members of the public who had addressed the Board concerning the ordinance were t~onsidered at great length. The following actions were then taken: Clarification of Article 2(A)(3 —Following a brief dis cussion regarding Article 2,Section A,Subsection 3,the Chairman directed.that the word “permit”be striken from the last sentence and replaced by the word “connection”. Establishing effective date of ordinance —Moved,seconded and duly carried by roll call vote:- That October 1,1973,be established as the effective date for proposed Sewer Connection Ordinance No.203,and that said date be so incorporated Into the proposed ordinance. Establishing waiver period re fees for developed properties — Moved,seconded and duly carried by roll call vote: That connection fees for property which is currently developed but not discharging to a sewer be waived until August 1,19714, and that said date be so incorporated into the proposed ordinance. Adoption of In response to a question posed by Ordinance No.203 Directors,the General Manager reiterated that he antic ipated the necessity of major changes to the District’s Uniform Connection and Use Ordinance In the near future as a result of the new Federal Water Quality Control Act of 1972,whIch requires that sewering agencies adopt a system of charges to ensure that each user pays his equitable share of the cost of operating the system. —6— #2 5/2 3/7 3 Director Fox of the City of Brea then read the following statement concerning fees into the record: “The City of Brea has reviewed this subject and the supporting financial consultant’s report with Mr.Harper and his staff.We feel that the following recommendations should be accomplished,based upon the information received from the report and from the District staff,and based upon the fact that both the proposed ordinance and the existing fee structure will be required by the Federal Government to be superseded some time in October,1973.This will need to be done in order to meet the Federal requirements. of a user’s fee schedule.Therefore,after joint study and deliberation of all the facts presented in the proposed ordinance,we would recommend that this Board take the following action: 1.That we go on record as not supporting the adoption of the suggested fee schedule at this time,since my information indicates that our fees will have to be modified in the near ‘future anyway.It should also be noted that the financial consultant’s report contemplates a tax reduction as a result of implementing the recom mended fee structure. 2.I would further recommend that we go on record as favoring the cOntinuance of our present tax rate which will enable us to consider a reduced fee structure. These recommendations will obviously be influenced by our meetings with the Federal Government:However,in view of these same meetings,we feel all the more strongly that this recommended approach is the most appropriate and cautious method of procedure to follow.” It was then moved and seconded that Ordinance No.203,an ordinance amending Uniform Connection and Use Ordinance No.202,be adopted. Director Winn requested that It be made a matter of record that he was not opposed to the philosophy of a connection charge,but that he did not agree with the fee schedule incorporated into the ordinance. The ordinance then passed by the following roll call vote: AYES:.Directors Nevil,Clark,Chaput, Finnell,Fox,Just,Patterson, Root,Smith and Stephenson NOES:Directors Culver and Winn ABSENT:None Adjournment It was moved,seconded and duly carried: That this meeting of the Board of Directors of County Sanitation District No.2 be adjourned.The ChaIrman then declared the meeting so adjourned at 6:52 p.m.,May 23,1973. —7— #2 3/23/7.3 Chairman Board of Directors County Sanitation District No.2 ATTEST: Secretary,Board of Directors County Sanitation District No.2 —8—