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HomeMy WebLinkAboutMinutes 1988-02-18COUNTY SANITATION DISTRICT NO.11 OF ORANGE COUNTY,CALIFORNIA MINUTES OF ADJOURNED REGULAR MEETING February 18,1988 -7:30 p.m. Huntington Beach City Hall —Council Chambers 2000 Main Street Huntington Beach,California Pursuant to adjournment of the regular meeting of February 10,1988,the Board of Directors of County Sanitation District No.11 of Orange County,California,met in an adjourned regular meeting at the above hour and date at the Huntington Beach City Hall Council Chambers. The Chairman called the meeting to order at 7:30 p.m.The roll was called and the Secretary reported a quorum present. DIRECTORS PRESENT:Tom Mays,Chairman,and Grace Winchell DIRECTORS ABSENT:Roger R.Stanton STAFF MEMBERS PRESENT:J.Wayne Sylvester,General Manager, Rita J.Brown,Secretary,William H. Butler,Thomas M.Dawes,Gary Streed,and Dan Dillon OTHERS PRESENT:Thomas L.Woodruff,General Counsel, Clark Ide,John Locke,J.A.Wilson, Margaret Wilson and Ron Weller Public Hearing on proposal to collect adopted annual sewer service charges on the property tax bill,s and on the Sewer Service Charge Report for 1988-89 Open Public Hearing The Chairman declared the hearing open at 7:35 p.m. He then announced that the purpose of the public hearing was to consider and select the best method by which the District’s previously adopted annual sewer service charge shall be collected. I 02/18/88 DISTRICT 11 Staff Report on proposed use of the The General Manager stated that the County County of Orange property tax bill Sanitation District is responsible for for collection of the annual sewer transporting,treating and disposing of service charge sewage in a safe manner in accordance with strict federal and state laws to protect the public health and safety and the environment.Re noted that some of the citizens attending the hearing had not had an opportunity to acquaint themselves with fhe role that the District plays in handling the sewage and, therefore,a video presentation was given on the Districts’activities. The General Manager then reported that the Orange County Sanitation Districts’cost of providing sewerage service to the comunity has been escalating rapidly because of the increasingly stringent federal and state laws and regulations requiring advanced treatment of wastewater to remove toxic materials and other pollutants from the sewage to assure protection of the public health and safety and the environment.To comply with the new stricter requirements,the Joint Sanitation Districts have recently constructed sophisticated treatment facilities at a cost of more than $124,000,000. For several years property tax revenues have been insufficient to meet the District’s operating costs,and it has been necessary for the District to draw down its reserves.In fiscal year 1988—89,without appropriate measures to protect the District’s financial integrity,it would have been necessary for the Board to authorize a transfer of $786,000 in capital reserves from the District’s Accumulated Capital Outlay Fund to the Operating Fund to pay the full costs of operating and maintaining the District collection system and its proportionate share Of the operating and maintenance costs of the Joint Treatment Works.By 1991—92 the District will require additional revenues in the amount of $6 million to meet its operating expenses and maintain the solvency of the fund due to insufficient tax revenues,and capital reserves will have long been exhausted. To address this fiscal crisis,in 1987,after considerable study of.the District’s long—range funding requirements,the Board adopted a financial program to avoid projected revenue shortfalls and provide the necessary income required to finance the District’s rising operating expenses,as well as major capital expenditures for construction of master—planned treatment facilities. The Board’s adopted financial program includes a one—time connection fee of $1,500 per dwelling unit for residential property and a $300 per 1,000 square feet charge for conrnercial,industrial and governmental property.The connection fee is used to pay for expansion of facilities to serve new development. As the second part of the long—range financial program,to pay for costs of operating,maintaining and rehabilitating the sewerage system,the Board adopted annual sewer service fees,as follows: ~ill~ —2- — 02/18/88 DISTRICT 11 Type of Property Annual Fee —Single—family residence $26.40 —Multi—family residence/mobile home 15.85 -Commercial 18.90/1,000 sq.ft. —Industrial 18.90/1,000 sq.ft. —Governmental 18.90/1,000 sq.ft. The large coninercial or industrial dischargers that place an inordinant demand on the District’s system are also subject to an additional surcharge under a separate industrial waste ordinance that has been in effect since 1976. The General Manager then reiterated that the purpose of the hearing was to receive public commentary on the District’s proposal to collect the annual service charge on the property tax bill.He also advised that official notice of the hearing was mailed on January 4,1988,to 34,897 property owners of record on the last equalized assessment roll of the County of Orange,in accordance with the provisions of Section 5473.1 Of the California Health and Safety Code. As prescribed by law,a legal notice of the hearing was published in the Orange Coast Daily Pilot on January 11,1988 and again on January 18,1988.The hearing notice included the District’s telephone number for citizens to call with questions or for more information. The staff received approximately 100 calls.The General Manager summarized the types of questions raised at the workshop held February 4th and in the telephone calls received by the District,which dealt primarily with: —Propositions 13 and 62,the issue of tax vs.fee —The equitability of the system of charges —Efficiency of the District’s operation —Whether or not the proposed fees would be used to pay for sewers to accommodate growth —The relationship of the local street sewer system provided by the City to the regional system of Sanitation District No.11 —Other methods of collection,such as the City water bill Several property owners also indicated that their properties were not connected or they were unsure whether their properties were connected to the local sewer system,or felt that their fee should be modified, or advised of a change in ownership. —3— 02/18/88 DISTRICT 11 Mr.Sylvester then introduced William Butler,the District’s Director of Finance,and asked him to review the alternative methods available for collecting the annual service charge. The Director of Finance reviewed the following three billing and collection alternatives identified and evaluated by the staff: —Direct Billing and Collection by District This approach would require the Sanitation District to send a direct bill on a monthly or bimonthly basis to every property owner of the approximately 34,897 pieces of property within the District.The one—time setup cost for this method is estimated at $22,000 plus an annual cost of $188,000 making the total cost for the first year $210,000.The projected five—year cost for the direct billing alternative would be $962,000. —Placement of User Fee on City of Huntington Beach Utility Bills for Collection and Remittance to District Under this method the sewer service charge would be included as a separate line item on the utility bill from the City of Huntington Beach who serves the properties within District No.11.The setup cost for this alternative would be $20,000 plus an annual cost of $94,000,for a total cost for the first year of $114,000.The estimated five—year cost of performing this billing service is $490,000. —Placement of User Fee on County of Orange Property Tax Bill for Collection and Remittance to District Under this alternative the sewer service charge would be included as a separate line item on the property tax bills for all properties within District No.11.Because there are some major computer software modifications that must be made to the County tax roll system to implement this alternative,the setup cost of $35,000 is a little higher.However,the annual cost of billing under this method is only $10,000.The total first—year cost would be $45,000 and the five—year cost is estimated to be $85,000. Staff recommended this alternative as it is clearly the most cost—effective billing and collection method available,and results in lower costs to each property owner.District 1,5,6 and 13 have already adopted this method for billing their user fees,and it has proven quite effective in keeping the administrative costs for billing and collecting fees under control in these four Districts. The Director of Finance reiterated that the rising costs to operate the District are due to higher mandated levels of treatment and increased energy costs.The long-range financial program was adopted by the District because the District’s revenues and reserves were decreasing and soon the District would not have been able to meet its operational requirements and provide the services necessary to protect the public health and the environment. -4- -a 02/18/88 DISTRICT 11 Mr.Butler then observed that although many of the issues posed were not really relevant to the specific purpose of the hearing,he recognized that the citizens have a genuine interest in the activities of the Sanitation Districts and he,therefore,summarized responses to those questions that had been raised thus far.He explained the role of the District as an operating utility providing an essential service necessary for the protection of the public health and safety,and indicated that the District was established solely to provide wastewater collection,treatment and disposal services to the community.The Director of Finance further explained that while the District has always had the statutory authority to levy a sewer service fee,it had historically financed its operations,maintenance and rehabilitation activities from the property tax.The reduction in tax revenues resulting from the passage of Proposition 13 and its implementing legislation,combined with the higher energy costs,the effects of high inflation over the past several years,and more stringent treatment requirements mandated by federal and state regulatory agencies,will result in the projected operating deficits for the District. The adopted sewer service charge is based upon use;it is not a tax. Property taxes are based on the value of the property and have no direct relationship to use.Mr.Butler reiterated that the reason for the proposal to collect this fee on the tax bill is because it is the most cost—effective method. The Director of Finance highlighted the appeal process available to allow for an adjustment of fees in the event of a demonstrated inequity. Appeals relative to inaccurate billings or properties that are not connected to local sewers will be handled on a case—by—case basis. Receive and file written comments The General Manager reported that four written communications had been received regarding the sewer service fee and proposed method of collection and summarized the comments;whereupon, It was then moved,seconded and duly carried: That the written communications received from the following property owners be,and are hereby,received and ordered filed: Dated —Robert P.Winks,715 April Drive,H.B.January 09,1988 —Robert D.Runyard,5451 Old Pirate Lane,H.B.January 10,1988 —Dennis Foster,10418 Rainbow Circle,F.V.January 12,1988 -County of Orange,General Services Agency,January 28,1988 Real Estate Division,S.A. —5— 02/18/88 DISTRICT 11 Oral Public Comments Chairman Mays reported that it has been the Board’s experience that most residents of the County do not have the information nor knowledge concerning the importance of the role that the County Sanitation Districts play in the lives of all of the two million residents of Orange County.In order to guarantee the protection of our environment, particularly the ocean waters,as seen earlier in the meeting,very elaborate and complex and costly procedures must be undertaken to provide the sewage treatment service for the County residents. The Chairman reiterated that the purpose of the meeting was not for the Board to consider the adoption of a sewer use charge or to consider increasing an existing use charge.Their sole purpose was to select the method by which the charge,which was adopted by the Board last year,is to be collected.He again emphasized that the charges were adopted last December at a public meeting held for purposes of determining the rates to be established.This was done after two years of study and discussions at five separate public meetings.It is now important to find the most cost—effective way of collecting this revenue,which is necessary to pay for District li’s share in the operation and maintenance of the joint treatment and disposal facilities. Mr.Mays acknowledged that some persons were concerned about the adoption of fees,charges and taxes,but again stressed that this is not the scope of this hearing.He asked that any testimony or statements given address solely the collection method,and not as to whether they like or dislike the user charge.The Chairman invited anyone with some specific concerns regarding the charge to leave their name and address and the staff would contact them.He added that if they wished to write the District,the Board would give them due consideration and would respond to them at a later date. The Chair then recognized the following persons who addressed the Board regarding the proposed method for billing and collection of the annual sewer service charge: —John Locke,6392 Sligo Circle,H.B. —Ron Weller,16601 Edgewater Lane,H.B. —Margaret Wilson,16841 Green Street,H.B. Mr.Locke expressed his opposition to the sewer service fee,as well as to the proposed method of collection of the charge.He also questioned the legality of said fee,which in his view is a tax,and the collection method.Mr.Locke suggested that this charge be collected by direct billing on an annual basis rather than monthly.He also inquired as to the Sanitation Districts’governing authority,and asked if the District was “privatized”and questioned the impact of the recent stockmarket drop.Mr.Locke also inquired as to the relationship between the user fee and the allocation received by the District from the basic property tax levy. -6- 02/18/88 DISTRICT 11 Mr.Weller then addressed the Board and stated that he was opposed to using the County Tax Collector to collect this fee.He stated his view was that the user fee was a tax and his tax bill already included a special assessment.Therefore,he believed this to be double taxation. He indicated that he felt that all state and federal mandated treatment requirements should also provide for funding and that those costs should not be passed on to the local taxpayer. Mrs.Margaret Wilson reiterated the statements of Mr.Locke and Mr.Weller.She stated that she would prefer the billing to be on the City of Huntington Beach utility bill.She also expressed concern that if this charge is placed on the County tax bill,it will automatically increase along with any annual tax increases.Mrs.Wilson asked for an explanation regarding how District il’s share of the joint treatment costs was determined and about the District’s operating and fee relationships to the other Sanitation Districts.She also inquired as to how boat owners and offshore operations are assessed. Di rector/Staff/Counsel response to oral comments In response to the public commentary,it was pointed out that the first year cost to separately bill all the property owners annually would be approximately $62,000 with an estimated five-year cost of $222,000 which is still considerably higher than the five—year cost of $85,000 to collect the charge on the County tax bills. It was also clarified that the District is a governmental agency operating pursuant to the State of California Health and Safety Code;it is not a private organization,and it was not affected by the recent stockmarket drop. It was also pointed out that the user fee is in addition to the portion of the basic property tax levy allocated to the District and that one did not affect the other. The General Counsel responded relative to the legality of the charge and proposed collection method.He stated that the Health and Safety Code provides for this method as an alternative for collecting user fees.It has been used by other Districts for many years. With regard to double taxation,it was pointed out that the special assessment currently on the tax bill was for bond redemption.These bonds are due to be paid off in a few years and this item will then disappear from the tax bill. Use of the utility bill method of collection was addressed and staff advised that the cost for this method would also be higher.Further,it has been the Districts’experience that water agencies are not receptive to assuming the responsibilities associated with collecting the Districts’sewer service charge on their water bill and staff reviewed some of the reasons therefor. -7- 02/18/88 DISTRICT 11 Also addressed was the inquiry re District li’s share of the joint treatment costs.It was explained that each District,under the terms of a joint powers agreement,pays its proportionate share of the joint treatment costs in accordance with their contribution to the total flow. Each District’s cost to transport their wastewater varies greatly.The inland Districts’trunk sewers flow by gravity while the coastal areas, such as District No.11,must pump their flows which increases the cost of operation and maintenance.Because of this and different levels of reserve funds in the various Districts,individual District’s supplemental fee programs varied as well as their respective implementation dates. It was also pointed out that the sewer service charge,although expected to increase in the future to keep pace with rising costs of providing sewerage service,will not automatically increase each year. The fee cannot change until the Board of Directors adopts a new ordinance revising the charge. Close hearing Chairman Mays and Director Winchell comented further regarding the Board’s responsibilities for maintaining the District’s financial integrity,providing the high level of sewerage service that the coninunity had come to expect,and protecting the public health and safety and the environment.They stated that in view of the District’s financial condition,the method of collecting the sewer service charge on the County tax bills was the most prudent because it is the most cost—effective method. The Chairman then declared the hearing closed at 9:06 p.m. Adopting a finding that the Moved,seconded and duly carried: majority of property owners have not protested relative to That the Board of Directors does hereby collecting annual sewer service find that a majority of the owners of charges on the property tax bills the property,which is the subjectof the Sewer Service Charge Report for Fiscal Year 1988—89,have not protested the proposed collection of annual sewer service charges on the property tax bills. Receive,file and adopt Sewer Moved,seconded and duly carried: Service Charge Report for Fiscal Year 1988—89 That the County Sanitation District No.11 Sewer Service Charge Report for Fiscal Year 1988—89 be,and is hereby,received,ordered filed and adopted. Directing the County Auditor Moved,seconded and duly carried: Controller to include sewer service charges on property tax bills That the Board of Directors hereby beginning in 1988—89 adopts Resolution No.88-22-11, directing the County Auditor—Controller to include sewer service charges on property tax bills beginning in fiscal year 1988—89 for collection,pursuant to Ordinance No.1108 of County Sanitation District No.11 of Orange County.A certified copy of this resolution is attached hereto and made a part of these minutes. -8- 02/18/88 DISTRICT 11 Adjournment Moved,seconded and duly carried: That this meeting of the Board of Directors of County Sanitation District No.11 be adjourned.The Chairman then declared the meeting so adjourned at 9:15 p.m.,February 18,1988. Secretary,Board of Directors County Sanitation District No.11 of Orange County,California —9— I certify that the minutes of the adjourned regular meeting of County Sanitation District No.11 of Orange County,California,on February 18,1988, reporting the actions of said District,are a true and correct report of said minutes. ce~~ Board of Directors of County I.~) Sanitation District No.11 of Orange County,California Secretary,Boar of Directors of County Sanitation District No.11 of Orange County,California ‘S a. 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 ______________,was duly posted for public inspection at the main lobby of the District’s offices on~~a9.J~4AoJu.\%.~,19~. IN WITNESS WHEREOF,I have hereunto set my hand this _____ day of __________________,19 ~. Rita J.Brown,Secretary of the Board of Directors of County Sanitation District No. ____ of Orange County,California