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HomeMy WebLinkAboutMinutes 1991-04-18COUNTY SANITATION DISTRICT NO.7 OF ORANGE COUNTY,CALIFORNIA MINUTES OF ADJOURNED REGULAR MEETING April 18,1991 —7:30 p.m Tustin Presbyterian Church 225 West Main Street Tustin,California Pursuant to adjournment of the regular meeting of April 10,1991,the Board of Directors of County Sanitation District No.7 of Orange County,California,met in an adjourned regular meeting at the above hour and date. The Chairman called the meeting to order at 7:50 p.m.The roll was called and the Deputy Board Secretary reported that the Board lacked a quorum. DIRECTORS PRESENT:Richard B.Edgar,Chairman,John C.Cox,Jr.,Robert Richardson (arrived at 8:27 p.m.),James A.Wahner DIRECTORS ABSENT:Fred Barrera,Don R.Roth,Sally Anne Sheridan STAFF MEMBERS PRESENT:J.Wayne Sylvester,General Manager,Thomas M.Dawes, Gary G.Streed,Penny Kyle,Corinne Clawson,Jeff Esber,Dan Dillon,Bob Geggie,Judy Lee OTHERS PRESENT:Thomas L.Woodruff,General Counsel,Franklin D. Cole,Frank Costantino,Edward P.Stamford,Ben Lovelace,Bing Ng,Mr.and Mrs.Robert G.William, Dr.and Mrs.Sylvan Katz,Al Baker,Hilary Baker, M.A.Marcheso,Evelyn Edna Dalby,Frances P.Morrow, Walter T.Sullens,E.Rhoades,Dave Bryant Video Presentation on Districts The Chaiman stated that a Board quorum Wastewater Management Program was expected shortly.He observed that since many of the citizens in attendance had not had an opportunity to acquaint themselves with the activities of the Sanitation District,while awaiting a quorum he would open the meeting by showing a video on the District’s wastewater management program. Declaring a Quorum Present Upon the arrival of Director Richardson at 8:27 p.m.the Chairman declared a quorum present. Public Hearing on proposal to collect adopted annual sewer service charges on the property tax bills and on the Sewer Service Charge Report for 1991—92 Open Public Hearing The Chairman declared the hearing open at 8:27 p.m. He.then announced that the purpose of the public hearing was to consider a written report pertaining to the providing of sewer service for all properties within the District,and the proposal to collect the adopted sewer use fee on the property tax roll beginning with the 1991-92 fiscal year. DISTRICT 7 4/18/91 Staff Report on proposed use of the The General Manager stated that the County of Orange property tax bill County Sanitation District Is for collection of the annual sewer responsible for transporting,treating service charge and disposing of sewage in a safe manner in accordance with strict federal and state laws to protect the public health and safety and the environment. In order to do so it had been necessary for the Board to implement a user fee to provide adequate funding for District’s activities because of tax revenue limitations.He observed that the purpose of this hearing was not to consider any new fee or any change of an existing fee,but,rather, the method of collecting the already adopted sewer use fee that will take effect on July 1,1991. He then Introduced Gary Streed,the Director of Finance,who reviewed the staff’s reports on District No.7’s financial plan,summarized as follows: The Orange County Sanitation Districts’cost of providing sewerage service to the community 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 constructed sophisticated treatment facilities at a cost of hundreds of millions of dollars over the past few years. In fiscal year 1992-93,without appropriate measures to protect the District’s financial integrity,property tax revenues and other existing revenues were projected to be insufficient to meet the District’s funding requirements.Due to insufficient tax revenues,by the end of 1992-93 the projected shortfall to meet the District’s operating expenses and maintain the solvency of the fund would have reached $2.9 million, increasing to $21.6 million by the year 2000. Therefore,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 sewerage facilities, The Board’s adopted financial program includes a one-time connection fee of $2,350 per dwelling unit for residential property and a $470 per 1,000 sq.ft.charge for commercial,industrial and governmental property.The connection fee is used to pay for expansion of capital facilities to serve new development. As the second element 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: Type of Property Annual Fee -Single—family Residence $40.00 —Multi—family Residence/Mobile Home 24.00 —Commercial/Industrial/Other 28.60/1,000 sq.ft. (government buildings,utilities, non-profit organizations,etc.) -2- DISTRICT 7 4/18/91 The Director of Finance noted that the large comercial 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.Some large industrial Industrial dlschargers pay as much as $122,056 per year under this program. The Director of Finance,utilizing a slide presentation,sumarized the District’s organizational make—up and their wastewater managemen.t program.He also reviewed the following three billing and collection alternatives that had been 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 periodic basis to every property owner within the District.The one—time setup cost for this method is estimated at $157,100 plus an annual cost of $92,100,making the total cost for the first year $249,200.The projected five—year cost for the direct billing alternative would be $617,600. —Placement of User Fee on Local Water Service Bills for Collection and Remittance to District Under this method the sewer service charge would be included as a separate line item on the bill of the several water utilities that serve the properties within District No.7.He noted that a major problem of this method is that with the numerous water purveyors involved it would be difficult to establish a uniform system,which adds significantly to the cost;and the reluctance of the water utilities to become the billing agent.The setup cost for this alternative would be $157,100 plus an annual cost of $232,500,for a total cost for the first year of $389,600.The estimated five—year cost of performing this billing service is $1,319,600. -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.7.The setup cost would be $142,600.The annual cost of billing under this method is only $11,700.The total first—year cost would be $154,300 and the five—year cost is estimated to be $201,100. Mr.Streed observed that this method would save the property owner both directly because of significantly lower costs to the District, and indirectly because the cost of making periodic payments by the property owner would be reduced. Staff reconrnended this alternative as It is clearly the most cost—effective billing and collection method available. Districts 1,2,3,5,6,11 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 seven Districts. —3- DISTRICT 7 4/18/91 The Director of Finance reiterated that the rising costs to operate the District are due to higher mandated levels of treatment and increased energy costs0 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 without an additional revenue source0 Mr0 Streed then observed that although many of the issues posed by the public 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 in the workshop held by the Districts’staff and in telephone inquiries0 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 community0 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 tax0 The adopted sewer service charge is based upon use,thus,he reported,it is not a tax and is not subject to Proposition 13 and 62 provisions0 Property taxes are based on the value of the property and have no direct relationship to use0 Mr0 Streed reiterated that the reason for the proposal to collect this fee on the tax bill is because it is the most cost—effective method,and has no bearing on whether it is defined as a tax or a fee0 Mr0 Streed also reiterated the impact of evolving federal and state regulatory requirements on the District’s activities and costs,the cost reduction measures implemented by the Districts,the basis of the fee structure for various purposes and for the various classes of users and the statutory provisions under which the fees were adopted,and then reviewed cash flow projections0 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 Inflation over the past several years,and more stringent treatment requirements mandated by federal,state and local regulatory agencies,would result In depleting reserves and projected operating deficits for the District without the new fees0 The Director of Finance then highlighted the appeal process available to allow for an adjustment of fees in the event of a demonstrated inequity0 Appeals relative to inaccurate billings or properties that are not connected to local sewers are handled on a case—by—case basis0 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 bill0 He also advised that official notice of the hearing was mailed during the latter part of February and early March to 41,165 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 Code0 -4- DISTRICT 7 04/18/91 As prescribed by law,a legal notice of the hearing was published in the Orange County Register on April 1,1991 and again on April 8,1991.The hearing notice Included the District’s telephone number for citizens to call with questions or for more Information.The staff received approximately 39 calls.Staff also conducted a workshop to answer questions about the proposal and the District’s operations.The workshop was held at 7:30 p.m.on Thursday,March 21,at the Tustin Presbyterian Church,and ten people attended. Receive and file Sewer Service Moved,seconded and duly carried: Charge Report for Fiscal Year 1991-92 That the County SanitationDistrict No.7 Sewer Service Charge Report for Fiscal Year 1991-92 be,and is hereby,received and ordered filed. Receive and file written corrinents The General Manager reported that 34 written conniunications had been received regarding the sewer service fee and proposed method of collection and sunniarized the conruents;whereupon, It was moved,seconded and duly carried: That the written comunications received from the property owners listed on “Attachment 1”to these minutes,be,and are hereby.,received and ordered filed. Oral Public Conilients Chairman Edgar recognized the following persons who addressed the Board regarding the proposed method for billing and collection of the annual sewer service charge:’ -Lorane Katz,12202 Redhill Avenue,Santa Ana Ms.Katz questioned the basis for computing the single—family dwelling charge.She Indicated that she had heard it may be based on front footage or square footage. In response,the Chairman advised that the charges for residential dwellings were a per—dwelling unit charge.Charges for coimiercial and Industrial property are based on square footage. Ms.Katz also requested Information on how sewer services were financed in District 13;and the difference between projected fees and actual fees In District 7. The Director of Finance reviewed the fee and tax structure of District 13 and the data used to calculate projected and actual user fees in District 7. -Frank Costantino,534 N.Thomas Street,Orange Mr.Costantino asked whether a private engineering firm had inspected the Districts’facilities and determined the need for new facilities which led to the District implementing the sewer service fees to payforthesefacilites.He questioned whether these fees couldn’t be delayed for several years.He also asked for information on the code section(s)that allow implementation of the fees. -5— DISTRICT 7 4/18/91 In response,the Chairman reported that need for new facilities is due to the District’s increased demand for wastewater treatment service,as well as the more stringent requirements for higher levels of treatment mandated by the state and federal regulatory agencies0 He noted that the Districts’facilities were extremely sophisticated and cost efficient,and,In fact,are master planned based on studies by consulting engineering firms.The District’s portion of the tax revenue received will not meet the financial needs of the District in order to operate the facilities0 Staff also responded to his question regarding the exact code section which allows the Districts to establish these fees0 Section 5473.1 of the Health and Safety Code empowers the District to establish user charges and Section 5471 provides for the method of collecting the charge on the property tax bill0 -Major Edward Stamford,1002 Tropic Lane,Santa Ana Major Stamford requested Information regarding the total annual dollar amount that would be raised by each type of charge and the breakdown of the District’s expenses and the equitability of the fee0 Staff responded that the total amount expected to be collected from user fees in the first year was $3.6 million0 The total operating requirements for this year are projected to be $8.3 million.A breakdown by category of user was not available but staff indicated it would be mailed to Major Stamford.Staff also reviewed how various types of properties are charged to achieve equity and the procedures for fee adjustments if actual sewer use is less than the property use might otherwise indicate. Major Stamford also expressed his view that these charges were actually taxes and should not be allowed according to Proposition 62. It was pointed out that the user fees are based on the actual cost to treat the wastewater and those costs are being apportioned to the appropriate user.It Is not a tax and was established In accordance with provisions of the Health and Safety Code and under the strict definitions of Proposition 13. —Evelyn Edna Dalby,525 W.Main Street,Tustin Ms.Dalby questioned the equity of the fee structure because of different household occupancies.She objected to being charged the same for her residence with only one person as another residence with a family and several children. Chairman Edgar and Mr.Streed reiterated the basics of calculating fees to attempt to achieve equity. —Frances P.Morrow,Space 9,692 N.Adele Lane,Orange Ms.Morrow also questioned the equity of the fee structure.She stated her belief that the developers of new residential property should be responsible for paying these fees.She also questioned whether environmental impact reports completed for new construction addressed the proposed user fees. In response,the Chairman advised that developers pay a separate, additional fee for sewage facilities to serve new development and that environmental impact reports would acknowledge whether sewage treatment facilites were in place. -6— DISTRICT 4/18/91 7 —Franklin D.Cole,#3 Hutton Centre Drive,Suite 900,Santa Ana Mr.Cole stated that he was representing C.J.Segerstrom Sons and Far West Management.He read a letter relative to five different properties and projects.Mr.Cole expressed concern relative to these charges being collected by the County on the tax bill.He also comented that the cheapest way is not necessarily the best way.It was suggested that the direct billing method should be used instead of placing this charge on the tax bills.Mr.Cole submitted letters to the Secretary as part of the record. —Dave Bryant,1331 Bryan Avenue,Tustin Mr.Bryant questioned whether the other Sanitation Districts used the same method to collect their user fees and why District 7 was the last District to implement these charges. In response,the Chairman and staff pointed out that all of the other Districts also use the property tax bill to collect their sewer service charges.District 7 has not had to implement these charges until now because they have had more development in recent years since Proposition 13 passed,which resulted in higher assessed valuations as the new property developed which,therefore,increased the amount of revenue received from property taxes.Also,some of the other Districts have higher operating costs due to the necessity to pump their wastewater from lower areas,such as Newport Beach and Costa Mesa.Several factors have allowed District 7 to delay implementation of the user fee until now. —Walter 1.Sullens,1712 La Lorna Drive,Santa Ana Mr.Sullens expressed his concern that other agencies would also be implementing user fees or service fees,such as the police and fire departments.He cautioned the District’s Board to be aware of increased government spending and urged them to try to develop ideas to control costs and prevent implementation of additional charges being placed on the taxpayers by other governmental agencies. There being no further public coniiients,the Chairman then Moved,seconded and duly carried: Adoption of Sewer Service Charge Report for Fiscal Year 1991-92 Moved,seconded and duly carried: That the County Sanitation District No.7 Sewer Service Charge Report for Fiscal year 1991-92 be,and is hereby, adopted. Close hearing declared the hearing closed at 9:07 p.m. Adopting a finding that the majority of property owners have not protested relative to collecting annual sewer service charges on the QroPertv tax bills ___________________________________ That the Board of Directors does hereby ________________________________ find that a majority of the owners of -the property,which is the subject of the Sewer Service Charge Report for Fiscal Year 1991—92,have not protested the proposed collection of annual sewer service charges on the property tax bills. -7- Directing~the county Auditor—Controller to Include sewer service ~ginning in 1991—92 That the Board of Directors herebyadoptsResolutionNo,91—64—7,directing the County Auditor_ControiiertoincludesewerservicechargesonPropertytaxbillsbeginninginfiscalyear1991—92 for collection,pursuant to Ordinance No,725 of CountySanitationDistrictNo,7 of Orange County.Said resolution by referencehereto,is hereby made a part of these minutes. Moved,Seconded and duly carried: Directors of County Sanitation Districtthendeclaredthemeetingsoadjournedat it H I DISTRICT 7 4/18/91 ‘it ‘I Moved,seconded and duly carried: ~4jpurnment That this meeting of No.7 be adjourned, 9:08 p.m.,April 18, the Board of The Chairman 1991. 0 a 0 County Sanitation District No.7 ofOrangeCounty,California -8- I:j~~~~ r ~TTTV~!T~Tul I COUNTY SANITATION DISTRICTS of ORANGE COUNTY.CALIFORNIA DISTRICT 7 P1~JPOSAL ¶10 COLlECT USER FEE ON PROPERTY TPiC B]IL 10844 ELLIS AVENUE P.O.BOX 8127 FOUNTAIN VALLEY.CALIFORNIA 92728-8127 1714)962-2411 Suu~nary of Written Ca~ents Received Through April 10,1991 I.Should Not be on Property Tax Bill: John Rau 2017 Centella P1. Newport Beach,CA 92660 II.Properties Not Connected to Sewer: IRVI~ Jane Vaughn 2052 La Cuesta Dr. Santa ~na Bernard C.Mallard 1432 Caneo Dr. Tustin Quentin P.Johnson TR 1762 1 Fiesta Way Tustin Floyd E.Curl 1411 Lance Dr. Tustin T~JSTIN Tharas L.Gunkel,II 11242 La Vereda Dr. Santa ~na W.Donald B~nan 1681 Mitchell Ave. Tustin Junior L.Jaites 150 S.Pacific St. Tusthi Robert N.Phillips 17662 Westbury In. Tustin Wanda O’Dell 17341 IvkFadden Tusthi Patricia M.Ri e 14031 Woodlawn Ave. Thsth~ UNIN~ORPOR~TED P~E~ Western Hare Financing Corp 10530 Brier Ln. Santa Ana Albert J.Stefan 10472 Broadview P1,. Santa Ana Richard L.Crawford 14172 Clarissa Ln. Santa Ana Matropolitan Waste 16381 Construction w Cr. Irvine “1 Page 2 110 Properties not Connected to Sewer (Cont’d tJNINCOPPOR1~JTED AREPJS (Cont ‘d., Daniel J..Hamines Jack M0 Hollander TR 13772 N0 Deodar St..13531 Malena Dr., Santa Ma Tustin Thanas E0 King TR Gregorio .Aguirre,Jr0 13871 Deodar St0 13812 Pasadena Ave.. Santa Ma Santa Ana Eugene B0 Erbentraut Belford L.Phillips 13911 N..Deodar St.12652 Prospect Ave.. Santa Ma Santa Ana Alvin R0 Pauck TR Wiley C0 Raulston TR 13922 N..Deodar St0 1762 Sierra Alta Dr0 Santa Ma Santa Ma Robert F.Cole Dayton 0.Dargatz 12952 Elizabeth Way 19102 E0 Siniley Dr. Tustin Orange Ralph C0 Anderson Ray M0 Hall 19131 E..Equestrian In..1031 Smoke Tree Ln.. Orange Santa Aria Dan W..Tcswnley Victor B.Bertagna TR 12451 Everiingside Dr..1112 St0 John P1.. Santa Aria Santa Ma Louis F..Lyon TR Rollo S.Pickford 18231 E.Fairhaven Ave0 1111 St.Vincent P1. Santa Aria Santa Ma Ronald P.Fialcowitz E.W0 Hamlin 10391 Greenbrier Rd.1221 Triun~ha1 Way Santa Aria Santa Ma Robert E..Casey TR 3 La Raina Dr.. Santa Aria REE’:2 /Dist7 ..Lst 0 I certify that the minutes of the adjourned regular meeting of County Sanitation District No.7 of Orange County,California,on April 18,1991, reporting the actions of said District,are a true and correct report of said minutes. 4Lj~ Chai rman Board of Directors of County Sanitation District No.7 of Orange County,California Secretary,Board of Directors of County Sanitation District No.7 of Orange County,California 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 ~\~,19~J was duly posted for public inspection at the main lobby of the Districtis offices on ~%, IN WITNESS WHEREOF,I have hereunto set my hand this t I ~ day of ___________________ ,19 ~~ ~ Board of Directors of County Sanitation District No.‘ of Orange County,California