HomeMy WebLinkAboutResolution 2014-187 N.C.S. 12/01/2014Resolution No. 2014-187 N.C.S.
of the City of Petaluma, California
ESTABLISHING ADMINISTRATIVE GUIDELINES PURSUANT TO PETALUMA
MUNICIPAL CODE SECTION 19.28.050 FOR PAYMENT OF WASTEWATER
CAPACITY FEES FOR QUALIFYING INDUSTRIAL DEVELOPMENT
WHEREAS, the City Council last updated the City's Wastewater Capacity Fee for New
Development by Resolution No. 3014-041 N.C.S., adopted March 3, 2014: and,
WHEREAS, ten (10) days advance notice of the public hearing at which the City
Council considered the adoption of this resolution was given by publication in accordance with
Government Code Section 6062a: and,
WHEREAS, the City had prepared an Economic Development Strategy which identified
food and beverage processing as one of seven economic growth opportunities for the City; and
WHEREAS, the Economic Development strategy contained analysis of a dozen food and
beverage processing companies with 1,150 employees earing from $11 to $51 per hour that
supported an additional 3,670 jobs and generated $1.3 billion in economic activity in the region
and $99.4 million in state and local taxes: and
WHEREAS, industry leaders have indicated that the current payment policies of the
wastewater capacity fees detrimentally affects their business growth because all fees are due
contemporaneously with issuance the building permit or industrial wastewater discharge permit;
and
WHEREAS, the City Council adopted Resolution No. 3013-035 N.C.S. entitled,
Establishing the City Council's Goals and Priorities for 2013 and 2014 which sets the following
goal: "Goal: Attract and Retain Businesses in Petaluma to enhance the tax base, jobs and quality
of life for the community:" and
WHEREAS, said goal contains the following priority: "Priority: Focus attention on
supporting food and beverage processing, manufacturing and alternative energy business
Clusters*': and
WHEREAS, the wastewater enterprise fund currently carries outstanding debt of
approximately $122 million with a blended average interest rate of 3.03% for the construction of
the Ellis Creel: Water Recycling Facility: and
WHEREAS, the City has experienced a significant increase in hydraulic, organic, and
solids loading to its sewer system as a result, in part, of increased or intensification of operations
of industrial customers that have not, heretofore, been required to pay wastewater capacity fees
commensurate with those increases in loading and impact on the City's sewer system: and
WHERE, AS. as a result, the City has not been able to collect the fiords needed to make
upgrades and expand capacity to meet those impacts; and
Resolution No. 2014-187 N.C.S. page I
WHEREAS, Petaluma Municipal Code Section 19.32.050 authorizes the City Council to
adopt administrative guidelines to provide procedures for calculation, payment and other
administrative aspects of the wastewater capacity fee.
NOW, THEREFORE, BE IT RESOLVED, that the City Council does hereby establish
Administrative Guidelines Pursuant to Petaluma Municipal Code Section 19.28.050 for the
Payment of Wastewater Capacity Fees for Qualifying Industrial Developments incorporated
herein as Exhibit A, to be effective December 1, 2015.
Under the power and authoriIN conferred upon this Council by the Charter ol'said City.
REFERENCE: I hereby ccr ifN the foregoing Resolution was introduced and adopted by the !,--Approv l as to
Council ol'the Cit} of Petaluma at a Regular meeting nn the I" day of December. / loom:014, by the following vote; I
City Ali ney
AYES: Barren, Manor Glass. Harris, Healy, Vice Mayor Kearney. Miller
NOES: None
ABSENT: Albertson
ABSTAIN: None
:n TEs'r:P�e� CLC Cx� 1
City Clerk ' 5ryor
Resolution No, 3014-187 N.C.S. Page 2
Exhibit A
CITY OF PETALUMA, CALIFORNIA
MEMORANDUM
Public Works & Utilities
203 N. McDowell Blvd, Petaluma, C4 94954
(707) 778-4546 Fae (707) 778-4508
DATE: December 1, 2014
TO: Qualifying Industrial Developers
FROM: Dan St. John, F.ASCE — Director, Public Works and Utilities
SUBJECT: Administrative Guidelines for the Payment of Wastewater Capacity Fees for
Qualifying Industrial Development
Purpose: The purpose of these administrative guidelines is to provide a qualifying
industrial development an alternate schedule of payment to comply with the City's
Resolution for Wastewater Capacity Fees. In addition, these guidelines address the
process of reconciliation of wastewater capacity fees after completion and start-up of an
industrial development. including existing industrial developments that have significantly
increased hydraulic, organic, and/or solids discharges to the City sewer system since Judy
1, 2011 or since the date an industrial development paid wastewater capacity fees to the
City related to previous building permit and/or industrial wastewater discharge permit,
whichever date is later.
Applicability: These Administrative Guidelines shall apply to any existing or proposed
industrial development that meets the following criteria and shall hereafter be referred to
as a Qualified Industrial Development:
A. New or Exnanded Industrial Developments:
A new or expanded Industrial Development that, based on projected
hydraulic, organic, and solids loading to the City sewer system, result in
an estimated wastewater capacity fee of $250,000, or more, and
ii. Will hire and continuously employ 35 or more additional employees in the
City of Petaluma within a two-year time frame from the date of certificate
of occupancy of a new or expanded facility, if applicable; or date of
obtaining a new or revised industrial discharge permit, whichever is later.
B. Existing Industrial Developments: An Industrial Development that discharges to
the City sewer system of sufficient hydraulic, organic, and/or solids loading that
would result in a computed wastewater capacity fee of $100,000 or more based on
measurements and monitoring as required by the Sewer Use and Source Control
Ordinance (Petaluma Municipal Code Section 15.44-15.76).
Resolution No. 2014-187 N.C.S. Page 3
3. Pavment of Wastewater Capacitv Fees: A developer of a new or expanded Qualified
Industrial Development may elect to pay the requisite wastewater capacity fee as follows:
A. Initial payment: The developer shall pay:
a minimum of $135,000, of the calculated Wastewater Capacity Fee, if the
fee is between $250,000 and $1,000,000, or
ii. a minimum of $250,000 of the calculated Wastewater Capacity Fee, if the
fee is between $1.000,000 and $2,500,000, or
iii. a minimum of 10 percent of the calculated Wastewater Capacity Fee, if
the fee is greater than $2.500,000.
The wastewater capacity fee shall be based on the rates that are applicable at the
time of issuance of the building permit and/or the industrial wastewater discharge
pennit and shall be due upon issuance of either permit.
B. Monthlv navments: Beginning with the first month following payment of the
initial payment, the developer, or successor shall make equal monthly installment
payments until the balance of the wastewater capacity fee is paid in full, or until
the industrial development permanently ceases sewer discharges to the City sewer
system. The monthly payment amount shall be based on principal and interest of
the outstanding balance calculated for a 20 -year payment term based on an
interest rate as defined below.
C. Interest Rate: Interest rate shall be equal to the City's average interest paid on
bonds and loans used by the City to finance major sewer improvement projects,
plus 0.25 percent to cover City administration costs. The current average interest
rate on bonds and loans used to finance major sewer improvement projects is 3.02
percent: therefore the monthly payments shall be based on 3.37 percent interest.
Only the principal portion of the monthly payments shall apply to the payment of
the wastewater capacity fee. The interest rate shall remain fixed for the term of
the repayment period for the development regardless of whether the City obtains
additional loans or bonds that would cause the interest rate to be different that
stated above for a new development.
D. Vested Capacity:
The calculation of Wastewater Capacity Fees, including reconciliation of
those fees, shall take into consideration the Vested Capacity of a
Qualifying Industrial Development.
An existing or expanded industrial development shall be entitled to
discharge wastewater to the City sewer system based on the hydraulic,
organic, and solids loading used to calculate a wastewater capacity fee that
was paid in conjunction with an issued building permit and/or industrial
discharge permit in the past.
iii. If no such fee has been paid to the City in the past, then a development has
a vested wastewater discharge capacity equal to the average flow,
Biochemical Oxygen Demand (BOD), and Total Suspended Solids (TSS)
Resolution No. 2014-187 N.C.S.
Page 4
discharged for the year ending June 30, 2011 based on records maintained
by the City for compliance with the Sewer Use and Source Control
Ordinance (Petaluma Municipal Code Section 15.44-15.76).
4. Reconciliation of Wastewater Canacitv Fees: Reconciliation of the assessed wastewater
capacity fees for a Qualifying Industrial Development shall be as follows:
A. New or Fxnanded Develonmenl: Within five years of payment of a wastewater
capacity fee, the developer or successor, or the City may request a reconciliation
of the wastewater capacity fees paid to the City. Not more than two
reconciliations shall be requested by either party during the five-year period. The
City shall establish a reconciliation period of up to 12 -months in which sewer
flows, and BOD and TSS loadings are monitored from the subject development.
A new capacity fee shall be calculated at the rates established by the Wastewater
Capacity Fee Resolution as applicable on the date the fee was paid for the flows
and loadings detennined by monitoring during the reconciliation period. Payment
shall be made as specified in paragraph 5.C.1 and 2 of the Wastewater Capacity
Fee Resolution, except that the City shall reimburse any Initial Payment and/or
Monthly Payments based on how the fee was originally allocated between the
Initial and Monthly Payments (e.g. reimbursement may be a combination of an
adjustment to the Initial Payment and/or to the Monthly Payments).
B. Cxistina Develonmenl• If, in the course of monitoring sewer discharges from an
existing industrial development, the City determines that the total discharges
would result in a capacity fee, based on the currently applicable Wastewater
Capacity Fee Resolution, of ten percent or more than that calculated for the vested
capacity for the development based on the same rates, then the City shall notify
the development and assess a monthly capacity rental fee as follows. High flows
resulting from storm events would not be taken into consideration for the purpose
of determining the wastewater capacity fee for this purpose:
i. The City will notify the industrial development or discharger of the City"s
intent to charge a rental fee for the excess capacity fee above the
developer"s vested capacity unless the discharge in reduced to within the
development's vested capacity, and
ii. The City will provide the industrial user a 30 -day correction period to
reduce wastewater flows and loading to within ten percent of the vested
loading, and
iii. If, alter the 30 -day correction period, the developer has not reduced the
wastewater flows and loading in accordance with 4.B.ii, above, the City
will begin charging a monthly Capacity Rental Fee based on measurement
of actual wastewater flows and loadings obtained through the industrial
discharge control program.
iv. Canacitv Rental Fee: The monthly capacity rental fee shall be based on
the difference between the wastewater capacity fee calculated on the
actual flows and loadings measured for the month and that for the vested
capacity. The monthly rental fee shall be the principal and interest
calculated on the difference described above based on the interest rate
Resolution No. 2014-187 N.C.S. Page 5
defined in paragraph 3.C. and a 20 -year repayment period (e.g. Rental
Rate = [Difference X 0.03317 / 12] + [Difference / 340]).
Additional Vested Capacity: The industrial development or discharger has
the option of purchasing additional vested capacity, subject to availability.
to avoid the monthly capacity rental rate fee should the increases be
determined to be permanent.
vi. The provisions of this paragraph shall tale effect begirming April 1, 2015,
notwithstanding the 30 -day notification and correction.
Enforcement of Pavment: the City shall retain all legal and administrative power
currently applicable to payment of sewer charges in order to enforce payment including,
but not limited to, revocation ofthe development"s industrial wastewater discharge
permit, and/or cessation of wastewater service, pursuant to the Sewer Use and Source
Control Ordinance (Petaluma Municipal Code Section 15.44-15.76).
A. Late Charges: Should the developer or successor fail to pay within 30 days of
receiving a monthly statement, the City may charge a late payment penalty of five
percent of the amount due.
B. If monthly payments received by the City from the developer are insufficient to
pay the entire amount due for wastewater usage fees, penalties, and the capacity
fee payments or capacity rental fee, the amount paid shall first be applied to
wastewater usage fees.
6. Refund ADnlications Based on Wastewater Capacity Fee Paid under the Current Fee
Resolution. Current owners of Qualifying Industrial Development that paid a wastewater
capacity fee pursuant to Resolution 3014 -XXX may apply for a refund of the difference
between that fee and the wastewater capacity fee that would have been imposed by a
fixture wastewater capacity fee resolution ("future fee') that may be adopted by the City
within four years of this Resolution, subject to the following:
A. To be eligible for a refund, current development owners must certify in writing to
the City that the owner has not recovered or is not recovering from third parties
such as tenants or others the amount of the prior fee paid or the amount by which
the prior fee exceeds the future fee.
B. Any refunds pursuant to this provision shall only be paid from existing, un -
obligated, unspent Fee revenue balances. The City will have no obligation to pay
refunds to any owner absent sufficient existing, un -obligated, unspent Fee revenue
balance available for that purpose.
C. 11' existing, un -obligated, unspent Fee revenue balances are insufficient to cover
eligible applications for refund, such eligible applications shall be paid refunds on
a pro rata basis in accordance with applicable law.
Resolution No. 2014-187 N.C.S. Pace 6