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HomeMy WebLinkAboutResolution 2010-212 N.C.S. 12/06/2010Resolution No. 2010 -212 N.C.S. of the City of Petaluma, California AMENDING THE RATE SCHEDULE FOR WASTEWATER SERVICE AND RESOLUTION NO. 2007 -023 N.C.S. TO REDUCE WASTEWATER SERVICE CHARGES FOR THE PERIOD JANUARY 1, 2011 THROUGH DECEMBER 21, 2011 WHEREAS, the City of Petaluma operates and maintains a wastewater collection, treatment, disposal and recycling system; and, WHEREAS, in 2000, the City issued wastewater revenue bonds ( "2000 Bonds ") in the principal amount of $8,895,000 and entered related agreements requiring that the City maintain charges for the wastewater system during each fiscal year which are sufficient to yield net revenues, excluding connection fees, at least equal to one hundred percent (100 %) of the wastewater enterprise debt service, and net revenues including connection fees at least equal to one hundred twenty -five percent (125 %) of the wastewater debt service; and, WHEREAS, in 2005, the City entered line of credit loan agreements with PNB Paribas and Zions First National Bank ( "Lines of Credit ") requiring that the City impose wastewater service rates and collect wastewater service rate proceeds so that net revenues of the wastewater enterprise, including connection fee proceeds, equal at least 125% of the enterprise's annual debt service obligations, and the City ultimately borrowed approximately $23.7 million against such loan agreements; and, WHEREAS, in August, 2006, the City entered into a loan Agreement under the State Revolving Fund loan program ( "State Revolving Fund Loan ") in the approximate amount of $126 million, and the City's agreement with the State Water Resources Control Board governing the State Revolving Fund Loan requires the City to: maintain a user charge system sufficient to meet the requirements of Section 204(b)(1) of the federal Clean Water Act (which, together with its implementing regulations, requires development of a user charge system that generates sufficient revenue to pay the total operation and maintenance costs necessary for the proper operation, maintenance and replacement of treatment works, and requires each recipient of wastewater services to pay its proportionate share of the costs); and to set rates sufficient to yield net revenues which are equal to the debt service of the wastewater enterprise; and the State Revolving Fund Loan prohibits the City from reducing wastewater service rates (unless the net revenues from such reduced rates will at all times be sufficient to meet the loan agreement requirements); and, WHEREAS, such indebtedness pursuant to the 2000 Bonds, the Lines of Credit and the State Revolving Fund Loan on behalf of the City's wastewater enterprise has been necessary to fund needed capital projects of the enterprise, including construction of the City's new Ellis Creek Water Recycling Facility project to replace the City's Hopper Street sewer facility, which was completed in 1938; and, WHEREAS, wastewater services currently provided by the City include collection, treatment, and discharge of treated wastewater, treatment and distribution of recycled water, and collection and disposal of storm water, and use of the term "wastewater services" in this resolution refers to all of those services; and, Resolution No. 2010 -212 N.C.S. Page 1 WHEREAS, the City retained Bartle Wells Associates to develop a Wastewater and Water Rate Study and Financial Plan ( "2007 Study "); and, WHEREAS, the Petaluma City Council conducted duly noticed public hearings on the, proposed rates pursuant to the 2007 Study on December 4, 2006, December 18, 2006, and January 22 2007 and on January 22, 2007, adopted water and wastewater service rates for 2007, 2008, 2009, 2010 and 2011; and, WHEREAS, the City retained The Reed Group to develop a Financial Plan and Water and Wastewater Rate Study ( "2010 Study "), which 2010 Study included analysis of 2011 rates (the last year of rates contained in the 2007 Study) as well as of rates for 2012 through 2015; and, WHEREAS, the 2010 Study supports that a 9% increase in wastewater rates for 2011, rather than 13% as previously adopted, is sufficient to meet debt service obligations, capital improvement program needs, and maintain an adequate reserve, and accordingly the 2010 Study recommends a 4% reduction in the wastewater rates already adopted for 2011; and, WHEREAS, none of the wastewater service rates established pursuant to this resolution is a "tax" as defined in Section 1, paragraph (e) of Article XIIIC of the California Constitution (referred to as Proposition 26), because: such rates are imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable cost to the local government of providing the service or product; and, WHEREAS, the case of Bighorn- Desert View Water Agency v. Verjil, (2006) 39 Cal.4 205, held that water and wastewater service fees are property related fees subject to the requirements of Article XIIID of the California Constitution (referred to as Proposition 218); and WHEREAS, Proposition 218 requires that public agencies imposing new or increased property related fees or charges must satisfy specified procedural requirements, including: identifying the parcels upon which proposed fees will be imposed; calculation of the fee proposed to be imposed upon each parcel; provision of written notice by mail of the proposed fees, the fee basis, the reason for the fee, and the date, time and location of a public hearing on the fee for each record owner of parcels for which fees are proposed; conducting a public hearing on the proposed fee not less than 45 days after mailed notice to property owners; and refraining from imposing the fees if a majority of owners of identified parcels submit written protests; and, WHEREAS, Proposition 218 imposes certain substantive requirements on existing, new or increased property related fees or charges, including that: the revenue derived from such fees or charges shall not exceed the funds required to provide the property related service; the revenue derived from the fee or charge shall not be used for any purpose other than that for which the fee or charge was imposed; the amount of the fee or charge imposed upon any parcel or person as an incident of property ownership shall not exceed the proportional cost of the service attributable to the parcel; and that no fee or charge may be imposed for a service unless that service is actually used by or immediately available to the owner of the property; and, WHEREAS, the 4% wastewater service rate reduction proposed pursuant to the 2010 Study and this resolution does not involve new or increased property related fees or charges, and is therefore not subject to the procedural requirements of Proposition 218; and, WHEREAS, after due consideration, the Petaluma City Council finds based on the 2010 Study and the November 23, 2010 addendum ( "Addendum ") that: Resolution No. 2010 -212 N.C.S. Page 2 Findings 1. The proposed wastewater rate decrease of 4% pursuant to the 2010 Study and the Addendum is sufficient to achieve full recovery of the costs of providing wastewater services to residents and businesses in Petaluma in accordance with applicable law and applicable requirements of the 2000 Bonds, the Lines of Credit and the State Revolving Fund Loan, as reflected in the 2010 Study (see, for example, Exhibits IV -3, IV -4, and IV -5 in the 2010 Study); 2. The proposed rate reduction of 4% pursuant to the 2010 Study and the Addendum will not generate revenue in excess of the funds required to provide wastewater services in accordance with the requirements of Proposition 218, as reflected in the 2010 Study (see, for example, Exhibits IV -3, 1V -4, and IV -5 in the 2010 Study); 3. The proceeds of the proposed reduced rate pursuant to the 2010 Study will not be used for purposes other than providing wastewater services in accordance with the requirements of Proposition 218, in that such rate proceeds will be deposited and accounted for in restricted accounts available only for authorized expenses of the wastewater enterprise; 4. The rate or charge imposed on any parcel or person as an incident of property ownership shall not exceed the proportional cost of the service attributable to the parcel, as reflected in the 2010 Study (see, for example, Exhibits IV -3, IV -4, and IV -5 in the 2010 Study) and in accordance with the requirements of Proposition 218; and, WHEREAS, adoption of revised rates and charges pursuant to this resolution involves the establishment, modification, restructuring or approval of rates and charges, as identified and analyzed in the Study, including rates and charges to obtain funds for meeting operating expenses, purchasing or leasing supplies, equipment or materials, meeting financial reserve needs and requirements and /or obtaining funds for capital projects necessary to maintain service within existing service areas. Therefore, adoption of this resolution setting rates and charges is not a project under the California Environmental Quality Act pursuant to California Public Resources Code Section 21080(b)(8)(D) and 14 Cal. Code Regs. Section 15273; NOW, THEREFORE., BE IT RESOLVED by the Petaluma City Council as follows: 1. The above recitals are hereby declared to be true and correct and to be findings of the City Council of the City of Petaluma and are made a part of this resolution, and the 2010 Study and the Addendum are approved and incorporated into and made a part of this Resolution. 2. Resolution no. 2007 -023 N.C.S. adopted January 22, 2007, is hereby amended as follows: Paragraph (D) of Section 1.1 of Article 1 is hereby replaced by the following: (D) Study. This resolution and the wastewater charges established in this resolution are based on the 2007 Wastewater and Water Rate Study and Financial Plan prepared by Bartle Wells Associates ( "2007 Study ") and the Water and Wastewater Financial Plan and Rate Study prepared by the Reed Group ( "2010 Study "), published October 27, 2010, and the Addendum prepared by the Reed Group published November 23, 2010 ( "Addendum "). The 2007 Study, the 2010 Study and the Addendum are attached to and made a part of this resolution as Exhibits A, A1, and A2, respectively. b. Section 3.1 of Article III is hereby replaced by the following: SECTION 3.1 FIXED MONTHLY FEES (A) Residential Users. The fixed monthly fee for Residential users, per dwelling unit, shall be as set forth in Table 1. Resolution No. 2010 -212 N.C.S. Page 3 (B) Non- Residential Users. The fixed monthly fee for Non - residential Users shall be as set forth in Table 1. Table 1. Fixed Monthly Wastewater Charges Wastewater Customer Fixed Monthly Charge For Billings Rendered On Or After the Classification Dates Indicated Below Feb 1, 2007 Jan 1, 2008 Jan 1, 2009 Jan 1, 2010 Jan 1, 2011 Single - Family Residential $ /mo $10.29 $11.63 $13.14 $14.85 $16.19 Multi -Unit Residential, p er dwelling unit $ /mo $10.29 $11.63 $13.14 $14.85 $16.19 Unmetered Residential, p er dwelling unit $ /mo $49.96 $56.45 $63.79 $72.08 $78.57 Commercial ($ /mo) Low- Strength $10.29 $11.63 $13.14 $14.85 $16.19 Medium - Strength $10.29 $11.63 $13.14 $14.85 $16.19 High-Strength $10.29 $11.63 $13.14 $14.85 $16.19 Metered Industrial Users $ /mo $10.29 $11.63 $13.14 $14.85 $16.19 c. Section 3.2 of Article III is hereby replaced by the following: SECTION 3.2 USER CHARGES (A) Residential Users In addition to the fixed monthly fee set forth in Section 3.1 and Table 1, there shall be a user charge for Residential Users as set forth in Table 2, based on the amount of wastewater discharged. The amount of wastewater discharged shall be established based on the average amount of water used each month during the winter months. The winter months shall generally be December, January and February, but actual winter months used for this determination may vary depending individual billing cycles, as determined by the Director. The average becomes effective each July and is based on the most recent average winter water usage. (B) Non- residential Users In additional to the fixed monthly fee set forth in Section 3.1 and Table 1, there shall be a user charge for Non - residential Users, based on the amount of water used or discharged, as set forth in "liable 2. (1) User Charge For Non - Residential Users with Shared Water Meters If a water meter is used by Non - residential Users in different customer classes, the user charge shall be based on the Non- residential User with the higher wastewater strength. For example, if a Low Strength user and a High Strength user use the same water meter, the wastewater user charge shall be based on the High Strength user rate. (2) Commercial Customers Commercial customers shall be assessed a variable user charge based on the strength of the wastewater, Low, Medium, or High. Assignment to Low, Medium, or High strength shall be as determined by the Director, or based on laboratory analyses of the Non - residential User's wastewater. A State of California Certified laboratory must conduct the laboratory analysis. Resolution No. 2010 -212 N.C.S. Page 4 Table 2. Variable Wastewater User Charges Wastewater Customer Variable User Charge For Billin,4s Rendered On Or After the Dates Classification Indicated Below Feb 1, 2007 Jan 1, 2008 Jan 1, 2009 Jan 1, 2010 Jan 1, 2011 Single - Family /het 4.88 $5.51 $6.23 $7.04 $7.67 Multi -Unit Residential $ /hc $4.88_ $5.51 $6.23 $7.04 $7.67 _ Commercial ($/hcf) Low - Strength $4.86 $5.49 $6.20 $7.01 $7.64 Medium - Strength $5.78 $6.53 $7.38 $8.34 $9.09 High-Strength $7.48 $8.45 $9.55 $10.79 $11.76 Metered Industrial Users Flow ($ /hcf) $3.62 $4.09 $4.62 $5.22 $5.69 BOD ($ /lb) $0.35 $0.40 $0.45 $0.51 $0.56 TSS $/lb) $0.38 $0. 43 $0.49 $0.55 $0.60 3. This Resolution shall become effective immediately. 4. Except as expressly modified above in this resolution, Resolution 2007 -023 adopted January 22, 2007, remains unchanged and in full force and effect. 5. The individual rates and all other portions of this resolution are severable. Should any of the rates or any portion of this resolution be adjudged to be invalid and unenforceable by a body of competent jurisdiction, then the remaining rates and /or resolution portions shall be and continue in full force and effect, except as to those rates and /or resolution portions that have been adjudged invalid. The City Council of the City of Petaluma hereby declares that it would have adopted each of the rates set forth in this resolution, and this resolution and each section, subsection, clause, sentence, phrase and other portion thereof, irrespective of the fact that one or more of the rates, or sections, subsections, clauses, sentences, phrases or other portions of this resolution may be held invalid or unconstitutional. Under the power and authority conferred upon this Council by the Charter of said City. REFERENCE: I herebv certify the lorcgoing Resolution was introduced and adopted by the Council of the City of' Petaluma at a Regular meeting on the 6` day of December, 2010, by the following vote: AYES: Barrett, Vice Mayor Glass, Harris. Healy, Rabbitt. Renee, Mayor Torliatt NOES: None ABSENT: None ABSTAIN: None ATTEST: City Clerk Ci Resolution No. 2010 -212 N.C.S. Page 5