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HomeMy WebLinkAbout15 Water Standby Charges Agenda Item # 15 Public Utility District Workshop To: Board of Directors From: Neil Kaufman Date: March 30, 2007 Subject: Collection of Water System Standby Charges 1. Why this matter is before the board: The District will need to begin taking actions in the next few weeks in order to impose Water System Standby Charges for the OOL ke0and xGlenshire he issue of areas should abe System Standby Charges in the Donner considered. 2. History: In 2001, the District acquired the Donner n 2003Nthe r System. In Dist District began �mpos imposing District Water acquired the Glenshire Water System. System Standby Charges in those areas. In 2006, the Board determined that water system standby charges should not be collected at Donner Lake and Glenshire because they were not part of the District when the Water System Standby Charge Engineer's Standby was approved by the Charges previously collected at oard in 1991. The Board then decided to refundY Donner Lake and Glenshire. 3. New information: I have investigated the matter of imposing water system standby charges at Donner Lake garding possible courses of action open to the and Glenshire. I will make a presentation re District at the April 4 meeting. There are two blank slides in the presentation regarding e a memoranduml8. These will be from Steve Gross completed by the Board meeting also hope toav discussing the issue Proposition 218 in more detail. 1 Given below is the tentative schedule that the District must and w in order for standby charges to appear on the next property tax bills se y NevadaMay 2, 2007: Board Discussion of Standby Charges—Set Date for Public Hearing June 6, 2007: Hold Public Hearings Regarding Intent ton to Impose Standby Charges June 6, 2007: Adopt Standby Charges by June 30, 2007: Submit Property List to Nevada and Placer Counties According to Steve Gross public notice of the hearing to the heari ng,lished and thfor two successive e second notice to weeks. The first notice to be public two weeks prior be published one week prior to the hearing. 4. Recommendation: This is a workshop item. I do not have a recommendation for the Board. Staff requires direction from the Board regarding what course of action to pursue. Attachments: Powerpoint slides June 6, 2006 Steve Gross Memo 2 DATE: June 6, 2006 TO: Board of Directors, Truckee-Donner Public Utility]District Peter Holzmeister, General Manager TDPUD FROM: Steve Gross,District Counsel RE; Standby Charges At the May 17, 2006 meeting of the District's Board of Directors, concerns were raised with respect to whether the District was complying with the Uniform Standby Charge Procedures Act in continuing the District's water and electric standby charges. I recall that the concerns raised involved whether the District was complying with the procedural requirements in preparing an engineer's report, identifying the parcels to be charged, and providing notice of the charge. However, I was not provided with a list of specific concerns or issues to review. Since approximately 1975, the District has been fixing and collecting water and electric standby charges on vacant lands or parcels within the District's boundaries to which water and electric service are made available. In 1988 the California Legislature enacted the Uniform Standby Charge Procedures Act, which is located at California Government Code Section 54984 and following (the "Law"). The Law, in part, allows a public agency, such as the District, to fix and collect standby charges in amounts greater than that which it may otherwise be able to fix and collect. The Law makes clear that it does not affect the standby charge procedures authorized or provided for otherwise, if the local agency elects to use those procedures. (Gov. Code Section 54984.L) In 1991 the District initiated the procedure to raise its water standby charges in accordance with the Law. I understand that at that time, the District did in fact comply the Law's requirements with respect to the adoption of a resolution in March of 1991 that included all of the requirements of Section 54984.3, including reference to an engineer's report (which was I prepared by Sauer's Engineering) describing the charge and the method by which it would be P imposed, a compilation of the amount of the charge, a statement of the methodology and rationale followed to determine to the degree of benefit conferred by the service, a description of the parcels to be charged, the amount of the charge and the date, time and place of protest hearing. I also believe that notice of a protest hearing was mailed to the affected parcels, protest hearing was in fact conducted in April of 1991 regarding the imposition appears that the and that thereafter the District's Board adopted Ordinance No. 9105• In short, it p ears that he charges standby District complied with the procedures of the Law in 1991 in when it increased its charge. The Law provides further that if its procedures have been followed in a given year, the District's Board of Directors may continue the charge in successive years by adopting a resolution. Notice of the intention to adopt the resolution must be given in compliance Government Code Section 6066, which requires publication once a week for two successive weeks with two publications in a newspaper published once a week or oftener, with at least five days intervening between the respective publication dates. Section 54984.7 provides: "if the procedures set forth in this chapter have been followed in a given year, the governing body may, by resolution, continue the charge in successive years at with the requirement for mailedtnotice. he same rate and in the same manner,but dispensing The local agency shall cause notice of the intent adopt tion, and hall hear any and all published for ado pursuant to Section 6066, prior to the date set p objections at the time and place set forth in the notice. The governing body shall, at the time and place specified, conduct the hearing and consider all objections to the assessment, if any. The governing Y may, thereafter, adopt, revise, reduce, or modify Y, therea overrule the assessment or charge,but may not increa n t bodharge, or may shall be final Th•1Ssection h 11 objections. The determination of the govern g Y not apply if the amount of the assessment is increased,or if the governing body makes any change in the areas subject to the assessment, compared to the prior year's assessment." When this abbreviated procedure is followed, the District need not prepare another engineer's report or mail notice to the affected property owners. It need only conduct a hearing and publish notice of the hearing in the newspaper prior to continuing the charge. In the process 2 of conducting this review, we have learned that the District began collecting water standby charges in the Donner Lake and Glenshire areas. In as much as this practice constitutes a change in the areas subject to the water charge, then the District should comply with the more detailed provisions of the Law if it wants to continue collecting the charges in those areas. However, if the District does not want to collect the water standby charges in those areas it could continue with the more abbreviated procedure of publishing a notice of hearing and conducting a hearing to continue the same charges. In such a case, the Board could conduct the hearing and take action on the resolutions continuing the charges at the same meeting if it would like to do so. 3 STANDBY CHANGES Board Presentation April 4, 2007 i I 1 777777 Public utility District" What we will be covering • Purpose of Standby Charge • Past Practice • Applicable Laws & Regulations • Future Options 2 - ---- ---------- Purpose of Standby Charge • Property owners (even vacant properties) benefit from the availability of electric and water service in proximity to their property • Owners should contribute to operation and maintenance of the electric and water systems • Owners of vacant land do not pay monthly bills. f Therefore, a sepa rate charge is needed .I 3 I Past Practice • Electric and Water Standby Charges Implemented in 1975 Parcel Size Electric Standby Water Standby Charge Charge 1 acre or larger $20.00 $10.00 $5.00 Smaller than 1 acre $10.00 i 4 District Public Utility Past Practice • In 1991 , Water Standby Charge was changed to $80 per parcel regardless of parcel size • Electric Standby Charge was not changed • Same charges are still used today 5 i Past Practice • In 2001 , the District acquired Donner Lake Water System • In 2002 , the District acquired Glenshire Water System • No changes to Electric System service area 6 Public Utility District Past Practice • In 2003, Water Standby Charges were imposed in newly acquired -water service areas • In 2006 , Water Standby Charges were refunded (372 properties = $29,760) 7 i Standby Charge Revenue 2006 Actual • Electric = $24,040 • Water = $ 154 ,960 2007 Budget • Electric = $20 ,628 • Water = $ 124,740 8 k, Public Utility District I Applicable - Laws & Regulations . Uniform Standby Procedures Act Government Code 549 4 • Proposition 218 9 Uniform Standby Procedures Act • Allows for Imposition of Standby Charges • Requires the following : - Resolution of Intent to Impose Standby Charge - Engineer's Report - Public Notice - Public Hearing - Allows for Landowner Protest - Does not define calculation methodology 10 Uniform Standby Procedures Act • Once Standby Charges are imposed , they can be renewed annually - Resolution of Intent to Impose Standby Charge - Public Notice - Public Hearing - No Changes to Charges i i 11 Proposition 218 12 Public Utility District Proposition 218 (cont' d) � 13 POO Future Options • No Change • Eliminate Standby Charge • Impose New Standby Charge District-wide • Impose New Split Standby Charge • Impose New Standby Charge at Donner Lake and Glenshire only �I 14 I options Future • No Change - Continue Current Practice Continue current Standby Charge in old service territory (pre-2001 ) - Maintains revenues Inequity between old and new service territories r t E } E E 15 Future Options • Eliminate Standby Charge - Revenue loss must be addressed - Old and new service territories treated equally 16 Future Options • Impose New Standby Charge District-wide - Prepare new Engineer's Report - Hold new vote - Likelihood of approval is low - Old revenue stream is lost. If new charges are not approved, revenue loss must be addressed � - Old and new service territories treated equally i 17 Future Options • Impose New Split Standby Charge - Prepare new Engineer's Report - Hold two votes on new Standby Charge: • One in old service territory • Second at Donner Lake and Glenshire - Likelihood of approval is low - Old revenue stream is protected j - Old and new service territories treated equally ` - Significantly more effort to administer V I 18 Future Options • Impose New Standby Charge at Donner Lake and Glenshire Only - Prepare new Engineer's Report - Hold vote - Likelihood of approval is low - Old revenue stream is protected - Old and new service territories treated equally - More effort to administer (not as much as "Split Charge") I 19 Conclusions • No easy fix • Unlikely that new Standby Charges would be approved . Questions . Direction for Staff ICI 20 ATTORNEY - CLIENT PRIVILEGED AND CONFIDENTIAL MEMORANDUM DATE: April 4, 2007 TO: Neil Kaufman, TDPUD, Water Engineer FROM: Steven C. Gross, General Counsel RE: Standby Charges I prepared this memorandum to address several concerns the District has regarding increasing standby charges, as well as implementing standby charges in new areas. I. Questions Presented (1) Are standby fees subject to Proposition 218's stringent requirements? (2) If standby charges are subject to Proposition 218,what procedures must the District follow to increase standby charges or implement new standby charge? (3) If the appropriate procedures are followed and the initiative is defeated, are the original standby charges still valid? (4) When a property is subdivided, can both parcels be charged standby fees independently? H. Law and Analysis (1) Are standby charges subject to the rules of Prop. 218? Yes, all new and increased standby charges are subject to Proposition 218. (Cal. Const. Art. XIIID, §4; see 82 Ops. Calif. Att'y Gen'l 35 (1999)). According to the provisions of Cal Const. Art. XIIID, §6(b), standby charges must be classified as assessments and must not be imposed without compliance with the proportionality requirements for assessments. Standby charges that were in place prior to the enactment of Prop. 218 are "grandfathered" in as long as 1 there is no increase in the charges. (Cal. Const. art. XIIID, §5(a);Keller v. Chowchilla Water Dist. (2000) 80 Cal. App. 0' 1006, 1009-1010). (2) If standby charges are governed by Prop. 218,what procedures must the District follow to increase existing fees or implement new fees? There is a very precise process that must be followed, in accordance with Prop. 218, when there is an attempt to increase an assessment(standby fees) or implement a new assessment (standby fee).' The procedures and substantive requirements for assessments established by Proposition 218 are contained in article XIIID, § 4. They are summarized as follows: A. Identify all parcels which will have a special benefit conferred upon them. B. Determine the"proportionate special benefit"to each property in relationship to the entirety of cost of acquiring or constructing an improvement or of"maintaining and operating" such an improvement. The assessment on a parcel may not exceed the reasonable cost of the "proportional special benefit" conferred on such parcel. Apportioning special benefit does not require mathematical precision. So long as the apportionment is reasonable and is justified by the engineer's report, it should be upheld. C. Notice requirements. (1) Proposition 218 requires a 45-day mailed notice to the record owner of each parcel. It eliminates the published notice option established in the Brown Act for assessment districts which are coterminous with local government boundaries or for assessment districts of 50,000 parcels or more. The record owner is the owner of a parcel whose name and address appears on the last equalized secured property tax assessment roll. Cal. Gov't Code § 537520). (2) Notice of hearings required by the statutory provisions under which the agency is levying the assessment must also be followed. In some instances this will require combined notices and multiple public hearings. The vote under Proposition 218 would occur at the last required public hearing. 1 The voting procedure that must be followed for standby charge implementation or increases does not affect the voting procedure that the District follows for water fee charges. 2 (3) Contents of notice. (a) Total assessment for entire assessment district. (b) Assessment chargeable on owner's parcel. (c) Duration of proposed assessment. (d) Reason for assessment. (e) Basis on which amount of proposed assessment was calculated. (fl Date, time and place of public hearing. (h) Summary of voting procedures and effect of majority protest. E. Protest by ballot. (1) Property owners may now express their support or opposition to a proposed assessment by ballot which must accompany the notice. (2) Ballots must be returned before the conclusion of the public hearing. (3) Ballots tabulated at the public hearing. (4) No assessment may be imposed if a"majority protest" exists. (5) "Majority protest"exists if ballots submitted in opposition exceed ballots submitted in favor of assessment.2 (6) Vote is weighted according to proportional financial obligation of affected property. (3) If the appropriate procedures are followed and the initiative is defeated, are the original standby charges still valid? Standby charges that are exempt pursuant to Cal. Const. art. XIIID, §5(a)will become subject to the procedures and approval process of Prop. 218 if and when the charges are increased. Therefore,when standby fees are proposed to be increased,there is a possibility that a defeat to the initiative may make the existing standby charges null and void. For this reason, Prop.218 modifies preexisting law which generally required owners of 50 percent or more of property proposed to be assessed(determined by acreage)to file a written protest in order to establish a majority protest. 3 when an increase is sought it would be prudent, in an effort to protect the then existing standby charges, to leave the "grandfathered" standby charge in place and propose a new standby charge that would be imposed in addition to the pre-existing standby charge to make it very clear that rejection of the increase does not endanger the existing standby charges. (League of California Cities, The California Municipal Law Handbook§ 51.15(D)(7)(d) (2006).) 4, When a property is subdivided, can multiple parcels be charged standby fees independently? According to District Resolution#2006-BB the, "water standby charge for the fiscal year 2006-2007 shall be the sum of$80 for all parcels regardless of size."The language used in this portion of the resolution would have the effect to of imposing the standby charge on all parcels of a newly subdivided parcel. We believe that this is enforceable and does not result in an impermissible expansion or increase of the standby charge. 4