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HomeMy WebLinkAbout11 Glenshire Water System Upgrade Charge Agenda ItemTRUCKEE DONNER # 11 Tq CTION To: Board of Directors From: Robert Mescher Date: July 06, 2011 Subject: Consideration of Adopting an Ordinance to Reduce the Monthly Glenshire Water System Upgrade Charge 1. WHY THIS MATTER IS BEFORE THE BOARD Only the Board can adopt resolutions affecting a surcharge. 2. HISTORY In 2002, the District acquired the Glenshire Mutual Water Company (GMWC) and its customers. In order to connect the GMWC pipelines and customers to the District's system, capital improvements were needed. These projects included pipeline extensions and replacements, pumping capacity increase at the District's Glenshire Drive Well, well abandonment and other system upgrades. The GMWC customers agreed to reimburse the District for these costs. The GMWC transferred all of its assets to the District. Included in the asset transfer was cash and land. The cash and land sales proceeds have been used to partially offset costs incurred by the District to install and upgrade capital assets. The District financed the upgrade cost with two loans, an external 15 year loan of $1,740,000 and a small internal loan of $246,000. To pay off the external loan, the Glenshire customers were assessed a $10.75 surcharge, the "Glenshire Water System Upgrade Charge" on their monthly water bills. Land sales, lease and surcharge proceeds were used to extinguish the internal loan. The surcharge is projected to end in 2017. In February 2009, the internal loan was extinguished with the sale proceeds of the southern portion of the Glenshire Drive parcel and $33,000 of the accumulated surcharge. 3. NEW INFORMATION One remaining parcel, the northern portion of the Glenshire Drive property, was marketed for sale in 2009, but was removed from the market. The building had been leased to the Truckee Fire Protection District while Station 95 was being remodeled. Truckee Fire vacated the premises March 31, 2011. The property was placed back on the market April 1, 2011 and was sold June 3, 2011. In anticipation of successfully selling the parcel, the District sent out a letter to the Glenshire area residents asking how they would prefer the proceeds to be applied. The options were to either lower the monthly surcharge from $10.75 to $4.75 per month or to adjust the end date from November 2017 to March 2014. The overwhelming response to the letter was to lower the monthly surcharge amount. All of the GMWC asset sale proceeds have been collected and all of the costs have been calculated. The future monthly surcharge can be lowered by $6.00 from $10.75 to $4.75, ending November 30, 2017, and it will be sufficient to pay the remaining related debt payments (Attachment 1). Since the $10.75 charge was established by an ordinance, an ordinance is required to revise the charge to $4.75 (Attachment 2). 4. FISCAL IMPACT Either decision, to lower the monthly surcharge amount or to shorten the length of the monthly surcharge, would be revenue-neutral to the District. 5. RECOMMENDATION Adopt an Ordinance reducing the monthly Glenshire Water System Upgrade Charge to $4.75 effective for utility bills issued on or after August 25, 2011 through November 30, 2017. Robert Mescher Michael D. Holley Acting Administrative Services Manager General Manager Attachment 1 Truckee Donner Public Utility District Re-Calculation of the Glenshire Water System Upgrade Charge Effective for Bills Issued on or after August 25,2011 25 quarterly debt payments @ $41,700 $ 1,043,000 Parcel sale less accumulated costs (295,000) Glenshire surcharge collected balance as of 8/24/2011 (217,000) Surcharge required $ 531,000 Divided by the remaining months until 11/30/2017 75 Average monthly surcharge collections $ 71080 Divided by the parcels paying surcharge 11490 New monthly surcharge $ 4.75 Attachment 2 TRUCKEE DONNER jr Ordinance No. 2011 - XX Reduction of the Glenshire Water System Upgrade Charge Ord 2011- XX adopted July 6, 2011 WHEREAS,the Board of Directors of the Truckee Donner Public Utility District, hereinafter referred to as District, acquired the Glenshire Mutual Water Company water system, hereinafter referred to as Glenshire; and WHEREAS, Glenshire experienced water quality and quantity problems; and WHEREAS, the agreement for the acquisition required that the Glenshire customers pay the cost of water system upgrades by means of a Glenshire Water System Upgrade Charge; and WHEREAS, on July 17, 2002, the Board of Directors of the District passed Ordinance 2002-04 establishing that the Glenshire Water System Upgrade Charge would be set at $10.75 per month; and WHEREAS, an external loan was obtained to fund a portion of the upgrade cost; and WHEREAS, certain assets acquired from Glenshire have been subsequently sold and the proceeds have been or will be used toward the payment of the external loan; and WHEREAS, the amount necessary to collect from the Glenshire customers has been reduced; and WHEREAS, the District notified the Glenshire customers of a pending change in the Glenshire Water System Upgrade Charge, requesting their response as to whether they preferred a lower charge of $4.75 through November 2017 or an unchanged charge of $10.75 through March 2014; WHEREAS, on June 1, 2011, the District held a public workshop; and WHEREAS, most of the responses indicated that the Glenshire customers preferred the lower charge of$4.75 through November 2017; 1 NOW,THEREFORE, BE IT ORDAINED by the Board of Directors of the District as follows: 1. Effective with the effective date of this ordinance, all portions of prior ordinances and/or resolutions that are inconsistent with the provisions of this ordinance are hereby repealed insofar as they are inconsistent. 2. Glenshire Water System Upgrade Charge: The Glenshire Water System Upgrade Charge is hereby reduced to the amount of$4.75 per month applicable to all customers within the territory of the former Glenshire Mutual Water Company. 3. If no protest is made pursuant to Public Utilities Code Section 16078, then this ordinance shall be effective with bills issued on or after August 25,2011 until November 30, 2017. 4. The Glenshire Water Upgrade Charge shall be reviewed each year in conjunction with adopting of the District budget and shall be amended as appropriate. 5. The Clerk of the District shall immediately cause a copy of this ordinance to be posted in three places within the District. PASSED AND ADOPTED by the Board of Directors of the Truckee Donner Public Utility District at a meeting duly called and held within the District on the 6th day of July 2011 by the following roll call vote: AYES: NOES: ABSTAIN: ABSENT: TRUCKEE DONNER PUBLIC UTILITY DISTRICT By Jeff Bender, President ATTEST: Michael D. Holley, District Clerk 2