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HomeMy WebLinkAboutS30 - OC Sanitation District's Proposed Rate IncreaseCITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item s30 February 26, 2008 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: City Manager's Office Homer Bludau, City Manager 949/644 -3000 or hbludau @city.newport- beach.ca.us SUBJECT: CITY COUNCIL'S POSITION ON THE ORANGE COUNTY SANITATION DISTRICT'S PROPOSED RATE INCREASE ISSUE: Does the City Council desire to take a position of support or opposition to the OC Sanitation District's proposed service fee rate increase and convey its position at the District's Board at its meeting on February 27`h? RECOMMENDATION: Take a position and have the Council's representative to the District vote that position at the February 27`h Board meeting. Appoint a Council representative to attend the meeting and vote if the representative and the alternate cannot attend. Background: The Orange County Sanitation District (OCSD) is the sixth largest wastewater treatment agency in the United States, serving a 470 square mile service area. The District is governed by a Board of 25 Directors, with Newport Beach having a seat on the Board. Councilman Don Webb is the current Council representative, and Mayor Pro Tern Leslie Daigle serves as the Council's alternate. OCSD is proposing a rate increase over each of the next five years. Starting with 2008- 09, the annual service fee charge for the collection, treatment and disposal of sewage would average $201 for residential properties, depending on the usage. The fee would increase roughly $20 per year through 2012 -13, when the average annual residential rate would be $294. The District's fee increase rationale is based on increased costs of chemicals, managing biosolids, maintaining clean beaches, moving to additional secondary treatment; and maintaining the water reclamation Ground Water Replenishment System. The OCSD's staff report for the item is attached, along with information obtained from the web site. Orange County Sanitation District's Proposed Rate Increase February 26, 2008 Page 2 Fiscal impacts: The rate increase would also affect the charge for City facilities, and staff will have that impact by the time of the Council meeting. Environmental Issues: Going to full secondary wastewater treatment would have a positive effect on ocean water quality and our beaches. Any CEQA issues would be the responsibility of the Orange County Sanitation District. Public Notice: This agenda item may be noticed according to the Brown Act (72 hours in advance of the public meeting at which the City Council considers the item). Submitted by: W^-4'—'ze Z--� �� Homer Bludau City Manager AGENDA REPORT Orange County Sanitation District Meeting Q3te To Bd. of Dir. B2127XB Item Number I Item Number FROM: James D. Ruth, General Manager Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: PROPOSED FIVE -YEAR SEWER SERVICE USER FEE SCHEDULE GENERAL MANAGER'S RECOMMENDATION Adopt Ordinance No. OCSD -35, An Ordinance of the Board of Directors of Orange County Sanitation District Establishing Sanitary Sewer Service Charges and Repealing Article II of Ordinance No. OCSD -32: ADOPTING REVISED TABLE A RE RESIDENTIAL USER FEES, AND REVISED SECTION 2.03D, LIMITATIONS PERIOD a. Motion to read Ordinance No. OCSD -35 by title only and waive reading of said entire ordinance. b. Motion to adopt Ordinance No. OCSD -35, An Ordinance of the Board of Directors of Orange County Sanitation District Establishing Sanitary Sewer Service Charges and Repealing Article II of Ordinance No. OCSD -32. SUMMARY During a series of workshops held in August through October 2007, the Board of Directors and staff reviewed the Sanitation Districts proposed Five -Year Strategic Plan and options for financing the plan. The financing plan addressed the Sanitation Districts operating and capital programs for the period covering FY 2008 -09 through FY 2012 -13. On December 17, 2007, the Board unanimously approved the District's Strategic Plan which included rate increases of 10.5 percent, 10.0 percent, 10.0 percent, 9.8 percent and 9.8 percent respectively to support its implementation. The net effect of adopting the attached five -year rate ordinance will be to increase annually the single - family residential rate (SFR), the basis for all sewer service charges, 10.5 percent, 10.0 percent, 10.0 percent, 9.8 percent and 9.8 percent, respectively. FISCALYEAR 2008 -09 2009 -10 2010 -11 2011 -12 2012 -13 SFR" $201.00 $221.00 $244.00 $267.00 $294.00 MFR $140.70 $154.70 $170.80 $186.90 $205.80 SFR = SINGLE - FAMILY RESIDENTIAL MFR = MULTI - FAMILY RESIDENTIAL 'The SFR tee Is the minimum sanitary sewer service charge any user must pay J ADDITIONAL INFORMATION Historically, the District has sought to increase our overall sewer user fees in small annual increments, using some debt financing to smooth the impact of the capital improvement program. With the public interest in Improved effluent quality and the Board's decision to meet secondary treatment discharge standards, it is appropriate to evaluate larger, near -term rate increases, in order to match the requirements of the capital improvement program and to reduce the long -term rate impacts of additional future debt financing and interest costs. The Directors last adopted a five -year rate plan in 2003 that included debt financing for $1.4 billion of the $2.8 billion capital improvement and rehabilitation, refurbishment and replacement program. By authorizing this amount of borrowing, the Directors were able to limit projected annual sewer user fee increases to approximately 15% (approximately $18 per year) each year through 2007 -08. Included in staff's recommendation on "Adopting Revised Limitations Period" is a proposed revision on the limitation period for rebates. Currently, the Sanitation District allows for a rebate period covering the current year and the preceding four years. Recently, the County Auditor- Controller has limited the processing of our rebates from the current year and preceding four years to the current year and preceding three years. Staff is now recommending that the rebate limitation period be revised to coincide with what the County of Orange is willing to process. Without a Board action (by 2/3 majority), the SFR rate will remain at the current $182.00 per year. The $201 rate recommended for 2008 -09 will generate approximately $204 million of user fees; an annual increase of $20.1 million over the prior year. All properties located within Revenue Area No. 14 pay no annual service fees. Sanitation District costs relating to providing service to these properties are billed by the Sanitation District directly to the Irvine Ranch Water District; the local agency providing the local sewer service. There are no extraordinary costs associated with the recommendation. Schedule for Implementinq Sewer Service Fee Increase 15t Reading of Fee Ordinance 2nd Reading, Public Hearing, & Adoption of Fee Ordinance Ordinance is effective in 30 days, or in the new fiscal year Fees per parcel due to County Auditor - Controller Rate Increase Chronology June 2003 C]Documerts and Setling"artiMMV OocurrenIMPGSMNG FOLDERIItem 1 ZRale Ordinance.doc Revised: GGA3003 January 23, 2008 February 27, 2008 July 1, 2008 August 11, 2008 Page 2 1) 1n June 2003, the Board approved a revised Capital Improvement Plan (CIP). 2) To support this Cl P, staff recommended a five -year plan which included rate increases averaging 20 %. 3) The Board directed staff to issue a Proposition 218 public notice stating the rates would increase by an amount not to exceed a total of 20% annually over the next five -year period. 4) While the increases were tentatively approved and noticed, the Board chose not to implement the full 20% increase for 2003/04. 5) The Board did discuss alternatives between 10 -20 %. 6) Ultimately, the Board acted to implement a 15% increase in 2003/04. 7) Staff reset the budget and long -term cash flow model to reflect the annual increases of 15% for the subsequent five -year period. 8) Board policy stated that 50% of all future capital improvements (approximate percentage of non - capacity related projects), would be funded from current revenues and the remaining 50% through debt financing. However, reducing the projected annual rate increases to 15% required as deviation from that policy in order to support the capital program. As of July 2003, the ratio of CIP funded debt increased to 62 percent. By July 2005, this ratio decreased to 58 percent. The debt fiscal policy has subsequently been changed to provide additional flexibility when addressing this Sanitation Districts capital program and debt issuances. 9) While the five -year plan was still in place, the Board directed staff to bring back the rate schedule for annual adoption. June 2004 Through the adoption of the 2004/05 Budget, the Board acted to implement a portion of the 20% rate increase included in the five -year plan. 2. The Board acted to implement a 15% rate increase for 2004/05. C]Docum nisanO Sefling9iprclaWY DacumentelPOSTING FOtOER10eml 2. Rate Ordinance.= Revised 06104103 Page 3 G� June 2005 1. The CIP increased by $400M, from $1.94B to $2.388. 2. Additionally, Operations costs increased by $400M, from $1.313 to $1.713. 3. To support these increased costs, rates needed to be increased above 15 %. 4. The Board approved a 31 % rate increase for 2005 -06, instead of 15%_ 5. The additional increase was based on only 15% increases in each of the previous two years. 6. Both the 2005 -06 Adopted Budget and the existing ordinance include 20% rate increases for 06 -07 and 07 -08. 7. Proposition 218 notices were issued based on the 20% figure. 8. As the Board must act to implement any rate increase, it reserves the option to approve any rate increase, under the existing Proposition 218 notice, that does not exceed 20% in fiscal year 2006 -07, or 40% over the next two years. June 2006 1. The CIP decreased by $549M, from $2.388 to $1.83B as budgeted construction costs were delayed or deferred. 2. The Sanitation District contracted with Carollo Engineers to complete a Revenue Program and Rate Analysis study. The result of these efforts reduced projected 2006 -07 and 2007 -08 single - family residential rate (SFR) Increases, the basis for all sewer service charges, from 20.0% to 9.8 %. 3. The Carollo rate model developed proposed revised capital facility capacity charges (CFCC) that increases the benchmark 3- bedroom SFR from $2,890 to $4,360, or 50.9 percent, and the average demand for commercial industrial from $1,050 to $1,306, or 24.4 percent. 4. The previous CFCC rates have not been increased over the last two- and -one -half years. It has generally been the practice of the Sanitation District not to update CFCC rates until the completion of an Interim Strategic Plan Update, which generally occurs only once in approximately five years. With the implementation of this new rate ordinance, staff recommended that these fees be adjusted annually, based on a commonly accepted price indicator, the Engineering News Record Construction Cost Index for Los Angeles, to reflect the current value of the facilities or the current cost of capital projects. C.IDacmerds and Sadifgalgan:iMMy Daounnen�OUIN0 FOLDERUtan 12. Rate Ordiname.dac Revised: 0610403 Page 4 June 2007 1. Staff re- evaluated every project in the Validated Capital Improvement Program and many newly proposed projects as a part of the 2006 -07 and 2007 -08 budget preparation process. Approximately $474 million of budgeted construction costs were delayed or deferred. 2. The Sanitation District contracted with Carollo Engineers to complete a Revenue Program and Rate Analysis Study. The result of these efforts was to reduce projected 2006 -07 and 2007 -08 single - family residential rate (SFR) increases, the basis for all sewer service charges, from 20.0% to 9.8 %. f-i'll11ICTS M11= 111 1. Ordinance No. OCSD -35 C lOdcurrents and Seff ng9gar[Ie1M9 OacunerAMPOSTINO FOLOERUtem 12 Rate Ordinance dac Revised: 0810403 Page 5 ORDINANCE NO. OCSD -35 AN ORDINANCE OF THE BOARD OF DIRECTORS OF ORANGE COUNTY SANITATION DISTRICT ESTABLISHING SANITARY SEWER SERVICE CHARGES; AND REPEALING ARTICLE II OF ORDINANCE NO. OCSD -32. ADOPTING REVISED TABLE A RE RESIDENTIAL USER FEES AND REVISED SECTION 2.03D, LIMITATIONS PERIOD WHEREAS, the Board of Directors of the Orange County Sanitation District ( "District ") has previously adopted Ordinance No. OCSD -32, establishing annual Sanitary Sewer Service Charges for all uses; and, WHEREAS, for purposes of improved efficiency and effectiveness of the District's operations, it is the intent, by the adoption of this Ordinance, to establish sanitary sewer service charges. NOW, THEREFORE, the Board of Directors of the Orange County Sanitation District does hereby ORDAIN: Section I. Fees and Charges Ordinance — Adopted TABLE OF CONTENTS ARTICLE L RECITAL OF FINDINGS Section 1.01, Findings — Declaration of Intent ARTICLE II: SANITARY SEWER SERVICE CHARGES Section 2.01, Purpose and Scope Section 2.02, Annual Sanitary Sewer Service Charge Section 2.03 A. Exemptions B. Application for Rebate C. Application for Refund D. Limitation Period E. Determination F. Administrative Fee Section 2.04, Annual Charge Based on Fiscal Year Section 2.05, Method of Collection Section 2.06, Credit for Industrial Permittees Section 2.07, Open -Air Facilities Table A Annual Sewer Service Charges for Residential Users Table B Annual Sewer Service Charges Property Use Classifications for Commercial or Industrial Users WS &S — BRH: pj:201660:04l20l05 OCSD -ADB 4125107 5d0499.1 ARTICLE III: MISCELLANEOUS Section 3.01, Application of Ordinance Section 3.02, Exceptions Section 3.03, Out of Area Sewer Service Agreements ARTICLE I RECITAL OF FINDINGS Section 1.01. Findings — Declaration of Intent. The Board of Directors of District has previously adopted Master Plans, as more particularly described in Findings B, C, D, and E below, setting forth the financial and engineering needs of the District, and hereby adopts the following Findings supporting the amounts of charges and fees adopted pursuant to this Ordinance. A. That the former County Sanitation Districts Nos. 1, 2, 3, 5, 6, 7, 11, 13 and 14 of Orange County, California (the "Predecessor Districts "), were nine individual County Sanitation Districts, organized pursuant to the County Sanitation District Act (California Health & Safety Code Section 4700 et seq.). By action of the Board of Directors of the Predecessor Districts, pursuant to specific legislation enacted by the California State Legislature in 1996, an application was submitted to the Orange County Local Agency Formation Commission to legally consolidate the nine Predecessor Districts into one single Sanitation District for all purposes. The application was approved, with an effective date of July 1, 1998. As of July 1, 1998, the Predecessor Districts ceased to exist, and one single consolidated County Sanitation District, known as the Orange County Sanitation District, came into existence in place of the Predecessor Districts. The District was formed to carry on the functions of the Predecessor Districts. B. That a comprehensive 20 -year Master Plan of Capital Facilities, entitled "1999 Strategic Plan ", hereinafter referred to as the "Master Plan ", which includes detailed financial and engineering reports, was prepared, approved, and adopted by the Board of Directors in 1999, with updates approved in 2002 and 2006, setting forth and identifying the required future development of District Facilities, including the financial projections for providing sewer service to all properties within the service area. C. That the financial and engineering reports of the Master Plan were made available to the public, both prior to and subsequent to the adoption of the Master Plan, and were subject to noticed public hearings, all in accordance with the provisions of the California Constitution and Government Code Section 66016, and other provisions of law. D. That the District, in 1997, as part of its maintenance and updating of its Master Plan, undertook a comprehensive evaluation and study of its operational and financial needs for the next 20 years, including a detailed assessment of all types and categories of users; the demands on the system and capacity needs of the system to provide necessary service to the multiple categories of users; the total costs of the existing and future facilities in the system; and alternate methodologies for establishing fair and equitable charges WS&S- BRH: pj: 201660:04120105 2 OCSD -ADB 4125107 560199.1 0 to connect to and gain access to the system. These comprehensive planning, engineering, and financial studies led to the development of an updated Comprehensive Master Plan of Capital Facilities, which was approved and adopted by OCSD Resolution No. 99 -21 of the Board of Directors on October 27, 1999. E. That in support of this Ordinance and the revised charges for sewer service as provided for on Table A herein, the Board of Directors finds that the Capital Improvement Program ( "CIP ") Validation Study for Fiscal year 2003- 04 and the Secondary Treatment Peer Review, as approved by the Board of Directors, has resulted in the development of a Capital Improvement Program that provides for the implementation of secondary treatment standards, thereby improving effluent quality in a reasonably short period of time, consistent with the goals and policies of the Board of Directors, the member agencies, and the public, while also providing for the construction of necessary improvements to accommodate projected increased flows and the rehabilitation and refurbishment of existing facilities. The Board further finds that programming annual adjustments in sewer service charges over a period of years is appropriate and ensures adequate revenues to finance the improvements and programs necessary to implement secondary treatment standards, accommodate increased flows, rehabilitate and refurbish existing facilities, and retire any necessary or prudent debt incurred to finance such improvements in a reasonable manner and over a reasonable period of time. The Board of Directors also finds that such Sanitary Sewer Service Charges are reasonably related to, and do not exceed the cost of providing sewer services. F. That the financial requirements of the District, as shown in reports prepared by Staff and Consultants relating to the Strategic Plan and the CIP validation studies, are based on current, reliable information and data relating to population projections, wastewater flow, and capital facilities' needs, and are expected to be realized in each year as described in the reports. G. That the revenues derived under the provisions of this Ordinance will be used for the acquisition, construction, reconstruction, maintenance, and operation of the sewage collection, wastewater treatment and disposal facilities of the District; together with costs of administration and provisions for necessary reserves; H. That the owners or occupants of properties upon which all fees and charges established by this Ordinance are levied, discharge wastewater to the District's collection, treatment and disposal facilities. The costs of operating and maintaining said facilities have constantly increased due in part to increased regulatory requirements to upgrade the treatment process. I. That the need for upgraded and improved treatment of all wastewater collection, treatment and disposal facilities is required to protect the public health and safety, and to preserve the environment without damage. J. That the Sanitary Sewer Service Charges established and levied by this Ordinance are to allow the District to recover the reasonable costs to provide a service to individual properties which have been improved for any of WS &S- BRH: pl: 201660:04!20/05 3 OCSD,ADB 4125107 560499 1 I numerous types of uses. The basis for the respective charge is the request of the owner of property or a structure thereon, for the benefit of him/her/itself, or the occupants of the property, to receive a service based upon actual use, consumption, and disposal of water to the District's system in lieu of disposal by other means. K. That the Sanitary Sewer Service Charges established by this Ordinance are not imposed as a condition of approval of a development project, as defined in California Government Code Section 66001, and do not exceed the estimated reasonable cost to provide the sewer service for which the fee is levied, as provided in Government Code Sections 66013 and 66016 and California Constitution Article MID. L. That the Sanitary Sewer Service Charges adopted herein will not necessarily result in an expansion of facilities to provide for growth outside the existing service area. The adoption of these Sanitary Sewer Service Charges will not result in any specific project, nor result in a direct physical change in the environment. M. That the Sanitary Sewer Service Charges adopted herein are established upon a rational basis between the fees charged each customer and the service and facilities provided to each customer of the District, a portion of which are necessary to replace the loss of ad valorem property taxes to the State General Fund as a result of state legislative action on September 2, 1992, and in subsequent years. N. That all fees and charges established herein have been approved by the District's Board of Directors at a noticed public meeting, all in accordance with applicable provisions of law. O. That the adoption of this Ordinance is statutorily exempt under the California Environmental Quality Act pursuant to the provisions of Public Resources Code Section 21080(b)(8) and California Code of Regulations Section 15273(a). P. That each of the Findings set forth in previous Ordinances Nos. OCSD -05, OCSD -06, OCSD -11, OCSD -13, OCSD -15, OCSD -18, OCSD -19, OCSD -20, OCSD -22, OCSD -24, OCSD -26, OCSD 30B, and OCSD 32 are reaffirmed and readopted hereat, except to the extent that they have been specifically superseded or otherwise amended by specific Findings herein. ARTICLE II SANITARY SEWER SERVICE CHARGES Section 2.01. Purpose and Scope. The purpose of this Ordinance is to establish Sanitary Sewer Service Charges required to be paid by property owners for the services and facilities furnished by the District in connection with its sanitation treatment works and sewage collection system. Revenues derived under the provisions of this Ordinance shall be used for the acquisition, WS &S - BRH: q:2 0 16 60. 04120!05 4 OCSD -ADB 4125'07 560499 1 construction, reconstruction, maintenance, and operation of the wastewater collection, treatment and disposal facilities of the District; to repay principal and interest on debt instruments; or to repay federal and state loans issued for the construction and reconstruction of said sewerage facilities, together with costs of administration and provisions for necessary reserves. Section 2.02. Annual Sanitary Sewer Service Charge. Commencing with the effective date of this Ordinance, the owner of each parcel of real property located within the District which is improved with structures designed for residential, commercial, or industrial use and which, at the request of the owner or the owner's predecessor -in- interest, is connected to the Districts system, shall pay an annual Sanitary Sewer Service Charge based on the respective class of users, in the sum or sums, as set forth in Tables A and B of this Ordinance, below. The annual Sanitary Sewer Service Charges for residential users are set forth in Table A. The applicable single family residential rate shown in Table A is multiplied by the applicable percentage figure shown on Table B with respect to the particular use classification to arrive at the annual Sanitary Sewer Service Charge rate per 1,000 square feet for the commercial or industrial user. The annual Sanitary Sewer Service Charges for commercial or industrial users are dependent upon the respective classifications of property use, determined by reference to Table B. Section 2.03. A. Exemptions. It is the intent of the District that the legal owner(s) of parcels of real property, otherwise subject to the levy and payment of the Sanitary Sewer Service Charges, as prescribed herein, be relieved, in whole or in part, from the payment of said charges, in certain circumstances and under conditions prescribed herein, and be entitled to either a rebate or a refund with respect to charges paid, as more specifically set forth in Subparagraphs 2.036 and 2.03C below, provided an inequity is established or a billing error is proven, as specified in Subparagraphs B or C. B. Application for Rebate. Any property owner may apply to the District for a rebate of Sanitary Sewer Service Charges paid to the District by establishing that an unfair valuation of the property has been made by the District. An applicant for a rebate must establish, by proof satisfactory to the General Manager of the District, or his designee, that an inequity exists between the amount of the charge paid and the amount of wastewater discharged to the Districts system, resulting in an unfair valuation. Satisfactory proof shall establish that either: (1) The principal water use is agricultural or horticultural; or (2) The property is devoted to any other use wherein the amount of wastewater discharged to the Districts system is significantly less on a regular basis than the amount that would normally be expected to be discharged by the class of property in question. Satisfactory proof shall include, but not be limited to, documentation showing actual water usage for each billing cycle during the entire period for which the rebate is sought. WS &S- BRH: 0201660:04/20/05 5 OCSQADB 4125'07 556M199.1 ■ The amount of any rebate shall not reduce the charge payable by any property owner, whose property is connected to the Districts system, to less than the single family residential charge shown on the applicable Table attached hereto. C. Application for Refund. Any property owner may apply to the District for a refund of Sanitary Sewer Service Charges paid to the District by establishing that the amount paid was pursuant to an error in the amount billed or the amount paid. The applicant for a refund must submit proof satisfactory to the General Manager of the District, or his designee, that a billing error has been made by the District, or the County Tax Collector. Such proof shall include, but not be limited to, proof that: (1) The owner's parcel of property is not connected to the District's system; or (2) The property has not been classified in the proper property use classification code ; or (3) A clerical error has been made. D. Limitations Period. Applications for refunds shall be deemed to be governed by the provisions of California Revenue & Taxation Code Sections 5096 and 5097. Applications for rebates shall be deemed a claim and be governed by the provisions of California Government Code Sections 935 et seq., and shall be presented to the District as provided in the Government Tort Claims Act, Government Code Sections 915 et seq., not later than four (4) years after the submission of the roll to the County Auditor /Controller, and the claim for rebate may only be made with respect to amounts paid or payable under such property tax bill. A claim for rebate is not deemed a claim for refund, and California Revenue & Taxation Code Sections 5096 and 5097 are not applicable. E. Determination. All applications for rebates or' refunds of the Sanitary Sewer Service Charge will be determined by the General Manager of the District, or his designee, who, based on the submitted proof, may grant a full or partial rebate or refund. F. Administrative Fee. At the time of filing the application for rebate or refund, the property owner shall pay District an administrative fee for the processing of such application. The amount of the fee shall be equal to the total of all fees and charges imposed on the District by any other public entity, such as the Orange County Tax Collector, the Orange County Auditor, or the Orange County Recorder, in connection with the rebate or refund. Section 2.04. Annual Charge Based on Fiscal Year. The Sanitary Sewer Service Charges established by this Ordinance shall be effective as of July 1 of each year, as set forth in Tables A and B, attached hereto, for the Districts fiscal year, and shall remain in effect until such time as the rates adopted herein are changed by District Ordinance. There shall be no proration of such charges in any fiscal year. WS&S - BRH. pj 201660'.04/2(105 OCSQAM 4125107 560199.1. 3 Section 2.05. Method of Collection. A. Pursuant to the authority granted by California Health & Safety Code Section 5473, and except as otherwise provided in Subparagraph 2.05B below, all sanitary sewer service charges established herein shall be collected on the County Tax Roll in the same manner, by the same persons, and at the same time as, together with, and not separately from, its general taxes. The County Tax Collector is authorized and hereby ordered to make said collections in accordance with the terms and conditions of agreements between the County of Orange and the District. B. In the event District determines that, due to billing or payment error, or to inequity in the amount billed, a property owner has underpaid annual Sanitary Sewer Service Charges payable to District, District, within four (4) years after the date of mailing of the tax bill, may: (1) collect the amount of any deficiency directly on the County Tax Roll; (2) off -set the amount of any deficiency against any amounts that District determines is owing, by District, to the property owner, as a rebate or refund under this Ordinance; or (3) submit, directly to the property owner, a bill for the amount of any deficiency, which shall be due and payable within thirty (30) days of the invoice date and which, if not paid, shall become a lien on said property. Section 2.06. Credit for Industrial Permittees. A credit shall be allowed to all dischargers permitted pursuant to Article 3 of District Ordinance No. OCSD -31, as amended, in an amount equal to the annual Sanitary Sewer Service Charge established by Section 2.02 of this Ordinance, in the same manner as credit is allowed for ad valorem taxes pursuant to Sections 302.6 (B), and 303.6 (B) of District Ordinance No. OCSD -31, as amended. Section 2.07 Open -Air Facilities. Sanitary Sewer Service Charges for open -air facilities will be based on annual attendance records. Open -Air facilities will pay a rate per million gallons based upon the related sewage flow, Biochemical Oxygen Demand ("BOD ") and Suspended Solids ("SS') charge for single family residences. The usage per attendee will be 15 gallons. WS &S- BRH: 0: 201660:04/20105 7 OCSCIAM 4125107 56149.9.1 Iq TABLE A ANNUAL SEWER SERVICE USER FEES RESIDENTIAL USERS FISCALYEAR 2008 -09 2009 -10 2010 -11 2011 -12 SFR* $201.00 $221.00 MFR $140.70 $154.70 SFR = SINGLE FAMILY RESIDENTIAL MFR = MULTI FAMILY RESIDENTIAL 2012 -13 $244.00 $267.00 $294.00 $170.80 $186.90 $205.80 * The SFR fee is the minimum sanitary sewer service charge any user must pay. All properties located within Revenue Area No. 14 pay no annual service fees. District costs relating to providing service to these properties are billed by the District directly to the Irvine Ranch Water District, the local agency providing the local sewer service. WS&S - BRH: pj: 201660:04120105 OCSD -ADB 4/25107 560499.1 E 15 TABLE B ANNUAL SEWER SERVICE CHARGES WS &S - BRH: pj:201660 0420/05 OCSQADB 4125107 560499.( 4 PROPERTY USE CLASSIFICATIONS FOR COMMERCIAL OR INDUSTRIAL USERS Percentage of SFR Assessor Use Code Description Per 1.000 SF or Unit 1 Vacant Land Parcel 0% 5 Common Area Parcel 0% 6 "Hold" Parcel 0% 8 Equivalent to Vacant 0% 121 Parcel of Minimal or No Value 0% 122 Subsurface Parcels 0% 124 Oil /Mineral Rights 0% 125 Mineral Rights Equipment 0% 126 Vacant Comm. Area -IMP Alloc. 0% 201 Homeowners Exemption AddT 0% 666 Unassigned Vacant 0% 777 Septic Tank Property 0% 112 Steel Building 7% 113 Mini- Warehouse 7% 58 Nurseries (Plants) 10% 100 Drive -In Theater 10% 44 Lumber/Constr. Material Yard 17% 71 Parking Garage 17% 72 Paved Parking Lot 17% 110 Warehouse — Single Tenant 17% 111 Warehouse — Multi Tenant 17% 115 Recreational Vehicle Storage 17% 116 Truck Terminal 17% 33 Church Buildings 20% 94 Department Store 23% 95 Discount Store 23% 96 Unattached Single Store 23% 97 Strip Store 23% 74 Recreational Vehicle Park 27% 36 Financial Buildings 27% 40 Health Club 29% 68 High Rise Office 30% 225 United States Post Office 35% 21 Automobile Dealership 41% 22 Auto Repair Shop 41% 23 Automotive Service 41% 24 Used Car Lot 41% 39 Golf Course 41% 57 Motorcycle/Small Vehicle Building 41% 83 Automotive Service Station 41% WS &S - BRH: pj:201660 0420/05 OCSQADB 4125107 560499.( 4 TABLE B (CONTINUED) ANNUAL SEWER SERVICE CHARGES WS&S - BRH: pj:201660:04l20l05 10 OCSD -ADB 4125107 360499.1 1' PROPERTY USE CLASSIFICATIONS FOR COMMERCIAL OR INDUSTRIAL USERS Percentage of SFR Assessor Use Code Description Per 1,000 SF or Unit 84 Marine Service Station 41% 86 Combin. - Service Station /Convenience 41% 65 Single Office Bldgs. to 3 Stories 41% 66 mall Office Center 41% 67 Office Complex 41% 69 Converted Residence to Office 41% 7 Mobile Home 50% 55 Mobile Home Park 50% 107 Light Industrial — Single Tenant 50% 108 Light Industrial — Multi Tenant 50% 109 Research and Development 50% 114 Industrial Park 50% 37 Fraternal Buildings 51% 101 Unattached Theater 51% 26 Airport and Related Buildings 53% 45 Marinas 53% 88 Low Flow Shopping Center 53% 3 Two or More Residences 70% 10 Duplex Only 70% 11 Triplex Only 70% 12 04 -Units Only 700.6 13 5 to 16 Units 70% 14 17 to 25 Units 70% 15 26 to 40 Units Only 70% 16 41 -99 Units Only 70% 17 100 or More Units 70% 18 Developed with a Mix of Forms 70% 63 Low Rise Retirement Building 70% 64 High Rise Retirement Building 70% 56 Motels 70% 81 Pre - Schools, Nursery or Care 82% 82 Private Schools 82% 98 Store with Offices or Living Quarter 82% 99 Store with Office Upstairs 82% 118 Governmental Use Vacant/Develop. 82% 19 SFR with 1 or 2 rental units 85% 34 Dormitory 97% 42 Hospital 97% 43 Hotel 97% 0 Conversion -C /1, Rural PC 100% 2 One Residence 100% WS&S - BRH: pj:201660:04l20l05 10 OCSD -ADB 4125107 360499.1 1' TABLE B (CONTINUED) ANNUAL SEWER SERVICE CHARGES NOTE: Multiplythe Table A Single Family Residential Rate bythe percentage figure above in order to determine the rate per 1,000 square feet for the commercial or industrial user. WS &S - BRH: pj:201660:0420M OCSQADB 4125107 560999.1 11 I PROPERTY USE CLASSIFICATIONS FOR COMMERCIAL OR INDUSTRIAL USERS Percentage of SFR Assessor Use Code Description Per 1.000 SF or Unit 4 Miscellaneous Improvement 100% 85 Comb. Serv. Stn. /Restaurant 100% 103 Chemical Tank and Bulk Storage 100% 104 Food Processing Plant 100% 105 Cold Storage Plant 100% 106 Factory 100% 119 Public Utility 100% 120 Water Mutual or Company 100% 888 Conversion - Composite Prop. 100% 32 Cemetery& Related Buildings 101% 38 Funeral Home 101% 60 Nursing Home 102% 61 Convalescent Hospitals 102% 62 Converted Res. Used as Nursing 102% 28 Bawling Alleys 112% 92 Skating Rinks 112% 50 Single Medical Bldgs. to 3 Stories 124% 51 Small Medical Center 124% 52 Medical Center Complex 124% 53 High Rise Medical 124% 54 Converted Residence to Medical 124% 89 Average Flow Shopping Center 139% 20 Amusement Parks 144% 35 Entertainment Center 144% 73 Recreation 144% 30 Coin Operated Car Wash 151% 47 Supermarket 151% 48 Convenience Market 151% 224 Nightclub 200% 90 High Flow Shopping Center 226% 76 Restaurant — Take Out 300% 77 Restaurant — Coffee Shop 600% 78 Restaurant — Dinner House 600% 79 Restaurant — Conversion from SF 600% 29 Conventional Car Wash 796% 223 Laundromat 1,800% NOTE: Multiplythe Table A Single Family Residential Rate bythe percentage figure above in order to determine the rate per 1,000 square feet for the commercial or industrial user. WS &S - BRH: pj:201660:0420M OCSQADB 4125107 560999.1 11 I MISCELLANEOUS Section 3.01. Application of Ordinance. The provisions of this Ordinance shall be in addition to the provisions of the District's Wastewater Discharge Regulations for use of Districts sewage facilities, including provisions for payment of charges or fees related thereto; District's ordinance establishing Fees Concerning Annexations of Territory to the District; and any other District Ordinances and Resolutions not in conflict herewith. Section 3.02. Exceptions. The provisions of this Ordinance shall apply to all owners of properties within the District, including those properties otherwise deemed exempt from payment of taxes or assessments by provisions of the State Constitution or statute, including properties owned by other public agencies or tax- exempt organizations, except as expressly provided herein. Section 3.03 Out of Area Sewer Service Agreements. The District is empowered to contract for the transport, treatment and disposal of wastewaters originating within areas outside of the District if it is in the best interest of the District to do so. These Out of Area Sewer Service Agreements will establish fees and charges relative to the services provided by the District for each individual agreement. The Board of Directors of the Orange County Sanitation District does further hereby ORDAIN: Section II. Severability. If any provision of this Ordinance, or the application to any person or circumstances is held invalid by order of Court, the remainder of the Ordinance, or the application of such provision to other persons or other circumstances, shall not be affected. Section III. Effective Date. This Ordinance shall take effect July 1, 2008. Section IV. Repeal. Article II of Ordinance No. OCSD -32 is hereby repealed. Section V. Certification and Publication. The Clerk of the Board shall certify to the adoption of this Ordinance, and shall cause a summary to be published in a newspaper of general circulation as required by law. wS &S -SRH pj:20166004120105 12 OCSD -ADB 405507 Sh0499A 1 PASSED AND ADOPTED by a vote of not less than two- thirds of the Board of Directors of the Orange County Sanitation District at a Regular Meeting held CHAIR, BOARD OF DIRECTORS ORANGE COUNTY SANITATION DISTRICT U"m =m6 CLERK OF THE BOARD ORANGE COUNTY SANITATION DISTRICT BRADLEY R. HOGIN, GENERAL COUNSEL WS&S -BRH: pj 201660:04!20105 13 OCSD -ADB 4/25107 560499.1 • , OCSD - Rate increases Page 1 of About OCSD I Construction Business Center Environmentai Programs I Education I Document Center Homepaye > About OCSD > Rate Increases Options. Proposed Rate Increase Email peee Print friendly format Yca The Orange County Sanitation District Board of Directors will hold a public hearing on Wednesday, February 27, 2008 to consider your input on the proposed rate change. The hearing will be held at 6:30 p.m. in the OCSD Board Room, 10844 EllisA.venue,. Fountain Valley, California. Written comments may also be submitted through the mail to the OCSD at P.O. Box 8127, Fountain Valley, CA 92728 -8127. We have also established an email account should you prefer to leave an electronic message. Our address is rates @ocsd.com. Frequently Asked Questions • Who is the Orange County_ Sanitation District (OCSD)? • What is the fee? • How is the fee calculated? • Who approved the fee? • How is the fee collected? Why was the rate increase needed? • Was the fee voter approved? • How do you satisfy the requirements of Propositions 13 and 218? • Am I paying for the same thing on my utility bill? • Can I get the fees lowered? http:// www. ocsd .com/about/rate_increases.asp 02/21/2008 a OCSD - Rate increases Page 2 of • What if I am not connected to the sewer? • What if I have further questions or comments? • What is the proposed _annual single family residence sewer fee over the next 5 years? • Why is the rate increase needed? • How do our rates compare to other agencies? Who is the Orange County Sanitation District (OCSD)? OCSD is responsible for safely collecting, treating, and disposing of wastewater. Separate from the County of Orange or any city government, it is governed by a 25- member board of directors represented by a member of the board of supervisors, 3 local sewer agencies and 21 cities within our 470 -square-mile service area. What is the fee? The sewer service fee is for the collection, treatment, and disposal of wastewater (sewage). It is a fee, not a tax because it is not based on the value of the property, but upon average use of the sewerage system. How is the fee calculated? It is based upon the type of property. Residential properties, including condominiums and town homes, are charged a flat rate. Multi- family (apartment buildings including duplexes and triplexes) and mobile home parks are charged on a per unit basis. Non - residential properties are charged a rate per thousand square feet of improvements. The rate varies based upon the use of the property. Who approved the fee? The fee was passed by ordinance by the OCSD Board of Directors How is the fee collected? Fees appear on the property tax bill annually. Using the property tax bill is the most cost effective method of collection as it avoids adding additional staff. Why was the rate increase needed? As the sixth largest wastewater treatment agency in the United States, several factors influence future costs and rates to cover them. Increased costs of chemicals, managing biosolids, maintaining clean beaches, moving to additional secondary treatment, funding half of the water reclamation Ground Water Replenishment System (GWR System), and the ongoing need to replace our aging infrastructure to name a few. To continue operating 24 hours a day, 365 days a year and maintain the reliable service you've come to expect, it is essential we continue investing in our facilities. http://www.ocsd.com/about/rate—increases.asp 02/21/2008 Cry OCSD - Rate increases Page 3 of 4 Additionally, these increases in the next few years will allow the District to avoid additional borrowing and debt service payments which would result in even higher rates in the future. Was the fee voter approved? No public vote is required. When a fee is imposed or increased, a Public Notice is published in the local newspaper and notifications are mailed to property owners. The fees are enacted after a public hearing by a vote of the Board of Directors. How do you satisfy the requirements of Propositions 13 and 218? Proposition 13 deals with taxes. The user fee is based upon the average use of the sewer system, not property values. Therefore the user fee is not a tax and is not governed by Proposition 13. Proposition 218 has a specific exemption for sewer user fees. OCSD mails a notice to each property owner and conducts a public hearing. In this case the notice was mailed in January, 2008 for the subsequent 5 years. An election is not required by Proposition 218 for sewer user fees. Am I paying for the same thing on my utility bill? No. Some of the cities charge a maintenance fee for their local sewer lines. Often times, this fee is on the water bill. The sewage from those local lines Flows into OCSD's large regional trunk sewers and comes to one of our two plants for treatment. Those local fees are only used for the local sewers and are not forwarded to the Sanitation District. Can I get the fees lowered? Non - residential users with a low water use may be eligible for a reduction based on actual water use. They must send OCSD a written request (from the property owner) along with a copy of their water bills for the prior fiscal year (12 complete months) and a copy of the current tax bill. What if I am not connected to the sewer? Parcels not connected to the sewer are exempt from sewer service fees. There are no other exemptions. The owner may write to the Sanitation District at P.O. Box 8127, Fountain Valley, CA 92728 -8127, indicating they use a septic tank or that the property is not developed along with their parcel number and the owner's signature. What if I have further questions or comments? Written comments may be submitted through the mail to the Sanitation District at P.O. Box 8127, Fountain Valley, CA 92728 -8127. We have also established an e-mail account should you prefer to leave an electronic message. Our address is rates @ocsd.com If you have additional questions or want more information, please call (714) 593 -7281. Our office hours are 8.00 a.m. to 4:30 p.m., Monday through Friday. If these times are not convenient, you may leave a recorded message after hours or on weekends or email. A member of the Sanitation District's staff will return your call. http:// www. ocsd.com/about/rate_increases.asp 1lyafr40#1lI1R., `l-% S OCSD - Rate increases General information > Board of Directors > Management > Press Releases Jobs > Budget 8 Financial > Reporting Document Center Calendar Contact Us > Page 4 of 4 What is the proposed annual single family residence sewer fee over the next 5 years? The proposed rates are: 2008 -2009 - $201 2009 -2010 - $221 2010 -2011 - $244 2011 -2012 - $267 2012 - 2013 - $294 Why is the rate increase needed? The District maintains a Capital Improvement Program (CIP) that requires nearly $1.5 billion over the next ten years. Large projects within the CIP Include: • Funding for the Groundwater Replenishment System, the world's largest water reclamation plant which helps convert 70 million gallons into drinking water every day. This $490 million project joint funded with the Orange County Water District and serves as a hedge against water shortages and population growth. • Compliance with the Federal court consent decree requiring the District to move to full secondary treatment levels, as required by the Clean Water Act, by December 2012. The goal of this initiative Is to minimize the bacteria and solids dispersed out into the ocean. • Various rehabilitation projects to replace the District's aging infrastructure, including the headworks replacement at Plant No. 2, a $260 million project. How do our rates compare to other agencies? Rate comparisons Click to View About OCSD I Construction I Business Center I Enviromental Programs I Education I Document Center I Calendar i Jobs I Contact Privacy Statement I Disclaimer htt p:// www. ocsd .com/about/rate_inereases.asp 02/21/2008 ORANGE COUNTY SANITATION DISTRICT e - ........... 1x Ra January 14, 2008 phaaa: (7141 zs2 -zn11 lax: {714) 962w(Z)356 w .ocsd.com nailing addreas: P.O eat 8127 Apartment Association of Orange County Attn: Vicki Binford and Dean Zarkos 12822 Garden Grove Blvd., Suite D Garden Grove, California 92843 -2010 Re: Your letter dated February 8 re Proposed Rate Increases sruain Valley, rA 22728-812; Vicki Binford and Dean Zarkos: .street address: aria °''f " ° ° "Qe attain Valley, cn I received a co py of your letter to Councilrnember Davert regarding the rates required 32708.7018 by the Orange County Sanitation District to support its operations. 1 have been asked to respond and provide some of the additional information requested in your letter, i Member would like to start with some general background information to provide some context Agencies to the discussion. Cities As you are aware, OCSD operates the third largest wastewater facility west of the Anaheim Mississippi. Our mission is to protect public health and the environment by providing wren effective wastewater collection treatment and recycling. As such, we are responsible suana Fark for the operation and maintenance of two treatment plants, 501 miles of collection Gyro ass r°untam Valley systems and sewer and 16 pump stations. OCSD processes nearly 230 million gallon Fullerton of wastewater each from 2.5 million residents and businesses. Treating wastewater is ear °r p.oro reCir:gtnn 6epch a 24 hour per day, 7 days per week, 355 day operation which cannot be interrupted h v,»° without serious risk to public health. a 04abra Lu Poana Los Alamitos Your letter mentions that the required increases are above those of the current rate of 'dau,J °ra Beach Orrannge ge inflation necessary for general maintenance. While that statement is true. it is ciacelma important to recognize that the current immediate needs of the Sanitation District well Santa Ann exceed that of general upkeep. seal fjenr.h 5canw+Y Tustin In July 2002, OCSD committed to move all of its operations to a higher level of service ''"a Park, )101&0 tlnda — secondary treatment standards by December 31, 2012. Complying with this court- ordered consent decree represents significant capital improvement far beyond my of orange existing maintenance and operating levels. If we are to complete this task and thus avoid potential fines, penalties and risks to public health, additional fund will be :ary Districts required. C°ata Mesa Midway Oty Newly approved State and Regional regulations also impact our rate requirements. ;ter Districts These new regulations outside OCSD's control have required us to install and operate additional equipment to control air emissions from our two treatment plants and will Irvine Ranrh result in millions of dollars of new expenditures. Lastly, OCSD is responsible for an aging infrastructure, some of which is more that 5( years old. Rehabilitation of this nature is generally an ongoing activity. However, in a previous attempt to keep rates artificially low, much of this work was not completed. During the 1990s, rates did not increase for several years, allowing our revenue to lag inflation by nearly 30 percent resulting in the deterioration of our infrastructure. 12 p f Page 2 February 14, 2008 Without a strategy to address these needs, rates may fluctuate in the future. The proposed financial plan addresses these long -term needs Your letter included three specific questions that I would like to address individually. What are the specific reasons this increase is necessary? As I have mentioned, in addition to the general maintenance and upkeep of the system, there are large projects, some State and Regionally mandated, which must be completed including the move to Pull Secondary Treatment, the Groundwater Replenishment System, System Rehabilitation and other new mandated programs. Again, it is important to note that all of these activities exceed the normal maintenance that generally parallels inflation. What cost savings or cost cutting measures were considered? Each year, staff scrutinizes and prioritizes its needs. Last year, the District undertook an extensive audit of our capital improvement program. We reaffirmed our $2.4 billion CIP and reduced proposed capital improvement budget by $490 million by deferring, rescoping, or eliminating various projects. The change allowed the District to reduce this year's proposed sewer rate increase from 20 percent to 9.8 percent. In addition, last year through creative resourcefulness, $10 million in efficiencies were identified and implemented to mitigate increasing costs. Positions were eliminated and others were reduced in level. We are committed to this continual analysis to keep rates as low as possible. This year, we have identified a cost savings of approximately $9.3 million. Why should there be a vote now on future rates? The District is committed to these programs that protect public health and the environment. It is essential that there is an identified revenue stream that is tied to these activities. It would be irresponsible to start these needed programs without the commitment to complete them. If you have any further questions, please call me at 714/593.7550. Sincerely, Lorenzo FfAdmfnistrative er Director Services cc: Doug Davert, Vice Chair Jim Ferryman, Chair Jim Ruth, General Manager 1 comparison, of SFR. R- .. (Rates 00 M per U EM .rtes: 12822 Garden Grove Blvd. Ste. D, Garden Grove, California 92843 -2010 (714) 538 -5550 Fax(714)638 -6042 www.aaoc.com ?�43iJt�l i�. February 8. 2008 Council€nember Douglass Davert City of Tustin 300 Centennial. Way Tustin, CA 92680 Dear Councilmember Davert: The Apartment Association of Orange County (AAOC) urges you, as a Active Director of the Orange County Sanitation District, to oppose the current rate increase proposal that will be considered at the February 27 °i Board of Directors meeting. As you know, the proposal calls for a 10% rate increase this year, plus automatic 10% increases for the next four years; this translaites to a 61% rate increase over five years. In our opinion, such a large rate increase goes well beyond a rate adjustment necessitated by inflation. Currently, rental housing owners pay $127 per apartment. unit, if this proposal is approved rental housing owners will be paying $204 per apartment unit by 20.12. The rapid increase in sanitation rates, combined with the rapid increase in other costs; will in no doubt inflate the price to rent in Orange County. As a result rents will rise, not to increase- the profit margin of the owner, but'instead to cover the Cost of rising fees imposed by government. We acknowledge that some rate increases are necessary due to inflation, but a 10% annual increase is well over the line. Furthermore we believe that it is bats government policy for the board to vote for automatic increases for subsequent years. rather the board should only vote to adjust rates one year at a time. The excessive 61 % increase over five years is just too burdensome a cost to be imposed on business owners and housing providers. There are some important questions not answered in the notice concerning that rate increase that was Sent out by the Orange County Sanitation District. Questions include: What are the specific reasons such a large increase is necessary? What. if any, cost savings or coat cutting measures were considered before asking for these rate increases'? Why must tine Board vote now to increase rates in 2009.2010. 2011 . and 2012? At the February 27's Board Meeting plcasa consider the concerns in this Setter. We urge you to support more sensible sanitation ratesCouncibnemberCouncilmemberCottucitrneunber and oppose a rate proposal that automatically increases rates in future years. If you have any additional questions regarding AAOC's position on the sanitation rates, please contact the AAOC "s Director of Public Affairs, Ray Grangoff,'at (714) 638 -0015, Thank you for your time and service. Sincerely. Vicki Binford President Dean 7-arkos Vice President, Legislative Council JD aq