06-18-2019 - Item 16 - Public Hearing Regarding Citywide Sewer Service ChargeAGENDA ITEM NO. 16
AGENDA STAFF REPORT
City of West Covina | Office of the City Manager
DATE:June 18, 2019
TO:Mayor and City Council
FROM:David Carmany
Interim City Manager
SUBJECT:PUBLIC HEARING REGARDING CITYWIDE SEWER SERVICE CHARGE
RECOMMENDATION:
It is recommended that the City Council adopt the following resolution:
RESOLUTION NO. 2019-43 — A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF WEST COVINA, CALIFORNIA, APPROVING THE SEWER SERVICE CHARGES TO
BE COLLECTED ON THE 2019-20 TAX ROLL
BACKGROUND:
The Sewer Service Charge funds the maintenance and operation of the City’s sewer system. It is
charged annually to property owners on the property tax bill. A fixed fee is charged for each
residential dwelling unit and each 667-square feet of floor area for non-residential uses. The charge
is only collected from properties that are connected to the City’s sewer mains.
DISCUSSION:
Although sewer charges are exempt from voter approval under Proposition 218, if a new or
increased sewer charge is to be imposed at a rate that exceeds the previously adopted rates, the City
Council must conduct a protest hearing 45 days after mailed notice to property owners. If more than
50% of the property owners protest against the proposed rates, the new rates may not be imposed.
In Fiscal Year (FY) 2017-18, the City Council conducted a protest hearing regarding a five-year
schedule of sewer rates. Under this schedule, rates were proposed to increase from the proposed FY
2107-18 rate by 5% each year. Following the hearing, the City Council adopted the rate increases
for the subsequent five years. The remaining rates approved in those proceedings are as follows:
For Fiscal Year 2019-20
$74.40 per Service Unit
For Fiscal Year 2020-21
$78.12 per Service Unit
For Fiscal Year 2021-22
$82.02 per Service Unit
These rates have already been approved by the Council by Resolution No. 2017-55 and
automatically take effect each year.
On May 7, 2019, the City Council adopted Resolution No. 2019-27. That Resolution confirmed the
rates for FY 2019-20 and called a hearing to be held at the June 18, 2019 City Council Meeting
regarding a report listing the amount to be collected on the tax roll against each parcel in FY 2019-
20. The purpose of this hearing is to allow property owners to object if they believe that the amount
the City intends to collect against their parcel is incorrect. After the hearing, the City Council can
adopt a resolution that approves the charges listed on the report and orders the report be transmitted
to the County for collection on the tax roll.
The increase to the Sewer Service Charge for FY 2019-20 is from $70.86 to $74.40 (an increase of
approximately 30 cents per month or $3.54 per year) for residential dwelling units, and per 667
square feet of floor area for commercial units.
LEGAL REVIEW:
The City Attorney has reviewed and approved the staff report, resolution and Engineer's Report.
OPTIONS:
The City Council has the following options:
1.Adopt Resolution No. 2019-43, approving the charges for FY 2019-20 as set forth in the
Report; or
2.Adopt the Report with modified amounts; or
3.Provide alternative direction.
ENVIRONMENTAL REVIEW:
This item is exempt from the provisions of the California Environmental Quality Act (CEQA)
pursuant to Section 15061(b)(3)of the CEQA Guidelines in that it consists of the maintenance and
operations of the sewer system, which does not have the potential for causing a significant effect on
the environment.
Prepared by: Miguel Hernandez, Public Works Project Supervisor
Fiscal Impact
FISCAL IMPACT:
For Fiscal Year 2019-20, the Citywide Sewer Service Charge rates are proposed to be increased by
5% from $70.86 to $74.40 per unit per year and generate an additional $167,457 in sewer service
charge. The total proposed sewer rate is projected to generate a total of $3,519,434. In addition,
$210,000 is projected to be received from the pre-existing ad valorem (according to value) and
$15,000 from cash balance interest. The total projected revenue is $3,744,434. Including the
$3,637,426 balance from the previous year, the total funds available is $7,381,859.
The preliminary operating budget for Fiscal Year 2019-20 is $1,381,752. This includes an
administration and overhead charge of $171,530. The administration and overhead costs are derived
from support services provided by various departments including: City Manager’s office, City
Attorney’s office, City Clerk’s office, Finance Department, and Human Resources Department.
Support services include, but not limited to payroll, personnel recruitment, insurance claims, audits,
budgets, and purchasing. In addition, Staff is proposing to add six new Capital Improvement
Program (CIP) projects:
1.Sewer Main Replacement - portions of Glenview Road, Michelle Street, and Azusa Avenue
2.Upgrades to Sewer Lift Station at Police Department Building
3.Sewer Mainline Replacement - Azusa Avenue
4.Sewer Mainline Replacement - Citrus Street
5.City Hall Storm Water Lift Station
6.Catch Basin Trash Capture
The total cost of the proposed CIP projects is $2,675,000 for Fiscal Year 2019-20.
The Preliminary Financial Report for Fiscal Year 2019-20 contains the following components:
1.Budget and Revenue Summary
2.Proposed Assessment Rate
3.Revised Projected Reserve (Fiscal Year 2018-19)
4.Preliminary Sewer Charge Roll
There are no legal requirements or formal guidelines for the amount of reserves; however, at least
50% is required to cover cash flow. A reserve between 100% and 200% is recommended by staff to
cover cash flow, future capital improvement projects, emergencies, and as a benefit it also provides
interest income.
Attachments
Attachment No. 1 - Rate History
Attachment No. 2 - Preliminary Financial Report
Attachment No. 3 - Utility Operating Report
Attachment No. 4 - 10 Year Projection
Attachment No. 5 - Resolution No. 2019-43