06-23-2020 - AGENDA ITEM 04 PUBLIC HEARING REGARDING WEST COVINA CITYWIDE SEWER SERVICE CHARGES TO BE COLLECTED ON TAX ROLL FOR FY 2020-21AGENDA ITEM NO. 4
AGENDA STAFF REPORT
City of West Covina I Office of the City Manager
DATE: June 23, 2020
TO: Mayor and City Council
FROM: David Carmany
City Manager
SUBJECT: PUBLIC HEARING REGARDING WEST COVINA CITYWIDE SEWER SERVICE
CHARGES TO BE COLLECTED ON TAX ROLL FOR FY 2020-21
RECOMMENDATION:
It is recommended that the City Council adopt the following resolution:
RESOLUTION NO. 2020-61— A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
WEST COVINA, CALIFORNIA APPROVING THE SEWER SERVICE CHARGES TO BE
COLLECTED ON THE FISCAL YEAR 2020-21 TAX ROLL
BACKGROUND:
From 1968 to 1978, the City of West Covina funded the costs of sewer maintenance and operation through the
Improvement Act of 1911, which provided an ad -valorem (according to value) levy used to pay for these costs.
With the passage of Proposition 13, the revenues generated from the 1911 Act were reduced considerably,
which made it necessary to find an alternative method of funding sewer maintenance and operation costs. In
Fiscal Year 1978-79, the City Council established the Citywide Sewer Service Charge pursuant to Section
38902 of the Government Code as that alternative method.
The Sewer Service Charge funds the maintenance and operation of the City's sewer system assuring that lines
are clear and flowing properly. This includes routine video inspections, jetting, and cleaning of sewer lines.
The fees also fund capital improvements including purchase of sewer equipment and
rehabilitation/replacement of sewer mainlines and appurtenances. The Sewer Service Charge 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.
State law requires that a specific procedure be followed to collect the Citywide Sewer Service Charge on the
annual property tax bill. The initial step is to adopt a resolution setting a date for a public hearing on the
proposed rates and method of collection. The process requires that a public notice be published in a locally
circulated newspaper announcing the public hearing. Mailing notices to each property owner is only required
when the charges are increased above the current Consumer Price Index (CPI). At the regular meeting of May
5, 2020, the City Council reviewed the proposed rate increase and set June 16, 2020 as the date for the public
hearing. On June 16, 2020, the City Council continued the public hearing to June 23, 2020.
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WHEREAS, the City Council now desires to cause the collection of the sewer service
charges as listed in the Report.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF WEST COVINA,
CALIFORNIA DOES HEREBY RESOLVE AS FOLLOWS:
SECTION 1. The City Council determines that the charges set forth in the Report are
correct and approves each such charge.
SECTION 2. The City Clerk is directed to file a copy of the Report with the Los Angeles
County Auditor -Controlled pursuant to Section 5473.4 of the California Health & Safety Code.
SECTION 3. The City Clerk shall certify to the adoption of this resolution and shall enter
the same in the book of original resolutions and it shall become effective immediately.
APPROVED AND ADOPTED this 23rd day of June, 2020.
Tony Wu, Mayor
APPROVED AS TO FORM ATTEST
Thomas P. Duarte Lisa Sherrick
City Attorney Assistant City Clerk
I, LISA SHERRICK, Assistant City Clerk of the City of West Covina, California, do
hereby certify that the foregoing Resolution No. 2020-61 was duly adopted by the City Council of
the City of West Covina, California, at a special meeting thereof held on the 23rd day of June,
2020, by the following vote of the City Council:
AYES:
NOES:
ABSENT:
ABSTAIN:
Lisa Sherrick, CMC
Assistant City Clerk
11/24/2020
Print Staff Report
DISCUSSION:
Although sewer charges are exempt from voter approval under Proposition 218, if a new or increased sewer
charge is to be imposed (more than the CPI increase), 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 fees, the
new/increased fees may not be imposed.
In Fiscal Year 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 Fiscal Year 2017-18 rate by 5%
each year. The City did not receive majority protest against the proposed increase. Following the hearing, the
City Council adopted the rate increases for the subsequent five years. The remaining rates approved in those
proceeds are as follows:
For Fiscal Year 2020-21
• $78.12 per Service Unit
For Fiscal Year 2021-22
• $82.02 per Service Unit
The Council approved these rates in 2017 by Resolution No. 2017-55. The rates automatically take effect each
year.
On May 5, 2020, the City Council adopted Resolution No. 2020-36, declaring its intention to collect sewer
service charges on the County tax roll for Fiscal Year 2020-21 and setting June 16, 2020 for the public hearing
regarding the charges to be collected. On June 16, 2020, the City Council continued the public hearing to June
23, 2020. The purpose of the 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 Fiscal Year 2020-21 is from $74.40 to $78.12 (an increase of
about 31 cents per month or $3.72 per year) for residential dwelling units, and per 667 square feet of floor area
for commercial units.
LEGAL REVIEW:
The City Attorney's Office has reviewed the resolution and approved it as to form.
OPTIONS:
The City Council has the following options:
1. Adopt Staff's recommendation to increase assessment rate by 5% based on the Sewer System Revenue
Sufficiency Analysis to increase revenues and stabilize the reserves for Fiscal Year 2020-21; or
2. Maintain the assessment rates at their current level; reserves would be depleted sooner and result in the
need to reduce services or subsidize the district with General Funds; or
3. Provide alternative direction.
Prepared by: Michael Ackerman, City Engineer
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11/24/2020
Print Staff Report
Fiscal Impact
FISCAL IMPACT:
For Fiscal Year 2020-21, the Citywide Sewer Service Charge rates will increas by 5%, from $74.40 to $78.12
per unit per year and generate an additional $178,942 in sewer service charges. The total proposed sewer rate
is projected to generate a total of $3,698,376. In addition, $210,000 is projected to be received from the pre-
existing ad valorem (according to value) and $4,948, from cash balance interest. The total projected revenue
is $3,910,324. Including the $2,474,136 balance from the previous year, the total fands available is
$6,387,461.
The preliminary operating budget for Fiscal Year 2020-21 is $2,277,377. This includes an administration and
overhead charge of $139,901. 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 are not limited
to, payroll, personnel recruitment, insurance claims, audits, budgets, and purchasing.
The Preliminary Financial Report for Fiscal Year 2020-21 contains the following components:
1. Budget and Revenue Summary
2. Proposed Assessment Rate
3. Revised Projected Reserve (Fiscal Year 2019-20)
4. Preliminary Sewer Charge Roll
Attachments
Attachment No. 1 - 15 Year Rate History
Attachment No. 2 - Engineer's Report
Attachment No. 3 - 10 Year Fiscal Projection
Attachment No. 4 - Resolution No. 2020-61 (Citywide Sewer Service Charges)
CITY Enhance City Facilities and Infrastructure
COUNCIL Enhance the City Image and Effectiveness
GOALS &
OBJECTIVES:
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ATTACHMENT NO. 1
West Covina
Citywide Sewer Service Charges
15 Rate History
r
Unit/Month
Proposed Rate
UnIVYear
2020-21
$6.51
$78.12
2019-20
$6.20
$74.40
2018-19
$5.91
$70.86
2017-18
$5.62
$67.49
2016-17
$4.69
$56.24
2015-16
$4.61
$55.30
2014-15
$4.59
$55.02
2013-14
$4.54
$54.48
2012-13
$4.44
$53.31
2011-12
$4.36
$52.26
2010-11
$4.19
$50.25
2009-10
$3.81
$45.68
2008-09
$2.76
$33.10
2007-08
$2.34
$28.05
2006-07
$2.16
$25.97
ATTACHMENT NO. 2
City of West Covina
Citywide Sewer Service Charge
FISCAL YEAR 2020/2021
PRELIMINARY FINANCIAL REPORT
Intent Meeting: May 5, 2020
Public Hearing: June 16, 2020
W WILLDAN
-A/W I L L DA N
BUDGET AND REVENUE SUMMARY
Previous Fiscal Year Fund Balance $2,474,136
Revenues
Assessment Income (Total Balance to Levy) $3,698,376
Property Tax Revenue (Ad Valorem) 210,000
Interest 4,948
Total Projected Revenue $3,913,324
Expenditures
Operating
Maintenance
Personnel Services
$999,318
Material and Services
88,643
Professional Services
291,852
Maintenance Contracts
105,541
Utilities
10,000
Vehicles
24,700
Fuel and Oil
15,617
Property & Liabilti Insurance
146,098
Total Maintenance
$1,681,769
Engineering & Incidental
Personnel Services
$383,553
Materials & Services
10,330
Consultant Services
23,767
Property & Liability Insurance
5.272
Administration & Overhead
139,901
Total Engineering & Incidental
$562,823
Community Enhancement
Personnel Services
$32,785
Total Community Enhancement
$32,785
Capital Improvement
$0
Total Operating and Capital Budget
$2,277,377
Ending Fund Balance
$4,110,083
'Totals may not foot due to rounding
2020-2021 City of West Covina -Citywide Sewer Service Charge Page 1
W"W I LLDAN
PROPOSED ASSESSMENT RATE
In Fiscal Year (FY) 2017-18, the Citywide Sewer Service Charge (the "Sewer Service
Charge") rate was increased by 20% and is proposed to increase by 5% thereafter for
four (4) years. For FY 2020-21, the rate will increase from $74.40 to $78.12 per unit, for
an increase of approximately 31 cents per month or $3.72 per year. The following table
shows proposed rate increases:
$67.49 $70.86 $74.40 $78.12 $82.02
Residential 1 DU = 1 unit
Commercial 667 s . ft = 1 unit
Notice of said increases were sent to landowners in FY 2017-18 in accordance with the
provisions of Proposition 218 indicating the proposed rates and the date of public hearing.
The City of West Covina (the "City") did not receive majority protest against the proposed
increase, the City may now impose the Sewer Service Charge at the maximum proposed
level or less.
REVISED PROJECTED RESERVE
Fund Balance (as of 6/30/19) $ 3,637,426
Projected Revenue for FY2019-20 3,520,992
Appropriations (Operating & Capital) for FY2019-20 (4,684,282)
Projected Fund Balance (as of 6130119) $ 2,474,136
PRELIMINARY SEWER CHARGE ROLL
The FY 2020-21 preliminary sewer charge roll is voluminous, has been submitted to the
City Clerk, and is hereby included by reference.
2020-2021 City of West Covina -Citywide Sewer Service Charge Page 2
ATTACHMENT NO.3
Assessment Income
Interest (1)
Property Tax Revenue (Ad Valorem)
Prior Year Balance
Total Funding
Maintenance Costs (2)
Capital Improvements
Total Cost
Ending Balance
Charaes oer Unit
West Covina Citywide Sewer Charges
10 Year Fiscal Proiection
$3,698,376 $3,883,295 $3,883,295 $3,883,295 $3,883,295 $3,883,295 $3,883,295 $3,883,295 $3,883,295 $3,883,295
4,948 8,220 11,777 15,249 18,632 21,926 25,128 28,235 31,246 34,159
210,000 210,000 210,000 210,000 210,000 210,000 210,000 210,000 210,000 210,000
2,474,136 4,110,083 5,888,673 7,624,363 9,316,135 10,962,956 12,563,769 14,117,495 15,623,034 17,079,265
$6,387,460 $8,211,598 $9,993,746 $11,732,906 $13,428,062 $15,078,177 $16,682,191 $18,239,025 $19,747,575 $21,206,718
2,277,377 2,322,925 2,369,383 2,416,771 2,465,106 2,514,408 2,564,696 2,615,990 2,668,310 2,721,676
0 0 0 0 0 0 0 0 0 0
$2,277,377 $2,322,925 $2,369,383 $2,416,771 $2,465,106 $2,514,408 $2,564,696 $2,615,990 $2,668,310 $2,721,676
$4,110,083 $5,888,673 $7,624,363 $9,316,135 $10,962,956 $12,563,769 $14,117,495 $15,623,034 $17,079,265 $18,485,042
$78.12 $82.02 $82.02 $82.02 $82.02 $82.02 $82.02 $82.02 $82.02 $82.02
Notes: (1) Interest is 0.4 % of one-half of the previous year ending balance.
(2) 2 % increase in maintenance cost each year due to inflation.
ATTACHMENT NO.4
RESOLUTION NO.2020-61
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
WEST COVINA, CALIFORNIA, APPROVING THE SEWER
SERVICE CHARGES TO BE COLLECTED ON THE FISCAL
YEAR 2020-21 TAX ROLL
WHEREAS, on June 26, 1978, in accordance with Section 38902 of the California
Government Code, the City Council adopted Resolution No. 5726, establishing a sewer service
charge exclusively for sewer operation, mlmtenance, and capital costs. The City collects the sewer
service charge as part of the property tax roll; and
WHEREAS, on April 27,1987, the City Council adopted Resolution No. 8019, amending
Resolution No. 5726 to adjust the schedule of charges so that the fees collected bear a reasonable
relationship to the cost of providing the services; and
WHEREAS, on June 6, 2017, the City Council adopted Resolution No. 2017-55, adopting
a five-year schedule of annual sewer service charges for Fiscal Years 2017-18, 2018-19, 2019-20,
2020-21, and 2021-22; and
WHEREAS, the five-year schedule was adopted following proceedings conducted
pursuant to Article X111 D, Section 6(a) of the California Constitution, which was added to the
California Constitution in 1996 as part of Proposition 218; and
WHEREAS, a report has been filed with the City Clerk containing a description of each
parcel of real property receiving sewer services and the amount of the charge for each parcel for
Fiscal Year 2020-21, computed in conformity with the schedule of charges previously adopted by
the City Council (the "Report"); and
WHEREAS, the Report is on file in the Office of the City Clerk, available for public
inspection, and incorporated herein by reference; and
WHEREAS, by Resolution No. 2020-36, adopted on May 5, 2020, the City Council
elected to collect the sewer service charges for Fiscal Year 2020-21 on the tax roll in the same
manner, by the same persons, and at the same time as, together with and not separately from, the
City's general taxes; and
WHEREAS, Resolution No. 2020-36 also set June 16, 2020, at 7:00 p.m in the City
Council Chambers located at 1444 West Garvey Avenue South in the City of West Covina as the
time and place for a public hearing (the "Hearing') on the Report. On June 16, 2020, the City
Council continued the Hearing to June 23, 2020; and
WHEREAS, notice of the Hearing was published as required by law; and
WHEREAS, at the Hearing, the City Council heard and considered all objections or
protests, if any, to the Report; and