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HomeMy WebLinkAboutMinutes 2010-02-17°~x~~s~`~~ MINUTE S o '" ~ CITY COUNCIL J O `~zIFOR~l~ OF THE CITY OF SOUTH SAN FRANCISCO CITY HALL LARGE CONFERENCE ROOM 400 GRAND AVENUE. WEDNESDAY, FEBRUARY 17, 2010 Call to Order 6:31 p.m. 2. Roll Call. Present: Councilmembers Gonzalez, Garbarino and Matsumoto, Vice Mayor Mullin, Mayor Addiego Absent: None. 3. Agenda Review No changes. 4. Public Comments -comments are limited to items on the Special Meeting Agenda. None. 5. Capacity fee revision analysis. Director of Public Works, Terry White went over background information and presented the analysis and options for fee revisions. He noted the City charges aone-time sewer capacity charge for a new development. This charge was intended to allow the City to recover costs associated with providing wastewater collection and treatment capacity to that development, both through existing infrastructure, and through future capital projects. Bartle Wells Associates ("BWA") was retained by the City to assist in updating the sewer capacity charge (currently called a sewer connection fee). The report presented to Council summarized the methodology, analysis and draft findings for this work. The primary goal of the study was to provide the City with updated analysis demonstrating a clear nexus between the sewer capacity fee and the new development paying the fee. The fee was last updated through a study in 2000, when it was set at $1360 per single family dwelling unit or equivalent dwelling unit ("EDU") and has since been increased to $1729 per EDU. In April 2009, average daily flows from the City to the treatment plant were approximately 5.46 million gallons/day. Total capacity is 13 million gallons/day with the City owning 73.08% and the remainder owned by the City of San Bruno. Table 1 on page 3 of analysis study was discussed and included information on flow capacity, bio-oxygen demand ("BOD") and total suspended solids ("TSS") counts per day. In determining the fee, the value of the system must be determined. To determine fair value of the assets, BWA uses the Replacement Cost New Less Depreciation ("RCNLD"). In total, the BWA estimates the fair value of existing capital assets is $161.223 million. The City has approved a five year CIP for sewer utility. Capital projects of note include: Reliability upgrades, Recycle Water Project and Solar/Wind/Cogeneration projects. BWA estimates the total system investment -existing and future projects included - is $188.791 million. Calculation of the fees was discussed, using table 4 from the analysis for detail. A survey of neighboring providers of sewer services was depicted in table 5, showing the City slightly below the median after the adoption of the new fees. South San Francisco currently had the lowest fees. After acceptance of the nexus report, BWA will present the findings of the study at a public hearing to consider changes to the sewer capacity fee, if necessary. Councilwoman Matsumoto questioned the time frame for the CIP projects and if the rate structure for the compared cities was known. Director White referred to page 6, table 3 and stated the current rates were based upon the values of the BWA study. Going back to 2000, the City had been put on notice in 1997 to make substantial improvements to the plant. An investment of $78 miilion has been made over the last 10 years. It stands to reason that the fee would increase substantially to coincide with the value of the plant. Technical Services Supervisor, Cassie Prudhel stated the Daly City connection fee as of 2003 was $2600 per single family resident. Vice Mayor Mullin questioned the time horizon of when the existing and future projects would be completed, arriving at the $188 million total and whether the value would be revisited at the end of the horizon. Director White noted the $188 million represented the current value plus a $30 million investment above and beyond; clarifying the discussion covered a 5 year time horizon. Councilman Gonzalez asked when the matter would be taken to the public. Director White stated if the direction was to move forward, it would probably be seen the first or second meeting of March for public hearing, adopted and implemented within 30 days. Councilman Gonzalez noted an increase would be a tough sell during these times and questioned how long it would take to see the increase. City Manager Nagel noted the increase would be for new construction, new homes and new connectivity. In regards to fees, Director White noted in 2000 the City's rate was where it should have been but probably started to lag behind beginning in 2003/04 due to improvements made to the treatment plant in 2002. Councilman Garbarino clarified the City was behind a substantial 3 or 4 years. SPECIAL CITY COUNCIL MEETING FEBRUARY 17, 2010 MINUTES PAGE 2 Mayor Addiego noted little depreciation and questioned how the schedule was built. He questioned if depreciation was heavier, would it lessen total value and bring down capacity fee? Director White stated it was modeled by taking averages of new pipe and old pipe. Most pipes were advertised with life span of 50 years and we have a fair share beyond that goes beyond 50 years. He believed no model ever looked at it as being completely depreciated. Further depreciation could lower the capacity fee. Councilwoman Matsumoto asked if this was the type of pipe that was referred to by Director White during his report on the news. Director White responded yes, they were unreinforced terra cotta or clay pipe. Mayor Addiego noted the SKS project was a billion dollar project and this increase would be tenths of a percent. Vice Mayor Mullin questioned if the language would need to be changed in the memorandum of understanding ("MOU") with SKS. Attorney Mattas stated the MOU vas nonbinding. Binding documents were expected the latter part of year, early into next year. At that point SKS is assumed to go forward with a DA then try to lock fees in based on documented fee structure at that time. Assistant City Manager Ver_ Duyn added that the City's strength lied in the fact that it could move and grow companies. He believed this would be recognized as we start flushing out more fee study data. He also noted the market place was getting tougher and more fees were being charged because this was one of the only way things get financed. P~~layor Addiego noted his surprise to see heavier fees in the BAE study in regards to fees other than sewer capacity. Manager Nagel stated staff would be considering other fees, such as the park fee, in the near future. Council gave direction for staff to move forward and present the matter at a public hearing. 6. Review of alternate sewer rate structure "dynamic pricing." Director White noted the levels of protest received by the Rotary Plaza and individual home owners in multi-unit buildings during last year's review/increase of sewer rates. Though a rate structure was put in place, Council directed staff to go back and look into dynamic pricing and how rates could be charged differently. The result of the study was presented to Council and included information on Parcel Use Classifications, Annual Rate/unit Rate, Dynamic or Tiered Rate structures and timeline for actions needed fora 2010-11 rate change for compliance with Proposition 218. SPECIAL CITY COUNCIL MEETING FEBRUARY 17, 2010 MINUTES PAGE 3 Classes were noted as the following: Residential, Institutional (schools, colleges, rest homes, hospitals, clubs, lodges and similar class of uses), and Commercial and Non-monitored Industrial Classes. Strength of usage included light and moderate strength users. Following the plan adopted last year, proposed schedule of rates would increase by 10% for years 2010-11, 5% in 2011-12, and 0% for years 2012-2014. Total number of South San Francisco users was reported as 14,229. Of total water consumed, 65% was residential and 35% included all others. Based upon operation budget, debt service, plus current CIP budget funding and anticipated expenditures, if all numbers hold true, $1.3 million will be put into reserves. However, that was a target number and not guaranteed. A breakdown of multi-unit dwellings was reviewed, identifying the number of complexes and units within the complexes throughout the City. The multi-unit breakdown excluded the Westborough area as everything west of the 280 flowed from Daly City. Mayor Addiego clarified with a representative from Rotary Plaza their complex had 181 units. Director White went onto discuss the Dynamic or Tiered sewer rate options as followed: 1) Convert all users to water consumption base rates. Set a cost of $5.50/hcf plus a minimum base rate/administrative fee. It was recommended that this be done through a private biller. All commercial users would remain the same as they are based on water plus loading fee multipliers. Consumption based would see an increase in dollars because you would most likely see a spike because people do not realize how much water they actually consume. Once people got use to it, the usage would fall off. Residential rates could jump frorr~ $4b1 to as high as $700. Proposition 2 i 8 guidelines would need to be followed because of the very real possibility of a rate payer exceeding the current maximum charge. Councilwoman Matsumoto and Mayor Addiego questioned water consumption for landscaping. Finance Director Jim Steele noted the City could not charge users for sewer based on landscaping usage. Councilwoman Matsumoto requested clarification as to what was meant by false indicator. Manager Nagel stated with set rates, people would start conserving and we would see numbers go down over time and capturing that $17 million may not happen whereas with a flat rate with a price escalator, it would be likely to reach the $17 million. Director White stated the false indicator had much to do with the cost of operations and felt we would need to have experience to know if we had set the rate correctly. --___ SPECIAL CITY COUNCIL MEETING FEBRUARY 17, 2010 MINUTES PAGE 4 Supervisor Prudhel noted most cities that base charges on flow also have a base rate and then charge per flow above that. A minimum rate of $250 seemed standard. This information was included in the analysis. 2) Provide Multi-unit price break. Multiple unit buildings would receive a price break of 10% per unit reduction up to 12 units, a 15% break for up to 24 units, and a 20% break for 48 units and above. For this option, if the multi-unit rates drop, the single family home fee would have to be raised from $461 to $493, approximately 7%. 3) Rates based on consumption with incentives for conservation. Base residential rates would remain the same, however, based on flow data, a reduction in cost or credit is applied to the following year's rate if the amount consumed is less that 7500 (75hcf) cubic feet of 10% of rate and a 20% reduction if less than SOhcf. Conversely, if more that 100hcf is consumed there is a 10% penalty and if more that 150hcf is consumed there is a 20% penalty. This option would be based on the edu. The gross user would not be rewarded. Councilwoman Matsumoto and Vice Mayor Mullin both expressed interest in this option. The Councilwoman felt it would level the playing field. The Vice Mayor wanted more information of the 218 process it would surely trigger but also wanted to know how Director White felt about the certainty of income with the incentive approach versus the other types of dynamic pricing options. Director White felt it could be more controllable and therefore more predictable by looking at the average use and setting the bar at a rate that people could actually conserve. IJe felt more comfortable knowing what the income level would be by setting realistic goals that could be adjusted. Vice Mayor Mullin asked if there were any benefits to dealing with conservation proactively even though mandates were on their way. Director White didn't know of any benefit other than South San Francisco establishing the model. Assistant City Manager Van Duyn felt maybe it could make us more eligible/competitive for grants and matching funds or for other financial incentives to come our way. Resident Teresa De Laurentis stated she owns two (2) four (4) unit apartment buildings. She started tracking her usage beginning in January of 2009 at her and reported the numbers as being half of what was used at her 8 unit building. She pays $461 for her home and $3688 for her building. In her opinion, trailers have their own tier so she felt multi-units should have their own tier as well. SPECIAL CITY COUNCIL MEETING FEBRUARY 17, 2010 MINUTES PAGE 5 4) Remove multiple unit dwellings from residential rate. Reclassify residential multiple units into the commercial category above institutions. Abase rate fee would be set for multiple units and an increase from the current rate for all others would offset this decrease. This option would set the multi-unit rate at $372, but would necessitate an increase in single family homes by 7.11 % or $494. Director Steele noted the Proposition 218 process would need to be followed for this option because of the increase for some rate payers. If there was just a price break, the process would not be required. Councilwoman Matsumoto asked if studio and three bedroom units would be considered the same. Director White stated the plan was devised in a simplistic approach and that area was not explored. He explained there are options within the options such as whether rate would be determined based on fixtures or other factors. Dave Dietrich, resident and owner of a seven unit building on Grand Ave, expressed displeasure over the idea that units should have to pay the same rate as a single family home. The usage at his home compared to the units had a drastic difference. Recently his complex had a fire, he questioned if he would receive a rebate due to the fact that the affected units would not be used for 1 year. He expressed frustration and stated the current system made no sense. In his opinion, if someone used 100 gallons, they should be charged for 100 gallons. Mayor Addiego requested Mr. Dietrich to address the chair and stay on topic. Mr. Dietrich continued that if it was about capacity then we need to address capacity, amounts per unit should be equal. He felt it was not right to pass it on to the tenant as they can only afford so much. Mayor Addiego felt perhaps Option 1 seemed best in its purest form, but noted there were pitfalls. Director White stated essentially those were the four options devised and continued to go over the various outcomes expected based on some previous usage and raw numbers. Director Steele cited these figures as examples and noted that every city has different structures for example; Daly City and San Mateo base their rates on water usage during winter months. Director White noted it was hard to take specific examples so averages were used. In the first option, income would spike up $350,000 in the first year. In second option we would collect $321,000 less. With the third option based on consumption, if 10% breaks were given to households who met conservation target, we could lose $361,000 in income, 20% break would result in a loss of $1.7 million. However, an offset was not factored in if practices and levels of SPECIAL CITY COUNNCIL MEETING FEBRUARY 17, 201 C MINUTES PAGE 6 chemicals used were reduced to make up lower treatment costs. Option four, the rebalancing option, would not change anything from an income perspective but rather try to rebalance what rate payers pay based upon perceived usage of what those average consumptions really are. Ms. De Laurentis asked how she could be charged 7 times $461 for apartments that have one bathroom with a toilet, sink and shower and then somebody who owns a 5 bedroom home is charged the same amount. She reiterated her opinion that single family homes and apartments should not be on the same tier. Mayor Addiego reminded attendees that the inequities spoken of brought about the analysis and meeting. Director White provided a snapshot of what the surrounding cities charged and methods of collection. Director Steele stated the survey could be redone multiple times. Ms. De Laurentis asked if other cities charge a flat rate like South San Francisco does and if there were any cities that had separate tiers for houses, apartments and trailers. Director White noted that some cities, such as Redwood City, charged flat rates. He was unsure of how any of the cities listed tiered, if at all. Analyst Prudhel verified online the flat rate was the same for all residential units. Director Steele believed that rates based on water consumption corrected for any issues. Director White stated the data used was collected by Redwood City, and was collected from all over the bay area. Analyst Prudhel stated that most of the surrounding cities have a base rate and charge per unit on top of base rate. William Harrison and Dennis Rosaia spoke on behalf of Rotary Plaza and thanked staff for the excellent analysis. They felt consumption based rates were more equitable and noted further that some jurisdictions take water cost and make sewer fee a factor of that. This helped accomplish the objectives of dealing with all the other inequities of the system. Analyst Prudhel noted some cities do tie sewer and water together monthly. Councilman Gonzalez related an incident some years back involving the complaints from a tenant of a mixed use building that included a restaurant on the bottom and apartments on top. At that time he was told it was measured by effluent water. Is it possible to measure in this manner? Director White stated people could install an effluent flow device but this would require self reporting of the numbers followed by an inspection. Measurements could be taken from a building, but not individual units. SPECIAL CITY COUNCIL MEETING FEBRUARY 17, 2010 MINUTES PAGE 7 Councilman Gonzalez understood the operating costs would probably negate the savings. Councilman Garbarino asked if basing the fee on actual usage would benefit Rotary Plaza. Mr. Harrison responded yes, absolutely. Director White explained the Proposition 218 requirements and timeline for any change to the system and reiterated that if rates were increased, the process would start all over again. It would be identical to what was done in May of 2009, involving noticing and mail in ballots. A majority of 8000 plus 1 would be needed to stop the action. Manager Nagel added the notice would be on the new range of rates, estimated to be from $400 to $600. Director Steele added 218 rates have to be based on analysis of true cost of delivering the service. Mayor Addiego questioned if we could do that with just multi family and use single family as is, looking at the greatest inequities like Rotary Plaza and Antoinette Apartments. The Mayor recalled the issue being raised at a subcommittee meeting. Was this a merited idea? Attorney Mattas stated rates could be lowered without requiring the 218 process, but additional funds could not be collected without the process being implemented. He further stated the focus could be on certain use categories but analysis on tracking would need to be done, trailing it by one ;year. Director White responded that rebalancing would still need to be done, keeping the income level the same while adjusting the rate based on usage. Ms. De Laurentis questioned why the increase was set at i 0%. Director White noted the rate would sunset to zero, but the main reason was to meet the state requirements. Mayor Addiego noted the sewage plant stands alone. None of the money ends up at City Hall, these dollars are what it takes to operate plant and the City was not in control of what that required. Director White requested Council's direction. Mayor Addiego wanted to be equitable throughout town and felt the multi family approach should be used. Councilwoman Matsumoto noted that with the way zoning was going, multi-family was the future of South San Francisco as it was with most cities. Vice Mayor Mullin questioned if the homework and analysis could be done and amulti-family rate system developed in time for Council action by July. SPECIAL CITY COUNCIL MEETING FEBRUARY 17, 2010 MINUTES PAGE 8 Director Steele and Mayor Addiego noted that the multi-family approach would still have to be looked at relative to the whole system. Director White felt the 218 process was inevitable. Vice Mayor Mullin questioned whether it could come up for review in the 2011/2012 budget process. Director Steele commented the rates would be brought back next year to be certified at a public hearing. Noticing would not be required unless the structure was changed. Manager Nagel stated if Council liked the idea of the structure being based on water usage, staff could look at it citywide, but that it could not be done this go-around as triere was a schedule in place. Mayor Addiego stated there was no advantage to calling out one group and felt Option 1 was the most equitable. Manager Nagel stated he thought it could be looked at during the next cycle. Council reached a consensus and gave direction for staff to move forward with Option 1. Meeting Recessed: 8:35 p.m. Meeting Resumed: 8:42 p.m. 7. Recommendation to replace Quint 65 with a fire engine. Fire Captain Paule Medeiros presented the staff report highlighting the Department's history and need for replacing the Quint 6~ with a fire engine. In May of 1993 the Fire Department embarked on a 3-year plan to: 1) provide increased level of service to residents, 2) ensure a cost effective and efficient administration, and 3) reduce Departmental operational costs. Captain Medeiros provided clarification on the differences between a truck, quint and engine. Currently the department owned three (3) fire engines, two (2) quints, and two (2) rescue ambulances. In 1993, the decision to replace the truck company with a quint helped the Department achieve some of its then goals. However it has proven to be a costly decision and should be reviewed before deciding to replace the Quint 65 with another quint. Operating costs analysis and comparison on the Quint 65 and a fire engine was provided, showing the costs of maintaining a quint to be significantly higher than the costs of maintaining a fire engine. Analysis and comparison of replacement costs was also provided, and again showed a significant savings should the quint be replaced with an engine. Lastly, the operational benefits of having two (2) quints had also shown to be limited, particularly since the development of the San Mateo SPECIAL CITY COUNCIL MEETING FEBRUARY 17, 2010 MINUTES PAGE 9 County Automatic Aid Agreement in 1996, which facilitated the sharing of fire apparatus between jurisdictions. Councilwoman Matsumoto recalled an issue being the height of buildings. What if a plane were to crash into Centennial Towers? Captain Medeiros stated fires occurring in buildings five (5) stories or higher are typically fought internally and noted that regulations make it physically impossible to park next to locations. The quint only makes it to the fifth floor. Ladders on the truck company reach 105 ft, increasing the distance and ground ladders help as well. Ground ladders are used for rescue, but rescues occur internally above the fourth floor. Mayor Addiego recalled the wild land fire in Brisbane. County dispatch told Station 65 to go to Brisbane and there was no one there for quite a while. He wanted to understand what happened that evening as people in the neighborhood who felt they were going to be affected went to their fire station to find it empty. They thought all of their equipment had moved to Brisbane. He asked the Chief what he would do in that situation today and questioned if Station 61 was the right place for the engine rather that 65. Fire Chief Phil White commented Station 61 was covering to minimize the response time. Today he would activate the CERT team and use off duty personnel. The Chief believed 61 to be the correct station because even though there was fire coming over the hill, the greater risk was receiving a medical, and being ready for that. He felt it was a "Darned if you do, darned if you don't" si±~~ation. Captain Medeiros went on to explain how Quint 65 is not recognized as an engine or truck in the County system. This omission causes a burden on the responding city when central dispatches an engine to cover a fire in South San Francisco. Captain Medeiros stated meetings with staff and line personnel to discuss apparatus needs would continue. In conclusion, Captain Medeiros stated replacing Quint 65 with a fire engine would still allow the Department to realize its 1993 goals in addition to greatly reducing the impact on the City's vehicle replacement fund and have no negative impact on Department emergency operations. Councilman Gonzalez asked what would happen to the quint. Captain Medeiros responded it would be put on reserve for another five (5) years. He noted that the life span of a quint is 15 years frontline and five (5) years reserve. Captain Medeiros stated the last engines purchased were still front line at 22 years old. The Chief stated quints had historically been a contentious topic is South San Francisco. Because of this past, staff wanted to bring it before Council and get direction. There was no further action required; but when the item comes up in the 2010/1.1 budget, the Department would be able to go forward. Director Steele stated budget documents would not have a discussion on quint versus engine but would include a budget for specific vehicles in specific years. SPECIAL CITY COUNCIL MEETING FEBRUARY 17, 2010 MINUTES PAGE 10 Councilman Gonzalez asked if the engine and parts were made in the United States to which Captain Medeiros responded yes. Council approved of the Fire Departments assessment and directed staff to proceed. Adjournment. Being no further business, Mayor Addiego adjourned the meeting at 9:30 p.m. Submitted: Approved: --~-- -~ ,..,.. .. " l~~ Krista M~-~in~i-Larson Mark Addiego Clerk, City of South San Francisco Mayor, City of South San Francisco SPECIAL CITY COUNCIL MEETING FEBRUARY 17, 2010 MINUTES PAGE 11