Loading...
HomeMy WebLinkAboutMinutes 1996-05-29 Mayor Jack Drago Council: Joseph A. Fernekes Eugene R. Mullin --John R. Penna Robert Yee MINUTES City Council Municipal Services Building Community Room May 29, 1996 VO£.5o AGENDA ADJOURNED REGULAR MEETING CALL TO ORDER: (Cassette No. 1) ROLL CALL: Study session to discuss the WQCP sewer rates and the stormwater sewer rates ~D ~ 7 ACTION TAKEN ADJOURNED REGULAR MEETING 7:07 p.m. Mayor Drago presiding. Council Present: Council Absent: Fernekes, Mullin, Yee and Drago. Penna. Mayor Drago noted that San Bruno cut their sewer rates and are laying off people. Director of Public Works Gibbs stated that following notice of individual stormwater fees per parcel the Council must hold a public hearing to hear protests and levy assessments which will be adopted on the second meeting of July for the County deadline of August 1st. He related: Council had the staff report that out- lines the program and the budget based on the fees collected and the amount of monies disbursed; there was a total of $412,517 for this year, of that $247,241 went to the drainage at the Corporation Yard, $124,111 to administration costs and $41,165 budgeted for inspection costs; left in the account is $69,000 because we did not hire an inspector; the balance will be carried over to the 1996-1997 bud- get; expect to accumulate the same amount of money this current year with the same amount going to the Street Department for drainage; they reduced it by $53,000 that will increase the balance; Council may want to handle the surplus by a onetime $8.00 re- duction in rates; the $247,241 does not cover all the drainage problems. Discussion followed: what is the intrusion into the General Fund for the drainage system; another two people; staff pays for 2.5 people out of this pro- gram and the actual staffing for the Corporation Yard is four; we can put money in the Yard or 5/29/96 Page 1 AGENDA ACTION TAKEN S._..tudy session - continued. 5/29/96 Page 2 expand the business outreach; etc. City Manager Wilson related: because of the sensi- tivity acquired last year on the rates, Mr. Gibbs looked at how we can meet our obligations and cut costs; it appeared that by blending positions he could meet objectives; at the last meeting Mr. Gibbs gave Council a table showing the combination of func- tions that will save dollars; etc. Director of Public Services Gibbs continued: he used some of the fund balance for the Yard; he estimates a $121,000 surplus this year prior to gen- erating a surplus next year; need direction on wheth- er to do nothing with the fund balance or increase the fund balance in the future or decisions can be made at the hearing perhaps through a reduction in rates or enhancement of existing services; etc. Discussion followed: bringing everyone's rates down by $5.00 or from $9.00 to $6.00; the biggest bulk of the tax comes from the industrial sites; the rates should be reduced equally; reduce all rates 10%; if that amounts to $1.00, then it is okay, but not if it means twenty cents; supposedly this pro- gram has two and a half more years to go; can any of the fund balance be used for the Treatment Plant; the City is cross-utilizing people; there is infil- tration of stormwater into the sewers, so if their pipes are bad they could be paying for the Plant; the City can do sewer capital improvements; could do a one time expenditure and apply the fund balance to storm drains to try to prevent more intrusions, if it saves money at the Plant; we can use the fund for consultants for the EIR, for we have a big problem there; Councilman Yee stated the Council cannot co- mingle the funds; if the Council does nothing the balance stays in reserves; staff is hearing that the wastewater program will never end; it is politically unwise to raise rates and have another balance; the Council could work on an economic development program where they assist businesses that have to do improvements and subsidize some of the improve- ments; the improvements are a horrendous problem due to the laterals being old and underneath and they must ask Montgomery to put together a proposal to come to a conclusion of how massive the problem is; they may have to put in another force main; the Plant Superintendent has seen as much as ten to twelve million gallons of water in the storm drains when the normal is 8 million; whether to treat all AGENDA ACTION TAKEN ...~Study session - Continued. 5/29/96 Page 3 the water through the stormwater rather than it running down the street and into Colma Creek; Mayor Drago asked what is the actual savings and can that be used for the Treatment Plant; etc. Director of Public Works Gibbs stated he had Corroio Engineering people and Laura Stowell of Bartel & Wells present to give an outline of the plant expansion, the rate structure is included and the CIP funding. He related: $2 million in im- provements of infrastructure with wastewater and storm drains; the improvements are a large order of magnitude; the plant is 50 years old and the system is subject to costly failures; the current citation is a crisis response to random system failure which they must find out on an emergency basis; we are run- ning the risk of catastrophic failure and community disruption with pumps going down; etc. Ms. Stowell, Bartel & Wells, related: her firm's job is to come up with the financing monies for the project and the impact on the customers for the payback for the capital improvements and on-going operations and maintenance at the Plant; Phase I is $22.2 million and provides some expansion and im- provements to the Plant and wet weather facilities; the costs have been allocated between the two cities and S.S.F. is $16.8 million and San Bruno is $5.4 million; Phase II is expansion when needed ten years from now and that is predominately S.S.F.'s based on the additional capacity; in addition to the Treatment Plant there is the collection system and sewers and that is $5 million in the next five years; etc. She continued: funding sources for wastewater capital improvements and operating costs are cash on hand, user charges, connection charges and pay- ments from other agencies; State revolving loans, local bonds or COPs interest earning and other sources; State Revolving Funds is a program run by California and every other State has its own program to provide low cost loans which came from the grant program in the 1980s; the State has two options, one is the standard low interest and the other is what the State calls a zero interest loan, it is not, but is one you provide a match which makes funds avail- able at the State level; the city provides the matching funds and the city has a reduced cost over the cost of the loan; it is less costly to use the State Revolv- ing Funds providing you can raise the local costs AGENDA ACTION TAKEN Study session - Continued. 5/29/96 Page 4 which is about 17%; the net result is an interest rate of 1.8%; the State does not have a whole lot of money, but it is worth pursuing; it is unlikely the city can get all the money from State Revolving Funds and will need local debt for the balance of the funding and with local debt the City has to borrow more money; the reserve fund is money that goes into a saving account and is used to pay the final maturity of the bonds. Mayor Drago asked if, in her experience, any cities had problems bringing in the bonds without a vote of the voters. Ms. Stowell replied, no, when it is supported by revenues, is mandated, goes to the voters you still must do it. A non-voted bond is the most common and her firm has worked with citizen groups and gone through the logic and the financing. She stated the last thing was the annual revenue which must exceed the O&M costs and this is the same as the existing variable rates. The city makes a commitment to its investors and provides a level of revenues which are more than the exact dollar amount and that provides them the security since the only security is the wastewater revenues. She spoke in detail on bond issues vs. State funding. Discussion followed: connection charges can help pay expansion costs; expansion cost equals $20 mil- lion; current connection charges equal $500.00; there is a certain amount of money in the Federal budget for matching funds for states to provide the matching funds; the position of the plant would place S.S.F. in top priority for State matching funds; staff should focus on the State loans; the worse case scenario could be the time lag to pay construction; the Council will know before the rate is set for next year on what the funding will be; the connection fees should be increased to $850.00, they should be looked at annually and could be higher and paid over a number of years; user increased charges will be needed for O&M debt service; look at a 13.5% increase for next fiscal year to pay for the expansion; people can argue they are paying for the future users in this tax; increase the charges that relate directly to the expansion; staff anticipates that as new growth comes in they pay their fair share and it is a break for the residential areas; the reason for the lack of capacity is do to the changed AGENDA ACTION TAKEN ~,, Study session - Continued. ADJOURNMENT: standards, from 13 to 30; the Statewide average is $211.00 for residential rates; other cities are not building part of the stormwater costs into their fees; a city must have an approach that shows equity; connection charges can only be used for capital or like debt service; staff to go with 13.5% fees, look at the connection fees and come back with a public hearing the first meeting in July; etc. M/S Fernekes/Yee - To adjourn the meeting. Carried by unanimous voice vote. Time of adjournment was 9:10 p.m. RESPECTFULLY SUBMITTED, Barbara A. Battaya, City Clerk d_~ City of South San Francisco APPROVED. ~~tty of South San Francisco lhe entries of this Council meeting show the action taken by the City Council to dispose of an item. Oral communica- tions, arguments and comments are recorded on tape. The tape and documents related to the items are on file in the Office of the City Clerk and are available for inspection, review and copying. 5/29/96 Page 5