HomeMy WebLinkAbout04/16/2002, PH 1 - WATER AND WASTEWATER IMPACT FEES Council M..tin Da.
4-16-02.
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CITY OF SAN LUIS 0BAISP�O
FROM: Bill Statler, Director of Financak
Prepared By: Sue Baasch, Utilities Administrative Analyst
SUBJECT: WATER AND WASTEWATER IMPACT FEES
CAO RECOMMENDATION
Adopt a resolution amending water and wastewater impact fees effective July 1, 2002.
DISCUSSION
Background. In 1991, the Council adopted impact fees in order to implement the City's General
Plan policy that new development pay its fair share of the water and wastewater facilities needed
to serve it. Except for increases in the consumer price index, wastewater impact fees have not
been revised since 1991. Water impact fees were increased in 1994 to reflect water supply costs,
and they have also been adjusted by increases in the consumer price index since then.
At their March 12, 2002 study session, the Council considered proposed increases in water and
wastewater impact fees resulting from updated facility plans and related costs. Based on this
review, the Council directed staff to set a public hearing for April 16, 2002 for the adoption of
amended water and wastewater impact fees. The attached resolution adopts the new fees with an
effective date of July 1, 2002. The proposed fees were developed under the guidelines of AB
1600, which require a nexus between fees imposed, the use of the fees and the development
projects on which the fees are imposed.
Water-Sewer Master Plans and Related New Development Impact Fees. The City recently
completed a comprehensive analysis of the long-term water and wastewater infrastructure needed
to meet the City's adopted General Plan. As part of this planning effort, we evaluated the impact
fees necessary to ensure that new development pays its fair share of both system-wide and area-
specific improvements. Along with these infrastructure fee studies for our treatment, collection
and distribution systems, we also updated the water supply component of the water development
impact fees. The results of this work were presented to the Council on March 12, 2002.
Proposed Citywide Impact Fees. Provided in the side bar are the current and proposed
Citywide water and wastewater impact fees for single family residential (SFR) uses. Each SFR
unit represents one "equivalent dwelling
unit," which is the basis for all other
residential and non-residential fees. A Current Pro osed
complete listing of current and proposed Water $7,059 $11,256
impact fees for all uses—residential and Wastewater $2,795 $3,236
non-residential—is provided in Exhibit A of
the attached resolution. Single family residential units represent one"equivalent dwelling
unit,"which is the basis for setting all other fees.
Council Agenda Report–Water and Wastewater Impact Fees
Page 2
Proposed Area-Specific Fees. "Area-specific" impact fees are also being recommended that
will be added onto the Citywide fees. These area-specific fees are also included in Exhibit A.
Wastewater Impact Fees: Consolidation of Three Areas. The wastewater impact fees are based
on the analysis prepared by David Taussig and Associates, which shows six separate "add-on"
areas. In reviewing these further, three of these areas—Airport, Margarita and Edna-Islay—have
per unit costs that are within 5% of each other.
This small difference makes sense given how
close these areas are to each other. Because of Airport Area 751
this, in the interest of simplicity, we Edna Islay 722Margarita 713
recommend consolidating these into one area Consolidated Area Fee $ 729
as shown in the sidebar. This will result in
four"add-on" areas instead of six.
Other Administrative Changes. The current resolution setting water and wastewater impact
fees exempts landscape meters from paying these fees. This was initially done to avoid over-
assessing impact fees for wastewater facilities, which are not affected by landscape uses. It was
also done to avoid penalizing customers who, with no change in water requirements,
subsequently wanted to separate their landscape from "inside" usage for management purposes.
However, in some cases, we believe this has resulted in the unintended consequence of new
development under-sizing their initial water meter size for a lower fee, and subsequently
returning a later date to install a landscape meter to correct for this—with no additional fee
assessed due to this exemption.
On balance, we believe it makes the most sense to charge water impact fees for landscape meters
but to exempt them from wastewater fees. At this point, we have already accommodated most of
those cases where a separate meter may be warranted by an existing customer for"management"
reasons (and not to address increased water requirements or an initial under-sizing). In those
cases where an additional landscape (or other meter) is requested, no fees will be charged if the
existing meter is down-sized so that the total "EDU's"at the site remain the same (or less).
In those rare cases where this won't work and there is a legitimate case for another meter
unrelated to water demand, the Utility Billing Adjustments Committee is already authorized to
make equity adjustments where this is truly warranted. In summary on this point, we believe it
makes the most sense for our rate structure to assume that an initial (or subsequent) request for a
landscape meter is based on demand, not other factors. In the event that it is genuinely due to
"other factors,"this should be considered the exception,not the rule.
Public Notification. We have provided extensive notification about the proposed fee increases
for both the March 12 study session as well as this public hearing. In both cases, along with our
usual public notice, we mailed notices to over 200 community groups or individuals who have
expressed interest in fee issues in the past. Along with providing background information about
the proposed fees (and for the April 16 public hearing, a detailed listing of the proposed Citywide
and area-specific fees), the notice offered to provide additional information upon request and to
meet with them at any time at their convenience. As of April 8, we have received several
/-a
Council Agenda Report—Water and Wastewater Impact Fees
Page 3
requests for information via telephone and email; however, we have not received any meeting
requests nor have we received any correspondence in support or opposition to the proposed fee
increases.
FISCAL IMPACT
There are no direct fiscal impacts associated with adopting the proposed impact fees. In fact,
their purpose is to avoid adverse fiscal impacts on our ratepayers by ensuring that new
development pays its fair share of the water and wastewater improvements needed to serve it.
ALTERNATIVES
As presented at the March 12, 2002 study session, alternatives include:
1. Defer adopting the water supply portion of the updated fees. The recommended fees are
based on Council-adopted policies and the best information we have at this time. Deferring
adoption of the water supply portion of the proposed fees makes sense if new information or
underlying policy changes are likely in the near term. However, no new information is likely
in the near term; and revision of these policies, while certainly possible, is unlikely to occur
soon given the high level of community interest in water supply issues. If these policies are
revised at some point in the future, the fees can be correspondingly revised at that time.
2. Adopt lower fees. The facility costs allocated to new development are based on the best
engineering and financial analysis available to the City at this time, which is not likely to
change soon. Based on past experience, adopting lower fees based on less-than-likely
assumptions simply defers hard decision-making to the future, when the cumulative impact
of deferral may make these decisions even more difficult. Moreover, this will result in
higher general-purpose water rates in the future than would otherwise be required. Lastly,
purposely setting fees at levels that are less than the supported cost would be inconsistent
with adopted City policy.
3. Do not adopt any revisions to current fees. As with Alternative 2, this would also be
inconsistent with adopted City policy that new development "pay its own way."
Additionally, given the high cost of this infrastructure, this option would also result in higher
general-purpose rate increases in the future than would otherwise be required.
ATTACHMENT
Resolution amending water and wastewater impact fees
AVAILABLE IN THE COUNCIL READING FILE
1. Council Agenda Reports from March 12, 2002 Council Study Session on Water and
Wastewater Development Impact Fees
l
I
Council Agenda Report—Water and Wastewater Impact Fees
Page 4
2. Water and Wastewater Development Impact Fee Studies Prepared by David Taussig and
Associates and the Department of Finance
G:Water and Sewer Impact Fee Update/Council Agenda Report—Adoption of Water and Wastewater Impact Fees
q
RESOLUTION NO. (2002 Series)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO
AMENDING WATER AND WASTEWATER IMPACT FEES
WHEREAS, chapter 4.20.140 of the City of San Luis Obispo Municipal Code establishes
water and wastewater connection fees, hereinafter referred to as impact fees, and provides for the
setting of fee amounts and other matters by resolution of the Council; and
WHEREAS, the Council has reviewed the WATER AND WASTEWATER SYSTEM
MASTER PLANS which identify needed improvements to the City's water and sewer systems to
meet General Plan build-out; and
WHEREAS, David Taussig and Associates has prepared an AB 1600 FEE STUDY
UPDATE dated February 2-5, 2002 showing appropriate impact fees based on these master plans;
and
WHEREAS, the Council has approved the Water Element to the General Plan that
identifies the amount of water necessary to meet build-out based on adopted planning policies;
and
WHEREAS, the March 12, 2002 study titled WATER DEVELOPMENT IMPACT
FEES updates water supply costs based on the best engineering information available and
allocates them appropriately to new development.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
SECTION 1. FINDINGS
a. The purpose of water and wastewater impact fees is to protect the public health,
safety and general welfare by providing adequate water supply, treatment, distribution and
wastewater collection and treatment facilities to satisfy the needs of new development and to
mitigate the impacts of new development on the City's water and wastewater facilities and
improvements.
b. The water and wastewater impact fees collected pursuant to this resolution shall
be used only to pay for facilities and improvements identified in the impact fee analysis and shall
not be in lieu of any other fee or tax as may be required.
C. There is a reasonable relationship between the types of development on which the
impact fees are imposed and the use of the impact fees and the need for the facilities and
improvements. All new development requires adequate water supply, treatment and distribution
as well as wastewater collection and treatment facilities to protect the public health and safety.
d. There is a reasonable relationship between the amount of the fee and the cost of
the facilities and improvements attributable to the developments on which the fees are imposed.
The estimated costs of facilities and improvements, including financing costs, to be paid for by
_s
Resolution No. (2002 Series)
Page 2
connection fees are shown in the February 25, 2002, Water and Wastewater AB 1600 Fee Study
Update prepared by David Taussig and Associates, Inc., and the March 12, 2002, Water
Development Impact Fees study prepared by the City of San Luis Obispo Finance Department.
The costs have been allocated to new development on the basis of dwelling unit type(residential)
or water meter size and estimated strength of sewer system discharge (non-residential), which are
reasonably related to the water and wastewater facility capacity consumed by a development
proj ect.
SECTION 2. COST ESTIMATES
At any time that the actual or estimated costs of facilities identified in the impact fee
analysis changes, the Finance Director shall review the impact fees and determine whether the
change affects the amount of the impact fees. If the impact fees are significantly affected, the
Finance Director will recommend to the Council a revised fee for their consideration.
SECTION 3. AMOUNT OF IMPACT FEES
Effective July 1, 2002, water and wastewater impact fees shall be in the amounts set forth
in Exhibit A attached hereto. Unless otherwise acted upon by the Council, the amount of the fees
will automatically be adjusted on July 1 of each subsequent year by the annual percentage change
in the U.S. Bureau of Labor Statistics consumer price index for all urban consumers (CPI-U), all-
cities average for the prior calendar year.
SECTION 4. TIME OF PAYMENT
a. Impact fees for any development project or portion thereof shall be payable prior
to issuance of building permits required for that development, and shall be collected by the
Building Official. Under Government Code Section 66007(b), the City is authorized to collect
the fees at the time of building permit issuance because the fees are for public facilities and
improvements for which an account has been established and funds appropriated, and for which
the City has adopted a proposed construction schedule; or the fees are to reimburse the City for
expenditures previously made.
b. For any development project or portion thereof, impact fees shall be assessed at
the time of application and remain valid for as long as the processing time period allowed by the
Uniform Administrative Code as adopted by the Council.
SECTION 5. EXEMPTIONS
a. Fire Protection. Upgrading existing water service and/or meters for the sole
purpose of providing new or improved fire protection facilities shall be exempt from any impact
fee provided for in this resolution.
b. Landscape Irrigation. No wastewater impact fees will be charged for meters
installed solely for landscape irrigation purposes.
l' I
1
Resolution No. (2002 Series)
Page 3
SECTION 6. SEPARATE ACCOUNTS
The Finance Director shall deposit fees collected under this resolution in a separate water
impact fee and wastewater impact fee accounts as required by Government Code Section 66006.
Within one hundred and eighty (180) days of the close of each fiscal year, the Finance Director
shall make available to the public an accounting of these fees, and the Council shall review that
information at its next regular public meeting.
Upon motion of , seconded by
and on the following roll call vote:
AYES:
NOES:
ABSENT:
the foregoing resolution was adopted on April 16, 2002.
Mayor Allen Settle
ATTEST:
Lee Price, City Clerk
APPROVED AS TO FORM:
Joh". Jor nsen ity orney
EXHIBIT A
Water and Wastewater Development Impact Fee Schedule
Effective July 1, 2002
WATER DEVELOPMENT IMPACT FEES
.:.
Area-Specific
"Add-On"
Airport
EDU* Citywide Margarita
Residential
Per Unit
Single Family Residential 1.0 $ 11,256 $ 746
Multi-Family Residential 0.8 9,005 597
Mobile Home 0.6 6,754 448
Non-Residential
Meter Size
3/4 Inch 1.0 11,256 746
1Inch 2.0 22,512 1,492
1Y2 Inch 4.0 45,024 2,984
2Inch 6.4 72,038 4,774
3 Inch 14.0 157,584 10,444
4Inch 22.0 247,632 16,412
.6 Inch 45.0 506,520 33,570
WASTEWATER DEVELOPMENT IMPACT FEES
Impact
Area-Specific"Add-On"
Airport Dalidio
Margarita Madonna Irish
7EDU* 70tywideEdna-Islay McBride Hills Orcutt
Residential
Per Unit
Single Family Residential 1.0 $ 3,236 $ 729 $ 207 $ 367 $ 1,689
Multi-Family Residential 0.8 2,589 583 166 294 1,351
Mobile Home 0.6 1,942 437 124 220 1,013
Non-Residential
Meter Size **
'/41nch 1.0 3,350 729 207 367 1,689
IInch 2.0 6,700 1,458 414 734 3,378
1%2 Inch 4.0 13,400 2,916 828 1,468 6,756
2Inch 6.4 21,440 4,666 1,325 2,349 10,810
3Inch 14.0 46,900 10,206 2,898 5,138 23,646
4Inch 22.0 73,700 16,038 4,554 8,074 37,158
,6 Inch 45.0 150,750 32,805 9,315 16,515 76,005
* Equivalent dwelling unit
** Citywide non-residential EDU is adjusted upwards by about 3.5%to account for higher discharge strengths
I-�
DATE N ___ ITE !j��
San Luis Obispo Chamber of Commerce
1039 Chorro Street • San Luis Obispo, California 93401-3278
(805) 781-2777 a FAX (805) 543-1255 • TDD (805) 541-8416
David E. Garth, President/CEO
April 15, 2002
UNCIL ❑ CIDD DIR
i2rgAO DIR
r?ACAO [I FXCHIEF
Mayor Allen Settle " RNEY (�W DIR
y LERK/ORIG ❑ POLICE CHF
Members of the City CouncilMiaq0
` REC DIR
City of San Luis Obispo UTIL DIR
990 Palm Street HR DIR
San Luis Obispo, CA 93401 �h"'""
777977,
Re: Water Impact Fees, Item# PH 1, Council Agenda for Apr11 16
Dear Mayor Settle and Council Members:
While our Chamber has not adopted an official position regarding the proposed
Citywide water and wastewater impact fees, we would like to re-iterate at this time
our concern about water policy issues that have a direct effect on the need to raise
rates so dramatically.
In our letter of July, 2001 on the subject of the water management element policies,
we requested that Council take action on City staffs suggestion regarding the need to
reassess the policy (4.1.1) requiring a reliability reserve of half of the safe annual yield
from a new water supply. Our statement at that time was that this may not be
economically feasible in today's water market and we recommended that the
percentage be adjusted. Council's decision not to do so at that time has now
contributed to the need for significantly higher water impact fees. We ask that you re-
visit the issue and once again look at the possibility of reducing the amount of water
required for the reliability reserve.
We think that it would be prudent to re-evaluate some of the underlying assumptions
and policies that create a scenario where we need to increase water impact fees by
over$4,000 and, in the years to come, increase fees by 21.5% for all ratepayers.
Thank you for considering our input on this matter.
Sincerely, RECEIVED
nod 1 5 2<<ill
�
4eanne Potter
Chairperson of the Board SLO CITY COUNCIL
e-mail: slochamber@slochamber.org • websites: www.slochamber.org www.visitsio.com
i
To Honorable Mayor and City Council
From: Dave Romero
Subject: Water Impact Fee Increase—April 16, 2002
The Council is considering raising.the impact fee for new connections from$7095/house
(already the highest within the county or among comparison cities)to $11,256/house,
which will be BY FAR the highest in the county or among comparison cities. Most of
this fee increase is driven by the inclusion of costs for a "Reliability Reserve". Water
customers will pay$3.1 million every year though it may NEVER be used
I believe city water users would be well served by a reconsideration of this costly
approach to reliability and deferring this fee increase until after the fimdamental approach
has been reviewed. Rather than continually paying for excess water from one source, I
believe reliability can more effectively be achieved by utilizing many different water
supply sources. Thus if one failsto produce full yield, other sources can fill the need
The City currently relies on 2 Vz sources of supply-
1.
upply1. Salinas Dam
2. Whale Rock Dam
3. Limited pumping from Los Osos Valley
The City could greatly increase reliability by-
1.
y1. Agreement with Morro Bay for joint use of Desal plant
2. A connection to the State Water pipeline which is adjacent to our city.
3. An agreement with the Dalidio family permitting city pumping and use of water
historically used for farming,thereby greatly increasing Los Osos valley water.
If all three of these additional sources were obtained,the city would have 5 separate
water sources, and supplies would be VERY secure,more reliable than any other
community I have heard of Costs for adding these sources would be minimal and would.
allow elimination ofthe 2000 acJft reserve and its$3.1 million/yr cost. This might result
in REDUCED water impact fees and water rates rather than INCREASED fees and rates.
San.Luis Obispo housing costs are among the highest in the nation,with city fees adding
significantly to the cost. Young fimnlies cannot afford to live here(including our own
children and grandchildren), and San Luis Obispo is rapidly becoming a city of seniors
and students,with fewer and fewer moderate-income fimn7ies able to afford housing and
provide vitg&y.
The fee issue is so fimdamental to our community that I urge:the Council to defer adding
these fees until the alternatives have been thoroughly considered