June 15, 2004

SUBJECT: Collection of Wastewater Charges for Property Outside the City on the FY 2004/2005 Property Tax Roll

The City provides wastewater service to various properties located outside the City limits. Payment for these services is received through property tax assessments. In accordance with legal requirements for the collection of fees on the property tax roll, the City Council set a public hearing on proposed charges for wastewater services provided by the City of Sunnyvale to properties located outside the City limits. A report addressing the hearing and the proposed FY 2004/2005 assessments was filed with the City Clerk.

Staff recommends adoption of a resolution establishing outside wastewater charges to be placed on the FY 2004/2005 property tax roll.

On June 1, 2004, the City Council adopted a resolution setting June 15, 2004 as the date for the public hearing on proposed assessments for 1,867 properties located outside of the City which are served by the City’s wastewater utility. As shown on Attachment D, the areas serviced are bounded by Stevens Creek Blvd., Lawrence Expressway, Blaney Ave., and Bollinger Road in the City of Cupertino, and by Bollinger Road, Lawrence Expressway, Johnson Avenue and Castle Glen Avenue in the City of San Jose. A report containing each parcel number receiving wastewater services from the City was filed with the City Clerk and was made available for public inspection on May 26, 2004.

Assessments are made pursuant to Section 5473 of the Health and Safety code and Section 12.16.020 of the Sunnyvale Municipal Code.

Wastewater Rates

The City Council approved a 5.0% increase to the wastewater rates for the coming year during its April 27, 2004 meeting. The assessments proposed for these properties are equivalent to the rates charged to similar customers inside the City limits.

Wastewater rates are based entirely on the City’s cost for operating and maintaining its wastewater facilities and services. As was identified in the FY 2004/2005 Utility Rate Report (RTC No. 04-147) infrastructure maintenance and replacement has been, and remains, the largest issue for the Wastewater Management Fund. The Wastewater Management Fund Long Term Financial Plan reflects large infrastructure expenditures on projects that are underway in the early years of the plan. These projects were largely funded by revenues from the Water and Wastewater Revenue Bonds, Series 2001.

Portions of the treatment plant and collection system are approaching 50 years in age. Staff has made significant progress in the past year identifying projects for the future and working to isolate the cost and life span of various pieces of infrastructure, both at the treatment plant and in the collection system. As they are identified, projects are incorporated into a long-term infrastructure replacement plan which will then drive the financing of the projects and ensure that all wastewater collection and treatment processes are maintained in working order. Potential funding sources are being explored with the goal of minimizing the impact of infrastructure renovation and replacement on rate payers.

Service to Maintain, Repair, and Replace Private Sewer Laterals, and Install Clean-outs on Private Sewer Laterals

During the FY 2004/2005 Utility Rate setting process, Council reinstated the service to maintain, repair, and replace private sewer laterals, and install clean-outs on private sewer laterals. This service is also provided to customers in the outside sewer service area and costs to provide the service were included in both the FY 2004/2005 recommended wastewater operating budget and in the Budget Modification No. 38 (RTC 04-148) adopted by Council on April 27, 2004 that restored the service in the current fiscal year.

Affect on Wastewater Customers Outside the City Limits

There are 1,864 single family residential properties, two multi family properties, and one commercial property for a total of 1,867 total properties located outside the City limits that are serviced by the City’s wastewater collection and treatment system. Charges for single family residential customers are equal to the City’s yearly flat rate charges adopted on April 20, 2004. Multi family customers pay a yearly, per unit, flat rate, also the same as adopted by council for similar customers within the City. The commercial property is charged based on the customer’s water usage over the past fiscal year at the same rate as similar customers within the City.

The proposed annual assessment for a single-family residential property is $237.24 per parcel. Four single-family properties are not being assessed as they do not have any structure on the parcel and therefore do not impact the City sewer system. The proposed annual assessment for the two multi family properties is $592.80 for parcel number 375-07-003 (four units) and $5928.00 for parcel number 375-07-060 (forty units). The proposed assessment for the commercial property is $1.9292 per hundred cubic feet of water consumption. Based on the customer’s past year consumption, their total proposed charge for Fiscal Year 2004/2005 is $1,412.17.

The City collects these fees as part of the County Tax Roll. The fees go directly into the Wastewater Management Fund and are used to offset the costs of operating the City’s wastewater utility. The proposed assessments total $449,673.85 an increase of $20,743.81 compared to the Fiscal Year 2003/2004 assessment of $428,930.04.

Notice of public hearing was published in the San Jose Mercury News. A copy of the list of properties to be assessed and the proposed assessment amounts was made available in the City Clerks office on May 26, 2004. A copy of this report is also available in the Library and on the City’s Internet home page.

Adopt the resolution approving the proposed assessments.

Adopt the resolution, considering protests presented at the public hearing, with the roll modified to a different amount than recommended by staff.

Do not adopt the resolution. This action would prevent collection of charges on the property tax roll, requiring some other form of billing.

Staff recommends that the City Council adopt Alternative 1.

Prepared by:

Timothy J. Kirby
Revenue Systems Supervisor

Reviewed by:

Mary J. Bradley
Director of Finance

Approved by:

Amy Chan
City Manager
Attachments

A. Resolution (.pdf format)
B. Outside Sewer Roll (.pdf format)
C. Public Notice (.pdf format)
D. Map (.pdf format)