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HomeMy WebLinkAboutAgenda Statement 1988/07/26 Item 24 . . . COUNCIL AGENDA STATEMENT Item 24 Meeting Date 7/26/88 ITEM TITLE: Public meeting on proposal increasing the sewer service charge for all Montgomery residents Repo~ncreaSing the sewer service charge for all Montgomery residents Resolution 1.3 7{)~ Modifying Master Fee Schedule relative to increasing the Montgomery sewer service charges Di rector of Pub 1 i c Works j ~v 1/1'1 ~rJ / A,\ . City ManagerJI~,\/}UY (4/5ths Vote: Yes No X ) SUBMITTED BY: REVIEWED BY: -- At the present time, Montgomery resi dents are payi ng an annual sewer servi ce charge of $39 per equivalent dwelling unit (EDU). This is equivalent to $3.25 a month. By comparison, residents of the City outside the Montgomery area are presently paying $8 a month per EDU. The lower Montgomery rate has been possible due to the large reserve of sewer funds available at the time of annexation. However, the reserve fund is being depleted thus necessitating an increase to the sewer service charge to maintain a prudent reserve and cover increased mai ntenance and operati ng costs. It is proposed that the increase be made effecti ve in July, 1988 so the County Assessor IS offi ce may be notified in time to incorporate the increased annual fee into the property tax roll. RECOMMENDATION: That: 1) City Council accept this report for increasing the sewer service charge of Montgomery residents to $70 a year, 2) hold the public meeting on the proposed increase, and 3) adopt a resolution amending the Master Fee Schedule relative to the new sewer service charge for Montgomery residents. BOARDS/COMMISSIONS RECOMMENDATION: A verbal report on the Montgomery Planning Committee's position, taken at their meeting of July 25, 1988, will be given at the July 26, 1988 Council meeting. DISCUSSION: The residents of the Montgomery area were formerly in the Montgomery Sanitation District. The Montgomery Sanitation District was dissolved on July 1, 1986 when the Ci ty assumed responsi bil i ty for provi di ng sewer servi ce to Montgomery resi dents. Before the City annexed Montgomery on January 1, 1986, the residents were informed that no increases in the annual sewer service charge were planned until the reserve fund was drawn down. This is mentioned in the City Council position paper on the pro osed M n. y ~ ~-1 rrfl"4 - the Cit'! '... :,.,';1 ~f ,~lIa Vist ._, ',.::- i i lornl1 \ ~___...._. ~w.! . Page 2, Item 24 Meeting Date 7/26/88 An analysis of the Montgomery Sewer Maintenance Fund indicates an opening balance as of July 1, 1987 of $814,275, and an estimated balance, as of June 30, 1988, of $525,297. This represents a decrease of about 35.5 percent. Expenditures for FY 87-88 are based on the most recent cost figures given to Engineering by the City of San Diego of $458 per million gallons (MG) of sewage treated. The latest figure of estimated costs received by Engineering for FY 1988-89 is $674 per MG of sewage that is treated at the Poi nt Lorna Sewage Treatment Pl ant. Thus the Metro System M&O cost wi 11 be increased by about 47 percent. With the significant rise in expenditures for the Montgomery area this fiscal year, it is estimated, based on assessments of $39 per year per EDU, that the balance in the Montgomery Sewer Fund will be $38,623 as of June 30, 1989. This represents a reserve of only 4%, significantly below the recommended 20% reserve. . Therefore, it is recommended that the monthly sewer service charge for Montgomery residents be increased to $70 a year or $5.83 a month as compared to $8.00 a month for the other City residents. The total projected revenue for FY 1988-89 based on the increased rate is about $1,285,326 for the Montgomery sewer fund. Subtracting estimated expenditures and transfers to cover maintenance cost by City forces, there will be a balance of approximately $374,862 in the Montgomery Sewer Fund as of June 30, 1989. This would exceed the recommended reserve. This balance would decrease with an additional increase in Metro costs in fiscal year 1989-90 as presently proposed. It is estimated that the r~etro Sewerage System M&O cost wi 11 be increased to $820 per MG for FY 1989-90. This will represent an increase of about 21.7 percent from FY 1988-89. Based upon the 1 atest fi gures, it may be necessary to increase the sewer charge again in July 1989. At that time, the Montgomery sewer service charge rate will most likely be increased to the same level as the rest of the City and integrated into one bi 11 i ng system for the enti re City. Another study will be made in Mayor June 1989 when more definitive Metro M&O costs are known at the time of this study, Engineering staff will also consider variable sewer rates based both on water consumption and sewage characteristics with consideration for water conservation. For FY 1988-89, the annual sewer service charge will again be collected through the County Tax Collector's Office on the property tax billings mailed to the Montgomery residents. Summary/Conclusions Resolution No. 12177 adopted on September 24, 1985, affirmed the Council Pol icy Paper before the Montgomery annexati on and menti oned the $39 annual sewer assessment. . Due to the uncertai nty of future Metro Sewerage System M&O costs per MG that affect the expenditures of both City and Montgomery Sewer Funds, it is difficult to calculate fund balances as of June 30, 1989 and beyond. Using the latest estimated cost figures and $39 per year assessment, it is estimated - ~ - . Page 3, Item Meeting Date 7/26/88 24 that the Montgomery Sewer Fund will have a balance of $525,297, as of June 30, 1988, and a surplus of $38,623 as of June 30, 1989. It is evident the monthly sewer service charge needs to be raised for Montgomery residents. A two step raise is proposed. The first one to increase the sewer charge from $39 a year to $70 a year effective in August, 1988. The second step would increase the sewer charge to the same level as other City residents outside the Montgomery area pay. The second step may be put into effect in 1989 or 1990 depending on Metro M&O costs. A public meeting has been scheduled for this date. It may be held immediately before the acceptance of thi s report. A Noti ce of Pub 1 i c Meeti ng has been published in the Chula Vista Star News. All affected property owners in the Montgomery area wi 11 have the opportuni ty to make comments on the proposed sewer rate increase. Upon acceptance of the proposed $70 a year sewer service charge, the resolution mOdifying the Master Fee Schedule shall be adopted by Council. FISCAL IMPACT: The increase in the annual sewer service charge from $39 a year per EDU to $70 a year wi 11 increase the estimated income by about $336,237. . SMR/mag:KY-090 WPC 3809E . - -:: ,-,'