HomeMy WebLinkAboutAgenda Statement 1979/04/24 Item 13a, bCOUNCIL AGENDA~STATEMENT
ITEM TI1~LE
Item'No. 13a,b
For meeting of 4-24-79
Resolution 9.5'6 ~ Approving Ninth Amendment to the
Agreement with he Montgomery Sanitation District
Resolution Approving fiecond Amendment
Agreement with the Spring Valley Sanitation
SUBMITT D BY City Engineer
to the
District
ITEM EX LANATION (4/5TH'S VOTE REQUIRED YES NO )
In early 1964, the City entered into separate agreements with
th Spring Valley Sanitation District and the Montgomery Sanitation
Di trict to permit use of the districts' sewer systems by the
Ci y.
Am ng other things, these, agreements provided for service charges
to be paid to the serving agency in order to defray the maintenance
an operating (M&~0) expense of Chula Vista flow discharged into
th Metro system plus a proportionate share of the M&O expense for
th serving agency's own system. The intent of the agreements was
to provide full reimbursement to the serving agency for expenses
in urred in behalf of Chula Vista.
'1'n respective charges were initially established in the form of
a fixed amount per equavalent dwelling unit per month. After a
pe iod of several years, those fixed amounts, through inflation,
be ame inadequate for the purposes for which they were intended.
Bo h agreements were consequently modified in 1971 to provide
in reased service charges. The following table depicts the specific
ch rges involved:
Age cy Spring Valley, S.D. Montgomery, S.D.
Ini ial Charge $0.40 $0.40
197 Modification $0.50 $0.70
In he summer of 1976, the Districts notified the City that
fur her adjustment of the charges was necessary. In point of
EXHIBITS (continued on supplemental page)
Ogre ment Resolutions_ X Ordinance Plat Notification List
)the ENVIRONMENTAL DOCUMENT: Attached Submitted on
FINANCIAL IMPACT
The City has continued to pay the specified contract amounts
($0 50/EDU/month for Spring Valley District and $0.70/EDU/month
for the Montgomery District) since receipt of formal notice from
the Districts in June '76. Based on the terms of the modified
agr ements, the City owes an approximate total of $49,300 to the
Spring Valley District and $58,350 to the Montgomery District as
STAFF REC MMENDATION
App ove resolutions (2) authorizing the Mayor to execute the
ame dments to the agreements and appropriating funds totaling
$60,000 from the available balance in the Sewer Service Revenue
Fund.
BOARD/COM ISSION RECOMMENDATION
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Item No. 13a,b
For meeting of 4-24-79
Supplemental page 2
fa t the charges for at least the previous year had been insufficient
to cover the direct Metro system M&O costs not to mention the
di tricts' M&0 expenses.
Pr paration of amendments to the agreements were undertaken
i ediately, but the City and District staffs could not reach
ac ord relative to the precise amounts to be charged. Other points
of disagreement included whether retroactive payments were appro-
pr'ate, and the degree of formality required to modify the charges.
Re olution of these matters, which was complicated by rotation of
Co my personnel, required an extended period of time. Cost studies
we a made, other agencies were contacted and legal opinions were
ob ained. During that time period the contractual service charges
be ame even more inadequate because of inflation. The following
to le shows the rapid increase in Metro system M&O costs (expressed
as monthly cost per equivalent dwelling unit):
Fiscal Year Cost per E.D.U.
72-73 $0.45
73-74 0.49
74-75 0.66
75-76 0.78
76-77 0.75
77-78 0.82
78-79 1.05 (est.)
It is readily apparent that a fixed service charge based on such
Met o system costs would have to be modified frequently in order
to e realistic.
Dis rict and City staffs have jointly prepared modifications to the
two subject agreements which will tie service charges directly to
the actual annual Metro system A4&0 expense. The proposed modification
wil automatically adjust the service charges upward or downward
wit variations in Metro system costs and thereby eliminate the
nee for frequent agreement modifications made simply for the purpose
of pdating a fixed amount service charge. This methodology
wil create a far more equitable situation than has existed in
the past. Further, it will result in reduced administrative costs.
The service charges as proposed include actual Metro system M&O costs
plu a percentage (10% Spring Valley, 20o Montgomery) to defray
loc 1 collection system M&0 costs. Thus, the total service charges
are expressed as 1100 (Spring Valley) and 1200 (Montgomery) of the
Met o systems M&O cost per equivalent dwelling unit. Based on
cur ent Metro system costs those service charges would be:
Spring Valley Sanitation District - $1.169/mo.
^4ontgomery Sanitation District - $1.276/mo.
The percentage surcharges (10% and 200) were determined through
joint research by City and District staffs. Inquiries to other
agen ies in the area and state resulted in an extremely broad range
of s wer system M&O costs. Consequently those figures for outside
agen ies were not considered suitable as a basis of comparison.
Conv rsely, it was found that District and City system costs were
gene ally comparable and so detailed investigations were confined
to t ose systems.
The ity utilizes both the collection system and the outfall sewer
in t e Montgomery Sanitation District. Conversely it uses only the
outf 11 sewer of the Spring Valley Sanitation District. This
diff rence in extent of use results in the different surcharge
perc ntages proposed to be applied in calculating service charges
to b paid to the two districts.
,- r
Item No. 13a,b
For meeting of 4-24-79
Supplemental page 3
1
2.
3.
ree methods of computation were developed during the evaluation
ocess. They included:
Determine average cost per equivalent dwelling unit (EDU) through
use of total District expense and total member EDU's served.
Determine cost per EDU on basis of cost to transport one million
gallons for one mile; and number of miles of the system used
by the City.
Determine cost per EDU based on proportionate length of the
total system used by City residents and total District expense.
Ea h methodology was applied to each Districts' system.
li itations permitted by City methods of record keeping,
me hodologies were also applied to the City system so as
a ough check on the Districts' M&O expenses.
Within the
the
to provide
Wh le the three methodologies did not provide precise confirmation
of one another, they fall in a relatively limited range in each
in tance. The results for the Spring Valley Sanitation District
ra ge from loo to 17% surcharge. For the Montgomery Sanitation
Di trict that range is 17% to 22%. No single methodology was
co sidered to be generally superior to the others. Consequently,
st ffs agreed that a mutually acceptable figure within each range
wo ld be appropriate for use as a standardized surcharge.
Th l0o surcharge rate recommended for use relative to the Spring
Va ley Sanitation District agreement is at the lower end of the
ra ge. The figure was selected primarily on the basis of a specific
pr vision in the original agreement for a loo surcharge to be applied
in the event that City flow were to be metered (vs. estimated via
nu ber of EDU connections).
The 20o surcharge rate recommended for use relative to the Montgomery
District agreement represents an approximate "average" of the various
met ods of computation studied.
Bas d on the latest estimate of Metro system M&O costs and applying
the recommended 10% and 20o surcharges the current service charges
are respectively:
Spring Valley Sanitation District - $1.169/EDU/mo.
Montgomery Sanitation District - $1.276/EDU/mo.
If urther experience shows either percentage surcharge to be
be nappropriate, then the agreements make provision for further
mod fication. Staff proposes to make periodic audits of District
cos s, etc in relationship to Metro system costs so as to justify
the ontinued use and/or modification of those percentage rates.
Dis rict staff initially billed the City (retroactively) for total
per od in which they considered that the service charges had been
ins fficient. City staff argued that no payment would be made for
sho t.falls which existed prior to receipt of formal notification
fro the Districts. County staff now concurs with the City s
pos'tion. Staff considers it appropriate and the agreement provides
tha back payment (based on service charges as established per
the modified agreement) be made commencing with the first quarter
fol owing formal notification (June '76) to the City by the
Dis ricts.
Total additional amounts due for fiscal years '76-'77 and '78-'79
are pproximately:
Spring Valley Sanitation District - $29,000
Montgomery Sanitation District - $31,000
Both the '77-'78 and '78-'79 budgets included provisions for
incr ases in service charges for both Districts in anticipation of
form 1 modifications to those agreements.
,; , _
Item No. 13a,b
For meeting of 4-24-79
Supplemental page 4
FINANCIAL IMPACT (cont'd)
of March 31, 1979. It will be necessary to appropriate funds for
pa ment of charges incurred during fiscal years '76-'77 and '77-'78.
Am unts to be appropriated are:
Spring Valley Sanitation District - $29,000
Montgomery Sanitation District - $31,000
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CITY OF CHULA VISTA
COUNCIL AGENDA STATEMENT
Item No.13a,b
For meeting of 4-24-79
Resolution 9J~"70 Approving Eighth Amendment to the
Agreement with the Montgomery Sanitation District
ITEM TI LE Resolution Approving Second Amendment to the
Agreement with the Spring Valley Sanitation District
SUBMITT D BY City Engineer
ITEM EX LANATION (4/5TH'S VOTE REQUIRED YES NO )
In early 1964, the City entered into separate agreements with
th Spring Valley Sanitation District and the Montgomery Sanitation
Di trict to permit use of the districts' sewer systems by the
Ci y.
Am ng other things, these. agreements provided for service charges
to be paid to the serving agency in order to defray the maintenance
an operating (M&~0) expense of Chula Vista flow discharged into
th Metro system plus a proportionate share of the M&O expense for
th serving agency's own system. The intent of the agreements was
to provide full reimbursement to the serving agency for expenses
in urred in behalf of Chula Vista.
Th respective charges were initially established in the form of
a fixed amount per equavalent dwelling unit per month. After a
pe iod of several years, those fixed amounts, through inflation,
be ame inadequate for the purposes for which they were intended.
Bo h agreements were consequently modified in 1971 to provide
in reased service charges. The following table depicts the specific
ch rges involved:
Ag~ncy Spring Valley, S,D. Montgomery, S.D,
19 1 Modification $0.50 $0.70
In'tial Charge $0.40 $0.40
In the summer of 1976, the Districts notified the City that
fu they adjustment of the charges was necessary. In point of
EXHIBITS (continued on supplemental page)
Ordinance Plat Notification List
t Resolutions X
r ENVIRONMENTAL DOCUMENT: Attached Submitted on
FINANCI L IMPACT
Th City has continued to pay the specified contract amounts
($ .50/EDU/month for Spring Valley District and $0.70/EDU/month
fo the Montgomery District) since receipt of formal notice from
th Districts in June '76. Based on the terms of the modified
ag eements, the City owes an approximate total of $49,300 to the
Sp ing Valley District and $58,350 to the Montgomery District as
STAFF R COMMENDATION
Ap rove resolutions (2) authorizing the Mayor to execute the
am ndments to the agreements and appropriating funds totaling
$6 ,000 from the available balance in the Sewer Service Revenue
Fu d.
BOARD/COMMISSION RECOMMENDATION
COUNCIL 14CTION
Item No. 13a,b
For meeting of 4-24-79
Supplemental page 2
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:t the charges for at least the previous year had been insufficient
cover the direct Metro system M&O costs not to mention the
stricts' M&O expenses.
paration of amendments to the agreements were undertaken
ediately, but the City and District staffs could not reach
ord relative to the precise amounts to be charged. Other points
disagreement included whether retroactive payments were appro-
ate, and the degree of formality required to modify the charges.
olution of these matters, which was complicated by rotation of
my personnel, required an extended period of time. Cost studies
e made, other agencies were contacted and legal opinions were
ained. During that time period the contractual service charges
ame even more inadequate because of inflation. The following
le shows the rapid increase in Metro system M&O costs (expressed
monthly cost per equivalent dwelling unit):
Fiscal Year
72-73
73-74
74-75
75-76
76-77
77-78
78-79
Cost per E.D.U.
$0.45
0.49
0.66
0.78
0.75
0.82
1.05 (est.)
I is readily apparent that a fixed service charge based on such
M tro system costs would have to be modified frequently in order
t be realistic.
District and City staffs have jointly prepared modifications to the
t o subject agreements which will tie service charges directly to
t e actual annual Metro system DZ&0 expense. The proposed modification
w'll automatically adjust the service charges upward or downward
w'th variations in Metro system costs and thereby eliminate the
n ed for frequent agreement modifications made simply for the purpose
o updating a fixed amount service charge. This methodology
w'll create a far more equitable situation than has existed in
t e pest. Further, it will result in reduced administrative costs.
T e service charges as proposed include actual Metro system M&O costs
p us a percentage (10% Spring Valley, 20% Montgomery) to defray
1 cal collection system M&O costs. Thus, the total service charges
a e expressed as 110% (Spring Valley) and 1200 (Montgomery) of the
M tro systems M&O cost per equivalent dwelling unit. Based on
c rrent Metro system costs those service charges would be:
Spring Valley Sanitation District - $1.169/mo.
Montgomery Sanitation District - $1.276/mo.
T e percentage surcharges (loo and 200) were determined through
j int research by City and District staffs. Inquiries to other
a encies in the area and state resulted in an extremely broad range
o sewer system M&O costs. Consequently those figures for outside
a encies were not considered suitable as a basis of comparison.
C nversely, it was found that District and City system cots were
g nerally comparable and so detailed investigations were confined
t those systems.
T e City utilizes both the collection system and the outfall sewer
i the Montgomery Sanitation District. Conversely it uses only the
o tfall sewer of the Spring Valley Sanitation District. This
d fference in extent of use results in the different surcharge
p rcentages proposed to be applied in calculating service charges
t be paid to the two districts.
Item No. 13a,b
For meeting of 4-24-79
Supplemental page 3
T ree methods of computation were developed during the evaluation
p ocess. They included:
1. Determine average cost per equivalent dwelling unit (EDU) through
use of total District expense and total member EDU's served.
2. Determine cost per EDU on basis of cost to transport one million
gallons for one mile; and number of miles of the system used
by the City.
3. Determine cost per EDU based on proportionate length of the
total system used by City residents and total District expense.
E ch methodology was applied to each Districts' system. Within the
li itations permitted by City methods of record keeping, the
m thodologies werE also applied to the City system so as to provide
a rough check on the Districts' M&O expenses.
W ile the three methodologies did not provide precise confirmation
of one another, they fall in a relatively limited range in each
i stance. The results for the Spring Valley Sanitation District
r nge from loo to 17o surcharge. For the Montgomery Sanitation
District that range is 17% to 220. No single methodology was
c nsidered to be generally superior to the others. Consequently,
s affs agreed that a mutually acceptable figure within each range
wo ld be appropriate for use as a standardized surcharge.
T loo surcharge rate recommended for use relative to the Spring
Valley Sanitation District agreement is at the lower end of the
ra ge. The figure was selected primarily on the basis of a specific
pr vision in the original agreement for a 10% surcharge to be applied
in the event that City flow were to be metered (vs. estimated via
n ber of EDU connections).
T 20% surcharge rate recommended for use relative to the Montgomery
District agreement represents an approximate "average" of the various
methods of computation studied.
Based on the latest estimate of Metro system M&0 costs and applying
the recommended loo and 20o surcharges the current service charges
are respectively:
Spring Valley Sanitation District - $1.169/EDU/mo.
Montgomery Sanitation District - $1.276/EDU/mo.
If further experience shows either percentage surcharge to be
be inappropriate, then the agreements make provision for further
mo ification. Staff proposes to make periodic audits of District
costs, etc in relationship to Metro system costs so as to justify
th continued use and/or modification of those percentage rates.
District staff initially billed the City (retroactively) for total
pe iod in which they considered that the service charges had been
insufficient. City staff argued that no payment would be made for
sh rt.falls which existed prior to receipt of formal notification
fr m the Districts. County staff now concurs with the City's
position. Staff considers it appropriate and the agreement provides
th t back payment (based on service charges as established per
th modified agreement) be made commencing with the first quarter
following formal notification (June '76) to the City by the
Di tricts.
To al additional amounts due for fiscal years '76-'77 and '78-'79
ar approximately:
Spring Valley Sanitation District - $29,000
Montgomery Sanitation District - $31,000
Bo h the '77-'78 and '78-'79 budgets included provisions for
in reases in service charges for both Districts in anticipation of
fo mal modifications to those agreements.
Item No. 13a,b
For meeting of 4-24-79
Supplemental page 4
FINANCIAL IMPACT (cont'd)
o March 31, 1979. It will be necessary to appropriate funds for
p yment of charges incurred during fiscal years '76-'77 and '77-'78.
A ounts to be appropriated are:
Spring Valley Sanitation District - $29,000
Montgomery Sanitation District - $31,000