HomeMy WebLinkAbout17 - Adoption of Sewer Rate Adjustment
17-1
NEWPORT BEACH
City Council Staff Report
COUNCIL STAFF REPORT
CITY OF
March 22, 2016
Agenda Item No. 17
ABSTRACT:
The Municipal Operations Department retained the consulting services of HF&H
Consultants, LLC (“HF&H”) to prepare a sewer rate study. The study analyzed the cost
of service and made recommendations regarding the rate and structure in compliance
with State law. The study concluded that a rate increase is recommended to ensure
adequate funds are available to continue to maintain a safe and healthy sewer
infrastructure.
RECOMMENDATION:
a) Introduce Ordinance No 2016-6, An Ordinance of the City Council of the City of
Newport Beach, California, Amending Section 14.24.065 of Title 14 of the Newport
Beach Municipal Code Pertaining to Sewer Use Charge, and pass to second reading
on April 12, 2016; and
b) Adopt Resolution 2016-42, A Resolution of the City Council of the City of Newport
Beach, California, Adopting New Sewer Service and Use and Consumption Rates
Pursuant to Newport Beach Municipal Code Section 14.24.065.
FUNDING REQUIREMENTS:
There are no funding requirements to implement the sewer rate structure; however , this
action will change the sewer rate and structure currently being charged to users of
sewer water.
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: George Murdoch, Municipal Operations Director – Utilities
949-644-3011, gmurdoch@newportbeachca.gov
PREPARED BY: Rachell Wilfert, Management Specialist
PHONE: 949-644-3011
TITLE: Adoption of Sewer Rate Adjustment
Adoption of Sewer Rate Adjustment
March 22, 2016
Page 2
17-2
DISCUSSION:
Background:
In February of 2013, the City entered into an agreement with HF&H to conduct a Sewer
and Recycled Water Rate Study that resulted in the average reduction of recycled rates
of 50% (completed in 2014) and recommended an adjustment in sewer rates to cover
operational and capital improvement costs as well as to provide funding to meet reserve
policies. The rate study can be found at www.newportbeachca.gov/sewerrates.
On October 13, 2015, City Council reviewed the proposed rates and directed staff to
send out notices to sewer customers and property owners regarding the potential rate
increase in compliance with State law. The City mailed 27,193 notices to property
owners and non -property owning customers on December 9, 2015 .
On January 26, 2016, the City concluded the 45-day notice period and conducted a
public hearing. In the absence of a majority protests, the City Council discussed the
item and approved the introduction of Ordinance No . 2016-1 An Ordinance of the City
Council of the City of Newport Beach Amending Section 14.24.065 of Title 14 of the
Newport Beach Municipal Code Pertaining to Sewer Use Charge , and passed the
second reading to February 9, 2016. Additionally, two resolutions were introduced, one
adopting the new rate schedule (Resolution No. 2016-21) and the second resolution
adopting a one-time rebate to residential customers for a portion of the monthly sewer
service (Resolution No. 2016-20). Both resolutions would take effect upon the effective
date of Ordinance No. 2016-1.
On February 9, 2016, the second reading of Ordinance No. 2016-1 did not receive a
majority vote of City Council. As a result of this action, resolutions attached to
Ordinance No. 2016-1 did not become effective because the ordinance did not pass the
second reading. .
The Municipal Operations Department is returning to Council for a first reading of
Ordinance No. 2016-6 to adopt the proposed sewer rate adjustment and to pass the
Ordinance on to a second reading. The attached resolution (Attachment D) will adopt
the adjusted sewer rates upon the successful vote of Ordinance No. 2016-6 at its
second reading. The attached resolution (Attachment D) also repeals Resolutions
Nos. 2016-20 and 2016-21 to confirm that both are without any further force or effect.
The new sewer rates and structure will be effective 30 days after the second reading of
the ordinance (approximately May 12, 2016). The next rate adjustment will be affective
on January 1, 2017, and on the first day of each year thereafter until January 1, 2020.
Adoption of Sewer Rate Adjustment
March 22, 2016
Page 3
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Proposed Rates:
The proposed rates are for a five-year period (May 2016 through January 2020) and
include a variable (Sewer Use) charge and a Fixed (Sewer Service) charge. For those
customers that do not receive water service from the City, a monthly fixed charge is
recommended. The study recommends a change in the rate structure to eliminate the
existing surcharge and per unit charge. These charges have been moved to the fixed
portion of the rates. The proposed rates are included in the Current and Proposed
Sewer Rates (Attachment A).
Approximately ninety four percent of our customers have 5/8”, 3/4” or 1” meters. The
average monthly water use for our single family homes is 15 HCF (billing units). One
HCF is 748 gallons. Using the average meter size and water use, the below table
depicts the average increase in sewer fees over five years.
Current 2016 2017 2018 2019 2020
Sewer Use Charge per HCF $0.35 $0.39 $0.43 $0.48 $0.53 $0.59
Sewer Use Charge at 15 HCF (avg. use)$5.25 $5.85 $6.45 $7.20 $7.95 $8.85
Sewer Service Charge 3/4" to 1" Meter $4.50 $6.04 $6.71 $7.44 $8.26 $9.17
Total $9.75 $11.89 $13.16 $14.64 $16.21 $18.02
Average Monthly Increase $2.14 $1.27 $1.48 $1.57 $1.81
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California
Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not
result in a direct or reasonably foreseeable indirect physical change in the environment)
and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA
Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no
potential for resulting in physical change to the environment, directly or indirectly.
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
ATTACHMENTS:
Attachment A – Current and Proposed Sewer Rates
Attachment B – Ordinance No. 2016-6 Amendment to Sewer Use Charge (Redline)
Attachment C – Ordinance No. 2016-6 Amendment to Sewer Use Charge (Final)
Attachment D – Resolution 2016-42 Adopting New Sewer Service and Use and
Consumption Rates Pursuant to Newport Municipal Code Section 14.24.065
Current and Proposed Sewer Rates
Current
Structure FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
Effective Increase Date 04/12/2016 01/01/2017 01/01/2018 01/01/2019 01/01/2020
Sewer Service (Fixed)
5/8" or 3/4" $4.50 $6.04 $6.71 $7.44 $8.26 $9.17
1" $4.50 $6.04 $6.71 $7.44 $8.26 $9.17
1 1/2" $4.50 $6.65 $7.38 $8.19 $9.09 $10.09
2" $14.50 $9.06 $10.06 $11.17 $12.40 $13.76
2 1/2" $14.50 $9.67 $10.73 $11.91 $13.22 $14.68
3" $14.50 $10.27 $11.40 $12.66 $14.05 $15.59
4" $14.50 $12.08 $13.41 $14.89 $16.53 $18.34
6" $14.50 $13.59 $15.09 $16.75 $18.59 $20.64
8" $14.50 $15.11 $16.77 $18.61 $20.66 $22.93
10" $14.50 $19.33 $21.46 $23.82 $26.44 $29.35
Sewer Service – No Water (Sewer Only Customers)
Rate per Account $6.25 $10.51 $11.66 $12.94 $14.37 $15.95
Sewer Use (Variable)
Rate per HCF $0.35 $0.39 $0.43 $0.48 $0.53 $0.59
Sewer Surcharges
Multi-Unit surcharge
(per DU) $2.00 Note 1 Note 1 Note 1 Note 1 Note 1
Note 1: The surcharge has been incorporated into the Sewer Service (Fixed) under the revised structure
ATTACHMENT A
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ORDINANCE NO. 2016-__
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF NEWPORT BEACH AMENDING SECTION 14.24.065
OF TITLE 14 OF THE NEWPORT BEACH MUNICIPAL
CODE PERTAINTING TO SEWER USE CHARGE
WHEREAS, The City of Newport Beach charges users of the City’s sewer
service to cover the annual operation and maintenance of the sewer system, as wells as
the repair and replacement of pipes, pump station, facilities and equipment to improve
the sewer system safety, efficiency and reliability; and
WHEREAS, on February 26, 2013, the City’s Municipal Operations Department
retained the consulting services of HF&H Consultants, LLC (HF&H) to prepare a sewer
rate study in order to analyze the current cost to the City to provide sewer services and
to provide recommendations regarding an appropriate rate structure; and
WHEREAS, The HF&H study recommended a revised rate structure that
includes a fixed fee component for sewer customers, a fixed fee component for non-
water customers, and a commodity charge; and
WHEREAS, The City Council has reviewed the conclusions of the HF&H study
and agrees that the recommended rate structure should be implemented, which will
allow the City to charge the users of the sewer services a rate that reflects the City’s
current cost of maintaining the sewer system.
NOW THEREFORE, the City Council of the City of Newport Beach ordains as
follows:
Section 1: Section 14.24.065 is hereby amended to the Newport Beach
Municipal Code to read as follows:
A. A monthly basic fixed sewer use service charge of four dollars and fifty cents
($4.50) per month, shall be assessed against each individually metered dwelling
unit or business structure connected to the public sewer system and for each
sewer connection to the public sewer system for customers who purchase water
from the City of Newport Beach except as provided in subsection (C) of this
section. The sewer service charge is based on the water customer’s water meter
size. Fixed sewer service charges shall be effective January 1st of each year and
charged pursuant to a resolution adopted by the City Council.
B. A monthly basic fixed sewer use service charge for customers who do not
purchase water from the City of Newport Beach of six dollars and twenty-five
cents ($6.25) per month, shall be assessed for each use service connection to
the public sewer system for customers who do not purchase water from the City
of Newport Beach. Fixed sewer service charges shall be effective January 1st of
each year and charged pursuant to a resolution adopted by the City Council.
ATTACHMENT B
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Page | 2
C. A monthly supplemental sewer use charge of two dollars ($2.00) per month,
shall be assessed for each additional living unit served by the same sewer
connection. For the purposes of this subsection, the term “living unit” shall mean
each additional dwelling unit and structures designed for permanent residential
use and each room with sanitary and sleeping facilities in any hospital, care
facility, hotel or motel.
DC. In addition to the sewer service charges specified above, a sewer
consumption use charge of thirty cents ($0.30) shall be assessed for each
hundred (100) cubic feet of water delivered to each water customer connected to
the public sewer system. Effective September 1, 2006, the sewer consumption
charge shall become thirty-five cents ($0.35). The sewer use charges shall be
effective January 1st of each year and charged pursuant to a resolution adopted
by the City Council.
E. A monthly wastewater surcharge of ten dollars ($10.00) per month shall be
assessed to each water customer on all nonirrigation water meters which have a
diameter that equals or exceeds two inches. Water meter connections for the
exclusive purpose of providing water for fire sprinkler of fire protection systems
shall be exempted from this surcharge.
Section 2: The recitals provided in this ordinance are true and correct and are
incorporated into the substantive portion of this ordinance.
Section 3: If any section, subsection, sentence, clause or phrase of this
ordinance is for any reason held to be invalid or unconstitutional, such decision shall not
affect the validity or constitutionality of the remaining portions of this ordinance. The
City Council hereby declares that it would have passed this ordinance and each section,
subsection, clause or phrase hereof, irrespective of the fact that any one or more
sections, subsections, sentences, clauses and phrases be declared invalid or
unconstitutional.
Section 4: The City Council finds the approval of this ordinance is not subject
to the California Environmental Quality Act (“CEQA”) pursuant to Section 15060(c)(2)
(the activity will not result in a direct or reasonably foreseeable indirect physical change
in the environment) and 15060(c)(3) (the activity is not a project as defined in Section
15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3,
because it has no potential to have a significant effect on the environment.
Section 5: Except as expressly modified in this ordinance, all other Sections,
Subsections, terms, clauses and phrases set forth in the Newport Beach Municipal
Code shall remain unchanged and shall be in full force and effect.
Section 6: The Mayor shall sign and the City Clerk shall attest to the passage
of this ordinance. The City Clerk shall cause the ordinance, or a summary thereof, to be
17-6
Page | 3
published once in the official newspaper of the City, and it shall be effective thirty (30)
days after its adoption.
This Ordinance was introduced at a regular meeting of the City Council of the
City of Newport Beach held on the 22nd day of March, 2016, and adopted on the 12th
day of April, 2016, by the following vote, to-wit:
AYES, COUNCILMEMBERS ______________________________
_____________________________________________________
NOES, COUNCILMEMBERS______________________________
_____________________________________________________
ABSENT COUNCILMEMBERS ____________________________
_____________________________________________________
MAYOR_______________________________________________
DIANE B. DIXON
ATTEST:
_____________________________________
LEILANI I. BROWN, CITY CLERK
APPROVED AS TO FORM:
CITY ATTORNEY’S OFFICE
_____________________________________
AARON C. HARP, CITY ATTORNEY
17-7
ORDINANCE NO. 2016-_
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF NEWPORT BEACH AMENDING SECTION 14.24.065
OF TITLE 14 OF THE NEWPORT BEACH MUNICIPAL
CODE PERTAINTING TO SEWER USE CHARGE
WHEREAS, The City of Newport Beach charges users of the City's sewer
service to cover the annual operation and maintenance of the sewer system, as wells as
the repair and replacement of pipes, pump station, facilities and equipment to improve
the sewer system safety, efficiency and reliability: and
WHEREAS, on February 26, 2013, the City's Municipal Operations Department
retained the consulting services of HF&H Consultants, LLC (HF&H) to prepare a sewer
rate study in order to analyze the current cost to the City to provide sewer services and
to provide recommendations regarding an appropriate rate structure; and
WHEREAS, The HF&H study recommended a revised rate structure that
includes a fixed fee component for sewer customers, a fixed fee component for non-
water customers, and a commodity charge; and
WHEREAS, The City Council has reviewed the conclusions of the HF&H study
and agrees that the recommended rate structure should be implemented, which will
allow the City to charge the users of the sewer services a rate that reflects the City's
current cost of maintaining the sewer system.
NOW THEREFORE, The City Council of the City of Newport Beach ordains as
follows:
Section 1: Section 14.24.065 is hereby amended to the Newport Beach
Municipal Code to read as follows:
A. A monthly fixed sewer service charge shall be assessed against each
individually metered dwelling unit or business structure connected to the public
sewer system and for each sewer connection to the public sewer system for
customers who purchase water from the City of Newport Beach. The sewer
service charge is based on the water customer's water meter size. Fixed sewer
service charges shall be effective January 1®^ of each year and charged pursuant
to a resolution adopted by the City Council.
B. A monthly fixed sewer service charge for customers who do not purchase
water from the City of Newport Beach shall be assessed for each service
connection to the public sewer system. Fixed sewer service charges shall be
effective January 1®' of each year and charged pursuant to a resolution adopted
by the City Council.
C. In addition to the sewer service charge specified above, a sewer use charge
shall be assessed for each hundred (100) cubic feet of water delivered to each
ATTACHMENT C
17-8
water customer connected to the public sewer system. The sewer use charges
shall be effective January 1®' of each year and charged pursuant to a resolution
adopted by the City Council.
Section 2: The recitals provided in this ordinance are true and correct and are
incorporated into the substantive portion of this ordinance.
Section 3: If any section, subsection, sentence, clause or phrase of this
ordinance is for any reason held to be invalid or unconstitutional, such decision shall not
affect the validity or constitutionality of the remaining portions of this ordinance. The
City Council hereby declares that it would have passed this ordinance and each section,
subsection, clause or phrase hereof, irrespective of the fact that any one or more
sections, subsections, sentences, clauses and phrases be declared invalid or
unconstitutional.
Section 4: The City Council finds the approval of this ordinance is not subject
to the California Environmental Quality Act ("CEQA") pursuant to Section 15060(c)(2)
(the activity will not result in a direct or reasonably foreseeable indirect physical change
in the environment) and 15060(c)(3) (the activity is not a project as defined in Section
15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3,
because it has no potential to have a significant effect on the environment.
Section 5: Except as expressly modified in this ordinance, all other Sections,
Subsections, terms, clauses and phrases set forth in the Newport Beach Municipal
Code shall remain unchanged and shall be in full force and effect.
Section 6: The Mayor shall sign and the City Clerk shall attest to the passage
of this ordinance. The City Clerk shall cause the ordinance, or a summary thereof, to be
published once in the official newspaper of the City, and it shall be effective thirty (30)
days after its adoption.
This Ordinance was introduced at a regular meeting of the City Council of the
City of Newport Beach held on the 22nd day of March, 2016, and adopted on the 12'^
day of April, 2016, by the following vote, to-wit;
AYES, COUNCILMEMBERS
NOES, COUNCILMEMBERS
ABSENT COUNCILMEMBERS
Page | 2
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MAYOR
DIANE B. DIXON
ATTEST:
LEILANI I. BROWN, CITY CLERK
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
Twvi
AARON C. HARP, CITY ATTORNEY
Page | 3
17-10
RESOLUTION NO. 2016-42
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
NEWPORT BEACH, CALIFORNIA, ADOPTING NEW
SEWER SERVICE AND USE AND CONSUMPTION
RATES PURSUANT TO NEWPORT MUNICIPAL CODE
SECTION 14.24.065 AND REPEALING RESOLUTION
NOS. 2016-20 AND 2016-21
WHEREAS, the City of Newport Beach charges users of the City’s sewer system
to cover the operation and maintenance and capital improvement of the sewer system;
and
WHEREAS, in 2013, the City’s Municipal Operations Department retained the
consulting services of HF&H Consultants, LLC (HF&H) to prepare a sewer rate study in
order to analyze the current cost to the City to provide sewer services and to provide
recommendations regarding an appropriate rate structure; and
WHEREAS, the HF&H study recommended a revised rate structure that includes
a fixed fee component for sewer customers, a fixed fee component for non-water
customers, and a variable commodity charge; and
WHEREAS, the City Council has reviewed the conclusions of the HF&H study
and agrees that the recommended rate structure should be implemented, which will
allow the City to charge the users of the sewer services a rate that reflects the City’s
current cost of maintaining the sewer system; and
WHEREAS, in November 1996, California voters approved Proposition 218 and
as a result thereof, California public entities must comply with the requirements set
forth in Proposition 218 when setting rates for sewer service; and
WHEREAS, one requirement of Proposition 218 requires that a noticed public
hearing on sewer rates be held and that rates not be increased if a majority of affected
property owners protest the increased rates in writing; and
WHEREAS, on January 12, 2016, a public hearing was conducted in the City
Council Chambers at 100 Civic Center Drive, Newport Beach, California 92660, to
allow public testimony and discussion of the proposed sewer rate adjustments; and
WHEREAS, at this time, the City Council took in written and oral comments that
evening, considered all written protests against the proposed charges to determine if
a majority protest exists; and
WHEREAS, subsequent to the public hearing and at its regular meeting on
January 26, 2016, the City Council determined that a majority protest did not exist and
thereafter introduced Ordinance No. 2016-1. Concurrent with the introduction of
ATTACHMENT D
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Resolution No. 2016-42
Page 2 of
Ordinance No. 2016-1, the City Council adopted Resolution Nos. 2016-20 and 2016-21,
which would implement the rate adjustment and a rebate upon the adoption of Ordinance
No. 2016-1. On February 9, 2016, a motion to adopt Ordinance No. 2016-1 failed; and
WHEREAS, Ordinance No. 2016-6 amends Section 14.24.065 of the Newport
Beach Municipal Code to provide for a variable (Sewer Use) charge and a fixed (Sewer
Service) charge pursuant to a resolution adopted by the City Council; and
WHEREAS, if Ordinance No. 2016-6 is adopted following a second reading at a
regular meeting of City Council, upon its effective date, the rate structure proposed is as
follows:
NOW THEREFORE, the City Council of the City of Newport Beach hereby
resolves as follows:
FY 2015-
16
FY 2016-
17
FY 2017-
18
FY 2018-
19
FY 2019-
20
Effective Increase
Date 5/12/2016 01/01/2017 01/01/2018 01/01/2019 01/01/2020
Monthly Sewer Service
(Fixed)
5/8" or 3/4"
$6.04 $6.71 $7.44 $8.26 $9.17
1"
$6.04 $6.71 $7.44 $8.26 $9.17
1 1/2"
$6.65 $7.38 $8.19 $9.09 $10.09
2"
$9.06 $10.06 $11.17 $12.40 $13.76
2 1/2"
$9.67 $10.73 $11.91 $13.22 $14.68
3"
$10.27 $11.40 $12.66 $14.05 $15.59
4"
$12.08 $13.41 $14.89 $16.53 $18.34
6"
$13.59 $15.09 $16.75 $18.59 $20.64
8"
$15.11 $16.77 $18.61 $20.66 $22.93
10"
$19.33 $21.46 $23.82 $26.44 $29.35
Monthly Sewer Service – No Water (Sewer Only
Customers)
Rate per Account
$10.51 $11.66 $12.94 $14.37 $15.95
Sewer Use (Variable)
Rate per HCF
$0.39 $0.43 $0.48 $0.53 $0.59
17-12
Resolution No. 2016-42
Page 3 of
Section 1: The City Council does hereby approve and adopt the following
sewer use and consumption charges:
Section 2: The recitals provided above are true and correct and are
incorporated into the operative part of this resolution.
Section 3: If any section, subsection, sentence, clause or phrase of this
resolution is, for any reason, held to be invalid or unconstitutional, such decision shall
not affect the validity or constitutionality of the remaining portions of this resolution. The
City Council hereby declares that it would have passed this resolution, and each
section, subsection, sentence, clause or phrase hereof, irrespective of the fact that any
FY 2015-
16
FY 2016-
17
FY 2017-
18
FY 2018-
19
FY 2019-
20
Effective Increase
Date 5/12/2016 01/01/2017 01/01/2018 01/01/2019 01/01/2020
Monthly Sewer Service
(Fixed)
5/8" or 3/4"
$6.04 $6.71 $7.44 $8.26 $9.17
1"
$6.04 $6.71 $7.44 $8.26 $9.17
1 1/2"
$6.65 $7.38 $8.19 $9.09 $10.09
2"
$9.06 $10.06 $11.17 $12.40 $13.76
2 1/2"
$9.67 $10.73 $11.91 $13.22 $14.68
3"
$10.27 $11.40 $12.66 $14.05 $15.59
4"
$12.08 $13.41 $14.89 $16.53 $18.34
6"
$13.59 $15.09 $16.75 $18.59 $20.64
8"
$15.11 $16.77 $18.61 $20.66 $22.93
10"
$19.33 $21.46 $23.82 $26.44 $29.35
Monthly Sewer Service – No Water (Sewer Only
Customers)
Rate per Account
$10.51 $11.66 $12.94 $14.37 $15.95
Sewer Use (Variable)
Rate per HCF
$0.39 $0.43 $0.48 $0.53 $0.59
17-13
Resolution No. 2016-42
Page 4 of
one or more sections, subsections, sentences, clauses or phrases be declared invalid
or unconstitutional.
Section 4: The City Council finds the adoption of this resolution is exempt from
environmental review under the California Environmental Quality Act (“CEQA”) pursuant
to Section (15060(c)(2) (the activity (the activity will not result in a direct or reasonably
foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is
not a project as defined in Section 15378) of the CEQA Guidelines, California Code of
Regulations, Title 14, Chapter 3, because it has no potential to have a significant effect
on the environment.
Section 5: This resolution shall only take effect immediately upon effective date
of Ordinance No. 2016-6.
Section 6: Resolution Nos. 2016-20 and 2016-21 are hereby repealed.
ADOPTED this 22nd day of March, 2016.
________________________________
Diane B. Dixon
Mayor
ATTEST:
__________________________
Leilani I. Brown
City Clerk
17-14