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HomeMy WebLinkAbout18 - Proposition 218 Ratesetting ProceduresCITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. 18 July 28, 2009 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Utilities Department George Murdoch, Utilities Director, 949 - 718 -3401 or amurdochCDcity.newport- beach.ca.us SUBJECT: Proposition 218 Ratesetting Procedures ISSUE Should the City Council adopt procedures, consistent with the requirements of Proposition 218, for the submission and tabulation of protests submitted by residents in response to a Utilities Department rate increase? RECOMMENDATION: Approve Resolution No. 09 -XX establishing procedures for the submission and tabulation of protests in connection with water and wastewater ratesetting proceedings pursuant to Article XIIID of the California Constitution. DISCUSSION: Background: The City has not raised water or wastewater rates since 2005. Now, because of steep increases in the cost of imported water, along with mandatory reductions in the supply of both imported and groundwater supplies, the Utilities Department will be proposing an increase to the water rate in the next few months. The ratesetting process, which historically has involved extensive review by the Finance Committee, City Council and the public (through the Public Hearing process) has recently been amended to require public notification and the opportunity to submit written protests. If a majority protest is established, the City Council is prohibited from adopting a proposed increase. Proposition 218, passed in 1996, added these new requirements. The 'Right To Vote On Taxes Act,' Proposition 218's formal title, added new Articles to the California Constitution. Relevant here is Article XIIID, which defines "fee" and "charge" broadly, as "any levy other than an ad valorem tax, a special tax, or an assessment, imposed by an agency upon a parcel or upon a person as an incident of property ownership, including Proposition 218 Ratesetting Procedures July 28, 2009 Page 2 a user fee or charge for a property related service." Until 2005, it was generally understood that water and wastewater fees were not subject to Article XIIID requirements. In 2005, the California Supreme Court, in Bighorn- Desert View Water Agency v. Vidd, (2006) 39 Cal.4" "205, stated that metered water rates are property related fees subject to Proposition 218. Under this decision, the City must: 1) comply with the notice and majority protest proceedings of Article XIIID, section 6(a) of the California Constitution and, 2) ensure that the City's rates do not exceed the cost of providing water and wastewater services, and that the rate proceeds are used only to provide water and wastewater services as required by Article XIIID, section 6(b) of the California Constitution. Because the City has not raised water and sewer rates since this decision was handed down, this will be the first time the Proposition 218 process will be used. Proposition 218 Ratesetting Process As noted previously, the new water and wastewater ratesetting process is generally similar to the historical process, however, the °Proposition 218 Notice" is now a significant legal and informational element. This process will adhere to the following steps: 1. Rate Study completed that ensures compliance with Article XIIID, Section 6(b) 2. Finance Committee reviews and recommends approval by City Council 3. Rate Increase and Proposition 218 Notice reviewed by City Council 4. Council directs staff to issue Proposition 218 Notice (Article XIIID, Section 6(a)) 5. 45 -day Public Notice period commences 6. Written protests submitted and tabulated according to Submission and Tabulation Procedures (discussed below) 7. Public Hearing held; if less than majority of property owners submit written protests, Council can proceed with rate increase. The actual Proposition 218 Notice will be presented to Council, along with the background information for the proposed rate increase, during a series of presentations to the Council. Protest Submission and Tabulation Procedures Again, because this is a new process, a procedure for addressing questions that were left undefined in Article XIIID is needed. Attached to this Resolution is Exhibit A, which provides guidance on issues such as: • To whom should notice of hearing be sent? • If a parcel is owned by more than one owner, and more than one protest is submitted, how many are counted? Proposition 218 Ratesetting Procedures July 28, 2009 Page 3 • Can a protest be withdrawn? • Is this an election? • Are protests public records? • What constitutes an invalid protest? • Can an invalid protest decision be appealed? • What constitutes a majority protest? • When will the votes be tabulated? • If there are few votes submitted, must the validity of all votes submitted be determined prior to the Council making its decision? The adoption of these procedures is not required by law, but rather is recommended by special legal counsel, Michael Colantuono. Adoption of these procedures is independent of the upcoming specific water rate increase process and does not allow or restrict staff from proceeding with bringing a proposed rate increase to the Council; however, adoption of the procedures is recommended prior to issuance of the Proposition 218 Notice. Environmental Review: Establishing ratesetting procedures is not a project as defined by CEQA. Funding Availability: Funding for the eventual distribution of the Proposition 218 Notice will come from the Water Enterprise fund. Prepared and Submitted by: /1 ' eorg Mur och, Utilities Director Attachments: Resolution No. 09- Exhibit A — Procedures for the Submission and Tabulation of Protests RESOLUTION NO. 09- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH ESTABLISHING PROCEDURES FOR THE SUBMISSION AND TABULATION OF PROTESTS IN CONNECTION WITH WATER AND SEWER RATESETTING PROCEEDINGS PURSUANT TO ARTICLE XIIID OF THE CALIFORNIA CONSTITUTION WHEREAS, the City of Newport Beach levies charges for water and sewer services pursuant to the Newport Beach Municipal Code and Section 5470 et seq. of the California Health & Safety Code; and WHEREAS, Section 6 of Article XIIID of the California Constitution sets forth notice, hearing, and protest requirements applicable to increases of water and sewer rates; and WHEREAS, the City desires to establish a uniform set of procedures applicable to the submission and tabulation of protests submitted against proposed water and sewer rate increases. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Newport Beach as follows: 1. Recitals. The foregoing recitals are all true and correct. 2. Guidelines. The City adopts the guidelines set forth in Exhibit "A" to this Resolution, which is incorporated herein by reference to govern the acceptance and tabulation of protests against proposed water and sewer rate increases. 3. Effective Date. This Resolution shall be effective as of the date of its adoption. PASSED and ADOPTED this roll call vote: AYES: NOES: ABSTAIN: ABSENT: ATTEST: City Clerk `�' day of _, 2009 by the following Mayor APPROVED AS TO FORM: EXHIBIT "A" GUIDELINES FOR THE SUBMISSION AND TABULATION OF PROTESTS Submission of Protests 1. Any utility customer or property owner may submit a written protest against a rate increase proposed with respect to a proposed water rate increase, a proposed sewer rate increase, or both to the City Clerk, either by delivery to the office of the City Clerk or by submitting the protest at the public hearing. Protests must be received by the end of the public hearing. No postmarks will be accepted. 2. Each protest must identify the affected property (by assessor's parcel number or street address) and include the original signature of the utility customer or record property owner. Email or fax protests cannot be accepted. Although oral comments at the public hearing will not qualify as a formal protest unless accompanied by a written protest, the City Council welcomes input from the community during the public hearing on the proposed fees. 3. If a parcel served by the City is the service location for more than one customer or is owned by more than a single record owner, each customer or owner may submit a protest, but only one protest will be counted per parcel and any one protest submitted in accordance with these rules will be sufficient to count as a protest for that property. 4. In order to be valid, a protest must bear the original signature of the customer or record owner with respect to the property identified on the protest. Protests not bearing the original signature of a customer or record owner shall not be counted. 5. Any person who submits a protest may withdraw it by submitting to the City Clerk a written request that the protest be withdrawn. The withdrawal of a protest shall contain sufficient information to identify the affected parcel and the name of the record owner or record customer who submitted both the protest and the request that it be withdrawn. 6. A fee protest proceeding is not an election. 7. To ensure transparency and accountability in the fee protest tabulation, protests shall constitute disclosable public records from and after the time they are received. Tabulation of Protests 1. The City Clerk shall determine the validity of all protests. The City Clerk shall not accept as valid any protest if the City Clerk determines that any of the following conditions exist: a. The protest does not identify a property served by the City. b. The protest does not bear an original signature of a record owner of the parcel identified on the protest. C. The protest does not state its opposition to the proposed fees. d. The protest was not received by the City Clerk before the close of the public hearing on the proposed fees. e. A request to withdraw the protest is received prior to the close of the public hearing on the proposed fees. Z. The City Clerk's decision that a protest is not valid or does not apply to a specific fee shall constitute a final action of the City and shall not be subject to any internal appeal. 3. A majority protest exists if written protests are timely submitted and not withdrawn by the record owners of a majority of the properties subject to the proposed fee. 4. At the conclusion of the public hearing, the City Clerk shall complete the tabulation of all protests received, including those received during the public hearing and shall report the results of the tabulation to the City Council upon completion. If review of the protests received demonstrates that the number received is manifestly less than one -half of the parcels served by the City with respect to the fee which is the subject of the protest, then the Clerk may advise the City Council of the absence of a majority protest without determining the validity of all protests.