HomeMy WebLinkAbout04 - Sewer RatesQ �EwaaR�
O INA
>, z
Cq<I FO RNP
TO:
FROM:
CITY OF
NEWPORT BEACH
City Council Staff Report
September 26, 2017
Agenda Item No. 4
HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
George Murdoch, Municipal Operations Director - 949-644-3011,
gmurdoch@newportbeachca.gov
PREPARED BY: Joshua Rosenbaum, Senior Management Analyst,
jrosenbaum@newportbeachca.gov
PHONE: 949-644-3057
TITLE: Amendment to Newport Beach Municipal Code 14.24.065
(2nd Reading) and Resolution Adopting Sewer Rates
ABSTRACT:
On September 12, 2017, the City Council conducted a Prop 218 public hearing, tabulated
written protests, and approved the introduction of Ordinance No. 2017-15 and passed it
to a second reading for adoption on September 26, 2017.
In addition, staff recommends that the City Council adopt a resolution establishing sewer
charges effective January 1, 2018 and four years of phased in increases.
RECOMMENDATION:
a) Determine these actions are exempt from the California Environmental Quality Act
(CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines
because these actions will not result in a physical change to the environment, directly
or indirectly;
b) Conduct a second reading and adopt Ordinance No. 2017-15, 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
c) Adopt Resolution No. 2017-61, A Resolution of the City Council of the City of Newport
Beach, California, Establishing Sewer Charges Effective January 1, 2018 and Four
Years of Phased In Increases Thereto.
FUNDING REQUIREMENTS:
There are no funding requirements to implement the sewer rate structure; however, with
the adoption of the second reading of the ordinance, the cost of sewer service will
increase for the sewer customers of the City of Newport Beach effective January 1, 2018.
4-1
Amendment to Newport Beach Municipal Code 14.24.065 (2nd Reading)
and Resolution Adopting Sewer Rates
September 26, 2017
Page 2
DISCUSSION:
On March 20, 2017, the City entered into an agreement with HF&H Consultants LLC to
conduct a Sewer Rate Study that resulted in recommended adjustments in sewer rates
to cover operations and capital improvement costs as well as provide funding to meet City
Council Reserve Policy F-2. The study addressed the wastewater operations and capital
expenditures and the revenue shortfalls and predicted that the Sewer Fund reserve
balances would dip below the minimum target in FY2017-18 and become negative by
FY2019-20. More information available at: www.newportbeachca.gov/sewerrates.
A draft of the rate study was presented to the Finance Committee on June 29, 2017.
During this meeting, Municipal Operations Department staff presented a general overview
of the services provided by the City's Sewer Division, the cost for operating and
maintaining the sewer system, including the capital improvement component, the revenue
requirements, and discussed the Sewer Fund's reserve target policy. The consultant,
HF&H, presented their study's findings and recommendations for a proposed new sewer
rate structure and new rate tables for the water and sewer customers and .sewer -only
customers, respectively. At the conclusion of the presentation, following some discussion,
the Finance Committee unanimously recommended that the Sewer Rate Study be
forwarded to City Council for discussion.
At the City Council Study session on July 25, 2017, the Municipal Operations Department
and HF&H presented the findings and recommendations of the Draft Sewer Rate Study
Report for proposed sewer rates. Subsequently, during the City Council's regular agenda
on the same night, the City Council reviewed the proposed rates and directed staff to
send out (Prop 218) notices in compliance with State law. The City mailed 22,570 notices
to property owners and customers receiving sewer service from the City of Newport
Beach on July 28, 2017.
In accordance with Proposition 218, agencies are required to provide a 45 -day notice
period whereby property owners may submit in writing a protest objecting to the
proposed rates. At the conclusion of the notice period, the City is required to conduct a
public hearing and tabulate the protests received. In the absence of a majority of
property owners objecting to the rate, City Council may adjust the rate and/or structure.
At the regular scheduled City Council meeting on September 12, 2017, the City
concluded the 45 -day notice period and conducted a public hearing. The City Clerk
tabulated the results of the protests and announced that thirteen (13) protests were
received from property owning customers, and zero (0) protests from non -property
owning customers. In the absence of the majority protests, the City Council discussed
the item and approved the introduction of Ordinance No 2017-15, 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 September 26, 2017.
4-2
Amendment to Newport Beach Municipal Code 14.24.065 (2nd Reading)
and Resolution Adopting Sewer Rates
September 26, 2017
Page 3
Should Council adopt the Ordinance, the effective date of the first sewer rate change will
be January 1, 2018. All subsequent rate adjustments will take effect the first day of each
calendar year with the last adjustment on January 1, 2022.
The accompanying Resolution (Attachment C) will establish the sewer rate fees to be
contained in the City's Schedule of Rents, Fines and Fees or other successor document.
The proposed sewer rate tables are shown in Exhibit A to Attachment C.
We encourage all interested parties to visit the City's web site for more information about
the proposed sewer rates and sewer rate study at www.newportbeachca.gov/sewerrates
or contact the Municipal Operations Department at 949-644-3011.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find that adopting Ordinance No. 2017-15 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.
In addition, staff recommends the City Council find that adopting Resolution No. 2017-61
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 — Ordinance No. 2017-15 (Redline)
Attachment B — Ordinance No. 2017-15 (Final)
Attachment C — Resolution No. 2017-61, including Exhibit A (Proposed Sewer Rate
Tables for Schedule of Rents, Fines and Fees)
4-3
ATTACHMENT A
ORDINANCE NO. 2017-15
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
WHEREAS, the City of Newport Beach charges users of the City's sewer service
to fund the operation and maintenance of the City's sewer system, as well as the repair
and replacement of pipes, pump stations, facilities and equipment to improve the sewer
system safety, efficiency and reliability;
WHEREAS, on March 20, 2017, the City's Municipal Operations Department
retained the consulting services of HF&H Consultants, LLC ("HF&H") to update HF&H's
prior sewer rate study from 2013-14 in order to analyze the current cost of sewer services
and to provide recommendations regarding an appropriate rate structure;
WHEREAS, the resulting HF&H study recommended a revised rate structure that
includes a both a fixed charge and a use charge for sewer customers who also receive
water service from the City, and a fixed charge for sewer customers who do not receive
water service from the City;
WHEREAS, following a public hearing held on September 12, 2017 in conformity
with Proposition 218, the City Council determined that no majority protest against the
recommended rates had occurred; and
WHEREAS, the City's current sewer charges are codified in Newport Beach
Municipal Code Section 14.24.065. By this ordinance, the City Council intends amend
that Section to have the sewer charges and any changes thereto be adopted and charged
pursuant to a resolution adopted by the City Council.
NOW THEREFORE, the City Council of the City of Newport Beach ordains as
follows..
Section 1: Newport Beach Municipal Code Section 14.24.065 is hereby
amended to read as follows:
A. A monthly basi6fixed sewer u&eservice charge adopted by resolution of fGw
dollars and fifty Gents ($4.50) per month the City Council shall be assessed against
each individually metered dwelling unit or business structure connected to the
public sewer system and eaGh sewer ^Gen�nTeGtinn to the p bli^ SeWer SyStemT=
for customers who PUFGhasealso receive water service from the City of Newport
Beach ov^ont as nreyided in ouhoo^tion (G) of thio SeGtien This sewer service
charge is based on the customer's water meter size.
B. A monthly Basi fixed sewer useservice charge adopted by resolution of six
dollars and tWeRty fiVe ^onto ($6.25) per R;eRth,the City Council shall be assessed
.J
Ordinance No. 2017 -
Page 2 of
fo-ragainst each useservice connection to the public sewer system for customers
who do not purGh also receive water service from the City of Newport Beach.
D—.In addition to the Gharg fixed sewer service charge specified in subdivision
A above, a sewer Gens impti^"use charge adopted by resolution of thirty c;ents
f$0.303the CityCouncil shall be assessed for each hundred (100) cubic feet of
water delivered to sewer customers who also receive water service from the City
o� c4^mor nn e d to the p blip t+eWeF Syst8m F=48Gtiye
o Newport eac .�c� c��T�ee,,,-rec�� �Y�y������,�Se.t., , 11— 1 1 2 -GN, th- GeRSUMPtOOR Gharge shall beGGme thirty five GeRtS
The recitals provided in this ordinance are true and correct and are incorporated
into the substantive portion of this ordinance.
Section 2: 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, sentence, clause or phrase hereof, irrespective of the fact that any one or
more sections, subsections, sentences, clauses or phrases be declared invalid or
unconstitutional.
Section 3: The City Council finds the introduction and adoption 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 4: 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.
Page 12
G�
..
r
1z
-
I
D—.In addition to the Gharg fixed sewer service charge specified in subdivision
A above, a sewer Gens impti^"use charge adopted by resolution of thirty c;ents
f$0.303the CityCouncil shall be assessed for each hundred (100) cubic feet of
water delivered to sewer customers who also receive water service from the City
o� c4^mor nn e d to the p blip t+eWeF Syst8m F=48Gtiye
o Newport eac .�c� c��T�ee,,,-rec�� �Y�y������,�Se.t., , 11— 1 1 2 -GN, th- GeRSUMPtOOR Gharge shall beGGme thirty five GeRtS
The recitals provided in this ordinance are true and correct and are incorporated
into the substantive portion of this ordinance.
Section 2: 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, sentence, clause or phrase hereof, irrespective of the fact that any one or
more sections, subsections, sentences, clauses or phrases be declared invalid or
unconstitutional.
Section 3: The City Council finds the introduction and adoption 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 4: 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.
Page 12
G�
Ordinance No. 2017 -
Page 3 of
Section 5: 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 pursuant to City Charter Section 414.
This ordinance was introduced at a regular meeting of the City Council of the City
of Newport Beach held on the 12th day of September, 2017, and adopted on the 26th day
of September, 2017, by the following vote, to -wit:
AYES, COUNCILMEMBERS
NOES, COUNCILMEMBERS
ABSENT COUNCILMEMBERS
ATTEST:
LEILANI I. BROWN, CITY CLERK
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
AARON C. HARP, CITY ATTORNEY
KEVIN MULDOON, MAYOR
Page 13
.0
ATTACHMENT B
ORDINANCE NO. 2017-15
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 fund the operation and maintenance of the City's sewer system, as well as the repair
and replacement of pipes, pump stations, facilities and equipment to improve the sewer
system safety, efficiency and reliability;
WHEREAS, on March 20, 2017, the City's Municipal Operations Department
retained the consulting services of HF&H Consultants, LLC ("HF&H") to update HF&H's
prior sewer rate study from 2013-14 in order to analyze the current cost of sewer services
and to provide recommendations regarding an appropriate rate structure;
WHEREAS, the resulting HF&H study recommended a revised rate structure that
includes a both a fixed charge and a use charge for sewer customers who also receive
water service from the City, and a fixed charge for sewer customers who do not receive
water service from the City;
WHEREAS, following a public hearing held on September 12, 2017 in conformity
with Proposition 218, the City Council determined that no majority protest against the
recommended rates had occurred; and
WHEREAS, the City's current sewer charges are codified in Newport Beach
Municipal Code Section 14.24.065. By this ordinance, the City Council intends amend
that Section to have the sewer charges and any changes thereto be adopted and charged
pursuant to a resolution adopted by the City Council.
NOW THEREFORE, the City Council of the City of Newport Beach ordains as
follows..
Section 1: Newport Beach Municipal Code Section 14.24.065 is hereby
amended to read as follows:
A. A monthly fixed sewer service charge adopted by resolution of the City
Council shall be assessed against each individually metered dwelling unit or
business structure connected to the public sewer system, for customers who also
receive water service from the City of Newport Beach. This sewer service charge
is based on the customer's water meter size.
B. A monthly fixed sewer service charge adopted by resolution of the City
Council shall be assessed against each service connection to the public sewer
system for customers who do not also receive water service from the City of
Newport Beach.
4-7
Ordinance No. 2017 -
Page 2 of
C. In addition to the fixed sewer service charge specified in subdivision A above,
a sewer use charge adopted by resolution of the City Council shall be assessed
for each hundred (100) cubic feet of water delivered to sewer customers who also
receive water service from the City of Newport Beach.
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, sentence, clause or phrase hereof, irrespective of the fact that any one or
more sections, subsections, sentences, clauses or phrases be declared invalid or
unconstitutional.
Section 4: The City Council finds the introduction and adoption 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 pursuant to City Charter Section 414.
This ordinance was introduced at a regular meeting of the City Council of the City
of Newport Beach held on the 12th day of September, 2017, and adopted on the 26th day
of September, 2017, by the following vote, to -wit:
Page 12
130
AYES, COUNCILMEMBERS
NOES, COUNCILMEMBERS
ABSENT COUNCILMEMBERS
ATTEST:
LEILANI I. BROWN, CITY CLERK
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
AARON C. HARP, CITY ATTORNEY
Ordinance No. 2017 -
Page 3 of _
KEVIN MULDOON, MAYOR
Page 13
OR
ATTACHMENT C
RESOLUTION NO. 2017-61
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF NEWPORT BEACH, CALIFORNIA, ESTABLISHING
SEWER CHARGES EFFECTIVE JANUARY 1, 2018 AND
FOUR YEARS OF PHASED IN INCREASES THERETO
WHEREAS, on March 20, 2017, the City of Newport Beach ("City") retained the
services of HF&H Consultants, LLC ("HF&H") to update HF&H's prior sewer rate study
from 2013-14 in order to analyze the current cost of sewer services and to provide
recommendations regarding an appropriate rate structure;
WHEREAS, the resulting HF&H study recommended establishing a rate structure
that includes a both a fixed charge and a use charge for sewer customers who also
receive water service from the City, and a fixed charge for sewer customers who do not
receive water service from the City, plus four years of phased in increases thereto;
WHEREAS, following a public hearing held on September 12, 2017, in conformity
with Proposition 218, the City Council determined that no majority protest against the
recommended rate structure had occurred;
WHEREAS, the City's current sewer charges are codified in Newport Beach
Municipal Code ("NBMC") Section 14.24.065. On September 12, 2017, the City Council
for the City of Newport Beach ("City Council") introduced Ordinance No. 2017-15 to
amend NBMC Section 14.24.065 to have the sewer charges and any changes thereto be
adopted and charged pursuant to a resolution adopted by the City Council and passed
Ordinance No. 2017-15 to second reading and adoption on September 26, 2017;
WHEREAS, by adopting this resolution, the City Council intends to establish sewer
charges effective January 1, 2018 and phased in increases thereto over a period through
January 1, 2022, pursuant to the schedule attached hereto as Exhibit "A" and
incorporated herein by this reference.
NOW, THEREFORE, the City Council of the City of Newport Beach resolves as
follows..
Section 1: The City Council does hereby establish the sewer charges effective
January 1, 2018 and phased in increases thereto through January 1, 2022, as identified
in Exhibit "A." The sewer charges shall become effective according to the schedule in
Exhibit "A." The City Council directs staff to include the newly established sewer charges
and phased in increases thereto, as adopted by this resolution, in the City's Schedule of
Rents, Fines and Fees, or other successor document thereto as amended from time to
time.
Section 2: The recitals provided in this resolution 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
4-10
Resolution No. 2017 -
Page 2 of
hereby declares that it would have passed this resolution, and each section, subsection,
sentence, clause or phrase hereof, irrespective of the fact that any 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 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.
Section 5: This resolution shall take effect immediately upon its adoption by the
City Council, and the City Clerk shall certify the vote adopting the resolution.
ADOPTED this 26th day of September, 2017.
Kevin Muldoon
Mayor
ATTEST:
Leilani I. Brown
City Clerk
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
Aaron C. Harp
City Attorney a `,4
Attachments:
A -- Current and Newly Adopted Sewer Charges
4-11
Exhibit "A"
Current and Newly Adopted Sewer Charges
(Per Resolution 2017 -XX)
Monthly Sewer Service Charge
Newport Beach Water and Sewer Customers
Meter Size
Current
1/1/2018
1/1/2018
1/112019
1/1/2020
1/1/2021
1/1/2022
518"
$
4.50
$
6.46
$
7.07
$
7.74
$
8.39
$
8.55
314"
$
4.50
$
6.46
$
7.07
$
7.74
$
8.39
$
8.55
1"
$
4.50
$
6.46
$
7.07
$
7.74
$
8.39
$
8.55
1.5"
$
4.50
$
7.11
$
7.78
$
8.51
$
9.23
$
9.41
2"
$
14.50
$
9.70
$
10.61
$
11.61
$
12.58
$
12.83
3"
$
14.50
$
10.99
$
12.02
$
13.15
$
14.26
$
14.54
4"
$
14.50
$
12.93
$
14.14
$
15.47
$
16.77
$
17.11
6"
$
14.50
$
14.55
$
15,91
$
17,41
$
18.87
$
19.25
8"
$
14.50
$
16.16
$
17.68
$
19.34
$
20.97
$
21.39
10"
$
14.50
$
20.69
$
22.63
$
24.76
$
26.84
$
27.37
12"
$
14.50
$
25.86
$
28.29
$
30.95
$
33.55
$
34.22
Sewer Use Charge
HCF
Current
1/1/2018
1/1/2019
1/1/2020
1/1/2021
1/1/2022
$
0.35
$
0.38
$
0.42
$
0.46
$
0.50
$
0.51
Monthly
Newport Beach Sewer Customers Only
Sewer Service - No Water Charge
Meter Size
Current
1/1/2018
111/2019
111/2020
1/1/2021
1/1/2022
518"
$
6.25
$
9.90
$
10.83
$
11.85
$
12.84
$
13.10
314"
$
6.25
$
9.90
$
10.83
$
11.85
$
12.84
$
13.10
1"
$
6.25
$
11.59
$
12.68
$
13.87
$
15.04
$
15.34
1.5"
$
6.25
$
34.87
$
38.15
$
41.73
$
45.24
$
46.14
2"
$
6.25
$
35.92
$
39.30
$
42.99
$
46.60
$
47.54
3"
$
6.25
$
92.27
$
100.94
$
110.43
$
119.70
$
122.10
4"
$
6.25
$
163.41
$
178.78
$
195.58
$
212.01
$
216.25
6"
$
6.25
$
287.97
$
315.04
$
344.65
$
373.60
$
381.07
8"
$
6.25
$
289.58
$
316.80
$
346.58
$
375.70
$
383.21
10"
$
6.25
$
294.11
$
321.75
$
352,00
$
381.57
$
389,20
Note: Surcharge and Per Dwelling knit charges have been removed from proposed rates
4-12