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HomeMy Public PortalAbout2023-04-11 Item 10CITY OF MILLBRAE 621 MAGNOLIA AVE MILLBRAE, CA 94030 CITY COUNCIL AGENDA REPORT SUBJECT: Introduction and Waive the First Reading of an Ordinance Amending Sections 8.20.830, 8.20.890, and 8.20.900 of Title VIII of the Millbrae Municipal Code providing for the collection of sewer service charges on the County tax roll ATTACHMENTS: 1. Ordinance Report No. 1-14L Agenda Item: 1r` For Agenda of: April 11, 2023 Department: Finance & Public Works Originator: Mike Sung Finance Director SamBautista Public; Works Director Budget Action: ❑ Yes ® No Finance ReviewMS REPORT TYPE: ® ACTION ❑ INFORMATIONAL ITEM TYPE: ❑ CONSENT ❑ PUBLIC HEARING ® EXISTING BUSINESS ❑ NEW BUSINESS RECOMMENDATION: Staff recommends that the City Council Introduce and Waive the First Reading of an Ordinance Amending Sections 8.20.830, 8.20.890, and 8.20.900 of Title VIII of the Millbrae Municipal Code providing for the collection of sewer service charges on the County tax roll. BACKGROUND: At the April 12, 2022 Council meeting, Council authorized staff to move forward with the consideration of placing the wastewater service utility billing on the San Mateo County Assessment Roll. This would replace the current practice, which is for wastewater bills to be sent via mail every two months and collected directly from customers. Staff then conducted a Request for Proposals (RFP) and selected a consultant to assist with moving the collections of the sewer enterprise portion of the utility bill to the county property tax roll. The consultant would calculate out the proper amounts for each parcel and staff would seek Council authorization in accordance with the provisions of California Health and Safety Code Section 5473 et. seq. At that time, staff recommended implementing the transfer to the county tax roll effective Fiscal Year 2023-2024, giving owners sufficient time to modify their future leases accordingly. At the November 15, 2022 Council meeting, staff provided Council with an informational memo regarding placing the sewer charges onto the county property tax roll. Council directed staff to proceed forward with an analysis and Staff has engaged with consultants and legal to review the City's current structure and recommends Council introduce an ordinance to amend the municipal code. Page 1 of 2 19461146.1 Ordinance Introduction: Code Amendment related to Municipal Sanitary Sewer System Page 2 of 2 ANALYSIS: Many cities in the Bay Area collect their sewer service charges on the property tax roll. There are benefits to billing the sewer utilities through the County system to both ratepayers and the sewer enterprise fund. There is an added benefit for cities in County of San Mateo, as the county participates in the Teeter plan, a method in which the county advances 100% of the taxes and charges to each taxing jurisdiction (including Millbrae) for those amounts collected on the tax roll. This allows staff to project revenue with more accuracy and better plan any future expenditures required to maintain the City's sewer collection system, including any long-term debt obligations. With the consistent revenue stream, there is a possibility to increase the City's bond rating, which could lead to the City receiving lower interest rates when financing capital improvement projects. Lower interest rates equate to lower overall costs and would be factored into future rate studies. These potential cost savings would be beneficial to ratepayers. Once added to the tax roll, the sewer charges will be paid by the parcel owner and will be collected through the County tax collection system. The payments would be set on the same schedule as property tax, which is collected twice a year. Rates would not increase through this transition, but there will be a transition period the first year this takes place. The City would transition the bills that the ratepayers receive by prorating any bills received after the transition date (in this case anticipated to be July 1, 2023) to reflect the transition to county billing. Ratepayers would notice a change in their current bimonthly utility (which currently includes both the water and sewer portions) bill in July or August, with the sewer portion transitioned fully by the September or October bill. The sewer charges for residential and commercial customers are divided into three separate charges: a fixed basic service charge (or universal life service, for those that meet the income thresholds and qualify), a variable user fee, and the clean bay charge (which is fixed for residential and variable for commercial). The variable fees for residential will continue to be calculated in accordance with the municipal code based on the average water consumption during winter water usage (December through March) and expanded out to a yearly amount to be paid in two payments, aligning with the county property tax collection schedule. The variable fees for commercial will continue to be calculated in accordance with the municipal code as well and are based on the average water consumption for the last 12 months (April through March). Any ratepayers on Universal Life Support would continue to see the reduced rates via the property tax bill process. The water billing portion would continue to be managed by the City and ratepayers will continue to receive bimonthly bills for their water service. Staff will come back in early April for the second reading of the ordinance and work with the consultant and return in May with a comprehensive listing of wastewater charges by parcel number for consideration after a public hearing. If approved following the public hearing, a new resolution will place the sewer charges onto the San Mateo County Assessment Roll beginning July 1, 2023. FISCAL IMPACT: Moving the sewer utility to the property tax system would provide more stable revenue remittances and better position the city for a possible credit rating increase, which would provide the city with better rates when financing capital projects in the future. COUNCIL ACTION: Staff recommends that the City Council Introduce and Waive the First Reading of an Ordinance Amending Sections 8.20.830, 8.20.890, and 8.20.900 of Title VIII of the Millbrae Municipal Code providing for the collection of sewer service charges on the County tax roll. CITY OF MILLBRAE, COUNTY OF SAN MATEO STATE OF CALIFORNIA X X X AN ORDINANCE OF THE CITY OF MILLBRAE AMENDING SECTIONS 8.20.830, 8.20.890, AND 8.20.900 OF THE MILLBRAE MUNICIPAL CODE PROVIDING FOR THE COLLECTION OF SEWER SERVICE CHARGES THROUGH THE COUNTY TAX ROLL The City Council of the City of Millbrae does ordain as follows: SECTION 1: FINDINGS WHEREAS, the City Council of the City of Millbrae ("City") has determined that adding sewer service charges to the property tax roll is the least costly and most efficient method of collecting the sewer service charge, and WHEREAS, pursuant to California Health and Safety Code Section 5470 et. seq., the City is authorized to have charges for sewer services rendered by the City collected on the property tax roll, and WHEREAS, the City hereby desires, pursuant to California Health and Safety Code Section 5473, commencing with Fiscal Year 2023-24, to have sewer service charges for services rendered by the City collected on the property tax roll of the County of San Mateo, State of California, in the same general manner, by the same persons and at the same time as the collection of general property taxes, in the manner provided pursuant to California Health and Safety Code Sections 5470 et seq.. SECTION 2: AMENDMENT OF SECTION 8.20.830 Section 8.20.830 "Sanitary Sewer and Use Charges," of Article VIII, of the Millbrae Municipal Code is hereby amended and restated in its entirety to read as follows: 8.20.830 Sanitary sewer and use charges. A. Each person whose premises in the city is served by the publicly owned treatment works (POTW), or which may otherwise be discharging sewage which is conveyed in the sanitary sewer collection system and/or ultimately passes through the POTW, shall pay for the use, services and facilities of the sanitary sewer collection system and POTW by means of an annual sanitary sewer service and use charge. The table in subsection D below describes the customer classes for the annual sanitary sewer service and use charge. The charges for each customer class set forth in the current rate schedule for adopted by the city council and any updated charges will be reflected in the separate city-wide fee schedule. B. The charges for each person shall be determined using the following definitions: 19458808.3 Lifeline Customers. To qualify as a lifeline customer, a residential customer must provide satisfactory evidence to the director of public works or his/her designee that such customer has qualified for and is currently being provided telephone service under the universal lifeline telephone service rate or gas or electric service under the California alternate rate for energy, in which event such customer shall pay a basic sanitary sewer service and use charge per the table below so long as such customer is provided telephone, gas or electric services under these rates. Variable User Fee. In addition to the basic sewer service and use charge, every customer shall pay the appropriate variable user fee, which shall be based on each unit (one hundred cubic feet) of water consumed, except that the variable user fee shall be based on consumption. For nonresidential customers, the variable user fee shall be calculated based on the consumption of water during the prior calendar year (January to December) and shall be collected for the next fiscal year (July 1 through June 30). For residential customers, the variable user fee is based on the average water consumption for four months (December through March) winter water usage (the "base consumption"). Each June the base consumption amount by residential customers will be multiplied by three to determine the estimated consumption for the entire fiscal year, to which the variable user fee will be applied. Residential customers include, but, subject to the determination of the director of public works are not limited to, single-family dwellings and multiple -family units such as duplexes, triplexes, multiplexes and condominiums. In the case of multiple - family units and condominiums, each separate dwelling unit within the complex is billed as if it was a single-family dwelling relative to the fixed amount of the sanitary sewer service and use charge. The variable user fee is based on the total water used unless each separate unit is metered separately, in which case the fixed amount and variable amount of each unit are combined. C. For a residential customer who has less than the four months or no recorded winter consumption because of the period of their service, the average for billing purposes shall be determined as follows: Less than four months (one hundred twenty days) but more than thirty days: the average shall be the average of the actual service period calculated on the basis of actual full (thirty-day/twenty-eight or twenty-nine for February) months only. (Example: seventy- five day period would be considered two months.) Less than one month (thirty days) except for February twenty-eight/twenty-nine days or no use history: the average shall be calculated on an occupancy per capita basis of fifty gallons per day for each occupant six years old or older on the day water service begins. D. The sanitary sewer and use charges shall be charged for each of the following classes of customer/user: Service Charge ($ per acct/mo) Basic Universal Life Service 2 Variable User Fee (charged for the following customer classes) ($ per 100 cubic feet) Residential Restaurants, Cocktail Lounges, Caterers Hotels, Motels, Convalescent Homes w/Eating or Laundry Facilities Food Processors — Misc. Supermarkets, Delicatessens Auto — Service Stations, Car Washes, Auto Repair Facilities Schools w/Food Service Schools w/No Food Service Commercial (Business Establishments, Banks, Office Bldgs., Retail Stores, Hotels and Motels without Eating or Laundry Facilities) Groundwater Pretreatment I Pretreatment II SECTION 3: AMENDMENT OF SECTION 8.20.890 Section 8.20.890 of Article VIII of the Millbrae Municipal Code is hereby amended and restated in its entirety to read as follows: Section 8.20.890 Collection of sewer and use charges on the tax roll. A. Authorization. Pursuant to California Health and Safety Code Section 5473, sewer service charges for services rendered by the City shall be collected on the property tax roll of the County of San Mateo, State of California, in the same general manner, by the same persons and at the same time as the collection of general property taxes, in the manner provided pursuant to California Health and Safety Code Sections 5470 et seq.. B. Preparation of Report, Hearing. and Transmission to Tax Collector. A written report shall be prepared once a year which shall contain a description of each parcel of real property receiving sewer service and the amount of the charge for each parcel for such year computed in conformity with the City's Rate Schedule and this Ordinance. The report shall be approved by the City Council after a noticed public hearing and filed with the City Clerk. C. Authorization. The San Mateo County Tax Collector is hereby authorized and directed to include the amount of sewer charges on bills for taxes levied against the respective lots and parcels of land in the City. SECTION 4: AMENDMENT OF SECTION 8.20.900 Section 8.20.900 of Article VIII of the Millbrae Municipal Code is hereby amended and restated in its entirety to read as follows: Section 8.20.890 Delinquency. 3 Pursuant to California Health and Safety Code Section 5473.10, if the sewer service charges are unpaid and become delinquent, the following delinquency penalties shall attach to them: (a) a basic delinquency of ten percent (10%); and (b) an additional delinquency penalty of one and one-half percent (1.5%) per month. All such delinquency penalties shall be collected in the same general manner, by the same persons and at the same time as are delinquency penalties on general taxes for the County of San Mateo. SECTION 5: EFFECTIVE DATE; PUBLICATION. This ordinance shall be in full force and effect commencing on July 1, 2023. At least five days prior to its adoption and within fifteen days after its adoption, a summary of this ordinance shall be published once in a newspaper of general circulation printed and published in the County of San Mateo and circulated in the City of Millbrae. SECTION 6: NOTICE OF EXEMPTION. The City Manager hereby is authorized and directed to file a Notice of Exemption with the County Clerk to record the bases for which the actions taken by this Ordinance are exempt from the California Environmental Quality Act. INTRODUCED at a regular meeting of the City Council of the City of Millbrae held on April 11, 2023. PASSED AND ADOPTED at a regular meeting of the City Council of the City of Millbrae held on April , 2023, by the following roll call vote: Mayor ATTEST: City Clerk 4