Loading...
HomeMy WebLinkAbout1977-11-01; City Council; 5201-1; Allocation of capacity-Encina Water PollutionCITY OF CARLSBAD ~*IA^ AGENDA BILL NO. *S*«L61 -X^V^^^^*^^ / Initial:'—-y-y Dept.Hd. DATE: November I, 1977 VjpA DEPARTMENT: Pub lie Works _^ ' C. Mgr. J Subject:ALLOCATION OF. LEASED CAPACITY IN ENCINA WATER POLLUTION CONTROL FACILITY Statement of the Matter The acquisition of 75,000 gallons per day of leased capacity from the Encinitas - Sanitary District in the Encina Water Pollution Control Facility and potential implementation of an allocation system create the necessity for a policy de- termination on how funds will be raised to finance the lease payments and how those funds will be collected and administered. In a staff report, dated August I, 1977 (Exhibit 2 attached), staff recommended a one-time charge of $375 per equivalent dwelling unit for each of 270 equivalent dwelling units in addition to the $500 sewer connection fee. The $375 could then be deposited into a special account within the water pollution control budget from which quarterly lease payments could be made to the Encinitas Sanitary District. To facilitate administration of these special funds and to discourage speculation on sewer permits, it is recommended that the $375 collected for these equivalent dwelling units be'collected on the basis of no return/no credit. Exh ibits 1. Staff report dated October 20, 1977 2. Staff report dated August I, 1977 Recommendation If Council concurs with staff's method of administering the fees to be collected under this program, their action should be to adopt the staff report of October 20, 1977 by minute motion. Council action 11-1-77 Council concurred with staffs recommended method of administering the fees to be collected in accordance with staff report dated October 20, 1977. MEMORANDUM TO: City Manager FROM: Public Works Administrator DATE: October 20, 1977 SUBJECT: Allocation of Leased Capacity in Encina Water Pollution Control Facility With the acquisition of 75,000 gallons of leased capacity from the Encinitas Sanitary District and potential implementation of an allocation system, it becomes necessary for Council to determine policy as to how funds will be raised to finance the leased capacity and how those funds shall be collected and administered. In my August I, 1977 report (attached) I indicated that the 75,000 gallons of leased capacity can be equated, for administrative purposes, to 270 equivalent dwelling units (EDU). Of the possible methods of fi- nancing discussed in that report, the one that appeared to be most ac- ceptable to Council was a one time flat rate charge of $375 per EDU for each of the 270 dwelling units in question. It will become necessary to establish a special account within the water pollution control budget for purposes of depositing revenues accrued from connection fees for these 270 units and from which quarterly payments will be made to the Encinitas Sanitary District. Unless instructed otherwise, I wiI I prepare the neces- sary forms requesting the Finance Department to establish the appropriate budget and to make quarterly payments to the Encinitas Sanitary District. If Council concurs, we will charge additional fees for those permits granted under the allocation program and will continue to charge these fees until the 270 EDU sewer connections have been issued. These adjusted fees will be at the rate of $875 per EDU. Five hundred dollars of this fee will go into the general sewer construction fund and the remaining $375 will go into the special fund for purposes of paying lease payments to the Encinitas Sanitary District. To facilitate administration of these special funds, as well as to re- inforce the stated Council policy discouraging speculation on sewer permits, it would be my recommendation that the $375 collected for these EDUs be col- lected on the basis of no return/no credit; that is, the payment once made is not refundable. Should an applicant fail to exercise his right to use the permit in the allocated time, thereby losing that right, the money would not be returnable. Should that applicant choose to apply on a subsequent round, a new fee would be collected. Ronald A. Beckman, P.E. Public Works Administrator RAB:veb "'"^ . (- L MEMORANDUM ( TO: City Manager FROM: Public Works Administrator DATE: . August 1, 1977 SUBJECT: Available Capacity at the Encina Water Pollution Control Facility The Encinitas Sanitary District has made 300,000 gallons of capacity avail- able for lease in the Encina Water-Pollution Control Facility. Their terms for lease are $65,000 per year for the 300,000 gallons for the first five years. For the sixth and subsequent years the rates will increase at 10% per year. Equating proposed costs to actual usage, if we assume that the five-year program for the construction of Phase III is anywhere near accurate and if we allow one additional year for contingencies (Federal delays, construction delays, etc.), then the cost for leasing the 300,000 gallons for six years would be $396,500 (see Chart I) or $1.32+ per gallon (see Chart II). It must be remembered that this lease cost is over and above the capital re- placement cost upon which/our $500 connection fee is based. After the five or six-year lease period, this capacity must be returned to Encinitas./" i In addition to the lease costs, individual agencies would still be paying (' the normal operations and maintenance costs associated with whatever* gal -v lonage they are running through the Encina facility. These costs are fi- nanced from the monthly service charges. If we assume that the four agencies which expressed interest in the capaci- ty are still interested, each agency could lease 75,000 gallons per-day. This is based on the policy that Encinitas established for equal division of capacity to all interested agencies. Should some of the agencies no longer be interested in it (highly doubtful), the potential for lease ca- pacity would be increased. Allowing for a leased capacity of 75,000 gal- lons/day, we could authorize the release of from 267 to 277 sewer permits (use 270). To offset the cost of leasing the capacity, we could establish an addition- al monthly service charge of $5.10 per unit (see Chart III) or absorb the cost in our overall operations or we could establish a one-time connection fee of $375 over and above the normal connection fee. ~ Establishing an ad- ditional monthly service fee would present a situation where certain devel- opments would be paying a higher monthly cost for the same service. Absorb- ing the cost in overall operations would be subsidizing certain present de- velopments at the expense of all. Payment of a one-time fee would provide a situation where the specific developer would be paying a cost that is jus- tified by allowing the project to proceed now rather than facing a five or six-year delay while Phase III expansion of the Encina Water Pollution Con- trol Facility is completed. The funds accrued from these additional charges f could be put in a separate account from which lease,^payments to Encinitas - would be paid. While there is an element of risk to the latter proposal, that risk being the potential of delay beyond six years, it is my belief that is offset. by the ease of administering a one-time charge versus a monthly charge. City Manager -2- August 1, 1977 An additional problem that may arise, if the additional cost of leasing is passed on to the developers, is the question of which development pays that cost. We have a few connections left from our existing ownership and a substantial portion committed to the Plaza Camino Real expansion. Since v/e have established that the commitment to the Plaza is from our existing own- ership, it is administratively defensible to accept that their hookup fees not include any interim surcharge. It is my recommendation that all other new applications for building/sewer permits be charged the base hookup fee plus the surcharge fee to pay capacity lease costs. Staff has performed an analysis of remaining available capacity. At the time the moratorium was established, the remaining capacity was estimated at 130 EDUs. After considering decisions made regarding mobile home parks, appeals granted and building shells which have never been occupied (or only partially occupied), the remaining available capacity is 19 EDUs. This as- sumes that the appeal regarding building shells is allowed. It would seem justifiable therefore to include the Encinitas allocation in with the first round on the sewer allocation program. This would make available 281 EDUs in the first round. It is my recommendation that City Council: (1) instruct staff to notify the Encinitas Sanitary District we are willing to lease as much of the available capacity as we can and authorize staff to work with Encinitas in preparing a lease agreement for Council's approval; (2) instruct-staff to prepare documents establishing an additional connection charge of $375 per EDU for each building permit which is issued after those which were sub- mitted prior to the April 19th cutoff date (an exception to this additional charge being the Plaza expansion project); and (3) include the Encinitas al- location in the first round of the sewer capacity allocation program. Ronald A. Beckman, P.E. Public Works Administrator RABrveb Attachment CHART I Lease Rate for 300,000 Gallons/Day Capacity Year 123456 Total Cost per year .$65,000 $65,000 $65,000 $65,000 $65,000 $71,500 $396,500 CHART II Total Cost Per Gallon to Lease for Six Years $396,500 v 300,000 gallons = $1.3217/gallon CHART III $1.3217/gallon x 75,000 gallons = $99,125 $99,125 - 270 EDUs = $367.13/EDU $367.13/EDU T 72 months (six years) = $5.lO/EDU/month