For Utilities Commission Meeting [October 16, 2018]
TO: Honorable Chairperson and Commission
APPROVAL: Thomas J. Crowley, P.E., Utilities Manager
FROM: Susanne Wilcox, Administrative Analyst
Title
Recommend City Council Consider Adoption of the Updated Water and Wastewater Development Impact Fees.
(ACTION)
Body
BACKGROUND:
Development Impact Fees [DIF(s)] are charges imposed by local governmental agencies for the purpose of defraying all or a portion of the cost of public facilities needed to serve development projects. Government Code Sections 66000-66025 (the “Mitigation Fee Act”) establishes the procedural framework for adopting development impact fees.
A DIF is not a tax, special assessment or rate increase on existing development, but is only imposed upon new development as a mitigation measure. DIFs are a one-time charge to new applicants for service representing a proportionate share of the cost of facilities necessary to provide system capacity to a new development. The DIFs must be reasonable related to the demand for public services created by the development. The power to exact DIFs arises from the City’s duty to protect the community’s public health, safety and welfare.
From 1989-1990, the City of Rialto adopted Ordinances establishing DIFs for various public facilities, including but not limited to general municipal, police, fire, park, storm drains, water and sewer. The City imposes the DIFs to mitigate the demands that new development places upon the City’s public facilities. The enacting Ordinances provide allow the DIFs to be set by Resolution, and may be increased by the City Council based upon material changes in facility needs, construction costs, or demographic trends.
The DIF schedules were last updated for a variety of facilities, including Water and Wastewater in 2011. To ensure the DIFs continue to keep pace with inflation, the City adopted an automatic inflationary adjustment to be made each July 1st. The DIFs are adjusted by the percentage change in the California Construction Cost Index (CCCI) for the preceding calendar year.
On May 9, 2017, the City Council/Rialto Utility Authority (RUA) approved Resolution 7125 temporarily reducing sewer connection fees to $393.98 per seat for full service and $204.73 per seat for fast service restaurants. On December 12, 2017, the City Council/RUA approved Resolution 7261 temporarily reducing sewer connection fee to $500.00 per hotel room with and without restaurants. On May 8, 2018, the City Council/RUA approved Resolution 7334 continuing the temporary sewer connection rate reduction until December 31, 2018.
ANALYSIS/DISCUSSION:
The City’s General Plan requires all developed areas within the City of Rialto to be adequately served with essential public services and infrastructure. New development places additional demands upon existing public facilities and often requires the construction of new or expanded facilities to maintain service standards. To ensure that the City collects sufficient funds to construct the master planned facilities, the City should periodically review and update its DIFs to adjust for demographic trends, the increased cost of construction and/or any material changes to the list of master planned facilities.
To evaluate the current DIFs for Water and Wastewater services, the City retained the services of FG Solutions who developed the proposed DIFs. The proposed DIFs are fully discussed in the Water and Wastewater Development Impact Fee Update report and based on the fact that water and wastewater system capacity to serve new development is provided by both existing and future infrastructure. The report is included as Attachment 1.
There are three separate fees calculated in this DIF Update.
1. Water Holding and Distribution.
2. Wastewater Treatment:
Consistent with the current sewer DIF, the treatment DIF is based on the cost of the treatment plant, sewer pump stations, and pipes greater than 12” in diameter.
3. Wastewater Collection:
This DIF is based on the cost of collection system pipes 12” or less in diameter. It recognizes that infill development will rely on the City’s existing small-diameter sewer mains, but new subdivisions will not.
The calculations to determine the DIFs were completed following the basic steps below. Section 2 of the attached report shows the actual calculations in greater detail.
• Determine the Cost Basis:
o The cost of existing and future infrastructure required to serve new development.
• Determine the System Capacity:
o For water, it is the demands, in units of million gallons per day, at the end of the planning period in the District’s 2012 Master Plan.
o For wastewater, it is the treatment plant capacity as identified in the 2017 Basis of Design Report (“BODR”) after the upcoming Wastewater Treatment Plant Improvement Project, also known as the “S1” project.
• Calculate Unit Cost of Capacity:
o Cost Basis divided by the System Capacity
• Calculate the DIF for each customer class:
o Unit Cost of Capacity multiplied by the use of capacity for each customer class.
The Proposed Water DIF amounts are shown below in Table 1.
Table 1
DIF Proposed Wastewater Treatment are shown below in Table 2.
Table 2
It should be noted that for hotels/motels with restaurants, DIFs are separately calculated for the restaurant and hotel and then added together. For manufacturing, the DIF for an equivalently sized warehouse is calculated to capture domestic wastewater and added to a calculation for process water discharged to sewer based on a formula that takes in to account flow, Biochemical Oxygen Demand (BOD) loading, and Total Suspended Solids (TDS) loading.
Proposed Wastewater Collection DIF is shown below in Table 3.
Table 3
Overall, the biggest changes to the City’s DIFs are:
• In just about every category, proposed DIFs are lower than current DIFs.
• Proposed DIFs are reflective of the water and wastewater infrastructure required to serve new development.
• Wastewater Treatment customer classes have been simplified, making it easier to administer and removing the customer classifications that were redundant or no longer relevant.
The draft Resolution is under review by the City Attorney’s office and is included as Attachment 2.
Staff believes the proposed DIF fee schedule will be easier to use and implement, keeps pace with inflation and the cost of providing services, while still allowing the City to maintain a competitive edge in efforts to bring new development to the Community.
FINANCIAL IMPACT:
A projection of the total reduction in DIF revenues is not made because development levels vary considerably from year to year. The proposed fees for water and wastewater categories are listed in the fee resolutions/ordinances. The actual fees will vary for each new customer, depending on customer specific parameters such as customer type, water meter size, and lineal front footage.
RECOMMENDATION:
Staff requests that the Utilities Commission recommend City Council conduct a Public Hearing and adopt the updated Water and Wastewater Development Impact Fees.