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HomeMy WebLinkAboutRPT 2 SWR MAINT DIST 04-21-86AGENDA sATE: APRIL 11, 1986 REPORTS NO. 2 4-21-86 Inter- Corn TO: FROM: SUBJECT: WILLIA)4 HUSTON, CITY MANAGER PUBLIC WORKS DEPARTMENT/ENGINEERING DIVISION 7TH AND 70TH SEWER MAINTENANCE DISTRICT (INFORMATIONAL REPORT) RECOMMENDED ACTION: Receive and file. BACKGROUND: In the early 1960's, the Seventh and Seventieth Sewer Maintenance Districts were formed with the County Board of Supervisors, acting as the governing body. These districts have provided local sewer service (maintenance) to areas within County Sanitation District No. 7. A detailed explanation of the issues and alternatives is outlined in Attachment "A" prepared by the County Sanitation Districts and entitled, "Preliminary Status Report for Seventh and Seventieth Sewer Maintenance District". Also included as Attachment "B" is a recap of a meeting held on April 1, 1986 between the Sanitation Districts, City of Irvine and City of Tustin. DISCUSSION: Staff has reviewed the information provided to date and concurs that the most feasible solution with the least of amount of financial and .staffing impacts to the City would be the implementation of Alternative No. 4. This alternative would provide for the County Sanitation Districts takeover of the 7th and 70th Sewer Maintenance Districts. There are no immediate actions required by the City Council at this time, but the County Sanitation District'has requested that any specific concerns be forwarded to them at the earliest practical date. The recommended action for the City Council is to receive and file unless there are any specific concerns or questions that need to be forwarded to the County Sanitation Districts. Bob Ledendecker Director of Public Works/City Engineer BL:jr Attachment January 15, ~.:~6 COUNI'Y SANITATION DISTRICTS ~f O=Z~,:}[ COU!,TY CAIIFOR';IA PRELIMINARY STATUS REPORT Seventh and Seventieth Sewer Maintenance Districts BACKGROUND The Seventh and Seventieth Sewer Maintenance Districts were formed in the early 1960's to provide local sewer service to areas within County Sanitation District No. 7. The County Board of Supervisors is the governing body. Today the Maintenance Districts provide service to portions of the Cities of Tustin and Irvine, and unincorporated areas all within District No. 7. In addition, portions of the Cities of Costa Mesa, Newport Beach, Orange and Santa Ana are within the Sewer Maintenance District boundaries but are pending deannexation approval by the County. Since their inception, the Maintenance ~Districts have contracted with County Sanitation District No. 7 for sewerage ystem maintenance, engineering services and managerial services. ISSUE In fiscal year 1983-84 the Board of Supervisors directed its Environmental Management Agency (EMA) to review the feasibility of transferring the governance of the Maintenance Districts to County Sanitation District No. 7 and/or of levying property owner assessments to assist in financing of Maintenance District services. Subsequently the EMA was further authorized to negotiate an agreement in concept with County Sanitation District No. 7 to assume governance of the Maintenance District. This request is partly an outcome of the 1981-82 Orange County Grand Jury Report on Special Districts. Because the formation of new District No. 14 had a bearing on the long-term needs of the Maintenance Districts, the County's request has been held in abeyance pending the outcome of the proposed formation of District No. 14. However, during the District No. 14 proceedings we have continued to concurrently study the issues. Staff has held numerous discussions and meetings with the staff of EMA and is now seeking more specific direction from the Select Committee. -1- aLTERNATIVES c~,,~r =,-,, ._ have been evaluated The following appear to be ...... t ,~._, al alt .... viable for further review. I. No change from existing practice. 2. Dissolve the SMD; cities form a joint powers agr.eement with County Sanitation District No. 7 to provide local sewer service. 3. Dissolve the SMD; each city assumes local sewer service within its boundaries and its presently unincorporated sphere of influence. 4. Dissolve the SMD; County Sanitation District No. 7 assumes lodal sewer service by: 1) Absorbing as part of regular CSD service responsibility. -or- 2) Establish separate zones for financing local service to the areas. The relative advantages and disadvantages are summarized on the attached Exhibit "A". DISCUSSION ~e major issue is financial. The cost of providing sewer service to the ,aintenance Districts is expected to exceed the currently available financing. This is because a large portion of the historical tax share, 49% for 7th and 68% for 70th is now diverted pursuant to Proposition 13 since the Sewer Maintenance Districts received State bail-out funds subsequent to passage of the Jarvis Initiative. To date, the shortfall has been made up by an appropriation from the Special District Agumentation Fund. However, this source will dry-up as the Board of Supervisors has ruled that no SDAF money will be available for special districts in 1986-87. If the service could be taken over by an agency which did not receive bail-out funds (such as the Sanitation Districts) then that agency would be able to retain the entire pre-diversion tax revenue, and the funds would be adequate to pay for the service in the foreseeable future. If the SDAF diversion cannot be stopped, then there would be an immediate need to establish user fees. Staff has reviewed the present and projected financial status of the Maintenance Districts with the EMA. If another agency assumes responsibility for the Maintenance Districts it appears the County would be receptive to a request for a one-time SDAF transfer to provide sufficient funds to cover the needed capital projects identified in the recently approved Maintenance District Master Plan, service for areas annexed without property tax exchanges, manhole repairs required by the contemplated County road resurfacing project, and certain ~ngineering studies. .ne County is anxious to resolve this issue prior to June 3~, 1986. Otherwise they will be required to institute user fees. -2- EXHIBIT "A" Advantaoes and Disadvantages A1 ternati ve 1. No change No organizational proceedings required Disadvantaoes CSD No. 7 still contracts for local maintenance Requires user fees Does not accom'odate Supervisors request 2. Form Joint Powers Agreement All t~xes available for service Acco~,~dates Supervisors request CSD No. 7 stil 1 contracts for maintenance Cities ass~ne all local responsibility ~r~oJ.~dates Supervisors request Must include spheres of influence CSD No. 7 Stil 1 contracts for local m~intenance Ma~ not retain all taxes because of bail-out funds Sone areas have surplus; others have deficit 4. a) Absorb into __r~_ No. 7 All taxes available for service C~m,t operating surplus Potential surplus as punp stations take~ out of service Acc~i;',-~dates Supervisors request No local s~;~ing agency Precedent setting in that historically the CSD has not provided local service (although it does by contract with ~'s) b) Establish zones in CSD NO. 7 All taxes available for service Curr~nt operating surplus Potential surplus as pu~p stations taken out of service Cu,~licates cost accounting No local se~:_ring agency Precedent setting in that historically the CSD has not provided local service (although it does by c~]tract with S~)'s) MEETING NOTES 7th and 7~th c~D ,~Y~,~,~ ~c~T~, . ..~,,~,. .~,~,~uN D~rT a?il 1. 1986 Present: Bob Graham, Bob Storchneim, City of Irvine Jerry Otteson, City of Tustin Tom Dawes, Gary Streed, Hilary Baker, Sanitation Districts Tom Dawes explained that discussions have been held with the County of Orange regarding the Sanitation Districts taking over the 7th and 70th Sewer Main- tenance Districts (SMD). These are two special districts for local sewer service in County territory, owned by the County which are maintained by the Sanitation Districts under the provisions of an agreement with the sewer main- tenance districts. The 7th SMD handles sewage that flows by gravity and sewage from the 70th SMD is pumped. The County Board of Supervisors has determined that all special districts will lose Special District Augmentation Funds (SDAF) in fiscal 1986-87 fiscal year. Previously these two special districts have been receiving much of their fund- ing from this source. Additionally, in a recent Grand Jury report, it was recommended that all special districts be dissolved, so this action is par- tially in response to that recommendation. Part of this issue revolves around the acceptance of bail out funds. The Sanitation Districts did not take any bail out funds after Proposition 13. Because of that, we can recover full tax revenue from the 7th and 70th SMDs if they are dissolved. At the present time, about half the tax revenue from those districts is directed to the SDAF, and in turn, those districts have been receiving a large portion of their funding from that source. Under current regulations, if the districts are given to the cities, they may not receive the full portion of the tax rate because the cities received bail-out monies. Our Boards of Directors (comprised of City Council members from the cities we serve) are studying the takeover of the 7th and 70th SMDs by OCSD No. 7. If this is done, the local sewers would be owned and operated by the Sanitation Districts. This issue will be discussed at a special committee meeting of our Boards of Directors on April 2. If the takeover occurs, the Sanitation Districts would ask the cities to re- dedicate the easements they now hold for local sewers owned by the 7th and 70th SMDs to the Sanitation Districts, and in the future we would have those ease- ments dedicated to us initially by the developers. The Districts would need to determine with the City of Tustin what functions they wish to retain since they currently do their own engineering and inspec- tion. Tom Dawes did not feel that these arrangements would have to change, since it is a self-supporting function. All engineering and inspection would continue to be paid for by developer fees. It was emphasized that this action will not result in an increase in costs to the cities and may be the only way for the public to avoid user charges. The Districts have examined our historical figures and find that we can perform the required maintenance for the monies which will be received because of being able to receive the full share of the basic levy.