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ITEM: |
ACTION
ITEM |
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17. |
CONSIDER AUTHORIZATION OF
CONTRACT FOR PRINTING AND MAILING OF PROPOSITION 218 HEARING NOTICE |
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Meeting
Date: |
March 19, 2012 |
Budgeted: |
Yes |
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From: |
David J.
Stoldt, General
Manager |
Program/Line Item No: |
Project Expenditures/ 3-1-2 and Services &
Supplies/Professional Fee |
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Prepared
By: |
David J.
Stoldt |
Cost Estimate: |
$17,000 |
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General Counsel Approval: N/A |
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Committee Recommendation: N/A |
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CEQA Compliance: N/A |
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SUMMARY: As discussed in the background section of this staff note, the General Manager has recommended that the District consider shifting the collection mechanism of the User Fee from a percentage of the consumer’s water bill to a direct billing of the property owner based on industry standard allocations of water use based on the type of property, as recommended by the rate consultant. The process would consist of a majority protest proceeding at least forty-five days after mailing a Notice of Public Hearing to all identified California American Water (CAW) customers in the District except the Hidden Hills and Bishop units, informing them that the Board will consider an ordinance to authorize the User Fee. At least forty-five days after the mailing of the notice, the District could then proceed with the second reading of the ordinance to authorize the User Fee. The ordinance could be adopted at second reading unless a majority protest is received.
RECOMMENDATION: The General Manager recommends the Board initiate the process required for authorization of the User Fee including printing and mailing, however, actual distribution will be subject to Board approval of the notice and first reading of the Ordinance at the April 16, 2012 Board Meeting. Approval at this time, simply allows staff to engage the printer and mailing house prior to the April 16, 2012 meeting.
IMPACTS ON STAFF AND RESOURCES: No funding for this effort is included in the Fiscal Year 2011-12 budget. In addition to time spent by District staff and General Counsel, additional costs would be incurred to print and mail the Notice of Public Hearing. It is estimated that cost for printing would approximate $3,500 and the cost for a mailing house to distribute the Notice, including postage, would be about $13,000. The unbudgeted costs for this effort could be charged to uncommitted balances in the Public Outreach-General account and the Professional Services account, which has a balance since the rate consultant expense was significantly below the not-to-exceed authorization.
BACKGROUND: Through a recent CPUC decision, the District’s ability to collect its User Fee has been impaired. Failure to enact a new collection mechanism for the User Fee will result in the District suspending environmental and water supply development programs and possible lay-offs and/or furloughs.
The proposed new User Fee, approximately $3.7 million, will be used primarily for new water supply projects and is the cornerstone to successful implementation of the Groundwater Replenishment project with MRWPCA.
MPWMD has collected a User Fee from California American Water (“Cal-Am”) customers and other water system customers continuously since 1983. The District has adopted 14 ordinances since then, modifying and adopting the User Fee at different levels for different purposes. This fee was allocated based on actual water use. It has shown on Cal-Am water bills and also on bills from the Seaside Municipal Water System and the Pebble Beach Reclamation Project. The User Fee has been expressed as a percentage of meter and water charges. The User Fee was set at 8.325% of a customer’s water bill when it was suspended.
The California Supreme Court in Bighorn-Desert View Water Agency v. Verjil, 39 Cal.4th 205 that was issued in July 2006, determined that Proposition 218 applies to fees imposed upon consumption of utility services such as water related charges. To comply with the requirements of Proposition 218, the District must consider authorization of the User Fee collection as proposed. This shall require notice and majority protest proceedings in accord with Article XIII D of the California Constitution. An election, however, is not required because a specific exemption applies to water services. As noted, though, revenues from the water User Fee are also governed by the rules of § 6(b). These generally require that rates not exceed the cost of providing the service and that rate proceeds be used only for costs related to provision of the service.
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