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SR-505-002-01 (2) .. 5CJS-ooz--o/ r-IS GS:SES:JM:JH:srcode.h2o.sm Council Meeting: July 7, 1992 JUL Santa Monica, California '/ j992 To: Mayor and City City Council From: City staff Subject: Recommendation to Direct City Attorney to Amend Certain Sections of the Santa Monica Municipal Code Relating to water and Wastewater Service INTRODUCTION This staff report recommends that the City council direct the City Attorney to add and amend certain sections of the Santa Monica Municipal Code relating to water and wastewater service. BACKGROUND City staff is recommending that certain additions and changes be made to the Santa Monica Municipal Code relating to water and wastewater services. The modifications will make the ordinance language consistent throughout certain Municipal code sections, clarify or add sections so that the city can better recover the actual costs of water and wastewater service, and provide consistency with the City practice of setting and revising fees and deposits by resolution. Many of these sections have not been reviewed or revised since the 1960's and 1970's. RECOMMENDED REVISIONS TO SECTIONS OF THE MUNICIPAL CODE RELATING TO WATER Add Section: Late Fees for Past Due utilities Bills. Currently, an inequity exists in that there is no incentive to pay utility bills on time. The utility bill which includes water, sewer, refuse and Baysaver charges is sent to a customer on a bi-monthly - 1 - q- ..B JUl '":- 11))- ~ ~ : ~~ t.. basis. It is due upon presentation and delinquent after 25 days. If a payment has not been received by the 35th day, a final notice is sent. After 45 days, a field representative calls the customer and/or leaves a "shut off" notice at the customer's home or bus iness . The customer has 48 hours to pay the past due balance plus a $15 service fee before service is disconnected. If the customer contacts the office and is unable to pay the full amount owed, a payment plan may be arranged in order to continue service. Total average monthly bills for 1992 are $1,763,819 and the average net monthly past due accounts for 1992 is $718,110. staff is recommending that a section be added to the Municipal Code authorizing the City to assess a three percent late charge which will be applied to past due balances appearing on the bi-monthly utility bill. This late charge rate will be set and revised by resolution. A revision of another section of the Code will provide that a bill is deliquent 20 days after mailing. It is anticipated that by implementing a late charge, utilities bills will be paid in a more timely fashion, therefore, reducing the amount of accounts receivables past due. A survey of more than twenty other local water agencies indicates that a majority of water agencies charge a late fee. cities that are currently charging a bi-monthly late fee include the Torrance (3%), Pasadena (as of July I, 1992, 5%), Los Angeles' Department of Water and Power (3%), Manhattan Beach (5%), and San Fernando (10%). - 2 - Add section: Time Limits for credits and Backcharges. currently, when a customer has been mischarged there is no provision in the Code to provide for a retroactive adjustment and an administrative decision is made for each occurrence. For consistency in handling these types of mischarges, staff is recommending that a section of the Code be added which establishes the City's authority to provide retroactive adjustments for a maximum period of two years from the date that the error is first determined. Any overpayment or underbilling shall be applied to the next or succeeding bills, unless other arrangements are requested by the customer. Add Section: Hydrant Flow Test. At a developer's request, the Water Division conducts tests of available water flows and pressures at various fire hydrant locations in the city in order for the developer to design the proper fire sprinkler system for a building. Currently, the City charges $200 for a hydrant flow test. The authority to charge the fee is governed by Section 7203 "Temporary Water Service". However, staff is recommending that a separate section be added to the Code to specifically address hydrant flow tests and allow the fee to be set by resolution. The fee will remain at $200. Revise Article VII "Public Works II , Chapter 2 "Water Division". Change "Water Division" to "utilities Division" throughout. Change "Water Superintendenttf and "street Superintendent" to "utilities Manager" throughout. - 3 - Revise Section 7203 "Temporary Water service", paragraph (a) "From Fire Hydrants". (Adopted 1986). Currently, this section authorizes City staff to establish a customer account for temporary water service at a vacant site during construction so that the customer will not be charged for sewer or regular refuse pick up. The current charge for temporary water service is at the highest unit rate (currently $.97 per billing unit) and no bi-monthly fixed water meter rate is charged. The bi-mont1y fixed water meter rates were established to recover the fixed costs of providing water service to the city's customers. Providing temporary water service also incurs these fixed costs and temporary water customers should be charged the same rates as regular water customers. In addition, there is no incentive for temporary water service customers to conserve since the water use. Therefore, staff is recommending that the section be revised from "...and water used at the highest unit rate established pursuant to Section 7200 herein..." to "...and water used at two times the highest rate established pursuant to " Section 7200 herein and the appropriate bi-month1y fixed watef meter charges shall be applied...1I ~ /' ... ~ A__ Revise Section 7206 t1Water Construction and Connection Fee". (Adopted 1986). The term IIWater Construction and Connection FeeH should be changed to "Water Capital Facility Feell throughout the section. The term "connection fee II is no longer appropriate terminology due to the adoption of AB 1600 (Sections 66000 et seq. to the Government Code). This bill renamed the fee and - 4 - specified that funds collected for this purpose must be used for capital expansions. Section 7206, Subparagraph (e) states "Although fire service installations are not subject to this (water connection] fee,...". This section should be revised to state "Fire service installations are subject to this fee and if necessary specific offsite improvements may be required...II. Revise Section 7208 "Meter Reading, Billing and collection". (Adopted 1986). This section should be modified to provide a consistent definition of when a utility bill becomes deliquent. Currently Section 7208 reads "Water statements ... shall become delinquent if not paid before the twentieth (25th) day after mailing". The section should be revised to read "Water statements ... shall become delinquent if not paid before the twentieth (20th) day...II. Revise Section 7210 uDeposit Guaranteeing Payment". (Adopted 1986) . This section should be revised to include reference to sewer service charges. The first paragraph should be changed from "... to guarantee the payment of all water services and refuse collection charges..." to lito guarantee the payment of all water service, sewer service and refuse collection charges...". Also in the first paragraph, "The amount of the deposit ...shall be approximately equal to an estimated three (3) months billing for water and refuse charges..." should be revised to "The amount of the deposit... shall be approximately equal to an estimated three (3) months billing for water service, sewer service and - 5 - refuse collection charges...". In the last paragraph, "the deposit may be applied to any outstanding water or refuse bills..." should be changed to "...the deposit may be applied to any outstanding water service, sewer service or refuse collection bills...". Revise section 7.211 "Service Connections and Meters" r Paragraph (b) "Changes in Location And/Or Size". (Adopted 1986). The last sentence in the first paragraph should be revised from " . . . shall be the regular service fee for that size service" to "shall be the charge for instal1ling a new service and meter. It This will clarify the language in the Code to be consistent with Section 7.211 (a). Revise Section 7220 "Testing Meters". (Adopted 1986). This section allows a customer to request a water meter accuracy test. If the meter is found to be inaccurate the City adjusts the water meter as well as the water and sewer charges on the utilities bill for the most current period. If the meter is found to be correctly registering the water, then according to this section "the consumer shall pay a twenty-five dollar ($25.00) fee for the testing procedure." Staff is recommending that the section be revised to set the fee and/or deposit by resolution and require the customer to pay the fee or deposit before the test is conducted. The proposed fee for testing water meters 2" and under is $75.00 which is based on actual average cost of labor and equipment. Testing meters 3" and above generally requires more labor, equipment and materials - 6 - as they vary greatly with each test. Staff is recommending that for meters 3" and over a $250 deposit be collected from the customer. After a meter has been tested and found to be accurate, for meters 2" and below the $75.00 will be retained. For meters 3n and above, the actual cost of the test will be calculated and an invoice for any amount over $250 will be prepared by Finance and sent to the customer. If the actual cost of the work is under $250, a refund will be given to the customer. For any size water meter that is not accurante, any fee or deposit will be refunded in whole and adjustments to the water and sewer charges will be made on the most current utilities bill. RECOMMENDED REVISIONS TO THE SEWER (WASTEWATER) CODE SECTIONS Revise Section 7137 "Sewer Connection Feell. The term "Sewer Connection Feell should be changed to "Wastewater capital Facility Fee" throughout. As previously stated, the term "connection fee" is no longer appropriate terminology due to the adoption of AB 1600 (Government Code sections 66000 et seq.). This bill renamed the fee and specified that funds collected for this purpose must be used for capital expansions. Revise Section 7139 "House Connection Sewer". (Adopted 1949). section 7139 states that nNot more than two lots shall be connected to anyone house connection sewer." city staff has been involved in settling disputes between several customers connected to one sewer lateral. One such case is currently being mediated by the city Attorney's office. Staff is recommending - 7 - that the Code be changed to permit only one lot per connection during new construction in order to avoid such disputes. Revise Section 7141 "Duration of Permits". (Adopted 1961). This section authorizes the city to cancel a sewer permit if the work is not commenced within thirty days from date of issuance and retain $5.00 as an administrative charge from the permit fee. staff is recommending that the section be revised to authorize the city to set and revise the amount retained from the permit fee by resolution. The proposed retained amount is $25.00 which represents the cost of the Ci ty to issue and cancel the sewer permit. Revise Section 7142 "Permit and Inspection Fees". (Adopted 1975). The city is authorized to collect permit and inspection fees regarding sewer installation. Currently, Section 7142 states that the applicant pay Ita fee in the sum of $25.00 far each such permit issued, which fee shall include the payment of one inspection only. A fee of $10.00 shall be charged for each additional inspection required." staff is recommending that the section be revised to authorize the city council to set and revise the fee by resolution. The proposed fees, which are based on actual expenses, are $100.00 for the permit and one inspection and $25.00 for each additional inspection. Revise section 7143 tlSewer Connection Regulations" r Paragraph (b). (Adopted 1955). This section currently states "The minimum grade for any house connection sewer... shall be one percent." Staff is recommending that this section be revised to state tiThe - 8 - minimum grade for any house connection sewer...shall be in conformance with the currently adopted edition of the Uniform Plumbing Code." This revision will allow staff to enforce this section using current industry standards and be consistent with Article VIII "Building Regulations", Chapter 1 "Administrative and Technical Codes", Section 8108 "Plumbing Codell. Revise section 7145 "Tapping or Saddlin9 Sanitary sewers, storm Drains or Catch Basins and Connections to Manho1estf I paraqraphs A, B, D and G. (Adopted 1971). Staff is recommending that the current section be revised from "Tap connections made to sewers or storm drains over 18 inches in diameter..n to "Tap connections made to sewers or storm drains over 12 inches in diameter... II . The time involved and complexity in providing a tap connection to a sewer or storm drain over 12 inches is the same as for an 18 inch and over sewer or storm drain. Paragraphs A, Band D of Section 7145 refer to miscellaneous deposits required from a customer in order to connect to a city sewer. After a deposit is collected, the work is performed. The acutal cost of the work is calculated by a work order and the work order is forwarded to the Finance Department and the customer is sent an invoice since the current deposits do not cover the cost of the actual work. Staff is recommending that the deposit be replaced by a fee set by resolution therefore eliminating preparation of a work order and invoice. The proposed fees are based on the average cost of each type of connection. The current deposits and proposed fees are: - 9 - Description section 7145A: Saddle connection section 7145B: Tap connection Section 71450: Y-connection Current Deposit $ 50.00 $100.00 $ 50.00 Proposed Fee $300.00 $400.00 $350.00 Paragraph G of Section 7145 refers to the contractor's responsibilty to open and close the street in order for City crews to physically connect the sewer to a house. To ensure the safety of the city crews, staff is recommending that a sentence be added: "However, in all cases where the house connection sewer and the City sewer are connected such excavation shall be opened and shored per OSHA regulations". FINANCIAL/BUDGET IMPACT Late Fees for Past Due Utilities Bills (New Section) The 1992 monthly net average of past due accounts is $718,110. The proj ected revenue generated from late fees is estimated as follows: Average Net 1992 Past Due utilities Bill: $718,110 Est. monthly revenue @ 3% $ 21,543 Estimated annual revenue: $258,520 Staff is recommending that a separate revenue account be established to track the funds generated from the late fee for past due utilities accounts. It is anticipated that revenue will be generated in the second quarter of FY 1992-93. Temporary Water Service (Section 7203 (a)). The increased per unit water charge and addition of the - 10 - ", bi-monthly fixed charge to temporary water service will generate an additional $70,956 per fiscal year. The additional revenue will be in Account No. 25-500-671-00000-0235-10000. Testing Meters (Section 7220) . In FY 1991-92, 43 two-inch and smaller meters three-inch and above were tested. The proposed fee increase from $25 to $75 for two-inch and smaller meters will generate approximately $2,150. The proposed fee increase from $25 to a deposit of $250 for three-inch meters and above will generate approximately $1,125 per fiscal year (depending on the actual cost). A total of $3,275 will be deposited at Account No. 25-500-671-00000-0235-10000. Estimates on Credits & Backcharges The revenue impact for credits and backcharges will be insignificant. Sewer Permit "Duration of Permits" (Section 7141). Since very few sewer permits are cancelled, the revenue impact would be insignificant. Sewer Permit and Inspection Fee Increase (section 7142). In FY 1991-92, approximately 48 sewer permits were issued. The proposed fee of $100 would generate an additional $75 per permit for a total of $3,600 in additional revenue. There were approximately 156 inspections last year which generate an additional $15 per inspection for a total of $2,340 in additional revenue. Total additional revenue is $5,940 and will be deposited in Revenue Account 3l-500-661-00000-0143-00000. - 11 - '. Saddle, Tap and Y-Connection Fees (Sections 7145 A, B, D). The actual revenue to be collected from the proposed fees will not be significantly greater that the amount currently collected via the work order system. RECOMMENDATIONS It is recommended that the City Council direct the City Attorney to amend certain sections of the Santa Monica Municipal Code relating to water and wastewater service as described in this report. Prepared by: stan Scholl, Director of General services John Mundy, utilities Manager Jean Higbee, Sr. Administrative Analyst - 12 -