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CITY COUNCIL OF THE CITY OF UKIAH
STUDY SESSION
May 17, 1983
The Council convened at 4:00 p.m. in the Council Chambers to discuss
development fees. Councilmembers present: Kelley, Dickens, Hickey, Myers,
Feibusch. Staff present: Payne, Orchard, Harris, Kruth, Gutierrez, Roper,
Goforth.
Study session discussion concerned a letter received by Wendy's requesting a
return of their development fees which were paid under protest.
Councilmember Dickens questioned the $1.25 million profit mentioned in the
letter. City Manager stated we have not seen a cash benefit yet. A cash flow
situation exists because the City waited for WAPA energy for many years.
Mayor Feibusch questioned Gary Akerstrom, representative for Mike Turnbull of
Wendy's, how he arrived at his figures. Mr. Akerstrom reviewed data taken
from the City of Ukiah Budget for Fiscal Year 1982-83 for the Electric
Department. It was his opinion that items listed as costs were actually
investments in improving the system, and that the City was realizing a
substantial profit from those investments. In light of the profits, he did
not feel it was appropriate to charge new customers electric hook up fees.
City Manager stated that two years ago the Electric Fund was in the red
$200,000. Negotiations for Central Valley Power (CVP) allowed the fund to
return to the black. In January, 1982 the City Council allowed a rate
increase which was still 5% less than PG&E's rates. The rates have since
dropped 25% to coincide with PG&E's rate decreases. In February 1982 all the
City's energy was from PG&E. In March, 1982 one third of the City's energy
was from Federal power sources. One month none of the City's power came from
PG&E. The City Council adopted a policy to build Lake Mendocino without rate
fluctuations. He noted that the City cannot go to the Bond market with
unstable utility rates. He felt the profits indicate a healthy electric
utility and are paying for the Lake Mendocino Hydroelectric Project. There is
a positive cash flow and the profits are passed to the consumer by lower rates
than PG&E's.
Mayor Feibusch stated although he is not a great fan of the electric utility,
the people of Ukiah wanted it. He further stated the City must have the funds
on hand as needed reserve funds.
Mr. Akerstrom felt the City charges more than enough to cover its obligations,
and should only charge actual costs.
Councilmember Hickey pointed out that it has already been stated at a previous
meeting the City charges $25/KVA, which actually costs $65/KVA. He noted that
if the City charges actual costs, the rates would have to be raised.
City Manager stated the City is responsible to have the infastructure ready.
Delays to developers due to not having the infastructure are more costly than
the development fees.
Mayor Feibusch pointed out the City is on record to accommodate all new
businesses and to create jobs. He felt it would be appropriate to look
further into reducing development fees during upcoming budget sessions.
Councilmember Dickens felt it would be a poor financial decision to lower
development fees at this time. She noted there has been a recession which may
account for the industrial park not being built yet, and the lack of new
businesses.
Council concurred that they would reconsider the development fees during
budget hearings.
Sandra Gutierrez
Secretary
Study Session
May 17, 1983
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