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HomeMy WebLinkAboutmin 04-05-83MINUTES CITY COUNCIL OF THE CITY OF UKIAH STUDY SESSION APRIL 5, 1983 The City Council convened in special session at 3:35 p.m. in the City Chambers. Roll was taken with the following Councilmembers present: Councilmembers Kelley, Myers, Feibusch. Absent: Councilmember Hickey, Dickens. Staff present: Payne, Orchard, Harris, Roper, Goforth, Gutierrez. Councilmember Dickens arrived at 3:37 p.m. City Manager stated the City Council policy in past years and the policies adopted in the mid 70's reflect the general feeling that the new demand being put on the system be paid for by those creating the new demand and not by the general rate payers and tax payers. This policy also encouraged remodeling of old structures. The only exception in the past years was that the City did not charge for labor on the Las Casas project. Subsequently, the City Council passed a policy resolution that even on residential areas the full cost, including labor was to be charged in the future. He noted that there is a certain amount of cost to hook up to a system. The question is who should pay for those costs. He reviewed Exhibits A, B and C. Exhibit A explains the City Council policies regarding capital improvement fees and the reasons for their adoption. Exhibit B deals with comparisons between Ukiah, other cities in Mendocino County, and a few others that were added for various reasons. He noted that some of the information has changed since the document was prepared. As an example the Millview water development fee has gone up eight times. A letter attached to Exhibit B deals with the PG&E system and the potential PUC ruling that indicates that the PUC was requiring PG&E to require the developers to pay the total cost of a project in advance including a new fee called "Cost of Ownership". He noted that at this time the PUC has delayed further ruling on this, but it appears to be the trend. Exhibit C is a direct response to a specific letter the City Council members received. He further noted that it points out how misinformation can occur in a community and how confusion gets started. Attached to Exhibit C is a copy of the building department check list, which has been revised as the developer has decided to purchase his. own equipment. Councilmember Dickens raised the following questions regarding Exhibit B: Why were the cities compared chosen; Were comparisons made in Lake, Napa or Sonoma; Were any cities that may have been considered using in the comparisons rejected and why; Are there any figures from the League of California Cities for averages for cities of similar size to Ukiah; How do our total fees compare with other cities of the same size in regards to economy, location, desirability, and politically; How much does it actually cost for particular projects; Do we require 100% from developers; Do other similar cities charge 100%? Mayor Feibusch stated he advocated in 1976 that the developer pay the fees and that the general rate payer should not subsidize commercial or subdivision developments. He noted that he still feels the same but questioned the actual cost and why it is $25 per KVA on capital improvement fees. He explained the formula the Ukiah Valley Sanitation District adopted for annexations. He wanted to establish the exact cost of the City's fees. He opposed the fact that Ukiah charges a 10% contingency cost for materials, plus a 6% sales tax and was concerned with the 15% cost for warehouse charge. In response to some of the questions raised, City Manager explained how the cities in the comparison were chosen. Staff wanted to use cities in Mendocino County for local comparisons. (Local includes anything PG&E, which would include Millview and Willow). Like areas were also used, one with their own electrical system (Healdsburg) and one that does not (Santa Rosa). Eureka was used because a Wendy's was just built there. Roseville and Fairfield were Study Session April 5, 1983 Page 1 291 used at the specific request of the Employer's Counsel as they are rapidly growing cities. The League of California Cities was not contacted. Each city has its own unique method of charging capital improvement fees. In response to the questions raised regarding the cost, he explained that the fees paid by the developers do not cover 100% of all the capital improvement fees. They have generated an average of $40,000 per year over the last seven years. This year, $500,000 has been budgeted to cover the difference. Maurice Roper explained how the figure of $25 per KVA was arrived at. He noted that if a recalculation would be done, the cost would be approximately $65 per KVA. He then explained the contingency and warehouse fees. Mayor Feibusch opened the meeting to the public. Jared Carter, attorney representing Wendy's, questioned whether the capital improvement fees go into a general fund or if they are set aside for a special fund for which they were collected. He asked how Ukiah's electric rates compare to other cities and questioned how the costs are arrived at. He asked the Council to consider what kind of posture is best for the City of Ukiah rather than justifying what has been in the past. Gary Akerstrom, North Coast Engineering, asked if the rate structure provides a return on the investment. He questioned the difference of system expansion and system upgrading. He did not feel the capital improvement fees should be used for replacement. Larry Kier, local realtor and Airport Commissioner, was of the opinion that the City's philosophy was more important than the numbers presented. He felt that the new businesses will generate additional capital strictly on sales tax. He felt the City is short sighted and that they should look at what new industry and business will generate in the coming years, in terms of broadening our tax base, creating jobs, etc. Councilmember Myers agreed that the matter is indeed complicated and that economic times have changed since the original philosophy was adopted. He pointed to the positive aspects of the City and noted the water and electric systems are working. He felt that they were comparing apples and oranges. Bill Linstedt, Economic Development Coordinator for Mendocino County, felt that the problems raised could not be answered at this session. He asked for a commitment from the City Council to initiate a study to weigh development fees compared to sales tax revenues of other cities to see if new growth will outweigh the capital improvement fees. Cheryl Baker, Rural Communities Housing Development Corporation, expressed concern that new businesses will not locate in Ukiah due to excessive costs and also if they could not obtain housing. She felt the problem needs to be looked at in terms of Ukiah and not in comparison with other cities. Larry Kier noted the biggest problem facing new businesses is cash flow and suggested charging more but not asking for all the fees to be paid in advance. Mel Johnson, resident, questioned the City's need for the electrical system and noted its profit in the last few years is just over $200,000. He did not feel it is a positive asset to the community. Don Vander Mey, 1040 Maple, felt the undergrounding done on School Street was not a growth inducing project. He favored capital improvement fee expenditures for expansion, but not for replacement. City Manager responded to some of the questions raised. He stated the development fees do not go into the general fund, but into the fund for which they were collected. He noted that a rate study was not done at the request of the City Council and staff concentrated on development fees. He noted that staff has attempted to inform the City Council where the City is and how they Study Session April 5, 1983 Page 2 292 got there, not justify their position. He explained there is no return on the capital improvement fees investment. He stated capital fees are used for expansion and upgrading, including replacement. He agreed this matter is a question of philosophy, which is the reason of this session - to decide who pays. He supported the suggested study of the overall impact of generation of new businesses, but did not feel that staff had the expertise to conduct the study and suggested private industry do it and submit the results to the City Council or Board of Supervisors. He felt the concept of stretched out payments needs to be seriously considered. Regarding the ownership of the electrical system he noted our rates are less than PG&E's and have been for many years. The City's goal is for the gap to increase in the years ahead. The meeting was adjourned to another study session, April 26, 1983 at 4:00 p.m. Sandra Gutierrez Secretary Study Session April 5, 1983 Page 3