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HomeMy WebLinkAbout2008-02-06 Packet - Special, Joint UVSDCITY OF UKIAH SPECIAL JOINT MEETING OF THE UKIAH CITY COUNCIL AND UKIAH VALLEY SANITATION DISTRICT CIVIC CENTER COUNCIL CHAMBERS 300 Seminary Avenue ' Ukiah, CA 95482 February 6, 2008 4:00 p.m. ROLL CALL 2. a. Discussion and Possible Action Regarding Consolidation of City Wastewater and Sewer Facilities with District Sewer Facilities b. Discussion of Ukiah Valley Sanitation District Board of Director's Intent to Re-Organize as a Five Member Elected Board 3. OTHER BUSINESS a. Set the next Joint Meeting of the Ukiah City Council and Ukiah Valley Sanitation District 4. ADJOURNMENT Please be advised that the City needs to be notified 72 hours in advance of a meeting if any specific accommodations or interpreter services are needed in order for you to attend. The City complies with ADA requirements and will attempt to reasonably accommodate individuals with disabilities upon request. I hereby certify under penalty of perjury under the laws of the State of California that the foregoing agenda was posted on the bulletin board at the main entrance of the City of Ukiah City Hall, located at 300 Seminary Avenue, Ukiah, California, not less than 24 hours prior to the meeting set forth on this agenda. Dated this 1st day of February, 2008. Linda C. Brown, City Clerk ITEM NO. 2a DATE: February 6 2008 AGENDA SUMMARY REPORT SUBJECT: DISCUSSION AND POSSIBLE DIRECTION REGARDING CONSOLIDATION OF CITY WASTEWATER AND SEWER FACILITIES WITH DISTRICT SEWER FACILITIES Background: Members of the Ukiah Valley Sanitation District Board have been considering changing the Board from a 3 member board representing the City Council and the Board of Supervisors to a 5 member board directly elected by registered voters of the District. As an alternative to this change, the Board has asked if the City Council would consider establishing a county sanitation district with a directly elected board to operate the combined City-District waste collection system and the wastewater treatment plant currently owned and operated by the City. This matter has been placed on the agenda to consider this proposal by the District Board. The City has not received a detailed description of this proposal or of the reasons for it. As a result, a discussion of the proposal by staff must be preliminary. Considering any such consolidation raises numerous questions and would involve a considerable amount of study. Currently, the District and City waste collection systems are operated on a consolidated basis and wastewater is treated at the City owned wastewater treatment plant under a 1995 Participation Agreement, which has been amended twice, and a Financing Agreement which was entered when the City issued bonds to finance the upgrade and expansion of the WWTP. The 1995 Participation Agreement was a restatement and modification of a similar agreement between the City and the District first entered in 1955 and revised four times. ntinued page 2 RECOMMENDED ACTION: The City Council discuss with the District Board members the elements of and the impetus for the proposal, and the benefits to be obtained and problems that are to be addressed by a service consolidation. The City Council should also consider whether to a) move forward with a Study Committee to review the merits of a consolidated District under an elected board or b) decide whether a consolidation study should be pursued at this juncture given the issues that are listed in the staff report. ALTERNATIVE COUNCIL POLICY OPTIONS: N/A Citizen Advised: Requested by: City Council Prepared by: Pat Thompson, Interim City Manager Coordinated with: David Rapport, City Attorney Attachments: APPROVED: ~1~~~'~'`,>r~~ Pat Thompson, Interim City Manager The first amendment to the 1995 Participation Agreement added provisions requiring agreement between the District and the City for any new capital expenditures, exceeding $100,000, which were not previously part of approved budgets. It also requires joint agreement to annual budgets for the combined sewer system to be approved at a joint City Council/District Board meeting. Finally, it provides a procedure for resolving budget disputes between the District and the City. The second amendment allocated the costs and expenses of the WWTP upgrade and expansion project between the City and the District. The Financing Agreement was entered in connection with the City entering a Installment Sales Agreement with the Association of Bay Area Governments (ABAG), which issued the bonds for the upgrade and expansion project. The purpose of the Financing Agreement is to secure the portion of the financing costs which are allocable to the District in accordance with the Participation Agreement, in the same manner in which the City's allocable share of such financing costs is secured under the Installment Sale Agreement. To accomplish this, a portion of the installment payments due under that agreement are allocated to the District in the proportion as set forth in the Participation Agreement. The District agrees to set rates and charges in conformity with the requirements of the ABAG agreement. Finally, the Financing Agreement prohibits the City and the District from terminating or allowing the Participation Agreement to terminate, while the bonds remain outstanding, unless the District enters a separate Installment Sales Agreement with ABAG or deposits with the City an amount sufficient to prepay the District's share of the installment payments due under the ABAG agreement. The District Board has concerns about these current arrangements and is proposing changes to the District Board or the alternative of a consolidated District to operate the sewer system for both the City and the District. The City Council is aware that the public expects a high level of service and one that is not fragmented or provides duplication of effort. The City cooperates with the District through a 1995 Participation Agreement which is designed to provide consistency and coordination of service. While the City operates the wastewater treatment facilities for both agencies and also provides field operations under contract with the District, there have been concerns that better coordination and information might be achieved in some fashion. Discussion: The City Council, in considering any request or effort toward consolidation, may want to take into account the following: • Will cost savings be generated or enhanced services provided as a potential goal of establishing a stand alone Sewer District with an elected board? (i.e. what is the problem we are solving?) • The City currently provides for a cost effective consolidated billing of water, sewer and electrical service for residents...would this continue? • The City currently has employees who work on both the water and sewer system, would the new District want its own staff and at what cost? • What would be the overhead costs of a new District for legal, administration and other overheard? • Ukiah ratepayers and residents have a major investment in the ownership in the wastewater collectioin and treatment facilities belonging to the City. Would ownership be transferred to the separate sanitation district? • Can the City and the District satisfy the requirements of the Financing Agreement for a termination of the Participation Agreement? Under the Installment Sales Agreement with ABAG, the City has pledged the net revenues of the consolidated waste collection and treatment system to make the installment payments required by the ABAG agreement which are used to repay the bonds. Moreover, the City has agreed not to pledge, transferor sell all or any part of the sewer system, if doing so would impair its ability to repay the bonds. Could the City participate in the proposed consolidation without violating its obligations under the Installment Sales Agreement? Could those obligations be assigned to a newly formed district? Whose approval would be required, ABAG, alone. ABAG and the bond trustee, ABAG and the individual bond holders? The answers to these questions will require a detailed evaluation by a qualified consultant of the financial impact of the proposed consolidation on net revenues and sewer rates and the retention of a specialized bond counsel. The City Council currently retains the ability and authority to upgrade or expand the wastewater treatment plant to insure consistent implementation of the City's General Plan. Would a separately elected board be as diligent in meeting such goals and provisions? A City owned and operated service allows for maximum coordination with other city public works projects. As the owner of the WWTP, the City of Ukiah is the permitted discharger on the SWRCB NPDES permit and legally responsible for compliance. If a consolidated agency assumed WWTP ownership and/or operations, how would legal responsibility for the discharge permit be addressed? Would the SWRCB require a new discharge permit be issued to a different owner or the operating agency of the facility? If a new discharge permit had to be issued, would the Regional Board imposed new limits, additional monitoring or treatment requirements? If the coordination and cooperation between the City and the District is of concern to the District Board, are there other, less comprehensive measures, requiring less radical changes to the existing 55 year old arrangement, to be considered which could adequately address those concerns and help streamline the systems to a greater degree. Some of these might include further modifications to the Partnership Agreement, detaching from the District those portions of the District which are inside the city limits, evaluating the results of the District's creation of a manager position by the District Board, and more frequent joint meetings of the City Council and the District Board. The Council should further take into consideration the fact that a significant staff commitment will be involved in supporting such a study and could involve several key city staff. Currently, there are Interim Directors for Water, Wastewater and Electrical who may not be able to participate throughout the study period. In addition, the District is moving forward with their recruitment of a District Manager. One option to consider would be to delay a formal study until a permanent Director is hired and has had a few months to review the current system and has had a chance to work with the District Board as well. Recommendations: That the City Council discuss with the District Board members the elements of and the impetus for the proposal, and the benefits to be obtained and problems that are to be addressed by a service consolidation. The City Council should also consider whether to a) move forward with a Study Committee to review the merits of a consolidated District under an elected board or b) decide whether a consolidation study should be pursued at this juncture given the issues that are listed in the staff report.