CITY OF HEALDSBURG
CITY COUNCIL/REDEVELOPMENT SUCCESSOR AGENCY
REGULAR MEETING AGENDA
City Hall Council Chamber Meeting Date: April 18, 2022
401 Grove Street Time: 6:00 PM
Healdsburg, CA 95448 Date Posted: April 13, 2022
(707) 431-3317
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AMENDED AGENDA
CORONAVIRUS (COVID-19) ADVISORY NOTICE
Consistent with Government Code section 54953(e), City Council Members will be participating in this meeting either via Zoom Webinar or in person, socially distanced, in the Council Chamber at 401 Grove Street.
How to Observe the Meetings
To maximize public safety while maintaining transparency and public access, the Healdsburg City Council will be using Zoom Webinar service to allow remote participation. Members of the public who only wish to watch the meeting live or recorded can do so by using the link http://healdsburgca.iqm2.com/Citizens/default.aspx or watching it on the City’s Facebook Page www.facebook.com/cityofhealdsburg.
To Watch the Meeting and Submit Public Comment as Part of the Zoom Webinar:
To join by computer, tablet, or mobile device:
1. Go to https://zoom.us/join and type in the Webinar ID: 843 1752 9999 or follow this link:
https://cityofhealdsburg-org.zoom.us/s/84317529999 (Pre-registration for the meeting is not required.)
2. Fill in your full name, verify you are not a robot (if required), and click “Join”.
3. If the meeting host has started the Webinar, you should join automatically. If the meeting host has not started the Webinar, remain in the Webinar and it will start shortly.
To join by phone:
1. Dial 669-900-9128 or 253-215-8782 or 346-248-7799.
2. Enter the meeting ID: 843 1752 9999 and press # #.
3. If the meeting host has started the meeting, you should join automatically. If the meeting host has not started the meeting, remain in the meeting and it will start shortly.
To Submit Public Comment
By computer, tablet, or mobile device:
1. In the bottom center of the screen is a hand icon, click on “Raise Hand”. The hand icon will place you in line to speak.
City Council/RSA Regular Meeting Agenda
April 18, 2022
2. When it is your turn to comment, the meeting moderator will call upon you to comment.
State your first name, last name, address, and comment. Each speaker will be given no more than three (3) minutes to make your comment.
3. When you are done commenting, please remember to lower hand.
By phone:
1. Press *9 to raise your hand.
2. When it is your turn to comment, the meeting moderator will call the last four digits of your phone number. Press *6 to speak at that time. State your first name, last name, address, and comment. Each speaker will be given no more than three (3) minutes to make your comment.
3. At the conclusion of your comments or when three minutes has passed, the meeting host will remove your ability to talk.
Americans with Disabilities Act Accommodations
Any member of the public who needs accommodations should email the City Clerk at [email protected] or by calling 707-431-3317. The City Clerk will use their best efforts to provide reasonable accommodations to provide as much accessibility as possible while also maintaining public safety in accordance with the city procedure for resolving reasonable accommodation requests. All reasonable accommodations offered will be listed on the city website at https://www.ci.healdsburg.ca.us/406/ada---public-accessibility.
City Council/RSA Regular Meeting Agenda
April 18, 2022
1. CALL TO ORDER/ROLL CALL
A. Pledge of Allegiance
B. Approval of Agenda
2. REPORT ON CLOSED SESSION(S)
3. ANNOUNCEMENTS/PRESENTATIONS
A. Proclamation Recognizing April as Volunteer Appreciation Month B. Firefighter Dean De La Montanya Badge Pinning
C. Fire Department Annual Update
Receive the Annual Fire Department Update including a report on vegetation management and SB 1205.
4. CITY MANAGER REPORTS
A. Water Supply Update
B. Affordable Housing Update
Receive an update on affordable housing projects currently in the pipeline and under construction.
5. PUBLIC COMMENTS ON ITEMS ON THE CONSENT CALENDAR AND NON
AGENDA ITEMS
This time is set aside to receive comments from the public regarding matters of general interest not on the agenda, but related to City Council/RSA business. Pursuant to the Brown Act, however, the City Council cannot consider any issues or take action on any requests during this comment period. Public comment on non-agenda items is limited to thirty (30) minutes total for all speakers, with each speaker given no more than three (3) minutes. If there are more than ten (10) audience/public comment speakers, the Mayor may reduce each speaker’s time from three (3) minutes so that all speakers have an equal time to speak. At the Mayor’s discretion, the public comment period may be extended past 30 minutes. Members from the public wishing to speak on a Consent Agenda item should notify the Mayor during Public Comments.
6. CONSENT CALENDAR
The following items listed on the Consent Calendar are considered routine in nature or have been previously reviewed by the Council and require little or no further discussion by the Council, public, or applicant and action will be taken by the City Council by a single motion. A City Council/RSA Regular Meeting Agenda
April 18, 2022
Councilmember may request that an item be removed from the Consent Calendar and action taken separately. Consent by a majority of the Councilmembers present will be required in order to remove the item. In the event an item is removed, the matter will be considered immediately following the adoption of the Consent Calendar.
A. Fire Department SB 1205 Inspection Report
Adopt a Resolution acknowledging receipt of a report regarding the inspection of certain occupancies required to receive annual inspections pursuant to Sections 13146.2 and 13146.3 of the California Health and Safety Code.
B. Acceptance of Foss Creek Pathway Segments 7 and 8 Project Adopt a Resolution accepting the Foss Creek Pathway Segments 7 and 8 Project as complete and authorizing staff to file a Notice of Completion with the County Recorder's Office.
C. Assignment Administration Agreement for Western Area Power Authority Base Resource between the Northern California Power Agency and City of Healdsburg Adopt a Resolution approving the Assignment Administration Agreement for Western Area Power Administration (WAPA) Base Resource Percentage between the Northern California Power Agency (NCPA) and the City of Healdsburg and delegate authority to the City Manager to sign the agreement on the City's behalf.
D. Acceptance of a Public Utility Easement Along a Portion of Parcel Six of Sonoma Luxury Resort, LLC
Adopt a Resolution accepting a Dedication of a Public Utility Easement Along a Portion of Parcel Six of Sonoma Luxury Resort, LLC (APN: 091-310-006).
E. Vacate An Offer Of Dedication For Public Roads Provided To The City In Connection With The Saggio Hills Project and Approving and Authorizing the Amended Irrevocable Offer Of Dedication Of Public Roads Provided By Sonoma Luxury Resort, LLC For The Saggio Hills Project
By motion:
1. Adopt a Resolution summarily vacating an Offer of Dedication for Public Roads in accordance with the Third Amendment to the Development Agreement between the City of Healdsburg and Sonoma Luxury Resort, LLC for the Saggio Hills Project; and City Council/RSA Regular Meeting Agenda
April 18, 2022
2. Adopt a Resolution approving and authorizing the recording of the Amended Irrevocable Offer Of Dedication Of Public Roads provided by Sonoma Luxury Resort, LLC to the City for the Saggio Hills Project and authorizing the City Manager to execute and record the Acceptance of the Amended Irrevocable Offer of Dedication of Public Roads.
F. An Ordinance Amending the Development Agreement by and between the City of Healdsburg and Kendal at Sonoma, a Zen Inspired Community, for the Enso Village Project
Pass an ordinance amending the Development Agreement by and between the City of Healdsburg and Kendal at Sonoma, a Zen Inspired Community, for the Enso Village Project.
G. An Ordinance Amending the Development Agreement by and between the City of Healdsburg and CCS Healdsburg, LLC for the North Village Project Pass an ordinance amending the Development Agreement by and between the City of Healdsburg and CCS Healdsburg, LLC for the North Village Project.
H. Adoption of Resolution Authorizing Remote Meetings
Adopt a Resolution authorizing remote meetings of the City Council and other legislative bodies.
7. PUBLIC HEARINGS
None.
8. OLD BUSINESS
A. Fiscal Years 2022-23 and 2023-24 Budget Development Update Receive a presentation from City staff on the status of budget development activities for the upcoming two-year budget cycle and provide feedback and direction.
B. 2022 Water and Wastewater Rate Study
By motion:
1. Accept the 2022 Water and Wastewater Rate Study as basis for proposing multiyear rate increases for the City's Water Funds; and
2. Direct staff to prepare and mail, as required by law, a notice of public hearing on the proposed water and wastewater rates, with a public hearing to be held on June 21, 2022.
City Council/RSA Regular Meeting Agenda
April 18, 2022
9. NEW BUSINESS
A. Reserve Policy Review and Update
1. Adopt a Resolution rescinding Resolution No. 139-2000 and updating the reserve policy for the Water and Wastewater Funds; and
2. Adopt a Resolution updating the reserve policy for the Lighting and Landscaping Assessment District and rescinding the previous reserve policy adopted by Resolution No. 95-2009.
B. Saggio Hills Development Park Parcel Exchange
Receive a report on a proposed parcel exchange associated with the Saggio Hills park project and provide direction to staff.
C. An ordinance adding Chapter 2.60 to the Healdsburg Municipal Code, approving a Military Equipment Use Policy for Police Services
By motion, introduce for first reading, by title only, waiving the full reading of the text, an ordinance of the City Council of the City of Healdsburg, Adding Chapter 2.60 to the Healdsburg Municipal Code, approving a Military Equipment Use Policy for Police Services.
10. COUNCIL REPORTS ON MATTERS OF INTEREST OCCURRING SINCE
PREVIOUS REGULAR MEETING/EXPENSE REIMBURSEMENT REPORTS
11. WRITTEN COMMUNICATIONS
12. ADJOURN CITY COUNCIL / RSA MEETING
13. FUTURE AGENDA ITEMS
A. Future Agenda Items
Some of the items planned for the May 2, 2022 Council Meeting include, but are not limited to:
• Cannabis Policy Discussion
• Annual Water Supply Update per the Urban Water Management Plan • Automatic License Plate Reader Introduction Discussion • Bid award for the L&M Motel Rehab Project
• Villa Chanticleer Lease Update
Some of the items planned for the May 9, 2022 Special Council Meeting include, but are not limited to:
City Council/RSA Regular Meeting Agenda
April 18, 2022
• Budget Study Session - All funds
Some of the items planned for the May 16, 2022 Council Meeting include, but are not limited to:
• Quarter Three Financial Update
• Community Center Preschool Provider Agreement
• Housing Element Policy Discussion
• Park Naming Policy Discussion
Some of the items planned for the May 31, 2022 Special Council Meeting include, but are not limited to:
• Budget Study Session
Some of the items planned for the June 6, 2022 Council Meeting include, but are not limited to:
• FY2023-2025 Budget and CIP Adoption
• REDCOM Contract
• Juneteenth Proclamation
These agenda items may be delayed or removed before the meeting. Please review the agenda for that meeting when it is published to ensure that you can voice your opinion about issues you are concerned about.
SB 343 - DOCUMENTS RELATED TO OPEN SESSION AGENDAS: Any writings or documents provided to a majority of the City Council/Redevelopment Successor Agency Board regarding any item on this agenda after the posting of this agenda and not otherwise exempt from disclosure, will be made available for public review in the City Clerk's Office located at City Hall, 401 Grove Street, Healdsburg, during normal business hours. If supplemental materials are made available to the members of the City Council/Redevelopment Successor Agency Board at the meeting, a copy will be available for public review at the City Hall Council Chambers, 401 Grove Street, Healdsburg, CA 95448.
These writings will be made available in appropriate alternative formats upon request by a person with a disability, as required by the Americans with Disabilities Act.
DISABLED ACCOMMODATIONS: The City of Healdsburg will make reasonable accommodations for persons having special needs due to disabilities. Please contact Raina Allan, City Clerk, at Healdsburg City Hall, 401 Grove Street, Healdsburg, California, 431-3317, at least 72 hours prior to the meeting, to ensure the necessary accommodations are made.
CITY OF HEALDSBURG
PROCLAMATION
A PROCLAMATION OF THE CITY COUNCIL OF THE CITY
OF HEALDSBURG RECOGNIZING THE MONTH OF APRIL
2022 AS NATIONAL VOLUNTEER APPRECIATION MONTH
AND THANKING OUR VOLUNTEERS THROUGHOUT THE
COMMUNITY FOR THEIR SERVICE
WHEREAS, National Volunteer Week began in 1974 when President Richard Nixon signed an executive order establishing the week as an annual celebration, and every president since has done the same; and
WHEREAS, National Volunteer Week has now flourished to encompass an entire month, allowing time to recognize the hard work, dedication and passion of volunteers and national service members throughout our nation; and
WHEREAS, our City government could not function without volunteers who serve on our boards, commissions, task forces and committees; and
WHEREAS, to encourage an environment in which volunteers can flourish, the City Council of the City of Healdsburg created a formal volunteer program in 2019 that promotes community volunteer organizations and encourages intergenerational community volunteerism; and
WHEREAS, there are thousands of volunteers in our community who give their time and effort to help others through their church, community organizations, service clubs, schools, hospitals, charitable organizations and other worthy endeavors; and WHEREAS, these volunteers are motivated by the satisfaction of helping their fellow citizens and making their community a better place to live.
NOW, THEREFORE, BE IT PROCLAIMED, that the City Council of the City of Healdsburg does hereby express its sincere appreciation, gratitude, and respect to all of the volunteers in Healdsburg for their service to our community, and declares the month of April 2022 as Volunteer Appreciation Month.
DATED: April 18, 2022
SO ORDERED:
Osvaldo Jimenez, Mayor
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Attachment: Proclamation (3571 : Proclamation - Volunteer Appreciation Month)
CITY OF HEALDSBURG
CITY COUNCIL AGENDA STAFF REPORT
MEETING DATE: April 18, 2022
SUBJECT: Fire Department SB 1205 Inspection Report
PREPARED BY: Linda Collister, Fire Marshal
STRATEGIC INITIATIVE(S):
Provide Effective Governance
Maintain and Enhance Public Health and Safety
RECOMMENDED ACTION(S):
Adopt a Resolution acknowledging receipt of a report regarding the inspection of certain occupancies required to receive annual inspections pursuant to Sections 13146.2 and 13146.3 of the California Health and Safety Code.
COMMUNITY ENGAGEMENT/OUTREACH:
The Fire Chief gives an annual update to the City Council that includes annual inspection data.
BACKGROUND:
On December 2, 2016, a fire broke out in a warehouse, known as Ghost Ship in the Fruitvale neighborhood of Oakland, California. The warehouse had been converted into an artist collective, including and an upstairs assembly area and dwelling units. A total of 36 people were killed in the fire, becoming the deadliest fire in the City of Oakland. It was also the deadliest building fire in the United States since the Station nightclub fire in 2003, and the deadliest in California since the 1906 San Francisco earthquake. The Ghost Ship tragedy brought national attention and put a spotlight on fire safety laws and inspection in California. A series of investigative articles and editorials have been published highlighting the inadequacies of building inspections, specifically around the Bay Area. An article published June 1, 2018, by The Mercury News and the East Bay Times, titled: “Burned Out”, outlines an investigation done by the news group into inspection practices from 11 of the Bay Area’s largest fire agencies. SB 1205 holds jurisdictional policy makers accountable to make progress on fire prevention resource requests and ensures fire department funding allocations account for the longstanding needs of resource deficient fire prevention bureaus.
DISCUSSION/ANALYSIS:
According to the bill’s author, “SB 1205 ensures that fire departments are communicating with
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their governing authority about their compliance with State mandated safety inspections they are required to conduct on schools, apartments, and hotels. This dialogue will ensure that fire departments are complying with their inspection mandates and increase the likelihood that they are receiving the resources they need to appropriately staff and carry out state mandated inspections.” On September 27, 2018, SB 1205 became effective and added Section 13146.4 to the California Health and Safety Code which affects every fire department or fire district in the state. Existing State law requires every fire department or district providing fire protection services to inspect every building used as a public or private school annually. This same annual inspection requirement is applicable to hotels, motels, lodging houses and apartment houses.
This new bill requires every fire department or district to annually report to its administering authority its compliance with the annual inspection requirements of the California Health and Safety Code. The bill also requires the administering authority to formally acknowledge receipt of the compliance report in a resolution or a similar formal document. SB 1205 holds jurisdictional policy makers accountable to make progress on fire prevention resource requests and ensures fire department funding allocations account for the longstanding needs of resource deficient fire prevention bureaus.
Local fire departments are required to annually report on their compliance with inspections currently mandated in statute. Specifically, SB 1205:
1. Requires every city, county or district fire department required to perform annual inspections (pursuant to HSC Sec. 13146.2 and 13146.3) to annually report to its administrative authority on its compliance of said inspections.
2. Requires the report to occur when the administering authority discusses its annual budget or at another time determined by the administering authority.
3. Requires the administering authority to acknowledge receipt of the report in a resolution or a similar formal document.
4. Defines “administering authority” as a city council, county board of supervisors, or district board.
EXISTING LAW:
1. Requires the State Fire Marshal (SFM), the chief fire official of any city, county, or fire protection district and their authorized representatives to enforce regulations and building standards relating to fire and panic safety published in the California Building Standards Code in all state-owned buildings, state occupied buildings, and state institutions throughout the state.
2. Establishes the California Building Standards Code under Title 24 of the California Code of Regulations.
3. Establishes the building design and construction standards for the SFM under Title 19 of the California Code of Regulations.
4. Requires every city or county fire department or district providing fire protection services to enforce building standards and other regulations adopted by the SFM to, annually, inspect all structures subject to HSC Section 17921(b) (hotels, motels, lodging houses, apartment houses and dwellings, buildings, and structures), except dwellings, for compliance with building standards and other regulations of the SFM. (HSC Sec. 13146.2)
5. Requires the chief of any city or county fire department or district providing fire protection
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services to inspect every building used as a public or private school within his or her jurisdiction, for the purpose of enforcing regulations promulgated pursuant to Section 13143, not less than once each year. The SFM and his or her authorized representatives shall make these inspections not less than once each year in areas outside of corporate cities and districts providing fire protection services. (HSC Sec. 13146.3)
6. The California Constitution requires the State to reimburse local agencies and school districts for certain costs mandated by the State, statutory provisions establish the procedures for making that reimbursement.
7. The provisions of Sections 13145, 13146 and 13146.3 shall, so far as practicable, be carried out at the local level by persons who are regular full-time members of a regularly organized fire department of a city, county, or district providing fire protection services, and shall not be carried out by other persons pursuant to Section 34004 of the Government Code.
INSPECTION COMPLIANCE REPORTING:
Educational Group E occupancies are generally those public and private schools used by more than six persons at any one time for educational purposes through the 12th grade. Within the City of Healdsburg, there are 13 known Group E occupancies, buildings, structures and/or facilities.
During calendar year 2021, the Fire Marshal completed the annual inspection of 13 Group E occupancies, buildings, structures and/or facilities. This is a compliance rate of 100% for this reporting period.
Residential Group R occupancies, for the purpose of this resolution, are generally those occupancies containing sleeping units and including hotels, motels, apartments (three units or more), etc. as well as other residential occupancies (including several residential care facilities).
These residential care facilities have sub-classifications, and they may contain residents or clients that have a range of needs including those related to custodial care, mobility impairments, cognitive disabilities, etc. The residents may also be non-ambulatory or bedridden. Within the City of Healdsburg, there are 108 known Group R (and their associated sub-classifications) occupancies of this nature. Typically, except for more complex facilities, these inspections are carried out by the operation line staff. The fire prevention division will help with inspections as needed.
SB 1205 requires the Fire Department to provide a report to City Council for inspections completed in 2021 by the end of 2022. Chief Boaz will be providing SB 1205 inspections numbers during the annual Fire Department Status update to Council. By the end of calendar year 2021, 107 of 108 required inspections were completed or 99%. The last occupancy was inspected as soon as this was discovered.
ENVIRONMENTAL STEWARDSHIP:
Not applicable.
ALTERNATIVES:
Acknowledge receipt of a report regarding the inspection of certain occupancies required to receive annual inspections in such occupancies pursuant to Sections 13146.2 and 13146.3 of the California Health and Safety Code by other means than by resolution.
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FISCAL IMPACT:
There is no fiscal impact resulting from this report.
ENVIRONMENTAL ANALYSIS:
Pursuant to Title 14, the California Code of Regulations, Section 15378(b)(5) of the California Environmental Quality Act (“CEQA”) guidelines, the proposed action is an administrative activity of the City that will not result in direct or indirect physical changes to the environment.
ATTACHMENT(S):
Resolution
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CITY OF HEALDSBURG
RESOLUTION NO. ___-2022
A RESOLUTION OF THE COUNCIL OF THE CITY OF
HEALDSBURG ACKNOWLEDGING RECEIPT OF A REPORT
MADE BY THE HEALDSBURG FIRE DEPARTMENT
REGARDING THE INSPECTION OF CERTAIN
OCCUPANCIES REQUIRED TO RECEIVE ANNUAL
INSPECTIONS PURSUANT TO SECTIONS 13146.2 AND
13146.3 OF THE CALIFORNIA HEALTH AND SAFETY CODE
WHEREAS, California Health & Safety Code Section 13146.4 was added in 2018, and became effective January 1, 2019; and
WHEREAS, California Health & Safety Code Sections 13146.2 and 13146.3 requires all fire departments, including the Healdsburg Fire Department, that provide fire protection services to perform annual inspections in every building used as a public or private school, hotel, motel, lodging, house, apartment house, and certain residential care facilities for compliance with building standards, as provided; and
WHEREAS, California Health & Safety code Section 13146.4 requires all fire departments, including the Healdsburg Fire Department, that provide fire protection services to report annually to its administering authority on its compliance with Section 13146.2 and 13146.3; and
WHEREAS, the Council of the City of Healdsburg intends this Resolution to fulfill the requirements of the California Health & Safety Code regarding acknowledgement of the Healdsburg Fire Department’s compliance with California Health & Safety Code Sections 13146.2 and 13146.3.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Healdsburg that said Council expressly acknowledges the measure of compliance of the Healdsburg Fire department with California Health & Safety Code Sections 13146.2 and 13146.3 in the area encompassed by the City of Healdsburg, as follows:
A. EDUCATIONAL GROUP E OCCUPANCIES:
Educational Group E occupancies are generally those public and private schools, used by more than six persons at any one time for educational purposes through the 12th grade.
Within the City of Healdsburg, there lie 13 known Group E occupancies, buildings, structures and/or facilities.
During Calendar Year 2021, the Healdsburg Fire Marshal completed the annual inspection of 13 Group E occupancies, buildings, structures and/or facilities. This is a compliance rate of 100% for this reporting period.
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Attachment: Resolution [Revision 1] (3574 : SB 1205 Fire Protection Services Inspection Report) Resolution No. -2022
B. RESIDENTIAL GROUP R OCCUPANCIES:
Residential Group R occupancies, for the purpose of this resolution, are generally those occupancies containing sleeping units, and including hotels, motels, apartments (three units or more), etc. as well as other residential occupancies (including a few residential care facilities). These residential care facilities have sub-classifications, and they may contain residents or clients that have a range of needs including those related to custodial care, mobility impairments, cognitive disabilities, etc. The residents may also be non-ambulatory or bedridden. Within the city of Healdsburg, there are 108 known Group R (and their associated sub-classifications) occupancies of this nature.
During calendar year 2021, the Fire Department completed 107 Group R occupancies, buildings, structures and/or facilities. For 2021 calendar year the fire department achieved 99% completion of known mandated inspections. Once discovered of the missed inspection, it was completed in 2022.
PASSED AND ADOPTED by the City Council of the City of Healdsburg, this 18th day of April 2022, by the following vote:
AYES: Councilmembers: ( )
NOES: Councilmembers: ( )
ABSENT: Councilmembers: ( )
ABSTAINING: Councilmembers: ( )
SO ORDERED: ATTEST:
_________________________________ ____________________________________ Osvaldo Jimenez, Mayor Raina Allan, City Clerk
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Attachment: Resolution [Revision 1] (3574 : SB 1205 Fire Protection Services Inspection Report)
CITY OF HEALDSBURG
CITY COUNCIL AGENDA STAFF REPORT
MEETING DATE: April 18, 2022
SUBJECT: Acceptance of Foss Creek Pathway Segments 7 and 8 Project PREPARED BY: Clay Thistle, Senior Engineer
STRATEGIC INITIATIVE(S):
Maintain and Improve Infrastructure and Facilities
RECOMMENDED ACTION(S):
Adopt a Resolution accepting the Foss Creek Pathway Segments 7 and 8 Project as complete and authorizing staff to file a Notice of Completion with the County Recorder's Office.
COMMUNITY ENGAGEMENT/OUTREACH:
Prior to beginning construction, notices were mailed to all properties within 300-feet of the construction area. The notice provided description of the project, anticipated impacts, and direct contact information for the City's Project Manager.
BACKGROUND:
City Council awarded the bid for the Foss Creek Pathway Segments 7 and 8 Project in September of 2020. Construction on the project began in April of 2021.
The project included extending the Foss Creek Pathway along the North Coast Railroad Authority Railroad right-of-way from the flood control detention basin by the Carson Warner Memorial Skate Park north to the intersection of Grove Street and Healdsburg Avenue. The pathway generally consists of a 10-foot-wide paved surface with sections as narrow as 8-footwide where space is limited. The pathway includes lighting and a prefabricated steel truss bridge where crossing over Foss Creek. At Dry Creek Road, a signalized pedestrian crossing has been installed so cyclists and pedestrians can activate a signal to stop vehicular traffic while crossing.
On February 9, 2022, Rege Construction, Inc., notified the City in writing that they consider the work complete, supported by the fact that all contract documents have been reviewed and the work has been inspected for compliance.
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DISCUSSION/ANALYSIS:
Rege Construction, Inc. has completed all work in compliance with approved Project Plans, Specifications, Special Provisions, and Contract Change Orders. City representatives have reviewed all contract documents and performed final inspections of the work and have determined that all work has been performed and completed in accordance with the contract documents, and as directed by the City Engineer. There are no liquidated damages to be assessed and there are no existing or potential contractor claims. Therefore, the project is deemed completed by staff and ready for council acceptance.
ENVIRONMENTAL STEWARDSHIP:
Construction waste was diverted from landfill for reuse or recycling where possible.
ALTERNATIVES:
There is no reasonable alternative to the recommended action, as the City has begun beneficial use of the completed facilities.
FISCAL IMPACT:
The original contract amount was $2,631,649.33 and awarded with a 10% construction contingency for a total authorized amount of $2,894,814.26. Construction was completed for $2,744,983.00, or $149,831.26 under budget. The cost increases beyond the original contract amount were primarily due to extra work due to unforeseen underground conditions, providing a temporary pedestrian pathway to allowing for the pathway to remain open during construction, and storm damage repairs and cleanup. Unused funds will be returned to the originating funds for use on future projects.
ENVIRONMENTAL ANALYSIS:
The recommended action does not constitute a project under CEQA., pursuant to Section 15378(b)(5) of the California Environmental Quality Act (CEQA) Guidelines, approval of this Resolution is an administrative activity of the City that does not constitute a project under CEQA.
ATTACHMENT(S):
Resolution
Certificate of Completion
Notice of Completion
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CITY OF HEALDSBURG
RESOLUTION NO. __-2022
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
HEALDSBURG ACCEPTING THE FOSS CREEK PATHWAY
SEGMENTS 7 AND 8 PROJECT AS COMPLETE AND
AUTHORIZING STAFF TO FILE A NOTICE OF COMPLETION
WITH THE COUNTY RECORDER'S OFFICE
WHEREAS, on September 8, 2020, the Healdsburg City Council awarded a construction contract for the Foss Creek Pathway Segments 7 and 8 Project to Rege Construction, Inc.; and WHEREAS, the Healdsburg City Council at a regular meeting held April 18, 2022, received the report from the City Engineer that the Project has been satisfactorily completed in accordance with the contract documents and City Standards; and WHEREAS, the work consisted of extending the Foss Creek Pathway along the North Coast Railroad Authority Railroad right-of-way from the flood control detention basin by the Carson Warner Memorial Skate Park north to the intersection of Grove Street and Healdsburg Avenue; and
WHEREAS, the City Engineer recommended that the City Council accept the Project as complete and take appropriate action to finalize the Project; and WHEREAS, pursuant to Section 15378(b)(5) of the California Environmental Quality Act (CEQA) Guidelines, approval of this Resolution is an administrative activity of the City that does not constitute a “project” under CEQA.; and
WHEREAS, after due consideration, the City Council accepts the recommendation of the City Engineer; and
WHEREAS, there remains approved unspent contingency funding for the project that shall be returned to the original funding sources.
NOW, THEREFORE, BE IT RESOLVED that the City Council finds that its action does not constitute a “project” under CEQA, accepts the Project as complete, authorizes staff to file a Notice of Completion with the County Recorder's Office, and authorizes staff to take appropriate action to finalize the Project.
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Attachment: Resolution (3534 : Acceptance of the Foss Creek Pathway Segments 7 and 8 Project) Resolution No. -2022
PASSED, APPROVED AND ADOPTED, this 18th day of April 2022, by the following vote:
AYES: Councilmembers:
NOES: Councilmembers:
ABSENT: Councilmembers:
ABSTAINING: Councilmembers:
SO ORDERED: ATTEST:
_________________________________ ____________________________________ Osvaldo Jimenez, Mayor Raina Allan, City Clerk
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Attachment: Resolution (3534 : Acceptance of the Foss Creek Pathway Segments 7 and 8 Project)
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Attachment: Certificate of Completion (3534 : Acceptance of the Foss Creek Pathway Segments 7 and 8 Project) Recording Requested by:
Healdsburg City Clerk
When Recorded Return to:
Healdsburg City Clerk
401 Grove Street
Healdsburg, CA. 95448
CITY OF HEALDSBURG
NOTICE OF COMPLETION
Project Title: Foss Creek Pathway Segments 7 and 8 Project City Project No. 2019-11
Site Address or
Location:
North Coast Railroad Authority Railroad right-of-way from the flood control detention basin by the Carson Warner Memorial Skate Park north to the intersection of Grove Street and Healdsburg Avenue Property Owner: City of Healdsburg
Address: 401 Grove Street, Healdsburg, CA 95448
Nature of Owner’s
Interest Public Facilities
NOTICE IS HEREBY GIVEN THAT I, Larry Zimmer, City Engineer of the City of Healdsburg, California, on March 17, 2022 did file with the City Clerk of the City of Healdsburg, my Certificate of Completion of the following described work the contract for doing which was heretofore awarded Rege Construction, Inc. on September 8, 2020, in accordance with the City Clerk and approved by the City Council of said City;
That said work and improvements were actually completed on February 9, 2022; That acceptance of the said work and improvements was ordered by City Council Resolution No. ___- 2022 on April 18, 2022.
That said work and improvements consisted of extending the Foss Creek Pathway along the North Coast Railroad Authority Railroad right-of-way from the flood control detention basin by the Carson Warner Memorial Skate Park north to the intersection of Grove Street and Healdsburg Avenue.
I, Larry Zimmer, City Engineer, of the City of Healdsburg do hereby certify, under penalty of perjury, that the foregoing is true and correct.
DATED: ATTEST:
________________________________ ___________________________________ Larry Zimmer, City Engineer Raina Allan, City Clerk
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Attachment: Notice of Completion (3534 : Acceptance of the Foss Creek Pathway Segments 7 and 8 Project)
CITY OF HEALDSBURG
CITY COUNCIL AGENDA STAFF REPORT
MEETING DATE: April 18, 2022
SUBJECT: Assignment Administration Agreement for Western Area Power Authority Base Resource between the Northern California Power Agency and City of Healdsburg
PREPARED BY: Terry Crowley, Utilities Director
STRATEGIC INITIATIVE(S):
Pursue Initiatives that Promote Environmental Stewardship RECOMMENDED ACTION(S):
Adopt a Resolution approving the Assignment Administration Agreement for Western Area Power Administration (WAPA) Base Resource Percentage between the Northern California Power Agency (NCPA) and the City of Healdsburg and delegate authority to the City Manager to sign the agreement on the City's behalf.
COMMUNITY ENGAGEMENT/OUTREACH:
No community engagement was sought for this agreement.
BACKGROUND:
The Western Area Power Authority (Western) markets surplus generation, system capacity, and operates high-voltage transmission lines as a part of the Central Valley Project (CPV). These generation, capacity, and transmission products (Base Resource) are marketed in accordance with the Western final 2025 Power Marketing Plan (Marketing Plan). The Marketing Plan provides that starting on January 1, 2025, Western will provide 98 percent of available CVP power to its existing customers, including member of Northern California Power Agency (NCPA).
In February of 2021, the City council approved a contract with Western to supply Base Resources during a period starting January 1, 2025 and ending December 31, 2054. The Base Resource generation and capacity are predominately from large-hydroelectric plants but also include a small portion of California eligible renewable energy (small-hydroelectric). In past years Healdsburg’s portion of the Western Base Resource has met between 5 to 20% of the City’s energy needs with the annual supply variation largely due to fluctuations in annual rainfall.
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In preparation for the 2025 Western Base Resource allocations, the City, NCPA’s Power Pool, and other NCPA member cities are working to “pool” or aggregate their allocations of the Base Resource to drive a larger economic benefit than would otherwise be gained by singular efforts.
Historically the City has assigned the City’s share of Base Resource to NCPA to manage through the Power Pool. This has resulted in financial savings for the City of Healdsburg and other NCPA members while lowering exposure to risky energy market positions.
DISCUSSION/ANALYSIS:
As part of the contract obligations to take Base Resources, Western requires that the federal energy produced and allocated to the City cannot be resold to other entities. To comply with this obligation NCPA members have assigned their Base Resource to NCPA through an Assignment Administration Agreement (AAA). The AAA allows NCPA to aggregate the assigned allocation percentages of all the participating members. At the time of writing this staff report is expected that all NCPA pool members with Base Resource allocations will participate in the assignment arrangement to drive the largest economic value.
In order for the City to assign its Base Resource percentage to NCPA, NCPA and the City must execute the AAA to administer the allocated Base Resource. In accordance with the AAA, NCPA will accept assignments of Base Resource percentages from certain Members (Assignors), and NCPA will supply Joint Assignment Administration Services to the Assignors, and in doing so NCPA will strive to create benefits equal to or greater than those benefits that individual Assignors would have derived had their Base Resource percentage been scheduled and administered solely for their own use. Joint Assignment Administration Services include, but are not limited to, joint scheduling, settlement, reporting and other day-to-day operations associated with Base Resource. All benefits derived from operating a joint portfolio will be shared and allocated among the Assignors in accordance with Attachment A of the AAA.
By executing the AAA, an Assignor agrees to and acknowledges its mandatory obligation to pay its allocated share of costs associated with its Base Resource percentage as a take-or-pay contract. By necessity, the term of the AAA coincides with the term of the underlying Assignor's Request for Assignment Agreement. As allowed by the AAA, the City or NCPA may elect to terminate the assignment of Bas Resource by submitting a 90-day written notice to Western, requesting the assignment be unwound; upon which the City's Base Resource will be returned to the City.
Staff is recommending the execution of the AAA as it will help support continued delivery of carbon-free energy and result in cost savings for Healdsburg electric customers. A final draft of the assignment contract prepared for Healdsburg is attached.
ENVIRONMENTAL STEWARDSHIP:
Western provides a carbon-free energy source for Healdsburg. Continuing to review this contract to capture the best value while meeting the Council’s climate goals ultimately helps to lower GHG emissions and stem climate change.
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ALTERNATIVES:
As an alternative Council could choose not to approve of the AAA and provide further direction to staff. Staff does not recommend this alternative as not executing the AAA will increase Healdsburg electric customers’ costs for carbon-free energy and potentially result in high GHG emissions.
FISCAL IMPACT:
By participating in the AAA the City of Healdsburg will realize a savings in energy purchase versus the open market. The savings amount can fluctuate with a variety of factors, one being the hourly measured load across Healdsburg interconnection with PG&E, but a measurable savings is expected to be maintained over the contract period.
ENVIRONMENTAL ANALYSIS:
The adoption of these Resolutions is exempt from environmental review under the California Environmental Quality Act as this action is not considered a “project” as defined in Title 14, California Code of Regulations, Section 15378(a), as it has no reasonably foreseeable direct or indirect physical change on the environment, and is further specifically excluded under Section 15378(b)(4), as a government funding mechanism or fiscal activity that does not involve a commitment to any specific project.
ATTACHMENT(S):
Resolution
2025 Assignment Administration Agreement
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CITY OF HEALDSBURG
RESOLUTION NO XX-2022
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
HEALDSBURG APPROVING THE ASSIGNMENT
ADMINISTRATION AGREEMENT (AAA) FOR WESTERN
AREA POWER ADMINISTRATION BASE RESOURCE
PERCENTAGE BETWEEN THE NORTHERN CALIFORNIA
POWER AGENCY (NCPA) AND CITY OF HEALDSBURG AND
AUTHORIZING THE CITY MANAGER TO SIGN THE
AGREEMENT ON THE CITY’S BEHALF
WHEREAS, the City of Healdsburg owns and operates an Electric Utility and therefore contract for and schedules generation and generation capacity to meet the energy needs of Healdsburg’s electric customers; and
WHEREAS, to meet contract and scheduling obligations the City of Healdsburg is a member of the Northern California Power Agency (NCPA), a joint powers agency; and WHEREAS, the United States Department of Energy Western Area Power Administration Sierra Nevada Region (Western) markets surplus generation, generation capacity, and operates high-voltage transmission lines as a part of the Central Valley Project (CPV); and WHEREAS, Western’s Marketing Plan provides that starting on January 1, 2025, Western will provide 98 percent of available CVP power to its existing customers, including Healdsburg, and Western has, under separate contract with certain NCPA members, provided a percentage of the Base Resource consistent with the Marketing Plan; and WHEREAS, in February of 2021, the City Council approved the Western Area Power Administration Contract for Electric Service Base Resource with the City of Healdsburg (Contract 20-SNR-02319) to renew carbon-free energy deliveries from the CVP through 2054; and WHEREAS, the 2025 Base Resource Contract will become effective on the date the agreement is executed by Healdsburg and Western, and will remain in effect through December 31, 2054, subject to prior termination; and
WHEREAS, Healdsburg desires to assign their Base Resource percentage to NCPA to enable NCPA to administer and aggregate Base Resource percentages of NCPA members to create a power resource portfolio for the mutual benefit of participating members; and WHEREAS, in order for Healdsburg to assign all or a portion of its Base Resource percentage to NCPA, Healdsburg and NCPA are required to enter into a Request for Assignment of Base Resource Percentage letter agreement that is subsequently approved by Western; and WHEREAS, in accordance with the AAA, NCPA will accept assignments of Base Resource percentages from certain Members (Assignors), and NCPA will supply Joint Assignment
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Attachment: Resolution (3577 : Western 2025 Assignment Agreement) Resolution No. – 2022
Administration Services to the Assignors, and in doing so NCPA will strive to create benefits equal to or greater than those benefits that individual Assignors would have derived had their Base Resource percentage been scheduled and administered solely for their own use; and · WHEREAS, Joint Assignment Administration Services include, but are not limited to, joint scheduling, settlement, reporting and other day-to-day operations associated with Base Resource, and all benefits derived from operating a joint portfolio will be shared and allocated among the Assignors in accordance with Attachment A of the AAA; and WHEREAS, in addition to the 2025 Base Resource Contract and Request for Assignment of Base Resource Percentage letter agreement, Healdsburg will be required to execute the AAA between NCPA and Healdsburg, and the AAA sets forth the terms and conditions under which NCPA will administer Healdsburg’s Base Resource percentage, and establishes the Healdsburg's obligation to pay for all Base Resource costs incurred by NCPA as a result of the assignment; and WHEREAS, the continued administrative actions do not constitute a project under California Environmental Quality Act (“CEQA”) guidelines and are therefore exempt from further environmental review.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Healdsburg does hereby:
1. Find that continued administrative actions are exempt from CEQA and no further environmental review is needed.
2. Approve the Assignment Administration Agreement for Western Area Power Administration Base Resource Percentage (AAA) including any non-substantial modifications to the AAA as approved by the City Attorney and NCPA’s General Counsel
3. Authorize the City Manager to execute the AAA on behalf of the City.
PASSED, APPROVED AND ADOPTED this 18th day of April 2022, by the following vote:
AYES: Councilmembers:
NOES: Councilmembers:
ABSENT: Councilmembers:
ABSTAINING: Councilmembers:
SO ORDERED: ATTEST:
_________________________________ ____________________________________ Osvaldo Jimenez, Mayor Raina Allan, City Clerk
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Attachment: Resolution (3577 : Western 2025 Assignment Agreement)
ASSIGNMENT ADMINISTRATION AGREEMENT
FOR
WESTERN AREA POWER ADMINISTRATION BASE RESOURCE
PERCENTAGE
BETWEEN
NORTHERN CALIFORNIA POWER AGENCY
AND
ASSIGNOR: ____________________________
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Attachment: 2025 Assignment Administration Agreement (3577 : Western 2025 Assignment Agreement) i
ASSIGNMENT ADMINISTRATION AGREEMENT
Table of Contents
Section 1. Definitions................................................................................................................... 3 Section 2. Purpose........................................................................................................................ 6 Section 3. Duties and Authorities.............................................................................................. 6 Section 4. Allocations ................................................................................................................ 10 Section 5. Resource Planning ................................................................................................... 12 Section 6. Resource Sale and Purchase ................................................................................... 12 Section 7. O&M Funding and Restoration Costs .................................................................. 13 Section 8. Central Dispatch and Scheduling Services .......................................................... 13 Section 9. Billing and Payments .............................................................................................. 14 Section 10. Cooperation and Further Assurances ............................................................... 16 Section 11. Assignor Covenants and Defaults ..................................................................... 16 Section 12. NCPA Administrative Costs .............................................................................. 21 Section 13. Administration of Agreement............................................................................ 22 Section 14. Term and Termination ........................................................................................ 24 Section 15. Other Agreements................................................................................................ 24 Section 16. Settlement of Disputes and Arbitration............................................................ 25 Section 17. Reports and Records............................................................................................ 26 Section 18. Miscellaneous ....................................................................................................... 27 APPENDIX A................................................................................................................................ 1
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Attachment: 2025 Assignment Administration Agreement (3577 : Western 2025 Assignment Agreement) 1 ASSIGNMENT ADMINISTRATION AGREEMENT
This ASSIGNMENT ADMINISTRATION AGREEMENT (“Agreement”) is dated as of ________________, 20__ by and among the Northern California Power Agency, a joint powers agency of the State of California ("NCPA"), and ________________________ (“Assignor”). NCPA and Assignor are referred to herein individually as a “Party” and collectively as the “Parties”.
RECITALS
A. NCPA has heretofore been duly established as a public agency pursuant to the Joint Exercise of Powers Act of the Government Code of the State of California and, among other things, is authorized to acquire, construct, finance, and operate buildings, works, facilities and improvements for the generation and transmission of electric capacity and energy for resale.
B. Assignor is a signatory to the Joint Powers Agreement which created NCPA and therefore is a Member.
C. As a Member, Assignor entered into Contract ___________________ (“Assignment Contract”), dated ______________, 20__ whereby Assignor assigned its Base Resource Percentage under this Agreement to NCPA in order for NCPA to create a power resource portfolio for the mutual benefit of participating Members (collectively referred to as “Assignors”) beginning January 1, 2025.
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Attachment: 2025 Assignment Administration Agreement (3577 : Western 2025 Assignment Agreement) 2 ASSIGNMENT ADMINISTRATION AGREEMENT
D. NCPA has agreed to accept assignment of Assignor's Base Resource Percentage, and will administer the Assignment Contract for the benefit of Assignor according to the terms and conditions of this Agreement.
E. It is intended Assignor will receive an economic benefit from assigning its Base Resource Percentage to NCPA, with such benefit being equal to or greater than the benefit Assignor would have derived had Assignor’s Base Resource Percentage been scheduled solely to service its own use.
F. NCPA anticipates taking assignment of additional Base Resource Percentages from other Assignors to likewise supply Joint Assignment Administration Services, and will strive to create benefits equal to or greater than those benefits individual Assignors would have derived had their Base Resource Percentage been scheduled solely for their own uses.
G. NCPA Members and other qualified entities assigning their respective Base Resource Percentages to NCPA expect to gain economies of scale and avoid certain costs associated with Base Resource Percentage delivery that would otherwise accrue if each Assignor’s Base Resource Percentage had been scheduled separately and solely for each Assignor’s own use.
H. NCPA will strive to equitably allocate a portion of the common savings generated, if any, associated with Joint Assignment Administration Services to Assignor in accordance with this Agreement.
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Attachment: 2025 Assignment Administration Agreement (3577 : Western 2025 Assignment Agreement) 3 ASSIGNMENT ADMINISTRATION AGREEMENT
I. Assignor desires NCPA to establish facilities, staff and the capability to enable NCPA to provide Joint Assignment Administration Services to Assignor.
J. NCPA has established facilities, staff and the capability for the provision of Joint Assignment Administration Services to Assignor.
K. This Agreement is an Operating Services Agreement; therefore, this Agreement shall be considered to be a Services Agreement pursuant to the Power Management and Administrative Services Agreement.
L. Assignor agrees to pay its allocated share of costs for Joint Assignment Administration Services pursuant to this Agreement and the Power Management and Administrative Services Agreement.
M. Assignor further desires, insofar as possible, to insulate itself and each other Member, whether or not such Member is also an Assignor, from risks inherent in the services and activities undertaken on behalf of any given Assignor or Assignors.
NOW, THEREFORE, the Parties agree as follows:
Section 1. Definitions.
1.1 Definitions. Whenever used in this Agreement (including the Recitals hereto), the following terms shall have the following respective meanings, provided, capitalized terms used in this Agreement (including the Recitals hereto) that are not defined in Section 1 of this Agreement shall have the meaning indicated in Section 1 of the Power Management and Administrative Services Agreement:
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Attachment: 2025 Assignment Administration Agreement (3577 : Western 2025 Assignment Agreement) 4 ASSIGNMENT ADMINISTRATION AGREEMENT
1.1.1 “Agreement” means this Assignment Administration
Agreement, including all Appendices attached hereto.
1.1.2 “Assignment Contract” means the contract between NCPA and Assignor and approved by the Western Area Power Administration, providing for the assignment of Assignor's Base Resource Percentage to NCPA.
1.1.3 “Assignor” is a party to an Assignment Contract assigning its Base Resource Percentage to NCPA. Assignor is also a Member, a signatory to the Power Management and Administrative Services Agreement, and a signatory to this Agreement.
1.1.4 “Base Resource Percentage” means Assignor’s percentage share of Western Area Power Administration Base Resource under its Base Resource Contract ________________, prior to assigning the Base Resource Percentage to NCPA. Base Resource Percentage may be modified by Western Area Power Administration from time to time as contemplated in Base Resource Contract ________________.
1.1.5 “Base Resource” means the energy, capacity and associated products made available from the Western Area Power Administration on a daily basis as a result of Assignor's Base Resource Percentage.
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Attachment: 2025 Assignment Administration Agreement (3577 : Western 2025 Assignment Agreement) 5 ASSIGNMENT ADMINISTRATION AGREEMENT
1.1.6 “Base Resource Energy” means the associated electrical energy and capacity made available from the Western Area Power Administration on a daily, monthly or annual basis as a result of Assignor's Base Resource Percentage.
1.1.7 “Joint Assignment Administration Services” has the meaning set forth in the Section 3.2 of this Agreement.
1.1.8 “NCPA” has the meaning set forth in the recitals hereto.
1.1.9 “NCPA Base Resource Contract” means Contract 21-SNR-02661, dated as of November 12, 2021 between NCPA and the Department of Energy Western Area Power Administration Sierra Nevada Region.
1.1.10 “Party” or “Parties” has the meaning set forth in the recitals hereto; provided that “Third Parties” are entities that are not party to this Agreement.
1.1.11 “Power Management and Administrative Services Agreement” means the NCPA Power Management and Administrative Services Agreement, dated as of October 1, 2014, between NCPA and the Members who are signatories to that agreement by which NCPA provides Power Management and Administrative Services.
1.1.12 “Third Party” means an entity (including a Member) that is not a Party to this Agreement.
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Attachment: 2025 Assignment Administration Agreement (3577 : Western 2025 Assignment Agreement) 6 ASSIGNMENT ADMINISTRATION AGREEMENT
1.2 Rules of Interpretation. All words and references as used in this Agreement (including the Recitals hereto), unless in any such case the context requires otherwise, shall be interpreted pursuant to Section 1.2 of the Power Management and Administrative Services Agreement.
Section 2. Purpose. The purpose of this Agreement is to set forth the terms and conditions under which NCPA will supply efficient and cost effective Joint Assignment Administration Services for Assignors Base Resource Percentages assigned to NCPA.
Section 3. Duties and Authorities.
3.1 Commission Duties. The Commission’s duties and authorities include, but are not limited to, the following:
3.1.1 Act on behalf of NCPA in carrying out any action properly taken pursuant to the provisions of this Agreement. The Commission, or its designee, shall have the authority on behalf of all NCPA to execute any contract, lease or other instrument which has been properly authorized pursuant to this Agreement including documents supplementing this Agreement, contracts with Third Parties, contracts relating Base Resource and related items.
3.1.2 Establish standards, in addition to the authority provided in other sections of this Agreement, with respect to any aspect of arrangements between NCPA and Assignors, which it determines may adversely affect the
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Attachment: 2025 Assignment Administration Agreement (3577 : Western 2025 Assignment Agreement) 7 ASSIGNMENT ADMINISTRATION AGREEMENT
administration of the Base Resource Percentage assigned to NCPA, and to review such arrangements to determine compliance with such standards.
3.1.3 In addition, the Commission shall have such further powers and duties as are conferred or imposed upon it by other sections of this Agreement.
3.2 General Manager Duties. The General Manager, or his or her designee, shall have the duties and authorities as necessary to provide for the day-to-day administration of this Agreement, which include, but are not limited to, the following actions (collectively referred to herein as “Joint Assignment Administration Services”):
3.2.1 Carry out directions of the Commission with respect to matters related to this Agreement.
3.2.2 Coordinate interchange accounting and maintain records pertaining to the administration of the Base Resource Percentage assigned to NCPA, including determination of the volume of power delivered to each Assignor for each calendar month.
3.2.3 Supply certain Power Management and Administrative Services to Assignor, including, but not limited to, scheduling and settlement of Base Resource Energy in accordance with the terms and conditions of the Amended and Restated Scheduling Coordination Program Agreement and this Agreement.
3.2.4 Prepare and submit a proposed budget for assignment-related expenditures for the ensuing fiscal year to appropriate committees and the
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Commission, on such schedule as established by the Commission or consistent with the NCPA annual budget process.
3.2.5 Furnish such information and reporting as are required to keep this Assignor informed of the outlook for, the functioning of, and results achieved with regard to the Base Resource Percentage assigned to NCPA.
3.2.6 Implement operating principles, practices and procedures as they relate to the economy of operation of the Base Resource Percentages assigned to NCPA.
3.2.7 Calculate costs for the Base Resource Percentage assignment transactions among Assignors.
3.2.8 Develop a billing system for Base Resource Percentage transactions pursuant to this Agreement, including criteria, rules, and standards thereto.
3.2.9 Issue an invoice to Assignor for Base Resource Percentage related costs.
3.2.10 Assist Assignor in making sales and purchases of generation and transmission capacity related to their Base Resource Percentage assigned to NCPA.
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Attachment: 2025 Assignment Administration Agreement (3577 : Western 2025 Assignment Agreement) 9 ASSIGNMENT ADMINISTRATION AGREEMENT
3.2.11 Initiate and make long and short-range planning studies with respect to the Base Resource Percentage assigned to NCPA. These studies shall be updated annually, or at such other times as the Commission may direct.
3.2.12 Develop any needed generation and transmission resource plans related to the Base Resource Percentage assigned to NCPA, in consultation with Assignor.
3.2.13 Act on behalf of Assignor, as directed in writing by Assignor, and in accordance with Assignor’s power purchasing statues, regulations, rules, ordinances, and charter, as they may apply, to subscribe to additional Western Area Power Administration products other than Base Resources, that Western Area Power Administration chooses to market in proportion to each of its customers’ Base Resource Percentage, including taking delivery of environmental attributes for compliance purposes.
3.3 Assignor Duties. Assignor’s duties and authorities include, but are not limited to the following:
3.3.1 Assignor shall cooperate with NCPA in providing its relevant load and resource data to NCPA in a timely fashion to insure NCPA can satisfy NCPA Base Resource Contract requirements, and that is required to enable NCPA to supply Joint Assignment Administration Services on behalf of Assignor.
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Attachment: 2025 Assignment Administration Agreement (3577 : Western 2025 Assignment Agreement) 10 ASSIGNMENT ADMINISTRATION AGREEMENT
3.3.2 Assignor shall indemnify NCPA in regard to Joint Assignment Administration Services provided by NCPA in accordance with this Agreement.
3.3.3 Assignor shall pay for all costs and charges incurred by NCPA under this Agreement, including, but not limited to, Base Resource costs, Administrative Services Costs and Power Management Services Costs.
Section 4. Allocations.
4.1 Western Allocations Excluded From this Agreement.
4.1.1 All benefits, costs, and energy schedules associated with the CVP Corporation’s Energy Exchange Arrangements for Project Use and First Preference Support program shall not be subject to this Agreement. This exclusion applies to all Bank Energy and Bank Return Energy schedules allocated by the CVP Corporation.
4.1.2 Base Resource Percentage that is not assigned to NCPA will not be subject to this Agreement, and will be scheduled only for the benefit of the Member receiving the allocation.
4.1.3 A Member who does not assign its Base Resource Percentage to NCPA shall not be subject to this Agreement.
4.2 Determination of Benefits. In order to determine the benefits of assigning each Member’s Base Resource Percentage to NCPA for joint administration, NCPA staff will first estimate the value of the Base Resource Percentage as if no assignment has
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Attachment: 2025 Assignment Administration Agreement (3577 : Western 2025 Assignment Agreement) 11 ASSIGNMENT ADMINISTRATION AGREEMENT
been executed, then compare this value with the value obtained through NCPA’s joint administration of all Base Resource Percentages assigned to NCPA. The computational algorithm for this comparison is contained in Appendix A of this Agreement; however, such algorithm, as it may be refined from time to time by the Commission, shall be consistent with the following policy goals agreed to by each Assignor, namely (i) Base Resource Energy shall be fully utilized to the maximum extent possible, (ii) subject to (i) above, Base Resource Energy shall be scheduled during those time periods that maximize its value; and (iii) consistent with scheduling Base Resource Energy to maximize its overall net value, NCPA will also seek to reasonably minimize associated transmission-related and other applicable costs. NCPA staff shall monitor the results of the algorithm contained in Appendix A and recommend corrective action be taken if and when application of this procedure results in allocations of benefits and costs to Assignor that is inconsistent with the policy goals and allocation parameters described in this Section 4.
4.3 Allocation of Benefits.
4.3.1 For each monthly accounting period, all benefits attained through NCPA’s joint administration of Base Resource Percentages assigned to NCPA shall be allocated to Assignor proportionately to (i) the number of days this Agreement is in force that month, i.e., the fraction of the month this Agreement is in force, and (ii) the amount of Base Resource Energy attributed to Assignor hereunder.
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4.3.2 One-half of any benefits shall be allocated to that group of Assignors providing Base Resource Energy in excess of their own load, and the remaining one-half of benefits shall be allocated to that group of Assignors whose load exceeds the Base Resource Energy they have assigned.
4.3.3 Each individual Assignor within either group shall receive a share of the group’s benefit proportional to its contribution to the group’s excess energy or excess load respectively, as further set forth in Appendix A.
Section 5. Resource Planning.
5.1 NCPA staff, in consultation with Assignor’s staff, shall perform necessary forecasts, studies and resource planning related to maximizing the overall value of the integrated Base Resource Percentage assigned to NCPA. NCPA staff shall perform member-specific forecasts, studies and resource plans for the benefit of the individual Assignor so requesting only upon receiving a detailed written request from Assignor particularly describing the task requested to be performed as part of a duly authorized Services Agreement between the individual Assignor and NCPA.
Section 6. Resource Sale and Purchase.
6.1 Sales and Transfers to Third Parties. Sales and transfers of Base Resource Energy to entities that have not assigned a Base Resource Percentage to NCPA, under the authorization of the Western Area Power Administration, are strictly prohibited without the express written consent of the Western Area Power Administration.
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6.2 Penalties. Any penalties incurred for violation of Section 6.1 shall be the sole responsibility of Assignor found to be in noncompliance with Section 6.1.
Section 7. O&M Funding and Restoration Costs.
7.1 NCPA shall pass through to Assignor on an as-billed basis any and all charges or credits related to the Western Area Power Administration Agreement for the Funding of Operations and Maintenance for Central Valley Project Power Facilities (“O&M Funding”) and the Central Valley Project Improvement Act Restoration Funding, as part of the normal billing procedure described in Section 9 of this Agreement.
Section 8. Central Dispatch and Scheduling Services.
8.1 Central Dispatch. Each Assignor shall, to the fullest extent practicable, subject its Base Resource Percentage to the central dispatch of NCPA. The objective of the central dispatch with respect to the Base Resource Percentage is to supply energy and capacity requirements of the combined Assignors at the lowest practicable costs, and in a reliable and safe manner.
8.2 Base Resource Scheduling. Base Resource Energy shall be scheduled in accordance with the terms and conditions of the Amended and Restated Scheduling Coordination Agreement, this Agreement and other applicable requirements. NCPA and Assignor shall cooperate to meet each applicable scheduling timeline and protocol
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to maximize the value of the Base Resource Percentage assigned to NCPA, and correspondingly minimize related transmission costs.
Section 9. Billing and Payments.
9.1 Invoices. NCPA will issue an invoice to Assignor for its share of estimated and actual costs associated with NCPA’s provision of Joint Assignment Administration Services, including Base Resource costs, Administrative Services Costs, Power Management Services Costs, O&M Funding costs, Central Valley Project Improvement Act Restoration Funding costs, and all other costs for services provided in accordance with this Agreement. Such invoice may be either the All Resources Bill or separate special invoice, as determined by NCPA. Such invoices will be made pursuant to the requirements and procedures provided for in this Agreement and all other applicable agreements. At NCPA’s discretion, invoices may be issued to Assignor using electronic media or physical distribution.
9.2 Payment of Invoices. All invoices delivered by NCPA (including the All Resources Bill) are due and payable thirty (30) Calendar Days after the date thereof; provided, however, that any amount due on a day other than a Business Day may be paid on the following Business Day.
9.3 Late Payments. Any amount due and not paid by Assignor in accordance with Sections 9 shall be considered late and bear interest computed on a daily basis until paid at the lesser of (i) the per annum prime rate (or reference rate) of the Bank of
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America NT&SA then in effect, plus two percent (2%) or (ii) the maximum rate permitted by law.
9.4 Billing Disputes. Assignor may dispute the accuracy of any invoice issued by NCPA under this Agreement by submitting a written dispute to NCPA, within thirty (30) Calendar Days after the date of such invoice; nonetheless Assignor shall pay the full amount billed when due. If Assignor does not timely question or dispute the accuracy of any invoice in writing, then the invoice shall be deemed to be correct. Upon review of a submitted dispute, if an invoice is determined by NCPA to be incorrect, NCPA shall issue a corrected invoice and refund any amounts that may be due to Assignor. If NCPA and Assignor fail to agree on the accuracy of an invoice within thirty (30) Calendar Days after Assignor has disputed it, then the General Manager shall promptly, but no later than the second Commission meeting after the failure to agree, submit the dispute to the Commission for resolution. If the Commission and Assignor fail to agree on the accuracy of a disputed invoice within sixty (60) Calendar Days after its submission to the Commission, then the dispute may then be resolved under the mediation and arbitration procedures set forth in Section 16 of this Agreement; provided, however, that prior to resorting to either mediation or arbitration proceedings, the full amount of the disputed invoice must have been paid.
9.5 Billing/Settlement Data and Examination of Books and Records.
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9.5.1 Billing/Settlement Data. NCPA shall make billing and settlement data available to Assignor in the All Resources Bill, or other invoice, or upon request. NCPA may also, at its sole discretion, make billing and settlement support information available to Assignor using electronic media (e.g. electronic data portal). Procedures and formats for the provision of such electronic data submission may be as established by the Commission from time to time. Without limiting the generality of the foregoing, NCPA may, in its reasonable discretion, require Assignor to execute a non-disclosure agreement prior to providing access to the NCPA electronic data portal.
9.5.2 Examination of Books and Records. Assignor shall have the right to examine the books and records created and maintained by NCPA pursuant to this Agreement at any reasonable, mutually agreed upon time.
Section 10. Cooperation and Further Assurances. Each of the Parties agree to provide such information, execute and deliver any instruments and documents and to take such other actions as may be necessary or reasonably requested by any other Party, which are consistent with the provisions of this Agreement and which do not involve the assumption of obligations other than those provided for in this Agreement, in order to give full effect to this Agreement and to carry out the intent of this Agreement.
Section 11. Assignor Covenants and Defaults.
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11.1 Assignor covenants and agrees: (i) to make payments to NCPA, from its Electric System Revenues, of its obligations under this Agreement as an operating expense of its Electric System; (ii) to fix the rates and charges for services provided by its Electric System, so it will, at all times, have sufficient Revenues to meet the obligations of this Agreement, including the payment obligations; (iii) to make all such payments due NCPA under this Agreement whether or not there is an interruption in, interference with, or reduction or suspension of services provided under this Agreement, such payments not being subject to any reduction, whether by offset or otherwise, and regardless of whether any dispute exists; subject to Section 9.4 and (iv) to operate its Electric System, and the business in connection therewith, in accordance with Good Utility Practice.
11.2 Events of Default. An Event of Default under this Agreement shall exist upon the occurrence of any one or more of the following by Assignor (the “Defaulting Assignor”):
(i) the failure of Assignor to make any payment in full to NCPA when due, where such failure is not cured within thirty (30) Calendar Days following receipt of a notice from NCPA demanding cure;
(ii) the failure of Assignor to perform any covenant or obligation of this Agreement where such failure is not cured within thirty (30) Calendar Days following
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receipt of a notice from NCPA demanding cure; provided, that this subsection shall not apply to any failure to make payments specified by subsection 11.2 (i)); (iii) if any representation or warranty of Assignor material to the services provided hereunder shall prove to have been incorrect in any material respect when made and Assignor does not cure the facts underlying such incorrect representation or warranty so that the representation or warranty becomes true and correct within thirty (30) Calendar Days of the date of receipt of notice from NCPA demanding cure; or (iv) if Assignor is in default or in breach of any of its covenants under any other agreement with NCPA and such default or breach is not cured within the time periods specified in such agreement.
11.3 Uncontrollable Forces. A Party shall not be considered to be in default in respect of any obligation hereunder if prevented from fulfilling such obligation by reason of Uncontrollable Forces; provided, that in order to be relieved of an Event of Default due to Uncontrollable Forces, a Party affected by an Uncontrollable Force shall:
(i) first provide oral notice to the General Manager using telephone communication within two (2) Business Days after the onset of the Uncontrollable Force, and subsequently provide written notice to the General Manager within ten (10) Business Days after the onset of the Uncontrollable Force, describing its nature and extent, the obligations which the Party is unable to fulfill, the anticipated duration of the
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Uncontrollable Force, and the actions which the Party will undertake so as to remove such disability and be able to fulfill its obligations hereunder; and (ii) use due diligence to place itself in a position to fulfill its obligations hereunder and if unable to fulfill any obligation by reason of an Uncontrollable Force such Party shall exercise due diligence to remove such disability with reasonable dispatch; provided, that nothing in this subsection shall require a Party to settle or compromise a labor dispute.
11.4 Cure of an Event of Default. An Event of Default shall be deemed cured only if such default shall be remedied or cured within the time periods specified in Section 11.2 above, as may be applicable, provided, however, upon request of the Defaulting Assignor the Commission may waive the default at its sole discretion, where such waiver shall not be unreasonably withheld.
11.5 Remedies in the Event of Uncured Default. Upon the occurrence of an Event of Default, which is not cured within the time limits specified in Section 11.2, without limiting other rights or remedies available under this Agreement, at law or in equity, and without constituting or resulting in a waiver, release or estoppel of any right, action or cause of action NCPA may have against the Defaulting Assignor, NCPA may take any or all of the following actions:
(i) suspend the provision of services under this Agreement to such Defaulting Assignor;
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(ii) demand that the Defaulting Assignor provide further assurances to guarantee the correction of the default, including the collection of a surcharge or increase in electric rates, or such other actions as may be necessary to produce necessary Revenues to correct the default;
(iii) terminate this Agreement as to the Defaulting Assignor, on ten (10) Calendar Days prior written notice to the Defaulting Assignor; or (iv) enforce all other rights or remedies available to it under any other agreement in which the Defaulting Assignor is a signatory.
11.6 Effect of Termination or Suspension.
11.6.1 Generally. The termination or suspension of this Agreement will not terminate, waive, or otherwise discharge any ongoing or undischarged liabilities, credits or obligations arising from this Agreement until such liabilities, credits or obligations are satisfied in full.
11.6.2 Suspension. If performance of all or any portion of this Agreement is suspended by NCPA with respect to Assignor in accordance with subsection 11.5(i), then such Assignor shall pay any and all reasonable costs incurred by NCPA as a result of such suspension including reasonable attorney fees, the fees and expenses of other experts, including auditors and accountants, or other reasonable and necessary costs associated with such suspension and any portion of the costs associated with NCPA’s provision of Joint Assignment Administration
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Services, including Administrative Services Costs, that were not recovered from Assignor as a result of such suspension.
11.6.3 Termination. If this Agreement is terminated by NCPA with respect to Assignor in accordance with Section 11.5(iii), then such Assignor shall pay any and all costs incurred by NCPA as a result of such termination, including reasonable attorney fees, the fees and expenses of other experts, including auditors and accountants, other reasonable and necessary costs associated with such termination and any portion of costs associated with NCPA’s provision of Joint Assignment Administration Services that were not, or will not be, recovered from Assignor as a result of such termination.
Section 12. NCPA Administrative Costs.
12.1 Cost of Services. All costs associated with NCPA’s provision of Joint Assignment Administration Services to Assignor, including, but not limited to, Administrative Services Costs and Power Management Services Costs, shall be allocated to Assignor in accordance with this Agreement and the Power Management and Administrative Services Agreement.
12.2 Base Resource and Associated Costs. Assigner agrees to and acknowledges its mandatory obligation to pay its allocated share of costs associated with its Base Resource Percentage, including, but not limited to, Base Resource costs,
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O&M Funding costs and Central Valley Project Improvement Act Restoration Funding costs, as invoiced in its All Resources Bill.
Section 13. Administration of Agreement.
13.1 General. The Commission has sole overall responsibility and authority for the administration of this Agreement. Any acts, decisions or approvals taken, made or sought by NCPA under this Agreement shall be taken, made or sought, as applicable, in accordance with the Joint Powers Agreement, the NCPA Commission Bylaws and Section 13.2 of this Agreement.
13.2 Action by Commission.
13.2.1 Forum. Whenever any action anticipated by or related to this Agreement is to be taken by Assignors, such actions shall be taken at a regular or special meeting of the Commission, but shall be participated in only by those Commissioners, or their designated alternates (“Alternate”), who represent Assignors.
13.2.2 Quorum. A quorum of the Commission, for purposes of acting upon matters relating to this Agreement, shall consist of those Commissioners, or their Alternate, representing each and every Assignor.
13.2.3 Voting. Each Assignor shall have the right to cast one vote with respect to matters pertaining to this Agreement. Actions of the Commission with
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regard to this Agreement shall be effective upon the unanimous affirmative vote of all Assignors.
13.3 Adoption and Amendment of Annual Budget. Annually, the Commission shall adopt an Annual Budget, which includes, but is not limited to, all costs attributed to services provided under this Agreement, for at least the next succeeding Fiscal Year in accordance with the Joint Powers Agreement and this Agreement; provided, however, that the Commission may in its discretion adopt a two-year budget if permitted to do so by the NCPA Commission Bylaws or the Joint Powers Agreement.
13.4 Facilities Committee. The Facilities Committee has been established pursuant to the Amended and Restated Facilities Agreement to act as an advisory committee to the Commission. The Commission may, in coordination with the General Manager, refer matters pertaining to the administration of this Agreement to the Facilities Committee for review and recommendation, including, but not limited to, proposed amendments to this Agreement and to the Appendices. If the Commission or General Manager refers matters pertaining to the administration of this Agreement to the Facilities Committee, then NCPA will provide a copy of the public notice of the Facilities Committee meeting at which the matter will be discussed to Assignors. The Facilities Committee may act upon such matters referred to it by the Commission in accordance with the procedures, including the general administration quorum and voting procedures, set forth in the Amended and Restated Facilities Agreement. Any
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recommendations of the Facilities Committee shall be made to the Commission and others, as appropriate, in coordination with the General Manager.
Section 14. Term and Termination.
14.1 Effective Date. This Agreement shall become effective on the date this Agreement has been duly executed by Assignor and NCPA (the “Effective Date”).
NCPA shall notify all Assignors in writing of the Effective Date.
14.2 Term and Termination. Of necessity, the term of this Agreement must coincide with the term of the underlying Assignor’s Assignment Contract. More specifically, this Agreement shall terminate automatically upon the termination of the Assignment Contract.
14.3 No Effect on Prior Liabilities. Termination of this Agreement will not terminate any ongoing or un-discharged liabilities, credits or obligations, including any contingent liabilities, credits or obligations, resulting from this Agreement until they are satisfied in full.
Assignor shall not be obligated to compensate the remaining Assignors for loss of any benefits that would have accrued to the remaining Assignors if this Agreement was not terminated. Nor shall the remaining Assignors be obligated to compensate Assignor for any benefits that accrue to the remaining Assignors because of the termination.
Section 15. Other Agreements.
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15.1 Precedence of Agreement. This Agreement complements the Joint Powers Agreement. It extends the responsibility and authorities assigned to the Commission and to the General Manager under the terms of the Joint Powers Agreement.
15.2 Pooling Agreement. This Agreement supersedes the Second Amended and Restated Pooling Agreement, and takes precedence with respect to issues addressed in this Agreement to the receipt, delivery, scheduling, accounting and billing for all Base Resource Percentage assigned to NCPA to which Assignor is entitled for as long as this Agreement is in effect.
15.3 Other Agreements. With the exception of the Power Management and Administrative Services Agreement and Amended and Restated Scheduling Coordination Program Agreement, this Agreement shall upon the Effective Date, take precedence with respect to issues addressed in this Agreement and also addressed in any other agreement between Assignor and NCPA. With respect to issues common to the Power Management and Administrative Services Agreement and Amended and Restated Scheduling Coordinator Program Agreement, the Power Management and Administrative Services Agreement and Amended and Restated Scheduling Coordinator Program Agreement shall take precedence over this Agreement.
Section 16. Settlement of Disputes and Arbitration. The Parties agree to make best efforts to settle all disputes among themselves connected with this Agreement as a matter of normal business under this Agreement. The procedures set forth in Section 10
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of the Power Management and Administrative Services Agreement shall apply to all disputes that cannot be settled by the Parties; provided, that the provisions of Section
9.4 shall first apply to all disputes involving invoices prepared by NCPA.
Section 17. Reports and Records.
17.1 Reports. Assignor and NCPA shall each prepare and make available to the other all data necessary for each to (i) perform all duties required under this Agreement, and (ii) verify the accuracy of all amounts due and payable under this Agreement. Examples of data to be made available by NCPA at Assignor’s request includes, but are not limited to:
17.1.1 All load data relevant to Assignor’s Base Resource Percentage assigned to NCPA.
17.1.2 All CAISO or other cost information relevant to determining the cost savings obtained by Assignor due to the Base Resource Percentage assigned to NCPA.
17.1.3 Such additional reports and records as are reasonably requested in writing; provided, however, that Assignor so requesting shall reimburse NCPA for costs associated with producing reports that are not essentially completed or kept in the ordinary course of business.
17.2 Reports to Other Agencies. NCPA will submit such reports and records which are required or may be required by Western Area Power Administration, or
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other local, state or referral agencies, as such reports and records are required for NCPA to fulfill its obligations under this Agreement.
Section 18. Miscellaneous.
18.1 Confidentiality. The Parties will keep confidential all confidential or trade secret information made available to them in connection with this Agreement, to the extent possible, consistent with applicable laws, including the California Brown Act and Public Records Act. Confidential or trade secret information shall be marked or expressly identified as such.
If a Party (“Receiving Party”) receives a request from a Third Party for access to, or inspection, disclosure or copying of, any of the other Party’s (the “Supplying Party”) confidential data or information (“Disclosure Request”), then the Receiving Party shall provide notice and a copy of the Disclosure Request to the Supplying Party within three (3) Business Days after receipt of the Disclosure Request. Within three (3) Business Days after receipt of such notice, the Supplying Party shall provide notice to the Receiving Party either:
(i) the Supplying Party believes there are reasonable legal grounds for denying or objecting to the Disclosure Request, and the Supplying Party requests the Receiving Party to deny or object to the Disclosure Request with respect to identified confidential information. In such case, the Receiving Party shall deny the Disclosure Request and the Supplying Party shall defend the denial of the Disclosure Request at its
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sole cost, and it shall indemnify the Receiving Party for all costs associated with denying or objecting to the Disclosure Request. Such indemnification by the Supplying Party of the Receiving Party shall include all of the Receiving Party’s costs reasonably incurred with respect to denial of or objection to the Disclosure Request, including but not limited to costs, penalties, and the Receiving Party’s attorney’s fees; or (ii) the Receiving Party may grant the Disclosure Request without any liability by the Receiving Party to the Supplying Party.
18.2 Indemnification and Hold Harmless. Subject to the provisions of Section
18.4, Assignor agrees to indemnify, defend and hold harmless NCPA and its Members, including their respective governing boards, officials, officers, agents, and employees, from and against any and all claims, suits, losses, costs, damages, expenses and liability of any kind or nature, including reasonable attorneys’ fees and the costs of litigation, including experts (the “Damages”), to the extent caused by any act, omission, breach of contract, negligence (active or passive), gross negligence, recklessness, or willful misconduct of Assignor, its governing officials, officers, employees, subcontractors or agents, to the maximum extent permitted by law.
18.3 Several Liabilities. No Assignor shall be liable under this Agreement for the obligations of any other Assignor, and each Assignor shall be solely responsible and liable for performance of its obligations under this Agreement, except as otherwise
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provided for herein, and the obligation of each Assignor under this Agreement is a several obligation and not a joint obligation with those of the other Assignors.
18.4 No Consequential Damages. FOR ANY BREACH OF ANY PROVISION
OF THIS AGREEMENT FOR WHICH AN EXPRESS REMEDY OR MEASURE OF
DAMAGES IS PROVIDED IN THIS AGREEMENT, THE LIABILITY OF THE
DEFAULTING PARTY SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER DAMAGES OR REMEDIES ARE HEREBY WAIVED. IF NO
REMEDY OR MEASURE OF DAMAGE IS EXPRESSLY PROVIDED, THE LIABILITY
OF THE DEFAULTING PARTY SHALL BE LIMITED TO ACTUAL DAMAGES ONLY AND ALL OTHER DAMAGES AND REMEDIES ARE HEREBY WAIVED. IN NO
EVENT SHALL NCPA OR ANY ASSIGNOR OR THEIR RESPECTIVE SUCCESSORS,
ASSIGNS, REPRESENTATIVES, DIRECTORS, OFFICERS, AGENTS, OR EMPLOYEES
BE LIABLE FOR ANY LOST PROFITS, CONSEQUENTIAL, SPECIAL, EXEMPLARY,
INDIRECT, PUNITIVE OR INCIDENTAL LOSSES OR DAMAGES, INCLUDING LOSS
OF USE, LOSS OF GOODWILL, LOST REVENUES, LOSS OF PROFIT OR LOSS OF
CONTRACTS EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES, AND NCPA AND EACH ASSIGNOR EACH HEREBY WAIVES
SUCH CLAIMS AND RELEASES EACH OTHER AND EACH OF SUCH PERSONS FROM ANY SUCH LIABILITY.
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The Parties acknowledge that California Civil Code section 1542 provides that:
“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.” The Parties waive the provisions of section 1542, or other similar provisions of law, and intend that the waiver and release provided by this Section of this Agreement shall be fully enforceable despite its reference to future or unknown claims.
18.5 Waiver. No waiver of the performance by a Party of any obligation under this Agreement with respect to any default or any other matter arising in connection with this Agreement shall be effective unless given by the Commission. Any such waiver by the Commission in any particular instance shall not be deemed a waiver with respect to any subsequent performance, default or matter.
18.6 Amendments.
18.6.1 Amendments in General. Except where this Agreement specifically provides otherwise, this Agreement may be amended only by written instrument executed by the Parties with the same formality as this Agreement.
18.6.2 Approval and Amendment to Appendices. Notwithstanding Section 18.6.1, any addition to, amendment to or removal of the Appendices of this Agreement shall take effect after being approved by the Commission in a manner
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consistent with the voting procedures set forth in Section 12 without the requirement of an approval of Assignor’s governing bodies.
18.7 Assignment of Agreement.
18.7.1 Binding Upon Successors. This Agreement, including the Appendices attached hereto, shall inure to the benefit of and shall be binding upon the respective successors and assignees of the Parties to this Agreement.
18.7.2 No Assignment. This Agreement, nor any interest herein, shall be transferred or assigned by a Party hereto except with the consent in writing of the other Parties hereto, where such consent shall not be unreasonably withheld.
Without limiting the foregoing, this Agreement shall not be assigned by PlumasSierra Rural Electric Cooperative without the approval in writing of the Administrator of the Rural Electrification Administration Utilities Service.
18.8 Severability. In the event that any of the terms, covenants or conditions of this Agreement or the application of any such term, covenant or condition, shall be held invalid as to any person or circumstance by any court having jurisdiction, all other terms, covenants or conditions of this Agreement and their application shall not be affected thereby, but shall remain in force and effect unless the court holds that such provisions are not severable from all other provisions of this Agreement.
18.9 Governing Law. This Agreement shall be interpreted, governed by, and construed under the laws of the State of California.
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18.10 Headings. All indices, titles, subject headings, section titles and similar items are provided for the purpose of convenience and are not intended to be inclusive, definitive, or affect the meaning of the contents of this Agreement or the scope thereof.
18.11 Notices. Any notice, demand or request required or authorized by this Agreement to be given to any Party shall be in writing, and shall either be personally delivered to Assignor’s Commissioner or Alternate, and to the General Manager, or shall be transmitted to Assignor and the General Manager at the addresses shown on the signature pages hereof. The designation of such addresses may be changed at any time by written notice given to the General Manager. All such notices shall be deemed delivered when personally delivered, two (2) Business Days after deposit in the United States mail first class postage prepaid, or on the first Business Day following delivery through electronic communication.
18.12 Warranty of Authority. Each Party represents and warrants that it has been duly authorized by all requisite approval and action to execute and deliver this Agreement and that this Agreement is a binding, legal, and valid agreement enforceable in accordance with its terms. Upon execution of this Agreement, Assignor shall deliver to NCPA a resolution of the governing body of Assignor evidencing approval of and authority to enter into this Agreement.
18.13 Counterparts. This Agreement may be executed in any number of counterparts, and each executed counterpart shall have the same force and effect as an
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original instrument and as if all the signatories to all of the counterparts had signed the same instrument. Any signature page of this Agreement may be detached from any counterpart of this Agreement without impairing the legal effect of any signatures thereon, and may be attached to another counterpart of this Agreement identical in form hereto but having attached to it one or more signature pages.
18.14 Venue. In the event that a Party brings any action under this Agreement, the Parties agree that trial of such action shall be vested exclusively in the state courts of California in the County of Placer or in the United States District Court for the Eastern District of California.
18.15 Attorneys’ Fees. If a Party to this Agreement brings any action, including an action for declaratory relief, to enforce or interpret the provisions of this Agreement, each Party shall bear its own fees and costs, including reasonable attorneys’ fees, associated with the action.
18.16 Counsel Representation. Pursuant to the provisions of California Civil Code Section 1717 (a), each of the Parties were represented by counsel in the negotiation and execution of this Agreement and no one Party is the author of this Agreement or any of its subparts. Those terms of this Agreement which dictate the responsibility for bearing any attorney’s fees incurred in arbitration, litigation or settlement in a manner inconsistent with the provisions of Section 18.15 were intentionally so drafted by the
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Parties, and any ambiguities in this Agreement shall not be interpreted for or against a Party by reason of that Party being the author of the provision.
18.17 No Third Party Beneficiaries. Nothing contained in this Agreement is intended by the Parties, nor shall any provision of this Agreement be deemed or construed by the Parties, by any third person or any Third Parties, to be for the benefit of any Third Party, nor shall any Third Party have any right to enforce any provision of this Agreement or be entitled to damages for any breach by the Parties of any of the provisions of this Agreement.
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IN WITNESS WHEREOF, NCPA and Assignor have, by the signature of its duly authorized representative shown below, executed and delivered a counterpart of this Agreement.
NORTHERN CALIFORNIA
POWER AGENCY
651 Commerce Drive
Roseville, CA 95678
_____________________________
By:__________________________
Title: __________________________
Date:
Approved as to form:
_____________________________
By:__________________________
Its: General Counsel
Date:
ASSIGNOR NAME
ADDRESS
CITY, STATE, ZIP
_____________________________
By:__________________________
Title: __________________________
Date:
Approved as to form:
_____________________________
By:__________________________
Its: General Counsel
Date:
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ASSIGNMENT ADMINISTRATION AGREEMENT
APPENDIX A
BENEFITS SHARING ALLOCATION ALGORITHM
Updated: November 29, 2017
Introduction
Steps 1-9 determine each Assignor’s monthly percentage allocator that will be used to distribute the benefits resulting from assigning the Base Resource to NCPA. Step 10 uses that percentage allocator to distribute the benefits.
All computational steps in this allocation algorithm will be implemented in a manner that is consistent with NCPA staff’s goal of scheduling the assigned Base Resource (BR) to maximize the economic market value of the BR.
Step 1: Constrained Own-Load Optimal Dispatch
NCPA staff shall perform after the fact monthly “own-load” optimal dispatch of each Assignor’s BR to establish the value of the individual BR allocation to each Assignor pre-assignments. The own-load dispatch shall be constrained by hourly loads equal to each Assignor’s gross hourly loads such that BR energy schedules cannot exceed 100 percent of load in any hour. In addition, revenues Assignor would have received from Western Area Power Administration (Western) through the re-marketing of its “standard” energy allocations (the portion of monthly energy allocations that cannot be utilized by Assignor) will be added to this value.
Step 2: Net Value of Own-Load Constrained Dispatch
All Western costs will be deducted from the values computed in Step 1.
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Step 3: Unconstrained Own-Load Optimal Dispatch
Perform individual optimal dispatches without load constraints. The difference in net value between this un-constrained net value and the net value of each Assignor’s ownload constrained dispatch (NetValueOL) of Step 2 shall be the allocation determinant for 50% of the assignment benefit computed in Step 7.
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Step 4: Daily Head-Room Value
Compute the value of load “head-room” provided by each Assignor during the day.
Head-room value is a function of each Assignor’s net load (net of constrained own-load BR schedules) in each time-step when NCPA’s actual BR schedule exceeds the sum of Assignors’ own-load BR energy schedule.
Step 5: Allocation of Headroom Provider
Compute the allocation determinant of 50% of the pooling benefit computed in Step 7 on the basis of the Headroom value for the month.
Step 6: Net Daily Benefit of BR Assignment
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Compute the daily net benefit of BR assignments to NCPA as the difference between the net market value of NCPA’s actual BR schedule and the net market value of the sum of Assignors’ own-load constrained daily dispatches. If the result is positive, then proceed to Step 7. If the result is negative proceed to Step 8.
Step 7: Allocate Positive Daily Net Benefit (Only if the Net Daily Benefit is Positive) Allocate one-half of the daily Net Benefit using AllocatorE and one-half using AllocatorL. Proceed to Step 9.
Step 8: (Only if Daily Net Benefit is Negative); Zero Benefit from Assignment Set value of zero for each Assignor.
Step 9: Assign Constant Adjusted BR Percentage Shares for the Month
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ASSIGNMENT ADMINISTRATION AGREEMENT
Determine each Assignor’s monthly percentage share of NCPA’s BR by normalizing the sum of each Assignor’s daily Assignor Benefit and Net Value of Own-Load constrained dispatch. Each Assignor’s share of NCPA’s BR schedules in each time-step during the month shall be equal to the percentage computed in this step. For example, if a Member’s share in a given month is calculated as 15% in this step, that Member is assigned 15% of actual Western schedules each time-step during that month. .
Step 10: Assign Base Resource Costs
Assign any difference between NCPA’s actual BR costs and the sum of the Own-Load constrained monthly costs. Positive or negative differences will be distributed to each assignor using the optimized BR shares calculated in step 9. Each assignor’s Western BR costs for the month (to be billed by NCPA) will equal the respective Own-Load constrained costs adjusted by this step added to Assignor’s Base Resource share.
NCPA staff shall regularly monitor the results of this procedure and recommend corrective action to be taken if and when the application of this procedure results in counter-intuitive and/or unfair allocations of benefits and costs to Assignors.
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CITY OF HEALDSBURG
CITY COUNCIL AGENDA STAFF REPORT
MEETING DATE: April 18, 2022
SUBJECT: Acceptance of a Public Utility Easement Along a Portion of Parcel Six of Sonoma Luxury Resort, LLC
PREPARED BY: Curt Bates, Principal Engineer
STRATEGIC INITIATIVE(S):
Maintain and Improve Infrastructure and Facilities
RECOMMENDED ACTION(S):
Adopt a Resolution accepting a Dedication of a Public Utility Easement Along a Portion of Parcel Six of Sonoma Luxury Resort, LLC (APN: 091-310-006).
COMMUNITY ENGAGEMENT/OUTREACH:
On September 30, 2020, the City Council received a report regarding potential amendments to the Development Agreement (“Saggio DA”) with Sonoma Luxury Resort LLC ("Developer") for the Saggio Hills Project (now known as "Montage Healdsburg").
On December 15, 2020, the Planning Commission conducted a public hearing on the proposed Third Amendment to the Development Agreement ("Third Amendment") and adopted Resolution No. 2020-17) recommending that the Healdsburg City Council approve the proposed Third Amendment.
On January 19, 2021, the City Council conducted a public hearing on the Third Amendment and introduced an ordinance amending the Development Agreement by and between Sonoma Luxury Resort LLC and the City of Healdsburg for the Saggio Hills Project. The ordinance was adopted on February 1, 2021.
BACKGROUND:
The Saggio DA requires the Developer to improve Passalacqua Drive to public street standards (but without sidewalks, as the Developer's obligation to construct the Multi-Use Trail was required in lieu of sidewalks), to construct a connecting street between Passalacqua Drive and Parkland Farms Boulevard, and to install related public utilities.
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Pursuant to the Third Amendment executed by and between the Developer and the City, the Developer was required to construct the Parkland Farms Boulevard connector street and install public utilities on a slightly modified alignment that fits better with site topography. The Third Amendment, in part, addresses the realignment of the proposed Parkland Farms Boulevard and the process for vacating the existing Offer of Dedication for Public Roads, recording an amended Offer of Dedication ("Amended Offer of Dedication") as well as recording a new public utility easement to conform with the new roadway alignment.
DISCUSSION/ANALYSIS:
In order for the City to accept the public utility improvements that were constructed in the public utility easement area by the Developer, the City Council must first adopt a resolution accepting the proposed public utility easement (Exhibit A and B) which will be recorded in the Official Records of Sonoma County. The public utility easement has been executed by the Developer and has been reviewed and approved for technical correctness by the City Surveyor.
Additionally, Pacific Gas and Electric Company (PG&E) requires that the public utility easement be accepted by the City prior to PG&E completing its utility connections in the new roadway.
City staff will present a staff report and resolution for consideration by the City Council at a future meeting to accept the public improvements in Passalacqua Drive, Parkland Farms Boulevard Extension, and the public utility easement area once all remaining PG&E construction work has been completed.
The recommended resolution authorizes the City Manager to accept the dedication of the public utility easement and directs staff to file the easement for recordation with the Sonoma County Recorder’s Office. The resolution has been approved as to form by the City Attorney.
ENVIRONMENTAL STEWARDSHIP:
The Developer is bound by, and required to perform, all mitigation measures for the Project contained in and required by the Final Environmental Impact Report for the Saggio Hills Project, including all mitigation monitoring and reporting.
ALTERNATIVES:
There is no alternative. The public utility easement is a required condition of approval as part of the Saggio Hill Development and is necessary to accommodate public utilities.
FISCAL IMPACT:
The Saggio Hills and Montage Healdsburg Project is a privately funded development that will generate property tax, transient occupancy tax, and sales tax revenues which will help to offset the City's costs of providing services to the project. The project is likely to provide other longterm fiscal benefits to the community.
More specifically, through the Developer Agreement, the Developer is required to make several land dedications, public and private improvements, and cash contributions to the City.
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ENVIRONMENTAL ANALYSIS:
Under the provisions of the California Environmental Quality Act ("CEQA") Guidelines Section 15061(b)(3), the proposed Resolution of Acceptance is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment and, where it can be seen with certainty that there is no possibility of the activity in question having a significant effect on the environment, such as the action contained herein, the activity is not subject to CEQA.
ATTACHMENT(S):
Resolution
Exhibits A and B
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CITY OF HEALDSBURG
RESOLUTION NO. -2022
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF HEALDSBURG ACCEPTING A DEDICATION OF A
PUBLIC UTILITY EASEMENT ALONG A PORTION OF
PARCEL SIX OF SONOMA LUXURY RESORT, LLC
(PORTION OF APN: 091-310-006)
WHEREAS, Sonoma Luxury Resorts, LLC, record owners (hereafter “Owners”) of real property known as parcel six of Sonoma Luxury Resort in the Saggio Hills Subdivision, (APN:
091-310-006) Healdsburg, California, is obligated as part of the project development agreement and public improvement agreement to dedicate a public utility easement for construction, maintenance, and ongoing operations of public utilities; and WHEREAS, Owners have dedicated in satisfaction of project development agreement and public improvement agreements, a strip of land as described in Exhibit “A” and as shown on Exhibit “B”, for a public utility easement.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Healdsburg hereby accepts the dedication of public utility easement along a portion of parcel six of Sonoma luxury resort, LLC (portion of APN 091-0310-006), Healdsburg, California, as described in Exhibit “A” and shown on Exhibit “B”, both of which are attached hereto and made a part hereof.
BE IT FURTHER RESOLVED that the City Council hereby authorizes the City Manager to certify said acceptance and directs staff to file the Public Utility Easement with the Sonoma County Recorder’s Office for recordation.
PASSED, APPROVED, AND ADOPTED by the City Council of the City of Healdsburg this 18th day of April 2022, by the following vote:
AYES: Council members: ( )
NOES: Council members: ( )
ABSENT: Council members: ( )
ABSTAINING: Council members: ( )
SO ORDERED: ATTEST:
_________________________________ ___________________________________ Osvaldo Jimenez, Mayor Raina Allan, City Clerk
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Attachment: Resolution (3578 : Acceptance of a Public Utility Easement Along a Portion of Parcel Six of Sonoma Luxury Resort, LLC)
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Attachment: Exhibits A and B (3578 : Acceptance of a Public Utility Easement Along a Portion of Parcel Six of Sonoma Luxury Resort, LLC)
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Attachment: Exhibits A and B (3578 : Acceptance of a Public Utility Easement Along a Portion of Parcel Six of Sonoma Luxury Resort, LLC)
CITY OF HEALDSBURG
CITY COUNCIL AGENDA STAFF REPORT
MEETING DATE: April 18, 2022
SUBJECT: Vacate An Offer Of Dedication For Public Roads Provided To The City In Connection With The Saggio Hills Project and Approving and Authorizing the Amended Irrevocable Offer Of Dedication Of Public Roads Provided By Sonoma Luxury Resort, LLC For The Saggio Hills Project
PREPARED BY: Curt Bates, Principal Engineer
STRATEGIC INITIATIVE(S):
Maintain and Improve Infrastructure and Facilities
RECOMMENDED ACTION(S):
By motion:
1. Adopt a Resolution summarily vacating an Offer of Dedication for Public Roads in accordance with the Third Amendment to the Development Agreement between the City of Healdsburg and Sonoma Luxury Resort, LLC for the Saggio Hills Project; and
2. Adopt a Resolution approving and authorizing the recording of the Amended Irrevocable Offer Of Dedication Of Public Roads provided by Sonoma Luxury Resort, LLC to the City for the Saggio Hills Project and authorizing the City Manager to execute and record the Acceptance of the Amended Irrevocable Offer of Dedication of Public Roads.
COMMUNITY ENGAGEMENT/OUTREACH:
On September 30, 2020, the City Council received a report regarding potential amendments to the Development Agreement (“Saggio DA”) with Sonoma Luxury Resort LLC ("Developer") for the Saggio Hills Project (now known as "Montage Healdsburg").
On December 15, 2020, the Planning Commission conducted a public hearing on the proposed Third Amendment to the Development Agreement ("Third Amendment") and adopted Resolution No. 2020-17) recommending that the Healdsburg City Council approve the proposed Third Amendment.
On January 19, 2021, the City Council conducted a public hearing on the Third Amendment and introduced an ordinance amending the Development Agreement by and between Sonoma Luxury
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Resort LLC and the City of Healdsburg for the Saggio Hills Project. The ordinance was adopted on February 1, 2021.
BACKGROUND:
The Saggio DA requires the Developer to improve Passalacqua Drive to public street standards (but without sidewalks, as the Developer's obligation to construct the Multi-Use Trail was required in lieu of sidewalks), to construct a connecting street between Passalacqua Drive and Parkland Farms Boulevard, and to install related utilities.
The Developer previously made an Irrevocable Offer of Dedication for Public Roads to City dated May 15, 2019, and recorded in the Official Records on June 4, 2019, at Instrument No. 2019037260, of real property described therein (“Offer of Dedication”).
Pursuant to the Third Amendment, the City and Developer entered into a Public Improvement Agreement which required the Developer to construct the Parkland Farms Boulevard connector street and install utilities on a slightly modified alignment that fits better with site topography.
The Public Improvement Agreement addressed the process to modify the alignment of the proposed Parkland Farms Boulevard by adoption of a resolution to vacate the existing Offer of Dedication for Public Roads, recording a lot line adjustment affecting Parcels 5, 6 and 11 of the Saggio Hills Subdivision, and recording an Amended Irrevocable Offer of Dedication for Public Roads ("Amended Offer of Dedication") to conform with the new roadway alignment.
Pursuant to the terms of Public Improvement Agreement, a lot line adjustment affecting Parcels 5, 6 and 11 of Saggio Hills has been approved by the Community Development Director, the Amended Offer of Dedication for the modified roadway alignment has been delivered by the Developer to the City and reviewed and approved by the City Surveyor, and the Developer has constructed the superseding public roadway and utility improvements in, on and over the modified roadway alignment.
DISCUSSION/ANALYSIS:
For the City to accept the public road and utility improvements that have been constructed by the Developer within the modified roadway alignment, the City Council must adopt the two (2) resolutions enclosed with this staff report.
The first resolution will vacate the Offer of Dedication that was provided by the Developer to the City in 2019 for the initial roadway alignment pursuant to the provisions set forth in Section 8330 of the California Streets and Highways Code. (“Resolution to Vacate”) (See Attachment 1).
Once approved, the City Clerk will be required to record a certified copy of the Resolution to Vacate in the Official Records of Sonoma County pursuant to California Streets and Highways Code Section 8336.
The second resolution will approve and authorize the recording of the Amended Offer of Dedication in the Official Records of Sonoma County. In addition, the second resolution authorizes the City Manager to execute and record in the Official Records the Acceptance of the Amended Irrevocable Offer of Dedication of Public Roads. (See Attachment 2).
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Note that Streets and Highways Code Section 8330 authorizes the summary vacation of a street when it has been superseded by relocation, as is the case in this instance by virtue of the modified roadway alignment. Accordingly, the recording of the Resolution to Vacate is conditioned on the concurrent recording of the Amended Offer of Dedication to ensure the replacement roadway reflected in the Amended Offer of Dedication is in place when the Resolution to Vacate becomes effective.
ENVIRONMENTAL STEWARDSHIP:
The Developer is bound by, and required to perform, all mitigation measures for the Project contained in and required by the Final Environmental Impact Report for the Saggio Hills Project, including all mitigation monitoring and reporting.
ALTERNATIVES:
It is recommended that the City Council adopt the two attached Resolutions to (i) vacate the original Offer of Dedication and (ii) approve the Amended Offer of Dedication and authorize it to be recorded and for the City Manager to execute and record the Acceptance of the Amended Offer of Dedication. Alternatively, the City Council could consider the following actions:
1) Approve the Resolution with minor revisions,
2) Direct that significant changes be made to the Resolution in which case the item will be brought back for Council action on a future agenda.
FISCAL IMPACT:
The Montage Healdsburg project is a privately funded development that will generate property tax, transient occupancy tax, and sales tax revenues which will help to offset the City's costs of providing services to the project. The project is likely to provide other long-term fiscal benefits to the community.
More specifically, through the Developer Agreement, the Developer is required to make several land dedications, public and private improvements, and cash contributions to the City.
ENVIRONMENTAL ANALYSIS:
The adoption of the two Resolutions described above are not a project subject to the requirements of the California Environmental Quality Act (“CEQA”) because the public roadway improvements have already been constructed upon the modified roadway alignment in accordance with the terms of the Public Improvement Agreement. Therefore, the adoption of these Resolutions will not result in a direct physical change in the environment nor a reasonably foreseeable indirect physical change in the environment. Further, even assuming the adoption of these Resolutions are a project as defined in CEQA, the adoption of these Resolutions are exempt from environmental review pursuant to section 15061(b)(3) of the State CEQA Guidelines because each is covered by the common sense exemption that CEQA applies only to projects which have the potential for causing a significant effect on the environment and where, as in the case of the adoption of these Resolutions, it can be seen with certainty that there is no possibility that the adoption of these Resolutions may have a significant effect on the environment, the adoption of these Resolutions are not subject to CEQA.
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ATTACHMENT(S):
Resolution - Vacation of OTD for Public Roads
Resolution - Acceptance of OTD for Public Roads
Amended Irrevocable Offer ofDedication for Public Roads
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CITY OF HEALDSBURG
RESOLUTION NO. XX-2022
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
HEALDSBURG TO VACATE AN OFFER OF DEDICATION
FOR PUBLIC ROADS PROVIDED TO THE CITY IN
CONNECTION WITH THE SAGGIO HILLS PROJECT
PURSUANT TO CHAPTER 4 OF PART 3 OF DIVISION 9 OF
THE CALIFORNIA STREETS AND HIGHWAYS CODE
WHICH PUBLIC ROAD WILL BE SUPERSEDED BY
RELOCATION
WHEREAS, on April 11, 2011, under the authority of Ordinance No. 1107, the City of Healdsburg ("City") and Sonoma Luxury Resort LLC ("Developer") entered into a Development Agreement; a Memorandum of Development Agreement was recorded in the Official Records of Sonoma County on April 27, 2011, Instrument No. 2011-037227 (“Development Agreement”); and WHEREAS, the Development Agreement governs the development of approximately 258 acres of real property, with a 130-room luxury resort (the “Resort”), 70 single family residences (the “Residences”), dedication of land to the City for development of up to 150 affordable housing units (the “Affordable Housing”), dedication of land to the City for development of a public park (the “Public Park”), and construction and dedication of land and improvements to the City of Passalacqua Drive and Parkland Farms Blvd. (the “Public Roads and Related Utilities”), hiking and pedestrian-bicycle trails (the “Public Trails”), a fire substation (the “Fire Substation”), and a pump station (the “Pump Station”)(collectively, the “Project”); and WHEREAS, in addition to the Development Agreement, the City has approved of the following entitlements governing the development of the Project on the Property:
1. On January 31, 2011, pursuant to Resolution No. 18-2011, the City conditionally approved the Saggio Hills Tentative Subdivision Map (TM06-04)(“Tentative Map”);
2. On April 4, 2016, pursuant to Resolution No. 19-2016, the first final map which was filed for record in the Official Records of Sonoma County on May 23, 2018, in Book 795 of Maps at Pages 31-40, Document No. 2018-037508 (“FM-1”);
3. On April 5, 2016, an Insubstantial Amendment To The Development Agreement Between The City Of Healdsburg And Sonoma Luxury Resort, LLC, Dated April 11, 2011 (“First Insubstantial Amendment”);
4. On June 18, 2018, pursuant to Resolution No. 61-2018, the second final map which was filed for record in the Official Records of Sonoma County on September 14, 2018, in Book 798 of Maps at Pages 29-35, Document No. 2018-065059 (“FM-2”);
5. On June 18, 2018, pursuant to Resolution 61-2018, the third final map which was filed
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Attachment: Resolution - Vacation of OTD for Public Roads (3583 : Vacation of Public Right of Way and Acceptance of Amended Public Right Resolution No. XX-2022
for record in the Official Records of Sonoma County on September 14, 2018, in Book 798 of Maps at Pages 36-43, Document No. 2018-065061 (“FM-3”).
6. On May 30, 2019, a Second Insubstantial Amendment To The Development Agreement Between The City of Healdsburg and Sonoma Luxury Resort, LLC, dated April 11, 2011 ("Second Insubstantial Amendment") was executed by the Parties.
7. On January 19, 2021, City and Developer entered into that certain Third Amendment to Development Agreement; a Memorandum of Third Amendment to Development Agreement was filed for record in the Official Records of Sonoma County on March 4, 2021, Document No. 2021-025567 (“Third Amendment”); and WHEREAS, FM-1 created Parcel 11 to encompass the public right of way known as Passalacqua Drive and Parkland Farms Blvd. (the “Public Roadway Property”), more particularly described in the legal description attached hereto as Exhibit A, and Developer executed, acknowledged and recorded an Irrevocable Offer Of Dedication For Public Roads in favor of the City related to the Public Roadway Property, dated May 15, 2019, and recorded June 4, 2019, in the Official Records at Instrument No. 2019-037260 (the “Offer of Dedication”); and WHEREAS, subsequent to the recording of the Offer of Dedication the City and Developer continued to discuss refinements to the timing and scope of their respective obligations, specifically including the final alignment of the Public Roadway Property as reflected in the Offer of Dedication; and
WHEREAS, pursuant to the Third Amendment, the City and Developer agreed, in part, to enter into a Public Improvement Agreement for Public Roads and Utilities (the "Public Improvement Agreement") which governs, in part, the process to modify the alignment of the Public Roadway Property, as reflected in the Offer of Dedication, by adoption of a resolution to vacate the Offer of Dedication in accordance with Streets and Highways Code Section 8330, recording of a lot line adjustment affecting Parcels 5, 6 and 11, and recording of an Amended Irrevocable Offer Of Dedication For Public Roads (“Amended Offer of Dedication”) of the modified roadway alignment; and
WHEREAS, the City and Developer entered into the Public Improvement Agreement on January 19, 2021, which was filed for record in the Official Records of Sonoma County on March 4, 2021, Document No. 2021-025569; and
WHEREAS, in accordance with the Public Improvement Agreement, a lot line adjustment affecting Parcels 5, 6 and 11 has been approved by the Community Development Director, an Amended Offer of Dedication for the modified roadway alignment has been delivered by Developer to City and reviewed and approved by the City Surveyor, and Developer has constructed the superseding public roadway and utility improvements in, on, over and upon the modified roadway alignment.
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Attachment: Resolution - Vacation of OTD for Public Roads (3583 : Vacation of Public Right of Way and Acceptance of Amended Public Right Resolution No. XX-2022
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Healdsburg as follows:
1. The recitals set forth above are adopted as findings in support of this Resolution.
2. The adoption of this Resolution to vacate an offer of dedication for public roads is not a project subject to the requirements of the California Environmental Quality Act (“CEQA”) because the vacation of the public roadway, which has already been superseded by relocation upon the modified roadway alignment in accordance with the terms of the Public Improvement Agreement, will not result in a direct physical change in the environment nor a reasonably foreseeable indirect physical change in the environment. Further, even assuming the adoption of this Resolution is a project as defined in CEQA, the adoption of this Resolution is exempt from environmental review pursuant to section 15061(b)(3) of the State CEQA Guidelines because it is covered by the common sense exemption that CEQA applies only to projects which have the potential for causing a significant effect on the environment and where, as in the case of the adoption of this Resolution, it can be seen with certainty that there is no possibility that the adoption of this Resolution may have a significant effect on the environment, the adoption of this Resolution is not subject to CEQA.
3. In accordance with California Streets and Highways Code Section 8330, the City Council of the City of Healdsburg hereby vacates that certain Offer of Dedication For Public Roads, recorded in the Official Records of Sonoma County on June 4, 2019, Document No. 2019-037260, as further described in Exhibit A, on the condition that the Amended Offer of Dedication be recorded in the Official Records of Sonoma County concurrently with this Resolution.
4. From and after the date of recordation of this Resolution, the Public Roadway Property described in the Offer of Dedication and more particularly in Exhibit A attached hereto, will no longer constitute a public street.
5. Pursuant to California Streets and Highway Code Section 8336, the City Clerk is directed to cause a certified copy of this Resolution, attested by the City Clerk under seal, to be recorded in the Official Records of Sonoma County concurrently with the Amended Offer of Dedication.
PASSED, APPROVED AND ADOPTED, this 18th day of April 2022, by the following vote:
AYES: Councilmembers:
NOES: Councilmembers:
ABSENT: Councilmembers:
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Attachment: Resolution - Vacation of OTD for Public Roads (3583 : Vacation of Public Right of Way and Acceptance of Amended Public Right Resolution No. XX
-2022
ABSTAINING: Councilmembers:
SO ORDERED: ATTEST:
__________________________________ ____________________________________ Osvaldo Jimenez, Mayor Raina Allan, City Clerk
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Attachment: Resolution - Vacation of OTD for Public Roads (3583 : Vacation of Public Right of Way and Acceptance of Amended Public Right Resolution No. XX-2022
EXHIBIT A
LEGAL DESCRIPTION OF VACATED PUBLIC ROADWAY PROPERTY
The real property referred to herein is situated in the State of California, County of Sonoma, City of Healdsburg and described as follows:
Parcel 11 of Saggio Hills per Map recorded May 23, 2018 in Book 795, Pages 31-40 as Instrument No. 2018-037508, of Official Records, in the City of Healdsburg, County of Sonoma, in the State of California.
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Attachment: Resolution - Vacation of OTD for Public Roads (3583 : Vacation of Public Right of Way and Acceptance of Amended Public Right
CITY OF HEALDSBURG
RESOLUTION NO. XX-2022
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF HEALDSBURG APPROVING AND AUTHORIZING
THE RECORDING IN THE OFFICIAL RECORDS OF
SONOMA COUNTY THE AMENDED IRREVOCABLE
OFFER OF DEDICATION OF PUBLIC ROADS
PROVIDED BY SONOMA LUXURY RESORT, LLC FOR
THE SAGGIO HILLS PROJECT AND AUTHORIZING
THE CITY MANAGER TO EXECUTE AND RECORD IN
THE OFFICIAL RECORDS OF SONOMA COUNTY THE
ACCEPTANCE OF THE AMENDED IRREVOCABLE
OFFER OF DEDICATION OF PUBLIC ROADS
WHEREAS, on April 11, 2011, under the authority of Ordinance No. 1107, the City of Healdsburg ("City") and Sonoma Luxury Resort LLC ("Developer") entered into a Development Agreement; a Memorandum of Development Agreement was recorded in the Official Records of Sonoma County on April 27, 2011, Instrument No. 2011-037227 (“Development Agreement”); and
WHEREAS, the Development Agreement governs the development of approximately 258 acres of real property, with a 130-room luxury resort (the “Resort”), 70 single family residences (the “Residences”), dedication of land to the City for development of up to 150 affordable housing units (the “Affordable Housing”), dedication of land to the City for development of a public park (the “Public Park”), and construction and dedication of land and improvements to the City of Passalacqua Drive and Parkland Farms Blvd. (the “Public Roads and Related Utilities”), hiking and pedestrian-bicycle trails (the “Public Trails”), a fire substation (the “Fire Substation”), and a pump station (the “Pump Station”)(collectively, the “Project”); and WHEREAS, in addition to the Development Agreement, the City has approved of the following entitlements governing the development of the Project on the Property:
1. On January 31, 2011, pursuant to Resolution No. 18-2011, the City conditionally approved the Saggio Hills Tentative Subdivision Map (TM06-04)(“Tentative Map”);
2. On April 4, 2016, pursuant to Resolution No. 19-2016, the first final map which was filed for record in the Official Records of Sonoma County on May 23, 2018, in Book 795 of Maps at Pages 31-40, Document No. 2018-037508 (“FM-1”);
3. On April 5, 2016, an Insubstantial Amendment To The Development Agreement Between The City Of Healdsburg And Sonoma Luxury Resort, LLC, Dated April 11, 2011 (“First Insubstantial Amendment”);
4. On June 18, 2018, pursuant to Resolution No. 61-2018, the second final map which was filed for record in the Official Records of Sonoma County on September 14, 2018, in Book 798 of Maps at Pages 29-35, Document No. 2018-065059 (“FM-2”);
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Attachment: Resolution - Acceptance of OTD for Public Roads (3583 : Vacation of Public Right of Way and Acceptance of Amended Public Resolution No. XX-2022
5. On June 18, 2018, pursuant to Resolution 61-2018, the third final map which was filed for record in the Official Records of Sonoma County on September 14, 2018, in Book 798 of Maps at Pages 36-43, Document No. 2018-065061 (“FM-3”).
6. On May 30, 2019, a Second Insubstantial Amendment To The Development Agreement Between The City of Healdsburg and Sonoma Luxury Resort, LLC, dated April 11, 2011 ("Second Insubstantial Amendment") was executed by the Parties.
7. On January 19, 2021, City and Developer entered into that certain Third Amendment to Development Agreement; a Memorandum of Third Amendment to Development Agreement was filed for record in the Official Records of Sonoma County on March 4, 2021, Document No. 2021-025567 (“Third Amendment”); and WHEREAS, FM-1 created Parcel 11 to encompass the public right of way known as Passalacqua Drive and Parkland Farms Blvd. (the “Public Roadway Property”), and Developer executed, acknowledged and recorded an Irrevocable Offer Of Dedication For Public Roads in favor of the City related to the Public Roadway Property, dated May 15, 2019, and recorded June 4, 2019, in the Official Records at Instrument No. 2019-037260 (the “Offer of Dedication”); and WHEREAS, subsequent to the recording of the Offer of Dedication the City and Developer continued to discuss refinements to the timing and scope of their respective obligations, specifically including the final alignment of the Public Roadway Property as reflected in the Offer of Dedication; and
WHEREAS, pursuant to the Third Amendment, the City and Developer agreed, in part, to enter into a Public Improvement Agreement for Public Roads and Utilities (the "Public Improvement Agreement") which governs, in part, the process to modify the alignment of the Public Roadway Property, as reflected in the Offer of Dedication, by adoption of a resolution to vacate the Offer of Dedication in accordance with California Streets and Highways Code Section 8330, recording of a lot line adjustment affecting Parcels 5, 6 and 11, and recording of an Amended Irrevocable Offer Of Dedication For Public Roads (“Amended Offer of Dedication”) of the modified roadway alignment; and
WHEREAS, the City and Developer entered into the Public Improvement Agreement on January 19, 2021, which was filed for record in the Official Records of Sonoma County on March 4, 2021, Document No. 2021-025569; and
WHEREAS, in accordance with the Public Improvement Agreement, a lot line adjustment affecting Parcels 5, 6 and 11 has been approved by the Community Development Director, an Amended Offer of Dedication for the modified roadway alignment has been delivered by Developer to City and reviewed and approved by the City Surveyor, and Developer has constructed the superseding public roadway and utility improvements in, on over and upon the modified roadway alignment; and
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Attachment: Resolution - Acceptance of OTD for Public Roads (3583 : Vacation of Public Right of Way and Acceptance of Amended Public Resolution No. XX-2022
WHEREAS, in accordance with the Public Improvement Agreement, contemporaneously with its consideration of this resolution, the City Council of the City of Healdsburg is considering the adoption of a resolution to vacate the Offer of Dedication in accordance with California Streets and Highways Code Section 8330 (the “Resolution to Vacate”).
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Healdsburg as follows:
1. The recitals set forth above are adopted as findings in support of this Resolution.
2. The adoption of this Resolution approving and authorizing the recording in the Official Records of Sonoma County the Amended Irrevocable Offer of Dedication Of Public Roads, in the form appended hereto as Attachment 1, provided by Sonoma Luxury Resort, LLC to the City of Healdsburg for the Saggio Hills Project and authorizing the City Manager to execute and record in the Official Records of Sonoma County the Acceptance Of The Amended Irrevocable Offer Of Dedication Of Public Roads, attached as Exhibit B to the Amended Offer of Dedication, is not a project subject to the requirements of the California Environmental Quality Act (“CEQA”) because the public roadway reflected in this Amended Offer of Dedication has already been constructed upon the modified roadway alignment in accordance with the terms of the Public Improvement Agreement. Therefore, the adoption of this Resolution will not result in a direct physical change in the environment nor a reasonably foreseeable indirect physical change in the environment. Further, even assuming the adoption of this Resolution is a project as defined in CEQA, the adoption of this Resolution is exempt from environmental review pursuant to section 15061(b)(3) of the State CEQA Guidelines because it is covered by the common sense exemption that CEQA applies only to projects which have the potential for causing a significant effect on the environment and where, as in the case of the adoption of this Resolution, it can be seen with certainty that there is no possibility that the adoption of this Resolution may have a significant effect on the environment, the adoption of this Resolution is not subject to CEQA.
3. The City Council hereby approves the Amended Irrevocable Offer of Dedication Of Public Roads, in the form appended hereto as Attachment 1, provided by Sonoma Luxury Resort, LLC to the City of Healdsburg for the Saggio Hills Project, and authorizes it to be recorded in the Official Records of Sonoma County concurrently with the recording of the Resolution to Vacate.
4. The City Council hereby authorizes the City Manager to execute the Acceptance Of The Amended Irrevocable Offer Of Dedication Of Public Roads, in the form appended hereto as Exhibit B to Attachment 1, and authorizes it to be recorded in the Official Records of Sonoma County.
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Attachment: Resolution - Acceptance of OTD for Public Roads (3583 : Vacation of Public Right of Way and Acceptance of Amended Public Resolution No. XX-2022
PASSED, APPROVED AND ADOPTED, this 18th day of April 2022, by the following vote:
AYES: Councilmembers:
NOES: Councilmembers:
ABSENT: Councilmembers:
ABSTAINING: Councilmembers:
SO ORDERED: ATTEST:
__________________________________ ____________________________________ Osvaldo Jimenez, Mayor Raina Allan, City Clerk
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Attachment: Resolution - Acceptance of OTD for Public Roads (3583 : Vacation of Public Right of Way and Acceptance of Amended Public Resolution No. XX-2022
ATTACHMENT 1
AMENDED IRREVOCABLE OFFER OF DEDICATION FOR PUBLIC ROADS
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Attachment: Resolution - Acceptance of OTD for Public Roads (3583 : Vacation of Public Right of Way and Acceptance of Amended Public
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Attachment: Amended Irrevocable Offer ofDedication for Public Roads (3583 : Vacation of Public Right of Way and Acceptance of Amended
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Attachment: Amended Irrevocable Offer ofDedication for Public Roads (3583 : Vacation of Public Right of Way and Acceptance of Amended
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Attachment: Amended Irrevocable Offer ofDedication for Public Roads (3583 : Vacation of Public Right of Way and Acceptance of Amended
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Attachment: Amended Irrevocable Offer ofDedication for Public Roads (3583 : Vacation of Public Right of Way and Acceptance of Amended
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Attachment: Amended Irrevocable Offer ofDedication for Public Roads (3583 : Vacation of Public Right of Way and Acceptance of Amended
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Attachment: Amended Irrevocable Offer ofDedication for Public Roads (3583 : Vacation of Public Right of Way and Acceptance of Amended
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Attachment: Amended Irrevocable Offer ofDedication for Public Roads (3583 : Vacation of Public Right of Way and Acceptance of Amended
CITY OF HEALDSBURG
CITY COUNCIL AGENDA STAFF REPORT
MEETING DATE: April 18, 2022
SUBJECT: An Ordinance Amending the Development Agreement by and between the City of Healdsburg and Kendal at Sonoma, a Zen Inspired Community, for the Enso Village Project
PREPARED BY: Raina Allan, City Clerk
STRATEGIC INITIATIVE(S):
Expand Affordable Housing Opportunities
RECOMMENDED ACTION(S):
Pass an ordinance amending the Development Agreement by and between the City of Healdsburg and Kendal at Sonoma, a Zen Inspired Community, for the Enso Village Project.
COMMUNITY ENGAGEMENT/OUTREACH:
On February 11, 2020, the Planning Commission approved an application by CCS Healdsburg, LLC, for a Master Conditional Use Permit (CUP 2019-04) and recommended that the City Council approve a Development Agreement for the North Village Project.
On April 6, 2020, the City Council approved a Development Agreement (DA 2020-01) with CCS Healdsburg, LLC for the North Village Project.
On November 17, 2020, the Planning Commission approved applications by Kendal at Sonoma, A Zen Inspired Community for a major design review permit (DR 2020-09) and a major conditional use permit (CUP 2020-02) for development of the Enso Village Senior Living Community.
On February 23, 2022, at a properly noticed public hearing, the Planning Commission adopted Resolution No. 2022-22 recommending that the City Council approve the First Amendment to the Development Agreement for the Enso Village Project (DA 2020-01.01) to modify the affordability levels for 10 of the 30 affordable units in the Enso Village senior living community.
Notices of the City Council's April 4, 2022, public hearing on the First Amendment were published in a newspaper of local publication and mailed to property owners within 300' of the property boundaries.
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BACKGROUND:
The City of Healdsburg and CCS Healdsburg, LLC entered into the DA for the North Village Project on May 6, 2020. On August 20, 2020, pursuant to authority provided by Section 9.1 of the DA, CCS Healdsburg LLC and Kendal at Sonoma, A Zen Inspired Community ("Developer") entered into a Partial Assignment of Rights and Assumption of Obligations Under Development Agreement which, among other rights and obligations, assigns Section 5.4 of the DA to the Developer.
Section 5.4 calls for the development of thirty (30) units of affordable housing within the Senior Living Community component of the Project, with twenty (20) units designated as Very Low Income and restricted to use by employees and volunteers of the Senior Living Community who also qualify per the age restrictions of the Residential Care Facility for the Elderly license. An additional 10 Moderate Income units would be made available to the public, subject to local preference requirements defined in the DA.
An amendment to the Development Agreement that would be by and between the City of Healdsburg and Developer is proposed ("First Amendment"). The First Amendment was considered by the Planning Commission at a public hearing on February 23, 2022, and the Planning Commission adopted Resolution No. 2022-22 recommending that the City Council approve the First Amendment.
At its April 4, 2022, meeting the City Council introduced for first reading, by title only, waiving further reading of the text, “An Ordinance of the City Council of the City of Healdsburg approving a First Amendment to the Development Agreement by and between the City of Healdsburg and Kendal at Sonoma, a Zen inspired community for the Enso Village Project located at 1801 Boxheart Drive (DA 2020-01.01).”
DISCUSSION/ANALYSIS:
The proposed "First Amendment" is appended to the Ordinance in Attachment 1. The First Amendment modifies a portion of the DA that was assigned to the Developer, specifically the affordability requirements in Section 5.4 of the DA pertaining to housing units designated for Very Low Income households for employees and volunteers within the senior living community.
This amendment is requested because the Developer determined that not all of the employees/volunteers who will utilize this affordable housing have incomes that are within the Very Low Income threshold. The First Amendment would modify Section 5.4 as follows:
• Section 5.4 calls for the development of thirty (30) units of "Senior Living Community Affordable Housing" within the Senior Living Community component of the Project, with twenty (20) units designated for Very Low Income households.
These Very Low Income units are restricted to use by employees and volunteers of the Senior Living Community who qualify for the age restrictions of the RCFE license. An additional ten (10) Moderate Income units are required to be made available to the public, subject to local preference requirements. No alterations are requested for these Moderate Income units. To align the income requirements in the DA with the actual incomes of the employees and volunteers of the Senior Living
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Community, the Developer requests that five (5) of the Very Low Income units be converted to Moderate Income units, and five (5) of the Very Low Income units be converted to Low Income units. The remaining ten (10) units would be available to Very Low Income households.
When the City approved the DA, it intended to have a portion of the Senior Living Community be reserved as housing for employees and volunteers at the facility to provide workforce housing opportunities on-site. To ensure that the housing was accessible, City and the Developer agreed to affordability levels for the units based on assumptions about the income levels of the employees and volunteers. However, the Developer has since determined that some employees and volunteers would be over the previously-assumed income levels. As noted above, the modifications to the affordability requirements established in the DA are necessary to accommodate the City and Developer's intention to house 20 senior Zen teachers at the facility.
The Developer submitted the following statement justifying the requested change:
Two sizes of units for the Zen Teachers are available – 550 sq ft units meant for single teachers and 650 sq ft units meant to be shared by couples. The teachers with the most seniority, who have been living at San Francisco Zen Center for 40 years or more and receiving a small monthly stipend plus room and board, and devoting their lives to teaching meditation, have partners who were allowed to be employed outside San Francisco Zen center. These partners did accrue income and invested it, causing the couples to have required minimum distributions, and in some cases pensions and higher social security. Their income exceeds that allowed for couples at the Very Low Income level. However, they can all easily fit within the Moderate Income level. Therefore, we are requesting 5 of the Very Low Income units become Moderate income units.
Also, a few of the Zen teachers have other assets, and their dividends and/or pensions that were earned before spending their required 20 years in residence at San Francisco Zen Center cause them to be slightly over the Very Low Income limit. Therefore, we request that 5 of the Very Low Income units become Low Income units.
Staff recommends that this modification be approved, as the 20 Very Low Income units were intended for and are restricted to employees who meet the age-restrictions of the facility.
Modifying the affordability requirements for 10 of those units will make it possible for the Developer to meet that intention by aligning the affordability requirements with the actual incomes of the employees and volunteers of the Senior Living Community.
ENVIRONMENTAL STEWARDSHIP:
Development of the Enso Village Senior Living Community is required to comply with mitigation measures for the North Village Project as contained in and required by the Final Environmental Impact Report for the North Village Project, including all mitigation monitoring and reporting.
ALTERNATIVES:
It is recommended that the City Council introduce for first reading, by title only and waiving reading of the text, an Ordinance approving the First Amendment to the Development Agreement for the North Village Project as recommended by the Planning Commission.
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Alternatively, the City Council could consider the following actions:
1) Approve the Ordinance with further minor revisions to the First Amendment; 2) Direct that significant changes be made to the First Amendment and refer the matter back to the Planning Commission for review of those changes; or 3) Deny the First Amendment in which case the provisions of the existing DA would remain intact.
FISCAL IMPACT:
The Enso Village Project is a privately funded development. The Project will generate property and sales tax revenues which will help to offset the City's costs of providing services to the Project. In accordance with the Development Agreement, the nonprofit Senior Living Community developer and operator is required to record a Payment-In-Lieu of Taxes (PILOT) Agreement against the Senior Living Community parcel to reimburse the City for lost property tax revenue in the event that the Senior Living Community receives a "welfare exemption" from ad valorem property taxes, plus the cost of increased demands for services from the City's Fire Department. The annual payment shall equal approximately $334,000, with increases each year based on the Consumer Price Index.
ENVIRONMENTAL ANALYSIS:
Any environmental impacts related to the Development Agreement for the North Village project have been reviewed and considered in accordance with the provisions of the California Environmental Quality Act. On May 20, 2019, the City Council certified the Final Environmental Impact Report ("EIR") for the North Entry Area Plan (State Clearinghouse No. 2018062041) and adopted related findings, a Mitigation Monitoring and Reporting Program, and a Statement of Overriding Considerations which can be found in the Planning Department’s files for the North Village Project at 401 Grove Street, Healdsburg, CA 95448. In accordance with the California Environment Quality Act (CEQA) Guidelines Section 15162, no further environmental review is required for the First Amendment because (i) there are no changes involving new significant environmental effects or a substantial increase in the severity of previously identified significant effects/impacts, (ii) there are no changes with respect to the circumstances under which the project is taken which will require major revisions to the EIR due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects/impacts, and (iii) there is no new information of substantial importance that was not known at the time the EIR was certified which shows (a) the project will have one or more significant effects not discussed in the EIR, (b) significant impacts/effects will be substantially more severe than shown in the EIR, (c) mitigation measures or alternatives previously found not to be feasible would in fact be feasible and would substantially reduce one or more significant effects/impacts, or (d) mitigation measures or alternatives which are considerably different from those analyzed in the EIR would substantially reduce one or more significant effects/impacts on the environment.
ATTACHMENT(S):
1. PC Reso 2022-02 First Amendment to North Village DA
2. Ordinance-1st Amendment to North Village DA (Enso)
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PC Resolution 2022-02
1 EXHIBIT 1
Planning Commission Resolution 2022-02
A RESOLUTION OF THE PLANNING COMMISSION OF THE
CITY OF HEALDSBURG RECOMMENDING THAT THE CITY
COUNCIL APPROVE THE FIRST AMENDMENT TO THE
DEVELOPMENT AGREEMENT FOR THE NORTH VILLAGE
PROJECT (DA 2020-01.01)
WHEREAS, the City of Healdsburg, a California municipal corporation (the “City”) and CCS Healdsburg, LLC, a Delaware limited liability company are Parties to that certain Development Agreement, dated May 6, 2020; a Memorandum of Development Agreement was recorded in the Official Records of Sonoma County on June 1, 2020, as Document No. 2020041464 (“Development Agreement”); and
WHEREAS, the Development Agreement governs the development of approximately 32- acre property located at 16977 Healdsburg Avenue with a Senior Living Community with 221 independent living units (including 11 density bonus units), ancillary facilities (including dining facilities, meeting rooms, and administrative offices) and a total of 54 assisted living and memory care beds; 30 multi-family apartments; a 108-key hotel with a restaurant/bar, fitness facility and spa, meetings rooms and other amenities; and 45 multi-family units, five live-work units, and 12,000 square feet of commercial/retail space in a mixed use development; and WHEREAS, on August 20, 2020, pursuant to authority provided by Section 9.1 of the Development Agreement, CCS Healdsburg, LLC ("Assignor") and Kendal at Sonoma, A Zen Inspired Community ("Developer") entered into a Partial Assignment of Rights and Assumption of Obligations Under Development Agreement which was recorded in the Official Records of Sonoma County on August 20, 2020, as Instrument No. 2020071885 (“Partial Assignment”); and WHEREAS, Section 5.4 of the Development Agreement was assigned to the Developer under the Partial Assignment. This Section 5.4 calls for the development of thirty (30) units of Senior Living Community Affordable Housing within the Senior Living Community component of the Project, with twenty (20) units designated as Very Low Income, which were restricted to use by employees and volunteers of the Senior Living Community, and who qualified for the age restrictions of the Residential Care Facility for the Elderly ("RCFE") license. An additional 10 Moderate income units were made available to the public, subject to local preference requirements defined in Development Agreement Section 5.3(a); and
WHEREAS, City staff and Developer have prepared a proposed First Amendment to the Development Agreement ("First Amendment") for consideration by the Healdsburg Planning Commission and the Healdsburg City Council and the First Amendment is intended to align the affordability requirements for the Senior Living Community Affordable Housing that is restricted to employees and volunteers of the Senior Living Community who are qualified for the age restrictions of the RCFE license with the incomes of those employees and volunteers; and WHEREAS, in accordance with Sections 65864 through 65869.5 of the California Government Code (“State Development Agreement Law”), the City adopted Ordinance No. 1097
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2 to add Chapter 17.20 to the Healdsburg Municipal Code authorizing the use of, and imposing additional requirements on, development agreements; and WHEREAS, Chapter 17.20.060 requires the Planning Commission to conduct a public hearing on an amendment to a development agreement; and WHEREAS, pursuant to the California Environmental Quality Act (Pub. Res. Code § 21000, et seq.) ("CEQA"), the City prepared and, on May 20, 2019, the City Council certified the Final Environmental Impact Report ("EIR") for the North Entry Area Plan (State Clearinghouse No. 2018062041) and adopted related findings, a Mitigation Monitoring and Reporting Program, and a Statement of Overriding Considerations which can be found in the Planning Department’s files for the North Village Project at 401 Grove Street, Healdsburg, CA 95448; and WHEREAS, the Planning Commission held a noticed public hearing on February 23, 2022, for the purpose of receiving oral testimony on the proposed First Amendment, reviewed written and oral staff reports, and received into the record all pertinent documents related to the First Amendment, before making its decision.
NOW, THEREFORE BE IT RESOLVED that the Healdsburg Planning Commission hereby recommends to the City Council that the First Amendment to the Development Agreement by and between the City of Healdsburg and CCS Healdsburg LLC (DA 2020-01.01) be approved as presented in Attachment A to this resolution based upon the facts and findings as set forth below:
1. The Development Agreement and its First Amendment are consistent with the Healdsburg 2030 General Plan, the North Entry Area Plan, and the Land Use Code. The City Council made findings of consistency in its action to adopt Ordinance No. 1202, approving the Development Agreement, and the First Amendment does not modify the Development Agreement in any way that would conflict with the goals and policies of the Healdsburg 2030 General Plan and the North Entry Area Plan, and requirements of the City's Land Use Code.
2. The Development Agreement and its First Amendment will provide Healdsburg with tangible benefits including: 105 units of Affordable and Middle Income Housing; a $2,000,000 contribution for construction of a Fire Substation; contribution of $250,000 to the City for connectivity improvements; annual payments to the City of approximately $334,000 per year from the Senior Living Community for lost tax revenue and increased demands for services; remittance of a 1/2% Hotel Add-On Fee (beginning 10 years after issuance of a certificate of occupancy for the hotel); and other improvements.
3. Any environmental impacts related to the Development Agreement have been reviewed and considered in accordance with the provisions of the California Environmental Quality Act. On May 20, 2019, the City Council certified the Final Environmental Impact Report ("EIR") for the North Entry Area Plan (State Clearinghouse No. 2018062041) and adopted related findings, a Mitigation Monitoring and Reporting Program, and a Statement of Overriding Considerations which can be found in the Planning Department’s files for the North Village Project at 401 Grove Street, Healdsburg, CA 95448. In accordance with the California Environment Quality Act (CEQA) Guidelines Section 15162, no further environmental review is required for the First Amendment because (i) there are no changes involving new significant environmental effects or a substantial
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3 increase in the severity of previously identified significant effects/impacts, (ii) there are no changes with respect to the circumstances under which the project is taken which will require major revisions to the EIR due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects/impacts, and (iii) there is no new information of substantial importance that was not known at the time the EIR was certified which shows (a) the project will have one or more significant effects not discussed in the EIR, (b) significant impacts/effects will be substantially more severe than shown in the EIR, (c) mitigation measures or alternatives previously found not to be feasible would in fact be feasible and would substantially reduce one or more significant effects/impacts, or (d) mitigation measures or alternatives which are considerably different from those analyzed in the EIR would substantially reduce one or more significant effects/impacts on the environment.
DULY AND REGULARLY ADOPTED by the Healdsburg Planning Commission on the 23rd day of February 2022, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
APPROVED: ATTEST:
____________________________ _____________________________ Jerry Eddinger, CHAIR Scott Duiven, SECRETARY
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4 ATTACHMENT A
FIRST AMENDMENT TO DEVELOPMENT AGREEMENT
This First Amendment to Development Agreement (this “Agreement”) is entered into this ___ day of __________, 2022, by and between the City of Healdsburg, a California municipal corporation (the “City”), and Kendal at Sonoma, a Zen Inspired Community, a California nonprofit public benefit company (“Developer”), and has been approved and agreed to by CCS Healdsburg, LLC, a Delaware limited liability company (“Assignor”). The City and Developer are referred to herein individually as a “Party” and collectively as the “Parties”.
RECITALS
A. Under the authority of Ordinance No. 1202, the City and Assignor entered into a Development Agreement (the “Development Agreement”), the effective date of which is May 6, 2020. The Development Agreement was recorded in the Official Records of Sonoma County on June 1, 2020, as Instrument No. 2020041464. The Development Agreement governs the development of approximately 32-acre property located at 16977 Healdsburg Avenue (APNs 091- 060-009; -019; -022; -025): Senior Living Community with 221 independent living units (including 11 density bonus units), ancillary facilities (including dining facilities, meeting rooms, and administrative offices) and a total of 54 assisted living and memory care beds; 30 multi-family apartments; a 108-key hotel with a restaurant/bar, fitness facility and spa, meetings rooms and other amenities; and 45 multi-family units, five live-work units, and 12,000 square feet of commercial/retail space in a mixed use development. Backbone infrastructure includes the following: a new traffic signal on Healdsburg Avenue at the site entry; Healdsburg Avenue frontage improvements which include curbs, gutters, landscaping and lighting; two private streets including sidewalks, lighting, landscaping, and underground utilities; establishment of a secondary emergency vehicle access; extension of a segment of the Foss Creek Pathway; and establishment of Perimeter Trail (collectively, the “Project”).
B. In addition to the Development Agreement, the Project required, and received from the City, certain entitlements, including approval of a Conditional Use Permit, which was approved by the City Council on April 6, 2020, pursuant to findings and subject to conditions of approval (“CUP Conditions”).
C. In addition, on August 20, 2020, pursuant to authority provided by Section 9.1 of the Development Agreement, the Assignor and Developer entered into a Partial Assignment of Rights and Assumption of Obligations Under Development Agreement which was recorded in the Official Records of Sonoma County on August 20, 2020, as Instrument No. 2020071885 (“Partial Assignment”).
D. Section 5.4 of the Development Agreement was assigned to the Developer under the Partial Assignment. This Section 5.4 calls for the development of thirty (30) units of Senior Living Community Affordable Housing within the Senior Living Community component of the Project, with twenty (20) units designated as Very Low Income, which were restricted to use by
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5 employees and volunteers of the Senior Living Community, and who qualified for the age restrictions of the RCFE license. An additional ten (10) Moderate Income units were made available to the public, subject to local preference requirements defined in Development Agreement Section 5.3(a). To assist with the feasibility of this portion of the Project by aligning the income requirements in the Development Agreement with the actual incomes of the employees and volunteers of the Senior Living Community, Developer has requested and City has agreed to convert five (5) Very Low Income units to Moderate Income, and to convert an additional five (5) Very Low Income units to Low Income units.
E. On _____________, 2022, the Planning Commission, after a duly noticed public hearing, recommended approval of this Agreement. On ______________, after a duly noticed public hearing, the City Council introduced its Ordinance _________ approving this Agreement and authorizing its execution and adopted that Ordinance __________ on ____________.
Ordinance ____________ became effective on _____________.
Now, therefore, the City and Developer, for valuable consideration the receipt of which is hereby acknowledged, agree as follows:
1. This Agreement constitutes a Major Amendment to the Development Agreement for the Project in accordance with Section 6.4(b) of the Development Agreement.
2. Senior Living Community Affordable Housing.
a. Sections 5.4(a) and 5.4(b) of the Development Agreement are amended and restated in their entirety as follows:
(a) Developer shall cause construction of a minimum of thirty (30) units of Senior Living Community Affordable Housing within the Senior Living Community component of the Project, affordable to households with very low, low, and moderate incomes, as follows:
i. Ten (10) dwelling units shall be made available for occupancy at an affordable Monthly Housing Fee or rent, adjusted for household size, to Very Low Income Households.
ii. Five (5) dwelling units shall be made available for occupancy at an affordable Monthly Housing Fee or rent, adjusted for household size, to Low Income Households.
iii. Fifteen (15) dwelling units shall be made available for occupancy at an affordable Monthly Housing Fee or rent, adjusted for household size, to Moderate Income Households.
b. Twenty units, comprised of the Senior Living Community Affordable Housing for Very Low, Low and five (5) of the Moderate Income Households shall be reserved for employees and volunteers of the Senior Living Community. The Senior Living Community Affordable Housing for the remaining ten (10) Moderate Income Households shall be subject
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6 to the local preference requirements described in Section 5.3(a) of this Agreement.
3. Interpretation. This Agreement shall be interpreted to give each of the provisions their plain and fair meaning. The Recitals set forth above are incorporated into this Agreement.
The section headings used herein are solely for convenience and shall not be used to interpret this Agreement. The Parties acknowledge that this Agreement is the product of negotiation and compromise on the part of both Parties, and the Parties agree, that since all have participated in the negotiation and drafting of this Agreement, this Agreement shall not be construed as if prepared by one of the Parties, but rather according to its plain and fair meaning as a whole, as if all Parties had prepared it.
4. Integration. This Agreement contains the entire agreement between the Parties with respect to its subject matter and supersedes whatever oral or written understanding they may have had prior to the execution of this Agreement. This Agreement shall not be amended or modified except by a written agreement executed by each of the Parties.
5. Inconsistencies. In the event of any conflict or inconsistency between the provisions of this Agreement and the Development Agreement, the provisions of this Agreement shall control.
6. Severability. If any term, provision, condition or covenant of this Agreement or its application to any Party or circumstances shall be held by a court of competent jurisdiction, to any extent, invalid or unenforceable, the remainder of this Agreement, or the application of the term, provision, condition, or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the fullest extent permitted by law unless the rights and obligations of the Parties have been materially altered or abridged thereby.
7. Status of Agreement. Except as modified by this Agreement, the terms and provisions of the Development Agreement shall remain in full force and effect.
8. Counterparts. This Agreement may be signed in counterparts by the Parties hereto and shall be the binding agreement of the Parties upon execution by each of them of one or more copies hereof.
9. Recording of Memorandum. Approximately concurrent with the Amendment’s effective date, the Parties shall execute, acknowledge and record a Memorandum of Agreement, in the form attached hereto as Exhibit B, in the official records of Sonoma County.
10. Authority. Each of the persons signing this Agreement hereby represents and warrants that he or she is fully authorized to sign this Agreement on behalf of the Party for which he or she is signing.
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7 IN WITNESS WHEREOF, the Parties hereto have affixed their signatures to this Agreement as of the date and year indicated below and effective as of the date and year first above written.
[Signatures on Following Page]
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8 DEVELOPER:
KENDAL AT SONOMA, A ZEN
INSPIRED COMMUNITY
a California nonprofit public benefit
company
By: _____________________________
CITY:
CITY OF HEALDSBURG,
a California municipal corporation
By: _____________________________
Jeff Kay, City Manager
ATTEST:
________________________________
Raina Allan, City Clerk
APPROVED AS TO FORM:
________________________________
Samantha Zutler, City Attorney
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EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
The real property situated in the City of Healdsburg, County of Sonoma, State of California, described as follows:
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EXHIBIT B
FORM OF MEMORANDUM OF AGREEMENT
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of Healdsburg
401 Grove Street
Healdsburg, CA 95448
Attention: City Clerk
EXEMPT FROM RECORDING FEES
PER GOVERNMENT CODE §27383
AND BUILDING HOMES & JOBS
TRUST FUND FEE PER
GOVERNMENT CODE
§27388.1(a)(2)(D)
Space above this line for Recorder’s use.
MEMORANDUM OF FIRST AMENDMENT TO DEVELOPMENT AGREEMENT
This Memorandum of First Amendment to Development Agreement (this “Memorandum”), dated for reference purposes as of _________, 2022, is executed by and between the CITY OF HEALDSBURG, a California municipal corporation (“City”), and KENDAL AT SONOMA, A ZEN INSPIRED COMMUNITY, a California nonprofit public benefit company (“Developer”) and has been approved and agreed to by CCS HEALDSBURG, LLC, a Delaware limited liability company (“Assignor”).
WHEREAS, City and Assignor have entered into a Development Agreement (the “Development Agreement”), the effective date of which is May 6, 2020, which was recorded in the Official Records of Sonoma County on June 1, 2020, as Instrument No. 2020041464. The Development Agreement pertains to the development of certain property (the “Property”) located in Healdsburg, California, as more particularly described in Exhibit A, attached hereto; and WHEREAS, Assignor and Developer have entered into a Partial Assignment of Rights and Assumption of Obligations Under Development Agreement (the “Partial Assignment”) dated August 20, 2020, which was recorded in the Official Records of Sonoma County on August 21, 2020 as Instrument No. 2020071885; and
WHEREAS, City and Developer have entered into a First Amendment to Development Agreement (the “[First Amendment”), dated _______, 2022.
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1. This Memorandum is solely to provide record notice of the First Amendment and in no way modifies the terms, conditions, provisions and covenants thereof. In the event of any inconsistency between this Memorandum and First Amendment, the First Amendment shall prevail. The foregoing recitals are incorporated by reference as though fully set forth herein.
Each exhibit referred to herein is attached hereto and incorporated by reference.
2. The City and Developer agree that this Memorandum may be executed in counterparts, each of which shall be deemed an original, and said counterparts shall together constitute one and the same agreement, binding all of the parties hereto, notwithstanding all of the parties are not signatory to the original or the same counterparts.
IN WITNESS WHEREOF, City and Developer have caused this Memorandum to be executed as of the date first above written.
DEVELOPER:
KENDAL AT SONOMA, A ZEN
INSPIRED COMMUNITY
a California nonprofit public benefit
company
By: _____________________________
, President
CITY:
CITY OF HEALDSBURG,
a California municipal corporation
By: _____________________________
Jeff Kay, City Manager
ATTEST:
________________________________
Raina Allan, City Clerk
APPROVED AS TO FORM:
________________________________
Samantha Zutler, City Attorney
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ACKNOWLEDGMENT
State of California )
) ss
County of Sonoma )
On ,20__, before me,___________________________________________, (Name of Notary)
notary public, personally appeared _________________________________________________ who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
(Notary Signature)
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
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ACKNOWLEDGMENT
State of California )
) ss
County of Sonoma )
On ,20__, before me,___________________________________________, (Name of Notary)
notary public, personally appeared _________________________________________________ who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
(Notary Signature)
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
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Packet Pg. 114 Attachment: 1. PC Reso 2022-02 First Amendment to North Village DA (3597 : Enso DA Amendment 1 - 2nd Reading) PC Resolution 2022-02 14
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
The real property situated in the City of Healdsburg, County of Sonoma, State of California, described as follows:
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Packet Pg. 115 Attachment: 1. PC Reso 2022-02 First Amendment to North Village DA (3597 : Enso DA Amendment 1 - 2nd Reading)
CITY OF HEALDSBURG
ORDINANCE NO. ___
AN ORDINANCE OF THE CITY COUNCIL OF THE
CITY OF HEALDSBURG APPROVING A FIRST
AMENDMENT TO THE DEVELOPMENT AGREEMENT
BY AND BETWEEN THE CITY OF HEALDSBURG AND
KENDAL AT SONOMA, A ZEN INSPIRED
COMMUNITY FOR THE ENSO VILLAGE PROJECT
LOCATED AT 1801 BOXHEART DRIVE (DA 2020-
01.01)
WHEREAS, under the authority of Ordinance No. 1202, the City of Healdsburg, a California municipal corporation (the “City”) and CCS Healdsburg, LLC, a Delaware limited liability company entered into a Development Agreement, dated May 6, 2020; and a Memorandum of Development Agreement was recorded in the Official Records of Sonoma County on June 1, 2020, as Instrument No. 2020-041464 (“Development Agreement”); and WHEREAS, the Development Agreement governs the development of an approximately 32-acre property located at 16977 Healdsburg Avenue with a Senior Living Community with 221 independent living units, ancillary facilities including dining facilities, meeting rooms, and administrative offices, and a total of 54 assisted living and memory care beds; 30 multi-family apartments; a 108-key hotel with a restaurant/bar, fitness facility and spa, meetings rooms and other amenities; and 45 multi-family units, five live-work units, and 12,000 square feet of commercial/retail space in a mixed use development ("Project"); and WHEREAS, pursuant to authority provided by Section 9.1 of the Development Agreement, CCS Healdsburg, LLC and Kendal at Sonoma, A Zen Inspired Community, a California nonprofit public benefit company ("Developer") entered into a Partial Assignment of Rights and Assumption of Obligations Under Development Agreement which was recorded in the Official Records of Sonoma County on August 20, 2020, as Instrument No. 2020-071885 (“Partial Assignment”); and WHEREAS, among other rights and obligations, Section 5.4 of the Development Agreement was assigned to the Developer under the Partial Assignment. This Section 5.4 calls for the development of thirty (30) units of Senior Living Community Affordable Housing within the Senior Living Community component of the Project, with twenty (20) units designated as Very Low Income, which were restricted to use by employees and volunteers of the Senior Living Community, and who qualified for the age restrictions of the RCFE license. An additional ten (10) Moderate income units were made available to the public, subject to local preference requirements defined in Development Agreement Section 5.3(a); and WHEREAS, to assist with the feasibility of the Senior Living Community portion of the Project by aligning the income requirements in the Development Agreement with the actual incomes of the employees and volunteers of the Senior Living Community who are qualified for the age restrictions of the Residential Care Facility for the Elderly license, Developer has requested
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Packet Pg. 116 Attachment: 2. Ordinance-1st Amendment to North Village DA (Enso) (3597 : Enso DA Amendment 1 - 2nd Reading) Ordinance No.
authorize the conversion of five (5) Very Low Income Units to Moderate Income, and conversion of an additional five (5) Very Low Income units to Low Income; and WHEREAS, City staff and Developer have prepared a proposed First Amendment to the Development Agreement ("First Amendment") for consideration by the Healdsburg Planning Commission and the Healdsburg City Council; and
WHEREAS, in accordance with Sections 65864 through 65869.5 of the California Government Code (“State Development Agreement Law”), the City adopted Ordinance No. 1097 to add Chapter 17.20 to the Healdsburg Municipal Code authorizing the use of, and imposing additional requirements on, development agreements; and WHEREAS, pursuant to the California Environmental Quality Act (Pub. Res. Code § 21000, et seq.), the City prepared and, on May 20, 2019, the City Council certified the Final Environmental Impact Report for the North Entry Area Plan (State Clearinghouse No. 2018062041) and adopted related findings, a Mitigation Monitoring and Reporting Program, and a Statement of Overriding Considerations which can be found in the Planning Department’s files for the North Village Project at 401 Grove Street, Healdsburg, CA 95448; and WHEREAS, pursuant to Chapter 17.20.060 of the Healdsburg Municipal Code, the Planning Commission held a noticed public hearing on February 23, 2022, for the purpose of receiving oral testimony on, deliberating, and making a recommendation regarding the proposed First Amendment. The Commission considered all public comments received and all pertinent documents, including the Staff Report dated February 23, 2022, regarding the proposed First Amendment, and by Resolution No. 2022-02, recommended approval of the First Amendment; and
WHEREAS, the Healdsburg City Council held a duly noticed public hearing on the First Amendment on April 4, 2022, reviewed the written and verbal staff reports, took testimony, and received into the record all pertinent documents related to the Project.
NOW, THEREFORE BE IT ORDAINED that the Healdsburg City Council hereby approves the First Amendment to the Development Agreement by and between the City of Healdsburg and Kendal at Sonoma, A Zen Inspired Community, as presented in Exhibit 1 to this ordinance and based upon the facts and findings as set forth below:
Section 1. Findings.
1. The foregoing Recitals are true and correct and by this reference are made a part hereof.
2. The Development Agreement and its First Amendment are consistent with the Healdsburg 2030 General Plan, the North Entry Area Plan, and the Land Use Code.
The City Council made findings of consistency in its action to adopt Ordinance No. 1202, approving the Development Agreement, and the First Amendment does not
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modify the Development Agreement in any way that would conflict with the goals and policies of the Healdsburg 2030 General Plan and the North Entry Area Plan, and requirements of the City's Land Use Code.
3. The Development Agreement and its First Amendment will provide Healdsburg with tangible benefits including: a 221-unit Senior Living Community with 30 units of Affordable Housing; 80 additional units of Affordable and Middle Income Housing; a $2,000,000 contribution for construction of a Fire Substation; contribution of $250,000 to the City for connectivity improvements; annual payments to the City of approximately $334,000 per year from the Senior Living Community for lost tax revenue and increased demands for services; remittance of a 1/2% Hotel Add-On Fee (beginning 10 years after issuance of a certificate of occupancy for the hotel); and other improvements.
4. Any environmental impacts related to the Development Agreement have been reviewed and considered in accordance with the provisions of the California Environmental Quality Act. On May 20, 2019, the City Council certified the Final Environmental Impact Report ("EIR") for the North Entry Area Plan (State Clearinghouse No. 2018062041) and adopted related findings, a Mitigation Monitoring and Reporting Program, and a Statement of Overriding Considerations which can be found in the Planning Department’s files for the North Village Project at 401 Grove Street, Healdsburg, CA 95448. In accordance with the California Environment Quality Act (CEQA) Guidelines Section 15162, no further environmental review is required for the First Amendment because (i) there are no changes involving new significant environmental effects or a substantial increase in the severity of previously identified significant effects/impacts, (ii) there are no changes with respect to the circumstances under which the project is taken which will require major revisions to the EIR due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects/impacts, and (iii) there is no new information of substantial importance that was not known at the time the EIR was certified which shows (a) the project will have one or more significant effects not discussed in the EIR, (b) significant impacts/effects will be substantially more severe than shown in the EIR, (c) mitigation measures or alternatives previously found not to be feasible would in fact be feasible and would substantially reduce one or more significant effects/impacts, or (d) mitigation measures or alternatives which are considerably different from those analyzed in the EIR would substantially reduce one or more significant effects/impacts on the environment.
Section 2. Approval and Execution. The City Council hereby approves the First Amendment to the Development Agreement, substantially in the form attached hereto as Exhibit 1, subject to such minor and clarifying changes consistent with the terms thereof as may be approved by the City Attorney prior to execution hereof. The City Council further authorizes the City Manager to execute the First Amendment on behalf of the City.
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Packet Pg. 118 Attachment: 2. Ordinance-1st Amendment to North Village DA (Enso) (3597 : Enso DA Amendment 1 - 2nd Reading) Ordinance No.
Section 3. Severability. If any section, subsection, sentence, clause or phrase or word of this Ordinance is for any reason held to be unconstitutional, unlawful or otherwise invalid by a court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this ordinance. The City Council hereby declares that it would have passed and adopted this Ordinance and each and all provisions thereof irrespective of the fact that any one or more of said provisions may be declared unconstitutional, unlawful or otherwise invalid.
Section 4. Effective and Operative Dates. This Ordinance of the City of Healdsburg shall be effective thirty (30) days after the date of its passage. Before expiration of fifteen days after its passage, this ordinance or a summary thereof as provided in Government Code Section 36933, shall be published at least once in a newspaper of general circulation published and circulated in the City of Healdsburg, along with the names of the City Council voting for and against its passage.
This ordinance was introduced by the City Council of the City of Healdsburg, County of Sonoma, at a regular meeting thereof on the 4th day of April, 2022, and passed and adopted on the 18th day of April, 2022 by the following roll call vote:
AYES: Councilmembers:
NOES: Councilmembers:
ABSENT: Councilmembers:
ABSTAINING: Councilmembers:
SO ORDERED ATTEST
__________________________________ _____________________________________ Osvaldo Jimenez, Mayor Raina Allan, City Clerk
Dated: ______________________________
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Packet Pg. 119 Attachment: 2. Ordinance-1st Amendment to North Village DA (Enso) (3597 : Enso DA Amendment 1 - 2nd Reading) Ordinance No.
EXHIBIT 1
FIRST AMENDMENT TO DEVELOPMENT AGREEMENT
THIS FIRST AMENDMENT TO DEVELOPMENT AGREEMENT (this “Agreement”) is entered into this ___ day of __________, 2022, by and between the City of Healdsburg, a California municipal corporation (the “City”), and Kendal at Sonoma, a Zen Inspired Community, a California nonprofit public benefit company (“Developer”), and has been approved and agreed to by CCS Healdsburg, LLC, a Delaware limited liability company (“Assignor”). The City and Developer are referred to herein individually as a “Party” and collectively as the “Parties”.
RECITALS
A. Under the authority of Ordinance No. 1202, the City and Assignor entered into a Development Agreement (the “Development Agreement”), the effective date of which is May 6, 2020. The Development Agreement was recorded in the Official Records of Sonoma County on June 1, 2020, as Instrument No. 2020041464. The Development Agreement governs the development of an approximately 32-acre property located at 16977 Healdsburg Avenue (APNs 091-060-009; -019; -022; -025): Senior Living Community with 221 independent living units (including 11 density bonus units), ancillary facilities (including dining facilities, meeting rooms, and administrative offices) and a total of 54 assisted living and memory care beds; 30 multi-family apartments; a 108-key hotel with a restaurant/bar, fitness facility and spa, meetings rooms and other amenities; and 45 multi-family units, five live-work units, and 12,000 square feet of commercial/retail space in a mixed use development. Backbone infrastructure includes the following: a new traffic signal on Healdsburg Avenue at the site entry; Healdsburg Avenue frontage improvements which include curbs, gutters, landscaping and lighting; two private streets including sidewalks, lighting, landscaping, and underground utilities; establishment of a secondary emergency vehicle access; extension of a segment of the Foss Creek Pathway; and establishment of Perimeter Trail (collectively, the “Project”).
B. In addition to the Development Agreement, the Project required, and received from the City, certain entitlements, including approval of a Conditional Use Permit, which was approved by the Planning Commission on February 11, 2020, pursuant to findings and subject to conditions of approval (“CUP Conditions”).
C. In addition, on August 20, 2020, pursuant to authority provided by Section 9.1 of the Development Agreement, the Assignor and Developer entered into a Partial Assignment of Rights and Assumption of Obligations Under Development Agreement which was recorded in the Official Records of Sonoma County on August 20, 2020, as Instrument No. 2020071885 (“Partial Assignment”).
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D. Section 5.4 of the Development Agreement was assigned to the Developer under the Partial Assignment. This Section 5.4 calls for the development of thirty (30) units of Senior Living Community Affordable Housing within the Senior Living Community component of the Project, with twenty (20) units designated as Very Low Income, which were restricted to use by employees and volunteers of the Senior Living Community, and who qualified for the age restrictions of the RCFE license. An additional 10 Moderate income units were made available to the public, subject to local preference requirements defined in Development Agreement Section 5.3(a). To assist with the feasibility of this portion of the Project by aligning the income requirements in the Development Agreement with the actual incomes of the employees and volunteers of the Senior Living Community, Developer has requested and City has agreed to convert 5 Very Low Income Units to Moderate Income, and to convert an additional 5 Very Low Income units to Low Income.
E. On February 23, 2022, the Planning Commission, after a duly noticed public hearing, recommended approval of this Agreement and conditionally approved an Amendment to the Conditional Use Permit for the Project to address the requested change in affordability levels.
F. On ______________, after a duly noticed public hearing, the City Council introduced its Ordinance _________ approving this Agreement and authorizing its execution and adopted that Ordinance __________ on ____________. Ordinance ____________ became effective on _____________.
AGREEMENT
NOW, THEREFORE, with reference to the foregoing recitals and in consideration of the mutual promises, obligations and covenants contained herein, Parties consent to this First Amendment as follows:
1. This Agreement constitutes a Major Amendment to the Development Agreement for the Project in accordance with Section 6.4(b) of the Development Agreement.
2. Defined Terms. All capitalized terms used herein shall have the meanings given in the Development Agreement, except as expressly otherwise defined herein.
3. Enumeration of Specific Deletions and Amendments. The Development Agreement is hereby revised to incorporate the following amendments. a. Sections 5.4(a) and 5.4(b) of the Development Agreement are amended and restated in their entirety as follows:
5.4(a) Developer shall cause construction of a minimum of thirty (30) units of Senior Living Community Affordable Housing within the Senior Living
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Packet Pg. 121 Attachment: 2. Ordinance-1st Amendment to North Village DA (Enso) (3597 : Enso DA Amendment 1 - 2nd Reading) Ordinance No.
Community component of the Project, affordable to households with very low, low, and moderate incomes, as follows:
i. Ten (10) dwelling units shall be made available for occupancy at an affordable Monthly Housing Fee or rent, adjusted for household size, to Very Low Income Households.
ii. Five (5) dwelling units shall be made available for occupancy at an affordable Monthly Housing Fee or rent, adjusted for household size, to Low Income Households.
iii. Fifteen (15) dwelling units shall be made available for occupancy at an affordable Monthly Housing Fee or rent, adjusted for household size, to Moderate Income Households.
5.4(b) Twenty units, comprised of the Senior Living Community Affordable Housing for Very Low, Low and five (5) of the Moderate Income Households shall be reserved for employees and volunteers of the Senior Living Community. The Senior Living Community Affordable Housing for the remaining ten (10) Moderate Income Households shall be subject to the local preference requirements described in Section 5.3(a) of this Agreement.
3. Interpretation. This Agreement shall be interpreted to give each of the provisions their plain and fair meaning. The Recitals set forth above are incorporated into this Agreement. The section headings used herein are solely for convenience and shall not be used to interpret this Agreement. The Parties acknowledge that this Agreement is the product of negotiation and compromise on the part of both Parties, and the Parties agree, that since all have participated in the negotiation and drafting of this Agreement, this Agreement shall not be construed as if prepared by one of the Parties, but rather according to its plain and fair meaning as a whole, as if all Parties had prepared it.
4. Integration. This Agreement contains the entire agreement between the Parties with respect to its subject matter and supersedes whatever oral or written understanding they may have had prior to the execution of this Agreement. This Agreement shall not be amended or modified except by a written agreement executed by each of the Parties.
5. Inconsistencies. In the event of any conflict or inconsistency between the provisions of this Agreement and the Development Agreement, the provisions of this Agreement shall control.
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Packet Pg. 122 Attachment: 2. Ordinance-1st Amendment to North Village DA (Enso) (3597 : Enso DA Amendment 1 - 2nd Reading) Ordinance No.
6. Severability. If any term, provision, condition or covenant of this Agreement or its application to any Party or circumstances shall be held by a court of competent jurisdiction, to any extent, invalid or unenforceable, the remainder of this Agreement, or the application of the term, provision, condition, or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the fullest extent permitted by law unless the rights and obligations of the Parties have been materially altered or abridged thereby.
7. Status of Agreement. Except as modified by this Agreement, the terms and provisions of the Development Agreement shall remain in full force and effect.
8. Counterparts. This Agreement may be signed in counterparts by the Parties hereto and shall be the binding agreement of the Parties upon execution by each of them of one or more copies hereof.
9. Recording of Memorandum. Approximately concurrent with the Amendment’s effective date, the Parties shall execute, acknowledge and record a Memorandum of Agreement, in the form attached hereto as Exhibit B, in the official records of Sonoma County.
10. Authority. Each of the persons signing this Agreement hereby represents and warrants that he or she is fully authorized to sign this Agreement on behalf of the Party for which he or she is signing.
IN WITNESS WHEREOF, the Parties hereto have affixed their signatures to this Agreement as of the date and year indicated below and effective as of the date and year first above written. [Signatures on Following Page]
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Packet Pg. 123 Attachment: 2. Ordinance-1st Amendment to North Village DA (Enso) (3597 : Enso DA Amendment 1 - 2nd Reading) Ordinance No.
DEVELOPER:
KENDAL AT SONOMA, A ZEN
INSPIRED COMMUNITY
a California nonprofit public benefit
company
By: _____________________________
CITY:
CITY OF HEALDSBURG,
a California municipal corporation
By: _____________________________
Jeff Kay, City Manager
ATTEST:
________________________________
Raina Allan, City Clerk
APPROVED AS TO FORM:
________________________________
Samantha Zutler, City Attorney
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Packet Pg. 124 Attachment: 2. Ordinance-1st Amendment to North Village DA (Enso) (3597 : Enso DA Amendment 1 - 2nd Reading) KENDAL DA Amdt v.1
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
The real property situated in the City of Healdsburg, County of Sonoma, State of California, described as follows:
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Packet Pg. 125 Attachment: 2. Ordinance-1st Amendment to North Village DA (Enso) (3597 : Enso DA Amendment 1 - 2nd Reading) KENDAL DA Amdt v.1
EXHIBIT B
FORM OF MEMORANDUM OF AGREEMENT
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of Healdsburg
401 Grove Street
Healdsburg, CA 95448
Attention: City Clerk
EXEMPT FROM RECORDING FEES
PER GOVERNMENT CODE §27383
AND BUILDING HOMES & JOBS
TRUST FUND FEE PER
GOVERNMENT CODE
§27388.1(a)(2)(D)
Space above this line for Recorder’s use.
MEMORANDUM OF FIRST AMENDMENT TO DEVELOPMENT AGREEMENT
This Memorandum of First Amendment to Development Agreement (this “Memorandum”), dated for reference purposes as of _________, 2022, is executed by and between the CITY OF HEALDSBURG, a California municipal corporation (“City”), and KENDAL AT SONOMA, A ZEN INSPIRED COMMUNITY, a California nonprofit public benefit company (“Developer”) and has been approved and agreed to by CCS HEALDSBURG, LLC, a Delaware limited liability company (“Assignor”).
WHEREAS, City and Assignor have entered into a Development Agreement (the “Development Agreement”), the effective date of which is May 6, 2020, which was recorded in the Official Records of Sonoma County on June 1, 2020, as Instrument No. 2020041464. The
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Packet Pg. 126 Attachment: 2. Ordinance-1st Amendment to North Village DA (Enso) (3597 : Enso DA Amendment 1 - 2nd Reading) KENDAL DA Amdt v.1
Development Agreement pertains to the development of certain property (the “Property”) located in Healdsburg, California, as more particularly described in Exhibit A, attached hereto; and WHEREAS, Assignor and Developer have entered into a Partial Assignment of Rights and Assumption of Obligations Under Development Agreement (the “Partial Assignment”) dated August 20, 2020, which was recorded in the Official Records of Sonoma County on August 21, 2020 as Instrument No. 2020071885; and
WHEREAS, City and Developer have entered into a First Amendment to Development Agreement (the “[First Amendment”), dated _______, 2022.
1. This Memorandum is solely to provide record notice of the First Amendment and in no way modifies the terms, conditions, provisions and covenants thereof. In the event of any inconsistency between this Memorandum and First Amendment, the First Amendment shall prevail. The foregoing recitals are incorporated by reference as though fully set forth herein.
Each exhibit referred to herein is attached hereto and incorporated by reference.
2. The City and Developer agree that this Memorandum may be executed in counterparts, each of which shall be deemed an original, and said counterparts shall together constitute one and the same agreement, binding all of the parties hereto, notwithstanding all of the parties are not signatory to the original or the same counterparts.
IN WITNESS WHEREOF, City and Developer have caused this Memorandum to be executed as of the date first above written.
DEVELOPER:
KENDAL AT SONOMA, A ZEN
INSPIRED COMMUNITY
a California nonprofit public benefit
company
By: _____________________________
CITY:
CITY OF HEALDSBURG,
a California municipal corporation
By: _____________________________
Jeff Kay, City Manager
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Packet Pg. 127 Attachment: 2. Ordinance-1st Amendment to North Village DA (Enso) (3597 : Enso DA Amendment 1 - 2nd Reading) KENDAL DA Amdt v.1
, President ATTEST:
________________________________
Raina Allan, City Clerk
APPROVED AS TO FORM:
________________________________
Samantha Zutler, City Attorney
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Packet Pg. 128 Attachment: 2. Ordinance-1st Amendment to North Village DA (Enso) (3597 : Enso DA Amendment 1 - 2nd Reading)
ACKNOWLEDGMENT
State of California )
) ss
County of Sonoma )
On ,20__, before me,___________________________________________, (Name of Notary)
notary public, personally appeared _________________________________________________ who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
(Notary Signature)
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
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Packet Pg. 129 Attachment: 2. Ordinance-1st Amendment to North Village DA (Enso) (3597 : Enso DA Amendment 1 - 2nd Reading) Ordinance No. ___
KENDAL DA Amdt v.1
ACKNOWLEDGMENT
State of California )
) ss
County of Sonoma )
On ,20__, before me,___________________________________________, (Name of Notary)
notary public, personally appeared _________________________________________________ who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
(Notary Signature)
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
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Packet Pg. 130 Attachment: 2. Ordinance-1st Amendment to North Village DA (Enso) (3597 : Enso DA Amendment 1 - 2nd Reading) Ordinance No. ___
KENDAL DA Amdt v.1
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
The real property situated in the City of Healdsburg, County of Sonoma, State of California, described as follows:
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Packet Pg. 131 Attachment: 2. Ordinance-1st Amendment to North Village DA (Enso) (3597 : Enso DA Amendment 1 - 2nd Reading)
CITY OF HEALDSBURG
CITY COUNCIL AGENDA STAFF REPORT
MEETING DATE: April 18, 2022
SUBJECT: An Ordinance Amending the Development Agreement by and between the City of Healdsburg and CCS Healdsburg, LLC for the North Village Project
PREPARED BY: Raina Allan, City Clerk
STRATEGIC INITIATIVE(S):
Maintain and Improve Infrastructure and Facilities
Maintain and Enhance Public Health and Safety
RECOMMENDED ACTION(S):
Pass an ordinance amending the Development Agreement by and between the City of Healdsburg and CCS Healdsburg, LLC for the North Village Project.
COMMUNITY ENGAGEMENT/OUTREACH:
On January 7, 2019, the City Council received a report regarding the Healdsburg Fire Substation project, received public input, and directed staff to engage a consultant to prepare a Fire Services Impact Assessment.
On December 2, 2019, the City Council received a report on the findings of the "Fire Services Development Impact Assessment" prepared by the Municipal Resource Group and directed staff to continue planning for construction of the Fire Substation project.
On April 6, 2020, the City Council approved a Development Agreement ("DA) by and between the City of Healdsburg and CCS Healdsburg LLC ("Comstock") for the North Village Project.
The DA required the Developer to construct the Healdsburg Fire Substation using private funds from the remaining balance of the Saggio Hills Project’s $1,750,000 contribution plus a Comstock Developer contribution capped at $2,000,000, subject to increases based on the Consumer Price Index.
6.G
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On January 19, 2021, the City Council approved the Third Amendment to the Development Agreement between the City of Healdsburg and Sonoma Luxury Resort LLC ("SLR") for the Saggio Hills Project which, in part, removed the SLR's obligation to construct the Fire Substation, since the obligation was assigned to Comstock in the North Village DA.
On February 23, 2022, the Planning Commission conducted a public hearing on the proposed Second Amendment to the Development Agreement by and between the City of Healdsburg and CCS Healdsburg LLC ("Second Amendment") and reviewed the proposed Second Amendment for consistency with the General Plan, North Village Area Plan and the Land Use Code. The Commission adopted Resolution No. 2022-04 (Attachment 1) recommending that the Healdsburg City Council approve the Second Amendment.
Notices of City Council's April 4, 2022, public hearing on the Second Amendment were published in a newspaper of local publication and mailed to property owners within 300' of the property boundaries.
BACKGROUND:
The Fire Substation originally was intended to be designed and constructed in conjunction with the Saggio Hills Project (now known as "Montage Healdsburg"). In 2011, when the Saggio DA was approved, SLR's capped contribution of $1.75M was expected to be sufficient to cover design and construction costs for the Fire Substation. SLR completed the conceptual design process for the Fire Substation in 2018, but further work was delayed after preliminary cost estimates came in at about $3.5M and it became evident that the City would need to identify additional funding sources. In 2019, the City Council directed that a formal needs assessment be prepared for the Fire Substation. The assessment, performed by Municipal Resource Group ("MRG"), evaluated the need for the Fire Substation and reviewed potential alternatives for the facility. The review found that:
- The proposed Fire Substation will not improve response times as, generally, it will be unstaffed. However, if reserve firefighters are staged at the Substation during "red flag warnings," response times will be enhanced.
- The alternative of expending funds set aside for the Fire Substation to purchase fire equipment and make improvements to the main Fire Station would not provide the overall improvement in service to the north Healdsburg area that would be provided by the Fire Substation.
- The Fire Substation would have the following positive benefits to fire services:
o It could be upstaffed during "red flag" warnings and other emergency situations, thus improving response times;
o It would serve as a back-up facility if the main Fire Station floods; o It could accommodate regional trainings and help meet future needs should consolidation of regional fire agencies occur;
o It would provide additional storage for emergency response vehicles and training equipment;
o It would implement General Plan and Saggio Hills Area Plan policies regarding the Fire Substation.
6.G
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Upon receiving the MRG assessment in January 2020, the Council directed staff to identify potential revenue sources for the funding shortfall in order for the Fire Substation to be constructed. In April 2020, the City entered into a Development Agreement with Comstock for the North Village Project. The DA requires Comstock to construct the Fire Substation and caps their developer contribution at $2M with an annual Consumer Price Index adjustment. The remaining balance of SLR's $1.75M developer contribution would be passed through to Comstock.
Subsequently, the Third Amendment to the Saggio Hills Development Agreement removed SLR's obligation to construct the Fire Substation. SLR is required to place the balance of their $1.75M developer contribution ($1,599,586) into escrow to be released to the City when a notice to proceed has been issued for construction of the Fire Substation. Per the North Village Development Agreement, if design and construction costs for the Fire Substation exceed the combined funds from SLR and Comstock, the City is obligated to fund the shortfall. It is estimated that Comstock’s costs for preparation of construction documents will total $500,000 leaving approximately $3.1M of the total developer’s contributions for construction of the Fire Substation.
In compliance with the North Village Development Agreement, Comstock completed the Design Development plans for the Fire Substation last fall and the 50% Construction Documents in January 2022. The 100% Construction Documents are nearing completion. Once the Construction Documents are complete, they will go through the plan check process and then the public bid and contracting process will occur. At this time, it is anticipated that construction of the Fire Substation will commence later this year.
At its April 4, 2022, meeting the City Council introduced for first reading, by title only, waiving further reading of the text, “An Ordinance of the City Council of the City of Healdsburg approving a Second Amendment to the Development Agreement by and between the City of Healdsburg and CCS Healdsburg, LLC for the North Village Project (DA 2020-01.02).” DISCUSSION/ANALYSIS:
When the North Village Development Agreement was negotiated in 2019, it was thought that the funding from SLR and Comstock would be sufficient to complete construction. At the time, it was believed that the remaining design and construction work could be completed using private funds, which would allow Comstock to use its construction team to complete the work while already mobilized on the North Village Project.
Unfortunately, construction costs have sky-rocketed in the past two years due to pandemicrelated inflation, escalation of labor costs, and supply chain issues. The most recent cost estimate for the Fire Substation, prepared last fall, projected costs at roughly $4.76M plus an additional $1.26M in construction contingency and construction management/inspection costs. Because the City will make up the shortfall using public funds, State law will require the Fire Substation project to undergo public bidding and contracting processes, which precludes the strategy of obtaining efficiencies by having Comstock construct the Fire Substation itself.
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Over the last several months, City staff and Comstock have discussed the cost estimates and the public bidding, contracting and construction process for the Fire Substation. The City and the design team engaged in a lengthy process of "value-engineering" the project while ensuring that the end result will be a high-quality Fire Substation that meets the City's needs. An updated cost estimate will be prepared based on the 100% Construction Documents, prior to soliciting bids for construction of the Fire Substation.
The City and Comstock discussed the possibility of phasing construction of the Fire Substation so that Comstock could build a "cold shell" with the available developer contributions and then the City could complete the interior of the Fire Substation with additional public funds. In the end, it was determined that a phased approach is not feasible. Furthermore, such an arrangement would increase the risk of construction-related disputes, result in added costs, and ultimately could result in the delivery of an inferior product.
City staff has identified challenges inherent in controlling cost overruns with a third party (Comstock) overseeing the construction management of the Fire Substation given that the City is obligated to cover costs beyond the capped developer contributions. Staff concluded that the most efficient and effective means of managing the construction process will be for the City's Public Works Department to oversee construction of the Fire Substation. This will avoid unnecessary duplication of effort for construction management and will allow the City to exercise close control over costs, provide quality assurance, and oversee an efficient and smooth delivery of the project.
The Second Amendment is proposed to modify the responsibilities of the parties. As presented in the Ordinance in Attachment 2, the Second Amendment reflects City staff's recommendations and agreements negotiated with Comstock. Specifically, the Amendment would allow Comstock to fulfill its obligation through a cash payment to the City equaling the maximum amount of construction costs Comstock would have been responsible for under the DA. The City would then use the contributions from Comstock and SLR in combination with other funding sources to complete construction of the Fire Substation.
ENVIRONMENTAL STEWARDSHIP:
Development of the Fire Substation project will be required to comply with mitigation measures for the Saggio Hills Development Project as contained in and required by the Final Environmental Impact Report for the Saggio Hills Project, including all mitigation monitoring and reporting.
ALTERNATIVES:
It is recommended that the City Council introduce for first reading, by title only and waiving reading of the text, an Ordinance approving the Second Amendment to the Development Agreement for the North Village Project as recommended by the Planning Commission.
Alternatively, the City Council could consider the following actions:
1) Approve the Ordinance with further minor revisions to the Second Amendment, 2) Direct that significant changes be made to the Second Amendment and refer the matter back to the Planning Commission for review of those changes, or
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3) Deny the Second Amendment in which case the provisions of the existing DA would remain intact.
FISCAL IMPACT:
The Fire Substation Project will be partially funded by developer contributions from SLR and Comstock and the remaining funds will be provided by the City. The following table provides a breakdown of construction costs estimated last fall by Leyland Saylor Associates based on the 100% Design Development Plans. An updated cost estimate will be prepared based on the 100% Construction Documents prior to initiating the public bid process for the Fire Substation.
City staff are currently exploring funding options for the City portion of costs. Options currently include using the General Fund, Measure T, and Fire Facilities Development Impact Fees. Staff will bring a funding recommendation to Council at the Budget workshop scheduled for May 9th.
ENVIRONMENTAL ANALYSIS:
Any environmental impacts related to the Development Agreement for the North Village project have been reviewed and considered in accordance with the provisions of the California Environmental Quality Act. On May 20, 2019, the City Council certified the Final Environmental Impact Report ("EIR") for the North Entry Area Plan (State Clearinghouse No. 2018062041) and adopted related findings, a Mitigation Monitoring and Reporting Program, and a Statement of Overriding Considerations which can be found in the Planning Department’s files for the North Village Project at 401 Grove Street, Healdsburg, CA 95448. In accordance with the California Environment Quality Act (CEQA) Guidelines Section 15162, no further environmental review is required for the Second Amendment because (i) there are no changes involving new significant environmental effects or a substantial increase in the severity of previously identified significant effects/impacts, (ii) there are no changes with respect to the circumstances under which the project is taken which will require major revisions to the EIR due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects/impacts, and (iii) there is no new information of substantial importance that was not known at the time the EIR was certified which shows (a) the project will have one or more significant effects not discussed in the EIR, (b) significant impacts/effects will be substantially more severe than shown in the EIR, (c) mitigation measures or alternatives previously found not to be feasible would in fact be feasible
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and would substantially reduce one or more significant effects/impacts, or (d) mitigation measures or alternatives which are considerably different from those analyzed in the EIR would substantially reduce one or more significant effects/impacts on the environment.
ATTACHMENT(S):
1. PC Reso 2022-04 Second Amendment to North Village DA 2 . Ordinance-2nd Amendment to North Village DA(Fire Substation)
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PC Resolution 2022-04 1
EXHIBIT 1
Planning Commission Resolution 2022-04
A RESOLUTION OF THE PLANNING COMMISSION OF THE
CITY OF HEALDSBURG RECOMMENDING THAT THE CITY
COUNCIL APPROVE THE SECOND AMENDMENT TO THE
DEVELOPMENT AGREEMENT FOR THE NORTH VILLAGE
PROJECT (DA 2020-01.02)
WHEREAS, the City of Healdsburg, a California municipal corporation (the “City”) and CCS Healdsburg, LLC, a Delaware limited liability company (“Developer”) are Parties to that certain Development Agreement, dated May 6, 2020; a Memorandum of Development Agreement was recorded in the Official Records of Sonoma County on June 1, 2020, as Document No. 2020041464 (“Development Agreement”); and
WHEREAS, City staff and Developer have prepared a proposed Second Amendment to the Development Agreement ("Second Amendment") for consideration by the Healdsburg Planning Commission and the Healdsburg City Council; and WHEREAS, the Second Amendment is intended to provide for efficient and cost-effective completion of construction of the Healdsburg Fire Substation project; and WHEREAS, in accordance with Sections 65864 through 65869.5 of the California Government Code (“State Development Agreement Law”), the City adopted Ordinance No. 1097 to add Chapter 17.20 to the Healdsburg Municipal Code authorizing the use of, and imposing additional requirements on, development agreements; and WHEREAS, Chapter 17.20.060 requires the Planning Commission to conduct a public hearing on an amendment to a development agreement; and WHEREAS, pursuant to the California Environmental Quality Act (Pub. Res. Code § 21000, et seq.) ("CEQA"), the City prepared and, on May 20, 2019, the City Council certified the Final Environmental Impact Report ("EIR") for the North Entry Area Plan (State Clearinghouse No. 2018062041) and adopted related findings, a Mitigation Monitoring and Reporting Program, and a Statement of Overriding Considerations which can be found in the Planning Department’s files for the North Village Project at 401 Grove Street, Healdsburg, CA 95448; and WHEREAS, the Planning Commission held a noticed public hearing on February 23, 2022, for the purpose of receiving oral testimony on the proposed Second Amendment, reviewed written and oral staff reports, and received into the record all pertinent documents related to the Second Amendment, before making its decision.
NOW, THEREFORE BE IT RESOLVED that the Healdsburg Planning Commission hereby recommends to the City Council that the Second Amendment to the Development Agreement by and between the City of Healdsburg and CCS Healdsburg LLC (DA 2020-01.02) be approved as presented in Attachment A to this resolution based upon the facts and findings as set forth below:
1. The Development Agreement and its Second Amendment are consistent with the Healdsburg 2030 General Plan, the North Entry Area Plan, and the Land Use Code. The City Council made findings of consistency in its action to adopt Ordinance No. 1202,
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approving the Development Agreement and the Second Amendment does not modify the Development Agreement in any way that would conflict with the goals and policies of the Healdsburg 2030 General Plan and the North Entry Area Plan, and requirements of the City's Land Use Code.
2. The Development Agreement and its Second Amendment will provide Healdsburg with tangible benefits including: 105 units of Affordable and Middle Income Housing; a $2,000,000 contribution for construction of a Fire Substation; contribution of $250,000 to the City for connectivity improvements; annual payments to the City of approximately $334,000 per year from the Senior Living Community for lost tax revenue and increased demands for services; remittance of a 1/2% Hotel Add-On Fee (beginning 10 years after issuance of a certificate of occupancy for the hotel); and other improvements.
3. Any environmental impacts related to the Development Agreement have been reviewed and considered in accordance with the provisions of the California Environmental Quality Act. On May 20, 2019, the City Council certified the Final Environmental Impact Report ("EIR") for the North Entry Area Plan (State Clearinghouse No. 2018062041) and adopted related findings, a Mitigation Monitoring and Reporting Program, and a Statement of Overriding Considerations which can be found in the Planning Department’s files for the North Village Project at 401 Grove Street, Healdsburg, CA 95448. In accordance with the California Environment Quality Act (CEQA) Guidelines Section 15162, no further environmental review is required for the Second Amendment because (i) there are no changes involving new significant environmental effects or a substantial increase in the severity of previously identified significant effects/impacts, (ii) there are no changes with respect to the circumstances under which the project is taken which will require major revisions to the EIR due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects/impacts, and (iii) there is no new information of substantial importance that was not known at the time the EIR was certified which shows (a) the project will have one or more significant effects not discussed in the EIR, (b) significant impacts/effects will be substantially more severe than shown in the EIR, (c) mitigation measures or alternatives previously found not to be feasible would in fact be feasible and would substantially reduce one or more significant effects/impacts, or (d) mitigation measures or alternatives which are considerably different from those analyzed in the EIR would substantially reduce one or more significant effects/impacts on the environment.
DULY AND REGULARLY ADOPTED by the Healdsburg Planning Commission on the 23rd day of February 2022, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
APPROVED: ATTEST:
____________________________ _____________________________ Jerry Eddinger, CHAIR Scott Duiven, SECRETARY
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ATTACHMENT A
SECOND AMENDMENT TO DEVELOPMENT AGREEMENT
THIS SECOND AMENDMENT TO DEVELOPMENT AGREEMENT (the
“Amendment”) is made and entered into as of [the 30th day following final adoption of the ordinance approving it] ("Second Amendment Effective Date") by and between the CITY OF HEALDSBURG, a California municipal corporation ("City") and CCS HEALDSBURG, LLC, a Delaware limited liability company (“Comstock” or “Developer”). City and Developer may each be referred to as a “Party,” and collectively as the “Parties.”
RECITALS
A. On May 6, 2020, the Parties entered into that certain Development Agreement ("Development Agreement") concerning the development of an approximately 32-acre parcel of land at 16977 Healdsburg Avenue in the City of Healdsburg, defined as the "Property" in the Development Agreement, and shown on Exhibit A attached thereto. The Development Agreement was recorded against Property on June 1, 2020 in the Official Records of Sonoma County as Document No. 2020041464.
B. The parties agree to modify the Development Agreement pursuant to Government Code Sections 65867 and 65868, and Healdsburg Municipal Code Section 17.20.060, in order to modify the terms related to the delivery of a new fire substation as provided below.
C. On _____________, 2022, the Planning Commission, after duly noticed public hearing, recommended approval of this Second Amendment. On ______________, after duly noticed public hearing, the City Council introduced its Ordinance _________ approving this Second Amendment and authorizing its execution and adopted that Ordinance __________ on ____________. Ordinance ____________ became effective on _____________.
AGREEMENT
NOW, THEREFORE, with reference to the foregoing recitals and in consideration of the mutual promises, obligations and covenants contained herein, Parties consent to this Second Amendment as follows:
1. Defined Terms. All capitalized terms used herein shall have the meanings given in the Development Agreement, except as expressly otherwise defined herein.
2. Enumeration of Specific Deletions and Amendments. The Development Agreement is hereby revised to incorporate the following amendments. (a) Replace and restate Section 5.6 in its entirety as follows:
5.6(a) The Montage Healdsburg Development Agreement includes approximately 0.85 acres located within the boundaries of the Saggio Hills Area
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Plan that is required to be used for the development of a Healdsburg Fire Department substation (“Fire Substation”) which site has been or will be conveyed to the City (the “Fire Substation Site”).
5.6(b) Developer will prepare construction drawings (the “Fire Substation Construction Plans”) for an approximately 4,162 square‐foot Fire Substation on the Fire Substation Site, and shall submit the Fire Substation Construction Plans to the City for review and approval in accordance with the City's plan check process. Plans shall be revised, as necessary, until such time as the City has determined that the Fire Substation Construction Plans are ready for issuance of construction permits, such that it would be possible to obtain a building permit for the Fire Substation, but without Developer actually obtaining any building permits for the Fire Substation (“Developer Fire Substation Design Completion”). The Fire Substation Construction Plans shall be substantially consistent with the conceptual plans approved by the Planning Commission on April 24, 2018 (Design Review DR 2018-02), as amended by the Design Review Amendment approved by the Planning Commission on August 24, 2021 (Design Review DR 2021-11). Subject to the Developer Fire Substation Contribution limit as set forth below with respect to such costs and expenses, the Developer shall pay any and all amounts due with respect to design work for the Fire Substation Construction Plans, as contemplated by this Section 5.6 as and when they become due and payable.
5.6(c) The City shall cause the Fire Substation Construction Plans to be reviewed by City promptly, and provide comments and responses to the submittals made by Developer within 30 days after the City’s receipt of each submittal of a plan set by Developer. Upon any disapproval by the City of the Fire Substation Construction Plans, the Developer shall cause the architect selected by Developer to revise the Fire Substation Construction Plans and then submit the revised plans to the City for review and approval or disapproval until Developer Fire Substation Design Completion is obtained.
5.6(d) Developer shall complete the Fire Substation Construction Plans work as described above at its sole cost and expense (“Developer’s Fire Substation Costs”); provided, however, that Developer’s total out-of-pocket cost shall not exceed Two Million Seventy-Six Thousand Dollars ($2,076,000) (“Developer Fire Substation Contribution”). On April 1, 2022, or as soon thereafter as the Index is available, the Developer Fire Substation Contribution shall be increased by a percentage equal to the percent increase of the Consumer Price Index for All Urban Consumers (CPI-U San Francisco-Oakland-Hayward) (the “Index”), or an equivalent index if the Index is no longer available, calculated from April of the previous year to April of the current year. If the Index shows a decrease for the year, the Developer Fire Substation Contribution will not change.
5.6(e) As of December 31, 2021, the Developer has incurred [________] in out-of-pocket costs for the preparation of the Fire Substation Completion Plans,
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which costs are a portion of Developer Fire Substation Contribution.
Notwithstanding that Developer shall pay directly the additional Developer Fire Substation Costs incurred to the extent of the Developer Fire Substation Contribution as described immediately above. Within 60 days of satisfaction of the Developer Fire Substation Design Completion, Developer shall provide invoices and other evidence satisfactory to City to demonstrate the amount of Developer’s Fire Substation Costs that have been incurred and that such work has been paid for by Developer, including bills, invoices, lien waivers and other supporting documentation submitted by the design professionals selected by Developer to complete the Fire Substation Construction Plans. Developer shall indemnify the City against any claims for payment of work to prepare the Fire Substation Construction Plans within the limit of the Developer Fire Substation Contribution by the design professionals selected by Developer and performed prior to the Developer Fire Substation Design Completion.
5.6(f) The City shall review and approve or disapprove the amount of the Developer’s Fire Substation Costs already paid by Developer as set forth in the submission by Developer within 30 days following the City’s receipt thereof, provided that such request includes the documentation described above in form and content satisfactory to City. Any failure by the City to give such a notice of approval or disapproval within 30-day period shall be deemed approval. Any disapproval shall include a statement setting forth the particular basis for the City’s disapproval in reasonable detail.
5.6(g) Developer shall assign to City all contracts, plans, warranties, and other intangible property rights obtained with respect to the Fire Substation Plans (the “Fire Substation Work Product”) and pay the City the balance of the Developer Fire Substation Contribution to the City within 30 days of City giving notice of approval of the Developer's Fire Substation Costs.
5.6(h) Notwithstanding anything to the contrary contained in this Agreement, if the Developer Fire Substation Design Completion has not occurred on or before the first to occur of December 31, 2022 or the date of issuance of the first certificate of occupancy by the City with respect to the Project, notwithstanding that Developer has submitted three sets of Fire Substation Plan sets to the City and responded to the City comments with revisions to each prior set of City comments, which have resulted in City approval as of the date set forth immediately above, then Developer may submit a final set of Fire Substation Construction Plans to City, together with notice to City that such plan set is the final plan set to be submitted to City pursuant to the requirements of this Agreement, and thereafter Developer shall assign to City all Fire Substation Work Product as of such date, and upon such assignment Developer shall be deemed to have satisfied all of its obligations under the provisions of the Development Agreement related to the Fire Substation, except for the accounting for costs already incurred and payment of the remaining balance of the Developer Fire Substation Contribution, as provided in Sections 5.6(e) through (g) above, which shall be completed as provided in those sections.
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5.6(i) At Developer’s sole option, for a period not to exceed ten (10) years after the issuance of a certificate of occupancy for the hotel, Developer may collect the Hotel Community Benefit Fee described in Section 5.9 of this Agreement and keep the proceeds to offset a portion of the Fire Substation costs. (b) Exhibit D of the Agreement is hereby deleted in its entirety.
3. Interpretation. This Agreement shall be interpreted to give each of the provisions their plain and fair meaning. The Recitals set forth above are incorporated into this Agreement. The section headings used herein are solely for convenience and shall not be used to interpret this Agreement. The Parties acknowledge that this Agreement is the product of negotiation and compromise on the part of both Parties, and the Parties agree, that since all have participated in the negotiation and drafting of this Agreement, this Agreement shall not be construed as if prepared by one of the Parties, but rather according to its plain and fair meaning as a whole, as if all Parties had prepared it.
4. Integration. This Agreement contains the entire agreement between the Parties with respect to its subject matter and supersedes whatever oral or written understanding they may have had prior to the execution of this Agreement. This Agreement shall not be amended or modified except by a written agreement executed by each of the Parties.
5. Inconsistencies. The Development Agreement shall be construed as having been modified by this Second Amendment. Except as expressly modified by this Second Amendment. The Development Agreement remains in full force and effect. In the case of conflict between the provisions hereof and the terms of the Development Agreement, the provisions of this Second Amendment shall control.
6. Severability. If any term, provision, condition or covenant of this Agreement or its application to any Party or circumstances shall be held by a court of competent jurisdiction, to any extent, invalid or unenforceable, the remainder of this Agreement, or the application of the term, provision, condition, or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the fullest extent permitted by law unless the rights and obligations of the Parties have been materially altered or abridged thereby.
7. Counterparts. This Agreement may be signed in counterparts by the Parties hereto and shall be the binding agreement of the Parties upon execution by each of them of one or more copies hereof.
8. Recording of Memorandum. Approximately concurrent with the Second Amendment Effective Date, the Parties shall execute, acknowledge and record a Memorandum of Agreement in the official records of Sonoma County.
9. Authority. Each of the persons signing this Agreement hereby represents and warrants that he or she is fully authorized to sign this Agreement on behalf of the Party for which he or she is signing.
[signature page follows]
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IN WITNESS WHEREOF, this Amendment has been executed as of the date first written above.
CITY
City of Healdsburg, a California municipal corporation
By: _________________________
Jeff Kay
City Manager
APPROVED AS TO FORM:
By: __________________________
Samantha Zutler, Esq. City Attorney
ATTEST:
By: __________________________
Raina Allan, City Clerk
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-048
DEVELOPER
CCS Healdsburg, LLC, a
Delaware limited liability
company
By:
_________________________
Robert Comstock
Title:
________________________
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CITY OF HEALDSBURG
ORDINANCE NO. ___
AN ORDINANCE OF THE CITY COUNCIL OF THE
CITY OF HEALDSBURG APPROVING A SECOND
AMENDMENT TO THE DEVELOPMENT AGREEMENT
BY AND BETWEEN THE CITY OF HEALDSBURG AND
CCS HEALDSBURG, LLC FOR THE NORTH VILLAGE
PROJECT (DA 2020-01.02)
WHEREAS, under the authority of Ordinance No. 1202, the City of Healdsburg, a California municipal corporation (“City”) and CCS Healdsburg, LLC, a Delaware limited liability company ("Developer") entered into a Development Agreement, dated May 6, 2020; and a Memorandum of Development Agreement was recorded in the Official Records of Sonoma County on June 1, 2020, as Instrument No. 2020-041464 (“Development Agreement”); and WHEREAS, the Development Agreement governs the development of an approximately 32-acre property located at 16977 Healdsburg Avenue with a Senior Living Community with 221 independent living units, ancillary facilities including dining facilities, meeting rooms, administrative offices, and a total of 54 assisted living and memory care beds; 30 multi-family apartments; a 108-key hotel with a restaurant/bar, fitness facility and spa, meetings rooms and other amenities; and 45 multi-family units, five live-work units, and 12,000 square feet of commercial/retail space in a mixed use development ("Project"); and WHEREAS, City staff and Developer have prepared a proposed Second Amendment to the Development Agreement ("Second Amendment") for consideration by the Healdsburg Planning Commission and the Healdsburg City Council; and WHEREAS, the Second Amendment is intended to provide for efficient and cost-effective completion of construction of the Healdsburg Fire Substation project given changesin construction costs, materials, and other factors that have occurred since the City originally approved the Development Agreement; and
WHEREAS, in accordance with Sections 65864 through 65869.5 of the California Government Code (“State Development Agreement Law”), the City adopted Ordinance No. 1097 to add Chapter 17.20 to the Healdsburg Municipal Code authorizing the use of, and imposing additional requirements on, development agreements; and WHEREAS, pursuant to the California Environmental Quality Act (Pub. Res. Code § 21000, et seq.), the City prepared and, on May 20, 2019, the City Council certified the Final Environmental Impact Report for the North Entry Area Plan (State Clearinghouse No. 2018062041) and adopted related findings, a Mitigation Monitoring and Reporting Program, and a Statement of Overriding Considerations which can be found in the Planning Department’s files for the North Village Project at 401 Grove Street, Healdsburg, CA 95448; and
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WHEREAS, pursuant to Chapter 17.20.060 of the Healdsburg Municipal Code, the Planning Commission held a noticed public hearing on February 23, 2022, for the purpose of receiving oral testimony on, deliberating, and making a recommendation regarding the proposed Second Amendment. The Commission considered all public comments received and all pertinent documents, including the Staff Report dated February 23, 2022, regarding the proposed Second Amendment, and by Resolution No. 2022-04, recommended approval of the Second Amendment; and
WHEREAS, the Healdsburg City Council held a duly noticed public hearing on the Second Amendment on April 4, 2022, reviewed the written and verbal staff reports, took testimony, and received into the record all pertinent documents related to the Project.
NOW, THEREFORE BE IT ORDAINED that the Healdsburg City Council hereby approves the Second Amendment to the Development Agreement by and between the City of Healdsburg and CCS Healdsburg, LLC, as presented in Exhibit 1 to this ordinance and based upon the facts and findings as set forth below:
Section 1. Findings.
1. The foregoing Recitals are true and correct and by this reference are made a part hereof.
2. The Development Agreement and its Second Amendment are consistent with the Healdsburg 2030 General Plan, the North Entry Area Plan, and the Land Use Code.
The City Council made findings of consistency in its action to adopt Ordinance No. 1202, approving the Development Agreement, and the Second Amendment does not modify the Development Agreement in any way that would conflict with the goals and policies of the Healdsburg 2030 General Plan and the North Entry Area Plan, and requirements of the City's Land Use Code.
3. The Development Agreement and its Second Amendment will provide Healdsburg with tangible benefits including: a 221-unit Senior Living Community with 30 units of Affordable Housing; 80 additional units of Affordable and Middle Income Housing; a $2,000,000 contribution for construction of a Fire Substation; contribution of $250,000 to the City for connectivity improvements; annual payments to the City of approximately $334,000 per year from the Senior Living Community for lost tax revenue and increased demands for services; remittance of a 1/2% Hotel Add-On Fee (beginning 10 years after issuance of a certificate of occupancy for the hotel); and other improvements.
4. Any environmental impacts related to the Development Agreement have been reviewed and considered in accordance with the provisions of the California Environmental Quality Act. On May 20, 2019, the City Council certified the Final Environmental Impact Report ("EIR") for the North Entry Area Plan (State Clearinghouse No. 2018062041) and adopted related findings, a Mitigation Monitoring and Reporting Program, and a Statement of Overriding Considerations which can be found in the
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Planning Department’s files for the North Village Project at 401 Grove Street, Healdsburg, CA 95448. In accordance with the California Environment Quality Act (CEQA) Guidelines Section 15162, no further environmental review is required for the Second Amendment because (i) there are no changes involving new significant environmental effects or a substantial increase in the severity of previously identified significant effects/impacts, (ii) there are no changes with respect to the circumstances under which the project is taken which will require major revisions to the EIR due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects/impacts, and (iii) there is no new information of substantial importance that was not known at the time the EIR was certified which shows (a) the project will have one or more significant effects not discussed in the EIR, (b) significant impacts/effects will be substantially more severe than shown in the EIR, (c) mitigation measures or alternatives previously found not to be feasible would in fact be feasible and would substantially reduce one or more significant effects/impacts, or (d) mitigation measures or alternatives which are considerably different from those analyzed in the EIR would substantially reduce one or more significant effects/impacts on the environment.
Section 2. Approval and Execution. The City Council hereby approves the Second Amendment to the Development Agreement, substantially in the form attached hereto as Exhibit 1, subject to such minor and clarifying changes consistent with the terms thereof as may be approved by the City Attorney prior to execution hereof. The City Council further authorizes the City Manager to execute the Second Amendment on behalf of the City.
Section 3. Severability. If any section, subsection, sentence, clause or phrase or word of this Ordinance is for any reason held to be unconstitutional, unlawful or otherwise invalid by a court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this ordinance. The City Council hereby declares that it would have passed and adopted this Ordinance and each and all provisions thereof irrespective of the fact that any one or more of said provisions may be declared unconstitutional, unlawful or otherwise invalid.
Section 4. Effective and Operative Dates. This Ordinance of the City of Healdsburg shall be effective thirty (30) days after the date of its passage. Before expiration of fifteen days after its passage, this ordinance or a summary thereof as provided in Government Code Section 36933, shall be published at least once in a newspaper of general circulation published and circulated in the City of Healdsburg, along with the names of the City Council voting for and against its passage.
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This ordinance was introduced by the City Council of the City of Healdsburg, County of Sonoma, at a regular meeting thereof on the 4th day of April, 2022, and passed and adopted on the 18th day of April, 2022 by the following roll call vote:
AYES: Councilmembers:
NOES: Councilmembers:
ABSENT: Councilmembers:
ABSTAINING: Councilmembers:
SO ORDERED ATTEST
__________________________________ _____________________________________ Osvaldo Jimenez, Mayor Raina Allan, City Clerk
Dated: ______________________________
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EXHIBIT 1
SECOND AMENDMENT TO DEVELOPMENT AGREEMENT
THIS SECOND AMENDMENT TO DEVELOPMENT AGREEMENT (the
“Amendment”) is made and entered into as of [the 30th day following final adoption of the ordinance approving it] ("Second Amendment Effective Date") by and between the City of Healdsburg, a California municipal corporation ("City") and CCS Healdsburg, LLC, a Delaware limited liability company (“Comstock” or “Developer”). City and Developer may each be referred to as a “Party,” and collectively as the “Parties.”
RECITALS
A. On May 6, 2020, the Parties entered into that certain Development Agreement ("Development Agreement") concerning the development of an approximately 32-acre parcel of land at 16977 Healdsburg Avenue in the City of Healdsburg, defined as the "Property" in the Development Agreement, and shown on Exhibit A attached thereto. The Development Agreement was recorded against Property on June 1, 2020 in the Official Records of Sonoma County as Document No. 2020041464.
B. The parties agree to modify the Development Agreement pursuant to Government Code Sections 65867 and 65868, and Healdsburg Municipal Code Section 17.20.060, in order to modify the terms related to the delivery of a new fire substation as provided below.
C. On February 23, 2022, the Planning Commission, after duly noticed public hearing, recommended approval of this Second Amendment.
D. On ______________, after duly noticed public hearing, the City Council introduced its Ordinance _________ approving this Second Amendment and authorizing its execution and adopted that Ordinance __________ on ____________. Ordinance ____________ became effective on _____________.
AGREEMENT
NOW, THEREFORE, with reference to the foregoing recitals and in consideration of the mutual promises, obligations and covenants contained herein, Parties consent to this Second Amendment as follows:
1. Defined Terms. All capitalized terms used herein shall have the meanings given in the Development Agreement, except as expressly otherwise defined herein.
2. Enumeration of Specific Deletions and Amendments. The Development Agreement is hereby revised to incorporate the following amendments.
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(a) Replace and restate Section 5.6 in its entirety as follows:
5.6(a) The Montage Healdsburg Development Agreement includes approximately 0.85 acres located within the boundaries of the Saggio Hills Area Plan that is required to be used for the development of a Healdsburg Fire Department substation (“Fire Substation”) which site has been or will be conveyed to the City (the “Fire Substation Site”).
5.6(b) Developer will prepare construction drawings (the “Fire Substation Construction Plans”) for an approximately 4,162 square‐foot Fire Substation on the Fire Substation Site, and shall submit the Fire Substation Construction Plans to the City for review and approval in accordance with the City's plan check process.
Plans shall be revised, as necessary, until such time as the City has determined that the Fire Substation Construction Plans are ready for issuance of construction permits, such that it would be possible to obtain a building permit for the Fire Substation, but without Developer actually obtaining any building permits for the Fire Substation (“Developer Fire Substation Design Completion”). The Fire Substation Construction Plans shall be substantially consistent with the conceptual plans approved by the Planning Commission on April 24, 2018 (Design Review DR 2018-02), as amended by the Design Review Amendment approved by the Planning Commission on August 24, 2021 (Design Review DR 2021-11). Subject to the Developer Fire Substation Fire Substation Contribution limit as set forth below with respect to such costs and expenses, the Developer shall pay any and all amounts due with respect to design work for the Fire Substation Construction Plans, as contemplated by this Section 5.6 as and when they become due and payable.
5.6(c) The City shall cause the Fire Substation Construction Plans to be reviewed by City promptly, and provide comments and responses to the submittals made by Developer within 30 days after the City’s receipt of each submittal of a plan set by Developer. Upon any disapproval by the City of the Fire Substation Construction Plans, the Developer shall cause the architect selected by Developer to revise the Fire Substation Construction Plans and then submit the revised plans to the City for review and approval or disapproval until Developer Fire Substation Design Completion is obtained.
5.6(d) Developer shall complete the Fire Substation Construction Plans work as described above at its sole cost and expense (“Developer’s Fire Substation Costs”); provided, however, that Developer’s total out-of-pocket cost shall not exceed Two Million Seventy-Six Thousand Dollars ($2,076,000) (“Developer Fire Substation Contribution”). On April 1, 2022 or as soon thereafter as the Index is available, the Developer Fire Substation Contribution shall be increased by a percentage equal to the percent increase of the Consumer Price Index for All Urban Consumers (CPI-U San Francisco-Oakland-Hayward) (the “Index”), or an equivalent index if the Index is no longer available, calculated from
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April of the previous year to April of the current year. If the Index shows a decrease for the year, the Developer Fire Substation Contribution will not change.
5.6(e) As of December 31, 2021, the Developer has paid Two Hundred Twenty Two Thousand Ninety Nine Dollars and Eighty-Two Cents ($222,099.82) in out-of-pocket costs for the preparation of the Fire Substation Completion Plans, which costs are a portion of Developer Fire Substation Contribution.
Notwithstanding that Developer shall pay directly the additional Developer Fire Substation Costs incurred to the extent of the Developer Fire Substation Contribution as described immediately above. Within 60 days of satisfaction of the Developer Fire Substation Design Completion, Developer shall provide invoices and other evidence satisfactory to City to demonstrate the amount of Developer’s Fire Substation Costs that have been incurred and that such work has been paid for by Developer, including bills, invoices, lien waivers and other supporting documentation submitted by the design professionals selected by Developer to complete the Fire Substation Construction Plans. Developer shall indemnify the City against any claims for payment of work to prepare the Fire Substation Construction Plans within the limit of the Developer Fire Substation Contribution by the design professionals selected by Developer and performed prior to the Developer Fire Substation Design Completion.
5.6(f) The City shall review and approve or disapprove the amount of the Developer’s Fire Substation Costs already paid by Developer as set forth in the submission by Developer within 30 days following the City’s receipt thereof, provided that such request includes the documentation described above in form and content satisfactory to City. Any failure by the City to give such a notice of approval or disapproval within 30-day period shall be deemed approval. Any disapproval shall include a statement setting forth the particular basis for the City’s disapproval in reasonable detail.
5.6(g) Developer shall assign to City all contracts, plans, warranties, and other intangible property rights obtained with respect to the Fire Substation Plans (the “Fire Substation Work Product”) and pay the City the balance of the Developer Fire Substation Contribution to the City within 30 days of City giving notice of approval of the Developer's Fire Substation Costs.
5.6(h) Notwithstanding anything to the contrary contained in this Agreement, if the Developer Fire Substation Design Completion has not occurred on or before the first to occur of December 31, 2022 or the date of issuance of the first certificate of occupancy by the City with respect to the Project, notwithstanding that Developer has submitted three sets of Fire Substation Plan sets to the City and responded to the City comments with revisions to each prior set of City comments, which have resulted in City approval as of the date set forth immediately above, then Developer may submit a final set of Fire Substation
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Construction Plans to City, together with notice to City that such plan set is the final plan set to be submitted to City pursuant to the requirements of this Agreement, and thereafter Developer shall assign to City all Fire Substation Work Product as of such date, and upon such assignment Developer shall be deemed to have satisfied all of its obligations under the provisions of the Development Agreement related to the Fire Substation, except for the accounting for costs already incurred and payment of the remaining balance of the Developer Fire Substation Contribution, as provided in Sections 5.6(e) through (g) above, which shall be completed as provided in those sections.
5.6(i) At Developer’s sole option, for a period not to exceed ten (10) years after the issuance of a certificate of occupancy for the hotel, Developer may collect the Hotel Community Benefit Fee described in Section 5.9 of this Agreement and keep the proceeds to offset a portion of the Fire Substation costs. (b) Exhibit D of the Agreement is hereby deleted in its entirety.
3. Interpretation. This Agreement shall be interpreted to give each of the provisions their plain and fair meaning. The Recitals set forth above are incorporated into this Agreement. The section headings used herein are solely for convenience and shall not be used to interpret this Agreement. The Parties acknowledge that this Agreement is the product of negotiation and compromise on the part of both Parties, and the Parties agree, that since all have participated in the negotiation and drafting of this Agreement, this Agreement shall not be construed as if prepared by one of the Parties, but rather according to its plain and fair meaning as a whole, as if all Parties had prepared it.
4. Integration. This Agreement contains the entire agreement between the Parties with respect to its subject matter and supersedes whatever oral or written understanding they may have had prior to the execution of this Agreement. This Agreement shall not be amended or modified except by a written agreement executed by each of the Parties.
5. Inconsistencies. The Development Agreement shall be construed as having been modified by this Second Amendment. Except as expressly modified by this Second Amendment. The Development Agreement remains in full force and effect. In the case of conflict between the provisions hereof and the terms of the Development Agreement, the provisions of this Second Amendment shall control.
6. Severability. If any term, provision, condition or covenant of this Agreement or its application to any Party or circumstances shall be held by a court of competent jurisdiction, to any extent, invalid or unenforceable, the remainder of this Agreement, or the application of the term, provision, condition, or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the fullest extent permitted by law unless the rights and obligations of the Parties have been materially altered or abridged thereby.
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7. Counterparts. This Agreement may be signed in counterparts by the Parties hereto and shall be the binding agreement of the Parties upon execution by each of them of one or more copies hereof.
8. Recording of Memorandum. Approximately concurrent with the Second Amendment Effective Date, the Parties shall execute, acknowledge and record a Memorandum of Agreement in the official records of Sonoma County.
9. Authority. Each of the persons signing this Agreement hereby represents and warrants that he or she is fully authorized to sign this Agreement on behalf of the Party for which he or she is signing.
[signature page follows]
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Packet Pg. 154 Attachment: 2 . Ordinance-2nd Amendment to North Village DA(Fire Substation) (3598 : Enso 2nd DA amendment - 2nd Reading) LEGAL_US_W # 84669566.4
IN WITNESS WHEREOF, this Amendment has been executed as of the date first written above.
CITY
City of Healdsburg, a California municipal corporation
By: _________________________
Jeff Kay
City Manager
APPROVED AS TO FORM:
By: __________________________
Samantha Zutler, Esq. City Attorney
ATTEST:
By: __________________________
Raina Allan, City Clerk
DEVELOPER
CCS Healdsburg, LLC, a
Delaware limited liability company
By: _________________________
Robert Comstock
Title: ________________________
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CITY OF HEALDSBURG
CITY COUNCIL AGENDA STAFF REPORT
MEETING DATE: April 18, 2022
SUBJECT: Adoption of Resolution Authorizing Remote Meetings PREPARED BY: Raina Allan, City Clerk
STRATEGIC INITIATIVE(S):
Provide Effective Governance
Maintain and Enhance Public Health and Safety
RECOMMENDED ACTION(S):
Adopt a Resolution authorizing remote meetings of the City Council and other legislative bodies.
COMMUNITY ENGAGEMENT/OUTREACH:
The City has made and continues to engage in extensive outreach to the community regarding the City’s response to COVID-19, including updates at public meetings.
BACKGROUND:
On or about March 4, 2020, as part of the State of California’s response to address the global COVID-19 outbreak, Governor Gavin Newsom declared a State of Emergency to make additional resources available, formalize emergency actions already underway across multiple state agencies and departments, and help the state prepare for broader spread of COVID-19 following one official COVID-19 death.
When the COVID-19 pandemic started, local agency boards struggled to conduct their meetings in compliance with the Brown Act’s public accessibility requirements while still abiding by stayat-home orders. As a result, Governor Newsom signed Orders N-25-20, N-29-20, and N-35-20 to grant local agencies the flexibility to meet remotely during the COVID-19 pandemic. These orders expired on September 30, 2021.
DISCUSSION/ANALYSIS:
On September 16, 2021, Governor Newsom signed into law AB 361 – Brown Act: Remote Meetings During Emergencies. AB 361, codified at Government Code Section 54953(e)(1)(B), amended the Brown Act to allow public agencies to allow local legislative bodies to continue meeting by teleconference during a gubernatorial proclaimed state of emergency if the local
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legislative body determines, by majority vote, that as a result of the emergency, meeting entirely in person without restrictions would present imminent risks to the health or safety of attendees.
By adopting the proposed resolution, the Council would, on behalf of the City Council and all other legislative bodies formed by the Council, make the findings required by AB 361 to meet remotely. Because the Council is required to make these findings every thirty days, staff will place a version of this resolution on the consent calendar at all subsequent meetings, until the Council decides that meeting fully in person will no longer pose an imminent risk to the health or safety of attendees.
The resolution was amended at the February 22, 2022, City Council meeting and further amended at the March 21, 2022 City Council meeting, to amend public meeting protocol in response to the latest COVID-19 conditions, as directed by the City Council.
ENVIRONMENTAL STEWARDSHIP:
This section is not applicable.
ALTERNATIVES:
Because the Governor’s Order authorizing online meetings has expired, if the Council does not adopt the proposed resolution, the Council should immediately return to in-person meetings.
FISCAL IMPACT:
There is not a fiscal impact as a direct result of this action.
ENVIRONMENTAL ANALYSIS:
Pursuant to Title 14, the California Code of Regulations, Section 15378(b)(5) of the California Environmental Quality Act (“CEQA”) guidelines, the proposed action is an administrative activity of the City that will not result in direct or indirect physical changes to the environment.
ATTACHMENT(S):
Resolution
Public Meeting COVID-19 Protocols for the City of Healdsburg
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CITY OF HEALDSBURG
RESOLUTION NO. _____
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
HEALDSBURG AND ON BEHALF OF COMMISSIONS AND
COMMITTEES CREATED BY THE CITY COUNCIL
PURSUANT TO CALIFORNIA GOVERNMENT CODE
SECTION 54952(b) AUTHORIZING TELECONFERENCE
MEETINGS IN COMPLIANCE WITH AB 361 (GOVERNMENT
CODE SECTION 54953(e)) TO CONTINUE TO ALLOW
MEMBERS OF THE PUBLIC TO SAFELY PARTICIPATE IN
LOCAL GOVERNMENT MEETINGS
WHEREAS, the City Council is committed to ensuring public access to observe and participate in local government meetings; and
WHEREAS, all meetings of the City Council and other legislative bodies created pursuant to Government Code Section 54952(b) are open and public, as required by the Ralph M. Brown Act, so that any member of the public may participate in local government meetings; and
WHEREAS, the recently adopted AB 361, codified at Government Code section 54953(e), makes provisions for remote teleconferencing participation in local government meetings, without compliance with the requirements 54953(b)(3), subject to the existence of certain conditions; and
WHEREAS, on March 4, 2020, Governor Newsom proclaimed a State of Emergency due to the outbreak of respiratory illness due to a novel coronavirus (now known as COVID 19) and that State of Emergency is still in effect in the State of California; and WHEREAS, the Sonoma County Public Health Officer continues to recommend teleconferencing or social distancing during public meetings of all legislative bodies to protect the community’s health against the spread of COVID-19; and WHEREAS, the City Council, acting as a legislative body pursuant to Government Code section 54952(a) and for the benefit of the commissions, committees and other bodies that were created by the City Council pursuant to Government Code section 54952(b) (collectively referred to as “Legislative Bodies”), finds that the current conditions meet the circumstances set forth in Government Code section 54953(e)(3) to allow Legislative Bodies to continue to use teleconferencing to hold open and public meetings if the Legislative Bodies comply with the requirements set forth in Government Code section 54953(e)(2) to ensure the public can safely participate in and observe local government meetings.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Healdsburg that the City Council does hereby:
1. Find that Current Conditions Authorize Teleconference Public Meetings of
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Legislative Bodies. Based on the California Governor’s continued declaration of a State of Emergency and the Sonoma County Public Health Officer’s recommendation to continue teleconferencing or social distancing during public meetings, the City Council finds that the conditions continue to exist pursuant to Government Code section 54953(e)(3) to allow Legislative Bodies to use teleconferencing to hold public meetings in accordance with Government Code section 54953(e)(2) to ensure members of the public have continued access to safely observe and participate in local government meetings.
2. Authorize Legislative Bodies to Conduct Teleconference Meetings. The Legislative Bodies are hereby authorized to take all actions necessary to carry out the intent and purpose of this Resolution, including conducting open and public meetings in accordance with Government Code section 54953(e)(2) and other applicable provisions of the Brown Act.
3. Authorize Legislative Bodies to Conduct Hybrid Meetings. The Legislative Bodies are hereby authorized to conduct meetings in a “hybrid” format, whereby members of the Body and members of the public may elect to be present in person, utilizing appropriate safety procedures, or participate by teleconferencing technology. Such meetings of the Legislative Bodies that occur using teleconferencing technology will provide an opportunity for any and all members of the public who wish to address Legislative Bodies to do so, and will otherwise occur in a manner that protects the statutory and constitutional rights of members of the public attending the meeting via teleconferencing. In-person meetings will be held consistent with the protocols described in Exhibit A to this Resolution.
PASSED and ADOPTED by the City Council of the City of Healdsburg, County of Sonoma, State of California, this 18th day of April 2022, by the following vote:
AYES: Councilmembers: ( )
NOES: Councilmembers: ( )
ABSENT: Councilmembers: ( )
ABSTAINING: Councilmembers: ( )
SO ORDERED: ATTEST:
________________________________ ___________________________________ Osvaldo Jimenez, Mayor Raina Allan, City Clerk
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PUBLIC MEETING COVID-19 PROTOCOLS
FOR THE CITY OF HEALDSBURG
SCOPE: These protocols shall apply to all public meetings held in the Council Chamber located at Healdsburg City Hall, 401 Grove Street, Healdsburg, California, by the City Council and by any and all boards, committees and commissions created and/or appointed by the City Council.
APPLICABILITY: These protocols shall apply to all participants, including members of the public, elected officials, appointed members of all boards, committees and commissions, city staff, consultants, applicants, contractors, and any other person or individual attending or participating in a public meeting in the Council Chamber.
In addition to these protocols, the City of Healdsburg will follow all laws, regulations, policies, and orders from all relevant public agencies, including the Center for Disease Control, California Department of Public Health, CalOSHA, and the Sonoma County Public Health Officer.
PURPOSE: The City intends to implement a hybrid public meeting format to allow all participants of a public meeting in the Council Chamber to participate either in-person or remotely via teleconference in a manner consistent with provisions of the Ralph M. Brown Act. Due to the fact that all participants of a public meeting that choose to participate in-person in the Council Chamber will therefore be in a confined indoor space and, the period of confinement will more likely than not be longer than 15 minutes, the City is adopting these protocols to protect the public health, safety and general welfare and thereby limit the potential risks associated with COVID-19.
COMMITMENT TO PUBLIC PARTICIPATION: None of the protocols established herein are intended to limit public participation by participants of a public meeting in the Council Chamber in any way; indeed, the intent is to protect the statutory and constitutional rights of participants appearing before the legislative bodies of the City of Healdsburg, while protecting the public health, safety and general welfare. Any participant of a public meeting that desires to participate in-person in the Council Chamber that is unable or unwilling to comply with the inperson attendance protocol outlined below, or otherwise chooses not to participate in-person in a public meeting in the Council Chamber, will have the right and ability to participate in a public meeting in the Council Chamber remotely via teleconference in a manner consistent with provisions of the Ralph M. Brown Act.
IN-PERSON ATTENDANCE PROTOCOL:
1. Social Distancing and Occupancy Limits: The occupancy limit in the Council Chamber will be reduced by at least 50%.
a. Due to limited capacity, participants who indicate they are only interested in a specific item may be asked to wait outside the Council Chamber until their item is called on the agenda.
b. City staff will monitor occupancy within the Council Chamber to ensure proper social distancing is maintained. All participants of a public meeting permitted entry into the Council Chamber shall obey all directions from City staff provided to ensure proper social distancing is maintained. Any participant of a public meeting permitted entry into the Council Chamber who fails or refuses to obey the directions
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from City staff provided to ensure social distancing, following one or more warning(s) from an appropriate City official, shall leave the Council Chamber upon instruction from an appropriate City official.
c. City staff and outside consultants to the City will, as appropriate or directed by the City Manager, participate in the public meeting remotely via teleconference.
2. Enforcement: In the event a participant of a public meeting in the Council Chamber refuses or fails to obey a decision, direction or instruction of an appropriate City official issued pursuant to these In-Person Attendance Protocols, the Chief of Police, or his or her designee, may in his or her discretion, or at the direction of the City Manager or the Presiding Officer of the public meeting, take appropriate and reasonable steps to enforce the decision, direction or instruction of the appropriate City official and/or remove the offending participant from the Council Chamber. Additionally, the Presiding Officer of the public meeting may, in his or her discretion, suspend and adjourn the public meeting and/or clear the Council Chamber of all participants in the event of a disturbance and/or disruption to the public meeting, and thereafter reconvene the public meeting once the matter is resolved.
CLEANING PROTOCOL: The Council Chamber shall be professionally cleaned after each public meeting. City staff will additionally use an electrostatic cleaner to disinfect the Council Chamber after each use.
AIR FILTRATION: Air control settings in the Council Chamber will be adjusted to allow for maximum fresh air flow during public meetings. When conditions allow, doors may be left open to facilitate additional fresh air circulation.
DISTRIBUTION OF PROTOCOLS TO PARTICIPANTS: A copy of these protocols shall be published and posted on the City’s website and shall be made available at the entry to the Council Chamber for distribution to all participants of a public meeting seeking to gain entry to the Council Chamber.
CHANGES TO PROTOCOL: The City Council may, from time to time, amend, modify, suspend and/or terminate and repeal all or any portion of these protocols as it may determine to be appropriate and necessary in consideration of changes in conditions or the need to protect the statutory and constitutional rights of participants appearing before the legislative bodies of the City of Healdsburg, while protecting the public health, safety and general welfare.
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CITY OF HEALDSBURG
CITY COUNCIL AGENDA STAFF REPORT
MEETING DATE: April 18, 2022
SUBJECT: Fiscal Years 2022-23 and 2023-24 Budget Development Update PREPARED BY: Andrew Sturmfels, Administrative Services Director STRATEGIC INITIATIVE(S):
Provide Effective Governance
RECOMMENDED ACTION(S):
Receive a presentation from City staff on the status of budget development activities for the upcoming two-year budget cycle and provide feedback and direction.
COMMUNITY ENGAGEMENT/OUTREACH:
City staff kicked off budget development activities with City Council at the January 3rd, 2022 City Council meeting. Since that time, staff have held three community workshops, launched the interactive budget simulation, and spoken with 5 different community organizations about the budget development process. Each engagement offered an opportunity for residents to provide their input on budget priorities.
BACKGROUND:
The City operates on a two-year budget cycle. The current two-year budget cycle will end on June 30, 2022. The next two-year budget, for fiscal year’s 2022-23 and 2023-24 is on schedule to be adopted in early June to allow staff time to upload the new budget and update the City Enterprise Resource Planning (ERP) system to ensure a smooth transition between fiscal years.
DISCUSSION/ANALYSIS:
The purpose of this report is to provide a status update to the City Council on budget activities completed to date, including budget goal status, a summary of community input, and a review of next steps.
Status of Budget Development Process:
Finance staff have gathered inputs from department heads and consultants and are currently in the process of creating an initial draft of the budget for each fund. A draft of the General Fund and Community Services Fund budget will be ready for Council review during the May 9th Special meeting on the budget.
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Remaining Enterprise Funds and CIP projects will be ready for review during the May 31st Special Meeting.
During the January 3rd, 2022, Budget Kickoff, staff presented the following budget development goals to the City Council. Those goals included:
1. Align Budget Resources with Council Goals.
2. Incorporate Identified Needs from the Long-Range Financial Forecast Model. a. Street and Sidewalk Improvements.
b. Internal Services Fund (ISF) Rightsizing.
c. Community Services Infrastructure Plan.
d. Fire Substation.
3. Update the Capital Improvement Plan (CIP) and implement new policies and procedures for accounting for capital projects.
4. Update the City Pension Liability Funding Policy.
5. Update the City Reserve Policy.
6. Improve accounting efficiency through fund consolidation.
Staff are working to ensure that the proposed budget will provide adequate funding to support the City Council Goals adopted on April 4th (Goal 1). Staff are currently working to finalize plans to address all the identified needs from the long-range forecast model (Goal 2). Staff are seeking Council confirmation on the following:
1. Use of ARPA funds for FY 22-23 and Measure T funds for FY 23-24 for Street and Sidewalk Improvements.
2. Confirm the use of Measure T funds, spread across both FY 22-23 and 23-24 for the Fire Substation Project.
An Internal Service Fund is a fund that provides goods or services to other funds, departments, or agencies within the City organization on a cost-reimbursement basis, with the. goal to 'breakeven' rather than make a profit. Examples include building maintenance, vehicle replacement, and information technology. Staff are continuing to work on ISF rightsizing. Staff have completed draft budgets and are currently in the process of incorporating ISF costs into each fund budget. The Community Services Infrastructure plan is also in process. Staff have identified a list of deferred maintenance projects and are exploring options for funding new park infrastructure. A more detailed discussion on both topics will occur during the Special Meeting on the Budget scheduled for May 9th.
Staff are currently in the process of updating the Capital Improvement Plan (Goal 3). Staff are also developing new policies and procedures for CIP project tracking to improve transparency, accountability, and accuracy. Due to fund constraints within the Water Fund, the City will be limited in its ability to deliver capital projects requiring Water Operations funding during the next two-year budget cycle.
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The Pension Liability funding policy was reviewed by Council on February 22nd and Council approved staffs recommended updates to the policy (Goal 4). The Reserve Policy will also be discussed on April 18th (Goal 5)
For the final goal of Improving accounting efficiency, the City has identified one fund eligible for elimination, the Traffic Congestion Relief Fund. This fund was created as part of a state program in the early 2000’s. The program is no longer in existence, and the remaining funds will be transferred to the Streets Capital Fund to support the eligible activity of sidewalk repair and replacement work approved by Council on March 21st. Outside of fund consolidation, staff have identified several process improvements that will improve efficiency and transparency.
Community Input:
City staff, in partnership with Corazon, held three public workshops to discuss the City budget.
Corazon provided Spanish translation and laptop devices, and attendees were able to complete the budget simulation and ask questions of City staff as they filled it out. City staff has also met with and presented to seven different stakeholder groups. Stakeholder meetings included a discussion of the budget and budget process and steered participants to provide direct feedback via the budget simulation.
Finally, City staff launched the budget simulation. The simulation closed on April 10th, and 371 responses were submitted (262 English and 109 Spanish). Staff’s presentation to Council on this item will include a summary of major themes and findings.
Next Steps:
City Council will convene for a Special Meeting on May 9th to begin reviewing the budget, with a focus on the General Fund and Community Services Fund. This meeting will highlight anticipated revenues and expenses, as well as major changes to budgets and projects for consideration.
During the regularly scheduled City Council meeting on May 16th, staff will provide a third quarter update for the current fiscal year, which will include a discussion on year end position, outstanding funding priorities, and any final budget amendments needed.
A second Special Meeting is scheduled for May 31st to continue review and discussion of the City Budget, focusing on the City Utility Funds and other remaining funds, CIP projects, and any outstanding questions or issues that need to be addressed.
On the regularly scheduled City Council meeting on June 6, 2022, staff will present a final draft budget with a recommendation to Council for adoption. If for some reason the budget is not adopted at the June 6th meeting, staff will return for the June 21st Council meeting to finalize the budget.
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ENVIRONMENTAL STEWARDSHIP:
Staff have taken several steps to reduce the environmental impact of budget development, including, but not limited to moving away from a paper-based survey to an online feedback tool and increasing use of existing functionality within the City’s Enterprise Resource Planning system to reduce paper processes and unnecessary printing of financial documents.
ALTERNATIVES:
City Council can provide direction to City staff to make changes to the proposed budget development goals, timeline, and public participation plan.
FISCAL IMPACT:
There is no fiscal impact associated with providing this staff report and presentation.
ENVIRONMENTAL ANALYSIS:
Consideration of the City’s budget is an administrative activity, which is not considered a 'project' as defined by the California Environmental Quality Act (“CEQA”) (CEQA Guidelines§15378). Consequently, no CEQA action is required.
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CITY OF HEALDSBURG
CITY COUNCIL AGENDA STAFF REPORT
MEETING DATE: April 18, 2022
SUBJECT: 2022 Water and Wastewater Rate Study
PREPARED BY: Terry Crowley, Utilities Director
STRATEGIC INITIATIVE(S):
Maintain and Improve Infrastructure and Facilities
Maintain and Enhance Public Health and Safety
RECOMMENDED ACTION(S):
By motion:
1. Accept the 2022 Water and Wastewater Rate Study as basis for proposing multi-year rate increases for the City's Water Funds; and
2. Direct staff to prepare and mail, as required by law, a notice of public hearing on the proposed water and wastewater rates, with a public hearing to be held on June 21, 2022.
COMMUNITY ENGAGEMENT/OUTREACH:
In March the City Council was presented with an overview of the City’s Water and Wastewater Departments financial outlook and proposed rate increases. Proposition 218 requires that the setting of municipal water and wastewater rates include community engagement at City Council meetings and an open and public rate protest process.
BACKGROUND:
On March 21, 2022, Mark Hildebrand of Hildebrand Consulting presented the City Council with an overview of water and wastewater financials and proposed rate increases. As presented, recommended rate increases over the next five-year period primarily account for revenue losses due to the drought, higher than normal inflation, and the need to fund capital replacement projects for the Water and Wastewater departments.
The previous series of approved rate increases ended in July of 2020. Due to the ongoing pandemic, staff delayed the presentation and possible implementation of a new rate increases one year to allow for the uncertainty of the economy. During that time, the City experienced a historic drought and responded with historic levels of water conservation. While this
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conservation was necessary due to limited water supplies, it also resulted in a significant reduction in operating revenues. The proposed rate increases account for the current drought as well as future droughts while also developing sufficient funding to continue replacing aging infrastructure that has become increasing unreliable.
DISCUSSION/ANALYSIS:
Two important rules when setting utility rates are; 1) rates must cover the full operating and capital replacement costs of the utility and 2) rates must be fair and equitable to all users. The final 2022 Water and Wastewater Rate Study includes a multi-year financial plan, updated costof-service analysis, and an update to existing rate structures.
Primary objectives of the rate study are to:
i. Ensure that the rates being charged by the City are legally defensible - Rates must reflect the cost of providing service by proportionately assigning costs to each customer group based on service requirements and demands.
ii. Minimize impact to rate payers – Particular consideration will be given to the economic conditions created by the pandemic as well as the financial impact of the most recent climate induced drought.
iii. Generate sufficient rate revenue to meet each utility’s financial obligations related to operations, debt service, and capital improvement needs - Maintaining strong financial performance is important for credit ratings, which affects the utilities’ interest rates and ability to obtain debt in the future.
iv. Keep rates administratively simple and easy to explain.
The attached 2022 Water and Wastewater Rate Study presents a five-year financial plan for both the Water and Wastewater Funds. The study reflects the City's FY 2021-22 budget and financial conditions, as well as the City's debt service obligations and capital improvement plan during the five-year planning period extending through FY 2026-27.
Water Utility
The City has taken and continues to take significant steps to control utility costs. However, drought conditions and water use restrictions have resulted in reduced water sales, and the water utility may not meet debt service coverage requirements in FY 2021-22. Debt covenants require the City to maintain water rates and other revenues such that total revenues less operating and maintenance costs are at least 1.20 times the annual debt service payments.
At present, the financial condition of the City's water utility is characterized with some basic facts. The water utility has:
• Estimated current annual operating and maintenance costs, including debt service obligations, totaling just over $6.2 million in FY 2023 • Insufficient current revenues to meet debt service coverage requirements, creating a need for a water rate increase.
• The Water Department’s debt payments continue to consume roughly 19% of the annual operations budget.
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• Proposed rate increases provide cash maintain ongoing operations as well as provide funds to meet the scaled-back needs of the 5-year capital improvement program.
As a result of the forgoing, it is recommended that the City increase the overall level of water rate revenues as indicated below:
July 2022 Utility Billing 2%
July 2023 Utility Billing 8%
July 2024 Utility Billing 8%
July 2025 Utility Billing 5%
July 2026 Utility Billing 5%
Early in the development of the financial plan and associated rate increases, the series of rate increases were much higher due to the need to fund deferred replacements of aging water infrastructure. To reduce these rate increases, Staff analyzed forecasted cost to identify potential projects and programs that could either be scaled back or deferred until future years. In doing so (deferring costs and projects to future years), the proposed rate increases were minimized to the amounts shown.
Of note is that while the first-year water rate increase is indicated at 2%, a restructuring of costs allocations (as required by Prop 218) will effect a larger rate increase for most water customers.
The range of increase in the first-year is from a cost decrease of roughly 2% to a rate increase of roughly 10.8%. Larger users will see increase toward the higher side of this range.
The financial plan analysis includes a reasonable estimate for a partial rebound in water demand during the five-year planning period. With this rebound and the proposed water rate adjustments, annual water rate revenue are estimated to increase from FY2022’s forecasted $5.0 million (low due to drought) to $8.7 million in FY 2027. The future revenues assume a slow but steady rebound in the water demands. Actual usage may lag the forecast resulting in lower revenues.
Wastewater Utility
Between FY2016 and FY2022, no rate increases were imposed for Wastewater customers. This was largely due to the ability to use unrestricted fund balance to support both operational needs as well as a capital improvement plan focused on meeting increased regulatory requirements.
Additionally, in October of 2016 the City Council adjusted the Sewer Season Average (SSA) calculation which resulted in a roughly 2% decrease in residential sewer rates.
In considering the forecasted funding needs over the next five-years, it is no longer possible to defer rate increases while maintain ongoing operations and adequately support capital replacements. Therefore, rate increases are proposed to cover current and estimated future operating and maintenance costs, debt service payments, and capital program needs, as well as maintain a contingency reserve and capital reserve. At present, the financial condition of the City's wastewater utility is characterized with the following basic statistics. The wastewater utility has:
• Estimated current annual operating and maintenance costs, including debt service
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obligations, totaling about $8.0 million, with roughly $700,000 transferred to support Capital Improvement Projects.
• Current annual Operating Fund revenues of about $7.1 million. • The Wastewater Department’s debt payments continue to consume roughly 30% of the annual operations budget.
• The proposed rate increase allows the ability to meet the financial and service obligations of the wastewater utility and fund a limited 5-year capital improvement plan.
As a result of the above, the following rate increases are proposed for the City’s Wastewater Fund:
July 2022 Utility Billing 8%
July 2023 Utility Billing 8%
July 2024 Utility Billing 7%
July 2025 Utility Billing 6%
July 2026 Utility Billing 6%
As with the Water Capital Improvement Plan, staff removed several identified and needed replacement projects to lower wastewater’s over rate increase. While this helps ease the immediate impact of rate increases, the identified work will remain and require funding in future years. The rates shown above do support ongoing operations, debt service, and a limited amount of capital replacement projects. As with water revenues, conservation will impact the level of revenue generated. If wastewater usage remains low and efficient, forecasted revenues may not be realized.
Overall Rate Setting and Impact
The City's water and wastewater rates must meet the constitutional requirements that they reflect the cost of providing service, and costs are allocated to customers in proportion to service requirements. The 2020 Water and Wastewater Rate Study contains a detailed explanation of the financial condition of each utility, the need for increased water and wastewater utility revenues, the basis for the cost-of-service analysis. Proposed water and wastewater rate schedules reflect the revenue needs of the utilities, as determined with the financial planning models, as well as updated cost of service analyses.
The table below shows the bill impact for typical residential dwellings. Usage is shown in both hundred-cubic feet (HCF) and gallons per capita/person per day (GPCD).
Monthly Usage
(HCF/GPCD) Current Proposed
Change /
Month
Single Family - Water 6 / 60 $56.25 $62.21 $5.96
Single Family - Sewer 5 / 50 $89.38 $96.31 $6.93
Apartment (8 Units) – Water 40 / 55 $349.44 $364.80 $15.36 Apartment (8 Units) – Sewer 40 / 55 $692.40 $704.80 $12.40 If the Council accepts the 2022 Water and Wastewater Rate Study, staff will schedule a public hearing for the Council to receive public input on the recommended water and wastewater rate.
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The public hearing is tentatively scheduled for June 21, 2022 during the Council’s regular meeting. As required by law, Prop 218 public hearing notices would be mailed to all City utility property owners at least 45 days prior to the public hearing. Absent a majority protest on the proposed rates, the Council would then be asked to adopt the recommended water and wastewater rates in order to implement the increase on the schedule recommended in the Revised Draft Report.
ENVIRONMENTAL STEWARDSHIP:
Continued funding of the City’s water and wastewater departments allows the City to maintain public water and sewer services within regulatory compliance. Meeting state and regional regulatory compliance in the provisioning of these two public health services, helps lessen the City’s impact on the natural environment surrounding Healdsburg.
ALTERNATIVES:
Council may request revisions to the report, the proposed rate increases, and structure.
FISCAL IMPACT:
There is no immediate fiscal impact in accepting the study and directing staff to proceed with the Proposition 218 process. Should the proposed rates ultimately be accepted by the community and adopted by the Council, rates will increase water and wastewater revenues to meet operational, proposed capital replacement projects, and debt service requirements. Without rate increases these two funds will likely not meet debt service requirements, ongoing maintenance costs, and fall further behind in necessary planned capital replacements.
ENVIRONMENTAL ANALYSIS:
Pursuant to Title 14, the California Code of Regulations, Section 15302(c) of the California Environmental Quality Act ("CEQA") guidelines, the proposed action is an administrative activity of the City that will not result in direct or indirect physical changes to the environment.
ATTACHMENT(S):
Healdsburg 2022 Water and Wastewater Rate Study
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Packet Pg. 171 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) March 31, 2022
Terry Crowley, PE., Utility Director
City of Healdsburg
401 Grove St.
Healdsburg, CA 95448
Re: 2021 Water and Wastewater Rate Study
Dear Mr. Crowley,
Hildebrand Consulting is pleased to present this 2022 Water and Wastewater Rate Study (Study) for the City of Healdsburg (City). We appreciate the assistance provided by you and all of the members of the City staff who participated in the Study, as well as the input and guidance provided by the City Council.
If you or others at the City have any questions, please do not hesitate to contact me at:
[email protected]
(510) 316-0621
We appreciate the opportunity to be of service and look forward to the possibility of doing so again in the near future.
Sincerely,
Mark Hildebrand
Hildebrand Consulting, LLC
Enclosure
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2022 Water and Wastewater Rate Study Table of Contents
1 TABLE OF CONTENTS
INTRODUCTION.................................................................................5 UTILITY BACKGROUND.......................................................................................................... 5 SCOPE &OBJECTIVES OF STUDY ............................................................................................ 8 STUDY METHODOLOGY ......................................................................................................... 8 PROCESS ........................................................................................................................... 9 REPORT ORGANIZATION ..................................................................................................... 10 WATER RATE STUDY......................................................................... 11 WATER UTILITY FINANCIAL PLAN.......................................................................................... 11 WATER UTILITY BEGINNING FUND BALANCES ......................................................................... 12 CUSTOMER GROWTH.......................................................................................................... 12 WATER UTILITY RATE REVENUE............................................................................................ 12 WATER UTILITY NON-RATE REVENUES.................................................................................. 13 WATER UTILITY OPERATING AND DEBT EXPENSES................................................................... 14 DEBT SERVICE COVERAGE ................................................................................................... 15 COST ESCALATION............................................................................................................. 16 WATER UTILITY CAPITAL IMPROVEMENT PROGRAM.................................................................. 16 WATER UTILITY FUNDS....................................................................................................... 17 CASH RESERVE POLICIES .................................................................................................... 19 PROPOSED RATE REVENUE INCREASES.................................................................................. 20 WATER COST OF SERVICE & RATE STRUCTURE ....................................................................... 22
2.13.1 Current Water Rates .....................................................................................................................................23
2.13.2 Customer Statistics.......................................................................................................................................25
2.13.3 Meter Equivalencies......................................................................................................................................26
2.13.4 Water Rate Calculations...............................................................................................................................28
2.13.5 Service Charges.............................................................................................................................................31
2.13.6 Water Usage Rates .......................................................................................................................................32
2.13.7 Proposed Water Rate Schedules..................................................................................................................32 PASSALACQUA PUMP-STATION PUMPING SURCHARGE ............................................................ 33
2.14.1 Source Data...................................................................................................................................................35
2.14.2 Calculations ..................................................................................................................................................36 SPECIAL METER MAINTENANCE CHARGE................................................................................ 42 WATER SHORTAGE RATE SURCHARGE ................................................................................... 44 WASTEWATER RATE STUDY .............................................................. 47 WASTEWATER UTILITY FINANCIAL PLAN................................................................................. 47 WASTEWATER UTILITY BEGINNING FUND BALANCES................................................................ 48 CUSTOMER GROWTH.......................................................................................................... 48 WASTEWATER UTILITY RATE REVENUE .................................................................................. 48
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2022 Water and Wastewater Rate Study Table of Contents
2 WASTEWATER UTILITY NON-RATE REVENUES......................................................................... 49 WASTEWATER UTILITY OPERATING AND DEBT EXPENSES ......................................................... 50 DEBT SERVICE COVERAGE ................................................................................................... 51 COST ESCALATION............................................................................................................. 52 WASTEWATER UTILITY CAPITAL IMPROVEMENT PROGRAM ........................................................ 52 WASTEWATER UTILITY FUNDS.............................................................................................. 53 CASH RESERVE POLICIES .................................................................................................... 55 PROPOSED RATE REVENUE INCREASES.................................................................................. 56 WASTEWATER COST OF SERVICE & RATE STRUCTURE .............................................................. 58
3.13.1 General Methodology ...................................................................................................................................58
3.13.2 Current Wastewater Rates ...........................................................................................................................59
3.13.3 Customer Account Data and Sewer Flow and Loading Estimates ............................................................60
3.13.4 Wastewater Cost of Service & Rate Design .................................................................................................63
3.13.5 Special Rates.................................................................................................................................................67
3.13.6 Proposed Wastewater Rate Schedule .........................................................................................................69 CONCLUSION .................................................................................. 71
LIST OF TABLES
Table 1: Water Utility FY 2021/22 Beginning Cash Balance (rounded) ...................................... 12 Table 2: Recommended Water Rate Revenue Increase.............................................................. 21 Table 3: Current Fixed Monthly Service Charges ........................................................................ 24 Table 4: Rated Flow Capacity by Meter Size................................................................................ 27 Table 5: Summary of Water Service Connections and Water Usage.......................................... 27 Table 6: FY 2022/23 Calculation of Unit Costs............................................................................. 31 Table 7: Proposed Monthly Service Charges............................................................................... 32 Table 8: Annual Costs for the Passalacqua Pump Station.......................................................... 37 Table 9: Above Pump Station Estimated Build-Out Water Demand.......................................... 38 Table 10: Estimated Annual Cash Flows for the Passalacqua Pump Station ............................ 39 Table 11: Passalacqua Pump Station Pumping Surcharge Schedule........................................ 40 Table 12: Meter Maintenance Charge Calculation...................................................................... 43 Table 13: Proposed Water Shortage Surcharges and Capital Spending Reductions................ 46 Table 14: Wastewater Utility FY 2021/22 Beginning Cash Balance (rounded)........................... 48 Table 15: Recommended Wastewater Rate Revenue Increase.................................................. 56 Table 16: Current Wastewater Rates ........................................................................................... 60 Table 17: Wastewater Customer Account Data and Estimated Sewer Flows and Loadings..... 62 Table 18: Determination of Unit Costs ........................................................................................ 63 Table 19: Allocation of Sewer Costs to Users1............................................................................. 65
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2022 Water and Wastewater Rate Study Table of Contents
3 Table 20: Wastewater Rate Determination for FY 2021/22......................................................... 66 Table 21: Current and Proposed Wastewater Rates for FY 2022/23........................................... 70
LIST OF FIGURES
Figure 1: City Service Area as shown in 2015 UWMP Update........................................................ 7 Figure 2: Budgeted Water Utility Revenue Categories (FY 2021/22) .......................................... 14 Figure 3: Water Utility Operating & Debt Expenses (FY 2021/22) ............................................... 15 Figure 4: Water Utility Historic and projected capital spending ................................................ 17 Figure 5: Water Utility Cash Flow Schematic Diagram ............................................................... 18 Figure 6: Water Utility Financial Projection with Recommended Rate Increases ..................... 22 Figure 7: Budgeted Wastewater Utility Revenue Categories (FY 2021/22) ................................ 50 Figure 8: Wastewater Utility Operating & Debt Expenses (FY 2021/22) ..................................... 51 Figure 9: Wastewater Utility Historic and Projected Capital Spending ..................................... 53 Figure 10: Wastewater Utility Cash Flow Schematic Diagram ................................................... 53 Figure 11: Wastewater Financial Projection with Recommended Rate Increases .................... 57
LIST OF SCHEDULES
Schedule W-1 – Water Utility Budgeted & Projected Operating and Debt Expenses Schedule W-2 – Water Utility Capital Spending Request
Schedule W-3 - Water Utility Cash Flow Pro Formas
Schedule W-4 – Water Utility 5-Year Schedule of Proposed Rates Schedule WW-1 – Wastewater Utility Budgeted & Projected Operating and Debt Expenses Schedule WW-2 – Wastewater Utility Capital Spending Request Schedule WW-3 - Wastewater Utility Cash Flow Pro Formas Schedule WW-4 – Wastewater Utility 5-Year Schedule of Proposed Rates
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Packet Pg. 175 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study List of Acronyms
4 List of Acronyms
ADU accessory dwelling unit
AF acre-feet (measure of water volume)
AWWA American Water Works Association
BOD biochemical oxygen demand (BOD)
HCF hundreds (centum) of cubic feet (measure of water volume) CIP capital improvement program
COS cost of service
CSA County Service Area
DCR debt service coverage ratio
DU dwelling unit
ESFD equivalent single-family dwellings
FY fiscal year (which ends on June 30 for the City)
HOA homeowner association
O&M operations and maintenance
PayGo “pay as you go” (i.e., cash financing for capital projects) SWRCB California State Water Resources Control Board
SSA seasonal sewer average
TSS total suspended solids
UWMP Urban Water Management Plan
WWTF Wastewater Treatment, Reclamation and Disposal Facility
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2022 Water and Wastewater Rate Study Introduction
5 INTRODUCTION
Hildebrand Consulting, LLC has been retained by City of Healdsburg (City) to develop five-year financial plans and to update user rates for the City’s water and sewer utilities. The purpose of this Study is to ensure that each utility is meeting financial obligations for ongoing operation and maintenance, debt service, and capital improvements while maintaining prudent financial reserves. The last comprehensive rate study was completed in 2016 (Water and Wastewater Financial Plans and Rate Study, March 9, 2016, The Reed Group, Inc.), and the most recent adjustments to the level of water rates occurred in July 2020 (a 3% increase), while the wastewater rates have not been adjusted since July 2016 (a 2% decrease).
This report describes in detail the assumptions, procedures, and results of the Study, including conclusions and recommendations.
UTILITY BACKGROUND
The City of Healdsburg is located in the County of Sonoma (County), approximately 12 miles north of the City of Santa Rosa. Healdsburg is within the nine-county San Francisco Bay Region. The location of Healdsburg in California is shown in Figure 3-1.
The City of Healdsburg is located in an inland valley between Highway 101 and the Russian River, which flows southward to the east of the City and crosses through the southern portion of the City in a westerly direction. The City’s water service area is approximately four square miles, roughly equivalent to the City Limit. The potable water distribution system contains three pressure zones that are served by six storage reservoirs. Figure 1, taken from the City’s 2015 Urban Water Management Plan (UWMP) shows the City Limit, sphere of influence, and water distribution areas, which includes County Service Area #41 (previously #24). Since the mid-1990s, the City has sold wholesale water to Sonoma County under the County’s operation of the Fitch Mountain CSA #41, which is a small water system located outside of the City’s limits.
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Packet Pg. 177 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Introduction
6 The wastewater collection system consists of a network of underground pipelines that collect and convey raw wastewater from individual user connections to the City’s tertiary level wastewater treatment plant, known as the City of Healdsburg’s Wastewater Treatment, Reclamation and Disposal Facility (WWTF). The WWTF treats all of the City’s wastewater to Title 22 recycled water standards. The WWTF discharges the treated effluent year-round to a former gravel extraction pit (Basalt Pond) for percolation into the underlying groundwater basin, which is hydrologically connected to the Russian River.
The Healdsburg City Council is the governing entity of the City. The Council consists of five council members that serve four-year terms and appoint a Mayor once per year.
The Council sets policy and adopts a budget for the City bi-annually.
Historically, the City’s economy was supported by agriculture and logging. In more recent years, the City has experienced an increase in urban development and a diversification of the local economy with tourism as a growing element of the economy.
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2022 Water and Wastewater Rate Study Introduction 7
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2022 Water and Wastewater Rate Study Introduction
8 SCOPE & OBJECTIVES OF STUDY
The scope of this Study is to prepare multi-year financial plans for the water and wastewater enterprises, review and update the water and wastewater rate structures, propose 5-year rate schedules, and recommend financial strategies for addressing water shortage events.
The primary objectives of this Study are to:
i. Develop multi-year water and wastewater financial plans that integrate operational and capital project funding needs with a funding strategy. ii. Identify future annual adjustments to water and wastewater rates to help ensure adequate revenues to meet each utility’s ongoing financial obligations. iii. Update the cost of providing water and wastewater services using industryaccepted methodologies. iv. Recommend specific updates to the City’s existing rate structures in order to ensure that the City is equitably recovering the cost of service and comporting with industry standards1 and California’s legal requirements. v. Recommend water shortage financial strategy, including Water Shortage Surcharges to be overlaid on then-current water usage rates during water shortage events, as declared by the City.
STUDY METHODOLOGY
This Study applied methodologies that are aligned with industry standard practices for rate setting as laid out in the AWWA M1 Manual, and applicable law, including California Constitution Article XIII D, Section 6(b), commonly known as Proposition 218.
1 As promulgated the American Water Work Association (AWWA) M1 Manual: Principles of Water Rates, Fees and Charges: Manual of Water Supply Practices M1, (7 th edition), which documents many of the
standards used by professionals in the utility rate-setting industry.
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2022 Water and Wastewater Rate Study Introduction
9 The Study began with a review of both utility enterprises’ current financial dynamics and latest available data for the utilities’ operations. Multi-year financial management plans were then developed to determine the level of annual rate revenue required to cover projected annual operating expenses, debt service (including coverage targets), and capital cost requirements while maintaining adequate reserves. This portion of the Study was conducted using MS Excel©-based financial planning models which were customized to reflect financial dynamics and latest available data for the City’s operations in order to develop a long-term financial management plan, inclusive of projected annual revenue requirements and corresponding annual rate adjustments.
Revenue requirements calculated for fiscal year ending June 2023 (FY 2022/23 2 ) were
then used to perform a detailed cost-of-service (COS) analysis. The COS analysis and rate structure design were conducted based upon principles outlined by the AWWA, legal requirements (i.e., Proposition 218) and other generally accepted industry practices to develop rates that reflect the cost of providing service.
PROCESS
Over the course of numerous meetings, Hildebrand Consulting collaborated with City Staff to develop the recommendations in this Study. The project team also met with City Council to review the proposed financial plans and proposed updates to the rate structures. The Study was first developed and presented to City Council in early 2021 but no action was proposed. The Study was then updated in 2022 and presentations were made to the Healdsburg City Council on March 21st and April 18th, 2022, in advance of the Public Hearing which is scheduled to take place June 21st, 2022.
The rate setting process was further guided by three primary considerations:
2 Fiscal years are sometimes indicated by their ending years. For example, FY 2022/23, starts on July 1, 2022 and ends on June 30, 2023, can also be expressed as FY 2023.
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2022 Water and Wastewater Rate Study Introduction
10 Legal Requirements – California Constitution and relevant case law requires that water rates not exceed the cost of providing service and rates must reflect the proportionate share of costs attributable to each parcel.
Rate Setting Objectives – The following objectives guided the financial plan and rate structure updates:
• Financial sufficiency and sustainability – Water and wastewater rates should generate sufficient revenues to meet each utility’s service and financial obligations including covering operating and maintenance costs, meeting debt service obligations, and rehabilitating and upgrading the respective systems to provide high quality utility services to customers.
• Legal compliance - Utility rates should meet legal requirements to not exceed the cost of service and proportionately allocate costs to customers. • Fiduciary Responsibility – The City seeks to minimize rate increases and avoid debt when possible.
• Rate Structure - Utility rates should strike an appropriate balance between fixed and usage-based charges, with consideration of:
o Revenue stability
o Cost-based affordability for basic usage
o Customer bill impacts of rate structure changes
o Simplicity
REPORT ORGANIZATION
This report contains two major sections: Section 2 is the water rate study and Section 3 is the wastewater rate study. By design there is considerable redundancy in the language between these Sections 2 and Section 3; they are meant to stand-alone so as to avoid the need to cross-reference between them.
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Packet Pg. 182 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Water Rate Study
11 WATER RATE STUDY
The following subsections include the Water Utility’s financial plan, cost of service, rate design, proposed rates schedule, and water shortage strategy (including rate surcharges). This section also contains an update to the special charges for the Passalacqua development.
WATER UTILITY FINANCIAL PLAN
This section presents the Water Utility’s 10-year Financial Plan, including a description of the source data, assumptions, and the City’s financial policies. The City provided historical and budgeted financial information, including historical and budgeted operating costs, a multi-year capital improvement program (CIP), and outstanding debt service obligations. City staff also assisted in providing other assumptions and policies, such as reserve targets and escalation rates for operating costs (all of which are described in the following subsections).
The Water Utility 10-year Financial Plan was developed through several interactive work sessions with City staff. As a result of this process, the Study has produced a Water Utility Financial Plan that will enable the City to meet its future revenue requirements and achieve financial performance objectives throughout the projection period while striving to limit rate increases.
The analysis identifies a revenue shortfall in upcoming years as a result of an increase in capital spending and expense inflation, which leads to a conclusion that rate revenue adjustments are required for the Water Utility. The schedules attached to this report include detailed data supporting the Water Utility Financial Plan discussed herein.
The Water Utility Financial Plan reflects assumptions and estimates believed reasonable at the present time. However, conditions change. It is recommended that the City review the financial condition of the Water Utility and reaffirm annual rate adjustments
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2022 Water and Wastewater Rate Study Water Rate Study
12 as part of the annual budget process, as well as perform a more comprehensive financial plan and water rate update every 5 years or as conditions dictate.
WATER UTILITY BEGINNING FUND BALANCES
The ending cash balance for FY 2020/21 was used to establish the FY 2021/22 beginning balance, as outlined in Table 1. It should be noted that the amount of cash that the Water Utility keeps in reserves is a product of its reserve policies (see Section 2.10).
CUSTOMER GROWTH
In recent years, the City has collected an average of approximately $176 thousand per year in Development Capacity Charges3revenue from new customers connecting to the system, which equates to a growth rate of approximately 0.59% per year. This Study assumes that this growth trend, and the associated Development Capacity Charges revenue, will continue for the duration of the next 10 years.
WATER UTILITY RATE REVENUE
Rate revenue is the revenue generated from customers for water service. The City collects rate revenue from water customers based on a fixed “Service Charge” (assessed 3 Development Capacity Charges are one-time charges to new development to pay for capacity in the utility systems.
Fund 520 (Water Operations) $2,196,000
Fund 522 (Water Capital Reserve) $979,000
Total Unrestricted: $3,175,000
Fund 920 (Restricted Water Capacity Charges) $1,400,000 Total Reserves: $4,575,000
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Packet Pg. 184 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Water Rate Study
13 based on dwelling units or meter sizes) and a water “Usage Rate” (applied to each hundred cubic feet4(“HCF”) of water use). Customers receive a monthly bill.
The Water Utility Financial Plan projects that FY 2021/22 rate revenue will be approximately $1.0 million less than the budgeted $6.237 million due to significant reductions in water usage during calendar year 2021 (encouraged largely by City programs). FY 2022/23 water usage is projected to be greater than FY 2020/21 levels, but still 10 percent less than FY 2020/21 water usage (which is characterized as a “normal” year of water usage for purposes of this Study). Per capita water demand is projected to further recover by another 5 percent in FY 2023/24 while water demand driven by customer growth is projected to continue as described in Section 2.3. Budgeted and projected rate revenues (including proposed rate adjustments) are listed in the first table in Schedule W-3.
WATER UTILITY NON-RATE REVENUES
In addition to rate revenue, the City receives additional “non-rate revenue” from sources such as miscellaneous service fees (operating revenue), Development Capacity Charges, grants, and interest revenue on investments. Projections of all non-rate revenues were based on FY 2021/22 budgeted revenues with the exception of interest income which was calculated annually based upon projected fund balances and assumed interest rate of 2.01%, which is consistent with the City’s historical interest earnings relative to its total reserve levels. Budgeted water rate and non-rate revenues are depicted in Figure 2 below and listed in detail in the first table in Schedule W-3. 4 One HCF is equal to 748 gallons
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Packet Pg. 185 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Water Rate Study
14 WATER UTILITY OPERATING AND DEBT EXPENSES
The Water Utility’s expenses include operating and maintenance expenses, debt service, and capital spending. Capital spending is addressed separately in Section 2.9. Future operating and maintenance expenses were projected based upon the budgeted expenditures from FY 2021/22 and adjusted for inflation (see Section 2.8).
Major budgeted expense categories for FY 2020/21 are depicted in Figure 3. Budgeted and projected operating and maintenance costs as well as debt service expenses are listed in detail in Schedule W-1.
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2022 Water and Wastewater Rate Study Water Rate Study
15 Figure 3: Water Utility Operating & Debt Expenses (FY 2021/22) The water utility currently pays about $1,057,000 annually on debt service related to a CSCDA 2005D Refunding of 2000B Revenue Bonds (water portion of annual payments of approximately $205,000 and will be retired in FY 2030/31), a 2014 Water Revenue Refunding Bond (annual payments of approximately $740,000 and will be retired in FY 2032/33), and a 2012 Taxable Pension Obligation Bond (annual payments of approximately $112,000 and will be retired in FY 2022/23).
While a general increase in capital spending is forecasted, this Water Utility Financial Plan does not propose any new debt issues during the planning period (see Section 2.9).
DEBT SERVICE COVERAGE
One of the requirements associated with bond financing is to maintain rates and other water system revenues at levels sufficient to meet debt service coverage requirements.
At present, the City is required to maintain water system revenues at a level that covers
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16 all ongoing operating and maintenance costs, as well as 1.20 times annual debt service.
Based on recently published guidance from Fitch Ratings5, utility systems with midrange financial profiles should maintain a debt coverage ratio (DCR) greater than 1.50 times annual debt service. The Water Utility currently has a DCR of approximately 1.6 (see Schedule W-3, Row 29) and, with the proposed rate adjustments, is expected to maintain a healthy DCR through-out the planning period. Having a high DCR value does not indicate excessive revenue but is rather an indication that the Water Utility is not overly-reliant on debt.
COST ESCALATION
Annual cost escalation factors for the various types of expenses were developed based upon a review of historical inflation trends, published inflation forecasts, industry experience, and discussions with City staff. During the projection period, all expenses are projected to increase at 4.0 percent per year through FY 2023/24 and 3.0 percent thereafter.
WATER UTILITY CAPITAL IMPROVEMENT PROGRAM
Figure 4 shows that from FY 2016/17 to FY 2019/20 the City invested modestly in capital projects to rehabilitate or improve the water system. More recently the City has increased its annual capital spending in order to pro-actively address the water system’s rehabilitation needs associated with aging wells, treatment facilities, pipes, pump stations, water tanks, and other system facilities. The proposed capital expenditures from FY 2022/23 through FY 2024/25 is significantly lower than first planned by the City’s engineering department. The capital expenditures were reduced as part of this Study to include only critical projects in order to avoid a spike in nearterm water rates. A detailed list of the planned capital projects through FY 2024/25, as well as a list of some deferred projects, is provided in Schedule W-2. The actual projects 5 As published on July 31, 2013.
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17 that are built during those years may change based on system priorities. A certain number of projects from the City’s original capital program will need to be deferred which will create a backlog of capital spending needs. In order to address the backlog of capital projects, the capital spending levels beyond FY 2026/27 is assumed to be $2.16 million (in 2022 dollars).
This financial plan is proposing that all capital spending be funded on a “pay as you go” (PayGo) basis as opposed to using a debt strategy. This decision is based on the fact that debt is typically used to address anomalous spikes in capital spending. There is not sufficient time to issue debt for the immediate spike in capital spending, and the longterm increase in capital spending isn’t a “spike” in spending but rather a sustained increase to a “new normal” level of annual re-investment in the water system’s aging infrastructure.
Figure 4: Water Utility Historic and projected capital spending
WATER UTILITY FUNDS
The financial plan model is based on the fund, reserve, and account structures currently used by the City. These structures include recent modifications to improve efficient
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18 funding of the capital improvement program. Figure 5 is a schematic diagram of the funds/reserves and major cash flows associated with the financial plan model.
The fund / reserve structure is comprised of:
Operating Fund – The Water Operating Fund (Fund 520) is the primary fund within the Water Utility. Most revenue, including rate revenues, flow into the Operating Fund and all operating and maintenance costs, including debt service payments, are paid out of this fund. Funds are also transferred from the Operating Fund to the Capital Replacement Reserve to provide funds for capital projects intended to rehabilitate and upgrade facilities. While not necessarily a roadmap for future City decisions on transfers, this financial plan shows annual transfers from the Operating Fund to the Capital Replacement Reserve sufficient to meet the capital improvement for each year in the planning period.
Capital Replacement Fund – The Capital Replacement Fund (Fund 522) is intended to serve as a mechanism for funding rehabilitation, replacement, and upgrade projects contained in the capital improvement program. The reserve is funded with annual transfers of rate revenue from the Operating Fund (see the second table in Schedule W8.B.a Packet Pg. 190 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
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19 3). Funds are then used for capital project expenditures. By establishing regular transfers from the Operating Fund, the City is able to fund capital projects in a manner that facilitates rate stability and/or modest annual rate adjustments. This reserve also helps to establish and maintain steady funding of the ongoing replacement and rehabilitation efforts of the utility system, which many utilities neglect as part of the financial obligations of long-term sustainability of service.
Water Capacity Fund – The Water Capacity Fund (Fund 920) is used to account for revenues from water system Development Capacity Charges. The City’s Development Capacity Charges are based on a system buy-in methodology. As such, capacity fee revenues reimburse the utilities for prior investment in water system capacity including debt service payments in order to help the City meet its DCR obligations. The financial plan model use available Development Capacity Charge revenues to help pay for capacity-related, planned capital improvement projects but does not foresee the need to supplement debt service payments.
CASH RESERVE POLICIES
Cash reserve policies are cash balances targets that are retained for specific cash flow needs. The target for reserves is an important component when developing a multiyear Water Utility Financial Plan and maintaining prudent reserves is an essential component of any sound financial management strategy. Utilities rely on reserves for financial stability; credit rating agencies evaluate utilities in part on their adherence to formally adopted reserve targets; and lending agencies require utilities to maintain specific debt reserves for outstanding loans. The target levels of the policies below are consistent with: 1) the City’s established policies and practices; 2) the findings of reserve studies conducted by the AWWA; 3) a healthy level of reserves for a utility per the evaluation criteria published by rating agencies (e.g., Fitch, Moody’s, and Standard & Poor’s); and, 4) Hildebrand Consulting and The Reed Group’s industry experience for similar systems.
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20 The following recommended reserve policies are based on the policies that were recommended in the 2016 rate study with some minor modifications. The policy recommendations are intended to help the City mitigate and manage financial risk while meeting service and financial obligations.
Contingency Reserve – The City currently has a policy goal (Resolution No. 139-2000) to maintain Contingency Reserves within the Operating Fund equal to 25 percent of annual rate revenue (or about $1.56 million). The purpose of the Contingency Reserve is to provide working capital and funds for unplanned operating and maintenance expenditures or revenue shortfalls resulting from reduced water sales. The balance in the Operating Fund is currently meeting the target Contingency Reserve.
Debt Service Reserve (restricted) – The Water utility also includes a Debt Service Reserve within the Water Operating Fund. The Debt Service Reserve is a restricted reserve required by some debt agreements as security against debt repayment obligations and is not available for general operating purposes. The Water Utility’s only outstanding debt that requires a debt service reserve is the CSCDA 2005D bond (for a reserve level of about $205,000).
Capital Replacement Reserve – A capital replacement reserve serves the dual purpose of (1) supporting the City’s PayGo strategy by absorbing some of the inherent fluctuations in annual capital spending and (2) serves as safety net in the event of the catastrophic failure of a major system asset (such as a pump station or a major water main). While the City does not currently maintain a targeted reserve in the Capital Replacement Fund, this financial plan proposes to establish the practice of working towards a target balance of $1.0 million during the planning period. In the future the City may wish to formalize the practice with a more detailed analysis of the appropriate target levels.
PROPOSED RATE REVENUE INCREASES
All of the above information was entered into a financial planning model to produce a 10-year projection of the sufficiency of current rate revenues to meet projected financial
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21 requirements and determine the level of rate revenue increases necessary in each year of the projection period.
Based upon the previously discussed financial data, assumptions, policies, and PayGo strategy, this Study proposes a 5-year schedule of annual rate adjustments as shown in Table 2.
It is important to note that water rates in the first year (FY 2022/23) will be modified based on the findings of the cost-of-service analysis (see Section 2.13), meaning that the percent change to individual customer bills may differ significantly from the percent change in rate revenue received by the City. This dynamic is principally driven by the recent reduction in water usage by customers, which requires rates to be increased to compensate.
The numbers provided in the first table in Schedule W-3 (cash flow proforma for the operating fund) are summarized graphically in Figure 6, which shows the Operating Fund target reserves and DCR target levels being met at all times.
Rate Adjustment Date
July 1, 2022
July 1, 2023
July 1, 2024
July 1, 2025
July 1, 2026 5.0%
Proposed Rate
Revenue Increase
2.0%
8.0%
8.0%
5.0%
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22 Schedule W-3 shows the cash flow with each of the Water Utility’s fund and the projected transfers between the Operating Fund, the Capital Replacement Fund and the Capacity Fund.
The forecasted rate increases after FY 2026/27 in Figure 6 are estimates based on longterm projections. The City will need to renew the rate analysis for those years once the time period comes closer.
WATER COST OF SERVICE & RATE STRUCTURE
The cost-of-service (COS) analysis evaluates the cost of providing water and allocates those costs to rate structure components to ensure the proposed rates are aligned with the costs to provide service. The COS analysis is performed in order to comply with Proposition 218, which requires water rates to be equitably apportioned and proportional to the cost of providing water service.
Proposed Revenue Increases: 2.0% 8.0% 8.0% 5.0% 5.0% 2.0% 2.0% 2.0% 2.0% 0.0% Debt Coverage Ratio: 1.60 1.53 2.37 3.64 3.98 5.41 6.73 6.84 6.99 7.06 11.22 $0
$1
$2
$3
$4
$5 MILLIONS
Combined Fund Balance (ending)
Target Reserve Level Minimum Reserve Levels
$0
$2
$4
$6
$8
$10
$12
FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 FY2032 Total Revenue / Expenses ($M) Non-Rate Revenue Existing Rate Revenue
Additional Rate Revenue Operating Expenses
Debt Service Rate Funded Capital Spending (cash) Expense Revenues
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23 Upon completion of the COS analysis, a rate structure analysis was performed to evaluate rate structure modifications and calculate specific rate schedules for implementation in FY 2022/23. The complete schedule of proposed rates for FY 2022/23 through FY 2026/27 is detailed in Schedule W-4.
The rate structure proposed by this Study is designed to:
Fairly and equitably recover costs through rates
Conform to accepted industry practice and legal requirements Provide fiscal stability and recovery of water system costs Meet other rate setting objectives, as described in Section 1.4 This Study employed a COS methodology that is consistent with the “commoditydemand” COSA methodology promulgated in AWWA’s Manual M1: Principles of Water Rates, Fees, and Charges (M1). This is a well-established methodology as recognized by the AWWA and other accepted industry standards.
2.13.1 Current Water Rates
The structure for the City’s current water rates follow a common industry practice with a two-part structure that is comprised of a fixed Service Charge and consumption-based Usage Charge. The Service Charge is scaled for residential accounts based on the number of dwelling units (DU) and for non-residential accounts based on the size of the meter. The current Service Charge schedule (which is assessed monthly) is summarized in Table 3.
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24 The Usage Charge is assessed based on actual water usage (measured in hundreds of cubic feet or “HCF,” which is equal to 748 gallons). The Usage Charge is a flat (or “uniform”) rate as shown in Table 3.
• Riverview Homeowners Association (HOA) - As an exception to the standard rates, the City has an agreement with the Riverview HOA based on an Order of Condemnation (1997). The agreement gives the City a land easement to access water supply wells while providing the Riverview HOA with treated water at a rate (at the time) of $0.33 per HCF, which can only be increased by general rate revenue increases imposed by the City (in this case, 2 percent in FY 2022/23). The current water usage rate for Riverview HOA is $1.44 per HCF. • Hydrant Water Sales – The City provides water through fire hydrants for construction, dust control, or other purposes. The current rate is $11.02 / HCF. It is recommended that the City continue to maintain a rate for hydrant water sales equal to two times the uniform water rate for water service. This would be a rate of $12.00 / HCF for FY 2022/23. Deposits and connection fees may also apply, as determined by the City. The higher rate is intended to reflect the extra administrative cost associated with this type of service.
Water Usage Rates ($/HCF)
All Potable Water Use $5.51
Riverview HOA (non-potable) $1.44
Hydrant Water Sales $11.02
Fixed Monthly Service Charges
Single Family $23.19
Single Family + ADU (per DU) $23.19
Multi-Family (per DU) $16.13
Non-Residential
Up to 1" Meter $37.09
1 1/2" Meter $71.54
2" Meter $113.07
3" Meter $210.02
4" Meter $348.47
10" Meter $1,593.91
Water Usage Rates ($/HCF)
All Potable Water Use $5.51
Riverview HOA (non-potable) $1.44
Hydrant Water Sales $11.02
Fixed Monthly Service Charges
Single Family $23.19
Single Family + ADU (per DU) $23.19
Multi-Family (per DU) $16.13
Non-Residential
Up to 1" Meter $37.09
1 1/2" Meter $71.54
2" Meter $113.07
3" Meter $210.02
4" Meter $348.47
10" Meter $1,593.91
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25 • County Service Area (CSA) 41 - The City also has a 1992 agreement with Sonoma County (CSA 41, previously CSA 24) which obliges the City "To sell COUNTY water at a mutually agreed rate for other utilities. Such rate may be adjusted from time to time in a nondiscriminatory manner. Rates shall be based upon a periodic proportion division of costs isolating such activities not provided to the County, including but not limited to storage, local distribution, and service maintenance including associated depreciation and debt service." City staff is currently working to update the water rates applicable to CSA 41, and these rates were not addressed by this report.
2.13.2 Customer Statistics
Water rate calculations are based on a number of factors related to the City’s customer base. Factors include the number of customers, customer classes, meter size, and actual water usage. In FY 2020/21 the City provided water service through 4,556 water service connections (customer accounts). Single-family customers comprise about 83 percent of the customer accounts and about 59 percent of annual water usage. Multifamily customer accounts make up about 2 percent of the customer accounts and 7 percent of annual water usage. Commercial customer accounts make up about 11 percent of the customers and 19 percent of annual water usage. Irrigation customer accounts make up about 4 percent of the customers and about 14 percent of the water usage.
While there are extremes on both the low and high ends, average monthly single-family water usage is about 10 HCF (about 251 gallons per day). Water usage for condominium units and multi-family dwellings is lower than for single-family residences for a variety of reasons including fewer people per household and limited landscape irrigation (or irrigation that is separately metered). Non-residential water usage can vary dramatically, and non-residential customers are served by meters of varying sizes to accommodate the differences in water demands.
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26 2.13.3 Meter Equivalencies
Service connections with different meter sizes can place different demands on the water system. For example, much more water can be delivered through a 4” water meter than through a 1” meter. The current rate structure is based on hydraulic capacity factors which relate to the potential demands on the water system from customers with different sized water meters. These factors are used to determine the number of equivalent meters represented by the total customer base with variable meter sizes.
Table 4 presents the rated flow capacity of various meter sizes and how these are used to develop hydraulic capacity factors. For purposes of rate analysis, a 1” meter is assigned a hydraulic capacity factor of 1.0. The ratios of rated flow capacities of the various meter sizes compared to the capacity of a ¾” meter are used to determine the capacity factors for other meter sizes. This capacity relationship across meter sizes is used to allocate capacity-related fixed costs to various customers. This is also a common rate-setting practice used in the water industry.
The same concept is used for allocating costs among residential accounts. The water demands of single-family residential accounts are established as the baseline with hydraulic capacity factor of 1.0, which makes each single family home dwelling unit equivalent to a ¾” meter. The hydraulic capacity factor for a multifamily dwelling unit (DU) is inferred based on the City’s historical water usage data which shows that the average multifamily dwelling unit uses about 54% as much water as the average single family dwelling unit. As such, the hydraulic capacity factor for a multifamily DU is set at
0.536 (see Table 4). Similarly, the hydraulic capacity factor for single-family accounts with accessory dwelling units (ADUs) was measured to be 0.729 per DU.
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27 Table 5 summarizes customer account and water usage data used in water rate calculations for FY 2022/23. Account information is based on the utility billing data from FY 2019/20; however water usage was reduced by 10% to account for recent water usage trends.
Meter Size
Rate Flow
Capacity (gpm)1
Hydraulic
Capacity Factor
Single Family 30.0 1.00
Single Family with ADU (per DU) (na) 0.729
Multi-family (per DU) (na) 0.536
1" 50 1.667
1 1/2" 100 3.333
2" 160 5.333
3" 300 10.00
4" 500 16.667
6" 1350 45.00
8" 1800 60.00
10" 2400 80.00
12" 3375 112.50
1 AWWA M1 Manual 7th Edition, Table B-2
Non-Residential Meter Size Total Annual Water
1" 1.5" 2" 3" 4" Accounts Use (HCF)
Single Family Residential 3,794 3,794 394,000
Single Family with ADU 280 140 21,200
Multi-Family Residential 938 87 52,200
Non-Residential 368 33 77 10 5 493 139,500
Irrigation 109 30 44 3 3 189 96,900
Riverview HOA 4 4 8,500
Totals: 5,012 477 63 125 13 8 4,707 712,300
No. of 1" Equiv. Meters: 4,501 795 210 667 130 133 6,436 Operating Capacity (gpm) 1: 30 50 100 160 300 500
Hydraulic Capacity Factor: 1.0 21.67 3.33 5.33 10.00 16.67 1 Source: C701-12 Singlejet Type for meters 1" to 4" and C704-15 Propeller Type for meters 6" and larger, M1, Table B-2, Seventh Edition 2 All single family homes are given a factor of 1.0 while multifamily DU are assigned a value of 0.54 based on the relationship of average single family demand to multi-family demand per DU. Single family accounts with ADUs are given a factor of 0.73 per dwelling unit.
Residential
Dwelling
Units
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28 2.13.4 Water Rate Calculations
There were two primary steps in calculating the proposed water rates. These are:
▪ Determine annual water rate revenue requirements
▪ Analyze the cost of providing service and proportionately allocate costs to be recovered from customers either through the Service Charge or the Usage Charge.
2.13.4.1 WATER RATE REVENUE REQUIREMENTS
The ten-year Water Utility Financial Plan was used to identify the water rate revenue required to meet financial obligations for each fiscal year of the planning period. The water rate calculations presented herein are based on the revenue to be generated in FY 2023 and reflects the proposed 2 percent overall rate revenue increase to be incorporated in the Water Utility’s Financial Plan.
2.13.4.2 WATER COST-OF-SERVICE ANALYSIS
Once the annual water rate revenue requirement was determined using the financial planning model, the next step in the rate-setting process was to allocate costs to be recovered through the various rate elements. Water rate calculations contained herein are intended to generate water rate revenue equal to the revenue requirement from the water customers. The manner in which each customer is responsible for the water utility’s costs is the determining factor in the cost-of-service analysis.
The cost allocation approach presented by this Study is consistent with the methodology that was used in the 2016 rate study. Used herein the methodology is commensurate with the available data and the requirement to fairly and reasonably reflect the cost difference to provide services to different types of customers.
The cost allocation methodology begins by assigning all costs to one of three revenue recovery categories (see Table 6). The cost allocation process is performed with data available in the City’s detailed budget and other documents. The three revenue recovery categories include:
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29 • Customer charges are a fixed revenue that are used to recover fixed costs such as meter reading and billing that tend to vary as a function of the number of customers being served. Customer charges are assessed to each customer account equally (regardless of size). Table 6 shows that a portion of employee salaries and general administration costs are designated to be recovered through this charge.
• Meter charges are also a fixed revenue and are used to recover some of the fixed costs associated with the capacity of the water system and the ability to serve the demands of active customers. These fixed costs include some of the costs associated with the capital program, debt service, maintenance, and certain fixed operating costs (see Table 6).
The sizing of the water system is based on the potential demand that each customer could place on the water system. Customers that have the potential to place a greater burden on the capacity of the water system (based on the size of their meter or number of dwelling units) should bear a greater share of these costs.
Meter sizes and number of dwelling units reflect the potential demand that customers could place on the water system at any given time and are general indicators of each customer’s capacity requirement. A customer with a large meter size (or numerous dwelling units) will be assigned a larger share of fixed capacity-related costs compared to a customer with a smaller meter (or fewer dwelling units) based on the ratios summarized in Table 4. • Usage charges are intended to recover all variable costs that vary in response to the amount of actual water use and some fixed costs that are reasonably allocated on the basis of water use. Utilities and fuel is an example of variable costs that are recovered through the usage charges (see Table 6). Even though some of the costs that are allocated to the usage category are fixed, rather than variable, the costs are tied to the utility’s long-term water demands. As such, it is reasonable to allocate a portion of fixed costs to customers on the basis of usage, rather than the capacity relationship expressed by meter size and hydraulic.
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30 Table 6 summarizes how the FY 2023 revenue requirement of $6,253,000 is comprised of operating and maintenance costs, debt service obligations, and cash-funded capital spending (as derived from the FY 2021/22 operating budget, current debt repayment schedules, and the 10-year capital spending budget, respectively), along with (offsetting) budgeted non-rate revenues and the application of available reserves. It also illustrates how the budget categories that make up the revenue requirement are each assigned to one or more of the three (previously described) revenue recovery categories. The variable costs are assigned entirely to the usage charge category, while variable costs are generally recovered 30:70 from the meter charge and usage charge, respectively (with some exceptions). These are reasonable allocations to the different revenue recovery categories and ensure that water ratepayers will pay for the cost of service, both through their fixed charges and their usage charges.
Row 12 represents the use of reserves (treated as a source of funds and therefore a credit in this table) and the allocation percentages are calculated based on the indirect allocation method (the overall allocation of costs from Row 1 through Row 8).
Once all costs have been allocated, the total for each revenue recovery category is divided by the respective number of service units to arrive at a unit cost for each charge.
For example, the costs to be recovered through the customer charges are divided by the total number of dwelling units / non-residential accounts. As shown in Table 6, those costs amount to $190,000, which are divided by the 4,708 accounts, for a unit cost of $3.36 per account. Similarly, the total cost allocated to the meter charge category is divided by the total equivalent meters in the system (6,436). The total cost allocated to the usage charge category is divided by the estimated annual units of water sales (712,300 HCF).
The allocations result in 3.0 percent of costs assigned to the customer charge component, 28.6 percent to the meter charge component, and 68.4 percent to the usage charge component. These percentages are similar but not identical to those developed in the 2016 water rate study. Changes to the results are a natural by-product of changes to the Water Utility’s cost profile (such as the increase in capital spending).
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31 2.13.5 Service Charges
Service Charges are a combination of the customer charge and meter charge identified through the cost-of-service analysis. Service Charges apply to all customer water bills, regardless of the amount of water actually used. Customers with active accounts that use no water during a month should still be required to pay the service charge, as service is immediately available to them. In calculating Service Charges, customer charges are assessed equally to all customers and meter charges are allocated based on dwelling units or meter size in relation to the hydraulic capacity associated with the various account types and meter sizes.
The proposed monthly Service Charge in FY 2023 for a single-family dwelling unit is $26.49, as shown in Table 7. This value was calculated by adding the monthly customer charge of $3.36 to the monthly meter charge of $23.13 (also found at the bottom of Table 6).
Test Year
Budget Expense Budget Customer Meter Usage Customer Meter Usage Operating Expenses
1 Salaries and Benefits $2,626,000 5% 30% 65% $131,300 $787,800 $1,706,900 2 Utilities & Fuel $291,000 100% $291,000
3 Professional Services $383,000 30% 70% $114,900 $268,100 4 Maintenance & Operations $820,000 30% 70% $246,000 $574,000 5 General Administration $718,000 15% 15% 70% $107,700 $107,700 $502,600 6 Conservation $31,000 100% $31,000
Capital
7 Existing Debt $1,063,000 30% 70% $318,900 $744,100
8 Cash Capital $2,230,000 30% 70% $669,000 $1,561,000
Credits & Other
9 Non Rate Revenue & Credits ($245,000) 100.0% ($245,000) 10 Use of Reserves ($1,664,000) 2.9% 27.5% 69.6% ($49,000) ($458,000) ($1,158,000) 11 Rate Revenue Requirement: $6,253,000 Totals: $190,000 $1,786,300 $4,275,700 12 Units of Service: 4,707 6,436 712,300
Accounts Equivalent
Meters
HCF
13 Unit Rate: $3.36 $23.13 $6.00
per account per
month
per eq. meter
per month
per HCF
Revenue Recovery Categories
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32 For larger meters, the meter charge portion of the Service Charge increases in proportion to the meter equivalency, while the customer charge remains the same for all meter sizes. The variation of Service Charges through meter sizes reflects the fact that a small portion of water system costs are directly related to the number of customers served. A majority of fixed costs are allocated on a capacity basis as reflected by the meter size. The changes to the Service Charges across the range of meter sizes more objectively reflect a consistent proportioning of the cost of providing service to customers of varying meter sizes.
2.13.6 Water Usage Rates
Under the proposed water rates for FY 2022/23, the uniform water rate would be $6.00 per HCF (see the bottom of Table 6).
2.13.7 Proposed Water Rate Schedules
Schedule W-4 summarizes the proposed water rate schedule for the next 5 years. The first rate increase will be effective on July 1, 2022. The proposed water rates are designed to generate the rate revenue requirements as identified by this Water Utility Financial Plan.
Account Type / Meter Size
Monthly Customer
Charge
Hydraulic
Capacity Factor
Monthly
Capacity Charge
Monthly Service
Charge
(A) (B) (A + B)
Single Family $3.36 1.0 $23.13 $26.49
Single Family with ADU (per DU) $3.36 0.73 $16.86 $20.22 Multi-family (per DU) $3.36 0.54 $12.39 $15.75
1" $3.36 1.67 $38.55 $41.91
1 1/2" $3.36 3.3 $77.10 $80.46
2" $3.36 5.3 $123.36 $126.72
3" $3.36 10.0 $231.30 $234.66
4" $3.36 16.7 $385.50 $388.86
6" $3.36 45.0 $1,040.85 $1,044.21
8" $3.36 60.0 $1,387.80 $1,391.16
10" $3.36 80.0 $1,850.40 $1,853.76
12" $3.36 112.5 $2,602.13 $2,605.49
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2022 Water and Wastewater Rate Study Passalacqua Pumping Surcharge 33 PASSALACQUA PUMP-STATION PUMPING SURCHARGE
A 2018 report by The Reed Group (“Passalacqua Pump-Station Pumping Surcharge”, December 14, 2018) calculated a surcharge to recover the Passalacqua PumpStation’s operation, maintenance, repair, and replacement costs, which applies to applicable water usage within the development. That surcharge is being updated with this Study.
The Saggio Hills Area Plan (Montage Resort and related residential development) encompasses 258.5 acres located east of Healdsburg Avenue just north of Parkland Farms. It provides for the development of a 130-unit resort hotel and associated amenities (e.g., spa, restaurant, wedding pavilion, etc.), 70 resort residences, a community park, public and private open space and trails, a pump station, and a City fire substation). As a requirement for development, a new water pump station (the Passalacqua Pump-Station) was built to provide water for normal use and fire flows.
The Passalacqua Pump Station Zone of Benefit encompasses of portion of the Saggio Hills Area Plan that includes the Montage Resort, the low-density residential area, and associated landscaping. Areas that are within the Saggio Hills Area Plan but are located below the Pump Station are not served by the pump therefore not subject to the Pumping Surcharge. These include the “Affordable Housing” area, the Fire Station, the Community Park, and certain landscaped areas.
The pump station is dedicated to the City’s water utility. Under the terms of the development agreement, the cost to operate and maintain these facilities is allocated to the water customers that will benefit from the facilities, as indicated in the agreement’s language below:
“Developer shall be aware of and agree to the development and establishment of a surcharge for the additional costs (including but not limited to cost of energy, fuel, labor and materials for maintenance and replacement of motor controls, pumping equipment, building maintenance, etc.) associated with the operation and maintenance (O&M) of a new water pumping station. The new pumping station is necessary, and only benefits the Saggio Hills development,
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Packet Pg. 205 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Passalacqua Pumping Surcharge 34 in order to provide peak domestic flow, fire flow and landscape irrigation at acceptable pressures. The monthly surcharge will be billed to all future Saggio Hills Development water users as a component of the monthly water bill based on actual usage.”6
The cost of these facilities is allocated based on volume of water usage, as indicated in the agreement’s language below:
“Because the Pump Station will serve only the Resort and the Residences, the City requires that the costs and expenses that the City incurs in the ownership, operation, maintenance, repair and replacement of the Pump Station be paid by and allocated to the owners of the Resort and the Residences as part of a "Zone of Benefit" under the City's water billing policies and practices. The City therefore shall have the right to from time-to-time impose on each water bill for the Resort and each of the Residences a surcharge (based on a charge assessed against each cubic foot of water consumed, which charge shall be the same for the Resort and each of the Residences) sufficient to reimburse the City for such costs and expenses and to provide a reserve for replacement of the Pump Station and/or components thereof. The Developer shall disclose in writing to each purchaser of a Residence the intent and right of the City to impose such surcharge.”
7 The methodology for calculating the Pumping Surcharge follows the same methodology as the 2018 study but replaces the cost estimates from that study with actuals cost data that is now available. The methodology consists of the following steps:
6 From TM Conditions of Approval (Resolution 18-2011), C. "Public Works", Condition 4. 7 From the Development Agreement, Exhibit B, Section 16 "Infrastructure", subsection (f) "Pump Station.
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Packet Pg. 206 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Passalacqua Pumping Surcharge 35 1) Calculate the annual operating and maintenance costs for the pump station, including labor hours and direct expenses (parts, services, electricity, etc.). 2) Calculate the annual depreciation expense of the pump station infrastructure based on actual construction costs and expected useful life of each component.
3) Estimate the total build-out water demands within the Zone of Benefit. 4) Estimate the trajectory of the growth in annual water demands that may occur as the Zone of Benefit develops towards build-out.
5) Establish a financial plan (cash flow model) based on projected water demands that calculates the annual unit rates (in dollars per hundred cubic feet (HCF)) that will be sufficient to meet each year’s revenue requirements of the pump station (including the building of a sinking fund for the repair and replacement of the facility).
6) Establish a Pumping Surcharge Schedule that defines the unit rate of the Pumping Surcharges based on varying levels of annual water demand. 7) Adopt a policy to adjust the Pumping Surcharge schedule based on annual inflation and to periodically update surcharge calculations based on actual costs, water demands, and experience.
2.14.1 Source Data
The following data was used for calculating the proposed surcharge:
• Water System Estimated Water Demand Saggio Hills, Carlile Macy, April 2007 (Carlile, 2007)
• Montage PS Surcharge and Meter Maintenance Charge update 2021 v1 (Microsoft Excel file), as updated by City staff
• Landscape Irrigation Calculations, Sheet No. LI-6.01-0, The Robert Green Company, July 28, 2017 (Green, 2017)
• Data provided by City staff regarding water usage projections through buildout.
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Packet Pg. 207 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Passalacqua Pumping Surcharge 36 2.14.2 Calculations
This section introduces a series of tables which summarize the data and calculations that were used to calculate the Pumping Surcharge. The sequencing of the exhibits follows the steps in the methodology described in Section 2.14.
Table 8 summarizes the annual operating and maintenance costs for the pump station, including labor hours, direct expenses (parts, services, electricity, etc.), and depreciation expense. While the depreciation expense is not an actual cash expense, it represents the amount that should be set aside in a capital replacement sinking fund reserve for future repair and replacement costs. Most cost information came from updates provided by City staff based on actual costs and time spent on maintenance. The exhibit footnotes to Table 8 provide additional explanation. The estimated total annual operation, maintenance, and replacement expenses (in 2021 dollars) is $152,000.
Table 9 provides a summary of the estimated water demands within the Zone of Benefit. These numbers are taken from the 2018 report, which began with the demand estimates from the 2007 study (Carlile, 2007). There is insufficient actual flow data to provide a meaningful update to these estimates. Average flow rates expressed in gallons per day were converted to 100 cubic feet (HCF) per year. Adjustments were then made for the resort and associated uses (e.g., guest/employee uses and commercial uses) to account for the expected variations in the demands due to seasonality. In the interest of documentation, this exhibit shows the forecasted water demands for both “above” the Pump Station (i.e., the Zone of Benefit”) and “below” the Pump Station (not included in the Pumping Surcharge calculation). Total annual water usage above the pump station at buildout is estimated at 29,729 HCF.
Table 10 provides a 10-year cash flow projection based on estimated annual water demands, the total annual costs and resultant Pumping Surcharge rate ($/HCF). The exhibit shows the capital replacement sinking fund set aside as a “Transfer In” and demonstrates how the sinking fund will accumulate over the 10-year period with the
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Packet Pg. 208 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Passalacqua Pumping Surcharge 37 purpose of periodically replacing components as they reach the end of their useful life (for example the Booster Pumps in Year 10).
Annual
Hours
Hourly
Rate2
Annual
O&M Cost1
Annual Operation & Maintenance Costs
Water Distribution Operator3 142 $115.00 $16,300
Landscape Maintenance Worker4 na na $7,200
Outside Labor (Generator Checks/Testing/Service) $2,200 Total Annual Labor Costs $25,700
Equipment O&M Part5 $14,300
Electrical Charges6
Customer Charges $1,000
Demand Charges $11,900
Usage Charges $4,000
Internet (SCADA)/Phone (Fire Alarm) $3,600
Total Annual Materials & Services $34,800
Total Annual Operation & Maintenance Costs $60,500
Estimated
Capital Costs7
Expected
Useful Life
Annual
Replac. Cost
Annual Replacement Costs
Site Hardscape $65,000 15 $4,300
Retaining Wall $124,000 30 $4,100
Buried Piping $72,000 50 $1,400
Building $185,000 50 $3,700
Roof $13,000 20 $700
Paint $24,000 10 $2,400
Pumps, High $229,000 15 $15,300
Pumps, Booster $149,000 10 $14,900
Above Ground Piping $322,000 50 $6,400
HVAC $52,000 25 $2,100
Controls8 $203,000 12 $8,500
Generator $193,000 15 $12,900
Electrical8 $607,000 25 $12,100
Wiring and Grounding $112,000 50 $2,200
Pumping Surcharge Update9 $2,500 5 $500
Total Annual Replacement Cost $91,500
Total Annual O&M and Replacement Costs $152,000
9 Pumping surcharge updated every 5 years at $2,500 per update in conjunction with general water rate study. 4 Includes pump station landscape maintenance, based on actual costs from FY 2019/20 5 Annual O&M parts based on 1 percent of cost of pumps, HVAC, controls, generator, and electrical equipment. 7 Based on actual capital costs
8 Only 50% of controls/electrical costs are included in the depreciation expense calculation because equipment will be re-used. 6 Demand charge based on monthly exercise of high lift pumps. Usage charge based on 42 gallons per minute at 320 feet of lift. 1 Cost information source: Updated by City staff in January 2021 3 Operator hours based on actual hours from FY 2019/20 as provided by City staff 2 Hourly rates taken from the City's Master Fee Schedule effective July 1, 2020 & include salaries, benefits, and overhead costs.
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Packet Pg. 209 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Passalacqua Pumping Surcharge 38 Total Potential
Demand
(gpd) 1
Total Potential
Demand
(HCF/Yr) 1
Total Expected
Demand
(HCF/Yr) 2
"Above" Pump Station
Low-Desnity Residential 28,400 13,858 13,858
Resort
Guest & Employee Use 20,500 10,003 6,502
Commercial Use
Entry Building 7,700 3,757 2,442
Spa Building 8,300 4,050 2,633
Conference Center 1,500 732 476
Function Areas & Pool 900 439 285
Landscape Use3 45,800 22,349 3,533
Vineyard Irrigation Use4 2,500 1,220 n/a
Total "Above" Pump Station 115,600 56,409 29,729
1 Data source: Carlile, 2007.
% Capacity
Summer 90%
Fall 75%
Winter 35%
Spring 60%
Annual Average 65%
Gals. Per Year HCF Per Year
Sub-Meter A / Controller A 610,889 817
Sub-Meter B / Controller B 878,269 1,174
Sub-Meter C / Controller C 758,394 1,014
Sub-Meter D / Controller D 394,913 528
Sub-Meter E / Controller E n/a n/a Recycled Water 4
Sub-Meter F / Controller F n/a n/a Vineyard / GW 4
2,642,465 3,533
3 From Sub-Meters A - D, as follows: Source: Green, 2017 4 Areas to be irrigated with recycled water or groundwater (GW) have been excluded from annual water demand calculations for pumping surcharge purposes.
2 Annual demand totals for resort elements reflects seasonal capacity (occupancy/utilization) estimates from water demand study, as shown below.
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Packet Pg. 210 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Passalacqua Pumping Surcharge 39 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Estimated Water Demands (HCF) 15,871 21,414 22,454 23,493 24,532 25,572 26,611 27,651 28,690 29,729 Hypothetical Pumping Surcharge ($/HCF) 1 $9.20 $7.52 $6.49 $6.14 $6.14 $5.80 $5.80 $5.45 $5.45 $5.11 Pumping Surcharge Revenue 2 $145,981 $161,131 $145,718 $144,359 $150,746 $148,312 $154,341 $150,832 $156,501 $151,917 Annual Pump Station Costs 3, 4
Labor Costs $ (25,700) $ (25,700) $ (25,700) $ (25,700) $ (25,700) $ (25,700) $ (25,700) $ (25,700) $ (25,700) $ (25,700) $ (30,800) $ (30,800) $ (30,800) $ (30,800) $ (30,800) $ (30,800) $ (30,800) $ (30,800) $ (30,800) $ (30,800) Electrical Usage $ (2,135) $ (2,881) $ (3,021) $ (3,161) $ (3,301) $ (3,441) $ (3,580) $ (3,720) $ (3,860) $ (4,000) Replacement Cost (to Sinking Fund) $ (91,500) $ (91,500) $ (91,500) $ (91,500) $ (91,500) $ (91,500) $ (91,500) $ (91,500) $ (91,500) $ (91,500) Total Annual Costs $ (150,135) $ (150,881) $ (151,021) $ (151,161) $ (151,301) $ (151,441) $ (151,580) $ (151,720) $ (151,860) $ (152,000) Annual Surplus/(Deficit) 5 $ (4,154) $ 10,250 $ (5,304) $ (6,802) $ (555) $ (3,128) $ 2,760 $ (889) $ 4,641 $ (83) Cumulative Surplus/(Deficit) $ (4,154) $ 6,096 $ 792 $ (6,009) $ (6,564) $ (9,692) $ (6,932) $ (7,821) $ (3,179) $ (3,263) Pump Station Sinking Fund 6
Beginning Balance $ - $ 91,500 $ 180,500 $ 272,000 $ 363,500 $ 455,000 $ 546,500 $ 635,500 $ 727,000 $ 818,500 Transfer In $ 91,500 $ 91,500 $ 91,500 $ 91,500 $ 91,500 $ 91,500 $ 91,500 $ 91,500 $ 91,500 $ 91,500 New Paint 7 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ (24,000) Replace Booster Pumps 7 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ (149,000) Pumping Surcharge Update 7 $ - $ (2,500) $ - $ - $ - $ - $ (2,500) $ - $ - $ - Ending Balance $ 91,500 $ 180,500 $ 272,000 $ 363,500 $ 455,000 $ 546,500 $ 635,500 $ 727,000 $ 818,500 $ 737,000 2 Calculated based on estimated annual water demand times pumping surcharge. 3 Electrical usage costs vary with annual water demand. All other costs assumed to be fixed. 4 All costs presented in current dollars. 5
Schedule of pumping surcharges adjusted to minimize annual surplus/(deficit). 6 Pump station sinking fund should be established to help ensure funds are available for scheduled replacements. 7 Pumping surcharge updates, new paint, and replacement of booster pumps are the first replacement items based on estimated useful live of pump station components. 1 Actual Pumping Surcharge for any given year will be based on the actual water demands from the previous year.
Materals & Services
(Excluding Electrical Usage)
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Packet Pg. 211 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Passalacqua Pumping Surcharge 40 Table 11 provides the proposed Passalacqua Pump-Station Pumping Surcharge schedule given a range of annual water demands. As development proceeds and water demand increases the amount of the Pumping Surcharge will decline. Annual revenues, however, are intended to approximately match annual costs, including contributions to the capital replacement sinking fund.
The proposed Pumping Surcharge schedule shown in Table 11 should be formally adopted by the City in accordance with the requirements of California Constitution Article XIIID (Proposition 218). Because general inflation will affect both operation and Pumping Surcharge ($/HCF)1
Previous Fiscal Year's Aggregate Water Demand 2
Up to 10,000 HCF $8.56
10,001 to 12,000 HCF $8.21
12,001 to 14,000 HCF $7.87
14,001 to 16,000 HCF $7.52
16,001 to 18,000 HCF $7.18
18,001 to 20,000 HCF $6.83
20,001 to 22,000 HCF $6.49
22,001 to 24,000 HCF $6.14
24,001 to 26,000 HCF $5.80
26,001 to 28,000 HCF $5.45
28,001 to 30,000 HCF $5.11 <-- Est. Buildout
30,001 to 32,000 HCF $4.77
32,001 to 34,000 HCF $4.42
34,001 to 36,000 HCF $4.08
36,001 to 38,000 HCF $3.73
38,001 to 40,000 HCF $3.39
Over 40,000 HCF $3.04
Footnotes:
1 Proposed pumping surcharge schedule for FY 2022/23. This entire schedule should be adjusted for inflation at the beginning of each fiscal year, as described in the report. 2 Each subsequent fiscal year the pumping surcharge is adjusted based on the water demand from the previous fiscal year, in accordance with the schedule.
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Packet Pg. 212 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Passalacqua Pumping Surcharge 41 maintenance costs and capital replacement costs it is recommended that the City adjust the entire Pumping Surcharge schedule annually, at the beginning of each fiscal year, based on changes in the San Francisco-Oakland-Hayward Consumer Price Index (SF-CPI). Annual inflationary adjustments for up to five years can be approved as part of the Proposition 218 rate approval process in accordance with Government Code Section 53756. Any additional adjustments after five years (i.e., after FY 2026/27) would require a new Proposition 218 process and City Council approval.
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Packet Pg. 213 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Special Meter Maintenance Charge 42 SPECIAL METER MAINTENANCE CHARGE
The City serves a single meter assembly for the Montage resort which is much larger than any other water service connection within the City, and the dual-purpose (fire and domestic flows) is atypical relative to other meters maintained by the City.
Because of the unique circumstances for this particular situation, it is appropriate to impose a separate monthly charge for meter maintenance and replacement. This charge is in addition to the monthly service charge and the uniform water usage rate imposed by the City associated with this water service.
Table 12 summarizes the calculation of a monthly meter maintenance and replacement charge for the dual-purpose compound water meter at the Montage resort development. All costs are expressed in current dollars. A 15-year service life for the meter assembly has been assumed and is believed to be reasonable for this type of application. The cost analysis results in a monthly meter maintenance and replacement charge of $284.83. This amount includes a credit for the estimated meter maintenance and replacement charge implicitly embedded in the monthly service charge for a standard 3” meter. The credit is based on the installation cost for a 3” meter, as contained in the City’s Master Fee Schedule for FY 2019/20.
The proposed monthly maintenance and replacement charge should be formally adopted by the City in accordance with the requirements of California Constitution Article XIIID (Proposition 218). The calculations presented herein are in current dollars. Because general inflation will affect both maintenance and capital replacement costs it is recommended that the City adjust the monthly charge annually, at the beginning of each fiscal year, based on changes in the San FranciscoOakland-Hayward Consumer Price Index (SF-CPI). Annual inflationary adjustments for up to five years can be approved as part of the Proposition 218 rate approval process in accordance with Government Code Section 53756. Any additional adjustments after five years (i.e., for fiscal year 2023 - 2024) would require a new Proposition 218 process and City Council approval.
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Packet Pg. 214 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Special Meter Maintenance Charge 43 Annual
Hours
Hourly
Rate1
Annual
O&M Cost2
Annual Maintenance Costs
Water Distribution Operator312 $115.00 $1,380
Maintenance Parts4
$282
Credit for 3" Meter Maint. & Replac.5$ (217.67)
Total Maintenance Costs $1,444
Estimated
Meter Cost
Expected
Useful Life
Annual
Replac. Cost
Annualized Life Cycle Replacement Cost
10" Meter w/ 2" Bypass6$28,166 15 $1,878
Labor and Misc. Parts7$1,444 15 $96
Total Annualized Replacement Cost $1,974
Total Annual Maintenance & Replacement Costs $3,418
MONTHLY MAINTENANCE AND REPLACEMENT CHARGE8 $284.83
Footnotes:
4 Miscelleneous maintenance parts estimated at 1% of original cost of the meter assembly. 5 Credit for the estimated meter maintenance and replacement costs for a 3" meter, which is embedded in the standard monthly service charge to be imposed for this installation. 6 Based on a 2018 quote for meter assembly from Pace Supply Corp. and 20 year service life and escalated by the CPI to 2021.
7 Assumes labor and miscellaneous parts for replacement is the same as annual maintenance effort. 8 To be imposed for this installation in addition to the monthly service charge for a standard 3" water meter. 3 Based on actual hours spent during FY 2019/20 as provided by City staff 1 Hourly rate, from the City's Master Fee Schedule effective July 1, 2020, includes salaries, benefits, and overhead costs.
2 Minor discrepencies due to rounding.
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Packet Pg. 215 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Water Shortage Rate Surcharge 44 WATER SHORTAGE RATE SURCHARGE
This section presents recommended financial strategies in the event of drought, including Water Shortage Rate Surcharges, which are to be overlaid on then-current water rates during the time that a water shortage is declared by the City. Water shortage surcharges would be temporary.
The Water Shortage Rate Surcharge is a tool the City would use to reduce the (potentially severe) financial impacts associated with reduced water sales and increases in operating costs during a drought event. The multi-pronged approach includes implementing the temporary surcharge (see Row 24 of Table 13), reducing capital spending (see Rows 25 & 26 of Table 13), and relying (modestly) on reserves to help bridge the financial deficit (see Row 27 of Table 13).
The proposed updates to the City’s Water Shortage Surcharges addresses the requirements of California Senate Bill (SB) 6068, which has directed (some) water utilities to establish water shortage contingency plans that include 6 stages of shortage for its water shortage contingency planning. In the future, the State will issue directives to public water utilities within the construct of this 6-stage system, therefore the proposed updates to the City’s water shortage strategy are consistent with the framework being used by state regulators.
Table 13 presents:
1) The water usage reduction goals (by stage) as dictated by SB 606 (Row 1) 2) The assumed actual water use reduction during each respective stage (Row 2) 3) The proposed Water Shortage Rate Surcharge, expressed as a percent increase to all water rates (Rows 5 & 6)
4) The changes in revenue for each respective stage (total revenue in Row 7) 8 Codified as Water Code Section 10632
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Packet Pg. 216 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Water Shortage Rate Surcharge 45 5) The changes in expenditures for each respective stage (Rows 10 through 16) including the proposed reduction in capital spending (Rows 25 & 26) 6) The financial deficit that will occur even with the mitigating measures (Row 27) It should be noted that the temporary Water Shortage Rate Surcharges would only partially assist in covering the costs of providing water service during shortage conditions. Revenue from the surcharges would help bridge the financial deficit and would not exceed the cost of providing service. The Water Shortage Rate Surcharges and reduction in capital spending have been calibrated to yield an overall deficit in the general range of $200 thousand, regardless of the stage. Given the City’s reserve policies, this size of a deficit was deemed sustainable for the duration of an extended drought.
Under normal water supply conditions and in shortage Stages 1 (with voluntary measures), the then-current water rate structure remains in place. Beginning in Stage 2, a Water Shortage Rate Surcharge of 6 percent will be added to the then-current Water Usage Rates and fixed Service Charges. The surcharge will increase to 10 percent in Stage 3, 15 percent in Stage 4, 20 percent in Stage 5, and 24 percent in Stage 6.
Under normal water supply conditions and in shortage Stages 1, the planned levels of capital spending remain in place. The planned level of capital spending won’t be changed until Stage 2 at which time it will be reduced by 5 percent, followed by 15 percent in Stage 3, 25 percent decrease in Stage 4, a 40 percent decrease in Stage 5, and a 60 percent decrease in Stage 6.
The Water Shortage Rate Surcharge implemented in Stages 2 through 6 helps recover a portion of the revenue from the shortfall. The proposed Water Shortage Rate Surcharge policy shown in Table 13 (Row 23) should be formally adopted by the City following the requirements of California Constitution Article XIIID (Proposition 218).
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Packet Pg. 217 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Water Shortage Surcharge 46 Normal
Supply
Conditions1
Stage 1
Minor
Shortage
Stage 2
Moderate
Shortage
Stage 3
Significant
Shortage
Stage 4
Urgent
Shortage
Stage 5
Critical
Shortage
Stage 6
Severe
Shortage
1 Use Reduction Goal --> n/a 0% to 10% 10% to 20% 20% to 30% 30% to 40% 40% to 50% > 50% 2 Modeled Use Reduction --> 5% 15% 25% 35% 45% 55%
Revenues
3 Service Charge Revenues $2,016,000 $2,016,000 $2,016,000 $2,016,000 $2,016,000 $2,016,000 $2,016,000 4 Water Usage Charge Revenues 2 $4,273,000 $4,059,000 $3,632,000 $3,205,000 $2,777,000 $2,350,000 $1,923,000 5 Other Revenue and Transfers In $61,000 $61,000 $61,000 $61,000 $61,000 $61,000 $61,000 6 Use of Reserves4 $566,000 $566,000 $566,000 $566,000 $566,000 $566,000 $566,000 7 Total Sources $6,916,000 $6,702,000 $6,275,000 $5,848,000 $5,420,000 $4,993,000 $4,566,000 8 (% of Normal) 97% 91% 85% 78% 72% 66%
9 Revenue Deficit due to Drought (na) (214,000) (641,000) (1,068,000) (1,496,000) (1,923,000) (2,350,000) Expenditures and Transfers
10 Employee Costs $2,525,000 $2,525,000 $2,525,000 $2,525,000 $2,525,000 $2,525,000 $2,525,000 11 Utilities & Fuel $280,000 $273,000 $259,000 $245,000 $231,000 $217,000 $203,000 12 Professional Services $368,000 $368,000 $368,000 $368,000 $368,000 $368,000 $368,000 13 Maintenance & Operations $788,000 $788,000 $788,000 $788,000 $788,000 $788,000 $788,000 14 General Administration $623,000 $623,000 $623,000 $623,000 $623,000 $623,000 $623,000 15 Conservation 5 $30,000 $32,000 $39,000 $54,000 $82,000 $137,000 $250,000 16 Typical Capital Spending $2,302,000 $2,302,000 $2,302,000 $2,302,000 $2,302,000 $2,302,000 $2,302,000 19 Total Expenditures $6,916,000 $6,911,000 $6,904,000 $6,905,000 $6,919,000 $6,960,000 $7,059,000 20 (% of Normal) 100% 100% 100% 100% 101% 102%
21 Change in Expenses due to Drought (na) -$5,000 -$12,000 -$11,000 $3,000 $44,000 $143,000 22 Total Deficit Due to Drought - (209,000) (629,000) (1,057,000) (1,499,000) (1,967,000) (2,493,000) 23 Percentage: 0% 6% 10% 15% 20% 24%
24 Revenue: $0 $339,000 $522,000 $719,000 $873,000 $945,000 25 0% 0% 5% 15% 25% 40% 60%
26 $0 $0 -$115,000 -$345,000 -$576,000 -$921,000 -$1,381,000 27 Surplus/(Deficit) in after Remedial Measures 6-$209,000 -$175,000 -$190,000 -$204,000 -$173,000 -$167,000 1 Analysis based on FY 2021/22 budget and assumed that current usage reflects normal water supply conditions. 2 Assumes that water usage revenue would decline in proportion to water sales. 3 Water shortage charges are an incremental increase to both the Water Usage Rates and the fixed monthly Service Charge. 4 Represents the planned change in fund balance during the Test Year. 5 Estimated water conservation program costs assumed to increase in inverse proportion to water use reductions. 6 Deficits to be absorbed by Water Fund reserves.
Rate Surcharge Revenue3
Capital Spending Reduction
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Packet Pg. 218 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Wastewater Rate Study 47 WASTEWATER RATE STUDY
The following subsections include the wastewater utility’s financial plan, cost of service, rate design, and proposed wastewater rates schedule. The information has some redundancies with Section 2 (by design to allow the section to stand alone).
WASTEWATER UTILITY FINANCIAL PLAN
This section presents the Wastewater Utility’s 10-year Financial Plan, including a description of the source data, assumptions, and the City’s financial policies. The City provided historical and budgeted financial information, including historical and budgeted operating costs, a multi-year capital improvement program (CIP), and outstanding debt service obligations. City staff also assisted in providing other assumptions and policies, such as reserve targets and escalation rates for operating costs (all of which are described in the following subsections).
The Wastewater Utility 10-year Financial Plan was developed through several interactive work sessions with City staff. As a result of this process, the Study has produced a robust Wastewater Utility Financial Plan that will enable the City to meet its future revenue requirements and achieve financial performance objectives throughout the projection period while striving to limit rate increases.
The financial plan indicates that the Wastewater Utility currently has a revenue shortfall, which is primarily due to the fact that the City hasn’t raised wastewater rates since 2016. Operating costs have increased significantly since 2016 due to inflation.
The Study concludes that rate revenue increases will be required in order to afford operating and capital expenses. The schedules attached to this report include detailed data supporting the Wastewater Utility Financial Plan discussed herein.
The Wastewater Utility Financial Plan reflects assumptions and estimates believed reasonable at the present time. However, conditions change. It is recommended that
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Packet Pg. 219 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Wastewater Rate Study 48 the City review the financial condition of the Wastewater Utility and reaffirm annual rate adjustments as part of the annual budget process, as well as perform a more comprehensive financial plan and wastewater rate update every 5 years or as conditions dictate.
WASTEWATER UTILITY BEGINNING FUND BALANCES
The ending cash balance for FY 2020/21 was used to establish the FY 2021/22 beginning balance, as outlined in Table 14. It should be noted that the amount of cash that the Wastewater Utility keeps in reserves is a product of its reserve policies (see Section 3.10).
CUSTOMER GROWTH
In recent years, the City has collected and average of approximately $263 thousand per year in Development Capacity Charges revenue from new customers connecting to the system, which equates to a growth rate of approximately 0.59% per year. This Study assumes that this growth trend, and the associated Development Capacity Charges revenue, will continue for the duration of the next 10 years.
WASTEWATER UTILITY RATE REVENUE
Rate revenue is the revenue generated from customers for wastewater service. The City collects rate revenue from wastewater customers based on a fixed “Service Charge” (assessed based on meter sizes) and a wastewater “Usage Rate” (applied to Fund 530 (Wastewater Operations) $3,002,000
Fund 532 (Wastewater Capital Reserve) $736,000
Total Unrestricted: $3,738,000
Fund 930 (Restricted Wastewater Capacity Fees) $1,428,000 Total Reserves: $5,166,000
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Packet Pg. 220 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Wastewater Rate Study 49 each hundred cubic feet9(“HCF”) of winter water use10 for residential customers and all water use for non-residential customers). Customers receive a monthly bill. The Wastewater Utility Financial Plan starts with FY 2021/22 budgeted rate revenues.
Estimated future wastewater demand and rate revenues include the small amount of customer growth (see Section 3.3) as well as the annual rate revenue adjustments proposed by this Study. Other than demand increases associated with customer growth, wastewater demand is anticipated to remain constant. Budgeted and projected rate revenues (including proposed rate adjustments) are listed in the first table in Schedule WW-3.
WASTEWATER UTILITY NON-RATE REVENUES
In addition to rate revenue, the City receives additional “non-rate revenue” from sources such as miscellaneous service fees (operating revenue), Development Capacity Charges, grants, and interest revenue on investments. Projections of all nonrate revenues were based on FY 2021/22 budgeted revenues with the exception of interest income which was calculated annually based upon projected fund balances and assumed interest rate of 2.01%, which is consistent with the City’s historical interest earnings relative to its total reserve levels. Budgeted wastewater rate and non-rate revenues are depicted in Figure 7 below and listed in detail in the first table in Schedule WW-3.
9 One HCF is equal to 748 gallons
10 Winter water usage refers to the average water usage during the prior period of January through April, with the highest month omitted.
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Packet Pg. 221 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Wastewater Rate Study 50 WASTEWATER UTILITY OPERATING AND DEBT EXPENSES
The Wastewater Utility’s expenses include operating and maintenance expenses, debt service, and capital spending. Capital spending is addressed separately in Section 3.9.
Future operating and maintenance expenses were projected based upon the budgeted expenditures from FY 2021/22 and adjusted for inflation (see Section 3.8).
Major budgeted expense categories for FY 2021/22 are depicted in Figure 8. Budgeted and projected operating and maintenance costs as well as debt service expenses are listed in detail in Schedule WW-1.
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Packet Pg. 222 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Wastewater Rate Study 51 Figure 8: Wastewater Utility Operating & Debt Expenses (FY 2021/22) The Wastewater Utility currently pays about $1,954,000 annually on debt service related to a 2015 Refunding Bond and a 2012 Taxable Pension Obligation Bond (annual payments of approximately $160,000 and will be retired in FY 2022/23).
While a general increase in capital spending is forecasted, this Wastewater Utility financial plan does not propose any new debt issues during the planning period (see Section 3.9).
DEBT SERVICE COVERAGE
One of the requirements associated with bond financing is to maintain rates and other wastewater system revenues at levels sufficient to meet debt service coverage requirements. At present, the City is required to maintain wastewater system revenues at a level that covers all ongoing operating and maintenance costs, as well as 1.20 times annual debt service. Based on recently published guidance from Fitch Ratings, utility systems with midrange financial profiles should maintain a DCR greater
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Packet Pg. 223 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Wastewater Rate Study 52 than 1.50 times annual debt service. The Wastewater Utility is forecasted to have a DCR of approximately 1.24 in FY 2022/23 (after proposed rate increases, see Schedule WW-3, Row 27) and, with the proposed rate adjustments, is expected to rebuild the DCR to healthier levels by FY 2023/24.
COST ESCALATION
Annual cost escalation factors for the various types of expenses were developed based upon a review of historical inflation trends, published inflation forecasts, and discussions with City staff. During the projection period, all expenses are projected to increase at 4.0 percent per year through FY 2023/24 and 3.0 percent thereafter.
WASTEWATER UTILITY CAPITAL IMPROVEMENT PROGRAM
Figure 9 shows capital expenditures from FY 2021/22 through FY 2030/31 that are needed to pro-actively address the wastewater system’s rehabilitation needs associated with aging conveyance, treatment facilities, pump stations, and other system facilities. The average annual spending of about $2.6 million is significantly lower than first planned by the City’s engineering department in order to avoid a spike in near-term wastewater rates. Schedule WW-2 provides a detailed list of the budgeted capital projects through FY 2024/25, the budgeted capital spending from FY 2025/26 through FY 2031/32, and a list of deferred capital projects. The actual projects that are built during those years may change based on system priorities. The level of capital spending is shown to increase after FY 2028/29 as the cumulation of rate increases positions the Wastewater Utility to afford more capital spending.
This financial plan is proposing that all capital spend be funded on a PayGo basis as opposed to using a debt strategy. This decision is based on the fact that debt is typically used to address anomalous spikes in capital spending. There is not sufficient time to issue debt for the immediate spike in capital spending, and the long-term increase in capital spending is not a “spike” in spending but rather a sustained increase to a “new normal” level of annual re-investment in the wastewater system’s aging infrastructure.
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Packet Pg. 224 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Wastewater Rate Study 53 Figure 9: Wastewater Utility Historic and Projected Capital Spending
WASTEWATER UTILITY FUNDS
The financial plan model is based on the fund, reserve, and account structures currently used by the City. These structures include recent modifications to improve efficient funding of the capital improvement program. Figure 10 is a schematic diagram of the funds/reserves and major cash flows associated with the financial plan model.
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Packet Pg. 225 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Wastewater Rate Study 54 The fund / reserve structure is comprised of:
Operating Fund – The Wastewater Operating Fund (Fund 530) is the primary fund within the Wastewater Utility. Most revenue, including rate revenues, flow into the Operating Fund and all operating and maintenance costs, including debt service payments, are paid out of this fund. Funds are also transferred from the Operating Fund to the Capital Replacement Reserve to provide funds for capital projects intended to rehabilitate and upgrade facilities. While not necessarily a roadmap for future City decisions on transfers, this financial plan shows annual transfers from the Operating Fund to the Capital Replacement Reserve sufficient to meet the capital improvement for each year in the planning period.
Capital Replacement Fund – The Capital Replacement Fund (Fund 532) is intended to serve as a mechanism for funding rehabilitation, replacement, and upgrade projects contained in the capital improvement program. The reserve is funded with annual transfers of rate revenue from the Operating Fund (see the second table in Schedule WW-3). Funds are then used for capital project expenditures. By establishing regular transfers from the Operating Fund, the City is able to fund capital projects in a manner that facilitates rate stability and/or modest annual rate adjustments. This reserve also helps to establish and maintain steady funding of the ongoing replacement and rehabilitation efforts of the utility system, which many utilities neglect as part of the financial obligations of long-term sustainability of service.
Wastewater Capacity Fund – The Wastewater Capacity Fund (Fund 930) is used to account for revenues from wastewater system Development Capacity Charges. The City’s Development Capacity Charges are based on a system buy-in methodology. As such, capacity fee revenues reimburse the utilities for prior investment in wastewater system capacity including debt service payments in order to help the City meet its DCR obligations. The financial plan model use available Development Capacity Charge revenues to help pay for planned capital improvement projects but does not foresee the need to supplement debt service payments.
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Packet Pg. 226 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Wastewater Rate Study 55 CASH RESERVE POLICIES
Cash reserve policies are cash balances targets that are retained for specific cash flow needs. The target for reserves is an important component when developing a multiyear Wastewater Utility Financial Plan and maintaining prudent reserves is an essential component of any sound financial management strategy. Utilities rely on reserves for financial stability; credit rating agencies evaluate utilities in part on their adherence to formally adopted reserve targets; and lending agencies require utilities to maintain specific debt reserves for outstanding loans. The target levels of the policies below are consistent with: 1) the City’s established policies and practices; 2) the findings of reserve studies conducted by the AWWA; 3) a healthy level of reserves for a utility per the evaluation criteria published by rating agencies (e.g., Fitch, Moody’s, and Standard & Poor’s); and 4) Hildebrand Consulting and The Reed Group’s industry experience for similar systems.
The following recommended reserve policies are based on the policies that were recommended in the 2016 rate study with some minor modifications. The policy recommendations are intended to help the City mitigate and manage financial risk while meeting service and financial obligations.
Contingency Reserve – The City currently has a policy goal (Resolution No. 139-2000) to maintain Contingency Reserves within the Operating Fund equal to 25 percent of annual rate revenue (or currently about $1.75 million). The purpose of the Contingency Reserve is to provide working capital and funds for unplanned operating and maintenance expenditures or revenue shortfalls resulting from reduced wastewater rate revenue. The balance in the Operating Fund is current meeting the target Contingency Reserve.
Debt Service Reserve – While a Debt Service Reserve is required by some debt agreements as security against debt repayment obligations, none of the Wastewater Utility’s current debt contract have such a requirement.
Capital Replacement Reserve – A capital replacement reserve serves the dual purpose of (1) supporting the City’s PayGo strategy by absorbing some of the inherent
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Packet Pg. 227 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Wastewater Rate Study 56 fluctuations in annual capital spending and (2) serves as safety net in the event of the catastrophic failure of a major system asset (such as a pump station or a major wastewater trunkline). While the City does not currently maintain a targeted reserve in the Capital Replacement Fund, this financial plan proposes to establish the practice of working towards a target balance of $1.0 million during the planning period. In the future the City may wish to formalize the practice with a more detailed analysis of the appropriate target levels.
PROPOSED RATE REVENUE INCREASES
All of the above information was entered into a financial planning model to produce a 10-year projection of the sufficiency of current rate revenues to meet projected financial requirements and determine the level of rate revenue increases necessary in each year of the projection period.
Based upon the previously discussed financial data, assumptions, policies, and PayGo strategy, this Study proposes a 5-year schedule of annual rate adjustments as shown in Table 15.
It is important to note that water rates in the first year (FY 2022/23) will be modified based on the findings of the cost-of-service analysis, which calls for more costs to be recovered through the fixed charges (see Section 3.13). This means that the percent Rate Adjustment Date
July 1, 2021
July 1, 2022
July 1, 2023
July 1, 2024
July 1, 2025 6.0%
Proposed Rate
Increase
8.0%
8.0%
7.0%
6.0%
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Packet Pg. 228 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Wastewater Rate Study 57 change to individual customer bills may differ from the percent change in rate revenue received by the City.
The numbers provided in the first table in Schedule WW-3 (cash flow proforma) are summarized graphically in Table 14, which shows that the Operating Fund target reserves are met in FY 2023/24 and the DCR attains a healthy level by FY 2023/24.
The proposed rate increases are driven by the cost inflation that has occurred since the last rate increase in 2016.
Schedule WW-3 shows the cash flow with each of the Wastewater Utility’s fund and the projected transfers between the Operating Fund, the Capital Replacement Fund and the Capacity Fund.
After the final recommended increase in FY 2026/27, it is anticipated (barring unforeseen emergencies or changes in infrastructure/operational needs) that the Proposed Revenue Increases: 8.0% 8.0% 7.0% 6.0% 6.0% 6.0% 5.0% 6.0% 6.0% 5.0% Debt Coverage Ratio: 2.20 1.24 1.55 1.79 2.02 2.25 2.51 2.75 3.05 3.38 3.66 $0
$1
$2
$3
$4
$5
$6 MILLIONS
Combined Fund Balance (ending)
Target Reserve Level Minimum Reserve Level
$0
$2
$4
$6
$8
$10
$12
$14
$16
FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 FY2032 Total Revenue / Expenses ($M) Non-Rate Revenue Existing Rate Revenue Additional Rate Revenue Operating Expenses Debt Service Cash Funded Capital Spending Expenses Revenues
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Packet Pg. 229 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Wastewater Rate Study 58 increases will need to continue at around 5 to 6 percent per year, which is needed to increase revenues to match the City’s increase in annual capital spending on critical infrastructure.
WASTEWATER COST OF SERVICE & RATE STRUCTURE
The COS analysis evaluates the cost of providing wastewater service and allocates those costs to rate structure components to ensure the proposed rates are aligned with the costs to provide service. The COS analysis is performed in order to comply with Proposition 218, which requires wastewater rates to be equitably apportioned and proportional to the cost of providing wastewater service.
Upon completion of the COS analysis, a rate structure analysis was performed to evaluate rate structure modifications and calculate specific rate schedules for implementation at the beginning of FY 2022/23. The complete schedule of proposed rates for FY 2022/23 through FY 2026/27 is detailed in Schedule WW-4.
The rate structure proposed by this Study is designed to:
Fairly and equitably recover costs through rates
Conform to accepted industry practice and legal requirements Provide fiscal stability and recovery of wastewater system costs Meet other rate setting objectives, as described in Section 1.4
3.13.1 General Methodology
There are three steps to determining wastewater rates. These are:
▪ Determine annual wastewater rate revenue requirements ▪ Analyze the cost of providing service to each customer class ▪ Design wastewater rates to recover costs from each customer class.
The Wastewater Utility Financial Plan was used to identify the wastewater rate revenue requirements for each fiscal year of the five-year planning period.
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Packet Pg. 230 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Wastewater Rate Study 59 Once the annual wastewater rate revenue requirement has been determined, the next step in the rate setting process is to evaluate the cost of providing service.
Wastewater rate calculations contained herein are intended to generate the level of revenue commensurate with the revenue requirement from the City’s wastewater service customers. The manner in which each customer is responsible for the wastewater utility’s costs is the determining factor in the cost-of-service analysis.
3.13.2 Current Wastewater Rates
Single family and multi-family residential customers are subject to fixed monthly Service Charges plus a Usage Charge based on winter water usage. The Service Charges are assessed based on the number of dwelling units and differ between different types of residential accounts due to differences in demand characteristics.
Each year, the City monitors water usage during low-use winter months (the average of the three lowest bills rendered between January through April) and then determines the average winter usage for each residential customer (seasonal sewer average or “SSA”). The SSA value is assumed to be primarily indoor water usage. In May of each year, the City calculates a new wastewater bill amount for each residential customer based on the prior winter water use. When the winter average is not available the average for all residential accounts is used. In some cases, adjustments are made to the winter average based on special circumstances.
Non-residential customers are subject to a low, medium, or high strength Usage Rate based on the type of type of business activity. The usage charge is calculated based on actual water usage within each monthly billing cycle since non-residential accounts have minimal outdoor water usage (or a separate meter for irrigation). Nonresidential wastewater bills also include a fixed service charge based on the size of the water meter.
The current Service Charge schedule (which is assessed monthly) is summarized in Table 16.
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Packet Pg. 231 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Wastewater Rate Study 60 3.13.3 Customer Account Data and Sewer Flow and Loading Estimates Wastewater rate calculations are based on a number of factors related to the City’s customers. Factors include the number of customers, customer classes, water usage, estimated sewer flows, and sewer strength characteristics as measured by biochemical oxygen demand (BOD) and total suspended solids (TSS).
Residential sewer flows are estimated based on average water usage during winter months. A review of residential water usage data indicated that about 53.3 percent of annual water usage returns to the sewer system (based on average winter water Monthly Service Charge
Single Family $37.33 per dwelling unit
Single Family with ADU (per DU) $37.33 per dwelling unit Flat Rate1
$99.76 per dwelling unit
Multifamily (per DU) $34.50 per dwelling unit
Non-Residential
1" meter $60.67 per meter
1 1/2" meter $118.49 per meter
2" meter $188.16 per meter
3" meter $350.82 per meter
4" meter $583.15 per meter
6" meter $1,163.46 per meter
8" meter $1,860.11 per meter
10" meter $2,673.10 per meter
12" meter $4,995.02 per meter
Wastewater Usage Rates ($/HCF)
All Residential 2
$10.41 per HCF
Non-Residential 3
Low Strength $9.37 per HCF
Medium Strength $13.62 per HCF
High Strength $19.85 per HCF
3 Applies to actual monthly water usage.
1 Applies to customers not receiving water service
and
2 Applies to the account's measured SSA
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Packet Pg. 232 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Wastewater Rate Study 61 usage). For multi-family customers, about 80 percent of annual water usage is estimated to return to the sewer system, which is expected since irrigation water usage tends to be either minimal or separately metered. Single-family accounts with ADUs show 45.6 percent of annual water usage returning to the sewer system. Nonresidential sewer flows are based on actual water usage, with a 90 percent rate of return to the sewer system to reflect minor irrigation usage.
The sewer utility serves 3,690 single-family homes, 111 single-family accounts with an ADU (therefore 222 DUs), 1,005 multi-family dwelling units, and 488 non-residential customers. On average, single-family sewer flows (based on winter water usage) are about 5.0 HCF per month. For multi-family dwellings, the average sewer flow is about
4.0 HCF per month (based on winter water usage). This average sewer flow value is then used to calculate a conversion factor of 0.80 to convert the number of multifamily dwellings to the equivalent number of single-family dwellings (ESFU). The conversion factor for single-family accounts with ADUs (on a single meter) is 0.662. Nonresidential sewer flows vary based on customer characteristics.
Wastewater rate analyses consider the strength (loading) characteristics of sewage entering treatment facilities. Strength factors for BOD and TSS are considered, as these factors play a key role in treatment facility operations. Residential customers are assigned standard residential strength factors of 240 mg/l for BOD and 200 mg/l for TSS. Low, medium, and high non-residential strength categories have been defined with strength factors as indicated in Table 17. Strength factors assigned to each category of customer are based on guidelines published by the California State Water Resources Control Board (SWRCB) and other sources.
Table 17 summarizes customer account and water usage data obtained from the City’s utility billing system, as well as estimates of resulting wastewater flow and loading characteristics. Applying residential and non-residential strength factors to estimates of annual sewer flows results in an estimated annual sewage volume and loading that is commensurate to actual WWTF inflows. Account information is based on the utility billing data from FY 2019/20.
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Packet Pg. 233 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Wastewater Rate Study 62 Customer Class
No. of DUs/
Accounts 1
No. of
ESFDs
Water
Usage 1
Rate of
Return
Estimated
Annual
Wastewater
Flow 2
Estimated
Annual
Wastewater
Flow
BOD
Strength 3
Annual BOD
Loading
TSS
Strength 3
Annual TSS
Loading
HCF HCF MG mg/l lbs mg/l lbs
Residential
Single Family Residential 3,690 3,690 419,200 53.3% 223,500 167.2 240 334,600 200 278,900 Single Family + ADU 222 147 19,500 45.6% 8,900 6.7 240 13,300 200 11,100 Multi-Family Residential 1,005 801 60,400 80.3% 48,500 36.3 240 72,600 200 60,500 Non-Residential
Low Strength 339 841 69,100 90.0% 57,800 43.2 240 86,500 200 72,100 Medium Strength 85 224 30,700 90.0% 25,700 19.2 500 80,200 400 64,100 High Strength 64 163 28,700 90.0% 24,000 18.0 1,000 149,700 600 89,800 Totals 5,405 5,865 627,600 388,400 291 736,900 576,500
Notes: 1
Based on utility billing system data for FY 2019/20. DU = dwelling units. 2 Based on annualized average winter water usage for residential accounts (based on the lowest three months between January and April) and annual water usage for non-residential accounts. 3
Based on previous wastewater rate analyses, SWRCB guidelines, and adjustments to better match actual treatment plant flows and loadings.
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Packet Pg. 234 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Wastewater Rate Study 63 3.13.4 Wastewater Cost of Service & Rate Design
To develop equitable wastewater rates, the revenue requirement is allocated to various customer classifications according to the services provided and the demands placed on the sewer system. Table 18 summarizes how the wastewater rate revenue requirement is allocated to fixed charges as well as to flow, BOD, and TSS components, which comprise the usage charges. Once total costs are allocated unit costs were determined by dividing the total cost for each component by the number of units identified in Table 17. These unit costs become the basis for then assigning costs to customer classes.
The cost-of-service analysis for wastewater service is more complicated than water rate analysis in that treatment costs are separated from collection system costs.
Collection system costs are allocated entirely on the basis of flow, whereas treatment costs are allocated on the basis of flow, BOD, and TSS.
Cost Category
Category
Allocation
Percentages
Parameter
Allocation
Percentages4
Annual Cost
Allocated to
Each
Parameter
Total
Quantities
Unit Cost
for Each
Parameter
Fixed Charge Costs1 40% $3,026,000 `
Customer Accounts 6% $181,600 5,405 $33.60 per account
Equiv. Single Family Dwellings (ESFDs) 94% $2,844,400 5,865 $484.98 per ESFD Usage Charge Costs for Collection 2 15% $1,134,800
Flow (MG) $1,134,800 291 $3,906.06 per MG
Usage Charge Costs for Treatment 3 45% $3,404,300
Flow (MG) 34% $1,157,500 291 $3,984.19 per MG
BOD (lbs) 33% $1,123,400 736,900 $1.52 per lbs of BOD
TSS (lbs) 33% $1,123,400 576,500 $1.95 per lbs of TSS
Total FY 2021/22 Wastewater Rate Revenue Requirement $7,565,000 Notes:
1 Includes estimated administrative costs, debt service costs, a portion of maintenance costs, and transfer to the capital fund. 2 Includes estimated collection system and a portion of maintenance costs. 3 Includes estimated wastewater treatment costs.
4 Parameter allocations based on previous rate analyses, information provided by City, and rate setting practices.
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Packet Pg. 235 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Wastewater Rate Study 64 We have relied on the information that is available for allocating costs to the various categories, as well as relied upon professional judgment and standard estimating practices used in rate setting to allocate costs across flow, BOD, and TSS parameters.
The wastewater revenue requirement has been allocated 40 percent to fixed service charges, 15 percent to the collection system, and 45 percent to treatment. Sewer treatment costs have been allocated 34 percent to flow, 33 percent to BOD, and 33 percent to TSS. We believe these allocations are reasonable and are within the ranges found in other wastewater rate analyses.
The unit costs from Table 18 are applied to the annual wastewater flows, as well as BOD and TSS loadings associated with each customer class (see Table 17) to arrive at the allocation of total costs to each customer class. Table 19 presents the allocation of costs to each user class.
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Packet Pg. 236 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Wastewater Rate Study 65 Usage Charge Costs
Collection Treatment
No. of Customer Capacity Flow Flow BOD SS Allocation
DUs/ Customer Class Unit Cost = Unit Cost = Unit Cost = Unit Cost = Unit Cost = Unit Cost = of Total Accts. $33.60 $484.98 $3,906.06 $3,984.19 $1.52 $1.95 Costs per account per ESFD per MG per MG per lbs BOD per lbs TSS Residential
3,690 Single Family Residential $124,000 $1,789,500 $653,000 $666,100 $510,100 $543,500 $4,286,200 222 Single Family + ADU $7,500 $71,300 $26,000 $26,600 $20,300 $21,600 $173,300 1,005 Multi-Family $33,800 $388,300 $141,700 $144,500 $110,700 $117,900 $936,900 Non-Residential
339 Low Strength $11,400 $407,700 $168,800 $172,300 $131,900 $140,500 $1,032,600 85 Medium Strength $2,800 $108,600 $75,100 $76,600 $122,300 $124,900 $510,300 64 High Strength $2,100 $78,900 $70,100 $71,500 $228,200 $175,000 $625,800 5,405 Totals (rounded) $181,600 $2,844,300 $1,134,700 $1,157,600 $1,123,500 $1,123,400 $7,565,000 Notes: 1
Unit costs from Table 16 are multiplied by the wastewater flow, the BOD loading, or the SS loading for each customer class from Table 15.
Fixed Charge Costs
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Packet Pg. 237 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Wastewater Rate Study 66 No. of
DUs/
Accts. Customer Class
Estimated
Annual
Sewer Flow
BOD
Strength
TSS
Strength
Monthly
Fixed
Charge
Usage
Rate 1
Fixed
Charges
Usage
Charges
Total Annual
Revenue
HCF mg/l mg/l $/DU $/HCF
Residential
3,690 Single Family Residential 223,500 240 200 $43.21 $10.62 $1,913,300 $2,373,600 $4,287,000 222 Single Family + ADU 8,900 240 200 $29.58 $10.62 $78,800 $94,500 $174,000 1,005 Multi-Family 48,500 240 200 $35.00 $10.61 $422,100 $514,600 $937,000 Non-Residential
339 Low Strength 57,800 240 200 $9.55 $419,100 $613,300 $1,032,000 85 Medium Strength 25,700 500 400 $13.97 $111,400 $398,900 $510,000 64 High Strength 24,000 1,000 600 $20.44 $81,000 $545,100 $626,000 5,405 Totals 388,400 $3,025,700 $4,540,000 $7,566,000
Notes: 1
Wastewater usage rates apply to average winter water use for residential customers and actual monthly water use for non-residential customers. 2 Monthly service charges for non-residential customers vary based on the size of the water meter (see Schedule WW-4).
Varies by
Meter
Size 2
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Packet Pg. 238 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Wastewater Rate Study 67 Table 20 presents the final wastewater user rates and charges recommended for each customer class. Rates for residential customers include flat monthly charges for each DU. The logic for the relative pricing between the three residential account types is explained in Section 3.13.3. Non-residential (low, medium, and high strength) customers are subject to a monthly Service Charge based on meter size (see the meter equivalency schedule in Table 4) and wastewater usage rates applied to actual monthly water usage. Usage charges vary for each strength category.
No changes in the wastewater rate structure is proposed at this time, although the proposed rate schedule for July 2022 reflects the updated cost-of-service analysis, as presented herein.
3.13.5 Special Rates
The City currently has a few special rates applicable in certain circumstances.
Recommendations related to these special circumstances are as follows:
Residential Flat Rates – Residential customers receiving wastewater service, but not water service, from the City should continue to be charged for service based on a flat monthly service charge. The sewer-only residential wastewater rate for single family customers was determined to be $96.31 per month based on the monthly service charge for single family customers, plus a usage charge based on an average winter water use among single family customers of 5 HCF.
Non-Residential Flat Rates – The City maintains a small number of nonresidential flat rate customers. The City should continue to charge these customers for wastewater service based on customer characteristics and estimated service demands for each account. The non-residential wastewater rate for these customers is determined based on a monthly service charge, plus a usage charge based on estimated flow and strength characteristics.
Wastewater Usage Rate for Special Situations – In limited situations, the City may provide wastewater service to customers with unique and/or significant wastewater discharge characteristics. Examples may include wineries, breweries, or food
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Packet Pg. 239 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Wastewater Rate Study 68 processors with non-standard strength characteristics, or with wastewater flow that does not correlate with water usage like other nonresidential accounts.
In these situations, the City may determine it is reasonable and appropriate to calculate a special wastewater usage rate based on the specific wastewater flow characteristics of each special case customer.
The cost-of-service calculations described in the preceding pages resulted in unit costs for the volumetric portion of wastewater collection and treatment in terms of flow volume, pounds of BOD, and pounds of TSS. These unit costs for collection and treatment are the building blocks for wastewater usage rates.
Flow volume $5.90 per HCF
BOD $1.52 per pound
TSS $1.95 per pound
An example calculation for developing a customer-specific wastewater usage rate for a special situation (a large winery) is shown below. The calculation relies on the unit costs identified above. The customized wastewater usage rate would be used in place of a standard (low, medium, or high) wastewater usage rate.
Sample Special Wastewater Usage Rate Calculation
Wastewater strength characteristics are estimated or determined through sampling.
For this sample calculation, BOD is assumed to be 2,500 mg/l and TSS is assumed to be 1,000 mg/l.
Wastewater Usage Rate = $5.90 + [ BOD x $1.52 + TSS x $1.95 ] x 8.34 / 1,000,000 x 748
= $5.90 + [ 2,500 x $1.52 + 1,000 x $1.95 ] x 8.34 /
1,000,000 x 748
= $5.90 + [ $3,800 + $1,950 ] x 8.34 / 1,000,000 x 748
= $41.77 per HCF of wastewater flow
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Packet Pg. 240 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Wastewater Rate Study 69 This customized wastewater usage rate would apply to the wastewater flow volume.
To apply the wastewater usage rate to metered water usage a rate of return factor should be applied. For example, if it is determined that 80 percent of the water usage returns to the sewer system as wastewater then the appropriate wastewater usage rate, applied to metered water usage, would be $33.42/HCF of water usage (41.77 x 80%). A fixed service charge, based on meter size, would also be part of the wastewater bill.
The unit costs used in the sample calculation above should be adjusted commensurate with any future wastewater rate changes.
3.13.6 Proposed Wastewater Rate Schedule
Table 21 summarizes the proposed wastewater rate schedule for July 2022, which reflects an overall 8 percent increase from the current wastewater rates. The proposed wastewater rates are designed to generate the rate revenue requirements as identified by this Wastewater Utility Financial Plan.
Schedule WW-4 summarizes the proposed wastewater rate schedule for the next 5 years.
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Packet Pg. 241 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Wastewater Rate Study 70 Monthly Service Charge Current
Effective July 1,
2022
Single Family $37.33 $43.21 per dwelling unit
Single Family with ADU (per DU) $37.33 $29.58 per dwelling unit Flat Rate1
$99.76 $96.31 per dwelling unit
Multifamily (per DU) $34.50 $35.00 per dwelling unit
Non-Residential
1" meter $60.67 $70.14 per meter
1 1/2" meter $118.49 $137.49 per meter
2" meter $188.16 $218.31 per meter
3" meter $350.82 $406.89 per meter
4" meter $583.15 $676.29 per meter
10" meter $2,673.10 $3,235.59 per meter
Wastewater Usage Rates ($/HCF)
All Residential 2$10.41 $10.62 per HCF
Non-Residential 3
Low Strength $9.37 $9.55 per HCF
Medium Strength $13.62 $13.97 per HCF
High Strength $19.85 $20.44 per HCF
3 Applies to actual monthly water usage.
1 Applies to customers not receiving water service and assumes an average level of water usage (5 HCF).
2 Applies to average winter water usage during the proceeding January to April period, with the highest month being omitted.
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Packet Pg. 242 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Conclusion
71 CONCLUSION
This 2022 Water and Wastewater Rate Study proposes updated utility rates for the City of Healdsburg. While the rate structures themselves required only limited updates, the financial plans for both utilities called for material increases in rate revenue. These rate increases are driven primarily by a change in the City’s approach to managing its critical utility infrastructure. The City has developed detailed capital improvement plans that are designed to pro-actively repair and replace critical and aging infrastructure in order to ensure that the City can continue to provide safe and reliable utility services.
This Study used methodologies that are aligned with industry standard practices for rate setting as promulgated by AWWA and all applicable laws, including California’s Proposition 218. The proposed annual adjustments to the water rates are expected to enable the City to continue to provide reliable service to customers while meeting the state’s mandates.
The water and wastewater rates, including the water shortage surcharges and special rates for Passalacqua, will need to be adopted in accordance with Proposition 218, which will require a detailed notice describing the proposed charges to be mailed to each affected property owner or customer at least 45 days prior to conducting a public hearing to adopt the rates.
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Packet Pg. 243 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Schedules
1 SCHEDULES
_____________________________________________________
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Packet Pg. 244 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Schedules 1
FY2021/22 FY2022/23 FY2023/24 FY2024/25 FY2025/26 FY2026/27 FY2027/28 FY2028/29 FY2029/30 FY2030/31 FY2031/32 1 Wages $695,900 $723,700 $752,600 $775,200 $798,500 $822,400 $847,100 $872,500 $898,700 $925,600 $953,400 2 Wages-Overtime $24,000 $25,000 $26,000 $26,700 $27,500 $28,400 $29,200 $30,100 $31,000 $31,900 $32,900 3 Wages-Standby/On Call $33,500 $34,800 $36,200 $37,300 $38,400 $39,600 $40,800 $42,000 $43,300 $44,600 $45,900 4 Fringe Benefits $242,300 $252,000 $262,100 $269,900 $278,000 $286,400 $295,000 $303,800 $312,900 $322,300 $332,000 5 Fringe Benefits: PERS Employer Share UAL $206,300 $214,500 $223,100 $229,800 $236,700 $243,800 $251,100 $258,700 $266,400 $274,400 $282,700 6 Fringe Benefits: REMIF Workers Comp Ins $32,600 $33,900 $35,200 $36,300 $37,400 $38,500 $39,600 $40,800 $42,000 $43,300 $44,600 7 Personal Protective Equipment $5,200 $5,400 $5,600 $5,800 $6,000 $6,100 $6,300 $6,500 $6,700 $6,900 $7,100 8 Other Employee Expenses: Employee Physicals $300 $300 $300 $300 $300 $400 $400 $400 $400 $400 $400 9 Other Employee Exp: Overtime Meals $3,000 $3,100 $3,200 $3,300 $3,400 $3,500 $3,700 $3,800 $3,900 $4,000 $4,100 10 Building Maintenance Service Fee $25,600 $26,600 $27,700 $28,500 $29,400 $30,300 $31,200 $32,100 $33,100 $34,100 $35,100 11 Vehicle Service Fee $117,600 $122,300 $127,200 $131,100 $135,000 $139,000 $143,200 $147,500 $151,900 $156,500 $161,200 12 Vehicle Replacement Fee $100,000 $104,000 $108,200 $111,400 $114,700 $118,200 $121,700 $125,400 $129,100 $133,000 $137,000 13 Insurance $37,600 $39,100 $40,600 $41,800 $43,100 $44,400 $45,700 $47,100 $48,500 $50,000 $51,500 14 Telecommunication & Data Services $15,000 $15,600 $16,200 $16,700 $17,200 $17,700 $18,300 $18,800 $19,400 $20,000 $20,600 15 Property Tax $1,000 $1,000 $1,100 $1,100 $1,100 $1,200 $1,200 $1,300 $1,300 $1,300 $1,400 16 Contracted Services $28,000 $29,100 $30,300 $31,200 $32,100 $33,100 $34,100 $35,100 $36,200 $37,200 $38,400 17 Meeting, Travel, and Training-Engineering $1,100 $1,100 $1,200 $1,200 $1,300 $1,300 $1,300 $1,400 $1,400 $1,500 $1,500 18 Meeting, Travel, and Training-Maintenance $3,500 $3,600 $3,800 $3,900 $4,000 $4,100 $4,300 $4,400 $4,500 $4,700 $4,800 19 Repairs and Maintenance $120,000 $124,800 $129,800 $133,700 $137,700 $141,800 $146,100 $150,500 $155,000 $159,600 $164,400 20 License, Dues, Certs, Membrshps $2,000 $2,100 $2,200 $2,200 $2,300 $2,400 $2,400 $2,500 $2,600 $2,700 $2,700 21 Rentals and Leases $4,300 $4,500 $4,700 $4,800 $4,900 $5,100 $5,200 $5,400 $5,600 $5,700 $5,900 22 Office Supplies $2,200 $2,300 $2,400 $2,500 $2,500 $2,600 $2,700 $2,800 $2,800 $2,900 $3,000 23 Noticing $300 $300 $300 $300 $300 $400 $400 $400 $400 $400 $400 24 Government Fees $700 $700 $800 $800 $800 $800 $900 $900 $900 $900 $1,000 25 Operational Expense $180,000 $187,200 $194,700 $200,500 $206,500 $212,700 $219,100 $225,700 $232,500 $239,400 $246,600 26 Wages $842,600 $876,300 $911,400 $938,700 $966,900 $995,900 $1,025,800 $1,056,600 $1,088,300 $1,120,900 $1,154,500 27 Wages-Overtime $9,600 $10,000 $10,400 $10,700 $11,100 $11,400 $11,700 $12,100 $12,400 $12,800 $13,200 28 Wages-Standby/On Call $16,100 $16,700 $17,400 $17,900 $18,400 $19,000 $19,600 $20,100 $20,800 $21,400 $22,000 29 Fringe Benefits $316,800 $329,500 $342,700 $353,000 $363,600 $374,500 $385,700 $397,300 $409,200 $421,500 $434,100 30 Fringe Benefits: PERS Employer Share UAL $55,800 $58,100 $60,400 $62,200 $64,100 $66,000 $68,000 $70,000 $72,100 $74,300 $76,500 31 Fringe Benefits: REMIF Workers Comp Ins $49,600 $51,600 $53,700 $55,300 $57,000 $58,700 $60,400 $62,200 $64,100 $66,000 $68,000 32 Personal Protective Equipment $11,200 $11,600 $12,100 $12,500 $12,900 $13,200 $13,600 $14,000 $14,500 $14,900 $15,300 33 Other Employee Exp: Overtime Meals $1,000 $1,000 $1,100 $1,100 $1,100 $1,200 $1,200 $1,300 $1,300 $1,300 $1,400 34 Telecommunication & Data Services $7,500 $7,800 $8,100 $8,300 $8,600 $8,800 $9,100 $9,400 $9,600 $9,900 $10,200 35 Utility Services $280,000 $291,200 $302,800 $311,900 $321,300 $330,900 $340,900 $351,100 $361,600 $372,500 $383,600 36 Contracted Services $85,000 $88,400 $91,900 $94,700 $97,500 $100,500 $103,500 $106,600 $109,800 $113,100 $116,500 37 Meeting, Travel, and Training $7,500 $7,800 $8,100 $8,400 $8,600 $8,900 $9,100 $9,400 $9,700 $10,000 $10,300 38 Printing $6,500 $6,800 $7,000 $7,200 $7,500 $7,700 $7,900 $8,200 $8,400 $8,600 $8,900 39 Repairs and Maintenance $10,500 $10,900 $11,300 $11,700 $12,000 $12,400 $12,700 $13,100 $13,500 $13,900 $14,300 40 License, Dues, Certs, Membrshps $2,800 $2,900 $3,000 $3,100 $3,200 $3,300 $3,300 $3,400 $3,600 $3,700 $3,800 41 Rentals and Leases $1,000 $1,000 $1,100 $1,100 $1,100 $1,200 $1,200 $1,300 $1,300 $1,300 $1,400 42 Office Supplies $5,000 $5,200 $5,400 $5,600 $5,700 $5,900 $6,100 $6,300 $6,500 $6,700 $6,900 43 Government Fees $28,000 $29,100 $30,300 $31,200 $32,100 $33,100 $34,100 $35,100 $36,200 $37,200 $38,400 44 Operational Expense $192,100 $199,800 $207,800 $214,100 $220,500 $227,100 $233,900 $240,900 $248,100 $255,600 $263,300 45 Conservation & Energy Rebates $30,000 $31,200 $32,400 $33,400 $34,400 $35,500 $36,500 $37,600 $38,700 $39,900 $41,100 46 Overhead Allocation $438,400 $526,000 $547,000 $563,500 $580,400 $597,800 $615,700 $634,200 $653,200 $672,800 $693,000 47 Information Services Service Fee $181,400 $188,600 $196,200 $202,000 $208,100 $214,300 $220,800 $227,400 $234,200 $241,200 $248,500 48 Building Maintenance Service Fee $25,500 $26,500 $27,500 $28,400 $29,200 $30,100 $31,000 $31,900 $32,900 $33,900 $34,900 49 Insurance $92,800 $96,500 $100,400 $103,400 $106,500 $109,700 $113,000 $116,400 $119,900 $123,500 $127,200 50 Bank Fees $35,000 $36,400 $37,900 $39,000 $40,200 $41,400 $42,600 $43,900 $45,200 $46,600 $48,000 51 Debt Service $1,058,000 $1,063,000 $946,000 $780,000 $785,000 $632,000 $517,000 $518,000 $516,000 $520,000 $316,000 52 Totals $5,671,700 $5,930,900 $6,008,900 $5,994,700 $6,156,100 $6,164,700 $6,215,400 $6,387,700 $6,561,600 $6,746,800 $6,729,900
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Packet Pg. 245 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Schedules
1 Project Driver 1 College Street Sewer and Water Main Replacement fire capacity backbone $765,900 2 Scenic Water Main Replacement condition - low pressure $292,500 4 McDonough Water Transmission Main Replacement fire capacity backbone / condition $108,000 $1,080,000 5 Brown Street Sewer and Water Replacement condition $79,200 $793,800 6 University Street Sewer and Water Replacement fire capacity backbone $88,200 $793,800 7 Reed Court and Bianca Lane Sewer and Water Replacement fire capacity backbone $92,700 8 Healdsburg North fire capacity backbone $81,000 $810,000 9 Fitch Water Treatment Building Modernization condition $234,900 10 Abandonment and Sale of Old Dry Creek Well Field hazard mitigation $54,000 11 Dry Creek Water Treatment Plant Clear Well Leak Repair condition $46,800 $316,800 12 Gauntlett/Iverson Roof Repair & Replacement condition $883,800 13 Well Rehabilitation Program reliability / resilience $78,300 $81,000 $83,700 $86,400 $88,200 14 UV treatment for Cryptosporidium at Fitch regulatory compliance $135,000 15 UV treatment for Cryptosporidium at Dry Creek regulatory compliance $18,000 $139,500 16 CMMS Software for Linear Assets prudent infrastructure stewardship $74,700 17 Replacement Chlorine Generators at Dry Creek and WTP regulatory compliance $45,000 $45,000 18 Filtration for Fitch Well Field reliability / resilience $450,000 19 Replacement Membranes for the Gauntlett Water Treatment Plant regulatory compliance $405,000 $2,340,000 $724,500 $2,144,700 $1,196,100 $1,845,900
Estimated Annual Spending after FY 2024/25: $2.16M to $2.27M (in 2022 dollars) Deferred Projects Driver
Estimated Cost
(2022 dollars)
Fitch Filtration Plant reliability / resilience $5,000,000 University Street Sewer and Water Replacement (North Street to Mason St) fire capacity backbone $935,000 Johnson Street Sewer and Water fire capacity backbone $940,500 Totals: $6,875,500
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Packet Pg. 246 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Schedules
1 WATER OPERATING FUND (520) 1 Rate Revenue Increase: 2.0% 8.0% 8.0% 5.0% 5.0% 2.0% 2.0% 2.0% 2.0% 0.0% Revenue 2 Water Rate Revenue $6,237,000 $6,058,000 $6,215,000 $7,061,000 $7,809,000 $8,245,000 $8,705,000 $8,930,000 $9,161,000 $9,398,000 $9,641,000 3 Change due to growth & use $36,000 $349,000 $183,000 $46,000 $48,000 $51,000 $52,000 $54,000 $55,000 $57,000 4 Increase due to rate adjustments $121,000 $497,000 $565,000 $390,000 $412,000 $174,000 $179,000 $183,000 $188,000 $0 5 Sales shortfall due to water usage reduction ($1,000,000) Non-Rate Revenues 6 Interest Earnings $44,000 $36,000 $35,000 $40,000 $43,000 $46,000 $48,000 $49,000 $50,000 $51,000 $53,000 7 Operating Revenue $17,000 $17,000 $17,000 $17,000 $17,000 $17,000 $17,000 $17,000 $17,000 $17,000 $17,000 8 Total Revenue $5,298,000 $6,268,000 $7,113,000 $7,866,000 $8,305,000 $8,768,000 $8,995,000 $9,227,000 $9,465,000 $9,709,000 $9,768,000 O&M Costs 9 Employee Costs $2,525,000 $2,626,000 $2,731,000 $2,813,000 $2,898,000 $2,984,000 $3,074,000 $3,166,000 $3,261,000 $3,359,000 $3,460,000 10 Utilities & Fuel $280,000 $291,000 $303,000 $312,000 $321,000 $331,000 $341,000 $351,000 $362,000 $372,000 $384,000 11 Professional Services $368,000 $383,000 $398,000 $410,000 $422,000 $435,000 $448,000 $461,000 $475,000 $489,000 $504,000 12 Maintenance & Operations $788,000 $820,000 $852,000 $878,000 $904,000 $931,000 $959,000 $988,000 $1,018,000 $1,048,000 $1,080,000 13 General Administration $623,000 $718,000 $746,000 $769,000 $792,000 $815,000 $840,000 $865,000 $891,000 $918,000 $945,000 14 Conservation $30,000 $31,000 $32,000 $33,000 $34,000 $35,000 $37,000 $38,000 $39,000 $40,000 $41,000 15 Total Operating Expenses $4,614,000 $4,869,000 $5,062,000 $5,215,000 $5,371,000 $5,531,000 $5,699,000 $5,869,000 $6,046,000 $6,226,000 $6,414,000 Capital Costs
16 Total Capital Spending $805,000 $2,230,000 $1,293,000 $2,077,000 $2,503,000 $2,578,000 $2,788,000 $2,871,000 $2,958,000 $3,046,000 $3,138,000 17 Existing Debt Service $1,058,000 $1,063,000 $946,000 $780,000 $785,000 $632,000 $517,000 $518,000 $516,000 $520,000 $316,000 18 Transfer Out 58,000 341,000 894,000 1,684,000 2,040,000 2,490,000 2,722,000 2,783,000 2,843,000 2,903,000 3,023,000 19 Total Capital Expenses $1,116,000 $1,404,000 $1,840,000 $2,464,000 $2,825,000 $3,122,000 $3,239,000 $3,301,000 $3,359,000 $3,423,000 $3,339,000 20 Total Revenue Requirement $5,730,000 $6,273,000 $6,902,000 $7,679,000 $8,196,000 $8,653,000 $8,938,000 $9,170,000 $9,405,000 $9,649,000 $9,753,000 21 Beginning Year Balance - 520 $2,196,000 $1,764,000 $1,759,000 $1,970,000 $2,157,000 $2,266,000 $2,381,000 $2,438,000 $2,495,000 $2,555,000 $2,615,000 22 Surplus/(Shortfall) ($432,000) ($5,000) $211,000 $187,000 $109,000 $115,000 $57,000 $57,000 $60,000 $60,000 $15,000 23 End of Year Balance - 520 $1,764,000 $1,759,000 $1,970,000 $2,157,000 $2,266,000 $2,381,000 $2,438,000 $2,495,000 $2,555,000 $2,615,000 $2,630,000 24 Debt Reserve $205,000 $205,000 $205,000 $205,000 $205,000 $205,000 $205,000 $205,000 $205,000 $205,000 $205,000 25 Contingency Reserve $1,559,000 $1,554,000 $1,765,000 $1,952,000 $2,061,000 $2,176,000 $2,233,000 $2,290,000 $2,350,000 $2,410,000 $2,425,000 26 Available Cash $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Debt Coverage Calculations
27 Revenue Available for Debt Service* $1,689,700 $1,628,500 $2,246,200 $2,842,200 $3,121,500 $3,418,700 $3,480,300 $3,544,500 $3,607,500 $3,673,000 $3,545,100 28 Total Yearly Parity Debt Payment $1,058,000 $1,063,000 $946,000 $780,000 $785,000 $632,000 $517,000 $518,000 $516,000 $520,000 $316,000 29 Debt Coverage Ratio 1.60 1.53 2.37 3.64 3.98 5.41 6.73 6.84 6.99 7.06 11.22 * Includes Development Capacity Charge revenue
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Packet Pg. 247 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Schedules
1 WATER CAPITAL REPLACEMENT RESERVE (522)
WATER DEVELOPMENT CAPACITY CHARGE FUND(920) 1 Beginning Balance - 522 979,000 $969,000 $310,000 $10,000 $373,000 $82,000 $164,000 $274,000 $370,000 $447,000 $502,000 Revenues 2 Interest Income $19,700 $19,500 $6,200 $200 $7,500 $1,700 $3,300 $5,500 $7,500 $9,000 $10,100 3 Transfer In 58,000 341,000 894,000 1,684,000 2,040,000 2,490,000 2,722,000 2,783,000 2,843,000 2,903,000 3,023,000 4 Total Revenues $77,700 $360,500 $900,200 $1,684,200 $2,047,500 $2,491,700 $2,725,300 $2,788,500 $2,850,500 $2,912,000 $3,033,100 Expenditures 5 Capital Projects $88,000 $1,020,000 $1,200,000 $1,321,000 $2,339,000 $2,410,000 $2,615,000 $2,693,000 $2,774,000 $2,857,000 $2,943,000 6 Ending Balance - 522 969,000 310,000 10,000 373,000 82,000 164,000 274,000 370,000 447,000 502,000 592,000 1 Beginning Balance - 920 $1,400,000 $1,669,000 $669,000 $765,000 $200,000 $217,000 $229,000 $237,000 $240,000 $237,000 $229,000 Revenues 2 Interest Income $28,000 $34,000 $13,000 $15,000 $4,000 $4,000 $5,000 $5,000 $5,000 $5,000 $5,000 3 Development Capacity Charges $958,000 $176,000 $176,000 $176,000 $176,000 $176,000 $176,000 $176,000 $176,000 $176,000 $176,000 5 Total Revenues $986,000 $210,000 $189,000 $191,000 $180,000 $180,000 $181,000 $181,000 $181,000 $181,000 $181,000 Expenditures 6 Transfer out $717,000 $1,210,000 $93,000 $756,000 $163,000 $168,000 $173,000 $178,000 $184,000 $189,000 $195,000 7 Ending Balance - 920 $1,669,000 $669,000 $765,000 $200,000 $217,000 $229,000 $237,000 $240,000 $237,000 $229,000 $215,000
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Packet Pg. 248 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Schedules
1 Current Rates
Effective
July 1, 2022
Effective
July 1, 2023
Effective
July 1, 2024
Effective
July 1, 2025
Effective
July 1, 2026
Water Usage Rates ($/HCF)
All Potable Water Use $5.51 $6.00 $6.48 $7.00 $7.35 $7.72 Riverview HOA 1$1.44 $1.47 $1.59 $1.71 $1.80 $1.89
Fixed Monthly Service Charges
Single Family $23.19 $26.49 $28.61 $30.90 $32.45 $34.07 Single Family + ADU (per DU) $23.19 $20.22 $21.84 $23.59 $24.77 $26.01 Multi-Family (per DU) $16.13 $15.75 $17.01 $18.37 $19.29 $20.25 Non-Residential
Up to 1" Meter $37.09 $41.91 $45.26 $48.88 $51.32 $53.89 1 1/2" Meter $71.54 $80.46 $86.90 $93.85 $98.54 $103.47 2" Meter $113.07 $126.72 $136.86 $147.81 $155.20 $162.96 3" Meter $210.02 $234.66 $253.43 $273.70 $287.39 $301.76 4" Meter $348.47 $388.86 $419.97 $453.57 $476.25 $500.06 6" Meter $694.27 $1,044.21 $1,127.75 $1,217.97 $1,278.87 $1,342.81 8" Meter $1,109.42 $1,391.16 $1,502.45 $1,622.65 $1,703.78 $1,788.97 10" Meter $1,593.91 $1,853.76 $2,002.06 $2,162.22 $2,270.33 $2,383.85 12" Meter $2,977.63 $2,605.49 $2,813.93 $3,039.04 $3,190.99 $3,350.54 1 Rate applicable to Riverview HOA for non-potable water under terms of 1997 order of condemnation.
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Packet Pg. 249 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Schedules 1
FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 1 Wages $701,300 $729,300 $758,500 $781,200 $804,700 $828,800 $853,700 $879,300 $905,700 $932,800 $960,800 2 Wages-Overtime $8,500 $8,800 $9,200 $9,500 $9,800 $10,000 $10,300 $10,700 $11,000 $11,300 $11,600 3 Fringe Benefits $243,900 $253,700 $263,800 $271,800 $279,900 $288,300 $297,000 $305,900 $315,000 $324,500 $334,200 4 Fringe Benefits: PERS Employer Share UAL $114,900 $119,500 $124,300 $128,000 $131,800 $135,800 $139,900 $144,000 $148,400 $152,800 $157,400 5 Fringe Benefits: REMIF Workers Comp Ins $33,400 $34,700 $36,100 $37,200 $38,300 $39,400 $40,600 $41,800 $43,100 $44,400 $45,700 6 Personal Protective Equipment $6,600 $6,900 $7,100 $7,400 $7,600 $7,800 $8,000 $8,300 $8,500 $8,800 $9,000 7 Building Maintenance Service Fee $76,700 $79,700 $82,900 $85,400 $88,000 $90,600 $93,300 $96,100 $99,000 $102,000 $105,000 8 Vehicle Service Fee $135,300 $140,700 $146,300 $150,700 $155,200 $159,900 $164,700 $169,600 $174,700 $180,000 $185,400 9 Vehicle Replacement Fee $100,000 $104,000 $108,200 $111,400 $114,700 $118,200 $121,700 $125,400 $129,100 $133,000 $137,000 10 Telecommunication & Data Services $13,000 $13,500 $14,100 $14,500 $14,900 $15,400 $15,800 $16,300 $16,800 $17,300 $17,800 11 Contracted Services $45,000 $46,800 $48,700 $50,100 $51,600 $53,200 $54,800 $56,400 $58,100 $59,900 $61,700 12 Meeting, Travel, and Training-Engineering $1,000 $1,000 $1,100 $1,100 $1,100 $1,200 $1,200 $1,300 $1,300 $1,300 $1,400 13 Meeting, Travel, and Training-Maintenance $4,800 $5,000 $5,200 $5,300 $5,500 $5,700 $5,800 $6,000 $6,200 $6,400 $6,600 14 Repairs and Maintenance $92,000 $95,700 $99,500 $102,500 $105,600 $108,700 $112,000 $115,400 $118,800 $122,400 $126,100 15 License, Dues, Certs, Membrshps $3,400 $3,500 $3,600 $3,700 $3,900 $4,000 $4,100 $4,200 $4,300 $4,500 $4,600 16 Rentals and Leases $5,800 $6,000 $6,300 $6,500 $6,700 $6,900 $7,100 $7,300 $7,500 $7,700 $7,900 17 Land, Bldg, Vehicles and Equipment $76,000 $79,000 $82,200 $84,700 $87,200 $89,800 $92,500 $95,300 $98,200 $101,100 $104,100 18 Office Supplies $2,700 $2,800 $2,900 $3,000 $3,100 $3,200 $3,300 $3,400 $3,500 $3,600 $3,700 19 Noticing $600 $600 $600 $600 $600 $700 $700 $700 $700 $700 $800 20 Operational Expense $78,000 $81,100 $84,400 $86,900 $89,500 $92,200 $95,000 $97,800 $100,700 $103,800 $106,900 21 Wages $1,045,000 $1,086,800 $1,130,300 $1,164,200 $1,199,100 $1,235,100 $1,272,200 $1,310,300 $1,349,600 $1,390,100 $1,431,800 22 Wages-Overtime $30,900 $32,100 $33,400 $34,400 $35,400 $36,500 $37,600 $38,700 $39,900 $41,100 $42,300 23 Wages-Standby/On Call $16,100 $16,700 $17,400 $17,900 $18,400 $19,000 $19,600 $20,100 $20,800 $21,400 $22,000 24 Fringe Benefits $400,500 $416,500 $433,200 $446,200 $459,600 $473,300 $487,500 $502,200 $517,200 $532,700 $548,700 25 Fringe Benefits: PERS Employer Share UAL $155,300 $161,500 $168,000 $173,000 $178,200 $183,500 $189,000 $194,700 $200,600 $206,600 $212,800 26 Fringe Benefits: REMIF Workers Comp Ins $59,800 $62,200 $64,700 $66,600 $68,600 $70,700 $72,800 $75,000 $77,200 $79,500 $81,900 27 Personal Protective Equipment $7,200 $7,500 $7,800 $8,000 $8,300 $8,500 $8,800 $9,000 $9,300 $9,600 $9,900 28 Telecommunication & Data Services $700 $700 $700 $700 $800 $800 $800 $800 $900 $900 $900 29 Utility Services $410,000 $426,400 $443,500 $456,800 $470,500 $484,600 $499,100 $514,100 $529,500 $545,400 $561,800 30 Contracted Services $90,000 $93,600 $97,300 $100,300 $103,300 $106,400 $109,600 $112,800 $116,200 $119,700 $123,300 31 Meeting, Travel, and Training $7,500 $7,800 $8,100 $8,400 $8,600 $8,900 $9,100 $9,400 $9,700 $10,000 $10,300 32 Repairs and Maintenance $7,000 $7,300 $7,600 $7,800 $8,100 $8,300 $8,600 $8,800 $9,100 $9,400 $9,600 33 License, Dues, Certs, Membrshps $10,500 $10,900 $11,400 $11,700 $12,000 $12,400 $12,800 $13,200 $13,600 $14,000 $14,400 34 Rentals and Leases $8,000 $8,300 $8,700 $8,900 $9,200 $9,500 $9,700 $10,000 $10,300 $10,600 $11,000 35 Office Supplies $4,000 $4,200 $4,300 $4,500 $4,600 $4,700 $4,900 $5,000 $5,200 $5,300 $5,500 36 Noticing $1,000 $1,000 $1,100 $1,100 $1,100 $1,200 $1,200 $1,300 $1,300 $1,300 $1,400 37 Government Fees $22,000 $22,900 $23,800 $24,500 $25,200 $26,000 $26,800 $27,600 $28,400 $29,300 $30,100 38 Operational Expense $401,700 $417,700 $434,400 $447,500 $460,900 $474,700 $489,000 $503,600 $518,700 $534,300 $550,300 39 Transfers Out $618,200 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 40 Overhead Allocation $497,300 $596,000 $619,800 $638,400 $657,600 $677,300 $697,600 $718,600 $740,100 $762,300 $785,200 41 Information Services Service Fee $277,100 $288,200 $299,700 $308,700 $318,000 $327,500 $337,400 $347,500 $357,900 $368,600 $379,700 42 Insurance $110,500 $114,900 $119,500 $123,100 $126,800 $130,600 $134,500 $138,500 $142,700 $147,000 $151,400 43 Bank Fees $35,000 $36,400 $37,900 $39,000 $40,200 $41,400 $42,600 $43,900 $45,200 $46,600 $48,000 44 Debt Service $1,954,000 $1,957,000 $1,791,000 $1,795,000 $1,791,000 $1,796,000 $1,795,000 $1,793,000 $1,794,000 $1,796,000 $1,795,000 45 Totals $7,912,200 $7,588,900 $7,648,600 $7,828,200 $8,005,200 $8,196,700 $8,387,700 $8,583,300 $8,788,000 $9,000,000 $9,215,000
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Packet Pg. 250 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Schedules
1 Budgeted Project Driver 1 College Street Sewer and Water Main Replacement condition $634,000 2 Healdsburg Avenue Sewer Replacement condition $1,000,000 3 McDonough Water Transmission Main Replacement condition $30,000 $300,000 4 Brown Street Sewer and Water Replacement condition $88,000 $882,000 5 University Street Sewer and Water Replacement condition $98,000 $882,000 6 Reed Court and Bianca Lane Sewer and Water Replacement condition $0 $91,000 $817,000 7 Corp Yard Force Main - Westside Rd Gravity Sewer - Hendricks Lift Station condition $50,000 $334,000 8 Corporation Yard Vactor Station and Pump Station condition $188,000 $1,250,000 9 Reroof Pump Shop condition $40,000 10 Water Reclamation Facility Membranes and Accessories regulatory compliance $191,000 $197,000 11 WRF Dewatered Biosolids Modifications operational change $200,000 12 Recycled Water System Expansion regulatory compliance $1,900,000 13 Totals: $3,765,000 $703,000 $2,580,000 $1,307,000 $817,000 Budgeted Capital Spending in Out Years: $1,944,000 $1,944,000 $1,944,000 $1,944,000 $2,592,000 $3,240,000 $3,240,000 Deferred Projects Driver
Estimated Cost
(2022 dollars)
14 WRF Biosolids Dewatering Improvements reliability / resilience $1,650,000 $0 $150,000 $1,500,000 $0 15 I&I Reduction Investigation regulatory compliance $300,000 $150,000 $0 $150,000 $0 16 I&I Reduction Improvements/ Condition Based Rehab/Replacement, Basin 1 regulatory compliance $3,000,000 $0 $1,500,000 $0 $1,500,000 17 Grove Street and Vine Street Sewer Trunk Main Replacement capacity $3,575,000 $325,000 $3,250,000 $0 $0 18 University Street Sewer and Water Replacement (North Street to Mason St) condition $935,000 $0 $85,000 $850,000 $0 19 Johnson Street Sewer and Water condition $85,500 $0 $0 $0 $85,500 Totals: $9,545,500
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Packet Pg. 251 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Schedules
1WASTEWATER OPERATING FUND (5
30) 1 Rate Revenue Increase: 8.0% 8.0% 7.0% 6.0% 6.0% 6.0% 5.0% 6.0% 6.0% 5.0% Revenue 2 Wastewater Rate Revenue $7,004,552 $7,005,000 $7,606,000 $8,259,000 $8,885,000 $9,470,000 $10,094,000 $10,759,000 $11,360,000 $12,109,000 $12,907,000 3 Change due to growth & use $41,000 $45,000 $48,000 $52,000 $56,000 $59,000 $63,000 $67,000 $71,000 $76,000 4 Increase due to rate adjustments $560,000 $608,000 $578,000 $533,000 $568,000 $606,000 $538,000 $682,000 $727,000 $645,000 Non-Rate Revenues 5 Interest Earnings $70,000 $60,000 $42,000 $39,000 $42,000 $45,000 $48,000 $51,000 $54,000 $57,000 $61,000 6 Operating Revenue $22,000 $22,000 $22,000 $22,000 $22,000 $22,000 $22,000 $22,000 $22,000 $22,000 $22,000 7 Total Revenue $7,096,552 $7,688,000 $8,323,000 $8,946,000 $9,534,000 $10,161,000 $10,829,000 $11,433,000 $12,185,000 $12,986,000 $13,711,000 O&M Costs 8 Employee Costs $3,357,000 $3,491,000 $3,631,000 $3,740,000 $3,852,000 $3,968,000 $4,087,000 $4,209,000 $4,335,000 $4,465,000 $4,599,000 9 Utilities & Fuel $410,000 $426,000 $443,000 $457,000 $470,000 $485,000 $499,000 $514,000 $530,000 $545,000 $562,000 10 Maintenance & Operations $897,000 $933,000 $971,000 $1,000,000 $1,030,000 $1,061,000 $1,093,000 $1,125,000 $1,159,000 $1,194,000 $1,230,000 11 General Administration $675,000 $781,000 $812,000 $837,000 $862,000 $888,000 $914,000 $942,000 $970,000 $999,000 $1,029,000 12 Total Operating Expenses $5,339,000 $5,631,000 $5,857,000 $6,034,000 $6,214,000 $6,402,000 $6,593,000 $6,790,000 $6,994,000 $7,203,000 $7,420,000 Capital Costs
13 Total Capital Spending $702,000 $2,658,000 $1,400,000 $910,000 $2,231,000 $2,298,000 $2,367,000 $2,438,000 $3,348,000 $4,310,000 $4,439,000 14 Existing Debt Service $1,954,000 $1,957,000 $1,791,000 $1,795,000 $1,791,000 $1,796,000 $1,795,000 $1,793,000 $1,794,000 $1,796,000 $1,795,000 15 Transfer Out $1,054,552 $275,000 $538,000 $961,000 $1,382,000 $1,807,000 $2,275,000 $2,700,000 $3,210,000 $3,787,000 $4,316,000 16 Total Capital Expenses $3,008,552 $2,232,000 $2,329,000 $2,756,000 $3,173,000 $3,603,000 $4,070,000 $4,493,000 $5,004,000 $5,583,000 $6,111,000 Transfers
17 Transfer In from Drainage Capital Fund $26,000 $26,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 18 Transfer In from Fund 930 $300,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 19 Total Revenue Requirement $8,021,552 $7,837,000 $8,186,000 $8,790,000 $9,387,000 $10,005,000 $10,663,000 $11,283,000 $11,998,000 $12,786,000 $13,531,000 20 Beginning Year Balance - 530 $3,002,000 $2,077,000 $1,928,000 $2,065,000 $2,221,000 $2,368,000 $2,524,000 $2,690,000 $2,840,000 $3,027,000 $3,227,000 21 Surplus/(Shortfall) ($925,000) ($149,000) $137,000 $156,000 $147,000 $156,000 $166,000 $150,000 $187,000 $200,000 $180,000 22 End of Year Balance - 530 $2,077,000 $1,928,000 $2,065,000 $2,221,000 $2,368,000 $2,524,000 $2,690,000 $2,840,000 $3,027,000 $3,227,000 $3,407,000 23 Contingency Reserve $1,751,000 $1,902,000 $2,065,000 $2,221,000 $2,368,000 $2,524,000 $2,690,000 $2,840,000 $3,027,000 $3,227,000 $3,407,000 24 Available Cash $326,000 $26,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 Debt Coverage Calculations
25 Revenue Available for Debt Service* $4,295,652 $2,433,200 $2,773,100 $3,205,700 $3,617,500 $4,043,800 $4,513,900 $4,922,900 $5,479,700 $6,072,300 $6,572,800 26 Total Yearly Parity Debt Payment $1,954,000 $1,957,000 $1,791,000 $1,795,000 $1,791,000 $1,796,000 $1,795,000 $1,793,000 $1,794,000 $1,796,000 $1,795,000 27 Debt Coverage Ratio 2.20 1.24 1.55 1.79 2.02 2.25 2.51 2.75 3.05 3.38 3.66 * Includes Development Capacity Charge revenue
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Packet Pg. 252 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Schedules
1 WASTEWATER CAPITAL REPLACEMENT RESERVE (532)
WASTEWATER DEVELOPMENT CAPACITY CHARGE FUND(930) 1 Beginning Balance - 532 $736,000 $1,526,552 $1,617,552 $1,172,552 $1,362,552 $684,552 $359,552 $434,552 $873,552 $929,552 $609,552 Revenues 2 Interest Income $49,000 $31,000 $33,000 $24,000 $27,000 $14,000 $7,000 $9,000 $18,000 $19,000 $12,000 3 Transfer In 1,054,552 275,000 538,000 961,000 1,382,000 1,807,000 2,275,000 2,700,000 3,210,000 3,787,000 4,316,000 4 Total Revenues $1,103,552 $306,000 $571,000 $985,000 $1,409,000 $1,821,000 $2,282,000 $2,709,000 $3,228,000 $3,806,000 $4,328,000 Expenditures 5 Loan $113,000 $113,000 $113,000 $113,000 $113,000 $113,000 $113,000 $113,000 $113,000 $113,000 $113,000 6 Capital Projects $200,000 $102,000 $903,000 $682,000 $1,974,000 $2,033,000 $2,094,000 $2,157,000 $3,059,000 $4,013,000 $4,133,000 7 Ending Balance - 532 $1,526,552 $1,617,552 $1,172,552 $1,362,552 $684,552 $359,552 $434,552 $873,552 $929,552 $609,552 $691,552 1 Beginning Balance - 930 $1,428,000 $2,789,100 $553,300 $330,400 $372,100 $385,600 $392,400 $391,300 $382,200 $363,900 $337,200 Revenues 2 Interest Income $12,100 $56,200 $11,100 $6,700 $7,500 $7,800 $7,900 $7,900 $7,700 $7,300 $6,800 3 Development Capacity Charges $2,151,000 $263,000 $263,000 $263,000 $263,000 $263,000 $263,000 $263,000 $263,000 $263,000 $263,000 4 Total Revenues $2,163,100 $319,200 $274,100 $269,700 $270,500 $270,800 $270,900 $270,900 $270,700 $270,300 $269,800 Expenditures 5 Capacity Charge Funded Capital Projects $502,000 $2,555,000 $497,000 $228,000 $257,000 $264,000 $272,000 $280,000 $289,000 $297,000 $306,000 6 Transfer Out to 530 $300,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 7 Total Expenditures $802,000 $2,555,000 $497,000 $228,000 $257,000 $264,000 $272,000 $280,000 $289,000 $297,000 $306,000 8 Ending Balance - 930 $2,789,100 $553,300 $330,400 $372,100 $385,600 $392,400 $391,300 $382,200 $363,900 $337,200 $301,000
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Packet Pg. 253 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates) City of Healdsburg
2022 Water and Wastewater Rate Study Schedules
1 Current July 1, 2022 July 1, 2023 July 1, 2024 July 1, 2025 July 1, 2026 Monthly Residential Service Charges
Single Family $37.33 $43.21 $46.67 $49.94 $52.94 $56.12 Single Family + ADU (per DU) $37.33 $29.58 $31.95 $34.19 $36.24 $38.41 Flat Rate1
$99.76 $96.31 $104.01 $111.29 $117.97 $125.05
Multifamily (per DU) $34.50 $35.00 $37.80 $40.45 $42.88 $45.45 Monthly Non-Residential Service Charges (per meter)
Up to 1" meter $60.67 $70.14 $75.75 $81.05 $85.91 $91.06 1 1/2" meter $118.49 $137.49 $148.49 $158.88 $168.41 $178.51 2" meter $188.16 $218.31 $235.77 $252.27 $267.41 $283.45 3" meter $350.82 $406.89 $439.44 $470.20 $498.41 $528.31 4" meter $583.15 $676.29 $730.39 $781.52 $828.41 $878.11 6" meter $1,163.46 $1,821.24 $1,966.94 $2,104.63 $2,230.91 $2,364.76 8" meter $1,860.11 $2,427.39 $2,621.58 $2,805.09 $2,973.40 $3,151.80 10" meter $2,673.10 $3,235.59 $3,494.44 $3,739.05 $3,963.39 $4,201.19 12" meter $4,995.02 $4,548.92 $4,912.83 $5,256.73 $5,572.13 $5,906.46 Wastewater Usage Charges ($/HCF)
All Residential 2$10.41 $10.62 $11.47 $12.27 $13.01 $13.79 Non-Residential 3
Low Strength $9.37 $9.55 $10.31 $11.03 $11.69 $12.39
Medium Strength $13.62 $13.97 $15.09 $16.15 $17.12 $18.15 High Strength $19.85 $20.44 $22.08 $23.63 $25.05 $26.55 1 Applies to customers not receiving water service. 2
Applies to average winter water usage during the proceeding January to April period, with the highest month being omitted. 3 Applies to actual monthly water usage.
Proposed Effective Date
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Packet Pg. 254 Attachment: Healdsburg 2022 Water and Wastewater Rate Study (3585 : Water/Wastewater Rates)
CITY OF HEALDSBURG
CITY COUNCIL AGENDA STAFF REPORT
MEETING DATE: April 18, 2022
SUBJECT: Reserve Policy Review and Update
PREPARED BY: Andrew Sturmfels, Administrative Services Director STRATEGIC INITIATIVE(S):
Provide Effective Governance
Provide Resident-Driven Community Services
RECOMMENDED ACTION(S):
1. Adopt a Resolution rescinding Resolution No. 139-2000 and updating the reserve policy for the Water and Wastewater Funds; and
2. Adopt a Resolution updating the reserve policy for the Lighting and Landscaping Assessment District and rescinding the previous reserve policy adopted by Resolution No. 95-2009.
COMMUNITY ENGAGEMENT/OUTREACH:
Not applicable.
BACKGROUND:
The City Budget includes a variety of governmental funds. The fund balance for each fund is the difference between assets and liabilities within the fund. For purposes of financial reporting, fund balance is required to be reported in two components – reserved and unreserved. When a portion of a fund balance is reserved, it either means the resources are in a form that cannot be appropriated and spent (such as inventory) or that the resources are legally limited to being used for a particular purpose. For Healdsburg, examples of reserved expenses would include grant funds received for a specific purpose and the City Pension Stabilization Fund. The portion of the fund balance that is not reserved is called the unreserved fund balance. It represents resources that can be used for any purpose of the fund they are reported in.
The purpose of a reserve policy is to set a target for unreserved fund balance that a fund should maintain, at a minimum. A reserve policy is a best practice as the policy serves to demonstrate financial stability to ratepayers, credit agencies, and lending institutions. Reserve policies for enterprise funds generally include (1) an operating reserve based upon several days-of-cash on
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hand or a set percentage of the annual operating budget, and (2) a capital reserve to fund unplanned capital expenses. At its core, a reserve policy is a financial risk management tool.
The city has implemented and revised reserve policies for operating funds many times over the last several decades. Initial reserve policies were created for the General Fund, Electric Fund, Water Fund, and Wastewater Fund in 2000. In 2003 City Council adopted an additional recession reserve for the General Fund, and in 2016 City Council updated the Reserve Policy to its current 30% of general operating expenditures. In 2006 the City Council approved a reserve policy for the Community Services Fund. In 2008, and again in 2019, the city updated the Reserve Policy for the Electric Fund, including a capital reserve. In 2009, the City Council approved a Reserve Policy for the Landscaping and Lighting Assessment Districts.
Current Reserve Policy Standards for relevant funds are provided in the table below:
Reserve Policy Fund(s) Reserve Targets Resolution
Lighting and Landscape
Assessment Districts
221, 222,
223, 224, 225
75%-100% of annual budget 95-2009
Electric Fund 540, 542
50% of Approved Operating
Budget or 180 days of cash
on hand
$4 million capital reserve
112-2019
Water Fund 520 25% of revenues 139-2000
Sewer Fund (Wastewater) 530 25% of revenues 139-2000
Community Services Fund 585 30% of annual operating
expenditures 55-2016
General Fund 101 30% of annual operating
expenditures 56-2016
DISCUSSION/ANALYSIS:
The existing reserve policies for the General Fund, Community Services Fund, and Electric Fund meet or exceed current Government Finance Officers Association best practice recommendations. Staff do not propose any changes to the reserve policies for those funds. Upon review staff are recommending the following changes to the Lighting and Landscape Assessment District, Water, and Wastewater Fund Reserve Policies.
Updating the Lighting and Landscape Assessment District Fund Reserve Policy, from 75- 100% of annual budget to 50% of annual operating budget.
Landscape and Lighting Assessment Districts (LLAD) are governed by Division 15, Part 2 of the Streets and Highway Code. SHC Code Section 22569 includes language that limits LLAD reserves to the amount of costs estimated for maintenance and servicing from the beginning of the fiscal year to December 10th or whenever the City expects to receive it’s apportionment of special assessments and tax collections form the county, whichever is later.
The City receives its tax apportionment of special assessments from the County in mid to late December each year. As such, the City Reserve policy should be no more than half of the annual operating budget for each district. Staff recommend updating the reserve policy to reflect a 50%
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Reserve. The impacts of the reduction in reserve would be offset by establishing long-term project reserves as part of the annual LLAD engineering report, which is also authorized within the Streets and Highway Code. Capital reserves for LLAD’s must be project specific and will be determined within the scope of the current annual process. Staff are not requesting action to establish the capital reserve at this time and will bring back a recommended action to Council with the annual Engineer’s Report in May.
Revising the Water Fund and Wastewater Fund reserve policies to be 25% of operating expenditures, instead of operating revenues, and including a $1,000,000 capital reserve for each Capital Fund.
As part of the water rate study the consultant has recommended updating the reserve policy to be 25% of expenditures instead of 25% of revenue. The consultant has also recommended setting a capital reserve of $1,000,000 to ensure future funding for emergency capital repairs and replacement.
Having a reserve based on revenue in normal financial years is a conservative policy, as budgets should generally demonstrate larger revenues than expenses. However, when revenue’s sharply decline as they have in the current fiscal year due to drought, having the reserve target tied to revenue is problematic. In those cases, the very moment the City needs a strong reserve, the reserve amount is declining with the loss in revenue. With a reserve target that automatically decreases with lower revenues, those monitoring the budget may be less inclined to take action to reduce costs. As such, City staff recommend revising the water and wastewater reserve policies to be 25% budgeted operating expenses. This will result in a modest increase in reserve target for the current fiscal year.
Given the age and frequency of issues with our existing water and sewer infrastructure, creating a capital reserve of $1 million is a logical approach to ensuring the City can respond to future infrastructure failures. Staff propose adding this reserve target to both the Water Capital Fund and Sewer Capital Fund. Additional details on the impact of this addition can be found in the Fiscal Impact section.
ENVIRONMENTAL STEWARDSHIP:
Ensuring the fiscal health of our utility funds is a critical component to ensuring funds are available to complete future projects that will have a direct and positive impact on the environment.
ALTERNATIVES:
Council can direct staff to maintain the status quo or make additional changes to the proposed changes in reserve policies. If an alternative direction is preferred, staff would request the ability to bring this item back at a later date.
FISCAL IMPACT:
LLAD Funds:
Lowering the operational reserve requirement for the LLAD’s will provide the opportunity to reallocate these funds to a Long-Term Project Reserve in the annual Engineers Report that will be presented to council in May. The anticipated impact would be minimizing volatility of future
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years assessments while still maintaining sufficient funds for operations while building funding for long-term capital improvements.
Water Operating Fund:
In the current year, the Water Operating Fund reserve target would increase from the Revised Budget of $1,473,961 to the proposed amount of $1,573,723 for a total increase of $99,762, as seen in the chart below. While modest, the increase reflects the additional need for reserves to support ongoing operations in the event of continued revenue deficiencies. It also serves as a benchmark to assess the sustainability of current operational expenditures. In years where revenue was not impacted by the drought, the reserve target would be modestly reduced as revenues would exceed budgeted expenditures.
Despite the increase, the ending fund balance is still projected to be $2,752,585, which includes the new 25% reserve target of $1,573,723 and a remaining working capital balance of $1,178,862.
FY 21-22 FY 21-22 FY 21-22
Budget Revised Proposed
Beginning Working Capital $3,176,228 $3,176,228 $3,176,228 Revenue 6,878,022 5,895,842 5,895,842
Expenditure - Operations 5,801,665 6,294,891 6,294,891
Expenditure - Capital Transfers 500,000 24,594 24,594
Estimated Ending Working Capital $3,752,585 $2,752,585 $2,752,585 Change in Working Capital $576,357 ($423,643) ($423,643) Components of Fund Balance
Reserve Policy (25%) $1,719,506 $1,473,961 $1,573,723
Remaining Working Capital 2,033,080 1,278,625 1,178,862 Total $3,752,585 $2,752,585 $2,752,585
Water Fund Balance
Water Capital Fund:
The Water Capital Fund does not have sufficient funds to meet the proposed reserve policy in the current year. The chart below illustrates the Water Capital Fund is budgeted to have an available fund balance of $250,812 which falls below the proposed $1 million target by $749,188. As part of the budget, staff will propose transferring additional funds from the Water Operation Fund to the Water Capital Fund to build the reserve over time. The City does have Water Impact Fee funds available, but they must be tied to future water expansion projects or operations. The overall impact will be reflected in the limited number and scope of capital project that will be included in the proposed Capital Improvement Plan budget under development.
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FY 21-22 FY 21-22 FY 21-22
Budget Revised Proposed
Beginning Working Capital $769,895 $769,895 $769,895
Revenue 618,205 727,221 727,221
Expenditure 922,941 1,031,957 1,246,304
Estimated Ending Working Capital $465,159 $465,159 $250,812 Change in Working Capital ($304,736) ($304,736) ($519,083) Components of Fund Balance
Reserve Policy $0 $0 $1,000,000
Remaining Working Capital 465,159 465,159 -749,188
Total $465,159 $465,159 $250,812
Water Capital Fund Balance
Sewer Operating Fund:
The Sewer Operating Fund reserve target would decrease from the Revised Budget of $1,927,727 to the Proposed amount of $1,903,467 for a total decrease of $24,260, as seen in the chart below. The small decrease reflects the healthy alignment of revenues and expenditures.
FY 21-22 FY 21-22 FY 21-22
Budget Revised Proposed
Beginning Working Capital $3,010,746 $3,010,746 $3,010,746 Revenue 7,484,644 7,710,906 7,710,906
Expenditure - Operations 7,318,793 7,613,866 7,613,866
Expenditure - Capital Transfers 618,200 642,794 642,794 Estimated Ending Working Capital $2,558,397 $2,464,992 $2,464,992 Change in Working Capital ($452,349) ($545,754) ($545,754) Components of Fund Balance
Reserve Policy (25%) $1,871,161 $1,927,727 $1,903,467
Remaining Working Capital 687,236 537,266 561,526
Total $2,558,397 $2,464,992 $2,464,992
Sewer Fund Balance
Sewer Capital Fund:
The Sewer Capital Fund has sufficient funds to meet the proposed reserve target and is budgeted to have $1,275,529 in available working capital to use towards future capital projects.
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FY 21-22 FY 21-22 FY 21-22
Budget Revised Proposed
Beginning Working Capital $2,443,391 $2,443,391 $2,443,391 Revenue 646,328 646,328 646,328
Expenditure 814,190 814,190 814,190
Estimated Ending Working Capital $2,275,529 $2,275,529 $2,275,529 Change in Working Capital ($167,862) ($167,862) ($167,862) Components of Fund Balance
Reserve Policy $0 $0 $1,000,000
Remaining Working Capital 2,275,529 2,275,529 1,275,529 Total $2,275,529 $2,275,529 $2,275,529
Sewer Capital Fund Balance
ENVIRONMENTAL ANALYSIS:
The adoption of these Resolutions is exempt from environmental review under the California Environmental Quality Act as this action is not considered a “project” as defined in Title 14, California Code of Regulations, Section 15378(a), as it has no reasonably foreseeable direct or indirect physical change on the environment, and is further specifically excluded under Section 15378(b)(4), as a government funding mechanism or fiscal activity that does not involve a commitment to any specific project.
ATTACHMENT(S):
Water and Wastewater Resolution
LLAD Resolution
ATTACHMENT(S):
Water and Wastewater Resolution
LLAD Resolution
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CITY OF HEALDSBURG
RESOLUTION NO XX-2022
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
HEALDSBURG RESCINDING RESOLUTION NO. 139-2000
AND ADOPTING A NEW RESERVE POLICY FOR THE
WATER AND WASTEWATER FUNDS
WHEREAS, the City’s Water and Wastewater utilities are publicly owned and provide water and wastewater services to the City’s residents and businesses; and WHEREAS, the operation of the City’s Water and Wastewater utilities requires ongoing planned and unplanned maintenance; and
WHEREAS, The Government Finance Officers Association recognizes having a fund balance policy for the General Fund and Enterprise Funds a best practice in budgeting and financial management; and
WHEREAS, in 2000, the City Council adopted Resolution 139-2000, which established reserve targets for the General Fund, Water Fund, Wastewater Fund, and Electric Fund; and WHEREAS, the City Council has since adopted updated reserve targets for the General Fund and Electric Fund; and
WHEREAS, City staff recommend updating the reserve target to be based on 25% of budgeted operating expenses excluding capital transfers for both the water and wastewater funds; and
WHEREAS, City staff recommend additionally adding a $1 million Capital Fund reserve for the water and wastewater funds to cover the contingencies of major equipment failures and natural disasters; and
WHEREAS, the reserve levels proposed are realistic and worthwhile for the purposes of providing stability of operations and future water and wastewater rates for City customers; and WHEREAS, the City Council has reviewed the policy and desires to update the policy to better align with the City’s current fiscal position and budget priorities; and WHEREAS, the continued administrative actions do not constitute a project under California Environmental Quality Act (“CEQA”) guidelines and are therefore exempt from further environmental review.
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Packet Pg. 261 Attachment: Water and Wastewater Resolution [Revision 1] (3563 : Reserve Policy Review and Update) Resolution No. -2022