TO: HONORABLE MAYOR FROM: Julia H. Cooper
AND CITY COUNCIL Kerrie Romanow
Jim Shannon
SUBJECT: SEE BELOW DATE: March 28, 2022
Approved Date
3/29/2022
SUBJECT: ACTIONS RELATED TO THE STATE OF CALIFORNIA LOW-INCOME
HOUSEHOLD WATER ASSISTANCE PROGRAM
RECOMMENDATION
(a) Accept the staff report regarding the State of California’s Low-Income Household Water Assistance Program (LIHWAP).
(b) Adopt a resolution:
(1) Ratifying the City of San José application to participate in the LIHWAP, and authorizing the City Manager, Director of Finance, or their designees to negotiate and execute the necessary agreements, including the Direct Payment Agreement with Horne, LLP, and any amendments or revisions, and other actions, to execute the participation agreement and fulfill associated participation requirements; and (2) Authorizing the City Manager, Director of Finance or their designees to apply for, negotiate, and execute any documents, and take other actions necessary to receive funds for any other state or federal assistance programs which will help customers pay water utility bills.
(c) Adopt the following 2021-2022 Appropriation Ordinance and Funding Sources Resolution amendments in the General Fund:
(1) Increase the estimate for Transfers and Reimbursements by $500,000; (2) Establish the Low-Income Household Water Assistance Payment Program City- Wide Expenses appropriation to the Environmental Services Department in the amount of $200,000; and
(3) Establish the Low-Income Household Water Assistance Payment Program Reserve in the amount of $300,000.
COUNCIL AGENDA: 04/12/2022
FILE: 22-484
ITEM: 6.2
HONORABLE MAYOR AND CITY COUNCIL
March 28, 2022
Subject: Actions Related to the Low-Income Household Water Assistance Program
(d) Adopt the following 2021-2022 Appropriation Ordinance and Funding Sources Resolution amendments in the Water Utility Fund:
(1) Increase the estimate for Other Revenue by $500,000; and (2) Increase the Transfer to the General Fund – Late Fees by $500,000.
OUTCOME
The proposed action allows the City of San José (City) to fully participate in the LIHWAP, which provides customer relief for unpaid utility bills, and authorizes the Director of Finance to take any actions as required for participation in the LIHWAP and to take actions necessary to secure any other state and federal assistance programs for relief for utility bills.
BACKGROUND
The San José Municipal Water System is a rate-funded utility, intended to operate at full cost recovery, which provides water to approximately 26,000 customer accounts, serving a population of about 130,000 people in the North San José, Alviso, Evergreen, Edenvale, and Coyote Valley areas. Water customers are billed on a bimonthly basis and charged a flat service charge based on the size of the water meter, as well as a quantity charge per unit of water used.
The COVID-19 pandemic has led to job loss and other financial hardships for many San José residents and businesses. Pandemic-related economic hardship has continued for the public, leading to an increase in unpaid water bills.
Established by Congress in December 2020, the Low-Income Household Water Assistance Program, funded on a one-time basis with appropriations from the Consolidated Appropriations Act, 2021 and the American Rescue Plan Act of 2021 as part of a COVID-19 emergency effort, will provide financial assistance to low-income Americans to help manage their residential water and wastewater costs, and help low-income households pay their outstanding water bills.
California has been allocated $116 million in one-time funding to provide LIHWAP assistance.
Where eligible, California residents can potentially receive utility bill assistance from both the California Water and Wastewater Arrearage Payment Program (CWWAP) and LIHWAP.
On November 16, 2021, the City Council approved the Municipal Water Billing and Customer Service Audit Report
1, which included direction on Recommendation #13 (enabling rapid distribution of federal and state aid for low income residents with delinquent bills) “to provide Council and Council staff with the best available information about local, state and federal assistance programs that they can share with their constituents through our outreach and engagement efforts.” The City Council also directed the Administration to pursue low-income assistance programs that can be accomplished with funding from the federal LIHWAP or state
1 Municipal Water Billing and Customer Service Audit Report and Council memoranda https://sanjose.legistar.com/LegislationDetail.aspx?ID=5203911&GUID=35F2CB81- 2835-41D 0-A555- CBB7E8C72B07&Options=&Search=
HONORABLE MAYOR AND CITY COUNCIL
March 28, 2022
Subject: Actions Related to the Low-Income Household Water Assistance Program
grant programs, and to expedite implementation to ensure eligibility of City residents for those programs as soon as the dollars become available (and, in particular, before they are exhausted by statewide demand). Furthermore, for those recommendations that state law or other regulations require the use of General Fund dollars, “return to Council through the budgetary process, with estimates of the cost of enabling Muni Water’s customers and the more than 90% of San José’s low-income residents who live outside of Muni Water’s service area to benefit from eligibility from the same program.”
On January 11, 2022
2, the City Council approved City participation in the CWWAP. On January 31, 2022, the City received $643,419 in CWWAP funding to distribute as bill credits to eligible residential and commercial customers, plus an additional 3% for the City’s administrative costs of implementing the CWWAP. The CWWAP customer credits will be applied to eligible customer accounts by the end of March 2022.
ANALYSIS
The Department of Community Services and Development (CSD) has been designated the administering agency for LIHWAP in California. CSD developed a LIHWAP State Plan modeled on existing processes, procedures, policies, and systems to provide assistance through the CSD-administered Low-Income Home Energy Assistance Program (LIHEAP). The U.S.
Department of Health and Human Services, Office of Community Services, approved the state’s plan in November 2021. In February 2022, CSD released draft program guidelines and held a public review and input session. The LIHWAP is scheduled to commence in May/June 2022 and operate through August 2023.
The LIHWAP will ensure low-income households have access to safe and clean drinking water.
Eligible households may receive a one-time payment of up to $2,000 to be credited to their water account, which can cover a customer’s past due balance, current charges, late fees, and taxes.
Low-income households can demonstrate eligibility for LIHWAP either by meeting specified income levels, defined as total household income at or below 60 percent California State Median Income (SMI), or a member of the household must be a current recipient of one of the following federal programs: CalFRESH, CalWORKS, or LIHEAP.
2 California Water and Wastewater Arrearage Payment Program, https://sanjose.legistar.com/View.ashx?M=F&ID=10362895&GUID=00CFB992- C 87D-4809-AC24- DB65AE1C7A55
HONORABLE MAYOR AND CITY COUNCIL
March 28, 2022
Subject: Actions Related to the Low-Income Household Water Assistance Program
SMI for
4-Person
Family
60% SMI
for 1-Person
Household
60% SMI
for 2-Person
Household
60% SMI
for 3-Person
Household
60% SMI
for 4-Person
Household
60% SMI
for 5-Person
Household
60% SMI
for 6-Person
Household
California3,4 $98,644 $30,777 $40,246 $49,716 $59,186 $68,656 $78,126
The statewide LIHWAP will be administered by several state-designated local service providers.
Sacred Heart Community Service (Sacred Heart) will be the local service provider for the Santa Clara County area. The local service provider will be responsible for conducting outreach to low- income households, confirming household eligibility, collecting all information required for the LIHWAP application, and determining LIHWAP benefit payment amounts for households.
The City is required to participate in CSD’s Direct Payment program and execute a Direct Payment Agreement with Horne, LLP (attached) to receive the funds. The benefit payments will be provided directly to utilities on behalf of eligible households. As a participant in LIHWAP, the City will accept LIHWAP payments on behalf of approved households within the Municipal Water System service area, as well as being responsible for confirming benefits have been credited to customer accounts, confirming services have been restored or disconnection prevented, assisting with promoting the LIHWAP program to Municipal Water System customers, and notifying the customer an LIHWAP benefit has been applied to their account.
In addition, the City is responsible for complying with program documentation requirements and state reporting. Horne LLP will be primarily responsible for coordinating with utility providers to both set up participation in the Direct Payment program, and to collect information about account credits as necessary to satisfy federal LIHWAP reporting requirements.
San José Water Company and Great Oaks Water Company, the other two water utility providers to San José residents, also are participating in the LIHWAP.
A General Fund budget of $500,000 has been identified as necessary to implement the LIHWAP from May/June 2022 to August 2023. Funding up to $170,000 is estimated to be needed to support staff efforts in complying with the terms and conditions of the Direct Payment Agreement with Horne, LLP. In addition, staff recommends funding up to $180,000 to support staff costs to coordinate city-wide outreach with Sacred Heart, San José Water Company, Great Oaks Water Company, and Council offices, and to develop and distribute outreach material, as well as up to $150,000 in non-personal/equipment expenses to create LIHWAP outreach material, including translations, printing, and postage, available to all San José residents. As
3 LIHEAP IM-2021-03 State Median Income Estimates
https://www.acf.hhs.gov/sites/default/files/documents/ocs/COMM_LIHEAP_IM03%20Attachment1%20SMITable_ FY2022.pdf
4 In accordance with 45 CFR 96.85, 60 percent of each State's estimated median income for a four-person family is multiplied by the following percentages to adjust for household size for LIHEAP: 52 percent for one person, 68 percent for two persons, 84 percent for three persons, 100 percent for four persons, 116 percent for five persons, and 132 percent for six persons. For each additional household member above six persons, add three percentage points to the percentage for a six-person household (132 percent), and multiply the new percentage by 60 percent of the State's estimated median income for a four-person household.
HONORABLE MAYOR AND CITY COUNCIL
March 28, 2022
Subject: Actions Related to the Low-Income Household Water Assistance Program
described below, the General Fund resources for this program will come from previously collected late fees received by the Municipal Water System.
Lastly, it is unclear if additional programs will become available to assist customers with utility bills. However, in order to move quickly on potential funding sources, especially when there are short deadlines or limited funds, staff requests additional delegation of authority to apply for, receive, and fully participate in those programs.
CONCLUSION
The City will participate in LIHWAP as a utility provider so Municipal Water System customers may receive funds under the program. Additionally, the City will generate outreach material to assist in promoting the LIHWAP to San José residents to encourage participation in the program.
EVALUATION AND FOLLOW-UP
Staff will provide information to the state as necessary to facilitate participation in the program and will bring back further actions related to this recommendation as necessary.
CLIMATE SMART SAN JOSE
The recommendation in this memorandum has no effect on Climate Smart San José energy, water, or mobility goals.
PUBLIC OUTREACH
This memorandum will be posted on the City’s Council Agenda website for the April 12, 2022 Council Meeting.
COORDINATION
This item has been coordinated with the Department of Finance and the Office of the City Attorney.
COMMISSION RECOMMENDATION/INPUT
No commission recommendation or input is associated with this action.
HONORABLE MAYOR AND CITY COUNCIL
March 28, 2022
Subject: Actions Related to the Low-Income Household Water Assistance Program
FISCAL/POLICY ALIGNMENT
The 2021-2022 City Manager’s Budget Addendum #20 Municipal Water System Rate Change5 addressed a pathway to reducing San José Municipal Water rates, including reviewing strategies to utilize federal, state, and local assistance to cover the costs incurred by the system due to families’ inability to pay water bills.
COST SUMMARY/IMPLICATIONS
Eligible Municipal Water System customers may receive a one-time credit of up to $2,000 for water bills. The staffing and non-personal/equipment costs for the program are anticipated to be up to $500,000 in the General Fund, with $200,000 allocated in a new City-wide Expenses appropriation in 2021-2022 to begin implementation of the program immediately and the remaining funding of $300,000 allocated in a reserve for anticipated use. It is difficult to predict how many households will qualify for this program, making it challenging to determine how much staff costs and non-personal/equipment costs are necessary to implement this program.
Should additional funds be needed beyond the initial $200,000 for this program, budget actions will be brought forward at a later date to liquidate funding from the reserve.
Late fees collected in the Water Utility Fund in 2021-2022 are expected to exceed the $300,000 estimate by $500,000, which is due to customers making larger than expected payments on outstanding balances from July to September 2021. This increased account activity coincided with the distribution of COVID-19 stimulus checks for individuals, including Economic Impact Payments and Advanced Child Tax credits, along with an overall opening of businesses, increased economic activity, and a decrease in unemployment. Late fees typically are not restricted in use, and are transferred to the General Fund. The higher than expected late fee revenue are recommended to be transferred from the Water Utility Fund to the General Fund to offset the costs for the program— potentially benefitting the customers from whom the late fees were collected.
BUDGET REFERENCE
The table below identifies the fund and appropriations to fund City participation in the LIHWAP Program as recommended as part of this memorandum.
5 Manager’s Budget Addendum #20 - Municipal Water System Rate Change https://www.sanjoseca.gov/home/showpublisheddocument/73582/637577197298970000
HONORABLE MAYOR AND CITY COUNCIL
March 28, 2022
Subject: Actions Related to the Low-Income Household Water Assistance Program
Fund # APPN # APPN Name Total APPN
Recommend
Budget
Action
2021-22
Adopted
Budget Page
Last Budget
Action (Date,
Ord. No.)
001 R003
Transfers and
Reimbursements $170,655,334 $500,000 Page 288
02/08/2022,
80365
001 NEW
Low-Income Household
Water Assistance
Payment Program N/A $200,000 N/A N/A
001 NEW
Low-Income Household
Water Assistance
Payment Program
Reserve N/A $300,000 N/A N/A
515 R130 Other Revenue $400,000 $500,000 Page 1,027
06/22/2021,
80109
515 A048
Transfer to the General
Fund – Late Fees $300,000 $500,000 Page 1,027
06/22/2021,
30621
CEQA
Not a Project, File No. PP17-004, Government Funding Mechanism, or Fiscal Activity with no commitment to a specific project which may result in a potentially significant physical impact on the environment.
/s/ /s/
JULIA H. COOPER KERRIE ROMANOW JIM SHANNON
Director of Finance Director of Environmental Services Budget Director
I hereby certify that there will be available for appropriation in the Water Utility Fund in the Fiscal Year 2021-2022 monies in excess of those heretofore appropriated therefrom, said excess being at least $500,000.
JIM SHANNON
Budget Director
For questions, please contact John Kachmanian, Deputy Director of Finance – Revenue Management at [email protected] or (408) 535-7034 or Jeff Provenzano, Deputy Director of Environmental Services at [email protected] or (408) 277-3671.
Attachment: Horne LLP Direct Payment Agreement
DIRECT PAYMENT AGREEMENT
THIS DIRECT PAYMENT AGREEMENT (Agreement) is made and entered into effective as of the date signed below (the “Effective Date”), by and between [Name] (“the Water System”), [Address] and HORNE LLP, a Delaware limited liability partnership, having a place of business at 661 Sunnybrook Road, Suite 100, Ridgeland, MS 39157 (“HORNE”).
WHEREAS, the California Department of Community Services and Development (“CSD”) is authorized to administer the Low -Income Household Water Assistance Program (“LIHWAP” or “Program”) to provide financial assistance to help low-income Californians manage their residential water utility costs;
WHEREAS, CSD has contracted with HORNE to disburse direct payments to water systems to apply a LIHWAP credit to households identified as eligible for LIHWAP assistance by CSD or its Local Service Providers (LSPs);
WHEREAS, CSD has authorized HORNE to enter into this Agreement with Water System; and WHEREAS, the Water System desires to enroll in LIHWAP and participate in the direct payment service established by the Direct Payment Program.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the Water System agrees to receive direct payments from HORNE for the benefit of California residents who qualify for LIHWAP and agrees to abide by all terms and conditions below:
Direct Payment Program General Terms and Conditions
1.1 To participate in the Direct Payment Program, a Water System must be defined as a “Community Water System” or “Community Water System Billing Entity” , “Wastewater Treatment Provider” or “Wastewater Billing Entity” (collectively referred to as a “Water System” in this Agreement).
1.2 A “Community Water System” means a public water system with at least 15 service connections used by yearlong residents or regularly services at least 25 yearlong residents.
1.3 A “Community Water System Billing Entity” means a third -party entity that is the designated billing entity for a community water system.
1.4 A “Wastewater Treatment Provider ” means a city, county, special district, or joint powers authority that provides wastewater collection, treatment, or disposal service through a publicly owned treatment works.
1.5 A “Wastewater Billing Entity” means a local government entity (city, county, or special district) that is the designated billing entity for a wastewater treatment provider.
1.6 The Water System enrolled in the Direct Payment Program must be the responsible entity for applying the LIHWAP credit to customer accounts.
1.7 Qualified low-income residential customers will be identified by CSD and its LSP partners. CSD will provide HORNE with a dir ect pay file that contains customer account information as well as the amount for the direct payment to the Water System for each customer . Commercial customers are not eligible for the program.
1.8 HORNE will provide the Water System a direct pay file that contains customer account information and the LIHWAP benefit amount for the purpose of crediting the accounts of qualified low-income residential customers of the Water System who have been identified as eligible for water assistance payments under LIHWAP by CSD or its LSPs.
1.9 HORNE will establish a secure method to provide the direct pay file and customer information to the Water System and a secure method to receive the Direct Payment Summary from the Water System as described in 2.11.
1.10 The Water System is encouraged to offer a payment plan or other forms of assistance to customers who have a remaining balance after the LIHWAP benefit is applied to support the continuation of services or the restoration of services for accounts where services are terminated due to nonpayment.
Obligations of the Water System
2.1 Water System shall provide water and/or wastewater services to each eligible and approved residential household for which payment is provided under LIHWAP.
2.2 Water System shall charge LIHWAP residential households using the Water System’s normal billing process, the difference between the actual amount due and the amount of the payment made by the LIHWAP payment.
2.3 Water System shall restore water services on a timely basis or remove disconnection status upon payment, if applicable, and shall confirm this action to H ORNE by submission of the Direct Payment Summary report as specified in provision 2.11.
2.4 Water System shall charge all LIHWAP eligible residential households the same rates charged for home drinking water and/or wastewater services billed to other similarly situated residential households that are non-eligible, as determined by the approved rate setting process.
2.5 Water System shall not apply LIHWAP payments to account balances that have previously been written off or paid off with other customer assistance program funds. The Water System shall return issued LIHWAP payments to HORNE within 15 business days of receipt for accounts where the owed balance has been paid off with other customer assistance program funds or discharged (written off) in its entirety by the Water System along with the Direct Payment Summary specified in 2.11.
2.6 Water System shall apply the LIHWAP benefit to closed accounts to cover the pending balance and shall return any remaining amount of the LIHWAP payment to HORNE within 1 5 days of receipt along with the Direct Payment Reconciliation Summary specified in 2.11.
2.7 Water Systems shall adhere to existing credit return policies when returning funds to a customer that received a LIHWAP benefit, and the account is later closed and there is a remaining LIHWAP credit balance on the account.
2.8 Water systems that include other services on the customer’s bill shall only apply LIHWAP payments towards the water , wastewater, and/or storm water amount owed including any applicable late fees, reconnection fees, taxes, and other charges.
2.9 Water System shall not discriminate against a LIHWAP eligible household with respect to terms, deferred payment plans, credit, conditions of sale, or discounts offered to other customers.
2.10 Water System shall post all payments to customer accounts within 5 business days from receipt of payment.
2.11 Water System shall submit to HORNE a Direct Payment Summary (in a format provided by HORNE) that reconciles the associated direct pay file and return payments that could not be credited to customer accounts within 15 business days of receipt of payment. The Direct Payment Summary must contain information on the date the credit was posted, direct pay file date ; the total number of customer accounts that the Water System was successful in fully crediting; and the total number of customer accounts that the Water System was not successful in crediting.
For those customer accounts that were not credited, the Water System shall reflect in the Direct Payment Summary the customer accounts that were not credited to include customer account information (customer name, account number, account address, benefit amount ), and reason why the LIHWAP benefit was unable to be applied to the customer‘s account. The Water System shall use customer and account information contained in the direct pay file to complete the reporting and identification of customer accounts that were not credited.
2.12 Water System shall clearly enter, on the LIHWAP recipient’s bill, the amount of LIHWAP payment(s) received and identify the payment was rece ived from LIHWAP. The credit should appear on the first billing statement after the credit has been posted. If posting on the LIHWAP recipient’s bill is not feasible, the Water System shall send customers a notification of the LIHWAP payment via phone call, letter, text, or email communication as soon as practicable.
2.13 Water System shall cooperate with any Federal or State investigation, audit, or program review related to the administration of LIHWAP to ensure funds are accurately applied to customer accounts in compliance with this Agreement, including allowing CSD and its designated representatives access to all books and records relat ed to the receipt and posting of LIHWAP benefits under review.
2.14 Water System is informed that failure to cooperate with any Federal or State investigation, audit, or program review may result in the immediate suspension or disqualification from participation in LIHWAP.
2.15 Water System shall take corrective action in the time frame specified by the CSD if violations of this Agreement are discovered. Corrective action may include, but is not limited to, providing detailed documentation of changes made and detailed plans for future changes that will bring the Water System into compliance.
2.16 Water System is informed that failure to implement corrective actions may result in the immediate suspension or disqualification from participation in LIHWAP.
2.17 Water System shall comply with all federal and California privacy laws, and shall take all necessary steps to protect the confidentiality of the information provided by HORNE to the Water System.
Water System agrees to provide required security to ensure the confidential, physical security and safekeeping of all data, information files, and documents (“customer information”) pertaining to the recipients of LIHWAP utility assistance payments, while such customer information is in its possession. Water System will, in accordance with applicable law and the terms of this A greement, protect from unauthorized use and disclosure all sensitive data, documentation, or other customer information provided to Water System by HORNE, CSD, or CSD’s LSPs for purposes of this Agreement.
Term
3.1 The term of this Agreement shall be the effective date of this contract through October 31, 2023.
Project Coordinator
4.1 The Project Coordinator is designated to manage all HORNE inquiries regarding direct payments, issues with the direct payment process, mishandled or incorrect payments, clarification and updates of reports, and fraud and abuse. The Project Coordinator during the term of this Agreement is listed below. The Water System may designate a different Project Coordinator by notifying HORNE in writing.
Water System’s Project Coordinator
Name and Title: __________________________________________________________ Company Name: _________________________________________________________ Address: _______________________________________________________________ City, State, and ZIP Code: _________________________________________________ Email: _________________________________________________________________ Phone: (_______) ________-______________________
Additional Provisions
5.1 Amendment. All amendments to this Agreement shall be in writing, signed by HORNE and Water System.
5.2 Assignment. Neither this Agreement nor any of the rights, interests, or obligations under this Agreement shall be assigned by any party without the prior written consent of the other parties.
5.3 Merger/Entire Agreement. This Agreement (including the attachments, documents and instruments referred to in this Agreement) constitutes the entire agreement and understanding of the parties with respect to the subject matter of this Agreement and supersedes all prior understandings and agreements, whether written or oral, among the parties with respect to such subject matter.
5.4 Nonwaiver. The waiver by either party of any breach of any term, covenant, or condition contained in this Agreement, or any default in the performance of any obligations under this Agreement, shall not be deemed to be a waiver of any other breach or default of the same or any other term, covenant, condition, or obligation; nor shall any waiver of any incident of breach or default constitute a continuing waiver of the same. All waivers shall be in writing.
5.5 Severability. If any provision of this Agreement is found invalid or unenforceable in any resp ect for any reason, the validity and enforceability of any such provision in any other respect and of the remaining provisions of this Agreement will not be in any way impaired and shall remain in full force and effect.
5.6 Venue. In the event that suit shall be brought by either party to this Agreement, the parties agree that venue shall be exclusively vested in the State Courts of the County of Sacramento, or where otherwise appropriate, exclusively in the United States District Court for the Eastern District of California in Sacramento, California.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement, or caused it to be signed by their duly authorized representatives “below”.
HORNE LLP
By: ___________________________________
Name: __Loden Snell_____________ __________
Title: __Deputy Project Manager____ ________
Date: ___________________________________
Water System: [_______________]
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
Date: ___________________________________
4882-0103-6556, v. 1