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CC 2015-01-27_08c Annual Report_Water Sewer Fees and ChargesMEMORANDUM TO: CITY COUNCIL FROM: DEBBIE MALICOAT, DIRECTOR OF ADMINISTRATIVE SERVICES~ SUBJECT: CONSIDERATION OF ANNUAL FINANCIAL REPORT -FISCAL YEAR 2013-14 RECEIPT AND USE OF WATER AND SEWER CAPACITY AND CONNECTION FEES/CHARGES DATE: JANUARY 27, 2015 RECOMMENDATION: It is recommended the City Council receive and file the annual report of the receipt and use of water and sewer capacity and connection fees and charges, in compliance with Government Code Section 66013. IMPACT ON FINANCIAL AND PERSONNEL RESOURCES: No outside funding is required. No or minimal future staff time is projected. BACKGROUND: Government Code Section 66013 requires a financial accounting of the transactions dealing with water and sewer capacity and connection fees and charges (development impact fees) shall be made available to the public. The basic accounting and reporting responsibilities under the Government Code require the following: 1. A description of the charges/fees deposited in the fund; 2. The beginning and ending balance of the fund and any interest earned from investment of moneys in the fund; 3. The amount of charges/fees collected in the fiscal year; 4. The public improvements on which charges/fees were expended; 5. The percentage of the total cost of the public improvements that were funded by these charges/fees; 6. The completed public improvements on which charges/fees were expended; 7. Each public improvement that is anticipated to be undertaken in the current fiscal year. Attached to this staff report is the financial information (Attachment 1) as required by Government Code Section 66013 as of June 30, 2014. The information consists of beginning and ending fund balances for each fee charged by the City, including interest Item 8.c. - Page 1 CITY COUNCIL WATER AND SEWER CAPACITY AND CONNECTION FEES-ANNUAL REPORT JANUARY 27, 2015 PAGE2 earned and details of all expenditures made from these sources. The information provided is consistent with the financial records. Pursuant to Government Code Section 66013, this report is for review purposes only. ANALYSIS OF ISSUES: The City utilizes fund accounting to segregate development related fees from other City revenues. Although the City pools its cash for investment purposes, interest income is allocated to the facility funds based on their respective cash balances. The City accounts for water and sewer connection and capacity fees or charges can be found in three separate funds the Water Facility Fund, the Sewer Facility Fund, and the Water Availability Fund. The information in Attachment A is presented in a format consistent with the annual audit of the Fiscal Year from July 1, 2013 to June 30, 2014. The following is a description of the City funds used to track water and sewer connection and capacity fees and charges: • Water Facility (Fund 642) Water Main Charges, enacted pursuant to the provision of Sections 13.04.050 of the City Municipal Code, are accounted for in the Water Facility Fund. These revenues are to be used for future water infrastructure improvements. • Sewer Facility (Fund 634) Sewer Connection fees, enacted pursuant to the provision of Section 13.12.190 et seq. of the City Municipal Code, is collected to help pay for improvements and future sewer system capacity as necessary to meet the needs of the City resulting from growth and expansion. • Water Availability Fund (Fund 241) This fund is used to account for the accumulation of water availability charge revenues. This charge was enacted pursuant to the provision of Section 387 43 of the Government Code, and Section 13.04.040 of the City Municipal Code. Due to the volatility in development activity in recent years, new revenue in these funds has been unpredictable. This has required adjustments to projections for future capital improvement projects. ALTERNATIVES: The following alternatives are provided for City Council consideration: -Approve staff recommen~ation and accept the report; Do not approve staff recommendation; Modify staff recommendation and approve; Provide direction to staff. Item 8.c. - Page 2 CITY COUNCIL WATER AND SEWER CAPACITY AND CONNECTION FEES-ANNUAL REPORT JANUARY 27, 2015 PAGE3 ADVANTAGES: By accepting the Water and Sewer Development Impact Fees-Annual Report, the City will be complying with Government Code Sections 66013 et seq. which requires a financial accounting of the transactions dealing with water and sewer capacity and connection fees and charges (development impact fees) shall be made available to the public. DISADVANTAGES: There are no disadvantages in relation to the recommended action. ENVIRONMENTAL REVIEW: No environmental review is required for this item. PUBLIC NOTIFICATION AND COMMENTS: The Agenda was posted in front of City Hall on Thursday, January 22, 2015. The Agenda and report were posted on the City's website on Friday, January 23, 2015. No public comments were received. Attachment: 1. Statement of Fund Balances for Water and Sewer Development Fees and Charges Item 8.c. - Page 3 ATTACHMENT 1 CITY OF ARROYO GRANDE Water and Sewer Development Fees and Charges Statement of Revenues, Expenditures and Changes in Fund Balances Fiscal Year Ended June 30, 2014 Sewer Water Water Facility Facility Availability Revenues: Interest Income $ 2,092 $ 4,240 $ 9,394 Sewer Facility Charges 22,676 Water Main Charges Distribution Charges 37,849 Water Availability Charges 44,900 Total Revenues 24,768 42,089 54,294 Expenditures Operating Expenses Excess of Operating Revenues Over Operating Expenditures 24,768 42,089 54,294 Other Financing Uses Capital Transfers Out (33,000) (15, 187) (33,000) (15,187) Excess of Revenues Over (Under) Expenditures and Other Financing Uses (8,232) 42,089 39,107 Fund Balance, Beginning of Year 384,178 778,555 1,744,578 Fund Balance, End of Year $ 375,946 $ 820,644 $ 1,783,685 Item 8.c. - Page 4 CITY OF ARROYO GRANDE Water and Sewer Development Fees and Charges Sewer Facility Transfers Fiscal Year 2013-14 Completed Work Transfers N. Rena Sewer Relocation $ 33,000 Total Capital Transfers $ 33,000 Future Fiscal Year Project(s) Transfers Old Ranch Road Property Improvements $ 30,000 Total Funding for Future Projects $ 30,000 Water Facility Transfers Fiscal Year 2013-14 Completed Work Transfers $ Total Capital Transfers $ Future Fiscal Year Project(s) Transfers Old Ranch Road Property Improvements $ 30,000 LePoint Area Main Upgrade 342,050 Leanna Drive Creek Crossing Upgrade 175,800 Reservior No 7 Construction 377,600 Total Funding for Future Projects $ 895,450 Water Availability Transfers Fiscal Year 2013-14 Completed Work Transfers Water Well No 11 Facilities 15, 187 Total Capital Transfers $ 15, 187 Future Fiscal Year Project(s) Transfers Water Well No. 11 Facilities 206,610 Total Funding for Future Projects $ 206,610 % of Project 50% % of Project 19% % of Project % of Project 19% 50% 35% 43% % of Project 5% % of Project 72% ATTACHMENT 1 % Project is Complete 100% % Project is Complete % Project is Complete 28% Item 8.c. - Page 5 THIS PAGE INTENTIONALLY LEFT BLANK Item 8.c. - Page 6