CC 2023-12-23_09.d. Water and Sewer Capacity and Connection Fees 2022-23Item 9.d.
MEMORANDUM
TO: City Council
FROM: Nicole Valentine, Administrative Services Director
BY: Lynda Horejsi, Accounting Manager
SUBJECT: Annual Financial Report for Fiscal Year 2022-23 – Receipt and Use of
Water and Sewer Capacity and Connection Fees/Charges
DATE: December 12, 2023
SUMMARY OF ACTION:
The attached report provides an accounting of fees derived from water and sewer
capacity and connection fees as required by State law.
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
There is no direct financial impact from the status report other than the staff time required
to prepare it, which is estimated at 2 hours. During FY 2022-23, the Water Facility Fund
balance increased by $26,579. The Sewer Facility Fund balance increased by $17,614.
The Water Availability Fund decreased by $1,250,424.
RECOMMENDATION:
1) 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;
2) Determine that ratifying the annual report is not a project subject to the California
Environmental Quality Act (“CEQA”) because it has no potential to result in either a direct,
or reasonably foreseeable indirect, physical change in the environment. (State CEQA
Guidelines, §§ 15060, subd. (b)(2)-(3), 15378.).
BACKGROUND:
Government Code Section 66013 requires an annual financial accounting of the
transactions dealing with water and sewer capacity and connection fees and charges.
The basic accounting and reporting responsibilities under Government Code Section
66013 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 monies in the fund;
3. The amount of charges/fees collected in the fiscal year;
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Item 9.d.
City Council
Annual Financial Report for Fiscal Year 2022 -23 – Receipt and Use of Water and
Sewer Capacity and Connection Fees/Charges
December 12, 2023
Page 2
4. An identification of all of the following:
a. Public improvement charges expended and the amount of the expenditure
for each improvement, including the percentage of the total cost of the
public improvements that were funded by these charges/fees if more than
one source of funding was used;
b. The public improvements on which charges/fees were expended that was
completed during the fiscal year;
c. Each public improvement that is anticipated to be undertaken the following
fiscal year.
5. A description of each interfund transfer or loan made from the capital facilities fund.
In the case of an interfund transfer, identify the public improvements the
transferred moneys are, or will be, expended. In the case of an interfund loan, the
date the loan will be repaid and the rate of interest the fund will receive on the loan.
Attached to this staff report is the financial information (Attachments 1 -3) required by
Government Code Section 66013 and, which is current as of June 30, 202 3. The
information consists of beginning and ending fund balances for each fee charged by the
City, including interest earned and details of all expenditures made from these sources.
Information within this report and Attachments 1-3 meet the requirements of Government
Code section 66013.
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 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 Attachments 1 -3 compares the revenues,
expenditures, and changes in fund balances for each fund from July 1, 201 3, to June 30,
2023.
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
collected and accumulated for future water infrastructure improvements. The Water
Facility Fund has accumulated $1,040,290 in unspent connection fees. There are no
projects budgeted in FY 2023-24 at this time.
Sewer Facility (Fund 634)
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Item 9.d.
City Council
Annual Financial Report for Fiscal Year 2022-23 – Receipt and Use of Water and
Sewer Capacity and Connection Fees/Charges
December 12, 2023
Page 3
Sewer Connection fees, enacted pursuant to the provision of Section 13.12.190 et seq.
of the City Municipal Code, are collected and accumulated to help pay for improvements
and future sewer system capacity as necessary to meet the needs of the City resulting
from growth and expansion. The Sewer Facility Fund ended the year with a fund balance
of $346,404, and the FY 2023-24 budget did not identify any projects at this time.
Water Availability Fund (Fund 241)
This fund is used to account for the accumulation of water availability charge revenues.
The Water Availability charge was enacted pursuant to the provision of Section 38743 of
the Government Code, and Section 13.04.040 of the City Municipal Code. Water
availability charges are imposed upon each parcel of property not served with city water.
During FY 2022-23, the City supported the preconstruction work related to the Central
Coast Blue (CCB) Project. The project is ongoing. The Water Availability Fund has a fund
balance of $40,851, with no projects budgeted for FY 2023-24 at this time.
ALTERNATIVES:
The following alternatives are provided for the Council’s consideration:
1. Approve staff’s recommendation to receive and file the annual report;
2. Do not approve staff’s recommendation and request further information; or
3. Provide other direction to staff.
ADVANTAGES:
By accepting the Water and Sewer Capacity and Connection Fees and Charges-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) to 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. Ratifying the annual report is not a
project subject to the California Environmental Quality Act (“CEQA”) because it has no
potential to result in either a direct, or reasonably foreseeable indirect, physical change
in the environment. (State CEQA Guidelines, §§ 15060, subd. (b)(2)-(3), 15378.)
PUBLIC NOTIFICATION AND COMMENTS:
The Agenda was posted at City Hall and on the City’s website in accordance with
Government Code Section 54954.2.
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Item 9.d.
City Council
Annual Financial Report for Fiscal Year 2022-23 – Receipt and Use of Water and
Sewer Capacity and Connection Fees/Charges
December 12, 2023
Page 4
Attachments:
1. Statement of Fund Balances for the Water Facility Fund
2. Statement of Fund Balances for the Sewer Facility Fund
3. Statement of Fund Balances for the Water Availability Fund
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ATTACHMENT 1CITY OF ARROYO GRANDEWater Facility FundComparative Statement of Revenues, Expendituresand Changes in Fund BalancesFiscal Years Ending June 30, 2014-2023FY 13-14 FY 14-15 FY 15-16 FY 16-17 FY 17-18 FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23Actual Actual Actual Actual Actual Actual Actual Actual Actual ActualRevenues:Interest Income 4,240$ 8,045$ 11,944$ 2,771$ 4,718$ 16,285$ 13,958$ 1,967$ (14,638)$ 9,539$ Water Main Charges - - 753 665 - 66,457 105,507 48,561 7,081 17,040 Distribution Charges 37,849 58,104 35,534 126,135 29,584 - - - - - Total Revenues 42,089 66,149 48,231 129,571 34,302 82,742 119,465 50,528 (7,557) 26,579 Expenditures:Operating Expenses - - - (2,794) - - - - - - Excess of Revenues OverExpenditures 42,089 66,149 48,231 126,777 34,302 82,742 119,465 50,528 (7,557) 26,579 Other Financing Uses:Capital Projects - (114,570) (213,000) - - - - - - - Excess of Revenues Over(Under) Expenditures andOther Financing Uses 42,089 (48,421) (164,769) 126,777 34,302 82,742 119,465 50,528 (7,557) 26,579 Fund Balance, Beginning of Year 778,555 820,644 772,223 607,454 734,231 768,533 851,275 970,740 1,021,268 1,013,711 Fund Balance, End of Year 820,644$ 772,223$ 607,454$ 734,231$ 768,533$ 851,275$ 970,740$ 1,021,268$ 1,013,711$ 1,040,290$ Capital Project DetailReservoir No 6 Construction -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Old Ranch Rd Property Improvemen- 30,000 - - - - - - - - Leanna Dr Creek Crossing Upgrade- 84,570 - - - - - - - - LePoint Area Main Upgrade - - 38,000 - - - - - - - Alpine Street Overlay & Waterline - - 175,000 - - - - - - - Total Capital Projects -$ 114,570$ 213,000$ -$ -$ -$ -$ -$ -$ -$ There are no current Capital Improvement Projects budgeted for this Fund in this budget cycleThere was one refund made during FY 22-23Page 58 of 301
ATTACHMENT 2CITY OF ARROYO GRANDESewer Facility FundComparative Statement of Revenues, Expendituresand Changes in Fund BalancesFiscal Years Ending June 30, 2014-2023FY 13-14 FY 14-15 FY 15-16 FY 16-17 FY 17-18 FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23Actual Actual Actual Actual Actual Actual Actual Actual Actual ActualRevenues:Interest Income 2,092$ 3,864$ 6,328$ 2,030$ 3,170$ 10,934$ 9,579$ (60)$ (4,717)$ 3,156$ Sewer Facility Charges 22,676 36,860 24,434 74,156 19,011 57,602 71,251 31,209 9,441 14,458 Total Revenues 24,768 40,724 30,762 76,186 22,181 68,535 80,830 31,150 4,724 17,614 Expenditures:Operating Expenses - - - - - - - - - - Excess of Revenues OverExpenditures 24,768 40,724 30,762 76,186 22,181 68,535 80,830 31,150 4,724 17,614 Other Financing Uses:Capital Projects (33,000) (30,000) - - - - (372,249) - - - Excess of Revenues Over(Under) Expenditures andOther Financing Uses (8,232) 10,724 30,762 76,186 22,181 68,535 (291,419) 31,150 4,724 17,614 Fund Balance, Beginning of Year 384,178 375,946 386,670 417,432 493,618 515,799 584,334 292,916 324,065 328,790 Fund Balance, End of Year 375,946$ 386,670$ 417,432$ 493,618$ 515,799$ 584,334$ 292,916$ 324,065$ 328,790$ 346,404$ Capital Project DetailLift Station No 3 Replacement -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ N. Rena Sewer Relocation 33,000 - - - - - - - - - Old Ranch Rd Property Impr - 30,000 - - - - - - - - Lift Stn No 1 Force Main Replaceme- - - - - - 372,249 - - - Total Capital Projects 33,000$ 30,000$ -$ -$ -$ -$ 372,249$ -$ -$ -$ There are no current Capital Improvement Projects budgeted for this Fund in this budget cycleNo refunds were made during FY 22-23Page 59 of 301
ATTACHMENT 3CITY OF ARROYO GRANDEWater Availability FundComparative Statement of Revenues, Expendituresand Changes in Fund BalancesFiscal Years Ending June 30, 2014-2023FY 13-14 FY 14-15 FY 15-16 FY 16-17 FY 17-18 FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23Actual Actual Actual Actual Actual Actual Actual Actual Actual ActualRevenues:Interest Income 9,394$ 19,009$ 26,303$ 7,021$ 10,518$ 30,006$ 22,571$ 3,038$ (22,947)$ 12,250$ Water Availability Charges 44,900 99,600 21,450 144,312 32,450 85,363 126,325 48,050 9,900 28,601 Expense Recovery - - - - - - - - - - Total Revenues 54,294 118,609 47,753 151,333 42,968 115,369 148,896 51,088 (13,047) 40,851 Expenditures:Operating Expenses - - - (42,179) - (83,198) (41,166) - - - Excess of Revenues OverExpenditures 54,294 118,609 47,753 109,154 42,968 32,171 107,730 51,088 (13,047) 40,851 Other Financing Uses:Capital Projects (15,187) (26,115) (352,550) - (232,499) (75,035) - (5,059) (297,578) (1,291,275) Excess of Revenues Over(Under) Expenditures andOther Financing Uses 39,107 92,494 (304,797) 109,154 (189,531) (42,864) 107,730 46,029 (310,626) (1,250,424) Fund Balance, Beginning of Year 1,744,578 1,783,685 1,876,179 1,571,382 1,680,536 1,491,005 1,448,141 1,555,871 1,601,901 1,291,275 Fund Balance, End of Year 1,783,685$ 1,876,179$ 1,571,382$ 1,680,536$ 1,491,005$ 1,448,141$ 1,555,871$ 1,601,901$ 1,291,275$ 40,851$ Capital Project DetailLopez Spillway Feasibility Study -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Water Well No 11 Facilities 15,187 26,115 352,550 - 227,957 6,654 - - - - Well Siting Study - - - - 4,542 24,396 - - - - Well 7 Evaluation - - - - - 43,985 - - - - Central Coast Blue - - - - - - - 5,059 - 1,291,275 Total Capital Projects 15,187$ 26,115$ 352,550$ -$ 232,499$ 75,035$ -$ 5,059$ -$ 1,291,275$ There are no current Capital Improvement Projects budgeted for this Fund in this budget cycleNo refunds were made during FY 21-22Page 60 of 301