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CC 2016-01-12_09d Annual Report Water Sewer Fees MEMORANDUM TO: CITY COUNCIL FROM: DEBBIE MALICOAT, DIRECTOR OF ADMINISTRATIVE SERVICES SUBJECT: CONSIDERATION OF ANNUAL FINANCIAL REPORT – FISCAL YEAR 2014-15 RECEIPT AND USE OF WATER AND SEWER CAPACITY AND CONNECTION FEES/CHARGES DATE: JANUARY 12, 2016 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 that a financial accounting of the transactions dealing with water and sewer capacity and connection fees and charges (development impact fees) 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, 2015. The information consists of beginning and ending fund balances for each fee charged by the City, including interest Item 9.d. - Page 1 CITY COUNCIL WATER AND SEWER CAPACITY AND CONNECTION FEES-ANNUAL REPORT JANUARY 12, 2016 PAGE 2 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 i s 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, 2014 to June 30, 2015. 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 38743 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 recommendation and accept the report; - Do not approve staff recommendation; - Modify staff recommendation and approve; - Provide direction to staff. Item 9.d. - Page 2 CITY COUNCIL WATER AND SEWER CAPACITY AND CONNECTION FEES-ANNUAL REPORT JANUARY 12, 2016 PAGE 3 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 that a financial accounting of the transactions dealing with water and sewer capacity and connection fees and charges (development impact fees) 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 7, 2016. The Agenda and report were posted on the City’s website on Friday, January 8, 2016. No public comments were received. Attachment: 1. Statement of Fund Balances for Water and Sewer Development Fees and Charges Item 9.d. - Page 3 ATTACHMENT 1 Sewer Water Water Facility Facility Availability Revenues: Interest Income 3,864$ 8,045$ 19,009$ Sewer Facility Charges 36,860 Water Main Charges - Distribution Charges 58,104 Water Availability Charges 99,600 Total Revenues 40,724 66,149 118,609 Expenditures Operating Expenses - - - Excess of Operating Revenues Over Operating Expenditures 40,724 66,149 118,609 Other Financing Uses Capital Transfers Out (30,000) (114,570) (26,115) (30,000) (114,570) (26,115) Excess of Revenues Over (Under) Expenditures and Other Financing Uses 10,724 (48,421) 92,494 Fund Balance, Beginning of Year 375,946 820,644 1,783,685 Fund Balance, End of Year 386,670$ 772,223$ 1,876,179$ 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, 2015 Item 9.d. - Page 4 ATTACHMENT 1 Fiscal Year 2014-15 Completed Work Transfers % of Project % Project is Complete Old Ranch Road Property Improvements 30,000$ 19%100% Total Capital Transfers 30,000$ Budgeted Future Fiscal Year Project(s)Transfers % of Project Total Funding for Future Projects -$ Fiscal Year 2014-15 Completed Work Transfers % of Project % Project is Complete Old Ranch Road Property Improvements 30,000$ 19%100% Leanna Drive Creek Crossing Upgrade 84,570 35%48% Total Capital Transfers 114,570$ Budgeted Future Fiscal Year Project(s)Transfers % of Project -$ LePoint Area Main Upgrade 342,050 50% Leanna Drive Creek Crossing Upgrade 91,230 35% Reservior No 7 Construction 600,000 68% Total Funding for Future Projects 1,033,280$ Fiscal Year 2014-15 Completed Work Transfers % of Project % Project is Complete Water Well No 11 Facilities 26,115 9%37% Total Capital Transfers 26,115$ Budgeted Future Fiscal Year Project(s)Transfers % of Project Water Well No. 11 Facilities 206,610 72% Total Funding for Future Projects 206,610$ Sewer Facility Transfers Water Facility Transfers Water Availability Transfers CITY OF ARROYO GRANDE Water and Sewer Development Fees and Charges Item 9.d. - Page 5 THIS PAGE INTENTIONALLY LEFT BLANK Item 9.d. - Page 6