CC 2020-01-14_08c Annual Financial Water Sewer Connection Report
MEMORANDUM
TO: CITY COUNCIL
FROM: NICOLE VALENTINE, ACCOUNTING MANAGER
SUBJECT: CONSIDERATION OF ANNUAL FINANCIAL REPORT – FISCAL YEAR 2018-
19 RECEIPT AND USE OF WATER AND SEWER CAPACITY AND
CONNECTION FEES/CHARGES
DATE: JANUARY 14, 2020
SUMMARY OF ACTION:
The annual report provides an accounting of fees derived from water and sewer capacity and
connection fees and charges, as required by State law.
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
There is no direct financial impact of the annual report other than the staff time required to
prepare it, which is estimated at 2 hours.
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.
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) be
made available to the public annually.
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 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 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;
6. The completed public improvements on which charges/fees were expended; and
7. Each public improvement that is anticipated to be undertaken in the current fiscal year.
Item 8.c. - Page 1
CITY COUNCIL
CONSIDERATION OF REPORT ON WATER AND SEWER CAPACITY AND CONNECTION
FEES/CHARGES
JANUARY 14, 2020
PAGE 2
Attached to this staff report is the financial information required by Government Code Section
66013 as of June 30, 2019 (Attachment 1). 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. The information provided is consistent with the
financial records.
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 in three
separate funds: the Water Facility Fund, the Sewer Facility Fund, and the Water Availability
Fund. The information in Attachment 1 is presented in a format consistent with the annual audit
of the Fiscal Year from July 1, 2018 to June 30, 2019.
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 Section 13.04.050 of the Arroyo Grande
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 Sections 13.12.190 et seq. of the Arroyo
Grande Municipal Code, are 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 Section 38743 of the Government Code, and Section
13.04.040 of the Arroyo Grande Municipal Code.
ALTERNATIVES:
The following alternatives are provided for City Council consideration:
1. Receive and file the annual report;
2. Do not receive and file the report at this time and request further information; or
3. Provide direction to staff.
Item 8.c. - Page 2
CITY COUNCIL
CONSIDERATION OF REPORT ON WATER AND SEWER CAPACITY AND CONNECTION
FEES/CHARGES
JANUARY 14, 2020
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 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.
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.
Attachment:
1. Statement of Fund Balances for Water and Sewer Development Fees and Charges
Item 8.c. - Page 3
ATTACHMENT 1
Sewer Water Water
Facility Facility Availability
Revenues:
Interest Income 9,601$ 14,326$ 26,415$
Sewer Facility Charges 57,602
Distribution Charges 66,457
Water Availability Charges 85,363
Total Revenues 67,203 80,783 111,778
Expenditures
Operating Expenses - - 83,198
Excess of Operating Revenues Over
Operating Expenditures 67,203 80,783 28,579
Other Financing Uses
Capital Transfers Out - - 75,035
- - 75,035
Excess of Revenues Over
(Under) Expenditures and
Other Financing Uses 67,203 80,783 103,615
Fund Balance, Beginning of Year 519,202 773,597 1,502,526
Fund Balance, End of Year 586,405$ 854,379$ 1,606,141$
Fiscal Year 2018-19 Completed Work Transfers
Water Well No 11 Facilities 6,654
Well Siting Study 24,396
Well 7 Evaluation 43,985
Total Capital Transfers 75,035$
Water Availability Transfers
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, 2019
Item 8.c. - Page 4