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08d FY 10-12 Annual Report Water & Sewer Connection FeesMEMORANDUM TO: CITY COUNCIL FROM: ANGELA KRAETSCH, DIRECTOR OF ADMINISTRATIVE SERVICE SUBJECT: CONSIDERATION OF ANNUAL FINANCIAL REPORT - FISCAL YEAR 2010-11 RECEIPT AND USE OF WATER AND SEWER CAPACITY AND CONNECTION FEESICHARGES DATE: JANUARY 10,2012 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 6601 3. 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 chargeslfees 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 chargeslfees collected in the fiscal year; 4. The public improvements on which chargeslfees were expended; 5. 'The percentage of the total cost of the public improvements that were funded by these chargeslfees; 6. The completed public improvements on which chargeslfees 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, 201 1. The information consists of beginning and ending fund balances for each fee charged by the City, including interest Agenda Item 8.d.Page 1 CITY COUNCIL WATER AND SEWER DEVELOPMENT IMPACT FEES-ANNUAL REPORT JANUARY 10,2012 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 6601 3, 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, 2010 to June 30, 201 1. 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 Section 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 substantial reduction in development activity, new revenue in these funds has decreased. 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 accept staff recommendation; - Modify staff recommendation and approve; - Provide direction to staff. Agenda Item 8.d.Page 2 CITY COUNCIL WATER AND SEWER DEVELOPMENT IMPACT FEES-ANNUAL REPORT JANUARY 10,2012 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 irr~pact 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 5, 2012. The Agenda and report were posted on the City's website on Friday, January 6, 2012. No public comments were received. Attachment: 1. Statement of Fund Balances for Water and Sewer Development Fees and Charges Agenda Item 8.d.Page 3 ATTACHMENT I CITY OF ARROYO GRANDE Water and Sewer Development Fees and Charges Statement of Revenues, Expenditures and Changes in Fund Balances Fiscal Year Ended June 30.201 1 Sewer Water Water Facility Facility Availability Revenues: Interest l ncome Sewer Facility Charges Distribution Charges Water Availability Charges Expense Recovery Total Revenues Expenditures Operating Expenses Excess of Operating Revenues Over Operating Expenditures Other Financing Uses Capital Transfers Out Excess of Revenues Over (Under) Expenditures and Other Financing Uses Fund Balance, Beginning of Year Fund Balance, End of Year Agenda Item 8.d.Page 4 ATTACHMENT 1 CITY OF ARROYO GRANDE Water and Sewer Development Fees and Charges Sewer Facility Transfers Fiscal Year 201 1-12 Current Projects Transfers % of Project The Pike Sewer Upgrade $ 50,000 42 % Lift Station No 3 Replacement Total Funding for Current Projects $ 100,000 Water Facility Transfers Fiscal Year 201 0-1 1 Completed Work Transfers % of Project % Complete Reservoir No 6 Construction $ 53,073 6% 6% Water Well No 10 144,177 22% 80% Total Capital Transfers $ 197,250 Fiscal Year 201 1-12 Current Projects Transfers % of Project Reservoir No 6 46,389 5% Waterline Upgrade-Bell St & Faeh Ave 25,000 9% Reservior No 7 Construction 200,000 22% Total Funding for Current Projects $ 271,389 Water Availability Transfers Fiscal Year 201 0-1 1 Completed Work Transfers % of Project % Complete Water Well No 10 $ 134,880 20% 20% Lopez Spillway Feasibility Study 6,752 22% 23% Water Well No 1'1 Facilities Total Capital Transfers Fiscal Year 201 1-1 2 Current Projects Transfers % of Project Lopez Spillway Feasibility Study $ 23,236 77% Water Well No. 1 1 Facilities 266,343 93% Total Funding for Current Projects $ 289,579 Agenda Item 8.d.Page 5 THIS PAGE INTENTIO NALLY LEFT BLANK Agenda Item 8.d.Page 6