The URL can be used to link to this page

Home My WebLink About08.a. Reconsider Board action of May 17, 2012 approving Contractual Assessment District (CAD) Policy exceptions for a potential El Toyonal-Alta Vista-Dos Osos CAD.NOTICE TO MEMBERS OF THE PUBLIC SUBJECT: AGENDA ITEM 8.a. Staff recently learned that two Board members will be unable to attend the June 21, 2012 Board meeting. For this reason, staff will recommend that the following agenda item be continued to the Board meeting at 2:00 p.m. on July 19, 2012. Central Contra Costa Sanitary District .Q. ' BOARD OF DIRECTORS POSITION PAPER Board Meeting Date: June 21, 2012 subject: RECONSIDER CONTRACTUAL ASSESSMENT DISTRICT (CAD) FINANCING POLICY EXCEPTIONS FOR POTENTIAL EL TOYONAL AREA CAD Submitted By: Initiating Dept. /Div.: Russell Leavitt, Engineering Assistant III Engineering /Environmental Services REVIEWED AND RECOMMENDED FOR BOARD ACTION: R. Leavitt T. Brightbill J. Miyamoto -Mills K. Alm Ann . arrell General Manager ISSUE: On May 17, 2012, the Board voted to approve certain policy exceptions related to formation of a potential El Toyonal CAD covering 35 properties. These exceptions were to allow the District to cover up to 18 non - participant shares and to provide a longer repayment period for participants. On June 7, 2012, a group of property owners within the potential assessment district appeared before the Board and asked that these exceptions be reconsidered. After hearing testimony from the property owners both supporting and opposing the exceptions, the Board voted to reconsider its May 17, 2012, action. RECOMMENDATION: 1) Rescind approval of CAD Policy exception to pay non - participant cost shares for the potential El Toyonal CAD. 2) Confirm approval of CAD Policy exception to extend the repayment period available for participants' assessments from the ten years allowed in the CAD Policy to twenty years in order to mitigate the high cost of sewering in the El Toyonal area. FINANCIAL IMPACTS: 1) Rescinding exception for paying non - participant cost shares would reduce the financial risk to the District. 2) Confirming approval of a twenty year repayment period would extend the amount of time for the District to fully recover the funds advanced from ten to twenty years. N: \ENVRSEC \Position Papers \Leavitt\2012 \6- 21 -12 \PP El Toyonal CAD Reconsider Pol Excptns 6 -21 -12 FINAL 3.doc Page 1 of 5 POSITION PAPER Board Meeting Date: June 21, 2012 subject. RECONSIDER CONTRACTUAL ASSESSMENT DISTRICT (CAD) FINANCING POLICY EXCEPTIONS FOR POTENTIAL EL TOYONAL AREA CAD ALTERNATIVES /CONSIDERATIONS: The Board can decline to rescind either of the approved policy exceptions. BACKGROUND: Proponents of a potential El Toyonal CAD requested that the District grant exceptions to the current CAD financing policy that would allow the District to cover some non - participant cost shares and provide a longer repayment period for participants. On May 17, 2012, the Board approved exceptions that would: 1) Allow the District to cover up to 18 non - participant cost shares for a potential CAD designated as "Scenario B" comprised of 35 El Toyonal area properties (see Figure 1); and 2) Provide a longer repayment period for participants. On June 7, 2012, the Board voted to reconsider its approval of these exceptions. Current CAD financing policy requires that voluntary participants cover the cost of non- participants. For advancing these costs, participants are eligible to receive reimbursements from non- participants who connect to the CAD - installed public sewer within a period of twenty years. A participant may pay off their assessments in a lump sum once the final assessment is set, or they may finance the assessment on their property tax bill at six percent annual interest for up to ten years. The financing runs with the property and may be assumed by future property owners. Greater District participation would reduce the cost to initial participants, which would increase the likelihood that a CAD would be formed. Since some properties adjacent to proposed CAD sewer routes may not connect to the public sewer for many years, if at all, it is likely that the District would not be fully reimbursed by non - participants for many years; it is possible that some reimbursements might never be collected. Lengthening the financing term would extend the period over which the District recovers the funds advanced for construction of the CAD project. While making the participants' annual payment lower, extending the term would not lower their total costs, as additional interest would be paid during the longer financing period. Extending the financing period from 10 years to 20 years would reduce participants' annual payment amount by 64 %, but would increase the total interest paid over the full life of the financing (and earned by the District) by 112 %. N: \ENVRSEC \Position Papers \Leavitt\2012 \6- 21 -12 \PP El Toyonal CAD Reconsider Pol Excptns 6 -21 -12 FINAL 3.doc Page 2 of 5 POSITION PAPER Board Meeting Date: June 21, 2012 subject RECONSIDER CONTRACTUAL ASSESSMENT DISTRICT (CAD) FINANCING POLICY EXCEPTIONS FOR POTENTIAL EL TOYONAL AREA CAD The Case for Upholding the CAD Policv Exceptions. Representatives of the proponents cite a number of factors associated with the El Toyonal area to justify these CAD policy exceptions including: 1) The project is in the EBMUD watershed (San Pablo Reservoir); 2) Existing septic tanks perform poorly due to the El Toyonal hill's clay soil and steep topography; 3) The Contra Costa Environmental Health Division has imposed a moratorium on development of new septic tanks in the area since 1970 (only limited repair and replacement of existing septic systems is allowed); 4) Extending public sewers before property owners replace old septic systems with new "enhanced" (high cost) systems is an advantage to all (property owners and the District). Once an enhanced system is installed the owner of that property is unlikely to participate in a future sewer extension project, making it even more difficult for remaining property owners to afford extending the public sewer; 5) Sewer installation in El Toyonal is exceptionally expensive since the road is steep, narrow and windy, and City encroachment permits require severely limited working hours as it is the only practical route up and down the hill for upslope residents. The Case for Rescinding the CAD Policy Exceptions Property owners opposed to extension of public sewer have requested that the Board reconsider its approval of the CAD Policy exception to pay for non - participants costs asserting that: 1) The approved exception for the District to fund the non - participants' costs will inappropriately subsidize a few property owners (who would be able to fund a public sewer extension privately or by using the traditional CAD process and covering non - participant cost shares themselves). 2) Many property owners with developed properties oppose the extension of public sewer. N: \ENVRSEC \Position Papers \Leavitt\2012 \6- 21 -12 \PP El Toyonal CAD Reconsider Pol Excptns 6 -21 -12 FINAL 3.doc Page 3 of 5 POSITION PAPER Board Meeting Date: June 21, 2012 subject RECONSIDER CONTRACTUAL ASSESSMENT DISTRICT (CAD) FINANCING POLICY EXCEPTIONS FOR POTENTIAL EL TOYONAL AREA CAD 3) The CAD program was designed to assist getting developed properties off septic tanks and onto sewers not to facilitate development of undeveloped properties. Interest surveys conducted by sewer opponents have been received by the District. Unsewered properties whose owners oppose the extension of public sewer are identified with an asterisk ( *) on Figure 1. These surveys indicate that owners of 26 properties in the area are currently opposed to extension of public sewer, though not all of these properties are adjacent to the potential CAD sewers discussed above. RECOMMENDED BOARD ACTION: 1) Rescind approval of CAD Policy exception to pay non - participant cost shares for the potential El Toyonal CAD. 2) Confirm approval of CAD Policy exception to extend the repayment period available for participants' assessments from the ten years allowed in the CAD Policy to twenty years in order to mitigate the high cost of sewering in the El Toyonal area. N: \ENVRSEC \Position Papers \Leavitt\2012 \6- 21 -12 \PP El Toyonal CAD Reconsider Pol Excptns 6 -21 -12 FINAL 3.doc Page 4 of 5 ]!9 m} 'r i4 n w W W 0 a U J Q Z 0 0 H J W J a Z W O a W w /D _V LL C zWd � O'SwF G F z a 4 z cn zw CC ZF C .i cw �c�z wW JpzC �3ws 3 � v OC.rwn C�0.'C Cz wdUe it TV O u� 0 o) W IL O O a c� J Q _Z LL N IL N r_ C Q X W O d N 0 U N Q U m 0 O a H w CL N N N O co J N N CL cU CL 0 O .y O d U w rr Z w MA