Loading...
HomeMy WebLinkAbout07.a.1) Report on permit counter connection fee collection matters and proposed fee recovery plan7. a. 1) Central Contra Costa Sanitary District October 11, 2012 TO: THE HONORABLE BOARD OF DIRECTORS VIA: ANN FARRELL, GENERAL MANAGER l W JARRED MIYAMOTO- MILLS, PROVISIONAL ENVIRONMENTAL SERVICES DIVISION MANAGER,i� FROM: THOMAS BRIGHTBILL, SENIOR ENGINEER SUBJECT: COLLECTION OF OUTSTANDING FEES - SUMMARY AND RECOMMENDATIONS This memo presents an update on the review of fees identified in the Outstanding Fee Report. Fees totaling $214,490 from 44 parcels have been identified as having no issues preventing collection and these property owners will receive collection letters. An additional 56 parcels have fees that are possibly collectible as described in the memo. Staff will collect fees following the four recommendations below: 1. If property ownership has changed, the District will bill the person who owned the property at the time fee was incurred. If a contractor is associated with this work, the District will send the contractor an invoice as well at the property owner. If the previous property owner or contractor cannot be located, the District will not bill the current property owner. 2. If the District has been aware that a fee is owed for more than four years, there may be some legal issues affecting fee collection and the District will not bill property owners for these fees. 3. All fees will be updated and charged at current rates. 4. Property owners will be required to have uninspected work televised (CCTV) in the presence of a District inspector to determine whether the sewer meets the District's standards. In the case that deficiencies are identified, the property owner will be required to correct the deficiencies immediately or agree to the recording of a "Notice of Uninspected Work" on the property. Each of these issues as well as several procedural improvements that have been implemented as a result of the review are presented in this memo. Collection of Outstanding Fees October 11, 2012 Page 2 of 9 BACKGROUND An audit report prepared by Bartle Wells Associates submitted in March 2012, and Outstanding Fee Reports run by staff identified up to $21.4 million in "entered, but uncollected fees" in CCCSD's SunGard enterprise software. Concurrent with the preparation of the audit report, CCCSD staff began a thorough investigation of these fees. Each of the 1,762 items from the report was individually reviewed and grouped into one of the following classifications: • Active application • Possibly collectible • Main line extensions • No fees currently due • Paid in full • Partial payment • Payments in progress (Capacity Use Agreement, CAD, AVAD, septic conversion installment) • Septic conversion • Other fees less than $1,000 Depending on the classification, the documents and data sources reviewed included: • Notes in SunGard • Aerial photographs taken in 2000, 2004, 2008, 2009, and 2011 • Building permits obtained from local building departments • Review of CCTV inspection reports and video • Field inspections In each case where a determination was made that a fee was not owed, the supporting information was reviewed by at least two District engineers. Five presentations between March and July 2012 were made to provide progress updates to the Board of Directors. As the review progressed, the amount of fees classified as Possibly Collectible was reduced from $7.8 million in mid -May 2012 to the present figure of $572,512, which is broken down as follows: C: \Users \dandersonWppData \Local \Microsoft \Windows \Temporary Internet Files \Content.Outlook \DVCG8C5G \GM Report - Outstanding Fee Collection Program Issues FINAL 10- 18- 12.doc Collection of Outstanding Fees October 11, 2012 Page 3 of 9 a. Ready for collection letter b. Ownership changes c. Discovery date issues d. Inquiry or inspection letter e. Septic conversion (field testing in progress) f. Collections in progress TOTAL Number of Arn lications 44 8 11 10 18 9 100 Fees $214,490 32,175 46,343 38,908 152,704 87,892 $572,512 Review of each of the 44 applications designated as Ready for Collection Letter provided clear evidence that a fee is owed. In these cases, property ownership has not changed and the length of time the District has known that a fee is owed does not exceed four years. The effects of property ownership change and discovery date are discussed in the Issues Section below along with the District's approach for fee collection in these cases. After reviewing 10 of the parcels it was still unclear what work, if any, had been performed and if a fee was owed. Inquiry and Inspection Letters have been prepared and mailed to each of these property owners requesting that they schedule a time where a District inspector can inspect their property and conclusively determine what work was performed and if any fees are owed. Similarly, a review of 18 parcels in the Septic Conversion category could not conclusively determine if those parcels had connected to District facilities. Field inspections of these parcels are in progress. Finally, collection efforts on 9 parcels were already in progress prior to the start of the Outstanding Fee Report review. These collection efforts are still ongoing. ISSUES During the fee review process, several questions related to collection of fees owed were identified. These issues are discussed below with a listing of options and a recommendation for each of them as we begin the collection phase of the program. 1. Who should be billed if property ownership has changed since the fees were incurred? The District Code allows collection of fees owed from several parties including the current property owner, even if they were not the owner at the time the fee was C: \Users \danderson\AppData \Local \Microsoft \Windows \Temporary Internet Files \Content.Outlook \DVCG8C5G \GM Report - Outstanding Fee Collection Program Issues FINAL 10- 18- 12.doc Collection of Outstanding Fees October 11, 2012 Page 4 of 9 incurred. Current District practice in cases where property ownership has changed between the time that a fee is incurred' and the time that District becomes aware that a fee is owed is to bill either the person who owned the property at the time the fee was incurred or the contractor who did the work that incurred the fee. Affected Properties: 8 parcels with ownership changes only $32,175 in potentially collectible fees Options: • Bill the person who owned the property when the fee was incurred. • Bill the contractor who did the work that incurred the fee. • Bill both the person who owned the property when the fee was incurred and the contractor who did the work that incurred the fee, if known. • Bill the current property owner if billing the other parties is unsuccessful. • Do not bill where property ownership has changed and write off fees. Staff Recommendation: Bill both the person who owned the property when the fee was incurred and, if known, the contractor who did the work that incurred the fee. If these parties do not respond to a letter and invoice seeking payment, locate other property owned by those parties on which a certificate of unpaid charges can be filed to secure payment. If no such property can be located, write off the fees owed. Do not attempt to collect fees from a current property owner if property ownership has changed and the District is unable to collect from either the contractor or the property owner who incurred the fee. 2. Should collection of fees discovered more than four years ago be pursued? For the purpose of collecting fees owed, the Discovery Date (the date when the District first became aware that a fee was owed) is defined as the earliest of the following: • the date that a note was placed in the file or in the SunGard software indicating that a fee was owed, • the date that a Sewer Service Charge was first levied (for new construction) or increased (for Second Living Units and expansions), or ' Typically the time a connection is made C: \Users \danderson\AppData \Local \Microsoft \Windows \Temporary Internet Files \Content.Outlook \DVCG8C5G \GM Report - Outstanding Fee Collection Program Issues FINAL 10- 18- 12.doc Collection of Outstanding Fees October 11, 2012 Page 5 of 9 • the date when the fees owed were identified in the current review process. The existence of an application in the SunGard system should not be considered as an awareness that a fee was owed since applications are often entered for work that does not go forward. District Counsel has indicated that there are several sections of the Civil Procedure Code that could limit the District's ability to prevail in the unlikely event a dispute over fees discovered more than four years ago went to court. Affected Properties: 11 parcels2 $46,343 in potentially collectible fees Options: • Bill all fees owed regardless of Discovery Date. • Do not bill for fees owed where the Discovery Date is more than four years ago. Staff Recommendation: Do not attempt to collect fees owed that the District has known about for more than four years. 3. Should fees be billed at current rates or at the rates in effect when the fees were incurred? The District Code requires that fees be billed at the rate in effect at the time the unpermitted connection is discovered, rather than at the rate that may have been in effect when the work was done and the fee incurred. Current connection fees reflect the current cost of a parcel's share of the total value of District assets and charging property owners at the current rate reflects the current value of their share of District facilities and other assets. The current rate of other fees reflects the District's current cost of service. Charging fees at current rates provides an incentive for applicants to pay fees when they are initially due to avoid being liable for higher fees later. However, in the current situation, an amnesty program that allows property owners (or contractors) to pay fees at the rate that was in effect when the fee was incurred may speed collection. 2 Five of these parcels have had an ownership change as well C:\ Users \danderson\AppData \Local \Microsoft \Windows \Temporary Internet Files \Content.Outlook \DVCG8C5G \GM Report - Outstanding Fee Collection Program Issues FINAL 10- 18- 12.doc Collection of Outstanding Fees October 11, 2012 Page 6 of 9 Affected Properties: At least 44 parcels (those receiving collection letters). It could be higher if other categories of parcels are included. Options: • Charge capacity and other fees at current rates • Charge fees at rates in effect when a connection was made Potential Effect Total fees at current rates3: $279,805 Total fees entered in SunGard 4: $214,490 Difference between total current fees and total fees per SunGard: $ 65,315 Average percent increase in total fees: 30% Staff Recommendation: If the fees are increased to current rates, the average increase would be 30 %. Based on this nominal increase, staff recommends charging all fees at the current rate. 4. Should work be inspected and should inspection fees be charged? Sewer work that was performed and is associated with applications listed in the Outstanding Fee Report was not inspected during construction. While it should be noted that the property owner owns and is responsible for the maintenance of the side sewers, enforcement of District Standards for these private sewers protects both current and future property owners from improper work. Since the work was not inspected by the District and the majority of the work is buried, it can be quite difficult to determine whether the completed work conforms to District Standards. Current District practice when work that was built without a permit is discovered is typically to require a CCTV inspection as well as excavation and 3 Based on the 44 parcels ready for collection letters. Eight additional parcels are proposed in recommendation #1. Additional parcels may be added after inspection letter and septic reviews are completed. 4 Some fees in SunGard have been updated over time while others are the original fees. C: \Users \danderson\AppData \Local \Microsoft \Windows \Temporary Internet Files \Content.Outlook \DVCG8C5G \GM Report - Outstanding Fee Collection Program Issues FINAL 10- 18- 12.doc Collection of Outstanding Fees October 11, 2012 Page 7 of 9 inspection of the connection points. When such an inspection is done, compliance with specific standards for pipe material, diameter, slope, bedding, cover, and installation of cleanouts and overflow prevention devices (OPDs) is verified and proper function of the sewer is ensured. The District typically requires that any non - conforming work discovered during an inspection be replaced. If this is not practical or the property owner is not cooperative, an option would be to develop and record a Notice of Unpermitted Work on the property. Such a notice would alert future property owners that unpermitted sewer work has been performed and that the work has not been inspected by the District. This notice would likely result in eventual correction and inspection of the deficient work, fulfilling the District's code enforcement obligation and ensuring that all sewer work meets District standards. The specific language for the notice would need to be reviewed by District Counsel, as would procedures for filing and removal of the notices. Affected Properties: Likely to be between 44 and 100 parcels Options: • Require CCTV inspection of side sewers. Such an inspection would identify any defective pipe joints and sags. • Require the installation and inspection of an OPD if none is present. • Require property owners to excavate and expose the entire side sewer to allow inspection. • Require property owners to excavate and expose the points of connection at each end of the work to allow inspection. • Record a Notice of Unpermitted Work on the property. • Perform no inspections. Staff Recommendation: Require CCTV inspection of side sewers in the presence of a District inspector where unpermitted work has been done to identify any defective pipe joints and sags. Require the installation of OPDs as required by District code if none is present. The property owner may file an application for exemption under District code if applicable. Develop a "Notice of Unpermitted Work" with District Counsel. The notice or agreement could be used for side sewers that are functional, but do not comply C:\ Users\ danderson \AppData \Local\Microsoft \Windows \Temporary Internet Files \Content.Outlook \DVCG8C5G \GM Report - Outstanding Fee Collection Program Issues FINAL 10- 18- 12.doc Collection of Outstanding Fees October 11, 2012 Page 8 of 9 with District standards but the property owner considers it impractical to replace the work at this time. PROCEDURALIMPROVEMENTS To prevent the accumulation of future unpaid fees for work that is not expected to proceed, the following procedural changes have been implemented or will be implemented shortly: Regular reviews of Outstanding Fee Reports The Development Services Supervisor now runs and reviews the SunGard Outstanding Fees Report monthly. The results of the review are included in the Permit Counter Monthly Report to management. Closing out inactive applications and permits Where an application has been entered in the SunGard system, and no permit has been issued within 18 months, and where field verification indicates that no work has been performed, the application will be closed and the applicant will be notified by mail that a new application must be filed, a District permit obtained and applicable fees paid before any sewer work is done. Where the field check indicates that sewer work has begun or is imminent, the property owner and contractor (if any) will be notified that a District permit must be obtained and fees paid prior to any further sewer work. If sewer work has commenced, a Notice of Violation (NOV) will be issued and, if necessary, code enforcement proceedings will be initiated. Permits will retain an "active" designation in the SunGard system for 6 months. Inspectors will conduct regular drive -bys where permits have been issued, but no inspection has been requested. If five months pass with no activity, the permit holder will be notified by mail that the permit will be closed and that a new permit will be required for any further work if an extension is not requested and approved. Closing out inactive applications and permits will reduce the number in the system to those that are actually "active" so that applications- with -fees included in the monthly run of the Outstanding Fee Report will indicate only those where collections are likely. C: \Users \danderson\AppData \Local \Microsoft \Windows \Temporary Internet Files \Content.Outlook \DVCG8C5G \GM Report - Outstanding Fee Collection Program Issues FINAL 10- 18- 12.doc Collection of Outstanding Fees October 11, 2012 Page 9of9 Collection of fees at the time of application for new residential unit equivalents where no new connection will be made to the District's public sewer District Code specifies that fees are to be collected when a connection is made to the District's public sewer system. For a significant number of applications, the proposed work will not involve a new connection to the District's system; rather the new work will connect to the customer's private building plumbing or side sewer. Permit counter staff now collects fees for this category of work at the time an application is filed, rather than when the roof and rough framing inspections have been completed. This ensures that fees are collected in a timely manner. Commitment from all local building departments to included District in final inspection Over the past several months, Development Services staff met with the building inspection department supervisors in each of the local jurisdictions within the District to review procedures for the approval of plans and inspections when both building permits and CCCSD permits are required. All agencies have agreed to give the District prior notice of final inspection and pending issuance of Certificates of Occupancy for any project where District fees or permits may be required. This will enable the District to ensure that fees are paid before connections are made and placed into service. TB:JM2:sdh C:\ Users\ danderson \AppData \Local\Microsoft \Windows \Temporary Internet Files \Content.Outlook \DVCG8C5G \GM Report - Outstanding Fee Collection Program Issues FINAL 10- 18- 12.doc