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Home My WebLink About05.a. Public hearing re delinquent charges for 2500 Annalisa Drive, Concord (Caffe Classico)Central Contra Costa Sanitary District �Q BOARD OF DIRECTORS ..: POSITION PAPER Board Meeting Date: August 6, 2015 Subject. CONDUCT A PUBLIC HEARING TO RECEIVE COMMENTS ON AND CONSIDER ADOPTION OF A RESOLUTION DIRECTING THAT FISCAL YEAR 2015 -16 DELINQUENT CHARGES BE COLLECTED ON THE CONTRA COSTA COUNTY PROPERTY TAX ROLL Submitted By. Initiating Dept✓Div.: Danea Gemmell, Planning & Engineering & Technical Services/ Development Services Division Manager Planning & Development Services REVIEWED AND RECOMMENDED FOR BOARD ACTION: JM. Petit — Director of Engineering & Technical Services. Kent Alm Roger S. Bailly Counsel for the District General Manager ISSUE: A resolution of the Board of Directors passed by four affirmative votes is needed to place charges on the Contra Costa County tax roll. RECOMMENDATION: Adopt a resolution directing that Fiscal Year (FY) 2015 -16 delinquent charges be collected on the Contra Costa County property tax roll for the property located at 2500 Annalisa Drive in Concord (APN 159- 362 -001). FINANCIAL IMPACTS: This action will provide for the collection of $114,970.47 including capacity fees plus penalties and delinquent charges. Placing the delinquent charges on the property tax roll for collection will ensure that the District collects the charges. This action constitutes a lien on the property. ALTERNATIVES /CONSIDERATIONS: The Board could decline to place the delinquent charges on the property tax roll or could direct staff to make alternative arrangements. Since staff has exhausted all feasible efforts for collection, declining establishment of a lien would likely result in the delinquent amounts being uncollectible. BACKGROUND: The building at 2500 Annalisa Drive was built and connected to sanitary sewer in 1983. The District issued a sewer permit and collected $1,515 in connection fees based on fixtures. Notes on the permit reference 3,000 square feet of office space and 3,000 square feet of light industrial space. In 2000, Mr. Thomas Heffernan purchased the property and relocated his business, Caffe Classico, onto the parcel. In 2003, District Source Control Inspectors became aware that an ice cream manufacturer, Caffe Classico, was operating on the premises and was not in compliance with District discharge regulations. Source Control took enforcement action and had over 30 interactions with Caffe Classico between 2003 and 2013, and eventually reached a settlement agreement for the discharge violations in January 2010 N:\ADMINSUP\ADMIN \DIST- SEC \Position Papers\2015 \PP -Hold PH regarding delinquency - Caffe Classico - 8 -6 -15 DRAFT.docxPage 1 of 3 POSITION PAPER Board Meeting Date: August 6, 2015 subject: CONDUCT A PUBLIC HEARING TO RECEIVE COMMENTS ON AND CONSIDER ADOPTION OF A RESOLUTION DIRECTING THAT FISCAL YEAR 2015 -16 DELINQUENT CHARGES BE COLLECTED ON THE CONTRA COSTA COUNTY PROPERTY TAX ROLL and again for subsequent violations in January 2013. Mr. Heffernan sold the business to an investment group in 2007, yet retained ownership of the property. In September 2011, Caffe Classico management notified the District that the testing for Source Control strength data had been intentionally manipulated to reduce wastewater strength readings. District staff investigated whether an added burden had been placed on the sanitary sewer and discovered in the next few months that no capacity fees had been paid for the change in use or the subsequent expansion from 6,000 square feet to over 12,000 square feet. In December 2012, the District notified the property owner that capacity fees were due based on the property's change of use and increased burden. Under District Code, Caffe Classico would be classified as a "Permitted Industry" and would require a special study to determine the appropriate Capacity Fee, which utilizes analysis of water consumption and wastewater strength data. The District and property owner met to review operations on the property, the basis for capacity fees, and various options for payment. The District offered Caffe Classico a Capacity Use Agreement, under which a substantial down payment would be made and Capacity Use Charges would be placed on the tax bill for the next 15 years. In February 2013, Caffe Classico achieved zero discharge status as specified in the January 2013 settlement agreement with Source Control. In March 2013, the District notified the property owner that a down payment on a Capacity Use Agreement of $102,974 was due by April 30. The down payment amount is calculated from building square footage and does not use any of the wastewater strength data provided by Caffe Classico. On May 3, 2013, the District notified the property owner that the $102,974 capacity fee was delinquent and could be placed on the parcel's property tax bill along with interest and penalties. A 10% delinquent charge of $10,297.40 and penalties at 1.5% per month totaling $1,699.07 were added to the amount due, bringing the total to $114,970.47. Section 6.12.030E of District Code states that the persons jointly and severally responsible for the payment of capacity fees, including such fees as may arise out of an added burden due to change of use, are: (1) the parcel owner at the time the added burden occurs, (2) the tenant or business owner (user) in the case of nonresidential use, (3) the wastewater utility service permit applicant, and (4) the parcel owner at the N:WDMINSUPWDMIN\DIST- SEC \Position Papers\2015 \PP -Hold PH regarding delinquency - Caffe Classico - 8 -6 -15 DRAFT.docxPage 2 of 3 POSITION PAPER Board Meeting Date: August 6, 2015 Subject: CONDUCT A PUBLIC HEARING TO RECEIVE COMMENTS ON AND CONSIDER ADOPTION OF A RESOLUTION DIRECTING THAT FISCAL YEAR 2015 -16 DELINQUENT CHARGES BE COLLECTED ON THE CONTRA COSTA COUNTY PROPERTY TAX ROLL time the District discovers an unpaid or delinquent capacity fee. Mr. Heffernan's LLC, Anmani Investments, meets all four classifications. District staff has met with the property owner multiple times in an attempt to resolve questions regarding the capacity fee in light of ongoing legal issues involving the property owner and the new business operator. As the District and the property owner have been unable to reach agreement on payment of capacity fees, staff is recommending that delinquent capacity fees in the amount of $114,970.47 be placed on the property tax bill for the parcel. The deadline to submit delinquent charges to Contra Costa County for placement on the property tax roll is August 10, 2015. Health and Safety Code states that the District's resolution to place the charges on the tax roll must be adopted no later than August 10, 2015. Because of the deadlines, it is necessary for the Board to take action by adopting the attached resolution no later than August 10, 2015 in order to place the charges on the 2015 -16 tax roll. This delinquency represents a complex situation that has existed for several years. In addition to this public hearing, a closed session is scheduled for August 26, 2015 for the Board to consider alternative or additional amounts to be collected through litigation or other remedies. If an alternative resolution is decided upon at the August 26 meeting, this resolution may be rescinded and separate action may be taken. COMMITTEE RECOMMENDATION: The Finance Committee reviewed this matter at its July 27, 2015 meeting and recommended that staff pursue additional collection action. Adopting this resolution is a first step in pursuing collection of appropriate fees. RECOMMENDED BOARD ACTION: Adopt a resolution directing that FY 2015 -16 delinquent charges in the amount of $114,970.47 be collected on the Contra Costa County property tax roll for the property located at 2500 Annalisa Drive in Concord (APN 159- 362 -001). A_ _ttached Supportinq Document: 1. Proposed Resolution N:\ADMINSUP\ADMIN \DIST- SEC \Position Papers\2015 \PP -Hold PH regarding delinquency - Caffe Classico - 8 -6 -15 DRAFT.docxPage 3 of 3 ATTACHMENT 1 RESOLUTION NO. 2015-0,21 A RESOLUTION DIRECTING THAT FISCAL YEAR 2015 -16 DELINQUENT CHARGES FOR THE PROPERTY LOCATED AT 2500 ANNALISA DRIVE IN CONCORD BE COLLECTED ON THE CONTRA COSTA COUNTY PROPERTY TAX ROLL WHEREAS, there was a change in use at the commercial property located at 2500 Annalisa Drive in Concord (APN 159- 362 -001) without payment of appropriate capacity fees and other fees due; and WHEREAS, Central Contra Costa Sanitary District (District) staff has attempted to collect said fees and charges by mailing letters and invoices to the property owner and the business owner; and WHEREAS, the fees and charges became delinquent in 2013; and WHEREAS, the District assessed delinquency charges, and since that time has assessed penalties pursuant to provisions of District Code Section 1.08.080; and WHEREAS, the District Code provides that the District may elect to collect delinquent charges on the tax roll as provided by Section 5473a and following, of the California Health and Safety Code; and WHEREAS, the District considers it to be economical and efficient to collect delinquent charges on the Contra Costa County tax roll. NOW, THEREFORE, be it resolved by the Board of Directors of the District: 1) THAT Fiscal Year 2015 -16 delinquent charges in the amount of $114,970.47 for the property located at 2500 Annalisa Drive in Concord, are to be collected on the Contra Costa County Property Tax Roll. Passed and adopted this 6th day of August, 2015 by the Central Contra Costa Sanitary District Board of Directors by the following vote: AYES: Members: NOES: Members: ABSENT: Members: Michael R. McGill, P.E. President of the Board of Directors Central Contra Costa Sanitary District County of Contra Costa, State of California Resolution No. 2015-62'f Central Contra Costa Sanitary District Page 2 of 2 COUNTERSIGNED: Elaine R. Boehme, CIVIC Secretary of the District Central Contra Costa Sanitary District County of Contra Costa, State of California Approved as to form: Kenton L. Alm, Esq. Counsel for the District